S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   5345
 
                        2025-2026 Regular Sessions
 
                           I N  A S S E M B L Y
 
                             February 13, 2025
                                ___________
 
 Introduced by M. of A. HUNTER -- read once and referred to the Committee
   on Banks
 
 AN  ACT  to  amend  the banking law, in relation to enacting the uniform
   special deposits act
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1. The banking law is amended by adding a new article 13-F to
 read as follows:
                               ARTICLE XIII-F
                       UNIFORM SPECIAL DEPOSITS ACT
 SECTION 680.   SHORT TITLE.
         680-A. DEFINITIONS.
         680-B. SCOPE; CHOICE OF LAW; FORUM.
         680-C. VARIATION BY AGREEMENT OR AMENDMENT.
         680-D. REQUIREMENTS FOR SPECIAL DEPOSIT.
         680-E. PERMISSIBLE PURPOSE.
         680-F. PAYMENT TO BENEFICIARY BY BANK.
         680-G. PROPERTY INTEREST OF DEPOSITOR OR BENEFICIARY.
         680-H. WHEN CREDITOR PROCESS ENFORCEABLE AGAINST BANK.
         680-I. INJUNCTION OR SIMILAR RELIEF.
         680-J. RECOUPMENT OR SET OFF.
         680-K. DUTIES AND LIABILITY OF BANK.
         680-L. TERM AND TERMINATION.
         680-M. PRINCIPLES OF LAW AND EQUITY.
         680-N. UNIFORMITY OF APPLICATION AND CONSTRUCTION.
         680-O. TRANSITIONAL PROVISION.
         680-P. SEVERABILITY.
   § 680. SHORT TITLE. THIS ARTICLE SHALL BE KNOWN AND MAY  BE  CITED  AS
 THE "UNIFORM SPECIAL DEPOSITS ACT".
   §  680-A.  DEFINITIONS.  AS  USED IN THIS ARTICLE, THE FOLLOWING TERMS
 SHALL HAVE THE FOLLOWING MEANINGS:
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD06883-01-5
              

 A. 5345                             2
 
   1. "ACCOUNT AGREEMENT" MEANS AN AGREEMENT THAT:
   (A) IS IN A RECORD BETWEEN A BANK AND ONE OR MORE DEPOSITORS;
   (B) MAY HAVE ONE OR MORE BENEFICIARIES AS ADDITIONAL PARTIES; AND
   (C) STATES THE INTENTION OF THE PARTIES TO ESTABLISH A SPECIAL DEPOSIT
 GOVERNED BY THIS ARTICLE.
   2.  "BANK"  MEANS  A  PERSON  ENGAGED  IN  THE BUSINESS OF BANKING AND
 INCLUDES A SAVINGS BANK, SAVINGS AND  LOAN  ASSOCIATION,  CREDIT  UNION,
 TRUST  COMPANY,  AND  A  BANK AS DEFINED IN SECTION TWO OF THIS CHAPTER.
 EACH BRANCH OR SEPARATE OFFICE OF A BANK IS  A  SEPARATE  BANK  FOR  THE
 PURPOSE OF THIS ARTICLE.
   3. "BENEFICIARY" MEANS A PERSON THAT:
   (A) IS IDENTIFIED AS A BENEFICIARY IN AN ACCOUNT AGREEMENT; OR
   (B) IF NOT IDENTIFIED AS A BENEFICIARY IN AN ACCOUNT AGREEMENT, MAY BE
 ENTITLED TO PAYMENT FROM A SPECIAL DEPOSIT:
   (I) UNDER THE ACCOUNT AGREEMENT; OR
   (II) ON TERMINATION OF THE SPECIAL DEPOSIT.
   4.  "CONTINGENCY"  MEANS AN EVENT OR CIRCUMSTANCE STATED IN AN ACCOUNT
 AGREEMENT THAT IS NOT CERTAIN TO OCCUR BUT MUST OCCUR BEFORE THE BANK IS
 OBLIGATED TO PAY A BENEFICIARY.
   5. "CREDITOR PROCESS" MEANS ATTACHMENT, GARNISHMENT, LEVY,  NOTICE  OF
 LIEN,  SEQUESTRATION,  OR  SIMILAR  PROCESS  ISSUED BY OR ON BEHALF OF A
 CREDITOR OR OTHER CLAIMANT.
