162

LAWS OF MARYLAND

[Ch. 49

(1)    No restrictive indorsement prevents further
transfer or negotiation 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 collection," "for deposit," "pay any bank," or
like terms (subparagraph (a) and (c) of § 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 § 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 § 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 coarse if he otherwise complies with the
requirements of § 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
transaction for his own benefit or otherwise in breach of
duty (subsection (2) of §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rescinded.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 negotiation is in an appropriate case subject