indorsement

/andorsmant/ The act of a payee, drawee, accommodation indorser, or holder of a bill, note, check, or other negotiable instrument, in writing his name upon the back of the same, with or without further or qualifying words, whereby the property in the same is assigned and transferred to another. U.C.C. No. 3-202 et seq.

The signature on an instrument of a person who has the liability thereon of an indorser. Any signature in an ambiguous capacity is an indorsement. U.C.C. No. 3-402.

As applied to documents, the term means the signature thereon of a person to whose order the document runs. An indorsement must be written by or on behalf of the holder and on the instrument or on a paper so firmly affixed thereto as to become a part thereof. An indorsement is effective for negotiation only when it conveys the entire instrument or any unpaid residue. If it purports to be of less it operates only as a partial assignment. U.C.C. No. 3-202.

@ accommodation indorsement

In the law of negotiable instruments, one made by a third person without any consideration, but merely for the benefit of the holder of the instrument, or to enable the maker to obtain money or credit on it. Unless otherwise explained, it is understood to be a loan of the indorser's credit without restriction. Accommodation indorser is not liable to party accommodated. U.C.C. No. 3-415.

See also indorsement

@ blank indorsement

@ indorsement in blank

blank indorsement, also indorsement in blank

One made by the mere writing of the indorser's name on the back of the note or bill, without mention of the name of any person in whose favor the indorsement is made, but with the implied understanding that any lawful holder may fill in his own name above the indorsement if he so chooses. An indorsement in blank specifies no particular indorsee and may consist of a mere signature. An instrument payable to order and indorsed in blank becomes payable to bearer and may be negotiated by delivery alone until specially indorsed. 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. U.C.C. No. 3-204(2), (3).

+ blank indorsement

The indorsement of a bill of exchange or promissory note, by merely writing the name of the indorser, without mentioning any person to whom the bill or note is to be paid; called "blank," because a blank or space is left over it for the insertion of the name of the indorsee, or of any subsequent holder. Otherwise called an indorsement "in blank." Such indorsement causes an instrument, otherwise payable to order, to become payable to bearer and negotiable by delivery alone. U.C.C. No. 3-204(2).

With respect to a document of title, the signature of a person to whom the document runs in which the signer specifies no particular person to whom the goods should be delivered.

See U.C.C. No. 7-501(1)

@

- collection indorsement

@ conditional indorsement

An indorsement that is restrictive because it purports to limit when the instrument can be paid or further transferred, or to condition payment or further transfer on the occurrence of a specified event. One by which the indorser annexes some condition (other than the failure of prior parties to pay) to his liability. The condition may be either present or subsequent. Special indorsement with additional words of condition. U.C.C. No. 3-205(a).

See also indorsement

@ full indorsement

One by which the indorser orders the money to be paid to some particular person by name; it differs from a blank indorsement, which consists merely in the name of the indorser written on the back of the instrument.

See also indorsement

@ general indorsement.

See blank indorsement

@ irregular indorsement

An indorsement out of the chain of title which is ordinarily added to an instrument prior to delivery to the payee. Also known as an anomalous indorsement.

E.g., M makes a note payable to P; M is the maker and P is the payee. If when the note is executed by M, I also signs in the margin of the instrument, or on the back of it, I's indorsement is irregular. An irregular indorsement is notice of accommodation status. U.C.C. No. 3-415(4).

See also indorsement

@ qualified indorsement

One which restrains or limits, or qualifies or enlarges, the liability of the indorser, in any manner different from what the law generally imports as his true liability, deducible from the nature of the instrument. Stover Bank v. Welpman, Mo.App., 284 S.W. 177, 180.

A transfer of a bill or promissory note to an indorsee, without any liability to the indorser. Such is accomplished by adding after signature words such as "without recourse" or the like. U.C.C. No.No. 3-414(1), 3417(2X3).

See also indorsement

@ restrictive indorsement

One which stops the negotiability of the instrument, or which contains such a definite direction as to the payment as to preclude the indorsee from making any further transfer of the instrument. An indorsement is restrictive which either:

(a) is conditional; or

(b) purports to prohibit further transfer of the instrument; or

(c) includes the words "for collection", "for deposit", "pay any bank", or like terms signifying a purpose of deposit or collection; or

(d) otherwise states that it is for the benefit or use of the indorser or of another person. U.C.C. No. 3-205.

@ special indorsement

An indorsement that specifies a person to whom or to whose order the instrument is thereafter payable, U.C.C. No. 3-204(1), or, in the case of a document, as the person to whom or to whose order the goods should be delivered. Any instrument specially indorsed becomes payable to the order of the special indorsee and may be further negotiated only by his indorsement.

+ restrictive indorsement

An indorsement so worded as to restrict the further negotiability of the instrument. Thus, "Pay the contents to J. S. only," or "to J. S. for my use," are restrictive indorsements, and put an end to the negotiability of the paper. An indorsement is restrictive which either

(a) is conditional; or

(b) purports to prohibit further transfer of the instrument; or

(c) includes the words "for collection", "for deposit", "pay any bank", or like terms signifying a purpose of deposit or collection; or

(d) otherwise states that it is for the benefit or use of the indorser or of another person. U.C.C. No. 3-205

@ trust indorsement

An indorsement of an instrument that is restrictive because it states that it is for the benefit or use of the indorser or of another person. U.C.C. No. 3-205(d).

@ unauthorized indorsement

One made without actual, implied or apparent authority and includes a forgery. U.C.C. No. 3-404. Without recourse.

See qualified indorsement, above

@ anomalous indorsement

See irregular indorsement

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