2006 New York Code - Negotiation Effective Although It May Be Rescinded.

 
  Section 3--207. Negotiation Effective Although It May Be Rescinded.
    (1)  Negotiation  is effective to transfer the instrument although the
  negotiation is
         (a) made by an infant, a corporation exceeding its powers, or any
             other person without capacity; or
         (b) obtained by fraud, duress or mistake of any kind; or
         (c) part of an illegal transaction; or
         (d) made in breach of duty.
    (2)  Except  as  against  a  subsequent  holder  in  due  course  such
  negotiation  is  in  an  appropriate  case  subject  to  rescission, the
  declaration of a constructive trust or any  other  remedy  permitted  by
  law.