I was given a check by a customer drawn on Bank A. The check was deposited into my company checking account at Bank A on 8/21 (Monday). On 8/24 a stop payment was issued on the check and the funds were removed from my account. My questions are: Is this legal? How long after a check is cleared (this one cleared on the night it was deposited) can a stop payment be issued.
Given the facts as you have presented them, the stop payment order would have to have been received by the paying bank by its cutoff hour on Tuesday, August 22, in order to be effective. The bank would have until midnight on that same day (Tuesday) to charge your account for the amount of the check and return it unpaid to you.
One of two things may have happened in this situation (again, based on the information you have provided):
The bank erred in accepting the stop payment order, because it was too late to be effective; or
The stop payment order was received in time to be effective (on Tuesday, before the cutoff hour), but the bank failed to make a timely return of the check (it missed the midnight Tuesday deadline).
Discuss the matter with your banker. You should be entitled to reimbursement for the amount of the check, plus any charges you incurred as a result of the bank's actions. Whether the bank will have to absorb a loss will depend on whether it was the stop order or the return that was late.
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Given the facts as you have presented them, the stop payment order would have to have been received by the paying bank by its cutoff hour on Tuesday, August 22, in order to be effective. The bank would have until midnight on that same day (Tuesday) to charge your account for the amount of the check and return it unpaid to you.