Martha draws a check payable to the order of Stella. Stella indorses the check to Karen. But Leslie steals the check from Karen, forges Karen's indorsement, and cashes the check at a liquor store. When the forgery is exposed, whom can the liquor store legally recover from?

Question

Quizplus · Accepted Answer

The liquor store can legally recover from Leslie, the forger who committed the fraud. Martha, the drawer of the check, is not liable because she issued the check to the order of Stella, not Karen or Leslie. Karen is not liable because her indorsement was forged and she did not receive the proceeds of the check. Stella is not liable because she properly indorsed the check to Karen, and it was Karen's indorsement that was forged.

Martha Draws a Check Payable to the Order of Stella