                        United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 96-2781
                                    ___________

Leo G. Wetherill and LGW            *
Energy Resources, Inc.,             *
                                    *
      Appellants,                   * Appeal from the United States
                                    * District Court for the Western
      v.                            * District of Missouri.
                                    *
Putnam Investments, a Mutual        *
Fund, and State Street Bank &       *
Trust Company, a State Banking      *
Corporation,                        *
                                    *
      Appellees.                    *
                               ___________

                             Submitted:    February 13, 1997

                                  Filed:   August 8, 1997
                                   ___________

Before HANSEN and MORRIS SHEPPARD ARNOLD, Circuit Judges, and MELLOY,1
     District Judge.
                             ___________

MORRIS SHEPPARD ARNOLD, Circuit Judge.




      1
       The Honorable Michael J. Melloy, Chief Judge, United States District Court for
the Northern District of Iowa, sitting by designation.
      Leo G. Wetherill and LGW Energy Resources, Inc., appeal from the
district court's2 order granting the defendants' motion for summary
judgment and dismissing the complaint. For the reasons discussed below,
we affirm.

                                    I.
     In August, 1985, Mr. Wetherill (LGW's president, vice-president, and
sole shareholder) opened a corporate cash trust account for LGW with
defendant Putnam Investments, Inc.     Defendant State Street Bank and Trust Company
contracted with Putnam to be the account's custodian. Mr. Wetherill and LGW authorized
State Street to redeem Putnam account shares upon the receipt of a signed
check drawn on the Putnam account, and designated Mr. Wetherill as the only
person who was allowed to write checks. They also designated P.O. Box 8651
in Kansas City, Missouri ("the Missouri Box"), as the address of record for
the account.

      LGW subsequently appointed Gary Leitner to the position of corporate
secretary. Mr. Leitner prepared tax returns and corporate documents, kept
the corporate books, and managed LGW's various accounts in accordance with
Mr. Wetherill's instructions, much as a corporate treasurer would.
Mr. Wetherill instructed Mr. Leitner to deposit LGW's corporate profits
in the Putnam account, but he was not authorized to remove funds from the
account; as already indicated, that privilege belonged to Mr. Wetherill
alone.

      When Mr. Leitner became secretary, Mr. Wetherill gave him all of
LGW's financial records. He also instructed Mr. Leitner to change the
corporate address of record for the state of Kansas to Mr. Leitner's home
address in Olathe, Kansas, where Mr. Leitner would be LGW's registered
agent. Sometime between April and December, 1986, the address of record
for the Putnam account was changed to P.O.




      2
        The Honorable Ortrie D. Smith, United States District Judge for the Western
District of Missouri.

                                         -2-
Box 4000 in Olathe, Kansas ("the Kansas Box").        The record strongly
indicates that Mr. Leitner made this change and that he did so without
Mr. Wetherill's knowledge.     Mr. Wetherill, however, was aware of the
existence of the box and of the fact that some corporate mail was received
there. The defendants did not notify Mr. Wetherill of the address change
and did not confirm with Mr. Wetherill that this change was authorized.

     From December, 1986, through January, 1989, State Street cashed
checks that Mr. Leitner had fraudulently signed and endorsed in an amount
between $275,000 and $300,000. Mr. Leitner signed Mr. Wetherill's name on the
checks and several times added his own name to Mr. Wetherill's, along with
the notation "treasurer."          The defendants neither verified that the
signatures were indeed Mr. Wetherill's nor notified Mr. Wetherill of the
withdrawals. Putnam did send LGW monthly and annual account statements
that contained this information, as well as statements following each
transaction.         Putnam also sent monthly, annual, and transactional
statements to LGW's broker.

      Mr. Wetherill and LGW became suspicious of Mr. Leitner's activities
late in 1992 or early in 1993 and confirmed the nature of those activities
in May, 1993. In a letter dated May 11, 1993, Mr. Wetherill's and LGW's
broker asked Putnam to provide them with any account-related documents in
its possession and stated that Mr. Wetherill's "business has been subjected
to embezzlement by a former business associate."       It was not until a
subsequent letter, dated November 1, 1994, that Mr. Wetherill and LGW
identified the checks at issue, stated that "[t]hese checks were signed
and/or endorsed by an unauthorized person," and asked the defendants to
make good on the losses to the Putnam account. When the defendants refused
to do so, Mr. Wetherill and LGW sued them, seeking recovery on theories of
fraud, negligence, conversion, breach of fiduciary duty, failure to adhere
to commercially reasonable standards, and bad faith.




