Question: John Waddell Construction Company Waddell maintained a checking account at
John Waddell Construction Company (Waddell) maintained a checking account at the Longview Bank & Trust Company (Longview Bank). Waddell drafted a check from this account made payable to two payees, Engineered Metal Works (Metal Works) and E. G. Smith Construction (Smith Construction). The check was sent to Metal Works, which promptly indorsed the check and presented it to the First National Bank of Azle (Bank of Azle) for payment. The Bank of Azle accepted the check with only Metal Works’s indorsement and credited Metal Works’s account. The Bank of Azle subsequently presented the check to Longview Bank through the Federal Reserve System. Longview Bank accepted and paid the check. When Waddell received the check along with its monthly checking statements from Longview Bank, a company employee noticed the missing indorsement and notified Longview Bank. Longview Bank returned the check to the Bank of Azle, and the Bank of Azle’s account was debited the amount of the check at the Federal Reserve. Has the Bank of Azle breached its warranty of good title? Longview Bank & Trust Company v. First National Bank of Azle, 750 S. W. 2d 297, 1988 Tex. App. Lexis 1377 (Court of Appeals of Texas)
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