The Vermont Statutes Online
The Statutes below include the actions of the 2025 session of the General Assembly.
NOTE: The Vermont Statutes Online is an unofficial copy of the Vermont Statutes Annotated that is provided as a convenience.
(Cite as: 9A V.S.A. § 3-405)
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§ 3—405. Employer’s responsibility for fraudulent indorsement by employee
(a) In this section:
(1) “Employee” includes an independent contractor and employee of an independent contractor
retained by the employer.
(2) “Fraudulent indorsement” means (i) in the case of an instrument payable to the employer,
a forged indorsement purporting to be that of the employer, or (ii) in the case of
an instrument with respect to which the employer is the issuer, a forged indorsement
purporting to be that of the person identified as payee.
(3) “Responsibility” with respect to instruments means authority (i) to sign or indorse
instruments on behalf of the employer, (ii) to process instruments received by the
employer for bookkeeping purposes, for deposit to an account, or for other disposition,
(iii) to prepare or process instruments for issue in the name of the employer, (iv)
to supply information determining the names or addresses of payees of instruments
to be issued in the name of the employer, (v) to control the disposition of instruments
to be issued in the name of the employer, or (vi) to act otherwise with respect to
instruments in a responsible capacity. “Responsibility” does not include authority
that merely allows an employee to have access to instruments or blank or incomplete
instrument forms that are being stored or transported or are part of incoming or outgoing
mail, or similar access.
(b) For the purpose of determining the rights and liabilities of a person who, in good
faith, pays an instrument or takes it for value or for collection, if an employer
entrusted an employee with responsibility with respect to the instrument and the employee
or a person acting in concert with the employee makes a fraudulent indorsement of
the instrument, the indorsement is effective as the indorsement of the person to whom
the instrument is payable if it is made in the name of that person. If the person
paying the instrument or taking it for value or for collection fails to exercise ordinary
care in paying or taking the instrument and that failure substantially contributes
to loss resulting from the fraud, the person bearing the loss may recover from the
person failing to exercise ordinary care to the extent the failure to exercise ordinary
care contributed to the loss.
(c) Under subsection (b) of this section, an indorsement is made in the name of the person
to whom an instrument is payable if (i) it is made in a name substantially similar
to the name of that person or (ii) the instrument, whether or not indorsed, is deposited
in a depositary bank to an account in a name substantially similar to the name of
that person. (Added 1993, No. 158 (Adj. Sess.), § 12, eff. Jan. 1, 1995.)