Valley Bank of Ronan v. Hughes

Facts

Hughes was the victim of a “Nigerian scam” where he was promised large sums of money for his aid in procuring agricultural equipment for import into Africa. On March 22, 2002, Hughes received four checks, two were personal checks and the other two were “official” checks. One official check was for $1 million and the other official check for $500,000. The personal checks were for significantly less. Prior to depositing the checks at Valley Bank, Hughes requested that the employees verify the validity of the checks. Hughes was assured by one of the bank’s employees that the “official” checks were “just like” cashier’s checks, and that the checks “would be good.” Hughes’s account was provisionally credited with the face amount of the checks. Hughes returned to the bank on March 26, 2002, to request Valley Bank initiate a wire transfer for $800,000 to an overseas bank. Around ten minutes after this transfer was initiated, the bank employees and Hughes learned that one of the personal checks was being returned for insufficient funds. Hughes immediately attempted to stop the wire transfer but the money had already been withdrawn at the overseas bank. Later, the bank discovered the two “official” checks were counterfeit and this resulted in Hughes’ account being overdrawn by $800,000. Hughes transferred $607,838 from his retirement account to cover the overdraft and executed a promissory note, secured by mortgaged property. with Valley Bank to cover the rest of the $800,000. After Hughes stopped paying on the note, Valley Bank initiated foreclosure on his property. Hughes counterclaimed against Valley Bank on the basis that the bank employees had falsely represented to him that at least the “official” checks he deposited would clear.