## Facts

- Wayne Blake sold cattle to James Knight, who paid with checks drawn on Knight’s “K & K Farm Account” at Woodford Bank & Trust Co. (Woodford).
- A check payable to Blake for **$16,449.84**, dated **December 3, 1973**, was deposited by Blake at his Ohio bank on **December 6, 1973**.
- A second check payable to Blake for **$11,200.00**, dated **December 17, 1973**, was deposited on **December 19, 1973**.
- When Blake deposited the second check, his bank told him the first check had been dishonored for insufficient funds.
- Based on prior dealings in which previously dishonored checks were later paid, Blake instructed his bank to **re-present the first check** along with the second check.
- Both checks traveled through the collection process and arrived by courier at Woodford on **Monday, December 24, 1973**.
- **December 25 (Christmas Day)** was not a banking day; the next banking day was **Wednesday, December 26, 1973**, making Woodford’s **midnight deadline** the end of **December 26**.
- Woodford determined on **December 26** that the account lacked sufficient funds but did not return the checks until **Thursday, December 27, 1973**.
- Blake sued Woodford, claiming Woodford became liable for the **full amount** of both checks because it held them past the midnight deadline.
- Woodford argued the one-day delay was excused by heavy holiday check volume, breakdowns of two posting machines, and the absence of a regular bookkeeper.
- After a bench trial, the circuit court found for Woodford and dismissed Blake’s claim; Blake appealed, and Woodford cross-appealed concerning liability on the re-presented first check.

## Issues

1. Whether a payor bank’s failure to return dishonored checks by the U.C.C. midnight deadline is excused by heavy holiday volume, equipment breakdowns, and staffing shortages.
2. Whether a payor bank avoids accountability on a check upon re-presentment when it previously returned that same check within the midnight deadline on an earlier presentment.

## Decision

- The Court of Appeals of Kentucky **reversed** the judgment for Woodford and **directed entry of judgment for Blake**.
- The court held Woodford’s reasons (holiday workload, machine failure, and personnel absence) did **not** excuse missing the midnight deadline.
- The court held Woodford was **accountable for the face amount of both checks**, including the re-presented first check, because the bank failed to return either item by the midnight deadline triggered by the December 24 receipt.
- The court directed that Blake’s recovery be **reduced by any amounts** he recovered from Knight to avoid a double recovery.

## Legal Principles

- A payor bank that retains a demand item beyond **midnight of the next banking day** after the banking day of receipt, without timely return or dishonor, is **accountable for the amount of the item**. (U.C.C. § 4-302; “midnight deadline” as defined in U.C.C. § 4-104.)
- The midnight deadline is a firm timing rule in the check-collection process; a bank’s ordinary internal operational difficulties generally do not excuse noncompliance.
- Increased processing volume, equipment malfunctions, and temporary staffing gaps are risks of the bank’s business operations and do not, by themselves, justify a late return past the statutory deadline.
- **Each presentment** of a check creates a new obligation to meet the midnight deadline; a prior timely dishonor on an earlier presentment does not eliminate the payor bank’s duty to act timely on a later re-presentment.
- When a payor bank becomes accountable due to a late return, the payee may recover the **face amount** of the item, with an offset for amounts recovered from the drawer to prevent double recovery.

## Conclusion

The Kentucky Court of Appeals held that Woodford Bank became accountable for the full amounts of two insufficient-funds checks because it returned them after the U.C.C. midnight deadline, and it rejected the bank’s claim that holiday volume, equipment issues, and staffing shortages excused the delay; the court also held that re-presentment of the first check triggered a new midnight deadline, making the bank liable on that check as well, subject to credit for any recovery from the drawer.


Blake v. Woodford Bank & Trust Co., 555 S.W.2d 589 (1977)