The opinion of the court was delivered by: LASKER
In this suit by a North Carolina corporation against a national banking association which has its principal office in the Southern District of New York, the plaintiff moves for summary judgment. The suit relates to two checks in the total amount of $16,729.75 which defendant received for the account of plaintiff and the proceeds of which defendant disbursed from that account. Plaintiff claims that, as a matter of law, defendant had authority neither to receive and collect the checks nor to permit the proceeds to be withdrawn.
The material facts are not in dispute
and may be described as follows: For some time prior to September 17, 1969, plaintiff maintained a checking account with defendant at its office at 2 Park Avenue, New York City. On that day one of plaintiff's officers telephoned Daniel McGlynn, an Assistant Treasurer of defendant, and requested that plaintiff's bank account be closed forthwith and that all funds in the account be forwarded to plaintiff's credit and account with the North State Bank of Burlington, North Carolina. McGlynn advised Maurice Koury, Chairman of plaintiff's Board of Directors, to put the request in writing, which Koury did, sending a letter of instructions on September 17, 1969, by certified mail, return receipt requested, addressed to the defendant to the attention of McGlynn. The letter, received by defendant on September 18, reads as follows:
"Confirming our phone conversation, we wish to close our checking account, General Sales Corp. Account # 020-1-031986, immediately. All funds are to be transferred by wire to our Account # 101-344-5 with the North State Bank of Burlington, North Carolina. This transfer must be made through North Carolina National Bank in Charlotte, North Carolina for the account of North State Bank.
"I assume complete responsibility for this account as I am acting within the scope of my authority as Chairman of the Board of Directors.
"If you encounter any problems in carrying out our instructions, please feel free to phone us at 919 226-5581.
GENERAL APPAREL SALES CORP.
On September 26, 1969, the defendant marked the plaintiff's checking account closed, and on September 30 mailed to the plaintiff a final statement (for the period August 29 through September 26) showing a zero balance in the account.
There was no further activity in the account until February 17, 1970, on which date the defendant accepted two checks payable to plaintiff's order in the total amount of $16,729.75, the proceeds of which defendant collected on February 19, 1970 and deposited in plaintiff's closed account. The proceeds of the checks were admittedly disbursed to some party other than the plaintiff. Curiously, the record contains no positive identification of the person to whom the proceeds were in fact paid, but only the statement in the affidavit of George R. Janssen, Second Vice President of defendant, sworn to June 24, 1970, that
"I believe Murray Wilson made the deposits on * * *. February 17, 1970 and the withdrawals between February 17 and February 25, 1970, but I cannot be certain."
In any event, the disposition of the case does not depend on whether Wilson, the former President of plaintiff, who had been authorized to draw on this account, did in fact receive the proceeds, but rather, on the fact that the proceeds were, without plaintiff's authority, paid out, in violation of the instructions of plaintiff as set forth in its letter of September 17, 1969, to some person other than the plaintiff or a person to whom payment was authorized by plaintiff. On the basis of these facts, the complaint alleges that defendant is liable for permitting unauthorized persons to convert the proceeds of the checks and for its negligence in doing ...