Ark. Code Ann. § 4-4-210 (2026)
Security interest of collecting bank in items, accompanying documents, and proceeds
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A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either:
- in case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied;
- in case of an item for which it has given credit available for withdrawal as of right, to the extent of the credit given, whether or not the credit is drawn upon or there is a right of charge-back; or
- if it makes an advance on or against the item.
- If credit given for several items received at one (1) time or pursuant to a single agreement is withdrawn or applied in part, the security interest remains upon all the items, any accompanying documents or the proceeds of either. For the purpose of this section, credits first given are first withdrawn.
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Receipt by a collecting bank of a final settlement for an item is a realization on its security interest in the item, accompanying documents, and proceeds. So long as the bank does not receive final settlement for the item or give up possession of the item or possession or control of the accompanying documents for purposes other than collection, the security interest continues to that extent and is subject to Chapter 9, but:
- no security agreement is necessary to make the security interest enforceable (§ 4-9-203(b)(3)(A));
- no filing is required to perfect the security interest; and
- the security interest has priority over conflicting perfected security interests in the item, accompanying documents, or proceeds.
History. Acts 1961, No. 185, § 4-208; A.S.A. 1947, § 85-4-208; Acts 1991, No. 572, § 6; 2001, No. 1439, § 13; 2007, No. 342, § 24.
A.C.R.C. Notes. This section was formerly codified as § 4-4-208. Former § 4-4-210 has been renumbered as § 4-4-212.
Case Notes
Attachment of Security Interest.
Where an automobile dealership deposited checks which were immediately credited but subsequently dishonored, and the dealership's bank entered the amount of the dishonored checks in its own general ledger cash items account, the bank had no security interest in the proceeds of the dealership's sale of vehicles in which a finance company had a perfected security interest; by depositing the proceeds in its cash items account to cover the dishonored checks, rather than exchanging the dishonored checks with the dealership or the drawer for value, the bank engaged in a separate transaction with the dealership which did not involve any interest of the bank in the dishonored checks. GMAC v. Union Bank & Trust Co., 329 F.3d 594 (8th Cir. 2003).
Proceeds.
For purposes of subsection (c) of this section, “proceeds” include funds paid out by a presenting bank to the payee or funds directly received in exchange for the item; thus, when a depository bank advances funds on checks that are never converted to proceeds because payment is stopped, the checks, returned to the depository bank, have had no proceeds created to which a security interest can attach. GMAC v. Union Bank & Trust Co., 329 F.3d 594 (8th Cir. 2003).
Cited: Citizens Bank v. National Bank of Commerce, 334 F.2d 257 (10th Cir. 1964).