400.3-405. Employer's responsibility for fraudulent endorsement by employee.
Employer's responsibility for fraudulent endorsement by employee.
400.3-405. (a) In this section:
(1) "Employee" includes an independent contractor andemployee of an independent contractor retained by the employer.
(2) "Fraudulent endorsement" means (i) in the case of aninstrument payable to the employer, a forged endorsementpurporting to be that of the employer, or (ii) in the case of aninstrument with respect to which the employer is the issuer, aforged endorsement purporting to be that of the person identifiedas payee.
(3) "Responsibility" with respect to instruments meansauthority (i) to sign or endorse instruments on behalf of theemployer, (ii) to process instruments received by the employerfor bookkeeping purposes, for deposit to an account, or for otherdisposition, (iii) to prepare or process instruments for issue inthe name of the employer, (iv) to supply information determiningthe names or addresses of payees of instruments to be issued inthe name of the employer, (v) to control the disposition ofinstruments to be issued in the name of the employer, or (vi) toact otherwise with respect to instruments in a responsiblecapacity. "Responsibility" does not include authority thatmerely allows an employee to have access to instruments or blankor incomplete instrument forms that are being stored ortransported or are part of incoming or outgoing mail, or similaraccess.
(b) For the purpose of determining the rights andliabilities of a person who, in good faith, pays an instrument ortakes it for value or for collection, if an employer entrusted anemployee with responsibility with respect to the instrument andthe employee or a person acting in concert with the employeemakes a fraudulent endorsement of the instrument, the endorsementis effective as the endorsement of the person to whom theinstrument is payable if it is made in the name of that person.If the person paying the instrument or taking it for value or forcollection fails to exercise ordinary care in paying or takingthe instrument and that failure substantially contributes to lossresulting from the fraud, the person bearing the loss may recoverfrom the person failing to exercise ordinary care to the extentthe failure to exercise ordinary care contributed to the loss.
(c) Under subsection (b), an endorsement is made in thename of the person to whom an instrument is payable if (i) it ismade in a name substantially similar to the name of that personor (ii) the instrument, whether or not endorsed, is deposited ina depositary bank to an account in a name substantially similarto the name of that person.
(L. 1992 S.B. 448)*No continuity with § 400.3-405 as repealed by L. 1992 S.B. 448.