Title: Pelican v. Provident

State: maryland

Issuer: Maryland Supreme Court

Document:

Pelican National Bank v. Provident Bank of Maryland
No. 48, September Term, 2002
HEADNOTES: CHECK, AMBIGUITY, REQUIRED INDORSEMENTS FOR STACKED PAYEE
DESIGNATION, MARYLAND UNIFORM COMMERCIAL CODE
Pursuant to Uniform Commercial Code, § 3-110 (d), which dictates a default rule that
when a check lists multiple payees in a manner that renders it ambiguous as to the
indorsements necessary to negotiate the instrument, a check, made payable to multiple
payees in stacked format, without any grammatical connector or punctuation, is
ambiguous, and thus, payable in the alternative to any one of the named payees. 
IN THE COURT OF APPEALS OF
MARYLAND
No. 48
September Term, 2002
Pelican National Bank
v.
Provident Bank of Maryland
                             Bell, C.J.
                          * Eldridge
                             Raker
                            Wilner
                             Cathell
                             Harrell
                             Battaglia,
                                                   JJ.
                                              
Opinion by Bell, C.J.
Filed:   May 14, 2004
*Eldridge, J., now retired, participated in
the hearing and conference of this case
while an active member of this Court; after
being recalled pursuant to the Constitution,
Article IV, Section 3A, he also participated
in the decision and adoption of this opinion.
1The appellant avers that the Bogdan property was financed initially by  First National
Funding Corporation.   That company sold the note and deed of trust pertaining to the
property to Oceanmark, who, in turn, sold them to Pelican National Bank, the appellant. 
It is for this reason that the appellant asserts that it is assignee of the note and deed of
trust and, thus, Oceanmark’s successor in interest.
The issue in this case is whether a check made payable to  multiple payees, listed in
stacked formation on its face, without any grammatical connector or punctuation, is
ambiguous as to whether it is  negotiable only jointly, thus, requiring the indorsement of all
of the named payees, or  alternatively,  requiring the indorsement of any one  of the named
payees.   The Circuit Court for Baltimore City held that a check so drawn is ambiguous and,
accordingly, entered summary judgment in favor of Provident Bank of Maryland, the
appellee, and against Pelican National Bank, the appellant.   We shall affirm the judgment
of the Circuit Court.
I.
 Harford Mutual Insurance Company issued a check, drawn on Allfirst Bank,  in the
amount of $60,150.00, to payees as follows:
“Andrew Michael Bogdan, Jr., Crystal Bogdan
Oceanmark Bank FSB
Goodman-Gable-Gould Company”.
The check was in payment of a casualty claim made by Bogdan on an  insurance policy,
issued by Harford Mutual, on commercial property owned by Bogdan and his wife and on
which Oceanmark, the appellant’s predecessor in interest,1  held a mortgage.  Thus, the
payees of the check were the property owners, the mortgage holder and the insurance agent
2Under Maryland  Code (1975, 2002 Replacement Volume) § 3-420 of the Commercial
Law Article:
“An instrument is . . . converted if it is taken by transfer, other than a
negotiation, from a person not entitled to enforce the instrument or a bank
makes or obtains payment with respect to the instrument for a person not
entitled to enforce the instrument or receive payment. An action for conversion
of an instrument may not be brought by (i) the issuer or acceptor of the
instrument or (ii) a payee or indorsee who did not receive delivery of the
instrument either directly or through delivery to an agent or a co-payee.”
3The appellee also filed a Third-Party Complaint against the other payees named on the
check, Andrew Michael Bogdan, Jr., Crystal Bogdan, and Goodman-Gable-Gould Company,
seeking indemnification. Goodman filed a Motion to Dismiss the Third-Party Complaint
against it, which the court granted.
2
who adjusted the casualty claim.     In addition to the payees, the face of the check listed, in
small print, the insurance policy number, claim identification number and the “loss date” and
a small notation that read “MEMO Fire - building.” 
The check, indorsed only by the Bogdans and the insurance adjuster, was presented
to the appellee, which cashed it. Michael Bogdan deposited the proceeds in a commercial
account he held at the appellee bank. When the appellant filed its Complaint for Money
Judgment, Bogdan had not distributed any of the proceeds of the check to the appellant.
