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#16930 - 05/06/02 08:28 PM Undue Enrichment?????
P*Q Offline

Power Poster
Joined: May 2001
Posts: 8,458
Here's the scoop. One of our customers came in and placed a stop payment on a check on April 12th. The branch never placed the stop payment correctly therefore when the payee came into cash (on the 16th), he was able to because of the stop not being placed correctly. The Branch Administrator wants me to turn this (the payee) over to our collection attorney for collection citing that the payee received "undue enrichment" and he quotes UCC. He states even though we messed up placing the stop and cashed the check in error that the payee was not entitled to the money. Any thoughts because this has happened more than once. Thanks!

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General Discussion
#16931 - 05/06/02 10:01 PM Re: Undue Enrichment?????
banksconsultus Offline
New Poster
Joined: May 2002
Posts: 15
Los Angeles, California
Actually, I think your Administrator has it in reverse. The "maker" cannot "enrich" him or herself beyond actual loss after a check is mistakenly paid. This gets a little complicated depending on what the maker says was the purpose of the check and the reason for stopping payment. For example, if maker claimed the full sum of a stopped check which was written for the purchase of a radio, the Bank is entitled to the radio if it honors the loss. The maker would be enriched if he or she accepted the check refund from the Bank and kept the radio. If the maker stopped payment on a check because a knob fell off the radio, the real loss is not the whole purchase price of the radio. Satisfy yourself with the purpose of the check and the reason for the stop before you refund the full amount to the maker. In most cases you will simply have to pay the claim, especially in those cases where the check was written for a service and not a product. Good luck.

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#16932 - 05/06/02 10:46 PM Re: Undue Enrichment?????

Before you consider recrediting your customer's (the drawer's) account for the amount of the mistakenly paid check, keep in mind that under Section 4-403(c) of the UCC:

"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. The loss from payment of an item contrary to a stop-payment order may include damages for dishonor of subsequent items under Section 4-402."

What was the check for? Was your customer obligated to pay the payee? Was there really a loss to your customer? If so, you will probably be liable for the extent of the loss caused by your payment over the stop payment order, but you will then legally stand in the shoes of your customer to proceed against the payee. So, if the payee was accidentally paid twice, for example, you can proceed against him to get back the overpayment.

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