## Facts

- Entech Personal Services, Inc. maintained an account at JPMorgan Chase Bank, N.A.
- On August 12, 2002, Entech issued a $200,000 check payable to Betty Crawford, drawn on Entech’s Chase account.
- That day, Crawford presented the check to Chase, and Chase honored it by issuing Crawford a $200,000 Chase cashier’s check in exchange.
- On August 19, 2002, Entech filed for bankruptcy and requested that Chase stop payment on the original Entech check; Chase stopped payment and recredited $200,000 to Entech’s account.
- On August 21, 2002, Crawford deposited the cashier’s check at her Florida bank.
- When Crawford’s bank later presented the cashier’s check to Chase through the collection process (around August 24 or 26, 2002), Chase dishonored it and returned it unpaid.
- Nearly six years after the dishonor, Crawford sued Chase in federal court seeking to recover $200,000.
- The district court dismissed under Rule 12(b)(6), concluding Chase’s obligation on the original check had been discharged and any claim on the cashier’s check was time-barred; Crawford appealed.

## Issues

1. Whether Crawford stated a viable claim against Chase based on Chase’s post-issuance stop-payment of the original Entech check and recrediting of Entech’s account.
2. Whether Crawford’s claim based on Chase’s dishonor of its cashier’s check was barred by the applicable UCC three-year statute of limitations.

## Decision

- The Sixth Circuit affirmed the dismissal.
- Chase discharged its obligation on the original Entech check when it honored the check by issuing a cashier’s check to Crawford; later actions regarding the original item did not create liability to Crawford on that original check.
- Any claim to enforce payment of the cashier’s check accrued upon dishonor in August 2002 and was barred by the UCC three-year limitations period because suit was filed nearly six years later.

## Legal Principles

- A drawee bank’s obligation on an item is discharged when it pays the item; issuing a cashier’s check in exchange for the presented check constitutes payment that discharges the bank’s obligation on the original check.
- After discharge of the original check, the payee’s rights, if any, depend on the instrument received in exchange (here, the cashier’s check), not on the original check or the drawer’s account.
- A cashier’s check is a draft drawn by a bank on itself and represents the issuing bank’s primary obligation to pay according to the law governing negotiable instruments.
- An action to enforce liability based on dishonor of a cashier’s check is subject to a three-year UCC statute of limitations (as applied under Michigan law in this case).
- A cause of action for dishonor accrues when payment is refused; filing beyond the limitations period warrants dismissal.

## Conclusion

The court held that Chase’s issuance of a cashier’s check discharged any obligation on the original customer check, and Crawford’s separate claim based on dishonor of the cashier’s check was untimely because it was brought well after the UCC’s three-year limitations period had run.


Crawford v. JPMorgan Chase Bank, N.A., 425 F. App’x 445 (6th Cir. 2011)