CHAP. XVII. seen to have in fact flowed in natural and uninterrupted sequence from the negligent act. But, in order to relieve the banker from the consequence of paying money upon a forged cheque, it would not be enough for the banker to show that the conduct of his customer, wilful, or careless, or wasteful, or combining all these elements, enabled the fraud to be committed. He must show that the cheque.. customer caused him to pay the money on the forged He thought that, for the defence to estoppel may succeed, it should be shown that the conduct of the Direcbe founded on Semble conduct con- tors in or immediately connected with the forging or nected (a) with the forging, (b) with the uttering. 1906. uttering of the cheques misled the defendant bank into making the payments upon those cheques, and that the fraud perpetrated flowed as a natural and ordinary result from the plaintiff's conduct; but the facts did not warrant either inference. Lewes Sanitary Steam Laundry, Ltd., v. Barclay and Co., Ltd., XXII. T.L.R., p. 737, decision of Kennedy, J.; curiously enough, this decision was delivered just one day before the decision of the Privy Council in Marshall v. Colonial Bank. CHAPTER XVIII. INDORSEMENTS. CHAP. XVIII. An indorsement is a signature written, usually, across the back of a bill or cheque; there may be writing or printing above the signature, but the signature is essen- Indorsement. tial and sufficient. Where the indorsement consists simply in the signa- In blank. ture of the payee (or previous indorsee), the indorsement is in blank, and the bill becomes payable to bearer. The same effect would be reached by an indorsement to a named person or bearer. Where an indorsement specifies a person to whom, Special. or to whose order, the bill is to be payable, the indorsement is special. Where the indorsement prohibits the further negotia- Restrictive. tion of the bill, or expresses that it is a mere authority to deal with the bill as thereby directed, and not a transfer of the ownership thereof, the indorsement is restrictive. Examples of restrictive indorsement : Pay D only, (Signature.) Pay D for the account of X, (Signature.) Pay D, or order for collection, (Signature.) Where the drawer of a bill or any indorser desires, Without he may insert an express stipulation negativing or limit- recourse. ing his own liability to the holder. Such an indorsement Act, § 16. CHAP. XVIII. is known as an indorsement sans recours. It is made (Signature.) or, (Signature.) Without recourse. Conditional. Definition. Conditional Indorsement.-Where a bill purports to be indorsed conditionally, the condition may be disregarded by the payer, and payment to the indorsee is valid whether the condition has been fulfilled or not. The condition, however, operates between the parties to it. For the purposes of the Bills of Exchange Act, the term indorsement has a technical meaning and a precise legal effect; it means "an indorsement completed by delivery," and delivery means "transfer of possession, actual or constructive, from one person to another." Where a negotiable instrument is in such form as to Negotiation require indorsement before negotiation, and indorsement by. in the sense of the Act is made, such indorsement operates. as a negotiation, except where otherwise provided by the Bills of Exchange Act-e.g., a restrictive indorsement for the purpose of collection only. Place for. In representa An indorsement on the face of a bill is valid; and where there is no room on a bill for further indorsements, a slip of paper called an "allonge" may be attached thereto. It becomes part of the bill, and indorsements may be written thereon. In the case of bills issued in certain foreign countries, or negotiated there, an indorsement on a copy of the bill may be valid. In Australia no indorsement should be attempted except on the back of the bill, or on an allonge if really necessary. Where a person is under obligation to indorse a bill tive capacity in a representative capacity, he may indorse it in such terms as to negative personal liability. Order. Where there are more than one indorsements on a bill, they are taken to have been made in the order in which they appear, unless the contrary be proved. By the banks, use is CHAP. XVIII. Where a bill is payable to order, and the payee or Misspelling. indorsee is wrongly designated, or his name misspelt, he may indorse the bill as therein described, adding, if he think fit, his proper signature. made of this provision thus: If a cheque for payment to Thomas J. Jones be given to him made out payable to Tom J. Jones or order, it is collected and paid upon the indorsement, Tom J. Jones. If a cheque is made payable to Mrs. John Brown, the correct indorsement would be, Mary Brown. Wife of John Brown. But if indorsed and presented Mrs. John Brown, it would be paid. As to the responsibilities of the paying and the collecting banker in respect of indorsements, reference should be made to the chapters on those subjects. indorsers. By the Bills of Exchange Act, section 55 (2), the Liability of indorser of a bill by indorsing it— (a) Engages that on due presentment it shall be accepted and paid according to its tenor, and that if it be dishonoured he will compensate the holder or a subsequent indorser who is compelled to pay it, provided that the requisite proceedings on dishonour be duly taken; Provided that where two or more persons indorse as co-sureties, nothing in this subsection shall disentitle any one or more of them to contribution from the other or others, but the rights and liabilities inter se of such in ૨ CHAP. XVIII. Quasi dorsers shall be subject to the contract in pursuance of which they became indorsers; (b) Is precluded from denying to a holder in due course the genuineness and regularity in all respects of the drawer's signature and all previous indorsements; (c) Is precluded from denying to his immediate or a subsequent indorsee that the bill was at the time of his indorsement a valid and subsisting bill, and that he had then a good title thereto. And by section 56, where a person signs a bill otherindorsement. wise than as drawer or acceptor, he thereby incurs the liabilities of an indorser to a holder in due course. Chalmers, p. 193. Under this provision of the Act, strangers who are not parties to a bill may by backing it become liable to subsequent holders for value, and this provision is often availed of to give strength and currency to the bill. Persons who sign for this purpose are termed, sometimes, quasi-indorsers, and their signatures are quasi-indersements. It should be carefully noted that such signatures are not indorsements in a strict sense; for an indorsement properly so called must be made by the holder This section is sometimes of great importance in the case of accommodation bills, and in cases where an indorsement is given by way of security, for in order to fix a quasi-indorser with liability under section 56, it must be shown that the plaintiff is a holder in due course. Now, a holder in due course must be one who has taken a bill complete and regular on the face of it; and if, as is sometimes done, the indorsement for security is placed on the bill or promissory note before it is a complete and regular bill, the first holder has necessarily notice of this, and cannot avail himself, by relying simply on the bill, of the intended security. |