tracts in the form of a guaranty on the back of a bill or note, he cannot be made liable as an indorser.15 A guaranty is declared by the courts to mean a guaranty, and not an indorsement.18 And this one rule of interpretation

15 In an action on a promissory note it was shown that the payee of a note transferred the same to a third party, having first written over his signature: "I hereby guaranty the within note." It was held by the court that, where the name of the payee was indorsed on the back of the note in no other form than as a signature to a guaranty fully written out, this was not such an indorsement as authorized a subsequent holder to sue upon it as indorsee. Belcher v. Smith, 7 Cush. (Mass.) 482. CENTRAL TRUST CO. v. FIRST NAT. BANK, 101 U. S. 68, 25 L. Ed. 876, Moore Cases Bills and Notes, 110. Contra: Upham v. Prince, 12 Mass. 14; Manrow v. Durham, 3 Hill (N. Y.) 584, and cases cited; Barrett v. May, 2 Bailey (S. C.) 1; Partridge v. Davis, 20 Vt. 449; Vanzant v. Arnold, 31 Ga. 210; Judson v. Gookwin, 37 Ill. 286; Pattillo v. Alexander, 96 Ga. 60, 22 S. E. 646, 29 L. R. A. 616; National Bank of Commerce v. Galland, 14 Wash. 502, 45 Pac. 35; Donnerberg v. Oppenheimer, 15 Wash. 290, 46 Pac. 254; Kellogg v. Latham, 58 Kan. 43, 48 Pac. 587; Hendrix v. Bauhard Bros., 138 Ga. 473, 75 S. E. 588, 43 L. R. A. (N. S.) 1028, Ann. Cas. 1913D, 688. Where the payee (D.) indorsed, "Pay E. [Signed] D.," and also, "Payment guaranteed. D.," the writing constituted an indorsement. Elgin City Banking Co. v. Zelch, 57 Minn. 487, 59 N. W. 544. And see Tuttle v. Bartholomew, 12 Metc. (Mass.) 452; Fullerton v. Hill, 48 Kan. 558, 29 Pac. 583, 18 L. R. A. 33, Johns. Cas. Bills & N. 124. As to liabilities of guarantors and sureties, see Gridley v. Capen, 72 Ill. 11, Johns. Cas. Bills & N. 209; Read v. Cutts, 7 Greenl. (7 Me.) 186, 22 Am. Dec. 184, Johns. Cas. Bills & N. 210; Temple v. Baker, 125 Pa. 634, 17 Atl. 516, 3 L. R. A. 709, 11 Am. St. Rep. 926; Rouse v. Wooten, 140 N. C. 557, 53 S. E. 430, 111 Am. St. Rep. 875, 6 Ann. Cas. 280 (N. I. L.). See, also, Pugh v. Sample, 123 La. 791, 49 South. 526, 39 L. R. A. (N. S.) 834 (N. I. L.); Union Trust Co. of New Jersey v. McCrum, 145 App. Div. 409, 129 N. Y. Supp. 1078 (N. I. L.). For distinction between guarantor and surety, see La Rose v. Logansport Nat. Bank, 102 Ind. 332, 1 N. E. 805, Johns. Cas. Bills & N. 213.

16 Where the payment of a note is guaranteed subsequent to its delivery there must be a distinct consideration. Had the guaranty been written before the delivery, no other consideration would have been necessary than that implied in the note. By the statute of the state, since the guaranty did not express any consideration, it is void. Moses v. Lawrence County Bank, 149 U. S. 298, 13 Sup. Ct. 900, 37 L. Ed. 743. And see Leonard v. Vredenburgh, 8 Johns. (N. Y.) 29, 5 Am. Dec. 317; Tinker v. McCauley, 3 Mich. 188; Phelps v. Church, 65 Mich. 231, 32 N. W. 30; Hunt v. Adams, 7 Mass. 518;

differs from the other in that the words are not doubtful words of transfer, but are plain words, having a plain legal meaning. Hence it is not proper for courts to seek to construe the meaning of words which are already settled beyond dispute. It is only their province to enforce the contract in the clear words in which it stands, and that contract they will enforce as a guaranty.1

