Question: Recently I paid an insurance premium by check. The insurance company informed me that my bank had refused to honor my check. I asked that they return the check to me, and I took it to the manager of the local branch. "I see what happened," he said. "The check was torn slightly when the insurance company opened your envelope. Our automatic equipment couldn't read the code numbers in the bottom left hand corner, so the check was rejected."
Did the bank have a legal right to refuse to honor my check? If so, why? If not, why not?