84-3-203. Transfer of instrument; rights acquired by transfer. (a) An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.
(b) Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a transfer, directly or indirectly, from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.
(c) Unless otherwise agreed, if an instrument is transferred for value and the transferee does not become a holder because of lack of endorsement by the transferor, the transferee has a specifically enforceable right to the unqualified endorsement of the transferor, but negotiation of the instrument does not occur until the endorsement is made.
(d) If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur. The transferee obtains no rights under this article and has only the rights of a partial assignee.
History: L. 1991, ch. 296, § 22; February 1, 1992.
KANSAS COMMENT, 1996
This section is identical to the 1995 Official Text. It is derived, with amendments, from the former provisions of 84-3-201. Historical case and statutory references may be obtained from the bound 1965 or 1983 Volume 7 of the Kansas Statutes Annotated.
Subsection (a). This is a variation of the former concept of negotiation. It is now possible to transfer an instrument for the purpose of having it enforced, without any indorsement on an order instrument, and with title remaining in the transferor.
Subsection (b). This is the shelter principal, the principal that the transferee acquires all the rights the transferor had, as well as any rights as a holder in due course that the transferee has. The transferor often will also have rights under the shelter principal, which also will be transferred to the transferee, so that the transferee will be able to assert shelter from a remote prior holder in due course, a principle now explicitly stated in the subsection, but which was only implied in the prior provisions.
A transferee who is not a holder will have the burden of proving the right to possession of, and to enforce, the instrument.
Shelter may not be asserted by a transferee, whether or not a prior holder, to acquire holder in due course status if the transferee was a party to fraud or illegality affecting the instrument, a provision that was in the former 84-3-201.
Subsection (c). A transferee for value is entitled to the unqualified indorsement of the transferor on order paper. After the indorsement, the transferee becomes a holder, with all the rights and presumptions in favor of a holder. See 84-3-308.
Subsection (d). There can only be negotiation of the entire instrument or the entire unpaid balance on the instrument. The effect of a partial assignment is not addressed by this article. This is in accord with the former 84-3-202(3) and prior Kansas law. See Offenstein v. Weigandt, 89 K. 739, 132 P. 991 (1913).
Revisor's Note:
Former section 84-3-203 was repealed by L. 1991, ch. 296, § 111 and the number reassigned to the current text.
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