In Roy Supply, Inc. v. Wells Fargo Bank (1995) 39 Cal.App.4th 1051, plaintiffs sued a bank for negligent payment of forged checks. The Court of Appeal conducted an extensive review of the statutory scheme concerning the relationship between banks and their depositor customers set forth in Divisions 3 and 4 of the California Uniform Commercial Code. The court explained section 4406 as follows: "Section 4406 imposes a duty upon a customer to act promptly in discovering and reporting unauthorized signatures and alterations. If the customer fails to fulfill this duty then the payor bank is relieved from absolute liability and for an initial one-year period the loss may be imposed upon the bank only if it was negligent in the matter. After one year the statute bars the customer from asserting an unauthorized signature or alteration against the payor bank unless it has been earlier discovered and reported to the bank. Section 4406 is not per se a statute of limitation but instead is an issue-preclusion statute. Unlike a statute of limitations, it does not purport to bar an action against a bank; rather, it simply precludes a customer from asserting an unauthorized signature or alteration against the bank if the customer has failed to discover and report the unauthorized signature or alteration to the bank. The effect this will have on a customer's claim against the bank will depend upon whether proof of the unauthorized signature is an essential element of the particular claim asserted. In essence, if a customer must prove an unauthorized signature in order to establish a claim then the customer will not be able to establish the claim because he or she is precluded from proving the unauthorized signature. On the other hand, any claim that is not dependent upon proof of the unauthorized signature will not be precluded by section 4406, subdivision (f), although the customer will still be precluded from asserting the unauthorized signature in pursing that claim." (Roy Supply, supra, 39 Cal.App.4th at pp. 1065-1066.)