Credit Cards
  

Home
Public Forum
Credit Reports
Apply For Cards
Credit Directory
Credit Articles
Credit Problems
Credit News
International
Credit Glossary
Credit Laws
Business Credit
Merchants

 

 
   

Regulation CC
Availability of Funds And Collection Of Checks

Subpart C--Collection of Checks

Section 229.30 - Paying bank's responsibility for return of checks.
Section 229.31 - Returning bank's responsibility for return of checks.
Section 229.32 - Depositary bank's responsibility for returned checks.
Section 229.33 - Notice of nonpayment.
Section 229.34 - Warranties by paying bank and returning bank.
Section 229.35 - Indorsements.
Section 229.36 - Presentment and issuance of checks.
Section 229.37 - Variation by agreement.
Section 229.38 - Liability.
Section 229.39 - Insolvency of bank.
Section 229.40 - Effect of merger transaction.
Section 229.41 - Relation to state law.
Section 229.42 - Exclusions.

Subpart C--Collection of Checks
 

Sec. 229.30 Paying bank's responsibility for return of checks.

     (a) Return of checks. If a paying bank determines not to pay a check, it shall return the check in an expeditious manner as provided in either paragraph (a)(1) or (a)(2) of this section.
     (1) Two-day/four-day test. A paying bank returns a check in an expeditious manner if it sends the returned check in a manner such that the check would normally be received by the depositary bank not later than 4:00 p.m. (local time of the depositary bank) of--
     (i) The second business day following the banking day on which the check was presented to the paying bank, if the paying bank is located in the same check processing region as the depositary bank; or
     (ii) The fourth business day following the banking day on which the check was presented to the paying bank, if the paying bank is not located in the same check processing region as the depositary bank.

If the last business day on which the paying bank may deliver a returned check to the depositary bank is not a banking day for the depositary bank, the paying bank meets the two-day/four-day test if the returned check is received by the depositary bank on or before the depositary bank's next banking day.
     (2) Forward collection test. A paying bank also returns a check in an expeditious manner if it sends the returned check in a manner that a similarly situated bank would normally handle a check--
     (i) Of similar amount as the returned check;
     (ii) Drawn on the depositary bank; and
     (iii) Deposited for forward collection in the similarly situated bank by noon on the banking day following the banking day on which the check was presented to the paying bank. Subject to the requirement for expeditious return, a paying bank may send a returned check to the depositary bank, or to any other bank agreeing to handle the returned check expeditiously under Sec. 229.31(a). A paying bank may convert a check to a qualified returned check. A qualified returned check must be encoded in magnetic ink with the routing number of the depositary bank, the amount of the returned check, and a ``2'' in position 44 of the MICR line as a return identifier, in accordance with the American National Standard Specifications for Placement and Location of MICR Printing, X9.13 (Sept. 1983). This paragraph does not affect a paying bank's responsibility to return a check within the deadlines required by the U.C.C., Regulation J (12 CFR part 210), or Sec. 229.30(c).
     (b) Unidentifiable depositary bank. A paying bank that is unable to identify the depositary bank with respect to a check may send the returned check to any bank that handled the check for forward collection even if that bank does not agree to handle the check expeditiously under Sec. 229.31(a). A paying bank sending a returned check under this paragraph to a bank that handled the check for forward collection must advise the bank to which the check is sent that the paying bank is unable to identify the depositary bank. The expeditious return requirements in Sec. 229.30(a) do not apply to the paying bank's return of a check under this paragraph.
     (c) Extension of deadline. The deadline for return or notice of nonpayment under the U.C.C. or Regulation J (12 CFR part 210), or Sec. 229.36(f)(2) is extended to the time of dispatch of such return or notice of nonpayment where a paying bank uses a means of delivery that would ordinarily result in receipt by the bank to which it is sent--
     (1) On or before the receiving bank's next banking day following the otherwise applicable deadline, for all deadlines other than those described in paragraph (c)(2) of this section; this deadline is extended further if a paying bank uses a highly expeditious means of transportation, even if this means of transportation would ordinarily result in delivery after the receiving bank's next banking day; or
     (2) Prior to the cut-off hour for the next processing cycle (if sent to a returning bank), or on the next banking day (if sent to the depositary bank), for a deadline falling on a Saturday that is a banking day (as defined in the applicable U.C.C.) for the paying bank.
     (d) Identification of returned check. A paying bank returning a check shall clearly indicate on the face of the check that it is a returned check and the reason for return.
     (e) Depositary bank without accounts. The expeditious return requirements of paragraph (a) of this section do not apply to checks deposited in a depositary bank that does not maintain accounts.
     (f) Notice in lieu of return. If a check is unavailable for return, the paying bank may send in its place a copy of the front and back of the returned check, or, if no such copy is available, a written notice of nonpayment containing the information specified in Sec. 229.33(b). The copy or notice shall clearly state that it constitutes a notice in lieu of return. A notice in lieu of return is considered a returned check subject to the expeditious return requirements of this section and to the other requirements of this subpart.
     (g) Reliance on routing number. A paying bank may return a returned check based on any routing number designating the depositary bank appearing on the returned check in the depositary bank's indorsement.
 

