Business Law Today, Comprehensive 10th Edition by Roger LeRoy Miller

Exercise 13

Signature Liability. Marion makes a promissory note payable to the order of Perry. Perry indorses the note by writing "without recourse, Perry" and transfers the note for value to Steven. Steven, in need of cash, negotiates the note to Harriet by indorsing it with the words "Pay to Harriet, [signed] Steven." On the due date, Harriet presents the note to Marion for payment, only to learn that Marion has filed for bankruptcy and will have all debts (including the note) discharged in bankruptcy. Discuss fully whether Harriet can hold Marion, Perry or Steven liable on the note.