SB358,42,1111 (a) Any person in possession of the instrument is its holder.
SB358,42,1412 (b) An endorsement by any person in the name of the payee stated in the
13instrument is effective as the endorsement of the payee in favor of a person who, in
14good faith, pays the instrument or takes it for value or for collection.
SB358,42,18 15(3) Under sub. (1) or (2), an endorsement is made in the name of a payee if it
16is made in a name substantially similar to that of the payee or if the instrument,
17whether or not endorsed, is deposited in a depositary bank to an account in a name
18substantially similar to that of the payee.
SB358,42,24 19(4) With respect to an instrument to which sub. (1) or (2) applies, if a person
20paying the instrument or taking it for value or for collection fails to exercise ordinary
21care in paying or taking the instrument and that failure substantially contributes
22to loss resulting from payment of the instrument, the person bearing the loss may
23recover from the person failing to exercise ordinary care to the extent that the failure
24to exercise ordinary care contributed to the loss.
SB358,43,2
1403.405 Employer's responsibility for fraudulent endorsement by
2employe.
(1) In this section:
SB358,43,43 (a) "Employe" includes an independent contractor and employe of an
4independent contractor retained by the employer.
SB358,43,85 (b) "Fraudulent endorsement" means, in the case of an instrument payable to
6the employer, a forged endorsement purporting to be that of the employer or, in the
7case of an instrument with respect to which the employer is the issuer, a forged
8endorsement purporting to be that of the person identified as payee.
SB358,43,109 (c) 1. "Responsibility" with respect to instruments means authority to do any
10of the following:
SB358,43,1111 a. Sign or endorse instruments on behalf of the employer.
SB358,43,1312 b. Process instruments received by the employer for bookkeeping purposes, for
13deposit to an account or for other disposition.
SB358,43,1414 c. Prepare or process instruments for issue in the name of the employer.
SB358,43,1615 d. Supply information determining the names or addresses of payees of
16instruments to be issued in the name of the employer.
SB358,43,1817 e. Control the disposition of instruments to be issued in the name of the
18employer.
SB358,43,1919 f. Act otherwise in a responsible capacity with respect to instruments.
SB358,43,2220 2. "Responsibility" does not include authority that merely allows an employe
21to have access to instruments or blank or incomplete instrument forms that are being
22stored or transported or are part of incoming or outgoing mail, or similar access.
SB358,44,8 23(2) For the purpose of determining the rights and liabilities of a person who,
24in good faith, pays an instrument or takes it for value or for collection, if an employer
25entrusted an employe with responsibility with respect to the instrument and the

1employe or a person acting in concert with the employe makes a fraudulent
2endorsement of the instrument, the endorsement is effective as the endorsement of
3the person to whom the instrument is payable if it is made in the name of that person.
4If the person paying the instrument or taking it for value or for collection fails to
5exercise ordinary care in paying or taking the instrument and that failure
6substantially contributes to loss resulting from the fraud, the person bearing the loss
7may recover from the person failing to exercise ordinary care to the extent that the
8failure to exercise ordinary care contributed to the loss.
SB358,44,13 9(3) Under sub. (2), an endorsement is made in the name of the person to whom
10an instrument is payable if the endorsement is made in a name substantially similar
11to the name of that person or if the instrument, whether or not endorsed, is deposited
12in a depositary bank to an account in a name substantially similar to the name of that
13person.
SB358,44,18 14403.406 Negligence contributing to forged signature or alteration of
15instrument.
(1) A person whose failure to exercise ordinary care substantially
16contributes to an alteration of an instrument or to the making of a forged signature
17on an instrument is precluded from asserting the alteration or the forgery against
18a person who, in good faith, pays the instrument or takes it for value or for collection.
SB358,44,23 19(2) Under sub. (1), if the person asserting the preclusion fails to exercise
20ordinary care in paying or taking the instrument and that failure substantially
21contributes to loss, the loss is allocated between the person precluded and the person
22asserting the preclusion according to the extent to which the failure of each to
23exercise ordinary care contributed to the loss.
SB358,45,3
1(3) Under sub. (1), the burden of proving failure to exercise ordinary care is on
2the person asserting the preclusion. Under sub. (2), the burden of proving failure to
3exercise ordinary care is on the person precluded.
SB358,45,7 4403.407 Alteration. (1) "Alteration" means an unauthorized change in an
5instrument that purports to modify in any respect the obligation of a party or an
6unauthorized addition of words or numbers or other change to an incomplete
7instrument relating to the obligation of a party.