Having failed in its attempt to obtain reimbursement from the appellee for negotiating
the check without Oceanmark’s endorsement, the appellant filed against the appellee, in the
Circuit Court for Baltimore City, a Complaint for Money Judgment.   Alleging conversion,2
it argued that the subject check was negotiable only if each of the listed payees indorsed it
and, since the check was not indorsed by Oceanmark, the appellee improperly negotiated the
check.   After it filed its answer to the complaint,3 arguing as an affirmative defense, that the
4More specifically, the appellee asserted:
“Pelican’s claims against Provident are barred because, under Section 3-110
(d) of the Commercial Law Article of the Maryland Annotated Code, the check
was payable to the payees in the alternative and Oceanmark’s endorsement was
not required to negotiate the check.”
Section 3-110 (d) is a part of Maryland’s Uniform Commercial Code.  The Uniform
Commercial Code is a set of  uniform laws, initially promulgated by the National Conference
of Commissioners on Uniform State Laws (N.C.C.U.S.L.) and the American Law Institute,
to ensure uniformity among the states and territories regarding commercial practices. The
first version of the Uniform Commercial Code was promulgated in the early 1960's.   It was
extensively revised in 1990 by the N.C.C.U.S.L. Maryland, in 1996, like a number of other
states, adopted the revisions, including the revision to § 3-116, the predecessor of  the current
provision, § 3-110.  
5In support, the appellant relied on Peoples National Bank v. American Fid. Fire Ins. Co., 39
Md. App. 614, 618, 386 A.2d 1254, 1257 (1978), which, interpreting  Maryland U.C.C. § 3-
116, the precursor to  § 3-110, held that a check payable to two or more persons  without
indication that it is payable in the alternative is payable only jointly, i.e., requires the
indorsement of all of the named payees.   The petitioner also relied upon Bank of America
National Trust and Savings Assoc. v. Allstate Insurance Co., 29 F. Supp.2d 1129 ( C.D.
Calif. 1998).  
3
check was payable in the alternative pursuant to Maryland  Code, (1975, 2002 Replacement
Volume) § 3-110 (b) of the Commercial Law Article,4 the appellee  moved for summary
judgment on that basis.   The appellant responded with its Cross-Motion for Summary
Judgment.5 
 The Circuit Court granted the appellee’s motion for summary judgment.  
Interpreting § 3-110 (b) as resolving any ambiguity with respect to whether a check payable
to two or more persons is payable jointly or in the alternative in favor of the latter, i.e., that
such checks are payable in the alternative, and noting the parties’ arguments acknowledging
that the issue was whether the check was ambiguous, the court held: 
6The payee designation in City First Mortgage Corp. v. Florida Residential Property &
Casualty, 37 U.C.C. Rep. Serv. 2d 126 (Miami-Dade County Ct. 1998) was:
 “BORIS LA ROSA ODALYS LA ROSA 
CITY FIRST MTG. CORP. ISAOA ATIMA.”
  
Applying § 3-110 (d) of the Florida Code, the court held, “the Check is payable to two or
more persons and, as a matter of law, the payee designation on the Check is ambiguous as
to whether it is payable to the persons alternatively.”
7In Bijlani v. Nationsbank of Florida, N.A., 25 U.C.C. Rep.Serv. 2d 1165 (Fla. Cir. 1995),
the payees were listed as follows:
“Bay Village Inc Michael
Bijlani & Ron Delo & Assoc
5411 Grenada Blvd
Coral Gables, FL 33133.”
The court held that “[t]he multiple payee designation on the check is ambiguous as to
whether it is payable to [the named stacked payees] jointly or alternatively” and that “Section
673.1101(4), Fla. Stat. . . . [Florida’s revised UCC rule], which applies to this case, reverses
the prior rule.”
4
“[o]n its face, the check is payable to two or more persons and has no
intervening connectors, marks or punctuation, such as ‘and’, ‘or,’ or ‘and/or’.
Therefore, this court finds as a matter of law that the check is ambiguous as to
whether or not it is payable to the persons jointly or alternatively.” 
It relied on City First Mortgage Corp. v. Florida Residential Property & Casualty, 37 U.C.C.
Rep. Serv. 2d 126 (Miami-Dade County Ct. 1998)6 and Bijlani v. Nationsbank of Florida, N.
A., 25 U.C.C. Rep. Serv. 2d 1165 (Fla. Cir. Ct. 1995),7 but neither addressed, nor cited,
Peoples National Bank v. American Fid. Fire Ins. Co., 39 Md. App. 614, 386 A.2d 1254
(1978).  The court also rejected  Bank of America National Trust and Savings Assoc. v.
Allstate Insurance Co., 29 F. Supp.2d 1129 ( C.D. Calif. 1998) as supporting the appellant’s
5
argument.  The court explained that the court in Allstate Insurance Company, 29 F. Supp. at
1139, “required extrinsic evidence and determined that the check was unambiguous based
[on] the custom and usage developed under the prior UCC provision, § 3-116;” however, it
pointed out,  “‘[n]egotiability [should be] determined from the face, the four-corners, of the
instrument without reference to extrinsic facts.’” (quoting Participating Parts Associates v.
