Okla. Stat. tit. 12A § 3-203

Current through Laws 2024, c. 378.

Section 3-203 - Transfer of Instrument; Rights Acquired by Transfer

(a) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.

(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.

(c) Unless otherwise agreed, if an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, the transferee has a specifically enforceable right to the unqualified indorsement of the transferor, but negotiation of the instrument does not occur until the indorsement is made.

(d) If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur. The transferee obtains no rights under this article and has only the rights of a partial assignee.

Okla. Stat. tit. 12A, § 3-203

Laws 1961, p. 107, § 3-203; Amended by Laws 1991, SB 25, c. 117, § 47, eff. 1/1/1992.

Oklahoma Code Comment

1. This Section essentially embodies pre-revision Section 3-201 and pre-revision sub section 3-202(3).

2. In Swan Au Conditioning Co. v. Crest Construction Corp., 568 P.2d 1330 (Okla. Ct. App. 1977), one of two joint payees of checks drawn by a contractor and payable to both of them indorsed and presented the checks to the bank, and in return received cashier's checks payable to the same joint payees. When the contractor protested the action, given the missing indorsement, the court held no liability accrued because the bank's action did not alter the parties' rights. Sub section 3-203(b) would not impact on this analysis and the bank would be treated as a conduit because "transfer" does not include a delivery to a payor. See UCC § 3-203, Official Comment 1. A similar situation also has been recognized as supplementary to the Code when even though an indorsement is absent or unauthorized, the funds represented by the instrument are received for the benefit of the parry entitled to them under the instrument. See O'Petro Energy Corp. v. Canadian State Bank, 837 P.2d 1391 (Okla. 1992), and cases cited by the court in footnotes 10 and 11 to the opinion.

3. Official Comment 2 indicates that sub section 3-203(b) continues what has been Oklahoma law for many years as to a transferee's burden when bringing suit. Compare UCC § 3-203(b) with First Nat'l Bank of Poteau v. Moniot, 50 Okla 85, 150 P. 1040 (1915) (where a draft on its face shows its ownership and is not indorsed to another, one who asserts ownership of draft different from that shown has the burden of proving such ownership). Of course, in Code terms, the burden is as to the right to enforce the instrument. See UCC § 3-203, Official Comment 1.

4. Official Comment 5 points out that the rights of a partial assignee are determined by other law (pursuant to Section 1-103 ) and not by the Code.