breach of warranty disclaimer for forged end claim

We submitted a forged endorsement claim to another bank. Today I received by fax a "disclaimer" for the claim stating "claim amount exceeds funds in account". Never had that happen before! Anyone else ever receive one of these? It's not a large amount (under $300).

Unless your bank and the depositary bank are both members of a clearinghouse association that has a rule that changes the effects of the UCC, this "disclaimer" gets a high score on the BS meter. It's an attempt to admit that the depositary bank is responsible for the amount of the check due to the breach of transfer or presentment warranty, coupled with a statement that the bank doesn't want to pay more than what's left in its depositor's account. That's a result of either a misunderstanding of how the UCC works in the case of a forged indorsement, or a bluff, hoping that you'll accept the disclaimer and go away quietly.

This is not to say that the depositary bank has to automatically agree to pay you the claim. It may have reasoned that if they can work the "disclaimer" scheme successfully, you won't bother to pursue your case in the courts.

Candidly, unless you're willing to forge ahead strictly on principle, regardless of the cost, the depositary bank may have called your bluff successfully. You could try small claims court if the depositary is under its jurisdiction, but otherwise, I think you've come to the end of your options.

Thanks John!