Clay issues a check payable to Discount Mart.Ernestina,Discount's cashier,forges the store's indorsement and deposits the check in her bank ac?count.Clay's bank,First Friendly Bank,pays the check.Clay can recover from
A)Ernestina,who can recover from First Friendly Bank.
B)First Friendly Bank,which cannot recover from Ernestina.
C)First Friendly Bank,which can recover from Ernestina.
D)no one.

Question

Quizplus · Accepted Answer

although Ernestina committed forgery, Clay's bank, First Friendly Bank, still paid the check based on the forged endorsement. As a result, First Friendly Bank acted negligently in not verifying the authenticity of Discount Mart's endorsement, and ultimately bears responsibility for the loss. Therefore, Clay can recover from First Friendly Bank and First Friendly Bank can recover from Ernestina.

Clay Issues a Check Payable to Discount Mart