§ 4-3-602 — Payment

(a) Subject to subsection (b) of this section, an
instrument is paid to the extent payment is made (i) by or on behalf of a party
obliged to pay the instrument, and (ii) to a person entitled to enforce the instrument.
To the extent of the payment, the obligation of the party obliged to pay the
instrument is discharged even though payment is made with knowledge of a claim
to the instrument under section 4-3-306 by another person.

(b) The obligation of a party to pay the instrument is not discharged under
subsection (a) of this section if:

(1) A claim to the instrument under section 4-3-306 is enforceable against
the party receiving payment and (i) payment is made with knowledge by the payor
that payment is prohibited by injunction or similar process of a court of competent
jurisdiction, or (ii) in the case of an instrument other than a cashier's check, teller's
check, or certified check, the party making payment accepted, from the person
having a claim to the instrument, indemnity against loss resulting from refusal to
pay the person entitled to enforce the instrument; or

(2) The person making payment knows that the instrument is a stolen
instrument and pays a person it knows is in wrongful possession of the instrument.

Legislative History

Source: L. 94: Entire article R&RE, p. 876, � 1, effective January 1, 1995.