                                     -3-
                                    II.
      We agree with the district court that Massachusetts law governs this
dispute. The Massachusetts version of U.C.C. § 4-406(4) requires a bank
customer to report an unauthorized signature on his or her checks to the
relevant bank within one year from the time that a bank statement is "made
available" to that customer, or the customer "is precluded from asserting
against the bank ... [his] unauthorized signature." A statement is "made
available" when a bank "sends" its customer an account statement,
U.C.C. § 4-406(1), and under U.C.C. § 1-201(38), one "sends" a statement
when one deposits it "in the mail ... properly addressed." Mr. Wetherill
and LGW maintain that the statements here were not "properly addressed"
because they were mailed to an address other than the one that
Mr. Wetherill agreed to for their receipt. As the court below correctly held, however,
"[t]he receipt of any writing or notice within the time at which it would have arrived if properly sent has the
effect of a proper sending." U.C.C. § 1-201(38).

      We believe that the record does not reveal any likelihood that the
statements would have arrived at and been received at the Missouri Box any
sooner than they would have at the Kansas Box, at least not significantly
so, partly because they would have been sent by mail in any case and partly
because Mr. Leitner lived in Kansas. We thus believe that the district
court correctly concluded that "the account statements were actually
received by LGW within the time" that they would have been received at the
Missouri Box. The statements were therefore properly sent.

      Mr. Wetherill and LGW further contend that even if the statements
were "properly sent" within the meaning of the statute, the time for giving
notice did not begin to run until they discovered or should have discovered
Mr. Leitner's activity.     But the time limit in the statute is "not a
statute of limitations which might not start to run until the [appellants]
knew or should have known of [their employee's] treachery"; rather, it
fixes the time within which the appellants must give notice to the
defendants. Jensen v. Essexbank, 483 N.E.2d 821, 822 (Mass. 1985). U.C.C.
§ 4-406(4)




                                                     -4-
establishes a statute of repose under which the time for bringing suit
expires one year following the availability of the relevant account
statements.    See 7 RONALD A. ANDERSON, ANDERSON ON THE UNIFORM COMMERCIAL
CODE § 4-406:1, Official Code Comment, ¶ 5, at 451, § 4-406:11 at 458 (3d
ed. 1995).

      We believe, moreover, that Mr. Wetherill and LGW would not prevail
even if the statute begins to run when a customer should have discovered
the forgeries. Mr. Leitner's illegal activities lasted from December,
1986, through January, 1989. Mr. Wetherill did not discover Mr. Leitner's
fraud until 1992 or 1993. During this entire period, Mr. Wetherill never
sought to review the account statements in Mr. Leitner's possession, never
sought to review the statements in his broker's possession, and never
contacted the defendants to ensure that all was as it should be. We think
it likely that other records in Mr. Leitner's possession, such as the
corporate tax returns, would also have revealed the fraud had Mr. Wetherill
reviewed them even once. The fact that Mr. Leitner did not volunteer the
information did not render the information unavailable to Mr. Wetherill and
LGW.   Rather, their own tardiness in reviewing their financial status
rendered the information unavailable.        Had Mr. Wetherill exercised
reasonable diligence, he would have discovered the forgeries years before
he finally did so.

      Mr. Wetherill and LGW likewise would not prevail if, as they also
maintain, the statute begins to run when a customer actually discovers the
forgeries. Mr. Wetherill and LGW allege that they discovered the forgeries
in April, 1993. If their proposed interpretation of the statute is right,
they had until April, 1994, to notify the defendants, and they argue that
they in fact notified the defendants of the account's problems in their
broker's May 11, 1993, letter. But that letter informed the defendants only
that Mr. Wetherill had been defrauded and requested the Putnam account
records; it did not state that money had been improperly taken from the
account or that the fraud was related to account activities. Mr. Wetherill
and LGW also assert that a March, 1993, Justice Department subpoena
requesting all records pertaining to the account notified




                                    -5-
the defendants of Mr. Leitner's activities.     Like the May 11 letter,
however, the subpoena did not advert to any improper withdrawal of funds
from the account.

