Topic: Authorized Signers
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One of our corporate customers asked us over the phone to remove one of the authorized signers from their account but has not returned the updated signature card and corporate resolution. Can we delete the designated individual as a signer from the account, or are we required to wait for the signed documents?
We believe that it is a best practice to wait until your bank at least has a copy of the corporate resolution reflecting the removal of the designated individual as a signer from the corporate account before removing the individual as a signer. Ultimately, this is a matter of bank policy if your account agreement…
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Our bank opened a joint account with right of survivorship, and we added another as an authorized signer on the account (although we ordinarily allow authorized signers only for individual accounts). Both owners have died, and there is one payable-on-death (POD) beneficiary on the account. Who should receive the funds?
We believe that the POD beneficiary should receive the funds. An authorized signer’s authority to sign on behalf of an accountholder is governed by agency law. Under Illinois law, an agency relationship terminates when the principal (the accountholder) dies. Consequently, we believe that the authorized signer’s authority expired when the accountholders died. Additionally, we note…
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How should customers who use both foreign and English spellings for their name endorse checks? For example, if a customer’s given name is Wiktor, but they also go by “Victor” and they have a check made out to “Victor Smith,” should they endorse the check as “Victor Smith”? Or, should the customer endorse the check as Wiktor Smith, a/k/a Victor Smith?
We believe your customer may endorse the check as “Victor Smith” or as “Wiktor Smith” — or they may sign both names. The Uniform Commercial Code (UCC) provides that an “instrument is payable to the person intended by the signer even if that person is identified in the instrument by a name or other identification…
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When a customer presents a check made out to “John Doe, Successor Trustee,” can John Doe endorse the check and deposit it into his personal account? The check does not identify a specific trust, but since it refers to a “Successor Trustee” does it identify a fiduciary role and indicate that it should be deposited into a trust account? The customer stated it is a distribution payable to him, not the trust.
Yes, we believe that John Doe may endorse a check payable to himself as trustee and deposit it into his personal account, and your bank would likely be protected from any potential resulting liability under the Fiduciary Obligations Act (FOA). The FOA generally shields banks from potential liability that may result from allowing a trustee…
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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?
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…
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When an individual or joint account has an authorized signer and the account owner (or joint owners) want to remove the authorized signer, should we require the account owner only to sign a new signature card, or should we close the account and open a new one with a new account number? We are concerned about a former authorized signer using the account number to try to get a counter check.
If your account agreement does not address the process for removing an authorized signer, whether to require only a new signature card or to close the account and open a new one is a matter of bank policy. Given the concern about a former authorized signer using the account number after their removal, closing the…
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In August of 2016, our customer (Jane Doe) deposited a check made out to “Jane Doe AND Mary Doe JT TEN” into her account. The back of the check was stamped with our bank’s stamp, but it was not endorsed by Jane Doe or Mary Doe. Mary Doe recently asked us for information about the check, which we did not provide since she is not our customer. We are aware that she also went to the maker of the check, and the maker did not help her either. What is the timeframe for making a claim related to an unauthorized endorsement? Can we be required to reimburse the check?
We do not believe your bank could be held liable to Mary Doe for reimbursement of the check, since it appears that the three-year statute of limitations on claims for conversion has passed — unless your bank was found to have fraudulently concealed the conversion. Under the Uniform Commercial Code (UCC), when a check is…
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If a corporate resolution states that only one signature is required to open a deposit account or a CD on behalf of the corporation — regardless of the number of authorized signers listed in the resolution — does that mean any one of the authorized signers can come into the bank and sign the CD agreement on behalf of the corporation?
Yes, we believe that if customer with multiple authorized signers has a corporate resolution authorizing any of the authorized signers to open a certificate of deposit (CD) account, any one of the authorized signers may sign a CD account agreement on behalf of the customer — provided that this would not be inconsistent with the…
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Is there a resource you can suggest on how individuals and businesses should endorse checks?
Generally, an individual should endorse a check made out to them by signing their name on the back of the check in the area designated for endorsements. For businesses, an owner or an authorized signer on a business account should endorse a check made out to the business by writing the name of the business…
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If a person is a signer on a representative payee deposit account (opened for the purpose of receiving disability benefits for an individual lacking legal capacity) and has no other accounts with our bank, should we treat that person as a new customer when they open a new deposit account for themselves? We would like to know for CIP and Regulation CC (new account hold) purposes.
If your bank reasonably believes that you know the true identity of the signer on the representative payee account, we believe they can be treated as an existing customer who would not be subject to your CIP requirements when they open an account for themselves. However, in our view the person should be treated as…