Chapter 404

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.

404.105(3) (3) “Depositary bank” means the first bank to take an item even though it is also the payer bank, unless the item is presented for immediate payment over the counter.

404.105(4) (4) “Intermediary bank” means a bank to which an item is transferred in course of collection except the depositary or payer bank.

404.105(5) (5) “Payer bank” means a bank that is the drawee of a draft.

404.105(6) (6) “Presenting bank” means a bank presenting an item except a payer bank.

404.105 History History: 1983 a. 189; 1995 a. 449.

404.106 404.106 Payable through or payable at bank; collecting bank.

404.106(1) (1) If an item states that it is “payable through” a bank identified in the item, the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item and the item may be presented for payment only by or through the bank.

404.106(2) (2) If an item states that it is “payable at” a bank identified in the item, the item designates the bank as a collecting bank and does not by itself authorize the bank to pay the item and the item may be presented for payment only by or through the bank.

404.106(3) (3) If a draft names a nonbank drawee and it is unclear whether a bank named in the draft is a codrawee or a collecting bank, the bank is a collecting bank.

404.106 History History: 1995 a. 449.

404.107 404.107 Separate office of a bank. A branch or separate office of a bank is a separate bank for the purpose of computing the time within which and determining the place at or to which action may be taken or notices or orders must be given under this chapter and under ch. 403.

404.107 History History: 1995 a. 449 s. 31; Stats. 1995 s. 404.107.

404.108 404.108 Time of receipt of items.

404.108(1) (1) For the purpose of allowing time to process items, prove balances and make the necessary entries on its books to determine its position for the day, a bank may fix an afternoon hour of 2 p.m. or later as a cutoff hour for the handling of money and items and the making of entries on its books.

404.108(2) (2) An item or deposit of money received on any day after a cutoff hour so fixed or after the close of the banking day may be treated as being received at the opening of the next banking day.

404.108 History History: 1995 a. 449 s. 31; Stats. 1995 s. 404.108.

404.109 404.109 Delays.

404.109(1) (1) Unless otherwise instructed, a collecting bank in a good faith effort to secure payment of a specific item drawn on a payer other than a bank, and with or without the approval of any person involved, may waive, modify or extend time limits imposed or permitted by chs. 401 to 411 for a period not exceeding 2 additional banking days without discharge of drawers or endorsers or liability to its transferor or a prior party.

404.109(2) (2) Delay by a collecting bank or payer bank beyond time limits prescribed or permitted by chs. 401 to 411 or by instructions is excused if the delay is caused by interruption of communication or computer facilities, suspension of payments by another bank, war, emergency conditions, failure of equipment or other circumstances beyond the control of the bank and the bank exercises such diligence as the circumstances require.

404.109 History History: 1979 c. 89; 1991 a. 148, 304, 315; 1995 a. 449 s. 31; Stats. 1995 s. 404.109.

404.110 404.110 Electronic presentment.

404.110(1) (1) “Agreement for electronic presentment” means an agreement, clearinghouse rule or federal reserve regulation or operating circular, providing that presentment of an item may be made by transmission of an image of an item or information describing the item (“presentment notice”) rather than delivery of the item itself. The agreement may provide for procedures governing retention, presentment, payment, dishonor and other matters concerning items subject to the agreement.

404.110(2) (2) Presentment of an item pursuant to an agreement for electronic presentment is made when the presentment notice is received.

404.110(3) (3) If presentment is made by presentment notice, a reference to “item” or “check” in this chapter means the presentment notice unless the context otherwise indicates.

404.110 History History: 1995 a. 449.

404.111 404.111 Statute of limitations. An action to enforce an obligation, duty, or right arising under this chapter must be commenced within 3 years after the cause of action accrues.

404.111 History History: 1995 a. 449.

subch. II of ch. 404 SUBCHAPTER II

COLLECTION OF ITEMS:
DEPOSITARY AND COLLECTING BANKS

404.201 404.201 Status of collecting bank as agent and provisional status of credits; applicability of chapter; item endorsed “pay any bank”.

