Cashing A Check For An Authorized Signer
by Mary Beth Guard, BOL Guru
Question: Let's say I am the owner of the account, my husband is an authorized signor and POD. My husband comes to cash a check. The bank will not cash the check because it is not his account and if the check came back they would have no recourse. Is it legal to charge back a check if the bank cashes a check in good faith because my husband is an authorized signer on an account at the bank?
Sounds a little confusing, we are having major discussions at our bank and desperately need some input on this issue.
Answer: It would be likely be a violation of your contract with your deposit account owner to charge the bad check that you cashed for the authorized signer and POD beneficiary back to the deposit account owner's account. The POD beneficiary has no present interest in the account and an authorized signer is merely an agent for the owner. The agent is supposed to be conducting transactions for the benefit of the owner -- not for his own personal benefit. By placing someone on the account as an authorized signer, the customer is not according the authorized signer the rights of an owner.
One way to get around the problem is for the authorized signer to endorse the check over to the account owner. The account owner should then endorse the item. Then, if it is returned, you can go after the person (the account owner) under their endorser's liability.
The original version appeared in the November 2002 edition of the Oklahoma Bankers Association Compliance Informer.
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!
