Two employees of the state of New Mexico fraudulently procured and indorsed

a warrant (a draft drawn against funds of the state) made out to the Greater

Mesilla Valley Sanitation District. There was no such sanitation district. The

employees obtained payment from Citizens Bank. Western Casualty, the state’s

insurer, reimbursed the state for its loss and then brought suit against the bank

for negligently paying the warrant. Is the bank liable for its payment? Discuss

your answer. [Western Casualty & Surety Co. v Citizens Bank of Las Cruces, 676

F2d 1344 (10th Cir)]

AppendixLO1