RESTRICTIVE INDORSEMENTS

Authors

Abstract

Under Sec. 36 of the N. I. L. an indorsement is restrictive which prohibits further negotiation or constitutes the indorsee the agent of the indorser or vests the title in a trustee in trust for some other person. The mere absence of words importing a power to negotiate does not, however, make the indorsement restrictive. Among the rights of a restrictive indorsee as declared by Sec. 37 is the one to bring "any action thereon that the indorser could bring." The remaining provision of the statute dealing with such indorsements is Sec. 47, which provides that "An instrument negotiable in its origin continues to be negotiable until it has been restrictively indorsed or discharged by payment or otherwise." The types of indorsements stated to be restrictive in Sec. 36 are represented respectively by the following: (1) "Pay to A only"; (2) "Pay to A or order for collection, account of" the indorser; (3) "Pay to A or order in trust for C." The final provision of the section under which the absence of such words in an indorsement as "or order" does not render the indorsement restrictive is a preservation of the doctrine of Edie & Laird v. East India Co.

Recommended Citation

RESTRICTIVE INDORSEMENTS, 31 Mich. L. Rev. 72 (1932).
Available at: https://repository.law.umich.edu/mlr/vol31/iss1/7