to the same rule as money, and if such an instrument be transferred in good faith for value before it is over-due, it becomes available in the hands of the holder, notwithstanding fraud which would have rendered it unavailable in the hands of a previous holder. This rule, however, is only intended to favour transfers in the ordinary and usual manner, whereby a title is acquired according to the law merchant, and not to a transfer which is valid in equity according to the doctrine respecting the assignment of choses in action; and it is therefore clear that in order to acquire the benefit of this rule the holder must, if it be payable to order, obtain an indorsement, and that he is affected by notice of a fraud received before he does so. Until he does so he is merely in the position of the assignee of an ordinary chose in action, and has no better title than his assignor."1 § 31. by representa (5) Where any person is under obligation to Indorsement indorse a bill in a representative capacity, he tive. may indorse the bill in such terms as to negative personal liability. See sect. 16 (1), ante, p. 39, as to indorsements limiting or negativing liability, and sect. 26, ante, p. 77. a valid in 32. An indorsement in order to operate as a Requisites of negotiation must comply with the following con- dorsement. ditions, namely (1) It must be written on the bill itself and be signed by the indorser. The simple signa- An indorsement written on an allonge, or on a Allonge or "copy" of a bill issued or negotiated in a country where "copies are recognized, is Whistler v. Forster (1863), 14 C. B. N. S. at pp. 257, 258; 32 L. J. C. P., p. 163. "copy." § 32. ILLUSTRATIONS. 1. C., the holder of a bill, signs it and writes thereon, "I hereby assign this draft and all benefit of the money secured thereby to D." This is an indorsement by C.' 2. C., the holder of a note, signs it and writes thereon, "I bequeath-Pay the within to D., or his order, at my death,” and gives it to D. This is not an indorsement, but an attempted testamentary gift, invalid under the Wills Act.? 3. An express promise in writing to indorse a bill is not an indorsement.3 4. The assignment of a note by a separate writing is not an indorsement.1 By sect. 2 "indorsement" means an indorsement completed by delivery. As to delivery, see sect. 21, ante, p. 52. As to negotiation, see sect. 31. As to signature by agent, see sect. 91, post, p. 274. As to indorsement of bill drawn in a set, see sect. 71, post, p. 235. It has recently been held that where a bill broker who has discounted bills re-discounts them with his bankers, and instead of indorsing each bill gives a general guarantee, he can prove against the acceptor for the amount he has to pay under his guarantee and interest, if the bills are dishonoured.5 An indorsement on the face of a bill is valid. Under the repealed Act, 17 Geo. 3, c. 30, the indorsement of a bill or note under 57. required an attesting witness. French Code, Art. 137, requires an indorsement to be dated, to state the consideration, and the name of the indorsee, and to be to order. By Art. 138, if any of these requisites be wanting, it can only avail as a "procuration." When there is no room on a bill for further indorsements, a slip of paper, called an "allonge," may be attached thereto. It becomes part of the bill, and indorsements may be written thereon.7 1 Richards v. Frankum (1810), 9 C. & P. at p. 225. 2 Mitchell v. Smith (1864), 33 L. J. Ch. 596. 3 Cf. Harrop v. Fisher (1861), 10 C. B. N. S. at p. 204; 30 L. J. C. P. 286, and Rose v. Sims (1830), 1 B. & Ad. 521. Re Barrington (1804), 2 Scho. & Lef. 112; cf. Ex parte Harrison (1789), 2 Brown C. C. 614. Ex parte Bishop (1880), 15 Ch. D. 400, C. A. 6 Young v. Glover (1857), 3 Jur. N. S. Q. B. 637; Ex parte Yates (1858), 2 De G. & J. 191; 27 L. J. Bank. 9. 7 Cf. Monmohunee v. Secretary of State (1874), 13 Bengal L. R. 359; German Exchange Law, Art. 11. Some of the foreign codes contain minute provisions to prevent frauds, e.g., that the first indorsement on the allonge must begin on the bill and end on the allonge; otherwise an allonge might be taken from one bill and struck on to another: Cf. Nouguier, § 668. As to "copies," see Nouguier, §§ 208-211, and German Exchange Law, Arts. 70-72. A "copy" of a bill must be distinguished from the parts of a set: see sect. 71, post, p. 235. § 32. dorsement. (2) It must be an indorsement of the entire Partial inbill. A partial indorsement, that is to say, an indorsement which purports to transfer to the indorsee a part only of the amount payable, or which purports to transfer the bill to two or more indorsees severally, does not operate as a negotiation of the bill. ILLUSTRATIONS. 