can i say in this case despite the very long briefs it seems to be a very simple issue and i'm not sure you need to fifteen minutes but do the best you can to not using the time if you don't need  issue what brings us here today is questioning the application of the one year statute of limitations which bar to claim for the improper payment of ten dollars checks which total nine hundred and eighty one thousand change the contract a deposit as well section four for one of the code the only issue is whether applying the statute of limitations by determining that the claim accrued upon the issuance of the bank statement was what was appropriate hotel they had hired champion to do some of the framing and duchene and columns and champion in turn hires its own so sub contractors and vendors and payments are all pursuant to a i e contracts where you submit progress payments architect reviews release the claims and everything else and what it occurred is that the st check that that issue went out in january th two thousand and sixteen payable to champion and one of its supply ayers known as cal ply that check was for limitations does not have a point in time for cruel neither does the uniform commercial code limitation statute four thousand one hundred and eleven which talks about three years have a point in time for when it accrues so in order to make the determination that it accru upon the issuance of the statement the district court set on a look st of four thousand four hundred and six s and what that provides is that there's a one year limitation for making claims for alterations of a check or a customer signature commonly referred to as a drawl or signature it does not reference forged indorsements but before that one year limitation can be imposed you have to comply with four thousand four hundred and six a and that means the bank has got to send out your statements and inform you of what checks have been you know issued in the dates and everything else and provide you either checks or or an opportunity to get them so when the district court took a look at this and dovetailed the three hundred and forty c with four  problem that we find they are is that only relates to those forged roller signatures not to forged endorsements so i would not trust the actual governing limitations period say the ahead and check a statement for a forged endorsement are not such a statement checked made to do any investigation about a forged endorsement and both the code case law and common sense indicate kates why so dealing with common sense of any of your honors would write me a check and then you received it back in your statement you would have no idea if that's my my indorsement i understand the common sense part but just to be clear because i think judge burrs on asked what's the the language and i and maybe i've got it wrong i've tried to put it back together but sufficient you have to provide statements sufficient to allow the customer to reasonably identify the just a minute i'm sorry so the they've been integrated in the sense that it's understood that for troy for origin raise it's a year from the statement not a year from the forgery correct and then the question is whether the same rule or a more lenient rule applies to endorsements essentially so you're arguing it's not a year from the indorsement it's not even a year from the drawer  between when an action improves and and discovery the classic example that you know sponges are left in the patient and they don't know about it till till they have pain the real action includes when the sponge is left but you don't know it until you have is actually now my understanding my understanding is that even in that instance of it a cruise when you're in a real question is whether it's encouraging discovery or knowledge discovery that in either event it's still a cruel as of whatever that the trigger date is that that's correct and that's why i say it's not it may be a fine line here whether it is because i don't believe it is really  and discovery issue and so when it accrues there is a very instructive case that i would direct the court to and that's use aleck tronics corp version versus citibank of delaware and in that situation direct v which is subsidiary of hughes electronics issues a check for four hundred and thirty nine thousand dollars to american express the check is stolen the endorsement in is then forwards and the case comes up you know similar to this such that california now would apply the three year statute which is in the code as opposed to the one year statute and it's the rationale in that case which not only did it focus on a way or a never once this is a statement but it's the rationale in that case which i us the let's assume we think you're conceptually right that at least that the statement just not the trigger to the right then there's a question of whether i mean how much you had to know i mean you'd have to use yet you suspect i mean you knew there was some kind of a problem going i'm winning when the lawyers were running around complaining about not getting paid you your client i mean and figured out what the problem was the bench may not that long why a month or two doesn't at that do we do anything more with this case than say that the judge was wrong about from your point of view if we agree with you that the the statement is the complaint was filed in june your honor so i can honestly you know any argument for it not being incurring notice been actual knowledge that because the i don't in this particular case i don't think any of the situations which cause the inquiries what was going on with those lead one to ascertain when the checks were forged and the problem is under the code  predicated upon the depository bank having the responsibility of checking indorsements that's the whole scheme behind it but who are they supposed to check that that's one of the questions i had is when i get it that the depositor or the you know the bank how do you know i mean we're here here and that was answered in this case your honor c b into the explain themselves that if they were the depository bank they would have required a nd signature guarantee and that's what's done frequently certainly with an eight hundred and fifty and you go to a remote a t m and exactly you deposit there no one's checking anything you know i grab and that becomes a risk of loss that's taken by the depository bank for going to heaven doing this and not having all of the expense of the person good morning rogers and may please the court todd beatty for california bank interest i'd like to begin with where the discussion left off which is the question if one would assume for the sake of argument that a delay our oh i'm not giving that up at all and i'll get to that but i think the nd half of the argument is so clear that i want to jump on up and down on that for a minute if i may if you assume that for the sake of argument then the the then the question is does the statute begin to run upon inquiry know those or does the statute begin to run upon conclusive confirmation of the ultimate sas well i might be somewhere in the middle i mean what we have here is a situation in which you know in in the ordinary course the fact that some subcontract suppliers who aren't getting paid  necessarily lead to any suggestion and the most likely reason is because of subcontractors just out of money and isn't paying them and how you would get to the notion that they were forging checks i don't know well let me get there that is important in this case because if inquiry notices enough we have this dramatic event where all of the employees of the subcontractor are surrounding the project office yeah i think of those old movies where you have the peasants storming the