Davis v. Stern, Agee & Leach, Inc.
Supreme Court of Alabama
965 So. 2d 1076 (2007)
Sterne (defendant) received a change-of-beneficiary form purportedly signed by Robert Davis switching his IRA beneficiary from his wife Mary (plaintiff) to his sons, distributed the funds to the sons after Robert's death without verifying the signature, and later Mary's handwriting expert opined the signature was forged after comparing it to three earlier authenticated forms. Mary sued Sterne and the sons for conversion and wrongful transfer; Sterne argued it had orally confirmed the change with Robert, and the trial court granted Sterne summary judgment.
Whether, under the Uniform Commercial Code, if a securities intermediary makes a transfer based on a forged and therefore ineffective directive, the intermediary is liable to the holder of the security.