Sixty-ninth Legislative Assembly of North Dakota
In Regular Session Commencing Tuesday, January 7, 2025
SENATE BILL NO. 2123
(Industry and Business Committee)
(At the request of the Commission on Uniform State Laws)
AN ACT to create and enact chapter 6-08.6 of the North Dakota Century Code, relating to the Uniform
Special Deposits Act; and to provide for application.
BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
SECTION 1. Chapter 6-08.6 of the North Dakota Century Code is created and enacted as follows:
6 - 08.6 - 01. Definitions.
In this chapter:
1."Account agreement" means an agreement that:
a.Is in a record between a bank or credit union 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 in accordance with this
chapter.
2."Bank" means a trust company or a person engaged in the business of banking as defined in
section 6 - 01 - 02.
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:
(1)Under the account agreement; or
(2)On termination of the special deposit.
4."Contingency" means an event or circumstance stated in an account agreement which is not
certain to occur but must occur before the bank or credit union 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" of a fact means:
a.With respect to a beneficiary, actual knowledge of the fact; or
b.With respect to a bank or credit union holding a special deposit: S. B. NO. 2123 - PAGE 2
(1)If the bank or credit union:
(a)Has established a reasonable routine for communicating material information
to an individual to whom the bank or credit union has assigned responsibility
for the special deposit; and
(b)Maintains reasonable compliance with the routine, actual knowledge of the
fact by that individual; or
(2)If the bank or credit union has not established and maintained reasonable
compliance with a routine described in paragraph 1 or otherwise exercised due
diligence, implied knowledge of the fact that would have come to the attention of an
individual to whom the bank or credit union has assigned responsibility for the
special deposit.
9."Obligated to pay a beneficiary" or "obligation to pay a beneficiary" means a beneficiary is
entitled under the account agreement to receive from the bank or credit union a payment
when:
a.A contingency has occurred; and
b.The bank or credit union has knowledge the contingency has occurred.
10."Permissible purpose" means a governmental, regulatory, commercial, charitable, or
testamentary objective of the parties stated in an account agreement. The term includes an
objective to:
a.Hold funds:
(1)In escrow, including for a purchase and sale, lease, buyback, or other transaction;
(2)As a security deposit of a tenant;
(3)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
(4)For distribution to a defined class of persons after identification of the class
members and their interest in the funds;
b.Provide assurance with respect to an obligation created by contract, including 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 infrastructure;
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 performance of an obligation with respect to the
infrastructure.
11."Person" means an individual, estate, business or nonprofit entity, 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 satisfied, 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. S. B. NO. 2123 - PAGE 3
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 6 - 08.6 - 04.
14."State" means a state of the United States, the District of Columbia, Puerto Rico, the United
States Virgin Islands, or any other territory or possession subject to the jurisdiction of the
United States. The term includes an agency or instrumentality of the state.
6 - 08.6 - 02. Scope - Choice of law - Forum.
1.This chapter applies to a special deposit under an account agreement that states the intention
of the parties to establish a special deposit governed by this chapter, 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, 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.
3.This chapter does not affect:
a.A right or obligation relating to a deposit other than a special deposit under this chapter;
or
b.The voidability of a deposit or transfer that is fraudulent or voidable under other law.
6 - 08.6 - 03. Variation by agreement or amendment.
1.The effect of sections 6 - 08.6 - 01 through 6 - 08.6 - 05, 6 - 08.6 - 07 through 6 - 08.6 - 10, and
6 - 08.6 - 13 may not be varied by agreement, except as provided in those sections. Subject to
subsection 2, the effect of sections 6 - 08.6 - 06, 6 - 08.6 - 11, and 6 - 08.6 - 12 may be varied by
agreement.
2.A provision in an account agreement or other record that substantially excuses liability or
substantially limits remedies for failure to perform an obligation under this chapter is not
sufficient to vary the effect of a provision of this chapter.
