Not Reported in A.2d, 2008 WL 1733278 (N.J.Super.A.D.), 65 UCC Rep.Serv.2d
UNPUBLISHED OPINION. CHECK COURT RULES BEFORE CITING.
Superior Court of New Jersey,
Appellate Division.
Robert J. TRIFFIN, Plaintiff-Appellant,
AMERICAN INTERNATIONAL GROUP, INC., a/k/a AIG, individually and t/a New
Hampshire Insurance Co.-NJ Lad Loss, and the Robert Plan of New York,
Defendants-Respondents,
Jermielem Merriwether FN1 and Bank of America, N.A., individually as successor
to Fleet Bank, N.A.,FN2 Defendants.
FN1. Jermiellem Merriwether could not be located for service of plaintiff’s
summons and complaint.
FN2. Bank of America, N.A. was voluntarily dismissed by plaintiff.
Robert J. Triffin, Plaintiff-Appellant,
Neal Silberberg t/a Red Carpet Realty,FN3 Defendant-Respondent,
FN3. The original complaint named defendant as Red Carpet Realty, Inc. d/b/a
Red Carpet Realty. At trial, upon consent of both parties, the judge permitted the
complaint to be amended to reflect defendant as Neal Silberberg t/a Red Carpet
Realty.
David Ruddy, Defendant.
Argued Dec. 5, 2007.
Decided April 16, 2008.
On appeal from the Superior Court of New Jersey, Law Division, Special Civil
Part, Essex County, DC-26349-05 (A-0513-06T5) and Middlesex County, DC-
6834-06 (A-0514-06T5).
Robert J. Triffin, appellant, argued the cause pro se in A-0513-06T5 and A-0514-
06T5.
Brian A. Maloof argued the cause for respondents in A-0513-06T5 (Maloof,
Lebowitz, Connahan & Oleske, attorneys; Mr. Maloof, on the brief).
Neal Silberberg, respondent, argued the cause pro se in A-0514-06T5.
Before Judges SAPP-PETERSON and MESSANO.
PER CURIAM.
*1 These are back-to-back appeals that have been consolidated for the purposes
of this opinion. Plaintiff, Robert J. Triffin, is in the business of purchasing
dishonored checks. He in turn obtains an assignment of rights, in connection with
the dishonored checks, from the check cashing entity. Plaintiff appeals the
dismissal of two complaints following separate bench trials. The first complaint
was filed in Essex County against American International Group Inc., a/k/a AIG;
New Hampshire Insurance Company-NJ LAD Loss, and The Robert Plan
(hereinafter all referred to as AIG). The trial judge dismissed the complaint after
concluding that plaintiff’s assignor, A-1 Check Cashing Emporium (A-1), was not
a holder in due course because it knowingly cashed a check that was facially
defective when it was presented for payment. In the second action filed in
Middlesex County against Red Carpet FN4 and David Ruddy (Ruddy), the trial
against Red Carpet and remand for the entry of judgment in favor of plaintiff
against Red Carpet.
FN4. As previously stated, the complaint was later amended to include Neal
Silberberg as a defendant. For purposes of this opinion, both Silberberg and Red
In the AIG action, the trial proofs were as follows. In November 2002, AIG issued
a check to Jermielem Merriwether in connection with a personal injury action.
Merriwether presented the check to A-1 for payment on December 4, 2002. A-1’s
representative, John Carter, testified that “[he] forgot to have Mr. Mer [r]iwether
sign the check.” He indicated that it was “an oversight” on his part and that he
talking too much here, you know, the check came back, and then we wound up
receiving a[n] affidavit indicating that he didn’t cash the check. He meaning Mr.
Mer[r]iwether. And I just think that it was conspiracy on his part to try to get over
because he realized that he forgot to sign the check.
instrument that
*2 (1) … when issued or negotiated to the holder does not bear such apparent
evidence of forgery or alteration or is not otherwise so irregular or incomplete as
to call into question its authenticity; and
“[he] printed [Merriwether’s] name [on the check] so we could make the deposit to
the bank.” Carter also testified that he told A-1’s owner, Alex Neu, who later
entered into the assignment/transfer agreement with plaintiff, what he had done
prior to the assignment. Hence, at the time A-1 submitted the check for payment,
it knew that the check bore an “unauthorized signature or [had] been altered.”
