What are a bank’s obligations with respect to stale checks? Should Bank One have contacted RPM before paying the check? Why or why not?
RPM Pizza, Inc., issued a check for $96,000 to Systems Marketing for an advertising campaign. A few days later, RPM decided not to go through with the deal and placed a written stop-payment order on the check. RPM and Systems had no further contact for many months. Three weeks after the stop-payment order expired, however, Toby Rierson, an employee at Systems, cashed the check. Bank One Cambridge, RPM’s bank, paid the check with funds from RPM’s account. Because of the amount of the check, and because the check was more than six months old (stale), the signature on the check should have been specially verified according to standard banking procedures and Bank One’s own policies, but it was not. RPM filed a suit in a federal district court against Bank One to recover the amount of the check.