S-0346.1          _______________________________________________


                                 SENATE BILL 5444



State of Washington              52nd Legislature             1991 Regular Session


By Senators Moore and A. Smith.


Read first time January 31, 1991.  Referred to Committee on Financial Institutions & Insurance.Extending the time for a bank customer to discover and report unauthorized signatures and alterations.

     AN ACT Relating to the duty of a bank customer to discover and report unauthorized signatures and alterations; and amending RCW 62A.4-406.




     Sec. 1.  RCW 62A.4-406 and 1967 c 114 s 1 are each amended to read as follows:

     (1) When 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, the customer must exercise reasonable care and promptness to examine the statement and items to discover his or her unauthorized signature or any alteration on an item and must notify the bank promptly after discovery thereof.

     (2) If the bank establishes that the customer failed with respect to an item to comply with the duties imposed on the customer by subsection (1) of this section the customer is precluded from asserting against the bank:

     (a) His or her unauthorized signature or any alteration on the item if the bank also establishes that it suffered a loss by reason of such failure; and

     (b) An unauthorized signature or alteration by the same wrong-doer on any other item paid in good faith by the bank after the first item and statement was available to the customer for a reasonable period and before the bank receives notification from the customer of any such unauthorized signature or alteration.

     (3) The preclusion under subsection (2) of this section does not apply if the customer establishes lack of ordinary care on the part of the bank in paying the item(s).

     (4) Without regard to care or lack of care of either the customer or the bank, a customer who does not within ((sixty days)) one year from the time the statement and items are made available to the customer (subsection (1) of this section) discover and report his or her unauthorized signature or any alteration on the face or back of the item or does not within three years from that time discover and report any unauthorized indorsement is precluded from asserting against the bank such unauthorized signature or indorsement or such alteration.

     (5) If under this section a payor bank has a valid defense against a claim of a customer upon or resulting from payment of an item and waives or fails upon request to assert the defense the bank may not assert against any collecting bank or other prior party presenting or transferring the item a claim based upon the unauthorized signature or alteration giving rise to the customer's claim.