N.J.S.A. 12A:3-302(a) and, therefore, plaintiff did not acquire a holder in due
course status by virtue of the assignment. There is no question that A-1, prior to
depositing the check into its bank account, was aware that the check had not
been properly endorsed but, nonetheless, proceeded to attempt to enforce its
right to receive payment on the check. Because A-1 knew that it had altered the
when it granted a judgment of no cause to defendant after its earlier ruling that
defendant had waived any defense that the signature on Merriwether’s check
was forged because it failed to specifically plead the defense of forgery in its
answer to the complaint. See N.J.S.A. 12A:3-308(a). The trial court’s ruling did
not negate plaintiff’s obligation to prove that it was a holder in due course entitled
plaintiff’s complaint with prejudice.
II. The Red Carpet Action
The salient facts presented at trial are largely undisputed. Neal Silberberg owns
Red Carpet, a real estate agency located in Edison. Defendant, David Ruddy, is
a former employee of Red Carpet, where he worked as a real estate agent for
approximately ten years. In the summer of 2004, Silberberg wrote out two checks
drawer without authorization and cashed them at Check-X-Change.FN6 The
Check-X-Change endorsement shows that the checks were cashed on July 23,
2004. When Silberberg realized that the checks had been removed from his
desk, he placed a stop payment on the checks. The stop payment was placed on
the checks prior to their being cashed by Check-X-Change. When Check-X-
FN6. Triffin does not dispute that the checks were stolen from Silberberg’s
desk drawer and cashed without authorization.
answer, claiming that there was no legal transfer of the checks from Red Carpet
to Ruddy.
FN7. David Ruddy did not answer the complaint or appear at trial. A default
judgment was entered against him in the amount of $2,584.24, plus costs,
and, as such, the subsequent transfer of its rights of enforcement in connection
with the dishonored checks did not create a holder in due course status in
plaintiff. The court reasoned that “[t]he check cashing company did not observe
reasonable commercial standards [when it cashed] the checks in question
without making a very simple inquiry as to their legitimacy, and therefore, cannot
was a holder in due course at the time it transferred its rights under the two
checks to plaintiff. We agree.
There is no dispute that at the time the two checks were presented to Check-X-
Change for payment, the checks showed no signs of forgery or alteration, and
instrument … ha [d] been dishonored … contain[ed] an unauthorized signature” or
that “any party ha[d] a defense or claim.” N.J.S.A. 12A:3-302(a).
The trial judge concluded that Check-X-Change did not act in good faith and,
therefore, was not a holder in due course because it failed to confirm the validity
“a party who puts negotiable paper afloat.” Calvetti, supra, 68 N.J.Super. at 27.
Rather, we concluded that whether one is a holder in due course is determined
by honesty and good faith, and not by issues of diligence or negligence. Id. We
acknowledged, however, that suspicious circumstances are relevant when
determining if a holder acted in good faith, even if suspicious circumstances
N.J. 396, 403-04 (1971)) (holding that a party cannot claim holder in due course
status when it fails to confirm an instrument’s validity when the circumstances of
the transaction require that an inquiry be made.). Compare, Triffin v. Somerset
Valley Bank, 343 N.J.Super. 73, 85 (App.Div.2001) (holding eighteen dishonored
checks the plaintiff acquired through assignment were enforceable because there
this contention. Thus, Check-X-Change was a holder in due course entitled to
recover from Red Carpet, and its assignment of its rights under the checks to
plaintiff transferred its holder in due course status to plaintiff as well.
*5 We reject Red Carpet’s additional contention that since Silberberg never
endorsement, then the transferee is not a holder. However, if the transferor was
a holder, the transferee obtains the transferor’s rights if he or she can prove the
transaction through which the instrument was acquired. N.J.S.A. 12A:3-203,
comment 2. Because Check-X-Change was a holder in due course within the
meaning of N.J.S.A. 12A:3-302(a) and because plaintiff proved the validity of the
Pomerantz, supra, 370 N.J.Super. at 309 (holder in due course status may not
be claimed by one who remains ignorant of facts that are readily apparent and
may disclose a defect in an instrument).
