fictitious payee rule
fictitious-payee rule. Commercial law. The principle that if a drawer or maker issues commercial paper to a payee whom the drawer or maker does not actually intend to have any interest in the instrument, an ensuing forgery of the payee’s name will be effective to pass good title to later transferees. — Also termed padded-payroll rule. [Cases: Banks and Banking 148, 174. C.J.S. Banks and Banking §§ 416–417, 419, 421–428, 430–432, 434–438.]
