BILLS AND NOTES-INDORSEMENTS-LIABILITY OF COLLECTING BANK TO DRAWER FOR PAYMENT ON FORGED INDORSEMENT

Plaintiff was the drawer of a series of checks which were signed by, an authorized agent because of the fraudulent representation of one of its employees. These checks were never delivered to the payees but were cashed by defendant bank for the guilty employee upon indorsements forged by him. Defendant indorsed the checks and collected thereon from the drawee bank which, in turn, charged the checks to plaintiff's account. Plaintiff discovered the fraud after the statute of limitations had run on any action by plaintiff against the drawee bank.

Plaintiff brought this action seeking recovery on the basis of (1) a contractual obligation on defendant's indorsement, (2) conversion of the money collected from the drawee bank or (3) money had and received for the use and benefit of the plaintiff. On appeal from a judgment for defendant, held, affirmed. California Mill Supply Corp. v. Bank of America National Trust and Savings Association, (Cal. 1959) 223 P. (2d) 849.