
USCA1 Opinion

	




                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ____________________          No. 94-1537                                  JEAN R. KENERSON,                             ADMINISTRATRIX OF THE ESTATE                               OF VAUGHAN H. KENERSON,                                Plaintiff - Appellant,                                          v.                                    FDIC, ET AL.,                               Defendants - Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF NEW HAMPSHIRE                       [Hon. Shane Devine, U.S. District Judge]                                           ___________________                                 ____________________                                        Before                               Torruella, Chief Judge,                                          ___________                            Coffin, Senior Circuit Judge,                                    ____________________                             and Keeton,* District Judge.                                          ______________                                _____________________               Cordell A.  Johnston, with whom  Bradford W. Kuster  and Orr               ____________________             __________________      ___          and Reno, P.A. were on brief for appellant.          ______________               Irvin D. Gordon, with whom William D. Pandolph  and Sulloway               _______________            ___________________      ________          & Hollis were on brief for appellee Dean Witter Reynolds Inc.          ________               Emily Gray Rice,  with whom  Broderick & Dean,  P.A. was  on               _______________              _______________________          brief for appellees Bank of  California, N.A. and Morgan Guaranty          Trust Company.                                 ____________________                                   January 5, 1995                                 ____________________                                        ____________________          *  Of the District of Massachusetts, sitting by designation.                    KEETON,  District Judge.    This case  arises from  the                             ______________          fraudulent conduct  of an attorney who  forged check indorsements          and  absconded with a widow's  money.  The  attorney, however, is          not a party.   Rather, the widow, appellant Jean  Kenerson, suing          in  her  capacity as  administratrix  of  her deceased  husband's          estate, seeks  to recoup her  losses from the  institution ("Dean          Witter") that wrote the checks  and the banks on which  they were          drawn.   We  use "plaintiff"  (or "appellant")  to refer  to Mrs.          Kenerson  in her  capacity  as currently  the administratrix  and          formerly co-administrator with the attorney.                    The  trial court granted  motions for  summary judgment          for all defendants.  We affirm the judgment for Dean Witter,  but          vacate  the judgment  for other  defendants and  remand  for such          further  proceedings, consistent  with  this Opinion,  as may  be          necessary to final disposition.                                          I.                                          I.                    One week after the death of Vaughan H. Kenerson in July          1981,  the  Sullivan  County  Probate  Court  appointed  Jean  R.          Kenerson  and  John  C.  Fairbanks as  co-administrators  of  his          Estate.   Mrs. Kenerson,  having limited experience  in financial          matters, including estate  administration and investments, relied          on  Fairbanks' legal and investment counsel.  She took little, if          any, role in the Estate administration.                    In  August  1981, Fairbanks  opened an  Estate checking          account at First Citizens  National Bank, listing himself  as the          sole  authorized signatory.   He also maintained  a trust account                                         -2-                                          2          for his law offices at the same bank.                    In November  1981, Fairbanks opened an  account for the          Estate  with Dean  Witter  Reynolds, Inc.,  into which  he placed          stock holdings of  the Estate valued  at $248,660.87.   Fairbanks          did not inform Mrs. Kenerson of  the existence of the Dean Witter          account  or of  his  withdrawals from  it, totalling  $255,978.38          between November 1981 and  the closing of the account  in October          1984.  Fairbanks received  the withdrawals in the form  of checks          that were mailed to  him.  Most of the checks  were issued in the          following manner:                      Pay to the order of                         Estate of Vaughan H. Kenerson                         Jean R. Kenerson &                         John C. Fairbanks Administrators          On  some  checks, however,  "Admin"  instead  of "Administrators"          appeared  on  the last  line.   The  checks  were  drawn on  Dean          Witter's accounts  at Morgan Guaranty  Trust Company and  Bank of          California.                    Fairbanks deposited  one of the Dean  Witter checks, in          the  amount of  $150,000, in  his own  account at  First Citizens          National  Bank.   He  deposited the  other  checks in  the Estate          checking account that  he had opened  at First Citizens  National          Bank.  Fairbanks indorsed  these checks by writing first  his own          name  (without any description of his role), followed by the name          of  Mrs. Kenerson.   No evidence  was offered at  trial that Mrs.          Kenerson had ever affirmatively  authorized Fairbanks to  indorse          any checks in her name.                    In  each instance,  First Citizens  National Bank,  the                                         -3-                                          3          depository  bank, accepted  the check and  transmitted it  to the          drawee  bank -- Morgan  Guaranty  Trust  or  Bank  of  California          ("Banks") -- and  the drawee  bank  paid the  check.   Though the          record is not explicit,  the parties appear to have  assumed, and          we take  it to be  undisputed, that  in each instance  the drawee          bank charged Dean Witter's account.                    Fairbanks withdrew  from the  Estate bank account,  for          his  own benefit, all  but a small  portion of the  funds in that          account.  Mrs. Kenerson acknowledged  receiving only $20,000.  In          any  event, appellees do not  contend that she  received any more          than $66,000.   Beyond this sum, little  if any of the  remaining          funds  from the Estate account with  First Citizens National Bank          were disbursed in any way that inured to Mrs. Kenerson's benefit,          either individually or in her capacity as co-administrator.                                         II.                                         II.                    Plaintiff  did  not   sue  the  most  obvious   target,          Fairbanks; he  had disappeared.   Instead  she sued  Dean Witter,          drawer  of  the checks,  and Morgan  Guaranty  Trust and  Bank of          California,  drawees  (or  payors)  of the  checks.    (Plaintiff          initially sued  the depositor bank,  too, but claims  against the          F.D.I.C., as that bank's successor in interest, were dismissed by          stipulation.)                    Plaintiff sued  Dean Witter on  the theory that  it was          still liable to her on the checks because she had received only a          small  portion of  their  value  and,  in  her  capacity  as  co-                                         -4-                                          4          administrator  and later  sole  administratrix,  was entitled  to          recover a sum equal to the remainder of the full value.  She sued          the  drawee Banks  on  the theory  that  they had  converted  the          proceeds  of the  checks  when they  paid  them over  the  forged          indorsements of her name.                    Plaintiff  sued  all  defendants -- the   drawer  (Dean          Witter)  and drawees  (the Banks) -- on  two  different theories.          The  trial court, in granting summary judgment to all defendants,          relied, essentially, on one  proposition -- that under the U.C.C.          (as enacted in New Hampshire) and the common law (as developed in          New Hampshire) all defendants were entitled to rely on Fairbanks'          indorsement when paying on the checks he forged.                    The  trial  court read  the  checks as  payable  to the          Estate.    Based  on  this  reading,  the  court  concluded  that          Fairbanks' negotiation  of the checks --  by  his own indorsement          and   the  forged  indorsement  in  plaintiff's  name -- absolved          defendants of liability to plaintiff.  We conclude that the trial          court's  reasoning  rested on  an  impermissible  reading of  the          checks and  that the rules of  law invoked by the  trial court do          not apply to the checks at issue in this case.                    We  assume,  without  deciding,  that,  in  general,  a          determination as to  who are the payees  of an instrument may  be          one of fact  if on  the evidence received,  under the  applicable          law,  reasonable  finders  of fact  could  differ.    Cf. Feldman                                                                ___ _______          Construction Co. v.  Union Bank,  104 Cal. Rptr.  912, 913  (Cal.          ________________     __________          App.  1972) (referring  to "trial  court's  findings of  fact and                                         -5-                                          5          conclusions  of law  that the  check was  payable jointly  to two          payees and required the endorsement of both").  We agree with the          district court that,  on the  evidence before the  court in  this          case,  factfinders can  not reasonably  differ as  to  the proper          reading  of   the  instruments   at  issue,  and   therefore  the          determination of the meaning of those instruments must be made by          the court "as a matter of law."                    Contrary  to  the  determination of  the  trial  court,          however, we conclude that the only reasonable construction of the          checks  at  issue in  this  case  is that  they  were payable  to          plaintiff  and  Fairbanks  together  (that  is, collectively)  as          payees, in their capacities as administrators of the Estate.1                    As  we explain more fully  below, under the statute and          the  applicable  precedents,  a  check  payable  to  two  persons          together  (as   distinguished  from   a  check  payable   in  the          alternative, to either of two persons) can properly be negotiated          only on the valid indorsements of both payees.                    Nevertheless, as  explained in Parts III  and IV below,          because  Fairbanks  had authority  to  receive  the checks,  even                                             ___________          though he did not have authority to indorse them with plaintiff's                                           __________          signature and  then negotiate  them, summary judgment  for drawer                                        ____________________          1    We  have chosen  to  use the  word  "together,"  rather than          "jointly," because the drafters  of the U.C.C. expressly declined          to refer  to the payees of  an instrument written in  this way as          "joint payees."  The U.C.C. omitted the word "joint" because that          term might be thought to carry a possible  implication of a right          of survivorship.   New  Hampshire R.S.A. 382-A:3-110,  comment 1.          