HOLDER OF BILL OF EXCHANGE. The holder of a bill is the person who is in possession of it and may be either the payee, or an indorser, or the bearer.
There are three kinds of holders, a simple holder of a bill, a holder for value, and a holder in due course.
If the holder of a bill has not given value for it, he cannot sue any party subsequent to the last indorsement when value was given.
The holder of a bill, unless it is indorsed payable to him, need not indorse it, though, as a rule, any person taking a bill would require the person from whom he takes it to indorse it. The person receiving a bill has the right to demand the indorsement of the transferor if the bill was payable to his order.
If a bill is payable to the holder's order, he must indorse it, whether the transferee demands his indorsement or not.
Where the holder of a bill payable to bearer (see BEARER) negotiates it by de livery, without indorsing it, he is called a " transferor by delivery " and warrants to his immediate transferee that the hill is what it purports to be.
A transferor by delivery is not liable on the bill—that is, he is not liable thereon if he has not indorsed it, though if he is a holder for value he may sue all, or any, of the parties to the bill. That, however, does not affect the transferee's right to sue the trans feror for the debt. Judgment obtained
against one party will not release the others. If the title of a holder for value is defective. lie is not in as good a position as a holder in due course.
Neither a holder for value nor a holder in due course can obtain a title to a bill through a forged signature.
Any holder may convert a blank indorsement into a special indorsement by writing above the indorser's signature a direc tion to pay the bill to the order of himself or some other person.
A holder may strike out any indorsement on a bill, and the person whose signature is struck out is thereby released from liability, and so are all subsequent indorsers. A banker usually cancels his indorsement on a dishonoured bill.
If a holder receives payment of a bill from an indorser, the bill must be given up to that indorser, who will then have all the rights of the holder from whom he received it. (See PAYMENT FOR HONOUR.) A banker is under no liability on a cheque or bill to a holder, unless he has in some way given the holder to understand that the cheque or bill will be paid. (See BILL OF EXCHANGE, HOLDER FOR VALUE, HOLDER IN DUE COURSE.)