“Accordingly, when here the payees of the cashier’s checks indorsed the checks in blank, the checks then became bearer paper and could—similar to cash—be transferred by possession alone.” —Miller, Judge 

Facts: Cynthia Stafford worked as a real estate closing secretary for Gerber & Gerber, P.C. (G&G), a law firm. The law firm acted as a trustee for the closing of real estate transactions. Real estate buyers would write cashier’s checks for the purchase price of the real estate and make these checks payable to the seller-payee. The seller-payee in turn indorsed these checks in blank to the law firm and gave the checks to the law firm to hold during the time period for closing of their real estate transactions. This created bearer paper. Over a period of two years, Stafford stole some of these blank-indorsed cashier’s checks. Stafford then personally indorsed the cashier’s checks in her possession and deposited them in her personal bank account at Regions Bank. The total loss was $180,000. Stafford confessed to the theft. She pleaded guilty to criminal charges and received a five-year jail sentence. Stafford claimed to have spent the money. G&G sued Regions Bank to recover for the checks paid to Stafford, alleging that the bank was negligent in accepting the checks from Stafford. Regions Bank moved for summary judgment, arguing that it had acted properly under the Uniform Commercial Code (UCC) in accepting the bearer blank-indorsed checks from Stafford. The trial court granted Regions Bank summary judgment as to the bearer paper. G&G appealed. 

Issue: Has Regions Bank properly accepted the blank-indorsed bearer cashier’s checks from Stafford? 

Language of the Court: Accordingly, when here the payees of the cashier’s checks indorsed the checks in blank, the checks then became bearer paper and could—similar to cash—be transferred by possession alone. Thus, Regions Bank quite properly accepted the indorsed-in-blank cashier’s checks from the person in possession of them and deposited the checks into that person’s account. 

Decision: The court of appeals held that Regions Bank was not negligent in accepting the blank-indorsed bearer cashier’s checks from Stafford and placing the money in Stafford’s personal account. The court of appeals upheld the trial court’s grant of summary judgment to Regions Bank. 

Ethics Questions: Did Stafford act ethically in this case? Did G&G act ethically in suing Regions Bank to recover for Stafford’s thefts?