Ala. Code
Code of Alabama

Ala. Code § 7-4-201 (2026)

Status of Collecting Bank as Agent and Provisional Status of Credits, Applicability of Article; Item Indorsed “Pay Any Bank.”

✓ official Alabama Legislature (ALISON) text, current July 2026
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(a) Unless a contrary intent clearly appears and before the time that a settlement given by a collecting bank for an item is or becomes final, the bank, with respect to the item, is an agent or sub-agent of the owner of the item and any settlement given for the item is provisional. This provision applies regardless of the form of indorsement or lack of indorsement and even though credit given for the item is subject to immediate withdrawal as of right or is in fact withdrawn; but the continuance of ownership of an item by its owner and any rights of the owner to proceeds of the item are subject to rights of a collecting bank, such as those resulting from outstanding advances on the item and rights of recoupment or setoff. If an item is handled by banks for purposes of presentment, payment, collection, or return, the relevant provisions of this article apply even though action of the parties clearly establishes that a particular bank has purchased the item and is the owner of it.

(b) After an item has been indorsed with the words “pay any bank” or the like, only a bank may acquire the rights of a holder until the item has been:

(1) Returned to the customer initiating collection; or

(2) Specially indorsed by a bank to a person who is not a bank.

(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §2; added by Acts 1995, No. 95-668, p. 1381, §2.)

Notes of Decisions
Cited in 2 cases, 1988–2012 · leading case: Braden Furniture Co. v. Union State Bank, 109 So. 3d 625 (Ala. 2012).
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Braden Furniture Co. v. Union State Bank, 109 So. 3d 625 (Ala. 2012). “Specifically, the UCC sets forth provisions addressing the collection of items by depository and collecting banks, see § 7-4-201 et seq.; the collection of items by payor banks, see § 7-4-301 et seq.”
Creech v. First Bank of Baldwin Cnty., 539 So. 2d 267 (Ala. Civ. App. 1988). “Section 7-4-201(1), Ala. Code (1975), provides in pertinent part: “(1) Unless a contrary intent clearly appears and prior to the time that a settlement given by a collecting bank for an item is or becomes final (subsection (3) of section 7-4-211 and sections 7-4-212 and 7-4-213)…”
— Ala. Code § 7-4-201(1) — 1 case
Creech v. First Bank of Baldwin Cnty., 539 So. 2d 267 (Ala. Civ. App. 1988). “Section 7-4-201(1), Ala. Code (1975), provides in pertinent part: “(1) Unless a contrary intent clearly appears and prior to the time that a settlement given by a collecting bank for an item is or becomes final (subsection (3) of section 7-4-211 and sections 7-4-212 and 7-4-213)…”
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