46 ARTICLE 11.

1929, ch. 454, sec. S6.

86. (Legal Effect of Indorsements. ) An indorsement of an item by
the payee or other depositor "for deposit" shall be deemed a restrictive
indorsement and indicate that the indorsee bank is an agent for collection
and not owner of the item.

An indorsement "pay any bank or banker" or having equivalent words
shall be deemed a restrictive indorsement and shall indicate the creation
of an agency relation in any subsequent bank to whom the paper is
forwarded unless coupled with words indicating the creation of a trustee
relationship; and such indorsement or other restrictive indorsement
whether creating an agency or trustee relationship shall constitute a
guaranty by the indorser to all subsequent holders and to the drawee or
pay or of the genuineness of and the authority to make prior indorsements
and also to save the drawee or payor harmless in the event any prior
indorsement appearing thereon is defective or irregular in any respect
unless such indorsement is coupled with appropriate words disclaiming
such liability as guarantor.

Where a deposited item is payable to bearer or indorsed by the depositor
in blank or by special indorsement, the fact that such item is so payable
or indorsed shall not change the relation of agent of the bank or deposit
to the depositor, but subsequent holders shall have the right to rely on
the presumption that the bank of deposit is the owner of the item. The
indorsement of an item by the bank of deposit or by any subsequent holder
In blank or by special indorsement or its delivery when payable to bearer,
shall carry the presumption that the indorsee or transferee is owner
provided there is nothing upon the face of the paper or in any prior
indorsement to indicate an agency or trustee relation of any prior party.
But where an item is deposited or is received for collection indorsed
specially or in blank, the bank may convert such an indorsement into a
restrictive indorsement by writing over the signature of the indorser the
words "for deposit" or "for collection, " or other restrictive words to
negative the presumption that such bank of deposit or indorsee bank
is owner; and in the case of an item deposited or received for collection
payable to bearer, may negative such presumption by indorsing thereon
the words "received for deposit" or "received for collection" or words of
like import.

1929, ch. 454, sec. 87.

87. (Duty and Responsibility of Bank Collecting Agents. ) It shall
be the duty of the initial or any subsequent agent collecting bank to
exercise ordinary care in the collection of an item and when such duty
is performed such agent bank shall not be responsible if for any cause
payment is not received in money or an unconditional credit given on the
books of another bank, which such agent bank has requested or accepted.
An initial or subsequent agent collecting bank shall be liable for its own
lack of exercise of ordinary care but shall not be liable for the neglect,
misconduct, mistakes or defaults of any other agent bank or of the drawee
or, payor bank.