Irregular Checks Problems Arising in the Daily Routine of the Average Bank Illustrated and Explained Classic Reprint

Excerpt from Irregular Checks: Problems Arising in the Daily Routine of the Average Bank Illustrated and Explained

With the checks the officers of the bank have supplied answers to their own prob lems. The examinations have, up to the present time, been purely a matter of disci pline within the bank. The officers of the Seaboard, however, are willing to furnish such facilities as they may have to further the work of education among bank em ployees, and at the request of the Institute submit the answers following as their per sonal interpretation of the problems involved in the checks under consideration. It is not assumed that the judgment of the Seaboard officials is any better than the judg ment of the average of experienced and conservative bankers. The solutions of the various problems contained therein are given from what the Seaboard Bank considers the standpoint of safe and conservative banking, coupled with the desire to serve the interest of customers as far as possible, but, of course, for obvious reasons, cannot in dicate the particular discretion that would be used in each individual case.

Under the Negotiable Instrument law of New York, which governs also in many other States, the paying bank has recourse to the Clearing House Bank to which it pays the money, and to all other indorsers, excepting only as to the drawer's signature, for which the paying bank is alone responsible. In the absence of restrictive indorse ments, the collecting bank is absolutely liable for forgeries and all irregularities, even though its ordinary Clearing House stamp should not appear on the check, as it has been held that the fact of the demand and acceptance of payment by a bank carries with it an applied warranty of the genuineness of the instrument in all respects, excepting, as above stated, as to the signature of the drawer. From this condition of the law, re garding the liability of indorsers, it may be seen that wide discretion may be used by the paying bank in regard to irregular indorsements. Many of these irregularities will be found upon examination to be perfectly innocent and would not in any way invali date the instrument in which they appear.

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