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founded, the Court held the indorsement was restrictive and that the property in the bill, remained in the indorser who had so restricted it, and that he was entitled to recover the amount against the holders, who had taken it after the restrictive indorsement. In order to constitute a valid indorsement of a bill of exchange, there must be a writing of the name of the holder, and a manual delivery by him of the bill, with the intention, not only to pass the property in it, but to guarantee the payment, if the acceptor makes default, and evidence of facts, showing the absence of this intention, is admissible, under a traverse of the indorsement.1 In Crouch v. Credit Foncier, it was said that if the right of suing on an instrument, should not appear on the face of it to be extended beyond one particular individual, no usage of trade however extensive, would be allowed by the Courts, (at least in the case of an English instrument), to confer upon it the character and incidents of negotiability. But in a later case3 remarking on the above case, the Court say, we cannot concur in thinking, that if proof of general usage had been established, it would have been a sufficient ground, for refusing to give effect to it, that it did not form part of what is called the ancient law merchant. A proper indorsement can only be made by one who has a right to the bill and who thereby transmits the right.*

Illustration (f).—Value in account means only value received in account, and is of the same effect in an indorsement as on the face of the bill. It expresses, that value has been received, and received in a certain manner, but it in no way, restricts the effect of the indorsement. 5.

A restrictive indorsement, constitutes the indorsee the holder of the bill, but expresses that he is not the beneficial owner. It may be defined to be an indorsement, which expresses that it is a mere authority to deal with the bill as directed, and not a transfer of the ownership thereof. o A hundi indorsed "for

Denton v. Peters, L. R. 5 Q. B. 475.

2 L. R. 8 Q. B. 374; S. C. 42 L. J. (Q. B.) 183.

3 Goodwin v. Robarts, L. R. 10 Ex. per. Cockburn, C. J. at p. 351; Affd. App. Cas. 476; S. C. 44 L. J. (Ex.) 57, 157.

4 Steele v. M'Kinlay, 5 App. Cas. at p. 782.

5 Buckley v. Jackson, L. R. 3 Ex. at p. 136; following Stuart v. Murrow, 8 Moo. P. C. 267.

6 Chalmer's Digest of Bills of Exchange, 2nd ed., Art. 124.

W homay negotiate.

realization" is specially indorsed, and cannot be transferred without the indorser's authority. Thus where a hundi was indorsed to R. L. B. D. "for realization," and was lost in the post or stolen, and R. L. B. D's, name was erased by some chemical process and the name of B. N. D. H. substituted before the words "for realization," it was held that though the defendant had given value for it to B. N. D. H. in the course of business, and without notice of the forgery, that did not give him a good title to it, as the hundi was specially indorsed, and there was nothing in Hindu law, which allowed such a hundi to pass as one payable to bearer, and without indorsement.'

A 'hundi' should not be paid, until it is indorsed by the Shah who presents it.2

51. Every sole maker, drawer, payee or indorsee, or all of several joint makers, drawers, payees or indorsees, of a negotiable instrument may, if the negotiability of such instrument has not been restricted or excluded as mentioned in section fifty, indorse and negotiate the same.

Explanation.-Nothing in this section enables a maker or drawer to indorse or negotiate an instrument, unless he is in lawful possession or is holder thereof; or enables a payee or indorsee to indorse or negotiate an instrument, unless he is holder thereof.


A bill is drawn payable to A or order. A indorses it to B, the indorsement not containing the words "or order" or any equivalent words. B may negotiate the instrument.

Explanation. The following case illustrates what is not a valid indorsement or negotiation. Where one of two partners is in possession of a bill of exchange belonging to the partnership, and indorses it over in payment of a private debt, and the indorsee at the time knows the bill of exchange belonged to the

1 Thakur Das v. Futteh Mull, 7 Beng. L. R. 275.

2 Davlatram V. Bulakidas, 6 Bom. H. C. R, at p. 28.

firm, and that the indorser had no authority to indorse it for such
purpose, no property in the bill passes to the indorsee.'
As to who is a holder, see ante, Sec. 8.

52. The indorser of a negotiable instrument may, by express words in the indorsement, exclude his own liability thereon, or make such liability or the right of the indorsee to receive the amount due thereon depend upon the happening of a specified event, although such event may never happen.

Where an indorser so excludes his liability and afterwards becomes the holder of the instrument, all intermediate indorsers are liable to him.


(a). The indorser of a negotiable instrument signs his name, adding the words

"Without recourse.' ""

"Upon this indorsement he incurs no liability.

(b). A is the payee and holder of a negotiable instrument. Excluding personal liability by an indorsement "without recourse," he transfers the instrument to B, and B indorses it to C, who indorses it to A. A is not only reinstated in his former rights, but has the rights of an indorsee against B and C.

