Stauffer v. Oakwood Deposit Bank

• Decision Date: 16 July 1969
• Citation: 249 N.E.2d 848,19 Ohio App.2d 68
• Parties: , 48 O.O.2d 127, 6 UCC Rep.Serv. 931 STAUFFER, Appellant, v. The OAKWOOD DEPOSIT BANK, Appellee.
• Court: Ohio Court of Appeals

Page 68

19 Ohio App.2d 68

249 N.E.2d 848, 48 O.O.2d 127, 6 UCC Rep.Serv. 931

STAUFFER, Appellant, v. The OAKWOOD DEPOSIT BANK, Appellee.

Court of Appeals of Ohio, Third District, Paulding County.

July 16, 1969.

Syllabus by the Court

1. Division (D) of Section 1304.29, Revised Code, is not a statute of limitations limiting the time within which an action shall be brought. It merely creates a condition to the right of a bank customer, in an action against the bank, to assert the lack of the bank's authority to debit the customer's account due to an alleged unauthorized signature of the customer.

2. The failure of the customer to fulfill such condition by discovering and reporting his unauthorized signature to the bank within one year from the time the item on which the signature appears and the bank statement of account showing a debit entry thereon of such item are made available to the customer is a matter of defense upon which the bank has the burden of proof and which may be waived by the bank by its failure to assert same.

3. Division (F) of Section 1304.29, Revised Code, is a statute of limitations limiting the time within which an action shall be brought, constituting an affirmative defense which must be pleaded by the defendant bank in those cases where the running of the statute does not appear from the allegations of the plaintiff's petition. The failure to so plead constitutes a waiver of same.

4. Section 1304.29, Revised Code, does not create a cause of action against a bank for debiting a depositor's account pursuant to an unauthorized signature. Bank customer's cause of action is the common-law action for money had and received.

5. The limitation of the time within which an action shall be brought, prescribed by division (F) of Section 1304.29, Revised Code, is applicable to a bank customer in an action against the bank for money had and received, where the knowledge of the bank as to the authority for the customer's signature on an item debited to his account is not absolute but involves the knowledge and activities of a third party.

Weaner, Hutchinson & Zimmerman and Karl H. Weaner, De Finance, for appellant.

Stroup & Walters and Sumner J. Walters, Van Wert, for appellee.

GUERNSEY, Judge.

On July 30, 1962, a teller of defendant bank, acting under the instructions of its cashier, signed plaintiff Paul Stauffer's name to a counter check in the amount of $2,034 made payable to 'Cash,' debited same to plaintiff's checking account, and credited the checking account of one Rolland Porter with the same amount. On July 3, 1967, plaintiff filed his action against the bank to recover the sum of money thus charged to his account claiming that the withdrawal was not authorized. Upon trial plaintiff testified that his signature had been affixed to the counter check without his authority and the employees of the bank testified to the effect that they had no recollection of any specific authority personally communicated by plaintiff to the bank. Defendant's amended answer and the evidence further indicate that on or about September 30, 1962, plaintiff received from the bank a statement of his acccount reflecting such debit accompanied by the cancelled counter check. Plaintiff was uncertain as to when he first reported the alleged unauthorized signature to the bank. The cashier testified that it seemed to him 'like it was the first part of 1963.' The trial court found, 'Although there is no specific evidence of precisely when plaintiff so notified defendant, it is clear that it occurred no later than December 31, 1965.'

The trial court further found that plaintiff was barred from recovery because he did not bring his action within one year from December 31, 1965, as required by Section 1304.29(F), Revised Code, and entered judgment dismissing plaintiff's petition, which is the judgment from which this appeal is taken by the plaintiff. He claims error in that (1) the general verdict of the trial court is not sustained by the evidence and is contrary to law; (2) defendant was not entitled to raise the bar of the statute of limitations (Section 1304.29(F)) without pleading same as an affirmative defense; and (3) the trial court ignored the undisputed evidence that the bank teller with knowledge of the cashier, wrote a counter check payable to cash, signed plaintiff's name to it without his authority and then placed the money in another customer's account. The appellant, plaintiff below, argued, and we will dispose of, these assignments of error together.

Section 1304.29, Revised Code, reads, in pertinent parts, as follows:

'(A) When a bank sends to its customers a statement of account accompanied by items paid in good faith in support of the debit entries * * * the customer must exercise reasonable care and promptness to examine the statement and items to discover his unauthorized signature * * * on an item and must notify the bank promptly after discovery thereof.

'(B) If the bank establishes that the customer failed with respect to an item to comply with the duties imposed on the customer by division (A) of this section, the customer is precluded from asserting against the bank:

'(1) his unauthorized signature * * *.

'* * *.

'(C) The preclusion under division (B) of this section does not apply if the customer establishes lack of ordinary care on the part of the bank in paying the item.

'(D) Without regard to care or lack of care of either the customer or the bank a customer who does not within one year from the time the statement and items are made available to the customer discover and report his unauthorized signature * * * on the face or back of the item * * * is precluded from asserting against the bank such unauthorized signature * * *.

'(E) If under this section a payor bank has a valid defense against a claim of a customer upon or resulting from payment of an item and waives or fails upon request to assert the defense, the bank may not assert against any collecting bank or other prior party presenting or transferring the item a claim based upon the unauthorized signature or alteration giving rise to the customer's claim.

'(F) An action against a bank arising out of an unauthorized signature or indorsement of the item must be brought within one year after the customer has notified the bank of his claim as required by the provisions of this section.'

Defendant's amended answer discloses that it did allege the facts necessary to bring it within the protection of division (D) of Section 1304.29, but did not plead the limitation of action appearing in division (F) thereof. Plaintiff additionally claims that even had the defendant pleaded facts which would normally invoke the limitation of action contained in division (F), such limitation of action is not applicable in a case where the defendant bank, by and through the participation of its employees in the transaction, has absolute knowledge of whether the signature on the item was authorized.

Examination of division (D) of the statute shows that it is not a statute of limitations at all, for its does not purport to limit the time within which an action may be brought but merely creates a condition to the assertion of a claim of unauthorized signature. The claim may not be asserted unless the customer discovers and reports the lack of authority within the statutory period of time. As appears from division (E), which is in pari materia with division (D), the failure to fulfill the condition is a defense which may be waived by a payor bank by failure to assert same. Thus it was an affirmative defense which the defendant bank had the burden of proving. However, as the defendant did plead this defense, the issue of whether it must be pleaded to be available is not before us. Nor may we find on the evidence, as a matter of law, that the discovery...