Section 16 Generally

• Library: Commercial Law 2007

If an instrument is payable to an identified person (i.e., to order), it is negotiated by that person’s endorsement followed by transfer of possession of the instrument to another person who thereby becomes its holder. Section 400.3-201(b), RSMo 2000; Partney v. Reed, 889 S.W.2d 896 (Mo. App. S.D. 1994); Bank of Waverly v. City Bank & Trust Co., 600 S.W.2d 630 (Mo. App. W.D. 1980). Under UCC Article 3, an endorsement means a signature, other than that of the maker, drawer, or acceptor, that alone or accompanied by other words is made on the instrument for the purpose of “(i) negotiating the instrument, (ii) restricting payment of the instrument, or (iii) incurring endorser’s liability on the instrument.” Section 400.3-204(a), RSMo 2000. A signature and its accompanying words on an instrument are an endorsement unless those words or the terms of the instrument, the place of signature, or other circumstances unambiguously indicate that the signature was made for some purpose other than endorsement. Id.; Geller, Ward & Hasner Hardware Co. v. Drozda, 217 S.W. 557 (Mo. App. E.D. 1920) (intention to become bound in a capacity other than endorser had to appear by appropriate words written on the instrument rather than merely from prior dealings of the parties). For negotiation to occur, the endorsement must be made by the payee or someone authorized to act on behalf of the payee in the name of the identified payee. Twellman v. Lindell Trust Co., 534 S.W.2d 83 (Mo. App. E.D. 1976) (treasurer’s...