IN examining the subject of the transfer of bills and notes, let us consider, first, what bills are transferable; secondly, the modes of transfer; thirdly, the nature and extent of an indorser's liability; fourthly, the rights of an indorsee; fifthly, the liability of a person transferring by delivery; sixthly, the rights of a transferee by delivery; seventhly, transfer under peculiar circumstances; eighthly and lastly, when the Court will restrain a transfer.

Division of the subject.

All WHAT BILLS
AND NOTES

First, as to what bills or notes are transferable. bills, cheques, or notes are negotiable, and, as it should seem, even without the words "order or bearer," unless they contain words prohibiting transfer, or indicating an intention that they should not be transferable. No precise form of words is given in the Code to constitute a restrictive drawing (save in the case of cheques), but words are given

ARE NEGO-
TIABLE.

CHAPTER
XII.

Effect of in

a bill not negotiable.

that form a restrictive indorsement, s. 35 (1), and they probably would be equally applicable to a drawing (a).

But if, nevertheless, the payee do indorse a bill not negodorsement of tiable, he is liable on his indorsement to his indorsee (b). For every indorser of a bill is in the nature of a new drawer (c). If a note, however, were not originally negotiable, it seems to have been considered by the Court of Common Pleas that the first drawing exhausts the stamp, and that the indorsee cannot acquire a right, without a new stamp (d), which cannot by law be impressed. If the declaration on a bill indorsed in blank, but not originally negotiable, or not indorsed by the payee, state that the defendant, the indorser, drew and indorsed the bill, payable to his order, it will upon evidence be open to the double objection that the same act is treated both as a drawing and an indorsement, which it cannot be, and that the bill is described as made payable to order, whereas the effect of the blank indorsement is to make it payable to bearer (e).

Of a note not negotiable.

It has been held that the indorsement of a note (whether originally negotiable or not), by one to whom it has not been transferred, will not make the indorser liable on his indorsement (ƒ). For though every indorser of a bill may

(a) Since a bill or note payable to C.-to C.'s order-or to C. or order, is in either case payable to C. or his order at his option, and if he indorse in blank, payable to bearer, it seems to follow that the mere absence of the words "order or bearer" in no wise hinders the negotiability of the bill or note. Code, s. 8 (3), (4), and (5). They also are not recognized as a material part, alteration of which may avoid the instrument. Sect. 64. In a "not negotiable" cheque a transferee does not acquire, as we have seen, a new and independent title, but stands in the transferor's -shoes.

(b) Hill v. Lewis, 1 Salk. 132 ; Smallwood v. Vernon, 1 Stra. 478; Gwinnell v. Herbert, 5 Ad. & E. 436 Burmester v. Hogarth, 11 M. & W. 97; Penny v. Innes, 1 C. M. & R. 439; 5 Tyr. 107. But

see Plimley v. Westley, infra, where the Court seemed to think that the stamp laws might interpose an obstacle.

(c) And therefore a blank indorsement on a bill not negotiable has been held to operate as the drawing of a bill payable to bearer. Matthews v Blorum, 33 L. J., Q. B. 209. See Allen v. Walker, 2 M. & W. 317; 5 Dowl. 460. Matthews v Bloram was doubted in Steele v. McKinlay, L. R., 5 Ap. Ca. 754. The liability incurred by such a signature is probably that of an indorser. Code, s. 56.

(d) Plimley v. Westley, 2 Bing. N. C. 249; 2 Scott, 423; 1 Hodges, 324. The Code does not touch the Stamp Acts. See s. 97.

(e) Burmester v. Hogarth, 11 M. & W. 97.

(f) Gwinnell v. Herbert, 5 A. & E. 436; 6 N. & M. 723. The

XII.

be treated, without inconvenience, as a new drawer or CHAPTER maker (for in that character he still requires notice of dishonour), yet an indorser of a note cannot be treated as a drawer or maker of the note, without altering his situation for the worse, and depriving him of the right to notice of dishonour.

The words to his order or to bearer, if omitted by mistake, Subsequent may be afterwards inserted, without vitiating the instrument insertion of either at common law, under the Stamp Act, or under the provisions relating to alteration (g).

