My father has always been in the habit, when writing a cheque, of writing on the back “for deposit only.” If it was a cheque to his father, for example, he would add the account number – “for deposit only in account no. XXXXXX.”
I told him that my understanding (from my commercial paper class) was that actually cheques, as negotiable instruments, weren’t supposed to work this way and that such instructions could be legally ignored by banks.
Indeed, once when depositing such a cheque from my father, I decided I wanted some of it in cash and the bank teller told me just to strike out the “for deposit only” when I indorsed it.
Now, he has started writing “for deposit only after positive identification.”
So far as I understand, the indoser need only strike out such an instruction. Is this correct?
In general, I guess what I want to know is whether the person writing a cheque can put such restrictions on its use; can a valid indorser strike such instructions; and what would a bank do when confronted with such a situation?