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#1596012 - 08/24/11 07:31 PM REG CC check deposited with missing endorsement.
CARM9 Offline
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A check made payable to two individuals, however, only one endorses the back of the check and then deposits the check into the their individual account. It is identified the next business day and a hold placed on the check for the exception reason that the bank is "unable to verify the endorsement of a joint payee", can we hold the check longer than business days allowed under Reg CC as the joint payee that did not sign the check can come back and make a claim against the bank for up to 3 years?

§ 229.13 Exceptions, 4) For the purposes of this section, a “reasonable period” is an extension of up to one business day for checks described in §229.10(c)(1)(vi), five business days for checks described in §229.12(b) (1) through (4), and six business days for checks described in §229.12(c) (1) and (2) or §229.12(f). A longer extension may be reasonable, but the bank has the burden of so establishing.
Last edited by CARM9; 08/24/11 08:47 PM.
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#1596026 - 08/24/11 07:41 PM Re: REG CC check deposited with missing endorsement. CARM9
Doug Hendrickson Offline
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I doubt that a hold longer than proscribed by the regulation would be considered reasonable in this circumstance.
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#1596058 - 08/24/11 08:18 PM Re: REG CC check deposited with missing endorsement. CARM9
Elwood P. Dowd Offline
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There is no question you could put on an exception hold based on reasonable cause to doubt collectibility if you were unable to verify an endorsement. However, that is not what happened here.

This situation involves a "missing" endorsement. I'm hesitant to say you were entitled to an exception hold because the defect could have been noted with an inspection. However, the same could certainly be said about being unable to verify an endorsement. It is acknowledged that not all holds have to be imposed by the teller who took the deposit.

Unfortunately, even if you did note the flaw and put on a hold at the time of deposit, you could not reasonably stretch it out for the 3 years which the paying bank and the drawer have to come back on your insitution under the model version of the UCC.
Last edited by Ken_Pegasus; 08/24/11 10:43 PM. Reason: Keep seeing the problem differently
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#1596097 - 08/24/11 09:06 PM Re: REG CC check deposited with missing endorsement. Elwood P. Dowd
CARM9 Offline
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Unfortunately the item was deposited at the new image ATM's, process by a third party and sent on electronically to the FED.
Last edited by CARM9; 08/24/11 09:19 PM.
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#1596763 - 08/25/11 08:46 PM Re: REG CC check deposited with missing endorsement. CARM9
John Burnett Offline
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All tech advances come with some new risks. Even RDC at an ATM should have some review procedure for significant items (dollar threshold?) before images are processed for presentment.
Last edited by John Burnett; 08/25/11 08:47 PM.
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#1597085 - 08/26/11 04:23 PM Re: REG CC check deposited with missing endorsement. John Burnett
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Isn't there some recourse to the paying bank for not verifying the endorsement and returning the check to us by the midnight of the next banking day?

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#1597480 - 08/27/11 10:39 AM Re: REG CC check deposited with missing endorsement. CARM9
John Burnett Offline
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The paying bank has a midnight deadline for using the standard return process to bounce the check. However, the presentment and transfer warranties, which cover endorsements, survive the midnight deadline and can haunt the depositary bank for one to three years, depending on where the depositary bank is located (three years in most states). The return process can't be used, but claims without entry are still available, as are the courts.
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