1.

For this given situation, the parties involved are: Mario, being the maker; R, the payee
and indorser; W, the holder and indorsee; S, the theft and forgery and; A, the holder of
the forged !. W, "hose indorsement is forged, is not liable to A, "hether A is a holder
in due #ourse or not. $eing forged, the indorsement is "holly inoperative. Mario and R,
parties prior to W, "hose signature is forged, are not also liable to A. %he indorsement of
the note by W together "ith the delivery of the same, is the only means through "hi#h A
#ould a#&uire any right against Mario and R under the instrument, $ut sin#e the
indorsement is forged, it is inoperative. 'onse&uently, no rights #an be enfor#ed by
virtue of su#h instrument.
$e#ause only W(s signature is forged or made "ithout authority by S is
inoperative, the instrument or other signatures "hi#h are genuine are not affe#ted. %he
! #an be enfor#ed by W, the original holder to "hose title the forged signature is not
ne#essary. Where W(s signature is forged, the future payment by Mario to A "ill be
ineffe#tive. %here "ill be no debtor)#reditor relationship bet"een Mario and A is #reated.
%herefore, W as the party "hose indorsement is forged on the ! payable on or before
a fi*ed period and all parties prior to him in#luding the maker +R and Mario, #annot be
held liable by any holder "hi#h is A.
2. For this given situation, the parties involved are: R, being the maker; M, the original
payee and indorser; A, the holder and indorsee; -, the theft and forgery and; $ and ',
holders of the forged !; and ., the holder in due #ourse of the forged !. %he
indorsement of M, A, and $ are not ne#essary to vest o"nership of the note to .. $eing
originally payable to bearer, mere delivery is suffi#ient. /en#e, even if the indorsement of
A is forged, A #an be held liable to .. For the same reason, R, the maker, and , a party
prior to A "hose signature is forged, #an also be held liable to .. . may 0ust strike out
the forged instrument of A. 1f #ourse, . #an enfor#e the note against $ and ' "ho are
liable under their "arranties as indorsers.
When - forged the signature of A, loss "ill be borne by the former and the
parties subse&uent thereto. %herefore, A as the party "hose indorsement is forged on a
! originally payable to bearer and all parties prior to him in#luding the maker +A and M,
may be held liable by . as the holder in due #ourse provided that it "as me#hani#ally
#omplete before the forgery. %he reason is that the instrument being originally payable to
bearer, it #an be negotiated by mere delivery. 2n other "ords, indorsement is not
ne#essary to the title of the holder. /en#e , even if the indorsement is forged, the forgey
may be disregarded.