                                 CODE OF VIRGINIA

IMPOSTORS; FICTITIOUS PAYEES (§ 8.3A-404)

a. If an impostor, by use of the mails or otherwise, induces the issuer of an
instrument to issue the instrument to the impostor, or to a person acting in
concert with the impostor, by impersonating the payee of the instrument or a
person authorized to act for the payee, an endorsement of the instrument by any
person in the name of the payee is effective as the endorsement of the payee in
favor of a person who, in good faith, pays the instrument or takes it for value
or for collection.

b. If (i) a person whose intent determines to whom an instrument is payable (§
8.3A-110 (a) or (b)) does not intend the person identified as payee to have any
interest in the instrument, or (ii) the person identified as payee of an
instrument is a fictitious person, the following rules apply until the
instrument is negotiated by special endorsement:

   1. Any person in possession of the instrument is its holder.

   2. An endorsement by any person in the name of the payee stated in the
   instrument is effective as the endorsement of the payee in favor of a person
   who, in good faith, pays the instrument or takes it for value or for
   collection.

c. Under subsection (a) or (b), an endorsement is made in the name of a payee if
(i) it is made in a name substantially similar to that of the payee or (ii) the
instrument, whether or not endorsed, is deposited in a depositary bank to an
account in a name substantially similar to that of the payee.

d. With respect to an instrument to which subsection (a) or (b) applies, if a
person paying the instrument or taking it for value or for collection fails to
exercise ordinary care in paying or taking the instrument and that failure
substantially contributes to loss resulting from payment of the instrument, the
person bearing the loss may recover from the person failing to exercise ordinary
care to the extent the failure to exercise ordinary care contributed to the
loss.

HISTORY: Code 1950, § 6-361; 1956, c. 149; 1964, c. 219, § 8.3-405; 1992, c.
693.