69th OREGON LEGISLATIVE ASSEMBLY--1997 Regular Session
Enrolled
House Bill 2239
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Joint Interim Judiciary
Committee for the Oregon Bankers Association)
CHAPTER ................
AN ACT
Relating to demand drafts; amending ORS 73.0103, 73.0104,
73.0416, 73.0417, 74.2070 and 74.2080.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 73.0103 is amended to read:
73.0103. (1) As used in this chapter:
(a) 'Acceptor' means a drawee who has accepted a draft.
(b) 'Drawee' means a person ordered in a draft to make payment.
(c) 'Drawer' means a person who signs or is identified in a
draft as a person ordering payment.
(d) 'Good faith' means honesty in fact and the observance of
reasonable commercial standards of fair dealing.
(e) 'Maker' means a person who signs or is identified in a note
as a person undertaking to pay.
(f) 'Order' means a written instruction to pay money signed by
the person giving the instruction. The instruction may be
addressed to any person, including the person giving the
instruction, or to one or more persons jointly or in the
alternative but not in succession. An authorization to pay is
{ - to - } { + not + } an order unless the person authorized
to pay is also instructed to pay.
(g) 'Ordinary care' in the case of a person engaged in business
means observance of reasonable commercial standards, prevailing
in the area in which the person is located, with respect to the
business in which the person is engaged. In the case of a bank
that takes an instrument for processing for collection or payment
by automated means, reasonable commercial standards do not
require the bank to examine the instrument if the failure to
examine does not violate the bank's prescribed procedures and the
bank's procedures do not vary unreasonably from general banking
usage not disapproved under this chapter or ORS chapter 74.
(h) 'Party' means a party to an instrument.
(i) 'Promise' means a written undertaking to pay money signed
by the person undertaking to pay. An acknowledgment of an
obligation by the obligor is not a promise unless the obligor
also undertakes to pay the obligation.
(j) 'Prove' with respect to a fact means to meet the burden of
establishing the fact as defined in ORS 71.2010 (8).
(k) 'Remitter' means a person who purchases an instrument from
the issuer if the instrument is payable to an identified person
other than the purchaser.
Enrolled House Bill 2239 (HB 2239-A) Page 1
(2) Other definitions applying to this chapter and the sections
in which they appear are:
____NOTE_TO_GOPHER_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
'
Acceptance'
ORS 73.0409
'
Accommodated party'
ORS 73.0419
'
Accommodation party'
ORS 73.0419
'
Alteration'
ORS 73.0407
'
Anomalous indorsement'
ORS 73.0205
'
Blank indorsement'
ORS 73.0205
'
Cashier's check'
ORS 73.0104
'
Certificate of deposit'
ORS 73.0104
'
Certified check'
ORS 73.0409
'
Check'
ORS 73.0104
'
Consideration'
ORS 73.0303
{ +
'
Demand draft'
ORS 73.0104 + }
'
Draft'
ORS 73.0104
'
Holder in due course'
ORS 73.0302
'
Incomplete instrument'
ORS 73.0115
'
Indorsement'
ORS 73.0204
'
Indorser'
ORS 73.0204
Enrolled House Bill 2239 (HB 2239-A) Page 2
'
Instrument'
ORS 73.0104
'
Issue'
ORS 73.0105
'
Issuer'
ORS 73.0105
'
Negotiable instrument'
ORS 73.0104
'
Negotiation'
ORS 73.0201
'
Note'
ORS 73.0104
'
Payable at a definite time'
ORS 73.0108
'
Payable on demand'
ORS 73.0108
'
Payable to bearer'
ORS 73.0109
'
Payable to order'
ORS 73.0109
'
Payment'
ORS 73.0602
'
Person entitled to enforce'
ORS 73.0301
'
Presentment'
ORS 73.0501
'
Reacquisition'
ORS 73.0207
'
Special indorsement'
ORS 73.0205
'
Teller's check'
ORS 73.0104
'
Transfer of instrument'
ORS 73.0203
'
Traveler's check'
ORS 73.0104
'
Value'
ORS 73.0303
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
Enrolled House Bill 2239 (HB 2239-A) Page 3
(3) The following definitions in ORS chapter 74 apply to this
chapter:
____NOTE_TO_GOPHER_CUSTOMERS:__________________________________
THE FOLLOWING TABULAR TEXT MAY BE IRREGULAR.
