Indorsement may on the other hand, by waiving any or all Waiver of the steps otherwise necessary to fix the indorser's liability, enlarge the holder's rights.

steps.

Joint indorsement.

Any indorsement may be made by two or more persons jointly, as where the indorsement is by partners, or where it is by several persons united in interest in the transaction. It will not make an indorsement by two or more a joint indorsement that they indorse at the same time, though they may have been led to do so by the same inducement; their interest in the transaction must be joint, they must have undertaken to share the contract together,1 which be shown to be the fact.2 When such is the case they are, notwithstanding their individual indorsements, all joint indorsers towards the holder, their own indorsee, though not to subsequent holders in due course. Between themselves, however, they are not indorsers at all; that is, one of them could not maintain an action against one of his associates as an indorser, nor indeed could one without his associates, after taking up the paper, maintain an action against any party to it.

may

As has been said already, indorsement is an act of the law merchant, to be done according to the law merchant. Whether Conformity to a particular act is according to the law merchant should, it seems, be determined by the question of What the custom is may be in

law merchant.

its conformity to the custom. ferred from what has been stated.

To write one's name simply

his title does not depend upon it, and sue the other parties accordingly. See N. I. L. § 46.

1 Shaw v. Knox, 98 Mass. 214; Hogue v. Davis, 8 Gratt. 4. Successive indorsers for accommodation of another are presumptively liable in the order of their indorsement. Shaw v. Knox, supra; Moore v. Cushing, 162 Mass. 594.

2 Harrah v. Doherty, 111 Mich. 175.

3 Shaw v. Knox, supra.

Under the Statute joint payees or joint indorsees who indorse are deemed to indorse jointly and severally (that is, towards subsequent holders). N. I. L. § 75.

upon the instrument; or in connection with it to write 'Pay to A or order,' or the like, or Pay to A only,' or 'for collection, or in trust,' or 'without recourse,' or 'upon condition,' nam ing the condition, or 'waiving demand' or 'demand and notice,' or 'protest,' or the like; such would be according to the law merchant, because they are of custom.

Material departures from the custom should not, in sound theory, be admitted to the footing of indorsement, but should stand upon their own footing according to their terms. In other words the common law or equity, according to the case, and not the law merchant, should be applied to the rights and liabilities of the parties to such transactions. This doctrine however has sometimes been overlooked, and transactions in terms which, apart from their connection with instruments of the law merchant, would be governed by principles of the common law or of equity, have been treated as indorsement within the law merchant.

Some authorities appear indeed to have gone the length of declaring that any writing by the holder of a negotiable instrument, which purports to transfer his title thereto Irregular may be construed to mean indorsement. For ex- indorsement. ample: The holder of a negotiable note writes on the back of it, 'I this day sold and delivered to A the within note,' or 'I hereby sell and assign all my right and title to this note,' adding his signature. This has been deemed indorsement according to the law merchant. Again: In like case the

writing is, I hereby guaranty the payment of this note.' This too has been treated as indorsement.2 Again: The defendant writes on the back of a negotiable note an agreement by himself to pay the note 'as if by me indorsed.' This has (perhaps with better reason) been held indorsement.

8

1 Adams v. Blethen, 66 Maine, 19; Markey v. Corey, 108 Mich. 184; s. c. 36 L. R. A. 117; Sears v. Lantz, 47 Iowa, 658; Merrill v. Hurley, 55 Am. St. Rep. 859, 866; Hatch v. Barrett, 34 Kans. 230.

2 Partridge v. Davis, 20 Vt. 499. See Tuttle v. Bartholomew, 12 Met. 452, referring to various cases so holding and rightly repudiating them. See also Belcher v. Smith, 7 Cush. 482.

8 Pinnes v. Ely, 4 McLean, 173.

Such doctrine may well be doubted; to sell and deliver is not to indorse according to the law merchant, nor does the act become indorsement by the fact that it is evidenced by writing and signature upon a negotiable instrument. The owner of a non-negotiable instrument might sell and deliver' it, and note the fact by writing and signature on the instrument; but the act, though of the same nature as in the case in question, would not be indorsement.1 So to sell and assign' is not to indorse, though written and signed by the owner of a negotiable note. If done upon a separate instrument, it clearly would be nothing more than a transfer of title, legal or equitable according to circumstances; and it could not be more by attaching such instrument to the note or by writing the words upon the note. The distinction between assignment and indorsement is plain enough. And so of writing a guaranty upon the instrument; guaranty is a very different undertaking from indorsement, and might of course be added to an indorsement proper, as often is done.

