40: Discharge of indorser’s liability

When the holder of a negotiable instrument, without the consent of the indorser, destroys or impairs the indorser’s remedy against a prior party, the indorser is discharged from liability to the holder to the same extent as if the instrument had been paid at maturity. Illustration A is the holder of a bill of exchange made payable to the order of B, which contains the following indorsements in blank:— First indorsement, “B”. Second indorsement, “Peter Williams.” Third indorsement, “Wright & Co.” Fourth indorsement, “John Rozario.” This bill A puts in suit against John Rozario and strikes out, without John Rozario’s consent, the indorsements by Peter Williams, and Wright & Co. A is not entitled to recover anything from John Rozario.

Effective date: 1881-12-09

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