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#99242 - 07/22/03 01:45 AM Is account number an endorsement?
Sam Ott Offline
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Sam Ott
Joined: May 2001
Posts: 3,573
Norman, Ok, USA
A check payable to company A for $2000 is written on an account at bank A. Company A stamps check with their bank B account number and for deposit only. The check is deposited in bank B and sent to bank A. Bank A refuses check for missing endorsement. Who is correct?
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Operations Compliance
#99243 - 07/22/03 05:07 AM Re: Is account number an endorsement?
Don_Narup Offline

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Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
Sam,
The endorsement must contain the name of the payee. The account number and for deposit only makes it a restricted endorsement.
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#99244 - 07/22/03 12:59 PM Is account number an endorsement?
elcinoca Offline
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Joined: Jan 2002
Posts: 537
Elizabeth City, NC
Details, details, I want details!

What type of check was it Sam? Would the type of check make a difference Don?

I am researching a New Jersey case determined under the UCC in which the court held, in part, "that a signature used to endorse a check may take many forms and need not be a signed name; and holding that the entry of a deposit account number on the back of a check was a sufficient signature because; and in keeping with the electronic age, it is the numbers which have the primary significance."

I just don't get it anymore.

MarkB

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#99245 - 07/22/03 01:38 PM Re: Is account number an endorsement?
complyguy Offline
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complyguy
Joined: May 2001
Posts: 494
PA
My "Brady on Bank Checks" says that two pre-UCC cases reached different conclusions about an indorsement consisting of numerical symbols.

It then says that "An indorsement for deposit followed by the account number of the named payee was said to have been sufficient, even though the payee did not sign his own name." The case was Knauf v. Bank of La Place.

I'm no operations guru, but I believe you'd have to check to see whether your state adopted UCC-3 in its entirety or made amendments before you use another state's court case as a precedent.

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#99246 - 07/22/03 01:57 PM Re: Is account number an endorsement?
elcinoca Offline
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Joined: Jan 2002
Posts: 537
Elizabeth City, NC
The case was Spevack, Cameron & Boyd v. National Community Bank. I can't find the case summary. However, the case was cited by our state Banker's Association's legal counsel with regard to acceptable indorsments in North Carolina.

I've looked on www.FindLaw.com and have not had much success.

MarkB

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#99247 - 07/22/03 02:22 PM Re: Is account number an endorsement?
Don_Narup Offline

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Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
Bank B guaranteed the restricted endorsement of the Payee. and the check should have been accepted by bank A. It doesn't matter that the payee name was not part of the endorsement as Bank B assumes all liability as to the endorsement.

The bank could process the check without the endorsement of the payee, by simply endorseing the item with a bank stamp indicating the check was deposited to the credit of the named payee. Bank A should accept that endorsement as well.

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#99248 - 07/22/03 02:36 PM Re: Is account number an endorsement?
QuestionQuest Offline
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Joined: Jul 2003
Posts: 234
Not to be too picky, and I know the interpretation of the rules have gotten rather loose and sloppy over time, but, at least in the La. UCC which, I believe is uniform, the definition of indorsement is as follows...

(a) "Indorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of the instrument, or (iii) incurring indorser's liability on the instrument, but regardless of the intent of the signer, a signature and its accompanying words is an indorsement unless the accompanying words, terms of the instrument, place of the signature, or other circumstances unambiguously indicate that the signature was made for a purpose other than indorsement. For the purpose of determining whether a signature is made on an instrument, a paper affixed to the instrument is a part of the instrument.

I would argue that the operative term is signature.
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#99249 - 07/22/03 03:02 PM Re: Is account number an endorsement?
Don_Narup Offline

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Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
Given the circumstances presented in the original question I'll stick with my previous response. However,the kicker here is the maker of an item can require the personal endorsement of the payee and request the item be returned for an endorsement that includes the payee signature.

There are variations in acceptable endorsements in that corporations do not manualy endorse every check with a signature. An endorsement stamp with name, account number and for deposit only is also acceptable. Its the banks endorsemnt after the payee endorsement that guarantees all prior endorsements regardlees of their form.





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