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ScottyMacEsq
ScottyMacEsq, Attorney
Category: Legal
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Experience:  Licensed Texas General Practice Attorney
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I need to speak with a lawyer who knows checking cashing laws.

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I need to speak with a lawyer who knows checking cashing laws. My scenario: 1. I wrote a check for $6500 to contractor 2. Contractor cashes check at Check Cashing place (on 6/12 - I'm unaware of this) and never comes out to do work on 6/13. 3. I check on-line (6/13 afternoon) and check is not cashed. I put a stop on the check. 4. Check cashing place attempts to cash my check on 6/14 and can't due to the stop. 5. Check cashing place is now coming after me and the contractor is no where to be found.

 

From check casher letter: "

You, the maker of the check, owe us this money because we are a "holder in due
course" which makes both the maker and the payee of this check liable to me so
long as it was cashed in "good faith" for the proper payee which it was. I strongly
advise that if you disagree with this demand for payment to forward this to
your attorney & have them refer to the Pennsylvania Uniform Commercial
Code Section 3302 (rights of a holder in due course).


ScottyMacEsq :

Thank you for using JustAnswer. I am researching your issue and will respond shortly.

ScottyMacEsq :

I'm sorry to hear about your situation. Unfortunately it's all too common. You may have some defenses to their claim against you. UCC (Uniform Commercial Code) 3-302 provides protection to parties who accept a negotiable instrument (such as a check)
1. In good faith,
2. For value ,
3. without notice that the instrument has been dishonored or is overdue,
4. Without notice that the instrument contains an unauthorized signature or has been altered.

The above is called "holder in due course" status. If the check cashing place can establish ALL of the elements, then it can legally go after you. That doesn't mean that you'd be without recourse, in that you could still go after the contractor, but the law does put the burden on BOTH parties to a check, not just the recipient. If you can show that the check casher took the instrument with notice that it had a stop payment order, you may be able to kick them from their holder in due course status. The statute does not say “knew or should have known” the instrument has been dishonored, but “without notice”. You need to prove that they “had notice”.

If you are adamant about disputing it with the check cashing company, Investigate to see if this company had a check verification service “TeleCheck”, “Cross-Check”, “VeriCheck” or some sort. They usually have a decal posted somewhere in view. *Take a picture of it, if possible. The stop payment notice should have been posted on these services, you may have to actually prove that it was posted on these services. You should be able to impute the knowledge from the service to the company. It is like receiving a letter and not reading it. You are still imputed as knowing what is contained in the letter even though you chose not to read it.

If it was posted on a verification service that the check cashing company utilizes, that may be enough to eject them from their holder in due course status.

Getting your proof in at trial will be difficult. You must have the correct evidence presented by the proper witnesses. I recommend consulting with an attorney, if it goes that far.

I would also recommend bringing in the ex-employee to the suit. You may be found liable to the check cashing company, but the employee should be liable to you (for whatever reason you placed the stop payment order on the check). *I assume you had a valid defense to paying the ex-employee.

ScottyMacEsq :

Sorry, the contractor, if you can find him, (not ex employee). ,

ScottyMacEsq :

So again, it really depends on the circumstances. If you can show that they have the ability to verify if it's a good check or not, and they did not attempt, then you could easily argue bad faith.

ScottyMacEsq :

But if they don't have that ability, under the law they could go after you if they did not have actual notice of the stop payment order.

ScottyMacEsq :

I know this is probably not what you wanted to hear, but it is the law. I hope that clears things up anyway. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX luck to you!

Customer:

Thank you. The Check Cashing place letter said, "I will be forced to file a small claims lawsuit against you thus adding additional court costs to the amount that you will have to pay me. Additionally, a lien will be filed against your bank accounts, assets & wages." If I were to have a lawyer draft a letter along with payment of 1/2 the amount ($3250) to settle the issue, what would it look like if they refused and I let it take its natural course (i.e., they file a small claims lawsuit)? Can I see if it goes that far and then pay the $6500 without major impact (e.g., legal fees, credit score impact, etc.)? Maybe the check cashing place will be happy to settle for 1/2.

ScottyMacEsq :

That would depend largely on your assets, what it could lien, etc... It's possible that they could go for the full amount, but if there's any evidence that would show bad faith on their part, they would likely settle for less.

ScottyMacEsq :

Further, the judge is the one that grants legal costs and fees, so it would be dependent on their good faith, efforts to try to deal with this outside of court, etc...

ScottyMacEsq :

So ultimately it's hard to say what will happen when you go to court. If you can show a lack of good faith on their part, they can't claim bona fide purchaser status, and you can claim any defense that you would have against the contractor against them.

ScottyMacEsq :

But if they can claim that status, then they could still seek to enforce it regardless of those defenses that you would have

Customer:

Given the timing of events, I'm afraid they paid in "good faith". Check writtten 6/10, cashed on 6/12, stopped on 6/13, attempt at deposit on 6/14. The check cashing place said they contacted my bank to verify funds on 6/12 before giving over the money.

Customer:

That hurts!

Customer:

Thank you!

ScottyMacEsq :

I see. I had read your facts as the contractor having cashed it after your stop payment order. If it was before, then they would almost certainly have bona fide status.

ScottyMacEsq :

My pleasure.If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX good luck to you!

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