Legal Question in Banking Law in District of Columbia

Re: Banking, Paycheck, Thumbprint

1) There is no such case law or statute. In fact, the cases are unanimous that the banks may do this. See Cockrell v. First Tenn. Bank, 1998 U.S. Dist. LEXIS 13756 (W.D. Tenn. 1998); Messing v. Bank of America, 373 Md. 672, 821 A.2d 22 (2003); Durocher v. Wells Fargo Bank Montana, 2003 ML 1224; 2003 Mont. Dist. LEXIS 2383 (Mont. Dist. 2003); Yeager v. Ohio Civ. Rights Comm'n, 148 Ohio App. 3d 459 (2002).

2) Under UCC 3-104, a "negotiable instrument" means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

(a) Is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

(b) Is payable on demand or at a definite time; and

(c) Does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain:

(1) An undertaking or power to give, maintain or protect collateral to secure payment;

(2) An authorization or power to the holder to confess judgment or realize on or dispose of collateral; or

(3) A waiver of the benefit of any law intended for the advantage or protection of an obligor.

A normal check satisfies these requirements. The fact of dishonor (wrongful or not) does not make it not a negotiable instrument, and it does not make it not payable upon demand.

3) Read the Messing case cited under #1 above (the following is all a quote from that case)

"Under the U.C.C., a check is simply an order to the drawee bank to pay the sum stated, signed by the makers and payable on demand. Receipt of a check does not, however, give the recipient a right against the bank. The recipient may present the check, but if the drawee bank refuses to honor it, the recipient has no recourse against the drawee.

This is because . . . receipt of a check gives the recipient no right in the funds held by the bank on the drawer's account.

Absent a special relationship, a non-customer has no claim against a bank for refusing to honor a presented check. City Check Cashing, Inc. v. Manufacturers Hanover Trust Co. 166 N.J. 49, 764 A.2d 411, 417 (N.J. 2001). A "transient, non-contractual relationship" is not enough to establish a duty. Id. (quoting FMC Corp v. Fleet Bank, 641 N.Y.S.2d 25, 26, 226 A.D.2d 225 (N.Y. App. Div. 1996)). It is also well settled that a check does not operate as an assignment of funds on deposit, Ward v. Federal Kemper Ins. Co., 62 Md. App. 351, 357-58, 489 A.2d 91, 94 (1985), and the bank only becomes obligated upon acceptance of the instrument. This is made clear by � 3-408, which states:

A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts it.