Haber v. Citibank

Between April and August 2002, 13 unauthorized checks and drafts (electronic instruments without signature), worth approximately $8,000, were drawn on the 81-year old plaintiffs account with defendant Citibank. A bank is strictly liable for charges against a customers account on any item that is not "properly payable" (Woods v MONY Legacy Life Ins. Co., 84 NY2d 280, 283 [1994]; UCC 4-401[1]). Such strict liability is tempered, however, by the customers obligation to exercise reasonable care and promptness in examining account statements, and to notify the bank promptly about items therein that might bear an unauthorized signature or alteration (4-406[1]). A reasonable period for such notification is defined as no more than 14 days (4-406[2][b]). If, on the other hand, the customer can establish that the bank lacked ordinary care in paying a check bearing an unauthorized signature or alteration (4-406[3]), the customer is given one year to assert a claim (4-406[4]). Plaintiff gave formal notification, in an "affidavit of forgery" on August 26, 2002, of an unauthorized signature on a check dated April 18, 2002 in the amount of $799. Defendant contended this notice was untimely.