or 2. Constitutes the indorsee the agent of the indorser; 3. Vests the title in the indorsee in trust for or to the use of some other person. But the mere absence of words implying power to negotiate does not make an indorsement restrictive. SECTION 37. A restrictive indorsement confers upon Rights of inthe indorsee the right: 1. To receive payment of the instrument; 2. To bring any action thereon that the indorser could bring; 3. To transfer his rights as such indorsee, where the form of the indorsement authorizes him to do so. dorsee in cases of restrictive indorsement. dorsement. But all subsequent indorsees acquire only the title of the first indorsee under the restrictive indorsement. SECTION 38. A qualified indorsement constitutes the Qualified inindorser a mere assignor of the title to the instrument. It may be made by adding to the indorser's signature the words "without recourse", or any words of similar import. Such an indorsement does not impair the negotiable character of the instrument. indorsement. SECTION 39. Where an indorsement is conditional a Conditional party required to pay the instrument may disregard the condition and make payment to the indorsee or his transferee, whether the condition has been fulfilled or not. But any person to whom an instrument so indorsed is negotiated will hold the same, or the proceeds thereof, subject to the rights of the person indorsing conditionally. SECTION 40. Where an instrument payable to bearer Instrument inis indorsed specially it may nevertheless be further nego- may be further tiated by delivery; but the person indorsing specially is negotiated. liable as indorser only to such holders as make title through his indorsement. dorsed specially dorsees, not SECTION 41. Where an instrument is payable to the Payees or inorder of two or more payees or indorsees who are not partners, must partners, all must indorse, unless the one indorsing has all indorse, authority to indorse for the others. unless, etc. able to an officer such bank, etc. SECTION 42. Where an instrument is drawn or in- Instrument paydorsed to a person as "cashier", or other fiscal officer of a bank, etc., of a bank or corporation, it is deemed prima facie to be to be payable to payable to the bank or corporation of which he is such officer, and may be negotiated either by the indorsement of the bank or corporation, or by the indorsement of the officer. When name of payee, etc., is SECTION 43. Where the name of a payee or indorsee misspelled, etc. is wrongly designated or misspelled he may indorse the instrument as therein described, adding, if he thinks fit, his proper signature. Indorser in a representative capacity. Where indorse- maturity, etc. Place of indorsement. Negotiability of instrument not SECTION 44. Where any person is under obligation to indorse in a representative capacity he may indorse in such terms as to negative personal liability. SECTION 45. Except where an indorsement bears date after the maturity of the instrument every negotiation is deemed prima facie to have been effected before the instrument was overdue. SECTION 46. Except where the contrary appears every indorsement is presumed prima facie to have been made at the place where the instrument is dated. SECTION 47. An instrument negotiable in its origin to cease until, continues to be negotiable until it has been restrictively indorsed or discharged by payment or otherwise. etc. Holder may strike out indorsement. Transfer of instrument, etc. Reissue of instrument in certain cases. SECTION 48. The holder may at any time strike out any indorsement which is not necessary to his title. The indorser whose indorsement is struck out and all indorsers subsequent to him are thereby relieved from liability on the instrument. SECTION 49. Where the holder of an instrument payable to his order transfers it for value without indorsing it the transfer vests in the transferee such title as the transferer had therein, and the transferee acquires, in addition, the right to have the indorsement of the transferer. But for the purpose of determining whether the transferee is a holder in due course the negotiation takes effect as of the time when the indorsement is actually made. SECTION 50. Where an instrument is negotiated back to a prior party, such party may, subject to the provisions of this act, reissue and further negotiate the same. But he is not entitled to enforce payment thereof against any intervening party to whom he was personally liable. Rights of holder. Holder in due course. RIGHTS OF THE HOLDER. SECTION 51. The holder of a negotiable instrument may sue thereon in his own name, and payment to him in due course discharges the instrument. SECTION 52. A holder in due course is a holder who has taken the instrument under the following conditions : 1. That it is complete and regular upon its face; 2. That he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; 3. That he took it in good faith and for value; 4. That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it. instrument SECTION 53. Where an instrument payable on demand Negotiation of is negotiated an unreasonable length of time after its issue payable on the holder is not deemed a holder in due course. demand, etc. defect in title. SECTION 54. Where the transferee receives notice of Infirmity or any infirmity in the instrument or defect in the title of the person negotiating the same before he has paid the full amount agreed to be paid therefor he will be deemed a holder in due course only to the extent of the amount theretofore paid by him. instruments, SECTION 55. The title of a person who negotiates an Defective instrument is defective within