SB358,45,11 8(2) Except as provided in sub. (3), an alteration fraudulently made discharges
9a party whose obligation is affected by the alteration unless that party assents or is
10precluded from asserting the alteration. No other alteration discharges a party, and
11the instrument may be enforced according to its original terms.
SB358,45,16 12(3) A payer bank or drawee paying a fraudulently altered instrument or a
13person taking it for value, in good faith and without notice of the alteration, may
14enforce rights with respect to the instrument according to its original terms, or, in
15the case of an incomplete instrument altered by unauthorized completion, according
16to its terms as completed.
SB358,45,20 17403.408 Drawee not liable on unaccepted draft. A check or other draft
18does not of itself operate as an assignment of funds in the hands of the drawee
19available for its payment, and the drawee is not liable on the instrument until the
20drawee accepts it.
SB358,46,2 21403.409 Acceptance of draft; certified check. (1) "Acceptance" means the
22drawee's signed agreement to pay a draft as presented. The acceptance shall be
23written on the draft and may consist of the drawee's signature alone. Acceptance
24may be made at any time and becomes effective when notification pursuant to

1instructions is given or the accepted draft is delivered for the purpose of giving rights
2on the acceptance to any person.
SB358,46,4 3(2) A draft may be accepted although it has not been signed by the drawer, is
4otherwise incomplete, is overdue or has been dishonored.
SB358,46,7 5(3) If a draft is payable at a fixed period after sight and the acceptor fails to date
6the acceptance, the holder may complete the acceptance by supplying a date in good
7faith.
SB358,46,11 8(4) "Certified check" means a check accepted by the bank on which it is drawn.
9 Acceptance may be made as stated in sub. (1) or by a writing on the check which
10indicates that the check is certified. The drawee of a check has no obligation to certify
11the check, and refusal to certify is not dishonor of the check.
SB358,46,15 12403.410 Acceptance varying draft. (1) If the terms of a drawee's acceptance
13vary from the terms of the draft as presented, the holder may refuse the acceptance
14and treat the draft as dishonored. In that case, the drawee may cancel the
15acceptance.
SB358,46,18 16(2) The terms of a draft are not varied by an acceptance to pay at a particular
17bank or place in the United States, unless the acceptance states that the draft is to
18be paid only at that bank or place.
SB358,46,21 19(3) If the holder assents to an acceptance varying the terms of a draft, the
20obligation of each drawer and endorser that does not expressly assent to the
21acceptance is discharged.
SB358,46,24 22403.411 Refusal to pay cashier's checks, teller's checks and certified
23checks.
(1) In this section, "obligated bank" means the acceptor of a certified check
24or the issuer of a cashier's check or teller's check bought from the issuer.
SB358,47,6
1(2) If the obligated bank wrongfully refuses to pay a cashier's check or certified
2check, wrongfully stops payment of a teller's check or wrongfully refuses to pay a
3dishonored teller's check, the person asserting the right to enforce the check is
4entitled to compensation for expenses and loss of interest resulting from the
5nonpayment and may recover consequential damages if the obligated bank refuses
6to pay after receiving notice of particular circumstances giving rise to the damages.
SB358,47,8 7(3) Expenses or consequential damages under sub. (2) are not recoverable if the
8refusal of the obligated bank to pay occurs because of any of the following:
SB358,47,99 (a) The bank suspends payments.
SB358,47,1210 (b) The obligated bank asserts a claim or defense of the obligated bank that it
11has reasonable grounds to believe is available against the person entitled to enforce
12the instrument.
SB358,47,1413 (c) The obligated bank has a reasonable doubt as to whether the person
14demanding payment is the person entitled to enforce the instrument.
SB358,47,1515 (d) Payment is prohibited by law.
SB358,47,22 16403.412 Obligation of issuer of note or cashier's check. The issuer of a
17note or cashier's check or other draft drawn on the drawer is obliged to pay the
18instrument according to its terms at the time that it was issued or, if not issued, at
19the time that it first came into possession of a holder or, if the issuer signed an
20incomplete instrument, according to its terms when completed, to the extent stated
21in ss. 403.115 and 403.407. The obligation is owed to a person entitled to enforce the
22instrument or to an endorser who paid the instrument under s. 403.415.
