Title: Stale Checks. On July 15, 1986, IBP, Inc, issued to Meyer Land & Cattle Co a check for ... Post by: mandyns on Jan 27, 2018 Stale Checks. On July 15, 1986, IBP, Inc, issued to Meyer Land & Cattle Co a check for 135,234.18 payable to both Meyer and Sylvan State Bank for the purchase of cattle. IBP wrote the check on its account at Mercantile Bank of Topeka. Someone at the Meyer firm misplaced the check. In the fall of 1995, Meyer's president Tim Meyer found the check behind a desk drawer. Jana Huse, Meyer's office manager, presented the check for deposit at Sylvan, which accepted it. After Mercantile received the instrument and its computers noted the absence of any stop payment order, it paid the check with funds from IBP's checking account. IBP insisted that Mercantile credit IBP's account. Mercantile refused. IBP filed a suit in a federal district court against Mercantile and others, claiming, among other things, that Mercantile had not acted in good faith because it had processed the check by automated means, without examining it manually. Mercantile responded that its check-processing procedures adhered to its own policies, as well as to reasonable commercial standards of fair dealing in the banking industry. Mercantile filed a motion for summary judgment. Should the court grant the motion? Why or why not?
Title: Stale Checks. On July 15, 1986, IBP, Inc, issued to Meyer Land & Cattle Co a check for ... Post by: breoh on Jan 27, 2018 Stale checks
The court granted the motion and issued a judgment in favor of Mercantile. The court ex-plained that a bank's obligations with respect to the payment of stale checks are governed by UCC 4-404, which provides that a bank may charge its customer's account for a payment made on a check more than six months after its date in good faith. Good faith is honesty in fact and the observance of reasonable commercial standards of fair dealing, under UCC 3-103(a)(4) and UCC 4-104(c). The court pointed out that the UCC explicitly acknowledge |