Necessity, A holder, to be a bona fide holder, must take in accordance with the nature of the instrument.

If it is payable to the payee or bearer, delivery alone is sufficient.1 Without delivery, a person who acquires rights in a negotiable instrument does not become a bona fide holder.2 If A has wrongfully taken an instrument which belongs to B, and which is indorsed in blank, from B's safety deposit box, and A has pledged such instrument to C to secure A's indebtedness, A's act in receiving such instrument from C for collection and placing it in A's safety deposit box, does not amount to a new delivery to A, so that A's rights are prior to those of C.3The act of one who has, in his custody, an instrument indorsed in blank, in showing it to another whose money he has for investment, and telling him that such instrument represents an investment, does not amount to deliverv.4

If the instrument is payable to payee or order, the payee must indorse the instrument - that is, he must write his name upon the back of it, as well as deliver it to the holder, to constitute the latter a bona fide holder.5If a note is assigned but not delivered, as where it is not in the assignor's possession,6or where the assignor shows it to the assignee but does not deliver it,7 the assignee takes subject to all defenses. If a note payable to "order" is assigned and delivered but not indorsed, the assignee takes subject to all defenses,8 although he takes the interest of his assignor.9 Thus if A transfers a note to B without indorsement, B taking without notice of defenses, and subsequently after B has notice of defenses A indorses to B, B is not a bona fide holder.10

6 Vander Ploeg v. Van Zuuk, 135 Ia. 350, 124 Am. St. Rep. 275, 13 L. R. A. (N.S.) 490, 112 N. W. 807.

1 United States. Thompson v. Per-rine, 106 U. S. 589, 27 L. ed. 298.

Massachusetts. Truesdell v. Thompson, 53 Mass. (12 Met.) 565; Avery v. Latimer, 14 Ohio, 542.

2Voss v. Chamberlain, 139 Ia. 569, 19 L. R. A. (N.S.) 106, 117 N. W. 269.

3Voss v. Chamberlain, 139 la. 569, 19 L. R. A. (N.S.) 106, 117 N. W. 269.

4Bettanier v. Smith, 129 la. 597, 5 L. R. A. (N.S.) 628, 105 N. W. 999.

5 Georgia. Sulunias v. Poolos, 148 Ga. 409, 96 S. E. 866.

Kentucky. Instone v. Williamson, 5 Ky. (2 Bibb.) 83; Bellis v. Lyons, 97 Mich. 398, 56 N. W. 770.

Minnesota. Cochran v. Stein, 118 Minn. 323, 41 L. R. A. (N.S.) 391, 136 N. W. 1037.

Oklahoma. Phelps v. Womack, - Okla. - , 167 Pac. 478.

South Carolina. First National Bank v. Wood, - S. Car. - , 95 S. E. 140.

See also, Mangold & Glandt Bank v. Utterback, - Okla. - , L. R. A. 1917B, 364, 160 Pac. 713.

6 Muller v. Pondir, 55 N. Y. 325, 14 Am. Rep. 259.

7Bettanier v. Smith, 129 la. 597, 5 L. R. A. (N.S.) 628, 105 N. W. 999 (instrument the property of the original indorser and not the property of the subsequent assignor).

These rules have been carried into the Negotiable Instruments Law, which provides: "An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer it is negotiated by delivery; if payable to order it is negotiated by the indorsement of the holder completed by delivery."11