Printable Format84-3-411. Refusal to pay cashier's checks, teller's checks and certified checks. (a) In this section, "obligated bank" means the acceptor of a certified check or the issuer of a cashier's check or teller's check bought from the issuer.
(b) If the obligated bank wrongfully (1) refuses to pay a cashier's check or certified check, (2) stops payment of a teller's check, or (3) refuses to pay a dishonored teller's check, the person asserting the right to enforce the check is entitled to compensation for expenses and loss of interest resulting from the nonpayment and may recover consequential damages if the obligated bank refuses to pay after receiving notice of particular circumstances giving rise to the damages.
(c) Expenses or consequential damages under subsection (b) are not recoverable if the refusal of the obligated bank to pay occurs because (1) the bank suspends payments, (2) the obligated bank asserts a claim or defense of the bank that it has reasonable grounds to believe is available against the person entitled to enforce the instrument, (3) the obligated bank has a reasonable doubt whether the person demanding payment is the person entitled to enforce the instrument, or (4) payment is prohibited by law.
History: L. 1991, ch. 296, § 48; February 1, 1992.
KANSAS COMMENT, 1996
This section is identical to the 1995 Official Text except that the lower case roman numerals have been replaced by arabic numbers. This section is new, but was derived from 84-1-207. Historical case and statutory references can be obtained from the 1965 and 1983 bound volume 7 of the Kansas Statutes Annotated.
This section will make it more expensive for a bank to resist payment of cashier's checks (84-3-104(g)), teller's checks (84-3-104(h)) and certified checks (84-3-409(d)) it has sold to remitters (an owner in possession of an instrument purchased payable to others, 84-3-103(11)) and others who indorse a bank instrument to pay an obligation. The issue comes up when the remitter, because of fraud or failure of consideration, asks the bank to stop payment on the instrument. If the "obligated bank" (subsection (a)) (issuing bank cashier's checks and teller's checks or acceptor for certified checks) complies with the customer's request, it is liable for interest and expenses for the wrongful refusal to pay the instrument. In addition, it is liable for consequential damages from nonpayment after it has received notice of the circumstances which would cause them. These damages may include attorney fees if otherwise permitted according to Official Comment 2.
Under subsection (c), the bank is not liable for all of these damages if nonpayment of the instrument is caused by a suspension of payments, or the bank's own personal, reasonable defense, or there is an issue regarding whether the claimant is the person entitled to demand payment, or, finally, the payment is prohibited by law.
As a result, a disappointed or defrauded customer who has used bank paper in a transaction is not likely to persuade the bank to dishonor the bank's own obligation. The customer will be forced to get an injunction pursuant to 84-3-602(b)(1), a difficult procedure. Consequently, paying with bank paper is nearly as final as paying with cash.
Revisor's Note:
Former section 84-3-411 was repealed by L. 1991, ch. 296, § 111 and the number reassigned to the current text.