{ "id": 1755040, "name": "SEQUOYAH STATE BANK v. UNION NATIONAL BANK", "name_abbreviation": "Sequoyah State Bank v. Union National Bank", "decision_date": "1981-10-05", "docket_number": "81-68", "first_page": "1", "last_page": "7", "citations": [ { "type": "official", "cite": "274 Ark. 1" }, { "type": "parallel", "cite": "621 S.W.2d 683" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "67 Colum. L. Rev. 524", "category": "journals:journal", "reporter": "Colum. L. Rev.", "year": 1967, "opinion_index": 0 }, { "cite": "252 N.Y.S. 2d 100", "category": "reporters:state", "reporter": "N.Y.S.2d", "year": 1964, "opinion_index": 0 }, { "cite": "244 N.Y.S. 2d 474", "category": "reporters:state", "reporter": "N.Y.S.2d", "year": 1963, "pin_cites": [ { "page": "477" } ], "opinion_index": 0 }, { "cite": "329 N.Y.S. 2d 91", "category": "reporters:state", "reporter": "N.Y.S.2d", "year": 1972, "opinion_index": 0 }, { "cite": "313 N.Y.S. 2d 810", "category": "reporters:state", "reporter": "N.Y.S.2d", "year": 1970, "opinion_index": 0 }, { "cite": "277 N.Y.S. 2d 141", "category": "reporters:state", "reporter": "N.Y.S.2d", "year": 1966, "opinion_index": 0 }, { "cite": "223 N.E. 2d 566", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1966, "opinion_index": 0 }, { "cite": "18 N.Y. 2d 941", "category": "reporters:state", "reporter": "N.Y.2d", "case_ids": [ 6801752 ], "year": 1966, "opinion_index": 0, "case_paths": [ "/ny-2d/18/0941-01" ] }, { "cite": "267 N.Y.S. 2d 698", "category": "reporters:state", "reporter": "N.Y.S.2d", "year": 1966, "opinion_index": 0 }, { "cite": "25 A.D. 2d 137", "category": "reporters:state", "reporter": "A.D.2d", "case_ids": [ 3153916 ], "year": 1966, "opinion_index": 0, "case_paths": [ "/ad2d/25/0137-01" ] }, { "cite": "399 N. Y.S. 2d 869", "category": "reporters:state", "reporter": "N.Y.S.2d", "weight": 2, "year": 1977, "opinion_index": 0 } ], "analysis": { "cardinality": 529, "char_count": 10159, "ocr_confidence": 0.77, "pagerank": { "raw": 2.9328982093465e-07, "percentile": 0.8474851236500661 }, "sha256": "8362626800f9af57a699c9606225a49da315ce3f8617c3a5762ba39d0db2770f", "simhash": "1:129eddab963326a3", "word_count": 1771 }, "last_updated": "2023-07-14T21:01:13.587143+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Holt, Dudley, and Hays, JJ., dissent." ], "parties": [ "SEQUOYAH STATE BANK v. UNION NATIONAL BANK" ], "opinions": [ { "text": "Richard B. Adkisson, Chief Justice.\nThe only issue in this case is whether Union Bank by its own initiative can stop payment on a personal money order it had issued in exchange for a hot check and, thereby, cause Sequoyah Bank, a holder in due course, to bear the loss. Under these circumstances the loss must be borne by Union Bank which issued the negotiable instrument to be circulated in commerce.\nWe do not decide the question of whether the purchaser may stop payment, but we do hold that after the sale of a personal money order, the issuing bank cannot stop payment on the instrument.\nA personal money order is issued with unfilled blanks for the name of the payee, the date, and the signature of the purchaser. Only the amount is filled out at the time of issue, usually by checkwriter impression as was done in this case.\nThe Uniform Commercial Code apparently did not directly contemplate the use of money orders and made no specific provision for them. Mirabile v. Udoh, 399 N. Y.S. 2d 869 (1977). It was recognized in Mirabile that it is the custom and practice of the business community to accept personal money orders as a pledge of the issuing bank\u2019s credit. We may consider this custom and practice in construing the legal effect of such instruments. See Ark. Stat. Ann. \u00a7 85-1-103 (Add. 1961).\nAppellee relies on the cases of Garden Check Cashing Service, Inc. v. First National City Bank, 25 A.D. 2d 137, 267 N.Y.S. 2d 698 (1966), aff\u2019d. 18 N.Y. 2d 941, 223 N.E. 2d 566, 277 N.Y.S. 2d 141 (1966) and Krom v. Chemical Bank New York Trust Co., 313 N.Y.S. 2d 810 (1970), rev\u2019d. 329 N.Y.S. 2d 91 (A.D. 1972) which held that a purchaser of a personal money order may stop payment on it. However, the only cited case to specifically address the issue of whether the issuing bank, on its own initiative, may stop payment on a personal money order is Rose Check Cashing Service, Inc. v. Chemical Bank N.Y. Trust Co., 244 N.Y.S. 2d 474, 477 (1963). In holding that the issuing bank could not stop payment and therefore must suffer the loss the court stated:\nAll of these differences between the instrument at issue and an ordinary check would seem to indicate that the bank would honor the order to pay no matter who signed the face of the instrument, assuming of course an otherwise valid negotiation of the instrument.