The only issue in this case is whether Union Bank by its own initiative can stop payment on a personal money order it had issued in exchange for a hot check and, thereby, cause Sequoyah Bank, a holder in due course, to bear the loss. Under these circumstances the loss must be borne by Union Bank which issued the negotiable instrument to be circulated in commerce.
We do not decide the question of whether the purchaser may stop payment, but we do hold that after the sale of a personal money order, the issuing bank cannot stop payment on the instrument.
A personal money order is issued with unfilled blanks for the name of the payee, the date, and the signature of the purchaser. Only the amount is filled out at the time of issue, usually by checkwriter impression as was done in this case.
The Uniform Commercial Code apparently did not directly contemplate the use of money orders and made no specific provision for them. Mirabile v. Udoh, 399 N. Y.S. 2d 869 (1977). It was recognized in Mirabile that it is the custom and practice of the business community to accept personal money orders as a pledge of the issuing bank’s credit. We may consider this custom and practice in construing the legal effect of such instruments. See Ark. Stat. Ann. § 85-1-103 (Add. 1961).
Appellee relies on the cases of Garden Check Cashing Service, Inc. v. First National City Bank, 25 A.D. 2d 137, 267 N.Y.S. 2d 698 (1966), aff’d. 18 N.Y. 2d 941, 223 N.E. 2d 566, 277 N.Y.S. 2d 141 (1966) and Krom v. Chemical Bank New York Trust Co., 313 N.Y.S. 2d 810 (1970), rev’d. 329 N.Y.S. 2d 91 (A.D. 1972) which held that a purchaser of a personal money order may stop payment on it. However, the only cited case to specifically address the issue of whether the issuing bank, on its own initiative, may stop payment on a personal money order is Rose Check Cashing Service, Inc. v. Chemical Bank N.Y. Trust Co., 244 N.Y.S. 2d 474, 477 (1963). In holding that the issuing bank could not stop payment and therefore must suffer the loss the court stated:
All of these differences between the instrument at issue and an ordinary check would seem to indicate that the bank would honor the order to pay no matter who signed the face of the instrument, assuming of course an otherwise valid negotiation of the instrument.
In the instrument in suit, the drawer purchases the instrument from the bank. The transaction is in the nature of a sale. No deposit is created. The funds to pay the instrument, immediately come within the bank’s exclusive control and ownership. . . .
The bank’s contention that the instrument is a check is inconsistent with its own acts. The bank (drawee) stamped “Stop Payment” on the instrument in suit on its own order. Nowhere in the Negotiable Instruments Law is there any provision that a drawee [bank] may “Stop Payment” of a check unless ordered to do so by the drawer.
Appellee also denies liability on the instrument based upon Ark. Stat. Ann. § 85-3-401 (1) which states that “No person is liable on an instrument unless his signature appears thereon.” Subdivision (2) of this same section provides that a signature may be “any work or mark used in lieu of a written signature.” The authenticity of the instrument involved here is not in question. The issuance of the money order with the bank’s printed name evidences the appellee’s intent to be bound thereby. Mirabile, supra.
Appellee also relies on Ark. Stat. Ann. § 85-3-409 for the proposition that it is not liable on the personal money order since it did not accept it. In our opinion, however, the appellee accepted the instrument in advance by the act of its issuance. Rose Check Cashing Service, Inc. v. Chemical Bank New York Trust Co., 252 N.Y.S. 2d 100 (1964).
The personal money order constituted an obligation of Union from the moment of its sale and issuance. The fact that Union was frustrated in retaining the funds because instead of cash it accepted a check drawn on insufficient funds is no reason to hold otherwise. We note by analogy that the Uniform Commercial Code on sales, Ark. Stat. Ann. § 85-2-403 (1) (b), provides that a purchaser of goods, who takes delivery in exchange for a check which is later dishonored, transfers good title to the goods.
Union placed the personal money order in commerce for a consideration it accepted as adequate and was, thereafter, liable on it. Banks are not allowed to stop payment on their depositor’s checks and certainly should not be allowed to stop payment on personal money orders. See Note, PERSONAL MONEY ORDERS AND TELLER’S CHECKS: MA VERICKS UNDER THE UCC, 67 Colum. L. Rev. 524 (1967).
Reversed.
Holt, Dudley, and Hays, JJ., dissent.