J. MILLARD TAWES, Governor                        863

(e) correcting or reversing an entry or erroneous action with re-
spect to the item.

Part 2

Collection of Items; Depositary and Collecting Banks

4—201. Presumption and Duration of Agency Status of Collecting
Banks and Provisional Status of Credits; Applicability of Sub-title;
Item Indorsed "Pay Any Bank".

(1)   Unless a contrary intent clearly appears and prior to the
time that a settlement given by a collecting bank for an item is or
becomes final (sub-section (3) of Section 4—211—and Sections 4—
212 and 4—213) the bank is an agent or sub-agent of the owner of
the item and any settlement given for the item is provisional. This
provision applies regardless of the form of indorsement or lack of
indorsement and even though credit given for the item is subject to
immediate withdrawal as of right or is in fact withdrawn; but the
continuance of ownership of an item by its owner and any rights of
the owner to proceeds of the item are subject to rights of a collecting
bank such as those resulting from outstanding advances on the item,
and valid rights of setoff. When an item is handled by banks for
purposes of presentment, payment and collection, the relevant pro-
visions of this Sub-title apply even though action of parties clearly
establishes that a particular bank has purchased the item and is the
owner of it.

(2)  After an item has been indorsed with the words "pay any
bank" or the like, only a bank may acquire the rights of a holder

(a)  until the item has been returned to the customer initiating
collection; or

(b)  until the item has been specially indorsed by a bank to a per-
son who is not a bank.

4—202. Responsibility for Collection; When Action Seasonable.
(1) A collecting bank must use ordinary care in

(a)  presenting an item or sending it for presentment; and

(b)  sending notice of dishonor or non-payment or returning an
item other than a documentary draft to the bank's transferor or
directly to the depositary bank under sub-section (2) of Section 4—
212 after learning that the item has not been paid or accepted, as
the case may be; and

(c)  settling for an item when the bank receives final settlement;
and

(d)  making or providing for any necessary protest; and

(e)  notifying its transferor of any loss or delay in transit within
a reasonable time after discovery thereof.

(2) A collecting bank taking proper action before its midnight
deadline following receipt of cm item, notice or payment acts season-
ably; taking proper action within a reasonably longer time may be
seasonable but the bank has the burden of so establishing.