§ 34.1-3-206 — Restrictive indorsement

Wyoming § 34.1-3-206

• Jurisdiction: Wyoming
• Title 34.1: Uniform Commercial Code
• Art. 3: NEGOTIABLE INSTRUMENTS

Text

(a) An indorsement limiting payment to a particular person
or otherwise prohibiting further transfer or negotiation of the
instrument is not effective to prevent further transfer or
negotiation of the instrument.
(b) An indorsement stating a condition to the right of the
indorsee to receive payment does not affect the right of the
indorsee to enforce the instrument. A person paying the
instrument or taking it for value or collection may disregard
the condition, and the rights and liabilities of that person are
not affected by whether the condition has been fulfilled.
(c) If an instrument bears an indorsement (1) described in
section 34.1-4-201(b), or (2) in blank or to a particular bank
using the words "for deposit," "for collection," or other words
indicating a purpose of having the instrument collected by a
bank for the indorser or for a particular account, the following
rules apply:
(i) A person, other than a bank, who purchases the
instrument when so indorsed converts the instrument unless the
amount paid for the instrument is received by the indorser or
applied consistently with the indorsement;
(ii) A depositary bank that purchases the instrument
or takes it for collection when so indorsed converts the
instrument unless the amount paid by the bank with respect to
the instrument is received by the indorser or applied
consistently with the indorsement;
(iii) A payor bank that is also the depositary bank
or that takes the instrument for immediate payment over the
counter from a person other than a collecting bank converts the
instrument unless the proceeds of the instrument are received by
the indorser or applied consistently with the indorsement;
(iv) Except as otherwise provided in paragraph (iii),
a payor bank or intermediary bank may disregard the indorsement
and is not liable if the proceeds of the instrument are not
received by the indorser or applied consistently with the
indorsement.
(d) Except for an indorsement covered by subsection (c),
if an instrument bears an indorsement using words to the effect
that payment is to be made to the indorsee as agent, trustee, or
other fiduciary for the benefit of the indorser or another
person, the following rules apply:
(i) Unless there is notice of breach of fiduciary
duty as provided in section 34.1-3-307, a person who purchases
the instrument from the indorsee or takes the instrument from
the indorsee for collection or payment may pay the proceeds of
payment or the value given for the instrument to the indorsee
without regard to whether the indorsee violates a fiduciary duty
to the indorser;
(ii) A subsequent transferee of the instrument or
person who pays the instrument is neither given notice nor
otherwise affected by the restriction in the indorsement unless
the transferee or payor knows that the fiduciary dealt with the
instrument or its proceeds in breach of fiduciary duty.
(e) The presence on an instrument of an indorsement to
which this section applies does not prevent a purchaser of the
instrument from becoming a holder in due course of the
instrument unless the purchaser is a converter under subsection
(c) or has notice or knowledge of breach of fiduciary duty as
stated in subsection (d).
(f) In an action to enforce the obligation of a party to
pay the instrument, the obligor has a defense if payment would
violate an indorsement to which this section applies and the
payment is not permitted by this section.