Conference 7.286::dcu

Because, strictly speaking, in both cases, the check is not properly endorsed.

In the first case it doesn't make a whole lot of sense, except that many checks
having binding legal agreements on the back as part of the condition of
endorsement.  For example, most checks from insurance companies say that the
amount on the check is a full settlement of the claim.  By endorsing the
check, you are agreeing that you won't come back later and try to get more
money.

In the second case, since the check was made out to party a AND b, it requires
both signatures to be a valid endorsement.  This is done to prevent one party
from getting the check, cashing it, and disappearing with the money.

I agree that it seems bizarre, especially in the case of spouses.

Bob

>Because, strictly speaking, in both cases, the check is not properly endorsed.

So other banks are breaking a law by letting me cash it because it isn't
properly endorsed?   I would think it would not have to be endorsed as long as
the money was ending up in the right hands (i.e., in the account of the person
to whom the check was written).

>having binding legal agreements on the back as part of the condition of
>endorsement.  For example, most checks from insurance companies say that the
>...

This wasn't the case which could clearly be verified by turning the check over
and seeing that there wasn't any such verbage there.


>both signatures to be a valid endorsement.  This is done to prevent one party
>from getting the check, cashing it, and disappearing with the money.

But I'm not cashing it.  I'm depositing it.  A could see their point if I
cashed it.  By depositing it there is a record of the transaction (even if I
withdrawal the same amount the next day, in which case there are two
transactions recorded) and therefore if the other spouse was worried about such
a thing could "catch" the his/her spouse when these unexplained transactions
appeared on the statement.

If I wrote "For deposit only" would they then believe the money was surely
going in the intended place?

I just get sick of the DCU's (imo) excessivly conservative approach to things
(this and holds on large checks, for another example, which was discussed
elsewhere) enough to make banking with them a more hasstle than convenient
sometimes.

                                                               _Mike

    You always know an institution is a poor institution if you ever here
    the phrase:
    
    	"I'm sorry about that, I don't make the rules I only enforce them"
    
    It implies that the staff are not trained well enough. There should
    never be an excuse for the above sort of answer.
    
    Dave

Forgive me, I don't understand the indignation in .2

In .0, two perfectly good questions were raised.

In .1, someone was nice enough to say that they really didn't understand the
policy in the first instance, but gave you a perfectly reasonable (and correct)
answer to the second --- about the requirement for endorsement by both payees
on checks made payable to both.

In .2, it seemed like you were shooting the messenger!  

So, at great personal risk, I offer:             :7)

>>> So other banks are breaking a law by letting me cash it because it isn't
properly endorsed?   I would think it would not have to be endorsed as long as
the money was ending up in the right hands (i.e., in the account of the person
to whom the check was written). <<<

No, it has nothing to do with any law.  It has to do with the Bank's liability
if it turns out that Party B knew nothing about the check and Party A deposits
and then draws out the funds.  The Bank is LIABLE to Party B.  No ifs, ands,
or buts.

If DCU's tellers are more alert than those of another institution, it may be 
that they are better trained.  Would you have preferred to have had the
deposit debited and returned to you for proper endorsement?  That happens,
you know.
And it matters not whether you are trying to deposit it or cash, as I explained
above.

If this is a recurring problem for you, perhaps a rubber stamp bearing:
FOR DEPOSIT ONLY TO THE ACCOUNT OF <husband> AND <wife> BRODERICK # 987654321
would help, assuming it's a joint account.

A customer's ignorance of banking rules, regulations, and practices is no
reason for indignation at the institution or its employees as long as they
act courteously and explain it to you in a friendly manner.
\Gary

>Forgive me, I don't understand the indignation in .2
>...
>In .2, it seemed like you were shooting the messenger!  

I apologize if .2 sounded indignant or was shooting down his response.  .1
brought up a good example of when a problem could be caused.  Thankyou.  I just
thought in that case, whether the situation he mentioned applies or not could
be verified.


>No, it has nothing to do with any law.  It has to do with the Bank's liability
>if it turns out that Party B knew nothing about the check and Party A deposits
>and then draws out the funds.  The Bank is LIABLE to Party B.  No ifs, ands,
>or buts.