3.If a beneficiary is a party to an account agreement, the bank or credit union and the depositor
may amend the agreement without the consent of the beneficiary only if the agreement
expressly permits the amendment.
4.If a beneficiary is not a party to an account agreement and the bank or credit union and the
depositor know the beneficiary has knowledge of the agreement's terms, the bank or credit
union 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 or credit union and the
depositor do not know whether the beneficiary has knowledge of the agreement's terms, the
bank or credit union and the depositor may amend the agreement without the consent of the
beneficiary only if the amendment is made in good faith.
6 - 08.6 - 04. Requirements for special deposit.
A deposit is a special deposit if it is: S. B. NO. 2123 - PAGE 4
1.A deposit of funds in a bank or credit union 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.
6 - 08.6 - 05. 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
termination of the special deposit.
2.If, before termination of the special deposit, the bank or credit union or a court determines the
special deposit no longer satisfies subsection 1, sections 6 - 08.6 - 07 through 6 - 08.6 - 10 cease
to apply to any funds deposited in the special deposit after the special deposit ceases to
satisfy subsection 1.
3.If, before termination of a special deposit, the bank or credit union determines the special
deposit no longer satisfies subsection 1, the bank or credit union may take action the bank or
credit union believes is necessary under the circumstances, including terminating the special
deposit.
6 - 08.6 - 06. Payment to beneficiary by bank or credit union.
1.Unless the account agreement provides otherwise, the bank or credit union 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 subsection 3, the obligation to pay the beneficiary is excused if the
funds available in the special deposit are insufficient to cover the 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 or credit union's obligation to pay a beneficiary and does not constitute
an accord and satisfaction with respect to another person obligated to the beneficiary.
4.Unless the account agreement provides otherwise, the obligation of the bank or credit union
obligated to pay a beneficiary is immediately due and payable.
5.The bank or credit union may discharge the bank's or credit union's obligation under this
section by:
a.Crediting another transaction account of the beneficiary; or
b.Taking other action that:
(1)Is allowed under the account agreement for the bank or credit union to obtain a
discharge; or
(2)Otherwise would constitute a discharge under law.
6.If the bank or credit union obligated to pay a beneficiary has incurred an obligation to
discharge the obligation of another person, the obligation of the other person is discharged if S. B. NO. 2123 - PAGE 5
action by the bank or credit union under subsection 5 would constitute a discharge of the
obligation of the other person under law that determines whether an obligation is satisfied.
6 - 08.6 - 07. Property interest of depositor or beneficiary.
1.A depositor or a beneficiary does not have a property interest in the special deposit itself.
2.The only property interest with respect to a special deposit is the right to receive payment if
the bank or credit union is obligated to pay a beneficiary. Any property interest under this
subsection is determined under other law.
6 - 08.6 - 08. When creditor process is enforceable against bank or credit union.
1.Subject to subsection 2, creditor process with respect to a special deposit is not enforceable
against the bank or credit union holding the special deposit.
2.Creditor process is enforceable against the bank or credit union holding a special deposit with
respect to an amount the bank or credit union is obligated to pay a beneficiary or a depositor if
the process:
a.Is served on the bank or credit union;
b.Provides sufficient information to allow the bank or credit union to identify the depositor or
the beneficiary from the bank's or credit union's books and records; and
c.Gives the bank or credit union a reasonable opportunity to act on the process.
3.Creditor process served on a bank or credit union before it is enforceable against the bank or
credit union under subsection 2 does not create a right of the creditor against the bank or
credit union or a duty of the bank or credit union to the creditor. Other law determines whether
creditor process creates a lien enforceable against the beneficiary on a contingent interest of a
beneficiary, including a depositor as a beneficiary, even if not enforceable against the bank or
credit union.
6 - 08.6 - 09. Injunction or similar relief.
A court may enjoin, or grant similar relief that would have the effect of enjoining, a bank or credit
union 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.
