Texas Business & Commerce Code - Section 4.407. Payor Bank's Right To Subrogation On Improper Payment
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§ 4.407. PAYOR BANK'S RIGHT TO SUBROGATION ON IMPROPER
PAYMENT. If a payor bank has paid an item over the order of the
drawer or maker to stop payment, or after an account has been
closed, or otherwise under circumstances giving a basis for
objection by the drawer or maker, to prevent unjust enrichment and
only to the extent necessary to prevent loss to the bank by reason
of its payment of the item, the payor bank is subrogated to the
rights:
(1) of any holder in due course on the item against the
drawer or maker;
(2) of the payee or any other holder of the item
against the drawer or maker either on the item or under the
transaction out of which the item arose; and
(3) of the drawer or maker against the payee or any
other holder of the item with respect to the transaction out of
which the item arose.
Acts 1967, 60th Leg., p. 2343, ch. 785, § 1, eff. Sept. 1, 1967.
Amended by Acts 1995, 74th Leg., ch. 921, § 4, eff. Jan. 1, 1996.
Section: 4.303 4.401 4.402 4.403 4.404 4.405 4.406 4.407 4.501 4.502 4.503 4.504 5.101 5.102 5.103
Last modified: August 10, 2007
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