American Airlines Employees Federal Credit Union v. Martin

Tim Martin (plaintiff) opened an account at the American Airlines Employees Federal Credit Union (credit union) (defendant). The credit union’s agreement with its members stated that members were required to give notice of an unauthorized draw on their account within 60 days of the credit union mailing an account statement. The credit union received a membership-change notice adding Molly Blair to Martin’s account. The notice contained a signature purporting to be Martin’s, but this signature turned out to be a forgery. Blair was also a member of the credit union and made 14 transfers totaling $49,800 to her account from Martin’s. Most but not all these transfers, as well as Blair’s status as a joint accountholder, appeared on Martin’s quarterly statements. Martin claimed that he did not receive these statements. When Martin realized that his account balance was lower than anticipated, he sued the credit union to recover the transferred funds. The credit union relied on the 60-day-notice provision in the membership agreement. Uniform Commercial Code (UCC) § 4.406(d) required bank accountholders to report an unauthorized draw from the account within one year. The credit union argued that this timeline could be modified by agreement. The trial court disagreed and ruled in Martin’s favor. The court of appeals affirmed. The credit union appealed.