840                               LAWS OF MARYLAND                        [CH. 538

ment or who as a prior holder had notice of a defense or claim
against it cannot improve his position by taking from a later holder
in due course.

(2)  A transfer of a security interest in an instrument vests the
foregoing rights in the transferee to the extent of the interest trans-
ferred.

(3)   Unless otherwise agreed any transfer for value of an instru-
ment not then payable to bearer gives the transferee the specifically
enforceable right to have the unqualified indorsement of the trans-
feror. Negotiation takes effect only when the indorsement is made
and until that time there is no presumption that the transferee is
the owner.

3—202. Negotiation.

(1)  Negotiation is the transfer of an instrument in such form
that the transferee becomes a holder. If the instrument is payable
to order it is negotiated by delivery with any necessary indorsement;
if payable to bearer it is negotiated by delivery.

(2)  An indorsement must be written by or on behalf of the holder
and on the instrument or on a paper so firmly affixed thereto as to
become a part thereof.

(3)  An indorsement is effective for negotiation only when it con-
veys the entire instrument or any unpaid residue. If it purports to
be of less it operates only as a partial assignment.

(4) Words of assignment, condition, waiver, guaranty, limitation
or disclaimer of liability and the like accompanying an indorsement
do not affect its character as an indorsement.

3—203. Wrong or Misspelled Name.

Where an instrument is made payable to a person under a mis-
spelled name or one other than his own he may indorse in that name
or his own or both; but signature in both names may be required by
a person paying or giving value for the instrument.

3—204. Special Indorsement; Blank Indorsement.

(1)  A special indorsement specifies the person to whom or to
whose order it makes the instrument payable. Any instrument spe-
cially indorsed becomes payable to the order of the special indorsee
and may be further negotiated only by his indorsement.

(2)  An indorsement in blank specifies no particular indorsee and
may consist of a mere signature. An instrument payable to order
and indorsed in blank becomes payable to bearer and may be nego-
tiated by delivery alone until specially indorsed.

(3)   The holder may convert a blank indorsement into a special
indorsement by writing over the signature of the indorser in blank
any contract consistent with the charter of the indorsement.

3—205. Restrictive Indorsement.

An indorsement is restrictive which either
(a) is conditional; or