§ 26-1-4-407 — Payor bank's right to subrogation on improper payment

If a payor bank has paid an item over the
order of the drawer or maker to stop payment, or after an account has
been closed, or otherwise under circumstances giving a basis for
objection by the drawer or maker, to prevent unjust enrichment and
only to the extent necessary to prevent loss to the bank by reason of its
payment of the item, the payor bank is subrogated to the rights:
(1) of any holder in due course on the item against the drawer or
maker;
(2) of the payee or any other holder of the item against the drawer
or maker either on the item or under the transaction out of which
the item arose; and
(3) of the drawer or maker against the payee or any other holder
of the item with respect to the transaction out of which the item
arose.
Formerly: Acts 1963, c.317, s.4-407. As amended by
P.L.222-1993, SEC.41.