THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW A TREATISE ON THE LAW OF DEFENSES IN ACTIONS ON COMMERCIAL PAPER INCLUDING THE DEFENSES AT COMMON LAW AND UNDER THE NEGOTIABLE INSTRUMENTS ACTS BY JOSEPH A.JOYCE AND HOWARD C.JOYCE Authors of "Damages," "Electricity," etc. INDIANAPOLIS THE BOBBS-MERRILL COMPANY 1907 r Copyright 1907 By the BOBBS-MERRILL COMPANY THE HOLLENBECK PRESS INDIANAPOLIS V «0 PREFACE. The purpose of the authors in this work has heen to furnish a treatise on the defenses in actions upon commercial paper, including therein a]l of the common law defenses, and also those which are provided for by the Negotiable Instruments Laws. The preparation of this manuscript has necessitated the examination of many thousands of decisions, all of which has been done personally by the authors. The subjects have been arranged to present logically those de- fenses which originate with the inception of the paper, and extend down to the final action thereon, and to include those defenses which may arise subsequent to the commencement of the action. The English Bills of Exchange Act is also added, as well as the Negotiable Instruments Laws, and these are considered with reference to the latest decisions. It is believed that this book will prove a practical working tool, and a convenient handbook for the busy lawyer. Joseph A. Joyce, Howard C. Joyce. New York, September, 1907. Ill TABLE OF CONTENTS. CHAPTER I. AVAILABILITY, GENERALLY AS TO PARTIES. Sec. 1. Rule as to makers. 2. Same Subject — That transfer from payee was procured by undue influence. 3. Joint and several makers. 4. Defense of maker not available to indorser. 5. Where maker concluded by acts of agent. 6. Accommodation indorser — Rule as to. Sec. 7. In action on corporation note or indorsement. 8. Clearing-house rules — When available. 9. Guarantor — Rule as to. 10. Note indorsed in blank. 11. On note purchased from bank. 12. Obligors on bond — Rule as to where given in consideration of extension of time. CHAPTER II. EXECUTION OR DELIVERY. Sec. 13. Execution or delivery procured by force or fraud. - 14. Hon est factum — Where name signed by another. 15. Where payee signs note at foot with maker's name. 16. Signing after delivery. 17. Mistake. 18. Reliance on recitals in note. 19. As to re-^enue stamp. 20. Want of delivery. . 21. Delivery by agent in violation of instructions. or indorsement in Sec. 22. Execution blank. 23. Same subject — Application of rule. 24. Instruments payable to fictitious person. 25. Misrepresentations as to nature of instrument. 26. Same subject — Bona fide holder. 27. Same subject — Maker unable to read English. 28. Effect of negligence. 29. Instruments executed, accepted or delivered on Sunday. VI TABLE or CONTENTS. CHAPTER III. INCAPACITY AND WANT OF AUTHORITY. Subdivision I. Subdivision II. Subdivision III. Subdivision IV. Subdivision V. Subdivision VI. Coverture §§ 30-62 Infancy 63-68 Intoxication 69-79 Mental incapacity and insanity 71-72 Want of authority 73-94 To whom defense is available 95 Subdivision I. COVERTURE. Sec. Sec, 30. Coverture — Rule at common law. 45. 31.' Effect of new promise after hus- band's death. 46. 32. Rule In equity — English deci- sions. 47. 33. Same subject— United States de- 48. cisions. 49. 34. Defense of coverture as affected by statute. 50. 35. Statute does not have retroac- 51. tive effect. 36. Coverture a defense when trans- 52". action not within statutory exceptions. 53. 37. Same subject — Burden of proof —Pleading. 54. 38. Assent of husband. 55. 39. Note given for insurance premi- ums. 56. 40. Where note made by wife to hus- 57. band. 58. 41. Where wife a joint maker. 42. Where husband and wife live 59. apart — English decisions. 43. Same subject — United States de- 60. cisions — Conclusion. 61. 44. Where wife signs as surety — 62. Generally. Same subject — ^Where statute ex- pressly prohibits. Same subject — Under particular statutes. Same subject — When no defense. Same subject — Bona fide holders. Rule as to determining whether principal or surety. Liability as acceptor. Indorsement by married woman — Common-law rule. Same subject — Assent of hus- band. Same subject — Under particular statutes. Same subject — General rule. Woman in business — Sole trader, etc. Separate estate, benefit, etc. Same subject continued. Same subject continued — Note for borrowed money. Same subject continued — Inten- tion as affecting. What law governs. Who may urge. Where there is a failure to plead coverture and judgment is ren- dered. TABLE OF CONTENTS. Vll Subdivision II. INFANCY. Sec. Sec. 63. Infancy as a defense — Generally. 67. Where Infant accepts bill of ex- 64. Effect of ratification. change. 65. Note given for support of has- 68. Who may urge defense of in- tard child. fancy. 66. Note given in satisfaction of tort. Subdivision III. INTOXICATION, Sec. 69. Of maker or drawer. Sec. 70. Of indorser. Subdivision IV. MENTAL INCAPACITY AND INSANITY. Sec. 71. Of maker. Sec. 72. Of indorser or surety. Subdivision V. WANT OF AUTHORITY. Sec. 73. Unauthorized signature or in- dorsement. 74. Where unauthorized signature is ratified — Estoppel. 75. Violation of instructions by agent. 76. Unauthorized collection of note given as collateral. 77. Receipt of paper by public officer only authorized to receive cash. Sec. 78. Paper given to or transferred by administrator or executor. 79. Corporate want of authority as affected by illegality or stat- ute. 80. Want of authority of corporate officers or agents. 81. Same subject — Application of rules — Illustrations. 82. Same subject — Bank officials' acts. Vlll TABLE OF CONTENTS. Sec, 83. 84. 86. 87. Same subject — Paper issued by- public officers. Ultra vires instruments. Same subject — Corporation au- thorized to issue paper. Same subject — Application and illustration of rule. Same subject — Municipal or public corporations. Guarantee of checks beyond de- posits. Sec, 89. 90. 91. 92. 93. 94. Want of authority — Partner. Same subject continued. Same subject — Qualifications and limitations of rule. Note between partner and firm. Paper given in violation of ar- ticles of partnership. Paper executed in firm name after dissolution. Subdivision VI. Sec, 95. To whom defense is available. CHAPTEE IV. FOKGEKY. Sec. 96. General rule as to forgery. 97. Particular cases where forgery no defense. 98. Of name of maker or drawer. 99. Where drawer obligated to know signature of drawer. Sec. 100. Payment of or by forged paper — Duty as to notice. 101. In case of certified check. 102. Of name of payee. 103. By agent of owner. 104. To whom defense available. CHAPTER V. DUEESS. Sec. 105. General rule as to duress. 106. Equity may decree cancellation. 107. What does not constitute du- ress. 108. Where procured from one un- der illegal arrest or restraint. 109. By abuse of legal process. 110. Effect of threat to lawfully in- voke legal process. 111. Giving of paper indorsed by fear of violence. Sec. 112. Threatened criminal prosecu- tion and imprisonment as in- ducing. 113. Availability of as between par- ties. 114. Same subject — Against subse- quent parties. 115. Same subject — Parties with no- tice. TABLE OF CONTENTS IX CHAPTER VI. FEAUD AND FRAUDULENT KEPEESENTATIONS. Sec. 116. Rule as to fraud and fraudu- lent representations — Gener- ally. 117. What constitutes a misrepre- sentation which is a defense. 118. Fraudulent concealment. 119. As against bona fide holder — Generally. 120. Same subject— Rule illustrated. 121. Same subject — Fraud of partic- ular persons. 122. False representations as to con- sideration. 123. Same subject — Bona fide holder. 124. Certified check— Effect of fraud — Bona fide holder. Sec. 125. Paper in fraud of creditors. 126. Fraudulent procurement of in- dorsement. 127. Fraud as to amount. 128. Fraud as to surety. 129. Same subject — Bona fide hold- ers. 130. Fraudulent transfer. 131. Same subject— By partner. 132. Same subject — By adminis- trator. 133. Availability of defense- Maker. 134. Same subject— Other parties. CHAPTER VII. ALTERATIONS OF PAPER. Subdivision I. General rules §§ 135-150 Subdivision II. Particular alterations §§ 151-182 Subdivision I. GENERAL RULES. Sec. 135. Availability of alterations as a defense generally. 136. Rule as to hona fide holders. 137. Immaterial alterations. 138. Alteration by co-m a k e r or drawer. 139. Alteration by maker without surety's consent. 140. Alteration by payee or subse- quent holder — Effect on rights of surety. Sec. 141. Alteration by agent of holder. 142. Alteration by third party. 143. Alteration by mistake or acci- dent. 144. Filling in blanks — Instrument incomplete — Rule as to. 145. Same subject — Application of rule. 146. Same subject— Where instru- ment complete. TABLE OF CONTENTS. Sec. 147. 148. Defense to action on original consideration or debt. Alteration not fraudulent — To make paper conform to orig- inal agreement — May recover on original consideration. Sec. 149. Effect of consent or ratification, 150. Same subject — "What consti- tutes. Subdivision II. PARTICULAR ALTERATIONS. Sec. 151. 152. 153. 154. 155. 156. 157. 158. 159. 160. 161. 162. 163. 164. 165. 166. Sec. Alteration of number. 168. Alteration of date. 169. Same subject — To conform to 170. actual date. 171. Alteration of time of payment. Same subject — Application of 172. rule. Alteration in statement as to 173. consideration. Alteration of form of promise. 174. Alteration of name of payee. Same subject — To correct mis- 175. take. Alteration as to negotiable 176. words. Substitution or addition of 177. words "or order" — "Or bearer." 178. Alteration of place of payment. 179. Same subject — By agent before delivery. 180. Designation of place of pay- 181. ment where none specified. Alteration of amount. 182. Same subject — Where there are marginal figures. 167. Alteration of interest clause. Same subject — Rate of interest. Addition of an interest clause. Alteration of conditions or stip- ulations. Erasure or alteration of mak- er's signature. Same subject — When alteration not a defense. Rule where signatures are add- ed. Same subject — When not a de- fense. Alteration or destruction of seal. Alteration, erasure or addition of names of witnesses. Stamping of note. Addition or erasure of memo- randa. Alteration of indorsement. Erasure or alteration of name of surety. Addition of name as surety or guarantor. Alteration in medium of pay- ment. TABLE OF CONTENTS. XI Sec. CHAPTER VIII. CONSIDERATION GENERALLY. Sec. i 183. Presumption as to considera- 156. "Value received" — Considera- tion — Rules. tion not expressed — Rebut- 184. Showing real consideration — ting presumption. Rebutting presumption as to 187. Showing real consideration — consideration. To what parties rule applies. 185. Same subject — Matters dehors contract. CHAPTER IX. ADEQUACY OR SUFFICIENCY OF CONSIDERATION. Sec. 188. Inadequate or insufficient con- sideration distinguished from want or failure of considera- tion. 189. Sufficient if consideration is a benefit or injury. 190. Distinction between valuable consideration other than money and a money consid- eration. 191. Slight consideration — Purchas- ing paper at undervalue. Sec. 192. Adequacy in value unnecessary. 193. Inadequacy or insufficiency of consideration — Rule as to in- quiry into — Fraud. 194. Sufficient consideration — Illus- trations. 195. Compromise, settlement or re- linquishment note. 196. Same subject — Unfounded or il- legal claim. 197. Compromise of forgery claim. CHAPTER X. WANT OR FAILURE OF CONSIDERATION. Sec. 198. Total want of consideration — Defense between original or immediate parties. 199. Upon acceptance — Between ac- ceptor and other parties — "Want of consideration. Sec. 200. Indorser and indorsee as im- mediate parties — W ant of consideration. 201. Partial want of consideration. 202. Total failure of consideration — Defense between original or immediate parties. Xll TABLE OF CONTENTS. Sec. Sec. 203. Upon acceptance — Between ac- 220. ceptor and other parties — Failure of consideration. 204. Indorser and indorsee as im- mediate parties — Failure of 221. consideration. 205. Consideration acknowledged — 222. Failure of consideration. 206. Non-negotiable paper made at 223. request of another — Failure of consideration. 224. 207. Partial failure of consideration — Defense — Between original 225. parties. 208. Same subject— Review of de- 226. cisions. 209. Where number of notes are given — Partial failure of con- 227. sideration. 210. Rescinding contract and restor- 228. ing consideration — General rule. 229. 211. Same subject — Exceptions to and qualifications of rule. 212. As to guarantors. 230. 213. As to sureties. 231. 214. As to donor and donee. 232. 215. As to donor and donee — Nego- tiable check on bank. 216. Joint and joint and several 233. notes. 217. Notes under seal. 234. 218. Notes under seal — Gratuitous 235. promise to pay. 219. Renewal notes generally. Renewal notes — Waiver by principal precluding defense of failure of consideration — Surety's defense. Renewal notes — Implied or ex- pressed consideration. Renewal notes — Consideration for original paper. Renewal notes — Discount be- fore maturity. Notes or checks given for other notes or bills purchased. Drafts accepted to extinguish other drafts. When only part of considera- tion is good — Action by payee. Defense to one note in action on another. Note given for political assess- ments. Where paper sued on is impos- sible to perform in reason- able time. As to agents. As to trustees or committees. As to holders of municipal war- rants and coupons attached to bonds. Third persons as holders of notes. Note of third person. Note given to promote peace be- tween husband and wife — Note of stranger. CHAPTEE XI. WANT OR FAILURE OF CONSIDERATION CONTINUED. Sec. 236. 237. 238. Assignees — Consideration of as- signment. Assignees — Want or failure of consideration. Bona fide indorsees or holders —Rule, Sec. 239. Transfer after maturity. 240. Rule as to payment of value; its basis and qualifications — Bona fide indorsees or hold- ers. TABLE OF CONTENTS. Xlll Sec. Sec. 241. Rule as to value continued — 260. Payment of pre-existing debt — Bona fide indorsees or hold- 261. ers. 262. 242. Same subject — Decisions contra or qualifications. 263. 243. Bank s — Distinctions between crediting amount- of note on 264. undrawn deposit and credit on pre-existing indebtedness 265. — Bona fide holder. 244. Parting with value — Surrender 266. by creditor of debtor's own not e — Receiving negotiable note of third person. 267. 245. Joint note of husband and wife — Outlawed debt of husband — Indorsee for past indebted- ness — Indorsement by presi- 268. dent payee to bank. 246. Rule as to value — Collateral se- curity for pre-existing debt — 269. Bona fide indorsees or hold- ers. 247. Same subject — Particular deci- 270. sions. 248. Same subject — Specific excep- 271. tions. 249. Security for pre-existing debt — 272. Additional consideration. 250. Intermediary party — H older 273. from bona fide holder. 274. 251. Paper issued by corporation — Bona fide holder. 275. 252. Want or failure of considera- 276. tion subsequent to transfer — 277. Bona fide holder. 253. Suit in name of original party 278. — Bona fide holder. 254. Lex Fori. 279. 255. Indorsement for transfer mere- ly or to pass title. 256. Same subject — Instances. 280. 257. Purchase-price notes — Original I>arties. 281. 258. Same subject — acceptor. 259. Same subject — Guarantors. Same subject — Bona fide holder or assignee. Effect of judgment — Assignees. Purchase-price notes — Property useless or of no value. Vendor or seller without title — Loss of title. Purchase-price notes — Land — Warranty. Purchase-price notes — Personal property — Warranty. Where property for which note given is of some value — No failure of consideration. Rights of holder where prior indorsee held note as collat- eral security and for continu- ing credit — Lien. Purchase-price notes — In- stances in general of want or failure of consideration. Accommodation paper — Consid- eration as between original or immediate parties. Bona fide holders — Assignees — Notice or knowledge. Same subject — Particular deci- sions. Accommodation acceptor — Gen- eral rules and illustrations. Same subject — Continued. Same subject continued — Ex- ceptions and qualifications. Bill payable to order. Taking before acceptance. Accommodation p a p e r — Con- flict of laws— Acceptance. Accommodation check — B a n k check. Accommodation indorsers — Availability of defenses- General rule. Same subject — Application of rule. Same subject — Qualifications of and exceptions to rule. XIV TABLE OF CONTENTS. Sec. Sec. 282. Bona fide holder — Accommoda- 285. tion paper taken after matur- ity — Want of consideration. 286. 283. Accommodation of other par- ties in general. 287. 284. Payment of pre-existing debt — Bona fide holder against ac- commodation maker. Same subject — Particular rul- ings and opinions. Same subject — Bona fide in- dorsee against indorser. Same subject — Drafts and bills — Payee — Accommodation ac- ceptor. CHAPTEE XII. ILLEGAL OR IMMORAL CONSIDERATION. Sec 288. Illegal consideration — Original parties — Bona fide holders. 289. Same subject — Exceptions and qualifications — Notice — Knowledge — Fraud, etc. 290. Illegal considerations — Effect on surety. 291. Paper given for consideration in violation of statute. 292. Same subject. 293. Where constitution and laws violated — Enemy aided. 294. Illegal sales. Sec. 295. Compounding criminal acts. 296. Where consideration is money or property won at gambling device. 297. Same subject — Statutory pro- hibitions. 298. Same subject — Qualifications of rule — Other instances. 299. Illegal and immoral considera- tions. 300. Same subject — Decisions. 301. Same subject — Decisions con- tinued. CHAPTER XIII. USURY. Sec. Sec. 302. Usury — Generally. 304. Maker and transferee — Dis- 303. Bona fide holders— Paper based count and transfer. on usurious contract between 305. Renewal bill or note — Exten- original parties. sions. 306. Corporations. TABLE OF CONTENTS. XT CHAPTEK XIV. EFFECT OF CONDITIONS OR AGREEMENTS. Sec. Sec. 307. Collateral conditions or agree- 327. ments — General rules. 308. Same subject— Illustrations. 328. 309. Evidence explanatory of con- tract. 329. 310. When note and contempora- neous agreement are mutual 330. and dependent. 331. 311. Conditions precedent — Gener- 332. ally. 333. 312. Conditional delivery — Maker to payee — Effect of. 334. 313. Same subject continued — Appli- 335. cation of rule. 314. Same subject — Effect upon 336. third parties — Bona fide hold- ers. 337. 315. Condition that other signatures 338. be procured. 316. Same subject continued. 317. Delivery in escrow. 339. 318. Same subject — Payee without 340. notice. 319. Same subject — W h e re paper 341. taken as security for ante- cedent debt. 320. That instrument is to be void 342. or payable on contingency. 321. Same subject — Happening of 343. contingency prevented by act 344. of maker. 345. 322. Conditions affecting considera- tion. 346, 323. Same subject — Application of rule generally. 324. Same subject — When not a de- 347. fense. 348. 325. Same s u b j e c t — Performance prevented by maker — non- 349. performance prevented by maker. 350. 326. Same subject — Agreement not to do certain acts. Same subject — Purchase-price notes. Same subject — Purchase-price notes — Subsequent holder. Same subject — Agreement to render services or labor. Note not to be negotiated. As to place of payment. As to amount. As to mode or manner of pay- ment. Same subject continued. Same subject — Note to admin- istrator. Executed agreement as a de- fense. Agreements not to sue. Same subject — Where simulta- neous or subsequent and for a limited time. As to time of payment. Subsequent agreements extend- ing time. Same subject — What essential to render such an agreement a defense. Agreements to release from or limit liability. Effect of conditions in note. Same subject continued. Same subject — Substantial per- formance of condition. Same subject — Condition that contract be completed to ac- ceptance of agent. Conditional acceptance. Conditional or restricted in- dorsement. Indorsement of condition to en- force which would be illegal. Waiver of conditions. XVI TABLE OF CONTEXTS. CHAPTER XV. COLLATERAL SECURITY. Sec. - Sec. 351. Original patries. 367. 352. Surety — Guaranty — Indemnity. 353. Accommodation paper — Maker 368. — Bona fide holder. 354. Accommodation paper — In- dorser — Bona fide holder. 355. Bills — Accommodation acceptor. 369. 356. Form of assignment, when im- material — Bona fide holder. 357. When note not collateral se- 370. curity but independent obli- gation. 358. Note payable to order, assigned 371. but not indorsed. 359. Contemporaneous or future 372. loans — Advances — Bona fide holder. 373. 360. Same subject — Instances. 361. Agreements and conditions. 362. Same subject. 374. 363. Security for the performance of illegal contract. 375. 364. Note secured by mortgage — • Mortgagee against maker — Surety. 376. 365. Note secured by mortgage or other instrument — Bona fide Zll. holder — Pledgee. 366. Same subject. 378. Same subject — Knowledge or notice. Transferee of note and mort- gage — Payment of or collat- eral security for pre-existing debt. Receiving or surrendering col- lateral — Exhausting collat- eral. Paper given or indorsed for specific purpose — Principal and agent. Defense subsequent to indorse- ment — Bona fide holders. Transferee after maturity — Pledgee. Pledgor and pledgee — Laches, negligence or tortious acts — Statute of limitations. Priority of transfer — Different notes. Renewals — Continuance of se- curity — Extinguishment of debt. Extent of recovery — Bona fide holders. Same subject — Collateral for pre-existing debt. Same subject — Accommodation paper. CHAPTER XYI. DIVERSION AND FRAUDULENT TRANSFER. Sec. 379. 380. As a defense generally. Where paper is taken in ordi- nary course of business — Bona fide holders. Sec. 381. Same subject — Evidence — Bur- den of proof. 382. Same subject — Transfer in vio- lation of statute. TABLE OF CONTEXTS. XVH Sec. 383. 384. 385. 386. 387. Accommodation paper — Bona fide holders. Same subject continued. Accommodation paper — Other holders. Accommodation paper — Where purpose substantially effected or no restrictions imposed. Negotiation of accommodation paper to party not contem- plated. Sec. 388. Same subject — Paper to be dis- counted at a particular bank. 389. Paper to be discounted at par- ticular bank continued — Rule illustrated. 390. Where transferred or applied as security for an antecedent debt. 391. Same subject continued. 392. Diversion of proceeds of paper. 393. Effect of waiver. CHAPTER XVII. LOST OR STOLEN INSTRUMENTS. Sec. 394. Lost or stolen instruments — ■ General rules and principles. 395. Same subject — Application of rule. 396. Statutory provision as to holder in due course construed. 397. Non-negotiable paper. Sec. 398. Bank and treasury notes. 399. City or county certificates — Stolen after cancellation. 400. Action under statute by owner of lost instruments. 401. Evidence — Burden of proof. CHAPTER XYIII. WANT or TITLE OR INTEREST. Sec 402, 403. Possession as evidence of title. Right of holder or owner to sue — Real party in interest. 404. Right to recover generally — Legal and equitable title. 405. Payees. 406. Indorsee against indorser. 407. Assignee. 408. Agency. 409. Recovery for benefit of holder — Beneficial interest. Sec. 410. Transfer of title or interest after suit commenced. 411. Character of title or interest. 412. Void or voidable title or trans- fer. 413. Checks. 414. Bill of lading. 415. To protect maker or let in his defense. , 416. Same subject. 417. Denial of ownership or title. 418. Same subject. Joyce Defenses — ii XVlll TABLE OF CONTENTS. CHAPTER XIX. PURCHASERS AFTER MATURITY. Sec. 419. 420. 421. 422. 423. 424. 425. 426. 427. 428. 429. General rule. Same subject continued. Application of rule — Generally. Application of rule continued — Set-off and recoupment. Where series of notes mature on failure to pay any one. Where payable on default in payment of interest. Application to particular paper. Same subject — Coupon bonds. Certificate of deposit. Where transferred before but not indorsed until after ma- turity. Non-negotiable note. Sec. 430. Effect of statute providing that suit by assignee shall be without prejudice. 431. Limitations of rule — In gen- eral. 432. Pro tanto recovery. 433. Purchaser from bona fide holder — General rule. 434. Same subject — Application of rule. 435. Demand paper. 436. Defenses and equities between maker and indorsee or inter- mediate holder. 437. Secret equity in favor of entire stranger. CHAPTEE XX. BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. Sec. 438. Bona fide holders — Preliminary statement. 439. Bona fide holders — Rule. 440. Essentials of rule. 441. Exceptions to and qualifications of rule — Generally. 442. Bona fide holder generally — Decisions. 443. Certified bank checks — Dis- counting paper. 444. Notes under seal. 445. Equities generally. 446. Holder, transferee or assignee — Non-negotiable paper — Equities and defenses. 447.' Defenses against assignees. 448. Assignee — Equities — Construc- tion and essentials of rule — Generally. Sec. 449. Assignee — Negation and quali- fications of rule. 450. Assignee of void note — For- bearance to sue. 451. So-called assignments — Not subject to equities. 452. Assignment by parol — Suit in own name — Equities. 453. Suit for use or benefit of as- signee. 454. Subsequent defenses and equi- ties. 455. Note payable to order or bearer. 456. Transferee without indorse- ment. 457. Agents and trustees. 458. Agent's unauthorized acts. 459. Corporate certificates of indebt- edness issued in restraint of trade — Anti-trust law. TABLE OF COXTEXTS. XIX Sec. 460. Guarantor — Guaranty. 461. Same subject. 462. Pledge of note by holder — Pledgee's rights. 463. Note payable to order or bearer. Sec. 464. Under statutes and codes — No- tice or knowledge — Bad faith. 465. Same subject. 466. Joint and several notes. CHAPTER XXL BONA FIDE HOLDERS AXD EIGHTS OX TRAXSFER COXTINUED. Sec. 467. Overdue paper. 468. Overdue paper — Default in pay- ment of interest. 469. Overdue paper — Demand notes. 470. Delivery of paper to imposter or wrong party — Liability to drawee or bona fide holder. 471. Application by bank of pro- ceeds to credit of depositor. 472. Notice or knowledge — Gener- ally. 473. Notice or knowledge — Con- tinued. . 474. Notice or knowledge — Matters apparent from the paper it- self. 475. Notice or knowledge — Sus- picious circumstances — Gross negligence — Bad faith. 476. Same subject — Decisions. Sec. 477. 478. 479. 480. 481. 482. 483. 484. 485. 486. 487. 489. Same subject — Rule in Ver- mont. Indorsement subsequent to no- tice. Notice — Fraud. Notice — Fraudulent alteration. Erasures — Forgery — Notice — Negligence — Recovery. Knowledge — Purchaser of mar- ried woman's note. Notice — Accommodation paper. Notice — Notes of a series. Notice — Corporation — Agency. Same subject. Corporation indorsement — Ac- commodation paper. Notice — Purchaser of bonds. Transferee of bona fide holder — Notice. CHAPTER XXII. WANT OF PRESENTMENT — PRESENTMENT FOR ACCEPTANCE. Sec. 490. 491. When presentment must be made — Fixing maturity of instrument. Agreement as to acceptance or presentment — Want of funds — Promise to accept. Sec. 492. Acceptance not refused — Time desired — Want of funds. 493. Presentment after refusal to accept. 494. When presentment unneces- sary. XX TABLE OF CONTEXTS. Sec. 495. Effect of presentment made un- necessarily — Presentment be- fore due. 496. Release of drawer and indorser — Presentment or negotiation in reasonable time. Sec. 497. Presentment how made — By whom. 498. Same subject — Time and place. 499. Same subject — To whom. 500. Acceptance of order on commit- tee. 501. Where presentment is excused. CHAPTER XXIII. WANT OF PRESENTMENT CONTINUED PRESENTMENT FOR PAYMENT. Sec. Sec. 502. Want of demand on principal 512. debtor — When presentment necessary to charge drawer 513. and indorsers. 503. Same subject continued — Agent —^Acceptor — Instances. 514. 504. Sureties and guarantors — Par- 515. ties primarily liable — De- 516. mand. 505. Time of presentment where 517. note is not and is payable on 518. demand^Reasonable time. 506. Same subject continued. 507. Same subject — Notes payable 519. with or without interest. 508. Demand note and demand note 520. bearing interest, distinctions abrogated by statute — Pre- sentment — Reasonable time 521. — Question of law or fact — Pleading — Burden of proof. 522. 509. Time of maturity — Sunday or holiday — Saturday. 510. Same subject continued. 523. 511. Sufficiency of presentment — 524. By whom made — Time when made. 525. Sufficiency of demand — Bring- ing suit. Sufficiency of presentment — Ex- hibition and delivery up of instrument. Place of presentment. Same subject continued. Presentment — Instrument pay- able at bank. Same subject continued. Same subject continued — In- solvency or suspension of bank. Presentment to whom — Person primarily liable dead. Same subject — Persons prima- rily Uable — Partners — Joint debtors. Excuses for delay in present- ment. Excuses — When presentment dispensed with — Drawer — In- dorser. Same subject continued. Waiver of presentment and de- mand. Same subject continued. TABLE OF COXTEXTS. 2X1 CHAPTER XXIV. PEOTEST AND WANT OF PROTEST. Sec. 526. Protest defined. 527. In what cases protest necessary. 528. In what cases protest unnecesr sary. 529. Same subject continued. 530. How made — Form, contents and sufficiency of. 531. Same subject— Signature. 532. Same subject — Instances — Cer- tificate. 533. By whom made. 534. When to be made. 535. Where made. Sec, 536. When protest dispensed with — Excuses. 537. Waiver of protest generally. 538. Same subject continued. 539. Same subject continued — What is included. 540. Same subject continued — Deci- sions. 541. Same subject — Parties. 542. Certificate of protest — Evi- dence. 543. Same subject. CHAPTER XXV. WANT OF NOTICE OF PROTEST AND DISHONOR. Sec. 544. To whom notice of dishonor must be given — Discharge of drawer or indorser. 545. Same subject. 546. Notice to all other parties. — Necessary after non-accept- ance at holder's election, not- withstanding subsequent ac- ceptance. 547. To whom notice may be given. 548. Same subject — Notice of pro- test. 549. By whom given. 550. Effect of notice given on be- half of holder or by party en- titled to give notice. 551. When notice sufficient — Form of notice — Notice personally or by mail. 552. Form, contents and sufficiency of notice, continued. Sec. 553. Manner or mode — Oral, written, and personal notice. 554. Same subject — Notice by mail. 555. Same subject — Sufficiency of address and mailing. 556. Same subject — What is includ- ed in the term mailing. 557. Same subject — Mailing notice — • Usage or custom. 558. Same subject — Mailing notice — When sufficient and insuffi- cient — Instances. 559. To whom notice given — Where party dead. 560. Notice to partners. 561. Notice to persons jointly liable, 562. Notice to bankrupt. 563. Time within which notice must be given. 564. Same subject continued — Dili- gence — Reasonable time. XXll TABLE OF CONTENTS, Sec. 565. Same subject continued — Where parties reside in same place. 566. Same subject continued — Where parties reside in dif- ferent places. 567. Time of notice — Subsequent and antecedent parties. 568. Same subject — Notice received on Saturday — Form of notice sent by last indorser — Plead- ing. Sec. 569. 570. 571. 572. 573, Where notice must be sent. When notice is dispensed with — Drawer — Indorser — Ex- cuses. Same subject. Delay in giving notice — Ex- cuses — Circumstances beyond holder's control. Waiver of notice. CHAPTER XXVI. CHECKS. Sec 574. Presentment — Reasonable time — Diligence. 575. Same subject continued. 576. Same subject continued — Mail — Collection through bank. 577. When presentment is made. 578. Substituted check — Present- ment — Want of diligence. 579. Substituted presentment by copy or description. 580. Substituted checks — Local cus- tom of banks. 581. Effect of certification — Opera- tion of check as assignment or lien. Sec 582. Necessary that drawer sustain actual loss or injury from laches in presentment. Where drawee becomes insol- vent or bankrupt — Collection through bank, 584. Surety. 585. Indorser. Reasonable expectation that check will be honored — Want of funds. Protest. Notice of non-payment. 589. Waiver of presentment for pay- ment. 583. 586. 587. 588. CHAPTER XXYII. SET-OFF, RECOUPMENT AND COUNTERCLAIM. Subdivision I, General rules as to. Subdivision II. Availability in respect to particular parties and holders other than maker or drawer. Subdivision I. GENERAL RULES AS TO, Sec. 590. What law governs. 591. What essential to allowance of a set-off. Sec. 592. Right to set off — Must have been acquired prior to com- mencement of suit. TABLE OF CONTENTS. XXlll Sec. Sec. 593. Where claim or demand ac- 604. quired subsequent to trans^ 605. fer. 594. Where claimed set-off was ac- 606. quired after notice of assign- 607. ment. 595. A mere contingent liability is 608. not available. 596. What may be set off generally 609. — Particular claims or de- mands. 610. 597. Set-off of damages recoverable in an action of tort. 611. 598. Same subject continued — Ap- plication of rule. 612. 599. Damages arising ex contractu 613. and under same contract. 600. Damages arising ex contractu 614. but under different contract. 601. Damages for breach of war- 615. ranty or covenant. 602. Same subject — In action by an 616. innocent holder. 603. Money paid to clear land of in- 617. cumbrance. Of bank deposits — Rule as to. In action by depositor to re- cover bank deposit. Of bill or note. Same subject — Essentials to availability. Same subject — Essentials to availability continued. Same subject — Where a fraud on plaintiff. Same subject — As affected by statutes or laches. Same subject — Want of title to notes will preclude. Of bills or notes of bank. Where collateral has been given. Usurious interest — Rule as to recoupment of. Same subject — Right as affect- ed by federal statutes. Right of set-off generally as af- fected by statutes. Waiver of right to set off. Subdivision II. AVAILABILITY IN" RESPECT TO PARTICULAR PARTIES AND HOLDERS OTHER THAN MAKER OR DRAWER. . Sec. 618. Availability in respect to par- ties generally. 619. Acceptor. 620. Administrators and executors. 621. Agents and brokers. 622. Same subject — Collecting banks. 623. Assignees and indorsees — What available generally. 624. Same subject — What available generally continued. 625. Same subject — Statute as to set- off against indorsees. 626. Bankrupts and insolvents. 627. Bona fide purchasers — General rule as to. Sec. 628. Husband and wife. 629. Joint creditors and debtors. 630. Same subject — Where party sues in his sole right — Set- off of joint liability. 631. Same subject — Right as affect- ed by statute. 632. Same subject — Principal and surety. 633. Same subject — Joint and sev- eral note. 634. Partners. 635. Purchasers after maturity. 636. Same subject continued. XXIV TABLE OF CONTENTS. Sec. 637. Same subject— Set-off arising out of other transactions. 638. State — No right of set-off against. Sec. 639. Sureties. 640. Same subject — Set-off of ages due to principal. dam- CHAPTER XXVIII. WAIVER AND ESTOPPEL. Sec. 641. 642. 643. 644. 645. 646. 647. 648. 649. 650. 651. 652. 653. 654. 655. 656. 657. 658. 659. 660, Sec. By acceptance — Generally. 661. Same subject — Certification by 662. bank of check. 663. Same subject — Payment by bank of check. 664. By signature and execution. 665. By indorsement. 666. By recitals. Recitals in bonds. By bill or note. 667. By giving of new note. By new promise. 668. By new promise — Limitations of rule. By giving paper to cover short- 669. age in accounts or to deceive state officials. 670. By representations in connec- tion with transfer — What 671. operates as an estoppel. By representations in connec- 672. tion with transfer continued — When an estoppel does not arise. 673. Effect of representations subse- quent to transfer. 674. By admission or declaration. Same subject continued. 675. By admissions or declarations continued. 676. By acts, conduct or words. 677. Same subject — Corporate trans- actions. By laches. By retaining consideration. By another action or proceed- ing. As to consideration in general. Where consideration illegal. Signing for accommodation — Want or failure of considera- tion. By receipt of benefits — Failure of consideration. By conduct, representation or promise — Want or failure of consideration. By knowledge or notice — Want or failure of consideration. As to capacity and authority generally. Same subject — Corporate trans- actions. Same subject continued — Act of public or corporate official in violation of statute. As to forgery and alteration — In general. Same subject — By admission of signature. Same subject — Failure to give notice of forgery. Same subject — As to checks. As to statute of limitations.' TABLE OF COXTEXTS. XXV CHAPTER XXIX. DISOHARGB. Sec. 678. What constitutes a discharge — Under statute. 679. Same subject — Maker. 680. Discharge of surety. 681. Discharge of guarantor. 682. Mortgage security. 683. Sale or surrender of collateral, or satisfaction of debt. 684. Agreement and condition — De- cisions generally. 685. Same subject. 686. Payment by note or check of or by order on third person — Accord and satisfaction. 687. By payment of other indebted- ness. 688. By bill, note or check — Substi- tuted note — Renewal note. 689. By stock or bonds. 690. By conveyance of land or agreement to take deed. Sec. 691. By assignment, transfer or sur- render of property. 692. Siirrender of valid notes for forged notes. 693. By work, labor or services per- formed or rendered. 694. Tender of payment. 695. Indorsements of payments — Receipts — Cancellation. 696. Whether a purchase or pay- ment. 697. Payment — By whom. 698. Same subject — To whom. 699. Same subject. 700. Renunciation by holder. 701. Right of party who discharges instrument. 702. Discharge — Miscellaneous deci- sions. APPENDIX. Negotiable Instrument Law of New York pp. 857- 901 Bills of Exchange Act PP- 902- 939 Index pp. 941-1091 TABLE OF CASES. [References are to Sections.'] Abat V. Gormley, 3 La. 238, 439 Abbe V. Newton, 12 Conn. 20, 193 V. Root, 6 McLean (U. S.) 106. 143 Abbott V. Bailey, 213 Mass. (6 Pick.) 89, 43 V. Muir, 5 Ind. 444, 658 V. Rose, 62 Me. 194, 22, 144, 145 V. Winchester, 105 Mass. 115, 51 Abel V. Burgett, 3 Blackf. (Ind.) 502, 2^8 Abernathy & Pinegar v. Myer Bridges Coffee & Spice Co. (Ky. C. A. 1907), 100 S. W. 862, 598 Aborn v. Pardon Bosworth, 1 R. L 401, 527 Abraham v. Mitchell, 112 Pa. St. 320, 283 Abrams v. Bank, 31 La. Ann. 61, 138 Ackland v. Pearce, 2 Camp. 599, 303 Acme Co. v. Erne, 83 Kan. 858, 257 Acme Harvest Co. v. Butterfield, 12 S. D. 91, 163 Adair v. England, 58 Iowa 314, 162 Adams v Adams, 25 Minn. 72, 288 V. Adams, 91 N. Y. 381, 288 V. Ashman, 203 Pa. St. 536, 116 V. Blancan, 6 Rob. (N. Y.) 334, 307 V. Blethen, 66 Mo. 19, 451 V. Curry, 15 La. Ann. 485, 213 V. De Frehn, 27 Pa. Super. Ct. 184, 680 V. Faircloth (Tex. Civ. App. 1906), 97 S. W. 507, 135, 140, 158 V. Johnson, 11 Ky. L. Rep. 137, 329 V. Leland, 30 N. Y. 309, 514 V. McGrew, 2 Ala. 675, 608 V. Nelson, 22 U. C. Q. B. 199, 682 V. Otterback, 15 How. (U. S.) 539, 534 V. Robinson, 69 Ga. 627, 320, 449 V, Rowan, 8 Smedes & M. 624, 289 V. Smith, 35 Me. 324, 314 Adams v. Wilson, 12 Mete. (Mass.) 138, 320 V. Woodbridge, 3 Scam. (111.) 255, 296 Adams Bank v. Jones, 16 Pick. (Mass.) 574, 389 Adle V. Metoyer, 1 La. Ann. 254, ■ 271, 340 Adler v. Broadway Bank, 30 Misc. (N. Y.) 382, 73 Aebi V. Bank of Evansville, 124 Wis. 73, 525, 579, 585 Aeby v. Rapelye, 1 Hill (N. Y.) 9, 302, 303 ^tna Nat. Bank v. Fourth Nat. Bank, 46 N. Y. 82, 243, 581 V. Winchester, 43 Conn. 391, 135, 165 Agaman Nat. Bank v. Downing, 169 Mass. 297, 688 Agee V. Smith, 7 Wash. 471, 503, 545 Agnew V. Alden, 84 Ala. 502, 208 V. Bank. 2 Har. & G. 478, 511 Agra & Masterman's Bank, In re, L. R. 2 Ch. App. 391, 627 Ahern v. Goodspeed, 9 Hun (N. Y.) 263, aff'd 72 N. Y. 108, 653 Aikens v. Wilson, 7 Idaho 12, 690 Ainsworth v. Ainsworth, 24 Miss. 145, 419 Akers v. Demond, 103 Mass. 318, 302 Akin V. Jones, 93 Tenn. 353, 581 Akshire v. Corey, 113 Ind. 484, 630 Alabama National Bank v. Hal- sey, 109 Ala. 196. 119, 122, 288 V. Parker & Co., 40 So. 987, 291 V. Rivers, 116 Ala. 1, 525, 536, 537, 538, 573 Albany County Bank v. People's Co-operative Ice Co., 92 App. Div. (N. Y.) 47, 243 Albany Trust Co. v. Frothing- ham, 99 N. Y. Supp. 343. 555, 564, 570 Albee v. Little. 5 N. H. 277, 617 Albertson v. Halloway, 16 Ga. 377, 216 XXVll XXVlll TABLE OF CASES. [References are to Sections.'] Albertson v. Laughlin, 173 Pa. St. 525, 288 Albietz V. Hellon, 37 Pa. St. 367, 121 Alcock V. Alcock, 3 Man. & G. 268, 72 Alden v. Parkhill, 18 Vt. 205, 465 Alderson v. Langdale, 3 Barn. & Ad. 660, 147, 154 Aldine Mfg. Co. v. Warner, 96 Ga. 370, 570 Aldous V. Cornwall, L. R. 3 Q. B. 573, 155 Aldrich v. Campbell, 4 Gray (Mass.) 284, 592 V. Grimes, 10 N. H. 194, 64 V. Smith, 37 Mich. 468, 135, 158 V. Stockwell, 91 Mass. 45, 262, 265, 460 Alexander v. Birchfield, 1 Car. & Marsh. 75, 576 V. Bouton, 55 Cal. 14, 34 V. Mackenzie, 6 C. B. 766, 75 V. Parsons, 3 Lans. 333, 507 V. Pierce, 10 N. H. 494, 112 V. Wilkes, 11 Lea (Tenn.) 221, 312, 315 Alexander & Co. v. Springfield Bank, 2 Mete. 534, 355 Alexandria Sav. Bank v. Mc- Veigh, 84 Va. 41, 569 Alfred v. Watkins, 1 Code R. N. S. 343, 4 V. Watkins, 1 Edm. Sel. Cas. (N. Y.) 369, 4 Allaire v. Hartshorne, 21 N. J. Law 665, 241, 369, 376 Allan V. Eldred, 50 Wis. 132, 496 Alleman v. Wheeler, 101 Ind. 141, 645 Allen V. Bank, 127 Pa. St. 51, 125 V. Bank of United States, 20 N. J. L. 620, 208 V. Brown, 44 N. Y. 228, 418 V. Chambers, 13 Wash. 327, 238 V. Deming, 14 N. H. 133, 29 V. Dunn (Neb.), 99 N. W. 680, 302, 366, 367 V. Freedman's Savings & Trust Co., 14 Fla. 418, 670, 671 V. Furbish, 4 Gray (Mass.) 504, 324, 328 V. Johnson, 13 Pa. Co. Ct. 218, 57 V. Kemble, 6 Moore • P. C. 314, 639 T. Kimball, 23 Pick. (Mass.) 473, 338 y. Long, 19 Ky. Law Rep. 488, 57 V. McCreary, 101 Ala. 514, 232 Allen V. McFadden, 20 N. Y. Supp. 360, 294 V. Newberry, 8 Clarke (Iowa) 65, 410 V. O'Donald, 28 Fed. 17, 341 V. Pearce, 84 Ga. 606, 291 V. Rightmere, 20 Johns. 365, 504 V. Shackleton, 15 Ohio St. 145, 601 V. Suydam, 20 Wend. 321, 496 V. Thompson, 22 Ky. Law Rep. 164, 342 V. West Point Min. & M. Co., 132 Ala. 292, 80, 86 V. Woodard, 125 Mass. 400, 390 Aller V. Aller, 40 N. J. L. 446, 218 Allison V. Barrett, 16 Iowa 278, 472 Allum V. Perry, 68 Me. 232, 654 Alpena National Bank v. Green- baum, 80 Mich. 1, 126 Alsop V. Todd, 2 Root (Conn.) 109, 64 Altoona Second National Bank V. Dunn, 151 Pa. St. 228, 246 American Bank v. Gluck, 68 Minn. 129, 85 V. Jenness, 2 Mete. (Mass.) 288, 419 American Boiler Co. v. Foutham, 50 N. Y. Supp. 351, 199, 202, 203 American Buttonhole, Overseam- ing & S. M. Co. V. Murray, Fed. Cas. 292, 12 American Car Co. v. Atlanta St. Car Co., 100 Ga. 254, 213, 220 American Exchange Bank v. Blanchard, 7 Allen 333, 367 American Exchange Nat. Bank V. American Hotel Victoria Co., 92 N. Y. Supp. 1006, 553 V. New York B. & P. Co., 148 N. Y. 698, 359, 473, 483, 484 V. New York Belting & P. Co., 74 Hun (N. Y.) 446, 381 American Express Co. v. Haire, 21 Ind. 4, 527 American File Co. v. Garrett, 110 U. S. 288, 246 American Ins. Co. v. Avery, 60 Ind. 566, 30 V. McWhorter, 78 Ind. 136, 28 V. Wellman, 69 Ind. 413, 291 American Iron & Steel Mfg. Co. V. Beal, 101 Md. 423, 681 American Nat. Bank v. Banks, 42 Mo. 450, 179 V. Cruger, 44 S. W. 278, 91 Tex. 446, 644 TABLE OF CASES. XXIX [References are to Sections.'} American Nat. Bank v. Harrison Wire Co., 11 Mo. App. 446, 380 V. Junk Bros. Lumber Co., 94 Tenn. 624, 562 V. Lumber Mfg. Co., 94 Iowa 624 523 V. Watkins, 119 Fed. 545, 208, 264 American Trust & S. Bank v. Yluck, 68 Minn. 129, 474 American Trust & Sav. Co. v. Crowe, 82 111. App. 537, 581 American Zinc L. & S. Co. v. Marble Leadworks, 102 Mo. App. 158, 414 Ames V. Crosier, 101 Cal. 260, 119 V. Foster, 42 N. H. 381, 56 V. Colburn, 77 Mass. (11 Gray) 390, 137 Ames & F. Co. v. Smith, 65 Minn. 304, 402 Amor V. Stockele, 76 Minn. 180, 525, 573 Amory v. Merryweather, 4 Dowl. & R. 86, 296 Amsinck v. Rogers, 93 N. Y. Supp. 87, 527 Anderson v. Anderson, 4 Dana (Ky.) 352, . 272 V. Bank, 98 Mich. 543, 368, 376 ,V. Chicago Title & Trust Co., ' 101 Wis. 385, 409 V. Gill, 79 Md. 312, 578, 583 V. Johnson, 106 Wis. 218, 409, 597 V. Kissan, 35 Fed. 699, 476 V. Lee, 73 Minn. 397, 198 V. Mason, 6 Dana (Ky.) 217, 624 V. Oregon Mortg. Co., 8 Idaho 418, 302 V. Robertson, 32 Miss. 241, 634 V. Rodgers, 53 Kan. 542, 574, 583 V. Starkweather, 28 Iowa 409, 19, 178, 288 V. Van Alen, 12 Johns. (N. Y.) 343, 626 V. Walter, 34 Mich. 113, 28 V. Warne, 71 111. 20, 27, 129, 133 Andover Savings Bank v. Ad- ams, 1 Allen 28, 679 Andrews v. Bond, 16 Barb. (N. Y.) 633, 418 V. Bradley, 102 Fed. 54, 574 V. Butler, 46 111. App. 183, 380 V. Campbell, 36 Ohio St. 361, 657 V. Galloway, 50 Ark. 358, 142, 161 Andrews v. German Nat. Bank, 9 Heisk. 211, 581 V. Hart, 17 Wis. 297, 123 V. Hoxie, 5 Tex. 171, 292 V. McCoy, 8 Ala. 920, 260 V. Meadows, 31 So. 971, 278 V. Pond, 13 Pet. (38 U. S.) 65, 436, 483 V, Pope, 126 N. C. 472, 681 V. Robertson, 111 Wis. 334, 87 N. W. 190, 54 L. R. A. 673, 489 V. Simms, 33 Ark. 771, 180 V. Varrell, 46 N. H. 17, 632 Androscoggin Bank v. Kimball, 10 Cush. (Mass.) 373, 22 Andrus v. Bradley, 102 Fed. 54, 582, 659 Andrysiah v. Satkowski, 159 Ind, 428, 49 Angier v. Brewster, 69 Ga. 362, 25 V. Smith, 101 Ga. 844, 302, 303 Angle V. Northwestern Mut. L. Ins. Co., 92 U. S. 330, 144, 476 V. Northwestern Mut. L. I. Co., 92 N. S. 330, 22 Anglo-Californian Bank v. Ames, 27 Fed. 727, 72, 670 Aniba v. Yeomans, 39 Mich. 171, 348 Ankeney v. Hannon, 147 N. S. 118, 56 Annan v. Houck, 4 Gill (Md.) 325, 431, 637 Ansell V. Baker, 15 Q. B. 20, 682 Ansern v. Byrd, 6 Ind. 475, 210 Anthony v. Fritts, 45 N. J. L. 1, 271, 340 V. Harrison, 14 Hun (N. Y.) 198, 217 Apache County v. Barth (Ariz. 1898), 53 Pac. 187, 87 Appeal of Taylor, 45 Pa. St. 71, 125 Apperson v. Stewart, 27 Ark. 619, 651 Apple V. Lesser, 93 Ga. 749, 527, 544, 555, 564 Applegarth v. Robertson, 65 Md. 493. 4 Atl. 896, 663 Appling County v. McWilliams, 69 Ga. 840, 288 Ai-agon Coffee Co. v. Rogers (Va.), 52 S. E. 843, 489 Arbold V. Sprague, 34 Vt. 402, 272 Arbuckle v. Hawks, 20 Vt. 538, 325 Archer v. Heiman, 21 Ind. 29, 679 V. Shea, 14 Hun 493, 61, 279, 283, 304 Arden v. Watkins, 3 East 317, 203 sxx TABLE OF CASES. [References are to Sections.'] Arents v. Com., 18 Gratt. (Va.) 750, 419 Arman v. First National Bank, 36 Fla. 398, 392 Armendiaz v. Serna, 40 Tex. 291, 523 Armour v. Michigan Cent. R. Co., 65 N. Y. Ill, 414 V. Mitchell, 36 N. J. L. 92, 241, 246 V. Moore, 5 111. App. 533, 302 Armstrong v. American Ex- change Bank, 133 U. S. 433, 527, 641, 653 V. Brown, 1 Wash. C. C. (U. S.) 43, 600 V. Cook, 30 Ind. 22, 116, 389 V. Gav, 1 Stew. (Ala.) 175, 523 V. Noble, 55 Vt. 428, 431, 637 V. Scott, 36 Fed. 63, 270' V. Southern Express Co., 4 Baxt. 376, 288' Arnold v. Engleman, 103 Ind. 512, 34, 37 V. Jones, 2 R. I. 345, 158 V. National Albany Exch. Bank, 3 Thomp. & C. (N. Y.) 769, 641 V. Spragiie, 34 Vt. 402, 183, 199 Arnot V. Woolburn, 35 Mo. 98, 99, 431, 637 Arnson v. Abrahamson, 930 N. Y. Supp. 514, 270 Arpin v. Owens, 140 Mass. 144, 187, 198, 199, 200, 202, 272 Arthurs v. Hart. 17 How. 6, 449 Ashburn v. Evans (Tex. Civ. App.), 72 S. W. 242, 702 Ashby V. Carr. 40 Miss. 64, 596 Ashe V. Beasley, 6 N. Dak. 191, 542, 549 Ashton V. Burbank, 2 Dill. 435, 679 V. Sproule, 35 Pa. St. 492, 270, 341 Aspinwall v. Meyer, 2 Sandf. (N. Y.) 280, 240, 418 Association v. Stewart, 27 Tex. Civ. App. 299, 423 Atchison. T. & S. F. R. Co. v. Kearney, 58 Kan. 19, 232 Atherton v. Dearmond, 33 Iowa 353, 332 Atkins V. Knight, 46 Ala. 539, 420, 608 Atkinson v. Brooks, 26 Vt. 569, 248, 353, 355 V. Burt. 65 Ark. 316, 302 V. Hawdon, 2 Adol. & E. 628, 147 Atlanta Bottling Co. v. Hutchin- son, 109 Ga. 550, 241, 648 Atlanta R. Co. v. American Car Co., 103 Ga. 254, 265 Atlantic National Bank v. Frank- lin, 55 N. Y. 235, 341 V. Franklin, 64 Barb. 449, 353, 359 Atlas Bank v. Holm, 34 U. S. App. 472, 288, 475, 476, 483 Attleborough Nat. Bank v. Rog- ers, 125 Mass. 339, 671 Attorney-General v. Continental Life Ins. Co., 71 N. Y. 325, 581 V. Life & Fire Ins. Co., 9 Paige (N. Y.) 470, Atwater v. Smith, 73 Minn. 507, Atwood V. Crowdie, 1 Stark 485, V. Lewis, 6 Mo. 391, 392, 338, 339 V. Mumings, 7 B. & C. 285, 75 V. Weeden, 12 R. I. 293, 296 Aubert v. Maze, 2 Bos. & P. 374, Aubuchon v. McKnight, 1 Mo. 312, Auburn Nat. Exch. Bank v. Ben- eman, 43 Hun (N. Y.) 241, AudleuT V. Kuffel, 71 Ind. 543, Auerbach v. Le Sueur Mill Co., 28 Minn. 291, Auld V. Magruder, 10 Cal. 282, 290, Aultman v. Hetherington, Wis. 622, V. Jett, 42 Wis. 488, V. Olson, 34 Minn. 450, Aultman and Taylor v. Rush, 26 S. C. 517, Aultman, Taylor & Co. v. Hef- ner, 67 Tex. 54, 11, 212, 601 Aurora v. West, 22 Ind. 88, 292 Austell V. Rice, 5 Ga. 472, 191, 195 Austin V. Feland, 8 Mo. 309, 629 V. Rodman, 1 Hawks 194, 523 V. Vandermark, 4 Hill (N. Y.) 259, Auten V. Gauner, 90 111. 300, V. Manistee Nat. Bank, 67 Ark. 243, 518 Averett v. Booker, 15 Gratt. (Va.) 163, 183 Averton v. Mathews, 35 Ark. 146, 23 Avery v. Brown, 31 Conn. 398, 208 V. Swords. 28 111. App. 202, 699 Ayer v. Hutchins, 4 Mass. 370, 288, 348, 419 V. Tilden, 15 Gray (Mass.) 178. 303 288 684 282 296 152 28 648 85 42 603 603 25, 133 44 25 TABLE OF CASES. XKXl [References are to Sections.'] Ayer v. Younker, 10 Colo. App. 27, 297 Ayers v. Burns, 87 Ind. 245, 63 V. Doying, 42 Hun (N. Y.) 630, 390 V. Warren, 47 Me. 217, 43 Aymar v. Beers, 7 Cow. 705, 496 Aynsworth, Ex parte, 4 Ves. 678, 306 Avrault v. Pacific Bank, 47 N. Y. 570, 583 Ayres v. McConnel, 15 111. 230, 606 V. Milroy, 53 Mo. 516, 316 V. Prebasco, 14 Kan. 175, 292 Ayrey v. Davenport, 2 Bos. & P. 474, 679 B Babbitt v. Moore, 51 N. J. L. 229, 683 Babcock v. Hawkins, 23 Vt. 561, 691 V. Murray, 58 Minn. 386, 175 V. Stone, Fed. Cas. No. 701, 3 McLean 172, 89 Baborg v. Peyton, 2 Wheat. (U. S.) 385, 199 Babson v. Webber, 9 Pick. (Mass.) 163, 1 Bachellor v. Priest, 12 Pick. 399, 498, 511 Backus V. Spaulding, 116 Mass. 418, 606 V. Spaulding, 129 Mass. 234, 593, 594 Bacon v. Abbott, 137 Mass. 397, 365 V. Bacon, 94 Va. 686, 505 V. Hanna, 137 N. Y. 379, 514 V. Harris, 15 R. I. 599, 282 V. Iowa Sav. & Loan Assoc, 121 Iowa 449, 302 V. Lee, 4 Iowa 490, 292, 303 Badger v. Stephens, 61 Mo. App. 387, 1 Mo. App. Rep. 627, 650 Bagley v. Cohen (Cal.), 50 Pac. 4, 681 Bahmsen v. Gilbert, 55 Minn. 334, 402 Bailey v. Adams, 10 N. H. 162, 340, 341 V. Cromwell, 3 Scam. (111.) 71, 262, 310, 327 V. Dozier, 6 How. 23, 528, 534 V. Pearson, 29 N. H. 77, 56 V. Porter, 14 Mees. & W. 44, 523 V. Seymour, 42 S. C. 322, 368 V. Sharkey, 29 Mo. App. 518, 514 V. Smith, 14 Ohio St. 396, 240, 365, 439, 440 Bailey v. Stiles, 3 N. J. Eq. 249, 288 V. Tompkins. 127 Mich. 74, 86 N. W. 400, 87 Bair v. People's Bank, 27 Neb. 577, 43 N. W. 347, 671 Baird v. Bruning, 84 Ky. 645, 57 Baker v. Arnold, 2 Cai. Cas. (N. Y.) 279, 238, 441 V. Charlton, Peake 80, 89 V. Faris, 61 Mo. 889, 288 V. Hawkins, 14 R. I. 359, 689 V. Kennett, 54 Mo. 82, 68 V. Kinsey, 41 Ohio St. 403, 421, 630 V. Lichtenberger, 41 Neb. 751, 433 V. Nipple, 16 Pa. Co. Ct. 659, 447 V. Scott, 29 Kan. 136, 539 V. Singer Mfg. Co., 122 Pa. St. 363, 57 Baker-Boyer Bank v. Hughson, 5 Wash. St. 100, 238 Baker, In re, 76 N. Y. Supp. 61, 699 Balch V. Wilson, 25 Minn. 299. 626 Baldwin v. Barrour, 86 Ind. 351, 28 V. Bricker, 86 Ind. 221, 25, 28 V. Daly. 41 Wash. 416, 700 V. Dow, 130 Mass. 416, 283 V. Hart, 136 Cal. 222, 194 V. Killian, 63 111. 550, 328 V. Sewall, 23 La. Ann. 444, 292 Bales V. Hyman, 57 Miss. 330, 620 Balkwill V. Bridgeport Wood Finishing Co., 62 111. App. 102, 583 Ball V. Denniston, 4 Dall. 163, 564 V. Powers, 62 Ga. 757, 29 V. Putnam, 123 Cal. 134, 288 Ballard v. Insurance Company, 81 Ind. 239, 141, 147, 164 Ballston Spa Bank v. Maine Bank, 16 Wis. 120, 74 Baltimore & Ohio R. Co. v. Wil- kins, 44 Md. 11. 414 Bamet v. Bank, 98 U. S. 555, 306 Bancroft v. McKnight. 11 Rich. L. (S. C.) 663, 121 Banerman v. Radenius, 7 Term R. 663, 679 Banghaman v. Gould, 45 Mich. 481. 601 Bangor Electric Light & Power Co. V. Robinson, 52 Fed. 520, 523, 397 Bangs V. Hornick, 30 Fed. 97, 298 Bank v. Alsop, 64 Iowa 97, 291 V. Anderson, 32 S. C. 538, 260 V. Bank. 10 Wall. 380, 576 V. Barnett, 27 La. Ann. 177, 377 V. Carrington, 5 R. I. 515, 246 V. Chambers, 11 Rich. 657, 376 IXXH TABLE OF CASES. [References are to Sections.l Bank v. Coit, 104 N. Y. 537, 212 V. Dumell, 5 Mason 56, 500 V. Farmers' Deposit Nat. Bank, 130 Pa. St. 209, 605 V. Flanigan, 39 Leg. Int. (N. Y.) 264, 303 v. Goss, 31 Vt. 315, 477 v. Hooper. 47 Md. 88, 476 V. Hunt (R. I.), 13 Atl. 115, 681 V. Johnston, 105 Tenn. 521, 241, 242 V. Mayberry, 48 Me. 198, 29 V. O'Connell, 84 Iowa 377, 373 V. Portner. 46 Ohio St. 381, 291 V. Rider, 58 N. H. 512, 270 V. Short, 15 Pa. Co. Ct. 64, 45 V. Stowell, 123 Mass. 196, 146 V. Tartter, 4 Abb. N. C. 215, 604 V. Thomas, 79 Hun (N. Y.) 595, 155 V. Vanderhorst, 32 N. Y. 553, 353, 359 V. Vankirk, 39 111. App. 23, 291 V. Wood, 142 Mass. 563, 616 Bank of Alexandria v. Swan, 9 Pet. 33, 530, 552, 563, 566 Bank of America v. Shaw, 142 Mass. 290, 560, 562, 569 V. Wavdell, 92 N. Y. Supp. 666, 583 Bank of Batavia v. N. Y. L. E. & W. R. Co., 106 N. Y. 195, 414 Bank of Bennington v. Raymond, 12 Vt. 401, 494 Bank of British North Amer- ica V. Ellis, 6 Sawy. (U. S.) 96, 184, 187, 240, 279 V. Jones, 8 U. C. Q. B. 86, 682 V. Mechanics' Nat. Bank of N. Y. City, 91 N. Y. 106, 676 Bank of Buffalo v. Dantziger, 65 N. Y. Supp. 981, 681 Bank of California v. J. L. Mott Iron Works, 113 Cal. 409, 402 Bank of Charleston v. Cham- bers, 11 Rich. (S. C.) 657, 246 Bank of Columbia v. French, 1 Cranch (U. S.) 221, 279 V. Lawrence, 1 Pet. (U. S.) 578, 563, 569 Bank of Commerce v. Baird Min- ing Co. (N. M. 1906), 85 Pac. 970, 80 V. Haldeman, 22 Ky. Law Rep. 717, 145 V. Miller, 105 111. App. 224, 585 Bank of Commonwealth v. Cur- ry, 2 Dana (Ky.) 142, 22 Bank of Cooperstown v. Woods, 28 N. Y. 545, 531 Bank of Cumberland v. May- berry, 48 Me. 198, 29 Bank of Edgefield v. Farmers' Co-operative Mfg. Co., 52 Fed. 98, 476, 545 Bank of Gallipolis v. Trimble, 5 B. Mon. (Ky.) 599, 590 Bank of Genesee v. Patchin Bank, 19 N. Y. 312, 280 V. Patchin Bank, 13 N. Y. 309, 180 Bank of Herington v. Wangerin, 65 Kan. 423, 146, 165 Bank of Horton v. Brooks, 64 Kan. 285, 680 Bank of Indian Territory v. First Nat. Bank, 109 Mo. App. 665, 475, 697 Bank of Ireland v. Archer, 11 M. & W. 383, 491 Bank of Jamaica v. Jefferson, 92 Tenn. 537, 503, 529, 545 Bank of Kentucky v. Brooking, 2 Lift. (Ky.) 41, 93 V. Pursley, 3 T. B. Mon. 238, 530 Bank of Limestone v. Penick, 5 T. B. Mon. (Ky.) 25, 33, 174 Bank of Louisiana v. Satterfield, 14 La. Ann. 80, 511 Bank of Louisville v. First Nat. Bank of Knoxville, 8 Baxt. 101, 583 V. First Nat. Bank of Rush- ville, 8 Baxt. 101, 583 Bank of Luverne v. Birmingham Fertilizer Co. (Ala. 1905), 39 So. 126. 307 Bank of Martin v. Cassedy, 103 Ky. 363. 627 Bank of Metropolis v. Bank of New England, 1 How. (U. S.) 234, 622 Bank of Middlebury v. Bingham, 33 Vt. 621, 388 Bank of Missouri v. Phillips, 17 Mo. 29, 316 Bank of Mobile v. Hall, 6 Ala. 639, - 352 V. Poelnitz, 61 Ala. 147, 626 Bank of Monongahela Valley v. Weston, 159 N. Y. 201, 483 Bank of Montgomery Co. v. Walker, 9 Serg. & R. (Pa.) 229, 340 Bank of Montpelier v. Joyner, 33 Vt. 481, 390 TABLE OF CASES. XXXlll [References are to Sections.l Bank of Montreal v. Douglas, 17 U. C. Q. B. 208, 679 Bank of Morehead v. Elam, 24 Ky. L. Rep. 2425, 680 Bank of Morganton v. Hay (N. C. 1906), 55 S. E. 811, 73, 75 Bank of Newark v. Crawford, 2 Houst. (Del.) 282, 135 Bank of Newberry v. Richards, 35 Vt. 281, 387 Bank of Newbury v. Sinclair, 60 N. H. 100, 658 Bank of New York v. Bank of Ohio, 29 N. Y. 619, 80, 82 V. Muskingum Branch of Bank of Ohio, 29 N. Y. 619, 121 V. Vanderhorst, 32 N. Y. 553, 383 Bank of Niagara v. McCracken, 18 Johns. (N. Y.) 493, 612 Bank of North America v. Pet- tit, 4 Dall. 127, 564 Bank of Ohio Valley v. Lock- wood, 13 W. Va. 392, 135, 162 Bank of Pittsburgh v. Neal, 22 How. 95, 22, 121, 476 Bank of Port Jefferson v. Dar- ling, 36 N. Y. Supp. 153, 559, 671 Bank of Ravenswood v. Wetzel (W. Va.), 50 S. E. 886, 559 Bank of Richland v. Nicholson, 120 Ga. 622, 543, 545, 571 Bank of Rochester v. Gray, 2 Hill 227, 530 V. Monteath, 1 Denio (N. Y.) 402, 89 Bank of Rutland v. Buck, 5 Wend. (N. Y.) 66, 386 Bank of Sandusky v. Scoville, 24 Wend. 416, 471 Bank of Spencer v. Simmons, 43 W. Va. 79, 402 Bank of St. Albans v. Farmers' & Merchants' Bank, 10 Vt. 141, 99 Bank of Staten Island v. City of New York, 68 N. Y. App. Div. 231, 232 Bank of St. Clairsville v. Smith, 5 Ham. (Ohio) 222, 217 Bank of Tennessee v. Cum- mings, 9 Heisk. (Tenn.) 465, 293 V. Johnson, 1 Swan 217, 389 Bank of United States v. Beirne, 1 Graft. (Va.) 234, 561 V. Corcoran, 2 Pet. 121, 555 V. Dandridge, 12 Wheat, 64, 581 V. Daniel, 12 Pet. 32, 527 V. Davis, 2 Hill 551, 542 V, Leachers, 10 B. Mon. 64, 525 Joyce Defenses — iii Bank of United States v. Russell, 3 Yeates (Pa.) 391, 154 Bank of University v. Tuck, 96 Ga. 556, 699 Bank of Upper Canada v. Jar- dine, 9 Up. Can. C. P. 332, 340 Bank of Utica v. Bender, 21 Wend. 645, 570 V. Hillard, 3 Cow. 153, 306 V. Smith, 18 Johns. 230, 511, 549 Bank of Vergennes v. Cameron, 7 Barb. 143, 89, 542, 560 Bank of Woodstock v. Kent, 15 N. H. 579, 369 Bankers' Iowa State Bank v. Mason Hand Lathe Co., 90 N. W. 612, 270, 280 Bannister v. Kenton, 46 Mo. App. 462, 240 Banque de Peuple v. Denincourt, Rap. Jud. Queb. 10 C. S. 428, 505, 506 Barbaroux v. Barker, 4 Mete. (Ky.) 47, 609 Barber v. Boyd, 24 Ky. L. Rep. 1389, 702 v. Gordon, 2 Root 95, 342, 685 V. Ruggles, 27 Ky. L. Rep. 1077, 680 V. Van Horn, 54 Kan. 33, 121, 131 Barbour v. Bank, 45 Ohio St. 133, 306 V. Washington Fire & Mar. Ins. Co., 60 Ala. 433, 699 Barclay v. Pursley, 110 Pa. St. 13, 173 V. Weaver, 19 Pa. 396, 538 Bardsley v. Delp, 88 Pa. St. 420, 241, 380, 390 Barker v. Earth, 88 111. 23, 237 V. Barth, 192 111. 460, 446 V. International Bank of Chi- cago. 80 111. 96, 353 V. Lichtenberger, 41 Neb. 751, 241 V. Parker, 23 Ark. 390. 288 V. Parker, 10 Gray (Mass.) 339, 627 V. Richards, 20 Law J. Exch. 135, 136, 380 V. Valentine, 10 Gray 341, 441 Barkhamsted v. Case, 5 Conn. 528, 122 Barlow v. Bishof, 1 East 432, 51 V. Fleming, 6 Ala. 146, 322 V. Myers, 3 Hun (N. Y.) 720, 627 V. Scott, 12 Iowa 63. 239, 419 Barmby v. Wolfe, 44 Neb. 77, 376 Barnard v. Mercer, 54 Kan. 630, 702 XXXIV TABLE OF CASES. [References are to Sections.'] Barnard State Bk. v. Fesler, 80 Mo. App. 217, 456 Earner v. Moorehead, 22 Ind. 354, 198 Barnes v. De France, 2 Colo. 294, 55 V. McMullins, 78 Mo. 260, 431, 637 V. Ontario Bank, 19 N. Y. 156, 581 V. Shelton, Harp. (S. C.) 21, 208 V. Stevens, 62 Ind. 226, 110 V. Van Keuren, 31 Neb. 165, 182 Barnet v. Bank, 98 U. S. 555, 614, 615 V. Smith, 31 N. H. 256, 581 Barnett v. Denison, 145 N. S. 135, 87 V. Offerman, 7 Watts (Pa.) 130, 198, 202, 239 Barney v. Clark, 46 N. H. 514, 655 V. Norton, 2 Fairf. (Me.) 350, 635 Barnum v. Barniim, 9 Conn. 242, 198 V. Phoenix, 60 Mich. 388, 366 V. Young, 10 Neb. 309, 46, 56 Barr v. Baker, 9 Mo. 850, 208 Barrett v. Bank, 85 Tenn. 426, 306 V. Mahnken, 6 Wyo. 541, 111, 194 V. Russell, 45 Vt. 43, 98 Barrington v. Bank of Washing- ton, 14 Serg. & R. (Pa.) 405, 172 Barroll v. Foreman. 88 Md. 188, 698 Barrow v. Miltenberger, 21 La. Ann. 396, 34 Barry v. Holderman, 6 J. J. Marsh. (Ky.) 471, 380 V. Kirkland (Ariz.), 52 Pac. 771, 650 V. Stover, 107 N. W. 672, 254 V. Wachosky, 57 Neb. 534, 407 Barstow v. Mining Co., 64 Cal. 388, 397 Bartholomew v. First Nat. Bank, 18 Wash. 683, 517 V. Hendrix, 5 Blackf. 572, 472 Bartle v. Breniger, 37 Iowa 139, 113, 659 Bartlett v. Farrington, 120 Mass. 284, 600' Barton v. Anderson, 4 Rich. (S. C.) 507, 312 V. Beer, 35 Barb. (N. Y.) 78, 34, 55 Bascom v. Young, 7 Mo. 1, 89 Baskerville v. Brown, 2 Bur- rows 1229, 617 V. Harris, 41 Miss. 535, 525 Bass V. Inhabitants of Welles- ley (Mass.), 78 N. E. 543, 692 Bassenhorst v. Wilby, 45 Ohio 333, 503, 523, 524, 540, 545, 573 Batavian Bank v. North, 114 Wis. 637, 313 Batchelder v. White, 80 Va. 103, 135, 165 Batchellor v. Priest, 12 Pick. (Mass ) 399 179 Bates V. Butler, 46 Me. 387, 108, 113 V. Hyman (Mass. 1900), 26 So. 567, 71 V. Kemp, 12 Iowa 99, 419, 436 V. Kemp, 13 Iowa 223, 328, 637 V. Leclair, 49 Vt. 229, 656 V. Rosekrans, 37 N. Y. 409, 688 V. State Bank, 2 Ala. 451, 671 Bath Gas Light Co. v. Claffy, 151 N. Y. 24, 277 Bathe v. Tayler, 15 East 412, 416, 135, 137, 152 Battalora v. Earth, 25 La. Ann. 318, 22, 238 Batterman v. Butcher, 95 App. Div. 213, 269 Battersbee v. Calkins, 128 Mich. 569, 230, 402, 489 Battle V. Weems, 44 Ala. 105, 282, 419 Battrell v. Franklin, 57 Mo. 566, 208 Baucom v. Smith, 66 N. C. 537, 419 Baumgardner v. Reeves, 35 Pa. St. 250, 323 Baxter v. Ellis, 57 Me. 178, 294 V. Graves, 2 A. K. Marsh. 152, 523 V. Little, 6 Mete. (Mass.) 7, 624, 635 Bay V. Church, 15 Conn. 15, 528 y. Shrader, 50 Miss. 326, 155, 179 Bayley v. Taber, 5 Mass.- 286, 291, 292 Bayou Sara, Town of, v. Harper, 15 La. Ann. 233, 231 Bay View Brew. Co. v. Tecklen- berg, 19 Wash. 469, 407 Beach v. Bennett, (Colo.- App.), 66 Pac. 567, 467 v. Lattner, 101 Ga. 357, 302 V. State Bank, 2 Ind. 488, 272 Beacon Trust Co. v. Robbins, 173 Mass. 261, 351 Beale v. Parrish, 20 N. Y. 407, 550, 570 Beall V General Electric Co., 16 Misc. Rep. 611, 270, 433 V. January, 62 Mo. 434, 122 TABIJB OF CASES. XXXV [References are to Sections.'] Beall V. Pearre, 12 Md. 550, 198, 201, 207, 208 Bealle v. Bank, 57 Ga. 274, 120, 121, 376 Bean v. Jones, 8 N. H. 149, 201 V. Morgan, 4 McCord (S. C.) 148, 43 V. Proseus, 31 Pac. 49, 224 Beard v. Bingham, 76 N. C. 285, 302 V. Bedolph, 29 Wis. 136, 478 V. Westerman, 32 Oliio St. 29, 525 Bearden v. Moses, 75 Tenn. 459, 252 Beardsley v. Weber, 104 Midi. 88, 512 Beath v. Chapoton, 115 Mich. 506, 113 Beatty v. Carr, 109 Iowa 183, 208 Beattyville Banli v. Roberts, 117 Ky. 689, 223, 240, 243 V. Roberts, 25 Ky. Law Rep. 1796, 324 Beauchamp v. Parry, 1 Barn. & Adol. 89, 657 Beauford v. Patterson, 63 How. Prac. (N. Y.) 81, 122 Beauregard v. Knowlton, 156 Mass. 395, 523, 586 Beberdick v. Crevier, 60 N. J. L. 389, 41 Becherwaise v. Lewis, L. R. 7 C. P. 372, 639 Beck V. Thompson, 4 Harr. & J. 531, 525 Becker v. Headstine (Mich.), 100 N. W. 752, 302 V. Sandusky City Bank, 1 Minn. 311, 371 V. Seymour, 71 Minn. 394, 604 Beckhaus v. Commercial Nat. Bank (Pa.), 12 Atl. 72, 353, 376 Beckley v. Union Bank, 79 Va. 478, 112 Bedell v. Hering, 77 Cal. 572, 27 V. Scarlett, 75 Ga. 56, 439, 440, 441 Bedford v. Deakin, 2 Barn. & Aid. 210, 688 Bedford Bank v. Acoam, 125 Ind. 584, 606 Beebe v. Real Estate Bank, 5 Pike 183. 410 Beecher v. Buckingham, 18 Conn. 110, 472 Beeman v. Duck, 11 Mees. & W. 251, 641, 673 Beer v. Clifton, 98 Cal. 323, 503, 545 Behl V. Schuett, 88 Wis. 471, 108 Beissner v. Weekes, 21 Tex. Civ. App. 14, 504, 529 Belcher v. Smith, 7 Cush. (Mass.) 482, 460 Belden v. Hann, 61 Iowa 42, 180 Belknap v. Bank, 100 Mass. 376, 136, 146 Bell V. Bean, 75 Cal. 86, 376 V. First Nat. Bank of Chi- cago, 115 U. S. 373, 534 V. Hagerstown Bank, 7 Gill (Md.) 216, 566 V. Lent, 24 Wend. (N. Y.) 230, 542 V. Mahin, 69 Iowa 408, 29, 135, 150, 158 V. McNiece, 17 N. Y. Supp. 846, 242 V. Pletscher, 65 N. Y. Supp. 669, 199 V. Sheridan, 21 D. C. 370, 211 V. Shields, 19 N. J. L. 93, 673 V. Wandby, 4 Wash. 743, 747, 74 V. Wood, 1 Bay. (S. C.) 249, 288, 295 Bellemare v. Gray, 12 Rap. Jud. Queb. C. S. 581, 489 Belleville Sav. Bank v. Born- man, 124 111. 200, 10 N. E. 552, 312, 472, 688 Belloc V. Davis, 38 Cal. 242, 34 Bellows V. Folsom, 2 Rob. (N. Y.) 138, 345 V. Lovell, 4 Pick. (Mass.) 153, 663 Belshaw v. Bush, 11 C. B. (O. S.) 191, 697 Bement v. McClarlen, 1 B. Mon. (Ky.) 296, 119, 238, 447 Bemis v. Horner, 62 111. App. 38, 241, 439 Bemmon v. Whitman, 75 Ind. 318, 614 Benedict v. Cowden, 49 N. Y. 396, 171 V. Cox, 52 Vt. 274, 3 V. De Groat, 45 How. Pr. (N. Y.) 384, 433 V. Miner, 58 111. 19, 139, 152, 168 V. Schmieg, 13 Wash. 476, 520 Benjamin v. Delahv. 9 111. 536, 155 V. McConnel, 9 111. 536. 179 V. Rogers, 126 N. Y. 60, 380, 385 Bennett v. Carsner, 1 Tex. App. Civ. Cas., § 618, 419 V. Ford, 47 Ind. 264, 108 V. Mattingly, 110 Ind. 197, 61 V. Smith, 15 Johns. 355, 304 XXXYl TABLE or CASES. [References are to Sections.] Benninger v. Hawkes, 61 Pa. St. 343, 343 Benson v. Abbott, 95 Ga. 69, 358 V. Harrison, 39 Mo. 303, 341 V. Huntington, 21 Mich. 415, 13, 20 V. Keller (Oreg.), 60 Pac. 918, 473 V. Warehouse Co., 99 Ga. 303, 91 Bent V. Weston, 167 Mass. 529, 195 Benton v. Klein, 42 Mo. 97, 328 Berenbroick v. Stephens, 8 Daly 249, 376 Berg V. Abbott, 83 Pa. 177, 517, 543 Bergen Invest. Co. v. Vette, 142 Mo. 560, 44 S. W. 754, 64 Am. St. Rep. 567, . 475 Bergman v. Salmon, 79 Hun (N. Y.) 456, 116 Berkley v. Cannon, 4 Rich. L. (S. C.) 136, 69 Bernau v. Wessels, 53 Mich. 549, 29 Bernheimer v. Marshall, 2 Minn. 78. 99 Bernstein v. Coburn, 49 Neb. 734, 626 Berry v. Barton, 12 Okla. 221, 418 V. Robinson, 9 Johns. 121, 502, 503 V. Thompson, 3 Johns. Ch. 395, 303 V. Wisdom, 3 Ohio St. 241, 367 Berryman v. Manker, 56 Iowa 150, 182 Berryn v. Bates, 2 Blackf. (Ind.) 118, 338 Bertrand v. Barkman, 13 Ark. 150, 241, 246, 352 Best V. Crall, 23 Kan. 482, 246, 359 V. Givens, 3 B. Mon. (Ky.) 72, 75, 64 Bethune v. Dozier, 10 Ga. 235, 135 Bick V. Seal, 45 Mo. App. 475, 288 Bickford v. Mattocks, 95 Me. • 547, 214 Bidsall V. Wheeler, 62 App. Div. 625, 296 Biegler v. Merchants' Loan & Trust Co., 62 111. App. 560, 296 V. Merchants' Loan & T. Co., 164 111. 197, 45 S. E. 512, 473 Bierce v. Stocking, 77 Mass. 174, 262 Bierv v. Haines, 5 Whart. (Pa.) 563. 138, 176 Bigelow V. Denison, 23 Vt. 564, 94 V. Stilphen, 35 Vt. 521. 141, 142 Biggerstaff v. Marston, 161 Mass. 101, 699 Big Sandy Nat. Bank v. Chilton, 40 W. Va. 491, 553 Bill V. Stewart, 156 Mass. 508, 123 Billings V. Everett, 52 Cal. 661, 311, 322 Billings Estate, In re (Minn.), 85 N. W. 162, 548 Billingsley v. Niblett, 56 Miss. 537, 263 Billington v. McColpin, 22 Ky. L. Rep. 1281, 292 Bilofsky v. Conveyances' Title Ins. Co. (Mass. 1906), 78 N. E. 534, 116 Bilters' Estate, In re, 30 Pa. Super. Ct. 84, 680 Bingham v. Sessions, 6 Sm. & M. (Miss.) 13, 109 Binghamton Trust Co. v. Clark, 52 N. Y. Supp. 941, 635 Binney v. Globe Nat. Bank, 150 Mass. 574, 53, 61 Birch V. Fisher, 51 Mich. 36, 380 Bircher v. Payne, 7 Mo. 462, 333 Bircleback v. Wilkins, 22 Pa. St. 26, 342, 446 Bird v. Daggett, 97 Mass. 494, 80, 487 V. Kendall, 62 S. C. 178, 302 V. Louisiana State Bank, 93 U. S. 96, 549, 558 Birdsall v. Russell, 29 N. Y. 220, 151 Birket v. Edward, 68 Kan. 295, 246 Birmingham Trust & Sav. Co. v. Whitney, 95 App. Div. (N. Y.) 280, 158, 180 V. Whitney, 183 N. Y. 22, 76 N. E. 1089, 158, 180 Bisbee v. Tornlus, 26 Minn. 165, 208 Bisburg v. Graham, 14 Pa. 14, 451 Biscoe V. Moore, 12 Ark. 77, 344 Bishop V Chase, 156 Mo. 158, 474 V. Dexter, 2 Conn. 419, 503 V. Eaton, 161 Mass. 496, 681 V. Tucker, 4 Rich. L. (S. C.) 178, 592 Bissell V. City of Kankakee, 64 111. 249, 87 V. Curran, 69 111. 20, 419, 635 V. Dickerson, 64 Conn. 61, 123 V. Gowdy, 31 Conn. 47, 419 Bivins V. Helsley, 4 Mete. (Ky.) 78, 315 Bizzell V. Stone, 12 Ark. 378, 620 Black V. Bowman, 15 111. App. 166, 147, 168 V. Epstein, 93 Mo. App. 459. 117 V. First Nat. Bank, 96 Md. 399, 119, 240, 489 TABLE OF CASES. xxxvn [References are to Sections.'] Black V. Mitchell, 14 Ind. 397, 472 V. Reno, 59 Fed. 917, 359 Blackburn v, Harrison, 39 Mo. 303, 339 Blackman v. Bowling, 63 Ala. 304, 343 Blackmer v. Phillipe, 67 N. C. 340, 11, 260, 627 Blackwell v. Denie, 23 Iowa 63, 19, 178 Blades v. Grant Deposit Bank, 21 Ky. Law Rep. 1761, 677 V. Newman, 19 Ky. Law Rep. 1062, 43 S. W. 176, 653 Blair v. Bank, 30 Tenn. (11 Humph.) 84, 173 V. Chicago, 201 U. S. 400, 447, 448, 447 V. Hagemeyer, 26 App. Div. (N. Y.) 219, 383 V. Reed, 20 Tex. 310, 602 V. Rutherford, 31 Tex. 465, 251, 439 V. Wilson, 28 Gratt. 165, 581 Blake v. Blake, 110 Mass. 202, 336 V. Manufacturing Co. (N. J. Ch. 1897), 38 Atl. 241, 85 Blakeslee v. Hewett, 76 Wis. 341, 511 Blakey v. Johnson, 13 Bush (Ky.) 197, 144, 168, 661 Blakley v. Adams (Ky.), 68 S. W. 473, 614 Blanc V. Mutual Nat. Bank, 28 La. Ann. 921, 524 Blanchard v. Boom, 40 Mich. 566, 503 V. Stevens, 57 Mass. 162, 126, 241 Bland V. O'Hagan, 64 N. C. 471, 152 Blane v. Mutual Nat. Bank, 28 La. Ann. 921, 538 Blankenship v. Rogers, 10 Ind. 333, 630 Blant V. Blant, 41 Misc. Rep. 572, 442 Blatchford v. Harris, 115 111. App. 160, 539 Blazo V. Cochran, 71 N. H. 585, 214 Blee V. Giltinan (Pa.), 12 Atl. 479, 117 Blendermann v. Price, 50 N. J. L. 296, 570 Bliss V. Houghton, 13 N. H. 126, 590, 593 Block V. Commissioners, 99 N. S. 686, 87 V. Espy, 6 Ohio Dec. 833, 449 Blodgett V. Durgin, 32 Vt. 361, 525 V. Weed, 119 Mass. 215, 89 Blood V. Northrup, 1 Kan. 28, 202, 205, 211, 237 Blount V. Rick, 107 Ind. 238, 596 V. Riley, 3 Ind. 471, 658 Blue V. Capital Nat. Bank, 145 Ind. 518, 597, 598 Blue Valley Lumber Co. v. Smith, 48 Neb. 293, 238 Blum V. Bidwell, 20 La. Ann. 43, 523 Blumenthal v. Jassoy, 29 Minn. 177, 367 Blum, Jr.'s, Sons v. Whipple (Mass. 1907), 80 N. E. 501, 80 Blunt V. Walker, 11 Wis. 334, 85 V. Windley, 68 N. C. 1, 612 Bly V. Second Nat. Bank, 79 Pa. St. 453, 302, 303 Blydenburgh v. Thayer, 3 Keyes 393, 376 Boagin v. Fouchy, 26 La. Ann. 594, 28 Boalt V. Brown, 13 Ohio St. 364, 168 Board v. O'Donovan, 82 111. App. 163, 183 Boardman v. Gore, 15 Mass. 331, 89 V. Hayne, 29 Iowa 339, 232 V. Larrabee, 51 Conn. 39, 341 Board of Commissioners v. Green- leaf, 80 Minn. 242, 135, 169 V. Vandoiss, 115 Fed. 866. 647 Board of Commissioners of Has- kell Co. V. National Life Ins. Co., 32 C. C. A. 591, 488 Board of Education v. Thomp- son, 33 Ohio St. 321, 290 Bock V. Lauman. 24 Pa. St. 435, 306 Bockhoven v. National M. & T. Bk., 11 Wkly. Not. Cas. (Pa.) 570, 199 Boddington v. Schlencker, 4 Barn. & A. 752, 576 Bogart V. McClung, 11 Heisk. 105, 525 Bogarth v. Breedlove, 39 Tex. 561, 167 Bogert V. Gulick, 65 Barb. (N. Y.) 322, 30, 59 Boggs V. Lancaster Bank, 7 Watts & S. (Pa.) 331, 199, 273 V. Wann, 58 Fed. 681, 193, 210, 417 Boiler Co. v. Foutham, 50 N. Y. Supp. 351, 272 Bolinger v. Gordon, 11 Humph. (Tenn.) 61, 600 Boiling V. Chambers, 20 Colo. App. 113, 680 V. Munchus, 65 Ala. 558, 189 XXXVlll TABLE OF CASES, IReferences are to Sections.'] Bolo V. Hansen, 2 Bailey (S. C.) 114, 64 Bolton V. Puller, 1 B. & P. 539, 21 Bomar v. Equitable Mort. Co., Ill Ga. 143, 402, 403, 416 V. Roser, 131 Ala. 215, 117 V. Rosser, 123 Ala. 641, 119 Bonaud v. Genesi. 42 Ga. 639, 359 Bond V. Bragg, 17 111. 69, 528 V. Central Bank, 2 Kelly 92, 439, 670 V. Fitzpatrick, 4 Gray (Mass.) 89, 635 V. Fitzpatrick, 72 Mass. 536, 242, 432, 658 V. Kidd (Ga. 1905), 50 S. B. 934, 110, 111 V. Stockdale, 7 Dow. & Ry. 140, 186 V. Storrs, 13 Conn. 412, 504 V. Wiltse, 12 Wis. 611, 359, 376 V. Worley, 26 Mo. 253, 339 Bondurant v. Bladen, 19 Ind. 160, 353 Bonebrake v. King, 49 Kan. 296, 681 Bonker v. Randies, 31 N. J. L. 335, 208 Bonner v. Nelson, 57 Ga. 433, 316 Bonsall v. Bauer, 2 Wkly. Notes (Pa.) Cas. 298, 270, 354 Bonsted v. Cuyler, 116 Pa. 551, 512 Boodv V. Bartlett, 42 N. H. 558, 456 V. McKenney, 23 Neb. 517, 320 Book V. Stinger. 36 Ind. 346, 80 Booker v. Robbins, 26 Ark. 660, 293 V. Wingo, 29 S. C. 116, 44 Bookheim v. Alexander, 64 Hun (N. Y.) 458, 241 Bookstaver v. Jayne, 60 N. Y. 146, 286, 323 Boone v. Boone, 58 Miss. 820, 195, 196 V. Queen, 2 Cranch 37, 208 Booth V. Dexter Steam F. E. Co., 118 Ala. 369, 183, 185, 189, 195, 196 V. Powers, 56 N. Y. 22, 161 V. Storrs, 75 111. 438, 128 Borah v. Curry, 12 111. 66, 344 Borchsenius v. Manutson, 7 111. App. 365, 648 Bordelon v. Kilpatrick, 3 Rob. 159, 439 Borden v. Peavy, 20 Ark. 293, 339 Borgess v. Vette, 142 Mo. 560, 366, 476 Born V. First Nat. Bank, 123 Ind. 78, 581 Borrough v. Moss, 10 Barn. & C. 558, 637 Bosler v. Exchange Bank, 4 Pa. St. 32, 620 Bostick V. Scruggs, 50 Ala. 10, 627 Bostwick V. Bryant, 113 Ind. 448, 472 V. Dodge, 1 Doug. (Mich.) 413, 241, 439 V. Scruggs, 50 Ala. 10, 465 Bottum V. Scott, 120 N. Y. 623, 183 Bouche V. Souttet, 104 Cal. 230, 446 Boughner v. Meyer, 5 Colo. 71, 288, 296 Bouker v. Galligan (N. J. Eq.), 57 Atl. 1010, 302 Boulton V. Langmuir, 24 Ont. App. R. 618, 152 Boulware v. Bank, 12 Mo. 542, 143 Bound V. Fitzpatrick, 8 Gray 536, 376 Bourne v. Ward, 51 Me. 191, 183, 186 Boustead v. Cuyler, 116 Pa. St. 551, 170 Boutelle v. Wheaton, 13 Pick. (Mass.) 499, 385 Boutin, In re. Rap. Jud. Queb. 12 C. S. 186, 541, 570 Bovier v. McCarthy, 4 Neb. 490, 303 Bowen v. Bradley, 9 Abb. N. S. (N. Y.) 395, 277 V. Clark, 25 Oreg. 592, 181 V. Laird (Ind. App. 1906), 77 N. E. 295, 22, 144, 164 V. Needles Nat. Bank, 87 Fed. 430, 582 V. Thrall, 28 Vt. 382, 11, 419, 635 Bower v, Hastings, 36 Pa. St. 285, 282, 419 Bowerbank v. Monteriro, 4 Taunt. 844, 307 Bowers v. Douglass, 2 Head (Tenn.) 866, 307 V. Jewell, 2 N. H. 543, 135, 153 V. Rineard, 209 Pa. St. 545, 152 V. Thomas, 62 Wis. 480, 27, 28 Bower's Adm'r v. Briggs, 20 Ind. 139, 174 Bowery Nat. Bank v. Sniffen, 54 Hun (N. Y.) 394, 40 Bowes V. Industrial Bank, 64 111. App. 300, 563 Bowie V. Hume, 13 App. D. C. 286, 561 Bowles V. Newby, 2 Blackf. (Ind.) 364, 237 Bowling V. Harrison, 6 How. 248, 553 TABLE OF CASES. XXXIX [References are Bowman v. Halstead, 2 A. K. Marsh. (Ky.) 200, 591 V. Hiller, 130 Mass. 153, 114, 295 V. Mitchell, 79 Ind. 84, 135, 169 V. Pope, 33 Miss. 94, 6 V. Rector (Tenn.), 59 S. W. 389, 14, 219, 679 V. Van Kuren, 29 Wis. 209, 385 V. Wright, 7 Bush (Ky.) 375, 619 Bowser v. Rendell, 31 Ind. 128, 175 Boyce v. Tabb, 18 Wall. 546, 292 Boyd V. Bank of Toledo, 32 Ohio St. 526, 537 V. Central Bank, 2 Kelly (Ga.) 92, 241 V. Cummings, 17 N. Y. 101, 353, 354 V. Johnson, 89 fenn. 284, 183 V. McConnell, 29 Tenn. (10 Humph.) 68, 142, 152 V. Pape (Neb.), 90 N. W. 646, 698 V. Tarrant, 14 Tex. 230, 447 Boyer v. Richardson, 52 Neb. 156, 568 Boyett V. Standard Chem. & Oil Co., 41 So. 756, 291 Boynton v. McDaniel, 97 Ga. 400, 28 Bozeman v. Allen, 48 Ala. 512, 288, 291 Brackett v. Mountfort, 11 Me. 115, 177 Bradbury, In re, 93 N. Y. Supp. 418, 192 Bradford v. Boyer, 17 Ohio St. 388, 472 V. Hubbard, 25 Mass. 155, 273, 274, 679 V. Prescott, 85 Me. 482, 679 V. Williams, 91 N. C. 7, 23, 217 Bradley v. Anderson, 5 Vt. 152, 17 V. Asher, 65 Mo. App. 589, 539 V. Bush, 1 Cal. App. 516. 701 V. Linn, 19 111. App. 322, 419 V. Mann, 37 Mich. 1, 136, 170 V. Marshall, 54 111. 173, 336, 447 V. Pratt. 23 Vt. 378, 63 V. Trammel, 1 Hemp. 164, 447 Bradshaw v. Van Valkenburg, 97 Tenn. 316, 303 Braithwaite v. Coleman, 4 Nev. & M. 654, 607 Brake v. Corning, 19 Mo. 125, 597, 598 Braley v. Goff, 40 Iowa 76, 265 Braly v. Henry, 71 Cal. 481, 322, 333 to Sections.l Bramhall v. Bank, 36 N, J. L. 243, 306 V. Beckett, 31 Me. 205, 353 Branch v. Dawson, 33 Minn. 399, 577 .V. Howard, 4 Tex. Civ. App. 271, 184, 202, 208 Branch Bank v. James, 9 Ala. 949, 953, 3 Branch Bank at Mobile v. Boy- kin, 9 Ala. 320, 651 Brandegee v. Kerr, 7 Mart. (La. N. S.) 64, 41 Brandenburgh v. Three Forks Deposit Bank, 19 Ky. Law R. 1974, 45 S. W. 108, 646 Brandon v. Loftus, 4 How. 127, 542 Brandt v. Mickle, 28 Md. 436, 502 Brannum v. O'Connor, 77 Iowa 632, 194 Brant v. Barnett, 10 Ind. App. 653, 1, 3 Bratton v. Lowry, 39 S. C. 383, 58 Bray v. Hadman, 5 Maule & S. 68, 566 V. Pearson, 12 Ind. 334, 222 Brayant v. Merrill, 55 Me. 515, 30 Breckenridge v. Berrier, 3 Po- sey Unrep. Cas. (Tex.) 324, 122 V. Lewis, 84 Me. 349, 22, 23, 241, 383 Breedon v. Grigg, 8 Baxt. (Tenn.) 163, 312 Breese v. Crumpton, 121 N. C. 122, 456, 684 Breham v. German-American Bank, 144 U. S. 173, 87 Bremmerman v. Jennings, 61 Ind. 334, 238, 439 Brenerman v. Furniss, 90 Pa. St. 186, 342 Brennan v. Vogt, 97 Ala. 647, 510, 554 Brent v. Bank, 2 Cranch C. C. (U. S.) 517, 624 Brett V. Marston, 45 Me. 401, 143, 180 Brewer v. Hobbs, 17 Ky. Law Rep. 134, 51 V. Slater, 18 App. D. C. 48, 119, 475 Brewster v. Burnett, 125 Mass. 68, 645 V. Scrader, 57 N. Y. Supp. 606, 353 Brey v. Hagan, 23 Ky. Law R. 18, 182 Brick V. Campbell, 50 N. J. L. 282, 338 xl TABLE OF CASES. [References are to Sections.'] Brick V. Scott, 47 Ind. 299, 30 Brickley v. Edwards, 131 Ind. 3, 119, 671 Bridenbeeker v. Lowell, 32 Barb. (N. Y.) 9, 21 Bridge v. Hubbard, 15 Mass. 96, 303 V. Livingston, 11 Iowa 57, 119, 199 V. Tiernan, 36 Mo. 439, 338 Bridgeport Bank v. Dyer, 19 Conn. 136, 496 V. Welch, 29 Conn. 475, 246, 354 Bridgeport City Bank v. Em- pire Stone Dressing Co., 19 How. Prac. 51, 270 Bridges v. Winters, 42 Miss. 135, 167 Briggs V. Beatrice First Nat. Bank, 41 Neb. 17, 47 V. Boyd, 37 Vt. 543, 388 V. Central Nat. Bank of City of N. Y., 89 N. Y. 182, 583 V. Ewart, 51 Mo. 245, 25 V. Latham, 36 Kan. 205, 212, 259 V. Moore, 14 Ala. 433, 596 Brigham v. Marean, 7 Pick. 40, 418 V. Wentworth, 65 Mass. (11 Cush.) 123, 135 Bright V. Judson, 47 Barb. (N. Y.) 29, 242, 277 Brighton Five-Cent Savings Bank v. Sawyer, 132 Mass. 185, 600 Brinckerhoff v. Foote, 1 Hoff Ch. 291, 305 Brink v. Stratton, 72 N. Y. Supp. 87, 680 V. Stratton, 98 N. Y. Supp. 421, 688 Brisbane v. Lesterjette, 1 Bay S. C.) 113, 289, 291 Briscoe v. Kinealy, 8 Mo. App. 76, 201, 208 Bristol V. Warner, 19 Conn. 7, 183 Bristol Bank & T. Co. v. Jones- boro Bkg. & T. Co., 101 Tenn. 545. 473 British American Mortg. Co. v. Smith, 45 S. C. 83, 419 Brittain v. Pioneer State Bank (Wash. 1906). 87 Pac. 1051, 75 Brittin v. Chegary, 21 N. J. L. 625, 288 Britton v. Fisher, 26 Up. Can. Q. B. 338, 341 V. Dierker, 46 Mo. 591. 152 V. Hall, 1 Hilt. (N. Y.) 528, 433, 502 V, Milson, 19 Ont. App. 96, 573 Britton v. Nichols, 104 U. S. 757, 549 Broadbelt v. Huddleson, 2 Wkly. Notes Cas. 293, 28 Broadway Sav. Bank v. Vorster, 30 La. Ann. 587, 75, 408 Broadwav Trust Co. v. Man- heim, 95 N. Y. Supp. 93, 464 Broadwell v. Stiles, 8 N. J. L. 58, 673 Brockway v. Mason, 3 Williams (Vt.) 519, 260, 328 Bromley v. Hawley, 60 Vt. 50, 12 Atl. 222, 477 Brook V. Hook, L. R. 6 Exch. 89, 674 V. New York &c. R. Co., 108 Pa. St. 529, 414 Brooklyn City R. Co. v. Repub- lic Bank, 102 U. S. 14, 241. 391, 476 Brooklyn Trust Co. v. Toler, 138 N. Y. 675, 585 Brookman v. Metcalf, 32 N. Y. 591, 241, 359, 627 Brooks V. Allen. 62 Ind. 401, 140, 141, 142, 143, 168 V. Christopher, 5 Duer (N. Y.) 216, 238 V. Hey, 23 Hun (N. Y.) 372, 383, 392 V. Martin, 43 Ala. 360, 653 V. Matthews, 78 Ga. 739, 25 V. Stachpole, 168 Mass. 537, 631 V. Struthers, 110 Mich. 562, 366 V. Sullivan, 129 N. C. 190, 246 V. White, 2 Mete. 283, 686, 688 V, Whitson, 7 Sm. & M. (Miss.) 513, 314, 343 V. Wright. 13 Allen (Mass.) 72, 341 Brou V. Bechel, 200 La. Ann. 254, 212, 461 Broughton v. Fuller, 9 Vt. 373, 138, 158 V. Manchester Water Works Co.. 3 Barn. & A. 1, 84 V. West. 8 Ga. 248, 181 Brower v. Rupert, 24 111. 182, 523 Brown v. Bank of Abingdon, 85 Va. 95, 553, 558 V. Callaway, 41 Ark. 418, 359, 376 V. Chenoworth, 51 Tex. 469, 418 V. Clark, 14 Pa. St. 469, 418 V. Coit, 1 McCord (S. C.) 408, 321 V. Daggett. 22 Me. 30, 668 V. Davies, 3 Term R. 80, 419 V. Davis, 3 T. R. 86, 483 TAELE OF CASES. xH [Refere7ices are to Sections.'] Brown v. Donnell, 49 Me. 421, 52, 95 V. Everett-Ridley-Ragan Co., Ill Ga. 404, 288 V. Feldwert (Oreg.), 80 Pac. 414, 26, 137, 240 V. Ferguson, 4 Leigh. 37, 568 V. First National Bank, 115 Ind. 572, 18 N. E. 56, 651 V. First National Bank, 112 Fed. 901, 392 V. First Nat. Bank, 132 Fed. 450, 680 V. Fort, 1 Mart. O. S. (La.) 34, 200, 281 V. Foster, 4 Ala. 282, 679 V. Hall, 2 A. K. Marsh, (Ky.) 599, 183 V. Hoffelmeir, 74 Mo. App. 385, 475 V. Johnson, 127 Ala. 292, 174 V. Johnson, 135 Ala. 608, 183 V. Jones, 3 Port (Ala.) 420, 170 V. Jones, 125 Ind. 375, 532, 552, 566 V. Kewley, 2 Bos. & P. 516, 688 V. Kinsey, 81 N. C. 245, 300 V. Lambeth, 2 La. Ann. 822, 210 V. Leavitt, 31 N. Y. 113, 241 V. Leckie, 43 111. 497, 596, 619 V, Merchants' & T. Bank, 44 N. Y. Supp. 645, 525 V. Montgomery, 20 N. Y. 287, 118 V. Mott, 7 Johns. (N. Y.) 361, 270, 280, 384 V. North, 21 Mo. 528, 127 V. Noyes, 2 Woodb. & M. (U. S.) 75, 322 V. Orr, 29 Cal. 120, 41 V. Penfleld, 36 N. Y. 473, 418 V. Pettit, 178 Pa. 17, 91, 474 V. Powell, L. R. 10 C. P. 562, 414 V. Prophit, 53 Miss. 649, 302 V. Reed, 79 Pa. St. 370, 138, 144 V. Rice's Admr., 26 Gratt. (Va.) 467, 116 V. Roberts, 90 Minn. 314, 201, 208 V. Schintz 202 111. 509, 511 V. Schmitz, 203 111. 136, 679 V. Schmitz, 98 111. App. 452, 581 V. Scott, 87 Ala. 453, 616 V. Smedley, 136 Mich. 65, 198, 322 V. Smith, 122 Mass. 589, 689 V. Spofford, 95 U. S. 474, 307. 333. 439, 476 V. Straw, 6 Neb. 536, 538, 139, 152, 153 Brown V. Tabor, 5 Wend. (N. Y.) 566, 385 V. Tarkington, 3 Wall. (U. S.) 377, 292 V. Teague, 52 N. C. 573, 503 V. Thompson, 79 Tex. 58, 383 V. Turner, 15 Ala. 832, 520 V. Turner, 7 Term R. 630, 296 V. Tyler, 16 Vt. 22, 110 V. Union Bank, 62 Miss. 754, 237 V. United States Home & D. Assn. (Ky. 1890), 13 S. W. 1085, 95, 671 V. Wilcox, 15 Iowa 414, 303 V. Wilson, 45 S. C. 519, 528 Brown, In re, Fed. Gas. No. 1985, 523 Brownell v. Winne, 29 N. Y. 400, 182 Browning v. Carson, 163 Mass. 255, 61, 502, 544 V. Fountain, 1 Duv. (Ky.) 13 387 388 V. Gosnell, 91 Iowa 448, 16,' 175 Brownlee v. Arnold, 60 Mo. 79, 367 Brownville v. Winnie, 29 N. Y. 400, 175 Broyles v. Absher (Mo. App. 1904), 80 S. W. 703, 705, 25 Bruce v. Carter, 7 Daly (N. Y.) 37, 342 V. First Nat. Bank of Weath- erford, 25 Tex. Civ. App. 295 246 V. Westcott, 3 Barb. (N. Y.) 374, 136, 146, 160, 161 Brumbach v. Bank, 46 Neb. 540, 316 318 Brush V. Barrett, 82 N. Y. 400, ' 523 V. Scribner, 11 Conn. 388, 383, 385, 391 Brutt V. Picard, Ryan & M. 37, 153 Bruvn v. Russell, 38 N. Y. St. Rep. 50, 186 Bryan v. Brimm, 1 111. 59, 419 V. Harr, 21 App. D. C. 190, 201, 135 V. Saltenstall, 3 J. J. Marsh. (Ky.) 672, 663 Bryant v. Lord, 19 Minn. 396, 524, 573 V. Merchants' Bank, 8 Bush 43, 524 V. Merrill, 55 Me. 515, 30, 35 V. Peck & Whipple Co., 154 Mass. 460, 112 V. Pembler, 45 Vt. 487, 262 V. Vix, 83 III. 11, 365 xlii TABLE OF CASES. [References are to Sections.'\ Bryniolson v. Osthus, 12 N. D. 42, 240, 402 Bryon v. Thompson, 11 Adol. & E. 31, 161 Buch V. Pope, 114 Ga. 334, 135 Buchanan v. Adams, 49 N. J. L. 636, 336 V. Drovers' National Bank, 6 U. S. App. 506, 288 V. Mechanics' Loan & Sav- ings Institution, 84 Md. 430, 241, 246 Buck V. Appleton, 14 Me. 284, 180 V. Troy Aqueduct Co., 76 Vt. 75, 56 Atl. 285, 403 V. Wood, 85 Me. 204, 27 Atl. 103, 673 Buckanan v. Findley, 9 Barn. & C. 738, 621 Bucklen v. Huff, 53 Ind. 474, 137, 179 Buckley v. Second National Bank, 35 N. J. L. 400, 102 V. Seymour, 30 La. Ann. 1341, 511 Buffalo City Bank v. Howard, 35 N. Y. 500, 94 Bull V. Allen, 19 Conn. 101, 3 V. Jackson, 1 A. K. Marsh. (Ky.) 168, 208, 210 V. Kasson First Nat. Bank, 123 U. S. 105, 582 Bullard v. Dorsey, 7 Sm. & M. (Miss.) 9, 629 V. Raynor, 30 N. Y. 197, 302 V. Smith, 28 Mont. 389, 195 Bullen V. Milwaukee Treading Co., 109 Wis. 41, 80 Bullock V. Ogburn, 13 Ala, 346, 196, 198 V. Wilcox, 7 Watts. (Pa.) 328, 238, 439 Bullpin V. Clark, 17 Ves. Jr. 365, 32, 33 Bumatt V. Frazier (Ky.), 40 S. W. 697, 630 Buning v. Berteling, 5 Ohio N. P. 167, 41 Bunnell v. Butler, 23 Conn. 65, 1, 198, 606 Bunsall v. Harrison, 1 Mees. & W. 611, 436 Buntain v. Button, 21 111. 190, 596 Bunzel v. Maas, 116 Ala. 68. 383, 384 Buquo V. Bank of Erin (Tenn.), 52 S. W. 775, 302 Burch V. Hubbard, 48 111. 164, 685 V. Pope, 40 S. E. 227, 250 Burchfield v. Moore, 3 El. & Bl. 683, 136, 164 Burdette v. Robinson, 97 Ga. 612, 302 Burge V. Duden (Mo. App.), 78 S. W. 653, 680 Burgen v. Straughan, 7 J. J. Marsh. (Ky.) 584, 301 Burgess v. Merrill, 4 Taunt. 468, 68 V. Nash, 66 Vt. 44, 208 V. Northern Bank, 4 Bush (Ky.) 600, 645 Burgettstown Nat. Bank v. Nill, 213 Pa. 456, 538 Burgwin v. Babcock, 11 111, 28, 629 Burham v. Baylis, 14 Hun (N. Y.) 608, 242 Burke v. Allen, 29 N. H. 106, 72 V. Dulaney, 153 U. S. 228, 232, 307, 312, 313 V. McKay, 2 How. 66, 527, 571 V. Shreve, 2 N. J. L. 92, 527, 569, 570 V. Ward (Tex. Civ. App.), 32 S. W. 1047, 541 Burkhalter v. Bank, 42 N. Y. 538, 576 V. Pratt, 1 City Ct. R. (N. Y.) 22, 286 Burkhart v. Hart, 36 Ore. 586, 288 Burks V. Wonterline, 6 Bush (Ky.) 20, 302 Burlingame v. Brewster, 79 111. 515, 173 Burnap v. Cook, 32 111. 168, 240, 415 Burnes v. Scott, 117 U„ S. 582, 307, 312 Burnett v. Hawpes' Exr., 25 Graft. (Va.) 481, 59 Burnham v. James, 100 Va. 493, 702 V. Merchants' Exchange Bank, 92 Wis. 277, 246 V. Spring, 22 Me. 495, 523 V. Tucker, 18 Me. 179, 419, 436, 635 V. Windram, 164 Mass. 313, 679 Burnham, H. M. & Co. v. Mc- Cormick, 18 Utah 42, 524, 573 Burns v. Goddard (S. C. 1905), 51 S. E. 915, 327 V. Ross, 17 Ky. L. Rep. 181, 257 V. Sparks, 26 Ky. L. Rep. 688, 185, 447 V. Yocum (Ark.), 98 S. W. 956, 574 Burpee v. Smoot, 4 Wkly. Notes Cas. (Pa.) 186, 280 Burrall v. Jones, 20 N. Y. Super. Ct. 404, 683 TABLE OF CASES. xliii [References are to Sections.'] Burrill v. Parsons, 71 Me. 282, 119, 238 V. Smith, 7 Pick. (Mass.) 291, 61 V. Stevens, 73 Me. 395, 472 Burroughs v. Bank, 70 N. C. 283, 425 V. Nettles, 7 La. 113, 419 V. Nors, 10 Barn. & G. 558, 628 V. Pacific Guano Co., 81 Ala. 255, 25 V. Richman, 13 N. J. L. 233, 238, 69 Burrow v. Zapp, 69 Tex. 474, 681 Burrows v. Klunk, 70 Md. 451, 23, 136, 146, 165 V. W. U. T. Co., 86 Minn. 499, 470 Burrus v. Life Ins. Co., 124 N. C 9, 490, 499 Burt V. Bennett, 137 Cal. 227, 257 V. Gwinn, 4 Harr. & J. 507, 303 Burton v. Stewart, 3 Wend. (N. Y.) 236, 208, 210, 211 V. Stewart, 62 Barb. (N. Y.) 194, 79 V. Wynne, 55 Ga. 615, 419 Burton's Appeal, 93 Pa. St. 214, 380 Burwell v. Orr, 84 111. 465, 136, 165 Bush V. Brown, 49 Ind. 573, 112, 184 V. Gilmore, 61 N. Y. Supp. 682, . 502 V. Peckard, 3 Harr. (Del.) 385, 119, 238, 241 V. Whittaker, 45 Misc. 75, 192 V. Wright, 10 Rob. 23, 439 Bushley v. Reynolds, 31 Ark. 657, 323 Bussard v. Levering, 6 Wheat. 102, 510, 566 Bute V. Brainerd, 93 Tex. 137, 679 Butler V. Cams, 37 Wis. 61, 25, 26 V. Moore, 73 Me. 151, 644 V. Murison, 18 La. Ann. 363, 436 V. Slocum, 33 La. Ann. 170, 365 V. Sturges, 6 Blackf. (Ind.) 186, 407 Butler & Co. v. McCall, 119 Ga. 503, 262 Butt V. Picard Ryan & M. 37, 137 Butterfield v. Davenport, 84 Ind. 590, 114 Button V. Belding, 48 N. Y. Supp. 981, 534 V. Pratt, (Ky.), 11 S. W. 821, 524 Buzzell V. Bennett, 2 Cal. 101, 63 Byerly v. Walker (La. 1907), 42 So. 931, 56 Byers v. Daugherty, 40 Ind. 198, 25 V. Harris, 56 Tenn. 652, 230, 255 Bynum v. Apperson, 9 Heisk. 632, 514 Byrd v. Bertrand, 7 Ark. 322, 183, 199 v. Campbell Printing Press & M. Co., 94 Ga. 41, 17 V. Craig, 1 Mart. N. S. (La.) 625, 202, 263 Byrne v. Schwing, 6 B. Hon. (Ky.) 199, 199 Cabbell v. Knote, 2 Kan. App. 68, 367 Cabot Bank v. Morton, 4 Gray (Mass.) 156, 645 Cadillac State Bank v. Cadillac Stave & Heading Co., 129 Mich. 15, 80 Cady V. Bradshaw, 116 N. Y. 188, 524, 525, 573 V. Goodnow, 49 Vt. 400, 304 Cagle V. Lane, 49 Ark. 465, 238 Cagwin v. Hancock, 84 N. Y. 532, 542, 87 Cain v. Apann, 1 McMull (S. C.) 258, 419 V. Gimon, 36 Ala. 168, 302 Calder v. Billington, 3 Shep. 398, 447 Caldwell v. Cook, 5 Litt. (Ky.) 180, 591 V. Dismukes (Mo. App.), 86 S. W. 270, 447 V. Hurley, 41 Wash. 296, 679 V. Jones, 115 Mich. 129, 41 V. Lawrence, 84 111. 161, 404 V. May, 1 Stew. (Ala.) 425, 332 V. Nash, 190 Mass. 507, 40 V. Ruddy, 2 Idaho 5, 189 Calfee v. Burgess, 3 W. Va. 274, 665 California Bank v. Sayre, 85 Cal. 102, • 74 California Canneries Co. v. Pa- cific Sheet Metal Co., 144 Fed. 986, 600 Callahan v. Bank of Kentucky, 82 Ky. 231, 562 Callanan v. Shaw, 24 Iowa 441 653 Callaway v. Price, 32 Graft. 1, 688 Callen v. Fawcett, 58 Pa. St. 113, 523 Calvert v. Baker, 4 Mees. & W. 417, 164 V. Roberts, 3 Camp. 343, 138 Cambridge Savings Bank v. Hvde, 131 Mass. 77, 169 Camden v. Mullen, 29 Cal. 564, 55 Camden Bank v. Hall, 14 N. J. L. 583, 135 Cameron v. Chappell, 24 Wend. 94, 304 xliv TABLE OF CASES. [References are to Sections.'] Camp V. Byrne, 41 Mo. 525, 95, 671 V. Carpenter, 52 Mich. 375, 96 V. Sturdevant, 16 Neb. 693, 456 V. Walker, 5 Watts. (Pa.) 482, 657 Campbell v. Brown, 100 Tenn. 245, 119, 473 V. Oilman, 26 111. 120, 663 V. Jones, 2 Tex. Civ. App. 263, 291, 294 V. McCormack, 90 N. C. 491, 183, 186 V. Morgan, 111 Ga. 200, 304 v. Moulton, 30 Vt. 667, 263 V. Nixon, 25 Ind. App. 90, 695 V. Pettingill, 7 Me. 126, 523 V. Rusch, 9 Iowa 337, 442 V. Upshaw, 26 Tenn. 184, 339 V. Upton. 73 N. Y. Supp. 1084, 485 Campbell Printing Press & Mfg. Co. V. Hickok, 140 Pa. St. 290, 327 Campbell's Estate, In re, 7 Pa. St. 100, 695 Canadian Bank v. Coumbe, 47 Mich. 358, 203, 274 Canadian Bank of Commerce v. Gurley, 30 U. C. C. P. 583, 246 Canadian Nat. Bank v. Fries- Breslin Co., 214 Pa. 395. 442, 479 Canady v. Detrick, 63 Ind. 485, 261 Canajoharie Nat. Bank v. Die- fendorf, 4 N. Y. Supp. 262, 292, 476, 484, 488 Canal Bank v. Bank of Albany, 1 Hill (N. Y.) 287, 641 Candee v. Smith, 93 N. Y. 349, 679 Canfield v. Arnett, 17 Colo. App. 426, 68 Pac. 784, 629, 631 V. Ives, 18 Pick. 253, 405 Cannam v. Farmer, 3 Exch. 698, 30 Cannon v. Canfield, 11 Neb. 506, 123 V. Lindsey, 85 Ala. 198, 28 v. Serrel, 15 Colo. App. 199, 236, 240 Canon v. Grigsby, 116 111. 151, 23. 145, 168 Capehart v. Moon, 5 Jones Eq. (N. C.) 178, 17 Capell V. Long, 84 N. C. 17, 419 Capital Bank v. Armstrong, 62 Mo. 59, 170 Capital City Ins. Co. v. Quinn, 73 Ala. 560, 199, 304, 699 Capital National Bank v. Rob- inson, 41. AVash. 454, 685 Capital Sav. & Trust Co. v. Montpelier Sav. Bank & Trust Co., 77 Vt. 189, 119, 477 Caponigri v. Altiere, 48 N. Y. Supp. 808, 614 Capps V. Smith, 3 Scam (111.) 177, 202 Cardwell v. Martin, 9 East 190, 138 Carey v. Miller, 25 Hun (N. Y.) 28, 28 Carey-Lombard Lumber Co. v. First Nat. Bank of Ballinger, 86 Tex. 299, 510 v. First National Bank of Ballinger (Tex. Civ. App.), 24 S. W. 260, 534 Caries v. Tattersall, 2 Man. & G. 890, 137, 150, 161 Carithers v. Levy, 111 Ga. 740, 122 Carleton v. Whitcher, 5 Vt. 196, 288 v. White, 99 Ga. 384, 570 v. Woods, 28 N. H. 290, 288 Carlisle v. Hill, 16 Ala. 19, 525 V. Wishart, 11 Ohio 172, 241 Carlton v. Bailey, 27 N. H. 230, 288 Carman v. Harrison, 13 Pa. St. 158, 621 Carmena v. Bank of Louisiana, 1 La. Ann. 369, 568 Carmichael v. Bank of Pennsyl- vania, 4 How. 567, 498, 533 Carnegie Steel Co. v. Chattanoo- ga (Tenn. Ch. App.), 38 S. W. 102, . 525, 527, 540, 544 Carnwright v. Gray, 127 N. Y. 92, 183, 186 Carolina Nat. Bank v. Wallace, 13 S. C. 347, 557, 559 Carothers v. Richards, 17 Ky. Law Rep. 42, 30 S. W. 211, 627 Carpenter v. Bank, 106 Pa. St. 170, 353 V. First Nat. Bank, 119 111. 352, 28 V. Longan, 16 Wall. 271, 366 V. McClure, 37 Vt. 127, 691 V. McClure, 39 Vt. 9, 125, 336 V. Murphree, 49 Ala. 84, 685 V. National Bank of the Re- public, 106 Pa. St. 170, 380 V. Phillips, 2 Houst. (Del.) 524, 208 V. Rosenbaum, 73 Ark. 259, 702 Carr v. Jones (Wash.), 69 Pac. 646, 701 V. National Security Bank, 107 Mass. 45, 581 Carridine v. Wilson, 61 Miss. 573, 241 Carrier v. Sears, 4 Allen 336, 2, 72, 133, 307, 679 TABLE OF CASES, xlv [References are to Sections.} Carrington v. Odom, 124 Ala. 529, 516, 566 V. Turner, 101 Md. 473, 485, 689 V. Waff, 112 N. C. 115, 310, 312 Carroll v. Sweet, 37 N. Y. St. R. 868, 574, 583, 585, 586 V. Warren (Ala. 1904), 37 So. 687, 164 Carroll County Sav. Bank v. Strather, 28 S. C. 504, 288, 681 Carruthers v. West, 11 Q. B. 143, 282 Carskaddon v. Miller, 25 Pa. Super. Ct. 47, 418 Carson v. Alexander, 34 Miss. 528, 523 V. Buckstaff, 57 Neb. 262, 369, 613 V. Reed, 137 Cal. 253, 681 Carter v. Bolin, 11 Tex. Civ. App. 283, 659, 669 V. Burley, 9 N. H. 558, 530 V. Christie, 30 Ga. 813, 239 V. Eighth Ward Bank, 67 N. Y. Supp. 300, 442 V. Flower, 16 Mees. & W. 75, 570 V. McClintock, 29 Mo. 464, 116 V. Moses, 39 111. 539, 302 V. Moulton, 51 Kan. 9, 318 V. Odom, 121 Ala. 162, 553, 554, 557, 565 V. Steele, 83 Mo. App. 211, 90 Cartwright v. Gardner, 5 Cush. (Mass.) 273, 17 V. Gray, 127 N. Y. 92. 183, 186 Caruth v. Thompson, 16 B. Mon. (Ky.) 572, 394 Cary v. James, 7 Ala. 640, 606 Caryl v. Williams, 7 Lans. 416, 682 Casco Bank v. Keene, 53 Me. 103, 74, 674 Casco Nat. Bank v. Shaw, 79 Me. 376, 556 Case V. Burt, 15 Mich. 82, 492, 528 V. Grim. 77 Ind. 565, 208 V. Maxey, 6 Cal. 276, 208 V, Mechanics' Banking As- soc, 4 N. Y. 166, 408 V. Smith, 107 Mich. 416, 288 V. Watson, 21 La. Ann. 731, 417 Case, etc., Co. v. Wolfenden, 63 Wis. 185, 472 Case Nat. Bank v. Shaw, 79 Me. 376, 562 Casey-Swazy Co. v. Anderson (Tex. Civ. App.), 83 S. W. 840, 680 Cason V. Bank, 97 Ky. 487, 145 V. Grant County Deposit Bank, 97 Ky. 487, 23 Cason V. Wallace, 4 Bush (Ky.) 175 Cassel V. Dows, 1 Blatchf. (U. S.) 335, 180 Cassell V. Davis, 1 Black's C. C. Rep., . 491 V. Morrison, 8 Bradw. (111.) 175, 238 Cassidy v. Kreamer (Pa.), 13 Atl. 744, 565 v. Saline County Bank, 14 Okla. 532, 74, 89 Castle v. Rickly, 44 Ohio St. 490, 504 Caswell V. Railroad Co., 50 Ga. 70, 359 Catbell V. Goodwin, 1 Har. & G. (Md.) 468, 61 Catlett V. McDowell, 4 Blackf. (Ind.) 556, 208 Catlin V. Henton, 9 Wis. 476, 112 Catskill Bank v. Stall, 15 Wend. (N. Y.) 364, 89, 90 Catt V. Oliver, 98 Va. 580, 313 Catton V. Sampson, 9 Adol. & E. 136, 149 Caulkins v. Fry, 35 Conn. 170, 69 V. Whisler, 29 Iowa 495, 23, 98 Causey v. Snow, 122 N. C. 326, 469 Cawein v. Brewinski, 6 Bush 457, 576 Cayuga County Bank v. Warden, 1 N. Y. 413, 502 Cazet V. Field, 9 Gray 329, 291, 295 Cecil V. Board, 30 La. Ann. 34, 87 V. Hicks, 29 Grat. (Va.) 1, 292 Cecil Bank v. Farmers' Bank, 22 Md. 148, 622 V. Held, 25 Md. 562, 241 Central Bank v. Kimball, 76 N. Y. Supp. 227, 681 v. Willard, 17 Pick. (Mass.) 150, 41, 338 Central Citv Bank v. Rice, 44 Neb. 594, 63 N. W. 60, 418 Central Nat. Bank v. Adams, 11 S. C. 452, 555, 570 V. Copp, 184 Mass. 328, 288 v. Dreydoppel, 134 Pa. St. 499, 256 V. Pratt, 115 Mass. 539, 306 V. Valentine, IS Hun (N. Y.)'417, ' 243 Central Ohio R. Co. v. Thomp- son, 2 Bond (U. S.) 296, 597 Central Park v. Lang, 1 Bosw. 202, 456, 463 Central Railroad Co. v. First National Bank of Lynchburg, 73 Ga. 383, 622 slvi TABLE OF CASES. [References are to Sections.'] Central Savings Bank v. O'Con- nor, 132 Mich. 578, 224 Central School Supply House v. Donovan, 70 111. App. 208, 489 Central Trust Co. v. Burton, 74 Wis. 329, 43 N. W. 141, 646 V. First Nat. Bank, 101 U. S. 68, 419 Chadwick v. Eastman, 53 Me. 12, ■ 174 Chaffee v. Garrett, 6 Ham. (Ohio) 421, 263, 288 V. Memphis, C. & N. W. R. Co., 64 Mo. 193, 270 Chafin v. Bank, 7 Heisk. 499, 306 Chalfoin v. Rich, 77 Cal. 476, 504 Challis V. McCrum, 22 Kan. 157, 302, 348 Chamberlain v. Gorham, 20 Johns. 144, 446 Chambers v. Gilbert, 68 Minn. ■ 183, 302 Chambers County v, Clewes, 21 Wall. 317, 476 Champenois v. Collins (Miss. 1904), 36 S. E. 72, 400, 401 Champion v. Ulmer, 70 111. 322, 25 Chancely v. Bailey, 37 Ga. 532, 293 Chandler v. Dorsett, Finch 431, 648 Chapin v. Dake, 57 111. 295, 291, 297 Chapman v. Black, 2 Barn. & Aid. 590, 303 v. Kellogg, 102 Mass. 246, 679 V. Niantic Nat. Bank (R. I.), 69 Atl. 646, 701 V. Ogden, 56 N. Y. Supp. 73, 194, 553, 554 ■V. Rose, 56 N. Y. 137, 28, 120 V. Rose, 44 How. Prac. (N. Y.) 364, 25 V. Skellie, 65 Ga. 124, 646 V. Steiner, 5 Kan. App. 326, 366 V. Wagner (Neb.), 96 N. W. 412, 698 Chappell V. Phillips, Wright (Ohio) 372, 699 V. Spencer, 24 Barb. (N. Y.) 584, 182 Charles v. Marsden, 1 Taunt. 223. 282 Charles River Nat. Bank v. Da- vis, 100 Mass. 413, 74, 676 Charlisle v. Terre Haute &c. R. R. Co., 6 Ind. 316, 312 Charlton v. Reed, 61 Iowa 166, 136. 162 Charnoch v. Anderson, 11 N. Y, Supp. 639, 278 Chase v. Hathorn, 61 Me. 505, 388, 673 V. Kellogg, 59 Hun 623, 447, 455 V. Senn, 35 N. Y. St. Rep. 36, 198, 202 Chase Nat. Bank v. Faurot, 149 N. Y. 536, 17, 21, 306, 314 Chatham Bank v. Allison, 15 Iowa 357, 534 V. Betts, 37 N. Y. 356, 303 Chatham Nat. Bank v. Pratt, 135 N. Y. 423, 681 Chaxournes v. Edwards, 20 Mass. 5, 281 Cheetham v. Ward, 1 Bos. & P. 630, 685 Cheever v. Pittsburgh, S. & L. E. R. R. Co., 150 N. Y. 59, 66, 476, 483, 484 Chelsea Bank v. Goodsell, 107 Mass. 149, 472 Chemical Bank v. Wagner, 93 Ky. 525, 370 Chemical National Bank v. Col- well (Sup.), 9 N. Y. Supp. 285, 483 Chemical National Bank of New York V. Kellogg, 183 N. Y. 92, aff'd 87 App. Div. 633, 448, 482 Chemung Bank v. Bradner, 44 N. Y. 680, 89 Chenault v. Bush, 84 Ky. 528, 595 Cheney v. Cooper, 14 Neb. 415 303 V. Higginbotham, 10 Ark. 273, 185 V. Janssen, 20 Neb. 128, 303 Cherry v. Miller, 7 Lea (Tenn.) 305, 341 v. Sprague, 187 Mass. 113, 502, 545 Chesbrough v. Wright, 41 Barb. (N. Y.) 28. 79 Cheshire v. Taylor, 29 Iowa 492, 525, 538 Chester v. Door, .41 N. Y. 279. 239, 282. 419 Cheurout v. Bee, 44 W. Va. 103, 183. 186 Chevallier's Adm'r v. State, 10 Tex. 315, 638 Chicago, Danville & Vincennes R. R. Co. V. Fields, 86 111. 270, 617 Chicago Title & Trust Co. v. Bradv, 165 Mo. 197, 198, 269 v. Brugger, 196 111. 96. 474 Chicago Trust & S. Bank v. Nordgi-en, 157 111. 663, 42 N. E. 148, 460 TABLE OF CASES. xlvii [References are to Sections.'] Chicopee Bank v. Chapin, 49 Mass. 40, 369, 376, 384 V. Philadelphia Bank, 8 Wall. (U. S.) 641, 516 Child V. McKean, 2 Miles (Pa.) 192, 198 V. Moore, 6 N. H. 33, 186 Childerston v. Hammond, 9 Serg. & R. 68, 418 Childs V. Eureka Powder Works, 44 N. H. 354, 273 Chiles V. Corn, 3 A. K. Marsh. 230, 447, 472 Chillicothe Bank v. Dodge, 8 Barb. (N. Y.) 233, 84 Chilton V. Town of Gratton, 82 Fed. 873, 87 Chipman v. Tucker, 38 Wis. 43, 317 Chisholm v. City of Montgom- ery, 2 Woods C. C. 584, Fed. Cas. No. 2686, 87 Chism V. Bank, 96 Tenn. 641, 102 V. Toomer, 27 Ark. 108 135 Chittenango First Nat. Bank V. Morgan, 6 Hun (N. Y.) 346, 89 Christiansen v. Farmers' Ware- house Assn., 5 N. D. 438, 366 Chrity v. Ogle, 33 111. 295, 208 Church V. Barlow, 9 Pick. 547, 568 V. Clapp, 47 Mich. 257, 419 V. Fowfe, 142 Mass. 52, 177 V. Howard, 17 Hun (N. Y.) 5, 167 V. Muir, 33 N. J. L. 318, 125, 288 Churchill v. Turnage, 122 N. C. 426, 302 Citizens' Bank v. Cowles, 180 N. Y. 346. 243. 439, 471 V. Oilman, 18 La. Ann. 222, 241 V. Greenbrugh, 60 App. Div. (N. Y.) 225, 87 V. Payne, 18 La. Ann. 222, 243, 376 V. Strauss, 26 La. Ann. 736, 240 Citizens' Bank of Louisiana v. Grand, 33 La. Ann. 976, 343 Citizens' Nat. Bank v. Brown, 45 Ohio St. 39, 513 V. Cade, 73 Mich. 449, 569 V. Cammer (Tex. Civ. App.), 86 S. W. 625, 447 V. Davis, 62 N. H. 695, 44 V, Donnell, 172 Mo. 384, 302, 305, 306 V. Richmond, 121 Mass. 110, 165 V. Smith, 55 N. H. 593, 28 V. Wintler, 14 Wash. 558, 402 Citizens' Sav. Bank v. Blakes- ley, 42 Ohio St. 645, 80 v. Hays, 16 Ky. L. Rep. 505, 560, 561 V. Vangham (Mich.), 73 N. W. 143, 607 Citizens' State Bank v. Adams, 91 Ind. 280, 102 V. Nore (Neb.), 93 N. W. 160, 464 City Bank v. Barnard, 1 Hall (N. Y.) 70, 79, 288 V. Perkins, 29 N. Y. 554, 75, 95, 130, 366, 418 V. Taylor, 60 Iowa 66, 699 City Bank of Dowagiac v. Dill, 102 Mich. 305, 419 City Bank of Hartford v. Press Co., 56 Fed. 260, 671 City Deposit Bank of Columbus V. Green (Iowa), 103 N. W. 96, 243, 310, 471 City National Bank v. Kusworn, 91 Wis. 166, 113, 662 V. Thomas, 46 Neb. 861, 402 City Nat. Bank of Dayton v. Clinton County Nat. Bank, 49 Ohio St. 351, 525, 544 City of Concord v. Pillsbury, 33 N. H. 310, 640 City of Elizabeth v. Force, 29 N. J. Eq. 587, 151 City Savings Bank v. Hopson, 53 Conn. 453, 504, 526, 545 Claffin V. Torlina, 56 Mo. 369, 288 Clafflin V. Boorum, 122 N. Y. 385, 292, 302, 303, 306 V. Farmers' Bank, 25 N. Y. 293, 119, 124, 370, 440 V. Rowlinson, 2 Kan. App. 82, 376 Claflin V. Tushler, 66 Barb. (N. Y.) 649, 312 Clanin v. Easterly Harvesting Mach. Co., 118 Ind. 372, 307, 314 Clapp V. Hanson, 15 Me. 345, 304 V. Mock, 8 Ala. 122, 392 Claridge v. Dalton, 4 Maule & Selw. 229, 523 V. Kleet, 15 Pa. St. 255, 322 Clark V. Allen, 132 Pa. St. 40, 339 V. Ash, 5 N. Brunsw. 211, 208 V. Bryce, 64 Ga. 486, 315, 316, 318 V. Butts, 73 Minn. 361, 403 V. Castleman, 1 J. J. Marsh. 69, 523 xlviii TABLE OF CASES. [References are to Sections.1 Clark V. City of Des Moines, 19 Iowa 199, 87 V. Condit, 11 Mo. 79, 321 V. Day (N. J.), 60 Atl. 39, 302 V. Dederick, 31 Md. 148, 419 V. Ely, 2 Sandf. Ch. (N. Y.) 166, 242 V. Gallagher, 20 How. Pr. (N. Y.) 308, 240 V. Havard, 111 Ga. 242, 303 V. Hawkins, 5 R. I. 219, 604, 612 V. Johnson, 54 111. 296, 20 V. Loker, 11 Mo. 97, 241 V. Loomis, 5 Duer 468, 303 V. Mallory, 185 111. 227, 679 V. Marlow, 20 Mont. 249, 183 186 V. Moses, 50 Ala. 326, ' 502 V. Peabody, 9 Shep. (Me.) 500, 208, 266 V. Pease, 41 N. H. 414, 114 V. Porter, 90 Mo. App. 143, 119 238 V. Ricker, 14 N. H. 44, 288*, 295 V. Ross (Iowa), 60 N. W. 627, 343 V. Sigourney, 17 Conn. 511, 263 V. Sisson, 4 Duer 408 303, 304, 305 V. Stackhouse, 2 Mart. (O. S. La.) 319, 119 V. Tanner, 100 Ky. 275, 122, 243, 439, 441 V. Thayer, 105 Mass. 216, 383 V. Tryon, 23 N. Y. Supp. 780, 418 V. Valentina, 41 Ga. 143, 43 V. Whitaker (La.), 41 So. 580, 439, 445 V. Whittaker, 50 N. H. 474, 428 V. Young, 1 Cranch 181, 679 Clark, Appeal of, 57 Conn. 565, 193 Clark Co. v. Rice, 106 N. W. 231, 292 Clarkemont Bank v. Wood, 10 Vt. 582, 3 Clark Nat. Bank v. Bank of Al- bion, 52 Barb. (N. Y.) 592, 243 Clause V. Press Co., 118 111. 612, 600 Clauson v. Gustin, 5 N. J. L. 821, 180 Claxon V. Demaree, 14 Bush (Ky.) 172, 17 Claxton V. Swift, 2 Show. 441, 679 Clay V. Cottrell, 18 Pa. St. 408, 419 V. Layton, 134 Mich. 317, 194, 214 V. McClanahan, 5 B. Mon. (Ky.) 241, 650 Clemens v. Loggins, 1 Ala. 622, 447 Clement v. Clement, 69 Wis. 599, 94 V. Leverett, 12 N. H. 317, 21, 203, 380, 390 V. Reppard, 15 Pa. St. Ill, 184, 195 V. Sigur, 29 La. Ann. 798, 239 Clements v. Loggins, 2 Ala. 514, 654, 656 Cleveland, City of, v. Cleveland, C, C. & St. L. Ry., 93 Fed. 113, 417 Cleveland School Furn. Co. v. Greenville (Ala. 1906), 41 So. 862, 87 Clews V. Bank of New York, 89 N. Y. 418, 581, 642 Clifford V. Parker, 2 Man. & G. 909, 154 Clifford Banking Co. v. Dono- van Commission Co., 195 Mo. 262, 22, 119, 144, 288 Clifton Forge v. Alleghany Bank, 92 Va. 283, 87, 392 v. Brush Electric Co., 92 Va. 289, 87 Clinch Valley Coal & I. Co. v. Willing, 180 Pa. St. 165, 322 Cline V. Guthrie, 42 Ind. 227, 13 Clinton Nat. Bank v. Graves, 48 Iowa 228, 29 V. Stieger, 67 N. J. Eq. 522, 400 Clopper V. Union Bank, 7 Har. & J. (Md.) 92, 337, 338 Clopton V. Elkin, 49 Miss. 95, 128 Close V. Fields, 2 Tex. 232, 23 Closz V. Miracle, 103 Iowa 198. 520, 523, 524 Clothier v. Adriance, 51 N. Y. 322 119 126 Cloug'h V. Baker, 48 N. H. 254, ' 324 V. Holden, 115 Mo. 336, 511, 515 Clute V. Frazier, 58 Iowa 268, 419 Coakley v. Christie, 20 Neb. 509, 260 328 Coates v. Preston, 105 111. 470. ' 631 Coatsworth v. Barr, 11 Mich. 199, 302 Cobb V. Arnold, 49 Mass. 403, 195 V. Doyle, 7 R. I. 550, 246 Cobleskill First Nat. Bank v, Emmitt, 52 Kan. 603. 402 Coburn v. Odell, 30 N. H. 540, 288 V. Webb, 56 Ind. 96, 135, 168 Cochran v. Atchison, 27 Kan. 728, 104 v. Foxchase Bank, 209 Pa. 34. 58 Atl. 117, 488 V. Nebeker, 48 Ind. 459, 171 TABLE OF CASES. slix [References are to Sections.'\ Cochran v. Siegfried (Tex. Civ. App.), 75 S. W. 542, 408 Cochrane v. Dickenson, 40 La. Ann. 127, 380 Cocke V. Branch Banli, 3 Ala. 175, 91 V. Chaney, 14 Ala. 65, 376 Cocker v. Cocker, 2 Mo. App. 451, 418 Cockey v. Forrest, 3 Gill & J. 482, 303 Cockran v. Perkins, 40 So. 351, 222 Cocks V. Nash, 9 Bing. 341, 679 Coco V. Calihan, 21 La. Ann. 624, 292 Codwise v. Gleason, Fed. Cas. No. 2939, 280 Coffee V. Planters' Bank of Tenn., 13 How. (U. S.) 183, 297 Coffelt V. Wise, 62 Ind. 451, 105, 114 Coffin V. Anderson, 4 Blackf. (Ind.) 395, 96 V. Grand Rapids Co., 61 N. Y. Super. Ct. 51, 311 V, President Grand Rapids Hydraulic Co., 18 N. Y. Supp. 783, 362 Coffman v. Bank of Kentucky, 41 Miss. 212, 465, 699 V. Lookout Bank, 5 Lea (Tenn.) 232, 106 V. Wilson, 2 Mete. (Ky.) 542, 315 Coggill V. Bank, 1 N. Y. 113, 673 Coghlin V. May, 17 Cal. 515, 282, 419 Cogwill V. Petifish, 51 Mo. App. . 264, 28 Cohen v. Prater, 56 Ga. 203, 446, 449 V. Teller, 93 Pa. St. 123, 74, 673 Colby V. Lyman, 4 Neb. 429, 667 V. Parker, 34 Neb. 510. 240 Cole V. Carver, 6 East 109, 301 V. Hills, 44 N. H. 227, 137, 159, 302 V. Saulpaugh, 48 Barb. 104, 353 V, Temple, 142 Ind. 498, 41 N. E. 942, 646 V. Williams, 12 Neb. 440, 28 V. Wintercost, 12 Tex. 118. 523 Coleman v. Post, 10 Mich. 422, 352 V. Riches 16 C. B. 104, 414 v. Smith, 55 Ala. 368, 359 Collier v. Mahan, 21 Ind. 110, 348 V. Waugh, 64 Ind. 456, 288 Colliger v. Francis, 61 Tenn. 422. 191 Collingwood v. The Merchants' Bank, 15 Neb. 118, 491, 496, 685 Joyce Defenses — iv Collins V, Allen, 12 Wend. (N. Y.) 356, 635 V. Gilbert, 94 U. S. 754, 240, 243 V. Makepeace, 13 Ind. 448, 153 V. Martin, 1 Bos. & P. 648, 21, 199, 233, 270, 390 V. McDowell, 65 Minn. 10, 474 V. Schmidt, 126 Wis. 227, 473 Colonial & N. S. Mtg. Co. v. Brad- ley, 4 S. D. 158, 47 V. Stevens, 3 N. D. 265, 47 Colorado National Bank of Den- ver V. Boettcher, 4 Colo. 185, 581 Colston V. Pemberton, 47 N. Y. Supp. 1110, 212 Columbus City Bank v. Bruce, 17 N. Y. 507, 670 Columbus Ins. Co. v. First Nat. Bank, 73 Miss. 96, 463 Colyei V. Craig, 11 B. Mon. (Ky.) 73, 626 Comanche National Bank v. Dab- ney (Tex. Civ. App.), 44 S. W. 413, 306, 615 Combes v. Chandler, 33 Ohio St. 178, 380 Comelander v. Bird, 11 Ala. 913, 324 Comings v. Leedy, 114 Mo. 454, 30 Commerce Bank v. Bemero, 17 Mo. App. 313, 74 Commercial & Farmers' Bank v. Patterson, 2 Cranch C. C. 540, 172 Commercial Bank v. Atherton, 1 Smedes & M. 641, 443 V. Barkendale, 36 Mo. 563, 523 V. Bissett, 7 Manitoba Rep. 586, 517 V. Claiborne, 5 How. (Miss.) 301, 387 V. Clarke, 180 Mass. 249, 390 V. Cuvillier, 18 Up. Can. Q. B. 378, 682 V. First National Bank, 30 Md. 11, 99, 101, 641 V. J. K. Armsby, 120 Ga. 74, 414 V. St. Croix Mfg. Co., 10 Shep. (Me.) 280, 85 Commercial Bank of Albany v. Hughes, 17 Wend. 94, 573 Commercial Bank of Kentucky V. Varnum, 49 N. Y. 269, 527 Commercial Bank of Natchez v. Perry, 10 Rob. 61, 490 Commercial Nat. Bank v. Arm- strong. 148 U. S. 50, 583 Commercial Nat. Bank of Syra- cuse V. Zimmerman, 185 N. Y. 210, 508 TABLE OF CASES. [References are to Sections.] Commissioners Jefferson Co. v. Fox, 1 Morris 48, 699 Commissioners of Marion Co. v. Clark, 94 U. S. 278, 476 Commonwealtti v. Emigrant In- dustrial Sav. Bank, 98 Mass. 12, 151 Compton V. Oilman, 19 W. Va. 312, 576, 582, 589 V. Smith, 120 Ala. 233, 47 Comstock V. Draper, 1 Man. (Mich.) 481, 419 V. Hier, 73 N. Y. 269, 246 Conable v. Smith, 61 Hun (N. Y.) 185, 15 N. Y. Supp. 924, 673 Conant v. Wills, 1 McLean 427, 505 Concord Granite Co. v. French, 65 How. Prac. 317, 697 Cone V. Baldwin, 12 Pick. 545, 439 V. Rees, 11 Ohio Cir. Ct. R. 632, 3 Conger v. Babbet, 67 Iowa 13, 9, 302 V. Bean, 58 Iowa 321, 118 Congregational Society v. God- dard, 7 N. H. 430, 312 Congress Brewing Co. v. Haben- icht, 82 N. Y. Supp. 481, 573 Conklin v. Roberts, 36 Conn. 461, 291, 297 Conkling v. Underbill, 3 Scam. (111.) 388, 303 V. Vail, 31 111. 166, 122 Conley v. Sims, 71 Ga. 161, 291 Conn V. Coburn, 7 N. H. 368, 372, 63, 64 V. Gano, 1 Ohio 483, 516 Connecticut Trust & Safe Dep. Co. V. Fletcher, 61 Neb. 166. 359 366 V. Trumbo (Neb.), 90 N. W.' 216. 359 698 Connell v. Bliss, 52 Me. 476, ' 645 V. Nebeker, 58 Ind. 425, 661 Connerly v. Planters & Mer- chants' Ins. Co., 66 Ala. 432, 270, 282, 516 Gonnersville v. Connersville Hydraulic Co., 86 Ind. 184, 232 Connor v. Martin, 1 Strange 516, 51 V. Routh, 8 Miss. (7 How.) 176, 137 V. Thornton (Tex.), 51 S. W. 354, 172 Conover v. Stillwell, 34 N. J. 54, 183, 189, 195, 196 Conrad v. Le Blanc, 29 La. Ann. 123, 30, 57 V. Manning, 125 Mich. 77, 215 Conrad Seipp Brew. Co. v. Mc- Kittrich, 86 Mich. 191, 186 Conroe v. Birdsall, 1 Johns. Cas, (N. Y.) 127, 63 Conroy v. Logue, 87 Minn. 289, 202 Consolidated Association of Plant- ers V. Avegno, 28 La. Ann. 552, 394, 395 Consolidation National Bank v. Kirklaned, 99 App. Div. 121, 119 Consumers' Brewing Co. v. To- bin, 19 App. D. C. 353. 117 Consterdine v. Moore (Neb.), 96 N. W. 1021, 366 Continental Bank v. Common- wealth Bank, 50 N. Y. 575, 642, 676 Continental Life Ins. Co. v. Bar- ker, 50 Conn. 569, 341 Continental National Bank v. Crosby, 1 N. Y. Supp. 256, 353 V. First Nat. Bank, 84 Miss. 103, 581 V. McGeoch, 73 Wis. 332, 366 V. Metropolitan Nat. Bank, 107 111. App. 455, 100 V. Strauss, 137 N. Y. 148, 68 V. Townsend, 87 N. Y. 8, 246, 249, 391 V. Wells, 73 Wis. 332, 367 Converse v. Bartels (Kan.), 46 Pac. 940, 123 V. Foster, 32 Vt. 828, 288, 294 V. Moulton, 2 Root (Conn.) 195, 312, 320 Conwell V. Pumphrey, 9 Ind. 135, 260 Cooch V. Money, 5 Houst. (Del.) 177, 17 Cook V. American Tubing & W. Co. (R. I. 1905), 65 Atl. 641, 81 V. Buhrlage, 159 Ind. 162, 49 V. Cook, 24 S. C. 204, 693 V. Forker, 193 Pa. St. 461, 555 V, Larkin, 19 La. Ann. 507, 434 V. Lister, 13 C. B. N. S. 543, 274 V. Merchants' Nat. Bank, 72 Miss. 982, 532 V. Mix, 11 Conn. 477, 208 V. Smith. 3 Sandf. Ch. 333, 449 V. Weirman, 51 Iowa 561, 79 V. Whitfield, 41 Miss. 541. 325, 668 Cooke V. Darwin, 18 Beav. 60, 695 V. Pomeroy, 65 Conn. 466, 540 V. State Nat. Bank, 52 N. Y. 96, 82, 581 Cooks V. Pearce, 23 S. C. 239, 251 TABLE OF CASES. iReferenees are to Sections.'] Cooley V. Barcroft, 43 N. J. L. 363, 50 Coolidge V. Burns, 25 Ark. 241, 447 V. Payson, 2 Wheat. 63, 491 Coon V. Moore, 2 Pa. Co. Ct. R. 246. 284 Cooney v. United States Wringer Co., 101 111. App. 468, 688 Cooper V. Bank of Indian Terri- tory, 4 Okla. 632, 47 V. McClurkan, 22 Pa. St. 80, 89 V. Meyer, 10 Barn. & C. 468, 641 V. Nock, 17 Peck (III.) 301, 419 V. Paige, 24 Me. 73, 504 V. Tappan, 4 Wis. 362, 302 V. Thompson, 20 La. Ann. 182, 293 Coor V. Spicer, 65 N. C. 401, 303 Coors V. German Bank, 14 Colo. 202, 308, 348 Coove V. Callaway, 1 Esp. 115, 511 Copp V. Sawyer, 6 N. H. 386, 198, 214 Coquard v. Village of Oquawka, 192 III. 355, 87 Corbin v. Sistrunk, 19 Ala. 203, 329 V. Southgate, 3 Hen. & M. • (Va.) 319, 199, 203 Corbitt V. Miller, 43 Barb. (N. Y.) 305, 386 Corby v. Butler, 55 Mo. 398, 119 V. Weddle, 57 Mo. 452, 25, 28 Cork V. Bacon, 45 Wis. 192, 583 Cornell v. Bliss, 52 Me. 476, 23 V. Hichens, 11 Wis. 353, 251 Cornett v. Hafer, 43 Kan. 60, 569 Cornish v. Wolverton, 32 Mont. 456, 237, 447 Corser v. Paul, 41 N. H. 24, 74 Cory V. Scott, 3 Barn. & Aid. 619, 523 Coryell v. Croxall, 5 N. J. L. 764, 636 Cosgrove v. Cummings, 195 Pa. St. 497, 217 V. McKasy, 65 Minn. 426, 41, 639 Costelo V. Crowell, 134 Mass. 280, 343, 361 Cotes V. Davis, 1 Camp 485. 51 Cottam V. Smith, 27 La. Ann. 127, 93 Cottle V. Cleaves, 70 Me. 256, 291, 294 Cotton V. Evans. 21 N. C. 284, 89 V. Graham. 84 Ky. 672, 186, 240 V. John Deere Plow Co., 14 Okla. 605, 446 V. Simpson. 8 Ad. & E. 136, 182 V. Van Bokkelin, 21 N. C. 284, 131 Cottrell v. Watkins, 89 Va. 801, 282 Couch v. McKee, 1 Eng. (Ark.) 484. 236 Council Bluffs Iron Works v. Cuppey. 41 Iowa 104, 11, 439, 627 Counsell v. Livingston, 2 Ont. Law Rep. 582, 552 County of Bates v. Winters, 97 U. S. 83, 87 Coupry V. Dufau, 1 Mart. N. S. (La.) 9, 230 Court Valhalla v. Olson, 14 Colo. App. 243, 117 Courtney v. Doyle, 92 Mass. 122, 183 Cover V. Myers, 75 Md. 406, 474 Cowdrey v. Vandenburgh, 101 U. S. 572, 23, 679 Cowee V. Cornell, 75 N. Y. 98, 192, 193 Cowell V. Harris, 2 Ohio Cir. Ct. R. 404, 289 Cowgill V. Jones, 99 Mo. App. 390, 303 Cowie V. Halsall, 4 Barn. & Aid. 187, 164 Cowing V. Altman, 79 N. Y. 167, 419 V. Altman, 71 N. Y. 435, 291, 292 V. Cloud, 16 Colo. App. 326, 324 Cowles V. Gridley, 24 Barb. (N. Y.) 301. " 314 V. McVickar, 3 Wis. 725, 255 Cox V. Bank, 8 N. J. L. 172, 612 V. Bank (Ind. App.), 47 N. E. 841, 635 V. Beck, 83 Fed. 269, 306 V. Boone, 8 W. Va. 500, 576 V. Bruce, 18 E. B. Div. 147, 414 V. Cayan (Mich.), 76 N. W. 96, 366 V. Citizens' State Bank (Kan.), 85 Pac. 762, 575 V. Cox, 25 Kv. L. Rep. 1934, 183 V. Maddux, 72 Ind. 206, 679 V. National Bank, 100 U. S. 704, 502, 514 v. Smith, 1 Nev. 161, 192 Coyle V. Campbell, 10 Ga. 570. 288 V. Fowler, 3 J. J. Marsh (Ky.) 473, 198, 202 Cozen V. Middleton, 118 Pa. St. 622, - 385 Craig V. Butler, 9 Mich. 21, 614 V. Price, 23 Ark. 633, 490 V. Vicksburg, 31 Miss. 216, 439 Craig & Co. v. Proctor, 6 R. I. 547, 288 Craighead v. Building & Loan Ass'n, 69 Ark. 332, 316 Hi TABLE OF CASES. [References are to Sections.'\ Craighead v. McLonery, 99 Pa. St. 211, 135, 170 73 208 208 194 119 182 119 29 635 263 232 566 109 75 256 302 679 V. Peterson, 72 N. Y. 279, Cragin v. Fowler, 34 Vt. 326, Craigne v. Hall & Farr, 72 Vt. 104, Crampton v. Newton's Est., 132 Mich. 149, V. Perkins, 65 Md. 22, Crandall v. Bank, 61 Ind. 349, V. Vicery, 45 Barb. (N. Y.) 156, Cranson v. Goss, 107 Mass. 439, Crawford v. Beal, 1 Dud. (Ga.) 204, V. Beard, 4 J. J. Marsh. (Ky.) 187, V. Board of Commissioners of Noble Co., 8 Okla. 450, V. Branch Bank of Mobile, 7 , Ala. 206, V. Cato, 22 Ga. 594, V. Hildebrant, 6 Laws (N. Y.) 502, V. Lyttle, 70 N. C. 385, V. Nimmons, 180 111. 143, V. Roberts, 8 Oreg. 324, V. Spencer, 92 Mo. 498, 297, 298, 376 V. West Side Bank, 100 N. Y. 50, 152, 577, 581 Crayton v. Clark, 11 Ala. 787, 593, 594 Creamer v. Perry, 17 Pick. 332, 525 Credit Co., Ltd., v. Howe Ma- chine Co., 54 Conn. 357, 81, 242, 287, 476 Creed v. Stevens, 4 Whart. (Pa.) 223, 303 Crenshaw v. Collins, 70 Ark. 5, 39 Creston Nat. Bank v. Salmon, 93 S. W. 288. 254, 442, 476 Creteau v. Foote, 57 N. Y. Supp. 1103, Creveling v. Saladino, 89 N. Y. Supp. 834. Crew V. Bank, 31 Grat. (Va.) 348, Crim V. Starkweather, 88 N. Y. 340, 464, 506. 507, 511 Cripps V. BufRngton (Iowa 1906), 108 N. W. 231, 628 V. Davis, 12 Mees. & W. 159. 419 Crisp V. Griffiths, 2 Cromp. M. & R. 159, 688 Crissey v. Interstate Loan & T. Co., 59 Kan. 561, 460 505 194 178 Cristy v. Campau, 107 Mich. 172, 126, 280 Crocker v. Getchell, 10 Shep. (Me.) 392, 230 V. Gilbert, 9 Cush. (Mass.) 131, 390 Crockhite v. Nebeker, 81 Ind. 319, 23 Crofton V. Crofton, 33 Ch. Div. 612, 523 Crofut V. Aldrich, 54 111. App. 541, 117 Cromer v. Piatt, 37 Mich. 132, 552 Cromwell v. Arrott, 1 Serg. & R. (Pa.) 180, 419 V. County of Sac, 94 U. S. 362, 476 Cronise v. Kellogg, 20 111. 11, 272, 274 Cronkhite v. Nebeker, 81 Ind. 319, - 136, 146, 164 Cronly v. Hall, 67 N. C. 9, 293 Crooke & Fowkes v. Mali, 11 Barb. 205, 7, 359, 376 Crooker v. Holmes, 65 Me. 195, 321 Crosby v. Heartt, 15 La. 304, 439 V. Lane, Fed. Cas. No. 3425, 284, 439 V. Morton, 7 La. 227, 490, 494 V. Roub, 16 Wis. 616, 404 V. Tucker, 21 La. Ann. 512, 260 Crosley v. Roub, 16 Wis. 616, 359 V. Tanner, 40 Iowa 136, 437 Crosly V. Tucker, 21 La. Ann. 512, 333 Cross V. Herr, 96 Ind. 96, 122 Crossan v. May, 68 Ind. 242, 655 Crossley v. Ham, 13 East. 498, 419, 420 Grossman v. Fuller, 17 Pick. (Mass.) 171, 336 Crosswell v. Lebree, 81 Me. 44, 161 Crotty V. Hodges, 4 Man. & G. 561, 164 Crouch V. Wagner, 63 App. Div. (N. Y.) 526, 125 Crout V. DeWolf. 1 R. I. 393, 73, 74 Crowe V. Reem (Ind. App. 1905), 75 N. E. 302, 343 Crowell V. Plant, 53 Mo. 145, 347 Cruger v. Armstrong, 3 Johns. Cas. 5, 523 V. Lindheim (Tex. App.), 16 S. W. 420, 534 Crum V. Abbott, 2 McLean (U. S.) 233, 149 Crumbaugh v. Postell, 20 Ky. L. Rep. 1366, 46, 49 TABLE OP CASES. liii [References are to Sections.'] Crystal v. Hutton, 1 Cal. App. 251, 701 CuUinan v. Union Surety & Guar- anty Co., 80 N. Y. Supp. 58, 581 Cullum V. Bank, 4 Ala. 21, 37 Am. Dec. 725, 664 V. Casey, 9 Port. 131, 527 Culver V. Hide & Leather Bank, 78 III. 626, 119 V. Marks, 122 Ind. 554, 523, 586 Culverhouse v. Alexander, 2 Younge & C. Exch. 218, 445 Cumberland Bank v. Hann, 18 N. J. L. 222, 419, 627, 635, 636 Cuminsky v. Kleiner, 68 N. Y. Supp. 776, 585 Cummings v. Boyd, 83 Pa. St. 372, 353, 354 V. Hummer, 61 111. App. 393, 347 V. Little, 45 Me. 183, 3, 282, 419 V. Morris, 25 N. Y. 625, 418, 419 V. Thompson, 18 Minn. 246, 27 Cunningham v. Bank, 71 Ga. 400, 291, 298 V. Davis, 175 Mass. 213, 695 V. Holmes, 66 Neb. 723, 92 N. W. 1023, 467 V. Peterson, 29 Ont. R. 346, 137 V. McDonald, 98 Tex. 316, 698 V. Potter, 23 Ky. L. Rep. 847, 324, 447 Cunyus v. Guenther, 96 Ala. 564, 183 Currie v. Misa, L. R. 10 Exch. 153, 246 Curry v. Bank, 8 Port. (Ala.) 360, 180 V. Van Wagner, 32 Hun (N. Y.) 453, 341 Curtice v. Hokanson, 38 Minn. 510, 320 Curtin v. Salmon River Hydrau- lic Gold Mining & Ditch Co., 141 Cal. 308, 288 Curtis V. Brooks, 37 Barb. 476, 679 V. Mohr, 18 Wis. 615, 359, 376 V. Sprague, 51 Cal. 239, 525 Curtiss V. Martin, 20 111. 557, 658 Gushing v. Field, 70 Me. 50, 179 V. Wyman, 44 Me. 121. 307, 333, 684 Cushman v. Harrison, 90 Cal. 297, 523, 570 Cussen v. Brandt, 97 Va. 1, 467 Cuthbert v. Haley, 8 Term R. 390, 305 Cutler V. Cook, 77 Mo. 388, 431, 637 Cuyler v. Cuyler, 2 Johns. (N. Y.) 186. 337 D Dagal V. Simmons, 23 N. Y. 491, 442 Dages V. Lee, 20 W. Va. 584, 41 Dahle v. Starke, 96 N. W. 353, 263 Dahlman v. Antes (Iowa 1906), 109 N. W. 784, 117 Dailey v. Sharkey, 29 Mo. App. 518, 516 Dainelly v. Cabaniss, 52 Ga. 211, 87 Dair v. United States, 16 Wall. (U. S.) 1, 316 Dalrymple v. Hillenbrank, 62 N. Y. 5, 125 V. Wyker, 60 Ohio St. 108, 183 Damon v. Pardow, 34 Cal. 278, 3 Dampskibsaktieselskabet Habil V. United States Fidelity & Guaranty Co. (Ala.), 39 So. 54, 680 Dana v. Sawyer, 22 Me. 244, 511 Daudistel v. Beninghof, 71 Ind. 389, 44 Danforth v. Bank, 1 C. C. A. 62, 615 Daniel v. Boyce, 96 Ga. 566, 47 V. Cartony, 1 Esp. 274, 304 V. Daniel, Dud. (Ga.) 239, 138 Daniels v. Gower, 54 Iowa 319, 315, 316 V. Wilson, 21 Minn. 530, 238, 240, 440, 472 Danieri v. Gazzola, 139 Cal. 416, 680 Darby v. Institution, 1 Dill (U. S.) 141, 292 Darst V. Backus, 18 Neb. 231, 303 Darwall v. Smith's Admr., 26 Gratt. (Va.) 878, 59 Darwin v. Rippey, 63 N. C. 318, 167 Dashiell v. Merchants' & P. Sav- ings Bk. (Va.), 22 S. E. 169, 402 Davega v. Moore, 3 McCord (S. C.) 482, 24 Davenport R. Co. v. Rogers, 39 Iowa 298, 343 Davey v. Jones, 13 Vroom 28, 555 V. Kelly, 66 Wis. 452, 342 V. Waughtal, 99 Iowa 654, 681 Davidson v. Bartlett, 1 Up. Can. Q. B. 50, 340 V. Keyes, 2 Rob. (La.) 254, 199 V. Lanfer, 4 Wall, (U. S.) 447, 144 V. Powell, 114 N. C. 575, 451 V. Stuart, 10 La. 146, 41, 42 Davies v. Byrne, 10 Ga. 329, 494 V. Jenkins, 6 L. R. Ch. Div. 728. 41 v. Stainbank, 6 De Gex, M. & G. 679, 340 liv TABLE OF CASES. IReferences are to Sections.^ Daviess v. Newton, 5 J. J. Marsh. (Ky.) 89, 454 Davis V. Bank, 66 Ga. 651, 390 V. Barrington, 30 N. H. 517, 3 V. Bartlett, 12 Ohio St. 584, 381 V. Bauer, 41 Ohio St. 257, 158 V. Bean, 114 Mass. 358, 603 V. Benger, 57 Ind. 54, 29 V. Blanton, 71 Miss. 821, 238 V. Board, 74 N. C. 374, 290 V. Bower, 29 Colo. App. 422, 317 V. Bradley, 26 La. Ann. 555, 419, 436 V. Briggs, 139 Me. 304, 419, 634 V. Building Union, 32 Md. 285 121 V. Carlisle, 6 Ala. 707, 135 V. Clemson, 6 McLean (U. S.) 622, 277 V. Coleman, 29 N. C. 424, 172 V. Converse, 35 Vt. 503, 302 V. Dayton, 7 Misc. Rep. 488, 278 V. Elmira Sav. Bank, 161 U. S. 275, 306 v. Eppler, 38 Kan. 629, 522, 538, 569, 573 V. First Nat. Bank, 5 Neb. 242, 46, 56 V. Foy, 7 Sm. & M. (Miss.) 64, 30 V. Gray, 61 Tex. 506, 316, 318 v. Henry, 13 Neb. 497, 136, 170, 171 V. McVickers, 11 111. 327, 263 V. Merchants' National Bank, 103 Ky. 586, 123 V. Merrill, 51 Mich. 480, 92 V. Miller, 14 Gratt. (Va.) 1, 282, 419, 593 V. Neligh, 7 Nebr. 78, 84, 419, 431, 593, 635 V. Noll, 38 W. Va. 66, 635, 637 V. Randall, 115 Mass, 547, 270, 306 V. Rice, 88 Ala. 388, 110 V. Rockingham Ins. Co., 89 Va. 290, 80 V. Seelev, 71 Mich. 209, 119, 296 V. Sittig, 65 Tex. 497, 456, 644 V. Smith, 75 Mo. 219, 33 V. Snider, 70 Ala. 315, 27 V. Stout, 126 Ind. 12, 341 V. Thomas, 5 Leigh (Va.) 1, 653 V. Wait, 12 Oreg. 425, 208, 240, 274 V. West Saratoga Bldg. Union, 32 Md. 285, 80, 119 V. Willis, 47 Tex. 154, 94 Davis Co. V. Buckles, 89 111. 237, 134, 681 Davis, McDonald & Davis v. Tabdy, 107 Mo. App. 437, 302 Davis Sewing Machine Co. v. Best, 105 N. Y. 59, 464 V. Buckles, 89 111. 237, 134, 681 Davison v. Franklin, 1 Barn. & Adol. 142, 653 Dawson v. Bank, 5 111. 56, 339 v. Goodyear, 43 Conn. 548, 391 V. Graham, 48 Iowa 378, 122 V. Tolman, 37 111. App. 134, 270 Day V. Billingsley, 66 Ky. 157, 269 V. Cutler, 22 Conn. 632, 288 V. Long, 26 Ky. L. Rep. 123, 183 2^8 V. Nix, 9 J. B. Moore 159,' 208 Dayton v. Trull, 23 Wend. 345, 503 Deaderick v. Mitchell, 65 Tenn. (6 Baxt.) 35, 126 Deale v. Krofft, 4 Cranch C. C. (U. S.) 448, 607 Dean v. Carruth, 108 Mass. 242, 183, 186, 193 V. King, 22 Ohio St. 118, 414 V. Richmond, 23 Mass. (6 Pick.) 461, 43 Deardorff v. Foresman, 24 Ind. 481, 316, 319 Dearman v. Trimmier, 26 S. C. 506, 365 De Bruhl v. Patterson, 12 Rich. L. (S. C.) 363, 657 Debuys v. Johnson, 4 Mart. N. S. (La.) 286, 199 De Camp v. Hanna, 29 Ohio St. 467, 25, 26, 28 Decatur Bank v. Spence, 9 Ala. 800, 22 Decker v. Eisenhauer, 1 Pen. & W. (Pa.) 476, 659 Dedham Nat. Bank v. Everett Nat. Bank, 177 Mass. 392. 643 Deener v. Brown, 1 MacArthur (D. C.) 350, 278 Deere v. Marsden, 88 Mo. 512, 359 Deering v. Wiley, 56 111. App. 309, 524 Deitz V. Regnier, 27 Kan. 94, 89 De la Chaumette v. Bank of Eng- land, 9 Barn..& C. 208, 408 Delameter v. Kearns, 35 111. App. 634, 460 Delauney v. Mitchell, 1 Starkie 439, 391 Delfosse v. Metropolitan Nat. Bank, 98 111. App. 123, 232 Dell V. Oppenheimer, 9 Neb. 454, 302 TABLE OF CASES. Iv [References are to Sections.'] Delsman v. Friedlander, 40 Oreg. 33, 524, 538, 573 Delta County Bank v. McGrana- han (Wash. 1905), 79 Pac. 769, 112 Demelman v. Brazier, 79 N. E. 812, 509 De Mott V. Starkey, 3 Barb. (N. Y.) 403, 240, 419, 435, 472 De Nayer v. Bank, 8 Neb. 105, 655 Denheim v. Wilmarding, 55 Pa. St. 73, 13 Dennis v. Grove, 4 Pa. Super. Co. 480, 57 V. Morris, 3 Esp. 158, 523 V. Water Co., 10 Cal. 369, 503 Denniston v. Bacon, 10 Johns. (N. Y.) 198, 210 Dennistown v. Stewart, 17 How. 606, 530 Denny v. Palmer, 27 N. C. 710, 525 Deposit Bank of Owensboro v. Robertson (Ky.), 34 S. W. 23, 614 Deposit Bank of Sulphur v. Peak, 23 Ky. L. Rep. 19, 342, 680 Deppen v. German-American Title Co., 24 L. Rep. 1110, 441 Depuy V. Swart, 3 Wend. (N, Y.) 135, 651 Derby v. Thrall, 44 Vt. 413, 137, 159 Derr v. Keaough, 96 Iowa 396, 136, 170 Derrick v. Hubbard, 27 Hun 347, 175, 305 Derry v. Mazarine, 1 Ld. Raym. 147, 42 Desbrow v. Weatherly, 6 Car. & P. 758, 154, 164 Desha v. Robinson, 17 Ark. 228, 208, 210, 211 Des Moines Ins. Co. v. Mclntire, 99 Iowa 50, 63 Des Moines Valley R. Co. v. Graff, 27 Iowa 99, 231 D'Esterre v. City of Brooklyn, 90 Fed. 586, 476 Detwiler v. Bish, 44 Ind. 70, 25 Deussen v. Mogelin, 24 Tex. Civ. App. 339, 214 Devendorf v. West Virginia Oil & Oil Land Co.. 17 W. Va. 135, 74 Devlin v. Brady, 36 N. Y. 531, 288 De Vries v. Conklin, 22 Mich. 255, 48 Devries v. Shumate, 53 Md. 211, 312 Dewey v. Bell, 5 Allen (Mass.) 165, 649 V. Cocran, 49 N. C. 184, 388 V. Meritt, 106 111. App. 156, 136 V. Reed, 40 Barb. (N. Y.) 16, 168 De Witt V. Perkins, 22 Wis. 451, 191 De Wolf V. Murray, 2 Sandf. 166, 542 Dexter Sav. Bank v. Friend, 90 Fed. 703, 81, 251 De Zeng v. Fyfe, 1 Bosw. 335, 353 Diamond v. Harris, 33 Tex. 634, 419 Dickens v. Beal, 10 Pet. 572, 523, 555, 570 Dickerman v. Day, 31 Iowa 444, 303, 304 v. Miner, 43 Iowa 508, 16, 174, 175 Dickerson v. Cass County Bank (Iowa), 89 N. W. 15, 402 V. Higgins (Okla.), 82 Pac. 649, 446, 447 Dickey v. Pocomoke City Nat. Bank, 89 Md. 280, 407 Dickinson v. Bowes, 16 East 110, 502 V. Edwards, 77 N. Y. 573, 277 V. Hall, 31 Mass. 217, 262 V. Lewis, 34 Ala. 638, 1-28 Dickson v. Evans, 6 Term R. 57, 604 V. Kittson, 75 Minn. 168, 288, 472 V. Primrose, 2 Miles (Pa.) 366, 93 V. Tingstall, 3 C. P. Rep. (Pa.) 128, 257 Dieringer v. Klekamp (Ohio), 11 Wkly. Law Bui. 123, 193 Dietz V. City Nat. Bank, 42 Neb. 584, 73 V. Harder, 72 Ind. 208, 168 Dillaway v. Northwestern Nat. Bank, 82 111. App. 71, 581 Dilley v. Van Vie, 6 Wis. 209, 366 Dinsmore v. Duncan, 57 N. Y. 573, 398 V. Stimlert, 12 Neb. 433, 28 Dion V. Lachance, Rapp. Jud. Quebec, 14 C. S. 77, 574 District of Columbia v. Cornell, 130 U. S. 655, 13, 399 Ditto V. Slaughter (Ky. Civ. App. 1906), 92 S. W. 2, 482 Diversv v. Loeb, 22 111. 393, 272 V. Moore, 22 111. 331, 270, 272 Dixon V. Clayville, 44 Md. 573. 503 V. Dixon, 31 Vt. 450, 241, 316 V. Nuttall, 1 Compt. Mees. & Ros. 306, 490 D. M. Osborne & Co. v. Gullick- son, 64 Minn. 218. 681 Doane v. King, 30 Fed. 106, 123, 359 Dobbins v. Blanchard, 94 Ga. 500. 41, 73 V. Overman. 17 Neb. 163, 367 Dod V. Edwards, 2 Carr. & P. 602, 109 Ivi TABLE OF CASES. [References are to Sections.^ Dodd V. Dunne, 71 Wis. 578, 13, 20, 314 Dodge V. Freedman's Savings & Trust Co., 93 U. S. 379, 657 V. Haskell, 69 Me. 429, 97, 165 V. Oatis, 27 Kans. 762, 322 V. Pope, 93 Ind. 480, 653 Dod'son V. Taylor, 56 N. J. L. 11, 552, 599 Doe V. Burnham, 11 Fost. (N. H.) 426, 288, 291, 294, 439 V. Callow, 10 Kan. App. 581, 699 V. Northwestern Coal & T. Co., 78 Fed. 62, 475, 476 Doll V. Rizotti, 20 La. Ann. 263, 699 Dollner, Potter & Co. v. Snow, 16 Fla. 86, 30 Dolph V. Rice, 21 Wis. 590, 628 Dolson V. De Ganah, 70 Tex. 620, 33 Domestic Machine Co. v. Hat- field, 58 Ind. 187, 294 Donaldson v. Grant, 15 Utah 231, 364, 366 V. Means, 4 Dall. 109, 525, 573 V. Walker, 101 Tenn. 236, 232 Donegan v. Wood, 49 Ala. 242, 511, 530 Donley v. Camp, 22 Ala. 695, 504 Donlon v. Davidson, 39 N. Y. Supp. 1020, 574 Donly V. Brown, 3 Wkly. Notes Cas. (Pa.) 275, 685 Donnerberg v. Oppenheimer, 15 Wash. 290, 489 Donovan v. Fox, 121 Mo. 236, 314 Doolittle V. Ferry, 20 Kan. 230, 255 V. Lyman, 44 N. H. 608, 288 Doran v. Phillips, 47 Mich. 228, 288 Doremus v. Bond, 8 Blackf. 368- 447 Doss V. Ditmars, 70 Ind. 451, 457, 422 V. Peterson, 82 Ala. 253, 339 Dougherty v. Scudder, 17 N. J. Eq. 248, 119 Douglas V. Bank of Commerce, 97 Tenn. 133, 532 V. Matting, 29 Iowa 498, 28, 120, 441 Douglass V. Phoenix Ins. Co., 138 N. Y. 209, 442 V. Scott, 8 Leigh (Va.) 43, 154 Dovey's Appeal, 97 Pa. St. 153, 121 Dow V. Rowell, 12 N. H. 49, 699 V. Tuttle, 4 Mass. 414, 339 Dowden v. Cryder, 55 N. J. L. 329, 75, 476 Dowe v. Schutt, 2 Denio 621, 304 Dowling V. Gibson, 52 Iowa 517, 465, 635 V. National Bank, 145 U. S. 512, 91 Downey v. Beach, 78 111. 53, 28 Downing v. Ely, 125 Mass. 369, 109 V. Wheeler, 93 Me. 570, 417 Drake v. Lowry, 14 Iowa 125, 662 Draper v. Cowles, 27 Kan. 484, 119, 241, 288 V. Fletcher, 26 Mich. 154, 342 V. Wood, 112 Mass. 315, 138, 165, 170 Drawer v. Cherry, 14 La. Ann. 694, 343 Dreelen v. First National Bank (Tex. Civ. App. 1907), 99 S. W. 850, 80 Drennan v. Burne, 124 111. 184, 348 Dresser v. Construction Co., 93 U. S. 92, 119 Drew V, Towle, 27 N. H. 412, 208, 603 V. Wheelihan, 75 Minn. 68, 476 Drexler v. McGlynn, 99 Cal. 143, 549, 555, 559 V. Smith, 30 Fed. 754, 89, 131, 241, 616, 629 Driesbach v. Bank, 104 U. S. 52, 306, 615 Driggs V. Rockwell, 11 Wend. (N. Y.) 504, 635 Drinkall v. Morris (N. Dak.), 88 N. W. 724, 699 Drovers' Nat. Bank v. Anglo- American Packing Co., 117 111. 100, 581 Drum V. Drum, 133 Mass. 566, 142 Duboise v. Wheddon, 4 McCord (S. C.) 221, 63 Duck V. Autle, 5 Okla. 152, 196 Dudley v. Cilley, 5 N. H. 558, 288 V. Lake Co., 26 C. C. A. 82, 232 V. Littlefield, 8 Shep. (Me.) 418, 241 Dugan V. Campbell, 1 Ohio 115, 183 Duke V. Clark, 58 Miss. 465, 437, 448 V. Hall, 9 Baxt. (Tenn.) 282, 102 Dulles V. De Forest, 19 Conn. 190, 322 Dulty V. Brownfield, 1 Pa. St. 497, 68 Dumas v. Hardwick, 19 Tex. 238, 344 Dumont v. Pope, 7 Blackf. 367, 496 Dunbar v. Marden, 13 N. H. — , 262 Duncan v. Clark, 2 Rich. (S. C.) 587, 131 V. Finn, 79 Iowa 658, 436 V. Gosche, 8 Bosw. (N. Y.) 243, 390 TABLE OF CASES, Ivii [References are Duncan v. Gilbert, 29 N. J. L. 521, 240, 270, 377 V. McCollough, 4 Serg. & R. 180, 502 V. Scott, 1 Camp. 100, 114 Duncan, Sherman & Co. v. Gil- bert, 29 N. J. L. 521, 386, 387, 388, 391 Dundas v. Sterling, 4 Pa. St. 73, 341 Dunham v. Deraismes, 52 N. Y. Supp. 871, 573 V. Dey, 13 Johns. (N. Y.) 40, 302 V. Peterson, 5 N. D. 414, 241, 460, 461, 463 Duningan v. Stevens, 122 111. 396, 524, 538, 573 Dunn V. Clements, 52 N. C. 58, 137, 172 V. Dilks, 31 Ind. App. 673, 679 V. Ghost, 5 Colo. 134, 193, 237, 406 V. Meserve, 58 N. H. 429, 456 V. Smith, 12 Sm. & M. (Miss.) 602, 318 V. Stokern, 43 N. J. Eq. 401, 3 Atl. 349, 663 V. Weston, 71 Me. 270, 282, 285, 388 Dunning v. Sayward, 1 Greenl. 366, 453, 664 Dunscomb v. New York, H. & N. K. Co., 88 N. Y. 1, 486 Dunscombe v. Bunker, 2 Mete. 8, 363 Du Pont V. Beck, 81 Ind. 271, 183 Dupuy V. Clark, 12 Ind. 427, 369 Duramus v. Harrison, 26 Ala. 326, 630 Durand v. Bowen, 73 Iowa 573, 681 Durant v. Banta, 27 N. J. L. 624, 304 Durbin v. Northwestern Scraper Co. (Ind. App.), 73 N. E. 297, 680 Durden v. Smith, 44 Miss. 548, 521, 523 Durkee v. Conklin, 13 Colo. App. 313, 199, 291, 641 Durment v. Tuttle, 50 Minn. 426, 208, 263 Durnford v. Gross, 7 Mart. (La. O. S.) 466, 41 Dusscomb v. Bunker, 2 Mete. (Mass.) 8, 6 Dutchess of Kingston's Case, 3 Smith's Lead. Cas. 729, 343 Dutton V. Clapper, 53 Ind. 276, 28 to Sections.l Duvall V. Farmers' Bank of Ma- ryland, 9 Gill & J. (Md.) 31, 310, 339 Dwelling House Ins. Co. v. Bai- ley, 39 111. App. 488, 28 ' V. Downey, 39 111. App. 524, 25 ' Dwiggins v. Merchants' National Bank (Tex. Civ. App.), 27 S. W. 171, 342 Dye V. Grover, 17 Ky. L. Rep. 685, 260 Dyer v. Burnham, 25 Me. 9, 327 V. Homer, 22 Pick. 253, 446, 453 V. Sebrell, 135 Cal. 597, 412, 416, 626 Dyker v. Franz, 7 Bush (Ky.) 273, 137 Dykman v. Northbridge, 80 Hun (N. Y.) 258, 243, 516 E Eagle V. Kohn, 84 111. 292, 288, 289, 291 Eagle Bank v. Hathaway, 5 Met. 212, 568 Earl V. Peck, 64 N. Y. 596, 188, 192, 193 Earle v. Enos, 130 Fed. 467, 270 V. Reed, 10 Mete. (Mass.) 387, 63 V. Robinson, 91 Hun (N. Y.) 363, 202 Early v. McCarthy, 2 Dana (Ky.) 414, 109, 297, 303 Early Times Distilling Co. v. Earle, 21 Ky. Law Rep. 1709, 120 Earnest v. Moline Plow Co., 8 Tex. Civ. App. 159, 263 Easley v. Crockford, 3 Moore & S. 700, 419 Eason v. Locherer, 42 Tex. 173, 623 Easter v. Minard, 26 111. 494, 128 Eastern v. Iowa, 188 U. S. 220, 306 Eastern Bank v. Capron, 22 Conn. 639, 612 Eastin v. Succession of Osborn, 26 La. Ann. 153, 199 Eastman v. Lyon, 40 Iowa 438, 83 V. Shaw, 65 N. Y. 522, 304 East Oakland v. Skinner, 94 U. S. 255, 87 Easton v. Iowa, 188 U. S. 220, 306 Easton Packing Co. v. Kennedv, 131 Cal. 130, 185, 329 East River Bank v. Butterworth, 45 Barb. (N. Y.) 476, 282, 353 Eaton v. Alger, 57 Barb. (N. Y.) 179, 408, 418 V. Berlin, 49 N. H. 219, 80, 232 Ivili TABLE OF CASES. [References are to Sections.l Eaton V. Corson, 59 Me. 510, 436, 658 V. Emerson, 14 Me. 335, 339 Eaves v. Henderson, 17 Wend. (N. Y.) 190, 332 Ebert v. Gitt, 95 Md. 186, 464, 474 Eccleston v. Sands, 95 N. Y. Supp. 1107, 680 Eckert v. Louis, 84 Ind. 99, 157 V. Pickel, 59 Iowa 545, 135 Eddy V. Bond, 19 Me. 461, 157, 177 V. Fogg (Mass. 1906), 78 N. E. 548, 462 V. Herrin, 5 Shep. (Me.) 338, 112 Edgar v. Kline, 6 Pa. St. 327, 447, 653 Edgerton v. Aspinwall, 3 Conn. 445, 311 Edison General Electric Co. v. Blount, 96 Ga. 272, 23 S. E. 306, 265, 648 Edling V. Bradford, 30 Neb. 593, 367 Edmisten v. Herpolsheimer, 66 Neb. 94, 574, 576 Edmunds v. Bushell, L. R. 1 Q. B. 97, 75 V. Rose, 51 N. J. L. 547, 61 Edwards v. Jones, 2 Mees. & W. 414, 685 V. Porter, 42 Tenn. 42, 208 V. Sarter, 69 S. C. 540, 168 V. Thomas, 66 Mo. 468, 270 Eggan V. Briggs, 23 Kan. 710, 419 Ehrler v. Braun, 120 111. 503, 507, 96 Ehrman v. Union Cent. Life Ins. Co., 33 Ohio St. 324, 449, 670, 671 Eich V. Greeley, 112 Cal. 171, 635 Eichner v. Bowery Bank, 20 Misc. 90, 523 Eigenman v. Clark (Ind.), 51 N. E. 725, 635 Ekemberg v. Mousseau, Rap. Jud. Queb. 19 C. S. 289, 214 Ela V. Kimball, 30 N. H. 126, 327 Elder v. Elder, 119 Ga. 174, 302 Eldred v. Bank, 17 Wall. 545, 679 V. Paterson, 80 Iowa 264, 172 Elenville, The, 73 L. J. P. 104, 571 Elias V. Finnegan, 37 Minn. 144, 379 V. Whitney, 98 N. Y. Supp. 667, 464, 474 Elliott V. Abbott, 12 N. H. 549, 388 V. Blair, 47 111. 342, 158 V. Deason, 64 Ga. 63, 637 V. Levings, 54 111. 213, 171, 661 Elliott Nat. Bank v. Western & A. R. Co., 70 Tenn. 676. 680, 83 Ellis V. Ballon, 129 Mich. 303. 688 Ellis V. Commercial Bank of Natchez, 7 How. 294, 555, 566, 568 V. Hamilton, 26 Tenn. 512, 339 V. Littlefield (Tex. Civ. App. 1906), 93 S. W. 171, 78 V. Watkins, 73 Vt. 371, 96, 238, 240, 411 Ellsworth V. St. Louis & R. Co., 98 N. Y. 553, 85 Blminger v. Drew, 4 McLea (U. S.) 368, 208 Elmore v. Hoffman, 6 Wis. 68, 366 Elsass V. Institute, 77 Ind. 72, 116 Elting V. BrinkerofE, 2 Hall (N. Y.) 459, 184 Elwell V. Chamberlain, 17 N. Y. Super. Ct. 320, 224 V. Dodge, 33 Barb. 336, 439, 442 V. Turney (Wash. 1905), 81 Pac. 1047, 312 Ely V. Kilborn, 5 Denio (N. Y.) 514, 320 Emanuel v. White, 34 Miss. 56, 241 Embree v. Emmerson (Ind. App. 1905), 74 N. E. 44, 400, 401 Emerson v. Harmon, 14 Me. 271, 89 V. Sheffer, 113 App. Div. 19, 98 N. Y. Supp. 1057, 194 V. Townsend, 73 Md. 224, 291 Emery v. Lord, 26 Mich. 431, 48 Emmert v. Meyer, 65 Mo. App. 609, 119 Empire Dairy Feed Co. v. Chat- ham National Bank, 30 App. Div. (N. Y.) 476, 613 Empire Mfg. Co. v. Stuart, 46 Mich. 482, 9 N. W. 527, 671 Englehart v. Richter, 136 Ala. 562, 45 Englert v. White, 92 Iowa 97, 698 English V. Darley, 2 Bos. & P. 62, 688 V. Wall, 12 Rob. 137, 523 English-American Loan & Trust Co. V. Hiers, 112 Ga. 823, 473 Enix V. Hays, 48 Iowa 86, 629 Ennis v. Reynolds (Ga.), 56 N. E. 104, 541, 544, 570 Enscoe v. Fletcher, 1 Cal. App. 659, 679 Eppens v. Forbes, 82 Ga. 748, 504, 529 Equitable Ins. Co. v. Harvey, 98 Tenn. 636, 467 Brhardt v. Yarn, 51 S. C. 550, 302 Erickson v. First National Bank, 44 Neb. 622, 136, 158 V. Inman, 34 Oreg. 44, 199 TABLE OF CASES. lix [References are to Sections. 