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cocounselor23 · 09-07-2004, 08:17 AM

Delirious:

I do not practice in negotiable instruments and have limited knowledged of the Uniform Commercial Code (UCC) which would apply here. The "Hlder in Due Course" section is at Section 3-302(1)(b)(c) of the UCC and basically says that a bank (or a check cashing facility) is protected from this type of transaction, unless there are defenses. If you look at it from their perspective, they were presented with what appeared to be a valid check and they cashed it and gave the money to the crook. You then stopped payment on the check and they are left holding the bag. There may be defenses for you , however, especially considering it is a check cashing store and not a bank. I would imagine that a good amount of the checks presented at these check cashing store are counterfeit in one way or another.

UCC §§ 3-302(1) provides that a holder in due course is a holder who takes the instrument for value, in good faith, and without notice that it is overdue or has been dishonored or of any defense against or claim to it on the part of any person. Code §§ 1-201(19) defines "good faith" as honesty in fact in the conduct or transaction concerned, and Code §§ 1-201(25) provides that a person has "notice" of a fact when (a) he has actual knowledge of it; or (b) he has received a notice or notification of it; or (c) from all the facts and circumstances known to him at the time in
question, he has reason to know that it exists. In general, the test for determining good faith is not the objective one of prudence, due care, negligence, diligence, or failure to inquire, but a subjective one of knowledge of facts which render the taking dishonest. While knowledge of facts sufficient to cause one of ordinary prudence to make inquiry is not evidence of bad faith, a purchaser may not purposely refrain from making inquiry which would result in knowledge of a defense.

So, in your case, it's possible that you could argue that the check cashing place should have known that the check could have been bad. Some cases have held that a bank that immediately cashes a check for a customer, knowing that the customer has a history of bounced checks and being overdrawn, is not a holder in due course because they had reason to knwo that the check might not have been good. The other cosnideration is that the collection agency should frist get a judgment against you in court before it tries to collect and it does not sound like that has happened. You could tell them that they cannot enforce collection until they get a court ordered judgment. You could also go against the person that stiffed you, even if he has filed for bankruptcy, because fraud is not covered by bankruptcy protection.

This is a lot of trouble for $900.00 or so though. I would highly suggest that you try to negotiate a settlement with them, by offering 50-60% of what they claim is owed and make sure they remove any derogatory information from your credit report. Get it in writing.

09-07-2004, 08:17 AM	#34 (permalink)
cocounselor23 Upright	Delirious: I do not practice in negotiable instruments and have limited knowledged of the Uniform Commercial Code (UCC) which would apply here. The "Hlder in Due Course" section is at Section 3-302(1)(b)(c) of the UCC and basically says that a bank (or a check cashing facility) is protected from this type of transaction, unless there are defenses. If you look at it from their perspective, they were presented with what appeared to be a valid check and they cashed it and gave the money to the crook. You then stopped payment on the check and they are left holding the bag. There may be defenses for you , however, especially considering it is a check cashing store and not a bank. I would imagine that a good amount of the checks presented at these check cashing store are counterfeit in one way or another. UCC §§ 3-302(1) provides that a holder in due course is a holder who takes the instrument for value, in good faith, and without notice that it is overdue or has been dishonored or of any defense against or claim to it on the part of any person. Code §§ 1-201(19) defines "good faith" as honesty in fact in the conduct or transaction concerned, and Code §§ 1-201(25) provides that a person has "notice" of a fact when (a) he has actual knowledge of it; or (b) he has received a notice or notification of it; or (c) from all the facts and circumstances known to him at the time in question, he has reason to know that it exists. In general, the test for determining good faith is not the objective one of prudence, due care, negligence, diligence, or failure to inquire, but a subjective one of knowledge of facts which render the taking dishonest. While knowledge of facts sufficient to cause one of ordinary prudence to make inquiry is not evidence of bad faith, a purchaser may not purposely refrain from making inquiry which would result in knowledge of a defense. So, in your case, it's possible that you could argue that the check cashing place should have known that the check could have been bad. Some cases have held that a bank that immediately cashes a check for a customer, knowing that the customer has a history of bounced checks and being overdrawn, is not a holder in due course because they had reason to knwo that the check might not have been good. The other cosnideration is that the collection agency should frist get a judgment against you in court before it tries to collect and it does not sound like that has happened. You could tell them that they cannot enforce collection until they get a court ordered judgment. You could also go against the person that stiffed you, even if he has filed for bankruptcy, because fraud is not covered by bankruptcy protection. This is a lot of trouble for $900.00 or so though. I would highly suggest that you try to negotiate a settlement with them, by offering 50-60% of what they claim is owed and make sure they remove any derogatory information from your credit report. Get it in writing.