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Richard N. Golden, Respondent, v. Citibank, N.A., Appellant

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The Court of Appeals of New York affirmed the Appellate Divisions ruling regarding the inability of a bank to place a stop payment on a cashier's check.

In December 2009 Citibank, N.A. issued a cashier's check in the amount of $300,000 to "Richard Golden as attorney." XOX Solutions, Inc. deposited a check in the amount of $335,600 as the offset and purchased the cashier's check. Golden deposited the cashier's check into his attorney escrow account at JP Morgan Chase. The item XOX deposited was returned because of an endorsement error and Citibank subsequently stopped payment on the cashier's check. At his client's request Golden had already withdrawn $102,083 which was presented against insufficient funds and triggered an investigation by the attorney grievance committee. Six days later the endorsement error was corrected and the check re-deposited by XOX but Citibank was told an alternate payment had already been arranged with Golden so the stop order remained in effect.

Golden brought action against Citibank because the bank had no valid reason to not pay the cashier's check. Stop payment ability is limited to only a few circumstances. There must be evidence of fraud, or the check is lost, stolen, or destroyed. Golden said Citibank needed to collect from XOX. In this case Citibank maintained it received no consideration from XOX for issuing the check and because Golden had paid no value he was not a holder in due course. The Appellate Division said Golden had shown the cashier's check was properly issued, cashed and Citibank presented no evidence of fraud. Citibank argued that it was well established that there was a legal right to stop payment when there was a failure of consideration for the cashier's check. The Court of Appeals of New York has ruled the order of the Appellate Division should be affirmed, with costs.

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