Bank not responsible for conversion of two-party check lacking endorsement
In Elsebael v. JP Morgan Chase Bank, the Court of Appeals recently ruled that Morgan Chase was not legally responsible for allowing a check to be processed without a necessary second endorsement. The Plaintiff argued that bank employees "knew or should have known" that the check was being converted because it had been endorsed by only one of the two payees. The Court rejected this analysis, holding that the Plaintiff was required to show that a Chase employee "was aware, or understood, or had no substantial doubt, that the check was missing a required endorsement." Maybe we're missing something here, but does this holding imply that the bank employees aren't required to look at both sides of the check? Is the implication that the bank is only responsible for improperly honoring a check if someone explains to the teller, on presentation, that he is stealing the money? Something about this result just doesn't "add up."