[Code of Federal Regulations]
[Title 12, Volume 3]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 12CFR229.39]

[Page 544]
 
                       TITLE 12--BANKS AND BANKING
 
                   CHAPTER II--FEDERAL RESERVE SYSTEM
 
PART 229--AVAILABILITY OF FUNDS AND COLLECTION OF CHECKS (REGULATION CC)--Table of Contents
 
                     Subpart C--Collection of Checks
 
Sec. 229.39  lnsolvency of bank.

    (a) Duty of receiver. A check or returned check in, or coming into, 
the possession of a paying, collecting, depositary, or returning bank 
that suspends payment, and which is not paid, shall be returned by the 
receiver, trustee, or agent in charge of the closed bank to the bank or 
customer that transferred the check to the closed bank.
    (b) Preference against paying or depositary bank. If a paying bank 
finally pays a check, or if a depositary bank becomes obligated to pay a 
returned check, and suspends payment without making a settlement for the 
check or returned check with the prior bank that is or becomes final, 
the prior bank has a preferred claim against the paying bank or the 
depositary bank.
    (c) Preference against collecting, paying, or returning bank. If a 
collecting, paying, or returning bank receives settlement from a 
subsequent bank for a check or returned check, which settlement is or 
becomes final, and suspends payments without making a settlement for the 
check with the prior bank, which is or becomes final, the prior bank has 
a preferred claim against the collecting or returning bank.
    (d) Preference against presenting bank. If a paying bank settles 
with a presenting bank for one or more checks, and if the presenting 
bank breaches a warranty specified in Sec. 229.34(c) (1) or (3) with 
respect to those checks and suspends payments before satisfying the 
paying bank's warranty claim, the paying bank has a preferred claim 
against the presenting bank for the amount of the warranty claim.
    (e) Finality of settlement. If a paying or depositary bank gives, or 
a collecting, paying, or returning bank gives or receives, a settlement 
for a check or returned check and thereafter suspends payment, the 
suspension does not prevent or interfere with the settlement becoming 
final if such finality occurs automatically upon the lapse of a certain 
time or the happening of certain events.

[Reg. CC, 53 FR 19433, May 27, 1988, as amended at 57 FR 46973, Oct. 14, 
1992; Reg. CC, 62 FR 13810, Mar. 24, 1997]