Bank A accepts several checks for deposit from a business customer with the business customers deposit stamp on each check.

Problem arises when it is not noticed that one of the checks is payable to an unknown individual who has not endorsed the item over to the business.

The check in question then clears the maker's bank B and is paid to bank A's clearings.

The maker discovers that his check was credited to the business and not to the designated payee and also finds out the payee was not even aware of the transaction and received no funds.

Maker's bank B refuses to credit maker's account and then debit bank A's account telling maker (bank B's customer that he has to take up the issue with Bank A's business depositor as the check has already been paid. This even though the payee never endorsed the item or even received the item. The check was for $100.00 and apparently neither bank or the business depositor looked for the endorsement.

Don't banks have a liability in this situation?