Sec. 229.31 Returning bank's responsibility for return of checks.

     (a) Return of checks. A returning bank shall return a returned check in an expeditious manner as provided in either paragraph (a)(1) or (a)(2) of this section.
     (1) Two-day/four-day test. A returning bank returns a check in an expeditious manner if it sends the returned check in a manner such that the check would normally be received by the depositary bank not later than 4:00 p.m. (local time) of--
     (i) The second business day following the banking day on which the check was presented to the paying bank if the paying bank is located in the same check processing region as the depositary bank; or
     (ii) The fourth business day following the banking day on which the check was presented to the paying bank if the paying bank is not located in the same check processing region as the depositary bank.

If the last business day on which the returning bank may deliver a returned check to the depositary bank is not a banking day for the depositary bank, the returning bank meets this requirement if the returned check is received by the depositary bank on or before the depositary bank's next banking day.
     (2) Forward collection test. A returning bank also returns a check in an expeditious manner if it sends the returned check in a manner that a similarly situated bank would normally handle a check--
     (i) Of similar amount as the returned check;
     (ii) Drawn on the depositary bank; and
     (iii) Received for forward collection by the similarly situated bank at the time the returning bank received the returned check, except that a returning bank may set a cut-off hour for the receipt of returned checks that is earlier than the similarly situated bank's cut-off hour for checks received for forward collection, if the cut-off hour is not earlier than 2:00 p.m.
Subject to the requirement for expeditious return, the returning bank may send the returned check to the depositary bank, or to any bank agreeing to handle the returned check expeditiously under Sec. 229.31(a). The returning bank may convert the returned check to a qualified returned check. A qualified returned check must be encoded in magnetic ink with the routing number of the depositary bank, the amount of the returned check, and a ``2'' in position 44 of the MICR line as a return identifier, in accordance with the American National Standard Specification for Placement and Location of MICR Printing, X9.13 (Sept. 1983). The time for expeditious return under the forward collection test, and the deadline for return under the U.C.C. and Regulation J (12 CFR part 210), are extended by one business day if the returning bank converts a returned check to a qualified returned check. This extension does not apply to the two-day/four-day test specified in paragraph (a)(1) of this section or when a returning bank is returning a check directly to the depositary bank.
     (b) Unidentifiable depositary bank. A returning bank that is unable to identify the depositary bank with respect to a returned check may send the returned check to--
     (1) Any collecting bank that handled the check for forward collection if the returning bank was not a collecting bank with respect to the returned check; or
     (2) A prior collecting bank, if the returning bank was a collecting bank with respect to the returned check;

even if that collecting bank does not agree to handle the returned check expeditiously under Sec. 229.31(a). A returning bank sending a returned check under this paragraph must advise the bank to which the check is sent that the returning bank is unable to identify the depositary bank. The expeditious return requirements in paragraph (a) of this section do not apply to return of a check under this paragraph. A returning bank that receives a returned check from a paying bank under Sec. 229.30(b), or from a returning bank under this paragraph, but that is able to identify the depositary bank, must thereafter return the check expeditiously to the depositary bank.
     (c) Settlement. A returning bank shall settle with a bank sending a returned check to it for return by the same means that it settles or would settle with the sending bank for a check received for forward collection drawn on the depositary bank. This settlement is final when made.
     (d) Charges. A returning bank may impose a charge on a bank sending a returned check for handling the returned check.
     (e) Depositary bank without accounts. The expeditious return requirements of paragraph (a) of this section do not apply to checks deposited with a depositary bank that does not maintain accounts.
     (f) Notice in lieu of return. If a check is unavailable for return, the returning bank may send in its place a copy of the front and back of the returned check, or, if no copy is available, a written notice of nonpayment containing the information specified in Sec. 229.33(b). The copy or notice shall clearly state that it constitutes a notice in lieu of return. A notice in lieu of return is considered a returned check subject to the expeditious return requirements of this section and to the other requirements of this subpart.
     (g) Reliance on routing number. A returning bank may return a returned check based on any routing number designating the depositary bank appearing on the returned check in the depositary bank's indorsement or in magnetic ink on a qualified returned check.
 