   6. "DEPOSITOR" MEANS A PERSON THAT  ESTABLISHES  OR  FUNDS  A  SPECIAL
 DEPOSIT.
   7.  "GOOD  FAITH"  MEANS  HONESTY IN FACT AND OBSERVANCE OF REASONABLE
 COMMERCIAL STANDARDS OF FAIR DEALING.
   8. "KNOWLEDGE" MEANS:
   (A) WITH RESPECT TO A BENEFICIARY, ACTUAL KNOWLEDGE OF THE FACT; OR
   (B) WITH RESPECT TO A BANK HOLDING A SPECIAL DEPOSIT:
   (I) IF THE BANK:
   (1) HAS ESTABLISHED A REASONABLE ROUTINE  FOR  COMMUNICATING  MATERIAL
 INFORMATION  TO AN INDIVIDUAL TO WHOM THE BANK HAS ASSIGNED RESPONSIBIL-
 ITY FOR THE SPECIAL DEPOSIT; AND
   (2) MAINTAINS REASONABLE COMPLIANCE WITH THE ROUTINE, ACTUAL KNOWLEDGE
 OF THE FACT BY THAT INDIVIDUAL; OR
   (II) IF THE BANK HAS NOT ESTABLISHED AND MAINTAINED REASONABLE COMPLI-
 ANCE WITH A ROUTINE DESCRIBED IN SUBPARAGRAPH (I) OF THIS  PARAGRAPH  OR
 OTHERWISE  EXERCISED  DUE  DILIGENCE, IMPLIED KNOWLEDGE OF THE FACT THAT
 WOULD HAVE COME TO THE ATTENTION OF AN INDIVIDUAL TO WHOM THE  BANK  HAS
 ASSIGNED RESPONSIBILITY FOR THE SPECIAL DEPOSIT.
   9.  "OBLIGATED TO PAY A BENEFICIARY" OR "OBLIGATION TO PAY A BENEFICI-
 ARY" MEANS A BENEFICIARY IS ENTITLED  UNDER  THE  ACCOUNT  AGREEMENT  TO
 RECEIVE FROM THE BANK A PAYMENT WHEN:
   (A) A CONTINGENCY HAS OCCURRED; AND
   (B) THE BANK HAS KNOWLEDGE THE CONTINGENCY HAS OCCURRED.
   10.  "PERMISSIBLE  PURPOSE"  MEANS A GOVERNMENTAL, REGULATORY, COMMER-
 CIAL, CHARITABLE, OR TESTAMENTARY OBJECTIVE OF THE PARTIES STATED IN  AN
 ACCOUNT AGREEMENT. THE TERM INCLUDES AN OBJECTIVE TO:
   (A) HOLD FUNDS:
   (I)  IN  ESCROW, INCLUDING FOR A PURCHASE AND SALE, LEASE, BUYBACK, OR
 OTHER TRANSACTION;
   (II) AS A SECURITY DEPOSIT OF A TENANT;
   (III) THAT MAY BE DISTRIBUTED TO A PERSON AS REMUNERATION,  RETIREMENT
 OR  OTHER  BENEFIT,  OR  COMPENSATION  UNDER A JUDGMENT, CONSENT DECREE,
 COURT ORDER, OR OTHER DECISION OF A TRIBUNAL; OR
 A. 5345                             3
 
   (IV) FOR DISTRIBUTION TO A DEFINED CLASS OF PERSONS AFTER  IDENTIFICA-
 TION OF THE CLASS MEMBERS AND THEIR INTEREST IN THE FUNDS;
   (B)  PROVIDE  ASSURANCE  WITH  RESPECT  TO  AN  OBLIGATION  CREATED BY
 CONTRACT, SUCH AS EARNEST MONEY TO ENSURE A TRANSACTION CLOSES;
   (C) SETTLE AN OBLIGATION THAT ARISES IN THE  OPERATION  OF  A  PAYMENT
 SYSTEM,  SECURITIES SETTLEMENT SYSTEM, OR OTHER FINANCIAL MARKET INFRAS-
 TRUCTURE;
   (D) PROVIDE ASSURANCE WITH RESPECT TO AN OBLIGATION THAT ARISES IN THE
 OPERATION OF A PAYMENT SYSTEM, SECURITIES SETTLEMENT  SYSTEM,  OR  OTHER
 FINANCIAL MARKET INFRASTRUCTURE; OR
   (E)  HOLD  MARGIN,  OTHER  CASH  COLLATERAL, OR FUNDS THAT SUPPORT THE
 ORDERLY FUNCTIONING OF FINANCIAL MARKET INFRASTRUCTURE OR  THE  PERFORM-
 ANCE OF AN OBLIGATION WITH RESPECT TO THE INFRASTRUCTURE.