SB358,48,5 23403.413 Obligation of acceptor. (1) The acceptor of a draft is obliged to pay
24the draft according to its terms at the time that it was accepted, even though the
25acceptance states that the draft is payable "as originally drawn" or equivalent terms,

1if the acceptance varies the terms of the draft, according to the terms of the draft as
2varied, or if the acceptance is of a draft that is an incomplete instrument, according
3to its terms when completed, to the extent stated in ss. 403.115 and 403.407. The
4obligation is owed to a person entitled to enforce the draft or to the drawer or an
5endorser who paid the draft under s. 403.414 or 403.415.
SB358,48,11 6(2) If the certification of a check or other acceptance of a draft states the amount
7certified or accepted, the obligation of the acceptor is that amount. If the certification
8or acceptance does not state an amount, the amount of the instrument is
9subsequently raised, and the instrument is then negotiated to a holder in due course,
10the obligation of the acceptor is the amount of the instrument at the time that it was
11taken by the holder in due course.
SB358,48,13 12403.414 Obligation of drawer. (1) This section does not apply to cashier's
13checks or other drafts drawn on the drawer.
SB358,48,19 14(2) If an unaccepted draft is dishonored, the drawer is obliged to pay the draft
15according to its terms at the time that it was issued or, if not issued, at the time that
16it first came into possession of a holder, or if the drawer signed an incomplete
17instrument, according to its terms when completed, to the extent stated in ss. 403.115
18and 403.407. The obligation is owed to a person entitled to enforce the draft or to an
19endorser who paid the draft under s. 403.415.
SB358,48,21 20(3) If a draft is accepted by a bank, the drawer is discharged, regardless of when
21or by whom acceptance was obtained.
SB358,48,24 22(4) If a draft is accepted and the acceptor is not a bank, the obligation of the
23drawer to pay the draft if the draft is dishonored by the acceptor is the same as the
24obligation of an endorser under s. 403.415 (1) and (3).
SB358,49,4
1(5) If a draft states that it is drawn "without recourse" or otherwise disclaims
2liability of the drawer to pay the draft, the drawer is not liable under sub. (2) to pay
3the draft if the draft is not a check. A disclaimer of the liability stated in sub. (2) is
4not effective if the draft is a check.
SB358,49,11 5(6) If a check is not presented for payment or given to a depositary bank for
6collection within 30 days after its date, the drawee suspends payments after
7expiration of the 30-day period without paying the check, and because of the
8suspension of payments, the drawer is deprived of funds maintained with the drawee
9to cover payment of the check, the drawer, to the extent deprived of funds, may
10discharge its obligation to pay the check by assigning to the person entitled to enforce
11the check the rights of the drawer against the drawee with respect to the funds.
SB358,49,18 12403.415 Obligation of endorser. (1) Subject to subs. (2) to (5) and to s.
13403.419 (4), if an instrument is dishonored, an endorser is obliged to pay the amount
14due on the instrument according to the terms of the instrument at the time that it
15was endorsed, or if the endorser endorsed an incomplete instrument, according to its
16terms when completed, to the extent stated in ss. 403.115 and 403.407. The
17obligation of the endorser is owed to a person entitled to enforce the instrument or
18to a subsequent endorser who paid the instrument under this section.
SB358,49,21 19(2) If an endorsement states that it is made "without recourse" or otherwise
20disclaims liability of the endorser, the endorser is not liable under sub. (1) to pay the
21instrument.
SB358,49,24 22(3) If notice of dishonor of an instrument is required by s. 403.503 and notice
23of dishonor complying with that section is not given to an endorser, the liability of
24the endorser under sub. (1) is discharged.
SB358,50,2
1(4) If a draft is accepted by a bank after an endorsement is made, the liability
2of the endorser under sub. (1) is discharged.
SB358,50,6 3(5) If an endorser of a check is liable under sub. (1) and the check is not
4presented for payment, or given to a depositary bank for collection, within 30 days
5after the day on which the endorsement was made, the liability of the endorser under
6sub. (1) is discharged.
SB358,50,9 7403.416 Transfer warranties. (1) A person who transfers an instrument for
8consideration warrants to the transferee and, if the transfer is by endorsement, to
9any subsequent transferee that all of the following apply:
SB358,50,1010 (a) The warrantor is a person entitled to enforce the instrument.
SB358,50,1111 (b) All signatures on the instrument are authentic and authorized.
SB358,50,1212 (c) The instrument has not been altered.
SB358,50,1413 (d) The instrument is not subject to a defense or claim in recoupment of any
14party which can be asserted against the warrantor.
