Pub. 8 2013-2013 Issue 5

January | February 2014 19 Extraordinary Service for Extraordinary Members. ous that the court created without any guidelines. In reality, the bank not only would have to inquire, but also would have to be able to document that upon inquiry the person was properly granted authority to receive cash or purchase cashier’s checks using such check payable to the bank. You can see the obvious impossibility of documenting such inquiry. So, in summary, the bank cannot take a check payable to the bank and deposit it into an account of any party but the maker because of UCC § 3-307. The bank cannot take a check payable to the bank-in-exchange for cash or cashier’s checks because of the court-created “common law.” Banks should require all checks made payable to the bank to be applied to the account owner’s debt to the bank. This applies whether the check is from a corporation, LLC, partnership, trust, IRA, club, association, or almost any other kind of account. It also applies when a check is drawn on an individual’s account if someone other than that individual is presenting the check. For instance, if a check is drawn on Mr. Smith’s personal ac- count made payable to the bank but is presented to the bank by Mr. Smith’s son, then the same law applies. Because the presenter is a representative acting on behalf of Mr. Smith, the bank could have liability to Mr. Smith if Mr. Smith’s son uses the check to purchase a cashier’s check and then uses the cashier’s check to benefit someone other thanMr. Smith. For more information, call Kansas Bankers Surety Co. at (785) 228-0000. A bank can take a check payable to the bank from a cus- tomer if it is used for the benefit of the account owner, such as payment of a loan, tax deposit, or purchase of items a bank sells. For a customer to receive cash back or purchase cashier’s checks from a bank, the customer should make the check payable to “Cash” or payable to the person presenting such check. It is also acceptable to make the payee “Purchase of Cash from ABC National Bank” or “Purchase of Cashier’s Checks from ABC State Bank.” Though it seems logical that cash or cashier’s checks were items sold by a bank and a bank should be able to ac- cept checks payable to the bank for the purchase of cash or cashier’s checks, the courts have ruled that such logic is not only incorrect but results in negligence of the grossest kind. It is best to heed the rulings of the court. Therefore, we highly encourage banks to implement a rule that tellers are ABSOLUTELY PROHIBITED from accepting checks payable to the bank except for payment of a debt the account owner owes to the bank. 