|
 |
Home >> Accounts >> Business Accounts
Teller Questions Bank 'Policy'
I'm a teller that just transferred from a large town to a small town, same bank company. There are a lot things that are different at the small town branch - seems like they make up some of their own rules. Is it illegal to deposit a check made out to a business into a personal account, or would it just be a bank policy not to do that?
|
|
 Usually this is a matter of bank policy, but there are some legal considerations, too. For example, there would be nothing legally wrong with depositing such a check in an individual account if the business is a sole proprietorship and the depositor is the owner. The bank might not want a business operated out of a personal account, and it certainly can require such a customer to use a business account, but it's a policy decision.
If the business is an entity, it would be legal for the business to endorse a check over to an individual, and for the individual to deposit the check to his or her account. However, the individual's bank would not be able to verify the authenticity of or authorization for the endorsement of the business, and that can create liability for the bank for up to three years long in most states.
Suppose that a bank's customer, Samuel Jones, is the president and treasurer and sole stockholder of SJ Manufacturing, Inc. The company receives a $50,000 check from a third party. Samuel endorses the check over to himself and deposits it to his individual account. There has never been a board meeting of SJ Manufacturing, Inc., at which its board authorized Samuel to endorse checks payable to the company and do anything with them other than deposit them to the company's accounts. Two weeks after he deposits the funds, SJ Manufacturing, Inc., declares bankruptcy, and the trustee in bankruptcy discovers that $50,000 is missing. When he tracks it down, he figures out that Samuel converted the funds to his own use. Now creditors of SJ Manufacturing and the trustee in bankruptcy, have a legal claim against Samuel and against the bank for allowing the conversion. This is why banks have policies against the practice and often tell customers it's against the law just to deflect arguments.
Published on BankingQuestions.com 1/14/09
|
| |
|
Accounts
Article
Q&A
Podcast
Video
Blog
Discussions
PDF
Powerpoint
