Qiara steals a check from Reese, forges his signature, and transfers the check to Salon Beauteous, a beauty and barber salon,for value. Unaware that the signature is not Reese's, Salon Beauteous presents the check to Town & Country Bank, the drawee,
which cashes the check. Reese discovers the forgery and insists that his bank recredit his account. Can the bank refuse? If not, from whom can the bank recover?
Town & Country cannot refuse to recredit Reese's account under the facts as stated in this problem.
The general rule is that a bank must re¬credit a customer's account when it pays on the customer's forged signa¬ture. Thus, the bank here cannot collect from its customer. Furthermore, a bank has no right to recover from a holder who, without knowledge, cashes a check bearing a forged drawer's signa¬ture, which appears to be the circumstance in this problem.
Therefore, Town & Country cannot collect from Salon Beauteouseither. The bank can collect the amount of the check from the thief who forged the signature, however. The bank's best course of action is to charge Qiara.
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