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RESERVE BANK OF DALLAS DALLAS. TEXAS 75222 Circular No. 76-139 October 19, 1976 American Revolution Bicentennial REVISION OF BULLETINS 8 AND 11 T O ALL BANKS IN THE ELEVENTH FEDERAL RESERVE DISTRICT: It h a s b e e n o b s e r v e d t h a t c h e c k p r o c e s s i n g e q u i p m e n t in u s e b y som e p a y i n g b a n k s p l a c e s a n e n d o r s e m e n t o r o t h e r i d e n t i f y i n g s ta m p of t h e p a y i n g b a n k o n t h e r e v e r s e s i d e of item s p r e s e n t e d to it f o r p a y m e n t in lieu of t h e t r a d i t i o n a l " p a i d " s ta m p on t h e face of t h e it e m s . If s u c h item s a r e r e t u r n e d u n p a i d w ith o u t c a n c e l l a t i o n of t h e p a y i n g b a n k ' s e n d o r s e m e n t , t h e F e d e r a l R e s e r v e m ay r o u t e t h e item s b a c k to t h e p a y i n g b a n k on t h e a s s u m p t i o n th a t t h e e n d o r s e m e n t s a r e t h a t of a p r i o r c o l l e c t i n g b a n k . In o r d e r to m a k e c o l le c t in g a n d p a y i n g b a n k s a w a r e of t h e p o s s i b l e l i a b il it y a s s o c i a t e d w ith t h i s p r a c t i c e , t h i s B a n k ' s B u lle tin 8, S e c tio n 11, P a r a g r a p h 1 1 .0 0 , a n d B u ll e ti n 11, S e c tio n 7 , P a r a g r a p h 7 . 0 0 , a r e b e i n g a p p r o p r i a t e l y r e v i s e d e f f e c tiv e N o v e m b e r 1, 1976. T h e r e v i s i o n s p r o v i d e th a t: (1) P a y in g b a n k s s h o u l d n o t r e t u r n items b e a r i n g t h e i r uncancelled e n d o rse m e n ts, and (2) R e s e r v e B a n k s w ill a s s u m e no r e s p o n s i b i l i t y f o r a n y d e l a y c a u s e d b y m i s r o u t i n g of s u c h r e t u r n items b y a Federal R eserv e Bank. C o p ie s of t h e r e v i s e d p a g e s of B u l l e t i n s 8 a n d 11 a r e e n c l o s e d . M em b e r b a n k s a n d o t h e r s w h o m a in ta in R e g u l a t i o n s B i n d e r s s h o u l d file t h e p a g e s in t h e i r b i n d e r s a n d t h e c o r r e s p o n d i n g p a g e s s h o u l d b e r e m o v e d a n d d e s t r o y e d . If y o u h a v e a n y q u e s t i o n s o r c o m m en ts w ith r e s p e c t to t h e r e v i s i o n of t h e s e b u l l e t i n s , p l e a s e c o n t a c t J . A . C l y m e r , A s s i s t a n t V ic e P r e s i d e n t a t t h i s B a n k , a t (214) 651-6337, o r t h e a p p r o p r i a t e o f f ic e r a t o u r El P a s o , H o u s t o n , o r S a n A n to n io B ranch. A d d iti o n a l p a g e s of t h e r e v i s e d p a g e s o f B u l l e t i n s 8 a n d 11 w ill b e f u r n i s h e d u p o n r e q u e s t to t h e S e c r e t a r y ' s Office of t h i s B a n k (214) 651-6267. Sincerely yours, T . W. Plant First Vice President Enclosures This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) FEDERAL RESERVE BA N K OF DALLAS item s payable in any other Federal Reserve dis trict to justify direct sending and this Bank au thorizes such sender to send such item s direct to the Federal Reserve Bank of such other Federal Reserve district, we reserve the right to decline to accept any such items from such sender. 10.10 Direct sending o f cash item s to other offices o f this Bank M em ber banks and other senders m aintaining or using accounts w ith one office of this Bank w hich have a substantial volume or dollar am ount of cash item s payable in the territory of any other office of this Bank w hich they w ish to collect through this Bank are required to apply to us for authority to send such item s direct to such other office; provided, how ever, th at w e may, in our discretion, w ithdraw such authority at any time. A ppropriate instructions will be transm itted to the m em ber banks and other senders w hich are authorized to send direct. 10.15 Right to refuse intradistrict item s autho rized for direct sending In the event that any sender m aintaining or using ah account w ith one office of this Bank has, in our judgment, a sufficient volume or dollar am ount of cash item s payable in the territory of another office of this Bank to justify direct sending and this Bank authorizes such sender to send such item s direct to such other office of this Bank, w e reserve the right to decline to accept any such item s from such sender. 