Quiz 29: Transfers of Negotiable Instruments and Warranties of Parties
Bearer paper - can be negotiated by anyone holding the instrument, anyone holding the paper can negotiate it. Order paper - can only be negotiated by the person authorized in the order e.g. "Payable to XYZ" only XYZ can negotiate it. a) False. R only indorsed/endorsed with his signature meaning it is a blank endorsement not a special endorsement. b) False. It didn't matter because the note was payable to R or bearer. Payable to bearer means that anyone with the note is qualified to be holder. c) False. It can be converted to order paper using a special endorsement, such as writing "payable to F signed F ". d) True. A blank endorsement makes the note a bearer paper, and "pay to the order of F " makes this a special endorsement converting it to order paper.
CB was a divorcee, who met with an accident by DO's vehicle. The insurer of DO drafted an amount of $2,164.46 to compensate the damages caused by him to CB. The insurer of DO drafted a mail that the amount was negotiated to CB under his wife's name, BC. CB didn't receive the amount from the insurer, and filed a suit against DO and his insurance company. According to the law, the conversion process of personal property applies to instruments. An instrument can be converted if it is transferred from a person who is entitled to obtain the payment. The transfer or delivery of the negotiation instrument can't be said to be delivered until the payee doesn't have interest. The payee will not become the owner of the check until his or her details are handwritten on the draft. In the present case, the insurance company has sent the amount to wrong address. It has failed to take the correct address from DO and made wrong delivery. Therefore, it is the mistake of the insurance company, which has failed to take the correct details of CB. The plaintiff has to be paid or compensated by the defender's insurance company using accurate information. The payee receives the delivery or transfer of negotiation instrument, and becomes the owner of the payment if he is perfectly addressed.
Bearer paper - can be negotiated by anyone holding the instrument, anyone holding the paper can negotiate it. Order paper - can only be negotiated by the person authorized in the order e.g. "Payable to XYZ" only XYZ can negotiate it. a) False. "Payable to cash" makes the check a bearer paper, anyone with the check, e.g. someone who found it on the street can cash it. b) False. "Payable to T " and endorsed by T without any remarks is a blank endorsement which makes the check a bearer paper, anyone with the check, e.g. someone who found it on the street can cash it. c) True. "Payable to bearer" makes the check initially a bearer paper, but by making a special endorsement to be specifically paid to J makes it order paper. d) False. A blank endorsement makes the check a bearer paper.