Sec. 229.32 Depositary bank's responsibility for returned checks.

     (a) Acceptance of returned checks. A depositary bank shall accept returned checks and written notices of nonpayment
     (1) At a location at which presentment of checks for forward collection is requested by the depositary bank; and
     (2) (i) At a branch, head office, or other location consistent with the name and address of the bank in its indorsement on the check;
     (ii) If no address appears in the indorsement, at a branch or head office associated with the routing number of the bank in its indorsement on the check;
     (iii) If the address in the indorsement is not in the same check processing region as the address associated with the routing number of the bank in its indorsement on the check, at a location consistent with the address in the indorsement and at a branch or head office associated with the routing number in the bank's indorsement; or
     (iv) If no routing number or address appears in its indorsement on the check, at any branch or head office of the bank. A depositary bank may require that returned checks be separated from forward collection checks.
     (b) Payment. A depositary bank shall pay the returning or paying bank returning the check to it for the amount of the check prior to the close of business on the banking day on which it received the check (``payment date'') by--
     (1) Debit to an account of the depositary bank on the books of the returning or paying bank;
     (2) Cash;
     (3) Wire transfer; or
     (4) Any other form of payment acceptable to the returning or paying bank;

provided that the proceeds of the payment are available to the returning or paying bank in cash or by credit to an account of the returning or paying bank on or as of the payment date. If the payment date is not a banking day for the returning or paying bank or the depositary bank is unable to make the payment on the payment date, payment shall be made by the next day that is a banking day for the returning or paying bank. These payments are final when made.
     (c) Misrouted returned checks and written notices of nonpayment. If a bank receives a returned check or written notice of nonpayment on the basis that it is the depositary bank, and the bank determines that it is not the depositary bank with respect to the check or notice, it shall either promptly send the returned check or notice to the depositary bank directly or by means of a returning bank agreeing to handle the returned check expeditiously under Sec. 229.31(a), or send the check or notice back to the bank from which it was received.
     (d) Charges. A depositary bank may not impose a charge for accepting and paying checks being returned to it.
 

Sec. 229.33 Notice of nonpayment.

     (a) Requirement. If a paying bank determines not to pay a check in the amount of $2,500 or more, it shall provide notice of nonpayment such that the notice is received by the depositary bank by 4:00 p.m. (local time) on the second business day following the banking day on which the check was presented to the paying bank. If the day the paying bank is required to provide notice is not a banking day for the depositary bank, receipt of notice on the depositary bank's next banking day constitutes timely notice. Notice may be provided by any reasonable means, including the returned check, a writing (including a copy of the check), telephone, Fedwire, telex, or other form of telegraph.
     (b) Content of notice. Notice must include the--
     (1) Name and routing number of the paying bank;
     (2) Name of the payee(s);
     (3) Amount;
     (4) Date of the indorsement of the depositary bank;
     (5) Account number of the customer(s) of the depositary bank;
     (6) Branch name or number of the depositary bank from its indorsement;
     (7) Trace number associated with the indorsement of the depositary bank; and
     (8) Reason for nonpayment. The notice may include other information from the check that may be useful in identifying the check being returned and the customer, and, in the case of a written notice, must include the name and routing number of the depositary bank from its indorsement. If the paying bank is not sure of an item of information, it shall include the information required by this paragraph to the extent possible, and identify any item of information for which the bank is not sure of the accuracy with question marks.
     (c) Acceptance of notice. The depositary bank shall accept notices during its banking day--
     (1) Either at the telephone or telegraph number of its return check unit indicated in the indorsement, or, if no such number appears in the indorsement or if the number is illegible, at the general purpose telephone or telegraph number of its head office or the branch indicated in the indorsement; and
     (2) At any other number held out by the bank for receipt of notice of nonpayment, and, in the case of written notice, as specified in Sec. 229.32(a).
     (d) Notification to customer. If the depositary bank receives a returned check or notice of nonpayment, it shall send notice to its customer of the facts by midnight of the banking day following the banking day on which it received the returned check or notice, or within a longer reasonable time.
     (e) Depositary bank without accounts. The requirements of this section do not apply to checks deposited in a depositary bank that does not maintain accounts.
 

