## Facts

- Nu Tribe Radio Networks, Inc. (NTRN) retained Ameripay, LLC (Ameripay) to perform payroll services.
- As part of the arrangement, Ameripay opened a bank account for NTRN’s payroll obligations and issued payroll checks to NTRN employees from that account.
- NTRN funded the account by wiring payroll funds as needed; Ameripay did not contribute its own money to the account and did not mix NTRN funds with Ameripay funds or other clients’ funds.
- The only authorized signatories on the payroll account were Ameripay’s two owners.
- Bank documentation identified the account as a client payroll account for NTRN (e.g., “Ameripay LLC Client Payroll NTRN” on the signature card and on a certificate of authority), though one portion of the certificate also listed “Ameripay, L.L.C.”
- The face of each payroll check listed NTRN’s name, address, and telephone number in the top-left corner.
- The signature line did not state that the signer was acting as a representative, and Ameripay was not named on the face of the checks except by a faint watermark.
- Ameripay issued certain payroll checks on NTRN’s behalf, signed by one of Ameripay’s owners.
- NTRN failed to wire sufficient funds into the payroll account to cover the check amounts; Ameripay stopped payment, and the checks were dishonored when employees attempted to cash them at A-1 Check Cashing Emporium, Inc. (A-1).
- A-1 was a holder in due course and assigned the dishonored checks to Robert J. Triffin, who claimed holder-in-due-course status as an assignee under U.C.C. § 3-203(b).
- Triffin sued Ameripay to collect on the checks. After a bench trial, the Law Division held Ameripay liable, reasoning that the signature on the checks controlled. Ameripay appealed.

## Issues

1. Whether a payroll services company that signs payroll checks drawn on a client-funded payroll account is liable on dishonor when the employer is identified on the face of the checks as the issuer/payor.
2. Under U.C.C. § 3-402 and agency principles, whether liability for the dishonored checks falls on the disclosed principal (the employer) rather than the payroll company that signed in a representative capacity.

## Decision

- The Appellate Division reversed the judgment for Triffin and against Ameripay.
- The court held that the UCC places liability for the dishonored checks on the disclosed principal, NTRN, not on Ameripay as the signing agent.
- The court rejected the trial court’s approach that treated the bare presence of Ameripay’s owner’s signature as determinative of drawer liability without accounting for the disclosed-principal/representative-signature framework.

## Legal Principles

- The UCC’s rules on liability for negotiable instruments require identifying the party obligated on the instrument; the label “drawer” turns on who issues the check and on whose account it is drawn, not simply whose hand signed.
- Under U.C.C. § 3-402, when a representative signs an instrument for an identified principal, the principal is liable and the representative is generally not personally liable if the signature was made on the principal’s behalf.
- When the employer’s identity is fully disclosed on the check (here, NTRN’s name, address, and phone number on the face), a payroll processor that opens and administers a client payroll account and signs checks as part of payroll services acts as an agent for that employer.
- A holder in due course (and an assignee who takes the holder-in-due-course rights under U.C.C. § 3-203(b)) may enforce the instrument, but must proceed against the party the UCC makes liable—here, the disclosed employer—absent a separate basis to impose liability on the payroll agent.

## Conclusion

Triffin v. Ameripay, LLC holds that where payroll checks identify the employer on their face and are issued from a payroll account funded by that employer, the payroll services company that signs the checks as part of its payroll function signs in a representative capacity; under U.C.C. § 3-402, liability for dishonor rests with the disclosed principal employer (NTRN), not the payroll processor (Ameripay), so the judgment against Ameripay was reversed.


Triffin v. Ameripay, LLC, 847 A.2d 628 (2004)