A QUESTION OF ETHICS: Forged Drawers Signature. From the 1960s, James Johnson served as Bradley…

A QUESTION OF ETHICS: Forged Drawers Signature. From the
1960s, James Johnson served as Bradley Unions personal caretaker and
assistant, and was authorized by Union to handle his banking transactions.
Louise Johnson, Jamess wife, wrote checks on Unions checking account to pay
his bills, normally signing the checks Brad Union. Branch Banking & Trust
Co. (BB&T) managed Unions account. In December 2000, on the basis of
Unions deteriorating mental and physical condition, a North Carolina state
court declared him incompetent. Douglas Maxwell was appointed as Unions

A QUESTION OF ETHICS: Forged Drawers Signature. From the
1960s, James Johnson served as Bradley Unions personal caretaker and
assistant, and was authorized by Union to handle his banking transactions.
Louise Johnson, Jamess wife, wrote checks on Unions checking account to pay
his bills, normally signing the checks Brad Union. Branch Banking & Trust
Co. (BB&T) managed Unions account. In December 2000, on the basis of
Unions deteriorating mental and physical condition, a North Carolina state
court declared him incompetent. Douglas Maxwell was appointed as Unions
guardian. Maxwell froze Unions checking account and asked BB&T for
copies of the canceled checks, which were provided by July 2001. Maxwell
believed that Unions signature on the checks had been forged. In August 2002,
Maxwell contacted BB&T, which refused to recredit Unions account. Maxwell
fi led a suit on Unions behalf in a North Carolina state court against
BB&T. [ Union v. Branch Banking & Trust Co., 176 N.C.App. 711, 627
S.E.2d 276 (2006)]

(a) Before Maxwells appointment, BB&T sent monthly
statements and canceled checks to Union, and Johnson reviewed them, but no
unauthorized signatures were ever reported. On whom can liability be imposed in
the case of a forged drawers signature on a check? What are the limits set by
Section 4406(f) of the Uniform Commercial Code? Should Johnsons position,
Unions incompetence, or Maxwells appointment affect the application of these
principles? Explain. (b) Why was this suit brought against BB&T? Is
BB&T liable? If not, who is? Why? Regardless of any violations of the law,
did anyone act unethically in this case? If so, who and why?