BLS 442 Lecture Notes - Lecture 9: Demand Draft, Secondary Liability
4 Mar 2015
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D p -> x -> h1 h2 h3 (hdc) h4 h5. Demand draft, forged payee indorsement (forged by x), indorsed by h1 w/out recourse, blank indorsement by h2. No secondary liability b/c bank honored ir, 2nd triggered by dishonor. Db v. h5: breach of presentment warranties (good title) (pw #1) db wins. Shotgun approach: sue everybody who received payment or acceptance or any prior transferor (x, h1, h2, h3, h4); would win all cases. Hdc acting in good faith (hdcaigf); h3 could claim this defense. Holder through a hdc does not apply in this case. Same scenario, except drawer signature is forged by y instead of payee indorsement. Drawer has defense of forgery (real defense); h5 v drawer, h5 loses if drawer was not negligent. H5 v h4, h5 wins b/c of tw #2. H5 v h3, h5 loses b/c of transfer warranties only extend to next person unless you indorse it.