1 Erie Boot & Shoe Co. v. Eiclien- laub, 127 Pa. St. 164, 125 Erskine v. Steele County, 4 N. Dak. 339, 232 Erwin v. Downs, 15 N. Y. 575, 61 V. Lynn, 16 Ohio St. 539, 679 ' V. Morris (N. C), 40 S. E. 53, 302 V. Saunders, 1 Cow. (N. Y.) 249, 320 V. Schaffer, 9 Ohio St. 43, 280 Eskman v. Scott, 34 Neb. 817, 49 Eskridge v. Barnwell, 106 Ga. 587, 122 Espy V. National Bank of Cin- cinnati, 18 Wall. (U. S.) 605, 581, 642 Estep V. Burke, 19 Ind. 87, 222 Estes V. German Nat. Bank, 62 Ark. 7, 359 V. Lovering Shoe Co., 59 Minn. 504, 402, 470 V. Tower, 102 Mass. 65, 509, 511 Estudillo V. Aguirre, 5 Pac. 109, 202 Etheridge v. Gallagher, 55 Miss. 458, 208, 238, 465 V. Parker, 76 Va. 247, 383 Etz V. Place, 81 Hun (N. Y.) 203, 164 Eubler v. Pullen, 12 Ind. 567, 237 Eureka Bank v. Eureka Woolen Mfg. Co., 33 N. S. 302, 81 Evans v. Bridges, 4 Port. 351, 493, 495 V. Cook, 11 Nev. 69, 291 V. De Roe, 15 Neb. 630, 303 V. Drummond, 4 Esp. 89, 369 V. Foreman, 60 Mo. 449, 150, 168, 170 V. Gee, 11 Pet. 80, 451 V. George D. Cross Lumber Co., 21 Ohio Cir. Ct. R. 80, 516 V. Huey, 1 Bay (S. C.) 13, 111 V. Kneeland, 9 Ala. 42, 128 V. McHugh, 2 Woodw. Dec. Pa. 21, 431 V. Murphy, 1 Stew. & P. (Ala.) 226, 208 V, Prosser, 2 Term Rep. 186, 607 V. Speer Hardware Co., 65 Ark. 204, 241, 392, 473 V. Williamson, 79 N. C. 86, 208 V. Dennett, 161 U. S. 434, 87, 488 Evansville National Bank v. Kaufman, 93 N. Y. 273, 461 Everett v. Tidball, 34 Neb. 803, 451 Everhart v. Puckett, 73 Ind. 409, 288 Ever son v. Carpenter, 17 Wend. (N. Y.) 419, 64 Ewell V. Daggs, 108 U. S. 143, 303 Ewen V. Wilbor, 99 111. App. 132, 511, 515, 528 Ewing V. Clark, 76 Mo. 545, 342 V. Clark, 8 Mo. App. 570, 16, 342 V. Ewing, 26 Ky. L. Rep. 580, 702 V. Grisnold, 43 Vt. 400, 614 V. Trippe, 73 Ga. 776, 777, 778, 94 V. Wightman, 28 App. Div. (N. Y.) 326, 327 Exchange Bank v. Butner & Edgeworth, 60 Ga. 654, 359, 376 v. Monteath, 26 N. Y. 505, 75, 80 V. Sutton Bank, 78 Md. 577, 581 V. Bank of Little Rock, 50 Fed. 140, 136. 146 Eyerman v. Pirou, 151 Mo. 107, 183, 402 Eylers v. Coens, 39 N. Y. St. R. 789, 56 Eyre v. Yche, 67 Pa. St. 477, 418 F Fagle V. Kohn, 84 111. 292, 419 Fair v. Howard, 6 Nev. 304, 246 V. Shelton, 128 N. C. 105, 262 Fairchild v. Brown, 11 Conn. 26, 431, 437, 448 Fairfield v. Rural Independent School Dist, 116 Fed. 838, 488 Fale v. Dart, 19 N. Y. Supp. 389, 355 Faler v. Jordan, 44 Miss. 283, 89 Falk V. Moebs, 127 U. S. 597, 447 Fall V. Youmans, 67 Minn. 83, 681 Fall River Union Bank v. Wil- lard, 5 Mete. 216, 491, 497 Famous v. Crosswhite, 124 Mo. 34, 119, 470 Fanning v. Murphy, 126 Wis. 538, 680 Fant V. Miller, 17 Gratt. (Va.) 77, 303 Faris v. King, 1 Stew. 255. 303 Farkas v. Monk, 119 Ga. 115. 116 Farley Nat. Bank v. Pollock & Bernheimer (Ala.), 39 So. 612, 583 Farmer v. Perrv, 70 Iowa 358, 320 V. Rand, 14 Me. 225, 180 Farmers' and Citizens' Bank v. Noxon, 45 N. Y. 762. 381. 390 Farmers' and Drovers' Bank of La. V. Unser, 13 Ky. L. Rep. 965, 288 Ix TABLE OF CASES. [References are to Sections."] Farmers' and Mechanics' Bank V. Butchers' and Drovers' Bank, 14 N. Y. 623, 82, 96 V. Butchers' and Drovers' Bank, 16 N. Y. 125, 86, 101 V. Deering, 91 U. S. 29, 306 V. Empire Stone-Dressing Co., 18 N. Y. Super. Ct. 275, 276 V. Humphrey, 36 Vt. 554, 316, 383 V. Rathbone, 26 Vt. 33, 273 Farmers' and Mechanics' Nat. Bank V. Smith, 77 Fed. 129, 581 Farmers' and Merchants' Bank V. Hathaway, 36 Vt. 539, 379 V. Bank of Rutherford, 115 Tenn. 64, 643 Farmers' and Merchants' Bank of Genesee v. Parker, 37 N. Y. 148, 303 Farmers' and Merchants' Nat. Bank v. Novich, 89 Tex. 381, 135, 136, 170 Farmers' and Traders' Bank v. Harrison, 57 Mo. 503, 306 V. Lucas, 26 Ohio St. 385, 129 Farmers' Bank v. Boyd (Neb.), 93 N. W. 676, 59 V. Butchers' Bank, 28 N. Y. 425, 443, 581 V. Couch, 118 N. C. 436, 389 v. Dunbar, 32 Neb. 487, 581 V. Duval, 7 Gill & J. 78, 513 V. Hale, 59 N. Y. 53, 306 V. Willis, 7 W. Va. 31, 612 Farmers' Bank and Trust Co. v. Newland, 97 Ky. 464, 581 Farmers' Bank of Grand Rapids V. Butler, 48 Mich. 192, 114 Farmers' Bank of Kentucky v. Ewen, 78 Ky. 264, 524, 538 Farmers' Bank of Saratoga Co. V. Maxwell, 32 N. Y. 579, 627 Farmers' Deposit Bank v. Penn. Bank, 123 Pa. St. 283, 605 Farmers' Exch. Bank v. Altura Gold Mill & Min. Co., 129 Cal. 263, 524, 538, 573 Farmers' Loan and Trust Co. v. Northern P. R. Co., 120 Fed. 873, 414 Farmers' Nat. Bank v. Dreyfus, 82 Mo. App. 399, 574 V. Marshall, 9 Pa. Super. Ct. 621, 543 V. Sutton Mfg. Co., 52 Fed. 191, 86 V. Thomas, 79 Hun (N. Y.) 595, 145, 155 Farmers' Savings Bank v. Haus- mann, 114 Iowa 49, 198 Farmington Sav. Bank v. Buz- zell, 61 N. H. 612, 73 Farm Land Security Co. v. Nel- son, 52 Neb. 624, 302 Farnham v. Ingham, 5 Vt. 514, 320 Farnsworth v. Drake, 11 Ind. 101, 24 V. Mullen, 164 Mass. 112, 514, 515 Farnum v. Fowle, 12 Mass. 89, 510 Farrar v. New York Bank, 90 Ga. 331, 271 Farrell v. Lovell, 68 Me. 326, 120 Farrer v. People's Trust Co., 63 Kan. 881, 504, 545 Farrington v. Bank, 39 Barb. (N. Y.) 645, 419 V. Frankfort, 31 Barb. (N. Y.) 183, 286 Farris v. Gatlett, 32 Mo. 469, 419 V. Wells, 68 Ga. 604, 456 Farwell v. Hibner, 15 Hun (N. Y.) 280, 238 V. Hilliard, 3 N. H. 318, 679 V. St. Paul Trust Co., 45 Minn. 495, 523 V. Tyler, 5 Clarke (Iowa) 535, 618 Fassen v. Hubbard, 55 N. Y. 485, 255 Faulkner v. Ware, 34 Ga. 498, 238 V. White, 33 Neb. 199, 380, 383, 384 Faull V. Tinsman, 36 Pa. St. 108, 343 Paut V. Cathcart, 8 Ala. 725, 64 Favorite v. Lord, 35 111. 142, 436, 635 Fawcett v. Insurance Co., 97 111. 11, 348 Fay V. Hunt, 190 Mass. 378, 195, 447 v. Richards, 21 Wend. (N. Y.) 626, 327 V. Smith, 83 Mass. (1 Allen) 477, 138 V. Tower, 58 Wis. 286, 305 Favette County Savings Bank v. Steffes, 54 Iowa 214, 119 Fealey v. Bull, 163 N. Y. 397, 467 Fearing v. Clark, 16 Gray (Mass.) 74, 317 Featherston v. Wilson, 4 Ark. 154, 332 Fechbermer v. Peirce, 70 Mich. 440, 37 Fegley v. Jennings, 44 Fla. 203, 681 Fellers v. Penrod, 57 Neb. 463, 198 Fellows V. Steamer Powell, 16 La. Ann. 316, 414 TABLE OF CASES. Ixi [References are to Sections.'] Felsenthal v. Hawks, 50 Minn. 178, 623 Fenton v. Robinson, 4 Hun (N. Y. ) 252 28 V. White, 4 N. J. L. 115, 63 Fenwick v. Bowling, 50 Mo. App. 516, 210, 262 V. Sears, 1 Cranch 259, 434 Ferguson v. Harris, 39 S. C. 323, 57 V. Hill, 3 Stew. 485, 456 V. Milliken, 42 Mich. 441, 633 Fernandez v. Lewis, 1 McCord 323, 496 Fernando v. Beshoar, 9 Colo. 291, 30 Ferner v. Williams, 37 Barb. 10, 502 Ferris v. Adams, 23 Vt. 136, 288 V. Johnson (Mich. 1904), 98 N. W. 1014, 310, 341 Ferriss v. Tavel, 87 Tenn. 386, 242, 288 Ferst V. Blackwell, 39 Fla. 621, 681 Fetters v. Bank, 34 Ind. 251, 386, 390 Fidelity Trust Co. v. Palmer, 22 Wash. 473, 232 Field V. Carr, 5 Bing. 13, 274 V. Nickerson, 13 Mass. 131, 496, 506 V. Nbblett, 154 Ind. 357, 360, 49 V. Sibley, 77 N. Y. Supp. 252, 512 V. Sowle, 4 Russ. 112, 32 V. Tibbetts, 57 Mo. 358, 294 Fielding v. Corry, 67 L. J. Q. B. N. S. 7, 563 Fields V. Carney, 4 Baxt. (Tenn.) 137, 606 Fifth Ward Sav. Bank v. First Nat. Bank, 48 N. J. L. 513, 120, 476 Filler v. Gallantcheck, 66 N. Y. Supp. 509, 502 Finch V. Gregg, 126 N. C. 176, 236 V. Skilton, 29 N. Y. Supp. 925, 512 Findley v. Richardson, 46 Iowa 103, 263 Fine v. Stewart, 48 S. W. 371, 232 Fink V. Chambers, 95 Mich. 508, 186, 310, 322 V. Cox, 18 Johns. (N. Y.) 145, 198, 214 V. Farmers' Bank, 178- Pa. 154, 194 Finnell v. Nesbit, 16 B. Mon. (Ky.) 351, 604 Finney v. Pennsylvania Iron Works Co., 22 App. D. C. 476, 411 V. Moore, 9 Idaho 284, 302 Firman v. Blood, 2 Kan. 496', 627 First Ecclesiastical Soc. v. Loomis, 42 Conn. 570, 302 First National Bank v. Adam, 138 111. 483, 120, 121 V. Adamson, 24 R. I. 73, 504, 524 V. Albertson (N. J. Ch. 1900), 47 Atl. 818, 40 V. Badger Lumber Co., 54 Mo. App. 327, 74 V. Beach (Ind. App.), 72 N. E. 287, 447 V. Beck, 2 Tex. App. Civ. Cas. § 832, 394 V. Bentley, 27 Minn. 87, 303 V. Bonner (Tex. Civ. App.), 27 S. W. 698, 512 V. Briggs, 70 Vt. 599, 542 V. Bryan, 62 Iowa 42, 112 V. Buchan, 79 Minn. 322, 473 V. Buckhanson Bank, 80 Md. 475, 574, 578 V. Bynum, 84 N. C. 24, 446, 679 V. Campo Board Mfg. Co., 61 Minn. 274, 307 V. Carson, 60 Mich. 432, 169, 170 V. Cleaver, Fed. Cas. No. 4800. 342 V. Commercial Traveler s' Home Assn. (N. Y.) 1906), 78 N. E. 1103, aff' g 108 App. Div. 78, 95 N. Y. S. 454, 74, 80 V. Coughron (Tenn. 1898), 52 S. W. 1112, 79 V. Crittenden, 2 Thomp. & C. 118, 534 V. Currie (Mich.), 110 N. W. 499, 585 V. Dawson, 78 Ala. 67, 315 v. Deal, 55 Mich. 592, 28, 120 V. Dick, 22 Pa. Super. Ct. Rep. 445, 270 V. Drew, 93 111. App. 630, 503 V. Eureka Lumber Co., 123 N. C. 24, 504 V. Farmers' & Merchants' Bank (Neb.), 95 N. W. 1062, 474 V. Felt, 100 Iowa 680, 125 V. Fitts, 67 Vt. 57, 121 V. Forsyth, 67 Minn. 257, 468 V. Fowler, 36 Ohio St. 524, 307, 384. 390 V. Fricke. 75 Mo. 178, 135, 172 V. German Bank, 107 Iowa 543, 564 V. Gillilan. 72 Mo. 77, 85, 95, 671 V. Getz. 96 Iowa 139. 288 V. Glenn, 10 Idaho 224, 302 Ixii TABLE OF CASES. [References are to Sections.l First Nat. Bank v. Gridley, 93 N. Y. Supp. 445, 158, 480, 483, 688 V. Hanscom, 104 Mich. 67, 44 V. Haulenbeck, 65 Hun (N. Y.) 54, 380 V. Henry, 156 Ind. 7, 422 V. Hirschkowitz, 46 Fla. 588, 30 V. Howe, 1 Mont. 604, 122, 263 V. Jennings, 89 N. Y. Supp. 995, 44 Misc. 374, 418 V. Johns, 22 W. Va. 520, 26 V. Johnson, 97 Ala. 655, 247 V. Lasater, 196 U. S. 115, 306 V. Laughlin, 4 N. D. 391, 135, 147, 160 V. Latton, 67 Ind. 256, 119 V. Ledbetter, 34 S. W. 1042, 211, 306 V. Lewinson (N. M.), 76 Pac. 288, 679 V. Lierman, 5 Neb. 247, 27 V. Linn County Nat. Bank, 30 Oreg. 296, 586 V. Marshall, 73 Me. 79, 680, 685 V. Martin, 56 Kan. 247, 73 V. McCarthy (S. D.), 100 N. W. 14, 306 V. McCord fTex. Civ. App.), 39 S. W. 1003, 540 v. McKibben, 50 Neb. 513, 402 V. Miller, 37 Neb. 500, 585 V. Morgan, 73 N. Y. 593, 131 V. Nelson, 105 Ala. 180, 199, 52 V. Nordstom (Kan. 1904), 78 Pac. 804, 137 V. O'Connell, 84 Iowa 377, 613 V. Peek, 8 Kan. 660, 262 V. Pennington, 57 Neb. 404, 439 V. Pierson, 24 Minn. 140, 79 V. Portland & 0. R. Co., 2 Fed. 831, 350 V. Reid (Tenn. Ch. App.), 58 S. W. 1124, 554, 558, 565 V. Ruhl, 122 Ind. 279, 238 V. San Antonio & A. P. R. Co., 97 Tex. 201, 414 V. Sargent, 65 Neb. 594, 105 V. Schnurr, 57 Mo. App. 176, 354 V. Schuyler, 39 N. Y. Super. Ct. 440, 270, 272, 443 V. Security Nat. Bank, 34 Neb. 71, 427 V. Shaw, 109 Tenn. 237, 60 V. Skeen, 101 Mo. 683, 238 V. Smith, 8 S. D. 7, 418 V. Spear. 12 S. D. 108, 183 V. Stanley, 46 Mo. App. 440, 28 V. Stockell, 1 Pick. 252, 359 First Nat. Bank v. Stone, 106 Mich. 367, 581 V. Strang, 72 111. 559, 419 V. Tappan, 6 Kan. 456, 100 V. Turner, 3 Kan. 352, 42 Pac. 936, 306, 614 V. Watkins, 154 Mass. 385, 679 V. Weidenbeck, 97 Fed. 896, 182 V. Werst, 52 Iowa 284, 432 V. Weston, 49 N. Y. Supp. 542, 540 V. Whitmore, 94 U. S. 343, 102 V. Wilmington, 77 Fed. 401, 583 V. Wisdom's Exr's, 23 Ky. Law Rep. 530, 536, 96 V. Wood, 128 N. Y. 35, 246, 249, 391 V. Wood, 8 Tex. Civ. App. 554, 386, 388 V. Worst, 52 Iowa 684, 376, 378 V. Zeims, 93 Iowa 140, 23, 26 First Nat. Bank of Arkansas City V. Hasie, 57 Kan. 754, 597 First Nat. Bank of Bingham- ton V. Commercial Trav. Home Assn., 108 N. Y. App. Div. 78, 486 First Nat. Bank of Bridgeport V. Perris Irrigation District, 107 Cal. 62, ■ 437 First Nat. Bank of Brooklyn v. Gridlev, 112 App Div. 298, 572 V. Wallis, 150 N. Y. 455, 663 First Nat. Bank of Columbus v. Garlinghouse, 33 Ohio St. 492, 302, 306 First Nat. Bank of Council Bluffs V. Moore, 137 Fed. 505, 447, 452 First Nat. Bank of Crown Point V. First Nat. Bank of Rich- mond, 76 Ind. 561, 583 First Nat. Bank of Hastings v. Farmers' & Merchants' Bank (Neb.), 95 N. W. 1062, 457 First Nat. Bank of Indianapolis V. New, 146 Ind. 411, 680 First Nat. Bank of Jersey City V. Leach, 52. N. Y. 350, 581 First Nat. Bank of Joliet v. Adam, 138 111. 483, 246, 370 First Nat. Bank of Lancaster v. Hartman, 110 Pa. St. 196, 539 First Nat. Bank of Lebanon v. Bachman, 3 Pa. Dist. 460, 256 First Nat. Bank of Lisbon v. Bank of Wyndmere (N. D. 1906), 108 N. W. 546, 481 First Nat. Bank of Massillon v. Coughron, 52 S. W. 1112, 288 TABLE OF CASES. Ixiii [References are to Sections.'i First Nat. Bank of Mauch Chunk V. Rohrer, 138 Mo. 369, 366 First National Bank of McPher- son V. Bradley, 61 Kan. 615, 681 First Nat. Bank of Meridian v. Strauss, 66 Miss. 479, 246 First Nat. Bank of New Castle V. Nugen, 99 Ind. 160, 629 First Nat. Bank of New York v. Morris, 1 Hun (N. Y.) 680, 272, 277, 306 First Nat. Bank of North Ben- nington V. Wood, 51 Vt. 473, 553, 558, 568 First Nat. Bank of Rapid City V. Security Nat. Bank of Sioux City, 34 Neb. 71, 635 First Nat. Bank of Rochester v. Pierson, 24 Minn. 140, 671 First Nat. Bank of Salem v. Grant, 71 Me. 374, 282 First Nat Bank of Salisbury v. Michael, 96 N. C. 53, 699 First Nat. Bank of Seattle v. Harris, 7 Wash. 139, 688 First Nat. Bank of St. Cloud v. Lang, 102 N. W. 700, 270 First Nat Bank of Union Mills V. Clark, 134 N. Y. 368, 581 First Nat. Bank of Whitehall v. Lamb, 50 N. Y. 95, 306 First State Bank v. Hammond, 104 Mo. App. 403, 475 Fish V De Wolf, 17 N. Y. Super. Ct. 573, 304 V. French. 15 Gray 520, 289 V. Jacobsohn, 1 Keyes 539, 230 Fisher v. Beckwith, 19 Vt. 31, 513 V. Dennis, 6 Cal. 577, 23 V. Diehl, 94 Md. 112, 15 V. Fisher, 98 Mass. 303, 377, 679 V. Leland, 4 Cush. 456, 472 V. Salmon, 1 Cal. 413, 263 V. Von Behren, 70 Ind. 19, 27, 28 Fisherdick v. Hutton, 44 Neb. 1'22, 135 Fisk V. Collins, 9 Mo. 137, 116 V. Kenosha, 26 Wis. 23, 87 Fitch V. Frazer, 82 N. Y. Supp. 138, 194 V. Jones, 5 El. & Bl. 238, 291 Fitchburg Bank v. Greenwood, 2 Allen (Mass.) 434, 348 Fitts V. Hall. 9 N. H. 444, 450, 63 Fitz V. Bynum, 55 Cal. 459, 210 Fitzgerald v. Barker, 96 Mo. 661, 125, 129, 241 Fitzmaurice v. Mosier, 116 Ind. 363, 17 Fitzpatrick v. School Commis- sioners, 7 Humph. (Tenn.) 224, 74 Flagge V. Locke, 38 Mass. 241, 213 Flanagan v. Hambleton, 54 Md. 222, 375 Flanigan v. Phelps, 42 Minn. 186, 154, 155, 188 Flannagan v. National Union Bank, 2 N. Y. Supp. 488, 165 Flanner v. Butler, 131 N. C. 150, 214 Fleckner v. United States Bank, 8 Wheat. (U. S.) 339, 303, 367 Fleischman v. Stern, 90 N. Y. 110, 653 Fleitman v. Ashley, 172 N. Y. 628, 271 Fleming v. Greene, 48 Kan. 646, 122 Fletcher v. Arkansas National Bank, 62 Ark. 265, 542 V. Chase, 16 N. H. 38, 208 V. Fletcher, 29 Vt. 98, 418 V. Great Western Elevator Co.. 12 S. D. 643, 120 V. Gusbie, 32 Me. 587, 119 V. Pierson, 69 Ind. 281, 586 Fleury v. Roget, 5 Sandf. (N. Y.) 646, 339 Flewellin v. Hale, 6 Yerg. (Tenn.) 515, 327 Flight V. Reed, 1 Hurl. & C. 703, 305 Flint V. Phipps, 16 Oreg. 437, 183 Florence Mining Co. v. Brown, 124 U. S. 385, 581 Florence R. R. Imp. Co. v. Chase Nat. Bank, 106 Ala. 364, 85 Flour City Bank v. Connery, 12 Man. R. 365, 317 Flour City Nat. Bank v. Shire, 84 N. Y. Supp. 810, 243 V. Traders' Nat. Bank, 35 Hun (N. Y.) 241, 627 Flournoy v. First National Bank, 79 Ga. 814, 199, 203, 272 Flower v. Noble, 38 La. Ann. 938, fi99 Floyd V. Rust, 58 Tex. 503, 620 Fotaerts v. Sholes, 144 Mich. 215, 107 N. W. 904, 116 Fogg V. Stickney, Fed. Cas. No. 4898, 238 Foley V. Greene, 14 R. I. 618, 106 V. Smith, 6 Wall. (U. S.) 492, 436, 467 Follain v. Dupre, 11 Rob. (La.) 454, 126 Follett V. Buver, 4 Ohio St. 586, 594 V. Eastman, 16 Vt. 19, 333 Folmar v. Siler, 132 Ala. 297, 185 Ixiv TABLE OF CASES. IReferences are to Sections.'\ Folsom V. Bartlett, 2 Cal. 163, 239, 419 V. Mussey, 8 Greenlf. (Me.) 400, 185, 208 Foltier v. Schroeder, 19 La. Ann. 17, 102 Foltz V. Mey, 1 Bay (S. C.) 303, 486 Fonner v. Smith, 31 Neb. 107, 581 Fontaine v. Sunter, 31 Ala. 258, 136 Foote V. Bragg, 5 Blackf. (Ind.) 363, 180 Forbes v. Espy, 21 Ohio St. 474, 673 V. Williams, 13 Bradw. (111.) 280, 242, 329 Ford V. Angelrodt, 37 Me. 50, 347 V. Bank (Tex. Civ. App.), 34 S. W. 684, 174 V. Dosson, 1 Rob. (La.) 39, 419 V. H. C. Brown & Co., 114 Tenn. 467, 1 L. R. A. N. S. 188, 88 S. W. 1036, 465, 474 V. Phillips, 83 Mo. 530, 436 V. "Washington Bldg. Assn., 10 Idaho 30, 302 Ford & Co. V. People's Bank of Orangeburg, 74 S. C. 180, 54 S. E. 204, 100 Ford's Adm'r v. Thorton, 3 Leigh (Va.) 695, 605 Fordville Banking Co. v. Thomp- son, 26 Ky. L. Rep. 534, 702 Fordyce v. Kosminski, 49 Ark. 40, 136, 146, 165 Foreman v. Ahl, 55 Pa. St. 325, 29 V. Beckwith, 73 Ind. 515, 456 Forestville Soc. v. Farnham, 15 Hun (N. Y.) 381, 240 Forkner v. Dinuiddie. 3 Ind. 34, 629 Forstall v. Fussell, 50 La. Ann. 249, 378 Forsythe v. Kimball, 91 U. S. 291, 307 Fortune v. Stockton, 182 111. 454, 698 Fossitt & Co. V. Bell, 4 McLean 427, 419, 439, 593 Foster v. Bush, 104 Ala. 662, 599 V. Mackinnon L. R. 4 C. P. 704, 28 V. Metz, 55 Miss. 77, 196 V. Pearson, 1 Cromp. M. & R. 849, 359 V. Shattuck, 2 N. H. 446, 24 V. Walker, 32 N. S. 156, 214 Fotheringham v. Price, 1 Bay 291, 525 Fourth Nat. Bank v. Altheimer, 91 Mo. 190, 560 Fourth Nat. Bank v. Henscher, 52 Mo. 207, 520 V. Snow, 3 Daly 167, 376 Fourth Nat. Bank of Cadiz v. Craig, 96 N. W. 185, 241 Fowle V. Outcalt, 64 Kan. 352, 699 Fowler v. Allen, 32 S. C. 229, 318 V. Brantley, 14 Pet. 318, 420, 467, 472, 483 V. Brooks, 13 N. H. 240, 650 V. Strickland, 107 Mass. 552, 376 Fox V. Blackstone, 32 111. 538, 241, 307, 314, 320 V. Rural Home Co., 90 Hun (N. Y.) 365, 271 V. Whitney, 16 Mass. 118, 302 Fraker v. Cullum, 21 Kan. 555, 135, 152, 168 Fraley v. Kelly, 79 N. C. 348, 651 Franc v. Dickinson, 52 Hun (N. Y ) 373 333 Frank v. Bank, 84 N. Y. 209, 100 V. Quast, 86 Ky. 644, 273, 286, 287, 307, 383, 388 Frank & Sons v. Quast, 86 Ky. 649, 241 Frankenstein v. Levim, 65 N. Y. Supp. 562, 402 Franki v. Bailey, 31 Oreg. 235, 232 Franklin v. Browning (Ind. Terr 1901), 64 S. W. 563, 344 V. Vanderpool, 1 Hall. 78, 523 V. Verbois, 6 La. 727, 570 Franklin Bank v. Cooper, 36 Me. 221, 603 V. Steward, 37 Me. 519, 581 Franklin Life Ins. Co. v. Court- ney, 60 Ind. 134, 139, 146, 168 Franklin Sav. Inst. v. Heins- man, 1 Mo. App. 336, 394 Fraser v. Armstrong, 10 U. C. C. P. 506, 682 V. McConnell, 23 Ga. 368, 3 V. Stuart, 46 Iowa 15, 345 Frazee v. McFarland, 43 Up. Can. Q. B. 281, 47 Frazer v. Boss, 66 Ind. 1, 143 V. Edwards, 5 Dana (Ky.) 538, 421 V. Jordan, 8 El. & B. 303, 341 Frazier v. Gains, 2 Baxt. (Tenn.) 92, 22 V. Gilson, 7 Mo. 271, 592 V. Massey, 14 Ind. 382, 68 V. Warfield, 17 Miss. 220, 277 Frederick v. Clemens, 60 Mo. 313, 28 V. Winans, 51 Wis. 472, 240 Free v. Hawkins, 8 Taunt. 92, 320 TABLE OF CASES. Ixv [References are to Sections.l Freeman v. Boynton, 7 Mass. 483, 513 Freese v. Brownell, 35 N. J. L. 285. 306, 514 Freittenberg v. Rubel, 23 Iowa 154, 239 Frence v. Gordon, 10 Kan. 370, 258 French v. Bank of Columbia, 4 Cranch 141, 523, 570 V. Carr, 7 111. 664, 263 V. French, 84 Iowa 655, 195 V. Hoffmire, 43 N. Y. Supp. 496, 304 V. Irwin, 4 Baxt. 401, 591, 642 V. Talbot Paving Co., 100 Mich. 443, 105, 288 V. Wallack, 12 N. Y. St. R. 159, 314 Freund v. Importers' & Traders' Nat. Bank, 76 N. Y. 352, 413 Frick V. Moore, 82 Ga. 163, 288 Fridenberg v. Robinson, 14 Fla. 130, 341 Friedlander v. Texas & Pac. Ry. Co., 130 U. S. 416, 414 Friedman v. Johnson, 21 Minn. 12, 186 Friend v. Harrison, 2 Carr. & P. 584, 300 Frissell v. Mayer, 13 Mo. App. 331, 342 Fritz V. Kennedy, 119 Iowa 628, 585 Frum V. Keeney (Iowa 1899), 80 N. W. 507, 661 Fry V. Hammer, 50 Ala. 52, 30 V. Hill, 7 Taunt. 397, 496 Ft. Dearborn Nat. Bank v. Ber- rott (Tex. Civ. App.), 57 S. W. 340, 467 V Carter, 152 Mass. 34, 119 V. Seymour, 71 Minn. 81, 581 Fudge V. Marquell, 164 Ind. 447, 135, 165 Fugitt V. Nixon, 44 Mo. 295, 503, 523, 564 Fulford V. Block, 8 111. App. 284, 28, 133 Fuller V. Bean, 30 N. H. 181, 288 V. Green. 64 Wis. 159, 177 V. Hutchings, 10 CaJ. 523, 183, 419 V. Law, 207 Pa. St. 101, 334 V. Quesnel, 63 Minn. 302, 65 N. W. 634, 474 V. Wilde, 151 Mass. 412, 343 Fuller Buggy Co. v. Walden, 99 N. Y. Supp. 561, 688 Fullerton v. Andres, 70 Minn. 445, 73 N. W. 256, 473 Joyce Defenses — ^v Fullerton v. Sturges, 4 Ohio St. 529, 22, 176 Fulton V. Loughlin, 118 Ind. 286, 194, 241 V. McCracken, 18 Md. 528, 531 Furber v. Fogler, 97 Me. 585, 188, 266, 702 Furmish v. Burge (Tenn. 1899), 54 S. W. 90, 673 Furniss v. Gilchrist, 1 Sandf. (N. Y.) 53, 246, 249, 391, 593 Furth V. Baxter, 24 Wash. 608, 573 Fury V. Kempin, 79 Mo. 477, 125 G Gaar v. Hulse, 90 111. App. 548, 72 Gabbert v. Schwartz, 69 Ind. 450, 366 Gage V. Kendall, 15 Wend. 640, 95, 418 V. Mechanics' Nat. Bank, 79 111. 62, 504 V. Punchard, 6 Daly 229, 369 V. Sharp, 24 Iowa 15, 19, 307, 314 Gage Hotel Co. v. Union Nat. Bank, 171 111. 531, 581 Gaillard v. Le Seigneur, 1 Mc- Mullan (S. C.) 225, 302 Gaines v. Bank (Ky.), 39 S. W. 438, 446 Galbraith v. City of Knoxville, 105 Tenn. 453, 86 V. Shepard (Wash. 1906). 86 Pac. 1114, 502, 544, 545 Gale V. Birmingham, 64 Minn. 555, 439 V. Harp, 64 Ark. 462, 322 V. Miller, 54 N. Y. 536, 94 Gallagher v. Brewster, 153 N. Y. 364, 192 V. Donahy, 65 Kan. 341, 214 Gallaudet v. Sykes, 1 McArthur (D. C.) 489, 277 Galloway v. Bartholomew, 44 Greg. 75, 136, 181 V. Merchants' Bank, 42 Neb. 259, 127 Galusha v. Sherman, 105 Wis. 263, 106, 237 Galvin v. Syfers, 22 Ind. App. 43. 314 Gamacke v. Grimm, 23 Mo. 38. 208 Gammon v. Plaisted, 51 N. H. 444, 288 Gandy v. Bissell (Neb.), 100 N. W. 803, 240, 317, 402 ixvi TABLE OF CASES. [References are to Sections.'] Gano V. Farmers' Bank, 103 Ky. 508, 318 v. Finnell, 13 B. Mon. 390, 307 V. Samuel, 14 Ohio 592, 119 Gansevoort v. Williams, 14 Wend. 133, 91 Ganz V. Lancaster, 169 N. Y. 357, 305 V. Weisenberger, 66 Mo. App. 110, 109 Garber v. Breese, 96 Va. 644, 117 Garden Citv Nat. Bank v. Fit- ler, 155 Pa. St. 210, 270, 392, 528 Gardner v. Beacon Trust Co., 190 Mass. 27, 467 V. Burch, 101 Mich. 261, 345 V. Gager, 1 Allen 502, 382 V. Maxwell, 27 La. Ann. 561, 376, 439 V. Walsh, 5 El. & Bl. 63, 137, 174, 182 V. Wiley (Oreg.), 79 Pac. 286, 75 Garfield Nat. Bank v. Colwell, 57 Hun 169, 342, 385 Garfield Tp. v. Crocker, 63 Kan. 272, 232 Garland v. Lane, 46 N. H. 245, 288 V. West, 68 West 315, 505 Garlock v. Geortner, 7 Wend. 198, 695 Garner v. Fite, 93 Ala. 405, 307 Garnett v. Myers (Neb.), 94 N. W. 400, 699 Garrard v. Hadden, 67 Pa. St. 82, 144, 146 V. Pittsburgh & C. R. Co., 29 Pa. 154, 483 Garrett v. Campbell, 2 Ind. Ty. 301, 317 Garrison v. King, 35 Tex. 183, 263 V. Nelson, (Tex.), 19 S. W. 248, 314 Garrott v. Jaffray, 10 Bush 413, 447 V. Ratcliff, 83 Ky. 384, 73 Garthwaite v. Bank of Tulare, 134 Cal. 237, 577, 588, 702 Gaskill V. Huffaker, 20 Ky. L. Rep. 1555, 474 Gaskin v. Peck, N. B. Eq. Cas. 40, 44, 46 Gasquet v. Pechin, 143 Cal. 516, 20 Gates V. Beecher, 60 N. Y. 518, 520, 560 V. Morton Hardware Co. (Ala. 1906), 40 So. 509, 241 V. Renfroe. 7 La. Ann. 569, 231 Gatzmer v. Pierce, 6 Wkly. Not. Cas. (Pa.) 433, 222 Gaul V. Willis, 26 Pa. St. 259, 304 Gavin v. Burton. 8 Ind. 69, 65 Gay V. Rainey, 86 111. 221, 277 Gaylord v. Nebraska Sav. & Exch. Bank, 54 Neb. 104, 447, 456 Gazzam v. Armstrong, 3 Dana (Ky.) 554, 282 Gebhart v. Sorrels, 9 Ohio St. 461, 217 Geddes v. Blackmore, 132 Ind. 551, 175 Geisreiter v. Sevier, 33 Ark. 522, 236, 240 Gelpecke v. City of Dubuque, 1 Wall. 175, 487 General Electric Co. v. Nassau Electric Co., 36 N. Y. App. Div. 510, 194 Genesee County Sav. Bank v. Michigan Barge Co., 52 Mich. 438, 85 Geo. N. Fletcher & Sons v. Al- pena Cir. Judge, 136 Mich. 511, 302 George v. Cutting, 46 N. H. 130, 52 V. Gillespie, 1 G. Greene (Iowa) 421, 202 Georgia v. Lewin, 45 Barb. (N. Y.) 340, 277 Georgia Nat. Bank v. Hender- son, 46 Ga. 487, 583 Georgian Bay Lumber Co. v. Thompson, 35 Up. Can. Q. B. 64, 208 Gerding v. Welch, 51 N. Y. Supp. 1064, 418 German-American Bank v. At- water, 165 N. Y. 36, 563, 564 V. Mills, 91 N. Y. Supp. 142, 554 German-American Nat. Bank v. People's Gas & Elect. Co., 63 Minn. 12, 314 German-American Sav. Bank v. Burlington & Hanna (Iowa), 100 N. W. 56, 367 V. Hanna, 124 Iowa 374, 247, 354, 538 German-American Security Co. V. McCulloch (Ky.), 89 S. W. 5, 229, 322 German Bank v. De Shon, 41 Ark. 331, 304 V. Dunn, 62 Mo. 79, 158 Germania Bank v. La Follette, 72 Fed. 145, 392, 473 V. Michaud, 62 Minn. 459, 183 German Nat. Bank v. Beatrice, 63 Neb. 246, 587 V. Louisville Co., 97 Ky. 34, 85 TABLE OP CASES. Ixvii [References are to Sections.'] German Savings Bank v. Drake (Iowa), 79 N. W. 121, 681 Germans' National Bank v. Butchers' Hide & T. Co., 97 Ky. 34, 514 Gerrish v. Glines, 56 N. H. 9, 171 Getty V. Schantz, 101 Wis. 292, 681 Gettysburg Nat. Bank v. Chisolm, 169 Pa. St. 564, 136, 168, 170 Geysor Mfg. Co. v. Jones, 90 Ga. 307, 460 Giavanovitch v. Citizens' Bank of Louisiana, 26 La. Ann. 15, 21, 246 Gibbs V. Linabury, 22 Mich. 478, 25 Gibson v. Allen, 104 N. W. 275, 217 V. Hutchins, 43 S. C. 287, 419 V. Miller, 29 Mich. 355, 315, 456 V. Newman, 1 How. (Miss.) 341, 324 Gifford V. Fox, 95 N. W. 1066, 185 V. Harden, 88 Wis. 538, 574, 585 Gilbert v. Brown (Ky. 1906), 97 S. W. 40. 36, 222 V. Nelson, 5 Kan. App. 528, 366 V. Sharp, 2 Lans. 412, 102, 103, 428 Gildersleeve v. Caraway, 19 Ala. 246, 453, 492 V. Pelham Ry. Co., 11 Daly 257, 343 Giles V. Canary, 99 Ind. 116, 679 Gill V. Creed, 3 Coldw. (Tenn.) 295, 293 V. Cubitt, 3 Barn. & Cress. 466, 476 V. Morris, 11 Heisk. (Tenn.) 614, 290 Glllam V. Boynton, 36 Mich. 235, 55 Gillespie v. Battle, 15 Ala. 276, 210 V. Campbell, 39 Fed. 724, 272, 383 V. Planters' Oil Mill & Mfg. Co., 76 Miss. 406, 402, 536 V. Simpson (Ark.), 18 S. W. 1050, 107 V. Torrance, 7 Abb. Pr. 462, 280 Gillett V. Ballou, 3 Williams (Vt.) 296, 342 V. Sweat, 6 111. 475, 172 Gilliam v. Brown, 43 Miss. 641, 293 V. Myers, 31 111. 525, 199 • Gillispie v. Ft. Wayne & South- ern R. Co., 12 Ind. 398, 409 Gillman v. Henry, 53 Wis. 465, 307 Gilman v. Pillsbury, 16 La. Ann. 51, 203 V. Railroad Co., 72 Ala. 566, 472 Gilman v. Township of Gilby, 8 N. Dak. 627, 232 Gilman Sons & Co. v. New Or- leans & Selma R. Co., 72 Ala. 566, 476 Gilmore v. Allen, 118 Mass. 94, 262 V. German Sav. Bank, 89 111. App. 442, 240 V. Wilbur, 12 Pick. 124, 496 Gilson V. Gilson, 16 Vt. 464, 336 Girard Fire & Marine Ins. Co. V. Marr, 46 Pa. St. 504, 369 Giselman v. Starr, 106 Cal. 651, 403, 416 Gist V. Cans, 30 Ark. 285, 155 Givens v. Merchants' Nat. Bank, 85 111. 442, 525 Gladstone v. Dew, 9 Up. Can. C. P. 439, 147, 152 Gladstone Baptist Church v. Scott, 25 Ky. L. Rep. 237, 407 Glaser v. Rounds, 16 R. I. 235, 525 Glasgow & Harrison v. Copeland, 8 Mo. 268, 544, 570 Glass V. Adone (Tex. Civ. App.), 86 S. W. 798, 310, 339 Glasscock v. Balls, 24 Q. B. Div. 13 699 v'. Smith, 25 Ala. 474, 282, 436 Glaze V. Ferguson, 48 Kan. 157, 524, 540, 573 Gleaser v. Rounds, 6 N. Eng. Rep. 500, 522 Gleason v. Henry, 71 111. 109, 74 V. Saunders, 121 Mass. 436, 333, 343 Glengall v. Edwards, 2 Younge & C. Exch. 125, 445 Glenn v. Farmers' Bank of North Carolina, 70 N. C. 191, 288, 291, 293 V. Porter, 49 Ind. 500, 28 Glens Falls Ins. Co. v. Temple, 51 N. Y. Supp. 948, 681 Glicksman v. Earley, 78 Wis. 223, 530, 553, 554, 555 Glidden v. Chamberlain, 167 Mass. 486, 95, 525, 573 v. Massachusetts Hospital L. I. Co., 187 Mass. 538, 320, 343 Glover v. Green, 96 Ga. 127, 135 V. Jennings. 6 Blackf. 10, 449 v. Robbins, 49 Ala. 219, 139, 170 Goad V. Hart's Admr's, 8 Sm. & M. 787, 22 V. Moulton, 67 Cal. 536, 34 Goddard v. Cutts, 11 Me. 440, 312 V. Pratt, 33 Mass. 412, 94 Godfrey v. Megahan, 38 Neb. 748, 59 Ixviii TABLE OF CASES. [References are to 8ections.'\ Godin V. Bank of Common- wealth, 6 Duer 76, 490 Goetter v. Pickett, 61 Ala. 387, 28 Goetting v. Day, 87 N. Y. Supp. 510, 402, 475 Goetz V. Bank of Kansas City, 119 U. S. 551, 483 V. Goldbaum (Cal.), 37 Pac. 646, 74 Gold V. Eddy, 1 Mass. 1, 419 Golden v. Vyse, 115 Iowa 726, 702 Goldthwait v. Bradford, 36 Ind. 149, 333 Goodell V. Sinclair, 112 111. App. 594, 75 Goodenow v. Curtis, 33 Mich. 505, 161 V. Curtis, 18 Mich. 298, • 367 Goodfellow V. Stillwell, 73 Mo. 17, 699 Goodhue v. Barnwell, Rice's Eq. S. C. 198, 30 Goodman v. Eastman, 4 N. H. 455, 138 V. Fleming, 57 Ga. 350, 314 V. Harvey, 4 A. & E. 870, 476 V. Norton, 17 Me. 381, 566 V. Simonds, 20 How. (U. S.) 343, 119, 288, 359, 439, 442, 476 V. Simonds, 19 Mo. 107, 359 Goodnow V. Warren, 122 Mass. 79, 519 Goodrich v. Reynolds, 31 111. 490, 238 V. Stanley, 23 Conn. 79, 307 V. Stanley, 24 Conn. 613, 691 Goodsell V. Myers, 3 Wend. 479, 64 Goodson V. Johnson, 35 Tex. 622, 419 Goodwin v. Kent, 201 Pa. St. 41, 125 V. Morse, 9 Mete. (Mass.) 278, 208 V. Nickerson, 51 Cal. 166, 310, 322 Gordan v. Decker, 19 Wash. 188, 467 Gordon v. Bank, 144 U. S. 97, 143 V. Mulhare, 13 Wis. 22, 682 Gore Bank v. Eaton, 27 Up. Can. Q. B. 332, 682 V. Gibson, 9 Jur. 140, 69, 70 V. McWhirter, 18 Up. Can. C. P. 293, 682 Gorgier v. Mieville, 3 Barn. & C. 45. 308 Gorham v. Keyes, 137 Mass. 583, 109 V. Peyton, 3 111. 363, 328 Cornell v. Nebeker, 58 Ind. 425, 171 Gorrell v. Home Jjife Ins. Co., 63 Fed. 371, 309, 320, 333 V. Ins. Co.. 11 C. C. A. 240, 85 Gorsuth V. Butterfield, 2 Wis. 237, 288 Goshen Nat. Bank v. Bingham, 118 N. Y. 349, 581 V. State, 141 N. Y. 379, 485 Gosling V. Griffin, 85 Tenn. 737, 246, 359, 699 Gothrupt V. Williamson, 61 Ind. 599, 22 Gotzian & Co. v. Heine, 87 Minn. 429, 680 Gough V. Staats, 13 Wend. 549, 585 Gould V. Armstrong, 2 Hall. (N. Y.) 266, 288 V. Leavitt, 92 Me. 416, 241, 289 V. March, 1 Hun 566, 366 V. Robinson, 8 East 576, 688 V. Sigel, 5 Duer (N. Y.) 260, 240 V. Stevens, 43 Vt. 125, 191 Goupy V. Harden, 7 Taunt. 159, 496 Gowen v. Shute, 4 Baxt. 57, 288, 291 V. Wentworth, 5 Shep. 66, 376 Gower v. Moore, 25 Me. 16, 519 Grady v. Campbell, 78 Mo. App. 502, 47 Graf V. Smith, 62 Hun (N. Y.) 621, 284 Graff V. Logue, 61 Iowa 704, 307, 314, 317 Grafton Bank v. Kent, 4 N. H. 221, 3 Graham v. Alexander, 123 Mich. 168, 231 V. Cambel, 105 Ga. 839, 364 V. Marks, 98 Ga. 67, 115, 288 V. Morstadt, 40 Mo. App. 333, 5, 582 V. Remmel (Ark.), 88 S, W. 899, 313 V, Rush, 73 Iowa 451, 182 V. Troth, 69 Kan. 861, 411 V. Wilson, 6 Kan. 489, 446 Grandin v. Le Roy, 2 Paige (N. Y.) 509, 246, 249, 353, 391 Grand Island Bkg. v, Wright, 53 Neb. 574, 37, 59 Grange v. Reigh, 93 Wis. 552, 574, 576 Granger v. Roll, 6 S. D. 611, 41 Grant v. Alt, 17 Kan. 444, 294 V. Gaughan, 3 Burrow 1516, 394 V. Ellicott, 7 Wend. (N. Y.) 227, 199, 270, 272 V. Kidwell. 30 Mo. 455, 699 V. MacNutt, 33 N. Y. Supp. 62, 583 V. Norway, 10 C. B. 665, 414 V. Ryan, 37 Tex. 37, 293 V. Treadwell Co., 82 Hun 591, 80, 81 V. Vaughan, 3 Burrows 1516, 404 TABLE OF CASES. Ixix [References are to Sections.'\ Grant & Kelly v. Chambers, 30 N. J. L. 323, 197 Graphic Co. v. Marcy, 12 Phila. 218, 418 Graul V. Strutzel, 53 Iowa 712, 503, 563 Graves v. American, 17 N. Y. 205, 470 V. Mining Co., 81 Cal. 303, 446 Gray v. Bank of Kentucky, 29 Pa. St. 356, 119, 134, 240, 273, 456 V. Matthias, 5 Ves. Jr. 286, 300 V. Real Estate Bank, 5 Pike 93, 410 Grayson County Nat. Bank v. Nashville C. & St. L. R. (Tex. Civ. App.), 79 S. W. 1094, 414 Gray Tie Lumber Co v. Farm- ers' Bank, 22 Ky. L. Rep. 1333, 237 Great Palls Bank v. Farmington, 41 N. H. 32, 294 Greatly v. Noble, 3 Madd. 79, 31 Greeley v. Whitehead, 35 Fla. 523, 502, 525 Green v. Bickford, 60 N. H. 159, 260, 262 V. Brown, 49 N. Y. Supp. 163, 442 V. Davis, 4 B. & C. 235, 19, 178 V. Grant, 134 Mich. 462, 302 V. Kennedy, 6 Mo. App. 577, 22 V. Lake, 2 Mackey 162, 305 V. Louthain, 49 Ind. 139, 422, 436, 529 V. Lowry, 38 Ga. 548, 193 ■V, McAuley (Kan.), 79 Pac. 133, 417 V. McDonald, 21 Miss. 445, 260 V, Sarmiento, 3 Wash. 17, 254 V. Wilkie, 98 Iowa 74, 27 Greenfield Bank v. Crafts, 86 Allen 447, 74 V. Stowell, 123 Mass. 196, 165 Greenleaf v. Cook, 2 Wheat (U. S.) 13, 208 v. Watson, 83 Me. 266, 515 Greenwell v. Haydon, 78 Ky. 332, 419 Greer v. Bentley, 19 Ky. L. Rep. 1251, 320 Gregg V. Bank of Columbia, 72 S. C. 458, 581 V. Beane, 69 Vt. 22, 574. 576, 583 V. Union County Nat. Bank, 87 Ind. 238, 441 Gregory v. Harrington, 33 Vt. 241, 125 V. Hart, 7 Wis. 532. 332 V. Pierce, 4 Mete. 478, 37, 43 Greneaux v. Wheeler, 6 Tex. 515, 394 Grew V. Bevan, 3 Starkie 134, 116 Grew V. Burditt, 26 Mass. 265, 248 Grey v. Cooper, 3 Doug. 54, 68 V. Kentucky Bank, 2 Litt. (Ky.) 378, 238 Gridley v. Bane, 57 111. 326, 120, 121 Grier v. Hinman, 9 Mo. App. 213, 431 Grieves' Syndics v. Sagory; 3 Mart. O. S. (La.) 599, 224 Griffey v. Payne, 1 Morris (Iowa) 68, 208 Griffin v. Hasty, 94 N. C. 438, 419 V. Kemp, 46 Ind. 172, 576 v. Ketchum, 8 Peck (111.) 392, 239, 419 V. Simons, 61 Tenn. 19, 201 Griffith V. Clark, 18 Md. 566, 30 V. Collier, 1 Ky. L. Rep. 260, 23 V. Cox, 1 Overt. 210, 152 V. Shipley, 74 Md. 591, 323 Griffiths V. Kellogg, 39 Wis. 290, 25 Grigby v. Cox, 1 Ves. Sr. 517, 33 Griggs v. Day, 136 N. Y. 152, 373 V. Howe, 31 Barb. 100, 22 V. Woodruff, 14 Ala. 9, 472 Grim v. Grim, 65 N. Y. Supp. 1134, 699 Grimball v. Marshall, 3 Smedes & M. 359, 534 Grimes v. Grimes, 28 Ky. L. Rep. 549, 688 V. Hillenbrand, 6 Thomp. & C. 620, 291 V. Piersol, 25 Ind. 246, 158 Grimmerson v. Russell, 20 Neb. 337, 343 Grimsted v. Briggs, 4 Iowa 559, 149 Grissom v. Fife, 38 Tenn. 331, 23 Grist V. Grist, 1 Ind. 570, 417 Griswold v. Bueckle, 72 Mo. App. 53, 489 Groatman v. Delheim, 6 Me. 476, 505 Grocers' Bank v. Murphy, 9 Daly 510, 117 V. Penfield, 69 N. Y. 504, 246, 249, 284, 285, 353, 390, 391 Groff V. Groff, 209 Pa. St. 603, 96 Grooms v. Lieurance, 98 111. App. 394, 695 V. Oliff, 93 Ga. 789, 240 Gross V. Funk, 30 Kan. 655, 303 V. Kellard, 26 N. Y. Supp. 69, 212 Groves v. Clark, 21 La. Ann. 567, 291, 292 Grymes v. Blofield, Cro. Eliz. 541, 697 Guelich v. National Bank of Burlington, 56 Iowa 434, 583 Ixx TABLE OF CASES, [References are to Sections.'] Guenther v. Wisdom, 27 Ky. L. Rep. 230, 302 Guerguin v. Boone, 33 Tex. Civ. App. 622, 680 Guernsey v. Burns, 25 Wend. (N. Y.) 411, 418 Guignon v. Union Trust Co., 156 111. 135, 509, 515, 531, 534, 545 Guild V. Butler, 127 Mass. 386, 686 Gulicli V. Gulick, 16 N. J. L. 186, 307 Gullatt V. Thrasher, 42 Ga. 429, 293 Gumaer v. Sowers, 31 Colo. 126, 240, 402, 404 Gunnis Barrett & Co. v. Weig. ley, 114 Pa. St. 191, 10, 281 Gunnison County v. E. H. Rol- lins & Sons, 173 U. S. 255, 489 Gushee v. Leavitt, 5 Cal. 160, 416 Guthrie v. Howard, 32 Iowa 341, 62 V. Reid, 107 Pa. St. 251, 306 Guy V. Bibend, 41 Cal. 322, 361 V. Liberenz, 160 Ind. 524, 44, 45, 49 Gwathney v. McLane, 3 McLean U. S. 371, 419 Gwin V. Anderson, 91 Ga. 827, 145 Gwyn V. Patterson, 72 N. C. 189, 316 Gwynn v. Lee, 9 Gill (Md.) 137, 121, 288, 303, 359 H Haas V. American Nat. Bank (Tex. Civ. App.), 94 S. W. 439, 36, 482 V. Bank of Commerce, 41 Neb. 754, 369, 688 V. Hall & Farley, 111 Ala. 442, 288 Haber v: Brown, 101 Cal. 445, 503, 515, 570 Habenicht v. Rawls, 24 S. C. 461, 44 Hackensack Water Co. v. De Kay, 36 N. J. Eq. 548, 487 Hacker v. Brown, 81 Mo. 68, 263 Hackett v. City of Ottawa, 99 U. S. 86, 488 V. Kendall, 23 Vt. 275, 416 V. Reynolds, 114 Pa. St. 328, 622 Hackettstown v. Wing, 52 N. J. Eq. 156, 476, 662 Hackley v. Sprague, 10 Wend. (N. Y.) 113, 302, 303 Hadden v. Rodkey, 17 Kan. 429, 419, 463 Haden v. Lehman, 83 Ala. 243, 246 Hadley v. Wray, 76 Ind. 476, 592 Haescig v. Brown, 34 Mich. 503, 240 Haeussler v. Greene, 8 Mo. App. 451, 431 Hagan v. Bigler, 5 Okla. 575, 198, 208 Hagen v. Bank, 6 Lans. (N. Y.) 490, 642 V. Bowery National Bank, 64 Barb. (N. Y.) 197, 101 V. Caldwell, 15 La. 380, 439 Hagerman v. Hagermann, 188 111. 363, 214 V. Sutton, 91 Mo. 519, 56, 366 Haggerty v. Walker, 21 Neb. 596, 635 Haight V. Joyce, 2 Cal. 64, 296 Haines v. Dennett, 11 N. H. 180, 161 V. Dubois, 30 N. J. L. 259, 307 V. Nance, 52 111. App. 406, 347 Hair v. Edwards, 104 Mo. App. 213, 402 v. La Brouse, 10 Ala. 548, 307, 333 Halcraft v. Wellott, 57 Ind. 519, 614 Halcrow v. Kelly, 28 Up. Can. C. P. 551, 135, 169, 170 Halderman v. Bank of Middle- ton, 28 Pa. St. 440, 89 Hale V. Aldaffer, 5 Kan. App, 40, 198 v. Christy, 8 Neb. 264, 56 V. Dressen, 76 Minn. 183, 681 V. Harris, 28 Ky. L. Rep. 1172, 91 S. W. 660, 194 V. Kimball, 77 111. 161, 592 Haley v. Congdon, 56 Vt. 65, 635, 637 V. Harvey, 1 White & W. Civ. Cas. (Tex. Ct. App.) 1096, 333 Halifax v. Lyle, 3 Exch. 446, 95 Hall V. Auburn Turnpike Co., 27 Cal. 256, 257, 80 V. Bank, 5 Dana. (Ky.) 258, 166 V. Bank, 13 III. 234, 270 V. Campbell, 5 Ky. Law Rep. 247, 52 V. Carev, 5 Ga. 239, 416 V. Clofton, 56 Miss. 555, 116 V. Commonwealth Bank, 5 Dana (Ky.) 258, 105 V. Cordell, 142 U. S. 116, 277 V. Freeman, 2 Nott. & Me. 479, 525 V. Fuller, 5 Barn. & C. 750, 165 V. Hale, 8 Conn. 336, 179 V. Huse, 10 Mass. 39, 73 V. Parker, 37 Mich. 590, 29 V. Rodgers, 26 Tenn. 540, 212 V. Smith, 15 Iowa 584, 691 V. Wilson, 16 Barb. (N. Y.) 548, 394 TABLE OF CASES. Ixsi {References are to Gections.l Halliday v. Atkinson, 5 Barn. & Cr. 501, 186 Hallock V. Young, 72 N. H. 416, 476 Halloway v. Quinn, 18 Wkly. Not. Cas. (Pa.) 386, 270 Hallowell & Augusta Bank v. Howard, 13 Mass. 235, 612 Hall's Adm'x v. McHenry, 19 Iowa 521, 181 Halstead v. Colvin, 51 N. J. Eq. 387, 380, 402 V. Mayor of City of New York, 5 Bark (N. Y.) 218, 84 V. New York, 3 N. Y. 430, 87 Haly V. Lane, 2 Atk. 181, 61, 68 Ham V. Smith, 87 Pa. St. 63, 288 Haman v. Bannon, 71 Md. 424, 599 Hamburger v. Miller, 48 Md. 317, 185, 200, 204, 279 Hamelin v. Bruck, 9 Q. B. 306, 641 Hamer v. Brainerd, 7 Utah 245, 522 V. Johnson, 6 How. 698, 202 V. Johnston, 5 Miss. 698, 198, 237, 240 Hamill v. First Nat. Bank, 14 Colo. 1, 629 Hamilton v. Catchings, 58 Miss. 92, 272 V. Fowler, 99 Fed. 18, 288, 303 V. Hooper, 46 Iowa 515, 16, 141, 174, 175 V. La Grange, 2 H. Bl. 144, 302 V. Marks, 63 Mo. 167, 476 V. Pleasants, 31 Tex. 638, 78, 335 V. Vought, 34 N. J. L. 187, 476 V. Winona Salt & L. Co., 95 Mich. 436, 583 V. Wood, 70 Ind. 306, 153 Hamilton Nat. Bank v. Nye (Ind. App. 1906), 77 N. B. 295, 73 Hamlin v. Simpson, 105 Iowa 125, 523, 583 Hammett v. Trueworthy, 51 Mo. App. 281, 524, 539 Hammond v. Aiken, 3 Rich. Eq. (S. C.) 119, 94 V. Kingsley, 12 111. 343, 236 Hampton v. Mayes, 3 Ind. Terr. 65, 135 V. Miller 78 Conn. 267, 505, 506 V. Shehan, 7 Ala. 295. 409 Hanauer v. Doane, 12 Wall. (U. S.) 342, 293 V. Woodruff, 15 Wall. (U. S.) 439, 293 Hanbury v. Lovett, 18 Law T. N. S. 366, 164 Hance v. Holiman, 69 Ark. 57, 682 Hanchett v. Birge, 12 Mete. 545, 685 Hancock v. Chicot Co., 32 Ark. 575, 87 V. Joy, 41 Me. 568, 51 Hand v. Feld, Anth. N. P. (N. Y.) 87, 262 V. Pantagraph Co., 1 Colo. App. 270, 238 Handy v. Tracy, 150 Mass. 524, 682 V. Wilson, 75 Ga. 840, 328 Handy Brothers Hardware Co. V. Brownstone, 123 Cal. 643, 613 Hank v. Deal, 3 McCord (S. C.) 257, 66 Hankins v. Shoup, 2 Ind. 342, 238, 431, 465, 637 Hanks v. Brown, 79 Iowa 560, 288 V. Dunlap, 10 Rich. Eq. (S. C. 139, 121 Hanna v. Stroud, 13 S. Dak. 352, 681 Hannahs v. Sheldon, 20 Mich. 278, 72 Hannum v. Richardson, 48 Vt. 508, 348 Hanover Bank v. Johnson, 90 Ala. 549, 291, 295 Hanover Nat. Bank v. American D. & T. Co., 148 N. Y. 612, 75 V. Howell, 114 N. C. 271, 60 Hansard v. Robinson, 7 Barn. & C. 90, 513 Hansford v. Mills, 9 Port. (Ala.) 509, 209 Hanson v. Heard (N. H.) 38 Atl. 788, 581 Hanston v. Fellows, 27 Vt. 634^ 595 Hapgood V. Needham, 59 Me. 442, 288, 294 v. Watson, 65 Mass. 510, ' 92 Harbaugh v. Tanner, 163 Ind. 574, 303 Harbeck v. Craft, 4 Duer (N. Y.) 122, 307 V. Craft, 4 Duer (N. Y.) 122, 307 Harcrow v. Gardiner, 69 Ark. 6, 125 Hardie v. Wright, 83 Tex. 345, 361 Rardie & Co., In re, 143 Fed. 553, 439 Hardin v. McKitrich, 5 J. J. Marsh. (Ky.) 667, 329 V. Pelan, 41 Miss. 112, 183 Harding v. Commercial Loan Co., 84 111. 251, 312 Hardy v. Corliss, 21 N. H. 356, 592 V. First Nat. Bank, 56 Kan. 493, 473 V. Norton, 66 Barb. (N. Y.) 527, 160 V. Waddell, 58 N. H. 460, 659 Ixxii TABLE OF CASES. [References are to Sections.'] Hardy v, Walters, 38 Me. 450, 63, 68 Hare v. Hooper, 56 Neb. 480, 302 Hargrave v. Dusenberry, 9 N. C. 326, 645 Harigs v. Louisville Trust Co., 30 S. W. 637, 243 Harker v. Brown, 81 Mo. 68, 262 Harlan v. Reid, 3 Ham. (Ohio) 285, 122 Harlem v. Read, 3 Ham. (Ohio) 285, 193 Harlow v. Boswell, 5 Peck. 56, 270 V. Boswell, 15 111. 57, 320 Harmon v. Adams, 120 U. S. 263, 333, 685 V. Haggerty, 88 Tenn. 705, 292 V. Hale, 1 Wash. T. 422, c Harner v. Batford, 35 Ohio St. 113, 690, 691 Harness v. Home, 20 Ind. App. 134, 266 Harnett v. Holdrege (Neb. 1903), 97 N. W. 443, 180 Harp V. Osgood, 2 Hill (N. Y.) 216, 288 Harpening v. Gray, 76 Hun 351, 699 Harper v. Calhoun, 7 How. (Miss.) 203, 596 V. Middle States Loan, etc., Co., 55 W. Va. 149, 302 V. Stroud, 41 Tex. 367, 174 V. Wrigley, 48 Ga. 495, 333 V. Young, 112 Pa. St. 419, 297 Harpham v. Haynes, 30 111. 404, 240 Harphane v. Haynes, 33 111. 405, 237 Harrell v. Broxton, 78 Ga. 129, 419, 484 V. Citizens' Bkg Co., Ill Ga. 846, 467 Harrigan v. Advance Thresher Co., 26 Ky. L. Rep. 317, 265, 447 Harrington v. Butte & Boston Min. Co. (Mont), 83 Pac. 467, 465, 475 V. Claflin, 91 Tex. 295, 423 v. Dorr, 3 Rob. (N. Y.) 275, 282 V. Lee, 33 Vt. 249, 210 v. Wilcox, 8 Jones Law (N. C.) 349, 635 Harris v. Berger, 15 N. Y. St. R. 389, 391, 22, 23 v. Bressler, 119 111. 467, 614 V. Brooks, 21 Pick. (Mass.) 195 342 V. Burw'ell. 65 N. C. 584, 624 v. Clark, 10 Ohio 6, 520 V. Finberg, 46 Tex. 79, 41 V. Galbraith, 43 111. 309, 351 V. Robinson, 4 How. 336, 549, 570 Harris v. Runnels, 12 How. (U. S.) 79, 292 Harrisburg Nat. Bank v. Brad- shaw, 178 Pa. St. 180, 45 v. Moffitt, 10 Pa. Dist. R. 22, 505, 506, 545, 564 Harrisburg Trust Co. v. Shu- feldt, 31 C. C. A. 190, 594 Harrison v. Black, 10 Lea. (Tenn.) 117, 77 v. Copeland, 8 Mo. 268, 495 V. Edwards, 12 Vt. 648, 254 V. Henderson, 4 Ga. 198, 632 V. Morrison, 39 Minn. 319, 332 V. Nicollet Nat. Bank, 41 Minn. 488, 577 V. Pike, 48 Miss. 46, 238 V. Powers, 76 Ga. 218, 29 V. Remington Paper Co., 140 Fed. 385, 679 V. Wortham, 8 Leigh (Va.) 296, 597 V. V/right, 100 Ind. 515, 581 Harrisonburg Bank v. Meyer, 6 Serg. & R. 537, 449 Harsh v. Klepper, 28 Ohio St. 200, 169 Hart V. Adler, 109 Ala. 467, 366 V. Boston & M. R., 72 N. H. 410, 56 Atl. 920, 414 V. Clouser, 30 Ind. 210, 170 V. Grigsby, 14 Bush (Ky.) 542, 47 V. Harrison Wire Co., 91 Mo. 414, 186 V. Livermore Foundry & Ma- chine Co., 72 Miss. 809, 79, 134, 288 V. Long, 1 Rob. 83, 525 V. McLellan, 80 Me. 95, 555, 564 V. Smith, 15 Ala. 807, 496 V. Stickney, 41 Wis. 630, 468 V. Strong, 183 111. 349, 194, 685 V. Taylor, 70 Miss. 655, 307 V. U. S. Trust Co., 118 Pa. St. 565, 353 V. West, 16 Tex. Civ. App. 395, 403 Harter v. Johnson, 16 Ind. 271, 301 Hartford Bank v. Barry, 17 Mass. 94, 511 V. Stedman, 3 Conn. 489, 514 Hartman v. Shaffer, 71 Pa. St. 312, 183 Hartness v. Thompson, 5 Johns. R. N. Y. 160, 68 Hartwell v. Chandler, 5 Blackf. 215, 502, 514 V. McBeth, 1 Harr. (Del.) 363, 253 TABLE OF CASES, Isxiii [References are to Sections.'] Hartzell v. McClurg, 54 Neb. 316, 403 Harvard Pub. Co. v. Benjamin, 84 Md. 333, 40 Harvey v. First Nat. Bank, 56 Neb. 320, 681 v. Johnson, 133 N. C. 352, 357, 33 V. Nelson, 31 La. Ann. 434, 524, 539 v. Smith, 55 111. 224, 661 Harwell v. Martin, 115 Ga. 156, 122 V. Steel, 17 Ala. 373, 610 Harwood v. Brown, 23 Mo. App. 69, 185, 186, 198, 202 Hascall v. Whltmore, 19 Me. 102, 238, 241 Haseltine v. Central Nat. Bank, 183 U. S. 131, 306, 615 Haskell v. Avery, 181 Mass. 106, 447 V. Brown, 65 111. 29, 365, 367, 446, 447, 472 V. Jones, 86 Pa. St. 173, 292 Haskins v. Throne, 101 Ga. 126, 439 Hassam v. Dompier, 28 Vt. 32, 208 Hastings v. Dollarhide, 24 Cal. 195, 208, 63, 64, 68 Hastings First Nat. Bank v. Mc- Allister, 50 N. W. 1040, 510 Hatch V. Barrett, 34 Kan. 223, 113 v. Burroughs, 1 Woods 439, 291, 293 V. Hydes, 14 Vt. 25, 320 V. Reid, 112 Mich. 430, 288 V. Trayes, 11 Adol. & E. 702, 186 Hatchett v. Baddeley, 2 Sir W. Black. 1079, 42 Hathaway v. Delaware County, 93 N. Y. Supp. 436, 103 App. Div. 179, 474, 485 Hathorn v. Wheelwright, 99 Me. 351, 208, 264, 292 Hauck Clothing Co. v. Sharpe, 83 Mo. App. 385, 391, 393 Haug V. Riley, 101 Ga. 372, 439 Haugan v. Surwall, 60 Minn. 367, 246, 412 Hauptman v. Pike (Neb. 1906), 108 N. W. 163, 116 Hausbrandt v. Hofler (Iowa), 90 N. W. 494, 445 Havens v. Hintington, 1 Cow. (N. Y.) 387. 419 v. Potts, 86 N. C. 31, 446 Havorka v. Heminer, 108 111. App. 443, 96 Hawes v. Mulholland, 78 Mo. App. 493. 460 Hawk V. Johnson (Pa.), 6 Atl. 725, 679 Hawkell v. Champion, 30 Mo. 136, 172 Hawkins v. Baker, 14 R. I. 139, 689 V. Fourth Nat. Bank, 150 Ind. 117, 49 N. E. 957, 662 V. Neal, 60 Miss. 256, 270 V. Wilson, 71 Iowa 761, 119 Hawks V. Truesdell, 12 Allen (Mass.) 564, 322 Hawley v. Bibb, 69 Ala. 52, 298 V. Brownstone, 23 Cal. 643, 613 V. Foote, 19 Wend. 516, 686 V. Hirsch, 2 Woodw. Dec. (Pa.) 158, 122, 260 V. Jette, 10 Oreg. 31, 523, 570 Hawley Bros. Hardware Co. v. Brownstone (Cal.), 56 Pac. 468, 373 Haxtun v. Bishop, 3 Wend. (N. Y.) 13, 612 Hay V. Ayling, 16 Q. B. 423, 291 V. Jaeckle, 90 Hun (N. Y.) 114, 386, 388 Haycock v. Rand, 59 Mass. (5 Cush.) 26, 127 Hayden v. Lincoln City Elec. Ry. Co., 43 Neb. 680, 359 V. Davis, 3 McLean (U. S.) 276, Fed. Cas. No. 6259, 79 Haydenville Saving Bank v. Parsons, 138 Mass. 53, 341 Haydon v. Nicoletti,, 18 Nev. 290, 376, 466 Hayes v. Allen, 160 Mass. 286, 689 V. Gorham, 2 Scam. (111.) 429, 239 V. Matthews, 63 Ind. 412, 173 Haynes v. Foster, 2 Cromp. & M. 237, 380 V. Gay, 37 Wash. 230, 302 V. Rudd, 30 Hun (N. Y.) 237, 112 V. Thorn, 8 Fost. (N. H.) 386, 198 Havs V. Citizens' Sav. Bank, 101 Ky. 201, 541, 560, 561 V. Hathorn, 74 N. Y. 486, 418 V. Kingston, 16 Atl. 745, 265 V. McFarlan, 32 Ga. 699, 301 V. Southgate, 10 Hun 511, 418 V. Walker, 25 Ky. L. Rep. 1045, 292 Hayward v. Barker, 52 Vt. 429, 43 V. Empire State Sugar Co., 93 N. Y. Supp. 449. 524, 539 V. Minger, 14 Iowa 516, 419 V. Stearns, 39 Cal. 58, 419, 436 Haywood v. McNair, 2 Dev. & Bat. (N. C.) 283, 419 Hazard v. Spencer, 17 R. I. 561. 514, dl7 Ixxiv TABLE OF CASES. [References are to Sections.'] Hazard v. White, 26 Ark. 155, 525 Hazelton v. Batchelder, 44 N. H. 40, 74 Hazlett V. Bragdon, 7 Pa. Super. Ct. 581, 522, 564, 570 H. B. Claflin Co. v. Feibelman, 44 La. Ann. 518, 514 Head v. Baldwin, 83 Ala. 132, 214 Headley v. Good, 24 Tex. 232, 329 Healey v. Gilman, 1 Bosw. 235, 523 Heaps V. Dunham, 95 111. 583, 108 Heard v. De Loach, 105 Ga. 500, 257, 404 V. Dubuque County Bank, 8 Neb. 10, 367 Heath v. Blake, 28 S. C. 406, 157, 174 V. Derry Bank, 44 N. H. 174, 3 Heath, Ex parte, 2 Ves. & B. 240, 523 Heatley v. Thomas, 15 Ves. 596, 33 Heaton v. Knowlton, 53 Ind. 357, 210, 662 Heaverin v. Donnell, 7 Sm. & M. (Miss.) 244, 347 Hebberd v. Southwestern Land & Cattle Co., 55 N. J. Eq. 29, 476 Hecker v. Boylan (Iowa), 101 N. W. 755, 447 Hedge v. Gibson, 58 Iowa 656, 419 Heffington v. Jackson (Tex. Civ. App. 1906), 96 S. W. 108, 63 Hefiierman v. Pennington County, 3 S. D. 162, 402 Heffner v. Wenrich, 32 Pa. St. 423, 152 Heffron v. Cunningham, 76 Tex. 312, 307 V. Daly, 133 Mich. 613, 288 Hefner v. Dawson, 63 111. 403, 74, 674 V. Vandolah, 62 111. 483, 74, 674 Heirn v. Carron, 11 S. & M. 361, 691 Heist V. Hart, 73 Pa. St. 286, 123 Helena Nat. Bank v. Rocky Mt. Teleg. Co., 20 Mont. 379, 447 Helfenstein, In re, 77 Pa. St. 328, 317 Helmer v. Commercial Bank, 28 Neb. 474, 359, 460 V. Krolick, 36 Mich. 371, 366 Helms V. Wayne Agricultural Co., 73 Ind. 325, 104, 673 Helwege v. Hibernia Nat. Bank, 28 La. Ann. 520, 642 Hemenway v. Cropsey, 37 111. 357, 302, 303 V. Hickes, 21 Mass. 497, 183 Hemings v. Robinson, Barnes 436, 657 Hemming v. Trenery, 9 Adol. & El. 926, 171 Hemminguay v. Mathews, 10 Tex. 207, 12, 54 Hempler v. Schneider, 17 Mo. 258, 343 Hendershot v. Nebraska Nat. Bank, 25 Neb. 127, 565 Henderson v. Anderson, 3 How. (U. S.) 73, 121 V. Benson, 8 Price 281, 291, 303 V. Case, 31 La. Ann. 215, 419 V. Davisson, 157 III. 379, 41 N. E. 560, 402 V. Fox, 5 Ind. 489, 63, 68 V. Glass, 16 Tex. 559, 183 V. Lewis, 9 Serg. & R. (Pa.) 379, 629 V. Shafer, 110 La. Ann. 481, 696 V. Waggoner, 2 Lea (Tenn.) 133, 288 V. Wilson, 7 Miss. (6 How.) 65, 152, 153 Hendrick v. Foote, 57 Miss. 117, 56 Hendricks v. Judah, 1 Johns. (N. Y.) 319, 627, 635 Hendrie v. Berkowitz, 37 Cal. 113, 116, 73 Henke v. Eureka End. Assoc, 100 Cal. 429, 183 Henley v. Helzer, 19 Mo. App. 245, 431 Henly v. Lanier, 75 N. C. 172, 651 Hennesey Bros. & Co. v. Mem- phis National Bank, 129 Fed. 557, 81 Henniger v. Wager, 4 Ohio Dec. 242, 237 Henriette Nat. Bank v. State Bank, 80 Tex. 648, 581 Henriques v. Ypsilanti Savings Bank, 84 Mich. 168, 126 Henry v. Coats, 17 Ind. 161, 174 V. Coleman, 5 Vt. 402, 343 V. Galliland, 103 Ind. 177, 446, 651 V. McAllister, 99 Ga. 557, 26 S. E. 469, 653 V. Scott, 3 Ind. 412, 447, 623 V. Spengler, 12 Ohio C. C. 153, 558, 567 V. State Bank of Laurend (Iowa), 107 N. W. 1034, 112, 194, 288 Henry Wood's Sons Co. v. Schae- fer, 173 Mass. 443, 689 Henshaw v. Dutton, 59 Mo. 139, 307, 312, 314, 320 Hentz V. Jewell, 20 Fed. 592, 298 Hepler v. Bank, 97 Pa. St. 420, 135 TABLE OF CASES. Ixxv [References are to Sections."] Herbert v. Ford, 33 Me. 90, 206, 208, 211 V. Hule, 1 Ala. 18, 22 Herdon v. Henderson, 41 Miss. 584, 338 Hereth v. Bank, 34 Ind. 380, 120, 193 Herider v. Phoenix Loan Assoc, 82 Mo. App. 427, 582 Herman v. Gunter, 83 Tex. 66, 241 V. HecM, 116 Cal. 553, 416, 560 Hermann Furniture & Plumbers' Cabinet Works v. German Ex- change Bank, 87 N. Y. Supp. 462, 581 Hermen v. Bourgeat, 12 Bab. (La.) 522, 95 Herndon v. Bremond, 17 Tex. 432, 238 Herod v. Snyder, 48 Ind. 480, 261, 446 Herrick v. Baldwin, 17 Minn. 209, 179, 515, 542 V. Carman, 10 Johns. 224, 408 V. Edwards, 106 Mo. App. 633, 505, 545 V. Swomley, 56 Md. 439, 295, 419 V. Whitney, 15 Johns. (N. Y.) 240, 645 V. Woolverton, 41 N. Y. 581, 507 Herriman v. Mulhellan, 1 Mart. N. S. (La.) 605, 419 Herrington v. Butte & B. Min. Co., 27 Mont. 1, 119 Hershizer v. Florence, 39 Ohio St. 516, 524, 59 Hert V. Ford (Mo. 1896), 36 S. W. 671, 312 V. Oehler, 80 Ind. 83, 136, 168 Herter v. Goss & Edsall Co., 57 N. J. L. 42, 347 Hervey v. Hervey, 15 Me. 357, 152, 154 Heslau v. Bergeren, 94 Me. 395, 505, 512 Heuertematte v. Morris, 101 N. Y. 63, 123, 240 Heugh V. Jones, 32 Pa. St. 432, 56 Hewett V. Goodrick, 2 Car. & P. 468, 341 Hewins v. Cargill, 67 Me. 554, 165 Hewitt V. Johnson, 72 111. 513, 25 V. Jones, 72 111. 218, 25, 120 Heyman v. Dooley, 77 Md. 162, 681 Heysham v. Oeltre, 89 Pa. St. 506, 107 Hibbs V. Brown, 98 N. Y. Supp. 353, 476 Hibernia Bank & Trust Co. v. Smith (Miss.), 42 So. 345, 516 Hibernian Bank v. Everman, 52 Miss. 500, 89, 131, 437 Hibernia Sav. & Loan Assoc, v. Thornton, 109 Cal. 427, 364 Hickerson v. McFadden, 1 Swan (Tenn.) 258, 606 V. Raiguel & Co., 49 Tenn. 329, 287, 389 V. Marvin, 31 Barb. 297, 688 Hickman v. Bayl, 55 Ind. 551, 310, 324 Hickok V. Bunting, 92 N. Y. App. Div. 167, 183 Hicks V. Randolph, 3 Baxt. (Tenn.) 352, 61 Hidden v. Bishop, 5 R. I. 29, 379 V. Waldo, 55 N. Y. 294, 199 Higgenbotham v. McGready, 183 Mo. 96, 296, 297 Higgins V. McPherson, 118 111. App. 464, 680 V. Ridgway, 153 N. Y. 130, 198, 269, 342 V. Worthington, 90 Hun (N. Y.) 436, 604 High V. Cox, 55 Ga. 662, 340 Highbaugh v. Hubbard, 6 Ky. L. Rep. 511, 447 Higley v. Dennis (Tex. Civ. App.), 88 S. W. 400, 699 Hilbert v. Burry, 111 Mich. 698, 194 Hildeburn v. Turner, 5 How. 69, 517 Hill V. Bank, 56 Vt. 582, 306 V. Buckminster, 22 Mass. 391, 186, 198, 222 V. Galvin, 15 Miss. (4 How.) 231, 135 V. Enders, 19 111. 163, 208, 322, 338 V. Heap, 1 Dowl. & Ry. 57, 523, 573 V. Huntress, 43 N. H. 480, 309, 310, 322, 333, 367 V. Northrup, 1 Hun (N. Y.) 612, 295 V. O'Neill, 101 Ga. 832, 136, 139 V. Ryan, 8 Up. Can. Q. B. 443, 208 V. Shields, 81 N. C. 250. 342, 348 V. Southwick, 9 R. I. 299, 599 V. Thixton, 94 Ky. 96, 23 S. W. 947, 654 Hlllard v. Taylor, 38 So. 549, 240, 442, 489 V. Walker, 11 111. 644, 630 Hillhouse v. Adams, 57 Conn. 153, 441, 623 Hills V. Place, 48 N. Y. 520, 502, 517 Ixxvi TABLE OF CASES. [References are to Sections.'] Hillsdale College v. Thomas, 40 Wis. 661, 212 Hinckley v. Bank, 131 Mass. 147, 425, 426 Hindostan v. Smith, 36 Law J. C. P. 241, 1'72 Hinds V. Chamberlin, 6 N. H. 225, 288 Hiner v. Newton, 30 Wis, 640, 601 Hinsey v. Studebaker, 73 111. App. 278, 528 Hintermister v. Bank, 3 Hun 345, 306 Hintington v. Shute, 180 Mass. 371, 186 Hinton v. Scott, Dud. (Ga.) 245, 208 Hirschfield v. Smith, L. R. 1 C. P. 340, 138, 146 Hirschman v. Budd, L. R. 8 Exch. 171, 152 Hirshfield v. Ft. Worth Nat. Bank, 83 Tex. 452, 510 Hirt V. Vincent, 29 N. Y. Supp. 61 563 Hitchcock V. Hogan, 99 Mich. 124, 510, 564 V. 'way, 6 Adol. & E. 943, 291 Hitchings v. Edmands, 132 Mass. 338, 506 Hoadley v. Bliss, 9 Ga. 303, 538 V. Good, 24 Tex. 232, 329 Hoag V. Parr, 13 Hun (N. Y.) 95, 257, 310, 327 Hoare v. Graham, 3 Camp, 57, 307, 339 Hoats V. Aschbach, 160 Pa. St. 6. 120 Hobart v. Penny, 70 Me. 248, 439, 440 Hobaugh v. Murphy, 114 Pa. St. 358, 7 Atl. 139, 11 East Rep. 12 651 Hobble V. Zaepffell, 17 Neb. 537, 288 Hobbs V. Chemical Nat. Bank, 97 Ga. 524, 543 V. Straine, 149 Mass. 212, 525, 569, 573 Hochmark v. Richler, 16 Colo. 263, 175, 679 Hockenbury v. Myers, 34 N. J. L. 346, 213 Hocksher v. Shoemaker, 47 Pa. St. 249, 699 Hodge V. Babk, 7 Ind. App. 94, 158 V. Mason. 21 D. C. 181, 262 V. Smith (Wis. 1907), 110 N. W. 192, 116 V. Wallace (Wis.), 108 N. W. 212 424, 468 Hodges V. Cole, 2 Dana (Ky.) 396, 343 V. Hunt, 22 Barb. (N. Y.) 150, 64 V. Nash, 43 111. App. 638, 270 V. Nash, 141 111. 391, 307 V. Price, 18 Fla. 342, 30 V. Terrey, 28 Mo. 99, 117 Hodson V. Davis, 43 Ind. 258, 30, 59 Hofer V. Cawan Co. (Ky.), 68 S. W. 438, • 29 Hoff V. Jasper Co., 110 U. S. 53, 87 Hoffman v. Bank of Milwaukee, 12 Wall. (U. S.) 181, 99 V. Foster, 45 Pa. St. 137, 282, 419 V. Planters' National Bank, 99 Va. 480, 158 V. Shupp, 80 Md. 611, 62 V. Zollinger, 39 Ind. 461, 630 Hofrichter v. Enyeart (Neb.), 99 N. W. 638, 511, 533, 549 Hogan V. Kaiser, 113 Mo. App. 711, 680, 688 V. 'Moore, 48 Ga. 156, 114 Hogdon V. Colder, 75 Me. 293, 208 Hoge V. Lansing, 35 N. Y. 136, 340 Hogg V. Shun, 34 L. J. C. P. 153, 93 Hoit V. Cooper, 41 N. H. Ill, 301 Holbrook v. Burt, 22 Pick. 555, 496 V. Mix, 1 E. D. Smith (N. Y.) 154, 270, 472 Holcomb V. Wycoff, 35 N. J. L. 35, 119, 240 Holden v. Clark, 16 Kan. 346, 439 V. Cosgrove, 12 Gray (Mass.) 216, 296 V. Kirby, 21 Wis. 449, 130, 240 Holder v. Western German Bank, 132 Fed. 187, 583 Holeman v. Hobson, 8 Humph. 127, 119. 376 Holland v. Hoyt, 14 Mich. 238, 268 V. Makepeace, 8 Mass. 418, 419, 591, 608 V. Smit, 11 Mo. App. 6, 699 Hollandsworth v. Squires (Tenn.), 56 S. W. 1044, 628 Holland Trust Co. v. Waddell, 75 Hun (N. Y.) 104, 270 Holley V. Younge, 27 Ala. 203, 603 Holliman v. Karger, 71 S. W. 299, 250, 489 Hollis V. Vandergrift, 5 Houst. (Del.) 521. 149 Hollister v. Bell, 107 Wis. 198, 46 V. Hopkins, 13 Hun (N. Y.) 210, 199 TABLE OF CASES. Ixxvii IReferences are to Sections.l Holm V. Atlas Nat. Bank, 84 Fed. 119, 476, 486 V. Jamieson, 173 111. 295, 460 Holman v. Creagmiles, 14 Ind. 177, 422, 602 Holmer v. Commercial Bank, 28 Neb. 474, 376 Holmes y. Bank, 53 Minn. 350, 303 V. Bemis, 25 111. App. 232, 271 V. Briggs, 131 Pa. 233, 570 V. Carman, 1 Freem. Ch. (Miss.) 408, 242 V. French, 68 Me. 525, 292 V. Goldsmith, 147 U. S. 150, 447 V. Harris, 97 Mo. App. 305, 268 V. Holmes, 36 Vt. 525, 369 V. Kerrison, 2 Taunt. 323, 490 V. Kid, 3 Hurl. & N. 891, 637 V. Roe, 62 Mich. 199, 514, 576, 579 V. Trumper, 22 Mich. 427, 136, 170 V. Williams, 10 Paige (N. H.) 326, 303 Holt V. Mclntire, 50 Minn. 466, 312 V. Nevassa Guano Co., 114 Ga. 666, 291 V. Ross, 54 N. Y. 472, 13 Am. Rep. 615, 673 Holtgreve v. Wuntker, 85 111. 470, 94 Holton V. Alley, 15 Ky. L. Rep. 529, 24 S. W. 113, 402 Holtz V. Boppe, 37 N. Y. 684, 570 Holzworth V. Koch, 26 Ohio St. 33, 241 Home Bank v. Drumgoole, 109 N. Y. 63, 15 N. E. 747, 659 Home National Bank v. Hill, 165 Ind. 226, 74 N. E. 1086, 14, 26, 28 Home Security Bldg. & Loan Ass'n V. George, 57 Cal. 363, 639 Homer v. Wallis, 11 Mass. 309, 177 Homes v. Bennett (Me. 1886), 3 Atl. 661, 34 V. Hale, 71 111. 552, 28 V. Smith, 20 Me. 264, 510 V. Smyth, 16 Me. 177, 241 Home Savings Bank v. Hosie, 119 Mich. 116, 505, 506 Honingford v. Vehman, 2 Ohio Dec. 151, 576 Hood V. Nicholas (Ohio), 1 Wkly. Law Bui. 227, 74 Hooker v. Forrester (Fla. 1907), 43 So. 241, 616 Hooper v. Spicer, 2 Swan (Tenn.) 494, 436, 624, 635 Hoopes V. Collingwood, 10 Colo. 107, 170 V. Northern National Bank, 102 Fed. 448, 265, 281 Hopkins v. Boyd, 11 Md. 107, 131, 222, 223 V. Hawkeye Ins. Co., 57 Iowa 203, 28 Hopkirk v. Page, Fed. Cas. No. 6697, 523, 572 Hopper V. Eiland, 21 Ala. 714, 309 Horn V. Bank, 32 Kan. 518, 138, 158 V. Fuller, 6 N. H. 511, 183 V. Newton City Bank, 32 Kan. 518, 136 Horner v. Speed, 2 Pat. & H. (Va.) 616, 651 Horst V. Wagner, 43 Iowa 373, 143 Horstman v. Henshaw, 11 How. (U. S.) 177, 199 Horton v. Arnold, 18 Wis. 212, 664 V. Horton's Estate, 71 Iowa 448, 166 Hosier v. Beard, 54 Ohio St. 398, 71 Host V. Bender, 25 Mich. 515, 433 Hotchkiss V. Fitzgerald Co., 41 W. Va. 357, 246 V. National Bank, 21 Wall. 354, 476, 483 V. Roehm, 181 Pa. St. 65, 595 Hough V. Gearen, 110 Iowa 240, 585 Houghton V. First National Bank, 26 Wis. 663, 280, 581 V. Houghton, 37 Me. 72, 595 Housatonic National Bank v. Fos- ter. 85 Hun (N. Y.) 376, 195 House V. Adams & Co., 48 Pa. St. 261, 494, 521, 572 V. Davis, 60 111. 367, 222, 614 V. Martin, 125 Ga. 642, 54 S. E. 735. 116 V. Vinton National Bank, 43 Ohio St. 346, 502 Houser v. Bank, 57 Ga. 95, 305 Housum V. Rogers, 40 Pa. St. 190, 359, 670 Houts V. Sioux City Brass Works (Iowa 1907), 110 N. W. 166, 81 Hovorka v. Hemmer, 108 111. App. 443, 136 Howard v. Ames, 3 Mete. 308, 365, 436 V. Fletcher, 59 N. H. 151, 341 V. Gresham, 27 Ga. 347, 419 V. Kitchens. 31 S. C. 490. 56 V. Mississippi Val. Bank, 28 La. Ann. 727, 26 Am. Rep. 105, 641 Ixxviii TABLE OF CASES. [References are to Sections.'] Howard v. Palmer, 64 Me. 86, 664 V. Simpkins, 70 Ga. 322, 44, 48, 63 V. Stratton, 64 Cal. 487, 336 V. Van Gieson, 61 N. Y. Supp. 349, 555 V. Witham, 2 Greenlf. (Me.) 390, 208 Howden v. Haigh, 11 Adol. & E. 1033, 125 Howe V. Potter, 61 Barb. (N. Y.) 356, 260 V. Raymond, 74 Conn. 68, 266 V. Taggart, 133 Mass. 284, 75 V. Thompson, 11 Me. 152, 179 V. Wildes, 34 Me. 566, 30, 51 Howell V. Crane, 12 La. Ann. 126, 433 V. Pennington, 118 Ga. 494, 302 Howes V. Austin, 35 111. 396, 581 Howie V. Lewis, 14 Pa. Super. Ct. 23, 237 Rowland v. Bates, 48 N. Y. St. Rep. 642, 418 V. Edmonds, 24 N. Y. 307, 311 Howry v. Eppinger, 34 Mich 29, 75 Hoye V. Kalishian (R. L), 46 Atl. 271, 489 Hoyt V. Jaffray, 29 111. 104, 186 V. Macon, 2 Colo. 502, 288 V. McNally, 60 Vt. 38, 211 y. Quint, 105 Iowa 443, 681 V. Seeley, 18 Conn. 352, 575 Hubbard v. Callahan, 42 Conn. 524, 292 V. Exchange Bank, 72 Fed. 234, 267 V. Freiburger, 133 Mich. 139, 201, 202, 208 V. Fulton, 7 Mart. 0. S. 241, 439 V. Galusha, 23 Wis. 398, 327 V. Gurney, 64 N. Y. 457, 340 V. Matthews, 54 N. Y. 43, 520, 660 V. Rankin, 71 111. 129, 25, 28, 120, 211 V. Williams, 27 N. C. 397, 179 Hubbell V. City of So. Hutchin- son, 64 Kan. 645, 68 Pac. 52, 653 V. Town of Coster City, 15 S. D. 55, 232 Hubbersty v. Ward, 8 Exch. 330, 414 Hubble V. Fogartie, 3 Rich. 413, 183, 186, 523 V. Murphy, 1 Duv. (Ky.) 278, 315 Huber v. Egner, 22 Ky. L. Rep. 1800, 447, 623 Huber v. German Congregation, 16 Ohio St. 371, 288 Hubler v. Tomney, 5 Watts (Pa.) 51, 599 Huck V. Craus, 99 N. Y. Supp. 490, 407 Huddleston v. Kempner, 3 Tex. Civ. App. 252, 419 Hudle V. Hanner, 50 N. C. 360, 633, 635 Hudson V. Best, 104 Ga. 131, 212, 473 V. Busby, 48 Mo. 35, 263 V. Hanson, 75 111. 198, 22 V. Walcott, 4 Ohio Dec. 459, 406, 502, 503, 545 Hudson River Nat. Bank v. Reynolds, 10 N. Y. Supp. 669, 540 Huertematte v. Morris, 101 N. J. 63, 199 Huff v. Wagner, 63 Barb. 215, 377 Huffman v. Johns (Pa. Sup.), 6 Atl. 205, 10 East Rep. 729, 651 Huggins V. Strong, 4 Blackf. (Ind.) 182, 262 Hughes V. Bowen, 15 Iowa 446, 525, 538 V. Heyman, 4 App. D. C. 444, 681 V. Large, 2 Pa. St. 103, 431, 637 V. Tindall, 1 Stew. & P. 237, 447 V. Wilcox, 17 Misc. 32, 418 Hulbut V. Hall, 39 Neb. 889, 170 Hull V. Myers, 90 Ga. 674, 570 Hulley V. Chedic, 22 Nev. 127, 412 Hullhorst V. Scharner, 15 Neb. 57, 112 Hulme V. Tenant, 1 Bro. C. C. 16, 33 Humberger v. Golden, 99 Pa. St. 34, 341 Humble v. Curtis, 160 111. 193, 359, 365, 366 Humboldt State Bank v. Ros- sing, 95 Iowa 1, 695 Hummellstown Brownstone Co. V. Knerr, 25 Pa. Super. Ct. 465, 680 Humphreays v. Crane, 5 Cal. 173, 137 Humphrey v. Clark, 27 Conn. 381. 123 V. Finch, 97 N. C. 303, 23 Humphrey Hardware Co. v. Her- rick (Neb. 1904), 101 N. W. 1016, 144 Humphreys v. Guillow, 13 N. H. 385, 150. 157 Hungerford v. O'B/ien, 37 Minn. 306, 504 TABLE OF CASES. Ixxix [References are to Sections.'] Hungerford's Bank v. Dodge, 30 Barb. 626, 306 Hungerfords' Bank v. Potsdam & W. R. Co., 10 Abb. Prac. 24, 306 Hunleath v. Leahy, 146 Mo. 408, 467 Hunnicutt v. Perot, 100 Ga. 170, 504, 529, 545 Hunt V. Adams, 6 Mass. 519, 137 V. Aldrich, 27 N. H. 31, 387 V. Bessey, 96 Me. 429, 699 V. Bridgham, 2 Pick. (Mass.) 581, 341 V. Brown, 146 Mass. 253, 679 V. Divine, 37 III. 137, 512 V. Gray, 35 N. J. L. 227, 135, 148 V. Johnson, 96 Ala. 130, 502, 503 V. Martin, 2 Litt. (Ky.) 82, 594 V. Miss. Cent. R. Co., 29 La. Ann. 446, 414 V. Rumsey, 83 Mich. 136, 288 V. Sandford, 14 Tenn. 387, 191 Hunter v. Allen, 94 N. Y. Supp. 880, 415 V. Blodget, 2 Yeates (Pa.) 480, 24 V. Clarke, 184 111. 158, 699 V. Fitzmaurice, 102 Ind. 449, 129 V. Henniger, 93 Pa. St. 373, 292 V. Parsons, 22 Mich. 96, 240 V. Reilly, 36 Pa. St. 509, 73 Huntington v. Finch, 3 Ohio St. 445, 135, 181 V. Harvey, 4 Conn. 124, 525 V. Lyman, 1 D. Chip. (Vt.) 438, 91, 448 V. Shute, 180 Mass. 371, 183 Huntley v. Hutchinson, 91 Minn. 244, 240, 402 Hurlbut V. Hall, 39 Neb. 889, 170 Hurt V. Cook, 151 Mo. 416, 52, 53 V. Wallace (Tex. 1899), 49 S. W. 675, 646 Huston V. Bank, 85 Ind. 21, 635 V. Young, 33 Me. 85, 17 Hutch V. Johnson Loan & T. Co;, 79 Fed. 828, 473 Hutchings V. Renalte (R. I.), 51 Atl. 429, 409 Hutch ins v. Langley, 27 App. D. C. 234, 1 V. Nichols, 10 Cush. (Mass.) 299, 338 Hutchinson v. Brown, 19 Dist. Col. 136, 317 V. Mitchell, 15 La. Ann. 326, 383 Hutchison v. Crutcher, 98 Tenn. 421, 517, 518 Huthoff V. Moje, 20 Misc. R. (N. Y.) 632, 28 Hyde v. Lawrence, 49 Vt. 361, 409 V, Stone, 20 How. 170, 558, 663 V. Tenwinkel, 26 Mich. 85, 320 Hyer v. Hyatt, 3 Cranch C. C. 276, Fed. Cas. No. 6977, 64 Hynes v. Winston (Tex. Civ. App.), 40 S. W. 1025, 475 Iberia Cypress Co. v. Cristen, 112 La. 451, 695 Ingells V. Sutcliff, 36 Kan. 444, 680 Iglehart v. Gibson, 56 111. 81, 350 Imhoff V. Brown, 3 Phila. (Pa.) 45, 44 Importers' & Traders' Nat. Bank V. Littell, 47 N. J. L. 233, 304, 306 V. Shaw, 144 Mass. 421, 562, 569 Independent Brewing Assoc, v. Kleit, 114 111. App. 1, 198 Indiana Nat. Bank v. Weckerly, 67 Ind. 345, 28 Indiana Novelty Mfg. Co. v. McGill, 15 Ind. App. 1, 635 Industrial Bank v. Bowes, 165 111. 70, 544, 564, 574, 582 Industrial Trust & Sav. Co. v. Weakley, 103 Ala. 458, 583 Ingersoll v. Martin, 58 Md. 67, 183, 184, 202 Ingerson v. Starkweather, Walk. Ch. (Mich.) 346, 242 Ingham v. Primrose, 7 C. B. N. S. 82, 20, 661 Inglis v. Kennedy, 6 Abb. Prac. 32, 353 Inglish V. Breneman, 5 Pike (Ark.) 377, 145 Ingram v. Jordan, 55 Ga. 356, 117 V. Morgan, 23 Tenn. 66, 240, 242, 456 Inney v. Kimpton, 46 Vt. 80, 340 In re Babcock, 3 Story (U. S.) 393, 273 In re Great Western Tel. Co., 5 Biss. 363, 240 International Bank v. German Bank. 71 Mo. 183, 95, 376 . v. Vankirk, 39 111. App. 23, 297 Iowa College Trustees v. Hill, 12 Iowa 462, 22, 383 Iowa Nat. Bank of Ottumwa v. Sherman & Bratiger, 17 S. D. 396, 241, 245, 486 Iowa State Bank v. Mason Hand Lathe Co. (Iowa), 90 N. W. 612, 354, 367 Ixxx TABLE OF CASES. {References are to Sections.l Iowa State Savings Bartk v. Black, 91 Iowa 490, 581 Iowa Valley State Bank v. Sig- stad, 96 Iowa 491, 524, 538, 573 Iron City Nat. Bank v. Fort Pitt Nat. Bank, 159 Pa. St. 46, 100 Iron Mountain Bank v. Murdock, 62 Mo. 70, 22, 23, 170 Irons V. Sayles, 5 R. I. 264, 620 V. Woodfill, 32 Ind. 40, 339 Irving V. Guthrie (Ind. App.), 62 N. E. 709, 473 Irving Bank v. Wetherall, 36 N. Y. 335, 585 Irving Nat. Bank v. Duryea, 1 City Ct. R. 317, 359 Irwin V. Bailey, 8 Biss. C. C. 523, Fed. Cas. No. 7079, 80 V. Guthrie, 28 Ind. App. 341, 116 V. Marquet, 26 Ind. App. 383, . 291, 297 V. Webster, 56 Ohio St. 9, 194 Isbell V. Lewis, 98 Ala. 550, 514, 569, 570, 573 Iselin V. Chemical Nat. Bank, 16 Misc. Rep. 437, 272 Isham V. Davidson, 1 Hun (N. Y.) 114, 649 Island Sav. Bank v. Galvin, 20 R. I. 158, 37 Atl. 809, 659 Isnard v. Torres, 10 La. Ann. 103, • 146, 661 Israel v. Ayer, 2 Rich. (S. C.) 344, 272 V. Gale, 77 Fed. 532, 270, 471 Italo French Produce Co. v. Thomas, 31 Pa. Super. Ct. 503, 41 Ives V. Bank, 84 Mass. (2 Allen) 236, 154 V. Bank of Lansingburgh, 12 Mich. 361, 690 V. Bosley, 35 Md. 262, 305, 341 V. Farmers' Bank, 84 Mass. 236 22 241 V. Jacobs, 21 Abb. N. C. (n! Y.) 151, 384 Ivey V. Nicks, 14 Ala. 564, 297 Jacand v. French, 12 East 322, "89 Jaccard v. Shands, 27 Mo. 440, 119 Jack V. Hosmer, 97 Iowa 17, 237, 465 Jackson v. Adamson, 7 Blackf. (Ind.) 597, 623 V. Allen, 4 Colo. 263, 112 V. Boyles, 64 Iowa 428, 171 Jackson v. Cooper, 19 Ky. Law Rep. 9, 158 V. Decker, 43 N. Y. Supp. 957, 681 V. Fassit, 33 Barb. (N. Y.) 645, 302, 641, 654 V. Finney, 33 Ga. 512, 301 V. First National Bank, 42 N. J. L. 177, 386 V. Foote, 12 Fed. 37, 461 V. Hulse, 6 Mackey (D. C.) 548, 30 V. Lalicker (Neb.), 99 N. W. 32, 684 V. Mclnnis, 33 Oreg. 529, 518 V. Packer, 13 Conn. 342, 502 V. Richards, 2 Caines 343, 510 V. Stockbridge, 29 Tex. 394, 117 Jackson County Bank v. Par- sons, 112 Wis. 265, 685 Jackson Paper Mfg. Co. v. Com- mercial Nat. Bank, 199 111. 151, 581 Jacobs V. Gibson, 77 Mo. App. 244, 524, 538, 573 v. Gilreath, 45 S. C. 46, 149, 169 V. Mitchell, 46 Ohio St. 601, 296, 310, 339, 472 Jacobs Pharmacy Co. v. Southern Banking & T. Co., 97 Ga. 573, 85 Jacoby v. Ross, 12 Mo. App. 577, 107 Jagger v. Nat. German Ameri- can Bank, 53 Minn. 386, 552 James v. Blackman, 68 Kan. 723, 240 V. Dalbey, 107 Iowa 463, 170, 646 V. Wade, 21 La. Ann. 548, 525 Jameson v. Heim (Wash. 1906), 86 Pac. 165, 119 Janin v. London & San Francisco Bank, 92 Cal. 14, 27 Pac. 1100, 676 Jarington v. Stratton, 95 Tenn. 619, 561 Jarrat v. Martin, 70 N. C. 459, 639 Jarratt v. Wilson, 70 N. C. 401, 690 Jarvis v. Campbell, 23 Kan. 370, 288 v. Rogers, 3 Vt. 336, 312 V. Wilson, 46 Conn. 90, 199 Jay V. Reed, 56 111. 130, 472 J. C. Stevenson & Co. v. Bethea, 68 S. C. 246, 407 Jefferson v. Hewitt, 103 Cal. 624, 311, 345 Jefferson Co. Bank v. Chapman, 19 Johns. (N. Y.) 322, 592 Jefferson County Board of Su- pervisors V. Arrghi, 51 Miss. 667, 232 .Jeffries v. Lamb, 73 Ind. 202, 322 Jemison v. Parker, 7 Mich. 355, 373 TABLE OF CASES. Ixxxi [References are to Sections.} Jeneson v. Jeneson, 66 111. 259, 71, 447 Jenkins v. Forbes (Ga. 1904), 49 S. E. 284, 400 V, Jones, 108 Ga. 556. 439, 441 V. Levis, 25 Kan. 479, 648 V. White, 147 Pa. 303, 540 Jenness v. Cutler, 12 Kan. 500, 302 V. Parker, 11 Shep. (Me.) 289, 208, 266 Jennings v. Carlucci, 87 N. Y. Supp. 475, 489 V. Chase, 10 Allen (Mass.) 526, 341 V. Davis, 31 Conn. 134, 693 V. Moore, 189 Mass. 197, 212, 213, 613, 680, 684 V. Shriver, 5 Blackf. (Ind.) 37, 633 V. Throgmorton, 21 Eng. C. Law 744, 301 V. Todd, 118 Mo. 296, 307, 314, 322 Jennison v. Stafford, 1 Cush. (Mass.) 168, 322 Jenz V. Gugel, 26 Ohio St. 527, 56 Jerome v. Whiting, 7 Johns. (N. Y.) 321, 186 Jessel V. Bath, L. R. 2 Exch. 267, 414 Jessup V. Dennison, 2 Disney (Ohio) 150, 137, 153 V. Trout, 77 Ind. 194. 327 Jewell V. Wright, 30 N. Y. 259. 277 Jewett V. Hone, 1 Woods (U. S.) 530. 241. 272. 287 V. Salisbury, 16 Ind. 370, 334, 342 V. West Somerville Co-opera- tive Bank, 173 Mass. 54, 581 J. H. Mohlman Co. v. McKane, 69 N. Y. Supp. 1046, 548, 554, 558 Joest V. Williams, 42 Ind. 565, 69 John V. City Nat. Bank of Selma, 62 Ala. 529, 553 John Hancock Mut. L. I. Co. v. City of Huron, 80 Fed. 652, 476 Johnson v. Amana Lodge No. 82, Independent Order of Odd Fel- lows, 92 Ind. 150, 593, 594 V. Bank, 74 N. Y. 329, 306 V. Bank, 2 B. Mon. (Ky.) 310, 161 V. Bloodgood, 1 Johns. Cas. (N. Y.) 51, 420. 626 V. Bloodgood. 2 Cai. Cas. (N. Y.) 302. 419 V. Brown, 154 Mass. 105, 556 Joyce Defenses — vi Johnson v. Conklin, 119 Ind. 109, 21 N. E. 462, 12 Am. St. Rep. 371, 417 V. First National Bank, 24 111. App. 352, 311, 328 V. Franklin Bank, 173 Mo. 171, 680 V. Gallagher, 1 De G.. F. & J. 494, 42 V. Garnett, 2 Chit. 122, 149 V. Gibb, 2 Chit. 123, 138 V. Haight, 13 Johns. 470, 502 V. Heagan, 23 Me. 329. 171 V. Joyce. 90 Minn. 377, 302 V. Lewis, 6 Fed. 27, 439 V. Marshall. 4 Rob. (La.) 157, 6, 213 V. Meeker, 1 Wis. 436, 439 V. Parsons, 140 Mass. 173, 524, 539 V. Redwine, 98 Ga. 112. 195 V. Sutherland, 39 Mich. 579, 30, 34 V. Washburn, 98 Ala. 258, 330 V. Watt, 15 La. Ann. 428, 682 V. Way, 27 Ohio St. 374, 439 V. Williard, 83 Wis. 420, 342 V. Wright, 2 App. Cas. 16, 183 Johnson Berger & Co. v. Dow- ing (Ark.), 88 S. W. 825, 503, 573 Johnson County Sav. Bank v. Lowe, 47 Mo. App. 151, 539 Johnston v. Dickson, 1 Blackf. (Ind.) 256, 288 v. Gulledge, 115 Ga. 981, 699 V. Hay, 76 Ind. 293, 135, 179, 379, 385 V. Humphrey, 91 Wis. 76, 637 Johnston Harvester Co. v. Mc- Lean, 57 Wis. 258, 264, 22, 23, 166 Joliffe V. Collins, 21 Mo. 338, 262 Jones V. Bank, 9 Heisk. (Tenn.) 455, 293 V. Bank of New York, 90 Ga. 334, 270 V. Banks, 40 Ohio St. 139, 170 V. Bradwell, 84 Ga. 309, 39 V. Broadhurst, 9 C. B. (O. S.) 173, 679 V. Camden, 44 N. C. 319, 87 V. Caswell, 3 Johns. Cas. (N. Y.) 29, 288 V. Cavanaugh, 149 Mass. 124, 288 V. Craigmiles, 114 N. C. 613, 30 V. Crosthwaite. 17 Iowa 393, 30 V. Dana, 24 Barb. (N. Y.) 395, 122 V. Deggs, 84 Va. 685, 193 V. Gordon, 2 App. Cas. 616, 191 Ixxxii TABLE OF CASES. Sneed Jones V. Hamlet, (Tenn.) 256, 74 V. Hawkins, 17 Ind. 550, 606 V. Hibbert, 2 Starkie 304, 274 V. Holt. 64 N. H. 546, 47 V. Houghton, 61 N. H. 51, 110 V. Insurance Co., 1 Mete. (Mass.) 58, 181 V. People's State Bank, 32 Ind. App. 119, 292 V. Primm, 6 Texas 170, 23 V. Nellis, 41 111. 482, 240 V. New York Bank, 90 Ga. 334, 271 V. Nicholl, 82 Cal. 32, 502 V. Robinson, 11 Ark. 504, 502 V. Robinson, 6 Bosw. 627, 604 V. Ryde, 5 Taunt. 488, 645 V. Sennott, 57 Vt. 355, 651 V. Shaw, 67 Mo. 667, 312, 320 V. Snow, 64 Cal. 456, 687 V. Stoddart. 8 Idaho 210, 67 Pac. 650, 80 V. Swan, 6 Wend. (N. Y.) 589, 202, 203, 208 V. Thayer, 12 Gray (Mass.) 443, 461 V. Tumour, 4 Car. & P. 204, 641 V. AViesen, 50 Neb. 243, 489 V. Young, 19 La. 553, 439 Jordan v. Downes, 9 Rob. (La.) 265, 635 V. Jordan, 10 Lea (Tenn.) 124, 20, 176, 317, 318, 385 V. Keeble, 85 Tenn. 412, 41, 59 V. Long, 109 Ala. 414, 532 V. National Shoe & Leather Bank, 74 N. Y. 467, 581 V. Sharlock, 84 Pa. St. 366, 604 V. Tarkington, 15 N. C. 357, 199 Jordon v. Jordon, Dud. (Ga.) 181, 208 Jordon & Son v. Thompson, 117 Ala. 468, 242 Josiah Morris Co. v. Alabama Carbon Co., 139 Ala. 620, 583 Journal Printing Co. v. Maxwell, 1 Pennew. (Del.) 511. 119, 122, 208 Joyce V. Spafford, 101 111. App. 422, 679 Judah V. Potter, 18 Ind. 224, 635 Judd V. Dennison, 10 "Wend. (N. Y.) 512, 208 Juggar V. Winslow, 30 Minn. 263, 117 Julllard V. Chaffee, 92 N. Y. 529, 309, 322, 336 Julian V. Calkins, 85 Mo. 202, 436 [References are to 8ections.'\ Jump V. Leon (Mass.), 78 N. E. 532, 447, 607 Jurden v. Ming, 98 Mo. App. 205, 699 Justh V. National Bank of Com- monwealth, 56 N. Y. 478, 124 K Kagel V. Totten, 59 Md. 447, 25 Kahn, Jr., v. Walton, 46 Ohio St. 195, . 288 Kaiser v. First Nat. Bank of Brandon, 78 Fed. 281, 476 Kaiser & Brother v. United States Nat. Bank, 99 Ga. 258, 246 Kalamazoo Nat. Bank v. Clark, 52 Mo. App. 593, 25, 28 V. Sides, 28 S. W. 918, 240 Kampmann v. Williams, 70 Tex. 568, 529 Kane v. Kerman, 109 Wis. 33, 149 Karns v. Moore, 5 Pa. Super. Ct. 381, 57 Kaskaskia Bridge Co. v. Shan- non, 6 111. 15, 600 Kassing v. Ordway, 100 Iowa 611, 305 Kaufman v. Barbour, 107 N. W. 1128, 254 V. Barringer, 20 La. Ann. 419, 225 Kaufmann & Runge v. Robey, 60 Tex. 308, 359 Kavanaugh v. Brown, 1 Tex. 481, 484, 30, 36 Kearney v. Metropolitan Trust Co., 110 App. Div. 236, 97 N. Y. S. 274, 100 Kearslake v. Morgan, 5 Term R. 513, 688 Keaton v. Read, 32 Ga. 493, 311 Keegan v. Rock (Iowa), 102 N. W. 805, 441, 465 Keeler v. Bartine, 12 Wend. 110, 679 Keene v. Behan, 40 Wash. 505, 465, 475 V. Weeks, 19 R. I. 309, 148, 169 Keene's Adm'r v. Miller, 103 Ky. 628, 137, 170 Keim v. Vette, 167 Mo. 389, 302 Keith V. Fork, 31 S. E. 240, 238, 440 V. Thisler, 61 Pac. 758, 260 Keller v. Schmidt. 104 Wis. 596, 114 V. Vowell. 17 Ark. 445, 122 Kelley v. Guy, 116 Mich. 43, 198, 202, 231 V. Pember, 35 Vt. 183, 457 TABLE OF CASES, Ixxxiii [References are to Sections.l Kelly V. Theiss, 72 N. Y. Supp. 467, 502, 544, 553 Kellogg V. Barton, 94 Mas?. 527, 282, 419 V. Curtis, 65 Me. 59, 28 V. Douglass Co. Bank, 58 Kan. 43, 86 V. Fancher, 23 Wis. 21, 89 V. Olmsted, 28 Barb. (N. Y.) 96, 341 V. Schnaake, 56 Mo. 136, 419 V. Steiner, 29 Wis. 626, 25, 26 Kellogg, In re, 113 Fed. 120, 302, 303 Kells V. Northwestern Live Stock Ins. Co., 64 Minn. 390, 67 N. W. 215, 402 Kelly V. Allen, 34 Ala. 663, 665 V. Ferguson, 46 How. Pr. 411, V. Garrett, 1 Oilman (111.) 649, V. Lawrence Bros., 79 N. Y. Supp. 914, V. Lynch, 22 Cal. 661, V. Pember, 35 Vt. 183, V. Smith, 1 Mete. (Ky.) 313, 237, 238, 243, 277, 465 V. Webb, 27 Tex. 368. 310 Kelly, Ex parte, 1 Low. 394, 376 Kemble v. Lull, 3 McLean (U. S.) 272, V. Mills, 1 Man. & O. 757, Kemp V. Balls, 10 Exch. 607, V. Northern Trust Co., 108 111. App. 242, 413 Kempner v. Huddleston, 90 Tex. 182, 37 S. W. 1066, 420, 646 Kemp's Estate, 49 Misc. R. 396, 100 N. Y. Supp. 221, 194 Kendall v. Galvin, 15 Me. 131 186, 199 V. Robertson, 12 Cush. 156, 291, 302 Kennedy v. Bank, 18 Pa. St. 347, 152 V. Crandell, 3 Lans. (N. Y.) 1, 147 V. Gibbes, 2 Desaus. (S. C.) 380, 3 V. Goodman, 14 Neb. 585, 17 V. Jones (Miss.), 29 So. 819, 119, 447, 455 V. Manship, 1 Ala. 43, 624, 635 V. Moore, 17 S. C. 464, 168 V. Rosier. 71 Iowa 671, 503, 570 V. Wells, 23 Ind. App. 490, 326 Kennon v. M'Rea, 7 Port. 175, 180, 525 Kent V. Lowen, 1 Camp. 177, 657 351 592 192 116 199 523 697 Kent V. Quicksilver Min. Co., 78 U. S. 159, 486 V. Walton, 7 Wend. 256, 305 Kenton Ins. Co. v. McClellan, 43 Mich. 564, 30, 34 Kentucky Loan Co. v. Merchants' Nat. Bank (Ky.), 13 S. W. 910, 605 Kentucky Nat. Bank v. Martin, 15 Ky. L. Rep. 646, 355 Kenworthy v. Hopkins, 1 Johns. Cas. (N. Y.) 107, 286 V. Merritt, 2 Wash. Terr. 155, 7 Pac. 62, 662 V. Sawyer, 125 Mass. 28, 53, 61, 270, 337 Keokuk County Bank v. Eunice Hall, 106 Iowa 540, 246 Kepley v. Schmidt, 21 111. App. 402, 238 Kernion v. Jumonville de Vil- lier, 8 La. 547, 202, 257 Kern's Estate, In re, 171 Pa. St. 55, 214 Kerr v. Cowen, 17 N. C. 356, 376 v. Hereford, 17 Up. Can. Q. B. 158, 682 V. Stripp, 40 U. C. Q. B. 215, 41 V. Topping, 109 Iowa 150, 691 Kerrison v. Cooke, 3 Camp. 362, 650 Kersey v. Fuaqua, 75 S. W. 56, 191, 473 Kershaw v. Cox, 3 Esp. 246, 149, 161 V. Ladd, 34 Oreg. 375, 583 Kervan v. Townsend, 25 App. Div. 256, 307 Kerwodle v. Hunt, 4 Blackf. (Ind.) 57, 262, 263 Kessler Co. v. Perilloux, 132 Fed. 903, 339 Ketchum v. Barber, 4 Hill (N. Y.) 224, 302 Keuka College v. Ray, 167 N. Y. 96, 185 Key V. Fielding, 32 Ark. 56, 341 v. Hanson, 17 Ark. 254, 324 Keys V. Cleburne (Tex. Civ. App.), 25 S. W. 809, 305 Keystone Mfg. Co. v. Forsythe, 126 Mich. 98, 257 Kibbv's Admr. v. Kibby, Wright (Ohio) 607, 102 Kidder v. Blake, 45 N. H. 530, 288 Kiel V. Reay, 50 Cal. 61, 121 Kilbowin v. Brown, 56 Conn. 149, 41 Kilcrease v. White, 6 Fla. 45, 431 Kilgore v. Bruce, 166 Mass. 136, 131 Kilkelly v. Martin, 34 Wis. 525, 170 Ixxxiv: TABLE OF CASES. [References are to 8ections.'\ Kilroy v. Simpkins, 26 Up. Can. C. P. 281, 208 Kimball v. Bryan, 56 Iowa 632, 523 Kimball Co. v. Mellow, 80 Wis. 133, 366 Kimble v. Christie, 55 Ind. 140, 28» 120 Kimbro v. Bullitt, 22 How. (U. S.) 256, 266, 93, 133 V. Little, 10 Yerg. (Tenn.) 417, 390 Kime v. Jesse, 52 Neb. 606, 135 Kimmell v. Bittmer, 62 Pa. St. 203, 256 V. Wiel, 95 111. App. 15, 502, 506, 524, 544, 545 King V. Conn, 25 Ind. 425, 593, 606 V. Crowell, 61 Me. 244, 513, 514, 563 V. Doane, 139 U. S. 166, 476 V. Doolittle, 38 Tenn. 77, 242 V. Faber, 22 Pa. St. 21, 89 V. Fowler, 16 Mass. 398, 617 V. Gayoso, 8 Mart. N. S. 370, 359 V. Hoare, 13 Mees. & W. 494, 679 V. Hunt, 13 Mo. 97, 149, 154 V. Hurley, 85 Me. 525, 552 V. Johnson, 3 McCord 365, 303, 439 V. Mechlenburg, 17 Colo. App. 312, 119 V. Rea, 13 Colo. 69, 173 V. Sparks, 77 Ga. 285, 75 Kingman v. Shawley, 61 Mo. App. 54, 25 Kingsbury v. Fleming, 66 N. C. 524, 293 V. Gooch, 64 N. C. 528, 293 V. Suit, 66 N. C. 601, 293 Kingston Savings Bank v. Bos- serman, 52 Mo. App. 269, 137 Kingston's (Dutchess of) Case 3 Smith's Lead. Cas. 729, 343 Kinkel v. Harper, 7 Colo. App. 45, 307 Kinne v. Kinne, 45 How. Pr. (N. Y.) 61, 30 Kinney v. Hinds (Wyo.), 49 Pac. 403, 473 V. Kruse, 28 Wis. 183, 130, 376, 380 Kinsman v. Birdsall, 2 E. D. Smith 395, 186, 216 Kinyon v. Stanton, 44 Wis. 479, 583 V. Wohlford, 17 Minn. 239, 20 Kinzie v. Chicago, 2 Scam. (111.) 187, 262 Kipp V. McChesney, 66 111. 460, 92 Kirby v. Berguin, 15 S. D. 44, 116 Kirby v. Huntsvllle, etc., 105 Ala. 529, 291 Kirkland v. Benjamin, 67 Ark. 480, 295 Kirkpatrick v. Howk, 41 Neb. 754, 369 V. Muirhead, 16 Pa. St. 117, 664, 679 V. Oldham, 38 La. Ann. 553, 353 V. Puryear, 95 Tenn. 409, 585 Kissam v. Anderson, 145 U. S. 435, 36 L. Ed. 765, 12 Sup. Ct. 960, 476 Kitchel V. Schenck, 29 N. Y. 515, 280, 303, 659 Kitchen v. Loudenback, 48 Ohio St. 177, 191, 439, 440, 441 V. Place, 41 Barb. (N. Y.) 465, 145 Kittle V. De Lamater, 3 Neb. 325, 292, 419 Klamouth County v. Leavitt, 32 Oreg. 437, 232 Kleeman v. Frisbie, 63 111. 482, 302 Klein v. Keys, 17 Mo. 326, 201 Klett V. Claridge, 31 Pa. St. 106, 325 Kline v. Spahr, 56 Ind. 296, 238 Kline's Estate, In re, 9 Pa. Dist. R. 286, 214 Knapp V. Briggs, 2 Allen 551, 303, 614 V. McBride, 7 Ala. 19, 89 Knappen v. Freeman, 47 Minn. 491, 210 Kneeland v. Miles (Tex. Civ. App.), 24 S. W. 1113, 679 V. Pennell, 96 N. Y. Supp. 403, 616 Knickerbocker Life Ins. Co. v. Pendleton. 112 U. S. 696, 523 Knight V. Hurlbut, 74 111. 133, 315 V. Walker Brick Co., 23 App. D. C. 519, 524, 332 Knights V. Putnam, 3 Pick. 184, 304 Knill V. Williams, 10 East. 431, 156 Knipper v. Chase, 7 Iowa 145, 344, 367 Kniss V. Holbrook, 16 Ind. App. 229, 44 N. E. 563, 659 Knott V. Tidyman, 86 Wis. 164, 116, 472 V. Venable, 42 Ala. 186, 496. 528, 566 V. Whitfield, 99 N. C. 76, 503 Knotts V. Preble, 50 111. 226, 116 Knox V. Clifford, 38 Wis. 651, 241, 330 V. Reside, 1 Miles (Pa.) 294, 95 TABLE OF CASES. Ixxxv [References are to 8ections.'\ Knox V. Whalley, 1 Esp. 159, 648 V. White, 20 La. Ann. 326, 288 Knox County Bank v. Lloyd, 18 Ohio St. 353, 368 Knoxville National Bank v. Clark, 51 Iowa 264, 136, 146, 165 Koehler v. Dodge, 31 Neb. 328, 366, 433, 434 Kohlman v. Ludwig, 5 La. Ann. 33, 439 Kohn V. Consolidated Butter & Egg Co., 63 N. Y. Supp. 265, 446 V. Watkins, 26 Kan. 691, 102 Kolp V. Specht, 11 Tex. Civ. App. 685, 33 S. W. 714, 668 Koppel V. Hatch, 98 N. Y. Supp. 619, 472 Kortepeter v. List, 16 Ind. 295, 199 Kost V. Bender, 25 Mich. 515, 457 Koster v. Seney, 99 Iowa 584, , 297 Kottwitz V. Alexander, 34 Tex. 689, 523 Kountz V. Hart, 17 Ind. 329, 170 V. Kennedy, 63 Pa. St. 187, 137 V. Price, 40 Miss. 341, 29 Kramer v. Kramer, 90 N. Y. App. Div. 176, 186, 234, 335 V. Sandford, 4 Watts & S. 328, 525 Krebs v. O'Grady, 23 Cal. 726, 52 Krouskop V. Shoutz, 51 Wis. 204, 179 Kruger v. Persons, 66 N. Y. Supp. 1135, 548 Krumbar v. Ludeling, 3 Mart. O. S. (La.) 641, 183 Krumbieg v. Missouri K. & T. Trust Co., 71 Fed. 350, 302 Krumhaar v. Ludeling, 3 Mart. O. S. (La.) 641, 198 Kuder v. Greene (Ark.), 82 S. W. 836, 583 Kugler V. Taylor, 19 La. Ann. 100, 447 Kuhl V. Galley Universal Press Co., 123 Ala. 452, 288 V. Press Co., 123 Ala. 452, 291 Kuhns V. Gettysburg National Bank, 68 Pa. St. 445, 394, 401 Kuriger v. Joest (Ind. App. 1899), 52 N. E. 764, 674 Kurz V. Fish, 58 Hun (N .Y.) 602, 288 V. Holbrook, 13 Iowa 562, 419 Kyle V. Thompson, 11 Ohio St. 616, 208 La Banque Jacques Cartier v. La Corporation de Limoilon, 17 Rap. Jud. Queb. C. S. 211, 581, 587 Lackey v. Boruff, 152 Ind. 371, 30, 60, 61 Lacoste v. Harper, 3 La. Ann. 385, 523 Lacroix v. Derbigny, 18 La. Ann. 27, 606 La Due v. First Nat. Bank, 31 Minn. 33, 431, 435, 636 Lafayette Sav. Bank v. St. Louis Stoneware Co., 4 Mo. App. 276, 240 Lafflin & Rand Powder Co. v. Simsheimer, 48 Md. 411, 272 Lagonda Nat. Bank v. Portner, 46 Ohio St. 380, ' 297 La Grange Collegiate Institute V. Anderson, 63 Ind. 367, 64 Laib V. Lanagan, 2 Leg. Chron. (Pa.) 386, 270 Lake v. Streeter, 34 Iowa 601, 288 Lamar v. Brown, 56 Ala. 157, 170 Lamb v. Pannell, 28 W. Va. 663, 595 V. Matthews, 41 Vt. 42, 407 Lambert v. Ghiselin, 9 How. 552, 555 Lamberton v. Windom, 12 Minn. 232, 373 Lambeth v. Caldwell, 1 Rob. 01, 530 V. Kerr, 3 Rob. (La.) 144, 650 Lamkin v. Edgerly, 151 Mass. 348, 569 Lamon v. French, 25 Wis. 37, 347 Lamoile County Nat. Bank v. Bingham, 50 Vt. 105, 302 Lamourieux v. Hewitt, 5 Wend. 307, 460 Lamson Consol. Store Service Co. V. Conynhan, 32 N. Y. Supp. 129, 512 Lanati v. Bayhi, 31 La. Ann. 229, 192, 419 Lancaster v. Collins, 7 Fed. 338, 336 Lancaster Bank v. Huver, 114 Pa. St. 216, 447 Lancaster County Nat. Bank v. Garber, 178 Pa. 91, 475 V. Moore, 78 Pa. St. 407, 71 Lanclos v. Robertson, 3 La. 259, 439 Land v. Lacoste, 5 Miss. 471, 260 Landauer v. Improvement Co., 10 S. D. 205, 149 Landon v. Bryant, 69 Vt. 303, 502, 503, 545 Ixxxvi TABLE OF CASES. [References are to Sections.'] Landrum v. Trowbridge, 2 Mete. Land 'Title & Trust Co. v. North- western Nat. Bank, 211 Pa. j^2i 470, 644 V Northwestern Nat. Banli, 196 Pa. 230, 470 Landwirth v. Shaphran, 47 La. Ann. 336, ^ 1°^ Lane v. Krekle, 22 Iowa 399, ^4 V. Manning, 8 Yerg. (Tenn.) 435, III V. Price, 5 Mo. 67, 332 V Schlemmer, 114 Ind. 297, 15 N. E. 454, 57, 645 V Steward, 20 Me. 98, 538 Lang V. Metzger, 86 111. App. 117, 474 Langenberger v. Kroeger, 48 Cal. 147^ 148, 167 Langley v. Wadsworth, 91 N. Y. 61, ^^^ Lanham v. Bank, 46 Neb. 663, 306, bio Lanier v. McCabe, 2 Fla. 32, 91 V. Cox, 65 Ga. 265, 302 V Union Mortgage Banking Co., 64 Ark. 39, 120 Lanning v. Burns, 36 Neb. 236, 208 Lansing v. Gaine, 2 Johns. (N. Y.) 300, 94, 419 V. Lansing, 8 Johns. (N. Y.) 354, Lapha v. Barnes, 2 Vt. 213, Lapice v. Clifton, 17 La. 152, Laramore v. Bank, 69 Ga. 722, Laraway v. Harvey, Rap. Jud. Quebec, 14 C. S. 97, Larkin v. Hardenbrook, 90 N. Y. 333, Larrabee v. Fairbanks, 11 Shep. (Me.) 363, Lasher v. Union Central L. I. Co., 115 Iowa 231, Lashmett v. Prall, 96 N. W. 152, Laster v. Stewart, 89 Ga. 181, 44, 48, 246, 376 Latham v. Smith, 45 111. 25, 25 Lathrop v. Donaldson, 22 Iowa 234, ^99 V. Morris, 5 Sand. 7, 353 Lattin V. Vail, 17 Wend. (N. Y.) 188 "^4 Lau V. Blomberg, 3 Neb. (Un- offic.) 124, 1J9 Laub V. Paine, 46 Iowa 550, 136, l»i V. Rudd, 37 Iowa 617, 137, 380 568 64 395 680 340 698 419 686 419 303 186 695 200 343 Laubach v. Pinswell, 35 N. J. L. 434, 133 Lauter v. Jarvis Conklin Mtg. Trust Co., 29 C. C. A. 473, 85 Fed. 894, 671 Lauve v. Bell, 1 La. 73. 408 Laux V. Gildersleeve, 23 N. Y. App. Div. 352, 302 Law V. Brinker, 6 Colo. 555, 199, 277, 641 V Crawford, 67 Mo. App. 150, 25 Lawrence v. Clark, 36 N. Y. 128, 242, 467 V. Miller, 16 N. Y. 235, 544, 549 V. Stonington, 6 Conn. 521, 184, 198, 201 Lawson v. Dunn (N. J. Eq.), 49 AU. 1087, . ^^ 701 V. Farmers' Bank, 1 Ohio St. 206, V. Lovejoy, 8 Me. 405, V. Weston, 4 Esp. 56, Laxell V. Miller, 40 Oreg. 549, Laxton v. Reat, 2 Camp. 185, Lay V.' Honey (Neb.), 89 N. W. 998, V. Wissman, 36 Iowa 305, 119, 193, 240 Lazarus v. Cowle, 3 Q. B. 459, 282 Lazear v. Bank, 52 Md. 78, 79 Leach v. Bank, 2 Ind. 488, 89 V. Buchanan, 4 Esp. 226, 674 V. Funk, 97 Iowa 576, 419, 688 V. Hill, 106 Iowa 171, 581 V Lewis, 1 McArthur (D. C.) ■ 112, 241, 246, 386 Leaf V. GiblDS, 4 Car. & P. 466, 315 Leahy v. Haworth, 141 Fed. 850, 451, 4dU Leary v. Blanchard, 48 Me. 269, 348 Leas V. Walls, 101 Pa. St. 57, 146, 165 Leask V. Dew, 184 N. Y. 599, 700 Leather man v. Hecksher (Pa. 188), 12 Atl. 485. 89 Leavitt V. Peabody, 62 N. H. 185, 627 Lebcher v. Lambert, 23 Utah 1, 237, 463 Le Blanc v. Sinclair, 12 Mart. O. S. 402, ,^ 439 Lee V. Alexander, 9 B. Mon. (Ky ) 25, 1'*'^' 1^'^ V. Butler, 167 Mass. 427, 390 V. Field, 9 N. M. 435, 697 V. Melby, 93 Minn. 4, 302 V. Newell, 107 Pa. St. 283, 214 V. Pile, 37 Ind. 107, 236, 255 V. Ryder, 1 Kan. App. 293, 211 V Smead, 1 Mete. 628, 355 TABLE OF CASES. Ixxxvii [References are to Sections.li Leev. Starbird, 55Me. 491, 135, 170 V. Turner, 89 Mo. 489, 95, 359 V. Ware, 3 Rich. L. 193, 418 V. White, 4 Stew. & P. (Ala.) 178, 208 V. Whitney, 149 Mass. 447, 362 V. Zagury, 8 Taunt. 114, 419 Lee Bank v. Satterlee, 24 N. Y. Super. Ct. 1, 30, 50, 51, 53 Leeds v. County Bank, 11 Q. B. 34, 151 V. Hamilton Paint & G. Co. (Tex. Civ. App.), 35 S. W. 77, 524, 518, 473 Leeke v. Hancock, 76 Cal. 127, 281 Legare v. Arcaud, 9 Quebec Repp. Fud. 122, 574, 581 Legg V. Vinal, 165 Mass. 555, 502, 513, 542, 545, 552 Legge V. Thorpe, 2 Camp. 310, 523 Lehigh Val. Coal Co. v. West Depere Agricultural Works, 63 Wis. 45, 85 Lehman v. City of San Diego, 83 Fed. 669, 87 V. Press, 106 Iowa 389, 76 N. W. 818, 475 Leicester v. Biggs, 1 Taunt. 367, 52 Leightman v. Kadetska, 58 Iowa 676, 29, 421 Leighton v. Grant, 20 Minn. 345, 208 Leitner v. Miller, 49 Ga. 489, 61, 95 Lemmert v. Guthrie Bros., 69 Neb. 499, 681 Lemmon v. Whitman, 75 Ind. 318, 302 Lenhart v. Ramey, 2 Ohio C. D. 77, 564 Lenheim v. Fay, 27 Mich. 70, 116 Lenoir v. Moore, 61 Miss. 400, 629 Leonard v. Draper, 187 Mass. 536, 271 V. Olson, 99 Iowa 162, 506, 507, 515, 523, 545, 564 V. Phillips, 39 Mich. 182, 168 V. Vredenburgh, 8 Johns. 29, 212 Leonhardt v. Citizens' Bank, 56 Neb. 38, 681 Lerch Hardware Co. v. First Nat. Bank (Pa. 1886), 5 Atl. 778, 89 Lescherr v. Guy, 149 Ind. 17, 48, 49 Lesslie v. Bassett, 59 N. Y. Super. Ca. 403, 285 Levy V. Ford, 41 La. Ann. 473, 246 V. Germillion, 21 La. Ann. 635, 292 V. Rose, 17 La. Ann. 113, 55 Levy & Co. v. Kaufman, 114 Fed. 170, 272 Lewin v. Greig, 115 Ga. 127, 199 Lewis v. Brehune, 33 Md. 412, 525 v. Brooks, 9 Mete. (Mass.) 367, 625 v. Clay, 67 L. J. Q. B. 224, 25 V. Clay, 77 Law T. Rep. 653, 465 V. Davison, 29 Gratt. 216, 688 V. Dunlap, 72 Mo. 174, 342, 348 V. Faber, 65 Ala. 460, 594 V. Hodgdon, 5 Shep. (Me.) 267, 238, 241, 650 V. Jewett, 51 Vt. 378, 614 V. Kramer, 3 Md. 265, 152, 350 V. Latham, 74 N. C. 283, 293 V. Long. 102 N. C. 206, 308, 433 V. North, 62 Neb. 552, 702 V. Parker, 33 Tex. 121, 274 V. Pickering, 58 Neb. 63, 591 V. Sheamen, 28 Ind. 427, 623 V. Shepherd, 1 Mackey (D. C.) 46, 170 V. Westover, 29 Mich. 14, 679 V. Woods, 4 Daly (N. Y.) 241, 55 V. Woodworth, 2 N. Y. 512, 657 Lewis, Hubbard & Co. v. Mont- gomery Supply Co., 59 W. Va. IS, 576 Lewter v. Price, 25 Fla. 574, 184 Liebig Mfg. Co. v. Hill, 9 Pa. Super. Ct. 469, 489 Liesmer v. Berg (Mich.), 63 N. W. 999, 695 Liggett V. Weed, 7 Kan. 273, 347 V. Wing, 1 Ohio Dec. 277, 555 Liggett Spring & Axle Co., Ap- peal of. 111 Pa. St. 291, 246 Light V. Scott, 88 111. 239, 231 Lightall V. Moore, 2 Colo. App. 554, 112 Lightfoot V. West, 98 Ga. 546, 322 Lighty V. Brenner, 14 Serg. & R. (Pa.) 127, 635 Lilley v. Evans, 3 B. Mon. (Ky.) 417, 16 Lillie V. Bates, 3 Ohio Cir. Ct. R. 94, 635 Lilly V. Petteway, 73 N; C. 358, 525 Limerick Nat. Bk. v. Adams, 70 Vt. 133, 40 Atl. 166, 477 Lincoln v. Bassett, 23 Pick. (Mass.) 154, 390 V. Fitch, 42 Me. 456, 380 V. Stevens, 7 Mete. (Mass.) 529. 270 Lincoln Nat. Bank v. Butler, 74 N. Y. S. R. 116, 270, 280 V. Perry, 66 Fed. 887, 367 Ixxxviii TABLE OF CASES. [References are to Sections.l Lincoln Savings Bank & Safe Dep. Co. V. Allen, 82 Fed. 148, 683, 686 Linden v. Beach, 6 Hun (N. Y.) 200, 242, 347 Lindenberger v. Beal, 6 Wheat. (U. S.) 104, 558, 563 Linderman v. Farquaharson, 101 N. Y. 434, 30 Lindley v. Hofman, 22 Ind. App. 237, 26, 27 Lindsey v. Casseoberry, 3 Wkly. Notes Cas. (Pa.) 42, 342 V. Rottaken, 32 Ark. 619, 87 V. Sellers, 4 Cushm. (26 Miss.) 169, 450 Line v. Nelson, 38 N. J. L. 358, 679 Lingg V. Blummer, 88 Pa. St. 518, 392 Linn v. Horton, 17 Wis. 151, 568 V. Rugg, 19 Minn. 181, 593, 635 Linthicum v. Caswell, 160 N. Y. 702, 525, 573 Linton v. King, 4 Allen (Mass.) 562, 114 V. Porter, 31 111. 107, 263 Linville v. Savage, 58 Mo. 248, 260 Lintz V. Howard, 18 Huh (N. Y.) 424, ' 284 Lippincott v. Lawrie, 119 Wis. 573, 185 Lipsmeier v. Vehslage, 29 Fed. 175, 419 Lisle V. Rogers, 18 B. Mon. (Ky.) 528, 136, 152, 154 Litchfield v. Allen, 7 Ala. 779, 211, 240, 262, 663 V. Dyer, 46 Me. 31, . 79, 447 Litchfield Bank v. Peck, 29 Conn. 384, 122, 198 Lititz Nat. Bank v. Siple, 145 Pa. 49, 537, 544 Little V. Cooper, 11 N. J. Eq. 224, 436 V. Dunlap, 44 N. C. 40, 439 V. O'Brien, 9 Mass. 423, 447, 670 V. Phcenix Bank, 2 Hill 425, 523 V. Sturgis, 127 Iowa 298, 422 V. Thurston, 53 Me. 86, 325 Littlefield v. Coombs, 71 Me. 110, 179 V. Dinguall, 71 Mich. 223, 44 V. Perkins, 60 Atl. 707, 226 Little Rock Trust Co. v. Martin, 57 Ark. 277, 170 Litton V. Baldwing, 8 Humph. (Tenn.) 209, 59 Livermore v. Blood, 40 Mo. 48, 436 Live Stock Remedy Co. v. White, 90 Mo. App. 498, 116 Livingston v. Brown County, 15 S. D. 606, 232 V. Roosevelt, '4 Johns. (N. Y.) 251, 91 Lizardi v. Cohen, 3 Gill (Md.) 430, 277 Lloyd V. Davis, 3 L. J. K. B. 38, 472 V. First Nat. Bank, 5 Kan, App. 512, 615 V. Jewell, 1 Greenl. (Me.) 352, 208 V. Johnson, 1 Bos. & P. 340, 301 V. Osborne, 92 Wis. 93, 576, 583 Lloyd & Co. V. Matthews (HI. 1906), 79 N. E. 172, 81 Lock V. Fulford, 52 111. 166, 419 Lockey v. Boruft', 152 Ind. 371, 30 Lockner v. Holland, 81 N. Y. Supp. 730, 222, 357 Lockrow V. Clime, 4 Kan. App. 716, 366 Lockwood v. Beckwith, 6 Mich. 168, 607 V. Bock, 50 Minn. 142, 538, 573 Lodge V. Lewis, 32 Wash. 191, 72 Pac. 1009, 407 Loeff V. Taussig, 102 111. App. 398, • 681 Loeween v. Forsee, 137 Mo. 29, 246 Loffland v. Russell, Wright (Ohio) 438, 116, 186, 198, 202 Loftinv. Hill, 131 N.C. 105, 119, 473 Loftus v. Maloney, 89 Va. 576, 193 Logan V. Hodges, 6 Ala. 699, 324 V. Plummer, 70 N. C. 338, 293 V. Smith, 62 Mo. 455. 359 Logan County Nat. Bank v. Bar- clay, 20 Ky. L. Rep. 773, 679 Loizeaux v. Fremder, 123 Wis. 129, 698 Lomax v. Picot, 2 Rand. (Va.) 247, 439 Lombard v. Guillet, 11 Mart. O. S. 581, 41 Lombard Lumber Co. v. First Nat. Bank, 86 Tex. 300, 534 Londerman v. Judy, 48 Ohio St. 562, 217 Long v. Bank of Commerce, 18 Ky. L. Rep. 922, 583 v. Crosson, 119 Ind. 3, 21 N. E. 450, 645 V. Dismer, 71 Mo. 452, 650 V. Garnett. 59 Tex. 229, 94 V. Long, 208 Pa. 368, 418 V. Mason, 84 N. C. 15, 170 V. Moore, 3 Esp. 155, 155 TABLE OF CASES. Ixxxix [References are to Sections.^ Long V. Rhawn, 75 Pa. St. 128, 282, 380, 431 Long Bros. v. Eckert, 1 Mo. App. 125, 582 Longford v. Varner, 65 Mo. App. 370, 489 Long Island Bank v. Boynton, 105 N. Y. 656, 303 Long Island L. & T. Co. v. Columbus C. & I. C. R. Co., 65 Fed. 455, 121, 476 Longmire v. Fain, 89 Tenn. 393, 18 S. W. 70, 125, 652 Lookout Bank v. Aull, 93 Tenn. 645, 316 Loomis V. Brown Co., 15 S. D. 606, 9 N. W. 309, 83 V. Eagle Bank of Rochester, 1 Disn. (Ohio) 285, 627 V. Eaton, 32 Conn. 550, 302 V. Metcalf, 30 Iowa 382, 119, 123 V. Ruck, 56 N. Y. 462, 114 Lord V. Appleton, 15 Me. 270, 555, 566 V. Favorite, 29 111. 149, 240, 419, 436, 685 Lorentz v. Pinnell, 55 W. Va. 114, 302 Loring v. Morrison, 15 (N, Y.) App. Div. 498, 601, 639, 640 V. Otis, 7 Gray (Mass.) 563, 600 Los Angeles Nat. Bank v. Wal- lace, 101 Cal. 478, 523 Loudermann v. Judy, 48 Ohio Cir. Ct. R. 351, 237 Loudermilk v. Loudermilk, 93 Ga. 443, 214 V. Loudermilk, 98 Ga. 780, 17 Lough V. Bragg, 18 Minn. 121, 263 Louis V. Triscony, 58 Cal. 304, 679 Louisiana Mutual Ins. Co. v. Batt, 22 La. Ann. 621, 328 Louisiana Nat. Bank v. Citizens' Nat. Bank of Louisiana, 28 La. Ann. 189, 26 Am. Rep. 92, 642 V. Laveille, 52 Mo. 380, 414 Louisiana State Bank v. Gaienne, 21 La. Ann. 555, 353, 359 V. Orleans Nav. Co., 3 La. Ann. 294, 87 Louisville Banking Co. v. Asher, 23 Ky. L. Rep. 1180, 528 Louisville, Evansville & St. L. R. Co. v. Caldwell, 98 Ind. 245, 183 Loux V. Fox, 171 Pa. 68, 576 Love v. Gibson. 13 N. & W. 623, 69 V. Lamar, 79 Ga. 323, 44 Loveday v. Anderson, 18 Wash. 322, 524, 538, 573 Loving V. Dixon, 56 Tex. 75, 316 Lovejoy v. Citizens' Bank, 23 Kan. 331, 255 Lovell V. Everston, 11 Johns, 52, 451 Low V. Argrove, 30 Ga. 129, 156 V. Merrill, 1 Finn. (Wis.) 340, 152 V. Warren, 77 Cal. 94, 341 Lowden v. National Bank, 38 Kan. 533, 22, 145 Lowe V. Blair, 6 Blackf. (Ind.) 282, 338 V. Waler, 2 Doug. 736, 303 Lowell Trust Co. v. Pratt, 183 Mass. 379, 558 Lowenstine v. Males, 3 Ohio Dec. 390, 208 Loweree v. Babcock, 8 Abb. Prec. N. S. (N. Y.) 255, 54 Lowes V. Mazzaredo, 1 Starkie 385, 303 Lowndes v. Anderson, 13 East 130, 121 Lowry v. Danforth, 95 Mo. App. 441, 183, 240, 447, 693 Lubbering v. Kohlbrecher, 22 Mo. 590, , 142, 168 Lucas V. Kernoddle, 2 Ala. 199, 260 V. Pico, 55 Col. 126, 194 V. The Bank, 28 P. E. Smith 228, 615 V. Waul, 12 Smedes & M. (Miss.) 157, 297 Luckett V. Triplett, 2 B. Mon. 39, 238 Luddington v. Kirk, 16 Misc. Rep. 301, 306 Ludington v. Bell, 77 N. Y. 138, 679 V. Thompson, 38 N. Y. Supp. 768, 541 Luellen v. Hare, 32 Ind. 211, 22 Luke V. Koenen, 120 Iowa 103, 183 Lull V. Stone, 37 111. 224, 376 Lulu, The, 10 Wall. 192, 476 Lum V. Robertson, 6 Wall. (73 U. S.) 277. • 417 Luning v. Brady, 10 Cal. 265, 41 V. Wise, 64 Cal. 410, 240 Lybrand v. Fuller, 30 Tex. Civ. App. 116, 423 Lyddane v. Owensboro Banking Co., 21 Ky. L. Rep. 320, 544, 549 Lyle V. Winn, 45 'Fla. 419, 302 Lyman v. Warner, 113 Fed. 87, 404, 456 sc TABLE OF CASES. [References are to Sections.'] Lynch v. Bragg, 13 Ala. 773, 639 V. First Nat. Bank, 107 N. Y. 179, 581 V. Hicks, 80 Ga. 200, 181 V. Kennedy, 34 N. Y. 151, 653 Lynchburg v. Norvell, 20 Gratt. 601, 303 Lyncliburg Nat. Bank v. Scott, 91 Va. 652, 240, 302, 303 Lyndon Sav. Bank v. Interna- tional Co., 78 Vt. 169, 702 Lyndouville Nat. Bank v. Fletcher, 68 Vt. 81, 34 Atl. 38, 654 Lyon V. Bryant, 54 111. App. 331, 597 V. Ewings, 17 Wis. 61, .359 V. Petty, 65 Cal. 322, 610 V. Phillips, 106 Pa. St. 57, 665 V. Williamson, 27 Me. 149, 502 Lyons V. Stills, 97 Tenn. 514, 320 Lytle V. Crawford, 74 N. Y. Supp. 660, 679 V. Lansing, 147 U. S. 59, 476 M Maas V. Chatfield, 90 N. Y. 303, 193, 307 Mabie v. Johnson, 8 Hun (N. Y.) 309, 601 Mac, see Mc. Macfarlane v. Lowell, 9 Ha- waiian 438, 186 Machado v. Fernandez, 74 Cal. 362, 507 Mack V, Clark, 42 Mass. (Mete.) 423, 1, 123 V. Prang, 104 Wis. 1, 114 V. Starr, 78 Conn. 184, 187, 475 Mackall v. Gosler, Fed. Cas. No. 8835, 523 Mackay v. Dodge, 5 Ala. 388, 135 V. Holland, 4 Mete. (Mass.) 69, 436, 650 Mackey v. Peterson, 29 Minn. 298, 27, 28 Maclae v. Sutherland, 3 E. & B. 132, 82 Maclay v. Love, 25 Cal. 367, 379, 33, 34 MacLean v. O'Brien, Rap. Jud. Quebec, 12 C. S. 110, 48 Macomb v. Wilkinson, 83 Mich. 486, 230, 288, 289 Macon Co. v. Shores, 97 U. S. 272, 120 Macungie Sav. Bank v. Hotten- stein, 89 Pa. St. 328, 305 Macy V. Kendall, 33 Mo. 164, 270 Madden v. Blair, 86 Ga. 780, 50 Maddox v. Graham, 2 Mete. (Ky.) 56, 288 V. Maddox's Exr., 12 La. 13, 41 Mader v. Cool, 14 Ind. App. 299, 326 Maderon v. Heath & M. Mfg. Co., 35 111.^ App. 588, 576, 583 Magee v. Badger, 30 Barb. (N. Y.) 246, 241, 484 Magee Furnace Co. v. Boston Soapstone Furnace Co., 124 Mass. 409, 599 Magel V. Milligan, 150 Ind. 582, 50 N. E. 564, 402 Magoffin V. Boyle Nat. Bank, 24 Ky. L. Rep. 585, 44 Magoon v. Reber, 76 Wis. 392, 105, 111, 113 Magruder v. Union Bank, 3 Pet. 87, 502, 503, 519 Maguire v. Donavan, 108 Mo. App. 511, 699 Mahan v. Ross, 18 Mo. 121, 600 Mahaska Bank v. Crist, 87 Iowa 415, 360, 376 Maher v. Lanfrom, 86 111. 513, 302 V. Moore (Del.), 42 Atl. 721, 270, 684 Mahler v. Merchants' Nat. Bank, 65 Minn. 37, 302 Mahon v. Gormley, 24 Pa. St. 80, 34 Mahoney v. Barber, 67 Minn. 308, 194 Mahuris v. Perason, 8 N. H. 539, "639 Main v. Hilton, 54 Cal. 110, 3102 Civil Code, 670 Maine Bank v. Butts, 9 Mass. 49, 306 Maine Mut. Marine Ins. Co. v. Blunt, 64 Me. 95, 664 V. Pickering, 66 Me. 130, 695 Maine T. & B. Co. v. Butler, 45 Minn. 506, 451 Maitland v. Citizens' National Bank, 40 Md. 540, 246, 270, 282, 285, 353, 377, 383, 385, 386, 391, 476 Major V. Hansen, 2 Biss. (U. S.) 195, 162 V. Holmes, 124 Mass. 108, 34 Makepeace v. College, 10 Pick. 27, 684 Maledon v. Lefler, 62 Ark. 387, 17 Mallard v. Aillet, 6 La. Ann. 92, 2250 Mallett v. Thompson, 5 Esp. 178, 270 Manahan v. Hart, 24 Ohio Cir. Ct. R. 526, 33 TABLE OF CASES. XCl [References are to Sections.l Manawaring v. Keenan, 86 N. Y. Supp. 262, 240, 402 Manchester v. Van Brunt, 40 N. Y. St. Rep. 56, 555, 556 Mandeville v. Union Bank of Georgetown, 9 Cranch (U. S.) 9, 618 Maness v. Henry, 96 Ala. 454, 179 Mangan v. Sunwall, 60 Minn. 367, 126 Manhattan Life Ins. Co. v. First Nat. Banlc (Colo. App.), 80 Pac. 467, 583 Manhattan Liquor Co. v. Ger- man National Bank (Tex. Civ. App. 1906), 94 S. W. 1120, 80, 458 V. Magnus & Co. (Tex. Civ. App. 1906), 94 S. W. 1117, 80 Manhattan Sav. Inst. v. New- York Nat. Exch. Bank, 170 N. Y. 58, 360, 376 Manistee National Bank v. Sey- mour, 64 Mich. 59, 183 Manley v. Park, 68 Kan. 400, 409 Mann v. Merchants' Loan & Trust Co., 100 111. App. 224, 237, 240, 394, 395, 447 Manning v. Lyon, 24 N. Y. Supp. 265, 523, 570 v. Maroney, 87 Ala. 563, 591, 594 v. McClure, 36 111. 490, 241 V. Tyler, 21 N. Y. 567, 442 Manning First Nat. Bank v. Farneman, 93 Iowa 161, 563 Manufacturers' & Merchants' Bank v. Follett, 11 R. I. 92, 173 Manufacturers' Bank of Troy v. Scofield, 39 Vt. 590, 655 Manufacturers' Nat. Bank v. Barnes, 65 111. 69, 73 V. Thompson, 129 Mass. 438, 8 Many, In re. Fed. Cas. No. 9054, 653, 659 Maples V. Browne, 48 Pa. St. 458, 419 Maquin v. Bennett, 24 Misc. (N. Y.) 157, 73 Marcal v. Melliet, 18 La. Ann. 223, 419 March v. Bank, 4 Hun (N. Y.) 466, 118 V. Marshall, 53 Pa. St. 396, 419 Marchand v. Griffon, 140 U. S. 516, 44 Margesson v. Goble, 2 Chit. 364, 341 Marine Bank v. Clements, 31 N. Y. 33, 125 Marine Nat. Bank v. National City Bank, 59 N. Y. 67, 581, 642 Marion & Monroe Gravel Road Co. V. Kessinger, 16 Ind. 549, 195 Marion Mfg. Co. v. Harding, 155 Ind. 648, 327 Marion Nat. Bank v. Phillips, 16 Ky. L. Rep. 159, 504, 561 v. Thompson, 101 Ky. 277, 306 Market & Fulton National Bank V. Sargent, 85 Me. 349, 23 Markey v. Corey, 108 Mich. 184, 451 Markland v. McDanlel, 51 Kan. 350, 525, 573 Marks v. Boone, 24 Fla. 177, 565 v. First Nat. Bank, 79 Ala. 550, 126, 241, 270, 285 V. Schram, 109 Wis. 452, 149 Marling v. Milwaukee Realty Co. (Wis.), 106 N. W. 844, 682 Marlow v. Barlew, 53 Cal. 456, 34 Marness v. Henry, 96 Ala. 454, 185 Marsh v. Bank, 34 Barb. (N. Y.) 298, 605 V. Griffin, 42 Iowa 403, 139, 168 v. Low, 55 Ind. 271, 258 V. Small, 3 La. Ann. 402, 395 V. Wheeler, 77 Conn. 449, 91, 94 Marshall v. Billings, 7 Ind. 250, 447 V. Conger, 10 Serg. & R. (Pa.) 164, 177 V. Freeman, 52 111. App. 42, 582 V. Meyers, 96 Mo. App. 643, 696 V. Mitchell, 34 Me. 227, 525 V. Perkins, 72 Me. 343, 679 V. Shiff (Ala.), 30 So. 335, 467 Marshall Nat. Bank v. O'Neal, 11 Tex. Civ. App. 640, 85, 86 V. Smith, 33 Tex. Civ. App. 555, 680 Marston v. Allen, 8 Mees. & W. 494, 20, 379, 645 Martendale v. Follet, 1 N. H. 95, 147, 167 Martin v. Bartow Iron Works, Fed. Cas. No. 9157, 208, 217 V. Brown, 75 Ala. 422, 553 V. Foster, 83 Ala. 213, 183 V. Home Bank, 52 N, Y. Supp. 464, 583 V. .lohnson, 34 Neh. 797, 241 V. Kercheval, 4 McLean (U. S.) 117, 191, 200, 236 V. Martin, 174 111. 371, 51 N. E. 691, aff'g 74 111. App. 215, 402 V. Martin, 89 111. App. 147, 214 V. Monroe, 107 Ga. 330, 685 V. Muncy, 40 La. Ann. 190, 272 V. Niagara Falls Paper Co., 122 N. Y. 165, 486 xcu TABLE OF CASES. [References are to Sections.'] Martin v. Perqua, 20 N. Y. Supp. 285, 503, 540 V. Richardson, 68 N. C. 255, 636 V. Smith, 116 Ala. 639, 28 V. Smith, 108 Mich. 278, 517 V. Smylee, 55 Mo. 577, 25, 26 V. Stone, 67 N. H. 367, 186, 198 V. Suber, 39 S. C. 525, 34 V. Trobridge, 1 Vt. 477, 593 V. Winslow, Fed. Cas. No. 9172, 525 V. "Witty (Mo. 1904), 78 S. W. 828, 317 Martina v. Muhllie, 186 III. 327, 222, 324 Martindale v. Hudson, 25 Mo. 422, 240 Marvin v. McCullum, 20 Johns. (N. Y.) 288, 456 Mascolo V. Montesanto, 61 Conn. 50, 110, 186 Maslin's Ex'rs v. Hiett, 37 W. Va. 15, 679 Mason v. Anthony, 42 N. Y. 609, 303 V. Bradley, 11 Mees. & W. 590, 172 V. Dousay, 35 III. 424, 527 V. Eldred, 6 Wall. 231, 679 V. Jones, 7 App. D. C. 247, 119 V. Kilcourse, 71 N. J. 472, 59 V. McCullock. 31 Me. 158. 610 Maspero v. Pedesclaux, 22 La. Ann. 227, 559, 560 Massachusetts L. & T. Co. v. Twichell, 7 N. Dak. 440, 446 Massachusetts Nat. Bank v. Snow, 187 Mass. 159, 136. 240, 396, 402. 465, 472, 475 V. "Whicher. 173 Mass. 517, 40 Massey v. Blair. 196 Pa. St. 34, 311 V. Wallace, 32 S. C. 149, 300 Massie v. Byrd, 87 Ala. 672 507 Massman v. Holscher, 49 Mo. 87, 312 Master v. Miller, 4 Term R. 320, 136, 142, 152 Masterson v. Grubbs, 70 Ala. 406, 305 Mastin v. Cochran, 25 Ky. L. Rep. 712, 302 Mastin Bank v. Hammerslousrh, 72 Mo. 274, 388. 393 Mather v. Gordon Bros., 77 Conn. 341. 59 Atl. 424. 414 Mathes v. Shank. 94 Fed. 501, 53 Mathewson v. Brouse, 1 U. C. Q. B. 272, 682 Matson v. Alley, 141 111. 284, 238, 433 Matteson v. Ellsworth, 33 Wis. 488, 148 Matthews v. Crosby, 56 N. H. 21, 307 V. Rutherford, 7 La. Ann. 225, 378 Mattingley v. Bank of Com- merce, 21 Ky. 1029, 534, 542 Mattingly v. Riley, 20 Ky. Law Rep. 1621, 150 Mattoon v. McDaniel, 34 Mo. 138, 419 Matz V. Avick, 76 Conn. 388, 302 Mauney v. Coit, 80 N. C. 300, 503, 541 Maurin v. Chambers, 6 Rob. 62, 439 Maury v. Coleman, 24 Ala. 381, 60 Am. Dec. 478, 656 Maxfield v. Jones, 76 Me. 135, 691 Max Simons & Co. v. McDowell, 125 Ga. 203, 53 S. E. 1031, 135, 136 Maxwell v. Akin, 89 Fed. 178, 85 V. CampbeJl. 8 Ohio St. 265, 301 V. Jacksonville Loan & Imp. Co., 45 Fla. 425, 302 May V. Cole, 8 Blackf. (Ind.) 479, 310, 327 V. Folsom, 113 Ala. 198, 302 V. Quimby, 3 Bush (Ky.) 96, 241, 246 Mayberry v. Morris. 62 Ala. 113, 241 Mavdole v. Peterson, 7 Idaho 502, 322, 340 Maver v. Columbia Sav. Bank, 86 Mo. App. 108, 467 V. Mode, 14 Hun (N. Y.) 155, 342 V. Thomas, 97 Ga. 772, 523, 570 Mayes v. Robinson, 93 Mo. 114, 366, 476 Mayfield Grocer Co. v. Andrew Price & Co. (Tex. Civ. App.), 95 S. W. 31, 370, 419, 420, 467 Mavhew v. Crickett, 2 Swanst. 190. 650 Mavnard v. Davis, 127 Mich. 571, 246 V. Nekervis, 9 Pa. St. 81, 418 McAdam v. Cooke, 6 Daly (N. Y.) 101, 385 McAfee v. Doremus, 5 How. 53, 542 McAllister v. Pitts, 58 Neb. 424, 694 McAlpin V. Lee, 12 Conn. 129, 208 V. Wingard, 2 Rich. L. (S. C.) 547, 431, 607 McAndrew v. Radway, 34 N. Y. 511. 542 McArthur v. Bloom, 2 Duer (N. Y.) 151, 43 V. McLeod. 51 N. C. 475, 22 McAuley v. Reynolds, 64 Me. 136, 29 TABLE OF CASES. XClll [References are to Sectiotis.l McCaffrey v. Burkhardt, 97 Minn. 1, 695 V. Dustin, 43 111. App. 34, 419 McCagg V. Woodman, 28 111. 84, 604 McCall V. Corning, 3 La. Ann. 409, 99 McCallum v. Driggs, 35 Fla. 277, 183 McCann v. Lewis, 9 Cal. 246, 679 McCarthy v. Sleight (Mich.), 72 N. W. 165, 630 McCarty v. Lockwood, 6 Houst. (Del.) 451, 119 V. Louisville Bkg. Co., 100 Ky. 4, 475 V. Mewhinney, 8 Ind. 513, 628 McCarville v. Lynch, 14 Misc. .R. (N. Y.) 174, ' 102 McCasky v. Sherman, 24 Conn. 605, 241 McCaughey v. Smith, 27 N. Y. 9, 182 McCauley v. Gordon, 64 Ga. 221, 91 V. Murdock, 97 Ind. 229, 97 McCIain v. Davis, 77 Ind. 419, 71 McClair v. Wilson. 18 Colo. 82, 110 McClelland v. Bartlett, 13 Bradw. 236, 699 McClintick v. Johnson, 1 Mc- Lean (U. S.) 414, 240 McClintock v. Central Bank, 120 127, 24 S. W. 1052, 670 McClure v. Litchfield, 11 Ala. 337, 417 V. Little, 15 Utah 379, 148 V. Livermore, 78 Me. 390, 6 Atl. 11, 663 McComas v. Haas, 107 Ind. 512, 343 McCord V. W. U. T. Co., 39 Minn. 181, 414 V. Williams, 2 Ala. 81, 600 McCormack v. Warren, 74 Conn. 234, 230 McCormack Harvesting Machine Co. v. Yoeman, 26 Ind. App. 415, 257 McCormal v. Redden, 46 Neb. 776, 194 McCormick v. Holmes, 41 Kan. 265, 21 v. Stockton & T. C. R. Co., 130 Cal. 100, 81 V. Williams, 54 Iowa 50, 419 McCormick Harvesting Mach. Co. v. Faulkner, 7 S. D. 363, 312 McCosker v. Banks, 84 Md. 292, 474 McCoy V. Gouvion, 19 Ky. Law R. 1441, 28 v. Lockwood, 71 Ind. 319, 23, 164 McCrady v. Cann, 5 Harr. (Del.) 175, 239 V. Jones, 36 S. C. 136, 351, 359, 376 McCramer v. Thompson, 21 Iowa 244, 181 McCrary v. Pritchard, 119 Ga. 876, 266 McCready v. Cann, 5 Harr. (Del.) 175, 198, 238 McCreary v. Parsons, 31 Kan. 447, 2 Pac. 570, 668 McCrum v. Corby, 11 Kan. 464, 376, 463 McCullock V. Hoffman, 10 Hun (N. Y.) 133, 185, 198 V. Houston, 1 Dall. (U. S.) 441, 238. 419 McCullough V. Cook, 34 Ind. 290, 502 V. Houston, 1 Dall. (U. S.) 441, 238, 419 V. Pritchett, 120 Ga. 585, 684 McDade v. Mead, 18 Ala. 214, 608 McDaniel v. Chinski, 23 Tex. Civ. App. 504, 57 S. W. 922, 403 V. Whitsett, 96 Tenn. 10, 161 McDonald v. Harrison, 12 Mo. 447, 623 v. McDonald, 139 Cal. 246, 245 V. Mayer, 97 Ga. 281, 23 S. E. 72, 656 V. Mosher, 23 111. App. 206, 521, 576 V. Muscatine Nat. Bank, 27 Iowa 319, 22, 28 V. Nalle (Tex. Civ. App. 1906), 91 S. W. 632, 140 V. Randall, 139 Cal. 246, 72 Pac. 997, 486 McDonald Mfg. Co. v. Moran, 52 Wis. 203, 281 McDonough v. Goule, 8 La. 472, 255 McDuffie V. Dame, 11 N. H. 244, 419 McEwin V. Humphrey (Ind. Ty.), 45 S. W. 114, 302 McFadden v. Maxwell, 17 Johns. 188, 472 McFarland v. Sikes, 54 Conn. 250, 312 V. State Bank, 7 Kan. App. 722, 489 McFatridge v. Williston, 25 N. S. 11, 525 McFetrich v. Woodrow, 67 N. H. 174, 570 McGarvey v. Hall, 23 Cal. 140, 446 McGavack v. Whitfield, 45 Miss. 452, 61 XCIV TABLE OF CASES. McGowan v. Budlong, 79 Pa. St. 470, 608 McGowen v. Bush, 17 Tex. 195, 115 McGrath v. Barnes, 13 S. C. ooc 320 ''v.' Clark, 56 N. Y. 34, 146, 170 V. Perkins, 56 N. Y. Supp. 398, 627 McGrea v. Long, 83 Ga. 156, 614 McGregor v. Bishop, 14 Ont. 7, 208 McGruder v. Bank of Washing- ton, 9 Wheat. 598, 514 McGue V. Rommell (Col. 1906), 83 Pac. 1000, 208 McGuire v. Sinclair, 47 How. Pr. (N. Y.) 360, 391 McHenry v. Davis, 10 L. R. Eq. 88, 42 Mclntire v. Preston, 5 Gilm. (111.) 48, 85 V. Yates, 104 111. 491, 392 Mcintosh V. Rice, 13 Colo. App. 393, 307 McKay v. Bellows, 8 Fla. 31, 238 McKean v. Cook, 73 N. H. 410, 682 McKeen v. Page, 18 Me. 140, 325 McKenzie v. British Linen Co., 44 Law T. N. S. 431, 675 V. Hunt, 32 Ala. 494, 624, 635 V. Linen Co., 6 App. Cas. 82, 677 McKesson v. Jones, 66 N. C. 258, 293 McKewer v. Kirtland, 33 Iowa 348, 553 McKinney v. Beeson, 7 La. O. S. 254, 417, 530 McKinnon v. Armstrong, L. R. 2 App. Cas. 531, 626 V. Armstrong Bros. & Co., L. R. 2 App. Cas. 531, 613 McKirdy v. Hare, 7 Atl. 172, 273 McKnight v. Wheeler, 6 Hill (N. Y.) 492, 302, 303 McKown V. Mathes, 19 La. 542, 419 McLain v. Coulter, 5 Pike (Ark.) 13, 449, 653 McLaren v. Pennington, 1 Paige 102, 604 McLaughlin v. Brady, 63 S. C. 433, 119 V. Clausen, 85 Cal. 322, 311, 345 McLaurin v. Seguin (Rap. Jud. Queb.), 12 C. S. 63, 539 McLean v. Bryer, 24 R. I. 599, 464, 469 V. Clydesdale Banking Co., 9 App. Cas. 95, 241 V. Fleming, L. R. 2 H. L. Sc. 128, 414 [References are to Sections.'] McLean v. Lafayette Bank, 2 McLean (U. S.) 587, 302 V. Ryan, 55 N. Y. Supp. 232, 532, 542, 554, 558 McLellan v. File Works, 56 Mich. 579, 85 McLemore v. Hawkins, 46 Miss. 715 695 v.'powell, 12 Weat. (U. S.) 554, 341 McLennan v. McMonies, 25 U. C. Q. B. 114, 679 McLeod V. McKay, 20 U. C. Q. B. 258, 702 V. Williams, 122 N. C. 451, 44 McLin V. Marshall, 1 Heisk. (Tenn.) 678, 105, 106 McMahon v. Thomas (Cal.), 39 Pac. 783, 119 McManus v. Bark, L. R. 5 Exch. 65, 341 McMickey v. Safford, 197 111. 540, 183 McMillan v. Hefferlin, 18 Mont. 385, 135, 152 McMonigal v. Brown, 45 Ohio St. 333, 524, 540, 573 McMurray v. Moran, 134 U. S. 150, 307 V. Sisters of Charity, 68 N. J. L. 312, 199 McMurtry v. Ramsey, 25 Ark. 350, 293 McNabh v. Tally, 27 La. Ann. 640, 272 McNair v. Moore, 55 S. C. 435, 502 McNamara v. Gargett, 68 Mich. 454, 296 V. Jose, 28 Wash. 461, 191, 240, 440, 464, 465 McNaught V. McClaughtry, 42 N. Y. 22, 212 McNeel v. Smith, 106 Ga. 215, 257, 669 McNeil V. Tenth Nat. Bank, 46 N. Y. 325, 329, 95, 380 McNeill V. Baird, 6 Munf. 316, 449 V. McDonald, 1 Hill (S. C.) 1, 419 McNitt V. Helm, 33 Iowa 342, 419 McPeeters v. Blankenship, 123 N. C. 651, 232 McPherson v. Boudreau, 48 La. Ann. 431, 359 V. Foster, 43 Iowa 48, 87 V. Weston, 64 Cal. 275, 255 McQuade v. Irwin, 39 N. Y. Super. Ct. 396, 240 595, 613 TABLE OF CASES. xcv [References are to Sections.l McQueen v. Mclntyre, 30 Up. Can. C. P. 426, 162 V. McQueen, 9 Up. Can. Q. B. 536, 339 McQueen's Appeal, 104 Pa. St. 595, 373, 613 McRae v. McNair, 69 N. C. 12, 333 V. Rhodes, 22 Ark. 315, 523 McRaven v. Crisler, 53 Miss. 542, 137 McSmithee v. Feamster, 4 W. Va. 673, 600 McSparran v. Neeley, 91 Pa. St. 17, 69, 119, 123 McSpedon v. Troy, 41 N. Y. 35, 246, 249 V. Troy City Banlt, 2 Keyes (N. Y.) 35, 391 McVean v. Scott, 46 Barb. (N. Y.) 379, 174 McVey v. Cantrell, 70 N. Y, 295, 34, 58 V. Ely, 73 Tenn. (5 Lea) 438, 138, 170 McVicker v. Shropshire, 6 J. J. Marsh. (Ky.) 328, 322 McWilliams v. Mason, 31 N. Y. 294, 121, 123 Meachem v. Dow, 32 Vt. 721, 288 Meacher v. Fort, 3 Hill (S. C.) 227, 24, 102, 673 Mead v. Merrill, 10 Fost. (N. H.) 472, 133 V. Munson, 60 111. 49, 28 V. Pawling National Bank, 89 Hun (N. Y.) 102, 342 V. Young, 4 Term R. 28, 470 Meadow v. Bird, 22 Ga. 246, 288 Meadows v. Smith, 7 Ired. Eq. (N. C.) 7, 108 Mechanics' and Traders' Bank v. Barnett, 27 La. Ann. 177, 376 V. Livingston, 6 Misc. Rep. 81, 353 Mechanics' Bank v. Fowler, 36 Mo. 33, 35, 418 V. Hasard, 13 Johns. 352, 697 Mechanics' Bank &c. v. Charda- voyne, 69 N. J. L. 256, 241, 243, 391 Mechanics' Banking Assoc, v. New York & Saugerties White Lead Co., 35 N. Y. 505, 85, 270, 487, 505 Mechanics' Bank of New York V. Griswold. 7 Wend. 166, 573 Mechanics' Building Assoc, v. Ferguson, 29 La. Ann. 548, 376 Mechanics' &c. Bank v. Living- ston, 4 Misc. 257, 376 Meeker v. Shanks, 112 Ind. 207, 213, 635 Meggett v. Baum, 57 Miss. 22, 272, 275, 465 Mehlherg v. Tisher, 24 Wis. 607, 523 Mehlin v. Mutual Reserve Fund L. A., 2 Ind. Terr. R. 296, 307, 312 Meise v. Doscher, 83 Hun (N. Y.) 580, 170 v. Newman, 76 Hun 341, 502, 542, 551 Melancon v. Melancon, 4 Rob. 33 439 Melendy v. Keen, 89 111. 395, 419 Melick V. Bank, 52 Iowa 94, 128 Mellen v. Harvey, 6 Super. & Com. P. Dec. 15, 210 Melvin v. Hodges, 71 111. 422, 74 Memphis Bethel v. Bank, 101 Tenn. 130, 359, 376, 402 Memphis Nat. Bank v. Sneed, 97 Tenn. 120, 72 Menaugh v. Chandler, 89 Ind. 94, 629, 646 Mendenhall v. Lenwell, 5 Blackf. (Ind.) 125, 338 V. Ulrich (Minn. 1905), 101 N. W. 1057, 312, 314 Menenway v. Cropsey, 37 111. 357, 288 Menkens v. Heringhi, 17 Mo. 297, 52 Menzie v. Smith, 63 Neb. 666, 88 N. W. 855, 402 Mercantile Bank v. Boggs, 48 W. Va. 289, 241 Mercantile Guaranty Co. v. Hil- ton (Mass. 1906), 77 N. E. 312, 390 Mercer v. Clark, 3 Bibb. (Ky.) 224, 17 V. Woodward, 74 Conn. 589, 98 Merchants' & Farmers' Bank v. Cleland, 25 Ky. Law Rep. 1169, 116 Merchants' & Manufacturers' Nat. Bank v. Ohio Valley Fur- niture Co. (W. Va.), 50 S. E. 880, . 473, 475 Merchants' & Mechanics' Bank V. Evans, 9 W. Va. 373. 179 Merchants' & Planters' Bank v. Millsap, 71 Miss. 361, 15 S. 659, 208, 222, 443, 465 V. Pentland, 101 Tenn. 445, 473 Merchants' Bank v. Cleveland, 9 Colo. 608, 246 V. Easley, 44 Mo. 286, 523 XCVl TABLE OF CASES. ^References are to Sections."} Merchants' Bank v. McCall, 6 Bosw. (N. Y.) 473, 80 Merchants' Bank of Canada v. Brown, 86 App. Div. (N. Y.) 599, aso Merchants' Co. v. Jones, 95 Me. 335, 375, 466 Merchants' &c. Bank v. Hewitt, 3 Clarke 93, 447 Merchants' Exchange Bank v. Fuldner, 92 Wis. 415, 612 V. Liickow, 37 Minn. 542, 315 Merchants' Exch. Nat. Bank v. Bergen Co., 115 N. S. 384, 87 Merchants' Loan & Trust Co. V. Metropolis Bank, 7 Daly (N. Y.) 137, 119, 642 V. Welter, 205 111. 647, 421, 467 Merchants' National Bank v. Baltimore, C. & R. Steamboat Co., 102 Md. 573, 63 Atl. 108, 152 V. Comstock, 55 N. Y. 24, 383 V. Hansom, 33 Minn. 40, 21 N. W. 849, 671 V. Standard Wagon Co., 6 Ohio N. P. 264, 528 V. State Nat. Bank, 10 Wall. 604, 476, 581, 585 V. Sullivan, 63 Minn. 468, 473 Merchants' Sav. Bank v. Cross, 65 Minn. 154, 459 Merchants' State Bank v. State Bank, 94 Wis. 444, 571 Mercien v. Cotton, 34 Miss. 64, 439 465 Meredith v. Ladd, 2 N. H. 517, ' 288 Merriam v. Granite Bank, 8 Gray (Mass.) 254, 394 V. Rockwood, 47 N. H. 81, 316, 318 T. Wolcott, 3 Allen (Mass.) 258, 645 Merrick v. Boury, 4 Ohio St. 60, 148 V. Butler, 2 Lans. (N. Y. 103, 294 419 V. Phillips, 58 Mo. 436, ' 238 Merrill v. Bank, 94 Cal. 59, 683 V. Carr, 60 N. H. 114, 288 V. Mowry, 33 Me. 455, 333, 685 V. Packer, 80 Iowa 542, 288, 296 Merriman & Co. v. Knox, 99 Ala. 93, 291 Merritt v. Bagwell, 70 Ga. 578, 119, 123 V. Boyden, 93 111. App. 613, 474 V. Duncan, 7 Heisk. (Tenn.) 156, 307, 380 V. Flemming, 42 Ala. 234, 301 Merritt v. Gate City Nat. Bank, 100 Ga. 147, 502 V. Hurley, 6 S. D. 593, 451 V. Jackson, 181 Mass. 69, 505 V. Pollys, 16 B. Mon. (Ky.) 355, 94 V. Seaman, 6 N. Y. 168, 620 V. Todd, 23 N. Y. 28, 502, 506, 507 Mersick v. Alderman, 77 Conn. 634, 267, 282 Mersman v. Werges, 112 U. S. 139, 98, 102, 182 Messmore v. Larson, 86 111. 278, 606 V. Morrison, 172 Pa. St. 300, 186 Metcalf V. Draper, 98 111. App. 399, 240, 475 Metropolitan Bank v. Bouny, 42 La. Ann. 439, 467 V. Engle, 72 N. Y. Supp. 691, 516. 517, 558, 567 N. Y. Supp. 691, 516, 517, 558, 567 Y. Jones. 137 111. 634, 581, 585 V. Merchants' Nat. Bank, 182 111. 367, 307 V. Sieber (Pa.), 33 Leg. Int. 193, 292 Metropolitan Printing Co. v. Springer, 90 N. Y. Supp. 376, 270 Metz V. Winne (Okla.), 79 Pac. 223, 302 Meuer v. Phoenix Nat. Bank, 88 N. Y. Supp. 83, 446, 456, 581 Meyer v. Beardsley, 30 N. J. Law 236, 272 V. Brand, 102 Ind. 301, 198, 216 V. Brown, 65 Cal. 583, 80 V. Dresser, 16 C. B. N. S. 646, 414 V. Poster, 147 Cal. 166, 456, 563 V. Hibscher, 47 N. Y. 265, 525 V. Huneke, 55 N. Y. 412, 147, 170 Meyer-Marx Co. v. Ensley City, 141 Ala. 602, 288, 291 Mevers v. Kasten, 9 Misc. Rep. 221, 280 V. Kessler, 142 Fed. 730, 296 Michigan Bank v. Eldred, 9 Wall. (N. S.) 544, 89, 93 Michigan Mut. L. Ins. Co. v. Klatt. 92 N. W. 325, 240 Michigan Sav. Bank v. Miller, 110 App. Div. 670, 607 Michigan State Bank v. Leaven- worth, 28 Vt. 209, 688 Micklewait v. Noel, 69 Iowa 344, 316 Middaugh v. Elliott, 61 Mo. App. 601, 136 1 TABLE OF CASES. XCVH [References are to Sections.^ Middleborough Nat. Bank v. Cole, 191 Mass. 168, 53 Middlebury v. Case, 6 Vt. 165, 240 Middletown Bank v. Jerome, 18 Conn. 443, 191, 238, 653, 659 Midland Steel Co. v. Citizens' Nat. Bank, 72 N. E. 290, 238 V. Citizens' National Bank of Kokonao, 34 Ind. App. 107, 277 Miers v. Coats, 57 111. App. 216, 98 Milberry v. Storer, 75 Me. 69, 177 Miles V. Porter, 6 Blackf. (Ind.) 44, 200 Milius V. Kauffman, 104 App. Div. (N. Y.) 442, 391 Millard v. Barton, 13 R. I. 601, 116 Miller v. Bank, 8 Watts (Pa.) 192, 373 V. Bingham, 29 Vt. 82, 436 V. Butler, Fed. Cas. No. 9565, 17 V. Clendenin, 42 W. Va. 416, 504, 529 V. Delameter, 12 Wend. (N. Y.) 433, 51, 52 V. Filley, 26 Mich. 249, 69, 174, 182 V. Gamble, 4 Barb. (N. Y.) 146, 315, 350 V. Gettysburg Bank, 8 Watts (Pa.) 192, 613 V. Gilleland, 19 Pa. St. 119, 124, 152 V. Holbrook, 1 Wend. (N. Y.) 317, 341 V. Kreiter, 76 Pa. St. 78, 446, 629 V. Larned, 103 111. 562, 270, 271, 282, 285 V. Longacre, 26 Ohio St. 291, 3 V. Lynch, 38 Miss. 344, 29 V. McKenzie, 95 N. Y. 575, 192 V. Manice, 6 Hill (N. Y.) 114, 00 V. Meller, 59 Mo. 388, 279 V. Pollock, 99 Pa. St. 202, 354, 359 V. Race, 1 Burrows 452, 394, 398, 404 V. Receiver, 1 Paige 444, 604 V. Reed, 27 Pa. St. 244, 157 V. Stark, 148 Pa. St. 164, 148, 152 V. Wells, 46 111. 46, 351 V. Wisner, 22 La. Ann. 457, 57 Miller & Co. v. Boykin, 70 Ala. 469, 359 Millerd v. Thorn, 56 N. Y. 402, 688 Millish V. Rawdon, 9 Bing. 416, 496 Millius V. Kaufmann, 93 N. Y. Supp. 669, 241, 246, 249 Joyce Defenses— vii Millius V. Kauffmann, 104 App. Div. 442, 360 Mills V. Bank of United States, 11 Wheat. 431, 509, 530, 552 V. Gilpin, 2 Harr. (Del.) 32, 202, 208 V. Lumpkin, 1 Kelly (Ga.) 511, 620 V. Rice, 6 Gray (Mass.) 458, 671 V. Rosenbaum. 103 Ind. 152, 601 V. Starr, 2 Bailey (S. C.) 359, 147, 165 V. Williams, 16 S. C. 593, 317 V. Young, 23 Wend. (N. Y.) 314, 105 Miltenberger v. Cooke, 18 Wall. (U. S.) 421, 672 Milton V. Steward, 5 111. App. 533, 63 Milwaukee Trust Co. v. Warren, 112 Wis. 505, 702 Miner v. Vedder, 66 Mich. 101, 232 Mineral Point R. Co. v. Barron, 83 111. 365, 590 Mining Co. v. First Nat. Bank of Hailey, 95 Fed. 23, 660 Minneapolis Sash & D. Co. v. Metropolitan Bank, 76 Minn. 136, 583 Minor v. Minor's Adm'r, 8 Grat. (Va.) 1, . 620 Minot v. Russ, 156 Mass. 458, 581 Minzey v. Marcy Mfg. Co., 25 Ohio Cir. Ct. R. 593, 310 Miser v. Trovinger, 7 Ohio St. 281, 523 Mishler v. Reed, 76 Pa. St. 76, 307 Missouri K. & T. Co. v. Krum- seig, 172 U. S. 351, 302 Missouri Real Estate Syndicate V. Sims, 179 Mo. 679, 302, 305 Mitchell V. Bristol, 10 Wend. 492, 699 V. Degrand, 1 Mason 176, 544, 546 V. Donahey, 62 Jowa 376, 133 V. Easton, 37 Minn. 335, 505 V. Farrish, 69 Md. 235, 41 V. Kingman, 5 Pick. (Mass.) 431, 71 V. Lyon, 77 111. 525, 614 V. McCullough, 59 Ala. 179, 305 V. Oakley, 7 Paige (N. Y.) 68, 387 V. Richmond, 164 Pa. St. 566, 39 Miller v. Purchase. 5 S. D. 232, 41 V. Sellman. 5 Md. 376, 634 V. Smith, 32 Iowa 484, 57 V. Sullivan, 5 Md. 376, 336 XCVlll TABLE OF CASES. [References are to Sections.'] Miller v. Whaley, 29 Ky. Law R. 125, 92 S. W. 556, 73, 89 V. Wheeler, 122 Iowa 368, 680 Mitcherson v. Dozier, 7 J. J. Marsh. (Ky.) 53, 53, 208, 329 Mix V. National Bank of Bloom- ington, 91 111. 20, 241, 246 V. White, 52 Vt. 284, 17 Mobile Bank v. Hall, 6 Ala. 639, 241 V. Poelnitz, 61 Ala. 147, 635 Mobile County v. Sand, 127 Ala. 493, 400, 401 Mobile Life Ins. Co. v. Randall, 71 Ala. 220, 688 Mobile R. Co. v. Heirath, 67 Ala. 189, 241 Mobile Sav. Bank v. Board of Sup'rs, 22 Fed. 580, 238 V. McDinnell, 83 Ala. 595, 512 Mobley v. Ryan, 4 Peck. 51, 699 Modlin V. Northwestern Turn- pike Co., 48 Ind. 492, 119 Moeckel v. Heim, 46 Mo. App. 340, 47 Moffett V. Bickle, 21 Graft. (Va.) 280, 302 Mohawk Bank v. Broderick, 10 Wend. 304, 523, 585 V. Corey, 1 Hill (N. Y.) 513, 353, 392 Mohr V. Byrne, 135 Cal. 87, 437 Molaka v. American Fire Ins. Co., 29 Pa. Super. Ct. 149, 680 Mollere v. Harp, 36 La. Ann. 471, 111 Molson V. Hawlev, 1 Blatchf. (U. S.) 409, 286, 354 Monarch v. Farmers' & Drovers' Bank, 105 Ky. 430, 95 Money v. Ricketts, 62 Miss. 209, 419 Monroe v. Connor, 15 Me. 179, 93 Monson v. Drakeley, 40 Conn. 552. 213 Montague v. Perkins, 22 Eng. L. & Eq. 516, 307 Montclair v. Ramsdell, 107 U. S. 147, 476 Montelius v. Charles, 76 111. 303, 496, 503 Montfort v. Americus Guano Co., 108 Ga. 12, 33 S. E. 636, 669 Montgomery v. Albion Nat. Bank, 50 Neb. 652, 306, 615 V. Brown, 1 Del. Co. Rep. (Pa.) 307, 63 V. Crosthwaite, 90 Ala. 553, 524. 573 V. Elliott, 6 Ala. 701, 502, 516 V. Hunt, 93 Ga. 438, 310, 475 Montgomery Bank v. AValker, 9 Serg. & R. (Pa.) 229, 273 Montgomery Railroad Co. v. Hurst, 9 Ala. 518, 182 Montross v. Clark, 2 Sandf. (N. Y.) 115, 284 Monument Nat. Bank v. Glove Works, 101 Mass. 57, 85, 270, 271, 487 Moody V. Keller, 127 Ala. 630, 523 V. Threlkeld, 13 Ga. 55, 22 V. Towle, 5 Greenl. (Me.) 415, 606 Moore v. Alexander, 68 N. Y. Supp. 888, 522, 523, 570 V. Andrews, 13 U. C. C. P. 405, 633 V. Baird, 30 Pa. St. 138, 270 V. Beem, 83 Ind. 219, 342 V. Boyd, 95 Ind. 134, 198, 201, 202 V. Britton, 22 La. Ann. 64, 514 V. Buthin, 7 Adol. & SI. 595, 596 V. Cross, 19 N. Y. 227, 280 V. Davidson, 18 Ala. 209, 331 V. Hershey, 90 Pa. St. 196, 200, 201 V. Hutchinson, 69 Mo. 429, 169 V. Metropolitan Nat. Bank, 55 N. Y. 41, 366 V. Miller, 6 Oreg. 254, 456 V. Miller, 6 Lans. (N. Y.) 396, 307, 317 V. Mitchell, 1 Miss. 231, 183 V. Moore, 112 Ind. 152, 153, 13 N. E. 673, 123, 645 V. Moore. 39 Iowa 461. 210 V. Phillips, 13 Mont. Co. Rep. 173, 198 V. Prussig, 165 111. 319, 333, 351 V. Steigel, 50 Mo. App. 308, 503, 527 V. Weir, 3 Sneed (Tenn.) 46, 600 V. Weston, 102 N. W. 163, 288 V. Williams, 26 Tex. Civ. App. 142, 62 S. W. 977. 89 Moore & Handley Hardware Co. V. Towers Hardware Co., 87 Ala. 207, 288 Mordecai v. Dawkins, 9 Rich. L. (S. C.) 262, 291, 297 More V. Finger, 128 Cal. 313, 211, 445, 472 Morehead v. Parkersburg Na- tional Bank, 5 W. Va. 74, 160, 164 Morehouse & Wells Co. v. Schwaber, 118 111. App. 44, 549 TABLE OF CASES. XCIX [References are to Secti07is.1 Moreland v. Citizens' Sav. Bank, 97 Ky. 211, 243, 392, 533 Morey v. Wiley, 100 111. App. 75, 214 Morgan v. Bailey, 59 Ga. 683, 29 V. Bean, 100 111. App. 114, 419, 467 V. Morgan, 20 Kv. L. Rep. 1308, 61 V. Nowlin, 126 Mich. 105, 116, 122 V. United States, 113 U. S. 476, 151 V. Wolstencroft, 1 Super. Ct. 13, 525 Morley v. Culverwell, 7 Mees. & W. 174. 682 Morningstar v. Hardwick, 3 Ind. App. 431, 47 Mornyer v. Cooper, 35 Iowa 257, 238 Moroney v. Coombes (Tex. Civ. App.), 88 S. W. 430, 339, 680 Morrill v. Goodenow, 65 Me. 178, 288 V. Nightingale, 93 Cal. 452, 112 Morris v. Bailey, 10 S. Dak. 507, 534 V. Bethell, L. R. 5 C. P. 47, 673 V. Eufalia Nat. Bank, 122 Ala. 580, 574, 576 V. First Nat. Bank, 201 Pa. 158, 583 V. Morton, 14 Neb. 358, 317, 386, 388 v. North, 21 C. C. A. 553, 194 V. Preston, 93 111. 215, 221, 380, 390 V. White, 28 La. Ann. 855, 238 Morris Canal & Banking Co. v. Fisher, 9 N. J. Eq. 667, 394 V. Van Vorst, 21 N. J. L. 100, 688 Morrison v. Currie, 4 Duer (N. Y.) 79, 645 V. Farmers' & Merchants' Bank, 9 Okla. 697, 123, 203, 445 V. Faulkner, 80 Tex. 128, 112 V. Fishel, 64 Ind. 177, 439, 679 V. Garth, 78 Mo. 434, 172 V. Hart, 122 Ga. 660, 189, 202 V. Huggins, 53 Iowa 76, 148 V. Jewel, 34 Me. 146, 208 V. Smith, 13 Mo. 234, 180 V. State Bank, 3 Kan. App. 201, 614 V. Welty, 18 Md. 169, 148, 176 Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173, 288 Morrow v. Bright, 20 Mo. 298, 626 Morse v. Chamberlain, 144 Mass. 406, 555, 556, 569 V. Chapman, 24 Ga. 249, 612 Morse v. Welcome, 68 Minn. 210, 302, 305 Morton v. Fletcher, 2 A. K. Marsh. (Ky.) 137, 291 V. Provident Nat. Bank of Waco (Tex.), 93 S. W. 189, 297 Mosely v. Hanford, 10 Barn. & Cr. 729, 339 Moses V. Comstock, 4 Neb. 516, 292 V. Lawrence County, 149 U. S. 298, 186 Mosher v. Carpenter, 13 Hun (N. Y.) 602, 28, 645 Moskowitz V. Deutsch (N. Y. App. Div. 1905), 92 N. Y. Supp. 721, 136 Mosser v. Criswell, 150 Pa. St. 409, 281, 353 Mosteller v. Bost, 7 Ired. Eq. (N. C.) 39, 419 Mouchet V. Cason, 1 Brev. (S. C.) 307, 158 Moul V. Pfeiffer, 23 Pa. Super. Ct. 280, 268 Moule V. Brown, 4 Bing. N. C. 266, 576 Moulton V. Posten, 52 Wis. 169, 270, 472 Mount, see Mt. Mount V. Sholes, 120 111. 394, 679 Mount Morris Bank v. Lawson, 10 Misc. R. (N. M.) 259, 136 Moye V. Herndon, 30 Miss. 110, 137 Moyer v. Brand, 102 Ind. 301, S V. Urtal, 9 N. Y. St. Rep. 667, 353 Moynihan v. McKeon, 74 N. Y. St. R. 316, 270 Mt. Pleasant Branch of State Bank v. McLeran, 26 Iowa 306, 511, 520 Mt. Vernon Bridge Co. v. Knox County Sav. Bank, 46 Ohio L. J. 168, 517 Mudge V. Bullock, 83 111. 22, 30, 50, 51 Mueller v. Buck (N. J. S. C. 1904), 58 Atl. 1.092, 116 V. Wiese, 95 Wis. 381, 46 Mueur v. Phoenix Nat. Bank, 88 N. Y. Supp. 83, 413 Muhlke V. Hegemess, 56 111. App. 322, 27 Muilman v. D'Eguino, 2 H. Bl. 565, 496 Muir V. Demaree, 12 Wend. (N. Y.) 468, 175 Mulberger v. Morgan (Tex. Civ. App.), 34 S. W. 148, 119 TABLE OF CASES. [References are to Sections.} Mullen V. Hawkins, 141 Ind. 363, 263 Mullendore v. Wertz, 75 Ind. 431, 340 Mullick V. Radakissen, 9 Moore P. C. 66, 496 Mullikem v. Latchen, 7 Blackf. (Ind.) 136, 262 Mumford v. Tolman, 54 111. App. 471, 369 V. Tolman, 8 Nat. Corp. Rep. 417, 512 Munday v. Clements, 58 Mo. 577, 447, 635 Mundy v. Whitmore, 15 Neb. 647, 114 Munn V. Baldwin, 6 Mass. 316, 555 V. Commission Co., 15 Jolins. (N. Y.) 44, 303 V. McDonald, 10 Watts 270, 359 Munro v. King, 3 Colo. 238, 310 Munroe v. Hass, 105 Ga. 468, 44 Munson v. Cheeseborough, 6 Blackf. (Ind.) 17, 233, 270 Muorhead v. Kirkpatrick, 21 Pa. St. 237, 222 Murdock v. Arndt, 1 Pin. (Wis.) 70, 307 Murphy v. Arkansas & L. Ld. & Improvement Co., 97 Feci- 723, 627 V. Barnard, 162 Mass 72, 472 V. Citizens' Savings Bank, 22 Ky. L. Rep. 1672, 528, 537, 544, 573 V. Gumaer, 12 Colo. App. 472, 246 V. Gumaer, 18 Colo. App. 183, 194 V, Hubble, 2 Duv. (Ky.) 247, 315 V. Levy, 50 N. Y. Supp. 682, 574, 576 V. Lucas, 58 Ind. 360, 219 V. Metropolitan Nat. Bank, 191 Mass. 159, 77 N. E. 693, 100 V. Robbins, 17 Ind. 422, 338 V. Rogers, 151 Mass. 118, 296 V. Weems, 69 Ga. 687, 293 Murray v. Gibson, 2 La. Ann. 311, 699 V. Graham, 29 Iowa 520, 3, 148 V. Judah, 6 Cow. (N. Y.) 490, 523 V. Jones, 50 Ga. 109, 125 V. Lardner, 2 Wall. 110, 122, 394, 395, 401, 476 V. Miller, 1 Upp. Can. Q. B. 353, 682 V. Peterson, 6 Wash. 418, 142 V. Reed, 17 Wash. 1, 472, 688 Murrell v. Jones, 40 Miss. 565, 21, 23, 121 Murto V. Lemon (Colo. App.), 75 Pac. 160, 402 Musselman v. Hays, 28 Ind. App. 360, 236 V. McElhenny, 23 Ind. 4 240, 463, 659, 664 Musson V. Lake, 4 How. 262, 513, 532 Muth V. St. Louis Trust Co., 88 Mo. App. 596, 581 Mutual Nat. Bank v. Rotge, 28 La. Ann. 933, 443, 536, 581 Muzzy V. Knight, 8 Kan. 456, 367 M. V. Monarch & Co. v. First Nat. Bank, 20 Ky. L. Rep. 1223, 681 M. V. Monarch Co. v. Farmers* D. Bank, 20 Ky. L. Rep. 1275, 553, 554, 565 Myer v. Hettinger, 94 Fed. 370, 260 V. Hibscher, 47 N. Y. 265, 514 v. Reedy, 115 N. C. 538, 681 V. Withman, 41 Mo. App. 397, 560 Myers v. Hazard, 50 Fed. 156, 365 V. Kessler, 142 Fed. 730, 439 V. Tumer, 17 111. 179, 262 V. Welles, 5 Hill (N. Y.) 463, 688 Mynders v. Snook, 1 Lans. (N. Y.) 488, 634 N Nabb V. Koontz, 17 Md. 283, 61 Nailor v. Daniel, 5 Houst. (Del.) 455, 270, 304 Nance v. Gray (Ala. 1905), 38 So. 916, 137 v. Winship, 94 Ga. 649, 681 Nash V. Brown, 165 Mass. 384, 517 V. Lull, 102 Mass. 60, 262 Nashua Fire Ins. Co. v. Moore, 55 N. H. 48, 95, 671 Nashville Trust Co. v. Smythe, 94 Tenn. 514, 365 Nassau Bank v. Broadway Bank, 54 Barb. (N. Y.) 236, 124 Nassq.u Trust Co. v. Matherson, 100 N. Y. Supp. 55, 481 Natchez, City of, v. Trimble, Walker (Miss.) 376, 288 National Bank v. Bradley, 117 N. C. 526, 562, 566, 570 V. Carlton, 96 Ga. 469, 47 V. Dakin, 54 Kan. 656, 380 V. Lutterloh, 95 N. C. 495, 515 V. Mackey, 5 Kan. App. 437, 116 V. Matthews, 98 U. S. 621, 88 V. Texas, 20 Wall. (U. S.) 72, 426 I A TABLE OF CASES. CI [References are to Sections.'] National Bank v. Weil, 141 Pa. 457, '583 V. White, 30 Fed. 412, 439, 440 V. Whitney, 103 U. S. 99, 88 National Bank of Auburn v. Lewis, 75 N. Y. 516, 302, 615, 623 National Bank of Bristol v. Bal- timore, 99 Md. 661, 414 National Bank of Commerce v. American Exchange Bank, 151 Mo. 320, 583 V. Chicago, 44 Minn. 224, 414 V. Guthrie, 11 S. Dak. 517, 388 V. Kenney, 98 Tex. 293, 247, 356, 447 V. National Mechanics' Bank- ing Assoc, of N. Y., 55 N. Y. 211, 642 V. Pick (N. Dak.), 99 N. W. 63, 465 V. Teeney (S. Dak.), 80 N. W. 186, 602 V. Town of Granada, 54 Fed. 100, 488 National Bank of Fayette Co. v. Dushane, 96 Pa. St. 340, 306, 615 National Bank of Madison v. Davis, 6 Biss. (U. S.) 100, 615 National Bank of Newbury v. Sayer, 73 N. H. 595, 64 Atl. 189, 194 National Bank of North Amer- ' ica V. White, 19 N. Y. App. Div. 390, 270 National Bank of Poultney v. Lewis, 50 Vt. 622, 540 National Bank of Rahway v. Brewster, 49 N. J. L. 231, 30, 40, 44 National Bank of Republic v. Delano, 185 Mass. 425, 70 N. E. 444, 40 V. Young, 41 N. J. Eq. 531, 85, 270, 476, 487 National Bank of Rising Sun v. Brush, 10 Biss. (U. S.) 188, 198, 281 National Bank of St. Joseph v. Dakin, 54 Kan. 656, 362, 390 National Bank of Washington v. Texas, 20 Wall. 72, 476 National Bank of Winterset v. Eyre, 52 Iowa 114, 305 National Citizens' Bank v. Top- litz, 178 N. Y. 464, 222 National Exch. Bank v. Cumber- land Lumber Co., 100 Tenn. 479, 59 V. Venemans, 4 N. J. St. R. 363, 26, 28 National Exch. Bank v. White, 30 Fed. 412, 22 National Granite Bank v. Tyn- dale, 176 Mass. 547, 40 National Hudson River Bank v. Kinderhook & H. R. Co., 45 N. Y. Supp. 588, 517, 534 V. Moffett, 162 N. Y. 623, 517 V. Reynolds, 57 Hun. 307, 573 National Life & Trust Co. v. Gif- ford, 90 Minn. 358, 402 National Loan & Inv. Co. v. Rockland County, 36 C. C. A. 370, 186 National Newark Bkg. Co. v. Delaware L. & W. R. Co., 70 N. J. L. 774, 414 National Park Bank v. German- American Mut. W. & S. Co., 21 Jones & S. (N. Y.) 367, 80 V. German-American Security Co., 116 N. Y. 281, 443 National Park Bank of New York V. Remsen, 43 Fed. 226, 483 National Pemberton Bank v. Por- ter, 125 Mass. 333, 79 National Revere Bank v. Morse, 163 Mass. 383, 246 V. National Bank of the Re- public, 66 N. Y. Supp. 662, 583 National Salt Co. v. Ingraham, 143 Fed. 805, 459 National Sav. Bank v. Cable, 73 Conn. 568, 183 National Shoe & L. Bank v. Gooding, 87 Me. 337, 570 National Spraker Bank v. Tread- well Co., 80 Hun (N. Y.) 363, 85 National State Bank v. Rising, 4 Hun (N. Y.) 793, 150 National State Capitol Bank v. Noyes, 62 N. H. 35, 359 National Union Bank v. Hollings- worth (N. C. 1906), 55 S. E. 809, 80 V. Landon, 66 Barb. (N. Y.) 189 93 V. Todd,' 132 Pa. St. 312, 353 Neal V. First Nat. Bank (Ind. App. 1901), 60 N. E. 164, 673 V. Parker (Tenn.) 62 S. W. 170 98 V. Wood, 23 Ind. 523, 538 Neale v. Head, 133 Cal. 42, 446, 447 Nebeker v. Cutsinger, 48 Ind. 436, 28 CIL TABLE OF CASES. IReferejices are to Sections.l Nebraska Mut. Bond Assn. v. Klee (Neb. 1903), 97 N. W. 476, 478, 105, 111 Nebraska National Bank v. Lo- gan, 35 Neb. 182, 574, 585 V. Pennock, 55 Neb. 188, 328 Needles v. Shaffer, 60 Iowa 65, 161 Neel V. Harding, 2 Mete. (Ky.) 247, 3 Neely v. Lewis, 10 111. 31, 312 Neff V. Horner, 63 Pa. St. 327, 138 Neilsville Bank v. Tuthill, 4 Dak. 295, 30 N. W. 154, 671 Nelson v. Castle, 105 Mo. App. 187, 582 V. Eaton, 26 N. Y. 410, 670 V. First National Bank, 69 Fed. 798, 527, 533, 552 V. Flagg, 18 Wash. 39, 340 V. Fotteral, 7 Leigh. 179, 534 V. Grondahl (N. Dak.), 100 N. W. 1093, 515 V. Lovejoy, 14 Ala. 568, 194, 322 V. Miller, 52 Miss. 410, 55 V. White, 61 Ind. 139, 341 Nephi First National Bank v. Foote, 12 Utah 157, 183 Nethercutt v. Hopkins, 38 Wash. 577, 116 Nettles V. Huggins, 8 Rich. L. (S. C.) 273, 626 Neuhoff V. O'Reilly, 93 Mo. 164, 95 Nevada v. Cleaveland, 6 Nev. 181, 24 Neverman v. Bank of Cass County, 14 Okla. 417, 320 Nevill V. Hancock, 15 Ark. 511, 1 Nevins v. De Grand, 15 Mass. 436, 143 New V. Walker, 108 Ind. 365, 262, 292 New Bedford Savings Bank v. Union Mill Co., 128 Mass. 27, 390 Newbold v. Boraef, 155 Pa. St. 227, 270, 354, 521, 554, 564 New Central Coal Co. v. Cum- ings, 66 Hun (N. Y.) 626, 386 Newcomb v. Gibson, 127 Mass. 396, 354 Newell V. First Nat. Bank, 13 Ky. Law Rep. 775, 23 V. Gregg, 51 Barb. 263, 419, 468 V. Salmons, 32 Barb. (N. Y.) 647, 640 New England Fire Ins. Co. v. Haynes. 71 Vt. 306, 45 Atl. 221, 652 New England Trust Co. v. New York Belting & Pack. Co., 166 Mass. 42, 447 Newgrass v. City of New Or- leans, 42 La. Ann. 163, 412 New Haven Mfg. Co. v. New Haven Pulp & Bond Co., 76 Conn. 126, 240, 260, 402, 403 Newkirk v. Neild, 19 Ind. 194, 341 Newman v. Kaufman, 28 La. Ann. 865, • 504, 584 V. King, 54 Ohio St. 273, 152 V. Williams, 29 Miss. 212, 304 New Orleans Canal & Bkg. Co. V. Montgomery, 95 U. S. 16, 24 L. Ed. 346, 402 Newport Nat. Bank v. Tweed, 4 Ploust. (Del.) 225, 302 Newsom v. Russell, 77 N. C. 277, 130 Newton v. Wilson, 31 Ark. 484, 292 V. Woodley, 55 S. C. 132, 302 New York & Alabama Con. Co. V. Selma Sav. Bank, 51 Ala. 305, 560 New York Belting & P. Co. v. Ela, 61 N. H. 352, 564 New York County Bank v. Mas- sey, 24 Sup. Ct. 199, 243 New York etc., v. Smith, 11 N. Y. Super. Ct. 362, 241 New York Iron Mine v. Citi- zens' Bank, 44 Mich. 344, ' 490 New York Life Ins. Co. v. Mar- tindale (Kan. 1907), 88 Pac. 559, 135, 169 V. Smucker (Mo. App. 1904), 80 S. W. 27, 336 New York National Bank v. Coydendall, 58 Hun (N. Y.) 205, 390 V. Crowell, 177 Pa. 313, 475 New York Security & Trust Co. V. City of Tacoma, 21 Wash. 303, 232 Nexsen v. Lyell, 5 Hill 466, 369 Nezro v. Fuller, 24 Wend. (N. Y.) 374, 164 Niagara Bank v. Roosevelt, 9 Cow. (N. Y.) 409, 612 Niagara Co. Bank v. Baker, 15 Ohio St. 68, 306 Niblack v. Champeny, 10 S. D. 165, 183, 305 V. Park Nat. Bank, 169 111. 317, 576 Nicholls V. Webb, 8 Wheat. 326, 511 Nichols V. Alsop, 6. Conn. 477, 208 V. Baker, 75 Me. 334, 116, 122 V. Blackmore, 27 Tex. 587, 496 V. Fearson, 7 Pet. 103, 304 V. Gee. 30 Ark. 135, 292 V. Goldsmith, 7 Wend. 160, 514 TABLE OF CASES. em [References are to Sections.'\ Nichols V. Holt, 9 Gray 202, 685 V. Hunton, 45 N. H. 470, 208 V. Levins, 15 Iowa 362, 412 V. Parsons, 6 N. H. 30, 340 V. Sober, 38 Mich. 678, 90, 131 Nichols & Shepard Co. v. Soder- quist, 77 Minn. 509, 208, 216 Nicholson v. Barnes, 11 Neb. 452, 514 V. Combs, 90 Ind. 215, 174 V. Gouthit, 2 H. Bl. 609, 503 V. National Bank, 92 Ky. 251, 11 V. Revill, 4 Adol. & E. 675, 172, 679 Nicker'son v. Gilliam, 29 Mo. 456, V. Ruger, 76 N. Y. 279, Nicklewait v. Noel, 69 Iowa 344, Nicolay v. Pritschie, 40 Mo. 67, Nicrosi v. Walker, 139 Ala. 369, Nielson v. Schulkman, 53 Wis. 638, Nightingale v. Meginnis, 34 N. J. L. 461, V. Withington, 15 Mass. 272, 63, 68 Niles V. Porter, 6 Blackf. (Ind.) 44, Nimocks v. Woody, 97 N. C. 1, Nisbet V. Lawson, 1 Kelly, 275, Nispel V. Laparle, 74 111. 306, Nixon V. English, 3 McCord (S. C.) 549, 436, 635 V. Whitely Co., 120 Ind. 360 45 Noble V. Anniston Nat. Bank (Ala. 1906), 41 So. 136, 639 V. Carey, 64 Hun (N. Y.) 635, 240 V. Cornell, 1 Hilt 98, 291 V. Daughton, 72 Kan. 336, 578, 580 V. Eades, 51 Me. 34, 687 V. Smith, Quincy (Mass.) (Mass.) 254, 208 Noel V. Clark, 25 Tex. Civ. App. 136, 60 S. W. 356, 36 V. Harding, 2 Mete. (Ky.) 247, 3 V. Kinney, 106 N. Y. 74, 41 Nolan V. Bank of New York, 67 Barb. (N. Y.) 24, 394, 395, 401 Noll V. Smith, 64 Ind. 511, 171, 661 Norfolk Nat. Bank v. Griffin, 107 N. C. 173, 270 v. Schwenk, 46 Neb. 381, 306, 615 Norris v. Langley, 19 N. H. 423, 291, 294 V. Scott, 6 Ind. App. 18, 210 V. Ward, 59 N. H. 487, 525 North American Coal Co. v. Dyett, 7 Paiger (N. Y.) 9, 33 618 381 318 404 305 27 340 280 491 416 55 Northampton Nat. Bank v. Kid- der, 106 N. Y. 221, 419 North Atcheson Bank v. Gay, 114 Mo. 203, 316, 318 North Ave. Sav. Bank v. Hays, 188 Mass. 135, 680 North Bank v. Kyle, 7 How. (Miss.) 360, 593 North Bridgewater Bank v. Copeland, 7 Allen (Mass.) 139, 292, 302, 303 North Carolina Corp. Commis- sioners V. Merchants & Farm- ers' Bank, 137 N. C. 697, 688 Northern Liberty Market v. Keily, 113 U. S. 199, 195, 688 Northern Liberty Market Co. v. Steubner, 4 Mackey (D. C.) 301, 195 Northern Nat. Bank v. Arnold, 187 Pa. 356, 298, 439 Northern Pacific Ry. Co. v. Holmes, 88 Minn. 389, 195 Northern Trust Co. v. Hiltgen, 62 Minn. 311, 361 North River Bank v. Aymer, 3 Hill (N. Y.) 262, 75 Northrup v. Cheney, 50 N. Y. Supp. 389, 552 V. Minturn, 13 Johns. (N. Y.) 35, 288 North Trust Co. v. Hiltgen, 62 Minn. 361, 592 Northwestern Coal Co. v. Bow- man, 69 Iowa 150, 555, 569, 574, 576 Northwestern Creamery Co. v. Lanning, 83 Minn. 19, 185 Northwestern Iron & Metal Co. V. National Bank, 70 111. App. 245, 574, 576 Norton v. Foster, 12 Kan. 44, 635, 636 v. Pickens, 21 La. Ann. 575, 230, 456 V. Waite, 20 Me. 175, 241 Norton & Macauley v. Pickens, 21 La. Ann. 575, 289 Norwalk Bank v. Adams Ex- press Co., 4 Blatchf. (U. S.) 345, 154 Norwood V. Pettis, 10 La. Ann. 259, 594 Noteboom v. Watkins, 103 Iowa 580, 245 Notes to Duchess of Kingston's Case, 3 Smith's Lead. Cas. 729, 343 CIV TABLE OF CASES. [References are to Sections."] Nott V. Thompson, 35 S. C. 461, 14 S. E. 940, 59, 646 Novel V. Hittle, 23 Ind. 346, 503 Nowack V. Lehmann, 102 N. W. 992, 198, 231 Nowak V. Excelsior Stone Co., 78 111. 