BILLS AND NOTES-NEGLIGENT CONDUCT BY DRAWER PREVENTING HIS CLAIM THAT DRAWEE PAID ON A FORGED INDORSEMENT

Authors

John S. Slavens S. Ed., University of Michigan Law SchoolFollow

Abstract

X and Y, owners of a joint savings account with the plaintiff bank, delivered their bankbook to Z with a withdrawal receipt signed by both depositors in the amount of $75. Z fraudulently altered the receipt, a form used only in paying directly to a depositor, by raising the amount to $5,000, and then presented the bankbook and altered instrument to a teller employed by plaintiff, asking for $5,000. The teller, unwilling to give Z the money, was then instructed to alter the receipt so as to give it the appearance of a check. Then on behalf of plaintiff, without attempting to communicate with X and Y, the teller drew a check on the defendant payable to Y's order in the amount of $5,000 and gave it to Z. Z forged Y's indorsement; defendant paid the check, routed through Z's bank, in the regular course of business and charged plaintiff's account. The plaintiff, after X and Y had recovered, brought this action to recover its loss, claiming defend ant had paid on a forged indorsement. In the lower court plaintiff's negligence was found to preclude its recovery. On appeal, held, affirmed. When drawer's negligence causes drawee to pay on payee's forged indorsement, drawer cannot recover the charge to his account. Negligence and causation are questions of fact for the jury. Connecticut Sav. Bank of New Haven v. First Nat. Bank and Trust Co., 138 Conn. 298, 84 A. (2d) 267 (1951).

Recommended Citation

John S. Slavens S. Ed., BILLS AND NOTES-NEGLIGENT CONDUCT BY DRAWER PREVENTING HIS CLAIM THAT DRAWEE PAID ON A FORGED INDORSEMENT, 51 Mich. L. Rev. 103 (1952).
Available at: https://repository.law.umich.edu/mlr/vol51/iss1/9