Sec. 229.34 Warranties by paying bank and returning bank.
     (a) Warranties. Each paying bank or returning bank that transfers a returned check and receives a settlement or other consideration for it warrants to the transferee returning bank, to any subsequent returning bank, to the depositary bank, and to the owner of the check, that--
     (1) The paying bank, or in the case of a check payable by a bank and payable through another bank, the bank by which the check is payable, returned the check within its deadline under the U.C.C., Regulation J (12 CFR part 210), or Sec. 229.30(c) of this part;
     (2) It is authorized to return the check;
     (3) The check has not been materially altered; and
     (4) In the case of a notice in lieu of return, the original check has not and will not be returned.

These warranties are not made with respect to checks drawn on the Treasury of the United States, U.S. Postal Service money orders, or checks drawn on a state or a unit of general local government that are not payable through or at a bank.
     (b) Warranty of notice of nonpayment. Each paying bank that gives a notice of nonpayment warrants to the transferee bank, to any subsequent transferee bank, to the depositary bank, and to the owner of the check that--
     (1) The paying bank, or in the case of a check payable by a bank and payable through another bank, the bank by which the check is payable, returned or will return the check within its deadline under the U.C.C., Regulation J (12 CFR part 210), or Sec. 229.30(c) of this part;
     (2) It is authorized to send the notice; and
     (3) The check has not been materially altered.

These warranties are not made with respect to checks drawn on a state or a unit of general local government that are not payable through or at a bank.
     (c) Warranty of settlement amount, encoding, and offset. (1) Each bank that presents one or more checks to a paying bank and in return receives a settlement or other consideration warrants to the paying bank that the total amount of the checks presented is equal to the total amount of the settlement demanded by the presenting bank from the paying bank.
     (2) Each bank that transfers one or more checks or returned checks to a collecting, returning, or depositary bank and in return receives a settlement or other consideration warrants to the transferee bank that the accompanying information, if any, accurately indicates the total amount of the checks or returned checks transferred.
     (3) Each bank that presents or transfers a check or returned check warrants to any bank that subsequently handles it that, at the time of presentment or transfer, the information encoded after issue in magnetic ink on the check or returned check is correct.
     (4) If a bank settles with another bank for checks presented, or for returned checks for which it is the depositary bank, in amount exceeding the total amount of the checks, the settling bank may set off the excess settlement amount against subsequent settlements for checks presented, or for returned checks for which it is the depositary bank, that it receives from the other bank.
     (d) Damages. Damages for breach of these warranties shall not exceed the consideration received by the bank that presents or transfers a check or returned check, plus interest compensation and expenses related to the check or returned check, if any.
     (e) Tender of defense. If a bank is sued for breach of a warranty under this section, it may give a prior bank in the collection or return chain written notice of the litigation, and the bank notified may then give similar notice to any other prior bank. If the notice states that the bank notified may come in and defend and that failure to do so will bind the bank notified in an action later brought by the bank giving the notice as to any determination of fact common to the two litigations, the bank notified is so bound unless after seasonable receipt of the notice the bank notified does come in and defend.
     (f) Notice of claim. Unless a claimant gives notice of a claim for breach of warranty under this section to the bank that made the warranty within 30 days after the claimant has reason to know of the breach and the identity of the warranting bank, the warranting bank is discharged to the extent of any loss caused by the delay in giving notice of the claim.
 

Sec. 229.35 Indorsements.

