§ 1144. Signature.

Section 18. [LIABILITY OF PERSON SIGNING IN TRADE OR ASSUMED NAME.] No person is liable on the instrument whose signature does not appear thereon, except as herein otherwise expressly provided. But one who signs in a trade or assumed name will be liable to the same extent as if he had signed in his own name.51

Section 19. [SIGNATURE BY AGENT; AUTHORITY; HOW SHOWN.] The signature of any party may be made by a duly authorized agent. No particular form of appointment is necessary for this purpose; and the authority of the agent may be established as in other cases of agency.52

Section 20. [LIABILITY OF PERSON SIGNING AS AGENT, ETC.] Where the instrument contains or a person adds to his signature words indicating that he signs for or on behalf of a principal, or in a representative capacity, he is not liable on the instrument if he was duly authorized; but the mere addition of words describing him as an agent, or as filling a representative character, without disclosing his principal, does not exempt him from personal liability.5

The purpose of this section seems to be to change (if the signer was duly authorized and his principal disclosed on the instrument) the law by which signatures of those who sign in a representative character have been held in many cases to bind the signers personally even though they were authorized to sign on behalf of another, 54 and the courts seem generally disposed to construe the section as effecting this change. 55 same transactions, intended to accomplish the same object, they may be construed as one and the same instrument as to all parties having notice thereof."

51 See First Nat. Bank v. Cottonwood Land Co., 51 Mont. 544, 154 Pac. 582; New York L. Ins. Co. v. Martindale, 75 Kans. 142, 88 Pac. 559, 121 Am. St. 362; Seattle Shoe Co. v. Packard, 43 Wash. 527, 86 Pac. 845, 117 Am. St. 1064.

52 See In re Chismore's Est., 166 Ia. 217, 147 N. W. 297; Grant County

State Bank v. Northwestern Land Co., 28 N. Dak. 479, 150 N. W. 736. In the Kentucky Act instead of this section it is provided that: "The signature of any party may be made by an agent duly authorized in writing." See Finley v. Smith, 165 Ky. 445, 177 S. W. 262, L. R. A. 1915 F. 777.

53 In the Virginia Act after the word "capacity" the words "without disclosing his principal" are inserted.

4 See supra, §§ 298, 299, 311, 312. 55 Jump v. Sparling, 218 Mass. 324, 105 N. E. 878; Chelsea Exch. Bank v.

The words "if he was duly authorized" seem to carry the implication that if unauthorized the agent is not merely liable for breach of a non-negotiable warranty,56 but liable on the instrument itself. 57

Section 21. [SIGNATURE BY PROCURATION; EFFECT OF.] A signature by "procuration " operates as notice that the agent has but a limited authority to sign, and the principal is bound only in case the agent in so signing acted within the actual limits of his authority.58

§ 1145. Voidable or void signatures.

Section 22. [EFFECT OF INDORSEMENT BY INFANT OR CORPORATION.] The indorsement or assignment of the instrument by a corporation or by an infant passes the property therein, notwithstanding that from want of capacity the corporation or infant may incur no liability thereon.59

This provision presumably does not change the rule of the common law. It is not stated whether or not the transfer of the instrument may be rescinded by the corporation or infant, but in view of Section 196 of the statute the infant doubtless still retains his right of rescission.60

Section 23. [FORGED SIGNATURE; EFFECT OF.] When a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under such signature, unless the party, against whom it is sought to enforce such right, is precluded from setting up the forgery or want of authority.

Whether a forgery can subsequently be ratified or adopted without estoppel or new consideration is a question to which judicial answers are hopelessly conflicting. It is pointed out that since the forgery did not purport to be made on behalf of the person whose name was forged, there can be no ratification. This criticism is sound. The person whose signature it is may indeed adopt it, but adoption involves no fictitious relation, and to sustain recovery after adoption either consideration or estoppel should be requisite.61 Called by whatever name the doctrine may be, the vital question is whether the enforcement of the instrument without this basis should be permitted.62

The right of recovery is clear not only when consideration

61 See Capps v. Hensley, 23 Okl. 311, 100 Pac. 515; Edwards v. Heralds of Liberty, 263 Pa. 548, 107 Atl. 324.

62 Enforcement was allowed in Union Bank v. Middlebrook, 33 Conn. 95; Livings v. Wiler, 32 Ill. 387; Hefner v. Vandolah, 62 Ill. 483, 14 Am. Rep. 106; Fay v. Slaughter, 194 Ill. 157, 167, 62 N. E. 592, 56 L. R. A. 564, 88 Am. St. Rep. 148; Casco Bank v. Keene, 53 Me. 103; Greenfield Bank v. Crafts, 4 Allen, 447; Wellington v. Jackson, 121 Mass. 157; Central Bank v. Copp, 184 Mass. 328, 68 N. E. 334; Fitzpatrick v. School Commrs., 7 Humph. 224, 46 Am. Dec. 76; Marks v. Schram, 109 Wis. 452, 84 N. W. 830. See also Campbell v. Campbell, 133 Cal. 33, 65 Pac. 134; Ofenstein v. Bryan, 20 App. D. C. 1; Smith v. Tramel, 68 Ia. 488, 27 N. W.