FOR COMPLETE INFORMATION PLEASE SEE THE PRINTED MEASURE.
_______________________________________________________________
'
Bank'
ORS 74.1050
'
Banking day'
ORS 74.1040
'
Clearing house'
ORS 74.1040
'
Collecting bank'
ORS 74.1050
'
Depositary bank'
ORS 74.1050
'
Documentary draft'
ORS 74.1040
'
Intermediary bank'
ORS 74.1050
'
Item'
ORS 74.1040
'
Payor bank'
ORS 74.1050
'
Suspends payments'
ORS 74.1040
____________________________________________________________
END OF POSSIBLE IRREGULAR TABULAR TEXT
____________________________________________________________
(4) In addition, ORS chapter 71 contains general definitions
and principles of construction and interpretation applicable
throughout this chapter.
SECTION 2. ORS 73.0104 is amended to read:
73.0104. (1) Except as provided in subsections (3) and (4) of
this section, 'negotiable instrument' means an unconditional
promise or order to pay a fixed amount of money, with or without
interest or other charges described in the promise or order, if
it:
(a) Is payable to bearer or to order at the time it is issued
or first comes into possession of a holder;
(b) Is payable on demand or at a definite time; and
(c) Does not state any other undertaking or instruction by the
person promising or ordering payment to do any act in addition to
the payment of money, but the promise or order may contain:
(A) An undertaking or power to give, maintain or protect
collateral to secure payment;
(B) An authorization or power to the holder to confess judgment
or realize on or dispose of collateral; or
Enrolled House Bill 2239 (HB 2239-A) Page 4
(C) A waiver of the benefit of any law intended for the
advantage or protection of an obligor.
(2) 'Instrument' means a negotiable instrument.
(3) An order that meets all of the requirements of subsection
(1) of this section, except subsection (1)(a) of this section,
and otherwise falls within the definition of 'check' in
subsection (6) of this section, is a negotiable instrument and a
check.
(4) A promise or order other than a check is not an instrument
if, at the time it is issued or first comes into possession of a
holder, it contains a conspicuous statement, however expressed,
to the effect that the promise or order is not negotiable or is
not an instrument governed by this chapter.
(5) An instrument is a 'note' if it is a promise. An instrument
is a 'draft' if it is an order. If an instrument falls within the
definition of both 'note' and 'draft,' a person entitled to
enforce the instrument may treat it as either.
(6) 'Check' means a draft, other than a documentary draft,
payable on demand and drawn on a bank, or a cashier's check or
teller's check. An instrument may be a check even though it is
described on its face by another term, such as 'money order. '
(7) 'Cashier's check' means a draft with respect to which the
drawer and drawee are the same bank or branches of the same bank.
(8) 'Teller's check' means a draft drawn by a bank:
(a) On another bank; or
(b) Payable at or through a bank.
(9) 'Traveler's check' means an instrument that:
(a) Is payable on demand;
(b) Is drawn on or payable at or through a bank;
(c) Is designated by the term 'traveler's check' or by a
substantially similar term; and
(d) Requires, as a condition to payment, a countersignature by
a person whose specimen signature appears on the instrument.
(10) 'Certificate of deposit' means an instrument containing an
acknowledgment by a bank that a sum of money has been received by
the bank and a promise by the bank to repay the sum of money. A
certificate of deposit is a note of the bank.
