mode that there should have been a physical impossibility of writing the indorsement or transfer on the note itself, but it may be on another paper attached to the note, whenever necessity or the convenience of the parties requires it.56

d. Indorsement on collateral instrument. Where a note and a mortgage given as security therefor are not fastened together so as to form one and the same instrument, a written assignment on the back of the mortgage will not be construed as an indorsement of the note.57 And where a receipt was given by an attorney for a note left with him for collection, the indorsement of such receipt does not pass to the assignee the legal title to the note, although such attorney by another indorsement on the receipt promises to pay the proceeds of the note, when collected, to the assignee.58

the back of the original note, and, of making a transfer; but they have therefore, amounted only to an equita- been held to be within the reason of ble transfer. The indorsement was the custom, and are supported by prinmade on a paper attached to the back ciple. Bayley on Bills, 92; Violett v. of the note by a wafer, and it had been Patton, 5 Cranch (U. S.), 142. before thus attached for the purpose "So in the present case, as there is of entering thereon indorsements of no authority against the validity of payments, the back of the original the indorsement, we think we shall note having been before covered with violate no principle in holding it to be indorsements; and several payments a legal transfer of the note." had been indorsed on the attached paper, before the note was transferred by indorsement to the plaintiff. This paper thus attached had become a part of the note, and no good reason can be given why an indorsement made thereon should not be held a valid and legal transfer. The objection is, that such an indorsement is not sanctioned

by custom; but we think it is sup-
ported by the reasons on which the
custom was originally founded. Bills
of exchange and promissory notes were
indorsed on the back of the bills and
notes, because it was
a convenient
mode of making the transfer, and in
order that the evidence thereof might
accompany the note. Such an indorse-
ment as this will rarely happen, and
no authority to support it could rea-
sonably be expected; but there is no
authority against it.

"If a person write his name on a blank paper, to be used as an indorsement of a note to be written on the other side, and it be filled up as intended, the party would be held liable as indorser of the note, although such indorsements are infrequent, and are not according to the customary form

56. Crosby v. Roub, 16 Wis. 616.

57. Assignment of notes on mortgage.-Doll v. Hollenback, 19 Neb. 639, 28 N. W. 286, where an assignment

was written on the back of a mortgage given to secure certain notes, which was in the following language: "For value received, I hereby assign described to John J. French." (Signed) the within mortgage and notes therein "Moses Turner." It was held that such assignment did not convey the legal title to the notes, and that the assignor did not thereby warrant the solvency of the maker of the notes. French v. Turner, 15 Ind. 59. But in the case of Bange v. Flint, 25 Wis. 544, where a negotiable note, and a mortgage securing it, given to a railroad company, were attached to its negotiable bond, which recited that they were transferred as security for, and should be transferable only in connection with, the bond, it was held that this was an indorsement of the note, within the law merchant.

58. Gookin v. Richardson, 11 Ala. 889, 46 Am. Dec. 232; Dickson v. Cunningham, Mart. & Y. (Tenn.) 203.

§ 58. Indorsement must be of entire instrument.

66

66

66

a. Statutory provision.- The Negotiable Instruments Law provides that: "The indorsement must be an indorsement of the entire instrument. An indorsement, which purports to transfer "to the indorsee a part only of the amount payable, or which purports to transfer the instrument to two or more indorsees severally, does not operate as a negotiation of the instrument. But where the instrument has been paid in part, it may be indorsed as "to the residue." 59 A similar provision is contained in the English Bills of Exchange Act. The rule of the statute was established in England at an early date,61 and was based upon the principle that a bill of exchange or promissory note being a personal contract cannot be apportioned, since "a man cannot be made liable to two actions, where, by the contract, he is liable to but one." And the same rule has been declared by the courts of this country, based upon the same principle. But in equity there may be an effectual assignment of a portion of an entire debt, which will enable the assignee to recover by a proceeding in equity the amount of his portion, all other persons having an interest in the debt being made parties, and all their rights being disposed of in a single proceeding.63 It would not seem, however, that a partial indorse

59. Neg. Inst. L. (N. Y.), § 62. For the same section in the statutes of other States see Appendix. For a construction and application of this section see King v. King, 73 App. Div. (N. Y.) 548.

60. English Bills of Exchange Act, 1882, § 32 (2). See Appendix.

61. Hawkins v. Cardy, 1 Ld. Raym. (Eng. 1699) 360.

63. Assignment of part of contract. -The tendency of modern decisions is in the direction of more fully protecting the equitable rights of assignees of choses in action, and the objection that to allow an assignment of a part of an entire claim might subject the creditor to several actions to enforce a single obligation has much less force under a system which requires all parties in in62. In the case of Bibb v. Skinner, terest to be joined as parties to the ac2 Bibb (Ky.), 57, the court said: "It tion. Risley v. Phenix Bank, 83 N. Y. is a settled principle that an indorse- 318, 329; James v. City of Newton, 142 ment of part only of a debt is not Mass. 368, 8 N. E. 122, 56 Am. valid to charge the drawer or acceptor; Rep. 692; Daniels v. Meinhard, 53 because it would render him liable on Ga. 359; Grain v. Aldrich, 38 Cal. one contract to as many actions as the payee or indorser should think fit." See also Frank v. Kaigler, 36 Tex. 305; Goldman v. Blum, 58 Tex. 630, 636, where the court said: At common law such a transfer of a part only of the note to two distinct persons, and a reservation of the balance of the instrument to the original payee, could not be recognized, and no action at law could be maintained on such a note by any of the parties to it."

