Okla. Stat. tit. 12A § 3-204

Current through Laws 2024, c. 378.

Section 3-204 - Indorsement

(a) "Indorsement" means a signature, other than that of a signer as maker, drawer, or acceptor, that alone or accompanied by other words is made on an instrument for the purpose of (i) negotiating the instrument, (ii) restricting payment of the instrument, or (iii) incurring indorser's liability on the instrument, but regardless of the intent of the signer, a signature and its accompanying words is an indorsement unless the accompanying words, terms of the instrument, place of the signature, or other circumstances unambiguously indicate that the signature was made for a purpose other than indorsement. For the purpose of determining whether a signature is made on an instrument, a paper affixed to the instrument is a part of the instrument.

(b) "Indorser" means a person who makes an indorsement.

(c) For the purpose of determining whether the transferee of an instrument is a holder, an indorsement that transfers a security interest in the instrument is effective as an unqualified indorsement of the instrument.

(d) If an instrument is payable to a holder under a name that is not the name of the holder, indorsement may be made by the holder in the name stated in the instrument or in the holder's name or both, but signature in both names may be required by a person paying or taking the instrument for value or collection.

Okla. Stat. tit. 12A, § 3-204

Laws 1961, p. 107, § 3-204; Amended by Laws 1991, SB 25, c. 117, § 48, eff. 1/1/1992.

Oklahoma Code Comment

1. This Section is drawn from pre-revision Sections 3-201, 3-202, 3-203 and 3-402. The current Section does not change decisions like King v. Finnell, P.2d 754 (Okla. 1979), finding that under the circumstances, the signature on the note in question was an indorsement and not a maker's signature, or Bailey v Plumbers Supply Co., 117 Okla. 81, 244 P. 791 (1926), indicating that one indorsing a note, without more, cannot set up as a defense a parol agreement that the indorsement was not intended to involve liability. See UCC § 3-204, Official Comment 1; but see Section 3-117.

2. This Section will change dicta in Shepherd Mall State Bank v. Johnson 603 P.2d 1115 (Okla. 1979), to the effect an allonge cannot be used except where the instrument is so covered with previous indorsements that additional space is required. It will not change those aspects of the Johnson case, however, (1) requiring an allonge to be firmly attached, (2) determining that a separate, unattached paper was not an indorsement, or (3) determining a guaranty may have the effect of an indorsement where it is written on the instrument itself or on an allonge. Indeed, under sub section 3-419(b), a guarantor is obligated to pay the instrument in the capacity in which the guarantor signs, such as indorser, except as provided in subsection (d), which deals with a collection guaranty. This changes pre-revision sub section 3-416(5), which provided that when words of guaranty were used, presentment, notice of dishonor and protest, if otherwise required, were not necessary. Under current Sections 3-415 and 3-503, presentment and notice of dishonor will be necessary to hold liable an accommodation indorser who guarantees payment.

3. National Bank of Commerce of Guthrie v. Lee, 33 Okla. 641, 126 P. 782 (1912), long ago made an important point by holding that the payee of a nonnegotiable instrument who writes his name across the back of the instrument and sells and delivers it does not render himself liable to the assignee, as either an indorser a guarantor. This is still true, the liability of an indorser or an indorser who also is a guarantor under Article 3 to pay the instrument upon its dishonor is not the same as that of an assignor of an ordinary contract who at common law does not, absent an agreement, undertake to perform a contract to pay money if its principal obligor does not. This is a particularly important point, given the generally narrower range of negotiable instruments under Section 3-104.