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Home >> Checks/Money Orders >> Checks You Wrote
Suing for Stopped Check Cashed - a Year Later!
How does California banking law address this situation? I wrote a check in mid-2008 to a vendor, who in turn took it to a liquor store for cashing. I placed a stop payment on it within 48 hours after writing it. The liquor store apparently tried to deposit it per the stamp placed on it by my bank four days after they provided money for it across their counter. The store now wants it's money almost a year later. Am I liable? The stop is for six months and the check is an invalid instrument after that, correct?
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 Incorrect. Although a stop generally expires in six months, the bank may contract to honor it for a longer period. A check doesn't become invalid after that same period of time. The current law is that a bank may refuse payment on a check more than six months old, but it may also pay it, if it does so in good faith (ignorance of the date or in the absence of a currently effective stop payment). The law was changed several years ago in recognition that banks do not routinely review dates on checks before paying them.
Even if your stop payment was still effective, or if your bank notes the date and refuses to pay the check, it would not affect your obligation to pay the check yourself if a holder-in-due-course (the liquor store) attempts to enforce payment. Check cashing companies and others who cash checks are not parties to the transactions that result in the issuance of the checks they cash. When they cash checks, they do so ignorant of any disputes the check drawers might have with their payees.
Your dispute is with the vendor, not with the liquor store owner. You'll have a chance to recover your money from the vendor if you're owed anything. Check with an attorney familiar with local law if you wish, but you will have to pay the liquor store for the check in all likelihood.
Published on BankingQuestions.com 7/03/09
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