## Facts

- Spacemakers hired Jenny Triplett as a bookkeeper without asking about criminal history or running a background check.
- Triplett had prior convictions for multiple forgeries and theft-related crimes involving forged employer checks.
- Spacemakers gave Triplett sole control over the checkbook, bank-statement reconciliation, and preparation of financial reports; no other employee reviewed monthly statements or the check register.
- Triplett forged the company president’s signature on about 65 checks totaling more than $475,000, payable to her husband’s business, which was not a Spacemakers vendor.
- The forgeries were discovered only after a bank employee questioned a check and contacted Spacemakers’ president.
- Spacemakers sued SunTrust for negligence, conversion, and unauthorized payment of forged items; the trial court granted SunTrust summary judgment on all claims.

## Issues

1. Whether Spacemakers’ failure to supervise its bookkeeper and promptly examine bank statements precluded it from asserting the forgeries against SunTrust under Georgia’s UCC provisions governing customer negligence and notice duties.
2. Whether SunTrust failed to exercise ordinary care in paying the checks, supporting liability in negligence, conversion, or for unauthorized payment of forged items.

## Decision

- The Court of Appeals of Georgia affirmed summary judgment for SunTrust.
- Spacemakers’ hiring and internal-control failures, combined with its lack of statement review and notice, substantially contributed to the forgeries and barred or limited its claims under Georgia’s UCC loss-allocation rules.
- On the record presented, SunTrust was not negligent as a matter of law in paying facially regular checks, and Spacemakers’ tort theories could not avoid the UCC framework.

## Legal Principles

- A bank customer must exercise reasonable care in supervising employees who handle payments and in promptly examining account statements and items to discover and report unauthorized signatures or alterations.
- A customer whose negligence substantially contributes to a forged signature may be precluded from asserting the forgery against a bank that pays in good faith and in accordance with reasonable commercial standards.
- UCC-based loss-allocation and preclusion rules govern and may defeat parallel common-law claims (such as negligence and conversion) arising from payment of forged checks when the customer’s conduct triggers statutory preclusion.

## Conclusion

Because Spacemakers entrusted a single employee with both issuing and reconciling checks, failed to investigate that employee’s background, and did not independently review bank statements, it was precluded under Georgia’s UCC scheme from shifting losses from the employee’s forgeries to the bank; SunTrust therefore was entitled to summary judgment.


Spacemakers of Am., Inc. v. SunTrust Bank, 271 Ga. App. 335, 609 S.E.2d 683 (2005)