Wachovia Bank, N.A. v. Federal Reserve Bank of Richmond

A large dollar item being mailed by a bank customer to a payee is stolen from the mail. The payee is altered. The item is paid. Who bears the loss? In the latest addition to Court Watch, we tell you about a new 4th Circuit case where the drawee bank was able to successfully pass the loss on to an intermediary bank under a theory of breach of transfer and presentment warranties. The case is of interest on several levels, but it is particularly noteworthy that the court rejected arguments that the drawee bank's failure to examine the item, which had a face amount of more than $500,000, constituted a lack of good faith.