Universal Premium Acceptance Corporation v. The York Bank & Trust Company

OPINION OF THE COURT

WEIS, Circuit Judge.

Defendant bank accepted drafts drawn on plaintiff containing the direction “PAY AND DEPOSIT ONLY TO THE CREDIT OF [payee]” and on which the payee’s indorse-ments were forged. Reasoning that the drafts were in effect negotiable, the district court in this diversity case entered judgment for the bank, based on Article 3 of the Uniform Commercial Code as adopted in Pennsylvania. We conclude that the explicit direction on the drafts precluded transfer and made them non-negotiable. Moreover, we hold that the indorsements in blank did not make the drafts…