Ok, I agree where things can get sticky when there's more than one person's
name on the check.


>If DCU's tellers are more alert than those of another institution, it may be 
>that they are better trained.  

I doubt it's a case of other institution's tellers being less trained.  Like I
said, the teller even said, yes, other banks allow this but not the [Digital]
credit union.  That's why I asked, "What's the difference."  Why can other
banks allow it and the DCU not allow it?

>Would you have preferred to have had the deposit debited and returned to you
>for proper endorsement?  That happens, you know.

I don't understand?  Is the scenario, someone puts money in my account via a
check in my name, and the funds don't get credited until until it gets mailed
to me and returned with a proper endorsement?  Well, if it's that or chase down
the person who still has my undeposited check and deposit it myself (which must
have been difficult else I would have deposited it myself), I'd prefer the
mailed endorsement.

>And it matters not whether you are trying to deposit it or cash, as I 
>explained above.

That seem contradictory?  It seems to me the DCU is saying you need a proper
endorsement whether you deposit it or cash it.  To them it doesn't make a
difference.  I'm claiming there is a difference.

>If this is a recurring problem for you, perhaps a rubber stamp bearing:
>FOR DEPOSIT ONLY TO THE ACCOUNT OF <husband> AND <wife> BRODERICK # 987654321
>would help, assuming it's a joint account.

And this replaces a legal endorsement so the bank is no longer liable???  I
find that real, real hard to believe.  I could have one of those made at the
ACME Rubber Stamp Co. without my wife's consent and then conduct the same
deposit-a-joint-check-than-withdrawal-against-it scenario as before without her
ever knowing (unless she looked at the statement).  By writing "FOR DEPOSIT
ONLY" on it, it seems all I'm am doing is deterring a forgery of my signature
since they'd have to scribble out those words which would look awfully
suspicious.  But I can't imagine how those words have any legally binding
significance (i.e., can release liablilty on the bank's part).

It seems to me that (for the case of depositing a check into someone else's
account) if the name on the check matches the name on the account than
depositing the check into the account is as good as handing the check to the
account owner.  How could anyone show that the bank was liable here when the
bank has in no way allowed the money to fall into the unauthorized hands?  Now,
if they cashed it, that's a different story.

BTW, I've also run across it a couple times in NY (old home) where I asked my
father (who's an attorney) about it and he verified that, yes, such depositis
should be allowed (no endorsements) without any fear of liability on the bank's
part.  And that I was not allowed to do it because of a specific bank policy or
more than likely the teller's ignorance of the finer details who abided by a
more simplistic policy of "ALL checks must be endorsed".  He also said (and I
agree, that it's not a good idea to endorse a check in your name that is to be 
deposited in your account because then it's as good as cash to anyone's hands
into which it may accidentally fall.

>A customer's ignorance of banking rules, regulations, and practices is no
>reason for indignation at the institution or its employees as long as they
>act courteously and explain it to you in a friendly manner.

Fine.  They were courteous, as always, but didn't really "explain" anything. 
They just politely said, you can't do that.  It appeared to be a DCU policy
that other institutions don't all have.  So I thought this conference was a
good place to inquire for an explanation of why I can't do that. 


                                                              _Mike

    What's the difference between the rubber stamp that says
    "For deposit only" and hand printing "For deposit only"?

    I maintain an account for an organization.  The bank told
    me to endorse checks "For deposit only" and include the
    account number.

    BTW, DCU wouldn't let me open an account for this non-profit
    organization even though all members are DEC employees.    

>    I maintain an account for an organization.  The bank told
>    me to endorse checks "For deposit only" and include the
>    account number.

In fact that's a situation similar to mine.  I was trying to deposit checks
made out to an organization into an account of the same name.  I'm an officer
in the organization and want to deposit dues that I received but my name is not
one of the two names (only two allowed) on the account.  

I assume your name is on the account for signatory authorization?  Do they
check that only an authorized person (you) are making the deposit?

BTW, to others, someon on the DCU BOD has contacted me and given me the name of
someone to contact at the DCU (main office at PK05) about my situation.  I'll
post any info I get here...

