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06/16/88 Wilder Binding Company, v. Oak Park Trust and Savings

June 16, 1988

WILDER BINDING COMPANY, PLAINTIFF-APPELLEE

v.

OAK PARK TRUST AND SAVINGS BANK, DEFENDANT-APPELLANT



APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, FOURTH DIVISION

527 N.E.2d 354, 173 Ill. App. 3d 34, 122 Ill. Dec. 856 1988.IL.941

Appeal from the Circuit Court of Cook County; the Hon. Odas Nicholson, Judge, presiding.

APPELLATE Judges:

JUSTICE LINN delivered the opinion of the court. JOHNSON, J., concurs. PRESIDING JUSTICE JIGANTI Dissenting.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE LINN

Plaintiff, Wilder Binding Company, brought this action to recover $19,630 that Oak Park Trust & Savings Bank paid out of Wilder's account on checks that were forged by Wilder's bookkeeper during an eight-month period. Wilder also sought an award of prejudgment interest. Following a hearing on Wilder's motion for summary judgment, the trial court entered judgment for the principal balance against Oak Park but denied Wilder's request for interest.

Oak Park appeals, contending that there are fact issues precluding summary judgment, including the relative standards of care that depositors and banks owe for the prevention and discovery of check forgeries, as set out in the Uniform Commercial Code, particularly section 4-406 (Ill. Rev. Stat. 1985, ch. 26, par. 4-406).

Wilder cross-appeals from the order denying its request for prejudgment interest.

We affirm the trial court.

Background

From December 20, 1983, through July 15, 1984, Oak Park debited Wilder's account for a total of $25,254.78 in checks that had been forged by Wilder's bookkeeper, Lorine Daniels. On file at the bank were signature cards for Donald McCarrell and Douglas McCarrell only. Daniels made the checks payable to her and forged McCarrell's signature. The checks, all in amounts under $1,000, were cashed through the use of Oak Park's automatic check-sorting device. This machine separates checks in amounts less than $1,000 and pays them automatically. Use of this device is a business practice, presumably shared by many or most banks in Chicago, and was developed to allow banks to quickly process large daily volumes of checks.

Wilder was unaware that Daniels, a convicted felon, was forging checks until its accountant discovered them during an inspection of Wilder's records on July 15, 1984.

Within a few days, Wilder informed the bank of the forgeries and unauthorized payments from its account. Wilder demanded the return of the full $25,254.78, but the bank credited only $5,624.78 to Wilder. This sum represented the total of forged checks that had been paid out in the month immediately preceding Wilder's report of the forgeries to Oak Park Trust and Savings Bank (June 1984).

The bank admitted that no checks under the amount of $1,000 were reviewed by sight or other method that would reveal the possibility of an unauthorized or forged signature. Instead, the bank used a check-sorting machine, which was programmed to pay, automatically, those drafts in the amount of $1,000 or less. According to an affidavit of Robert C. Visconti, a bank official with many years of ...


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