CASE BRIEF: State Bank v. Smith

85 UCC Rep. Serv. 2d 260, 2014 WL 6088513 (Mich. App. 2014)

FACTS: On March 26, 2012, Dale M. Smith (defendant/counter-plaintiff), presented a cashier's check for $294,500.99 for deposit in his account with State Bank (plaintiff). The check appeared to be a cashier's check drawn on Chase Bank. State Bank accepted the check for deposit. The following day, March 27, 2012, Smith requested that plaintiff wire approximately $275,000 from his account to an account in Japan. Before performing this transfer, State Bank contacted a local Chase branch and spoke to a representative. A Chase representative confirmed the check number, the account number, verified the amount in the check and represented there were no stop-payment orders placed on the item. State Bank then processed Smiths wire transfer request.

On March 28, 2012, Chase returned the check to State Bank with the notation refer to maker. State Bank then presented the check to Chase for payment a second time, and Chase again returned the check to State Bank. Elizabeth Roush, a Vice President and Reconciliation Manager for Chase, explained that the cashier's check was different from the form of official cashier's checks issued by Chase. The check number had an incorrect number of digits, did not include a printed audit number to indicate its validity[,] did not have the proper signature, and was missing a security symbol. At her deposition, Roush explained that only one authorized signature exists for all cashier's checks drawn on the account number printed on the cashier's check. This signature is electronically printed on all checks issued by Chase retail branches. Roush was immediately able to identify that the check was not issued by Chase because the signature was not an authorized signature for that account. Roush did not know who signed the check.

On May 16, 2012, State Bank filed suit against Smith and Chase. State Bank alleged that Chase wrongfully dishonored the check. The trial court granted summary judgment for Chase and State Bank appealed.

What is the ISSUE in this Case?

Selected Answer:

D. Can there be a holder of a check that does not have an authorized signature?