Can a credit union place a stop payment on a cashier’s check?
A credit union cannot place a stop payment on a
cashier’s check, but it can allow the member to file a “Declaration of Loss”
for the missing check.
A credit union cannot place a stop payment on a cashier’s check it has issued
because the Uniform Commercial Code states the issuer of a cashier’s check is
obligated to pay such a check (See UCC 3-412). A credit union may “refuse to
pay” its cashier’s check under certain circumstances, such as alteration,
forged endorsement, or a claim against the payee or presenter of the check.
However, where the credit union wrongfully refuses to pay the cashier’s check,
it is liable to any holder in due course on which payment is refused for
compensation of expenses, loss of interest, and consequential damages in
addition to the amount of the check (See UCC 3-411(b)).
A credit union may also
properly refuse to pay a cashier’s check when the person who claims the right
to receive payment under the check (Claimant), executes and provides to the
credit union a “Declaration of Loss” (See UCC 3-312). A “Declaration of Loss”
is a written or electronic statement provided to the credit union and made
under penalty of perjury by either the payee or the remitter of the check, that
the check has been lost, destroyed or stolen. On the 90th day following the
date of the check, if the check has not been presented, the credit union is
obligated to pay the amount of the check to the claimant and it is relieved of
its obligation to pay the check if it is presented for payment. The credit
union may rightfully, refuse to pay the check in this situation or it may pay
the check and obtain reimbursement from the claimant. Prior to the 90th day,
the credit union may pay the check if it is presented for payment by a person
entitled to enforce payment and such payment discharges the credit union of any
obligation to pay the claimant based upon the “Declaration of Loss.”