RHODE ISLAND HOSPITAL TRUST NATIONAL BANK V. ZAPATA CORP. 848 F.2d 291 (1st Cir. 1988) CASE BRIEF

RHODE ISLAND HOSPITAL TRUST NATIONAL BANK V. ZAPATA CORP.

848 F.2d 291 (1st Cir. 1988)

NATURE OF THE CASE: Zapata (D) sought review of the judgment that held that Bank (P) was not required to reimburse D for payment of forged checks that cleared after D had opportunity to examine its account statement.

FACTS: 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.

ISSUE:

RULE OF LAW:

HOLDING AND DECISION:

LEGAL ANALYSIS:

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