C&N and Alabama Siding performed construction work at job sites throughout

the southeastern United States. On Wednesday of each week, the foreman at

each job site would telephone Bivens and give her the names of the employees

working on the job and the number of hours they had worked. Bivens would

then convey this information to Automatic Data Processing (ADP). Under a

contract with C&N and Alabama Siding, ADP prepared payroll checks for the

two companies. After preparing the payroll checks based on the information

given to it by Bivens, ADP sent the checks to the offices of C&N and Alabama

Siding for authorized signatures. Bivens was not an authorized signer. After the

checks were signed, Bivens sent the checks to the job site foreman to deliver to

the employees.

Bivens soon began conveying false information and hours worked. On the

basis of this false information, ADP prepared payroll checks payable to persons

658 Part 4 Negotiable Instruments

who were actually employees but had not worked the hours Bivens had

indicated. After obtaining authorized signatures, Bivens intercepted the checks,

forged the indorsements of the payees, and either cashed them at Community

Bancshares or deposited them into her checking account at Community, often

presenting numerous checks at one time. Bivens continued this practice for over

a year, forging more than 100 indorsements.

The vice president of C&N discovered the embezzlement after noticing

payroll checks payable to employees who had not recently performed services

for the corporations. Bivens later admitted to forging the indorsements.

C&N brought suit against the bank for paying on forged indorsements.

Can C&N recover? [C&N Contractors, Inc. v Community Bancshares, Inc.,

646 So2d 1357 (Ala)]

AppendixLO1