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Patriot Bank v. Navy Federal Credit Union

Virginia Circuit Court
47 U.C.C. Rep. Serv. 2d 662, 2002 WL 481129 (2002)


Thomas Peeso obtained a cashier’s check from Navy Federal Credit Union (Navy) (defendant), payable to Peeso. Peeso indorsed the check over to Nation’s Auto Loan Center (Nation’s Auto). Nation’s Auto wrote its account number at Patriot Bank, N.A. (Patriot) (plaintiff) on the check and deposited the check into its account. Patriot credited Nation’s Auto’s account for the check amount and submitted the check to Navy for payment. Navy refused to pay the check and returned the check to Patriot, stating that Nation’s Auto had failed to properly indorse the check. Peeso asked Navy to stop payment on the check, and Navy did so. Peeso obtained a second cashier’s check from Navy, payable directly to Nation’s Auto. Nation’s Auto deposited the second check in an account at another bank. Patriot tried to reverse the credit that Patriot had given to Nation’s Auto on the first cashier’s check, but Nation’s Auto had already ceased doing business, and Nation’s Auto’s account with Patriot was overdrawn. Patriot sued Navy, arguing that Nation’s Auto had properly indorsed the first cashier’s check and that Navy had wrongfully refused to honor the check upon presentment.

Rule of Law


Holding and Reasoning (Roush, J.)

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