§ 33. Indorsement in blank. ditionally the condition may be disregarded by the payer, and payment to the indorsee is valid whether the condition has been fulfilled or not. ILLUSTRATION. An indorsement running, Pay to the order of C. "on the arrival of the ship Swallow at Calcutta," or on his marriage with D.," would be conditional. See sect. 11 (2). Compare sect. 35 (post, p. 112), as to restrictive indorsements. This section alters the law. It was formerly held that if a bill was indorsed conditionally, the acceptor paid it at his peril if the condition was not fulfilled. This was hard on him. If he dishonoured the bill he might be liable in damages, and yet it might be impossible for him to find out if the condition had been fulfilled. Under this section, as between indorser and indorsee, the condition would presumably be operative. If the indorsee received payment without the condition being fulfilled, he could not sue the indorser, and he would moreover hold the proceeds in trust for the indorser. The continental codes do not recognise conditional indorsements; and Pothier (No. 38) says expressly, that an indorsement must conform to the conditions of an original draft. Sect. 52 of the Indian Negotiable Instruments Act appears to preserve the common law rule. 34. (1) An indorsement in blank specifies no indorsee, and a bill so indorsed becomes payable to bearer. ILLUSTRATION. Bill payable to the order of John Smith. He signs on the back, "John Smith." This act is interpreted by the law merchant as an indorsement in blank by John Smith, and operates as if he had written-1. I hereby assign this bill to bearer. 2. I hereby undertake that if this bill be dishonoured, I, on receiving due notice thereof, will indemnify the bearer. By sect. 31 (2), ante, p. 102, a bill payable to bearer is negotiated by delivery. See German Exchange Law, Art. 12, to same effect. 1 Robertson v. Kensington (1811), 4 Taunt. 30. 2 See Peacock v. Rhodes (1781), 2 Dougl. at p. 636, per Lord Mansfield; Under French Code, Arts. 137, 138, an indorsement in blank merely operates as a "procuration," and not as a negotiation of the bill. The indorsee is considered as the agent or "mandataire," of the indorser, and their relations are regulated accordingly. If, however, the indorsee has given value, he may convert the blank into a special indorsement.1 § 34. dorsement. (2) A special indorsement specifies the person Special into whom, or to whose order, the bill is to be payable. 1. "Pay D. or order." ILLUSTRATIONS. 2. "Pay to D. & Co.," which in legal effect is "pay D. & Co. or order." See sect. 8 (4). 3. "Pay to the order of the D. Company," which in legal effect is "Pay the D. Company or order." 2 A bill specially indorsed is payable to the indorsee therein designated, and can only be negotiated by his indorsement. Under sect. 8 (3), ante, p. 24, a special indorsement following an indorsement in blank controls the effect of the indorsement in blank. a (3) The provisions of this Act relating to payee apply with the necessary modifications to an indorsee under a special indorsement. See sects. 7 and 8, ante, pp. 19-25, as to payee. blank into (4) When a bill has been indorsed in blank, Conversion of any holder may convert the blank indorsement special ininto a special indorsement by writing above the dorsement. indorser's signature a direction to pay the bill to or to the order of himself or some other person. and see indorsement in blank distinguished from special indorsement, per 1 Nouguier, §§ 747–760; and see Bradlaugh v. De Rin (1870), L. R. 5 C. P. 473, Ex. Ch. 2 Soares v. Glyn (1845), 8 Q. B. 24, Ex. Ch. See sect. 8 (5). 3 See sect. 31 (3), and Harrop v. Fisher (1861), 30 L. J. C. P. 283. § 34. Striking out indorsements. indorsement. ILLUSTRATION. The holder of a bill, indorsed by C. in blank, writes over C.'s signature the words, "Pay to the order of D." The holder who does this is not liable as an indorser, but the transaction operates as a special indorsement from C. to D.1 Striking out Indorsements. The holder may at any time (e.g., at the trial after the plaintiff has finished his case)2 strike out any indorsement which is not necessary to his title. The indorser, whose indorsement is intentionally struck out, and all indorsers subsequent to him, are discharged from their liabilities; aliter if the indorsement be struck out by mistake.3 Qu. if the present system of open pleading affects the necessity for striking out indorsements where the action is against the acceptor? The holder may, in some cases, make title through a person whose indorsement is struck out. Indorsements for collection may be struck out by the owner of the bill, and if the indorser of a bill takes it up or pays it when dishonoured, he may strike out his own and all subsequent indorsements, whether blank or special. Restrictive 35. (1) An indorsement is restrictive which prohibits the further negotiation of the bill, or which expresses that it is a mere authority to deal with the bill as thereby directed and not a transfer of the ownership thereof, as, for example, if a bill be indorsed "Pay D. only," or "Pay D. for the account of X.," or "Pay D. or order for collection." 