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

Ky. Rev. Stat. § 355.3-404 (2026)

Impostors -- Fictitious payees

✓ current as of May 2026
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(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 indorsement of the instrument by any person in the name of the payee is effective as the indorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.

(2) (a) If:

1. A person whose intent determines to whom an instrument is payable (KRS 355.3-110(1) or (2)) does not intend the person identified as payee to have any interest in the instrument; or

2. The person identified as payee of an instrument is a fictitious person, the rules set out in paragraph (b) of this subsection apply until the instrument is negotiated by special indorsement.

(b) 1. Any person in possession of the instrument is its holder.

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

(3) Under subsection (1) or (2) of this section, an indorsement is made in the name of a payee if:

(a) It is made in a name substantially similar to that of the payee; or

(b) The instrument, whether or not indorsed, is deposited in a depositary bank to an account in a name substantially similar to that of the payee.

(4) With respect to an instrument to which subsection (1) or (2) of this section 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 the failure to exercise ordinary care contributed to the loss. Effective: January 1, 1997 History: Repealed and reenacted 1996 Ky. Acts ch. 130, sec. 42, effective January 1, 1997. -- Created 1958 Ky. Acts ch. 77, sec. 3-404, effective July 1, 1960.

Notes of Decisions
Cited in 2 cases, 1987–2014 · leading case: Mark D. Dean, P.S.C. v. Commonwealth Bank & Trust Co., 434 S.W.3d 489 (Ky. 2014).
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Mark D. Dean, P.S.C. v. Commonwealth Bank & Trust Co., 434 S.W.3d 489 (Ky. 2014). “The list of scenarios directly covered by Articles 3 and 4 is long, and includes instances where a bank pays a check written by an imposter or to a fictitious payee, KRS 355.3-404 (allocating loss to the person failing to exercise ordinary care); pays on a forged signature or…”
Enzweiler v. Peoples Deposit Bank of Burlington, 742 S.W.2d 569 (Ky. Ct. App. 1987). “00 note are governed by KRS 355.3-404(1). That statute states: Any unauthorized signature is wholly inoperative as that of the person whose name is signed unless he ratifies it or is precluded from denying it; but it operates as the signature of the unauthorized signer in favor…”
— Ky. Rev. Stat. § 355.3-404(1) — 1 case
Enzweiler v. Peoples Deposit Bank of Burlington, 742 S.W.2d 569 (Ky. Ct. App. 1987). “00 note are governed by KRS 355.3-404(1). That statute states: Any unauthorized signature is wholly inoperative as that of the person whose name is signed unless he ratifies it or is precluded from denying it; but it operates as the signature of the unauthorized signer in favor…”
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