Liberty Bank and Trust Co. of Oklahoma City, N.A. v. Bachrach

Lawyer Osher Bachrach (defendant) maintained an account with Liberty Bank and Trust Company of Oklahoma City, N.A. (Liberty) (defendant). Bachrach’s depository agreement with Liberty provided that deposits would be provisionally credited to Bachrach’s account but that Liberty could charge back account credits if there was an overdraft. On June 24, 1992, Bachrach indorsed and deposited a $15,000 check from a client (Janice Whitefield) into his Liberty account. On June 26, Bachrach purchased more than $12,000 in cashier’s checks from his Liberty account. On June 29, Liberty learned that Whitefield’s bank had dishonored Whitefield’s check; Liberty received a second notice of dishonor on July 2. Liberty first sent Bachrach a notice of dishonor on July 3, which Bachrach received on July 6. Liberty also orally advised Bachrach of the dishonor on July 7. Liberty sued Bachrach, alleging that Bachrach was liable for repayment both as an indorser of Whitefeld’s check and under the depository agreement. Bachrach responded that Liberty failed to provide him with timely notice, as required by Oklahoma’s version of the Uniform Commercial Code (UCC), that Whitefield’s bank dishonored her check. Liberty moved for partial summary judgment, arguing that, due to an alleged industry practice, its duty to notify Bachrach of the dishonor did not arise until July 2, when Whitefield’s bank issued its second notice of dishonor. Liberty also contended that its charge-back rights under its agreement with Bachrach trumped the UCC’s notice requirement. The trial court granted Liberty’s motion, and the court of appeals affirmed. Bachrach appealed.