The opinion of the court was delivered by: Sweet, District Judge.
Defendant Chemical Bank ("Chemical") has moved pursuant to
Rules 54 and 58 of the Federal Rules of Civil Procedure for
entry of judgment in its favor in accordance with the opinion
dated February 16, 1990, which granted its motion for summary
judgment. Plaintiff Lund's, Inc. ("LI") has renewed its motion
for reconsideration of the February 16 opinion. For the
following reasons, the motion for reconsideration is granted
and on reconsideration the February 16 opinion is affirmed,
with judgment to be entered in favor of Chemical pursuant to
the earlier opinion.
The parties, facts, and prior proceedings in this case are
set forth in detail in the numerous prior opinions, familiarity
with which is assumed. Lund v. Chemical Bank, 665 F. Supp. 218,
(S.D.N.Y. 1987) ("Lund's I") and Lund v. Chemical Bank,
675 F. Supp. 815 (S.D.N.Y. 1987) ("Lund's II"), rev'd, Lund's, Inc.
v. Chemical Bank, 870 F.2d 840 (2d Cir. 1989) ("Lund's III"),
on remand, Lund v. Chemical Bank, 84 Civ. 1621, 1990 WL 17711
(S.D.N.Y. February 16, 1990) ("Lund's IV").
On October 18, 1990 the Court of Appeals issued its opinion
affirming Barclays I. State v. Barclays Bank of New York, N.A.,
76 N.Y.2d 533, 561 N.Y.S.2d 697, 563 N.E.2d 11 (1990)
("Barclays II"). Chemical thereupon moved for entry of judgment
pursuant to the decision in Lund's IV, and LI in response
argued in support of its original motion for reconsideration of
that decision.*fn1 Oral argument was heard on November 30,
1. The Check Was Not Constructively Delivered to LI.
In light of Barclays II, the only issue presented here is
whether or not check no. 56853 for $400,000 ("the Check"),
drawn on Chemical by Laidlaw, Adams & Peck, Inc. ("Laidlaw")
originally payable to Flight Transportation Corporation
("FTC"), was constructively delivered to LI when it was
endorsed by FTC's secretary payable to LI and given to William
Rubin ("Rubin"), FTC's president to deliver to LI.*fn2
In Lund's IV, this question was considered and decided in
Chemical's favor, on the basis of the Barclays I discussion of
the concept of constructive delivery: "[Barclays I]
contemplates that there can be 'constructive' delivery, but
such delivery occurs when the check is physically delivered
'into the hands' of a co-payee or an agent of the payee."
Lund's IV at 8 (citing Barclays I, 151 A.D.2d at 21, 546 N.Y.
So.2d at 481).
The Court of Appeals confirmed that no constructive delivery
had occurred in Barclays II, specifically distinguishing the
situations in which an instrument is given to an agent of the
payee, 76 N.Y.2d at 539, 561 N.Y.S.2d at 700, 563 N.E.2d at 14,
or to "a nonagent third party either in its capacity as sole
payee with intended delivery to plaintiff or as plaintiff's
copayee." Id. at 539 n. 4, 561 N.Y.S.2d at 700 n. 4, 563 N.E.2d
at 14 n. 4 (distinguishing Charmglow Products v. Mitchell St.
State Bank, 687 F. Supp. 448 (E.D.Wis. 1988)). As regards this
factor, Rubin was neither the payee nor co-payee of the Check,
and LI has presented no evidence — aside from its belated
ratification theory, discussed below — that he was LI's agent
and not merely its purported agent under the forged power of
LI's argument rests primarily on Wolfin v. Security Bank, 170
A.D. 519, 156 N.Y.S. 474 (1st Dep't 1915), aff'd 218 N.Y. 709,
113 N.E. 1068 (1916). In that case, the drawer of the check in
question had given it directly to the named payee after
requiring the payee to endorse the check to a third party, and
directed that the payee deliver the check to the third party.
This was held to constitute constructive delivery to the third
party which entitled that party to sue for wrongful payment of
the check. LI asserts that the Barclays II court indicated that
Wolfin is still good law, and that under Wolfin the Check here
was constructively delivered to LI.
As for the constructive delivery from FTC to LI, the
Barclays II court clarified its view of Wolfin: "Unlike the
case at bar . . . in Wolfin the drawer retained no control
after the Check was delivered to the named payee as a fully
negotiable instrument." 76 N.Y.2d at 540, 561 N.Y.S.2d at 700,
563 N.E.2d at 14 (emphasis added). Here the Check, as endorsed
by FTC payable to LI was not "fully negotiable" until delivery
to LI. As Rubin was not the named payee under this ...