Snug Harbor Realty Co. had a checking account in First National Bank. When

construction work was obtained by Snug Harbor, its superintendent, Magee,

would examine the bills submitted for labor and materials. He would

instruct the bookkeeper which bills were approved, and the bookkeeper then

prepared the checks in accordance with his instructions. After the checks were

signed by the proper official of Snug Harbor, Magee picked them up for

delivery. Instead of delivering certain checks, he forged the signatures of the

respective payees as indorsers and cashed the checks. The drawee bank then

debited the Snug Harbor account with the amount of the checks. Snug Harbor

claimed this was improper and sued the bank for the amount of the checks.

The bank claimed it was protected by the impostor rule. Will the bank be

successful? Explain. [Snug Harbor Realty Co. v First National Bank, 253 A2d

581 (NJ Super)]

660 Part 4 Negotiable Instruments

AppendixLO1