Legal Question in Banking Law in California

Stop payment placed on cashiers check

I allowed a friend to use my credit union checking account to cash a cashiers check issued by another credit union ( both CU's in San Diego, CA ). The teller at my CU verified the check before cashing. The check was issued in my friends name. Two business days later the issuing CU stopped payment on the cashiers check and my CU withdrew the funds from my account. How is this possible and what recourse do I have?

It appears that my ''friend'' sold a car he did not hold clean title to and the buyer entered into this agreement without checking thoroughly enough.


Asked on 12/23/05, 4:17 am

1 Answer from Attorneys
Carl Starrett Law Offices of Carl H. Starrett II

Re: Stop payment placed on cashiers check

I am not entirely sure, but there may be a hole in the law involving cashier's checks. Under Commerical Code 3312, the circumstances of a BANK stopping payment on a cashier's check are very limited, usually if the check is lost and stolen. Credit unions are different than banks, so I'm not sure if this law applies. I did note that the largest credit union in San Diego charges $15 for stopping payment on a cashier's check. If want to retain me for this case, I can do the research for you.

If we are talking about an amount of less than $7500, I would file a small claims lawsuit against your friend after the higher small claims limits kick in on 01/01/06. I would report this matter to the police and demand that they take a report. The DMV might also have jurisdiction because it involves the purchase of a car, so you might call them too.

Call me if you have any more questions.

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Answered on 12/23/05, 11:09 am


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