SB358,50,1715 (e) The warrantor has no knowledge of any insolvency proceeding commenced
16with respect to the maker or acceptor or, in the case of an unaccepted draft, the
17drawer.
SB358,50,22 18(2) A person to whom the warranties under sub. (1) are made and who took the
19instrument in good faith may recover from the warrantor as damages for breach of
20warranty an amount equal to the loss suffered as a result of the breach, but not more
21than the amount of the instrument plus expenses and loss of interest incurred as a
22result of the breach.
SB358,51,2 23(3) The warranties stated in sub. (1) may not be disclaimed with respect to
24checks. Unless notice of a claim for breach of warranty is given to the warrantor
25within 30 days after the claimant has reason to know of the breach and the identity

1of the warrantor, the liability of the warrantor under sub. (2) is discharged to the
2extent of any loss caused by the delay in giving notice of the claim.
SB358,51,4 3(4) A cause of action for breach of warranty under this section accrues when
4the claimant has reason to know of the breach.
SB358,51,9 5403.417 Presentment warranties. (1) If an unaccepted draft is presented
6to the drawee for payment or acceptance and the drawee pays or accepts the draft,
7the person obtaining payment or acceptance, at the time of presentment, and a
8previous transferor of the draft, at the time of transfer, warrant to the drawee
9making payment or accepting the draft in good faith that all of the following apply:
SB358,51,1210 (a) The warrantor is, or was at the time that the warrantor transferred the
11draft, a person entitled to enforce the draft or authorized to obtain payment or
12acceptance of the draft on behalf of a person entitled to enforce the draft.
SB358,51,1313 (b) The draft has not been altered.
SB358,51,1514 (c) The warrantor has no knowledge that the signature of the drawer of the
15draft is unauthorized.
SB358,51,25 16(2) A drawee making payment may recover from any warrantor damages for
17breach of warranty equal to the amount paid by the drawee less the amount that the
18drawee received or is entitled to receive from the drawer because of the payment.
19In addition, the drawee is entitled to compensation for expenses and loss of interest
20resulting from the breach. The right of the drawee to recover damages under this
21subsection is not affected by any failure of the drawee to exercise ordinary care in
22making payment. If the drawee accepts the draft, breach of warranty is a defense
23to the obligation of the acceptor. If the acceptor makes payment with respect to the
24draft, the acceptor is entitled to recover from any warrantor for breach of warranty
25the amounts stated in this subsection.
SB358,52,5
1(3) If a drawee asserts a claim for breach of warranty under sub. (1) based on
2an unauthorized endorsement of the draft or an alteration of the draft, the warrantor
3may defend by proving that the endorsement is effective under s. 403.404 or 403.405
4or the drawer is precluded under s. 403.406 or 404.406 from asserting against the
5drawee the unauthorized endorsement or alteration.
SB358,52,8 6(4) If a dishonored draft is presented for payment to the drawer or an endorser
7or any other instrument is presented for payment to a party obliged to pay the
8instrument and payment is received, the following rules apply:
SB358,52,139 (a) The person obtaining payment and a prior transferor of the instrument
10warrant to the person making payment in good faith that the warrantor is, or was
11at the time that the warrantor transferred the instrument, a person entitled to
12enforce the instrument or authorized to obtain payment on behalf of a person entitled
13to enforce the instrument.
SB358,52,1614 (b) The person making payment may recover from any warrantor for breach of
15warranty an amount equal to the amount paid plus expenses and loss of interest
16resulting from the breach.
SB358,52,21 17(5) The warranties stated in subs. (1) and (4) may not be disclaimed with
18respect to checks. Unless notice of a claim for breach of warranty is given to the
19warrantor within 30 days after the claimant has reason to know of the breach and
20the identity of the warrantor, the liability of the warrantor under sub. (2) or (4) is
21discharged to the extent of any loss caused by the delay in giving notice of the claim.
SB358,52,23 22(6) A cause of action for breach of warranty under this section accrues when
23the claimant has reason to know of the breach.
SB358,53,6 24403.418 Payment or acceptance by mistake. (1) Except as provided in sub.
25(3), if the drawee of a draft pays or accepts the draft and the drawee acted on the

1mistaken belief that payment of the draft had not been stopped pursuant to s.
