Joseph Stell, an attorney, employed Bernice Ruff as a secretary and bookkeeper for his law firm. During a period of approximately a year and one-half, Ruff stole some 29 checks intended for Stell and forged the necessary indorsements thereon. She cashed some of these checks at Union Bank and deposited the rest in her personal account at Crocker Bank. After depositing the checks in her account, Ruff withdrew the entire amount of these deposits. After Stell discovered the fraud, he sued Union Bank and Crocker Bank (the payor banks).

The banks, however, refused to issue any refund to Stell.

CASE QUESTIONS

1. In your opinion, who should win this case, and why?

2. Did Ruff breach any transfer or presentment warranties in this case? If so, why wasn’t she sued?