SB358, s. 34
25Section
34. 404.110 of the statutes is created to read:
SB358,73,7
1404.110 Electronic presentment. (1) "Agreement for electronic
2presentment" means an agreement, clearinghouse rule or federal reserve regulation
3or operating circular, providing that presentment of an item may be made by
4transmission of an image of an item or information describing the item
5("presentment notice") rather than delivery of the item itself. The agreement may
6provide for procedures governing retention, presentment, payment, dishonor and
7other matters concerning items subject to the agreement.
SB358,73,9
8(2) Presentment of an item pursuant to an agreement for electronic
9presentment is made when the presentment notice is received.
SB358,73,12
10(3) If presentment is made by presentment notice, a reference to "item" or
11"check" in this chapter means the presentment notice unless the context otherwise
12indicates.
SB358, s. 35
13Section
35. 404.111 of the statutes is created to read:
SB358,73,16
14404.111 Statute of limitations. An action to enforce an obligation, duty, or
15right arising under this chapter must be commenced within 3 years after the cause
16of action accrues.
SB358, s. 36
17Section
36. The unnumbered subchapter title preceding 404.201 of the
18statutes is numbered subchapter II (title) of chapter 404.
SB358, s. 37
19Section
37. 404.201 of the statutes is amended to read:
SB358,74,10
20404.201 (title)
Presumption and duration of agency status Status of
21collecting banks bank as agent and provisional status of credits;
22applicability of chapter; item indorsed endorsed "pay any bank". (1) Unless
23a contrary intent clearly appears and
prior to before the time that a settlement given
24by a collecting bank for an item is or becomes final
(ss. 404.211 (3), 404.212 and
25404.213), the bank
, with respect to the item, is an agent or subagent of the owner of
1the item and any settlement given for the item is provisional. This provision applies
2regardless of the form of
indorsement endorsement or lack of
indorsement 3endorsement and even though credit given for the item is subject to immediate
4withdrawal as of right or is in fact withdrawn; but the continuance of ownership of
5an item by its owner and any rights of the owner to proceeds of the item are subject
6to rights of a collecting bank
, such as those resulting from outstanding advances on
7the item and
valid rights of
recoupment or setoff.
When If an item is handled by
8banks for purposes of presentment, payment
and, collection
or return, the relevant
9provisions of this chapter apply even though action of
the parties clearly establishes
10that a particular bank has purchased the item and is the owner of it.
SB358,74,13
11(2) After an item has been
indorsed
endorsed with the words "pay any bank"
12or the like, only a bank may acquire the rights of a holder
until any of the following
13occur:
SB358,74,1514
(a)
Until the The item has been returned to the customer initiating collection
;
15or.
SB358,74,1716
(b)
Until the The item has been specially
indorsed endorsed by a bank to a
17person who is not a bank.
SB358, s. 38
18Section
38. 404.202 (title) and (1) (intro.) and (a) to (c) of the statutes are
19amended to read:
SB358,74,22
20404.202 (title)
Responsibility for collection or return; when action
21seasonable timely.
(1) (intro.) A collecting bank must
use exercise ordinary care
22in
all of the following:
SB358,74,2323
(a) Presenting an item or sending it for presentment
; and.
SB358,75,3
1(b) Sending notice of dishonor or nonpayment or returning an item other than
2a documentary draft to the bank's transferor after learning that the item has not
3been paid or accepted, as the case may be
; and.
SB358,75,44
(c) Settling for an item when the bank receives final settlement
; and.
SB358, s. 39
5Section
39. 404.202 (1) (d) of the statutes is repealed.
SB358, s. 40
6Section
40. 404.202 (1) (e) of the statutes is renumbered 404.202 (1) (d).
