Benchmark Bank v. State Farm Lloyds

Benchmark Bank v. State Farm Lloyds, 893 S.W.2d 649 (Tex. App.--Dallas 1994, no writ), involved a property loss settlement from a homeowner's insurance policy made jointly payable to the homeowner and Benchmark Bank as mortgagee. In Benchmark, the question was whether Benchmark Bank's failure to endorse the settlement check, despite being cashed by the homeowner, discharged State Farm's obligations under the policy to pay Benchmark Bank as mortgagee. Id. at 650. The Dallas Court held that State Farm discharged its duties, despite the fact that Benchmark Bank never received payment from the loss pursuant to the policy. Id. at 651. The Court held that "payment to and possession of a draft by one joint payee is constructive possession by the other joint payee," and that State Farm's obligations under the insurance policy were not affected. Id.