Is Central liable to GECC

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Reference no: EM132163275

Roger Duchow (owner of Duchow’s Marine, Inc.) borrowed money from General Electric Capital Corp. (GECC) to buy boats for his business. He agreed that when he sold a boat, he would deposit the funds in a blocked account at Central Bank. Funds could be withdrawn from this blocked account only with GECC’s signature. Duchow also had a separate, unrestricted account at Central.

Duchow sold a yacht and, in an effort to defraud GECC, told the buyer to wire the $215,000 purchase price to the unrestricted account. The buyer’s bank sent the wire transfer to an intermediary bank, Banker’s Bank. But Banker’s instructions to Central included only Duchow’s name, omitting his account number. As luck would have it, the money was put in the blocked account. Duschow immediately ordered Central to transfer the funds to his unrestricted account, which Central did. Duchow quickly spent the money and had no other assets. Is Central liable to GECC?

What is the argument for Central?

What is the argument for GECC:

Reference no: EM132163275

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