[CLC-Discussion] Contractor Check "Seized" by CBP

[Gibbons, Michael]

      The check is a negotiable instrument and liability of the maker of the check is governed by the UCC.  The stop payment order only extends between your client and its bank and obligates the bank not to pay the instrument against which the stopped payment order has been issued.  However, the stop payment transaction doesn't serve to insulate the maker of the check from liability to a third party who is a holder in due course.  Under Fla. Stat. s. 673.3021(3)(a), a party who takes an instrument by "legal process" (presumably US Customs seizure) is not a Holder in Due Course UNLESS their predecessor in interest was a Holder in Due Course.  Although the original payee fraudulently obtained the second instrument issued by your client,  it would appear that the instrument or check at issue was obtained originally by the payee in good faith for value and thus the payee was likely a Holder in Due Course at the time of the Customs seizure.

      Just some thoughts but I'm a construction lawyer so I can't warrant the accuracy of this analysis.

    

Michael R. Gibbons
Shareholder
Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
215 N. Eola Drive
Orlando, FL 32801
Phone: 407-418-6378
Fax: 407-843-4444
email: michael.gibbons at lowndes-law.com
website: http://www.lowndes-law.com

        

-----Original Message-----
From: clc-discussion-bounces at lists.flabarrpptl.org [mailto:clc-discussion-bounces at lists.flabarrpptl.org] On Behalf Of Charles B. Hernicz, Esq
Sent: Wednesday, June 04, 2014 4:49 PM
To: clc-discussion at lists.flabarrpptl.org
Subject: [CLC-Discussion] Contractor Check "Seized" by CBP

OK, I'm not too proud to admit that this is the first time in nearly 30 years of practice that this issue has hit my desk (such a protected existence I've led).  My GC client issued payment to a sub for work performed for $9,994 on April 4, 2014.  A few weeks letter, the sub called and said he had lost the check and asked for a new check to be issued.  The GC checked its bank records, the check had not been paid, so they put a pay hold on that check and reissued the check to the sub on May 5, 2014 (annotating on the check that it was a replacement for the lost check).
Yesterday the GC receives a letter dated June 2 from the US Customs and Border Protection saying that on April 5, it seized the check for $9,994 to the sub and the check is subject to forfeiture for unlicensed money transmitting.  The letter has a laundry list of options: Petition, offer in compromise, abandon, court action, release on payment, take no action.  That check was cancelled IAW law and is now worthless, right?  Can anyone help??
Much appreciated.

Chuck

Charles B. Hernicz, Esq.
Board Certified in Construction Law by The Florida Bar           
Hernicz Legal Services, P.L.
15854 Bent Creek Road
Wellington, FL 33414
Telephone: (561) 753-7511
Facsimile: (561) 753-7082
Chernicz at HerniczLegal.com

 


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