Cengage Advantage Books: Business Law 9th Edition by Arnold Goldman ,William Sigismond

Exercise 5

Kane was notified by the Carson City National Bank that $200 had been deducted from her checking account for a check issued to Hayes. The check had been presented to the bank for payment by Gabby, a holder in due course. Kane immediately investigated and discovered that Hayes, the payee, was the person who had actually made out the check, forged Kane's signature as the drawer, and then negotiated the check to Gabby.
Questions
1. Is the bank liable to Kane for paying the check with the forged signature?
2. What must Kane do to protect any legal rights she may have against the bank?
3. If Kane had found a forged indorsement on the check that was returned to her instead of a forged signature, would the bank be liable to Kane?