Section 3--419. Conversion of Instrument; Innocent Representative

(1) An instrument is converted when
         (a) a  drawee  to  whom it is delivered for acceptance refuses to
             return it on demand; or
         (b) any person to whom it is delivered  for  payment  refuses  on
             demand either to pay or to return it; or
         (c) it is paid on a forged indorsement.
    (2)  In an action against a drawee under subsection (1) the measure of
  the drawee's liability is the face amount  of  the  instrument.  In  any
  other  action  under subsection (1) the measure of liability is presumed
  to be the face amount of the instrument.
    (3) Subject to the  provisions  of  this  Act  concerning  restrictive
  indorsements  a  representative,  including  a  depositary or collecting
  bank, who has in good  faith  and  in  accordance  with  the  reasonable
  commercial  standards  applicable to the business of such representative
  dealt with an instrument or its proceeds on behalf of one  who  was  not
  the  true  owner  is  not  liable in conversion or otherwise to the true
  owner beyond the amount of any proceeds remaining in his hands.
    (4) An intermediary bank or payor bank which is not a depositary  bank
  is  not  liable in conversion solely by reason of the fact that proceeds
  of an item indorsed restrictively (Sections 3--205 and 3--206)  are  not
  paid  or  applied  consistently  with  the restrictive indorsement of an
  indorser other than its immediate transferor.