...you cancelled the check that he didn't ever cash...
Your reading comprehension sucks: he said that the dealer cashed the check and that he has the cancelled check. I would say the guy owes him $400.
Cancelling a check that has already been cashed seems a bit useless, don't ya think?
I believe he means cancelled by being CASHED.
You seem to want to pick nits on this.
Read it in context, and it's really not too hard to comprehend.
