Banks won the latest round Monday in their fight for the right to charge noncustomers for using their automated teller machines.

The Connecticut Supreme Court issued a 5-2 decision overturning Banking Commissioner John P. Burke's four year ban on ATM surcharges. FleetBoston Financial Corp. and First Union Corp. had challenged the ban.

First Union said it would start imposing a $1 fee to noncustomers today, and FleetBoston expects to follow suit on Jan. 3.

The state banking regulator said he would abide by the decision, but Attorney General Richard Blumenthal, an activist on consumer protection and antitrust issues, vowed to seek legislation explicitly outlawing surcharges.

Nonetheless, FleetBoston spokesman Jim Schepker said, "Today it appears to be finally and fully resolved."

Since the start of the litigation in January 1997, FleetBoston has estimated, it lost $15,000 a day in revenue on 370 machines. FleetBoston - the product of the Fleet Financial Group merger with BankBoston Corp. - will have 433 ATMs in Connecticut in April, after completion of a divestiture.

Mr. Burke imposed the ban after concluding that charges to consumers were implicitly off-limits under a 1975 state law that let banks charge each other for their respective customers' use of ATMs.

But the court's ruling said: "There is nothing in the statute's language, history, or background" to support the contention.

Lynne Barr, a partner of Goodwin, Procter & Hoar in Boston, agreed.

"That law was not designed to regulate the charges that consumers pay for ATMs," said Ms. Barr, an electronic banking expert. "That was really designed to regulate access to ATMs of other institutions."

Because the case was decided by the state's highest court and does not raise a constitutional issue, there is no avenue for appeal.

Mr. Burke said he is not sure whether he will support Attorney General Blumenthal's legislative remedy. "We haven't had time to the review the entire ruling," Mr. Burke said. "At this time, we are not sure whether or not there will be any move on our part to legislation."

He added that a state law "would more than likely not apply to national or federally chartered banks and would therefore place our own state-chartered banks at a competitive disadvantage."

In California, banks are fighting anti-surcharge ordinances in San Francisco and Santa Monica. As the dispute unfolds in federal court, Bank of America Corp. and Wells Fargo & Co. have locked noncustomers out of their machines in Santa Monica, which, unlike San Francisco, had implemented its ban.

New York City Council Speaker Peter F. Vallone seeks a similar prohibition in New York.

Unlike other cases, Connecticut's did not raise the issue of federal preemption of state law. "It was solely a question of interpretation of state law," said Michael F. Crotty, deputy general counsel of the American Bankers Association.

"It's good news for the banks in Connecticut and good news for the consumers in Connecticut," he said. "Without the ability to earn an income from installing these machines. there's really not much incentive for them to do it."

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