The drawee or payor bank has similar liability to the drawer when it pays a check bearing a forged endorsement or a check bearing a forged drawer’s signature.
Regarding the liability of drawer - if the payee’s endorsement is forged before the check is delivered to the payee, the underlying obligation of the drawer to the payee is not discharged by the check, and the payee can require the drawer to pay the obligation a second time. With liability of the payor bank a forged or unauthorized endorsement of the payee is ineffective as the payee’s endorsement. This white paper reviews liability, defenses, rights of payee, and double forgeries.
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