A drew a check to B who deposited it in his account in X Bank. The check was presented to the drawee-payor, Y Bank, on Friday morning through the local clearing house, was sorted, encoded, run through the electronic computer, and stamped "Paid." On Monday morning exception reports were reviewed, the check was photographed, cancelled, and filed away in A's account. On Monday afternoon A stopped payment on ,the check. Y Bank removed the check from A's file and notified X Bank the check was being returned in accordance with the local clearing house rule. In an action by X Bank against Y Bank held: the Uniform Commercial Code provides that posting is not completed until the time for reversal of entries expires, and since the bank by clearing house rule could return items until Tuesday, Y Bank had not completed the process of posting, and was not accountable to X Bank for the amount of the check. West Side Bank v. Marine National Exchange Bank, 155 N.W. 2d 587, 4 UCC Rep. Ser. 1003 (Wis. 1968) (hereinafter referred to as West Side).
This recent holding poses in sharp outline the significance of the UCC concept of "process of posting"' in the law relating to payor bank liability. Where, how, and why does completion of the process of posting affect the bank's legal posture? How clear are the rules? Did the court in West Side apply them consistently with the policy of the Code draftsmen? Finally, ought the rules be construed and applied differently to reflect other interests and policy goals? To those questions this paper is directed.
Ralph J. Rohner, Posting of Checks: Final Payment and the Four Legals, 23 BUS. LAW. 1075 (1968).