Those whose seals are misappropriated are not liable to the holders as the drawers (Taiwan)

Elva Chuang

The Supreme Court rendered the 109-Tai-Jian-Shang-51 Decision of November 26, 2020 (hereinafter, the “Decision”), holding that since the persons whose seals are misappropriated do not sign negotiable instruments, they are not liable as drawers, and those whose seals are misappropriated may raise such reason as an absolute defense against all holders.

According to the Appellant in this case, A, not a party to this lawsuit, borrowed NT$1.8 million for the Appellee, and the Appellant wired NT$1,735,200 (from which an interest of NT$64,800 was deducted in advance) to A’s account.  In return, A delivered a NT$1.8 million check (hereinafter, the “Check at Issue”) issued by the Appellee to the drawee, Bank X, as the collateral.  It was not until the Appellant subsequently presented the Check at Issue but did not receive the payment that he learned that the Appellee had fraudulently reported that a blank check was lost in order to maintain his credit standing.  The Appellee contended that the Check at Issue was issued because A had stolen a blank check and the Appellee’s corporate and personal seals to stamp on such check to issue the Check at Issue, which the Appellee did not issue, and for which the Appellee did not authorize A to supplement the matters that should be specified in the check.  Therefore, the check was forged, and the Appellee was not required to assume the liability for the Check at Issue as the drawer in accordance with Article 5, Paragraph 1 of the Negotiable Instruments Law.  。

According to the Decision, the original trial court had determined that the Check at Issue was issued by A, who had stolen the Appellee’s corporate and personal seals to be stamped on a stolen blank check.  Therefore, this was a forgery of negotiable instrument because of the act to misappropriate the seals of another person to issue a check.  Since those whose seals were stolen did not engage in the act of issuing a check by signing the check, they are certainly not liable as the drawers.  Such reason may be raised as an absolute defense against all holders, and the Appellant should not request check payment and any interest from the Appellee.