Central Bank v. Kaiperm Santa Clara Federal Credit Union

Opinion

BRAUER, J.

Nineteen blank money orders were stolen from a branch office of Kaiperm Santa Clara Federal Credit Union (Kaiperm), filled out in varying amounts and subsequently paid by Central Bank (Bank). Bank brought suit against Kaiperm for damages and declaratory relief, claiming that Kaiperm had breached its duties under a written trust agreement by failing to safeguard the blank forms. Kaiperm based its defense primarily upon the theory that the rules of the commercial code apply to fix liability between the parties. Under the code, when a negotiable instrument such as a check is…