Third party check cashing on a stop payment

[Mdlarson]

What is the name of your state (only U.S. law)? CO

We recently hired our next door neighbor/contractor to landscape our backyard. He in turn hired a subcontractor to do the patio portion. The first day the subcontractor was out, he constructed part of the framing for the patio and then told my husband he needed up front payment of $3000 for materials. My husband paid him not knowing that he was specifically told not to ask us for any money. Our neighbor came home an hour later and was furious to hear that he got a check from us and told us to stop payment on the check, which we did.

Our neighbor fired him and used different people to finish the work on our patio. We paid our neighbor upon completion of our backyard, and the subcontractor contacted us twice, both times we responded that our contract is not with him, it's with our neighbor.

3 weeks later, we get a call from a third party check cashing company saying they paid out our check to the subcontractor and need to collect from us since our bank did not cash our check. We explained that he misled us and we had no contract or agreement with him. We also explained that the subcontractor knew we stopped payment and cashed it anyway. They are claiming that non of this matters and threatening to take us to small claims court.

Do they really have recourse against us, when there was no contract, and this guy misled us into paying him?

 

[sandyclaus]

The check cashing store has nothing to do with your contract (or lack of one), nor any of your dealings with the subcontractor. They were given a check made payable to the subcontractor, and negotiated it in good faith.

You will have to make good on the check with the check cashing store or they can take you to court and get a judgment against you. You, in turn, will have to sue the subcontractor to get him to return the funds he received.

 

[Mdlarson]

That's what I was afraid of. Isn't there something about having made the transaction in good faith that would be protecting us? This guy lied to us and led us to believe we were supposed to be paying him.

Can we wait till they bring us to court and pull the subcontractor into the lawsuit at that time?

 

[OHRoadwarrior]

I would notify the check cashing place by certified mail that the check was obtained by fraudulent representation. I believe that is an affirmative justification to have stopped payment. Advise them they must seek recourse against the contractor. This may require support from your true contractor as to the nature of the fraud the sub tried to commit.

 

[Antigone*]

What is the name of your state (only U.S. law)? CO

We recently hired our next door neighbor/contractor to landscape our backyard. He in turn hired a subcontractor to do the patio portion. The first day the subcontractor was out, he constructed part of the framing for the patio and then told my husband he needed up front payment of $3000 for materials. My husband paid him not knowing that he was specifically told not to ask us for any money. Our neighbor came home an hour later and was furious to hear that he got a check from us and told us to stop payment on the check, which we did.

Our neighbor fired him and used different people to finish the work on our patio. We paid our neighbor upon completion of our backyard, and the subcontractor contacted us twice, both times we responded that our contract is not with him, it's with our neighbor.

3 weeks later, we get a call from a third party check cashing company saying they paid out our check to the subcontractor and need to collect from us since our bank did not cash our check. We explained that he misled us and we had no contract or agreement with him. We also explained that the subcontractor knew we stopped payment and cashed it anyway. They are claiming that non of this matters and threatening to take us to small claims court.

Do they really have recourse against us, when there was no contract, and this guy misled us into paying him?

Hold on a second: Was the check made out to the subcontractor? It sounds to me like you should have paid the contractor? Why did he get your money?

 

[Zigner]

You have to be careful there -

In a case such as THIS, the rules are different. Sandy is correct. OP will need to make good on the check with the check-cashing business and then pursue the funds from the former sub-contractor.

 

[Antigone*]

I would notify the check cashing place by certified mail that the check was obtained by fraudulent representation. I believe that is an affirmative justification to have stopped payment. Advise them they must seek recourse against the contractor. This may require support from your true contractor as to the nature of the fraud the sub tried to commit.

I say this is a bunch of hooey. You are making assumptions on more that one issue here.

Do yourself a favor, Google Holder in Due Course

 

[OHRoadwarrior]

I have. Fraudulent representation is an affirmative defense. They may have to exercise recourse against the sub.

 

[Antigone*]

You have to be careful there -

In a case such as THIS, the rules are different. Sandy is correct. OP will need to make good on the check with the check-cashing business and then pursue the funds from the former sub-contractor.

Sandy is absolutely correct if the check is made out to the sub. The OP makes it sound like his contract is with the contractor so I would think he would pay only his contractor. So, I'm just wondering did he pay the sub?

And yes, OHroadwarrior is full of it.

 

[OHRoadwarrior]

I am not saying that I am not wrong. I am saying it is an affirmative defense and may meet the legal burden under UCC. The sub fraudulently represented the need for OP to pay him the money. When OP discovered the fraud, he put stop payment on check. Contractor promptly fired sub for the fraud. OP xceld check for that reason. Sub intentionally passed a bad check to third party.

 

[Antigone*]

I am not saying that I am not wrong. I am saying it is an affirmative defense and may meet the legal burden under UCC. The sub fraudulently represented the need for OP to pay him the money. When OP discovered the fraud, he put stop payment on check. Contractor promptly fired sub for the fraud. OP xceld check for that reason. Sub intentionally passed a bad check to third party.

YOU DON'T KNOW THAT!!!!! We don't know to whom the check was made out. If the check was made out to the sub then the OP is screwed. You don't know if the check was cashed prior to being fired ~ YOU JUST DON'T KNOW.

Oh and please what the heck is up with the double negative

 

[OHRoadwarrior]

I am going off what OP posted.

 

[Antigone*]

OP, please be wary of that OHroadwarrior is saying to you. He does not have enough information to even point you in the right direction.

Please answer my questions and then we can tell you with more certainty what should be done to correct your issue.

 

[Mdlarson]

Hello, yes, to verify, when our neighbor left our house, the subcontractor approached my husband and told him that in order for the concrete work to be done, we were supposed to pay him up front. My husband wrote the check to the subcontractor. When our neighbor/contractor came back and heard what happened, he told us that the subcontractor was specifically told he was not to get money upfront and had us stop payment. The stop payment was made within an hour of the subcontractor leaving, so it was definitly cashed after the stop payment.

I was hoping that we had the defense of the subcontractor having misled us into writing the check. He knew better and asked us anyway. We unfortunatly didn't know better.

 

[Antigone*]

Hello, yes, to verify, when our neighbor left our house, the subcontractor approached my husband and told him that in order for the concrete work to be done, we were supposed to pay him up front. My husband wrote the check to the subcontractor. When our neighbor/contractor came back and heard what happened, he told us that the subcontractor was specifically told he was not to get money upfront and had us stop payment. The stop payment was made within an hour of the subcontractor leaving, so it was definitly cashed after the stop payment.

I was hoping that we had the defense of the subcontractor having misled us into writing the check. He knew better and asked us anyway. We unfortunatly didn't know better.

It does not matter when the stop was placed in relation to when the check was cashed. The check cashing facility should be held harmless. They have every right to come after you; and if they do so in a court of law, they will win.

You need to make the check cashing facility whole, and then go after the subcontractor in small claims court.