Facts of the Case
- A bill was made payable to X or order.
- The bill was stolen, and Y forged X’s endorsement.
- Y then endorsed the bill to Z, who took it for value and in good faith.
Issues in the Case
- Can Z, who received the bill with a forged endorsement, obtain a valid title?
- Does good faith and value paid by Z protect him when the endorsement is forged?
Principles Associated with It
- Under the Negotiable Instruments Act, only the true owner can transfer title through proper endorsement.
- A forged endorsement is null and void and passes no title, even to a bona fide purchaser for value.
- The rule “nemo dat quod non habet” (no one gives what they do not have) applies—Y had no right to transfer ownership.
- A holder in due course cannot acquire a better title than the person who had none.
Judgement
- Z does not acquire a good title to the bill.
- Since the endorsement by Y was forged, it is legally ineffective, and no rights are transferred to Z.
- Therefore, X, the original payee, retains the ownership, and the bill is invalid in Z’s hands.