2019 New Mexico Statutes
Chapter 55 - Uniform Commercial Code
Article 5 - Letters of Credit
Section 55-5-113 - Transfer by operation of law.
(a) A successor of a beneficiary may consent to amendments, sign and present documents, and receive payment or other items of value in the name of the beneficiary without disclosing its status as a successor.
(b) A successor of a beneficiary may consent to amendments, sign and present documents, and receive payment or other items of value in its own name as the disclosed successor of the beneficiary. Except as otherwise provided in Subsection (e) of this section, an issuer shall recognize a disclosed successor of a beneficiary as beneficiary in full substitution for its predecessor upon compliance with the requirements for recognition by the issuer of a transfer of drawing rights by operation of law under the standard practice referred to in Section 55-5-108(e) NMSA 1978 or, in the absence of such a practice, compliance with other reasonable procedures sufficient to protect the issuer.
(c) An issuer is not obliged to determine whether a purported successor is a successor of a beneficiary or whether the signature of a purported successor is genuine or authorized.
(d) Honor of a purported successor's apparently complying presentation under Subsection (a) or (b) of this section has the consequences specified in Section 55-5-108(i) NMSA 1978 even if the purported successor is not the successor of a beneficiary. Documents signed in the name of the beneficiary or of a disclosed successor by a person who is neither the beneficiary nor the successor of the beneficiary are forged documents for the purposes of Section 55-5-109 NMSA 1978.
(e) An issuer whose rights of reimbursement are not covered by Subsection (d) of this section or substantially similar law and any confirmer or nominated person may decline to recognize a presentation under Subsection (b) of this section.
(f) A beneficiary whose name is changed after the issuance of a letter of credit has the same rights and obligations as a successor of a beneficiary under this section.
History: 1978 Comp., § 55-5-113, enacted by Laws 1997, ch. 75, § 15.
ANNOTATIONSOFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
This section affirms the result in Pastor v. Nat. Republic Bank of Chicago, 76 Ill.2d 139, 390 N.E.2d 894 (Ill. 1979) and Federal Deposit Insurance Co. v. Bank of Boulder, 911 F.2d 1466 (10th Cir. 1990). Both electronic and tangible documents may be signed.
An issuer's requirements for recognition of a successor's status might include presentation of a certificate of merger, a court order appointing a bankruptcy trustee or receiver, a certificate of appointment as bankruptcy trustee, or the like. The issuer is entitled to rely upon such documents which on their face demonstrate that presentation is made by a successor of a beneficiary. It is not obliged to make an independent investigation to determine the fact of succession.
Repeals and reenactments. — Laws 1997, ch. 75, § 15 repealed former 55-5-113 NMSA 1978, as enacted by Laws 1961, ch. 96, § 5-113, relating to indemnities, and enacted a new section, effective July 1, 1997. For provisions of former section, see the 1996 NMSA 1978 on NMOneSource.com.
