Wachovia Bank, N.A. v. Foster Bancshares, Inc.

Facts

A customer of Foster deposited in her account a check for $133,026, listing her as the payee. The check had been drawn from Wachovia by a company called MediaEdge that had an account at Wachovia. Foster presented the check to Wachovia for payment, Wachovia paid Foster and debited MediaEdge’s account for the amount of the check. Later, it was discovered that the customer had somehow obtained the check and inserted her own name in place of a company called CMP Media. After CMP Media told MediaEdge that it never received the check, an investigation uncovered the fraudulent check but the thief was unable to be located. Wachovia had also destroyed the paper check that Foster had presented to it for payment, in keeping with its usual business practices, and only retained a digital image of the check. Due to the destruction of the original check, there was no way to tell if what had been presented was the original check with an alteration or a completely forged check. MediaEdge sued Wachovia to recover the amount of the check. Wahovia sued Foster, seeking a declaratory judgment that Foster must indemnify Wachovia if it was found liable in the suit with MediaEdge on the grounds that Foster violated its presentment warranty that the check was unaltered.