[Employee Theft] Tom Operates a Hardware Store

Multiple Choice

[Employee Theft] Tom operates a hardware store. Tom hired an assistant bookkeeper, Emma, who began to steal from him. Emma came into work early one day and took some checks and the rubber stamp of Tom's signature that he kept in an unlocked drawer, and she used the signature stamp to create a check payable to herself. She then took the check to the bank and cashed it. Tom, who was diligent in examining his bank statements, noticed the unauthorized check to Emma. He also noticed an unauthorized check cashed by Rose, another employee. Rose did not know about the stamp in the unlocked drawer. Instead, she broke into a locked cabinet, stole some checks, and skillfully forged Tom's name. Tom immediately informed his bank about the check involving Emma. He held off, however, on informing the bank about Rose, as she had only stolen fifty dollars and he didn't want to lose both employees at once. Tom told the bank manager what he suspected had happened involving Emma taking his stamp and checks from the unlocked drawer. The bank manager told Tom that the bank was not required to reimburse him because Tom was responsible for his own losses. Tom tells the bank manager about the unauthorized check to Rose 35 days after he received his bank statement and discovered the forgery. To his surprise, when Tom opened his next bank statement, he discovered that after Rose wrote the first check for fifty dollars, she had forged more checks for larger amounts. The bank was notified of those forgeries within 15 days of when Tom received his bank statement. The bank refused to reimburse Tom for the checks written by Rose, again claiming that he was responsible for his own losses. Tom institutes litigation against the bank.
-Which statement is true regarding whether the bank will legally have to accept responsibility for the check presented by Emma?

A) The bank has no responsibility to repay Tom on the basis that because Emma was an employee, the check was not considered forged.
B) The bank will be required to repay Tom because the check was forged.
C) Tom will have to bear the loss because the check was paid before the bank had notice of the forgery.
D) Tom will not have to bear the loss because the forgeries were by an employee; otherwise, he would have had to bear the loss.
E) The bank will likely not be required to repay Tom because Tom's negligence in leaving the rubber stamp with his signature readily available likely substantially contributed to the forged signature.