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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
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Appendix F
Credit And Banking
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