A cheque‑cashing company sought to recover losses arising from a fraudulent mortgage scheme and the negotiation of a bank draft bearing a forged endorsement.
The plaintiff alleged negligence and fraud against multiple parties involved in the mortgage transaction, including the property owner, a lawyer, a lender, and a relative of the homeowners.
The court found that the homeowners were not involved in the fraud and dismissed claims against them and other defendants, including the lawyer and lender.
The court declined to recognize a novel duty of care owed by the drawer of a bank draft to a subsequent negotiator and held that the plaintiff’s loss arose from the strict liability tort of conversion when the draft with a forged endorsement was negotiated.
Liability was established only against the relative who participated in the mortgage fraud.
