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Stowell v. Cloquet Co-Op Credit Union Case Brief
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Case Brief Summary & Legal Analysis
tl;dr: A credit union customer sued to recover funds paid on forged checks. The court reversed lower court rulings, upholding a 20-day notice requirement in the account agreement as not manifestly unreasonable under the UCC.
Legal Significance: This case affirms that parties may contractually shorten UCC timeframes for a customer to report unauthorized signatures, provided the agreement is not manifestly unreasonable and does not disclaim the bank’s duty of ordinary care.
Stowell v. Cloquet Co-Op Credit Union Law School Study Guide
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Case Facts & Court Holding
Key Facts & Case Background
Plaintiff Stowell, a customer of Cloquet Co-Op Credit Union, signed a Draft Withdrawal Agreement requiring him to notify the Credit Union of any errors in his account statement within twenty days of its mailing. Over ten months, Stowell’s neighbor stole his checks and monthly account statements, forging checks totaling approximately $22,000. Stowell informed the Credit Union multiple times that he was not receiving his statements, and duplicate statements were mailed but also intercepted. He did not, however, express concern about his diminishing balance or suspect unauthorized activity until a check he purportedly wrote to the forger bounced. The Credit Union used an automated check processing system, consistent with industry practice, and relied on account holders to review statements. Stowell, a sophisticated businessman, had read and understood the agreement. The trial court found the 20-day notice provision manifestly unreasonable. The jury allocated liability for different periods, finding the Credit Union 75% at fault for forgeries in August 1993.
Court Holding & Legal Precedent
Issue: Did the contractual provision requiring an account holder to notify the credit union of unauthorized items within twenty days of the statement’s mailing date constitute a manifestly unreasonable standard under Minn. Stat. § 336.4-103(a), and did the plaintiff prove the credit union failed to exercise ordinary care in paying forged items?
The Supreme Court of Minnesota reversed, holding that the 20-day notice provision Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehende
IRAC Legal Analysis
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Legal Issue
Did the contractual provision requiring an account holder to notify the credit union of unauthorized items within twenty days of the statement’s mailing date constitute a manifestly unreasonable standard under Minn. Stat. § 336.4-103(a), and did the plaintiff prove the credit union failed to exercise ordinary care in paying forged items?
Conclusion
This case establishes that contractual modifications of UCC § 4-406 notice periods Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in volupt
Legal Rule
Under Minn. Stat. § 336.4-103(a), parties may by agreement determine the standards Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excep
Legal Analysis
The court reasoned that Minn. Stat. § 336.4-103(a) explicitly permits parties to Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum. Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserun
Flash-to-Full Case Opinions
Flash Summary
- A bank agreement requiring a customer to report forgeries within 20