2.  Payee or later holder indorses a note or check.  Happens automatically regardless of indorser’s intent.

3.  Secondary Liability Three conditions precedent must occur before the holder can sue the indorser.

4.  Note – holder previously presented to maker.  Draft (e.g., check) – holder previously presented to drawee (e.g., bank on which the check is drawn; the drawer’s bank).  Must be done within 30 days of indorsement.

5.  Note – Maker refuses to pay.  Draft (e.g., check) – Drawee refuses to pay (e.g., the check bounces for insufficient funds, closed account, etc.).

6.  General Rule = Indorser is given notice of the dishonor within 30 days of the dishonor.  Collecting Bank = Indorser is given notice of the dishonor by the midnight deadline.

7.  An indorser may disclaim liability by including the phrase “without recourse” in the indorsement.

8.  Presumed liable in order of signatures.  Sue prior indorsers for payment.  Liable to later indorsers.

9. DrawerPayee – I1 BigelowSnow Bascombe – I2 Drawee Jordan State Bank – I3 Rogers An indorser in chain of title is a sub-surety and can recover all from earlier indorser.

10. MakerBank CharliePayee Lucy – I1 Schroeder – I2 Pig Pen – I3 Patty – I4 An indorser not in chain of title is a co-surety and is only entitled to contribution.

11. MakerIvory MarianPayee “Without recourse” Friendly Loan Co.