Bills and Notes – Indorsements – Liability of Drawee Bank on Forged Indorsement
H applied to the plaintiff credit corporation for a loan to finance a new auto dealership. In exchange for a note and contract purportedly signed by H and his wife W, plaintiff issued a check payable to H and W. The check, after being indorsed, was paid by defendant, the drawee bank. The proceeds of the loan were used as planned, but the business subsequently failed at which time it was discovered that H had forged W‘s signature on the note, the contract and the check. Plaintiff sued to compel restoration of the amount of the check to his account. Held, for the defendant. The proceeds of the check went to the very person intended by the drawer. Plaintiff’s loss was a result of the forged note and contract, not the unauthorized indorsement. Commercial Credit Corp. v. Empire Trust Co., (W.D. Mo. 1957) 156 F. Supp. 599.