We have a customer who is a retired attorney and no longer maintains a business or IOLTA account. He wishes to deposit a Treasury check made payable to “John Doe ATTY FOR Client Doe.” The description on the check reads “SOC SEC for INS,” and our customer says the funds are his fees for representing a client in a Social Security dispute. Is our customer’s signature enough to endorse this check, or is the client’s signature required to complete the endorsement? We would typically require a check like this to be deposited into an IOLTA account. Generally, when a check is made out to Person A for Person B, what type of endorsement is required?

Jul 30, 2020

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We believe only the attorney’s signature is required to endorse this check.

The Social Security Administration (SSA) has published guidance stating that when it issues fee payments either by check or direct deposit to attorneys who have represented Social Security claimants, the check may read, for example: “John Altmeyer ATTY FOR James Crandle.” Since the SSA authorizes attorneys to receive fees for representing SSA claimants, we believe the check is payable to the attorney, and only his signature is necessary to endorse the check.

Generally, we believe you may treat a check payable to “Person A for Person B” as payable to either party. The Illinois Uniform Commercial Code (UCC) provides that when a check is made payable to “a person described as agent or similar representative of a named or identified person, the instrument is payable to the represented person, the representative, or a successor of the representative.”

The UCC also requires that when a check is payable to two or more persons not alternatively (such as to Person A and Person B), it must be endorsed “by all of them.” However, the UCC commentary provides that in cases where it is ambiguous whether a check is payable to multiple payees alternatively, “persons dealing with the instrument should be able to rely on the indorsement of a single payee.” Consequently, we believe either Person A or Person B may endorse a check made payable to “Person A for Person B.”

For resources related to our guidance, please see:

SSA, Direct Deposit Factsheet (“The Social Security Administration (SSA) issues fee payments either by check or direct deposit to individuals who have represented Social Security claimants. . . . For example, a check issued to an attorney may read ‘John Altmeyer ATTY FOR James Crandle’ . . .”)

Illinois UCC, 810 ILCS 5/3-110(c)(2) (“If an instrument is payable to: . . . (ii) a person described as agent or similar representative of a named or identified person, the instrument is payable to the represented person, the representative, or a successor of the representative . . .”)

UCC § 3-110 cmt. 3 (“Subsection (c)(2) . . . merely determines who can deal with an instrument as a holder. It does not determine ownership of the instrument or its proceeds. . . . Under subsection (c)(2)(ii), if the instrument states that it is payable to Doe, President of X Corporation, either Doe or X Corporation can be holder of the instrument.”)

Illinois UCC, 810 ILCS 5/3-110(d) (“If an instrument is payable to 2 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 2 or more persons not alternatively, it is payable to all of them and may be negotiated, discharged, or enforced only by all of them. If an instrument payable to 2 or more persons is ambiguous as to whether it is payable to the persons alternatively, the instrument is payable to the persons alternatively.”)
UCC § 3-110, comment 4 (“The third sentence of subsection (d) is directed to cases in which it is not clear whether an instrument is payable to multiple payees alternatively. In the case of ambiguity persons dealing with the instrument should be able to rely on the indorsement of a single payee. For example, an instrument payable to X and/or Y is treated like an instrument payable to X or Y.”)