Section 55 of the Negotiable Instruments Act,1881.
Conversion of indorsement in blank into indorsement in full. If a negotiable instrument, after having been indorsed in blank, is indorsed in full, the amount of it cannot be claimed from the indorser in full, except by the person to whom it has been indorsed in full, or by one who derives title through such person.
The marginal note of the section has not been correctly stated. The section does not deal with the effect of conversion of an endorsement in blank into an endorsement in full but with the effect of an endorsement in blank followed by an endorsement in full. If a bill is endorsed in blank and the blank endorsement is followed by an endorsement in full, the bill is nevertheless payable to bearer as against all parties prior to the endorser in full, but as against the indorser in full the bill cannot be enforced except by his endorsee or by some one who has acquired his title through such endorsee by means of an indorsement and not by mere delivery. Thus, a bill is endorsed in blank by A to B. B endorses it in blank to C. C endorses it in full to D or order. D without endorsement delivers it to E. Now E can sue A and B but not C and D. But D instead of delivering the bill without endorsement does so with an endorsement. E can sue A,B,C,D who are all prior parties.