Payor bank's right to subrogation on improper payment

84-4-407. 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: (a) Of any holder in due course on the item against the drawer or maker; (b) 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 (c) 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. History: L. 1965, ch. 564, § 233; L. 1991, ch. 296, § 106; February 1, 1992. KANSAS COMMENT, 1996 This section is identical to the 1995 Official Text except that lower case letters have been substituted for the arabic numbers in the text and the punctuation has been slightly modified. The section is derived from, and is very similar to the former 84-4-407. The section has been expanded to include payments of items from an account which has been closed. The other amendments are stylistic and are not meant to change the substantive law. This section, which is closely related to the customer's right to stop payment under 84-4-403, is also analyzed in Kansas Comment 1996 to that section. It allows the bank to assert the rights of any party to an instrument against any other party to recover funds on account of the bank's improper payment of an item. CASE ANNOTATIONS 1. Consumer protection act (K.S.A. 50-623 et seq.) inapplicable to negotiable instruments law; drawer liable to subrogee of holder in due course. First Nat'l Bank v. Jones, 17 Kan. App. 2d 269, 271, 839 P.2d 535 (1992).