castle with pitchforks and torches they're angry because they haven't been paid and my colleagues optimism to the contrary notwith standing people are bouncing checks are not cashed flush the fact that they're bouncing cash down some checks means that they don't have catch fire now ninety nine times out of one hundred a defendant arguing delay discovery has to say that a point of who was not suspicious should have been suspicious or a diff or defendant has to say that up points if who was suspicious but did not take action should have taken action this case is remarkable because the undisputed record is that the customer actually was suspicious it was in the separate statement knowledge of the fact that the payroll shut down sed prompted deacon to reach out to the joint on these shifts and asked them whether they'd gotten the money or not but that she was never presented to the district court that this is a court just assume to trigger it upon the statement so seems like we don't have a full record i understand you're citing to that but maybe there's additional evidence out there there's the admissions of deacons or project manager that are in the record wound i e get it you know i'm going to get lost in the mail that's a different question i mean it's so unlikely that this is what happened to that the fact that that they were made inquiry because they wanted to make find out you know if there was a problem with getting the suspicious that the intended payee did not receive the money and you can actually was suspicious i'm not saying they should have been i'm saying they actually were that fact is in the record it is undisputed and the nd the only fact that was in the record is that they were suspicious of whether they were getting paid it's not that they were suspicious that there was a fraud fraudulent endorsements occurring one means the other table too i think that's  why didn't get the money if the check cleared obviously i think it would but more difficult question is if they're not getting paid is that enough to trigger you know you should've known or issue should have done it but i think that goes beyond where we're at i actually i'm not totally convinced i want to be more sure about the argument on the one year statute because i say statute the one year notice requirement it is true that this has been interpreted at least as to fraudulent fraudulent signatures on the check not indorsements but but but when you actually sign that checked that applies one year after you receive your statement that's pretty well established my correct on that so if that's true then why are we going to impose maybe this is a softball question to you but why are we then going to impose a discovery rule on endorsements when the signatures are clearly a political tool when you're right out of the gate we don't look at whether they should have known that there was a fraudulent signature we just assume earliest case law assumes that they know and  therefore when your replies i think can't they do then in one year and the case that really helps the court on this point it seems like front but but here's here's the one thing that concerns me is are different and as i understand it there's never been interpreted no one ever looked at comment five specifically but it's there how do you explain that comment five being is part of forty four of six well we we have an interesting mean i don't know if you don't run if you don't recognize that poor fellow for six says it can't run from the actual forgery because out anybody know right and then it says the statement but it says it only with regard to their drawers and then it says nobody people don't have a responsibility to know about the endorsement so where are you getting the notion that the endorsement runs from the either a from the forgery or from the statement that takes us back the commercial code by decades and when the commercial code was st prompted the version those three of four for six that was proposed by the uniform commission had a split notice period where it was one year for the customer to report to the bank claims that a maker's signature was forged and three years for the customer to report to the bank that in the norse mythology i was for and what the california legislature did was look at that and there were recommendations that were adopted that said the preexisting california statute that gave the customer one year to discover and reports either a for indorsement has proven to be satisfactory in practice and that the existing california rule of one year to discover and report should be maintained and that's what happened  the the interplay between the two is what the court talked about in his electronics where the conclusion of the california legislature was to reject the rule of four hundred and forty six which would have given a longer statute of limitations for forged endorsements or a longer notice period for forged indorsements right and instead to preserve the existing california rule that a customer has one year to discover and report that but that's declined to add that non uniform comment about the one year bar and adopted comment five stating the depositor has no duty to discover forged indorsements reflecting a change from prior practice so this doesn't apparently bring us back to my initial question about how do you square up comment five from forty four o six and i guess i'm going to ask them to explain footnote tend to me because if they're right i'm footnote ten that seems to my mind to be pretty compelling and what the hughes electronics court concluded was that the legislature never intended to change so you think that they're just it's just a misstatement in footnote ten dollars is premised on the idea that the person who signed the check when they when he or she receives this bank statement and sees a copy of the check would recognise his her own signature may seem like that's that's the rationale behind it you get a statement you'll know if it's your signature of someone else signature or if someone said instead one thousand dollars one hundred thousand dollars so if we apply that rationale here me seems like you would need to give some kind of notice to the to recognize who  whether the endorsement was fraudulent and who best analysts only judge posner but who would best be able to figure that out it would be the person who wrote the check and he or she would have no idea who signed indorsement whether that's real or not or forged it would be the bank the bank could insist the eight hundred thousand dollars check cashing it give me your id let me check your id your signature with with your driver's license whatever maybe i mean well but why didn't that the sensible rule here that would be the bank of st deposit not the bank on which the check is drawn california bank and trust does not deal with the deposit or california bank and trust is not in a position to validate endorsements anyway but i think the answer to that is what arguing for specifically is it that the time runs from the statement even of the statement just tell you anything or that the time runs from the forgery or is that the time runs from some notice or from the statement you have to be incorporating four o six even though for six specifically doesn't apply well there which which really you are going for there are numerous california cases saying that the statute runs from the statement days when the statement included copies of cancelled checks you then have the ability to look at the back but i would argue for that role because as in practice we've seen that even though you won't know a forged indorsement just by turning the ready to file a complaint with six months to spare on the one year statute with no tolling ok thank you very much