§3-1405. Employer's responsibility for fraudulent indorsement by employee








(1). 
 
In this section, unless the context otherwise indicates, the following terms have
the following meanings.





(a). "Employee" includes an independent contractor and employee of an independent contractor
retained by the employer. [1993, c. 293, Pt. A, §2 (NEW).]










(b). "Fraudulent indorsement" means:



(i) In the case of an instrument payable to the employer, a forged indorsement purporting
to be that of the employer; or






(ii) In the case of an instrument with respect to which the employer is the issuer,
a forged indorsement purporting to be that of the person identified as payee. [1993, c. 293, Pt. A, §2 (NEW).]













(c). "Responsibility" with respect to instruments means authority:



(i) To sign or indorse instruments on behalf of the employer;





(ii) To process instruments received by the employer for bookkeeping purposes, for
deposit to an account or for other disposition;






(iii) To prepare or process instruments for issue in the name of the employer;





(iv) To supply information determining the names or addresses of payees of instruments
to be issued in the name of the employer;






(v) To control the disposition of instruments to be issued in the name of the employer;
or






(vi) To act otherwise with respect to instruments in a responsible capacity.




"Responsibility" does not include authority that merely allows an employee to have
access to instruments or blank or incomplete instrument forms that are being stored
or transported or are part of incoming or outgoing mail, or similar access. [1993, c. 293, Pt. A, §2 (NEW).]







[
1993, c. 293, Pt. A, §2 (NEW)
.]








(2). 
 
For the purpose of determining the rights and liabilities of a person who in good
faith pays an instrument or takes it for value or for collection, if an employer entrusted
an employee with responsibility with respect to the instrument and the employee or
a person acting in concert with the employee makes a fraudulent indorsement of the
instrument, the indorsement is effective as the indorsement of the person to whom
the instrument is payable if it is made in the name of that person. If the person
paying the instrument or taking it for value or for collection fails to exercise ordinary
care in paying or taking the instrument and that failure substantially contributes
to loss resulting from the fraud, the person bearing the loss may recover from the
person failing to exercise ordinary care to the extent the failure to exercise ordinary
care contributed to the loss.


[
1993, c. 293, Pt. A, §2 (NEW)
.]








(3). 
 
Under subsection (2), an indorsement is made in the name of the person to whom an
instrument is payable if:





(a). The instrument is made in a name substantially similar to the name of that person;
or [1993, c. 293, Pt. A, §2 (NEW).]










(b). The instrument, whether or not indorsed, is deposited in a depositary bank to an
account in a name substantially similar to the name of that person. [1993, c. 293, Pt. A, §2 (NEW).]







[
1993, c. 293, Pt. A, §2 (NEW)
.]





SECTION HISTORY

1993, c. 293, §A2 (NEW).