Shelley International Marketing (Shelley) opened a checking account at First National Bank (First National) (plaintiff). Thereafter, World Commodities, Inc. (WC), a company composed of the same principals as Shelley, opened a checking account at Colonial Bank (Colonial) (defendant). Shelley and WC began engaging in check-kiting activities between the accounts. The check-kiting scheme involved a kiter opening checking accounts at different banks, writing checks against inadequate funds in one account, and then covering the deficiency by depositing a check written against insufficient funds in another account. On February 10, 1992, Shelley deposited various checks payable by Colonial, totaling approximately $1.5 million, into its First National account (Colonial checks). On the same day, WC deposited various checks payable by First National, also totaling approximately $1.5 million, into its Colonial account (First National checks). On February 11, the checks were presented to each bank for payment. Upon review of the Shelley account, a First National officer suspected check-kiting fraud. As a result, First National returned the First National checks to Colonial on February 12. Upon receipt of the checks, a Colonial officer investigated the transactions, knowing that Colonial could be liable for the sum of the Colonial checks unless the checks were returned to First National before midnight that day. Instead of risking angering WC by immediately returning the checks, Colonial took more time to investigate based on assurances by WC that the checks were good. After further discussions, Colonial returned the Colonial checks to First National the following day. First National brought suit against Colonial, arguing that Colonial was required to honor the Colonial checks because Colonial did not return the checks by the midnight deadline. Both parties moved for summary judgment.