Wilson was employed as the office manager of Palmer & Ray
Dental Supply of Abilene, Inc. Soon after an auditor discov-
ered a discrepancy in the company’s inventory, Wilson con-
fessed to cashing thirty-five checks that she was supposed
to deposit on behalf of the company. Palmer & Ray Dental
Supply used a rubber stamp to indorse checks. The stamp
listed the company’s name and address but did not read “for
deposit only.” The company’s president, James Ray, author-
ized Wilson to indorse checks with this stamp. Wilson
cashed all of the checks at First National Bank.
a. What are the arguments that First National Bank is
liable to Palmer & Ray Dental Supply for converting
the company’s funds by giving Wilson cash instead
of depositing the checks into the company’s bank
account?
b. What are the arguments that First National Bank is not
liable to Palmer & Ray Dental Supply?
c. Explain who should prevail.
