Allstate Insurance Company issued a check payable to “Chuk N. Tang & Rosa C. Tang HWJT” with “Bank of America” on the second line and the following explanation on the front of the check: “Settlement of our rental dwelling loss caused by fire on 11/21/93.” The Tangs indorsed the check and forged the indorsement of Bank of America. When Bank of America objected, the Tangs claimed that only they needed to sign the instrument for further negotiations.

The check was intended as a joint payment for Bank of America as the mortgagee on the Tangs’ rental property because the insurance policy required that the mortgagee be paid first before any proceeds went to the property owners. Bank of America sued Allstate. Is Bank of America entitled to recover for the lack of its indorsement? Was its indorsement necessary for further negotiation? [Bank of America Nat’l Trust & Savings Ass’n v Allstate Insurance Co., 29 F Supp 2d 1129 (CD Cal)]