Because you have the guarantee of the depositary bank, we do not believe it is necessary to require endorsements with signatures or account numbers. When a depositary bank sends a check written by one of your customers for collection, that bank is warranting to you (and to your customer) that it has paid the check to the payee, or that it has deposited the check in the payee’s account. 810 ILCS 5/4-205(2). If your customer complains that the check wasn’t paid to the correct person, any liability should fall on the depositary bank. However, you may want to review your account agreements, in case you have agreed to review checks of certain amounts or payable certain customers for proper endorsements.
We often receive checks drawn on our business accounts that are endorsed with “for deposit only,” without a signature or the customer’s account number. Should we be paying those checks?
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