BILLS AND NOTES-NEGLIGENCE OF THE DEPOSITOR-RIGHT OF THE DRAWEE TO CHARGE THE ACCOUNT

Authors

Thomas Hartwell, University of Michigan Law SchoolFollow

Abstract

A depositor in the defendant bank was a large firm with a payroll clerk who prepared the employees' checks for signing by the proper officer. The clerk prepared checks for employees not then on the payroll, which the officer signed without investigation. The clerk then indorsed as the named payee, signed in her own name as final indorser, and cashed the checks at various banks. Such conduct did not seem unusual to the banks, as she would frequently cash properly indorsed checks as a favor to other employees. The returned vouchers were not examined by the depositor to detect errors. The plaintiff surety company sued on the depositor's claim against the drawee bank for improperly charging these checks against the depositor's account. Held, judgment for the bank affirmed. Depositor's negligence in issuing the checks caused the loss and precluded recovery. United States Guarantee Co. v. Hamilton National Bank, (Tenn. 1949) 223 S.W. (2d) 519.

Recommended Citation

Thomas Hartwell, BILLS AND NOTES-NEGLIGENCE OF THE DEPOSITOR-RIGHT OF THE DRAWEE TO CHARGE THE ACCOUNT, 48 Mich. L. Rev. 1187 (1950).
Available at: https://repository.law.umich.edu/mlr/vol48/iss8/12