(810 ILCS 5/3-405) (from Ch. 26, par. 3-405)
Sec. 3-405.
Employer responsibility for fraudulent indorsement by employee.
(a) In this Section:
(1) "Employee" includes an independent contractor and |
| employee of an independent contractor retained by the employer.
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(2) "Fraudulent indorsement" means (i) in the case of
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| an instrument payable to the employer, a forged indorsement purporting to be that of the employer, or (ii) in the case of an instrument with respect to which the employer is the issuer, a forged indorsement purporting to be that of the person identified as payee.
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(3) "Responsibility" with respect to instruments
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| means authority (i) to sign or indorse instruments on behalf of the employer, (ii) to process instruments received by the employer for bookkeeping purposes, for deposit to an account, or for other disposition, (iii) to prepare or process instruments for issue in the name of the employer, (iv) to supply information determining the names or addresses of payees of instruments to be issued in the name of the employer, (v) to control the disposition of instruments to be issued in the name of the employer, or (vi) to otherwise act with respect to instruments in a responsible capacity. "Responsibility" does not include authority that merely allows an employee to have access to instruments or blank or incomplete instrument forms that are being stored or transported or are part of incoming or outgoing mail, or similar access.
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(b) For the purpose of determining the rights and liabilities of a
person who, in good faith, pays an instrument or takes it for value or for
collection, if an employer entrusted an employee with responsibility with
respect to the instrument and the employee or a person acting in concert with
the employee makes a fraudulent indorsement of the instrument, the indorsement
is effective as the indorsement of the person to whom the instrument is payable
if it is made in the name of that person. If the person paying the instrument
or taking it for value or for collection fails to exercise ordinary care in
paying or taking the instrument and that failure substantially contributes to
loss resulting from the fraud, the person bearing the loss may recover from the
person failing to exercise ordinary care to the extent the failure to exercise
ordinary care contributed to the loss.
(c) Under subsection (b), an indorsement is made in the name of the
person to whom an instrument is payable if (i) it is made in a name
substantially similar to the name of that person or (ii) the instrument,
whether or not indorsed, is deposited in a depositary bank to an account in
a name substantially similar to the name of that person.
(Source: P.A. 87-582; 87-1135.)
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