194

LAWS OF MARYLAND

[Ch. 49

(iii) To an acceptor of an item if the holder
in due course took the item after the acceptance or
obtained the acceptance without knowledge that the
drawer's signature was unauthorized; and

(c) The item has not been materially altered,
except that this warranty is not given by any customer or
collecting bank that is a holder in due course and acts
in good faith

(i) To the maker of a note; or

(ii) To the drawer of a draft whether or not
the drawer is also the drawee; or

(iii) To the acceptor of an item with respect
to an alteration made prior to the acceptance if the
holder in doe coarse took the item after the acceptance,
even though the acceptance provided "payable as
originally drawn" or equivalent terms; or

(iv) To the acceptor of an item with respect
to an alteration made after the acceptance.

(2) Each customer and collecting bank who transfers
an item and receives a settlement or other consideration
for it warrants to his transferee and to any subsequent
collecting bank who takes the item in good faith that

(a) He has a good title to the item or is
authorized to obtain payment or acceptance on behalf of
one who has a good title and the transfer is otherwise
rightful; and

(b)   All signatures are genuine or authorized;
and

(c)   The item has not been materially altered;
and

(d)   No defense of any party is good against
him; and

(e)    He has no knowledge of any insolvency
proceeding instituted with respect to the maker or
acceptor or the drawer of an unaccepted item.

In addition each customer and collecting bank so
transferring an item and receiving a settlement or other
consideration engages that upon dishonor and any
necessary notice of dishonor and protest he will take up
the item.

(3) The warranties and the engagement to honor set