§ 4-3-404 — Impostors; fictitious payees

Colorado § 4-3-404

• Jurisdiction: Colorado
• Title 04: Uniform
• Art.: Negotiable Instruments

Text

(a) If an impostor, by use of the mails
or otherwise, induces the issuer of an instrument to issue the instrument to the
impostor, or to a person acting in concert with the impostor, by impersonating the
payee of the instrument or a person authorized to act for the payee, an indorsement
of the instrument by any person in the name of the payee is effective as the
indorsement of the payee in favor of a person who, in good faith, pays the
instrument or takes it for value or for collection.

(b) If (i) a person whose intent determines to whom an instrument is payable
(section 4-3-110 (a) or (b)) does not intend the person identified as payee to have
any interest in the instrument, or (ii) the person identified as payee of an instrument
is a fictitious person, the following rules apply until the instrument is negotiated by
special indorsement:

(1) Any person in possession of the instrument is its holder.

(2) An indorsement by any person in the name of the payee stated in the
instrument is effective as the indorsement of the payee in favor of a person who, in
good faith, pays the instrument or takes it for value or for collection.

(c) Under subsection (a) or (b) of this section, an indorsement is made in the
name of a payee if (i) it is made in a name substantially similar to that of the payee
or (ii) the instrument, whether or not indorsed, is deposited in a depositary bank to
an account in a name substantially similar to that of the payee.

(d) With respect to an instrument to which subsection (a) or (b) of this section
applies, if a person paying the instrument or taking it for value or for collection fails
to exercise ordinary care in paying or taking the instrument and that failure
contributes to loss resulting from payment of the instrument, the person bearing
the loss may recover from the person failing to exercise ordinary care to the extent
the failure to exercise ordinary care contributed to the loss.

Legislative History

Source: L. 94: Entire article R&RE, p. 863, � 1, effective January 1, 1995.