Pylant, 460 So. 2d 1299, 1301, 40 U.C.C. Rep. Serv. 498 (Ala. Civ. App. 1984) and
Holsonback v. First State Bank of Albertville, 394 So. 2d 381, 383, 30 U.C.C. Rep. Serv. 222
(Ala. Civ. App.1980)).
The appellant timely filed a Notice of Appeal to the Maryland Court of Special
Appeals. This court issued a writ of certiorari before the intermediate appellate court
considered the case. Pelican National Bank v. Provident Bank of Maryland, 369 Md. 659,
802 A.2d 438 (2002).
In this Court, the appellant argues that the Circuit Court erred when it granted the
appellee’s motion for summary judgment and denied its motion.  In so arguing, it
acknowledges the applicability to the case sub judice of § 3-110 (d) and that, pursuant to that
provision, the default rule with regard to the payment of checks with ambiguous multiple
payee designations is that they are payable alternatively, rather than jointly.  Nor does the
appellant dispute that the default rule was changed from the prior law.   Nevertheless, the
appellant asserts, as it did in the Circuit Court, that the listing of multiple payees in stacked
format on a check, without any terms or connectors, is not ambiguous. To the contrary, again
6
as it did in the Circuit Court, the appellant maintains that the Court of Special Appeals
resolved the matter in Peoples National Bank, where  the court  “held the bank liable [in that
case] because the check was payable jointly, not payable in the alternative.” (appellant’s
Brief at 7).   According to the appellant, the rule enunciated by that case is that checks
containing multiple payees in “stacked” format are per se unambiguous and  jointly payable.
The appellant also relies on Allstate Insurance Co., supra for the proposition that,
notwithstanding the change in the language of the relevant U.C.C. provision, “the case law
that existed under § 3-116 with respect to stacked payee designations on the checks
(specifically including Peoples Nat. Bank) remains firmly in place under § 3-110 (d).” 
Rejecting the argument that the sentence in § 3-110 (d) prescribing the default rule for
ambiguity is dispositive of this case,  the appellant submits:
“The last sentence to § 3-110 (d) only applies if the check is ambiguous.   The
second sentence to § 3-110 (d) (which was applied in both the Peoples Nat.
Bank  and Allstate Ins. Co. decisions) remains firmly in place.   The second
sentence of § 3-110 (d) provides that ‘[i]f an instrument is payable to two or
more persons not alternatively, it is payable to all of them and may be
negotiated, discharged, or enforced only by all of them.’  (emphasis added).
Because the Check in the present case was in the stacked payee designation
format and ‘payable to two or more persons not alternatively,’the Court need
not reach the last sentence of § 3-110 (d) which would only apply if the Check
was ambiguous.”
The appellee acknowledges that, prior to 1996, pursuant to § 3-116 and  People’s
National Bank, checks with stacked payees, as is the case with the check sub judice, were
deemed payable only jointly.  Noting that “Maryland law regarding checks payable to
7
multiple payees was changed with the adoption of the 1990 version of the UCC in 1996,” in
particular, the addition of a sentence, which provides that checks with an ambiguous multiple
payee designation are payable in the alternative, it argues that, under that provision, checks
listing multiple payees in stacked format without terms or connectors are ambiguous and
thus, payable in the alternative.   Consequently, the appellee contends  that People’s National
Bank, having been decided under  § 3-116, is inapposite to the case sub judice.   Because §
3-110 expressly resolves the situation in which a check with  multiple payees is ambiguous
as to whether it is alternatively or jointly payable, it asserts that the default rule enunciated
in People’s National Bank  is abrogated.  
II.
The only issue that we must resolve is one of law, whether a check with stacked
payees, unseparated by a term, punctuation, connector or symbol indicating joint or
alternative payment, is ambiguous.    Where a statutory provision of the U.C.C. purports to
cover an area of the law, it is the language and the intent of the statute that will govern a
conflict that arises within that particular area of law. Harford Fire Ins. Co. v. Maryland Nat’l
Bank, N.A., 341 Md. 408, 413, 671 A.2d 22, 24 (1996) (“The rights and duties of drawers
and depositary banks are governed by ... Titles 3 and 4 of the Commercial Law Article,
which are essentially the same as Articles 3 and 4 of the Uniform Commercial Code
8 Maryland  Code (1975, 2002 Replacement Volume) § 1-103 of the Commercial Law Article
provides:
“Unless displaced by the particular provisions of Titles 1 through 10 of this
article, the principles of law and equity, including the law merchant and the
law relative to capacity to contract, principal and agent, estoppel, fraud,
misrepresentation, duress, coercion, mistake, bankruptcy, or other validating
or invalidating cause shall supplement its provisions, except that
“(a) the age of majority as it pertains to the capacity to contract
is eighteen years of age;  and
“(b) no person who has attained the age of eighteen years shall be      
     considered to be without capacity by reason of age.”
