Chase Natl Bank of New York v. Battat [et al.

]
Court of Appeals of New York; 1948; Conway, J.
Items in brackets are in the original but not in the CAMPOS copy of the decision.
A. Facts
1. Aug. 9, 1946: ARBEEDEE [a partnership where Battat et al. were partners]
drew a $25,000 check on its account in CHASE and issued it to payee
CARACANDA Bros. and Co.
a. The check was given pursuant to an agreement for the purchase of
sugar.
b. The purpose was to bind the transaction; Caracanda was supposed
to return an amount once it receives a letter of credit to be obtained by
CHASE
2. Afterwards, ARBEEDEE requested CHASE to stop payment on the
check.
3. Aug. 13: CHASE nevertheless certified the check by mistake when
CARACANDA presented it for certification.
4. Aug. 14: CHASE paid the check when CARACANDA presented it for
payment.
5. Upon being advised of the payment, ARBEEDEE insisted that its account
should not be debited since CARACANDA had no legal right to the money.
6. CHASE then demanded CARACANDA to repay the $25,000, but this was
refused.
7. So CHASE sued CARACANDA and ARBEEDEE for unjust enrichment (as
alternative defendants, since CHASE had doubt as to whom he was entitled to
redress); the complaint alleged that
a. If the money was due and owing by ARBEEDEE to CARACANDA,
ARBEEDEE was unjustly enriched at the expense of CHASE;
b. Alternatively, if the money was not due and owing from ARBEEDEE to
CARACANDA CARACANDA was unjustly enriched at the expense of
CHASE.
8. ARBEEDEE moved to dismiss the complaint for failure to state a cause
of action. The trial court dismissed the complaint; appellate division upheld
the dismissal.
B. Issue: WON the complaint failed to state a cause of action.
C. Held: YES, the complaint did not state a cause of action. Judgment affirmed.
D. Ratio
1. The complaint fails to state a cause of action against ARBEEDEE because (1)
it fails to allege ratification of ARBEEDEE upon learning of the payment to
CARACANDA, and (2) no alternative allegations of fact upon which a cause of
action can be based were alleged.
a. It does not matter that the suit was on unjust enrichment and not for
breach of contract. Unless ARBEEDEE ratifies by (1) crediting itself with
the payment or (2) recognizing CARACANDAs receipt as payment of its
obligation, there was no unjust enrichment
2. CARACANDA had no legal right to the money, and CHASE cannot go after
ARBEEDEE to recoup a potential loss resulting from its (CHASEs) own error.

3. A bank may protect itself by contract with its depositor so as to limit

liability on a stop payment order; when this is not done, the
common-liability is absolute in the absence of ratification.