SB358, s. 41
7Section
41. 404.202 (2) and (3) of the statutes are amended to read:
SB358,75,148
404.202
(2) A collecting bank
taking proper action before its midnight deadline
9following receipt of an item, notice or payment acts seasonably; taking proper action
10within a reasonably longer time may be seasonable but the bank has the burden of
11so establishing exercises ordinary care under sub. (1) by taking proper action before
12its midnight deadline following receipt of an item, notice or settlement. Taking
13proper action within a reasonably longer time may constitute the exercise of ordinary
14care, but the bank has the burden of establishing timeliness.
SB358,75,17
15(3) Subject to sub. (1) (a), a bank is not liable for the insolvency, neglect,
16misconduct, mistake or default of another bank or person or for loss or destruction
17of an item
in the possession of others or in transit
or in the possession of others.
SB358, s. 42
18Section
42. 404.203 of the statutes is amended to read:
SB358,75,25
19404.203 Effect of instructions. Subject to
the provisions of s. 403.419 to s.
20403.420 concerning conversion of instruments and
the provisions of both ch. 403 and
21this chapter to s. 403.206 concerning restrictive
indorsements endorsements, only a
22collecting bank's transferor can give instructions
which that affect the bank or
23constitute notice to it and a collecting bank is not liable to prior parties for any action
24taken pursuant to
such the instructions or in accordance with any agreement with
25its transferor.
SB358, s. 43
1Section
43. 404.204 of the statutes is amended to read:
SB358,76,6
2404.204 (title)
Methods of sending and presenting; sending direct
3directly to payor
payer bank. (1) A collecting bank
must shall send items by
a 4reasonably prompt method
, taking into consideration
any relevant instructions, the
5nature of the item, the number of
such those items on hand,
and the cost of collection
6involved and the method generally used by it or others to present
such those items.
SB358,76,7
7(2) A collecting bank may send
any of the following:
SB358,76,88
(a)
Any An item
direct directly to the
payor payer bank
;.
SB358,76,109
(b)
Any An item to
any a nonbank
payor payer if authorized by its transferor
;
10and.
SB358,76,1311
(c)
Any An item other than documentary drafts to
any a nonbank
payor payer,
12if authorized by federal reserve regulation or operating
letter circular, clearinghouse
13rule or the like.
SB358,76,15
14(3) Presentment may be made by a presenting bank at a place where the
payor 15payer bank
or other payer has requested that presentment be made.
SB358, s. 44
16Section
44. 404.205 of the statutes is repealed and recreated to read:
SB358,76,18
17404.205 Depositary bank holder of unendorsed item. If a customer
18delivers an item to a depositary bank for collection, all of the following apply:
SB358,76,22
19(1) The depositary bank becomes a holder of the item at the time that it receives
20the item for collection if the customer at the time of delivery was a holder of the item,
21whether or not the customer endorses the item, and, if the bank satisfies the other
22requirements of s. 403.302, it is a holder in due course.
SB358,76,25
23(2) The depositary bank warrants to collecting banks, the payer bank or other
24payer and the drawer that the amount of the item was paid to the customer or
25deposited to the customer's account.
SB358, s. 45
1Section
45. 404.206 of the statutes is amended to read:
SB358,77,3
2404.206 Transfer between banks. Any agreed method
which that identifies
3the transferor bank is sufficient for the item's further transfer to another bank.
SB358, s. 46
4Section
46. 404.207 of the statutes is repealed and recreated to read:
SB358,77,7
5404.207 Transfer warranties. (1) A customer or collecting bank that
6transfers an item and receives a settlement or other consideration warrants all of the
7following to the transferee and to any subsequent collecting bank:
SB358,77,88
(a) The warrantor is a person entitled to enforce the item.
SB358,77,99
(b) All signatures on the item are authentic and authorized.
SB358,77,1010
(c) The item has not been altered.
SB358,77,1211
(d) The item is not subject to a defense or claim in recoupment of any party that
12can be asserted against the warrantor.
SB358,77,1513
(e) The warrantor has no knowledge of any insolvency proceeding commenced
14with respect to the maker or acceptor or, in the case of an unaccepted draft, the
15drawer.
