1. Subject to subsection 2, an instrument is paid to the extent payment is made by or on behalf of a party obliged to pay the instrument to a person entitled to enforce the instrument. To the extent of the payment, the obligation of the party obliged to pay the instrument is discharged even though payment is made with knowledge of a claim to the instrument under section 41-03-32 by another person.
2. The obligation of a party to pay the instrument is not discharged under subsection 1 if either:
a. A claim to the instrument under section 41-03-32 is enforceable against the party receiving payment and payment is made with knowledge by the payor that payment is prohibited by jurisdiction or, in the case of an instrument other than a cashier's check, teller's check, or certified check, the party making payment accepted, from the person having a claim to the instrument, indemnity against loss resulting from refusal to pay the person entitled to enforce the instrument.
b. The person making payment knows that the instrument is a stolen instrument and pays a person that it knows is in wrongful possession of the instrument.