Rancho San Carlos, Inc. v. Bank of Italy National Trust & Savings Ass'n

In July, 1928, the plaintiff had a commercial checking account with defendant bank at Monterey, California. Plaintiff had in its employ a bookkeeper named Harris, and another employee named James P. Dunnigan. It was plaintiff’s custom to deliver to Harris checks in blank signed by its superintendent for the purpose of enabling Harris to pay plaintiff’s current bills. On July 30, 1928, Harris filled in one of the checks so delivered to him for the sum of $10,000, the check being in terms payable to order, and inserted Dunnigan’s name therein as payee. He then forged Dunnigan’s signature as indorser on the instrument and deposited the same to the credit of Dunnigan’s checking account in the First National Bank of Monterey. All this was without the knowledge or consent of Dunnigan. On the same day the last-named bank indorsed and presented the check to defendant, which paid the same and charged plaintiff’s account therewith. Harris, by false representations, then induced the delivery to himself of a check signed in blank by Dunnigan. This check was drawn on the latter’s account in the First National Bank of Monterey and was made payable to Harris. The latter filled in the check for…