Wachovia Bank, N.A. v. Foster Bancshares, Inc.

457 F.3d 619 (2006)

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Nature of the Case

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Facts

A customer of D named Choi deposited in her account a check for $133,026 that listed her as the payee. The check had been drawn on P by a company called MediaEdge that had an account with that bank. D presented the check for payment. P paid D and debited MediaEdge's account. The actual payee of the check was a company called CMP Media. CMP Media complained about nonpayment, and it was revealed that Choi had somehow gotten her name substituted for CMP Media on the check she'd deposited with D. Of course, Choi had withdrawn the money from her account and vanished, while P had destroyed the paper check that D had presented to it for payment. P had retained a computer image of the check, but whether the image is of the original check drawn on P, with an alteration, or a forged check, cannot be determined. P seeks a declaratory judgment that D must indemnify it in the event that MediaEdge obtains a favorable judgment in the New York suit against P. When a depositary bank presents a check for payment by the bank that issued the check, it warrants that the check 'has not been altered.' UCC §§ 3-417(a)1-2, 4-208(a)1-2. The district court granted summary judgment for P. D appealed. D argues that P because it cannot produce the paper check, cannot prove that the check was altered. Had the original paper check not been destroyed, it could be examined, and the examination might reveal whether the check had been forged as just described or the payee's name had been changed by chemical washing of the check or by some other method that utilized rather than replaced the original check.