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BORRELLO v. PERERA CO.

September 20, 1974

Jose BORRELLO, Plaintiff,
v.
PERERA COMPANY, INC., Defendant


Levet, District Judge.


The opinion of the court was delivered by: LEVET

OPINION, FINDINGS OF FACT and CONCLUSIONS OF LAW

LEVET, District Judge.

 This is a diversity action brought by plaintiff, Jose Borrello ("Borrello"), a citizen of the Republic of Argentina, residing in the City of Buenos Aires, Argentina, against defendant, Perera Company, Inc. ("Perera"), a New York corporation.

 This action is brought by Borrello, the maker of two checks, against Perera, the payee, who received these checks by delivery from a third party, Marfinco, S.A. ("Marfinco") and deposited the funds in its corporate account but internally credited the sum to an account maintained with it by the third party, Marfinco. From the facts shown at the trial the parties were unable to determine who placed the following typed legend on the back of the checks: "For deposit only -- Pay to the credit of Marfinco S.A."

 After hearing the evidence presented by the parties, examining the exhibits, the pleadings, the briefs and the proposed Findings of Fact and Conclusions of Law submitted by counsel, this court makes the following Findings of Fact and Conclusions of Law:

 FINDINGS OF FACT

 1. Plaintiff is a resident of the City of Buenos Aires, Argentina. (Ex. 2, Q & A Nos. 1, 2.) *fn1"

 2. Defendant is a New York corporation organized under the New York Stock Corporation Law (now Business Corporation Law) having its main place of business in New York County. (Tr. 3.)

 3. This court has jurisdiction of the subject matter and of the parties in this action.

 4. On September 20, 1971 plaintiff delivered to Waroquiers, S.A., a broker in Buenos Aires, two checks with a written instruction describing the purpose for the delivery of the checks and the procedure to be followed. (Ex. 2, Q & A Nos. 10-14, 23-24; Exs. 3, 4, 5A.)

 5. The two checks delivered by plaintiff to Waroquiers were each dated September 20, 1971, each drawn on plaintiff's bank account maintained at the First National City Bank, New York, New York, each in the amount of $10,000 and each payable to the order of Perera as payee. (Exs. 3, 4.)

 6. The checks were made payable to Perera at the request of the broker, Waroquiers, which was instructed by plaintiff to deliver the checks to Perera with instructions to hold the funds pending plaintiff's authorization to make payment against the delivery of Argentine external bonds to plaintiff. (Ex. 5A.)

 7. Marfinco was a company engaged in the foreign exchange business and which had engaged in a course of business with Perera and maintained an account with Perera in connection with various foreign currency exchange transactions. (Ex. B; Tr. 16, 19, 29.)

 8. Subsequently, in some manner not disclosed, the two checks came into the possession of Marfinco. On September 20, 1971 Marfinco sent the two checks (Exhibits 3 and 4) with a group of other checks to Perera with a letter (Ex. 14) stating: "We enclose the following checks to be credited to our account with you:" One vonMihaly, a vice president of defendant corporation, testified that in September 1971 Marfinco was a customer of Perera and maintained an account with Perera. (Tr. 16, 19, 20.)

 9. At some time (apparently before Marfinco mailed the checks to Perera (see letter Ex. 12)) some person typed on the back of each check (Exs. 3 and 4) the legend: "For deposit only -- Pay to the credit of Marfinco, S.A." No evidence of authority for any such transfer was ever submitted to this court.

 10. Some employee or officer, concededly acting for Perera, endorsed the two checks: "Pay to the order of Manufacturers Hanover Trust Company, New York, New York, for credit to the account of the First National Bank of Fleischmanns, Fleischmanns, N.Y." and deposited both checks in the Manufacturers Bank to the credit of defendant's account with the Fleischmanns bank. That amount was then credited on defendant's internal books to the account of Marfinco. (Exs. 3, 4; Tr. 24, 25, 28, 29.)

 11. Perera then permitted Marfinco to use a portion of these funds to pay for certain orders. (Tr. 34.)

 12. Marfinco's account with defendant was "closed" on February 17, 1972 by a transfer to a Perera suspense account of the then balance of $6,982.43. Defendant issued a check in favor of Marfinco for said sum dated March 24, 1972 and the check was paid by defendant's bank on May 17, 1972. (Exs. 15, B.)

 13. Plaintiff demanded that defendant return the $20,000 by letter dated March 30, 1972 and defendant rejected the claim by letter dated May 10, 1972. (Exs. 6A, 10A.)

 14. Prior to the transaction involved here, plaintiff had never had any business dealings with Marfinco or Perera. Neither did plaintiff have any discussions with any officer or employee of Waroquiers with ...


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