   11.  "PERSON" MEANS AN INDIVIDUAL, ESTATE, BUSINESS OR NONPROFIT ENTI-
 TY, GOVERNMENT OR GOVERNMENTAL SUBDIVISION, AGENCY, OR  INSTRUMENTALITY,
 OR  OTHER  LEGAL  ENTITY.  THE TERM INCLUDES A PROTECTED SERIES, HOWEVER
 DENOMINATED, OF AN ENTITY IF THE PROTECTED SERIES IS  ESTABLISHED  UNDER
 LAW  THAT LIMITS, OR LIMITS IF CONDITIONS SPECIFIED UNDER LAW ARE SATIS-
 FIED, THE ABILITY OF A CREDITOR OF THE ENTITY OR OF ANY OTHER  PROTECTED
 SERIES  OF  THE  ENTITY  TO SATISFY A CLAIM FROM ASSETS OF THE PROTECTED
 SERIES.
   12. "RECORD" MEANS INFORMATION:
   (A) INSCRIBED ON A TANGIBLE MEDIUM; OR
   (B) STORED IN  AN  ELECTRONIC  OR  OTHER  MEDIUM  AND  RETRIEVABLE  IN
 PERCEIVABLE FORM.
   13.  "SPECIAL  DEPOSIT"  MEANS  A  DEPOSIT  THAT SATISFIES SECTION SIX
 HUNDRED EIGHTY-D OF THIS ARTICLE.
   14. "STATE" MEANS A STATE OF THE UNITED STATES, THE DISTRICT OF COLUM-
 BIA, PUERTO RICO, THE UNITED STATES VIRGIN ISLANDS, OR ANY OTHER  TERRI-
 TORY OR POSSESSION SUBJECT TO THE JURISDICTION OF THE UNITED STATES. THE
 TERM INCLUDES AN AGENCY OR INSTRUMENTALITY OF THE STATE.
   §  680-B.  SCOPE;  CHOICE  OF LAW; FORUM. 1. THIS ARTICLE APPLIES TO A
 SPECIAL DEPOSIT UNDER AN ACCOUNT AGREEMENT THAT STATES THE INTENTION  OF
 THE  PARTIES  TO  ESTABLISH  A SPECIAL DEPOSIT GOVERNED BY THIS ARTICLE,
 REGARDLESS OF WHETHER A PARTY TO THE ACCOUNT AGREEMENT OR A  TRANSACTION
 RELATED  TO  THE  SPECIAL  DEPOSIT, OR THE SPECIAL DEPOSIT ITSELF, HAS A
 REASONABLE RELATION TO THIS STATE.
   2. THE PARTIES TO AN ACCOUNT AGREEMENT MAY  CHOOSE  A  FORUM  IN  THIS
 STATE FOR SETTLING A DISPUTE ARISING OUT OF THE SPECIAL DEPOSIT, REGARD-
 LESS  OF  WHETHER  A  PARTY  TO  THE  ACCOUNT AGREEMENT OR A TRANSACTION
 RELATED TO THE SPECIAL DEPOSIT, OR THE SPECIAL  DEPOSIT  ITSELF,  HAS  A
 REASONABLE RELATION TO THIS STATE.
   3. THIS ARTICLE DOES NOT AFFECT:
   (A)  A  RIGHT OR OBLIGATION RELATING TO A DEPOSIT OTHER THAN A SPECIAL
 DEPOSIT UNDER THIS ARTICLE; OR
   (B) THE VOIDABILITY OF A DEPOSIT OR TRANSFER  THAT  IS  FRAUDULENT  OR
 VOIDABLE UNDER OTHER LAW.