                                                           _Mike

re .7:

>I assume your name is on the account for signatory authorization?  Do they
>check that only an authorized person (you) are making the deposit?

    Yes, I'm the one who has to sign the checks.  No, anyone can make a
    deposit.  It's pretty hard to steal from an account by making a
    deposit into it.

reply to 197.5 JAZZ::BRODERICK "Just do it!!!" 

>>> Why can other banks allow it and the DCU not allow it?

If I were the management of ANY financial institution, I would not allow it.
I cannot answer why some banks do it.  Those that do take a risk, and there
are even fraud artists who use this scheme.  

Re:  returned deposits:

You endorse check (improperly), deposit it your account, your bank CREDITS
your account, your balance goes up.  Your bank forwards the item, then the
clearinghouse or drawer's bank DISHONORS the check due to improper endorsement,
returns it to your bank.  Your bank DEBITS your account, your balance drops,
they return the item to you for PROPER endorsement.  You endorse it, and the
process starts again.  

It's basically the same process as if you had deposited an NSF (bad) check
into your account.  

In reality, no one looks at signatures and endorsements any more, but 
occasionally someone does and this is actually what happens.  MORAL:  You're
better off to have the teller reject it NOW than to have the system reject
it LATER.

>>> It seems to me the DCU is saying you need a proper endorsement whether 
    you deposit it or cash it.  To them it doesn't make a difference.  I'm 
    claiming there is a difference.  <<<

OK, what's the difference?  The only real difference (assuming that you HAVE TO
HAVE an account at DCU to cash a check there) is timing.  Any time you cash a
check at your bank, you are IN EFFECT using your account to cover that check
in the event that it is dishonored later on.  If you deposit it, you are given
use of the funds, but if there is a problem later (NSF, Stop Payment, etc.),
your account will be debited.

As far as the rubber stamp endorsement is concerned, this is (admittedly) a
grey area, but banks are more likely not to question them.  I'll not defend 
this point vigorously.  It was more of a suggestion.

I'm also not seriously suggesting, as you pointed out, that DCU's staff is any
better trained than anyone else's... I jsut hate to see them singled out for
criticism when it IS the INSTITUTION that sets the policy.
\Gary

>Those that do take a risk, and there are even fraud artists who use this scheme.  

Please explain the risk.

>Re:  returned deposits:
>
>You endorse check (improperly), deposit it your account, your bank CREDITS
>your account, your balance goes up.  Your bank forwards the item, then the
>clearinghouse or drawer's bank DISHONORS the check due to improper endorsement,
>returns it to your bank.  Your bank DEBITS your account, your balance drops,
>...

Please explain how the drawer's bank can expect to verify an endorsement?  They
have no idea who this person is that the check was written to or what the
receiver's signature even looks like!  What do they look for to consider it
properly endorsed?  ...that the name's match?  Any moron could copy the name
from the front onto the back but surely that doesn't indicate the check was
properly endorsed.  If there was some other binding reason for a proper
endorsement (as mentioned before with some insurance claim checks etc.), that
would have to be clearly noted on the back of the check.

The bank that cashes (deposits) the check is the only one who can verify that
it is being endorsed properly, by the correct person (check an ID etc.).  They
must check an ID or know the who the person is who is cashing the check and be
sure that's who's name is on the front of the check in the case of cashing it.

In my situation the account is in the name of an organization.  So how in any
way is the drawer's bank going to know what names are on the account at the
receiver's bank.  They wouldn't know my signature from that of someone whose
name is on the account.  In fact someone in a previous reply said that he has
an account in an organizations name and he endorses the checks "for deposit
only".  Now that makes sense.  Any other signature is meaningless (and looks
improper since it couldn't match the name on the check (the name of the
organization).


>OK, what's the difference?  The only real difference (assuming that you HAVE TO
>HAVE an account at DCU to cash a check there) is timing.  Any time you cash a
>check at your bank, you are IN EFFECT using your account to cover that check
>in the event that it is dishonored later on.  If you deposit it, you are given
>use of the funds, but if there is a problem later (NSF, Stop Payment, etc.),
>your account will be debited.

