If a customer delivers an item to a depositary bank for collection:

(1) The depositary bank becomes a holder of the item at the time it receives the item for collection if the customer at the time of delivery was a holder of the item, whether or not the customer indorses the item, and, if the bank satisfies the other requirements of Section 7-3-302, it is a holder in due course; and
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Terms Used In Alabama Code 7-4-205

  • Account: means any deposit or credit account with a bank, including a demand, time, savings, passbook, share draft, or like account, other than an account evidenced by a certificate of deposit;
    (2) "Afternoon" means the period of a day between noon and midnight;
    (3) "Banking day" means the part of a day on which a bank is open to the public for carrying on substantially all of its banking functions;
    (4) "Clearing house" means an association of banks or other payors regularly clearing items;
    (5) "Customer" means a person having an account with a bank or for whom a bank has agreed to collect items, including a bank that maintains an account at another bank;
    (6) "Documentary draft" means a draft to be presented for acceptance or payment if specified documents, certificated securities (Section 7-8-102) or instructions for uncertificated securities (Section 7-8-308), or other certificates, statements, or the like are to be received by the drawee or other payor before acceptance or payment of the draft;
    (7) "Draft" means a draft as defined in Section 7-3-104 or an item, other than an instrument, that is an order;
    (8) "Drawee" means a person ordered in a draft to make payment;
    (9) "Item" means an instrument or a promise or order to pay money handled by a bank for collection or payment. See Alabama Code 7-4-104
(2) The depositary bank warrants to collecting banks, the payor bank or other payor, and the drawer that the amount of the item was paid to the customer or deposited to the customer’s account.
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