   §  680-C.  VARIATION  BY AGREEMENT OR AMENDMENT. 1. THE EFFECT OF THIS
 SECTION AND SECTIONS SIX HUNDRED EIGHTY-A,  SIX  HUNDRED  EIGHTY-B,  SIX
 HUNDRED  EIGHTY-D,  SIX  HUNDRED  EIGHTY-E,  SIX  HUNDRED  EIGHTY-G, SIX
 HUNDRED EIGHTY-H, SIX HUNDRED EIGHTY-I, SIX  HUNDRED  EIGHTY-J  AND  SIX
 HUNDRED  EIGHTY-M  OF  THIS  ARTICLE  SHALL  NOT BE VARIED BY AGREEMENT,
 EXCEPT AS PROVIDED IN SUCH SECTIONS. SUBJECT TO SUBDIVISION TWO OF  THIS
 SECTION, THE EFFECT OF SECTIONS SIX HUNDRED EIGHTY-F, SIX HUNDRED EIGHT-
 Y-K AND SIX HUNDRED EIGHTY-L OF THIS ARTICLE MAY BE VARIED BY AGREEMENT.
 A. 5345                             4
 
   2.  A  PROVISION IN AN ACCOUNT AGREEMENT OR OTHER RECORD THAT SUBSTAN-
 TIALLY EXCUSES LIABILITY OR SUBSTANTIALLY LIMITS REMEDIES FOR FAILURE TO
 PERFORM AN OBLIGATION UNDER THIS ARTICLE IS NOT SUFFICIENT TO  VARY  THE
 EFFECT OF A PROVISION OF THIS ARTICLE.
   3.  IF  A BENEFICIARY IS A PARTY TO AN ACCOUNT AGREEMENT, THE BANK AND
 THE DEPOSITOR MAY AMEND THE AGREEMENT WITHOUT THE CONSENT OF THE BENEFI-
 CIARY ONLY IF THE AGREEMENT EXPRESSLY PERMITS THE AMENDMENT.
   4. IF A BENEFICIARY IS NOT A PARTY TO AN  ACCOUNT  AGREEMENT  AND  THE
 BANK  AND THE DEPOSITOR KNOW THE BENEFICIARY HAS KNOWLEDGE OF THE AGREE-
 MENT'S TERMS, THE BANK AND THE DEPOSITOR MAY AMEND THE AGREEMENT WITHOUT
 THE CONSENT OF THE BENEFICIARY ONLY IF THE AMENDMENT DOES NOT  ADVERSELY
 AND MATERIALLY AFFECT A PAYMENT RIGHT OF THE BENEFICIARY.
   5.  IF  A  BENEFICIARY  IS NOT A PARTY TO AN ACCOUNT AGREEMENT AND THE
 BANK AND THE DEPOSITOR DO NOT KNOW WHETHER THE BENEFICIARY HAS KNOWLEDGE
 OF THE AGREEMENT'S TERMS, THE BANK  AND  THE  DEPOSITOR  MAY  AMEND  THE
 AGREEMENT  WITHOUT  THE CONSENT OF THE BENEFICIARY ONLY IF THE AMENDMENT
 IS MADE IN GOOD FAITH.
   § 680-D. REQUIREMENTS FOR SPECIAL DEPOSIT.  A  DEPOSIT  IS  A  SPECIAL
 DEPOSIT IF IT IS:
   1. A DEPOSIT OF FUNDS IN A BANK UNDER AN ACCOUNT AGREEMENT;
   2. FOR THE BENEFIT OF AT LEAST TWO BENEFICIARIES, ONE OR MORE OF WHICH
 MAY BE A DEPOSITOR;
   3. DENOMINATED IN A MEDIUM OF EXCHANGE THAT IS CURRENTLY AUTHORIZED OR
 ADOPTED BY A DOMESTIC OR FOREIGN GOVERNMENT;
   4. FOR A PERMISSIBLE PURPOSE STATED IN THE ACCOUNT AGREEMENT; AND
   5. SUBJECT TO A CONTINGENCY.
   § 680-E. PERMISSIBLE PURPOSE. 1. A SPECIAL DEPOSIT MUST SERVE AT LEAST
 ONE  PERMISSIBLE  PURPOSE  STATED IN THE ACCOUNT AGREEMENT FROM THE TIME
 THE SPECIAL DEPOSIT IS CREATED IN THE  ACCOUNT  AGREEMENT  UNTIL  TERMI-
 NATION OF THE SPECIAL DEPOSIT.
