Sterling National Bank & Trust Co. v. Savings Banks Trust Co. ( 1978 )

OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be affirmed, with costs.

We agree that appellant breached its duty to respondent under the terms of their collection agreement when it failed to return the two checks erroneously sent to it. There is no merit to appellant’s contention that the provision of the applicable collection agreement requiring the prompt return of "missent” items refers exclusively to items eligible for presentment (i.e., those drawn on or payable at that bank) as distinguished from those physically capable of delivery to the receiving bank. We agree with both courts below that the term "missent” includes items neither drawn on nor payable to the signatory bank but mistakenly forwarded to that bank. Nor is there any substance to the further assertion that because it was the forwarding bank that made the initial mistake in forwarding the item to the wrong bank, the forwarder must be denied the benefit of the contract provision. To accept either argument would be effectively to render the contract provision nugatory.

Chief Judge Breitel and Judges Jasen, Gabrielli, Jones, Wachtler, Fuchsberg and Cooke concur in memorandum.

Order affirmed.