## Facts

- Rose Tepper’s guardian found an uncertified check for $6,068 payable to Tepper.
- Citizens Federal Savings and Loan Association (Citizens) drew and signed the check on its account at Jefferson National Bank (Jefferson).
- The check was dated January 4, 1974.
- On December 20, 1982, a representative for Tepper presented the check to Jefferson for payment.
- Jefferson refused to pay the check.
- Tepper’s representative notified Citizens that the check had been dishonored.
- Citizens stated it would not honor the check or refund the amount.
- On July 12, 1983, Tepper’s guardian sued Citizens based on the dishonor of the check.
- Citizens moved to dismiss, arguing the statute of limitations began running on the check’s 1974 date/issuance, making the 1983 suit untimely.
- The trial court granted the motion to dismiss, and Tepper’s guardian appealed.

## Issues

1. In an action by a payee against the drawer of an uncertified check, does the cause of action (and thus the statute of limitations) begin to run on the check’s date/issuance, or on presentment and dishonor?

## Decision

- The appellate court reversed the order dismissing the complaint and remanded for further proceedings.
- The court held that, under the U.C.C. rule governing accrual on drafts/checks, the payee’s claim against the drawer accrues upon presentment and dishonor (and any required notice), not upon issuance or the date written on the check.
- Because the check was dishonored in December 1982 and suit was filed in July 1983, the complaint was not barred by the statute of limitations on the theory accepted by the trial court.

## Legal Principles

- Under U.C.C. Article 3, a check is a draft payable on demand; the drawer’s obligation is enforced when the instrument is duly presented and dishonored (subject to notice requirements where applicable).
- For limitations purposes, a cause of action against the drawer of an uncertified check accrues upon dishonor, not when the check is created, dated, or delivered.
- A limitations rule triggered by issuance is inconsistent with demand instruments because it could expire before any demand for payment is made and refused.
- When a trial court dismisses an action as time-barred based on an incorrect accrual date, reversal is proper so the case can proceed under the correct accrual rule.

## Conclusion

The court held that Tepper’s claim against Citizens on the uncertified check accrued when the check was presented to Jefferson and dishonored in December 1982, not when the check was dated in 1974. Because Tepper sued within the limitations period measured from dishonor, the dismissal was reversed and the case was remanded for further proceedings.


Tepper v. Citizens Federal Savings & Loan, 38 U.C.C. Rep. Serv. 528 (1984)