Farmers Bank v. Chicago Title Insurance

ADKINS, Judge.

In this case we study negligence and the economic damages rule, negotiable instruments and the loss allocation rules of the Uniform Commercial Code regarding drawers, drawees, and depositary banks. We decide that it is necessary to address the novel question of whether a drawer can sue a depositary bank in negligence, because the Uniform Commercial Code’s loss allocation rules are largely inapplicable. We decide that it can, under the particular circumstances of this case.

FACTS AND LEGAL PROCEEDINGS

In November 1997, Mark Shannahan, a customer of Farmers Bank of Maryland…