[Code of Federal Regulations]
[Title 31, Volume 2]
[Revised as of July 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 31CFR240.12]

[Page 86-87]
 
                  TITLE 31--MONEY AND FINANCE: TREASURY
 
         CHAPTER II--FISCAL SERVICE, DEPARTMENT OF THE TREASURY
 
PART 240--INDORSEMENT AND PAYMENT OF CHECKS DRAWN ON THE UNITED STATES TREASURY--Table of Contents
 
Sec. 240.12  Indorsement by payees.

    (a) General requirements. Checks shall be indorsed by the payee or 
payees named, or by another on behalf of such payees as set forth in 
this part.
    (b) Checks indorsed by the payee or payees named. When a check is 
indorsed by the payee or payees named, the forms of indorsement shall 
conform to those recognized by general principles of law and commercial 
usage for negotiation, transfer or collection of negotiable instruments.
    (c) Checks indorsed by another on behalf of the named payee or 
payees--(1) Acceptable indorsement. The only acceptable indorsement of a 
check by another on behalf of the named payee or payees (except when a 
check is indorsed by a financial institution under the payee's or 
payees' authorization) is one which indicates that the person indorsing 
is doing so on behalf of the named payee or payees. Such an acceptable 
indorsement shall include the signature of the indorser and sufficient 
wording to indicate that the indorser is indorsing on behalf of the 
named payee or payees, pursuant to authority expressly conferred by or 
under law or other regulation. An example would be: ``John Jones by Mary 
Jones.'' This example states the minimum indication acceptable. However, 
Secs. 240.12(a)(1), 240.13(a)(1), and 240.15(d) specify the addition of 
an indication in specified situations of the actual capacity in which 
the person other than the named payee is indorsing. Checks indorsed 
``for collection'' or ``for deposit only to the credit of the within 
named payee or payees,'' are acceptable without any signature. However, 
in the absence of a signature, the presenting bank will be deemed to 
guarantee its good title to such checks to all subsequent indorsers and 
to Treasury.
    (2) Unacceptable indorsement. The indorsement by another on behalf 
of the named payee or payees, which consists of the name(s) of the 
payee(s),

[[Page 87]]

whether as purported signature(s) or otherwise, and not the signature of 
the person other than named payee or payees indorsing the check, 
regardless of the relationship between the indorser and the named payee 
or payees, will be rebuttably presumed to be a forgery and is 
unacceptable. The indorsement by a person who purports to indorse for 
the named payee(s) with an indorsement consisting of the name(s) of the 
payee(s), whether as purported signature(s) or otherwise, and the 
indorsing person's signature and no indication of the indorsing person's 
representative capacity, will create a rebuttable presumption that the 
indorsing person was not authorized to indorse for the named payee(s). 
In these circumstances it is the responsibility of the individual or 
institution accepting a check from a person other than the named 
payee(s) to determine that such person is authorized and has the 
capacity to indorse and negotiate the check. Evidence of the basis for 
such a determination may be required by the Treasury in the event of a 
dispute.
    (d) Indorsement of checks by a financial institution under the 
payee's authorization. When a check is credited by a financial 
institution to the payee's account under the payee's or payees' 
authorization, the financial institution may use an indorsement 
substantially as follows: ``Credit to the account of the within-named 
payee in accordance with the payee's or payees' instructions. XYZ.'' A 
financial institution using this form of indorsement will be deemed to 
guarantee to all subsequent indorsers and to the Treasury that it is 
acting as an attorney-in-fact for the payee or payees, under the payee's 
or payees' authorization, and that this authority is currently in force 
and has neither lapsed nor been revoked either in fact or by the death 
or incapacity of the payee or payees.
    (e) Indorsement of checks drawn in favor of financial institutions. 
All checks drawn in favor of financial institutions, for credit to the 
accounts of persons designated payment so to be made, shall be indorsed 
in the name of the financial institutions as payee in the usual manner. 
Financial institutions receiving and indorsing such checks shall comply 
fully with part 209 of this chapter.
    (f) Social Security benefit checks issued jointly to individuals of 
the same family. A social security benefit check issued jointly to 2 or 
more individuals of the same family shall, upon the death of 1 of the 
joint payees prior to the negotiation of such check, be returned to the 
Social Security District Office or the Treasury Regional Financial 
Center. Payment of the check to the surviving payee or payees may be 
authorized by placing on the face of the check a stamped legend signed 
by an official of the Social Security Administration or the Treasury 
Regional Financial Center, redesignating such survivor or survivors as 
the payee or payees of the check. A check bearing such stamped legend, 
signed as herein prescribed, may be indorsed and negotiated by the 
person or persons named as if such check originally had been drawn 
payable to such person or persons.

[54 FR 35642, Aug. 29, 1989. Redesignated at 67 FR 36518, May 24, 2002]