§ 430. (Nego. Instru., Sec. 39.) Incomplete Instrument.

Case 446. Melton v. Pensacola Bank & Trust Co., 190 Fed. 126.

SANFORD, D. J.: "The fact that the name of the payee was blank at the time the note was signed by the defendants and delivered to Scudamore does not impeach its validity in the hands of the plaintiff. An implied authority was thereby given to Scudamore to fill in the name of the payee, and even if he filled it in with the wrong name, in violation of his agreement with the defendants (as to which there is no evidence in the récord) this would not affect the title of the plaintiff, taking the note as holder for value before maturity and without notice. See by analogy, in the case of filling in a blank date, Goodman v. Simonds, supra, 20 How. at page 361, 50 L. Ed. 934, and Androscoggin Bank v. Kimball, 10 Cush. (Mass.) 373, and other cases there cited as to the general authority given to fill up blanks, by signing and delivering to an agent of an instrument in which blanks are left."

Question 446: What was the alleged defect in the above note! How did the court dispose of it?

Case 447. Uniform Negotiable Instruments Act, Sec. 14.

"Where the instrument is wanting in any material particular, the person in possession thereof has a prima facie authority to complete it by filling up the blanks therein. And a signature on a blank paper delivered by the person making the signature in order that the paper may be converted into a negotiable instrument operates as a prima facie authority to fill it up as such for any amount. In order, however, that any such instrument when completed may be enforced against any person who became a party thereto prior to its completion, it must be filled up strictly in accordance with the authority given and within a reasonable time. But if any such instrument, after completion, is issued or negotiated to a holder in due course it is

valid and effectual for all purposes in his hands, and he may enforce it as if it has been filled up strictly in accordance with the authority given and within a reasonable time."

Question 447: (See following cases.)

Case 448. Louis M. Greeley, "The New Illinois Negotiable Instruments Act," Illinois Law Review, Vol. 2, p. 145.

"Section 14. This section changes the law as generally laid down in American cases, and conforms to the law as originally established by the English cases and now embodied in the English Bills of Exchange Act (from which the Uniform Negotiable Instruments Law was largely derived). The principle involved can be most quickly shown by an example. The maker of a note payable to A which is blank as to the amount, gives it to A with instructions to fill in and negotiate it for an amount not exceeding $100. A takes the note to B in its incomplete state and offers to fill it in for $500 if B will purchase it for that amount. B agrees. A fills in the note for $500 and indorses it to B who pays the $500 to A. B has no notice of the maker's instructions to A. A absconds. According to most American cases B would be protected. It is held that A, having lawful possession of the blank note, has ostensible authority to fill in the blank for any amount (in reason), and that a purchaser may rely upon this ostensible authority, where he has no actual notice that the authority has been exceeded. Huntington v. Branch Bank, 3 Ala. 186; Bank of Commonwealth v. Curry, 2 Dana, 142; Fullerton v. Sturges, 4 Ohio St. 529; Page v. Moerell, 3 Keyes, 117, and see City of Chicago v. Gage, 95 Ill. 593. According to the English cases, B, under the circumstances supposed, having actual knowledge that the instrument was issued blank as to the amount, would not be protected. He would be deemed to take at his peril as to the extent of A's actual authority. Awde v. Dixon, 6 Exch. 869; Hatch v. Searles, 2 Sm. & Gif. 147; Hogarth v.

Latham, 3 Q. B. D. 643. As above stated the English rule is the one adopted in Section 14 of our new Act.

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'Both English and American cases are agreed that if the note, in the case above supposed, had been filled in before B took it, and B had no notice it was issued in blank, B would be protected. Merritt v. Boyden, 191 Ill. 136; Young v. Ward, 21 Ill. 223. This principle also finds expression in Section 14."

Question 448: Give the illustration here made by Professor Greeley and state his solution of the question thereby presented.

§ 431. (Nego. Instru., Sec. 40.) Delivery of complete instrument containing uncancelled spaces.

(Note: See post, § 485.)

§ 432. (Nego. Instru., Sec. 41.) Form of signature—Execution by agent.

Case No. 449. Uniform Sales Act, Secs. 18-23.

"(Sec. 18.) No person is liable on the instrument whose signature does not appear thereon, except as herein otherwise expressly provided. But one who signs in a trade or assumed name will be liable to the same extent as if he had signed his own name.

