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403.416(1)(b) (b) All signatures on the instrument are authentic and authorized.
403.416(1)(c) (c) The instrument has not been altered.
403.416(1)(d) (d) The instrument is not subject to a defense or claim in recoupment of any party which can be asserted against the warrantor.
403.416(1)(e) (e) The warrantor has no knowledge of any insolvency proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.
403.416(1)(f) (f) If the instrument is a demand draft, the creation of the instrument according to the terms on its face was authorized by the person identified as the drawer.
403.416(2) (2) A person to whom the warranties under sub. (1) are made and who took the instrument in good faith may recover from the warrantor as damages for breach of warranty an amount equal to the loss suffered as a result of the breach, but not more than the amount of the instrument plus expenses and loss of interest incurred as a result of the breach.
403.416(3) (3) The warranties stated in sub. (1) may not be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under sub. (2) is discharged to the extent of any loss caused by the delay in giving notice of the claim.
403.416(4) (4) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.
403.416 History History: 1995 a. 449; 2003 a. 86.
403.417 403.417 Presentment warranties.
403.417(1) (1) If an unaccepted draft is presented to the drawee for payment or acceptance and the drawee pays or accepts the draft, the person obtaining payment or acceptance, at the time of presentment, and a previous transferor of the draft, at the time of transfer, warrant to the drawee making payment or accepting the draft in good faith that all of the following apply:
403.417(1)(a) (a) The warrantor is, or was at the time that the warrantor transferred the draft, a person entitled to enforce the draft or authorized to obtain payment or acceptance of the draft on behalf of a person entitled to enforce the draft.
403.417(1)(b) (b) The draft has not been altered.
403.417(1)(c) (c) The warrantor has no knowledge that the signature of the drawer of the draft is unauthorized.
403.417(1)(d) (d) If the instrument is a demand draft, the creation of the instrument according to the terms on its face was authorized by the person identified as the drawer.
403.417(2) (2) A drawee making payment may recover from any warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount that the drawee received or is entitled to receive from the drawer because of the payment. In addition, the drawee is entitled to compensation for expenses and loss of interest resulting from the breach. The right of the drawee to recover damages under this subsection is not affected by any failure of the drawee to exercise ordinary care in making payment. If the drawee accepts the draft, breach of warranty is a defense to the obligation of the acceptor. If the acceptor makes payment with respect to the draft, the acceptor is entitled to recover from any warrantor for breach of warranty the amounts stated in this subsection.
403.417(3) (3) If a drawee asserts a claim for breach of warranty under sub. (1) based on an unauthorized endorsement of the draft or an alteration of the draft, the warrantor may defend by proving that the endorsement is effective under s. 403.404 or 403.405 or the drawer is precluded under s. 403.406 or 404.406 from asserting against the drawee the unauthorized endorsement or alteration.
403.417(4) (4) If a dishonored draft is presented for payment to the drawer or an endorser or any other instrument is presented for payment to a party obliged to pay the instrument and payment is received, the following rules apply:
403.417(4)(a) (a) The person obtaining payment and a prior transferor of the instrument warrant to the person making payment in good faith that the warrantor is, or was at the time that the warrantor transferred the instrument, a person entitled to enforce the instrument or authorized to obtain payment on behalf of a person entitled to enforce the instrument.
403.417(4)(b) (b) The person making payment may recover from any warrantor for breach of warranty an amount equal to the amount paid plus expenses and loss of interest resulting from the breach.
403.417(5) (5) The warranties stated in subs. (1) and (4) may not be disclaimed with respect to checks. Unless notice of a claim for breach of warranty is given to the warrantor within 30 days after the claimant has reason to know of the breach and the identity of the warrantor, the liability of the warrantor under sub. (2) or (4) is discharged to the extent of any loss caused by the delay in giving notice of the claim.
403.417(6) (6) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.
403.417 History History: 1995 a. 449; 2003 a. 86.
403.418 403.418 Payment or acceptance by mistake.
403.418(1) (1) Except as provided in sub. (3), if the drawee of a draft pays or accepts the draft and the drawee acted on the mistaken belief that payment of the draft had not been stopped pursuant to s. 404.403 or that the signature of the drawer of the draft was authorized, the drawee may recover the amount of the draft from the person to whom or for whose benefit payment was made or, in the case of acceptance, may revoke the acceptance. Rights of the drawee under this subsection are not affected by failure of the drawee to exercise ordinary care in paying or accepting the draft.
403.418(2) (2) Except as provided in sub. (3), if an instrument has been paid or accepted by mistake and the case is not covered by sub. (1), the person paying or accepting may, to the extent permitted by the law governing mistake and restitution, recover the payment from the person to whom or for whose benefit payment was made or, in the case of acceptance, may revoke the acceptance.
403.418(3) (3) The remedies provided by sub. (1) or (2) may not be asserted against a person who took the instrument in good faith and for value or who in good faith changed position in reliance on the payment or acceptance. This subsection does not limit remedies provided by s. 403.417 or 404.407.
