Ala. Code
Code of Alabama

Ala. Code § 7-3-420 (2026)

Conversion of Instrument.

✓ official Alabama Legislature (ALISON) text, current July 2026
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(a) An instrument is converted under circumstances which would constitute conversion under personal property law. An instrument is also converted if it is taken by transfer, other than a negotiation, from a person not entitled to enforce the instrument or a bank makes or obtains payment with respect to the instrument for a person not entitled to enforce the instrument or receive payment. An action for conversion of an instrument may not be brought by (i) the issuer or acceptor of the instrument or (ii) a payee or indorsee who did not receive delivery of the instrument either directly or through delivery to an agent or a co-payee.

(b) In an action under subsection (a), the measure of liability is presumed to be the amount payable on the instrument, but recovery may not exceed the amount of the plaintiff’s interest in the instrument.

(c) A representative, other than a depositary bank, who has in good faith dealt with an instrument or its proceeds on behalf of one who was not the person entitled to enforce the instrument is not liable in conversion to that person beyond the amount of any proceeds that it has not paid out.

(Acts 1995, No. 95-668, p. 1381, §1.)

Notes of Decisions
Cited in 5 cases, 2002–2020 · leading case: Southland Health Servs., Inc. v. Bank of Vernon, 887 F. Supp. 2d 1158 (N.D. Ala. 2012).
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Southland Health Servs., Inc. v. Bank of Vernon, 887 F. Supp. 2d 1158 (N.D. Ala. 2012). · cites it 10× “Count One: Ala.Code § 7-3-420 The first of Plaintiffs’ claims against Citizens is for violating § 7-3-420 of the Alabama Code.”
Am. Liberty Ins. Co. v. Amsouth Bank, 825 So. 2d 786 (Ala. 2002). · cites it 2× “Currently, conversion of instruments under Alabama's UCC is found in Ala.Code 1975, § 7-3-420. See Act No. 95-668, Ala.”
Bennett v. CIT Bank, N.A. (N.D. Ala. 2019). · cites it 8× “See Ala. Code § 7-3-420 (“Conversion of instrument.”
Wells Fargo Bank, N.A. v. Nat'l Bank of Com., 240 So. 3d 541 (Ala. 2017). · cites it 2× “, under Ala. Code §§ 7-3-420 and 7-3-310 [are] granted.”
Bennett v. CIT Bank, N.A. (N.D. Ala. 2020). · cites it 2× “103 at 8); see also Ala. Code § 7-3-420 . Where even CIT’s actions do not qualify as conversion in light of Crown and Gray, Fannie Mae’s actions do not qualify as conversion either.”
— Ala. Code § 7-3-420(a) — 1 case
Southland Health Servs., Inc. v. Bank of Vernon, 887 F. Supp. 2d 1158 (N.D. Ala. 2012). “Count One: Ala.Code § 7-3-420 The first of Plaintiffs’ claims against Citizens is for violating § 7-3-420 of the Alabama Code.”
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