OPINION OF THE COURT
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 ac
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. Woods claims she first discovered the existence of the MONY Market account in May or June 1991. She thereupon requested and on June 21, 1991 received copies of the account statements and paid drafts.
On November 7, 1991, Woods notified MONY that the signatures on the six drafts were forgeries and requested reimbursement. After MONY declined, Woods commenced this action to recover the amounts improperly debited from her account. On MONY’s motion to dismiss, Supreme Court dismissed the complaint and the Appellate Division affirmed, holding that suit was barred under UCC 4-406 (4) on the ground that plaintiff failed to give notice of the forgeries within one year of receipt of the account statements. We granted leave and now affirm.
The UCC imposes strict liability on a bank that charges against a customer’s account any item not properly payable, such as a check bearing a forgery of the customer’s signature
(see,
UCC 4-401 [1];
Putnam Rolling Ladder Co. v Manufacturers Hanover Trust Co.,
This provision is derived from the depositor’s common-law duty to examine drafts and statements furnished by the bank and report alterations or forgeries within a reasonable time
(see, National Sur. Co. v President & Directors of Manhattan Co.,
MONY concedes that it is not a bank, but argues that it is entitled to application of the statutory time limit because, in administering money market checking accounts, it performs essentially the same function as a bank. The UCC defines a "bank” as "any person engaged in the business of banking” (UCC 1-201 [4]), a definition we are obligated to construe liberally to promote the underlying purposes and policies of the UCC (UCC 1-102 [1]). We conclude that, though not a bank, in its operation of the MONY Market account defendant was "engaged in the business of banking” for purposes of UCC 4-406 (4).
In basic respects, plaintiffs MONY Market account resembled an ordinary checking account. MONY, for example, provided and retained her signature card, issued a checkbook and sent its customer monthly statements. Thus, the same policy concern that motivated UCC 4-406 — prompt detection of alterations and forgeries by the person better able to detect them — existed with respect to Woods’ account.
Plaintiff argues that, because the checks were "payable through” State Street Bank and Trust Company, that entity, a bank, bore the ultimate responsibility of compliance with UCC 4-406. However, MONY, not State Street, opened Woods’ account, retained the signature card, issued the checkbook, provided monthly statements and corresponded with the customer (see also, UCC 3-120 [instrument stating "payable through” bank does not itself authorize bank to pay the instrument]). We conclude that, insofar as it administered Woods’ MONY Market checking account, MONY is entitled to the benefit of UCC 4-406.
The remaining question is whether plaintiff timely notified MONY of the forgery.
The one-year period begins to run "[w]hen a bank sends to its customer a statement of account accompanied by items paid in good faith in support of the debit entries or holds the statement and items pursuant to a request or instructions of its customer or otherwise in a reasonable manner makes the statement and items available to the customer” (UCC 4-406 [1]). Defendant argues that the account statements were made available to Woods in a reasonable manner when mailed to Collins and that the one-year period commenced no later than July 31, 1990. We agree.
Thus, we conclude that the account statements were "made available” to Woods, and the one-year period commenced, when Collins received the monthly statements in 1990
(see, 1
White and Summers, Uniform Commercial Code § 16-3, at 790 [Practitioner’s 3d ed];
see also, McMickle v Girard Bank,
356 Pa Super 521, 523,
Accordingly, the order of the Appellate Division should be affirmed, with costs.
Judges Simons, Titone, Bellacosa, Smith, Levine and Ciparick concur.
Order affirmed, with costs.