## Facts

- Osher Bachrach, an attorney, maintained a trust account at Liberty Bank and Trust Company of Oklahoma City, N.A.
- The depository agreement provided that deposits would receive provisional credit and that the bank could charge back credits if an item was dishonored and an overdraft resulted.
- On June 24, 1992, Bachrach deposited a $15,000 check (restitution proceeds) into his Liberty trust account.
- On June 26, 1992, relying on the provisional credit, Bachrach purchased seven cashier’s checks totaling $12,255.86 from the trust account.
- On June 29, 1992, Liberty first received notice from the payor bank that the $15,000 check was dishonored for insufficient funds.
- On July 2, 1992, Liberty received a second dishonor notice from the payor bank.
- On July 3, 1992, Liberty mailed written notice of dishonor to Bachrach; Bachrach later received it on July 7.
- Bachrach was orally informed of the dishonor when he attempted another withdrawal for a cashier’s check on July 6 or July 7 (date disputed in the record summaries).
- Liberty charged back the dishonored item, creating an overdraft, and sued Bachrach both as an indorser and as a depositor responsible for the deficiency.
- Bachrach contested liability, asserting Liberty failed to provide timely notice of dishonor under Oklahoma’s UCC provisions.

## Issues

1. Whether the bank was entitled to summary judgment on its claims against the depositor/indorser arising from a dishonored check and charge-back.
2. Whether a depository agreement, under Okla. Stat. tit. 12A, § 4-103, could displace or nullify statutory notice-of-dishonor obligations so as to excuse timely notice.
3. Whether disputed facts regarding the timing/adequacy of notice and alleged banking-industry usage precluded summary judgment.

## Decision

- The Oklahoma Supreme Court vacated the Court of Appeals’ opinion, reversed the trial court’s summary judgment for Liberty, and remanded.
- The Court rejected the trial court’s conclusion that the depository agreement “superseded” Article 4 notice duties so as to eliminate any notice requirement.
- The Court held that genuine disputes of material fact existed concerning when Liberty’s duty to notify was triggered, whether notice was timely, and whether any alleged industry practice affected the analysis.
- Because Liberty was not entitled to judgment as a matter of law on this record, summary judgment was improper.

## Legal Principles

- Summary judgment is improper where material facts are disputed or where competing inferences may be drawn from the evidence.
- Under UCC Article 4 as adopted in Oklahoma, banks have statutory duties in handling dishonored items, including duties tied to prompt notice.
- Okla. Stat. tit. 12A, § 4-103 permits parties to vary the effect of Article 4 by agreement, but contractual variation has limits and may not disclaim essential bank responsibilities in a manifestly unreasonable manner.
- Contractual charge-back authority does not, by itself, establish that a bank may charge back and impose liability without compliance with applicable notice obligations.
- Alleged trade usage or industry practice affecting notice triggers and timing presents fact questions, including whether the usage exists, is sufficiently established, and can operate within § 4-103’s limits.

## Conclusion

The court required further proceedings because the bank could not avoid UCC-based notice obligations solely through its depository agreement, and factual disputes about notice timing and asserted trade usage prevented judgment as a matter of law on the depositor/indorser’s liability for the dishonored check and resulting overdraft.


Liberty Bank & Tr. Co. of Okla. City, N.A. v. Bachrach, 916 P.2d 1377 (Okla. 1996)