Chapter 403

403.403(3) (3) The civil or criminal liability of a person who makes an unauthorized signature is not affected by any provision of this chapter which makes the unauthorized signature effective for the purposes of this chapter.

403.403 History History: 1995 a. 449.

403.404 403.404 Impostors; fictitious payees.

403.404(1) (1) 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 endorsement of the instrument by any person in the name of the payee is effective as the endorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.

403.404(2) (2) If a person whose intent determines to whom an instrument is payable under s. 403.110 (1) or (2) does not intend the person identified as payee to have any interest in the instrument or if the person identified as payee of an instrument is a fictitious person, the following rules apply until the instrument is negotiated by special endorsement:

403.404(2)(a) (a) Any person in possession of the instrument is its holder.

403.404(2)(b) (b) An endorsement by any person in the name of the payee stated in the instrument is effective as the endorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.

403.404(3) (3) Under sub. (1) or (2), an endorsement is made in the name of a payee if it is made in a name substantially similar to that of the payee or if the instrument, whether or not endorsed, is deposited in a depositary bank to an account in a name substantially similar to that of the payee.

403.404(4) (4) With respect to an instrument to which sub. (1) or (2) 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 that the failure to exercise ordinary care contributed to the loss.

403.404 History History: 1995 a. 449.

403.405 403.405 Employer’s responsibility for fraudulent endorsement by employee.

403.405(1) (1) In this section:

403.405(1)(a) (a) “Employee” includes an independent contractor and employee of an independent contractor retained by the employer.

403.405(1)(b) (b) “Fraudulent endorsement” means, in the case of an instrument payable to the employer, a forged endorsement purporting to be that of the employer or, in the case of an instrument with respect to which the employer is the issuer, a forged endorsement purporting to be that of the person identified as payee.

403.405(1)(c) (c)

403.405(1)(c)1. 1. “Responsibility” with respect to instruments means authority to do any of the following:

403.405(1)(c)1.a. a. Sign or endorse instruments on behalf of the employer.

403.405(1)(c)1.b. b. Process instruments received by the employer for bookkeeping purposes, for deposit to an account or for other disposition.

403.405(1)(c)1.c. c. Prepare or process instruments for issue in the name of the employer.

403.405(1)(c)1.d. d. Supply information determining the names or addresses of payees of instruments to be issued in the name of the employer.

403.405(1)(c)1.e. e. Control the disposition of instruments to be issued in the name of the employer.

403.405(1)(c)1.f. f. Act otherwise in a responsible capacity with respect to instruments.

403.405(1)(c)2. 2. “Responsibility” does not include authority that merely allows an employee to have access to instruments or blank or incomplete instrument forms that are being stored or transported or are part of incoming or outgoing mail, or similar access.

403.405(2) (2) For the purpose of determining the rights and liabilities of a person who, in good faith, pays an instrument or takes it for value or for collection, if an employer entrusted an employee with responsibility with respect to the instrument and the employee or a person acting in concert with the employee makes a fraudulent endorsement of the instrument, the endorsement is effective as the endorsement of the person to whom the instrument is payable if it is made in the name of that person. If the 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 the fraud, the person bearing the loss may recover from the person failing to exercise ordinary care to the extent that the failure to exercise ordinary care contributed to the loss.

403.405(3) (3) Under sub. (2), an endorsement is made in the name of the person to whom an instrument is payable if the endorsement is made in a name substantially similar to the name of that person or if the instrument, whether or not endorsed, is deposited in a depositary bank to an account in a name substantially similar to the name of that person.

403.405 History History: 1995 a. 449.

403.406 403.406 Negligence contributing to forged signature or alteration of instrument.

403.406(1) (1) A person whose failure to exercise ordinary care substantially contributes to an alteration of an instrument or to the making of a forged signature on an instrument is precluded from asserting the alteration or the forgery against a person who, in good faith, pays the instrument or takes it for value or for collection.

403.406(2) (2) Under sub. (1), if the person asserting the preclusion fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss, the loss is allocated between the person precluded and the person asserting the preclusion according to the extent to which the failure of each to exercise ordinary care contributed to the loss.

403.406(3) (3) Under sub. (1), the burden of proving failure to exercise ordinary care is on the person asserting the preclusion. Under sub. (2), the burden of proving failure to exercise ordinary care is on the person precluded.

403.406 History History: 1995 a. 449.

403.406 Annotation Although a claim for misrepresentation may “supplement” the provisions of the UCC, it may not supplant them. A bank customer’s failure to comply with ss. 403.406 and 404.406 precluded the customer’s claim for strict-liability misrepresentation. Weber, Leicht, Gohr & Associates v. Liberty Bank, 2000 WI App 249, 239 Wis. 2d 461, 620 N.W.2d 472, 99-1557.

403.407 403.407 Alteration.

403.407(1) (1) “Alteration” means an unauthorized change in an instrument that purports to modify in any respect the obligation of a party or an unauthorized addition of words or numbers or other change to an incomplete instrument relating to the obligation of a party.

