Title Insurance Co. of Minnesota v. Comerica Bank-California
Court of Appeal for the Sixth District of California
32 Cal. Rptr. 2d 735 (1994)
First National Mortgage Company (FNMC) issued a check payable to Helen Nastor for a loan, delivered it to her son Rudy, but someone impersonating Nastor herself indorsed and cashed the check at Comerica Bank (defendant); FNMC then made a second loan to Nastor based on a forged power of attorney purporting to authorize Rudy to act as her agent, and when that loan went unpaid and the forgery was discovered, Title Insurance (plaintiff), as subrogee of FNMC's title-insurance claim, sued the bank for negligence in paying the first check to an impersonator without alerting FNMC to the fraud before the second loan was made. The trial court dismissed based on the UCC's imposter rule, and Title appealed.
Whether, under the Uniform Commercial Code, an indorsement of a check by an imposter is effective if the imposter induced the issuance of the instrument to the imposter or a person acting in concert with the imposter.