24.7 Forged Indorsements. In 1994, Brian and Penny Grieme bought a house in Mandan, North Dakota. They borrowed for the purchase through a loan program financed by the North Dakota Housing Finance Agency (NDHFA). The Griemes obtained insurance for the house from Center Mutual Insurance Co. When a hailstorm damaged the house in 2001, Center Mutual determined that the loss was

$4,378 and issued a check for that amount, drawn on Bremer Bank, N.A. The check’s payees included Brian Grieme and the NDHFA. Grieme presented the check for payment to Wells Fargo Bank of Tempe, Arizona. The back of the check bore his signature and in hand-printed block letters the words “ND Housing Finance.” The check was processed for collection and paid, and the canceled check was returned to Center Mutual. By the time the insurer learned that NDHFA’s indorsement had been forged, the Griemes had canceled their policy, defaulted on their loan, and filed for bankruptcy. The NDHFA filed a suit in a North Dakota state court against Center Mutual for the amount of the check. Who is most likely to suffer the loss in this case? Why? [State ex rel. North Dakota Housing Finance Agency v. Center Mutual Insurance Co., 720 N.W.2d 425 (N.Dak. 2006)]