North Dakota Code 41-03-41 – (3-404) Impostors – Fictitious payees
1. 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 endorsement of the instrument by any person in the name of the payee is effective as the endorsement of the payee in favor or any person that in good faith pays the instrument or takes it for value or for collection.
Terms Used In North Dakota Code 41-03-41
- Authorized: when used with reference to a financing statement record, means that the financing statement record was filed by a person authorized to do so as provided in sections 41-09-80 and 41-09-130. See North Dakota Code 41-10-01
- following: when used by way of reference to a chapter or other part of a statute means the next preceding or next following chapter or other part. See North Dakota Code 1-01-49
- Person: means an individual, organization, government, political subdivision, or government agency or instrumentality. See North Dakota Code 1-01-49
2. If a person whose intent determines to whom an instrument is payable under subsection 1 or 2 of section 41-03-10 does not intend the person identified as payee to have any interest in the instrument or if the person identified as payee of an instrument is a fictitious person, the following rules apply until the instrument is negotiated by special endorsement:
a. Any person in possession of the instrument is its holder.
b. An endorsement by any person in the name of the payee stated in the instrument is effective as the endorsement of the payee in favor of any person that in good faith pays the instrument or takes it for value or for collection.
3. Under subsection 1 or 2, an endorsement is made in the name of a payee if it is made in a name substantially similar to that of the payee or if the instrument, whether or not endorsed, or deposited in a depositary bank to an account in a name substantially similar to that of the payee.
4. With respect to an instrument to which subsection 1 or 2 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 substantially 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.