ACTION
This is an action averring negligence against a bank which resulted in a judgment for $6,000.00 in favor of plaintiff-ap-pellee. We affirm.
FACTS
Appellee Dykstra entered a written agreement to purchase a Cadillac purport*863edly owned by James and Peggy Bateman. Appellee Dykstra presented James Bate-man with a personal check drawn upon appellant National Bank of South Dakota payable to “James Bateman and Peggy Bateman.” The bank knew that appellee Dykstra, a customer of twenty years, had made a deal on a Cadillac. Appellant bank loaned appellee Dykstra money for the purchase of the automobile.
James Bateman appeared at appellant bank’s main office and, in the presence of bank officer James Murphy, endorsed “James Bateman and Peggy Bateman” on appellee Dykstra’s check. It was subsequently discovered that Peggy Bateman did 'not exist and James Bateman was not the owner of the Cadillac. Appellee Dykstra informed appellant bank of the fraud within nine days of Bateman’s endorsement. Upon payment of an additional $6,000.00, appellee Dykstra received title to the Cadillac from its true owner.
ISSUES
.1.
DID APPELLANT BANK ACT NEGLIGENTLY IN HONORING A CHECK THAT ITS OFFICER KNEW WAS IMPROPERLY ENDORSED? WE HOLD THAT IT DID.
II.
DOES THE APPLICATION OF SDCL 57A-3-405 AND SDCL 57A-3-406 ABSOLVE APPELLANT BANK’S NEGLIGENCE? WE HOLD THAT IT DOES NOT.
DECISION
I.
Initially, we must discern if the improper endorsement issue is properly before us. The trial court’s memorandum opinion forthrightly states that allowing a forgery in the presence of a bank officer is completely inconsistent with reasonable commercial banking standards. Although a memorandum opinion is simply the trial court’s opinion of facts and law, Christiansen v. Strand, 82 S.D. 416, 147 N.W.2d 415 (1966), and our review here is limited to the actual findings of fact and conclusions of law, Connelly v. Sherwood, 268 N.W.2d 140 (S.D.1978), we have examined the trial court’s findings of fact and conclusions of law and we hold the improper endorsement issue was preserved for our consideration.
Specifically, the trial court found that James Bateman signed Peggy Bateman’s name in the presence of appellant’s officer, James Murphy. The trial court concluded that appellee Dykstra notified appellant bank within a reasonable time period about the problems with the check. Therefore, we have a sufficient foundation to proceed with our examination of this issue.
Appellant’s officer tolerated forgery in his presence. Obviously, appellant bank should have required the check to be endorsed by both payees. In permitting a forged endorsement, appellant bank was not following a commercially established standard set for handling the purchase and finance of cars in Sioux Falls, South Dakota. It was negligence on the part of the appellant bank not to require a proper endorsement. U.C.C. § 3-405. Official Comment 1, states that “a purportedly regular chain in indorsements is required.”
Additionally, the appellant bank’s own officer testified that the bank’s standard policy is to secure title of an automobile before releasing the funds. Appellant bank failed to secure title. The trial court ruled on the negligence issue four-square in Conclusion of Law VII which states: “That plaintiff is entitled to recover because of defendant’s negligence the sum of $6,000.00, plus costs.” We agree with the trial court.
*864II.
Appellant bank contends that SDCL 57A-3-405 and SDCL 57A-3-4061 absolve it from liability. We disagree. Appellee Dykstra may have been unwise to purchase the Cadillac, however, this does not absolve appellant bank’s responsibility to conduct its banking in a proper manner. Permitting forgery in an officer’s presence is, ipso facto, poor banking. Appellee Dykstra may be made responsible only if his negligence proximately caused the bank to pay this forged check. We hold it was the bank’s negligence which proximately caused the loss. Further, appellee Dykstra owed a duty to disclose a forgery to the bank within a reasonable time. Appellee Dykstra disclosed the forgery upon his discovery thereof.
Flaherty v. Bank of Kimball, 75 S.D. 468, 68 N.W.2d 105 (1955), holds that the duty of a bank to its depositors (appellee Dykstra was such) is based on implied contract. In Conclusion of Law III, the trial court expressed: “That the duty of the bank rests on implied contract.” We went on to hold in Flaherty that a bank may only pay a check upon a signature of the drawer and the bank must bear the loss for paying a forged or altered check if the conduct of the drawer has not contributed to induce the payment. Appellee Dykstra did not induce the bank officer to cash a forged instrument.
Had the bank officer not permitted a forgery in his presence and the issuance of two bank drafts for $4,500.00 based thereon, there would have been no loss. It was the bank’s poor practice which proximately caused the customer’s loss.
Affirmed.
FOSHEIM, C.J., .and DUNN, J., concur. WOLLMAN and MORGAN, JJ., dissent.. SDCL 57A-3-405 provides:
(1) An endorsement by any person in the name of a named payee is effective if
(a) An impostor by use of the mails or otherwise has induced the maker or drawer to issue the instrument to him or his confederate in the name of the payee; or
(b) A person signing as or on behalf of a maker or drawer intends the payee to have no interest in the instrument; or
(c) An agent or employee of the maker or drawer has supplied him with the name of the payee intending the latter to have no such interest.
(2) Nothing in this section shall affect the criminal or civil liability of the person so endorsing. SDCL 57A-3-406 provides:
Any person who by his negligence substantially contributes to a material alteration of the instrument or to the making of an unauthorized signature is precluded from asserting the alteration or lack of authority against a holder in due course or against a drawee or other payor who pays the instrument in good faith and in accordance with the reasonable commercial standards of the drawee’s or payor’s business.