307, 199, 237, 272 Noyes v. Gilman, 65 Me. 589, 186 V. Landon, 59 Vt. 569, 302, 351 Nutter V. Stover, 48 Me. 169, 246, 288, 380, 383 Nye V. Chace, 138 Mass. 379, 31 N. E. 736, 653 V. Moseley, 6 Barn. & Cr. 133, 300 O Oakland Cemetery Assn. v. La- kins (Iowa 1904), 101 N. W. 778, 312 Oakley v. Carr, 66 Neb. 751, 567, 568 Oates V. Montgomery Bank, 100 U. S. 239, 465, 627 V. National Bank, 100 U. S. 247, 359, 476 Oberle v. Schmidt, 86 Pa. St. 221, 406 O'Brien v. McDonald, 78 Hun (N. Y.) 420, 322 O'Bryne v. City of Savannah, 41 Ga. 331, 293 O'Callaghan v. Sawyer, 5 Johns. (N. Y.) 118, 419 Ocean Nat. Bank v. Williams, 102 Mass. 141. 511 Ockington v. Law, 66 Me. 551, 339 O'Connor v. Mechanics' Bank, 124 N. Y. 324, 581 O'Daily v. Morris, 31 Ind. Ill, 30 Odell V. Greenly, 4 Duer (N. Y.) 358, 303, 305 Oden V. Andre, 4 Bosw. 583, 359 V. Blydenburgh, 1 Hilt. (N. Y.) 182, 61 V. County of Daviess, 102 U. S. 634, 87 v. Marchand, 29 La. Ann. 61, 130 Odiorne v. Howard, 10 N. H. 343, 419 V. Sargent, 6 N. H. 401, 333 Offut V. Stout, 4 J. J. Marsh. 332, 510 Ogilvie V. Mortgage Co., App. Cas. 257, 677 Ohio Thresher & Engine Co. v. Hensel, 9 Ind. App. 326, 257 Oishel V. Craven, 11 Misc. (N. Y.) 139, 236 O'Kane v. Riser, 25 Ind. 168, 257 O'Keefe v. Frankfort First Nat. Bank, 49 Kan. 347, 402 V. Handy, 31 La. Ann. 832, 114 Olcott V. Tioga Railroad Co., 27 N. Y. 546, 81 Oldham v. Wallace, 4 Pike 559, 447 Oldhausen v. Lewis, Fed. Cas. No. 10507, 523 Old National Bank of Fort Wayne v. Marcy (Ark.), 95 S. W. 145, 472, 473 Olds V. Cummings, 31 111. 188, 365 Olds Wagon Works v. Bank of Louisville, 10 Ky. L. Rep. 235, 385, 392 Oliphant v. Markham, 79 Tex. 543, ■ 109 Oliver v. Andry, 7 La. 496, 104 Olmstead v. Winsted Bank, 32 Conn. 278, 394, 398 Olpherts v. Kelly, 61 N. Y. Supp. 1107, 693 Omaha National Bank v. Walker, 5 Fed. 399, 212, 447 O'Malley v. Ruddy, 79 Wis. 147, 30, 41 O'Neal V. Bacon, 1 Houst. (Del.) 215, 363 Oneida Bank v. Ontario Bank, 21 N. Y. 490, 292 O'Neill V. Meighan, 66 N. Y. Supp. 313, 506, 523 Onondaga County Bank v. De Duy, 17 Wend. (N. Y.) 47, 89 Ontario Bank v. Worthington, 12 Wend. (N. Y.) 593, 242 Oppenheimer v. Kruckman (N. Y. App. Div. 1903), 84 N. Y. Supp. 129, 320 Orear v. McSinald, 9 Gill 350, 523 Oregon National Bank v. Gard- ner, 13 Wash. 154, 128 Orme v. Young, 1 Holt's N. P. 87, 341 Ormsbee v. Howe, 54 Vt. 182, 477 V. Kidder, 48 Vt. 361, 92, 95, 418 O'Rourke v. Hanchett, 35 N. Y. Supp. 328, 525 v. Mahl, 109 Fed. 276, 119 Orr V. Maginnis, 7 East 359, 523, 527, 545, 570 V. South Amboy Terra Cotta Co., 113 App. Div. 103, 473, 485 V. Sparkman, 120 Ala. 9, 28, 303, 464 Orrick v. Dunham, 79 Mo. 174, 679 Ort v. Fov/ler, 31 Kan. 478, 2 Pac. 589, 24, 28, 641 TABLE OF CASES. CT [References are to Sections.1 Osborn v. Kistler, 35 Ohio St. 99, 463 V. Payne, 111 Mo. App. 29, 302 V. Robbins, 36 N. Y. 365, 108, 109, 114, 115 V. Taylor, 58 Conn. 439, 310, 320 Osborne v. Brice, 23 Fed. 171, 1, 259, 601 V. McQueen, 67 Wis. 392, 29 N. W. 636, 646 Osgood V. Artt, 17 Fed. 575, 478 Oster V. Mickley, 35 Minn. 245, 365 Ostrow V. Tarver, 28 S. W. 701, 195 Oswald V. Moran, 8 N. D. Ill, 288 Oswego County Sav. Bk. v. Town of Genoa, 72 N. Y. Supp. 786, 441 Otis V. Barton, 10 N. H. 433, 502 Otto V. Belden, 28 La. Ann. 302, 502 V. Halff. 89 Tex. 384, 168 V. Surgee, 14 Wis. 571, 303 Ot.well V. Cock, 9 B. Mon. (Ky.) 357, 606 Outhwite V. Porter, 13 Mich. 533, 241 Overend, Gurney & Co., In re, 6 L. R. Eq. 344, 282 Overhalt v. The Bank, 1 Norris (Pa.) 490, 615 Overman v. Hoboken City Bank, 30 N. J. L. 61, 8 Overstreet v. Dunlap, 56 111. App. 486, 105 Overton v. Matthews, 35 Ark. 146, 135, 136, 145 Outhwaite v. Luntley, 4 Camp. 179, 135, 136, 152, 154 Owen V. Hall, 70 Md. 97, 170 V. Van Uster, 10 C. B. 318, 500 Owens V. Dickerson, 1 Cr. & Ph. 54, 33 V. Mynatt, 1 Heisk. (Tenn.) 675, 111 Owings V. Arnot, 33 Mo. 406, 152 V. Grimes, 5 Litt. (Ky.) 331, 303 Owsley V. Beasley, 4 Bibb (Ky.) 277, 208 V. Phillips. 78 Ky. 517, 74 Oxford Iron Co. v. Quinchett, 44 Ala. 487, 293 V. Spradley, 46 Ala. 98, 293 Oxford State Bank v. Holscher, 115 Iowa 196, 702 Oxman v. Garwood, 80 111. App. 658, 502 Oxnard v. Varnum, 111 Pa. 193, 525, 573 Oyster v. Short, 177 Pa. St. 589, 626 Pace v. Gilbert School (Mo. App.), 93 S. W. 1124, 698 v. Martin, 2 Duv. (Ky.) 522, 297 Packer v. Taylor, 12 Pa. Co. Ct. 521, 57 Packwood v. Clark, 2 Sawy. (U. S.) 13, 208 v. Gridley, 39 111. 388, 603 Page v. Danaher, 43 Wis. 221, 168 Page Woven Wire Fence Co. v. Pool, 133 Mich. 323, 698 Pahlman v. Taylor, 75 111. 629, 164 Paige v. Bradfoot, 100 Ala. 613, 402 v. Cagwin, 7 Hill (N. Y.) 361, 657 V. Chapman, 58 N. H. 333, 119 Paine v. (Central Vermont R. R. Co., 118 U. S. 152, 422 Painter v. Weatherford, 1 Iowa 97, 43 Palm V. Watt, 7 Hun (N. Y.) 317, 109- 673 Palmer v. Call, 2 McCrary (U. S.) 522, 303, 305 V. Carpenter, 53 Neb. 394, 305 V. Hawes, 73 Wis. 46, 126 V. Marshall. 60 111. 289, 23 V. Poor, 121 Ind. 135, 13, 111, 119 V. Sargent, 5 Neb. 223, 171 V. Whitney, 21 Ind. 58, 570 Palo Alto Stock Farm v. Brooker (Iowa 1906), 108 N. W. 307, 25, 116 Pana v. Bowler, 107 U. S. 529, 402 Pancoast v. Ruffin, 1 Ham. (Ohio) 381, 449, 594 Pankey v. Mitchell, 1 111. 383, 135 Pardee v. Fish, 60 N. Y. 265, 502, 507 Pardoe v. State Nat. Bank, 106 Iowa 345, 302, 305 Parish v. Stone, 31 Mass. 198. 186, 193, 198, 201. 208, 214 Park Bank v. Watson, 42 N. Y. 490, 380, 441 Parker v. Bond, 121 Ala. 529, 684 V. Burgess, 5 R. I. 277, 89. 131 V. Gilmore, 10 Kan. App. 527, 240 V. Kellogg, 158 Mass. 90, 515 V. Kendall, 3 Vt. 540, 593 V. McCrea, 7 U. C. C. P. 124, 682 V. McDowell, 95 N. C. 219, 387, 388 V. McLean, 134 N. Y. 255, 392 V. Morton, 29 Ind. 89, 184, 200 V. Pitts, 73 Ind. 597, 29 CVl TABLE OF CASES. [References are to Sectionh.'i Parker v. Reddick, 65 Miss. 249, 574, 585 V. Stroud, 98 N. Y. 379, 502, 507 V. Sutton, 103 N. C. 191, 193, 387, 388 Parkersburg First Nat. Bank V. Johns, 22 W. Va. 520, 28 Parkinson v. Boddiker, 10 Colo. 503, 449 Parks V. Hughes, 19 Ind. App. 266, 524 V. Smith, 155 Mass. 26, 525 V. Zeek, 53 Ind. 221, 591 Parlin & Orendorff Co. v. Hud- son, 198 111. 389, 680 Parmelee v. Williams, 72 Ga. 42, 340 Parr v. Eliason, 1 East 92, 304 V. Erickson, 115 Ga. 873, 238, 292, 442 V. Jewell, 16 C. B. 684, 282 Parshley v. Heath, 69 Me. 90, 524 Parsons v. Alexander, 5 El. & Bl. 263, 291 V. Dickinson, 23 Mich. 56, 525 V. Gaylord, 3 Johns. (N. Y.) 463, 5 V. Jones, 16 Up. Can. Q. B. 274, 183 V. Parsons, 17 Colo. App. 154, 238 V. Randolph, 21 Mo. App. 553, 288 Parston v. Petit, 1 Camp. 82, 173 Partee v. Silliman, 44 Miss. 272, 60 Partridge v. Davis, 20 Vt. 499, 460 V. Williams, 72 Ga. 807, 359, 375, 376 Passumpsic Bank v. Goss, 31 Vt. 315, 31G Pastene v. Pardein, 135 Cal. 431, 183 Pate V. Gray, Hempst. (U. S.) 155, 630 Patience v. Townley, 2 Smith's Rep. 224, 572 Paton V. Lund, 114 Iowa 201, 97 v. Winter, 1 Taunt. 420, 135, 154 Patrick v. Pettv. 83 Ala. 420, 336 V. Smith, 165 Pa. St. 526, 45 Patten v. Gleason, 106 Mass. 439, 307 V. Pearson. 57 Me. 428, 255 Patterson v. Cave, 61 Mo. 439, 68 V. Higgins, 58 111. App. 268, 142 V. McNeely, 16 Ohio St. 348, 168 V. Wright, 64 Wis. 289. 441, 472, 627 Pattillo V. Alexander, 96 Ga. 60, 528, 564 Patton V. Bank of Lafayette, 124 Ga. 965, 509, 533, 542 Patton V. Carr, 117 N. C. 176, 274 Paul V. Berry, 78 111. 158, 74 Pauly V. Wilson, 57 Fed. 548, 683 Pavey v. Stauffer, 45 La. Ann. 353, 246, 404, 428, 440, 478, 627 Pawcatuck National Bank v. Bar- ber (R. I.), 46 Atl. 1095, 517 Payne v. Eden, 3 Caines (N. Y.) 91 Q 288 V. Ladue, 1 Hill (N. Y.) 116, 208 V. Raubinek, 82 Iowa 587, 288, 296 V, Trexevant, 2 Bay 23, 303 V. Waterston, 16 La. Ann. 239 184 V. Weibie, 30 111. 166, 341 V. Zell, 98 Va. 294, 238, 241, 246 Peabody v. Citizens' State Bank of St. Charles (Minn.), 108 N. W. 272, 526, 582 V. King, 12 Johns. (N. Y.) 426, 338 V. Munson, 211 111. 324, 185, 240 Peabody Ins. Co. v. Wilson, 29 W. Va. 528, 514, 516, 532, 543, 553, 566 Peacock v. Monk, 2 Ves. Sr. 190, 33 V. Rhodes, 2 Doug. 633, 394, 404 Peake v. La Baw, 21 N. J. Eq. 269, 44 Peale v. Addicks, 174 Pa. St. 549, 282 Pearce v. Dill, 149 Ind. 136, 288 V. Langfit, 101 Pa. St. 507, 556 V. Rice, 142 U. S. 28, 297 Pearce & Miller Eng. Co. v. Brouer, 10 Misc. 502, 359, 376 Pearl v. Wells, 6 Wend. (N. Y.) 291, 338 Pearson v. Bailey, 23 Ala. 537, 303 V. Cummings, 28 Iowa 344, 447 V. Pearson, 7 Johns. (N. Y.) 26, 198 Pease v. Cornish, 19 Me. 191, 503 v. Horst, 10 Barn. & Cr. 122, 274 V. McClelland, 2 Bond (U. S.) 42, 238 Peaslee v. Robbins, 44 Mass. (3 Mete.) 164, 2, 72 Peasley v. Boatwright, 2 Leigh. (Va.) 195, 183 Peck V. Bligh, 37 111. 317, 449 Pecker v. Sawyer, 24 Vt. 459, 635 Peckham v. Hendren, 76 Ind. 47, 110, 114 Peddie v. Donnelly, 1 Colo. 421, 423, 310 Peden v. Moore, 1 Stew. & P. (Ala.) 71, 208 TABLE OF CASES. CYll [References are to Sections.'] Pegrau v. American Alkali Co., 122 Fed. 1000, 292 Pelton V. Lumber Co., 113 Cal. 21, 163. 164 V. Spider Lake Sawmill & Lumber Co., 117 Wis. 569, 94 N. W. 293, 474, 487 V. Prescott, 13 Iowa 567, 150 Pence v. Arbuckle, 22 Minn. 417, 380 Pendar v. Kelley, 48 Vt. 27, 292 Pendleton v. Fay, 2 Paige 202, 483 V. Galbreath, 45 Miss. 43, 57 V. Insurance Co., 5 Fed. 238, 505 V. Smissart, 1 Colo. App. 508, 270 Penn Bank v. Farmers' Nat. Bank, 130 Pa. St. 209, 606 Pennsylvania Safe Deposit & T. Co. V. Kennedy, 175 Pa. 164, 270, 342 Pennsylvania Trust Co. v. Mc- Elroy, 112 Fed. 509, 97 Penny v. Graves, 12 111. 287, 322 People, V. Bank of North. Amer- ica, 75 N. Y. 547, 144, 673 V. Bradner, 108 N. Y. 659, 15 N. E. 445, 15 Cent. Rep. 474, 402 V. Call, 1 Denio (N. Y.) 120, 172 V. Cromwell, 102 N. Y. 477, 585 V. Grant (Mich.), 11 Det. L. News 474, 680 V. Hall, 8 Colo. 485, 232 V. Hayes, 70 Hun (N. Y.) Ill, 300 V. Johnson, 100 111. 537, 232 V. St. Nicholas Bank, 77 Hun 157, 581 V. Supervisors of Eldorado, 11 Cal. 171, 87 People's Bank v. Brooke, 31 Md. 7, 514, 532, 542 V. Keech, 26 Md. 521, 561 V. Nat. Bank. 101 U. S. 181. 662 V. Pearsons. 30 Vt. 711, 3 People's Bank of New Orleans V. Tredeau. 38 La. Ann. 898, 260 People's Bldg., etc., v. Palmer (Neb.), 89 N. W. 316, 302 PeoDle's Bldg., etc., Co. v. Pick- ard (Neb.), 96 N. W. 337, 302 People's Nat. Bank v. Clayton, 66 Vt. 541, 246 V. Dibrell, 91 Tenn. 301, 525. 551, 573 V. Lutterloh, 95 N. C. 495. 498. 528, 545 People's Sav. Bank v. Gifford, 108 Iowa 277, 296 Peoria v. Neill, 6 Peck (111.) 269, 237 Peoria R. Co. v. Thompson, 103 111. 187, 85 Pepoon V. Stagg, 1 Nott & McC. (S. C.) 102, 161 Percival-Porter Co. v. Oaks, 106 N. W. 626, 214 Perdew v. Tillma, 62 Neb. 865, 694 Perkins v. Anent, 2 Head 110, 389 V. Bumford, 3 N. H. 522, 263 V. Chains, 1 N. H. 254, 119 V. Elliott, 23 N. J. Eq. 526, 33 V. Oilman, 8 Pick. (Mass.) 229, 322, 338 V. Rowland, 69 Ga. 661, 30, 59 V. Trinka, 30 Minn. 241, 109 Perkins Windmill & A. Co. v. Tillman. 55 Neb. 652, 142 Perley v. Perley, 144 Mass. 104, 313 Perot v. Cooper, 17 Colo. 80, 183, 402 Perring v. Hone, 2 Car. & P. 401, 138 V. Hone, 4 Bing. 28, 157 Perris Irrigation Dist. v. Thomp- son, 116 Fed. 832, 476, 488 Perry v. Armstrong, 39 N. H. 583, 386 V. Connell, 31 S. W. 685, 222 V. Crammond, 1 Wash. (C. C.) 100, 270 V. Friend. 57 Ark. 437, 523 V. Green, 19 N. J. L. 61, 506 V. Mays, 2 Bailey (S. C.) 354, 436, 635 Ferryman v. Pope, 94 Ga. 672, 110 Perry State Bank v. Elledge, 109 111. App. 179, 240 Persons v. Kruger, 60 N. Y. Supp. 1071, 542, 548 Perth-Amboy Mut. L. H. & B. Assn. V. Chapman. 78 N. Y. 558, 439, 476, 488 Peters v. Hobbs. 25 Ark. 67, 521 V. Gay, 9 Wash. 383. 246, 359, 380, 383 Peterson v. Berry, 125 Fed. 902, 302 Petillo V. Hopson, 23 Ark. 196, 208 Petrie v. Clark, 11 Serg. & R. (Pa.) 377, 242 V. Miller, 57 App. Div. (N. Y.) 17 627 Pettee v. Prout, 3 Gray (Mass.) 502, 439, 621, 621 Pettigrew v. Chave, 2 Hilt. (N. Y.) 546. 270 V. Dix, 33 Tex. 277, 447, 691 cvm TABLE OF CASES. [References are to Sections.'] Petty V. Young, 43 N. J. Eq. 654, 194 Pettyjohn v. Liebscher, 92 Ga. 149, 213 Peyton v. Compress Co., 63 Miss. 410, 630 Phelan v. Moss, 67 Pa. St. 59, 119, 441, 661 Phelps V. Mayers, 126 Cal. 549, 367 V. Stocking, 21 Neb. 443, 510, 564, 566 V. Zusching, 34 Tex. 371, 105, 113 Philbrick v. Dallett, 34 N. Y. Super. Ct. 370, 242 Philbrook v. Superior Court, 111 Cal. 31, 416 Philler v. Jewett & Co., 166 Pa. St. 456, 360 V. Patterson, 168 Pa. St. 468, 270, 271 Phillip & William Ebling Brew- ing Co. V. Reinheimer, 66 N. Y. Supp. 458, 569 Phillips V. Bank of Lewiston, 18 Pa. St. (6 Harris) 394, 594 V. Dippo, 93 Iowa 35, 573 V. Im Thurm, 18 C. B. N. S. 694, L. R. 1 C. P. 463, 24, 641, 673 V. Lawrence, 6 Watts & S. (Pa.) 150, 600 T. Runnels, 1 Morris (Iowa) 391, 420 Phipps V. Harding, 70 Fed. 468, 561, 570 V. Shegogg, 30 Miss. 241, 616, 635 Phoenix v. Church, 56 How. Pr. (N. Y.) 29, 240, 242, 244 Phoenix Ins. Co. v. Allen, 7 Cooley 501, 496 V. Fiquet, 7 Johns. (N. Y.) 384, 208 Phoenix Iron Works v. Rhea (Tenn. Ch. App.), 38 S. W. 1079, 601, 639 Pickaway Co. Bank v. Prather, 12 Ohio St. 497, 79, 303 Pickel V. St. Louis Chamber of Com. Assoc, 80 Mo. 65, 195 Pickens Tp. v. Post, 99 Fed. 659, 476 Picket V. Picket, 6 Ohio St. 525, 208 Pickle V. Muse, 88 Tenn. 381, 102 Pier V. Heinrichshoffen, 67 Mo. 163, 522 Pierce v. Indseth, 106 U. S. 546, 542 V. Kibbee, 51 Vt. 559, 472 V. Schaden, 55 Cal. 406, 553 Pierce v. Tresch, 40 Ohio St. 168, 601 Piercy's Heir v. Piercy, 5 W. Va. 199, 172, 176 Piersol v. Grimes, 30 Ind. 129, 142, 158, 180 Pierson v. Boyd, 2 Duer (N. Y.) 33, 270 Pike V. Street Moody & M., 226, 337 V. Taylor, 49 N. H. 124, 208 Pindar v. Barlow, 31 Vt. 529, 294 Piner v. Clary, 17 B. Mon. 645, 527 Pine River Bank v. Hodsdon, 46 N. H. 114, 671, 672 Pink Front Bankrupt Store v. G. A. Mistrot & Co. (Tex. Civ. App.), 90 S. W. 75, 583 Pinney v. First National Bank, 68 Kan. 223, 292 v. Kimpton, 46 Vt. 80, 353, 359 Pintard v. Davis, 20 N. J. L. 205, 340 Pioneer Press Co. v. Cossage, 13 S. D. 624, 334 Pippen v. Wesson, 74 N. C. 437, 56 Piscataqua Exchange Bank v. Carter, 20 N. H. 246, 502 Pitcher v. Barrows, 17 Pick. (Mass.) 361, 363, 92 Pitts v. Congdon, 2 N. Y. 352, 369 v. Foglesong, 37 Ohio St. 676, 246, 270, 284, 354 v. Holmes, 10 Cush. (Mass.) 92, 600 Pittsburg Railway Co. v. Lynde, 55 Ohio St. 23, 85, 121 Placer County Bank v. Freeman, 126 Cal. 90, 194 Plank V. Johnson, 128 Ind. 424, 288 Planters' Bank v. Keese, 7 Heisk. 200, 523 Planters' Bank of Ft. Valley v. Houser, 57 Ga. 140, 653 Planters' Bank & Trust Co. v. Major, 25 Ky. Law Rep. 702, 49 Planters' Ins. Co. v. Tunstall, 72 Ala. 142, 241 Plato V. Reynolds, 27 N. Y. 586, 493 Piatt V. Beebe, 57 N. Y. 339, 388 Plawt V. Storey, 131 Ind. 46, 45 Pleasant Val. Dist. Tp. v. Calvin, 59 Iowa 189, 13 N. W. 80, 670 Plets v. Johnson, 3 Hill (N. Y.) 112, 630 Plover Sav. Bank v. Moodie (Iowa), 110 N. W. 29, 575 Plumb V. Niles, 34 Vt. 230, 324 Plummer v. Bank, 90 Ind. 386, 653 V. Lyman, 49 Me. 229, 491 TABLE OF CASES. cix [References are to 8ections.'\ Plummer v. Smith, 5 N. H. 553, 288 Plyler v. Elliott, 19 S. C. 257, 170 Pocock V. Billing, 2 Bing. 269, 658 Poe V. Justice of the Peace, Dud- ley (Ga.) 249, . 288 Poess V. Twelfth Ward Bank, 43 Misc. 45, 240, 402 Poindexter v. Davis, 67 N. C. 112, 293 Polhemus v. Ann Arbor Sav. Bank, 27 Mich. 44, 238 Pollacek v. Scholl, 51 App. Div. (N. Y.) 319, 618 Pollard V. Vinton, 105 U. S. 7, 414 Pollen V. James, 45 Miss. 129, 205 Pollock V. Carolina Interstate Bldg. & L. Assoc, 51 S. C. 420, 581 Poncin v. Furth, 15 Wash. 201, 183 Pond V. Agricultural Works, 50 Iowa 596, 121 V. Home, 65 N. C. 84, 292 V. Kidd (Ga. 1905), 50 S. E. 934, 105 V. Lockwood, 8 Ala. 669, 439 Poock V. Association, 71 Ind. 357, 670 Pool V. Alexander, 26 La. Ann. 669, 17 V. Anderson, 116 Ind. 88, 524 Pooley V. Harradine, 7 El. & Bl. 430, 340 Poor's Exr. v. Scott, 24 Ky. L. Rep. 239, 690 Pope V. Hanke, 52 111. App. 453, 297, 298 V. Havs, 19 Tex. 375, 338 V. Linn, 50 Me. 83, 29 Port V. Pulaski Co., 49 Fed. 628, 488 Porter v. Andrus, 10 N. D. 558, 562, 20. 246, 359, 390 V. Doby, 2 Rich. Eq. (S. C.) 49, 176 V. Hardy, 10 N. D. 551, 96 V. Jones, 52 Mo. 399. 288 V. Knapp, 6 Lans. (N. Y.) 125, 663 V. Pierce, 22 N. H. 275, 312 V. Roseman, 165 Ind. 255, 698 V. Thom, 57 N. Y. Supp. 479, 511, 513, 573 V. Vaughn, 26 Vt. 624, 325 V. Webb, 22 Ky. Law Rep. 917, 342 V. White, 39 Md. 613, 89 Port Huron Engine & Thresher Co. V. Sherman, 14 S. D. 461, 141, 142, 162 Portis V. Green, 25 Ark. 376, 293 Portland Bank v. Fox, 19 Me. 99, 663 Portsmouth Sav. Bank v. Wilson (D. C), 22 Wash. L. Rep. 817, 524, 538, 573 Posey V. Denver Nat. Bk., 24 Colo. 199, 44 Pac. 282, 474 Post v. Abbeville & W. R. Co., 99 Ga. 232, 25 S. E. 405. 474 V. Bank, 159 111. 421, 683 V. LQsey, 111 Ind. 74, 169 V. Tradesman's Bank, 28 Conn 420, 280 Potter V. Belden, 105 Mass. 11, 120 V. Earnest, 45 Ind. 418, 332 V. Green, 6 Allen 442, 679 V. New Wheaton, 20 Wash. 589, 232 V. Sheets, 5 Ind. App. 506, 41 V. Sheets, 5 Ind. 521, 238, 463 Potter & Son v. Gracie, 58 Ala. 303, 300 Potts V. Dublin, 125 N. C. 413, 307 V. Mayer, 74 N. Y. 594, 246 V. Taylor, 140 Pa. St. 601, 89 Powe V. ipowe, 42 Ala. 113, 333 Powell V. Hogue, 8 B. Mon. (Ky.) 443, 629 V. Inman, 52 N. C. 28, 125 V. Smith, 66 N. C. 401, 293 V. Waters, 17 Johns. (N. Y.) 176, 280 V. Waters, 8 Cow. (N. Y.) 669, 270, 303, 305, 472 Power V. Hambrick. 25 Ky. L. Rep. 30, 183, 195, 237, 447, 702 Powers V. Ball, 1 Williams (Vt.) 662, 119, 238 V. Heath, 20 Mo. 319, 449 V. Nash, 37 Me. 322, 150 V. Nelson, 19 Mo. 190, 240 Prall V. Hinchman, 6 Duer (N. Y.) 351, 270, 472 Pralon v. Aymard, 12 Rob. 486, 439 Prather v. Gammon, 25 Kan. 379, 680 v. Smith, 101 Ga. 283, 302 v. Weisiger, 10 Bush (Ky.) 117, 394, 616 V. Zulauf, 38 Ind. 155, 149, 152 Pratt V. Adams, 7 Paige 715, 304 V. Lamson, 128 Mass. 529, 679 V. Menkins, 18 Mo. 158, 600 V. Short, 53 How. Prac. (N. Y.) 506, 671 Prentice v. Zane, Fed. Cas. No. 11383, 242 Prentice & Weissinger v. Zane, 2 Gratt. (Va.) 262, 246 ex TABLE OF CASES. [References are to Sections.} Prentiss v. Graves, 33 Barb. 621, 319 354 V. Strand, 116 Wis. 647, 25o! 489 Presbrey v. Thomas, 1 App. D. C. 171, 525, 560 Presbury v. Michael, 33 Mo. 542, 135 Presbyterian Board of Pub. & S. S. Work V. Gilliford (Ind.), 38 N. E. 404, 681 Prescott V. Johnson, 8 Fla. 391, 400 Prescott Bank v. Caverly, 7 Gray (Mass.) 221, 217, 496 Prescott Nat. Bank v. Butler, 157 Mass. 548, 95 Press Co. v. City Bank, 58 Fed. 321, 79 Preston v. Bacon, 4 Conn. 471, 108 V. Breedlove, 36 Tex. 96, 432 V. Cutler, 64 N. H. 461, 412 Prestwich v. Marshall, 4 C. & P. 594, 52 V. Marshall, 1 Bing. 565, 52 Price V. Edmunds, 10 Barn. & Cr. 578, 341 V. Kean, 40 N. J. L. 332, 11, 429, 627 V. Neal, 1 W. Bl. 390, 3 Bur- rows, 1354, 99, 101, 641 V. Sanders, 60 Ind. 310, 63 V. Young, 1 Nott. & McC. (S. C.) 438, 519 V. Winnebago, 14 Okla. 268, 116, 240, 402 Price County Bank v. McKenzie, 91 Wis. 658, 281 Prideaux v. Collier, 2 Stark. 57, 492 V. Criddle, L. R. 4 Q. B. 455, 576 Pridgen v. Buchanon, 27 Tex. 589, 3 Prim V. Hammel, 134 Ala. 652, 22, 145, 699 Prior V. Jacocks, 1 Johns. Cas. 169, 699 V. Lindsay, 3 Bibb. (Ky.) 76, 183 Pritchard v. Johnson, 60 Ga. 288 327 V. Norton, 106 U. S. 124, 254 V. Sharp, 51 Mich. 432, 108 V. Smith, 77 Ga. 463, 135, 529 Proctor V. Baldwin, 82 Ind. 370, 11, 238, 241, 246, 627 V. Cole, 104 Ind. 373, 591, 608, 630 V. Whitcomb, 137 Mass. 303, 386, 388 Produce Bank v. Bache, 30 Hun (N. Y.) 351, 281 Produce Exchange Trust Co. v. Bieberbach, 176 Mass. 577, 102, 175 Prosser v. Leatherman, 5 Miss. (4 How.) 237, 132 Proul V. Dorner, 79 111. 331, 369 Prouty V. Adams, 141 Cal. 304, 310, 320 V. Roberts, 60 Mass. (6 Cush.) 19, 133 V. Wilson, 123 Mass. 297, 150 Providence Machine Co. v. Browning, 70 S. C. 148, 681 Provost V. McEnroe, 102 N. Y. 650, 298 Pryor v. Wright, 14 Ark. 189, 502 Puffer V. Smith, 57 111. 527, 25, 27 Pugh V. Durfee, 1 Blatchf. (C. C.) 412, 287 V. Grant, 86 N. C. 39, 419 Pullen V. Placer County Bank, 138 Cal. 169, 214, 215 V. Ward, 60 Ark. 90, 368 Pulliam V. Owen, 25 Ala. 492, 597 V. Taylor, 50 Miss. 251, 691 V. Withers, 8 Dana (Ky.) 98, 149 Pulsifer v. Hotchkiss, 12 Conn. 234, 208 Purchase v. Mattison, 6 Duer (N. Y.) 587, 241, 284 Pursell V. Allemong & Son, 22 Grat. 739, 576 Puryear v. McGavock, 9 Heisk. (Tenn.) 461, 293 Putman v. Schyler, 4 Hun (N. Y.) 166, 134 Putnam v. Sullivan, 4 Mass. 45, 21, 22, 645 Q Quachita County v. Wolcott, 103 U. S. 559, 232 Quackenbush v. Miller, 4 Strob. (S. C.) 235, 635 Quaintance v. Goodrow, 16 Mont. 376, 525, 573 Quaker City Bank v. Showacre, 26 W. Va. 48, 439, 646 Quebec Bank v. Hellmah, 110 U. S. 178, 312, 385 Queen City Bank v. Brown, 75 Hun (N. Y.) 259, 639 Quimby v. Stoddard, 67 N. H. 283, 467 V. Varnum, 190 Mass. 211, 699, 701 Quincy Union Bank v. Tutt, 8 Mo. App. 342, 253 Quinn v. Aldrich, 70 Hun (N. Y.) 205, 343 v. Hard, 43 Vt. 375, 383 TABLE OF CASES. CXI [References are to Sections.] R Raatz V. Gordon, 51 S. W. 651, 241 Rabberman v. Muchlausen, 3 Bradw. (111.) 326, 463 Racine Co. Bank v. Keep, 13 Wis. 209, 612 Radcliff V. Biles, 94 Ga. 480, 28, 198 Radican v. Radican, 22 R. I. 405, 30 Raesser v. National Exchange Bank, 112 Wis. 591, 581 Ragsdale v. Gresham, 141 Ala. 308, 198, 199 Rainbolt v. Eddy, 34 Iowa 440, 23, 144, 170 Rains v. Lee, 18 Ky. L. Rep. 285, 195 Raleigh & G. R. Co. v. Lowe, 101 Ga. 320, 414 Rambo v. Metz, 5 Strob. (S. C.) 108, 104 Ramsbotham v. Cator, 1 Starkie 228, 21, 308 Ramsey v. Clark, 4 Humph. (Tenn.) 244, 303 Ran V. Latham, 11 La. Ann. 276, 417, 445 Rand v. Pantagraph Co., 1 Colo. App. 270, 440 Randall v. Rhode Island Lumber Co., 20 R. I. 625, 246, 370 R. & W. Jenkinson Co. v. Eg- gers, 28 Pa. Super. Ct. 151, 540 Ransom v. McClees, 64 N. C. 17, 620, 635 V. Turley, 50 Ind. 273, 385 Rapid City First National Bank V. Security National Bank, 34 Neb. 71, 512 Rapp V. Bank, 136 Pa. St. 426, 20 Atl. 508, 645 Rasberry v. Moye, 23 Miss. 320, 208, 211 Ratcliffe v. Planters' Bank, 2 Sneed 425, 149, 152, 570 Rave V. Kohle, 4 Cal. 285, 30 Ravenswood Bank v. Reneker, 18 Pa. Sup. Ct. 192, 199 Rawlings v. Fisher, 24 Ind. 52, 379 Rawlinson v. Stone, 3 Wils. 5, 51 Rawson v. Walker, 1 Starkie 161, 320 Ray V. Anderson, 119 Ga. 926, 240, 260. 331. 416 V. Baker (Ind.), 74 N. E. 619, 28, 237 V. Banks, 6 Jones L. (N. C.) 118, 383 V. McMurtrv, 20 Ind. 307, 651 V. Moore, 24 Ind. App. 480, 326 Ray V. Morgan, 112 Ga. 923, 199 V. Smith, 17 Wall. 411, 521, 571 V. Tubbs, 50 Vt. 688, 66 Raymond v. People, 2 Colo. App. 529, 232 V. Sellick, 10 Conn. 480, 186, 198 Read v. Buffalo, 67 Barb. (N.Y.) 526, 232 V. Eastman, 50 Vt. 67, 302 V. Wilkinson, Fed. Cas. No. 11611, 347, 523 Reading, Town of, v. Town of Weston, 7 Conn. 409, 302 Reagan v. First National Bank, 157 Ind. 623, 392 Reakert v. Sanford, 5 Watts & S. (Pa.) 164, 419 Receiver of Middle District Bank, 1 Paige 585, 604 Reddick v. Jones, 6 Ired. (N. C.) 107, 241, 439 V. Mickler, 23 Fla. 335, 208 Reddin v. First Nat. Bank, 66 Kan. 747, 679 Redding v. Redding, 69 Vt. 500, 186 Reddish v. Ritchie, 17 Fla. 867, 446, 448 Redington v. Woods, 45 Cal. 406, 99, 100 Redlon v. Churchill, 73 Me. 146, 131 Reece v. Knott, 3 Utah 451, 448 Reed v. Batchelder, 1 Mete. (Mass.) 559, 64 V. Gulp, 63 Kan. 595, 137, 169 V. First National Bank, 23 Colo. 380, 183, 194, 402 V. Fleming, 102 111. App. 668, 689 V. Litsev, 17 Ky. L. Rep. 1125, 33 S. W. 827, 646 V. Mitchell. 18 Pa. St. 405, 472 V. Newcomb, 59 Vt. 630, 34 V. Nicholson, 37 Mo. App. 646, 342 V. Prentiss, 1 N. H. 174, 262 V. Roark, 14 Tex. 329, 137 V. Sidener, 32 Ind. 373, 117 V. Spear, 94 N. Y. Supp. 1007, 544, 553, 559 V. Spear, 107 N. Y. App. Div. 144, 519 V. Stapp. 9 U. S. App. 34, 441 V. Trentman, 53 Ind. 438, 270, 387 V. Vancleve, 27 N. J. L. 352, 658 V. Warner, 5 Paige (N. Y.) 650. 419 V. Wheeler, Lo. Tenn. 50, 183 V. Wilson, 41 N. J. L. 29, 510 cxu TABLE OF CASES. [References are to Sections.'] Reedy v. Brunner & Co., 60 Ga. 107, 653 Rees V. Sessions, 41 Ohio St. 234, 260 Reese v. Bell, 138 Cal. xix, 428 V. Bell (Cal.), 71 Pac. 87, 465, 467 V. Gordan, 19 Cal. 147, 208 V. Teagarden, 31 Tex. 642, 636 Reeve v. Pack, 6 Mich. 240, 502 Reeves v. Butcher, 31 N. J. L. 224, 29, 288 V. Graffling, 67 Ga. 512, 291 V. Pierson, 23 Hun (N. Y.) 185, 135 Re Freeman, 116 N. C. 199, 38 Regan v. Williams, 185 Mo. 620, 680 Regener v. Warner, 56 N. Y. Supp. 310, 349 Reich V. Cochran, 85 N. Y. Supp. 247, 302 Reichert v. Koerner, 54 111. 306, 419 Reid V. Bank, 70 Ala. 199, 121 V. Cain, 3 Ky. L. Rep. 329, 449 V. Field, 83 Va. 26, 1 S. E. 395, 648 Reier v. Strauss. 54 Md. 278, 535 Reigel v. Cunningham, 9 Phila. 177, 282 Reilly v. Rucker, 16 Ind. 303, 611 Reinke v. Wright, 93 Wis. 368, 515, 523 Remington v. Wright, 43 N. J. L. 451, 107 Remy v. Graves, 12 111. 287, 320 Renner v. Bank of Columbia, 9 Wheat. 581. 509 Renwick v. Williams, 2 Md. 336, 239, 282, 431 Repplier v. Bloodgood, 1 Sweeny (N. Y.) 34, 288 Revell V. Thrash, 113 N. C. 803, 680 Reynolds v. Bird, 1 Root (Conn.) 305, 116 V. Dechaums, 24 Tex. 174, 69, 315 V. Roth, 61 Ark. 317, 95, 671 Rhea v. Allison, 40 Tenn. 176, 242 Rhett V. Poe, 2 How. 457, 454, 529, 570 Rhoades v. Frederick, 8 Watts (Pa.) 448, 143 V. Patrick, 27 Pa. St. 323, 262 Rhodes v. Beall, 73 Ga. 641, 288, 289, 292 V. Gent, 5 Barn. & Aid. 244, 502 V. Pray, 36 Minn. 392, 343 Rice V. Ahbles(Pa.), 1 Wkly. Not. Cas. 38, 418 V. Brantley, 5 Ala. 184, 3 Rice V. Catlin, 14 Pick. 221, 691 V. Doane, 164 Mass. 136, 91 V. Grange, 131 N. Y. 149, 1, 227, 606 V. Groff, 56 Pa. St. 116, 679 V. Jones, 103 N. C. 226, 9 S. E. 571, 656 V. Peet, 15 Johns. (N. Y.) 503, 71 V. Porter, 16 N. J. L. 440, 347 V. Ragland, 10 Humph. (Tenn.) 545, 342 V. Raitt, 17 N. H. 166, 246 V. Rice, 106 Ala. 636, 193, 214 Rich V. Goldman, 90 N. Y. Supp. 364, 697 Richards v. Daly, 34 Iowa 427, 429, 430 v. Harrison, 71 Mo. App. 224, 539 V. James, 2 Exch. 471, 607 V. Monroe, 85 Iowa 359, 465 Richardson v. Ashby, 132 Mo. 238, 613 V. Comstock, 21 Ark. 69, 183. 186, 195 V. Fenner, 10 La. Ann. 600, 496 V. Lemore, 5 Baxt. 586, 679 V. McFadden, 46 Iowa 103, 263 V. Sanborn, 33 Vt. 75, 208 V. Schirtz, 59 111. 313, 25 V. Stephens, 114 Ala. 238, 45 V. Thomas, 28 Ark. 387, 391, 310 Richardson & Morgan Co. v. Gudewill, 61 N. Y. Supp. 1120, 329 Richmond Bank v. Robinson, 42 Me. 589, 671 Richmond R. & E. Co. v. Dick, 52 Fed. 379, 483 Ricketts v. Harvey, 106 Ind. 564, 288 Riddell v. Stevens, 32 Conn. 378, 22 Riddle v. Gage, 37 N. H. 519, 208 V. McKinney, 67 Tex. 29, 597, 598 V. Russell, 117 Iowa 533, 696, 697 Rider v. Johnson, 20 Pa. St. (8 Harris) 190, 606 Ridgway v. Davenport, 37 Wash. 134, 302 Ridley v. Taylor, 13 East. 175, 89, 131 Riegel v. Ormsby (Iowa), 82 N. W. 432, 489 Riggs V. Hatch, 16 Fed. 838, 241 Rightor V. Aleman, 4 Rob. (La.) 45, 192, 321 Rigley v. Watts, 15 Ohio C. C. 645, 512 Riley v. Johnson, 8 Ham. (Ohio) 526, 242 TABLE OF CASES. cxin [References are to Sections.'] Riley v. Loughrey, 22 111. 97, 405 V. Reifert (Tex. Civ. App.), 32 S. W. 185, 129 V. Schawacker, 50 Ind. 592, 119 Rill V. Logan, 8 Dana 134, 502 Rindge v. Kimball, 124 Mass. 209, 525, 538 Rindskopf v. Dornan, 28 Ohio St. 516, 128, 659 Ringling v. Kohn, 4 Mo. App. 59, 23 Risley v. Gray, 98 Cal. 40, 239 Risloy V. Smith, 64 N. Y. 576, 347 Ritchie v. Cralle, 108 Ky. 483, 56 S. W. 963, 666 V. Moore, 5 Munf. (Va.) 388, 594, 629 V. Safe Deposit & T. Co., 189 Pa. 410, 183 Ritter v. Bruss, 116 Wis. 55, 92 N. W. 361, 46 Roach V. Davis (Tex. App. 1900), 54 S. W. 1070, 329 V. Woodall, 91 Tenn. 206, 102 Robb V. Mudge, 14 Gray 534, 472 V. Victory, 6 Blackf. (Ind.) 47, . 312 Robbins v. Blodgett, 124 Mass. 279, 343 V. Brooks, 42 Mich. 62, 629 v. Richardson, 2 Bosw. (N. Y.) 253, 285 V. Swinburne Print Co. (Minn.), 98 N. W. 331, 475 Roberts v. Adams, 8 Port. (Ala.) 297, 22 V. Grath, 38 Wis. 52, 20, 317 V. Hall, 37 Conn. 205, 441 V. Hawkins, 70 Mich. 566, 681 V. Jones, 1 Murph. (N. C.) 353, 591, 608 V. Lane, 64 Me. 108, 11, 22, 119 V. Mason, 1 Ala. 373, 517 V. Miles, 12 Mich. 297, 655 V. Pepple, 55 Mich. 367, 91 V. Wood, 38 Wis. 60, 317 Robertshaw v. Britton, 74 Miss. 873, 238, 465 Robertson v. Allen, 3 Baxt. (Tenn.) 233, 341 V. Angle (Tex. Civ. App.), 76 S. W. 317, 680 V. Bank, 41 Mich. 356, 688 V. Breedlove, 7 Port. (Ala.) 541, 419, 431, 637 V. Bruner, 24 Miss. 242, 30, 36, 37 V. Case, 8 Ohio S. D. C. P. Dec. 386, 696, 697 Joyce Defenses — viii Robertson v. Coleman, 141 Mass. 231, 119, 288 V. Kensington, 4 Taunt. 30, 348 v. Parks, 2 Md. Ch. 65, 630 V. Rowell, 158 Mass. 94, 271 V. Smith, 18 Ala. 220, 22 V. Williams, 5 Munf. (Va.) 582, 238, 387 Roberts, Thorp & Co. v. Laugh- lin, 4 N. D. 167, 681 Robins v. Gibson, 3 Camp. 334, 523 Robinson v. Aird, 43 Fla. 30, 544, 547 V. Ames, 20 Johns. 146, 496, 523, 566 V. Bank of Darien, 18 Ga. 65, 120, 398 V. Barnett, 19 Fla. 670, 537 V. Berryman, 22 Mo. App. 509, 158 V. Crenshaw, 2 Stew. & P. 276, 463 V. Eames, 20 Johns. 146, 523 V. Insurance Co., 25 Iowa 430, 137 V. Keyes, 9 Humphr. 144, 447 V. Lair, 31 Iowa 9, 19, 241, 460 V. Lyman, 10 Conn. 30, 420, 422, 431, 637 V. Hanson, 37 Ga. 66, 119 V. Perry, 73 Me. 168, 635, 637 V. Reed, 46 Iowa 219, 180 V. Reynolds, 2 Ad. & Ell. (N. S.) 196, 199 V. Shelton, 2 Rob. 277, 439 V. Sims, 85 Minn. 242, 302 V. Smith, 14 Cal. 94, 246, 339 V. Smith, 62 Min. 62, 303, 402 Roblee v. Union Stockyards Nat. Bank (Neb.), 95 N. W. 61, 367 Robson V. Bennett, 2 Taunt. 389, 585 Roby V. Sharp, 6 T. B. Mon. (Ky.) 375, 193, 303, 307 V. Phelon, 118 Mass. 541, 40 Roche V. Roanoke Seminary, 56 Ind. 198, 312 Rochester v. Taylor, 23 Barb (N. Y.) 18, 385 Rochester Co. v. Loomis, 45 Hun (N. Y.) 93, 242 Rock V. Nichols, 85 Mass. 343, 263 Rockiord v. McGee, 16. S. D. 606, 94 N. W. 695, 474, 480 Rockville Nat. Bank v. Citizens' Gas Light Co., 72 Conn. 576, 241, 246, 475 Rockwell v. Charles, 2 Hill 499, 288 Rodecker v. Littauer, 8 C. C. A. 320, 303, 304 CXIT TABLE OF CASES. \_References are to Sections.'] Rodemeyer v. Rodman, 5 Iowa 426, 34, 37 Rodgers v. Jewel Belting Co., 56 N. E. 1017, 194 Roe V. Jerome, 18 Conn. 138, 28 Roehl V. Pleasants, 31 Tex. 45, 263 Rogers v. Batchelor, 12 Pet. (U. S.) 221, 121 V. Blythe, 51 Ark. 519, 295 V. Broadnax, 24 Tex. 538, 322 V. Burr, 97 Ga. 10, 681 V. Corre, 6 Ohio Cir. Dec. 602, 288 V. Donovan, 13 Phila. (Pa.) 51, 320 V. Hackett, 21 N. H. 100, 525 V. Insurance Co., Ill Ind. 343, 12 N. E. 495, 645 V. Mercantile Adjuster Rub. Co. (Mo. App. 1906), 93 S. W. 328, 198 V. Morton, 95 N. Y. Supp. 49, 379, 439, 442 V. Poston, 1 Mete. (Ky.) 643, 145 V. Priest, 74 Wis. 538, 43 N. W. 510, 662 y. Schulenberg, 111 Cal. 281, 183 V. Sipley, 35 N. J. L. 86, 386 V. Smith, 47 N. Y. 324, 310 V. Stephens, 2 Term R. 713, 523 V. Vosburg, 87 N. Y. 228, 152 Rogge V. Cassidy, 10 Ky. L. Rep. 396, 13 S. W. 716, 388, 447 Rohde V. Lodge, 15 Tex. 446, 372 Rohrbacher v. Aitkem, 145 Cal. 485, 194, 195 Rohrer v. Morningstar, 18 Ohio 579, 68 Roland v. Logan, 18 Ala. 307, 43 51 52 Rolfe V. Wyatt, 5 Car. & P. 181, 679 Rollins V. Bartlett, 20 Me. 319, 177 V. Russell, 46 Wis. 594, 89 Rolls V. Learce, 5 Ch. Div. 730, 214 Rome Sav. Bank v. Kremer, 32 Hun (N. Y.) 270, 670 Ronehill v. Lofguist, 46 111. App. 442, 635 Rood V. Wright, 124 Ga. 849, 58 Rooker v. Rooker, 29 Ohio St. 1, 191 Root V. Godard, 3 McLean (U. S.) 102 (Fed. Cas. Mo. 12037), 79, 84 V. Irwin, 18 111. 147, 239. 436, 635 V. Merriam, 27 Fed. 909, 291 298 V. Strang, 77 Hun (N. Y.) 14, 193 V. Wallace, 4 McLean 8, 292 Roquemore v. Alloway, 33 Tex. 461, 293 Rosa V. Butterfield, 33 N. Y. 665, 306 Rose V. Hurley, 39 Ind. 77, 653 V. Johnson, 1 Handy (Ohio 388), 607 V. Teeple, 16 Ind. 37, 653 Rosemond v. Graham, 54 Minn. 323 119, 246 Rosenplanter v. Toof, 99 Tenn. 92, 650 Rosenthal v. Ehrlicher, 154 Pa. 396, 576 V. Rambo, 28 Ind. App. 285, 236, 446 Ross V. Barker, 58 Neb. 402, 376 V. Doland, 29 Ohio St. 473, 22, 28 V. Drinkard, 35 Ala. 434, 117 V. Hurd, 71 N. Y. 14, 524, 525, 538, 573 V. Saron, 93 N. Y. Supp. 553, 198, 588 V. Walker, 31 Mich. 120, 34 V. Webster, 63 Conn. 64, 123, 649 V. Western Loan & Trust Co., Rap. Jud. Queb. 11 R. R. 292, 221 Rossiter v. Loeber, 18 Mont. 372, 111 Rosson V. Carroll, 90 Tenn. 90, 503, 534, 544, 545, 563, 573 Rotan V. Maedgen (Tex.), 59 S. W. 585, 439, 440 Roth V. Colvin, 32 Vt. 125, 89, 131 V. Reiter, 213 Pa. St. 400, 597 Rothchild v. Gorney, 9 Barn. & C. 388, 425 V. Raab, 93 Ind. 488, 57 Rothermal v. Hughes, 134 Pa. St. 510, 121, 129 Rouligny v. Fortier, 17 La. Ann. 121, 365 Rouse V. Wooten, 140 N. C. 557, 504, 545 Rouss V. King, 69 S. C. 168, 680 Rowe V. Barnes, 101 Iowa 302, 194, 195 V. Blanchard. 18 Mo. 441, 262 V. Gohlman (Tex. Civ. App. 1907), 98 S. W. 1077, 241, 286 V. Kohle, 4 Cal. 285, 36 V. Putnam, 131 Mass. 281, 102 V. Young, 2 Bli. 391, 395, 502 Rowland v. Fowler, 47 Conn. 347, 25, 123 V. Harris, 55 Ga. 141, 183 TABLE OF CASES. CXV [References are to Sections.} Roxborough v. Mesick, 6 Ohio St. St. 448, 246, 352, 359 Royce v. Bank, 50 Neb. 16, 182 V. Barnes, 11 Mete. (Mass.) 276, 621 Royer v. Keystone Nat. Bank, 82 Pa. St. 248, 353 Royland v. Harris, 55 Ga. 141, 222 Rozelle v. Dicherson, 63 Miss. 538, 302 Rucker v. Hiller, 16 East 43, 523. Rudd V. Deposit Bank, 20 Ky. L. Rep. 1276, 530 V. Matthews, 79 Ky. 479, 674 Ruddell V. Dillman, 73 Ind. 518, 27, 28, 123 V. Landers, 25 Ark. 238, 293 V. Phalor, 72 Ind. 533, 28 V. Walker, 7 Ark. 457, 502 Ruddick v. Lloyd, 15 Iowa 441, 352 Rudolph V. Brewer, 96 Ala. 189, 16, 174, 270, 666 Ruffner v. Luther, 19 Pa. Co. Ct. 349, 45 Ruggles V. Patten, 8 Mass. 480, 679 V. Swanwick, 6 Minn. 526, 198, 309 Rugland v. Thompson, 48 Minn. 539, 601 Ruiz V. Campbell, 6 Tex. Cir. App. 714, 41 Rumley Co. v. Wilcher, 23 Ky. L4w R. 1745, 174, 341 Rumney v. Coville, 51 Mich. 186, 361 Rumsey v. Leek, 5 Wend. (N. Y.) 20, 38 Russ V. George, 45 N. H. 647, 52 V. Hobbs, 61 N. H. 93, 341 V. Sadler, 197 Pa. St. 51, 618 Russell V. Ball, 2 Johns (N. Y.) 50, 348 V. Cornwell, 2 Root 122, 679 V. People's Sav. Bank, 39 Mich. 671, 34 V. Pyland, 2 Humph. (Tenn.) 131, 288 V. Rice, 19 Ky. Law Rep. 1613, 44 V. Rood, 72 Vt. 238, 208 V. Russell, 1 MacArthur (D. C.) 263, 78 V. Splater, 47 Vt. 273, 241 Russell & Irwin Mfg. Co. v. Car- penter, 5 Hun 162, 679 Russ Lumber & Mill Co. v. Mus- cupiable, 120 Cal. 521, 122, 123, 202, 208, 211, 573 Rutherford v. Neuson, 30 Ga. Ga. 728, 457 Rutland Bank v. Buck, 5 Wend. 66, 353 Ruzeoski v. Wildrodt (Tex. Civ. App. 1906), 94 S. W. 142, 591 Ryan v. Bank, 148 111. 349, 181 V. Chew, 13 Iowa 589, 591, 635 V. Great Northern R. Co., 90 Minn. 12, 414 V. Illinois Ti'ust & Sav. Bank, 100 111. App. 251, 240 V. West, 63 Neb. 894, 402 Ryland v. Brown, 2 Head (Tenn.) 270, 472 S Sachleben v. Hentze, 117 Mo. 520, 118 Sachs V. Fuller Bros. Toll, Lum- ber & Box Co., 69 Ark. 270, 503, 545 Sackett v. Johnson, 54 Cal. 107, 241 V. Kellar, 22 Ohio St. 554, 654 V. Montgomery, 57 Neb. 424, 679 Saco Nat. Bank v. Sanborn, 63 Me. 340, 564 Safe Deposit & Trust Co. v. Wright, 105 Fed. 155, 241 Saffer v. Lambert, 111 111. App. 410, 333 Safford v. Wyckoff, 1 Hill 11, 549 Sage V. Fargo, 107 Fed. 383, 87 Saint, see St. Salazar v. Taylor, 18 Colo. 538, 186 Salem Bank v. Gloucester Bank, 17 Mass. 1, 98 Salen v. Bank of State of New York, 97 N. Y. Supp. 361, 486 Salina Bank v. Babcock, 21 Wend. (N. Y.) 499, 243, 443 Salisbury v. Bartleson, 39 Minn. 365, 515 Salley v. Terrill, 95 Me. 553, 394 Salmon v. Grosvenor, 66 Barb. 160, 507 Saloman v. Pfeister (N. J.), 31 Atl. 602, 552, 554 Saloy v. Bank, 39 La. Ann. 90, 246 Saltmarsh v. Tuthill, 13 Ala. 390. 119. 288 Salt Springs Bank v. Burton, 58 N. Y. 430, 511, 516 Sample v. Geiyer (Ala 1904), 42 So. 106, 44 Samson v. Yager, 4 Up. Can. Q. B. 0. S. 3, 157 CXVl TABLE OF CASES. [References are to Sections.'] Samuel Wilde's Sons, In re, 133 Fed. 562, 302 Sanborn v. Little, 3 N. H. 539, 44, 623 Sanders v. Atkinson, 1 Tex. Ct. App. Civ. Cas. (W. & W.) § 1326, 418 Sanders v. Bagwell, 32 S. C. 238, 139, 170 V. Bagwell, 37 S. C. 145, 139, 169, 179 V. Howe, 1 D. Chip. (Vt.) 363, 336 V. Whitesides, 10 Cal. 89, 343 San Diego Bank v. Babcock, 94 Cal. 96, 503, 570 San Diego Nat. Bank v. Falken- han, 94 Cal. 141. 524, 539 Sandilands v. Marsh, 2 B. & A. 678, 93 Sandford, etc., Co. v. Hull, Brayt. (Vt.) 231, 447 San Jose Ranch Co. v. San Jose Land & W. Co., 132 Cal. 582, 446 Sanner v. Smith, 89 111. 123, 302 Santa Cruz County Bank v. Bart- lett, 78 Cal. 301, 232 Sapp V. Cobb, 60 Ark. 367, 302 Saratoga County Bank v. Prujoi, 90 N. y. 250, 256, 59 Sard V. Rhodes, 1 Mees. & W. 153, 688 Sargeant v. Kellogg, 5 Gilm. (111.) 273, 239 V. Sargeant, 18 Vt. 371, 376 Sargent v. Southgate, 5 Pick. Pick. (Mass.) 312, 420, 422, 436, 635 Sarraile v. Calmon, 142 Cal. 651, 688 Sater v. Hunt, 66 Mo. App. 527, 47 Sathre v. Rolfe, 77 Pac. 431, 247 Satterfield v. Compton, 6 Rob. (La.) 120, 6 Saunders v. Richardson, 2 Sm. & M. (Miss.) 90, 336 Saunderson v. Brooksbank, 4 C. & P. 286, 75 Savage v. Aldren, 2 Starkie 232, 310 V. Bank, 62 Miss. 586, 624, 635 V. Fox, 60 N. H. 17, 302 V. Gamey (Tenn.), 47 S. W. 571. 610 V. King, 17 Me. 301, 51, 428 V. Laclede Bank, 62 Minn. 586, 465 Savings Bank V. Fisher (Cal.), 41 Pac. 490, 524, 573 V. V. V. Savings Bank of Kansas v. Na- tional Bank of Commerce, 38 Fed. 800, 297 Savings Bank of San Diego County V. Central Market Co., 122 Cal. 28, 364 Sawyer v. Chambers, 44 Barb. (N. Y.) 42, 6, 202, 208 V. Chambers, 43 Barb. (N. Y.) 622, 6 Child, 66 Vt. 360, 345 Cutting, 23 Vt. 486, 376 Equitable Accident Ins. Co. of Cincinnati, 42 Fed. 30, 476 V. Hill, 12 Ala. 575, 333, 627 V. Hoovey, 5 La. Ann. 153, 419 V. McLouth, 46 Barb. (N. Y.) 350, 183, 186, 190, 198, 201, 202, 208 V. Phaley, 38 Ct. 69, 361 V. Prickett & Wife, 19 Wall. 146, 476 V. Wiswell, 91 Mass. (9 Al- len), 39, 116,600 Sawyers v. Campbell, 107 Iowa 397 135 Saxto'n V. Dodge, 57 Barb. (N. Y.) 84 216, 466 Sayl'es v. Sayles, 21 N. H. 312, 288 Saylor v. Daniels, 37 111. 339, 303 V. Merchants' Exch. Bank, 1 Walk. (Pa.) 328, 89 Sayre v. Mohney, 30 Oreg. 238, 310, 322 V. Wheeler, 31 Iowa 112, 447 Sayres v. Linkhart, 25 Ind. 145, 237 Schaller v. Borger, 47 Minn. 357 Scheie v. Wagner, 163 Ind. 20, Schellbeck v. Studebaker, 13 Ind. App. 438, Schepp V. Carpenter, 51 N. Y. 602, 284, 285, 353 Schiei V. Baumel, 75 Wis. 75, 525 Schleissman v. Kallenberg, 72 Iowa 338, Schlesinger v. Kelly, 99 N. Y. Supp. 1083, V. Kurzrok, 94 N. Y. Supp. 442, V. Lehmeier, 99 N. Y. Supp. 819, 306, 472 V. Schultz, 96 N. Y. Supp. 383, 505, 507, 518, 542 Schmelz v. Rix, 95 Va. 509, 149 Schmueckle v. Waters, 125 Ind. 265, 288, 296 116 91 91 449 306 581 TABLE OF CASES. CXVll [References are to Sections."] Schnabel v. German-American Title Co., 21 Ky. Law Rep. 1063, 324 Sclinitzer v. Gordon, 28 App. Div. 342, 442 Schofield V. Bayard, 3 Wend. 488 523 V. 'Palmer, 134 Fed. 753, 543, 549 School Directors v. Fogelman, 76 111. 189, 83, 87 School District No. 16 v. State Bank, 8 Neb. 168, 21 Schoolfield v. Moon, 9 Heisk. (Tenn.) 171, 576 Schooner Freeman v. Bucking- ham, 18 How. 182, 414 Schoonmaker v. Roosa, 17 Johns. (N. Y.) 301, 184, 186 Schroder v. Webster, 88 Iowa 627, 161 Schroeder v. Nielson, 39 Neb. 335, 262 V. Seittz, 68 Mo. App. 233, 475 Schryver v. Hawkes, 22 Ohio St. 308, 166 Schuchardt v. Hall & Loney, 36 Md. 590, 494 Schuckmann v. Knoebel, 27 111. 175, 208 Schuler v. Gillette, 12 Hun (N. Y.) 278, 164 Schultz V. Catlin, 78 Wis. 611, 112, 113 V. Culbertson, 46 Wis. 313, 112 Schuster v. Marsden, 34 Iowa 181, 419 Schwartz v. Oppold, 74 N. Y. 307, 170 V. Wilmer, 90 Md. 136, 136, 270, 573 Schwind v. Hacket, 54 Ind. 248, 138 Scionneaux v. Wahuespack, 32 La. Ann. 283, 417 Scofleld V. Ford, 56 Iowa 370, 171 Scollans v. Flynn, 120 Mass. 271, 296 V. Robbins, 179 Mass. 346, 380 Scotland County Bank v. O'Con- nel, 23 Mo. App. 165, 144 Scott V. Armstrong, 146 U. S. 499, 604 V. Bankers' Union (Kan. 1906), 85 Pac. 604, 84 V. Betts, 1 Hill & Den. Supp. 363- 241 V. Collier (Ind. 1906), 78 N. E. 184, aff' g 77 N. E. 666, 57 V. Cooper, Ga. Dec, pt. 2, 163. 238, 239 Scott V. Johnson, 5 Bosw. 213, 359 V. Kennedy, 201 Pa. 462, 302 V. Ocean Bank, 23 N. Y. 289, 242 V. Otis, 25 Hun (N. Y.) 33, 58 V. Searles, 7 Smedes & M. 498, 447 V. Taul, 115 Ala. 529, 533, 38, 48 Scribner v. Hanke, 116 Cal. 613, 183 Scudder v. Andrews, 2 McLean (U. S.) 464, 202, 208 V. Gori, 3 Barb. (N. Y.) 661, 30, 36, 44 V. Union National Bank, 91 U. S. 106, 277 Search v. Miller, 9 Neb. 26, 183 Searles v. Seipp, 6 S. D. 472, 146, 447 Sears v. Lang, 47 Iowa 658, 451 V. Wingate, 3 Allen 103, 414 Seaton v. Scovill, 18 Kan. 433, 566 Seattle v. Griffith Realty & Bkg. Co., 28 Wash. 605, 315 V. Powles, 33 Wash. 21, 414 Seattle Shoe Co. v. Packard (Wash. 1906), 86 Pac. 845, 73 Sebree Deposit Bank v. More- land, 96 Ky. 150, 525 Second Nat. Bank v. Brady, 96 Ind. 498, 447 V. Dunn, 151 Pa. St. 228, 353 V. Fitzpatrick, 27 Ky. L. Rep. 483,> 306 V. Hemingway, 31 Ohio St. 168, 439, 590 V. Hewitt, 59 N. J. L. 57, 104, 119, 476 V. Merchants' Nat. Bank, 23 Ky. L. Rep. 1255, 583 V. Miller, 63 N. Y. 639, 59 V. Morgan, 165 Pa. St. 199, 119 V. Morrison, 3 Ohio Dec. 534, 270 V. Smith, 118 Wis. 18, 530, 542 V. Weston, 172 N. Y. 250, 484 V. Wheeler, 75 Mich. 546, 328 V. Woodruff, 118 111. App. 6. 348 Second National Bank of Balti- more V. Western Nat. Bank of Baltimore, 51 Md. 128, 581 Second National Bank of Cin- cinnati V. Hemingway, 34 Ohio St. 381, 377 Secor V. Witter, 39 Ohio St. 208, 246 Security Bank v. Kingsland, 5 N. D. 263, 359 V. National Bank of the Re- public, 67 N. Y. 458, 581 Securities Co, v. Talbert, 49 La. Ann. 1393, 365 Sedgwick v. Dixon, 18 Neb. 445, 303 CXVIU TABLE OF CASES. [References are to Sections.'] Sedgwick v. Lewis, 70 Pa. St. 217, 89 Seebold v. Tatlie, 76 Minn. 131, 155 Seeley v. Reed, 28 Fed. 164, 348 Sefton V. Hargett, 113 Ind. 592, 639 Sehring v. Rathbun, 1 Jolins. Cas. (N. Y.) 331, 419 Seibel v. Vaughan, 69 111. 257, 661 Seiger v. Allentown, 132 Pa. 307, 525 Selby V. Brinkley (Tenn.), 17 S. W. 479, 525 Seldner v. Mt. Jackson Nat. Bank, 66 Md. 488, 525, 537, 540, 573 Selkirk v. McCormick, 33 Tex. 136, 627, 650 Sellers v. Hembaugh, 117 Pa. St. 218, 56 Selover v. Snively, 24 Kan. 672, 502 Selser v. Brock, 3 Obio St. 302, 128, 302, 645, 673 Sentance v. Poole, 3 Car. & P. 1, 71 Serviss v. Stockstill, 30 Ohio St. 4'18, 322 Setzer Russell v. Deal, 135 N. C. 428, 475 Seventh Ward Nat. Bank v. Newbold, 2 City Ct. Rep. (N. Y.) 125, 288 Seybel v. National Currency Bank, 54 N. Y. 288, 394 Seybold v. Bank, 5 N. Dak. 460, 416 Sevfert v. Edison, 45 N. J. L. 343, 282 Seymour v. Cowing, 4 Abb. Dec. (N. Y.) 200, 312 V. Francisco, 4 Ohio Dec. 12, 524, 539 V. McDonal Lumber Co., 58 Fed. 957, 119 V. Malcolm, 16 U. S. App. 245, 199 V. Prescott, 69 Me. 376, 113 Shabata v. Johnson, 53 Neb. 12, 467 Shackleford v. Hooker, 54 Miss. 716, 347 Shade v. Creviston, 93 Ind. 591, 658, 679 Shakespear v. Smith, 77 Cal. 638, 232 Shamokin Bank v. Street, 16 Ohio St. 1, 441 Shane v. Lowry, 48 Ind. 205, 236, 447 Shank v. Albert, 47 Ind. 461, 169 V. Bank, 124 Ga. 508, 291 Shanklin v. Cooper, 8 Blackf. (Ind.) 41. 200 V. Moodv, 23 Ky. Law Rep. 2063, 66 S. W. 502, 62 Shannon v. Canney, 44 N. H. 592, 56 Sharp V. Allgood, 100 Ala. 183, 318 V. BoWie, 142 Cal. 462, 194 V. Smith, 7 Rich. L. (S. C.) 3, 658 Sharpe v. Bagwell, 16 N. C. 115, 147, 177 V. Drew, 9 Ind. 281, 499, 566 Sharps v. Eccles, 5 T. B. Mon. 69, 699 Shaw V. Clark, 49 Mich. 384, 298 V. Crawford, 16 Up. Can. Q. B. 101, 341 V. Fortine, 98 Mich. 254, 41 V. McNeill, 95 N. C. 535, 524, 525, 527, 528, 539, 573 V. Pratt, 22 Pick. 305, 679 V. Railroad Co., 101 U. S. 557, 476 V. Shaw, 60 N. H. 565, 183 V. Spencer, 100 Mass. 388, 483 V. Spooner, 9 N. H. 197, 109 V. Stein, 79 Mich. 77, 116, 126 Shawmut Nat. Bank v. Mauson, 168 Mass. 425, 574 Sheary v. O'Brien, 77 N. Y. Supp. 378, 288 Shed V. Miller, 12 Me. 318, 346 V. Pierce, 17 Mass. 623, 332 Shedd V. Brett, 1 Pick. 413, 511 Shedden v. Heard, 110 Ga. 461, 230, 473 Sheffield School v. Andress, 56 Ind. 157, 447 Shelburne Falls Nat. Bank v. Townsley, 102 Mass. 177, 567 Sheldon v. Horton, 43 N. Y. 93, 524, 538, 573 Sheller v. McKenney, 17 111. App. 185, 674 Sheneberger v. Union Ins. Co., 114 Iowa 678, 28 Shenk v. Mingle, 13 Serg. & R. (Pa.) 29, 301 V. Phelps, 6 111. App. 612, 109, 113 Shepard v. Citizens' Ins. Co., 8 Mo. 272, 570 V. Hansor, 9 N. D. 249, 402 V. Hawley, 1 Conn. 368, 561 V. "Whetstone, 51 Iowa 457, 135, 137, 170 Shepherd v. Merrill, 20 N. H. 415, 325 V. Richland Dist. Tp., 22 Iowa 595 232 V. Temple, 8 N. H. 455, 322 Shepp V. Carpenter, 51 N. Y. 602, 353 TABLE OF CASES. CXIX [References are Sheppard v. Stites, 7 N. J. L. 90, 606 Sheridan v. Carpenter, 61 Me. 83, 172 V. Mayor, etc., of New York, 68 N. Y. 30, 418 Sheridan Elec. L. Co. v. Chat- ham Nat. Bank, 127 N. Y. 517, 486 Sherman v. Barnard, 19 Barb. (N. Y.) 291, 262 V. Blackman, 24 111. 347, 303 V. Rollberg, 11 Cal. 38, 419 Sherrington v. Jermyn, 3 Car. & P. 374, 149 Sherrod v. Rhodes, 5 Ala. 683, 523 Sherwin v. Brigham, 39 Ohio St. 137, 199 Sherwood v. Barton, 36 Barb. (N. Y.) 284, 635 V. Francis, 11 Vt. 204, 593, 627 V. Haney, 63 Ark. 249, 302 V. Meadow Valley Mining Co., 50 Cal. 412, 397 V. Snow, 46 Iowa 481, 89, 91 Shields v. Stark (Tex. Civ. App.), 51 S. W. 540, 616, 629 Shillito V. Theed, 7 Bing. 405, 291 Shinn v. ^oard of Education, 39 W. Va. 497, 232 V. Fredericks, 56 111. 439, 679 Shipley v. Carroll, 45 111. 285, 13, 20 V. Reasoner, 87 Iowa 555, 54 N. W. 470, 653 Shipman v. Robbins, 10 Iowa 208, 419. 431, 591 Shipp V. Stacker, 8 Mo. 145, 436 Shipp's Adm'r v. Suggett's Adm'r, 9 B. Mon. (Ky.) 5, 174 Shiretzki v. Kessler, 37 So. 422, 266 Shirk V. North, 138 Ind. 210, 308, 465, 645 Shirley v. Fellows, 9 Port. 300, 523 V. Howard, 53 111. 455, 296 V. Todd, 9 Me. 83. 635 Shirts V. Overjohn, 60 Mo. 305, 28 Shober v. Jack, 3 Mont. 351, 658 Shoe & Leather Bank v. Woo.d, 142 Mass. 563, ' 257. 312, 322, 465 Shook V. Brinkerhoff, 2 Hall 459, 496 Shore v. Martine. 85 Minn. 29, . 333 Short V. Post, 58 N. J. Bq. 130, 302 V. Pullen, 63 Ark. 385, 302 Sboulters v, Allen, 51 Mich. 529 71 Shove V. Martine. 85 Minn. 29, 702 Shreve v. Olds, 2 A. K. Marsh. (Ky.) 141, 288 to Sections.'\ Shriner v. Keller, 25 Pa. St. 61, 523 Shriver v. Lovejoy, 32 Cal. 574, 3 Shropshire v. Kennedy, 84 Ind. 111. 117 Shufeldt V. Gillilan, 124 111. 460, 314, 342 Shugart v. Shugart, 111 Tenn. 179, 194, 214 Shule'r v. Hummel (Neb.), 5 N. W. 350, 680 Shute V. Bank, 136 Mass. 487, 606 V. Pacific Nat. Bank, 136 Mass. 487, 441 V. Robins, 3 Carr. & P. 80, 496 Shutts V. Fingar, 100 N. Y. 39, 520 Sibley v. American Exchange Nat. Bank, 97 Ga. 126, 504, 529, 545 v. Robinson, 10 Shep. (Me.) 70, 247 Sibree v. Tripp, 15 Mees. & "W. 23, 688 Sice V. Cunningham, 1 Cow. (N. Y.) 397, , 339, 507 V. Hilleary, 6 Har. & J. (Md.) 86, 118 Sidle V. Anderson, 45 Pa. St. 464, 183 Sidway v. Nichol, 62 Ark. 146, 58 Siebe v. Joshua Handy Mach. Works, 86 Cal. 390, 260 Sieger v. Allentown Second Nat. Bank, 132 Pa. 307, 573 Slewing v. Tacke, 112 Mo. App. 414, 702 Sigerson v. Matthews, 20 How. 496, 525 Sigourney v. Lloyd, 8 Barn. & Cr. 622, 348 Silfer v. Howell's Adm'r, W. Va. 391, 293 Sill V. Rood, 15 Johns. (N. Y.) 230, 262 Silver v. Kent. 105 Fed. 840, 646 Silverman v. Bulloc, 98 111. 11, 121 Silvers v. Reynolds, 17 N. J. L. 275, 695 Silverstri v. Savieriano, 95 N. Y. Supp. 580, 695 Simmons v. Atkinson & Hamp- ton Co., 69 Miss. 862, 146, 161, 164 V. Thompson, 29 App. Div. (N. Y.) 559, 337 Simms v. Clark. 11 111. 137, 100 V. Field, 1 Cleve. Law Rep. (Ohio) 337, 281 Simon v. Windt, 84 Ky. 157, 409 Simons v. Fisher, 17 U. S. App. 1, 281 cxx TABLE OF CASES. [References are to Sections.'\ Simons v. Morris, 53 Mich. 155, 282, 419, 436 V. Steele, 36 N. H. 73, 212 Simpers v. Sloan, 5 Cal. 457, 30 Simpson v. Board, 74 Pa. St. 351, 22 V. Hefter, 87 N. Y. Supp. 243 304 V. Ins. Co., 44 Cal. 139, 576 Simpson College v. Bryan, 50 Iowa 293, 322 V. Tuttle, 71 Iowa 596, 185, 198, 214 Sims V. Bice, 67 111. 88, 26, 28, 116, 120, 260, 447 V. Hundley, 6 How. 1, 542 V. Lyles, 1 Hill (S. C.) 39, 119 V. National Commercial Bank, 73 Ala. 250, 516 V. Rice, 67 111. 88, 26, 28, 116, 120 V. Squires, 80 Ind. 42, 614 V. Wilson, 47 Ind. 226, 456 Sinclair v. Johnson, 85 Ind. 527, 503 V. Piercy, 5 J. J. Marsh. (Ky.) 63, 398 Singer Mfg. Co. v. Summers (N. C. 1906), 55 S. E. 522. 241 Singleton v. Bank of Monticello, 113 Ga. 527, 288 V. Bremar, Harp. (S. C.) 201, 187, 300 V. McQuerry, 85 Ky. 41, 174 Singluff V. Tindale, 40 S. C. 504, 34 Sinklar v. Siljan, 136 Cal. 356, 475 Sinnot v. Schlater, 22 La. Ann. 201, 457 Sioux City & Pac. R. Co. v. First Nat. Bank, 10 Neb. 556, 414 Sistare v. Hecksher, 18 N. Y. Supp. 475, 106 Sixth Nat. Bank v. Lorillard Brickworks Co., 18 N. Y. Supp. 861, 243 Skiles V. Houston, 110 Pa. St. 254, 604 Skiles' Est, In re, 211 Pa. 631, 680 Skiller v. Richmond, 48 Barb. (N. Y.) 428, 339 Skinner v. Carr, 51 S. W, 799, 21 Ky. Law Rep. 525, 47 V. Church, 36 Iowa 91, 307, 348 V. Lynn, 21 Ky. Law Rep. 185, 44, 46 Slacum V. Pomeroy, 2 Cranch 221, 297 Slade' V. Halstead, 7 Cow. (N. Y.) 322. 198 Slater v. Foster, 62 Minn. 150, 262, 322 Slaton V. Fowler, 124 Ga. 955, 53 S. E. 567, 202, 217 Slaughter v. Bank, 109 Ala. 157, 306 Slayback v. Jones, 9 Ind. 470, 639, 640 Slevin v. Reynolds, 1 Handy (Ohio) 37, 1 Slifer V. Howell's Admr., 9 W. Va. 391, 87 Sloan V. Gibbes, 56 S. C. 480, 541 V. Johnson, 20 Pa. Super. Ct. 643, 456 Sloane v. Lucas (Wash.), 79 Pac. 949, 302 Sloman v. Cox, 1 Cromp. M. & R. 471, 148 Small V. Older, 57 Iowa 326, 3 V. Smith, 1 Denio (N. Y.) 583, 270, 322, 472 Smalley v. Doughty, 6 Bosw. 66, 305 Smart v. Breckinridge Bank (Ky. 1905), 90 S. W. 5, 91 S. W. 697, 659 Smedes v. Bank of Utica, 20 Johns. 372, 549 Smith V. Adams, 14 La. Ann. 409 , 199. 619 V. 'Applegate, 23 N. J. L.'352, 288 V. Bartholomew, 1 Mete. 276, 342, 679 V. Bayer (Oreg.), 79 Pac. 497, 403 V. Bibber, 82 Me. 34, 246 V. Bing, 3 Ohio 85, 3 V. Bond, 56 Neb. 529, 49 V. Boruff, 75 Ind. 412, 185, 196, 198 V. Boyer (Oreg. 1905), 79 Pac. 497, 498, 348 V. Bryan, 33 N. C. 416, 418 V. Busby, 15 Mo. 388, 446 V. Capital Elevator Co. (Kan. 1899), 58 Pac. 483, 81 V. Carter, 25 Wis. 283, 322 V. Clopton, 48 Miss. 66, 682 V. Corn, 3 Head (Tenn.) 116, 344 V. Cromer, 66 Miss. 157, 503 V. Coulton, 5 111. App. 422, 28 V. Curtis, 38 Mich. 393, 679 V. De Witts, 6 Dowl. & Ry. 120, 273 V. Dunham, 8 Pick. (Mass.) 246, 177 V. Ewer, 22 Pa. St. 116, 618 V. First National Bank, 21 Ky. Law Rep. 953, 379 TABLE OF CASES. CXXl [References are to Sections.'] Smith V. Fox, 48 N. Y. 674, 604 V. Framel, 68 Iowa 488, 73 V. Giegrick, 36 Mo. 369, 208, 260 V. Glanton, 39 Tex. 365, 292 V. Grabill, 15 Ind. 267, 338 V. Greer, 31 Cal. 476, 34 V. Hardman, 99 Ga. 381, 44 V. Harrison, 33 Ala. 706, 404 V. Hine, 179 Pa. St. 260, 353 V. Hiscox, 14 Me. 449, 246, 376 V. Hogeland, 78 Pa. St. 252, 359 V. Hunter, 33 Ind. 106, 679 V. Isaacs, 23 La. Ann. 454, 376 V. Jansen, 12 Neb. 125, 191 V. Jennings, 974 Ga. 551, 358 V. Johnson, 5 Harr. (Del.) 40, 628 V. Judson, 4 U. C. Q. B. (0. S.) 134, 682 V. Kelton, 43 N. Y. 419, 604 V. Kennedy, 13 Hun (N. Y.) 9, 58 V. Kinney, 32 Neb. 162, 246 V. Knox, 3 Esp. 46, 270, 272 V. Lac County, 11 Wall. 139, 476 V. Lawson, 18 W. Va. 212, 419 V. Livingston, 111 Mass. 342, 119, 476 439 419 Loyd, Charlt. (Ga.) 253, Lloyd, Charlt. T. U. P. (Ga.) 253, Lockridge, 8 Bush (Ky.) 423, 23, 137, 175 Lownsdale, 6 Oreg. 78, 525 Lurry, Cooke (Tenn.) 325, 419 Lusher, 5 Cow. (N. Y.) 688, 709, 89 Mace, 44 N. H. 553, 147 McDonald (Mich. 1905), 103 N. W. 738, 116 McLennan, 101 111. App. 196, 194 McMillan, 46 W. Va. 577, 302 McNair, 19 Kan. 330, 645 Mercer, 6 Taunt. 76, 99 Miller, 52 N. Y. 545, 573 Miller, 43 N. Y. 171, 583 Milton, 133 Mass. 369, 500 Mississippi & A. R. Co., 6 Sm. & M. (Miss.) 179, 79 Missouri P. R. Co., 74 Mo. App. 48, 414 Moberly, 10 B. Mon. (Ky.) 266, 316 V. Mulock. 24 N. Y, Super. Ct. 569, 280 V. Mussetter, 58 Minn. 159, 312, 313 Smith V. National Bank, 21 Ky. Law Rep. 953, 128 V. Paris, 70 Mo. 615, 107 V. Pettus, 1 Stew. & P. (Ala.) 107, 447 V. Pickman, 8 Tex. Civ. App. ■ 326, 573 V. Poillon, 87 N. Y. 590, 567 V. Popular Loan & Bldg. Ass'n, 93 Pa. St. 19, 381 V. Rawson, 61 Ga. 208, 238 V. Richards, 29 Conn. 232, 301 V. Scott, 106 Ind. 145, 183 V. Sheldon, 35 Mich. 42, 688 V. Silence, 4 Iowa 321, 43 V. Smith, 80 Ind. 267, 679 V. Smith, 1 Ind. 476, 600 V. Smith, 1 R. I. 398, 166 V. Smith, 30 Vt. 139, 210, 211, 262 V. Spalding, 40 Neb. 339, 47 V. Spengler, 83 Mo. 408, 604 V. Stone, 17 B. Mon. (Ky.) 170, 653 V. Taylor, 39 Me. 242, 195, 222 V. Thomas. 29 Mo. 307, 332 V. Thompson, 93 N. W. 678, 241 V. Turney, 32 Tex. 143, 627 V. Unangst, 46 N. Y. Supp. 340, 502, 545 V. Van Loan, 16 Wend. (N. Y.) 659, 284, 465, 627 V. Van Loan, 16 Wend. 492, 699 V. Weld, 2 -Pa. St. 54, 172 V. Weston, 88 Hun 25, 439, 472 V, White (Tex. Civ. App.), 25 S. W. 809, 305 V. Williamson, 8 Utah 219, 69 V. Willing (Wis. 1904), 101 N. W. 692, 391 V. Wilson (Tex. Civ. App. 1895), 32 S. W. 434, 62 Wood, 111 Gei^ 221, 292 Worman, 19 Ohio St. 148, 359 Smock V. Pierson, 68 Ind. 405, 262 Smyth V. Strader, 4 How. (U. S.) 404, 419 Sneed v. Milling Co., 73 Fed. 925, 158 Snoddv V. American Nat. Bank, 88 fenn. 572, 291, 297, 298, 465 Snow V. Holmes, 71 Cal. 142, 599 Snyder v. Braden, 58 Ind. 143, 110 V. Elliot, 2 Penny. (Pa.) 474, 284 V. Gruniger, 77 N. Y. Supp. 234, 236, 449 V. Hargue, 26 Kan. 416, 122, 257 V. Jones, 36 Md. 542, 444 V. Koehler, 17 Kan. 432, 288 V. V. CXXll TABLE OF CASES. [References are to Sections."] Snyder v. Lauback, 7 Wkly. Notes Cas. 464, 466, 72 V. Riley, 6 Pa. St. 164, 419 V. Van Doren, 46 Wis, 602, 22, 175 V. Webb, 100 Ga. 793, . 473 Soloman v. Cohen, 94 N. Y. Supp. 502, 565 Solomans v. Bank of England, 13 East. 135, 120, 412, 457 V. Jones, 3 Brev. 54, 303 SoltykofE, In re (1891), 12 B. 413, 67 Sondheim v. Gilbert, 117 Ind. 71, . 298 Sonnentbiel v. Skinner, 67 Tex. 453, 446 Soper V. Peck, 51 Mich. 563, 25 V. St. Regis Paper Co., 38 Misc. (N. Y.) 294, 122 Soule V. Bonney, 37 Me. 128, 108 Southard v. Porter, 43 N. H. 379, 419, 428 South Bend Iron Works v. Pad- dock, 37 Kan. 510, 446 South Boston Iron Co. v. Brown, 63 Me. 139, 241, 329 Souther v. McKenna, 20 R. I. 645, 525, 573 Southern Bank of Georgia v. Williams, 25 Ga. 534, 79 Southern Ins. Co. v. Lanier, 5 Fla. 110, 192 South Ottawa v. Perkins, 94 N. S. 260, 87 Southwark Bank v. Cross, 35 Pa. St. 80, 164 Southwick V. Sax, 9 Wend. 122, 369 Sowders v. Citizens' Nat. Bank, 12 Ky. Law Rep. 356, 22 Spalding v. Vandercook, 2 Wend. (N. Y.) 431, 208 Spann v. Batzell,»l Fla. 362, 517 Spatz V. Martin, 46 Neb. 917, 49 Spaulding v. Backus, 122 Mass. 553, 607 Spear v. Atkinson, 1 Ired. 262, 523 Specht V. Howard, 16 Wall. (U. S.) 564, 331 Speers v. Sterrett, 29 Pa. St. 192, 592 Speight V. Porter, 4 Cushm. (Miss.) 286, 663 Spence v. Railway Co., 79 Ala. 576, 366 Spencer v. Biggs, 2 Mete. (Ky.) 123, 237, 238, 465 V. Harvey. 17 Wend. 489, 525 V. Sloan, 108 Ind. 183, 246 V. Stockwell, 76 Vt. 176, 34, 53 Spero V. Holoschutz, 74 N. Y. Supp. 852, 474 Spies V. National City Bank, 174 N. Y. 222, 702 Spindler v. Grelley, 1 Exch. 384, 502 Splivallo V. Patten, 38 Cal. 138, 238 Spoor V. Spooner, 12 Met. 285, 496 Sprague v. Fletcher, 8 Oreg. 367, 524, 539 V. Graham, 29 Me. 160, 419, 436 Spray v. Burk, 123 Ind. 565, 296, 654 Sprigg V. Bank of Mt. Pleasant, 10 Pet. (U. S.) 257, 217 V. Bossier, 5 Wart. N. S. (La.) 54, 41, 57 Spring V. Lovett, 11 Pick. 417, 465 Sproule V. Merrill, 16 Shep. 260, 291, 412 Spurgin v. Pheeters, 42 Ind. 527, 272 Stacy V. Kemp, 97 Mass. 166, 599 V. Ross, 27 Tex. 3, • 27 Stafford v. Fargo, 35 111. 481, 239, 419 V. Staunton, 88 Ga. 298, 320 V. Yeates, 18 Johns. 327, 545 St. Albans v. Gulliland, 23 Wend. (N. Y.) 311, 241 Stalker v. McDonald, 6 Hill. (N. Y.) 93, 242 Stall V. Cassady, 57 Ind. 284, 94 Stamford v. Coran, 26 Mont. 285, 681 Standard Cement Co. v. Wind- aam, 71 Conn. 668, 80, 440 Standard Sewing Machine Co. v. Smith, 1 Marv. 330, 544, 549. 551, 553, 567 Standford v. Marshall, 2 Atl. 69, 32 Standley v. Miles, 36 Miss. 434, 212 Stanford v. Pruet, 27 Ga. 243, 277 Stanley v. McElrath, 86 Cal. 449, 553, 545 V. Miles & Adams, 36 Miss. 434, 259 Stannus v. Stannus, 30 Iowa 448, 419, 635 Stanton v. Blossom, 14 Mass. 116, 523 Stark V. Alford, 49 Tex. 260, 203 V. Anderson, 30 Ala. 438, 263 V. Olsen, 44 Neb. 646, 367 Starke v. Hill, 6 Ala. 785, 664 Star Kidney Pad. Co. v. Green- wood, 5 Ont. 28, 208 Starr v. Yourtee, 17 Md. 341, 674 Starrett v. Burkhalter, 86 Ind. 439, 340, 341 Star Wagon Co. v. Swezy, 59 Iowa 609, 13 N. W. 749, 670 TABLE OF CASES. CXXlll [References are to Sections.} State (York First Nat. Bank) V. Cook, 43 Neb. 318, 232 State (Emerald & Brewing Co.) V. Foley, 61 N. J. L. 428, 506 State V. Hart, 46 La. Ann. 40, 83 State (Livesay) v. Harrison, 99 Mo. App. 57, 232 State V. Hobbs, 40 N. H. 229, 224 V. Huff, 63 Mo. 283, 232 State (Parks) v. Hughes, 19 Ind. App. 266, 573 State V. Liberty Tp., 22 Ohio St. 144, 232 State (Grimm) v. Manhattan Mfg. Co., 149 Mo. 181, 183 State V. Mason Co., 68 Mo. 29, 87 V. School District, 10 Nebr. 544, 98 V. Sutherland, 111 La. 381, 419 State Bank v. Ayres, 7 N. J. L. 130, 568 V. Bartle, 114 Mo. 276, 525, 552, 573 V. Burton, 14 Utah 420, 312 V. Fearing, 16 Pick. (Mass.) 533, 61, 645 V. Kahn, 98 N. Y. Supp. 858, 694 V. Kirk, 65 Atl. 932, 613 V. McCoy, 69 Pa. St. 204, 69 V. Whitlow, 6 Ala. 135, 333 V. Wilson, 12 N. C. 484, 655 State Bank of Indiana v. Cook, 125 Iowa 111, 330, 333 V. Mentzer (Iowa), 100 N. 417 29 W. 69, State Capital Bank v. Thomp- son, 42 N. H. 369, State Nat. Bank v. Haylen, 14 Neb. 480, 460 V. J. J. Hyatt & Co., 75 Ark. 170, 698 State Sav. Assoc, v. Hunt, 17 Kan. 532, 359 State Sav. Bank v. Scott, 10 Neb. 83, 46, 303 V. Shaffer, 9 Neb. 1, 148, 165 Staylor v. Ball, 24 Md. 183, 570 Stayner v. Joice, 82 Ind. 35, 154 St. Charles First Nat. Bank v. Hunt, 25 Mo. App. 170, 570 St. Clairsville Bank v. Smith, 5 Ham. (Ohio) 222, 21 Stedwell v. Morris, 61 Ga. 67, 17 Stebbins v. Goldthwait, 31 Ind, 159, 417 Steckbaner v. Leykorn (Wis. 1907), 110 N. W. 217, 599 Stedman v. Rochester Loan & Banking Co., 42 Neb. 641, 260 Steed V. Groves, 103 Ga. 550, 467 Steele v. Johnson (Mo. App.), 69 S. W. 1065, 680 V. Sellman, 79 Md. 1, 447 Steere v. Benson, 2 111. App. 560, 376, 377 Steers v. Lashley, 6 T. R. 61, 296 Steffen v. Smith, 159 Pa. St. 207, 58 Steiffel V. Tolhurst, 55 App. Div. 532, 442 Stein V. Yglesias, 1 Cromp. M. & R. 565, 282 Steinau v. Moody, 100 Ga. 136, 154, 155 Steiner v. Jeffries, 118 Ala. 573, 199 V. Ray, 84 Ala. 93, 291 Steinhart v. Bank, 94 Cal. 362, 695 Stephens v. Bank, 111 U. S. 197, 306 V. Davis, 85 Tenn. 271, 13, 135,-136, 171 V. Graham, 7 Serg. & R. (Pa.) 505, 506, 152 v. Monongahela Bank, 111 U. S. 197, 615 V. Monongahela Nat. Bank, 7 Wkly. Notes (Pa.) Cas. 491, 270 V. Stephens, 66 Ark. 356, 690 Stephenson v. Primrose, 8 Port. 155, 525 Stern v. Bank, 34 La. Ann. 1119, 436 V. Freeman, 4 Mete. (Ky.) 309, 64 Sternburg v. Bowman, 103 Mass. 325, 125 Stetson V. Stackhouse, 18 La. 119, 419 Stettinus v. Myer, 4 Cranch G. G. (U. S.) 349, 606 Stevens v. Beals, 64 Mass. (10 Cush.) 291, 52 V. Campbell, 13 Wis. 375, 241, 376 V. Deering, 10 Ky. L. Rep. 393, 62 V. Gregg, 89 Ky. 461, 627 V. Hannan, 88 Mich. 13, 679 V. Jackson, 4 Camp. 164, 67 V. Johnson, 28 Minn. 172, 208 V. Llovd, Moody & M. 292, 149 V. Lvnch. 12 East. 38, 650 V. Norris, 30 N. H. 466, 254 v. Parker, 89 Mass. (7 Al- len) 361, 125 V. Parker, 5 Allen 333, 447 V. Thacker, 1 Peake's Cas. 187, 336 V. Wood, 127 Mass. 123, 29 exxiv TABLE OF CASES. [References are to Sections.'] Stevenson v. Bethea, 68 S. C. 246, 217 V. Hyland, 11 Minn. 198, 241 V. Scofield, 70 111. App. 299, 512 V. Short, 25 La. Ann. 967, 685 Stewart v. Anderson, 59 Ind. 375, 312, 324 V. Anderson, 6 Cranch (U. S.) 203, 593, 606 V. Bank, 40 Mich. 248, 150 V. Bramhall, 11 Hun 139, 304, 306 V. Bramhall, 74 N. Y. 85, 302 V. Desha, 11 Ala. 844, 523 V. Hidden, 13 Minn. 43, 695 V. Miller, 3 Wilson (Tex. Civ. App.) 292, 297 V. Moore, 12 Phil. 225, 272 V. Simpson, 2 Ohio Cir. Ct. R. 415, 296 V. Small, 2 Barb. (N. Y.) 559, 128 V. Smith, 17 Ohio St. 83, 278 V. Tizzard, 3 Phil. (Pa.) 362, 635 Stickney v. Clement, 7 Gray (Mass.) 170, 606 v. Moore, 108 Ala. 590, 302 Stigler V. Anderson (Miss.), 12 So. 831, 69, 202 Stiles V. Farrar, 18 Vt. 444, 617 V. Hobhs, 2Disn. (Ohio) 571, 601 Still V. Snow, 66 Vt. 277, 122 Stilwell V. Chaffell, 30 Ind. 72, 603 V. Kellogg, 14 Wis. 461, 238 V. Woodruff, 76 Ga. 347, 73 Stiman v. Harrison, 42 Penn. St. 49, 491 Stinson v. Lee, 68 Miss. 113, 503 Stirling v. Gray (Tex. Civ. App. 1904), 81 S. W. 789,- 323 Stivers v. Prentice, 3 B. Hon. 461, 511 St. Joe & M. F. Consol. Min. Co. V. First Nat. Bank, 10 Colo. App. 339, 85, 475 St. Joseph Fire & Marine Ins. Co. V. Hauck, 71 Mo. 465, 340, 671 St. Louis & Iron Mt. R. Co. V. Larned, 103 111. 293, ' 414 St. Louis, etc., Ry. Co. v. Knight, 122 U. S. 79, 414 St. Louis National Bank v. Flan- nagan. 129 Mo. 178, 213, 389 St. Louis Perpetual Ins. Co. v. Cohen, 9 Mo. 421, 80 v. Homer, 9 Mete. (Mass.) 39, 624 Stoddard v. Kimball, 6 Cush. 469, 376, 377, 384 Stoddard v. Pehniman, 108 Mass. 366, 135, 149, 158 Stockdale v. Keyes, 79 Pa. St. 251, 91 Stocking V. Tomlin, 3 Stew. & P. (Ala.) 35, 624 Stocks V. Scott, 188 111. 266, 208 Stockton V. Fortune, 82 111. App. 272, 698 V. Montgomery, 9 Kan. App. 104, 583 Stockton Savings & L. Soc. v. Giddings, 96 Cal. 84, 322, 601, 639, 640 Stokeley v. Buckler, 22 Ky. L. Rep. 1740, 447 Stokes V. Anderson, 118 Ind. 533, 288 V. Brown, 4 Chand. (Wis.) 39, 64 V. Winslow, 31 Miss. 518, 208, 463, 465 Stone V. Bond, 2 Heisk. (Tenn.) 425, 238 V. Dodge, 96 Mich. 514, 604 V. Peake, 16 Vt. 213, 198, 202, 210 V. Smith, 30 Tex. 138, 525 V. Vance, 6 Ohio 246, 270, 472 V. Wainwright, 147 Mass. 201, 679 V. White, 74 Mass. (8 Gray) 589, 182 V. Wright, 83 Tex. 345, 238 Stoner v. Brown, 18 Ind. 464, 121, 380 v. Ellis, 6 Ind. 152, 658 Stoney v. American Life Ins. Co., 11 Paige (N. Y.) 635, 86 V. Joseph, 1 Rich. Eq. (S. C.) 352, 240 Storrs & Co. v. Wingate, 67 N. H. 190, 45 Story V. Kemp, 51 Ga. 399, 404 v. Kinzler, 73 App. Div. (N. Y.) 372, 334 Stotts V. Byers, 17 Iowa 303, 352 Stough V. Ponca Mill Co., 54 Neb. 500, 474 Stout V. Watson, 45 Minn. 454, 350 Stoutenberg v. Lybrand, 13 Ohio St. 228, 288 Stowell V. Stowell, 45 Mich. 364, 345 Stoy V. Bledsoe, 31 Ind. App. 643, 423 St. Paul Grain Co. v. Rudd, 102 Iowa 748, 76, 365 St. Paul Nat. Bank v. Cannon, 46 Minn. 95, 376 Strachan v. Muxlow, 24 Wis. 21, 339 TA3LE OF CASES. CX2V [References are to Sections.'] Stratford v. Crosby, 8 Me. 154, 659 Stratton v. Henser, 19 Ky. L. Rep. 1019, 407 V. Stone, 15 Colo. App. 237, 144 Straughan v. Fairchild, 80 Ind. 598, 368 Strauss v. American Exchange Nat. Bank, 72 111. App. 314, 581 V. Friend, 73 Ga. 782, 48, 282 Strauthers v. Kendall, 41 P^,. St. 214, 173 Streit V. Sanborn, 47 Vt. 702, 295 Strieker v. McDonald, 213 Pa. 108. 682 Strickland v. Gray, 98 Ga. 667, 47 V. Graybill, 97 Va. 602, 596 V. Henry, 66 (N. Y.) App. Div. 23, 302, 306 V. Lee, 65 Md. 384, 685 V. Vance, 99 Ga. 531, 44, 48 Stricklin v. Cunningham, 58 111. 293, 314, 315, 419 Stringer v. Adams, 98 Ind. 539, 541, 317 Stronach v. Bledsoe, 85 N. C. 473, 183, 186 Strong V. Bowes, 102 Wis. 542, 375 V. Grannis, 26 Barb. (N. Y.) 122, 108 Strouffer v. Latshaw, 2 Watt. (Pa.) 165, 108 Strough V. Gear, 48 Ind. 100, 107, 123 Struthers v. Kendall, 41 Pa. St. 214, 279 Stryker v. Beekman, 8 N. J. L. 209, 618 Stuart V. Kirkwall, 3 Madd. 387, 32, 33 V. Stonebraker, 63 Neb. 554, 699 Studebacker Bros. Mfg. Co. v. Montgomery, 74 Mo. 101, 80, 95, 671 Sturges V. Setson, 1 Biss. C. Car. 246, Fed. Cas. No. 13586, 95 V. Williams, 9 Ohio St. 443, 135, 164 Sturgis V. Baker, 43 Oreg. 236, 696 V. Miller, 80 111. 241, 202, 240, 265 Sturtevant v. Ford, 4 Man. & G. 101, 282 V. Inhabitants of Liberty, 46 Me. 457, 87 Stutsman v. Thomas, 39 Ind. 384, 655 Stutzman v. Payne, 23 Iowa 17, 23 Sudlpr V. Collins, 2 Houst. (Del.) 538, 136, 162, 164, 699 Suffell V. Bank, 9 Q. B. 555, 151 Sugg V. Powell, 38 Tenn. 221, 241 Sullivan v. Bonesteel, 79 N. Y, 631, 130 V. Collins, 18 Iowa 228, 116, 118 V. Field, 118 N. C. 358, 681 V. German Nat. Bank, 18 Colo. App. 99, 298 V. Langley, 120 Mass. 437, 476 V. Rudisill, 63 Iowa 158, 148, 182 V. Sullivan, 29 Ky. Law Rep. 239, 92 S. W. 966, 198 V. Sullivan (Wis. 1904), 99 N. W. 1022, 89 Sully V. Goldsmith, a2 Iowa 397, 119, 240 Sulzbacher Bros. v. Bank of Charleston, 86 Tenn. 201, 535, 543 Summerfeldt v. Worts, 12 Ont. 48, 291 Summers v. Hutson, 48 Ind. 228, 448 V. Sander (Tex. Civ. App.), 28 S. W. 1038, 183 Supervisors v. Schenck, 5 Wall. 772, 476, 487 Supervisors of Jefferson County V. Arrighi, 54 Mass. 668, 87 Sutherland v. Whitaker, 50 N, C. 5, 388 Sussex Bank v. Baldwin, 17 N. J. L. 487, 511 Sutherland v. Whitaker, 50 N. C. 5, 253 Sutton V. Beckwith, 68 Mich. 303, 310, 314, 322, 653 V. Gregory, 2 Peake. Ad. Cas. 150, 131 V. Kautzman, 6 Ohio St. 525, 208, 376 V. Toomer, 7 Barn. & C. 516, 169 Swan V. Craig (Neb.), 102 N. W. 471, 699 V. Ewing, 1 Morris (Iowa) 344, 198, 257 V. Steele, 7 East. 210, 89 Swanger v. Mayberry, 59 Cal. 91, 288 Swank v. Nichols, 24 Ind. 199, 332 Swanwell v. Watson, 71 III. 456, 27 Swanze v. Hull, 8 N. J. L. 54, 288 Swasey v. Vanderheyden, 10 Johns. (N. Y.) 33. " 63 Swayze v. Button, 17 Kan. 627, 550 Sweet v. Powers, 72 Mich. 393, 522 V. Stevens, 7 R. I. 375, 312 V. Swift, 65 Mich. 90, 503 CSXVl TABLE OF CASES. ^References are to Sections.] Sweetser v. French, 2 Cush. (Mass.) 30, 380 V. French, 14 Mete. (Mass.) 262, 383 Sweetzer v. First Nat. Bank, 73 Miss. 96, 463 Swenson v. Stolz, 36 Wash. 999, 456, 460 Swett V. Stark, 31 Fed. 858, 366 Swift V. Barber, 28 Mich. 503, 150 V. Crocker, 38 Mass. 241, 213 V. Smith, 102 U. S. 442, 380, 476 V. Tyson, 16 Pet. (U. S.) 1, 241, 246 Swift, In re, 106 Fed. 65, 525 Swing V. Cider & Vinegar Co., 77 Mo. App. 391, 288 Swinney v. Edwards, 8 Wyo. 54, 297 V. Patterson (Nev.), 62 Pac. 1, 473 V. Patterson, 25 Nev. 411, 116 Sydnor v. Boyd, 119 N. C. 481, 310, 322, 323 Sykes v. Citizens' Nat. Bank (Kan.), 76 Pac. 393, 447 V. Lewis, 17 Ala. 261, 627 Sylverstein v. Atkinson, 45 Miss. 81, 89 Sylvester v. Crohan, 138 N. Y. 494^ 510, 564 V. Swan, 5 Allen 134, 303 Symonds v. Riley, 188 Mass. 470, 224, 471, 489 Sypert v. Harrison, 11 S. W. 435, 10 Ky. Law Rep. 1052, 47 Tabor v. Merchants' Nat. Bank, 48 Ark. 454, 241, 316 Taft V. Myerscough, 197 111. 600, 211, 257 V. Sergeant, 18 Barb. (N. Y.) 320, 64 Tagg V. Bank, 56 Tenn. (9 Heisk.) 479, 133 Talbot V. Bank of Rochester, 1 Hill (N. Y.) 295. 102 V, National Bank of the Com- monwealth, 129 Mass. 67, 515 Tallapoosa Lumber Co. v. Hol- bert, 5 App. Div. (N. Y.) 559, 79 Tanner v. Hall, 1 Pa. St. 417, 89, 91 Tapley v. Herman, 95 Mo. App. 537 183 Tappan v. Ely, 15 Wend. (N. Y.) 362, 348 Tarbell v. Sturtevant, 26 Vt. 513, 1, 359, 376, 415 " Tardy v. Boyd, 26 Gratt. 637, 525 Tarleton v. Allhusen, 2 Adol. & E. 32, 679 Tate V. Fletcher, 77 Ind. 102, 171 Tatum V. Kelley, 25 Ark. 209, 293, 447, 472 Tausig V. Reid, 145 111. 488, 681 Taylor v. American Freehold Land Mtg. Co., 160 Ga. 238, 57 V. Atchison, 54 111. 196, 27 V. Bank of Illinois, 7 T. B. Mon. 576, 494, 515, 523, 549, 570 V. Boardman, 92 111. 566, 30 V. Bowles, 28 La. Ann. 294, 439 V. Burgess, 5 Hurl. & N. 1, 340 V. Croker, 4 Esp. 187, 68 V. Dansby, 24 Mich. 82, 68 V. Dudley, 5 Dana (Ky.) 308, 310, 71 V. Fletcher, 15 Ind. 80, 116 V. Ford, 131 Cal. 440, 117, 266 V. Gitt, 10 Pa. St. 428, 119 V. Gribb, 100 Ga. 94, 123 V. Hearn, 131 Ind. 537, 402 V. Hillyet, 3 Blackf. (Ind.) 433, 91 V. Jerrell, 104 Ga. 169, 679 V. Littell, 21 La. Ann. 665, . 415, 417 V. Mather, 3 Term. R. 83, 419 V. Newman, 77 Mo. 257, 183, 186 V. Purcell, 60 Ark. 606, 69 V. Rhea Minor (Ala.) 414, 343 V. Sharp, 108 N. C. 377, 60 V. Taylor, 80 Tenn. (12 Lea) 714, 138, 147, 154 V. Thomas, 22 Wall. (U. S.) 279, 293 V. Thompson, 3 Bradw. (111.) 109, 238 V. Thompson, 3 111. App. 109,' 119 Taylor's Appeal, 45 Pa. St. 71, 244 Tebbetts v. Dowd, 23 Wend. 379 ^38 Tellon V. City Bank, 9 Ind. 119, 472 Temple v. Carroll (Neb.), 105 N. W. 989, 576 V. Hays, 1 Morris (Iowa) 9, 22 Temple Nat. Bank v. Louisville Cotton Oil Co., 26 Ky. L. Rep. 518, ^'^^ Temp'leton v. Poole, 59 Cal. 286, 419 Tennessee Bank v. Johnson, 1 Swan 217, Tennessee Mfg. Co. v. Haines, 16 R. I. 204, 343 TABLE OF CASES. CXXVll [References are to Sections.'] Tenney v. Foote, 4 III. App. 594, 297 V. Turner (Mo. App. 1905), 86 S. W. 506, 116 Terrell v. Gamblin, 10 La. Ann. 623, 448 Terry v. Allis, 16 Wis. 478, 102 V. Ragsdale, 33 Gratt. (Va.) 342, 183 Tescher v. Merea, 118 Ind. 586, 292 Texarkana First Nat. Bank v. Wever (Tex.), 15 S. W. 41, 569 Texas v. Hardenberg, 10 Wall. (U. S.) 68, 426 V. White, 7 Wall. (U. S.) 700, 426 Texas Banking & Ins. Co. v. Turnley, 61 Tex. 365, 376 Thaeher v. Stevens, 46 Conn. 561, 280 Thacker v. Thacker, 125 Ind. 489, 41 Thatcher v. West River Nat. Bank, 19 Mich. 196, 270 Thayer v. Buffum, 11 Mete. 398, 92, 465 V. Jewett, 9 Shep. (Me.) 19, 134 Theard v. Gueringer (La.), 38 So. 579, 447 The Lady Franklin, 8 Wall. 325, 414 Theopold Mercantile Co. v. Deike, 76 Minn. 121, 179 Theurer v. Schmidt, 10 La. Ann. 293, 52, 380 Thiel V. Conrad, 21 La. Ann. 214, 502 Thielman v, Gueble, 32 La. Ann. 260, 506, 507, 523 Thimbledy v. Barron, 3 Mees. & W. 210, 338 Thing v. Libley, 16 Me. 55, 57, 64 Third Nat. Bank v. Angell, 18 R. I. 1, 402 V. Harrison, 3 McCray (U. S.) 316, 298, 476 V. Laboring Man's Mercan- tile & M. Co. (W. Va.) 1904), 49 S. E. 544, 81 V. Tinsley, 11 Mo. App. 498, 288, 298 Third National Bank of Louis- ville V. Vicksburg Bank, 61 Miss. 112, 583 Thom V. Sinsheimer, 66 111. App. 555, 586 Thomas v. Bagley & Co., 119 Ga. 778, 334 V. Exchange Bank (Iowa), 68 N. W. 780. 607 V. Kinsey, 8 Ga. 421, 436 V. Mayo, 56 Me. 40, 525 Thomas v. Page, 3 McLean (U. S.) 167, 310 V. Passage, 54 Ind. 106, 56 V. Ruddell, 66 Ind. 326, 240, 489 V. Shoemaker, 6 Watts (S. Pa.) 179, 614 V. Todd, 6 Hill (N. Y.) 340, 100 V. Watkins, 16 Wis. 549, 20, 386 Thomason v. Wilson (Ga. 1906), 56 S. E. 302, 135 Thompson v. Armstrong, 5 Ala. 383, 183, 186, 383 V. Bank, 113 N. Y. 325, 121, 291 V. Bank, 146 U. S. 449, 291 V. Buehler (Neb.), 95 N. W. 854, 698 V. DesMoines Driv. Park, 112 Iowa 628, 81 V. Gibson, 1 Mart. N. S. 150, 439 V. Hale, 23 Mass. 259, 239 V. Hale, 6 Pick. (Mass.( 259, 419 V. Hinds, 67 Me. 177, 112, 116 V, Hudgins, 116 Ala. 93, 209 V. Ketcham, 8 Johns. (N. Y.) 190, 339 V. Lowe, 111 Ind. 272, 635 v. Maddox, 117 Ala. 468, 246, 366 v. Mansfield, 43 Me. 146, 208 V. Massie, 41 Ohio St. 307, 139, 140, 142 V. McClelland, 29 Pa. St.475, 425, 446, 635 V. McDonald, 17 Up. Can. Q. B. 304, 341 V. Moore, 4 T. R. B. Mon. (Ky.) 79, 296 V. Niggley, 53 Ken. 664, 115 V. Oliver, 18 Iowa 417, 343 V. Boston, 62 Ky. 389, 274, 355 V. Poston, 1 Duv. (Ky.) 389, 385 V. Rathbun, 18 Oreg. 202, 145 V. Rawles, 33 Ala. 29, 333 V. Roatcup, 27 Mo. 283, 447 V. Samuels (Tex.), 14 S. W. 143, 296 V. S h e p h e r d, 12 Mete. (Mass.) 311, 282 V. Sioux Falls Nat. Bank, 150 U. S. 231, 243 V. Taylor, 66 N. J. L. 253, 60 . V. Taylor, 65 N. J. L. 107, 60 V. Union Trust Co., 130 Mich. 508, 604 Thomson Co. v. Capital Co., 56 Fed. 849, 457 Thomson-Houston Electric Co. V. Capitol Electric Co., 65 Fed. 341, 350, 476 Thorn v. Pinkham, 84 Me. 101, 112 CXXVlll TABLE OF CASES. [References are to Sections.'] Thornburg v. Emmons, 23 W. Va. 325, 496 V. Harris, 3 Coldw. (Tenn.) 157, 293 Thornton v. Appleton, 29 Me. 298, 177 V. Maynard, L. R. 10 C. P. 695, 623 V. Wynn, 12 Wheat. 183, 525 Thorp V. Goewey, 85 111. 611, 658 V. Mindeman, 123 Wis. 149, 366, 439 Thorpe v. Dickey, 51 Iowa 676, 102 V. White (Mass.), 74 N. E. 592, 136 Thrall v. Norton, 44 Vt. 386, 208 Thurgood v. Spring, 139 Cal. 596, 202, 268 Thurman v. Burt, 53 111. 129, 109 V. Van Brunt, 19 Barb. (N. Y.) 409, 274 Thurston v. James, 6 R. I. 103, 341 V. McKeown, 6 Mass. 428, 119 Tichenor v. Avensboro Sav. Bank & Trust Co., 24 Ky. Law R. 145, 68 S. W. 127, 653 Ticonic Bank v. Stackpole, 41 Me. 321, 553 Tidmarch v. Grover, 1 Maule & S. 735, 162 Tierney v. Peerless Shoe Co., 68 N. Y. Supp. 392, 618 Tilden v. Blair, 21 Wall. (U. S.) 241, 303 Till V. Collier, 27 Ind. App. 333, 58 Tillinghast v. Craig, 9 Ohio Cir. Dec. 459, 288 Tillock V. Webb, 56 Me. 100, 29 Tillottson V. Grapes, 4 N. H. 444, 198 Tillou V. Britton, 9 N. J. L. 120, 627, 636 Tilson V. Gatling, 60 Ark. 114, 262 Timberlake v. Thayer, 76 Miss. 76, 524, 539 Timerson, In re, 80 N. Y. Supp. 639, 214 Tinker v. Babcock, 107 111. App. 78, 679 Tinsdale v. Mallett (Ark. 1904), 88 S. W. 481, 332 V. Murray, 9 Daly (N. Y.) 446, 246, 249, 383, 390, 391 Tinson v. Francis, 1 Camp. 19, 282, 420 Tischler v. Shurman, 97 N. Y. Supp. 360, 472 Titus V. Himrod, 39 Barb. (N. Y.) 581, 431 Tobey v. Berley, 26 111. 426, 525 Tobey v. Chipman, 13 Allen (Mass.) 123, 653 Tobias v. Sadler, 5 N. Y. Leg. Obs. 100, 271 Tod V. Kentucky Union Land Co., 57 Fed. 47, 85, 483 V. Wick, 36 Ohio St. 370, 191 Todd V. Bailey, 58 N. J. L. 10, 58 V. Cromer, 36 Neb. 430, 366 V. Roberts, 1 Tex. Civ. App. 8, 342 Toledo & Ann Arbor R. R. Co. v. Johnson, 55 Mich. 456, 345 Tollman v. Quincy, 129 Fed. 974, 285 Tomblin v. Gallen, 69 Iowa 299, 383, 390 V. Higgins, 53 Neb. 92, 306 Tomlin v. Morris, 26 Ky. L. Rep. 681, 302 V. Thornton, 99 Ga. 585, 574, 583 Tompkins v. Garner, 8 N. Y. Supp. 193, 199 Toms V. Jones. 127 N. C. 464, 73, 439 Toner v. Wagner, 158 Ind. 447, 137, 142 Tooke V. Newman, 75 111. 215, 376 Toole V. Crafts (Mass.), 78 N. E. 775, 524, 538 Topeka Capital Co. v. Merriam, 60 Kan. 397, 241 Torinus v. Buckham, 29 Minn. 128, 208 Torpey v. Tebo, 184 Mass. 307, 320 Torrey v. Grant, 10 Smedes & M. 89, 303, 636, 665, 668 Totten V. Bucy, 57 Md. 452, 474, 476 Tourtelot v. Bushnell, 66 Minn. 1, 270 V. Reed, 62 Minn. 384, 475 Towle V. American Bldg. L. & I. Co., 78 Fed. 688, 689, 121 V. Starz, 67 Minn. 370, 507 Towles V. Tanner, 21 App. D. C. 530, 96, 183 Towles Excelsior Co. v. Tuman, 96 Ga. 506, 85 Towne v. Rice, 122 Mass. 67, 303, 367 Towner v. McClelland, 110 111. • 542, 265 Town of Northborough v. Wood, 142 Mass. 551, 688 Townsend v. Auld, 31 N. Y. Supp. 29, 542 V. Bush. 1 Conn. 260, 303 V. Hagar, 72 Fed. 949, 89 V. Heer Dry Goods Co., 85 Mo. 526, 514 V. Wagon Co., 10 Neb. 615, 164 TABLE OF CASES. CXXIS [References are to Sections.} Townsley v. Sumrall, 2 Pet. (U. S.) 170, 199, 272, 491, 494, 542 Traders' Bank v. Alsop, 64 Iowa 98, 297 Traders' Nat. Bank v. Jones, 93 N. Y. Supp. 768, 549 V. Rogers, 167 Mass. 316, 45 N. E. 923, 655 Tradesman's Nat. Bank v. Looney, 99 Tenn. 278, 474 Trafford v. Hall, 7 R. I. 104, 359, 431, 637 Trammell v. Swift Fertilizer Works, 121 Ga. 778, 680 Trapp V. Spearman, 3 Esp. 57, 164 Trask v. Wingate, 63 N. H. 474, 116, 238, 386 Travelers' Ins. Co. v. Denver, 11 Colo. 434, 183 Treacy & Wilson v. Chinn, 79 Mo. App. 648, 288 Treadway v. Antisdel, 86 Mich. 82, 504, 529 Treadwell v. Himmelmann, 50 Cal. 9, 693 Trease v. Haggin, 107 Iowa 458, 515 Tredwell v. Blount, 86 N. C. 33, 627 V. Lincoln, 52 Hun (N. Y.) 614, 242, 333 Trego V. Lowrey, 8 Neb. 238, 199 Tremont Bank v. Paine, 2 Wil- liams 24, 679 Trentman v. Fletcher, 100 Ind. 105, 339 Trieber v. Commercial Bank of St. Louis, 31 Ark. 128, 29 Trigg V. Taylor, 27 Mo. 245, 135, 136 Triplett v. Holly. 4 Litt. 130, 447 Trow V. Baaley, 56 Vt. 560, 606 Troxell v. Malin, 9 Pa. Super. Ct. 383, 292, 473 Troy & Cohoes Shirt Co., In re, 136 Fed. 420, 474, 483 Troy Fertilizer Co. v. Zachry, 114 Ala. 177, 55 True V. Thomas, 16 Me. 36, 523 V. Triplett, 4 Mete. 57, 303 Trueman v. Hurst, 1 Term R. 40, 648 Truesdale v. Watts, 12 Pa. St. 73, 208 Trust Co. V. Bendow, 135 N. C. 303, 194 V. Gray, 12 App. D. C. 276, 287, 380 V. Nat. Bank, 101 U. S. 68, 456, 460 Joyce Defenses — ix Trustees v. Hill, 12 Iowa 462, 252, 352 Trustees of Internal Imp. Fund V. Lewis, 34 Fla. 424, 699 Trustees of the Town of Ewing V. Clarkesville, 61 Ind. 129, 231 Tryon v. Oxley, 3 G. Greene, 289, 498 Tuck V. National Bank of Ath- ens, 108 Ga. 446, 684 V. Tuck, 5 Mees. & W. 109, 596 Tucker v. Horner, 3 Coldw. (Tenn.) 157, 293 v. Ronk, 43 Iowa 80, 196 V. Smith, 4 Me. 415, 419 V. Wilamouicz, 8 Ark. 157, 303 Tuckes V. West, 29 Ark. 386, 29 Tufts V. Kidder, 8 Pick (Mass.) 53, 311, 339 V. Shepherd, 49 Me. 312, 304, 421 Tuggle V. Adams, 3 A. K. Marsh. (Ky.) 429, 238, 243, 269, 405 Tullett V. Armstrong, 4 Beav. 319, 323, 32 Tumelty v. Bank of Missouri, 13 Mo. 276, 22 Tunno v. Lague, 1 Johns. Cas. 1, 521 Turcas v. Rogers, 3 Mart. N. S. (La. L.) 699, 419 Turley v. Bartlett, 10 Heisk. (Tenn.) 221, 202, 295 Turnbull v. Bowyer, 40 N. Y. 456, 645 v. Bouyer, 2 Rob. (N. Y.) 406, 645 V. Maddox, 68 Md. 579, 525 Turner v. Beggarly, 11 Ired. (N. C.) 331 419 V. Hoy'le, 95 Mo. 345, 436 v. Iron Chief Min. Co., 74 Wis. 355, 506, 564, 570 V. Merchants' Bank, 126 Ala. 397, 302 V. Mitchell, 22 Ky. L. Rep. 1784, 240 Tuscaloosa Ice Mfg. Co. v. Wil- liams, 28 So. 669, 288 Tuscaloosa Cotton Seed Co. v. Perry, 85 Ala. 158, 333, 341 Tuttle V. Bartholomew, 12 Mete. 454, 460 V. Cooper, 5 Pick. (Mass.) 414, 657 V. George A Tuttle Co. (Me. 1906), 64 Atl. 496, 80, 208, 226 V. Wilson, 33 Minn. 422, 635 Tuxbury v. Abbott, 59 Me. 466, 302 cxxx TABLE OF CASES. [References are to Sections.l Twelfth Ward Bank v. Brooks, 71 N. Y. Supp. 388, 701 Twentieth Century Co. v. Quill- ing (Wis. 1907), 110 N. W. 174, 190, 192 Twenty-Sixth Ward Bank v. Stearns, 148 N. Y. 515, 315 Tye V. Chickasha Town Co., 2 Ind. Ty. 113, 194 Tyler v. Jaeger, 93 N. Y. Supp. 558, 234 V. Still, 106 N. W. 114, 214 V. Todd, 36 Conn. 218, 96 V. Waddington, 58 Conn. 375, 504 Tyrell v. Railroad Co., 7 Mo. App. 294, 660 Tyson v. Bray, 117 Ga. 639, 412 V. Jackson Bros. (Tex. Civ. App. 1905), 90S. W. 930, 599 U Uchtmann v. Tonyes, 64 Hun (N. Y.) 634, 286 Ueland v. Hibbard, 65 N. Y. Supp. 790, 505 Ullen V. Brohm (Colo. App.), 79 Pac. 180, 402 Unangst v. Fetler, 84 Pa. 135, 62 Unapa Nat. Bank v. Butler, (Tenn.), 83 S. W. 655, 465, 475 Underbill v. Phillips, 10 Hun (N. Y.) 591, 183, 186 Underwood v. Patrick, 94 Fed. 468, 660 V. Simonds, 12 Mete. (Mass.) 275, 312 Unger v. Ross, 12 Pa. St. 601, 297 Union Bank v. Beirne, 1 Grat. (Va.) 226, 73 V. Cook, 2 Cranch C. C. 218, 152 V. Crine, 23 Fed. 809, 238, 342 V. Fonteneau, 12 Rob. 120, 553 V. Fowlkes, 2 Sneed 555, 511 V. Gregory, 46 Barb. 98, 542 V. Hyde, 6 Wheat. 572, 528, 543 V. Middlebrook, 33 Conn. 95, 150 V. Morgan, 2 La. Ann. 418, 280 Union Banking Co. v. Martin, 113 Mich. 521, 174, 194 Union Bank of Rochester v. Gilbert, 83 Hun 417, 303 Union Central Insurance Co. v. Huyck, 5 Ind. App. 474, 116, 127 Union Cent. Life Ins. Co. v. Ehrman, 2 Wkly. Law Bui. (Ohio) 3, 95 Union Collection Co. v. Buck- wan (Cal. 1907), 88 Pac. 708, 196, 198 Union Credit, etc., Co. v. Union Stockyard, etc., Co., 92 N. Y. Supp. 269, 302 Union Gold Min. Co. v. Rocky Mountain Nat. Bank, 2 Colo. 248, 671 Union Loan & Trust Co. v. So. California Motor Road Co., 51 Fed. 840, 662 Union National Bank v. Can- nonburgh Iron Co. (Pa. Sup.), 6 Atl. 577, 591 V. Cross, 100 Wis. 174, 339 V. Fraser, 63 Miss. 231, 303, 305, 465, 614 V. Neil, 149 Fed. 711, 89 V. Roberts, 45 Wis. 373, 142, 161, 369, 376 V. Wheeler, 60 N. Y. 612, 302, 306 V. Williams Milling Co., 117 Mich. 535, 532 Union Sav. Assn. v. Diebold, 1 Mo. App. 323, 102 Union Stock Yards Nat. Bank V. Coffman, 104 Iowa 594, 46, 55 V. Haskell (Neb.), 90 N. W. 233, 698 Union Trust Co. v. McClellan, 40 W. Va. 405, 247, 381, 390 United States v. Bank of United States, 5 How. 382, 527, 528 V. Barker, 12 Wheat. 559, 511 V. Bank of the Metropolis, 15 Pet. (U. S.) 377, 199, 270, 377 V. National Exchange Bank, 45 Fed. 163, 100, 675 V. National Exch. Bank, 141 Fed. 209, 100 V. Read, Fed. Cas. No. 16125, 398 V. Spalding, 2 Mason (C. C.) 478, 142 United States Bank v. Dunn, 6 Pet. 51, 581 V. Carneal, 2 Pet. 543, 517 V. Goddard, 5 Mason 366, 568 V. Geer, 53 Neb. 67, 348 V. McNair, 116 N. C. 550, 627 V. National Park Bank, 59 Hun (N. Y.) 495, 173 V. Russell, 3 Yeates (Pa.) 391, 136 V. Southard, 17 N. J. L. 473, 523, 525 United States Bank of New York V. McNair, 116 N. C. 550, 241 United States Nat. Bank v. Bur- ton, 58 Vt. 426, 560 V. Ewing, 131 N. Y. 506, 390 TABLE OF CASES. CXXXl United States Nat. Bank v. First Nat. Bank, 79 Fed. 296, 49 U. S. App. 67, 471 V. McNair, 116 N. C. 550, 240 United States Trust Co. v. Har- ris, 2 Bosw. (N. Y.) 75, 607 United States Wind Engine, etc., Co. V. Simonton, 84 Wis. 545, 348 University Bank v. Tuck, 96 Ga. 456, 246 University Press, John Wilson & Sons V. Williams, 59 N. Y. Supp. 817, 564, 569 Unseld v. Stephenson, 33 Mo. 161, 431 Upham V. Smith, 7 Mass. 265, 342 Upson V. Mt. Morris Bank, 92 N. Y. Supp. 1101, 688 Urquhart v. Thomas, 24 La. Ann. 95, 523 Vacitt V. James, 39 Tex. 189, 24 Valette v. Mason, 1 Ind. 288, 359, 376 V. Mason, 1 Smith 89, 377 Vallett V. Parker, 6 Wend. 615, 79, 238, 291, 317 Valley Nat. Bank v. Urich, 191 Pa. 556. 541 Valley Sav. Bank of Middle- town V. Mercer, 97 Md. 458, 465, 476 Van Aiken v. Dunn, 117 Mich. 421, 232 Vananken v. Hornbeck, 14 N. J. L. 178, 135 Vanatta v. Bank, 9 Ohio St. 27, 671 V. Lindley, 98 111. App. 327, aff'd 198 111. 40, 13 Van Brunt v. Eoff, 35 Barb. (N. Y.) 501, 141, 143 V. Vaughn, 47 Iowa 145, 555 Van Buren County Sav. Bank V. Mills, 99 Mo. App. 65, 702 Vanburnt v. Singley, 85 111. 281, 27 Van Buskirk v. Day, 32 111. 260, 449 Vance v. Lowther, L. R. 1 Exch. Div. 176, 136, 152 V. Wells & Co., 6 Ala. 737, 31 Vandemal v. Dougherty, 17 Mo. 277, 321, 343 Vanderpool v. Brake, 28 Ind. 130, 653 Van Duzer v. Howe, 21 N. Y. 531, 22, 23, 144, 627 Van Eps v. Dullaye, 6 Barb. (N. Y.) 244, 94 Van Etten v. Hemann, 35 Mich. 513, 270 [References are to Sections.l Van Etten v. Howell, 40 Neb 850, 320, 339 Vankirk v. Skillman, 34 N. J. L. 109, 45, 46 Van Metre v. Wolf, 27 Iowa 341, 62 Vann v. Edwards, 128 N. C. 425, 52 V. Marbury, 100 Ala. 438, 246, 616 Van Patton v. Beals, 46 Iowa 62, 71 Van Pelt v. Eagle Ins. Co., 18 La. 64, 439 Vansteeburgh v. Hoffman, 15 Barb. (N. Y.) 28, 30 Van Stophorst v. Pearce, 4 Mass. 258, 297 Vanstrum v. Liljengren, 37 Minn. 191, 199, 272, 324 Van Valkenburgh v. Stupple- beem, 49 Barb. 99, 465 Van Wagoner, 23 N. J. L. 283, 604 Van Winkle Gin & Mach. Co. v. Citizens' Bank of Buffalo, 89 Tex. 147, 274 Variscope Co. v. Brady, 77 N. Y. Supp. 159, 280 Varner v. Lamar, 9 Ga. 589, 416 Varnum v. Mauro, 2 Cranch 425, 208, 286, 354 Vary v. Norton, 6 Fed. 808, 305, 340 Vass V. Riddick, 89 N. C. 6, 133 Vatterlieve v. Howell, 37 Tenn. 441, 242, 246, 447 Vaughan v. Fowler, 14 S. C. 355, 176 Vauliew v. Mason, 1 Cart. 288, 376 Veach v. Thompson, 15 Iowa 380, 105 Veazie v. Willis, 6 Gray (Mass.) 90, . 645 Velie v. Titus, 60 Hun (N. Y.) 405, 194 Veuable v. Lippold, 102 Ga. 208, 41 V. Stewart, 102 Ga. 208, 48 Vere v. Lewis, 3 Term R. 182, 199 Verder v. Verder, 21 Atl. 611, 507 Vermont Loan Co. v. Hoffman, 5 Idaho 376, 291 Vette V. Geist, 155 Mo. 27, 302 V. Sacher, 114 Mo. App. 363, 89 S. W. 360, 473 Vickery v. Assoc, 21 Fed. 773, 622 Vickroy v. Pratt, 7 Kan. 238, 263 Victor v. Bauer, 11 N. Y. St. R. 531, 380 Viets V. Union Nat. Bank, 101 N. Y. 658, 549 Villa Rica Lumber Co. v. Par- tain, 92 Ga. 370, 47 CXXXll TABLE OF CASES. [References are to Sections.} Vining v. Bricker, 14 Ohio St. 331, 288 Vinson v. Palmer, 45 Fla. 630, 34 So. 276, 407 Vinton v. Crowe, 4 Cal. 309, 419, 436 V. Peck, 14 Mich. 287, 29, 240 Viser v. Bertrand, 14 Ark. 267, 288 Vliet V. Eastburn, 63 N. J. L. 450, 45 Voe V. Smith, 1 Smith (Ind.) 88, 329 Vogle V. Ripper, 34 111. 100, 137 Voiers v. Stout, 4 Bush (Ky.) 572, 113 Voltz V. Bank, 158 111. 532, 88 Von Windlich v. Klaus, 46 Conn. 433, 126 Voorhees v. Fisher, 9 Utah 303, 402 Voreis v. Nussbaum, 131 Ind. 267, 45, 213 Voris V. Harshbarger, 11 Ind. App. 555, 238 Vosburg v; Diefendorf, 119 N. Y. 357, 193, 292, 488 W Wachovia Nat. Bank v. Ireland, 122 N. C. 571, 306 Wachusett Nat. Bank v. Fair- brother, 148 Mass. 181, 569 Waddell's Succession, In re, 44 La. Ann. 361, 529 Waddill V. Hanover Nat. Bank, 67 N. Y. Supp. 305, 48 Misc. Rep. 578, 119 Wade V. Foster, 24 Ky. Law- Rep. 1292, 237, 439 V." Wade, 36 Tex. 529, 255 V. Wickersham, 27 Neb. 457, 288 V. Withington, 83 Mass. (1 Allen) 561, 136, 165 Wadley, Town of, v. Lancaster, 124 Ga. 354, 293 Wadsworth v. Dunham, 117 Ala. 661, 288 V. Smith, 10 Shep. (Me.) 500, 208 Wager v. Brooks, 37 Minn. 392, 322 Waggoner v. Colvin, 11 Wend. 27, 406 V. German-American Co., 56 S. W. 961, 22 Ky. L. R. 215, 644 Wagner v. Crook, 167 Pa. 259, 583 V. Dietrich, 50 Mo. 484, 270, 472 V. Freshl, 56 N. H. 495, 94 Wagnor v. Pease, 104 Ga. 417, 302 Wahling v. Standard Pump Mfg. Co., 9 N. Y. Supp. 739, 80 Wait V. Chandler, 63 Me. 257, 43, 119, 307, 314 V. Pomeroy, 20 Mich. 425, 136, 171 Waite V. City of Santa Cruz, 46 L. Ed. 552, 488 V. Kalurisky, 22 111. App. 382, 270, 271 Wakeman v. Sherman, 9 N. Y. 85, 651 Walbridge v. Kibbee, 20 Vt. 543, 635 V. Senold, 21 Conn. 424, 108 Waldner v. Bowden State Bank (N. D.), 102 N. W. 169, 302 Waldo Bank v. Lumbert, 16 Me. 416, 89, 90 Waldorf v. Simpson, 15 App. Div. (N. Y.) 297, 180 Waldron v. Young, 9 Heisk. (Tenn.) 777, 23 Waldrop v. Black, 74 Cal. 409, 186 Walker v. Bank of State of New York, 9 N. Y. 582, 497 V. Crawford, 56 111. 444, 320, 361 V. Ebert, 29 Wis. 194, 25, 27 V. Eyth, 25 Pa. St. 216, 632 V. Fearhake (Tex. Civ. App.), 52 S. W. 629, 616 V. Gregory, 36 Ala. 180, 300 V. Hall, 66 Miss. 390, 591, 629 V. Jeffries, 45 Miss. 160, 293 V. McConnico, 18 Tenn. (10 Yerg.) 228, 125 V. McKay, 2 Mete. 294, 449, 472 V. Millard, 29 N. Y. 375, 208 V. Perkins, 3 Burr. 1568, 300 V. Rogers, 40 111. 278, 523, 525 V. Russell, 17 Pick. (Mass.) 280, 338 V. Smith, 2 Vt. 339, 208 V. Squires, Hill & Den. (N. Y.) 23, 203 V. Stetson, 14 Ohio St. 89, 555 V. Thompson, 108 Mich. 686, 365 V. Wilson, 79 Tex. 188, 419, 439, 467 V. Wilson, 70 Tex. 188, 420 Wall V. Bry, 1 -La. Ann. 312, 538 V. Monroe County, 103 U. S. 74, 232 Wallace v. Agry, 4 Mason 336, 496 V. Finnegan, 14 Mich. 170, 613. V. Goodlet, 104 Tenn. 670, 302 V. Goodlet, 93 Tenn. 598, 59 V. Jewell, 26 Ohio St. 163, 174, 175 TABLE OF CASES. CXXXlll [References are to Sections.l I Wallace v. Lark, 12 S. C. 576, 293 V. McConnell, 13 Pet. 136, 502, 514 V. Randol (Cal.), 54 Pac. 842, 694 V. Richards, 16 Utah 52, 504 V. Romley, 91 Ind. 586, 55 V. Tice, 32 Oreg. 283, 137 V. Wallace, 8 111. App. 69, 147, 148 Wallach v. Bader, 7 N. Y. St. Rep. 375, 353 Walmseley v. Cooper, 11 Adol. & E. 216, 337 Walsh V. Blatchley, 6 Wis. 422, 501 V. Dart, 23 Wis. 334, 496, 501 V. Hunt, 120 Cal. 46, 52 Pas. 115, 661 V. Peterson, 59 Neb. 645, 698 Walston V. Davis (Ala. 1906), 40 So. 1017, 400 Walter v. Cubley, 2 Cromp. & M. 151, 137, 149, 162 V. Logan (Kan.), 65 Pac. 225, 447 Walter A. Wood Mowing Mach. Co. V. Laud, 98 Ky. 516, 461 Walters v. Armstrong, 5 Minn. 448, 332 V. Munroe, 17 Md. 154, 74, 525 V. Palmer, 110 Ga. 776, 119 Walton V. Black, 5 Houst. 149, 258 V. Bristal, 125 N. C. 419, 52 V. Hastings, 4 Camp. 233, 135, 152, 154 V. Young, 26 La. Ann. 164, 419 Walton Guano Co. v. Copeland, 112 Ga. 319, 28, 303 Walton Plow Co. v. Campbell, 35 Neb. 174, 147, 161 Walwyn v. St. Quentin, 2 Bsp. 515, 523 Wanzer v. Tupper, 8 How. 234, 528 Waples-Painter Co. v. Bank of Commerce (Ind. Ter.), 97 S. W. 1025, 528, 545 Ward V. Allen, 43 Mass. (2 Mete.) 53, 136, 154 V. City Trust Co., 102 N. Y. Supp. 50, 241 V. Doane, 77 Mich. 328, 296 V. Hackett, 30 Minn. 150, 182, 316 V. Howard, 88 N. Y. 74, 284 V. Ins. Co.. 108 Ind. 301, 9 N. E. 361, 645 V. Johnson, 51 Minn. 480, 28 V. .lohnson, 13 Mass. 148, 679 V. Martin, 3 Mo. 19, 618 Ward V. Northern Bank of Ken- tucky, 14 B. Mon. (Ky.) 351, .387, 389 V. Sugg, 113 N. C. 489, 291, 292, 302 V. Wick, 17 Ohio St. 159, 341 V. Williams, 45 Tex. 617, 263 V. Whitney, 32 Vt. 89, 302 V. Winship, 12 Mass. 480, 687 Warden v. Howell, 9 Wend. (N. Y.) 170, 396 V. Hughes, 3 Wend. (N. Y.) 418, 330, 387 Warder Bushnell & Co. v. John- son, 114 Mo. App. 571, 328, 681, 734 Warder, Bushnell & Glessner Co. V. Gibbs, 92 Mich. 29, 282 V. Myers, 96 N. W. 992, 265 Ware v. Allen, 128 U. S. 590, 312, 313 V. Russell, 57 Ala. 43, 374 V. Smith, 62 Iowa 159, 312 Waring v. Betts, 90 Va. 46, 513, 514, 518, 577 Wareham Bank v. Lincoln, 3 Allen (Mass.) 192, 383 Warner v. Schultz, 74 Minn. 252, 202 Warnock v. Itawis, 38 Wash. 144, 27, 288 Warpole v. Ellison, 4 Houst. (Del.) 322, 170 Warren v. Branch, 15 W. Va. 21, 128 V. Fant, 79 Ky. 1, 179 V. Haight, 65 N. Y. 171, 133 V. Layton, 3 Harr. (Del.) 404, 148, 152 V. Lynch, 5 Johns. (N. Y.) 239, 125 Warrenburg v. Co-Operative Bldg. Assn. V. Zoll, 83 Mo. 94, 341 Warrington v. Early, 2 El. & Bl. 763, 170 V. Early, 23 Law J. Q. B. 47, 179 Washburn v. Picot, 14 N. C. 390, 108, 201, 202 Washington v. Triplett, 1 Pet. 25, 509 Washington College v. Duke, 14 Iowa 14, 679 Washington Savings Bank v. Ecky, 51 Mo. 272, 136 Waterbury v. Andrews, 67 Mich. 281, 30, 44, 48 Waterman v. Barrett, 4 Harr. (Del.) 311, 108, 238 v. Clark, 76 111. 428, 640 CXXXIV TABLE OF CASES. 348 232 654 Waterman v. Vose, 43 Me. 504, 135, 168, 170 V. Waterman, 42 Misc. 195, 271 Waters v. White, 75 Conn. 98, 241 Watford v. Windham, 64 S. C. 509, 240 Wathen v. Chamberlain, 8 Dana (Ky.) 164, 594 Watkins v. Bowers, 119 Mass. 383 ^^2 V. 'Maule, 2 Jac. & W. 237, 282 Watson V. Boston Woven Cor- dage Co., 75 Hun (N. Y.) 115, 18 V. Cabot Bank, 5 Sandf. 423, 359 V. Cheshire, 18 Iowa 202, V. City of Huron, 38 C. C. A. 664, V. Hoag, 40 Iowa 142, V. Russell, 3 Best & S. 34, 20, 376 V. Terpley, 18 How. 517, 564 Watt V. Gans, 114 Ala. 264, 583 V. Rice, 1 La. Ann. 280, 237 Watts V. Burnett, 56 Ala. 340, 359 V. Fletcher, 107 Ind. 391, 422 Watzlavick v. D. & A. Oppen- heimer (Tex. Civ. App.), 85 S. W. 855, 119, 359 Way V. Lamb, 15 Iowa 79, 635 V. Peck, 47 Conn. 23, 41 V. Sperry, 6 Cush. (Mass.) 238, 651 Wayne Agricultural Co. v. Card- well, 73 Ind. 555, 104, 129, 673 Wavnesville Nat. Bank v. Irons, 8>ed. 1, 443, 662 Weader v. Bank, 126 Ind. Ill, 593 Weakly v. Hall, 13 Ohio 174, 594 Wearse v. Pierce, 41 Mass. (24 Pick.) 141, 125 Weathered v. Smith, 9 Tex. 622, 447 Weaver v. Bromley, 65 Mich. 212, 161 V. Farrington, 7 Misc. 405, 354 V. Fries, 85 111. 356, 342 V. Lynch, 25 Pa. St. 449, 447 V. Shropshire, 42 Ala. 230, 601 Webb V. Corbin, 78 Ind. 403, 25, 27 V. Galveston (Tex. Civ. App.), 75 S. W. 355, 302 V. Mosely, 30 Tex. Civ. App. 311, 117, 230 V. Odell, 49 N. Y. 583, 116 V. Salmon, 19 L. J. Q. B. N. S. 34, 310, 339 Webber v. Alderman, 102 Mich. 638, 342 V. Gotthold, 28 N. Y. Supp. 763, 555 [References are to Sections.^ Webber v. Maddocks, 3 Camp. 1, 137 Weber v. Orton, 91 Mo. 677, 328, 456 V. Spokane Nat. Bank, 12 C. C.A. 93, 64 Fed. 208, 88, 662 Webster v. Whitworth (Tenn. Ch. App. 1901), 63 S. W. 290, 80 Webster & Co. v. Howe Mach. Co., 54 Conn. 394, 242, 276, 277, 287 Wechler v. First Nat. Bank, 42 Md. 581, 581 Weed V. Bond, 21 Ga. 195, 192, 291, 292 V. Carpenter, 10 Wend. (N. Y.) 403, 150, 659 V. Richardson, 19 N. C. 535, 91 V. Snow, 3 McLean 265, 292 V. Van Houten, 4 Halst. (N. J.) 489, 516 Weeks v. Medler, 20 Kan. 57, 322 Weems v. Shaughnessy, 70 Hun (N. Y.) 175, 433 Weidman v. Symes, 120 Mich. 657, 144 Weil V. Carswell, 119 Ga. 873, 47 S. E. 217, 489 Weil, Succession of, 24 La. Ann. 139, 288 Weiler v. Henarie, 15 Oreg. 28, 681 Weill V. Trosclari, 42 La. Ann. 171, 270 Weimer v. Shelton, 7 Mo. 237, 6, 363 Weirick v. Bank, 16 Ohio St. 297, 645 Weisser v. Denison, 10 N. Y. 68, 73 Welch V. Kinney, 46 Oreg. 406, 691 V. Mayer, 4 Colo. App. 440, 199 V. Taylor, 82 111. 574, 523 Welles' Appeal, 103 Pa. St. 594, 27 Wellington v. Jackson, 121 Mass. 157, 74 Wellman v. Dismukes, 42 Mo. 101, 263 V. Highland, 87 111. App. 405, 402 Wells V. Evans, 20 Wend. (N. Y.) 251, 89 V. Gress, 118 Ga. 566, 262, 265, 277 V. Masterman, 2 Esp. 731, 131 V. Potter, 120 Ga. 889, 196 V. Sutton, 85 Ind. 70, 670 Wells & Fargo Co. v. Simpson, 19 Tex. Civ. App. 636, 536 Welstead v. Levy, 1 Moody & R. 138. 658 Welter v. Kiley, 95 Pa. St. 461. 446 Wendlebone v. Parks, 13 Iowa 546, 359, 365 TABLE OF CASES. CXXXV [References are to Sections.^ Wentworth v. Blaisdell, 17 N. H. 275, 295 V. Dows, 117 Mass. 14, 601 V. Goodwin, 21 Me. 150, 208 Wenzel v. Shulz, 78 Cal. 221, 25, 116 Werr v. Kohler, 71 N. Y. Supp. 713, 540 Wessell V. Glenn, 108 Pa. St. 105, 144 Wessellman v. Stuart, 30 Misc. 808, 195 West V. Bannigan, 51 N. Y. App. Div. 328, 221, 222 V. Gavins, 74 Ind. 265, 214 V. Hayes, 104 Ind. 251, 600 V. Kelly's Exrs., 19 Ala. 353, 309, 320 V. Laraway, 28 Mich. 464, 34 V. Miller, 125 Ind. 70, 61 West Bank v. Shawnee Bank, 95 U. S. 557, 370 Westbay v. Stone, 112 Mo. App. 411, 502, 544, 680 Westbrook v. Belden Nat. Bank, 97 Tex. 246, 680 V. Robinson, 5 Blackf. 105, 472 Wesson v. Saline Co., 73 Fed. 917, 919, 20 C. C. A. 227, 229, 488 Wester v. Bailey, 118 N. C. 183, 183 Western Bank v. Mills, 7 Gush. (Mass.) 539, 671 Western Carolina Bank v. Moore (N. G. 1905), 51 S. E. 79, 342 Western Cottage Organ Co. v. Boyle, 10 Neb. 406, 260 Western Mfg. Co. v. Rogers, 54 Neb. 456, 320 Western T. & Coal Co. v. Kilder- house, 87 N. Y. 430, 442 Western Wheeled Scraper Co. V. Sadilek, 50 Neb. 105, 574, 583 Westheimer v. Phillips, 11 Neb. 54, 30, 350 Westinghouse Go. v. Gainor, 130 Mich. 393, 327, 328 Westloh V. Brown, 43 Up. Can. Q. B. 402, 154 Westminster Bank v. Wheaton, 4 R. I. 30, 256 Weston V. Hight, 17 Me. 287, 214 West St. Louis Bank v. Shaw- nee Bank, 95 U. S. 557, 483 Wethey v. Andrews, 3 Hill 582, 507 Wetmore v. Blush, Brayt. Vt. 55, 447, 679 Wetter v. Kiley, 95 Pa. St. 461, 271 Weverhauser v. Dun, 100 N. Y. 150, 135, 170 Weyman v. Perry, 42 S. C. 415, 379 Whaley v. American Freehold Land Mort. Co., 74 Fed. 73, 302 Wharton v. Hopkins, 11 Ired. (N. C.) 505, 635 Wheaton v. Wheeler, 27 Minn. 464, 688 Whedbee v. Reddick, 79 N. G. 521, 620 Wheeler v. Allen, 59 How. Pr. (N. Y.) 118, 386, 391 V. Asher, 2 Mo. App. 1286, 524, 539 V. Bancroft, 18 N. H. 537, 325 V. Barret, 20 Mo. 573, 436 V. Guild, 20 Pick. (Mass.) 545, 551, 394, 621 V. Seamans, 123 Wis. 573, 102 N. W. 28, 17 V. Traders' Deposit Bank, (Ky. 1900), 55 S. W. 552, 673 V. Traders' Deposit Bank, 21 Ky. Law R. 1416, 28 Wheeling Ice & Storage Go. v. Connor (W. Va. 1906), 55 S. E. 982, 80 Wheelock v. Barney, 27 Ind. 462, 193 V. Berkely, 138 111. 153, 222, 601 V. Freeman, 30 Mass. (13 Pick.) 165, 147, 171 Wheelwright v. Wheelwright, 2 Mass. 347, 317 Whelan v. Swain, 132 Cal. 389, 194 Wheller v. Barret, 20 Mo. 573, 419 Whelpley v. Stoughton, 112 Mich. 593, 57 Whett V. Blount, 53 S. E. 205, 192, 198, 202 Whitaker v. Brown, 8 Wend. (N. Y.) 490, 657 V. Crutcher, 5 Bush (Ky.) 621. 387 Whitcomb v. Miller, 90 Ind. 384, 316 318 White V. Bank, 64 N. Y. 316, ' 642 V. Camp, 1 Fla. 109, 238 V. Dougherty, Mart. & Y. 308, 682 V. Duggan, 140 Mass. 18, 380 V. Francis, 5 Ohio Dec. 328, 241 V. Goldsberg, 49 S. C. 530, 27 S. E. 517, 646 V. Harris, 69 S. C. 65, 142, 171 V. Hass, 32 Ala. 430. 147 V. Heylman, 34 Pa. St. 142, 446 V. Howe, 3 McLean (U. S.) 291, 119, 120 V. Keith, 97 Ala. 668, 538, 573 CXXXVl TABLE OF CASES. \_References are to Sections.'] "White V. Rasines, 21 N. Y. Supp. 243, 106 V. Savage (Or. 1906), 87 Pac. 1040, 270 V. Springfield Bank, 5 N. Y. Super. Ct. 222, 241, 242 V. Stoddard, 11 Gray 258, 511 V. Sutlierland, 64 111. 181, 365 Whiteford v. Munroe, 17 Md. 135, 73, 673 Whitehead v. Emmerick (Colo. 1906), 87 Pac. 790, 125, 149 V. Heidenheimer, 57 App. Div. 590, . 442 V. Walk-er, 10 M. & W. 698, 637 Whitehouse v. "Whitehouse, 90 Me. 468, 214 Whitely v. Allen, 56 Iowa 224, 515 Whiteside v. First National Bank (Tenn. Ch. App. 1898), 47 S. W. 1108, 394 Whitesides v. Cannon, 23 Mo. 457, 33 V. Northern Bank, 10 Bush. (Ky.) 501, 164 Whitlock V. Manciet, 10 Ore. 166, 142 Whitman v. Farmers' Bank of Chattahoochie, 8 Port. 258, 566 Whitmer v. Frye, 10 Mo. 348, 147, 169 Whitmore v. Nickerson, 125 Mass. 496, 137, 175 Whitney v. Cook, 53 Miss. 551, 691 V. Snyden, 2 Laws (N. Y.) 447, 25, 26 Whitney Nat. Bk v. Cannon, 52 La. Ann. 1484. 27 So. 948, 467 Whitt V. Blount, 124 Ga. 671, 53 S. E. 205, ' 105, 198, 202 Whittaker v. Edmunds, 1 Mood. 6 R. 366, 193 V. Kuhn, 52 Iowa 315, 260 V. Ordway, 69 N. H. 182, 693 Whittemore v. Obear, 58 Mo. 280, 271, 350 Whitten v. Hayden, 7 Allen 407, 303, 304 Whittenhall v. Korber, 12 Kan. 618, 3 Whittier v. Collins, 15 R. I. 44, 525, 573 Whittington v. Farmers' Bank, 5 Har. & J. (Md.) 489, 596 Whittle V. Hide & Leather Bank, 7 Tex. Civ. App. 616, 380 Whit well V. Crehore, 8 La. (0. S.) 540, 282 Whitworth v. Carter, 43 Miss. 61, 61 Wickersham v. Beers, 20 111. App. 243, 183 Wickham v. Grant, 28 Kan. 517, 119, 122 Widoe V. Webb, 20 Ohio St. 431, 288 Wiffen V. Roberts, 1 Esp. 261, 369, 376 Wiggin V. Bush, 12 Johns. 306, 472 V. Damrell, 4 N. H. 69, 617, 653 Wiggins V. McGimpsey, 21 Miss. 532, 260 Wilbur V. Jeep, 37 Neb. 604, 635 V. Prior, 67 Vt. 508, 116, 117 Wilcox V. Arnold, 116 N. C. 708, 30, 36 V. Aultman, 64 Ga. 544, 699 V. Howland, 23 Pick. (Mass.) 167, 110 V. Tennent, 13 Tex. Civ. App. 220, 126 Wilcoxon V. Logan, 91 N. C. 449 291 Wild 'v. Howe, 74 Mo. 551, 305 V. Van Valkenburgh, 7 Cal. 166, 514 Wilderman v. Donelly, 86 Minn. 184, 198, 238 Wile & Brickner Co. v. Roches- ter & F. F. L. Co., 4 Misc. (N. Y.) 570, 85 Wilensky v. Morrison, 50 S. E. 472, 202, 328 Wiley V. First Nat. Bank, 47 N. Y. 546, 581 Wilkie V. Chandon, 1 Wash. 355, 288, 524, 539 Wilkins v. Gillis, 20 La. Ann. 538, 539 V. McGuire, 2 App. D. C. 448, 514, 515 Wilkinson v. Jeffers, 30 Ga. 155, 635 V. Nicklin, Fed. Cas. No. 17,673, 23 V. Sargent, 9 Iowa 521, 699 V. Seary, 74 Ala. 243, 653 V. Wooten, 59 Ga. 584, 614 Willard v. Crook, 21 App. D. C. 237, 270, 279 V. Dow, 54 Vt. 182, 195, 196 V. Nelson, 35 Neb. 651, 27 V. Pinard, 65 Vt. 160, 183 Willard Mfg. Co. v. G. H. Tier- ney & Co., 133 N. C. 630, 45 S. E. 1026, 414 Willets V. Bank, 2 Duer. (N. Y.) 121, 24 WillettsR. laine, 43 111. 432, 523 TABLE OF CASES. CXXXVll [References are to Sections.'] Willetts V. Phoenix Bank, 2 Duer 121, 443 Williams v. Alexander, 79 N. C. 411, 293 V. Baker (Mo. App.), 73 S. W. 339, 260, 264, 265, 467 V. Baker, 100 Mo. App. 284, 419 V. Baltimore Nat. Bank, 70 Md. 343, 503, 570 V. Bank of United States, 2 Pet. 96, 553 V. Barrett, 52 Iowa 637, 135 V. Benton, 10 La. Ann. 158, 343, 419 V. Bosson, 11 Ohio 52, 389 V. Bristoe, 1 A. K. Marsh. (Ky.) 176, 208 V. Brown, 65 N. Y. Supp. 1049, 583 V. Cheney, 3 Gray (Mass.) 215, 215, 288, 376 V. Donaldson, 8 Clarke (Iowa) 109, 312 V. Farmers' & D. Bank, 20 Ky. Law Rep. 1273, 49 S. W. 183, 47 V. Haines, 27 Iowa 251, 217, 254 V. Harrison, 3 Salk. 197, 67 V. Holt, 170 Mass. 351, 49 N. E. 654, 402 V. Huntington, 68 Md. 590, 119, 474, 476 V. Island City M. Co., 25 Oreg. 573, 181 V. Jenson, 75 Mo. 681, 684, 175 V. Jones, 77 Ala. 294, 679 V. Judy, 8 111. 282, 297 V. Keokuk, 44 Iowa 88, 87 V. Keyes, 90 Mich. 290, 699 V. King, 43 Conn. 569, 34, 57 V. Little, 11 N. H. 79, 241, 359 V. Nat. Bank of Baltimore, 72 Md. 441, 375 V. Planters' & M. Nat. Bank, 91 Tex. 651, 527, 533 V. Rabk, 1 Ind. 230, 224 V. Reid, 18 Wash L. Rep. (D. C.) 607, 56 V. Scott, 83 Ind. 405, 338, 340 V. Smith, 2 Hill (N. Y.) 201, 270, 359, 376, 377 V. Stoll, 79 Ind. 80, 27, 28 V. Urmiston, 35 Ohio St. 296, 33 V. Wall, 60 Mo. 318, 297 V. Wilmington, 93 N. C. 42, 414 Williamson v. Cline, 40 W. Va. 194, 34, 47 V. Doby, 36 Ark. 689, 421 V. Fox, 30 N. J. Eq. 488, 629 Williamson v. Watts, 1 Camp. 552, 67 Willis V. Barrow (Mo.), 45 S. W. 289, 634 V. Finley, 173 Pa. 28, 574 V. Green, 5 Hill 232, 520, 561 V, Twambly, 13 Mass. 204, 63, 446 Willmarth v. Crawford, 10 Wend. (N. Y.) 241, 85 Wills V. Wilson, 3 Oreg. 308, 167 Wilmington v. Kitchin, 91 N. C. 39, 150 Wilson V. Denton, 82 Tex.' 531, 237 V. Ellsworth, 25 Neb. 246, 184, 201 V. Forder, 20 Ohio St. 89, 5 Am. Rep. 627, 17, 610 V. Henderson, 9 Sm. & M. (Miss.) 375, 145 V. Holmes, 5 Mass. 543, 348 V. labeil, 45 Ala. 142, 273 V. Jamieson, 7 Pa. St. 126, 149 V. Jordan, 3 Stew. & P. (Ala.) 92, 208 V. Kinsey, 49 Ind. 35, 22 V. Knight, 59 Ala. 172, 303 V. Lewiston Mills Co., 150 N. Y. 314, 277 V. Metropolitan R. R. Co., 120 U. S. 145, 370, 483 V. Powers, 131 Mass. 539, 541, 312 V. Richards, 28 Minn. 337, 555 V. Riddler, 92 Mo. App. 335, 119, 475 V. Roche, 58 N. Y. 642, 380 V. Senier, 14 Wis. 380, 505, 521 V. Skaggs, 10 Tex. 298, . 73 V. Van Winkle, 2 Gil. (111.) 684, 236 V. Wright, 116 Mich. 476, 684 Wilson's Admrs. v. Green, 25 Vt. 450, 128 Wilson, Ex parte. 11 Ves. 411, 523 Wiltbank v. Tobler, 181 Pa. St. 103, 45 Wilthaus V. Ludecus, 5 Pick. L. (S. C.) 326, 5B Wiltsie V. Northam, 5 Bosw. (N. Y.) 421, 635 V. Northam, 3 Bosw. (N, Y.) 162, 239 Wimbish v. Wade, 21 La. Ann. 180, 350 Win V. Thomas, 55 N. H. 294, 288 Winans v. Gibbs & Starrett Mfg. Co., 48 Kan. 777, 212, 259 CXXXVlll TABLE OF CASES. ^References are to Sections.'i Windham County Bank v. Ken- dall, 7 R. I. 77, 89, 131 Windle v. Canaday, 21 Ind. 248, 655 Winebrinner v. Weigsger, 3 T. B. Mon. 33, 300 Wineman v. Oberne, 40 III. App. 269, 202, 272 Wing V. Dunn, 24 Me. 128, 302 V. Ford, 89 Me. 140, 35 Atl. 1023, 475 Wingo V. McDowell, 8 Rich. (S. C.) 446, 183 Winkle v. Citizens' Bank (Tex.), 33 S. W. 862, 439 Winklemam v. Choteau, 78 111. 107, 202 Winkles v. Guenther, 98 Ga. 472, 135 Winn V. Wilkins, 35 Miss. 186, 134, 273 Winona Bank v. Wofford, 71 Miss. 711, 463, 465 Winship v. Bank, 42 Ark. 24, 352, 476, 670 V. Bank, 5 Pet. (U. S.) 529, 93, 131 Winslow V. Bailey, 4 Shep. (Me.) 319, 211 Winstead v. Davis, 40 Misc. 785, 463, 264, 465 Winston v. Richardson, 27 Ark. 34, 502 Winter v. Loeb, 100 Ala. 503, 160 V. Pool, 100 Ala. 503, 164 V. Pool, 104 Ala. 580, 23, 145 Winters v. Home Ins. Co., 30 Iowa 172, 270, 383 Winthrop Sav. Bank v. Jackson, 67 Me. 570, 597, 598 Wintle V. Crowther, 1 Cromp. & J. 316, 90, 91 Winton v. Freeman, 102 Pa. St. 366, 125 Wirebach v. Easton Bank, 97 Pa. St. 543, 72 Wirt V. Stubblefield, 17 App. D. C. 283, 306, 464 Wisconsin Yearly Meeting of Freewill Baptists v. Babler, 115 Wis. 289, 473 Wisdom V. Shanklin, 74 Mo. App. 428, 61 Wise V. Kelly, 2 A. K. Marsh. (Ky.) 545, 208 Wiseman v. Chiappella, 23 How. 368, 511, 513, 517, 532 Wistrand v. Parker, 7 Kan. App. 562, 366 Witherow v. Slayback, 158 N. Y. 647, 570 Witkowski v. Maxwell, 69 Miss. 56, 530, 532, 542, 552 Witmer Bros. v. Weid, 108 Cal. 569, 350 Witte V. Williams, 8 S. C. 290, 383 Wittkowski v. Smith, 84 N. C. 671, 514 Wittman v. Pickens, 33 Colo. 484, 695 Wolcott V: Boston Faucet Co., 9 Gray 376, 405 V. Van Santvoord, 17 Johns. 248, 502 Wold V. "Marsh, 54 Cal. 228, 321 Wolf V. Duvall (Ark.), 13 S. W. 728, 57 V. Hostetter (Pa.), Lane. L. Rev. 201, 567 V. Michael, 21 Misc. R. (N. Y.) 86, 639 V. Shelton, 159 Ind. 531, 42 V. Zimmerman, 127 Ind. 486, 45 Wolfe V. Jewett, 10 La. 283, 230 Wolford V. Andrews, 29 Minn. 350, 524, 539 Wolka V. Kuhne, 109 Ind. 313, 10 N. E. 116, 95, 670 Wolverton v. George H. Taylor & Co., 157 111. 485, 271 Wood V. Bank, 129 Mass. 358, 622 V. Boylston National Bank, 129 Mass. 358, 392 V. Bush, 72 Cal. 22, 592, 594 V. Callaghan, 61 Mich. 402, 544, 556 V. Kendall, 7 J. J. Marsh. (Ky) 212, 329 V. Ridgeville College, 114 Ind. 320, 210, 367 V. Rosendale, 18 Ohio Cir. Ct. R. 247, 509, 515, 566, 569 V. Steele, 65 Ala. 436, 125, 133, 595 V. Steele, 6 Wall. (U. S.) 80, 139 V. Viosca, 26 La. Ann. 716, 636 V. Warren, 19 Me. (1 App.) 23, 635 V. Wellington, 30 N. Y. 218, 418 Wooden v. Wampler, 69 Ind. 88, 34 Woodford v. Dorwin, 3 Vt. 82. 94 Woodham v. Allen, 130 Cal. 194, 113, 295 Woodhull V. Holmes, 10 Johns. (N. Y.) 231, 317, 380 Woodin v. Foster, 16 Barb. (N. Y.) 146, 333 I TABLE OF CASES. CXXXl.: ^References are to Sections.'] Woodman v. Eastman, 10 N. H. 359, 525 Wood Mowing & Reaping Mach. V. Land. 98 Ky. 516, 212 Wood River Bank v. Omaha First Nat. Bank, 36 Neb. 708, 587 Woodruff V. Hill, 116 Mass. 310, 341, 383 V. Munroe, 33 Md. 146, 102 V. Webb, 32 Ark. 612, 237, 465 Woods V. Colony Bank, 114 Ga. 683, 701 Woodson V. Barret, 2 Hen. & M. 80, 291 V. Owens, 12 So. 207, 242, 247 Wood Sons Co. v. Schaefer, 173 Mass. 443, 369 Woodsum V. Cole, 69 Cal. 142, 417 Woodward v. Lowry, 74 Ga. 148, 524, 538, 573 V. Mathews, 15 Ind. 339, 455 V. Rogers, 31 Iowa 342, 119 Woodworth v. Anderson, 63 Iowa 503, 147 V. Bank, 19 Johns. (N. Y. 391, 135, 164, 179 V. Huntoon, 40 111. 131, 434 V. Veitch, 29 Ind. App. 529, 183 Woolfolk V. Bank, 10 Bush (Ky.) 504, ' 166, 661 V. Plant, 46 Ga. 422, 302 Woollen V. Whitacre, 73 Ind. 198, 26, 123 Woolridge v. Gates, 2 J. J. Marsh. (Ky.) 222, 288 Wooten V. Inman, 33 Ga. 41, 307 Worcester National Bank v. Che- ney, 87 111. 602, 241 Work V. Brayton, 5 Ind. 396, 368 V. Case, 34 Pa. St. 138, 359 V. Prall, 26 Pa. Super. Ct. 104, 679 Workingmen's Banking Co. v. Blell, 57 Mo. App. 410, 525 Workman v. Wright, 33 Ohio St. 405, 31 Am. Rep. 546, 74, 674 Worley v. Moore, 97 Ind. 15, 210 Wormer v. Agricultural Works, 50 Iowa 262, 121 Wormley v. Lowry, 1 Humphr. 468, 447 Worrall v. Green, 39 Pa. St. 388, 165 Wortendyke v. Meehan, 9 Neb. 221, 303 Worthington v. Curd, 22 Ark. 277, 465 Wray v. Furniss, 27 Ala. 471, 594, 600 Wray v. Warner (Iowa), 82 N. W. 455, 473 Wright V. Andrews, 70 Mo. 86, 570 V. Austin, 56 Barb. (N. Y.) 13, 639 V. Benjamin, 5 La. Ann. 179, 227 V. Brosseau, 73 111. 381, 28 V. Flinn, 33 Iowa 259, 28 V. Hardie, 88 Tex. 653, 246, 376 V. Hughes, 13 Ind. 109, 288 V. Irwin, 33 Mich. 32, 123, 328 V. Leonard, 11 C. B. N. S. 258, 30 V. Lessenfield, 93 Cal. 90, 573 V. Levy, 12 Cal. 257, . 437, 447, 448 V. Maccarty, 92 111. App. 120, 581 V. Parvis, 1 Marv. (Del.) 325, 45 V. Pipe Line Co., 101 Pa. St. 204, 85, 86, 251 V. Remington, 41 N. J. L. 48, 60, 107, 342 V. Riley, Peake 173, 178 V. Steel, 2 N. H. 54, 64 V. Vetter, 54 Mo. App. 384, 322 Wrightman v. Hart, 37 111. 123, 183 Wrixon v. Macoboy, 6 Vict. Law R. 350, 282 Wulschner v. Sells, 87 Ind. 71, 57, 629 Wyatt V. Ayers, 2 Port (Ala.) 157, 116 V. Duferne, 106 111. App. 214, 680 V. Evins, 52 Ala. 285, 195 V. Wallace, 67 Ark. 575, 291, 292 Wyckokk v. Runyon, 33 N. J. L. 107, 208 Wylie V. Cotter, 170 Mass. 356, 507 V. Railway Co., 41 Fed. 623, 151 Wyman v. Bank, 29 Fed. 734, 670 V. Bank, 5 Colo. 30, 121, 203 V. Ft. Dearborn Nat. Bank, 181 111. 279, 581 V. Gray. 7 Har. & J. (Md.) 409, 193, 198, 234, 239 V. Robbins, 51 Ohio St. 98, 635, 639 V. Whitehouse, 80 Me. 257, 30 V. Yeomans, 84 111. 403, 152 Yager v. Kentucky Title Co., 23 Ky. L. Rep. 2240, 681 Yakima Nat. Bank v. Knipe, 6 Wash. 348, 402 Yale V. Dederer, 18 N. Y. 265, 33 V. Dederer, 22 N. Y. 450, 59 cxl TABLE OF CASES. IReferences are to Sections.'\ Yance v. English, 78 Ind. 80, 679 Yardley National Bank v. Van- sant, 214 Pa. 250, 442 Yarwood v. Trusts & Guarantee Co., Ltd., 87 N. Y. Supp. 947, 192 Yates V. Donaldson, 5 Md. 389, 270 Yates V. Goodwin, 96 Me. 90, 507, 511 Yates, Ex parte, 2 De Gex, & J. 191, 175 Yeager v. Farwell, 13 Wall. 6, 573 Yeagley v. Webb, 86 Ind. 424, 25, 27 Yeamans v. Chatterton, 9 Johns. (N. Y.) 295, 288 Yeates v. Williams, 5 Ark. 684, 288 Yeatman v. Mattison, 59 Ala. 382, 233 Yeatman Shields & Co. v. Bell- main, 1 Tenn. Ch. 589, 30 Yeaton v. Burney, 62 111. 61, 502 Yellow Medicine County Bank V. Tagley, 57 Minn. 391, 25, 28, 315 V. Wiger, 59 Minn. 384, 61 N. W. 452, 659 Yellowstone National Bank v. Gagnon, 19 Mont. 402, 241, 376, 377 Yenney v. Central City Bank, 44 Neb. 402, 699 Yocum V. Smith, 63 111. 321, 145 Yoho V. McGovern, 42 Ohio St. 11, 3, 216 York V. Jones, 43 N. L. J. 332, 158 York Bank v. Asbury, Fed. Cas. No. 18142, 1 Biss C. C. 233, 112 Young V. American Bank, 89 N. Y. Supp. 915, 512 V. Baker, 29 Ind. App. 130, 185, 136 Young V. Bell, Fed. Cas. No. 18152, 1 Cranch C. C. 342, 63 V. Berkeley, 2 N. H. 410, 303 V. Brewster, 62 Mo. App. 628, 397 V. Bryan, 6 Wheat. 146, 528, 543 V. Chew, 9 Mo. App. 387, 92, 421 V. Clarendon, 132 U. S. 340, 87 V. Currier, 63 N. H. 419, 172, 679 V. Grundy, 7 Cranch (U. S.) 548, 324, 650 V. Grote, 4 Bing. 253, 146 V. Rodes, 5 T. B. Mon. (Ky.) 498, 623 V. Shriner, 80 Pa. St. 463, 627, 634, 635 V. Sims, 41 111. App. 28, 112 V. Smith, 14 Wash. 565, 316 V. Wright, 1 Camp. 139, 303 Young Men's Christian Associa- tion Gymnasium Co. v. Rock- ford Nat. Bank, 179 111. 599, 372, 467 Youngs V. Lee, 18 Barb. 187, 241 V. Little, 15 N. J. L. 1, 419, 465 Younker v. Martin, 18 Iowa 143, 465 Zabriskie v. Spielman, 46 N. J. L. 35, 472 Zane v. Xane, Munf. (Va.) 406, 195 Zeigler v. Maner, 53 S. C. 115, 302 Zeis V. Potter, 14 C. C. A. 665, 237 V. Potter, 105 Fed. 671, 420, 436 Zimmerman v. Rote, 75 Pa. St. 188, 171, 661 Zinsser v. Columbia Cab. Co., 66 App. Div. (N. Y.) 514, 334 Zobel V. Bauersachs, 55 Neb. 20. 341 DEFENSES TO COMMERCIAL PAPER CHAPTER I. AVAILABILITY, GENERALLY AS TO PARTIES. Sec. Sec. 1. Rule as to makers. 7. In action on corporation note or 2. Same Subject — That transfer indorsement. from payee was procured by 8. Clearing-house rules — When undue influence. available. 3. Joint and several makers. 9. Guarantor — Rule as to. 4. Defense of maker not available 10. Note indorsed in blank. to indorser. 11. On note purchased from bank. 5. Where maker concluded by acts 12. Obligors on bond — Rule as to of agent. where given in consideration 6. Accommodation indorser — Rule of extension of time. as to. § 1. Rule as to makers. — In an action upon commercial paper it is a general rule that a defendant cannot avail himself of a defense that is peculiar to his co-defendant and goes only to the personal dis- charge of the latter/ as where the defense of coverture and surety- ship is pleaded by one joint maker in which case, though such defense is established by liim, it is held not to release his co-maker.- And though the indorser may, in an action against him and the maker, successfully defend the suit upon the ground of want of proof of due demand and notice the right of the holder to recover against the maker will not be affected thereby as the plea goes to the personal discharge of the party interposing it.^ And a maker cannot demur to a petition in an action on a note on the ground that it does not 'Slevin v. Reynolds, 1 Handy = Brant v. Barnett, 10 Ind. App. (Ohio) 37. 653, 38 N. E. 421. See § 62. herein. 3 Nevill v. Hancock, 15 Ark. 511. 1 §2] AVAILABILITY, GENERALLY AS TO PARTIES. 2 state a cause of action against an indorser.* Xor is it any defense to an action against the maker by the indorsee that, in consequence of the insolvency of the maker, the plaintifE obtained the note from the payee for an amount much less than the amount due thereon, the plaintiff verbally agreeing with the indorser to exact from the maker about the same amount as he paid therefor, as such representation and promise were made to the indorser, were without any consideration moving from the defendant, and are to be regarded as of too loose and indefinite a character to discharge the defendant from his legal liability or to impair the legal obligation of his contract. A promisor may also withdraw a promised favor or gratuity and it cannot be de- manded as a legal right since only such rights and liabilities are looked to by courts of law.= And in such an action it is no defense that the note was obtained by the payee under an agreement with his creditors, to which the maker was not a privy, that it should be in- dorsed to them and that in violation of such agreement it was trans- ferred to the indorser.*' So the drawer of a check is as between him- self, the payee, and holder, the principal and it is immaterial that the check was for the accommodation of the payee and that the in- dorsee had knowledge that it was an accommodation check.^ But where a maker has a good defense to a note as between him and the payee, but is prevented from making it, in consequence of the note having passed into the hands of an indorsee, it may be proper to show the circumstances under which the indorsement was made, as that it w-as indorsed to him past due, or that he is not for other reasons, a hona fide holder of the note. This defense is proper in many in- stances for the purpose of subjecting the note in the hands of the in- dorsee to a defense existing between the original parties.^ § 2. Same subject — That transfer from payee was procured by un- due influence. — The maker cannot avail himself of the defense that the indorsement of a promissory note from the payee was procured by undue influence, where the act was disaffirmed neither by the payee nor his legal representatives. The indorsement in such case is a con- tract which is voidable and not void, and the right to avoid it is a *Sleviii V. Reynolds, 1 Handy « Tarbell v. Sturtevant, 26 Vt. 512. (Ohio) 37. Defenses available against a holder ■^Babson v. Webber, 26 Mass. (9 of a note may be set up against a re- Pick.) 163. ceiver appointed to collect it. "Mack V. Clark, 42 Mass. (1 Hutchins v. Langley, 27 App. (D. Mete.) 423. C.) 234. "Murray v. Judah, 6 Cow. (N. Y.) 484. I 3 JOINT AND SEVERAL MAKERS. [§ 3 personal right which can only be exercised by the one upon whom the undue influence was exerted or by his guardian or representatives.^ § 3. Joint and several makers. — If one of several joint makers of a note establishes a defense in an action against them all, which goes to the merits of the case and will defeat the rights of the plaintiff to recover, such defense will inure to the benefit of the other defend- ants," whether they individually made such defense or not.^^ So a defense by one of several makers sued jointlj^, which goes to the in- validit}' of the note as that the consideration therefor was illegal, is held to inure to the benefit of the others.^- But the makers of a joint and several note, whatever may be their true relation as between themselves, stand as to the payee as principals and it cannot be shown by either of them that, as bet«-een him and the other joint makers, he was a surety, where the payee had no knowledge of such relation.^^ The principle underlying this rule is, that a person executing a note as maker with another enters into an unconditional obligation to pay, and the contract so made must stand or fall by the legal rules which are controlling in such contracts. The language importing such an unconditional promise, the meaning thereof cannot be varied by parol, and the law afl&xes to the language used its obvious signification.^* "Carrier v. Sears, 86 Mass. (4 Al- Cal. 278; Shriver v. Lovejoy, 32 Cal. len) 336, 81 Am. Dec. 707; distin- 574; Auld v. Magruder, 10 Cal. 282. guishing Peasley v. Robbins, 44 Connecticut. — Bull v. Allen, 19 Mass. (3 Mete.) 164, which appar- Conn. 101. ently holds to the contrary, on the loica. — Small v. Older, 57 Iowa ground that the defendant in such 326, 10 N, W. 734; Murray v. Gra- case had been notified by the guar- ham, 29 Iowa 520. dian of the insane payee, not to pay Kansas. — Whittenhall v. Korber, the note to the plaintiff, and the de- 12 Kan. 618. fense being conducted by the guar- New Hampshire.— Heath v. Derry dian for the bene^c of the ward. Bank, 44 N. H. 174. '■^Moyer v. Brand, 102 Ind. 301, Ohio. — Cone v. Rees, 11 Ohio Cr. 26 N. E. 125; Brant v. Barnett, 10 Ct. 632, 1 Ohio Cr. Dec. 192. Ind. App. 653, 38 N. E. 421; Miller Vermont.— Benedict v. Cox. 52 Vt. V. Longacre, 26 Ohio St. 291. 247; People's Bank v. Pearsons, 30 "Brant v. Barnett, 10 Ind. App. Vt. 711; Claremont Bank v. Wood, 653, 38 N. E. 421. 10 Vt. 582. "Miller v. Longacre, 26 Ohio St. But examine Texas.— Pridgen v. 291. Buchannon, 27 Tex. 589. " Alabama.— Rice v. Brantley, 5 "Auld v. Magruder, 10 Cal. 282, Ala. 184. 290. California. — Damon v. Pardow, 34 3] AVAILABILITY, GENERALLY AS TO PARTIES. The note being a joint obligation the same construction must be put upon it as to all the defendants. The plaintiff's legal right in regard to one of the defendants cannot be looked upon in a different light from what they are in regard to the others without at once destroying their joint liability and changing a principal debtor into a mere surety.^^ Makers in such a case cannot be permitted to require that tlie holder of the instrument should respect rights arising out of a relation of the parties to each other of which he is ignorant, and to impose such an obligation the character in which they occupy should appear on the face of the instrument, or he must be notified of it in some other way.^^ It has, however, been decided that where a note does not hose verba describe the parties either as principals or sure- ties, but merely as joint promisors, the general rule that, where a party has stated the character in which he contracts, he shall not be allowed to prove the reverse by extrinsic evidence does not apply.^^ And it has been determined that a person who signs a note jointly with an- other, may show that he in fact signed as surety with the knowledge of the payee or holder.^^ So it has been decided that if one person buys property and makes a gift of a portion of it to another and both « Bull V. Allen, 19 Conn. 101. "Noel V. Harding, 2 Mete. (Ky.) 247. In this case it was said: "It is a just and reasonable doctrine that where the parties make an in- strument which is assignable, and upon the contract itself hold them- selves out as principals, they are to be regarded and treated both by the assignor and assignee as occupying the attitude in which they have rep- resented themselves to stand, unless the holder has knowledge that some of them are the sureties of the others. Good faith requires that the holder of the paper should have a right to so regard and treat them. It would be manifestly unjust to subject them to the legal conse- quence of discharging the sureties to the note by an agreement with the principal, when he was igno- rant of the relation in which the parties stood to each other and had a right to consider them all as prin- cipals." Per Simpson, C. J. In Shriver v. Lovejoy, 32 Cal. 574, it is said that: "Whatever may be their true relation between themselves as to the payee they stood as principals. The promise of each is an absolute and primary promise, not a condi- tional or secondary one. The cred- itor is not interested in knowing the relation of the makers with each other. In a suit on the note he ought not to be delayed by an investigation into matters which do not concern him." Per Rhodes, J. " Branch Bank v. James, 9 Ala. 949, 953. See, also, Davis v. Bar- rington, 30 N. H. 517; Smith v. Bing, 3 Ohio 85. i^Neel V. Harding, 2 Mete. (Ky.) 247; Cummings v. Little, 45 Me. 183; Grafton Bank v. Kent, 4 N. H. 221; Harmon v. Hale, 1 Wash. T. 422, 34 Am. Rep. 816. See Kennedy V. Gibbes, 2 Desauss. (S. C.) 380. I 5 MAKER CONCLUDED BY ACTS OF AGENT. [§§ 4-6 unite in giving a note therefor with the understanding that the Litter signs as security, the gift to him does not constitute him a principal in the contract.^'' And where a statute provides that "when judgment is rendered * * * on a joint contract or instrument, parties to the action who were not summoned * * * may be made parties thereto by action in the same court," the fact that at the commence- ment of the original action the days of grace allowed the maker had not expired, is no defense to an action to charge a joint maker.^o §4. Defense of maker not available to indorser. — Wliere the makers and indorsers are sued upon a note, it has been decided that an answer by one of the makers will not inure as an answer of the in- dorsers.^^ « § 5. Where maker concluded by acts of agent. — Where the obligee of a bond delivered the same to his creditor with authority to receive payment, and the latter accepted the note of the obligor with a surety and surrendered the bond, agreeing that the note should be delivered up to the maker in case the obligee should refuse to consider the note as payment, it was decided that he could not set up in defense to the •note the agreement and the subsequent refusal of the obligee to con- sider the note as payment, as the giving of the note, and the taking pos- session of the bond under the authority given amounted in law to a payment and any subsequent dissent by the obligee was unavailing, he being concluded by the acts of his agent.-^ § 6. Accommodation indorser — Rule as to. — Where a note is in- dorsed by one, merely for the accommodation of another, the former is to be regarded as surety and may avail himself of any defense, which the maker could make against a subsequent holder.^^ In an "Fraser V. McConnell, 23 Ga. 368. contract between him and the '°Yohe V. McGovern, 42 Ohio St. maker. Weimer v. Shelton, 7 Mo. 11, decided under R. S. § 5366. 237: "An indorsee for accommoda- 21 Alfred v. Watkins, Code R. N. tion is to be regarded in the light S. (N. Y.) 343, 1 Edm. Sel. Cas. (N. of a surety and as such is entitled Y.) 369. ' to avail himself of any defense =^ Parsons v. Gaylord, 3 Johns, which would have availed the (N. Y.) 463. maker." Per Napton, J. Sawyer v. =^Dunscomb v. Bunker, 43 Mass. Chambers, 44 Barb. (N. Y.) 52: (2 Mete.) 8, may show that the in- "Has a right to any defense the dorsee received the note as security maker could avail himself of." Per for the performance of a usurious Ingraham, J. Sawyer v. Chambers, § G] AVAILABILITY, GENERALLY AS TO PARTIES. 6 early case it was said : "As the act regulating interest stood at the in- stitution of this suit, the excess of the usurious interest over the real sum of money advanced was adjudged against the lender, and it be- came a debt of record, upon which the party setting up usury, could on motion have judgment. This provision presents a serious difficulty in allowing the defense to be set up by a surety, as it would seem to be the intention of the legislature that the party whose necessities had been taken advantage of should alone be entitled to" the benefit of this provision. But, however this may be, and whatever would be the proper course when a case of this kind arises, it is clear that to con- strue the act so as to preclude securities from setting up its provisions as a defense, would enable usurers, by a very simple and easy device, to evade the law conpletely."-* So evidence has been held admissible in an action against an accommodation indorser "by the indorsees to show that the whole consideration of the note, or the greater part of it, had failed; that the note was given on account of goods which the plaintiffs had agreed to sell to the maker; that only a small portion of such goods had been delivered and that the amounts so delivered had been actually paid for.-^ And a discharge in bankruptcy may be set up or waived by the bankrupt at his pleasure, and it is no defense to an action by the second indorser against the first that the former negligently omitted, in an action against him on the note, to avail himself of this defense in consequence of wliich he was obliged to pay a judgment recovered thereon.-'' In Louisiana this general rule is also affirmed, an exception, however, being apparently made in the case of pleas or defenses personal to the maker. ^^ 43 Barb. (N. Y.) 622; Gunnis v. sued upon the note, they could have Weigley, 114 Pa. St. 191, 6 Atl. 465; shown that the note was given on "As a general rule a surety is al- account of goods to be delivered, lowed to stand upon the rights of his and that such goods had never been principal." Per Mr. Justice Clark. received. The plaintiffs, under -* Weimer v. Shelton, 7 Mo. 238, such proof, would have no proof 240. Per Napton, J. against defendants, as the note -^ Sawyer v. Chambers, 44 Barb, would be with consideration. So (N. Y.) 42, the court said. "I am at long as the court permits the con- a loss to see any ground on which sideration of a note to be inquired this evidence could be excluded, into, under any circumstances, the Surely an accommodation indorser facts presented in the defendants' is in no wors« condition than the offer come within the rule." Per maker. He has a right to any de- Ingraham, P. J. fense which the maker could avail -" Bowman v. Pope, 33 Miss. 94. himself of. If the makers had been -' Johnson v. Marshall, 4 Rob. 7 ACTION ON CORPORATION NOTE — BLANK INDORSEMENT. [§§ 7-11 § 7. In action on corporation note or indorsement. — Where a corporation authorized by resolution the raising of money on its as-' sets to pay its debts and subsequently a party whose note it held gave two notes in place of the old one, one of which was then indorsed by the corporation to secure the loan, it was decided that it was no de- fense against the indorser that the transfer was unauthorized because the notes were not in existence at the time of the resolution, it being declared that the substituted notes would seem to be as much within the resolution as the original note, in whose place they were put.-^ § 8. Clearing-house rules — When available. — Clearing-house rules are solely for the purpose of facilitating exchange between banks, and in an action against the indorser of a note he cannot avail himself, as a defense, of such rules to which he is not a party. WTiatever effect is to be given such regulations as between the banks, a defendant in such a case is not in a situation to claim the benefit of them.^® § 9. Guarantor — Rule as to. — One who is a guarantor by virtue of his indorsement, may set up a defense of usury in the inception of the note in the same manner as if he had indorsed it in blank, he being regarded as a surety and entitled to avail himself of this defense to the same extent as the principal can.^'' § 10. Note indorsed in blank. — Where one indorses a negotiable, promissory note in blank and delivers it to another for his accommo- dation, by whom it is delivered without indorsement to a third party in settlement of an indebtedness, the latter agreeing to pay the differ- ence in cash, which he fails to do, but indorses the note and delivers it to a fourth party, who brings an action against the accommodation indorser for the amount of the note, it has been decided that an affidavit of defense, which sets forth the above facts and alleges that plaintiff is not a bona fide holder, is sufficient.^^ § 11. On note purchased from bank. — Where a note is purchased by a national bank at a discount, though the discount may be such (La.) 157: Satterfield v. Compton, Rep. 376. Examine Overman v. Ho- 6 Rob. (La.) 120, may show usury, boken City Banlt, 30 N. J. L. 61. Sustains general rule. =" Conger v. Babbet, 67 Iowa 13, "Crooke v. Mali, 11 Barb. (N. 24 N. W. 569. Y.) 205. 2' Gunnis, Barrett & Co. v. Weig- ^ Manufacturers' Nat. Bank v. ley, 114 Pa. St. 191, 6 Atl. 465. Thompson, 129 Mass. 438, 37 Am. § 12] AVAILABILITY, GENERALLY AS TO PARTIES. 8 that it amounts to usury and the bank forfeits the entire interest, yet the purchase, so far as the title of the note and its negotiability is concerned, is not affected by the usurious discount. The discount may, however, be so great as to be strong evidence, in connection with other circumstances tending to prove notice of the infirmity of the paper, and that the bank had notice at the time it bought the paper of its infirmity as to let in antecedent equities between the makers and payee as against the note in the hands of the bank.^^ So where a person made and indorsed a note which the plaintiff purchased from the bank, it is no defense to an action by the latter to recover thereon, that the bank from which he purchased is by statute prohibited from discounting paper which has not at least two names thereon, such restriction being designed for the protection of the stock and bill holders and the depositors of the bank.^^ § 12. Obligors on bond — Rule as to where note is given in con- sideration of extension of time. — Wliere, in consideration of an ex- tension of the time for payment, the obligors upon a bond given to secure the debts of third parties, execute a note for the amount due thereon, it has been determined that they may avail themselves of any defense which would defeat a recovery upon the bond. Thus it was so held, where one who had the exclusive right to sell sewing machines manufactured by the plaintiff, and who was required to execute a bond with good and sufficient sureties for the payment of notes given in purchase of such machines, and who, being indebted to the plaintiff on notes so given and which had matured, made an arrangement with him, in consideration of the extension of the time of payment, to give a new note executed by himself and the sureties upon his bond, which note was given.^* == Nicholson v. National Bank, 92 Am. Rep. 242, construing R. S., Ky. 251, 17 S. W. 627, 16 L. R. A. Chap. 47, § 14. 223. ^* American Button-Hole &c. Mach. ^Roberts v. Lane, 64 Me. 108, 18 Co. v. Murray, Fed. Cas. No. 292. CHAPTER 11. EXECUTION OR DELIVERY. Sec. Sec. 13. Execution or delivery procured 22. Execution or indorsement in by force or fraud. blank. 14. 2Jon est factum — Where name 23. Same subject — Application of signed by another. rule. 15. Where payee signs note at foot 24. Instruments payable to fictitious with maker's name. person. 16. Signing after delivery. 25. Misrepresentations as to nature 17. Mistake. of instrument. 18. Reliance on recitals in note. 26. Same subject — Bona fide holder. 19. As to revenue stamp. 27. Same subject — Maker unable to 20. Want of delivery. read English. 21. Delivery by agent in violation of 28. Effect of negligence. instructions. 29. Instruments executed, accepted or delivered on Sunday. § 13. Execution or delivery procured by force or fraud. — Where the execution or delivery of a note is procured by force or fraud without the maker's fault there can be no recovery thereon even by a lona fide holder.^ So where the maker of a note, who was old, in- firm and ignorant, was told by the payees that unless he signed the note they would do him violence, and one of them pretended to draw a weapon from his pocket, while the man with him stood guard at the door of the maker's house and demanded that he sign the note, and there was no one on the farm at the time except defendant's wife, who was also aged and infirm, and he signed the note through fear of violence, whereupon one of the payees snatched it up, and, against *Vanatta v. Lindley, 98 111. App. Mich. 415, 4 Am. Rep. 497; Denheim 327, aff'd, 198 111. 40, 64 N. E. 735; v. Wilmarding, 55 Pa. St. 73. Com- Cline V. Guthrie, 42 Ind. 227, 13 Am. pare Dodd v. Dunne, 71 Wis. 582, 37 Rep. 357; Burson v. Huntington, 21 N. W. 430. 9 §§ IJr, 15] TLXT.CTmoy or deliteet. 10 the will of the defendant, carried it awav, it was decided that the defendant \ras not liable thereon.- And where a note was torn by the payee from the maker's book and from an attached stub containing an express condition, written contemporaneous with the note and which, by agreement of the partieSj was a snbstantiTe part thereof and restricted its negotiation, it was decided that the maker was not liable thereon, the severance in such a case of the condition being held to amount to a material alteration which would defeat lecoveTy even by a bona fide purchaser for Talne and without notice.* And there can be no recoreiy on municipal bonds fraudulently re-issued after redemption and cancellation as they hare by such acts become estingnished.* Where, however, a note was drawn as a matter of amusement, there being no intention to delivrar it as a note, and it was taken by the payee by stealth and carried off without the knowl- edge of the maker and against his will, there was hdd to be no de- livery, but in an action by a bona fide holder want of deUvery was declared to be no defense.* § 14- Non est factam — ^Where name signed by another. — Where a person's name is signed to a note by another, the defense of non est factum is not made out where it appears that the execution of the note in the former's name by the latter was authorized, that its execution was subsequently ratified and that an extension and renewal of the note was agreed to by him.* Where a defendant has controverted the ^ecution of a note sued upon by a varied plea of non est factum the burden of proving its execution is then held to rest on the plaintiff." § 15. Where payee sisr.j r.::e :-'. :o:: •-:-'•. --.ker'? nsire, — "^^-re a person who was :„. r— ;-- - - ^ — : ^— - -- -i-- i-.:;; u^:i- ::i i-^^e also signed his name at its foot along with the other makers, whatever may be the rights, as against him, of a third party, if the note has come to such a one, bona fide and for value, in the due course of trade, his promise to pay himself is held to be a mere nugatory act which . does not affect his right to recover against the makei^ thou^ there - Palmer v. Poor, la Ind. 135, 22 130 U. S. 655, 9 Sup. CL 694. N. E. &S4, 6 L. R. A- 469. See Cbap. V. * Shipley v. Carroll. 45 HL 285. * Stephen v. Davis. 85 Tenn. 271, 'Bowman v. Rector, (Tenn. Ch. 2 S. W. 3S2- See chapter VII. post^ App.) 59 S. W. 389. as to alteration of paper. ^Home Nat. Bank t. HiU. (Ind.) * District of Colombia v. Cornell. 74 N. E. 1086. 11 SIGNING AFTER DELIVERY — MISTAKE. [§§ 16, 17 is said to be authority for the proposition that if the note had simply been a joint one he could not sue upon it.