9 As indicated, this case was decided on summary judgment.  This court has frequently stated
the standard of review for a grant of summary judgment, “whether the trial court was legally
correct.”  Goodwich v. Sinai Hosp. of Baltimore, Inc., 343 Md. 185, 204, 680 A.2d 1067,
1076 (1996);  Murphy v. Merzbacher, 346 Md. 525, 530-31, 697 A.2d 861, 864 (1997); Heat
& Power Corp., Inc. v. Air Prods. & Chems., Inc., 320 Md. 584, 592, 578 A.2d 1202, 1206
(1990) (citations omitted).   “Whether summary judgment is properly granted as a matter of
law is a question of law.” Engineering Management Services, Inc. v. Maryland State
Highway Admin., 375 Md. 211, 229, 825 A.2d 966, 976 (2003). 
8
(U.C.C.)”); see § 1-301 of the Commercial Law Article.8  This is, in other words,  a matter
of statutory interpretation,9 the canons of which are well settled.
This Court has often stated the paramount goal of statutory interpretation, to “ascertain
and effectuate the intention of the legislature.” Oaks v. Connors, 339 Md. 24, 35, 600 A.2d
423, 429 (1995); NationsBank v. Stine, 379 Md. 76, 85, 839 A.2d 727, 732-33 (2003).  The
quest to ascertain legislative intent requires examination of  the language of the statute as
written and if, given the plain and ordinary meaning of the words used, the meaning and
application of the statute is clear, we end our inquiry. Comptroller of the Treasury v. Kolzig,
375 Md. 562, 567, 826 A.2d 467, 469 (2003). It is also true, however, that :
9
“While the language of the statute is the primary source for determining
legislative intention, the plain meaning rule of construction is not absolute;
rather, the statute must be construed reasonably with reference to the purpose,
aim, or policy of the enacting body.  The Court will look at the larger context,
including the legislative purpose, within which statutory language appears.
Construction of a statute which is unreasonable, illogical, unjust, or incon-
sistent with common sense should be avoided.” 
 Tracey v. Tracey, 328 Md. 380, 387, 614 A.2d 590, 594 (1992) (Citations omitted). In
seeking to “avoid constructions of a statute which is unreasonable, illogical, unjust, or
inconsistent with common sense,” Pak v. Hoang, 378 Md. 315, 323, 835 A.2d 1185, 1189
(2003), we  prefer an interpretation of the statute that avoids rendering any “part of the
statute . . . meaningless or nugatory.” Toler v. Motor Vehicle Admin., 373 Md. 214, 220, 817
A.2d 229, 234 (2003) (citing Gillespie v. State, 370 Md. 219, 222, 804 A.2d 426, 428
(2002)).
Enacted by Acts of 1996, ch. 1, § 2, as part of the 1996  revision to the Maryland
Uniform Commercial Code, § 3-110 (d) enunciates the rules for determining, objectively, the
intent of a drawer with respect to an instrument made payable to multiple payees.  Therefore,
we must first examine § 3-110 (d) to determine whether the stacked payee format in this case
is an ambiguous multiple payee designation as contemplated by the Maryland Legislature
when it enacted the statute.  Section 3-110 (d) provides:
“(d) If an instrument is payable to two or more persons alternatively, it is
payable to any of them and may be negotiated, discharged, or enforced by any
or all of them in possession of the instrument. If an instrument is payable to
two or more persons not alternatively, it is payable to all of them and may be
negotiated, discharged, or enforced only by all of them. If an instrument
10
payable to two or more persons is ambiguous as to whether it is payable to the
persons alternatively, the instrument is payable to the persons alternatively.”
The Official Comment to that section provides further guidance regarding how to treat a
check with multiple payees:
“An instrument payable to X or Y is governed by the first sentence of
subsection (d). An instrument payable to X and Y is governed by the second
sentence of subsection (d). If an instrument is payable to X or Y, either is the
payee and if either is in possession that person is the holder and the person
entitled to enforce the instrument. ... If an instrument is payable to X and Y,
neither X nor Y acting alone is the person to whom the instrument is payable.
... The instrument is “payable to an identified person.” The “identified person”
is X and Y acting jointly.
