Legal Question in Credit and Debt Law in South Carolina

returned check

I am the controller for a staffing agency. Recently, a stop payment was placed on one of our employee's payroll check that was reported lost. A new check was issued. The employee cashed both checks at a check cashing facility. The check cashing company is now informing me that we are legally responsible for the stop payment check. We have been in business for 11 years and have never honored a check before that was stopped. They are citing UCC rulings that make this our legal responsibility, supposedly. Is there any truth to their allegation? Are we truly responsible for this debt?


Asked on 3/28/07, 5:49 pm

1 Answer from Attorneys
Sheryl Schelin Law Office of Sheryl Schelin

Re: returned check

Unfortunately, yes. The Check Cashing Facility is what's known as a "holder in due course." They had no notice of the stop payment, and thus are off the hook for the cost of honoring it. Your company's recourse is to demand payment from, and/or bring suit against, the employee. Depending on the amount of the check, this suit would almost certainly be appropriate in Magistrate's Court.

Read more
Answered on 3/28/07, 10:17 pm


Related Questions & Answers

More Credit, Debt and Collections Law questions and answers in South Carolina