Warranty of Prior Endorsements on Checks
Treasury regulations provide that a bank presenting a check
by the United States for payment is deemed to have guaranteed prior
endorsements. 31 C.F.R. § 240.5. Suit should be brought against
presenting bank, which is liable on its warranty of the prior
endorsement. National Metropolitan Bank v. United States, 323 U.S.
(1945). The UCC does not control in such situations. See United
v. First National Bank of Atlanta, Ga., 441 F.2d 906 (5th Cir.
Rather, federal law controls the rights and duties of the United
on its commercial paper. See Clearfield Trust Co. v. United States,
U.S. 363 (1943). |
If the Secretary of the Treasury determines that a Treasury
has been paid over a forged or unauthorized endorsement, within a
year period beginning on the date of payment, the Secretary may
the amount of the check from the presenting bank or any other
that has breached its guarantee of endorsements. A civil action may
brought by the United States against an endorser, transferor,
or a fiscal agent on a forged or unauthorized signature or
on a check issued by the United States within a one year period,
may be extended an additional three years if written notice is
endorser within the one year time frame. 31 U.S.C. § 3712(a).
event of fraudulent concealment, suit may be commenced within two
after discovery of the cause of action, 31 U.S.C. § 3712(b).
[cited in USAM 4-4.533]