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Forged Signatures

Cynthia Stafford worked as an administrative professional at Gerber & Gerber, P.C. (Professional Corporation) a law firm, for more than two years. During that time, she stole ten checks payable to Gerber & Gerber (G&G), which she endorsed in blank by forging one of the attorney's signatures. She then endorsed the forged checks in her name and deposited them in her accounts at Regions bank thousands of checks amounting to $300 million to $400 million. Each G&G check was endorsed with a rubber stamp for deposit into the G&G account. The thefts were made possible in part because G&G kept unendorsed checks in an open file accessible to all employees and Stafford was sometimes the person assigned to stamp the checks. When the thefts were discovered, G&G filed a suit in a Georgia state court against Regions Bank to recover the stolen funds, alleging in part negligence. Regions Bank filed a motion for summary judgment. What principles apply to attribute liability between these parties? How should the court rule on the bank's motion? Explain.

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The court will rule in favor of the Regions bank:

1. Regions Bank is in part responsible for the negligence because it failed to detect the forgery of signatures. It is the responsibility of the bank to satisfy itself about the genuineness of the signature.
2. On the other hand Gerber & Gerber should not have kept unendorsed check in an ...

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