ports 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 indorsed as to the residue.1

Sec. 33. An indorsement may be either special or in blank; and it may also be either restrictive or qualified, or conditional.2 Sec. 34. A special indorsement specifies the person to 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. 35. The holder may convert a blank indorsement into a special indorsement by writing over the signature of the indorser in blank any contract consistent with the character of the indorsement.4

Sec. 36. An indorsement is restrictive, which either

I. Prohibits the further negotiation of the instrument; or 2. Constitutes the indorsee the agent of the indorser; or Vests the title in the indorsee in trust for or to the use of some other person.5

3.

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

Sec. 37. A restrictive indorsement confers upon the indorsee the right,

I. 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.

1 The provision in the last sentence is not in B. E. A. See section 32 (2).

2 The English Act omits the words “qualified or conditional." B. E. A. s. 32 (6).

3 The last clause is omitted in the English Act. B. E. A. s. 34 (2), but see s. 34 (3), which reads: "The provisions of this Act relating to a payee apply with the necessary modifications to an indorser under a special indorsement.”

4 "By writing above the indorser's signature a direction to pay the bill to, or to the order of, himself or some other person." B. E. A. s. 34 (4).

5 "An indorsement is restrictive which prohibits the further negotiation of the bill, or which expresses that it is a mere authority to deal with the bill as thereby directed, and not a transfer of the ownership thereof, as, for example, if a bill be indorsed, 'Pay D. only' or 'Pay D. for the account of X,' or 'Pay D. or order for collection."" B. E. A. s. 35 (1).

"Where a bill, either originally or by indorsement, is expressed to be payable to the order of a specified person, and not to him or his order, it is nevertheless payable to him or his order at his option." B. E. A. s. 8 (5).

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

Sec. 38. 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.1

Sec. 39. 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.2

Sec. 40. 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 make title through his indorsement.3

Sec. 41. 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. 42. 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.3

Sec. 43. Where the name of a payee or indorsee is wrongly designated or misspelled, he may indorse the instrument as therein described, adding, if he think fit, his proper signature.

Sec. 44. Where any person is under obligation to indorse in a representative capacity, he may indorse in such terms as to negative personal liability.

Sec. 45. Except where an indorsement bears date after the maturity of the instrument, every negotiation is deemed prima facie to have been effected before the instrument was overdue.

1 "The drawer of a bill, and any indorser, may insert therein an express stipulation (1) Negotiating or limiting his own liability to the holder; (2) Waiving as regards himself some or all the holder's duties." B. E. A. s. 16.

2 The words "or his transferee" and the provision in the last sentence are omitted in B. E. A. s. 33. 8 Not in B. E. A.

Sec. 46. Except where the contrary appears, every indorsement is presumed prima facie to have been made at the place where the instrument is dated.1

Sec. 47. An instrument negotiable in its origin continues to be negotiable until it has been restrictively indorsed or discharged by payment or otherwise.

Sec. 48. The holder may at any time strike out any indorsement which is not necessary to his title. The indorser whose indorsement is struck out, and all indorsers subsequent to him, are thereby relieved from liability on the instrument.1

Sec. 49. Where the holder of an instrument payable to his order transfers it for value without indorsing it, the transfer vests in the transferee such title as the transferor had therein, and the transferee acquires, in addition, the right to have the indorsement of the transferor. 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.2

Sec. 50. Where an instrument is negotiated back to a prior party, such party may, subject to the provisions of this 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.

Sec. 51.

ARTICLE IV.

RIGHTS OF THE HOLDER.

The holder of a negotiable instrument may sue thereon in his own name; and payment to him in due course discharges the instrument.3

Sec. 52. A holder in due course is a holder who has taken the instrument under the following conditions:

1. That it is complete and regular upon its face;

2. 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;

3. That he took it in good faith and for value;

1 Not in B. E. A.

2 The English Act omits the provision in the last sentence. B. E. A. s. 31 (4). 8" Where his title is defective (a) if he negotiates the bill to a holder in due course, that holder obtains a good and complete title to the bill, and (b) if he obtains payment of the bill the person who pays him in due course gets a valid discharge for the bill." B. E. A. s. 38 (3).

4. 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.1

Sec. 53. Where an instrument payable on demand is negotiated an unreasonable length of time after its issue, the holder is not deemed a holder in due course.2

Sec. 54. Where the transferee receives notice of any infirmity in the instrument or defect in the title of the person 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.3

Sec. 55. The title of a person who negotiates an instrument 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.

Sec. 56. To constitute notice of an infirmity in the instrument 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."

Sec. 57. A holder in due course holds the instrument free from any defect of title of prior parties, and free from defences available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof? against all parties liable thereon.

1 The English Act omits the words "infirmity in the instrument." B. E. A. s. 29 (1)(b). 2 "Where a note payable on demand is negotiated, it is not deemed to be overdue, for the purpose of affecting the holder with defects of title of which he had no notice, by reason that it appears that a reasonable time for presenting it for payment has elapsed since its issue." B. E. A. s. 86 (3). "A bill payable on demand is deemed to be overdue within the meaning and for the purposes of this section (relating to transfer) where it appears on the face of it to have been in circulation for an unreasonable length of time. What is an unreasonable length of time for this purpose is a question of fact." B. E. A. s. 36 (3). The same rule would apply to a check. B. E. A. s. 73. 8 Not in B. E. A.

4 The English Act uses the words "the acceptance thereof " instead of "any signature thereto." B. E. A. s. 29 (2).

5 Not in B. E. A. "A thing is deemed to be done in good faith within the meaning of this Act when it is in fact done honestly, whether it is done negligently or not." B. E. A. s. 90.

The English Act reads "from mere personal defences." B. E. A. s. 38 (2).

7 The words "for the full amount thereof " are omitted in the English Act. B. E. A. s. 38 (2).

Sec. 58. In the hands of any holder other than a holder in due course, a negotiable instrument is subject to the same defences as if it were non-negotiable.1 But a holder 2 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 rights of such former holder in respect of all parties prior to the latter.

Sec. 59. 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 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.

Sec. 60. The maker of a negotiable instrument by making it engages that he will pay it according to its tenor, and admits the existence of the payee and his then capacity to indorse.5

7

Sec. 61. 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 indorser who may be compelled to pay it. But the drawer may

1 Not in B. E. A.

2 The English Act inserts here" (whether for value or not)." B. E. A. s. 29 (3). 8 "But if in an action on a bill it is admitted or proved that the acceptance, issue, or subsequent negotiation of the bill is affected with fraud, duress, or force and fear, or illegality, the burden of proof is shifted, unless and until the holder proves that, subsequent to the alleged fraud or illegality, value has in good faith been given for the bill." B. E. A. s. 30 (2).

The provision in the last sentence is omitted in the English Act. B. E. A. s. 30 (2). 5 "The maker of a promissory note by making it (1) Engages that he will pay it according to its tenour; (2) Is precluded from denying to a holder in due course the existence of the payee and his then capacity to indorse." B. E. A. s. 88.

6 " 'Is precluded from denying to a holder in due course the existence of the payee and his then capacity to indorse." B. E. A. s. 55 (1) (b).

7 The English Act reads "and" instead of "or" B. E. A. s. 55 (1) (a). or both" are omitted in B. E. A. s. 55 (1) (a).

8 The words "