No  such implication is associated with our use of "collectively"          and "together" in this Opinion.                                         -6-                                          6          Dean Witter was appropriate, given that the Banks paid the checks          and charged Dean Witter's  account.  This rule as to the drawer's          discharge   applies  even  when  the  payment   is  on  a  forged          indorsement.  It is,  however, a rule as to  a drawer's liability          and  does not  apply to  drawees.   For this  and other  reasons,          explained below,  we vacate  summary judgment for  appellee Banks          and remand for further proceedings.                                         III.                                         III.                    Plaintiff sued  Dean Witter,  drawer of the  checks, on          the ground that Dean Witter was liable  to her on the instruments          themselves.  She brought  her suit against Dean Witter  under New          Hampshire R.S.A. 382-A:3-804, which provides in relevant part:                      The owner of an instrument which is lost,                      whether   by    destruction,   theft   or                      otherwise, may maintain  an action in his                      own  name  and  recover  from  any  party                      liable  thereon upon  due  proof  of  his                      ownership,  the  facts which  prevent his                      production  of  the  instrument  and  its                      terms.          Dean  Witter did not  dispute that plaintiff  properly framed her          action  under this  section.   We assume, without  deciding, that          plaintiff sufficiently alleged a cause of action under  3-804.                    Dean  Witter  asserted  that  it  was  discharged  from          liability  to   plaintiff  under  R.S.A.   382-A:3-603(1),  which          provides in relevant part:                      The liability of any party  is discharged                      to   the   extent  of   his   payment  or                      satisfaction to the holder even though it                      is  made with  knowledge  of a  claim  of                      another person to the instrument . . . .                                         -7-                                          7          The trial court, relying on this clause, granted summary judgment          for Dean Witter on the ground that Fairbanks was a holder and had          received  payment on  the  checks Dean  Witter drew  on defendant          Banks.                                          A.                                          A.                    We  review de  novo the district  court's determination          that  3-603 applies, because the issue is one of law.   See Salve                                                                  ___ _____          Regina  College v. Russell, 499  U.S. 225, 239  (1991) (courts of          _______________    _______          appeals must  review state-law determinations of  district courts          de novo).                    New Hampshire  courts  have not  explicitly  considered          which U.C.C. provisions apply to instruments drafted precisely in          the manner of the  instruments in this case.  Thus, in construing           3-603,  as  well as  other statutes  referred  to later  in this          Opinion, we do not  have the benefit of direct  guidance from New          Hampshire case law.   We  are guided, however,  by principles  of          statutory interpretation  that are well settled  in New Hampshire          law.   We begin by considering  the words of the  statute, and on          the assumption "that all words in  [the] statute were meant to be          given  meaning in  the interpretation  of the  statute," Town  of                                                                   ________          Wolfeboro v. Smith,  556 A.2d 755, 756-57  (N.H. 1989).   We take          _________    _____          account also of our obligation to determine manifested meaning of          a statute "from  its construction  as a whole,  not by  examining          isolated words and phrases."  Petition of Jane Doe, 564 A.2d 433,                                        ____________________          438 (N.H. 1989).                    We  conclude, in  light  of various  provisions of  the                                         -8-                                          8          statute  taken  together,  that  payment  to  Fairbanks  was  not          "payment   . . .  to   the  holder"   for  purposes   of   3-603.          Nonetheless,  Fairbanks  was  an  agent  of  plaintiff  for  some          purposes, and was authorized to receive the checks on her behalf;          therefore, under a rule of the  common law that was not abrogated          by  enactment  of  the U.C.C.  in  New  Hampshire,  Dean Witter's          delivery of the checks  to Fairbanks, followed by the  payment of          the checks through  the Banks, absolved Dean Witter  of liability          on the instruments.                    In  all  relevant respects,  the New  Hampshire statute          mirrors  precisely the  Uniform Commercial  Code.   Our citations          will  be   primarily  to  the  New   Hampshire  Revised  Statutes          Annotated.    References  to the  statute  in  the  text of  this          Opinion, however, will be by section number alone.                    The  New  Hampshire statute,  as  well  as the  Uniform          Commercial Code  on which it  is based,  defines a "holder"  as a          person  who is in possession  of an instrument  drawn, issued, or          indorsed  to him  or to his  order.  R.S.A.  382-A:1-201(20).2  A                                        ____________________          2   The  text,  in relevant  part,  of the  statutory  provisions          considered here is as follows:                                      Article 1                                      Article 1                                  GENERAL PROVISIONS                                  GENERAL PROVISIONS                                       . . . .                     1-201  General Definitions.                     1-201  General Definitions.                                       . . . .                      (20)   "Holder"  means a  person who  is in                    possession  of  a  document of  title  or  an                    instrument or an  investment security  drawn,                    issued or indorsed  to him or to his order or                                         -9-                                          9                                        ____________________                    to bearer or in blank.                                        Article 3                                      Article 3                                   COMMERCIAL PAPER                                   COMMERCIAL PAPER                     3-110  Payable to Order.                     3-110  Payable to Order.                      (1)  An instrument is payable to order when                    by its  terms it is  payable to the  order or                    assigns of any person therein  specified with                    reasonable certainty, or to him or his order,                    . . . .  It may be payable to the order of                                       . . . .                         (e)    an estate,  trust  or fund,  in                      which case it is  payable to the order of                      the representative of such  estate, trust                      or fund or his successors; . . .                                         . . . .                     3-116  Instruments  Payable  to Two  or More                     3-116  Instruments  Payable  to Two  or More                    Persons.  An instrument payable  to the order                    Persons.                      of two or more persons                                        . . . .                         (b)   if  not  in  the alternative  is                      payable   to  all  of  them  and  may  be                      negotiated,  discharged or  enforced only                      by all of them.                     3-117  Instruments  Payable  With  Words  of                     3-117  Instruments  Payable  With  Words  of                    Description.  An instrument made payable to a                    Description.                    named  person  with  the  addition  of  words                    describing him                                        . . . .                         (b)   as  any . . .  fiduciary  [other                      than an agent or officer] for a specified                      person or purpose is payable to the payee                      and  may  be  negotiated,  discharged  or                      enforced by him . . . .                      3-202  Negotiation.                     3-202  Negotiation.                      (1)   Negotiation  is the  transfer  of  an                    instrument in  such form that  the transferee                    becomes  a  holder.    If  the  instrument is                    payable to order it is negotiated by delivery                                         -10-                                          10          holder  of an instrument has  the power to  negotiate or transfer          it, or to discharge  the instrument or enforce  payment on it  in          his own name.   R.S.A. 382-A:3-301.  Negotiation is  the transfer          of  an  instrument in  such form  that  the transferee  becomes a          holder.   R.S.A.  382-A:3-202(1).   Negotiation of  an instrument          that  is payable to the order of specific persons is accomplished          by   delivery  of   the   instrument  with   all  the   necessary          indorsements.  Id.                         ___                    It is  undisputed that  Fairbanks was in  possession of          the checks, and that the checks were drawn to him in his capacity          as administrator.  They were not drawn to him alone, however, but          to   him  and   plaintiff   together  in   their  capacities   as                                        ____________________                    with any necessary indorsement; if payable to                    bearer it is negotiated by delivery.                       3-301  Rights of a Holder.  The holder of an                     3-301  Rights of a Holder                    instrument whether or not he is the owner may                    transfer  or  negotiate  it  and,  except  as                    otherwise  provided  in   Section  3-603   on                    payment  or  satisfaction,  discharge  it  or                    enforce payment in his own name.                       3-603  Payment or Satisfaction.                     3-603  Payment or Satisfaction.                      (1)The liability of any party is discharged                    to  the extent of his payment or satisfaction                    to  the holder  even though  it is  made with                    knowledge of a claim of another person to the                    instrument . . . .                     3-804      Lost,    Destroyed   or    Stolen                     3-804      Lost,    Destroyed   or    Stolen                    Instruments.                    Instruments.                    The owner  of an  instrument  which is  lost,                    whether by destruction,  theft or  otherwise,                    may maintain  an action  in his own  name and                    recover  from any  party liable  thereon upon                    due proof  of his ownership, the  facts which                    prevent his production of the  instrument and                    its terms.                                         -11-                                          11          administrators.   Neither co-administrator, acting on  his or her          own, could  negotiate the  checks.   