Chase Bank refused to honor a depositor's check, despite verifying the funds. The payee took the check to a Chase branch and requested a cashier's check for the full amount, but was told the bank would only cash 1/5 of the check. If the payee wanted the rest, he would have to open a Chase account.
Now, a bank may refuse to cash a check when it is issued from a third party or another bank. But never ever have I heard of a bank refusing to cash a check issued from one of its own depositor accounts.
Neither had my credit union, or three friends all of whom work in banking, one of whom is a bank manager.
When the payee informed the check maker (Chase's customer) that his bank refused to honor his check, the account-holder became understandably enraged and is now engaged in the process of terminating his relationship with Chase.