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Check Payable to 4 People-Liability if Returned?

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Question: 
A check is payable to 4 people, 2 of the payees are our bank customers and have endorsed the back of the check. The other 2 payees came into our branch, signed and cashed the check. If by some chance this check is returned to our bank, who would be liable? We understood that it is always the last signer and the person who received the cash. Is this true?
Answer: 

In this scenario, where four indorsements were required to negotiate the check, each of those indorsers is liable to the bank if the check is returned unpaid. One of your customers would be the most likely party to pursue, but you could go after any one or all of them.

First published on 04/21/2019

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