(810 ILCS 5/3-404)
(from Ch. 26, par. 3-404)
Impostors; fictitious payees.
(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 indorsement of
the instrument by any person in the name of the payee is effective as the
indorsement 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 (Section 3-110(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 indorsement:
(1) Any person in possession of the instrument is its
(2) An indorsement by any person in the name of the
payee stated in the instrument is effective as the indorsement 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 indorsement 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 indorsed, is deposited in a
depositary bank to an account in a name substantially similar to that of
(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.
(Source: P.A. 87-582; 87-1135.)