Chapter 404

404.212   Presentment by notice of item not payable by, through or at a bank; liability of drawer or endorser.

404.213   Medium and time of settlement by bank.

404.214   Right of charge-back or refund; liability of collecting bank; return of item.

404.215   Final payment of item by payer bank; when provisional debits and credits become final; when certain credits become available for withdrawal.

404.216   Insolvency and preference.

SUBCHAPTER III

COLLECTION OF ITEMS: PAYER BANKS

404.301   Deferred posting; recovery of payment by return of items; time of dishonor; return of items by payer bank.

404.302   Payer bank’s responsibility for late return of item.

404.303   When items subject to notice, stop-payment order, legal process or setoff; order in which items may be charged or certified.

SUBCHAPTER IV

RELATIONSHIP BETWEEN PAYER BANK AND ITS CUSTOMER

404.401   When bank may charge customer’s account.

404.402   Bank’s liability to customer for wrongful dishonor; time of determining insufficiency of account.

404.403   Customer’s right to stop payment; burden of proof of loss.

404.404   Bank not obligated to pay check more than 6 months old.

404.405   Death or incompetence of customer.

404.406   Customer’s duty to discover and report unauthorized signature or alteration.

404.407   Payer bank’s right to subrogation on improper payment.

SUBCHAPTER V

COLLECTION OF DOCUMENTARY DRAFTS

404.501   Handling of documentary drafts; duty to send for presentment and to notify customer of dishonor.

404.502   Presentment of “on arrival” drafts.

404.503   Responsibility of presenting bank for documents and goods; report of reasons for dishonor; referee in case of need.

404.504   Privilege of presenting bank to deal with goods; security interest for expenses.

Ch. 404 Cross-reference Cross-reference: See definitions in s. 401.201.

subch. I of ch. 404 SUBCHAPTER I

GENERAL PROVISIONS AND DEFINITIONS

404.102 404.102 Applicability.

404.102(1) (1) The extent that items within this chapter are also within chs. 403 and 408, they are subject to those chapters. If there is conflict, this chapter governs ch. 403, but ch. 408 governs this chapter.

404.102(2) (2) The liability of a bank for action or nonaction with respect to an item handled by it for purposes of presentment, payment or collection is governed by the law of the place where the bank is located. In the case of action or nonaction by or at a branch or separate office of a bank, its liability is governed by the law of the place where the branch or separate office is located.

404.102 History History: 1995 a. 449.

404.103 404.103 Variation by agreement; measure of damages; action constituting ordinary care.

404.103(1) (1) The effect of the provisions of this chapter may be varied by agreement, but the parties to the agreement cannot disclaim a bank’s responsibility for its lack of good faith or failure to exercise ordinary care or limit the measure of damages for the lack or failure. However, the parties may determine by agreement the standards by which the bank’s responsibility is to be measured if those standards are not manifestly unreasonable.

404.103(2) (2) Federal reserve regulations and operating circulars, clearinghouse rules, and the like, have the effect of agreements under sub. (1), whether or not specifically assented to by all parties interested in items handled.

404.103(3) (3) Action or nonaction approved by this chapter or pursuant to federal reserve regulations or operating circulars is the exercise of ordinary care and, in the absence of special instructions, action or nonaction consistent with clearinghouse rules and the like or with a general banking usage not disapproved by this chapter, is prima facie the exercise of ordinary care.

404.103(4) (4) The specification or approval of certain procedures by this chapter is not disapproval of other procedures that may be reasonable under the circumstances.

404.103(5) (5) The measure of damages for failure to exercise ordinary care in handling an item is the amount of the item reduced by an amount that could not have been realized by the exercise of ordinary care. If there is also bad faith it includes any other damages the party suffered as a proximate consequence.

404.103 History History: 1991 a. 304 s. 51; 1995 a. 449.

404.104 404.104 Definitions and index of definitions.

404.104(1) (1) In this chapter, unless the context otherwise requires:

404.104(1)(a) (a) “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.

404.104(1)(b) (b) “Afternoon” means the period of a day between noon and midnight.