     (a) Indorsement standards. A bank (other than a paying bank) that handles a check during forward collection or a returned check shall legibly indorse the check in accordance with the indorsement standard set forth in appendix D to this part.
     (b) Liability of bank handling check. A bank that handles a check for forward collection or return is liable to any bank that subsequently handles the check to the extent that the subsequent bank does not receive payment for the check because of suspension of payments by another bank or otherwise. This paragraph applies whether or not a bank has placed its indorsement on the check. This liability is not affected by the failure of any bank to exercise ordinary care, but any bank failing to do so remains liable. A bank seeking recovery against a prior bank shall send notice to that prior bank reasonably promptly after it learns the facts entitling it to recover. A bank may recover from the bank with which it settled for the check by revoking the settlement, charging back any credit given to an account, or obtaining a refund. A bank may have the rights of a holder with respect to each check it handles.
     (c) Indorsement by a bank. After a check has been indorsed by a bank, only a bank may acquire the rights of a holder--
     (1) Until the check has been returned to the person initiating collection; or
     (2) Until the check has been specially indorsed by a bank to a person who is not a bank.
     (d) Indorsement for depositary bank. A depositary bank may arrange with another bank to apply the other bank's indorsement as the depositary bank indorsement, provided that any indorsement of the depositary bank on the check avoids the area reserved for the depositary bank indorsement as specified in appendix D. The other bank indorsing as depositary bank is considered the depositary bank for purposes of subpart C of this part.
 

Sec. 229.36 Presentment and issuance of checks.

     (a) Payable through and payable at checks. A check payable at or through a paying bank is considered to be drawn on that bank for purposes of the expeditious return and notice of nonpayment requirements of this subpart.
     (b) Receipt at bank office or processing center. A check is considered received by the paying bank when it is received:
     (1) At a location to which delivery is requested by the paying bank;
     (2) At an address of the bank associated with the routing number on the check, whether in magnetic ink or in fractional form;
     (3) At any branch or head office, if the bank is identified on the check by name without address; or
     (4) At a branch, head office, or other location consistent with the name and address of the bank on the check if the bank is identified on the check by name and address.

     (d) Liability of bank during forward collection. Settlements between banks for the forward collection of a check are final when made; however, a collecting bank handling a check for forward collection may be liable to a prior collecting bank, including the depositary bank, and the depositary bank's customer.
     (e) Issuance of payable-through checks. (1) A bank that arranges for checks payable by it to be payable through another bank shall require that the following information be printed conspicuously on the face of each check:
     (i) The name, location, and first four digits of the nine-digit routing number of the bank by which the check is payable; and
     (ii) The words ``payable through'' followed by the name of the payable-through bank.
     (2) A bank is responsible for damages under Sec. 229.38 to the extent that a check payable by it and not payable through another bank is labelled as provided in this section.
     (f) Same-day settlement. (1) A check is considered presented, and a paying bank must settle for or return the check pursuant to paragraph (f)(2) of this section, if a presenting bank delivers the check in accordance with reasonable delivery requirements established by the paying bank and demands payment under this paragraph (f)--
     (i) At a location designated by the paying bank for receipt of checks under this paragraph (f) that is in the check processing region consistent with the routing number encoded in magnetic ink on the check and at which the paying bank would be considered to have received the check under paragraph (b) of this section or, if no location is designated, at any location described in paragraph (b) of this section; and
     (ii) By 8 a.m. on a business day (local time of the location described in paragraph (f)(1)(i) of this section). A paying bank may require that checks presented for settlement pursuant to this paragraph (f)(1) be separated from other forward- collection checks or returned checks.
     (2) If presentment of a check meets the requirements of paragraph (f)(1) of this section, the paying bank is accountable to the presenting bank for the amount of the check unless, by the close of Fedwire on the business day it receives the check, it either:
     (i) Settles with the presenting bank for the amount of the check by credit to an account at a Federal Reserve Bank designated by the presenting bank; or
     (ii) Returns the check.
     (3) Notwithstanding paragraph (f)(2) of this section, if a paying bank closes on a business day and receives presentment of a check on that day in accordance with paragraph (f)(1) of this section, the paying bank is accountable to the presenting bank for the amount of the check unless, by the close of Fedwire on its next banking day, it either:
     (i) Settles with the presenting bank for the amount of the check by credit to an account at a Federal Reserve Bank designated by the presenting bank; or
     (ii) Returns the check.

     If the closing is voluntary, unless the paying bank settles for or returns the check in accordance with paragraph (f)(2) of this section, it shall pay interest compensation to the presenting bank for each day after the business day on which the check was presented until the paying bank settles for the check, including the day of settlement.
 

