HH Computer Systems, Inc. v. Pacific City Bank

I. INTRODUCTION

This case about stolen checks and check cashing services presents a distressingly common scenario: An employee of a corporation with responsibility to gather incoming checks made payable to the corporation and deposit those checks into the corporation’s bank account — in this case, the corporation’s accounting manager — steals some of the incoming checks and takes them to a check cashing service where she forges the signature of one of the officers of the corporation and receives hard cash in return. (See Cook, Robbed by Your Employees (Feb. 2013) 55 Orange County Law., p. 28 [noting risk that accounting managers with access to incoming checks may “grab the check” and “run down to a check cashing service”] (hereafter Cook article on check theft).) Naturally, after discovery of the thefts, the corporation fires the accounting manager and tries to recoup at least some of its losses. In this case, the corporation’s recoupment effort includes suing its own bank, the three check cashing services where the employee took the checks, and the three banks which received those checks from the check cashing services for deposit into those companies’ own…