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Frost National Bank v. Heafner


based on the following circumstantial evidence: Frost did not compare the signature on the forged checks to her signature card at the bank, Frost's bookkeeper did not report the forgeries to her supervisor, Frost paid the two forged checks, Frost induced Heafner to sign forgery affidavits that it later altered to recover her money, Frost denied knowledge of the alteration on the affidavits, Frost did not immediately tell Heafner it received a $10,000 credit from the Federal Reserve, Frost did not return the money to her account after it received the Federal Reserve credit, and Frost investigated the forgeries but did not tell her about its decision to not return the money. Heafner also contends Frost did not disclose that it interpreted the deposit account agreement to contain a "benefit" exception that might relieve Frost of liability for paying on forged signatures.

Heafner said that when she reported the forgeries to Frost, she was told Frost would return the money to her account, investigate the forgeries, and report back to her. When Heafner went to Frost to report the forgeries, Veserra had someone prepare a forgery affidavit for each check, which stated in part:

That the purported signature/endorsement of Mary Heafner is in fact a forgery and is not the signature/endorsement of this affiant; that affiant gave no one authority to negotiate said check, and that the signature/endorsement on said check was not put thereon through connivance of this affiant with any person or persons; and that this affiant has not received the proceeds nor any benefit from the proceeds of said check.

Neither Heafner nor Veserra circled the word "endorsement" or "signature" on the affidavits. Although Heafner signed both affidavits, neither was notarized in her presence. Heafner later discovered that the word "endorsement" had been circled.

Veserra admitted the two checks were forgeries and that someone in Frost's bookkeeping department made a mistake by paying the checks. She said that either "endorsement" or "signature" or both had to be circled to indicate whether one or both were forged. Veserra claimed she did not know which word would be circled when Heafner signed the affidavit. She denied "altering" the affidavits, saying instead, that she merely "completed" them. Veserra said that by circling only the word "endorsement" (instead of both "endorsement" and "signature") she was attempting to shift any loss to Bank United.

When Veserra returned the checks to Bank United, she returned them via the Federal Reserve Bank "without entry." She explained that, when one bank returns a check to another bank, the notation "without entry" means the Federal Reserve should not credit the bank returning the check until a determination is made as to which bank should be credited. Veserra did not initially know the Federal Reserve had credited Frost's account with the $10,000, but she explained that the credit was a mistake because of the "without entry" notation. She said Frost did not deposit the money into Heafner's account after discovering the Federal Reserve credit because she knew it was a mistake and the credit would be reversed. She said that if the credit to Frost's account had not been a mistake, then the money would have been deposited into Heafner's Frost account.

Veserra admitted she did not immediately tell Heafner about the Federal Reserve credit or that Frost would not return the $10,000 to her account after the credit was reversed. However, a few days later, she did tell Heafner that Frost would not return the money because the two checks were deposited into Heafner's Bank United account. She did not offer any further explanation to Heafner because s

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