1995 Wisconsin Act 449

449,70 Section 70 . 404.303 (1) (e) of the statutes is renumbered 404.303 (1) (d) and amended to read:

404.303 (1) (d) Become The bank becomes accountable for the amount of the item under ss. 404.213 (1) (d) and s. 404.302 dealing with the payor payer bank's responsibility for late return of items.

449,71 Section 71 . 404.303 (1) (e) of the statutes is created to read:

404.303 (1) (e) With respect to checks, a cutoff hour no earlier than one hour after the opening of the next banking day after the banking day on which the bank received the check and no later than the close of that next banking day or, if no cutoff hour is fixed, the close of the next banking day after the banking day on which the bank received the check.

449,72 Section 72 . 404.303 (2) of the statutes is amended to read:

404.303 (2) Subject to sub. (1), items may be accepted, paid, certified or charged to the indicated account of its customer in any order convenient to the bank.

449,73 Section 73 . The unnumbered subchapter title preceding 404.401 of the statutes is numbered subchapter IV (title) of chapter 404 and amended to read:

Subchapter IV
Relationship between payor payer
bank and its customer

449,74 Section 74 . 404.401 (1) of the statutes is amended to read:

404.401 (1) As against its customer, a A bank may charge against the customer's account any of a customer an item which that is otherwise properly payable from that account even though the charge creates an overdraft. An item is properly payable if it is authorized by the customer and is in accordance with any agreement between the customer and bank.

449,75 Section 75 . 404.401 (2) of the statutes is renumbered 404.401 (4) and amended to read:

404.401 (4) A bank which that in good faith makes payment to a holder may charge the indicated account of its customer according to any of the following:

(a) The original tenor terms of the customer's altered item; or.

(b) The tenor terms of the customer's completed item, even though the bank knows the item has been completed unless the bank has notice that the completion was improper.

449,76 Section 76 . 404.401 (2) and (3) of the statutes are created to read:

404.401 (2) A customer is not liable for the amount of an overdraft if the customer neither signed the item nor benefited from the proceeds of the item.

(3) A bank may charge against the account of a customer a check that is otherwise properly payable from the account, even though payment was made before the date of the check, unless the customer has given notice to the bank of the postdating describing the check with reasonable certainty. The notice is effective for the period stated in s. 404.403 (2) for stop-payment orders, and must be received at such time and in such manner as to afford the bank a reasonable opportunity to act on it before the bank takes any action with respect to the check described in s. 404.303. If a bank charges against the account of a customer a check before the date stated in the notice of postdating, the bank is liable for damages for the loss resulting from its act. The loss may include damages for dishonor of subsequent items under s. 404.402.

449,77 Section 77 . 404.402 (title) of the statutes is amended to read:

404.402 (title) Bank's liability to customer for wrongful dishonor; time of determining insufficiency of account.

449,78 Section 78 . 404.402 of the statutes is renumbered 404.402 (2) and amended to read:

404.402 (2) A payor payer bank is liable to its customer for damages proximately caused by the wrongful dishonor of an item. When the dishonor occurs through mistake liability Liability is limited to actual damages proved. If so proximately caused and proved damages may include damages for an arrest or prosecution of the customer or other consequential damages. Whether any consequential damages are proximately caused by the wrongful dishonor is a question of fact to be determined in each case.

449,79 Section 79 . 404.402 (1) and (3) of the statutes are created to read:

404.402 (1) Except as otherwise provided in this chapter, a payer bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft.

(3) A payer bank's determination of the customer's account balance on which a decision to dishonor for insufficiency of available funds is based may be made at any time between the time the item is received by the payer bank and the time that the payer bank returns the item or gives notice in lieu of return, and no more than one determination need be made. If, at the election of the payer bank, a subsequent balance determination is made for the purpose of reevaluating the bank's decision to dishonor the item, the account balance at that time is determinative of whether a dishonor for insufficiency of available funds is wrongful.

449,80 Section 80 . 404.403 (1) and (3) of the statutes are amended to read:

404.403 (1) A customer may by order to the customer's bank stop payment of any item payable for the customer's account but the order must be or any person authorized to draw on the account if there is more than one person may stop payment of any item drawn on the customer's account or close the account by an order to the bank describing the item or account with reasonable certainty received at such a time and in such a manner as to afford that affords the bank a reasonable opportunity to act on it prior to before any action by the bank with respect to the item described in s. 404.303. If the signature of more than one person is required to draw on an account, any of these persons may stop payment or close the account.

(3) The burden of establishing the fact and amount of loss resulting from the payment of an item contrary to a binding stop payment stop-payment order or order to close an account is on the customer. The loss from payment of an item contrary to a stop-payment order may include damages for dishonor of subsequent items under s. 404.402.

449,81 Section 81 . 404.403 (2) of the statutes is repealed and recreated to read:

404.403 (2) A stop-payment order is effective for 6 months, but it lapses after 14 calendar days if the original order was oral and was not confirmed in writing within that period. A stop-payment order may be renewed for additional 6-month periods by a writing given to the bank within a period during which the stop-payment order is effective.