BLANK AND SPECIAL INDORSEMENTS

58. AN INDORSEMENT IN BLANK-Specifies no indorsee, and an instrument upon which the only or the last indorsement is in blank is in effect payable to bearer and may be negotiated by delivery.18

59. The holder may convert a blank indorsement into a special indorsement by writing over the signature of the indorser any contract consistent with the character of the indorsement.19

60. A SPECIAL INDORSEMENT-Specifies the person to whom, or to whose order, the instrument is payable; and the indorsement of such indorsee is necessary to the further negotiation of the instrument.20

61. An instrument originally payable to bearer, though afterwards specially indorsed, is still payable to bearer; except as to the special indorser, who, on such an instrument, after such an indorsement, is only liable on his indorsement to such parties as make title through it.21

21

Spaulding v. Putnam, 128 Mass. 363; National Bank of Commonwealth v. Law, 127 Mass. 72; Dubois v. Mason, 127 Mass. 37, 34 Am. Rep. 335.

17 Brown v. Curtiss, 2 N. Y. 225.

18 N. I. L. §§ 9 (subd. 5), 34.

19 This is the language of N. I. L. § 35.

20 This is the language of N. I. L. § 34.

21 “Where an instrument, payable to bearer, is indorsed specially, it may nevertheless be further negotiated by delivery; but the person indorsing specially is liable as indorser to only such holders as

Indorsements in Blank

In form an indorsement in blank consists in writing merely the name of the payee or holder upon the back of the instrument. Thus, if John Smith, in the illustration mentioned in § 12, indorsed the instrument in blank, he would write simply "John Smith" on the back of it. How the courts have interpreted this appears from PEACOCK v. RHODES 22 and Grant v. Vaughan,23 which have been generally adopted as the law.

PEACOCK v. RHODES was a case of a bill indorsed in blank by the payee to a third person, and stolen from the third person, and received by a bona fide purchaser for value. Lord Mansfield said, "I see no difference between a note indorsed in blank and one payable to bearer. They both go by delivery, and possession proves property in both cases;" and it was deemed that such a bill is to be treated as so much cash, unless the payee chooses by a specific indorsement to some person to restrain its currency. The court construed the contract to mean that the payor might follow out the contract embodied in the bill, "Pay to John Smith, or such person as he directs," and that, when he so indorsed, he was deemed to say, "You may pay to any one who holds the bill." In Grant v. Vaughan, the maker of a note2 to bearer was sued by Grant, who gave value for the note to a person who had found it, and who had no right to it. It was contended that Grant could only recover from the person from whom he got the note. But the court construed the contract of Vaughan otherwise.25

make title through his indorsement." N. I. L. § 40. Cf. N. I. L. §§ 9 (subd. 5), 34.

22 2 Doug. 633, Moore Cases Bills and Notes, 112. See, also, Williams v. Paintsville Nat. Bank, 143 Ky. 781, 137 S. W. 535, Ann. Cas. 1912D, 350 (N. I. L.).

23 3 Burrows, 1516.

24 The instrument, though called a note in the report, was a check. 25 See, also, Miller v. Race, 1 Burrows, 452. This was an action in trover to recover a bank note payable to W. F. or bearer, on demand. The note was stolen, and later came into the plaintiff's possession. Upon notice of the robbery, W. F. ordered payment stopped on the note. It was held that such note, when it came into the hands of a third party, for value and without notice, could not be followed.

