Bank Deflects Forged Check Claim Ballplayer Forgets Rules of Game, Strikes Out John S. Burnett, BOL Associate Editor
Just how important is it for your checking account customers to examine their bank statements? Ask Fernando Tatis, a professional baseball player with the Montreal Expos. On January 16, 2007, in Fernando Tatis v. US Bancorp, the U.S. Court of Appeals for the Sixth District affirmed a district court's decision to grant summary judgment to his bank in a case involving Tatis's responsibility as a depositor to promptly review his bank statement.
Tatis opened a checking account with US Bancorp (an Ohio corporation) in April 2001. He authorized transfers from his other accounts at the bank to cover any overdrafts, and asked the bank to retain his account statements at its "Professional Sports Division" offices. Between August and November 2001 Tatis's dishonest employee had forged Tatis's signature on many checks, created numerous overdrafts, and caused the bank to contact Tatis's agent at least once to request that funds be deposited to cure overdrafts that could not be covered by Tatis's other accounts. Tatis failed to examine his statements until December 2001 and first notified the bank of the forgeries more than 120 days after the printing of the first statement showing the payment of a forged check. Tatis's claim of violations of the Ohio UCC, filed in May 2003, resulted in summary judgment for the bank.
The Ohio Revised Code sections in question, which parallel §§ 4-406(c) and (d) of the model UCC, require customers to promptly examine statements of account for alterations and forgeries. The bank's deposit contract modifies the UCC by setting a 30-day deadline for that examination. A "same wrongdoer" provision in the law sets a similar 30-day limit for notification to the bank. The fact that Tatis's statements were not delivered to him didn't affect his duty to inspect the statements, since he had agreed to that arrangement and he could have asked for the statements at any time. The court ruled that Tatis had missed the deadline (established by contract) for notifying the bank of the August forgeries, and that the UCC "same wrongdoer" provision prohibited recovery for any of the subsequent forgeries.
This case illustrates two important points:
Spending some time and money for legal counsel's assistance in crafting deposit contract language can reap benefits. The provisions of the UCC can be modified (with some limitation) by agreement, and setting in a deposit contract a definite deadline for statement examination and notification of discrepancies can limit a bank's exposure to forgery claims.
Customers have a responsibility for protecting their own assets, and it's a good idea for a bank to enforce that concept. A bank need not respond to every customer forgery claim with an automatic refund, and should make sure that its customer contact personnel have clear guidance and training on handling forgery claims.
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