As we have seen, a bill or note is negotiable when it is payable to bearer or to a particular person or to order. If payable to bearer, it is negotiated by cle f livery a bill payable to order is negotiated by the indorsement of the holder completed by delivery. A bill is payable to order which is expressed to be so payable, or which is expressed to be payable to a par ticular person, and does not contain words prohibit ina transfer or indicating an intention that it should not be transferable. If the holder of a bill or note payable to his order dies, his rights pass, as we have seen, to his executors or personal representatives, who in turn, may negotiate the instrument by indorsement thereof. The same would be true of a bill made pay able to a dead man by someone not aware of his death.
When a bill or note is negotiable in its origin it continues to be negotiable, until it has been restric tively indorsed or has been discharged by payment or otherwise.' And a bill or a note negotiable in its ori gin is one which is made payable to bearer, or to a particular person or to his order.
5. Indorsement.—By indorsement is meant in the Act an indorsement completed by delivery. It is the act of writing one's name on a negotiable instrument, with the intent either of transferring the title thereto, or of giving extra security to the holder, or both. The word implies a writing of the name on the back of the bill; but it has been held to be immaterial where it is written. If there are numerous indorsements and the back of the instrument is filled, frequently an allonge is added in the form of a piece of paper attached to the bill. To prevent fraud, the first indorsement on the allonge should be written so that it is begun on the bill itself and completed on the allonge. If the indorsement is given solely to add to the security, it is said to be for accommodation. It is clear from what has been said that the act of in dorsement is to be distinguished from the act of ne gotiation which transfers the instrument.
6. Requisites of indorsement, in order to operate as a negotiation, must be written on the bill itself (an allonge is deemed to form part of the bill) and be signed by the indorser; and must be an indorsement of the entire bill. By "written" is also meant, as we have already seen, words printed, painted, engraved, and so on. Banks often use a stamp accompanied by the signature of the officer using it. The indorsement must be signed by the indorser, i.e., by the indorser or by some one acting for him and under his authority. It must be an in dorsement of the entire bill, i.e., it must not be a partial indorsement, and must follow the tenor of the instrument. So if A holds a bill reading, "Pay to the order of B the sum of five hundred dollars," he can not indorse it, "Pay to X two hundred and fifty dol lars, pay to the order of lI two hundred and fifty dollars." Otherwise the maker or drawer might have to defend two actions. But there may be a partial acceptance of a bill; and an indorsement of a bill so accepted, as being an indorsement of the entire bill as accepted, would be When a person is under an obligation to indorse a bill in a representative capacity, he may indorse it in such terms as to negative personal liability. Thus, a tutor or curator or executor, when it becomes neces sary to indorse bills or notes payable to the order of some one who died, or who lost his capacity before in dorsing, may indorse in his capacity as such tutor, curator, executor or otherwise, in such a way as to negative personal liability. The indorser should,
however, be careful to make it apparent for whom and on whose behalf lie is indorsing, and be will be wise to add also the words "without recourse," or "with out recourse to me personally." Thus, it was held by Lord Ellenborough, that a man who puts his name to a bill of exchange makes himself personally liable, unless he states upon the face of the bill that he subscribes it for another, or by procuration of another; unless he says plainly, "I am the mere scribe," he becomes liable.' Similarly when a bill was drawn on "W. A. Geddes, Treas. W. I. C. Co.," and he accepted it, "WI. A. Geddes, Treas. W. I. C. Co.," and affixed the company's seal, he was held per sonally liable. Had he accepted as follows: "W. I. C. Co. per W. A. Geddes, Treas.," the company, as was intended, would have been held liable. So a bill addressed "To the Sec. R. G. M. Co.," and accepted as follows : "The R. G. M. Co. per Jas. Glass, Sec.," was held not to be the acceptance of the secretary, and he was not personally liable. It has also been held that an agreement in writing to indorse a bill is not an indorsement. An indorsement may be to two or more persons jointly, or to a third person, who is to hold it merely as collateral security for a smaller debt due him from the endorser. The maker or drawer may thus pay part of the instrument; if the person re ceiving payment writes a receipt on the back of the instrument, subsequent holders thereof may sue the prior parties for the balance only.
Maclaren, speaking of the commercial usage in the matter of endorsement, says: Use the Christian name or initials, as in the bill or special indorsement, if there be no mistake in the name as there given, and no misspelling, dropping all prefixes and suffixes, such as Mr., Mrs., Miss, Messrs., Hon., Esq., etc. Where, for the purpose of identification, an addition follows, such as Merchant, M.D., M.P., K.C., or the like, it may be well to add this to the signature. A bill to the order of Mrs. John Smith may be endorsed "Mary Smith, wife of John Smith"; or a bill "To the Estate of John Jones, or order," by "A. B., Executor or Administrator late John Jones": a bill "To the order of the City Treas., Toronto," by "A. C., City Treas., Toronto"; a bill to the order of "The Canada Gas Co.," by "The Canada Gas Co., per E. F., Manager": a bill "To the order of John Smith & Co.," if by a partner, should be indorsed simply "John Smith & Co., " and if by another person authorized by the firm, "John Smith & Co., per G. H., Atty.," or "Per pro. G. H." Signatures such as the following should be avoided, partly on the ground of ambiguity and partly on account of the danger of the agent or representative making himself personally liable: "A. B., agent for C. D.," "Per proc. E. F., G. H.," "J. K. for the L. M. Co., "J. K., for L. M. & Co.," "J. K., for the Estate of L. M."' When there are two or more indorsements on a bill, any indorsement is deemed to have been made in the order in which it appears on the bill, until the con trary is proved.
'7. Kinds of are several kinds of indorsement which have been for many years rec ognized in law and in commercial practice, and it is well to understand the effect that a particular in dorsement may have upon the rights and liabilities of the parties to a negotiable instrument.
We may take the following form of a promissory note and examine the possible indorsements thereof. and the result in each case.