* § 16. Signing after delivery. — Where a note joint and several in form, is signed by one person only, and delivered by him to the obligee, he cannot avoid liability thereon by the fact that another name is subsequently signed thereto, on the ground that it was unauthorized by him, unless he shows an actual dissent or circumstances equivalent thereto.® And if a person signs a note after delivery for the purpose of enabling the payee to negotiate it, he will be concluded from the defense that there was no consideration for his signature in an action thereon by a lona fide purchaser.^** But it has been decided that, if the name of a person is signed as maker after a note is executed and delivered, the other makers may set this up in defense to an action thereon, but the one so signing will not be discharged from liability." § 17. Mistake. — A bona fide holder of a note is entitled to regard it as correctly written, and it is no defense to an action thereon by such a holder that by reason of a mistake the agreement of the parties is not correctly expressed therein."* It has, however, been determined that in an action by the payee of a note against the maker it may be shown by the latter that by mistake the amount expressed therein is too large.^^ So where a note is given on a settlement of accounts it •^ Fisher v. Diehl, 94 Md. 112, 50 C. 470. The date of a note cannot Atl. 432. be shown in such an action to be 'Lilley v. Evans, 3 B. Mon. (Ky.) other than as expressed in the in- 417. strument. Huston v. Young, 33 Me. •"Rudolph V. Brewer, 96 Ala. 189, 85. 11 So. 314. ^ Claxon v. Demaree, 14 Bush "Browning v. Gosnell, 91 Iowa (Ky.) 172; Kennedy v. Goodman, 14 448, 59 N. W. 340; Hamilton v. Neb. 585, 16 N. W. 834. But see Hooper, 46 Iowa 515, 26 Am. Rep. Cooch v. Money, 5 Houst. (Del.) 161; Dickerman v. Miner, 43 Iowa 177 ; Mix v. White, 52 Vt. 284. Where 508. One who signs a note after ex- in an action on a due bill it is ecution makes himself absolutely li- claimed by the defendant that there able for the amount to an innocent was a mutual mistake as to amount holder. Ewing v. Clark, 8 Mo. App. and the evidence is conflicting the 570. question should be submitted to the "•* Steadwell v. Morris, 61 Ga. 67; jury. Wheeler v. Seamens, 123 Wis. Chase National Bank v. Faurot, 149 573, 102 N. W. 28. Equity will N. Y. 532, 44 N. E. 164; Miller v. cancel a note executed by mistake Butler, Fed. Cas. No. 9565. 1 Cranch for an amount not due. Fitzmaurice §§ 18, 19] EXECUTION OR DELIVERY. 12 may be shown that the balance was produced by mistake when in fact nothing was due.^-* Again it has been decided that in such an action a maker may show that by mistake there was an omission of certain provisions, either from the note itself or the contract in connection with which it was executed.^-** The fact, however, that a note was executed under a mistake of law will not operate to defeat recovery in an action thereon. ^^ And it has also been decided that it cannot be shown in defense that a note was given under a mutual mistake and error of the parties, not in reference to any material fact but to some future, imaginary or speculative event, provided there was no fraud or misrepresentation.^^* § 18. Reliance on recitals in note. — A recital in a note as to the place of execution is a representation, upon which an innocent holder has a right to rely, that the note was executed at the place designated, and his right to recover cannot be defeated by showing that it was not so executed.^'* § 19. As to revenue stamp. — Where a revenue stamp is required upon a note it is no defense to an action by a bona fide holder that V. Hosier, 116 Ind. 363, 16 N. E. 175, signed it in the belief that it was 19 N. E. 180, 9 Am. St. R. 854. Com- necessary to make it binding on the pare Capehart v. Moon, 5 Jones Eq. corporation and without any inten- (N. C.) 178. To the extent of what tion to bind himself. Maledon v. is actually due a note given for an Leflor, 62 Ark. 387, 35 S. W. 1102. indebtedness will be sustained. Wil- Equity will grant relief in the case son V. Forder, 20 Ohio St. 89, 5 Am. of an honest mistake of law as to Rep. 627. In the case of negligence the effect of an instrument on the on the part of the maker in omit- part of both contracting parties ting to use the means within his when such mistake operates as a power of obtaining correct informa- gross injustice to one and gives an tion a mistake has been held to be unconscionable advantage to the no defense. Capehart v. Moore, 5 other. Thus it was so held where a Jones Eq. (N. C.) 178. note was given as a donation and .'-* Mercer v. Clark, 3 Bibb (Ky.) there was no intention that it 224 should bear interest and to effect i:** Byi-fi V. Campbell Printing- this purpose the interest clause was Press & Mfg. Co., 94 Ga. 41, 20 S. E. left out. Loudermilk v. Louder- 253; Glisson v. Craig, 1 Tex. App. milk, 98 Ga. 780, 25 S. E. 927. Civ. Cas. 42. But see Bradley v. "* Cartwright v. Gardner, 5 Cush. Anderson, 5 Vt. 152. (Mass.) 273. "Pool V. Alexander, 26 La. Ann. "Watson v. Boston Woven Cord- 669. A director of a corporation age Co., 75 Hun (N. Y.) 115, 58 N. signing a note cannot set up that he Y. St. 194, 26 N. Y. Supp. 1101. 13 WANT OF DELIVERY. [§ 20 such stamp was not placed thereon at the time of execution, if it was properly stamped when negotiated, he having received it in ignorance of such facts."* § 20. Want of delivery. — The fact that a note was never delivered may be a good defense to an action thereon. ^'^ So where a bill was indorsed without delivery and issued in fraud of the indorser, it was held that he might show in defense to an action on the instrument that the plaintiff was not a. horui fide holder. ^^ And where a note left by the maker on the table, was carried off without his authority by the payee without any negligence on the part of the former it was decided that even as against a bona fide purchaser for value the want of delivery of the instrument was a good defense.^' And where a note was executed with the understanding that it should take effect upon the consummation of a certain contract for the sale of land, and the payee wrongfully . and fraudulently took the note from a desk on which it was placed and left with the note in his possessioii, it was de- cided that, though the makers did not attempt to prevent his taking the note, they were not guilty of negligence thereby and were not liable to a lona fide holder.^^ Again, where a note signed by certain persons was left with the agent of the payee for the purpose of pro- curing other signatures upon the performance of certain conditions, and was not to be delivered until those conditions were performed and the signatures obtained, it was decided that it might be shown against the payee, though not against a hona fide holder, that the note was delivered before the condition was performed or the signatures obtained.^'' As was said by the court : "Such an unauthorized delivery to the payee and its subsequent transfer to the plaintiffs, the present holders, does not make the note subject to defenses by the .makers, providing the plaintiffs are holders of the note in due course, without notice, and for value. It simply compels the plaintiffs to show that they are such holders. The possession of the note alone duly in- "♦IRobinson v. Lair, 31 Iowa 9; Wis. 52; Thomas v. Watkins, 16 Anderson v. Starkweather, 28 Iowa Wis. 549. 409; Gage v. Sharp, 24 Iowa 415; '^ Marston v. Allen, 8 Mees. & W. Blackwell v. Denie, 23 Iowa 63. 494. Compare Green v. Davies, 4 B. & C. " Benson v. Huntington, 21 Mich. 233; Ebert v. Gitt, 95 Md. 186, 52 415. Atl. 900. " Dodd v. Dunn, 71 Wis. 578, 37 «Gasquet v. Pechin, 143 Cal. 515, N. W. 430. 77 Pac. 481; Roberts v. McGrath, 38 "Porter v. Andrus, 10 N. D. 558, 88 N. W. 567. § 20] EXECUTION OR DELIVERY. 14 dorsed to them, is not sufficient to protect them as against the show- ing of an unauthorized and fraudulent deliverj- and putting into circulation. Such a showing shifts the burden upon them to show that they are bona fide holders. If they succeed in showing that they are such bona fide holders, they are protected as against any defenses in favor of the makers. The makers having permitted the note regu- larly signed by them to remain in the agents' hands, and trusted him with its possession for the purpose of procuring the other signatures, cannot complain of his breach of trust, and they should be the suffer- ers, rather than those who innocently purchased the note without any notice of the manner in which it was put into circulation.""* But in another case it has been decided, that as against a payee want of de- livery of a note complete and perfect upon its face is no defense where the payee was ignorant of the fraud perpetrated by the maker's agent who obtained and delivered the instrument to him, it being declared to be necessary to show knowledge of such fact in the payee to render it a defense.-" And where a note had been fully executed by the maker, though, as between the parties, it may be shown in defense that there was never a valid and legal execution of the same because not delivered, or fraudulently obtained possession of, yet, as between the maker and an innocent holder for value, such fact will be no defense.-^ If, however, in an action upon a note proof is given showing a fraudu- lent and unauthorized delivery, it is decided that the burden of proof rests upon the plaintiff to show that he is a holder of the note in due course, without notice and for value." Again, where one accepted a bill and gave it to another who put his name thereto as drawer for the purpose of procuring it to be discounted and handing over the pro- ceeds to the former, and, having failed to discount it, he returned it to the acceptor, who tore the bill in half and threw it aside and it was picked up by the one to whom it had been given, for the purpose of discount, in the presence of the acceptor, and was pasted together by him and put into circulation and transferred to a bona fide holder, the want of proper delivery was held to be no defense." And, where a payee writes his name on the back of a note, his liability as an in- "* Porter v. Andrus, 10 N. D. 558, yon v. Wohlford, 17 Minn. 239, 10 88 N. W. 567. Per Morgan, J. Am. Rep. 165. ^Jordan v. Jordan, 78 Tenn. (10 -Porter v. Andrus, 10 N. D. 558, Lea) 124, 43 Am. Rep. 294. See 88 N. W. 567. Watson v. Russell, 3 Best & S. 34. == Ingham v. Primrose, 7 C. B. N. =1 Clarke v. Johnson, 54 111. 296; S. 82. Shipley v. CarroU, 45 111. 285; Kin- 15 DELIVERY BY AGENT IN VIOLATION OF INSTRUCTIONS. [§§ 21, 23 dorser cannot be defeated as to an innocent holder by the claim that it had not been delivered by him.^'* § 21. Delivery by agent in violation of instmctions. — It is no de- fense to an action by a bona fide holder of a note that it was delivered by the agent of the maker in violation of his instructions, the posses- sion by the agent being evidence of ownership.-^ So where a note was indorsed by the payee thereof and given to his agent with instructions to deliver it to a certain person upon the performance of certain con- ditions and was delivered to the latter before tlie conditions were performed, upon his promise that they would be performed on the same day, and he failed to perform them and delivered the note to a broker for sale and it was in fact sold, the indorser could not defend on the ground that his agent had violated his instructions.^^ And where the maker and payee of a note went to a hotel to leave it en- closed in an envelope with the landlord to hold, and he being out, the payee, with the knowledge of the maker, placed the envelope contain- ing the note in the drawer of a table in the office of the hotel, the landlord's wife promising to give it to him upon his return, and this was the last the maker saw of the note, it was decided that he could not interpose the defense of want of delivery against a purchaser of the note in good faith before maturity.^'^ This rule has likewise been applied in the case of a bill of exchange accepted by the prin- cipal where drawn by his agent, to whose order it was made payable, and who agreed to get it discounted for the principal's benefit, but pledged it to a hojin fide holder for his own use;-'^ and also in the case of school district bonds, which had been intrusted to a banker to sell for the benefit and account of the school district, where they are sold or pledged by the banker on his ovm account.^'' § 22. Execution or indorsement in blank. — Where a bill or note as signed is incomplete by reason of unfilled blanks, the fact that it is =* Gould V. Segree, 5 Duer (N. Y.) & P. 539; Ramsbotham v. Cator, 1 260. Starkie 238. ^Giavanovich v. Blank, 26 La. =* Chase Nat. Bank v. Faurot, 149 Ann. 15; Putnam v. Sullivan, 4 N. Y. 532, 44 N. E. 164. Mass. 45, 3 Am. Dec. 206; Murrell =' McCormick v. Holmes, 41 Kan. V. Jones, 40 Miss. 565; Bridenbecker 265, 21 Pac. 108. V. Lowell, 32 Barb. (N. Y.) 9; St. ** Clement v. Leverett, 12 N. H. Clairsville Bank v. Smith, 5 Ham. 317. (Ohio) 222. See Collins v. Martin, =» School District Na 1& v. State 1 B. & P. 648; Bolton v. Puller, 1 B. Bank, 8 Neb. 168. § 32] EXECUTION OR DELIVERY. 16 subsequently filled fraudulently or in a manner not contemplated will be no defense to an action by a bona fide holder against the drawer, maker or indorser, for one who signs or indorses such an instrument furnishes the means of fraud and is estopped to deny his liability.^" The proper rule in this class of cases has been declared by the United States Supreme Court in the following words : "Where a party to a negotiable instrument intrusts it to the custody of another with blanks not filled up, whether it be for the purpose to accommodate the person to whom it was intrusted, or to be used for his own benefit, such negotiable instrument carries on its face implied authority to fill up the blanks and perfect the instrument; and as between such party and innocent third parties, the person to whom it was so intrusted must be deemed the agent of the party who committed such instru- ^^ Alabama. — Prim v. Hammel, 134 Ala. 652, 32 So. 1006; Robertson v. Smith, 18 Ala. 220; Decatur Bank v. Spence, 9 Ala. 800; Roberts v. Ad- ams, 8 Port. (Ala.) 297, 33 Am. Dec. 291; Herbert v. Hule, 1 Ala. 18, 34 Am. Dec. 755. Georgia. — Moody v. Threlkeld, 13 Ga. 55. Illinois. — Hudson v. Hanson, 75 111. 198. Indiana. — Gothrupt v. Williamson, 61 Ind. 599; Wilson v. Kinsey, 49 Ind. 35; Bowen v. Laird (Ind. App. 1906), 77 N. E. 295. Iowa. — McDonald v. Muscatine Nat. Bank, 27 Lowa 319; Iowa Col- lege Trustees v. Hill, 12 Iowa 462. Kansas. — Lowden v. National Bank, 38 Kan. 533, 16 Pac. 748. Kentucky. — Bank of Common- wealth V. Curry, 2 Dana (Ky.) 142; Sowders v. Citizens' Nat. Bank, 12 Ky. L. Rep. 356. Louisiana. — Battalora v. Erath, 25 La. Ann. 318. Maine. — Breckenridge v. Lewis, 84 Me. 349, 24 Atl. 864, 30 Am. St. R. 353; Roberts v. Lane, 64 Me. 108, 18 Am. Rep. 242; Abbott v. Rose, 62 Me. 194, 16 Am. Rep. 427. Massachusetts. — Ives v. Farmers' Bank, 84 Mass. (2 Allen) 236; An- droscoggin Bank v. Kimball, 64 Mass. (10 Cush.) 373; Putnam v. Sullivan, 4 Mass. 45, 36 Am. Dec. 206. Mississippi. — Goad v.- Hart's Admr's, 8 Sm. & M. (Miss.) 787. Missouri. — Clifford Banking Co. v. Donovan Commissiono Co., 195 Mo. 262, 94 S. W. 527; Iron Mountain Bank v. Murdock, 62 Mo. 70; Tu- milty V. Bank of Missouri, 13 Mo. 276; Green v. Kennedy, 6 Mo. App. 577. New York. — Van Duzer v. Howe, 21 N. Y. 531; Griggs v. Howe, 31 Barb. (N. Y.) 100. North Carolina. — McArthur v. Mc- Leod, 51 N. C. 475. Ohio. — Ross V. Doland, 29 Ohio St. 473; Fullerton v. Sturges, 4 Ohio St. 529. Pennsylvania. — Simpson v. Board, 74 Pa. St. 351. Tennessee. — Frazier v. Gains, 61 Tenn. (2 Baxt.) 92. Wisconsin. — Johnston Harvester Co. V. McLean, 57 Wis. 258, 15 N. W. 177, 46 Am. Rep. 39. Federal. — National Exch. Bank v. White, 30 Fed. 412; Angle v. North- western Mut. &c. Co., 92 U. S. 330, 23 L. Ed. 556. Compare Riddell v. Stevens, 32 Conn. 378, 87 Am. Dec. 181. See also. Chaps. VII, VIII. 17 INDORSEMENT IN BLANK APPLICATION OF RULE. [§ 23 ment to his custody, or, in other words, it is the act of the principal and he is bound by it."^^ And in a case in New York it is said : "It is settled law that when a person signs a note in blank, he impliedly confers upon the person to whom it is entrusted authority to fill up the usual and ordinary blanks, such as date, name of payee, amount and time of payment. * * * The note having found its way into the hands of an innocent holder, it is immaterial whether the defend- ant's express authority as to the filling in of the blanks was followed or not, for the defendant, by leaving the blanks unfilled, undertook to be answerable for the note when it was filled up in the shape of a •binding obligation. In short, the sending into the world of printed notes, with the blanks unfilled, seems to be regarded as a letter of credit for an indefinite sum, and it will not do to allow a person who does this to escape the consequence of his act to the prejudice of the public."^" .The fact, however, that a blank has been filled in a man- ner other than that contemplated is a defense against the one so fill- ing it,^^ or against one taking the instrument with knowledge there- of.^* And where a note pajable to a person named or his order, is in- dorsed in blank it Jias been decided that the holder may sue either in his own name or in the payee's to his use, but in the latter case the maker may set up any defense which he could avail himself of if the payee had retained the Ownersliip of the note.^^ § 23. Same subject — Application -of rule. — This rule has been ap- plied -wliere l)lanks have been left for the amount,^" as in the case of ^^Bank of Pittsburgh v. Neal, 22 Tenn. (1 Head) 331. "Having exe- How. (U. S.) 97^ 107. P?r Mr. Jus- cuted the note in blank as to the tice Clifford. amount, with the intention that the «= Harris v. Berger, 15 -N. Y. St. blank should be filled before being R. 389, 391. Per McAdam, J. negotiated by the person in whose ''Luellen v. Hare, 32 Ind. 211. possession he placed it after signa- '^* Snyder v. Van Dosen^ 46 Wis. ture, third persons dealing with the 602, 1 N. W. 285, 32 Am. Rep. 739. person in possession have the right =* Temple v. Hays, Morris (Iowa) to presume that the authority to fill 9. the blank was a general and not a ^^ Kentucky.— Grimth v. Collier, 4 special authority, and they are not Ky. L. Bep. 260. bound by any private instructions New York. — Van Duzer v. Howe, as to the amount which should be 21 N. -Y. 531. inserted in the note." North Carolina. — Humphrey v. Wisconsin. — Johnston Harvester Finch, 97 N. C. 303, 1 S. "E. 870, 2 Co. v. McLean, 57 Wis. 258, 264, 46 Am. St. R. 293. Am. Rep. 39, 15 N. W. 177, per Tay- Tennessee. — Grissom v. Pite, 38 lor, J. Joyce Defensps — 2. § 23] EXECUTIOX OR DELIVERY. 18 one who gives blank notes to another to secure the latter on his in- dorsement of notes executed by the former with the understanding that if the latter notes are paid the blank notes are to be returned, but if not paid they are to be filled out for the amount the indorser be- comes liable for and are to be valid obligations for such amount, and the blank notes are filled up and negotiated in violation of the agree- ment and come into the hands of an innocent holder.^^ So where a bill of exchange is left blank as to the amount, and the person for whose benefit it is made fills it up for a larger amount than was agreed upon, an innocent holder who has discounted the bill for the amount called for upon its face may collect such amount.^^ And where a per- son, as accommodation maker with another, signed a note with the understanding that the space for the amount, which was left blank, should be filled so as to make a note for forty-five dollars, and the figures forty-five preceded by the dollar sign were put in the corner of the note, but the person intrusted with the note placed a cipher after such figures and filled the blank with the words "four hundred and fifty dollars," without the knowledge of the payee and before de- livery to him, it was held that the maker was liable.^^ Again where a person signed three accommodation notes and delivered them to another to be filled out with an amount to be ascertained and which was due on a prior accommodation note given between the same parties and instead of making the notes for one-third each of the total amount due, the person to whom it had been intrusted filled one of them out for a considerably larger amount and indorsed it to the plaintiff' bank Ijefore maturity in the usual course of business, the bank was allowed to recover thereon against the maker.**' But where the note is com- plete in itself in every way, the amount being stated therein in the proper places, the fact that there is space left before the amount sufficient to enable the one to whom it is given to enlarge it by in- serting words and figures before the proper amount, is held not to be such negligence as will enable a bona fide holder of a note which has been so changed to recover the enlarged amount.*^ The general rule ^' Harris v. Berger, 15 N. Y. St. ^'' Market & Fulton National Bank R. 389. V. Sargent, 85 Me. 349, 27 Atl. 192, =' Smith V. Lockridge, 8 Bush 35 Am. St. R. 376. (Ky.) 423. "Burrows v. Klank, 70 Md. 451, =» Johnston Harvester Co. v. Mc- 17 Atl. 378, 14 Am. St. R. 371, 3 L. Lean, 57 Wis. 258, 15 N. W. 177, 46 R. A. 576. Am. Rep. 39. I 19 INDORSEMENT IN BLANK — APPLICATION OF RULE. [§ 23 has also been applied in the case of blanks as to the rate of interests- date/^ name of payee/* term/''"' and the place at which the instrument is payable.*^ Again where there is a blank after the words "payable at" in a note, the payee is declared to have implied authority to fill such blank, and it is no defense to an action by a bona fide holder on such a note, which the payee subsequently filled by inserting a place of payment, that he had no authority to fill the blank.*^ And in the application of the general rule it has been decided that the owner of paper, who delivers it indorsed in blank to an agent for collection, cannot recover the proceeds from one purchasing it from such agent for value, without notice,'*^ nor where it is delivered to an agent for safe keeping.*^ The blank indorsement of a bill or note to an agent is a power to transfer, and a bona fide purchaser from such agent will not be affected by any violation of duty or excess of authority on the part of such agent of which he has no knowledge,*^* and may hold the instrument against him, whether he purchased it before or after its maturity.^'' In the case, however, of a non-negotiable demand, in- dorsed in blank by the owner, the purchaser from any other party than the original owner is held to take only such rights as the latter has parted with, except where such owner is by his acts estopped from as- serting his original claim thereto.^^ Again, the fact that a note was fraudulently written over a signature placed on a blank piece of « Fisher v. Dennis, 6 Cal. 577, 65 In Bradford v. Williams, 91 N. C. Am. Dec. 534; Rainbolt v. Eddy, 34 7, it is said: "The rule seems to be Iowa 440, 11 Am. Dec. 152; Iron that the owner thus puts the note Mountain v. Murdock, 62 Mo. 70. in the power of his indorsee to use *^ Averton v. Matthews, 35 Ark. and dispose, as his property, and is 146, 37 Am. Rep. 9. bound by his agents' acts and trans- •" Jones V. Primm, 6 Tex. 170; actions within the scope of his ap- Close V. Fields, 2 Tex. 232. parent authority, in his dealing ^■'Waldron v. Young, 56 Tenn. (9 with a bo/m fide assignee who pays Heisk.) 777. full value therefor." Per Smith, C. J. "Winter v. Pool, 104 Ala. 580, 16 *» Ringling v. Kohn, 4 Mo. App. 59. So. 543; Canon v. Grigsby, 116 111. ^'* Palmer v. Marshall, 60 111. 289; ISl, 5 N. E. 362, 56 Am. Rep. 769. Murrell v. Jones, 40 Miss. 565. Corn- Compare Cronkhite v. Nebeker, 81 pare People v. Bank of North Amer- ind. 319, 42 Am. Rep. 127; McCoy v. ica. 75 N. Y. 547. Lockwood, 71 Ind. 319. =^» Cornell v. Bliss, 52 Me. 476. "Cason v. Grant County Deposit " Cowdry v. Vandenburgh, 101 U. Bank, 97 Ky. 487, 31 S. W. 40, 53 S. 572, 25 L. Ed. 923. Compare Am. St. R. 418; Newell v. First Nat. Caulkins v. Whistler, 29 Iowa 495, Bank, 13 Ky. L. Rep. 775. 4 Am. Rep. 236. ^Stutzman v. Payne, 23 Iowa 17. § 24] EXECUTION OR DELIVERY. 20 paper has been held a good defense against all persons." But in a case in Maine it has been decided that, where names are signed on a blank piece of paper for commercial use, such as to write an order over the signature, and a promissory note is subsequently written over, such signatures the persons whose names are so signed are liable to a bona fide holder.^^ Again the blank indorsement of a bill of ex- change is held to pass all the interest in the bill to every indorsee in succession, discharged from any obligation which might subsist be- tween the original parties, but which does not appear upon the face of the instrument itself.^* § 24. Instruments payable to fictitious person. — That a bill or note is made payable to a fictitious person is no defense to an action by aboim fide holder, where such a designation is not forbidden by stat- ute, as the maker by making the instrument payable to such a person is estopped to deny that the payee named exists and it may be re- garded as one payable to bearer.^^ So the acceptor of a bill of ex- change cannot set up that the payee named is a fictitious person, as by accepting the bill he is estopped to assert such fact.^^ And this rule has been applied in the case of a note made payable to a fictitious firm and indorsed by the holder in the name of the payee to a bona fide purchaser, though the maker had no knowledge at the time he exe- cuted the note that the name of the payee was fictitious." And where a bank check is payable to '"bill payable" it is held to stand upon the same ground as one payable to a fictitious person and not to he subject in the hands of an assignee to every defense to which it was liable when transferred.^^ And a similar rule has been held to prevail in the case of a note payable "to order."^^ Again, where the holder treats as fictitious the name of the payee to whom the instru- ment was drawn by the maker and whose indorsement was forged by »- First Nat. Bank v. Zeims, 93 Blodgett, 2 Yeates (Pa.) 480; Vacitt Iowa 140, 61 N. W. 483. v. James, 39 Tex. 189. See Foster v. ■^^ Breckenridge v. Lewis, 84 Me. Shattuck, 2 N. H. 446. 349, 24 Atl. 864, 30 Am. St. R. 353. '' Phillips v. Im Thurn, 18 C. B. "Wilkinson v. Micklin, Fed. Cas. N. S. 694. No. 17673. " Ort v. Fowler, 31 Kan. 478, 2 =» Farnsworth v. Drake, 11 Ind. Pac. 580, 47 Am. Rep. 501. 101; Lane v. Krekle, 22 Iowa 399; =^^Willets v. Bank, 2 Duer (N. Y.) Ort V. Fowler, 31 Kan. 478, 2 Pac. 121. 580, 47 Am. Rep. 501; Nevada v. ^"Davega v. Moore, 3 McCord (S. Cleveland, 6 Nev. 181; Hunter v. C.) 482. 31 MISREPRESENTATIONS AS TO NATURE OF INSTRUMENT. [§ 25 him, the latter is held to be estopped from any contest on the ground of the genuineness of the signature.®" § 25. Misrepresentations as to nature of instrument. — It is a good defense to an action upon a note against the maker tliat he was in- duced to sign the same by reason of fraud, artifice or deception prac- ticed upon him by another as to the nature of the instrument, and that he signed the same innocently and under the belief that it was a con- tract of a different character, unless it appear that he was guilty of laches or carelessness in affixing his signature thereto.*'^ So it is said in a recent case : "While the legal presumption obtains that the party attaching his signature to the written embodiment of the contract ha? read it, as he is obligated to do, and is acquainted with its contents, yet, between the original parties to the instrument, defendant may plead and establish by proper proof that through his illiteracy, by the misreading of the paper to him or other fraudulent device, an in- strument other than the one understood and intended by him to be executed was fraudulently substituted, and his signature thereto wrongfully obtained.*'- Such evidence is not addressed in variation of a written instrument, but assails its actual execution, and is ad- »»Meacher v. Fort, 3 Hill (S. C.) 227, 30 Am. Dec. 364. "^ Alabama. — Burroughs v. Pacific Guano Co., 81 Ala. 255, 1 So. 212. California. — Wenzel v. Shulz, 78 Cal. 221, 20 Pac. 404. Georgia. — Brooks v. Matthews, 78 Ga. 739, 3 S. E. 627. Illinois. — Auten v. Gauner, 90 111. 300; Hewitt v. Johnson, 72 111. 513; Hewitt V. Jones, 72 111. 218; Hub- bard V. Rankin, 71 111. 129; Rich- ardson V. Schirtz, 59 111. 313; Puffer V. Smith, 57 111. 527. Indiana. — Yeagley v. Webb. 86 Ind. 424; Baldwin v. Bricker, 86 Ind. 221; Webb v. Corbin, 78 Ind. 403; Detwiler v. Bish, 44 Ind. 70; Ryers V. Dougherty, 40 Ind. 198. Maryland. — Kagel v. Totten, 59 Md. 447. Michigan. — Soper v. Peck, 51 Mich. 563, 17 n; W. 57; Gibbs v. Linabury, 22 Mich. 478, 7 Am. Rep. 675. Minnesota. — Yellow Medicine Co. V. Tagley, 57 Minn. 391, 59 N. W. 486; Aultman v. Olson, 34 Minn. 450, 26 N. W. 451. Missouri. — Martin v. Smylee, 55 Mo. 577; Briggs v. Ewart, 51 Mo. 245, 11 Am. Rep. 445; Kalamazoo Nat. Bank v. Clark, 52 Mo. App. 593. New York. — Chapman v. Rose, 44 How. Pr. (N. Y.) 364; Whitney v. Snyder, 2 Lans. (N. Y.) 477. Ohio. — De Camp v. Hanna, 29 Ohio St. 467. Wisconsin. — Griffiths v. Kellogg, 39 Wis. 290, 20 Am. Rep. 48; Butler V. Cairns, 37 Wis. 61; Kellogg v. Steiner, 29 Wis. 626; Walker v. Ebert, 29 Wis. 194, 9 Am. Rep. 548. But see Rowland v. Fowler, 47 Conn. 347. That printed matter was obscured is no defense. Palo Alto Stock Farm V. Brooker (Iowa 1906), 108 N. W. 307. «= Citing Corby v. White, 57 Mo. 452; Law v. Crawford, 67 Mo. App. 150; Kingman v. Shawley, 61 Mo. App. 54. §■26] EXECUTION OR DELIVERY. 22 missible under a plea of non est factum."^^ So in an action by an in- surance company on a note given to them, it is a good defense thereto that the maker signed the same under the belief that he was signing an application for insurance instead of a note.®* And where one was induced to sign a promissory note by a fraudulent representation that he was witnessing a deed and he so believed at the time, and had no knowledge of the existence of the promissory note, and the jury nega- tived negligence on his part in so signing a document, such facts afford a defense to the action.*'^ So where a note is obtained through the usual device of men who go about the country as dealers in patent rights or new inventions, with papers so prepared as to obtain the signatures of their victims to promissor}' notes, when the latter have no expectation or intention of executing a promissory note, the fraud and circumvention of such parties is a defense thereto.^® Again, where one paper is read to the maker and another is fraudulently substituted for his signature, in the absence of negligence on his part, this will be a good defense.®^ And where a maker objects to a clause which the other party agrees to strike out, but instead of striking out the clause objected to, erases another, thereby defrauding plaintiff, a plea setting up such facts has been held good.*** A misrepresenta- tion, however, as to the legal effect of an instrument- has been held not to be such a fraud as will constitute a defense against a bona fide holder."^ § 26. Same subject — Bona fide holder. — This defense of fraud, artifice, or deception has also been held available even against a pur- chaser before maturity, for value and without notice.'^" So where a «Broyles v. Absher, 107 Mo. App. 168, 80 S. W. 703, 705. Per Rey- bum, J. ** Dwelling House Ins. Co. v. Downey, 39 111. App. 524. 8^ Lewis V. Clay, 67 L. J. Q. B. 224, 77 Law T. 653. «« Champion v. Ulmer, 70 111. 322. «' Butler V. Carus, 37 Wis. 61. "^Angier v. Brewster, 69 Ga. 362. «« Latham v. Smith, 45 111. 25. '" jninOTS.— Sims v. Rice, 67 111. 88. Indiana. — Home National Bank v. Hill, 165 Ind. 226, 74 N. E. 1086; Lindley v. Hofman, 22 Ind. App. 237, 53 N. E. 471. Iowa. — First Nat. Bank v. Zeims, 93 Iowa 140, 61 N. W. 483. Missouri. — Martin v. Smylee, 55 Mo. 577. Isleiv York. — National Exch. Bank V. Venemans, 4 N. Y. St. R. 363; Whitney v. Snyder, 2 Lans. (N. Y.) 477. Ohio. — De Camp v. Hanna, 29 Ohio St. 467. Wisconsin. — Butler v. Cams, 37 Wis. 61; Kellogg v. Steiner, 29 Wis. 626. But see Woolen v. Whitacre, 73 Ind. 198; First Nat. Bank v. Johns, 22 W. Va. 520, 46 Am. Rep. 506. 23 MISREPRESENTATIONS AS TO NATURE OP INSTRUMENT. [§ 27 person was induced by another to sign a paper believing it to be merely to furnish means of identification and not intending it to be a note or contract in any form, and the latter then filled in certain blanks in the paper so as to make it a note, it was held that plaintiff, though an innocent holder for value, could not recoverJ^ And where a person signs a note under the belief induced by representations of another, that he is signing an agreement appointing him agent for the sale of a certain article and a statement of his ownership of property, and it appeared from the evidence that he could read printed matter and writing with difficulty, the fraud and circumvention in obtaining his signature will be a good defense even as against a bona fide holder.''^ In an action, however, against the maker of a note by. a bona fide holder the fact that the maker was induced by fraud to exe- cute the note in the belief that he was signing a paper of an entirely different character is not of itself a good defense, as it is essential to the perfection of such a defense that it should appear that there was no negligence on the part of the maker J^ § 27. Same subject — Maker unable to read English. — That the maker of a note was unable to read English and that his signature was obtained by false representations as to the character of the in- strument, without any negligence on his part, will be a good defense even as against a bona fide holder.'^^ In such a case the note has never existed in the sense of the minds of the parties meeting to give it validity.''^ So where a person unable tq read and write executes a note, after it has been misread to him, and under the belief that the time of payment is different from that actually stated in the note, evidence of such fraud is admissible to defeat an action on tJie instru- ment.''® And where such a person signs a note for a larger sum than " First Nat. Bank v. Zeims, 93 Minnesota. — Cummings v. Thomp- lowa 140, 61 N. W. 483. son, 18 Minn. 246. " Sims v. Rice, 67 111. 88. iV^e&msfca.— First Nat. Bank v. "Brown v. Feldwert, (Ore.) 80 Lierman, 5 Neb. 247. Pac. 414. Texas. — Stacy v. Ross, 23 Tex. 3. '* Illinois. — Davis v. Snider, 70 Wisconsin. — Walker v. Ebert, 29 Ala. 315; Taylor v. Atchison, 54 111. Wis. 194, 9 Am. Rep. 548. 196, 5 Am. Rep. 118; Vanbrunt v. '^ Green v. Wilkie, 98 Iowa 74, 66 Singley, 85 111, 281; Puffer v. Smith, N. W. 1046. 57 111. 527. • ■"' Nielson v. Schuckman, 53 Wis. /ndiana.— Webb v. Corbin, 78 Ind. 638, 11 N. W. 44. 403; Lindley v. Hofman, 22 Ind. App. 237, 53 N. E. 471. § 27] EXECUTION OR DELIVERY, 24 he intends, being ignorant of the fact that it is drawn for the larger amount and is guilty of no negligence in not knowing the exact amount of the note in question, he is not bound thereby." And where an action was brought on a note signed by defendant, and it appeared that the defendant was an illiterate person and had signed the note in question, not knowing it to be such, but under the belief that he was signing duplicate contracts by which he was to be ap- pointed agent for a certain company and no other parties were pres- ent and he was compelled to trust to the reading of the paper by the one to whom it was given, it was decided that there could be no re- covery.'^* But if the maker was guilty of negligence in signing the instrument without having the same read to him or taking steps to learn its contents, or exercising the ordinary care which a prudent business man would exercise, tlie fact that he was fraudulently in- duced to sign it, will be no defense to an action by a bona fide holder, as in such case the rule of law applies, that where one of two persons must suffer loss, he who by his negligent conduct has made it possible must bear the same."^ So where an answer alleged the inability of the maker to read, and the misreading of the note by the payee, on which the maker had relied in affixing his signature, it was decided that the facts pleaded were not sufficient to constitute a good answer there being no averment that he was alone or had no other means of having the paper read to him except by the payee.*" It has also been said : "Where a party, through neglect of precautions within his power, affixes his name to that kind of paper without knowing its character, the consequent loss ought not to be shifted from him to a bona fide purchaser of the paper. Tested by this rule, the facts which defendant offered to prove would have been no defense. He signed the paper voluntarily. He was under no controlling necessity to sign witliout taking such time as might be needed to inform himself of its character. If he could not read it himself, there was no reason, ex- cept, perhaps, his own convenience or haste, why he should not post- pone signing until he could have it read by some person upon whom '' Bowers v. Thomas, 62 "Wis. 480, Muhlke v. Hegerness, 56 111. App. 22 N. W. 710. 822; Yeagley v. Webb, 86 Ind. 424; " Willard v. Nelson, 35 Neb. 651, Williams v. Stoll, 79 Ind. 80, 41 Am. 53 N. W. 572, 37 Am. St. R. 455. Rep. 604; Ruddell v. Dillman, 73 Ind. "Bedell v. Hering. 77 Cal. 572, 20 518, 37 Am. Rep. 152; Fisher v. Von Pac. 129, 11 Am. St. R. 307; Swan- Behren, 70 Ind. 19, 36 Am. Rep. 162. nell V. Watson, 71 111. 456; Anderson ^"Lindley v. Hofman, 22 Ind. App. V. Warne, 71 111. 20, 22 Am. Rep. 83; 237, 53 N. E. 471. I 25 EFFECT OF NEGLIGEXCE. [§ 28 he had a right to rely. Instead of doing this he chose to rely upon an entire stranger, that stranger the party opposed to him in interest, and the only person under any temptation to deceive him as to the character of the paper he was asked to sign. One who, without any necessity, so misplaces his confidence ought not to be heard to claim that the paper he is in consequence misled to sign should be taken out of the rule protecting commercial paper."®^ In the absence of fraud, illiteracy has been held no defense.^^ In this connection it is decided in a recent case that the mere fact that the maker of a note is an Indian and that he could not, at the time he made the note, read or write the English language and understood the language imper- fectly, is not of itself sufficient to overcome the presumption that he understood the plain terms of the note when he signed it.*^ § 28. Effect of negligence. — The fact that fraud was practiced upon the maker of a note Avill be of no avail as a defense if it appears that he was guilty of negligence, as in such a case where one of two innocent parties must suffer, the one whose negligence contributed to the loss must bear it.^* It is incumbent upon a party executing an '^Mackey v. Peterson, 29 Minn. 298, 13 N. W. 132, 43 Am. Rep. 211. Per. Gilfillan, C. J. *2 Waller's Appeal, 103 Pa. St. 594. *' Warnock v. Itawis, 38 Wash. 144, 80 Pac. 297. ^Alabama. — Orr v. Sparkman, 120 Ala. 9, 23 So. 829 ; Goetter v. Pickett, 61 Ala. 387. Illinois. — Homes v. Hale, 71 111. 552; Fulford v. Block, 8 111. App. 284. Indiana. — Home National Bank v. Hill, 165 Ind. 226, 74 N. E. 1086; Baldwin v. Barrows, 86 Ind. 351; Baldwin v. Bricker, 86 Ind. 221; Williams v. Stoll, 79 Ind. 80, 41 Am. Rep. 604; Ruddell v. Phalor, 72 Ind. 533, 37 Am. Rep. 177; Fisher v. Von Behren, 70 Ind. 19, 36 Am. Rep. 162; Button v. Claffer, 53 Ind. 276. Iowa. — Hopkins v. Hawkeye Ins. Co., 57 Iowa 203, 42 Am. Rep. 41; Wright V. Flinn, 33 Iowa 259; Mc- Donald v. Bank, 27 Iowa 319. Kentucky. — Wheeler v. Traders' Bank, 21 Ky. L. Rep. 1416, 55 S. W. 552. Maine. — Kellogg v. Curtis, 65 Me. 59. Minnesota. — ^Ward v. Johnson, 51 Minn. 480, 53 N. W. 766. Missouri. — Frederick v, Clemens, 60 Mo. 313; Shirts v. Overjohn, 60 Mo. 305. Nel>7'aska. — Cole v. Williams, 12 Neb. 440, 11 N. W. 875. New Hampshire. — Citizens' Nat. Bank v. Smith, 55 N. H. 593. New York. — Chapman v. Rose, 56 N. Y. 137; 15 Am. Rep. 401; Carey v. Miller, 25 Hun. (N. Y.) 28; Mosher v. Carpenter, 13 Hun (N. Y.) 602. Ohio. — Ross V. Doland, 29 Ohio St. 473. West Virginia. — Parkersburg First Nat. Bank v. Johns, 22 W. Va. 520, 46 Am. Rep. 506. See Roe v. Jerome, 18 Conn. 138; Carpenter v. Bank, 119 111. 352, 10 N. E. 18. § 28] EXECUTIOX OR DELIVERY. 26 instrument to exercise reasonable care and diligence to ascertain its contents.*^ He is not required, however, to exercise every possible precaution, but only that caution which would be expected from a man of ordinary prudence.^" But though a maker may be estopped by his carelessness from setting up the defense of fraud as against a bona fide holder yet it may be available against the payee. ^^ So the gen- eral rule has been applied in the case of one who intends to bind him- self by some obligation in writing and signs the instrument voluntar- ily with full means of ascertaining its true character, but negligently signs and delivers a note in lieu of the instrument he intended to sign, that he will be estopped to impeach its validity in the hands of a bona fide holder.^* So one who has signed a note as surety cannot, in an action by the payee, who is an innocent holder, defeat recovery on the note by setting up that one of the signatures which was upon the note when he signed it was a forgery, he having trusted and relied upon the one who procured him to sign it, the fraud being practiced upon him by such person and not by the payee.*^ And where one signed a note under the belief that it was a receipt for a plow, the one presenting the instrument to him for his signature having so repre- sented it, both by his statements and in his reading of it, and there was no one within half a mile who could read English, the person so «5 Hopkins v. Hawkeye Ins. Co., Mo. App. 264; First Nat. Bank v. 57 iQwa 203, 10 N. W. 605, 42 Am. Stanley, 46 Mo. App. 440. Rep. 41. Nebraska. — Dinsmore v. Stimbert, «« Sims V. Rice, 67 111. 88. 12 Neb. 433. 11 N. W. 872. "Dwelling House Ins. Co. v. Neic Hampshire. — Citizens' Nat. Bailey, 39 111. App. 488. Bank v. Smith, 55 N. H. 593. ** 7«inois.— Hubbard v. Rankin, 71 ^^ew Yorfe.— Chapman v. Rose, 56 111. 129; Sims v. Rice, 67 111. 88; N. Y. 137; Hutkoff v. Moje, 20 Misc. Smith V. Culton, 5 111. App. 422. (N. Y.) 632, 46 N. Y. Supp. 905; Indiana.— Ind. Nat. Bank v. Wech- Auburn Nat. Exch. Bank v. Bene- erly, 67 Ind. 345; Kimble v. Christie, man, 43 Hun (N. Y.) 241; Fenton 55 Ind. 140; Glenn v. Porter, 49 Ind. v. Robinson, 4 Hun (N. Y.) 252, 6 500. Thomp. & C. 427. Zotca.— Douglass v. Matting, 29 English.— Broadhelt v. Huddleson, Iowa 498. 2 Wkly. Notes Cas. 293; Foster v. Michigan.— Anderson v. Walter, Mackinnon, L. R. 4 C. P. 704. 34 Mich. 113. See De Camp v. Hanna, 29 Ohio Minnesota. — Yellow Medicine St. 467. But see Corby v. Weddle, County Bank v. Tagley, 57 Minn. 57 Mo. 452. 391, 59 N. W. 486. ^" Wheeler v.. Traders' Dsijubit Misscmri.— Cogwill v. Petifish, 51 Bank, 21 Ky. L. Rep. 1416, 55 S. W. 552. 37 EFFECT OF NEGLIGENCE. [§' 28 affixing his signature in reliance merely upon the statement of such party, was held guilty of such negligence as to estop him from defeat- ing recovery by a bona fide holder."" In another case, however, where it appeared that one had signed a note, relying upon the representa- tion of a stranger, who had come to his farm, that the instrument was an application for insurance and it was read to him as such by the stranger, he being unable to read, it was decided that a purchaser of such note could not recover thereon against the maker.**^ Again, failure to read the instrument has been held to be such negligence as will estop a maker from setting up fraudulent representations,®^ the note not having been signed under any emergency and there being nothing to prevent him from doing so and no allegation of any suffi- cient excuse."^ And such failure will not be excused by the fact that the maker was unable to read without glasses where they could easily have been obtained.^* In this case it appeared that the defendant, who was president of the school board, had been given several papers to sign in reference to school matters, among which papers the note in question had been surreptitiously placed in such a manner that the defendant could not distinguish it from the other papers, that he had affixed his signature thereto, in the belief that it was an order in regard to school matters, and that at the time he was unable to read or dis- tinguish papers without his glasses, but neglected to use them, and he was held estopped, in an action by an innocent holder, to deny he executed the paper. Nor is it any excuse that the maker was not ac- "Mackey v. Perterson, 29 Minn. lotoa. — Sheneberger v. Union Ins. 298, 13 N. W. 132, 43 Am. Rep. 211. Co. 114 Iowa 678, 87 N. W. 493. "First Nat. Bank v. Deal, 55 Kansas. — Ort v. Fowler, 31 Kan. Mich. 592, 22 N. W. 53. 478, 2 Pac. 580, 47 Am. Rep. 501. ^- Alabama.— Martin v. Smith, 116 Minnesota.— WarA v. Johnson, 51 Ala. 639, 22 So. 917; Cannon v. Lind- Minn. 480, 53 N. W. 766, 38 Am. St. sey, 85 Ala. 198, 3 So. 676, 7 Am. St. R. 515. R. 38. New York. — Chapman v.. Rose, 56 Georgia.— Walton Guano Co. v. N. Y. 137. Copelan, 112 Ga. 319, 37 S. E. 411. Compare Radcliffe v. Biles, 94 Ga. /JImois.— Carpenter v. First Nat. 480, 20 S. E. 359; Downey v. Beach, Bank, 119 111. 352, 10 N. E. 18; Mead 78 111. 53; Hopkins v. Hawksye Ins. V. Munson, 60 111. 49. Co., 57 Iowa 203, 10 N. W. S05, 42 Indiana. — Baldwin v. Barrows, 86 Am. Rep. 41. Ind. 351; American Ins. Co. v. Mc- "' Boynton v. McDaniel, 97 Ga. 400, Whorter. 78 Ind. 136; Nebeker v. 23 S. E. 824. Cutsinger, 48 Ind. 436. »* McCoy v. Gouvion, 19 Ky. L. Rep. 1441, 43 S. W. 699. § 28] EXECUTION OR DELIVERY. 28 quainted with the language,^^ where the instrument could have been read to him by others who were present when he signed it/*' or where no effort was made by him to ascertain the contents.^'' So it has been determined that as a matter of law one who, possessed of all his facul- ties, and able to read, signs a bill or note relying upon the assurance or the reading of a stranger that it is a different instrument, is guilty of such negligence as will render him liable thereon.^^ The rule is said to be founded upon the principle, that a party who is in pos- session of his faculties and able to read can know the character of the instrument which he is signing, and owes the duty to know this to every party who may be subsequently affected by his act. By affix- ing his signature to the instrument, the credence of the world to every statement and promise therein is invited and an omission on his part to ascertain what the provisions and statements are, constitutes negligence.'''' Ordinarily, however, the question of what constitutes negligence on the part of the maker is held to be one of fact for the jury.^**° And mere failure of an illiterate person to procure some one to read a note for him before signing it cannot be held, as a matter of law, to constitute such negligent signing thereof as would prevent him from controverting its execution even against a hona fide holder.^*'^ So where two persons called on the person whose name was signed to a note, several days before it was executed, and as a result of their negotiations with him he was appointed agent for a certain territor}' for the sale of cornshellers, which were to be forwarded to him, but before they were received another party called and procured his signa- ture to what was represented to be a paper in the nature of a receipt ''Fisher v. Van Behren, 70 Ind. his reading as his own knowledge, 19, 36 Am. Rep. 162; Boagin v. what his agent knows he knows, Fouchy, 26 La. Ann. 594. and he cannot disaffirm the acts of ^' Baldwin v. Barrows, 86 Ind. 351. that agent done within the scope of ®'Ruddell V. Dillman, 73 Ind. 518, the authority he has intrusted to 38 Am. Rep. 152. him." Per Brewer, J. "** Ort v. Fowler, 31 Kan. 478, 2 Pac. ^^ Ort v. Fowler, 31 Kan. 478, 2 580, wherein it is said: "If he has Pac. 580. eyes and can see he ought to exam- ^'^Ray v. Baker, (Ind.) 74 N. E. ine; if he can read he ought to read; 619; Hopkins v. Hawkeye Ins. Co., and he has no right to send his 57 Iowa 203, 10 N. W. 605; National signature out into the world affixed Exch. Bank v. Venemans, 4 N. Y. to an instrument of whose contents St. R. 363; Bowers v. Thomas, 62 he is ignorant. If he relies upon Wis. 480, 22 N. W. 710. the word of a stranger he makes ^"^ Ray v. Baker, (Ind.) 74 N. E. that stranger his agent. He adopts 619. 29 INSTRUMENT EXECUTED, ACCEPTED OR DELIVERED ON SUNDAY. [§ 29 of a certain number of cornshellers, claimed to be at a certain depot consigned to him, and in response to the signer's statement that he feared the paper might be a note, he was assured that it was not, and he was unable to read English, and had no neighbor within a mile, it was held in an action by a bo7m fide holder of the instrument, which was in fact a note, that the question whether he was negligent in signing the same was for the jury and in this case it was held there could be no recovery.^"- In determining the question of negligence the age, mental power, and physical infirmities of the one signing the note are among the elements to be considered. ^^^ §29. Instruments executed, accepted or delivered on Sunday. Though it may be shown as a defense to an action between the parties, that a note or bill of exchange was executed or accepted and delivered on Sunday, yet if such an instrument bears the date of a secular day, the maker or acceptor will be estopped to set up such defense as against a bona fide holder taking the same before it became due for a valuable consideration and without notice."* So this rule has been applied in a case of drafts delivered and accepted on Sunday, but falsely dated as of another date. And in reference to this the court said: "The drafts were negotiable paper and bore date upon a day of the month corresponding to Saturday. If they were in fact executed on Sunday, they were void as between the original parties ; and that they were thus void might be shown also against any holder affected with notice. But if Ball purchased them before maturity, and took them for a valuable consideration, in the due course of trade, and without notice of their immoral taint, the acceptor, having accepted upon Sunday, with no correction of the false date, and no indication of the true time of the acceptance, is estopped from urging in defense of a suit against him by Ball that the drafts M^ere drawn and accepted on Sunday. * * * This does not trench upon the rule that a Sunday "= National Exch. Bank v. Vene- Kentucky. — Hofer v. Cowan C5o., mans, 4 N. Y. St. R. 363. (Ky.) 6S S. W. 438. "" Kalamazoo Nat. Bank v. Clark, J/ai?ie.— Bank v. Mayberry, 48 Me. 52 Mo. App. 593. 198. ^"^ Arkansas.— Trieher v. Commer- Massachusetts. — Cranson v. Goss, cial Bank of St. Louis, 31 Ark. 128. 107 Mass. 439, 9 Am. Rep. 45. Georgia.— Harrison v. Powers, 76 Michigan.— Bernan v. Wessels,' 53 Ga. 218. Mich. 549, 19 N. W. 179; Vinton v. /owa.— Clinton Nat. Bank v. Peck, 14 Mich. 287. Graves, 48 Iowa 228. New Hampshire. — State Capital Bank v. Thompson, 42 N. H. 369. g 29] EXECUTION OR DELIVERY. 30 contract is void; it only excludes the acceptor from treating those drafts as Sunday contracts, after he has given currency to them as Saturday contracts and with no timely disclosure that they were other than what they purported to be. It makes their date conclusive that they were Saturday contracts, and not Sunday contracts. The de- fense that a party's own act is void may be outlawed by the doctrine of estoppel, to protect innocent purchasers and prevent fraud."^°^ And where a note is delivered on a secular day, it is held that it is no de- fense to an action thereon, that it was signed on a Sunday, it being declared that a note becomes a contract at the time of delivery.^"® And it has been decided that in an action by a transferee after ma- turity, the fact that the note, though purporting to have been exe- cuted on a week day, was executed on a Sunday, cannot be set up in defense thereto by the surety where it is not shown that such de- fense could have been set up by him against the payee."^ But where the contract, which was the consideration of the note, was made on Sunday, and the note was made and delivered on that day to the original payee, such facts were declared to be a good defense to an action by him on the note.^"® And where a note is given on Sunday the fact that the consideration was goods purchased on a week day is held not to alter the rule, in an action by the payee.^"^ And it has also been decided that there can be no recovery on a note given on a week day for a contract completed on a Sunday,"" or on a note exe- cuted on such a day where the consideration was a tort growing out of an unlawful Sunday contract, as where the consideration for a note was an injury done to a horse and wagon by careless or negligent driving on a Sunday."^ Again, where a note executed on Sunday is void as in violation of a penal statute, there can be no recovery on a renewal note made on Sunday and delivered by the maker to another to be delivered to the payee on the following day."- And under "^Ball V. Powers, 62 Ga. 757. Per 9 Am. Rep. 45; Allen v. Deming, 14 Bleckley, J. N. H. 133, 40 Am. Dec. 179. '°«Bell V. Mahin, 69 Iowa 408, 29 ""Morgan v. Bailey, 59 Ga. 683; N. W. 331; Bank of Cumberland v. McAuley v. Reynolds, 64 Me. 136; Mayberry, 48 Me. 198. See Hall v. Miller v. Lynch, 38 Miss. 344. See Parker, 37 Mich. 590, 27 Am. Rep. Foreman v. Ahl, 55 Pa. St. 325. 540. ""Kountz v. Price, 40 Miss. 341. "^Leightman v. Kadetska, 58 "^ Tillock v. Webb, 56 Me. 100. Iowa 676, 12 N. W. 736, 43 Am. Rep. "= Davis v. Benger, 57 Ind. 54. 129. See Stevens v. Wood, 127 Mass. 123. '<«Cranson v. Goff, 107 Mass. 439, I 31 INSTRUMENT EXECUTED, ACCEPTED OR DELIVERED ON SUNDAY. [§ 29 such a statute there can be no recovery against a surety on a note so executed by him, in an action by the payee to whom it was delivered by the principal, the payee taking the same in good faith and with no knowledge as to the date of the execution.^^^ So a Sunday note, void under the laws of a state, cannot, as between the parties, be ratified by a subsequent promise to pay the same made on a week day, as the transaction, being illegal in its inception, will not be purged of its illegality by a subsequent promise, it not being in the power of par ties to render a contract legal which the law declares to be illegal 114 "3 Parker v. Pitts, 73 Ind. 597, 38 amine Tucker v. West, 29 Ark. 386; Am. Rep. 155. Reeves v. Butcher, 31 N. J. L. 224. "*Pope V. Linn, 50 Me. 83. Ex- CHAPTEE III. INCAPACITY AND WANT OF AUTHORITY. Subdivision I. Coverture §§ 30-62 Subdivision II. Infancy 63-68 Subdivision III. Intoxication 69-79 Subdivision IV. Mental incapacity and insanity 71-72 Subdivision V. Want of authority 73-94 Subdivision VI. To whom defense is available 95 Suh division I. COVERTURE. Sec. Sec. 30. Coverture — Rule at common law. 45. Same subject — ^Where statute ex- 31. Effect of new promise after bus- pressly prohibits. band's death. 46. Same subject — Under particular 32. Rule in equity — English deci- statutes. sions. 47. Same subject — When no defense. 33. Same subject — United States de- 48. Same subject — Bona fide holders. cisions. 49. Rule as to determining whether 34. Defense of coverture as affected principal or surety. by statute. 50. Liability as acceptor. 35. Statute does not have retroac- 51. Indorsement by married woman live effect. — Common-law rule. 36. Coverture a defense when trans- 52. Same subject — Assent of hus- action not within statutory band. exceptions. 53. Same subject — Under particular 37. Same subject — Burden of proof statutes. Pleading. 54. Same subject — General rule. 38. Assent of husband. 55. Woman in business — Sole trader, 39. Note given for insurance premi- etc. ums. 56. Separate estate, benefit, etc. 40. Where note made by wife to hus- 57. Same subject continued. band. 58. Same subject continued — Note 41. Where wife a joint maker. for borrowed money. 42. Where husband and wife live 59. Same subject continued — Inten- apart — English decisions. tion as affecting. 43. Same subject — United States de- 60. What law governs. cisions — Conclusion. 61. Who may urge. 44. Where wife signs as surety — 62. Where there is a failure to plead Generally. coverture and judgment is ren- dered. § 30. Coverture — Rule at common law. — At common law a mar- ried woman had no separate legal existence.^ She could not make a binding contract, and a promissory note made by her was regarded as ^Dollner, Potter & Co. v. Snow, 16 Fla. 86; Scudder v. Gori, 3 Rob. (N. y.) 661. 32 I 33 COVERTURE RULE AT COMMON LAW. [§ 30 void.^ Coverture, therefore, was and is a good defense to an action on a note or bill made or indorsed by her, in the absence of some enabling statute,* even as against a hona fide holder.^ So where money was loaned Illinois. — Taylor v. Boardman, 92 ^Florida. — First Nat. Bank v. Hirschkowitz (Fla. 1903), 35 So. 22, 24; Dollner, Potter & Co. v. Snow, 16 Fla. 86. Iowa. — Jones v. Crosthwalte, 17 Iowa 393. Maine. — Bryant v. Merrill, 55 Me. 515; Howe v. Wildes, 34 Me. 566. Mississippi. — Robertson v. Bruner, 24 Miss. 242. Missouri. — Cummings v. Leedy, 114 Mo. 454, 21 S. W. 804. New York. — Kinne v. Kinne, 45 How. Pr. (N. Y.) 61; Vansteenburgh V. Hoffman, 15 Barb. (N. Y.) 28. South Carolina. — Goodhue v. Barn- well, Rice's Eq. (S. C.) 198. California. — So it was declared in an early California case, that a feme covert has no power to make a con- tract, such as to sign her name to a note, is a doctrine which this court has no power to disturb. Simpson v. Sloan, 5 Cal. 457. See Rowe v. Kohle, 4 Cal. 285. Indiana. — And in an Indiana case that: "It is the settled law of this state that a married woman, during her coverture, cannot make a prom- issory note which will be valid and binding on her." American Ins. Co. V. Avery, 60 Ind. 566. ^Alabama. — Fry v. Hammer, 50 Ala. 52. California. — Simpers v. Sloan, 5 Cal. 457. Colorado. — Fernando v. Beshoar, 9 Colo. 291. 12 Pac. 196. District of Columhia. — Jackson v. Hulse. 6 Mackey (D. C.) 548. Florida. — First Nat. Bank v. Hirschkowitz (Fla. 1903), 35 So. 22, 24; Hodges v. Price, 18 Fla. 342; Dollner, Potter & Co. v. Snow, 16 Fla. 86. Georgia. — Perkins v. Rowland, 69 Ga. 661. Joyce Defexse.s — 3. 111. 566; Madge v. Bullock, 83 111. 22. Indiana. — Lackey v. Boruff, 152 Ind. 371, 53 N. E. 412; American Ins. Co. V. Avery, 60 Ind. 566; Brick v. Scott, 47 Ind. 299; Hodson v. Davis, 43 Ind. 258; O'Daily v. Morris, 31 Ind. 111. Iowa. — Jones v. Crosthwalte, 17 Iowa 393. Louisiana. — Conrad v. LeBlanc, 29 La. Ann. 123. Maine. — Wyman v. Whitehouse, 80 Me. 257, 14 Atl. 68; Bryant v. Mer- rill, 55 Me. 515; Howe v. Wildes, 34 Me. 566. Maryland. — Griffith v. Clarke. 18 Md. 457. Michigan. — Waterbury v. An- drews, 67 Mich. 281, 34 N. W. 575; Kenton Ins. Co. v. McClellan, 43 Mich. 564, 6 N. W. 88; Johnson v. Sutherland, 39 Mich. 579. Mississippi. — Robertson v. Bruner, 24 Miss. 242; Davis v. Foy, 7 Sm. & M. (Miss.) 64. New Jersey. — National Bank v. Brewster, 49 N. J. L. 231, 12 Atl. 769. New York. — Linderman v. Farqua- harson, 101 N. Y. 434, 5 N. E. 67; Scudder v. Gori, 3 Rob. (N. Y.) 661; Kinne v. Kinne, 45 How. Pr. (N. Y.) 61; Bogert v. Gulick, 65 Barb. (N. Y.) 322; Vansteenburgh v. Hoffman, 15 Barb. (N. Y.) 28; Lee Bank v. Satterlee, 24 N. Y. Super. Ct. 1. Rhode Island. — Radican v. Radi- can, 22 R. I. 405, 48 Atl. 143. South Carolina. — Goodhue v. Barn- well, Rice's Eq. (S. C.) 198. Tennessee. — Yeatman, Shields & Co. V. Bellman, 1 Tenn. Ch. 589. Texas. — Kavanaugh v. Brown, 1 Tex. 481. ° Louisiana. — Conrad v. LeBlanc, 29 La. Ann. 123. §§ 31, 32] INCAPACITY AND WANT OF AUTHORITY — COVERTURE. 34 to a wife, and she and her husband executed a note therefor, prior to the Indiana Act of 1881, conferring certain rights upon married women, it was decided that the note was void.® And a married woman is not estopped from showing her coverture in defense to a note by the fact that the word "widow" followed her signature thereto.'' And where a married woman cannot make a valid promissory note, cover- ture will be a defense to an action against her on a mortgage note given by her, though she made a payment thereon subsequent to her husband's death,^ or made a promise after his death to pay, the prom- ise being void and not binding on her.'' So though a note was given by a husband and wife for money and supplies furnished to be used, and which were used for the support of the husband and his family, such support and maintenance being a legal charge against the hus- band alone, and for which his wife could not bind herself to pay un- less she had a separate estate and business, and there was no proof or claim that she had either, she was held to be under the common law disability of coverture." And it has been decided, that a married woman is not liable on a note given by her for false representations in the nature of a warranty of her capacity.^^ § 31. Effect of new promise after husband's death. — Where a mar- ried woman pleads her coverture in bar to an action on a note it is not a good replication thereto that she promised to pay the note after her husband's death, where there is no moral obligation to pay shown, nor any new consideration to support the subsequent promise.^^ § 32. Rule in equity — English decisions. — Although the note of Michigan. — Johnson v. Suther- holder." Johnson v. Sutherland, 39 land, 39 Mich. 579. Mich. 579, per Campbell, C. J. Missouri. — Comings v. Leedy, 114 "Lackey v. Boruff, 152 Ind. 371, Mo. 454, 21 S. W. 804. 53 N. E. 412. New Jersey. — National Bank v. ' Cannam v. Farmer, 3 Exch. 698. Brewster, 49 N. J. L. 231, 12 Atl. 769. ^Radican v. Radican, 22 R. I. 405, Neio York. — Linderman v. Farqua- 48 Atl. 143. harson, 101 N. Y. 434, 5 N. E. 67; "Wilcox v. Arnold, 116 N. C. 708, Scudder v. Gori, 3 Rob. (N. Y.) 661; 21 S. E. 434. Lee Bank v. Satterlee, 24 N. Y. Su- '" O'Malley v. Ruddy, 79 Wis. 147, per. Ct. 1. "Inasmuch as a married 48 N. W. 116, 24 Am. St. Rep. 702. woman cannot contract generally, " Wright v. Leonard, 11 C. B. N. her contracts, whether negotiable or S. 258. i.on-negotiable in form, can never be '^ Vance v. Wells & Co., 6 Ala. any better in the hands of a bona 737. fide holder than in those of the first 35 RULE IN EQUITY ENGLISH DECISIONS. [§32 a married woman was void at common law, and her coverture was a defense to an action thereon, yet a different doctrine prevailed in courts of equity. So in an early English ease, where by deed a fatlier directed rents and profits of a real estate to be paid to his daughters, whether sole or covert, for their separate use, and they joined in bonds for money lent to their husbands, the trustee was ordered by the court to pay the rents and profits accordingly.^^ And in a case, where it appeared that a married woman had borrowed money, which she had promised should be repaid with interest out of her separate property, and had given her promissory note therefor, it was decreed that the debt should be paid out of the rents and profits of estates, settled to her separate use for life.^* In a later case the court said : "At law there can be no separate enjoyment of property by a feme covert; in equity there may; and as incident to the power of enjoyment, she has a power of charging her separate property. Where a wife joins vnih her husband in a security, it is implied to be an execution of her power to charge her separate property ."^^ And in the same year it was again said by the court: "I am of opinion that a feme covert being incapable of contract this court cannot subject her separate prop- erty to general demands, but that, as incident to the power of enjoy- ment of separate property, she has a power to appoint it, and that this court will consider a security executed by her, as an appointment pro tanto of her separate estate."^*' It was subsequently decided that where a feme covert, having a separate property, joined her husband in a promissory note for money advanced to the husband, her signa- ture was prima fade evidence to charge her and that the court acted upon the security of the wife, not as an agreement to charge her sepa- rate estate, but as an equitable appointment under the settlement. Without the consent of the defendant, the court said, it could not order the property to be either sold or mortgaged, and the decree must be for satisfaction out of the rents and profits.^^ Again, in another case, it was declared that when a woman has property settled to her separate use, she may bind that property, without definitely stating that she intends to do so, and that she may enter into a bond, bill, promissory note, or other obligation which, considering her state as a " Standford v. Marshall, 2 Atk. 69. ' " Stuart v. Kirkwall, 3 Madd. 387, "Bullpin v. Clarke, 17 Ves. Jr. 365. 388, per vice-chancellor. « Greatly v. Noble, 3 Madd. 79, 94, " Field v. Sowle, 4 Russ. 112. per the vice-chancellor. § 33] INCAPACITY AXD WANT OF AUTHORITY — COVERTURE. 36 married woman, could only be satisfied by means of her separate estate.^* § 33. Same subject — United States decisions. — In the United States it has been determined, that the power of a married woman to bind her separate estate in equity, for the payment of a promissory note is recognized,^^ and the power is declared to be sustained by a great weight of authority.^** And in a New York case it is said, that the rule may be regarded as settled, that in equity, the written engage- ments of a married woman, entered into on her own account, to pay money, with the intention to charge her separate estate, are to be satisfied out of her separate estate and her coverture therefore is no defense.^^ The following extract from a decision in ISTew Jersey is of value in this connection as showing the origin and growth of this doc- trine : "My examination has satisfied me that this entire subject, with respect to the power of the feme covert over her separate estate, has been the creation of the court of equity, and that the system had been from time to time, circumscribed or extended, not under the co- ercion of any inflexible rules or established principle, but in accord- ance with judicial opinion founded on very general considerations as to the propriety or policy of the particular circumscription or expan- sion. No one who has the least acquaintance with the topic, can doubt that the rule, that a feme can bind her separate estate by a contract of suretyship and this, too, in the absence of any expressed intent so to do, is, and has been for a long time past, entirely settled in the Eng- lish courts. But still the doctrine in its established form, is not suffi- ciently ancient to have in this court an imperative force and the con- sequence is, as I have already remarked, the way is open for us to adopt a rule which will embrace, or one which will exclude, the power which has been exercised in the present instance. * * * Looking back to the beginning of this system, we find that the separate estate itself of the feme covert is a pure creature of equity. It bears no "Tullett v. Armstrong, 4 Beav. " Yale v. Dederer, 18 N. Y. 265, 72 319, 323. Am. Dec. 503n, citing North Amer- '" Maclay v. Love, 25 Cal. 367, 379, lean Coal Co. v. Dyett, 7 Paige 85 Am. Dec. 133; Davis v. Smith, (N. Y.) 9; Bullpin v. Clarke, 17 Ves. 75 Mo. 219; Whltesides v. Cannon, Jr. 365; Heatley v. Thomas, 15 Ves. 23 Mo. 457; Harvey v. Johnson, 133 596; Stuart v. Kirkwall, 3 Madd. N. C. 352, 357. 387; 2 Story's Eq., § 1400. *" Williams v. Urmiston, 35 Ohio St. 296, 35 Am. Rep. 611. 37 RULE IN EQUITY — UNITED STATES DECISIONS. [§ 33 analogy to anything existing at the common law. According to the general legal doctrine, the effect of marriage was to merge the exist- ence of the wife into the legal life of the husband, so that with re- spect to property and civil rights she, as a separate person, had no recognition. In open derogation of this cardinal principle, equity chose to clothe her with a capacity to hold property in her individual right. It is certainly not to be wondered at that an estate thus origi- nating in this clear violation of the laws of property as between hus- band and wife, should have been afterward modified to suit the sup- posed convenience or exigency of the case. Nor did equity scruple to introduce another anomaly when the occasion seemed to require it. It having been settled that the wife might enjoy a separate estate, the result was, as the laws of property attached to it, that she .x)uld alien- ate it, and this power in its application to settlements, proving dis- advantageous, the defect was cured by another violation of legal rules, and a restraint against alienation inconsistent with the nature of the estate granted was supported. The structure raised on a foundation thus arbitrarily laid, could of necessity have no other form than that which would proceed from the will of the builders. And such in truth was the result. The married woman being thus recognized as the owner of the estate, the question arose as to the nature and extent of her authority over it. It became obvious at once, that in order to en- joy the privileges thus granted, she must be allowed to make contracts with respect to her separate interests and it was accordingly soon intimated,^^ that to this extent she would be regarded in equity as a feme sole. The result was that those contracts which a woman under coverture made touching her separate property, although void at law, were universally enforced in equity, the principle at fi-rst being, that such contracts, operating on the property, were in the nature of an execution of a power of appointment. But it was soon supposed that this principle was not broad enough to satisfy the purposes to be sub- served and accordingly in the great case of Hulme v. Tenant,^* Lord' Thurlow decided that a bond of a feme covert, jointly with her hus- band, would bind her separate property. His language is: 'I have no doubt about this principle, that if a court of equity says a feme covert may have a separate estate, the court will bind her to the whole extent, as to making that estate liable to her own engagements, as, for " In Grigby v. Cox, 1 Ves. Sr. 517, " Hulme v. Tenant, 1 Bro. C. C. and in Peacock v. Monk, 2 Ves. Sr. 16. 190. § 34] INCAPACITY AND WANT OF AUTHORITY — COVERTURE. 38 instance, for the payments of debts/ etc. This case does not appear to have been entirely satisfactory to Lord Eldon, but he never judi- cially departed from it, and it has been followed in many subsequent cases, and according to Lord Coltenham, it contains the correct view of the principle upon which equity acts in giving effect to the agree- ments of married women.^® This principle, that the general engage- ments of a feme covert will be effectuated by the method of the court acting on her separate property, has, in a long series of cases, been applied and put in force. Thus it has been held, that she can render her estate liable in the form of the acceptance of a promissory note, or her own note, or on an engagement to pay the costs and proceed- ings of a suit in chancery. * * * Although the theory of the English courts on this subject has, after an agitation of a century, set- tled into form and coherence, the process by which this result has been produced has not escaped the criticism of some of the most distin- guished of American lawyers."^® In the application of this doctrine it has been decided that a wife only charges so much of her property as she had at the time of signing the note and not after-acquired property.^^ § 34. Defense of coverture as affected by statute. — The strict doc- trine of common law in regard to married women, has been greatly modified by legislation. Coverture is not at the present date a defense to such an extent as it formerly was, as in most of the states laws have been passed removing most of their disabilities and enlarging their j)Ower to contract.-^ So it was determined in Indiana that, prior ^^ Owens V. Dickenson, 1 Cr. & Ph, which she may make, though it can 54. . be enforced only as against her ^Perkins v. Elliot, 23 N. J. Eq. separate property. See also, Alex- 526, per Beasley, C. J. ander r. Bouton, 55 Cal. 14; Marlow -'Manahan v. Hart, 24 Ohio Cir. v. Barlew, 53 Cal. 456; Belloc v. Ct. 526. Davis, 38 Cal. 242, holding that a ^ The following citations show married woman was incapable of how various statutes have been con- binding her estate except by an in- strued in different states: strument in writing acknowledged California. — Goad v. Moulton, 67 and certified as required by statute. Cal. 536, 8 Pac. 63, holding that un- See Smith v. Greer, 31 Cal. 476; der Cal. Civ. Code, § 158, providing Maclay v. Love, 25 Cal. 367. that a married woman may enter Connecticut. — Williams v. King, 43 into any engagement or transaction Conn. 569, holding that the Con- respecting property which she might necticut act of 1872, providing that if unmarried; a promissory note is an action at law might be sustained an engagement respecting property, against any married woman upon 39 DEFENSE OF COVERTURE AS AFFECTED BY STATUTE. [§ to the passage of the Act of March 25, 1879, it was the settled law of that state that the contract of a married woman was void and could any contract made by her, upon her personal credit, for the benefit of herself, her family, or her estate in the same manner as if she were sole, single, and unmarried, simply changed the form of the remedy for liabilities which had been or should be incurred by married women, and did not create any new liability. It authorized an action at law against a married woman for the same cause of action upon which she would have previously been liable in equity. Iowa. — Rodenmeyer v. Rodman, 5 Iowa 426, holding that if a married woman by her contract, as upon a promissory note, becomes liable, she may be sued at law in the same manner as any other person, but her liability is not a personal one and only extends to and can affect her separate property or estate under code. Louisiana. — Barrow v. Mitten- berger, 21 La. Ann. 396, construing Louisiana Act of 1855, which de- clared in its title that it was "an act to enable married women to con- tract debts and bind their parapher- nal or dotal property." Maine. — Howes v. Bennett (Me. 1886), 3 Atl. 661, holding that under the laws of Maine a married woman might bind herself by note as if sole. Massachusetts. — Major v. Holmes, 124 Mass. 108, holding that the Mas- sachusetts statute of 1874, c. 184, authorizing her to contract, except with her husband, was in this latter respect not intended to impose any new restriction on her capacity, but merely to affirm the rule of common law, so far as her husband is the other party to her grant or contract, and did not prevent her executing a note jointly with her husband to a third party, though the considera- tion is no other than a debt of his to the payee. Michigan. — Kenton Ins. Co. v. Mc- Clellan, 63 Mich. 564, 6 N. W. 88; Russel V. People's Sav. Bank, 39 Mich. 671, 33 Am. Rep. 671; Johnson V. Sutherland, 39 Mich. 579; Ross v. Walker, 31 Mich. 120; West v. Lara- way, 28 Mich. 464. In these cases it is decided that under the statutes of Michigan a married woman cannot become personally liable on an exec- utory promise except concerning her separate estate, and that a nota given for any other consideration is void. See Mich. Comp. L., § 4803. New York. — McVey v. Cantrell, 70 N. Y. 295, 26 Ana. Rep. 605, holding that by § 3 of the Act of 1860, ch. 90, as amended by the Act of 1862, ch. 172, a married woman may enter into any contract having reference to her real estate, and by § 7 of the Act of 1860 she may sue and be sued in all matters having relation to her separate property. The test of her liability is not whether her separate estate is actually benefited or not, but whether the contract has reference to it or relation to -it. Barton v. Beer, 35 Barb. (N. Y.) 78, holding that the law of 1860 in New York, sess. laws 157, § 2, re- lieved a married woman from her disabilities to a certain extent and enabled her to carry on her trade or business and perform any labor or services on her sole and separate account, and to make all contracts incident to such trade or business, 34] INCAPACITY AND WANT OF AUTHORITY — COVERTURE. 40 and to give a note in payment of goods purchased for use in such business. Pennsylvania. — Mahon v. Gorm- ley, 24 Pa. St. 80, holding that the Pa. Act of April 11, 1848, to se- cure the rights of married women "was intended for their protection, not for their injury, and must re- ceive such a construction as shall promote that object. * * * The statute is in derogation of the com- mon law and must therefore be strictly confined to the objects plain- ly expressed or necessarily implied. * * * Where the declaration is on a promissory note, and contains no averment respecting the origin of the debt, the plea of coverture, without any such averment, is a good answer to it on demurrer. If the plaintiff wishes to avoid its ef- fect he must set forth in a replica- tion the special circumstancesi which make the defendant liable, notwith- standing her coverture, or amend his declaration so as to set forth these circumstances. So if the plaintiff, in his affidavit of claim, sets forth a promissory note, with- out stating any of the special cir- cumstances which make a married woman liable on such a contract, an affidavit of defense, setting forth the coverture of the defendant, with- out negativing these special circum- stances, is sufficient." South Carolina. — Singluff v. Tin- dal, 40 S. C. 504, 19 S. E. 137; Martin V. Suber, 39 S. C. 525, 18 S. E. 125, holding that a promissory note is not a conveyance, mortgage, or a like formal instrument affecting her separate estate within the meaning of the S. C. Act of 1887. Vermont. — Spencer v. Stockwell, 76 Vt. 176, 56 Atl. 661, holding that the doctrine of the common law by which all the personal property of the wife's became her husband's upon marriage has been abrogated by statutes. Reed v. Newcomb, 59 Vt. 630, 10 Atl. 593, holding that un- der Vermont laws of 1884, Act No. 140, a married woman has power to make contracts with any person other than her husband, and to bind herself and her separate estate in the same manner as if she was un- married, and she may sue and be sued as to all such contracts made by her estate, either before or during coverture. This law removes the in- capacity of a married woman to con- tract, and permits her to make con- tracts in the same manner and to the same extent as a feme sole, ex- cepting with her husband, and en- forces them. West Virginia. — Williamson v. Cline, 40 W. Va. 194, 197, 20 S. E. 917, declaring, per Brannon, J., that "What is commonly called the 'Mar- ried Woman's Act' has undergone material legislative amendment since the first enactment in chapter 66 of the Code of 1868. Up to the enactment of chapter 3, Acts 1893, a court of law had no jurisdiction to render judgment upon the contract of a married woman, and the plea of coverture filed in this action would have at once ousted the law court of the case. Only a court of equity had jurisdiction to enforce against her separate estate such contracts as bound it. * * * So far as con- cerns the jurisdiction of courts of law to enforce her contracts against her separate estate, § 15, of chapter 66, of the Code, as found in chapter 3, Acts. 1893, makes a radical revo- lution. By it a married woman may sue and be sued in any court of law or chancery in this state, which may have jurisdiction of the subject- I 41 STATUTE NOT RETROACTIVE BURDEN OF PROOF. [§§ 35-37 not be enforced against her;-^ but ability has since been declared to be the rule in this state and disability the exception.^" § 35. Statute does not have retroactive effect. — Where coverture is a defense to a note at the time of its execution, the right to inter- pose such a defense will not be affected by a statute subsequently passed, as a retroactive effect will not be given to an enabling statute so as to render a note executed by a married woman valid unless it clearly appears that such was the intention of the legislature.^^ § 36. Coverture a defense when transaction not within statutory exception. — The rule of the common law that coverture is a defense, is not changed except in the particular cases provided by statute,^- for where the legislation has created some specific status for a woman, she cannot act otherwise than the law specifically directs and per- mits.^^ So a married woman cannot bind herself by a promissory note, unless the transaction comes within the exceptions of the statute which authorizes her to contract, and the fact that the transaction is not of such a character will defeat a recovery thereon.^* § 37. Same subject — Burden of proof — Pleading. — The general rule being that a married woman cannot make a contract, or be sued, the burden of proof is on the plaintiff to show that she is within the matter, the same in all cases as if "Rowe v. Kohle, 4 Cal. 285. See she were a feme sole; and any judg- Wilcox. v. Arnold, 116 N. C. 708, 21 ment rendered against her in any S. E. 434, holding that except in such suit shall be a lien against the the cases mentioned in the Code, corpus of her real estate, and an §§ 1828, 1831, 1832, 1836, a feme execution may issue thereon and he covert is at law Incapable of mak- collected against the separate per- ing an executory contract and that sonal property of a married woman no recovery could be had on a note as though she were a feme sole, which neither purported to charge Under this section her status or her separate estate or to be for her condition of coverture has no influ- benefit. ence upon jurisdiction. It depends '' Scudder v. Gori, 3 Rob. (N. Y.) on the subject-matter." 661; see Robertson v. Bruner, 24 " Wooden v. Wampler, 69 Ind. 88, Miss. 242. per Scott J Miss. 242. As to purchasing a mar- '" Arnold v. Engleman, 103 Ind. I'ied woman's note see Haas v. Amer- 512, 3 N. E 238 ^^^^ ^^^- Bank (Tex. Civ. App.), " Bryant v. Merrill, 55 Me. 515, 94 S. W. 439. so construing ch. 52 of P. L. of 1866, " ^oel v. Clark, 25 Tex. Civ. App. providing that the "contracts of any 136, 60 S. W. 356. See Kavanaugh married woman, made for any law- '^- ^'■°^°' ^ '^^^^ ^^^' ^^^- ^^^^^^ ^^ ful purpose, shall be valid and bind- ^'^''Smal note of a married woman is ij^o-" void. Gilbert v. Brown (Ky.), 97 S. W. 40. §§ 38, 39] INCAPACITY AND WANT OF AUTHORITY — COVERTURE. 42 exception. ^^ And where coverture is pleaded as a defense to an action on promissory notes, it is proper and necessary for plaintiff to supply the facts which show that the contract declared on is one which the married woman had power to execute.^® So an answer which suffi- ciently avers coverture, is a sufficient prima facie defense, and if plain- tiff would show or rely upon her ability as a feme covert, he should confess the coverture and avoid its effects, by setting up or showing such a state of case, as is contemplated by the provisions of the code. The rule is that she is not liable and if he seeks to bring her within some of the exceptions to the rule, he should plead the exception.^^ § 38. Assent of husband. — In some states the assent of the hus- band is required by law to render a note executed by her valid. So under the code of Alabama, a married woman might, with the assent or concurrence of her husband expressed in writing, execute a note payable in bank, or a bill of exchange, as well as any other contract into which she was authorized to enter by the statute.^'* And in an early case in New York, it was decided that a note made by a feme covert to bind a submission by her was void when made without the assent of her husband.^^ Wliere the written assent of the husband to a contract of the wife is required in order to render such a contract enforceable against her, his assent need not be signified by a separate clause, but his execution of a note jointly with her, is a sufficient com- pliance with the law in this respect.'*'^ § 39. Note given for insurance premiums. — A wife is liable on a note executed by her and her husband for the purpose of securing the "Gregory v. Preice, 4 Mete. Bkg. Co. v. Wright, 53 Neb. 574, 74 (Mass.) 478; Robertson v. Bruner, N. W. 82, per Nerval, J. 24 Miss. 242. Where a married ^^ Arnold v. Engleman, 103 Ind. woman can make no obligation ex- 512, 3 N. E. 238. cept on account of her own prop- " Rodemeyer v. Rodman, 5 Iowa erty any one seeking to hold her, 426. must make out an affirmative case. ^' Scott v. Taul, 115 Ala. 529, 533, Feckheimer v. Peirce, 70 Mich. 440, 22 So. 447, under Code of 1886, 38 N. W. 325. "In a suit against § 2346. a married woman, when her cover- ^'Rumsey v. Leek, 5 Wend. (N. ture is pleaded and proven, it de- Y.) 20. volves upon the plaintiff to show ^"Freeman, In re, 116 N. C. 199, that the contract was made with 21 S. E. 110; Jones v. Craigmiles, reference to and upon the credit of 114 N. C. 613, 19 S. E. 638. her separate estate." Grand Island 43 NOTE MADE BY WIFE TO HUSBAND. [§ 40 payment of the dues and premiums of an insurance policy on her hus- band's life in favor of her and her child.^^ So she has been held liable on a note so given for the premiums on such a policy issued at her request and in his absence, the note being declared to be primary ob- ligation against her and not to be a guaranty of the husband's debt.*^ But where a married woman gives a note for moneys lent to her hus- band to pay an insurance premium, it has been held that the note, being for a debt due by her husband, and it not appearing what in- terest she had, if any, in the policy, or what it was worth, or its value, she is not liable.*^ § 40, Where note made by wife to husband. — Where a note is made by a wife to her husband and indorsed by him, it has been de- cided in Massachusetts, that under the rule of the common law the note cannot be enforced against her, and that such rule is in force in this state.** So it has been decided that where notes were made by a married woman payable to the order of her husband and indorsed by him, no action could be maintained thereon against her or her ad- ministrator and that plaintiff could not be relieved in equity against the defense that the notes were void as a contract between husband and wife, since this would enable parties, with the aid of a court of equity, to set aside at their pleasure this rule of the common law which had been declared and recognized by the legislature and the court.*'^ In Xew Jersey, it has been determined, that a contract made by a note executed by a wife to her husband and indorsed to the plain- tiff, who advanced money to the wife on her credit and for her sole and separate use, being one which in its inception is a contract made between husband and wife, no legal cause for action upon the contract can arise in favor of the indorsee, and the remedy against the wife must be in equity.**^ And imder a statute which provides that a mar- ried woman may be sued jointly with her husband on any note which " Crenshaw v. Collier, 70 Ark. 5, *^ National Granite Bank v. Tyn- 65 S. W. 709. dale, 176 Mass. 547, 57 N. E. 1022. "Mitchell v. Richmond, 164 Pa. See, also, Caldwell v. Nash, 190 St. 566, 30 Atl. 486. Mass. 507, 77 N. E. 515. "Jones V. Bradwell, 84 Ga. 309, *• First National Bank v. Albert- 10 S. E. 745. son (N. J. Ch. 1900), 47 Atl. 818, "National Bank of Republic v. decided under Act June 13, 1895 (P. Delano, 185 Mass. 425, 70 N. E. 444; L. 821, 2 Gen. St., p. 2017), Act of Massachusetts Nat. Granite Bank v. 1874, §§ 5, 14. Compare National Whicher, 173 Mass. 517, 53 N. E. Bank v. Brewster, 49 N. J. L. 231, 1004; Roby v. Phelon, 118 Mass. 541. 12 Atl. 769. §41] INCAPACITY AND WANT OF AUTHORITY — COVERTURE. 44 she hab executed jointly with him/'^ she is not liahle on a note executed by her to her husband and indorsed by him to a third person as her common law disability still extends to all undertakings other than those which she is empowered by statute to enter intc*^ Under the Xew York laws, however, authorizing a married woman to contract but providing that the act does not apply to any contract that shall be made between the husband and wife/^ it has been decided that it is not a contract between her and her husband where she executes a note payable to his order which he indorsed before maturity, where it is given as a loan of her credit to her husband. In such a case the con- tract is held not to spring into existence until the note has been dis- counted and the proceeds given to the husband of the defendant who is liable thereon.^" § 41. Where wife a joint maker. — In an action against a wife on a note on which her. name appears as a joint maker, coverture is a good defense thereto either at common law or where her contract is not one within the statutory exception. ^^ So where a husband and wife give a joint note for the purchase price of a horse purchased jointly, she was held not liable on the note, as its effect was to make her liable as a surety for her husband, which she cannot become in Michigan, and it is also the established doctrine in this state that the wife is not liable generally for her engagements, nor can she make herself liable, except by contract relating to her separate estate or by contract by which she acquires separate property."- And coverture is a defense to an action against a wife on a note executed by her and her husband jointly for money and supplies furnished to be used for support and maintenance of the husband and his family and which was a legal charge against him alone where there is no proof or claim that she " Md. Code, Art. 45, § 2. Maryland. — Mitchell v. Farrish, 69 *^ Harvard Pub. Co. v. Benjamin, Md. 235, 14 Atl. 712. 84 Md. 333, 35 Atl. 930. Michigan.— Caldwell v. Jones, 115 ^^-N. Y. Laws 1884, chap. 381, § 2. Mich. 129, 73 N. W. 129, 4 Det. L. =° Bowery Nat. Bank v. Snift'en, 54 N. 795. Hun (N. Y.) 394, 27 N. Y. St. R. 10, Tennessee.— J or dsin v. Keeble, 85 7 N. Y. Supp. 520, 2 Bkg. Law J. 173. Tenn. 412, 3 S. W. 511. If within " California. — Brown v. Orr, 29 her power under statute it is imma- Cal. 120; Luning v. Brady, 10 Cal. terial that the purpose was not car- 265. ried out. Italo-French Produce Co. Indiana. — Thacker v. Thacker, 125 v. Thomas, 31 Pa. Super. Ct. 503. Ind. 489, 25 N. E. 595. =•- Caldwell v. Jones, 115 Mich. 129, Louisiana. — Sprigg v. Boissier, 5 73 N. W. 129. Mart. (La. 0. S.) 54. 45 WIFE A JOIXT MAKER. [§ 41 had a separate estate or business.^^ And where the real consideration of such a "note was a loan to the husband by the payee, it was held that she was not estopped by a recital in the note that the said sum was procured for her benefit and that for the payment of this claim when called for she pledged her own individual estate.^* In some jurisdic- tions, however, slie is liable where the consideration for the note passed to her,^^ or is liable to a bona fide purchaser without notice of her suretyship,^'^ or to an indorsee in good faith before maturity, if it be shown that she executed the note as principal, or that she is estopped from denying that she so executed it,^^ or where the note was for the benefit of her separate estate,^** or where its effect was to extinguish a mortgage held by the payee and which in turn freed the wife's in- choate right of dower. ^" And, though a note may be so given for the individual indebtedness of the husband, she is liable thereon under a statute which provides that "either husband or wife may enter into any engagement or transaction with the other or with any other person respecting property, which either might if unmarried.'"'*' So in Eng- land, where a woman, married since the passage of the Married Wom- ens' Property Act of 1870, joined her husband in signing a joint and several promissory note for money lent to him and he became bank- rupt, it was held that her separate estate was liable for the amount due on the note.''^ And in Canada, under the act of 1872,^^ giving a married woman power to contract under certain conditions and to be sued or proceeded against separately from her husband in respect of any of her separate debts, engagements, contracts or torts as if she were unmarried ; the power to contract within the conditions specified is just as absolute as the power of a man, and she is liable on a prom- issory note signed by her and her husband, for money due by him which was accepted on the representation, which was true, that she "O'Malley v. Ruddy, 79 Wis. 147, "Potter v. Sheets, 5 Ind. App. 149, 48 N. W. 116, 24 Am. St. 702. 506, 32 N. E. 811. =* Kilbourn v. Brown, 56 Conn. ''" Noel v. Kinney, 106 N. Y. 74, 12 149, 14 Atl. 784, decided under Conn. N. E. 351. Gen. St. 1888, § 984. "■' Beberdick v. Crevier, 60 N. J. L. "Shaw v. Fortine, 98 Mich. 254, 389, 37 Atl. 959. 57 N. W. 128. She is liable for only ™ Miller v. Purchase, 5 S. D. 232, so much of the consideration as she 58 N. W. 556, decided under Dak. receives. Dobbins v. Blanchard, 94 Comp. Laws, § 2590. See Granger Ga. 500, 21 S. E. 215. v. Roll, 6 S. D. 611, 62 N. W. 970. ■■"Venable v. Lippold, 102 Ga. 208, "Davis v. Jenkins, 6 L. R. Ch. 29 S. E. 181. Div. 728. »=35 Vict. Ch. 160. § 42] INCAPACITY AND WANT OF AUTIIOrxITY COVEETUEE. 4G had a separate estate, the only consideration being a forbearance of the husband's debt.*'^ Again, in West A-^irginia, in an action on a note given by a husband and wife jointly and severally, in consideration of a discharge of a partnership debt the husband being a member of a partnership, it was decided that, "the separate estate of a married woman is liable for any simple contract debt, which she would be liable for if she were a feme sole; and the consideration for such debt need not inure to her own benefit, or that of her separate estate; but it may inure to the benefit of her husband, or any third party, or may be a mere prejudice to the other contracting party ."^* In an action upon a note executed by a husband and wife jointly and sev- erally, to entitle the plaintiff to recover, the facts appearing of record must bring the case within the provisions of the statute which makes a married woman liable "upon any contract made by her since her marriage, upon her personal credit, for the benefit of herself, her family or her separate joint estate."^^ So no recovery can be had on a note signed by husband and wife jointly against her succession where the authorization of the husband is not shown. ^^ And a wife is not bound on a note given by her and her husband jointly, unless it be shown that the contract turned to her advantage and was for some- thing which the husband was not bound to furnish. ^^ And in Ohio it has been decided that a married woman is not liable on such a note unless it appear that she has separate property to be charged there- with.*^^ Again, a wife's name being found on a note conjointly with that of her husband, does not raise a legal presumption that slie is either jointly or severally liable upon it.*''* § 42. Where husband and wife live apart — English decisions. The question has arisen in several cases, as to whether coverture is *^Kerr v. Stripp, 40 U. C. Q. B. by the wife herself, with the con- 125. sent of her husband, which property °* Dages v. Lee, 20 W. Va. 584, under the code became community 586, per Snyder, J. property. See Brandegee v. Kerr, "Way V. Peck, 47 Conn. 23, de- 7 Mart. (La. N. S.) 64; Durnford v. cided under Gen. St., p. 417, § 9. Gross, 7 Mart. (La. O. S.) 466. "" Maddox v. Maddox's Exr., 12 La. ** Buning v. Berteling, 5 Ohio N. 13. See Lombard v. Guillet, 11 P. 167, 7 Ohio Dec. 129. Mart. O. S. 581. '^'Harris v. Finberg, 46 Tex. 79. «' Davidson v. Stuart, 10 La. 146. See Ruiz v. Campbell, 6 Tex. Civ. In this case the note was given for App. 714, 26 S. W. 295. part of the price of land purchased 47 HUSBAND AND WIFE LIVING APAET, ENGLISH DECISIONS. [§43 available as a defense to actions on obligations of a married woman where she and her husband are living apart. In this connection it was declared in an early decision in the English courts that a wife of a man who is under an absolute disability of coming into the coun- try, may be sued as a feme sole.'"* And in a later case it was deter- mined that in an action against a feme covert, who eloped from her hufeband, for work and labor done and materials furnished, that she was in every view, unless adultery be proved, a feme covert and as such could neither sue nor be sued alone, this being the general rule subject to following exceptions: 1. Local customs, as in the city of London, where a fe77ie covert being a sole trader may sue and be sued. But there the husband must be joined at the outset for conformity. 2. The wife of an exile, one abjuring the realm, or perhaps one pro- fessed; who are looked upon as dead in law. 3. The same law has been extended to cases somewhat like the former, as the Duchess of Mazarine's Case, whose husband lived in France. All these are by the acts of the husband; but no act of the wife can ever make her liable to be sued alone." And in a later English case, which was not an action on a note, it was decided that, when a married woman hav- ing a separate estate, and living apart from her husband, contracts debts, the court will impute to her the intention of dealing with her separate estate.^- Again it was subsequently decided in England that, where a married woman who lived abroad in Paris alone, under cir- cumstances which led to the belief that she was a feme sole, indorsed a bill of exchange, and drew a check on her London bankers, for the purpose of enabling one who acted as her agent to raise money and the ■bill and check were cashed by a banker at Paris but were dishonored, the separate estate of the married woman was liable to make good the amount, irrespective of any equities between her and her agent. It was said" by Lord Eomilly in this case : "Here is a lady not legally separated from her husband, but residing alone in Paris for above three months for the benefit of medical advice, having a separate account at her bankers', paying her bills and accounts and the like with her own money, and acting like a woman who had no husband, everything about her tending to confirm this impression, I think she cannot afterward be heard to say that she was a feme covert, and that '" Derry v. Mazarine, 1 Ld. Raym. 1079, in substance words of De- 147. This was not an action on a Grey, C. J. note, but for wages and money lent. " Johnson v. Gallagher, 1 DeG. F. • '"■ Hatchett v. Baddeley, 2 W. Bl. & J. 494. §43] INCAPACITY AXD WANT OF AUTHOEITY COVERTURE. 48 she is not liable to have her separate property applied to make good the money that was paid to her or for her benefit."" § 43. Same subject — United States decisions — Conclusion. — In a case in Georgia it was determined that where a husband deserted his wife, leaving her in Georgia, and he went to another state, where he continued to reside, she was competent to contract as a feme sole and to sue and be sued, and was bound by a note given by her for a debt due by her husband, in consideration that the creditor would not proceed to attach goods of her husband in her hands.''* In an early Massachusetts case it is said: "At common law, while the marriage contract subsists, unless the husband is banished or has abjured the realm, the wife cannot be treated as a feme sole, saving, however, the custom of London, according to which, if a married woman trades by herself without the intermeddling of her husband, she may sue and be sued as a feme sole. Now without doubt the law is the same with us, in relation to the effect of a voluntary separation of husband and wife, or the absence of the husband. The wife is still a feme covert, and is to be treated as such in all judicial proceedings, for it will not be allowed to parties by their own act without, as it may be, any sufficient cause, to destroy the effect of that relation, which for most important reasons the laws of society have chosen to establish."''^ And in another case in this state the rule is affirmed that the wife may be liable on a note given by her, where there has been an abso- lute desertion of her by her husband ; that is, there must be a volun- tary separation from and abandonment of the wife, embracing both the fact and intent of the husband to renounce de facto, and as far as- he can do it, the marital relation and leave his wife to act as a feme soleJ^ In this case it was said by Chief Justice Shaw that: "The principle is now to be considered as established in this state, as a neces- sary exception to the common law, placing a married woman under disability to contract or maintain a suit, that where the husband was never within the commonwealth, or has gone beyond its jurisdiction, has wholly renounced his marital rights and duties, and deserted his wife, she may make and take contracts and sue and be sued in her own " McHenry v. Davis, 10 L. R. Eq. " Gregory v. Pierce, 4 Mete. 88. (Mass.) 478, 479. See Smith v. Si- " Clark v. Valentino, 41 Ga. 143. lence, 4 Iowa 321, 66 Am. Dec. 137. " Dean v. Richmond, 5 Pick. (Mass.) 461, per Parker, C. J. 49 SAME SUBJECT — UNITED STATES DECISrONS. [§ 'iS name as a feme sole. It is an application of an old rule of the com- mon law, which took away the disability of coverture when the hus- band was exiled or had abjured the realm." And in a case in Alabama it was declared by the court that : "If a husband permits his wife to take her children to a foreign country, or to another state, and there -enter into business for their support and maintenance, and by her industry she acquires rights and property to which he never asserted any title during his life, nor ever came to the country where she had located, it must be presumed that he intended that she should con- tract in reference to property as a feme sole, and as such might receive payment of debts contracted with and due her, and indorse bills or notes which she had acquired."" In South Carolina it has also been ■decided that if a husband depart from the state, for the purpose of a residence abroad, without the intention of returning, such absence renders the wife competent to contract, and to sue and be sued as if she were a feme sole, and, notwithstanding her coverture, she will be bound by a note executed by her.^^ And in New York it has been determined that, where the wife, who was a resident of the United States, exe- cuted notes and in an action thereon set up coverture, she was to be regarded as a feme sole and liable thereon, her husband residing in Prussia, which kingdom he could not leave without a passport or permit.'^'' But where a husband and wife mutually agreed to a separa- tion, but nothing was proved showing that the separation was designed to be perpetual, further than its continuance after it took place, and no separate maintenance was provided by the husband, it was de- cided that the court was not satisfied that the separation was so complete that he was to be treated as having renounced his marital rights and relations, so as to enable her to contract as a feme sole and become liable on a note given by her.®'^ So in Vermont it has been likewise held that where a wife who had been deserted by her husband, and while living apart from him gave a note for groceries and other goods purchased by her in her own support, her coverture is a good defense to an action thereon, though she made a promise after she had obtained a divorce from her husband to pay the same.'^^ So proof of coverture has been held a defense in an action by a payee who "Roland v. Logan, 18 Ala. 307, '" McArthur v. Bloom, 2 Duer (N. per Dargan, C. J. Y.) 151. ^^Bean v. Morgan, 4 McCord (S. **" Ayer v. Warren, 47 Me. 217. C.) 148. s^Hayward v. Barker, 52 Vt. 429, 36 Am. Rep. 762. Joyce Defense § 44] INCAPACITY AND WANT OF AUTHORITY — COVERTURE. 50 knew of the marriage, though the wife had been living apart from her' husband for two j^ears, but both were witliin the state.^^ In this connection it may be well to note the following decisions as to the right of a married woman to sue. Thus it has been decided that by a divorce a mensa et thoro the husband's power over a note to his wife before the divorce is not extinguished and an action upon such a note cannot be maintained by her.**^ And where a wife was driven from her husband and her home more than twenty years prior to an action of trover by her for a note made by the defendant to her, and she had all that time acted as a feme sole and had been treated as such by those with whom she had dealings, and her husband, so far from sup- porting her, had considered the connection as extinct and had mar- ried and lived with another woman, and it was agreed that the separa- tion was caused by the cruelty and ill usage of the husband and he had obliged her to live apart from him and to get her own living by trading, and she had sustained herself as a feme sole within the com- monwealth, it was decided that she was entitled to maintain the action.^* From an examination of these cases the rule seems to be that a wife may contract as a feme sole and that she cannot defeat a recovery on her obligations by the defense of coverture where there has been an absolute desertion and abandonment of her by the hus- band, who has gone beyond the Jurisdiction of the state or country, or where a wife has lived in another state or country under circum- stances which led to the belief that she was a feme sole. § 44. Where wife signs as surety — Generally. — Coverture is usually a good defense to an action against a married woman on a note signed by her where it appears that she was a surety merely, either for an obligation or debt of her husband or of another.^^ So it is de- «2 Painter v. Weatherford, 1 Iowa Smith v. Hardman, 99 Ga. 381, 27 S. 97. See Abbott v. Bailey, 23 Mass. E. 731; Lester v. Stewart, 89 Ga. 181, (6 Pick.) 90. 15 S. E. 42; Love v. Lamar, 78 Ga. «=Dean v. Richmond, 23 Mass. (5 323, 3 S. E. 90; Howard v. Simpkins, Pick.) 461. 70 Ga. 322. ^* Abbott v. Bailey, 23 Mass. (6 Indiana. — Guy v. Liberenz, 160 Pick.) 89. Ind. 524, 65 N. E. 186. "^^ Federal. — Marchand v. Griffon, Kentucky. — Magoffin v. Boyle Nat. 140 U. S. 516, 35 L. Ed. 527, 11 Sup. Bank, 24 Ky. L. R. 585, 69 S. W. 702; Ct. R. 834. Skinner v. Lynn, 21 Ky. Law. Rep. Georgria.— Munroe v. Hass, 105 Ga. 185, 51 S. W. 167; Russell v. Rice, 468, 30 S. E. 654; Strickland v. 19 Ky. Law Rep. 1613, 44 S. W. 110. Vance, 99 Ga. 531, 27 S. E. 152; Michigan. — First Nat. Bank v. 51 WIFE SIGNING AS SURETY. [§' 44 Glared in one state that the signing of a note by a married woman as a surety of her husband is a general personal engagement on her part, without "reference to her separate estate," and is void,^^ and she is held not liable, though her intention in such a case to bind her separate estate is expressly declared." And in another Jurisdiction, where a married woman executed a note to a mercantile firm of which her husband was a member, the contract was held void and not en- forceable at law by an indorsee.^ ^ So in Michigan a wife cannot be- come liable upon her promise to pay her husband's debt, and where she and her husband made a note in order to obtain money for his business, in which she had no interest except as a creditor of his, and some of her separate property was used therein, it was decided that the note was void as to her, as she was a mere surety.^^ So in Ken- tucky, no personal liability is imposed upon a married woman who as surety affixes her signature to the note of her husband, given for his debts, to which she is a stranger and in no way personally liable.^* And in Indiana, where a note was executed by a husband, wife and another, against whom a judgment was rendered thereon, which was paid by the latter, the defense of coverture was held a good defense to an action by him, after the death of the husband insolvent, to re- cover as surety the sum so paid.^^ Hanscom, 104 Mich. 67, 62 N. W. As to burden of proof see Sample 167; Waterbury v. Andrews, 67 v. Guyer (Ala.), 42 So. 106. Mich. 281, 34 N. "W. 575. ^"Booker v. Wingo, 29 S. C. 116, New Hampshire.— Citizens' Nat 7 S. E. 49, decided under Act of Bank v. Davis, 62 N. H. 695. 1882, Gen. St., § 2037, permitting Neio Jersey. — National Bank of her to contract as to her separate Rahway v. Brewster, 49 N. J. L. 231, property. Aultman & Taylor Co. v. 12 Atl. 769; Peake v. La Baw, 21 N. Rush, 26 S. C. 517, 2 S. E. 402; Habe- J. Eq. 269. nicht v. Rawls, 24 S. C. 461, 58 Am. New Yorfc.— Scudder v. Gori, 3 Rep. 268. Rob. (N. Y.) 661. ^' Habenicht v. Rawls, 24 S. C. 461, North Carolina.— McLeod v. Wil- 48 Am. Rep. 268. liams, 122 N. C. 451, 30 S. E. 129. "" National Bank of Rahway v. Pennsylvania. — Imhoff v. Brown, Brewster, 49 N. J. L. 231, 12 Atl. 3 Phila. (Pa.) 45. 769. South Carolina. — Booker v. Win- ^9 Li^tiefield v. Dingwall, 71 Mich. go, 29 S. C. 116. 7 S. E. 49; Habe- 223, 39 N. W. 38. nicht V. Rawls, 24 S. C. 461, 58 Am. "" Magoffin v. Boyle Nat. Bank, 24 Rep. 268. Ky. Law Rep. 585, 69 S. W. 702. New Brunswick. — Gaskin v. Peck, " Daudistel v. Beninghof, 71 Ind. N. B. Eq. Gas. 40. 389. 45] -WIFE SIGNING AS SURETY — WHERE STATUTE PROHIBITS. 53 § 45. Same subject — ^Where statute expressly prohibits. — In many states it has been expressly provided by statute tliat a married woman shall not become liable as surety for the debt of another.^^ The object ^^ Alabama. — Richardson v. Ste- phens, 114 Ala. 238, 21 So. 949, con- struing Ala. Code, § 2349, and hold- ing that a note which a married woman signs as surety for her hus- band is void, and the fact that the money was used to improve her land does not render it valid. Delaivare. — Wright v. Parvis, 1 Marv. (Del.) 325, 40 Atl. 1123. Indiana. — Voreis v. Nussbaum, 131 Ind. 267, 31 N. E. 70, 16 L. R. A. 45, construing Ind. Rev. St. 1881, § 5119, and holding that in an ac- tion against a married woman on a note signed by her as surety for her husband, while the statute makes the contract of suretyship void as to her, she alone can claim the benefit thereof and being under the statute bound by an estoppel in pais, like any other person, it fol- lowed that she may in some cases be estopped by her conduct or rep- resentations from claiming the ben- efit of the statute, it being declared that this is not an affirmance or ratification of a void contract, but an estoppel against the exercise of a personal right. Wolf v. Zimmer- man, 127 Ind. 486, 26 N. E. 173, holding that under the statute, where a wife assigns a note which belongs to her to sureties of her husband, as collateral security to an indemnifying mortgage to them, she thereby becomes surety to her husband, and the assigftment is void. Nixon v. Whitely Co., 120 Ind, 360, 22 N. E. 411. New Hampshire. — Storrs & Co. v. Wingate, 67 N. H. 190, 29 Atl. 413, decided under N. H. Gen. Laws, ch. 183, § 12. New Jersey. — Vliet v. Eastburn, 63 N. J. L. 450, 43 Atl. 741, constru- ing 2 N. J. Stat, p. 2017, pi. 26, and holding that an accommodation note by a married woman is a con- tract of suretyship and void under this statute unless she obtains di- rectly or indirectly any money, property or other thing of value for her own use or for the use, benefit, or advantage of her sepa- rate estate. Vankirk v. Skillman, 34 N. J. L. 109, holding that a mar- ried woman is not liable at law, as surety, under Act March 24, 1862. Pennsylvania. — Wiltbank v. Tob- ler, 181 Pa. St. 103, 37 Atl. 188, con- struing Pa. Act June 8, 1893, § 2, and holding that a wife is not liable who signs as surety a note of her husband, though given to secure a loan for the payment of taxes^ in- terest, and repairs on her separate estate. Harrisburg Nat. Bank v. Bradshaw, 178 Pa. St. 180, 35 Atl. 629, 34 L. R. A. 597, 39 W. N. 0. 138, holding that under this act a married woman may, however, bind herself by the renewal of an ac- commodation indorsement which she made before marriage. Patrick V. Smith, 165 Pa. St. 526, 30 Atl. 1044, 36 W. N. C. 10, construing Pa. Act of June 3, 1887, and holding that a married woman was not lia- ble on a note given by her as secur- ity for her husband's debt. Ruff- ner v. Luther, 19 Pa. Co. Ct. 349, 6 Pa. Dist. R. 588; Bank v. Short, 15 Pa. Co. Ct. 64, holding that the Pa. Act of June 3, 1887, § 2 (P. L. 332) enabling a married woman to contract "Provided, however, that nothing in this or the preceding sec- 53 WIFE SIGNING AS SURETY — UNDER PARTICULAR STATUTES. [§ -16 of a statute declaring such paper void is to shield and protect married women from contracts from which neither they nor their estate could be benefited, and therefore they alone are held entitled to invoke the bene- fit afforded by the prohibition.^^ ^ defendant, however, is not entitled to a general affirmative charge on her plea of coverture on proof merely that she was the wife of the other defendant at the time the note sued on was executed, there being no proof that the note was given for the debt of the husband.^* And the burden of proof is on a married woman in an action against her on a note and mortgage executed by her to allege and show that she executed such note and mortgage as surety, and not as principal.^^ § 46. Same subject — Under particular statutes. — In !N"ebraska a married woman has been held not liable on a promissory note wliich she has signed as surety, unless it appears that it was made with reference to, and upon the faith and credit of, her separate estate.^^ tion shall enable a married woman to become accommodation indorser, guarantor, or surety for another" unfettered a married woman to a limited extent only, and did not clothe her with a general power to contract as a feme-sole, and under this act and Act of June 8, 1893, § 2 (P. L. 344), providing that "she may not become accommodation in- dorser, maker, guarantor or surety for another," a note given by a wife as accommodation surety for her husband is void for the reason that she had no power to make such an accommodation note, and is subject to the common-law defenses of a married woman, and a banker 'who discounts the promissory note of a person known by him to be a mar- ried woman is chargeable with knowledge that there is a statutory limitation on her power to contract. "^Vories v. Nussbaum, 131 Ind. 267, 16 L. R. A. 45, 31 N. E. 70. See also, Plaut v. Storey, 131 Ind. 46, 30 N. E. 886. "Englehart v. Richter, 136 Ala. 562, 33 So. 939. ^^Guy v. Liberenz, 160 Ind. 524, 65 N. E. 186, 188; Vories v. Nuss- baum, 131 Ind. 269, 31 N. E. 70, 16 L. R. A. 45. ".'State Sav. Bank v. Scott, 10 Neb. 83, 4 N. W. 314; Barnum v. Young, 10 Neb. 309, 4 N. W. 1054, decided under Act March 1, 1871, providing that "a married woman, while the marriage relation exists, may bargain, sell and convey her real and personal property, and en- ter into any contract with reference to the same, in the same manner, to the same extent, and with like ef- fect, as a married man may, in re- lation to his real and personal prop- erty," and that "a woman may, while married, sue and be sued in the same manner as if she were un- married." Davis v. First National Bank, 5 Neb. 242, 25 Am. Rep. 484 (same point decided). Union Stock Yards Nat. Bank v. Coffman, 101 Iowa 294, 70 N. W. 693 (decided un- der laws of Nebraska, which con- trolled in this case). § 46] IXCAI'ACITY AXD WANT OF AUTHORITY — COVERTURE. 54 So under the early Xebraska statutes permitting a married woman to contract,^^ and to carry on any trade or business/^ when she sets up coverture to avoid liability on a note signed by her as surety she must, in her answer, negative all the causes from which otherwise her liability may be inferred, as that "the contract did not concern her separate property, trade, or business," the reason being that her non-liability can only arise from her inability to contract, and this she must clearly allege.^^ And in JSTew Jersey it was decided that the Act of March 24, 18G2, should receive a somewhat rigorous con- struction, and that it should not be construed as rendering liable at law a married woman who signs a note purely for the accommodation of one of the makers, since, if such an obligation be valid, there is "no imaginable contract which a man or feme sole can make which a married woman cannot make. She can place herself as surety on all kinds of bonds. She can indorse the notes of her mercantile friends or relatives without the knowledge of her husband, or even against his express dissent, to any amount ; and if this suit is to be sustained, such indorsements will form a legal basis for actions at law against herself and her husband."^*'" And in Wisconsin it is decided that where a wife alleged in her answer that she executed the note as surety for her husband, and that the transaction did not concern her sepa- rate property or earnings, and it appeared from the evidence that she was a married woman and that the debt represented by the note was the husband's, there could be no recovery against her in an action at law unless it was shown that the transaction was necessary and convenient for the use and enjoyment of her separate estate, or the carrying on of her separate business, or in relation to her personal services.^"^ Again, under the Kentucky statute, providing that the " Act March 1, 1871. from said notes to her or her sepa- ls See chap. 53, Comp. St. rate estate; that she neither con- *» Gillespie v. Smith, 20 Neb. 455, tracted nor intended to make said 30 N. W. 526, holding that an an- notes a charge on her separate es- swer by a married woman alleging tate," does not constitute a defense. coverture, and "that she executed ""Vankirk v. Skillman, 34 N. J, said notes as surety, and that she L. 109, per Beasley, C. J. had no interest in the transaction, "' Ritter v. Brass, 116 Wis. 55, 92 nor did the consideration thereof N. W. 361, 362. See Hollister v. accrue to her separate estate, and Bell, 107 Wis. 198, 83 N. W. 297; neither were given in relation there- Mueller v. Wiese, 95 Wis. 381, 70 N. to; that she received no part of the W. 485, all decided under R. S.. consideration for which said notes §§ 2342-2345, which in substance so were given, and no benefit accrued provide. 35 WIFE SIGNING AS SURETY — WHEN NO DEFENSE. [§ 47 •wife's estate is not liable for the debt of another unless set apart for that purpose by deed, mortgage or other conveyance,"- a married woman is not liable on a note which she signs jointly with her hus- band, but merely as his surety, where the statute has not been com- plied with, as it was the manifest purpose of the legislature that a wife should not contract an obligation as a surety for her husband, or any other person so as to charge her estate, unless such estate should be expressly set apart for that purpose by deed or other conveyance."^ And in Canada it has been decided that a wife's personal property will not be charged by a joint and several note executed by her and her husband in payment of his debt, where it is provided by statute that her property shall be exempt from seizure in any way for such debts without "her consent," as the execution of the note is not such consent as is required by law."* § 47. Same subject — ^When no defense. — Under the laws in force in some jurisdictions a married woman cannot defeat a recovery on a note on the ground that she signed it as surety. So under the Oklahoma statute,"^ which provides that "either husband or wife may enter into any engagement or transaction with the other, or with any other person, respecting property, which either might, if unmarried, subject, in transactions between themselves, to the gen- eral rules which control the actions of persons occupying confidential relations with each other, as defined by the title on trusts," a wife who joins with her huslxand in executing a promissory note for the latter's debt will be bound thereby."" And a similar rule has been affirmed under like statutes in North Dakota"'^ and in South Da- kota."^ So in West Virginia it has been decided that where a married woman executes a bond as surety for her husband's debt it will be bind- ing on her separate estate under the law of 1893, and coverture is no bar to an action thereon."'' And under the statute in Missouri, per- "=Ky. Stat, §2127, Act March 15, ^"Colonial & U. S. Mtg. Co. v. 1894. Stevens, 3 N. D. 265, 55 N. W. 578, '"'Skinner v. Lynn, 21 Ky. Law decided under § 2590, of Compiled Rep. 185, 51 S. W. 167. See Crum- Laws. baugh v. Postell, 20 Ky. Law Rep. "^Colonial & U. S. Mtg. Co. v. 1366, 49 S. W. 334. Bradley, 4 S. D. 158, 55 N. W. 1108, "*Gaskin v. Peck, N. B. Eq. Cas. decided under § 2590, Compiled 40, decided under ch. 72, Consol. St. Laws.^ ^'"§ 2968 of Laws of 1893. '™ Williamson v. Cline, 40 W. Va. '"* Cooper V. Bank of Indian Ter- 194, 20 S. E. 917, decided under ch. ritory, 4 Okla. 632, 46 Pac. 475. 3 Acts 1893. § 47] INCAPACITY AND WANT OF AUTHORITY — COVERTURE. 56 mitting a married woinan to contract as a feme- sole,'^'^^ a recovery may be had against her on a note of her husband's which she signs as surety.^^^ In Canada, under the Married Woman's Act of 1872, a married woman will be liable on a note, indorsed by her for the ac- commodation of her husband, she being possessed of a separate estate, and credit being extended to her husband on the faith of such sepa- rate estate and her indorsemeiit in reference thereto.^ ^- Again, where by a judgment of a court, pursuant to statute, a married woman is empowered to "make contracts as a feme sole" the effect is to remove the disability of coverture and gives power to make any lawful con- tract and render her subject to all the remedies to which she would have been subject if unmarried, and coverture is no defense to her contract binding herself as surety on a note.^^^ In Nebraska a mar- ried woman may become surety for her husband and the extension of time on his past due indebtedness is a sufficient consideration.^^* So she has been held liable on such a note, though she personally re- ceived no consideration therefor, the contemporaneous loaning of money to her husband being held a sufficient consideration for a note so executed by her pledging her separate estate.^^^ Again the cir- cumstances in connection with the execution of the note may be such as to show that she was in reality the principal, or that she received the consideration or that it inured to the benefit of her separate estate, in which case she will be liable in most jurisdictions. So the defense that a note was given to secure a debt of the husband has been held not available, where the latter, who was the owner of the land, was indebted to a third person and an arrangement was made whereby he was to convey such land to his wife, who was to pay a certain sum in cash to him and to give a note to the debtor for the balance of the consideration, the amount of such note being the same as the debt.^^® And where a note was given to one holding a mortgage on personalty bought by her husband for the purpose of discharging the lien, she ""Mo. Rev. Stat. 1889, § 6864. 799, 21 Ky. Law Rep. 525; Sypert "'Grady v. Campbell, 78 Mo. App. v. Harrison, 10 Ky. Law Rep. 1052, 502, 2 Mo. A. Rep. 276. See Sater 11 S. W. 435. V. Hunt, 66 Mo. App. 527; Moeckel "^ Smith v. Spalding, 40 Neb. 339, V. Helm, 46 Mo. App. 340. 58 N. W. 952. "= Frazee v. McFarland, 43 Up. "= Briggs v. Beatrice First Nat. Can. Q. B. 281, decided under 35 Bank, 41 Neb. 17, 59 N. W. 351. Vict. Ch. 160. "° Strickland v. Gray, 98 Ga. 667, "^Hart V. Grigsby, 14 Bush (Ky.) 27 S. E. 155. 542. See Skinner v. Carr, 51 S. W. 57 WIFE SIGNING AS SURETY — BONA FIDE HOLDERS. [§48 was held liable, it appearing that she did not sign the note as surety for her husband and that the debt which she promised to pay was really contracted by her and not by him.^^' So she may be liable where any part of the consideration moved to her or was for her bene- fit."^ Thus a note is not within a statute forbidding a married woman to enter into any contract of suretyship, where it was given in pay- ment of fees for preparing a transcript upon appeal from a judgment against her husband, where it appears that judgments of the wife against her husband will be given a priority in case of a reversal.^^^ And she has been held liable where she joins with her husband in a note as a partner,^^" or where the proceeds were used in the business of a corporation of which she owned the stock.^^i ^^^^ gj-^e cannot defeat a recovery on a note for money borrowed by her to pay the indebted- ness of another unless the transaction was merely colorable and for the purpose of evading the statute forbidding her to become a surety ,^^2 or where the note was given for the purpose of discharging a debt upon property which was in substance her own.^-^ § 48. Same subject — Bona fide holders. — Some discussion has arisen as to the liability of a married woman to a bona fide holder of a note which she claims to have signed as surety. In most of the states statutes have been passed, as we have already stated, which enlarge the power of a married woman to contract, and in pursuance of which she may, in many cases, execute a note as principal, or even as surety, and it is in those states in which she is disqualified from acting as surety, but in which she may contract as principal that the ques- tion has arisen. In such a case it would seem that if she signs a note apparently as a joint maker, and there is nothing on the face of the paper indicating that she has signed other than as a principal, she cannot defeat recovery thereon in an action by a bona fide holder for value and without notice of any defense thereto. So it has been de- clared that, where a wife signs a note as co-maker with her husband, "^ Jones V. Holt, 64 N. H. 546, 15 Bank, 49 S. W. 183, 20 Ky. Law Rep. All. 214. ■ 1273. "' Morningstar v. Hardwick, 3 '" National Bank v. Carlton, 96 \nd. App. 431, 29 N. E. 929. Ga. 469, 23 S. E. 388. See Villa Rica "•Morningstar v. Hardwick. 3 Lumber Co. v. Paratain, 92 Ga. 370, Ind. App. 431, 29 N. E. 929. 17 S. E. 340. ^ Compton v. Smith, 120 Ala. 233, "' Daniel v. Royce, 96 Ga. 566, 23 25 So. 300. S. E. 493. "' Williams v. Farmers' & D. § 49] IXCAPACITY AXD WAXT OF AUTHOBITY COVERTURE. 58 there being nothing on its face to indicate that she signed as surety, and places it in the hands of the payees, she arms them with the power to negotiate it to an innocent purchaser for value, without notice of any defense, so as to cut off the defense that she was a mere surety on the note, though the code declares that she cannot directly or indi- rectly become surety for her husband.^^* And in Georgia it is decided 'that the defense of non-liability on the ground that the defendant, a married woman, signed as surety for another, is not available against an indorsee of a note which a married woman signed as joint maker with another to secure the latter's debt, where the indorsee took it for value, before due, in good faith and without notice.^^^ In other decisions, however, a contrary vietv is taken. So in Indiana it has been deter- mined that where a statute declares a contract of suretyship void, a married woman is not estopped from showing that she signed as surety and that the note is invalid as to her, by the fact that the note signed by her and her husband was payable in bank and has passed into the hands of an innocent holder.^^^ And it has been determined in Michigan that it will be a defense against a Ijona fide holder of a note given by a married woman, that such note was given without any consideration to her, but at the request of her husband and to secure his performance of a contract and agreement of purchase made by him.^^^ And in Canada, it is held that, as a married woman cannot by law bind herself to pay the debt of her husband, she may show the invalidity of a note executed by her husband in her name for a debt of a corporation of which he is the owner, though he had been author- ized by her to sign said note in her name.^^^ § 49. Kules as to determining whether principal or surety. Wliether or not a married woman is surety on a promissory note or other obligation is to be determined in Indiana, not from the form of the contract, nor from the basis upon which the transaction was ^ Scott v. Taul, 115 Ala. 529, 22 ^ Leschen v. Guy, 149 Ind. 17, 48 So. 447. See code as to right to N. E. 344, decided under 3 Burns' contract. Code 1886, § 2349. R. S. (1894), § 6964. '" Howard v. Simpkins, 70 Ga. ^" Waterbury v. Andrews, 67 Mich. 322. See also, Venable v. Stewart, 281, 34 N. W. 575. See Emery v. 102 Ga. 208, 29 S. E. 181; Strickland Lord, 26 Mich. 431; DeVries v. V. Vance, 99 Ga. 531, 27 S. E. 152, Conklin, 22 Mich. 255. 59 Am. St. R. 241; Laster v. Stew- i=« MacLean v. O'Brien, Rap. Jud. art, 89 Ga. 181, 15 S. E. 42; Strauss Que. 12 C. S. ilO. V. Friend, 73 Ga. 782. 59 RULE AS TO WHETHER PRIXCIPAL OR SURETY. [§^19 liad, but from the inquiry as to whether she received in person or in benefit to her estate the consideration upon which the contract de- pends.^^^ And in Kentucky it is decided that although a wife's name may first appear on a note, the court will look to the substance, and if in fact the contract of the wife is an a1 tempted assumption by her of the debt of another, she will not be held liable unless she binds her- self in the statutory form-^^*^ So where notes were signed by a married woman as "principal," and by her husband as "surety," these words following the names of the respective payors, and the wife when sued pleaded her coverture in bar of recovery on a debt which she alleged Avas the debt of her husljaud and a mere renewal of an old note for money borrowed by her husband of the payee, it was held that she was not bound thereby, the fact that she was designated as "principal" being immaterial.^^^ In Nebraska, in order to render a married woman liable on such a note, it must have been signed by her with the intention to bind her individual property for the payment, where it does not relate to her separate estate or business.^^- But where the evidence showed that the woman signed as surety a note given for professional services rendered to her; that while her husband enjoyed a good practice, all the property was in her name; that she had pre- viously signed notes as surety ; that she knew the object of giving this note, and that it was necessary for her husband to give security for it ; that her owning the property was the reason urged on the payee for accepting her as surety, although this conversation was not in her presence, and she testified that she presumed she was asked to sign the note because she owned the property, and that she believed that that was the reason why her signature was desired, it was decided that this was suflBcient evidence to sustain a verdict against her and that the *^Guy V. Liberenz, 160 Ind. 524, statute in force when the notes €5 N. E. 186, 188, per Monks, J.; were executed provided that the Cook V. Buhrlage, 159 Ind. 162, 64 wife's estate shall not be liable N. E. 603; Andrysiak v. Satkowski, "upon a contract made after mar- 159 Ind. 428, 63 N. E. 854; Field v. riage, to answer for the debt, de- Noblett, 154 Ind. 357, 360, 56 N. E. fault or misdoing of another, her 841; Leschen v. Guy, 149 Ind. 17, 48 husband included, unless such es- N. E. 344. tate shall have been set apart for "" Crumbaugh v. Postell, 20 Ky. the purpose by deed of mortgage or Law Rep. 1366, 49 S. W. 334; quoted other conveyance," etc. Ky. St. in Planters' Bank & Trust Co. v. § 2127. Major, 25 Ky. Law Rep. 702. ^^= Smith v. Bond, 56 Neb. 529, 76 ^^"^ Crumbaugh v. Postell, 20 Ky. N. W. 1062; Eckman v. Scott, 34 Law Rep. 1366, 49 S. W. 334. The Neb. 817, 52 N. W. 822. §§ 50, 51] INCAPACITY AXD WAXT OF AUTHORITY — COVERTURE. 60 jury was not bound by ber direct denial of tbe fact that she did intend to bind her separate property, and it had a right to believe from the evidence that when she signed the note, owning all the property of the family, and knowing that her signature was desired because of that fact, her intention was to charge that property.^^^ § 50. Liability as acceptor. — At common law a married woman could not become liable as an acceptor.^^* And it has been decided that under a statute in New Jersey she is disabled from accepting a bill of exchange."