This section contains the nature of the case and procedural background.

A D employee stole some blank checks from D. She wrote a large number of forged checks in amounts of $150 to $800 on D's accounts at P. Bank statements first began to reflect the forged checks in early April 1985. D failed to examine its statements closely until July 1985, when it found the forgeries. D immediately notified P, which then stopped clearing the checks. P had already processed and paid forged checks totaling $109,247.16. The trial court held that P must reimburse D in respect to all checks it cleared before April 25, 1985 (or for at least two weeks after D received the statement that reflected the forgeries). After April 25, P need not reimburse D because D failed to 'exercise reasonable care and promptness to examine the [bank] statement.' D appealed.

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