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?

I would like to know if a check is made out to two people and only one person endorses it and deposits it into an individual account, is the bank liable for taking the check with only one signature? Can they hold this check indefinately if both signatures are not on the check? Isin't the teller responsible for the deposit since he/she did not verify the signatures to begin with?

If a check is payable to "A and B" than each must endorse it for it to be properly paid. If it is made out to "A or B" than either can endorse and negotiate the check. If the check is silent and is to "A, B" it is assumed to be "or".

The check shouldn't be held by the bank. It should be processed or returned so that it may be properly endorsed.

What will be the endorsement if the payees name is "cash/ customer name/ bank name" ?

A check payable to "cash" is payable to the barer, whoemever has it. Payable to the customer and the bank is common, as in when you have an insurance check and the bank is the lienholder on the property insured.

But mixing the three makes no sense.