      We believe that the defendants did not have notice of Mr. Leitner's
dishonest activities until the November, 1994, letter to them. Therefore,
even if, as Mr. Wetherill and LGW maintain, the statute began to run when
they actually discovered the fraud, their claim would still be barred,
because they did not notify the defendants of Mr. Leitner's activities
within one year following their discovery of those activities.

        Mr. Wetherill and LGW also assert that a bank cannot rely on the § 4-406 defense if it sent the
statements to a customer's unethical employee. But "Jensen v. Essexbank, 396 Mass. 65 (1985) indicates that
Massachusetts [has adopted] the view of a majority of jurisdictions that '[m]isplaced confidence in an employee
will not excuse a depositor from the duty of notifying the bank ... [because] the depositor is chargeable with the
knowledge of all facts a reasonable and prudent examination of his bank statement would have disclosed if made
by an honest employee.' " Robert Francis Construction Company, Inc. v. MassBank for Savings, 4
Mass. L. Rptr. 181 n.1 (Mass. Super. Ct. 1995), quoting K&K Manufacturing, Inc. v. Union Bank, 628 P.2d
44, 48 (Ariz. 1981). See also Pine Bluff National Bank v. Kesterson, 520 S.W.2d 253, 258-59 (Ark. 1975).
The fact that the statements were sent to Mr. Leitner did not exempt Mr. Wetherill and LGW from their
responsibility of notifying the defendants.

      Mr. Leitner cashed the final check in January, 1989.                          When,
presumably in early 1989, the defendants mailed the January statement, the
one-year statute of repose started to run on the final check; it had
already begun running on the earlier checks, because it runs separately on
each item in a series of items. Roy Supply, Inc. v. Wells Fargo Bank, N.A., 46 Cal. Rptr. 2d
309, 323 (Cal. Ct. App. 1995). Under § 4-406, therefore, Mr. Wetherill's and
LGW's action was barred one year later -- several years before they
notified the defendants in 1994.




                                                       -6-
                                   III.
      Mr. Wetherill and LGW maintain that § 4-406 applies only to claims
brought under the U.C.C., as, for instance, to warranty claims under U.C.C.
§ 3-417. See Sun 'n Sand, Inc. v. United California Bank, 582 P.2d 920
(Cal. 1978), and Appley v. West, 832 F.2d 1021 (7th Cir. 1987). They
therefore contend that their claims, all of which are common-law causes of
action, are not barred. We disagree.

      First of all, § 4-406(4) itself states quite generally that the bank
customer "is precluded from asserting against the bank [an] unauthorized
signature" if the customer does not comply with its notice requirements.
The very generality of the language suggests that it bars the bank's
liability in the relevant circumstances, regardless of the theory on which
the customer is relying. There is nothing in § 4-406(4) that supports the
view that only claims under the U.C.C. are barred. It is no doubt the
sweeping language of the relevant section that led one commentator to
conclude, we think correctly, that the "time limits imposed by U.C.C. § 4-
406 are applicable without regard to the theory on which the customer
brings his or her action." See 7 RONALD A. ANDERSON, ANDERSON ON THE COMMERCIAL
CODE § 4-406:24 at 466.

      More importantly, the Supreme Judicial Court of Massachusetts, whose
law it is we are bound to apply, has specifically held that § 4-406(4) bars
claims sounding in contract or negligence, see Jensen, 483 N.E.2d at 822.
The claims of negligence, conversion, breach of fiduciary duty, and failure
to adhere to commercially reasonable standards are all based on the
defendants' alleged failure to act in a reasonable manner, and we do not
hesitate to conclude that the rule of Jensen extends to all of them. The
other two claims -- for fraud and bad faith -- do not literally fall within
the ambit of Jensen. But Mr. Wetherill and LGW produced in any event
insufficient evidence in support of these claims to survive a motion for
summary judgment, so we need not reach the question of whether § 4-406(4)
is applicable to them.




                                      -7-
                                    IV.
      The district court's grant of summary judgment is therefore affirmed
for the reasons indicated.

     A true copy.

             Attest:

                CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                        -8-