*     *     *     *
“The third sentence of subsection (d) is directed to cases in which it is not
clear whether an instrument is payable to multiple payees alternatively. In the
case of ambiguity persons dealing with the instrument should be able to rely
on the indorsement of a single payee. For example, an instrument payable to
X and/or Y is treated like an instrument payable to X or Y.”
Thus, § 3-110 (d), confirmed by the explanation in the Official Comment, clearly and
unambiguously enunciates the default rule, that, unless checks payable to multiple payees,
are specifically and clearly made payable jointly or in the alternative, they are ambiguous
with respect to how they are to be paid and, therefore, are payable alternatively.   Indeed, that
is precisely what the last sentence of the section states.   Confirmation is also supplied by an
analysis of the statute that § 3-110 (d) replaced.
10
A virgule is a slash or diagonal line, represented by the symbol, “/”. Dynalectron Corp. v.
Equitable Trust Co., 704 F.2d 737, 739 (4th Cir.,1983); Kinzig v. First Fidelity Bank, N. A.,
649 A. 2d 634, 636 (N. J. Super. 1994).   Courts have interpreted the use of a virgule to
11
Prior to 1996, the controlling provision with respect to multiple payee instruments
was  Maryland Code, (1975, 1992 Replacement Volume) § 3-116 of the Commercial Law
Article.    It provided:
“An instrument payable to the order of two or more persons 
“(a) If in the alternative is payable to any one of them and may be negotiated,
discharged or enforced by any of them who has possession of it;
“(b) If not in the alternative is payable to all of them and may be negotiated,
discharged or enforced only by all of them.” 
Like § 3-110 (d), § 3-116 is clear and unambiguous.   Unlike § 3-110 (d), which
addressed three scenarios, however, it addressed only two scenarios, where the multiple
payee instrument is payable in the alternative and where it is payable “not in the alternative.”
In the case of the former, § 3-116 provided for the payment of the instrument on the
indorsement of any one of the payees.   When, however, the instrument was payable “not in
the alternative,” that statute required the indorsement of all of the payees for negotiation.
Essentially, therefore, under § 3-116, joint payment was the default -  when the payment
direction did not clearly make the instrument payable jointly, i.e. by using the word, “and”
or an ampersand, or clearly make it payable in the alternative, i.e. by using, “or”, “and/or”,
or a virgule,10 then it was payable only jointly.
separate multiple payee names as a manifestation of the drawer’s intent to make the
instrument alternatively payable; thus a virgule is, in essence, the word “or” for purposes of
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 it held that “‘a virgule
normally is used to separate alternatives,’” citing Dynalectron Corp. v. Union First Nat’l
Bank, 488 F.Supp. 868, 869 (D.C. Mo. 1980), and thus, a check listing multiple payees
separated by a virgule was alternatively payable); Kinzig, 649 A. 2d at 637. 
  
12
The Court of Special Appeals considered, and applied, § 3-116 in  Peoples Nat’l Bank
v. American Fid. Fire Ins. Co., 39 Md. App. 614, 386 A.2d 1254 (1978). In that case,
pursuant to a surety payment bond arrangement, the plaintiff, American Fidelity, arranged
for payment from the United States of America, to cover the costs of an unpaid amount to
a subcontractor. The United States Treasury issued the check, payable to multiple payees, as
follows:
“Floors Inc.
    
American Fidelity Fire 
     
Insurance Company
     
8400 Truck Way 
     
Capitol Heights, Md. 20037”
Id. at 616, 386 A.2d at 1255.   Floors Inc. received and indorsed the check, but failed to
obtain the indorsement of the plaintiff insurance company before submitting it for payment.
The defendant, Peoples National Bank, accepted the check and deposited the entire amount
in the Floors, Inc. account.   The plaintiff sued the defendant for conversion and the Circuit
Court for Prince George’s County granted it summary judgment.  On appeal, the intermediate
appellate court held:
13
“As previously stated, Md. Com. Law Code Ann. § 3-116 (1975) clearly
provides that a check ‘payable to the order of two or more persons . . . (i)f not
in the alternative . . . may be negotiated, discharged or enforced only by all of
them.’ . . . Since the check was not payable in the alternative, then it could not
have been negotiated by less than all the payees. The fact that the defendant
bank was unaware of the ‘joint pay’ agreement between the United States and
the plaintiff does not change the result. 
“‘A payment upon a missing indorsement is equivalent to a payment over a
forged indorsement.’ Federal  Deposit Insurance Corp. v. Marine National
Bank, 431 F.2d 341 (5th Cir. 1970). An instrument is converted when paid on
a forged indorsement, Md. Com. Law Code Ann. s 3-419(1)(c) (1975). Since
the bank paid the amount of the check with a missing indorsement, it
converted the check.” 
