2018 New Mexico Statutes
Chapter 55 - Uniform Commercial Code
Article 3 - Negotiable Instruments
Section 55-3-205 - Special indorsement; blank indorsement; anomalous indorsement.
(a) If an indorsement is made by the holder of an instrument, whether payable to an identified person or payable to bearer, and the indorsement identifies a person to whom it makes the instrument payable, it is a "special indorsement". When specially indorsed, an instrument becomes payable to the identified person and may be negotiated only by the indorsement of that person. The principles stated in Section 55-3-110 NMSA 1978 apply to special indorsements.
(b) If an indorsement is made by the holder of an instrument and it is not a special indorsement, it is a "blank indorsement". When indorsed in blank, an instrument becomes payable to bearer and may be negotiated by transfer of possession alone until specially indorsed.
(c) The holder may convert a blank indorsement that consists only of a signature into a special indorsement by writing, above the signature of the indorser, words identifying the person to whom the instrument is made payable.
(d) "Anomalous indorsement" means an indorsement made by a person who is not the holder of the instrument. An anomalous indorsement does not affect the manner in which the instrument may be negotiated.
History: 1978 Comp., § 55-3-205, enacted by Laws 1992, ch. 114, § 111.
OFFICIAL COMMENTS
UCC Official Comments by ALI & the NCCUSL. Reproduced with permission of the PEB for the UCC. All rights reserved.
1. Subsection (a) is based on subsection (1) of the former Section 3-204. It states the test of a special indorsement to be whether the indorsement identifies a person to whom the instrument is payable. Section 3-110 [55-3-110 NMSA 1978] states rules for identifying the payee of an instrument. Section 3-205(a) [55-3-205 NMSA 1978] incorporates the principles stated in Section 3-110 [55-3-110 NMSA 1978] in identifying an indorsee. The language of Section 3-110 [55-3-110 NMSA 1978] refers to language used by the issuer of the instrument. When that section is used with respect to an indorsement, Section 3-110 [55-3-110 NMSA 1978] must be read as referring to the language used by the indorser.
2. Subsection (b) is based on subsection (2) of former Section 3-204. An indorsement made by the holder is either a special or blank indorsement. If the indorsement is made by a holder and is not a special indorsement, it is a blank indorsement. For example, the holder of an instrument, intending to make a special indorsement, writes the words "Pay to the order of" without completing the indorsement by writing the name of the indorsee. The holder's signature appears under the quoted words. The indorsement is not a special indorsement because it does not identify a person to whom it makes the instrument payable. Since it is not a special indorsement it is a blank indorsement and the instrument is payable to bearer. The result is analogous to that of a check in which the name of the payee is left blank by the drawer. In that case the check is payable to bearer. See the last paragraphs of Comment 2 to Section 3-115 [55-3-115 NMSA 1978].
A blank indorsement is usually the signature of the indorser on the back of the instrument without other words. Subsection (c) is based on subsection (3) of former Section 3-204. A "restrictive indorsement" described in Section 3-206 [55-3-206 NMSA 1978] can be either a blank indorsement or a special indorsement. "Pay to T, in trust for B" is a restrictive indorsement. It is also a special indorsement because it identifies T as the person to whom the instrument is payable. "For deposit only" followed by the signature of the payee of a check is a restrictive indorsement. It is also a blank indorsement because it does not identify the person to whom the instrument is payable.
3. The only effect of an "anomalous indorsement," defined in subsection (d), is to make the signer liable on the instrument as an indorser. Such an indorsement is normally made by an accommodation party. Section 3-419 [55-3-419 NMSA 1978].
4. Articles 14 and 16 of the Convention on International Bills of Exchange and International Promissory Notes includes similar rules for blank and special indorsements.
Repeals. — Laws 1992, ch. 114, § 237 repealed former 55-3-205 NMSA 1978, as enacted by Laws 1961, ch. 96, § 3-205, relating to restrictive indorsements, effective July 1, 1992. Laws 1992, ch. 114, § 111, enacted a new section, effective July 1, 1992. For provisions of former section, see the 1991 NMSA 1978 on NMOneSource.com. For present comparable provisions, see 55-3-206 NMSA 1978.
Indorsement required for negotiation. — Since the note was specially indorsed to the Federal Reserve Bank and transferred to the FDIC and then to the plaintiff company without indorsement by the Federal Reserve Bank, it was not properly negotiated and the plaintiff was not a holder-in-due-course. Cadle Co. v. Wallach Concrete, Inc., 1995-NMSC-039, 120 N.M. 56, 897 P.2d 1104.
