Who is liable when the bank honors checks that are signed by a person who is no listed on the signature card of the account?

The bank.

Was the person ever a signer on the account? If so and the the signature card was superceded by a new one that removed them, were the checks written prior to the new signature card being actuvated?

Yes, the person was an authorized signer on the account, but was unknowingly superceded in January and continued to sign checks.
Recently it has been discovered that some of the checks have been forged (using the superceded signature) and I am trying to determine the bank's liability. Any advice would be appreciated. There are several checks over a 3 month period totaling over $15k.

If I understand correctly, you are saying that Joe Smith was a signer at one time, but a new signature card was submitted, and Joe Smith is no longer on this card. But the bank continues to honor checks signed by Joe Smith. And now the the customer is stating that Joe Smith's signature is a forgery. Sounds like the bank is going to be liable and eat this entire amount, as they have honored checks from someone not on the signature card.

You say the person was "Unknowingly" removed as a signer on the account. If they didn't know they were no longer authorized I don't think thats Fraud.

Second you are going to have to prove you suffered a loss. If the checks were written and you received benefit
then you did not suffer a loss and the bank is not liable.

If someones signature is being forged you need to tell the bank so this can be stopped. The account needs to be closed now. You also need to take some responsibility for this if you didn't tell the person they were no longer authorized to sign.

The bank may not be totally liable here depending on what and is taking place.

Sorry Don, I made a few assumptions that the person posting was with the bank and the customer was claiming a loss. Your assertions are correct. However, I question how anyone can be removed from an account and not know about it? Especially in a commercial environment.

I am sorry, I think that I am not being clear enough, so let me try to explain.

A CPA pays their client's bills and is an authorized signer on their client's bank account. In January the client accidently removed the CPA from the signature card. The CPA still signs the checks (post January removal). An employee of the CPA firm then forges the CPAs signature on several checks. Once discovered the CPA immediately notifies the bank of the fraudulent checks and closes the client's bank account. Does the bank have any liability for not checking the signature (forged or not) against the signature card?

By the way, this happened with 2 clients and 2 different banks, one bank reimbursed the CPA for the loss, the second bank claims they have no liability. I am wondering why the 2 banks have reacted so differently.

Thank you for any information, and I apologize for not being clear before!

I would think that one bank paid because it was a very good customer that they wanted to retain, and the other did not care to retain the customer, or the loss was sifficient ot lose the customer. Their could be some split liability in this case, depending on what state you are in. In Louisiana, if the customer removed the CPA from the signature card, but allowed the CPA firm access to the checks, the customer is liable. If the customer had taken the checks back from the CPA firm, yet he secretly retained some, then the bank would be liable. In this case, it would also depend on the length of time that the CPA firm continued to write checks, yet was not on the card. If they went more than 2 or 3 statement cycles, I think liability would be only on the customer. However, if it was noticed in the first statement, I think it would go to the bank. This sounds like a tough one, I'd love to hear how it turns out.

Happy you assumed correctly that the bank was the poster and I didn't.

The word "inadvertant" and "mistake" have a lot to do with the bank liability but right now I am pron to say the bank is liable for the "Forged" signature checks. BUT, if the signatue was that of the CPA and the proceeds of the checks went to "Paying the Bills" of his client, then I don't think there is a loss to the bank.

If the checks were plain forged and funds stolen from the account by the CPA's employee then its a different story and the bank is probably liable for the loss.

Saying that, I'm still not sure we have all the facts to say deffinately its a loss to the bank. The key is where did the funds go on the forged checks.

Thank you for all of your wonderful advice!

By the way, the funds were deposited into the CPA's now former employees bank account.