10.20 Reim bursem ent o f transportation costs for member banks Each m em ber bank w hich sends cash items di rect to other Federal Reserve Banks will be reim bursed by us at First Class Airmail or com m on carrier rates, w hichever is usually lower, but not for insurance, on all such item s sent direct under our authority. Reim bursem ent also is allowable under sim ilar conditions for cash item s sent direct to other offices of this Bank. In the interest of expeditious and economical handling, those direct-sending m em ber banks th at by arrangem ent deliver cash item s payable in other Federal Reserve territories to this Bank for consolidated shipm ent should not deviate from the arrangem ent except upon prior ap proval of this Bank. T ransportation costs of such consolidated shipm ents will be paid by us. A direct-sending m em ber bank that has m ade an arrangem ent w ith this Bank for consolidated BULLETIN 8 shipm ent from an office of this Bank located in the same city as the m em ber bank will not normally be reim bursed by us w hen cash items are sent direct outside of the consolidated ship ment, except on Saturdays, Sundays, and holi days. 10.25 Claims for reim bursem ent Claims for reim bursem ent of transportation costs of direct sendings should be filed w ith us by the tenth day of the m onth following the m onth in w hich such costs were incurred, using Form TR-115, a supply of w hich will be fu r nished upon request. 10.30 M ethods o f shipm ent Each direct-sending m em ber bank should give constant attention to m ethods of shipm ent and should change the m ethod in any case in which shipm ent can be m ade by another m ethod at a low er cost and w ithout loss of time in present ment. In cases in w hich we pay the transporta tion costs, w e reserve the right to require a change in m ethod of shipm ent in any situation where, by the use of another m ethod, a m ore efficient handling by the receiving Federal Re serve office will result, or presentm ent can con sistently be m ade m ore promptly, or at a lower cost and w ithout loss of time. Section 11, HIGH-SPEED PROCESSING 1 1 .0 0 S ta n d a r d iza tio n , so r tin g , r o u tin g , and m echanized processing To facilitate the sorting, routing, and m echan ized processing of cash items, and thereby pro mote earlier presentm ent and earlier return of unpaid items, it is urged that: (1] In conform ity w ith the ABA M agnetic Ink Character Recognition Program, the routing symbol and the suffix of the transit num ber be encoded on all cash item s in m agnetic ink in E-13B type in the m anner prescribed, and at the location assigned, by the ABA. (2) The appropriate transit num ber-routing sym bol in fractional form be clearly im printed in the upper right corner of all cash item s payable by or through all par rem itting banks, preferably in Gothic type, the face of which m easures at least 8 points vertically or 1 /9 of an inch from the top to the bottom of the individual char acters. BULLETIN 8 FEDERAL RESERVE BA N K OF DALLAS (3) Cash item s be otherw ise conform ed to the standards prescribed by the ABA, including a m inimum w idth of 23/4 inches, a m axim um w idth of 32/s inches, a minimum length of 6 inches, and a m axim um length of 8s/4 inches, and be re stricted to a single thickness of card or paper. (4) The attention of senders is called to our operating letter entitled “Instructions to Collect ing Banks and Paying Banks” to the effect that: Cash items returned by collecting banks and paying banks should not bear on the back the endorsem ent, paid or other identifying stam p of the paying bank unless that stam p has been can celled. This Bank or another Reserve Bank w hich has handled an item, shall not assume any re sponsibility to the sender, to any other ow ner or holder of the item, or to any other person, for any delay resulting from action taken by a Re serve Bank in returing an item on the basis of the uncancelled endorsem ent, paid or other iden tifying stam p of the paying bank on the back of the item. 11.05 Right to encode, assum ption o f risk by sender If, in our judgement, the processing of any cash item by us requires the inscription thereon in m agnetic ink, or otherwise, of the ABA transit num ber, the routing symbol, or both, of the pay ing bank (or nonbank payor) or requires the inscription thereon in m agnetic ink of the am ount of such item, w e m ay so inscribe the item and present, send, or forw ard it accord ingly; and the sender of such item shall be deem ed to assum e the risk of loss resulting from delay caused by the act of inscribing such am ount or such num ber, symbol, or both. 11.10 D esignation o f paying bank or nonbank payor This Bank m ay present, send, or forw ard any cash item, in accordance w ith the provisions of Section 210.6 of Regulation J, on the basis of: (1) Any ABA transit num ber or routing symbol appearing thereon at the time of its receipt by us, w hether inscribed by magnetic ink or by other means, and w hether or not such transit num ber or routing symbol is consistent with each other form of designation of the paying b a n k (or n o n b a n k p a y o r) th e n a p p e a rin g thereon; or (2) A ny other form of designation of the paying bank (or nonbank payor) then appearing thereon, w hether or not consistent w ith any ABA transit num ber or routing symbol then appearing thereon. 