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Bank wrongfully refused to pay cashier's check

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In an issue of first impression as to what circumstances an issuing bank may refuse to pay a cashier's check, the Indiana Court of Appeals ruled in the instant case the issuing bank wasn't entitled to stop payment on it later.

In South Central Bank of Daviess County v. Lynnville National Bank, Bryan K. and Lisa C. Fisher, No. 87A01-0806-CV-256, the Court of Appeals for the first time today considered the propriety of a bank's refusal to pay a cashier's check under the Uniform Commercial Code.

Bryan and Lisa Fisher obtained a cashier's check for a down payment on a manufactured home they purchased through Landmark Housing Center, which had an account at South Central Bank. Shortly after the Fishers signed a contract with Landmark, they discovered Landmark was no longer a registered dealer with Patriot Homes and wanted to stop payment on the cashier's check. By then, South Central's bank manager had already called and confirmed the cashier's check with Lynnville and credited it to Landmark's account. Even after it was informed by Lynnville that it wasn't going to pay the cashier's check, South Central paid out $24,000 to a Landmark principal the next day.

South Central filed suit, alleging Lynnville wrongfully refused payment and sought the amount of the original cashier's check, plus prejudgment interest, attorney fees, and costs. Lynnville denied liability and contended South Central failed to mitigate its losses. The trial court granted Lynnville's cross-motion for summary judgment.

Indiana Code Section 26-1-3.1-411, which is modeled after Article 3 of the UCC, explains the specific situations in which an obligated bank can stop payment on a cashier's check. None of those circumstances occurred in this case, wrote Chief Judge John Baker.

"Lynnville's obligation to pay was clear and it was able to pay, but it refused payment on the check as an accommodation to the Fishers, who had no right to make that request," he wrote. "This statute was enacted specifically to discourage that practice."

The appellate court also found that South Central is a holder in due course of the cashier's check, which limits Lynnville's available defenses to those that fall under Indiana Code Section 26-1-3.1-305(a)(1), and none of those apply to Lynnville, he wrote.

Lynnville's arguments that South Central failed to mitigated its damages also failed. The Court of Appeals remanded with instructions to enter final judgment in favor of South Central in the amount of $31,917.55 - the original cashier's check - plus expenses, interest, and any consequential damages determined by the trial court.

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  1. Ah yes... Echoes of 1963 as a ghostly George Wallace makes his stand at the Schoolhouse door. We now know about the stand of personal belief over service to all constituents at the Carter County Clerk door. The results are the same, bigotry unable to follow the directions of the courts and the courts win. Interesting to watch the personal belief take a back seat rather than resign from a perception of local power to make the statement.

  2. An oath of office, does it override the conscience? That is the defense of overall soldier who violates higher laws, isnt it? "I was just following orders" and "I swore an oath of loyalty to der Fuhrer" etc. So this is an interesting case of swearing a false oath and then knowing that it was wrong and doing the right thing. Maybe they should chop her head off too like the "king's good servant-- but God's first" like St Thomas More. ...... We wont hold our breath waiting for the aclu or other "civil liberterians" to come to her defense since they are all arrayed on the gay side, to a man or should I say to a man and womyn?

  3. Perhaps we should also convene a panel of independent anthropological experts to study the issues surrounding this little-known branch of human sacrifice?

  4. I'm going to court the beginning of Oct. 2015 to establish visitation and request my daughters visits while she is in jail. I raised my grandchild for the first two and half years. She was born out of wedlock and the father and his adopted mother wantwd her aborted, they went as far as sueing my daughter for abortion money back 5mo. After my grandchild was born. Now because of depression and drug abuse my daughter lost custody 2 and a half years ago. Everyting went wrong in court when i went for custody my lawyer was thrown out and a replacment could only stay 45 min. The judge would not allow a postponement. So the father won. Now he is aleinating me and my daughter. No matter the amount of time spent getting help for my daughter and her doing better he runs her in the ground to the point of suicide because he wants her to be in a relationship with him. It is a sick game of using my grandchild as a pawn to make my daughter suffer for not wanting to be with him. I became the intervener in the case when my daughter first got into trouble. Because of this they gave me her visitation. Im hoping to get it again there is questions of abuse on his part and I want to make sure my grandchild is doing alright. I really dont understand how the parents have rights to walk in and do whatever they want when the refuse to stand up and raise the child at first . Why should it take two and a half years to decide you want to raise your child.The father used me so he could finish college get a job and stop paying support by getting custody. Support he was paying my daughter that I never saw.

  5. Pence said when he ordered the investigation that Indiana residents should be troubled by the allegations after the video went viral. Planned Parenthood has asked the government s top health scientists at the National Institutes of Health to convene a panel of independent experts to study the issues surrounding the little-known branch of medicine.

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