449,82 Section 82 . 404.405 of the statutes is amended to read:

404.405 Death or incompetence of customer. (1) A payor payer or collecting bank's authority to accept, pay or collect an item or to account for proceeds of its collection, if otherwise effective, is not rendered ineffective by incompetence of a customer of either bank existing at the time the item is issued or its collection is undertaken if the bank does not know of an adjudication of incompetence. Neither death nor incompetence of a customer revokes such the authority to accept, pay, collect or account until the bank knows of the fact of death or of an adjudication of incompetence and has reasonable opportunity to act on it.

(2) Even with knowledge, a bank may for 10 days after the date of death pay or certify checks drawn on or prior to before that date unless ordered to stop payment by a person claiming an interest in the account.

449,83 Section 83 . 404.406 (1) of the statutes is repealed and recreated to read:

404.406 (1) A bank that sends or makes available to a customer a statement of account showing payment of items for the account shall either return or make available to the customer the items paid or provide information in the statement of account sufficient to allow the customer reasonably to identify the items paid. The statement of account provides sufficient information if the item is described by item number, amount and date of payment.

449,84 Section 84 . 404.406 (2) and (4) of the statutes are renumbered 404.406 (4) and (6) and amended to read:

404.406 (4) If the bank establishes proves that the customer failed, with respect to an item, to comply with the duties imposed on the customer by sub. (1) (3), the customer is precluded from asserting all of the following against the bank:

(a) The customer's unauthorized signature or any alteration on the item, if the bank also establishes proves that it suffered a loss by reason of such the failure; and.

(b) An The customer's unauthorized signature or alteration by the same wrongdoer on any other item paid in good faith by the bank after the first item and statement was available to the customer for a reasonable period not exceeding 14 calendar days and before the bank receives notification from the customer of any such unauthorized signature or alteration if the payment was made before the bank received notice from the customer of the unauthorized signature or alteration and after the customer had been afforded a reasonable period of time, not exceeding 30 days, in which to examine the item or statement of account and notify the bank.

(6) Without regard to care or lack of care of either the customer or the bank, a customer who does not within one year from the time after the statement and or items are made available to the customer (sub. (1)) discover and report the customer's unauthorized signature on or any alteration on the face or back of the item or does not within 3 years from that time discover and report any unauthorized indorsement on the item is precluded from asserting against the bank such the unauthorized signature or indorsement or such alteration. If there is a preclusion under this subsection, the payer bank may not recover for breach of warranty under s. 404.208 with respect to the unauthorized signature or alteration to which the preclusion applies.

449,85 Section 85 . 404.406 (2) of the statutes is created to read:

404.406 (2) If the items are not returned to the customer, the person retaining the items shall either retain the items or, if the items are destroyed, maintain the capacity to furnish legible copies of the items until the expiration of 7 years after receipt of the items. A customer may request an item from the bank that paid the item, and that bank must provide in a reasonable time either the item or, if the item has been destroyed or is not otherwise obtainable, a legible copy of the item.

449,86 Section 86 . 404.406 (3) and (5) of the statutes are repealed and recreated to read:

404.406 (3) If a bank sends or makes available a statement of account or items under sub. (1), the customer must exercise reasonable promptness in examining the statement or the items to determine whether any payment was not authorized because of an alteration of an item or because a purported signature by or on behalf of the customer was not authorized. If, based on the statement or items provided, the customer should reasonably have discovered the unauthorized payment, the customer must promptly notify the bank of the relevant facts.

(5) If sub. (4) applies and the customer proves that the bank failed to exercise ordinary care in paying the item and that the failure substantially contributed to loss, the loss is allocated between the customer precluded and the bank asserting the preclusion according to the extent to which the failure of the customer to comply with sub. (3) and the failure of the bank to exercise ordinary care contributed to the loss. If the customer proves that the bank did not pay the item in good faith, the preclusion under sub. (4) does not apply.

449,87 Section 87 . 404.407 of the statutes is amended to read:

404.407 (title) Payor Payer bank's right to subrogation on improper payment. If a payor payer bank has paid an item over the stop payment order of the drawer or maker to stop payment, or after an account has been closed, or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unjust enrichment and only to the extent necessary to prevent loss to the bank by reason of its payment of the item, the payor payer bank shall be is subrogated to the rights of all of the following:

(1) Of any Any holder in due course on the item against the drawer or maker; and.

(2) Of the The payee or any other holder of the item against the drawer or maker either on the item or under the transaction out of which the item arose; and.

(3) Of the The drawer or maker against the payee or any other holder of the item with respect to the transaction out of which the item arose.

449,88 Section 88 . The unnumbered subchapter title preceding 404.501 of the statutes is numbered subchapter V (title) of chapter 404 and amended to read:

Chapter 404

Subchapter V
Collection of documentary drafts.

