Also known as: payees
Written by attorneys · grounded in primary & secondary sources — see below
A person identified as the recipient of payment on a negotiable instrument. The identity of the initial payee is fixed by the intent of the person signing on behalf of the issuer even when the name written on the instrument differs from the intended recipient.
Priscilla Parks signs a check drawn on her account and writes the name of her supplier as payee. She actually intends the funds for her accountant Pedro Pacheco. When the bank pays Pacheco the instrument is treated as payable to him because his identity matches the signer's intent.
Philip Powell receives a check made payable to him but never takes delivery. The bank later pays the proceeds to an unauthorized presenter. Powell cannot sue the bank for conversion because he never received the instrument and therefore never became a holder entitled to enforce it.
Select any source to read its text and confirm it supports the definition.
The instrument is payable to the person the signer intended even if the written name or identification does not match that person. This rule fixes the initial payee by reference to the issuer's intent at the time of signing.
Supporting sources
No. A payee or indorsee who did not receive delivery of the instrument either directly or through an agent lacks standing to bring a conversion claim against the bank that paid an unauthorized presenter.
Supporting sources
Yes when the policy language directs payment directly to the named employee or beneficiary without employer intermediation. The repeated identification of the employee as the direct recipient manifests intent to confer enforceable rights on the payee.
Supporting sources
…was therefore subject to the defense interposed by defendant, maker of the note, of failure of consideration on the part of the payee, which endorsed it to plaintiff. Since it was undisputed that the payee failed to furnish the consideration for which the note was given, judgment was entered for defendant. The Appellate…