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Ohio Revised Code

Ohio Rev. Code § 1303.26 (2026)

Restrictive indorsement - UCC 3-206

✓ current as of May 2026
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Effective:
August 19, 1994
Latest Legislation:
Senate Bill 147 - 120th General Assembly
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(A) An indorsement limiting payment to a particular person or otherwise prohibiting further transfer or negotiation of the instrument is not effective to prevent further transfer or negotiation of the instrument.

(B) An indorsement stating a condition to the right of the indorsee to receive payment does not affect the right of the indorsee to enforce the instrument. A person paying the instrument or taking it for value or collection may disregard the condition, and the rights and liabilities of that person are not affected by whether the condition has been fulfilled.

(C) If an instrument bears an indorsement as described in division (B) of section 1304.11 of the Revised Code, in blank, or to a particular bank, using the words "for deposit," "for collection," or other words indicating a purpose of having the instrument collected by a bank for the indorser or for a particular account, the following rules apply:

(1) A person, other than a bank, who purchases the instrument when so indorsed converts the instrument unless the amount paid for the instrument is received by the indorser or applied consistently with the indorsement.

(2) A depositary bank that purchases the instrument or takes it for collection when so indorsed converts the instrument unless the amount paid by the bank with respect to the instrument is received by the indorser or applied consistently with the indorsement.

(3) A payor bank that is also the depositary bank or that takes the instrument for immediate payment over the counter from a person other than a collecting bank converts the instrument unless the proceeds of the instrument are received by the indorser or applied consistently with the indorsement.

(4) Except as otherwise provided in division (C)(3) of this section, a payor bank or intermediary bank may disregard the indorsement and is not liable if the proceeds of the instrument are not received by the indorser or applied consistently with the indorsement.

(D) Except for an indorsement described in division (C) of this section, if an instrument bears an indorsement using words to the effect that payment is to be made to the indorsee as agent, trustee, or other fiduciary for the benefit of the indorser or another person, the following rules apply:

(1) Unless there is notice of breach of fiduciary duty as provided in section 1303.37 of the Revised Code, a person who purchases the instrument from the indorsee or takes the instrument from the indorsee for collection or payment may pay the proceeds of payment or the value given for the instrument to the indorsee without regard to whether the indorsee violates a fiduciary duty to the indorser.

(2) A subsequent transferee of the instrument or person who pays the instrument is neither given notice nor otherwise affected by the restriction in the indorsement unless the transferee or payor knows that the fiduciary dealt with the instrument or its proceeds in breach of fiduciary duty.

(E) The presence on an instrument of an indorsement to which this section applies does not prevent a purchaser of the instrument from becoming a holder in due course of the instrument unless the purchaser is a converter under division (C) of this section or has notice or knowledge of breach of fiduciary duty as stated in division (D) of this section.

(F) In an action to enforce the obligation of a party to pay the instrument, the obligor has a defense to the action if payment would violate an indorsement to which this section applies, and the payment is not permitted by this section.
Notes of Decisions
Cited in 7 cases, 1976–2006 · leading case: Cont'l Cas. Co. v. Fifth/Third Bank, 418 F. Supp. 2d 964 (N.D. Ohio 2006).
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Cont'l Cas. Co. v. Fifth/Third Bank, 418 F. Supp. 2d 964 (N.D. Ohio 2006). · cites it 4× “2d 1090 (1994); O.R.C. § 1303.26 (UCC § 3-206); see also State of Qatar v.”
Soc'y Nat'l Bank v. Sec. Fed. Sav. & Loan, 71 Ohio St. 3d 321 (Ohio 1994). · cites it 4× “27 was replaced by a revised version of R.C. 1303.26. Our holding today is consistent with the express terms of newly enacted R.”
Morris v. Ohio Cas. Ins., 517 N.E.2d 904 (Ohio 1988). “R.C. 1303.26 provides that “[a]n indorsement is restrictive which * * * (C) includes the words ‘for collection,’ ‘for deposit,’ ‘pay any bank,’ or like terms signifying a purpose of deposit or collection * * *.”
Michalski v. State Bank & Trust (In Re Taco Ed's, Inc.), 63 B.R. 913 (Bankr. N.D. Ohio 1986). · cites it 2× “11 of the Revised Code, concerning restrictive indorsements, a representative, including a depositary or collecting bank, who has in good faith and in accordance with the reasonable commercial standards applicable to the business of such representative dealt with an instrument…”
All Am. Fin. Co. v. Pugh Shows, Inc., 507 N.E.2d 1134 (Ohio 1987). “26 (UCC 3-205) provides: “An indorsement is restrictive which either: “(A) is conditional; or “(B) purports to prohibit further transfer of the instrument; or “(C) includes the words ‘for collection,’ ‘for deposit,’ ‘pay any bank,’ or like terms signifying a purpose of deposit…”
Lee v. Skidmore, 361 N.E.2d 499 (Ohio Ct. App. 1976). ““(C) Subject to the provisions of sections 1303.26, 1303.55, 1303.69, and 1304.”
Soc'y Natl. Bank v. Sec. Fed. S.& L., 1994 Ohio 152 (Ohio 1994). · cites it 6× “It held that Security Federal thereby violated former1 R.C. 1303.26 (former UCC 3-205), which defines restrictive indorsements, and former R.”
Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.