(a) A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid or provide information in the statement of account sufficient to allow the customer reasonably to identify the items paid. The statement of account provides sufficient information if the item is described by item number, amount, and date of payment.
(b) If the items are not returned to the customer, the person retaining the items shall either retain the items or, if the items are destroyed, maintain the capacity to furnish legible copies of the items until the expiration of seven years after receipt of the items. A customer may request an item from the bank that paid the item, and that bank must provide in a reasonable time either the item or, if the item has been destroyed or is not otherwise obtainable, a legible copy of the item.
(c) If a bank sends or makes available a statement of account or items pursuant to subsection (a), the customer must exercise reasonable promptness in examining the statement or the items to determine whether any payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized. If, based on the statement or items provided, the customer should reasonably have discovered the unauthorized payment, the customer must promptly notify the bank of the relevant facts.
(d) If the bank proves that the customer failed, with respect to an item, to comply with the duties imposed on the customer by subsection (c), the customer is precluded from asserting against the bank:
(1) The customer’s unauthorized signature or any alteration on the item, if the bank also proves that it suffered a loss by reason of the failure; and
(2) The customer’s unauthorized signature or alteration by the same wrongdoer on any other item paid in good faith by the bank if the payment was made before the bank received notice from the customer of the unauthorized signature or alteration and after the customer had been afforded a reasonable period of time, not exceeding 30 days, in which to examine the item or statement of account and notify the bank.
(e) If subsection (d) applies and the customer proves that the bank failed to exercise ordinary care in paying the item and that the failure substantially contributed to loss, the loss is allocated between the customer precluded and the bank asserting the preclusion according to the extent to which the failure of the customer to comply with subsection (c) and the failure of the bank to exercise ordinary care contributed to the loss. If the customer proves that the bank did not pay the item in good faith, the preclusion under subsection (d) does not apply.
(f) Without regard to care or lack of care of either the customer or the bank, a customer who does not within 180 days after the statement and the items or a legible copy or image of the items are sent to the customer, or within one year after the statement or items are otherwise made available to the customer (subsection (a)) discover and report the customer’s unauthorized signature on or any alteration on the item is precluded from asserting against the bank the unauthorized signature or alteration. Without regard to care or lack of care of either the customer or the bank, a customer who does not within one year after the statement or items are sent or made available to the customer, discover and report any alteration on the back of the item or any unauthorized endorsement is precluded from asserting against the bank any such alteration or unauthorized endorsement. If there is a preclusion under this subsection, the payor bank may not recover for breach of warranty under Section 7-4-208 with respect to the unauthorized signature or alteration to which the preclusion applies.
(Acts 1965, No. 549, p. 811; Acts 1990, No. 90-475, p. 695; repealed by Acts 1995, No. 95-668, p. 1381, §2; added by Acts 1995, No. 95-668, p. 1381, §2; Acts 1996, No. 96-766, p. 1351 §1.)
Notes of Decisions
Southland Health Servs., Inc. v. Bank of Vernon, 887 F. Supp. 2d 1158 (N.D. Ala. 2012).
· cites it 15× “Citizens’ amended answer specifically states, as a defense, that “Plaintiffs’ claims are barred and/or limited by Alabama Code 7-4-406.” (Doc. 74 at 39.) Additionally, the very first interrogatory propounded by Plaintiffs asked the Defendants to “[s]et for the factual basis for…”
Pinigis v. Regions Bank, 977 So. 2d 446 (Ala. 2007).
· cites it 4× “It then renewed its summary-judgment motion, asserting, once again, that "the customer's failure to notify the Bank in a timely fashion precludes recovery under Ala. Code § 7-4-406 (f)." Again, the trial court granted the Bank's motion, and Pinigis appeals.”
Absolute Drug Detection Servs., Inc. v. Regions Bank, 116 So. 3d 1162 (Ala. Civ. App. 2012).
· cites it 16× “Under Ala.Code 1975, § 7-4-406(0, a customer has a strict 180-day period within which to report suspected unauthorized transactions; the deposit agreement, however, expressly shortens the period to 30 calendar days.”
Moore-Dennis v. Franklin, 201 So. 3d 1131 (Ala. 2016).
· cites it 3× “They argue that the statements were "made available” to Franklin online, at least as of September 2013. However, nothing in § 7-4-406 addresses arbitration provisions; the statute merely precludes a customer from asserting certain claims against the bank, none of which are…”
Graves v. Wachovia Bank, Nat'l Ass'n, 607 F. Supp. 2d 1277 (M.D. Ala. 2009).
· cites it 7× “DISCUSSION Section 7-4-406 of the 1975 Alabama Code governs a “customer’s duty to discover and report unauthorized signatures or alterations” on any checks paid by the bank.”
Cagle's Inc. v. Valley Nat'l Bank, 153 F. Supp. 2d 1288 (M.D. Ala. 2001).
· cites it 4× “The 180 day rule is contained in Alabama Code § 7-4-406(f) and provides as follows: *1292 Without regard to care or lack of care of either the customer or the bank a customer who does not within 180 days after the statement and the items .”