^ So under a code in Georgia, which provided that a married woman cannot bind her separate estate by any contract of suretyship, nor by any assumption of the debts of her husband, it is decided that she cannot become an accommodation acceptor, though she may be a free trader.^^® § 51. Indorsement by married woman — Common law rule. — At common law a married woman could not, acting for herself, indorse a note or bill, payable to her, and the indorsee in such a case acquired no title through her indorsement in her own name.^^^ It is a general rule of law that a bill or note made payable to a married woman, whose husband is under no civil incapacity or disability, is by opera- tion of law payable to the husband, who may indorse, negotiate or sue upon it in his own name ; for the legal existence of the wife being suspended during the coverture, or rather incorporated into that of her husband, a promise to her during coverture is a promise directly to the husband.^^^ A married woman has in contemplation of law no separate existence, her husband and herself being in contemplation of law one person.^^^ So it has been declared that "there is no doubt of the general rule that the husband is entitled to all the personal prop- erty which belonged to his wife at the time of the marriage, or which "2 Spatz v. Martin, 46 Neb. 917, 65 ^" Mudge v. Bullock, 83 111. 22; N. W. 1063. Lee Bank v. Satterlee, 24 N. Y. "'Mudge v. Bullock, 83 111. 22; Super. Ct. 1. Lee Bank v. Satterlee, 24 N. Y. Sup. ^^ Roland v. Logan, 18 Ala. 307; Ct. 1. Brewer v. Hobbs, 17 Ky. L. Rep. "^Cooley V. Barcroft, 43 N, J. L. 134, 30 S. W. 605; Hancock v. Joy, 363, decided under N. J. Rev. St., p. 41 Me. 568; Savage v. King, 17 Me. 637, § 5. 301; Barlow v. Bishop, 1 East 432. "8 Madden v. Blain, 86 Ga. 780, 13 Compare Cotes v. Davis, 1 Camp. S. E. 128, decided under §§ 1760, 485. 1783, of the Georgia Code. "' Howe v. Wildes, 34 Me. 566. €1 INDORSEMENT BY MARRIED WOMAN HUSBAND's ASSENT. [§ 52 she may acquire during coverture ; and it necessarily follows that where that property consists of negotiable paper, payable to her or her order, it is, in legal effect, payable to her husband, and an effectual transfer by judgment can, as a general rule, be made only in his name.""" So where a note was given to a wife, knowing her to be such, with the the intention that she should indorse it to the plaintiff in payment of a debt which she owed him, in the course of carrying on a trade in her own name by the consent of her husband, the property in the note was held to vest in the husband and an indorsement in her own name was held to pass no interest to the plaintiff."^ And a feme covert cannot indorse a bill of exchange, the right thereto being in point of law vested in the husband, and the wife having no power to dispose of it.^*^ And where a promissory note was made and given by a husband to his wife before their marriage, and subsequently thereto was de- livered to the maker, who kept it for the benefit of his wife till a few weeks before his death, the note became a mere nullity and could not be revived by the death of the husband."^ Again, where a note was payable to a feme sole, or order, and she married, the note became her husband's property, and she could not indorse it over while she was covert}'^^ * § 52. Same subject — Assent of husband. — Xo power exists in a married woman to assign a note executed to her either before or after marriage, in the absence of authority by or assent of the husband, or of a statute empowering her so to act."* But if a bill or note be made payable to a married woman, although the title to it vests in the hus- band, if he sees fit to assert it, yet he may allow her to indorse it in her own name, and if he assents to her indorsement of it (which may be presumed from circumstances as well as expressly proved), her indorsee acquires a good title not only as against the husband, but also against the parties to the bill.^*^ And a husband may subsequently '«> Miller v. Delameter, 12 Wend. Rep. 247; Theurer v. Schmidt, 10 (N. Y.) 433, per Sutherland, J. La. Ann. 293; Stevens v. Beals, 64 "1 Barlow v. Bishop, 1 East. 432. Mass. (10 Cush.) 291, 57 Am. Dec. ^^ Connor v. Martin, 1 Strange 108; Vann v. Edwards, 128 N. C. 516. 425, 39 S. E. 66. »" Abbott v. Winchester, 105 Mass. "' Alabama. — Roland v. Logan, 18 115. Ala. 307. "'* Rawlinson v. Stone, 3 Wils. 5, Massachusetts. — Stevens v. Beals, citing 1 Strange 516. 64 Mass. (10 Cush.) 291, 57 Am. ^«Hall v. Campbell, 5 Ky. Law Dec. 108. § 52] INCAPACITY AND WANT OF AUTHORITY — COVERTUEE. 62 satisfy an assignment of a bill or note by his wife.^*" And it is declared that: "It is well settled that if the husband give the wife express authority to indorse a note payable to her or order, her indorsement is good to transfer the note, and may be made in her own name, though she acts by authority of the husband and as his agent."^*^ So where neither the assent of the husband, nor circumstances which authorized the wife to make the transfer of a note payable to her order, are alleged in the petition by her indorsee in an action against the maker, it is decided that a plea in abatement of the coverture of the indorser is good.^*^ In this connection it has been decided that if a husband gives his wife authority to sell her personal property and take for it a promissory note payable to herself or order, he gives her authority to indorse the note according to its tenor, and to hold the proceeds to her own use, and until this authority is revoked her indorsement of the note will be good to pass title in it, though not to bind either her or her husband as indorser,^*^ And a married woman may make a valid indorsement of a note by a name different from that of her husband, and an authority so to endorse may be presumed from all the circum- stances of the case.^^" Where, however, the husband went to Califor- nia, and his wife continued to carry on his business, and sold a part of the furniture and fixtures, taking notes payable to herself, which she afterwards transferred, the fact that the husband may have consented that she might carry on the business does not raise a legal presump- tion that she was authorized to transfer the notes, but the jury must decide whether the evidence would fairly bring their minds to this conclusion. ^°^ If the statute prescribes a form of assent by the hus- Missouri. — Menkins v. Heringhi, 88 Am. Dec. 195, per Perley, C. J. 17 Mo. 297. Citing Brown v. Bunnell, 49 Me. New Hampshire. — Russ v. George, 425; Stevens v. Beal, 64 Mass. (10 45 N. H. 467. Cush.) 291, 57 Am. Dec. 108; Leices- English. — Prestwick v. Marshall, 4 ter v. Biggs, 1 Taunt. 367; Prest- C. & P. 594. The indorsement by a wick v. Marshall, 1 Bing. 565, 4 C. married woman, with her husband's & P. 594. assent, of a bill of exchange drawn "^ Hemingway v. Mathews, 10 Tex. by her is binding upon him, and 207. will pass the interest in the bill to "" George v. Cutting, 46 N, H. 130, the endorsee so as to enable him to 88 Am. Dec. 195. sue the acceptor. Prestwick v. Mar- "° Miller v. Delameter, 12 Wend, shall, 4 C. & P. 594. (N. Y.) 433. "«Hall v Campbell, 5 Ky. Law ^" Krebs v. O'Grady, 23 Cal. 726, Rep. 247. 58 Am. Dec. 312. "^ George v. Cutting, 46 N. H. 130, G3 INDORSEMENT BY MARRIED W03IAN — PARTICULAR STATUTES. [§ 53 band there should be a compliance therewith. So where a written as- sent of the husband is by law expressly required to a conveyance of a wife's real or personal estate, or to an attempt to charge her separate estate, an indorsement of a note belonging to her is void for the pur- pose of transferring title or to charge her separate estate where made without his written assent, a verbal assent not being sufficient.^^- In Alabama it is decided that under the code a transfer by a married woman of a check payable to her is illegal and inoperative to pass her title to it, unless the transfer was made with the consent of both the husband and wife.^^^ § 53. Same subject — Under particular statutes. — Under a statu- tory provision giving to married women the right to hold all personal property acquired by them before coverture to their sole and separate use, a note given to a married Avoman does not become null and void by her marriage with the maker, and she may sell the note to a third party or transfer it for collection.^""* And under a statute authorizing a married woman to make contracts and to sue and be sued in the same manner as if she were sole, with the restriction only that she can- not make contracts with her husband, she will be liable on her indorse- ment of a promissory note made by a partnership, of which her hus- band is a member, for the accommodation of the lirm.^^^ And under this same statute it has been decided that where a married woman, at her husband's request, indorsed a blank promissory note and gave it to him, with the knowledge that he intended to fill up the blanks and use the same," which he did, and indorsed it by writing his name above hers, it was decided in a petition in equit}^ to vacate insolvency pro- ceedings brought against her, wherein she claimed that the note was not a valid claim against her, that she was in a position of an indorser, and that the note having been transferred to the holders with her con- sent for value, she could not deny its validity as against them, and was liable as an indorser.^^" Under an Indiana statute, where a mar- "^ Walton v. Bristol, 125 N. C. 419, ^^ Middleborough Nat. Bank v. 34 S. E. 544, decided under N. C. Cole, 191 Mass. 168, 77 N. E. 781, Const., Art. 10, § 6 and §§ 1826, 1835, decided under Mass. Rev. Laws, of the Code. See Hurt v. Cook, 151 c. 73, §§ 82, 83; Kenworthy v. Saw- Mo. 416, 52 S. W. 396, decided under yer, 125 Mass. 28, decided under Rev. St. 1889, § 6869. Mass. St. 1874, c. 184. ^" First Nat. Bank v. Nelson, 105 '■■» Binney v. Globe Nat. Bank, 150 Ala. 180, 199, 16 So. 707, decided Mass. 574, 23 N. E. 380, 6 L. R. A. under Ala. Code, § 2348. 379, decided under St. 1874, c. 184, ^=* Spencer v. Stockwell, 76 Vt. compare Hunt v. Cook, 151 Mo. 416, 176, 56 Atl. 661, decided under Vt. 52 S. W. 396. Laws 1884, p. 79, No. 84. §§ 54, 55] INCAPACITY AND WANT OF AUTHORITY — COVERTURE. 64 ried woman indorsed a promissory note, she and her separate estate, real and personal, would also be liable on her contract. ^^'^ And also, under an early statute in New York state, a recovery could De had where a married woman had indorsed a hill or note.^^^ § 54. Same subject — General rule. — A roarried woman to whose order a note is made payable can confer no right on an indorsee by her indorsement unless done under the forms provided by law, or with the implied or express assent of the husband, or under the special circumstances which would authorize her to employ her own or the community property for the benefit and preservation of her sepa- rate property, or for the support of herself and her children, or under circumstances which would authorize her separate action.^^^ So it has been decided that an action is not maintainable against a married woman where it was without benefit or consideration to her separate estate, though the plaintiff be a bona fide holder for value.^^" § 55. "Woman in business — Sole trader, etc. — In most of the states the right of a married woman to engage in business in her own name and to execute a note or other obligation in connection there- with has been recognized. So in Illinois it is decided that where a married woman executes notes for goods purchased by her as her own property, for her use in a business carried on in her own name, with- out the interference of her husband and for her exclusive benefit, her coverture is no defense to an action thereon.^''^ So in Louisiana it has been held that a wife, who is a public merchant, separated in property from her husband, can not set up the plea that a draft ac- cepted by her did not enure to her personal benefit."^ And in Michi- gan a debt for property purchased has been declared to be a valid liability against a married woman, and she is liable on a note given therefor.^^^ In South Carolina a feme sole trader has been held bound to a third person by her indorsement to him of a note drawn by her husband payable to herself.^®* Under the California act of 1852, "'Mathes v. Shank, 94 Ind. 501, "" Loweree v. Babcock, 8 Abb. decided under Act 1879, p. 160. Prac. N. S. (N. Y.) 255. "' Lee Bank v. Satterlee, 24 N. Y. '" Nispel v. Laparle, 74 111. 306. Super. Ct. 1; N. Y. Laws 1848, p. '"Levy v. Rose, 17 La. Ann. 113. 307, ch. 200; N. Y. Laws 1849, p. "' Gillam v.' Boynton, 36 Mich. 235. 528, ch. 375. '"Wilthaus v. Ludecus, 5 Rich. L. ""Hemingway v. Mathews, 10 Tex. (S. C.) 326. 207. 65 WOMAN IN BUSTNESS— rC0L3 TRADER, ETC. [§ 55 authorizing a married woman to transact bnsiness in her own name as a sole trader, she was liable on a promissory note given by her in her own name for a part of the purchase money for a tract of land sold and conveyed to her.^*'^ Under a statute in Colorado it is decided that a married woman carrying on business as a trader is bound by a note the consideration of which went to the benefit of her separate estate.^"^ So coverture is no defense, under the Indiana act of 1876, to a note given by a married woman for money borrowed by her for the purpose of carrying on a separate trade and business.^''^ In Missis- sippi, under the code of 1871, a married woman could not execute a valid promissory note except in the course of her trade and business as engaged in by her.^'^^ In New York, under the act of March 12, 1860, authorizing a married woman "to carry on any trade or business, or perform any labor or services, on her sole and separate account," she was enabled to embark in any trade or business and to give her checks and other commercial paper, and if she accepted the benefits of this act she also accepted its disadvantages, and in a mercantile business assumed the ordinary hazards incident to it, and to which merchants, in the course of whose business commercial paper is ordinarily issued, are exposed by their notes or checks, by accident or wrongful design, getting into the hands of bona fde holders, and for value, before maturity.^®^ Under this act she was also held liable in another case on her note given for goods purchased by her to be used in her business.^^" But where there was no written obligation on the part of the wife, nor written assent of the husband, nor his assent re- corded as required by statute to enable the wife to carry on business, it has been decided that, in an action on a note executed by the hus- band as agent, he carrying on a mercantile business for her, she is not estopped to deny her husband's authority to execute a note and may plead coverture.^^^ And the fact that a married woman is the owner of a farm does not show that she conducted a separate business so as to render her liable in jSTebraska on a note given by her as surety ^"Camden v. Mullen, 29 Cal. 564. "« Nelson v. Miller, 52 Miss. 410, "'Barnes v. De France, 2 Colo, decided under Code 1871, § 1780. 294, decided under Rev. St. 455, § 6, ^^^ Lewis v. Woods, 4 Daly (N. Y.) providing that a married woman 241. could make contracts affecting her ^™ Barton v. Beer, 35 Barb. (N. business or trade to same extent as Y.) 78. if she were a feme sole. "i Troy Fertilizer Co. v. Zachry, "'Wallace v. Rowley, 91 Ind. 586, 114 Ala. 177, 21 So. 471. decided under Ind. Act 1876, p. 160, Joyce Defenses — 5. 56] IXCAPACITY AXD "WAXT OF AUTHORITY COVERTURE. 66 for her husband where he had entire control of the farm and she re- ceived no part of the rents or jsrofits.^'^^ § 56. Separate estate, benefit, etc. — A married woman's capacity to contract is only enlarged in the case specifically mentioned in the stat- ute, and in other cases her coverture is a defense to an action on a note executed by her.^''^ In most of the states this defense may be set up by her in such an action, where the consideration therefor, either in whole or in part, did not go to her benefit or to the benefit of her separate estate.^^* "= Union Stock Yards Nat. Bank V. Coffman, 101 Iowa 594, 70 N. W. 693. "*Ankeney v. Hannon, 147 U. S. 118, 37 L. Ed. 105, 13 Sup. Ct. 206, 47 Alb. L. J. 150. "* Federal.— Williams v. Reid, 18 Wash. L. Rep. (D. C.) 607, holding that a note cannot be enforced against a married woman in an ac- tion at law where it was given by her for furniture which she pur- chased and which was used in fur- nishing a house which did not be- long to her separate statutory estate. Indiana. — Thomas v. Passage, 54 Ind. 106, holding that a note by a married woman based on a promise to pay for medical services rendered to her is not binding on her person- ally and under statute she may only charge her separate estate by such contracts as are conscionable and for the betterment of such estate. Mississippi. — Hendrick v. Foote, 57 Miss. 117, holding that where a married woman gives a note for the purchase price of land, the note im- poses no personal obligation on her and no decree iji personam can be obtained against her by the vendor or any subsequent holder of the note. Missouri. — Hagerman v. Sutton, 91 Mo. 519, 4 S. E. 73, holding that where a married woman exe- cutes a note and signs a mortgage of land in conjunction with her hus- band, her act in signing the note, she not being possessed of a sepa- rate estate in the land granted, gives her act no validity either In law or equity. Xebraska. — Barnum v. Young, 10 Neb. 308, 4 N. W. 1054; citing Hale V. Christy, 8 Neb. 264; Davis v. First Nat. Bank, 5 Neb. 242, and holding that no recovery can be had against a married woman on her note except it be given with refer- ence to and upon the faith and credit of her separate property. Neic Hampshire. — Shannon v. Can- ney, 44 N. H. 592, holding that a married woman is not bound by a promissory note given during cover- ture and the fact that at the time of her marriage she possessed prop- erty by inheritance is of no avail where it neither appears that she held it to her sole and separate use or that the promise was made in respect to such property. See Ames V. Foster, 42 N. H. 381; Bailey v. Pearson, 29 N. H. 77. Xeio York. — Eylers v. Coens, 39 N. Y. St. R. 789, 15 N. Y. Supp. 584, holding that a note not given for the benefit of the separate estate of the wife was uncollectible. North Carolina. — Pippen v. Wes- son, 74 N. C. 437, decided under 41 67 SEPARATE ESTATE, BENEFIT, ETC. [§ 57 § 57. Same subject continued. — ^Yhe^e it appears that the con- sideration for a note was received by her, or that it was for the use or benefit of her separate estate, she cannot under the laws in force in most jurisdictions, defeat a recovery thereon. ^■^** So her coverture has been held no defense to an action on a note executed by her for prop- erty purchased by her,^" as where the note was given for the pur- chase price of land,^^*' or for a sewing-machine purchased for her own use,^'^'^ or for goods which her husband purchased as her agent and Const, Art. X, § 6; Acts of 1871-72, ch. 193 (Bat. Rev. Ch. 691), holding that a married woman has no power to enter into an executory- contract even with the written con- sent of her husband, unless her sep- arate estate is charged with it, either expressly or by necessary im- plication arising out of the nature or consideration of the contract, show- ing it was for her benefit. Ohio. — Jenz v. Gugel, 26 Ohio St. 527, decided under 71 Ohio L. 47, and holding that a married woman was not liable on her note whether executed before or after the date of the act March 30, 1874, unless it ap- peared that she had separate prop- erty subject to be charged there- with. Pennsylvania. — Heugh v. Jones, 32 Pa. St. 432, holding that where a note is given for money borrowed by a married woman for the avowed purpose of improving her separate estate she is not liable under the act of 1848 unless It be shown further that the money was applied to that object. Sellars v. Heinbaugh, 117 Pa. St. 218, 11 Atl. 550, 20 W. N. C. 183, holding that under this act she is not liable on a judgment note for money borrowed to improve her sep- arate estate, even though so applied. South Carolina. — Howard v. Kitch- ens, 31 S. C. 490, 10 S. E. 224 hold- ing that, under the provision of the statute in South Carolina, permit- ting a married woman to contract in respect to her separate estate, (Gen. St., § 2037) where a part of the money was borrowed for her own use, it was such a contract and enforceable against her estate, but that she was not bound as to such part of the note as was for neces- sary expenses for her daughter and for which her husband was liable. It was said In this case that: "The defense to this action may seem un- gracious to use a mild term. It ap- pears that the defendant herself re- ceived part of this money at least, and that the remainder was ex- pended for the benefit of her sick daughter and at the request of the defendant. Here are strong reasons why the defense should never have been interposed. But these ungra- cious surroundings can have no in- fluence upon a court whose sole province isi to determine controver- sies according to law." Per Mr. Chief Justice Simpson. ^■»* Scott V. Collier (Ind. 1906), 78 N. E. 184, aff'g 77 N. E. 666. See also cases in following notes. "° Lane v. Schlemmer, 114 Ind. 296, 15 N. E. 454; Rothschild v. Raab, 93 Ind. 488; Wulschner v. Sells, 87 Ind. 71, decided under acts 1879, p. 160, § 3. 1'" Packer v. Taylor, 12 Pa. Co. Ct. 521, 2 Pa. Dist. R. 443, decided un- der Pa. Act, June 3, 1887. "^ Baker v. Singer Mfg. Co., 122 Pa. St. 363, 15 Atl. 458, 22 W. N. C. 366, 19 Pitts. L. J. (N. S.) 347. §' 57] INCAPACITY AXD WANT OF AUTHORITY — COVERTURE. 68 which were used for the benefit of her separate estate.^'^ And a prom- issory note executed by a married woman in consideration of tlie sale to her of stocks, is held to be a debt contracted for the benefit of her separate estate and for which she is liable. ^^® Nor can she defeat re- covery on a note given by her for an article which was purchased for use in and about her separate estate, although her husband managed such estate.^^*' So she has been held liable on a note given by her for a horse purchased by her to be used on a farm which she owned,^^^ and likewise on a note given in payment for a mule to be so used,^^^ or for agricultural implements to be used on her farm,^®^ or for mate- rials to be used in the necessary repair of her house,^^* or for lumber to be used in the construction of a building on her separate estate,^^^ or to secure the payment of money loaned to her to pay off a mortgage on her property,^^'' or to pay rent or to release her separate property from the lien of the levy thereon made by the landlord for the pay- ment of rent which was due on land occupied by her husband and the family.^^^ Under the Miss. Eev. Code of 1857 ^^^ it was decided that a married woman could not defeat recovery on a note, on the ground of coverture, given for the money and supplies furnished "for the use and benefit of herself and family."^'*^ And where a married woman executes a note to a certain creditor of her husband for the amount of a note due from the latter to the former and surrendered, and to relieve herself from an attack upon property conveyed by her hus- band to her on the ground that such conveyance was voluntary and in fraud of creditors, there is sufficient consideration to render it a I'^Wolf V. Duvall (Ark.), 13 S. W. ^^ Ferguson v. Harris, 39 S. C. 323, 728, decided under Mans. Dig., 17 S. E. 782. §§4625,4626,4630. ^'^ Taylor v. American Freehold "» Williams v. King, 43 Conn. 569. Land Mtg. Co., 106 Ga. 238, 32 S. E. "" Dennis v. Grove, 4 Pa. Super. 153. Ct. 480, decided under act June 3, "^ Kams v. Moore, 5 Pa. Super. 1887. Ct. 381. "'Mitchell V. Smith, 32 Iowa 484, ""Art. 25, p. 336, providing in part decided under Code, § 2506. that "all contracts made by the wife '*- Allen V. Long, 19 Ky. Law Rep. or by the husband with her consent 488, 41 S. W. 17, decided under Ky. for family supplies or necessaries Gen. St., ch. 52, art. 2, § 2. * * * shall be binding on her ^'^ Allen V. Johnson, 13 Pa. Co. Ct. and satisfaction may be had out of 218 holding that since act June 3, her separate property." 1887, the burden is on her to show ^' Pendleton v. Galbreath, 45 Miss, her contract void. 43. i«* Baird v. Pruning, 84 Ky. 645. 69 SEPARATE ESTATE — NOTE FOR BORROWED MONEY. [§§ 58, 59 contract in relation to her separate property. ^''•^ In Louisiana, where a note was executed by a married woman under the authorization of the district judge in accordance with the act of 1855, it may be en- forced against her by a transferree without showing that it enured to her advantage or benefit,^^^ for even as to such a holder, where the objection arises from the incapacity of the party, no additional effect to the obligation can be given by indorsement."^ § 58. Same subject continued — Note for borrowed money. — Where money is borrowed for the benefit or use of a married woman, or for the benefit of her separate estate, she is also liable on a note given therefor/"^ And though the money was not applied to the benefit of her separate estate, she cannot defeat recovery thereon.""* Thus it has been so decided where the money was loaned to her on the representation that it was for her sole and separate use, when in fact it was borrowed for the use of her husband.^^^ So where a married woman was carrying on the business of farming, through her hus- band as her agent, and she borrowed money in her own name and re- ceived it herself and then handed it over to her husband, who was carrying on the farm, it thus became part of the property employed in her business, and the fact that her husband wasted or misused it does not alter the liability of the wife, who borrowed it. The money borrowed became part of her separate estate by the act of borrowing, and her promise to pay related to her separate estate, and she was lia- ble on note given therefor.^'' "^ § 59. Same subject — Intention as affecting. — An intention to charge the separate estate of a married woman, as evidenced by the mere execution of a note is held not sufficient, where the note does I'oWhelpley v. Stoughton, 112 Steffen v. Smith, 159 Pa. St. 207, 28 Mich. 595, 70 N. W. 1098; 121 Mich. Atl. 295, 33 W. N. C. 520, decided 163, 79 N. W. 1098. under Pa. Act June 3, 1887. 1" Miller v. Wisner, 22 La. Ann. "' McVey v. Cantrell, 70 N. Y. 295, 457. 26 Am. Rep. 605. See Scott v. Otis, "= Conrad v. Le Blanc, 29 La. Ann. 25 Hun (N. Y.) 33. See, also, Rood 123; Sprigg v. Bossier, 5 Mart. (N. v. Wright, 124 Ga. 849, 53 S. E. 390. S. La.) 54. »=Till v. Collier, 27 Ind. App. 333, ''^^Sidway v. Nichol. 62 Ark. 146, 61 N. E. 203; Bratton v. Lowry, 39 34 S. W. 529, decided under Sand. S. C. 383, 17 S. E. 832. & H. (Ark.) Dig., §§4945-4951; Todd ""Smith v. Kennedy, 13 Hun (N. V. Bailey, 58 N. J. L. 10, 32 Atl. 696; Y.) 9. § 59] INCAPACITY AND WANT OF AUTHORITY — COVERTURE. 70 not, upon its face, show any such purpose, there being no independent agreement to that effect, and the complaint showing no contract to charge her separate estate.^^^ So it has been declared that "a promis- sory note in the ordinary form, signed by a married woman, payable to the order of her husband and indorsed and presented for discount by him, is not a representation upon its face that the note is made to raise money for her. 'Ho implication, presumption or impression that she was to be benefited by it in her business or estate could be drawn from its form and from the fact that she had given it to her husband for the purpose of having it discounted. To give such a note vitality and effect it must be made to appear, by evidence aliunde the instrument, that it was made in her separate business, or for the benefit of her separate estate. The fact that she owns a separate estate is not alone sufficient."^^^ And in another case it is said: "It is claimed that, when a feme covert executes a note, the presumption arises that she intended thereby to charge her separate estate or prop- erty. To this doctrine we cannot assent. A married woman cannot contract generally, and the burden is cast upon the one seeking to enforce a contract against her to show that it is an obligation she was authorized to make under the statute."^"^ So where a note was signed by a married woman as surety for her husband, but there was no in- tention expressed in the instrument to create a charge upon her separate estate, it was decided that the mere existence of such an in- tention on her part did not operate to render the note binding on her, and she might avail herself of the defense of coverture.^"" And it has been held that where a note is executed jointly by a husband and wife, but is silent as to the separate estate of the wife, parol evidence is not admissible to show that it was intended to be such a charge and coverture is a good defense.^"^ In other decisions, however, this doc- trine is not accepted, it being declared that when a married woman gives her promissory note the presumption of law arises that she "' Hodson v. Davis, 43 Ind 258. 90 N. Y. 250, 256, per Tracy J. See See, also, Farmers' Bank v. Boyd, Second Nat. Bank v. Miller, 63 N. 67 Neb. 497, 93 N. W. 676; Grand Y. 639. Island B'k'g Co. v. Wright, 53 Neb. ^"•' Grand Island Bk'g Co. v, 574, 74 N. W. 82; Bogert v. Gulick, Wright, 53 Neb. 574, 74 N. W. 82, 65 Barb. (N. Y.) 322; Wallace v. per Norval, J. Goodlet, 93 Tenn. 598, 30 S. W. 27; ^°»Yale v. Dederer, 22 N. Y. 450, Litton v. Baldwing, 8 Humph. 78 Am. Dec. 216. (Tenn.) 209. 47 Am. Dec. 605. ^^ Jordan v. Keeble, 85 Tenn. 412, 1"^ Saratoga County Bank v. Pruyn, 3 S. W. 511. 71 WHAT LAW GOVERXS. [§ 60 charges her separate property with the pa3'ment thereof,^"- which pre- sumption can not be overcome by testimony of the wife that such was not her intention-^^^ * But where a feme covert executes and puts into circulation a negotiable note and places upon its face a statement that it is free from all objection in respect to her condition as a married woman, she is estopped as against an innocent indorsee from denying such statement, unless she shows that by such statement he was not misled,-"^ And it is decided that whether a note of a married woman sued on was made with reference to her separate property, trade or business, or upon the faith and credit thereof, and with the intention on her part to thereby bind her separate property, is always a question of fact.^"^* The intention to charge the separate estate may also be pre- sumed from the nature of the transaction.^"* § 60. What law governs. — The right to defend an action on a note on the ground of coverture is to be determined by the law in force at the time of its execution. ^'^** And it is a general rule that a contract for its validity, obligation and construction is to be governed by the law of the place where made.^'^^ So it has been declared that the law of the place of performance does not in any way affect the capacity of a mar- ried woman to contract in a state which authorized her to make the contract, unless it is apparent from the terms of the contract that the parties intended to incorporate the laws of the state of performance therein.^"^* This rule is applied to the case of a note executed by a mar- ried woman residing in Missouri, payable to her son, resident at the time in the state of Indiana. The latter, who was a member of a firm doing a tailoring business, made out the note and mailed it to his mother in Missouri, with a request that she sign it for his accommo- dation, at the same time writing her of the stringent needs of the firm for money and promising to take up the note at or before maturity ; '<« Perkins v. Rowland, 69 Ga. 661. =»* Yale v. Dederer, 22 N. Y. 456. Burnett v. Hawpe's Ex'r, 25 Gratt. =«^* Lackey v. Boruff, 152 Ind. 371, (Va.) 481; see Darnall v. Smith's 53 N. E. 412. Adm'r, 26 Gratt. (Va.) 878. =»= Partee v, Silliman, 44 Miss. 272. ^■* Hershizer v. Florence, 39 Ohio See Wright v. Pennington, 47 N. J. St. 516, 524. L. (12 Vroom) 48, 32 Am. Rep. 180; '"'Nott V. Thomson, 35 S. C. 461, Hanover Nat. Bank v. Howell, 114 14 S. E. 940; National Exch. Bank N. C. 271, 23 S. E. 1005. V. Cumberland Lumber Co., 100 ="'* Hauck Clothing Co. v. Sharpe, Tenn. 479, 47 S. W. 85. 83 Mo. App. 385, 391. =»'* Godfrey v. Megahan, 38 Neb. 748, 57 N. W. 284. § GO] IXCAPACITY AND WANT OF AUTHORITY — COVERTURE. 72" she signed the note in Missouri and mailed it to her son, to be dis- counted in Indiana, to enable him to raise money on it ; the latter was unable to discount it there and mailed it to plaintiff, indorsing it by- writing his name across the back of it, with a request in writing to the plaintiff to let him have more goods, and the latter accepted the note and shipped the goods. The evidence was that the common law of coverture was in force in Indiana, and that if the note was an In- diana contract then it was void for want of capacity in the maker. Under the laws of Missouri, however, the defendant had legal capac- ity to make the note. The suit to enforce its collection was brought in Missouri, and defendant pleaded coverture, claiming that under the laws of the state of Indiana she had no power to make a personal obligation, and that she had no separate property, and that by reason of these facts said instrument of writing was void and of no effect, and still remained so.^°^ In this case the court said : "The law of the place of performance does not in any way affect the capacity of a mar- ried woman to contract in a state which authorized her to make the contract, unless made with reference to real estate situated in the state of performance, or it is apparent from the terms of the contract that the parties intended to incorporate the laws of the state of per- formance in the contract. * * * It is contended that the evidence proves that the parties intended to make the note an Indiana con- tract. What they intended as to an innocent assignee of the note can only be ascertained from the terms of the note and the circumstances attending the execution. These show no more than that the note was to be paid at a bank in Logansport, Indiana. The law presumes that when Mrs. Sharpe signed the note for the accommodation of her son that she did so in good faith, intending to be bound by it. * * * Courts will always validate contracts, where it is possible to do so without doing violence to the terms of the contract, or some well settled prin- ciple of law. The respondent signed her name to the note in Missouri, delivered it in Missouri, by mailing it to her son ; she made him the payee, with legal authority written in the body of the note, without restrictions or qualifications to sell it where and to whom he would; he exercised this delegated power, this agency, by indorsing and de- livering the note to appellant for value; they took it in good faith, gave value for it without notice of any restrictions on the payee as to his authority to endorse and transfer the note. The respondent ex- pressly and directly by her voluntary act put it in the power of her son. =»« Hauck Clothing Co. v. Sharpe. 83 Mo. App. 385, 391. 73 WHAT LAW GOVEENS. [§ 60 to transfer the note to the appellant. If he disobeyed respondent's private instructions, which were never disclosed to plaintiff, and transferred the note to them, she, not the innocent purchaser of the note, should suffer; and even if the general principle (which I do not concede) of the law of place should pronounce this an Indiana con- tract, the general principle should yield to the peculiar facts and the laws of Missouri should prevail, in order to make valid a contract which the law presumes the respondent intended should be valid when she made it/'^oe* g^ ^ j^q^q executed by a married woman in New York, of which she is presumed to have been a resident at the time of making it, and which note is valid by the law of that state, may be enforced in another state, though by the law of the latter state she is under a complete common law disability to make any contract.^" ^ And where a note executed by a married woman at the request of her husband, and for his accommodation alone, is by the express law of the state void,^"'^* it was decided in New Jersey that in an action by an indorsee for value, such fact may be shown in defense thereto, though it may appear that the note was payable in and has been transferred to the indorsee in another state, and that by the laws of the latter state a married woman may execute such a note; since the prohibition of the statute cannot be evaded, or the public policy declared by it thwarted by the device of providing that the place of performance shall be in a foreign jurisdiction, where marriage does not curtail a woman's contracting power.-"® But it was determined upon a review of this case that the statute was not declaratory of public policy and that where a note is signed in the state of New Jersey, but is passed away and comes first into legal existence in the state of New York, it is in contemplation of law made in the latter jurisdiction. So a note signed by a married womafi domiciled in New Jersey, and intrusted by her to her husband, thus giving him power to make for her a contract of sure- tyship in New York, where it came into legal existence, such a contract being valid in the latter state, by his indorsement and transfer there the wife was held to be as effectually bound to the payee as if she had executed the note in New York, and it was determined that it could be '""* Hauck Clothing Co. v. Sharpe, becoming an accommodation in- 83 Mo. App. 385, 391-393, P|er Bland, dorser, guarantor or surety, or from P. J. becoming liable on any promise to '"^ Taylor v. Sharp, 108 N. C. 377, pay the debt or answer for the de- 13 S. E. 138. fault or liability of a third person. ="'* See N. J. Gen. St., p. 2017, § 26, ="^ Thompson v. Taylor, 65 N. J. prohibiting a married woman from L. 107, 47 Atl. 544. 61] INCAPACITY AND WANT OF AUTHORITY — COVERTUEE. 74 enforced against her, though it would have been void if executed in New Jersey.^"** And it has been decided that a note signed by a mar- ried woman in Tennessee, but delivered and consummated in Ohio, and payable in the latter state, is an Ohio contract, and though it may be valid and enforceable against a married woman in that state, yet such a contract being voidable in Tennessee at the election of a mar- ried woman, coverture is a good defense to an action thereon in such state.2»9 § 61. "Who may urge. — The defense of coverture is a personal one and can only be availed of by a married woman and her privies in blood or representation.^"®* So this defense does not enure to the bene- fit of the indorser as he, by his indorsement, has guaranteed the capac- ity of the maker to contract in the manner which by the terms of the instrument she purported to contract.-^" And it has been declared in 20S* Thompson v. Taylor, 66 N. J. L. 253, 49 Atl. 544. ^= First Nat. Bank v. Shaw, 109 Tenn. 237, 70 S. W. 807. ="»* Lackey v. Boruff, 152 Ind. 371, 53 N. E. 412. See West v. Miller, 125 Ind. 70, 25 N. E. 143. ^^° Indiana. — Bennett v. Mattingly, 110 Ind. 197, 10 N. E. 299. Massachusetts. — Browning v. Car- son, 163 Mass. 255, 39 N. E. 1037; Kenworthy v. Sawyer, 125 Mass. 28; Prescott Bank v. Caverly, 73 Mass. (7 Gray) 217, 66 Am. Dec. 473. l== Smith V. Capital Elevator Co. 623. (Kan.), 58 Pac. 483. ™ Cooke v. State Nat. Bank, 52 =f Olcott v. Tioga Railroad Co., 27 N. Y. 96, 11 Am. Rep. 667. N. Y. 546, 84 Am. Dec. 298. ='" Bank of New York v. Bank of Ohio, 29 N. Y. 619. I 101 ULTRA VIRES INSTRUMENTS. [§§ 83, 84 to bind the partnership Jointly, and though the attempt to bind the shareholders severally was ultra vires and void and a stockholder separately sued might successfully deny his separate liability, yet they would be liable in a joint action.^*^ § 83. Same subject — Paper issued by public officers. — Where paper is issued by public officers without any authority at law to so act, the want of authority may be shown in defense to an action by a purchaser of the same, as in such a case the latter is bound to look to the au- thority to issue the paper,^*^ Their powers and duties are defined by statute, which is notice to the world of the limitations of their authority and no pretension of authority or customary action can amplify that authority beyond the statutory limitation.^*^ So ne- gotiable paper which originates in fraud and is issued by a person in- capable of entering into such contract on the part of the estate which such paper purports to represent is void and want of authority is a de- fense to an action thereon, as the powers and duties of state officers being defined by statute constitute notice to all the world of the limi- tation upon their authority to issue negotiable obligations for the state.3** § 84. Ultra vires instruments. — Want of corporate authority to make or indorse a bill or note may in some cases be available as a de- fense in an action against the corporation on such instrument.^*** So paper issued by a corporation in contravention of a statute forbidding it to issue such paper has been held subject to this defense.^*^ And where a statute provided that no monied corporation subject to it should "issue any bill or note of the said corporation, unless the same be made payable on demand, and without interest" and notes were issued in contravention of this act by a banking corporation the notes were held void in the hands of a 'bona fide holder without notice.^*^ And a draft or warrant drawn by the corporation of a city upon the treasurer of the city, not in the course of its proper legitimate busi- '^i Maclae v. Sutherland, 3 E. & '" Elliott Nat. Bank v. Western & B. 1, 32. Atlantic Railroad, 70 Tenn. 676, 680. ^*- School Directors v. Fogelman, ^" State v. Hart, 46 La. Ann. 40. 76 111. 189; Eastman y. Lyon, 40 '"* Scott v. Bankers' Union (Kan. Iowa 438; Elliott Nat. Bank v. 1906), 85 Pac. 604. Western & A. R. Co., 70 Tenn. (2 '" Chillicothe Bank v. Dodge, 8 Lea) 676. See Loomis v. Brown ^^arb. (N. Y.) 233. Co., 15 S. D. 606, 91 N. W. 309. '" ^^^o^ v. Godard, 3 McLean 102, Fed. Cas. No. 12037. 85] INCAPACITY AND WANT OF AUTHORITY. 102 ness, as required by the charter to render it valid, is void in the hands of a tona fide holder, without actual notice of its consideration, as the charter being a public act every person is bound to know the extent of the powers of the corporation.^*'' Again a corporation not estab- lished for trading purposes was held not liable on its acceptance of a bill of exchange where the act of acceptance was clearly within the prohibition of the several acts passed for the protection of the bank of England-^^s § 85. Same subject — Corporation authorized to issue paper. — A corporation which is authorized to issue commercial paper for any purpose and which executes such paper apparently within the scope of its corporate powers, will be estopped to set up in an action upon the instrument by a bona fide holder the defense of ultra vires.^*^ In such cases the presumption arises that the paper has been lawfully issued.^^" This rule applies in the case of accommodation paper.^^^ ^^Halstead v. Mayor, 5 Barb. (N. Y.) 218. ^*' Broughton v. Manchester Water Works Co., 3 Barn. & A. 1. ^^^ Georgia. — Jacobs v. Southern Banking Co., 97 Ga. 573, 25 S. E. 171; Towles Excelsior Co. v. Inman, 96 Ga. 506, 23 S. E. 418. Kentucky. — German Nat. Bank v. Louisville Co., 97 Ky. 34, 29 S. W. 882. Maine. — Commercial Bank v. St. Croix Mfg. Co., 10 Shep. (Me.) 280. Massachusetts. — Monument Nat. Bank v. Globe Works, 101 Mass. 57, 36 Am. Rep. 322. Michigan. — Gennesee County Sav. Bank v. Michigan Barge Co., 52 Mich. 438, 17 N. W. 790. Minnesota. — American Bank v. Gluck, 68 Minn. 129, 70 N. W. 1085; Auerbach v. Le Sueur Mill Co., 28 Minn. 291, 9 N. W. 799, 41 Am. Rep. 285. New Jersey. — Blake v. Manufac- turing Co. (N. J. Eq.), 38 Atl. 241; National Bank of Republic v. Young, 41 N. J. Eq. 531, 7 Atl. 488. New York. — Ellsworth v. St. Louis &c. R. Co., 98 N. Y. 553; Wile ft Brickner Co. v. Richester & K. F. L. Co., 4 Misc. (N. Y.) 570, 25 N. Y. Supp. 794. OTiio.— Pittsburg, C, C. & St. L. R. Co. v. Lynde, 55 Ohio St. 23, 44 N. E. 593. Pennsylvania. — Wright v. Pipe Line Co., 101 Pa. St. 204, 47 Am. Rep. 701. Wisconsin. — Lehigh Val. Coal Co. v. West Depere Agricultural Works, 63 Wis. 45, 22 N. W. 831. Federal. — Maxwell v. Akin, 89 Fed. 178. See: Illinois. — Peoria R. Co. v. Thomp- son, 103 111. 187. Wisconsin. — Blunt v. Walker, 11 Wis. 334, 78 Am. Dec. 709. "'° St. Joe & M. F. Consol. Min. Co. v. First Nat. Bank, 10 Colo. App. 339, 50 Pac. 1055. ^^'^ Alabama. — Florence R. R. & Imp. Co. v. Chase Nat. Bank, 106 Ala. 364, 17 So. 720. Georgia. — Jacobs Pharmacy Co. v. II 103 ULTRA VIRES INSTRUMENTS — APPLICATION OF RULE. [§ 86 And a similar rule prevails where a note is taken by a corporation and is subsequently transferred to one taking the same in good faith and for value. ^^2 Nor is the fact that a by-law as to the manner of execu- tion was not complied with available as a defense.^^^ § 86. Same subject — Application and illustration of rule. — Where a corporation having power to make and issue commercial paper, en- ters into a contract prohibited by its charter and executes a note in pursuance thereof, as in the case of a contract to purchase stock in another corporation and the contract is executed by the delivery of the stock, it cannot set up in defense to an action on the note by a bona fide purchaser that the note was ultra vires, there being no evidence of illegality on the face of the instrument.^^* And a negotiable secur- ity of a corporation, which upon its face appears to have been duly issued by such a corporation, and in conformity with the provisions of its charter, has been held valid in the hands of a bona fide holder thereof, without notice, although such security was in fact issued for a purpose and at a place not authorized by the charter of the corpora- tion and in violation of the laws of the state where it was actually issued.^^^ So where a banking corporation enters into an unauthor- ized contract which is in the form of a negotiable instrument it cannot avail itself of the defense that the instrument was ultra vires as against one who, without notice, has become the holder of the paper for value.^^^ And where money was loaned in good faith to a corpora- Southern Banking & T. Co., 97 Ga. '" Mclntire v. Preston, 10 111. (5 573, 25 S. E. 171. Gilm.) 48, 48 Am. Dec. 321; Stude- Minnesota. — American Trust & backer Bros. Mfg. Co. v. Montgom- Sav. Bank v. Gluck, 68 Minn. 129, 70 ery, 74 Mo. 101 ; First Nat. Bank N. W. 1085. V. Gillilan, 72 Mo. 77; Willmarth v. New Jersey. — National Bank of Crawford, 10 Wend. (N. Y.) 241; Republic v. Young, 41 N. J. Eq. 531, Gorrell v. Ins. Co., 11 C. C. A. 240, 7 Atl. 488. 63 Fed. 371. New York. — Mechanics* Banking '" National Spraker Bank v. Ass'n V. New York & S. White Lead Treadwell Co., 80 Hun (N. Y.) 363, Co., 35 N. Y. 505. 30 N. Y. Supp. 77. Texas. — Marshall Nat. Bank v. '"Wright v. Pipe Line Co., 101 O'Neal, 11 Tex. Civ. App. 640, 34 S. Pa. St. 204, 47 Am. Rep. 701. W. 344. 3^= Stoney v. American Life Ins. Federal— Tod v. Kentucky Union Co., 11 Paige (N. Y.) 635. Land Co., 57 Fed. 47. ===" Farmers' & Mechanics' Bank v. Michigan. — Compare McLellan v. Butchers' & Drovers' Bank, 16 N. Y. File Works, 56 Mich. 579, 23 N. W. 125, 69 Am. Dec. 678. In this case 321. it appeared that a check had been §• 87] INCAPACITY AND WANT OF AUTHOKITT. 104 tion on a note properly executed by the corporation, which imported a valid obligation, the corporation in an action on the note has been held liable, though it did not receive the money, there being nothing to show that the lender suspected fraud any more than an ordinary person in the usual course of transactions of the company who dealt in like manner would suspect such a thing.^^^ Again where a corporation has power to indorse negotiable paper in the transaction of its legitimate business, though it may have no right to lend its name for the accom- modation of another, yet the fact that it has exceeded the authority conferred upon it by indorsing paper for accommodation is no de- fense to an action thereon by one who was an innocent holder before maturity for value and without notice of the character of the indorse- ment.^^® Where it is provided by statute that it shall not be lawful for any corporation to divert its operations to purposes not set forth in its articles of association, such a statute has been held merely declaratory of the common law and to be no defense to an action by a bona fide indorsee for value before maturity against the corpora- tion on its acceptance of a bill of exchange for the accommodation of the drawee.^^^ So, though a banking corporation has not received its certificate from the bank commissioner authorizing it to transact busi- ness as required by law, yet innocent purchasers of paper negotiated by the bank will obtain a valid title thereto, as to otherwise construe such a law would be to aid in defrauding those who might deal with an unlawfully conducted bank.^^" § 87. Same subject — Municipal or public corporations.— A munici- pal or other public corporation which issues commercial paper in ex- cess of the authority conferred upon it by statute may set up in de- fense to an action on such paper, even by a bona fide holder, that the act of issuing the same was ultra vires, as one taking such paper is bound to a knowledge of the laws under which it was issued.^^^ There certified by an authorized agent of '" Alabama. — See Cleveland School the bank where the drawer had no Furn. Co. v. Greenville (Ala. 1906), funds. 41 So. 862. "^^ Allen v. "West Point Min. & M. Arkansas. — Lindsey v. Rottaken, Co., 132 Ala. 292, 31 So. 462. 32 Ark. 619; Hancock v. Chicot Co., ==" Marshall Nat. Bank v. O'Neal, 32 Ark. 575. 11 Tex. Civ. App. 640, 34 S. W. 344. Illinois. — School Directors v. Fi- '''^ Farmers' Nat. Bank v. Sutton gleman, 76 111. 189 ; Bissell v. City Mfg. Co., 52 Fed. 191, 3 C. C. A. 1. of Kankakee, 64 III. 249, 21 Am. Rep. =«" Kellogg v. Douglas Co. Bank, 58 554. Kan. 43, 48 Pac. 587, 62 Am. St. R. Iowa. — Williamson v. Keokuk, 44 596. i 105 ULTRA VIRES INSTRUMEINTS MUNICIPAL CORPORATIONS. [§ 87 can be no bona fide holders of auch paper, within the meaning of the law applicable to negotiable paper, which has been issued without au- thority. The conditions under which such paper may be issued and generally the manner of issuing the same are prescribed by statute and all persons taking the same are chargeable with knowledge of these express provisions of law and it is obligatory upon them to see whether there has been a compliance with the same before they can take this kind of paper with safety.^**^ So it has been declared by the United States Supreme Court that: "It is the settled doctrine of this court that municipal corporations are merely agents of the state government for local purposes, and possess only such powers as are expressly given, or implied because essential to carry into effect such as are expressly granted ; that the bonds of such corporations are void unless there be express or implied authority to issue them ; that the provisions of the statute authorizing them must be strictly pursued ; and that the pur- chaser or holder of such bonds is chargeable with notice of the require- ments of the law under which they are issued."^^^ And in a case in Illi- nois it is said : "The authority of a municipal corporation to issue bonds Iowa 88; McPherson v. Foster, 43 Iowa 48, 22 Am. Rep. 215; Clark v. City of Des Moines, 19 Iowa 199, 87 Am. Dec. 423. Louisiana. — Cecil v. Board, 30 La. Ann. 34; Louisiana State Bank v. Orleans Nav. Co., 3 La. Ann. 294. Michigan. — Bailey v. Tompkins, 127 Mich. 74, 86 N. W. 400. Mississippi. — Supervisors of Jef- ferson County V. Arrighi, 54 Miss. 668. Missouri. — State v. Macon Co., 68 Mo. 29; Cagwin v. Hancock, 84 N. Y. 532; Halstead v. New York, 3 N. Y. 430; Citizens' Bank v. Greenburgh, 60 App. Div. (N. Y.) 225, 70 N. Y. Supp. 68. Tennessee. — Galbraith v. City of Knoxville, 105 Tenn. 453, 58 S. W. 643. West Virginia. — Slifer v. Howell's Adm'r, 9 W. Va. 391. Wisconsin. — Fisk v. Kenosha, 26 Wis. 23. Federal. — Brenham v. German American Bank, 144 U. S. 173, 12 Sup. Ct. 559; Young v. Clarendon, 132 U. S. 340, 10 Sup. Ct. 107; Mer- chants' Exch. Nat. Bank v. Bergen Co., 115 U. S. 384, 6 Sup. Ct. 88; Hoff V. Jasper Co., 110 U. S. 53, 3 Sup. Ct. 476; Ogden v. County of Daviess, 102 U. S. 634; South Ottawa v. Perkins, 94 U. S. 260, 24 L. Ed. 154; Lehman V. City of San Diego, 83 Fed. 669, 27 C. C. A. 668; County of Bates v. Winters, 97 U. S. 83; East Oakland v. Skinner, 94 U. S. 255; Chisholm V. City of Montgomery, 2 Woods C. C. 584; Fed. Cas. No. 2686. Com- pare Evansville v. Dennett, 161 U. S. 434, 16 Sup. Ct. 613; Block v. Commissioners, 99 U. S. 686; Grand Chute V. Winegar, 15 Wall. (U. S.) 355. A note by a city for property it is not authorized to purchase is not binding. Cleveland School Furn. Co. V. Greenville (Ala. 1906), 41 So. 862. '"- Cagwin v. Town of Hancock, 84 N. Y. 532, 542. "'" Barnett v. Denison, 145 U. S. 135, 12 Sup. Ct. 819, per Brown, J. § 87] INCAPACITY AND WANT OF AUTHORITY. 106 is derived from public laws, and the avenues to information in regard to the law and ordinances of such corporations being open to public inspection, the holder of such securities will be presumed to have examined them, and to have known whether the corporation had the requisite power to issue the bonds. He has no such opportunity in regard to private corporations. Their by-laws are not open to in- spection by those who deal in securities issued by them, and hence the reason for the distinction that has been taken."^®* So a county war- rant is held binding on the county only where issued by the oflBcers having legal authority to issue it or to contract the obligation in set- tlement of which it was issued; and such a warrant imposes no lia- bility on the county when issued in violation of the law, or in fulfill- ment of a contract that the officers were prohibited from entering into.^^^ And where bonds are void from the beginning because of lack of power in a municipality to issue them, the municipality is not es- topped from asserting their invalidity by reason of any subsequent act of its officers or agents or by reason of any supposed ratification by them.^^® But where authority has been conferred by statute in general terms upon a municipality to issue bonds, the non-perform- ance of conditions and details provided by the act, which are not re- cited in the bond, cannot be set up in defense to an action thereon by a bona fide holder.^*^^ So the fact that bonds, which a municipal cor- poration has been authorized to issue, do not state upon their face the class of bond to which they belong, is no defense to an action thereon where the indebtedness which they represent is a valid one, as in such a case a technical compliance with the law in the form of the instru- ""Bissell V. Kankakee, 64 111. 249, of Eldorado, 11 Cal. 171; Sturte- 252, 16 Am. Rep. 554, per Scott, J. vant v. Inhabitants of Liberty, 46 "It must be conceded that munici- Me. 457. Where county warrants pal corporations, organized as they appear to be genuine upon their are, for restricted governmental pur- face, having the names and signa- poses, have no power to issue com- tures of proper persons and are mercial paper unless such power worded in accordance with the re- has been conferred by statute, and quirements of the statute relative without such power such paper is thereto, they are binding in the ab- void, even in the hands of an inno- sence of proof showing the con- cent holder for value before matur- trary. Apache County v. Barth ity." Coquard v. Village of Oquaw- (Ariz. 1898), 53 Pac. 187. ka, 192 111, 355, 61 N. E. 660, 661, =°' Sage v. Fargo, 107 Fed. 383. per Carter, J. ^" Danielly v. Cabaniss, 52 Ga. ^^ Supervisors v. Arrighi, 54 Miss. 211. See Chilton v. Town of Grat- 668. See also^ People v. Supervisors ton, 82 Fed. 873. I 107 WANT OF AUTHORITY OF PARTNER. [§§ 88, 89 ment is immaterial.^^^ And where power exists to execute bonds and it is exercised in a lawful manner, it is not competent to set up against a bona fide holder that the proceeds from such bonds have been used for an unauthorized purpose.^®* § 88. Guarantee of checks beyond deposits. — Where checks have, for clearing house purposes, been guaranteed by one bank to another beyond the drawer's deposits, the latter cannot set up the ultra vires character of the agreement against the bank having paid the check in compliance therewith, the power to redress the wrongful act of the bank in such case being declared to be in the government only by a proceeding to forfeit the bank's charter."*' § 89. Want of authority of partner. — The ostensible power of a partner raises a sufficient implication to bind the firm, and where a firm note is executed or transferred by one of the partners it will be no defense to an action thereon in the hands of one who is a bona fide holder for value and without notice that the note was given for a purpose other than the partnership business, and that the partner therefore acted without authority."^ So it has been declared to be •"» City of Gladstone v. Throop, 71 Fed. 341, 349, 18 C. C. A. 61. '«» Jones V. Camden, 44 N. C. 319, 23 S. B. 141; Clifton Forge v. Brush Electric Co., 92 Va. 289, 23 S. B. 288; Clifton Forge v. Alleghany Bank, 92 Va. 283, 23 S. B. 284. ^""Voltz v. Bank, 158 111. 532, 42 N. E. 69; citing National Bank t. Whitney, 103 U. S. 99; National Bank v. Matthews, 98 U. S. 621; Weber v. Spokane Nat. Bank, 64 Fed. 208. ^^^ Alabama.. — Knapp v. McBride, 7 Ala. 19. Illinois. — Wright v. Brosseau, 73 111. 381; Gregg v. Fisher, 3 111. App. 261. Iowa. — Sherwood v. Snow, 46 Iowa 481, 26 Am. Rep. 155. Kentucky. — Mitchell v. Whaley, 29 Ky. Law R. 125, 92 S. W. 556. Maine. — Emerson v. Harmon, 14 Me. 271. Maryland. — Porter v. White, 39 Md. 613. Massachusetts. — Blodgett v. Weed, 119 Mass. 215; Boardman v. Gore, 15 Mass. 331. Mississippi. — Hibernian Bank v. Everman, 52 Miss. 500; Sylverstein v. Atkinson, 45 Miss. 81; Faler v. Jordan, 44 Miss. 283. Missouri. — Bascom v. Young, 7 Mo. 1. New York. — Chittenango First Nat. Bank v. Morgan, 6 Hun (N. Y.) 346; Smith v. Lusher, 5 Cow. (N. Y.) 688, 709; Wells v. Evans, 20 Wend. (N. Y.) 251; Onondaga Coun- ty Bank v. DePuy, 17 Wend. (N. Y.) 47; Bank of Vergennes v. Cameron, 7 Barb. (N. Y.) 143; Bank of Roch- ester V. Monteath, 1 Denio (N. Y.) 402, 43 Am. Dec. 681. North Carolina. — Cotton v. Evans, 21 N. C. 284. Pennsylvania. — Potts v. Taylor, 140 Pa. St. 601, 21 Atl. 443; Leather- man V. Hecksher (Pa.), 12 Atl. 485; Sedgwick v. Lewis, 70 Pa. St. 217; Saylor v. Merchants' Exch. Bank, 1 90] INCAPACITY AND WANT OF AUTHORITY. 108 well settled that a general partner in a trading business may borrow money for the benefit of the firm and execute notes or drafts there- for, unless restrained by the articles of copartnership, of which the lender has notice, and that where money is borrowed by the partner of a trading firm in the name of the firm, and a note is executed therefor, such note is prima facie the obligation of the partnership, and if the other partner seeks to avoid its payment the burden of proof lies upon him to show that the note was given in a matter not relating to the partnership business, and that also with the knowledge of the holder of the note."^ And this rule applies in the case of an accommodation note which has been given by one partner in the firm name."^ It is a question for the jury where the evidence is conflicting whether the act of a partner was within the scope of his authority or whether there was a subsequent ratification of such act by the firm.^^* § 90. Same subject continued. — If one of several partners obtain Walk. (Pa.) 328; Haldeman v. Bank of Middletown, 28 Pa. St. 440, 70 Am. Dec. 142. Rhode Island. — Parker v. Burgess, 5 R. I. 277. Texas. — Moore v. Williams, 26 Tex. Civ. App. 142, 62 S. W. 977. Yermimt. — Roth v. Colvin, 32 Vt. 125. Wisconsin. — Sullivan v. Sullivan (Wis. 1904), 99 N. W. 1022; Rol. lins V. Russell, 46 Wis. 594, 1 N. W. 277; Kellogg v. Fancier, 23 Wis. 21. Federal. — Michigan Bank v. El- dred, 9 Wall. (U. S.) 544, 19 L. Ed. 763; Union Nat. Bank v. Neil, 149 Fed. 711; Townsend v. Hagar, 72 Fed. 949, 19 C. C. A. 256; Drexler v. Smith, 30 Fed. 754; Babcock v. Stone, Fed. Cas. No. 701, 3 McLean 172. English. — Ridley v. Taylor, 13 East 175; Jacaud v. French, 12 East 322; Swan v. Steele, 7 East 210; Baker v. Charlton, Peake 80. But compare Pennsylvania. — Lerch Hardware Co. v. First Nat. Bank (Pa.), 5 Atl. 778; Cooper v, McClur- kan, 22 Pa. St. 80; King v. Faber, 22 Pa. St. 21; Tanner V. Hall, 1 Pa. St. 417. "The Indorsement and ne- gotiation of promissory notes and bills is within the scope of the part- nership business; and as to every- thing within the scope Of that busi- ness, every partner by virtue of the partnership is clothed with the power to act for the firm — to use its name — and in that name to do every act the firm collectively might do, whether it be to make or indorse notes or bills." Rhode Island. — Windham County Bank v. Kendall, 7 R. I. 77, 84, per Brayton, J. "=Deitz V. Regnier, 27 Kan. 94, 105, per Horton, C. J. "3 Chemung Bank T. Bradner, 44 N. Y. 680; Austin V. Vandermark, 4 Hill (N. Y.) 259; Catskill Bank V. Stall, 15 Wend. (N. Y.) 864. See also, Leach v. Bank, 2 Ind. 488; Waldo Bank v. Lumbert, 16 Me. 416. "* Cassldy v. Saline County Bank, 14 Okla. S32, 78 Pac. 324. I 109 WANT OF AUTHORITY OF PARTNER. [§ 91 a loan of money for his individual use, by giving the note or cheek of the firm, but within their authority, the other partners will never- theless be bound thereby unless there be something in the transaction to induce the lender to suspect that the money is not borrowed for their benefit or the circumstances were such as to put him upon in- quiry.^'' ^ And where a note was made payable to an individual part- ner for partnership property, it is decided that the right of a trans- feree, who is a bona fide holder, to recover can not be defeated by the fact that such partner transferred the note in satisfaction of his individual debt, and in fraud of the other partner's rights, except there be evidence of a participation by the transferee in the fraud or mis- conduct of such partner.^^*' So where a partnership was formed for the purpose of, and was engaged in, selling and buying, an instruc- tion in an action upon a note executed by one of the partners in the firm name that if the other partner did not authorize the note to be so executed or did not subsequently ratify it, he was not bound, is errone- ous.^" And though the name of a firm be afiixed by one of the mera- bers to negotiable paper for the accommodation of a third person, if the note is discounted by a bank without knowledge of such fact, the other members of the firm are liable, though the note is given out of the course of the partnership business, and without their knowledge or consent.^^^ Again, where a partnership firm is pledged by the acceptance of a bill of exchange by one partner in the name of the firm, the partnership, of whomsoever it may consist, whether they are named or not, and whether the partners are known or secret partners, will be bound, unless the title of the person who seeks to charge them can be impeached or he be shown to have knowledge of the mis- application by such partner of the bill or its proceeds.^"'' § 91. Same subject — Qualifications and limitations of rule. — Wliere the partnership is not in the trade of merchandise, want of authority may be shown in an action on a firm note given by one of the partners in a transaction which has no connection with the business of the joint concern.^^*^ The general rule as to the authority of a partner to bind •"Wagner v. Freschl, 5& N. H. 416; Catskill Bank v. Stall, 15 465; Miller v. Manice, 6 Hill (N. Wend. (N. Y.) 364. T.) 114. "»Wintle v. Crowther, 1 Cromp & "'•Nichols V. Sober, 38 Mich. 678. J. 316. "'Carter v. Steele, 83 Mo. App. »8° Cocke v. Branch Bank, 3 Ala. 211. 175; Grey v. Ward, 18 111. 32. •'"Waldo Bank t. Lumbert, 16 Me. 91] INCAPACITY AND WANT OF AUTHORITY. 110 his co-partner by the execution or indorsement of paper in the firm name does not control in the case of a partnership of the non-trading class, which holds itself out as engaged in an employment or occupa- tion which does not necessarily or fittingly embrace buying and sell- ing, or a pledging of the firm's credit, unless it be shown to be the common usage, or the business is of a character to make the power essential to a proper transaction thereof, and in such case the burden is held to be on the holder of such paper to prove its validity against the firm.^®^ And want of authority may be shown against the payee taking a note with full knowledge of the fact that the note was not given in connection with the partnership business.^^^ So this is a good defense against one to whom a firm note is given by a partner for the individual debt of the latter.^^^ And where a partner borrowed money without his co-partner's knowledge, which money was with the lender's knowledge borrowed and used by such partner for the purpose of speculating in "cotton futures," and the firm note was given for such money, the other partner signing it in the belief that it was given for a lawful partnership debt, it was held that the lender could not re- cover thereon as against such partner.^** And a holder with notice of the want of authority is subject to this defense.^^^ So where a note is executed to the order of a firm by one of the partners, who indorses ^1 Marsh v. Wheeler, 77 Conn. 449; Scheie v. Wagner, 163 Ind. 20, 71 N. E. 127; citing Bowling v. Na- tional Bank, 145 U. S. 512, 12 Sup. Ct. 928, 36 L. Ed. 795; Schellenbeck V. Studebaker, 13 Ind. App. 438, 41 N .E. 845, 55 Am. St. R. 240. Com- mercial or trading partnerships "are those whose conduct so in- volves buying and selling whether incidentally or otherwise, that it naturally comprehends the employ- ment of capital, credit and the usual instrumentalities of trade and frequent contact with the commer- cial world in dealings which in their character and incidents are like those of trades generally." Marsh v. Wheeler, 77 Conn. 449, 454, per Prentice, J. ''" Benson v. Warehouse Co., 99 Ga. 303, 25 S. E. 645; Sherwood v. Snow, 46 Iowa 481, 26 Am. Rep. 155; Rice v. Doane, 164 Mass. 136, 41 N. E. 126; Roberts v. Pepple, 55 Mich. 367, 21 N. W. 319. ^^ Lanier v. McCabe, 2 Fla. 32; Taylor. V. Hillyet, 3 Blackf. (Ind.) 433, 26 Am. Dec. 430. ^^^ Benson v. Warehouse Co., 99 Ga. 303, 25 S. E. 645. ^^New Yorfc.^Gansevoort v. Wil- liams, 14 Wend. (N. Y.) 133; Liv- ingston V. Roosevelt, 4 Johns. (N. Y.) 251. North Carolina. — Weed v. Rich- ardson, 19 N. C. 535. Pennsylvania. — Brown v. Pettit, 178 Pa. St. 17, 35 Atl. 865, 56 Am. St. R. 742, 34 L. R. A. 723; Stockdale t. Keyes, 79 Pa. St. 251. English. — Wintle v. Crowther, 1 Cromp. & J. 316, Ill NOTE BETWEEN PARTNER AND FIRM. [§ 9^ the firm name theeron and delivers it to a bank for discount, with a direction that the proceeds be placed to his personal credit, this is declared to be a sufficient indication of the nature of the transaction to make it the duty of the bank, which discounts it, to inquire into his authority to use the firm name for the occasion unless there are circumstances from which the authority can be implied.^^® And it has been declared that "it is not necessary to secure a person giving credit to a partnership, that he should know or believe that each individual of the firm would approve the transaction ; but it is neces- sary that he should not know that the debt attempted to be secured was not the debt of the partnership, or the property sold was not to inure to their benefit. ^^^ But where a note is made payable to one member of a partnership, upon the purchase of partnership property, and the name of the partnership is different from that of the payee of the note, it is decided that the legal title does not pass by an in- dorsement by another one of the partners in the name of the payee, there being nothing whatever on the face of the note to indicate the connection of any partnership with it.^^^ § 92. Note between partner and firm. — Though a partner cannot sue the firm of which he is a member or be sued by it, yet if a note is executed by him to the firm or by the firm to him, a subsequent in- dorsee, who is not a member of the firm, may recover in an action against it on the note.^*^ The reason underlying this is that though a party cannot sue himself as promisor, yet "this is a difficulty at- tending the remedy only, not the right, and when the note is indorsed by those having the right to indorse it, to one against whom there is no such exception, whereby he acquires a legal interest and right to sue in his own name, the difficulty vanishes. It is like a note payable to »«« Brown v. Pettit, 178 Pa. St. 17, Maine.— Hapgood v. Watson, 65 35 Atl. 865, 56 Am. St. R. 742, 34 Me. 510. L. R A. 723; Tanner v. Hall, 1 Pa. Massachusetts. — Thayer t. Buf- 417. fum, 52 Mass. (11 Mete.) 398. ^ Huntington v. ^^yman, 1 D. Missouri. — Young v. Chew, 9 Mo. Chip. (Vt.) 438, 448i per Skinner, App. 387. Ch. J. Yermont. — Ormsbee v. Kidder, 48 '^ McCauley v. Gordon, 64 Ga. 221, Vt. 361. 37 Am. Rep. 68. Compare Michigan. — Davis v. Mer- '"^ Illinois.— KipD v. McChesney, 66 rill, 51 Mich. 480, 16 N. W. 864. 111. 460. § 93] INCAPACITY AXD WANT OF AUTHORITY. 113 one's own order, which, though till indorsement is not a good legal con- tract, becomes such by the indorsement."^^** § 93. Paper given in violation of articles of partnership. — The fact that a note was given in violation of the articles of partnership is no defense as against a bona fide holder for value and before ma- turity.^"^ "Whenever there are written articles of agreement between the partners, their power and authority, inter se, are to be ascertained and regulated by the terms and conditions of the written stipulations. * * * Any restriction which, by agreement among the partners, is attempted to be enforced upon the authority which one partner pos- sesses, as a general agent for the other, is operative only between the partners themselves, and does not limit the authority as to third persons, who acquire rights by its exercise, unless they know that such restrictions have been made."^^^ So where a note was given by one of the partners in a firm name to pay certain partnership expenses, and signed by him as agent, it was decided in an action thereon by a bona fide holder, who had discounted the same, that the partner had the power to make the note in suit and thereby bind his co-partners, and that the restriction on his authority contained in an agreement between the partners did not affect the plaintiff, as it was not com- municated to him.^"^ So the bona fide holder^ for a valuable con- sideration, without notice, of a bill of exchange indorsed by one of the partners of a firm, may recover the amount against all the part- ners, notwithstanding the indorsement of the name of the firm was expressly prohibited in the articles of partnership.^®* And though partners may have agreed between themselves that no member of the firm should indorse paper to make the others liable, yet this will be no defense to an action on such paper made payable to the firm and indorsed by one of the partners in the firm name to a bona fide pur- ^^ Pitcher v. Barrows, 17 Pick, against third parties unless it were (Mass.) 361, 363, 28 Am. Dec. 306. shown that such third party had ^" Cottana v. Smith, 27 La. Ann. knowledge of that agreement." Cot- 128; Michigan Bank v. Eldred, 9 tarn v. Smith, 27 La. Ann. 127, 128, Wall. (U. S.) 544; Winship v. Bank, per Taliaferro, J. 5 Pet. (U. S.) 529; Hogg v. Skeen, ^"Kimbro v. Bullitt, 22 How. (U. 34 L. J. C. P. 153. See Sandilands S.) 256, 266, per Clifford, J. V. Marsh, 2 B. & A. 678. "If by an '" National Union Bank v. Lan- agreement inter se, a different rule don, 66 Barb. (N. Y. ) 189. were established by commercial ^^ Bank of Kentucky v. Brooking, partners, it would be without effect 2 Litt. (Ky.) 41. 113 PAPER EXECUTED IN FIRM NAME AFTER DISSOLUTION. [§' 94 chaser for value. ^^^ In the case, however, of an action by an indorsee against the members of a firm on a bill accepted in the name of the firm, upon its being proved that^the acceptance was by one of the partners in fraud of the partnership and contrary to the partnership articles, it has been decided that the burden rests on the plaintiff to show that he gave value.^^" And the fact that a note was executed or transferred in violation of the articles of partnership will be a good defense as against a holder with notice.^^^ § 94. Paper executed in firm name after dissolution. — If after the dissolution of a firm by one or more of the parties retiring, a bill or note is reexecuted in the firm name by the remaining partners, in the usual course of business, the retiring partners cannot set up in defense to an action thereon by a holder for value and without notice the fact that the firm has been dissolved, as the authority and obligation of the partners continue until legal notice of the dissolution has been given.398 "Wlien a partnership has once existed the presumption is that it still exists until its dissolution is made known, and, until this is done, the public have the right to presume on its continued ex- istence, and when a former member contracts a debt in its name, to allow a retired member to escape liability from its payment would be to allow the perpetration of a fraud. * * * Until notice of the dissolution of a firm is given, the pul)lic, who has no such knowledge, may treat the firm as in existence, and a note given by one member ^ Barrett v. Russell, 45 Vt. 43. Massachusetts.— Goddard v. Pratt, '""Hogg V. Skeen, 34 L. J. C. P. 33 Mass. (16 Pick.) 412. 153. See Dickson v. Primrose, 2 New Hampshire.— Wagner v. Miles (Pa.) 366. Freschl, 56 N. H. 495. ="' Monroe v. Connor, 15 Me. 179; New Yorfc.— Buffalo City Bank v. Dickson v. Primrose, 2 Miles (Pa.) Howard, 35 N. Y. 500; Van Epps v. 366; Gallway v. Mathew, 10 East Dullaye, 6 Barb. (N. Y.) 244. 2^'^- South Carolina. — Hammond v. '^^ Connecticut.— Marsh v. Wheeler, Aiken, 3 Rich. Eq. (S. C.) 119. 77 Conn. 449. Texas.— Davis v. Willis, 47 Tex. Georgia.— Ewing v. Trippe, 73 Ga. 154. '^'^^- Wisconsin. — Clement v. Clement, Illinois.— Uoltgr eve v. Wuntker, 69 Wis. 599, 35 N. W. 17, 2 Am. St. 85 111. 470. R. 760. Indiana.— Stall v. Cassidy, 57 Ind. New Yorfc.— Compare Gale v. Mil- 284. ler, 54 N. Y. 536. Kentucky.— Merritt v. Pollys, 16 Yermon^.— Woodford v. Dorwin, 3 B. Mon. (Ky.) 355. Vt. 82. Joyce Defenses — 8. 95] IXCAPACITY AND WAXT OF AUTHORITY. 114 of such firm is binding upon all the other members, notwithstanding such dissolution."^^'' So where, after the dissolution of a partnership, a note is given by one of the members in the firm name in payment of a firm debt to one who has had no notice of the dissolution, the firm will be held liable thereon.*"*' But there can be no recovery against a firm on a note given by one of the partners in the firm name after dissolution where the payee knew that it was given for his private debt, and knew also, or what amounts to the sameothing, was charge- able with notice of the dissolution.*"^ Subdivision VI. TO WHOM DEFENSE IS AVAILABLE. § 95. Who may set up incapacity or want of authority. — The mak- ers of a note negotiable imder the law merchant warrant the capacity of the payee to transfer it in the usual course of business, and in an action by a bona fide holder can not dispute the authority of the payee to accept and transfer the note executed by them.*°^ The defendant, who owes the debt, has no interest beyond the bona fides of the holder. This rule is declared to be "founded in the most obvious dictates of reason and sound policy" and one which should be inflexibly main- tained.*"^ So the incapacity to contract of one party to a bill does not determine the responsibility of the other competent parties to each other, or to third parties.*"* The rights of the third parties do not ^^^Ewing- V. Trippe, 73 Ga. 776, 777, 778, per Blandford, J. «° Long v. Gamett, 59 Tex. 229. ^°^ Lansing v. Gains, 2 Johns. (N. Y.) 300. ^""Wolke v. Kuhne, 109 Ind. 313, 10 N. E. 116 (so holding where a note was made payable to order of "T. W. Wollen, attorney-general," the words added to the name of the payee being regarded as merely descriptive of the person, and which could in no way trammel the rights of a bona fide holder"; City Bank of New Haven v. Perkinsi. 29 N. Y. 554 (holding that defendant cannot question the legality of the trans- fer of a note to a bona fide holder, nothing short of notice or bad faith enabling a maker or indorser to de- feat an action brought upon it by one who is apparently a regular in- dorsee or holder). ^"^ City Bank of New Haven v. Perkins, 29 N. Y. 554. See also. Gage V. Kendall, 15 Wend. (N. Y.) 640. '"'Knox V. Reside, 1 Miles (Pa.) 294. 297. See Hennen v. Bourgeat, 12 Rob. (La.) 522. 115 TO WHOM DEFENSE IS AVAILABLE. [§ 95 depend in such cases "upon the actual title or authority of the party with whom they deal directly, but are derived from the act of the real owner, which precludes him from disputing, as against them, the ex- istence of the title or power, which, through negligence or mistaken confidence, he caused or allowed to be vested in the party making the conveyance.*"^ This rule is based upon the principle that when one of two innocent parties must suffer for the wrongful act of another the one who puts the latter in a position to do it must be the suf- ferer.*"® So this rule has been applied in the case of a bill of ex- change, where it was claimed that the paper was not a bill of ex- change or negotiable because the drawee was an officer of the govern- ment and as such had no authority to contract, and having been drawn upon him in his official character, his acceptance did not affect him personally.*"^ Again, in an action on a note by an assignee thereof for value and without notice before maturity, the makers cannot deny the existence of the corporation to whom he has executed such note as payee.*"* jSTor can a maker avail himself of the defense that the payee to whom he executed the note is a fraudulent associa- tion,*"^ or that it had no authority to loan the money which was the consideration of the note.*^" And an indorser cannot set up against the indorsee that the corporation made the note in violation of the statute, as by the indorsement he has admitted the capacity of every prior party to the paper.*" The indorser ordinarily warrants by his indorsement the existence of every essential necessary to constitute the instrument a valid and subsisting obligation. It is a part of his contract that the maker was competent to contract in that form, and he cannot escape liability on the ground that the act of the corpora- "^ McNeil V. Tenth Nat. Bank, 46 tion is an admission by the defend- N. Y. 329, per Papallo, J.; cited with ant of the existence of the corpora- approval in Lee v. Turner, 89 Mo. tion and he is not permitted to deny 489; International Bank v. German that there is a duly organized cor- Bank, 71 Mo. 195. poration." Nashua Fire Ins. Co. v. ''*' Neuhoff V. O'Reilly, 93 Mo. 164, Moore, 55 N. H. 48, per Smith, J. 6 S. W. 78. ^o" Reynolds v. Roth, 61 Ark. 317, ^"^Knox V. Reside, 1 Miles (Pa.) 33 S. W. 105. 294. "" Brown v. United States Home *"' Reynolds v. Rath, 61 Ark. 317, & D. Ass'n (Ky.), 13 S. W. 1085. 33 S. W. 105; Studebacker Bros. "' Glidden v. Chamberlain, 167 Mfg. Co. v. Montgomery, 74 Mo. 101; Mass. 486, 46 N. E. 103. See Pres- First Nat. Bank v. Gillilan, 72 Mo. cott Nat. Bank v. Butler, 157 Mass. 77; Camp v. Byrne, 41 Mo. 525. 548, 32 N. E. 909. "The giving of a note to a corpora- § 95] INCAPACITY AND WANT OF AUTHORITY. 116 tion in issuing the paper was ultra vires.*^- The maker of a note is only interested in paying the same to one who is authorized to re- ceive payment and to discharge him from liability, and the fact that the transaction between corporations, in consequence of which a note held by one of the corporation has been transferred to the other was unauthorized by their charters, does not constitute a defense by the maker.*^^ Again, where a note was payable to the maker's wife, or bearer, and was indorsed by her in blank, it was decided that the maker could not defeat a recovery by setting up in defense to an ac- tion on the note by a third party, to whom it had been transferred, that the payee was his wife at the time the note was executed and had no separate estate, and that she was incompetent to indorse the same.*^* And the acceptor of a bill of exchange payable to the order of the drawer cannot question the authority of the drawer to draw or indorse such bill.*^^ But where a person has entered into an unlawful contract for the purchase of corporate stock, and a third party pur- chases such stock from him and gives his promissory note, it has been decided that he cannot be compelled to perform the contract and may set up in defense to an action on the note the want of power on the part of the directors to sell the stock.*^^ "= Monarch v. Farmers' & Drov- "*Leitner v. Miller, 49 Ga. 486. ers' Bank, 105 Ky. 430, 49 S. W. 317, See Ormsbee v. Kidder, 48 Vt. 361. 88 Am. St. R. 31. "^ Halifax v. Lyle, 3 Exch. 446. "^ Union Cent. Life Ins. Co. v. «» Sturges v. Stetson, 1 Bias. C. C. Ehrman, 2 Wkly. Law Bui. (Ohio) 246, Fed. Cas. No. 13586. 3. See also, Brown v. Donnel, 49 Me. 421. 77 Am. Dec. 266. CHAPTEE IV. FORGERY. Sec. 96. General rule as to forgery. 97. Particular cases where forgery- no defense. 98. Of name of maker or drawer. 99. Where drawee obligated to know signature of drawer. Sec. 100. Payment of or by forged paper — Duty as to notice. 101. In case of certified check. 102. Of name of payee. 103. By agent of owner. 104. To whom defense available. § 96. General rule as to forgery. — The fact that a person is an in- nocent holder of a forged bill Or note does not render the paper valid, nor does the good faith of such a holder confer upon him any equity as against the one whose name is forged. And in an action against such a person the forgery of his name is a good defense thereto/ unless he has so acted in respect to the instrument as to estop him from interposing this infirmity.^ In an action on such an instrument, where the defense of forgery is set up, testimony of persons familiar with the signature affixed to the instrument is admissible to show that it is not genuine.* And a disputed signature may be compared with one admitted to be genuine for the purpose of aiding in the de- termination of the question whether the signature in dispute is genu- ine or not.^ So the use of an admittedly genuine lead-pencil signa- ture as a standard of comparison, where the genuineness of a signa- ^Ehrler v. Braun, 120 111. 503, 12 N. E. 996. "If forged no amount of good faith would profit the holder, who has no equity against the party whose name is forged," per Campbell, J., in Camp v. Car- penter, 52 Mich. 375, 379, 18 N. W. 113. "A forged bill or note derives no validity from being passed to an innocent holder," per Denio, C. J., in Farmers' & Mechanics' Bank v. Butchers' & Drovers' Bank, 14 N. Y. 626. "The loss resulting from the act of forgery must fall upon the purchaser of forged paper," per Young, J., in Porter v. Hardy, 10 N. D. 551, 88 N. W. 461. See Ha- vorka v. Hemmer, 108 111. App. 443; Coflan V. Anderson, 4 Blackf. (Ind.) 395. ^Ehrler v. Braun, 120 111. 503, 507, 12 N. E. 996. * Ellis V. Watkins, 73 Vt. 371, 50 Atl. 1105. " Tyler v. Todd, 36 Conn. 218. 117 §§■ 97, 98] PORGERY. 118 ture is in dispute, is proper.® So it has been held proper to admit en- larged photographs of the signature in contest and of admittedly genuine ones, after proof by the photographer of their accuracy, this being declared to be merely a more enduring form of showing the sig- natures to the jury as under a magnifying glass.'^ The question as to the genuineness of a signature which is in dispute is one for the jury.^ Again, the fact that in an affidavit of defense there is an allegation of forgery does not change the rule of law that forgery is a matter of defense, and it is not required in the first instance to be disproved by the plaintiff.^ § 97. Particular cases when forgery no defense. — Where one exe- cutes a note to a bank as security with a guarantee indorsed thereon by another of the payment of notes of third persons, which are de- posited by him in and discounted by the bank, neither the maker of the note nor the guarantor can avail himself, as a defense, of the fact that some of the notes so deposited and discounted were forged. ^° So an action on a note by an assignee, who occupies the position of a hona fide holder, cannot be defeated by the fact that an assignment of a forged note by the payee to the maker of the note in controversy was the consideration for such note.^^ And it is not a defense to one note that the person who presents it has forged another note, or that his general character is bad.^- § 98. Of name of maker or drawer. — In an action against the maker or drawer of an instrument it is a good defense thereto that the signature which purports to be that of such maker or drawer is in fact a forgery. ^^ This defense is as available against a suit by an assignee before maturity as against the payee. ^^ And where the name of the former owner of land is signed to notes which purport to reserve a vendor's lien on the land, if it is shown that the notes are forged « Groff V. Groff, 209 Pa. St. 603, 59 " McCauley v. Murdock, 97 Ind. Atl. 65. 229. ^ First National Bank v. Wisdom's " Dodge v. Haskell, 69 Me. 429. Exrs., 23 Ky. Law Rep. 530, 536, 63 See Patton v. Lund, 114 Iowa 201, S. W. 461. 86 N. W. 296. « Groff v. Groff (Pa. S. C. 1904), " Caulkins v. Whisler, 29 Iowa 59 Atl. 65. 495. See Mersman v. Werges, 3 •Towles v. Tanner, 21 App. D. C. Fed. 378; Mechanics' Bank v. Wood- 530, 543. ward, 74 Conn. 689, 51 Atl. 1084. ^^ Pennsylvania Trust Co. v. Mc- " Miers v. Coates, 57 111. App. 216. Elroy, 112 Fed. 509, 50 C. C. A. 371. I 119 DRAWEE OBLIGATED TO KNOW SIGNATURE OF DRAWER. [§ 99 no lien will be created.^^ And as the law prescribes the method in which school bonds are to be issued and the powers of the officers to issue the same, a school district will not be liable on such bonds where they are fraudulently issued, with forged signatures affixed thereto, even though they are in the hands of an innocent holder. It was declared by the court in one case: "It may be said that the bonds being negotiable and having passed into the hands of lona fide purchasers for value the district is bound by the recitals therein. It is sufficient answer to this objection to say that while lona -fide purchasers are protected against equities between the parties they are not protected against a want of power to execute."^*^ Again, where a note purporting to be that of an incorporated banking company was is^Sued after the cashier had signed it, but before the signature of the president was affixed, as required by law to render it binding, and the signature of the latter officer was forged thereto, the company was held not liable on the instrument.^^ § 99. Where drawee obligated to know signature of drawer. — It is incumbent upon a drawee to know the signature of a drawer, and in the absence of any fraud a drawee cannot recover back money paid by him on his acceptance of an instrument to which the drawer's name is forged.^® So it was said by Lord Mansfield in an early case : "It can never be thought unconscientious in the defendant to retain this money when he has once received it upon a bill of exchange indorsed to him for a fair and valuable consideration, which he had bona fide paid without the least privity or suspicion of the forgery. Here was no fraud, no wrong. It was incumbent upon the plaintiff to be satisfied that the bill drawn upon him was the drawer's hand before he accepted or paid it, but it was not incumbent on the defend- ant to inquire into it."" So a bank is obligated to knov.^ the signatures "Neal V. Parker (Tenn.), 62 S. court: "The rule is well settled W. 170. that the drawee of a check is bound, " State V. School District, 10 Neb. at his peril, to know the handwrit- 544, 7 N. W. 315, per Maxwell, C. J. ing of the drawer; and if he pays " Salem Bank v. Gloucester Bank, a check to which the signature of 17 Mass. 1. the drawer was forged, he must ^' Price V. Neal, 3 Burr 1354. See suffer the loss, as between himself also, McCall v. Corning, 3 La. Ann. and the drawer, or an innocent. 409, 48 Am. Dec. 454. holder, to whom he has made pay- " Price V. Neal, 3 Burr 1354. In ment. As between himself and the Redington v. Woods, 45 Cal. 406, 13 drawer, he undertakes that he will Am. Rep. 19, it was also said by the pay no checks except such as have § 100] FORGERY. 120 of those whose money it receives upon deposit, and if it pays a forged check the loss must fall upon the bank and not upon the one to whom the money has been paid, the latter having acted in good faith and without notice of the forgery.^" So where an acceptance was forged, and the bankers of the acceptor, where the bill was payable, paid the bill at maturity to a holder for value, and the forgery was discovered about a month after, when notice was given to the defendant, it was decided that the bankers were not entitled to recover the money so paid.^^ And where a consignor drew a bill of exchange on his con- signee with a forged bill of lading attached, and had the drafts dis- counted by a bank, ignorant of the fraud, and the drafts were ac- cepted and paid by the consignee in accordance with the ordinary custom between the consignor and consignee, it was decided that the latter had no recourse against the bank.-^ § 100. Payment of or by forged paper — Duty as to notice. — One who has made a payment on a forged bill or note may forfeit any right which he possesses to recover such payment by a failure to give a notice until after an unreasonable period of time has elapsed after his discovery of the forgery.^^ And a bank which has paid a check on the forged indorsement of the name of the payee may be relieved from liability to the maker by a failure to give notice within a reasonable time after it has learned that such indorsement was forged. So where the drawer of a check waited for over a month after knowledge of the fact that it had been paid on a forged indorse- the genuine signature of the of such payment, has parted with drawer, which he assumes to know; his own money or been placed in a and, as he is presumed to be ac- worse position than he would have quainted with the signature, he will been but for such payment," per not be allowed to recover the money Miller, J., in Commercial Bank v. back from an innocent holder, who First National Bank, 30 Md. 11. is not presumed to have such knowl- See also, Bernheimer v. Marshall, 2 edge." Minn. 78; Bank of St. Albans v. ^° "A bank which receives money Farmers' & Merchants' Bk., 10 Vt. on deposit and hence derives profit 141; Smith v. Mercer, 6 Taunt. 76. is justly held to the obligation to ^ Smith v. Mercer, 6 Taunt. 76. know the signature of its depositors - Hoffman v. Bank of Milwaukee, to their checks, and if it pays in 12 Wall. (U. S.) 181, 20 L. Ed. 366. mistake a forged check there is no ^ Redington v. Woods, 45 Cal. 406, reason why the loss should be 13 Am. Rep. 190; Continental Nat. shifted to another innocent party Bank v. Metropolitan Nat. Bank, upon whom the law casts no such 107 111. App. 455. See Thomas v. obligation, and who, upon the faith Todd, 6 Hill (N. Y.) 340. See also. Ford & Co. V. People's Bank, 74 S. C. ISO, 54 S. E. 204. 121 CERTIFIED CHECKS. [§ 101 ment before it gave notice to the bank of Bueh fact, and that it in- tended to hold the bank liable, it was decided that this was an unrea- sonable time to wait and that the bank was released from liability, as notice should have been given without unnecessary delay so as to enable the bank to pursue any remedy it might have against the forger or indorsers.^* This duty to give notice in either case does not mean that notice must be given on the very day of payment, but does require notice promptly, according to the circumstances and usage of the business.^^ So it has been decided that where forged checks are paid by a bank, charged to the depositor's account, and returned to him, he need not examine the vouchers at once so as to discover fraud. Only reasonable care is required, and if this is exercised by him or his agent the bank cannot complain, though it is too late when the forgery is discovered to enable it to retrieve its position or make reclamation from the forger.^® So where a bank without instructions paid a forged acceptance and sent the same to the firm whose name was forged as acceptor, it was decided that there was no legal obliga- tion on the firm to examine such acceptance immediately upon its reception for the purpose of ascertaining if it was genuine, that the firm was not guilty of negligence in not discovering the forgery at once, and that notice of the forgery, when discovered, was sufficient.^^ Again, where one pays out a counterfeit bill in good faith it has been decided that he is not obligated to receive it back unless it is returned within a reasonable time after it is discovered to be spurious.^^ So where a bank note was delivered to a party as payment and it was believed by both parties to be genuine, but it was discovered to be a counterfeit by the creditor at about the same time as he received it, he was held to have lost his remedy by failing to make an offer to return it for about two months.^^ What is reasonable diligence in giving notice of forgery after its discovery is a question of fact under the circumstances of each particular case.^" § 101. In case of certified checks. — ^Mierc a bank certifies a check =* United States v. National Ex- =' Simms v. Clark, 11 111. 137. change Bank, 45 Fed. 163. -'Thomas v. Todd, 6 Hill (N. Y.) "= Iron City Nat. Bank v. Fort Pitt 340. Nat. Bank, 159 Pa. St. 46, 28 Atl. =" Continental Nat. Bank v. Met- 195, 23 L. R. A. 615. See Murphy v. ropolitan Nat. Bank, 107 111. App. Metropolitan Nat. Bank, 191 Mass. 455. See Kearny v. Metropolitan 159, 77 N. E. 693. Trust Co., 110 App. Div. (N. Y.) =" Frank v. Bank, 84 N. Y. 209. 236, 97 N. Y. Supp. 274. " First National Bank v. Tappan, 6 Kan. 456, 7 Am. Rep. 568. g' 103] fORGERY. 123 drawn upon it as good, and in the ordinary course of business such check comes into the hands of a third person, who takes it in good faith and for value, it is no defense to an action against the bank that the check was forged, as the bank is liable to make good its certi- fication by paying the check.^^ § 102. Of name of payee. — The forgery of the name of a payee of a bill or note is a good defense to an action against him even by a bona fide holder,32 as no title can be acquired by such indorsement.^^ An action can only be maintained on notes or obligations by those in whom the legal title is vested, and to divest a person, to whom such an instrument is made payable, of his title a transfer from him or his indorsement is necessary.^* So it is said in a case in Iowa that: "Where a person has obtained possession of a promissory note belong- ing to another person, and without authority undertakes to transfer it by indorsing it in the name of the owner, we think that neither the person whose name is thus wrongfully used, nor the wrongdoer, would become liable to the transferee upon the note. The transferee would acquire no title to it."^^ So where one personated another and received a letter addressed to the latter, which contained a check, and forged the indorsement of the payee, it was decided that the forgery was a good defense even as against a bona fide holder, as no title passed by the forgery, and also because defendants remained re- sponsible upon the check to the real payee.^^ Again, a check drawn in favor of a particular payee or order, is payable only to the actual ^1 Hagen v. Bowery National 883, overruling, Duke v. Hall, 9 Bank, 64 Barb. (N. Y.) 197, 6 Lans. Baxt. (Tenn.) 282. 490; citing Commercial Bank v. ^^ Kohn v. Watkins, 26 Kan. 691, First National Bank, 30 Md. 11; 40 Am. Rep. 336; Buckley v. Second Farmers' & Mechanics' Bank v. National Bank, 35 N. J. L. 400, 10 Butchers' & Drovers' Bank, 26 How. Am. Rep. 249; Gilbert v. Sharp, 2 Pr. (N. Y.) 1; Price v. Neal, 3 Burr. Lans. (N. Y.) 412; Palm v. Watt, 1354. 7 Hun (N. Y.) 317; Terry v. Allis, == Citizens' State Bank v. Adams, 16 Wis. 478. 91 Ind. 280; Woodruff v. Munroe, '' Foltier v. Schroeder, 19 La. 33 Md. 146; Union Sav. Ass'n v. Ann. 17, 92 Am. Dec. 521. Diebold, 1 Mo. App. 323; McCarville == Thorpe v. Dickey, 51 Iowa 676, v. Lynch, 14 Misc. (N. Y.) 174, 35 2 N. W. 581, per Adams, J. N. Y. Supp. 383. See also, Kibby's '"Palm v. Watt, 7 Hun (N. Y.) Admr. v. Kibby, Wright (Ohio) 317. See Rowe v. Putnam, 131 607; Roach v. Woodall, 91 Tenn. Mass. 281, holding forgery of name 206, 18 S. W. 407, 30 Am. St. R. of payee a defense in an action against the maker. 123 TO WHOM DEFENSE AVAILABLE. [§§ 103, 104 payee, or upon his genuine indorsement; and if the bank mistake the identity of the payee, or pay upon a forged indorsement, it is not a payment in pursuance of authority, and it will be responsible.^^ But where the maker of a note payable to a real person forges the in- dorsement of such person, or procures it to be done, and puts the note into circulation, he is estopped from denying that the indorse- ment is genuine.^^ And it has been determined that a maker or prior indorser of a note is not relieved from liability thereon by the addi- tion of a forged name of another as a subsequent indorser.^'' § 103. By agent of owner. — Where a note is indorsed by an agent of the payee, in the latter's name, without any actual or apparent authority to so act, the one so taking, though for value and without no- tice, acquires no valid legal title thereto and does not become a bona -fide holder, in the sense of that term. Nor in such a case does a rati- fication of the indorsement by the payee after the commencement of an action by the indorsee relate back so as to cut off a defense on the merits. Under such circumstances the note is subject to defenses ex- isting between the original parties.**^ § 104. To whom defense available. — In an action by a payee against one who has signed a note as surety it is no defense thereto that the name of one or more of the obligors on such instrument has been forged, though the surety signed the same in the belief that the signatures were genuine, where it appears that the instrument was ^' Pickle V. Muse, 88 Tenn. 381, 12 added, though in form that of a S. W. 919, 17 St. R. 900, 7 L. R. A. joint promissor, is in fact that of a 93. See Chism v. Bank, 96 Tenn. surety or guarantor only, the orig- 641, 36 S. W. 387, 54 Am. St. R. 863, inal maker is as between himself 32 L. R. A. 778; First National and the surety exclusively liable for Bank v. Whitmore, 94 U. S. 343; the whole amount and his ultimate Buckley v. Bank, 35 N. J. L. 400; liability to pay is neither increased Talbot V. Bank of Rochester, 1 Hill nor diminished, and according to (N. Y.) 295. the general current of American au- ^' Meacher v. Fort, 3 Hill L. (S. thorities the addition of the name C.) 227, 30 Am. Dec. 364. See York of a surety, whether before or after Bank v. Asbury, Fed. Cas. No. first negotiation of the note, does 18142, 1 Biss. C. C. 233. not discharge the maker. Per Mr. '° Produce Exch. Trust Co. v. Bie- Justice Gray. As to alteration by berbach, 176 Mass. 577, 58 N. E. addition of names, see § 174, herein. 162. See Meisman v. Werges, 112 ^"Gilbert v. Sharp, 2 Lans. (N. U. S. 139, 28 L. Ed. 641 declaring Y.) 412. that where a forged signature is § 104] FORGERY. 124 accepted by the payee without notice of the forgery.*^ And it is no defense to an action against an indorser of an instrument by his in- dorsee or a bona fide holder that an indorsement previous to that of the defendant was a forgery/^ as an indorsee by his indorsement warrants the genuineness of the prior indorsements and that the in- strument is the valid one it purports to be.*^ So in a case in Louisi- ana, in which this question was considered, the court said: "The de- fense relied on is, that a previous indorsement on the note was not genuine, but a forgery committed by the drawer himself, and that the note was indorsed by the defendant through error, he believing the previous indorsement to be genuine. * * * We are of opinion that he is not entitled to be relieved on the ground of error or fraud without showing that such error was caused by the plaintiff or that he participated in the fraud. Such in substance -was the charge of the judge on the trial in the first instance, and we think it correct. * * * The plaintiff took the note on the credit of the defendant's indorsement and no privity is shown between the plaintiff and the drawer in relation to the forgery. Whether the indorsement was for the accommodation of the maker, or in the regular course of business, is, in our opinion, immaterial. Every indorsement is essentially an original' contract, equivalent to the drawing of a new bill in favor of the holder, on the acceptor or obligor. The obligation of the indorser is, that if the obligor or acceptor does not pay at maturity, he will pay on due notice of the dishonor of the bill. The forgery of a pre- vious indorsement does not release him from that obligation towards a bona fide holder, who took the note on the credit of his indorsement. The doctrine on this subject appears well settled."** "Wayne Agricultural Co. v. Card- ^^ Olivier v. Andry, 7 La. 496; well, 73 Ind. 555; Helms v. Wayne Rambo v. Metz, 5 Strob. (S. C.) Agricultural Co., 73 Ind. 325, 38 Am. 108. Rep. 147. See Second National ** Cochran v. Atchison, 27 Kan. Bank v. Hewitt, 59 N. J. L. 57, 34 728. Atl. 988. *^ Olivier v. Andry, 7 La. 496, per Bullard, J. II CHAPTER V. DURESS. Sec. 105. General rule as to duress. 106. Equity may decree cancellation. 107. What does not constitute du- ress. 108. Where procured from one un- der illegal arrest or re- straint. 109. By abuse of legal process. 110. Effect of threat to lawfully in- voke legal process. Sec. 111. Giving of paper indorsed by fear of violence. 112. Threatened criminal prosecu- tion and imprisonment as in-? ducing. 113. Availability of as between par- ties. 114. Same subject — Against subse- quent parties. 115. Same subject — Parties with no- tice. § 105. General rule as to duress. — Consent is one of the ordinary requisites to a valid contract and it is«essential as between the parties that it should be voluntarily given. This principle applies in the case of bills and notes, and it is therefore in many cases a good defense to an action on such an obligation to show that it was executed under duress.^ The common-law strictness as to what duress would avoid a contract has been much relaxed in modern times, especially in American courts, upon the principle that the very essence of a contract is the agreement of the minds entering into it. A mind constrained by fear cannot be said to have agreed.^ As showing that the courts are not holding to the strict rule of the common law as to what is necessary to constitute duress which will avoid a contract the follow- ing quotation from a recent case in Nebraska is pertinent. It is here said : "This state has already taken its position in line with the more advanced position upon this subject. * * * rpQ constitute duress sufficient to avoid a contract in this state, the means adopted ' Georgia.— What v. Blount, 124 Lin v, Marshall, 1 Heisk. (Tenn.) 678. See French v. Talbot, 100 Mich. 443, 59 N. W. 166. = Coffelt v. Wise, 62 Ind. 451, per Biddle, J.; Phelps v. Zuschlag, 34 Tex. 371. Ga. 671, 53 S. E. 205. Iowa.— Veach V. Thompson, 15 Iowa -380. Ken- tucky. — Hall V. Commonwealth Bank, 5 Dana (Ky.) 258, 30 Am. Dec. 685. New York. — Mills v. Young, 23 Wend. (N. Y.) 314. Tennessee.— Mc- 125 § 106] DURESS. 126 need only be of a character necessary to overcome the will and desire of the injured party, whether that person be above or below the aver- age person in firmness and courage, and whether the means employed come clearly within the common-law definition of duress or otherwise. In other words, the law extends its protection to the individual with- out reference to whether he is strong or weak intellectually, and re- fuses to measure his rights by an arbitrary yardstick avowedly ap- plicable only to men of ordinary intellect, firmness and courage. Under this view of the law the jury is properly directed to inquire into the mental capacity of the defendant, and whether the threats, whatever they were, probably deprived him of his free will, inducing him to make a contract that he would not otherwise have made rather than to the particular threats, made to see whether they meet with an arbitrary standard, which may or may not be applicable to the person injured."^ This defense is available though there may be some consideration to support the instrument.^* And it is decided that the fact that the defendant did not act as a reasonable man in resist- ing the coercion exercised upon him will not prevent him from setting up the defense of duress in such a case though it might be a circumstance from which the jury might find he did not yield and sign the note on that account.* Where a person relies upon duress as a defense to an action on such an instrument it is held that facts sufficient to show duress should be pleaded.** § 106. Equity may decree cancellation. — Wliere it clearly appears that a bill or note has been given by a person while imder duress a court of equity may decree that the obligation so given shall be can- celled.^ So where a mother executed and gave a note to the employer of her son, the latter having embezzled money from the former, and it appeared, to the satisfaction of the court, that the motive controlling the mother's action was to protect her son from prosecution, it was ^ Nebraska Mut. Bond Ass'n v. ^ Overstreet v. Dunlap, 56 111. App. Klee (Neb. 1903), 97 N. W. 476, 478, 486. per Kirkpatrick, C, citing First Na- '* Bond v. Kidd (Ga. 1905), 50 S. tlonal Bank v. Sargent, 65 Neb. 594, E. 934. 91 N. W. 595, 59 L. R. A. 296; Galu- ' McLln v. Marshall, 1 Heisk. sha V. Sherman, 105 Wis. 263, 81 N. (Tenn.) 678. See White v. Rasines, W. 495. 501, 47 L. R. A. 417. 21 N. Y. Supp. 243, 66 Hun (N. Y.) =* Magoon v. Reber, 76 Wis. 392, 633 mem., citing with approval Sis- 49 N. W. 112. tare v. Hecksher, 18 N. Y. Supp. 475, 63 Hun (N. Y.) 634 mem. I 127 WHAT DOES NOT CONSTITUTE DURESS. [§ 107 held that, as the evidence showed that she did not act of her own free will, the note should be cancelled.*^ And it was likewise so held where, under similar circumstances, a note was given by a father to take up forged notes executed by his son.'^ § 107. What does not constitute duress. — In an action against a wife on a note signed by her it is no defense that she was induced to execute the same by a threat of suicide made by her husband, as this does not constitute duress within the meaning of that term,® Nor does the fact that a note was signed under protest constitute a de- fense."* Nor can recovery be defeated on the ground of duress by the fact that the defendant was coerced into the performance of his duty.^" And a threat by one to remove property in the assertion of a claim that he is the owner thereof has been held no defense to an ac- tion on a note given to compromise such claim.^^ And duress has been held not established by evidence that a wife executed notes through fear of her husband, it not appearing that she was ever threat- ened by him in regard to the notes, or even requested by him to execute the same, and that she subsequenth^ wrote a letter, not claimed to have been dictated by fear, recognizing her husband's interest in the note and expressing a desire not to disturb such interest.^- Nor does a refusal by a party to a contract to perform his part thereof and the exaction of a larger amount than the contract designates for the doing of the acts specified therein, though he thereby takes advantage of the necessities of the other party, con- stitute duress which will defeat recovery on a note executed on the basis of the new demand. Thus it was so held where a party refused to supply ice on the basis of the contract and demanded an increased price, which the other party to the contract accepted and gave his note therefor.^ ^ "Foley V. Greene, 14 R. I. 618, 51 a duty which devolved upon the de- Am. Rep. 419. fendant. ' Coffman v. Lookout Bank, 5 Lea " Heysham v. Oeltre, 89 Pa. St. (Tenn.) 232, 40 Am. Rep. 31. 506. ^Remington v. Wright, 43 N. J. ^= Gillespie v. Simpson (Ark.), 18 L. 451; Wright v. Remington, 41 N. S. W. 1050. J. L. 48, 32 Am. Rep. 180. i= Goebel v. Linn, 47 Mich. 489, 11 * Jacoby v. Ross, 12 Mo. App. 577. N. W. 284, 41 Am. Rep. 723. The *" Smith V. Paris, 70 Mo. 615 so court said in this case: "The de- holding where the effect of coercion fense is * * * that a note for a was to hasten the performance of .sum greater than the contract price has been extorted under circum- §■ 108] DURBSS. 138 § 108. Where procured from one under illegal arrest or restraint. One who wrongfully restrains another of his liberty cannot obtain the benefit of any obligation which he may obtain from him while so restrained and which is executed as a consequence of such restraint.^* stances amounting to duress. It is to be observed of these circum- stances that if we confine our at- tention to the very time when an arrangement for an increased price was made the defendants make out a very plausible case. They had a very considerable stock of beer on hand and the case they make is one in which they must have ice at any cost or they must fail in busi- ness. If the ice company had the ability to perform their contract, but took advantage of the circum- stances to extort a higher price from the necessities of the defend- ants its conduct was reprehensible, and it would perhaps have been in the interest of good morals if de- fendants had temporarily submitted to the loss and brought suit against the ice company on their contract. No one disputes that at their option they might have taken that course, and that the ice company would have been responsible for all dam- ages legally attributable to the breach of the contract. But the de- fendants did not elect to take that course. They chose for reasons which they must have deemed suffi- cient at the time to submit to the company's demand and pay the in- creased price rather than rely upon their strict rights under the exist- ing contract. * * * if unfair advantage was taken of defendants, whereby they were forced into a contract against their interests, it is very remarkable that they sub- mitted to abide by it as they did for nearly eight months without in the meantime taking any steps for their protection. Whatever com- pulsion there was in the case was to be found in the danger to their business in consequence of the threat made at the beginning of May to cut off the supply of ice, but the force of the threat would be broken the moment they could make arrangements for a supply elsewhere; and there is no showing that such a supply was unattainable. The force of the threat was there- fore temporary; and the defend- ants, as soon as they were able to supply their needs elsewhere, might have been in position to act inde- pendently, and to deal with the ice company as freely as they might with any other party who declined to keep his engagements). On any view, therefore, which we may take of the law, the defense must fail. But if our attention were to be re- stricted to the very day when notice was given that ice would no longer be supplied at the contract price, we could not agree that the case was one of duress. It is not shown to be a case even of a hard bargain; and the price charged was probably not too much under the circum- stances," per Cooley, J. "Bennett v. Ford, 47 Ind. 264; Osborne v. Robbins, 36 N. Y. 365, 4 Abb. Prac. N. S. (N. Y.) 15; Strong V. Grannis, 26 Barb. (N. Y.) 122; Behl V. Schuett, 88 Wis. 471, 60 N. W. 701. See Preston v. Bacon, 4 Conn, 471, holding that a note given by a person under arrest in civil process to the officer having him in custody, for fees to which he was not entitled, was void on the i 129 BY ABUSE OF LEGAL PROCESS. [§ 109 So "when a party is arrested, without just cause, and from motives which the law does not sanction, any contract into whicli he may en- ter with the authors of the wrong, to procure his liberation from re- straint, is imputed to illegal duress. It is corrupt in its origin, and the wrongdoer can take no benefit from its execution."^ ^ The rule is said, in an early case in New York, to be "that where there is an ar- rest for improper purposes without a just cause, or where there is an arrest for a just cause but without lawful authority; or where there is an arrest for a just cause and under lawful authority, for unlawful purposes, it may be construed a duress."^^ So the defense of duress has been held good in an action on a note exacted from one under ar- rest on a false charge of felony, and which was given to procure his liberation from illegal restraint. ^^ But if a man be lawfully im- prisoned and to procure his discharge gives his note it w^ill not be subject to the defense of duress.^^ It is necessary to show either an unlawful imprisonment or an oppression under a lawful detention. ^^ So where a party who was under arrest in a criminal prosecution for an assault in which he had participated gave a note in settlement of the injury sustained by such an assault, it was decided that the note could not be avoided on the ground that its execution was procured by threats unless it appeared that they were such as would intimidate a person of ordinary firmness.^" § 109. By abuse of legal process. — A person cannot claim the bene- fit of an instrument which another has been induced by him to sign by an abuse of legal process, and it is a good defense as between the parties thereto that it has been so obtained.-^ In the case of an abuse ground of extortion, which was de- "Heaps v. Dunham, 95 111. 583; fined to be any oppression by color Soule v. Bonney, 37 Me. 128; Strouf- or pretense of right, and particular- fer v. Latshaw, 2 Watts (Pa.) 165, ly the exaction by an officer by color 27 Am. Dec. 297. See also, Water- of his office of money not due. man v. Barratt, 4 Har. (Del.) 311. »' Osborne v. Robbins, 36 N. Y. ^''Walbridge v. Senold, 21 Conn. 365, 371, 4 Abb. Pt. N. S. (N. Y.) 424. See Pritchard v. Sharp, 51 15, per Porter, J. Mich. 432, 16 N. W. 798. '"Strong V. Grannis, 26 Barb. (N. =' Thurman v. Burt, 53 111. 129; Y.) 122, per Welles, J. Shenk v. Phelps, 6 111. App. 612; "Osborne v. Robbinsi, 36 N. Y. Modlin v. Northwestern Turnpike 365, 4 Abb. Pr. N. S. (N. Y.) 15. Co., 48 Ind. 492; Gorham v. Keyes, See Meadows v. Smith, 7 Ired. Eq. 137 Mass. 583; Downing v. Ely, 125 ^N. C.) 7. Mass. 369; Osborn v. Robbins, 36 N. " Bates V. Butler, 46 Me. 387, cit- Y. 365, 4 Abb. Prac. 15. Ing 1 Black. Com. 136. Joyce Defenses — 9. § 110] DURESS. 130 of criminal process the rule is based on the ground of public policy, which will not permit the process of the state to be perverted and used b}'^ a person for the mere purpose of obtaining the execution of con- tracts,^^ So where a requisition was procured for the arrest and de- livery of a person on the ground that a crime had been committed in obtaining goods under false pretenses, and the process was made use of to compel defendant to settle the claims of his creditors and give the note in suit, it was decided that it was a use of process wholly un- authorized by the law and the note was void.-^ So it has been decided that if one fraudulently threaten to attach property upon a ground- less suit for the purpose of compelling the giving of notes by another, and the sole inducement for the giving of the notes is to prevent such attachment, there can be no recovery thereon.^^* And it has been de- cided that a note given under a threat to bring in a United States Marshal and to turn defendant and his family out of doors, and to take the defendant out of the state, is not binding as between the par- ties.2^ j^-^^ there can be no recovery on a note given to secure the possession of property which has been unlawfully detained,-^ as in the case of an illegal levy,-^ But it has been decided that the fact that a suit was brought to recover possession of land, claim thereto being made only under a tax deed, which fact the defendant knew, and the deed was in fact void, does not as a matter of law constitute duress so as to render a note given in settlement of such action void even though he may have been induced through fear of losing his land to execute the note in question.^^ § 110. Effect of threat to lawfully invoke legal process. — Courts are constituted for the purpose, among others, of enabling persons to obtain the proper remedies and process for the enforcement of tlieir legal rights. The mere fact, therefore, that one threatens to sue an- == Shenk v. Phelps, 6 111. App. 612. -^ Perkins v. Trinka, 30 Minn. 241, =^ Shaw V. Spooner, 9 N. H. 197, 15 N. W. 115. 32 Am. Dec. 348. '' Davis v. Rice, 88 Ala. 388, 6 So. =*Modlin V. Northwestern Turn- 751; McClair v. Wilson, 18 Colo, pike Co., 48 Ind. 492. 82, 31 Pac. 502; Bond v. Kidd (Ga. =^Ganz v. Weisenberger, 66 Mo. 1905), 50 S. E. 934; Perryman v. App. 110, 2 Mo. App. 1323. Pope, 94 Ga. 672, 21 S. E. 715; Peck- =" Crawford v. Cato, 22 Ga. 594; ham v. Hendren, 76 Ind. 47; Snyder Oliphant v. Markham, 79 Tex. 543, v. Braden, 58 Ind. 143; Jones v. 15 S. W. 569, 23 Am. St. R. 363. Houghton, 61 N. H. 51. " Bingham v. Sessions, 6 Sm. & M. (Miss.) 13. 131 PAPER GIVEN THROUGH FEAR OF VIOLEXCE. [§ 111 other or to invoke some legal process in respect to his property or per- son in order to enforce some right which the former may possess does not constitute duress so as to render void a note given as a result of such threat. ^^ So a threat of a judgment creditor to levy execution on the property of the debtor will not render a note void as being given under duress.^" Xor will a threat of bankruptcy proceedings against a third person which would affect the maker of the note.^^ And where a person's son was under arrest in a civil suit it was decided that a note given in settlement of such suit, in consideration of its withdrawal and of the release of the son, was not void for duress.^^ § 111. Giving of paper induced by fear of violence. — That the pa- per was executed under threats of death, violence, or bodily harm will be a good defense, as between the parties, to an action on the instru- ment where it appears that the threat was such as to reasonably ex- cite the fear of the person to whom it was made and induce the belief that the threat would be presently carried into execution.^^ The question whether the threat was such as to excite the fear of a person of ordinary courage is not made the test by the later decisions, but rather the determination of the question whether the threat was such as to reasonably excite the fear of the person to whom it was made and thus overcome his will without regard to whether his courage was that of an ordinary person or not is said to control, as it would seem it properly should.^* So where one executed notes to his uncle under threats by the latter that he would take his nephew's life if he ^"Wilcox V. Howland, 23 Pick, ful imprisonment about to be then (Mass.) 167; Brown v. Tyler, 16 and there, or at least to be very Vt. 22. shortly inflicted. The threat must '^Barnes v. Stevens, 62 Ind. 226. be such as would naturally excite ^^ Mascolo V. Montesanto, 61 Conn, such a fear (grounded upon the rea- 50, 23 Atl. 714, 29 Am. St. R. 170. sonable belief that the person who ^^Bond V. Kidd (Ga. 1905), 50 S. threatens has at hand the means E. 934; Palmer v. Poor, 121 Ind. of carrying his threat into present 135, 22 N. E. 984, 6 L. R. A. 469; execution) as would overcome the Magoon v. Reber, 76 Wis. 392, 45 will of a pers-on of ordinary cour- N. "W. 112. "Duress by threats ex- age." 6 Am. & Eng. Ency. Law 64, ists, not wherever a party has en- cited in Barrett v. Mahnken, 6 Wyo. tered into a contract under the in- 541, 48 Pac. 202. fluence of a threat, but only where ^^ Nebraska Mut. Bond Ass'n v. such a threat excites a fear of some Klee (Neb. 1903), 97 N. W. 476, 478, grievous wrong, — as of death or of See § 105 herein, great irremediable injury or unlaw- 8 112] DURESS. 133 refused, it was held that the courts would not enforce the same.^^ And where a person who owned a fourth interest in a mine, which had been leased to another, was surrounded by employes of the lessee, who threatened to shoot him unless he settled their claims, and he gave his notes therefor, it was decided that they were void as being given under duress. ^^ And a note given by a father as principal, and his son as surety, under the threat that the father would be taken off and killed, was held void as to both.^''* Though no actual threats are made to a person, yet the circumstances may be such as to create such a fear of violence or bodily harm as to constitute duress, which will be a defense to an action on paper given under these circumstances. Thus where the plaintiff had demanded entrance and had come into de- fendant's house with an armed force, shortly after the latter had been injured by the plaintiff, it was held sufficient to awaken his appre- hensions, and the court declared that a note given under such circum- stances did not deserve the countenance of a court or jury." Threats of personal violence, however, to a third person, who lives at a dis- tance, as where he resided in another state, have been held to be no defense to an action on a note induced by such threat.^^ § 112. Threatened criminal prosecution and imprisonment as in- ducing. — That the execution of paper was induced by a threat of crimi- nal prosecution and unlawful imprisonment, made in bad faith and for the purpose of procuring the execution of the paper in controversy, is a good defense to an action thereon.=*» So where a woman was re- ='5 Mollere v. Harp, 36 La. Ann. Nebraska. — Hullhorst v. Scharner, 471. 15 Neb. 57, 17 N. W. 259. 5»Rossiter v. Loeber, 18 Mont. 372, New Yorfc.— Haynes v. Rudd, 30 45 Pac. 560. Hun (N. Y.) 237. ^''* Owens V. Mynatt, 1 Heisk. Wisconsin. — Schultz v. Culbert- (Tenn.) 675. son, 46 Wis. 313, 1 N. W. 19. =^ Evans v. Huey, 1 Bay (S. C.) See Colorado. — Jackson v. Allen, 13. ' 4 Colo. 263. =» Barrett v. Mahnken, 6 Wyo. 541, Maine. — Thompson v. Hinds, 67 48 Pac. 202. Me. 177. =" California.— Morrill v. Night- Ytrf/inta.— Keckley v. Union Bank, Ingale, 93 Cal. 452, 28 Pac. 1068, 27 79 Va. 458. Am. St. R. 207. "If a person execute an instru- Co dorado.— Lighthall v. Moore, 2 ment from a well-grounded fear of Colo. App. 554, 31 Pac. 511. illegal imprisonment he may avoid 7ot<;a.— Henry v. State Bank it on the ground of duress," per (Iowa 1906), 107 N. W. 1034. Downey, J., in Bush v. Brown, 49 Massachusetts.— Bryant v. Peck & Ind. 573, 19 Am. Rep. 695. Whipple Co., 154 Mass. 460, 28 N. E. 678. 133 THREATETTED CEIMINAL PROSECUTION. [§ 112 strained illegally in the office of an attorney, who stated to her that her husband would be arrested on a charge of felony unless she ex- ecuted a certain mortgage and note, which she did to avoid his arrest, it was held that the defense of duress was good.*" And where a note was given by a sister because of threats of the plaintiff to prosecute her brother for an alleged felony it was held that recovery could be defeated on the ground of duress, though the threats were not made directly to the maker of the note, but to her brother, with the inten- tion that they should be communicated to her.*^ And where it ap- peared that notes were executed by a wife, who also turned over to the payee certain of her individual property in payment of her husband's debts to avoid a criminal prosecution against her husband, it was de- cided that such facts, which were both alleged and admitted, were sufficient to sustain a finding of duress.*^ In order to constitute duress in case of menace of imprisonment it has been decided that it must be unlawful imprisonment and that the party was put in fear and thereby induced to execute the note.^^ And in a case in Illinois it has been decided that: "Where the party making the threats is not, and is not represented to be, in any position, and has no means for car- rying out his threat other than one possessed by all members of the community, that is, where the liberty of the person against whom the threat is made is in no wise restrained and the threatener has made no complaint, has no warrant, and is not represented to have, and neither has or appears to have, at hand or within his control any means for carrying into execution his announced purpose, mere threats of arrest do not constitute duress."** "A contract made under threat in the the case of a threatened ar- of unlawful imprisonment, the rest for assault and battery on a fear induced by the threat be- warrant already issued, that a note ing the moving cause for its ex- obtained from one under the threat ecution, is a contract made under of lawful imprisonment and in sat- duress and its maker may avoid it," isfaction of the injury sustained, is per Stayton, C. J., in Morrison v. not subject to the defense of duress; Faulkner, 80 Tex. 128, 15 S. W. 797. Thorn v. Pinkham, 84 Me. 101, 24 '"First National Bank v. Bryan, Atl. 718, holding that where money 62 Iowa 42, 17 N. W. 165. was embezzled and a promissory "Schultz V. Catlin, 78 Wis. 611, note given in payment of the same 47 N. W. 946. on a threat of criminal prosecution " Delta County Bank v. McGrana- it is not void for duress. See, on han (Wash. 1905), 79 Pac. 796. same point as last, Catlin v. Hen- *' Alexander v. Pierce, 10 N. H. ton, 9 Wis. 476. Compare Henry v. 494. See Eddy v. Herrin, 5 Shep. State Bank (Iowa 1906), 107 N. W. (Me.) 338, 35 Am. Dec. 261, holding, 1034. "Youngs V. Sim, 41 III. App. 28, per Waterman, J. §§ 113, 114] DUEEsa. 134 § 113. Availability of as between the parties. — In an action on a bill or note it is a good defense, as between the parties, that the in- strument was executed under duress.*^ This rule has been applied where a note has been procured by an abuse of criminal process, such process having been used not for the punishment of the offender for an offense against the public, but to coerce him by threatened im- prisonment into the payment of a debt by giving the note in con- troversy.*^ It has also been applied in the. case of a note which has been obtained by the use of military force.*'^ It has been held, how- ever, that it is no defense that the note was given for the debt of the maker in order to procure his release from prison,*^ or for money embezzled for the maker, in pursuance of a threat to criminally prose- cute him,*^ or in pursuance of a declaration that he could not leave the state until he signed the note.^° And if the maker has received a valuable consideration for the note, duress will be no defense to an action thereon where there has been neither a return of nor an offer to return such consideration.^^ A note given under duress may be vali- dated by subsequent acts of ratification, and where it appears that it has been so ratified the maker will be precluded from setting up the defense of duress.^^ § 114. Same subject — Against subsequent parties. — A bona fide holder of a bill or note, having obtained the same before maturity and without notice, is not subject to the defense that it was obtained by duress. ^^ But upon proof that a note was executed under duress the burden is then cast upon the plaintiff to show that he is a bona *' Hatch V. Barrett, 34 Kan. 223, ^^Beath v. Chapoton, 115 Mich. 8 Pac. 129; Magoon v. Reber, 76 506, 73 N. W. 806. "Wis. 392, 45 N. W. 112. See Wood- '" Seymour v. Prescott, 69 Me. 376. ham V. Allen, 130 Cal. 194, 62 Pac. " City National Bank v. Kusworm, 398. 91 Wis. 166, 64 N. W. 843. *" Shenk v. Phelps, 6 111. App. 612; "Bartle v. Breniger, 37 Iowa 139. Phelps V. Zuschlag, 34 Tex. 371; ^' Hogan v. Moore, 48 Ga. 156; Schultz V. Catlin, 78 Wis. 611, 47 N. Peckham v. Hendrew, 76 Ind. 47; W. 946. O'Keefe v. Handy, 31 La. Ann. 832; *'Voiers v. Stout, 4 Bush (Ky.) Farmers' Bank of Grand Rapids v. 572. Butier. 48 Mich. 192, 1 N. W. 36; *** Bates V. Butler, 46 Me. 387; St. Mundy v. Whitmore, 15 Neb. 647, Albans Bank v. Dillon, 30 Vt. 122, 19 N. W. 694; Keller v. Schmidt, 73 Am. Dec. 295. 104 Wis. 596, 80 N. W. 935; Mack V. Prang, 104 Wis. 1, 79 N. W. 770. 135 AVAILABILITY AS BETWEEN" SUBSEQUENT PARTIES. [§ 111 fide holder.^* Again, in an action against an indorser it lias been decided that he cannot avail himself as a defense of the fact that the maker executed the note under duress, it being declared that the duress of a principal does not affect the free agency of the indorser.^''^ In other decisions, however, the rule is affirmed that in an action against a surety upon a bill or note he may avail himself of the fact that the paper was executed by his principal under duress.^*' In this connection it has been said by the court in an Indiana case : "There are reasons, which, to our minds are conclusive, why a surety should not be held bound upon a contract to which his principal has a valid defense, not of a personal character, but going to the contract itself as fraud, duress, want or failure of consideration, etc. If the surety is bound by such a contract one of two things must follow. The surety, having been compelled to pay the money due by the contract, must either have his action against his principal to recover the amount paid, or he must lose it. If the first alternative is to be adopted, and the surety may maintain an action against his principal to recover the money paid, then the principal will be compelled virtually to pay upon a contract to which he had complete defense. It is but a mockery to say that a man has a valid defense to a claim, and yet say that he must pay the amount due thereon to his surety, whom the law com- pels to pay to the creditor. On the other hand, if the surety, having been compelled to pay the money to the creditor, cannot recover it from his principal, he must lose it, and an equal injustice is done."^^ And in an action by the assig-nee of a non-negotiable note against the maker the defense of duress may be set up."* And where a note was executed by a married woman under duress which purported to charge her separate estate and contained a statement that the con- sideration was for the benefit of such estate, it was decided that in view of the circumstances under whicli the note was executed and the =* Clark V. Pease, 41 N. H. 414. holding that the defense of duress See Duncan v. Scott, 1 Camp. 100, was available in an action against holding that where the drawer of an indorser for the maker's accom- a bill of exchange executed the modation bj^ a holder who was same under duress, in an action guilty of the duress by means of against him by an indorsee the lat- which the note was obtained, ter must show that he gave some =° Osborn v. Robbins, 36 N. Y. 365. consideration therefor. " Per Biddle, J., in Coffelt v. Wise, °= Bowman v. Hiller, 130 Mass. 62 Ind. 451. 153, 39 Am. Rep. 442. Compare ^■* Butterfield v. Davenport, 84 Griffith V. Sitgreaves, 90 Pa. St. 161, Ind. 590. 115] 0nREas. 136 facts that the note was not given in the course of any separate business carried on by her, and that the consideration did not go to the benefit of her separate estate, the instrument could not be enforced against her even by a hona fide holder. ^^ A purchaser after maturity is also subject to this defense to the same extent as his indorsee.^^ § 115. Same subject — Parties with notice. — It is a good defense as against a transferee with notice that the note was procured from the maker by means of duress.*^'' But a surety who signs a note with notice of the duress of his principal cannot avail himself of this fact as de- fense to an action on the instrument.''