§ 34.1-3-602 — Payment

(a) Subject to subsection (b), an instrument is paid to
the extent payment is made (1) by or on behalf of a party
obliged to pay the instrument, and (2) 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 34.1-3-306 by another person.
(b) The obligation of a party to pay the instrument is not
discharged under subsection (a) if:
(i) A claim to the instrument under section
34.1-3-306 is enforceable against the party receiving payment
and (1) payment is made with knowledge by the payor that payment
is prohibited by injunction or similar process of a court of
competent jurisdiction, or (2) 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
(ii) 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.