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Home >> My Bank Said ...
Stop Payment Issued: Caught in the Middle
I run a check cashing business in Texas. Recently we cashed a Texas State unemployment check to the proper payee. We followed all of the check cashing protocols, including fingerprinting.
The payee informed the state that this check was never received and the state issued another payment while placing a stop payment on the check we have. The state is telling us that the collection problem is ours and not theirs. Is this correct? Can our bank somehow return this check for credit being that it was cashed to the right person and no affidavit of forgery is available? What should we do?
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 As long as there is a stop payment on the check, the bank that it's drawn on cannot pay it. You should be taking aim at (1) the individual who cashed the check with you, and (2) the issuer (the state treasurer).
If the check was, in fact, cashed by the payee, and you can document that fact (perhaps with security camera photos), you have a claim against the state as a holder in due course. If, however, the payee then signs an affidavit of forged endorsement, you are stuck with your only recourse being to the party who cashed the check with you, if you can identify, locate, prosecute and recover.
Published on BankingQuestions.com 7/18/07
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