Michigan Base Property Insurance Association v. Washington, presents the issue of liability for payment of a check with a forged indorsement. After you read the case analysis, determine if the appellate court reached the correct conclusion. Why?

case 10.0 Michigan Basic Property Insurance Association v. Washington Court of Appeals of Michigan, 2012 WL 205753 (2012). FACTS The Michigan Basic Property Insurance Association REASON The court noted that, under the Uniform Commer- (MBP) issued a check for $69,559.06 from its account with Fifth cial Code (UCC), the check was not properly payable because Third Bank to Joyce Washington, Countrywide Home Loans, and it had two forged indorsements. When a bank pays a check T&C Federal Credit Union as co-payees. Washington indorsed bearing a forged indorsement, the UCC ordinarily requires the the check herself by signing all three payees' names and did not bank to recredit the customer's account. Nevertheless, the court distribute the proceeds to the co-payees. pointed out that the UCC allows parties to change their duties When the check reached Fifth Third Bank, it notified MBP of the by contract. payment through a daily account statement. MBP did not object, In this case, the account agreement obligated MBP to care- so Fifth Third Bank withdrew the funds from MBP's account. Fifth fully review its checking account statements and to notify Fifth Third Bank also sent information about the check in a monthly Third Bank of any problems within thirty days. In the absence account statement, and MBP still failed to object, even though the of such notice, the contract provided that MBP, not Fifth Third account agreement required it to provide prompt notice of any Bank, was liable for any forged indorsements. Because MBP forgeries. MBP was forced to issue a second check to Country- did not provide prompt notice of the forgeries, Fifth Third Bank wide, so it sued Fifth Third Bank and sought to have its account was not required to recredit MBP's account. recredited. The trial court found that Fifth Third Bank was liable to MBP, and another party appealed on Fifth Third Bank's behalf. FOR CRITICAL ANALYSIS-Legal Consideration As a practical matter, does it make sense for the customer to bear primary ISSUE Was Fifth Third Bank liable to MBP for paying a check responsibility for discovering instances of fraud? Which party with forged indorsements? is in a better position to detect any irregularities? Explain. DECISION No. The Michigan appellate court reversed the trial court's judgment