Lost or Stolen Checks
by G. Bradley Hargrave, Esq.
One who loses a check, or has it stolen, may still enforce its payment. UCC [Rev.] Section 3-309 states that a person not in possession of a check may enforce its payment provided that (i) he had it in his possession and was entitled to payment at the time the loss occurred, (ii) its loss was not due to its transfer or lawful seizure and, (iii) its unavailability is due to its destruction, irretrievable loss or theft.
In order to have a judgment on a lost check entered in one's favor, a few evidentiary hurdles must be cleared. First, the term(s) of the check, and the right to receive payment, must be proved. (This might be achieved by the introduction of a photocopy of the check or invoice of the underlying transaction, as well as by credible testimony that the check was delivered as payment). Second, satisfactory evidence must be offered to establish that the claimant cannot reasonably obtain possession of the lost item. Finally, the court must be convinced that the drawer of the check is adequately protected against any double payment which might occur by reason of the claim of another to the lost item. (In the event that the check was payable to bearer, establishing "adequate protection" might pose some significant problems, as anyone in possession of the item can likely enforce its payment. Lost items payable to order stand a significantly better chance of being enforced).
While there is little case law involving this fairly new UCC section, a considerable number of cases have considered its relatively similar predecessor. In those cases, the courts have appeared quite willing to enforce payment of the lost item. Accordingly, one who finds himself in a "lost check" situation is urged to take the necessary steps to enforce payment.
