According to revised Article 3 if a bank pays a check that contains a forged indorsement:

Question

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If a bank pays a check that contains a forged endorsement, under revised Article 3 of the Uniform Commercial Code (UCC), the bank has converted the check by wrongfully paying it. This means that the bank is liable for any resulting damages or losses to the legitimate holder of the check. The person whose endorsement was forged is not liable, and the forger is liable to the bank, but not to the legitimate holder of the check.

According to Revised Article 3 If a Bank Pays a Check