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Mr. DW. Later, Mr. P, stole the promissory note and forged the
signature of Mr. DR. thereafter, Mr. P negotiated the instrument by
indorsement and delivery to Mr. A.
a. Can Mr. A recover from Mr. DW? What if Mr. A is holder in due
course?
No, Mr. A cannot recover from Mr. DW because Mr. DW did not yet
accept the note therefore he is not bound to pay the bill. However, if
Mr. DW accepts the bill then he admits the genuineness of Mr. DRs
signature and therefore he cannot refuse to pay Mr. A.
b. Can Mr. A recover from Mr. DR? What if Mr. A is a holder in due
course?
No, Mr. A cannot recover from Mr. DR even if he (A) is a holder in
due course. Forgery is a real defense which can be set up against
any holder. The signature is inoperative and, therefore, it did not
operate to make Mr. DR a party to the instrument.
c. In case of dishonor, can Mr. A recover from Mr. P?
Yes, Mr. A can recover from Mr. P. because by endorsing the bill to
Mr. A Mr. P warrants the genuineness of the bill.
d. Suppose Mr. A negotiated the instrument to Mr. B who is now the
present holder in due course, from can Mr. B recover?
Mr. B can recover from Mr. P and Mr. A who are endorsers
subsequent to forgery. As endorsers, they warrant that the
instrument is genuine and in all respects what is purports to be.
e. Would your answers be the same if the bill of exchange in the given
problem is payable to bearer and Mr. P indorsed the instrument to
A and A indorsed it to B?
Yes, given that the forged signature is Mr. DR, it does not hold the
fact that Mr. P do not have the ability to bind Mr. DR to the
instrument.
f. In an instrument payable to order, suppose DW did not notice that
the signature of DR was forged and paid the holder; can he (DW)
recover what he paid or ask for reimbursement from DR?
With drawee's acceptance, he is bound by warranty that the
signature of the drawer is genuine therefore he bears the loss.
Mr. DR prepared a check payable to the order of Mr. P but he (DR)
did not sign it. The check is addressed to the drawee, DW bank.
Later, Mr. P, stole the check and forged the signature of Mr. DR.
thereafter, Mr. P deposited the check in his account with CB bank
and CB bank presented the check to DW
bank for clearing. DW
bank cleared the check and paid CB bank. Later, Mr. DR discovered
the forgery of his signature.
a. Can Mr. DR ask DW bank to credit his account with the amount of
the check? In other words, can DR ask for the return of the amount
deducted by DW bank from his account?
Yes, Mr. DR can ask DW bank to credit his account with the amount
of the check because of the forgery. As the law provided, depository
owes to the depositor an absolute and contractual duty to pay the
check only to the person to whom it is made payable or upon his
genuine indorsement. It is also provided that in an action by the
drawee against the drawer for the amount charged by the drawee
against the account of the drawer where the drawee paid a check
on a forged indorsement, the drawee has no defense against the
drawer and the drawer may recover from the drawee for an
instrument paid on a forged indorsement.
b. If the answer to the previous problem is yes, can DW recover the
amount from CB?
Yes, DW can recover the amount from CB. According to the general
rule, a bank or other corporation or an individual, who has obtained
possession of a check, upon an unauthorized or forged indorsement
of the payees signature and who collects the amount of the check
from the drawee, is liable for the proceeds thereof to the payee or
other owner, notwithstanding that they have been paid to the
person whom the check is obtained. Be noted that collecting bank
bound to scrutinize checks deposited with it to determine
genuineness and regularity.
C. FORGERY OF INDORSERS SIGNATURE
1. Mr. DR issued a negotiable bill of exchange payable to the order of Mr.
P with Mr. DW as drawee. After the delivery to Mr. P by Mr. DR, Mr. A
stole the bill of exchange, forged the signature of Mr. P and delivered
the instrument to Mr. B who is the present holder.
a. Can Mr. B recover from Mr. DW? What if Mr. B is a holder in due
course?
No, Mr. B cannot recover from Mr. DW because under the law, the
party whose indorsement is forged and parties prior to him,
including the maker, aren't liable, even to a holder in due course.
Forged instruments are inoperative and can't transfer rights or title
over the instrument.
Can Mr. B recover from Mr. DR? What if Mr. B is a holder in due
course?
b.
c.
d.
e.