Exam 27: Checks and Banking in the Digital Age

A bank that pays a customer's check bearing a forged indorsement is not obligated to recredit the customer's account.

City Bank mistakenly transfers $1,000 from the account of Donna, its customer, to the account of Earl in First Federal Bank. The transfer is done electronically. When City Bank learns of the mistake, it credits Donna's account and asks First Federal to "return" $1,000. First Federal refuses. City Bank files a suit against First Federal, claiming that it is in violation of the Electronic Fund Transfer Act. How might the court rule