| (1) |
A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either:
Terms Used In Utah Code 70A-4-210- Account: means any deposit or credit account with a bank including a demand, time, savings, passbook, share draft, or similar account, other than the account evidenced by a certificate of deposit. See Utah Code 70A-4-104
- Item: means an instrument or a promise or order to pay money handled by a bank for collection or payment. See Utah Code 70A-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.
- Uniform Commercial Code: A set of statutes enacted by the various states to provide consistency among the states' commercial laws. It includes negotiable instruments, sales, stock transfers, trust and warehouse receipts, and bills of lading. Source: OCC
| (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in case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied; |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 or there is a right of charge-back; or |
| (c) |
if it makes an advance on or against the item. |
|
| (2) |
If credit given for several items received at one time or pursuant to a single agreement is withdrawn or applied in part, the security interest remains upon all the items, any accompanying documents or the proceeds of either. For the purpose of this section, credits first given are first withdrawn.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. So long as the bank does not receive final settlement for the item or give up possession of the item or possession or control of the accompanying documents for purposes other than collection, the security interest continues to that extent and is subject to Chapter 9a, Uniform Commercial Code – Secured Transactions, but:
| (a) |
no security agreement is necessary to make the security interest enforceable, Subsection 70A-9a-203(2)(c)(i); |
| (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. |
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Amended by Chapter 42, 2006 General Session
