Also known as: fraudulent indorsement · fraudulent endorsement · fraudulent endorsements · forged indorsements · forged endorsements
Written by attorneys · grounded in primary & secondary sources — see below
A forged indorsement purporting to be that of the employer on an instrument payable to the employer, or that of the identified payee on an instrument issued by the employer.
Flagship Logistics entrusted its accounts payable clerk Fiona Foster with preparing and processing checks to vendors. Foster prepared a check payable to Fulton Shipping but forged Fulton Shipping's indorsement and deposited the check into her personal account at a local bank. Because Foster had responsibility for the instrument, the forged indorsement binds Flagship Logistics for purposes of the bank's good-faith payment.
Stone & Webster drew three checks on its account payable to Westinghouse for goods and services. An employee in possession of the checks forged Westinghouse's indorsement before delivery and presented the checks to First National Bank & Trust Co. for cash. The bank paid the proceeds to the employee, who kept the funds for personal use.
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The indorsement binds the employer when the employer entrusted the employee with responsibility for the instrument and the employee makes a fraudulent indorsement in the name of the payee. The bank that pays in good faith can treat the indorsement as effective.
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It is a forged indorsement that purports to be that of the employer on an instrument payable to the employer or that of the identified payee on an instrument issued by the employer.
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Yes. If the person paying or taking the instrument fails to exercise ordinary care and that failure substantially contributes to the loss, the person bearing the loss may recover from the negligent party to the extent the negligence contributed to the loss.
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