11.15 N onm achinable item s A ny cash item w hich cannot be processed on our MICR high-speed check-processing equip m ent and w hich is received by this Bank on Friday or, if that day be a nonbanking day, on Thursday, m ay be held over and processed on the following Monday, or, if th at day be a non banking day, on the next succeeding banking day. Section 12, PHOTOGRAPHIC COPIES In the event w e receive, as a cash item, a prop erly prepared photographic copy of a lost or destroyed item w hich w as eligible for handling as a cash item, w hich copy bears a current en dorsem ent of the sender and the following legend, or one of equivalent effect, signed by or in behalf of the sender: “This is a photographic facismile of the original check w hich w as endorsed by the undersigned and reported lost, stolen, or destroyed while in the regular course of bank collection. All prior and any m issing endorsem ents and the validity of this facsimile are hereby guaranteed, and upon paym ent hereof in lieu of the original check, the undersigned will hold each collecting bank and the payor bank harm less from any loss suffered, provided the original check is unpaid and paym ent is stopped thereon.” W e will handle the copy as follows: (1) We will present or send the copy as a cash item to the paying bank (or nonbank payor), subject to all the rules as to rem ittance for, and return of, cash items; or (2) If such paying bank (or nonbank payor) declines to handle the copy as a cash item but is willing to handle it as a noncash item, w e will charge back to the sender the am ount of the copy and will present or send the copy to the paying bank (or nonbank payor) as a noncash item under the term s of our current bulletin relating to the collection of noncash items; or (3) If such paying bank (or nonbank payor) refuses to handle the copy, w e will charge back the am ount of the copy and return the copy to the sender. BULLETIN 8 FEDERAL RESERVE BA N K OF DALLAS Supplem ent A GOVERNMENT CHECKS A -1.00 Term s o f handling Government checks drawn on the United States Treasury will be handled by us as cash items in accordance with, and subject to, the provisions of Treasury Department Circular 21 (31 CFR 360). Copies of that Circular will be furnished upon request. With respect to matters not covered by that Circular, the terms and conditons of Regulation J applicable to cash items, of this bulletin, and of our time schedules shall be ap plicable to all such Government checks. A-2.00 Immediate credit We will give immediate credit, subject to pay ment in actually and finally collected funds, for Government checks as provided in our time schedules. Such checks will be forwarded by us to the United States Treasury and shall be sub ject in all cases to examination and payment by the United States Treasury. Under Treasury Circular 21, the United States Treasury has re served the right to examine and to refuse pay ment of all Government checks handled by the Federal Reserve Banks. A-3.00 Returns Section 210.12 of Regulation J, relating to the return of cash items by paying banks, is not applicable to Government checks. In the event that the United States Treasury refuses payment of any Government check upon first examina tion and such check, or photographic copy there of, is returned to this Bank as outlined in Treas ury Circular 21, the amount of such check will be charged back to the account of the sender and simultaneously credited to the account of the United States Treasury. This Bank shall have no responsibility to the sender of any Govern ment check, or any other owner or holder there of, with respect to the nonpayment of any such check and return by the United States Treasury of any such check or photographic copy thereof. A-4.00 Claims and actions The attention of senders is directed to 31 U.S.C. 122 and 129, to the effect that (1) claims on a Government check which appears of record to have been paid, must be made within six years after the date of issuance of the check and (2) an action to enforce liability upon a forged or un authorized signature or endorsement or altera tion of any Government check must be com menced within six years after the presentment of the check, or w ritten notice of such a claim given within that period, provided that, if a claim given within that period, provided that, if a claim is made upon an apparently paid check, the six-year