Rather, the  indorsements of          both administrators were "necessary," as that term is used in  3-          202(1), to "negotiate[]" the  checks as that term is  used in  3-          116(b), according to which  an instrument payable to two  or more          persons, if  not in the  alternative, is payable  to all  of them          together and  may be "negotiated" only by all of them.  Plaintiff          never  indorsed the  checks.   Thus,  Fairbanks did  not properly          negotiate the checks  when he signed his  indorsement, forged the          indorsement  of  plaintiff,  and  delivered  the  checks  to  the          depository   bank.    Consequently,   Dean  Witter's  payment  to          Fairbanks  on those checks did not  constitute the "payment . . .          to  the holder" that results in discharge of a drawer's liability          under   3-603.     To   conclude  otherwise  would   be  entirely          inconsistent with  3-116(b), under which, as stated in a comment,          "the  rights  of one  [co-payee] are  not discharged  without his          consent by the act of the other [co-payee]."  See R.S.A. 382-A:3-                                                        ___          116, comment.                    We need not, and do not, decide whether Fairbanks was a          holder  for  any  other  purpose  contemplated  by  the  statute.          Rather, we decide only  that, in the circumstances of  this case,          under   3-603 Fairbanks  was  not a  holder  for the  purpose  of          discharge  of  Dean  Witter's  liability when  he  received  Dean          Witter's payment through the drawee Banks.                    Similarly,  because  the   checks  were  not   properly          negotiated by  Fairbanks, the  depository bank did  not become  a                                         -12-                                          12          holder of the checks  when Fairbanks delivered them to  the bank.          See R.S.A.  382-A:3-202(1).  Thus,  Dean Witter's payment  to the          ___          depository  bank,   through  the  drawee  banks,   also  did  not          constitute payment to a holder under  3-603.                    As  stated above, we  conclude that the  checks in this          case  were payable to the co-administrators together.  It is true          that the manner in which the checks were written is  not one that          falls squarely within an  explicit provision of the statute.   In          these circumstances, we examine hypothetical variations, at least          some  of which are explicitly referred to  in the statute.  We do          so with the purpose of  considering which, among our hypothetical          instruments, the instruments at issue here most closely resemble.                    Suppose,  first, the  checks had  been made  payable to          "Estate  of  Vaughan  H.  Kenerson,"  without  more.    It  might          plausibly   have  been   argued  that   under   3-110(1)(e)   the          indorsement  of   either  of  the  co-administrators   (that  is,          Fairbanks  as  administrator or  Mrs. Kenerson  as administrator)          would have  discharged drawer  liability under  3-603.   Another,          and probably  more reasonable,  interpretation of the  statute is          that a  check drafted in this  manner would be payable  to all of          the  representatives  together, in  the  absence  of an  explicit          authorization in fact or in some source of law outside the U.C.C.          for  each to act alone;  but we need  not and do  not decide this          issue.                    The trial  court applied  3-110(1)(e) to  the checks in          this case, as if they  had been drawn only to "Estate  of Vaughan                                         -13-                                          13          H.  Kenerson."   Since  Fairbanks  was  a representative  of  the          Estate,  the court reasoned, the checks were payable to him under           3-110(1)(e).  As we have stated above and explain further below,          however,  on  the record  in this  case,  the application  of  3-          110(1)(e) to these checks was erroneous as a matter of law.                    Suppose, second,  the checks  had been made  payable to          "John C. Fairbanks & Jean R. Kenerson."  Then the indorsements of          both in their  individual capacities would have been  required to          negotiate the checks under   3-116(b).  See R.S.A. 382-A:3-116(b)                                                  ___          & comment.  According to that provision, an instrument payable to          two or more persons, if not in the alternative, is payable to all          of them ("together,"  one may say) and may  be negotiated only by          all  of them ("together").  See, e.g., Litchfield v. Pfeffer, 116                                      ___  ____  _____________________          N.H.  485, 487-88, 363 A.2d  413, 415 (1976)  (holding that trial          court properly found under   3-116(b) that notes payable to  "Roy          F.  Litchfield  and  Gloria  B.  Litchfield or  order"  could  be          discharged only by both of them).                    Third,  suppose the  checks  had been  made payable  to          "John C.  Fairbanks &  Jean  R. Kenerson,  Administrators of  the          Estate of Vaughan H. Kenerson."  Then the checks would  have been          payable to  the named fiduciaries, according  to  3-117(b), which          provides that                      [a]n  instrument made payable  to a named                      person   with   the  addition   of  words                      describing   him   . . .  as   any  . . .                      fiduciary [other than an agent or officer                      of a specified person] is payable  to the                      payee and may be negotiated . . . by him.          See also  R.S.A. 382-A:3-117(b), comment 2  (providing example of          ___ ____                                         -14-                                          14          "John Doe, Administrator of the Estate of Richard Roe").  In this          third type of case, in  which the checks are payable to  both but          in their fiduciary  capacities, under  3-116(b) the  indorsements          of both  in  their  fiduciary capacities  would  be  required  to          negotiate the checks.  Accordingly,  the indorsements of both  in          their fiduciary capacities would be necessary to invoke  3-603 to          relieve the drawer of liability.                    "Persons,"  as the term is used in  3-116 and elsewhere          in  the  statute, does  not mean  only  "natural persons."   This          common  sense  interpretation of  "persons"  is  reinforced by  a          statutory definition.  R.S.A. 382-A:1-201(30) (defining person as          including  "individual"  or  "organization").    It  is   further          reinforced  by usage  elsewhere in  the statute  and  in judicial          opinions.    See  R.S.A. 382-A:3-110(1)(e)  (listing  "an estate,                       ___          trust or  fund" as  possible "person[s]"  that  could qualify  as          payees); see also Equipment Distributors v. Charter Oak Bank, 379                   ___ ____ ______________________    ________________          A.2d  682 (Conn. App. Sess. 1977) (two business entities); Alumax                                                                     ______          Aluminum Corp.  v. Norstar  Bank, N.A.,  572 N.Y.S.2d  133 (A.D.4          ______________     ___________________          Dept.  1991)   (same).    Thus,   "persons"  includes   corporate          fiduciaries and natural persons in their fiduciary capacities, as          well as natural persons individually.                    The checks in this  case appear most like those  in the          third  of the  categories described  above.   Except for  the few          instances in  which the word "Administrators"  was abbreviated to          "Admin," the checks were made payable to the order of:                      Estate of Vaughan H. Kenerson                      Jean R. Kenerson &                                         -15-                                          15                      John C. Fairbanks Administrators                    It is true that the sequence of names on all the checks          in  this  case  is  the reverse  of  the  sequence  in  the third          hypothetical   category   described    above,   in   which    the          administrators  were  named  first  and  the  estate   afterward.          Appellees  urge  that  we   attach  great  significance  to  this          difference in  sequence.  They contend that it was proper for the          trial  court to  apply   3-110(1)(e) because  the Estate  appears          first  in  the sequence.    We do  not  interpret the  statute as          supporting this contention,  and appellees do  not cite a  single          case that suggests we should.                    A more  reasonable interpretation is  that  3-110(1)(e)          is directed to cases in which the  name of the estate is the only                                                                       ____          name to appear.  Comment 2 to  3-110 makes this point clear:                      2.   Paragraph (e)  of subsection  (1) is                      intended   to   change   the  result   of                      decisions   which   have  held   that  an                      instrument  payable to  the order  of the                      estate  of  a  decedent  was  payable  to                      bearer . . . .   The intent in such cases                      is obviously  not to make  the instrument                      payable to  bearer, but  to the  order of                      the representative of the estate.          R.S.A. 382-A:3-110, comment 2.                    Appellees  also contend  that the  checks in  this case          should  be subject to  3-110(1)(e) because the name of the Estate          appears alone  on the first line and is not connected by "and" or          "or"  to the names of  its administrators.   For several reasons,          the argument is not persuasive.                    First,  one  would not  expect  to  see  "and" or  "or"                                         -16-                                          16          linking the name of an estate with its administrators because the          addition of  such language  would ordinarily be  both unnecessary          and  confusing.   Accordingly,  we   decline  to  adopt,   as  an          alternative  reading of  the checks,  either (1)  that  they were          payable to the  Estate and  Mrs. Kenerson and  Fairbanks, or  (2)                                 ___                ___          that  they were  payable  to  the  Estate  or  Mrs.  Kenerson  or                                                     __                  __          Fairbanks.   Nor does the absence of punctuation (whether a comma          or  a semicolon) between  the first and  second lines, strengthen          significantly the argument for some alternative reading.  Placing          the name of  the first  named administrator on  a separate  line,                                                            ________          below the line on which the name of the Estate appeared and above          the line  on which  "John C. Fairbanks  Administrators" appeared,          conveyed the message  that she  and the individual  named on  the          next  line, with "&"  between them, were  named as administrators          and not as individuals.                    Second, we need  not explore  whether it  would make  a          difference if Jean R.  Kenerson had been named individually  as a          payee.   She was not so named.   Even the checks on which "Admin"          rather  than   "Administrators"  appeared  are   not  subject  to          interpretation as  naming her in  her individual capacity.   