471; Myer v. Wegener, 114 Ia. 74, 86 N. W. 49; Carthage Bank v. Butterbaugh, 116 Ia. 657, 88 N. W. 954; Forsythe v. Bonta, 5 Bush, 547. On the other hand, the adoption was held invalid in Brook v. Hook, L. R. 6 Ex. 89; Barry v. Kirkland, 6 Ariz. 1, 52 Pac. 771; Henry v. Heeb, 114 Ind. 275, 16 N. E. 606, 5 Am. St. Rep. 613 (but see Neal v. First Bank, 26 Ind. App. 503); Wilson v. Hayes, 40 Minn. 531, 42 N. W. 467, 4 L. R. A. 196, 12 Am. St. Rep. 754; Workman v. Wright, 33 Oh. St. 405, 31 Am. Rep. 546; McHugh v. County of Schuylkill, 67 Pa. 391, 5 Am. Rep. 445; Shisler v. Vandike, 92 Pa. 447, 37 Am. Rep. 702; Henry, etc., Assoc. v. Walton, 181 Pa. 201, 37 Atl. 261.

is given, but also when the acknowledgement of the forged signature takes place before the purchase of the instrument in question, and is an inducement to such purchase. Here there is an assertion of fact and an estoppel to deny it.63

Other circumstances besides the purchase of the forged instrument on the faith of a representation may afford ground for an estoppel. Thus where a customer of a bank has negligently failed for a long period to examine cancelled checks and discover a forgery, as he would have by such examination, he is estopped afterwards to assert his claim against the bank which has been deprived of the means to protect itself by recovery over against another.64 Under the statute "precluded" perhaps fairly implies that something in the nature of an estoppel is necessary.65

§ 1146. Consideration and value.

ARTICLE II

CONSIDERATION

Section 24. [PRESUMPTION OF CONSIDERATION.] Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration; and every person whose signature appears thereon to have become a party thereto for value.66

63 As to the circumstances sufficient to create an estoppel, see Terry v. Bissell, 26 Conn. 23, 41; Traders' Nat. Bank v. Rogers, 167 Mass. 315, 45 N. E. 923, 36 L. R. A. 539, 57 Am. St. Rep. 458; Crout v. DeWolf, 1 R. I. 393; Pettyjohn v. National Exchange Bank, 101 Va. 111, 43 S. E. 203.

64 Leather Manufacturers' Nat. Bank v. Morgan, 117 U. S. 96, 29 L. Ed. 811, 6 Sup. Ct. 657; California Vegetable Union v. Crocker Nat. Bank, (Calif. 1918), 174 Pac. 920. Cf. Hamlins Wizard Oil Co. v. United States Express Co., 265 Ill. 156, 106

N. E. 623, and see 32 Harv. L. Rev. 287.

65 See Catskill Nat. Bank v. Lasher, 84 N. Y. Misc. 523, 147 N. Y. S. 641; Gluckman v. Darling, 85 N. J. L. 457, 89 Atl. 1016; Olsgard v. Lemke, 32 N. Dak. 551, 156 N. W. 102; Denison . Gholson Dry Goods Co., 135 Tenn. 60, 185 S. W. 723.

66 A renewal note is no more binding than the original note if that was not supported by valuable consideration. Seager v. Drayton, 217 Mass. 571, 105 N. E. 461, and see supra, § 115.

In this and the following sections the statute includes with identical treatment two questions not previously regarded as identical by the common law:

(1) How far consideration is necessary to support the several promises on negotiable instruments; and when consideration is necessary what is its essence?

(2) What "value" must be given by the transferee of an instrument in order to constitute him a purchaser for value, or holder in due course?

The law prior to the statute was perfectly clear in regard to the first question. Between immediate parties the same kind of consideration was necessary as is essential to support any contractual promise.67 On the second question, however, the law was in conflict as will appear from the comment on the following section of the statute.

WHAT

CONSTI

Section 25. [CONSIDERATION, TUTES.] Value is any consideration sufficient to support a simple contract. An antecedent or pre-existing debt constitutes value; and is deemed such whether the instrument is payable on demand or at a future time.68

An obvious purpose of this section was to settle the conflict of decisions in regard to the value essential to constitute a transferee a purchaser for value or holder in due course. Prior to the enactment of the statute it was held in New York that one to whom negotiable paper was transferred either in payment of, or as security for an antecedent debt was not a purchaser for value; and a minority of States followed this rule, especially where the instrument was given only for security.69 The statute clearly adopts the rule of the greater number of

67 See supra, § 108.

68 See supra, § 108. In the Wisconsin Act the words "discharged, extinguished or extended" are inserted after the word "debt," and at the end of the section is added: "But the indorsement or delivery of negotiable paper as collateral security for a preexisting debt, without other consideration, and not in pursuance of an agree

ment at the time of delivery, by the maker, does not constitute value." The definition of value in the Negotiable Instruments Law is adopted in substance in the subsequent Uniform Commercial Acts on Sales, Bills of Lading and Warehouse Receipts.

69 See 1 Ames, Bill and Notes, 650, n. 667 n.; Daniel Neg. Inst., §§ 184, 820.