## Facts

- David Marx maintained a personal checking account at Whitney National Bank and received monthly account statements.
- Marx did not review his January–April 1995 statements, which included forged checks; the parties stipulated this failure was negligent.
- Earlier forgeries appeared on the January 1995 statement (five forged checks totaling $2,373), and timely review would have revealed a larger series of forgeries by the same person.
- On April 24, 1995, Marx added his children, Stanley Marx and Maxine Marx Goodman, as joint account owners.
- Additional forged checks in March–May 1995 first appeared on the May 16, 1995 statement; Stanley reviewed that statement, detected the forgeries, and the bank was promptly notified.
- The parties stipulated Marx’s grandson, Joel Goodman, had access to Marx’s checkbook, forged all checks at issue, and was the same wrongdoer throughout.
- Plaintiffs sought reimbursement only for the last five forged checks (about $10,000) that were detected upon receipt of the May statement.

## Issues

1. Whether La. R.S. 10:4-406(d)(2) precludes a customer who negligently failed to examine statements from recovering losses on later forged checks by the same wrongdoer paid before the bank received notice.
2. Whether La. R.S. 10:4-406(e) requires comparative allocation of loss despite subsection (d)(2) when the customer alleges the bank failed to exercise ordinary care.
3. Whether, on stipulated facts and cross-motions for summary judgment, the bank was entitled to judgment as a matter of law.

## Decision

- The Louisiana Supreme Court reversed the court of appeal and the trial court.
- The court rendered summary judgment for Whitney National Bank and dismissed plaintiffs’ reimbursement claim.
- The court held Marx’s failure to timely review statements triggered the statutory preclusion for later items forged by the same wrongdoer.
- The court held the comparative-allocation provision did not apply because the record did not show the bank failed to exercise ordinary care.

## Legal Principles

- Under La. R.S. 10:4-406(c), a customer must examine statements with reasonable promptness and notify the bank promptly of unauthorized signatures or alterations.
- Under La. R.S. 10:4-406(d)(2), if the customer fails to meet that duty and the bank pays in good faith, the customer is precluded from asserting unauthorized signatures by the same wrongdoer on items paid after the first unauthorized item and before the bank receives notice.
- La. R.S. 10:4-406(e) permits allocation of loss between customer and bank only if the bank’s lack of ordinary care in paying an item or sending a statement substantially contributed to the loss.
- When the customer’s negligence and the timing of notice are undisputed and there is no evidence of the bank’s lack of ordinary care, summary judgment for the bank is appropriate.

## Conclusion

Because Marx’s admitted failure to examine several months of statements allowed the same wrongdoer’s forgeries to continue and the bank received notice only after the later items were paid, La. R.S. 10:4-406(d)(2) barred recovery for the last five forged checks; absent proof that the bank failed to exercise ordinary care, La. R.S. 10:4-406(e) did not require loss allocation.


Marx v. Whitney Nat’l Bank, 713 So. 2d 1142 (La. 1998)