the word, “and” or an ampersand, or clearly make it payable in the alternative,
default
(1994). Courts have interpreted the use of a virgule to separate multiple payee
names as a manifestation of the drawer’s intent to make the instrument
rule
prescrib
applying the multiple payee provisions of the U.C.C. E.g., Dynalectron, 704
F.2d at 738 (holding that the Federal District Court in that case was correct when
payable
1254 (1978). In that case, pursuant to a surety payment bond arrangement, the
multiple
plaintiff, American Fidelity, arranged for payment from the United States of
States Treasury issued the check, payable to multiple payees, as follows:
Other
courts
American Fidelity Fire
Insurance Company
failed to obtain the indorsement of the plaintiff insurance company before
consider
ing their
submitting it for payment. The defendant, Peoples National Bank, accepted the
County granted it summary judgment. On appeal, the intermediate appellate
result.
sued the defendant for conversion and the Circuit Court for Prince George’s
court held:
“As previously stated, Md. Com. Law Code Ann. ß 3-116 (1975) clearly
forged indorsement, Md. Com. Law Code Ann. ß 3-419(1)(c) (1975). Since the
payable
© 2005 Thomson/West. No Claim to Orig. U.S. Govt. Works.
to a check with multiple payees listed in stacked format, “[i]t was not made
payable in the alternative and therefore the indorsement of both purported
payees is necessary,” citing People‘s National Bank ); Midwest Industrial
(holding that the critical inquiry is not whether the drawer of the check intended
to make a check containing multiple payees jointly payable and enunciating a
preference to rely on the plain language of Iowa Code, ß 554.3116(b) which
clearly stated that “ ‘[a]n instrument’ … payable to the order of two or more
multiple payees. Rather than retaining the test requiring a determination of
whether the check is unambiguously payable in the alternative, the General
Assembly added a new test; by adding the last sentence to the statute, it
established the default rule that if a check, drawn payable to multiple payees,
payees, listed in stacked format, with no grammatical connector, punctuation or
symbol indicating their relationship or how the check was intended to be paid.
Therefore, the check was neither clearly payable in the alternative, the payees
not being connected by “or” or its equivalent, nor clearly payable jointly, the
have considered this issue have given their states’ post-1990 version of the
U.C.C. multiple payee statute. J.R. Simplot, Inc. v. Knight, 139 Wash.2d 534,
988 P.2d 955, 956 (1999) (since multiple payees separated by hyphen “did not
unambiguously indicate whether they were to be paid jointly or in the
Ill.Dec.
770, 775
N.E.2d
without
gramma
tical
connect
payees
were
ambiguo
us as to
alternati
ve and
thus,
were
d
Proviso
State
Bank,
© 2005 Thomson/West. No Claim to Orig. U.S. Govt. Works.
provides that a check is payable to the persons alternatively. Therefore, in the
present case, one named payee was sufficient to negotiate the cashier‘s check….”
Id. See Harder v. First Capital Bank, 332 Ill.App.3d 740, 266 Ill.Dec. 770, 775
Californ
ia
equivale
© 2005 Thomson/West. No Claim to Orig. U.S. Govt. Works.
why the trial court, indicating that it must be “determined from the face, the four
corners without reference to extrinsic facts,” (quoting Participating Parts
Associates v. Pylant, 460 So.2d 1299, 1300, 40 U.C.C. Rep. Serv. 498
(Ala.Civ.App.1984)), refused to consider extrinsic evidence to decide the
ambiguity question.
“The obvious purpose of ß 3-110(d) is to provide a bright-line rule for how
checks with ambiguous payee designations should be treated. That purpose
would be thwarted if it were necessary to resort to extrinsic evidence of custom
and practice in order to determine whether a check was payable jointly or
resorting to extrinsic evidence to determine whether or not the check was
ambiguous, the Court in Allstate Ins. Co. violated the cardinal rule of contract
interpretation that extrinsic evidence may only be used to interpret an ambiguous
contract.”The appellee’s brief at 18-19.
381 Md. 327, 849 A.2d 475, 53 UCC Rep.Serv.2d 557
END OF DOCUMENT
to a check with multiple payees listed in stacked format, “[i]t was not made
payable in the alternative and therefore the indorsement of both purported
payees is necessary,” citing People‘s National Bank ); Midwest Industrial
(holding that the critical inquiry is not whether the drawer of the check intended
to make a check containing multiple payees jointly payable and enunciating a
preference to rely on the plain language of Iowa Code, ß 554.3116(b) which
clearly stated that “ ‘[a]n instrument’ … payable to the order of two or more
multiple payees. Rather than retaining the test requiring a determination of
whether the check is unambiguously payable in the alternative, the General
Assembly added a new test; by adding the last sentence to the statute, it
established the default rule that if a check, drawn payable to multiple payees,
payees, listed in stacked format, with no grammatical connector, punctuation or
symbol indicating their relationship or how the check was intended to be paid.
Therefore, the check was neither clearly payable in the alternative, the payees
not being connected by “or” or its equivalent, nor clearly payable jointly, the
have considered this issue have given their states’ post-1990 version of the
U.C.C. multiple payee statute. J.R. Simplot, Inc. v. Knight, 139 Wash.2d 534,
988 P.2d 955, 956 (1999) (since multiple payees separated by hyphen “did not
unambiguously indicate whether they were to be paid jointly or in the
Ill.Dec.
770, 775
N.E.2d
without
gramma
tical
connect
payees
were
ambiguo
us as to
alternati
ve and
thus,
were
d
Proviso
State
Bank,
© 2005 Thomson/West. No Claim to Orig. U.S. Govt. Works.
provides that a check is payable to the persons alternatively. Therefore, in the
present case, one named payee was sufficient to negotiate the cashier‘s check….”
Id. See Harder v. First Capital Bank, 332 Ill.App.3d 740, 266 Ill.Dec. 770, 775
Californ
ia
equivale
© 2005 Thomson/West. No Claim to Orig. U.S. Govt. Works.
why the trial court, indicating that it must be “determined from the face, the four
corners without reference to extrinsic facts,” (quoting Participating Parts
Associates v. Pylant, 460 So.2d 1299, 1300, 40 U.C.C. Rep. Serv. 498
(Ala.Civ.App.1984)), refused to consider extrinsic evidence to decide the
ambiguity question.
“The obvious purpose of ß 3-110(d) is to provide a bright-line rule for how
checks with ambiguous payee designations should be treated. That purpose
would be thwarted if it were necessary to resort to extrinsic evidence of custom
and practice in order to determine whether a check was payable jointly or
resorting to extrinsic evidence to determine whether or not the check was
ambiguous, the Court in Allstate Ins. Co. violated the cardinal rule of contract
interpretation that extrinsic evidence may only be used to interpret an ambiguous
contract.”The appellee’s brief at 18-19.
381 Md. 327, 849 A.2d 475, 53 UCC Rep.Serv.2d 557
END OF DOCUMENT