Court Opinions

State Laws

US Code

US Constitution

Texas Business & Commerce Code - Section 3.404. Impostors; Fictitious Payees

Legal Research Home > Texas Laws > Business & Commerce Code > Texas Business & Commerce Code - Section 3.404. Impostors; Fictitious Payees

§ 3.404. IMPOSTORS;  FICTITIOUS PAYEES.  (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   
		(2)  the instrument, whether or not indorsed, is 
deposited in a depositary bank to an account in a name substantially 
similar to that of the payee.
	(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 for collection fails to exercise ordinary care in paying or 
taking the instrument and that failure contributes to loss 
resulting from payment of the instrument, the person bearing the 
loss may recover from the person failing to exercise ordinary care 
to the extent the failure to exercise ordinary care contributed to 
the loss.

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

Last modified: August 11, 2007