   2.  IF, BEFORE TERMINATION OF THE SPECIAL DEPOSIT, THE BANK OR A COURT
 DETERMINES THE SPECIAL DEPOSIT NO LONGER SATISFIES  SUBDIVISION  ONE  OF
 THIS  SECTION,  SECTIONS SIX HUNDRED EIGHTY-G, SIX HUNDRED EIGHTY-H, SIX
 HUNDRED EIGHTY-I AND SIX HUNDRED EIGHTY-J OF THIS ARTICLE CEASE TO APPLY
 TO ANY FUNDS DEPOSITED IN THE SPECIAL DEPOSIT AFTER THE SPECIAL  DEPOSIT
 CEASES TO SATISFY SUBDIVISION ONE OF THIS SECTION.
   3.  IF,  BEFORE  TERMINATION OF A SPECIAL DEPOSIT, THE BANK DETERMINES
 THE SPECIAL DEPOSIT NO LONGER SATISFIES SUBDIVISION ONE OF THIS SECTION,
 THE BANK MAY TAKE ACTION IT BELIEVES  IS  NECESSARY  UNDER  THE  CIRCUM-
 STANCES, INCLUDING TERMINATING THE SPECIAL DEPOSIT.
   §  680-F. PAYMENT TO BENEFICIARY BY BANK. 1. UNLESS THE ACCOUNT AGREE-
 MENT PROVIDES OTHERWISE, THE BANK IS OBLIGATED TO PAY A  BENEFICIARY  IF
 THERE ARE SUFFICIENT ACTUALLY AND FINALLY COLLECTED FUNDS IN THE BALANCE
 OF THE SPECIAL DEPOSIT.
   2.  EXCEPT AS PROVIDED IN SUBDIVISION THREE OF THIS SECTION, THE OBLI-
 GATION TO PAY THE BENEFICIARY IS EXCUSED IF THE FUNDS AVAILABLE  IN  THE
 SPECIAL DEPOSIT ARE INSUFFICIENT TO COVER SUCH PAYMENT.
   3.  UNLESS  THE  ACCOUNT  AGREEMENT  PROVIDES  OTHERWISE, IF THE FUNDS
 AVAILABLE IN THE SPECIAL DEPOSIT ARE INSUFFICIENT TO COVER AN OBLIGATION
 TO PAY A BENEFICIARY, A BENEFICIARY MAY ELECT TO BE PAID THE FUNDS  THAT
 ARE  AVAILABLE  OR,  IF  THERE  IS MORE THAN ONE BENEFICIARY, A PRO RATA
 SHARE OF THE FUNDS AVAILABLE. PAYMENT  TO  THE  BENEFICIARY  MAKING  THE
 ELECTION UNDER THIS SUBSECTION DISCHARGES THE BANK'S OBLIGATION TO PAY A
 BENEFICIARY  AND  DOES  NOT  CONSTITUTE  AN ACCORD AND SATISFACTION WITH
 RESPECT TO ANOTHER PERSON OBLIGATED TO THE BENEFICIARY.
 A. 5345                             5
 
   4. UNLESS THE ACCOUNT AGREEMENT PROVIDES OTHERWISE, THE OBLIGATION  OF
 THE BANK OBLIGATED TO PAY A BENEFICIARY IS IMMEDIATELY DUE AND PAYABLE.
   5. THE BANK MAY DISCHARGE ITS OBLIGATION UNDER THIS SECTION BY:
   (A) CREDITING ANOTHER TRANSACTION ACCOUNT OF THE BENEFICIARY; OR
   (B) TAKING OTHER ACTION THAT:
   (I)  IS PERMITTED UNDER THE ACCOUNT AGREEMENT FOR THE BANK TO OBTAIN A
 DISCHARGE; OR
   (II) OTHERWISE WOULD CONSTITUTE A DISCHARGE UNDER LAW.