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2

Criticism of the doctrine mentioned must not however be considered as suggesting that there is no place for construction Construction or interpretation of the language used. It may of language. well be that words may be used not in strict conformity to usage but still as bearing the import of indorsement according to the law merchant; in such a case the words must be interpreted accordingly. But if the words do not import a special or blank indorsement, or a restrictive, qualified, or conditional indorsement, as those terms have been explained, they should not be taken to import indorsement according to the law merchant. For example: Above the defendant's signature, on the back of a negotiable promissory note, is written, 'Rec'd one year's interest on the within, May 10, 1871.' This imports, not indorsement according to the law merchant, but only acknowledgment of interest paid: and the defendant cannot be

1 Merchants' Bank v. Gregg, 107 Mich. 146; Story v. Lamb, 52 Mich. 525. But the courts of Michigan distinguish the two cases. Markey v. Corey, supra.

2 Gaylord v. Nebraska Bank, 54 Neb. 104.

3 See Elgin Banking Co. v. Zelch, 57 Maine, 487.

held as indorser without evidence showing that his signature has no connection, or not the connection it appears to have, with the words of receipt quoted.1

§ 5. INDORSEMENT AS AN ORDER OF PAYMENT. When indorsement is made by the holder of the instrument, as distinguished from one who indorses for accommodation, the act is an order upon the maker, acceptor, or drawee When indorseto pay the sum named to a designated indorsee, or ment an order of payment. to his order, or to bearer, according to the nature of the indorsement. If the indorsement is special, such order appears in terms upon the instrument; if it is in blank, the order is the legal effect of the indorsement.

It is often stated as an inference that indorsement by the holder is equivalent to drawing a bill of exchange for the amount named in the instrument indorsed. Such statements however should be taken only as a free expression of a general truth. To put the matter accurately, it should rather be said that indorsement is equivalent to drawing a bill or to drawing a cheque, according to circumstances. The indorsement of a cheque cannot properly be said to be equivalent to drawing a bill; for the question would arise at once, if the statement were made with full purpose, What kind of bill, a foreign or an inland bill? The difference is material. Dishonored indorsement of a cheque does not require protest to fix the indorser's liability; while the contrary is true of fixing the liability of the drawer of a dishonored foreign bill.

It may be said, however, that indorsement is equivalent to drawing an inland bill; but why that rather than equivalent to drawing a foreign bill, that is, why that, so far as the nature of indorsement is concerned, especially in a case in which the cheque or the note is drawn or made and payable in different States? And then in regard to indorsement of a bill of exchange, could it be said that indorsement of a foreign bill was equivalent to drawing an inland bill? That again would be to change the nature of the instrument.

1 Clark v. Whiting, 45 Conn. 149.

This shows that so far as there is any equivalency, the equivalency must have relation to the particular instrument, indorsement of a foreign bill to the drawing of, a foreign bill, indorsement of an inland bill to the drawing of an inland bill, indorsement of a cheque to the drawing of a cheque, indorsement of a promissory note to the drawing of an inland bill.

At best the equivalency is only for certain purposes; in no case is indorsement equivalent to the drawing of a bill for any of the special purposes considered in Chapter VII., such, for instance, as in regard to the rule of drawing without funds. Another important particular in which there is no equivalency will be noticed by referring to certain remarks on a preceding page concerning special indorsement; where it was seen that indorsement by such words as 'Pay to A' would not cut off negotiability, whereas a bill so drawn would not be negotiable.

Indeed, the statement that indorsement is equivalent to drawing a bill is misleading in many cases, and necessary in none. It would have been better to say that indorsement is an order on the drawee, acceptor, or maker to pay, according to the tenor of the instrument: That would be strictly true. But the statement under consideration is too well fixed in the language of the law-books to be discarded; hence, as we must have it, it must be explained.

Presumptive order: who may be sued.

§ 6. ORDER OF LIABILITY.

The holder of an instrument bearing several indorsements made before he acquired title has the right presumptively to sue the indorsers (whose liability has been fixed) in any order he pleases and obtain judgments accordingly, until he has received satisfaction. He is not bound to sue the last indorser. Between the indorsers themselves the order of liability runs back towards the party primarily liable, and never in the opposite direction. But any indorser prior in time to the indorser who, having taken up the paper, is now suing upon it, may be sued. Such indorser is no more required to sue the last prior indorser than is the holder at the end of the indorsements.