2006 Ohio Revised Code - 1303.55. (UCC 3-415) Obligation of indorser.

§ 1303.55. (UCC 3-415) Obligation of indorser.
 

(A)  Subject to divisions (B), (C), (D), and (E) of this section and to division (D) of section 1303.59 of the Revised Code, if an instrument is dishonored, an indorser is obliged to pay the amount due on the instrument according to the terms of the instrument at the time it was indorsed, or, if the indorser indorsed an incomplete instrument, according to its terms when completed, to the extent required by sections 1303.11 and 1303.50 of the Revised Code. The obligation of the indorser is owed to a person entitled to enforce the instrument or to a subsequent indorser who paid the instrument under this section. 

(B)  If an indorsement states that it is made "without recourse" or otherwise disclaims liability of the indorser, the indorser is not liable under division (A) of this section to pay the instrument. 

(C)  If notice of dishonor of an instrument is required by section 1303.63 of the Revised Code and notice of dishonor complying with that section is not given to an indorser, the liability of the indorser under division (A) of this section is discharged. 

(D)  If a draft is accepted by a bank after an indorsement is made, the liability of the indorser under division (A) of this section is discharged. 

(E)  If an indorser of a check is liable under division (A) of this section and the check is not presented for payment, or given to a depositary bank for collection, within thirty days after the day the indorsement was made, the liability of the indorser under division (A) of this section is discharged. 
 

HISTORY: 145 v S 147. Eff 8-19-94.
 

Not analogous to former RC § 1303.55 (129 v S 5), repealed 145 v S 147, § 2, eff 8-19-94. See now RC § 1303.60.

Analogous to former RC § 1305.12, repealed 129 v S 5, § 2, eff 7-1-62.

See now RC § 1303.60.

 

Official Comment

1.  Subsections (a) and (b) restate the substance of former section 3-414(1).  Subsection (2) of former section 3-414 has been dropped because it is superfluous.  Although notice of dishonor is not mentioned in subsection (a), it must be given in some cases to charge an indorser.  It is covered in subsection (c).  Regulation CC section 229.35(b) provides that a bank handling a check for collection or return is liable to a bank that subsequently handles the check to the extent the latter bank does not receive payment for the check.  This liability applies whether or not the bank incurring the liability indorsed the check. 

2. Section 3-503 states when notice of dishonor is required and how it must be given.  If required notice of dishonor is not given in compliance with section 3-503, subsection (c) of section 3-415 states that the effect is to discharge the indorser's obligation. 

3.  Subsection (d) is similar in effect to section 3-414(c) if the draft is accepted by a bank after the indorsemnt is made. See comment 3 to section 3-414.  If a draft is accepted by a bank before the indorsement is made, the indorser incurs the obligation stated in subsection (a). 

4.  Subsection (e) modified former sections 3-503(2)(b) and 3-502(1)(a) by stating a 30-day rather than a seven-day period, and stating it as an absolute rather than a presumptive period.