3. Vests the title in the indorsee in trust for or to the use of some other person (c).

But the mere absence of words implying power to negotiate does not make an indorsement restrictive (d).

(a) "Pay Bank of A only" would be such an indorsement as is meant here.

(b) The most frequent instance of this is the indorsement 66 for collection." Such indorsement does not transfer the title to the indorsee, but constitutes him merely an agent to present the paper, and receive payment thereof for the account of the owner. Commercial National Bank v. Armstrong, 148 U. S. 50; National Butchers' and Drovers' Bank v. Hubbell, 117 N. Y. 384; Armstrong v. National Bank of Boyertown, 90 Ky. 431; Freeman's Bank v. National Tube Works, 151 Mass. 413; Sweeney v. Easter, 1 Wall. 173; Commercial National Bank v. Hamilton National Bank, 42 Fed. Rep. 880; City Bank of Sherman v. Weiss, 68 Tex. 332; Central R. R. Co. v. First National Bank of Lynchburg, 73 Ga. 384; Bank of Metropolis v. First National Bank of Jersey City, 19 Fed. Rep. 658; Blaine v. Bourne, 11 R. I. 119; Cecil Bank v. Farmers' Bank, 22 Md. 148; Northwestern National Bank v. Bank of Commerce, 107 Mo. 402. Where an indorsement in blank is accompanied by a letter stating that the draft is for "collection and credit," the indorsement and letter must be read together, and the effect is to make the indorsement. restrictive and the same in character as if the contents of the letter had been incorporated in the indorsement. Bank of America v. Waydell, 187 N. Y. 115. As to the liability of an

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indorser to whom the instrument has been indorsed for collection," see note to section 116.

(c) Lloyd v. Sigourney, 5 Bing. 252; 3 M. & P. 229; Snee v. Prescott, 1 Atk. 245. Illustration: Pay A for account of B. In such case the title passes to A; but the indorsement is restrictive to the extent that it gives notice that the instrument cannot be negotiated by A for his own debt or for his own benefit. Hook v. Pratt, 78 N. Y. 371, 375.

(d) Thus, if the instrument is drawn to the order of A, his indorsement "Pay to B" does not restrict the further negotiation of the instrument, though the words "or order" are not included in the indorsement. See Leavitt v. Putnam, 3 N. Y. 494.

§ 67. Effect of restrictive indorsement; rights of indorsee. A restrictive indorsement confers upon the indorsee the right:

1. To receive payment of the instrument;

2. To bring any action thereon that the indorser could bring (a);

3. To transfer his rights as such indorsee, where the form of the indorsement authorizes him to do so (b).

But all subsequent indorsees acquire only the title of the first indorsee under the restrictive indorsement.

The

(a) This provision of the statute was applied in Smith v. Bayer, 46 Oregon, 143. The holder of negotiable paper may sue in his own name, though but an agent for others. Ward v. Tyler, 52 Pa. St. 393. The statute enables a bank to sue in its own name on paper indorsed to it "for collection." As to whether this could be done before the statute there was some conflict in the authorities. right is sustained by Wilson v. Tolson, 79 Ga. 137; Cummings v. Kohn, 12 Mo. App. 585; Wintermute v. Torrent, 83 Mich. 555; Regina Flour Mill Co. v. Holmes, 156 Mass. 11; Spofford v. Norton, 126 Mass. 333; Whiten v. Hayden, 9 Allen, 408; Roberts v. Parrish, 17 Oregon 583; McDaniel v. Pressler, 3 Wash. 636; Ward v. Tyler, 52 Pa. St. 393. But in Rock County National Bank v. Hollister, 21 Minn. 385, it was held that the provisions of the Code requiring the action to be brought in the name of the real party in interest would prevent an indorsee to whom the instrument was indorsed for collection" from maintaining the action.

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(b) The restrictive indorsee takes the paper subject to all equities that might have been asserted by the principal obligor had it not been indorsed. Smith v. Bayer, 46 Oregon, 143.

§ 68. Qualified indorsement. A qualified indorsement constitutes the indorser 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 (a). Such an indorsement does not impair the negotiable character of the instrument (b).

to

(a) Grant v. Fleming, 46 Pa. St. 140; Cowles v. Harts, 3 Conn. 522. But the words employed must clearly indicate that the indorser intends to disclaim liability. Fassin v. Hubbard, 55 N. Y. 470. Hence, where the payee wrote above his signature an assignment in the following form, "I hereby assign the within note " Held:- that this did not relieve him from liability as indorser. Markey v. Corey. 108 Mich. 184. The words "without following the name of the first, and preceding the name of a second, indorser may, as between them, be shown by parol evidence to apply to the former instead of to the latter. Corbett v. Fetzer, 47 Neb. 269. And this although the second indorsee took it without knowing that the limitation was applicable to the first indorser. Fitchburg Bank v. Greenwood, 2 Allen, 434.

