legal question

**ICantSpellDawg** · 05-30-2005, 08:26

lets say
there is a check
from Company A to Chris W (me)
i have endorsed the back
i drop it on the floor by accident
someone picks it up
goes to the bank and cashes the check

they have not committed fraud
but they have done something blatantly unethical
and in a society where something that is blatantly unethical is usually illegal
and this transaction is traceable in so many ways

what legal recourse is available to the actual owner of the check?

i have been having an arguement with a co-worker
he says that it isnt actually illegal to cash an endorsed check
i say otherwise (so does my common sense)
but as neither of us are lawyers and we cant find a comprehensive explanation
im looking for an answer here

we are talking new york state, USA
i want fact, i am have enough opinions on the matter

thanks

**Fragony** · 05-30-2005, 08:45

what legal recourse is available to the actual owner of the check?

If he pretended to be you it's illegal. This actually happened?

**Voigtkampf** · 05-30-2005, 09:25

Was there a name on the check? Or was it a check to be paid out to the possessor? If there was a name, than it is illegal, because he faked his identity. If there was no name, it is still illegal, because he should have reported a finding of the check, and you would have to prove that it is yours.

**KukriKhan** · 05-30-2005, 11:47

In California, Chris W would be the loser. If his endorsement on the back of the check was merely his signature, and no other instruction ("For Deposit in xxx account", for example), that check was the same as cash. Someone signing their own name below his could be entitled to payment.

However, a good lawyer could argue 'intent of the Payor', and point out that most banks will not accept 3-party checks without positive ID of each party. A case could be made.

**Spetulhu** · 05-30-2005, 19:20

Don't use checks. Demand money transfers.

**therother** · 05-31-2005, 04:53

IANAL, but this is one area where I think UK law would cover you. In the UK:

"A person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it."

There are a number of complications (hey, it is law!), but this would seem to be pretty straightforward to me.

**GodsPetMonkey** · 05-31-2005, 06:34

Originally Posted by therother

IANAL, but this is one area where I think UK law would cover you. In the UK:

"A person is guilty of theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it."

There are a number of complications (hey, it is law!), but this would seem to be pretty straightforward to me.

Actually, in a UK based system there would be 2 cases of larceny... larceny against you with regards to him finding the check, and them larceny by deception against the bank when he cashes it in.

Probably the same in New York, though it amy depend on teh conditions for someone being guilty of theft when they find a lost item, they seems to vary widely across otherwise similar jurisdictions.

**English assassin** · 05-31-2005, 09:48

Ah but the question was what recourse is available to the owner (viz the payee) of the cheque? It may well be theft to take the cheque but that is a crime, it won't get the owner his money back. He needs a civil action.

Anyway, IIRC an endorsed cheque is indeed as good as cash. There is therefore no hope of any action against the paying bank who has done nothing wrong in paying out.

You would have an obvious restitutionary claim (sometimes called "unjust enrichment" which sums up roughly what its about) against the person who cashed the cheque (and a claim in converson if he still had the cheque instead of cashing it.) Actually you would have a heap of remedies, since you could also assert a constructive trust over the money in his hands (ie that he holds it on trust for you). Come to think of it that would probably be better than restitution unless he had spent the money (the difference being the trust has to attach to trust property but a restitutionary claim is a free standing common law claim for compensation).

If he had spent the money, and doesn't have any other assets, then obviously your claim against him is worthless. You would then be into the rather tricky waters of tracing, ie trying to assert a claim against the money in the hands of a third party. Tracing is a bit out of my field but in essence IIRC if the third party took the money in good faith you are stuffed.

Its a reasonably complicated area of law and i haven't looked at if for some years, and i'm afraid i haven't time to pop down to the library today so if anyone wants to correct me feel free. Bottom line: You can recover, assuming you prove the case. only if you are left having to recover from third parties because the theif isn't good for the claim are you in trouble.

The good news is though (again IIRC) if he takes the money, flies to Vegas, and wins a million with it, you get the whole of the million.

Oh, this is English law but i don't expcet NY law to be materially different.

**GodsPetMonkey** · 05-31-2005, 10:06

A criminal conviction would be very useful against the thief! Not only for the punishment he gets, but in pursuing your civil action.

Things may get sticky about who’s money he stole, I can't remember the case, but there was something about the cashing of fraudulent checks where it was decided that it was the banks money (as it is their property) the person was stealing, the not that of the person who owned the account.

Now I have to go look this one up... knowing my luck its probably hidden away in a legal encyclopedia

Still, if the court recognises that a check is a suitable substitute for cash, which I would think is likely in a civil case on these facts, you should be able to get your money back.

**English assassin** · 05-31-2005, 10:34

A criminal conviction would be very useful against the thief! Not only for the punishment he gets, but in pursuing your civil action.

Yes and no. Higher standard of proof don't forget, you have to prove things you don't need to prove in the civil action (viz the dishonest intent permanently to deprive) and it doesn't get your money back per se.

He MIGHT argue he found the cheque, was on his way to give it to you, passed the bank on the way, and decided to cash it for you too to save you the bother. Maybe, he would say with a wink at the jury, he thought if he gave you cash it would be easy for you to show your appreciation for his honesty with a little thank you...

I bet some juries would be dumb enough to acquit.

The thing about whose money it is depends on if the cheque is negotiable or not. If not (ie its crossed ac payee only) then the bank should only pay it into the named account. if you persuade them to pay out in mistake on a cheque like that then its their money you are taking, as the paying bank isn't entitled to debit the payers account in contraventuion of his instructions. In this case the cheque is negotiable, the bank are authorised to pay out, so its your money.