404.204(2) (2) A collecting bank may send any of the following:

404.204(2)(a) (a) An item directly to the payer bank.

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)(c) (c) The item has not been altered.

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.