Some forty-nine checks payable to petitioner were delivered to its collector. The checks bore the forged endorsement of its general manager and were negotiated by its accountant with an electronic store. The checks were deposited with respondent bank: three in the account of the electronic store, one in the account of its manager, and the rest in the personal account of its treasurer.
Whether or not respondent bank was negligent in clearing and paying the checks with forged signature.
NO. Since the petitioner was not a client of respondent Bank, the latter had no way of ascertaining the authenticity of its indorsements on the checks which were deposited in the accounts of the third-party defendants in said Bank. Respondent Bank was not negligent because, in accordance with banking practice, it caused the checks to pass through the clearing house before it allowed their proceeds to be withdrawn by the depositors.