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November 25, 1985


The opinion of the court was delivered by: SAND


With a background of foreign intrigue and mystery more reminiscent of "The Maltese Falcon" than of a classic bills and notes dispute, plaintiff seeks to collect from defendant $150,000 and damages resulting from Cook's dishonoring 150 $1,000 travelers checks which Cook claims were stolen and bear forged counter-signatures. The case has been tried to the Court and the following constitutes our findings of fact and conclusions of law pursuant to F.R.Civ.P. 52(a).


 Plaintiff claims that his travelers checks were, in fact, countersigned by the proper party and that he is the holder in due course of valid negotiable instruments. Alternatively plaintiff contends that if forged, the forgery is "latent," i.e., not readily discernible to the average person, and thus, for various reasons, Cook is obligated to honor the travelers checks taken in good faith by plaintiff. Finally, plaintiff contends that in its investigation of the claim by the original purchaser, the checks had been lost or stolen and in its failure to adequately alert banks and agencies in Greece to the fact that these checks were on a lost or stolen list,. Cook was negligent and caused plaintiff to suffer compensable injuries. To deal with these issues we must trace the history of the checks in question:

 I. Majid Barghouthi's Purchase of the Checks

 The parties have stipulated (Pre-Trial Order § 3(a)(1), hereinafter "PTO") that on August 12, 1982 a person holding a Saudi Arabian passport showing the transliterated name "Majid Barghouthi" bought 150 U.S. $1,000 Thomas Cook Travelers Checks from Bank Indosuez in London, England. The manager of the bank branch who sold the checks to Barghouthi, Ramez Maatouk, testified that it was not unusual for mid-eastern customers to buy travelers checks in $1,000 denominations. He testified that he knew Barghouthi, held accounts for his brother and father, and that Barghouthi signed the checks in his presence. He further testified that Barghouthi had an account at that bank for some six to seven months before he bought the checks and still maintains a modest ($25,000) account there.

 On August 13, 1982, Barghouthi reported that the checks had been lost or stolen at Heathrow Airport in London and made a claim for a refund. Barghouthi spoke to the office manager of its branch of Bank Indosuez, who in turn called Cook. A Mr. Charles of branch of Bank Cook called Maatouk and he confirmed Barghouthi's integrity and good standing at the bank. Barghouthi completed a refund application at the bank's office, which application was forwarded to Cook. Maatouk received a telephone call from Mr. Charles advising that the checks could be replaced and he, together with Barghouthi, went to Cook's office where Barghouthi signed a new sales advance receipt and 150 $1,000 replacement checks.

 The tale now shifts to plaintiff and to Athens, Greece.

 II. Plaintiff Buys the Checks

 Plaintiff, Nicolaos Xanthopoulos, is a graduate architect with a degree in urban planning who maintains a planning office and acts as a consultant on urban planning. In 1980 his father died and plaintiff continued his father's business affairs which were those of a broker in stocks, precious metals and foreign currencies. Neither plaintiff nor his father was licensed to engage in such transactions but such dealings were common in Greece where inflation and other economic conditions led many Greeks to seek to protect the value of their money.

 A. Plaintiff's Version of How He Acquired the Checks

 In July, 1982 plaintiff received a telephone call asking for his father by nickname. Plaintiff advised the caller, who identified himself as Majid Barghouthi, that his father had passed away but that he had continued his father's business.

 A month later the same party again telephoned and said he was coming from Cypress, Greece. A meeting was arranged at the caller's hotel, the Hotel Meridien (a well-known luxury hotel much frequented by foreign tourists). Xanthopoulos met with the caller, who spoke of plaintiff's father and appeared familiar with the details of plaintiff's family. The caller (who for convenience we will refer to as "Barghouthi II") said that his parents lived in Beirut and intended to come to Greece and buy some property which would be converted into a hotel. Barghouthi II inquired if plaintiff would be interested in doing the design work for the conversion, an opportunity which plaintiff would have seized with relish. The parties conversed in English and Barghouthi II wore western garb.

 Barghouthi II then stated that he had $150,000 in travelers checks and that it would take 15 days to cash the checks at a bank. Barghouthi II said that he needed the cash because he would be going to contract and asked plaintiff if he would cash the checks. Plaintiff testified that he expressed reluctance at first, whereupon Barghouthi II said that if plaintiff was worried he would give him the serial numbers of the checks and only after plaintiff checked the numbers would they do the deal. Plaintiff did not then see the checks and learned they were Cook's checks only when he was given the numbers. He asked for and was shown Barghouthi II's Syrian passport which of course included a photograph resembling Barghouthi II. Nothing was said at the meeting about a commission to plaintiff.

 B. Plaintiff's Pre-Purchase Investigation

 Plaintiff testified that as he left the Hotel Meridien he went to the hotel register and verified from the registration form that a Majid Barghouthi with a Syrian passport had registered.

 Then he went across the road to the next block, which he believed contained a Thomas Cook agency. At the time the office (now in fact a Cook agency) was a branch of La Compagnie Internationale des Wagon Lits et de Tourisme, a travel company with which Cook maintains close relations and which acted as a sales agent for Cook in Greece. The parties have stipulated that "Thomas Cook has no knowledge of any instructions that were ever given to these selling agents in Greece [Wagon Lits, National Bank of Greece and the Ionian and Popular Bank of Greece] as to how to respond when inquiry is made whether certain Thomas Cook travelers checks had been reported to Thomas Cook to have been lost or stolen" (PTO at § 10).

 Plaintiff, observing the sign on the door reading "Associated with Thomas Cook" and believing himself to be at an authorized Cook agency, went to a cashier's window and asked whether the checks with the numbers on his list had been reported lost or stolen. He was told that the office did not keep a list of that sort and that he could go to the Tourist Police (Alien's Bureau) or the Bank of Greece. He was not given any other place or number to contact.

 Plaintiff went to the National Bank of Greece where he made the same inquiry, waited an hour and was told that the numbers were not on any list in the bank's possession. He also went to the Ionian Bank where ...

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