\nIn the instrument in suit, the drawer purchases the instrument from the bank. The transaction is in the nature of a sale. No deposit is created. The funds to pay the instrument, immediately come within the bank\u2019s exclusive control and ownership. . . .\nThe bank\u2019s contention that the instrument is a check is inconsistent with its own acts. The bank (drawee) stamped \u201cStop Payment\u201d on the instrument in suit on its own order. Nowhere in the Negotiable Instruments Law is there any provision that a drawee [bank] may \u201cStop Payment\u201d of a check unless ordered to do so by the drawer.\nAppellee also denies liability on the instrument based upon Ark. Stat. Ann. \u00a7 85-3-401 (1) which states that \u201cNo person is liable on an instrument unless his signature appears thereon.\u201d Subdivision (2) of this same section provides that a signature may be \u201cany work or mark used in lieu of a written signature.\u201d The authenticity of the instrument involved here is not in question. The issuance of the money order with the bank\u2019s printed name evidences the appellee\u2019s intent to be bound thereby. Mirabile, supra.\nAppellee also relies on Ark. Stat. Ann. \u00a7 85-3-409 for the proposition that it is not liable on the personal money order since it did not accept it. In our opinion, however, the appellee accepted the instrument in advance by the act of its issuance. Rose Check Cashing Service, Inc. v. Chemical Bank New York Trust Co., 252 N.Y.S. 2d 100 (1964).\nThe personal money order constituted an obligation of Union from the moment of its sale and issuance. The fact that Union was frustrated in retaining the funds because instead of cash it accepted a check drawn on insufficient funds is no reason to hold otherwise. We note by analogy that the Uniform Commercial Code on sales, Ark. Stat. Ann. \u00a7 85-2-403 (1) (b), provides that a purchaser of goods, who takes delivery in exchange for a check which is later dishonored, transfers good title to the goods.\nUnion placed the personal money order in commerce for a consideration it accepted as adequate and was, thereafter, liable on it. Banks are not allowed to stop payment on their depositor\u2019s checks and certainly should not be allowed to stop payment on personal money orders. See Note, PERSONAL MONEY ORDERS AND TELLER\u2019S CHECKS: MA VERICKS UNDER THE UCC, 67 Colum. L. Rev. 524 (1967).\nReversed.\nHolt, Dudley, and Hays, JJ., dissent.", "type": "majority", "author": "Richard B. Adkisson, Chief Justice." }, { "text": "Robert H. Dudley, Justice,\ndissenting, This case involves a personal money order, not a bank money order, not a certificate of deposit and not a certified check. A personal money order is for the convenience of anyone who does not have an ordinary checking account and needs a safe, inexpensive and readily acceptable means of transferring funds. The bank simply sells to the individual a check-sized form which has the amount impressed into the face of the paper, an identification number and the name of the issuing bank. No authorized representative of the bank signs the instrument. When the purchaser of the instrument decides to pass it, he dates it, enters the name of the payee and signs the instrument.\nArk. Stat. Ann. \u00a7 85-3-104 (1) (a) (Add. 1961) requires that a writing be signed by the drawer or maker in order to be negotiable. Any item which is an order to pay is considered a \u201cdraft\u201d and any draft drawn on a bank and payable on demand is a \u201ccheck.