Jefferson State Bank v. Lenk, 323 S.W.3d 146 (Tex. 2010).
After Decedent’s death in 2000, Fake Administrator presented Bank
with fraudulent letters of administration and over the next few months,
withdrew most of Decedent’s funds from the account. In 2003, the court
appointed Real Administratrix. In February 2004, Real Administratrix
learned about Decedent’s account at Bank but did not contact Bank until
June 2005 when she demanded that Bank recredit the account for the funds
Fake Administrator withdrew. Bank refused pointing to Business and
Commerce Code § 4.406 which provides a one year repose period to make
claims which had been reduced to 60 days by contract. Real
Administratrix, however, claimed that the period did not begin to run
until Bank made the bank statements available. The appellate court held
that Bank’s sending statements to Fake Administrator and holding the
statements at Bank’s office were insufficient to satisfy its duty and
thus Real Administratrix could recover. Bank appealed.
The Texas Supreme Court reversed. The court held that in the context of
deceased customers, “(1) a bank satisfies its burden by retaining
account statements for retrieval by the estate administrator, and (2)
the repose period begins to run once an administrator is appointed.”
Thus, since Real Administratrix waited until over two years after her
appointment to demand that Bank recredit the account, her demand came
too late and thus was barred. The court explained that after a
customer’s death, the bank cannot send statements to the customer and
thus retaining the statements is appropriate. Once a personal
representative is appointed, the time period begins to run as the
personal representative now has the right to all of the decedent’s
business records and papers under Probate Code § 37.
Moral: A personal representative must examine bank account statements
immediately after being appointed or else risk that the repose period
will run barring a recovery for unauthorized withdrawals from the
decedent’s accounts.
Warning: The repose period can run before the personal
representative obtains knowledge of the account. Thus, the personal
representative must take prompt action to locate all of the decedent’s
accounts. The decedent’s most recent income tax returns may be helpful
in determining the existence of the accounts.