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Trump Plaza Associates v. Haas

300 N.J. Super. 113, 692 A.2d 86 (App. Div. 1997)

UCC; CHECKS; MONEY ORDERS—A money order is more similar to an ordinary check than to a cashier’s check and it may be refused by the bank upon which it is drawn.

Trump Plaza submitted for payment a personal money order it had cashed to the bank upon which it was drawn. The bank refused to honor it, claiming the customer had insufficient funds. Trump Plaza’s suit claimed that a bank may not stop payment on a money order. The motion judge ruled that the money order was a personal check, not a cashier’s check, and that the bank had not “accepted” it under the provisions of the Uniform Commercial Code. On appeal, Trump claimed that: (1) it should not suffer because of the bank’s own negligence in issuing the check, (2) the bank “accepted” the money order by marking it “payment stopped”, and (3) the bank cannot properly stop payment, thereby prejudicing the rights of a holder in due course.

The Appellate Division affirmed the motion judge’s ruling and held that a money order is more similar to an ordinary check than to a cashier’s check, and that it may be refused by the bank on which the check is drawn. The Court stated that despite the common perception which equates a money order with certified and cashier’s checks, and therefore believes it to be more secure than a personal check, the bank did not sign, accept or certify the money order prior to its dishonor. Uniform Commercial Code comments explicitly permit an instrument to be “a check” even though it is described on its face by another term, such as a money order.” Therefore, a money order is subject to a stop order just as an ordinary personal check. The bank’s name and logo on the instrument was not enough to constitute a signature or any other form of acceptance. The Court held that Trump did not suffer from the bank’s own negligence because the bank had not yet accepted the instrument. In addition, the bank’s stamping “payment stopped” does not indicate acceptance of the check. Trump’s sole remedy is against the individual who cashed the money order, and that individual is the only one to whom the bank may be liable for dishonor of the money order. [Note: Certification has been denied.]


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