GENERAL COUNSEL OPINION
STATUTE OF LIMITATIONS ON STATE WARRANTS
NOVEMBER 13, 2006
What is the applicable statute of limitations in warrant recovery
process for forgeries on state warrants?
In an action by state Teachers' Retirement System and others to
recover against collecting bank on theory that it breached statutory
warranty by presenting for payment certain warrants which were drawn
on System's funds and which bore forged endorsements of deceased
retired teacher, the Alabama Supreme Court has held that claims on
forged endorsements is governed by the general six year statute of
limitations. Trust Company Bank v. State of Alabama 420 So.2d 10
“The Alabama Uniform Commercial Code (Alabama's codification of its version
of the Uniform Commercial Code) does not have an express statute of limitations
governing actions for breach of warranty; the general statute of limitations
governing action on contracts controls. (Emphasis added.) See, Winkie v. Heritage
Bank of Whitefish Bay, 99 Wis.2d 616, 299 N.W.2d 829 (1981); Lewittes Furniture v.
Peoples Nat'l Bank of Long Island, 82 Misc.2d 1013, 372 N.Y.S.2d 830 (1975); 2
Bender's, Uniform Commercial Code, § 10.05 (1982). The present rule is in accord
with pre-code cases that still reflect the correct rule of law. See also, Houston
v. Lawhead, 116 W.Va. 652, 182 S.E. 780 (1935); Home Ins. Co. v. Mercantile Trust
Co., 219 Mo.App. 645, 284 S.W. 834 (1926). A warranty of good title under § 7-4-
207 is an implied contractual warranty of the genuineness of the endorsement. The
contract being implied rather than under seal, § 6-2-34, Code 1975, is controlling.
Consistent with this view is Spragins v. McCaleb, 237 Ala. 658, 188 So. 251 (1939).
The period of limitation governing this cause of action begins to run from the time
of the wrongful payment, not from the time of the discovery of the breach.
Birmingham Trust Nat'l Bank v. Central Bank and Trust, 49 Ala.App. 630, 275 So.2d
148, cert. den., 290