Nancy Gabbard, the office manager for the Golden Years Nursing Home, received at the nursing home Social Security checks drawn on the United States Treasury and made payable either to individual patients or to "Golden Years Nursing Home for [an individual patient]." Gabbard engaged in an embezzling scheme whereby she would have certain patients indorse their own checks in blank—each patient would sign his own name on the back of the check, placing no restrictions on the manner in which the check could subsequently be negotiated. 

Gabbard would then cash the checks and either keep the cash or deposit the funds into her personal bank account. After Gabbard’s scheme was discovered, Golden Years brought suit against Gabbard and against the Star Bank Corporation where the checks had been cashed. The patients had in other documents assigned their interests in the checks to Golden Years, and the claim against the bank alleged that it had converted Golden Years’s property by cashing checks with forged indorsements. One of the issues in the lawsuit was whether the checks had been properly negotiated to Star Bank. Did Star Bank become a holder of the checks that had been indorsed in blank by the payees?