Legislation
SECTION 4-A-502
Creditor Process Served on Receiving Bank; Set Off by Beneficiary's Bank
Uniform Commercial Code (UCC) CHAPTER 38, ARTICLE 4-A, PART 5
Section 4-A-502. Creditor Process Served on Receiving Bank; Set Off by
Beneficiary's Bank.
(1) As used in this section, "creditor process" means levy,
attachment, garnishment, notice of lien, sequestration, or similar
process issued by or on behalf of a creditor or other claimant with
respect to an account.
(2) This subsection applies to creditor process with respect to an
authorized account of the sender of a payment order if the creditor
process is served on the receiving bank. For the purpose of determining
rights with respect to the creditor process, if the receiving bank
accepts the payment order the balance in the authorized account is
deemed to be reduced by the amount of the payment order to the extent
the bank did not otherwise receive payment of the order, unless the
creditor process is served at a time and in a manner affording the bank
a reasonable opportunity to act on it before the bank accepts the
payment order.
(3) If a beneficiary's bank has received a payment order for payment
to the beneficiary's account in the bank, the following rules apply:
(a) The bank may credit the beneficiary's account. The amount
credited may be set off against an obligation owed by the
beneficiary to the bank or may be applied to satisfy creditor
process served on the bank with respect to the account.
(b) The bank may credit the beneficiary's account and allow
withdrawal of the amount credited unless creditor process
with respect to the account is served at a time and in a
manner affording the bank a reasonable opportunity to act to
prevent withdrawal.
(c) If creditor process with respect to the beneficiary's account
has been served and the bank has had a reasonable opportunity
to act on it, the bank may not reject the payment order
except for a reason unrelated to the service of process.
(4) Creditor process with respect to a payment by the originator to
the beneficiary pursuant to a funds transfer may be served only on the
beneficiary's bank with respect to the debt owed by that bank to the
beneficiary. Any other bank served with the creditor process is not
obliged to act with respect to the process.
Beneficiary's Bank.
(1) As used in this section, "creditor process" means levy,
attachment, garnishment, notice of lien, sequestration, or similar
process issued by or on behalf of a creditor or other claimant with
respect to an account.
(2) This subsection applies to creditor process with respect to an
authorized account of the sender of a payment order if the creditor
process is served on the receiving bank. For the purpose of determining
rights with respect to the creditor process, if the receiving bank
accepts the payment order the balance in the authorized account is
deemed to be reduced by the amount of the payment order to the extent
the bank did not otherwise receive payment of the order, unless the
creditor process is served at a time and in a manner affording the bank
a reasonable opportunity to act on it before the bank accepts the
payment order.
(3) If a beneficiary's bank has received a payment order for payment
to the beneficiary's account in the bank, the following rules apply:
(a) The bank may credit the beneficiary's account. The amount
credited may be set off against an obligation owed by the
beneficiary to the bank or may be applied to satisfy creditor
process served on the bank with respect to the account.
(b) The bank may credit the beneficiary's account and allow
withdrawal of the amount credited unless creditor process
with respect to the account is served at a time and in a
manner affording the bank a reasonable opportunity to act to
prevent withdrawal.
(c) If creditor process with respect to the beneficiary's account
has been served and the bank has had a reasonable opportunity
to act on it, the bank may not reject the payment order
except for a reason unrelated to the service of process.
(4) Creditor process with respect to a payment by the originator to
the beneficiary pursuant to a funds transfer may be served only on the
beneficiary's bank with respect to the debt owed by that bank to the
beneficiary. Any other bank served with the creditor process is not
obliged to act with respect to the process.