Chevy Chase Bank, F.S.B. v. Wachovia Bank, N.A
United States Court of Appeals for the Fourth Circuit
208 F. Appx. 232 (2006)
Young & Rubicam (Y&R) used a positive-pay arrangement with Wachovia Bank (defendant), under which Y&R reported the date, check number, and amount of each issued check for Wachovia to verify before paying. Y&R issued a $341,187.45 check to Hearst Magazines, but it was deposited at Chevy Chase Bank (plaintiff) under a different payee name; Wachovia verified the date, number, and amount under the positive-pay system and paid it, then credited Y&R after discovering the discrepancy, having already destroyed the physical check after digitally copying it. Wachovia sought reimbursement from Chevy Chase for breach of the presentment warranty against alteration, but Chevy Chase's own investigation could not determine whether the check had been altered or was simply counterfeit; the district court granted summary judgment to Chevy Chase, and Wachovia appealed.
Whether a party presenting a check for payment breaches the UCC's presentment warranty against alteration when the payee name on the paid check differs from the payee name on the check as issued, but the presenting party cannot determine whether the check was altered rather than counterfeited.