Citizens Bank v. Maryland Industrial Finishing Co.

MURPHY, Chief Judge.

In this case we must decide whether, for the purposes of a conversion action under Maryland Code (1975, 1992 Repl.Vol.), § 3-419 of the Commercial Law Article,1 an agent’s indorsements on checks payable to the agent’s principal were unauthorized (1) when the agent indorsed the checks with an improper motive or later misappropriated the checks, or (2) when the agent omitted restrictive language required by the principal to be part of the indorsement.

I

Section 3-419(1) provides: “An instrument is converted when ... [i]t is paid on a forged indorsement.” Official comment 3…