SB358,77,23
16(2) If an item is dishonored, a customer or collecting bank transferring the item
17and receiving settlement or other consideration is obliged to pay the amount due on
18the item according to the terms of the item at the time it was transferred or, if the
19transfer was of an incomplete item, according to its terms when completed as stated
20in ss. 403.115 and 403.407. The obligation of a transferor is owed to the transferee
21and to any subsequent collecting bank that takes the item in good faith. A transferor
22cannot disclaim its obligation under this subsection by an endorsement stating that
23it is made "without recourse" or otherwise disclaiming liability.
SB358,78,3
24(3) A person to whom the warranties under sub. (1) are made and who took the
25item in good faith may recover from the warrantor as damages for breach of warranty
1an amount equal to the loss suffered as a result of the breach, but not more than the
2amount of the item plus expenses and loss of interest incurred as a result of the
3breach.
SB358,78,8
4(4) The warranties stated in sub. (1) cannot be disclaimed with respect to
5checks. Unless notice of a claim for breach of warranty is given to the warrantor
6within 30 days after the claimant has reason to know of the breach and the identity
7of the warrantor, the warrantor is discharged to the extent of any loss caused by the
8delay in giving notice of the claim.
SB358,78,10
9(5) A cause of action for breach of warranty under this section accrues when
10the claimant has reason to know of the breach.
SB358, s. 47
11Section
47. 404.208 of the statutes is renumbered 404.210, and 404.210 (1)
12(intro.), (a) and (b), (2) and (3) (intro.), (a) and (b), as renumbered, are amended to
13read:
SB358,78,1514
404.210
(1) (intro.) A
collecting bank has a security interest in an item and any
15accompanying documents or the proceeds of either
in any of the following situations:
SB358,78,1716
(a) In case of an item deposited in an account
, to the extent to which credit given
17for the item has been withdrawn or applied
;.
SB358,78,2018
(b) In case of an item for which it has given credit available for withdrawal as
19of right, to the extent of the credit given
, whether or not the credit is drawn upon
and
20whether or
not there is a right of charge-back
; or.
SB358,78,24
21(2) When If credit
which has been given for several items received at one time
22or pursuant to a single agreement is withdrawn or applied in part
, the security
23interest remains upon all the items, any accompanying documents or the proceeds
24of either. For the purpose of this section, credits first given are first withdrawn.
SB358,79,6
1(3) (intro.) Receipt by a collecting bank of a final settlement for an item is a
2realization on its security interest in the item, accompanying documents and
3proceeds.
To the extent and so So long as the bank does not receive final settlement
4for the item or give up possession of the item or accompanying documents for
5purposes other than collection, the security interest continues
to that extent and is
6subject to
the provisions of ch. 409
except that, but all of the following apply:
SB358,79,87
(a) No security agreement is necessary to make the security interest
8enforceable
(s. 409.203 (1) (a)); and.
SB358,79,99
(b) No filing is required to perfect the security interest
; and.
SB358, s. 48
10Section
48. 404.208 of the statutes is created to read:
SB358,79,15
11404.208 Presentment warranties. (1) If an unaccepted draft is presented
12to the drawee for payment or acceptance and the drawee pays or accepts the draft,
13the person obtaining payment or acceptance, at the time of presentment, and a
14previous transferor of the draft, at the time of transfer, warrant to the drawee that
15pays or accepts the draft in good faith that all of the following conditions exist:
SB358,79,1816
(a) The warrantor is, or was at the time the warrantor transferred the draft,
17a person entitled to enforce the draft or authorized to obtain payment or acceptance
18of the draft on behalf of a person entitled to enforce the draft.
SB358,79,1919
(b) The draft has not been altered.
SB358,79,2120
(c) The warrantor has no knowledge that the signature of the purported drawer
21of the draft is unauthorized.