The diffierence is that, yes, if you cash it, somebody has to cover the check
in case it "bounces" for one reason or another.  And as you pointed out, you
sign the check to tell the bank that your account will cover it.  But when you 
deposit the check this situation DOES NOT OCCUR.  The funds are automatically
held until the check clears!  There is absolutely no reason to give a hoot who
deposited the money, so a signature is useless.

If someone walks off the street and wanted to write me a check for $1000 and
deposit it on my account, I see absolutely NO reason why they should not be
allowed to do it and I'd be pretty upset if my bank wouldn't let the person
deposit it.  It just makes no sense to disallow it!

>I'm also not seriously suggesting, as you pointed out, that DCU's staff is any
>better trained than anyone else's... I jsut hate to see them singled out for
>criticism when it IS the INSTITUTION that sets the policy.

Fine, it's a policy, not an uninformed teller.  So why is it policy?  What is
the risk?  What possible use is the depositor's signature?

                                                              _Mike

FYI,  I just finished talking with someone at the DCU about my situation.  This
person had called the branch office I had gone to investigate the situation.

It seems it was a teller error (misunderstanding).  For some reason, the teller
thought I was going to endorse them.  I'm not sure why the teller thought that
because I just handed them all over and said please deposit them in the XXX
account (where all checks were written to XXX).  I had no intentions of signing
any of them.

The DCU person told me I should now be able to deposit them by merely endorsing
them with "FOR DEPOSIT ONLY" which is exactly how I thought it should have been
handled in the first place :-)  

(Well, one minor difference... I was figuring no endorsement was needed for
deposits, as opposed to using "FOR DEPOSIT ONLY", but I guess the latter does
make more sense because if there is nothing, you can't tell if it was a
deposited check or a cashed check that was inadvertantly unsigned)

                                                               _Mike

    
    I went through this exact same hassle with DCU.  It was also due to an
    organization.  One week I deposited a check in another persons account
    without endorsing it.  The teller had no problem with it.  She said it
    was just like some other checks they handle which are also not
    endorsed.
    
    Two weeks later I went back to do the exact same thing and the teller
    refused to deposit the check (after talking to the branch manager) because
    it was not endorsed.  She said I could transfer money from 1 account to
    another, no problem.  But I wanted a check for receipt purposes.  I
    could so very easily just sign a name before I got to the window and
    they would never know the difference or care for that matter.  I
    requested to speak to the branch manager who was now disallowing what I
    had done 2 weeks earlier.  It did NO good discussing the matter with
    her (Amelia Lopes).  I finally left frustrated and stating that they
    (DCU) were impossible deal with when they can't be consistent from week
    to week.  The branch manager's response was "Then don't bother coming
    back."  If I COULD put the organization account at another institution
    I would GLADLY oblige her.  To me, that statement seemed to sum up just
    how DCU approaches most everything with it's "members" and "owners".
    
    I hope this clarification is officialized in a DCU response to this note
    and circulated to each teller.  It just seems like needless BS to put
    customers through just for the sake of policy.
    
    Phil

re .12:
>            If I COULD put the organization account at another institution
>    I would GLADLY oblige her.

    Why can't you?  DCU wouldn't open an account for my vanpool, so I
    opened a money market account at the Bank of New England.  No minimum
    balance, up to three checks a month, and money market interest rates.
    The only disadvantage is that it's a nuisance to get to the bank for
    deposits (no ATM card).  It was a minor hassle to get a tax number
    from the IRS (the DCU only allows organizations that use Digital's
    tax number).

    Re .13:
    
>   DCU wouldn't open an account for my vanpool ... (the DCU only allows
>   organizations that use Digital's tax number)
    
    I had a similar go-round with DCU with regard to an account I opened as
    trustee for my children.  It turns out that BOTH Massachusetts law and
    the DCU's own bylaws extend membership eligibility to groups (such as
    my trust and your vanpool) of people who are themselves eligible for
    membership.  The rank-and-file DCU employees don't know that, though.