Sec. 229.37 Variation by agreement.

     The effect of the provisions of subpart C may be varied by agreement, except that no agreement can disclaim the responsibility of a bank for its own lack of good faith or failure to exercise ordinary care, or can limit the measure of damages for such lack or failure; but the parties may determine by agreement the standards by which such responsibility is to be measured if such standards are not manifestly unreasonable.
 

Sec. 229.38 Liability.

     (a) Standard of care; liability; measure of damages. A bank shall exercise ordinary care and act in good faith in complying with the requirements of this subpart. A bank that fails to exercise ordinary care or act in good faith under this subpart may be liable to the depositary bank, the depositary bank's customer, the owner of a check, or another party to the check. The measure of damages for failure to exercise ordinary care is the amount of the loss incurred, up to the amount of the check, reduced by the amount of the loss that party would have incurred even if the bank had exercised ordinary care. A bank that fails to act in good faith under this subpart may be liable for other damages, if any, suffered by the party as a proximate consequence. Subject to a bank's duty to exercise ordinary care or act in good faith in choosing the means of return or notice of nonpayment, the bank is not liable for the insolvency, neglect, misconduct, mistake, or default of another bank or person, or for loss or destruction of a check or notice of nonpayment in transit or in the possession of others. This section does not affect a paying bank's liability to its customer under the U.C.C. or other law.
     (b) Paying bank's failure to make timely return. If a paying bank fails both to comply with Sec. 229.30(a) and to comply with the deadline for return under the U.C.C., Regulation J (12 CFR part 210), or Sec. 229.30(c) in connection with a single nonpayment of a check, the paying bank shall be liable under either Sec. 229.30(a) or such other provision, but not both.
     (c) Comparative negligence. If a person, including a bank, fails to exercise ordinary care or act in good faith under this subpart in indorsing a check (Sec. 229.35), accepting a returned check or notice of nonpayment (Secs. 229.32(a) and 229.33(c)), or otherwise, the damages incurred by that person under Sec. 229.38(a) shall be diminished in proportion to the amount of negligence or bad faith attributable to that person.
     (d) Responsibility for certain aspects of checks--(1) A paying bank, or in the case of a check payable through the paying bank and payable by another bank, the bank by which the check is payable, is responsible for damages under paragraph (a) of this section to the extent that the condition of the check when issued by it or its customer adversely affects the ability of a bank to indorse the check legibly in accordance with Sec. 229.35. A depositary bank is responsible for damages under paragraph (a) of this section to the extent that the condition of the back of a check arising after the issuance of the check and prior to acceptance of the check by it adversely affects the ability of a bank to indorse the check legibly in accordance with Sec. 229.35. Responsibility under this paragraph shall be treated as negligence of the paying or depositary bank for purposes of paragraph (c) of this section.
     (2) Responsibility for payable through checks. In the case of a check that is payable by a bank and payable through a paying bank located in a different check processing region than the bank by which the check is payable, the bank by which the check is payable is responsible for damages under paragraph (a) of this section, to the extent that the check is not returned to the depositary bank through the payable through bank as quickly as the check would have been required to be returned under Sec. 229.30(a) had the bank by which the check is payable--
     (i) Received the check as paying bank on the day the payable through bank received the check; and
     (ii) Returned the check as paying bank in accordance with Sec. 229.30(a)(1).

Responsibility under this paragraph shall be treated as negligence of the bank by which the check is payable for purposes of paragraph (c) of this section.
     (e) Timeliness of action. If a bank is delayed in acting beyond the time limits set forth in this subpart because of interruption of communication or computer facilities, suspension of payments by a bank, war, emergency conditions, failure of equipment, or other circumstances beyond its control, its time for acting is extended for the time necessary to complete the action, if it exercises such diligence as the circumstances require.
     (f) Exclusion. Section 229.21 of this part and section 611 (a), (b), and (c) of the Act (12 U.S.C. 4010 (a), (b), and (c)) do not apply to this subpart.
     (g) Jurisdiction. Any action under this subpart may be brought in any United States district court, or in any other court of competent jurisdiction, and shall be brought within one year after the date of the occurrence of the violation involved.
     (h) Reliance on Board rulings. No provision of this subpart imposing any liability shall apply to any act done or omitted in good faith in conformity with any rule, regulation, or interpretation thereof by the Board, regardless of whether the rule, regulation, or interpretation is amended, rescinded, or determined by judicial or other authority to be invalid for any reason after the act or omission has occurred.
 

