The New York Stock Exchange rules provide that " Coupon Bonds issued to Bearer, having an indorsement upon them not properly pertaining to them as a security, must be sold specifically as ' Indorsed Bonds,' and are not a delivery, except as ' Indorsed Bonds.' "

An example of a bond which comes under this heading is one upon which some person's name has been indelibly written.

An instance is related of the treasurer of a savings institution who, in his spare moments, wrote across each of their bonds words to the effect that it was the property of the institution in question. In making a sale, through a stock exchange member, of bonds of a New England railroad, being part of an issue seldom traded in, and consequently offered at very infrequent intervals upon the market, the treasurer of this institution found himself in trouble when he came to make delivery, as the broker would not accept bonds with the institution's name indorsed upon them. The natural course would have been to purchase other like bonds in the open market in order to make the delivery good, the loss, if any, in the transaction, to be borne by the institution. In this case, however, the bonds were of such a rare issue that this was impossible and a compromise had to be effected with the purchasing party by selling the bonds at a lesser price as " indorsed bonds."

In reply to the query why the railroad company would not issue new securities in their place, it may be said from the standpoint of the company that the bonds were perfectly good. They might have been converted into " registered bonds " if privilege of registration had existed. The broker might not have accepted registered bonds, however.

It is a safe plan never to deface a security in any way. If any memorandum or other writing is necessary, write it on a separate piece of paper and attach it to the security.

1 Those desiring to follow this subject further may refer to " Joint In-dorsemement," "Absolute Indorsement," "Conditional Indorsement," "Restrictive Indorsement," "Indorsement in Full," "Indorsement in Blank," " Qualified Indorsement," "Joint Indorsement," " Without Recourse," and "Protest."