That          reading   is  rebutted  by  the  sequence   in  which  the  names          appear -- on  the first  line, the  Estate; on  the  second line,          "Jean R. Kenerson";  and on  the third line,  "John C.  Fairbanks          Admin."   If  only Fairbanks  were being named  as administrator,          common sense would reject the use of a sequence in which his name          and  designation as administrator were separated from the name of                                         -17-                                          17          the estate by the name of another payee who was meant to be named          only individually.                    Third, if we were  to adopt the proposed interpretation          of  the statute,  the result would  be to  give no  effect to the          drawer's  manifested   intent  in  naming   the  individuals   as          administrators only and not as individuals.                    For all  these reasons,  we conclude that   3-110(1)(e)          does not apply to this case.  Thus, the trial court erred when it          read the checks as  instruments controlled by  3-110(1)(e) rather          than instruments  controlled by   3-116(b) and  3-117(b).   These          sections  together made plaintiff's  indorsement essential to the          proper negotiation of the checks under  3-202(1).   Absent proper          negotiation,  payment to Fairbanks was  not "payment . . . to the          holder" under  3-603.                    Our  conclusion derived  from the  text of  the statute          itself, absent New Hampshire  case law in point, is  confirmed by          our examination of interpretations of the U.C.C. by the courts of          other states and a respected commentator.                    A recent decision of the Massachusetts Supreme Judicial          Court  is  closely  analogous.   In  GMAC  v.  Abington  Casualty                                               ____      __________________          Insurance Co., 602 N.E.2d 1085 (Mass. 1992), the defendant issued          _____________          to an individual  a physical damage  insurance policy covering  a          motor vehicle that the individual had purchased.   Plaintiff GMAC          was the  holder of a security  interest in the vehicle  and was a          loss  payee  beneficiary  of  that  policy.    When  the  vehicle          sustained damage,  defendant Abington  issued a check  payable to                                         -18-                                          18          the order of the individual and GMAC.  The check was delivered to          the  individual, who  presented  it to  the  drawee bank  without          GMAC's  indorsement;  the individual  received full  payment, and          GMAC received none of  the proceeds.  The Supreme  Judicial Court          ("SJC") held  that  the payee,  GMAC, could  proceed against  the          drawer on the underlying contract claim, or under  3-804.  Id. at                                                                     ___          1088-89.                    The SJC  specifically observed  that suit  under  3-804          was  not barred by  3-603  because the individual  who cashed the          check  without  GMAC's indorsement  "was  never a  holder  of the          check."    Id. at  1089.   Since GMAC  was  named as  a co-payee,                     ___          according to  3-116(b) the  check could not be discharged  by the          individual payee acting  alone.   Id. at 1087-88.   The SJC  also                                            ___          relied on  3-603, observing  that without GMAC's indorsement, the          purchaser  of the  vehicle  could not  have  taken the  check  by          negotiation and thus  did not  become a  holder under   3-202(1).          Id.  at 1088.    Without payment  to a  holder, the  liability of          ___          defendant was not discharged under   3-603.  Id.  In  relation to                                                       ___          this issue, the  case before us is in all  material respects like          GMAC v.  Abington, though  different in  details not  material to          ____     ________          this  issue.   It is  true that  the SJC  observed that  GMAC and          Abington were "not in  an agency relationship," id. at  1087, and                                                          ___          appellees  in this case have  argued that Fairbanks  was an agent          for plaintiff.   We  hold, however,  that in  the absence of  any          evidence  that  plaintiff   actually  or  apparently   authorized          Fairbanks to indorse and  negotiate checks on her behalf,  he was                                         -19-                                          19          not  an agent  for  indorsing  and  negotiating the  Dean  Witter          checks.  Thus, the present case, like GMAC v. Abington, is one in                                                ____    ________          which  for these  purposes  the payees  were  "not in  an  agency          relationship."  Id. at 1087.                          ___                    In  other but  closely analogous  circumstances, courts          and  commentators have adopted the same reasoning and come to the          same conclusion  as we do, namely,  that payment on  a missing or          forged  indorsement does  not discharge  a party  from liability.          White  and Summers address, for example, the situation in which a          thief,  rather than a co-payee, steals order paper and forges the          payee's indorsement.   The  thief who  steals order  paper cannot          qualify  as a  holder,  and  the  thief's  signature  is  not  an          indorsement.  White  & Summers, 680 n.7. Subsequent takers, also,          will not be holders.  Id. at 680.  Thus, when the drawee or maker                                ___          pays the  presenter, the payor  will not have  paid a holder,  no          discharge under  3-603 will have occurred, and the original owner          can  recover  on the  stolen instrument  under   3-804 or  on the          underlying obligation.  Id.                                  ___                    The same result holds  where an indorsement is missing,          rather  than forged.   In a suit  by the drawee  bank against the          collecting bank for accepting a check with a missing indorsement,          a California appeals  court noted  that "[w]hen a  check is  made          payable  to two  payees jointly,  only proper  negotiation, i.e.,          endorsement by  both, results in the payment contemplated" by  3-          603.  Feldman Construction Co. v. Union Bank, 104 Cal. Rptr. 912,                ________________________    __________          914  (Cal. Ct.  App. 1972).   That court  also relied  on  3-201,                                         -20-                                          20          defining a holder, and  3-202, defining proper negotiation.                    It may be suggested that  cases holding that a co-payee          who absconds with funds is not a holder appear to be inconsistent          with   3-603's reference  to a  "party who in  bad faith  pays or          satisfies  a holder who acquires  the instrument by  theft or who                       ____________________________________________________          . . . holds through  one who  so acquired it."   R.S.A.  382-A:3-          ____________________________________________          603(1)(a) (emphasis  added).  The meaning of holder as it is used          in  this instance, appears, however,  to be a  deviation from the          definition of  the term in   1-201(20).  Reading   3-603 together          with   1-201(20), 3-202(1),  and 3-116(b), one  is driven to  the          conclusion that payment to a thief does not constitute payment to          a holder for the purpose of discharge under  3-603.                                          B.                                          B.                    The trial court also relied on Protective Check Writers                                                   ________________________          Co.  v.  Collins,  23 A.2d  770  (N.H.  1942), interpreting  that          ___      _______          opinion as standing for  the unqualified proposition (referred to          here  as the  "single-entity  rule") that  the  acts of  one  co-          representative of an  estate -- namely, Fairbanks -- are  treated          in  law as  the acts of  the other -- namely,  plaintiff.   It is          unclear whether the trial  court, in its citation to  the single-          entity rule,  meant that only Fairbanks'  signature was necessary          to  negotiate the checks, or  instead meant that  under this rule          Fairbanks  was authorized  to  sign the  indorsement  of his  co-          administrator, plaintiff.                    To the extent that the trial court meant the former, we                                         -21-                                          21          have already  rejected the argument that under  New Hampshire law          Dean  Witter  was relieved  of liability  by  paying on  only one          effective  indorsement   where  two  were  required.     Even  if          Protective Check Writers can  properly be interpreted as standing          ________________________          for  the proposition  that fewer  than all  co-administrators may          negotiate   an   instrument  made   payable   to   all  of   them          together -- and we do not  decide whether it does -- it  would be          displaced by the provisions  of the later-enacted statute.                    To the extent that the trial court relied on Protective                                                                 __________          Check   Writers   for   the   proposition  that   Fairbanks,   as          _______________          administrator, was authorized  in law to sign  the indorsement of          plaintiff,  his co-administrator,  we  conclude that  the statute          displaces  that purported  rule also,  even if  we assume  it did          exist  (in the form  assumed by the  trial judge)  in earlier New          Hampshire law.                    In analyzing  the relationship between the  statute and          the common law that  existed before its enactment, we  start with          not only the guidance of  Town of Wolfeboro and Petition  of Jane                                    _________________     _________________          Doe, supra,  but as  well  the legislative  mandate that  "unless          ___  _____          displaced  by  the  particular  provisions of  this  chapter  the          principles  of   law  and  equity  . . .   shall  supplement  its          provisions."  See R.S.A.  382-A:1-103. Construing sections of the                        ___          statute in combination, as we must under Petition of Jane Doe, we                                                   ____________________          conclude that   3-116(b) and 3-117(b) leave no room for operation          of the single-entity rule regarding commercial instruments.                    The  statute  is  premised  on an  assumption  that  an                                         -22-                                          22          instrument  may be made payable to an estate, see R.S.A. 382-A:3-                                                        ___          110(1)(e),   or  its  fiduciaries,   see  R.S.A.  382-A:3-117(b).                                               ___          Although   both   clauses    are   worded    in   the    singular          ("representative"  in  3-110(1)(e), "named person" in  3-117(b)),          and  the illustrations in  the comment to   3-117(b) include only          one fiduciary, words in  the singular number include the  plural.          See R.S.A. 382-A:1-102(5)(a).   We  need not decide,  and do  not          ___          decide,   whether,   under    3-110(1)(e)   and   other  relevant          provisions,  a check  made  payable to  an  estate alone  can  be          negotiated on the indorsement of just one of its  administrators.          