Tex. Bus. & Com. Code Section 4.407
Payor Bank’s Right to Subrogation on Improper Payment

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:

(1)

of any holder in due course on the item against the drawer or maker;

(2)

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

(3)

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.
Acts 1967, 60th Leg., p. 2343, ch. 785, Sec. 1, eff. Sept. 1, 1967. Amended by Acts 1995, 74th Leg., ch. 921, Sec. 4, eff. Jan. 1, 1996.

Source: Section 4.407 — Payor Bank's Right to Subrogation on Improper Payment, https://statutes.­capitol.­texas.­gov/Docs/BC/htm/BC.­4.­htm#4.­407 (accessed Apr. 20, 2024).

4.101
Short Title 4.102
Applicability 4.103
Variation by Agreement 4.104
Definitions and Index of Definitions 4.106
Payable Through or Payable at Bank 4.107
Separate Office of a Bank 4.108
Time of Receipt of Items 4.109
Delays 4.110
Electronic Presentment 4.111
Statute of Limitations 4.112
Payment of Check at Par 4.202
Responsibility for Collection or Return 4.203
Effect of Instructions 4.204
Methods of Sending and Presenting 4.205
Depository Bank Holder of Unindorsed Item 4.206
Transfer Between Banks 4.207
Transfer Warranties 4.208
Presentment Warranties 4.209
Encoding and Retention Warranties 4.210
Security Interest of Collecting Bank in Items, Accompanying Documents and Proceeds 4.211
When Bank Gives Value for Purposes of Holder in Due Course 4.212
Presentment by Notice of Item Not Payable By, Through or at a Bank 4.213
Medium and Time of Settlement by Bank 4.214
Right of Charge-back or Refund 4.215
Final Payment of Item by Payor Bank 4.216
Insolvency and Preference 4.301
Deferred Posting 4.302
Payor Bank’s Responsibility for Late Return of Item 4.303
When Items Subject to Notice, Stop-payment Order, Legal Process, or Setoff 4.401
When Bank May Charge Customer’s Account 4.402
Bank’s Liability to Customer for Wrongful Dishonor 4.403
Customer’s Right to Stop Payment 4.404
Bank Not Obligated to Pay Check More than Six Months Old 4.405
Death or Incompetence of Customer 4.406
Customer’s Duty to Discover and Report Unauthorized Signature or Alteration 4.407
Payor Bank’s Right to Subrogation on Improper Payment 4.501
Handling of Documentary Drafts 4.503
Responsibility of Presenting Bank for Documents and Goods 4.504
Privilege of Presenting Bank to Deal with Goods
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Accessed:
Apr. 20, 2024

§ 4.407’s source at texas​.gov