Brown v. First Fed. Bank, 95 So. 3d 803 (Ala. Civ. App. 2012).
· cites it 2× “The defendants rely on § 7-4-406, Ala.Code 1975, subsection (c) of which provides: “If a bank sends or makes available a statement of account or items pursuant to subsection (a), the customer must exercise reasonable promptness in examining the statement or the items to…”
Pinigis v. Regions Bank, 942 So. 2d 841 (Ala. 2006).
“If its answer is " `liberally construed,'" the Bank argues, the pleading "more than sufficiently gives notice that [it] intended to rely on section 7-4-406(f)." Bank's brief, at 35-36 (quoting Adkison v.”
Braden Furniture Co. v. Union State Bank, 109 So. 3d 625 (Ala. 2012).
“” Hence, if a drawee bank debits a drawer’s account for an improperly payable item, the drawee bank is obligated to recredit the drawer’s account immediately unless the drawer fails to report the unauthorized payment within 180 days or one year depending upon the circumstances,…”
Brannon v. BankTrust, Inc., 50 So. 3d 397 (Ala. 2010).
“Section 7-4-406, Ala.Code 1975, addresses the necessity of a bank customer’s timely reviewing account statements and notifying the bank of problems with the account.”
— Ala. Code § 7-4-406(c) — 1 case
Moore-Dennis v. Franklin, 201 So. 3d 1131 (Ala. 2016).
“They argue that the statements were "made available” to Franklin online, at least as of September 2013. However, nothing in § 7-4-406 addresses arbitration provisions; the statute merely precludes a customer from asserting certain claims against the bank, none of which are…”
— Ala. Code § 7-4-406(d) — 2 cases
Absolute Drug Detection Servs., Inc. v. Regions Bank, 116 So. 3d 1162 (Ala. Civ. App. 2012).
“Under Ala.Code 1975, § 7-4-406(0, a customer has a strict 180-day period within which to report suspected unauthorized transactions; the deposit agreement, however, expressly shortens the period to 30 calendar days.”
Braden Furniture Co. v. Union State Bank, 109 So. 3d 625 (Ala. 2012).
“” Hence, if a drawee bank debits a drawer’s account for an improperly payable item, the drawee bank is obligated to recredit the drawer’s account immediately unless the drawer fails to report the unauthorized payment within 180 days or one year depending upon the circumstances,…”
— Ala. Code § 7-4-406(d)(2) — 1 case
Graves v. Wachovia Bank, Nat'l Ass'n, 607 F. Supp. 2d 1277 (M.D. Ala. 2009).
“DISCUSSION Section 7-4-406 of the 1975 Alabama Code governs a “customer’s duty to discover and report unauthorized signatures or alterations” on any checks paid by the bank.”
— Ala. Code § 7-4-406(e) — 2 cases
Graves v. Wachovia Bank, Nat'l Ass'n, 607 F. Supp. 2d 1277 (M.D. Ala. 2009).
“DISCUSSION Section 7-4-406 of the 1975 Alabama Code governs a “customer’s duty to discover and report unauthorized signatures or alterations” on any checks paid by the bank.”
Absolute Drug Detection Servs., Inc. v. Regions Bank, 116 So. 3d 1162 (Ala. Civ. App. 2012).
“Under Ala.Code 1975, § 7-4-406(0, a customer has a strict 180-day period within which to report suspected unauthorized transactions; the deposit agreement, however, expressly shortens the period to 30 calendar days.”
— Ala. Code § 7-4-406(f) — 4 cases
Southland Health Servs., Inc. v. Bank of Vernon, 887 F. Supp. 2d 1158 (N.D. Ala. 2012).
“Citizens’ amended answer specifically states, as a defense, that “Plaintiffs’ claims are barred and/or limited by Alabama Code 7-4-406.” (Doc. 74 at 39.) Additionally, the very first interrogatory propounded by Plaintiffs asked the Defendants to “[s]et for the factual basis for…”
Cagle's Inc. v. Valley Nat'l Bank, 153 F. Supp. 2d 1288 (M.D. Ala. 2001).
“The 180 day rule is contained in Alabama Code § 7-4-406(f) and provides as follows: *1292 Without regard to care or lack of care of either the customer or the bank a customer who does not within 180 days after the statement and the items .”
Absolute Drug Detection Servs., Inc. v. Regions Bank, 116 So. 3d 1162 (Ala. Civ. App. 2012).
“Under Ala.Code 1975, § 7-4-406(0, a customer has a strict 180-day period within which to report suspected unauthorized transactions; the deposit agreement, however, expressly shortens the period to 30 calendar days.”
Pinigis v. Regions Bank, 942 So. 2d 841 (Ala. 2006).
“If its answer is " `liberally construed,'" the Bank argues, the pleading "more than sufficiently gives notice that [it] intended to rely on section 7-4-406(f)." Bank's brief, at 35-36 (quoting Adkison v.”
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