" (3) Where a restrictive indorsement further transfer, all subsequent indorsees take the bill with the same rights and subject to the same liabilities as the first indorsee under the restrictive indorsement." An indorser may insert an express stipula tion (1) negativing or limiting his own liability to the holder, (2) waiving as regards himself some or all of the holder's duties (Section 16). An example of an indorsement so qualified is where an indorser adds after his signature the words " without recourse " or the French equivalent " sans yerours." By Section 31, s.s. 3 : " A bill payable to order is negotiated by the indorsement of the holder completed by delivery." A transferee, for value, acquires the right to have the indorsement of the transferor, where the bill was payable to the transferor's order (Section 31, s.s. 4).
A bill payable to " John Brown or order " may be indorsed simply " John Brown." He may then transfer the bill by simple delivery to another person. By John Brown's indorsement in blank the bill becomes payable to bearer, and may pass from hand to hand without any further indorsement, though, as a rule, anyone taking a bill will require the transferor to indorse it, so that he may thereby become a party to the bill and be liable thereon. If, however, John Brown indorsed the bill " Pay John Jones or order, John Brown " (or " John Brown, pay to the order of John Jones "), the bill is specially indorsed, and requires the signature of John Jones before he can transfer it to anyone else. Any holder may convert an indorsement in blank into a special one to himself, or to any other person. If a bill with John Brown's indorse ment in blank passes through the hands of certain holders who do not indorse it, and then comes into the possession of William Robinson, he may write above John Brown's signature the words " Pay William Robin son." Before further negotiation, the bill requires William Robinson's indorsement. If John Brown indorses the bill " Pay John Jones only," the indorsement of John Jones is required, but John Jones cannot transfer the bill to anyone else, as John Brown by his restrictive word prohibits the further negotiation of the bill.
A cheque or bill payable " to order " should (unless payable to a fictitious or non existing person) be indorsed. But see under PAYEE as to the case of a payee refusing to indorse a cheque when presented by himself. A cheque payable to bearer does not require to be indorsed. A cheque indorsed in blank is payable without further indorsement. But all cheques paid to credit, which do not legally require an indorsement, should either be indorsed or stamped with the name of the customer, so that the banker may know at any time from whom the cheques were received. Some customers cross all their
cheques which are paid to credit, thus : "Account John Brown at X. V. Bank. Ltd." All bills paid to credit should be indorsed by the customer.
An indorsement, as its name implies, should be upon the back of a bill or cheque, but it has been held that an indorsement on the face is valid.
An indorsement should be spelled exactly in the same way as the person's name appears on the face of the bill (or cheque) as payee, or in the special indorsement as indorsee. If the person's name has been misspelt by the drawer or the prior indorser, his indorsement should also be misspelt, but he may indorse it below with his name spelled correctly. All indorsements must be examined, even if they are in a foreign language.
In a memorandum dated June, 1910, circulated by the Council of the Institute of Bankers, with respect to indorsements in Oriental or other unusual characters, it is pointed out that bills bearing indorsements in Oriental characters are sometimes pre sented for payment with the name of the indorser written in Latin characters beneath the indorsement, and the memorandum con tinues : " Such ' translations ' may be, and it is believed often are, written on the bill by persons haying no authority and incur ring no responsibility, and the Council is of opinion that before paying the bill, a banker would be justified in requiring that the translation be properly verified by a notary, or that, in default of this, the indorsement be confirmed by a banker.
" In the event of bills bearing Oriental indorsements being returned, the answer given should be such as to leave no room for doubt that the reason for refusing pay ment is that such indorsement is unintelli gible, in which case the Council is advised that no legal liability will he incurred by the bank giving the answer.
" A suggested form of answer is ' . . .th indorsement requires notarially certified translation, or will pay on banker's con firmation.' " The Council think it would be most satisfactory for all concerned, and avoid delay in payment of bills bearing such in dorsements, if they were in all cases put in order before being remitted to London for payment, as it is sometimes a matter of difficulty in this country to obtain a satis factory translation." If a holder strikes out, intentionally, the indorsement of any indorser, that indorser and all indorsers subsequent to him are discharged from liability on the bill.