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. This is ridiculous. Most JDs not practicing law don't know squat to justify calling themselves a lawyer. Maybe they should try visiting the inside of a courtroom before they go around calling themselves lawyers. This kind of promotional BS just increases the volume of people with JDs that are underqualified thereby dragging all the rest of us down likewise.

  2. I think it is safe to say that those Hoosier's with the most confidence in the Indiana judicial system are those Hoosier's who have never had the displeasure of dealing with the Hoosier court system.

  3. 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

  4. 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?)

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