Section 3--201. Transfer: Right to Indorsement.

(1) Transfer of an instrument vests in the transferee such rights as
the transferor has therein, except that a transferee who has himself
been a party to any fraud or illegality affecting the instrument or who
as a prior holder had notice of a defense or claim against it cannot
improve his position by taking from a later holder in due course.

(2) A transfer of a security interest in an instrument vests the
foregoing rights in the transferee to the extent of the interest
transferred.

(3) Unless otherwise agreed any transfer for value of an instrument
not then payable to bearer gives the transferee the specifically
enforceable right to have the unqualified indorsement of the transferor.
Negotiation takes effect only when the indorsement is made and until
that time there is no presumption that the transferee is the owner.