The opinion of the court was delivered by: MORRIS
This is a suit for payment of treasurer's check No. 184-364, executed by defendant bank on March 5, 1954, in the amount of $ 6,000, which, when presented for payment by plaintiff on or about November 23, 1956, was dishonored by the defendant. The facts, as revealed by evidence and by stipulation of the parties, are as follows: On or about March 5, 1954, the corporate third-party defendant deposited some $ 21,000 with the defendant bank, and by its president, Ned Whitehead, individual third-party defendant, purchased the treasurer's check in question, payable to the order of Jorge L. Cordova. This payee, at a date unknown, negotiated the check by special endorsement and delivery to an attorney, Kyle C. Grainger, who was a mere agent or conduit of title, and who paid nothing for the check. Grainger, at a date unknown, negotiated the check by special endorsement and delivery to 'Harold J. Otley, County Clerk of the Superior Court of the State of California, in and for the County of Los Angeles.' The clerk paid nothing for the check, and took it to hold in escrow pending the outcome of Case No. 632-510 in the California court. At a date unknown, but subsequent to the date of the judgment of the California court, October 11, 1956, the clerk, without his endorsement, delivered said check to the plaintiff bearing the stamped endorsement 'Pay to any bank or banker, H. L. Byram, Treasurer, County of Los Angeles,' in compliance with the above mentioned judgment, which decreed:
'That the check * * * is the property of plaintiff herein, and plaintiff is entitled to the possession of said check and to the money which is represented by said check, and to the proceeds of said check when same is cashed or paid by the maker or any other person. That no other person has any right, title or interest in and to said check, or in the proceeds of said check and that said Whitehead and Company, Inc., in particular have no interest in said check when cashed, or the monies represented by said check.
'* * * that the County Clerk of the Superior Court of the County of Los Angeles, State of California, be and he hereby is hereby directed to turn over said check or the monies represented by said check to the plaintiff, Ruth Whitehead.'
The check was duly endorsed by the plaintiff and delivered for collection to the Security First National Bank of Los Angeles, which bank, on November 21, 1956, sent the check to the defendant for payment. Defendant dishonored the check and caused it to be returned unpaid and marked 'Payment Stopped.'
On July 14, 1954, Ned Whitehead represented to the defendant that the check in question had been lost. Upon his furnishing it an indemnity bond, defendant issued a 'duplicate' check, No. 187-402, bearing date of July 14, 1954, in the amount of $ 6,000, payable to Jorge Cordova (stipulated to be the same Jorge L. Cordova to whom the original check was made payable). This latter or 'duplicate' check, bearing special endorsement to Ned Whitehead by Cordova and the blank endorsement of Ned Whitehead was presented to and paid by the defendant on August 5, 1954, to Ned Whitehead. Never, after July 14, 1954, did the corporate or individual third-party defendant have funds, except in nominal amount, in the defendant bank, and after August 5, 1954, defendant had no funds on deposit by either of such third-party defendants with which to pay the check herein involved.
'A holder in due course is a holder who has taken the instrument under the following conditions:
'First. That it is complete and regular upon its face.
'Second. That he became the holder of it before it was over due, and without notice that it had been previously dishonored, if such was the fact.
'Third. That he took it in good faith and for value.
'Fourth. That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.'
'A special indorsement specifies the person to whom or to whose order the instrument is to be payable; and the indorsement of such indorsee is necessary to the further negotiation of the instrument. An indorsement in blank specifies no indorsee, and an instrument so indorsed is payable to bearer and may be negotiated by delivery.'
Applying the above quoted sections of the District of Columbia Code (1951) to the circumstances under which the plaintiff received the check, we find that the check was specially endorsed to the clerk of the California court, and without his endorsement, it could not be further negotiated. The subsequent stamped endorsement of the Los Angeles County Treasurer could only operate as a transfer of title, placing plaintiff in the position of a transferee. Section 28-320
gives the plaintiff the right to demand the endorsement of the court clerk, but for the purpose of determining whether she is a holder in due course, the negotiation thereby accomplished would ...