§ 4-3-420 — Conversion of instrument

(a) The law applicable to conversion of
personal property applies to instruments. An instrument is also converted if it is
taken by transfer, other than a negotiation, from a person not entitled to enforce
the instrument or a bank makes or obtains payment with respect to the instrument
for a person not entitled to enforce the instrument or receive payment. An action
for conversion of an instrument may not be brought by (i) the issuer or acceptor of
the instrument or (ii) a payee or indorsee who did not receive delivery of the
instrument either directly or through delivery to an agent or a co-payee.

(b) In an action under subsection (a) of this section, the measure of liability is
presumed to be the amount payable on the instrument, but recovery may not
exceed the amount of the plaintiff's interest in the instrument.

(c) A representative, other than a depositary bank, who has in good faith
dealt with an instrument or its proceeds on behalf of one who was not the person
entitled to enforce the instrument is not liable in conversion to that person beyond
the amount of any proceeds that it has not paid out.

Legislative History

Source: L. 94: Entire article R&RE, p. 872, � 1, effective January 1, 1995.