404.105
404.105 “
Bank"; “collecting bank"; “depository bank"; “intermediary bank"; “payer bank"; “presenting bank". In this chapter:
404.105(1)
(1) “Bank" means a person engaged in the business of banking, including a savings bank, savings and loan association, credit union or trust company.
404.105(2)
(2) “Collecting bank" means a bank handling an item for collection except the payer bank.
404.105(3)
(3) “Depositary bank" means the first bank to take an item even though it is also the payer bank, unless the item is presented for immediate payment over the counter.
404.105(4)
(4) “Intermediary bank" means a bank to which an item is transferred in course of collection except the depositary or payer bank.
404.105(5)
(5) “Payer bank" means a bank that is the drawee of a draft.
404.105(6)
(6) “Presenting bank" means a bank presenting an item except a payer bank.
404.105 History
History: 1983 a. 189;
1995 a. 449.
404.106
404.106
Payable through or payable at bank; collecting bank. 404.106(1)(1)
If an item states that it is “payable through" a bank identified in the item, the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item and the item may be presented for payment only by or through the bank.
404.106(2)
(2) If an item states that it is “payable at" a bank identified in the item, the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item and the item may be presented for payment only by or through the bank.
404.106(3)
(3) If a draft names a nonbank drawee and it is unclear whether a bank named in the draft is a codrawee or a collecting bank, the bank is a collecting bank.
404.106 History
History: 1995 a. 449.
404.107
404.107
Separate office of a bank. A branch or separate office of a bank is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notices or orders must be given under this chapter and under ch.
403.
404.107 History
History: 1995 a. 449 s.
31; Stats. 1995 s. 404.107.
404.108
404.108
Time of receipt of items. 404.108(1)(1)
For the purpose of allowing time to process items, prove balances and make the necessary entries on its books to determine its position for the day, a bank may fix an afternoon hour of 2 p.m. or later as a cutoff hour for the handling of money and items and the making of entries on its books.
404.108(2)
(2) An item or deposit of money received on any day after a cutoff hour so fixed or after the close of the banking day may be treated as being received at the opening of the next banking day.
404.108 History
History: 1995 a. 449 s.
31; Stats. 1995 s. 404.108.
404.109(1)(1)
Unless otherwise instructed, a collecting bank in a good faith effort to secure payment of a specific item drawn on a payer other than a bank, and with or without the approval of any person involved, may waive, modify or extend time limits imposed or permitted by chs.
401 to
411 for a period not exceeding 2 additional banking days without discharge of drawers or endorsers or liability to its transferor or a prior party.
404.109(2)
(2) Delay by a collecting bank or payer bank beyond time limits prescribed or permitted by chs.
401 to
411 or by instructions is excused if the delay is caused by interruption of communication or computer facilities, suspension of payments by another bank, war, emergency conditions, failure of equipment or other circumstances beyond the control of the bank and the bank exercises such diligence as the circumstances require.
404.109 History
History: 1979 c. 89;
1991 a. 148,
304,
315;
1995 a. 449 s.
31; Stats. 1995 s. 404.109.
404.110
404.110
Electronic presentment. 404.110(1)(1)
“Agreement for electronic presentment" means an agreement, clearinghouse rule or federal reserve regulation or operating circular, providing that presentment of an item may be made by transmission of an image of an item or information describing the item (“presentment notice") rather than delivery of the item itself. The agreement may provide for procedures governing retention, presentment, payment, dishonor and other matters concerning items subject to the agreement.
404.110(2)
(2) Presentment of an item pursuant to an agreement for electronic presentment is made when the presentment notice is received.
404.110(3)
(3) If presentment is made by presentment notice, a reference to “item" or “check" in this chapter means the presentment notice unless the context otherwise indicates.
404.110 History
History: 1995 a. 449.
404.111
404.111
Statute of limitations. An action to enforce an obligation, duty, or right arising under this chapter must be commenced within 3 years after the cause of action accrues.
