MARVIN MANDEL, Governor

195

forth in the two preceding subsections arise
notwithstanding the absence of indorsement or words of
guaranty or warranty in the transfer or presentment and a
collecting bank remains liable for their breach despite
remittance to its transferor. Damages for breach of
such warranties or engagement to honor shall not exceed
the consideration received by the customer or collecting
bank responsible plus finance, charges and expenses
related to the item, if any.

(4) Unless a claim for breach of warranty under

this section is made within a reasonable time after the

person claiming learns of the breach, the person liable

is discharged to the extent of any loss caused by the
delay, in making claim.

4—208. Security interest of collecting bank in items,
accompanying documents and proceeds.

(1)   A bank has a security interest in an item and
any accompanying documents or the proceeds of either

(a)    In case of an item deposited in an
account to the extent to which credit given for the item
has been withdrawn or applied;

(b)   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 and whether or not there is a right of
charge—back; or

(c)   If it makes an advance on or against the
item.

(2)    When credit which has been 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agreement is withdrawn or applied in part the security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this section, credits first given are first withdrawn.

(3)    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. To the extent and so long as the bank does
not receive final settlement for the item or give up
possession of the item or accompanying documents for
purposes other than collection, the security interest
continues and is subject to the provisions of (subtitle]
TITLE 9 except that

[(d)] (A) No security agreement is necessary
to make the security interest enforceable (subsection (1)