N.Y. UCC Law § 3-603

Section 3--603. Payment or Satisfaction.\n (1) The liability of any party is discharged to the extent of his\npayment or satisfaction to the holder even though it is made with\nknowledge of a claim of another person to the instrument unless prior to\nsuch payment or satisfaction the person making the claim either supplies\nindemnity deemed adequate by the party seeking the discharge or enjoins\npayment or satisfaction by order of a court of competent jurisdiction in\nan action in which the adverse claimant and the holder are parties. This\nsubsection does not, however, result in the discharge of the liability\n (a) of a party who in bad faith pays or satisfies a holder who\n acquired the instrument by theft or who (unless having the\n rights of a holder in due course) holds through one who so\n acquired it; or\n (b) of a party (other than an intermediary bank or a payor bank\n which is not a depositary bank) who pays or satisfies the\n holder of an instrument which has been restrictively indorsed\n in a manner not consistent with the terms of such restrictive\n indorsement.\n (2) Payment or satisfaction may be made with the consent of the holder\nby any person including a stranger to the instrument. Surrender of the\ninstrument to such a person gives him the rights of a transferee\n(Section 3--201).\n