23.5 The bank depending on the facts may have been correct in charging Ishmael’s account. The check may have been properly payable. The check was authorized by Ishmael, he wrote and signed the check himself in order to pay for the stereo. Ishmael did not notify the bank with enough time to tell them to stop payment. In order to properly stop payment he needed to notify his bank in writing with enough specificity in the description of the check, so the bank would be able to easily spot it.
For the check to be properly payable BigTown Bank would need to be the holders of the check. A holder of a check is someone who has possession of the check and can enforce it. Whether or not BigTown Bank is a holder would depend, on the relationship …show more content…
Like before, Alan’s Stereo is a holder of the check but for a different reason. They are a holder because they are in possession of check that named them as the payee. However, the rules of transferring order paper are different then transferring bearer paper. In order to transfer order paper the check not only must be physically transferred by the holder it has to be endorsed by the holder as well. However, there is an exception, depositing Banks become holders of unendorsed checks if their customer who was a holder delivered the check to the bank for collection. Alan’s Stereo delivered the check to BigTown Bank to deposit the check so BigTown Bank could collect it from Country …show more content…
Since Country Bank improperly paid the check they would have to reimburse Ishmael. Even though, the underlying dispute is between Ishmael and the now defunct Alan’s Stereo. The bank still has to reimburse Ishmael for improperly paying o the check. Country Bank can go after BigTown Bank for breach of presentment warranties. BigTown Bank breached the first warranty. They were not persons entitled to enforce the check. Nor, were they authorized to accept payment on the check on behalf of a person entitled to enforce the check since BigTown Bank had purchased the check from Alan’s Stereo and therefore they were trying to collect on it for themselves. Therefore, BigTown Bank would have to reimburse Country