a. Aren't banks liable if they pay forged checks?
b. Was the PGA negligent in this case?
c. wasn't the bank negligent, too? After all, it violated its own policy by cashing a $5,000 check without verifying the signature.
d. Who would be liable if both the PGA and the bank were negligent?
Adrenetti Collins was a secretary who worked in the PGA office. During a four-month period, she forged 18 PGA checks totaling $22,699.81. To avoid detection, she intercepted two of the bank statements sent by Whitney National Bank and replaced them with forged statements that left out the numbers of the checks she had stolen. The usual Whitney statement was printed on vanilla-colored paper measuring a non-standard 6 ¾ × 11 inches. The forged statements were on standard 8½ × 11 inch white paper. They were not dated but they did contain the Whitney logo. Collins's boss, Robert Brown, received two forged statements and then no statements at all for two months.
Whitney's policy was to verify signatures on checks equal to or greater than $5,000. One of the forged checks was in the amount of $5,000, but Whitney did not verify Brown's signature before paying it. Brown's signature was a semi-legible letter or two and a long loop. The forged signature on the check looked very similar to the real one.