CHAPTER to them, as trustees, by the firm, by delivery or other XII. Special indorsement. Conversion of blank into special in. dorsement. Delivery necessary. wise (2). An indorsement in full, besides the signature of the indorser, expresses in whose favour the indorsement is made. Thus, an indorsement in full, by A. B. is in this form : "Pay Mr. C. D., or order. A. B." The signature of the indorser being subscribed to the direction, its effect is to make the instrument payable to C. D. or his order only; and, accordingly, C. D. cannot transfer it otherwise than by indorsement. The omission of the words, "or order,” is not material in a special indorsement; for the indorsee takes it with all its incidents, and, among the rest, with its negotiable quality, unless it contain words prohibiting transfer (a). When a bill has been indorsed in blank any holder may convert the blank into a special indorsement, by writing above the indorser's signature a direction to pay the bill to, or to the order of, himself or some other person (b). If a bill indorsed in blank, were afterwards indorsed in full, it was formerly as against the acceptor, the drawer, the payee, the blank and all previous indorsers, payable to bearer; though as against the special indorser himself, title must have been made through his indorsee (c). When a holder converts a blank indorsement into a special one in favour of a stranger, he incurs no liability as indorser (d). If the holder turn a blank indorsement into special one in his own favour, that is an election to take the bill or note as indorsee, and he cannot afterwards be considered as merely servant or assignee of the indorser (e). Every contract on a bill or note, whether it be the drawer's, the acceptor's or maker's, or the indorser's, is incomplete and revocable, until completed by delivery. De (2) Machell v. Kinnear, 1 Stark. 499. (a) Code, s. 34 (2); Moore v. Manning, Com. Rep. 311; Acheson v. Fountain, 1 Stra. 557; Edic v. East India Company, 2 Burr. 1216; 1 W. Bl. 295; Cunliffe v. Whitehead, 3 Bing. N. C. 829; 5 Scott, 31; 6 Dowl. 63; Gay v. Lander, 6 C. B. 336. (b) Hirschfield v. Smith, L. R., 1 C. P. 340; Code, s. 34 (4). (c) Smith v. Clarke, Peake, 225; Walker v. M'Donald, 2 Ex. 527; 17 L. J., Ex. 377. But now the last indorsement governs the instrument. Code, s. 8 (3). (d) Vincent v. Horlock, 1 Camp. 442; Code, s. 23. (e) Clark v. Pigott, 12 Mod. 193; 1 Salk. 126. livery means transfer of possession, actual or constructive, CHAPTER from one person to another (ƒ). XII. Delivery must be made by or under the authority of the Requisites of party contracting on a bill or note; it may be conditional valid delivery. only, and not for the purpose of transferring the property in a bill or note, but only as between immediate parties, or remote parties other than a holder in due course (g). If the bill or note be in the hands of a holder in due Presumption course, a valid delivery by all prior parties so as to make as to. them liable to him is conclusively presumed. When the bill or note is no longer in the possession of the party signing it, a valid and unconditional delivery by him is presumed until the contrary appear (h). Constructive delivery, or delivery to the agent or servant of the intended transferee is equally binding: thus where A. specially indorsed certain bills to B., sealed them up in a parcel, and left them in charge with his own servant to be given to the postman, it was held that the special indorsement did not transfer the property in the bills till delivery, and that delivery to the servant was not sufficient, though it would have been otherwise had the delivery been made to the postman (i). But where A. and B. carried on business in partnership, and being indebted to C., A., who acted as C.'s agent, with the concurrence of B., indorsed a bill in the name of the firm, and placed it amongst the securities which he held for C., but no communication of the fact was made to C.: it was held to be a good indorsement by the firm to C. (j). Hence the word indorse in the pleadings in an action on a bill or note imports a delivery and transfer to the indorsee, so as to confer title. Therefore, under a traverse of the indorsement the defendant may show that the circumstances were such as that the indorsement did not effect a legal delivery of the bill to the indorsee (k), whether the CHAPTER By party incompetent to contract. Conditional indorsement. LIABILITY OF Contract of the drawer. actual delivery were to a third person, or to the indorsee himself (). As has already been noticed, where a bill is drawn, or a bill or note indorsed by an infant, or a corporation not having the power to incur liability on a bill or note, the instrument is available in the hands of the holder against all the other parties, but not against the infant or corporation (m). The drawing must be unconditional, while the acceptance may be conditional; and an indorsement is not void because it purports to be conditional, though the payer may disregard it, and payment to the indorsee is valid whether the condition be fulfilled or not (n). Thirdly, as to the liabilty of an indorser. Every indorser of a bill is in the nature of a new drawer (o); and is liable to every succeeding holder in default of acceptance or payment by the drawee. The drawer of a bill contracts that, on due presentment, it shall be accepted and paid according to its tenour; and that in case of dishonour he will compensate the holder, or any indorser who has to pay it, if notice of dishonour be duly given; he is also estopped from denying to a holder in due course the existence of the payee and his then capacity to indorse. L. J., Q. B. 1; 15 Q. B. 995; see (1) Bell v. Lord Ingestre, 19 (m) Lebel v. Tucker, 8 B. & S. 833; Smith v. Johnson, 3 H. & N. 222; Code, s. 22 (2). As we have seen, if the acceptance be by a person incapable of contracting, the holder may treat it as the drawer's promissory note. Sect. 5 (2). (n) Code, s. 33. Where a bill was accepted after having been conditionally indorsed, and was paid in disregard of the condition, the acceptor was formerly held liable to pay again on the fulfilment of the condition. Robertson v. Kensington, 4 Taunt. 