Opinion
July 11, 1967
Order entered January 31, 1967, denying plaintiff's motion to strike defendant's amended answer and for summary judgment against the defendant modified, on the law, with $50 costs and disbursements to appellant, to strike from the affirmative defenses and counterclaim therein the allegations of negligence on the part of the plaintiff. The defendant bank issued the checks in question at the request of its customer, and charged the latter's account therewith. They were delivered to the plaintiff payee in payment for warehouse receipts representing cottonseed and soybean oil which it surrendered upon receipt of the checks. Through fraud of the plaintiff's employees the checks were returned to the defendant bank unindorsed, with the representation that they had not been used, and the defendant credited the customer's account therewith. Plaintiff in this action seeks to collect the amounts of the checks which, it alleges, belong to it, since they were wrongfully taken from it without value; and plaintiff asserts that the defendant improperly accepted the return of the checks for cancellation, without indorsement. Defendant's contention that plaintiff's own negligence permitted this loss to occur and that plaintiff is therefore barred from recovery is insufficient in law on this record. ( People's Trust Co. v. Smith, 215 N.Y. 488; People v. Bank of North America, 75 N.Y. 547, 561-562; and see Wagner Trading Co. v. Battery Park Nat. Bank, 228 N.Y. 37.) Although the motion for dismissal of all of the amended answer and for summary judgment was properly denied, the defenses grounded upon negligence should be stricken to avoid confusion upon the trial (CPLR 2215).
I dissent insofar as the majority holds that the defenses are "insufficient in law on this record" and would affirm the order appealed from in its entirety. In the posture of the action at Special Term, pretrial examinations having been suspended because of the interposition of plaintiff's motion but the defendant nevertheless having indicating its intent to depose, among others, the three individuals who are alleged to have effectuated the check swapping and withholding scheme, the motion to strike the affirmative defenses and counterclaim was premature under the unusual facts here and was properly denied (CPLR 3212, subd. [f]). The bank cashier's checks in suit were but 3 of some 12 official checks involving transactions between the parties in connection with the notorious "salad oil scandal." If the defense should be supported that plaintiff was guilty of neglect in these three transactions by virture of its knowledge of the long-continued corrupt conduct of its employee, that such negligence was the proximate cause of the injury and that plaintiff failed in its duty to the defendant in the circumstances, plaintiff may indeed be estopped by its own conduct. The question of estoppel is one of ethics, and is to be enforced where, in good conscience and honest dealing, it ought to be. We may never know the entire truth in this stupendous oil scandal. However, we should afford defendant every opportunity to ferret it out.