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Unlimited Adjusting Group v. Wells Fargo Bank (Cal. Ct. App. - June 4, 2009)

By Shaun Martin

I'll admit it in advance. I'm a moron.

I keep reading and rereading this case to try to understand it. But I just can't get my head around it. Justice Mosk does a wonderful job writing a seventeen-page "UCC For Dummies" primer precisely for people like me. But I still don't understand.

What I hear Justice Mosk saying is that a depository bank doesn't have any liability on a check if the intended payee and the named payee are identical. After all that reading, and helpful explanation, I at least understand the terminology. But I still can't seem to grasp the concept. Notwithstanding Justice Mosk's totally helpful use of hypotheticals for people -- like me -- who barely know what "UCC" stands for.

Here's my problem with the whole thing. Imagine I write a check to pay my cable bill -- $100 to "Cox Cable Television" -- and put the check in my mailbox. Some dude walking along the street then opens my mailbox and steals the check. The dude then walks into my bank and says "I'd like to cash this check." The bank says: "But this check's payable to Cox Cable Television?" At which point the dude says: "Oh, yeah. That's me. First name: Cox. Last name Television. Middle name Cable, after my grandfather." The bank says: "Do you have any identification?" Dude responds: "See the 'CCT' monogram on my T-shirt. That's my identification." Bank says: "Good enough for us. Here's your $100. Have a nice day, Mr. Television."

As I understand it, Justice Mosk's saying the Bank has no liability at all in this setting. Even though the Bank was clearly totally negligent. After all, the present case is very similar -- Plaintiff writes $6.1 million in checks to a established Wall Street broker named "Carlin Equities Corporation," the thief opens up a bank account with a virtually identical name ("Won Charlie Yi dba Carlin Corporation"), cashes the checks, and steals the money. To which the Court of Appeal says that, as a matter of law, even if there's negligence, the Bank's not liable.

I keep thinking: "I've got to be totally off base here, right? No way the Bank gets off scot-free under the facts of my hypo, right? How's this case different?" Or am I reading the case correctly but merely displeased with what the UCC apparently provides?

As I said, I'm in a jumble on this one. Something -- and I assume it's my own competence -- just feels totally wrong.

P.S. - RIP, Kodiak ("Kodi") Rierson/Martin/Swartz/Price, 1993-June 5, 2009.

Full post as published by California Appellate Report on June 05, 2009 (boomark / email).