    
    RE: .13
    
    From "Financial Procedures: Digital Clubs and Leagues"
    
    	3. Clubs and/or leagues must open a Digital Credit Union (DCU)
    	   checkingaccount properly authorized by the Corporate Employee
    	   Services & Recreation Manager and a representative of the
    	   Treasury Dept.  The Corporate Tax I.D. Number is only authorized
    	   for DCU accounts.
    

re: .15

Well, it says you have to open it.  It doesn't say you have to use it :-)

Bob

re .15,.16:

    That excerpt from "Financial Procedures: Digital Clubs and Leagues"
    doesn't quite apply to my case.  It's talking about what clubs and
    leagues must do.  My vanpool isn't a club or a league (even though
    it's sponsored and subsidized by Digital, and all riders are Digital
    employees).  We aren't required to have a DCU account; I just thought
    it would be convenient.

    Here are the details of my experience.  I asked at my local branch of the
    DCU whether I could open an account for my vanpool.  I was told that I
    couldn't, so I called DCU HQ.  They said I could, but only if I used
    Digital's tax ID.  They sent me a form to submit to Employee Services.
    Employee Services signed it and passed it on to Finance.  Finance
    rejected it because it didn't fit into any of their categories.

    This is an official response by Mary Madden of the DCU, dated
    20-Nov-1989, that applies to this note topic is included below. See
    note 2.22 for more information. 
    
    Your comments on this response should be posted here or directed to
    to DCU directly at Mary Madden's number (dtn) 223-6735 x207.
        
    Carl Leeber
******************************************************************************
         Recently, there has been some concern regarding the types of 
         check endorsements permitted under checking regulations.  The 
         following will explain, in detail, general information on 
         check endorsements, two party endorsements, third party 
         endorsements and endorsements for deposits to group accounts 
         (club account).  If there are additional questions or 
         concerns, please contact MARY MADDEN at DTN/223-6735 or 
         (508) 493-6735, ext. 207.
         
         A check is a form of a contract (negotiable instrument) given 
         in payment for a service rendered.  The maker promises to pay 
         a certain amount on a specific date to the payee.  The 
         endorsement is a completion of this contract which gives the 
         maker a receipt that the payee has received payment.
         
         The payee of the check has the right to transfer ownership to 
         anyone he/she designates.  This transfer of ownership is 
         accomplished by the payee's endorsement.
         
         An endorsement has legal significance, because the endorser, 
         by the act of signing the endorsemnt, guarantees that he/she 
         is the lawful owner of the check and that he/she knows of no 
         condition which would make the check invalid.
         
                            ALTERNATE PAYEE CHECKS
         
         Where there are alternative payees (John Jones OR Robert 
         Smith), only one of the payees needs to endorse the check.
         
                              JOINT PAYEE CHECKS
         
         When a check is made payable to two parties (eg. husband and 
         wife), it must be endorsed by both payees, even if it is to 
         be deposited into an account where both parties are joint.  
         Before depositing or cashing a check made payable to two 
         parties, we require verification (signatures) that both 
         payees know the check exists.  This procedure protects our 
         members as well as the credit union from fraudulent acts.
         
         Furthermore, any two party check improperly endorsed may also 
         be returned to DCU by the Drawee Bank for "improper 
         endorsemnt," resulting in DCU debiting a member's account for 
         the check's amount until the check was endorsed by both 
         parties then redeposited.
         
         If the funds are no longer in the account, DCU may have a 
         collection concern.  Until we receive proper signatures, the 
         check cannot be redeposited.  This could cause significant 
         losses to DCU.
         
                              THIRD PARTY CHECKS
         
         A personal check that is paid to the order of an individual 
         then endorsed over to another individual is considered a 
         third pary check and will be accepted for deposit only into 
         the individual's account (third party).
         
         Any third party deposit will be subject to DCU's Third Party 
         Check Hold Policy.  According to our UPDATED Regulation CC 
         policy, all third party checks will be held depending on the 
         location of the bank from which the check is drawn.  A third 
         party check of $5,000 or more will be subject to an extended 
         hold of 4 days (local) and 7 days (nonlocal).
         
         In addition, any check written to a corporation, trust or 
         other organization cannot be accepted when it is endorsed 
         over to an individual.  It is necessary that these types of 
         checks be deposited into a corporation, trust or other 
         organization account.
         
