96-3

May 28, 1996

Re: ________ v. Travelers Express Co.

Dear Mr. _______:

This is in response to your letter of April 4, 1996.

Your letter implies that you considered our response to _______’s letter of March 27, 1996, to be somewhat vague regarding interpretation of Financial Code Section 33524. In order to resolve any ambiguity, please be advised that in our view, Section 33524 provides that a person licensed under the Payment Instruments Law (Division 16 (commencing with Section 33000) of the Financial Code) is liable with respect to each payment instrument issued by it which is sold in California as the maker of a promissory note would be liable under the Uniform Commercial Code (“UCC”).

In addition, you raise the issue of whether, for purposes of Section 33524, the payment instruments at issue in the subject litigation are “sold in this state.” In our view, the issue of whether a sale has occurred is not governed by the Payment Instruments Law. Accordingly, we do not believe it would be appropriate for us to opine on this matter, especially considering that the issue is currently pending before the Superior Court.

You also raise the issue of whether a licensee may stop payment on a payment instrument issued by it through its California agent. As indicated above, pursuant to Section 33524, that is a question to be decided under the UCC rather than under the Payment Instruments Law. Accordingly, that question too is more appropriately addressed to the court than to us.

Finally, we appreciate your bringing to our attention the practices of ________.

If you have any questions, please feel free to contact me at (415) 263-8512.

Very truly yours,

CONRAD W. HEWITT
Superintendent of Banks

By

THOMAS M. LOUGHRAN
Senior Counsel

TML:lca