created no duty to plaintiff. However, because a depositary bank is deemed to be handling the drawer's funds, a depositary bank may be liable to a drawer for paying on a check in violation of a restrictive endorsement, even though the restrictive endorsement, an instruction given by the payee, creates no duty in favor of the drawer.
There is a compelling reason for not holding Banco liable to plaintiff for a portion of the face amount of the check. On May 3, 1990, the date Banco received the first transfer order, Dinamica's account balance was approximately $ 100,000. (Pl's 3-G Stmt., Ex. 10.) Banco cannot be held liable for failing to transfer funds which were not in Dinamica's account when Banco received the transfer order. However, plaintiff has raised a factual question about the propriety of Banco's release of the funds from Dinamica's account after it was put on notice of an irregularity.
A depositary bank which pays on a check in violation of a restrictive endorsement is held liable to the drawer for loss caused by forgery because a check presented in violation of a restrictive endorsement puts the bank on notice of an irregularity. In Prudential-Bache, the court emphasized that the exception set forth in Underpinning was a narrow one, that paying out funds in violation of a restrictive endorsement is "a gross violation of banking practice" and that "it was only the restrictive endorsement that shifted liability to the depositary banks, because it placed the banks in a better position to avoid the loss caused by the forgery." Prudential-Bache, 73 N.Y.2d at 272, 539 N.Y.S.2d at 704 (citations omitted).
A transfer order generally provides no notice of irregularity, and plaintiff has proffered no evidence that Dinamica's transfer orders should have alerted Banco that the transfer was necessary to prevent a loss resulting from a forgery. While a bank which does not execute a transfer order may be held liable to its customer for resulting foreseeable injury, just as if it had wrongly dishonored a check, its failure to execute the transfer order provides no basis for holding the bank liable to the drawer for an injury which it could not have foreseen. Walker v. Texas Commerce Bank, 635 F. Supp. 678 (S.D.Tex. 1986), cited by plaintiff, does not suggest otherwise. There, the court held that a bank which wired funds in excess of the amount its customer requested could be held liable to its customer for the excess funds transferred.
While there is no evidence that Dinamica's transfer orders alerted Banco to an irregularity, there is evidence that plaintiff's secretary later notified Banco that the check had been wrongfully deposited into Dinamica's account. (McKelligan Aff., P 9.) Plaintiff's secretary contacted Banco on May 4, 1990; Dinamica's account balance at the beginning of business on this date was $ 107,790.55. (Pl's 3-G Stmt., Ex. 10.) There is no evidence that Banco questioned Dinamica about the check, or took any steps to investigate the matter.
Plaintiff has raised a factual question with respect to the $ 107,790.55 which Banco released from Dinamica's account after it was put on notice of an irregularity. However, plaintiff has failed to raise a factual question with respect to the funds which had been released from the account before Banco received Dinamica's transfer orders.
For the foregoing reasons, plaintiff's motion for summary judgment is denied. Banco's motion for summary judgment is granted with respect to the $ 152,209.45 which had been released from Dinamica's account before Banco received Dinamica's transfer orders. Banco's motion is denied with respect to the $ 107,790.55 in Dinamica's account on the date Banco was alerted to an irregularity.
Dated: New York, New York
July 1, 1993
MIRIAM GOLDMAN CEDARBAUM
United States District Judge