blank, then, carries all the advantage which sale with a clear title can give; but, on the other hand, the easier it may be for a stranger to acquire title, the more slippery becomes the holder's own grasp; and hence the precautions by way of restriction upon negotiability often adopted. As to restriction, upon an indorser's liability, a further discussion is suggested. § 457. The Same Subject. By the act of indorsement, whether in blank or to some particular person's order, provided it be unqualified, the party indorsing makes a new contract with the indorsee or holder and the parties following; and to this effect, that the paper is due and payable according to its tenor; that the acceptor, maker, or previous indorsers will pay the same at maturity, when called upon and notified; and that he, the present indorser, will pay the same if they do not.1

The rights and liabilities of an indorser, as one of the secondary parties who may be held responsible in case of the dishonor of a bill or note, we have already incidentally considered; and there are other mutual obligations, as between himself and his indorsee, which differ not from those attending the simple transfer of negotiable paper by delivery. But here it should be said that, an indorsement being a new and independent contract, every indorser of a bill or note makes a new contract with his indorsee, which may in any case be different from that which he received; that his implied admission of signature and capacity applies to every party to the paper, prior to the date of his own indorsement; and that as to the indorsee, he has all the rights of his immediate indorser, and sometimes more.2 And indorsement, we should bear in mind, may be made after maturity of the paper as well as before; the only essential difference being that in the one case the date of payment is fixed expressly by the parties, while in the other the law assumes a reasonable time on demand.3

12 Pars. 23.

2 See 2 Pars. 23-27, and cases cited. 8 Leavitt v. Putnam, 3 Comst. 494; Story Prom. Notes, § 178; ib. Bills,

§§ 220-223. See 2 Pars. 9-14, as to presumptions in case of indorsement when the paper is overdue.

Indorsement is a warranty to all

§ 458.

Effect of Transfer by Mere Delivery: Title of Bonâ Fide Holder for Value. The rule concerning paper transferable by mere delivery is, that all bills and notes payable to bearer, or indorsed to bearer, or indorsed in blank and not afterwards restricted by the holder, can be transferred by mere delivery; and title is obtainable accordingly, by any bona fide transferee for value without notice of infirmity of title though he should purchase it of a thief. And, as a general rule, one who transfers paper by delivery only is no longer a party to that paper, but his liability ceases with his interest therein. He is, to be sure, responsible, on the usual principle of sales, for the genuineness of the instrument and its existing signatures, and in fact has been said to warrant the title to be that purported; but beyond this, and as to any future honor or dishonor of the paper, or solvency of the parties, he promises nothing and is held for nothing.1

On the other hand, the party who takes negotiable paper transferable by delivery acquires in general an absolute property therein and may recover upon the instrument, provided only he took it in good faith and for a valuable consideration before it became overdue, without notice of adverse title.2 The presumption of good title in the holder, under such

but guilty holders, or at least a conclusive admission, that the signatures are genuine and made by parties having authority to pass the title, and that the paper is genuine. State Bank v. Fearing, 16 Pick. 533; Remsen v. Graves, 41 N. Y. 471; Condon v. Pearce, 43 Md. 83; Braithwaite v. Gardiner, 8 Q. B. 473; Turner v. Keller, 66 N. Y. 66; Big. 2d ed. 166. And it is a well-settled rule of law that in an action upon the indorsement the plaintiff need not prove the genuineness of prior signatures or of the paper itself; for it is enough to prove the indorsement. But as to an action brought against the acceptor of a bill, or the maker of a note, an indorsee may have to prove the indorsements he relies upon; hence

forgery may be alleged by such defendants. State Bank v. Fearing, supra.

12 Pars. 37-41, and cases cited; Aldrich v. Jackson, 5 R. I. 218; Gompertz v. Bartlett, 2 Ell. & B. 849.

22 Pars. 42 et seq., and cases cited. See, further, §§ 84, 85, supra.

Whether the paper in any case was transferred for a new or an old consideration, in payment of some preexisting debt or as security merely, — these and analogous questions which have much disturbed the judicial mind for years bear sometimes heavily upon a holder's rights; and as the matter is one of considerable detail and greater perplexity, we merely allude to it in passing. See supra, chapter on Debts; 1 Pars. 218-228. And see Swift v.

circumstances, is in these days very strong, and it is generally deemed sufficient for him to produce the paper which he sues upon, and leave the parties thus presumably liable to impeach his title if they can. Even as to overdue paper, so long as it is ordinarily current, the cases are somewhat lenient; forbearance stopping apparently at the point of discredit or dishonor, whatever that point may be.2

