400.8-108. Warranties in direct holding. - Missouri Statutes

Warranties in direct holding.

400.8-108. (a) A person who transfers a certificated security to apurchaser for value warrants to the purchaser, and an indorser, if thetransfer is by indorsement, warrants to any subsequent purchaser, that:

(1) The certificate is genuine and has not been materially altered;

(2) The transferor or indorser does not know of any fact that mightimpair the validity of the security;

(3) There is no adverse claim to the security;

(4) The transfer does not violate any restriction on transfer;

(5) If the transfer is by indorsement, the indorsement is made by anappropriate person, or if the indorsement is by an agent, the agent hasactual authority to act on behalf of the appropriate person; and

(6) The transfer is otherwise effective and rightful.

(b) A person who originates an instruction for registration oftransfer of an uncertificated security to a purchaser for value warrants tothe purchaser that:

(1) The instruction is made by an appropriate person, or if theinstruction is by an agent, the agent has actual authority to act on behalfof the appropriate person;

(2) The security is valid;

(3) There is no adverse claim to the security; and

(4) At the time the instruction is presented to the issuer:

(i) The purchaser will be entitled to the registration of transfer;

(ii) The transfer will be registered by the issuer free from allliens, security interests, restrictions and claims other than thosespecified in the instruction;

(iii) The transfer will not violate any restriction on transfer; and

(iv) The requested transfer will otherwise be effective and rightful.

(c) A person who transfers an uncertificated security to a purchaserfor value and does not originate an instruction in connection with thetransfer warrants that:

(1) The uncertificated security is valid;

(2) There is no adverse claim to the security;

(3) The transfer does not violate any restriction on transfer; and

(4) The transfer is otherwise effective and rightful.

(d) A person who indorses a security certificate warrants to theissuer that:

(1) There is no adverse claim to the security; and

(2) The indorsement is effective.

(e) A person who originates an instruction for registration oftransfer of an uncertificated security warrants to the issuer that:

(1) The instruction is effective; and

(2) At the time the instruction is presented to the issuer thepurchaser will be entitled to the registration of transfer.

(f) A person who presents a certificated security for registration oftransfer or for payment or exchange warrants to the issuer that the personis entitled to the registration, payment or exchange, but a purchaser forvalue and without notice of adverse claims to whom transfer is registeredwarrants only that the person has no knowledge of an unauthorized signaturein a necessary indorsement.

(g) If a person acts as agent of another in delivering a certificatedsecurity to a purchaser, the identity of the principal was known to theperson to whom the certificate was delivered, and the certificate deliveredby the agent was received by the agent from the principal or received bythe agent from another person at the direction of the principal, the persondelivering the security certificate warrants only that the deliveringperson has authority to act for the principal and does not know of anyadverse claim to the certificated security.

(h) A secured party who redelivers a security certificate received,or after payment and on order of the debtor delivers the securitycertificate to another person, makes only the warranties of an agent undersubsection (g).

(i) Except as otherwise provided in subsection (g), a broker actingfor a customer makes to the issuer and a purchaser the warranties providedin subsections (a) through (f). A broker that delivers a securitycertificate to its customer, or causes its customer to be registered as theowner of an uncertificated security, makes to the customer the warrantiesprovided in subsection (a) or (b), and has the rights and privileges of apurchaser under this section. The warranties of and in favor of the brokeracting as an agent are in addition to applicable warranties given by and infavor of the customer.

(L. 1992 S.B. 448, A.L. 1997 S.B. 6)

*No continuity with § 400.8-108 as repealed by L. 1997 S.B. 6 § A, or with § 400.8-108 which was transferred to § 400.8-109 in 1992.