^ ^'Loomis V. Ruck, 56 N. Y. 462. The court said in this case: "The law merchant which gives to the 6ona fide transferee of negotiable paper greater rights than those of the transferer has no application to this class of obligations. They are not recognized at law and we have been referred to no authority tend- ing to sustain the position, that the transferee of an obligation of a married woman obtained from her by fraud or duress, and against which she had a good defense, when in the hands of the original holder, can be enforced in eqviity out of her separate estate, simply because it has passed into the hands of a bona fide transferee. The rules applica- ble to commercial paper can not govern this case. It must be gov- erned by the rule of equity, which, in case of equal equities, and in the absence of sufficient grounds of es- toppel, give preference to the equity which is prior in point of time." Per Rappallo, J. °' Linton v. King, 4 Allen (Mass.) 562. '"Thompson v. Niggley, 53 Kan. 664, 35 Pac. 290, 26 L. R. A. 803; Osborn v. Robbins, 36 N. Y. 365, 4 Abb. Prac. N. S. 15. That the note was procured from the maker by threats of great bodily harm is a good defense against an assignee with notice. McGowen v. Bush, 17 Tex. 195. " Graham v. Marks, 98 Ga. 67, 25 S. E. 931. I CHAPTEE VI. FRAUD AND FRAUDULENT REPRESENTATIONS. Sec. 116. Rule as to fraud and fraudu- lent representations — Gener- ally. 117. "What constitutes a misrepre- sentation which is a defense. 118. Fraudulent concealment. 119. As against bona fide holder — Generally. 120. Same subject — Rule illustrated. 121. Same subject — Fraud of parti- cular persons. 122. False representations as to con- sideration. 123. Same subject — Bona fide holder. 124. Certified check— Effect of fraud — Bona fide holder. Sec. 125. Paper in fraud of creditors. 126. Fraudulent procurement of in- dorsement. 127. Fraud as to amount. 128. Fraud as to surety. 129. Same subject — Bona fide hold- ers. 130. Fraudulent transfer. 131. Same subject — By partner. 132. Same subject — By adminis- trator. 133. Availability of defense — Maker. 134. Same subject — Other parties. § 116. Rules as to fraud and fraudulent representations — Gener- ally. — Courts will always carefully scrutinize a contract and the sur- rounding circumstances in connection with its execution or considera- tion where it is alleged to have been procured by the fraud of the plaintiff or to which he was a party or had notice of. It is a general principle that courts will not allow one who has by fraud or deceit procured the execution of a contract to enforce the same against the one so induced to execute it and thus obtain an advantage or benefit by his fraudulent conduct. These principles apply in the case of com- mercial paper, and in an action between the parties fraud may be shown in defense thereto/ as it may also against a subsequent holder ^ Alabama. — Wyatt v. Ayers, 2 Port. (Ala.) 157. Connecticut. — Reynolds v. Bird, 1 Root (Conn.) 305. Georgia. — Farkas v. Monk, 119 Ga. 115, 46 S. E. 670. Illinois. — Sims v. Rice, 67 111. 88. loica. — Sullivan v. Collins, 18 Iowa 228. See Palo Alto Stock Farm v. Brooker (Iowa 1906), 108 N. W. 307. Kentucky. — Merchants' & Farm- ers' Bank v. Cleland, 25 Ky. Law Rep. 1169, 77 S. W. 176, 719. Massachusetts. — Bilafsky v. Con- veyancers' Title Ins. Co. (Mass. 1906), 78 N. E. 534. Michigan. — Roberts v. Sholes, 144 Mich. 215, 107 N. W. 904. Minnesota. — Schaller v. Borger, 47 Minn. 357, 50 N. W. 247. 137 116] FRAUD A^^D FRAUDULENT REPRESENTATIONS, who is not a hona fide holder,^ or who took the paper with notice of the fraud.^ And where prior to the maturity of a note a renewal note is given to the payee at the request of an innocent indorsee it has heen decided that, in an action by the former on the renewal note, fraud is a good defense.* So the fact that a person was induced to execute a note by false and fraudulent representations may be shown in defense to an action between the parties,^ or by a holder with notice.*' And it is available in defense to an action by one who, though he is a purchaser for value, is not shown to have bought the paper in the usual course of business or for full value. ^ And in an action against an indorser it may be shown that the plaintiff procured the indorse- ment to himself by means of fraud,® or that he was a privy to or par- ticipant in the fraud, and therefore had notice.^ A party may, how- ever, be precluded by waiver or estoppel from availing himself of the Missouri. — Carter v. McClintock, 29 Mo. 464. Xebraska. — Hauptman v. Pike (Neb.), 108 N. W. 163. New Yorfc.— Bergman v. Salmon, 79 Hun (N. Y.) 456, 29 N. Y. Supp. 968. OTiio.— Loffland v. Russell, Wright (Ohio) 438. See South Dakota.— Kirhy v. Ber- guin, 15 S. D. 44, 90 N. W. 856. Vermont.— KeWy v. Pember, 35 Vt. 183. Wisconsin. — Hodge v. Smith (Wis.) 110 N. W. 192; Knott v. Tidy- man, 86 Wis. 164, 56 N. W. 632. = Knott v. Tidyman, 86 Wis. 164, 56 N. W. 632. "" Indiana. — Irwin v. Guthrie, 28 Ind. App. 341, 62 N. B. 709. Mai7ie. — Nichols v. Baker, 75 Me. 334. Michigan. — Lenheim v. Fay, 27 Mich. 70. Missouri. — Fisk v. Collins. 9 Mo. 137. Nevada. — Swinney v. Patterson, 25 Nev. 411, 62 Pac. 1. * Sawyer v. Wiswell, 91 Mass. (9 Allen) 39; Adams v. Ashman, 203 Pa. St. 536, 53 Atl. 375. ^ California. — Wenzel v. Schultz, 78 Cal. 221, 20 Pac. 404. Illinois. — Knotts v. Preble, 50 111. 226, 99 Am. Dec. 514. Indiana. — Elsass v. Institute, 77 Ind. 72; Taylor v. Fletcher, 15 Ind. 80; Union Central Life Ins. Co. v. Huyck, 5 Ind. App. 474, 32 N. B. 580. Mississippi. — Hall v. Clofton, 56 Miss. 555. Missouri. — Live Stock Remedy Co. V. White, 90 Mo. App. 498. Neb7~aska. — Hauptman v. Pike (Neb.), 108 N. W. 163. New Jersey. — Mueller v. Buck (N. J. S. C. 1904), 58 Atl. 1092. See Vermont. — Wilbur v. Prior, 67 Vt. 508, 32 Atl. 474. Virginia. — Brown v. Rice's Admr., 26 Gratt. (Va.) 467. England. — Grew v. Bevan, 3 Starkie 134. House V. Martin, 125 Ga. 642, 54 S. E. 735. « Armstrong v. Cook, 30 Ind. 22; National Bank v. Mackey, 5 Kan. App. 437, 49 Pac. 324. ' Millard v. Barton, 13 R. I. 601, 43 Am. Rep. 51. «Shaw V. Stein, 79 Mich. 77, 44 N. W. 419; Nethercutt v. Hopkins, 38 Wash. 577, 80 Pac. 798. "Lenheim v. Fay, 27 Mich. 70. 139 WHAT CONSTITUTES MISREPRESENTATIOX. [§ 117 defense of fraud." These general rules have been applied in the case of a false representation that accommodation paper was business paper ;^^ and where a note was given in satisfaction of an injury sus- tained by the payee and the nature and extent of the injury was fraud- ulently exaggerated.^2 ^j^^j where the plaintiff had a joint interest with the payee of the note in the contract with the maker in connec- tion with which the note was given, it was held that the defense of fraud was available against him.^=^ But where a party seeks to avoid an instrument on the ground of fraud the defense will not be upheld where it appears that he was the principal party in the perpetration and that it is doubtful whether plaintiff had any knowledge thereof.^* And as between the parties to a bill or note there is no obligation on the defrauded party towards the one who defrauded him to use due diligence to discover the fraud. One who perpetrates a fraud cannot complain because his victim has confidence in him wliich a more vigilant person would not have.^^ The defense, however, that a note was obtained by fraud is held to be inconsistent with a plea of non est factum.^'^ § 117. What constitutes a misrepresentation which is a defense. A person cannot avail liimself as a defense to an action on a bill or note of a misrepresentation in reference to a matter which is wholly disconnected with the instrument. In order to render a false repre- sensation available as a defense it must be material, that is, of some- thing constituting an inducement or motive to the contract.^^ It must also be an assertion of a fact, a statement which is a mere ex- pression of an opinion being no defense.^^ And a person cannot sot »» Morgan v. -Nowlin, 126 Mich. "Price v. Winnebago National 105, 85 N. W. 468, holding that one Bank, 14 Okla. 268, 79 Pac. 105. who retains the consideration of a '=^ Smith v. McDonald (Mich, note cannot by setting up the de- 1905), 103 N. W. 738. fense of fraud defeat all recovery " Tenney v. Turner (Mo. App. on the instrument; examine Grif- 1905), 86 S. W. 506. fiths V. Parry, 16 Wis. 218. "Ingram v. Jordan, 55 Ga. 356; "Webb v. Odell, 49 N. Y. 583. See Dahlman v. Antes (Iowa 1906), 109 Trask v. Wingate, 63 N. H. 474, 3 N. W. 784; Hodges v. Torrey, 28 Mo. Atl. 926, holding that in an action 99; Jackson v. Stockbridge, 29 Tex. by an indorsee it is no defense that 394, 94 Am. Dec. 290. See Blee v. the note was for the accommodation Giltinan (Pa.), 12 Alt. 479. of the payee and that there was no " Taylor v. Ford, 131 Cal. 440, 63 consideration. Pac. 770, holding that a representa- " Thompson v. Hinds, 67 Me. 177. tion as to the value of book ac- " Kelly V. Pember, 35 Vt. 183. counts in the case of a sale of a business and stock is an expression § 118] FRAUD AND FRAUDULENT REPRESENTATIONS, 140 up in defense to an action on a bill or note, the fact that there was a misrepresentation as to the legal effect of the instrument.^® Nor can one avail himself of a misrepresentation as a defense where it was of such an absurd character that it cannot be regarded as fraud.^* So it has been held no defense to an action on a note that the maker was induced to sign it by a false representation as to the legal effect of an order of arrest,^ ^ or that it was necessary for the maker to sign the note to release her dower in real estate which was conveyed as security for certain notes.^^ Again it has been decided that a person cannot defeat recovery on a note on the ground that he was induced to sign it by a misrepresentation as to his liability thereon.^^ The fact, however, that the execution of a bill of exchange was procured by false representations that it was only an ordinary note on which statement the party relied, has been held to constitute a fraud on the latter which entitled him to relief as against an indorsee who did not pay value. 2* Again it is determined that recovery cannot be defeated on the ground of a false representation unless: damage has been sus- tained.-^ § 118. Traiidulent concealment. — One who induces another to af- fix his signature to commercial paper by the fraudulent concealment of a material fact connot enforce such instrument against the latter. This will be a good defense as against the one guilty of such fraudu- of opinion; Garber v. Bressee, 96 is not a false representation, in the Va. 644, 32 S. B. 39, holding that a legal acceptation of the term, and representation by an agent, in the cannot be made the subject of either case of a note given for a premium, action or defense." Court Valhalla, that there would be no trouble in Foresters of America, v. Olson, 14 getting the cash surrender value of Colo. App. 243, 59 Pac. 883, per a policy held by the maker, was an Thomson, J. expression of opinion. Consumers' =" Webb v. Moseley, 30 Tex. Civ. Brewing Co. v. Tobin, 19 App. D. App. 311, 70 S. W. 349. C. 353; Black v. Epstein, 93 Mo. =' Reed v. Sidener, 32 Ind. 373. App. 459, 67 S. W. 736. " Crofut v. Aldrich, 54 111. App. "Juggar V. Winslow, 30 Minn. 541. 263. "A representation that an in- "^ Shropshire v. Kennedy, 84 Ind. Btrument is valid or that a party 111; Grocers' Bank v. Murphy, 9 to it is legally bound by its terms Daly (N. Y.) 510. But see Wilbur and conditions, is not the statement v. Prior, 67 Vt. 508, 32 Atl. 474. of a fact. It is an expression of "Ross v. Drinkard, 35 Ala. 434. opinion upon a question of law. ^ Bomar v. Roser, 131 Ala. 215, 31 And, while it may be erroneous, it So. 430. 141 DEFENSE AS AGAINST BONA FIDE HOLDERS. [§ 119 lent conduct or a subsequent holder with notice.^® So where the payee of a note had knowledge, at the time of its execution, of a de- fect in the article for which it was given, but fraudulently concealed such knowledge, it was decided that there could be no recovery. ^^ An omission, however, by the payee of a note to state all the facts will not necessarily defeat an action by him against the maker where the latter has knowledge of such facts from other sources.^* § 119. As against bona fide holders — Generally. — The liability of the maker or acceptor of a negotiable instrument cannot be varied from that which is apparent from the instrument itself, by setting up, in an action by one who is a bona fide holder for value, before maturity and without notice, the fact that the paper was procured from him by fraud.^^ A person is held to be a bona fide holder within the appli- '« Conger v. Bean, 58 Iowa 321, 12 N. W. 284; Brown v. Montgomery, 20 N. Y. 287; March v. Bank, 4 Hun (N. T.) 466. "Sides V. Hilleary, 6 Har. & J. (Md.) 86. ^^ Sullivan v. Collins, 18 Iowa 228; Sachleben v, Hentze, 117 Mo. 520, 24 S. W. 54. '^Alabama. — Bomar v. Rosser, 123 Ala. 641, 26 So. 510; Saltmarsh v. Tuthill, 13 Ala. 390; Barney v. Earle, 13 Ala. 106. California. — McMahon v. Thomas (Cal.), 39 Pac. 783. Colorado. — King v. Mechlenburg, 17 Colo. App. 312, 68 Pac. 984. Delaware. — McCarty v. Lockwood, 6 Houst. (Del.) 451; Bush v. Pack- ard, 3 Har. (Del.) 385. District of Columbia. — Mason v. Jones, 7 App. D. C. 247. Georgia. — Walters v. Palmer, 110 Ga. 776, 36 S. E. 79; Merritt v. Bag- well, 70 Ga. 578; Robinson v. Vason, 37 Ga. 66. Illinois. — Culver v. Hide & Leather Bank, 78 111. 626 ; Taylor v. Thomp- son, 3 111. App. 109. Indiana. — Brickley v. Edwards, 131 Ind. 3, 30 N. E. 708; Palmer v. Poor, 121 Ind. 135, 22 N. E. 984, 6 L. R. A. 469; First National Bank V. Latton, 67 Ind. 256; Riley v. Schawacker, 50 Ind. 592. Iowa. — Hawkins v. Wilson, 71 Iowa 761, 32 N. W. 416; Fayette County Savings Bank v. Steffes, 54 Iowa 214, 6 N. W. 267; Loomis v. Met- calf, 30 Iowa 382; Bridge v. Living- ston, 11 Iowa 57. Kansas. — Draper v. Cowles, 27 Kan. 484. Kentucky. — Early v. McCarthy, 2 Dana (Ky.) 414. Louisiana. — Clark v. Stackhouse, 2 Mart. (O. S. La.) 319. Maine. — Roberts v. Lane, 64 Me. 108, 18 Am. Rep. 242; Wait v. Chand- ler, 63 Me. 257; Fletcher v. Gusbie, 32 Me. 587. Maryland. — Black v. First Na- tional Bank, 96 Md, 399, 54 Atl. 88; Crampton v. Perkins, 65 Md. 22, 3 Atl. 300; Davis v. West Sara- toga Bldg. Union, 32 Md. 285. Massachusetts. — Fort Dearborn National Bank v. Carter, 152 Mass. 34, 25 S. E. 38; Robertson v. Cole- man, 141 Mass. 231, 4 N. E. 619, 55 Am. Rep. 471; Thurston v. Mc- Keown, 6 Mass. 428. § 119] FRAUD A^TD FRAUDULENT REPRESENTATIONS. 142 cation of the rule, though he may have taken the paper under sus- picious circumstances,^'' or may have paid less than its face value.^'- Michigan. — Davis v. Seely, 71 Mich. 209, 38 N. W. 901. Minnesota. — Rosemond v. Graham, 54 Minn. 323, 56 N. W. 38, 40 Am. St. R. 336. Missouri. — Famous Shoe and Clothing Co. v. Crosswhite, 124 Mo. 34, 27 S. W. 397, 46 Am. St. R. 424, 20 L. R. A. 568; Corby v. But- ler, 55 Mo. 398; Jaccard v. Shands, 27 Mo. 440; Clark v. Porter, 90 Mo. App. 143; Emmert v. Meyer, 65 Mo. App. 609. New Hampshire. — Paige v. Chap- man, 58 N. H. 333; Perkins v. Chal- lis, 1 N. H. 254. New Jersey. — Second National Bank v. Hewitt, 59 N. J. L. 57, 34 Atl. 988. New York. — Clothier v. Adriance, 51 N. Y. 322; Merchants' Loan Co. v. Bank of Metropolis, 7 Daly (N. Y.) 137. Ohio. — Gano v. Samuel, 14 Ohio 592. Pennsylvania. — Phelan v. Moss, 67 Pa. St. 59, 5 Am. Rep. 402; Gray v. Bank, 29 Pa. St. 365; Taylor v. Gitt, 10 Pa. St. 428. South Carolina. — Sims v. Lyles, 1 Hill. (S. C.) 39, 26 Am. Dec. 155. Tennessee. — Holeman v. Hobson, 27 Tenn. (8 Humph.) 127. Texas. — Mulberger v. Morgan (Tex. Civ. App.), 34 S. W. 148. Vermont. — Powers v. Ball, 27 Vt. 662. Washington. — Jamieson v. Heim (Wash.), 86 Pac. 165. Federal. — Goodman v. Simonds, 20 How. (U. S.) 343; O'Rourke v. Mahl, 109 Fed. 276; Seymour v. Mc- Donal Lumber Co., 58 Fed. 957, 7 C. C. A. 593, 16 U. S. App. 245; White V. How, 3 McLean (U. S.) 291, Fed. Cas. No. 17549. Delaware. — "When a third party acquires the ownership of a promis- sory note before maturity, in good faith and for a valuable consider- ation, he is regarded in law as an innocent holder for value, and en- tirely unaffected by any fraud that may have existed in the incep- tion of the note on the part of the person to whom the note was given." Journal Printing Co. v. Maxwell, 1 Penn. (Del.) 511, 513, 43 Atl. 615, per Pennewill, J., in charging the jury. Kentucky. — "To assure credit and circulation to bills of exchange, as a species of useful currency, the law merchant in most cases forbids a party to such a bill, when sued by a bona fide holder for a valuable con- sideration without notice, to plead either fraud or want of considera- tion as between himself and the party with whom he directly con- tracted." Bement v. McClaren, 1 B. Mon. (Ky.) 296, 298, per Robertson, C. J. Maine. — "The rule is firmly estab- lished that the holder of negotiable paper, taking it in the usual course of business for a sufficient consider- ation before its maturity, and ignor- ant of any facts impeaching its va- lidity, can recover against the maker." Burrill v. Parsons, 71 Me. 282, per Appleton, C. J. See also Waddell v. Hanover Nat. Bank, 48 Misc. R. (N. Y.) 578, 67 N. Y. Supp. 305. ^® Brewer v. Slater, 18 App. (D. C.) 48; Smith v. Livingston, 111 Mass. 342; Wilson v. Ridler, 92 Mo. App. 335; Second National Bank v. Morgan, 165 Pa. St. 199, 30 Atl. 957, 44 Am. St. R. 652. '^Lay V. Wissman, 36 Iowa 305; Sully V. Goldsmith, 32 Iowa 397; Williams v. Huntington, 68 Md. 590, 13 Atl. 336, 6 Am. St. R. 477. il 143 DEFENSE AS AGAINST BONA FIDE HOLDERS. [§ 119 And one who takes a note as pledgee without any notice of fraud or misrepresentation inducing its execution is to be regarded as a bona ■fide holder for value.^^ And an injunction will not lie to restrain pro- ceedings by such a holder of a note on the ground of fraudulent repre- sentations by the payee to the maker.^^ If, however, it is established that the execution of the paper was procured by fraud on the part of the payee, the burden is then cast on the plaintiff to show that he is a hona fide holder as a prima facie good defense is presented by proof of such fraud.^* So where it appears that a check was obtained by the payee through fraud, in an action by his indorsee, it has been declared that the burden rests on him to show that he took the check in the usual course of business, for a valuable consideration and without knowledge of facts or circumstances which impeached its validity as between the original parties and without knowledge of facts or cir- cumstances that would lead a careful and prudent man to suspect that the check was invalid as between the antecedent parties.^^ If the paper is non-negotiable, it is a good defense to an action thereon that it was procured by false representations, even though it is in the hands of a hona fide holder.^^ Nor can a hona fide holder recover upon an instrument where the fraud is patent upon its face.^^ And it has been decided that it may be shown by the assignee of a note payable to order and not to bearer that it was procured by false and fraudulent representations.^^ Again, if a purchaser has notice of the fraud prior See Holcomb v. Wyckoff, 35 N. J. L. Jowa.— "The rule of the author- 35, 10 Am. Rep. 219, holding that In ities unquestionably is that when such a case there can only be a re- the defense to a note is fraud in its covery of the sum paid. inception, and such defense is sup- "Watzlavzick v. Oppenheimer ported by evidence, the onus is (Tex. Civ. App. 1905), 85 S. W. 854. thereby cast upon the holder, who *^ Dougherty v. Scudder, 17 N. J. brings the action, to show that he Eq. 248. gave value for it, and that he is a '^ Alabama.— Alabama National ^^na fide purchaser before matur- Bank v. Halsey, 109 Ala. 196, 19 So. ity." Woodward v. Rogers, 31 Iowa 522. 342, per Beck, J. CaZifornta.— Ames v. Crosier, 101 '= Capital Savings Bank & T. Co. Cal. 260, 35 Pac. 873. v. Montpelier Sav. Bank & T. Co. il/tssown.— Clifford Banking Co. (^t. 1905), 59 Atl. 827. V. Donovan Commission Co., 195 '"Wickham v. Grant, 28 Kan. 517; Mo. 262, 94 S. W. 527. McLaughlin v. Brady, 63 S. C. 433, Montana. — Herrington v. Butte & 41 S. E. 523. B. Min. Co., 27 Mont. 1, 69 Pac. 102. ^' Claflin v. Farmers' & Citizens' New Yorfc.— Consolidation Na- Bank, 25 N. Y. 293. tional Bank v. Kirkland, 99 App. =>" Kennedy v. Jones (Miss.), 29 Div. 121, 91 N. Y. Supp. 353, decided So. 819. under Laws 1897, p. 703, c. 612. § 120] FRAUD AND FRAUDULENT REPRESENTATIONS. 144 to the payment by him of the full consideration, he can only recover to the extent of the payments made by him before he received such notice, and where he makes no payments until after he received notice he will not be regarded as a bona fide holder.^^ § 120. Same subject — Rule illustrated. — The rule stated in the preceding section as to the right of a bona fide holder to recover, though there has been fraud in the procuring of the note, has been ap- plied where a note was given in payment of an order for goods and the order turned out to be fraudulent;*" where it was made for a larger amount than was stated to the maker, whose eyesight was impaired and who was in a state of extreme physical weakness ;*"* where the owner has been deprived of the instrument by fraud and it had been deposited with the holder aa collateral ;" where there has been fraud or mistake in the adjustment of the account for which the note was given f^ where the consideration of the note was a sale of goods by an insolvent debtor in fraud of the insolvent laws ;*3 where there was a misrepresentation as to the quality of the goods sold, in payment for which the note was given, and the maker of the paper had ample opportunity to examine them for himself ;** and where a party was induced to sign a note as a co-maker on the misrepresentation that a certain other party had signed the same, when in fact the signature of the latter person was forged.*^ And where the consideration for a note was a worthless patent right, it was decided that the fact that on the margin of the note were written the words "this note is given for a patent right" did not authorize the jury to infer that the indorser had notice or knowl- edge that the patent was of no value.*« Negotiable warehouse re- ceipts are also subject to the same rule and the title of a bona fide holder is not affected by fraud on the part of the original holder to- 2'Crandall v. Vicery, 45 Barb. (N. Y.) 156; Dresser v. Construction Co., 93 U. S. 92. See Loftin v. Hill, 131 N. C. 105, 42 S. E. 548; Camp- bell v. Brown, 100 Tenn. 245, 48 S. W. 970. " Hoats V. Aschbach, 160 Pa. St. 6, 28 Atl. 437. *"* McSparron v. Neeley, 91 Pa. St. 17. "Bealle v. Bank, 57 Ga. 274; First National Bank v. Adam, 138 111. 483, 28 N. E. 955. ^Lanier v. Union Mortgage Bank- ing & T. Co., 64 Ark. 39, 40 S. W. 466. " Potter V. Belden, 105 Mass. 11. ^Farrell v. Lovell, 68 Me. 326, 28 Am. Rep. 59. *=>Gridley v. Bane, 57 111. 529. "Hereth v. Merchants' National Bank, 34 Ind. 380. 145 FRAUD OF PARTICULAR PERSONS. . [§ 121 ward the warehouseman.*^ And coupon bonds, payable to bearer, and issued under competent legislative authority, can be transferred by delivery, and the title of a bona fide holder is not affected by the fact that he received them from one who obtained possession of them by fraud.*^ Nor will fraud and irregularity touching the issue of such bonds and their disposal be admissible to affect the right of a bona fide holder to coupons detached therefrom.*^ So bank notes, though fraud- ulently put into circulation, become the property of one who gives valuable consideration therefor without notice of the fraud.^° Again, it has been decided that a bona fide holder of a note is not subject to the defense that the maker was induced to sign the same by false representations as to the character of the paper he was signing.^^ In this latter class of cases, however, there are several decisions which hold that it is a good defense against a bona fide holder providing the maker has not been guilty of negligence in signing the instrument.^^ § 121. Same subject — Fraud of particular persons. — One who oe- l cupies the position of a bona fide holder of a bill or note is not sub- ject to the defense, in an action by him thereon, that there has been fraud on the part of a maker toward his co-makers ;^^ or of a princi- pal toward his guarantor f* or of a surety upon the maker in an action against the latter ;^^ or of a corporate officer toward the corporation "Early Times Distilling Co. v. Douglas v. Matting, 29 Iowa 498, 4 Earle, 21 Ky. Law Rep. 1709, 56 S. Am. Rep. 238; Chapman v. Rose, 56 W. 13. See Fletcher v. Great West- N. Y. 137. ern Elevator Co., 12 S. D. 643, 82 ^= Hewitt v. Jones, 72 111. 218; N. W. 184, holding that a bona fide Hubbard v. Rankin, 71 111. 129; holder of negotiable warehouse re- Sims v. Rice, 67 111. 88; First Na- ceipts is not affected by the fact tional Bank v. Deal, 55 Mich. 592, that, the agent of the warehouse- 22 N. W. 53. man issued the receipts for grain '^^Gridley v. Bane, 57 111. 529. which had not been received. " McWilliams v. Mason, 31 N. Y. ** Fifth Ward Savings Bank v. 294; Rothermal v. Hughes, 134 Pa. First National Bank. 48 N. J. L. St. 510, 19 Atl. 677, holding that a 513, 7 Atl. 318. note is not invalidated by the fact " Macon Co. v. Shores, 97 U. S. that the principal debtor or maker 272. secured the signatures of the sure- "'' Robinson v. Bank, 18 Ga. 65; ties by fraud or fraudulent repre- White V. Howe, 3 McLean (U. S.) sentations. 291, Fed. Cas. No. 17549. See Solo- ^^ First National Bank v. Fitts, 67 mans v. Bank, 13 East 135. Vt. 57, 30 Atl. 697. "Kimble v. Christie, 55 Ind. 140; Joyce Defenses — 10. 121] FRAUD AND FRAUDULENT REPRESENTATIONS. 14G which he represents;^® or of a partner toward his firm;^^ or of one who holds the paper in trust for another ;^^ or who holds or obtains it for some temporary or particular purpose f^ or who holds the paper '^ Grand Rapids & I. R. Co. v. Sanders, 17 Hun (N. Y.) 552, so holding In the case of negotiable bonds put in the hands of the presi- dent of a corporation with full power and authority to dispose of and negotiate them, where he used them as collateral for personal loans and they were subsequently transferred to the plaintiff, who was a bona fide holder. See also, Wormer v. Agricultural Works, 50 Iowa 262; Pittsburg Railway Co. v. Lynde, 55 Ohio St. 23, 44 N. E. 596; Long Island L. & T. Co. v. Colum- bus C. & I. C. R. Co., 65 Fed. 455. But where a corporation has no power to accept a draft it cannot be bound by the fraudulent act of one of its officers in accepting such pa- per, even to an innocent holder. Thus it has been said: "Corpora- tions are not bound by the abuse of its officers when such act of abuse is wholly and clearly outside the field of the corporation's power. Neither the president nor the di- rectory of a corporation can do such acts as the corporation itself has no power to do. The law of estoppel does not enlarge corporate powers and in consequence corporate liabil- ity. Where the powers of the cor- poration stop, the powers of its of- ficers also stop, and that point of limitation the public are bound at their peril to know." Towle v. American Bldg. L. & I. Co., 78 Fed. 688, 689, per Grosscup, D. J. " Barber v. Van Horn, 54 Kan. 33, 36 Pac. 1070, holding that, where a partnership executed a firm note for money borrowed and one of the partners drew money to pay the same at maturity and entered it on the books as paid, but appropriated the money and renewed the note, that the fraudulent conduct of the partner toward the firm was no de- fense against a holder for value, be- fore maturity and without notice; Albietz V. Hellon, 37 Pa. St. 367; Rogers v. Batchelor, 12 Pet. (U. S.) 221. See Henderson v. Anderson, 3 How. (U. S.) 73. =^Reid V. Bank, 70 Ala. 199; Ged- des V. Blackmore, 132 Ind. 551, 32 N. E. 567; Thompson v. Bank, 113 N. Y. 325, 21 N. E. 57. Where bonds payable to bearer are deposited as collateral with a bona fide holder he will be protected in his title even as against the true owner un- til he has been repaid or he realizes sufficient thereon to repay him. Bealle v. Bank, 57 Ga. 274. ^^ First National Bank v. Adam, 138 111. 483, 28 N. E. 955, holding where notes pledged with a bank were returned to the pledgor to be sold by him and the proceeds ap- plied on his indebtedness and he pledged them as collateral with an- other creditor before maturity and without notice, that the latter was protected in his title as against the bank; Stoner v. Brown, 18 Ind. 464, holding that where a payee, after pledging a note to another without indorsement, subsequently obtained it from the pledgee for a pretended temporary purpose and assigned the same for a valuable consideration to a bona fide purchaser, the latter may recover, as he has a legal title against all persons. 147 FALSE KEPRESENTATIONS AS TO CONSIDERATION. [§ 122 as agent for another and fraudulently disposes of the same in viola- tion of his instructions.®" So the fact that an agent, to whom the paper has been entrusted for collection, and who is the apparent owner thereof, has acted in fraud of his principal and transferred the same to another, who occupies the position of a hona fide holder, will bo no defense to an action thereon by the latter.''^ And a similar rule applies where a note has been given to an agent for the purpose of having it discounted and he has fraudulently negotiated the same in violation of his instructions.*'^ And fraud of the pledgee of negotiable paper in transferring the same is no defense to an action by a bona fide holder.®^ Nor can it be shown against such a holder that securities, which have been pledged as collateral for the note have been fraudulently trans- ferred by the payee.*''* § 122. False representations as to consideration. — False repre- sentations affecting the consideration may be shown in defense to an action between the original parties to a bill or note/^ or by a holder ^"^ Silverman v. Bulloc, 98 111. 11; Murrell v. Jones, 40 Miss. 565. See Dovey's Appeal, 97 Pa. St. 153. ^^Wyman v. Bank, 5 Colo. 30, 40 Am. Rep. 133; Pond v. Agricultural Works, 50 Iowa 596; Bank of New York V. Muskingum Branch of Bank of Ohio, 29 N. Y. 619. See Lowndes V. Anderson, 13 East 130. *^ Davis V. Building Union, 32 Md. 285; Gwynn v. Lee, 9 Gill (Md.) 137; Hanks v. Dunlap, 10 Rich. Eq. (S. C.) 139; Bank of Pittsburgh v. Neal, 22 How. (U. S.) 96. See Murrell v. Jones, 40 Miss. 565. «* Bancroft v. McKnight, 11 Rich. L. (S. C.) 663. **Kiel V. Reay, 50 Cal. 61. "^ Alabama. — Alabama National Bank v. Halsey, 109 Ala. 196, 19 So. 522. Georgia. — Carithers v. Levy, 111 Ga. 740, 36 S. E. 958. Illinois. — Conkling v. Vail, 31 111. 166. Indiana. — Cross v. Herr, 96 Ind. 96. Kansas. — Snyder v. Hargue, 26 Kan. 416. Missouri. — Beall v. January, 62 Mo. 434. Montana. — First National Bank v. Howe, 1 Mont. 604. Neiv York. — Beauford v. Patter- son, 63 How. Prac. (N. Y.) 81. Vermont. — Still v. Snow, 66 Vt. 277, 29 Atl. 250. See Connecticut. — Barkhamsted v. Case, 5 Conn. 528. New York. — Jones v. Dana, 24 Barb. (N. Y.) 395. Texas. — Breckenridge v. Berrier, 2 Posey Unrep. Cas. (Tex.) 324. Where a note was given to a bank it was held that fraudulent represent- ations could be set up as well as a defense to an action by the receiver of the bank as against the bank it- self. Connecticut. — Litchfield Bank v, Peck. 29 Conn. 384. 122] FRAUD AND FRAUDULENT REPRESENTATIONS. 148 with notice/" or by an indorsee who is not a holder for value.^^ So it may be shown in defense to an action by a payee of a note, or a holder with notice that the defendant was induced to sign the same by false representations as to the value and character of the property for which the note was given/^ or by fraudulent pretense of selling goods to be delivered in the future, but with no intention to actually deliver them."^ But a misrepresentation as to the quality or quantity of the property in payment of which a note was given will not operate as a complete defense to an action thereon where the plaintiff has not rescinded or offered to reconvey but still retains possession thereof.^'* Again, mere exaggeration will not constitute such fraud as will be a de- fense to an action on a note." If the note is non-negotiable fraudu- lent representations will be defense thereto even in an action by a purchaser for a valuable consideration.^ ^ j^t^^ likewise one who has taken a note without due indorsement will be subject to such a de- fense." It is essential in order to render a representation available «« Alabama National Bank v. Hal- sey, 109 Ala. 196, 19 So. 522; Russ Lumber Co. v. Muscupiabe Land & W. Co., 120 Cal. 521, 52 Pac. 993; Fleming v. Greene, 48 Kan. 646, 30 Pac. 11; Nichols v. Baker, 75 Me. 334. "Hawley v. Hirsch, 2 Woodw. Dec. (Pa.) 158. ^ Carithers v. Levy, 111 Ga. 740, 36 S. E. 958. See Keller v. Vowell, 17 Ark. 445. "^ Nichols v. Baker, 75 Me. 334. '" Morgan v. Nowlin, 126 Mich. 105, 85 N. W. 468; Soper v. St. Regis Paper Co., 38 Misc. (N. Y.) 294, 77 N. Y. Supp. 896. See Esk- ridge v. Barnwell, 106 Ga. 587, 32 S. E. 635; Harlan v. Reid, 3 Ham, (Ohio) 285, 17 Am. Dec. 594. " Dawson v. Graham, 48 Iowa 378, so holding in the case of exaggera- tion as to the amount of mineral de- posits on land in payment for which the note was given. "Wickham v. Grant, 28 Kan. 517. "Goshen National Bank v. Bank of Bingham, 118 N. Y. 349, 23 N. B. 180, 16 Am. St. R. 765, 7 L. R. A. 595. The court said in this case: "It is too well settled by authority, both in England and in this coun- try, to permit of questioning, that the purchaser of a draft, or check, who obtains title without an in- dorsement by the payee, holds it subject to all equities and defenses existing between the original par- ties, even though he has paid full consideration, without notice of the existence of such equities. The reasoning on which this rule is founded may be briefly stated as follows: The general rule is that no one can transfer a better title than he possesses. An exception arises out of the rule of the law merchant, as to negotiable instru- ments. It is founded on the com- mercial policy of sustaining the credit of commercial paper. Being treated as currency in commercial transactions, such instruments are subject to the same rule as money. If transferred by indorsement for value, in good faith and before maturity, they become available in the hands of the holder notwith- 149 FALSE KEPEESENTATIONS AS TO CONSIDERATION. [§ 122 as a defense not only that it be false but also that it was known to be such to the party making it at the time he made it, and that the one to whom it was made did not have the same opportunity open to him to obtain knowledge in regard to the consideration as was possessed by the one making itJ* So if the maker of a note had the opportunity of inspecting land, in payment of which the note was given, and failed to do so, fraudulent representations in reference to the land will be no defense to an action on the note, where an inspection would have revealed their falsity.'^ ^ And representations that certain improve- standing the existence of equities, and defenses which would have ren- dered them unavailable in the hands of a prior holder. The rule is only applicable to negotiable instruments which are negotiated according to the law merchant. When, as in this case, such an instrument is trans- ferred, but without an indorsement, it is treated as a chose in action assigned to the purchaser. The as- signee acquires all the title of the assignor and may maintain an ac- tion thereon in his own name. And like other choses in action it is subject to all the equities and de- fenses existing in favor of the maker or acceptor against the pre- vious holder. Evidence of an in- tention on the part of the payee to indorse does not aid the plaintiff. It is the act of indorsement, not the intention, which negotiates the in- strument, and it cannot be said that the intent constitutes the act." Per Parker, J. "Journal Printing Co. v. Max- well, 1 Penn. (Del.) 511, 43 Atl. 615, from which we quote as follows: "A mere affirmation or declaration as to the character of the property which is the consideration for the note, which is in fact untrue, is not sufficient in law to establish fraud, but the representation must have been false and known by the party making it to be false at the time he made it. And if the party who buys the property relies upon the repre- sentations and advice of some one other than the seller, or upon an ex- amination or investigation made by himself, or made by some one he procured to do it for him, or if the means and opportunity of the pur- chaser of acquiring knowledge of the property bought were equal to those of the seller, the representa- tion made by the seller would be no defense." Per Pennewill, J., in charge to jury. "Harwell v. Martin, 115 Ga. 156, 41 S. E. 686. The court said in this case: "Prom the allegations of this plea it will appear that the defend- ant chose to rely upon the repre- sentations made by Harwell & Rog- ers respecting the quantity and character of the timber upon the tract of land containing twelve hun- dred acres. It is alleged that these representations were false and fraudulent and that defendant was injured by relying and acting upon the same. The defect in the plea is that it did not disclose any emer- gency or condition authorizing the defendant to rely upon those repre- sentations without making for him- self an examination of the premises. If he had a reasonable opportunity to do this and failed to avail him- self thereof, he is not, from a legal standpoint, entitled to complain of 123] FRAUD AND FRAUDULENT REPRESENTATIONS. 150 ments were to be made near the land purchased and for which the note was given have been held no defense unless it appear that the pur- chaser has, and could acquire, no actual knowledge upon the subject." § 123. Same subject — Bona fide holder. — One who is a hona fde holder of a note, before maturity and without notice, will not be sub- ject to the defense of fraudulent representations afEecting the con- sideration for which the note was given." So an indorser cannot set up the defense of fraudulent representations affecting the considera- tion for his indorsement, in an action by a lona fide holder.'^ And a like rule prevails in the case of a guarantor," and of an acceptor of a bill of exchange.®" 'VMiere, however, it is established by the evidence the deception whicli he alleges was practised upon him. The allega- tions of the plea do not sufficiently show either that the defendant had no such opportunity, or that he was by the fraud or deceit of Harwell or Rogers prevented from thoroughly examining the timber upon the twelve hundred acres." Per Lump- kin, P. J. '" Clark v. Tanner, 100 Ky. 275, 38 S. W. 11. " California. — Russ Lumber Co. v. Muscupiape Land & W. Co., 120 Cal. 521, 52 Pac. 995. Connecticut. — Bissell v. Dicker- son, 64 Conn. 61, 29 Atl. 226; Ross V. Webster, 63 Conn. 64, 26 Atl. 476; Rowland v. Fowler, 47 Conn. 347. Geoj-firm.— Taylor v. Gribb, 100 Ga. 94, 26 S. E. 468; Meritt v. Bagwell, 70 Ga. 578. Indiana. — Ruddell v. Dillman, 73 Ind. 518, 38 Am. Rep. 152; Woollen V. Whitacre, 73 Ind. 198; Strough v. Gear, 48 Ind. 100. Iowa. — Loomis v. Metcalf, 30 Iowa 382. Massachusetts. — Bill v. Stewart, 156 Mass. 508, 31 N. E. 386. Michigan. — Wright v. Irwin, 33 Mich. 32. Missouri. — Fitzgerald v. Barker, 96 Mo. 661, 10 S. W. 45, 9 Am. St. R. 375. Nebraska. — Cannon v. Canfield, 11 Neb. 506, 9 N. W. 693. New York. — Heuertematte v. Mor- ris, 101 N. Y. 63, 4 N. E. 1, 54 Am. Rep. 657. Pennsylvania. — McSparran v. Nee- ley, 91 Pa. St. 17; Heist v. Hart, 73 Pa. St. 286. Federal. — Doane v. King, 30 Fed. 106. See Indiana. — Moore v. Moore, 112 Ind. 149, 13 N. E. 673, 2 Am. St. R. 170. Kansas. — Converse v. Bartels (Kan.), 46 Pac. Wisconsin. — Andrews v. Hart, 17 Wis. 297. '^Humphrey v. Clark, 27 Conn. 381. "Mc Williams v. Mason, 31 N. Y. 294, aff'g 1 Rob. 576. ^ Morrison v. Farmers' & Mer- chants' Bank, 9 Okla. 697, 60 Pac. 273. It was said by the court in this case: "It is a well settled rule of law that an acceptor of a bill of exchange will not be permitted to vary his liability from that which is apparent upon the face of the bill by setting up against bona fide hold- 151 CERTIFIED CHECK — EFFECT OF FEAUD BOXA FIDE HOLDER. [§ 124 that the payee of a note procured the same by such a representation, the burden then rests on the holder of the instrument to show that lie is a hona -fide holder.^^ § 124. Certified check — Effect of fraud — Bona fide holder. — The fact that fal'se representations were made by the drawer of a check as to his solvency to a bank in order to induce it to certify such check, which it does in consequence of such representations, will be no de- fense to an action thereon by one who has purchased the same for value, before dishonor, and without any notice of such fraudulent conduct.^^ And where a bank certified a check and the drawer, finding he had been defrauded, requested the bank not to pay the same and when it was presented for payment the bank wrote on it '^payment stopped" and returned it to the holder, who subsequently erased these words so that it was not noticeable, affixed a revenue stamp over the erasure, and transferred it to a tona -fide holder, the title of the latter was held good.^^ Where, however, it is apparent upon the face of a certified check that the acceptance was a fraud, a holder takes it with notice of such fraud and he cannot be said to be a hona fide holder. In such a case, therefore, he cannot recover thereon from the bank.^'* ers for value, who took the bill be- fore maturity, statements made by the drawers to the drawees where- by they were induced to accept the bill, and we have been unable to find that any distinction is made in this respect between holders of bills who took them before acceptance and those who took them after- wards." Per Burford, C. J. " David V. Merchants' National Bank, 103 Ky. 586, 45 S. W. 878. '^Bank of the Republic v. Baxter, 31 Vt. 101. See Justh v. National Bank of Commonwealth, 56 N. Y. 478. *' Nassau Bank v. Broadway Bank, 54 Barb. (N. Y.) 236. ^^Claflin V. Farmers' & Citizens' Bank, 25 N. Y. 293. The court said in this case: "A hona fide holder of commercial paper must receive the same in the usual course of busi- ness, for value, and without any no- tice of facts tending to impeach the character or validity of the paper as between the original parties. The plaintiffs cannot claim the protec- tion of this rule. They had distinct notice, by the face of the certificate and the signature thereto, that the acceptance was improper and irreg- ularly made. It was patent on the face of the paper, that the accept- ance was a fraud; that the presi- dent of defendant's bank, in accept- ing such checks, was violating his duty, and using his oflScial charac- ter for his personal benefit, and thereby perpetrating an act of dis- honesty in palpable violation of his trust. No business man of common intelligence could take these checks in good faith, and without suspi- cion or notice of this fraud. Upon this distinct fact I would hold that the plaintiffs are not hona fide hold- ers of these checks, and are not en- titled to recover the same of the defendants." Per Smith, J. § 135] FRAUD AND FRAUDULENT REPRESENTATIONS. 152 § 125. Paper in fraud of creditors. — The maker of a note cannot set up as a defense to an action thereon by a bona fide holder, the fact that the note was executed by him in fraud of his creditors or of those of the payee.^^ So where one sells property for the purpose of defrauding his creditors and the purchaser gives notes tl>erefor, which are transferred to a ho7ia fide holder, the purpose of the sale is no de- fense to an action thereon by the latter.^'' And the bona fide title of a holder protects all subsequent holders as a general rule, but this pro- tection does not extend to a party to the original fraud." Again, the maker of a note or check cannot obtain any relief as against a de- frauded creditor, for fraud to which he is a party.®^ Nor can the maker of a note defeat recovery thereon on the ground that it was transferred by the original owner in fraud of his creditors, this being a matter with which the maker is not concerned.®^ In an action, however, between the original parties to such a fraud they will be kept to themselves and the contract will not be enforced.^" And where an *^ Murray v. Jones, 50 Ga. 109; Fury v. Kempin, 79 Mo. 477; Dalrymple v. Hillenbrand, 62 N. Y. 5, 20 Am. Rep. 438, afl'g 2 Hun (N. Y.) 488, 5 Thomp. & C. 57; Warren V. Lynch, 5 Johns. (N. Y.) 239; Crouch V. Wagner, 63 App. Div. (N. Y.) 526, 71 N. Y. Supp. 607; Win- ton v. Freeman, 102 Pa. St. 366. Ex- amine Marine Bank v. Clements, 31 N. Y. 33. ^ Gregory v. Harrington, 33 Vt. 241. " Erie Boot & Shoe Co. v. Eichen- laub, 127 Pa. St. 164, 17 Atl. 889. «^ Allen V. Bank, 127 Pa. St. 51, 17 Atl. 886, 14 Am. St. R. 829; Long- mire V. Fain, 89 Tenn. 393, 18 S. W. 70, holding that, where a check was given to be used in lieu of cash to cover up the default of an official and enable him to continue in office, the maker was liable thereon to the creditors of such officer. Compare First National Bank v. Felt, 100 Iowa 680, 69 N. W. 1057, holding that where a note was given to a bank, without consideration, by one of the debtors, under an agreement that it should create no liability, the maker was not liable where the bank was solvent and no right of creditors was involved. ^ "Such defense does not deny that the maker of the note owes the money to some one. It only dis- putes the transferee's right to the proceeds, as against the creditors of the transferror. This is a question that does not concern the defendant, as debtor. As between transferror and transferee, no matter how fraudulent the intent of the trans- fer, the right to the note and its proceeds passes. Only creditors can assail the validity of the transfer and they may never assert the right. Such defense opposes no ob- stacle to a judgment against the debtor thus sued." Wood v. Steele, 65 Ala. 436, 438, per Stone, J. ^ Sternburg v. Bowman, 103 Ma^s. 325; Appeal of Taylor, 45 Pa. St. 71; Walker v. McConnico, 18 Tenn. (10 Yerg.) 228. See Stevens v. Parker. 89 Mass. (7 Allen) 361; Howden v. Haigh, 11 Adol. & E. 1033. But see Harcrow v. Gardiner, J 153 FRAUDULENT PROCUREMENT OP INDORSEMENT. [§ 126 action is brought by the executors of the payee against the sureties of a note it has been decided that they may show in defense to the action that it was given by the principal in fraud of his creditors and was without consideration, of which facts they had no knowledge.^^ And fraud of this character is also available as a defense to an action on a note by one to whom it has been indorsed for collection, after matur- ity, by the payee.^^ But where the maker has set up the defense of want of consideration it is held that the payee cannot, in rebuttal, avail himself of fraud on the part of the maker toward his creditors.^^ § 126. Fraudulent procurement of indorsement. — In an action by a bona fide holder against an indorser the latter cannot set up the fact that his indorsement was fraudulently obtained.*^* So one who takes 69 Ark. 6, 58 S. W. 553; Carpenter V. McClure, 39 Vt. 9. In a case in New Jersey in which the defendant to an action offered a promissory note under plea of payment and no- tice of set-off in disproof of plain- tiff's claim, evidence was admitted showing the consideration of the note was the transfer to the plain- tiff by the defendant of certain per- sonal property in fraud of his cred- itors and the court charged that if the jury believed this evidence a full defense to the note was estab- lished. On appeal the court said: "In equity the fraudulent parties are left as between themselves, in the position in which they put themselves by their misconduct. Why should a different rule prevail at law? In the present case there has been a past performance of the illegal arrangement — the goods have been delivered to the one party: the opposite party, in offsetting this note is seeking the aid of the court to consummate the execution of the agreement. It is settled in this state, that in equity no such relief would be granted and in my judg- ment, the same result must obtain at law." Church v. Muir, 33 N. J. L. 318, 323, per Beasley, C. J. " Goodwin v. Kent, 201 Pa. St. 41, 50 Atl. 290. Compare Harcrow v. Gardiner, 69 Ark. 6, 58 S. W. 553. °- "The indorsement by the payee of the note, sued on after it was due, for the purpose of enabling the plaintiffs to collect it as his agents, did not confer upon them any greater rights, as against the maker, than the payee himself had. If, as against the payee, the note was liable to the objection of hav- ing been given upon an illegal con- sideration, he certainly could not be allowed to obviate the difficulty by assigning it to an agent to col- lect for him. The law denouncing a contract founded in fraud would be untrue to itself, if it allowed it- self to be defeated by so simple and obvious a contrivance." Powell v. Inman, 52 N. C. 28, per Battle, J. '^Wearse v. Pierce, 41 Mass. (24 Pick.) 141. **Von Windlich v. Klaus, 46 Conn. 433; Follain v. Dupre, 11 Rob. (La.) 454. See Cristy v. Campan, 107 Mich. 172, 65 N. W. 12, holding that in an action by a bona fide holder against an accommodation indorser the latter cannot escape liability on the ground that his indorsement was procured by the fraudulent rep- 137] FRAUD AND FRAUDULENT REPRESENTATIONS. 154 a bill or note in payment of a pre-existing debt is held to be a bona fide holder, and not subject to the defense, in an action by him against an indorser, that the indorsement was fraudulently obtained by the maker.^^ And an indorsee cannot set up, in an action against him, false representations in respect to the note or the transaction in which it was given, which were made subsequent thereto and after the note had been transferred to the holder.^^ Nor is such a defense available to an accommodation indorser in an action against him by a payee who is to be regarded as a purchaser for value and who has taken the note without notice of the fraud.^^ Nor can indorsers of renewal notes defeat a recovery on the original notes by the fact that they were in- duced by fraudulent representations to indorse the renewals.®^ An indorser may, however, avail himself of this defense against one who was a party to the fraud.^^ § 127. Fraud as to amount. — It is a good defense to an action be- resentations of the maker. Clothier V. Adriance, 51 N. Y. 322. «=Blanchard v. Stevens, 57 Mass. (3 Cush.) 162, 50 Am. Dec. 723. See Mangan v. Sunwall, 60 Minn. 367, 62 N. W. 398. Where one to whom such paper is transferred cannot be regarded as an innocent holder, an accommodation indorser may, in an action against him by such trans- feree, set up the defense of fraud in obtaining his indorsement. Hen- riques v. Ypsilanti Savings Bank, 84 Mich. 168, 47 N. W. 558. '"Alpena National Bank v. Green- baum, 80 Mich. 1, 44 N. W. 1123; Palmer v. Hawes, 73 Wis. 46, 40 N. W. 676. In this case the court said: "It is alleged, in effect, that some six months after plaintiff obtained such stock he falsely represented to the appellant that the affairs and business of the company were in good condition, whereby she was lulled into inactivity and rest con- cerning her liability on the note. But that is no ground for defending against the note, nor of any action against the plaintiff, since the appel- lant parted with nothing on the faith of such representations." Per Cassoday, J. "^ "Accommodation indorsers, be- yond all doubt, are liable precisely to the same extent as if they had re- ceived value, when the paper upon which their names appear, has come into the hands of a holder for value, who has taken it bona fide, before maturity, and without notice of any fraud or other equity, which would vitiate it. It is entirely immaterial that such purchaser was cognizant of the fact that the bill or note was founded on an accommodation transaction, and was, therefore, to this extent, without consideration as between the indorser and the maker." Marks v. First National Bank, 79 Ala. 550, 58 Am. Rep. 620, per Somerville, J. "^ Alpena National Bank v. Green- baum, 80 Mich. 1, 44 N. W. 1123. '"Shaw v. Stein, 79 Mich. 77, 44 N. W. 419; Deaderick v. Mitchell, 65 Tenn. (6 Baxt.) 35; Wilcox v. Ten- nent, 13 Tex. Civ. App. 220, 35 S. W. 865. 155 FKAUD AS TO SECUEITY. [§ 128 tween the original parties to a note that, hj reason of fraudulent eon- duct to which the plaintiff was a party or privy, the instrument called for the payment of a larger amount than had been agreed upon.^*'" Where, however, a person voluntarily gives his note in settlement of an account rendered after the account had been submitted to him and he has had an opportunity to examine the same, it has been decided that proof of fraud will not operate as a complete defense to any re- covery upon the note.^"^ And though a person is induced by fraudu- lent representations to execute a note for a sum much larger than is due to the payee, such fraud will only operate to defeat recovery on the note for such amount as is in excess of that which is actually due.^°- § 128. Fraud as to surety. — That a surety was induced by false and fraudulent representations to affix his signature to the instrument may be a good defense to an action thereon.^"^ Where a misrepresent- ation, however, is relied on by a surety it must be an assertion of a fact and not a mere expression of opinion in order that he may de- feat a recovery on such ground.^"* And if a surety, with knowledge of all the facts in reference to the fraud, waives such a defense he cannot subsequently avail himself of the same to defeat a recovery on the instrument, though he acted without knowledge that the fraud was a defense at law.^°^ Such a defense is available as against one who has taken the paper without giving a consideration therefor.^*"' And a surety may defeat a recovery on a bill or note on the ground of fraud- ulent concealment or misrepresentation of facts, even though the con- tract is still binding on his principal. ^''^ A mere failure, however, to communicate facts to a surety which may be material for him to know "° Union Central Insurance Co. v. 302; Warren v. Branch, 15 W. Va. Huyck, 5 Ind. App. 474, 32 N. E. 21. See Wilson's Adm'rs v. Green, 580. See Galloway v. Merchants' 25 Vt. 450. Bank, 42 Neb. 259, 60 N. W. 569, ^'^ Evans v. Kneeland, 9 Ala. 42_. holding that relief may be obtained ^"'Rindskopf v. Dornan, 28 Ohio in equity in such a case. But on St. 516, so holding where a surety, this latter point see Dickinson v. after maturity of a note and with Lewis, 34 Ala. 638. full knowledge of all the facts '"'Haycock v. Rand, 59 Mass. (5 which constituted the fraud, request- Cush.) 26. ed an extension of time which was '"= Brown v. North, 21 Mo. 528. given. See Griffiths v. Parry, 16 Wis. 218. 'O" Stewart v. Small, 2 Barb. (N. '"= Easter v. Minard, 26 111. 494; Y.) 559. Melick V. Bank, 52 Iowa 94, 2 N. W. ">' Evans v. Kneeland, 9 Ala. 42. 1021; Selser v. Brock, 3 Ohio St. § 129] FRAUD AND FRAUDULENT REPRESENTATIONS. 156 will be no defense to an action against him by the payee in the ab- sence of fraud.^"^ So in an action on a note signed by a surety for a part of a debt, it was decided that failure to inform him of the fact that the maker had given his note to the payee for the balance of such debt was no defense, unless an inquiry had been made by the surety in respect thereto.^"^ And failure of a payee, before accepting a note, to inform the surety that the maker's property was about to be sold under attachment, has been held no defense to an action thereon where the payee was not present when the note was signed by the surety and had never made any representation to him on the sub- ject.^^" But where a note was, in fraud of the surety, made to cover another debt in addition to that for which the surety affixed his signa- ture, it has been held in Mississippi to be voidable as to the amount so added.^^^ § 129. Same subject — Bona fide holders. — The defense of fraud in inducing a surety to affix his signature to negotiable paper is not available in an action against him by a hona fide holder.^^^ So fraud- 108 Oregon National Bank v. Gard- ner, 13 Wash. 154, 42 Pac. 545, so holding in case of failure of obligee to inform surety of existence of a judgment which he held against the principal. The court said in this case: "The plaintiff was under no obligation to give the sureties a history of the financial standing of defendant "Wright. If there was a judgment against him it was a mat- ter of public record, and it would have been but the exercise of com- mon prudence on the part of the sureties to have made such slight inquiry concerning the financial standing of their principal, and the slightest inquiry would have re- vealed the existence of the judg- ment." Per Dunbar, J. Warren v. Branch, 15 W. Va. 21, in which it is said: "Though the simple failure of a creditor to communicate to a sure- ty a fact material for the surety to know, though connected with the contract of suretyship, will not gen- erally vitiate the contract, unless the concealment on the part of the creditor was fraudulent, even though the principal in procuring the security acted fraudulently, either in suppressing such material fact, or in misstating facts, yet if the dealings are such as fairly to lead the creditor, if a reasonable man, to believe that the principal must have used fraud in procuring the surety to enter into the con- tract, the creditor is bound to in- quire of the surety how his signing the contract has been procured; and his failure to do so will, if fraud has been practiced by the principal on the surety, vitiate the contract as to him, though no fraud has been traced to the creditor." Per Green, President. "» Booth V. Storrs, 75 111. 438. ""Smith V. First National Bank, 21 Ky. Law Rep. 953, 53 S. W. 648. "1 Clopton V. Elkin, 49 Miss. 95. "= Fitzgerald v. Barker, 96 Mo. 661, 10 S. W. 45; Riley v. Reifert (Tex. Civ. App.), 32 S. W. 185. 157 FRAUDULENT TRANSFER — BY PARTNER. [§§ 130/131 ulent representations by the principal to the surety will be no defense to an action against the latter by the payee who was not privy to the jfraud, but is an innocent holder with no knowledge of the facts. This is founded on the principle that where one of two innocent persons must suffer a loss, he who has made the loss possible must bear it.^^^ § 130. Fraudulent transfer. — In an action on a note against tlie maker by a bona fide holder, it is no defense that the instrument was transferred in fraud of the rightful owner by an agent or holder of the paper for such party.^^* Nor can the maker of a note defeat recovery by the transferee on the ground that the transfer was made by the payee in fraud of his creditors, as in such a case only the creditors or some one acting for them can assail such transfer.^^^ And the maker or acceptor of a bill of exchange cannot avail himself of the defense that the instrument was pledged to the plaintiff as security for a loan by one who had no authority to so act.^^^ § 131. Same subject — By partner. — Where paper belonging to partnership is transferred by one of the partners, it is no defense to an action against the maker, that such transfer was fraudulent as to the firm.^^^ The firm is bound in such cases, unless the person taking ^"Anderson v. Warne, 71 111. 20, lished against the plaintiffs, would 22 Am. Rep. 83; Hunter v. Fitz- constitute no defense to this action, maurice, 102 Ind. 449, 2 N. E. 127; The title is good as against the de- Wayne Agricultural Co. v. Cardwell, fendant, and that is sufficient; if 73 Ind. 555; Farmers' & T. Bank v. there are any others who claim a Lucas, 26 Ohio St. 385; Rothermal title to the instruments superior to V. Hughes, 134 Pa. St. 510, 19 Atl. that of the plaintiffs, it can be de- 677. termined whenever they come be- "* Ogden V. Marchand, 29 La. Ann. fore the court to assert it." City 61; Kinney v. Kruse, 28 Wis. 183. Bank v. Perkins, 29 N. Y. 554, 570, "5 Sullivan v. Bonesteel, 79 N. Y. 86 Am. Dec. 322, per Johnson, J. 631; Newsom v. Russell, 77 N. C. ^"Kansas. — Barber v. Van Horn, 277; Holden v. Kirby, 21 Wis. 149. 54 Kan. 33, 36 Pac. 1070. "" "It Is a question which in no Maine. — Redlon v. Churchill, 73 way concerns the defendant, and Me. 146. upon which he cannot be allowed to Maryland. — Hopkins v. Boyd, 11 defend and escape the payment of Md. 107. his obligations. It is enough that Michigan. — Nichols v. Sober, 38 the plaintiffs make out a title free Mich. 678. from mala fides on their part, and 'New York. — First National Bank which is every way sufficient for his v. Morgan, 73 N. Y. 593. protection. The issue beyond that Rhode Island. — Windham County between the parties before the court Bank v. Kendall, 7 R. I. 77; Parker is wholly immaterial; and if estab- v. Burgess, 5 R. I. 277. §§ 133, 133] FRAUD AND FRAUDULENT REPRESENTATIONS. 158 the paper knew or had reason to believe that it was executed or trans- ferred in fraud of the partnership."^ If, however, the circumstances imder which such paper is given or transferred are such as to naturally arouse suspicion so that the transferee will not be regarded as a bona fide holder, it may be shown that the partner acted in fraud of the firm and that the paper was given for accommodation without the firm's consent."'^ And where the holder of the paper is a party to the fraud of the partner upon his firm, such fraud will be available as a defense to an action against the firm.^-" In case of fraud by a mem- ber of a firm in procuring the execution of a note to the firm, such fraud will be a defense to an action by the latter on the instrument. "^ 121 § 132. Same subject — By administrator. — It is a good defense to an action on a note that it belonged to an estate and was transferred to the plaintiff by one who was acting as administrator in payment of his individual obligation and that the plaintiff took the instrument with full knowledge of all the facts.^^- § 133. Availability of defense — Maker. — The maker of a note may avail himself, as a defense to an action by the payee, of the fact that there was a fraudulent agreement between his co-maker and such payee in connection with the giving of the note,"=^ or that there was fraud of the agent of the payee upon the maker.124 ^^^ where the maker of a note was subsequently appointed administrator of the payee's estate, it was decided that in an action against him in that ca- pacity by the indorsee he might set up as a defense that the indorse- ment was invalid as against the payee's creditors and that he needed the avails of such note to pay the debts of the payee.^-^ But it is no defense to an action by the payee against a maker of a note that fraud South CaroZiwa.— Duncan v. Clark, "«Roth v. Colvin, 32 Vt. 125.. 2 Rich. (S. C.) 587. ""Wells v. Masterman, 2 Esp, 731. FefZeraZ.— Winship v. Bank, 5 Pet. "' Kllgore v. Bruce, 166 Mass. 136, (U. S.) 529; Drexler v. Smith, 30 44 N. E. 108. Fed. 754; Many, In re, Fed. Cas. No. "- Prosser v. Leatherman, 5 Miss, 9054. (4 How.) 237, 34 Am. Dec. 121. English.— RiAXey v. Taylor, 13 ^^ Mitchell v. Donahey, 62 Iowa East 175; Sutton v. Gregory, 2 376, 17 N. W. 641. Peake Ad. Cas. 150. See: "* Aultman v. Olson, 34 Minn. 450, Mississippi.— Hibernian Bank v. 26 N. W. 451. See Tagg v. Bank, 56 Everman, 52 Miss. 500. Tenn. (9 Heisk.) 479. "» Cotton V. Van Bokkelin, 21 N. "^ Cross v. Brown, 51 N. H. 486. C. 284. 159 AVAILABILITY OF DEFENSE. [§ 134 was practiced upon the latter by his co-maker, where tlie payee was innocent of the fraud.^^^ And the right of an acceptor who has paid the bill to recover cannot be defeated by the fraud of one drawer upon another.^" And in an action by an indorser against the maker of a note which both signed for the accommodation of the payee, it has been decided that the maker cannot set up the defense that his signa- ture was obtained by fraud of the payee.^-^ ]S"or is fraud of an in- dorsee upon his indorser any defense to an action by the former against the maker,^-'* or of the indorser upon his creditors.^^" And a maker cannot avail himself of fraud against the surety as a de- fense.^^^ And where a party who has received stolen property makes a loan from the proceeds thereof for the amount of which a note is given payable to bearer, it has been decided that the maker of such note cannot in an action against him avail himself of the fact that the loan was made from the proceeds of stolen property.^^- § 134. Same subject — Other parties. — In an action by the payee against the acceptor of a bill, fraud on the part of the drawer in the use of the proceeds of such bill, which was accepted for his accommo- dation, is no defense.^^^ And in an action against an accommodation acceptor by one who is an innocent holder for a valuable consideration the fact is not available as a defense that the bill was put in circula- tion in fraud of an agreement between the payee and drawer to which the acceptor was not a party. ^^* Kor can a guarantor in action against him by a payee without notice defeat recovery on the grounds of fraud upon him by the maker.^^^ And an indorser who has affixed his signa- ture to an instrument for a new and valuable consideration cannot avoid liability by setting up fraud between the original parties.^^^ ""Anderson v. Warne, 71 111. 20, '"i Mead v. Merrill, 10 Fost. (N. 22 Am. Rep. 23; Fulford v. Block, H.) 472. 8 111. App. 284; Vass v. Riddick, 89 ^='= Warren v. Haight, 65 N. Y. 171. N. C. 6. ^"' Gray v. Bank, 29 Pa. St. 365. '"Kimbro v. Bullitt, 22 How. (U. ^=' Winn v. Wilkins, 35 Miss. 186. S.) 256. "= Davis Co. v. Buckles, 89 111. 237. "' Laubach v. Pinsell, 35 N. J. L. Compare Putnam v. Schuyler, 4 Hun 434. (N. Y.) 166, holding that a guar- '-' Carrier v. Sears, 86 Mass. (4 antor may set up the defense that Allen) 336, 81 Am. Dec. 707; Prouty the note was obtained from his V. Roberts, 60 Mass. (6 Cush.) 19, principal by fraud. 52 Am. Dec. 761. "'"■ Hart v. Livermore Foundry & ""Wood V. Steele, 65 Ala. 436; Machine Co., 72 Miss. 809, 17 So. Mack V. Clark, 42 Mass. (1 Mete.) 769. See Thayer v. Jewett, 9 Shep. 423. (Me.) 19. CHAPTER VII. ALTERATIONS OF PAPER. Subdivision I. General rules Subdivision II. Particular alterations Subdivision I. 135-150 151-182 GENERAL RULES. Sec. 135. Availability of alterations as a defense generally. 136. Rule as to hona fide holders. 137. Immaterial alterations. 138. Alteration by co-maker or drawer. 139. Alteration by maker without surety's consent. 140. Alteration by payee or subse- quent h 1 d e r — Effect on rights of surety. 141. Alteration by agent of holder. 142. Alteration by third party. 143. Alteration by mistake or acci- dent. Sec. 144. Filling in blanks — Instrument incomplete — Rule as to. 145. Same subject — ^Application of rule. 146. Same subject — Where instru- ment complete. 147. Defense to action on original consideration or debt. 148. Alteration not fraudulent — To make paper conform to orig- inal agreement — May recover on original consideration. 149. Effect of consent or ratification. 150. Same subject — What consti- tutes. § 135. Availability of alterations as a defense generally. — An in- strument will not be avoided by alterations therein which are made with the consent of the parties.^ Where, however, one has entered into a contract he has a right to stand upon the terms of the original agreement, and, in the case of a bill or note, if there has been any alteration of the instrument which changes its operation and effect and the liability of the parties, it will be regarded as material and will be a good defense to an action on the paper against a party not consenting thereto.- And it is essential, for an alteration to have this ' Camden Bank v. Hall, 14 N. J. L. 583; Whitehead v. Emmerich (Cal.), 87 Pac. 790. -Alabama. — Davis v. Carlisle, 6 Ala. 707; Mackey v. Dodge, 5 Ala. 388. Connecticut. — ^tna National Bank V. Winchester, 43 Conn. 391. Delaivare. — Bank of Newark v. Crawford, 2 Houst. (Del.) 282. Georgia. — Ohowason v. Wilson (Ga). 56 S. E. 302; Simons & Co. V. McDowell, 125 Ga. 203, 53 S. E. 1031. Illinois. — Pankey v. Mitchell, 1 111. 383. Indiana. — Young v. Baker, 29 Ind. 160 161 AVAILABILITY OF ALTERATIONS AS DEFENSE. [§ 135 result, that it be such as to effect some change in the meaning or legal operation of the instrument.^ Where such a change is effected it operates to create a new contract, one which is different from that into which the parties originally entered, and to which the consent of one is necessary in order to hind him.* As is said in a case in Georgia in regard to a party who has not consented to such an alter- ation: "He is not bound by the old contract, for that has been abro- gated; neither is he bound by the new contract, because he is no party to it.^'^ Not only will an alteration of this kind in negotiable App. 130, 64 N. E. 54; Bowman v. Mitchell, 79 Ind. 84; Johnston v. May, 76 Ind. 293; Coburn v. Webb, 56 Ind. 96, 26 Am. Rep. 15. Indian Territory. — Hampton v. Mayes, 3 Ind. Ter. 65, 53 S. W. 483. Iowa. — Bell v. Mahin, 69 Iowa 408, 29 N. W. 331. Kansas. — New York Life Ins. Co. V. Martindale (Kan. 1907), 88 Pac. 559; Fraker v. Cullum, 21 Kan. 555. Maine. — Lee v. Starbird, 55 Me. 491; "Waterman v. Vose, 43 Me. 504. Massachusetts. — Stoddard v. Pen- niman, 108 Mass. 366, 11 Am. Rep. 363. Michigan. — Aldrich v. Smith, 37 Mich. 468. Minnesota. — Board of Commis- sioners V. Greenleaf, 80 Minn. 242, 83 N. W. 157. Missouri. — First National Bank v. Fricke, 75 Mo. 178; Presbury v. Michael, 33 Mo. 542. Trigg v. Tay- lor, 27 Mo. 245, 72 Am. Dec. 263. Montana. — McMillan v. Hefferlin, 18 Mont. 385, 45 Pac. 548. New Jersey. — Hunt v. Gray, 35 N. J. L. 227, 10 Am. Rep. 232; Vanan- ken V. Hornbeck, 14 N. J. L. 178, 25 Am. Dec. 509. Neio York. — Reeves v. Pierson, 23 Hun (N. Y.) 185; Woodworth v. Bank, 19 Johns. (N. Y.) 391. North Dakota. — First National Bank v. Laughlin, 4 N. D. 391, 61 N. W. 473. Ohio. — Sturges v. Williams, 9 Ohio St. 443, 75 Am. Dec. 473. Pennsylvania. — Craighead v. Mc- Loney, 99 Pa. St. 211; Hepler v. Bank, 97 Pa. St. 420, 39 Am. Rep. 813. Tennessee. — Stephens v. Davis, 85 Tenn. 271, 2 S. W. 382. Texas. — Farmers' & Merchants' Nat. Bank v. Novich, 89 Tex. 381, 34 S. W. 914; Adams v. Faircloth (Tex. Civ. App. 1906), 97 S. W. 507. Virginia. — Batchelder v. White, 80 Va. 103. West Virginia. — Bank of Ohio Val- ley V. Lockwood, 13 W. Va. 392. English. — Bathe v. Taylor, 15 East 412; Baton v. Winter, 1 Taunt. 420 Outhwaite v. Luntley, 4 Camp. 179 Walton v. Hastings, 4 Camp. 223 Halcrow v. Kelly, 28 Up. Can. C. P. 551. See: loiva. — Sawyers v. Campbell, 107 Iowa 397, 78 N. W. 56. New York. — Weyerhauser v. Dun, 100 N. Y. 150, 2 N. E. 274. ^ Huntington v. Finch, 3 Ohio St. 445. 'Mackay v. Dodge, 5 Ala. 388. See Chism v. Toomer, 27 Ark. 108, in which it is declared that the test is whether the alteration made cre- ates a new contract. '^ Bethune v. Dozier, 10 Ga. 235, per Lumpkin, J. Joyce Defenses — 11. §' 136] ALTEKATION OF PAPER. 163 paper be a good defense to an action against one not consenting thereto, but it is also decided that a bill or note may be avoided by an alteration in a contract to secure which the paper is given as collateral;" and likewise that a material alteration in a collateral mortgage given to secure a note will be a good defense to an action on the note/ That the instrument has been materially altered with- out the defendant's consent is sufficient to defeat recovery, no allega- tion or proof of fraud being necessary.^ It has, however, been decided that a maker cannot avail himself of this defense unless he rescinds the whole contract.^ And the fact that a note has been altered is not a defense to an action by a tona fide holder where it appears that the note was restored to its original form prior to its passing into his hands. ^** A general plea of non est factum will entitle the party inter- posing it to prove that after the execution of the instrument in question it was altered without his consent.^^ And an affidavit of defense, however, which sets up an alteration of the instrument should, it is held, be specific and certain enough to show a valid de- fense that would answer the declaration and defeat the entire right to recover thereon, if the case were put to trial on the pleadings. ^^ The question whether an alteration is material is one of law for the court to determine and not one for the jury.^^ § 136. Rule as to bona fide holders. — The rule that a material alteration of a bill or note will be a good defense to an action against a party not consenting thereto extends to those cases where the in- « Brigham v. Wentworth, 65 Mass. " Fudge v. Marquell, 164 Ind. 447, (11 Cush.) 123. 72 N. B. 565. ■ Williams v. Barrett, 52 Iowa 637, ^- Bryan v. Harr, 21 App. D. C. 3 N. W. 690. But see Kime v. Jesse, 190, 201, decided under Act of Con- 52 Neb. 606, 72 N. W. 1050. gress January 12, 1899, §§ 58, 59, ^Eckert v. Pickel, 59 Iowa 545. 124. Compare Burch v. Pope, 114 Ga. " Arkansas. — Overton v. Matthews, 334, 40 S. E. 227, holding that un- 35 Ark. 146, 37 Am. Rep. 9. der a provision of the code in Georgia. — Winkles v. Guenther, 98 Georgia it must appear that an al- Ga. 472, 25 S. E. 527; Pritchard v. teration relied on as a defense was Smith, 77 Ga. 463. made with intent to defraud, the Mississippi. — Hill v. Calvin, 15 fact that it was material not being Miss. (4 How.) 231. sufficient. Nebraska. — Fisherdiek v. Hutton, » Glover v. Green, 96 Ga. 127, 22 44 Neb. 122, 62 N. W. 488. S. E. 664. Neiv Hampshire. — Bowers v. Jew- " Shepard v. Whetstone, 51 Iowa ell, 2 N. H. 543. 457, 1 N. W. 753, 33 Am. Rep. 143. n 163 RULE AS TO BONA FIDE HOLDERS. [§ 136 strument has come into the hands of a bona fide holder." And the ap- plication of this rule will not be affected by the fact that the altera- u Arkansas. — Fordyce v. Kosmin- Pe7insylvania.— Gettysburg Na- ski, 49 Ark. 40, 3 S. W. 892; Overton tioal Bank v. Chisolm, 169 Pa. St. V. Matthews, 35 Ark. 146, 37 Am. 564, 32 Atl. 730, 47 Am. St. R. 929; Rep. 9. Delaware. — Sudler v. Collins, 2 Houst. (Del.) 538. Georgia. — Max Simons & Co. v. McDowell, 125 Ga. 203, 53 S. E. United States Bank v. Russell, 3 Yeates (Pa.) 391. Tennessee. — Stephens v. Davis, 85 Tenn. 271, 2 S. W. 382. Texas. — Farmers' & Merchants' 1031; Hill V. O'Neill, 101 Ga. 832, Nat. Bank v. Sovich, 89 Tex. 381, 28 S. E. 996. Illinois. — Burwell v. Orr, 84 111. 34 S. W. 914. Federal. — Exchange National Bank 465; Havorka v. Hemmer, 108 111. v. Bank of Little Rock, 50 Fed. 140, App. 443. Indiana. — Cronkhite v. Neheker, 7 C. C. A. 111. English. — Burchfield v. Moore, 3 81 Ind. 319, 42 Am. Rep. 127; Hert El. & Bl. 683; Vance v. Lowther, 1 V. Oehler, 80 Ind. 83. Exch. Div. 176; Master v. Miller, 4 Iowa. — Derr v. Keough, 96 Iowa Term R. 320; Outhwaite v. Luntley, 397, 65 N. W. 339; Charlton v. Reed, 4 Camp. 179. 61 Iowa 166, 16 N. W. 64, 47 Am. Indiana.— "The material and un- Rep. 808; Knoxville National Bank authorized alteration of a promis- V. Clark. 51 Iowa 264; Laub v. gory note renders it invalid in the Paine, 46 Iowa 550, 26 Am. Rep. 163. hands of the l)ona fide holder as Kansas. — Horn v. Newton City well as in the hands of. the payee." Bank, 32 Kan. 518, 4 Pac. 1022. Per Roby, J., in Young v. Baker, 29 Kentucky.— L^isle v. Rogers, 18 B. ind. App. 130, 64 N. E. 54. Mon. (Ky.) 528. Missouri.— "It is a general rule Maryland. — Schwartz v. Wilmer, that any alteration in a material 90 Md. 136, 44 Atl. 1059; Burrows v. part of a bill of exchange or prom- Klunk, 70 Md. 451, 17 Atl. 378, 14 issory note as in the date, sum, or Am. St. R. 371, 3 L. R. A. 576. time when payable or consideration Massachusetts. — Belknap v. Bank, or place of payment will render the 100 Mass. 376, 97 Am. Dec. 105. bill or note invalid as against any Michigan. — Bradley v. Mann. 37 party thereto not consenting to such Mich. 1; Holmes v. Trumper, 22 alteration, even in the hands of an Mich. 427, 7 Am. Rep. 661; Wait v. innocent party." Per Richardson, Pomeroy, 20 Mich. 425, 4 Am. Rep. J., in Trigg v. Taylor, 27 Mo. 245, 395. 72 Am. Dec. 263. Missouri. — "Washington Savings Nebraska. — "It is well settled that Bank v. Ecky. 51 Mo. 272; Mid- material alterations of an instru- daugh V. Elliott, 61 Mo. App. 601. ment invalidate it as to the maker, Nebraska. — Davis v. Henry, 13 who has not assented to or ratified Neb. 497, 14 N. W. 523. the change, even in the hands of a New York. — Bruce v. Westcott, 3 bona fide holder for value." Per Barb. (N. Y.) 374; Mount Morris Norval, J., in Erickson v. Bank, 44 Bank v. Lawson, 10 Misc. R. (N. Neb. 622. 62 N. W. 1078, 28 L. R. A. Y.) 359, 63 N. Y. St. R. 432, 31 N. Y. 77, 48 Am. St. R. 753. Supp. 18, g r67] ALTERATION OF PAPER. 164 tion was of such a character that it could not have been detected. ^^ In an action, however, by a bona fide holder of a bill of exchange against the acceptor it has been decided that the latter cannot de- feat recovery on the ground of a material alteration made before the acceptance.^'^ Again, where it is apparent upon the face of an instrument that it has been altered a prima facie presumption arises that the alteration was made after the instrument was exe- cuted, and the burden is held to be on the holder to show the con- trary. If, however, the alteration is not apparent upon the face of the instrument, the burden then rests on the one who sets up such alteration as a defense.^^ So where a bill of exchange ap- pears on its face to have been altered, the burden is then held to rest on the one asserting a right thereunder to show that such al- teration was made before the bill was executed or that the parties assented thereto. ^^ The general rule above stated, as to the availability of a material alteration as a defense to an action by a bona fide holder, has been changed in many states by the adoption of the provision of the negotiable-instruments law to the effect that when an instrument has been materially altered and is in the hands of a holder in due course not a party to the alteration, he may enforce payment thereof according to its original tenor.-" Under such a provision in iSTew York-^ it has been decided that an innocent holder of a check which has been altered to a later date may recover thereon, though it appears that the original payee represented to drawer that the check was lost and obtained another, which he cashed and then negotiated the first check.^^ And under Massachusetts laws, to the same effect,-^ it is decided that where a person indorsed a note and delivered it to the maker, who altered it before delivery to the payee, who took without notice thereof, he could recover from the indorser.^* § 137. Immaterial alterations. — Wliere an alteration is not in a material part of the instrument, and the identity of the paper is not " Wade V. Withington, 83 Mass. ■' New York Laws 1897, p. 745, c. (1 Allen) 561. 612. "Ward v. Allen, 44 Mass. (2 - Moskowitz v. Deutsch (N. Y. Mete.) 53, 35 Am. Dec. 387. App. Div. 1905), 92 N. Y. Supp. 721. "Dewey v. Merritt, 106 111. App. "Mass. Rev. Laws, c. 73, §§ 141, 156. See Towles v. Banner, 21 App. 69. D. C. 530; Galloway v. Bartholo- =* Thorpe v. White (Mass. 1905), mew, 44 Oreg. 75, 74 Pac. 467. 74 N. E. 592; see also, Massachu- '» Fontaine v. Gunter, 31 Ala. 258. setts National Bank v. Snow, 187 =°See appendix. Mass. 159, 72 N. E. 959. 165 IMMATERIAL ALTERATIONS. [§ 137 destroyed, or the liability thereunder in any way affected, it will not be of such a material character as will constitute it a defense. ^^ If an alteration is in fact immaterial, so far as the effect produced thereby is concerned, it will not be rendered material simply by rea- son of the intent with which it was made.^^ So the fact that an erasure appears upon the note sued upon which does not vary or alter its tenor as set out in the complaint, is held not to render the note inadmissible in evidence.^^ The right to recover on an instru- ment will not be affected by an alteration which is considered as a mere spoliation,^ ^ or by the insertion of s^ome word which the law necessarily implies.-'' Nor is there a material alteration by the re- tracing in ink of a writing which was originally in pencil.^" So where a note contained a description of land merely to identify it as the note which was given for the balance due on the land, and the word "west'* was inserted after the word "south," it was decided that the alteration, admitting it was one, was not material. ^^ And where a promissory -^^ Indiana. — Toner v. Wagner, 158 was not and could not be effectuated by the act done, the intent simply would not avoid it." Robinson v. Insurance Co., 25 Iowa 430, Per Cole, J. "If there be fraud at all in such a case it can only be such as a bad mo- tive can affix to an immaterial act, and if the act itself is incapable of working an injury, to wit: of chang- ing the obligations or rights of the parties to the contract, it cannot in a legal sense be said to be fraudu- lent, for the obvious reason that courts of justice only regard that as fraudulent which is capable of pro- ducing an injury or loss to the other party to the controversy." Moye v. Herndon, 30 Miss. 110, per Fisher, J. But see Vogle v. Ripper, 34 111. 100, 85 Am. Dec. 298. "Brown v. Feldwert (Oreg. 1905), 80 Pac. 414. -' Bucklen v. Huff, 53 Ind. 474. =" Hunt V. Adams, 6 Mass. 519. '"Reed v. Roark, 14 Tex. 329, 65 Am. Dec. 127. ^^ Nance v. Gray (Ala. 1905), 38 So. 916. Ind. 447, 63 N. E. 859; Bucklen v. Huff. 53 Ind. 174. Iowa. — Laub v. Rudd, 37 Iowa 617. Kansas. — Reed v. Culp, 63 Kan. 595, 66 Pac. 616. Kentucky. — Keene's Adm'r v. Mil- ler, 103 Ky. 628, 45 S. W. 1041; Smith V. Lockbridge, 8 Bush (Ky.) 423. North Carolina. — Dunn v. Clem- ents, 52 N. C. 58. English. — Walter v. Cubley, 2 Cromp. & M. 151; Butt v. Picard, Ryan & M. 37. Canadian. — Cunningham v. Peter- son, 29 Ont. R. 346. Compare: Missouri. — Kingston Savings Bank V. Bosserman, 52 Mo. App. 269. California. — "It is well settled that an alteration which does not vary the meaning, the nature, or subject-matter of the contract is im- material." Per Murray, C. J., in Humphr^ays v. Crane, 5 Cal. 173. ^ "An immaterial alteration is not made material simply by the intent; and if the intent to give a different effect to the instrument 138] ALTERATION OF PAPER. 166 note is made payable at a place different from the place at which it is executed the insertion therein of the words "with exchange" does not constitute a material alteration which will avoid the note, it being held not to in any way alter the legal effect of the instrument or change the contract obligation of the parties. It is only an ex- pression of what the contract itself implies. ^^ j^^^^ where an altera- tion, which is not material, is made in a note which is subsequently restored to its original form, a recovery on the instrument will not be thereby prevented.^^ And an alteration will not be considered material so as to defeat recovery on the instrument where it is made merely for the purpose of correcting a mistake so as to express the actual in- tention of the parties.^* A party, however, has no right to make an alteration in an instrument to correct a mistake unless it is made to make it conform to what all the parties agreed or intended it should have expressed. ^^ § 138. Alteration by co-maker or drawer. — A maker will not be bound by a material alteration of a bill or note made by a co-maker or under his direction, and to which the former has not consented. Such an alteration will be a good defense to an action against the maker not consenting thereto,^*' even though it was made without ^- First National Bank v. Nord- strom (Kan. 1904), 78 Pac. 804. "Kountz V. Kennedy, 63 Pa. St. 187, 13 Am. Rep. 541. See Whit- more V. Nickerson, 125 Mass. 496. ^* 7owa.— Shepard v. Whetstone, 51 Iowa 457, 1 N. W. 753, 33 Am. Rep. 143. Massachusetts. — Ames v. Colburn, 77 Mass. (11 Gray) 390, 71 Am. Dec. 723n. Mississippi. — McRaven v. Crisler, 53 Miss. 542; Conner v. Routh, 8 Miss. (7 How.) 176, 40 Am. Dec. 59. New Hampshire. — Cole v. Hills, 44 N. H. 227. Ohio. — Jessup v. Dennison, 2 Dis- ney (Ohio) 150. Oregon. — Wallace v. Tice, 32 Oreg. 283, 51 Pac. 773. Yermont. — Derby v. Thrall, 44 Vt. 413, 8 Am. Rep. 389. English. — Webber v. Maddocks, 3 Camp. 1; Cariss v. Tattersal, 2 Man. & G. 890; Butt v. Picard, Ryan & M. 37. See Gardner v. Walsh, 5 El. & Bl. 63; Bathe v. Taylor, 15 East 416. ^=Dyker v. Franz, 7 Bush (Ky.) 273. ^Indiana. — Schwind v. Racket, 54 Ind. 248. Kansas. — Horn v. Bank, 32 Kan. 518, 4 Pac. 1022. Massachusetts. — Fay v. Smith, 83 Mass. (1 Allen) 477, 79 Am. Dec. 752. Minnesota. — Flanigan v. Phelps, 42 Minn. 186, 43 N. W. 1113. Isleio Hampshire. — Goodman v. Eastman, 4 N. H. 455. Pennsylvania. — Brown v. Reef. 79 Pa. St. 370; Neff v. Horner, 63 Pa. St. 327, 3 Am. Rep. 555; Biery v. Haines, 5 Whart. (Pa.) 563. Tennessee. — McVey v. Ely, 73 Tenn. (5 Lea) 438. 167 BY MAKER WITHOUT SURETY'S COXSEXT. [§§ 139, 140 fraudulent intent or the knowledge of the payee." And an acceptor will not be bound by the consent of the drawer to an alteration of the paper which was made without the knowledge or consent of the for- mer. ^^ § 139. Alteration by maker without surety's consent. — A surety may, in an action against him on a bill or note, defend on the ground that there has been a material alteration of the instrument by the maker or principal debtor without the consent of the surety.^^ A surety, however, will not be relieved from liability on a note where he stands by and by his silence induces another to part with his money on the faith of the former's approval of an alteration by the ^prin- cipal of some part of the instrument.**' § 140. Alteration by payee or subsequent holder— Effect on rights of surety. — A material alteration in a bill or note by one of several joint payees will be a good defense to an action against the surety where made without his consent.-*^ So an alteration by one who subse- quently becomes a holder of the instrument will be a good defense to an action against the surety.*^ Vermont. — Broughton v. Fuller, 9 Vt. 373. English. — Perring v. Hone, 2 Car. & P. 401. See Hirschfield v. Smith, L. R. 1 C. P. 340. Tennessee. — Taylor v. Taylor, 80 Tenn. (12 Lea) 714. But see: Georgia. — Daniel v. Daniel, Dud. (Ga.) 239. "Draper v. Wood, 112 Mass. 315, 17 Am. Rep. 92 n. ^Cardwell v. Martin, 9 East 190; Calvert v. Roberts, 3 Camp. 343. See Abrams v. Bank, 31 La. Ann. 61. But see Johnson v. Gibb, 2 Chit. 123. ^Alabama. — Glover v. Robbins, 49 Ala. 219. Georgia.— RiU v. O'Neill, 101 Ga. 832, 28 S. E. 996. Illinois. — Benedict v. Miner, 58 111. 19. Indiana. — Franklin Life Ins. Co. V. Courteney. 60 Ind. 134. Iowa. — Marsh v. GrifBn, 42 Iowa 403. Nebraska. — Brown v. Straw, 6 Neb. 536, 29 Am. Rep. 369. Ohio. — Thompson v. Massie, 41 Ohio St. 307. South Carolina. — Sanders v. Bag- well, 32 S. C. 238, 10 S. E. 946, 7 L. R. A. 3. Federal. — Wood v. Steele, 6 Wall. (U. S.) 80. " Sanders v. Bagwell, 37 S. C. 145, 15 S. E. 714. " Thompson v. Massie, 41 Ohio St. 307, holding that in the case of a material alteration in the terms of such an instrument made without the assent of the surety he may well say that the note, thus altered, he did not sign. Adams v. Fair- cloth (Tex. Civ. App.), 97 S. W. 507. ^= Brooks V. Allen, 62 Ind. 401. See also, McDonald v. Nalle (Tex. Civ. App. 1906), 91 S. W. 632. §§ 141, 142] ALTERATION OF PAPER. 168 g 141. Alteration by agent of holder. — Where a bill or note is al- tered by an agent of the holder without the authority, consent or knowledge of his principal, it has been decided that the right of the holder to recover on the instrument is not thereby affected, such alter- ation being regarded as a mere spoliation by a stranger.*^ § 142. Alteration by a third party. — It is a generally accepted doctrine that an alteration of a bill or note made by a stranger to the instrument, without the authority or consent of the principal who claims under it, will be regarded as a mere spoliation which does not affect the rights of the parties, and is therefore no defense to an ac- tion on the paper.** This rule has been applied in the case of an ^^ Indiana. — Ballard v. Insurance Company, 81 Ind. 239; Brooks v. Allen, 62 Ind. 401. South Dakota. — Port Huron En- gine & Thresher Co. v. Sherman, 14 S. D. 461, 85 N. W. 1008. Vermont. — Bigelow v. Stllphen, 35 Vt. 521. Compare: Iowa. — Hamilton v. Hooper, 46 Iowa 515, 26 Am. Rep. 161. New York. — Van Brunt v. Eoff, 35 Barb. (N. Y.) 501. " Arkansas. — Andrews v. Callo- way, 50 Ark. 358, 7 S. W. 449. California. — Langenberger v. Kroe- ger, 48 Cal. 147. Illinois. — Patterson v. Higgins, 58 111. App. 268. Indiana. — Toner v. Wagner, 158 Ind. 447, 63 N. E. 859; Brooks v. Allen, 62 Ind. 401; Piersol v. Grimes, 30 Ind. 129, 95 Am. Dec. 673. Kentucky. — Lee v. Alexander, 9 B. Mon. (Ky.) 25, 48 Am. Dec. 412. Massachusetts. — Drum v. Drum, 133 Mass. 566. Missouri. — Lubbering v. Kohl- brecher, 22 Mo. 596. Ohio. — Thompson v. Massie, 41 Ohio St. 307. South Carolina.— White v. Harris, 69 S. C. 65, 48 S. E. 41. South Dakota. — Port Huron En- gine & Thresher Co. v. Sherman, 14 S. D. 461, 85 N. W. 1008. Tennessee. — Boyd v. McConnell 29 Tenn. (10 Humph.) 68. Vermont. — Bigelow v. Stilphen, 35 Vt. 521. Wisconsin. — Union National Bank V. Roberts, 45 Wis. 373. Federal. — United States v. Spald- ing, 2 Mason (C. C.) 478, Fed. Cas. No. 16365. But see: English. — Master v. Miller, 4 Term R. 320. The doctrine of the very old cases as to the effect of an alteration by a stranger was early repudiated in the United States, the rule stated in the text being favored by the courts. "The old cases proceed upon a very nar- row ground. It seems to have been held that a material alteration of a deed by a stranger, without the priv- ity of either obligor or obligee, avoided the deed; and by parity of reasoning the destruction or tear- ing off the seal either by a stranger or by accident, * * * a doctrine so repugnant to common sense and justice, which inflicts on an inno- cent party all the losses occasioned by mistake, by accident, by thp wrongful acts of third persons, or by the providence of Heaven, ought 169 BY MISTAKE OR ACCIDENT. [§ 143 alteration by a stranger with the intent to extinguish the obligation/^ to a change of the provision as to attorney's fees/^ and to alterations of particular parts or clauses of a bill or note.*^ Where, however, a holder with notice of an alteration by a stranger sues on the note as altered, he thereby ratifies the change and is held to lose his remedy on the original instrument.*^ Where the evidence is conflicting upon the question whether an alteration is one by a party to the instrument or by a stranger, and therefore a mere spoliation, is one which should be submitted to the jury under proper instructions as to the law.*^ § 143. Alteration by mistake or accident. — Recovery on a bill or note cannot be defeated on the ground of an alteration which is shown to have been the result of accident or mistake.^" So where the cashier of a bank by mistake cancelled a- note belonging to the bank, it was held not to affect the right to recover thereon.^ ^ And where the payee of a note in ignorance of the proper manner to trans- fer it erased his own name and inserted that of the transferee, but afterwards restored it to its original form, it was held not to avoid the note.^- So the accidental stamping of a waiver of demand and protest by a holder over two indorsements instead of one has been held not to affect the liability of the maker.^^ And where the tearing off of a signature, afterwards pasted on, is set up as a defense to an action, it is proper to show that it jvas accidentally torn off.^* Nor will an erasure, which is accidental, of one of two signatures or seals to an obligation for the payment be a defense to an action thereon,^^ to have the unequivocal support "White v. Harris, 69 S. C. 65, 48 of unbroken authority, before a S. E. 41. court of law is bound to surren- ''"Brett v. Maiston, 45 Me. 401. der its judgment to what deserves See Nevins v. De Grand, 15 Mass. no better name than a technical 436; Abbe v. Rood, 6 McLean (U. quibble. It appears to me to be S.) 106, Fed. Cas. No. 6. shaken to its very foundation in " Boulware v. Bank, 12 Mo. 542. modern times." United States v. " Horst v. Wagner, 43 Iowa 373, Spalding, 2 Mason (C. C.) 478, Fed. 22 Am. Rep. 250. Cas. No. 16365. =^ Gordon v. Bank, 144 U. S. 97, 12 *°Whitlock V. Manciet, 10 Ore. 166. Sup. Ct. 657. "Murray v. Peterson, 6 Wash. " Frazer v. Boss, 66 Ind. 1, hold- 418, 33 Pac. 969. ing in such a case that it might be " As to such alterations see sub- shown to have been the innocent act division II of this chapter. of a child. ** Perkins Windmill & A. Co. v. ^^Rhoades v. Frederick, 8 Watts Tillman, 55 Neb. 652, 75 N. W. 1098. (Pa.) 448. §■ 144] ALTERATIOX OF PAPER. 170 or an alteration made by an agent under a mistaken belief as to his authority.^® § 144. Filling in blanks — Instrument incomplete — Rule as to. One who has signed and put into circulation negotiable paper con- taining an implied blank or blanks, which makes the paper imperfect, thus rendering easy of execution an addition of words to the instru- ment, increasing his liability or altering the terms of the contract, which alteration is not discernible in the appearance of the paper, and having by his negligence put it in the power of another to impose upon an innocent third party and to obtain money from him upon the faith of the signature affixed to the instrument, which is honest in its appearance, will not be permitted to defeat an action by such third party by setting up the defense of an alteration in the terms of the in- strument.^'^ So in such a case it is declared: "Since the defendant, by executing a note, and delivering it with a blank in it, for the in- sertion of the interest, and thereby placed it in the power of the payee to do the wrong, as between him and the plaintiff, a bona fide purchaser for value, he ought to suffer any loss resulting therefrom, especially as he fails to show directly any notice to plaintiff of the alteration."^^ So it is said in a recent case: "It seems to be well sup- ported by the authorities that the alteration of a promissory note, after delivery, by filling the blanks left therein, where there is nothing on the face of the note to suggest an alteration, will not invalidate the note in the hands of a bona fide indorsee for value before maturity, and without notice of such alteration. The reason of this rule is that, where the maker of a note signs it and delivers it to the payee, with blank spaces in the note for the rate of interest, the time of ma- =»Van Brunt v. Eoff, 35 Barb. (N Slifford Banking Co. v. Donovan, Y.) 501. See Brooks v. Allen, 62 195 Mo. 262, 94 S. W. 527. Ind. 401. A'eto York. — People v. Bank, 75 N. "Colorado. — Stratton v. Stone, 15 Y. 547; Van Duzer v. Howe, 21 N. Colo. App. 237, 61 Pac. 481. Y. 531. Indiana. — Bowen v. Laird (Ind. Pennsylvania. — Wessell v. Glenn, App. 1906), 77 N. E. 295. 108 Pa. St. 105; Brown v. Reed, 79 Kentucky.— Blakely v. Johnson, Pa. St. 370, 21 Am. Rep. 75; Garrard 13 Bush (Ky.) 197, 26 Am. Rep. 254. v. Hadden, 67 Pa. St. 82, 5 Am. Rep. Maine. — Abbott v. Rose, 62 Me. 412. 194, 16 Am. Rep. 427. Federal. — Angle v. Insurance Co., Michigan.— Weidman v. Symes, 92 U. S. 330; 23 L. Ed. 556. See 120 Mich. 657, 79 N. W. 894. Davidson v. Lanier, 4 Wall. (U. S.) il/tssoMH.— Scotland County Bank 447, 18 L. Ed. 380. V. O'Connel, 23 Mo. App. 165. See ^ Rainbolt v. Eddy, 34 Iowa 440, 442, 11 Am. Rep. 152, per Cole, J. 171 APPLICATION OF KULE. [§§ 145, 146 turity or the place of payment, he will, in a contest with an innocent purchaser of the paper hefore maturity and for value, be held to have authorized the payee to fill in the blank spaces, unless the paper on its face bears evidence of mutilation or alteration."^** The execution and delivery of ^n instrument in such a form confers upon the holder the authority, as against the one so signing the paper, to fill up the blank space. ^^ So one who has executed a note of such a character is held to have the burden of proof in an action against which he set up the defense of an alteration, to show that the holder had notice of the facts at the time of the receipt of the note.®" § 145. Same subject — Application of rale. — The general rule stated in the preceding section has been applied where a blank has been left in a note for the name of the payee,*'^ as to the place of pay- ment,"- time of payment,*'^ or for the amount* And where the space for the date of a note is left blank a filling in of the time will not constitute an alteration of the instrument which will be available as a defense.®^ § 146. Same subject — Where instrument complete. — Where a bill or note, as delivered, is a complete and perfect legal instrument, it has been determined that the fact that it contains a space which will ^^* Humphrey Hardware Co. v. Georgia. — Gwin v. Anderson, 91 Herrick (Neb. 1904), 101 N. W. 1016, Ga. 827, 18 S. E. 43, holding that per Oldham, J. filling blank space with place of pay- ^° See § 22 herein as to execution ment is a material alteration. or indorsement in blank. "^ Lowden v. Bank, 38 Kan. 553, 16 ""Rainbolt v. Eddy, 34 Iowa 440, Pac. 748; Wilson v. Henderson, 9 11 Am. Rep. 152. Sm. & M. (Miss.) 375, 48 Am. Dec. "Thompson v. Rathbun, 18 Oreg. 716. Compare Farmers' National 202, 22 Pac. 837, in which it is held Bank v. Thomas, 79 Hun (N. Y.) that a hona fide holder may fill such 595, 29 N. Y. Supp. 837. a blank with his own name. "* Prim v. Hammel, 134 Ala. 652, ^- Alabama.— Winter v. Pool, 104 32 So. 1006; Yocum v. Smith, 63 111. Ala. 580, 16 So. 543. 321; Bank of Commerce v. Halde- Illinois.— Canon v. Grigsby, 116 man, 22 Ky. Law Rep. 717, 58 S. W. 111. 151, 5 N. E. 362, 56 Am. Rep. 587; Abbott v. Rose, 62 Me. 194, 16 769. Am. Rep. 427. Kentucky. — Cason v. Bank, 97 Ky. "° Overton v. Matthews, 35 Ark. 487, 31 S. W. 40, 53 Am. St. Rep. 146, 37 Am. Rep. 9. Compare In- 418; Rogers v. Poston, 1 Mete. (Ky.) glish v. Breneman, 5 Pike (Ark.) 643. 377, 41 Am. Dec. 96, holding the fill- "New York. — Kitchen v. Place, 41 ing in of a false date to be an alter- Barb. (N. Y.) 465. But see: ation which is a defense. § 147] ALTERATION OF PAPER. 172 permit of the insertion of other words will not, as a matter of law, confer authority upon the holder to fill such space, and where other words are inserted which materially alter the paper it will be a de- fense to an action thereon.®^ So it has been decided that the maker of a non-negotiable promissory note, perfect in its terms, does not, by leaving a blank space in the body of the note wherein words of negotiability may be inserted, give an implied authority to fill such space which he may not deny as against a bona fide purchaser.®^ And where a bill or note is complete in all its parts the weight of authority supports the rule that if the blank for the amount is filled so as to ex- press a larger amount than is stated therein, such fact will be a good defense even as against a bona fide holder.^^ There are, however, some decisions which do not adopt this rule, it being held that if the maker has left a space in such a manner as to admit of its being filled so as to increase the amount, he is guilty of negligence and is precluded from setting up this defense against such a holder.*'* § 147. As defense to action on original consideration or debt. The material alteration of a bill or note will not only be a defense to filled so as to increase the amount, he is guilty of negligence and is precluded from setting up this defense against such a holder.*''' ^Arkansas. — Fordyce v. Kosmin- v. Clark, 51 Iowa 264, 1 N. W. 491, ski, 49 Ark. 40, 3 S. W. 892, 4 Am. 33 Am. Rep. 129. St. R. 18. Kansas. — Bank of Herington v. Maryland.— Burrows v. Klunk, 70 Wangerin, 65 Kan. 423, 70 Pac. 330. Md. 451, 17 Atl. 378. Massac7iusetts.—Ban\i v. Stowell, Massachusetts. — Belknap v. Bank, 123 Mass. 196, 24 Am. Rep. 67. 100 Mass. 376, 97 Am. Dec. 105. South Dakota. — Searles v. Selpp, 3Iississippi.— Simmons v. Atkin- 6 S. D. 472, 61 N. W. 804. son, 69 Miss. 862, 12 So. 263, 23 L. Federal— Exchange National Bank R. A. 599. V. Bank of Little Rock, 58 Fed. 140, New Yorfc.— McGrath v. Clark, 56 7 C. C. A. 111. N. Y. 34; Bruce v. Westcott, 3 Barb. "^ Isnard v. Tones, 10 La. Ann. 103; (N. Y.) 374. Garrard v. Haddan, 67 Pa. St. 82; Pennsylvania. — Leas v. Walls, 101 Young v. Grote, 4 Bing. 253. See Pa. St. 57, 47 Am. Rep. 699. See: Franklin Life Ins. Co. v. Courtney, ^^ngritanr?.— Hirschfield v. Smith, 60 Ind. 134. L. R. 1 C. P. 340. '" Alabama.— White v. Hass, 32 "Cronkhite v. Nebeker, 81 Ind. Ala. 430, 70 Am. Dec. 548. 319, 42 Am. Rep. 127. Illinois. — Black v. Bowman, 15 111. ^Arkansas. — Fordyce v. Kosmin- App. 166; Wallace v. Wallace, 8 111. ski, 49 Ark. 30, 3 S. W. 892, 4 Am. App. 69. St. R. 18. Indiana. — Ballard v. Insurance /owa.— Knoxville National Bank Co., 81 Ind. 239. 173 AS DEFENSE TO ACTIOX OX ORIGIXAL DEBT. [§ 147 rule also applies to an indorsee after maturity, as he stands in the same position as his indorser in respect to such alteration/^ As to the availability of an alteration as a defense in such a case the fol- lowing words of the court in an early New York decision are perti- nent : "To allow parties to take the chances of success in fraudulently raising the amount of the written obligations of their debtors, with- out risk of loss in case of detection, would be an encouragement to this description of fraud which the law should not afford. It is said, on the other hand, that the debtor has sustained no injury by the fraud and that he should not be permitted to profit by the unsuccess- ful attempt of his creditor to defraud him. It is true that where the fraud is detected in season the debtor sustains no pecuniary loss ; but he has been intentionally exposed to injury. The alteration may have been so skilfully made as to render detection difficult, or the debtor might h»ve become infirm or died, and the altered instrument suc- cessfully imposed upon his representatives. It is for the purpose of discouraging such attempts that the law denies relief to a plaintiff who comes into court with his hands soiled with a fraud so inexcusa- ble. That the effect of such denial will be to benefit the other party is not a sufficient ground for overlooking the fraud. It is a conse- quence for which the plaintiff is alone responsible, and which always ensues when the action is founded upon a special contract which has been fraudulently .altered. It is conceded that in such a case the plaintiff has deprived himself of all remedy either upon the contract or the consideration. So, in the case of an altered deed the grantee loses the land, and the grantor is benefitted. If the argument now re- ferred to was sound, the plaintiff should be permitted in those cases Iowa. — Woodworth v. Anderson, North Dakota. — First National 63 Iowa 503, 19 N. W. 296. Bank v. Laughlin, 4 N. D. 391, 61 MassacJiusetts. — Wheelock v. Free- N. W. 473. man, 30 Mass. (13 Pick.) 165, 23 South Carolina.— Mills v. Starr, 2 Am. Dec. 674. Bailey (S. C.) 359. Missouri. — Whitmer v. Frye, 10 England. — Alderson v. Langdale, Mo. 348. 3 Barn. & Ad. 660. Nebraska. — Walton Plow Co. v. Canada. — Gladstone v. Dew, 9 Up. Campbell, 35 Neb. 174, 52 N. W. Can. C. P. 439. See: 883. Tennessee. — Taylor v. Taylor, 12 New Hampshire. — Smith v. Mace, Lea (Tenn.) 714. But see: 44 N. H. 553; Martendale v. Follet, England. — Atkinson v. Hawdon, 2 1 N. H. 95. Adol. & E. 628. North Carolina. — Sharpe v. Bag- "' Kennedy v. Crandell, 3 Lans. (N. well, 16 N. C. 115. Y.) 1. ?§ 148, 149] ALTERATION OF PAPER. 174 to recall the alteration and .avail himself of the contract or deed in its original and true form, which it is well settled he cannot do."" § 148. Alteration not fraudulent — To make paper conform to original agreement — May recover on original consideration. — A ma- terial alteration of a bill or note where it is not fraudulent, though it will be a defense to an action on the instrument itself, will not be a bar to a recovery on the original consideration or debt.^^ And a party cannot alter such a paper though for the purpose of making it conform to the original agreement and recover on the note, for to permit this would be in effect to render all written instruments oral ones, subject to change at will of one of the parties, to accord with his remembrance of the contract. The holder is not, however, in such a case precluded from a recovery on the original consideration.'^* § 149. Effect of consent or ratification. — A party to an instrument who has authorized, or consented to, a material alteration of the paper cannot subsequently, in an action thereon against him, avail himself of such alteration as a defense thereto." This rule has been applied "Meyer v. Huneke, 55 N. Y. 412, 419, per Rapallo, J. "/OM;a. — Sullivan v. Rudisill, 63 Iowa 158, 18 N. W. 856; Morrison v. Huggins, 53 Iowa 76, 4 N. W. 854; Clough V. Seay, 49 Iowa 111. Maryland. — Morrison v. Welty, 18 Md. 169. Nebraska. — State Savings Bank v. Shaffer, 9 Neb. 1, 1 N. W. 980, 31 Am. Rep. 394. New Yorfc.— Gillette v. Smith, 18 Hun (N. Y.) 10. Ohio. — Merrick v. Boury, 4 Ohio St. 60. Pennsylvania. — Miller v. Stark, 148 Pa. St. 164, 23 Atl. 1058. Rhode Island. — Keene v. Weeks, 19 R. I. 309, 33 Atl. 446. England. — Sloman v. Cox. 1 Cromp. M. & R. 471. See: Illinois. — ^Wallace v. Wallace, 8 111. App. 69. ''*Iovxi. — Murray v. Graham, 29 Iowa 520. New Jersey.— Hunt v. Gray. 35 N. J. L. 227, 10 Am. Rep. 232. C7fa7i.— McClure v. Little, 15 Utah 379, 49 Pac. 298. See: Belaxoare. — Warren v. Las^ton, 3 Harr. (Del.) 404. 'Wisconsin. — Matteson v. Ells- worth, 33 Wis. 488, 14 Am. Rep. 766. "^ Colorado. — Whitehead v. Em- merich (Colo. 1906), 87 Pac. 790. Delatvare. — Hollis v. Vandergrift, 5 Houst. (Del.) 521. Indiana. — Prather v. Zulauf, 38 Ind. 155. Massachusetts. — Stoddard v. Pen- niman, 113 Mass. 386. Missouri. — King v. Hunt, 13 Mo. 97. South Carolina. — Jacobs v. Gil- reath, 45 S. C. 46, 22 S. E. 757. Tennessee. — Ratcliff v. Planters' Bank, 2 Sneed (Tenn.) 424. Virginia. — Schmelz v. Rix, 95 Va. 509, 28 S. E. 890. Wisconsin. — Marks v. Schram, 109 Wis. 452, 84 N. W. 830. I 175 EATIFICATION, WHAT CONSTITUTES. [§ 150 in the case of the erasure of the name of a released guarantor/* where words have been added changing a joint contract to a joint and several one/^ where there was inserted at the end of a note the clause, "attest, this 9th day of October,"^^ and where other parts of the instru- ment have been similarly changedJ^ § 150. Same subject — What constitutes. — A consent or ratifica- tion which will preclude a party from availing himself of the defense of a material alteration of the instrument may be either in express terms or may be implied from acts of his in connection with the paper.*" So a consent or ratification may arise from a recognition of liability on the paper,*^ as by requesting and obtaining an extension of time,*^ by a subsequent promise to pay,^^ by making partial pay- ments,** by giving collateral security,*^ or by payment of interest.*® And the obligors upon a bond may be precluded from setting up an alteration as a defense where it was done by a co-obligor acting as their agent.*^ A new consideration is not essential to render a consent binding upon a party.** Federal. — Crum v. Abbott, 2 Mc- Lean (U. S.) 233, Fed. Cas. No. 3454. England. — Sherrington v. Jermyn, 3 Car. & P. 374; Kershaw v. Cox, 3 Esp. 246; Catton v. Sampson, 8 Adol. & E. 136; Stevens v. Lloyd, Moody & M. 292; Walter v. Cubley, 2 Cromp. & M. 151. See: Kentucky. — Pulliam v. Withers, 8 Dana (Ky.) 98, 33 Am. Dec. 479. England. — Johnson v. Garnett, 2 Chit. 122. Iowa. — "This assent would make it his instrument as fully and en- tirely as if the words had been in- serted at the time of its execution." Per Wright, C. J., in Grimsted v. Briggs, 4 Iowa 559. " Kane v. Kerman, 109 Wis. 33, 85 N. W. 140. "" Landauer v. Improvement Co., 10 S. D. 205, 72 N. W. 467. " Wilson v. Jamieson, 7 Pa. St. 126. "See Subdivision II of this chap- ter as to such alterations of other parts of a note or bill. *° Connecticut. — Union Bank v. Middlebrook, 33 Conn. 95. Kentucky. — Mattingly v. Riley, 20 Ky. Law. Rep. 1621, 49 S. W. 799. Maine. — Powers v. Nash, 37 Me. 322. New York. — Weed v. Carpenter, 10 Wend. (N. Y.) 403. See: Michigan. — Swift v. Barber, 28 Mich. 503. *^ Stewart v. Bank, 40 Mich. 348. «=Bell V. Mahin, 69 Iowa 408, 29 N. W. 331. ''^ National State Bank v. Rising, 4 Hun (N. Y.) 793. " Evans v. Foreman, 60 Mo. 449. ^^ Humphrey v. Guillow, 13 N. H. 385, 38 Am. Dec. 449. "« Caries v. Tattersall, 2 Man. & G. 890. See also, Prouty v. Wilson, 123 Mass. 297. "Wilmington v. Kitchin, 91 N. C. 39. ^Pelton V. Prescott, 13 Iowa 567. 151] ALTERATIOX OF PAPER. Subdivision II. 176 PARTICULAR ALTERATIONS. Sec. Sec. 151. Alteration of number. 167. 152. Alteration of date. 153. Same subject — To conform to 168. actual date. 169. 154. Alteration of time of payment. 170. 155. Same subject — Application of 171. rule. 156. Alteration in statement as to 172. consideration. 157. Alteration of form of promise. 173. 158. Alteration of name of payee. 159. Same subject — To correct mis- 174. take. 160. Alteration as to negotiable 175. words. 161. Substitution or addition of 176. words "or order" — "Or bearer." 177. 162. Alteration of place of payment. 163. Same subject — By agent before 178. delivery. 179. 164. Designation of place of pay- ment where none specified. 180. 165. Alteration of amount. 181. 166. Same subject — "Where there are marginal figures. 182. Alteration in medium of pay- ment. Alteration of interest clause. Same subject — Rate of interest. Addition of an interest clause. Alteration of conditions or stip- ulations. Erasure or alteration of mak- er's signature. Same subject — When alteration not a defense. Rule where signatures are add- ed. Same subject — When not a de- fense. Alteration or destruction of seal. Alteration, erasure or addition of names of witnesses. Stamping of note. Addition or erasure of memo- randa. Alteration of indorsement. Erasure or alteration of name of surety. Addition of name as surety or guarantor. § 151. Alteration of number. — Eecovery by a bona fide holder on a negotiable bond will not be prevented by an alteration of the num- ber, such an alteration being held to be immaterial. ^^ So where bonds of a commonwealth which are payable to bearer, and not re- quired by law to be numbered, are stolen, and the numbers altered, it has been decided that a bona fide holder is not affected by the alter- ation, though it was done in bad faith. '^^ In this class of cases it has *» Morgan v. United States, 113 U. S. 476, 5 Sup. Ct. 588; Wylie v. Rail- way Co., 41 Fed. 623. See Birdsall V. Russell, 29 N. Y. 220; Leeds v. County Bank, 11 Q. B. 84. But see Suffell V. Bank, 9 Q. B. 555, revers- ing 7 Q. B. 270. ""Commonwealth v. Emigrant In- dustrial Sav. Bank, 98 Mass. 12, 93 Am. Dec. 126. 177 OF DATE. [§ 153 been declared that the numbers are placed on bonds for the con- venience of the maker and his protection, showing it is one of a series and does not enter into or affect the agreement.**^ § 153. Alteration of date. — The date of a note is a material part of the contract, and any alteration thereof affects the identity of the contract and will be a good defense to an action on the instrument without regard to whether it may hasten or delay the date of pay- ment/- it being the change in the contract which the law regards and •^ City of Elizabeth v. Force, 29 N. J. Eq. 587. ^^ Delaware. — Warren v. Layton, 3 Harr. (Del.) 404. Illinois. — Wyman v. Yeomans, 84 111. 403. Kentucky. — Lisle v. Rogers, 18 B. Mon. (Ky.) 528. Mississippi. — Henderson v. Wil- son, 7 Miss. (6 How.) 65. Missouri. — Britton v. Dierker, 46 Mo. 591, 2 Am. Rep. 553; Owings v. Arnot, 33 Mo. 406; Aubuchon v. Mc- Knight, 1 Mo. 312, 13 Am. Dec. 502. ■ Montana. — McMillan v. Hefferlin, 18 Mont. 385, 45 Pac. 548. New York. — Crawford v. Bank, 100 N. Y. 50, 2 N. E. 881, 53 Am. Rep. 152; Rogers v. Vosburg, 87 N. Y. 228. North Carolina. — Bland v. O'Ha- gan, 64 N. C. 471. Ohio. — Newman v. King, 54 Ohio St. 273, 43 N. E. 683. Pennsylvania. — Bowers v. Rine- ard, 209 Pa. St. 545, 58 Atl. 912; Miller v. Stark, 148 Pa. St. 164, 2S Atl. 1058; Heffner v. Wenrich, 32 Pa. St. 423; Kennedy v. Bank, 18 Pa. St. 347. Wisconsin. — Low v. Merrill, 1 Finn. (Wis.) 340. England. — Hirschman v. Budd, L. R. 8 Exch. 171; Master v. Miller, 4 Term R. 320; Walton v. Hastings, 4 Camp. 223; Outhwaite v. Luntley. 4 Camp. 179; Vance v. Lowther, L. R. 1 Exch. Div. 176; Bathe v. Taylor, 15 East 412. Joyce Defenses — 12. Canada. — Gladstone v. Dew, 9 Up. Can. C. P. 439. But see: Federal. — Union Bank v. Cook, 2 Cranch C. C. 218, Fed. Cas. No. 14349. Pennsylvania. — "It does not de- pend on the accelerating or extend- ing the day of payment, but upon the identity; to insure the identity and prevent the substitution of one instrument for another is the foun- dation of the rule, and it is a wise rule, as it prevents all tampering with written instruments." Ste- phens V. Graham, 7 Serg. & R. (Pa.) 505, 506, 10 Am. Dec. 485, per Dun- can, J. Pennsylvania. — "If the day of pay- ment be accelerated by it, the debtor loses a part of the time for which he stipulated, and the computation of interest is affected by it; if it be retarded, the starting of the statute of limitations or the presumption of payment from lapse of time is also retarded by it." Miller v. Gilleland, 19 Pa. St. 119, 124, per Gibson, J. Nebraska. — "The alteration of the date, whether it hasten or delay the time of payment, is a material alter- ation, and if made without the con- sent of the party sought to be charged extinguishes his liability." Brown v. Straw, 6 Neb. 536, 29 Am. Rep. 369, per Maxwell, J. Alteration of the date of a bill of lading. Merchants' Nat. Bank v. Baltimore C. & R. S. Co., 102 Md. 573, 63 Alt. 108. §• 153] ALTERATION OF PAPER. 178 not the surrounding circumstances."^ So where a note is executed by an accommodation maker and is afterwards, without his consent or knowledge, materially altered by an indorsee or holder thereof, such note is thereby rendered invalid.^* And an acceptor of a bill is released by an alteration of date of the accepted bill by the holder, thereby short- ening the time of payment.®^ And likewise where one gives authority to draw upon him for ninety days after a certain date, and the date is altered to a later time than that specified, he will be released."® So a change of a demand note to a later date is material and avoids the note, thougji it may be a benefit to the maker by reducing the amount of interest chargeable against him."^ So a surety will be discharged by an alteration which would have the effect of causing the interest to run for a longer period of time."^ A maker or surety will not,, however, be relieved from liability by an alteration of the date of a note by the maker where it was authorized by the surety."" And such an alteration by the acceptor before he accepts the instrument, and which is acquiesced in by the other parties to the paper, will be bind- ing on them.^"° And an act of a stranger which is a mere spoliation will be no defense.^"^ Again, the alteration of the date of an indorse- ment has been held to be an immaterial one which will not affect the right of an indorsee to recover.^"^ § 153. Same subject — To conform to actual date. — A change, by a party to an instrument, of the date thereof, even though made for the purpose of having it conform to the actual date of execution, if made without the consent of the party sought to be charged will release him from liability on the instrument.^ "^ In this connection it is said in one case : "In an action between the original parties the court has ample power to correct mistakes and to enforce the original contract ; but the law does not permit the payee of a note to change its terms and ^'Boulton V. Langmuir, 24 Ont. (Ky.) 25, 48 Am. Dec. 412; Boyd v. App. R. 618. McConnell, 29 Tenn. (10 Humph.) "* Fraker v. Cullum, 21 Kan. 555. 68. ""^Hervey v. Hervey, 15 Me. 357. '»= Griffith v. Cox, 1 Overt. (Tenn.) »" Lewis V. Kramer, 3 Md. 265. 210. ^'Boulton V. Langmuir, 24 Ont. i"' Hamilton v. Wood, 70 Ind. 306; App. R. 618. Henderson v. V/ilson, 7 Miss. (6 "'Benedict v. Miner, 58 111. 6. How.) 65; Bowers v. Jewell, 2 N. H. "^ Prather v. Zulauf, 38 Ind. 155. 543. But see Jessup v. Dennison, 2 ""RatclifE v. Planters' Bank, 34 Disney (Ohio) 150; Brutt v. Picard, Tenn. (2 Sneed) 424. Ryan & M. 37. "^Lee V. Alexander, 9 B. Mon. I 179 OF TIME OF PAYMENT — APPLICATIOX OF RULE. [§§ 154, 155 conditions without the assent of the maker, even if the alteration is in his favor or to correct a mistake."^"* Where, however, the origi- nal date was altered by the draftsman to conform to the intention of the parties but, upon the maker's objection, the original date was re- stored with which date the maker expressed himself as satisfied, it was decided that the note was good as against him."^ § 154. Alteration of time of payment. — Where the time of pa)'- ment of a bill or note is changed it constitutes a material alteration which a party not consenting thereto may show in defense to an ac- tion against him even by a bona fide holder.^"^ This rule applies where the time of payment is extended by such alteration,^"^ and likewise where it is shortened. So where a note was altered so as to become payable after the maker's death instead of one year after its date, it was held to be a material alteration which would justify the direction of a verdict in favor of the defendants in an action against his execu- tors. ^°* Where, however, the parties have consented to such an alter- ation they will be precluded from setting up the same as defense. ^"'^ § 155. Same subject — Application of rule. — An alteration which is material and may be shown in defense has been held to exist where a clause was inserted "Privilege of extension for thirty days given." ^^^ ^<^ Brown v. Straw, 6 Neb. 536, 538, Camp. 223; Outhwaite v. Luntley, 4 29 Am. Rep. 369, per Maxwell, J. Camp. 179; Paton v. Winter, 1 *<*= Collins v. Makepeace, 13 Ind. Taunt. 420. 448. Canada. — Westloh v. Brown, 43 ^'^ Georgia. — Steinau v. Moody, 100 Up. Can. Q. B. 402. Ga. 136, 28 S. E. 30. ^«^ Stayner v. Joice, 82 Ind. 35; Kentucky. — Lisle v. Rogers, 18 B. Flanigan v. Phelps, 42 Minn. 186, 43 Mon. (Ky.) 537. N. W. 1113; Desbrow v. Weatherly, Maine. — Hervey v. Harvey, 15 Me. 6 Car. & P. 758. But see Douglass 357. V. Scott, 8 Leigh (Va.) 43. Massachusetts. — Ives v. Bank, 84 '"''Bowers v. Rineard. 209 Pa. St. Mass. (2 Allen) 236. 545, 58 Atl. 912; Taylor v. Taylor, Missouri.— King v. Hunt, 13 Mo. 80 Tenn. (12 Lea) 714; Alderson v. 97. Langdale, 3 Barn. & Aid. 660; Clif- Pennsylvania.—Ban'k of United ford v. Parker, 2 Man. & G. 909. States V. Russell, 3 Yeates (Pa.) ™ Ward v. Allen, 43 Mass. (2 39L Mete.) 53, 35 Am. Dec. 387; King v. J?'ederaL— Norwalk Bank v. Ad- Hunt, 13 Mo. 97. ams Express Co., 4 Blatchf. (U.S.) ''"Flanigan v. Phelps, 42 Minn. 455, Fed. Cas. No. 10354. 186, 43 N. W. 1113. England. — ^Walton v. Hastings, 4 §§ 156, 157] ALTERATIOX OF PAPER. ' 180 And an alteration of the phrase "^after sight" to "after date" or vice versa will be a material one.^^^ So a shortening of the time by chang- ing from a specified date of payment to thirty days after date is ma- terial. ^^- And recovery may be defeated by showing that the word "fixed" was inserted, having the effect of excluding the three days of grace allowed by law.^^^ And changing a time note to a demand note, which is repugnant to the expressed intention of the parties, is material and will be a defense.^^* The insertion of such words, however, has been held to be immaterial where they only express the effect of the instru- ment as it originally stood. ^^^ Again the erasure of a contemporaneous memorandum, which is a part of the contract and controls the time of payment, will avoid an instrument.^ ^^ § 156. Alteration in statement as to consideration. — If the state- ment in a note in respect to the consideration thereof is altered it is held to be of such a material character as to be available as a defense to an action on the instrument.^ ^^ And if no consideration is expressed in such an instrument it is decided that recovery may be defeated by showing that it was subsequently altered by the insertion of words showing a consideration.^ ^^ § 157. Alteration of form of promise. — The form of the promise of a note is a material part thereof affecting the liability of the parties, and the alteration of a joint note into a joint and several one will be a good defense to an action thereon,^ ^'' as will likewise the alteration '" Long V. Moore, 3 Esp. 155 n, indorsed on it a memorandum that holding an acceptor discharged in $250 was to be paid on January 1, such a case where the alteration 1872 and $250 on January 1, 1873. was made after acceptance. "' Knill v. Williams, 10 East 431. "= Seebold v. Tatlie, 76 Minn. 131, "' Low v. Argrove, 30 Ga. 129, 78 N. W. 967. holding in such a case that the in- "^ Steinau v. Moody, 100 Ga. 136, sertion of words expressing a cer- 28 S. E. 30. tain tract of land as the considera- "* Benjamin v. Delahy, 9 111. 536, tion was material. 46 Am. Dec. 474; Farmers' National ^^Terring v. Hone, 4 Bing. 28; Bank v. Thomas, 79 Hun (N. Y.) Samson v. Yager, 4 Up. Can. Q. B. 595, 29 N. Y. Supp. 837. O. S. 3. But see Miller v. Reed, 27 "=AldoUs V. Cornwall, L. R. 3 Q. Pa. St. 244, 67 Am. Dec. 459, holding B. 573. See Gist v. Gans, 30 Ark. that under the laws of Pennsylvania 285. such an alteration was not material ""Bay v. Shrader, 50 Miss. 326, so and would not avoid the note, holding where a note for $500 had 181 NAME OF PAYEE. [ 158 of a joint and several obligation into a joint one.^^" So changing the words "1 promise" to "we promise" is a material alteration which will be a good defense.^^^ § 158. Alteration of name of payee. — It will be a good defense to an action on a bill or note that there has been a material alteration of the name of the payee^^^ such as that it has been erased and another name inserted in its place without the consent of the defendant.^^^ An alteration of this character will be a good defense to an action against an indorser/^* surety/^^ or maker.^^*^ And it may be available, though there was no fraud in making the change. ^^'^ In applying this rule it has been decided that there is an alteration which defeats recov- ery where there is added to the name of the payee the word "collec- tor,"i28 «cashier,"i29 "junior"^^^^ and "guardian."!^! And there is a material alteration where there is an indorsement to a special person '=" Eckert v. Louis, 84 Ind. 99, hold- ing that such an alteration by the agent of the principal without the knowledge or consent of the surety is material and releases the surety from all liability thereunder. "^ Humphreys v. Guillow, 13 N. H. 385, 38 Am. Dec. 499, in which the court said: "It is true that the al- teration is of such a nature as to be apparently against the interest of the holder of the note. This, how- ever, cannot make any difference in the result; for the note as altered does not contain the contract as the parties saw fit to make it." Per Gilchrist, J. Heath v. Blake, 28 S. C. 406, 5 S. E. 842. But see Eddy V. Bond, 19 Me. 461, 36 Am. Dec. 767. '"Robinson v. Berryman, 22 Mo. App. 509; Erickson v. First Nat. Bank, 44 Neb. 622, 62 N. W. 1078, 48 Am. St. R. 753, 28 L. R. A. 577; Davis V. Bauer, 41 Ohio St. 257; Sneed v. Milling Co., 73 Fed. 925, 20 C. C. A. 230, affg. 71 Fed. 493, 18 C. C. A. 213. "^Stoddard v. Penniman, 108 Mass. 366, 11 Am. Rep. 363; Erick- son V. First National Bank, 44 Neb. 622. 62 N. W. 1078, 48 Am. St. R. 753, 28 L. R. A. 577; Hoffman v. Planters' National Bank, 99 Va. 480, 39 S. E. 134. First Nat. Bank v. Gridley, 112 App. Div. (N. Y.) 398, 98 N. Y. Supp. 445. '^^Aldrich v. Smith, 37 Mich. 468, 26 Am. Rep. 536. "'Bell V. Mahin, 69 Iowa 408, 29 N. W. 331. ""Horn V. Bank, 32 Kan. 518, 4 Pac. 1022, holding that an alteration with consent of one maker will re- lease a co-maker. '" German Bank v. Dunn, 62 Mo. 79. '^York V. Jones, 43 N. J. L. 332, holding that where such an altera- tion was shown to have been made by the payee, the admission of the note in evidence was properly re- fused on the ground that it was an altered instrument. '"Hodge V. Bank, 7 Ind. App. 94, 34 N. E. 123, holding that by such change the instrument was rendered payable to the bank of which payee was cashier. See also, Birmingham Trust and Sav. Co. v. Whitney, 183 N. Y. 522, 76 N. E. 1089. "" Broughton v. Fuller, 9 Vt. 373. '" Jackson v. Cooper, 19 Ky. Law Rep. 9, 39 S. W. 39. §§ 159, 160] ALTEEATIOX OF PAPER. 182 and the name of such person is erased and another inserted. ^^^ If, how- ever, the alteration is an immaterial one it will not defeat recovery as where the surname of the payee, to whom the note was originally given, is inserted.^^^ And where a note is made payable to a firm it has been decided that it is no defense to an action against a surety that it was subsequently altered by inserting a different firm name where it was merely another designation of the same partnership.^^* Again it has been held immaterial where the words "and Co." have in good faith been added to the name of the payee.^^^ § 159. Same subject — To correct mistake. — An alteration which is made for the mere purpose of correcting a mistake in the name of the payee and to make that name conform to the intention of the parties, as where it is spelled incorrectly or an initial is left out or a wrong initial is inserted will not avoid a bill or note.^^^ § 160. Alteration as to negotiable words. — The existence in a note of words which affect its negotiability is an important element of the contract which may be determinative of the liability of the parties to the instrument. Therefore the alteration of a non-negotiable note so as to give it the form and appearance of negotiable paper will be ma- terial and constitute a good defense in behalf of one not consenting thereto even as against a hona fide holder.^^^ "^Piersol v. Grimes, 30 Ind. 129, erasure of the letter R was imma- 95 Am. Dec. 673; Grimes v. Piersol, terial. Derby v. Thrall, 44 Vt. 413, 25 Ind. 246. 8 Am. Rep. 389 holding that it was ^^ Mouchet V. Cason, 1 Brev. (S. no defense that a note payable to C.) 307. Franklin Derby was altered to Fran- "^ Arnold v. Jones, 2 R. I. 345 cis E. Derby, which was the correct holding that the maker by giving name of the payee, the note to a firm Intended to be- "^ Winter v. Loeb, 100 Ala. 503, 14 come liable to whoever might com- So. 411; Hardy v. Norton, 66 Barb, pose the firm and that the defend- (N. Y.) 527, 534; Morehead v. Park- ant's liability as surety did not de- ersburg National Bank, 5 W. Va. 74, pend upon the evidence which this 13 Am. Rep. 636. note afforded, but upon evidence ali- "That the insertion of words mak- unde of proof of names of the indi- ing a note negotiable, which before viduals who composed the firm. was not so, is a material alteration, ^^° Elliott v. Blair, 47 111. 342. cannot, I think, be doubted. It is a "" Cole v. Hills, 44 N. H. 227 hold- different instrument and may ma- ing that where a note intended to terially change the rights and lia- be made payable to Benjamin Cole bility of the maker." Bruce v. West- was made to Benjamin R. Cole, the cott, 3 Barb. (N. Y.) 374, per Hand, 183 PLACE OF PAYilEXT. [§§ 161, 162 § 161. Substitution or addition of words "or order," "or bearer." The addition of the words "or bearer" or the substitution of such words for the words "or order," which have been erased, will be a ma- terial alteration of an instrument of which a party not consenting thereto may avail himself as a defense.^^^ And it has also been so held where the word "order" was changed to "holder."^^^ And the inser- tion of the words "or order" is a material alteration which will be a defense."" In such a case the burden is held to be on the plaintiff to show that the alteration was made with the knowledge or consent of the defendant.^*^ And if made with the consent of the defendant, as for the purpose of correcting a mistake, and to have the instrument accord with the intent of the parties, it will be no defense.^*- Nor can recovery be defeated by showing that such words have been in- serted, where done by a stranger, the act in such case being regarded as a mere spoliation.^*^ And where a note was payable only on a cer- tain contingency and was not negotiable, and the alteration by the in- sertion of such words did not make it so, it was decided that it was no defense.^** § 162. Alteration of place of payment. — An alteration of the place specified in a bill or note for payment is material and in an action J. Striking out the words in a note, Wisconsin. — Union National Bank "agreeing to pay all expenses in- v. Roberts, 45 Wis. 373. But see: curred by suit or otherwise in at- Michigan. — Weaver v. Bromley, 65 tempting the collection of this note, Mich. 212, 31 N. W. 839. including reasonable attorney's "" McDaniel v. Whitsett, 96 Tenn. fees," which words rendered the 10, 33 S. W. 567. note non-negotiable, is a material al- "° Johnson v. Bank, 2 B. Mon. teration. First National Bank v. (Ky.) 310; Haines v. Dennett, 11 N. Laughlin, 4 N. D. 391, 61 N. W. 473. H. 180; Bruce v. Westcott, 3 Barb. "« /OMJa.— Needles v. Shaffer, 60 (N. Y.) 374; Pepoon v. Stagg, 1 Nott Iowa 65, 14 N. W. 129. & McC. (S. C.) 102. Maine. — Crosswell v. Lebree, 81 "^ Schroeder v. Webster, 88 Iowa Me. 44, 16 Atl. 331, 10 Am. St. R. 627, 55 N. W. 569. 238. "= Kershaw v. Cox, 3 Esp. 246; Mississippi. — Simmons v. Atkin- Bryon v. Thompson, 11 Adol. & E. son, 69 Miss. 862, 12 So. 263, 23 L. 31; Cariss v. Tattersall, 2 Man. & G. R. A. 599. , 890. Nebraska. — Walton Plow Co. v. '"Andrews v. Calloway, 50 Ark. Campbell, 35 Neb. 174, 52 N. W. 358, 7 S. W. 449; Union National 883 16 L. R. A. 468. Bank v. Roberts, 45 Wis. 373. New Yorfc.— Booth v. Powers, 56 »* Goodenow v. Curtis, 33 Mich. N. Y. 22. 505. 163, 164] ALTERATION OF PAPER. 184 against one not consenting thereto will be a good defense even as against a bona fide holder.^*^ So an alteration by a drawer of the place named in an acceptance will be a good defense to an action against the acceptor who has not consented thereto.^**^ A party, how- ever, who has consented to such an alteration cannot avail himself of this defense. ^*^ And an alteration, erasure, or addition of a place of payment by a stranger will be regarded merely as an act of spoliation which will not prevent a recovery on the instrument. ^*^ § 163. Same subject — By agent before delivery. — Where an au- thorized agent of a corporation having power to negotiate a loan and secure it by the corporate note alters the place of payment of such note as expressed therein prior to delivery of the instrument to the payee, such alteration will be no defense to an action thereon against the corporation.^*^ And where the payee's clerk makes an unauthorized alteration of a note as to the place of payment, which is subsequently erased, and the note restored to its original form, such alteration is held to be no defense.^^'^ § 164. Designation of place of payment where none specified. Where no place of payment is specified in a bill or note the rule seems to be that the designation of a place will constitute a material altera- tion which will be a o-ood defense.^^^ And it has been declared that "'Sudler v. Collins, 2 Houst. (Del.) 538; Charlton v. Reed, 61 Iowa 166, 16 N. W. 64, 47 Am. Rep. 808; Adair v. England, 58 Iowa 314, 12 N. W. 277; Bank of Ohio Valley V. Lockwood, 13 W. Va. 392, 31 Am. Rep. 768; McQueen v. Mclntyre, 30 Up. Can. C. P. 426. "° Tidmarsh v. Grover, 1 Maule & S. 735. "' Walter v. Cubley, 2 Cromp. & M. 151. "' Port Huron Engine & Thresher Co. v. Sherman, 14 S. D. 461, 85 N. W. 1008; Major v. Hansen, 2 Biss. (U. S.) 195, Fed. Cas. No. 8982. ""Pelton V. Lumber Co., 113 Cal. 21. 45 Pac. 12. ^="Acme Harvester Co. v. Butter- field, 12 S. Dak. 91, 80 N. W. 170. ^^^ Alabama. — Winter v. Pool, 100 Ala. 503, 14 So. 411. Delaware. — Sudler v. Collins, 2 Houst. (Del.) 538. Indiana. — Cronkhite v. Nebeker, 81 Ind. 319, 42 Am. Rep. 127. Mississippi. — Simmons v. Atkin- son & Lampton Co., 69 Miss. 862, 12 So. 263, 23 L. R. A. 599. New York. — Nazro v. Fuller, 24 Wend. (N. Y.) 374. Ohio. — Sturges v. Williams, 9 Ohio St. 443, 75 Am. Dec. 473. Pennsylvania. — Southwark Bank V. Gross, 35 Pa. St. 80. See: California. — Pelton v. Lumber Co., 113 Cal. 21, 45 Pac. 12, holding that a note in such a case is only payable in the state where executed, and the naming of a place out of 185 OF AMOUNT. [§ 1G5 the rule is especially applicable where the note is rendered negotiable by such alteration.