recourse

(b) Statute applied, Elgin City Banking Co. v. Hall, (Tenn.) 108 S. W. Rep. 1068. A qualified indorsement in no respects affects the negotiability of the instrument, but simply qualifies the duties, obligations and responsibilities of the indorser resulting from the general principles of the law. Stewart v. Preston, 1 Fla. 10, 22. And whatever interest would pass by a general or full indorsement will pass by a qualified indorsement. Stewart v. Preston, 1 Fla. 10, 22; Epler v. Funk, 8 Pa. St. 468. If the indorsement is in blank, without recourse, any subsequent holder is authorized to fill up the blank with his own name as indorsee. Lyon v. Ewings, 17 Wis. 61. A qualified indorsement is not such a departure from the usual course of business as to put the transferee on inquiry as to the equities between the original parties. Bisbing v. Graham, 14 Pa. St. 14; Lomax v. Picot, 2 Rand. 260. And this is so, though the words without recourse are added to an indorsement in the following form: "For value received I hereby sell, transfer and assign the within note." Thorp v. Mindeman, 123 Wis. 140 (a case arising under the statute).

§ 69. Conditional indorsement.- Where an idorsement is conditional, a 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 (a). 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 (b).

(a) The first sentence is the same as section 33 of the English Bills of Exchange Act with a slight modification. In his note to that section Judge Chalmers says: "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 dishonored the bill he might be liable to damages, and yet it might be impossible for him to find out if the conditions had been fulfilled." See Daniel on Neg. Inst., sections 697, 698a. There appear to be no American cases upon the subject; and the only English case is Robertson v. Kensington, 4 Taunt. 30.

(b) The rule adopted here is somewhat analogous to that which gives to an indorser who has paid a note in part an equitable right pro tanto in the proceeds, where the holder afterward collects the whole amount of the note from the inaker. See Madison Square Bank v. Pierce, 137 N. Y. 444.

§ 70. Indorsement of instrument payable to bearer.Where an instrument, payable to bearer, is indorsed specially, it may nevertheless be further negotiated by delivery (a); but the person indorsing specially is liable as indorser to only such holders as make title through his indorsement.

(a) See Johnson v. Mitchell, 50 Tex. 212; Smith v. Clarke, Peake, 225; Daniel on Neg. Inst., sections 663a, 696. Where a bill accepted and indorsed by the payee, in blank, was by the next holder indorsed specially, it was held, that the first indorsement being in blank, the bill was afterward transferable by mere delivery, and a holder, by delivery, might strike out the special indorsement and in a suit against the acceptors declare and recover, as the indorsee of the payee. Mitchell v. Fuller, 15 Pa. St. 268. A check payable to a certain named person, or bearer, need not be indorsed, nor need the holder thereof be identified, and a bank paying such check without indentification of the

holder is not negligent, though the bank, in compliance with its custom, required it to be indorsed. Farmers & Merchants' Bank v. Bank of Rutherford, 115 Tenn. 64.

§ 71. Indorsement where payable to two or more persons.

Where an instrument is payable to the order of two or more payees or indorsees who are not partners, all must indorse, unless the one indorsing has authority to indorse for the others (a).

(a) Allen v. Corn Exchange Bank, 87 App. Div. (N. Y.) 335. As the indorsement of all the payees is necessary to give good title, an indorser of a note made payable to several payees is not liable to a transferee thereof when the maker, without authority from or knowledge of the indorser, has altered the note before negotiation by striking out the name of one payee and substituting his own name as payee thereon. First National Bank v. Gridley, 112 App. Div. (N. Y.) 398.

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872. Effect of instrument drawn or indorsed to a person as cashier. Where an instrument is drawn or indorsed to a person as cashier" or other fiscal officer of a bank or corporation, it is deemed prima facie to be payable to the bank or corporation of which he is such officer; and may be negotiated by either the indorsement of the bank or corporation, or the indorsement of the officer (a).

(a) It is common practice for banks to indorse in this manner paper remitted for collection. The rule above stated as to indorsements to cashiers of banks is supported by the following cases: Bank of the State v. Muskingum Bank, 29 N. Y. 619; First Nat. Bank v. Hall, 44 N. Y. 395; Bank of Genesee v. Patchin Bank, 19 N. Y. 312; Folger v. Chase, 18 Pick. 63; Farmers' etc., Bank v. Troy City Bank, 1 Dough. (Mich.) 457; Watervliet Bank v. White, 1 Denio, 608; Lookout Bank v. Aull, 93 Tenn. 645. The commissioners deemed it wise to extend the rule to all fiscal officers of corporations. Under this provision an indorsement to the treasurer of a savings bank would make the paper payable