Eaton and Gilbert, Com. Paper, 83. Norton, B. & N., 65, 66.

(a) The effect of this section is to make an agent liable on the instrument: (1) Where he fails to disclose his principal, even though the agent has authority to act. (2) Where the agent has no authority to act, even though he discloses his principal. Thus, if the agent sign "A. B., agent," he is liable personally whether he had authority to act for his principal or not; but if he signs the paper "C. D., by A. B., agent," the agent is not liable if he had authority to act. This section in so far as it makes the agent liable on the instrument itself, when he in fact has no authority, but discloses the name of his principal, has changed the law of Kentucky.

The form in which an instrument is signed by an agent may be material. Thus, apart from any question of the agent's authority to act, an instrument running, "I promise to pay," signed "A. B., for C. D.," is the obligation of A. B.

Offutt v. Ayres, 7 Mon. (23 Ky.) 356.

Patterson v. Henry, 4 J. J. M. (27 Ky.) 126;

Musgrove v. McIlroy, 5 J. J. M. (28 Ky.) 646.

The only form which can be known to be safe under any circumstances is a signature in the name of the principal by the agentfor instance, "A. B., by C. D., agent."

As to the liability of an agent negotiating an instrument without indorsement, see section 69. See, further, as to indorsements in a representative capacity, section 44, and as to indorsements by a "cashier" or like officer of a bank or corporation, section 42.

(b) A trustee of an insolvent firm, appointed by such firm and its creditors, who signs an instrument as "Trustee," is not personally liable on the instrument where it is given for property purchased from the payee for the trust estate, and the payee is one of the creditors of the firm.

Megowan v. Peterson, 173 N. Y., 1; 65 N. E., 738.

Although, in general, the word "agent," "trustee," etc., added to a signature is treated as a mere designatio personae, and does not relieve the person signing from individual liability, yet public officers, acting in their public capacity, with the knowledge of the other contracting party, are not individually liable. Randolph, Com. Paper, section 132.

Bank of Kentucky v. Sanders, 3 Mar. (10 Ky.) 184;
Murray v. Carothers, 1 Met. (58 Ky.) 71.

§ 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.

Eaton and Gilbert, Com. Paper, 98. Norton, B. & N., 65. Randolph, Com. Paper, § 1012.

§ 22. Effect of Indorsement or Assignment 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 (a).

Eaton and Gilbert, Com. Paper, 51. Norton, B. & N., 220, 222, 226. Randolph, Com. Paper, §§ 271, 1467.

(a) The indorsement or assignment of an infant is voidable, not void.

Semple v. Morrison, 7 Mon. (23 Ky.) 298.

This provision "means not only that the infant is not liable upon the implied contract of indemnity unless he chooses to be; but, according to Judge Story, it means also that the infant may intercept the payment to the indorsee by disaffirming the contract, and returning the consideration, and recover the money called for in the instrument of the maker or acceptor. If the disaffirmance is made before payment to an indorsee, it is a defense against the indorsee. If made after payment, and the infant is payee, the acceptor or maker must pay the money twice, because they have warranted the capacity of the infant. If parties prior to the infant receive notice of the infant's disaffirmance, they are discharged as to the parties subsequent to the infant, because these persons have lost their title to the paper by the avoidance of the indorsement, and they must look to their intermediate warranties to protect themselves. But, except as against himself, the indorsement is effectual as to all parties; and neither the maker, acceptor, nor any other party can refuse to pay the instrument on the ground that an intermediate indorser is an infant." Norton, B. & N., 220. As an indorser warrants that all prior parties had capacity to

contract (sections 65, 66), he is not released because a corporation which had indorsed the instrument had no capacity to do so.

Monarch Co. v. Farmers' Bank, 105 Ky., 430; 20 K. L.
R., 1351; 49 S. W., 317.

a

§ 23. Forged Signature; Effect of.-Where 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 (a), unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority (b).

Eaton and Gilbert, Com. Paper, 82. Norton, B. & N., 254.

(a) Hon v. Harned, 18 K. L. R., 864; 38 S. W., 688.

(b) Where a payee's indorsement was forged, one who afterwards indorses the note for the accommodation of the maker is liable to a subsequent indorsee who was compelled to take the note up before maturity.

Packard v. Windholz, 82 N. Y. S., 392; 84 N. Y. S., 666. Where one procures a check by falsely pretending that he is another person (the maker knowing that there is such a person) and indorses it in the name of the payee, the indorsement conveys no title, and the bank cashing the check can not charge the drawer's account with the money paid.

