The Uniform Commercial Code—Commercial Paper: An Outsider's View, Part II

Continental systems generally permit a possessor to acquire rights against the signatories of a bill or note despite a forged indorsement, it being sufficient that the sequence of indorsement on the instrument leads to the possessor. On general principles, the Anglo-American law differs in this respect. As early as the eighteenth century, it was held, in Mead v. Young (1790) that the possessor of a bill to order containing a forged indorsement has no right to the bill and is not entitled to demand payment from the parties whose signatures preceded the forgery. This approach was followed by the English Act and the N.I.L. The U.C.C. follows this principle in laying down that a forged signature is inoperative as that of the person whose name is signed. A person who acquires a bill to order on which there is a forged indorsement is therefore not a holder of the bill nor in legal possession of it, nor an owner. He consequently has no right under the bill against parties whose signatures preceded the forgery.