Is Whitney liable to the PGA for the forged checks it paid?

As executive director of the Gulf States Section of the Professional Golf Association (PGA), Robert Brown was responsible for paying bills and handling the bank account. Brown used Quicken, a software program, to write checks. These checks were kept in a box beneath the printer stand in his office.

Adrenetti Collins was a secretary who worked in the PGA office with Brown. During a four-month period, she forged 18 PGA checks totaling $22,699.81.To avoid detection, she intercepted two of the bank statements sent by Whitney National Bank and replaced them with forged statements that left out the numbers of the checks she had stolen. The usual Whitney statement was printed on vanilla-colored paper measuring a nonstandard6¾ × 11 inches. The forged statements were on standard 8½ × 11- inch white paper. They were not dated, but they did contain the Whitney logo. Brown received two forged statements and then no statements at all for two months. Shortly thereafter, Collins asked for a leave of absence.

Whitney’s policy was to verify signatures on checks equal to or greater than $5,000. One of the forged checks was in the amount of $5,000, but Whitney did not verify Brown’s signature before paying it. Brown’s signature was a semi-legible letter or two and a long loop. The forged signature on the check looked very similar to the real one.