Tolman v. American Nat. Bank, 22 R. I., 462; 48 A., 480. The negligence of the bank lay in not requiring identification. See, however, Land Title & Trust Co. v. Northwestern Nat. Bank, 196 Pa. St., 230; 46 A., 420; 50 L. R. A., 75; Sherman v. Corn Exchange Bank, 86 N. Y. S., 341.

As to alteration of the instrument, see sections 124, 125.

ARTICLE II.

CONSIDERATION OF NEGOTIABLE INSTRUMENTS.

Section 24. Presumption of consideration.

25. Consideration, what constitutes; antecedent debt.

26. Who deemed holder for value.

27. When lien on instrument constitutes holder

for value.

28. Effect of absence or failure of considera

tion.

29. Liability of accommodation party.

§ 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 (a).

Eaton and Gilbert, Com. Paper, 301. Norton, B. & N., 274.

(a) Bringman v. Von Glahn, 71 N. Y. S., 845; 71 App. Div., 537;
Murray v. Clayborn, 2 Bibb (5 Ky.) 300;
Dodge v. Bank of Kentucky,
Brown v. Hall, Ib., 599;

Mar. (9 Ky.) 614;

Early v. McCart, 2 Dana (32 Ky.) 414;

Johnson v. Offutt, 4 Met. (61 Ky.) 22;

James v. Hayden, 10 K. L. R., 534;

Kiesewetter v. Kress, 24 K. L. R., 405, 1239; 68 S. W., 633; 70 S. W., 1065;

Note. The numbers of the section of this article in other States than Kentucky are as follows: Arizona, 3327-3332; Colorado, Connecticut, District of Columbia, Florida, Idaho, Iowa, Massachusetts, Montana, New Jersey, North Carolina, North Dakota, Oregon, Pennsylvania, Tennessee, Utah, Virginia and Washington, 24-29; Maryland, 43-48; New York, 50-55; Ohio, 3171w-3127a; Rhode Island, 32-37; Wisconsin, 1675-50 to 1675-55.

Power, etc. v. Hambrick, 25 K. L. R., 30; 74 S. W., 660;

Cox v. Cox, 25 K. L. R., 1934; 79 S. W., 220;

Beattyville Bank v. Roberts, 25 K. L. R., 1796; 78 S. W., 901;

A consideration need not be stated, section 6.

§ 25. Consideration, What Constitutes; Antecedent Debt.-Value is any consideration sufficient to support a simple contract (a). An antecedent or preexisting debt constitutes a value (b), which is deemed such, whether the instrument is payable on demand or at a future time.

Eaton and Gilbert, Com. Paper, 287. Norton, B. & N., 270, 317. Randolph, Com. Paper, § 465.

(a) Bank of Monticello v. Dooly, 113 Wis., 590; 89 N. W., 490;

Mohlman Co. v. McKane, 69 N. Y. S., 1046; 60 App. Div., 546. (b) Where the holder of the antecedent debt receives the instrument before maturity in payment or partial payment of the debt, or incurs a legal obligation to forego the pursuit of an existing remedy, or has in any other form parted with any value, or given any new or additional consideration, in good faith and without notice, he is a holder in due course, although the delivery to him is a fraudulent diversion of the instrument.

Petrie v. Miller, 67 N. Y. S., 1043; 173 N. Y., 596;

Payne v. Zell, 98 Va., 294; 36 S. E., 379;

Black v. First Nat. Bank, 96 Md., 399; 54 A., 88;

Boston Steel & Iron Co. v. Steuer, 183 Mass., 140; 66 N. E., 646;

Alexander v. Springfield Bank, 2 Met. (59 Ky.) 535;

May v. Quimby, 3 Bush (66 Ky.) 102.

But where the instrument is taken only as collateral security for an antecedent debt, no consideration of any kind being given for it, the rule in Kentucky, unless changed by this statute, is that the person so taking the instrument is not a holder in due course. Lee v. Smead, 1 Met. (58 Ky.) 634;

Thompson v. Poston, 1 Duv. (62 Ky.) 392;

Schuster v. Jones, 22 K. L. R., 568; 58 S. W., 595;

Cf. Haldeman v. German Security Bank, 19 K. L. R., 1691; 44 S. W., 383.

This section, especially when read in connection with sections 27 and 52, seems to have changed the law in this particular, and