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 of the following:
  (a) Of any holder in due course on the item against the drawer or maker.

Terms Used In Michigan Laws 440.4407

  • Account: means any depositor credit account with a bank, including a demand, time, savings, passbook, share draft, or like account, other than an account evidenced by a certificate of deposit. See Michigan Laws 440.4104
  • Bank: means a person engaged in the business of banking, including a saving bank, saving and loan association, credit union, or trust company. See Michigan Laws 440.4105
  • Holder: means any of the following:
  (i) A person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession. See Michigan Laws 440.1201
  • Item: means an instrument or a promise or order to pay money handled by a bank for collection or pay. See Michigan Laws 440.4104
  • Payor bank: means a bank that is the drawee of a draft. See Michigan Laws 440.4105
    •   (b) 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.
      (c) 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.
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