Murray Walter, Inc. (Walter, Inc.), was a

general contractor for the construction of a waste treatment plant in New Hampshire. Walter, Inc., contracted with H. Johnson Electric, Inc. (Johnson Electric), to install the electrical system in the treatment plant. Johnson Electric purchased its supplies for the project from General Electric Supply (G.E. Supply). Walter, Inc., issued a check payable to “Johnson Electric and G.E. Supply” in the amount of $54,900, drawn on its account at Marine Midland Bank (Marine Midland). Walter, Inc., made the check payable to both the subcontractor and its material supplier, to be certain that the supplier was paid by Johnson Electric. Despite this precautionary measure, Johnson Electric negotiated the check without G.E. Supply’s indorsement, and the check was paid by Marine Midland. Johnson Electric never paid G.E. Supply. G.E. Supply then demanded payment from Walter, Inc. When Walter, Inc. learned that Marine Midland had paid the check without G.E. Supply’s indorsement, it demanded to be reimbursed. When Marine Midland refused, Walter, Inc., sued Marine Midland to recover for the check. Was Johnson Electric’s indorsement sufficient to legally negotiate the check to Marine Midland Bank?

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