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SB358, s. 39 5Section 39. 404.202 (1) (d) of the statutes is repealed.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.
SB358, s. 57 10Section 57. 404.213 (1a) of the statutes is repealed.
SB358, s. 58 11Section 58. 404.213 (2) to (4), (4m) and (5) of the statutes are renumbered
12404.215 (3) to (5), (5m) and (6), and 404.215 (3), (4), (5), (5m) (a) and (b) 1., 2. and 3.
13and (6), as renumbered, are amended to read:
SB358,84,1914 404.215 (3) If provisional settlement for an item between the presenting and
15payor payer banks is made through a clearinghouse or by debits or credits in an
16account between them, then to the extent that provisional debits or credits for the
17item are entered in accounts between the presenting and payor payer banks or
18between the presenting and successive prior collecting banks in a series, they become
19final upon final payment of the item by the payor payer bank.
SB358,84,2320 404.215 (4) If a collecting bank receives a settlement for an item which is or
21becomes final (ss. 404.211 (3) and 404.213 (2)), the bank is accountable to its
22customer for the amount of the item and any provisional credit given for the item in
23an account with its customer becomes final.
SB358,85,2 24(5) Subject to applicable law stating a time for availability of funds and to any
25right of the bank to apply the credit to an obligation of the customer, credit given by

1a bank for an item in an a customer's account with its customer becomes available
2for withdrawal as of right:
SB358,85,63 (a) In any case where If the bank has received a provisional settlement for the
4item,—when such when the settlement becomes final and the bank has had a
5reasonable time to learn that the settlement is final; receive return of the item and
6the item has not been received within that time.
SB358,85,97 (b) In any case where If the bank is both a the depositary bank and a payor the
8payer
bank and the item is finally paid,—at at the opening of the bank's second 2nd
9banking day following receipt of the item.
SB358,85,11 10(5m) (a) As used in In this subsection, "banking day" means a business day as
11defined in s. 421.301 (6) that is not a federal legal holiday.
SB358,85,1712 (b) 1. If the item is a check or draft endorsed only by the person to whom it was
13issued and is drawn on the treasury of the United States, the this state of Wisconsin
14or any unit of local government located in this state, after not more than one banking
15day has intervened between the banking day on which the check or draft is received
16at the proof and transit facility of the depository and the banking day on which the
17funds are available for withdrawal.
SB358,85,2118 2. If the payor payer bank or other financial institution is located in this state,
19after not more than 4 banking days have intervened between the banking day on
20which the item is received at the proof and transit facility of the depository and the
21banking day on which the funds are available for withdrawal.
SB358,85,2522 3. If the payor payer bank or other financial institution is located in any other
23state, after not more than 7 banking days have intervened between the banking day
24on which the item is received at the proof and transit facility of the depository and
25the banking day on which the funds are available for withdrawal.
SB358,86,5
1(6) A deposit of money in a bank is final when made but, subject to Subject to
2applicable law stating a time for availability of funds and
any right of the a bank to
3apply the a deposit to an obligation of the customer, the depositor, a deposit of money
4becomes available for withdrawal as of right at the opening of the bank's next
5banking day following after receipt of the deposit.
SB358, s. 59 6Section 59. 404.213 of the statutes is created to read:
SB358,86,10 7404.213 Medium and time of settlement by bank. (1) With respect to
8settlement by a bank, the medium and time of settlement may be prescribed by
9federal reserve regulations or circulars, clearinghouse rules and the like, or
10agreement. In the absence of such prescription, all of the following apply:
SB358,86,1211 (a) The medium of settlement is cash or credit to an account in a federal reserve
12bank of or specified by the person to receive settlement.
SB358,86,1313 (b) The time of settlement is:
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