Okla. Stat. tit. 12A § 4-301

Current through Laws 2024, c. 453.

Section 4-301 - Deferred Posting; Recovery of Payment by Return of Items; Time of Dishonor; Return of Items by Payor Bank

(a) 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 the settlement if, before it has made final payment and before its midnight deadline, it:

(1) Returns the item;

(2) Returns an image of the item, if the party to which the return is made has entered into an agreement to accept an image as a return of the item and the image is returned in accordance with that agreement; or

(3) Sends a record providing notice of dishonor or nonpayment if the item is unavailable for return.

(b) If a demand item is received by a payor bank for credit on its books, it may return the item or send notice of dishonor and may revoke any credit given or recover the amount thereof withdrawn by its customer, if it acts within the time limit and in the manner specified in subsection (a) of this section.

(c) 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 in accordance with this section.

(d) An item is returned:

(1) As to an item presented through a clearing-house, when it is delivered to the presenting or last collecting bank or to the clearing-house or is sent or delivered in accordance with clearing-house rules; or

(2) In all other cases, when it is sent or delivered to the bank's customer or transferor or pursuant to instructions.

Okla. Stat. tit. 12A, § 4-301

Added by Laws 1961, SB 36, p. 128, § 4-301; Amended by Laws 1991, SB 25, c. 117, § 121, eff. 1/1/1992; Amended by Laws 2008 , SB 1708, c. 382, § 17, eff. 11/1/2008 (Laws 2008, SB 1708, c. 382 held unconstitutional and void by Weddington v. Henry, 2008 OK 102, 202 P.3d 143, and repealed by Laws 2009 , SB 991, c. 208, § 22, eff. 11/1/2009); Amended by Laws 2009 , SB 991, c. 208, § 22, eff. 11/1/2009.

Oklahoma Code Comment

1. This Section is basically identical to prerevision Section 4-301. The former reference to Section 4-213 was deleted due to the fact that the definition of final payment now is contained in Section 4-215 . A bank cannot revoke provisional credit after final payment. Note that completion of the process of posting no longer is a point of final payment under Section 4-215 , unlike under pre-revision Section 4-213 .

2. The practice of deferred posting referred to in Official Comment I was adopted by Oklahoma in 1949 (6 O.S. § 119.1). Over-the-counter cash transactions as well as documentary drafts are excluded from the deferred posting rule. Basically, a bank has until its midnight deadline to pay or dishonor.

In Pracht v. Oklahoma State Bank, 592 P.2d 976 (Okla. 1979), the plaintiff presented a check for deposit after the dose on business on a Friday. The check was drawn on an account with the same bank. On Monday, several checks were posted against the drawer's account and on Tuesday, the bank took a set-off on a note owed by the drawer. Thereafter, the check was returned to the plaintiff as drawn on uncollected funds. Because the check was presented for payment after the close of business on Friday, the court held it was deemed presented on the following banking day (Monday), even though the bank did do some business after its close of business on Friday. The court found a banking day to be measured by "the period of time the bank is open for substantially all of its banking functions." Pracht, 592 P.2d 979 (emphasis in original). Therefore, because the check was deemed received for payment on Monday, the bank had until midnight on Tuesday to take action to return the check or send written notice of dishonor or nonpayment (citing pre-revision sub section 4-301(1)). Similarly, for purposes of the midnight deadline calculation, when the majority of a bank's departments are closed (e.g., if only paying and receiving are open), the following Monday will be the day of receipt of an item presented to the bank on Saturday. Se Security Bank & Trust Co. v. Federal Nat'l Bank & Trust Co. of Shawnee, 554 P.2d 119 (Okla. Ct. App. 1976), discussed in the next Comment. These results are the same under current Section 4-301 and sub sections 4-104(a)(3) and (10) .

3. Sub section 4-301(a)(2) requires written notice of dishonor or nonpayment prior to the midnight deadline if the item is not available for return (e.g. held by truncation). However, in Security Bank & Trust Co. v. Federal Nat'l Bank & Trust Co. of Shawnee, 554 P.2d 119 (Okla. Ct. App. 1976), the court held, based on pre-revision Section 4-103 , that the provisions of UCC Article 4 could be varied by Federal Reserve regulations and operating rules. Federal Reserve Operating Letter No. 3, in paragraph 52, allows telephonic and other non-written means of notice of nonpayment. Sub section 4-103(b) contains similar language to pre-revision Section 4-103 , therefore, it appears the court's analysis in Security Bank is still valid. However, there is a question of whether the operating letter was intended to vary the effect of Article 4, or actually addressed a separate federal requirement now contained in Reg. CC, 12 C.F.R. §229.33 . Compare the analysis in Reynolds-Wilson Lumber Co. v. Peoples National Bank, 699 P.2d 146 (Okla. 1985), where there was no agreement to change the rule and the court held that oral notice of dishonor is inadequate under Section 4-301 ; only written notice will suffice.