My daughter mailed a check to a landlord for a vacation cottage in February. The landlord told her in May that he did not receive it. Her bank investigated and showed the check had been cashed at another bank. The other bank confirmed that the check had been cashed there. Now they are looking for the endorser. It is now October and the bank that cashed the check has not returned the money to my daughter. They claim they know the individual who cashed it, and are charging her with theft. My daughter borrowed the money from me. Is not the bank that cashed the check responsible for returning the money (with interest)? What do we do to rectify this matter immediately?
The ordinary course of events in such cases is for the intended payee (the landlord) to provide the drawer of the check (your daughter) with an affidavit that the payee neither received nor endorsed the check, and received no benefit from it. That affidavit is routed to the paying bank (your daughter's bank), which enters a warranty claim against the depositary bank (the bank that did, in fact, receive the check for deposit or to be cashed). That bank is liable to your daughter's bank for presenting a fraudulently-endorsed check for payment, regardless of whether it is able to recover the funds from the forger or thief. Once the warranty claim is paid, the check drawer gets reimbursed, and a new check can be issued to the correct party.
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The ordinary course of events in such cases is for the intended 