7-4-407
Section 7-4-407 Payor bank's right to subrogation on improper payment. If a payor bank has
paid an item over the order of the drawer or maker to stop payment, or after an account has
been closed, or otherwise under circumstances giving a basis for objection by the drawer or
maker, to prevent unjust enrichment and only to the extent necessary to prevent loss to the
bank by reason of its payment of the item, the payor bank is subrogated to the rights (1)
of any holder in due course on the item against the drawer or maker; (2) of the payee or any
other holder of the item against the drawer or maker either on the item or under the transaction
out of which the item arose; and (3) of the drawer or maker against the payee or any other
holder of the item with respect to the transaction out of which the item arose. (Acts 1965,
No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §2; added by Acts 1995, No.
95-668, p. 1381, §2.)...
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7-3-103
Section 7-3-103 Definitions. (a) In this article: (1) "Acceptor" means a drawee who
has accepted a draft. (2) "Drawee" means a person ordered in a draft to make payment.
(3) "Drawer" means a person who signs or is identified in a draft as a person ordering
payment. (4) "Good faith" means honesty in fact in the conduct or transaction concerned.
(5) "Maker" means a person who signs or is identified in a note as a person undertaking
to pay. (6) "Order" means a written instruction to pay money signed by the person
giving the instruction. The instruction may be addressed to any person, including the person
giving the instruction, or to one or more persons jointly or in the alternative but not in
succession. An authorization to pay is not an order unless the person authorized to pay is
also instructed to pay. (7) "Ordinary care" in the case of a person engaged in business
means observance of reasonable commercial standards, prevailing in the area in which the person
is located, with respect...
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7-4-205
Section 7-4-205 Depositary bank holder of unindorsed item. If a customer delivers an item to
a depositary bank for collection: (1) The depositary bank becomes a holder of the item at
the time 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 indorses the item, and, if the bank satisfies
the other requirements of Section 7-3-302, it is a holder in due course; and (2) The depositary
bank warrants to collecting banks, the payor bank or other payor, and the drawer that the
amount of the item was paid to the customer or deposited to the customer's account. (Acts
1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §2; added by Acts 1995,
No. 95-668, p. 1381, §2.)...
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7-4-216
Section 7-4-216 Insolvency and preference. (a) If an item is in or comes into the possession
of a payor or collecting bank that suspends payment and the item has not been finally paid,
the item must be returned by the receiver, trustee, or agent in charge of the closed bank
to the presenting bank or the closed bank's customer. (b) If a payor bank finally pays an
item and suspends payments without making a settlement for the item with its customer or the
presenting bank which settlement is or becomes final, the owner of the item has a preferred
claim against the payor bank. (c) If a payor bank gives or a collecting bank gives or receives
a provisional settlement for an item and thereafter suspends payments, the suspension does
not prevent or interfere with the settlement's becoming final if the finality occurs automatically
upon the lapse of certain time or the happening of certain events. (d) If a collecting bank
receives from subsequent parties settlement for an item, which settlement...
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7-4-207
Section 7-4-207 Transfer warranties. (a) A customer or collecting bank that transfers an item
and receives a settlement or other consideration warrants to the transferee and to any subsequent
collecting bank that: (1) The warrantor is a person entitled to enforce the item; (2) All
signatures on the item are authentic and authorized; (3) The item has not been altered; (4)
The item is not subject to a defense or claim in recoupment (Section 7-3-305(a)) of any party
that can be asserted against the warrantor; and (5) 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. (b) 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 (i) according to the terms of the item at the time it was transferred,
or (ii) if the transfer was of an incomplete item, according to its terms...
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7-4-104
Section 7-4-104 Definitions and index of definitions. (a) In this article, unless the context
otherwise requires: (1) "Account" means any deposit or credit account with a bank,
including a demand, time, savings, passbook, share draft, or like account, other than an account
evidenced by a certificate of deposit; (2) "Afternoon" means the period of a day
between noon and midnight; (3) "Banking day" means the part of a day on which a
bank is open to the public for carrying on substantially all of its banking functions; (4)
"Clearing house" means an association of banks or other payors regularly clearing
items; (5) "Customer" means a person having an account with a bank or for whom a
bank has agreed to collect items, including a bank that maintains an account at another bank;
(6) "Documentary draft" means a draft to be presented for acceptance or payment
if specified documents, certificated securities (Section 7-8-102) or instructions for uncertificated
securities (Section 7-8-308), or...
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7-4-401
Section 7-4-401 When bank may charge customer's account. (a) A bank may charge against the
account of a customer an item that is properly payable from that account even though the charge
creates an overdraft. An item is properly payable if it is authorized by the customer and
is in accordance with any agreement between the customer and bank. (b) A customer is not liable
for the amount of an overdraft if the customer neither signed the item nor benefited from
the proceeds of the item, except that a bank may charge the amount of the overdraft, interest
thereon, and any applicable fee against deposits or other credits to the account, regardless
of the source of the deposits or credits. (c) A bank may charge against the account of a customer
a check that is otherwise properly payable from the account, even though payment was made
before the date of the check, unless the customer has given notice to the bank of the postdating
describing the check with reasonable certainty. The notice is...
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7-4-406
Section 7-4-406 Customer's duty to discover and report unauthorized signature or alteration.
(a) A bank that sends or makes available to a customer a statement of account showing payment
of items for the account shall either return or make available to the customer the items paid
or provide information in the statement of account sufficient to allow the customer reasonably
to identify the items paid. The statement of account provides sufficient information if the
item is described by item number, amount, and date of payment. (b) If the items are not returned
to the customer, the person retaining the items shall either retain the items or, if the items
are destroyed, maintain the capacity to furnish legible copies of the items until the expiration
of seven years after receipt of the items. A customer may request an item from the bank that
paid the item, and that bank must provide in a reasonable time either the item or, if the
item has been destroyed or is not otherwise obtainable, a...
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7-4-214
Section 7-4-214 Right of charge-back or refund; liability of collecting bank; return of item.
(a) If a collecting bank has made provisional settlement with its customer for an item and
fails by reason of dishonor, suspension of payments by a bank, or otherwise to receive settlement
for the item which is or becomes final, the bank may revoke the settlement given by it, charge
back the amount of any credit given for the item to its customer's account, or obtain refund
from its customer, whether or not it is able to return the item, if by its midnight deadline
or within a longer reasonable time after it learns the facts it returns the item or sends
notification of the facts. If the return or notice is delayed beyond the bank's midnight deadline
or a longer reasonable time after it learns the facts, the bank may revoke the settlement,
charge back the credit, or obtain refund from its customer, but it is liable for any loss
resulting from the delay. These rights to revoke, charge back, and...
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7-3-414
Section 7-3-414 Obligation of drawer. (a) This section does not apply to cashier's checks or
other drafts drawn on the drawer. (b) If an unaccepted draft is dishonored, the drawer is
obliged to pay the draft (i) according to its terms at the time it was issued or, if not issued,
at the time it first came into possession of a holder, or (ii) if the drawer signed an incomplete
instrument, according to its terms when completed, to the extent stated in Sections 7-3-115
and 7-3-407. The obligation is owed to a person entitled to enforce the draft or to an indorser
who paid the draft under Section 7-3-415. (c) If a draft is accepted by a bank, the drawer
is discharged, regardless of when or by whom acceptance was obtained. (d) If a draft is accepted
and the acceptor is not a bank, the obligation of the drawer to pay the draft if the draft
is dishonored by the acceptor is the same as the obligation of an indorser under Section 7-3-415(a)
and (c). (e) If a draft states that it is drawn...
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