514; Lapping v. Duffy, 47 Ind. 51; Fordyce v. Nelson, 91 Ind. 447; Etheridge v. Vernoy, 74 N. C. 809. In Indiana it was also held that a part interest in a promissory note may be assigned in equity, and the assignee, being the real party in interest, can, under the statute of that State, join with the owner of the other interest in an action on the note. Groves v. Ruby, 24 Ind. 418.

ment of a negotiable instrument would even, in equity, constitute a negotiation of the instrument and subject the indorsees to the same rights as to the portion indorsed as if the transfer had been made by a full indorsement. The partial indorsement would, in effect, be a partial assignment vesting the assignee with an equitable title to his portion of the instrument when collected.

64

b. Indorsement to two or more indorsees. While, under the statute and the common-law rule, an instrument may not be transferred to two or more indorsees severally so as to be divisible into separate causes of action there is no doubt that an entire note may be indorsed to two or more indorsees jointly, who may maintain a joint action thereon.65 An indorsement of a note to two indorsees entitles each to one-half the note and its proceeds, and neither can transfer any other or greater interest therein.G

59. Kinds of indorsement.

a. Statutory provisions. The Negotiable Instruments Law provides that: "An indorsement may be either special or in blank; and "it may also be either restrictive or qualified, or conditional." 67

64. Partial indorsement vests equitable title in portion of amount collected. In the case of Miller v. Bledsoe, 1 Scam. (Ill.) 530, 32 Am. Dec. 37, one of two joint payees in a negotiable note indorsed his interest to the other payee in the following words, "I assign my interest in the within to M. Ö. Bledsoe without recourse in any event. (Signed) B. F. Turpin."

in his own name; he would have had to declare for a moiety of the note as payee, and for the remainder as indorsee. This would lead to much confusion and complexity in pleading. In order, therefore, to enable an indorsee of a note to bring an action in his own name as indorsee, the whole interest in the note must be assigned to him. The interests of an assignee of part of a note would doubtless be protected in a The action was brought by Bledsoe court of law, but the action must be and Turpin to collect the note. Evi brought in the name of the payee or dence tending to show that Turpin had payees, who continue to be the legal parted with his interest in the note to holders of the note for the purpose of Bledsoe was rejected at the trial. The collection. The indorsement on the appellate court said: "It is only note can only be regarded as a private necessary for this court to decide memorandum between the payees, and whether the note was admissible in only vested in Bledsoe an equitable evidence. At law a moiety, or any title to the money when collected. The other portion of a promissory note, court cannot be so assigned as to enable the in receiving the note in evidence, and consequently decided correctly assignee to bring an action in his own in rejecting the parol evidence. name for his portion of the note. Had Turpin assigned his half of the note to judgment is affirmed, with costs." a third person, that third person could not have united with Bledsoe, in bringing the action, for they would have to sue in different capacities, Bledsoe as payee, and the third person as indorsee. The same result would follow if Bledsoe had brought the action

The

65. Flint v. Flint, 6 Allen (Mass.), 34, 83 Am. Dec. 615.

66. Herring v. Woodhull, 29 Ill. 92, 81 Am. Dec. 296.

67. Neg. Inst. L. (N. Y.), § 63. For same section in statutes of other States see Appendix.

Mr. Story says that: "Indorsements may be in blank or full, general or restrictive, qualified, conditional, or absolute." 68

b. Special indorsement. A special indorsement specifies the person to whom or to whose order the instrument is to be payable; and the indorsement of such indorsee is necessary to the further negotiation of the instrument.69 This kind of an indorsement is also called a full indorsement.70 A special indorsement may be as follows: "Pay to A. B. or order." But an indorsement, "Pay to A. B." is deemed a general indorsement and payable to him or his order, and the words "or order" may be added." If a note is indorsed in full, to a particular person, the indorsee cannot strike out his own name and substitute the name of another, but must himself indorse it in order to transfer it.72 Where an instrument is indorsed in blank by either the payee or any other holder, and is afterward transferred by an indorsement in full, it is still transferable by mere delivery.73 The special indorsement

69. Neg. Inst. L. (N. Y.), § 64. For same provision in statutes of other States see Appendix. See also Gaylord v. Nebraska Sav. & Exch. Bank, 54 Neb. 104, 74 N. W. 415, 69 Am. St. Rep. 705.

70. Story on Promissory Notes, 139. 71. Chitty on Bills (12th Am. ed.), 258; Bayley on Bills (5th ed.), p. 128. In Leavitt v. Putnam, 3 N. Y. 494, 497, the court said: "The note in the present case was upon its face transferable, and its character in respect to negotiability could only have been changed by an indorsement containing express words of restriction. The defendants' indorsement was a full one, containing the name of the person in whose favor it was made, but omitting the words 'or order,' the legal effect of which was, nevertheless, to make the note payable to him or his order, and his indorsement therefor was effectual to transfer the note to the plaintiff." See Hodges v. Adams, 19 Vt. 74.

