Merchant (B) accepts forged check on A's account at bank from C (criminal) in payment for goods or services and deposits check into its (B's) account at bank. Bank accepts and pays check, crediting funds from A's account to B's account (though in the case in mind this actually resulted in an overdraft in A's account). A (pursuant to 4.406 of B&C Code) notifies bank that check is a forgery and demands that funds be re-credited to her account, since charge was not authorized under 4.401. Bank does this.

It has always been my assumption under these facts that the bank suffered the loss as stated in comment 3 to 3.417 and the bank is the party to whom restitution in C's criminal case should be ordered made (assuming, of course that B breached none of the 3.417(a) warranties that might allow the bank recovery under 3.417(b)). In any event, I have always assumed that the bank virtually never made any claim against its other customer (B) in these circumstances. But, I am curious if by contract or otherwise a bank could not somehow try to charge-back B's account as though the check had been dishonored, so that B might be the ultimate victim of this offense, since the bank is both a drawee bank and collecting bank under these facts? I admit that if I ever understood how Chapter 4 of UCC deals with this issue, that knowledge has departed from me. Is 4.210 of the B&C Code involved in any way? Don't worry, I do not need any answer by a midnight deadline and I realize we became prosecutors with the intent of avoiding having to know any banking law. Just thought someone on this forum might know.

I don't know the correct answer to your question, but if you will call Debby Adair (214-953-4709, email: deborah.adair@swacha.org ) at the Southwest Automated Clearing House Association (SWACHA), I bet she will know the answer or definitely put you in touch with someone who knows the answer.

The merchant's account is debited for the amount of the forged check previously credited to the merchant's account. Additionally, the bank usually charges the merchant a returned-check fee. Restitution should be paid to the merchant.

It seems to me that if you want to scare away a large number of state prosecutors from a forum topic, just title it "Banking Law." It would be like calling a topic "Large, Multi-Defendant White Collar Crime." Now, you might attract a few feds with that bait, though.

Banking law sounds as exciting as prosecuting people who've received tickets in JP court for failing to maintain a "septic system maintenance agreement." (Yes, that's a real "crime.")

Thanks to John for pointing me to the person with the answer. Dennis Simmons of SWACHA advises that Ken is likely right in many cases, but not always. He says most banks do have depositary agreements with their commercial customers which permit them to charge back a forged item up to 90 days after it was initially presented for collection (payment). This contract modifies the rule of Price v. Neal. However, banks exercise discretion in whether to actually charge back an item. It depends on who the customer is and how large the loss would otherwise be to the bank. Bottom line: it is not possible to know whether you are ordering restitution to the appropriate person. Maybe the order should read "pay to A or B or other person suffering loss as their interests may appear".

By the way, the same scheme applies where collecting/depositary banks are involved. Almost all banks utilize clearing houses and CH Rule 9 says the drawee bank can send an item back to the bank from which it received same within 90 days, with a slight twist. If the collecting bank cannot recover 100% of its loss from its customer, then it can refuse to accept the item back. One final note, the Federal Reserve Board is considering modifying Regulation CC to put a 45 day return rule in effect applicable to all banks (nationwide). I promise never to mention banking law on this forum again!