Plaintiff was also entitled to a judgment against Ruddy as the endorser on the
of Check-X-Change, a holder in due course. Therefore, plaintiff is entitled to
judgment against Ruddy.
Plaintiff’s remaining argument on appeal is that the trial court committed
reversible error when it entered a default judgment, sua sponte, against Ruddy.
N.J.S.A. 38:23C-4 requires that a plaintiff in a civil action file an affidavit with the
court showing that a defaulting defendant is not serving in the military, within 20
day prior to entry of a default judgment. Rule 1:5-7 implements the statute, and
states “[b]efore entry of judgment by default, an affidavit, which may be filed as
part of the affidavit of proof, shall be filed as required by law setting forth facts
i.e ., a person on active military duty at the time of judgment. Id. at 128-29.
*6 In this case, plaintiff failed to file an affidavit of non-military service certifying
that Ruddy was not currently serving in the armed forces, and is now seeking
reversal on that ground. However, a default judgment entered under these
To summarize, we affirm the dismissal of plaintiff’s complaint in the AIG action,
affirm the entry of a default judgment in favor of plaintiff against David Ruddy in
the Red Carpet action. We reverse the dismissal of plaintiff’s complaint against
Red Carpet, and remand for the entry of judgment against Red Carpet.
Affirmed in part, reversed in part, and remanded for entry of judgment against
Neal Silberberg t/a Red Carpet Realty. We do not retain jurisdiction.
a holder in due course because it knowingly cashed a check that was facially
defective when it was presented for payment. In the second action filed in
Middlesex County against Red Carpet FN4 and David Ruddy (Ruddy), the trial
against Red Carpet and remand for the entry of judgment in favor of plaintiff
against Red Carpet.
FN4. As previously stated, the complaint was later amended to include Neal
Silberberg as a defendant. For purposes of this opinion, both Silberberg and Red
In the AIG action, the trial proofs were as follows. In November 2002, AIG issued
a check to Jermielem Merriwether in connection with a personal injury action.
Merriwether presented the check to A-1 for payment on December 4, 2002. A-1’s
representative, John Carter, testified that “[he] forgot to have Mr. Mer [r]iwether
sign the check.” He indicated that it was “an oversight” on his part and that he
talking too much here, you know, the check came back, and then we wound up
receiving a[n] affidavit indicating that he didn’t cash the check. He meaning Mr.
Mer[r]iwether. And I just think that it was conspiracy on his part to try to get over
because he realized that he forgot to sign the check.
instrument that
*2 (1) … when issued or negotiated to the holder does not bear such apparent
evidence of forgery or alteration or is not otherwise so irregular or incomplete as
to call into question its authenticity; and
“[he] printed [Merriwether’s] name [on the check] so we could make the deposit to
the bank.” Carter also testified that he told A-1’s owner, Alex Neu, who later
entered into the assignment/transfer agreement with plaintiff, what he had done
prior to the assignment. Hence, at the time A-1 submitted the check for payment,
it knew that the check bore an “unauthorized signature or [had] been altered.”
N.J.S.A. 12A:3-302(a) and, therefore, plaintiff did not acquire a holder in due
course status by virtue of the assignment. There is no question that A-1, prior to
depositing the check into its bank account, was aware that the check had not
been properly endorsed but, nonetheless, proceeded to attempt to enforce its
right to receive payment on the check. Because A-1 knew that it had altered the
when it granted a judgment of no cause to defendant after its earlier ruling that
defendant had waived any defense that the signature on Merriwether’s check
was forged because it failed to specifically plead the defense of forgery in its
answer to the complaint. See N.J.S.A. 12A:3-308(a). The trial court’s ruling did
not negate plaintiff’s obligation to prove that it was a holder in due course entitled
plaintiff’s complaint with prejudice.
II. The Red Carpet Action
The salient facts presented at trial are largely undisputed. Neal Silberberg owns
Red Carpet, a real estate agency located in Edison. Defendant, David Ruddy, is
a former employee of Red Carpet, where he worked as a real estate agent for
approximately ten years. In the summer of 2004, Silberberg wrote out two checks
drawer without authorization and cashed them at Check-X-Change.FN6 The
Check-X-Change endorsement shows that the checks were cashed on July 23,
2004. When Silberberg realized that the checks had been removed from his
desk, he placed a stop payment on the checks. The stop payment was placed on
the checks prior to their being cashed by Check-X-Change. When Check-X-
FN6. Triffin does not dispute that the checks were stolen from Silberberg’s
desk drawer and cashed without authorization.
answer, claiming that there was no legal transfer of the checks from Red Carpet
to Ruddy.
