A is holder of a bill he endorses it “sans re course” to B. B endorses it to C. C to D and D again to A :
- Can A recover the amount of the bill from B
- What are the rights of D
- Can A recover the amount from C and D or any of them
The given case is under the chapter of negotiable instrument which means promissory notes, bills of exchange or cheque payable either to order or to bearer. Under the Negotiable Instrument Act.1881, endorsement refers to writing the name of endorsee on the back of instrument by endorser under his signature with object of transferring the right therein.
In this set case a is A holder of bill he endorses it ”sans re course” to B. sans re course means without recourse- an endorser of a negotiable instrument may make his endorsement on condition that he is not to be held liable as a prior party. Therefore here A as a holder of bill endorses it sans re course to B that means he made endorsement on condition that he is not to be held liable as a prior party hence A can recover the amount of the bill from B
If an endorser excludes or limits his liability by using the word sans recourse and afterwards becomes the holder of the same instrument, therefore as per section.52 all intermediate endorser continue to be liable to him as negotiation back is taking place here.
Hence here A can recover the amount from C and D or any of them
Here the D is intermediate endorser therefore the rights of D are as follows :
- Right to signing at the back of instrument as endorser
- D is entitled to all the rights of the endorse, and, if the bill or note have been endorsed over to him before it became due, he may be entitled to greater rights than the payee and endorser would have had, had he retained it till it became due, as none of the parties can make a set- off, or inquire into the consideration of the bill which he then holds.
- If he continues to be the holder (q.v.) when the bill becomes due, he ought to make a legal demand, and give notice in case of non-acceptance or non- payment.
- Right to pay only to the instrument holder person
- Right to conduct negotiation back