SB358,80,6
22(2) A drawee making payment may recover from a warrantor damages for
23breach of warranty equal to the amount paid by the drawee less the amount the
24drawee received or is entitled to receive from the drawer because of the payment.
25In addition, the drawee is entitled to compensation for expenses and loss of interest
1resulting from the breach. The right of the drawee to recover damages under this
2subsection is not affected by any failure of the drawee to exercise ordinary care in
3making payment. If the drawee accepts the draft, breach of warranty is a defense
4to the obligation of the acceptor, and if the acceptor makes payment with respect to
5the draft, the acceptor is entitled to recover from a warrantor for breach of warranty
6the amounts stated in this subsection.
SB358,80,11
7(3) If a drawee asserts a claim for breach of warranty under sub. (1) based on
8an unauthorized endorsement of the draft or an alteration of the draft, the warrantor
9may defend by proving that the endorsement is effective under s. 403.404 or 403.405
10or the drawer is precluded under s. 403.406 or 404.406 from asserting against the
11drawee the unauthorized endorsement or alteration.
SB358,80,20
12(4) If a dishonored draft is presented for payment to the drawer or an endorser
13or any other item is presented for payment to a party obliged to pay the item, and the
14item is paid, the person obtaining payment and a prior transferor of the item warrant
15to the person making payment in good faith that the warrantor is, or was at the time
16the warrantor transferred the item, a person entitled to enforce the item or
17authorized to obtain payment on behalf of a person entitled to enforce the item. The
18person making payment may recover from any warrantor for breach of warranty an
19amount equal to the amount paid plus expenses and loss of interest resulting from
20the breach.
SB358,80,25
21(5) The warranties stated in subs. (1) and (4) cannot be disclaimed with respect
22to checks. Unless notice of a claim for breach of warranty is given to the warrantor
23within 30 days after the claimant has reason to know of the breach and the identity
24of the warrantor, the warrantor is discharged to the extent of any loss caused by the
25delay in giving notice of the claim.
SB358,81,2
1(6) A cause of action for breach of warranty under this section accrues when
2the claimant has reason to know of the breach.
SB358, s. 49
3Section
49. 404.209 of the statutes is renumbered 404.211 and amended to
4read:
SB358,81,8
5404.211 When bank gives value for purposes of holder in due course. 6For purposes of determining its status as a holder in due course,
the a bank has given
7value to the extent that it has a security interest in an item
provided that, if the bank
8otherwise complies with s. 403.302 on what constitutes a holder in due course.
SB358, s. 50
9Section
50. 404.209 of the statutes is created to read:
SB358,81,14
10404.209 Encoding and retention warranties. (1) A person who encodes
11information on or with respect to an item after issue warrants to any subsequent
12collecting bank and to the payer bank or other payer that the information is correctly
13encoded. If the customer of a depositary bank encodes, that bank also makes the
14warranty.
SB358,81,19
15(2) A person who undertakes to retain an item pursuant to an agreement for
16electronic presentment warrants to any subsequent collecting bank and to the payer
17bank or other payer that retention and presentment of the item comply with the
18agreement. If a customer of a depositary bank undertakes to retain an item, that
19bank also makes this warranty.
SB358,81,23
20(3) A person to whom warranties are made under this section and who took the
21item in good faith may recover from the warrantor as damages for breach of warranty
22an amount equal to the loss suffered as a result of the breach, plus expenses and loss
23of interest incurred as a result of the breach.
SB358, s. 51
24Section
51. 404.210 of the statutes is renumbered 404.212 and amended to
25read:
SB358,82,8
1404.212 (title)
Presentment by notice of item not payable by, through
2or at a bank; liability of secondary parties
drawer or endorser. (1) Unless
3otherwise instructed, a collecting bank may present an item not payable by, through
4or at a bank by sending to the party to accept or pay a written notice that the bank
5holds the item for acceptance or payment. The notice must be sent in time to be
6received on or before the day when presentment is due and the bank must meet any
7requirement of the party to accept or pay under s.