403.418(4) (4) Notwithstanding s. 404.215, if an instrument is paid or accepted by mistake and the payer or acceptor recovers payment or revokes acceptance under sub. (1) or (2), the instrument is considered not to have been paid or accepted and is treated as dishonored, and the person from whom payment is recovered has rights as a person entitled to enforce the dishonored instrument.
403.418 History History: 1995 a. 449.
403.419 403.419 Instruments signed for accommodation.
403.419(1)(1) If an instrument is issued for value given for the benefit of a party to the instrument ("accommodated party") and another party to the instrument ("accommodation party") signs the instrument for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument, the instrument is signed by the accommodation party "for accommodation".
403.419(2) (2) An accommodation party may sign the instrument as maker, drawer, acceptor or endorser and, subject to sub. (4), is obliged to pay the instrument in the capacity in which the accommodation party signs. The obligation of an accommodation party may be enforced notwithstanding any statute of frauds and whether or not the accommodation party receives consideration for the accommodation.
403.419(3) (3) A person signing an instrument is presumed to be an accommodation party and there is notice that the instrument is signed for accommodation if the signature is an anomalous endorsement or is accompanied by words indicating that the signer is acting as surety or guarantor with respect to the obligation of another party to the instrument. Except as provided in s. 403.605, the obligation of an accommodation party to pay the instrument is not affected by the fact that the person enforcing the obligation had notice when the instrument was taken by that person that the accommodation party signed the instrument for accommodation.
403.419(4) (4) If the signature of a party to an instrument is accompanied by words indicating unambiguously that the party is guaranteeing collection rather than payment of the obligation of another party to the instrument, the signer is obliged to pay the amount due on the instrument to a person entitled to enforce the instrument only if any of the following occurs:
403.419(4)(a) (a) Execution of judgment against the other party has been returned unsatisfied.
403.419(4)(b) (b) The other party is insolvent or in an insolvency proceeding.
403.419(4)(c) (c) The other party cannot be served with process.
403.419(4)(d) (d) It is otherwise apparent that payment cannot be obtained from the other party.
403.419(5) (5) An accommodation party who pays the instrument is entitled to reimbursement from the accommodated party and is entitled to enforce the instrument against the accommodated party. An accommodated party who pays the instrument has no right of recourse against, and is not entitled to contribution from, an accommodation party.
403.419 History History: 1995 a. 449.
403.420 403.420 Conversion of instrument.
403.420(1) (1) The law applicable to conversion of personal property applies to instruments. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by the issuer or acceptor of the instrument or by a payee or endorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a copayee.
403.420(2) (2) In an action under sub. (1), the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiff's interest in the instrument.
403.420(3) (3) A representative, other than a depositary bank, who has in good faith dealt with an instrument or its proceeds on behalf of one who was not the person entitled to enforce the instrument is not liable in conversion to that person beyond the amount of any proceeds that it has not paid out.
403.420 History History: 1995 a. 449.
subch. V of ch. 403 SUBCHAPTER V
DISHONOR
403.501 403.501 Presentment.
403.501(1)(1) "Presentment" means a demand made by or on behalf of a person entitled to enforce an instrument to do any of the following:
403.501(1)(a) (a) Pay the instrument made to the drawee or a party obliged to pay the instrument or, in the case of a note or accepted draft payable at a bank, to the bank.
403.501(1)(b) (b) Accept a draft made to the drawee.
403.501(2) (2) The following rules are subject to ch. 404, agreement of the parties, and clearinghouse rules and the like:
403.501(2)(a) (a) Presentment may be made at the place of payment of the instrument and shall be made at the place of payment if the instrument is payable at a bank in the United States; may be made by any commercially reasonable means, including an oral, written or electronic communication; is effective when the demand for payment or acceptance is received by the person to whom presentment is made; and is effective if made to any one of 2 or more makers, acceptors, drawees or other payers.
403.501(2)(b) (b) Upon demand of the person to whom presentment is made, the person making presentment shall do all of the following:
403.501(2)(b)1. 1. Exhibit the instrument.
403.501(2)(b)2. 2. Give reasonable identification and, if presentment is made on behalf of another person, reasonable evidence of authority to do so.
403.501(2)(b)3. 3. Sign a receipt on the instrument for any payment made or surrender the instrument if full payment is made.
403.501(2)(c) (c) Without dishonoring the instrument, the party to whom presentment is made may return the instrument for lack of a necessary endorsement or refuse payment or acceptance for failure of the presentment to comply with the terms of the instrument, an agreement of the parties or other applicable law or rule.
403.501(2)(d) (d) The party to whom presentment is made may treat presentment as occurring on the next business day after the day of presentment if the party to whom presentment is made has established a cutoff hour not earlier than 2 p.m. for the receipt and processing of instruments presented for payment or acceptance and presentment is made after the cutoff hour.
