2012 Pennsylvania Consolidated Statutes
Title 13 - COMMERCIAL CODE
Chapter 34 - Liability of Parties
Section 3404 - Impostors; fictitious payees

     § 3404.  Impostors; fictitious payees.
        (a)  Impostor.--If an impostor, by use of the mails or
     otherwise, induces the issuer of an instrument to issue the
     instrument to the impostor, or to a person acting in concert
     with the impostor, by impersonating the payee of the instrument
     or a person authorized to act for the payee, an indorsement of
     the instrument by any person in the name of the payee is
     effective as the indorsement of the payee in favor of a person
     who, in good faith, pays the instrument or takes it for value or
     for collection.
        (b)  Fictitious payee.--If a person whose intent determines
     to whom an instrument is payable (section 3110(a) or (b)) does
     not intend the person identified as payee to have any interest
     in the instrument or the person identified as payee of an
     instrument is a fictitious person, the following rules apply
     until the instrument is negotiated by special indorsement:
            (1)  Any person in possession of the instrument is its
        holder.
            (2)  An indorsement by any person in the name of the
        payee stated in the instrument is effective as the
        indorsement of the payee in favor of a person who, in good
        faith, pays the instrument or takes it for value or for
        collection.
        (c)  When indorsement made in name of payee.--Under
     subsection (a) or (b), an indorsement is made in the name of a
     payee if:
            (1)  it is made in a name substantially similar to that
        of the payee; or
            (2)  the instrument, whether or not indorsed, is
        deposited in a depositary bank to an account in a name
        substantially similar to that of the payee.
        (d)  Failure to exercise ordinary care.--With respect to an
     instrument to which subsection (a) or (b) applies, if a person
     paying the instrument or taking it for value or for collection
     fails to exercise ordinary care in paying or taking the
     instrument and that failure substantially contributes to loss
     resulting from payment of the instrument, the person bearing the
     loss may recover from the person failing to exercise ordinary
     care to the extent the failure to exercise ordinary care
     contributed to the loss.

        Cross References.  Section 3404 is referred to in sections
     3417, 4208 of this title.