KRS 355.3-602: Payment.

(1) Subject to subsection (5) of this section, an instrument is paid to the extent payment

is made by or on behalf of a party obliged to pay the instrument and

to a person entitled to enforce the instrument.

(2) Subject to subsection (5) of this section, a not e is paid to the extent payment is

made by or on behalf of a party obliged to pay the note to a person that formerly

was entitled to enforce the note only if at the time of the payment the party obliged

to pay has not received adequate notification that th e note has been transferred and

that payment is to be made to the transferee. A notification is adequate only if it is

signed by the transferor or the transferee; reasonably identifies the transferred note;

and provides an address at which payments subsequ ently are to be made. Upon

request, a transferee shall seasonably furnish reasonable proof that the note has been

transferred. Unless the transferee complies with the request, a payment to the person

that formerly was entitled to enforce the note is effect ive for purposes of subsection

(3) of this section even if the party obliged to pay the note has received a

notification under this subsection.

(3) Subject to subsection (5) of this section, to the extent of a payment under

subsections (1) and (2) of this section, 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 KRS 355.3-306 by another person.

(4) Subject to subsection (5) of this section, a transferee, or any party that has acquired

rights in the instrument directly or indirectly from a transferee, including any such

party that has rights as a holder in due course, is deemed to have notice of any

payment that is made under subsection (2) of this section aft er the date that the note

is transferred to the transferee but before the party obliged to pay the note receives

adequate notification of the transfer.

(5) The obligation of a party to pay the instrument is not discharged under subsections

(1) to (4) of this section if:

(a) A claim to the instrument under KRS 355.3 -306 is enforceable against the

party receiving payment; and

1. Payment is made with knowledge by the payor that payment is

prohibited by injunction or similar process of a court of competent

jurisdiction; or

2. 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; or

(b) The person making payment knows that the instrument is a stolen instrument

and pays a person it knows is in wrongful possession of the instrument.

(6) As used in the section, "signed," with respect to a record that is not a writing,

includes the attachment to or logical association with the record of an electronic

symbol, sound, or process with the present intent to adopt or accept the record.