New Jersey Statutes 12A:4-407. Payor bank’s right to subrogation on improper payment
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Terms Used In New Jersey Statutes 12A:4-407
- Account: means any deposit or credit account with a bank, including a demand, time, savings, passbook, share draft, or like account, other than an account evidenced by a certificate of deposit. See New Jersey Statutes 12A:4-104
- Bank: means a person engaged in the business of banking, including a savings bank, savings and loan association, credit union, or trust company. See New Jersey Statutes 12A:4-105
- Item: means an instrument or a promise or order to pay money handled by a bank for collection or payment. See New Jersey Statutes 12A:4-104
- Payor bank: means a bank that is the drawee of a draft. See New Jersey Statutes 12A:4-105
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:
a. of any holder in due course on the item against the drawer or maker;
b. 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
c. 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.
L.1995,c.28,s.2.