404.201(1) (1) Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes final, the bank, with respect to the item, is an agent or subagent of the owner of the item and any settlement given for the item is provisional. This provision applies regardless of the form of endorsement or lack of endorsement and even though credit given for the item is subject to immediate withdrawal as of right or is in fact withdrawn; but the continuance of ownership of an item by its owner and any rights of the owner to proceeds of the item are subject to rights of a collecting bank, such as those resulting from outstanding advances on the item and rights of recoupment or setoff. If an item is handled by banks for purposes of presentment, payment, collection or return, the relevant provisions of this chapter apply even though action of the parties clearly establishes that a particular bank has purchased the item and is the owner of it.

404.201(2) (2) After an item has been endorsed with the words “pay any bank” or the like, only a bank may acquire the rights of a holder until any of the following occur:

404.201(2)(a) (a) The item has been returned to the customer initiating collection.

404.201(2)(b) (b) The item has been specially endorsed by a bank to a person who is not a bank.

404.201 History History: 1995 a. 449.

404.202 404.202 Responsibility for collection or return; when action timely.

404.202(1) (1) A collecting bank must exercise ordinary care in all of the following:

404.202(1)(a) (a) Presenting an item or sending it for presentment.

404.202(1)(b) (b) Sending notice of dishonor or nonpayment or returning an item other than a documentary draft to the bank’s transferor after learning that the item has not been paid or accepted, as the case may be.

404.202(1)(c) (c) Settling for an item when the bank receives final settlement.

404.202(1)(d) (d) Notifying its transferor of any loss or delay in transit within a reasonable time after discovery thereof.

404.202(2) (2) A collecting bank exercises ordinary care under sub. (1) by taking proper action before its midnight deadline following receipt of an item, notice or settlement. Taking proper action within a reasonably longer time may constitute the exercise of ordinary care, but the bank has the burden of establishing timeliness.

404.202(3) (3) Subject to sub. (1) (a), a bank is not liable for the insolvency, neglect, misconduct, mistake or default of another bank or person or for loss or destruction of an item in the possession of others or in transit.

404.202 History History: 1995 a. 449.

404.203 404.203 Effect of instructions. Subject to s. 403.420 concerning conversion of instruments and to s. 403.206 concerning restrictive endorsements, only a collecting bank’s transferor can give instructions that affect the bank or constitute notice to it and a collecting bank is not liable to prior parties for any action taken pursuant to the instructions or in accordance with any agreement with its transferor.

404.203 History History: 1995 a. 449; 2005 a. 253.

404.204 404.204 Methods of sending and presenting; sending directly to payer bank.

404.204(1) (1) A collecting bank shall send items by a reasonably prompt method, taking into consideration relevant instructions, the nature of the item, the number of those items on hand, the cost of collection involved and the method generally used by it or others to present those items.

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

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

404.204(2)(b) (b) An item to a nonbank payer if authorized by its transferor.

404.204(2)(c) (c) An item other than documentary drafts to a nonbank payer, if authorized by federal reserve regulation or operating circular, clearinghouse rule or the like.

404.204(3) (3) Presentment may be made by a presenting bank at a place where the payer bank or other payer has requested that presentment be made.

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

404.205 404.205 Depositary bank holder of unendorsed item. If a customer delivers an item to a depositary bank for collection, all of the following apply:

404.205(1) (1) The depositary bank becomes a holder of the item at the time that it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer endorses the item, and, if the bank satisfies the other requirements of s. 403.302, it is a holder in due course.

404.205(2) (2) The depositary bank warrants to collecting banks, the payer bank or other payer and the drawer that the amount of the item was paid to the customer or deposited to the customer’s account.

404.205 History History: 1995 a. 449.

404.205 Annotation The general rule is that accepting a check when the payee’s endorsement is missing is not in accordance with the reasonable commercial standards of banking and the acceptance by a depositary bank of such a check for deposit is commercially unreasonable as a matter of law. This section excepts from the general rule depositary banks that receive unendorsed checks from customers when the missing endorsement is that of the customer. Schmitz v. Firstar Bank Milwaukee, 2003 WI 83, 262 Wis. 2d 672, 664 N.W.2d 594, 01-2139.