(Effective Until January 1, 1997) Effect of unauthorized indorsement.

Unless the owner has ratified an unauthorized indorsement or is otherwise precluded from asserting its ineffectiveness:

(a) He may assert its ineffectiveness against the issuer or any purchaser other than a purchaser for value and without notice of adverse claims who has in good faith received a new, reissued or reregistered security on registration of transfer; and

(b) An issuer who registers the transfer of a security upon the unauthorized indorsement is subject to liability for improper registration (Section 7-8-404).

(Acts 1965, No. 549, p. 811.)