The Basics: Conversion Actions Against Payor Banks On Paid Checks Based On Missing Indorsements

LexisNexis (March 16, 2023, 3:20 PM EDT) -- If a check payable to X is stolen by a dishonest employee Y and then deposited by Y in a personal bank account without an indorsement from X, X can sue the bank who paid the check on a theory of conversion under the UCC. UCC Article 3’s definition of conversion found in § 3-420(a) includes the situation where a bank pays the check to a person not entitled to enforce the instrument or receive payment....