(a) A collecting bank has a security interest in an item and any accompanying documents or the proceeds of either:
(1) in case of an item deposited in an account, to the extent to which credit given for the item has been withdrawn or applied;
(2) 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
(3) if it makes an advance on or against the item.
(b) If credit given for several items received at one time or pursuant to a single agreement is withdrawn or applied in part, the security interest remains upon all the items, any accompanying documents or the proceeds of either. For the purpose of this section, credits first given are first withdrawn.
(c) 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:
(1) no security agreement is necessary to make the security interest enforceable (Section 36-9-203(b)(3)(A));
(2) no filing is required to perfect the security interest; and
(3) the security interest has priority over conflicting perfected security interests in the item, accompanying documents, or proceeds.
HISTORY: 1962 Code Section 10.4-210; 1966 (54) 2716; 2008 Act No. 204, Section 3, eff July 1, 2008; 2014 Act No. 213 (S.343), Section 26, eff October 1, 2014.
Editor's Note
2014 Act No. 213, Section 51, provides as follows:
"SECTION 51. This act becomes effective on October 1, 2014. It applies to transactions entered into and events occurring after that date."
Effect of Amendment
2014 Act No. 213, Section 26, in subsection (c), inserted "possession or control of the".
Structure South Carolina Code of Laws
Chapter 4 - Commercial Code - Bank Deposits And Collections
Section 36-4-101. Short title.
Section 36-4-102. Applicability
Section 36-4-103. Variation by agreement; measure of damages; action constituting ordinary care.
Section 36-4-104. Definitions and index of definitions.
Section 36-4-105. Definitions of types of banks.
Section 36-4-106. Payable through or payable at bank; collecting bank.
Section 36-4-107. Separate office of bank.
Section 36-4-108. Time of receipt of items.
Section 36-4-110. Electronic presentment.
Section 36-4-111. Statute of limitations.
Section 36-4-202. Responsibility for collections or return; when action timely.
Section 36-4-203. Effect of instructions.
Section 36-4-204. Methods of sending and presenting; sending directly to payor bank.
Section 36-4-205. Depositary bank holder of unindorsed item.
Section 36-4-206. Transfer between banks.
Section 36-4-207. Transfer warranties.
Section 36-4-208. Presentment warranties.
Section 36-4-209. Encoding and retention warranties.
Section 36-4-211. When bank gives value for purposes of holder in due course.
Section 36-4-213. Medium and time of settlement by bank.
Section 36-4-214. Right of charge-back or refund; liability of collecting bank; return of item.
Section 36-4-216. Insolvency and preference.
Section 36-4-302. Payor bank's responsibility for late return of item.
Section 36-4-401. When bank may charge customer's account.
Section 36-4-403. Customer's right to stop payment; burden of proof of loss.
Section 36-4-404. Bank not obliged to pay check more than six months old.
Section 36-4-405. Death or incompetence of a customer.
Section 36-4-406. Customer's duty to discover and report unauthorized signature or alteration.
Section 36-4-407. Payor bank's right to subrogation on improper payment.
Section 36-4-502. Presentment of "on arrival" drafts.
Section 36-4-504. Privilege of presenting bank to deal with goods; security interest for expenses.