32 THECUBAREVIEW 



Certified Checks and Insolvency of Banks in Cuba 



The Division of Commercial Laws has been consulted on several occasions by holders 

 of certified checks emanating from banks in Cuba which have become insolvent since 

 certification. A Cuban legal authority was consulted as to whether the responsibiUty of 

 the debtor or the drawer of the check becomes extinguished by the tendering of the check 

 and its subsequent certification by the bank, and the following information was obtained: 



First Question. — Where a debtor in Cuba sends a certified check to a creditor in the' 

 United States and the bank becomes insolvent before the creditor collects the proceeds, is 

 the obligation of the debtor extinguished? 



Under the laws of Cuba checks are ruled by articles 534 to 543 of the Commercial Code, 

 and provisions concerning in solidum responsibility, protest, and the legal actions arising 

 from drafts are also applicable thereto. What are known as "certified checks" are unknown 

 under the said provisions, but they are employed in current use as a practice peculiar to 

 banking in the United States, due to the frequent and wide interchange of commerce 

 between the two countries. As the prior deposit of funds is a sine qua non condition for 

 the drawing of a check, it is our understanding that under that legislation the certification 

 which the bank stamps on the check has the principal eft"ect of attesting that the said prior 

 deposit of funds has been made in the bank to take care of its payment. 



Obligation Assumed by Bank — Presentation Limit 



It also seems that it has another effect: It is the acceptance by the bank of a direct 

 obligation to the holder of the check to pay the amount of same. Such acceptance, referring 

 to checks, which are orders to pay on presentation, is not favorably regarded under the 

 legislation of many countries, and it was so looked upon at the conference of The Hague in 

 1912, although at that time each of the countries represented reserved to itself the right 

 to admit of the acceptance of checks and certified checks. But with reference to Cuba, we 

 find that in the absence of law on the subject, commercial usage exists (Art. 2, Commercial 

 Code) ; and the United States custom of using certified checks having been adopted there, 

 this implies the charging of the account of the drawer of the check with an amount 

 sufficient to assure its payment when the said check has been certified. This sum from 

 that moment becomes part of the assets of the bank in exchange for the obligation which 

 the latter assumes to make the corresponding payment. 



In Cuba checks drawn in one place on banks located in the same place must be pre- 

 sented for collection within five days. Checks drawn in one place on banks located in another 

 place in the same country must be presented within eight days for collection. Checks 

 drawn in a foreign country on banks located in Cuba must be presented for collection 

 within twelve days. The consequence of nonpresentation of the checks within the said 

 periods is the loss of the right of legal action against the drawer, if the funds deposited to 

 cover payment become lost through the insolvency of the bank. This consequence is 

 mentioned because during the said legal period of time the holder of the check has in his 

 favor not only the obligation of the bank to pay it, but there is also the subsidiary responsi- 

 bility of the drawer. And it should also be noted that this obligation and responsibility 

 follow coexistently further than the legal periods stipulated, and while the check may not 

 have been paid or prescribed, with the sole exception, in favor of the drawer, whose 

 responsibility is canceled if the nonpayment is due to the supervening insolvency of the bank. 



Debtor's Obligation Not Extinguished 



The conclusions drawn from the above are: When a debtor sends from Cuba a check 

 certified by a bank in Cuba to a creditor resident in the United States and the bank becomes 

 insolvent before its payment, the obligation of the debtor is not extinguished. 



The first and principal reason is found in Articles 1091, 1157, and 1166 of the Cuban 

 Civil Code, as the obligation to pay a certain sum of money is extinguished by the delivery 

 of the money and nothing else; the form of payment by the medium of a check may or may 

 not be accepted by the creditor. 