Where, however, a  check is payable to  two named administrators,          not in the alternative,  3-116(b) declares that the instrument is          payable  to the two fiduciaries  together, and is negotiable only          by  the two together.   It would  render  3-116(b)  a nullity, at          least with respect to checks made payable to co-administrators of          estates, to hold that  one of two or more  co-administrators can,          as   a  matter   of  law,   sign   the  indorsements   of  fellow          administrators and proceed to  negotiate what is "negotiable only          by  all  of them."    Thus,  3-117(b)  and   3-116(b), considered          together, displace the common law single-entity rule.                    Appellees rely on a  commentator's suggestion that  the          problem  of who can indorse an instrument made payable to several          administrators  "will  depend,  as  it did  under  prior  law, on          whether  one  personal representative  has  authority  to act  on          behalf  of the others . . . ."   See Anderson,  UCC 3d  3-116:31.                                           ___          His  premise,  that  "[t]he  Code  makes  no  provision  in  this                                         -23-                                          23          respect," however, is  subject to  question.  Perhaps  it may  be          said that the Code  does not do so in any single  provision.  But          the  Code,  as  just  noted, explicitly  allows  for  instruments          payable  to several persons together, and we see no reason not to          apply   3-116 when the  "persons" are individuals  named in their          capacity as fiduciaries.                    The rules of construction  stated in the statute itself          further  strengthen this  interpretation.   The statute  declares          that it is to be "liberally construed and applied to  promote its          underlying purposes  and policies."  R.S.A.  382-A:1-102(1).  One          purpose of the statute is to "simplify, clarify and modernize the          law   governing  commercial   transactions."     R.S.A.  382-A:1-          102(2)(a).  Appellees have  offered no reason to infer  that, due          to policy considerations unique to the administration of estates,          either  the   drafters  of  the  U.C.C.   or  state  legislatures          (including that of New Hampshire), in proposing and adopting   3-          116(b) and  3-117(b),  manifested an  intent  to leave  intact  a          common law single-entity  rule, in those states  where it existed          or where no precedent existed one way or the other.  Furthermore,          though some recent cases in  other jurisdictions continue to cite          the single-entity  rule, see, e.g., Holmes  v. Lankenau Hospital,                                   ___  ____  ______     _________________          627  A.2d  763, 768  (Penn.  Sup. Ct.  1993), a  growing  body of          authority in the field of probate law (even if still a  minority)          rejects the rule.   See Unif. Probate Code   3-717, 8 U.L.A.  340                              ___          (1983) ("If two or  more persons are appointed co-representatives          and unless the will provides otherwise, the concurrence of all is                                         -24-                                          24          required  on  all  acts  connected with  the  administration  and          distribution of the estate.").                    Our  conclusion that the statute should  be read as not          preserving  any  purportedly pre-existing  single-entity  rule is          further supported by  the lack of any showing that  this rule was          ever firmly embedded in  New Hampshire law.  Appellees  cite only          one  New  Hampshire case,  Protective  Check  Writers, supra,  in                                     __________________________  _____          support of their  contention that the single-entity rule  was and          is  now a  part of  New Hampshire  law.   The cited  passage from          Protective Check  Writers, however,  is a passing  reference, not          _________________________          essential to the basis  of the decision, without citation  to any          other case, either in New Hampshire or elsewhere.                    The  reference  to   the  single-entity  rule   in  the          Protective Check  Writers  opinion was  made  in the  process  of          _________________________          explaining the  holding that each co-representative  of an estate          is liable for  his or her own  wrongdoing.  23 A.2d at  772.  The          court thus had no reason to be concerned with  the very different          question whether one co-representative  has authority to bind the          estate  by action taken without the approval or even knowledge of          the  other.  Moreover, the opinion in that case explicitly called          attention  to the  fact  that (1) "both  administrators [in  that          case] were equally  participants" in the transaction at issue, 23          A.2d  at 772 ("making  payments"), and  (2) the issue  before the          court  "was only  the  chargeability of  Mrs.  Ney, leaving  [the          chargeability] of her co-administrator  undetermined."  Id.    We                                                                  ___          conclude  that  Protective Check  Writers  does  not support  the                          _________________________                                         -25-                                          25          proposition for which appellees cite it.                    Appellees suggested  in oral argument that  the lack of          reported  New  Hampshire cases  regarding the  single-entity rule          indicates that  the rule  was so  taken  for granted  by the  New          Hampshire bar that it was not the subject of litigation, or, more          precisely, litigation that culminated in a reported opinion.  The          suggestion is unpersuasive in view of divided authority elsewhere          and  the interest litigants would have in presenting the issue in          any case where it would be likely to affect the outcome.                    Finally, even if  we were  to assume, for  the sake  of          argument, that  New Hampshire had adopted  the single-entity rule          at a  time  before  the  New Hampshire  legislature  enacted  the          commercial code,  this case  falls within  one of the  "equitable          exceptions"  to the rule to which the opinion in Protective Check                                                           ________________          Writers referred.   See id.,  23 A.2d at  772.  Because  the rule          _______             ___ ___          itself was  not in issue,  the court  did not explain  what these          exceptions might  be.  The  equities in the case  before us would          weigh strongly  toward recognition of  an exception, even  if the          single-entity rule were assumed to be  part of the current law of          New Hampshire.                    For the  foregoing reasons, we conclude  that we cannot          determine that under  the law  of New Hampshire  the trial  court          summary judgment for Dean Witter can be sustained on the basis of           3-603 and Protective Check Writers.                     ________________________                                         -26-                                          26                                          C.                                          C.                    Even though payment  to Fairbanks was not  payment to a          "holder"  for purposes of  3-603, we conclude that Dean Witter is          relieved of  liability by a  common law rule  of agency that,  we          conclude,  has been and  continues to be  part of the  law of New          Hampshire as in other jurisdictions.                    According to the Restatement (Second) of Agency,                                     ______________________________                      If an agent who  is authorized to receive                      a  check  payable  to  the  principal  as                      conditional     payment    forges     the                      principal's endorsement to such  a check,                      the maker is relieved of liability to the                      principal  if the  drawee  bank pays  the                      check  and  charges  the  amount  to  the                      maker.          Restatement  (Second) of  Agency   178(2) (1958).   Although  the          ________________________________          Restatement refers to  a "maker"  rather than a  "drawer," it  is          evident  from  the reference  to a  "drawee  bank" that  the rule          applies  to a  drawer.    No  reported  New  Hampshire  case  has          considered  this rule.  The modern  trend in other jurisdictions,          however, is consistent with the Restatement.  Also, jurisdictions          that have considered the question  since enactment of the  U.C.C.          have  held that this  rule of the  common law  of agency survives          under the U.C.C.                    Several  cases have involved  circumstances in which an          attorney forged a  client's indorsement on a  check received from          an alleged  tortfeasor or  the tortfeasor's insurance  company in          settlement of the client's tort claim.                         See  Terry  v. Kemper  Insurance. Co.,                         ___  _____     ______________________                      456  N.E.2d  465,  466-468  (Mass.  1983)                      (transfer to attorney, who was claimant's                                         -27-                                          27                      agent, of  draft in  the amount  of claim                      drawn on account  with sufficient  funds,                      was "payment" within  meaning of  statute                      providing   that   unpaid   party   could                      commence action in contract  for payments                      due over  30  days even  though  attorney                      forged client's indorsement);                         Navrides v. Zurich Insurance  Co., 488                         ________    _____________________                      P.2d    637,   642-646    (Calif.   1971)                      (Restatement  rule absolved  defendant of                      all liability to plaintiff);                         Hutzler  v.  Hertz  Corp., 347  N.E.2d                         _______      ____________                      627,  630-32 (N.Y.  1976) (in  action for                      negligence   of    drawer,   tortfeasor's                      obligation to claimant was discharged);                         Clarkson  v. Selected  Risks Insurance                         ________     _________________________                      Co., 406 A.2d 494,  497-98 (N.J. Sup. Ct.                      ___                      1979)   (defendant  fulfilled   insurance                      contract  obligation  and was  not liable                      for negligence  for forwarding settlement                      check   to   attorney  who   then  forged                      client's indorsement);                         see also Liberty Mutual  Insurance Co.                         ___ ____ _____________________________                      v. Enjay Chemical Co., 316 A.2d 219, 222-                         __________________                      226  (Del.  Sup.   Ct.  1974)   (adopting                      Restatement rule but not  considering its                      relationship  to   U.C.C.;  holding  that                      defendant's   payment  of   royalties  to                      plaintiff's  employee, who  embezzled the                      funds,  satisfied contractual  obligation                      of royalty payment).          