\u201d \u00a7 85-3-104 (2) (a), (b). Since the only signature on a personal money order is that of the purchaser, since the instrument takes the form of an order to pay, and since it is drawn on a bank and payable on demand, it is clearly within the classification of a check. The absence of the bank\u2019s signature as a \u201cmaker\u201d and the absence of any express \u201cundertaking\u201d to pay by the bank, \u00a7 85-3-102 (1) (c) and \u00a7 85-3-104 (2) (d) preclude a finding that the instrument is a note. Aside from \u201cdraft,\u201d \u201ccheck\u201d and \u201cnote\u201d the only other form of negotiable instrument recognized by the Uniform Commercial Code is a \u201ccertificate of deposit\u201d and that requires an acknowledgement that the bank will repay it. \u00a7 85-3-104 (2) (c). Under these code provisions a personal money order must be classified as a check. There is no other code classification of negotiable commercial paper. \u00a7 85-3-104. For the sake of clarity in the law of commercial paper this personal money order should be classified as a check.\nHowever, the matter of classification is not nearly as important as the issue of liability. No authorized representative of appellee bank signed this check. Section 85-3-401 states: \u201cNo person is liable on an instrument unless his signature appears thereon.\u201d Section 85-3-409 (1) states that a check or other draft is not an assignment of funds held by the drawee (appellee Union Bank) and the drawee is not liable until it accepts the check or draft. Appellee did not accept this instrument. It stopped payment. The language of these statutes, a part of the Uniform Commercial Code, is unmistakable.\nThe majority opinion holds:\nThe personal money order constituted an obligation of Union from the moment of its sale and issuance.\nI respectfully submit that statement is supported by absolutely no authority and it creates an unnecessary legal quagmire. Assume that a purchaser of a personal money order has not filled in the name of the payee or has not signed the check and it is lost or stolen. The purchaser then wants to stop payment before it is negotiated to a third party. The majority has stated that it was an obligation of the bank from the moment of sale and issuance. Fairness and logic dictate that the purchaser should not be allowed to stop payment and leave the bank liable. Yet, \u00a7 85-4-403 (1) provides:\nCustomer\u2019s right to stop payment \u2014 Burden of proof of loss. A customer may by order to his bank stop payment of any item payable for his account but the order must be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it prior to any action by the bank with respect to the item described in Section 4-303.\nComment 4 to this statute makes it abundantly clear that personal money orders are intended to be covered by this broad language.\nOne of the three explanations given for the holding is:\nThe issuance of the money order with the bank\u2019s printed name evidences the appellee\u2019s intent to be bound thereby.\nThat notion will echo because the name of the drawee bank is printed on every ordinary check in circulation.\nThe other two explanations are that banks should not be allowed to stop payment and business custom. Both explanations are dead letters. Assume, for the sake of argument only, that banks should not be allowed to stop payment. That occurrence takes place after the sale and issuance of the instrument. The majority has held that liability attached upon issuance. Therefore this subsequent event logically cannot have any effect on liability. It very simply is not a reason for a decision that liability attached at the time of issuance. Business custom is not proven. There is not one single word in the transcript or abstract about business custom. Even if this defense had been proven it would be an estoppel defense, or a defense which accrues after the sale and, once again, it would not be a reason for a decision that liability attached at the time of issuance.\nThe master purpose of the Uniform Commercial Code is to clarify the law governing commercial transactions. The tragedy of this case is that both the purpose and the Code are emaciated for no reason.\nI dissent.\nI am authorized to state that Mr. Justice Holt and Mr. Justice Hays join in this opinion.", "type": "dissent", "author": "Robert H. Dudley, Justice," } ], "attorneys": [ "Bryan & Fitzhugh, for appellant.", "Smith \u00bfr Nixon, by: IT. R. Nixon, Jr., for appellee." ], "corrections": "", "head_matter": "81-68\nSEQUOYAH STATE BANK v. UNION NATIONAL BANK\n621 S.W. 2d 683\nSupreme Court of Arkansas\nOpinion delivered October 5, 1981\n[Rehearing denied November 9, 1982.]\nBryan & Fitzhugh, for appellant.\nSmith \u00bfr Nixon, by: IT. R. Nixon, Jr., for appellee." }, "file_name": "0001-01", "first_page_order": 21, "last_page_order": 27 }