Michigan Compiled Laws

Mich. Comp. Laws § 440.3404 (2026)

Imposter; inducing issuance of instrument; endorsement in name of payee; failure to exercise ordinary care.

✓ current as of July 2026

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UNIFORM COMMERCIAL CODE

Act 174 of 1962

440.3404 Imposter; inducing issuance of instrument; endorsement in name of payee; failure to exercise ordinary care.

Sec. 3404.

(1) If an imposter, by use of the mails or otherwise, induces the issuer of an instrument to issue the instrument to the imposter, or to a person acting in concert with the imposter, by impersonating the payee of the instrument or a person authorized to act for the payee, an endorsement of the instrument by any person in the name of the payee is effective as the endorsement of the payee in favor of a person who, in good faith, pays the instrument or takes it for value or for collection.

(2) If (i) a person whose intent determines to whom an instrument is payable in section 3110(1) or (2) does not intend the person identified as payee to have any interest in the instrument, or (ii) the person identified as payee of an instrument is a fictitious person, the following rules apply until the instrument is negotiated by special endorsement:

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

(b) An endorsement by any person in the name of the payee stated in the instrument is effective as the endorsement 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), an endorsement is made in the name of a payee if (i) it is made in a name substantially similar to that of the payee or (ii) the instrument, whether or not endorsed, 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) 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.

History: 1962, Act 174, Eff. Jan. 1, 1964 ;-- Am. 1993, Act 130, Eff. Sept. 30, 1993

Notes of Decisions

Cited in 4 cases, 1972–2014 · leading case: Grosberg v. Michigan Nat'l Bank Oakland, 362 N.W.2d 715 (Mich. 1985).

Sort: Relevance Newest Treatment

Grosberg v. Michigan Nat'l Bank Oakland, 362 N.W.2d 715 (Mich. 1985). · cites it 2× “1201(43) and MCL 440.3404, Comment 1; MSA 19.3404, Comment 1, which is treated as "wholly inoperative as that of the person whose name is signed unless he ratifies it or is precluded from denying it.”

Matco Tools Corp. v. Pontiac State Bank, 614 F. Supp. 1059 (E.D. Mich. 1985). · cites it 2× “MCLA § 440.3404(1); Grosberg v. Michigan Nat’l Bank, 420 Mich, at 714 , 362 N.”

Winkler v. Com. Nat'l Bank of L'Anse, 202 N.W.2d 468 (Mich. Ct. App. 1972). “MCLA 440.3404(1); MSA 19.3404(1); MCLA 440.”

Hantz Fin. Servs. Inc v. Chem. Bank (Mich. Ct. App. 2014). · cites it 4× “3420, failure to exercise ordinary care, MCL 440.3404, statutory conversion, MCL 600.”

— Mich. Comp. Laws § 440.3404(1) — 4 cases

Matco Tools Corp. v. Pontiac State Bank, 614 F. Supp. 1059 (E.D. Mich. 1985). “MCLA § 440.3404(1); Grosberg v. Michigan Nat’l Bank, 420 Mich, at 714 , 362 N.”

Grosberg v. Michigan Nat'l Bank Oakland, 362 N.W.2d 715 (Mich. 1985). “1201(43) and MCL 440.3404, Comment 1; MSA 19.3404, Comment 1, which is treated as "wholly inoperative as that of the person whose name is signed unless he ratifies it or is precluded from denying it.”

Winkler v. Com. Nat'l Bank of L'Anse, 202 N.W.2d 468 (Mich. Ct. App. 1972). “MCLA 440.3404(1); MSA 19.3404(1); MCLA 440.”

Hantz Fin. Servs. Inc v. Chem. Bank (Mich. Ct. App. 2014). “3420, failure to exercise ordinary care, MCL 440.3404, statutory conversion, MCL 600.”

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