First, we must emphasize that we cannot tell you whether you are right without hearing the other side’s arguments. We can only explore the topic generally from a halachic perspective, and we will not get into certain legal questions that may differ from case to case and jurisdiction to jurisdiction. On a practical level, we will share our preliminary opinion about scenarios in which we think you should follow Shimon’s request and others in which we think you have the right, according to the details you provided, to refuse to pay and instead seek proper dispute resolution.
In general, the halachic status of checks is subject to serious debate. There are three basic approaches: 1) Giving a check is considered payment.[1] 2) A check is like a promissory note to the recipient of the check and to additional parties who receive it thereafter.[2] 3) A check is only a request of the bank, unless instructed otherwise later, to give money to the one who holds it.[3]
These different approaches can affect many legal questions. In our general context, according to approach #3, one can cancel, for a good reason, checks that he has already given; doing so is more difficult according to approaches #1 and #2.[4] In your case, according to #3, Shimon, with whom you had no direct dealings, ostensibly has no claims against you, but only against the person who gave him the checks.
However, based on the way checks are commonly used in practice and the legal systems we are aware of, we believe that a check should be treated as a promissory note.[5] Consequently, one may not cancel a check once it has been given, except to prevent its illegal use. You feel that your neighbor has, in fact, done just that by not following the conditions you set out for the use of your checks. We cannot investigate why he did not follow your arrangement, whether he still deserves your help,[6] or whether you can be morally expected to provide that help. We will deal only with the monetary halachic legality.
In the case of checks that Reuven gave to Shimon before you ended the arrangement, you clearly are obligated to allow payment to Shimon. First of all, at the time Reuven was making legal use of the checks, as was Shimon, you became obligated to pay Shimon. Furthermore, you apparently wrote the checks as a way of convincing Shimon and others to give Reuven products on credit. In other words, your promise to pay Reuven’s bills, by means of your checks, secured loans for him. This makes you an arev kablan,[7] a strong type of guarantor, who agrees to pay the creditor even if the borrower is able to pay himself.[8] Although one who promises to be a guarantor can back out of his promise, that is only possible before the loan based on his guarantee takes place. [9]
The situation regarding the checks that Reuven used after you told him to stop doing so is complex. Reuven, in effect, stole your checks and “sold” them to an unsuspecting Shimon in return for the goods he gave Reuven. The general rule is that if a buyer had no reason to suspect he was getting a stolen object, when the owner comes to retrieve it, he has to reimburse the buyer for his purchase.[10] This practice was instituted to prevent uncertainty in the markets (takanat hashuk). Although the takana does not usually apply to stolen documents,[11] it does apply to a mamrani (equivalent to an open or transferable check).[12] Thus, at first glance, the takana would require you to pay Shimon for the money he lost by accepting your checks. (If Reuven used your checks to pay past debts to Shimon, the takana does not apply, and you would not be required to pay Shimon.[13])
On the other hand, the takana requires payment before one extracts his object from the buyer. It apparently does not stop you, the owner of the bank account, from preventing Shimon from extracting money from you based on a stolen check.[14]
Other legal and moral factors may play a role here, but we have set out the basic halachic principles.