Colorado § 4-3-109 - Payable to bearer or to order.

§ 4-3-109. Payable to bearer or to order.

(a) A promise or order is payable to bearer if it:

(1) States that it is payable to bearer or to the order of bearer or otherwise indicates that the person in possession of the promise or order is entitled to payment;

(2) Does not state a payee; or

(3) States that it is payable to or to the order of cash or otherwise indicates that it is not payable to an identified person.

(b) A promise or order that is not payable to bearer is payable to order if it is payable (i) to the order of an identified person or (ii) to an identified person or order. A promise or order that is payable to order is payable to the identified person.

(c) An instrument payable to bearer may become payable to an identified person if it is specially indorsed pursuant to section 4-3-205 (a). An instrument payable to an identified person may become payable to bearer if it is indorsed in blank pursuant to section 4-3-205 (b).

Source: L. 94: Entire article R&RE, p. 845, § 1, effective January 1, 1995.

Editor's note: This section is similar to former §§ 4-3-110 and 4-3-111 as they existed prior to 1994.

ANNOTATION

Annotator's note. The following annotations include cases decided under former provisions similar to this section.

A check payable to "the royal consulate of Italy" is not payable to bearer but to the foreign consul. Scala v. Miners & Merchants Bank, 64 Colo. 185, 171 P. 752 (1918) (decided under repealed laws antecedent to CSA, C. 112, § 9, negotiable instruments law).

Effect of treating order paper as bearer paper. When a drawer of a check names a specific payee, the check becomes order rather than bearer paper. If a bank chooses to treat such checks as bearer paper, it acts at its own peril and may be liable for negligence if it misapplies the proceeds of the check. Arvada Hardwood Floor Co. v. James, 638 P.2d 828 (Colo. App. 1981).

Applied in In re Miller, 666 F.3d 1255 (10th Cir. 2012).