Legal Bulletins
Stacked Payee Checks are payable to any one of the Named Payees
It is now clear that, under Maryland law, checks drawn to more than one payee, listed in stacked format, with no grammatical connector, punctuation, or symbol indicating their relationship, are properly payable when they contain the endorsement of any one of the payees.
In Pelican National Bank v. Provident Bank of Maryland, 381 Md. 327, 849 A.2d 475 (2004), the Maryland Court of Appeals was asked to decide whether a check payable to multiple payees in stacked format without any grammatical connectors or punctuation, and endorsed by only one of the payees was properly paid. The Court held that such checks are ambiguous and, applying the default rule established by the Maryland Uniform Commercial Code, the Court held that such ambiguous checks are payable in the alternative to any one of the named payees.
While, based on this holding, financial institutions no longer need to require the endorsement of all payees when dealing with checks listing several payees in stacked format without connectors, we urge financial institutions to consider their best course of protection.