Printable Format84-8-205. Effect of unauthorized signature on security certificate. An unauthorized signature placed on a security certificate before or in the course of issue is ineffective, but the signature is effective in favor of a purchaser for value of the certificated security if the purchaser is without notice of the lack of authority and the signing has been done by:
(a) An authenticating trustee, registrar, transfer agent or other person entrusted by the issuer with the signing of the security certificate or of similar security certificates, or the immediate preparation for signing of any of them; or
(b) an employee of the issuer, or of any of the persons listed in subsection (a), entrusted with responsible handling of the security certificate.
History: L. 1996, ch. 202, § 48; July 1.
KANSAS COMMENT, 1996
This section is derived from the former 84-8-205, which has been modified to refer to certificated securities. The section is identical to the Official Text except that Kansas has designated subsections with lower case letters rather than arabic numbers.
This section is based on former K.S.A. 52-223, and continues the general rule that an unauthorized signature does not normally validate negotiable paper. "Unauthorized" is defined in 84-1-201(43). This section, like the provisions of Article 3, imposes liability on the issuer for the actions of its employees and agents. Under 84-3-403, dealing with commercial paper, an unauthorized signature is "wholly inoperative" unless the person whose name appears ratifies it, but 84-3-405 also imposes liability for the actions of an employee. Under 84-8-205, the circumstances which will preclude an issuer from denying lack of authority are listed specifically. This section recognizes that the issuer is normally in the best position to protect against the wrongful acts of the employees and agents listed. For an illustration of the operation of this section, see Farmers State Bank v. City of Yates Center, 229 K. 330, 624 P.2d 971 (1981).
Revisor's Note:
Former section 84-8-205 was repealed by L. 1996, ch. 202, § 91 and the number reassigned to the current text.