Texas Business & Commerce Code

§ 3.404 — IMPOSTORS; FICTITIOUS PAYEES

BC § 3.404Title 1. UNIFORM COMMERCIAL CODE · Ch. 3. NEGOTIABLE INSTRUMENTS · Art. D. LIABILITY OF PARTIES

Statute 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 indorsement of the instrument by any person in the name of the payee is effective as the indorsement 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 (Section 3.110(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 indorsement:

(1)Any person in possession of the instrument is its holder.

(2)An indorsement by any person in the name of the payee stated in the instrument is effective as the indorsement 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 indorsement is made in the name of a payee if:

(1)it is made in a name substantially similar to that of the payee; or

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Legislative history

Amended by Acts 1995, 74th Leg., ch. 921, Sec. 1, eff. Jan. 1, 1996.