OK. Our teller printed astop payment form, had the customer sign it but failed to actually place the stop payment. The check was paid. Several days later we found out. I was thinking two possibilities. ONE: the maker indicated he told the payee he was stopping payment. If he told him and the payee subsequently deposited check - then we have recourse. TWO: Even if that was not true, we could takeover the position and any rights the maker had in the dispute with the payee (non performance and non delivery of a transmission). However, my boss says no to both because once we paid it as drawee bank that was FINAL PAYMENT. Really, I need guidance on what "final payment" means. Please advise because this concept goes beyond this instance and despite 25 years in the business I am unfamiliar with the term. (Have mercy on me, I am a newbie to posting)

A discussion of "final payment" would be largely academic here; there is no question that you have finally paid the check, but that does not extinguish your right to invoke one of the UCC's protective provisions:

4-403(c) The burden of establishing the fact and amount of loss resulting from the payment of an item contrary to a stop-payment order or order to close an account is on the customer. Abridged

Before you reimburse the customer, you are entitled to the details of the transaction. If the customer can prove he was damaged by your payment over the stop payment order, so be it. In that circumstance, you may claim subrogation to the customer's rights and pursue the payee on the underlying transaction. Consider the amount involved and check with your attorney.

P.S. Welcome

Mercy, mercy, mercy. Is that enough mercy?

In all seriousness, Welcome to BOL Threads!

Your bank had until midnight of the business day following the banking day on which the check was presented for payment to dishonor the check because of the stop payment. Once that midnight deadline passed, your bank became accountable for the amount of the check.

Translation: If the check was posted to the drawer's account on Monday, April 23, 2007, you had until midnight on the 24th to bounce the check.

So now your options are limited to what you can do with the customer who gave you the stop order. What's the "price" for paying a stopped item? Your customer is entitled to recover his actual losses. If the entire transaction included the issuance of the check for the delivery of a transmission, and the transmission was not delivered, it would appear that the direct losses are equal to the amount of the check. But what if your depositor received a transmission but it wasn't the correct unit? If your customer still has the unsuitable transmission, his losses would be reduced by the value of the transmission he did receive (it might not be suitable for his needs, but it is worth something). But don't get too comfortable! Your depositor's claim can also include any damages for dishonor of subsequent items (wrongful dishonor claims, which can be substantial). Check out your state's version of UCC 4-403 for any variation from what I've said.

To the extent of your loss, you can step into the drawer's legal position vis-a-vis the provider of the transmission, and try to collect some or all of the loss from that source (in legal jargon, you are subrogated to the rights of the drawer).

Your theory about having recourse against the payee if the payee knew of the stop payment before depositing the check is interesting, but it really doesn't put you in a better position than being subrogated to the rights of the drawer of the check.