Missing Endorsement Liability
by Sam Ott, BOL Guru
QUESTION: I have a question about Endorsements on checks: If there is no endorsement on the back of the check drawn on Bank A in the amount of $20,000 and it is payable to Mary Doe deposited at Bank B in Oklahoma do I return it for lack of endorsement? I thought there was a law passed a few years back that any check with an Oklahoma bank of first deposit stamped on the back you did not have to get the payee's endorsement unless it was a two party check or payable to a business. The Okla. bank automatically guarantees the endorsement. Have all the states adopt this ruling?
ANSWER: The section of the UCC you are referring to is 4-205 which provides that the depositary bank warrants to collecting banks, the payor bank or other payor, and the drawer that the amount of the item was paid to the customer or deposited to the customer's account.
You may also want to read a discussion by Mary Beth Guard regarding "Deadline For Returning A Check With Missing Endorsement".
First published on BankersOnline.com 1/7/02