Mike signs a note payable to a bank.The bank indorses and negotiates the note to Fay,who then indorses and negotiates it to Sam.Sam presents the note to Mike,who dishonors it.Then Sam decides to pursue Fay and the bank on their secondary indorsers' liability.Against whom can Sam proceed?

Question

Quizplus · Accepted Answer

A person who is secondarily liable is like a guarantor on a contract;Article 3 requires a secondary party to pay the negotiable instrument only if a person who is primarily liable defaults on that obligation.

Mike Signs a Note Payable to a Bank