1 Vincent v. Horlock (1808), 1 Camp. 442: cf. Hirschfield v. Smith (1866), L. R. 1 C. P. 340; German Exchange Law, Art. 12; and Nouguier, SS 747, 748. 2 Mayer v. Jadis (1833), 1 M. & Rob. 247; Byles, 154. 3 Wilkinson v. Johnson (1824), 3 B. & C. 428. 4 Fairclough v. Pavia (1854), 9 Exch. at p. 695; but cf. Bartlett v. Benson (1845), 14 M. & W. 733. 5 Dugan v. United States (1818), 3 Wheat. 173; Bank of Utica v. Smith (1820), 18 Johns. 229, New York. 6 Callow v. Lawrence (1814), 3 M. & S. 95; German Exchange Law, Art. 55. See also sect. 59 (2), post, p. 203. 4. "The within must be credited to D., value in account." 66 5. " Pay the contents to my use," or Pay the contents to the use of X.,' ་་ or Carry this bill to the credit of X."5 " 6. " Pay D. or order for our use, value received in account." " 7. "Pay D. or order for the account of X."7 8. "Pay D. or order for my use. "8 9. "Pay to the order of D. & Co., under provision for my note in favour of X."9 10. " Pay D. & Co. or order for collection." 10 A statement in an indorsement that the value for it has been furnished by some person other than the indorsee does not make it restrictive; 11 e.g., Bill indorsed "Pay D., or order value in account with X." This is not restrictive. It is in effect a simple indorsement to D. or order.12 The mere omission to add words of negotiability to a special indorsement does not make it restrictive: see sect. 8 (1) and (4), ante, pp. 24, 25. Under German Exchange Law, Art. 15, if C. indorse a bill "Pay D. only," the result is this; D. can still indorse the bill away, but C. is not liable on his indorsement. It is in effect an indorsement "without recourse," and not a restrictive indorsement. § 35. indorsement. (2) A restrictive indorsement gives the indorsee Restrictive the right to receive payment of the bill and to 1 Evans v. Cramlington (1687), 1 Show. 4; 2 Show, 509; Ex. Ch. 2 Snee v. Prescott (1743), 1 Atk. at p. 249. 3 Edie v. East India Co. (1761), 2 Burr. at p. 1227, Wilmot, J. 4 Ancher v. Bank of England (1781), 2 Dougl. 637. 5 Cf. Rice v. Stearns (1807), 3 Mass. R. at p. 226. 6 Wilson v. Holmes (1809), 5 Mass. R. 543. 7 Treuttel v. Barandon (1817), 8 Taunt. 100; Blaine v. Bourne (1875), 23 Amer. R. 431. 8 Sigourney v. Lloyd (1828), 8 B. & C. 622; affirmed, 5 Bing. 525, Ex. Ch. 9 Wedlake v. Hurley (1830), Lloyd & Welsby, 330; 1 C. & J. 83. 10 Sweeney v. Easter (1863), 1 Wallace, 166, Sup. Ct. U. S.; Merchants' Bank v. Henson (1884), 53 Amer. R. 5; Williams, Deacon & Co. v. Shadbolt (1885), 1 C. & E. 529; cf. German Exchange Law, Art. 17. 11 Potts v. Reed (1806), 6 Esp. 57; Murrow v. Stuart (1853), 8 Moore, P. C. 267. 12 Buckley v. Jackson (1868), L. R. 3 Ex. 135. § 35. sue any party thereto that his indorser could have sued, but gives him no power to transfer his rights as indorsee unless it expressly authorize him to do so.2 ILLUSTRATIONS. 1. Bill indorsed "Pay D. for my account." D. cannot by indorsing it to E. authorize E. to collect it. Aliter if the indorsement ran, "Pay D. or order for my account." 3 2. Bill indorsed "Pay D. or order for collection per account of C. Bank." If the C. Bank receives payment before maturity, D. cannot recover from the acceptor, although he has credited the C. Bank with the amount of the bill.4 It has never been attempted to make the payer responsible for the due application of the proceeds by the indorsee, and it is clear that he is not responsible. (3) Where a restrictive indorsement authorizes further transfer, all subsequent indorsees take the bill with the same rights and subject to the same liabilities as the first indorsee under the restrictive indorsement.5 ILLUSTRATIONS. 1. C. indorses a bill "Pay D. or order for my use." D. indorses it to, and discounts it with, E. on his own account. E. collects it at maturity. C. can recover the amount of the bill from E.6 2. C. indorses a bill "Pay D. or order for the use of X." D. collects the bill at maturity. If he misappropriate the money, X. cannot sue him. The action must be brought by C.8 3. C. indorses a bill "Pay D. or order for account of X." D. is X.'s agent. D. indorses the bill to E., who collects it. X. can sue E. for the amount so received." 1 Evans v. Cramlington (1687), 2 Show. 509, Ex. Ch.; Wilson v. Holmes (1809), 5 Massachus. R. 543; cf. German Exchange Law, Art. 17. 2 Lloyd v. Sigourney (1829), 5 Bing. at p. 532, Ex. Ch. ; cf. Pothier, No. 89; German Exchange Law, Art. 17. 3 Lloyd v. Sigourney (1829), 5 Bing. at p. 532. Williams, Deacon & Co. v. Shadbolt (1885), 1 C. & E. 529, per Cave, J. 5 Treuttel v. Barandon (1817), 8 Taunt. 100; Lloyd v. Sigourney (1829), 5 Bing. at p. 531; Sweeney v. Easter (1863), 1 Wallace, R. 166, Sup. Ct. U. S.; German Exchange Law, Art. 17. Lloyd v. Sigourney (1829), 5 Bing. 525, Ex. Ch. 7 Wedlake v. Hurley (1830), Lloyd & Welsby, 330; 1 C. & J. 83. 8 Ibid. at pp. 332, 88, per Vaughan, B. 9 Treuttel v. Barandon (1817), 8 Taunt. 100. agent, C. must have brought the action. If D. had not been X.'s |