Id. at 618-19, 386 A.2d at 1257. Thus, the court interpreted, and applied, the default rule
prescribed by § 3-116,  that, if the check is drawn payable to multiple payees, but “not in the
alternative,” it is payable jointly.
Other courts considering their state’s equivalent of § 3-116, reach the same result. See
Moram Agencies, Inc. v. Farrell Trans., Inc., 35 U.C.C. Rep. Serv. 1236,  (E. D. Pa. 1982)
(noting, referring 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 Funding, Div. of Rivera Land
Lease, Inc. v. First National Bank, 973 F.2d 534, 537 (7th Cir. 1992) (explaining that “[t]he
general rule is that if there are two names on the check and the check is not payable in the
alternative then the statute establishes that check is jointly payable” and, thus, under the
“literal application of ¶ 3-116, the checks could be negotiated only by both [of the named
parties]”); Van Lunen v. State Central Savings Bank of Keokuk, Iowa, 751 F. Supp. 145, 148
14
(S.D. Iowa 1990) (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, § 554.3116 (b) which clearly stated
that “‘[a]n ‘instrument’ . . . payable to the order of two or more persons . . . if not in the
alternative is payable to all of them and may be negotiated . . . only by all of them.’”);
Feldman Constr. Co. v. Union Bank, 28 Cal.App.3d 731, 735 (1972). 
As we have seen, the General Assembly amended the Maryland U.C.C. in 1996, and,
in the process substituted § 3-110 (d) for § 3-116.  In so doing, the General Assembly also
changed the default rule regarding checks with  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, does not
clearly indicate the indorsements required for negotiation, and thus, is “ambiguous as to
whether it is payable to two or more persons alternatively,” the check is payable in the
alternative and may be negotiated on the indorsement of any one of the payees.
Applying § 3-110 (d) and this default rule to the facts of the case sub judice
produces a clear result.  The subject check was drawn to the order of three 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,
15
nor clearly payable jointly, the payees not being joined by “and” or its equivalent.  It was,
consequently, we hold, “ambiguous as to whether it is payable to the persons alternatively.”
Accordingly, we further hold, it was proper for the appellee to have negotiated the check
without the indorsement of the appellant.   The indorsement of any one of the payees was
sufficient.   
This interpretation of § 3-110 (d) is consistent with the interpretation courts that 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, 988 P.2d 955, 956 (Wash.,1999) (since multiple payees
separated by hyphen “did not unambiguously indicate whether they were to be paid jointly
or in the alternative,  RCW 62A.3-110 mandate[d] they were payable in the alternative”);
Hyatt Corporation v. Palm Beach National Bank, 840 So. 2d 300, 303 (Fla. D. Ct. App.
2003);  Harder v. First Capital Bank, 775 N.E.2d 610, 613 (Ill. App. 2002)(checks listing
multiple payees without grammatical connectors except between names of two payees were
ambiguous as to whether checks were payable jointly or in the alternative and thus, were
payable in the alternative); Meng v. Maywood Proviso State Bank, 702 N. E. 2d 258, 264 (Ill.
App. 1998) (cashier's check which did not include any language or markings, such as the
word "and" or the word "or," regarding whether the check was payable alternatively or jointly
was ambiguous, thus  payable alternatively); Allied Capital Partners, L.P. v. Bank One,
Texas, N.A., 68 S.W.3d 51, 52-54 (Tx. Ct. App. 2001)(checks which listed two payees that
were not connected by "and" or "or" were ambiguous as to whether they were payable to two
16
payees jointly or alternatively, and thus properly cashed on indorsement of only one payee);
Danco, Inc. V. Commerce Bank/Shore, N.A., 675 A. 2d 663, 665 (N. J. Super. 1996) (noting
that, under U.C.C. § 3-110 (d), “where any ambiguity between joint or alternative payees is
present, the ambiguity should be resolved in favor of alternative construction”);  Dimmitt &
Owens Financial, Inc. v. USA Glass & Metal, Inc., 1998 WL 852862 (N.D.Ill.1998)(holding
that check without any indication as to whether it was intended to be payable alternatively
or jointly was ambiguous as to whether it was made payable to either payee alternatively and
could be paid to either payee individually); But see, Bank of America Natl. Trust and Savings
Assoc. v. Allstate Ins. Co., 29 F. Supp.2d 1129 (C.D. Calif. 1998). 
