South-Western Legal Studies in Business

No Conviction for Writing Bad Checks So Long as Account Holder Has Check Guarantee Card
Description Appeals court overturned a life conviction for a defendant convicted of writing bad checks. While the defendant had insufficient funds to cover the checks, she had credit with the bank which promised to honor the checks by its check guarantee card. Hence, the check she wrote were covered.
Topic Negotiable Instruments/Commercial Paper
Key Words Bad Checks; Guaranteed Credit; Criminal Violation
C A S E   S U M M A R Y
Facts Goldyn opened a checking account with NFCU in 1987. It gave her a $500 line of credit and a “check guarantee card” which meant that the bank guaranteed any checks she wrote on the account while she had the card. After going through her bank balance and line of credit, she wrote a number of bad checks. She was convicted of five counts of Drawing and Passing Checks with Insufficient Funds on Deposit, a violation of Nevada Revised Statutes 205.130. Because she had been convicted previously of three felonies involving fraud she was sentenced as a habitual criminal to five life sentences. After twelve years, she was released and put on parole. She is a habeas petitioner who is “in custody” while on parole. She sought relief, contending that since the bank was obligated to cover the checks, she cannot have written bad checks. The trial court rejected that petition. She appealed.

Reversed. The statute states that it is violated when “a person … willfully … draws or passes a check … when the person has insufficient money, property or credit with the drawee of the instrument to pay it in full upon its presentation.” Credit means “an arrangement or understanding with a person, firm, corporation, bank or depositary for the payment of a check....” Goldyn did not violate the statute. She has a check guarantee card from the bank that obligated the bank to cover the checks she wrote. The bank honored the checks. Hence, she had sufficient credit to cover the checks she wrote. Her conviction is vacated.

Citation Goldyn v. Hayes, 436 F.3d 1104 (9th Cir., 2006)

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