Full text of Federal Reserve Bank of New York Circulars : 345. Omission of Protest of Checks on Banks in North Carolina

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F E D E R A L RESERVE B A N K
O F N E W YORK

( C i r c u l a r N o . 345, February 11, 1921,

Check Department

supplementing circulars No. 343, dated February 9,
1921, No. 340, dated January 29, 1921, No. 331, dated
December 30,1920. No. 309, dated October 15,1920, No.
280, dated June 1, 1920, No. 278, dated May 17, 1920,
Nmodlfying circular No. 258, dated March 1, 1920. •

Omission of Protest of Checks on Banks in North Carolina
To all Member Banks in the Second Federal Reserve District:
Your attention is directed to the appended law enacted by the State of North
Carolina regarding the charging of exchange on remittances covering checks. You will
observe that it contains a provision purporting in effect to prohibit notaries public or
other State officers within the jurisdiction of North Carolina from protesting for nonpayment any check or checks drawn on any bank or trust company chartered by that
State when payment is refused by the drawee bank solely on account of failure or
refusal of the holder or owner thereof to pay the exchange charges authorized in the
statute.
While this law is in effect it will be impossible for the Federal Reserve Bank of
New York to require compliance with the protest instructions set forth in its circular
No. 258, entitled "Collection of Checks," dated March 1, 1920, should a bank or banks
in North Carolina fail to honor checks because of the refusal of our collecting agent to
pay exchange. I t must be understood, therefore, t h a t any checks t h a t we accept drawn
on banks located in that State will be forwarded by us subject to omission of protest.
In conformity with our circular No. 258, we will continue to request telegraphic advice
of non-payment of items of $500 or over.
In a case where a check, accepted by us, is drawn on a banking institution in
North Carolina which takes advantage of the State law, the time of collecting it may
be slower due to the fact t h a t it may have to be presented in an unusual manner.
I n such cases, therefore, we cannot be responsible for any delay so resulting. In this
connection we have a letter from the Federal Reserve Bank of Richmond which says:
"We wish to notify all of our correspondents t h a t while we will continue
to receive, if sent to us for collection, all checks upon nonmember State
banks listed upon our par list and will present such checks as soon as practicable, we cannot be responsible for the delays occasioned by our inability
to procure agents to make presentation at the counters of the drawee banks
within the usual time; nor can we be responsible for the failure to procure
a formal protest of such checks if payment in cash is refused."




With respect to omission of protest you will no doubt have in mind the following
provisions of the uniform Negotiable Instruments Law, which we are informed are in
force in North Carolina:
Section 185. Check Defined.—A check is a bill of exchange drawn on a
bank payable on demand. Except as herein otherwise provided, the provisions
of this act applicable to a bill of exchange payable on demand apply to a check.
Section 129.
exchange is a bill
within this state.
on the face of the

Inland and Foreign Bills of Exchange.—An inland bill of
which is, or on its face purports to be, both drawn and payable
Any other bill is a foreign bill. Unless the contrary appears
bill, the holder may treat it as an inland bill.

Section 152. In What Cases Protest Necessary.— * * * Where a bill
does not appear on its face to be a foreign bill, protest thereof in case of dishonor
is unnecessary.




•

Very truly yours,
BENJ.

STRONG,

Governor

•

AN ACT TO PROMOTE THE SOLVENCY OF STATE BANKS.

The General Assembly of North Carolina Do Enact:
That for the purpose of providing

or persons violating this section shall be guilty of

for the solvency, protection, and safety of banking

misdemeanor, and upon conviction shall pay a fine

institutions and trust companies chartered by this

of not more than Two Hundred ($200.00) Dollars,

State and having their principal offices in this State,

or be imprisoned not more than thirty days.

Section 1.

it shall be lawful for all banks and trust companies
Section 4-

in this State to charge a fee, not in excess of one-

That all checks drawn on the banks

eighth of one per cent, on remittances covering

and trust companies in this State in payment of

checks, the minimum fee on any remittance there-

obligations due the State of North Carolina or the

for to be ten cents.

Federal Government shall be exempt from the provisions of Sections 1 and 2 of this Act.

Section 2.

T h a t , in order to prevent accumuSection 5.

lations of unnecessary amounts of currency in the

T h a t no officer in this State shall

protest for non-payment any check or checks drawn

vaults of the banks and trust companies chartered by
this State, all checks drawn on said banks and trust

on any bank or trust company chartered by this State

companies shall, unless specified on the face thereof to

when payment is refused by the drawee bank solely on

the contrary by the maker or makers thereof, be pay-

account of failure or refusal of the holder or owner

able a t the option of the drawee bank, in exchange

thereof to pay exchange charges herein authorized;

drawn on the reserve deposits of said drawee bank

and there shall be no right of action, either in law or

when any such check is presented by or through any

equity, against any bank or trust company chartered

Federal Reserve Bank, post-office, or express com-

by this State, for refusal to pay any such check

pany, or any respective agents thereof.

when such action is based alone on the ground of

Section 3.

refusal to pay exchange or collection charges here-

T h a t it shall be unlawful for any

in authorized.

person, or persons, other than the maker thereof, to
make, by rubber stamp or otherwise, any notation

Section 6.

on any check drawn on any bank or trust company

T h a t all laws in conflict with the

provisions of this Act are hereby repealed.

chartered in this State, the effect of which notation
Section 7.

shall change or affect any condition or provision
thereof, as created by this Act.




T h a t any person

That this Act shall be in full force

and effect from and after its ratification.

3