Miller does the payroll for XYZ Company.In between Adams and Bates, he inserts the name Appleton and makes out a weekly paycheck in that name.He keeps the check for himself, signing "Appleton" and cashing it at a local bank.Auditors discovered the fake payee many months later.May XYZ require the bank to recredit?
A)No, because of the holder rule
B)No, because Miller is an XYZ employee and the fictitious payee rule applies
C)Yes, because the indorsement is forged
D)Yes, because the check was, in effect, stolen

Question

Quizplus · Accepted Answer

The fictitious payee rule applies because Miller, an employee of XYZ, created a fake payee and endorsed the check himself. This rule typically prevents the company from holding the bank liable for the loss.

Miller Does the Payroll for XYZ Company