Sec. 4.407. PAYOR BANK'S RIGHT TO SUBROGATION ON IMPROPER PAYMENT. If a payor bank has paid an item over the order of the drawer or maker to stop payment, or after an account has been closed, or otherwise under circumstances giving a basis for objection by the drawer or maker, to prevent unjust enrichment and only to the extent necessary to prevent loss to the bank by reason of its payment of the item, the payor bank is subrogated to the rights:
(1) of any holder in due course on the item against the drawer or maker;
(2) of the payee or any other holder of the item against the drawer or maker either on the item or under the transaction out of which the item arose; and
(3) of the drawer or maker against the payee or any other holder of the item with respect to the transaction out of which the item arose.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1, eff. Sept. 1, 1967. Amended by Acts 1995, 74th Leg., ch. 921, Sec. 4, eff. Jan. 1, 1996.
Structure Texas Statutes
Title 1 - Uniform Commercial Code
Chapter 4 - Bank Deposits and Collections
Subchapter D. Relationship Between Payor Bank and Its Customer
Section 4.401. When Bank May Charge Customer's Account
Section 4.402. Bank's Liability to Customer for Wrongful Dishonor
Section 4.403. Customer's Right to Stop Payment; Burden of Proof of Loss
Section 4.404. Bank Not Obligated to Pay Check More Than Six Months Old
Section 4.405. Death or Incompetence of Customer
Section 4.406. Customer's Duty to Discover and Report Unauthorized Signature or Alteration
Section 4.407. Payor Bank's Right to Subrogation on Improper Payment