Fairfax Bank & Trust Co. v. Crestar Bank

In this dispute between banks, we deal with the effect of a check’s indorsement, which is restrictive as to the payee, upon the warranties a depositary bank makes to a payor bank in the check collection process.

The basic facts are undisputed. In June 1989, Robert M. Stolldorf applied to appellee Crestar Bank at its Chantilly branch for a loan to purchase a used 1988 Mercedes Benz automobile owned by Chantilly Fleet Service, a sole proprietorship. On June 15, Stolldorf executed a note and security agreement for $25,649.28 in which he agreed that the loan was to be secured by the automobile.

On…