period with respect to the com mencement of an action or the giving of written notice will be extended an additional 180 days. Supplem ent B POSTAL MONEY ORDERS B-1.00 Term s o f handling Postal money orders (United States postal money orders; United States international postal money orders; domestic-international postal money orders) will be handled by us as cash items in accordance w ith an agreement made by the United States Postal Service, and by the Federal Reserve Banks as depositaries and fiscal agents of the United States pursuant to author ization of the Secretary of the Treasury. With respect to matters not covered by that agree ment, the terms and conditions of Regulation ) applicable to cash items, of this bulletin, and of our time schedules shall be applicable to all such postal money orders. B-2.00 Im m ediate credit We will give immediate credit for postal money orders received from a sender maintaining or using an account with us as provided in our time schedules. Simultaneously with such credit, we will debit the amount of such money orders against the general account of the United States Treasury under such symbol numbers as may be assigned by the United States Treasury; and such credit to the account of the sender shall then become final as between us and the sender. B-3.00 Claims, returns The agreement between the United States Postal Service and the Federal Reserve Banks provides, in effect, that no claim for refund or otherwise with respect to any postal money order debited against the general account of the United States Treasury and delivered to the representative of the United States Postal Service as provided in said agreement (other than a claim based upon the negligence of a Federal Reserve Bank) shall be made against or through any Federal Reserve FEDERAL RESERVE BA N K OF DALLAS BULLETIN 8 separate cash letter. The sending bank’s trans mittal letter should be clearly stamped or marked “ FOOD COUPON S ." The tra n sm itta l le tte r should show the total number of, and the total amount of, each denomination of coupons en closed. Food coupons should be forwarded to us by the means ordinarily used by the sender for checks and other cash items; such shipments will be at the risk of the Department of Agricul ture, only to the extent and under the conditions stated in 7 CFR 272.5(c). Sending banks should retain customers’ deposit slips and any other pertinent records which would assist in substan tiating reimbursement claims against the Depart ment of Agriculture for coupons lost in transit. Bank; that, if the U nited States Postal Service m akes any such claim w ith respect to any such m oney order such m oney order will n o t be re turned or sent to a Federal Reserve Bank, but the U nited States Postal Service will deal di rectly w ith the bank or the party against w hich such claim is m ade; and th at the Federal Reserve Banks will assist the U nited States Postal Service in asserting such claim, including m aking their records and any relevant evidence in their pos session available to the United States Postal Service. Section 210.12 of Regulation J, relating to the return of cash item s by the paying banks is not applicable to postal m oney orders. Supplem ent C FOOD COUPONS (3) In accordance w ith the regulations of the United States Department of Agriculture (7 CFR 2), a portion of a food coupon consisting of less than three-fifths of a whole coupon shall not be accepted for redemption. Any coupon accepted for redemption shall show on its back either the AUTHORIZATION NUMBER or the name of the authorized retail food store and, if involved, the authorized wholesale food con cern. Each coupon shall also be cancelled by the first bank which receives it by indelibly marking "PAID” or " C A N C E L L E D together with the name of the bank or its ABA transit number, on the face of the coupon by means of an appropriate stamp. No coupon should be en dorsed by any bank. G-1.00 General Food coupons will be handled by us as cash item s in accordance w ith an agreem ent made by the Secretary of Agriculture, in behalf of the U nited States, and by the Federal Reserve Banks as depositaries and fiscal agents of the United States pursuant to authorization of the Secretary of the Treasury. W ith respect to m at ters n o t covered by such agreement, the term s and conditions of Regulation J applicable to cash item s, of this bulletin, and of our time schedules shall be applicable to such coupons. W e will re ceive food coupons only from m em ber banks and nonm em ber banks w hich have arranged w ith us to send coupons to us for collection for credit to the account of a m em ber bank on our books. All such banks sending coupons