In each case, upon determining that the attorney was  an agent of          the  plaintiff who was authorized  to receive the  check drawn by          defendant  to plaintiff  (and in  some cases  to the  attorney as          well), the court applied  the rule as stated in  the Restatement.          In  the  absence  of  some  explicit  showing  to  the  contrary,          authority of a co-payee  to receive a check seems apparent.   Cf.                                                                        __          Muzzy v. Rockingham County  Trust Co., 113 N.H. 520,  523-24, 309          _____    ____________________________          A.2d 893, 895 (1973) (holding bank's delivery to husband of draft          payable  to husband and to  wife together not  actionable by wife          because  each, as co-payee, was entitled to possession).  In this                                         -28-                                          28          case, appellant concedes  in her reply  brief that Fairbanks  was          authorized  to receive the Dean  Witter checks on  her behalf (in          her  capacity as administrator, we infer).  She contends that the          Restatement rule  is not  a good  rule  of law,  and is  moreover          inconsistent with the U.C.C.                    Appellant cites to  jurisdictions that she  claims have          repudiated, at least implicitly, the common law rule.                         See Morris v. Ohio  Casualty Insurance                         ___ ______    ________________________                      Co., 517 N.E.2d 904, 910 (Ohio 1988);                      ___                         Smith  v.  General  Casualty   Co.  of                         _____      ___________________________                      Wisconsin, 394 N.E.2d 804,  806-807 (Ill.                      _________                      App. Ct. 1979);                         Tormo  v.  Yormark,  144  U.C.C.  Rep.                         _____      _______                      Serv. 962, 967-972 (D.N.J. 1974).          Only  one of  these  courts, however,  considered  the rule;  the          others  did no more than  come to conclusions  that the appellant          argues are inconsistent with the  rule.  In fact, the results  in          these cases  are entirely  consistent with  the  common law  rule          stated in the Restatement.  See Florida Bar v. Allstate Ins. Co.,                                      ___ ___________    _________________          391 So.2d  238, 241 n.6  (Fla. App.  1981) (so  reasoning).   The          cases concern  the liability of insurance  companies that, though          both drawers  and drawees  (because they issue  "payable through"          checks and must  approve the collecting banks'  payment on them),          are sued in their status as drawees.                      See Morris, 517 N.E.2d at 910;                      ___ ______                      Smith, 394 N.E.2d at 806;                      _____                      Tormo, 144 U.C.C. Rep. Serv. at 968 & n.6.                      _____          Dean Witter, of course, is not a drawee.                    Some jurisdictions,  at one time at  least, declined to          apply the Restatement rule to a drawer.                                         -29-                                          29                         See  M. Feitel  House Wrecking  Co. v.                         ___  ______________________________                      Citizens' Bank  & Trust Co.,  106 So. 292                      ___________________________                      (La. 1925);                         Lawrence J. Kern,  Inc. v. Panos,  177                         _______________________    _____                      So. 432 (La. App. 1937);                         Hart  v.  Moore,  158  So.  490 (Miss.                         ____      _____                      1935);                         compare Rodgers v. Fleming, 188 A. 861                         _______ _______    _______                      (Penn.  1937)  (noting, but  not holding,                      that  drawer  remains liable  to  a payee                      when check indorsement is forged)                         with Zidek v. West Penn. Power Co., 20                         ____ _____    ____________________                      A.2d  810  (Penn.  Super. 1941)  (holding                      plaintiff  bound by  settlement concluded                      by  her  attorney  though   attorney  had                      forged her indorsement to the joint payee                      check and taken proceeds).          Louisiana's decision  not to  discharge drawers of  liability was          necessary to preserve  a remedy for aggrieved  payees, since that          jurisdiction,  unlike New  Hampshire,  did not  provide payees  a          cause of action  against drawees  and collecting banks.   In  any          event, these decisions are unpersuasive in the  face of carefully          reasoned, recent  decisions to the contrary by the highest courts          of California, Massachusetts,  and New  York, see  supra, and  an                                                        ___  _____          array of added authorities.                         See, e.g., Strickland  Transp. Co.  v.                         ___  ____  _______________________                      First  State Bank of  Memphis, 214 S.W.2d                      _____________________________                      934, 938 (Tex. 1948);                         Franciscan  Hotel  Co. v.  Albuquerque                         ______________________     ___________                      Hotel Co., 24 P.2d 718, 726 (N.M. 1933);                      _________                         Mills v. Hurley  Hardware &  Furniture                         _____    _____________________________                      Co., 196 S.W. 121, 121-22 (Ark. 1917);                      ___                         McFadden  v.  Follrath, 130  N.W. 542,                         ________      ________                      544 (Minn. 1911);                         Patterson  v.  Southern  Ry. Co.,  151                         _________      _________________                      S.E. 818, 819 (Ga. App. 1930);                         Indemnity Mutual  Marine Assurance Co.                         ______________________________________                      v. Powell & O'Rourke Grain  Co., 271 S.W.                         ____________________________                      538, 539-40 (Mo. App. 1925).                    Many of  these court  decisions advance  cogent reasons          for the position  that one who authorizes  an agent to  receive a                                         -30-                                          30          check  should bear the  risk that the  agent is corrupt.   Having          chosen the agent in the first place, the principal is in a better          position to prevent the loss than  the drawer, who has had no say          in the selection of the agent.                      Navrides,  488  P.2d at  643-44 (citation                      ________                      omitted);                      Hutzler, 347 N.E.2d at 631.                      _______          To  ask  of commercial  actors that  they inspect  every canceled          check  after it returns from the drawee bank for possible forgery          "would make payment  by check  a matter of  uncertainty and  some          risk."                      Navrides,  388  P.2d  at   645  (citation                      ________                      omitted);                      see  also Hutzler,  347 N.E.2d  at 630-31                      ___  ____ _______                      (same).          It  would be extremely expensive for business entities to look at          the back of each returned check; it would be even  more difficult          for  them  to determine  if the  indorser  was authorized  by the          creditor to indorse the particular check in question.                      Liberty Mutual Insurance Co., 316 A.2d at                      ____________________________                      224.                    Thus, a  clear majority  of the courts  considering the          issue  have  concluded  that it  is  better  to  hold a  creditor          responsible for the  choice of agent than  to impose a  burden on          drawers that will raise the cost of commercial transactions.  The          result is not unduly harsh on the defrauded creditor, for whom  a          remedy   is  ordinarily   available -- pursuing  an   action  for          conversion against the drawee  bank.  See Hutzler, 347  N.E.2d at                                                ___ _______          632.                                         -31-                                          31                    Appellant  contends  that  the   common  law  rule  was          displaced by UCC Articles 3 and 4.  The U.C.C. provides, however,          that  "[u]nless displaced  by the  particular provisions  of this          chapter the principles of law and equity, including . . . the law          relative to . . . principal and agent . . .  shall supplement its          provisions."   R.S.A. 382-A:1-103.   We conclude that  the U.C.C.          and  the New  Hampshire statute  do not  displace the  common law          agency rule.                    The U.C.C. and the New Hampshire statute do not contain          "particular provisions" that provide  for a cause of action  by a          payee against a drawer  where a co-payee forges the  payee's name          and  alone obtains the proceeds.   Daniel E.  Murray, Joint Payee                                                                ___________          Checks--Forged and Missing Endorsements, 78 Comm. Law J. 393, 399          _______________________________________          (1973).  Section 3-804, it  is true, allows a cause of  action to          be maintained  by a payee  against a drawer  even when the  payee          does  not  qualify  as a  holder.    Operation  of that  section,          however, is based on the stated premise that the defendant drawer          of the instrument  is "liable  thereon."  Thus,   3-804 does  not          "displace" common law rules, such as  the rule of agency at issue          here,  that are  relevant  to determining  the  liability of  the          drawer.                    The  Supreme  Judicial   Court  of  Massachusetts   has          explicitly  come to  the same  conclusion.   In Terry  v. Kemper,                                                          _____     ______          supra,  the  court adopted  the Restatement  rule  as the  law of          _____          Massachusetts.  A decade later, it held that a payee  could sue a          drawer -- under   3-804   or   on  the   underlying   contractual                                         -32-                                          32          obligation -- where the instrument was drawn to the plaintiff and          a co-payee and  the drawer  delivered the instrument  to the  co-          payee, who absconded  with the  plaintiff's funds.   See GMAC  v.                                                               ___ ____          Abington  Casualty  Insurance Co.,  supra.   In  GMAC,  the court          _________________________________   _____        ____          distinguished Terry v. Kemper, because that case was one in which                        _____    ______          the  absconding  co-payee  was  authorized by  the  plaintiff  to                                          __________          receive the check on his behalf.  602 N.E.2d at 1087.   Thus, the          SJC reasoned that there was no inconsistency between recognizing,          in general, a payee's cause of action against a drawer  under  3-          804, and barring such an action where the instrument is delivered          to an authorized agent.                    