Colorado § 4-3-201 - Negotiation.

§ 4-3-201. Negotiation.

(a) "Negotiation" means a transfer of possession, whether voluntary or involuntary, of an instrument by a person other than the issuer to a person who thereby becomes its holder.

(b) Except for negotiation by a remitter, if an instrument is payable to an identified person, negotiation requires transfer of possession of the instrument and its indorsement by the holder. If an instrument is payable to bearer, it may be negotiated by transfer of possession alone.

Source: L. 94: Entire article R&RE, p. 850, § 1, effective January 1, 1995.

Editor's note: This section is similar to former § 4-3-202 as it existed prior to 1994.

ANNOTATION

I. General Consideration.

II. Negotiation.

I. GENERAL CONSIDERATION.

Law reviews. For comment on Am. Nat'l Bank v. First Nat'l Bank appearing below, see 32 Dicta 185 (1955) and 27 Rocky Mt. L. Rev. 347 (1955). For article, "Payee v. Depository Bank: What is the UCC Defense to Handling Checks Bearing Forged Indorsements?", see 45 U. Colo. L. Rev. 281 (1974).

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

Former § 4-3-202 applied in Barclay Receivables v. Mtn. Majesty, Ltd., 903 P.2d 37 (Colo. App. 1995).

Applied in Pay Ctr., Inc. v. Milton, 632 P.2d 642 (Colo. App. 1981).

II. NEGOTIATION.

A promissory note payable to the order of a named person may be transferred by mere delivery; the assignee takes the legal title and may sue in his own name, but he takes subject to then-existing defenses of the maker. Best v. Rocky Mt. Nat'l Bank, 37 Colo. 149, 85 P. 1124 (1906); Bank of Bromfield v. McKinlay, 53 Colo. 279, 125 P. 493 (1912).

An allegation that the payee "indorsed and transferred" the note is a sufficient allegation of delivery. Louisville Coal Min. Co. v. Int'l Trust Co., 18 Colo. App. 345, 71 P. 898 (1903).

Where negotiated to third bank. Where one draws a check on a foreign bank and deposits it with his local bank, receiving credit therefor, and this bank in turn negotiates it to a third bank for a valuable consideration, there is a sale to the latter, and it can maintain suit on the check against the original drawer. See Union Nat'l Bank v. Maines-Hough Motor Co., 70 Colo. 132, 197 P. 753 (1921); Manatee County State Bank v. Bruen-Fisher Fruit Co., 70 Colo. 342, 201 P. 560 (1921); First Nat'l Bank v. Bruen-Fisher Fruit Co., 70 Colo. 345, 201 P. 561 (1921). But see First Nat'l Bank v. Fleming State Bank, 74 Colo. 309, 221 P. 891 (1923); Scully v. Denver Nat'l Bank, 76 Colo. 227, 230 P. 610 (1924).

Applied in Am. Nat'l Bank v. First Nat'l Bank, 130 Colo. 557, 277 P.2d 951 (1954); In re Miller, 666 F.3d 1255 (10th Cir. 2012).