I have a customer that has let his "girl friend" write checks and sign his name to them since January. He has come in this week to sign an affidavit of forgery on 4 checks written in July signed by her. I am looking for the UCC article that governs this. I think he is liable for these because he has let this happen for several months. He is a so called "Good customer" and I must have all "my ducks in a row" before persuing this.

I'm sure one of our resident experts can explain this better than I, but there is a caveat that says if the customer did not take reasonable steps to avoid this fradulent activity that he bears some of the responsibility. I would think that if he knew, and you should be able to prove this by statement items, that she had been signing the checks for some time prior to his ever bringing it to your attention that he shares in the culpability. But for the life of me, I'm trying to remember where I saw that - help us out, please, expert!

I too can not come up with the part of the UCC that deals with this, but I think if the customer would have allowed her to sign her name on the checks and did not dispute it with you within the time specified in your account agreement, he has in essence made her an authorized signer on the account. You may be on the hook here if she has been signing his name, because only he can sign an attest to the fact that that is not his signature. I will also be interested in hearing other opinions on this.

Don't you just love how we get caught in the middle of these domestic disputes! Next week they will be back together and he will be driving her to her preliminary hearing..........

Another important question to ask is whether or not your depositor received any benefit from the checks in question. Did the girlfriend buy groceries that were subsequently used by your customer, or pay a household bill?

In addition, UCC3-406(a) may apply, if you can prove that the depositor failed to exercise ordinary care, and that said failure contributed to the forgery. Past items which the customer allowed to girlfriend to sign will go a long way in backing this claim for you.

I know there is some other minutia in the UCC that may be useful, but I don't have all of my resources at home, so I'll try to find something tomorrow.

You will also find some help in §4-406(a) and (d).

John,
I was thinking of 4-406 last night. On that note, I wasn't sure if the 'same wrongdoer' provision (4-406(d)(2)) fit here. Could this provision be used to deny the total claim, or just the items on prior statements? I'm thinking that it probably would not apply to the items in dispute here, but I would be interested in a second opinion.

I'd use 4-406. But I'd also tell the guy outright, "You can't have it both ways. You can't ratify your signature forged by your girlfriend for 5 or 6 months and then just decide 'I don't want to do that any more'! You have to let us know in advance we can't recognize that signature any longer." That makes a hell of a lot more sense to me than the legal niceties of 4-406.

I would use repeated wrongdoer & ratifying the signature. Decline it totally..