Question

Horton v. JPMorgan Chase Bank, N.A. Court of Appeals of Texas, Dallas, 2018 WL 494776 (2018).

Background and Facts: Robbie Horton, a paralegal for the law firm of Stovall & Associates, P.C., opened an individual checking account with JPMorgan Chase Bank (Chase) with a signature card. The terms of the account required Horton to notify Chase, in writing, of any unauthorized item within thirty days of when a statement showing the item was made available. A failure to provide the notice would preclude a claim based on the item. Two months later, Chase received a second signature card purportedly signed by Horton and Kimberly Stovall, an attorney at the firm, to convert the account to a joint account. Less than a year later, Stovall terminated Horton’s employment, and on the same day, Stovall withdrew all of the funds from the joint account. Almost two years after the withdrawal, Horton filed a suit in a Texas state court against Chase, alleging breach of contract. Horton asserted that she had not agreed to the withdrawal by Stovall. Chase filed a motion for summary judgement, which the court granted. Horton appealed.

Decision and Remedy: A state intermediate appellate court affirmed the lower court’s summary judgement in favor of the bank. Chase required thirty days’ written notice of any errors in its monthly account statements. Because Horton did not notify the bank in writing until long after the thirty-day deadline had passed, the summary judgement dismissing her claim was appropriate.

Questions:

a. Legal Environment: Horton claimed that she had not agreed to the conversion of the account or to the withdrawal of the funds. These contentions did not affect the court’s decision. Why not?

b. Economic: Why does the UCC “absolutely” limit the time that a customer has to report an altered check or unauthorized signature?

Answer 1

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a. The contentions that Horton had not agreed to the conversion of accounts or to the withdrawal of the funds did not affect the court's decision because the court did not even come to this point. Even if there is no joint account or there is no withdrawal, still Horton is at fault.

She did not comply with the regulations and legal requirements by the Bank that they need to give notice within 30 days if any unauthorized transaction or item has happened. She filed a suit against the bank after almost two years, and if she would have filed the suit within the 30 days, maybe her claims would be valid.

b. The UCC limits absolutely the time the customer has to report an altered check for an authorized signature because it can impact on the financial risk of a bank. It would be considered as the negligence of the customer if the customer does not inform the bank timely. Bank performs many activities and performs many transactions even within a day, and it is possible to perform mistakes. So, it is the duty of the customer to inform about any unauthorized transaction. And if he doesn't inform the bank within a limited time period then it is possible that it adversely impacts the financial position of the Bank.