to us should follow the instructions set forth in an outline of procedures for commercial banks in handling such coupons under the current Food Stamp Program, prepared by the United States D epartm ent of Agriculture. C-2.00 Terms and conditions W e will accept food coupons received by us in accordance w ith the following term s and condi tions: (1) Redeemed food coupons should be forw arded to the office of this Bank m aintaining the reserve account to w hich the proceeds of the coupons are to be credited. W e will give im m ediate credit for deposits of redeem ed food coupons as pro vided in our time schedules. Such credit will not be final and will be subject to reclam ation and adjustm ent. (2) Food coupons should be separately sorted by denom inations and should be deposited in a (4) Additional information concerning the col lection of food coupons will be furnished by us upon request. C-3.00 Nonmember banks Nonmember banks which have not arranged with us to deposit food coupons for collection for credit to an account of a member bank on our books should forward redeemed food coupons through ordinary collection channels. Supplem ent D FOOD CERTIFICATES D-1.00 General Food certificates will be handled by us on the same basis as food coupons. Senders should con sult 7 CFR 265.11(b) for information regarding the extent to which, and the conditions under which, the Department of Agriculture assumes the risk of loss of certificates while in the course of shipment. 10 11-1-76 — A BULLETIN 11 FEDERAL RESERVE BANK OF DALLAS of any clearing house through which the item was presented or by agreement between this Bank and the paying bank. 6.15 R esponsibility o f this Bank This Bank shall have no responsibility for deter mining whether any other bank responsible therefor has [a] made or provided for the protest of any cash item protestable hereunder, or (b) given any wire advice of nonpayment required hereunder. Section 7, PROCEDURES 7.00 Standardization, sorting, routing and m e chanized processing To facilitate the sorting, routing, and mechanized processing of cash items, and thereby promote earlier presentment and return of unpaid items, paying banks are urged: (1) In conformity with the ABA Magnetic Ink Character Recognition Program, to preprint the routing symbol and the suffix of the transit num ber on all cash items in magnetic ink in E-13B type in the manner prescribed, and at the loca tion assigned, by the ABA. (2) To clearly imprint the appropriate transit number-routing symbol in fractional form in the upper right corner of all cash items payable by or through such paying banks, preferably in Gothic type, and the face of which measures at least 8 points vertically or 1/9 of an inch from the top to the bottom of the individual characters. (3) To conform cash items to the standards pre scribed by the ABA, including a minimum width of 23/i inches, a maximum width of 32h inches, a minimum length of 6 inches, and a maximum length of 83/4 inches, and to restrict cash items to a single thickness of card or paper. (4) Cash items returned by collecting banks and paying banks should not bear on the back of the endorsement, paid or other identifying stamp of the paying bank unless that stamp has been cancelled. This Bank or another Reserve Bank which has handled an item, shall not assume any responsibility to the sender, to any other owner or holder of the item, or to any other per son, for any delay resulting from action taken by a Reserve Bank in returning an item on the basis of the uncancelled endorsement, paid or other identifying stamp of the paying bank on the back of the item. 7.05 R eference to Bulletin 8 The attention of paying banks and collecting banks is called to our Bulletin 8, to the effect that: (1] This Bank may present, send, or forward any cash item, in accordance with section 210.6 of Regulation J, on the basis of: (a) Any ABA transit number or routing symbol appearing thereon at the time of its receipt by us, whether inscribed by magnetic ink or by any other means, and whether or not such transit number or routing symbol is consistent with each other form of designation of the paying bank (or nonbank payor) then appearing thereon; or (b) Any other form of designation of the paying bank (or nonbank payor) then appearing thereon, whether or not consistent with any ABA transit number or routing symbol then appearing there on; and (2) If, in our judgment, the processing of any cash item by us requires the inscription there on in magnetic ink, or otherwise, of the ABA transit number, the routing symbol, or both, of the paying bank (or nonbank payor) or requires the inscription thereon in magnetic ink of the amount of such item, we may so inscribe the item and present, send, or forward it accord ingly; and the sender of such item shall be deemed to assume the risk of loss resulting from delay caused by the act of inscribing such amount or such number, symbol, or both. 7.10 Cash letters received in m utilated condition In the event that our cash letter is received in a mutilated condition, please telephone this Bank before attempting to function any portion there of. Under certain conditions when the cash letter is returned intact, tracing and identification of mutilated or destroyed cash items is expedited. 