First National Bank Of Chicago v. Standard Bank & Trust

172 F.3d 472 (1999)

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Nature of the Case

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Facts

This is all about the aftermath of a check-kiting scheme. On November 18, 1993, an individual presented to P checks with an aggregate value of $3,997,406.75, drawn on customer accounts maintained at D. P accepted the checks. The same person deposited $4,025,000.00 in checks at D, drawn on P customer accounts. On November 19, 1993, P presented the checks it received to D and vice versa. LaSalle Bank, the collecting bank, charged both banks' accounts for the checks drawn on them and provisionally credited each bank for the amount presented to them. On November 22, 1993, P opted not to honor the checks, and returned all of the checks, totaling $ 4,025,000.00, to D. D received notice on Tuesday morning, November 23. That afternoon, D attempted to dishonor the checks it had received. Three of its bank officers dashed off to P's Operations Processing Center carrying checks totaling $3,785,441.35. The checks were received by P at 3:58 p.m. that day, but P did not credit d's account for that sum. On November 30, P filed suit, seeking a declaration that D's return of the checks was not timely. D argued that its return was proper as it missed the midnight deadline and no exceptions under EFAA regulations. The district court originally found for P, but reversed and decided that prejudgment interest was appropriate. P appealed.