N.Y. UCC Law § 3-419

Section 3--419. Conversion of Instrument; Innocent Representative.\n (1) An instrument is converted when\n (a) a drawee to whom it is delivered for acceptance refuses to\n return it on demand; or\n (b) any person to whom it is delivered for payment refuses on\n demand either to pay or to return it; or\n (c) it is paid on a forged indorsement.\n (2) In an action against a drawee under subsection (1) the measure of\nthe drawee's liability is the face amount of the instrument. In any\nother action under subsection (1) the measure of liability is presumed\nto be the face amount of the instrument.\n (3) Subject to the provisions of this Act concerning restrictive\nindorsements a representative, including a depositary or collecting\nbank, who has in good faith and in accordance with the reasonable\ncommercial standards applicable to the business of such representative\ndealt with an instrument or its proceeds on behalf of one who was not\nthe true owner is not liable in conversion or otherwise to the true\nowner beyond the amount of any proceeds remaining in his hands.\n (4) An intermediary bank or payor bank which is not a depositary bank\nis not liable in conversion solely by reason of the fact that proceeds\nof an item indorsed restrictively (Sections 3--205 and 3--206) are not\npaid or applied consistently with the restrictive indorsement of an\nindorser other than its immediate transferor.\n