K & K Manufacturing, Inc. v. Union Bank

OPINION

HATHAWAY, Chief Judge.

In this case we must apply articles three and four of the Uniform Commercial Code to determine who should bear the risk of loss when a dishonest employee forges her employer’s name as drawer on a number of checks on his business and personal checking accounts, then appropriates the proceeds for her personal use.

Appellant Bill J. Knight is the president and majority stockholder of both K & K Manufacturing, Inc. and Knight Foundry & Manufacturing, Inc. Knight Foundry employed about 80 people at the time of trial, while K & K Manufacturing, which was formed to…