Checking Endorsements
by Mary Beth Guard and John Burnett Guru BIOS Question: In checking for endorsements, I have read that it is the bank of first deposit’s responsibility to
obtain proper endorsement. Our customers have a responsibility also to examine their own checks. We do not, however, provide our customers with a back of
their check, only a front image, so how can our customer be responsible? Isn’t the responsibility back on the drawee bank in that case?
Answer: Under UCC §4-205, when a customer delivers a check to his bank for deposit without indorsing the check, the bank is presumed to have good title and
to have warranted that it gave credit to its customer. If your customer (the drawer of a check) has any reason to believe that the payee of one of his checks did
not receive it, he can request a copy of the front and back of the check to determine if the payee indorsed.
If the payee failed to indorse and persists in claiming non receipt of the check, the payee can sign an affidavit
to that effect which will work its way back to the bank of first deposit, under a warranty claim. The drawee bank is liable to its customer for the validity
of the transfers prior to payment, but it benefits from the warranties made by the presenting and collecting banks.
The original version appeared in the September/October 2004 edition of the Oklahoma Bankers Association Compliance Informer.
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