6 - 08.6 - 10. Recoupment or set off.
1.Except as provided in subsection 2 or 3, a bank or credit union may not exercise a right of
recoupment or set off against a special deposit.
2.An account agreement may allow the bank or credit union to debit the special deposit:
a.When the bank or credit union 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 or credit union that relates to an overdraft in the special
deposit account;
c.For costs incurred by the bank or credit union that relate directly to the special deposit; or
d.To reverse an earlier credit posted by the bank or credit union to the balance of the
special deposit account, if the reversal occurs under an event or circumstance warranted
under other law governing mistake and restitution. S. B. NO. 2123 - PAGE 6
3.The bank or credit union holding a special deposit may exercise a right of recoupment or set
off against an obligation to pay a beneficiary, even if the bank or credit union funds payment
from the special deposit.
6 - 08.6 - 11. Duties and liability of bank or credit union.
1.A bank or credit union does not have a fiduciary duty to any person with respect to a special
deposit.
2.When the bank or credit union holding a special deposit becomes obligated to pay a
beneficiary, a debtor-creditor relationship arises between the bank or credit union and
beneficiary.
3.The bank or credit union holding a special deposit has a duty to a beneficiary to comply with
the account agreement and this chapter.
4.If the bank or credit union holding a special deposit does not comply with the account
agreement or this chapter, the bank or credit union is liable to a depositor or beneficiary only
for damages proximately caused by the noncompliance. Except as provided by other law, the
bank or credit union is not liable for consequential, special, or exemplary damages.
5.The bank or credit union holding a special deposit may rely on records presented in
compliance with the account agreement to determine whether the bank or credit union is
obligated to pay a beneficiary.
6.If the account agreement requires payment on presentation of a record, the bank or credit
union shall determine within a reasonable time whether the record is sufficient to require
payment. If the agreement requires action by the bank or credit union on presentation of a
record, the bank or credit union 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 or credit union is not required to
determine whether a permissible purpose stated in the agreement continues to exist.
6 - 08.6 - 12. 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 or credit union 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 or credit union shall pay the balance to the
depositor as a beneficiary.
3.A bank or credit union that pays the remaining balance as provided under subsection 2 has no
further obligation with respect to the special deposit.
6 - 08.6 - 13. Principles of law and equity.
Title 41, consumer protection law, law governing deposits generally, law related to escheat and
abandoned or unclaimed property, and the principles of law and equity, including law related to capacity
to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, and
bankruptcy, supplement this chapter except to the extent inconsistent with this chapter.
6 - 08.6 - 14. Uniformity of application and construction.
In applying and construing this chapter, a court shall consider the promotion of uniformity of the law
among the states that enact it. S. B. NO. 2123 - PAGE 7
SECTION 2. APPLICATION. This Act applies to:
1.A special deposit made under an account agreement executed after July 31, 2025; and
2.A deposit made under an agreement executed before August 1, 2025, if:
a.All parties entitled to amend the agreement agree to make the deposit a special deposit
governed by chapter 6-08.6; and
b.The special deposit referenced in the amended agreement satisfies section 6-08.6-04. S. B. NO. 2123 - PAGE 8
____________________________ ____________________________
President of the Senate Speaker of the House
____________________________ ____________________________
Secretary of the Senate Chief Clerk of the House
This certifies that the within bill originated in the Senate of the Sixty-ninth Legislative Assembly of North
Dakota and is known on the records of that body as Senate Bill No. 2123.
Senate Vote:Yeas 47 Nays 0 Absent 0
House Vote: Yeas 88 Nays 0 Absent 6
____________________________
Secretary of the Senate
Received by the Governor at ________M. on _____________________________________, 2025.
Approved at ________M. on __________________________________________________, 2025.
____________________________
Governor
Filed in this office this ___________day of _______________________________________, 2025,
at ________ o’clock ________M.
____________________________
Secretary of State