Code of Alabama
Ala. Code § 7-4-205 (2026)
Depositary Bank Holder of Unindorsed Item.
✓ official Alabama Legislature (ALISON) text, current July 2026
If a customer delivers an item to a depositary bank for collection:
(1) The depositary bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer indorses the item, and, if the bank satisfies the other requirements of Section 7-3-302, it is a holder in due course; and
(2) The depositary bank warrants to collecting banks, the payor bank or other payor, and the drawer that the amount of the item was paid to the customer or deposited to the customer’s account.
(Acts 1965, No. 549, p. 811; repealed by Acts 1995, No. 95-668, p. 1381, §2; added by Acts 1995, No. 95-668, p. 1381, §2.)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 1
case, 1984–1984 · leading case: Trust Co. Bank v. Bronner, 451 So. 2d 247 (Ala. 1984).
Trust Co. Bank v. Bronner, 451 So. 2d 247 (Ala. 1984). “Trust Company Bank’s acceptance of the checks without its customer’s endorsement, though at variance with the written policy of the bank, was in accordance with Code 1975, § 7-4-205(1), and, therefore, within reasonable commercial standards.”
— Ala. Code § 7-4-205(1) — 1 case
Trust Co. Bank v. Bronner, 451 So. 2d 247 (Ala. 1984). “Trust Company Bank’s acceptance of the checks without its customer’s endorsement, though at variance with the written policy of the bank, was in accordance with Code 1975, § 7-4-205(1), and, therefore, within reasonable commercial standards.”
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