There is another, perhaps more plausible argument  that            3-116(b) and 3-404  "displace" the common law rule in question.          Section 3-116(b),  the argument goes, requires  the signatures of          both  principal and agent where they are both named as co-payees,          as in this case.  Section 3-404 provides that "[a]ny unauthorized          signature  is wholly inoperative as that of the person whose name          is signed unless he ratifies it or is precluded from denying it."           3-404(1).   Appellant  contends that the  forged signature  of a          principal is "wholly inoperative,"  and therefore does not excuse          the  drawer from liability to the principal even after the drawer          paid on the forged instrument that it delivered to the agent.                         See Muzzy v.  Rockingham County  Trust                         ___ _____     ________________________                      Co., 113 N.H. 520, 523, 309 A.2d 893, 895                      ___                      (1973) (holding that where  wife, without                      husband's authorization, signed husband's                      indorsement on draft, the  instrument was                      defective under both  3-404 and  3-116);                         Morris, 517 N.E.2d at 909 (noting that                         ______                      under   3-404  an unauthorized  signature                                         -33-                                          33                      does  not relieve drawer of obligation to                      pay payee).          Several  jurisdictions that  have adopted  the Restatement  rule,          however, have explicitly held that these sections do not displace          the rule.                      See Terry, 456 N.E.2d at  467 (  3-116(b)                      ___ _____                      and 3-404);                      Hutzler, 347 N.E.2d at 630-32 ( 3-404);                      _______                      Navrides, 488 P.2d at 643-646 (  3-116(b)                      ________                      and 3-404);                      Clarkson, 406 F.2d at 498 (  3-116(b) and                      ________                      3-404).          Indeed,  it  might plausibly  be  argued  that  3-404  should  be          interpreted as  allowing for the possibility that  a person whose          name is  forged on an instrument  by his agent is,  by his unwise          selection of the agent, "precluded from denying" the unauthorized          signature.   See  Hutzler, 347  N.E.2d at  621 (stating  that the                       ___  _______          court would,  in principle, so hold).   In any event,  all of the          jurisdictions that  have considered  whether that section  or  3-          116,  or  both  together,  displace  the  common  law  rule  have          concluded that they do not.                    We conclude  that summary  judgment for Dean  Witter is          appropriate  on the ground that appellant's action is barred by a          rule  of the  common law  of agency  that remains  a part  of New          Hampshire law after enactment  of the commercial code by  the New          Hampshire legislature.                                         IV.                                         IV.                    Before  the trial court,  plaintiff claimed that drawee          Banks were liable to her for conversion under  3-419(1)(c), which                                         -34-                                          34          treats an instrument as  converted when "it  is paid on a  forged          indorsement."  The Banks moved for summary judgment on the ground          that Fairbanks'  indorsement was valid and  sufficient to justify          their  payment  of  the checks.    The  Banks  relied on   3-301,          defining the rights of a holder as follows:                      The  holder of  an instrument  whether or                      not  he  is  the  owner may  transfer  or                      negotiate  it  and,  except as  otherwise                      provided in  Section 3-603 on  payment or                      satisfaction,  discharge  it  or  enforce                      payment in his own name.          The  trial court agreed that Fairbanks was a holder of the checks          and could  rightfully negotiate them with  his indorsement alone,          even though he forged Mrs. Kenerson's indorsement.                                          A.                                          A.                    As explained in Part III.A., Fairbanks was not a holder          for the  purpose of discharge  of drawer liability  under  3-603.                                            ______          Here, the question presented  is whether Fairbanks, acting alone,          could exercise the powers  of a holder  under  3-301 in a  manner          that  would discharge drawees  of liability.   We  conclude here,                                _______          also, that Fairbanks could not, acting alone, exercise the powers          of a holder -- in  this instance for the purpose  of invoking  3-          301.    See  GMAC, 602  N.E.2d  at  1087  (considering  3-301  in                  ___  ____          reasoning to the conclusion that the co-payee who took payment on          an instrument not signed by the other payee was not a holder).                    As explained above, this is the only reading consistent          with other applicable statutory provisions.  A holder's  power of          "negotiation" of  an instrument  under  3-301 depends,  under  3-                                         -35-                                          35          202(1),  upon  the  holder's   having  obtained  all  "necessary"          indorsements.   In this case, as we have already established,  3-          116(b) renders  "necessary" the signatures of  both co-payees, in          their fiduciary  capacities.  Indeed, to  conclude that Fairbanks          could alone  negotiate the checks under   3-301 would practically          nullify  3-116(b).  The district court thus erred as  a matter of          law in granting summary judgment for the Banks based on  3-301.                    It follows, as  well, that the district court  erred to          the extent  that it relied on  Jones v. Van Norman,  522 A.2d 503                                         _____    __________          (Pa.  1987), in holding that defendant Banks are not liable under           3-419(1)(c).   In Jones, the agent was authorized to indorse her                             _____          principal's name to the checks she received for her principal and          to deposit them  in her  principal's bank account.   Id. at  505.                                                               ___          The court decided that, because the indorsements were authorized,          they could not be the equivalent of forgeries for purposes of  3-          419(1)(c), even though the  agent misappropriated the proceeds of          the checks.                    In the present  case, the  Banks did not  argue to  the          trial  court,  or  to   this  court,  that  plaintiff  authorized          Fairbanks  to  indorse  the  checks; they  rely,  rather,  on  an          assertion that  he had  inherent authority  to do  so.   As  just          observed, however, Fairbanks' status as copayee did not confer on          him authority to cash the checks without plaintiff's indorsement,          or with a forged  indorsement purporting to be hers.   Similarly,          his  status  as attorney  and agent  of  Mrs. Kenerson  for other          purposes  did not clothe him with authority to indorse the checks                                         -36-                                          36          in her name.                         See Florida Bar v.  Allstate Insurance                         ___ ___________     __________________                      Co.,  391 So.2d 238, 240 (Fla. App. 1981)                      ___                      (adopting, in action for conversion where                      attorney  forged client's  indorsement on                      settlement  check,  the  "majority"  rule                      that an  attorney specifically authorized                      to compromise  a  claim and  collect  the                      proceeds  may  not  indorse the  client's                      name  on  a check  or  draft tendered  to                      effect the settlement);                         Morris v. Ohio Casualty Insurance Co.,                         ______    ___________________________                      517 N.E.2d 904, 908 (Ohio 1988) (adopting                      this as "the better rule").          Finally, we have already rejected the argument that his status as          co-administrator   clothed  Fairbanks   with  such   authority.            Consequently, Jones v. Norman is inapposite.                        _____    ______                                          B.                                          B.                    Appellee  Banks  offer  two  alternative   grounds  for          concluding that  appellant cannot maintain a  suit for conversion          under  3-419.  Neither, however, is sufficient to sustain summary          judgment for the Banks.                    The  Banks first contend  that plaintiff cannot satisfy           3-419's   requirement  that   a   payee  demonstrate   that  the          instruments in question were  delivered to her, because plaintiff          never obtained physical possession of the checks.                    No New Hampshire court  has addressed the existence and          scope  of the delivery requirement under  3-419(1)(c).  We do not          rest our  decision on the New Hampshire legislature's revision of          the  statute, which now requires delivery to the payee before the          payee can sue in conversion, see R.S.A. 382:3-420(a)(ii), because                                       ___                                         -37-                                          37          it took effect after this dispute arose.                    We assume, as an initial matter, that the New Hampshire          Supreme Court would find an implicit delivery requirement  in  3-          419 and that  it would recognize  "constructive delivery."   Most          jurisdictions  hold   that  a  payee  cannot   recover  from  the          collecting  bank that pays on  a forged indorsement  if the check          was never delivered to the payee.  Papex Intern. Brokers v. Chase                                             _____________________    _____          Manhattan Bank,  821 F.2d 883,  885 (1st  Cir. 1987).   Papex and          ______________                                          _____          other decisions cited by defendant drawees concern the collecting                                                                 __________          bank's  liability in  conversion  rather than  the drawee  bank's                                                             ______          liability in conversion; however, this difference  seems unlikely          to  be material  to  a  delivery  requirement.    In  any  event,          appellant  concedes   in  her  reply  brief   that  the  delivery          requirement applies  to  suits against  drawees  as well  and  we          assume, without deciding, that  this is an accurate statement  of          New Hampshire law.                    Some courts recognize a constructive  delivery where an          intended delivery  is thwarted,  but a  premise of  invoking this          rule  is a showing, at  minimum, that the  drawer surrendered the          instrument to  the power of the payee or to some third person for          the payee's use.                         Id. at 886;                         ___                         see also Lincoln Nat. Bank & Trust Co.                         ___ ____ _____________________________                      v. Bank  of Commerce,  764 F.2d  392, 398                         _________________                      (5th Cir. 1985) ("actual  or constructive                      delivery of the checks must occur").          In particular, delivery to a  co-payee or agent of the payee  has          generally  been  assumed  by  courts  to  constitute constructive                                         -38-                                          38          delivery.                         See,  e.g., United States   v. Bankers                         ___   ____  _____________      _______                      Trust   Co.,  17   UCC  Rep.   Serv.  136                      ___________                      (E.D.N.Y.1975) (delivery to copayee);                         Burks  Drywall  v.  Washington Bank  &                         ______________      __________________                      Trust  Co., 442  N.E.2d  648  (Ill.  App.                      __________                      1982) (delivery to copayee or agent);                         Thornton  &  Co.  v.  Gwinnett  Bank &                         ________________      ________________                      Trust Co., 260 S.E.2d 765 (Ga. App. 1979)                      _________                      (delivery to agent);                         see  also  J.  White  &   R.  Summers,                         ___  ____                      Uniform Commercial Code,   15-5, at 757 &                      _______________________                      n.8 (3d ed.  1988) (delivery to co-payee,                      on  grounds  that  co-payee  is  agent of                                                   __                      other co-payees).                    The appellee Banks  contend categorically in  this case          that  the  checks  were never  delivered  to  plaintiff.   It  is          undisputed that plaintiff did  not physically receive the checks,          and  the appellees also  maintain that delivery  to Fairbanks did          not constitute  constructive delivery  to her.   They  insist, in          particular,   that   appellant   is   foreclosed   from   arguing          constructive delivery  because such an  argument contradicts  her          other contention that Fairbanks was not her agent with respect to          negotiating the checks; and that, as a matter of law, delivery to          the forger is not sufficient for  3-419.                    Appellant responds that physical delivery of the checks          to Fairbanks,  the forger,  amounted to constructive  delivery to          her on two  grounds -- that he was a co-payee of  the checks, and          that he was authorized as her attorney to receive them for her.                    We conclude that appellant has the better of the  Banks          on this question.  It has  already been established in an earlier          portion of this opinion that Mrs. Kenerson and Fairbanks were co-          payees  in  their  capacity   as  co-administrators.    Appellant                                         -39-                                          39          conceded in another context,  moreover, see supra, that Fairbanks                                                  ___ _____          was  authorized to receive checks  on her behalf,  even though he          was  not  authorized  to indorse  her  signature.    There is  no          contradiction in an attorney's being authorized to receive checks          for a client, without being authorized to indorse the checks.                         See  Morris, 517  N.E.2d at  980 ("The                         ___  ______                      authority   to   receive   a   negotiable                      instrument on behalf of a client does not                      imply the power to endorse it.");                         Florida Bar, supra.                         ___________  _____          Moreover, there is authority for the proposition that a co-payee,          like  an employee,  is an  agent of  the other co-payees  for the                              __          purpose of receiving the check.  See White & Summers, at 757.  In                                           ___          any  event, if  the  agent receives  the  check, as  co-payee  or          otherwise,  and  the  agent  procures  payment  over  the  forged          indorsement of the payee, then  the payee has a right to  recover          in conversion.  White & Summers, at 757.  This is a "conventional          [case], grist for the check theft mill."  Id.                                                    ___                    The Banks' second proffered  basis for holding that  3-          419  does not  afford Mrs. Kenerson  a remedy is  that the checks          reached  their  intended  payee.    It  is  quite  true  that  no          conversion occurs where the owner of a forged instrument receives          the proceeds despite the forgery.   Atlantic Bank of New York  v.                                              _________________________          Israel  Discount Bank,  Ltd., 441  N.Y.S.2d 315,  317  (N.Y. App.          ____________________________          1981).   But "it  cannot be said  that the  monies reached  their          intended   destination  when   one   intended  beneficiary,   the          plaintiff, was deprived of  any incident of ownership."   True v.                                                                    ____          Fleet Bank, 138 N.H. 679, 645 A.2d 671 (N.H. 1994).          __________                                         -40-                                          40                    In True, plaintiff sued  the drawee bank for conversion                       ____          of  the proceeds of a  settlement check payable  to plaintiff and          her attorney; her  attorney, without authorization, indorsed  her          name  upon and deposited the check in  a trust account.  645 A.2d          at  671.  The  New Hampshire  Supreme Court  rejected defendant's          contention that the funds reached their intended destination when          they were deposited in an interest-bearing  trust account for the          benefit of plaintiff.  Id. at 672.  The court reasoned that "when                                 ___          the   defendant  accepted   the  two-party   check  without   the          plaintiff's  indorsement,  it  deprived  her  of  her  rights  of          ownership and placed the funds beyond her control."  Id.                                                               ___                    As  we have already held  that the checks  in this case          were payable  to the co-administrators together,  they were "two-          party" checks as that term was used in True. We can see no way in                                                 ____          which this  case is materially different from True.  Furthermore,                                                        ____          appellees' contention -- that the  checks reached their  intended          destination   because   they  were   deposited   in   the  Estate          account -- is  merely  another  formulation  of  their  argument,          rejected  above,  that the  checks  were payable  to  the Estate,          rather  than   to  Fairbanks   and  plaintiff  together   as  co-          administrators of the Estate.                    Thus, no funds other than those that the district court          determines  on   remand  in  fact  reached   plaintiff's  hands--          including, but not necessarily  limited to, the $20,000 to  which          she admits receiving--reached the intended payee.                                         -41-                                          41                                          C.                                          C.                    The  final  argument  advanced  by the  Banks  is  that          appellant's action for conversion is barred by her own negligence          respecting  the forgeries.   The  Code expressly  provides  for a          negligence defense in defined circumstances:                      Any   person   who   by  his   negligence                      substantially  contributes to  a material                      alteration  of the  instrument or  to the                      making  of  an unauthorized  signature is                      precluded  from asserting  the alteration                      or  lack of  authority  . . .  against  a                      drawee  or  other   payee  who  pays  the                      instrument   in   good   faith   and   in                      accordance with the reasonable commercial                      standards  of  the  drawee's  or  payor's                      business.          R.S.A. 382-A:3-406.                    The  proffer  of evidence  before  the  trial court  by          appellee  Banks in support  of their motion  for summary judgment          fell  short of meeting their burden of showing that no reasonable          factfinder  could find  that  they  had  failed  to  prove  by  a          preponderance of  the evidence  that plaintiff was  negligent and          that her  negligence  "substantially contribute[d]  . . . to  the          making of an unauthorized signature."                    We do not address what  are the appropriate elements of          a  defense  under   3-406  because  that  is  a  question  better          addressed in the first  instance by the trial court, to  which we          remand for reasons explained below.                                          D.                                          D.                    Appellee   Banks  assert  that   summary  judgment  for                                         -42-                                          42          appellant is  inappropriate even if all legal  issues are decided          in her favor.   The Banks have failed  to identify precisely  any          disputed  fact that  is material  to plaintiff's  claim.   We are          concerned, however, that the trial court's erroneous allowance of          the  Banks'  motion  for  summary judgment  may  have  distracted          attention  from the fact that if  the Banks wanted to press their          contention, in the alternative, that the  3-406 defense should go          to  the  factfinder, the  Banks  were  entitled  to a  reasonable          opportunity to proffer evidence that would support such a finding          of fact.  On the record before us, it is not clear that the Banks          were  appropriately  notified  that  summary  judgment  might  be          entered  against  them as  to this  defense  absent a  proffer of          admissible  evidence to show the  existence of a material dispute          of fact  on this issue.   Thus, we will vacate  the trial court's          rulings  on the  cross-motions  for summary  judgment  as to  the          Banks' liability and remand for such further proceedings, if any,          as the  district court  deems appropriate before  entry of  final          judgment.                    The judgment  of the district court for  Dean Witter is          affirmed.          ________                    The  judgment of  the district  court  awarding summary          judgment  for   Morgan  Guaranty   Trust  Company  and   Bank  of          California, N.A.,  and denying  plaintiff summary judgment  as to          liability  against those  parties,  is  vacated.    The  case  is                                                  _______          remanded  for  any  further  proceedings,  consistent  with  this          ________          Opinion, the district court deems necessary and final disposition                                         -43-                                          43          accordingly.                    Costs as to the claims  against Dean Witter are awarded          to Dean Witter against Kenerson.  Costs as  to claims against the          Banks are awarded to Kenerson against the Banks.                                         -44-                                          44
