KANSAS OFFICE of
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84-8-402. Assurance that indorsement or instruction is effective. (a) An issuer may require the following assurance that each necessary indorsement or each instruction is genuine and authorized:

(1) In all cases, a guaranty of the signature of the person making an indorsement or originating an instruction including, in the case of an instruction, reasonable assurance of identity;

(2) if the indorsement is made or the instruction is originated by an agent, appropriate assurance of actual authority to sign;

(3) if the indorsement is made or the instruction is originated by a fiduciary pursuant to subsection (a)(4) or (5) of section 35 [84-8-107], appropriate evidence of appointment or incumbency;

(4) if there is more than one fiduciary, reasonable assurance that all who are required to sign have done so; and

(5) if the indorsement is made or the instruction is originated by a person not covered by another provision of this subsection, assurance appropriate to the case corresponding as nearly as may be to the provisions of this subsection.

(b) An issuer may elect to require reasonable assurance beyond that specified in this section.

(c) In this section:

(1) "Guaranty of the signature" means a guaranty signed by or on behalf of a person reasonably believed by the issuer to be responsible. An issuer may adopt standards with respect to responsibility if they are not manifestly unreasonable.

(2) Appropriate evidence of appointment or incumbency means:

(i) In the case of a fiduciary appointed or qualified by a court, a certificate issued by or under the direction or supervision of the court or an officer thereof and dated within 60 days before the date of presentation for transfer; or

(ii) in any other case, a copy of a document showing the appointment or a certificate issued by or on behalf of a person reasonably believed by an issuer to be responsible or, in the absence of that document or certificate, other evidence the issuer reasonably considered appropriate.

History: L. 1996, ch. 202, § 62; July 1.

KANSAS COMMENT, 1996

This section is a modification of the former 84-8-402. It is identical to the Official Text.

This section states the assurances as to indorsements the issuer is entitled to receive prior to registering a transfer on its books. This section spells out in more detail the precondition set forth in paragraph (a)(3) of 84-8-401, which states the duty of the issuer to register a transfer. There is no obligation on the issuer to demand these assurances. The Revisor's Note to Article 8 state that the doctrine of issuer liability for wrongful registration set out in Lowery v. Commercial & Farmers' Bank, 15 F. Cas. 1040 (CCCD Md. 1848) (No. 8551) has been rejected. The issuer is not liable for adverse claims unless it has been served with legal process. See 84-8-403. Under paragraph (a)(1), a guarantee of the signature is always appropriate. "Guarantee of the signature" is defined in subsection (c)(1). A guarantee of a signature is to be distinguished from a guarantee of an indorsement. See 84-8-306.

Subsection (c)(2) places a limit on the evidence which may be requested of a fiduciary under paragraph (a)(3). See also 84-8-107, under which the failure of a fiduciary to comply with the controlling instrument does not necessarily render the indorsement unauthorized.

Revisor's Note:

Former section 84-8-402 was repealed by L. 1996, ch. 202, § 91 and the number reassigned to the current text.


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