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No Duty of Payor to Verify Endorsement of Its Checks.Fidelity and Deposit Co. of Maryland v. Dally, 148 Wash.App. 739, 201 P.3d 1040 (Wash.App. Div. 2, 2009), February 10, 2009 The city of Poulsbo hired Dally as the Municipal Court Administrator. She promptly began depositing City checks in a personal account for over six years until she was discovered. The checks that Dally stole came from the City’s contractor that collected unpaid fines, penalties, and costs. Twice a month the contractor issued two checks to the City, one for fines collected and one for penalties and costs collected. Dally stole 252 of these checks with a total value of $285,100.45. Using City letterhead, Dally presented a letter to the NFCU explaining that the checks were for past due child support that the City had collected on Dally's behalf. Dally indorsed the checks as “Poulsbo Municipal Court” followed by the name of the former court administrator “Sue O'Brien” and followed by “ddally” and her account number. The City fired her and made a claim under its Public Employee Dishonesty Policy with Fidelity, which Fidelity paid. Fidelity then began this lawsuit against the contractor, AllianceOne. The court held that the payor of a check is not negligent for failure to verify the indorsements on checks it issues. The payor has no duty under common law to verify indorsements. |
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