Cincinnati Insurance Co. v. Wachovia Bank
United States District Court for the District of Minnesota
2010 WL 2777478 (2010)
Schultz Foods Company (Schultz) had a checking account with Wachovia Bank, National Association (Wachovia) (defendant). When opening the account, Schultz signed a deposit agreement. The agreement provided that if Schultz failed to implement any of Wachovia’s products or services made available to customers to detect or deter check fraud, Schultz would be precluded from asserting claims against Wachovia for paying any unauthorized, altered, or fraudulent check. One such product that Wachovia offered was the Positive Pay check-fraud-protection software. Under the Positive Pay software system, a customer would submit information to Wachovia about each check that the customer issued, which Wachovia would then compare against any received check before paying the check. Schultz issued a check for more than $153,000. The check was stolen, and the name of a different payee was substituted onto the check. That payee endorsed and presented the check, and Wachovia paid out the amount of the check. Upon discovering the fraud, Schultz demanded that Wachovia bear the loss and re-credit Schultz’s account for the amount of the altered check. Wachovia refused. Schultz’s insurer, Cincinnati Insurance Company (Cincinnati) (plaintiff), paid out a claim to Schultz and then brought a subrogation action against Wachovia. Cincinnati argued that Wachovia had violated Uniform Commercial Code (UCC) § 4-401(a) by charging Schultz’s account for the altered check, which was not properly payable. Wachovia argued that Schultz was liable for the loss on the check, because Schultz had failed to implement Positive Pay.
Rule of Law
Holding and Reasoning (Schiltz, J.)
What to do next…
Unlock this case brief with a free (no-commitment) trial membership of Quimbee.
You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 97,000 law students since 2011. Some law schools—such as Yale, Vanderbilt, Berkeley, and the University of Illinois—even subscribe directly to Quimbee for all their law students. Read our student testimonials.
Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.
Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students. Read more about Quimbee.
Here's why 176,000 law students have relied on our case briefs:
- Written by law professors and practitioners, not other law students. 14,000 briefs, keyed to 188 casebooks. Top-notch customer support.
- The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
- Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
- Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.