§ 26-1-3.1-404 — Impostors; fictitious payees

Indiana § 26-1-3.1-404

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 3.1: 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 endorsement of the instrument by any person in the
name of the payee is effective as the endorsement 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 (IC 26-1-3.1-110(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
endorsement:
(1) Any person in possession of the instrument is its holder.
(2) An endorsement by any person in the name of the payee stated
in the instrument is effective as the endorsement 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), an endorsement is made in the name
of a payee if:
(1) it is made in a name substantially similar to that of the payee;
or
(2) the instrument, whether or not endorsed, 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)
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 substantially 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 person bearing the loss proves that the failure to exercise ordinary
care substantially contributed to the loss.

Legislative History

As added by P.L.222-1993, SEC.5. Amended by P.L.248-1995, SEC.1.