N.Y. Uniform Commercial Code 4-208 – Security Interest of Collecting Bank in Items, Accompanying Documents and Proceeds
Section 4–208. Security Interest of Collecting Bank in Items,
Terms Used In N.Y. Uniform Commercial Code 4-208
- Account: means any account with a bank and includes a
checking, time, interest or savings account;
(b) "Afternoon" means the period of a day between noon and
midnight;
(c) "Banking day" means that part of any day on which a bank is
open to the public for carrying on substantially all of its
banking functions;
(d) "Clearing house" means any association of banks or other
payors regularly clearing items;
(e) "Customer" means any person having an account with a bank or
for whom a bank has agreed to collect items and includes a
bank carrying an account with another bank;
(f) "Documentary draft" means any negotiable or non-negotiable
draft with accompanying documents, securities or other papers
to be delivered against honor of the draft;
(g) "Item" means any instrument for the payment of money even
though it is not negotiable but does not include money;
(h) "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;
(i) "Obligated bank" means the acceptor of a certified check, the
issuer of a cashier's check, or the drawer of a teller's
check;
(j) "Properly payable" includes the availability of funds for
payment at the time of decision to pay or dishonor;
(k) "Remitter" means the buyer from the obligated bank of a
cashier's check or a teller's check, and the drawer of a
certified check;
(l) "Settle" means to pay in cash, by clearing house settlement,
in a charge or credit or by remittance, or otherwise as
instructed. See N.Y. Uniform Commercial Code 4-104 - Settlement: Parties to a lawsuit resolve their difference without having a trial. Settlements often involve the payment of compensation by one party in satisfaction of the other party's claims.
Accompanying Documents and Proceeds.
(1) A bank has a security interest in an item and any accompanying documents or the proceeds of either
(a) in case of an item deposited in an account to the extent to
which credit given for the item has been withdrawn or
applied;
(b) in case of an item for which it has given credit available
for withdrawal as of right, to the extent of the credit given
whether or not the credit is drawn upon and whether or not
there is a right of charge-back; or
(c) if it makes an advance on or against the item.
(2) When credit which has been given for several items received at one time or pursuant to a single agreement is withdrawn or applied in part the security interest remains upon all the items, any accompanying documents or the proceeds of either. For the purpose of this section, credits first given are first withdrawn.
(3) Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents and proceeds. To the extent and so long as the bank does not receive final settlement for the item or give up possession of the item or accompanying documents for purposes other than collection, the security interest continues and is subject to the provisions of Article 9 except that
(a) no security agreement is necessary to make the security
interest enforceable ( Section 9–203 (b)(3)(A)); and
(b) no filing is required to perfect the security interest; and
(c) the security interest has priority over conflicting perfected
security interests in the item, accompanying documents or
proceeds.