New York Uniform Commercial Code Law Section 3-207 - Negotiation Effective Although It May Be Rescinded.

Section 3--207. Negotiation Effective Although It May Be Rescinded.
(1)  Negotiation  is effective to transfer the instrument although the
  negotiation is
     (a) made by an infant, a corporation exceeding its powers, or any
         other person without capacity; or
     (b) obtained by fraud, duress or mistake of any kind; or
     (c) part of an illegal transaction; or
     (d) made in breach of duty.
(2)  Except  as  against  a  subsequent  holder  in  due  course  such
  negotiation  is  in  an  appropriate  case  subject  to  rescission, the
  declaration of a constructive trust or any  other  remedy  permitted  by
  law.

Last modified: February 3, 2019