Sec. 42a-4-401. When bank may charge customer's account. - Connecticut Statutes

      Sec. 42a-4-401. When bank may charge customer's account. (a) A bank may charge against the account of a customer an item that is properly payable from that account even though the charge creates an overdraft. An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and bank.

      (b) A customer is not liable for the amount of an overdraft if the customer neither signed the item nor benefited from the proceeds of the item.

      (c) A bank may charge against the account of a customer a check that is otherwise properly payable from the account, even though payment was made before the date of the check, unless the customer has given notice to the bank of the postdating describing the check with reasonable certainty. The notice is effective for the period stated in section 42a-4-403(b) for stop-payment orders, and must be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it before the bank takes any action with respect to the check described in section 42a-4-303. If a bank charges against the account of a customer a check before the date stated in the notice of postdating, the bank is liable for damages for the loss resulting from its act. The loss may include damages for dishonor of subsequent items under section 42a-4-402.

      (d) A bank that in good faith makes payment to a holder may charge the indicated account of its customer according to: (1) The original terms of the altered item; or (2) the terms of the completed item, even though the bank knows the item has been completed unless the bank has notice that the completion was improper.

      (1959, P.A. 133, S. 4-401; P.A. 91-304, S. 98; May Sp. Sess. P.A. 92-11, S. 25, 70.)

      History: P.A. 91-304 redesignated former Subsec. (1) as Subsec. (a) and amended said Subsec. to make minor changes in wording and add provision re when an item is properly payable, added Subsec. (b) re when a customer is not liable for an overdraft, added Subsec. (c) re the payment of postdated checks, and redesignated former Subsec. (2) as Subsec. (d) and amended said Subsec. to make minor changes in wording and replace alphabetic with numeric Subdiv. indicators; May Sp. Sess. P.A. 92-11 made a technical change in Subsec. (b).

      The rule that instrument containing an unauthorized endorsement is not properly payable does not apply to items with multiple endorsements when the instrument is payable in the alternative and one endorsement is valid. 68 CA 716. Plaintiff who was named beneficiary of a certificate of deposit found not to be a "customer" of bank for purposes of the statute and not to have standing to bring an action pursuant to the statute. 69 CA 813.

      Subsec. (a) (Formerly Subsec. (1)):

      Bank may charge against customer's account only properly payable items. 170 C. 691.

      Cited. 5 Conn. Cir. Ct. 399.