Death or Incompetence of Customer

(1)A payor or collecting bank's authority to accept, pay or collect an item or to account for proceeds of its collection if otherwise effective is not rendered ineffective by incompetence of a customer of either bank existing at the time the item is issued or its collection is undertaken if the bank does not know of an adjudication of incompetence. Neither death nor incompetence of a customer revokes such authority to accept, pay, COL120106 DIV. 4 BANK DEPOSITS AND COLLECTIONS collect or account until the bank knows of the fact of death or of an adjudication of incompetence and has reasonable opportunity to act on it.

(2)Even with knowledge a bank may for 10 days after the date of death pay or certify checks drawn on or prior to that date unless ordered to stop payment by a person claiming an interest in the account.

(3)A bank may refuse to pay a check, draft or other order for the withdrawal of money from an account, whether commercial or savings, if it believes or receives an affidavit stating that the person drawing, indorsing or presenting the instrument is or was at the time of signing, indorsing or presenting it so under the influence of liquor or drugs or so mentally or physically disabled as to raise doubt whether such person is or was competent to transact business. No damages shall be awarded in any action against the bank, or its officers or other employees, for refusing in good faith to pay any such instrument for that reason or in relying upon such affidavit.