Recourse

The general mercantile law allows that when a payee or indorsee of a negotiable instrument desires to transfer his property in it, without at the same time assuming the responsibility of an indorser, he may do so by what is called a qualified or restricted indorsement. The form in common use is for him to write above the indorsement of his name the words "without recourse;" and this mode of indorsing is known as an indorsement without recourse. Such an indorsement transfers the property in the bill or note, and does not affect its negotiability in the hands of the new indorsee. The instrument passes with all its negotiable qualities.

Epler v. Funk, 8 Pa. St. 468.

But the indorsement does not expose the indorser to liability for the maker's solvency, or to respond for non-acceptance or non-payment.

Rice v. Stearns, 3 Mass. 225; Upham v. Prince, 12 Id. 14; Fitchburg Bank v. Greenwood, 2 Allen, 434.

The liability of an indorser of a note without recourse is the same as that of a transferrer by delivery merely, of a note payable to bearer; i.e., he warrants that the note is genuine, that it is of the kind or description that it purports to be, that the parties are capable of contracting, and that it has not been paid; and, where he knew that it was of no value, he may be compelled to repay the consideration that he has received for it from a bona fide purchaser not aware of the facts. But the indorsee cannot sue upon the indorsement itself: his action is for the original consideration or its value, or for the fraud practised.

Watson v. Chesire, 18 Iowa, 202.

The indorsement of a note "without recourse" transfers the whole interest to subsequent holders; yet such indorsement, with other circumstances, may tend to show that the note was not indorsed for value, so as to prevent the promisor from making the same defence in an action by the indorsee which he might make in an action by the promisee.

Richardson v. Lincoln, 5 Met. (Mass.) 201.