Question: We know you've written about ambiguously named payees - where there is no "and" or "or", the new UCC says in that case it's "or". We also know that's a change, and that the "old" UCC said it was the other way around. We read your Q & A about the New Hampshire case where the judge ruled the check with ambiguously named payees needed both endorsements in spite of what the UCC said. We're in Maryland, and we just lost the same kind of a case to a judge that came up with the same decision. We know it was wrong. We don't want to take the chance on it happening again. My question is, can we change our policy so that all joint payee checks MUST have all payees' endorsements, no matter if they are payable ambiguously or alternatively? It would be stricter than the UCC. Can we get in trouble doing that?
Answer: My immediate reaction was that you could get in trouble if one of your customers knows the revised UCC and wants to negotiate an ambiguously worded payable check and you refuse to do it. But two of our banking attorney advisors say you can institute such a policy if you choose to do so. You just have to be careful that you apply it consistently - no exceptions. That might be hard to do.
Editor's note: For those who have not read it - the Uniform Commercial Code referred to is:
U.C.C., Article 3 - Negotiable Instruments, Part 1. General Provisions And Definitions:
§ 3-110: Identification Of Person To Whom Instrument Is Payabl
(d) If an instrument is payable to two or more persons alternatively, it is payable to any of them and may be negotiated, discharged, or enforced by any or all of them in possession of the instrument. If an instrument is payable to two or more persons not alternatively, it is payable to all of them and may be negotiated, discharged, or enforced only by all of them. If an instrument payable to two or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrument is payable to the persons alternatively.
BankersOnline is a free service made possible by the generous support of our advertisers and sponsors. Advertisers and sponsors are not responsible for site content. Please help us keep BankersOnline FREE to all banking professionals. Support our advertisers and sponsors by clicking through to learn more about their products and services.
Print Friendly!
Email This Article!
Discuss NOW!