Recently, we discussed a case where we were able to hold JPMorgan Chase to their word with regards to a stipulation made in a New York court. We represented a defunct New York corporation suing for the return of a substantial amount of funds that the bank allowed a co-owner to withdraw without the two-signature authorization required by the New York corporate resolution.
Our theory of recovery was sound. The relationship between the bank and its depositor being that of debtor and creditor, the bank cannot charge the account of the depositor with moneys paid out without authority. Although research has failed to disclose any New York cases directly on point, it is obvious that a check signed by one of two depositors, where both signatures are required, is not authority for such payment.
Our client had contracted their rights away when they established the account with JPMorgan Chase. You see, when it signed up for the account, JPMorgan Chase Terms & Conditions includes a clause limiting liability and limited any contract action to a 2-year statute of limitations (which had come and gone several years prior while the owners squabbled). Things were looking tough.
What was left? Equitable remedies. Remedies in court come in two varieties – legal (normal monetary damages) and equity (some action/prohibition ordered by the Court). Nothing in New York Law prevents a party from pursuing both legal and equitable remedies. In this case, the equitable remedy we had in mind was an accounting.
In New York, an accounting action is a distinct cause of action rooted in equity. The right to an accounting is premised on the existence of a confidential or fiduciary relationship and a breach of a duty imposed by that relationship respecting property in which the party seeking the accounting has an interest. The relief we sought was an adjustment of the accounts of the parties and a judgment for the balance ascertained to be due.
Courts in New York have the power to state and settle accounts, or to compel an accounting, and it is exercised in a great variety of cases involving fiduciary and trust relationships. Accounting got my corporation to the promised land – and to a hard-fought and well-earned settlement for the client.