SB358,98,5 24404.407 (title) Payor Payer bank's right to subrogation on improper
25payment.
If a payor payer bank has paid an item over the stop payment order of

1the drawer or maker to stop payment, or after an account has been closed, or
2otherwise under circumstances giving a basis for objection by the drawer or maker,
3to prevent unjust enrichment and only to the extent necessary to prevent loss to the
4bank by reason of its payment of the item, the payor payer bank shall be is subrogated
5to the rights of all of the following:
SB358,98,7 6(1) Of any Any holder in due course on the item against the drawer or maker;
7and
.
SB358,98,9 8(2) Of the The payee or any other holder of the item against the drawer or
9maker either on the item or under the transaction out of which the item arose; and.
SB358,98,11 10(3) Of the The drawer or maker against the payee or any other holder of the
11item with respect to the transaction out of which the item arose.
SB358, s. 88 12Section 88. The unnumbered subchapter title preceding 404.501 of the
13statutes is numbered subchapter V (title) of chapter 404 and amended to read:
SB358,98,1414 Chapter 404
SB358,98,1615 Subchapter V
16 Collection of documentary drafts.
SB358, s. 89 17Section 89. 404.501 of the statutes is amended to read:
SB358,98,24 18404.501 Handling of documentary drafts; duty to send for presentment
19and to notify customer of dishonor.
A bank which that takes a documentary
20draft for collection must shall prepare or send the draft and accompanying
21documents for presentment and, upon learning that the draft has not been paid or
22accepted in due course must, shall seasonably notify its customer of such the fact
23even though it may have discounted or bought the draft or extended credit available
24for withdrawal as of right.
SB358, s. 90 25Section 90. 404.502 of the statutes is amended to read:
SB358,99,7
1404.502 Presentment of "on arrival" drafts. When If a draft or the relevant
2instructions require presentment "on arrival", "when goods arrive" or the like, the
3collecting bank need not present until in its judgment a reasonable time for arrival
4of the goods has expired. Refusal to pay or accept because the goods have not arrived
5is not dishonor; the bank must notify its transferor of such the refusal but need not
6present the draft again until it is instructed to do so or learns of the arrival of the
7goods.
SB358, s. 91 8Section 91. 404.503 of the statutes is amended to read:
SB358,99,11 9404.503 Responsibility of presenting bank for documents and goods;
10report of reasons for dishonor; referee in case of need.
(1) Unless otherwise
11instructed and except as provided in ch. 405, a bank presenting a documentary draft:
SB358,99,1312 (a) Must deliver the documents to the drawee on acceptance of the draft if it is
13payable more than 3 days after presentment; otherwise, only on payment ; and.
SB358,99,1914 (b) Upon dishonor, either in the case of presentment for acceptance or
15presentment for payment, may seek and follow instructions from any referee in case
16of need designated in the draft or, if the presenting bank does not choose to utilize
17the referee's services, it must use diligence and good faith to ascertain the reason for
18dishonor, must notify its transferor of the dishonor and of the results of its effort to
19ascertain the reasons therefor and must request instructions.
SB358,99,23 20(2) The presenting bank is under no obligation with respect to goods
21represented by the documents except to follow any reasonable instructions
22seasonably received; it has a right to reimbursement for any expense incurred in
23following instructions and to prepayment of or indemnity for such those expenses.
SB358, s. 92 24Section 92. 404.504 of the statutes is amended to read:
SB358,100,5
1404.504 Privilege of presenting bank to deal with goods; security
2interest for expenses.
(1) A presenting bank which that, following the dishonor
3of a documentary draft, has seasonably requested instructions but does not receive
4them within a reasonable time may store, sell, or otherwise deal with the goods in
5any reasonable manner.
SB358,100,8 6(2) For its reasonable expenses incurred by action under sub. (1), the
7presenting bank has a lien upon the goods or their proceeds, which may be foreclosed
8in the same manner as an unpaid seller's lien.
SB358, s. 93 9Section 93. 405.103 (3) (a) of the statutes is repealed and recreated to read:
SB358,100,1010 405.103 (3) (a) "Acceptance" — s. 403.409 (1).
SB358, s. 94 11Section 94. 409.203 (1) (intro.) of the statutes is amended to read:
SB358,100,1612 409.203 (1) (intro.) Subject to s. 404.208 404.210 on the security interest of a
13collecting bank, s. 408.321 on security interests in securities and s. 409.113 on a
14security interest arising under ch. 402 or 411, a security interest is not enforceable
15against the debtor or 3rd parties with respect to the collateral and does not attach
16unless:
SB358, s. 95 17Section 95. 409.302 (1) (f) of the statutes is amended to read:
SB358,100,2018 409.302 (1) (f) A security interest of a collecting bank (s. 404.208 404.210) or
19in securities (s. 408.321) or arising under ch. 402 or 411 (see s. 409.113) or covered
20in sub. (3);
SB358, s. 96 21Section 96. 409.312 (1) of the statutes is amended to read:
SB358,101,222 409.312 (1) The rules of priority stated in ss. 409.301 to 409.311 and 409.313
23to 409.318 and in the following sections shall govern when applicable: s. 404.208
24404.210 with respect to the security interests of collecting banks in items being

1collected, accompanying documents and proceeds; s. 409.103 on security interests
2related to other jurisdictions; s. 409.114 on consignments.
SB358, s. 97 3Section 97. 410.105 (3) (b) of the statutes is amended to read:
SB358,101,44 410.105 (3) (b) "Item" — s. 404.104 (1) (g) (i).
SB358, s. 98 5Section 98. 410.105 (3) (c) of the statutes is amended to read:
SB358,101,66 410.105 (3) (c) "Suspends payments" — s. 404.104 (1) (k) (L).
SB358, s. 99 7Section 99. 706.07 (2) (e) of the statutes is amended to read:
SB358,101,98 706.07 (2) (e) In making or noting a protest of a negotiable instrument, the
9notarial officer must determine the matters set forth in s. 403.509 403.505 (2).
SB358, s. 100 10Section 100. Initial applicability.
SB358,101,15 11(1)  This act first applies to transactions and events concerning a promise or
12order that is a negotiable instrument, as defined under section 403.104 (1) of the
13statutes, as affected by this act, or an item, as defined under section 404.104 (1) (i)
14of the statutes, as affected by this act, that is created on the effective date of this
15subsection
SB358, s. 101 16Section 101. Effective date.
SB358,101,18 17(1) This act takes effect on the first day of the first month beginning after
18publication.
SB358,101,1919 (End)
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