Yes. If your customer (the “drawer”) has properly stopped payment of a check drawn on his or her account, you should not pay the check even if a holder in due course presents the check for payment. Notwithstanding the general rule that a holder in due course takes a negotiable instrument free from all contrary claims and defenses, the funds in your customer’s account belong to your customer, and the mere act of writing a check does not assign those funds to another person. In other words, the payee of a check or a successor holder in due course has no claim against the bank on the funds in the drawer’s account until the check is finally paid or certified. Having said that, the drawer of the check is not protected from claims made by the currency exchange, nor is a payee or other previous holder in due course who may have presented the check to the currency exchange.

However, the answer is not the same for a cashier’s check. The purchaser of a cashier’s check has no legal right to place a stop payment order on it. Only a “customer” who draws a check on the customer’s account is entitled to stop its payment, and in the case of a cashier’s check, the “customer” is the bank that issued the check. There may be times when the bank may want to stop its own cashier’s check, such as when it knows of or suspects fraudulent or other criminal activity. But a bank that wrongfully refuses to pay its cashier’s check will be liable to a holder in due course for the amount of the check, as well as the holder’s expenses and lost interest due to nonpayment, and, in some cases, for consequential damages as well. Consequently, as a general rule, a cashier’s check should not be subject to a stop payment order. There are complicated exceptions to this general rule, however, and when faced with this question, we advise you to consult with your bank counsel.