Question: I got a check the other day that bounced. What claims can I make against the person who gave it to me?
Answer: A check is considered worthless if it is drawn on an account with insufficient funds. A check is a draft as defined by statute which is payable on demand and drawn on a bank or a cashier's check or teller's check. It involves an order to pay. A document can be a check even though it is titled something else, such as "money order."
A worthless check is not the same as a check under which the maker arranged for payment to be stopped. A "stopped payment check" is not worthless, but involves a later arrangement under which the maker interfered with the negotiation of the check.
The importance of this distinction is because if you sue to recover on a worthless check, Florida statutes provide that you are entitled to 3 times the amount of the original check, plus the amount of the original check, attorney's fees and court costs. In an action on a stop payment check, you are only able to pursue the amount you are owed.
To recover triple damages on a worthless check, you must first make a written demand by certified or registered mail to the maker or drawer of the check at the address given by the drawer at time the check was issued, or to the drawer's last known address. The notice must follow a statutory form, which advises the drawer he or she has 30 days from receipt of the notice to pay the full amount of the check plus a service charge of $25.00 if the check is no more than $50.00, $30.00 if the check is more than $50.00 but less than $300.00 or $40.00 if the check is for more than $300.00 or 5% of the face amount of the check, whichever is greater. Notice must warn the drawer that unless the payment is made within 30 days, the drawer will be liable for 3 times the amount of the check, payment of the check, court costs, attorney's fees and any bank fees incurred by the payee.
If the maker or drawer was from a corporation or other entity, the check should be carefully reviewed. If the check does not indicate the representative capacity of the signor, both the corporation and the signor may be held liable on a worthless check claim. In one case, the court held that a judgment against the corporation did not preclude judgment against the corporation's president where the representative capacity was not shown on the check. Accordingly, the president could be sued individually, even after court action against the corporation.
The bad check statute requires that the notice be delivered, which means the maker of the check must receive it. There is one exception. If certified or registered mail is refused, the notice requirement is satisfied.
When someone gets a worthless check, they also have the option of filing suit on the underlying obligation. In some cases, the underlying obligation may provide a bigger recovery such as when a check was tendered in compromise of the amount claimed due under a contract.
Although the possibility of collecting four times the amount of the check plus attorney's fees and costs may be enticing, sometimes it is better to not tip off the check writer that you intend to sue. And, because the statute not only requires 30 day notice, but also receipt of the notice, trying to comply with the pre-suit notice requirement can take a lot of time when the check writer is hiding or does not stay at one address.
Intentionally giving a worthless check or stopping a payment with intent to defraud are both criminal actions. Although the prosecutor may seek court order requiring restitution as part of a criminal case, the wheels of criminal justice turn slowly and you might be better served in pursuing suit than waiting to see what the outcome might be in a criminal proceeding. Delay in a collection action is not a friend of the creditor.
The statutory pre-suit notice in worthless check notices is technical. Although most of these cases are straight forward, they can take an unexpected turn or a check writer can raise a novel defense. As in all litigation, cost and benefit of pursuit should be reviewed. I urge you to consult with an experienced attorney as soon as possible. The attorney can advise you on procedures, problems with the case, likelihood of success and estimated cost of collection effort. These are all matters that should be considered before taking the next step.
By: William G. Morris, Esquire