{ + (11)(a) 'Demand draft' means a writing not signed by a
customer that is created by a third party under the purported
authority of the customer for the purpose of charging the
customer's account with a bank. A demand draft does not include a
check drawn by a fiduciary, as defined in ORS 73.0307. A demand
draft may contain any or all of the following:
(A) The customer's printed or typewritten name or account
number;
(B) A notation that the customer authorized the draft; and
(C) The statement 'No signature required' or words to that
effect.
(b) 'Demand draft' shall not include a check purportedly drawn
by and bearing the signature of a fiduciary as defined in ORS
73.0307. + }
SECTION 3. ORS 73.0416 is amended to read:
73.0416. (1) A person who transfers an instrument for
consideration warrants to the transferee and, if the transfer is
by indorsement, to any subsequent transferee that:
(a) The warrantor is a person entitled to enforce the
instrument;
(b) All signatures on the instrument are authentic and
authorized;
(c) The instrument has not been altered;
Enrolled House Bill 2239 (HB 2239-A) Page 5
(d) The instrument is not subject to a defense or claim in
recoupment of any party which can be asserted against the
warrantor; { - and - }
(e) The warrantor has no knowledge of any insolvency proceeding
commenced with respect to the maker or acceptor or, in the case
of an unaccepted draft, the drawer { + ; and + } { - . - }
{ + (f) If the instrument is a demand draft, creation of the
instrument according to the terms on its face was authorized by
the person identified as drawer. + }
(2) A person to whom the warranties under subsection (1) of
this section are made and who took the instrument in good faith
may recover from the warrantor as damages for breach of warranty
an amount equal to the loss suffered as a result of the breach,
but not more than the amount of the instrument plus expenses and
loss of interest incurred as a result of the breach.
(3) The warranties stated in subsection (1) { - of this
section - } of this section cannot be disclaimed with respect to
checks. Unless notice of a claim for breach of warranty is given
to the warrantor within 30 days after the claimant has reason to
know of the breach and the identity of the warrantor, the
liability of the warrantor under subsection (2) of this section
is discharged to the extent of any loss caused by the delay in
giving notice of the claim.
(4) A claim for relief for breach of warranty under this
section accrues when the claimant has reason to know of the
breach.
{ + (5) If the warranty in subsection (1)(f) of this section
is not given by a transferor under applicable conflict of law
rules, then the warranty is not given to that transferor when
that transferor is a transferee. + }
SECTION 4. ORS 73.0417 is amended to read:
73.0417. (1) If an unaccepted draft is presented to the drawee
for payment or acceptance and the drawee pays or accepts the
draft, the person obtaining payment or acceptance, at the time of
presentment, and a previous transferor of the draft, at the time
of transfer, warrant to the drawee making payment or accepting
the draft in good faith that:
(a) The warrantor is, or was, at the time the warrantor
transferred the draft, a person entitled to enforce the draft or
authorized to obtain payment or acceptance of the draft on behalf
of a person entitled to enforce the draft;
(b) The draft has not been altered; { - and - }
(c) The warrantor has no knowledge that the signature of the
drawer of the draft is unauthorized { + ; and + } { - . - }
{ + (d) If the draft is a demand draft, creation of the draft
according to the terms on its face was authorized by the person
identified as drawer. + }
(2) A drawee making payment may recover from any warrantor
damages for breach of warranty equal to the amount paid by the
drawee less the amount the drawee received or is entitled to
receive from the drawer because of the payment. In addition, the
drawee is entitled to compensation for expenses and loss of
interest resulting from the breach. The right of the drawee to
recover damages under this subsection is not affected by any
failure of the drawee to exercise ordinary care in making
payment. If the drawee accepts the draft, breach of warranty is
a defense to the obligation of the acceptor. If the acceptor
makes payment with respect to the draft, the acceptor is entitled
to recover from any warrantor for breach of warranty the amounts
stated in this subsection.