Whether a bill or note be negotiable or not is a question of law (h).

Secondly, as to the modes of transfer.

A bill or note is negotiated when it is transferred in such a manner as to constitute the transferee the holder of it. A bill payable to bearer is negotiated by delivery.

A bill payable to order is negotiated by the indorsement of the holder completed by delivery (i).

Where the holder of a bill payable to his order transfers it for value without indorsing it, the transferee has only the transferor's title, but has the right to have the indorsement made (k).

Code, s. 56, now makes a stranger signing a bill or note otherwise than as drawer, or acceptor or maker, liable as indorser to a holder in due course; hence it seems hardly open to doubt that if the note be negotiable, such a signer would be held liable, though, if the note were originally not negotiable, the objection under the Stamp Act would still remain. See, too, Story on Promissory Notes, s. 138; and Er parte Yates, 27 L. J., Bkey. 9.

(g) Kershaw v. Cox, 3 Esp. 246. See the Chapter on ALTERATION. (h) Grant v. Vaughan, 3 Burr.

1516.

(i) Delivery may be actual or constructive, i.e., to an agent. Code, s. 2. Delivery may, in certain cases, be presumed. Thus if a banker hold as agent a bill transferable by delivery, a direction given to him by the owner to hold it for another would. it is conceived, be a sufficient transfer

by delivery; so, too, if a holder
make over by deed, or perhaps by
any valid written or even verbal
contract, a bill or note trans-
ferable by delivery, though with-
out actually delivering it, he
would thenceforth hold it as agent
for the transferee. Notification
of the fact of acceptance, by the
acceptor to, or according to the
directions of, the person entitled
to the bill, makes the acceptance
complete and irrevocable,
though there had been actual
delivery. Code, s. 21. Delivery
from every party is conclusively
presumed in favour of a holder
in due course, sect. 21 (2) b;
and primâ facie where maker or
acceptor, drawer or indorser, has
parted with the possession of the
bill or note. Sect. 21 (3).

as

(k) Sect. 31 (4). By sect. 14 of the Judicature Act, 1884, 47 & 48 Vict. c. 61, he can compel indorsement by obtaining an order or judgment for that pur

words creating negotiability.

MODES OF
TRANSFER.

CHAPTER
XII.

What is required in an indorsement.

Allonge.

On a copy.

Of entire bill or note.

By a plurality of holders.

Executors or administrators having to indorse, may stipulate to pay out of the estate only ("so far as assets only" is believed to be a common form of doing so), or in any other manner expressly negative their personal liability (1).

An indorsement in order to be operative must be written on the bill and signed; the simple signature of the indorser suffices (m). It is not essential to the validity of an

indorsement that it should be on the back of a bill or note: it may equally well be on the face (n).

There is no legal limit to the number of indorsements, and if there be no room to write them on the bill, the supernumerary indorsements may be written on a slip of paper annexed to the bill, called an "allonge," or partly on both. An allonge is thenceforth part of the bill, and requires no additional stamp. Allonges are not so often met with in this country as in countries where the Code Napoleon is in force, which requires an indorsement to express the consideration, holding it to be otherwise merely a procuration. The German and other more modern Codes do not require this.

66

An indorsement may also be written on a copy" of a bill, if issued in any country where copies are recognized (0).

An indorsement must be of the entire bill or note; there cannot be a partial indorsement (though there can be a partial acceptance, in which case an indorsement of the bill so accepted for part of the sum would doubtless be good); nor one to two or more indorsees severally (p).

Where a bill or note is payable to two or more payees or indorsees, not being partners, all must indorse, unless one have authority to indorse for all (q).

(n) R. v. Bigge, 1 Stra. 18; Er parte Yates, 27 L. J., Bkcy. 9; Yarborough v. Bank of England, 16 East, 6; 14 R. R. 272. (0) Code, s. 32 (1). (P) Code, s. 32 (2). As there may be alternative payees, sect. 7, so presumably there may be alternative indorsees, sect. 34 (3), in which case the indorsement of either should suffice, if good in other respects.

(g) Sect. 32 (3). Carrick v. Vickery, 2 Doug. 653 (n).