for no consideration. Smith sells it to White. White can recover from Jones; Smith cannot. A bandit attacks Smith and forces him at the point of a revolver (duress) to indorse to him Jones's check to Smith. The bandit sells the check to White. White can recover from Jones or Smith; the bandit cannot. If the bandit forged Smith's indorsement and sold it to White, White is the loser. Jones draws a check payable to Smith and leaves it in his desk. Smith steals it and negotiates it to White. White can recover from Jones; Smith has no claim at all. Jones draws a check payable to Smith, but leaves it unfinished, locked in his desk. Smith gets it by fraud and sells it to White. Jones is not liable to any one. Jones delivers an incomplete check to Smith. Smith in finishing the check exceeds his authority and transfers it to White. White can recover from Jones. Smith raises a check of Jones's, which the latter wrote with due care, from $15 to $1500 (alteration). It is void in the hands of any one except for $15. Jones pays Smith on the street for a note before it is due. Smith then sells the note to White. Jones must also pay White. In any of the above cases if White had an inkling that something was wrong, he would not be a holder in due course and could not recover. Jones, Jr., a minor, gives Smith his note. Smith trades it to White. If young Jones pleads infancy and incapacity, White has recourse only on Smith. In so far as a note or bill truthfully tells its own story it is good against the world in the hands of a holder in due course, and he gives perfect title to the next buyer, even if that buyer knows something of previous fraud.

30. Other negotiable instruments. -- Warehouse receipts, documents of title, bills of lading, and certificates of shares of stock are often spoken of as negotiable instruments. Strictly speaking, the only negotiable paper is that which has been described in the preceding paragraphs. Commerce

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having developed a necessity for a more convenient transferability of property, certain documents have come by custom and by law to be regarded as the symbols of property; and to transfer the property all one has to do is to transfer the document that represents it. Many states have sought by statute to give to such paper at least some of the attributes of negotiability, but the law varies sharply from state to state and it must be remembered that in no case does the law of bills and notes apply to these forms. The Uniform Warehouse Receipts Act, The Uniform Sales Act, and the Uniform Bills of Lading Act have sought to unify the practice of the states. The Uniform Bills of Lading Act which in modified form has also been adopted by the U. S. Congress and applies, therefore, to all interstate shipments, makes order bills of lading negotiable.

31. Extent of their negotiability. A warehouse receipt is a contract between the warehouse owner and the owner of the goods in which the former bargains to keep the goods for an agreed compensation and to deliver them to the owner or his order upon demand. Many states require a standard contract to be used. An order bill of lading is a carrier's receipt for goods and a contract to transport them and deliver them to the order of the shipper or consignee, usually the former. A uniform bill of lading is used in all interstate commerce. Both the warehouse receipt and the bill of lading, if drawn to order so that only the owner of the document can get the goods, are symbols of property. The owner of the document is the owner of the goods.

The uniform acts and the weight of authority, generally speaking, give the warehouse receipt and the bill of lading the following phases of negotiability:

(1) If the goods are deliverable to the bearer of the document, or to the order of the person named in the document, title to the property passes by delivery with

the indorsement of the holder if to order, or without the indorsement of the holder if to bearer, or if indorsed in blank.

(2) The holder of the document has such "title to the goods as the person negotiating the document to him had or had ability to convey to a purchaser in good faith for value, and also such title to the goods as the person to whose order the goods were to be delivered by the terins of the document had or had ability to convey to a purchaser in good faith for value."

The indorser generally is not liable for the failure of others to fulfill their obligations, but the holder has the direct obligation of the warehouseman, or carrier, to protect and deliver the goods. The Uniform Bills of Lading Act gives good title to a holder in due course.

(3) While a bona fide purchaser for value may in some states get no more title than can be given him by the previous holder, he is, as an innocent purchaser, protected from the negligence of any one who allows the indicia of ownership to get out of his hands. Cole ships goods to Lee and gets a bill of lading to his own order. He indorses it in blank and sends it to his agent to deliver to Lee when Lee pays. By mistake Cole's agent delivers the bill of lading to Lee, who sells the goods to Ross and delivers to him the bill of lading. Ross has no actual title as he would have in the case of a note or bill of

exchange, but the law has a rule the doctrine of estoppel - which denies to Cole the right to set up his claim on account of the neglect of his agent. Ross therefore wins on account of his apparent title.*

Similar rules apply to documents of title which are in some ways like warehouse receipts.

A certificate of a share of ownership in a corporation has on its back or in a separate paper a blank in which

4 American Sales Act, Section 20.

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the owner can write an assignment of his interests and an irrevocable power of attorney authorizing the person specified to transfer his stock on the books of the corporation. If no person is specified and the certificate is signed in blank, it becomes transferable by delivery, because any holder can fill in his name and obtain a new certificate. To that extent stock is negotiable (see 176).

CHAPTER III

SAFE AND SAVINGS DEPOSITS

32. Kinds of deposits. One thinks of a bank first as a place for safe-keeping. While only one of its functions, so many others have grown out of it and depend upon it, that it is fundamental in importance. The child, the wage-earner, the salaried youth, patronizes a bank first as a depositary. Those who wish to save make deposits in a bank by the week, or by the month, and leave them to accumulate, their withdrawal being subject to the rules of the bank. Business and household funds are deposited by the day, week, or the month, to be repaid to the depositor on demand. Deposits of either of the above classes are "general deposits." Funds left thus are mingled with other funds. They may be loaned to borrowers. The bank can never return the exact property of the depositor. It simply owes the depositor what he has loaned to the bank. The relation of the bank to the depositor is that of a debtor to a creditor. On the other hand, if a man hands a banker a package of bonds, or stock certificates, or even money, the identical package to be returned, or leaves a check indorsed "for collection and credit," the title does not pass to the bank, but the depositor is still the owner. The above packages are "special deposits "; the check mentioned is a "specific deposit." In both cases the bank's relation to the depositor is that of a bailee. If $1000 is deposited on account, or on a certificate, and the bank fails paying 60 cents on the dollar, the depositor gets $600. In a like situation bonds left in safe-keeping, or a box left in storage, would be returned to the owner. If a bank fails before the collection of a note or check, in