Sample Question 6

Singer was a famous musician. Agent was authorized to collect payment for all of Singer's performances. Agent had no rights in any of the payments due Singer.

In payment for a completed performance by Singer, Concert issued a $20,000 check drawn on Bank One. As instructed by Singer, Concert made the check payable to the order of "Agent, as agent for Singer," and delivered the check to Agent. On the memo line on the face of the check, Concert had written, "For Singer's June 19th performance."

Agent visited Bank Two, where both she and Singer maintained separate checking accounts. Agent's personal account, #12345, was overdrawn. Agent spoke with Bank Two's manager, Manager, and apologized for being overdrawn in her personal account. Agent told Manager that, as a "temporary arrangement to cover the overdrafts," she wanted to deposit the $20,000 check from Concert into her own personal account at Bank Two. Agent indorsed the check as follows: "For Deposit To Account #12345 s/Agent."

Manager made the deposit as indicated by Agent although he knew that on all prior occasions Agent had deposited checks for Singer's performances into account #56789, which was Singer's checking account with Bank Two. The check was credited to Agent's personal account with Bank Two, clearing Agent's overdrafts, and the check was then timely presented to and paid by Bank One. Within the next few days, Agent withdrew the remaining balance from account #12345 and closed the account.

Subsequently, Agent and Singer had a falling out. Singer discovered the above facts and demanded that Bank Two pay him $20,000. Bank Two refused. Agent cannot be located.

Under the Uniform Commercial Code:

1. Can Singer successfully sue Bank Two for conversion and recover the $20,000? Explain.

2. What rights, if any, does Singer have to recover from Bank One? Explain.

3. What rights, if any, does Singer have to recover from Concert? Explain.