Some of these cases contrasted the interpretation of § 3-110 (d) with that given former
§ 3-116.  In  Allied Capital Partners, supra, applying Texas U.C.C. § 3-110 (d), which is
identical to the Maryland  provision, the court held that checks with stacked multiple payees
and without punctuation marks or connecting terms indicating the drawer’s intent with
respect to whether they were payable jointly or alternatively, were ambiguous and payable
alternatively.  68 S.W.3d at 54.   It noted, however, with respect to the prior law:
“While it does appear that former section 3.116 would have required the
checks in this case to be payable to and negotiable only by all of the payees
listed, this is no longer the case. Former section 3.116 provided that all checks
which were not payable in the alternative (‘or’) were payable and negotiable
only by all named payees. In contrast, section 3.110(d) now includes a third
category of instruments: those that are ambiguous as to whether they are
payable to the named payees alternatively and therefore payable to any of the
named payees individually. Thus, Allied and American’s reliance on cases
decided before the enactment of section 3-110(d) is misplaced.”
17
Id. (citations omitted)
Similarly, in Meng, supra, the Appellate Court of Illinois determined that a cashier’s
check, which listed multiple payees in stacked format was payable alternatively, reasoning
that “[u]nder former section 3-116 of the Code, an instrument was presumed to be payable
jointly where the instrument did not designate payment in the alternative. . . .  Contrary to the
former provision, the current section shifts the presumption to pay on an instrument in the
alternative rather than jointly.”  Id. at 136, 702 N.E.2d at 264.  The court added:
“We find, as a matter of law, that the designation of two payees on a cashier’s
check is ambiguous where no directives are stated on the checks to determine
the manner of payment. In the present case, the cashier’s check at issue names
two payees but does not include any directions regarding whether the check is
payable to the named persons alternatively or jointly. The subject cashier’s
check does not contain any language or markings to instruct the method of
payment, such as the word “and” or the word “or.” Accordingly, section 3-110
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, 775 N.E.2d 610, 614 (Ill. 2002), in which, applying
Meng, the court concluded that checks with stacked payee designations and “without any
grammatical connector between the listed payees”  were “ambiguous as a matter of law and,
therefore, were payable in the alternative with the indorsement of any single payee.”  See also
Matthew Bender & Co. § 115.10 Multiple Payees: Mode of Indorsement (2003) (“The
revised section states that ‘if an instrument payable to two or more persons is ambiguous as
to whether it is payable to the persons alternatively, the instrument is payable to the persons
alternatively thereby providing a definite rule which does not exist under the Code, reversing
11Peoples National Bank should be contrasted with  Dynalectron, both decided  under § 3-
116.  In Dynalectron, the court determined that a virgule constituted punctuation that was
generally used as a device to separate items in a list, 704 F.2d at 739, and, therefore, that
checks made payable to multiple payees separated by a virgule were meant to be payable in
the alternative.  Dynalectron enunciated a bright line rule, that  a “virgule” unambiguously
means, or is the equivalent of, “or.”  Id. Unlike Dynalectron, Peoples National Bank
enunciates no bright line rule regarding the proper payment of checks listing stacked payees
left unseparated by a term or connectors.  Peoples National Bank   is simply a statutory
construction case, in which the court determined that the statute clearly enunciated a default
rule favoring joint payment.
18
those cases which had held that where there was an ambiguity in the designation of multiple
payees, they were joint payees.”).
III.
The appellant’s reliance on  Peoples National Bank is misplaced.11   That case did not
enunciate a bright-line rule, holding that checks containing unpunctuated stacked payees
unambiguously direct that those checks be jointly payable.  The court simply interpreted, and
applied, § 3-116, concluding, in view of the clear direction provided, that a “check ‘payable
to the order of two or more persons . . . (i)f not in the alternative . . .’ may be negotiated,
discharged or enforced only by all of them,” that the check at issue in that case was payable
jointly, there being no clear statement that it was payable in the alternative.    The court, as
a matter of statutory interpretation, applied, in short, § 3-116's default rule for resolving
ambiguities in the multiple payee situation. 
Moreover, if the appellant is correct that Peoples National Bank, rather than simply
interpreting § 3-116, held that a check containing unpunctuated stacked multiple payees
12In Bank of America Natl. Trust and Savings. Assoc. v. Allstate Ins. Co., 29 F. Supp.2d 1129
(C. D. Calif. 1998), the plaintiff, Bank of America, had a security interest in a building,
insured by Allstate, that was damaged in a fire.   Allstate  issued a check to cover the
damages, payable as follows:
Chuk N. Tang & Rosa C. Tang, HWJT
Bank of America
P.O. Box 5696
Diamond Barca CA
Id. at 1132. The Tangs indorsed the check but failed to seek the indorsement of the Bank of
America prior to negotiating the check and retaining its proceeds. Id.  Bank of America filed
a Complaint against Allstate, claiming, inter alia, that the latter breached the insurance policy
when it issued the check to both the Tangs and Bank of America in such a way that it was
ambiguous as to whether the check was payable jointly or alternatively. Allstate argued, in
response, that the stacked payees format unambiguously directed that the check be paid
jointly. Id. at 1137.  