^^^ So where by statute a place of payment is re- quired in a note to I'ender it negotiable the insertion, in a note which contains no such designation, of a place of payment is a material al- teration which will avoid the instrument as to all parties who do not consent thereto.^^^ So, in such a case, in an action against an indorser, it has been decided that where no place is specified, an indorser's con- tract is that, if the same be duly presented to the maker at maturity either to him personally, at his residence or place of business and the same is not paid, the indorser will pay it, and that an alteration to an- other place is material and will release him.^'^* The rule has been ap- plied in the case of an acceptance where no place of payment is speci- fied and one is inserted, it being held that it is a material alteration which will defeat recovery except as to such parties who may have con- sented thereto or have ratified the same.^^^ And where words as to the place payable are inserted with the consent of the makers of a note it will operate to release the guarantors.^^*^ § 165. Alteration of amount. — An alteration of the amount for which a bill or note is given is a material one which may be shown in the state is a material alteration and releases indorsers having no knowledge or not consenting. See further, Bowen v. Laird (Ind. App. 1906), 77 N. E. 295. "^Cronkhite v. Nebeker, 81 Ind. 319, 42 Am. Rep. 127; Ballard v. In- surance Co., 81 Ind. 239; McCoy v. Lockwood, 71 Ind. 319; Morehead v. Bank, 5 W. Va. 74. 163 "The words so said to have been added made the note import nego- tiability, whereas under our statute, without words designating a place of payment, the instrument would not have been negotiable. An altera- tion which makes a note speak a language different in legal effect from that which it originally spoke is material, and when made by one not a stranger to the paper is ordi- narily sufficient to avoid the con- tract as to all parties not consenting thereto." Per Sharpe, J., in Carroll v. Warren (Ala. 1904), 37 So. 687, 688. 1=4 Townsend v. Wagon Co., 10 Neb. 615, 7 N. W. 274; Woodworth v. Bank of America, 19 Johns. (N. Y.) 391. But see Schuler v. Gillette, 12 Hun (N. Y.) 278, holding that where merely a place is designated in the same town in which plaintiff re- sides and the bill is payable there is not a material alteration, which will release an indorsei-. Etz v. Place, 81 Hun (N. Y.) 203, 30 N. Y. Supp. 765. "^Whitesides v. Bank, 10 Bush (Ky.) 501, 19 Am. Rep. 74; Cowie v. Halsall, 4 Barn. & Aid. 197; Cal- vert V. Baker, 4 Mees. & W. 417; Crotty V. Hodges, 4 Man. & G. 561; Burchfield v. Moore, 3 El. & Bl. 683; Desbrow v. Weatherly, 6 Car. & P. 758; Hanbury v. Lovett, 18 Law T. N. S. 366. But see Trapp v. Spear- man, 3 Esp. 57. 1^" Pahlman v. Taylor, 75 111. 629. 166] ALTERATION OF PAPER. 186 defense to an action, even though the instrument is in the hands of a bona fide holder.^^^ And, though the alteration is not disadvan- tageous to the one responsible, as where the instrument is changed to express a smaller amount, yet it will defeat recover}^ on the principle that it makes another and different contract.^"^ If, however, the al- teration is made by a stranger to the instrument it is then held to be no defense.^^^ § 166. Same subject — Where there are marginal figures. — Mar- ginal figures are held to "form no part of the instrument, being merely in the nature of memorandum for convenience, and the fact that the same have been altered in order to have them conform to the amount expressed in the body of the paper will not defeat a recovery thereon."" And where a blank space has been left in the body of such an instru- ment where the amount is to be inserted, the fact that it has been filled to express a different amount than is indicated by marginal figures and that such figures have been erased or cut off will be no defense as ^^^ Arkansas. — Fordyce v. Kosmin- ski, 49 Ark. 40, 3 S. W. 892, 4 Am. St. R. 18. Connecticut. — ^tna National Bank v. Winchester, 43 Conn. 391. Indiana. — Fudge v. Marquell, 164 Ind. 447, 72 N. E. 565. Iowa. — Knoxville National Bank V. Clark, 51 Iowa 264, 1 N. W. 491, 33 Am. Rep. 129. Kansas. — Bank of Herington v. Wangerin, 65 Kan. 423, 70 Pac. 330. Maine. — Dodge v. Haskell, 69 Mtr. 429. Maryland. — Burrows v. Klunk, 70 Md. 451, 17 Atl. 378, 3 L. R. A. 576, 14 Am. St. R. 371. Massachusetts. — Greenfield Bank v. Stowell, 123 Mass. 196, 25 Am. Rep. 67; Citizens' National Bank v. Richmond, 121 Mass. 110; Draper v. Wood, 112 Mass. 315, 17 Am. Rep. 92 n; Wade v. Withington. 83 Mass. (1 Allen) 561. Neiv Hampshire. — Goodman v. Eastman, 4 N. H. 455. New York. — Flanna^an v. Na- tional Union Bank, 2 N. Y. Supp. 488. Pennsylvania. — Leas v. Walls, 101 Pa. St. 57, 47 Am. Rep. 699. South Carolina. — Mills v. Starr, 2 Bailey (S. C.) 359. Virginia. — Batchelder v. White, 80 Va. 103. See: England. — Hall v. Fuller, 5 Barn. & C. 750. But see: Pennsylvania. — Worrall v. Green, 39 Pa. St. 388. Illinois. — An alteration of the provision as to the amount to be paid for attorney's fees is material. Burwell v. Orr, 84 111. 465. i^Hewins v. Cargill, 67 Me. 554; State Savings Bank v. Shaffer, 9 Neb. 1, 1 N. W. 980, 31 Am. Rep. 394; Adams v. Faircloth (Tex. Civ. App. 1906), 97 S. W. 507. ''^ Drum V. Drum, 133 Mass. 566. ^'"' Horton v. Horton's Estate, 71 Iowa 448, 32 N. W. 452; Woolfolk v. Bank, 10 Bush (Ky.) 504; Smith V. Smith, 1 R. I. 398, 53 Am. Dec. 652. 187 MEDIUM OF PAYMENT — IXTEREST CLAUSE. [§§ 167, 168 against a bona fide holder.^^^ As against the payee, however, such a defense may be available,^''^ or as against one who takes the paper with notice or knowledge of such facts. ^''^ § 167. Alteration in medium of payment. — That there has been a material alteration in the medium in which a bill or note is payable will be a good defense to an action thereon.^°* So the insertion of the words "in gold" or "in gold coin" will be a material alteration which will defeat recovery.^*^^ But the writing across the face of a draft the words "payable in United States gold coin" has been held imma- terial and no defense where it was the act of a stranger.^^^ § 168. Alteration of interest clause. — A party may show in an action against him on a bill or note that the interest clause therein has been altered without his knowledge or consent, and this defense is available even where the action is brought by a bona fide holder.^^^ 181 Johnston Harvester Co. v. Mc- Lean, 57 Wis. 258, 15 N. W. 177, 46 Am> Rep. 39; Garrard v. Lewis, L. R. 10 Q. B. Div. 30. "Without the figures the blank signature was an authority to fill up with any sum, and the office of the figures was merely to limit the authority and to convey notice to parties interested of the fact of limitation. They were no part of the note, for there was no note of "Which they could form any part. The paper was a mere power of at- torney, with private instructions given in such form as to be con- spicuous and not easily suppressed. It is the business of the principal to give notice to parties dealing with the agent of the fact of pri- vate instructions or limitations upon his authority. He must do so at his own risk, and if he adopts means to that end, which prove in- effectual through the fault of his agent, the principal, and not the stranger who has dealt with the agent in good faith, must suffer the loss." Schryver v. Hawkes, 22 Ohio St. 308, 315, per Welch, C. J. "=Hall V. Bank, 5 Dana (Ky.) 258. i«*Woolfolk V. Bank, 10 Bush (Ky.) 504. "^Martendale v. Follett, 1 N. H. 95, holding that recovery on a note payable in merchantable meat stock may be defeated by showing that the word "young" was inserted after word merchantable. Darwin v. Rip- pey, 63 N. C. 318 so hold where words "in specie" were added after word "dollars." See Church v. How- ard, 17 Hun (N. Y.) 5, reversed in 79 N. Y. 415, but not on this point. "'Wills v. Wilson, 3 Oreg. 308; Bogarth v. Breedlove, 39 Tex. 561. Compare Bridges v. Winters, 42 Miss. 135, 2 Am. Rep. 595, 97 Am. Dec. 443. "° Langenberger v. Kroeger, 48 Cal. 147. ^"Illinois. — Canon v. Grigsby, 116 111. 151, 5 N. E. 362, 56 Am. Rep. 769; Benedict v. Miner, 58 111. 19; Black v. Bowman, 15 111. App. 166. 168] ALTERATION OF PAPER. 188 This rule has been applied where words have been struck out, as in the case of an acknowledgment that interest has been paid to matur- ity/^ ^ and where the words "after maturity" or "after due" have been struck out so as to make the paper bear interest from its date.^®*^ And likewise recovery may be defeated by the addition of such words as "with interest/'^^" "after maturity" after the interest clause/^^ by changing the words "after maturity" to "after date,"^"^ or by changing the instrument from a simple interest obligation to a semi-annual or an annual obligation,^^^ And thouglf*such an alteration is made by one for the purpose of having it conform to the intention of the parties it will nevertheless be a defense to an action on the instru- ment/'^^ though it will not defeat recovery on the original considera- tion.^^^ And the addition of words to, or alteration of, the interest clause, where the act of a stranger, will be no defense.^^^ Indiana. — Dietz v. Harder, 72 Ind. 208. Iowa. — Woodworth v. Anderson, 63 Iowa 503, 19 N. W. 296; Marsh V. Griffin, 42 Iowa 403. Ohio. — Patterson v. McNeely, 16 Ohio St. 348. Pennsylvania. — Gettysburg Na- tional Bank v. Chisolm, 169 Pa. St. 564, 32 Atl. 730. South Carolina. — Edwards v. Sar- ter, 69 S. C. 540, 48 S. E. 537. rea;cs.— Otto v. Halff, 89 Tex. 384, 34 S. W. 910, 59 Am. St. R. 56. "' Hert v. Oehler, 80 Ind. 83. «» Brooks v. Allen, 62 Ind. 401; Page v. Danaher, 43 Wis. 221. ""Waterman v. Vose, 43 Me. 504; Mount Morris Bank v. Lawson, 10 Misc. R. (N. Y.) 359, 31 N. Y. Supp. 18. "1 Franklin Life Ins. Co. v. Court- ney, 60 Ind. 134; Coburn v. Webb, 56 Ind. 96, 26 Am. Rep. 15. "- Fraker v. Collum, 21 Kan. 555. "^ Iowa. — Marsh v. Griffin, 42 Iowa 403. Kentucky. — Blakely v. Johnson, 13 Bush (Ky.) 197. Neiv York. — Dewey v. Reed, 40 Barb. (N. Y.) 16. Ohio. — Boalt v. Brown, 13 Ohio St. 364. South Carolina. — Kennedy v. Moore, 17 S. C. 464. But see: Michigan. — Leonard v. Phillips, 39 Mich. 182, 33 Am. Rep. 370. ^"* "It is designed distinctly to as- sert that if mistakes do arise in the preparation of written instruments that aside from consent of all par- ties interested in the needed correc- tion, the court's of the country alone can furnish adequate redress; and that we will not give sanction or countenance to the attempts of an interested party to effect by his own. hand the desired reformation, as an honest blunder of this sort, if up- held in one instance, might necessi- tate sanctioning an alteration hav- ing that appearance, but which, from the infirmity of human testi- mony, might be grossly otherwise." Evans v. Foreman, 60 Mo. 449, 452, per Sherwood, J. "= Otto V. Halff, 89 Tex. 384, 34 S. W. 910, 59 Am. St. R. 56. '■"Brooks V. Allen, 62 Ind. 401; Lubbering v. Kohlbrecher, 22 Mo. 596. 189 RATE OF INTEREST INTEREST CLAUSE, [§§' 169, 170 § 169. Same subject — Rate of interest. — An alteration as to the rate of interest is a material one which will defeat recovery on the instrument in an action by a bona fide holder.^^^ And this rule ap- plies alike to cases where the rate has been increased,^ "*' or wliere it has been reduced.^'^^ Such an alteration, however, is not available to a party as a defense where made with his consent or ratified by him.^^" And the insertion in a note of a rate of interest which does not in- crease or reduce the rate in tlie note as originally drawn has been held immaterial.^^^ Again in an action against a surety it has been decided that a memorandum on the back of the note of a reduction in the rate of interest after a certain date is not a material alteration but simply evidence of an independent collateral agreement, having no more effect than if written on a separate paper. ^^- Nor will an offer indorsed by the payee on the back of a note to accept less interest than is stipu- lated on the face of the instrument constitute a material alteration which will defeat recovery.^*^ In the case of an alteration by a party to the paper which is against his interest and to the advantage of the parties liable, as where the rate of interest has been reduced, the pre- sumption of fraud is rebutted in the absence of other facts and re- covery on the original consideration is not precluded.^^* § 170. Addition of an interest clause. — Where there is no interest clause in an instrument as originally drawn it may be shown in de- fense to an action thereon that it has been altered by the addition of such a clause.^ ^^ So it may be shoM'n in defense to an action on such "'Shank v. Albert, 47 Ind. 461; "== Cambridge Savings Bank v. Sanders v. Bagwell, 37 S. C. 145, 15 Hyde, 131 Mass. 77, 41 Am. Rep. S. E. 714; Halcrow v. Kelly, 28 Up. 193. Can. Q. B. 551. "^ Reed v. Gulp, 63 Kan. 595, 66 ™ Bowman v. Mitchell, 79 Ind. 84; Pac. 616. Harsh v. Klepper, 28 Ohio St. 200. ''* Keene v. Weeks, 19 R. I. 446, 3 "° Indiana.— Post v, Losey, 111 Atl. 446. Ind. 74, 12 N. E. 121, 60 Am. St. R. '=' A Za&ama.— Lamar v. Brown, 56 677. Kansas. — New York Life Ins. Ala. 157; Glover v. Robbins, 49 Ala. Co. V. Martindale (Kan. 1907), 88 219, 20 Am. Rep. 272; Brown v. Pac. 559. Minnesota. — Board of Com- Jones, 3 Port. (Ala.) 420. missioners v. Greenleaf, 80 Minn. Delaicare. — ^Warpole v. Ellison, 4 242, 83 N. W. 157. Missouri.— Moore Houst. (Del.) 322. v. Hutchinson, 69 Mo. 429; Whitmer District of Columbia — Lewis v. V. Frye, 10 Mo. 348. England.— '^nt- Shepherd, 1 Mackey (D. C.) 46. ton v. Toomer, 7 Barn. & C. 416. Indiana.— Hart v. Clouser, 30 Ind. ""Jacobs V. Gilreath, 45 S. C. 46, 210; Kountz v. Hart, 17 Ind. 329. 22 S. E. 757. Iowa. — Derr v. Keaough, 96 Iowa "' First National Bank v. Carson, 397, 65 N. W. 339. 60 Mich. .432, 27 N. W. 589. 170] ALTERATION OF PAPER. 190 an instrument that figures have been inserted indicating a rate of in- terest to which the parties had not agreed.^**'' And the rule is held to apply where a rate higher than that which is allowed by law is in- serted.^" And an accommodation indorser will be discharged by the insertion of a rate of interest without his consent which is the maxi- mum rate which the law allows in cases of special agreement.^^^ If, however, the rate is the legal rate and one which the instrument would draw any way it will be no defense, there being no material altera- tion,^®^ And it has been determined that an innocent holder will not be precluded from a recovery in such a case where the clause added Maine. — Waterman v, Vose, 43 Me. 504. Maryland.— Owen v. Hall, 70 Md. 97, 16 Atl. 376. Massachusetts. — Draper v. Wood, 112 Mass. 315. Michigan. — Bradley v. Mann, 37 Mich. 1; Holmes v. Trumper, 22 Mich. 427, 7 Am. Rep. 61. Missouri. — Iron Mountain Bank v. Miirdock, 62 Mo. 70; Capital Bank V. Armstrong, 62 Mo. 59; Evans v. Foreman, 60 Mo. 449. Nebraska. — Hurlbut v. Hall, 39 Neb. 889, 58 N. W. 538. New York. — Schwartz v. Oppold, 74 N. Y. 307; McGrath v. Clark, 56 N. Y. 34, 15 Am. Rep. 372; Meyer V. Huneke, 55 N. Y. 412; Meise v. Doscher, 83 Hun (N. Y.) 580, 31 N. Y. Supp. 1072. North Carolina. — Long v. Mason, 84 N. C. 15. Ohio. — Jones v. Banks, 40 Ohio St. 139. Pennsylvania. — Gettysburg Na- tional Bank v. Chisolm, 169 Pa. St. 564, 32 Atl. 730, 47 Am. St. R. 929; Boustead v. Cuyler, 116 Pa. St. 551, 8 Atl. 848; Craighead v. McLoney, 99 Pa. St. 211. South Carolina. — Sanders v. Bag- well, 32 S. C. 238, 10 S. E. 946, 7 L. R. A. 743. Tennessee. — McVey v. Ely, 73 Tenn. (5 Lea.) 438. Texas. — Farmers' & Merchants' Nat. Bank v. Novich, 89 Tex. 381, 34 S. W. 914. Wisconsin. — Kilkelly v. Martin, 34 Wis. 525. Canada. — Halcrow v. Kelly, 28 Up. Can. C. P. 551. But see: loioa. — Rainbolt v. Eddy, 34 Iowa 440, 11 Am. Rep. 152. 1^" Little Rock Trust Co. v. Martin, 57 Ark. 277, 21 S. W. 468; Derr v. Keaough, 96 Iowa 396, 65 N. W. 339; Holmes v. Trumper, 22 Mich. 427, 7 Am. Rep. 661; Hurlbut v. Hall, 39 Neb. 889, 58 N. W. 538; Davis v. Henry, 13 Neb. 497, 14 N. W. 523. 1**^ Hoopes V. Collingwood, 10 Colo. 107, 13 Pac. 909, 3 Am. St. R. 565*; Lee V. Starbird, 55 Me. 491; War- rington V. Early, 2 El. & Bl. 763. But see Keene's Adm'r v. Miller, 103 Ky. 628, 45 S. W. 1041, holding that the insertion by the maker of a rate of interest which is illegal and un- enforceable does not vary the legal obligation of a surety. !><>< Weyerhauser v. Dun, 100 N. Y. 150, 2 N. E. 274. ^^0 James v. Dalbey, 107 Iowa 463, 78 N. W. 51; First National Bank v. Carson, 60 Mich. 432, 27 N. W. 589. 191 ADDITION OF INTEREST CLAUSE. [§ 170 has been subsequently erased,"" though it has been held that where "» Shepherd v. Whetstone, 51 Iowa 457, 1 N. W. 753, 33 Am. Rep. 143. It appeared in this case that the words "ten per cent, interest from date" had been added in blank space, after word "at," which was evident- ly for the insertion of the name of the place where the note should be payable, and was subsequently erased before coming into the hands of the plaintiff, who was a purchaser for value. That there had been an erasure was manifest from the face of the instrument. The court said: "This alteration, if it had been allowed to remain, was certainly sufficient to invalidate the note in the hands of the payee. The ques- tion presented is as to whether the fact that the words constituting the alteration were erased, and the note transferred to the plaintiff, is suffi- cient to enable him to recover not- withstanding the alteration. Where the note is restored, as in this case, to its original form it expresses the precise contract which the parties entered into, and the objection, if any, to enforcing such contract must rest upon grounds of public policy, and not upon the necessity of pro- tecting the maker in the individual case. * * * Conceding the im- portance of discouraging the altera- tion of instruments is such that a court is justified in declaring invalid an instrument which has been al- tered, and which remains in the hands of the person who made the alteration, notwithstanding the res- toration of the instrument, it is evi- dent that it should not be held in- valid in the hands of an innocent purchaser for value. The punish- ment of an innocent person for an act done by another has no tenden- cy to subserve the public interest or promote the public security. That the plaintiff is a purchaser for value . is not denied. Whether he pur- chased with notice that the instru- ment had been altered admits of some question. He had notice, of course, of what appears upon the face of the instrument, and it is in- sisted by the defendant that the instrument reveals an erasure, in proof of which the instrument it- self has been submitted to our in- spection. There does manifestly ap- pear an erasure. But an erasure is not necessarily an alteration. It is so only when made subsequent to delivery. * * * This blank was filled with certain words which were afterward erased. This was all that the plaintiff could see. The reason- able inference was that the note, as first drawn, was made payable at a particular place, and afterward, by erasure, was made payable general- ly. We see nothing in this to indi- cate that the erasure was not made before delivery. But the defendant insists that, conceding that such was the reasonable inference there was enough in the mere fact of erasure to put the plaintiff upon inquiry. But this doctrine, in our opinion, has no application. A person is put upon inquiry only when he has rea- son to apprehend that the claim which he is about to acquire will conflict with another person's sub- stantial rights. But the instrument in this case cannot, as we have seen, be declared invalid upon the ground that the defendant's just protection requires it, the contract expressed by it being precisely the contract which he entered into." Per Ad- ams, J. 171] ALTERATIOX OF PAPER. 192 such a clause is added by the payee to a sealed note it will be a good defense to an action by him, though he subsequently erases the same.^^^ § 171. Alteration of conditions or stipulations. — Where a note is materially altered by the erasure of some condition or stipulation which forms a part of the instrument or by the addition thereto of a condition or stipulation such fact may be set up in defense to an action thereon.^'^^ And, though the instrument is in the hands of a bona fide holder he will be subject to this defense,^^^ So where a condition was annexed to a note and was an essential part thereof, the fact that it has been detached from the instrument may be shown in defense.^^^ And a stipulation in a note as to attorney's fees while not material as af- fecting the negotiability of the paper is material so far as the contract liabilities of the parties are concerned and in case the indorsers of a note strike out such a clause the maker will be relieved from liability to them,^^^ It has been declared, however, that a duty rests upon a maker to protect himself from executing paper in such a form as to easily permit of fraudulent practices,^"** and that he may be preclud- ed from setting up this defense against a bona fide holder where it appears that he so negligently executed the note as to enable one to easily remove a condition afiixed thereto without in any way defacing "ipiyler v. Elliott, 19 S. C. 257. "= Tate V. Fletcher, 77 Ind. 102, so holding where the provision as to the payment of attorney's fees was altered by striking out the words "if suit be instituted," thus rendering a conditional promise to pay such fees into an absolute one; Hemming V. Trenery, 9 Adol. & El. 926, so hold- ing where a condition was inserted. Compare Jackson v. Boyles, 64 Iowa 428, 20 N. W. 746, holding that, where a note is conditioned for pay- ment on the performance of a writ- ten agreement, an endorsement after delivery and without the surety's consent that such condition had been performed, was not so material as to discharge the surety. "'Schofield v. Ford, 56 Iowa 370, 9 N. W. 309; Davis v. Henry, 13 Neb. 497, 14 N. W. 523; Palmer v. Sar- gent, 5 Neb. 223, 25 Am. Rep. 479; Gerrish v. Glines, 56 N. H. 9; Bene- dict V. Cowden, 49 N. Y. 396, 10 Am. Rep. 382. But see Elliott v. Levinge, 54 111. 213. "* Indiana. — Cochran v. Nebeker, 48 Ind. 459. Maine. — Johnson v. Heagan, 23 Me. 329. Massachusetts. — ^Wheelock v. Free- man, 30 Mass. (13 Pick.) 165, 23 Am. Dec. 674. Michigan. — Wait v. Pomeroy, Mich. 425, 4 Am. Rep. 395. Nebraska. — Davis v. Henry, Neb. 497, 14 N. W. 523. New Hampshire. — Benedict v. Cowden, 49 N. H. 396. Tennessee. — Stephens v. Davis, 85 Tenn. 271, 2 S. W. 382. '•'= White V. Harris, 69 S. C. 65, 48 S. E. 41. ''<■ Zimmerman v. Rote, 75 Pa. St. 188. 20 13 193 OF maker's signature. [§■ 173 the note.^^^ And the erasure of the words '^upon condition" wliere no condition is specified is held not to affect the liability of the parties, these words by themselves being declared to be immaterial.^^'* § 172. Erasure or alteration of maker's signature. — In an action against one of the parties to a bill or note he may show, in defense thereto, that there has been a material alteration of the paper by the erasure or cutting off of one of the signatures of one or more of the makers.^"^ And the rule is held to be applicable, though the note is a joint and several one.^"^ So where the signature of a maker was cut off and the name of another added as co-maker in his place it was held to avoid the note.'"*' And where the signature of a signer of a note was erased before delivery of the same, without the knowledge of the sureties, it was held that they were released from any liability thereon, though the one to whom it was delivered procured such person to again sign the same as such subsequent signing could not restore the note to its former position. -°^ This rule has also been held to apply in the case of an instrument of guaranty.^''^ Where, however, the signature of an infant co-maker is erased after his contract has been repudiated, it is decided that such erasure is no defense.^"^ And one whose name as co-maker is erased upon part payment of the amount called for by the obligation cannot defeat an action for the unpaid balance by setting up such erasure.-"* Again, though a signature has not been erased yet recovery may be defeated by showing that such signature has been materially altered.-"^ So there has been held to be a material altera- "^Noll V. Smith, 64 Ind. 511, 31 & E. 675, holding that a maker was Am. Rep. 131; Gornell v. Nebeker, discharged in such a case where the 58 Ind. 425. See Scofield v. Ford, 56 payee received from a co-maker his Iowa 370, 9 N. W. 309, holding that proportionate share of the note, re- in such a case the burden of proof leased him from liability, and cut rests on the one claiming under the his name off the note, instrument to show negligence. ="' Davis v. Coleman, 29 N. C. 424; ""* Palmer v. Sargent, 5 Neb. 223. Smith v. Weld, 2 Pa. St. 54. "'Gillettv. Sweat, 6 111. 475; Mor- =" Connor v. Thornton (Tex.), 51 rison v. Garth, 78 Mo. 434; People S. W. 354. v. Call, 1 Denio (N. Y.) 120; Bar- ="= Hindostan v. Smith, 36 Law J. rington v. Bank of Washington, 14 C. P. 241. Serg. & R. (Pa.) 405; Piercy's Heir ="= Young v. Currier, 63 N. H. 419. V. Piercy, 5 W. Va. 199. Compare "** Eldred v. Peterson, 80 Iowa 264, Dunn v. Clements. 52 N. C. 58. 45 N. W. 755, 20 Am. St. R. 416. ^~ Mason v. Bradley, 11 Mees & "'^ Sheridan v. Carpenter, 61 Me. W. 590; Nicholson v. Revill, 4 Adol. 83. Joyce Defenses — 13. ■§§ 173, 174] ALTERATION OF PAPER. 194 tion which may be set up as a defense where to the maker's signa- ture there have been added the words "and Co./'^°'^ "President A. B. Association,"^"^ and the maker's address, by which the note is rendered negotiable.-''^ § 173. Same subject — ^When alteration not a defense. — Though words used in connection with signatures of parties to commercial paper may be erased or words of such a character may be added, yet if by such act the rights or liabilities of the parties is in no way af- fected or where such words are added they are those which the law would necessarily imply, the alteration will be regarded as immaterial and will be no defense to an action on the instrument.^"® And a re- touching with ink of a signature is not a material alteration. ^^" § 174. Rule where signatures are added. — It is a general rule that the addition of the name of another person to a note as maker, subse- quent to its execution, is a material alteration of the instrument which may be shown in defense to an action against the original parties to the instrument who have not consented thereto.-^^ And this is declared ^'^ Haskell v. Champion, 30 Mo. 136. 207 First National Bank v. Fricke, 75 Mo. 178, 42 Am. Rep. 197. -'^ Commercial & Farmers' Bank v. Patterson, 2 Cranch C. C. 346, Fed. Cas. No. 3056. -°^ In the following cases are noted the particular alterations which were held immaterial. Colorado. — King v. Rea, 13 Colo. 69, 21 Pac. 1084 (making of cross after signature). Illinois. — Burlingame v. Brewster, 79 111. 515, 22 Am. Rep. 177 (cutting off the words "as Trustee of the First Universalist Soc"). Indiana. — Hayes v. Matthews, 63 Ind. 412, 30 Am. Rep. 226 (erasure of words "Trustees of the First Uni- versalist Church"). Pennsylvania. — Barclay v. Purs- ley, 110 Pa. St. 13, 20 Atl. 411 (adding "Fr." to signature); Strauthers v. Kendall, 41 Pa. St. 214, 80 Am. Dec. 610 (addition of endorser's address). Rliode Island. — Manufacturers' & Merchants' Bank v. Follett, 11 R. I. 92, 23 Am. Rep. 418 (addition of word "agent"). Tennessee. — Blair v. Bank, 30 Tenn. (11 Humph.) 84 (addition of individual signatures under joint signature). England. — Parston v. Petit, 1 Camp. 82, note (writing address be- low signature). ='° United States Nat. Bank v. Na- tional Park Bank, 59 Hun (N. Y.) 495, 13 N. Y. Supp. 411. -" Alabama. — Brown v. Johnson, 127 Ala. 292, 28 So. 579. Indiana. — Nicholson v. Combs, 90 Ind. 515, 46 Am. Rep. 229; Bower's Adm'r v. Briggs, 20 Ind. 139; Henry v. Coats, 17 Ind. 161. Iowa. — Hamilton v. Hooper, 46 Iowa 515, 26 Am. Rep. 161. Kentucky. — Rumley Co. v. Wil- cher, 23 Ky. Law R. 1745, 66 S. W. 7; Singleton v. McQuerry, 85 Ky. 41, 2 S. W. 652; Bank of Limestone I 195 SIGNATURES ADDED WHEN NOT DEFENSE. [§ 175 to be the rule regardless of the question of benefit or injury to the maker,^^^ And it has been held applicable in the case of a joint note,-^" and of a joint and several one.^^* § 175. Same subject — When not a defense. — Though the fact that the affixing by a party of his signature to a note as maker, subsequent to its execution, will release other original makers not consenting thereto, yet recovery may be had against the one so signing it, for as to him it will be regarded as a new instrument."^ ^ And where a note in blank is signed by one and entrusted by him to another to be nego- tiated for the latter's accommodation and he adds the name of another as maker it has been decided that the accommodation maker will not be discharged, as by so signing it he gives authority to fill the blanks.-^'' Again it has been decided that the adding of the name of a third party to a bill as acceptor after it was accepted by the parties to whom it was addressed and was discounted with the indorser's consent will not avoid the paper.^^'^ And where the object of a person's affixing his signa- ture is to guaranty payment or to furnish additional security other- wise than by becoming or assuming to become a joint maker, if in doing so by mistake or inadvertence he signs the note in such a way as to indicate prima facie that he was an original promisor, it has been de- V. Penick, 5 T. B. Mon. (Ky.) 25, ^" Shipp's Adm'r v. Suggett's 33. Adm'r, 9 B. Mon. (Ky.) 5; Gardner Maine. — Chadwick v. Eastman, 53 v. Walsh, 5 El. & Bl. 83. Me. 12. ='^ Hochmark v. Richler, 16 Colo. New Yorfc.— McVean v. Scott, 46 263, 26 Pac. 818; Browning v. Gos- Barb. (N. Y.) 379; Heath v. Blake, nell, 91 Iowa 448, 59 N. W. 340; 28 S. C. 406, 5 S. E. 842. Hamilton v. Hooper, 46 Iowa 515, 26 Texas. — Harper v. Stroud, 41 Am. Rep. 161; Dickerman v. Miner, Tex. 367; Ford v. Bank (Tex. Civ. 43 Iowa 508. Compare Howe v. Tag- App.), 34 S. W. 684. But see: gart, 133 Mass. 284. Alabama. — Rudolph v. Brewer, 96 "° Geddes v. Blackmore, 132 Ind. Ala. 189, 11 So. 314. 551, 32 N. E. 567; Snyder v. Van Michigan.— \]n\on Banking Co. v. Doren. 46 Wis. 602, 1 N. W. 285, 23 Martin's Estate, 113 Mich. 521, 71 Am. Rep. 739. See Whitmore v. N. W. 867; Miller V. Finley, 26 Mich. Nickerson, 125 Mass. 496, 28 Am. 249, 12 Am. 306. Dec. 257; Babcock v. Murray, 58 "•^ Dickerman v. Miner, 43 Iowa Minn. 386, 59 N. W. 1038. 508. =" Smith v. Lockridge, 8 Bush "'Wallace v. Jewell, 26 Ohio St. (Ky.) 423. 163, 8 Am. Rep. 48. 176] ALTERATION OF PAPER. 196 cided that a maker will not be released.-^^ Nor will the fact that the payee of a note by inadvertence places his signature under that of the maker release the latter from liability.^^^ And it has been deter- mined that if no liability is imposed on the signer by the added signa- ture, as in the case of a married woman, the liability of the original parties to the instrument will not be affected.--" Again it has been held that, where a note does not conform to the intention of the parties by reason of the accidental omission of the name of a corporation maker and it was intended to be a corporation note by the officers thereof who signed it, the note is not avoided by inserting the name of the corporation so as to correct the mistake. ^^^ § 176. Addition or destruction of seal. — Where a seal affixed to a note at the time of its execution is subsequently destroyed, a party may, in the absence of any controlling statute, avail himself of such fact as a defense. ^^^ And a similar rule prevails where a seal is added, there being none affixed to the instrument originally. By such an act the character of the instrument is changed from a simple note of hand to that of a specialty which in point of law is of a much higher grade than a simple promissory note,--^ against which no plea of want of consideration can be made.^^* But where private seals have been 2i» Wallace v. Jewell, 21 Ohio St. 163, 8 Am. Rep. 48. See, also, Bow- ser V. Rendell, 31 Ind. 128; Cason v. Wallace, 4 Bush (Ky.) 388; Denick T. Hubbard, 27 Hun (N. Y.) 347. =^^Muir V. Demaree, 12 Wend. (N. Y.) 468. See Brownell v. Winnie, 29 N. Y. 400, 86 Am. Dec. 314. The signature of the payee in such a case is to be construed as a mere indorsement. Ex p. Yates, 2 DeGex & J. 191. "" If all the original parties to the note had consented to the addition of her name, it would not in the slightest degree have altered their relations to the note or to each other. As the consent of the parties could add nothing to the validity of her signature, neither can the ab- sence of consent constitute her sig- nature an alteration of the note. When written, it was in the eye of the law, and still is, nothing, and the defendant remains liable just as he was before it was appended. It is unnecessary to cite authority to a case like this. The general rule is well understood; we have found no case in all respects like the present, and no light is to be drawn from analogous cases." Williams v. Jen- son, 75 Mo. 681, 684. Per Hough, J. '-^ Produce Exchange Trust Co. v. Bieberbach, 176 Mass. 577, 58 N. E. 162. "-Morrison v. Welty, 18 Md. 169; Porter v. Doby, 2 Rich. Eq. (S. C.) 49; Piercy's Heirs v. Piercy, 5 W. Va. 199. =^Biery v. Haines, 5 Whart. (Pa.) 563. ~* Vaughan v. Fowler, 14 S. C. 355. 197 NAMES OF WITNESSES — STAMPING OF NOTE. [§§ 177-179 abolished by a statute providing that the addition of a private seal to an instrument will not affect its character in any respect, it will be no defenise.^^^ And where a seal was affixed to an instrument by an agent of the maker, who had no authority to so act, it was held that the note was not avoided thereby.^-^ § 177. Alteration, erasure, or addition of names of witnesses. — To erase or cut off the name of an attesting witness to a note has been held to be a material alteration which will be a good defense to an action on the instrument,--^ as has also the subsequent addition of names of persons as witnesses.^^^ Where, however, a name of a wit- ness is, by mistake, omitte3 it is held that the right to recover will not be affected by the subsequent addition of such name in good faith.--^ And where by law it is immaterial whether an instrument has or has not an attesting witness, an attestation has no legal effect and the ad- dition of a name as witness will be an immaterial alteration.^^" § 178. Stamping of note. — Under the laws in force at various times the affixing of a stamp to commercial paper has been required and in such a case it has been decided that the fact that a bill or note is stamped subsequent to its execution will be no defense to an action by a bona fide holder.^^^ " § 179. Addition or erasure of memoranda. — The addition of a mere memorandum to a bill or note which in no way affects the rights or liabilities of the parties, which was not intended to be considered as a part of the contract, and which does not change the terms or -^Jordan v. Jordan, 78 Tenn. (10 ton v. Appleton, 29 Me. 298; Rol- Lea) 124, 43 Am. Rep. 294. lins v. Bartlett, 20 Me. 319; Eddy v. =^'' Fullerton v. Sturges, 4 Ohio St. Bond, 19 Me. 461, 36 Am. Rep. 767. 530. "^ Smith v. Dunham, 8 Pick. -'Sharpe v. Bagwell, 16 N. C. 115. (Mass.) 246. =*Brackett v. Mountfort, 11 Me. =="> Fuller v. Green, 64 Wis. 159, 24 115; Homer v. Wallis, 11 Mass. 309. N. W. 907, 54 Am. Rep. 600. Compare Church v. Fowle, 142 Mass. -' Anderson v. Starkweather, 28 52, 6 N. E. 764; Marshall v. Gouger, Iowa 409; Crews v. Bank. 31 Great. lOSerg. &R. (Pa.) 164. (Va.) 348. See, also, Blackwell v. In several cases in Maine, how- Denie, 23 Iowa 63, in which it is ever, it has been decided that if the declared that this is also the Eng- act of adding such names was not lish rule, and citing Wright v. Riley, fraudulent, the right to recover will Peake 173; Green v. Davis, 4 B. & not be affected. Milberry v. Storer, C. 235. 75 Me. 69, 46 Am. Rep. 361; Thorn- 180] ALTERATION OF PAPER. 198 effect thereof is not available as a defense to an action thereon. -^^ Where, however, such memorandum tends to affect the operation of the instrument, or to change its terms and conditions or to af- fect the liability of the parties it will constitute such an alteration as a party not consenting thereto may set up in defense to an ac- tion against him.^^^ And where a memorandum which is a material part of the contract is erased or cut off such fact is available as a de- fense.-^* But if the memorandum is one which does not in any way form a part of the contract, an erasure thereof will be immaterial.^^^ § 180. Alteration of indorsement. — A party has no right to change the contract of indorsement, and it will be a good defense to an action against an indorser to show that the indorsement has been altered in a material part.-^*^ So recovery may be defeated by showing that a guaranty has been written over the indorsement.-^^ Thus, writing over the names of the indorsers in blank of a note the words, "For value received we hereby guarantee the payment of the within note and waive presentment for payment, demand, and notice of protest," changes the liability assumed by the parties as indorsers and consti- tutes a material alteration which they may set up in defense to an '^-Alabama. — Maness v. Henry, 96 Ala. 454, 11 So. 410. Indiana. — Bucklen v. Huff, 53 Ind. 474. Maine. — Howe v. Thompson, 11 Me. 152. Massachusetts. — B atchellor v. Priest, 12 Pick. (Mass.) 399. Minnesota. — Herrick v. Baldwin, 17 Minn. 209, 10 Am. Rep. 161. Missouri. — American National Bank v. Banks, 42 Mo. 450, 97 Am. Dec. 349. West Virginia. — Merchants' and Mechanics' Bank v. Evans, 9 W. Va. 373. Wisconsin. — Krouskop v. Shoutz, 51 Wis. 204, 8 N. W. 241, 37 Am. Rep. 817. See: Mississippi. — Bay v. Shrader, 50 Miss. 326. ^'Johnston v. May, 76 Ind. 293; Warrei. ^r, Fant, 79 Ky. 1; Wood- worth V. Bank, 19 Johns. (N. Y.) 391; Sanders v. BagTvell, 37 S. C. 145, 15 S. E. 714, 32 S. C. 238, 10 S. E. 946, 7 L. R. A. 743; Warring- ton V. Early, 23 Law J. Q. B. 47. ^* Benjamin v. McConnel, 9 111. 536, 46 Am. Dec. 474. ==^ Littlefield v. Coombs, 71 Me. 110; Theopold Mercantile Co. v. Deike, 76 Minn. 121, 78 N. W. 977; Lau V. Blomberg. 3 Neb. (unoflBc.) 124. 91 N. W. 206; Hubbard v. Williamson, 27 N. C. 397. Examine Hall V. Hale, 8 Conn. 336; Gushing v. Field, 70 Me. 50, 35 Am. Rep. 293. ^"Kennon v. McRea, 7 Port. (Ala.) 175; Andrews v. Simms, 33 Ark. 771; Buck V. Appleton, 14 Me. 284; Farm- er V. Rand, 14 Me. 225; Clauson v. Gustin, 5 N. J. L. 821. ^' Belden v. Hann, 61 Iowa 42, 15 N. W. 591. 199 OF INDORSEMENT. [§ 180 action against them.^^^ And a holder of a note severally indorsed in blank has no right to alter the indorsement so as to make the assign- ment to him the joint act of all the indorsers.^^^ So a writing which seeks to render a guarantor a surety is material and will avoid the instrument.^*" And in an action against an indorser he may show that an indorsement prior to his own has been erased.^*^ Where, how- ever, it appears that the erasure of an indorsement was accidental it is held not to relieve the indorser.^*^ And an indorsement for col- lection is not a material part of an instrument, the striking out of which will defeat recovery.^*^ So the right to recover will not be af- fected by the erasure of an indorsement made by an unauthorized third person.^** And the addition of a word of description to the name of an indorsee is not a material alteration of a note or draft, when it is intended by the parties that the paper shall go to the indorsee in the exact capacity or relationship indicated by the descriptive word so added.^*^ Again the changing of an indorsement "pay the bearer" to a formal assignment to the indorsee has been held immaterial, as they are both in effect the same.^*** And where the striking out of the name of an indorsee is the act of a stranger it will be no defense to an action on the paper.^*^ And where, below the indorsement of a party's name upon a note, the words "Glens Falls, N. Y.," were written in pencil, by the manager of the bank at which it was payable, as a mere memorandum, pursuant to the custom of the bank to do so where the address of the indorser was not known, and it was done for the purpose of direction to the clerks in the bank in keeping their records, it was held to be an addition which in no way changed the obligation of the in- dorser and neither changed in the slightest nor assumed to change his contract, was immaterial and did not discharge him.^'*® ISTor will the =^ Harnett v. Holdredge (Neb., such circumstances added to the 1903), 97 N. W. 443. name of the one to whom a draft =''> Morrison v. Smith, 13 Mo. 234, was indorsed by the payee. See 53 Am. Dec. 145. also, Birmingham Trust & Sav. Co. ^'^ Robinson v. Reed, 46 Iowa 219. v. Whitney, 183 N. Y. 522, 76 N. E. =" Curry v. Bank, 8 Port. (Ala.) 1089, aff'g 95 App. Div. 280, 88 N. 360. Y. Supp. 578; Bank of Genesee v. =" Brett V. Marston, 45 Me. 401. Patchin Bank, 13 N. Y. 309. '"Cessel V. Dows, 1 Blatchf. (U. =^'' Foote v. Bragg, 5 Blackf. (In«l. S.) 335, Fed. Cas. No. 2502. 363. =" Waldorf V. Simpson, 15 App. =^' Piersol v. Grimes, 30 Ind. 129, Div. (N. Y.) 297, 44 N. Y. Supp. 921. 95 Am. Dec. 673. =" Birmingham Trust & Sav. Co. "^^ Merchants' Bank of Canada v. V. Whitney, 95 App. Div. (N. Y.) Brown, 86 App. Div. (N. Y.) 599, 83 280, 88 N. Y. Supp. 578, so holding N. Y. Supp. 1037. where the word cashier was under §§ 181, 182] ALTERATIOX OF PAPER. 200 release of an indorser on the groimd of a material alteration operate as a discharge of prior indorsers.^*^ § 181. Erasure or alteration of signature of surety. — It will be a good defense to an action against a surety that the name of a co-surety has been erased without the former's consent.^^" The principal debtor, however, is held not released by the alteration or erasure of the signa- ture of a surety. ^^^ So in a recent case in Oregon it is held that the erasure of the word "surety" after the name of one of the makers of a note is not a material alteration and does not affect the liability of the parties.^^^* And where the name of a surety in the body of a note, signed by the defendant in blank, was erased and the name of another inserted to conform to the signatures it was held not to be a material alteration, as the instrument would have been as valid and binding if no name had been inserted.^^^ And where the signature of a surety is misplaced by mistake and an alteration is made for the purpose of cor- recting the error it will not constitute a defense.^^^ So where a person signed a note as guarantor below the signatures of the makers and subsequently had his name erased as a maker and inserted on the back with a guaranty of payment it was held not a material alteration.^^* § 182. Addition of name as surety or guarantor. — The fact that the name of another is affixed to an instrument as surety subsequent to the signing of the same by the maker, a principal debtor, will not, it is 249 "Every indorsement of a paper 25 Oreg. 592, 37 Pac. 74; Williams is a new and substantive contract v. Island City M. Co., 25 Oreg. 573, and the liability of each indorser as 591, 37 Pac. 49.) It would only show it respects the holder is separate that as between themselves, one was and distinct from the others." Per principal and the other surety, and Collier, C. J., in Kennon v. McRea, would perhaps charge the payee or 7 Port. (Ala.) 175. holder with knowledge of that fact, ^° McCramer v. Thompson, 21 Iowa but it would not affect their liability 244; Hall's Adm'x v. McHenry, 19 to the payee." Per Mr. Justice Bean. Iowa 521, 87 Am. Dec. 451. Compare Lamb v. Paine, 46 Iowa ^'Broughton v. West, 8 Ga. 248. 550, 26 Am. Rep. 163; Huntington v. 251* Galloway v. Bartholomew, 44 Finch, 3 Ohio St. 445. Oreg. 75, 74 Pac. 467, in which it is =" Jones v. Insurance Co., 1 Mete. said: "The fact, if it is a fact, that (Ky.) 58. the word 'surety' was written after =" Lynch v. Hicks, 80 Ga, 200, 4 the name of one of the signers did S. E. 255. not render them any less joint and "' Ryan v. Bank, 148 111. 349, 35 Eeveral obligors. (Bowen v. Clarke, N. E. 1120. I 201 ADDITION OF XAME OF SURETY OR GUARANTOR. [§ 183 held, release the latter from liability/^^ as it does not increase or di- minish his liability, he being liable for the whole debt in any event.^^^ So where the name of a guarantor is added it has been declared that it "is not a material alteration and does not release those primarily bound. It does not in any way change or affect their rights. It is an independent contract made with a third party, to which the con- sent of the obligors is unnecessary. Their liability is neither in- creased nor diminished by the addition of the name of the guarantor, and he has no right of contribution or exoneration. The rights of the obligors are no more affected by the guaranty placed on the note than they would be by a guaranty placed on a separate instrument."^" And the addition of a name as surety, subsequent to the signing by the original surety, has been construed as an immaterial alteration, so far as the liability of the latter is affected.- ^'^ So it has been said that such a signing for a new consideration constitutes a now and in- dependent contract to which the consent of the original promisor is not required. ^°® *=* Montgomery Railroad Co. v. beck, 97 Fed. 896, 3 C. C. A. 131, Hurst, 9 Ala. 518; Stone v. White, 8 per Caldwell, C. J. Gray (Mass.) 589; Miller v. Finley, =«« ^ rand all v. Bank, 61 Ind. 349; 26 Mich. 249, 12 Am. Rep. 306; Royse Graham v. Rush, 73 Iowa 451, 35 N. V. Bank, 50 Neb. 16, 69 N. W. 301; W. 518; Brey v. Hagan. 23 Ky. Law Brownell v. Winne, 29 N. Y. 400. R. 18, 62 S. W. 1; Ward v. Hackett, See Cotton v. Simpson, 8 Ad. & E. 30 Minn. 150, 14 N. W. 578, 44 Am. 136. But see Sullivan v. Rudisill, Rep. 187; McCaughey v. Smith, 27 63 Iowa 158, 18 N. W. 856; Chappell N. Y. 9. Compare Berryman v. Man- V. Spencer, 23 Barb. (N. Y.) 584; ker, 56 Iowa 150, 9 N. W. 103, hold- Gardner V. Walsh, 5 El. & Bl. 83. ing that such a change after deliv- ^^ Barnes v. Van Keuren, 31 Neb. ery to the payee will operate as a 165, 47 N. W. 848; Mersman v. discharge. Werges. 112 U. S. 139, 5 Sup. Ct. 65. ==>" Stone v. White, 74 Mass. (8 "' First National Bank v. Weiden- Gray) 589. CHAPTEE YIII CONSIDERATION GENERALLY. Sec. 183. Presumption as to considera- tion — Rules. 184. Showing real consideration — Sec. 186. "Value received" — Considera- tion not expressed — Rebut- ting presumption. Rebutting presumption as to 187. Showing real consideration — consideration. 185. Same subject — Matters dehors contract. To what parties rule applies. § 183. Presumption as to consideration — Rules. — Although a pa- per which is not good as a bill of exchange does not import a valid consideration ;^ and although, notwithstanding decisions to the con- trary, this rule as to consideration has, under many adjudications, been held to govern in case of non-negotiable paper generally,^ yet, ordina- ^ Averett v. Booker, 15 Gratt. (Va.) 163, 76 Am. Dec. 203. In this case the court said: "I think it clear that this paper cannot be re- garded as a bill of exchange nor as carrying with it the exemption per- taining to that class of securities from the necessity of both averring and proving a sufficient considera- tion as the condition of recovering upon it." See, also. Summers v. Sanders (Tex. Civ. App.), 28 S. W. 1038. - Connecticut. — National Sav. Bk. V. Cable, 73 Conn. 568, 572, 48 Atl. 428 (a non-negotiable order drawn on particular fund, Neg. Inst. Law, g§ 1, 3; Pub. Acts 1897, ch. 74); Bristol V. Warner, 19 Conn. 7, 16. (The court said that it was, after some doubt, the settled law of the state). Illinois. — Wickersham v. Beers, 20 111. App. 243, 249. Kentucky. — Prior v. Lindsay, 3 9 Bibb (Ky.) 76 (a case of an order drawn on a particular fund). Maine. — Bourne v. Ward, 51 Me. 191 (holding that notes non-nego- tiable and notes negotiable while in the hands of the original promisee import consideration). Massachusetts. — Hemenway v. Hickes, 21 Mass. (4 Pick.) 497 (want of averment of consideration was held fatal); Courtney v. Doyle, 92 Mass. (10 Allen) 122, 123. Mississippi. — Hardin v. Pelan, 41 Miss. 112, 115. New Jersey. — Conover v. Stillwell, 34 N. J. L. 54 (a case of a written promise to pay money on a contin- gency). North Carolina. — Stronach v. Bled- soe, 85 N. C. 473. 476. Pennsylvania. — Sidle v. Anderson, 45 Pa. St. 464 (a case of an order un- der seal on one person to pay money to another). South Carolina. — Wingo v. Mc- 02 203 PRESUMPTION AS TO COXSIDERATIOX. [§ 183 rily a paper which constitutes a valid bill of exchange forms a written contract carrying with it evidence of the consideration on which it is based and it is scarcely ever necessary that a plaintiff in an action on it should prove that he gave a consideration.^ This rule also applies to negotiable paper in general.* Dowell, 8 Rich. (S. C.) 446 (holding it necessary to aver and prove con- sideration). Tennessee. — Reed v. "Wheeler, 10 Tenn. (2 Yerg.) 50 (holding that consideration must be averred). Decisions contra see California. — Rogers v. Schulenberg, 111 Cal. 281, 43 Pac. 899 (holding that written instruments are presumptive evi- dence of consideration under Civ. Code). /nfZiawo.— Louisville, Evansville & St. L. R. Co. V. Caldwell, 98 Ind. 245, 252. Missouri. — Taylor v. Newman, 77 Mo. 257, 263 (a case of a draft or order to pay a certain sum and charge same to drawee. It had all the essentials of an inland bill of ex- change. By the statute also an in- strument in writing for the payment of money imported a consideration). Islew York,. — Cartwright v. Gray, 127 N. Y. 92, 38 N. Y. St. Rep. 56, 12 L. R. A. 845, 27 N. E. 835, 24 Am. St. Rep. 424 (the instrument being a promissory note under the statute —1 Rev. Stat. 768, 3 & 4 Anne, c. 9— it was held to import a consideration whether non-negotiable or not, case affirms 57 Hun 518, 33 N. Y. St. Rep. 98, 11 N. Y. Supp. 278). See Dean v. Carruth, 108 Mass. 242, 244; First Nat. Bk. V. Spear, 12 S. D. 108, 80 N. W. 166. ^Krumbarr v. Ludeling, 3 Mart. 0. S. (La.) 641, 642; Averett v. Booker, 15 Graft. (Va.) 163, 76 Am. Dec. 205, where the court says: "If the order in question were good as a bill of exchange it cannot be ques- tioned that the party might have recovered upon it without averring in his declaration or proving at the trial that any value had been re- ceived for it, as such a bill is pre- sumed to stand upon a valuable con- sideration and prima facie to im- port it." * Alabama. — Brown v. Johnson Bros., 135 Ala. 608, 33 So. 683, 685 (a note is prima facie evidence of consideration. There was no plea setting up want or failure of consid- eration) ; Cunyus v. Guenther, 96 Ala. 564, 566, 11 So. 649 (offering note in evidence makes out prima facie case) ; Martin v. Foster, 83 Ala. 213, 214, 3 So. 422 (a note) ; Thomp- son V. Armstrong, 5 Ala. 383, 387. Arkansas. — Richardson v. Corn- stock, 21 Ark. 69, 76 (a note). Byrd V. Bertrand, 7 Ark. 32 (a bill of ex- change). California. — Pastene v. Pardein, 135 Cal. 431, 434, 67 Pac. 681 (a note); Scribner v. Hanke, 116 Cal. 613, 48 Pac. 714 (holding that in- dorsement on note imports valuable consideration) ; Fuller v. Hutchings, 10 Cal. 523, 70 Am. Dec. 746 (holding that presumption is that a check was given for a valid consideration). Colorado. — Reed v. First Nat. Bk. of Pueblo, 23 Colo. 380, 48 Pac. 507 (holding that presumption is that note was founded upon sufficient consideration) ; Perot v. Cooper, 17 Colo. 80, 83, 31 Am. St. Rep. 258, 28 Pac. 391 (note presumed to be founded on sufficient consideration) ; Travellers' Ins. Co. v. Denver, 11 Colo. 434, 18 Pac. 556 (holding city § 183] CONSIDERATIOX GENERALLY. 201 warrant a negotiable instrument un- der statute and an averment of con- sideration unnecessary). Connecticut. — Bristol v. Warmer, 19 Conn. 7 (a note). District of Columbia. — Johnson v. Wright, 2 App. Cas. D. C. 216 (ne- gotiable check). Florida. — McCallum v. Driggs, 35 Fla. 277, 284, 17 So. 407 (holding that where consideration of note is not denied it is unnecessary to prove the consideration). Georgia. — Rowland v. Harris, 55 Ga. 141; Scattergood v. Findlay, 20 Ga. 423, 425. Illinois. — McMickey v. Safford, 197 111. 540, 64 N. E. 540 (holding that offering a note in evidence and prov- ing signatures made out a prima -facie case) ; Wrightman v. Hart, 37 ni. 123 (holding that the presump- tion is that a promissory note was assigned for value) ; Board v. O'Don- ovan, 82 HI. App. 163 (indorsement on note imports consideration). Indiana. — Smith v. Scott, 106 Ind. 245, 6 N. E. 145 (holding that pre- sumption is that indorsement was for value) ; Du Pont v. Beck, 81 Ind. 271, 273; Woodworth v. Veitch, 29 Ind. App. 529, 64 N. E. 932 (pre- sumption is that note based on suffi- cient consideration) . Iowa : Luke v. Koenen, 120 Iowa 103, 94 N. W. 278, Code, § 3069. Kentucky. — Day v. Long, Ky. Cb. App. 1904, 26 Ky. L. Rep. 123, 80 S. W. 774, 775 (law presumes a con- sideration for a note, per Hobson, J.); Cox V. Cox, Ky. Cb. App. 1904, 25 Ky. L. Rep. 1934, 79 S. W. 220 (statute imports a consideration into every note) ; Power v. Hambrick, Ky. Ct. App. 1903, 25 Ky. L. Rep. 30. 74 S. W. 660 (presumption is that note was given for sufficient consid- eration) ; Brown v. Hall, 2 A. K. Marsh. (Ky.) 599 (bill of exchange). Louisiana. — Landwirth v. Shaph- ran, 47 La. Ann. 336, 339, 16 So. 839 (holding that every note imports value received). Maryland. — Ingersoll v. Martin, 58 Md. 67, 42 Am. Rep. 322 (holding that note is prima facie evidence of consideration). Massachusetts. — Huntington v. Shute, 180 Mass. 371, 62 N. E. 380 (holding that production of note with admission or proof of signature makes a prima facie case). Michigan. — Manistee Nat. Bk. v. Seymour, 64 Mich. 59, 72, 31 N. W. 140. Minnesota. — Germania Bk. v. Michaud, 62 Minn. 459, 466, 54 Am. St. Rep. 653, 65 N. W. 70, 30 L. R. A. 286 (under law merchant negotiable promissory note by administrator imports sufficient consideration to bind him personally, but rule quali- fied). Mississippi. — Moore v. Michell, 1 Miss. 231. Missouri. — Eyerman v. Pirou, 151 Mo. 107, 115, 52 S. W. 229 (note im- ports consideration, citing Rev. Stat. 1889, § 2389); State, Grimm v. Man- hattan Rubber Mfg. Co., 149 Mo. 181, 211, 212, 50 S. W. 321, 10 Am. & Eng. Corp. Cas. N. S. 338 (prima facie evidence of yalid obligation; note to directors by president and stockholders of corporation) ; Tap- ley V. Herman, 95 Mo. App. 537, 69 S. W. 482; Lowry v. Danforth, 95 Mo. App. 441, 69 S. W. 39 (under Mo. Rev. Stat. 1899, § 894). Montana. — Clark v. Marlow, 20 Mont. 249, 255, 50 Pac. 713 (consider- ation implied at common law as to all commercial paper). Nebraska. — Search v. Miller, 9 Neb. 26, 30, 1 N. W. 975. Neiv Hampshire. — Shaw v. Shaw, ■I 205 PRESUMPTION AS TO COXSIDERATIOX. [§ 183 60 N. H. 565 (production and proof of note shows prima facie a consid- eration) ; Horn v. Fuller, 6 N. H. 511 (a note). New York. — Carnwright v. Gray, 127 N. Y. 92, 98, 12 L. R. A. 845, 27 N. E. 835, 24 Am. St. Rep. 424, 38 N. Y. St. Rep. 56. aff'g 57 Hun 518, 33 N. Y. St. Rep. 98, 11 N. Y. Supp. 278; 1 Rev. Stat. 768; 3 & 4 Anne, c. 9; Langley v. Wads- worth, 99 N. Y. 61, 63, 1 N. E. 106 (possession and proof of genuine- ness makes out prima facie case) ; Hickok V. Bunting, 92 N. Y. App. Div. 167, 86 N. Y. Supp. 1059 {prima facie a note is supported by a valid consideration where nothing appears on its face showing the con- trary); Bottum V. Scott, 11 N. Y. afl'd 120 N. Y. 623 (mem.), 29 N. Y. St. Rep. 997, 23 N. E. 1152; Under- bill V. Phillips, 10 Hun (N. Y.) 591; Sawyer v. McLouth, 46 Barb. (N. Y.) 350, 354. North Carolina. — Campbell v. Mc- Cormac, 90 N. C. 491, 492. Ofiio. — Dalrymple v. Wyker, 60 Ohio St. 108, 41 Ohio L. J. 310, 53 N. E. 713; Dugan v. Campbell, 1 Ohio 115, 119 (declaring that by common consent actions have always been brought and sustained upon such in- struments without setting forth or proving the consideration). Oregon. — Flint v. Phipps, 16 Oreg. 437, 448, 19 Pac. 543. Pennsylvania. — Ritchie v. Safe De- posit & T. Co., 189 Pa. 410, 42 Atl. 20 (consideration of check presumed and not necessary in first instance to prove a consideration) ; Hartman v. Shaffer, 71 Pa. St. 312, 315; Sidle v. Anderson, 45 Pa. St. 464, 467 (rule applies to bills of exchange or nego- tiable instruments). South Carolina. — Hubble v. Fogar- tie, 3 Rich. (S. C.) 413, 417, 45 Am. Dec. 775. ("Every parol contract at common law required a considera- tion to be alleged and proved, but to this rule bills of exchange and prom- issory notes are exceptions; they furnish in themselves an implied le- gal consideration," and it is not nec- essary to allege and prove a consid- eration for them.) South Dakota. — Niblack v. Cham- peny, 10 S. D. 165, 166, 72 N. W. 402 (a written Indorsement of extension on a note affords presumptive evi- dence of a consideration). Tennessee. — Boyd v. Johnson, 89 Tenn. 284, 286, 14 S. W. 804 (admin- istrator's note). Utah. — Nephi First Nat. Bk. v. Foote, 12 Utah 157, 167, 42 Pac. 205. Texas. — See Henderson v. Glass, 16 Tex. 559, 560. Vermont. — Willard v. Pinard, 65 Vt. 160, 163, 26 Atl. 67; Arnold v. Sprague, 34 Vt. 402 (bills of ex- change are presumed to be upon a sufficient consideration); Terry v. Ragsdale, 33 Graft. (Va.) 342, 345 (a check is prima facie evidence that the drawer at the time it was drawn was indebted to the payee in the amount- of the check on an indebt- edness previously existing or in- curred at the time the check was drawn). Virginia. — Peasley v. Boatwright, 2 Leigh (Va.) 195 (consideration need not be alleged). Washington. — Poncin v. Furth, 15 Wash. 201, 206, 46 Pac. 241. West Virginia. — Cheurout v. Bee, 44 W. Va. 103, 28 S. E. 751 (plaintiff need not plead or prove considera- tion in action at law). Canadian. — Parsons v. Jones, 16 Up. Can. Q. B. 274, 276. Examine California. — Henke v. Eureka End. Assoc, 100 Cal. 429, 432, 34 Pac. 1089, which was a case of an 184] CONSIDERATION GENERALLY, 206 § 184. Showing real consideration — Rebutting presumption as to consideration. — It is well settled that as between original or imme- diate parties in an action upon a bill or note the consideration may be inquired into and the real consideration shown. ^ So where it was action on an endowment certificate, but Searles, C, said in argument that long before the Civ. Code, § 1614, providing that a written in- strument is presumptive evidence of a consideration, the same presump- tion applied to negotiable paper. Every negotiable Instrument is presumed prima facie to have been issued for a valuable consideration. Neg. Inst. Law, § 50. See Appendix herein. Consideration for a note under seal is presumed. Wester v. Bailey, 118 N. C. 183, 24 S. E. 9. Although there are cases in which the plaintiff may be required in the first instance and in his testimony in chief to go into the question of the consideration of a promissory note, nevertheless "it has been the gen- eral law, both in England and Amer- ica, for two hundred years — that is, since the statute of 3 and 4 Anne, chap. 9, relating to promissory notes — and this general law has been em- bodied in the Act of Congress of January 12, 1899 (30 Stat. 785), re- lating to negotiable instruments; and again, in the new code law for the District of Columbia, into which that Act of Congress has been in- corporated as sections 1304 to 1493, both inclusive, that every negotia- ble instrument is deemed prima facie to have been issued for a valu- able consideration, and every party whose signature appears thereon to have become a party thereto for value. * * * Proof of genuineness of signatures and proof of notice of protest would have constituted a sufficient prima facie case." Towles v. Tanner, 21 App. D. C. 530, 542, per Morris, J. ° Connecticut. — Lawrence v. Ston- ington Bk., 6 Conn. 521, 525. Indiana. — Bush v. Brown, 49 Ind. 573, 576, 19 Am. Rep. 695 (where it is said: "If there was no legal, valid or valuable consideration for the giving of the notes they are in- valid") ; Parker v. Morton, 29 Ind. 89, 92 (where it is said: "It has been repeatedly held by this court, under the code, in an action on an obligation in writing prima facie importing a consideration, that a plea alleging that it was given with- out any consideration whatever is good," per Elliott, J.). Louisiayia. — Payne v. Waterston, 16 La. Ann. 239; Brown v. Fort, 1 Mart. O. S. (La.) 34. Maryland. — Ingersoll v. Martin, 58 Md. 67, 73, 42 Am. Rep. 322 (holding that the question of consideration is always open between immediate par- ties and may be impeached by parol). Neb7-aska. — Wilson v. Ellsworth, 25 Neb. 246, 41 N. W. 177. Neto York. — Schoonmaker v. Roosa, 17 Johns. (N. Y.) 301; Elting V. Brinkeroff, 2 Hall (N. Y.) 459. Texas. — Branch v. Howard, 4 Tex. Civ. App. 271, 23 S. W. 478. Federal. — Bank of British North America v. Ellis, 6 Sawy. (U. S.) 96, Fed. Cas. No. 859. See Alabama. — Booth v. Dexter Steam F. E. Co., 118 Ala. 369, 24 So. 405, 16 Bkj. L. J. 93 (holding that real consideration of note may be shown when not apparent on face). I 207 MATTERS DEHORS CONTRACT. [§ 185 urged that there was no consideration for certain notes and a mort- gage and that they were to be operative only on the consummation of a certain purchase and were not to be presently operative, it was held that such notes and mortgage could not be enforced on the basis of a different consideration than that on which they were given." And as the consideration of every promissory note is open to inquiry between the parties to it, so the consideration of such a note not under seal, given for a balance of work done, may be inquired into in a suit be- tween the original parties, even though tlie maker, at the time it was given, expressed himself satisfied with it, there being no evidence that, at the time of the settlement or giving of the note any new considera- tion passed from the payee to the maker.^* § 185. Same subject — Matters dehors contract. — Although it is a settled principle, both in the English and American courts, that parol evidence is not admissible to contradict, vary or materially affect, by way of explanation, a contract in writing, upon the ground that writ- ten evidence is of a higher grade than the mere verbal declarations of witnesses, and consequently where parties have agreed upon the terms of a contract which is afterward reduced to writing, the verbal agree- ment is merged in the written contract, yet it has often been held as no violation of these doctrines, or if so, in terms as well settled as these doctrines themselves, even though upon the face of an instru- ment in writing, the usual expression of consideration, such as for "Value received," may be found, that the maker may show as against the payee or other person standing in the same situation, that the note or bond was given without consideration, or that the consideration has failed, or that fraud in respect to it was practiced upon him by the other party, and under some circumstances that the consideration was illegal.'^ The above rule does not therefore conflict with the rule "Lewter v. Price, 25 Fla. 574, 6 to show real consideration of note. So. 459, see: "* Clement v. Reppard, 15 Pa, St. Alabama. — Folmar v. Siler, 132 111. Ala. 297, 31 So. 719. ''Arkansas. — Cheney v. Higgin- Indiana. — Smith v. BorufE, 75 Ind. botham, 10 Ark. 273, 276, per Scott, 412; Burns' Rev. Stat. Ind. 1901, J. § 6630. See also Folmar v. Siler, 132 Missouri.— Mo. Rev. Stat. 1899, Ala. 297, 31 So. 719. § 645. Maine. — Folsom v. Mussey, 8 Nebraska. — Gifford v. Fox (Neb. Greenl. (Me.) 400, 23 Am. Dec. 522. 1901), 95 N. W. 1066. That parol evidence is admissible Xeiv York. — Keuka College v. Ray, 186] CON'SIDEKATIOX GENERALLY. 208 as to the inadmissibility of oral testimon}' to vary the terms of a writ- ten instrument/* nor does sncli a defense affect the terms of the writ- ing;^ and parol evidence being admitted to show the absence of any valid or sufficient consideration for the alleged liability of the defend- ant to the plaintifE its admission violates no principle established for the protection of third persons as bona fide holders of negotiable pa- per.° Again, to establish the defense of want of consideration it is competent to prove the facts and circumstances under which the signature was obtained, luit evidence is incompetent to change the effect or limit the character of the paper.^'' Nor can the defense of failure of consideration rest upon a showing by the makers of matters tending to vary the contract expressed by the terms of the note but which in no way relate to the consideration.^^ § 186. "Value received" — Consideration not expressed or ex- pressed — Rebutting presumption. — In the absence of a statute to the contrary, the use of the words "value received" is not essential to a bill of exchange, check, promissory note, or commercial paper gen- erally, and even though a consideration is not expressed by these or other words, the rule that such paper imports a consideration applies. ^^ 167 N. Y. 96, 60 N. E. 325, aff'g 58 N. Y. Supp. 745. Examine Northwestern Creamery Co. v. Lanning, 83 Minn. 19, 85 N. W. 823. Rule applies, even though note expressed to be for "value received." Booth V. Dexter Steam Fire Engine Co., 118 Ala. 369, 24 So. 405. Oral evidence may be admitted to impeach the acknowledgment of the consideration of a promissory note and to show the real purpose or con- sideration thereof. Lippincott v. Lawrie, 119 Wis. 573, 97 N. W. 179. Oral evidence of consideration for indorsement may always be shown as between indorser and his immedi- ate indorsee. Peabody v. Munson, 211 111. 324, 71 N. E. 1006, aff' g 113 111 App. 296. Where note was void under statute true consideration may be shown. Burns v. Sparks (Ky. 1904), 26 Ky. Law Rep. 688, 82 S. W. 425, Ky. Stat. 1903, § 4223. "* Harwood v. Brown, 23 Mo. App. 69. ^ Simpson College v. Tuttle, 71 Iowa 596, 599, 33 N. W. 74. " Hamburger v. Miller, 48 Md. 317, 325, 326, per Alvey, J. "McCullock V. Hoffman, 10 Hun (N. Y.) 133. See also Marness v. Henry, 96 Ala. 454, 458-460, 11 So. 410. " Easton Packing Co. v. Kennedy, 131 Cal. ^xviii, 63 Pac. 130, a case of bona fide holders. See §§ 202 et seg. herein. ^- Colorado. — Salazar v. Taylor, 18 Colo. 538, 541, 542, 33 Pac. 369. Maine. — Noyes v. Oilman, 65 Me. 589 (holding that an order operating as an assignment of a note need not contain the words "value re- ceived"); Kendall v. Galvin, 15 Me. 131, 133. I 209 VALUE RECEIVED. [§186 If the words "value received" are expressed, while it is declared that they add nothing more than the law implies/^ yet they raise a pre- sumption of a valuable and legal consideration ;" for the law attributes Massachusetts. — Dean v. Carruth, 108 Mass. 242, 244 (note "is evidence under the hand of the promisor of a contract made upon a good consider- ation, even if the words 'value re- ceived" are omitted"). Missouri. — Taylor v. Newman, 77 Mo. 257. Montana. — Clarke v. Marlow, 20 Mont. 249, 255, 50 Pac. 713 (declar- ing that all commercial paper at common law imports a considera- tion, though none is expressed by the words value received or other words, citing Hatch v. Trayes, 11 Adol. & E. 702; Edw. Bills & N., § 202; Randolph Com. Paper, § 178, and adding: "Having no statute in Montana requiring the use of the ex- pression 'value received' it is not es- sential. Story on Prom. Notes, § 51"). New Hampshire. — Martin v. Stone, 67 N. H. 367, 368, 29 Atl. 845. (Cit- ing Story on Prom. Notes, § 51; 1 Daniels Neg. Inst., § 108). New York. — Carnwright v. Gray, 127 N. Y. 92, 96-99, 12 L. R. A. 845, 27 N. E. 835, 24 Am. St. Rep. 424, 38 N. Y. St. Rep. 56 (holding that an instrument which is a promissory note within the statute — 1 Rev. Stat. 768, which is a substantial re-enact- ment of the statute of 3 & 4 Anne, c. 9 — imports a consideration and the words "value received" need not appear upon the face of the note; case affirms 57 Hun 518, 33 N. Y. St. Hep. 98, 11 N. Y. Supp. 278); Un- derbill V. Phillips, 10 Hun (N. Y.) 591, 592; Kramer v. Kramer, 90 N. Y. App. Div. 176, 86 N. Y. Supp. 129 ("value received" in a note imports a consideration) ; Bruyn v. Russell, Joyce Defenses — 14. 38 N. Y. St. Rep. 50; Kinsman v. Birdsall, 2 E. D. Smith (N. Y.) 395, 397 (declaring that the omission of the words "value received" does not alter the legal effect of a promissory note. South Carolina. — Hubble v. Fogar- tie, 3 Rich. (S. C.) 413, 417, 45 Am. Dec. 775. (It is nevertheless a valid instrument importing a con- sideration. Presumptively it was given for a sufficient consideration.) Federal. — Moses v. Lawrence Coun- ty, 149 U. S. 298, 302, 37 L. Ed. 743, 13 Sup. Ct. 900 ("every negotiable promissory note, even if not purport- ing to be for 'value received,' im- ports a consideration, and the in- dorsement of such a note is itself prima facie evidence of having been made for value"). English. — Laraway v. Harvey, Rap. Jud. Quebec, 14 C. S. 97 (rule ap- plied to checks and other negotiable instruments, citing Taylor on Ev., No. 178; 2 Daniel on Neg. Inst. 1643, 3 Phillips on Ev., p. 426, Civil Code Arts. 2285, 2351, 2353, and quoting 3 Kent's Com., p. 77). Examine Hart v. Harrison Wire Co., 91 Mo. 414, 418, 4 S. W. 123, un- der Rev. Stat., § 547, requiring note to be "expressed to be for value re- ceived." See Negot. Inst. Law N. Y., §§ 330, 331. '^Carnwright v. Gray, 127 N. Y. 92, 96-99, 12 L. R. A. 845, 27 N. E. 835, 24 Am. St. Rep. 424, 38 N. Y. St. Rep. 56. ^'^ Alabama. — Thompson v. Arm- strong, 5 Ala. 383 (the general rule was asserted and the words "value received" were expressed). 18G] COXSIDEIIATION GENERALLY. 210 so much force to a formal written contract and to the words "value received" as to presume in the absence of proof that there was a Arkansas. — Richardson v. Corn- stock, 21 Ark. 69, 76 (note expresses "value received"). California. — Waldrop v. Black, 74 Cal. 409, 16 Pac. 226 (indorsement for value received by payee to surety together with latter's possession of note raises, in absence of evidence to the contrary, the presumption of payment of value). Connecticut. — Mascolo v. Monte- santo, 61 Conn. 50, 53, 29 Am. St. Rep. 170, 23 Atl. 714; Raymond v. Sellick, 10 Conn. 480, 484, per Waite, J. Hawaiian. — Macfarlane v. Lowell, 9 Hawaiian, 438, 440. Illinois. — Hoyt v. JafEray, 29 111. 104 (value received is evidence of sufficient consideration to support assumpsit). Kentucky. — Cotton v. Graham, 84 Ky. 672, 680, 2 S. W. 647 (there was also the expressed consideration of love and affection). Ifaiwe.— Bourne v. Wood, 51 Me. 191 (declaring that where a note contains the words "value received" or words of equivalent import, the note itself will be evidence prima facie of the consideration. The note here was non-negotiable and did not contain the words "value received"). Massachusetts. — Huntington v. Shute, 180 Mass. 371, 62 N. E. 371 (holding that the production of a note with the words "value re- ceived," with the admission of proof of the signature, makes a prima facie case; but the decision is prin- cipally as to burden of proof). Michigan. — Conrad Seipp Brew. Co. V. McKittrich, 86 Mich. 191, 195, 196, 48 N. W. 1086 (note was a judg- ment note and not a promissory note, and it was held that the ex- pression "value received" was suffi- cient prima facie to show an ade- quate consideration). Minnesota. — Friedman v. Johnson, 21 Minn. 12, 15. Neiv Hampshire. — Child v. Moore, 6 N. H. 33 (holding that order for the payment of money expressed to be for "value received" is prima facie evidence that the drawer has received the amount of money or the money's worth) ; Odiorne v. Odiorne, 5 N. H. 315, 316. New York. — Bruyn v. Russell, 60 Hun (N. Y.) 280, 282, 283, 28 N. Y. St. Rep. 50, 14 N. Y. Supp. 591; Bruyn v. Russell, 52 Hun (N. Y.) 17, 22 N. Y. St. Rep. 374, 4 N. Y. Supp. 784 (in this case, however, plain- tiff attempted to establish affirma- tively the consideration) ; Jerome V. Whiting, 7 Johns. (N. Y.) 321 (a non-negotiable note). North Carolina. — Stronach v. Bled- soe, 85 N. C. 473, 476. Pennsylvania. — Messmore v. Mor- rison, 172 Pa. St. 300, 34 Atl. 45 (a promissory note, under statute). Vermont. — Redding v. Redding, 69 Vt. 500, 502, 503, 38 Atl. 230. Federal. — National Loan & Inv. Co. V. Rockland County, 36 C. C. A. 370, 94 Fed. 335. English. — Halliday v. Atkinson, 5 Barn. & Cr. 501, 11 Eng. C. L. 558. See Bond v. Stockdale Dow. & Ry. 140, 16 Eng. C. L. 278. In the following cases the words "value received" were used and the consideration was in question, but the effect of the words was not dis- cussed. Massachusetts. — Hill v. Buckmin- ster, 22 Mass. (5 Pick.) 391. 4 211 SHOWING REAL CONSIDERATIOX. [§ 18' valuable consideration for the promise.^^ however, be rebutted by proof .^® This presumption may, § 187. Showing real consideration — To what parties rule applies. The rule permitting an inquiry into the consideration of a bill or note generally, or even though the words "value received" are ex- pressed, applies to original or immediate parties, or to parties between whom there is a privity, but not as to remote parties ;^'^ that is, inquiry into the consideration of negotiable paper can only be made between privies or immediate parties thereto, as the maker and payee, an in- dorser and his indorsee. All other parties to negotiable paper are called remote, and, as between them, a consideration for making or indorsing the same is presumed. But the defendant may make the defense of a want of consideration against a remote party, if he could have done so against a nearer party and such remote party took the paper with a knowledge that it was open to this defense.^^ Michigan. — Fink v. Chambers, 95 Mich. 508, 55 N. W. 375. Missouri. — Harwood v. Brown, 23 Mo. App. 6. New York. — Schoonmaker v. Roo- sa, 17 Johns. (N. Y.) 301. Ohio. — Loffland v. Russell, Wright (Ohio) 438. " Parish v. Stone, 14 Pick. (Mass.) 198, 201. "' Halliday v. Atkinson, 5 Barn. & Cr. 501, 11 Eng. C. L. 558. SEE Neiv Hampshire. — Martin v. Stone, 67 N. H. 367, 39 Atl. 845. New York. — Bruyn v. Russell, 60 Hun (N. Y.) 280, 282, 38 N. Y. St. Rep. 50, 14 N. Y. Supp. 591; Sawyer V. McLouth, 46 Barb. (N. Y.) 350, 353. North Carolina. — Campbell v. Cor- mac, 90 N. C. 491. West 'Virgi7iia. — Cheurout v. Bee, 44 W. Va. 103, 28 S. E. 751. Canada. — Laraway v. Harvey, Rap. Jud. Quebec, 14 C. S. 97. England. — Bond v. Stockdale, 7 Dow. & Ry. 140, 16 Eng. C. L. 278, and examine cases cited under the sections herein as to want of con- sideration. "Singleton v. Bremar, Harp. (S. C.) 201; Daniels on Neg. Inst. (5th ed.), § 163. "As between remote parties, for example, between payee and ac- ceptor, between indorsee and ac- ceptor, between indorsee and re- mote indorser, two distinct consid- erations at least must come in ques- tion; first that which the defendant received for his liability, and sec- ondly, that which the plaintiff gave for his title. An action between re- mote parties will not fail unless there be an absence or failure of both these considerations." Byles on Bills (6th Am. Ed.) 206 quoted in Arpin v. Owens, 140 Mass. 144, 145, 3 N. E. 25. See § 191 herein. '^ Bank of British North America V. Ellis, 6 Sawy. (U. S.) 96, Fed. Cas. No. 859, 8 Am. L. Rec. 460, per Deady, D. J., citing 1 Daniels Neg. Inst., § 174; 1 Parsons Notes & Bills 175, 183. See Neg. Inst. Law, § 96. Appendix herein. See § 191 herein. CHAPTEK IX. ADEQUACY OR SUFFICIENCY OF CONSIDERATION. Sec. Sec. 188. Inadequate or insufficient con- 192. Adequacy in value unnecessary. sideration distinguislied from 193. Inadequacy or insufBciency of want or failure of considera- consideration — Rule as to in- tion. quiry into — Fraud. 189. Sufficient if consideration is a 194. Sufficient consideration — Illus- benefit or injury. trations. 190. Distinction between valuable 195. Compromise, settlement or re- consideration other than linquishment note. money and a money consid- 196. Same subject — Unfounded or il- eration. legal claim. 191. Slight consideration — Purchas- 197. Compromise of forgery claim. ing paper at undervalue. § 188. Inadequate or insufficient consideration distinguished from want or failure of consideration. — A distinction is to be observed be- tween inadequacy of consideration which does not in law constitute a defense and a want or failure of consideration, which, as appears else- where herein,^ is a defense, or a defense pro tanto in an action between the parties.^* A large number of the decisions, however, fail to make this distinction but use the terms, adequate or inadequate considera- tion, sufficient or insufficient consideration, and want or failure of con- sideration, as if they were all synonymous, or at least as if they were much the same. § 189. Sufficient if consideration is a benefit or injury. — Courts both of law and equity refuse to disturb contracts on grounds of mere inadequacy whether the consideration is of benefit to the promisor or of injury to the promisee.^ And it is a general rule that the considera- ^ tion to support a promise may be either a benefit accruing to the pur- chaser or a loss or disadvantage to the promisee. A consideration ^ See Chap. X. cited in Earl v. Peck. 64 N. Y. 596. ^*Furber v. Fogler, 97 Me. 585, 598. 588, 55 Atl. 514, per Peabody, J. = Caldwell v. Ruddy, 2 Idaho 5, Johnson v. Titus, 2 Hill (N. Y.) 606, Pac. 339. 212 213 SLIGHT CONSIDERATION, [§§ 190, 191 emanating from some injury or inconvenience to the one party, or from some benefit to tlie other party is a valuable consideration. But to give a consideration value sufficient for the support of a promise, it must be either such as deprived the person to whom the promise was made of a right which he before possessed, or else conferred upon the other party a benefit which he could not otherwise have had.^ So in an Alabama case the court says: "Any benefit resulting to the party promising, or detriment to the party to whom the promise is made, is sufficient, however slight or insignificant it may seem to bo in point of fact. The adequacy or sufficiency of a consideration to support a con- tract rests in the judgment of the parties; and if, in contemplation of law, it is of any value, in the absence of fraud or duress, the contract will be enforced."* So a note given by one person to pay another a certain amount at a fixed time for the performance of personal serv- ices in the future, is valid and binding upon the maker. The promise to pay and promise to perform the services are sufficient consideration.^ § 190, Distinction between valuable consideration other than money and a money consideration. — A distinction has been made be- tween a valuable consideration, other than money, and a money con- sideration. While in the former case the slightest consideration will support a promise to pay the larger amount, to the full extent of the promise, in the latter, the consideration will support a promise only to the extent of the money forming the consideration. The law leaves the measure of the value of a valuable consideration other than money, to the parties to the contract ; but money being the standard of value, is not subject to be changed by contract, and will support a promise to pay money only to the amount of the consideration." §191. Slight consideration — Purchasing paper at undervalue.^ A slight consideration is sufficient to sustain a contract and courts of ^ Conover v. Stillwell, 34 N. J. 54, son, J., in Booth v. Dexter Steam 57, per Depue, J. Fire Engine Co., 118 Ala. 369, 377, Value is any consideration sufR- 24 So. 405, a case of a note given cient to support a written contract, to cover a supposed liability. Neg. Inst. Law, § 51; Eng. Bills of '^Morrison v. Hart, 122 Ga. 660, 50 Exch. Act., § 27. See appendix S. E. 471. herein. ''Sawyer v. McLouth, 46 Barb. (N. 'Boiling v. Munchus, 65 Ala. 558, Y.) 350, 353. See Twentieth Cen- 561 (per Brickell, C. .T., asserting tury Co. v. Quilling (Wis. 1907), the general principle in a case to 110 N. W. 174. foreclose a mortgage and citing 1 ' See §§ 238, 240 herein. Chit. Con. 28-32). Quoted by Haral- § 191] ADEQUACY OR SUFFICIENCY OF CONSIDERATION. 214 law will not look closely into the adequacy of the consideration for a promissory note,^ nor is the fact that there was no fair consideration for negotiable paper, as between the original parties to it, any de- fense against it in the hands of hona fide indorsee;'' for as a general rule the indorsee of a negotiable promissory note, who, for value, pur- chases it before maturity, without knowledge of facts impeaching its validity, may recover the amount due by the terms of the note, al- though he paid an amount therefor less than its face, unless the cir- cumstances of its inception were such as to make it absolutely void by statute, or there was no power to issue the note, or it was obtained by the payee of the maker by illegal and fraudulent means.^** And al- though the fact of taking a bill at considerable undervalue is not -of it- self sufficient to affect the title of the holder, yet it is an important element in considering whether such purchaser acted hona fide^ in ig- norance and error, or was assisting in committing a fraud, and avoided making inquiries because they might be injurious to him.^^ But the inadequacy of the price paid by an indorsee must be such as to impeach his good faith ;^- the price paid by the purchaser must be so out of proportion, having regard to the solvency of the maker, that the indorsee takes the note at his peril.^^ If the purchaser pays a grossly inadequate price and trades with a man in embarrassed circumstances, and proper inquiry would have disclosed the real value of the note, the transaction is suspicious, even though there is no evidence of fraud, and the recovery will be limited to the amount actually paid, with in- terest.^*' Where the statute provides that the holder of a negotiable « Austell V. Rice, 5 Ga. 472. Mar- St. 177, 26 N. E. 979, 29 Am. St. tin V. Kercheval, 4 McLean (U. S. Rep. 540. C. C), 117 Fed. Cas. No. 9163. As "Jones v. Gordon, L. R. 2 App. between the indorser and indorsee Cas. 616, per Lord Blackburn, the face of the note is prima facie Smith v. Jansen, 12 Neb. 125, 10 evidence of the consideration paid N. B. 537, per Maxwell, Ch. J. (The on its negotiation, but it is only amount of the consideration may prima facie. The defendants (in- become a material inquiry upon the dorser) can show an entire want of question of good faith of the pur- consideration or that a small sum chaser) ; Tod v. Wick, 36 Ohio St. only was paid. But where the note 370 (the amount paid may affect in the ordinary course of business the question of the indorsee's good has been negotiated for a valuable faith). consideration the maker is bound by '- Rooker v. Rooker, 29 Ohio St. 1. the face of the note. "Hunt v. Sandford, 14 Tenn. (6 *Middletown Bank v. Jerome, 18 Yerg.) 387. Conn. 443. " Collger v. Francis, 61 Tenn. (2 "Kitchen v. Loudenback, 48 Ohio Baxt.) 422. 215 ADEQUACY IN" VALUE UXXECESSARY. [§ 192 instrument may enforce payment for its full amount against all parties liable, recovery by the purchaser of such paper is not limited to the amount paid therefor. And bad faith on the part of the purchaser of a note against which the maker had a valid defense is not shown by the fact that it was purchased at a heavy discount without inquiry of the maker whom the purchaser knew was perfectly solvent when in- quiry was made of the payee as to the consideration and the latter was in need of money, and the note, thougli held at the time in the state where the suit was brought, was payable in a foreign jurisdiction, the inaccessibility of which for half the year the court would take judicial notice, and the purchase was made some time before maturity and without notice of any infirmity in the paper.^^ But one who pur- chases a note for one-sixteenth of its face value is not a bona fide holder where he knew defendant was in fair credit and able to re- spond." And where the amount paid was very much, less than that of the note and it was purchased of a stranger, the question, whether or not reasonable inquiry would have shown the circumstances, was held to be one for the jury.^'^ If one purchases a note from a person in whose possession it is and to whose order it is payable, for a cer- tain «6um of money, one-half of which is received in cash, and the other half is not paid and the note is collected, he is in no different position than if he had purchased the note on credit for one-half its value, and he is liable to the actual owner of the one-half interest in the note, even though at the time of purchase he had no notice of the actual owner's interest, although he knew that the note belonged to some other person than his assignor, as in such case he is not a bona fide holder.^^ § 192. Adequacy in value unnecessary. — It is not necessary that the consideration of a note shall equal in pecuniary value the face of the obligation given. ^^ If no part of the consideration is wanting i,it the time and no part of it sul)sequently fails, although inadequate in amount, the note is a valid obligation.-^ And if notes are somewhat "McNamara v. Jose, 28 Wash. " Yarwood v. Trusts & Guarantee 461, 68 Pac. 903; Laws 1899, p. 350, Co., Ltd., 87 N. Y. Supp. 947, 950, 94 § 57. See N. Y. Neg. Inst. Law, § 96, App. Div. 47, per Hiscock, J.; Earl appendix herein. v. Peck, 64 N. Y. 596, 598, per '"DeWitt v. Perkins, 22 Wis. 451. Church, Ch. J.; Twentieth Century "Gould v. Stevens, 43 Vt. 125, 5 Co. v. Quilling (Wis. 1907), 110 N. Am. Rep. 265. W. 174. ''Kersey v. Fuaqua (Tex. Civ. =" Earl v. Peck, 64 N. Y. 596, 598; App. 1903), 75 S. W. 56. per Church, Ch. J. § 192] ADEQUACY OR SUFFICIENCY OF CONSIDERATION. 316 larger than the sum exigible, their valid consideration will not be im- paired.^^ So if a note is given for a larger sum than the amount of gold borrowed but it is for a sum equal to the worth of the gold in paper currency there is a valid obligation.^^ And if a draft is accepted solely for honor, and by means of the acceptance an assignment and possession of a bill of lading is obtained, the fact that the bill of lad- ing which is taken as collateral security is not of as great value as was supposed affects the adequacy of the consideration, but not its suf- ficiency in point of law, and, it not being necessary that the considera- tion be adequate in value to support a contract, and there being no pretense of fraud, the receipt of such collateral, though of little value, constitutes a legal consideration.^^ So the amount of a note may be for a sum in excess of the value of the property purchased or right granted^^* much larger than the value of services agreed to be ren- dered.^* While mere gratuitous services are an insufficient considera- tion for any executory agreement or promise, the performance of services and furnishing of valuable things, not as a gratuity, but in expectation of being compensated therefor, is sufficient to sustain a promissory note for an amount in excess of the real value of the services performed or things furnished. In the absence of fraud an existing legal obligation Mall sustain a promise to j)ay an amount for the excess of its real value. -^ iVgain, it is well settled that courts will not overturn such an oliligation because too liberal an amount has been paid for services rendered and to compensate which the note is given ; and if no part of the consideration was wanting at the time and no part of it subsequently failed, the note is a valid contract, although inadequate in amount.^ And the maker of a note, given to the payee for surveys made by the latter at his instance, cannot re- sist payment on the ground that the amount was out of proportion =^ Lanati v. Bayhi, 31 La. Ann. == In re Bradbury, 93 N. Y. Supp. 229. 418, 422. The court per Chase,. J., " Cox v. Smith, 1 Nev. 161, 90 Am. cites Gallagher v. Brewster, 153 N. Dec. 476. See Southern Ins. Co. v. Y. 364, 47 N. E. 450; Cowee v. Cor- Lanier, 5 Fla. 110, 58 Am. Dec. 448. nell, 75 N. Y. 98, 31 Am. Rep. 428; == Kelly v. Lynch, 22 Cal. 661. Earl v. Peck, 64 N. Y. 597; Yar- =3* Twentieth Century Co. v. Quil- wood v. Trust & Guarantee Co., Ltd., ling (Wis. 1907), 110 N. W. 174. 94 App. Div. 47, 87 N. Y. Supp. 947; =* Miller v. McKenzie, 95 N. Y. 575, Bush v. Whitaker, 45 Misc. 75, 91 47 Am. Rep. 85. See Weed v. Bond, N. Y. Supp. 616. See also "Illustra- 21 Ga. 195, Stat. 1831, Cobbs, Dig., tions" of services, § 194, herein, p. 91, as to equities of note given ^''Yarwood v. Trusts & Guarantee attorney for services, Whett v. Co., Ltd., 87 N. Y. Supp. 947, 950, 94 Blount (Ga.), 53 S. E. 205. App. Div. 47, per Hiscock, J. Il 217 INADEQUACY OR I^TSUFFICIENCY OF CONSIDERATIOX. [§ 193 to the value of the services rendered. ^^ So in an action upon a note given for the price of trees, it was held that there being neither war- ranty or fraud the maker could not insist upon inadequacy of con- sideration as a ground for reducing the damages.-^ § 193. Inadequacy or insufficiency of consideration— Rule as to inquiry into — Fraud. — In an action upon a note mere inadequacy of consideration, there being no warranty, misrepresentation, fraud, or undue influence, cannot be given as a defense,-'' where the parties have dealt on equal terms."" So, as between the original parties, and where the adverse rights of creditors are not in question, the law will not in- quire into the adequacy or sufficiency of the consideration.^^ And it is also declared that equity will not grant relief unless the inadequacy is so gross as to shock the conscience and lead to the irresistible conclu- sion of fraud ;^- and that the fraud must also extend to the entire "Rightor V. Aleman, 4 Rob. (La.) 45; Civ. Code Arts. 1854-1857. ^Johnson v. Titus, 2 Hill (N. Y.) 606. ="2Vew York.— Earl v. Peck. 64 N. Y. 596, 598, per Church, Ch. J.; Johnson v. Titus, 2 Hill (N. Y.) 606. See also Connecticut. — Appeal of Clark, 57 Conn. 565, 19 Atl. 332 (applied where there is a legal con- sideration) ; Abbe V. Newton, 19 Conn. 20 (consideration of note was grossly inadequate and fair infer- ence was that parties so under- stood). Georgia. — Green v. Lowry, 38 Ga. 5848 (under Code, §§ 2700, 2701, mere inadequacy of consideration alone will not void a contract. If the inadequacy be great, it is a strong circumstance to evidence fraud, and on a suit for damages for breach of the contract the inade- quacy of the consideration will al- ways enter as an element in estimat- ing the damages). Indiana. — Hereth v. Bank, 34 Ind. 380; Wheelock v. Barney, 27 Ind. 462. lotoa. — Lay v. Isman, 36 Iowa 305. Kentucky. — Roby v. Sharp, 6 T. B. Mon. (Ky.) 375. Massachusetts. — Dean v. Carruth, 108 Mass. 242, 245. New York. — Vosburg v. Diefen- dorf, 119 N. Y. 357, 23 N. E. 80; Maas v. Chatfleld, 90 N. Y. 303 (pur- chased at a discount exceeding the legal rate of interest) ; Root v. Strang, 77 Hun (N. Y.) 14, 28 N. Y. Supp. 273. Ohio. — Dieringer v. Klekamp (Ohio), 11 Wkly. Law Bui. 123 (fraud was not alleged). Virginia. — Loftus v. Maloney, 89 Va. 576, 16 S. E. 749. Federal. — Boggs v. Wann, 58 Fed. 681 (not a good defense in absence of misrepresentations or fraud). =" Cowee v. Cornell, 75 N. Y. 91, 31 Am. Rep. 428. "Parish v. Stone, 31 Mass. (14 Pick.) 198, 207, 25 Am. Dec. 378, per Shaw, C. J. '= Jones V. Deggs, 84 Va. 685, 5 S. E. 799. § 19-i] ADEQUACY OR SUFFICIENCY OF CONSIDERATIOISr. 218 consideration.^^ When the inadequacy of the consideration is such as to create a presumption of fraud and overreaching, or of unconscientious advantage, taken under circumstances of distress and improvidence, on the one side, or of mental incompetency on tlie other, the contract founded thereon cannot be enforced in law or in equity; and a court of equity will, at the instance of the party deceived, interfere and set it aside after it is executed. In cases of gross inadequacy the court will also take advantage of every circumstance which indicates imposition or improper advantage, to found a presumption of fraud, and thereby to rescind the contract. The mere inadequacy of the consideration is not, however, in such cases, the ground upon which a contract is invali- dated, but the fraud which is thereby indicated, and however inade- quate the consideration may be, yet if the circumstances of the case indicate no unfair advantage on the one side, or no great incompetency on the other, the contract will he valid. ^* Again, inadequacy will not be of avail as a defense in an action by an indorsee against an in- dorser,^^ nor, in general, will inadequacy support a plea of want of consideration;^^ but in an action by the indorsee against the maker, upon a note indorsed after maturity, it is a defense that there was want of sufficient consideration, such note being also based upon a considera- tion which was but the promise to pay the debt of another.^^ § 194. Sufficient consideration — Illustrations. — Negotiable paper has been held to be founded upon a sufficient consideration; where such consideration consists of the value of an interest in land and the balance is for compensation for domestic ser^dces, rendered by an adult daughter to her widowed mother, such note being given by the mother to the daughter f^ where the consideration is expressed to be for money and services rendered equivalent to the amount of the note and in full therefor when paid, and the note was executed to the testator's grand- daughter who had lived with him for years and rendered household and personal services both before and after the delivery of the note;^'' where a check was delivered inter vivos to decedent's housekeeper, upon whom he had been more dependent than upon any other person, and =^ Harlem v. Read, 3 Ham. (Ohio) =^Wyman v. Gray, 7 Har. & J. 285, 17 Am. Dec. 594. (Md.) 409. See §§ 234, 235, 239-241, =** Green v. Lowry, 38 Ga. 548, 552, 243, herein, quoting from Story on Contracts, ^ Petty v. Young, 43 N. J. Eq. § 432. 654, 12 Atl. 374. ^^ Dunn v. Ghost, 5 Colo. 134. ^» Velie v. Titus, 60 Hun (N. Y.) ==Rice v. Rice, 106 Ala. 636, 17 So. 405, 15 N. Y. Supp. 467. 626. 219 SUFFICIENT COXSIDERATIOX — ILLUSTRATIOXS, [§ 194 who had been faithful and honest ;^° where the payee, being under no legal obligation to live with his wife, nor compelled to support her child, with whom slie was pregnant by another man at the time of her marriage, but without her husband's then knowledge, agrees as a con- sideration for a note to live with and support them ■,*'^ where the paper is given by a stockholder of an association for his proportionate share of guaranteed indebtedness and he is released therefrom, and transfers his stock, although he had paid in full for such stock ;*- where the note is executed to an incorporated college as an aid toward effectuating the purposes of its incorporation, and on the strength thereof the col- lege has incurred obligations;*^ where it was given as part of a con- sideration of an agreement to quitclaim an interest in certain laud, and to dismiss an action to quiet title as fast as certain portions of the land were sold, even though a part of the note remaining unpaid, the suit to quiet title was renewed and finally determined against the plaintiff;** where the paper is given for a deed to remove a supposed cloud upon title to land ;*5 where there were differences between plain- tiff and defendant, and the former had a lien upon the latter's prop- erty which prevented him from receiving a payment on a building contract, and for the purpose of discharging that lien and thus obtain- ing the desired payment, there being no duress, and the order in ques- tion was given upon an account stated;**' where a surety's note on a cashier's bond is executed for forbearance in suing on such bond;*'' where a note of a son is indorsed by a mother to secure a debt of her husband in consideration of an agreement to forbear action;*^* *" Clay V. Layton, 134 Mich. 317, 96 the court to make a finding upon N. W. 458, 10 Det. Leg. N. 481. this matter is accounted for by the " Brannum v. O'Connor, 77 Iowa absence of any such issue, and the 632, 42 N. W. 504. deficiency of the complaint, if any, " Hilbert v. Burry, 111 Mich. 698, cannot be considered on this appeal. 70 N. W. 318, 3 Det. L. N. 866. As to evidence, it showed a good "Irwin V. Webster, 56 Ohio St. 9, and sufficient consideration for the 46 N. E. 63, 60 Am. St. Rep. 727, 36 contract at the time it was made." L. R. A. 239, 37 Ohio L. J. 157. « Rowe v. Barnes, 101 Iowa 302, " Sharp V. Bowie, 142 Cal. 462, 76 70 N. W. 197. Pac. 62. The action was one for *" Creveling v. Saladino, 89 N. Y. specific performance and one of the Supp. 834, 836, 97 App. Div. 202. appellant's claims was based partly "The renewal of the lien was a suf- upon the failure of the plaintiff to ficient consideration for the order," allege, and of the court to find that per Bartlett, J. there was a fair and adequate con- ^^ Fink v. Farmers' Bank, 178 Pa. sideration for the contract and note 154, 35 Atl. 636. and partly upon the evidence, and ■"* Emerson v. Sheffer, 113 App. Beatty, C. J., said: "The failure of Div. (N. Y.) 19, 98 N. Y. Supp. 1057. § 194] ADEQUACY OR SUFFICIENCY OF CONSIDERATION. 220 where the note is executed, without fraud, to cover a shortage in a deceased husband's account as co-executor of an estate, and in pursu- ance of a compromise and dismissal of legal proceedings against the surviving executor;*® where a person who is either a defaulter or a debtor executes a note for the amount due and his sister also executes a note as collateral ;*^* where the consideration of a note, given by sur- viving partners and an executrix and residuary legatee of a deceased partner, is the surrender of a guaranty of collection or payment of cer- tain securities and the transfer to the members of the old firm of the partnership property ;*® where a note is given by a debtor of the testa- tor to one who was about to administer the estate, the latter promis- ing to execute a receipt for the money as administrator after qualify- ing as such f° where the maker of the note has received all of the tes- tator's property, and as a consideration therefor decedent's note is can- celled and additional time given to pay the debt;^^ where a party en- ters into a compromise agreement with his other creditors, at the in- stance of a bank, and gives to said bank its note to obtain funds to consummate said settlement ;"- for the execution of a note by another, where the time of payment of a note is extended to one of the makers.^^ Where a third person gives his check to discharge a note secured by a mortgage which the holder was threatening to enforce by taking the property covered by the mortgage.^^* So a note is founded upon a good consideration where it is given for information of an outstand- ing title to land in another's adverse possession.^* And the re- lease of dower by a wife is a valuable consideration for a note ex- ecuted by her husband to her.^^ So a note is based upon a suffi- cient consideration where it is given between citizens of the United States for the right of occupancy of land of an Indian Nation, and peaceable possession is taken.^^ The consideration is also valid ^'Rohrbacher v. Aitken, 145 Cal. L. N. 482. See In re Kemp's Estate, 485, 78 Pac. 1054. 4y Misc. R. (N. Y.) 396, 100 N. Y. ^^* Henry v. State Bank (Iowa Supp. 221. 1906), 107 N. W. 1034. =■* National Bank of Newbury v. *^ Fitch v. Frazer, 82 N. Y. Supp. Sayer, 73 N. H. 595, 64 Atl. 189. 138, 84 App. Div. 119. "" Lucas v. Pico, 55 Col. 126. =0 Nelson v. Lovejoy, 14 Ala. 568. " Trust Co. v. Bendow, 135 N. C. ^•McCormal v. Redden, 46 Neb. 303, 47 S. E. 435, granting rehear- 776, 65 N. W. 881. ing of same case, 131 N. C. 415, 42 "■- Mahoney v. Barber, 67 Minn. S. E. 896. 308, 69 N. W. 886. =" Tye v. Chickasha Town Co., 2 " Union Banking Co. v. Martin, Ind. Ty. 113, 48 S. W. 1021. 113 Mich. 521, 71 N. W. 867, 4 Det. I 221 COMPROMISE, SETTLEMENT OR RELINQUISHMENT NOTE. [§ 195 where there is a benefit to the maker or a third person, as well as where the maker is benefited.^^ Again, a purchase of property is a valid consideration for a married woman's note and a promissory note is property. The fact that the maker may be irresponsible does not change the rule that one buying a note buys property.^* And where the agent of the maker receives the amount of a note and it is used for the latter's benefit, it is immaterial that it was furnished for the payee by a third person.^** But services rendered by a daughter to her mother, which are such as she is morally bound to render, do not con- stitute a valuable consideration for a note subsequently given by her father, and no recovery can be had thereupon in the absence of an ex- press promise.®" § 195. Compromise, settlement or relinquishment note. — A note given in compromise or settlement of a doubtful claim in dispute, or of a controversy likely to become the subject of litigation, or in settle- ment of a litigated claim, such compromise or settlement being a dis- charge or extinguishment of the claim or controversy, is based upon a valid and sufficient consideration where such compromise or settlement is made fairly, in good faith, without mistake, undue influence, mis- representation, false statement, fraud or duress, and each party under- stands the facts, and the maker of the note is not ignorant of the nature of his rights.**^ The invalidity of the original obligation is no de- " Barrett v. Mahnken, 6 Wyo. 541, New York. — Chapman v. Ogden, 37 48 Pac. 202. See Fulton v. Loughlin, N. Y. App. Div. 355, 56 N. Y. Supp. 118 Ind. 286. 73, aff'd 165 N. Y. 642, 59 N. E. 1120; '^'' Crampton v. Newton's Est., 132 General Electric Co. v. Nassau Elec- Mich. 149, 93 N. W. 250, 9 Det. L. trie Co., 36 N. Y. App. Div. 510, 55 N. 570. N. Y. Supp. 858, aff'd 161 N. Y. 650. For other instances of a sufficient 57 N. E. 1110. consideration for a note see the fol- Federal. — Morris v. North, 21 C. C. lowing cases: A. 553, 43 U. S. App. 739, 75 Fed. California. — Baldwin v. Hart, 136 912. Cal. 222, 68 Pac. 698; Wheelan v. Examine Murphy v. Gumaer, 18 Swain, 132 Cal. 389, 64 Pac. 560; Colo. App. 183, 70 Pac. 800. Placer County Bank v. Freeman, 126 =^* Hale v. Harris, 28 Ky. Law R. Cal. 90, 58 Pac. 388. 1172, 91 S. W. 660. CoZorado.— Reed v. First Nat. "^ Shugart v. Shugart, 111 Tenn. Bank, 23 Colo. 380, 48 Pac. 507. 179, 76 S. W. 821. See § 192 herein. Illinois. — Hart v. Strong, 183 111. ^^ Alabama. — Booth v. Dexter 349, 55 N. E. 629; Smith v. McLen- Steam Fire Engine Co., 118 Ala. 369. nan, 101 111. App. 196; Rodgers v. 24 So. 405; Wyatt \. Evins, 52 Ala. Jewell Belting Co. (111. App.), 56 285 (when no fraud). N. E. 1017. § 195] ADEQUACY OR SUFFICIENCY OF CONSIDERATION". 223 fense/^* as it does not matter on whose side the right ultimately turns out to be/- and the validity of the compromise will not be affected by the subsequent ascertainment of the fact that the claim is without foundation f^ for, if the setting up of the original defense to the whole Arkansas. — Richardson v. Corn- stock, 21 Ark. 69. California. — Rohrbacher v. Aitken, 145 Cal. 485, 78 Pac. 1054. District of ColumMa. — Northern Leberty Market Co. v. Steubner, 4 Mackey (D. C.) 301. Georgia. — Johnson v. Redwine, 98 Ga. 112, 25 S. E. 924 (compromise of doubtful claim to sufficient con- sideration to support a note fairly given in settlement of the contro- versy compromised) ; Austell v. Rice, 5 Ga. 472 (forbearance to prosecute a legal claim and the com- promise of a doubtful right are both sufficient considerations). Iowa. — Rowe v. Barnes, 101 Iowa 302, 70 N. W. 197; French v. French, 84 Iowa 655, 15 L. R. A. 300, 51 N. W. 145. Kentucky. — Power v. Hambrick, 25 Ky. L. Rep. 301, 74 S. W. 660. (Settlement of suit is sufficient con- sideration for note) ; Rains v. Lee, 18 Ky. L. Rep. 285. 36 S. W. 176 (compromise of claim and dismissal of suit is sufficient consideration). Massachusetts. — Bent v. Weston, 167 Mass. 529, 46 N. E. 386 (there was no contention of any fraud or duress and the check was volun- tarily given. All the facts were known, and a settlement was ef- fected by giving the check); East- on V. Easton, 112 Mass. 438 (note was fairly and freely given in set- tlement of a disputed claim likely to become the subject of litigation) ; Cobb V. Arnold, 49 Mass. (8 Mete.) 403, 405 (a compromise fairly made of a claim in dispute bfetween the parties, there being no misrepresen- tation or false statement of facts, and the defendant not being igno- rant of the nature of his rights con- stitutes a good consideration for a note, per Hubbard, J.). Minnesota. — Northern Pac. Ry. Co. V. Holmes, 88 Minn. 389, 93 N. W. 606. Mississippi. — Boone v. Boone, 58 Miss. 820. Missouri. — Pickel v. St. Louis Chamber of Commerce Assn., 80 Mo. 65, 66 ("in the absence of fraud in procuring it, mistake in making it, or ignorance of his rights when the settlement was made" a counter- claim against such note arising out of the matters compromised will not be allowed). New Jersey. — Conover v. Stillwell, 34 N. J. L. 54, 58. New York. — Housatonic National Bk. V. Foster, 85 Hun (N. Y.) 376, 32 N. Y. Supp. 1031, 66 N. Y. St. R. 435. Ver7no7it. — Willard v. Dow, 54 Vt. 182, 186, 41 Am. Rep. 841 (compro- mise of a doubtful right is suffi- cient). Virginia. — Zane v. Zane, Munf. (Va.) 406, 412 ("here were two con- siderations, not only good, but fa- vored in law, to compromise doubt- ful right, and to settle boundaries"). Federal. — N/arthern Liberty Mar- ket Co. V. Kelly, 113 U. S. 199, 28 L. Ed. 948, 5 N. Y. Supp. 422. "* French v. French, 84 Iowa 655, 15 L. R. A. 300, 51 N. W. 145. «= Willard v. Dow, 54 Vt. 182, 186, 41 Am. Rep. 841, per Veazey, J. '"Rowe V. Barnes, 101 Iowa 302, 70 N. W. 197. 223 COMPROMISE, SETTLEMENT OR RELINQUISHMENT NOTE. [§ 195 claim were not precluded, all compromises would be unavailing and all settlements by way of mutual concession would be defeated.''* So a counterclaim against such a note arising out of the matters compro- mised will not be allowed.*'^ And where legal proceedings have been dismissed upon a compromise agreement, the parties cannot afterward make the agreement depend upon the question whether or not the party could have prevailed in such proceeding.*"* Again, as is said in a Pennsylvania case : "The mutual giving up of something for the sake of peace is itself a consideration for an agreement that each party shall be satisfied with the event, however it may turn out."^'^ In a New Jersey case the court also asserts the rule that a compromise of a doubt- ful claim constitutes a sufficient consideration, whatever the actual rights of the parties may have been, and adds : "What substance there must be in a claim, to make a compromise of it, unless it is actually in suit, a valid consideration has occasioned a great contrariety of deci- sion. * * * But * * * there is no controversy that the claim, whatever it was, must be extinguished or discharged."*'^ If a note is given in settlement of an amount found due upon a contract for work which was represented to have been properly done, in an action by the payee upon the paper it is no defense that the work was not done in compliance with the contract, it not being averred that the defendant was deceived in any way or was ignorant of the character of the work, or that he had no opportunity to examine it, or had not examined it, or that there was any concealment by the plaintiff as to the work.'''* In case a note given to cover a supposed liability is coupled with a re- lease of all claims and demands it is founded upon a valuable and sufii- cient consideration, '° and the general rule that a settlement of a claim is a sufficient consideration for a note applies where the ownership of trees, cut from land, is asserted by a claimant thereto, and in settle- ment therefor a note is given to the claimant of the land by the al- leged trespasser.'^^ There is also a good, sufficient and valuable con- sideration for a note where it is given, without duress, in settlement of °*Cobb v. Arnold, 49 Mass. (8 "•'Marion & Monroe Gravel Road Mete.) 403, 405, per Hubbard, J. Co. v. Kessinger, 16 Ind. 549. See '"Pickel V. St. Louis Cbamber of Ostrow v. Tarver (Tex. Civ. App. Commerce Assn., 80 Mo. 65, 66. 1894), 28 S. W. 701, 29 S. W. 69. "° Rohrbacher v. Aitken, 145 Cal. '"Booth v. Dexter Steam Fire En- 485, 78 Pac. 1054. gine Co., 118 Ala. 369, 24 So. 405. " Clement v. Reppard, 15 Pa. St. " Northern Pacific Ry. Co. v. Ill, 113, per curiam. Holmes, 88 Minn. 389, 93 N. W. 606. "^ Conover v. Stillwell, 34 N. J. L. 54, 58, per Depue, J. § 196] ADEQUACY OR SUFFICIENCY OF COXSIDEEATIOK. 224 damages, for which it was believed that the maker was liable by reason of the fact that certain sheep had been stolen from the payee, who be- lieved the maker was in some way connected with the theftJ- If a note and deed are given in good faith, without undue influence, each party understanding the acts upon which the claim is based, and the purpose of the transaction is to remove a supposed cloud on title to land, and that is accomplished, there is a sufficient consideration for the note, even though the claim in question was without any valid con- siderationJ^ Again, the release of claims is a good consideration for a noteJ* And where legal proceedings have been instituted, and the parties, after investigation, in the absence of fraud, make a compro- mise agreement, and the proceedings are in consideration thereof dismissed, the dismissal of the proceedings constitutes a consideration for the agreement; and a note given in conformity with such compro- mise is enforceable;^^ for settlement and discontinuance of an action is a sufficient consideration, and an actual settlement involves practi- cally a discontinuance, the latter being a mere incidental matter not affecting the rights of either partyJ*' The relinquishment of an at- tachment also forms a good consideration for a note.'^^ A note for a sum resulting from a compromise constitutes no exception to the rule which permits an inquiry into the consideration of the noteJ^ § 196. Same subject — Unfounded or illegal claim. — A mere con- trovers}^ between the parties will not be sufficient,'" the compromise must be a bona fide controversy or disputed claim. ^^ So forbearance to sue on a claim not maintainable is without consideration;^^ and a note given for a supposed demand which did not in fact exist is without consideration.^- There must be at least a colorable ground of a claim, in law or in fact, to sustain an executory contract given as a compromise "Bullard v. Smith, 28 Mont. 387, "= Wesselman v. Stuart, 30 Misc. 72 Pac. 761. 808, 61 N. Y. Supp. 1110, per " Rowe v. Barnes, 101 Iowa 302, O'Dwyer, J. 306, 70 N. W. 197. " Smith v. Taylor, 39 Me. 242. '■• Housatonic National Bk. v. Fos- '^ Clement v. Reppard, 15 Pa. St. ter, 85 Hun (N. Y.) 376, 32 N. Y. Ill, 113. Supp. 1031, 66 N. Y. 435. "" Boone v. Boone, 58 Miss. 820. "Rohrbacher v. Aitken, 145 Cal. "^ Duck v. Autle, 5 Okla. 152, 47 485, 78 Pac. 1054. Pac. 1056. A promise to discontinue poor '^^ Foster v. Metts, 55 Miss. 77. debtor proceedings is a sufficient ^" Bullock v. Ogburn, 13 Ala. 346. consideration. Fay v. Hunt, 190 Mass. 378, 77 N. E. 502. I 225 COMPROMISE OF FORGERY CLAIM. [§ 197 for it, there must be a surrender of some legal benefit which the other party might have retained. ^^ If a claim is without legal merit and is clearly and absolutely unsustainable at law or in equity, its compro- mise and promise to pay it, whether its legal validity was known or not at the time, constitutes no sufficient legal consideration for a release or agreed compromise.^* And if the claim settled is wholly illegal and unfounded, and no suit is brought thereon which is the subject of a compromise, its settlement is not a sufficient consideration for a note.*'-"' Therefore, where the sole consideration of a note is the dismissal of a contest which the party asserting it knew was groundless and without any cause and which was prosecuted solely for a wrongful and illegal purpose no recovery can be had on the note.'*'' So a due-bill given by the defendant in a criminal case to the clerk of a court, in settlement of a bill for costs rendered by the clerk before there had been any con- viction of the accused, who was eventually acquitted, is without any legal consideration.®^ And the holder of a note who has been paid cannot hold on to the security and the note secured, and l)y denying the pajmient create a controversy which will support a promise to pay him the second time, in whole or in part, as the price of doing that which the law and equity and good conscience require him to do witli- out compensation.^® Again, if the promise is extorted by threats to sue on a claim which the party knew was wholly unfounded, and whicli he was making for the purpose of extorting money, the contract is ut- terly void.®^ § 197. Compromise of forgery claim. — A compromise is a good and sufficient consideration for a new note given in settlement of a civil suit upon a note to which the defense of forgery is set up. Such a case not being an indictment for forgery and a note given upon an agree- ment not to prosecute.°*^ '' Smith v. Boruff, 75 Ind. 412, 416. "" Duck v. Autle, 5 Okla. 152, 47 " Acknowledged to be a "well rec- Pac. 1056. ognized principle" in Booth v. Dex- "Wells v. Potter, 120 Ga. 889, 48 ter Steam Fire Engine Co., 118 Ala. S. E. 354. 369, 377, 24 So. 405, per Haralson, "*« Smith v. Boruff, 75 Ind. 412. J., but a note given to cover a sup- 416. posed liability was held in that case '" Willard v. Dow, 54 Vt. 182, 186, to be based upon a valid considera- 187, 41 Am. Rep. 841, per Veazey, J. tion. Union Collection Co. v. Buck- ""Grant & Kelly v. Chambers, 30 man (Cal. 1907), 88 Pac. 708. N. J. L. 323. '' Tucker v. Ronk, 43 Iowa 80. See Conover v. Stillwell, 34 N. J. L. 54. Joyce Defenses — 15. CHAPTER X. WANT OR FAILURE OF CONSIDERATION". Sec. Sec. 198. Total want of consideration — 216. Defense between original or immediate parties. 199. Upon acceptance — Between ac- ceptor and other parties — Want of consideration. 200. Indorser and indorsee as im- mediate parties — W ant of consideration. 201. Partial want of consideration. 202. Total failure of consideration — Defense between original or immediate parties. 203. Upon acceptance — Between ac- ceptor and other parties — failure of consideration. 204. Indorser and indorsee as im- mediate parties — Failure of consideration. 205. Consideration acknowledged — Failure of consideration. 206. Non-negotiable paper made at request of another — Failure of consideration. 207. Partial failure of consideration — Defense — Between original parties. 208. Same subject — Review of de- cisions. 209. Where number of notes are given — Partial failure of con- sideration. 210. Rescinding contract and restor- ing consideration — General rule. 211. Same subject — Exceptions to and qualifications of rule. 212. As to guarantors. 213. As to sureties. 214. As to donor and donee. 215. As to donor and donee — Nego- tiable check on bank. 226 217. 218. 219. 220. 221. 222. 223. 224. 225. 226. 227. 228. 229. 230. 231. 232. 233. 234. 235. Joint and joint and several notes. Notes under seal. Notes under seal — Gratuitous promise to pay. Renewal notes generally. Renewal notes — Waiver by principal precluding defense of failure of consideration — Surety's defense. Renewal notes — Implied or ex- pressed consideration. Renewal notes — Consideration for original paper. Renewal notes — Discount be- fore maturity. Notes or checks given for other notes or bills purchased. Drafts accepted to extinguish other drafts. When only part of considera- tion is good — Action by payee. Defense to one note in action on another. Note given for political assess- ments. Where paper sued on is impos- sible to perform in reason- able time. As to agents. As to trustees or committees. As to holders of municipal war- rants and coupons attached to bonds. Third persons as holders of notes. Note of third person. Note given to promote peace be- tween husband and wife — Note of stranger. 227 TOTAL WANT OF COXSIDEHATION, [§ 198 § 198. Total want of consideration — Defense between original or immediate parties. — It is a well-settled rule that as between original or immediate parties to a bill or note, or negotiable paper generally, it is a good defense to an action thereon to show an entire or total want of consideration.^ So it is a good defense in law or equity that a note ^Alabama. — Ragsdale v. Gresham, 141 Ala. 308, 37 So. 367. (Under the Alabama statute, Code 1896, § 1800^ the consideration of every and any written instrument, the foundation of the suit, may be impeached at law, and shown to have been made without any consideration, or that the consideration has failed) ; Bul- lock V. Ogburn, 13 Ala. 346. California. — Union Collection Co. V. Buckman (Cal. 1907), 88 Pac. 708. Connecticut. — Litchfield Bank v. Peck, 29 Conn. 384; Bunnell v. But- ler, 23 Conn. 65, 67; Raymond v. Sel- lick, 10 Conn. 482; Barnum v. Bar- num, 9 Conn. 242, 250; Lawrence v. Stonington Bk., 6 Conn. 521, 525-527. Delatvare. — McCready v. Cann, 5 Harr. (Del.) 175. Georgia. — Whitt v. Blount, 124 Ga. 671, 53 S. E. 205; Radcliff v. Biles, 94 Ga. 480, 20 S. E. 359. Indiana. — Meyer v. Brand, 102 Ind. 301, 26 N. E. 125; Moore v. Boyd, 95 Ind. 134, 135; Smith v. Boruff, 75 Ind. 412 (want of consideration may be shown by parol) ; Barner v. Morehead, 22 Ind. 354. Iowa. — Farmers' Savings Bank v. Hansmann, 114 Iowa 49, 51, 86 N. W. 31, per Sherwin, J.; Simpson College v. Tuttle, 71 Iowa 596, 599, 33 N. W. 74; Swan v. Ewing, 1 Morris (Iowa) 344. Kansas. — Hale v. Aldaffer, 5 Kan. App. 40, 47 Pac. 320, rehearing de- nied, 49 Pac. 684. Kentucky.— Coyle v. Fowler, 3 J. J. Marsh. (Ky.) 473 (holding that plea denying any consideration in fact is good since 1801). Sullivan V. Sullivan, 29 Ky. Law Rep. 239, 92 S. W. 966. Louisiana. — Krumhaar v. Lude- ling, 3 Mart. O. S. (La.) 641, 643. Maryland. — Beall v. Pearre, 12 Md. 550, 566; Wyman v. Gray, 7 Harr. & J. (Md.) 409. (Parol evi- dence is admissible to show want or failure of consideration.) Massachusetts. — Arpin v. Owens, 140 Mass. 144, 145, 3 N. E. 25 (quot- ing Byle on Bills (6th Am. Ed.) 206); Parish v. Stone, 31 Mass. (14" Pick.) 198, 201; Hill v. Buckminster, 22 Mass. (5 Pick.) 391. Michigan. — Nowack .v. Lehmann (Mich. 1905), 102 N. W. 992; Brown V. Smedley, 136 Mich. 65, 98 N. W. 856, 10 Det. L. N. 960. (Parol evi- dence admissible to show want of consideration); Kelley v. Guy, 116 Mich. 43, 74 N. W. 291. Minnesota. — Wilderman v. Don- nelly, 86 Minn. 184, 90 N. W. 366, per Collins, J.; Anderson v. Lee, 73 Minn. 397, 76 N. W. 24; Ruggles v. Swanwick, 6 Minn. 526 (Gil. 365). Mississippi. — Hamer v. Johnston, 5 Miss. (6 How.) 698, 721, per Shar- key, C. J. Missouri. — ^^Chicago Title & Trust Co. V. Brady, 165 Mo. 197, 65 S. W. 303. (Want of consideration; no consideration was ever received or intended, and the fact that the notes were given to increase a bank's ap- parent assets does not prevent such defense of want of consideration, and the same rule applies where the notes were given as accommodation notes for the same purpose.) Har- 199] WANT OR FAILURE OF CONSIDERATION. 228 was without consideration and was procured by fraud." The defense of want of consideration is also held available by the maker against the receiver of a payee bank.^ Again, a promissory note not negotia- ble and not a specialty may be defended against for want of consider- ation in avoidance thereof.* Under an averment of want of considera- tion and failure of consideration, in an action upon notes against the maker's estate by the payee, it is clearly competent evidence that said notes were asked for and given merely as a matter of form, but failure of consideration cannot be proven without first showing the consideration.^ g 199. Upon acceptance — Between acceptor and other parties — Want of consideration. — The presumption, raised by an unconditional acceptance of a bill of exchange by the drawee, that he has funds in his hands to the amount of the bill," may be rebutted between the ac- wood v. Brown, 23 Mo. App. 69. See Rogers v. Mercantile Adjuster Pub. Co. (Mo. App. 1906), 93 S. W. 328. Nebraska. — Fellers v. Penrod, 57 Neb. 463, 77 N. W. 1085. Neio Hampshire. — Morton v. Stone, 67 N. H. 367, 368, 29 Atl. 845 (words "value received" were expressed); Copp V. Sawyer, 6 N. H. 386; Tillot- son V. Grapes, 4 N. H. 444; Haynesv. Thorn, 8 Fost. (N. H.) 386. New York. — Ross v. Saron, 93 N. Y. Supp. 553; Higgins v. Ridgway, 153 N. Y. 130; 47 N. E. 32; aff'g 90 Hun 398, 35 N. Y. Supp. 944; Chase V. Senn, 35 N. Y. St. Rep. 36, 13 N. Y. Supp. 266; McCullock v. Hoffman, 10 Hun (N. Y.) 133; Sawyer v. Mc- Louth, 46 Barb. (N. Y.) 350, 353; Johnson v. Titus, 2 Hill (N. Y.) 606, 607 (Cowan, J., says substantially that although want of consideration may always be insisted upon as a complete answer to an action upon an executory contract, yet the only difficulty lies in the application of the rule) ; Slade v. Halstead, 7 Cow. (N. Y.) 322; Fink v. Cox, 18 Johns. (N. Y.) 145; Pearson v. Pearson, 7 Johns. (N. Y.) 26. Ohio. — Loffland v. Russell, Wright (Ohio) 438. Oklahoma. — Hagan v. 'Bigler, 5 Okla. 575, 49 Pac. 1011. Pennsylvania. — Barnett v. Offer- man, 7 Watts (Pa.) 130; Child v. McKean, 2 Miles (Pa.) 192; Moore V. Phillips (Pa.), 13 Mont. Co. L. Rep. 173. Vermont. — Stone v. Peake, 16 Vt. 213, 219. Federal, — National Bank v. Brush, 10 Biss. (U. S.) 188, 6 Fed. 132. Absence or failure of considera- tion a defense against any person not a holder in due course. Neg. Inst. Law, § 54. See appendix here- in. ==Radcliff V. Biles, 94 Ga. 480, 20 S. E. 359. =' Litchfield Bk. v. Peck, 29 Conn. 384. * Barnum v. Barnum, 9 Conn. 242, 250. ^ Independent Brewing Assoc, v. Kleit, 114 111. App. 1. •= Arkansas. — Byrd v. Bertrand, 7 Ark. 322. Connecticut. — Jarvis v. Wilson, 46 Conn. 90, 33 Am. Rep. 18 (in this 229 DEFENSE BETWEEN ACCEPTOR AND OTHER PARTIES. [§ 190 case Loomis, J., said: "The pre- sumption is that every bill of ex- change is drawn on account of some indebtedness from the drawee to the drawer, and that the accept- ance is an appropriation of the funds of the latter in the hands of the former"). Georgia. — Flournoy v. First Nat. Bk., 79 Ga. 810, 816, 78 Ga. 222, 228, 2 S. E. 547. (In this case Bleckley, C. J., said: "The effect of accepting a bill is to acknowledge that the drawer has funds in the hands of the acceptor applicable to its payment, and the payee is en- titled to repose with absolute trust and confidence upon that admis- sion.") Kentucky. — Byrne v. Schwing, 6 B. Mon. (Ky.) 199, 203. Louisiana. — Eastin v. Succession of Osborn, 26 La. Ann. 153. Maine. — Kendall v. Galvin, 15 Me. 131, 132, 32 Am. Dec. 141 (holding also that instruments liable to any objection preventing them from be- ing regarded as bills of exchange are not within the rule). Minnesota. — Vanstrum v. Liljen- gren, 37 Minn. 191, 192, 33 N. W. 555. (It was said in this case: "By accepting the bill the defendant had admitted the possession of funds of the drawer applicable to the pay- ment of the same, and had assumed the absolute obligation of making such payment. He became the prin- cipal debtor as respects the holder of the accepted bills.") Nebraska. — Trego v. Lowrey, 8 Neb. 238, 243. New York. — Hidden v. Waldo, 55 N. Y. 294, 297. North Carolina. — Jordan v. Tark- ington, 15 N. C. 357 (a case of an ac- ceptance of an order). Pennsylvania. — Bockoven v. Na- tional M. & T. Bk., 11 Wkly. N. Gas. (Pa.) 570. Federal. — Hortsman v. Henshaw, 11 How. (U. S.) 177, 183, 18 Curt. Dec. 590, 52 L. Ed. 653 (holding that the acceptor is presumed to accept upon funds of the drawer in his hands, and if he accepts without funds upon the credit of the drawer he must look to him for indemnity) : Baborg V. Peyton, 2 Wheat. (U. S.) 385, 386, 4 Curt. Dec. 144, 15 L. Ed. 268 (Story, J., said: ''Prima facie every acceptance affords a presump- tion of funds of the drawer in the hands of the acceptor, and is of it- self an express appropriation of those funds for the use of the holder." The case, however, rested upon whether an action of debt would lie by the payee or indorsee against the acceptor). English. — Vere v. Lewis, 3 Term R. 182 (the court said that the mere circumstance of the defendant's ac- cepting was evidence that he had received value from the drawers). Examine also Steiner v. Jeffries, 118 Ala. 573, 24 So. 37. See Gillian v. Myers, 31 111. 525 (holding that rule does not apply to acceptance of a writing which is a mere letter of request payable on a contingency which might never hap- pen). ""The effect of the acceptance of the order was to constitute the acceptor the principal debtor. By the act of acceptance he assumed to pay the order or bill, and be- came the principal debtor for the amount specified ; the acceptance being an admission of everything es- sential to the existence of such lia- bility. It admits that the acceptor had funds of the drawer in his hands, for the drawing of the order or bill implied this." Ragsdale v. Gresham, 141. Ala. 308, 37 So. 367, 369, per Haralson, J., citing 1 Daniel on Neg. Inst., §§ 552, 554, and quot- ing 1 Parsons on Notes & Bills, 199] WANT OR FAILURE OF CONSIDERATION. 230 ceptor and drawer.'^ So a plea of want of consideration for the ac- ceptance of an order is good under the Alabama statute.^ And a de- murrer to such a plea, that it did not aver in what way or under what circumstances the order was wanting in consideration, will be properly overruled.^ But an unconditional acceptance, however valid under the statute or otherwise, binds the acceptor as to a bona fide payee or holder for valiie,^" so that one who has accepted a bill cannot there- after, as against such bona fide 'payee or holder, show that there was p. 323; Story's Bills of Exchange, § 113; Capital City Ins. Co. v. Quinn, 73 Ala. 560, per Brickett, C. J.; Story on Bills, § 252. ' Trego v. Lowrey, 8 Neb. 238, 243 (as between the acceptor and the drawer and indorsers, for whose ac- commodation the acceptance was given, this presumption may be re- butted and the exact relations of the parties shown); Hidden v. Waldo, 55 N. Y. 294, 297 ("as be- tween the parties to the contract the presumption may be rebutted and their true relation shown and the liability of the one to the other will be that resulting from the true rather than the apparent relation of each to the other" a case of acceptance for accommodation); American Boiler Co. v. Foutham, 50 N. Y. Supp. 351. See Kortepeter v. List, 16 Ind. 295. This case was a suit by the payees of a bill of exchange against the drawer and acceptor, the bill having been indorsed by the payers and returned unpaid. The drawer answered that he, together with said payee, were sureties for the acceptor and known to each other as such, and that he had paid his contribu- tive share to the holder, and it was held that as this was a controversy between the drawer and drawees of a bill the consideration could be in- quired into. ^Code 1896, § 1800. ° Ragsdale v. Gresham, 141 Ala. 308, 37 So. 367. ^"Ray V. Morgan, 112 Ga. 923, 38 S. E. 335 (holding also that acceptor bound whether he had funds in his hands or not) ; Towsley v. Sumrall, 2 Pet. (U. S.) 169, 183, 8 Curt. Dec. 68, 27 L. Ed. 386 (holding that ac- ceptance binds acceptor even though he had no funds of the drawer in his hands and even though the holder knew of such fact) ; Corbin V. Southgate, 3 Hen. & M. (Va. P.) 319. In McMurray v. Sisters of Char- ity &c., 68 N. J. L. 312, 53 Atl. 389, it is held that the drawee is only bound to the extent of the availability of a particular fund on which it is drawn. As to necessity of acceptance be- ing in writing, see Lewin v. Grieg, 115 Ga. 127, 41 S. E. 497, Civ. Code. § 2693, par. 8; Erickson v. Inman, 34 Oreg. 44, 54 Pac. 949, 15 Bkg. L. J. 717; Ravenswood Bk. v. Rene- ker, 18 Pa. Super. Ct. 192, Act May 10, 1881, P. L. 17. In Durkee v. Conklin, 13 Colo. App. 313, 57 Pac. 486, it is held that a verbal accept- ance may bind even though the party has not at that time in his hands the funds of the drawer, if thereafter such funds should come into his hands. As to implied acceptance, see Bell V. Pletscher, 65 N. Y. Supp. 669, 32 Misc. 746. 1 231 DEFENSE BETWEEN" ACCEPTOR AND OTHER PARTIES. [§ 199 no consideration as between him and the drawer, for if the payee parts with his money and gives value to the drawer on the faith of the acceptance, and acquires the bill in due course of trade before maturity he is entitled to all the protection which the commercial law affords and he has nothing whatever to do with the state of accounts between the drawer and acceptor. ^^ Again, the acceptor has no right to inquire into the want of consideration betw^een the drawer and payee, or between the latter and a subsequent indorsee. If he pay the bill on the order of his creditor it is ample protection against any future claim of the creditor for the same money, whether the order was made with or without consideration.^- ISTor can an acceptor set" " Georgia. — Flournoy v. First Nat. Bk., 79 Ga. 814, 78 Ga. 222, 2 S. E. 547. Illinois. — Nowak v. Excelsior Stone Co., 78 111. 307 (so even though he had no funds in his hands at date of acceptance). Massachusetts. — Arpin v. Owens, 140 Mass. 144 (rule applied to for- eign bill of exchange, although bill taken before acceptance). New Jersey. — Huertematte v. Mor- ris, 101 N. J. 63, 4 N. E. 1, 54 Am. Rep. 657. New York. — Hollister v. Hopkins, 13 Hun (N. Y.) 210 (evidence of no consideration for acceptance exclud- ed); Grant v. Ellicott, 7 Wend. (N. Y.) 227 (so held even though fact of acceptance without consideration was known to payee). Pennsylvania. — Boggs v. Bank, 7 Watts & S. (Pa.) 331. Vermont. — Arnold v. Sprague, 34 Vt. 402. See also. Federal. — Hortman v. Henshaw, 11 How. (U. S.) 177, 183, 18 Curt. Dec. 590, 52 L. Ed. 653; United States v. Metropolis Bk., 15 Pet. (U. S.) 377; Seymour v. Mal- colm, 16 U. S. App. 245, 7 C. C. A. 593, 58 Fed. 597. In Law V. Brinker, 6 Colo. 555, it is held that the drawees of a bill, each of whom has indorsed thereon his unconditional accept- ance, becomes severally liable for the payment thereof, and having voluntarily placed themselves in this attitude they cannot plead want of consideration for their accept- ance in an action by the payee. In Sherwin v. Brigham, 39 Ohio St. 137, there was a letter of cred- it agreeing to honor drafts, but there was no acceptance and it was held that in order to render the writer of a letter of credit liable, either upon an implied acceptance or an agreement to accept drafts taken on the faith of such letter, the drafts must have been taken for a valuable consideration, and that a promise to have drafts discounted and to take up notes on which the persons taking the drafts are liable as in- dorsers is not a valuable considera- tion. ^- Colorado. — Welch v. Mayer, 4 Colo. App. 440, 36 Pac. 613 (this case, however, was an order pay- able out of a particular fund). Louisiana. — Smith v. Adams, 14 La. Ann. 409 (holding also that not even accommodation acceptors, and that to the knowledge of the payee, have the right to plead in compen- sation or reconvention a debt due 199] WANT OR FAILURE OF COXSIDERATIOX. 233 up the want of consideration for an acceptance as against an indorsee from whom the consideration did not move and who is not an imme- diate party.^^ So where the payees were plaintiffs and innocent holders it was declared that whatever might be the want or failure of consider- ation it could make no difference where the plaintiff purchased the paper after acceptance and before it was due.^* And if the drawer of a bill, payable to his own order before it is indorsed, give the ac- ceptor a general release, it is no defense to an action by the indorsee against the acceptor unless there be proof that the indorsee knew of the release.