Indorsement and Signature Guaranty

(a)A bank may assume secondary liability as an indorser of a negotiable or non-negotiable instrument which it owns or has received for collection or that of the guarantor of the genuineness of a signature. CH. 106 BANKS

(b)A guaranty of the signature means only that

(1)the signature is not forged;

(2)the signer is the holder or has the authority to sign in the name of the holder; and

(3)the signer has legal capacity to sign.

(c)A guaranty of the signature does not otherwise guaranty his rightfulness of the particular transfer.

(d)A bank may disclaim all or any part of the foregoing obligation in its guaranty.