Home Indemnity Co. v. The First National Bank of Waukegan and Willtrue Loyd, the First National Bank of Waukegan

PELL, Circuit Judge.

This case presents an archetypical example of the “forged payee” scenario in which the depository bank and the payor each claim the other is liable for the resulting loss. The undisputed facts as found by the district court are as follows.

Home Indemnity Company (Home) is an insurance company incorporated under the laws of New Hampshire with its principal place of business in New York City. For some time Home has maintained an agreement with the Hartford National Bank and Trust Company (Hartford) whereby drafts issued by Home in satisfaction of insurance claims against it…