I recently had my roof replaced following a hailstorm; the contractor has been paid in full and this afternoon I tried to deposit the final check from the insurance company into my checking account. The check was made out to me AND my ex-wife (she signed a quitclaim deed as part of the divorce) AND my mortgage company. I had the check indorsed by a representative of the mortgage company as well as my ex, then attempted to make the deposit.
The bank refused to accept the check, stating that since 1) my ex isn’t on my checking account (fat chance) and 2) they didn’t see her sign it and verify her identity they couldn’t be sure the signature wasn’t forged. They had no concerns about the indorsement from the mortgage company, because it had a stamp and “looked official.”
I’ve never experienced anything quite like this. They told me that unless I get my ex to come to the bank, sign it in their presence, and confirm her identity (fat chance, part 2) I’m out of luck. This is a very small local bank with which I’ve done business for years.
I’m firing them in the morning, after I have a talk with the bank president. I’m certain a national bank will be more than happy to allow me to use the check to open a new account. To be fair I only dealt with tellers and bank officers I’d never met before, but my relationship with this bank has always been cordial.
My question is: Did what they do have any basis in law? Is this covered by the UCC? This is NOT a request for legal advice; I simply want to have an informed discussion tomorrow when I cut them loose.
My wife had a similar experience … My solution: use the ATM to deposit the check and/or deposit by mail. In my case, we never heard anything about it (but we waited a week before drawing on the funds).
Yeah - they are full of it. Its in the UCC. But more importantly, it makes no practical sense what so ever. Tell them to go pound sand and take your business elsewhere.
The bank is correct. They should not be penalized for following the law.
If a check is writen out to you AND your ex-wife, then you AND your ex-wife must endorse the check.
If the check had been written to you OR your ex, or as you AND/OR your ex, then you could have endorsed it on your own.
Section 3-110(d) of the UCC says:
If an instrument is payable to two or more persons alternatively, it is payable to any of them and may be negotiated, discharged, or enforced by any or all of them in possession of the instrument. If an instrument is payable to two or more persons not alternatively, it is payable to all of them and may be negotiated, discharged, or enforced only by all of them. If an instrument payable to two or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrument is payable to the persons alternatively.
(bolding mine)
What you should have done is call the insurance company and explain to them that you’re divorced and need a check made out either only in your name or to you or your ex, which would allow you to deposit the check without her endorsement.
OR - he could have had it endorsed by his ex-wife. Which he did: “I had the check indorsed by a representative of the mortgage company as well as my ex, then attempted to make the deposit.”
Don’t banks have the right to refuse a transaction which they resonably belive may be fraudulent? I would go with the ATM deposit, or have the insurance company re-issue the check.
To the OP: it looks like you got valid indorsements, which converted the draft to bearer paper. As a holder, you are legally entitled to enforce the instrument. However, you are legally entitled to enforce the instrument against the drawee, which is some other bank (probably Bank of America, depending on your insurance company). A third party (i.e. your bank) is under no obligation to accept commercial paper. Imagine if some guy on the street came up to you and gave you a cocktail napkin that said “pay bearer $20.” Now you could certainly give him $20 for it, but you don’t have to. Your bank is stupid not to accept the check, but I know of no law requiring them to take it. They don’t even have to believe it’s fraudulent.
Yes, a bank has the right to do that. However, it varies bank to bank. I know Wells Fargo operates that way. However, Bank of America seems flexible. If I were to go to a teller, I might encounter your situation. However, if I use the ATM, they’ll take multiple payee checks as well as other people’s paychecks, who don’t have accounts there, signed over to me (Hmm…you don’t look Swedish).
I’m in bank operations and security. I comprehended the question. If you didn’t endorse a check in front of me, where I am able to either know you personally, or confirm your ID, you didn’t endorse it.
As far as the bank is concerned, the endorsement by the OP’s ex is not valid because it wasn’t done at the teller window, where her identity could be validated.
In real life, yes, the OP probably could have deposited the check in an ATM, and it probably would have gone through with no challenges. Proof operators are usually fixated on matching the dollar amount on the check with the dollar amount of the deposit entry.
Ultimately, the teller did the correct and legally defensible thing, even if it did annoy a customer. Trust me - I annoy the hell out of people all day long in the name of security and regulatory compliance.
Well, the bank’s concern is that an ex-husband could fake an ex-wife’s signature in order to rip her off, and that the ex-wife will come after the bank for paying him her half of the check. They can’t verify her signature if she’s not an account-holder there.
(NB: I’m not remotely suggesting that the OP is doing anything dishonest. I’m just pointing out what the bank will likely say was its purpose).
Well, I’ve got a new checking account with Chase (along with a free safety deposit box and some other financial goodies) and had the opportunity to discuss the situation with the President of my local bank. He believes his employees did the right thing, and that’s fine - we agreed to disagree. I understand that a $2400 check presents a much larger relative risk to a small bank than to a multinational.
At no time did I think what they were did was illegal, just poor business practice. Perhaps not with regard to risk, but to customer service. I’ve been with the bank for about 15 years and have been an excellent customer. They can’t compete with the big boys on scope of service or technology, so customer service is their claim to fame.
The other two checks my insurance company issued for this claim were happily accepted by my contractor and deposited by him under the same circumstances, and I expected (perhaps naïvely) that the same would be true for me - that my bank wouldn’t think twice about it.
Now I get to play with the Chase iPhone app. I’m itching to try the “deposit a check by taking a picture of it” feature. It won’t be with a third-party check, however…
Perhaps that is your bank’s policy, which is fine, and a bank is certainly allowed to have such a policy. But company policy is not law. The UCC considers signatures presumptively valid, so it is not really accurate to claim that the law requires a signature in your presence.
I called you on reading comprehension, because you seemed to answer the question “can a bank require me to have all payee indorsements if the order is to X, Y, and Z instead of to X, Y, or Z?” Which is the question that someone would think was being asked if someone quit reading the OP after the first paragraph. My apologies if you did, in fact, read the whole OP and decide to answer a different question anyway.
Yeah, that’s a loophole big enough to drive a truck through. I don’t even endorse checks when I deposit them at the ATM. They go through just fine. I’d only expect trouble if I tried to deposit something made out to a name completely different than mine. But, that does sort of bring us back around to the issue of the OP and a check with a payee name that’s not on the account title.
Assume the check was made out to only me and my mortgage company. My mortgage company isn’t on my checking account title; why would the bank allow me to deposit the company-indorsed check into my account?
Given that Chase was willing to accept the check to open a new account and that my contractor had no problems depositing both previous checks, I’m inclined to believe that this boils down to individual bank policy.