57 Pa. Super. 176 | Pa. Super. Ct. | 1914
Opinion by
Does the use of the words “without recourse to us” by an indorser on a promissory note affect the negotiability of the instrument? Is such an indorsement restrictive or qualified? Are subsequent holders affected with notice or is its use sufficient to put them on inquiry as to any defense between prior indorsers or parties? Does the knowledge of a qualified indorser that a prior indorsement without qualification had been procured through fraud affect the right of his indorsee, who was a holder in due course, to proceed against the indorser without qualification? These are the questions presented by this appeal.
The referee to whom the matters in controversy had been submitted by the court below found as a fact, that the note was sold outright before maturity for a good and valuable consideration to the appellee, who had no knowledge whatever of the circumstances under which the appellant’s name appeared on that note. The appellants’ second specification of error objects to these findings of fact. Inasmuch as the appellant’s paper-book does not contain the evidence that was submitted to the referee we must dismiss this exception and accept the findings of fact of the referee to be correct.
Prior to the act of 1901 it had been held that the use of the words “without recourse” did not affect the negotiable quality of the paper and its use was: (1) to exempt the indorser from liability for payment
The appellant’s contention that prior to the Negotiable Instrument Act of 1901 an indorsement “without recourse” was a restrictive indorsement cannot be sustained; nor does the act of 1901 make it a restrictive indorsement. Section 38 of this act provides that a qualified indorsement .... may be made by adding to the indorser’s signature the words “without recourse,” and as to its negotiability the section further provides “that such an indorsement does not impair the negotiable character of the instrument.” This language is clear, precise and free from doubt. It wrote into a statute what had been the decisions of the courts on these same questions, first made more than a century ago, and is in harmony with the law as it exists in other states.
Equally unfounded is the contention of the appellant that under the act of 1901 the use of the words “without recourse” affects subsequent holders with notice or puts them on inquiry as to defenses existing between prior parties. The purpose of the Negotiable Instrument Act, as it relates to an indorsement of this character’ placed upon an instrument, was to make the instrument as freely negotiable as it would have been had the indorsement been placed thereon without qualification.' The act endeavors to make this as plain as possible when it used the words as quoted from sec. 38. If, under the statute, the use of these words would have the effect
