§ 554.3405

554.3405 Employer’s responsibility for fraudulent endorsement by employee. 1. In this section:a. 'Employee' includes an independent contractor and employee of an independent contractor retained by the employer. b. 'Fraudulent endorsement' means one of the following:(1) in the case of an instrument payable to the employer, a forged endorsement purporting to be that of the employer; (2) in the case of an instrument with respect to which the employer is the issuer, a forged endorsement purporting to be that of the person identified as payee. c. 'Responsibility' with respect to instruments means authority to sign or endorse instruments on behalf of the employer; to process instruments received by the employerfor bookkeeping purposes, for deposit to an account, or for other disposition; to prepareor process instruments for issue in the name of the employer; to supply informationdetermining the names or addresses of payees of instruments to be issued in the name of theemployer; to control the disposition of instruments to be issued in the name of the employer;or to act otherwise with respect to instruments in a responsible capacity.

to be issued in the name of theemployer; to control the disposition of instruments to be issued in the name of the employer;or to act otherwise with respect to instruments in a responsible capacity. 'Responsibility'does not include authority that merely allows an employee to have access to instruments orblank or incomplete instrument forms that are being stored or transported or are part ofincoming or outgoing mail, or similar access. 2. 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 anemployee with responsibility with respect to the instrument and the employee or a personacting in concert with the employee makes a fraudulent endorsement of the instrument,the endorsement is effective as the endorsement of the person to whom the instrument ispayable if it is made in the name of that person. If the person paying the instrument ortaking it for value or for collection fails to exercise ordinary care in paying or taking theinstrument and that failure substantially contributes to loss resulting from the fraud, theperson bearing the loss may recover from the

llection fails to exercise ordinary care in paying or taking theinstrument and that failure substantially contributes to loss resulting from the fraud, theperson bearing the loss may recover from the person failing to exercise ordinary care to theextent the failure to exercise ordinary care contributed to the loss. 3. Under subsection 2, an endorsement is made in the name of the person to whom an instrument is payable if it is made in a name substantially similar to the name of that personor the instrument, whether or not endorsed, is deposited in a depositary bank to an accountin a name substantially similar to the name of that person. 94 Acts, ch 1167, §52, 121, 122; 2013 Acts, ch 30, §147, 261Referred to in §554.3417, 554.4208 Sat Dec 23 01:56:54 2023 Iowa Code 2024, Section 554.3405 (25, 0)