J. MILLARD TAWES, Governor                      841

(b)  purports to prohibit further transfer of the instrument; or

(c)  includes the words "for collection," "for deposit" "pay any
bank," or like terms signifying a purpose of deposit or collection; or

(d)  otherwise states that it is for the benefit or use of the indorser
or of another person.

3—206. Effect of Restrictive Indorsement.

(1)  No restrictive indorsement prevents further transfer or nego-
tiation of the instrument.

(2)  An intermediary bank, or a payor bank which is not the
depositary bank, is neither given notice nor otherwise affected by a
restrictive indorsement of any person except the bank's immediate
transferor or the person presenting for payment.

(3)  Except for an intermediary bank, any transferee under an
indorsement which is conditional or includes the words "for collec-
tion," "for deposit," "pay any bank," or like terms (subparagraphs
(a) and (c) of Section 3—205) must pay or apply any value given by
him for or on the security of the instrument consistently with the
indorsement and to the extent that he does so he becomes a holder
for value. In addition such transferee is a holder in due course if
he otherwise complies with the requirements of Section 3—302 on
what constitutes a holder in due course.

(4) The first taker under an indorsement for the benefit of the
indorser or another person (subparagraph (d) of Section 3—205)
must pay or apply any value given by him for or on the security of
the instrument consistently with the indorsement and to the extent
that he does so he becomes a holder for value. In addition such taker
is a holder in due course if he otherwise complies with the require-
ments of Section 3—302 on what constitutes a holder in due course.
A later holder for value is neither given notice nor otherwise affected
by such restrictive indorsement unless he has knowledge that a
fiduciary or other person has negotiated the instrument in any trans-
action for his own benefit or otherwise in breach of duty (subsection
(2) of Section 3—304).

3—207. Negotiation Effective Although It May Be Rescinded.

(1)  Negotiation is effective to transfer the instrument although
the negotiation is

(a)  made by an infant, a corporation exceeding its powers, or any
other person without capacity; or

(b)  obtained by fraud, duress or mistake of any kind; or

(c)  part of an illegal transaction; or

(d)  made in breach of duty.

(2)  Except as against a subsequent holder in due course such nego-
tiation is in an appropriate case subject to rescission, the declaration
of a constructive trust or any other remedy permitted by law.

3—208. Reacquisition.

Where an instrument is returned to or reacquired by a prior party
he may cancel any indorsement which is not necessary to his title