N.D. Cent. Code § 41-04-29
(4-301) Deferred posting - Recovery of payment by return of items - Time of dishonor - Return of items by payor bank
Redline — December 1, 2021 → current.View current text →
Current — January 1, 2022
As of December 1, 2021
(1) If a payor bank settles for a demand item other than a documentary draft presented otherwise than for immediate payment over the counter before midnight of the banking day of receipt, the payor bank may revoke the settlement and recover any settlement if before it has made final payment and before its midnight deadline it: Returns the item.
(1) If a payor bank settles for a demand item other than a documentary draft presented otherwise than for immediate payment over the counter before midnight of the banking day of receipt, the payor bank may revoke the settlement and recover any settlement if before it has made final payment and before its midnight deadline it: Returns the item.
(2) Sends written notice of dishonor or nonpayment if the item is unavailable for return.
(2) Sends written notice of dishonor or nonpayment if the item is unavailable for return.
(3) If a demand item is received by a payor bank for credit on its books, it may return that item or send notice of dishonor and may revoke any credit given or recover the amount thereof withdrawn by its customer, if it acts within the time limit and in the manner specified in subsection 1.
(3) If a demand item is received by a payor bank for credit on its books, it may return that item or send notice of dishonor and may revoke any credit given or recover the amount thereof withdrawn by its customer, if it acts within the time limit and in the manner specified in subsection 1.
(4) Unless previous notice of dishonor has been sent, an item is dishonored at the time when for purposes of dishonor it is returned or notice sent under this section.
(4) Unless previous notice of dishonor has been sent, an item is dishonored at the time when for purposes of dishonor it is returned or notice sent under this section.
(5) An item is returned: As to an item presented through a clearinghouse, when it is delivered to the presenting or last collecting bank or to the clearinghouse or is sent or delivered under clearinghouse rules.
(5) An item is returned: As to an item presented through a clearinghouse, when it is delivered to the presenting or last collecting bank or to the clearinghouse or is sent or delivered under clearinghouse rules.
(6) In all other cases, when it is sent or delivered to the bank’s customer or transferor or under instructions.
(6) In all other cases, when it is sent or delivered to the bank’s customer or transferor or under instructions.
(7) Subsection (c) fixes a base point from which to measure the time within which notice of dishonor must be given. See Section 3-503.
(8) Subsection (d) leaves banks free to agree upon the manner of returning items but establishes a precise time when an item is “returned.” For definition of “sent” as used in paragraphs (1) and (2) see Section 1-201(38). Obviously the subsection assumes that the item has not been “finally paid” under Section 4-215(a). If it has been, this provision has no operation.
(9) The fact that an item has been paid under proposed Section 4-215 does not preclude the payor bank from asserting rights of restitution or revocation under Section 3-418. National Savings and Trust Co. v. Park Corp., 722 F.2d 1303 (6th Cir.1983), cert. denied, 466 U.S. 939 (1984), is the correct interpretation of the present law on this issue.
(10) Paragraph (a)(2) is designed to facilitate electronic check-processing by authorizing the payor bank to return an image of the item instead of the actual item. It applies only when the payor bank and the party to which the return has been made have agreed that the payor bank can make such a return and when the return complies with the agreement. The purpose of the paragraph is to prevent third parties (such as the depositor of the check) from contending that the payor bank missed its midnight deadline because it failed to return the actual item in a timely manner. If the payor bank missed its midnight deadline, payment would have become final under Section 4-215 and the depositary bank would have lost its right of chargeback under Section 4-214. Of course, the depositary bank might enter into an agreement with its depositor to resolve that problem, but it is not clear that agreements by banks with their customers can resolve all such issues. In any event, paragraph (a)(2) should eliminate the need for such agreements. The provision rests on the premise that it is inappropriate to penalize a payor bank simply because it returns the actual item a few business days after the midnight deadline of the payor bank sent notice before that deadline to a collecting bank that had agreed to accept such notices..
Official source: North Dakota Legislative Branch. Reproduced from public-domain North Dakota statutes; confirm against the official source for the current text. Not legal advice.