Writing Checks Can Be Complicated

SANTE FE, NM(5/20/02)--A case in Albuquerque, NM brings to light how consumers write and cash checks. A man found a purse in a dumpster along with a check written out to "cash" by the owner of the purse. The man returned the purse to the owner, but decided to keep and cash the check. What happened next should cause every checkwriter to be more cautious(The Santa Fe New Mexican May 12).

The man added his name next to the word "cash" and endorsed the check. He ended up in district court, pleading guilty to one count of forgery, of which he was later found not guilty in a court of appeals.

The appeals court reasoned that the check was not a false document, it did not contain a false signature, and it did not have a false endorsement. The only way forgery could have been committed in this case is if the defendant changed the legal effect of the check.

Changing the legal effect of a check involves negotiable instruments--written and signed promises to pay a specified amount of money on demand. If you write a check to "Walmart," you produce a negotiable instrument. If you write a check to "cash" you produce a bearer instrument--payable to anyone who possesses it; don't lose it because it's like cash.

The defendant presented a bearer instrument because it was written out to "cash." Adding his name to the check did not change its status.