Dorothy Woods, Appellant, v. MONY Legacy Life Insurance Company, Respondent
84 N.Y.2d 280, 641 N.E.2d 1070, 617 N.Y.S.2d 452 (1994).
October 20, 1994
4 No. 161 (1994 NY Int. 154) Decided October 20, 1994
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This opinion is uncorrected and subject to revision before publication
in the New York Reports.
John A. Collins, for appellant.
Cindy Kaplan Bennes, for respondent.
KAYE, CHIEF JUDGE:
UCC 4-406(4) bars suit to recover amounts paid by a bank on a forged
instrument unless the customer gives written notice of the forgery
within one year of the time the account statement was made available.
On this appeal, defendant claims it should be treated as a "bank" for
purposes of applying UCC 4-406(4) because it performed the function of
a bank in administering plaintiff's money market checking account. We
conclude that defendant was entitled to invoke UCC 4-406 and that,
because plaintiff failed to give timely notice, the complaint was
properly dismissed.
Arthur Woods died in December 1989 holding an annuity issued by MONY
Legacy Life Insurance Company, payable on his death to his wife,
Dorothy Woods. The attorney for the estate, Cornelius F. Collins,
contacted MONY and requested that the proceeds of the annuity be paid
to plaintiff Dorothy Woods in a lump sum. Accordingly, on March 8,
1990, MONY transferred the $24,900 proceeds of the annuity to a "MONY
Market" checking account in Woods' name, forwarded the checkbook to
Collins and sent a statement to Woods confirming the amount of the
benefit and the opening of the account. On March 26, MONY received a
change of address request, purportedly signed March 21 by plaintiff
Woods, directing that all future correspondence regarding her account
be sent to Collins. MONY made the change and sent a confirmation to
Woods at her home address.
Between March 21 and July 17, 1990, six unauthorized checks bearing
Woods' forged signature--in the total amount of $24,448.91--were drawn
on the MONY Market account. The monthly statements reflecting these
forged drafts were mailed to Collins on March 31, April 30, May 31,
June 30 and July 31, 1990. Plaintiff Woods claims she first discovered
the existence of the MONY Market account in May or June 1991. She
SNIPPETS:
Dorothy Woods, Appellant, v. MONY Legacy Life Insurance Company, Respondent
UCC 4-406bars suit to recover amounts paid by a bank on a forged instrument unless the
defendant claims it should be treated as a "bank" for purposes of applying UCC 4-406because
We conclude that defendant was entitled to invoke UCC 4-406 and that, because plaintiff
Arthur Woods died in December 1989 holding an annuity issued by MONY Legacy Life Insurance
The attorney for the estate, Cornelius F. Collins, contacted MONY and requested that the
Accordingly, on March 8, 1990, MONY transferred the $24,900 proceeds of the annuity to a
On March 26, MONY received a change of address request, purportedly signed March 21 by
The monthly statements reflecting these forged drafts were mailed to Collins on March 31,
On November 7, 1991, Woods notified MONY that the signatures on the six drafts were forgeries
On MONY's motion to dismiss, Supreme Court dismissed the complaint and the Appellate Division
We granted leave and now affirm.
The UCC imposes strict liability on a bank that charges against a customer's account any item
Commercial Code, 73 Georgetown L Rev 1399, 1404).
However, banks may assert a defense under UCC 4-406, which provides that "ithout regard to
This provision is derived from the depositor's common law duty to examine drafts and
Other jurisdictions to consider the question have concluded, as do we, that there is no
tion")).
As plaintiff does not dispute that Collins had previously contacted MONY on behalf of the
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