Question

In: Operations Management

Spacemakers of America, Inc., hired Jenny Tripplet as its bookkeeper. Pacemakers did not inquire about any...

Spacemakers of America, Inc., hired Jenny Tripplet as its bookkeeper. Pacemakers did not inquire about any prior criminal record or conduct a criminal background check of Triplett. If it had taken those steps, it would have discovered that Triplett was on probation for 13 counts of forgery and had been convicted of theft by deception. All convictions were the result of Triplett forging checks of previous employers.

Spacemakers delegated to Triplett sole responsibility for maintaining the company’s checkbook, reconciling the checkbook with monthly bank statements, and preparing financial reports. Triplett also handled the company’s accounts payable and regularly presented checks do Dennis Rose, the president of Spacemakers, so he could sign them.

Just weeks after starting her job at Spacemakers, Triplett forged Rose’s signature on a check for $3,000 made payable to her husband’s company, Triple M Entertainment Group, which was not a vendor for Spacemakers. By the end of the first full month of employment, Triplett forged 50 more checks totaling approximately $475,000. All checks were drawn against Spacemaker’s bank account at SunTrust Bank. No one except Triplet reviewed the company’s bank statements. Subsequently, a SunTrust employee visuasilly inspected a $30,670 check She became suspicious of the signature and called Rose. The SunTrust employee faxed a copy of the check to Rose, which was made payable to Triple M. Rose knew that Triple M was not one of the company’s vendors, and a Spacamekrs employee reminded Rose that Triplett’s husband owned Triple M. Rose immediately called the police and Triplett was arrested.

Spacemakers sent a letter to SunTrust Bank, demanding that the bank credit $523,106 to its account for the forged checks. The bank refused, contending that Spacemaker’s failure to provide the bank with timely notice of the forgeries barred Spacemaker’s claim. Spacemakers sued SunTrust for negligence and unauthorized payment of forged items. The trial court granted SunTrust’s motion for summary judgment. Pacemakers appealed.

Using IRAC, how should this case have been decided and why? Please, do not copy from google. I need original answer.

Solutions

Expert Solution

The issue in the case of Spacemakers versus SunTrust Bank is in whether SunTrust Bank owed an obligation to compensate pacemakers for the payments made against the forged checks, arising out of neglect of its duty of care leading to a tortuous claim.

The four major elements of existence of a tort are namely duty, breach of Duty, position and injury, with a tort being identifiable as an intentional tort, tort arising due to negligence or a strict liability tort. An intentional tort results due to purposeful acts of an individual which cause subsequent injury or damage to another. Tort arising due to negligence result mostly from a person not applying due care to ensure the action would not cause injury to another and does not provide the required duty of care owed to another person. Strict liability torts only require proof of causation of injury by a product or animal, intention of the company or the person responsible for the animal is not relevant. the normal duty of care in various cases referred to as ordinary care is established by law. Ordinary care in the case of a person who is engaged in business refers to adequate performance of all ancillary duties required to ensure minimizing of risk and no harm or curse bye examining all statements and records for accuracy and correctness as a personal responsibility which cannot be absolutely delegated due to the importance of the responsibility and the final accountability being with the owner of the business. Inability to fulfill ordinary care in maintaining the financial accounts by implementation of adequate monitoring and control for accuracy and reconciliation amounts to professional negligence as the basic standard of care required within the circumstances has not been applied. Spacemakers of America incorporated, cannot hold the bank liable for non performance of basic duty of care and claim it has been negligent in performance of its duties, when in truth the negligence to apply ordinary care in analysis of financial statements of bank accounts to ensure that they are accurate or implement simple control measures by providing a cross-check within the procedure as through involvement of multiple individuals, was neglected by the company. Suntrust Bank is not responsible for undue verification of signature of every check unless it is brought to their notice by the account holder, through identification of ambiguous entries in the monthly statements. The bank utilizes a fraud detection software system and processes a large number of checks per day. Therefore, the bank applied all ordinary due care in performance of its duty but the fraud was undetected and hence it fulfilled its duties and obligation towards its customer. Reasonable commercial standards do not require banking staff to carefully scrutinize every check which has already been process by fraud detection software and is not part of the fraud detection policies and procedures followed by the bank. The customers duty was clearly specified by the bank as having an obligation to carefully examine all statements issued along with cancelled check and to secure an account by not providing bookkeepers absolute authority to retain possession of or prepare checks for the company as final responsibility and accountability was with the account holder, for any payment made by the bank due to errors or wrongdoing committed by such third person who has been provided absolute authority by a customer.

