Thread Options 
|
#104210 - 08/07/03 03:40 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
Power Poster
Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
|
Hi Amy
Read your stop payment agreement. There should be verbiage in there that will cover your situation. If its what I have seen in the past the stop payment would not be valid as you cashed it before the stop was placed, and exempts you from the item processing situation you had.
Its a good idea to circulate stop orders to tellers as they are taken.
Also typing in Upper Case is not considered good form as its considered to be screaming at someone.
_________________________
Compliance Analysis and Research - Software for your CRA/HMDA analysis needs
|
|
Return to Top
|
|
|
|
|
#104211 - 08/07/03 03:47 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
Power Poster
Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
|
I read T's post and reread your post. Please clarify if the check was cashed prior to your customer arriving at 4:45 to place the stop payment order.
_________________________
Compliance Analysis and Research - Software for your CRA/HMDA analysis needs
|
|
Return to Top
|
|
|
|
|
#104212 - 08/07/03 08:08 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
|
I think the conundrum stems from a deposit of the $2,000 check, with $200 cash back. In many banking systems, this is done to keep the check with the deposit. However, the check, IMO would not have been paid at the time, only accepted for deposit. In that case, I think the stop was accepted in time to act upon it (the bank had until the next day to return the item), and customer #2 is out the dough.
Of course, customer #2 can still try to collect the $2,000 under the underlying transaction, directly from #1.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8
|
|
Return to Top
|
|
|
|
|
#104213 - 08/07/03 09:20 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
Gold Star
Joined: Jun 2003
Posts: 484
|
Quote:
I think the conundrum stems from a deposit of the $2,000 check, with $200 cash back. In many banking systems, this is done to keep the check with the deposit. However, the check, IMO would not have been paid at the time, only accepted for deposit. In that case, I think the stop was accepted in time to act upon it (the bank had until the next day to return the item), and customer #2 is out the dough.
Of course, customer #2 can still try to collect the $2,000 under the underlying transaction, directly from #1.
John: So, your position is that because the customer did not cash the entire check, only receiving $200, you would honor the stop and charge back the entire $2,000? So, what if the customer received $1,800 in cash and deposited $200.00 - no other funds available - under your scenario the bank would become liability for the $1,800 and possibly take a loss, correct?
|
|
Return to Top
|
|
|
|
|
#104215 - 08/08/03 03:26 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
Power Poster
Joined: Nov 2001
Posts: 6,719
PA
|
Quote:
I'm thinking that due to the fact that the payee received as least part of the check in cash, the check was in fact negotiated prior to the placement of a stop.
I'm not John, but I think this is the key consideration here. However, I'm not sure negotiated is the right term. Negotiation takes place whenever a check moves from one party to another- what is at issue here is payment At this point, I would defer to the state UCC to determine if this transaction meets the definition of payment.
|
|
Return to Top
|
|
|
|
|
#104216 - 08/08/03 03:32 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
Gold Star
Joined: Jun 2003
Posts: 484
|
Quote:
Quote:
I'm thinking that due to the fact that the payee received as least part of the check in cash, the check was in fact negotiated prior to the placement of a stop.
I'm not John, but I think this is the key consideration here. However, I'm not sure negotiated is the right term. Negotiation takes place whenever a check moves from one party to another- what is at issue here is payment At this point, I would defer to the state UCC to determine if this transaction meets the definition of payment.
So, what would be the outcome on this issue in your state? Would you void the stop?
|
|
Return to Top
|
|
|
|
|
#104218 - 08/08/03 03:38 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
|
I think the only question here is whether the check was PAID at the time the bank accepted it for deposit and gave cash back. I'll have to do some research here, but I wonder what would be our opinion if the deposit consisted of 15 checks, including the check in question, and $200 of a total of $15,000 was taken as "cash back."
More later, I'm certain.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8
|
|
Return to Top
|
|
|
|
|
#104219 - 08/08/03 04:32 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
Gold Star
Joined: Jun 2003
Posts: 484
|
Quote:
I think the only question here is whether the check was PAID at the time the bank accepted it for deposit and gave cash back. I'll have to do some research here, but I wonder what would be our opinion if the deposit consisted of 15 checks, including the check in question, and $200 of a total of $15,000 was taken as "cash back."
Interesting point. The stop would probably be valid as there would be no way to prove that cash was given back based on the specific check in question. On the other hand, funds would normally be available to charge the stop back so this scenario would not necesarily place the bank at risk.
Back to this issue, my position is that if the check was cashed with $2,000 given to the payee, the stop would be voided - no doubt about it. Therefore, is it logical that when anything less than $2,000 relates to cash that the stop is valid?
On the other hand, if the check was simply deposited (no cash back) the stop would be valid.
The bottomline is that I believe the check was, in effect, transactionally paid when cash was given to the payee covering part of the check.
|
|
Return to Top
|
|
|
|
|
#104220 - 08/08/03 04:42 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
Power Poster
Joined: Nov 2001
Posts: 6,719
PA
|
Quote:
The bottomline is that I believe the check was, in effect, transactionally paid when cash was given to the payee covering part of the check.
