HRS 0490-0004-0205 ANNOTATIONS

Prior Uniform Statutory Provision: None.

Purposes:

1. Subsection (1) is designed to speed up collections by eliminating any necessity to return to a non-bank depositor any items he may have failed to indorse.

2. For the purpose of permitting items to move rapidly through banking channels, intermediary banks and payor banks which are not also depositary banks are permitted to ignore restrictive indorsements of any person except the bank's immediate transferor. However, depositary banks may not so ignore restrictive indorsements. If an owner of an item indorses it "for deposit" or "for collection" he usually does so in the belief such indorsement will guard against further negotiation of the item to a holder in due course by a finder or a thief. This belief is reasonably justified if at least one bank in any chain of banks collecting the item has a responsibility to act consistently with the indorsement.

Sections 3-205, 3-206, 3-419, 3-603, 4-203.

"Collecting bank". Section 4-105.

"Customer". Section 4-104.

"Depositary bank". Section 4-105.

"Intermediary bank". Section 4-105.

"Item". Section 4-104.

"Payor bank". Section 4-105.

"Restrictive indorsement". Section 3-205.