§ 6A-3-404 - Impostors – Fictitious payees.
SECTION 6A-3-404
§ 6A-3-404 Impostors – Fictitiouspayees. – (a) If an impostor, by use of the mails or otherwise, induces the issuer of aninstrument to issue the instrument to the impostor, or to a person acting inconcert with the impostor, by impersonating the payee of the instrument or aperson authorized to act for the payee, an indorsement of the instrument by anyperson in the name of the payee is effective as the indorsement of the payee infavor of a person who, in good faith, pays the instrument or takes it for valueor for collection.
(b) If (i) a person whose intent determines to whom aninstrument is payable (§ 6A-3-110(a) or (b)) does not intend the personidentified as payee to have any interest in the instrument, or (ii) the personidentified as payee of an instrument is a fictitious person, the followingrules apply until the instrument is negotiated by special indorsement:
(1) Any person in possession of the instrument is its holder.
(2) An indorsement by any person in the name of the payeestated in the instrument is effective as the indorsement of the payee in favorof a person who, in good faith, pays the instrument or takes it for value orfor collection.
(c) Under subsection (a) or (b), an indorsement is made inthe name of a payee if (i) it is made in a name substantially similar to thatof the payee or (ii) the instrument, whether or not indorsed, is deposited in adepositary bank to an account in a name substantially similar to that of thepayee.
(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 forcollection fails to exercise ordinary care in paying or taking the instrumentand that failure substantially contributes to loss resulting from payment ofthe instrument, the person bearing the loss may recover from the person failingto exercise ordinary care to the extent the failure to exercise ordinary carecontributed to the loss.