FN7. David Ruddy did not answer the complaint or appear at trial. A default
judgment was entered against him in the amount of $2,584.24, plus costs,
and, as such, the subsequent transfer of its rights of enforcement in connection
with the dishonored checks did not create a holder in due course status in
plaintiff. The court reasoned that “[t]he check cashing company did not observe
reasonable commercial standards [when it cashed] the checks in question
without making a very simple inquiry as to their legitimacy, and therefore, cannot
was a holder in due course at the time it transferred its rights under the two
checks to plaintiff. We agree.
There is no dispute that at the time the two checks were presented to Check-X-
Change for payment, the checks showed no signs of forgery or alteration, and
instrument … ha [d] been dishonored … contain[ed] an unauthorized signature” or
that “any party ha[d] a defense or claim.” N.J.S.A. 12A:3-302(a).
The trial judge concluded that Check-X-Change did not act in good faith and,
therefore, was not a holder in due course because it failed to confirm the validity
“a party who puts negotiable paper afloat.” Calvetti, supra, 68 N.J.Super. at 27.
Rather, we concluded that whether one is a holder in due course is determined
by honesty and good faith, and not by issues of diligence or negligence. Id. We
acknowledged, however, that suspicious circumstances are relevant when
determining if a holder acted in good faith, even if suspicious circumstances
N.J. 396, 403-04 (1971)) (holding that a party cannot claim holder in due course
status when it fails to confirm an instrument’s validity when the circumstances of
the transaction require that an inquiry be made.). Compare, Triffin v. Somerset
Valley Bank, 343 N.J.Super. 73, 85 (App.Div.2001) (holding eighteen dishonored
checks the plaintiff acquired through assignment were enforceable because there
this contention. Thus, Check-X-Change was a holder in due course entitled to
recover from Red Carpet, and its assignment of its rights under the checks to
plaintiff transferred its holder in due course status to plaintiff as well.
*5 We reject Red Carpet’s additional contention that since Silberberg never
endorsement, then the transferee is not a holder. However, if the transferor was
a holder, the transferee obtains the transferor’s rights if he or she can prove the
transaction through which the instrument was acquired. N.J.S.A. 12A:3-203,
comment 2. Because Check-X-Change was a holder in due course within the
meaning of N.J.S.A. 12A:3-302(a) and because plaintiff proved the validity of the
Pomerantz, supra, 370 N.J.Super. at 309 (holder in due course status may not
be claimed by one who remains ignorant of facts that are readily apparent and
may disclose a defect in an instrument).
Plaintiff was also entitled to a judgment against Ruddy as the endorser on the
of Check-X-Change, a holder in due course. Therefore, plaintiff is entitled to
judgment against Ruddy.
Plaintiff’s remaining argument on appeal is that the trial court committed
reversible error when it entered a default judgment, sua sponte, against Ruddy.
N.J.S.A. 38:23C-4 requires that a plaintiff in a civil action file an affidavit with the
court showing that a defaulting defendant is not serving in the military, within 20
day prior to entry of a default judgment. Rule 1:5-7 implements the statute, and
states “[b]efore entry of judgment by default, an affidavit, which may be filed as
part of the affidavit of proof, shall be filed as required by law setting forth facts
i.e ., a person on active military duty at the time of judgment. Id. at 128-29.
*6 In this case, plaintiff failed to file an affidavit of non-military service certifying
that Ruddy was not currently serving in the armed forces, and is now seeking
reversal on that ground. However, a default judgment entered under these
To summarize, we affirm the dismissal of plaintiff’s complaint in the AIG action,
affirm the entry of a default judgment in favor of plaintiff against David Ruddy in
the Red Carpet action. We reverse the dismissal of plaintiff’s complaint against
Red Carpet, and remand for the entry of judgment against Red Carpet.
Affirmed in part, reversed in part, and remanded for entry of judgment against
Neal Silberberg t/a Red Carpet Realty. We do not retain jurisdiction.