TRANSFER a.

The SC held that there is no justification in the NIL for an implied qualified
FAY V. WITTE – 262 N.Y. 215, 186 N.E. 678 (1933)
Crane, J. b.
A promissory note was executed to pay to the order of Harry C. Witte. However, Witte c.
indorsed the note to Richard Fay by stating: "I hereby assign all my right and interest in this
note to Richard Fay in full." The note was protested for non-payment, hence, Fay, being the
holder now, filed a case against Witte as an unqualified indorser
d.
DOCTRINE
An indorser, by his indorsement, impliedly enters into two contracts:
(1) A contract of sale or assignment of the instrument; and
(2) A contract to pay the instrument if the maker is unable to pay on maturity.
If the indorser wants to relieve himself of either contract he must do so in clear and express e.
terms such as adding the words "without recourse," or "sans recourse" or "at indorsee's own
risk" above his signature. By doing the latter, he is expressly ridding himself of contract (2).
indorsement
Words such as "without recourse" must be used and the exclusion of liability
must be express and not implied from the transaction
Mere placement of the word "assign" is ambiguous
i. "A person placing his signature upon an instrument otherwise than
as maker, drawer or acceptor is deemed to be an indorser, unless
he clearly indicates by appropriate words his intention to be bound
in some other capacity."
The signing on the back of the note is a form that is used in the NIL, and has
a different effect than for example, signing the same words on a separate
sheet of paper and not attaching the same to the instrument.
i. The former would have the effect of indorsement, while the latter
has the effect of mere assignment of title.
Expressio eorum quae tacite insunt nihil operatur.
i. "The expression of those things which are tacitly implied operates
nothing."

In the absence of clear and unmistakable language qualifying liability, an indorser will be DISPOSITIVE PORTION
liable on both his contracts. His liability cannot be limited by implication. The judgment of the Appellate Division should be reversed and that of the County Court
affirmed, with costs in this court and in the Appellate Division.
Sec. 38. QUALIFIED INDORSEMENT. – A qualified indorsement constitutes the indorser a
mere assignor of title to the instrument. It may be made by adding to the indorser's signature OTHER NOTES
the words "without recourse" or any words of similar import. Such an indorsement. NIL = Negotiable Instruments Law

Sec. 63. When a person deemed indorser. - A person placing his signature upon an
instrument otherwise than as maker, drawer, or acceptor, is deemed to be indorser unless DIGESTER:
he clearly indicates by appropriate words his intention to be bound in some other capacity

FACTS
1. Harry C. Witte was given a promissory note (Pay to the Order of Harry Witte) in the
amount of $2,500.00 at the Central Bank of Albany New York, with interest.
2. Witte, for good and valuable consideration, indorsed the note:
a. "I hereby assign all my right and interest in this note to Richard Fay in full."
3. The note was protested for non-payment, and due notice was given to Witte.
4. Now, Fay filed an action against Witte, ratiocinating that the latter is an unqualified
indorser.
5. It should be noted that an indorsement implies the following:
a. A transfer of the note
b. A promise to pay if a maker fails to do so
6. However, the Appellate Division ruled (split decision) that Witte rendered himself as an
indorser without recourse, or what the NIL calls a qualified indorser.
a. They ruled based on the fact that since Witte used the term "assign" it meant
that he IMPLIEDLY excluded himself from the second implication – to pay
upon default of the maker.
7. Hence, Fay appealed to the Supreme Court.

ISSUE with HOLDING

1. Whether or not Witte was a qualified indorser. NO. One cannot be considered a
qualified indorser by mere implication. The same must be expressed in clear and
unmistakable language.