I recently read a case summary, Melley v. Pioneer American Bank (23 Fidcu. Rep.2d 200 - Phila. Civil Div.), where a mother deposited into her personal checking account, wrongful death and survival action settlement checks for two minors. The face of the checks indicated that she held the funds as guardian of the minors (her daughters).
The court held the bank liable for the loss to the minors because the teller was on sufficient notice (based on the face of the checks) that funds deposited were fiduciary funds. Therefore the funds should not have been deposited into a personal checking account. Furthermore, the court stated that the teller had a duty to contact the attorney who issued the checks.
If a bank has a duty to contact a third party in investigating potential fraud, how can a bank successfully obtain the information when the third party may be unwilling or unable to provide it due to the frenzy surrounding the privacy and customer data protection rules?
Also, I just became aware of a situation where a customer is depositing checks, payable to another individual, into his business account. This customer, who is an investment advisor, purportedly has POA over the individual. We do not have a POA document. Even if we did, wouldn't this situation be similar to the court case? If so, wouldn’t we have a duty to investigate?