404.111 History
History: 1995 a. 449.
COLLECTION OF ITEMS:
DEPOSITARY AND COLLECTING BANKS
404.201
404.201
Status of collecting bank as agent and provisional status of credits; applicability of chapter; item endorsed “pay any bank". 404.201(1)(1)
Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes final, the bank, with respect to the item, is an agent or subagent of the owner of the item and any settlement given for the item is provisional. This provision applies regardless of the form of endorsement or lack of endorsement and even though credit given for the item is subject to immediate withdrawal as of right or is in fact withdrawn; but the continuance of ownership of an item by its owner and any rights of the owner to proceeds of the item are subject to rights of a collecting bank, such as those resulting from outstanding advances on the item and rights of recoupment or setoff. If an item is handled by banks for purposes of presentment, payment, collection or return, the relevant provisions of this chapter apply even though action of the parties clearly establishes that a particular bank has purchased the item and is the owner of it.
404.201(2)
(2) After an item has been endorsed with the words “pay any bank" or the like, only a bank may acquire the rights of a holder until any of the following occur:
404.201(2)(a)
(a) The item has been returned to the customer initiating collection.
404.201(2)(b)
(b) The item has been specially endorsed by a bank to a person who is not a bank.
404.201 History
History: 1995 a. 449.
404.202
404.202
Responsibility for collection or return; when action timely. 404.202(1)(1)
A collecting bank must exercise ordinary care in all of the following:
404.202(1)(a)
(a) Presenting an item or sending it for presentment.
404.202(1)(b)
(b) Sending notice of dishonor or nonpayment or returning an item other than a documentary draft to the bank's transferor after learning that the item has not been paid or accepted, as the case may be.
404.202(1)(c)
(c) Settling for an item when the bank receives final settlement.
404.202(1)(d)
(d) Notifying its transferor of any loss or delay in transit within a reasonable time after discovery thereof.
404.202(2)
(2) A collecting bank exercises ordinary care under sub.
(1) by taking proper action before its midnight deadline following receipt of an item, notice or settlement. Taking proper action within a reasonably longer time may constitute the exercise of ordinary care, but the bank has the burden of establishing timeliness.
404.202(3)
(3) Subject to sub.
(1) (a), a bank is not liable for the insolvency, neglect, misconduct, mistake or default of another bank or person or for loss or destruction of an item in the possession of others or in transit.
404.202 History
History: 1995 a. 449.
404.203
404.203
Effect of instructions. Subject to s.
403.420 concerning conversion of instruments and to s.
403.206 concerning restrictive endorsements, only a collecting bank's transferor can give instructions that affect the bank or constitute notice to it and a collecting bank is not liable to prior parties for any action taken pursuant to the instructions or in accordance with any agreement with its transferor.
404.203 History
History: 1995 a. 449;
2005 a. 253.
404.204
404.204
Methods of sending and presenting; sending directly to payer bank. 404.204(1)(1)
A collecting bank shall send items by a reasonably prompt method, taking into consideration relevant instructions, the nature of the item, the number of those items on hand, the cost of collection involved and the method generally used by it or others to present those items.
404.204(2)
(2) A collecting bank may send any of the following:
404.204(2)(b)
(b) An item to a nonbank payer if authorized by its transferor.
404.204(2)(c)
(c) An item other than documentary drafts to a nonbank payer, if authorized by federal reserve regulation or operating circular, clearinghouse rule or the like.
404.204(3)
(3) Presentment may be made by a presenting bank at a place where the payer bank or other payer has requested that presentment be made.
404.204 History
History: 1991 a. 304 s.
51;
1995 a. 449.
404.205
404.205
Depositary bank holder of unendorsed item. If a customer delivers an item to a depositary bank for collection, all of the following apply:
404.205(1)
(1) The depositary bank becomes a holder of the item at the time that it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer endorses the item, and, if the bank satisfies the other requirements of s.