The student must keep in mind that this relates only to an instrument held by a bona fide holder.26 Where the instrument is not in the possession of a bona fide holder, but of the finder or the thief, this extreme rule does not apply. It cannot be enforced by him. But, when once it is in the hands of the bona fide holder, then it is treated as money in the ordinary course of business. Alike in case of money and of paper indorsed in blank, where either has been stolen or found, the true owner cannot recover after it has been paid away fairly and honestly upon a valuable consideration, because it is necessary for the purposes of commerce that its currency should be established and secured. Very much like this general power, vested in the payee or subsequent indorser, to vest any lawful holder with the power to enforce the payment of the instrument, is the power conferred upon the indorsee in blank to write over the indorsement any contract consistent with the character of the instrument. In Russel v. Langstaffe,27 the defendant indorsed his name in blank on five copper-plate notes, the body of the notes being at that time not filled out. Upon the trial, on behalf of the defendant, it was urged that, because these notes were blank at the time of the indorsement, they were not promissory notes; and that no subsequent act could alter the original nature or operation of the defendant's signature, which, when written, was a mere nullity. Lord Mansfield, in deciding the case, used these often-quoted words: "The indorsement on a blank note is a letter of credit for an indefinite sum. The defendant said: "Trust Galley to any amount, and I will be his security.' The amount of the main instrument being left blank, an authority to fill it in for any sum was implied. The terms of the body of the note or bill are the principal terms of

26 As to who is a bona fide holder, see N. I. L. § 52; Johnson v. Way, 27 Ohio St. 374, Johns. Cas. Bills & N. 185; Dresser v. Missouri & I. R. Const. Co., 93 U. S. 92, 23 L. Ed. 815, Johns. Cas. Bills & N. 187; Brook v. Teague, 52 Kan. 119, 34 Pac. 347, Johns. Cas. Bills & N. 189; Lenheim v. Fay, 27 Mich. 70; Rickle v. Dow, 39 Mich. 91.

27 2 Doug. 514.

the contract of indorsement, and nothing inconsistent with these can be implied from the indorsement. Says Judge Cowen: 28 "The holder may put the blank paper in any form which shall accord with the intent of the names, either as makers, drawers, payees, or indorsers. This power of the bona fide holder depends upon the intent of the parties not written out in full, but evinced by the character of the slip on which the name appears." Similarly an indorsement in blank signifies not only that it was the payee's or subsequent indorser's mind and wish that the money called for in the instrument should be paid by the maker or acceptor to whomsoever should lawfully have it in his possession, but also that over such indorsement-which may be treated in itself as a blank general power-a subsequent holder might write any modification of the instrument which was not inconsistent nor a material alteration of its terms.29 He may not write over a blank indorsement a waiver of demand and notice; 30 or he may not change such an indorsement into a guaranty.31 He cannot split up the instrument, making part of the sum called for in it payable to one person, and part payable to another.32 All these change the terms of the contract as they are implied in law. But, if there are successive indorsements in blank, the holder may

28 Dean v. Hall, 17 Wend. (N. Y.) 214.

29 Camden v. McKoy, 3 Scam. (Hl.) 437, 38 Am. Dec. 91; Webster v. Cobb, 17 Ill. 459; Hance v. Miller, 21 Ill. 636; Maxwell v. Vansant, 46 Ill. 58; Boynton v. Pierce, 79 Ill. 145; Tenney v. Prince, 4 Pick. (Mass.) 385, 16 Am. Dec. 347; President, etc., of Central Bank v. Davis, 19 Pick. (Mass.) 373. But see Allen v. Coffil, 42 Ill. 293. In Dale v. Gear it was held that parol evidence was not admissible to prove that an indorsement in blank of a promissory note was to be considered as without recourse by a special agreement between the parties, where there was no evidence of any agency or equity as between them. 38 Conn. 15, 9 Am. Rep. 353. The holder under a blank indorsement may write over it an order to pay to another. Evans v. Gee, 11 Pet. 80, 9 L. Ed. 639.

30 President, etc., of Central Bank v. Davis, 19 Pick. (Mass.) 373. 31 Seabury v. Hungerford, 2 Hill (N. Y.) 80; Blatchford v. Milliken, 35 Ill. 434; Seymour v. Mickey, 15 Ohio St. 515; Belden v. Hann, 61 Iowa, 42, 15 N. W. 591.

32 Erwin v. Lynn, 16 Ohio St. 547; Lindsay v. Price, 33 Tex. 282. See N. I. L. § 32.