A customer of ours wrote a check payable to two individuals separated by "&". Of course only one person signed it and deposited it at their bank. Now, the other party is contacting our customer saying that they didn't receive their share of the money.
I have done some research and see everything about a warranty breach and having longer than the 24 hours to return the item because of the warranty breach.
That being said, what should I get from the customer for this and how do I go about going after the BOFD for the warranty breach. Our bank is completely imaged so I don't even have the original check to send to them. I guess I am saying that I need start to finish help!!

Your customer would request an "Affidavit of Forged Endorsement" from the injured party. They would present this to you and you would use it as a basis to send a "Photo in Leiu of Original" along with the affidavit to the BOFD as a without entry claim based on your assertion of a warranty breach. (Don't try to return it past your midnight deadline through the Fed.)

The BOFD should then investigate the claim and either send you a cashier's check or a letter explaining why they believe the claim is invalid.

Thank you Brian!!

Don't be surprised if and when the BOFD rejects your claim. The UCC provides that a joint payee whose required endorsement is missing, is entitled to recover the amount of their interest in the check (provided they make a timely claim under the applicable state law). The problem in joint payable check cases is determining the amount of each payee's interest in the check.

The complaining payee and the payee who deposited the check will often have a different opinion on what each party's respective interest is in the check. If the BOFD cannot determine the complaining payee's interest in the check, it may deny the claim on this basis.

Also, the UCC provides the complaining party must bear the loss to the extent the warranty claim is presented more than 30 days after the discover of the breach of warranty and such delay prevents the BOFD from recovering funds that otherwise would have been in its customer's account. Expect the BOFD to ask questions on when your customer discovered the other payee deposited the check without its endorsement.

We haven't had one of these in a while and the last one we had was for a check that was 18 months old. The depositing bank sent us a cashier's check for the full amount. We credited it back to the maker's account to have them reissue a new check(s). The payee that did not endorse the check had gone back to the maker (our customer) initially so we were dealing with our customer and the payee on the matter (but only gave status info to our customer - they could tell the payee the status if they wanted to)

Thank you all for the wonderful information. Thankfully the check paid last month so it isn't that old.