§ 28:4-105. "Bank"; "depositary bank"; "payor bank"; "intermediary bank"; "collecting bank"; "presenting bank".

UNIFORM COMMERCIAL CODE COMMENT

1. The definitions in general exclude a bank to which an item is issued, as this bank does not take by transfer except in the particular case covered in which the item is issued to payee for collection, as in the case in which a corporation is transferring balances from one account to another. Thus, the definition of "depositary bank" does not include the bank to which a check is made payable if a check is given in payment of a mortgage. This bank has the status of a payee under Article 3 on Negotiable Instruments and not that of a collecting bank.

2. Paragraph (1): "Bank" is defined in Section 1-201(4) as meaning "any person engaged in the business of banking." The definition in paragraph (1) makes clear that "bank" includes savings banks, savings and loan associations, credit unions and trust companies, in addition to the commercial banks commonly denoted by use of the term "bank."

3. Paragraph (2): A bank that takes an "on us" item for collection, for application to a customer's loan, or first handles the item for other reasons is a depositary bank even though it is also the payor bank. However, if the holder presents the item for immediate payment over the counter, the payor bank is not a depositary bank.

4. Paragraph (3): The definition of "payor bank" is clarified by use of the term "drawee." That term is defined in Section 4-104 as meaning "a person ordered in a draft to make payment." An "order" is defined in Section 3-103 as meaning "a written instruction to pay money . . . An authorization to pay is not an order unless the person authorized to pay is also instructed to pay." The definition of order is incorporated into Article 4 by Section 4- 104(c). Thus a payor bank is one instructed to pay in the item. A bank does not become a payor bank by being merely authorized to pay or by being given an instruction to pay not contained in the item.

5. Paragraph (4): The term "intermediary bank" includes the last bank in the collection process if the drawee is not a bank. Usually the last bank is also a presenting bank.

Reason for 1990 Change [D.C. Law 10-249]

The definition of "bank" is added and is in conformity with that found in Section 4A-105(a)(2). See the Official Comment.

The definition of "depositary bank" is amended. The term "transferred for collection" is too limiting as the purpose for which the item is taken. The amendment makes clear that a payor bank is not also a depositary bank with respect to an item presented for immediate payment over the counter.

The definition of "payor bank" is amended to require that in order for a bank to be a payor bank it must be instructed rather than authorized to pay and that the instruction must be contained in the item. As explained in the Official Comment, this result follows from the use of the defined terms "drawee" and "draft."

The definition of "remitting bank" is deleted because the term is not used in Article 4.

The other modifications are made to conform with current legislative drafting practices, with no intent to change substance.

Prior Codifications

1981 Ed., § 28:4-105.

1973 Ed., § 28:4-105.

Legislative History of Laws

For legislative history of D.C. Law 10-249, see Historical and Statutory Notes following § 28:4-101.