   6. IF THE BANK OBLIGATED TO PAY A BENEFICIARY HAS  INCURRED  AN  OBLI-
 GATION  TO DISCHARGE THE OBLIGATION OF ANOTHER PERSON, THE OBLIGATION OF
 THE OTHER PERSON IS DISCHARGED IF ACTION BY THE BANK  UNDER  SUBDIVISION
 FIVE  OF  THIS SECTION WOULD CONSTITUTE A DISCHARGE OF THE OBLIGATION OF
 THE OTHER PERSON UNDER LAW THAT  DETERMINES  WHETHER  AN  OBLIGATION  IS
 SATISFIED.
   §  680-G.  PROPERTY INTEREST OF DEPOSITOR OR BENEFICIARY. 1. NEITHER A
 DEPOSITOR NOR A BENEFICIARY HAS A PROPERTY INTEREST IN A SPECIAL  DEPOS-
 IT.
   2.  ANY PROPERTY INTEREST WITH RESPECT TO A SPECIAL DEPOSIT IS ONLY IN
 THE RIGHT TO RECEIVE PAYMENT IF THE BANK IS OBLIGATED TO PAY A BENEFICI-
 ARY AND NOT IN THE SPECIAL DEPOSIT ITSELF. ANY PROPERTY  INTEREST  UNDER
 THIS  SUBDIVISION SHALL BE SUBJECT TO THE PROVISIONS OF THIS CHAPTER AND
 TO RULES AND REGULATIONS MADE IN ACCORDANCE THEREWITH.
   § 680-H. WHEN CREDITOR PROCESS ENFORCEABLE AGAINST BANK. 1. SUBJECT TO
 SUBDIVISION TWO OF THIS SECTION, CREDITOR  PROCESS  WITH  RESPECT  TO  A
 SPECIAL  DEPOSIT IS NOT ENFORCEABLE AGAINST THE BANK HOLDING THE SPECIAL
 DEPOSIT.
   2. CREDITOR PROCESS IS ENFORCEABLE AGAINST THE BANK HOLDING A  SPECIAL
 DEPOSIT WITH RESPECT TO AN AMOUNT THE BANK IS OBLIGATED TO PAY A BENEFI-
 CIARY OR A DEPOSITOR IF THE PROCESS:
   (A) IS SERVED ON THE BANK;
   (B) PROVIDES SUFFICIENT INFORMATION TO PERMIT THE BANK TO IDENTIFY THE
 DEPOSITOR OR THE BENEFICIARY FROM THE BANK'S BOOKS AND RECORDS; AND
   (C) GIVES THE BANK A REASONABLE OPPORTUNITY TO ACT ON THE PROCESS.
   3.  CREDITOR PROCESS SERVED ON A BANK BEFORE IT IS ENFORCEABLE AGAINST
 THE BANK UNDER SUBDIVISION TWO OF THIS SECTION DOES NOT CREATE  A  RIGHT
 OF  THE CREDITOR AGAINST THE BANK OR A DUTY OF THE BANK TO THE CREDITOR.
 THE LIEN LAW AND ANY OTHER APPLICABLE LAW SHALL DETERMINE WHETHER CREDI-
 TOR PROCESS CREATES A LIEN ENFORCEABLE  AGAINST  THE  BENEFICIARY  ON  A
 CONTINGENT INTEREST OF A BENEFICIARY, INCLUDING A DEPOSITOR AS A BENEFI-
 CIARY, EVEN IF NOT ENFORCEABLE AGAINST THE BANK.
   §  680-I.  INJUNCTION  OR SIMILAR RELIEF. A COURT MAY ENJOIN, OR GRANT
 SIMILAR RELIEF THAT WOULD HAVE THE EFFECT  OF  ENJOINING,  A  BANK  FROM
 PAYING  A  DEPOSITOR  OR  BENEFICIARY ONLY IF PAYMENT WOULD CONSTITUTE A
 MATERIAL FRAUD OR FACILITATE A MATERIAL FRAUD WITH RESPECT TO A  SPECIAL
 DEPOSIT.
   §  680-J.  RECOUPMENT OR SET OFF. 1. EXCEPT AS PROVIDED IN SUBDIVISION
 TWO OR THREE OF THIS SECTION, A BANK  SHALL  NOT  EXERCISE  A  RIGHT  OF
 RECOUPMENT OR SET OFF AGAINST A SPECIAL DEPOSIT.