403.501 History History: 1995 a. 449.
403.502 403.502 Dishonor.
403.502(1)(1) Dishonor of a note is governed by the following rules:
403.502(1)(a) (a) If the note is payable on demand, the note is dishonored if presentment is duly made to the maker and the note is not paid on the day of presentment.
403.502(1)(b) (b) If the note is not payable on demand and is payable at or through a bank or the terms of the note require presentment, the note is dishonored if presentment is duly made and the note is not paid on the day on which it becomes payable or the day of presentment, whichever is later.
403.502(1)(c) (c) If the note is not payable on demand and par. (b) does not apply, the note is dishonored if it is not paid on the day on which it becomes payable.
403.502(2) (2) Dishonor of an unaccepted draft other than a documentary draft is governed by the following rules:
403.502(2)(a) (a) If a check is duly presented for payment to the payer bank otherwise than for immediate payment over the counter, the check is dishonored if the payer bank makes timely return of the check or sends timely notice of dishonor or nonpayment under s. 404.301 or 404.302, or becomes accountable for the amount of the check under s. 404.302.
403.502(2)(b) (b) If a draft is payable on demand and par. (a) does not apply, the draft is dishonored if presentment for payment is duly made to the drawee and the draft is not paid on the day of presentment.
403.502(2)(c) (c) If a draft is payable on a date stated in the draft, the draft is dishonored if presentment for payment is duly made to the drawee and payment is not made on the day on which the draft becomes payable or the day of presentment, whichever is later, or if presentment for acceptance is duly made before the day on which the draft becomes payable and the draft is not accepted on the day of presentment.
403.502(2)(d) (d) If a draft is payable on elapse of a period of time after sight or acceptance, the draft is dishonored if presentment for acceptance is duly made and the draft is not accepted on the day of presentment.
403.502(3) (3) Dishonor of an unaccepted documentary draft occurs according to the rules stated in sub. (2) (b) to (d), except that payment or acceptance may be delayed without dishonor until no later than the close of the 3rd business day of the drawee following the day on which payment or acceptance is required by those paragraphs.
403.502(4) (4) Dishonor of an accepted draft is governed by the following rules:
403.502(4)(a) (a) If the draft is payable on demand, the draft is dishonored if presentment for payment is duly made to the acceptor and the draft is not paid on the day of presentment.
403.502(4)(b) (b) If the draft is not payable on demand, the draft is dishonored if presentment for payment is duly made to the acceptor and payment is not made on the day on which it becomes payable or the day of presentment, whichever is later.
403.502(5) (5) In any case in which presentment is otherwise required for dishonor under this section and presentment is excused under s. 403.504, dishonor occurs without presentment if the instrument is not duly accepted or paid.
403.502(6) (6) If a draft is dishonored because timely acceptance of the draft was not made and the person entitled to demand acceptance consents to a late acceptance, from the time of acceptance the draft is treated as never having been dishonored.
403.502 History History: 1995 a. 449.
403.503 403.503 Notice of dishonor.
403.503(1)(1) The obligation of an endorser stated in s. 403.415 (1) and the obligation of a drawer stated in s. 403.414 (4) may not be enforced unless the endorser or drawer is given notice of dishonor of the instrument complying with this section or notice of dishonor is excused under s. 403.504 (2).
403.503(2) (2) Notice of dishonor may be given by any person; may be given by any commercially reasonable means, including an oral, written or electronic communication; and is sufficient if it reasonably identifies the instrument and indicates that the instrument has been dishonored or has not been paid or accepted. Return of an instrument given to a bank for collection is sufficient notice of dishonor.
403.503(3) (3) Subject to s. 403.504 (3), with respect to an instrument taken for collection by a collecting bank, notice of dishonor shall be given by the bank before midnight of the next banking day following the banking day on which the bank receives notice of dishonor of the instrument or by any other person within 30 days following the day on which the person receives notice of dishonor. With respect to any other instrument, notice of dishonor shall be given within 30 days following the day on which dishonor occurs.
403.503 History History: 1995 a. 449.
403.504 403.504 Excused presentment and notice of dishonor.
403.504(1)(1) Presentment for payment or acceptance of an instrument is excused if any of the following conditions exists:
403.504(1)(a) (a) The person entitled to present the instrument cannot with reasonable diligence make presentment.
403.504(1)(b) (b) The maker or acceptor has repudiated an obligation to pay the instrument or is dead or in insolvency proceedings.
403.504(1)(c) (c) By the terms of the instrument, presentment is not necessary to enforce the obligation of endorsers or the drawer.
403.504(1)(d) (d) The drawer or endorser whose obligation is being enforced has waived presentment or otherwise has no reason to expect or right to require that the instrument be paid or accepted.
403.504(1)(e) (e) The drawer instructed the drawee not to pay or accept the draft or the drawee was not obligated to the drawer to pay the draft.
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