403.302, it is a holder in due course.
404.205(2)
(2) The depositary bank warrants to collecting banks, the payer bank or other payer and the drawer that the amount of the item was paid to the customer or deposited to the customer's account.
404.205 History
History: 1995 a. 449.
404.205 Annotation
The general rule is that accepting a check when the payee's endorsement is missing is not in accordance with the reasonable commercial standards of banking and the acceptance by a depositary bank of such a check for deposit is commercially unreasonable as a matter of law. This section excepts from the general rule depositary banks that receive unendorsed checks from customers when the missing endorsement is that of the customer. Schmitz v. Firstar Bank Milwaukee,
2003 WI 83,
262 Wis. 2d 672,
664 N.W.2d 594,
01-2139.
404.206
404.206
Transfer between banks. Any agreed method that identifies the transferor bank is sufficient for the item's further transfer to another bank.
404.206 History
History: 1995 a. 449.
404.207
404.207
Transfer warranties. 404.207(1)(1)
A customer or collecting bank that transfers an item and receives a settlement or other consideration warrants all of the following to the transferee and to any subsequent collecting bank:
404.207(1)(a)
(a) The warrantor is a person entitled to enforce the item.
404.207(1)(b)
(b) All signatures on the item are authentic and authorized.
404.207(1)(d)
(d) The item is not subject to a defense or claim in recoupment of any party that can be asserted against the warrantor.
404.207(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.
404.207(1)(f)
(f) If the item is a demand draft, the creation of the item according to the terms on its face was authorized by the person identified as the drawer.
404.207(2)
(2) If an item is dishonored, a customer or collecting bank transferring the item and receiving settlement or other consideration is obliged to pay the amount due on the item according to the terms of the item at the time it was transferred or, if the transfer was of an incomplete item, according to its terms when completed as stated in ss.
403.115 and
403.407. The obligation of a transferor is owed to the transferee and to any subsequent collecting bank that takes the item in good faith. A transferor cannot disclaim its obligation under this subsection by an endorsement stating that it is made “without recourse" or otherwise disclaiming liability.
404.207(3)
(3) A person to whom the warranties under sub.
(1) are made and who took the item 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 item plus expenses and loss of interest incurred as a result of the breach.
404.207(4)
(4) The warranties stated in sub.
(1) cannot 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 warrantor is discharged to the extent of any loss caused by the delay in giving notice of the claim.
404.207(5)
(5) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.
404.207 History
History: 1995 a. 449;
2003 a. 86.
404.208
404.208
Presentment warranties. 404.208(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 that pays or accepts the draft in good faith that all of the following conditions exist:
404.208(1)(a)
(a) The warrantor is, or was at the time 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.
404.208(1)(c)
(c) The warrantor has no knowledge that the signature of the purported drawer of the draft is unauthorized.
404.208(1)(d)
(d) If the draft is a demand draft, the creation of the draft according to the terms on its face was authorized by the person identified as the drawer.
404.208(2)
(2) A drawee making payment may recover from a warrantor damages for breach of warranty equal to the amount paid by the drawee less the amount 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, and if the acceptor makes payment with respect to the draft, the acceptor is entitled to recover from a warrantor for breach of warranty the amounts stated in this subsection.
404.208(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.
404.208(4)
(4) If a dishonored draft is presented for payment to the drawer or an endorser or any other item is presented for payment to a party obliged to pay the item, and the item is paid, the person obtaining payment and a prior transferor of the item warrant to the person making payment in good faith that the warrantor is, or was at the time the warrantor transferred the item, a person entitled to enforce the item or authorized to obtain payment on behalf of a person entitled to enforce the item. 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.
404.208(5)
(5) The warranties stated in subs.
(1) and
(4) cannot 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 warrantor is discharged to the extent of any loss caused by the delay in giving notice of the claim.
404.208(6)
(6) A cause of action for breach of warranty under this section accrues when the claimant has reason to know of the breach.