I have to agree with this.
|
|
Return to Top
|
|
|
|
|
#104221 - 08/08/03 08:13 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
|
OK, I've done my research, after being interrupted by about three hours of WORK!  My source is my trusty-dusty Brady on Bank Checks again. In ΒΆ 15.03 (Final payment of on-us check in cash or by cashier's check), the author asks, "If a bank takes an on-us check on deposit but makes part payment in cash, has final payment taken place?" The text continues, citing a Virginia court case answering in the affirmative (Kirby v. First & Merchants Nat'l Bank, 210 Va. 88, 168 SE2d 273, 6 UCC Rep. 694 (1969)). In this case, "a $2,500 on-us check was received on deposit, against which the bank gave $200 in cash and a $2,300 deposit credit. . . .The court reasoned that, in effect, the bank had cashed the check for its full amount, $2,500, and then had received $2,300 of the cash back on deposit. The apparent reasoning. . . was that the check had been deposited along with a deposit slip that indicated a cash deposit of $2,300. "Presumably," the text continues, "had the deposit slip indicated deposit of a particular $2,500 check, together with $200 cash against the deposit [this is how many banks handle these transactions, and it's commonly known as 'less cash' or 'cash back'], the result would have been different." Another factor in the court's decision denying recovery of an overdraft caused by the bank's charge-back of the $2,500 check? "[T]he court stated that even if the settlement had been provisional and not final, the bank could charge the check back only if it had sent written notice of dishonor prior to its midnight deadline, which the bank had not done in this instance." It was asked earlier whether the fact that the stop order was not received until 4:30 p.m. on the day the check was deposited affected the result. The stop payment order had to arrive in time sufficient for the bank to act on it. In this case, if we consider the check deposited rather than cashed, the bank had until its next business day deadline to act on the stop. If the deposit occurred on Monday, the stop would have to be made by cutoff on Tuesday. The time of the stop would have made a difference only if it wasn't received until Tuesday. If the check is considered cashed rather than deposited (as we saw this may depend on how the transaction was recorded by the customer and by the bank), the stop was clearly too late, since it came after the check was paid. Summing up, I believe that - if the deposit slip depicts a cash deposit of the net amount, rather than deposit of the check and cash back, or if the bank's transaction record shows the check cashed and cash deposited, a court would likely consider the check finally paid and not subject to the stop received later.
- if the deposit slip clearly shows the full check amount and a cash back amount, and/or the bank's transaction record shows a deposit of the check with cash back, a court would likely consider the check deposited, and subject to a timely stop order (received before the next business day's processing deadline).
- in the second instance, the bank would have to be certain it completed the charge back and placed a notice of charge-back/dishonor in the mail on the business day following the business day of the deposit.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8
|
|
Return to Top
|
|
|
|
|
#104224 - 08/15/03 09:53 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
Platinum Poster
Joined: Jun 2003
Posts: 938
Do you know the way to ...
|
One issue I haven't seen addressed on this thread yet.... Our stop payment policy says we are not obilgated to stop a check within 24 hours of the time a stop payment order is made. That gives us some leeway if a check is in the middle of being processed (but has not yet been charged to the account) at the time the stop order is placed. Are we unique in this clause?  Seems to me if the original poster's institution has a similar clause in their policy, the stop was not yet in effect when the payee came in to deposit, cash, or otherwise negotiate the check, so it's a valid transaction. The check was brought in at 2:00 and the stop not placed until 4:45. Check is already being processed, so cannot be stopped.
_________________________
Just a lowly 1st Year Law Student ("1L"), so don't take anything I say seriously!
|
|
Return to Top
|
|
|
|
|
#104225 - 08/15/03 10:31 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
Diamond Poster
Joined: Jun 2002
Posts: 1,210
California
|
Most banks just say the stop payment order must be received in time to stop the payment and that they have a reasonable time to process the stop order. I have not seen a specific hour limitation. What if that 24th hour ends on a Sunday?
_________________________
My opinions are not legal advice and are worth what you paid for them.
|
|
Return to Top
|
|
|
|
|
#104226 - 08/15/03 10:57 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
Platinum Poster
Joined: Jun 2003
Posts: 938
Do you know the way to ...
|
Here's a direct quote from that section of our stop policy: "Stop payment requests will be processed promptly, but the bank will not be responsible for a check we pay within the first 24 hours after your request." I don't know if anybody thought about stops placed on Fridays (we're not open on Saturdays).... Maybe it should be changed to: "within the current and next business days after your request." I'll make a note of that for the next time we update.... 
_________________________
Just a lowly 1st Year Law Student ("1L"), so don't take anything I say seriously!
|
|
Return to Top
|
|
|
|
|
#104227 - 08/18/03 01:07 PM
Re: STOP PAYMENTS WHERE BOTH PARTIES ARE OUR CUSTOMER
|
10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
|
It's well-accepted that many provisions of the UCC may be altered by contract, but I wonder, Tina, whether your bank's language would stand up in a court test. It seems a mite extreme.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8
|
|
Return to Top
|
|
|
|
|
|
Previous Thread
Index