warding bank liable to an equitable owner of the draft of which equity the collecting bank had no notice. The forwarding bank is not the owner of the draft. Commercial Nat. Bank v. First Nat. Bank, 158 Ky. 392, 165 S. W. 398 and cases cited, and case of Caldwell v. Evans, 5 Bush 380.

Notice that under Section 1 the instrument to be negotiable must be payable to order or to bearer, while, under Subsection 3, the indorsement does not have to have these words or their equivalents.

§ 37. Effect of Restrictive Indorsement. "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.

(3) "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."

The rule laid down in First Nat. Bank v. Payne, 42 S. W. 736, 19 K. L. R. 839, that an indorsee for collection cannot sue in its own name (see Civil Code, Sec. 18), is changed by Subsection 2. But

while it may sue in its own name, a plea of payment to the owner is a good defense. Commercial Nat. Bank v. First Nat. Bank, 158 Ky. 392, 165 S. W. 398. The owner of a draft deposited for collection can treat the forwarding bank as his agent until the money is actually received, and where the collecting bank has collected the draft and credited the proceeds to the forwarding bank, the owner can claim the proceeds as against the forwarding bank. Armstrong v. Nat. Bank of Boyertown, 90 Ky. 431, 14 S. W. 411, 12 K. L. R. 393. But payment to an unknown holder of a note, indorsed finally to a named bank for collection, is made at payor's risk. Barnett v. Ringgold, 80 Ky. 289.

§ 38. 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. Such an indorsement does not impair the negotiable character of the instrument (Sec. 65)."

Where the words "without recourse" are written between the signatures of two indorsers, parol evidence is competent to show which indorsement they qualify. Goolrick v. Wallace, 154 Ky. 596,

157 S. W. 920. But "the purpose of the statute is to exclude parol evidence, and make the written instrument control the rights of the parties." First Nat. Bank v. Bickel, 143 Ky. 754, 137 S. W. 790. And it is well to read Section 110 in this connection. It provides that where waiver of notice "is written above the signature of an indorser, it binds him only."

§ 39. Conditional Indorsement.-"Where an indorsement 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. 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."

§ 40. Indorsement of Instrument Payable to Bearer.-"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 to* make title through his indorsement (Sec. 5, Subsecs. 9, 67)."

*The word "to" is not in the original draft.

§ 41. Indorsement Where Payable to

Order of 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 (Sec. 19)."

§ 42. Instrument Drawn or Indorsed to Person As Cashier or Other Fiscal Officer."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."

In case of Tyler v. First Nat. Bank, 150 Ky. 515, 150 S. W. 665, recovery was had on a note payable to "Joel Bailey, Pt." and indorsed "Joel Bailey, Pt., by G. A. Hurst, Cashier." The same rule applies to non-negotiable paper. Eades v. Muhlenberg County Savings Bank, 151 Ky. 416, 163 S. W. 494. See Caldwell v. Evans, 5 Bush 380.

§ 43. Indorsement Where Name Is Misspelled or Wrongly Designated. "Where the name of a payee or indorsee is wrongly designated or misspelled, he may indorse the in

strument as therein described, adding, if he thinks fit, his proper signature."

When a note was payable to one individually an assignment by him as "Administrator of T., deceased," was valid, the words being merely descriptive. McClure v. Biggstaff, 37 S. W. 294,

18 K. L. R. 601.

§ 44. Indorsement in Representative Capacity. "Where any person is under obligation to indorse in a representative capacity, he may indorse in such terms as to negative personal liability (Sec. 20)."

§ 45. Presumption As to Time of Indorsement. "Except where an indorsement bears date after the maturity of the instrument, every negotiation is deemed prima facie to have been affected* before the instrument was overdue (Sec. 52.)"

*"Effected" is used in the original draft.

See Alexander & Co. v. Springfield Bank, 2 Met. 534.

§ 46. Place of Indorsement-Presumption. "Except where the contrary appears every indorsement is presumed prima facie to have been made at the place where the instrument is dated."