N.Y. Uniform Commercial Code Law § 3-201: Transfer: Right to Indorsement

Section 3--201. Transfer: Right to Indorsement.

(1) Transfer of an instrument vests in the transferee such rights as

the transferor has therein, except that a transferee who has himself

been a party to any fraud or illegality affecting the instrument or who

as a prior holder had notice of a defense or claim against it cannot

improve his position by taking from a later holder in due course.

(2) A transfer of a security interest in an instrument vests the

foregoing rights in the transferee to the extent of the interest

transferred.

(3) Unless otherwise agreed any transfer for value of an instrument

not then payable to bearer gives the transferee the specifically

enforceable right to have the unqualified indorsement of the transferor.

Negotiation takes effect only when the indorsement is made and until

that time there is no presumption that the transferee is the owner.