§ 25-3-420. Conversion of instrument. - North Carolina Statutes

§25‑3‑420.  Conversion of instrument.

(a)        The law applicableto conversion of personal property applies to instruments. An instrument isalso converted if it is taken by transfer, other than a negotiation, from aperson not entitled to enforce the instrument or a bank makes or obtainspayment with respect to the instrument for a person not entitled to enforce theinstrument or receive payment. An action for conversion of an instrument maynot be brought by (i) the issuer or acceptor of the instrument, or (ii) a payeeor indorsee who did not receive delivery of the instrument either directly orthrough delivery to an agent or a co‑payee.

(b)        In an action undersubsection (a) of this section, the measure of liability is presumed to be theamount payable on the instrument, but recovery may not exceed the amount of theplaintiff's interest in the instrument.

(c)        A representative,other than a depositary bank, who has in good faith dealt with an instrument orits proceeds on behalf of one who was not the person entitled to enforce theinstrument is not liable in conversion to that person beyond the amount of anyproceeds that it has not paid out. (1899, c. 733, s. 137; Rev.,s. 2287; C.S., s. 3119; 1949, c. 954; 1965, c. 700, s. 1; 1995, c. 232, s. 1.)