Opinion ID: 523260
Heading Depth: 2
Heading Rank: 3

Heading: Stopping payment on the $25,000 cashier's check

Text: 25 On April 29, 1986, upon learning that South Mill was making demand on the original letter of credit and refusing to make any further shipments of mushrooms, Garden Fresh contacted the Bank to determine if payment could be stopped on the $25,000 cashier's check. Pankonin spoke with Jensen, who entered a stop payment order on the cashier's check. 26 The district court found that, under Minnesota law, the Bank was entitled to stop payment on the cashier's check if South Mill was not a holder in due course. Seman v. First State Bank, 394 N.W.2d 557, 560 (Minn.Ct.App.1986). The court concluded that South Mill was not a holder in due course and that therefore the Bank could assert any defenses it had against South Mill. As a defense, the Bank asserts failure of consideration because the Bank issued the cashier's check with the agreement that shipments to Garden Fresh would continue. When South Mill refused to make further shipments, it failed to provide the agreed-upon consideration for the cashier's check. The district court agreed and held that this provided a defense to South Mill's claim for wrongful dishonor of the cashier's check and, therefore, dismissed South Mill's claim. 27 South Mill argues that the Bank did not bargain for the continued shipments and contends that failure of consideration is a defense which only Garden Fresh can assert. In the alternative, South Mill claims that the consideration for the cashier's check was the release of the shipment of mushrooms on April 26, 1986. Thus, South Mill asserts, neither the Bank nor Garden Fresh can claim a failure of consideration. 28 The district court found that the defense of failure of consideration was the Bank's defense and not a Garden Fresh defense which the Bank was asserting. We agree with the district court that the Bank bargained for continued shipments to Garden Fresh and that this defense was the Bank's to assert. See State Bank v. American Nat'l Bank, 266 N.W.2d 496 (Minn.1978) (holding that a bank can assert the defense of failure of consideration if the defense is the bank's rather than the customer's and if the person against whom the bank is asserting the defense is not a holder in due course). Because we agree that South Mill was not a holder in due course and that South Mill did not provide the bargained-for consideration, the Bank was within its rights to stop payment on the cashier's check. Furthermore, we find that the cashier's check was not issued solely to ensure release of the April 26 shipment, but to ensure further shipments as well. Therefore, we affirm the findings of the district court on this issue.