2404.403 or that the signature of the drawer of the draft was authorized, the drawee
3may recover the amount of the draft from the person to whom or for whose benefit
4payment was made or, in the case of acceptance, may revoke the acceptance. Rights
5of the drawee under this subsection are not affected by failure of the drawee to
6exercise ordinary care in paying or accepting the draft.
SB358,53,11 7(2) Except as provided in sub. (3), if an instrument has been paid or accepted
8by mistake and the case is not covered by sub. (1), the person paying or accepting may,
9to the extent permitted by the law governing mistake and restitution, recover the
10payment from the person to whom or for whose benefit payment was made or, in the
11case of acceptance, may revoke the acceptance.
SB358,53,15 12(3) The remedies provided by sub. (1) or (2) may not be asserted against a
13person who took the instrument in good faith and for value or who in good faith
14changed position in reliance on the payment or acceptance. This subsection does not
15limit remedies provided by s. 403.417 or 404.407.
SB358,53,20 16(4) Notwithstanding s. 404.215, if an instrument is paid or accepted by mistake
17and the payer or acceptor recovers payment or revokes acceptance under sub. (1) or
18(2), the instrument is considered not to have been paid or accepted and is treated as
19dishonored, and the person from whom payment is recovered has rights as a person
20entitled to enforce the dishonored instrument.
SB358,54,2 21403.419 Instruments signed for accommodation. (1) If an instrument is
22issued for value given for the benefit of a party to the instrument ("accommodated
23party") and another party to the instrument ("accommodation party") signs the
24instrument for the purpose of incurring liability on the instrument without being a

1direct beneficiary of the value given for the instrument, the instrument is signed by
2the accommodation party "for accommodation".
SB358,54,8 3(2) An accommodation party may sign the instrument as maker, drawer,
4acceptor or endorser and, subject to sub. (4), is obliged to pay the instrument in the
5capacity in which the accommodation party signs. The obligation of an
6accommodation party may be enforced notwithstanding any statute of frauds and
7whether or not the accommodation party receives consideration for the
8accommodation.
SB358,54,16 9(3) A person signing an instrument is presumed to be an accommodation party
10and there is notice that the instrument is signed for accommodation if the signature
11is an anomalous endorsement or is accompanied by words indicating that the signer
12is acting as surety or guarantor with respect to the obligation of another party to the
13instrument. Except as provided in s. 403.605, the obligation of an accommodation
14party to pay the instrument is not affected by the fact that the person enforcing the
15obligation had notice when the instrument was taken by that person that the
16accommodation party signed the instrument for accommodation.
SB358,54,21 17(4) If the signature of a party to an instrument is accompanied by words
18indicating unambiguously that the party is guaranteeing collection rather than
19payment of the obligation of another party to the instrument, the signer is obliged
20to pay the amount due on the instrument to a person entitled to enforce the
21instrument only if any of the following occurs:
SB358,54,2322 (a) Execution of judgment against the other party has been returned
23unsatisfied.
SB358,54,2424 (b) The other party is insolvent or in an insolvency proceeding.
SB358,54,2525 (c) The other party cannot be served with process.
SB358,55,2
1(d) It is otherwise apparent that payment cannot be obtained from the other
2party.
SB358,55,7 3(5) An accommodation party who pays the instrument is entitled to
4reimbursement from the accommodated party and is entitled to enforce the
5instrument against the accommodated party. An accommodated party who pays the
6instrument has no right of recourse against, and is not entitled to contribution from,
7an accommodation party.
SB358,55,15 8403.420 Conversion of instrument. (1) The law applicable to conversion
9of personal property applies to instruments. An instrument is also converted if it is
10taken by transfer, other than a negotiation, from a person not entitled to enforce the
11instrument or a bank makes or obtains payment with respect to the instrument for
12a person not entitled to enforce the instrument or receive payment. An action for
13conversion of an instrument may not be brought by the issuer or acceptor of the
14instrument or by a payee or endorsee who did not receive delivery of the instrument
15either directly or through delivery to an agent or a copayee.
SB358,55,18 16(2) In an action under sub. (1), the measure of liability is presumed to be the
17amount payable on the instrument, but recovery may not exceed the amount of the
18plaintiff's interest in the instrument.
SB358,55,22 19(3) A representative, other than a depositary bank, who has in good faith dealt
20with an instrument or its proceeds on behalf of one who was not the person entitled
21to enforce the instrument is not liable in conversion to that person beyond the
22amount of any proceeds that it has not paid out.
SB358,55,2423 Subchapter V
24 Dishonor
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