30; Savage v. Aldren, 2 Stark. 232. It seems that a bill or note cannot be indorsed with a condition that, in a certain event, the indorsee shall not have power to indorse. Soares v. Glyn, 14 L. J., Q. B. 313; 8 Q. B. 24, i.e., an indorsement may be conditional, or restrictive, but not conditionally restrictive. XII. The indorser makes a similar contract, and promises in CHAPTER the same way to compensate the holder or any subsequent indorser; he is estopped from denying to a holder in due Contract of course the genuineness and regularity in all respects of the the indorser. drawer's signature, and of all previous indorsements; is estopped from denying to his immediate and any subsequent indorsee, that the bill was, at the time of his indorsement, a valid and subsisting bill, and that he had then a good title thereto (p). But a man may indorse a bill without incurring personal How declined. responsibility in several ways. recours. First, by expressing in his indorsement that it is made By indorsewith this qualification, that he shall not be liable on default ment sans of acceptance or payment by the drawee. Such qualified indorsement will be made by annexing in French the words 66 sans recours," or in English, "without recourse to me," or any equivalent expression (r). A drawer, or indorser, may, by express stipulation in- By agreement. serted in the bill or note, limit, as against all parties, his express or implied. liability in any way he pleases; or he may, on the other hand, increase it by waiving, as regards himself, some or all of the holder's duties. But unless such a stipulation appear on the bill it will only be effectual between the immediate parties, or a transferee without value, and is powerless against a holder in due course. Thus, if there be a written or even verbal agreement between an indorser and his immediate indorsee, that the indorsee shall not sue (p) Code, s. 55. Before acceptance the drawer is the principal debtor and the indorser his surety. They are both liable pari passu (sect. 57) to the holder, but payment by the drawer, the principal, discharges the indorser, the surety; whereas payment enforced from the indorser, the surety, does not discharge the drawer, the principal; but the indorser may recover from him afterwards. So payee or first indorser is principal as regards second indorser, and he in turn to third. After acceptance, a bill is like a note, and the liability of the drawer and of the indorsers is in abeyance, to revive on ac ceptor's default, on due protest, (2) The words "at the indor- XII. CHAPTER the indorser, but the acceptor only, it has been held, that such an agreement is a good defence on the part of the indorser against his immediate indorsee suing in breach of the agreement (s). By converting blank into special indorsement. What an indorsement admits. Indeed, the contract between indorser and indorsee does not consist exclusively of the writing popularly called an indorsement, though that indorsement be a necessary part of it. The contract consists partly of the written indorsement, partly of the delivery of the bill to the indorsee, and may also consist partly of the mutual understanding and intention with which the delivery was made by the indorser and received by the indorsee. That intention may be collected from the words of the parties to the contract, either spoken or written, from the usage of the place, or of the trade, from the course of dealing between the parties, or from their relative situation (t). But though a special contract qualifying the ordinary liability of an indorser may affect the rights of the immediate indorsee, and those who stand merely on his title, it is plain that it cannot restrain the rights of subsequent transferees for value without notice (u). A party transferring a bill may also (as we have just seen) decline personal responsibility, by converting an existing blank indorsement into a special one in favour of his transferee. An indorsement admits the signature and capacity of the drawer and every prior indorser (x). And in an action against an indorser the defendant will not be allowed to plead denying the indorsement to himself (y). (s) Code, s. 16. Pike v. Street, 1 M. & M. 226; Clark v. Pigott, 1 Salk. 126; 12 Mod. 192; Goupy v. Harden, 7 Taunt. 159; Soares v. Glyn, 8 Q. B. 24; contra, Thompson v. Clubly, 1 M. & W. 212; Abrey v. Cruz, L. R., 5 C. P. 37. Hence as between immediate parties or remote, other than a holder in due course, Pike v. Street seems to be law, Code, s. 21 (2) b; but where there is a holder in due course, Abrey v. Crux. Code, s. 16. (t) Kidson v. Dilworth, 5 Price, 564; Castrique v. Battigieg, 10 Moore, P. C. Cases, 94. See ante, Chap. VIII., and Byles on Bills, 6th American edition, p. 243. (u) Abrey v. Crux, L. R., 5 C. P. 37; Code, s. 21 (2) b. (x) Lambert v. Oakes, 1 Lord Raym. 443; 12 Mod. 244; Lambert v. Pack, 1 Salk. 127; Williams v. Seagrove, 2 Barnard, 82; Crichlow v. Parry, 2 Camp. 182; Free v. Hawkins, Holt, N. P. R. 550; Macgregor v. Rhodes, 25 L. J., Q. B. 318; but see East India Company v. Tritton, 3 B. & C. 280; 5 D. & R. 214. (y) Macgregor v. Rhodes, 25 L. J., Q. B. 318; 6 E. & B. 266. |