BILLS AND NOTES-INDORSEMENT IN BLANK FOLLOWED BY SPECIAL INDORSEMENT

Plaintiff purchased a cashier's check from X Bank payable to himself. He indorsed the check in blank and immediately below stamped it, "Pay to the order of Bank of America, National Savings and Trust Association, S. & R. Produce Co." Plaintiff then gave the check to one R with whom he had agreed to enter into business under the name of the S. & R. Produce Company. R took the check to Y Bank which at his request blocked out the special indorsement without the knowledge or consent of plaintiff. R then indorsed the check and deposited it to his personal account.

X Bank paid the check on presentment. In an action against both banks to recover the amount of the check alleged to have been paid to R wrongfully, held: the status of the check as a bearer instrument from plaintiff's indorsement in blank was unaffected by the subsequent special indorsement; Y Bank therefore took title to it by delivery as a holder in due course, and X Bank was bound to pay on the presentation of Y. Christian v. California Bank, (Cal. 1946) 173 P. (2d) 318.