Under this section the indorser has the power to impose either of two conditions, one on his indorsee, excluding his own liability, the other to make his own liability or the right of his indorsee to depend on the happening of a possible event. The mode of making the first is shown by illustration (a). An indorsement ' without recourse,' though it gives no right of action against the indorser, transfers all his rights of action on the bill.3 The latter proposition seems. founded on the following, where a bill was indorsed on a condition, then accepted, and afterwards passed through several hands, and paid to the holder before the condition was satisfied, it was held that the acceptor was liable to pay the payee (the first indorser) again."

1 Heilbut v. Neville, L. R. 5 C. P. 478.

Goupy v. Harden, 7 Taunt.,


3 Bradlaugh v. DeRin, L. R. 3 C. P. per Willes, J., at p. 543. Robertson v. Kensington, 4 Taunt., 30.

excludes his

Indorser who own liability or makes it con

Holder deriving title from holder in due course.

Instrument in. dorsed in blank.


As to the second clause of the section, short quotations from the judgments of a case decided last year, will show the reason for it. Bramwell, L. J. said, "It has been established that if "the indorser of a bill of exchange subsequently becomes the "indorsee, he can maintain no action against the intermediate "indorsers, because he would himself be liable to them, by 66 reason of his antecedent indorsement. But there are several "other cases which have decided, that if the holder of the bill "would not be liable to the indorser, whom he is suing, by reason of any previous indorsement of his own, he may enforce "his claim, because no circuity of action arises; the holder of "the bill may always show such circumstances, as do away with any liability by reason of his previous indorsement," and "Baggalay L. J., quoted the following passage from Byles :* "If a bill be re-indorsed to a previous indorser, he has in general, no remedy against the intermediate parties, for they would have their remedy over against him, and the result of the actions would be, to place the parties in precisely the same situation, as before any action at all. But where a holder has previously indorsed, and the subsequent intermediate indorser has no right of action or remedy on that previous indorsement against the holder, there are cases in which the holder may sue the intermediate indorser." "Prima facie, when the holder of the bill is likewise a previous indorser, no action can be maintained; but then, as has been pointed out in the work I have cited, certain exceptions exist to the general rule."3


53. A holder of a negotiable instrument who derives title from a holder in due course has the rights thereon of that holder in due course.

See notes on Sec. 9.


Subject to the provisions hereinafter contained as to crossed cheques, a negotiable instrument

Wilkinson v. Unwin, 7 Q. B. D. at p. 637; S. C. 29 W. R. (Q. B. D.) 458, C. A.

2 Byles on Bills, 13th, ed., p. 157.

Wilkinson v. Unwin, 3 Q. B.
D. at p. 639; see also Smith v.

Marsack, 6 C. B. 486; S. C. 18 L. J., (C. P.) 65; Wilders v. Stevens, 15 M. & W. 208; S. C. 15 L. J. (Ex.) 108; Morris v. Walker, 15 Q. B. 589; S. C. 19 L. J. (Q. B.)


indorsed in blank is payable to the bearer thereof even although originally payable to order.

See Chapter XIV as to crossed cheques.

blank followed

in full.

55. If a negotiable instrument, after having been Indorsement in indorsed in blank, is indorsed in full, the amount of by indorsement it cannot be claimed from the indorser in full, except by the person to whom it has been indorsed in full, or by one who derives title through such person.

See notes to Sec. 49.

Smith v. Clarke' and Walker v. McDonald are the cases upon which this rule is founded.

for part of sum due.

56. No writing on a negotiable instrument is Indorsement valid for the purpose of negotiation if such writing purports to transfer only a part of the amount appearing to be due on the instrument; but where such amount has been partly paid, a note to that effect may be indorsed on the instrument, which may then be negotiated for the balance.

The reason given, for providing that an indorsement for part of the amount, appearing due on a negotiable instrument is not valid, is, that a personal contract cannot be apportioned, and an indorsement to A for so much, and to B for so much, would render the acceptor liable to two actions, although by his acceptance, he intended to subject himself only to one.3 No authority can be found to show there may be a partial indorsement of a bill of exchange, it certainly cannot be indorsed so as to allow of an action by the indorsee for part of the amount, and by the indorser as to the residue. Where a person is as member of a partnership, jointly interested in the amount of a bill of exchange, and in fraud of the partnership, indorses it over, in payment of a private debt, his interest therein does not pass by the indorsement, there is no such form of indorsement known to the law.5

1 Peake, 225.

2 2

Ex. 527; S. C. 17 L. J. (Ex.) 377

3 Jones v. Broadhurst, 9 C. B. 173, per Cresswell, J.

4 Bradlaugh v. DeRin, L. R. 3 C. P., per Willes, J. at p. 543.

5 Heilbut v. Neville, L. R. 5 C. P. per Kelly, C. B. at p. 482.

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