Question

Drawer issues a check “to the order of Payee” for $5,000. Forger steals the check from payee, forges payee’s name on the check, and sells the check to Jane, who deposits it in her account with Depositary Bank. The check proceeds through the bank collection pro- cess, where it is ultimately paid by drawee. Because the check was stolen, payee was not paid.

a. Will Depositary Bank now be able to recover from Jane? Why? b. Can Jane now recover from Forger? Why?

Answer 1

Sol To the ooder o6 Ryee fos 45.000 the chect fso Couee fos ges Poiyees nome on the check Selts the Chect to Jone who derosits t in hes account uth pePositersy Bank The bank colection psocess. usheve its utimotey faid by drsowee the chece s stolen. Pauee wos not Paid Because (a) Once the depositosy bont mode poujment to Jone They viobred the Raw b engaging in a 6audolent 6ansoction Because the signature ob the chegue wag fosged. They can Steat eceuo se agounst Jane ond ast fo the oerayment and as thc cheque ws dePasited into ne's Occount he Bant can secoveb f6om ane Hence Jane s ui Derostersy Bank new be able to ecoves b) Con dane now ecoves foom fisiges + Jone cont gecoves foom to0ge Because the fosges is not the os3ina osawesard he gave check Enousing ts bad

te Piesented hes usith the cheue ushich had 'Dwes Signarse but byfoaud, uthour oppo VO qund Content a D6owes, Jone can go for Segal Teceurs se against fesges only