403.407(2) (2) Except as provided in sub. (3), an alteration fraudulently made discharges a party whose obligation is affected by the alteration unless that party assents or is precluded from asserting the alteration. No other alteration discharges a party, and the instrument may be enforced according to its original terms.

403.407(3) (3) A payer bank or drawee paying a fraudulently altered instrument or a person taking it for value, in good faith and without notice of the alteration, may enforce rights with respect to the instrument according to its original terms, or, in the case of an incomplete instrument altered by unauthorized completion, according to its terms as completed.

403.407 History History: 1995 a. 449.

403.408 403.408 Drawee not liable on unaccepted draft. A check or other draft does not of itself operate as an assignment of funds in the hands of the drawee available for its payment, and the drawee is not liable on the instrument until the drawee accepts it.

403.408 History History: 1995 a. 449.

403.409 403.409 Acceptance of draft; certified check.

403.409(1) (1) “Acceptance” means the drawee’s signed agreement to pay a draft as presented. The acceptance shall be written on the draft and may consist of the drawee’s signature alone. Acceptance may be made at any time and becomes effective when notification pursuant to instructions is given or the accepted draft is delivered for the purpose of giving rights on the acceptance to any person.

403.409(2) (2) A draft may be accepted although it has not been signed by the drawer, is otherwise incomplete, is overdue or has been dishonored.

403.409(3) (3) If a draft is payable at a fixed period after sight and the acceptor fails to date the acceptance, the holder may complete the acceptance by supplying a date in good faith.

403.409(4) (4) “Certified check” means a check accepted by the bank on which it is drawn. Acceptance may be made as stated in sub. (1) or by a writing on the check which indicates that the check is certified. The drawee of a check has no obligation to certify the check, and refusal to certify is not dishonor of the check.

403.409 History History: 1995 a. 449.

403.410 403.410 Acceptance varying draft.

403.410(1) (1) If the terms of a drawee’s acceptance vary from the terms of the draft as presented, the holder may refuse the acceptance and treat the draft as dishonored. In that case, the drawee may cancel the acceptance.

403.410(2) (2) The terms of a draft are not varied by an acceptance to pay at a particular bank or place in the United States, unless the acceptance states that the draft is to be paid only at that bank or place.

403.410(3) (3) If the holder assents to an acceptance varying the terms of a draft, the obligation of each drawer and endorser that does not expressly assent to the acceptance is discharged.

403.410 History History: 1995 a. 449.

403.411 403.411 Refusal to pay cashier’s checks, teller’s checks and certified checks.

403.411(1) (1) In this section, “obligated bank” means the acceptor of a certified check or the issuer of a cashier’s check or teller’s check bought from the issuer.

403.411(2) (2) If the obligated bank wrongfully refuses to pay a cashier’s check or certified check, wrongfully stops payment of a teller’s check or wrongfully refuses to pay a dishonored teller’s check, the person asserting the right to enforce the check is entitled to compensation for expenses and loss of interest resulting from the nonpayment and may recover consequential damages if the obligated bank refuses to pay after receiving notice of particular circumstances giving rise to the damages.

403.411(3) (3) Expenses or consequential damages under sub. (2) are not recoverable if the refusal of the obligated bank to pay occurs because of any of the following:

403.411(3)(a) (a) The bank suspends payments.

403.411(3)(b) (b) The obligated bank asserts a claim or defense of the obligated bank that it has reasonable grounds to believe is available against the person entitled to enforce the instrument, including a claim or defense that arises from accepting, in good faith and exercising ordinary care, an instrument as payment for a cashier’s check or teller’s check, where the instrument accepted as payment for the cashier’s check or teller’s check was, and the obligated bank was without notice that the instrument was, stolen, forged, drawn on a fictitious account, drawn on an account with insufficient funds, or otherwise fraudulent or worthless.

403.411(3)(c) (c) The obligated bank has a reasonable doubt as to whether the person demanding payment is the person entitled to enforce the instrument.

403.411(3)(d) (d) Payment is prohibited by law.

403.411 History History: 1995 a. 449.

403.412 403.412 Obligation of issuer of note or cashier’s check. The issuer of a note or cashier’s check or other draft drawn on the drawer is obliged to pay the instrument according to its terms at the time that it was issued or, if not issued, at the time that it first came into possession of a holder or, if the issuer signed an incomplete instrument, according to its terms when completed, to the extent stated in ss. 403.115 and 403.407. The obligation is owed to a person entitled to enforce the instrument or to an endorser who paid the instrument under s. 403.415.

403.412 History History: 1995 a. 449.

403.413 403.413 Obligation of acceptor.