Suntrust Bank therefore had applied all ordinary care required on its part to avoid any harm to the customer and also informed all required care to be taken by the customer to avoid suffering harm due to wrongdoing by a third party accessing the check book. Spacemakers however failed to apply due care in performance of its duties of checking the statements, retaining adequate control and monitoring the checkbook and issue of checks, and also was negligent in employment of its bookkeeper who had extensive financial access and power within the organisation. Therefore, the case should be decided in favour of suntrust bank with no claim being admissible for payment of the loss incurred by spacemakers due to forgery by its bookkeeper.


Related Solutions

You will advise Quark, Inc. about its potential tax problems and about any solutions you may...
You will advise Quark, Inc. about its potential tax problems and about any solutions you may have to reduce tax liability.   Corporate Background - Quark, Inc. is a calendar-year accrual-based C corporation. Marvin Marshon owns 100% of the Quark stock. Quark manufactures aluminum casing for the lighting industry. At the beginning of 2019, Quark had $2 million of accumulated earnings and profits. Situation - Quark's management has come to you and indicated that it has excess cash that Marvin wants...
How did the United States strengthen its control over territory in North America in the early...
How did the United States strengthen its control over territory in North America in the early nineteenth century by making the Louisiana Purchase and subsequently financing the Lewis & Clark Expedition?
What role (if any) did the Mont Pelerin Society (MPS) and its offshoots play in the...
What role (if any) did the Mont Pelerin Society (MPS) and its offshoots play in the paradigm shift that occurred in the late 20th Century, in both political and economic thinking?
What are the treatments (if any) for the Corona disease? How did/does this disease affect its...
What are the treatments (if any) for the Corona disease? How did/does this disease affect its community? With the Details. I have this question, and I have to answer it as essay (for my project). Can you help me. Please can you type the answer. I don't understand the writing hand. Sometime. Thanks
1. Why did Britain leave the EU? Is there any concern about other countries following the...
1. Why did Britain leave the EU? Is there any concern about other countries following the lead of Britain? Has any other country exited the EU after becoming a member? 2. What are the defenses of the EU? Why would European countries want to be part of the E.U. for collective security?
Did anyone ever heard about this?I've never seen any serious physicist talk about "mass fluctuations". Here...
Did anyone ever heard about this?I've never seen any serious physicist talk about "mass fluctuations". Here is the man in his own words: http://www.intalek.com/Index/Projects/Research/woodward1.pdf And what about this guy: http://aetherwavetheory.blogspot.com/ He claims his theory can explain virtually every unsolved problem in contemporary physics.
Just the Fax, Inc. (JTF) hired a consultant to estimate the demand for its line of...
Just the Fax, Inc. (JTF) hired a consultant to estimate the demand for its line of telecommunications devices in 35 different market areas for one month. The available data set includes observations on the number of thousands of units sold by JTF per month (QX), the price per unit charged by JTF (PX), the average unit price of competing brands (PZ), monthly advertising expenditures by JTF (A), and average gross sales (in thousands of dollars) of businesses in the market...
What did you learn or re-learn about revision this week from the text or any learning...
What did you learn or re-learn about revision this week from the text or any learning activities? What areas of your writing do you feel are strengths? Which areas could use some improvement? How will you integrate these ideas into the next steps you will take to complete or refine your paper?
Review 10K 2017 Apple Inc. Did the footnotes include any disclosures related to: -Corrections of errors...
Review 10K 2017 Apple Inc. Did the footnotes include any disclosures related to: -Corrections of errors -Changes in accounting principle -Changes in reporting entity -Changes in estimates What has the company disclosed related to the adoption of the new revenue recognition standard (ASC 606)? What has the company disclosed related to the adoption of the leases standard (ASC 842)?
Please talk about Bank of America regarding its ethical issues. provide introduction : you can describe...
Please talk about Bank of America regarding its ethical issues. provide introduction : you can describe the importance of ethical issues on the financial market Body : What cause and impact from the ethical issues of a financial institution. How financial institution handle it. Conclusion: Based on the body content. Recommendation: you opinion to help them to prevent it. References / Citations This paper requires minimum 3 full pages.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT