84-4a-502. Creditor process served on receiving bank; setoff by beneficiary's bank. (a) 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.
(b) 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.
(c) If a beneficiary's bank has received a payment order for payment to the beneficiary's account in the bank, the following rules apply:
(1) 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.
(2) The bank may credit the beneficiary's account and may 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.
(3) 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.
(d) 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.
History: L. 1990, ch. 367, § 33; L. 1991, ch. 294, § 28; July 1.
Structure Kansas Statutes
Chapter 84 - Uniform Commercial Code
84-4a-103 Payment order—definitions.
84-4a-104 Funds transfer—definitions.
84-4a-106 84-4a-106.Time payment order is received.
84-4a-107 Federal reserve regulations and operating circulars.
84-4a-108 Exclusion of consumer transactions governed by federal law; exceptions.
84-4a-202 Authorized and verified payment orders.
84-4a-203 Unenforceability of certain verified payment orders.
84-4a-205 Erroneous payment orders.
84-4a-206 Transmission of payment order through funds transfer or other communication system.
84-4a-207 Misdescription of beneficiary.
84-4a-208 Misdescription of intermediary bank or beneficiary's bank.
84-4a-209 Acceptance of payment order.
84-4a-210 Rejection of payment order.
84-4a-211 Cancellation and amendment of payment order.
84-4a-212 Liability and duty of receiving bank regarding unaccepted payment order.
84-4a-301 Execution and execution date.
84-4a-302 Obligations of receiving bank in execution of payment order.
84-4a-303 Erroneous execution of payment order.
84-4a-304 Duty of sender to report erroneously executed payment order.
84-4a-305 Liability for late or improper execution or failure to execute payment order.
84-4a-402 Obligation of sender to pay receiving bank.
84-4a-403 Payment by sender to receiving bank.
84-4a-404 Obligation of beneficiary's bank to pay and give notice to beneficiary.
84-4a-405 Payment by beneficiary's bank to beneficiary.
84-4a-406 Payment by originator to beneficiary; discharge of underlying obligation.
84-4a-501 Variation by agreement and effect of funds-transfer system rule.
84-4a-502 Creditor process served on receiving bank; setoff by beneficiary's bank.
84-4a-503 Injunction or restraining order with respect to funds transfer.
84-4a-505 Preclusion of objection to debit of customer's account.