403.413(1) (1) The acceptor of a draft is obliged to pay the draft according to its terms at the time that it was accepted, even though the acceptance states that the draft is payable “as originally drawn” or equivalent terms, if the acceptance varies the terms of the draft, according to the terms of the draft as varied, or if the acceptance is of a draft that is an incomplete instrument, according to its terms when completed, to the extent stated in ss. 403.115 and 403.407. The obligation is owed to a person entitled to enforce the draft or to the drawer or an endorser who paid the draft under s. 403.414 or 403.415.

403.413(2) (2) If the certification of a check or other acceptance of a draft states the amount certified or accepted, the obligation of the acceptor is that amount. If the certification or acceptance does not state an amount, the amount of the instrument is subsequently raised, and the instrument is then negotiated to a holder in due course, the obligation of the acceptor is the amount of the instrument at the time that it was taken by the holder in due course.

403.413 History History: 1995 a. 449.

403.414 403.414 Obligation of drawer.

403.414(1) (1) This section does not apply to cashier’s checks or other drafts drawn on the drawer.

403.414(2) (2) If an unaccepted draft is dishonored, the drawer is obliged to pay the draft according to its terms at the time that it was issued or, if not issued, at the time that it first came into possession of a holder, or if the drawer signed an incomplete instrument, according to its terms when completed, to the extent stated in ss. 403.115 and 403.407. The obligation is owed to a person entitled to enforce the draft or to an endorser who paid the draft under s. 403.415.

403.414(3) (3) If a draft is accepted by a bank, the drawer is discharged, regardless of when or by whom acceptance was obtained.

403.414(4) (4) If a draft is accepted and the acceptor is not a bank, the obligation of the drawer to pay the draft if the draft is dishonored by the acceptor is the same as the obligation of an endorser under s. 403.415 (1) and (3).

403.414(5) (5) If a draft states that it is drawn “without recourse” or otherwise disclaims liability of the drawer to pay the draft, the drawer is not liable under sub. (2) to pay the draft if the draft is not a check. A disclaimer of the liability stated in sub. (2) is not effective if the draft is a check.

403.414(6) (6) If a check is not presented for payment or given to a depositary bank for collection within 30 days after its date, the drawee suspends payments after expiration of the 30-day period without paying the check, and because of the suspension of payments, the drawer is deprived of funds maintained with the drawee to cover payment of the check, the drawer, to the extent deprived of funds, may discharge its obligation to pay the check by assigning to the person entitled to enforce the check the rights of the drawer against the drawee with respect to the funds.

403.414(7) (7) A person who issues a check or other draft that is not honored upon presentment, because the drawer does not have an account with the drawee or because the drawer does not have sufficient funds in his or her account or sufficient credit with the drawee, is liable for all reasonable costs and expenses in connection with the collection of the amount for which the check or draft was written, except recovery is not permitted under this section if a person licensed under s. 138.09 or 138.14 or any other person collected or could have collected a charge for that check or other draft under s. 422.202 (1) (d) or (2m).

403.414 History History: 1995 a. 449; 1997 a. 331; 2009 a. 405.

403.415 403.415 Obligation of endorser.

403.415(1) (1) Subject to subs. (2) to (5) and to s. 403.419 (4), if an instrument is dishonored, an endorser is obliged to pay the amount due on the instrument according to the terms of the instrument at the time that it was endorsed, or if the endorser endorsed an incomplete instrument, according to its terms when completed, to the extent stated in ss. 403.115 and 403.407. The obligation of the endorser is owed to a person entitled to enforce the instrument or to a subsequent endorser who paid the instrument under this section.

403.415(2) (2) If an endorsement states that it is made “without recourse” or otherwise disclaims liability of the endorser, the endorser is not liable under sub. (1) to pay the instrument.

403.415(3) (3) If notice of dishonor of an instrument is required by s. 403.503 and notice of dishonor complying with that section is not given to an endorser, the liability of the endorser under sub. (1) is discharged.

403.415(4) (4) If a draft is accepted by a bank after an endorsement is made, the liability of the endorser under sub. (1) is discharged.

403.415(5) (5) If an endorser of a check is liable under sub. (1) and the check is not presented for payment, or given to a depositary bank for collection, within 30 days after the day on which the endorsement was made, the liability of the endorser under sub. (1) is discharged.

403.415 History History: 1995 a. 449.

403.416 403.416 Transfer warranties.

403.416(1) (1) A person who transfers an instrument for consideration warrants to the transferee and, if the transfer is by endorsement, to any subsequent transferee that all of the following apply:

403.416(1)(a) (a) The warrantor is a person entitled to enforce the instrument.

403.416(1)(b) (b) All signatures on the instrument are authentic and authorized.

403.416(1)(c) (c) The instrument has not been altered.

403.416(1)(d) (d) The instrument is not subject to a defense or claim in recoupment of any party which can be asserted against the warrantor.

403.416(1)(e) (e) The warrantor has no knowledge of any insolvency proceeding commenced with respect to the maker or acceptor or, in the case of an unaccepted draft, the drawer.

403.416(1)(f) (f) If the instrument is a demand draft, the creation of the instrument according to the terms on its face was authorized by the person identified as the drawer.