§ 459. Rules appliable to Accommodation Paper. We hear sometimes of "accommodation paper." By this phrase is denoted those bills of exchange or promissory notes which are drawn, made, accepted, or indorsed without any consideration, for the "accommodation," as it were, or convenience of some party, and generally in order to enable him to raise money on the credit of the person thus affording the use of his name. Accommodation paper in the hands of the party to whom it is made, or for whose benefit the accommodation is given, is open to the defence of a want of consideration; but when taken by third persons in the usual course of business, it is governed by the usual rules of negotiable paper.1 Hence, though the accommodation indorser has a good defence against the payee for whose benefit he indorsed, it is usually no defence against the indorsee purchasing for value before maturity, that the latter knew, when he purchased, that it was accommodation paper.2

But there are some peculiar doctrines which grow out of a misappropriation of paper given for accommodation : where, for instance, it is given for a special purpose and is used otherwise; and while the holder's rights, under such circumstances, are not clearly defined in the decisions, it seems clear that if the holder took the paper with notice of a fraudulent diversion to the accommodating party's injury, the accommodating party can relieve himself of liability; while it is equally certain that to defend successfully against any such

Wall. 377. As to equities against one who takes an "overdue" bill or note, see 2 Pars. Bills and Notes, 603, 604; Burrough v. Moss, 10 B. & C. 558; Britton v. Bishop, 11 Vt. 70; Redf. & Big. 275, 276. And as to the extent of "set off" in such cases, see Redf. & Big. ib.; Baxter v. Little, 6 Met. 7. For further applying this rule of protecting a bona fide holder to lost and stolen negotiable instruments, see post, vol. ii. part iv. c. 1.

An agent, trustee, pledgee, &c., may usually sue in his own name; so favorably is any rightful holder's

convenience regarded. Pearce v. Austin, 4 Whart. 489; Dugan v. United States, 3 Wheat. 172; Big. 394, and cases cited. See Dodge v. Brown, 113 Mass. 323; Hays v. Hathorn, 74 N. Y. 486.

1 See 2 Kent Com. 86; 1 Pars. 256, 327; 2 ib. 27, 437.

2 Ib.; Grant v. Ellicott, 7 Wend. 227; Charles v. Marsden, 1 Taunt. 224. See Chester v. Dorr, 41 N. Y. 279, as to the transfer of accommodation paper after its maturity. And see Jones v. Berryhill, 25 Iowa, 289.

misappropriation, the accommodating party must prove that the holder had prior notice of the misapplication.1 Yet that the holder can recover in any event what he actually advanced for the note and no more, is sustained by numerous authorities.2

§ 460. Discharge of Drawer or Indorser from Liability. There are various instances in which a drawer or indorser may be discharged from liability by the acts of prior parties, whether it be by some satisfaction of the demand represented by the bill or note, or because the effect of such acts was to prejudice his own rights and remedies. It is a familiar principle of law that the release of the principal operates to discharge the surety; indorsement is much in the nature of a contract of suretyship; and if the holder of a promissory note release the first indorser, this discharges, presumptively at least, the subsequent indorsers.3 But the mere agreement by the holder with the drawer of a bill, for delay, made without consideration and not communicated, and hence not valid, does not discharge the indorser. Each successive indorser

to negotiable paper stands as a surety not only of the maker or acceptor, but also for all parties indorsing before him; though not, of course, for any indorser subsequent to himself; and hence prior indorsers are sureties together of the holder of the paper and entitled to subrogation as among themselves.

1 Stoddard v. Kimball, 6 Cush. 469; Mohawk Bank v. Corey, 1 Hill, 513; Small v. Smith, 1 Denio, 583. See Farmers' Bank v. Rathbone, 26 Vt. 19. And see Davidson v. Lanier, 4 Wall. 447; Spitler v. James, 32 Ind. 202.

2 See Allaire v. Hartshorne, 1 Zabr. 665, and other cases cited; Redf. & Big. 270. The question how far an indorsement of paper not yet issued, which indorsement was requested by a person contemplating taking it as an "accommodation" to him, binds the indorser, is considered in Yeager v. Farwell, 13 Wall. 6. And as to

the rights of one who takes accommodation paper which is overdue, see conflicting cases cited in Redf. & Big. 216, 217.

3 Newcomb v. Raynor, 21 Wend. 108.

4 McLemore v. Powell, 12 Wheat. 554. See, further, as to discharge of indorser, drawer, &c., Redf. & Big. 544-596, 617-642, and cases cited and examined; 2 Pars. 208-254; Smith v. Morrill, 54 Maine, 58; Okie v. Spencer, 2 Whart. 253. As to extension of time by a mere delay to sue, see Allen v. Brown, 124 Mass. 77. But difficulty arises as to the effect