   2.  AN  ACCOUNT  AGREEMENT MAY AUTHORIZE THE BANK TO DEBIT THE SPECIAL
 DEPOSIT:
   (A) WHEN THE BANK BECOMES OBLIGATED TO PAY A BENEFICIARY, IN AN AMOUNT
 THAT DOES NOT EXCEED THE AMOUNT NECESSARY TO DISCHARGE THE OBLIGATION;
   (B) FOR A FEE ASSESSED BY THE BANK THAT RELATES TO AN OVERDRAFT IN THE
 SPECIAL DEPOSIT ACCOUNT;
   (C) FOR COSTS INCURRED BY THE BANK THAT RELATE DIRECTLY TO THE SPECIAL
 DEPOSIT; OR
 A. 5345                             6
 
   (D) TO REVERSE AN EARLIER CREDIT POSTED BY THE BANK TO THE BALANCE  OF
 THE  SPECIAL  DEPOSIT  ACCOUNT, IF THE REVERSAL OCCURS UNDER AN EVENT OR
 CIRCUMSTANCE WARRANTED UNDER OTHER LAW OF THIS STATE  GOVERNING  MISTAKE
 AND RESTITUTION.
   3.  THE BANK HOLDING A SPECIAL DEPOSIT MAY EXERCISE A RIGHT OF RECOUP-
 MENT OR SET OFF AGAINST AN OBLIGATION TO PAY A BENEFICIARY, EVEN IF  THE
 BANK FUNDS PAYMENT FROM THE SPECIAL DEPOSIT.
   § 680-K. DUTIES AND LIABILITY OF BANK. 1. A BANK DOES NOT HAVE A FIDU-
 CIARY DUTY TO ANY PERSON WITH RESPECT TO A SPECIAL DEPOSIT.
   2.  WHEN THE BANK HOLDING A SPECIAL DEPOSIT BECOMES OBLIGATED TO PAY A
 BENEFICIARY, A DEBTOR-CREDITOR RELATIONSHIP ARISES BETWEEN THE BANK  AND
 BENEFICIARY.
   3.  THE  BANK HOLDING A SPECIAL DEPOSIT HAS A DUTY TO A BENEFICIARY TO
 COMPLY WITH THE ACCOUNT AGREEMENT AND THIS ARTICLE.
   4. IF THE BANK HOLDING A SPECIAL DEPOSIT  DOES  NOT  COMPLY  WITH  THE
 ACCOUNT  AGREEMENT OR THIS ARTICLE, THE BANK IS LIABLE TO A DEPOSITOR OR
 BENEFICIARY ONLY FOR DAMAGES PROXIMATELY CAUSED  BY  THE  NONCOMPLIANCE.
 EXCEPT  AS  PROVIDED  BY OTHER LAW OF THIS STATE, THE BANK IS NOT LIABLE
 FOR CONSEQUENTIAL, SPECIAL, OR PUNITIVE DAMAGES.
   5. THE BANK HOLDING A SPECIAL DEPOSIT MAY RELY ON RECORDS PRESENTED IN
 COMPLIANCE WITH THE ACCOUNT AGREEMENT TO DETERMINE WHETHER THE  BANK  IS
 OBLIGATED TO PAY A BENEFICIARY.
   6.  IF  THE  ACCOUNT  AGREEMENT  REQUIRES PAYMENT ON PRESENTATION OF A
 RECORD, THE BANK SHALL DETERMINE WITHIN A REASONABLE  TIME  WHETHER  THE
 RECORD  IS  SUFFICIENT  TO  REQUIRE  PAYMENT.  IF THE AGREEMENT REQUIRES
 ACTION BY THE BANK ON PRESENTATION OF A RECORD, THE BANK IS  NOT  LIABLE
 FOR RELYING IN GOOD FAITH ON THE GENUINENESS OF THE RECORD IF THE RECORD
 APPEARS ON ITS FACE TO BE GENUINE.
   7.  UNLESS  THE  ACCOUNT AGREEMENT PROVIDES OTHERWISE, THE BANK IS NOT
 REQUIRED TO DETERMINE WHETHER A PERMISSIBLE PURPOSE STATED IN THE AGREE-
 MENT CONTINUES TO EXIST.
   § 680-L. TERM AND TERMINATION. 1. UNLESS  OTHERWISE  PROVIDED  IN  THE
 ACCOUNT  AGREEMENT,  A  SPECIAL  DEPOSIT TERMINATES FIVE YEARS AFTER THE
 DATE THE SPECIAL DEPOSIT WAS FIRST FUNDED.