404.104(1)(c) (c) “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.

404.104(1)(d) (d) “Clearinghouse” means an association of banks or other payers regularly clearing items.

404.104(1)(e) (e) “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.

404.104(1)(f) (f) “Documentary draft” means a draft to be presented for acceptance or payment if specified documents, certificated securities or instructions for uncertificated securities, or other certificates, statements or the like are to be received by the drawee or other payer before acceptance or payment of the draft.

404.104(1)(g) (g) “Draft” means a draft as defined in s. 403.104 (5), or an item, other than an instrument, that is an order.

404.104(1)(h) (h) “Drawee” means a person ordered in a draft to make a payment.

404.104(1)(i) (i) “Item” means an instrument or a promise or order to pay money handled by a bank for collection or payment. “Item” does not include a payment order governed by ch. 410 or a credit or debit card slip.

404.104(1)(j) (j) “Midnight deadline” with respect to a bank is midnight on its next banking day following the banking day on which it receives the relevant item or notice or from which the time for taking action commences to run, whichever is later.

404.104(1)(k) (k) “Settle” means to pay in cash, by clearinghouse settlement, in a charge or credit or by remittance, or otherwise as agreed. A settlement may be either provisional or final.

404.104(1)(L) (L) “Suspends payments” with respect to a bank means that it has been closed by order of the supervisory authorities, that a public officer has been appointed to take it over or that it ceases or refuses to make payments in the ordinary course of business.

404.104(2) (2) Other definitions applying to this chapter and the sections in which they appear are:

404.104(2)(a) (a) “Agreement for electronic presentment” — s. 404.110 (1).

404.104(2)(b) (b) “Bank” — s. 404.105 (1).

404.104(2)(c) (c) “Collecting bank” — s. 404.105.

404.104(2)(d) (d) “Depositary bank” — s. 404.105.

404.104(2)(e) (e) “Intermediary bank” — s. 404.105.

404.104(2)(f) (f) “Payer bank” — s. 404.105.

404.104(2)(g) (g) “Presenting bank” — s. 404.105.

404.104(2)(h) (h) “Presentment notice” — s. 404.110 (1).

404.104(3) (3) The following definitions in other chapters apply to this chapter:

404.104(3)(a) (a) “Acceptance” — s. 403.409 (1).

404.104(3)(b) (b) “Alteration” — s. 403.407 (1).

404.104(3)(c) (c) “Cashier’s check” — s. 403.104 (7).

404.104(3)(d) (d) “Certificate of deposit” — s. 403.104.

404.104(3)(e) (e) “Certified check” — s. 403.409 (4).

404.104(3)(f) (f) “Check” — s. 403.104.

404.104(3)(fc) (fc) “Control” — s. 407.106.

404.104(3)(fe) (fe) “Demand draft” — s. 403.104 (11).

404.104(3)(g) (g) “Good faith” — s. 403.103 (1) (d).

404.104(3)(h) (h) “Holder in due course” — s. 403.302.

404.104(3)(i) (i) “Instrument” — s. 403.104 (2).

404.104(3)(j) (j) “Notice of dishonor” — s. 403.503.

404.104(3)(k) (k) “Order” — s. 403.103 (1) (f).

404.104(3)(L) (L) “Ordinary care” — s. 403.103 (1) (g).

404.104(3)(m) (m) “Person entitled to enforce” — s. 403.301.

404.104(3)(n) (n) “Presentment” — s. 403.501 (1).

404.104(3)(p) (p) “Promise” — s. 403.103 (1) (i).

404.104(3)(q) (q) “Prove” — s. 403.103 (1) (j).

404.104(3)(r) (r) “Teller’s check” — s. 403.104 (8).

404.104(3)(s) (s) “Unauthorized signature” — s. 403.403.

404.104(4) (4) In addition, ch. 401 contains general definitions and principles of construction and interpretation applicable throughout this chapter.

404.104 History History: 1991 a. 304 s. 51; 1995 a. 449; 2003 a. 86; 2009 a. 322.

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.