Litigation

Woman Must Pay U.S. Bank for Fraudulent Check

By H. William Allen et al.

The Arkansas Supreme Court affirmed summary judgment in Talbert v. U.S. Bank, N.A., No. 07-497 (1/17/08).

During the summer of 2005, Talbert lent $25,000 to a man she knew as David Smith. In mid-November 2005 Smith sent her a check for $85,000. The check was from Pelican Management, Inc., in New York. She deposited the check in her account at U.S. Bank and began disbursing the funds to other people. Additionally, she paid $75 for a special collections service. Not surprisingly, the check turned out to be a forgery. U.S. Bank put a temporary hold on the account, but Talbert withdrew all the remaining funds when the hold was lifted. U.S. Bank filed suit.

Talbert's main argument was that U.S. Bank agreed to assume the risk of loss. She made this argument from her payment for the special collections service. However, she failed to conduct adequate discovery to establish the existence of such an agreement, much less the terms. The trial court granted summary judgment to U.S. Bank. On appeal, the supreme court observed that Arkansas law prohibits anyone from contracting away transfer warranties. See A.C.A. § 4-4-207. Even if Talbert could prove the terms of the agreement as she argued, it would be void. The court affirmed summary judgment.

Full post as published by Arkansas Business Litigation Blog on January 23, 2008 (boomark / email).