CO Code § 4-8-304 (2021)
2021 Colorado Code|Title 4 - Uniform Commercial Code|Article 8 - Investment Securities|Part 3 - Transfer of Certificated and Uncertificated Securities|§ 4-8-304. Indorsement

  An indorsement may be in blank or special. An indorsement in blank includes an indorsement to bearer. A special indorsement specifies to whom a security is to be transferred or who has power to transfer it. A holder may convert a blank indorsement to a special indorsement.    An indorsement purporting to be only of part of a security certificate representing units intended by the issuer to be separately transferable is effective to the extent of the indorsement.    An indorsement, whether special or in blank, does not constitute a transfer until delivery of the certificate on which it appears or, if the indorsement is on a separate document, until delivery of both the document and the certificate.    If a security certificate in registered form has been delivered to a purchaser without a necessary indorsement, the purchaser may become a protected purchaser only when the indorsement is supplied. However, against a transferor, a transfer is complete upon delivery and the purchaser has a specifically enforceable right to have any necessary indorsement supplied.    An indorsement of a security certificate in bearer form may give notice of an adverse claim to the certificate, but it does not otherwise affect a right to registration that the holder possesses.    Unless otherwise agreed, a person making an indorsement assumes only the obligations provided in section 4-8-108 and not an obligation that the security will be honored by the issuer.     History. Source: L. 96: Entire article R&RE, p. 221, § 2, effective July 1.    Editor's note:   This section is similar to former §§ 4-8-307 , 4-8-308 , 4-8-309 , and 4-8-310 as they existed prior to 1996.   OFFICIAL COMMENT   1. By virtue of the definition of indorsement in Section 8-102 and the rules of this section, the simplified method of indorsing certificated securities previously set forth in the Uniform Stock Transfer Act is continued. Although more than one special indorsement on a given security certificate is possible, the desire for dividends or interest, as the case may be, should operate to bring the certificate home for registration of transfer within a reasonable period of time. The usual form of assignment which appears on the back of a stock certificate or in a separate “power” may be filled up either in the form of an assignment, a power of attorney to transfer, or both. If it is not filled up at all but merely signed, the indorsement is in blank. If filled up either as an assignment or as a power of attorney to transfer, the indorsement is special.   2. Subsection (b) recognizes the validity of a “partial” indorsement, e.g., as to fifty shares of the one hundred represented by a single certificate. The rights of a transferee under a partial indorsement to the status of a protected purchaser are left to the case law.   3. Subsection (c) deals with the effect of an indorsement without delivery. There must be a voluntary parting with control in order to effect a valid transfer of a certificated security as between the parties. Levey v. Nason, 279 Mass. 268, 181 N.E. 193 , and National Surety Co. v. Indemnity Insurance Co. of North America, 237 App.Div. 485, 261 N.Y.S. 605 (1933). The provision in Section 10 of the Uniform Stock Transfer Act that an attempted transfer without delivery amounts to a promise to transfer is omitted. Even under that Act the effect of such a promise was left to the applicable law of contracts, and this Article by making no reference to such situations intends to achieve a similar result. With respect to delivery there is no counterpart to subsection (d) on right to compel indorsement, such as is envisaged in Johnson v. Johnson, 300 Mass. 24, 13 N.E.2d 788 (1938), where the transferee under a written assignment was given the right to compel a transfer of the certificate.   4. Subsection (d) deals with the effect of delivery without indorsement. As between the parties the transfer is made complete upon delivery, but the transferee cannot become a protected purchaser until indorsement is made. The indorsement does not operate retroactively, and notice may intervene between delivery and indorsement so as to prevent the transferee from becoming a protected purchaser. Although a purchaser taking without a necessary indorsement may be subject to claims of ownership, any issuer's defense of which the purchaser had no notice at the time of delivery will be cut off, since the provisions of this Article protect all purchasers for value without notice (Section 8-202).   The transferee's right to compel an indorsement where a security certificate has been delivered with intent to transfer is recognized in the case law. See Coats v. Guaranty Bank Trust Co., 170 La. 871, 129 So. 513 (1930). A proper indorsement is one of the requisites of transfer which a purchaser of a certificated security has a right to obtain (Section 8-307). A purchaser may not only compel an indorsement under that section but may also recover for any reasonable expense incurred by the transferor's failure to respond to the demand for an indorsement.   