70A-3-405 - Employer's responsibility for fraudulent indorsement by employee.
70A-3-405. Employer's responsibility for fraudulent indorsement by employee.
(1) In this section:
(a) "Employee" includes an independent contractor and employee of an independentcontractor retained by the employer.
(b) "Fraudulent indorsement" means in the case of an instrument payable to the employer,a forged indorsement purporting to be that of the employer, or in the case of an instrument withrespect to which the employer is the issuer, a forged indorsement purporting to be that of theperson identified as payee.
(c) (i) "Responsibility" with respect to instruments means authority to sign or indorseinstruments on behalf of the employer, to process instruments received by the employer forbookkeeping purposes, for deposit to an account, or for other disposition, to prepare or processinstruments for issue in the name of the employer, to supply information determining the namesor addresses of payees of instruments to be issued in the name of the employer, to control thedisposition of instruments to be issued in the name of the employer, or to act otherwise withrespect to instruments in a responsible capacity.
(ii) "Responsibility" does not include authority that merely allows an employee to haveaccess to instruments or blank or incomplete instrument forms that are being stored or transportedor are part of incoming or outgoing mail, or similar access.
(2) For the purpose of determining the rights and liabilities of a person who, in goodfaith, pays an instrument or takes it for value or for collection, if an employer entrusted anemployee with responsibility with respect to the instrument and the employee or a person actingin concert with the employee makes a fraudulent indorsement of the instrument, the indorsementis effective as the indorsement of the person to whom the instrument is payable if it is made in thename of that person. If the person paying the instrument or taking it for value or for collectionfails to exercise ordinary care in paying or taking the instrument and that failure substantiallycontributes to loss resulting from the fraud, the person bearing the loss may recover from theperson failing to exercise ordinary care to the extent the failure to exercise ordinary carecontributed to the loss.
(3) Under Subsection (2), an indorsement is made in the name of the person to whom aninstrument is payable if it is made in a name substantially similar to the name of that person, orthe instrument, whether or not indorsed, is deposited in a depositary bank to an account in a namesubstantially similar to the name of that person.
Repealed and Re-enacted by Chapter 237, 1993 General Session