Where does a financial institution stand when funds made payable to a business account are used in a personal account?

Tellers are supposed to look at checks before depositing them to ensure that they are deposited to an account of the payee & that endorsements are correct.
Now I'm not saying that our tellers are perfect. There are probably countless times in which someone did not look at the payee and deposited checks into the wrong account. Customers try to sneak past the rules all the time.

It happens most often when we have John Doe who does some eletrical work. His customer writes a check to John Doe's Electrical Company. John Doe is attempting to deposit this check into his personal account.
A teller who is paying attention will inform the customer that we will not deposit the check into his personal account because it is made payable to a business. We encourage him to open his business account with us or he can have people write checks to him personally.

Search BOL for this and look in the InfoVault as well. It has been discussed many times and is generally a bad idea to allow it to happen for several reasons.