1. C., the holder of a bill for 1007., indorses it, "Pay 50l. to D. or order, and 50l. to E. or order." This is invalid. Neither D. nor E. can sue or further indorse.1 2. C., the holder of a bill for 1007., indorses it, "Pay D. or order 301." This is invalid, unless C. also acknowledge the receipt of 701.2 A partial indorsement, purporting to split the right of action on a bill, is invalid as a negotiation, but may operate as an authority to receive payment of the amount thereby specified.1 payees or (3) Where a bill is payable to the order of two Several or more payees or indorsees who are not indorsees. partners all must indorse, unless the one indorsing has authority to indorse for the others. 1 Cf. Heilbut v. Nevill (1869), L. R. 4 C. P. at p. 358; Conova v. Earl (1868), 26 Iowa, 169. See Nouguier, § 665. 2 Hawkins v. Cardy (1699), 1 Ld. Raym. 360. § 32. Misdescription of payee or indorsee. ILLUSTRATIONS. 1. Bill payable "to the order of C. and D." D. alone indorses it to E. This is insufficient. E. cannot sue the acceptor.1 2. Bill payable "to the order of C. and D." C., with D.'s authority, indorses it "for self and D." This is sufficient. 3. Bill payable to "C. and D., or the order of either of them." C. alone indorses it. This is sufficient." Qu. in Illustrations 2 and 3, as to the liability of D. as indorser? Where a dividend warrant is payable to the order of two or more persons the custom is to pay on the indorsement of any one of them; and by sect. 97 (3) (d), post, p. 284, the usages with respect to dividend warrants are expressly saved. (4) Where, in a bill payable to order, the payee or indorsee is wrongly designated, or his name is mis-spelt, he may indorse the bill as therein described, adding, if he think fit, his proper signature. ILLUSTRATION. A bill is indorsed to J. Smythe. The man's real name is T. Smith. He can validly negotiate the bill by indorsing it as J. Smythe.3 The usual and proper course is for the holder to sign first the name as described or spelt in the bill, and then to put underneath his proper signature. If a person trades under an assumed name, can he validly negotiate a bill payable to him under his trade name by indorsing it in his individual name or vice versâ ?—e.g., John Smith trades as "Brown & Co." A bill is drawn payable to the order of "Brown & Co." He indorses it as John Smith. Is the presentment for payment of this bill by the indorsee a due presentment? In Massachusetts it 1 Carvick v. Vickery (1781), 2 Dougl. 652; cf. Heilbut v. Nevill (1869), L. R. 4 C. P. at pp. 356, 358, per Willes, J. 2 Watson v. Evans (1863), 32 L. J. Ex. 137. 3 Supra, and cf. Willis v. Barrett (1816), 2 Stark. 29; cf. sect. 7 (1), ante, p. 19. seems it is. The point was raised in Walker v. Macdonald,2 but the decision proceeded on the ground that there was a prior indorsement in blank, and therefore the bill was payable to bearer. Such an indorsement is clearly irregular, if not invalid. A question sometimes arises as to how a bill payable (say) to "Mrs. John Jones" should be indorsed. The proper form appears to be "Ellen Jones, wife of John Jones." The form sometimes adopted, viz., "Mrs. John Jones," is clearly irregular, though its invalidity has never been decided: see note to sect. 91, post, p. 275. When the title to a bill payable to order is transmitted by act of law, and the person to whom the title is transmitted obtains possession of the bill, he has the rights of the holder. See transmission by marriage (post, p. 125), death (post, p. 126), execution (post, p. 127), bankruptcy (post, p. 127). See also dissolution of partnership (ante, p. 70). In America an exception to the general rule is admitted in the case of corporations. Thus a bill payable to the order of the cashier or other officer of a bank is deemed to be payable to the bank; therefore, any person who can indorse for the bank can negotiate such a bill-e.g., C. is the cashier of the "X. Bank," and D. is the president. A bill bought by the bank is indorsed "pay to the order of C. cashier." The "X. Bank" can sue on the bill in the corporate name, and D. the president can validly indorse it away without a previous indorsement by C.3 The expediency of this exception is very doubtful. § 32. indorsements. (5) Where there are two or more indorsements Order of on a bill each indorsement is deemed to have been made in the order in which it appears on the bill, until the contrary is proved. (6) An indorsement may be made in blank or Kinds of special. It may also contain terms making it restrictive. indorsement. 33. Where a bill purports to be indorsed con- Conditional 1 Bryant v. Eastman (1851), 61 Mass. R. 111. 2 Walker v. Macdonald (1848), 2 Exch. 527. 3 Watervliet Bank v. White, 1 Denio, 609; First Nat. Bank v. Hall (1871), 44 New York R. 395. indorsement. |