National Title Insurance Corporation Agency v. First Union National Bank

National Title Insurance Corporation (the “plaintiff”) opened an escrow checking account with First Union National Bank (the “defendant”) in April 1996. At the time, the parties entered into a deposit agreement. The deposit agreement defined and governed the relationship between the parties. At issue in this case is Paragraph 12 of the deposit agreement that absolves the defendant of any liability for paying an item containing an unauthorized signature, an unauthorized indorsement, or a material alteration of the plaintiff does not report such fact to the defendant within 60 days of the mailing of the account statement describing the questionable item. Considering this, the defendant paid two counterfeit checks. The plaintiff did not report either of the unauthorized signatures to the defendant within 60 days of receipt of the account statements. After the defendant failed to credit the plaintiff’s account, this action ensued. The trial court concluded that the parties could contractually reduce the one-year period for reporting unauthorized signatures set forth in Code Section: 8.4-406(f) and that the 60 day time period was not “manifestly unreasonable” under the provisions of the code.