Answer:
The payee has a claim against your customer. They would make this claim by completing an affidavit of forged endorsement. Your customer in turn has a claim against you and would provide the payee's affidavit as evidence that the check was not properly negotiated. You would then make a without entry claim citing breach of presentment warranties against the bank of first deposit supplying the original check or a certified copy of it and the payee's affidavit.
First published on BankersOnline.com 11/7/11