On April 1, Moore gave Pipkin a check properly drawn by Moore on Zebra Bank for $5,000 in payment of a painting to be framed and delivered the next day. Pipkin immediately indorsed the check and gave it to Yeager Bank as payment in full of his indebtedness to the bank on a note he previously had signed. Yeager Bank canceled the note and returned it to Pipkin. On April 2, upon learning that the painting had been destroyed in a fire at Pipkin’s studio, Moore promptly went to Zebra Bank, signed a printed form of stop payment order, and gave it to the cashier. Zebra Bank refused payment on the check upon proper presentment by Yeager Bank. a. What are the rights of Yeager Bank against Zebra Bank? b. What are the rights of Yeager Bank against Moore? c. Assuming that Zebra Bank inadvertently paid the amount of the check to Yeager Bank and debited Moore’s account, what are the rights of Moore against Zebra Bank?
On April 1, Moore gave Pipkin a check properly drawn
by Moore on Zebra Bank for $5,000 in payment of a
painting to be framed and delivered the next day. Pipkin
immediately indorsed the check and gave it to Yeager
Bank as payment in full of his indebtedness to the
bank on a note he previously had signed. Yeager Bank
canceled the note and returned it to Pipkin.
On April 2, upon learning that the painting had been
destroyed in a fire at Pipkin’s studio, Moore promptly
went to Zebra Bank, signed a printed form of stop payment order, and gave it to the cashier. Zebra Bank
refused payment on the check upon proper presentment
by Yeager Bank.
a. What are the rights of Yeager Bank against Zebra Bank?
b. What are the rights of Yeager Bank against Moore?
c. Assuming that Zebra Bank inadvertently paid the
amount of the check to Yeager Bank and debited
Moore’s account, what are the rights of Moore
against Zebra Bank?
Case summary: On April 1, Ms. M gave Ms. P a properly drawn check on ZB Bank for $5000 against the payment for the painting that Id bought from P which has to be delivered the next day. This check was instantly endorsed by P towards YG Bank to pay the complete debt that P has to pay towards YG Bank. The bank canceled the note and returned it to P. On April 2, when M learned that the painting that has to be delivered to her by P is destroyed by fire, she submitted a written stop payment order on the check that she gave to P. Over this, Zebra Bank refused payment to Yeager Bank when it presented this check was clearing.
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