Enrolled House Bill 2239 (HB 2239-A) Page 6
(3) If a drawee asserts a claim for breach of warranty under
subsection (1) of this section based on an unauthorized
indorsement of the draft or an alteration of the draft, the
warrantor may defend by proving that the indorsement is effective
under ORS 73.0404 or 73.0405 or the drawer is precluded under ORS
73.0405 or 74.4060 from asserting against the drawee the
unauthorized indorsement or alteration.
(4) If a dishonored draft is presented for payment to the
drawer or an indorser or any other instrument is presented for
payment to a party obliged to pay the instrument, and payment is
received, the following rules apply:
(a) The person obtaining payment and a prior transferor of the
instrument warrant to the person making payment in good faith
that the warrantor is, or was, at the time the warrantor
transferred in the instrument, a person entitled to enforce the
instrument or authorized to obtain payment on behalf of a person
entitled to enforce the instrument.
(b) The person making payment may recover from any warrantor
for breach of warranty an amount equal to the amount paid plus
expenses and loss of interest resulting from the breach.
(5) The warranties stated in subsections (1) and (4) of this
section cannot be disclaimed with respect to checks. Unless
notice of a claim for breach of warranty is given to the
warrantor within 30 days after the claimant has reason to know of
the breach and the identity of the warrantor, the liability of
the warrantor under subsection (2) or (4) of this section is
discharged to the extent of any loss caused by the delay in
giving notice of the claim.
(6) A claim for relief for breach of warranty under this
section accrues when the claimant has reason to know of the
breach.
{ + (7) A demand draft is a check, as defined in ORS 73.0104
(6).
(8) If the warranty in subsection (1)(d) of this section is not
given by a transferor under applicable conflict of law rules,
then the warranty is not given to that transferor when that
transferor is a transferee. + }
SECTION 5. ORS 74.2070 is amended to read:
74.2070. (1) A customer or collecting bank that transfers an
item and receives a settlement or other consideration warrants to
the transferee and to any subsequent collecting bank that:
(a) The warrantor is a person entitled to enforce the item;
(b) All signatures on the item are authentic and authorized;
(c) The item has not been altered;
(d) The item is not subject to a defense or claim in recoupment
under ORS 73.0305 (1) of any party that can be asserted against
the warrantor; { - and - }
(e) The warrantor has no knowledge of any insolvency proceeding
commenced with respect to the maker or acceptor or, in the case
of an unaccepted draft, the drawer { + ; and + } { - . - }
{ + (f) If the item is a demand draft, creation of the item
according to the terms on its face was authorized by the person
identified as drawer. + }
(2) If an item is dishonored, a customer or collecting bank
transferring the item and receiving settlement or other
consideration is obliged to pay the amount due on the item
according to the terms of the item at the time it was
transferred, or if the transfer was of an incomplete item,
according to its terms when completed as stated in ORS 73.0115
and 73.0407. The obligation of a transferor is owed to the
Enrolled House Bill 2239 (HB 2239-A) Page 7
transferee and to any subsequent collecting bank that takes the
item in good faith. A transferor cannot disclaim its obligation
under this subsection by an indorsement stating that it is made
'without recourse' or otherwise disclaiming liability.
(3) A person to whom the warranties under subsection (1) of
this section are made and who took the item in good faith may
recover from the warrantor as damages for breach of warranty an
amount equal to the loss suffered as a result of the breach, but
not more than the amount of the item plus expenses and loss of
interest incurred as a result of the breach.
(4) The warranties stated in subsection (1) of this section
cannot be disclaimed with respect to checks. Unless notice of a
claim for breach of warranty is given to the warrantor within 30
days after the claimant has reason to know of the breach and the
identity of the warrantor, the warrantor is discharged to the
extent of any loss caused by the delay in giving notice of the
claim.
(5) A claim for relief for breach of warranty under this
section accrues when the claimant has reason to know of the
breach.
