Check Payable to 2 Individual-One Signature Forged

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Question:

A check payable to 2 individuals - Payable as "and". One person forged the endorsement of the other. How much are we liable to reimburse the person that did not sign, Half of the amount since it was payable as "and"or the full amount of the check?

Answer:

Neither of those amounts is accurate. However, it could require the payment of legal fees to arrive at the "correct" amount, and theoretically, that could mean that the full amount of the check ends up being the "bargain" option.

What you'd like to be able to do is get the parties together in a room with documentation of their respective interests in the payment. It could be that the party whose signature was forged would only have received 5% of the total amount. It could be 95%. That's why, when large amounts are involved, these situations can sometimes end up in court where a trier of fact -- judge or jury -- will decide. But that costs money.

If this is a friendly spat -- forgeries usually aren't symptoms of friendly disagreements -- or one for relatively small dollars, you might be able to readily get the parties to agree on what is owed to the complaining payee. If you can get the payees to agree, get their agreement in writing before letting the checks fly.

If not, I suggest you get bank counsel involved.