Instances of special indorsement. An indorsement, "Wm. Dilworth, Jr.: Pay R. McCurdy, Cashr.," is a special indorsement. Reamer v. Bell, 79 Pa. St. 292.

Where the indorsement read, "Pay the within to the cashier of the Bank of the United States, or to W. W. Frazier, their agent or order," it was

held that Frazier was the only person who could transfer the legal title to the note, and that he alone could maintain an action thereon. Frazier v. Moore, 11 Tex. 755. An indorsement, "I order the contents of this note to be paid to B. at his own risk," is a special indorsement. Rice V. Stearns, 3 Mass. 225, 3 Am. Dec. 129.

72. Grimes v. Piersol, 25 Ind. 246. It was also held in this case that to strike out the name of the indorsee in a full or special indorsement of a promissory note, and substitute the name of another, without the consent of the indorser, is a material alteration of the contract, and no recovery can be had on it against the indorser.

73. Watervliet Bank v. White, 1 Den. (N. Y.) 608, 612; Hale v. Bailey, 16 La. 213; Bullock v. Nally, 12 La. 619; Habersham v. Lehman, 63 Ga. 380.

"A

Effect of blank indorsement.Chitty on Bills (12th Am. ed.), p. 264, contains the following: blank indorsement makes a bill transferable by the i dorsee, and every subsequent holder by mere delivery, and when the first indorsement has been in blank, the bill or note as against the payee, the drawer, and acceptor, is afterward assignable by mere delivery notwithstanding it may have upon it subsequent indorsements in full, because a holder, by delivery, may declare and recover as the indorsee of

of a negotiable instrument transfers the legal title in the instrument to the indorsee, which cannot be diverted except by canceling the indorsement or indorsing it again.74

c. Indorsement in blank.- The Negotiable Instruments Law provides that: "An indorsement in blank specifies no indorsee, "and an instrument so indorsed is payable to bearer, and may be "negotiated by delivery." 75 An indorsement in blank is that most frequently used in commercial transactions, and is made by the mere signature of the indorser, usually and properly, though not necessarily, on the back of the instrument. The statute also provides that: "The holder may convert a blank indorsement into a special indorsement by writing over the signature of the indorser "in blank any contract consistent with the character of the indorse66 ment.' "76 This is clearly a legislative enactment of the commonlaw rule. The right of a bona fide holder of a bill or note to write. over a blank indorsement to whom the bill shall be paid has long been settled by the English and American courts;" and the holder,

the payee, and strike out all the subsequent indorsements, whether special or not."

74. Burdick v. Green, 15 Johns. (N. Y.) 247; Everett v. Vendryes, 25 Barb. (N. Y.) 383; Garratt v. Jaffray, 10 Bush (Ky.), 413; Lake v. Hastings, 24 Miss. 490; Johnson v. Mitchell, 50 Tex. 212, 32 Am. Rep. 602; Pickering v. Cording, 92 Ind. 306, 47 Am. Rep. 145; Mitchell v. Fuller, 15 Pa. St. 268, 53 Am. Dec. 594.

U. S. 37: "The contract created by the indorsement and delivery of a negotiable note, even between the iminediate parties to it, is a commercial contract, and is not in any proper sense a contract implied by the law, much less an inchoate or imperfect contract. It is an express contract, and is in writing, some of the terms of which, according to the custom of merchants and for the convenience of commerce, are usually omitted, but not the less on that account perfectly understood. All its terms are certain, fixed, and definite, and, when necessary, supplied by that common knowledge, based on universal custom, which has made it both safe and convenient to rest the rights and obligations of parties to such instruments upon an The language of the text is also that abbreviation. So that the mere name of the English Bills of Exchange Act, 1882, § 34(1).

75. Neg. Inst. L. (N. Y.), § 64. For same provision in statutes of other States see Appendix. By section 28 of such law (ante, p. 233), it is provided that an instrument is payable to bearer "when the only or last indorsement is an indorsement in blank."

The universal rule, independent of the statute, is that a negotiable instrument indorsed in blank is transferable by delivery only. See ante, § 56, note 34.

76. Neg. Inst. L. (N. Y.), § 65. For the same section in the statutes of other States see Appendix.

of an indorser, signed upon the back of a negotiable instrument, conveys and expresses his meaning and intention as fully and completely as if he had written out the customary obligation of his contract in full."

The following cases are in point: United States.- United States V. Barker, Fed. Cas. No. 14,517. Alabama.-Agee v. Medlock, 25 Ala.

77. Evans v. Gee, 11 Pet. (U. S.) 281; Bancroft V. Paine, 15 Ala. 80, 9 L. Ed. 639.

Reason for rule. It is said by Justice Matthews, in Martin v. Cole, 104

834.

Illinois.- Weston v. Myers, 33 Ill. 424; Moore v. Maple, 25 Ill. 341.