This discussion revolves around our unfortunate defrauded check writer, Mr. Nicholson, and the responsibilities that two different banks have towards him after he is fleeced by the suave and sophisticated Mr. Kittinger. As always, make sure that you look at this in a chronological fashion, reviewing the rules that apply to the rights and responsibilities of each of the parties, especially in light of the concepts covered in this week’s readings and other materials.
Answer the discussion question below
On November 7, 2010, Edward Nicholson issued a check in the amount of $21,000 payable to the order of Michael Kittinger based upon Kittinger’s fraudulent representations concerning a real-estate transaction. That same day Kittinger delivered the check without endorsing it to Chase Bank, which paid him $ 5,000 in cash and deposited the balance to his account. Chase Bank stamped the back of the check “Pay any bank, banker, or trust company, prior endorsements guaranteed” and sent it to the drawee, Metropolitan Bank, for payment. Metropolitan paid Chase Bank and deducted $21,000 from Nicholson’s account.
Four months later, Nicholson discovered he had been defrauded; he immediately notified the Chase and Metropolitan banks of the situation. Kittinger has since departed for parts unknown.
Does Nicholson have any chance of recovering his money from either bank? Why or why not? What facts might we change in order to improve his chances of recovery?