Welcome to the on-line
July - August 2003 issue of the
Community Bankers' Advisor
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. . . . .
The Advisor is
prepared by attorneys at Olson & Burns, P.C. to provide information
pertaining to legal developments affecting the field of banking.
In order to accomplish this objective, we welcome any comments
our readers have regarding the content and format of this publication.
Please address your comments to:
Community Bankers' Advisor
c/o
Olson & Burns, P.C.
PO Box 1180
Minot, ND 58702-1180
olsonpc@minotlaw.com
Also,
visit our web site at:
www.minotlaw.com
The attorneys
at Olson & Burns represent a wide range of clients in the financial
and commercial areas. Our attorneys represent more than 30 banks
throughout North Dakota. |
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You Are Asking . . . .
If a check is made payable to all four owners of a joint account
with the word "and" between each name, does the check have
to be endorsed by each payee?
Answer: Yes. Regarding the word "and" being
used as a connector between payee names, the UCC has a requirement.
Under N.D.C.C. § 41-03-10(4) (UCC § 3-110(d)), "[i]f
an instrument is payable to two or more persons not alternatively, it
is payable to all of them and may be negotiated, discharged, or enforced
only by all of them." Specifically, this would include names being
listed with "and" as a connector because they are not listed
“alternatively.” In the case of several payees joined by
"and," if the financial institution pays the item without
all endorsements there is a possible risk that the payees who did not
sign could later sue the institution. There may be some situations where
the institution decides that the risk involved is minimal, for example,
where the check is deposited to an account held by all payees, or where
the signers have the contractual or other authority to endorse on behalf
of other owners. Consult your counsel as to the possible risks involved
when setting policy.
If a customer presents a check made payable "John Doe
and Jane Doe, Joint Tenants" do both of them need to endorse the
check?
Answer: Yes. Because the drawer put the word "and"
between the payees' names, both must endorse the check. (See our discussion
directly above.) N.D.C.C. § 41-03-10(4) provides as follows:
If an instrument is payable to two or more persons alternatively, it
is payable to any of them and may be negotiated, discharged, or enforced
by any or all of them in possession of the instrument. If an instrument
is payable to two or more persons not alternatively, it is payable to
all of them and may be negotiated, discharged, or
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