Negotiable Instruments Opinion II
August 13, 2014In this commercial paper case, Jason Kang signed several checks made out to various businesses and drawn on the bank account of his business, Ever Construction. Unfortunately, the checks ended up the hands of wrongdoer Kwan Sup Choi, who was not the named payee on the checks but took and cashed them at Lee’s Check Cashing. When Kang found out that his intended payees did not receive their money, Lee’s Check Cashing was forced to bear the loss and pay them.
Lee’s, however, blamed Kang for the forgery and sued him and Ever Construction under theories of negligence and fraud. After a bench trial, the trial court awarded judgment in favor of Lee’s, and Kang and Ever Construction appealed. The Court of Appeals reversed, holding, among other things, that Kang and Ever Construction had no duty to ensure that the checks it wrote were only presented to third parties for payment by persons who were authorized to cash them.
