Volume 237 — Kansas Reports

SYLLABUS BY THE COURT 1. BANKS — <italic>Payment by Bank on Check With Forged Indorsement.</italic> K.S.A. <cross_reference>84-4-401</cross_reference> requires the drawee bank to recredit its customer's account if it pays on a check with a forged indorsement or be liable to the intended payee in conversion. 2. SAME — <italic>Payment by Bank on Check With Forged Indorsement —</italic> <italic>U.C.C. Allows Shift of Liability Among Banks.</italic> The warranties under K.S.A. <cross_reference>84-4-207</cross_reference> allow the drawee bank to shift liability for forged indorsements and material alterations to prior collecting banks. 3. SAME — <italic>Payment by Bank on Check With No Indorsement.</italic> Payment on a check without any indorsement is the same as payment on a forged indorsement except where a depositary bank supplies the customer's missing indorsement. 4. SAME — <italic>Depositary Bank May Supply Missing Indorsement.</italic> K.S.A. <cross_reference>84-4-205</cross_reference> authorizes a depositary bank to supply the missing indorsement of its customer by certifying that the check is forwarded for collection, without the need to obtain an actual signature. 5. SAME — <italic>Use of "Prior Endorsement Guaranteed" Stamp by Bank —</italic> <italic>Effect.</italic> K.S.A. <cross_reference>84-4-207</cross_reference> is intended to give the effect formerly obtained when collecting banks used the stamp "P.E.G." in collection transfers and presentment between banks. 6. SAME — <italic>Use of "Prior Endorsement Guaranteed" Stamp by Bank —</italic> <italic>Acknowledgement of U.C.C. Implied Warranties Unless Otherwise</italic> <italic>Expressed by Parties.</italic> Stamping "P.E.G." on the back of a check is no more than an acknowledgement of the U.C.C.'s implied warranties under K.S.A. <cross_reference>84-4-207</cross_reference> unless the parties have expressed that the provisions of the U.C.C. shall not apply.