Opinion ID: 464652
Heading Depth: 1
Heading Rank: 3

Heading: the moran check

Text: 25 A collecting bank warrants the authenticity of endorsements on checks that it transfers to a drawee bank for payment. Tex.Bus. & Com.Code Sec. 4.207. First National provided such a warranty to First City when it guaranteed the prior endorsement on the Moran check. Because First City reimbursed Moran for this improperly paid check, First City is subrogated to Moran's rights and thus may recover from First National's receiver for the amount of the first Moran check. Tex.Bus. & Com.Code Sec. 4.407. 26 The burden of determining the authenticity of endorsements is properly placed upon the collecting bank because the collecting bank is the first bank in the collection chain and is in the best position to determine the authenticity of endorsements. Ames v. Great Southern Bank, 672 S.W.2d at 450. First National failed to carry its burden here and so must bear the loss occasioned by its failure. 27 First National argues that it should be relieved of liability because this loss was occasioned by Brown's negligence in failing adequately to supervise Plake. This argument must be rejected as it was earlier with regard to Brown's claims. Similarly, we reject the district court's finding that Brown constructively received the proceeds of the Moran check. For the reasons already discussed, this argument does not relieve First National of liability for paying this check on an unauthorized endorsement. 28 We uphold the district court's judgment permitting First City to recover $24,954.04 for the Moran check. We reverse the district court's judgment, however, assessing this liability against Brown and hold that the FDIC must pay this amount to First City.