Okla. Stat. tit. 12A § 4-403
Okla. Stat. tit. 12A, § 4-403
Oklahoma Code Comment
1. The right to stop payment is subject to four limitations: (1) It can be exercised only by the "customer" or other person authorized to draw on the account and, as to the stop payment order itself, it must (2) identify the item with reasonable certainty, and (3) be received "at such time" and (4) "in such manner" as to be effectuated before final payment. "Customer" is defined in sub section 4-104(a)(5) . Any one of multiple account holders may stop payment or close the account, even if more than one signature is required to draw on the account. But see UCC § 4-405.
It is not clear whether this Section affects cases like Johnson v. Grant Square Bank & Trust Co., 634 P.2d 1324 (Okla. Ct. App. 1981) (stop order misstated the amount by 3 cents and payment was not stopped because the bank's computer traced checks by amount; validity of the stop order was a question of fact) and Parr v. Security National Bank, 680 P.2d 648 (Okla. Ct. App. 1984) (stop payment order was effective despite 50 cent error in the amount). Parr distinguished Poullier v. Nacua Motors, Inc., 108 Misc. 2d 913, 439 N.Y.S.2d 85 (Sup. Ct. 1981), where the bank advised the customer that the precise amount of the check was needed.
2. Official Comment 5 to this Section suggests that in the absence of an agreement to the contrary, the customer must provide the information reasonably needed by the bank to identify the item subject to the stop order, based on the technology being used by the bane Thus the precise amount of the item may be essential if the bank's processing equipment identifies items on that basis. This is consistent with the general thrust of revised Article 4 to accommodate automated processing systems. See, e.g., UCC 5 § 4-110 (presentment) and 4-209 (encoding and retention warranties), and sub sections 4-401(c) (post-dated items) and 4 406(a) and (b) (statements of account and copies of items). Federal Reserve Reg. CC also encourages auto" mated processing. See, e.g., 12 C.F.R. 5 § 229.30 (expeditious return of dishonored checks) and 229.36(c) (truncation of checks). However, given that Section 4-403 is less than clear on this point, it would seem wise to deal with this issue specifically by agreement.
Of course, a bank may or may not be held to have waived its right to the necessary identification of the item if the bank accepts a stop order knowing the customer is unsure of the amount or other necessary information and, depending on the circumstances, does not advise the customer that the stop order will or may not be effective. Such issues may be resolved by giving notice to the customer that a stop order must include the precise amount of the check or other needed information.
3. The customer can stop payment for any reason, and if the bank fails to honor a valid stop order, it may be liable for any actual damages, including damages for wrongful dishonor of subsequent items caused by depletion of the account, under Section 4-402 . However, the bank's liability for wrongful payment over a stop order may be mitigated by its subrogation rights under Section 4-407 , and that Section should be read in conjunction with Section 4-403 . Thus, if the bank wrongfully pays a valid debt, the customer may not recover. See UCC § 4A-203 Official Comment I and Copper v. Stock Yards Bank of Okla. City, 6;4 P.2d 123 (Okla. Ct. App. 1981).
While ultimately the obligation to establish the fact and amount of the loss from a missed stop order is on the customer, the bank normally should recredit the customer's account, unless it can show that the customer suffered no loss or otherwise is not entitled to object, pursuant to Section 4-407 . Principles of ratification, preclusion, or estoppel may provide the basis for a bank's failure to recredit the account. See, e.g. UCC 5 § 3-406, 4-406, and the Oklahoma Comment to Section 4-407 . The need to recredit the account arises from the bank's risk that failure to recredit may lead to liability for wrongful dishonor of subsequent items under Section 4-402 . The bank may wish to bear this risk, perhaps because the item on which payment was stopped is large, the customer is of questionable solvency, the person paid appears to be owed or subsequent items seem inconsequential. If the bank has a security interest in the account that includes contingent claims, then the bank might assert its security interest in these circumstances to avoid liability for refusing to pay subsequent items.
4. A personal money order generally is treated as a check under sub section 3-104(f) and is an item under sub section 4-104(1)(h) . A personal money order is therefore subject to a stop payment order under this Section. The issuing bank is not liable to the payee or other holder of any such item, for wrongful dishonor or otherwise, because its only contractual and statutory duties are to its customer. See UCC § 3-104, Official Comment 4, and First Nat'l Bank of Nocona v. Duncan Sav. & Loan Ass'n, 656 F.Supp. 358 (W.D. Okla. 1987), aff'd, 957 F.2d 775 (10th Cir. 1992).
In contrast, a cashier's check teller's check or certified check is drawn or certified by the bank and represents an obligation of the bank. UCC 5 § 3-104(g) and (h), 3-412, 3-413, 3-414. A bank money order, bank draft, or similar instrument drawn by a bank on itself or another payor, is the functional equivalent of a cashier's or teller's check and should be treated as such regardless of its label. The bank's customer (the purchaser, or remitter of the drain) is not authorized to draw on the account and has no right to stop payment under this Section. But see UCC § 3-312. The issuing bank can stop or refuse payment of a cashier's, teller's or certified check. See First Nat'l Bank of Nocona v. Duncan Sav. & Loan Ass'n, 656 F.Supp. 358 (W.D. Okla. 1987) aff'd, 957 F.2d 775 (10th Cir. 1992). In such case, the bank's liability will be governed by Sections 3-305 , 3-312 , 3-411 and 3-412. See the Oklahoma Comments to those Sections.
5. An Oklahoma case held that where payment of a drain is conditioned on its face upon "acceptance," that is essentially the same as a drawer's right to stop payment under Section 4-403 . See Friendly Nat'l Bank of S. W. Okla. City v. Farmers Ins. Group, 630 P.2d 318 (Okla. 1981). However, a stop payment order does not relieve the customer of liability on the instrument under Section 3-414 ; in contrast, an unaccepted drain does not represent a liability of the drawee. See UCC 5 § 3-106(c), 3-401(a), 3-408, 3-409 and 3-413. In addition, where liability is conditioned upon a subsequent acceptance, the instrument may be nonnegotiable under Section 3-104 .
6. The payee or indorsee of a lost, destroyed or stolen instrument has no right to stop payment under this Section, and under sub section 3-310(b)(4) may have no right to proceed against the obligor on the underlying obligation. However, that person may proceed to enforce the instrument under Section 3-309 , or may have an action for conversion under Section 3-420 . See also UCC § 3-312.