[Code of Federal Regulations]
[Title 12, Volume 2]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR210.6]

[Page 315-316]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 210--COLLECTION OF CHECKS AND OTHER ITEMS BY FEDERAL RESERVE BANKS AND FUNDS TRANSFERS THROUGH FEDWIRE (REGULATION J)--Table of Contents
 
Subpart A--Collection of Checks and Other Items By Federal Reserve Banks
 
Sec. 210.6  Status, warranties, and liability of Reserve Bank.

    (a)(1) Status and liability. A Reserve Bank that handles an item 
shall act as agent or subagent of the owner with respect to the item. 
This agency terminates when a Reserve Bank receives final payment for 
the item in actually and finally collected funds, a Reserve Bank makes 
the proceeds available for use by the sender, and the time for 
commencing all actions against the Reserve Bank has expired. A Reserve 
Bank shall not have or assume any liability with respect to an item or 
its proceeds except--
    (i) For the Reserve Bank's own lack of good faith or failure to 
exercise ordinary care;
    (ii) As provided in paragraph (b) of this section; and
    (iii) As provided in subpart C of part 229 of this chapter 
(Regulation CC).
    (2) Reliance on routing designation appearing on item. A Reserve 
Bank may present or send an item based on the routing number or other 
designation of

[[Page 316]]

a paying bank or nonbank payor appearing in any form on the item when 
the Reserve Bank receives it. A Reserve Bank shall not be responsible 
for any delay resulting from its acting on any designation, whether 
inscribed by magnetic ink or by other means, and whether or not the 
designation acted on is consistent with any other designation appearing 
on the item.
    (b) Warranties and liability. (1) By presenting or sending an item, 
a Reserve Bank warrants to a subsequent collecting bank and to the 
paying bank and any other payor--
    (i) That the Reserve Bank is a person entitled to enforce the item 
(or is authorized to obtain payment of the item on behalf of a person 
who is either entitled to enforce the item or authorized to obtain 
payment on behalf of a person entitled to enforce the item); and
    (ii) That the item has not been altered.
    (2) The Reserve Bank also makes the warranties set forth in 
Sec. 229.34(c) of this chapter, subject to the terms of part 229 of this 
chapter (Regulation CC). The Reserve Bank shall not have or assume any 
other liability to the paying bank or other payor, except for the 
Reserve Bank's own lack of good faith or failure to exercise ordinary 
care.
    (c) Time for commencing action against Reserve Bank. A claim against 
a Reserve Bank for lack of good faith or failure to exercise ordinary 
care shall be barred unless the action on the claim is commenced within 
two years after the claim accrues. A claim accrues on the date when a 
Reserve Bank's alleged failure to exercise ordinary care or to act in 
good faith first results in damages to the claimant. This paragraph does 
not lengthen the time limit for claims under Sec. 229.38(g) of this 
title (which include claims for breach of warranty under Sec. 229.34 of 
this title).

[45 FR 68634, Oct. 16, 1980, as amended at 51 FR 21745, June 16, 1986; 
53 FR 21984, June 13, 1988; Reg. J, 59 FR 22966, May 4, 1994; 62 FR 
48172, Sept. 15, 1997]