New York Uniform Commercial Code Code § 3-207

Negotiation Effective Although It May Be Rescinded
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Section 3--207. Negotiation Effective Although It May Be Rescinded.\n  (1) Negotiation is effective to transfer the instrument although the\nnegotiation is\n       (a) made by an infant, a corporation exceeding its powers, or any\n           other person without capacity; or\n       (b) obtained by fraud, duress or mistake of any kind; or\n       (c) part of an illegal transaction; or\n       (d) made in breach of duty.\n  (2) Except as against a subsequent holder in due course such\nnegotiation is in an appropriate case subject to rescission, the\ndeclaration of a constructive trust or any other remedy permitted by\nlaw.\n

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