§490:3-404  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 490:3-110(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 (i) it is made in a name
substantially similar to that of the payee or (ii) 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 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. [L 1991, c 118, pt of §1]