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02/09 Negotiable Instruments (Commercial Paper) Question

Drawer wrote a check, drawn on Bank, to Payee for $3,000 and delivered the check to Payee as payment for services Payee had performed for Drawer. Before Payee had a chance to deposit the check in her bank account, she was robbed at gunpoint by Thief, who took her handbag with the check in it. After Thief discovered Payee’s check in her handbag, he used the examples of Payee’s signature on various pieces of identification inside her wallet to create a perfect forgery of Payee’s signature on the back of the check.

The next day, Thief agreed to buy a used car from Seller for $3,000. Thief offered Seller the $3,000 check stolen from Payee as payment for the car. Thief told Seller that his friend, Payee, owed him $3,000 and had signed the check over to him so that he could use it to pay for the car. Seller was initially reluctant to take the check in payment for the car. However, Thief showed Payee’s driver’s license to Seller, explaining that Payee had lent him her ID while she was at work. Seller saw that the signature on the check matched the signature on the driver’s license, so he was convinced that Thief was telling the truth and that Payee had negotiated the check to Thief. Acting in good faith, Seller took the check in payment for the car, gave Thief the car keys, and signed the certificate of title over to him. Thief drove off in the car.

The next day, Seller took Payee’s check to Bank and tried to cash it, but Drawer had stopped payment on the check after Payee had told him that the check had been stolen. Accordingly, Bank’s teller refused to pay the check.

Does Seller have a right to recover the amount of the check from any of Payee, Drawer, Bank, or Thief? Explain as to each.

 

 

MEE FAQs

Description of the MEE
Jurisdictions Using the MEE
Why Jurisdictions May Want to Implement the MEE

February 2009 MEE Questions

Agency and Partnership Question
Evidence Question
Decedents’ Estates Question
Real Property Question
Federal Civil Procedure and Conflict of Laws Question
Negotiable Instruments (Commercial Paper) Question
Torts Question
Family Law Question
Corporations Question

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