   2. UNLESS OTHERWISE PROVIDED IN THE ACCOUNT  AGREEMENT,  IF  THE  BANK
 CANNOT  IDENTIFY  OR  LOCATE  A BENEFICIARY ENTITLED TO PAYMENT WHEN THE
 SPECIAL DEPOSIT IS TERMINATED, AND A  BALANCE  REMAINS  IN  THE  SPECIAL
 DEPOSIT,  THE  BANK SHALL PAY THE BALANCE TO THE DEPOSITOR OR DEPOSITORS
 AS A BENEFICIARY OR BENEFICIARIES.
   3. A BANK THAT PAYS THE REMAINING BALANCE AS PROVIDED  UNDER  SUBDIVI-
 SION  TWO  OF THIS SECTION HAS NO FURTHER OBLIGATION WITH RESPECT TO THE
 SPECIAL DEPOSIT.
   § 680-M. PRINCIPLES OF LAW AND EQUITY. THE  UNIFORM  COMMERCIAL  CODE,
 ARTICLE TWENTY-TWO-A OF THE GENERAL BUSINESS LAW, THE PROVISIONS OF THIS
 CHAPTER  GOVERNING  DEPOSITS  GENERALLY, THE ABANDONED PROPERTY LAW, AND
 THE PRINCIPLES OF LAW AND EQUITY, INCLUDING ANY APPLICABLE  LAW  RELATED
 TO CAPACITY TO CONTRACT, PRINCIPAL AND AGENT, ESTOPPEL, FRAUD, MISREPRE-
 SENTATION,  DURESS,  COERCION,  MISTAKE, AND BANKRUPTCY, SUPPLEMENT THIS
 ARTICLE EXCEPT TO THE EXTENT INCONSISTENT WITH THIS ARTICLE.
   § 680-N. UNIFORMITY OF APPLICATION AND CONSTRUCTION. IN  APPLYING  AND
 CONSTRUING  THE PROVISIONS OF THIS UNIFORM SPECIAL DEPOSITS ACT, A COURT
 SHALL CONSIDER THE PROMOTION OF UNIFORMITY OF THE  LAW  AMONG  JURISDIC-
 TIONS THAT ENACT IT.
   § 680-O. TRANSITIONAL PROVISION. THIS ARTICLE APPLIES TO:
   1.  A  SPECIAL  DEPOSIT MADE UNDER AN ACCOUNT AGREEMENT EXECUTED ON OR
 AFTER THE EFFECTIVE DATE OF THIS ARTICLE; AND
 A. 5345                             7
 
   2. A DEPOSIT MADE UNDER AN AGREEMENT  EXECUTED  BEFORE  THE  EFFECTIVE
 DATE OF THIS ARTICLE, IF:
   (A)  ALL  PARTIES  ENTITLED  TO  AMEND THE AGREEMENT AGREE TO MAKE THE
 DEPOSIT A SPECIAL DEPOSIT GOVERNED BY THIS ARTICLE; AND
   (B) THE SPECIAL DEPOSIT REFERENCED IN THE AMENDED AGREEMENT  SATISFIES
 THE PROVISIONS OF SECTION SIX HUNDRED EIGHTY-D OF THIS ARTICLE.
   §  680-P.  SEVERABILITY.  IF ANY WORD, PHRASE, CLAUSE, SENTENCE, PARA-
 GRAPH, SECTION OR PART OF THIS ARTICLE SHALL BE ADJUDGED BY ANY COURT OF
 COMPETENT JURISDICTION TO BE INVALID, SUCH JUDGMENT  SHALL  NOT  AFFECT,
 IMPAIR OR INVALIDATE THE REMAINDER THEREOF, BUT SHALL BE CONFINED IN ITS
 OPERATION  TO  THE WORD, PHRASE, CLAUSE, SENTENCE, PARAGRAPH, SECTION OR
 PART THEREOF DIRECTLY INVOLVED IN  THE  CONTROVERSY  IN  WHICH  JUDGMENT
 SHALL HAVE BEEN RENDERED.
   §  2. This act shall take effect on the first of January next succeed-
 ing the date on which it shall have become a law.