5. Subsection (e) deals with the significance of an indorsement on a security certificate in bearer form. The concept of indorsement applies only to registered securities. A purported indorsement of bearer paper is normally of no effect. An indorsement “for collection,” “for surrender” or the like, charges a purchaser with notice of adverse claims (Section 8-105(d)) but does not operate beyond this to interfere with any right the holder may otherwise possess to have the security registered.   6. Subsection (f) makes clear that the indorser of a security certificate does not warrant that the issuer will honor the underlying obligation. In view of the nature of investment securities and the circumstances under which they are normally transferred, a transferor cannot be held to warrant as to the issuer's actions. As a transferor the indorser, of course, remains liable for breach of the warranties set forth in this Article (Section 8-108).   Definitional Cross References:   “Bearer form”. Section 8-102(a)(2)   “Certificated security”. Section 8-102(a)(4)   “Indorsement”. Section 8-102(a)(11)   “Purchaser”. Sections 1-201(33) 8-116   “Registered form”. Section 8-102(a)(13)   “Security certificate”. Section 8-102(a)(16)   ANNOTATION   I.GENERAL CONSIDERATION.   Law reviews. For note, “Attachment of Corporate Stock Where the Method is Not Prescribed by Statute”, see 2 Rocky Mt. L. Rev. 190 (1930). For article, “When Corporate Stock Becomes Real Estate”, see 21 Dicta 53 (1944). For article, “Application of the Uniform Stock Transfer Act to Gifts of Stock”, see 20 Rocky Mt. L. Rev. 67 (1947). For article, “One Year Review of Agency, Partnerships, Corporations, and Municipal Corporations”, see 41 Den. L. Ctr. J. 61 (1964). For article, “Impact of the Uniform Commercial Code on Colorado Law”, see 42 Den. L. Ctr. J. 67 (1965).   II.TRANSFER.   Annotator's note. The following annotations include cases decided under former provisions similar to this section.   Title to corporate stock can only be transferred as provided by statute. Quandary Land Dev. Co. v. Porter, 159 Colo. 8 , 408 P.2d 978 (1965).   The statutory methods are exclusive. Brennan v. W. A. Wills, Ltd., 263 F.2d 1 (10th Cir.), cert. denied, 360 U.S. 902, 79 S. Ct. 1284, 3 L. Ed. 2d 1254 (1959); Goeddel v. Aircraft Fin., Inc., 152 Colo. 419 , 382 P.2d 812 (1963); Quandary Land Dev. Co. v. Porter, 159 Colo. 8 , 408 P.2d 978 (1965).   This section requires delivery of the certificate to effect a transfer of title. Brennan v. Korholz, 293 F.2d 751 (10th Cir. 1961).   Any attempt to transfer stock without delivery of the certificate does not have the effect of passing title, but merely constitutes a promise to transfer. Brennan v. W. A. Wills, Ltd., 263 F.2d 1 (10th Cir.), cert. denied, 360 U.S. 902, 79 S. Ct. 1284, 3 L. Ed. 2d 1254 (1959); Goeddel v. Aircraft Fin., Inc., 152 Colo. 419 , 382 P.2d 812 (1963); Quandary Land Dev. Co. v. Porter, 159 Colo. 8 , 408 P.2d 978 (1965).   Under the uniform stock transfer act, title to a certificate and to the shares represented thereby could be transferred only by (1) delivery of the certificate indorsed either in blank or to a specified person by the person appearing by the certificate to be the owner of the shares represented thereby, or by (2) delivery of the certificate and a separate document containing a written assignment of the certificate or a power of attorney to sell, assign, or transfer the same or the shares represented thereby signed by the person appearing by the certificate to be the owner of the shares represented thereby. Brennan v. W. A. Wills, Ltd., 263 F.2d 1 (10th Cir.), cert. denied, 360 U.S. 902, 79 S. Ct. 1284, 3 L. Ed. 2d 1254 (1959); Arfsten v. Higby, 150 Colo. 254 , 372 P.2d 166 (1962); Goeddel v. Aircraft Fin., Inc., 152 Colo. 419 , 382 P.2d 812 (1963).   An assignment of a shareholder's interest without delivery of the certificates operates to vest an equitable title in the assignee. Arfsten v. Higby, 150 Colo. 254 , 372 P.2d 166 (1962).   Under prior stock transfer statutes the holder of an equitable title to stock had an enforceable status, where rights of third parties were not involved. Arfsten v. Higby, 150 Colo. 254 , 372 P.2d 166 (1962).   III.ATTEMPTED TRANSFER WITHOUT DELIVERY.   Law reviews. For article, “One Year Review of Agency, Partnerships, Corporations, and Municipal Corporations”, see 41 Den. L. Ctr. J. 61 (1964).   For prior provisions making attempted transfers without delivery a matter of contract, see Brennan v. W. A. Wills, Ltd., 263 F.2d 1 (10th Cir.), cert. denied, 360 U.S. 902, 79 S. Ct. 1284, 3 L. Ed. 2d 1254 (1959); Brennan v. Korholz, 293 F.2d 751 (10th Cir. 1961); Goeddel v. Aircraft Fin., Inc., 152 Colo. 419 , 382 P.2d 812 (1963) (decided under repealed § 31-9-10 , CRS 53, uniform stock transfer act).