449,89 Section 89 . 404.501 of the statutes is amended to read:

404.501 Handling of documentary drafts; duty to send for presentment and to notify customer of dishonor. A bank which that takes a documentary draft for collection must shall prepare or send the draft and accompanying documents for presentment and, upon learning that the draft has not been paid or accepted in due course must, shall seasonably notify its customer of such the fact even though it may have discounted or bought the draft or extended credit available for withdrawal as of right.

449,90 Section 90 . 404.502 of the statutes is amended to read:

404.502 Presentment of “on arrival" drafts. When If a draft or the relevant instructions require presentment “on arrival", “when goods arrive" or the like, the collecting bank need not present until in its judgment a reasonable time for arrival of the goods has expired. Refusal to pay or accept because the goods have not arrived is not dishonor; the bank must notify its transferor of such the refusal but need not present the draft again until it is instructed to do so or learns of the arrival of the goods.

449,91 Section 91 . 404.503 of the statutes is amended to read:

404.503 Responsibility of presenting bank for documents and goods; report of reasons for dishonor; referee in case of need. (1) Unless otherwise instructed and except as provided in ch. 405, a bank presenting a documentary draft:

(a) Must deliver the documents to the drawee on acceptance of the draft if it is payable more than 3 days after presentment; otherwise, only on payment; and .

(b) Upon dishonor, either in the case of presentment for acceptance or presentment for payment, may seek and follow instructions from any referee in case of need designated in the draft or, if the presenting bank does not choose to utilize the referee's services, it must use diligence and good faith to ascertain the reason for dishonor, must notify its transferor of the dishonor and of the results of its effort to ascertain the reasons therefor and must request instructions.

(2) The presenting bank is under no obligation with respect to goods represented by the documents except to follow any reasonable instructions seasonably received; it has a right to reimbursement for any expense incurred in following instructions and to prepayment of or indemnity for such those expenses.

449,92 Section 92 . 404.504 of the statutes is amended to read:

404.504 Privilege of presenting bank to deal with goods; security interest for expenses. (1) A presenting bank which that, following the dishonor of a documentary draft, has seasonably requested instructions but does not receive them within a reasonable time may store, sell, or otherwise deal with the goods in any reasonable manner.

(2) For its reasonable expenses incurred by action under sub. (1), the presenting bank has a lien upon the goods or their proceeds, which may be foreclosed in the same manner as an unpaid seller's lien.

449,93 Section 93 . 405.103 (3) (a) of the statutes is repealed and recreated to read:

405.103 (3) (a) “Acceptance" — s. 403.409 (1).

449,94 Section 94 . 409.203 (1) (intro.) of the statutes is amended to read:

409.203 (1) (intro.) Subject to s. 404.208 404.210 on the security interest of a collecting bank, s. 408.321 on security interests in securities and s. 409.113 on a security interest arising under ch. 402 or 411, a security interest is not enforceable against the debtor or 3rd parties with respect to the collateral and does not attach unless:

449,94m Section 94m. 409.302 (1) (d) of the statutes is amended to read:

409.302 (1) (d) A purchase money security interest in consumer goods having a purchase price not in excess of $500; but fixture filing is required for priority over conflicting interests in fixtures to the extent provided in s. 409.313;

449,95 Section 95 . 409.302 (1) (f) of the statutes is amended to read:

409.302 (1) (f) A security interest of a collecting bank (s. 404.208 404.210) or in securities (s. 408.321) or arising under ch. 402 or 411 (see s. 409.113) or covered in sub. (3);

449,96 Section 96 . 409.312 (1) of the statutes is amended to read:

409.312 (1) The rules of priority stated in ss. 409.301 to 409.311 and 409.313 to 409.318 and in the following sections shall govern when applicable: s. 404.208 404.210 with respect to the security interests of collecting banks in items being collected, accompanying documents and proceeds; s. 409.103 on security interests related to other jurisdictions; s. 409.114 on consignments.

449,97 Section 97 . 410.105 (3) (b) of the statutes is amended to read:

410.105 (3) (b) “Item" — s. 404.104 (1) (g) (i).

449,98 Section 98 . 410.105 (3) (c) of the statutes is amended to read:

410.105 (3) (c) “Suspends payments" — s. 404.104 (1) (k) (L).

449,99 Section 99 . 706.07 (2) (e) of the statutes is amended to read:

706.07 (2) (e) In making or noting a protest of a negotiable instrument, the notarial officer must determine the matters set forth in s. 403.509 403.505 (2).

449,100 Section 100 . Initial applicability.

(1)  This act first applies to transactions and events concerning a promise or order that is a negotiable instrument, as defined under section 403.104 (1) of the statutes, as affected by this act, or an item, as defined under section 404.104 (1) (i) of the statutes, as affected by this act, that is created on the effective date of this subsection

449,101 Section 101 . Effective date.

(1)  This act takes effect on the first day of the first month beginning after publication.