Okla. Stat. tit. 12A § 3-403

Current through Laws 2024, c. 378.

Section 3-403 - Unauthorized Signature

(a) Unless otherwise provided in this article or Article 4 of this title, an unauthorized signature is ineffective except as the signature of the unauthorized signer in favor of a person who in good faith pays the instrument or takes it for value. An unauthorized signature may be ratified for all purposes of this article.

(b) If the signature of more than one person is required to constitute the authorized signature of an organization, the signature of the organization is unauthorized if one of the required signatures is lacking.

(c) The civil or criminal liability of a person who makes an unauthorized signature is not affected by any provision of this article which makes the unauthorized signature effective for the purposes of this article.

Okla. Stat. tit. 12A, § 3-403

Laws 1961, p. 110, § 3-403; Amended by Laws 1991, SB 25, c. 117, § 66, eff. 1/1/1992.

Oklahoma Code Comment

1. Section 3-403 clarifies the rule when a payor pays or takes an instrument containing less than the required number of signatures. Subsection (b) specifies that if more than one signature is required to constitute the authorized signature of an organization, then the organization's signature is unauthorized if one of the required signatures is missing. The same result is reached if one of the required signatures is forged, pursuant to the definition of "unauthorized" in sub section 1-201(43). Thus, for example, a paper bank that pays a check containing less than the required number of drawers' signatures or containing a forged drawer's signature has paid over an "unauthorized" signature, triggering the one-year limitation period for the customer's suit contained in sub section 4-406(f) (pre-revision sub section 4-406(4) ). Section 3-403 resolves the split of authority on the issue found in Far West Citrus, Inc. v. Bank of America National Trust & Savings Association, 91 Cal. App. 3d 913,154 Cal. Rptr. 464 (1979) (payment was over "unauthorized" signature) and Pine Bluff National Bank v. Kesterson, 257 Ark. 813, 520 S.W.2d 253 (1975) (payment was over "authorized" signature).

2. Although the bank pays over an unauthorized signature, certain mitigating conditions may protect the bank from liability. Those conditions may include ratification of the unauthorized signature, estoppel or preclusion, or a valid defense. See, e.g., Eutsler v. First Nat'l Bank, Pawhuska, 639 P.2d 1245 (Okra. 1982) (ratification); Guaranty Bank & Trust Co. v. Federal Reserve Bank of Kansas City, 454 F.Supp. 488 (W.D. Okla. 1977) (ratification); W.R Grimshaw Co. v. First Nat'l Bank & Trust Co. of Tulsa, 563 P.2d 117, 122-23 (Okra. 1977) (estoppel); and the Oklahoma Comment to Section 4-401.