                 DIGITAL EQUIPMENT CORPORATION GROUP ACCOUNTS
         
         There are a number of DEC group accounts held at DCU.  DCU 
         has the names of those members authorized to withdraw from 
         this account.  All members of a group account are entitled to 
         make deposits into this account.
         
         For example, DEC has an account entitled ARCHERY CLUB, and 
         Joe Smith is the authorizing signature on the account.  Joe 
         Smith must sign all withdrawals from this account.  Any 
         member of this group may make deposits into this account by 
         endorsing a check with "FOR DEPOSIT ONLY INTO DEC ARCHERY 
         CLUB."  They are, however, unable to withdraw from this 
         account.
         
         
         
         
         MEMBER SOCIAL SECURITY NUMBER
         
         According to the Internal Revenue Service (IRS), DCU is 
         required to report TAX IDENTIFICATION NUMBERS (TIN) on all 
         members to the IRS.  DCU could incur penalties in the amount 
         of $50 per account for failing to adhere to this regulation.
         
         Furthermore, DCU would be obligated to forward 20% of any 
         interest paid on member's without a proper TIN or social 
         security number.  Therefore, we do not accept any new 
         memberships without valid social security numbers or TINs.
         
         
         
         
         
         NEW CAR GUIDE
         
         In the near future, DCU will have available in all branch 
         offices more than one copy of the New Car Guide.  One which 
         will remain in the branch for our lending personnel and the 
         others to be borrowed by the member.
         
         Members are welcome to view this book during branch hours.  
         We require, however, members submit their badge in exchange 
         for the Guide, if they wish to take the book out of the 
         branch.  Once the Guide is returned, we will return the 
         member's badge.
         
         We encourage members to contact the branch office directly as 
         to the availability of the member copy.
******************************************************************************

    Re .18:
    
    Another informative and well-thought-out response.  Mary's on a roll!
    
    I'd like to offer one minor amplification, though, and I trust the DCU
    won't contradict me.
         
>                           ALTERNATE PAYEE CHECKS
>        
>        Where there are alternative payees (John Jones OR Robert 
>        Smith), only one of the payees needs to endorse the check.
>        
>                             JOINT PAYEE CHECKS
>        
>        When a check is made payable to two parties (eg. husband and 
>        wife), it must be endorsed by both payees, even if it is to 
>        be deposited into an account where both parties are joint.  
>        Before depositing or cashing a check made payable to two 
>        parties, we require verification (signatures) that both 
>        payees know the check exists.  This procedure protects our 
>        members as well as the credit union from fraudulent acts.
    
    When a check is made payable to two parties as JOINT TENANTS
    (variously abbreviated and possibly also specifying "with right of
    survivorship"), then EITHER ONE is fully empowered to cash it.  It
    should be treated as ALTERNATE PAYEE rather than JOINT PAYEE.

    
    RE: .18
    
    	(Group accounts)
    
    >    Smith must sign all withdrawals from this account.  Any 
    >    member of this group may make deposits into this account by 
    >    endorsing a check with "FOR DEPOSIT ONLY INTO DEC ARCHERY 
    >    CLUB."  They are, however, unable to withdraw from this 
    >    account.
    
    Can somebody also endorse a check "FOR DEPOSIT ONLY INTO JOHN DOE
    ACCOUNT"?  DCU allows electronic transfer from 1 account to another. 
    Is this type of endorsement allowed when a receipt (check duplicate,
    cancelled check) is desired?
    

        re .18 and group accounts - how is the account number
        generated for such an account?  If the Digital employee
        already has a DCU account, the group account can't simply use
        his/her badge number (I assume that account numbers are unique
        :-)).
        
        Could the same algorithm be used to allow an individual member
        to have more than one account?

Re; -1
You can effectively have two accounts at the same time.  Open one in your 
name with your spouse as co-owner and another in your spouses name with you
as co-owner.

        That's a good idea - if one has a spouse (or other family
        member that can also be a member).

If you've run out of family members, you can have more than one checking 
account in your same account.  The first is account 5 and the second is
account 51.  I don't know where the numbers go from there.

One advantage of having two checking accounts on the same account number
is that you can transfer money between them at the DCU machines, without
writing and depositing a check.

	Larry