Answer:
This situation is too "fact sensitive" to be responsibly answered in a forum such as this. Refer the matter to your attorney.
You correctly note that your employee made at least two mistakes, failing to obtain an endorsement ("For Deposit Only" amounts to words of restriction, not an endorsement) and putting an unendorsed check payable to two parties in an account owned by only one of them.
My father was a banker and once said to me "As long as I still have the money, I 'm not wrong yet." That is the only good thing about your situation. If the amount of the funds merits the action, your attorney may advise you to sue both husband and wife, pay the funds over to the court and then walk out the room leaving the judge to decide ownership. If your bank gives the funds to one of them, it will be left to deal with the other, but have only its own pocket from which to draw any additional funds.
First published on BankersOnline.com 10/1/01
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