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A Check is a Check is A Check…

Most of us are accustomed to treating bank checks – whether we call them cashier’s checks or certified checks – as substantially different from personal checks. And in many respects, they are different – when someone has gone to the trouble to get a check from their bank, you can usually be pretty confident that the check will be honored. In one very important way, however, they are exactly the same – they can be forged. They are the same in another way as well – how they are classified under the laws of North Carolina. A recent Court of Appeals decision (Lawyers Mutual v. Mako) reviewed and rejected the argument that a cashier’s check is “irrevocably credited” upon deposit. In this case, a law firm received what appeared to be a cashier’s check for payment of a settlement amount. After wiring the funds to its client, the firm learned that the check had been forged, and it had been the victim of a fraud scheme by its “client” and the “defendant” (who were most likely one and the same). The question before the court was whether the law firm’s insurance covered the loss of nearly $150,000 and the answer, ultimately, was no. The court concluded that a cashier’s check is exactly the same as any other check under North Carolina statutes and must go through the same provisional settlement period any other traditional check does before it is “irrevocably credited.” Because the firm’s insurance covered losses only when deposits were irrevocably credited, the loss was ultimately the firm’s responsibility. The important lesson is to take the same approach to bank checks as you do with personal checks – wait for the funds to actually clear into your account before considering them yours.

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About Joe Davies

Joe’s practice focuses on construction law, landlord-tenant disputes, business and shareholder disputes, and employment matters. Joe practices throughout the state trial and appellate courts of North Carolina, and is also admitted to each of the Federal District Courts in North Carolina. Joe is also admitted in Pennsylvania and the District of Columbia, although he is currently inactive in both jurisdictions.