§ 554.3405 — Employer’s responsibility for fraudulent endorsement by employee

Iowa § 554.3405

• Jurisdiction: Iowa
• Title XIII: COMMERCE
• Ch. 554: UNIFORM COMMERCIAL CODE

Text

1. In this section:
a. “Employee” includes an independent contractor and employee of an independent
contractor retained by the employer.
b. “Fraudulent endorsement” means one of the following:
(1) inthecaseofaninstrumentpayabletotheemployer, aforgedendorsementpurporting
to be that of the employer;
(2) in the case of an instrument with respect to which the employer is the issuer, a forged
endorsement purporting to be that of the person identified as payee.
c. “Responsibility” with respect to instruments means authority to sign or endorse
instruments on behalf of the employer; to process instruments received by the employer
for bookkeeping purposes, for deposit to an account, or for other disposition; to prepare
or process instruments for issue in the name of the employer; to supply information
determining the names or addresses of payees of instruments to be issued in the name of the
employer; to control the disposition of instruments to be issued in the name of the employer;
or to act otherwise with respect to instruments in a responsible capacity. “Responsibility”
does not include authority that merely allows an employee to have access to instruments or
blank or incomplete instrument forms that are being stored or transported or are part of
incoming or outgoing mail, or similar access.
2. For the purpose of determining the rights and liabilities of a person who, in good
faith, pays an instrument or takes it for value or for collection, if an employer entrusted an
employee with responsibility with respect to the instrument and the employee or a person
acting in concert with the employee makes a fraudulent endorsement of the instrument,
the endorsement is effective as the endorsement of the person to whom the instrument is
payable if it is made in the name of that person. If the person paying the instrument or
taking it for value or for collection fails to exercise ordinary care in paying or taking the
instrument and that failure substantially contributes to loss resulting from the fraud, the
person bearing the loss may recover from the person failing to exercise ordinary care to the
extent the failure to exercise ordinary care contributed to the loss.
3. Under subsection 2, an endorsement is made in the name of the person to whom an
instrument is payable if it is made in a name substantially similar to the name of that person
or the instrument, whether or not endorsed, is deposited in a depositary bank to an account
in a name substantially similar to the name of that person.