N.D. Cent. Code § 41-08-05
(8-105) Notice of adverse claim
Redline — December 1, 2021 → current.View current text →
Current — January 1, 2022
As of December 1, 2021
(1) A person has notice of an adverse claim if: The person knows of the adverse claim;
(1) A person has notice of an adverse claim if: The person knows of the adverse claim;
(2) The person is aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim; or
(2) The person is aware of facts sufficient to indicate that there is a significant probability that the adverse claim exists and deliberately avoids information that would establish the existence of the adverse claim; or
(3) The person has a duty, imposed by statute or regulation, to investigate whether an adverse claim exists, and the investigation required would establish the existence of the adverse claim.
(3) The person has a duty, imposed by statute or regulation, to investigate whether an adverse claim exists, and the investigation required would establish the existence of the adverse claim.
(4) Having knowledge that a financial asset or interest therein is or has been transferred by a representative imposes no duty of inquiry into the rightfulness of a transaction and is not notice of an adverse claim. However, a person who knows that a representative has transferred a financial asset or interest therein in a transaction that is, or whose proceeds are being used, for the individual benefit of the representative or otherwise in breach of duty has notice of an adverse claim.
(4) Having knowledge that a financial asset or interest therein is or has been transferred by a representative imposes no duty of inquiry into the rightfulness of a transaction and is not notice of an adverse claim. However, a person who knows that a representative has transferred a financial asset or interest therein in a transaction that is, or whose proceeds are being used, for the individual benefit of the representative or otherwise in breach of duty has notice of an adverse claim.
(5) An act or event that creates a right to immediate performance of the principal obligation represented by a security certificate or sets a date on or after which the certificate is to be presented or surrendered for redemption or exchange does not itself constitute notice of an adverse claim except in the case of a transfer more than: One year after a date set for presentment or surrender for redemption or exchange; or
(5) An act or event that creates a right to immediate performance of the principal obligation represented by a security certificate or sets a date on or after which the certificate is to be presented or surrendered for redemption or exchange does not itself constitute notice of an adverse claim except in the case of a transfer more than: One year after a date set for presentment or surrender for redemption or exchange; or
(6) Six months after a date set for payment of money against presentation or surrender of the certificate, if money was available for payment on that date.
(6) Six months after a date set for payment of money against presentation or surrender of the certificate, if money was available for payment on that date.
(7) A purchaser of a certificated security has notice of an adverse claim if the security certificate: Whether in bearer or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving transfer; or
(7) A purchaser of a certificated security has notice of an adverse claim if the security certificate: Whether in bearer or registered form, has been endorsed “for collection” or “for surrender” or for some other purpose not involving transfer; or
(8) Is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor, but the mere writing of a name on the certificate is not such a statement.
(8) Is in bearer form and has on it an unambiguous statement that it is the property of a person other than the transferor, but the mere writing of a name on the certificate is not such a statement.
(9) Filing of a financing statement under chapter 41-09 is not notice of an adverse claim to a financial asset.
(9) Filing of a financing statement under chapter 41-09 is not notice of an adverse claim to a financial asset.
(10) Subsection (b) provides explicitly for some situations involving purchase from one described or identifiable as a representative. Knowledge of the existence of the representative relation is not enough in itself to constitute “notice of an adverse claim” that would disqualify the purchaser from protected purchaser status. A purchaser may take a security on the inference that the representative is acting properly. Knowledge that a security is being transferred to an individual account of the representative or that the proceeds of the transaction will be paid into that account is not sufficient to constitute “notice of an adverse claim,” but knowledge that the proceeds will be applied to the personal indebtedness of the representative is. See State Bank of Binghamton v. Bache, 162 Misc. 128, 293 N.Y.S. 667 (1937).
(11) Subsection (c) specifies whether a purchaser of a “stale” security is charged with notice of adverse claims, and therefore disqualified from protected purchaser status under Section 8-303. The fact of “staleness” is viewed as notice of certain defects after the lapse of stated periods, but the maturity of the security does not operate automatically to affect holders’ rights. The periods of time here stated are shorter than those appearing in the provisions of this Article on staleness as notice of defects or defenses of an issuer (Section 8-203) since a purchaser who takes a security after funds or other securities are available for its redemption has more reason to suspect claims of ownership than issuer’s defenses. An owner will normally turn in a security rather than transfer it at such a time. Of itself, a default never constitutes notice of a possible adverse claim. To provide otherwise would not tend to drive defaulted securities home and would serve only to disrupt current financial markets where many defaulted securities are actively traded. Unpaid or overdue coupons attached to a bond do not bring it within the operation of this subsection, though they may be relevant under the general test of notice of adverse claims in subsection (a).
(12) Subsection (d) provides the owner of a certificated security with a means of protection while a security certificate is being sent in for redemption or exchange. The owner may endorse it “for collection” or “for surrender,” and this constitutes notice of the owner’s claims, under subsection (d).
Official source: North Dakota Legislative Branch. Reproduced from public-domain North Dakota statutes; confirm against the official source for the current text. Not legal advice.