Louise Kalbe drew a check in the amount of $7,260 payable to the order of cash on her account at
Louise Kalbe drew a check in the amount of $7,260 payable to the “order of cash” on her account at the Pulaski State Bank. The check was lost or stolen, but Kalbe did not report this to the bank, nor did she attempt to stop payment on it. When the check was received by the Pulaski State Bank, Kalbe had only about $700 in her checking account.
However, the bank paid the check, creating an overdraft in her account of $6,542.12. The bank then sued Kalbe to recover the amount of the overdraft. Kalbe asserted that the check was not properly payable from her account. Was the bank legally entitled to pay a check that exceeded the balance in the drawer’s account and to recover the overdraft from the drawer?
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