|
 |
Home >> Checks/Money Orders >> Checks You Received
Endorsing a Check with Two Payees
I think I found the answer to my question on your website where you discuss two payees without the word "and" in between, but I'm wondering if you could direct me to the law that governs this. I am in NYS and my sister is in CA. Each of us received a check from a brokerage house made out to "Jane Doe" "Sally Doe" (using our real names, of course). There was no "and" or "or" in between and one name was below the other. My bank gave me a hard time about it, but did eventually accept it. My sister's bank refused to accept it, and she had to have another check sent, made out only to her. I am sure this situation must be covered in the UCC, probably in Negotiable Instruments, but for the life of me I can't find it. Can you lead me to it? If I recall correctly, "and" means we would both have to sign, "or" means either of us, and it seems that neither an "and" or "or" is read as an "or" - is this right?
|
|
 There is some real irony in your question, because New York, which has not yet adopted the 1990 amendments to the Uniform Commercial Code (UCC), doesn't address the issue of ambiguity in section 3-116 of the New York UCC. According to the New York UCC, payees are either named alternatively, or they are not. The official commentary to the UCC and court interpretations are left to address the gray area.
California, on the other hand, has adopted the 1990 amendments, and, according to section 3-110 of their UCC, payees listed ambiguously should be considered named alternatively. The problem is in defining what "alternatively," "not alternatively" and "ambiguous" mean.
On a more practical level, rules on multiple payees in the UCC only really matter if someone with a financial interest in a check makes a claim that his or her missing endorsement was required for a valid negotiation. If you want to interpret that as "no harm, no foul," I wouldn't disagree. In fact, the UCC is most often a set of rules for figuring out who's responsible when things go wrong, rather than a law that mandates that things be done a certain way.
Also on a practical level and directly related to your question, just because the UCC says that someone should be able to negotiate a multiple payee check with only one endorsement won't make it happen. The prospective transferee (your sister's bank, in this case) can refuse to accept any check for deposit, and certainly can insist on getting both payees' endorsements as a condition of accepting the check for deposit. So on the two sides of this issue, the fact that you were able to convince a New York bank to accept your two-payee check without your sister's endorsement doesn't mean that the bank will lose money on the deal even if the endorsement isn't legally complete in New York, and your sister's bank isn't wrong for having insisted on both endorsements or the replacement, one-payee check.
Published on BankingQuestions.com 8/01/08
|
| |
|
Accounts
Article
Q&A
Podcast
Video
Blog
Discussions
PDF
Powerpoint
