Ky. Rev. Stat. » Chapter 355
Kentucky Revised Statutes

Ky. Rev. Stat. § 355.3-306 (2026)

Claims to an instrument

✓ current as of May 2026
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A person taking an instrument, other than a person having rights of a holder in due course, is subject to a claim of a property or possessory right in the instrument or its proceeds, including a claim to rescind a negotiation and to recover the instrument or its proceeds. A person having rights of a holder in due course takes free of the claim to the instrument. Effective: January 1, 1997 History: Repealed and reenacted 1996 Ky. Acts ch. 130, sec. 32, effective January 1, 1997. -- Created 1958 Ky. Acts ch. 77, sec. 3-306, effective July 1, 1960.

Notes of Decisions
Cited in 3 cases, 1987–2006 · leading case: Schmuckie v. Alvey, 758 S.W.2d 31 (Ky. 1988).
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Schmuckie v. Alvey, 758 S.W.2d 31 (Ky. 1988). · cites it 2× “KRS 355.3-306. The matter of the unconditional promise is a nonissue in this case.”
Wagner v. Giles, 209 S.W.3d 489 (Ky. Ct. App. 2006). · cites it 2× “To the extent of the payment, the obligation of the party obliged to pay the instrument is discharged even though payment is made with knowledge of a claim to the instrument under KRS 355.3-306 by another person. (2) The obligation of a party to pay the instrument is not…”
Fed. Deposit Ins. Corp. v. Gamaliel Farm Supply, Inc., 726 S.W.2d 709 (Ky. Ct. App. 1987). “As it is not a holder in due course, the FDIC holds the notes subject to “all defenses of any party which would be available in an action on a simple *712 contract.”
— Ky. Rev. Stat. § 355.3-306(l)(b) — 1 case
Fed. Deposit Ins. Corp. v. Gamaliel Farm Supply, Inc., 726 S.W.2d 709 (Ky. Ct. App. 1987). “As it is not a holder in due course, the FDIC holds the notes subject to “all defenses of any party which would be available in an action on a simple *712 contract.”
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