403.505 403.501 by the close of the
8bank's next banking day after it knows of the requirement.
SB358,82,15
9(2) Where If presentment is made by notice and
neither honor nor payment,
10acceptance or request for compliance with a requirement under s.
403.505 403.501 11is
not received by the close of business on the day after maturity or
, in the case of
12demand items
, by the close of business on the
third 3rd banking day after notice was
13sent, the presenting bank may treat the item as dishonored and charge any
14secondary party drawer or endorser by sending
the secondary party it notice of the
15facts.
SB358, s. 52
16Section
52. 404.211 of the statutes is repealed.
SB358, s. 53
17Section
53. 404.212 (title), (1) and (2) to (5) of the statutes are renumbered
18404.214 (title), (1) and (3) to (6), and 404.214 (title), (1), (3), (4) and (6), as
19renumbered, are amended to read:
SB358,83,8
20404.214 (title)
Right of charge-back or refund; liability of collecting
21bank; return of item. (1) If a collecting bank has made provisional settlement with
22its customer for an item and
itself fails by reason of dishonor, suspension of payments
23by a bank or otherwise to receive
a settlement for the item which is or becomes final,
24the bank may revoke the settlement given by it,
charge-back charge back the amount
25of any credit given for the item to its customer's account
, or obtain refund from its
1customer
, whether or not it is able to return the
items item, if by its midnight
2deadline or within a longer reasonable time after it learns the facts it returns the
3item or sends notification of the facts.
If the return or notice is delayed beyond the
4bank's midnight deadline or a longer reasonable time after it learns the facts, the
5bank may revoke the settlement, charge back the credit or obtain a refund from its
6customer, but it is liable for any loss resulting from the delay. These rights to revoke,
7charge-back and obtain refund terminate if and when a settlement for the item
8received by the bank is or becomes final
(ss. 404.211 (3) and 404.213 (2) and (3)).
SB358,83,12
9(3) A depositary bank
which that is also the
payor payer may
charge-back 10charge back the amount of an item to its customer's account or obtain refund in
11accordance with s. 404.301 governing return of an item received by a
payor payer 12bank for credit on its books.
SB358,83,13
13(4) The right to charge-back is not affected by
any of the following:
SB358,83,1414
(a)
Prior Previous use of
the a credit given for the item
; or
.
SB358,83,1615
(b) Failure by any bank to exercise ordinary care with respect to the item
, but
16any a bank so failing remains liable.
SB358,83,21
17(6) If credit is given in dollars as the equivalent of the value of an item payable
18in a foreign
currency money, the dollar amount of any charge-back or refund
shall 19must be calculated on the basis of the
buying sight bank-offered spot rate for the
20foreign
currency money prevailing on the day when the person entitled to the
21charge-back or refund learns that it will not receive payment in ordinary course.
SB358, s. 54
22Section
54. 404.212 (1m) of the statutes is repealed.
SB358, s. 55
23Section
55. 404.213 (title) and (1) (intro.), (a), (b) and (d) of the statutes are
24renumbered 404.215 (title) and (1) (intro.), (a), (b) and (c), and 404.215 (title) and (1)
25(intro.) and (a) and (b), as renumbered, are amended to read:
SB358,84,4
1404.215 (title)
Final payment of item by payor payer bank; when
2provisional debits and credits become final; when certain credits become
3available for withdrawal. (1) (intro.) An item is finally paid by a
payor payer 4bank when the bank has
first done any of the following
, whichever happens first:
SB358,84,55
(a) Paid the item in cash
; or.
SB358,84,86
(b) Settled for the item without
reserving having a right to revoke the
7settlement
and without having such right under statute, clearinghouse rule or
8agreement
; or.
SB358, s. 56
9Section
56. 404.213 (1) (c) of the statutes is repealed.