New York resident Esther Braunstein worked as an usher at Lincoln Center, held a

Question

New York resident Esther Braunstein worked as an usher at Lincoln Center, held an administrative position with Citibank, was a school crossing guard, and assisted disabled persons and others as a volunteer on Roosevelt Island and at the New York Foundling Hospital. Before her death, she drew a $5,000 check payable to each of two of her daughters, Sandra Braunstein and Carol Russo. The checks were drawn on a joint account held in the names of Esther and Sandra. Carol did not cash her check until five months after Esther’s death. Sandra filed a suit in a New York state court against Carol to recover the funds. [Braunstein v. Russo, 988 N.Y.S.2d 521 (2 Dept. 2014)] (See The Bank’s Duty to Honor Checks.) (429, Miller)

1. Is one sister’s attempt to recover funds given to another sister by their mother always unethical? Who is legally entitled to the funds? Discuss.

2. If the check that Carol cashed five months after Esther’s death had not been a gift from Esther, but instead had contained a forged drawer’s signature, on whom could liability have been imposed? How might that circumstance have affected the ethics of the situation? Explain.

Explanation / Answer

1. Is one sister’s attempt to recover funds given to another sister by their mother always unethical? Who is legally entitled to the funds? Discuss.

The check was a gift from her mother Esther Braunstein. The check was drawn on a joint account held in the names of mother- Esther and other sister- Sandra. Carol cashed her check until five months after Esther’s death.

Ethics

A sister attempting to recover funds given to another sister may not be always wrong. For e.g. if the other sister is a minor or incompetent, then she may not have the capacity and capability to use the funds in the right way. In such cases, a sister can fight to recover the funds, to protect the funds. A sister(customer) may have used the bank account for her personal savings and for her mother, not intended for her other sister. The mother might have gifted the check, without knowledge of the account holder sister. In this case also, she can try to recover

Legal

The customer (Sandra ) did not make any stop payment order before cashing. Also, here bank does not know the death of the customer, Esther. Hence the bank can pay the item without liability. The fund is legally entitled to Carol Russo.

2. If the check that Carol cashed five months after Esther’s death had not been a gift from Esther, but instead had contained a forged drawer’s signature, on whom could liability have been imposed? How might that circumstance have affected the ethics of the situation? Explain.

Here the check cashed is not a gift from the account holder but rather contains forged drawer’s signature.

Note that the customer has a duty to check the account statements with reasonable care and notify any misdeeds/suspicions. So when deciding the liability of the customer or the bank , the level of care they exhibited and time factors are taken into account

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