Cite as: 516 U. S. 264 (1996)
Opinion of the Court
obligations under Regulation CC. The facts underlying the suit are uncontested. A customer of Bank One deposited a check for $64,294.27 drawn on an account at Midwest. Bank One forwarded the check through the Federal Reserve System for collection, but Midwest returned it unpaid because Bank One's endorsement stamp was illegible. Bank One properly endorsed the check, resubmitted it for collection, and made the funds available to the Bank One customer. Midwest again returned the check unpaid, this time stating that the payor's account lacked sufficient funds to cover the check. By then, however, Bank One's customer had withdrawn most of the funds from its account. Bank One sought to recover the amount it paid out to its customer against funds that remain uncollected.
On cross-motions for summary judgment, the District Court ruled for Bank One. That court centrally determined: "Midwest did not act with ordinary care [when it] return[ed] the check for guarantee of endorsement without first checking the sufficiency of the funds in support of the check." App. to Pet. for Cert. 12. To satisfy the payor bank's obligation under 12 CFR § 229.38(a) (1995), the court explained, Midwest should have notified Bank One of the insufficient funds problem the first time Midwest returned the check. By failing to do so, the court concluded, Midwest had caused Bank One to lose $43,912.06. The court accordingly entered judgment for Bank One in that amount. App. to Pet. for Cert. 15. Midwest appealed.
The Court of Appeals for the Seventh Circuit did not reach the merits of the appeal. Instead, the appellate court raised at oral argument, on its own motion, a threshold question of subject-matter jurisdiction. After affording the parties an opportunity to file memoranda, the Court of Appeals vacated the judgment for Bank One and ordered the District Court to dismiss the action for lack of jurisdiction. First Illinois Bank & Trust v. Midwest Bank & Trust Co., 30 F. 3d 64, 65 (1994).
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