In the case of Interior Crafts, Inc. v. Leparski, 366 Ill.App.3d 1148, 853 N.E.2d 1244, 304 Ill.Dec. 878 (3 Dist.2006), the trial court granted summary judgment in favor of Interior on the basis of conversion. The Appellate Court affirmed.
The indorsement is a restrictive indorsement under UCC 2-206(c)(2), which imposes conversion liability on a depository bank for failure to honor a restrictive endorsement. The first party to receive this indorsement is a depository bank strictly liable to the payee of the checks.
The Court stated that the code provides for liability if payment is made inconsistent with the restrictive endorsement. There is no requirement that the restrictive endorsement be made only by an authorized agent.
Therefore, regardless of Leparski's authority to indorse checks, he was not authorized to deposit them into his personal account.
b). Employee Thievery:
In order to discourage employee thievery the duties of receipt and deposit of funds should be delegated to different employees who both have the duty to submit recording of the receipts and deposits to a controlling authority. The separation and oversight provides multiple preventions to employee thievery.
Transfer and Holder in Due Course:
In the case of Chase Home Finance, LLC. v. Fequire, 119 Conn.App. 570, 989 A.2d 606 (2010), the trial court supported a judgment of strict foreclosure. The Appellate Court affirmed.
The Court stated that Chase was a holder of the negotiable note in due course because General Statutes § 49-17 permits the holder of a negotiable instrument that is secured by a mortgage to foreclose on the mortgage even when the mortgage has not yet been assigned to him.
Under this law the mortgage followed the note and as a holder of the note, it had common law rights to foreclose on the property when the mortgage was not yet assigned to them. Additionally, standing to enforce the promissory note is set forth by the provisions of the Uniform Commercial Code as adopted in General Statutes § 42a-1-101 et seq.
Holder in Due Course:
In the case of Triffin v. American International Group, Inc., ___ A.2d ___ (N.J.Super. 2008), the trial judge dismissed the complaint. The Court of Appeals affirmed.
The Court stated that Triffin was not a holder in due course because A-1 was not a holder in due course. A-1 tried to cash the check that was unsigned when it was presented for payment.
UCC 3-320 states that an unauthorized signature does not create a holder in due course. Merriwether was the only person authorized to sign the check and he did not.