Legal Question in Banking Law in Pennsylvania

Re: Third Party Check

You asked about a check endorsed to a third party.

From the limited facts that you have presented it would appear that the bank should have deposited the checks into the mother's account.

The debt to the bank seems to have had no relation to the mother and therefore the bank would not be able to secure payment from the mother.

It is easy to understand the bank's rationale but that does not make it correct. Legally the bank had no right to collect payment from the deposited funds.

The bank has probably exposed itself to a claim under both state and federal banking law and regulation. Though damages would be limited either to the actual damage or a statutory penalty if one is applicable. The bank would also be subject to potential regulatory action if this matter was discovered by report or in an audit.

Again, this is an analysis from a very limited set of facts.

Regards,

Roger