We issued a joint check to a subcontractor and his supplier with 'and' between the names. The subcontractor stamped the check 'for deposit only'. His bank took it and ours cleared it. The subcontractor did not pay the account to whom the funds were obligated. Can we hold his bank liable for those funds?
Your claim should be against your own bank for paying the check without the second endorsement. Before you can make that claim, however, you will need to obtain an affidavit from the supplier that it did not receive the check, did not endorse the check, received no benefit from the check, and remains unpaid. Give your bank a copy of that affidavit when you ask for reimbursement. You need to act promptly.
Your bank will then assert a warranty claim against the bank that took the check for deposit to the subcontractor's account, and that bank will have the right to recover the funds from the subcontractor. If the subcontractor in the meantime satisfies its obligation to the supplier, the parties will all be satisfied, and you can avoid all the hassle.
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Your claim should be against your own bank for paying the check without the second 