INTERBANK OF NEW YORK v. PCS (2004)

Order entered July 17, 2001 (Carol R. Edmead, J.) affirmed, with $10 costs.

 The action was properly dismissed since plaintiff Interbank of New York, having made payment on the fraudulently issued demand drafts or “telechecks” drawn on its customer's account, is accountable for the amount of the instruments and may not seek recoupment against the defendant depositary bank in the absence of a showing that the latter breached its warranty of presentment (see, 1 Brady, Bank Checks § 28.04;  see also, Manufacturers and Traders Trust Co. v. County Trust Region of the Bank of NY, 59 A.D.2d 645, 398 N.Y.S.2d 298 [1977];  Fromer Distrib., Inc. v. Bankers Trust Co., 36 A.D.2d 840, 321 N.Y.S.2d 428 [1971] ).   It does not avail plaintiff that the demand drafts merely bore the printed notation “verbally authorized by your [i.e., plaintiff's] depositor” and were unsigned.   Such a draft, even if not a negotiable instrument (see, UCC § 3-104[1];  Garden Check Cashing Serv., Inc. v. First Nat. City Bank, 25 A.D.2d 137, 267 N.Y.S.2d 698, affd. 18 N.Y.2d 941, 277 N.Y.S.2d 141, 223 N.E.2d 566 [1966] ), clearly qualifies as an “item” (see, UCC § 4-104[g] ) subject to the final payment and warranty provisions of UCC article 4 (see, UCC §§ 4-207[1], 4-213[1] ).   If an exception to the existing UCC framework is to be carved out with respect to drafts of the type here involved, such a departure must be made by the Legislature rather than by the court (see, by way of illustration, Cal. Comm. Code § 3104[k], Historical and Statutory Notes, at 177-178).

This constitutes the decision and order of the court.

PER CURIAM.