7.15 Photographic copies In the event we receive, as a cash item, a prop erly prepared photographic copy of a lost or destroyed item which was eligible for handling as a cash item, which copy bears a current en dorsement of the sender and the following leg end, or one of equivalent effect, signed by or in behalf of the sender: “This is a photographic facsimile of the original check which was endorsed by the undersigned and reported lost, stolen, or de j FEDERAL RESERVE BANK OF DALLAS stroyed while in the regular course of bank collection. All prior and any missing en dorsements and the validity of this fac simile are hereby guaranteed, and upon payment hereof in lieu of the original check, the undersigned will hold each collecting bank and the payor bank harmless from any loss suffered, provided the original check is unpaid and payment is stopped thereon.” ^ . ing day next following the banking day of re ceipt or takes such other action to recover such payment or remittance within such time and by such means as may be provided by applicable State law: Provided, that the foregoing pro visions shall not extend, nor shall the time herein provided for return be extended by, the time for return of unpaid items fixed by the ru les and p ractice s of any clearing h o u se through which the item was presented or fixed by the provisions of any special collection agreement pursuant to which it was presented. we will present or send the copy as a cash item to the paying bank (or nonbank payor) subject to all the rules as to payment or remittance for, and return of, cash items; and we urge paying banks (and nonbank payors) to accept such pho tocopies for handling as cash items. However, if a paying bank (or nonbank payor] declines to handle the copy as a cash item but is willing to handle it as a noncash item, we will charge back to the sender the amount of the copy and will present or send the copy to the paying bank (or nonbank payor) as a noncash item under the terms of our current bulletin relating to the col lection of noncash items; or, if such paying bank (or nonbank payor) refuses to handle the copy, we will charge back the amount of the copy and return the copy to the sender. (b) Any paying bank which takes or receives a credit or obtains a refund for the amount of any payment or remittance made by it in respect of a cash item received by it from or through a Federal Reserve Bank shall be deemed (1) to w arrant to such Federal Reserve Bank, to a subsequent collecting bank, and to the sender and all prior parties that it took all action nec essary to entitle it to recover such payment or remittance within the time or times limited there for by the provisions of this part, by the appli cable rules and practices of any clearing house through which the item was presented, by the applicable provisions of any special collection agreement pursuant to which it was presented, and, except as a longer time may be afforded by the provisions of this part, by applicable State law; and (2) to agree to indemnify such Federal Reserve Bank for any loss or expense sustained (including but not limited to attorneys’ fees and expenses of litigation) resulting from its action in giving such credit or making such refund, or in making any charge to, or obtaining any refund from, the sender. No Federal Reserve Bank shall have any responsibility to such pay ing bank or any subsequent collecting bank or to the sender of the item or any other prior party thereon for determining whether the action hereinabove referred to was timely." Supplem ent A RETURN OF CASH ITEMS Section 210.12 of Regulation J, captioned “Return of Cash Items,” provides as follows: “ (a) A paying bank that receives a cash item from or through a Federal Reserve Bank, other wise than for immediate payment over the counter, and that pays or remits for such item as provided in § 210.9(a) of this Part shall have the right to recover any payment or remittance so made if, before it has finally paid the item, it returns the item before midnight of its bank A-1 11-1-70 I BULLETIN 11
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