19
unambiguously directs joint payment of that check and that the People’s National Bank
determination in that case remains in full force and effect, notwithstanding the amendment
of the Maryland U.C.C.  to replace § 3-116 with present § 3-110 (d), then the third sentence
of the latter provision is largely superfluous.   That interpretation effectively thwarts the
legislative intent to change the presumption of joint payment, mandated by § 3-116, to one
of alternative payment, as contemplated by the third sentence of § 3-110 (d).  
 While decided on facts similar to those in the case sub judice and pursuant to the
California equivalent of § 3-110 (d),  Bank of America v. Allstate, supra,12 on which the
appellant also heavily relies, is not persuasive.   First, Allstate did not purport to apply to all
checks made payable to multiple payees listed in a stacked format.   29 F. Supp.2d at 1139
(“[T]he Court need not determine whether all checks with stacked payee designations are
unambiguous.”).   Furthermore, the issue in Allstate was different from the issue in the case
20
sub judice.   There, the issue was not whether the check had been cashed without all
necessary indorsements, rather, it was whether the drawer of the check was negligent in
issuing it without clear direction as to whether it was payable jointly or in the alternative.  In
deciding it was not, the court relied heavily on the fact that the memo line indicated that the
check constituted “SETTLEMENT OF YOUR RENTAL DWELLING LOSS CAUSED BY
FIRE ON 11/29/93.”  Id. at 1140. Furthermore, important to the court was testimony from
a Bank of America official that she could discern “from the face of the check that Bank of
America was a third party beneficiary under a fire policy and that the check is payable jointly
rather than in the alternative.” Id.  Based primarily upon this evidence, the court determined
that the check was not ambiguous, but rather, because it was clear from its  four corners that
the check was an insurance settlement check, the bank to which it was submitted for payment
should have realized that the drawer intended that each named payee indorse the instrument
before it could be negotiated.  Id. at 1139-40.
Section § 3-110 (d) effected a significant shift in policy from that reflected in its
predecessor, § 3-116.  See Public Citizen, Inc. v. First Nat’l Bank in Fairmont, 480 S. E. 2d
538, 544 (W. Va. 1996) (stating that W. Va. Code § 46-3-110 (d), the West Virginia
equivalent of § 3-110 (d), added in 1993, “dramatically changed the law with respect to the
problem of the ambiguous payees”); Allied Capital Partners, supra,  68 S. W. 3d at 54 (noting
that “reliance on cases decided before the enactment of section 3.110 (d) is misplaced”);
Reitman and Weisblatt, Checks, Drafts & Notes § 115.10[2] (Bender 1977, 2002 Supp.)
13Although not articulated as such, we believe this to be the thrust of the reason 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, 130,
40 U.C.C. Rep. Serv. 498 (Ala.Civ.App. 1984)),  refused to consider extrinsic evidence to
decide the ambiguity question.
21
(stating that U. C. C. § 3-110 (d) “provid[es] a definite rule which did not exist under the
[prior] Code, reversing those cases which [held] that where there was an ambiguity, in the
designation of multiple payees, they were joint payees”).   Furthermore, as the appellee points
out, the use of extrinsic evidence of custom and practice in the banking industry to determine
whether a check payable to multiple payees is ambiguous undermines, if not totally thwarts,
the purpose and function of § 3-110 (d).13   The appellee’s explanation as to why this is true
is quite persuasive:
“The obvious purpose of § 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
affirmatively.   To avoid the need to resort to extrinsic evidence, § 3-110 (d)
sets forth a simple and straight-forward rule: unless the check on its face is
unambiguously payable jointly, it is deemed payable alternatively.   The Court
in Allstate Ins. Co. ignored the function of § 3-110 (d) by resorting to extrinsic
evidence to determine whether the check was ambiguous.   The issue of
whether an ambiguity exists is a legal issue to be determined by the court. ...
By 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.
Thus, if we were to follow Allstate, § 3-110 (d) would have little, or no, effect, despite
22
the Legislature’s having  enunciated clear rules for determining the indorsement requirements
for the negotiation of multiple payee instruments. 
JUDGMENT AFFIRMED, WITH COSTS.