[Code of Federal Regulations]

[Title 12, Volume 3]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 12CFR229.35]



[Page 562-563]

 

                       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. 229.35  Indorsements.



    (a) Indorsement standards. A bank (other than a paying bank) that 

handles a check during forward collection or a returned check shall 

indorse the check in a manner that permits a person to interpret the 

indorsement, in accordance with the indorsement standard set forth in 

appendix D of this part.

    (b) Liability of bank handling check. A bank that handles a check 

for forward collection or return is liable to any bank that subsequently 

handles the check to the extent that the subsequent bank does not 

receive payment for the check because of suspension of payments by 

another bank or otherwise. This paragraph applies whether



[[Page 563]]



or not a bank has placed its indorsement on the check. This liability is 

not affected by the failure of any bank to exercise ordinary care, but 

any bank failing to do so remains liable. A bank seeking recovery 

against a prior bank shall send notice to that prior bank reasonably 

promptly after it learns the facts entitling it to recover. A bank may 

recover from the bank with which it settled for the check by revoking 

the settlement, charging back any credit given to an account, or 

obtaining a refund. A bank may have the rights of a holder with respect 

to each check it handles.

    (c) Indorsement by a bank. After a check has been indorsed by a 

bank, only a bank may acquire the rights of a holder--

    (1) Until the check has been returned to the person initiating 

collection; or

    (2) Until the check has been specially indorsed by a bank to a 

person who is not a bank.

    (d) Indorsement for depositary bank. A depositary bank may arrange 

with another bank to apply the other bank's indorsement as the 

depositary bank indorsement, provided that any indorsement of the 

depositary bank on the check avoids the area reserved for the depositary 

bank indorsement as specified in appendix D. The other bank indorsing as 

depositary bank is considered the depositary bank for purposes of 

subpart C of this part.



[53 FR 19433, May 27, 1988, as amended by Reg. CC, 55 FR 21855, May 30, 

1990; 69 FR 47311, Aug. 4, 2004]