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06/22/89 J.G. Duggan, v. State Bank of Antioch

June 22, 1989

J.G. DUGGAN, PLAINTIFF-APPELLANT

v.

STATE BANK OF ANTIOCH, DEFENDANT-APPELLEE



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

540 N.E.2d 1111, 184 Ill. App. 3d 699, 133 Ill. Dec. 245 1989.IL.970

Appeal from the Circuit Court of Lake County; the Hon. Barry R. Anderson, Judge, presiding.

APPELLATE Judges:

PRESIDING JUSTICE UNVERZAGT delivered the opinion of the court. LINDBERG and REINHARD, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE UNVERZAGT

Plaintiff, J.G. Duggan, brought this small claims complaint in the circuit court of Lake County against defendant, State Bank of Antioch (the Bank), for wrongful dishonor of a personal money order payable to plaintiff in the sum of $400. Plaintiff, an attorney, sought payment of the $400 as well as $400 in attorney fees. The Bank filed a counterclaim for malicious prosecution of the lawsuit. Following a hearing, the trial court entered judgment for the Bank on the complaint and for plaintiff on the counterclaim. Plaintiff appeals, contending the Bank acted wrongfully in refusing to pay a personal money order by honoring a stop-payment request from the purchaser of the money order.

The evidence presented at the hearing showed that plaintiff is the owner of Sequoit Apartments in Antioch. On January 18, 1988, Helen Musolino purchased a money order from the Bank in the sum of $400. On that same date she completed the money order naming herself as remitter and plaintiff as payee and presented the money order to Robert Lausch, manager of the apartments. The sum represented the balance of a $500 security deposit due for rental of one of the apartments. Mrs. Musolino had previously given Mr. Lausch a deposit of $100 to hold the apartment.

On January 19, 1988, Mrs. Musolino filled out a stop-payment request on the money order. On January 20, Mr. Lausch, acting on behalf of plaintiff, deposited the money order in the account plaintiff maintained for Sequoit Apartments at the Bank. On or about January 21, plaintiff received a notice from the Bank that his account had been debited $400, the amount of the money order. Subsequently, plaintiff instituted the instant action, challenging the Bank's act of honoring the stop-payment request of a money order.

At the Conclusion of the hearing on plaintiff's complaint, the trial court found that a personal money order, like a personal check, is subject to a stop-payment order to a bank by the remitter of the money order, notwithstanding that the party presenting the money order is a holder in due course. The court held that although the remitter of a personal money order would be obligated to a holder in due course, the drawee bank is not obligated, provided a stop-payment order has been received from the remitter. The court entered judgment in favor of the Bank. Additionally, the court denied plaintiff's claim for attorney fees since plaintiff appeared pro se in the proceedings. The court also denied the Bank's counterclaim for malicious prosecution of the suit.

On appeal, plaintiff argues that the Bank did not possess the right to stop payment on a personal money order. It is plaintiff's position that a money order is akin to a cashier's check upon which payment cannot be stopped and that, therefore, the Bank acted wrongfully in refusing to honor the money order. Although the Bank has not filed a brief on appeal, this court may nonetheless consider the plaintiff's contention on the merits. First Capitol Mortgage Corp. v. Talandis Construction Corp. (1976), 63 Ill. 2d 128, 133.

In the instant case the parties do not dispute that plaintiff was a holder in due course. Nevertheless, even if plaintiff was a holder in due course, the Bank would not have been obligated to plaintiff provided the Bank was required to follow Mrs. Musolino's stop-payment request on the money order, as the trial court concluded. Rather, Mrs. Musolino would remain liable on the instrument to plaintiff. See comment 8 to section 4 -- 403 of the Uniform Commercial Code (Ill. Ann. Stat., ch. 26, § 4 -- 403, Uniform Commercial Code Comment, at 535 (Smith-Hurd 1963)).

Our research has failed to reveal any cases which have previously considered whether payment can be stopped on a money order.

By definition a "money order" is:

"A type of negotiable draft issued by banks, post offices, telegraph companies and express companies and used by the purchaser as a substitute for a check. Form of credit instrument calling for payment of money to named payee, and involving three parties: remitter, payee and ...


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