Michigan Compiled Laws

Mich. Comp. Laws § 440.3405 (2026)

Definitions; fraudulent endorsement by employee or person acting in concert with employee.

✓ current as of July 2026

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UNIFORM COMMERCIAL CODE

Act 174 of 1962

440.3405 Definitions; fraudulent endorsement by employee or person acting in concert with employee.

Sec. 3405.

(1) As used in this section:

(a) "Employee" includes an independent contractor and employee of an independent contractor retained by the employer.

(b) "Fraudulent endorsement" means (i) in the case of an instrument payable to the employer, a forged endorsement 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 endorsement purporting to be that of the person identified as payee.

(c) "Responsibility" with respect to instruments means authority (i) to sign or endorse 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.

(2) 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 endorsement of the instrument, the endorsement is effective as the endorsement 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.

(3) Under subsection (2), an endorsement 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 endorsed, is deposited in a depositary bank to an account in a name substantially similar to the name of that person.

History: 1962, Act 174, Eff. Jan. 1, 1964 ;-- Am. 1993, Act 130, Eff. Sept. 30, 1993

Notes of Decisions

Cited in 6 cases, 1969–2014 · leading case: John Hancock Fin. Servs., Inc. v. Old Kent Bank, 185 F. Supp. 2d 771 (E.D. Mich. 2002).

Sort: Relevance Newest Treatment

John Hancock Fin. Servs., Inc. v. Old Kent Bank, 185 F. Supp. 2d 771 (E.D. Mich. 2002). · cites it 6× “Under § 440.3405, the employer who entrusts an employee with responsibility over an instrument and the employee fraudulently indorses the instrument the fraudulent indorsement is effective as the employer’s signature.”

Travco Corp. v. Citizens Fed. Sav. & Loan Ass'n, 201 N.W.2d 675 (Mich. Ct. App. 1972). “Citizens argues that MCLA 440.3405(1); MSA 19.3405(1) relieves it of liability because Frank Mitchell was an employee of Travco at the time he caused the checks to issue.”

Lee Morof v. United Missouri Bank, Warsaw, 391 F. App'x 534 (6th Cir. 2010). “” Mich. Comp. Laws § 440.3405 (3). Drawers of such checks retain a remedy against draw-ee banks.”

People ex rel. Michigan Pub. Sch. Employees' Ret. Sys. v. Michigan Nat'l Bank, 173 N.W.2d 762 (Mich. Ct. App. 1969). · cites it 2× “But the concepts here involved are well established and, although it is a contradiction in terms to speak of an intent to pay an impostor, that is the basis on which pre-uniform commercial code cases were decided. See 10 Am Jur 2d, Banks, § 638, pp 606-609, discussing the…”

Littky & Mallon v. Michigan Nat'l Bank, 287 N.W.2d 359 (Mich. Ct. App. 1979). “The defendant next argues that the plaintiff is estopped from denying that the signature on the check in question is valid pursuant to MCL 440.3405; MSA 19.3405. However, that section of the Code deals with "padded payroll” cases where payees’ signatures are forged.”

Hantz Fin. Servs. Inc v. Chem. Bank (Mich. Ct. App. 2014). · cites it 14× “611(A)(1)(g), which may have resulted in plaintiff being significantly undercompensated, we do not find that the trial court abused its discretion by ordering a new trial.”

— Mich. Comp. Laws § 440.3405(1) — 1 case

— Mich. Comp. Laws § 440.3405(1)(c) — 1 case

Hantz Fin. Servs. Inc v. Chem. Bank (Mich. Ct. App. 2014). “611(A)(1)(g), which may have resulted in plaintiff being significantly undercompensated, we do not find that the trial court abused its discretion by ordering a new trial.”

— Mich. Comp. Laws § 440.3405(2) — 1 case

— Mich. Comp. Laws § 440.3405(3)(ii) — 1 case

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