Sec. 229.39 lnsolvency of bank.

     (a) Duty of receiver. A check or returned check in, or coming into, the possession of a paying, collecting, depositary, or returning bank that suspends payment, and which is not paid, shall be returned by the receiver, trustee, or agent in charge of the closed bank to the bank or customer that transferred the check to the closed bank.
     (b) Preference against paying or depositary bank. If a paying bank finally pays a check, or if a depositary bank becomes obligated to pay a returned check, and suspends payment without making a settlement for the check or returned check with the prior bank that is or becomes final, the prior bank has a preferred claim against the paying bank or the depositary bank.
     (c) Preference against collecting, paying, or returning bank. If a collecting, paying, or returning bank receives settlement from a subsequent bank for a check or returned check, which settlement is or becomes final, and suspends payments without making a settlement for the check with the prior bank, which is or becomes final, the prior bank has a preferred claim against the collecting or returning bank.
     (d) Preference against presenting bank. If a paying bank settles with a presenting bank for one or more checks, and if the presenting bank breaches a warranty specified in Sec. 229.34(c) (1) or (3) with respect to those checks and suspends payments before satisfying the paying bank's warranty claim, the paying bank has a preferred claim against the presenting bank for the amount of the warranty claim.
     (e) Finality of settlement. If a paying or depositary bank gives, or a collecting, paying, or returning bank gives or receives, a settlement for a check or returned check and thereafter suspends payment, the suspension does not prevent or interfere with the settlement becoming final if such finality occurs automatically upon the lapse of a certain time or the happening of certain events.
 

Sec. 229.40 Effect of merger transaction.

     For purposes of this subpart, two or more banks that have engaged in a merger transaction may be considered to be separate banks for a period of one year following the consummation of the merger transaction.
 

Sec. 229.41 Relation to state law.

     The provisions of this subpart supersede any inconsistent provisions of the U.C.C. as adopted in any state, or of any other state law, but only to the extent of the inconsistency.

Sec. 229.42 Exclusions.
 

     The expeditious-return (Secs. 229.30(a) and 229.31(a)), notice-of- nonpayment (Sec. 229.33), and same-day settlement (Sec. 229.36(f)) requirements of this subpart do not apply to a check drawn upon the United States Treasury, to a U.S. Postal Service money order, or to a check drawn on a state or a unit of general local government that is not payable through or at a bank.
 

Sec. 229.43 Checks payable in Guam, American Samoa, and the Northern Mariana Islands.

     (a) Definitions. The definitions in Sec. 229.2 apply to this section, unless otherwise noted. In addition, for the purposes of this section--
     (1) Pacific island bank means an office of an institution that would be a bank as defined in Sec. 229.2(e) but for the fact that the office is located in Guam, American Samoa, or the Northern Mariana Islands;
     (2) Pacific island check means a demand draft drawn on or payable through or at a Pacific island bank, which is not a check as defined in Sec. 229.2(k).
     (b) Rules applicable to Pacific island checks. To the extent a bank handles a Pacific island check as if it were a check defined in Sec. 229.2(k), the bank is subject to the following sections of this part (and the word ``check'' in each such section is construed to include a Pacific island check)--
     (1) Sec. 229.31, except that the returning bank is not subject to the requirement to return a Pacific island check in an expeditious manner;
     (2) Sec. 229.32;
     (3) Sec. 229.34(c)(2), (c)(3), (d), and (e);
     (4) Sec. 229.35; for purposes of Sec. 229.35(c), the Pacific island bank is deemed to be a bank;
     (5) Sec. 229.36(d);
     (6) Sec. 229.37;
     (7) Sec. 229.38(a) and (c) through (h);
     (8) Sec. 229.39(a), (b), (c) and (e); and
     (9) Secs. 229.40 through 229.42.

Subpart A - General

Subpart B - Availability of Funds and Disclosure of Funds Availability Policies

Appendices A & B

Appendices C & D

Appendix E - (Large File - May Load Slowly)

Appendix F

 

Credit And Banking Laws Menu

 

    Top Of Page






  

 

Privacy, Security, And Legal Notices

Copyright 1999 - 2019 Enkephalos Web Design