Earl Tetley worked as a payroll clerk for Tinwings Inc. Over the course of several months, he defrauded the company of about $250 000. His plan was simple. He drafted cheques, on behalf of the company, that were payable to people who had recently quit or been fired from Tinwings. He then forged the payees’ blank endorsements and presented the cheques to the drawee, the Bank of Manitoba. The bank honoured the cheques, paid the money to Earl, and debited Tinwings’s account. Tinwings eventually discovered the scheme. Although it normally would have contacted the police immediately, it hesitated to do so because Earl was the company president’s nephew. Tinwings therefore agreed that it would keep the situation quiet as long as Earl repaid the money with interest within 18 months. After a year and a half, however, Earl had made only a token repayment of $5000. Earl has since been convicted and imprisoned for his fraud. Without any other option, Tinwings has now sued the Bank of Manitoba. The company argues that since the endorsements on the cheques were forged, the bank had no authority to debit its account. Is that correct? Explain your answer.