Opinion ID: 11175
Heading Depth: 2
Heading Rank: 4

Heading: The Unauthorized Cashier's Check

Text: 9 In 1989 Willow Bend's procedure for the issuance of cashier's checks required bank tellers, at the time that cashier's checks were issued, to collect payment of either cash or a cash equivalent. After doing so, a special machine would imprint the appropriate amount on the check along with a machine imprinted signature. Amounts in excess of $5000 required a bank officer's signature; very large amounts required the signature of Willow Bend's vice-president. The details regarding the issuance of all cashier's checks--including the date, check number, remitter, payee, and amount--were to be entered into a cashier's check log at the time of issuance. 10 On March 7, 1989, Harvard called Warren Jamieson, who was still president, chief executive officer, and--at this time--a director of Bonham, to borrow money from Bonham for the purchase of a house at a foreclosure sale. Harvard represented to Jamieson that he needed only interim financing for the house as he had already obtained a commitment for personal financing from Plano Savings and Loan conditioned on his becoming the successful bidder. Jamieson told Harvard that he did not have the authority to approve another $175,000 debt to Harvard, but he would seek the Board's approval, which was obtained that day. Jamieson informed Harvard, however, that the loan would not be funded until Bonham received the loan documents. The loan documents prepared at Willow Bend were faxed to Bonham the following day, March 8. On that day, Bonham wire transferred $175,000 to Harvard's personal account at Willow Bend. 11 On March 7, the day before the money was wired (and the same day that Harvard requested the loan from Jamieson), Janice Smith, a teller at Willow Bend, handed Harvard two blank cashier's checks. Ignoring Willow Bend's policy, she did not record in the cashier's check log the details of her parting with these checks. She knew that Harvard was the chief executive officer at Willow Bend, and she did not question him about the checks. She was also unaware that Harvard left the bank with both cashier's checks. Laura Palmer, Smith's supervisor, completed the log after Smith left for the day. Palmer entered Farm and Home, $166,201 for one of the cashier's checks and initialed the entry; the other cashier's check was voided. Harvard ultimately completed the check by endorsing it and writing in by hand the amount of $166,201 payable to Farm and Home Savings. This cashier's check was dated March 7, 1989, but the date stamp on the back of the check was March 8. The proof stamp on the face of the check was March 9. Neither Palmer nor Smith ever received any cash payment for either cashier's check. The cashier's check for $166,201 was used to purchase a house at a foreclosure sale on March 7. Willow Bend did not receive funds to pay for the check until June 11, 1989. As a result, Willow Bend suffered a cash loss of $117.73 in interest income it would have received from the $166,201.