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Allonge Indorsement

Under New York's version of the Uniform Commercial Code, an allonge can be considered an attached endorsement to a negotiable instrument if certain requirements are met. However, simply signing an allonge does not prove the signer had any rights to the instrument. If the principal lacked rights to the instrument, did the agent commit a crime by signing? Additionally, stamping an endorsement to unspecified successors and assigns may not constitute a valid negotiation if the new holder remains unidentified. Assigning a related security instrument to an unidentified successor would invalidate that security.

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A. Campbell
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426 views1 page

Allonge Indorsement

Under New York's version of the Uniform Commercial Code, an allonge can be considered an attached endorsement to a negotiable instrument if certain requirements are met. However, simply signing an allonge does not prove the signer had any rights to the instrument. If the principal lacked rights to the instrument, did the agent commit a crime by signing? Additionally, stamping an endorsement to unspecified successors and assigns may not constitute a valid negotiation if the new holder remains unidentified. Assigning a related security instrument to an unidentified successor would invalidate that security.

Uploaded by

A. Campbell
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Allonge Indorsement

Under each state(s) adaptation of the Uniform Commercial Code an Allonge could
be considered as an attached Indorsement to a negotiable instrument. However,
as the state of New York recognizes the 1961 version of the Uniform Commercial
Code, use of an allonge in New York has to be in legal compliance with the
adopted version. Where a signatory places a signature upon the face of the Allonge
with authority to sign does not present evidentiary fact that the signatory had any
rights except to sign the instrument. A serious legal question presents, where a
principle of the signer does not have rights to enforce the instrument and applying
the legal principle of Nemo Dat, would the creation of such Allonge be a
fraudulent method and means to attempt fraud?
Where it may be true under contract law, a party as a signatory agent could be
authorized by its principle, but if the principle was without rights to authorize a
signature to be placed upon the instrument, is it the agent of principle that has
committed a crime?
Where a signatory claims a stamping is an indorsement to subsequent successors
and assigns where such subsequent party is not identified and intent is required
under real property law, the stamping as per UCC 3-115 and UCC 3-205 reflects
intention that the stamping to represent a special indorsement, per UCC 3-203 until
negotiation is complete and the unidentified party is identified upon the face of the
instrument, negotiation has not been executed.
Where the negotiable instrument is to be secured by a security instrument (pledge
of real property as alternate means to collect upon the instrument), to assign the
security instrument to an unidentified party not identified upon the face of the
negotiable instrument would be fatal to the security instruments validity.
Additionally, for a successor and assign as being unidentified holder of Bearer
Paper would prevent an assignment of the security instrument to an unidentified
successor and assign.

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