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

(1) If an item is presented to and received by a payer bank, the bank is accountable for the amount of any of the following:

(a) A demand item, other than a documentary draft, whether properly payable or not, if the bank, in any case in which it is not also the depositary bank, retains the item beyond midnight of the banking day of receipt without settling for it or, whether or not it is also the depositary bank, does not pay or return the item or send notice of dishonor until after its midnight deadline.

(b) Any other properly payable item, unless within the time allowed for acceptance or payment of that item, the bank either accepts or pays the item or returns it and accompanying documents.

(2) The liability of a payer bank to pay an item under sub. (1) is subject to defenses based on breach of a presentment warranty or proof that the person seeking enforcement of the liability presented or transferred the item for the purpose of defrauding the payer bank.

History: 1983 a. 192; 1995 a. 449.

When a provisional settlement was not revoked by the payor bank before the midnight deadline under s. 404.301 (1), the payor bank became accountable under s. 404.302 for the value of the presented checks. Under the facts of the case, the payor bank had no defenses under s. 401.203, 403.418, or 403.511 (2) (b). Northwestern National Insurance Co. v. Midland National Bank, 96 Wis. 2d 155, 292 N.W.2d 591 (1980).

Bank required to disburse funds after final payment. 64 MLR 408 (1980).