05-3703 Wachovia Bank, N.A. v. Foster Bancshares, Inc.

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“Even if Foster had shown that forgery of the entire check has become a routine method of altering the payee’s name, we would not adopt the rule for which it contends, which is that the drawee bank cannot enforce the presentment warranty unless it retains the paper check. The question of which bank was, in the language of economic analysis of law, the ‘cheaper cost avoider’ would still be open. (Maybe neither bank is—which would hardly be a persuasive ground for changing a long-settled rule of law.) A depositary bank can sometimes discover an alteration of the payee’s name even when there is no physical alteration in the check presented to the bank for deposit. The size of the check may be a warning flag that induces the bank to delay making funds deposited by the check available for withdrawal. E.g., Bank of America, ‘Frequently Asked Questions,’ http://www.bankof america.com/deposits/ checksave/index.cfm?template=lc_faq_acct_info (visited July 5, 2006); Kennebunk Savings Bank, ‘Deposit Account Agreement,’ http://www.kennebunksavings.com/ depositagreement.html, (visited July 5, 2006). The check that Choi deposited with Foster was for a hefty $133,000, and there is no evidence that Choi had previously deposited large checks. We do not suggest that Foster was careless in deciding to make the money available for withdrawal when it did. But the uncertainties that the bank has made no effort to dispel counsel against adopting the legal change that it urges. Reform if needed in the light of modern copying technology should be left to the Uniform State Commissioners rather than engineered by a federal court in a diversity case.”

Affirmed.

Appeal from the United States District Court for the Northern District of Illinois, Holderman, J., Posner, J.