70A-4a-502 - Creditor process served on receiving bank -- Setoff by beneficiary's bank.
70A-4a-502. Creditor process served on receiving bank -- Setoff by beneficiary'sbank.
(1) 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 otherclaimant with respect to an account.
(2) This subsection applies to creditor process with respect to an authorized account ofthe sender of a payment order if the creditor process is served on the receiving bank. For thepurpose of determining rights with respect to the creditor process, if the receiving bank acceptsthe payment order the balance in the authorized account is deemed to be reduced by the amountof the payment order to the extent the bank did not otherwise receive payment of the order, unlessthe creditor process is served at a time and in a manner affording the bank a reasonableopportunity to act on it before the bank accepts the payment order.
(3) If a beneficiary's bank has received a payment order for payment to the beneficiary'saccount in the bank the rules listed in Subsections (4) through (6) apply.
(4) The bank may credit the beneficiary's account and the amount credited may be set offagainst an obligation owed by the beneficiary to the bank or may be applied to satisfy creditorprocess served on the bank with respect to the account.
(5) The bank may credit the beneficiary's account and may allow withdrawal of theamount credited unless creditor process with respect to the account is served at a time and in amanner affording the bank a reasonable opportunity to act to prevent withdrawal.
(6) If creditor process with respect to the account has been served and the bank has had areasonable opportunity to act on it, the bank may not reject the payment order except for a reasonunrelated to the service of process.
(7) Creditor process with respect to a payment by the originator to the beneficiarypursuant to a funds transfer may be served only on the beneficiary's bank with respect to the debtowed by that bank to the beneficiary. Any other bank served with the creditor process is notobliged to act with respect to the process.
Amended by Chapter 237, 1993 General Session