Here's the scenario: Both parties are our customers. Customer A deposits Customer B's $2,000 check. (sounds like a prior post doesn't it). But the twist is...we do a DDA-DDA transfer and customer A thinks the check is fine. Customer B calls THE NEXT DAY and we catch the check and send it back "Stop Pay". Customer A is confused and comes to the bank and asks "what's the deal?". Our operation people said it would be different if he would have cashed the check out and deposited it, but since it was a DDA-DDA transfer (or any other deposit) they have 24 hours after it posts to send it back. Any opinions?

UCC 4-301(a)and 4-301(b) lead me to believe that you are safe in honoring the stop the next day.

In your "cash it and deposit the cash" scenario I assume either "A" would have been required to have sufficient funds already on deposit so you could recoup the amount you gave him/her or you would immediately post the check to "B's" account so the stop payment would be too late. Otherwise you could be left holding the bag (empty bag at that.)

I'd like to clarify my prior response. I was assuming (yes, I know) that the stop had been placed prior to the transaction. As such, returning the item woudl be appropriate.

Had the stop not been in place at the time of the transaction, I would go the other way, and tell the maker that the stop order came in too late.

Hard question, one your lawyer might best answer. Nevertheless, if you follow this link I believe the model language for 4-303(5) indicates you could have set a time as early as one hour after you opened on the day following the day the check was deposited for refusing to accept the stop payment.

However, since you did not, accepting the stop payment any time prior to the end of business on the following day was acceptable. Please check the language of the parallel section of the code in your state.