the meaning of this act etc. when he obtained the instrument, or any signature thereto, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud. infirmity in SECTION 56. To constitute notice of an infirmity in the Notice of instrument or defect in the title of the person negotiating instrument. the same the person to whom it is negotiated must have had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith. course not SECTION 57. A holder in due course holds the instru- Holder in due ment free from any defect of title of prior parties, and free liable for from defences available to prior parties among themselves, defect, etc. and may enforce payment of the instrument for the full amount thereof against all parties liable thereon. other than SECTION 58. In the hands of any holder other than Rights of holder a holder in due course a negotiable instrument is subject holder in due to the same defences as if it were non-negotiable. But course. a holder who derives his title through a holder in due course, and who is not himself a party to any fraud or illegality affecting the instrument, has all the rights of such former holder in respect of all parties prior to the latter. SECTION 59. Every holder is deemed prima facie to be Holder to prove a holder in due course; but when it is shown that the title. title of any person who has negotiated the instrument was defective the burden is on the holder to prove that he or some person under whom he claims acquired the title as holder in due course. But the last mentioned rule does not apply in favor of a party who became bound on the instrument prior to the acquisition of such defective title. Liability of maker. Liability of drawer. Liability of acceptor. When a person is deemed an indorser. Liability of the indorser. LIABILITIES OF PARTIES. SECTION 60. The maker of a negotiable instrument by making it engages that he will pay it according to its tenor; and admits the existence of the payee and his then capacity to indorse. SECTION 61. The drawer, by drawing the instrument, admits the existence of the payee and his then capacity to indorse; and engages that on due presentment the instrument will be accepted or paid, or both, according to its tenor, and that if it is dishonored, and the necessary proceedings on dishonor are duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it. But the drawer may insert in the instrument an express stipulation negativing or limiting his own liability to the holder. SECTION 62. The acceptor by accepting the instrument engages that he will pay it according to the tenor of his acceptance; and admits: 1. The existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the instrument; and 2. The existence of the payee and his then capacity to indorse. SECTION 63. A person placing his signature upon an instrument otherwise than as maker, drawer or acceptor is deemed to be an indorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity. SECTION 64. Where a person, not otherwise a party to an instrument, places thereon his signature in blank before delivery, he is liable as indorser in accordance with the following rules: 1. If the instrument is payable to the order of a third person he is liable to the payee and to all subsequent parties; 2. If the instrument is payable to the order of the maker or drawer, or is payable to bearer, he is liable to all parties subsequent to the maker or drawer; 3. If he signs for the accommodation of the payee he is liable to all parties subsequent to the payee. SECTION 65. Every person negotiating an instrument Instrument by delivery or by qualified indorsement warrants: negotiated by delivery or qualified 1. That the instrument is genuine and in all respects indorsement. what it purports to be; 2. That he has a good title to it; 3. That all prior parties had capacity to contract; 4. That he has no knowledge of any fact which would impair the validity of the instrument or render it valueless. But when the negotiation is by delivery only the war- Instrument ranty extends in favor of no holder other than the imme- delivery only. diate transferee. The provisions of subdivision three of this section do not apply to persons negotiating public or corporate securities, other than bills and notes. negotiated by out qualifica SECTION 66. Every indorser who indorses without quali- Indorser withfication warrants to all subsequent holders in due course: tion. 1. The matters and things mentioned in subdivisions one, two and three of the next preceding section; and 2. That the instrument is at the time of his indorsement valid and subsisting. And, in addition, he engages that on due presentment it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it is dishonored, and the necessary proceedings on dishonor are duly taken, he will pay the amount thereof to the holder or to any subsequent indorser who may be compelled to pay it. indorser. SECTION 67. Where a person places his indorsement Liability of the on an instrument negotiable by delivery he incurs all the liability of an indorser. in the order in indorse. SECTION 68. As respects one another indorsers are Indorsers liable liable prima facie in the order in which they indorse; but which they evidence is admissible to show that as between or among themselves they have agreed otherwise. Joint payees or joint indorsees who indorse are deemed to indorse jointly and severally. broker or SECTION 69. Where a broker or other agent negoti- Liability of ates an instrument without indorsement he incurs all the agent. liabilities prescribed by section sixty-five of this act, unless he discloses the name of his principal and the fact that he is acting only as agent. |