Opinion ID: 2086756
Heading Depth: 1
Heading Rank: 1

Heading: drawer's signature

Text: Each of the nine forged checks at issue on this appeal has Wayne Anderson's signature forged as drawer of the check by Averill Anderson. The only testimony with regard to the quality of those forgeries was the deposition testimony of Alma Hale, assistant vice-president and cashier at Citizens, and Patsy Ferguson, assistant cashier at Citizens. Both witnesses testified that the six or seven employees of Citizens responsible for examining and filing all checks received by the bank for payment were instructed to compare the drawer's signature on the checks with that on the signature card and to also examine the date and the endorsements on the checks. Both witnesses also testified that the forged signatures of Wayne Anderson on all the checks, when compared with Wayne Anderson's signature card at the bank, would have passed as Wayne Anderson's genuine signature for purposes of Citizens' making payment on the checks. Claude Zweber, president of Citizens, testified by deposition that in his opinion Citizens' procedure for examining and filing checks was the standard procedure followed by all other banks in the area. There is no expert testimony with respect to the quality of the forgeries nor is there any other evidence, in addition to the testimony of Zweber, with respect to whether or not such forgeries would have passed as genuine signatures under reasonable banking practices. Pursuant to subsection 3 of Section 41-04-33, N.D.C.C., Thoreson had the burden of proving that Citizens failed to exercise ordinary care in making payment on the forged checks. [1] See Nu-Way Services, Inc. v. Mercantile Trust Co. Nat. Assoc., 530 S.W.2d 743 (Mo.App.1975). Subsection 3 of Section 41-04-03, N.D.C.C., provides the following partial definition of ordinary care: 3. Action or nonaction approved by this chapter or pursuant to Federal Reserve regulations or operating letters constitutes the exercise of ordinary care and, in the absence of special instructions, action or nonaction consistent with clearinghouse rules and the like or with a general banking usage not disapproved by this chapter, prima facie constitutes the exercise of ordinary care. There is no evidence in the record regarding Federal Reserve regulations or clearinghouse rules, and the only evidence of general banking usage is Zweber's deposition testimony that Citizens' procedure for examining and filing checks was the standard procedure followed by all other banks in the area. In Mercantile Trust Co., supra, Nu-Way Services, Inc., sued Mercantile to recover charges it made against Nu-Way's account on 43 forged and six altered checks. One of Nu-Way's employees had taken 43 blank checks from Nu-Way's checkbook and, after making himself payee on each of the checks, had forged the signature of Nu-Way's president as drawer on each of the checks. Each of the checks was paid by Mercantile and returned to Nu-Way along with an itemized statement of account at the end of each month in which the checks were cashed. The Missouri Court of Appeals determined that Nu-Way had failed to exercise reasonable care and promptness to discover and notify Mercantile of the unauthorized signatures. The appeals court further determined that, under Section 400.4-406(3), R.S.Mo.1969, [2] the burden of establishing Mercantile's lack of ordinary care rests staunchly on Nu-Way. 530 S.W.2d at 746. In determining that Nu-Way had failed to meet its burden the appeals court stated: We have only before us evidence of the method applied by Mercantile in processing Nu-Way's checks. There was no evidence presented by Nu-Way of any other methods employed by other banking institutions. On the record which we review we cannot rule that Mercantile lacked ordinary care in processing Nu-Way's checks. . . . ..... The record contains no references to Federal Reserve regulation or clearing house rules, and the only evidence of `general banking usage' came from Mercantile which described the system administered by it as being in general banking usage. . . . By Nu-Way's failure to review its own bank statements when supplied by Mercantile, it had the burden under § 400.4-406(3) to establish lack of ordinary care by Mercantile. On the record before us we conclude that Nu-Way failed to meet its burden as to the 43 forged checks. 530 S.W.2d at 748. In the instant case, as in Mercantile Trust Co., supra, there is insufficient evidence in the record to support a finding that Citizens failed to exercise ordinary care in accepting the forged signatures as genuine signatures of the drawer for making payment on the checks. Consequently, Citizens' acceptance of the forged signatures as Wayne Anderson's genuine signatures provides no basis upon which to hold Citizens liable to Thoreson for payment on the forged checks.