Smith v. Amsouth Bank, Inc
In Smith v. Amsouth Bank, Inc., 892 So. 2d 905 (Ala. 2004), Smith's employee Utsey was hired to buy and sell vehicles on Smith's behalf for Smith's business, Specialty Motor Cars.
In furtherance of this purpose, Utsey had the authority to receive, indorse, and deposit checks in Smith's account. Id. Utsey formed a corporation, then opened a bank account for the corporation in the name of the corporation doing business as "Specialty Motor Cars." Id.
In response to Smith's argument that he had not entrusted Utsey with responsibility because Utsey had "very limited authority concerning checking account matters, " the Alabama supreme court held that "the language in the definition does not require that some preponderance of the six factors be present, but, by the use of 'or' as the connector, states that any one of the listed factors will suffice." Id. at 911.
The court further stated that the evidence showed that Smith's employee could "on at least some occasions" sign or indorse instruments on Smith's behalf and "had authority to 'process' . . . instruments 'for deposit to an account.'" Id. Therefore, he "most likely could 'act . . . with respect to instruments in a responsible capacity.'" Id.
In Smith, the type of responsibility entrusted to the employee was directly correlated to the employee's fraudulent acts; in other words, Utsey was able to perpetrate the fraud because Smith gave him general authority to sign, indorse, and process checks payable to Smith's business. Id. at 907, 911.