24 Mar No Comments MikeT Checks Forged, Expert Matters

Facts: The plaintiff corporation originally opened a checking account at a branch office of a major regional bank located in Montgomery County, Pennsylvania. The signature card for the account initially named three individuals as the persons authorized to sign checks on behalf of the plaintiff. The plaintiff subsequently removed two of the three original signers and replaced them with two new signers. One of the removed signers was left with the possession and control of plaintiff’s checkbook. For over one year, the former signer continued to sign and issue checks in excess of $230,000.00 drawn on plaintiff’s account. In some cases, the checks were drawn to pay for legitimate business expenses of plaintiff. In others, the checks were drawn to either cash or to the order of the individual.

Client: The regional bank.

Subject of Expert Report: Whether (1) the bank acted with ordinary care and in accordance with the reasonable commercial standards of the banking community with regard to its check processing procedures and, specifically, selection of certain checks presented for payment for visual examination of the drawer’s signature and the comparison of that signature to the specimen signature on file at the bank; and (2) whether the plaintiff was negligent for (a) failing to remove the company checkbook from the former signer’s custody; and (b) continuing to give the former signer complete financial responsibility of the company, including reviewing monthly bank statements.

Outcome: The case settled after the completion of discovery.