N.Y. Uniform Commercial Code Law § 4-407: Payor Bank's Right to Subrogation on Improper Payment

Section 4--407. Payor Bank's Right to Subrogation on Improper Payment.

If a payor bank has paid an item over the stop payment order of the

drawer or maker or otherwise under circumstances giving a basis for

objection by the drawer or maker, to prevent unjust enrichment and only

to the extent necessary to prevent loss to the bank by reason of its

payment of the item, the payor bank shall be subrogated to the rights

(a) of any holder in due course on the item against the drawer or

maker; and

(b) of the payee or any other holder of the item against the

drawer or maker either on the item or under the transaction

out of which the item arose; and

(c) of the drawer or maker against the payee or any other holder

of the item with respect to the transaction out of which the

item arose.