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Fifth, Where the instrument is so ambiguous that there is doubt whether it is a bill or note, the holder may treat it as either, at his election;
Sixth, Where a signature is so placed upon the instrument that it is not clear in what capacity the person making the same intended to sign, he is to be deemed an indorser;
Seventh, Where an instrument containing the words "I promise to pay,” is signed by two or more persons, they are
deemed to be jointly and severally liable thereon. Liability of SEC. 20. No person is liable on the instrument whose sigsigner, in trade or assumed name.
nature does not appear thereon, except as herein otherwise expressly provided. But one who signs in a trade or assumed name will be liable to the same extent as if he had signed
in his own name. Signature by Sec. 21. The signature of any party may be made by a agent.
duly authorized agent. No particular form of appointment is necessary for this purpose; and the authority of the agent
may be established as in other cases of agency. Liability of agent. Sec. 22. Where the instrument contains, or a person adds
to his signature, words indicating that he signs for or on behalf of a principal, or in a representative capacity, he is not liable on the instrument if he was duly authorized, but the mere addition of words describing him as an agent, or as filling a representative character, without disclosing his prin
cipal, does not exempt him from personal liability. Signature by SEC. 23. A signature by "procuration" operates as notice procuration.
that the agent has but limited authority to sign, and the principal is bound only in case the agent in so signing acted
within the actual limits of his authority. Indorsement, etc., Sec. 24. The indorsement or assignment of the instrument by corporation or infant. by a corporation or by an infant passes the property therein,
notwithstanding that from want of capacity the corporation
or infant may incur no liability thereon. Forged
Sec. 25. Where a signature is forged or made without the authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under such signature, unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority.
Article II. Consideration.
All instruments deemed issued for value.
Sec. 26. Every negotiable instrument is deemed prima facie to have been issued for valuable consideration; and every person whose signature appears thereon to have become a party thereto for value.
Sec. 27. Value is any consideration sufficient to support a simple contract. An antecedent or pre-existing debt constitutes value, and is deemed such whether the instrument is payable on demand or at a future time,
Sec. 28. Where value has at any time been given for the Holder for value. instrument, the holder is deemed a holder for value in respect to all parties who became such prior to that time. SEC. 29. Where the holder has a lien on the instrument, Lien on
instrument. arising either from contract or by implication of law, he is deemed a holder for value to the extent of his lien. Sec. 30. Absence or failure of consideration is matter of Absence of
consideration. defense as against any person not a holder in due course; and partial failure of consideration is a defense pro tanto whether the failure is an ascertained and liquidated amount or otherwise.
Sec. 31. An accommodation party is one who has signed Accommodation the instrument as maker, drawer, acceptor, or indorser, with party. out receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party.
Article III. Negotiation.
must be of entire
SEC. 32. An instrument is negotiated when it is trans- When instrument
negotiated. ferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to the bearer it is negotiated by delivery; if payable to order it is negotiated by the indorsement of the holder completed by delivery.
SEC. 33. The indorsement must be written on the instru- Indorsement, ment itself or upon a paper attached thereto. The signature of the indorser without additional words, is a sufficient endorsement.
Sec. 34. The indorsement must be an indorsement of the Indorsement entire instrument. An indorsement which purports to trans- instrument. fer to the indorsee a part only of the amount payable, or which purports to transfer the instrument to two or more indorsees severally, does not operate as a negotiation of the instrument; but where the instrument has been paid in part it may be endorsed as to the residue. SEC. 35. An indorsement may be either special or in Special, blank,
conditional, etc. blank; and it may also be either restrictive or qualified or conditional. A special indorsement specifies the person to Various
indorsements whom or to whose order the instrument is to be payable; and the indorsement of such indorsee is necessary to the further negotiation of the instrument. An indorsement in blank specifies no indorsee, and an instrument so indorsed is payable to bearer and may be negotiated by delivery.
SEC. 37. The holder may convert a blank indorsement Blank into a special indorsement by writing over the signature of how converted. the indorser in blank any contract consistent with the character of the indorsement.
