COA: Bank could charge back account after check is lost

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A man who withdrew nearly all of the money in a bank account is personally liable to pay back that money to the bank, the Indiana Court of Appeals ruled Thursday. The bank had lost a check deposited into the account and the account holder was unable to help the bank identify the check writer to obtain a replacement check.

James R. Sapp had multiple bank accounts with Flagstar Bank and other banks in and out of state. He deposited $125,000 in late August 2005 into his account referred to as SF7 that was the account of an LLC he had formed. The check was a cashier’s check made up of various amounts from other banks paid to some of Sapps’ businesses as well as some unidentified amount of cash. Almost all of the money was gone from the account 16 days after the deposit; Sapp had deposited $100,000 from the SF7 account into an account to which only he had access.

In November 2005, Flagstar debited $125,000 from the SF7 account and was only able to recover nearly $2,000. This was after the bank pressed Sapp to help it identify who issued the previous check in order to obtain a replacement. In 2007, the bank sued Sapp for breach of contract, theft, conversion and unjust enrichment. The trial court ruled in favor of the bank on its claims and ordered Sapp to pay attorney fees.

The transaction was not final, as Sapp had argued, because the account agreement states that the account holder agrees to be liable for any account shortage resulting from a charge or an overdraft. He chose to withdraw funds from the SF7 account while the provision credit was in place, the COA ruled in James R. Sapp v. Flagstar Bank, FSB, 49A02-1311-PL-935.

“Had Sapp not written any of those checks, the account would still have held the $125,000 provision credit and would not have been overdrawn when that credit was revoked,” Judge John Baker wrote in finding Sapp liable for the shortage in the account.

Sapp argued the bank waited too long to notify him the check had been lost and that the transaction had been “finalized” based on language in the account agreement. The agreement allowed Sapp to withdraw the funds based on the provision credit, but it also put him on notice that he would be liable for any checks deposited in the account that are unpaid.

The judges upheld the order that Sapp pay the bank’s attorney fees, again citing the account agreement. They also remanded for the trial court to decide the amount of appellate attorney fees to which Flagstar may be entitled.


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  1. I have an open CHINS case I failed a urine screen I have since got clean completed IOP classes now in after care passed home inspection my x sister in law has my children I still don't even have unsupervised when I have been clean for over 4 months my x sister wants to keep the lids for good n has my case working with her I just discovered n have proof that at one of my hearing dcs case worker stated in court to the judge that a screen was dirty which caused me not to have unsupervised this was at the beginning two weeks after my initial screen I thought the weed could have still been in my system was upset because they were suppose to check levels n see if it was going down since this was only a few weeks after initial instead they said dirty I recently requested all of my screens from redwood because I take prescriptions that will show up n I was having my doctor look at levels to verify that matched what I was prescripted because dcs case worker accused me of abuseing when I got my screens I found out that screen I took that dcs case worker stated in court to judge that caused me to not get granted unsupervised was actually negative what can I do about this this is a serious issue saying a parent failed a screen in court to judge when they didn't please advise

  2. I have a degree at law, recent MS in regulatory studies. Licensed in KS, admitted b4 S& 7th circuit, but not to Indiana bar due to political correctness. Blacklisted, nearly unemployable due to hostile state action. Big Idea: Headwinds can overcome, esp for those not within the contours of the bell curve, the Lego Movie happiness set forth above. That said, even without the blacklisting for holding ideas unacceptable to the Glorious State, I think the idea presented above that a law degree open many vistas other than being a galley slave to elitist lawyers is pretty much laughable. (Did the law professors of Indiana pay for this to be published?)

  3. Paul Hartman of Burbank, Oh who is helping Sister Fuller with this Con Artist Kevin Bart McCarthy scares Sister Joseph Therese, Patricia Ann Fuller very much that McCarthy will try and hurt Patricia Ann Fuller and Paul Hartman of Burbank, Oh or any member of his family. Sister is very, very scared, (YES, I AM) This McCarthy guy is a real, real CON MAN and crook. I try to totall flatter Kevin Bart McCARTHY to keep him from hurting my best friends in this world which are Carolyn Rose and Paul Hartman. I Live in total fear of this man Kevin Bart McCarthy and try to praise him as a good man to keep us ALL from his bad deeds. This man could easy have some one cause us a very bad disability. You have to PRAISAE in order TO PROTECT yourself. He lies and makes up stories about people and then tries to steal if THEY OWN THRU THE COURTS A SPECIAL DEVOTION TO PROTECT, EX> Our Lady of America DEVOTION. EVERYONE who reads this, PLEASE BE CAREFUL of Kevin Bart McCarthy of Indianapolis, IN My Phone No. IS 419-435-3838.

  4. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.

  5. I had a hospital and dcs caseworker falsify reports that my child was born with drugs in her system. I filed a complaint with the Indiana department of health....and they found that the hospital falsified drug screens in their investigation. Then I filed a complaint with human health services in Washington DC...dcs drug Testing is unregulated and is indicating false positives...they are currently being investigated by human health services. Then I located an attorney and signed contracts one month ago to sue dcs and Anderson community hospital. Once the suit is filed I am taking out a loan against the suit and paying a law firm to file a writ of mandamus challenging the courts jurisdiction to invoke chins case against me. I also forwarded evidence to a u.s. senator who contacted hhs to push an investigation faster. Once the lawsuit is filed local news stations will be running coverage on the situation. Easy day....people will be losing their jobs soon...and judge pancol...who has attempted to cover up what has happened will also be in trouble. The drug testing is a kids for cash and federal funding situation.