Opinion
04-346.
Decided October 3, 2005.
Defendant appeals from a judgment of the Small Claims Part of the Civil Court, New York County, entered on or about May 13, 2004 after trial (Donna G. Recant, J.) in favor of plaintiff and awarding him damages in the principal sum of $750.
Judgment entered on or about May 13, 2004 (Donna G. Recant, J.) affirmed, without costs.
PRESENT: December 2004 Term McCooe, J.P., Gangel-Jacob, Schoenfeld, JJ.
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 plaintiff's account with defendant Citibank. A bank is strictly liable for charges against a customer's account on any item that is not "properly payable" ( Woods v. MONY Legacy Life Ins. Co., 84 NY2d 280, 283; UCC 4-401). Such strict liability is tempered, however, by the customer's 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.
The record in this small claims action makes clear that plaintiff is not suing for recovery on the drafts so much as cooperation from the bank in assisting his own efforts to recover against the forger. These checks were drawn in Las Vegas. At his own expense, plaintiff has worked with Las Vegas bank and local law enforcement agencies on this matter, but he was frustrated by his own bank, which considered these matters to be below the threshold for scrutiny and investigation. Plaintiff spent "quite a while," even "before August" of that year, at his bank branch and on the telephone, trying to convince defendant at least to make copies of the unauthorized checks to facilitate his own investigation.
Defendant's branch operations manager testified that there was a procedure for screening drafts or checks for signature variation, but that the industry-wide practice was not to do such screening on instruments valued below a certain threshold (except in circumstances where the check was being negotiated at the teller's window at that branch). The check in question was below that threshold.
Plaintiff is not a customer who ignored his legal obligations. Although he could not recall the dates, he was in regular contact with his branch in an effort to obtain documentary evidence that would aid Las Vegas investigative authorities whom he had contacted on his own initiative. Defendant's recalcitrance in cooperating with its customer's efforts in this regard was indicative of a lack of ordinary care ( see Putnam Rolling Ladder Co. v. Manufacturers Hanover Trust Co., 74 NY2d 340), and the judgment in plaintiff's favor thus achieved "substantial justice" consisted with substantive law principles (CCA 1804, 1807).
The trial court's reference to recovery on the balance of the checks, at least in Small Claims Part, was inappropriate ( see Eisen v. Bank of NY, 2003 NY Misc LEXIS 1326 n. [App Term], lv denied 2004 NY App Div LEXIS 2303).
This constitutes the decision and order of the Court.