Sec. 38. An indorsement is restrictive, which either:
Second, Constitutes the indorsee the agent of the indorser; or
Third, Vests the title in the indorsee in trust for or the use of some other person. But the mere absence of words implying power to negotiate does not make an indorsement re
strictive. Rights of
SEC. 39. A restrictive indorsement confers upon the inrestrictive indorsec. dorsee the right:
First, To receive payment of the instrument;
Second, To bring any action thereon that the indorser could bring;
Third, To transfer his rights as such indorsee, where the form of the indorsement authorizes him to do so.
But all subsequent indorsees acquire only the title of the
first indorsee under the restrictive indorsement. Qualified indorsement.
SEC. 40. 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. Such an instrument does not impair the negotiable character of the
instrument. Conditional SEC. 41. Where an indorsement is conditional, a party indorsement.
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. Specially indorsed SEC. 42. Where an instrument, payable to bearer, is ininstrument, payable to bearer. dorsed specially it may nevertheless be further negotiated by
delivery; but the person indorsing specially is liable as endorser to only such holders as make title through his in
dorsement. Indorsement, SEC. 43. Where an instrument is payable to the order of when payable to two or more. two or more payees or indorsees who are not partners, all
must indorse, unless the one indorsing has authority to in
dorse for the others. Drawn or indorsed SEC. 44. Where an instrument is drawn or indorsed to a to "cashier".
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. Misspelled names. SEC. 45. Where the name of the payee or indorsee is
wrongly designated or misspelled, he may indorse the instrument as therein described, adding, if he thinks fit, his proper signature.
Sec. 46. Where any person is under obligation to indorse Indorsment in in a representative capacity, he may indorse in such terms representative as to negative personal liability.
SEC. 47. Except where an indorsement bears date after Date of, the maturity of the instrument, every negotiation is deemed prima facie to have been effected before the instrument was overdue.
SEC. 48. Except where the contrary appears, every in- Where made. dorsement is presumed prima facie to have been made at the place where the instrument is dated.
SEC. 49. An instrument negotiable in its origin continues Negotiable in to be negotiable until it has been restrictively indorsed or to so continue. discharged by payment or otherwise.
Sec. 50. The holder may at any time strike out any in- Holder dorsement which is not necessary to his title. The indorser may strike out. whose indorsement is struck out, and all indorsers subsequent to him, are thereby relieved from liability on the instrument.
SEC. 51. Where the holder of an instrument payable to Transfer of his order transfers it for value without indorsing it, the
instrument transfer vests in the transferee such title as the transferer indorsement. 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.
Sec. 52. Where an instrument is negotiated back to a Negotiation back prior party, such party may, subject to the provisions of this to prior party. 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.
Article. It'. Rights of the Holder.
in own name, etc.
SEC. 53. The holder of a negotiable instrument may sue Holder may sue thereon in his own name, and payment to him in due course discharges the instrument.
Sec. 54. A holder in due course is a holder who has taken Holder in due the instrument under the following conditions:
course, defined. First, That it is complete and regular upon its face;
Second, 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;
Third, That he took it in good faith and for value;
Fourth, 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. Sec. 55. Where an instrument payable on
demand is Demand paper, negotiated an unreasonable length of time after its issue, the
unreasonable holder is not deemed a holder in due course.
SEC. 56. Where the transferee receives notice of any ininstrument; firmity in the instrument or defect in the title of the person defect in title of negotiant. 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. Defective title of Sec. 57. The title of a person who negotiates an instrunegotiant, defined.
ment is defective within the meaning of this act 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. Notice of
SEC. 58. To constitute notice of an infirmity in the instruinfirmity, what
ment, or defect in the title of the person negotiating 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. Rights of holder SEC. 59. A holder in due course holds the instrument free in due course.
from any defect of title of prior parties and free from defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount
thereof against all parties liable thereon. Rights of parties. Sec. 60. In the hands of any holder other than a holder
in due course, a negotiable instrument is subject to the same defenses as if it were non-negotiable. But 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 riglits of such former holder in respect of
all parties prior to the latter. Burden of proof. SEC. 61. Every holder is deemed prima facie to be a holder
in due course; but when it is shown that the 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 a 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.
Article V. Liabilities of Parties.
Liability of maker.
SEC. 62. The maker of a negotiable instrument by mak. ing it engages that he will pay it according to its tenor, and admits the existence of the payee and his then capacity to indorse.
SEC. 63. 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 be dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent endorser who may be compelled to pay