A customer purchased a cashiers check from our bank. A couple of weeks later he came in and said the check was missing we completed a affidavit for missing insturments. During our research we were able to determine that the check had been cashed by a bank in Richmond. We made a copy of the check and contacted the customer. His endorsement was forged and there was a second endorsement. The customer reconize the second endorsement (that of his former spouse. Our bank has returned the check to the paying bank as a forged item. Two questions first, since the check was cashed by the bank in Richmond is it this banks responsibility to take legal action and second, when must we refund the amount of the check to the customer,(time frame).

The bank of first deposit guarantees endorsement, it is up to them as to what action they take. I would ask for a notarized affidavet of forgery attached to a copy of the cashier check before I would make a refund to your customer. You are not under any time frame except reasonable, it may vary from state to state it is covered under UCC.

The bank in Richmond will probably be asking for the signed forgery affidavite from your customer. They may not accept the retun without it.

If there is money in an account of the endorseing party at the bank in Richmond they will charge it to the account and you may not ever hear from them again. In any event they collect from the party they negoiated the check for, or its their loss. If they collect they may not take any legal action. Its their call.

Ask yourself how well you know your customer? and What kind of balances does he carry with you. Check the laws in your state but as the Cashiers Check is drawn on a account of the bank and not the customer, you may be able to take up to 30 days before reimbursing. This makes sure you don't get any surprises from the Richmond bank.

Your customer can file a complaint and if he and ex are still fighting its one more thing to squabble about.

Should have added, It sounds like this was a paid item. If you returned it as a collection item, rather than through transit, make sure the Richmond bank has remitted payment to you.