In this case, Randy Bocian, doing business as Zurich Ltd., deposited a $28,800 check payable to his business into his account at First of America Bank.

The bank immediately honored the deposit and credited the account without waiting for the check to clear the issuing bank. In fact, First of America paid outstanding checks for Randy Bocian from this deposit.

First of America was not aware that the party who issued the check had placed a stop-payment on the draft.

Consequently, the check did not clear the drawer bank and First of America subsequently offset Bocian’s account. Since First of America had already paid out over $12,000 against the $28,800 deposit, First of America filed an action against Bocian for the balance owing to the bank.

Bocian argued that First of America should absorb the loss since it did not wait for the check to clear the issuing bank.

The court found that First of America acted in good faith and without knowledge of the stop-payment order; the court ruled that the bank had only provisionally credited Bocian’s account, and when the deposit did not clear, the bank was entitled to recover its loss from Bocian.

The court granted summary judgment in favor of First of America for the monies advanced to Bocian on his deposit. First of America Bank-Northeast Illinois v. Randy Bocian d/b/a Zurich Ltd., Appellate Court of Illinois, No. 2-92-0663.

Author: Charles R. Harroun, Attorney at Law