"(Sec. 19.) The signature of any party may be made by a duly authorized agent. No particular form of appointment is necessary for this purpose; and the authority of the agent may be established as in other cases of agency.

"(Sec. 20.) Where the instrument contains, or a person adds to his signature, words indicating that he signs for or on behalf of the principal, or in a representative capacity, he is not liable on the instrument if he was duly authorized; but the mere addition of words describing him as agent, or as filling a representative character, without disclosing his principal, does not exempt him from personal liability.

"(Sec. 21.) A signature by 'procuration' operates as notice that the agent has but limited authority to sign, and the principal is bound in case the agent in so signing acted within the actual limits of his authority.

"(Sec. 22.) The indorsement or assignment of the instrument by a corporation or by an infant passes the property therein, notwithstanding that from want of capacity the corporation or infant may incur no liability thereon.

"(Sec. 23.) Where a signature is forged or made without authority it is wholly inoperative, and no right to retain the instrument or to give a discharge therefor or to enforce payment thereof against any party thereto, can be acquired through or under such signature, unless the party against whom it is sought to enforce such right is precluded from setting up the forgery or want of authority."

Question 449: (1) A and B compose the "Northwestern Shoe Emporium," a partnership, and make and sign a note which states that the "Northwestern Shoe Emporium promises to pay," etc., and is signed "Northwestern Shoe Emporium, by A." A and B are sued. B defends that his name is not on the note. Are either or both liable (assuming that A had authority to sign for B)? (If the Northwestern Shoe Emporium had been a corporation and A and B stockholders, could A and B be sued personally on the note?)

(2) What is the effect of a signature "by procuration"? (3) Pauthorizes A to borrow money for P and execute P's promissory note therefor. P makes out a note "I promise to pay," etc., signed A, agent. Is P liable on this note? Is A?

(Note: The mere addition of words describing him [the signer] as an agent or filling a representative character, without disclosing his principal, does not exempt him from personal liability. This much is clear law. There is no confusion or difference of opinion on that point. But suppose he does in the language of the note or signature "disclose his principal." The act says: "Where the instrument contains or a person adds to his signature words indicating that he signs for or on behalf of

a principal or in a representative capacity, he is not liable on the instrument if he was duly authorized." This language is undoubtedly used to clear up the confusion that has heretofore existed. To what extent it will accomplish that result remains to be seen.

The conventional and safe way for an agent to execute any paper for his principal to avoid responsibility on his own behalf (where he has authority) is to name his principal in the body of the instrument (although "I" or "we" is proper in a negotiable instrument if properly signed) and to sign "John Smith (principal) by Harry Jones, Agent," or "Smith Manufacturing Company by John Smith, President." The business man should adhere strictly to this form of signature in order to avoid trouble.

Suppose, however, other forms of signature or execution are used. Can we get some idea of the law governing them? A quotation from Professor Brannan, "The Negotiable Instruments Law, 1919," page 69, is given:

"The plain language of this section indicates that it was the intention of the draftsman and the commissioners to clear up the unnecessary and unpardonable confusion caused by the failure of some of the courts to exercise a little common sense and to recognize mercantile usage. Much of the difficulty found in this subject is purely manufactured and would not trouble a business man for a moment. He would perceive no difference between notes signed, "The X Co. by A. Pres.' or signed "The X Co. A Pres.' or signed 'X Co. A. Pres.' or 'A, Pres. X Co.', or a note reading "The X Co. promises to pay' and signed 'A. Pres.' Yet courts have been found to make distinctions in such cases. For instance in Reeve v. First Bank, 54 N. J. L. 208, 23 Atl. 853, 16 L. R. A. 143, a note signed 'Warrick Glass Works, J. Price Warrick, Prest.,' was properly held to be the note of the corporation and not the note of Warrick or the joint note of Warrick and the corporation. So also in Aungst v. Cregue, 72 Oh. St. 551, 74 N. E. 1073. Whereas in McCandless v. Belle Plaine Co., 78 Iowa, 161, 42 N. W. 635, 4 L. R. A. 396, it was held that such a note is the note of the signer, that oral evidence was not admissible to show that the corporation alone was intended, and that both were liable. And in Day v. Ramsdell, 90 Iowa 731, 52 N. W. 208, a note reciting that 'We, the A. B. Co., promise to pay,' but signed merely by two persons describing themselves as