The opinion of the court was delivered by: LASKER
Allied Color Corporation, the payee named in two checks drawn on Manufacturers Hanover Trust Company in an aggregate amount of $ 24,020., sues to recover that amount. Manufacturers moves to dismiss the complaint under Rule 12(b)(6).
The two checks were issued to Allied on December 14, 1978, but postdated December 31, 1978. Allied deposited the checks to its account on December 15, 1978, at its bank in Connecticut, and on December 18, 1978 Manufacturers received them and stamped them "paid." On December 28th, Manufacturers cancelled its "paid" stamp and returned the checks unpaid.
Allied asserts that it is entitled to recover the amount of the checks because Manufacturers wrongfully revoked final payment of the checks, see N.Y.U.C.C. § 4-213, because it failed to send timely notice of dishonor, see id. § 3-508(2), and because it handled the checks negligently, see id. § 4-103. The present motion, however, addresses only Allied's final contention which is that it is entitled to recover from the bank under provisions of the federal banking regulations and the Uniform Commercial Code which provide, respectively:
"A paying bank becomes accountable for the amount of each cash item received by it from or through a Federal Reserve Bank at the close of the paying bank's banking day on which the cash item was so received if it retains such item after the close of such banking day, unless prior to such time, it pays or remits for the item as herein provided."
12 C.F.R. § 210.9(a)(1) (1979), and:
"In the absence of a valid defense . . . if an item is presented on and received by a payor bank the bank is accountable for the amount of
(a) a demand item other than a documentary draft whether properly payable or not if the bank, in any case where it is not also the depository bank, retains the item beyond midnight of the banking day of receipt without settling for it or, regardless of whether it is also the depository bank, does not pay or return the item or send notice of dishonor until after its midnight deadline . . . ."
N.Y.U.C.C. § 4-302(a). The bank moves to dismiss on the grounds that these two provisions are inapplicable because the postdated checks which Allied sues on are not "cash items" as that term is used in 12 C.F.R. § 210.9(a)(1), or "demand items" within the meaning of N.Y.U.C.C. § 4-302(a).
1. Federal Banking Regulations
Manufacturers' contention that a postdated check presented to a bank for payment prior to the stated date is not a "cash item" is correct. A "cash item" is defined as:
"(1) Any check other than a check classified as a noncash item in accordance with paragraph (j) of this section; or
"(2) Any other item payable on demand and collectible at par which the Federal Reserve bank of the district in which the item is payable may be willing to accept as a cash item."
12 C.F.R. § 210.2(i). However, a postdated check prior to date is not a "check" as that term is used in subsection (1) of section 210.2(i), since for these purposes a "check" is "any draft drawn on a bank and payable on demand," 12 C.F.R. § 210.2(b), and a postdated check is not, until the stated date, "payable on demand." For the same reason, such a check could never qualify as a "cash item" ...