{ + (6) If the warranty in subsection (1)(f) of this section
is not given by a transferor under applicable conflict of law
rules, then the warranty is not given to that transferor when
that transferor is a transferee. + }
SECTION 6. ORS 74.2080 is amended to read:
74.2080. (1) If an unaccepted draft is presented to the drawee
for payment or acceptance and the drawee pays or accepts the
draft, the person obtaining payment or acceptance, at the time of
presentment, and a previous transferor of the draft, at the time
of transfer, warrant to the drawee that pays or accepts the draft
in good faith that:
(a) The warrantor is, or was, at the time the warrantor
transferred the draft, a person entitled to enforce the draft or
authorized to obtain payment or acceptance of the draft on behalf
of a person entitled to enforce the draft;
(b) The draft has not been altered; { - and - }
(c) The warrantor has no knowledge that the signature of the
purported drawer of the draft is unauthorized { + ; and + }
{ - . - }
{ + (d) If the draft is a demand draft, creation of the draft
according to the terms on its face was authorized by the person
identified as drawer. + }
(2) A drawee making payment may recover from a warrantor
damages for breach of warranty equal to the amount paid by the
drawee less the amount the drawee received or is entitled to
receive from the drawer because of the payment. In addition, the
drawee is entitled to compensation for expenses and loss of
interest resulting from the breach. The right of the drawee to
recover damages under this subsection is not affected by any
failure of the drawee to exercise ordinary care in making
payment. If the drawee accepts the draft:
(a) Breach of warranty is a defense to the obligation of the
acceptor; and
(b) If the acceptor makes payment with respect to the draft,
the acceptor is entitled to recover from a warrantor for breach
of warranty the amounts stated in this subsection.
(3) If a drawee asserts a claim for breach of warranty under
subsection (1) of this section based on an unauthorized
indorsement of the draft or an alteration of the draft, the
warrantor may defend by proving that the indorsement is effective
Enrolled House Bill 2239 (HB 2239-A) Page 8
under ORS 73.0404 or 73.0405 or the drawer is precluded under ORS
73.0405 or 74.4060 from asserting against the drawee the
unauthorized indorsement or alteration.
(4) If a dishonored draft is presented for payment to the
drawer or an indorser or any item is presented for payment to a
party obliged to pay the item, and the item is paid, the person
obtaining payment and a prior transferor of the item warrant to
the person making payment in good faith that the warrantor is, or
was, at the time the warrantor transferred the item, a person
entitled to enforce the item or authorized to obtain payment on
behalf of a person entitled to enforce the item. The person
making payment may recover from any warrantor for breach of
warranty an amount equal to the amount paid plus expenses and
loss of interest resulting from the breach.
(5) The warranties stated in subsections (1) and (4) of this
section cannot be disclaimed with respect to checks. Unless
notice of a claim for breach of warranty is given to the
warrantor within 30 days after the claimant has reason to know of
the breach and the identity of the warrantor, the warrantor is
discharged to the extent of any loss caused by the delay in
giving notice of the claim.
(6) A claim for relief for breach of warranty under this
section accrues when the claimant has reason to know of the
breach.
{ + (7) A demand draft is a check, as defined in ORS 73.0104
(6).
(8) If the warranty in subsection (1)(d) of this section is not
given by a transferor under applicable conflict of law rules,
then the warranty is not given to that transferor when that
transferor is a transferee. + }
----------
Enrolled House Bill 2239 (HB 2239-A) Page 9
Passed by House February 27, 1997
Repassed by House June 11, 1997
...........................................................
Chief Clerk of House
...........................................................
Speaker of House
Passed by Senate June 9, 1997
...........................................................
President of Senate
Enrolled House Bill 2239 (HB 2239-A) Page 10
Received by Governor:
......M.,............., 1997
Approved:
......M.,............., 1997
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 1997
...........................................................
Secretary of State
Enrolled House Bill 2239 (HB 2239-A) Page 11