Question & Answer

Question: We had a customer call us with a problem with one of their checks. They had received their statement, and the payee on one of the checks claimed he never got the check. There were two endorsements on the back, and the check had been deposited in another bank. The payee claimed his endorsement, the first one, had been forged.But to complicate matters, my bank paid the check when it came in with no signature. Evidently our customer had not signed the check before he mailed it to the payee.Who is liable for the check? Our customer wants his money back.

Answer: Both attorneys we checked with agreed the financial institution that accepted the check for deposit has first liability. By accepting the check, they guaranteed the endorsement of the payee. If the payee has signed an affidavit of forgery, stating they did not endorse the check and received no benefit from the check or the proceeds, the endorsing bank must reimburse the maker of the check.The fact that the check was negotiated without a signature does not enter into the matter. The maker wrote and delivered the check, and intended that it should be paid to the proper payee. It is a secondary claim.

Copyright © 1991 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 2, No. 10, 11/91