The opinion of the court was delivered by: Judge James B. Zagel
MEMORANDUM OPINION AND ORDER
This is a case between two banks involved in the processing and payment of a fraudulent check. The issue is which bank bears the financial responsibility. Plaintiff, Bank of America, has moved for summary judgment. For the reasons that follow, Plaintiff's motion is denied.
On August 12, 2004, The Pharmaceutical Research and Manufacturers of America ("PhRMA")-one of Bank of America's customers-issued and signed check number 88175 dated August 12, 2004. The check, on its account at Bank of America, was made payable to the "University of Chicago Law School" in the amount of $200,000. On that same day, PhRMA mailed the check to the University of Chicago Law School.
On September 8, 2004, George and Cathlyn Murdaugh deposited a check into their account at Mazon State Bank ("Mazon"). Like the check PhRMA mailed to the University of Chicago Law School, the check the Murdaughs deposited was number 88175 and was dated August 12, 2004. In addition, it appeared to be drawn by PhRMA on its account at Bank of America and it was in the amount of $200,000. However, the payee on the check the Murdaughs deposited was "George Murdaugh." According to Mazon, no alteration was apparent from their visual inspection of the check.
Mazon placed a five-day hold on the deposit, which was standard for a large check. Upon the expiration of the five-day hold, on September 15, 2004, Cathlyn Murdaugh came in and began to withdraw the money. Mazon's tellers became concerned and called Deborah Durando, Mazon's compliance officer. On September 15, 2004, Ms. Murdaugh withdrew a total of $21,600. Prior to her withdrawals on September 15, 2004, Bank of America paid Mazon for the $200,000 check that the Murdaughs deposited on September 8, 2004. On September 15, 2004, Durando instructed that the hold on the funds in Murdaugh's account be extended.
The extended hold would have expired on September 23, 2004, but Mazon allowed Murdaugh to withdraw the funds a day early, on September 22, 2004, after Mazon received a threatening call from Ms. Murdaugh's attorney.
On October 22, 2004, PhRMA contacted Bank of America regarding the check that the Murdaughs had deposited. PhRMA claimed that the payee had been altered, and demanded that Bank of America re-credit its account. Bank of America subsequently returned the original $200,000 check to Mazon. Mazon then turned that original check over to the FBI. According to Durando, the FBI agent told her that "from the naked eye, it did not appear that the check had been altered and they would have to send it to their laboratory."
On or about October 27, 2004, Bank of America demanded $200,000 from Mazon. On December 5, 2005, Bank of America notified PhRMA that it was providing PhRMA with $200,000 in provision credit.
A. Summary Judgment Standard
Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). In determining whether any genuine issue of material fact exists, all facts must be construed in the light most favorable to the non-moving party and all reasonable and justifiable inferences drawn in its favor. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A material fact is genuinely in dispute when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. at 248.
A key issue in this matter is whether the check was altered or forged;*fn1 neither party maintains that PhRMA actually issued a $200,000 check to the Murdaughs. A depositary bank-in this case, Mazon-presenting a check for payment from the issuing bank, warrants that the check "has not been altered." 810 ILL COMP. STAT. 5/3-417(a); 810 ILL COMP. STAT. 5/4-208(a); Wachovia Bank, N.A. v. Foster Bancshares, Inc., 457 F.3d 619, 620 (7th Cir. 2006); Clean World Engineering, Ltd. v. MidAmerica Bank, FSB, N.E.2d 110, 117-18 (2003); Wachovia Bank, N.A. v. FRB, 338 F.3d 318, 321-22 (4th Cir. 2003). Conversely, the bank on which a check is drawn (hereinafter, I will use the term ...