Cengage Advantage Books: Law for Business 18th Edition by John Ashcroft ,Janet Ashcroft

Exercise 14

Getty Petroleum Corp. sold gasoline and products through dealer-owner stations. When a station customer paid with a credit card, the credit card company paid Getty, which then issued a check payable to the dealer for the sales. Getty did not intend many of the checks for the payees, since it voided them and credited the amount toward the dealers' future gasoline purchases. Lorna Lewis had the job of voiding the checks. She stole 130 checks, forged indorsements of the dealers, and sent the checks to American Express to pay her credit card debt. After Getty discovered Lewis's theft, it sued American Express. Should American Express bear the loss as a result of the forged indorsements? [Getty Petroleum Corp. v. American Exp., 660 N.Y.S.2d 689 (N.Y.)]