Can a bank refuse to accept a check for deposit to "A & B" where A has endorsed for deposit to B's account, and B is a customer of the bank and endorses the check? The bank's premise is that because A is not on a joint account with B at B's bank, the bank has no duty to accept the check for deposit. This not a question of a hold on the funds. The bank refuses to accept the endorsed joint check for deposit unless both payees are joint account holders at the bank. Is there any legal basis for the bank's position?
Yes, the bank can refuse to accept the check for deposit, since it can refuse to accept any check for deposit. When a bank takes a check for deposit and transfers it in the process of getting it presented for payment, the bank provides a warranty that all signatures on it at the time the bank itself endorsed it, are both genuine and authorized. That means the bank is guaranteeing the endorsement of "A" when it has no ability to verify either the authenticity of the signature or, if made on behalf of an entity, the authorization behind it.
A bank might accept such a check for deposit to "B"'s account if "B" is a substantial depositor with ample balances and the ability and willingness to absorb the loss if A's endorsement proves problematic and the check is returned, which can happen in many states as long as three years later. The legal basis for the bank's position is that there is no requirement that it accept the check for deposit.
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Yes, the bank can refuse to accept the check for deposit, since it can refuse to accept any check for deposit. When a bank takes a check for deposit and transfers it in the process of getting it presented for payment, the bank provides a warranty that all signatures on it at the time the bank itself endorsed it, are both genuine and authorized. That means the bank is guaranteeing the endorsement of "A" when it has no ability to verify either the authenticity of the signature or, if made on behalf of an entity, the authorization behind it.