^^ If, however, an acceptor of a bill of exchange sets up ■the want of consideration as against a third indorsee, he must show such want not only between the drawer and himself but also between the subsequent indorsee and himself.^® It is declared in an English case that "In questions between bankers, or those representing them, and their customers, they have been considered for some purposes as factors, or in the nature of factors; upon the same principle as in other cases, between holders of bills of exchange, and acceptors, or the first indorser of bills payable to a man's own order, the truth of the transactions between them has been allowed to be entered into to de- stroy the prima facie consideration of a bill, the supposed value re- ceived. But no evidence of want of consideration, or other ground to impeach the apparent value received, was ever admitted in a case be- by the payee to the drawer); Da- vidson V. Keyes, 2 Rob. (La.) 254, 38 Am. Dec. 209 (holding also that if the acceptor pay the bill he can- not be affected by any want or fail- ure of consideration which the drawer or payee may set up); De- buys V. Johnson, 4 Mart. N. S. (La.) 286. Minnesota. — Vanstrum v. Liljen- gren, 37 Minn. 191, 33 N. W. 555. Federal. — Kemble v. Lull, 3 Mc- Lean (U. S.) 272, Fed. Cas. No. 7683 (a case of an order contingent on payment, "if in funds," but as it was drawn on funds in the acceptor's hands, it was declared that they could not, after acceptance, allege a want of consideration, "and hav- ing incurred this liability to the plaintiffs hona fide and on a suflB- cient consideration, they cannot set up as a defense a want of considera- tion between the drawer of the bill and the plaintiffs"). In Tompkins v. Garner, 8 N. Y. Supp. 193, it was held no defense to an action by the transferee against the acceptor that a draft was drawn as an adVance payment on a proposed charter party, which the payees subsequently refused to sign, the defense being personal to the drawer. " Robinson v. Reynolds, 2 Ad. & Ell. (N. S.) 196. " Bridge v. Livingston, 11 Iowa 57. ^^Dod V. Edwards, 2 Carr. & P. 602. ^"Whittaker v. Edmunds, 1 Mood. & R. 366, 1 Adol. & E. 638. mt 233 INDORSEE AND INDORSEE AS IMMEDIATE PARTIES. [§ 200 tween such acceptor or drawer, and the third person liokling tlie bill for value. And the rule is so strict that it will \)e presumed that ho does hold for value until the contrary appears."^'' § 200. Indorser and indorsee as immediate parties — Want of con- sideration. — In an action by the indorsee of negotiable paper against his immediate indorser, the title of no innocent third party interven- ing, the defendant can avail himself by way of defense against the plaintiff of the entire want of consideration, or may show that there was no valuable consideration for the indorsement or that it was made without any consideration.^* The rule has also been held to ap- " Collins V. Martin, 1 Bos. & P. 648, 651, per Eyre, Ch. J. Acceptor precluded from denying liability, to holder in due course. Eng. Bills of Exch. Act, § 52. '"Indiana. — Parker v. Morton, 29 Ind. 89, 92 (want of consideration for indorsement may be shown) ; Shanklin v. Cooper, 8 Blackf. (Ind.) 41 (plea that indorsement was made without any consideration whatever is in substance valid) ; Miles v. Por- ter, 6 Blackf. (Ind.) 44 (indorse- ment may be shown to have been made without any consideration ex- cept in case of accommodation note and indorsee is bona fide holder for value). Louisiana. — Brown v. Fort, 1 Mart. 0. S. (La.) 34 (in this case the note was indorsed merely to se- cure the payment of it, and the plain- tiff having received the note from the makers was regarded as the original payee). Maine. — Larrabee v. Fairbanks, 11 Shep. (Me.) 363, 41 Am. Dec. 389 (in this case the plaintiff had ac- cepted the note which was transfer- able by delivery without the defend- ant's indorsement and the indorse- ment subsequently obtained was without consideration and the par- ties being immediate parties the de- fense was held good. Maryland. — Hamburger v. Miller, 48 Md. 317, 325, 326 (where Alvey, J., said; "That in an action by the holder of negotiable paper against the immediate indorser, the title of no innocent third party intervening, it is always competent for the de- fendant to show, by parol evidence, either the want of consideration as between himself and the plaintiff, or that the indorsement was pro- cured by fraud, or that it was made upon some special trust, or for a special purpose, as to an agent to enable him to use the paper or the money in some particular way, or to make collection, or have the paper discounted, for the benefit of the principal; or that the note was in- dorsed and delivered to the plain- tiff to be used only upon some ex- press condition that has not been complied with"). Massachusetts. — Arpin v. Owens, 140 Mass. 144, 145, 3 N. E. 25, quot- ing Byle on Bills (6th Am. ed.) 206. Federal. — Martin v. Kercheval, 4 McLean (U. S.) 117, Fed. Cas. No. 9,163; National Bank of Rising Sun V. Brush, 6 Fed. 132, where the in- dorsement was for convenience and without consideration. § 201] WAXT OK FAILURE OF COXSIDERATIOX. 234 ply in an action where the note had been assigned by an indorsement in blank.^'' § 201. Partial want of consideration. — The principle that in an action between the original or immediate parties to a bill or note the consideration may be inquired into, applies where the consideration is less than the amount of the bill or note, and in such case no recovery can be had beyond the sum actually paid;^'' and judgment rendered for the sum actually due, that is, an objection to a note that there is only a partial want of consideration may be sustained, but it affects the note with nullity only pro tanto.''^ A partial want of consideration may therefore be relied on as a defense between the original parties.-- Again, "whenever the defendant is entitled to go into the question of consideration he may set up the partial as well as the total want of consideration."^^ And want of consideration may be pleaded to a part as well as the whole of a cause of action when limited to that part.-* If an unjust claim is added to a note given in settlement of a balance found due on adjustment of mutual accounts such note is without consideration and void as to the amount added. ^^ So a note may be without consideration as to a part of the matters wrongfully ^^ Parker v. Morton, 29 Ind. 89. -" Lawrence v. Stonington Bank, 6 Conn. 521, 525-527; Wilson v. Ells- worth, 25 Neb. 246, 41 N. W. 177, holding that consideration may be Inquired into and judgment ren- dered for the sum actually due. =^ Sawyer v. McLouth, 46 Barb. (N. Y.) 350, 353, citing Story on Prom. Notes, § 187. When there is not a partial want of consideration within the Code, § 1806. See Griffin v. Simons, 61 Tenn. (2 Baxt.) 19. As to partial want of considera- tion, see Klein v. Keys, 17 Mo. 326, a case of a partnership note given by a partner and the defense was that the note was not a partner- ship transaction and that only part of the consideration was due on ac- count of the firm and the balance for a debt not growing out of the part- nership business and that such fact was known to the plaintiff. " Beall v. Pearce, 12 Md. 550. A partial want of consideration can be shown if properly pleaded as a defense pro tanto to a negotia- ble instrument in the hands of the original payee, or of a party stand- ing in his shoes. Brown v. Roberts, 90 Minn. 314, 96 N. W. 793, per Start, C. J. Evidence of partial want of con- sideration is not admissible unless notice of such defense shall be given. Hubbard v. Freiburger, 133 Mich. 139, 94 N. W. 727, 10 Det. L. N. 123; Comp. Laws, §§ 769, 828. -■'Daniel on Neg. Inst. (5th ed.), § 201. ^ Moore v. Boyd, 95 Ind. 134, 135. == Briscoe v. Kinealy, 8 Mo. App. 76. 235 TOTAL FAILURE OF CONSIDERATION. [§ 203 or not properly included therein."" In a Massachusetts case the court states the following rule : If a note is taken for two distinct liquidated sums consolidat'ed, and the consideration had been wholly wanting, or wholly failed as to one, the note, as between the original parties, and all who stand in such relation as to allow the defense of want of consideration, may be apportioned by the court and found good in part and void in part and the holder be permitted to recover accordingly, and where the parts of a bill are divisible, making an aggregate sum and as to one liquidated and definite part there is a valuable considera- tion and as to the other part there is no consideration, the bill as such may be apportioned and the holder may recover for such part as was founded on a good consideration. Want of consideration, therefore, either total or partial, may always be shown by way of defense. Wliere the note is not given upon any one consideration, which, whether good or not, whether it fail or not, goes to the whole note at the time it was made, but for two distinct and independent considerations, each go- ing to a distinct portion of the note, and one is a consideration which the law deems valid and sufficient to support a contract and the other not, there the contract shall be apportioned and the holder shall re- cover to the extent of the valid consideration and no further." § 202. Total failure of consideration — Defense between original or immediate parties.— It is a well-settled rule that as between origi- nal or immediate parties to a bill or note, or negotiable paper gener- all}^ that in an action thereon an entire or total failure of considera- tion constitutes a good defense.-^ But where the consideration of a "« Bean v. Jones, 8 N. H. 149. In sideration of the difference between this case a creditor charged his want and failure of consideration, traveling and other expenses in- "^ California. — Russ Lumber & Mill curred on a journey made for the Co v. Muscupiabe L. & W. Co., 120 purpose of collecting a debt and in- CaL 521; Estudillo v. Aguirre (Cal. eluded them in a new note given by 1884), 5 Pac. 109 (in this case a note the debtor. -was given in part for a definite sum "Parish v. Stone, 31 Mass. (14 innocently represented to have been Pick.) 198, 208-210, 25 Am. Dec. fixed, allowed and determined by 378. See also Washburn v. Picot, 14 the probate court for services as N. C. (3 Dev.) 390, where it is said guardian of defendant and the al- that if a part of a contract arises on lowance had not been made, and a good consideration and part on a this was held to constitute a failure bad one, it is divisible, but other- of consideration to the extent of the wise as to the security, that being amount of the note), entire. This statement, however, Delaware. — Mills v. Gilpin, 2 Harr. was made in connection with a con- (Del.) 32. J03] WANT OR FAILURE OF CONSIDERATION. 236 note sued on was the conveyance of land, secured by a deed of trust, the sale of the land under the deed of trust does not constitute a failure of consideration, for the conveyance having been fully ren- dered at the date of the deed there could be no failure otherwise than for some defect or deficiency in the consideration at the time of the rendition, and a sale subsequently made as provided for in the agree- ment of the parties could not be given such effect.^® If, however, personal property is sold and the title reserved and the seller retakes the property and sells it under warranty that he is the owner, it is Georgia.— Whitt v. Blount, 124 Ga. 671, 53 S. E. 205. Illinois. — Sturges v. Miller, 80 111. 241; Winkleman v. Choteau, 78 111. 107; Capps v. Smith, 3 Scam. (111.) 177; Winnemann v. Oberne, 40 111. App. 269. Indiana. — Moore v. Boyd, 95 Ind. 134, 135. Iowa. — George v. Gillespie, 1 G. Greene (Iowa) 421 (so under the Rev. Stat., p. 453, §§ 5, 6). Kansas. — Blood v. Northup, 1 Kan. 28, 35. Kentucky. — Coyle v. Fowler, 3 J. J. Marsh. (Ky.) 473 (holding plea of failure of consideration good since statute of 1801). Louisiana. — Kernion v. Jumon- ville de Villier, 8 La. 547; Byrd v. Craig, 2 Mart. N. S. (La.) 625. Maryland. — Ingersoll v. Martin^ 58 Md. 67, 73, 42 Am. Rep. 322; Beall V. Pearre, 12 Md. 550, 566. Massachusetts. — Arpin v. Owens, 140 Mass. 144, 145, quoting 1 Byle on Bills (6th Am. ed.) 206. Michigan. — Hubbard v. Freibur- ger, 123 Mich. 139, 94 N. W. 727, 10 Det. L. W. 123; Comp. Laws, §§ 709, 828; Kelley v. Guy, 116 Mich. 43, 74 N. W. 291. Minnesota. — Warner v. Schultz, 74 Minn. 252, 77 N. W. 25. Mississippi. — Stigler v. Anderson (Miss. 1893), 12 So. 831; Hamer v. Johnson (5 Miss.), 6 How. 698, 721 (per Sharkey, J.). iTfissoMri.— Harwood v. Brown, 23 Mo. App. 69. New York. — Sawyer v. Chambers, 44 Barb. (N. Y.) 42; Chase v. Senn, 36 N. Y. St. Rep. 36, 13 N. Y. Supp. 266; Sawyer v. McLouth, 46 Barb. (N. Y.) 350, 353; Britton v. Hall, 1 Hilt. (N. Y.) 528; American Boiler Co. v. Foutham, 50 N. Y. Supp. 351. North Carolina. — Washburn v. Pi- cott, 14 N. C. (3 Dev.) 390. Ohio. — Loffland v. Russell, Wright (Ohio) 438. Oregon. — Sayre v. Mohney, 30 Oreg. 238, 47 Pac. 197. Pennsylvania. — Barnett v. Offer- man, 7 Watts (Pa.) 130. Tennessee. — Turley v. Bartlett, 57 Tenn. (10 Heisk.) 221, 225. Texas. — Branch v. Howard, 4 Tex. Civ. App. 271, 23 S. W. 476. Vermo7it. — Stone v. Peake, 16 Vt. 213, 219. Federal. — Scudder v. Andrews, 2 McLean (U. S.) 464, Fed. Cas. No. 12,564; Hoopes v. Northern Nat. Bk., 102 Fed. 448; Neg. Inst. Law, § 54. See Jones v. Swan, 6 Wend. (N. Y.) 589, 593. In the case of a note under seal it is held that failure of considera- tion may be pleaded, whether or not want may be. Slaton v. Fowler, 124 Ga. 955, 53 S. E. 567. -^Thurgood v. Spring, 139 Cal. 596, 73 Pac. 456. 237 DEFENSE BETWEEN ACCEPTOR AND OTHER PARTIES. [§ 203 held that the consideration of notes given by the first purchaser fails. ^^ A plea of total failure of consideration filed to an action on a note, given by one person to another to pay a certain amount at a fixed time, is not good when the time for the performance of the service has not expired, although the note has matured.^^ And failure of the performance of the services to be performed by the payee is no de- fense to an action on the note brought by the purchaser thereof for value and before its maturity, though he knew of the consideration, but not of its failure when he purchased.^ ^ But a defense of failure of consideration is available where the note was given in consideration of an agreement to perform certain work under a contract which was performed but the work done was not in accordance with the agree- ment and did not fulfill the conditions represented, there being an alleged misrepresentation of material f acts.^^ § 203. Upon acceptance — Between acceptor and other parties — Failure of consideration. — Failure of consideration as between the drawer and drawee is no defense to an action by the payee or holder against an acceptor, if the payee or holder took the bill before ma- turity in good faith and for value f* provided also that the considera- =»Earle v. Robinson, 91 Hun (N. Y.) 363, 70 N. Y. St. R. 831, 36 N. Y. Supp. 178. =' Morrison v. Hart, Ga. 1905, 50 S. E. 471. "Wilensky v. Morrison, Ga. 1905, 50 S. E. 472. ^^Conroy v. Logue, 87 Minn. 289, 91 N. W. 1105. ^^ Morrison v. Farmers' and Mer- chants' Banlt, 9 Okla. 697, 60 Pac. 275 (a foreign bill of exchange. "It is a well-settled rule of law that an acceptor of a bill of exchange will not be permitted to vary his liabil- ity from that which is apparent on the face of the bill by setting up against bona fide holders for value, who took the bill before maturity, statements made by the drawers to the drawees whereby they were in- duced to accept the bill"). See Colorado. — Wyman v. Bank, 5 Colo. 30, 33, 40 Am. Rep. 133. Georgia. — Flournory v. First Nat. Bk., 79 Ga. 814, 78 Ga. 222, 2 S. E. 547. New Hampshire. — Clement v. Leverett, 12 N. H. 317, 320. New York. — American Boiler Co. v. Foutham, 50 N. Y. Supp. 351. England. — ^Arden v. Watkins, 3 East. 317. In Gilman v. Pillsbury, 16 La. Ann. 51, it is held that the acceptor, when sued by the payee, may call the drawer of the bill in warranty in the case where the drawee is re- quested to pay, not unconditionally but in accordance with a contract, and he has been notified by the drawer, because the consideration of the draft has failed, and when cited in warranty by the drawee the drawer may plead a failure of con- sideration as a defense to the suit. § 203] WANT OR FAILURE OF CONSIDERATION. 238 tion for the acceptance fails without any fault on the part of the payee.^^ So an acceptor cannot, b}^ paying a bill before he is bound to do so, and before maturity or out of due course, exchange the rela- tions of the original parties and cut off the drawer from the defense of failure of consideration. An acceptor paying before maturity is not a holder for value of the paper as against the drawer, and even though an acceptor may have been a surety for the drawer for per- sonal property purchased by him from the payee, yet such acceptor by paying before maturity is subject to any defense which the maker would have had in a suit by the payee. ^"^ Again, the rule which pre- cludes the acceptor from inquiring into the want of consideration be- tween the drawer and payee or between the latter and a subsequent in- dorsee applies to exclude inquiry into the failure of consideration be- tween such parties.^'' But it is no defense in favor of an acceptor when sued on his acceptance that there are subsequent dealings between the parties when his liability has not been changed thereby and such deal- ings are not to his prejudice or against his rights.^^ In an action by the indorsee against the maker of promissory notes, the consideration of which was the purchase price of certain bills of exchange, it is not available by way of defense to show a total failure of consideration on the ground that the drawee refused to accept, where recovery can be had against the indorser, especially where it does not appear that the plaintiffs are bona fide holders. The court said : "What was the con- sideration for the notes on which this action is brought? The two bills of exchange ! Were they of any value at the time they were given as the consideration for the notes? That they were of no value will hardly be affirmed without deciding the question whether the defend- ants could have resorted to" the payee when the bills were not ac- ''' Corbin v. Southgate, 3 Hen. & were not bound because of the fraud M. (Va.) 319. In Walker v. Squires, of the payee, and that the acceptors Hill & Den. (N. Y.) 23, the payee could not be regarded as in funds, of a bill knowingly sold standing and even if there were no fraud the timber, not his own, to the drawer, act of the owner of the timber was who was to manufacture it into equivalent to an eviction, and the boards and deliver them to the ac- failure of consideration was com- ceptors upon whom the bill was plete. drawn and accepted. The drawer '" Stark v. Alford, 49 Tex. 260. was forbidden by the owner to cut "See § 199, ante, as to acceptor the timber, and it was held that and other parties and want of con- even though he proceeded to get sideration. the timber and manufacture and de- ='*' Canadian Bk. v. Coumbe, 47 liver it to the acceptors, the latter Mich. 358, 11 N. W. 196. 239 PARTIAL FAILURE OF CONSIDERATION. [§§' 204-207 cepted "they had a perfect right to enforce the payment of them against the indorser. * * * l^ the case under consideration the bills were not void ; the responsibility of the indorser, if there was none in the drawer, constituted a good consideration."^" § 204. Indorser and indorsee as immediate parties — Failure of consideration. — In an action by the holder of negotiable paper against his immediate indorser, the title of no innocent third party interven- ing, the entire failure of consideration between such immediate parties may be shown.*" § 205. Consideration acknowledged — Failure of consideration. Wliere a certificate of deposit acknowledges the receijit of money upon its face the maker is not estopped from showing as against assignees occupying the status of payees that there was a failure of considera- tion.*^ So the statement in a promissory note that it is given in con- sideration of "money loaned" does not preclude the defense that the consideration was different from that expressed in the note and that it had failed.*^ § 206. Non-negotiable paper made at request of another — ^Failure of consideration. — In a suit upon a non-negotiable promissory note made payable to plaintiff at the request of a party from whom the consideration moved, and therefore presumed to be held in trust for the benefit of such party, the failure of consideration, total or partial, may, it is decided, be set up in defense whether the payee at the time of receiving the note did, or did not, know what the character of the consideration was; especially so where it does not appear that the plaintiff paid anything for the note or that he was in any manner a holder for a valuable consideration, and the note being regarded as the property of the party from whom the actual consideration moved the defense was still available in the same manner as if the action had been in the name of the last mentioned party.*^ § 207. Partial failure of consideration — Defense — Between, origi- nal parties. — Although there has been much discussion upon the ques- '° Jones V. Swan, 6 Wend. (N. Y.) Quaere in this case whether such 589, 594. certificate was a promissory note. *° Hamburger v. Miller, 48 Md. *" Pollen v. James, 45 Miss. 129. 317, 325, 326. ^^ Herbert v. Ford, 33 Me. 90. "Blood V. Northup, 1 Kan. 35. § 208] WANT OR FAILURE OF CONSIDERATION". 240 tion whether or not a partial failure of consideration may be availed of as a defense to an action on a bill of exchange, promissory note, or negotiable paper generally, and although in certain jurisdictions such partial failure is no defense, and in others, where land is the subject of contract or purchase and there is a defect of title, such partial failure is precluded as a defense, especially where the contract remains unrescinded and there has been no fraud, this rule being extended also to cases where the quality or quantity is deficient, still the great weight of modern authority, either by force of some statute or to avoid circuity of action, permits such defense, between the original parties to the paper, either wholly or pro tanto as a rule, at least so when properly pleaded. But the manner in which such defense may be availed of as well as the nature thereof varies in different jurisdic- tions, it being held in some courts that such partial failure of consider- ation can only be taken advantage of by way of abatement or in reduc- tion or mitigation of damages, or as a set-off, recoupment, counter- claim, or discount, and in certain cases it is allowed as a bar. In some states, however, the defense or allowance in reduction of damages, etc., is limited to those cases where the consideration or amount of the paper is divisible, or ascertainable and capable of liquidation, and in still other jurisdictions the right to make the defense of partial failure as such is absolute or it may be given in evidence. Such technical dis- tinctions as to its not being a defense but being merely available un- der a proper plea to reduce the amount of recovery will fully appear in the following review of the decisions. § 208. Same subject — Review of decisions. — The following review of decisions is subject to such qualifications and exceptions as may ex- ist by reason of any statute more recent than the decision given.** In Alabama evidence is admissil)le which tends to prove a partial failure of consideration.*^ And wherever a defendant can maintain a cross- action for damages on account of a defect in personal property pur- chased by him, or for a non-compliance by the plaintiff with his part of the contract, the former may, in defense to an action upon his note made in consequeace of such purchase or contract, claim a deduction corresponding with the injury he has sustained, as it is the policy in that state to avoid circuity of action. The rule, however, is different where real estate is the subject of the contract of purchase and a par- " See Appendix herein. " Agnew v. Walden, 84 Ala. 502, 4 So. 672. 241 PARTIAL FAILURE OF CONSIDERATION. [§ 208 tial defect in title, while the contract remains unrescinded, cannot be alleged as a defense to an action for the recovery of the purchase money.*® A distinction has, however, been made in regard to fraud.'*'^ In Arkansas, in all that class of cases commonly called partial failure of consideration, whether involving bad faith or not, or where fraud has intervened, whether in the obtaining or the performance of con- tracts, or there has been a breach of warranty, fraudulent or not, or of any other stipulation of the contract sued upon entitling the de- fendant to a cross-action against the plaintiff to recover damages for such failure, fraud or breach, he may, if he elect to do so, instead of resorting to such cross-action, recoup the damages sustained by him in diminution of what the plaintiff would otherwise be authorized to recover.*® In California a failure of consideration either total or partial may be pleaded as a defense to an action upon a promissory note, either wholly or pi'o tanio.^^ But in a case in that state where *^ Peden v. Moore, 1 Stew. & P. (Ala.) 71, 21 Am. Dec. 649. In Lee v. White, 4 Stew. & P. (Ala.) 178, the court charged the jury that in the sale of real estate, to render a failure of title a defense against a promissory note, the fail- ure of title should be total and the judgment for plaintiff was affirmed. In Evans v. Murphy, 1 Stew. & P. (Ala.) 226, however, a note was given for the rent of eighty acres of land including a ferry, and it was held that the failure of considera- tion from being deprived of the ferry could be shown in mitigation of the demand; "that by this course much delay and vexation, and the circuity of action will be avoided which should be regarded as a de- sideratum in the administration of justice." "Wilson V. Jordan, 3 Stew. & P. (Ala.) 92. In this case it was held no defense that the consideration of the note was the sale of land, the title to -which was alleged to be defective and incumbered, but a distinction was made as to fraud. The court said: "Nor do we feel Joyce Defenses — 16. i the least dissatisfaction with our former decisions so far as they tend to place partial and total failure of consideration on the same footing instead of driving parties to cir- cuity of action." It was also said, however, that "The principles of relief should in this respect be the same in reference to the same of either kind of property 'real or per- sonal' provided the circumstances constituting the failure of consid- eration be equally conclusive and susceptible of proof at law." '' Desha v. Robinson, 17 Ark. 228, 246-248. Petillo v. Hopson, 23 Ark. 196, holding that on a plea of fail- ure of consideration defendant is entitled to abatement for only so much as the consideration has failed; "most assuredly defendant had no right to keep back the full amount of the note when there was but a partial failure of considera- tion." " Russ Lumber & Mill Co. v. Mus- cupiabe L. «6; W. Co., 120 Cal. 521, 529, 52 Pac. 995, 65 Am. St. R. 186, per Haynes, C. See McGue v. Rom- mell (Cal. 1906), 83 Pac. 1000. § 208] WANT OR FAILURE OF COXSIDERATION. 242 the note was given for the purchase price of land it was held that the failure of consideration must be total. It was declared, however, that "In cases of fraud or warranty, where the consideration is divisi- ble or capable of apportionment, a partial failure may sometimes be given in evidence in reduction of damages, but the practice in this respect proceeds upon the principle of a cross-action, and an aJBirmative right of action must exist in favor of a party seeking relief in this form."™ The court also said in this case: "A partial failure of con- sideration is not a defense to an action on a promissory note or bill of exchange ; but when properly pleaded it may be shown in reduction or recoupment of damages."" In another case in the same state, where a note was given for defendant's interest in a ranch and mone}^ expended in bringing cattle across the plair^, but it was not alleged that it was given in payment for a division of cattle, it was held no defense or counter-claim that the maker of the note had been deceived as to the division of the stock, as such division had nothing to do with the consideration of the note.^^ In Connecticut, if the partial failure of the consideration of a note is of a sum liquidated or capable of liquidation it may be availed of. "The general principle that a partial failure of consideration, whether the action be for the price of prop- erty sold or upon a bill or note given for such price, may go to reduce the plaintiff's damages in such action has been fully recognized and is now well established in this court. ^^ But we do not suppose this prin- ciple should be applied to cases such as this, wherein the damage or amount to be deducted from the plaintiff's demand is merely conjec- tural, unliquidated and incapable of liquidation by known rules, at least we have seen no case which has extended the application of the rule so far."^* And the rule of an English case^^ is approved which holds that the quantum to be deducted on account of partial failure of the consideration must be of definite computation and not of unliquidated damages.^^ In Delaivare a pro tanto recovery may be had under the ^'' Reese v. Gordan, 19 Cal. 147, Stark. Ev. 281; Bailey on Bills 344; 149. Roscoe on Bv. 168; Byles on Bills "Quoting Edwards on Bills & 65; Day v. Nix, 9 J. B. Moore 159; Notes, 333, 334. 1 Saund. PI. & Ev. 304; Green v. ^' Case v. Maxey, 6 Cal. 276. Pratt, 11 Conn. 205; McAlpin v. ='McAlpin v. Lee, 12 Conn. 129; Lee, 12 Conn. 129. Cook v. Mix, 11 Conn. 432; Nichols ''^ Day v. Nix, 9 J. B. Moore 159. V. Alsop, 6 Conn. 477. '''= Pulsifer v. Hotchkiss, 12 Conn. "Citing Chitty on Bills 71; 2 234. 243 PARTIAL FAILURE OF COXSIDERATIOX. [§ 208 statute.^'' In Florida a partial failure of consideration is not a good plea to a note for the purchase price of lands when the quantity is deficient. '^^ In Georgia, in an action on a note given for the price of land sold, it is held that partial failure cannot be availed of as a de- fense, and the court said: "A partial failure of consideration cannot be gone into unless that part which has failed could be as clearly and distinctly ascertained in liquidated damages as the whole amount. But here the partial failure is as to the quality, not as to the quantity."^'' In another case in the same state where the consideration was a special interest in real estate, it was held that a partial failure of consideration could not be shown. But defendant was in quiet possession of the land and it was declared that he could not be protected from payment of the note from a mere apprehension of being disturbed at some fu- ture time.*'*' In Illinois, where the averment was that the considera- tion of the note sued on had wholly failed, it was held that to sus- tain such a plea a total failure must be shown and that it was insuffi- cient to show a partial failure.**^ But where the note in such case was for the price of real estate in fee and the land was incumljered by a life estate, it was decided that the consideration had failed as to the value of the estate of which defendant was deprived and that he might recoup damages sustained by the breach.*'^ And the defense of partial failure of consideration where land purchased was incumbered was also allowed under the statute in another case.®^ Again, where a note was sued on in violation of an agreement not to sue for a certain time, upon the faith of which agreement a part of the amount was incorporated into the note and promised to be paid, it was decided that "Journal Printing Co. v. Maxwell, also, Mills v. Gilpin, 2 Harr. (Del.) 1 Pennew. (Del.) 511, 43 Atl. 615; 32, 34, holding that partial failure of under Chap. 588, Vol. 20, Laws of consideration cannot be set up as a Del. But an exception is made as defense, but that there must be a to "bona fide holders. cross action except in cases of fraud. As to rule under earlier cases, °' Reddick v. Mickler, 23 Fla. 335, see Carpenter v. Phillips, 2 Houst. 2 So. 698. (Del.) 524, a case of a due bill, but ^^ Hinton v. Scott, Dud. (Ga.) 245. the rule was applied that partial "^ Jordon v. Jordon, Dud. (Ga.) failure of consideration was no de- 181. fense to a promissory note, a bill " Stocks v. Scott, 188 111. 266, 58 of exchange; but a recovery could N. E. 990. be had upon the note for the full "= Chrity v. Ogle, 33 111. 295. amoimt, leaving defendant to this "^ Schuckmann v. Knoebel, 27 111. action for damages for the par- 175, under Scates Comp. Stat. Ch. tial failure of consideration. See, 73, p. 292. § 208] WAXT OR FAILURE OF CONSIDERATION. 244 the consideration had necessarily failed in part and so constituted a defense.^'* In Indiaim an answer that the property sold was not worth half its price was held not a good defense.''^ Although it is deter- mined in an earlier case that defendant may reduce the damages by showing a partial failure of consideration.^^ In Iowa a partial failure of consideration, arising from breach of warranty or otherwise, may be shown both on the ground of avoiding circuity of action, also be- cause the statute allows the same as a defense." In Kentucly a plea impeaching the consideration of a note upon the ground that it was given upon a parol contract for land, and the inability of the obligee to convey a title to the property, must show a total failure of consider- ation, for a partial failure is no bar."' So where a note was given for the part of the price of a lot and possession of the lot was retained, it was decided that a partial failure of consideration furnished no de- fense at law, that the relief of defendants, if any, should be sought in equity and that they ought not to be permitted to avoid the contract while they still retained possession.®'' And under a statute permitting the consideration of writings to be impeached a partial failure of con- sideration is not a legal ground for defense.'^^ So a plea which is only of a partial failure is no bar. If a contract is to be regarded as executory the agreement and not the performance of the agreement is to be taken as the true consideration of the agreement on the other side to pay the price, and unless, by the terms of the contract, the payment of the price is made to depend upon the performance of the agree- ment to let or hire, a failure to perform the latter cannot be pleaded in bar to an action for the non-payment of the price.'^^ In Maiiu it is well settled that, as between the original parties or between others standing in no better position, for the purpose of avoiding a circuity of action, a partial failure of consideration can be shown in reduction of damages where a promissory note is given for two or more inde- pendent considerations and there is failure of consideration as to one.'- »^ Hill v. Enders, 19 111. 163. ™ Williams v. Bristofe, 1 A. K. "Case v. Grim, 77 Ind. 565. Marsh. (Ky.) 168. ""Catlett v. McDowell, 4 Blackf. "Owsley v. Beasley, 4 Bibl? (Ky.) (Ind.) 556. 277. " Griffey v. Payne, 1 Morris " Tuttle v. George A. Tuttle Co. (Iowa) 68. See Beatty v. Carr, 109 (Me. 1906), 64 Atl. 496; Hathorn v. Iowa 183, 80 N. W. 326. Wheelwright, 99 Me. 351, 59 Atl. ^Wise v. Kelly, 2 A. K. Marsh. 517. See Rev. Stat, c. 84, § 40, as (Ky.) 545. to note given for real estate and ^»Bull v. Jackson, 1 A. K. Marsh, partial failure of consideration as (Ky.) 176. to patent right. 245 PARTIAL FAILURE OF COXSIDERATION". [§' 208 Under an earlier decision it is determined that in an action upon a note between the original parties a partial failure of consideration, though the amount be unliquidated, may be proved by defendant in mitigation of damages and the jury may, upon the evidence, deter- mine the amount of the failure; it being declared by the court that the tendency of modern decisions in this country has been to allow a broader latitude of defense than was permitted by the rules of the common law to bills of exchange and promissory notes where the justice of the case required it and a circuity of action could be avoided.'^ So in another case in that state such partial failure of a note for goods sold is held to be a good defense pro tanto between parties,^* although it is also determined that there must be a failure of an entire or a certain and distinct part of the consideration.'^^ Again it is declared that if upon inquiry it results that there was no consideration or that it had failed totally or partially, the plaintiff fails to recover, or recovers a part only of the note ; but in this case the note was for sale of timber and the defense was that the defendant by agreement was to be held to pay only so much as he might actu- ally realize from the property."'^ It is also held that the holder of a non-negotiable promissory note, made payable to him at the request of the party from whom the consideration moved, is presumed to hold it in trust for the benefit of the party from whom the consideration moved, and in a suit upon such a note the defense is available of either a total or partial failure of consideration, whether the payee at the time of recovering the note did or did not know what the character of the consideration was." But a partial failure alone of title to land constitutes no defense in that state to a note given in payment for it.'^ After the death, however, of the payee and the insolvency of his estate, the maker may, in a suit against him by the administrator, set off the "Herbert v. Ford, 16 Shep. (Me.) (holding that partial want of title 546. is no defense to a note given for "Wadsworth v. Smith, 10 Shep. land; to constitute a valid defense (Me.) 500. between the parties, or wherein the "Clark v. Peabody, 9 Shep. (Me.) same defense may be made, the de- 500. feat of title must be entire so that "Folsom V. Mussey, 8 Greenl. nothing valuable passes by the con- (Me.) 400, 23 Am. Dec. 522. veyance; Wentworth v. Goodwin, 8 " Herbert V. Ford, 33 Me. 90. Shep. (Me.) 150; Howard v. Wit- "Hogdon v. Golder, 75 Me. 293; ham, 2 Greenl. (Me.) 390; Lloyd Thompson v. Mansfeild, 43 Me. 490; v. Jewell, 1 Greenl. (Me.) 352, 10 Morrison v. Jewell, 34 Me. 146; Jen- Am. Dec. 73. ness v. Parker, 11 Shep. (Me.) 289 § 208] WAXT OR FAILURE OF COXSIDERATIOX. 246 breach of oovenant against the note."^ In Maryland partial failure of consideration may be relied on as a defense and it avoids the note only pro tanto.^^ In Massachusetts the defendant is entitled to have so much deducted from the amount of the note as the chattel by reason of its defects was worth less than it should have been had it been as warranted, or if the defects had not existed ; but he is not entitled to a deduction of the difEerence between the amount of the note and the sum which the jury may deem the true value of the chattel. Shaw, C. J., said : "This mode of defenses is of modern origin, founded on a liberal application of the rules of law whioh allow such deduction as a substitute for a cross-action on the warranty to avoid circuity of action. The same rule of damages, therefore, must be adopted as would be adopted in assessing damages in such cross-action. In that case it is very clear that the rule of damages would be the loss ensu- ing from those defects in respect to which the warranty is broken."*^ In Michigan evidence of failure of consideration, in whole or in part, may be given in any action or set-off upon, or arising out of any con- tract except negotiable instruments, negotiated before due, to persons not having notice.^ ^* In Minnesota a partial failure of consideration can be shown, if properly pleaded, as a defense pro tanto to a negotia- ble instrument in the hands of the original payee, or of a party stand- ing in his shoes. ^^ It is also decided in that state that the allegation of a breach of warranty in the sale of chattels may be set up as a par- tial defense by way of recoupment, and it is well settled in that state that a partial failure of consideration is a good defense or partial de- fense, and may be availed of to defeat a recovery pro tanto.^^ In an- other case the defense is held available by way of reduction of damages recoverable upon a non-negotiable contract or instrument.^* In earlier '» Morrison v. Jewell, 34 Me. 146. as appears from the preceding cases ^'Beall v. Pearce, 12 Md. 550. the opposite doctrine prevails. " Goodwill V. Morse, 9 Mete. "* Hubbard v. Freiburger, 133 (Mass.) 278. Mich. 139, 94 N. W. 727, 10 Det. L. Examine Parish v. Stone, 14 Pick. N. 123; Comp. Laws, §§ 769, 828. (Mass.) 198, 208-210, 25 Am. Dec. «= Brown v. Roberts, 90 Minn. 314, 378 (although the language used in 96 N. W. 793. this case refers more particularly to *' Nichols and Shepard Co. v. partial want of consideration) ; No- Soderquist, 77 Minn. 509, 80 N. W. ble V. Smith, Quincy (Mass.) 254, 630; Durment v. Tuttle, 50 Minn, states the doctrine that a partial 426, 52 N. W. 909; Torinus v. Buck- consideration of a note cannot be ham, 29 Minn. 128, 12 N. W. 348. shown in reduction of damages, but ^* Stevens v. Johnson, 28 Minn. 172, 9 N. W. 677. J 24:7 PARTIAL FAILURE OF COXSIDERATIOX. [§ 208 cases, however, it is also determined that where the consideration is apportionable a partial failure thereof is a defense; but where it is not shown to what extent the consideration has failed in proportion to the whole consideration the whole amount of the note may be recov- ered.*^ In Mississippi, in an action upon instruments for a sum cer- tain, if introduced under a special plea, the defense of partial failure of consideration can be made.®*' In Missouri it is declared that, "It may now be considered as settled in this state, that part failure of con- sideration may be pleaded to an action at law on a note."®^ And may be shown in evidence.^® And where there was an agreement with an out-going partner for a pro tanto rebate if accounts proved worthless, such partial failure may be availed of as a defense in an action at law upon notes for the purchase price of notes and accounts of the firm at their face value.*^ In a Nehraska case it is decided that in an ac- tion between the parties on a negotiable check and persons not ho)ia fide purchasers, a partial failure of consideration may be shown, and where defendant admits an amount due and alleges such partial failure in an action against the drawer the plaintiff may recover the amount due.''° In New Hampshire, under the statute, such part failure may be proved in reduction of damages, after filing a brief statement thereof,®^ in all cases where total failure would have been a good defense. °" It was also at common law a good defense pro tanto where the sum to be deducted could be ascertained by mere computation, but otherwise where the amount to be deducted was unliquidated."^ In New Jersey it is held that in a suit between the original parties a partial failure ''Bisbee v. Tornius, 26 Minn. 165, "" Lanning v. Burns, 36 Neb. 236, 2 N. W. 168; Leighton v. Grant, 20 54 N. W. 427. Minn. 345, Gil. 298, 306. °^ Pike v. Taylor, 49 N. H. 124, ^° Rasberry v. Moye, 23 Miss. 320. 127, under stat. 1861, c. 2497. See Etheridge v. Gallgher, 55 ^- Nichols v. Hunton, 45 N. H. 470. Miss. 458, considering code, § 2281; "Nichols v. Hunton, 45 N. H. 470 Merchants' Bank V. Millsaps (Miss.), (Stat. 1861, c. 2497, § 1); Riddle v. 15 So. 659, considering code, § 3503; Gage, 37 N. H. 519, 75 Am. Dec. 151; Stokes V. Winslow, 31 Miss. 518, Drew v. Towle, 27 N. H. 412, 59 considering code, 640, § 9. Am. Dec. 380. See Fletcher v. " Barr v. Baker, 9 Mo. 850, 854. Chase, 16 N. H. 38, holding that past *' Gamacke v. Grimm, 23 Mo. 38. failure was not, in general, a de- ''Battrel v. Franklin, 57 Mo. 566. fense, for the defendant was left to See p. 320, § 3; Briscoe v. Kinealy, resort to action on covenants for 8 Mo. App. 76; Smith v. Giegrick, indemnity. A tract of land was 36 Mo. 369, under rev. code 1865. sold, but no distinction was made between land and personal property. § 208] WANT OR FAILURE OF CONSIDERATION. 348 of the consideration may be set up as a defense to the same extent as though the action were founded upon such consideration itself.''* But it is also decided that partial failure is no defense where the amount to be deducted on account of such failure is unliquidated.**^ In New York partial failure of consideration is, under the negotiable instru- ments law, a defense pro tanto, whether the failure is an ascertained and liquidated amount or otherwise."" In an early decision in that state it is determined that if a note be given on account of part per- formance of an entire contract, the non-performance of the entire con- tract is no defense to the note, and that a claim for damages for not completing the contract cannot be recouped against the note."" In another case in that state the court declares that partial want of con- sideration affects the note with nullity pro tanto, and that the same rule applies where there has been a part failure of the consideration,'^ not indeed in all cases, but in many cases, at least where it is a matter capable of definite computation and not mere unliquidated damages."^ Under earlier decisions such partial failure may be shown in defense,"* or be given in evidence to reduce the damages or recovery, under no- tice of defense.^"" Defendant may also show that the note was given for more than plaintiff was entitled to and the excess should be de- ducted.^**^ But it is also determined in that state that where there has been only a partial failure of consideration the defendant cannot say that the note is wholly void ; in such case each party may have an action and this is the only way in which complete justice can be done.^°^ In North Carolina such partial failure is inadmissible to de- feat recovery or lessen the sum due, but resort must be had to a coun- terclaim or cross-action for damages ;^°^ or as it has been decided in another case, such part failure furnishes a distinct and independent cause of action, and a distinction is made between the contract and the »*WyckofE V. Runyon, 33 N. J. L. Y.) 605; Judd v. Dennison, 10 107. Wend. (N. Y.) 512 (available in "^ Allen V. Bank of U. S., 20 N. J. mitigation or in bar); Burton v. L. 620. Stewart, 3 Wend. (N. Y.) 236, 20 ""Neg. Inst. Law, § 54. See Ap- Am. Dec. 692; Spalding v. Vander- pendix herein. cook, 2 Wend. (N. Y.) 431; Jones "^Walker v. Millard, 29 N. Y. 375. v. Swan, 6 Wend. (N. Y.) 589, 593. "' Sawyer v. McLouth, 46 Barb. '°^ Phoenix Ins. Co. v. Fiquet, 7 (N. Y.) 350, 353, quoting Story on Johns. (N. Y.) 384. Prom. Notes, § 187. ^"^ Payne v. Ladue, 1 Hill (N. Y.) °" Sawyer v. Chambers, 44 Barb. 116. (N. Y.) 42, 43 Barb. (N. Y.) 622. "'Evans v. Williamson, 79 N. C. i°" Payne v. Cutler, 13 Wend. (N. 86. I 249 PARTIAL FAILURE OF COXSIDERATION". [§ 20S security. If a part of the contract arises on a good consideration and part on a bad one it is divisible. But it is otherwise as to the secur- ity, that being entire.^"* In Oliio recovery is barred to the extent of failure of consideration/''^ and a party is entitled to abatement in price, in case of a partial failure of consideration, against all persons seeking to enforce a vendor's lien, as they are not hona fide holders. ^''^ But a purchaser of land who has received a deed containing a cove- nant of warranty cannot plead in bar, to an action on a note given for the purchase money, a defect of title, unless he has been evicted by title paramount.^"'^ In OJclahoma partial failure of consideration in recoupment of damages may be shown.^"^ In Oregon such part failure may be set up, and defendant may recoup his damages, though they be unliquidated.^*''' In a Pennsylvania case a note was given in payment pro tanto of work, but it was not to be extinguished or paid if the work was never completed. It was left to the jury to determine whether the work was substantially performed or not, under an in- struction to allow an offset if so done, but compensating plaintiff in damages for such part as was not fully completed. ^^° In South Caro- lina it is held that where it appears that a purchaser would have the right to recover back the purchase money he has a good defense by way of set-off in a case where he has not paid the purchase money ; that is, he who has a cross-action has a right of discount against an action brought ; and a set-off which equals a total failure as to part of a divisi- ble consideration may be shown under the terms of a contract allowing a return of part of the goods for the purchase price of which the note was given, although it was declared to be in strict analogy to a case of total failure of consideration. ^^^ In Tennessee a maker of a note is held to be entitled to credit to the amount and extent that the con- sideration has failed, caused by the land being held for debts of the grantor when the note is not in the hands of a hona fide holder.^^^ In '"Washburn v. Pi cot, 14 N. C. (3 '"' Hagan v. Bigler, 5 Okla. 575, 49 Dev.) 390. Pac. 1011. "'^ Lowenstine v. Males, 3 Ohio ^"^ Davis v. Wait, 12 Oreg. 425, 428, Dec. (reprint) 330. 8 Pac. 356. '""Sutton v. Kautzman, 6 Ohio "° Truesdale v. Watts, 12 Pa. St. Dec. (reprint), bottom page 910. 73. ""Picket v. Picket, 6 Ohio St. 525, "'Barnes v. Shelton, Harp. (S. C.) distinguished in Kyle v. Thompson, 21, 18 Am. Dec. 642. 11 Ohio St. 616, 623, where an order "' Edwards v. Porter, 42 Tenn. (2 was made enjoining collection of so Cold.) 42. much of a note as was necessary to cover a mortgage encumbered. § 208] WANT OR FAILURE OF CONSIDERATION. 250 a Texas case it is decided that a defense of partial failure of consider- ation may be shown between original parties.^^^ In Vermont, prior to the statute of 1867, partial failure of consideration could not be set up as a defense even in a suit between the original parties, unless there was fraud and an offer to rescind, and the amount to be deducted could be ascertained by computation ; and under the statute such a defense became available only between the original parties as expressed by the instrument itself, as between the maker and payee."* And where a note was given in part payment of land, the rest being in cash, it was held that the consideration of the note was the whole property pur- chased and not any particular part of it and that the case was not therefore within the statute, the alleged partial failure being greater than the amount of the note."'^ It is also held in that state that it is no defense that the land is incumbered, and that fraud which probably affects the consideration is inadmissible to reduce damages."® In a Federal case it is said : "It is urged that a partial failure of considera- tion is not a good defense at law, the amount being unliquidated. This is the English rule formerly followed in the United States."^ But the rule is now otherwise and the cases referred to in Connecticut and jSTew Jersey have been in express terms overruled by the courts of those states."^^^ So where a promissory note was given for the purchase price of land it was decided that failure of consideration through de- fect in title must be total to constitute a good defense, as any defect in the title or deed was inadmissible in a court of law in an action on a note, but relief must be sought in chancery."^ In a Canada case it "^Branch v. Howard, 4 Tex. Civ. 21 Me. 150; Morrison v. Jewell, 34 App. 271, 23 S. W. 478. Me. 146; Hogden v. Colder, 75 Me. "^Craigne v. Hall & Farr, 72 Vt. 293; Drew v. Towle, 27 N. H. 412, 59 104, 50 Atl. 806, 87 Am. St. Rep. 690, Am. Dec. 380; Riddle v. Cage, 37 N. 55 L. R. A. 876; Russell v. Rood, 72 H. 519, 75 Am. Dec. 151; Richard- Vt. 238, 47 Atl. 789; Burgess v. son v. Sanborn, 33 Vt. 75; Pulsifer Nash, 66 Vt. 44, 28 Atl. 419; Hoyt v. Hotchkiss, 12 Conn. 234; Allen v. V. McNally (Rev. Laws, § 911); Bank, 20 N. J. L. 620. Thrall v. Horton, 44 Vt. 386; Cragin "^American Nat. Bk. v. Watkins, V. Fowler, 34 Vt. 326, 80 Am. Dec. 119 Fed. 545, 555, 556. Citing Avery 680; Richardson v. Sanborn, 33 v. Brown, 31 Conn. 398; Bonker v. Vt. 75; Walker V. Smith, 2 Vt. 339. Randies, 31 N. J. L. 335; Wyckoff "= Craigne v. Hall & Farr, 73 Vt. v. Runyon, 33 N. J. L. 107. 104, 50 Atl. 806, 87 Am. St. Rep. "° Greenleaf v. Cook, 2 Wheat (U. 690. 55 L. R. A. 876. S.) 13, 4 L. Ed. 172. See also, Pack- "'Hassam v. Dompier, 28 Vt. 32. wood v. Clark, 2 Sawy. (U. S.) 546, "^Citing Wentworth v. Goodwin, Fed. Cas. No. 10656 (U. S. C. C. D. 251 PARTIAL FAILURE OF COXSIDEKATIOX. [§ 208 is decided that a partial failure of consideration is no objection in an action on a bill of exchange if that failure applies to a defined por- tion of the sum claimed, otherwise it is no defense.^-*' But it is also held that a plea is bad in law which shows only partial failure of con- sideration, as defendant's remedy is by cross-action or by suit in equity.'-' In an Ontario case it is decided that a partial failure of consideration for an ascertained and liquidated amount, such sum having been agreed to be allowed, may constitute a defense by way of Oregon) (holding that a failure of consideration to be defense must be total, and where some portion of the consideration still remains the defense can only come in by way of recoupment of damages for the par- tial failure, and under the code the damages, if any, can only be allowed as a counterclaim, which must be pleaded and proved in the same manner as if a separate action.) Elminger v. Drew, 4 McLean (U. S.) 368, Fed. Cas. No. 4416 (holding that total failure is a good defense, but partial is no defense where goods are sold and delivered with warranty and the contract is abso- lute and there is a breach; unless the contract be rescinded by con- sent it remains open; fraud avoids, but there must be an offer to rescind except where impracticable to re- turn property, as in the case of death of a horse, and that the weight of authority is against the right to set up part failure, although the court says: "A very recent case, not yet reported in the supreme court, has overruled the cases in that court.") Scudder v. Andrews, 2 McLean (U. S.) 464, Fed. Cas. No. 12564 (holding that partial fail- ure cannot be shown unless there has been a fraud. The case was one of a purchase-money note, and the court considers Chitty on Bills (Ed. 1839), p. 86, to the point that a sub- sequent failure of the consideration for which a bill or note has been given, either in whole or in part, when of a definite amount, such as the non-performance of a condition precedent, frequently, between the original parties or their representa- tives affords a defense entirely or partially. But the court denies that this is the law, except in cases of fraud.) Varnum v. Mauro, 2 Cranch (U. S. C. C.) 425, Fed. Cas. No. 16889 (holding that partial failure is no defense.) Boone v. Queen, 2 Cranch (U. S. C. C.) 37, Fed. Cas. No. 1643 (holding par- tial failure no defense, unless there is fraud.) Martin v. Barton Iron Works, Fed. Cas. No. 9157 (hold- ing that in Georgia a total as well as partial failure of consideration may be set up as a defense to what is commonly known as a sealed note or single bill. The writing was not strictly speaking, commercial paper governed by the law merchant). ''"Georgian Bay Lumber Co. v Thompson, 35 Up. Can. Q. B. 64, 70 72. '=' Kilroy v. Simkins, 26 Up. Can C. P. 281, 285. So a plea to an action on a prom issory note showing not a total but only a partial failure of considera tion, is bad. Hill v. Ryau, 8 Up Can. Q. B. 443. § 209] WANT OR FAILURE OF CONSIDERATION. 252' reduction of the amount agreed upon.^-- In another case it is held that partial failure of consideration, being a sum capable of a definite computation, can be set up as an answer pro tanto.^^^ And in a New Brunswick case it is held that defense can only be made where the failure of consideration is entire, and parties must resort to a cross- action for damages sustained by claimed part failure.^-* If a person who is under indictment engages the services of a lawyer and exe- cutes and gives to the latter his note for the amount of his fee, and commits suicide before his trial, the fact of non-performance by the lawyer of the services for which the note was given, and that he did not defend the criminal on his trial constitutes no ground in law or equity for impeachment of the consideration of the note. The promise to perform the service was the consideration of the note. The per- formance was not a condition on which the obligation of the note de- pended, but if by any act or omission on the lawyer's part, without de- fault of the obligor, the stipulated service had not been rendered there would have been a partial failure of consideration. There exists in such a case as this no failure of consideration, because the non-per- formance resulted from the obligor's acts, without the concurrence or delinquency of the obligee who was ready and willing to perform his undertaking and would have done so had not the obligor's act pre- vented.^^^ § 209. Where number of notes are given — Partial failure of con- sideration. — Where several notes are given for a consideration which with the assent of defendant has partially failed, it cannot be set up in defense against all the notes. The amount of the note first sued on may be recovered for past performance ; that is, the money actually owed thereon may be recovered.^^e There may, however, owing to a mistake between the parties be a pro tanto failure of consideration for notes and a mortgage for which equity will grant relief where there '^^^M'Gregor v. Bishop, 14 Ont. 7, '=' Clarke v. Ash, 5 N. Brunsw. (3 quoting Chalmers on Bills (1st Kerr) 211. See further, Daniels on ed.), p. 78, art. 93, that a "partial Neg. Inst. (5th Ed.), § 201. failure of consideration is a defense '=" Mitcherson v. Dozier, 7 J. J. pro tanto against the immediate Marsh. (Ky.) 53, 22 Am. Dec. 116. party when the failure is an ascer- "« Hansford v. Mills, 9 Port (Ala.), tained and liquidated amount, but 509; notes were for sale of personal not otherwise." property. ^=^Star Kidney Pad Co. v. Green- wood, 5 Ont. 28, 33. I ^53 RESCINDING CONTRACT AND RESTORING CONSIDERATION. [§ 210 is no longer any consideration some of the notes having been paid and it being obvious that the parties did not intend to bind themselves to the full extent of said obligation represented by all the notes and the surrender and cancellation will be ordered of the unpaid notes.^-^ If there is one consideration, not susceptible of apportionment, for sev- eral promissory notes, a partial failure of that consideration cannot, in the absence of fraud or mistake, impeach any one of the notes in an action on it.^^^ § 210. Rescinding contract and restoring consideration — General rule. — It is as a general rule a prerequisite to the defense that the con- sideration of a bill or note has failed or that it is without considera- tion, that such consideration, if of any value, should be restored, or there should be an offer to restore it. The underlying principle is that a party must affirm or avoid a contract in toto and not in part, and cannot at the same time repudiate and retain the benefit of a con- tract. The party seeking to rescind must put the other party in statu quo}~^ So where the purchaser of property gives a note for the price "^Thompson v. Hudgins, 116 Ala. 93, 116, 117, 22 So. 632. ^^« Leighton v. Grant, 20 Minn. 345 (Gil. 298, 306). ^Alabama. — Gillespie v. Battle, 15 Ala. 276 (holding that the maker of a promissory note given in part payment for the purchase price of land cannot retain the land, no fraud being shown, and insist that the contract is a nullity and that the note given is without consideration. It was also held that there was a failure of consideration). Arkansas. — Desna v. Robinson, 17 Ark. 228. California. — Fitz v. Bynum, 55 Cal. 459 (in this case it appears that the court instructed the jury that if the stock for which the notes in suit were given had any value, the defendant must have offered to return it or the plaintiff would be entitled to a verdict, and such in- struction was held correct; but the verdict was for defendant upon con- flicting evidence, and the judgment was affirmed). Indiana. — Heaton v. Knowlton, 53 Ind. 357 (holding that a party can- not repudiate a contract on the ground of fraud and at the same time retain the benefits derived from it, but must, when he dis- covers the fraud, restore, or offer to restore to the other party what he has received, and failing to do this he affirms the contract. When the consideration received is of any value to either party it must be re- turned or must be tendered before the party can sustain an action for rescission of the contract or suc- ces"Sfully defend an action based upon such contract. A party cannot treat a contract as good in part and void in part, but must affirm it or avoid it as a whole. In this case the notes were claimed to have been procured by false and fraudulent representations, having been given for the right to use, and in a cer- §■ 210] WANT OR FAILURE OF COXSIDERATION. •254 and subsequently ascertains that he has been defrauded in the sale, if the property is of any value, and he ascertains the fraud in season to enable him to do so, he must rescind the contract by returning the tain locality, a patented machine). loxca. — Moore v. Moore, 39 Iowa 461 (it was said in this case: "It is urged that defendant has not re- scinded nor offered to rescind the contract under which the note was given, and he cannot therefore re- fuse payment now. No further an- swer need be given to this position than this. If what defendant re- ceived under the contract was worthless, the consideration of the note failed, and recovery cannot therefore be had by a holder with notice." Plaintiff was the indorsee, and note was given in consideration of the appointment of defendant as agent for the sale of roofing cement under contract between defendant and the payee, who indorsed the note in blank without recourse. The consideration of the contract proved worthless, and it was held that a holder with notice could not re- cover. "If the note was taken out of the 'due course of business' under circumstances calculated to impart notice of its infirmities, plaintiff re- ceived It at his peril, though taken before due and without notice of fraud"). Kentucky. — Bull v. Jackson, 1 A. K. Marsh. (Ky.) 176 (holding that contract ought not to be avoided while possession remained). Louisiana. — Brown v. Lambeth*, 2 La. Ann. 822 (in this case the de- fendant, holder of a note indorsed by plaintiff, gave it up to him on the latter's executing his own note for the amount payable at a future period. Judgment was obtained upon the last note without defense. Plaintiff claimed that he had been discharged as indorser of the origi- nal note by the laches of the holders in not giving notice of protest, of which discharge he was ignorant. Upon these allegations an injunction was obtained, which defendants moved to dissolve, and it was held that it must be dissolved, the plain- tiff having no right to require the second note to be cancelled without restoring the original note received from defendants "now constat that the plaintiff may not have collected the note from the maker or other- wise disposed of it"). Missouri. — Fenwick v. Bowling, 50 Mo. App. 516. New York. — Burton v. Stewart, 3 Wend. (N. Y.) 236, 20 Am. Dec. 692. Ohio. — Mellen v. Harvey, 6 Super. & Com. P. Dec. (Ohio) 15 (in this case the defense was that the paper was signed to accommodate the payee, who, as executor of an estate desired to purchase the in- terest of another therein, that the foreclosure was made in the defend- ant's name, but in fact by and for the payee. The court said: "From all that appears from the second de- fense the purchase was actually made, and defendant neither handed it over to the executor nor offered to rescind, and may be now enjoying it; hence this defense is not suf- ficient"). Vermont. — Harrington v. Lee, 33 Vt. 249 (holding that an offer to re- scind was necessary, and if the maker of a note insists upon hold- ing the property in consummation of which the note was given, this operates as an affirmance of the contract in all its particulars and k 255 RESCINDING CONTRACT AND RESTORING CONSIDERATION. [§ 210 property, and he cannot retain the property and at the same time re- fuse to pay the note/^° In an Indiana case the appellant held a num- ber of notes and accounts against the appellee. Upon a settlement had, a certain aggregate sum was fixed as due upon them. In judg- ment of this sum appellee gave a certain amount in cash and conveyed the land for a certain price which equaled the balance of the in- debtedness. Upon this being done the accounts and notes were sur- rendered to him, and appellant asked that the conveyance of land be rescinded and that the accounts and notes be returned, he retaining the sum paid to him. There was a claimed offer to rescind the con- tract and sale of the land and to return notes and accounts surren- dered on settlement and conveyance of the land, but not in toto, and the court held that the rule was well settled that if a contract is re- scinded at all it must be rescinded in toto ; that a party cannot rescind a contract and retain the whole or a part of the benefits of it, and that a contract cannot be rescinded unless the parties can be placed in statu quo}^'^ So where notes were given in consideration of a lease, of which the appellants had received the benefit, and fraud was al- leged in the procurement of the notes in the form in which they were given, but the particular acts of fraud were not stated, and it was also asked that the notes not due be surrendered and cancelled, but no offer was made to give new notes or to compensate the appellee for the rent of the land for which they were given, it was declared that a de- cree of that kind could not be had without an offer to execute other notes, or in some way placing the appellee in statu quo. The court said: "The appellants having received the benefit of appellee's lease could not be heard to say that the notes given in consideration thereof should be destroyed without giving equivalent value for the lease."^^^ And the fact that the note was given for a particular purpose does not disentitles defendant to question plaintiff fraudulently left the state either the validity or amount of the to prevent it, and demurrer was sus- note). tained. It was also held that if In Ansern v. Byrd, 6 Ind. 475, a viewed as a plea of tender it was plea of fraud and misrepresentation defective for not making profert as to the contents and nature of the of the money in court, note was not sustained. The action "" Smith v. Smith, 30 Vt. 139, 144, was for the recovery of the entire per Poland, J. But examine Bell v. amount due on account of non-pay- Sheridan, 21 D. C. 370. ment of interest. There was a spe- "^Worley v. Moore, 97 Ind. 15. cial plea alleging readiness to pay "- Norris v. Scott, 6 Ind. App. 18, the interest, but averring that the 32 N. E. 103. § 210] WANT OK TAILURE OF COXSIDERATION. 2o'6 change the above rule.^^^ Thus, in a suit by an indorsee, in behalf of one of the original payees, it appeared that the note was made to be offered at a bank for discount on certain terms which were refused, and it was held that it ought to have been returned to the maker, the object of it having failed, and that it would have been fraudulent in the payees to have negotiated the note without notice of the agree- ment under which it was drawn and received, and as the terms upon which the note was to be offered to the bank were not accepted the maker was discharged from it.^^* Again, where a promissory note is based upon a conditional agreement to return, upon inability to per- form a certain condition, it is not enough to show a failure to perform such condition in order to avoid the note, but it must also be shown that the property received by the maker has not been used and that he has returned or tendered it.^^^ And where there is an absence of a total failure of consideration, and no offer has been made on the part of the defendant to rescind the contract, he cannot set up as a de- fense fraud in the contract on which the note was given, especially Avhen the damages are unliquidated. If a defendant relies upon prov- ing fraud as a defense to an action on a note, when there has been only a partial failure of consideration, he should in the first place offer to rescind the contract so as to place the parties in statu quo if he has it in his power to do so.^'^'' The general rule has also been applied, although the property is only of nominal value.^^^ But where a note is given for the right to use patented machinery in a certain locality and the patent has proved a useful one in other places, it is based upon a valuable consideration, even though it has failed of success in the locality for which the note was given. In such case, if the re- scinding of the contract depends entirely upon an agreement, its terms should be strictly complied with, and where such agreement also pre- scribes the terms upon which the note is to be given up, and no suffi- cient excuse for non-compliance is shown, the maker cannot avoid the note as a rescinded contract. ^^^* If, however, the answer sets forth that a suit has been commenced to rescind a conveyance tendered, the defense is good.^^^ '"' So held in Denniston v. Bacon, '=' Stone v. Peake, 16 Vt. 213. 10 Johns. (N. Y.) 198. "' Boggs v. Wann (C. C. N. D. "'Denniston v. Bacon, 10 Johns. Ohio), 58 Fed. 681. (N. Y.) 198. "•* Pottle v. Thomas, 12 Conn. 565. "= Wood v. Ridgeville College, 114 ^^^ Knappen v. Freeman, 47 Minn. Ind. 320, 16 N. E. 619. 491, 50 N. W. 533. I 257 RESCINDING CONTRACT AND RESTORING COXSIDERATION. [§ 211 § 211. Same subject — Exceptions to and qualifications of rule. If the thing purchased is of no value to either party it need not be restored.^^'' And if at the time the defendant discovers that he has been defrauded into giving a note for the purchase price of property the then state of affairs is such that it is impossible to rescind the con- tract and restore either of the parties to their former condition and ■ rights, it is unnecessary either to rescind or restore. Thus, where the consideration of a note is a falsely and fraudulently represented inter- est in property, if no such interest exists in fact, it cannot, therefore, be restored to the vendor by a disaffirmance of the contract, and the maker of the note may defend an action thereon upon the ground of want of consideration, even though he makes no effort to rescind the purchase.^*" An actual tender will also be excused where it is ren- dered impossible by sickness or death or the destruction of the chat- tel."^ Again, if one is induced by fraud and circumvention to exe- cute a note, believing that he is executing another paper and he is not guilty of negligence, it is immaterial whether such maker offers to return everything he has received under the contract he supposed he was making. ^*^ The maker of a note, the consideration of which was a draft which proves to have been forged, may also set up such de- fense without restoring or offering to restore the draft.^*^ Nor is it necessary in setting up usury in order to defeat the collection of in- terest or to have interest payments applied that the party pleading it should offer to restore benefits received.^** Other exceptions and qualifications are illustrated by the following decisions. Where the ""Desha V. Robinson, 17 Ark. 228; signee. It was also held that the Burton v. Stewart, 3 Wend. (N. Y.) note was void in the hands of a 236, 20 Am. Dec. 692 (holding that bona fide holder whether or not article purchased must be returned such holder had notice of the de- or shown to be of no value). fense. "° Smith V. Smith, 30 Vt. 139. In »^ Blood v. Northup, 1 Kan. 28. this case a note was given by one In this case the point was made that partner to another for his interest the defendant was not seeking to in an insolvent firm, which interest rescind the contract, but that he was falsely and fraudulently rep- had performed the same while his resented to be valuable when it was adversary had performed nothing, totally worthless. Examine Bell v. The plaintiffs were assignees and Sheridan, 21 D. C. 370. occupied the same status as would "' So held in Desha v. Robinson, the payee had he sued. 17 Ark. 228. "' First Nat. Bank v. Ledbettor "= Hubbard v. Rankin, 71 111. 129. (Tex., 1896), 34 S. W. 1042. In this case appellant sued as as- JoYCE Defenses — 17. § 211] WANT OR FAILURE OF CONSIDERATION". 258 payee named in a note and mortgage, procured by him by threats of prosecution and intimidation and without consideration, and which are therefore absolutely void, voluntarily leaves on the table another note and chattel mortgage after said execution, and the party executing the first note and mortgage never examined the papers so left as a pretended consideration and never agreed to receive them as a con- sideration and never received any Ijenefit from them, they form no part of the consideration and there exists no obligation in such case to return said papers or to account for their absence in order to defend an action on the first note and mortgage.^'*^ In another case it was held that in an action on a note given as the consideration of an as- signment of a bond of a third person for the conveyance of a tract of land on payment of a certain sum, within a certain time, the de- fendant could give in evidence that the contract was fraudulent with- out returning the bond, if the time had expired before he had knowl- edge of the fraud; and that the defendant was not bound to restore the bond assigned before its expiration unless he had ascertained that the statements were false and fraudulent before said expiration of the Ijond ; but if the facts had been ascertained before such expiration of the term limited by the bond it should have been returned.^*® Again, where the vendor of property received from the vendee a promissory note indorsed by the latter, for an amount larger than the purchase money and gave his own note payable at a day certain for the excess ; to entitle the vendor to insist upon a want of consideration when sued on his note, it is not necessary that he should release the vendee from his indorsement to a corresponding extent; if the defense is success- ful the plaintiff may claim a reduction from his liability as indorser. Xor vrill tlie pendency of a suit by the vendor, as indorsee, against his indorser in any manner prejudice the defense ; such an action may be maintained to recover the price of the property sold.^*'^ It has also been decided that where a note was fraudulently obtained from plain- tiff's husband and defendant knew that he had no title thereto, it was unnecessary for plaintiff to refund the amounts given for said note at the time it was received; since the note belonged to plaintiff, defend- ants could not acquire the right to retain it by purchasing it from one "=Lee V. Ryder, 1 Kan. App. 293, fendant (Allen) to insist upon a 41 Pac. 221. failure of consideration it was not """Winslow v. Bailey, 4 Shep. necessary that Allen should have re- (Me.) 319. leased the plaintiff from his indorse- '" Litchfield, v. Allen, 7 Ala. 779, ment, to the extent of the sum the 783. It was said, to entitle the de- latter is now seeking to recover. I 259 AS TO GUARANTORS. [§ 212 Avho had no right to dispose of it.^'*^ In another case it is declared that the defense of want or failure of consideration may be pleaded without a rescission of a contract for fraud.^*^ Again where a party makes a defense of only a partial failure of consideration it is held that an offer to return the article purchased is unnecessary.^^*' And in a marine case it is held that it is not necessary in order to make the defense of partial failure of consideration that the party who sets it up should restore what he has received under the contract.^^^ But in Vermont, prior to the statute of 1867, partial failure of considera- tion was no defense unless there was fraud and an offer to rescind.^^^ So a defense of total failure of consideration is available by the maker without any offer to return worthless corporate stock con- stituting the consideration.^^^ § 212. As to guarantors. — It may be stated generally that there must be some consideration to support a guaranty. ^^^ But, although "* More V. Finger, 128 Cal. 313, 60 Pac. 933, 38 Pac. 322. "» Russ Lumber & Mill Co. v. Mus- cupiabe L. & W. Co., 120 Cal. 521, 527, 52 Pac. 995, 65 Am. St. Rep. 186 ("Where the failure of consid- eration is total, as where nothing of value has been received by the defendant under it and the plaintiff cannot perform it, but the defend- ant may plead want or failure of consideration." Per Haynes, C.) '^^^ Rasberry v. Moye, 23 Miss. 320. "•Herbert v. Ford, 16 Shep. (Me.) 546. "=Hoyt V. McNally, 66 Vt. 38, 28 Atl. 417. See, also. Walker v. Smith, 2 Vt. 539, where fraudulent repre- sentations were held inadmissible, in an action on a note for purchase, to reduce wages, the defendants not having rescinded the purchase. '=^'Taft V. Myerscough, 197 111. 600, 64 N. E. 711, rev'g 92 111. App. 560. ^"A guaranty is a contract in and of itself but it has relation to some other contract or some obligation with reference to which it is collat- eral and it always requires a con- sideration. If the guaranty is exe- cuted at or about the time the main contract is executed and both con- tracts form parts of the same trans- action one transaction may support both contracts. But where the con- tract is sold and assigned and the guaranty is executed in contempla- tion or in pursuance of such sale and assignment one consideration may support both the sale and the guaranty. In all cases, however, where the guaranty is executed after the execution of the original contract, or after a sale thereof, and not in pursuance of any under- standing had at the time of the exe- cution of the original contract or at the time of the sale, neither the consideration for the original con- tract nor the consideration for the sale can support the guaranty. But the guaranty in all such cases must have a separate and independent consideration, and unless it has it is void. Briggs v. Latham, 36 Kan. 205, 209-210, 13 Pac. 129, per Valentine, J., § 212] "WANT OR FAILURE OF COXSIDERATION". 260 a guaranty may be a contract separate from the execution of the note or undertaking of the principal debtor it does not follow that the guarantor cannot make defense when sued upon his guaranty, and although a counterclaim or set-off may not be pleaded it does not fol- low that the plea of no consideration is not available, and if there be any consideration for the execution of a note it is sufficient to support a guaranty, yet if there be no consideration the guarantors may plead and prove that fact and thus defeat the creditor's action, unless the guarantors have received a consideration direct to them from the credi- tors.^^^ So the want of consideration for a guaranty may be set up citing Daniel on Neg. Inst., § 1759; Randolph on Commercial Paper, § 856; 2 Parsons on Notes & Bills, p. 125. See, also, Stearns on Sure- tyship (ed. 1903), §§ 16, 57, 144; 1 Brandt on Suretyship & Guar- anty (3d ed.), §§ 22, et seq.; Col- ston V. Pemberton, 47 N. Y. Supp. 1110, 1111, 21 Misc. 619, per Mc- Adam, J. (case affirms 45 N. Y. Supp. 1034, 20 Atl. 410), who says: "In Hall V. Rodgers, 26 Tenn. (7 Humph.) 540 the Supreme Court of Tennessee * * * followed the rule laid down by Kent, C. J., in Leonard v. Vredenburgh, 8 Johns. 29, 30, and adopted the classifica- tion of cases made by that eminent jurist, first in which are 'cases in which the guaranty or promise is collateral to the principal contract, but is made at the same time and becomes an essential ground of the credit given to the principal or di- rect debtor. Here * * * is not, nor need be any other consideration than that moving between the cred- itor and original debtor.' This clas- sification of the cases has been a landmark of the law of our state for more than half a century. Bay- lies Sur. P. 66. Following it, the court of Appeals, in Bank v. Coit, 104 N. Y., at p. 537, 11 N. E., at p. 54, said: 'Where a contract of guar- anty is entered into concurrently with the principal obligation, a con- sideration which supports the prin- cipal contract supports the subsid- iary one also. We understand this to be the settled doctrine,' citing McNaught v. McClaughtry, 42 N. Y. 22; Simons v. Steele, 36 N. H. 73; Brandt Sur., §§ 6, 7." 155 ^ood Mowing & Reap. Mach. Co. v. Land, 98 Ky. 516, 32 S. W. 607, where the court, per Guffy, J., quotes from 2 Parsons on Contracts, p. 7, as follows, as to guarantees: " 'It is itself a distinct contract and must rest upon its own considera- tion, but this consideration may be the same with that on which the original debt is founded for which the guarantor is liable. The rule of law is this: If the original debt or obligation is already incurred or undertaken previous to the colla- teral undertaking, then there must be a new and distinct consideration to sustain the guaranty. But if the original debt or obligation be founded upon a good consideration and at the time when it is incurred or undertaken or before that time the guaranty is given and received, and enters into the inducement for giving credit or supplying goods, then the consideration for which the original debt is incurred is regarded as a consideration also for the guaranty.' " Citing also, Winans v. I 261 AS TO GUAKAXTORS. [§ 212 even against a subsequent bona fide purchaser, where the guarantor never executed the paper, was never liable thereon and never owned the same, and there was no consideration whatever for the writing on the notes of the claimed words of guaranty."*^ Where the matters which operate as a defense to guaranteed notes grow out of the con- tract under which the notes were given, there is no objection, where the state procedure so permits, to giving relief to a guarantor, where the person primarily liable for the debt guaranteed is shown to have a defense growing out of the same transaction and going to the con- sideration of the notes which entitles him to a judgment; and it is generally true that a surety may set up any defense by offset or coun- terclaim which would be available to his principal. So where a de- fective warranty arising at the sale of personal chattels may be availed of as a defense, or the maker becomes entitled by reason thereof to re- cover a sum equal to the balance due on the notes as for damages, the notes are paid and the guaranty satisfied, and if the original promisor can thus be discharged the guarantor can.^^^ This rule does not, however, prevent the statement of a case which would render guarantors liable on their guarantee, notwithstanding the defenses set up by the makers, if the notes were good as to themselves.^^* Again, where the guarantors or the parties assuming the payment of notes have not put their names to the notes sued on and are not bound by the law merchant, but solely on their assumpsit of the notes, they may plead all the equities against the notes which the maker could, and may avail themselves of failure of consideration as to both a per- sonal and real obligation, and a partial failure may be shown. ^^® So in an action by the transferee of the guarantor, but not a bona fide holder, defendant may show that the note was invalid in the original transaction between the guarantor and defendant and therefore was without consideration.^®*' And if there is valid consideration for a Gibbs & Starrett Mfg. Co., 48 Kan. 67 Tex. 54, 2 S. W. 861, citing Bay- 777, 30 Pac. 163; Standley v. Miles lies on Sureties & Guarantors 408; & Adams, 36 Miss. 434. Brandt on Suretyship & Guaranty ""Briggs v. Latham, 36 Kan. 205, 203; De Golyer on Guarantees 431. 13 Pac. 120, the words of the guar- But compare 1 Brandt on Surety- anty written upon a mortgage se- ship (3d ed.), §259, p. 512. curing certain negotiable notes '^"Aultman & Taylor Co. v. Hef- were "I hereby guarantee the pay- ner, 67 Tex. 54, 2 S. W. 861. ment of the within mortgage — L. ^'^^ Brou v. Bechel, 20 La. Ann. 254. D. L." ^"o Gross v. Kellard, 26 N. Y. Supp. '" Aultman Taylor Co. v. Hefner, 69, 6 Misc. 27, 56 N. Y. St. R. 617. § 213] WAXT OR FAILURE OF COXSIDERATION. 262 guaranty, a motion to dismiss a complaint, seeking recovery upon the note, is properly denied.^"^ If a "transfer and guaranty of collection" operates only as an assignment thereof, any defense available between the original parties, including that of want of consideration, can be made in a suit brought by the assignee, even though the latter took the note before due and without knowledge of any infirmities.^"^ And, although a holder of a note who purchases before maturity and for value has knowledge of the consideration of a note and of the guar- anty, but has no notice at the time of his purchase that the guarantor had failed to perform his guaranty, this will not preclude a recovery, although if he had had knowledge or notice of the failure to perform or inability to perform the guaranty it might have been a sufficient defense. ^®^ § 213. As to sureties. — Xo exact line of demarcation between a guarantor and surety can be satisfactorily made and it has been well said in a Connecticut case that: "With respect to the technical dis- tinction in legal character and effect between a surety, guarantor, in- dorser, and maker of promissory notes, there is so much nicety of re- finement' as often to lead to great uncertainty as to the real nature of the distinctions, and especially as to the principle on which some of the assumed distinctions rest. In many cases the shades of legal dif- ference between a guarantor and surety are so subtle and readily blended as to be almost impossible of separate and satisfactory dis- crimination, and sometimes also between an indorser, guarantor and surety, and in some instances the question whether a party was maker, guarantor, or surety has been found not free from difficulty upon any clearly defined and well settled principles."^^* This difficulty in de- termining whether or not a party is a surety becomes important in determining not only his liability but also in formulating any rule in the matter of defenses as to sureties. It was the established law of England before the judicature act that in equity the true relations of the parties to a negotiable instrument could be inquired into and that it could be shown in equity that the maker of a note was in fact a surety and an indorser the principal, and further, that in such case "' Colston V. Pemberton, 47 N. Y. ^"^ Hudson v. Best, 104 Ga. 131, 30 Supp. 1110, 21 Misc. 639, aff'g 45 S. E. 688. N. Y. Supp. 1034, 20 Misc. 410. '" Monson v. Drakeley, 40 Conn. ^«^ Omaha Nat. Bank v. Walker, 5 552, 561, 16 Am. Rep. 74, per Phelps, Fed. 399. J. See 15 Central L. J. 82. 263 AS TO SURETIES, [§ 213 if the indorser, who was in fact the principal, was dealt with so as to discharge a surety, the maker was discharged. ^"^ So generally a surety may show, by way of defense, the facts going to the consideration of the execution of the note, as that he was a mere accommodation maker and the purpose for which the maker stated he wanted the surety's signature as an initial step affecting its consideration in the hands of the holder and notice thereof to the latter.^*'^ But a party cannot be bound as surety for a debt which is not due because of failure of con- sideration against the principal.^®^ Although the mere liability of one as surety for another on a note not yet due will not of itself give a cause of action against the principal in favor of the surety, still it may, however, furnisli a good consideration for a promissory note, upon a promise either express of implied by law, on the part of the surety, that he will pay and discharge the debt of his principal ; and such a note may be the foundation of an action and a valid attach- ment, at least to the extent of the actual payment made by the surety before taking judgment in his action; but where the attachment is made upon real estate before the note is signed and upon personal estate thereafter it constitutes a defense, since no claim was due and payable when the action was commenced. ^*'^ But the agreement be- tween the payee of a promissory note and a third party that the latter would become surety on the note and sign it in consideration that the payee would forbear to sue on the note is a valid enforceable agreement, no question being raised as to the statute of frauds. Such agreement may be either express or inferred from the facts and cir- cumstances of the case.^*^^ If the principal and sureties unite in a common defense of partial failure of consideration, and no plea peculiar to the contract of suretyship is entered by the sureties, they must stand or fall, according to the validity of the defense in favor "= Jennings v. Moore, (Mass., Rob. (La.) 157, Civ. Code Art. 2208, 1905), 75 N. E. 214, 215, per Lor- as to defenses as to indorsers as ing, J. sureties. What acts do and do not dis- ^"^ Swift v. Crocker, 38 Mass. (21 charge surety see generally, Daniels Pick.) 241. See Flagg v. Locke, 74 on Neg. Inst. (5th ed.), §§ 1308e, et Vt. 320, 52 Atl. 424, as to right, un- seq. See, also, chapter herein on der statute, of a surety in an action Satisfaction and Discharge. to set-up any defense that the prin- ^''" St. Louis Nat. Bank v. Flanna- cipal might have availed himself of gan, 129 Mo. 178, 201, 31 S. W. 773. in an action brought against him. "'"Adams v. Curry, 15 La. Ann. '•'^ Hockenbury v. Myers, 34 N. J. 485. See Johnson v. Marshall, 4 L. 346. 214] WANT OR FAILURE OF CONSIDERATION. 264. of the principal.^"" If paper is signed for a special purpose in which the sureties are interested, the fact that it is made payable to a par- ticular person may be sufficient to put another who takes it upon in- quiry, and if to take it would operate as an injury to or fraud upon the sureties, the latter may defend against it for want of considera- tion.^''^ A promissory note given by a surety in discharge of the obli- gation in its original form, but which the principal debtor had dis- charged, although the surety was ignorant of said fact, is based upon no consideration whether inquiry had or had not been made of the principal debtor as to the payment or existence of the original debt."2 § 214. As to donor and donee. — It constitutes a defense in an ac- tion by the donee against the donor of a promissory note that the note was a gift and that there was no valuable consideration, but only one based on love and affection ;^'^ for as a want of consideratin is a ^'"American Car Co. v. Atlantic Street Ry. Co., 100 Ga. 254, 256, 28 S. E. 40. "1 Meeker v. Shanks, 112 Ind. 207, 212, 13 N. E. 712, per Mitchell, J. See Voreis v. Nussbaum, 131 Ind. 267, 31 N. E. 70, 16 L. R. A. 45, as to Stat. 1881, § 5119, precluding married women becoming sureties, etc., available as defense against bona fide holder. '" Pettyjohn v. Liebscher, 92 Ga. 149, 17 S. E. 1007. "' Loudermilk v. Loudermilk, 93 Ga. 443, 21 S. E. 77. A non-negotia- ble note. A note based on love and affec- tion cannot be enforced. Kline's Est., In re, 9 Pa. Dist. R. 386; Shu- gart v. Shugart, 111 Tenn. 179, 76 S. W. 821. Examine Head v. Bald- win, 83 Ala. 132, 3 So. 393; West V. Cavins, 74 Ind. 265; Fink v. Cox, 18 Johns. (N. Y.) 145. 9 Am. Dec. 191; Kern's Estate, In re, 171 Pa. St. 55, 33 Atl. 129. A donor's own promissory note is held to be unenforceable; Shu- gart v. Shugart (Tenn., 1903), 76 S. W. 84. But as to gifts of bills and notes generally: See California. — Pullen v. Placer County Bank, 138 Cal. 169, 71 Pac. 83. Illinois. — Hagermann v. Hager- mann, 188 111. 363, 53 N. E. 950, 90 111. App. 251; Morey v. Wiley, 100 111. App. 75; Martin v. Martin, 89 111. App. 147. Kansas. — Gallagher v. Donahy, 65 Kan. 341, 69 Pac. 330. Maine. — Bickford v. Mattocks, 95 Me. 547, 50 Atl. 894. Michigan. — Conrad v. Manning, 125 Mich. 77, 83 N, W. 1038, 7 Dec. L. W. 440. New Hampshire. — Blazo v. Coch- ran, 71 N. H. 585, 53 Atl. 1026. Neiu York. — Timerson, In re, 80 N. Y. Supp. 639, 39 Misc. 675. North Carolina. — Flanner v. But- ler, 131 N. C. 150, 42 S. E. 557. Texas. — Deussen v. Moegelin, 24' Tex. Civ. App. 339, 59 S. W. 51. Canada. — Ekemberg v. Mousseau,. 265 AS TO DO>roR and doxee. [§ 214 good defense, a promise to give money cannot, as between original parties, be enforced even in the form of a promissory note.^''* So there is no consideration for a new note intended as a gift and given for a larger sum in lieu of a prior note made and executed as a gift.^^^ It is established as a rule of law that in a suit upon a promis- sory note against the promisor by the promisee, or by an indorsee without value given, or taking the note under such circumstances as to enable him to stand only upon the rights of the promisee, it is competent for the promisor to show by way of defense that it was gratuitous and made without any legal consideration, that a donor's promissory note, payable to the donee, cannot be the subject of a donatio causa mortis. ^'"^ And the indorsement of a promissory note by the donee cannot be the subject of a gift causa mortis so as to ren- der his estate liable on his indorsement. ^'^^ But upon a plea of want of consideration it is not a defense, which will defeat recovery upon a note, that the consideration of the note sued on was a loan to the donor of the money proceeds of a share of stock which was a volun- tary gift from the donor to the plaintiff.^'^® It is lawful for one to transfer notes to his wife by gift i^'^^ and a check drawn by a testator, payable to his wife or order, given to her before his death, and in- dorsed and paid by her into a foreign bank against the amount of Rap. Jud. Queb. 19 C. S. 289; Foster Iowa 596, 33 N. W. 74. See last pre- v. Walker, 32 N. S. 156. ceding note. A relinquishment of a note by '" Copp v. Sawyer, 6 N. H. 386. way of gift with tjie intent that it ^'"Parish v. Stone, 31 Mass. (14 should operate as a release or ex- Pick.) 198, 201, per Shaw, C. J. tinguishment of all obligation to When checks deposited, to be de- make further payment of the previ- livered after death, are not good as ously existing indebtedness is valid, gifts for want of delivery, see Clay Percival-Porter Co. v. Oaks (Iowa v. Layton, 134 Mich. 317, 96 N. W. 1906), 106 N. W. 626. 458. A delivery of the promisor's note "'Weston v. Hight, 17 Me. 287, 35 to a party payable out of the for- Am. Dec. 250. Compare Whitehouse mer's estate without any actual de- v. Whitehouse, 90 Me. 468, 38 Atl. livery of the property or amount is 374. without consideration, being a mere "** Rice v. Rice, 106 Ala. 636, 17 So. promise to make a gift or deliver 628. the property in the future, and such ^""Lee v. Newell, 107 Pa. St. 283, note cannot be enforced. Tyler v. see this case also as to legal and Still (Wis.), 106 N. W. 114. equitable defenses. "'Simpson College v. Tuttle, 71 §§ 215, 216] WANT OR FAILURE OF CONSIDERATION. 266 which she drew, is enforceable in the hands of such bona -fide holder, even though not presented until after such donor's death.^^*^ § 215. As to donor and donee — Negotiable check on bank. — In case of a negotiable check on a bank made and delivered to the payee in the lifetime of the drawer and not presented for payment until after the latter's death, but actually paid on presentation, there is such immediate possession and control of the thing intended to be given as to constitute an executed and perfected gift, and it is of no importance that the drawer after delivery of the check expressed a wish that it would not be delivered until after his death, and the bank would have no defense for refusal to pay it.^^^ § 216. Joint and joint and several notes. — Where a note is upon its face a joint one, presumably both makers executed it at the same time, and upon ample consideration as to each and both, but such presumption is not conclusive and under proper pleas it may be shown as a defense that there was no consideration at all, and it is decided that it may also be shown that there was a consideration as to one of the makers and none at all as to the other, and one of the joint makers cannot be precluded from setting up the defense of want of consideration as to him because it is common to all.^" But it is also decided that in a suit on a joint note it is not sufficient for one of the joint defendants to show that he received no consideration; it is necessary for him to show want of consideration between the plaintiff and the other makers. Proof that one of the joint makers of a note signed it without consideration, as between him and the payee, and at the request of another joint maker, is insufficient to de- stroy the presumption of consideration contained in the note itself; it must be shown that there was no consideration moving between the payee and the other joint maker.^^^ If all the joint payees of a note indorse the same to the holder, he is not a lona fide indorsee and holder for value so as to preclude the defense of want of considera- ''" Rolls V. Pearce, 5 Ch. Div. 730. "= Kinsman v. Birdsall, 2 E. D. But quaere if the check had been Smith (N. Y.) 395. Examine gen- payable to bearer. erally Yoho v. McGovern, 42 Ohio ^"^ Pullen v. Placer County Bk. St. 11, as to Rev. Stat., § 5366, when (Cal.), 66 Pac. 740. not applicable to charge joint maker ^'- Meyer v. Brand, 102 Ind. 301, of note. 26 N. E. 125; so also under Rev. St. 1881, §§ 366, 568. 267 NOTES UNDER SEAL. [§ 217 tion in an action by him upon the note, nor is he entitled to notice of want or failure of consideration to constitute it a defense.^^* Failure of consideration without fraud may be pleaded to a note which is a joint and several promise to pay by two, purporting to be signed and sealed by the makers, but sealed only as to one and signed only by the other as security.^ ^^ In Minnesota a partial failure of consideration may be interposed by one of the makers of a joint and several note to defeat a recovery pro tanto. The defense cannot be taken away because it is also available to another maker should he be sued on the note/**' § 217. Notes under seal. — The availability of the defenses of want or failure of consideration as against sealed notes and like obligations must rest largely, if not entirely, upon their character as non-negotiable, or as negotiable by statute, or as subject to assign- ment and equities under the statute. Thus a note may not be com- mercial paper governed by the law merchant, and yet under the statute total as well as partial failure of consideration may afford a good defense to writings which are commonly known as sealed notes or single bills.^" So a distinction has also been made between bonds or sealed obligations and notes, in that inquiry may not be made into the consideration of the former, but may as to the latter, between immediate parties.^** So upon the principle that a seal imports a consideration and creates a legal obligation, it is decided that, in an action on a bond or note under seal, want of consideration is no de- fense.^*^ But it is also determined that want of consideration may be '^Saxton v. Dodge, 57 Barb. (N. Quaere: Not definitely decided in Y.) 84. Iowa whether or not want of con- ^^Albertson v. Halloway, 16 Ga. sideration may be pleaded in de- 377. fense of note under seal. Slaton v. ^'*'' Nichols & Shepard Co. v. So- Fowler (Ga. 1906), 53 S. E. 567. derquist, 77 Minn. 509, 80 N. W. 630. ^^' Sprigg v. Bank of Mt. Pleasant, '"Martin v. Bartow Iron Works, 10 Pet. (U. S.) 257, 266, 9 Sup. Ct. Fed. Gas. No. 9, 157, so under Ga. 416, a case of principal and surety Stat. Action was between maker on a bond and of estoppel, and payee. When distinction exists When mortgage coupon bond between simple contracts and those with interest coupons attached and under seal, see Williams v. Haines, conditions therein is sealed instru- 27 Iowa 251, 1 Am. Rep. 268. ment, see Gibson v. Allen (S. D. Failure of consideration can be 1905), 104 N. W. 275. pleaded to a note under seal. Slaton ''° Cosgrove v. Cummings, 195 Pa. V. Fowler (Ga. 1906), 53 S. E. 567. St. 497, 498, 46 Atl. 69. §§ 218, 219] TVAXT OR FAILURE OF CONSIDERATION. 268 available by way of ^n equitable defense to a note under seal.^^* Again, notes under seal for the payment of money, negotiated before due, in good faith, are to be regarded as commercial paper, and all the incidents of such paper should attach to them, so that the makers cannot avail themselves of any breach of confidence by one of the parties in filling them up and putting them into circulation.^*^ But it is decided that the want of consideration cannot be availed of in defense on a sealed note against a bona fide holder.^"- But whatever infirmities or equities exist in favor of the maker against the payee are available against an assignee of a sealed note, and this applies to an accommodation note executed solely to enable money to be raised to pay a debt to a third person.^^^ Where notes purport on their face to have been given by decedent, not as evidence of any debt due to the payee, but to enable the latter to collect the amount thereof after the maker's death for the benefit of other persons named therein, they are unenforceable, even though under seal, where there exists a total want of consideration for such notes.^®* § 218. Notes under seal — Gratuitous promise to pay. — It is de- cided not to be a good defense that a promise in writing under seal to pay money was voluntary. ^^^ § 219. Renewal notes generally. — In an action by the payee against the maker of a note payable to a bank, which, under a statute,, is goverened by the law merchant as applicable to inland bills of ex- "" Londerman v. Judy, 48 Ohio St. course. The answer was set aside 562, 2 Ohio Cir. Ct. R. 351, 29 N. E. as insuflacient and judgment ren- 181, within code provision allowing dered for plaintiff which was re- legal and equitable defenses. versed. "' Bank of St. Clairsville v. Smith, "' Stevenson v. Bethea, 68 S. C. 5 Ham. (Ohio) 222. 246, 47 S. E. 71. '"= Bradford v. Williams, 91 N. "* Anthony v. Harrison, 14 Hun C. 7. (N. Y.) 198; 2 Rev. Stat. 406, § 77, Examine Gehhart v. Sorrels, 9 makes a seal only presumptive evi- Ohio St. 461. This case was one dence of a sufficient consideration, of an action on a bill of exchange ^'^Aller v. Aller, 40 N. J. L. 446. brought by an indorser, but the in- But statute Rev. St., p. 387, § 52, as strument was not in the ordinary to showing want of consideration form of a bill of exchange intended as defense to sealed instrument con- to be negotiated in the market, and sidered. See Abel v. Burgett, 3 was under seal and was indorsed Blackf. (Ind.) 502. by a bank to plaintiff without re- I 269 RENEWAL NOTES — SURETIES DEFENSE. [§ 220 change, it is no defense that the note sued on was in lieu of another paper for the same amount executed without consideration to a third person, who had indorsed the same to the plaintiff before maturity for an amount much less than the face value.^^*' And the maker of the old note, who has failed to sign a renewal note, is not released by the acceptance of such renewal note, where the agreement not to re- lease or extinguish the old note is the consideration for the renewal being accepted.^'*'^ Under a Massachusetts decision it is held that where a note was given in pursuance of a promise to name a child after the maker of the note, such child can recover on a renewal note given in place of said note. The court said in this case : "The de- fendants concede that the privilege * * * was a valid consideration. * * * But they contend that the plaintiff was a stranger to the con- sideration and that he could not recover upon that note, and that he cannot recover upon the note in suit, which the testator afterwards gave to the plaintiff in renewal of the original note. We have no doubt that the privilege of naming a child is a valid consideration for the promise. * * * j^-^ ^]-,jg ^^^gg j^^ ^g ^^^^ j.^ g^y thsit^ in the transac- tion in which the original note was given, the parents were acting for the child, and were understood * * * to be so acting," and that the child had ratified the contract after becoming of age. § 220. Renewal notes — Waiver by principal precluding defense of failure of consideration — Sureties defense.— The principal cannot de- feat a recovery upon a renewal note by setting up a failure of con- sideration, where a waiver of the right to take advantage of defects, based upon facts, existing at or about the time of the maturity of the original note and before the renewal, which facts were then fully known to the principal ; especially so when, in addition to giving the new note, he had repeatedly, in writing, acknowledged his liability both before and after giving the new note. And if the sureties have not pleaded any facts which would discharge them from liability on the contract of suretyship, and have no other defense than that relied on by their principal, they are bound thereby, although if they had a complete defense to the first note, and the holder knew it, and if in ignorance of the facts upon which their defense could have been predicated they signed the second note and renewed their contract of suretyship, they could by proper pleadings and proof have presented >M Murphy v. Lucas, 58 Ind. 360. "^Bowman v. Rector (Tenn., 1900), 59 S. W. 389. §§ 221, 222] WAXT OR FAILURE OF CONSIDERATION. 270 the question whether or not they could be discharged from liability thereon.^®^ § 221. Renewal notes — Implied or expressed consideration. — Even though matters are not expressed as part of an agreement which constitutes the consideration of a renewal note, yet the failure to perform such matters when not demanded cannot be availed of as a defense to an action on paper so renewed. ^''^ If a note is based upon a valid consideration, and a renewal note which expresses the receipt of value is given therefor, the maker in an action by the payee cannot defend on the ground of want of consideration.^"" § 222. Renewal note — Consideration for original paper. — If the original note is given for an adequate consideration it follows that no new or additional consideration is necessary to give validity to a renewal note.^"^ But a contract to extend the time of a payment of a promissory note, made after maturity of the note, is not one which necessarily imports a consideration.^"^ And a note given in renewal of a note voidable for want of consideration is without consideration.-"^ If a note is given in renewal only, and not in payment of a prior note, the real consideration is the same as that of the prior note, and failure of the consideration of the original note may be availed of in a suit on the renewal note.^"* So if the maker takes up a note by executing "' American Car Co. v. Atlanta '"^ Lockner v. Holland, 81 N. Y. Street Ry. Co., 100 Ga. 254, 28 S. E. Supp. 730. 40. In this case the principal and ^°- See National Citizens' Bank v. sureties all united in the common Toplitz, 178 N. Y. 464, 468, 71 N. E. 1. defense of partial failure of consid- "°^ Hill v. Buckminster, 22 Mass. eration and the sureties entered no (5 Pick.) 391. Action here was be- plea peculiar to their contract of tween original parties, suretyship and the court said: Where original note is without "Whether these sureties would be consideration renewal note is also, bound by the waiver of the princi- Cockran v. Perkins (Ala., 1906), 40 pal if the facts were unknown to So. 351; Gilbert v. Brown (Ky., them at the time they signed the 1906), 97 S. W. 40. last note, or whether for that reason •'^ Wheelock v. Berkeley, 138 111. they could avail themselves of any 153, 157, 27 N. E. 942, citing House other defense is not now for deci- v. Davis, 60 111. 367; 1 Parsons on sion." Bills and Notes, pp. 176, 177; -Tiede- "'West V. Banigan, 51 N. Y. App. man on Com. Paper, § 180. Div. 328, 64 N. Y. Supp. 684, aff'd A note given in renewal of one 172 N. Y. 622. which in fact had been paid is with- ^'^Ross V. Western Loan & Trust out consideration. Smith v. Taylor, Co., Rap. Jud. Queb., 11 R. R. 292. 39 Me. 242. 271 RENEWAL NOTE — CONSIDERATION FOR ORIGINAL PAPER. [§ 222 to the same payee new notes for the same amount, the consideration of the new notes is the same as that for the old, and the maker may set up failure of consideration in a suit by an assignee upon the new notes.205 go i^ jg gaid j^ ^ Maryland case : "The taking from the same party of a security of no higher grade or dignity, for another, never works an extinguishment or amounts to a payment, but leaves the original obligation in full force."^"*' And where notes were given in settlement of a note on which it was represented one was surety, but he was not, it was held that the consideration had failed.-<>" But it is insufficient evidence of want of consideration to prove that a note previously given by another for the same amount to the same payee was satisfied by the payee about the same time the note sued on was given.^"^ If a renewal note is based upon an independent valid con- sideration an inquiry cannot be made, as against a bona fide holder, into the consideration of the original note. So where renewal notes or a bill of exchange are given for extension of the original notes the parties thereto cannot inquire into the consideration of the origi- nal notes, payable at a bank, as against said bank after it becomes a bona fide purchaser thereof.-"^ So the extension of time of payment of a note is a valuable consideration for other notes taken in lieu of it, and if a new note taken in lieu of another is founded on a valuable con- sideration, independent of that on which the original note was founded, the failure of the consideration of the former note is not a defense by the drawer in a suit against him on the last note.-^'^ Where no promise is made to pay a note in order to obtain an ex- tension, and the maker does not authorize the payee to secure such extension from the indorsees, the maker is not, in an action against him by the indorsee, compelled to pay the last note where there has been a failure of consideration thereof.^" There has also been a total failure of consideration where there exists a failure or refusal to turn over the old notes as agreed to be done in consideration of new notes, ^^'Bray v. Pearsoll, 12 Ind. 334. Wkly. Notes Cas. (Pa.) 433, giving =°« Hopkins v. Boyd, 11 Md. 107, of time and release of indorser con- 118 per Le Grand, C. J. stitute new consideration and de- ="" Wright V. Vetter, 54 Mo. App. fense not good on original notes is 384. no defense on substitute notes -'^ Rowland v. Harris, 55 Ga. 141. which have been negotiated. ^'^Estep V. Burke, 19 Ind. 87. =" Merchants' & Planters' Bank v. ""Muirhead v. Kirkpatrick, 21 Pa. Millsaps (Miss.), 15 So. 659. St. 237. See Gatzmer v. Pierce, 6 §§' 223, 224] WANT OR failure of consideration. 272 and in such case the payee cannot recover against the makers.^^^ But in an action by a holder for value against the maker and in- dorsee upon renewal notes given upon an agreement that the old notes should be turned over to plaintiff, and one of them is not delivered until presented in court for such purpose, and such non-delivery is waived, there is not such a failure of consideration as to prevent plaintiff from recovering on the renewal notes against the indorsee.^^^ So the fact that old notes have never been surrendered as agreed con- stitutes no defense in law against the obligation of new notes in the hands of a bona fide purchaser before maturity and without notice, and where such purchaser obtains a judgment at law he is entitled to retain the same.^^* § 223. Renewal notes — Discount before maturity. — One who takes good title, when he discounts an original note by receiving it before maturity, for value and without any notice of want of consideration, may recover on renewals thereof, unless the taking of the last notes is an extinguishment of the original note.^^^ And where the note sued on is not a new transaction, but is a renewal note given by the maker to the payee for a balance due, and said renewal note has been purchased for value in due course of business without notice, said holder is not precluded from recovering by notice that the original note was without consideration.^^® §224. Notes or checks given for other notes or bills purchased. Where a note is given for the purchase price of another note which at the time had a certain cash value, the fact that the latter note was subsequently, in an action thereon, found, even though mistakenly, to be without consideration, does not constitute a defense to the for- mer note.^^'^ And where the payee of a note has sold it to a third person, and the maker being present at the request of the vendee, and for his accommodation takes it up and executes a new note, payable to the purchaser in a suit upon a new note the maker cannot prove "= Perry v. Connell (Tex. Civ. "= Hopkins v. Boyd, 11 Md. 107. App.), 31 S. W. 685. 2^= Beattyville Bank v. Roberts, 117 «^West V. Bannigan, 51 N. Y. Ky. 689, 25 Ky. L. Rep. 1796, 78 S. App. Div. 328, 64 N. Y. Supp. 884, W. 901, 902. aff'd 172 N. Y. 622, 65 N. E. 1123. =" Bean v. Proseus (Cal.), 31 Pac. »^* Martina v. Muhlke, 186 111. 327, 49. S7 N. E. 954. 273 DRAFT TO EXTIXGUISn OTHER DRAFTS. [§§ 225, 226 •vrant of eonsideration for the note which has been canceled.^^^ Again, it is no defense to an action upon a note that the consideration of it -vras another note, against one B., transferred to the defendant by the plaintiff, with a guaranty of payment before the note in suit should fall due, which note against B. has not been paid.^^^ If a person pur- chases bills of exchange from an insolvent's syndics and gives cash and other notes therefor, and they are protested for non-payment and returned to the purchaser, he may, for want of failure of con- sideration, refuse to pay his notes in the hands of the syndics of the vendor, who has failed. Said notes being still in the payee's hands, or, which is the same, in those of his syndics, the consideration may be inquired into.^^" But the fact that a check is given for the purchase price of a note, and that the makers of the note had stopped payment before the sale, does not constitute such a failure of consideration as to constitute a defense to an action on the check, where it was given for a note placed in a broker's hands to raise money. ^^^ And if post- dated checks are given in pursuance of an arrangement for the ex- change of checks and notes for the accommodation of defendant, and they are deposited in a bank which takes them before maturity, for full value without notice of any equities or defenses, such bank has a perfect title against all defenses in a suit by ij; against the drawers.^-^ Again where a note is transferred for a consideration of another note and a chattel mortgage, which latter note has indorsers against whom it may be enforced, there is not a total failure of consideration, even though the maker of the latter note and mortgage becomes insolvent.--^ § 225. Draft accepted to extinguish other drafts. — One who ac- cepts a draft drawn to extinguish other outstanding drafts cannot set up a failure of consideration for which the first drafts were given as a defense to his acceptance.--^ § 226. Where only part of the consideration is good — Action by payee. — If part of the consideration of a note is good and there is no ^'Williams v. Rank, 1 Ind. 230, 1 therefore that there was a consid- Smith (Ind.) 176. eration. ""State v. Hobbs, 40 N. H. 229. =" Symonds v. Riley (Mass., 1905), ^Grieve's Syndics v. Sagory, 3 74 N. E. 926. Mart. 0. S. (La.) 599. 223 ce^^rai SaV. Bank v. O'Connor, "" Elwell v. Chamberlain, 17 N. Y. 132 Mich. 578, 94 N. W. 11, 10 Det. Super. Ct. (4 Bosw.) 320, aff'd 31 L. N. 14. N. Y. 611. There was also a claim -^ Kaufman v. Barringer, 20 La. here that the transaction was usuri- Ann. 419. ous, and that it was not so, and Joyce Defenses — 18. §§ 277-230] WANT OR FAILURE OF COXSIDERATION". 274 consideration for the balance, and the valid obligation is paid, an ac- tion upon the note by the original payee will fail.--^ § 227. Defense to one note in action on another. — If notes are exchanged each note is a valid consideration for the other, and is fully available in the hands of its holder, and such transaction being fully consummated and in no sense executory, a defense of failure of consideration, in an action upon one of them, will not be sustained by the fact that the other is not paid at maturity, where there is nothing amounting to a plea of an equitable set-off. If, however, an. equitable counter-claim is set up under proper averments, defendant, might then show that no equities or rights of others had intervened, and that the transaction was such as to justify offsetting one note against the other.^^® § 228. Note given for political assessments. — There is no want of consideration for a note given to the chairman of a campaign com- mittee, by the nominee for a state office, to meet his proportion of campaign assessments and also of assessments to meet counsel fees and costs of a contest of election against all the candidates of the party, said note having been given after the contest was instituted.--^ § 229. Where paper sued on is impossible to perform in reasonable time. — There is both a want and failure of consideration where the paper sued on is impossible to perform within a reasonable time, at least, within the time contemplated by the contract on which the paper is based.^^^ § 230. As to agents.-^** — If defendant gives his negotiable note to the order of agents, and such payees indorse the same to a bona fide indorsee for value before maturity, it is valid in his hands and not subject as against him to defenses affecting the consideration.--" And where an agent, at the request of his principal, drew his check === Littlefleld v. Perkins (Me., -' German-American Security Go's 1905), 60 Atl. 707. See Tuttle v. Assignee v. McGulloch (Ky. App., George A. Tuttle Co.. (Me., 1906), 64 1905), 89 S. W. 5. Atl. 496. "** See Neg. Inst. Law, § 119, ap- ^^''Rice V. Grange, 131 N. Y. 149, pendix herein. 42 N. Y. St. R. 707, 30 N. B. 46. ==" McCormack v. Warren, 74 Conn. ^ Day V. Long, 26 Ky. L. Rep. 234, 50 Atl. 740. See Byers v. Har- 123, 80 S. W. 774. ris, 56 Tenn. (9 Heisk.) 652. 275 AS TO AGENTS. [§ 230 to another to discharge a lona fide debt due from his principal to the payee, having in his possession funds enough of his principal to meet the check, it was decided that the payee could recover against the drawer and that the money or funds^ for which the check was given, being in the drawer's hands at the time of giving plaintiff the check, there was no want of consideration.^ ^° But if a person draws as agent upon his principal for a debt not personal to himself, but due by the principal to the payee, and an action is brought against the agent as drawer, he may avail himself of the defense of want of consideration.^^^ If, however, an agent makes sales of the property of his principal, and in payment to the owner therefor has indorsed a note, which was not taken for the property sold, or any part thereof, such agent cannot set up want of consideration in defense of an action against him as indorser.^^^ But it is also decided that the consideration of a note is open to inquiry except where the rights of a hona fide purchaser have intervened, and that a principal is chargeable with such facts as are known to his agent, which rule was applied to a purchase of a note by an attorney at law for his client ;^^^ although as against a defense of failure of consideration a commercial firm holding a note in favor of one of its members, without indorsement, given for money loaned by the firm, cannot set up that they are innocent holders for value.^^* And, if a general agent, who appoints sub-agents to work for an insur- ance company under his supervision, takes from an applicant for in- surance a promissory note, to be negotiated and cash raised thereon, to be sent with an application in payment of a premium upon a policy, to be issued and delivered, and such general agent discounts the note in bank and forwards the money, with the application, he cannot, where he brings suit thereon, set up that he is a bona fide holder for value and so preclude the defense of failure of consideration, in that the note '^'^ Fish v. Jacobsohn, 1 Keyes 539, =^= Crocker v. Getchell, 10 Shep. 2 Abb. Dec. 132, aff'g 18 N. Y. Super. (Me.) 392, 398. 514. =^^ Macomb v. Wilkinson, 83 Mich. =^1 Wolfe V. Jewett, 10 La. 383; 486, 47 N. W. 336. Coupry V. Dufau, 1 Mart. N. S. ^'^^ Norton v. Pickens, 21 La. Ann. (La.) 9. The evidence showed that 575. Such was on a promissory the bill on which suit was brought note made by defendant to the or- was drawn by defendant as the der of one of tHe plaintiff's firm, but mere agent of Coupry and that he the note was never indorsed to the received no consideration for it firm and they did not appear as whatever and oral evidence was re- hona fide holders, ceived to show that no considera- tion was received by the drawer. § 231] WANT OR FAILURE OF CONSIDERATION. 276 was obtained before the policy was delivered, and the policy as deliv- ered was not that contracted for and for which the application was made.^^^ If an agent has authority to make a contract on which a note is based, and there is a breach thereof, there is a failure of consider- ation.-^® And where the purchaser of a note from a bona fide holder transfers it to the payee's agent it becomes subject in his hands to equitable defenses.^^'' § 231. As to trustees or committees. — Generally, if notes are issued or held by trustees or committees, in determining whether there is a defense to such notes the objects and purposes contemplated, and upon the consideration of which the notes are issued, are the determining factors, as a rule, upon the question of availability of defense, which must therefore depend upon the particular circumstances of the case.^^^ If a note is given to a trustee or committee for money raised for a specific purpose, said trustee or committee not being owners of the fund, it is based upon a special consideration, and want of con- sideration can not be set up as a defense.^^^ Again, no recovery can be had upon a note executed by a father, given, upon compromise of certain suits, to a trustee, to secure a settlement on his minor children for their support, during the existence of a marriage.^*" A note is also without consideration where it is given to a trustee, at his request, merely to enable him to show to the party for whom he was trustee to account for the disposition of money which said party had directed to be paid to defendant as a gift to the brother of said trustee, who was the plaintiff and son of the party for whom he acted as trustee.-" ='= Shedden v. Heard, 110 Ga. 461, shown and that the consideration 35 S. E. 707. had failed. =^" Webb v. Mosely, 30 Tex. Civ. ^'^ Town of Bayou Sara v. Harper, App. 311, 70 S. W. 349. 15 La. Ann. 233. See Des Moines ^' Battersbee v. Calkins, 128 Mich. Valley R. Co. v. Graff, 27 Iowa, 99, 569, 87 N. W. 769, 8 Detroit Leg. N. 1 Am. Rep. 256. 778. ='" Gates v. Renfroe, 7 La. Ann. ^ As to trustees or committees is- 569. Court declared that it was suing or holding notes, and defenses doubtful if such contract could be thereto, see Light v. Scott, 88 111. enforceable in a common law state 239. Trustees of the Town of Ewing as it implied a delegation of pater- V. Clarksville, 61 Ind. 129; Russell nal power which could not be recog- v. Hall, 8 Mart. N. S. (La.) 558. nized. As to compromise as a con- That payees were trustees fcrr sideration see §§ 195-197 herein, another for whose use and bene- =" Norwack v. Lehmann, (Mich, fit they received the notes may be 1905), 102 N. W. 992, 11 Det. L. N. 908. II 277 HOLDERS OF MUXICIPAL WAERANTS. [§ 232 The principle involved in this ease is, as is stated by the court therein, sustained by other decisions in the same state : thus where the amount of a promised legacy was advanced upon an understanding that in- terest should be paid during the testator's lifetime, and the legatee's husband, in recognition of the obligation to pay interest, voluntarily, without request, gave the testator his note for the amount, and paid interest thereon until the testator's death, it was held, in an ac- tion by the administrator, that there was no consideration for the note.^*^ So in another case it is held that want of consideration for a note executed by defendant to decedent in her lifetime is established where it is shown that the note was executed merely as a memoran- dum of a previous transaction, whereby decedent paid to defendant the amount of the note in consideration of his agreeing to use the same in the construction of a house, where she might make her home and receive maintenance and support, which agreement was carried out to the satisfaction of decedent.-*^ § 232. As to holders of municipal warrants and coupons attached to bonds. — The assignee of a municipal warrant is subject to the de- fense of failure of the consideration in the original contract occurring prior to notice, to the maker or drawer of the assignment.-** But where the evidence showed that defendant purchased a city warrant in good faith, and the warrant contained nothing giving any notice or intimation to put him on his guard as to another's ownership, the defendant was held not liable to the owner. The court in considering this case declared that a county or city warrant possesses all the quali- ties of negotiable paper but one, and that is, that it is open to any defense that might have been made to the claim on which it is founded; that for all purposes involving title it must be treated as negotiable.^*^ So city warrants regularly and legally issued and in =" Graham v. Alexander, 123 Mich. v. Palmer, 22 Wash, t/S, 61 Pac. 168, 81 N. W. 1064. 158 citing numerous cases. =" Kelly v. Guy, 116 Mich, 43, 74 See generally as to negotiability N. W. 291. of and defenses to municipal and ^" Board of Supervisors of Jeffer- county warrants, even in hands of son County v. Arrghi, 51 Miss. 667. bona fide holders: As to defenses on all promissory Alabama. — Allen v. McCreary, 101 notes and other writings for the Ala. 514, 14 So. 320. payment of money and other things, California. — Santa Cruz County see Annot. Code Miss., § 3503. Bank v. Bartlett, 78 Cal. 301, 20 Pac. ■*' Washington. — Fidelity Trust Co. 682; Shakespear v. Smith, 77 Cal. 232] WANT OE FAILURE OF CONSIDERATIOX. 97R the hands of innocent purchasers are not affected by the subsequent loss of bank deposits, applicable to their payment, through the bank's insolvency.^*^ Transferees, by delivery and written assignment from bona fide holders of coupons attached to county bonds, become the legal owners of such coupons and succeed to all the rights of such holders, and may recover upon such coupons, whether they have given 638, 11 Am. St. Rep. 327, 20 Pac. 294 (Municipal). Colorado. — People v. Hall, 8 Colo. 485, 9 Pac. 34; Raymond v. People, 2 Colo. App. 529, 30 Pac. 504 (Mu- nicipal). Illinois. — People v. Johnson, 100 111. 537, 39 Am. Rep. 63; Delfosse v. Metropolitan Nat. Bank, 98 111. App. 123 (Municipal). Indiana. — Connersville v. Conners- ville Hydraulic Co., 86 Ind. 184 (Mu- ( Municipal). Iowa. — Boardman v. Hayne, 29 Iowa 339 (Municipal); Shepherd v. Richland Dist. Tp., 22 Iowa 595 (Mu- nicipal). Kansas. — Garfield Tp. v. Crocker, 63 Kan. 272, 65 Pac. 273; Atchison T. & S. F. R. Co. v. Kearney, 58 Kan. 19, 48 Pac. 583. Michigan. — Van Aiken v. Dunn, 117 Mich. 421, 75 N. W. 938; Miner V. Vedder, 66 Mich. 101, 33 N. W. 47 (Municipal). Missouri. — State v. Huff, 63 Mo. 283 (Municipal); State, Livesay v. Harrison, 99 Mo. App. 57, 72 S. W. 469. JN'ebrosfca. — State, York First Nat. Bank v. Cook, 43 Neb. 318, 61 N. W. 693 (Municipal). New Hampshire. — Eaton v. Berlin, 49 N. H. 219 (Municipal). New York. — Bank of Staten Island V. City of New York, 68 N. Y. App. Div. 231, 74 N. Y. Supp. 284; Read V. Buffalo, 67 Barb. (N. Y.) 526 (Mu- nicipal). North Carolina. — McPeeters v. Blankenship, 123 N. C. 651, 31 S. E. 876. North Dakota. — Gilman v. Town- ship of Gilby, 8 N. D. 627, 80 N. W. 889 (Municipal); Erskine v. Steele County, 4 N. D. 339, 60 N. W. 1050, 28 L. R. A. 645. Ohio. — State v. Liberty Tp., 22 Ohio St. 144 (Municipal). Oklahoma. — Crawford v. Board of Commissioners of Noble Co., 8 Okla. 450, 58 Pac. 616. Oregon. — Klamouth County v. Leavitt, 32 Oreg. 437, 52 Pac. 20; Franki v. Bailey, 31 Oreg. 285, 50 Pac. 186. South Dakota. — Livingston v. Brown County, 15 S. D. 606, 91 N. W. 309; Hubbell v. Town of Coster City, 15 S. D. 55, 87 N. W. 520 (Mu- nicipal). Tennessee. — Fine v. Stewart (Tenn.), 48 S. W. 371; Donaldson v. Walker, 101 Tenn. 236, 41 S. W. 417. Washington. — Potter v. New Wheaton, 20 Wash. 589, 56 Pac. 394 (Municipal). West Virginia. — Shinn v. Board of Education, 39 W. Va. 497, 20 S. E. 604 (Municipal). Federal. — Ouachita County v. Wol- cott, 103 U. S. 559, 26 L. Ed. 505 (Mu- nicipal) ; Wall v. Monroe County, 103 U. S. 74, 26 L. Ed. 430; Watson V. City of Huron, 38 C. C. A. 664, 97 Fed. 449 (Municipal). -*^ New York Security & Trust Co. V. City of Tacoma, 21 Wash. 303, 57 Pac. 810. ^79 THIRD TERSOXS AS HOLDERS OF NOTES. [§§ 233, 234 any consideration for them or not, especially where no defense is pleaded which makes it material whether value was or was not paid for them. 2*^ § 233. Third persons as holders of notes. — It is decided that if a third person becomes the holder of a bill or note, negotiable by the law merchant, which had been obtained from the maker without consideration, and it can be proved that he had notice of the transac- tion between the original parties, and gave no value for the note or bill, he will be affected by everything which would affect the first liolder."^ But a party defendant cannot defeat an action upon a note by showing that the plaintiff obtained it from the payee without con- sideration. Thus if a party to a suit in pursuance of an award exe- cutes his promissory note, payable to a third person, he cannot defeat a recovery thereon by showing that no consideration passed between the plaintiff and the payee. 249 § 234. Note of third person. — "\\liile the giving of a note of a third person by a debtor to a creditor, when it is agreed between the parties that such note shall be taken in payment of the indebtedness, operates to discharge the debt, yet where a third party, subsequent to the time of incurring the debt, and a stranger thereto, promises to pay such debt, such promise is unenforceable, such third party not having requested the loan and not having received any benefit there- from, nor the payee having been injured, and there being no agree- ment between the debtor and the payee that such third person should give any note, nor between such third person and the debtor, the debtor being in no way a party to the transaction, and no forbearance on the creditor's part being shown. Such a case differs from one where the debtor is a party to the transaction and the payment made is en- forceable against the debtor by such third person upon the express or implied promise of the debtor, or was a payment by the third person of his own debt to the creditor. This rule, with its qualifications, controlled the court in a recent case in New York. In this case the plaintiff was the owner of a copyright of a play, which he sold to a =" Dudley v. Lake Co., 26 C. C. A. =" Munson v. Cheesborough, 6 82, 80 Fed. 672. Blackf. (Ind.) 17, citing Collins v. As to negotiability of bonds and Martin, 1 Bos. & Pull. 651. interest coupons see Article "Bonds," =" Yeatman v. Mattison, 59 Ala. 5 Cyc, pp. 777-784. 382. See § 244 herein. § 235] WANT OR FAILURE OF COXSIDERATION. 280 sister of defendant, she agreeing to pay therefor a certain sum of money as soon as she could sell some property owned by her. De- fendant, to some extent, participated in the prior negotiations, but it was not claimed that the play was sold to him or that he ever agreed to pay any portion of the purchase price, except as hereinafter stated. Subsequently the plaintiff applied to defendant for a loan, and two notes were made and signed by defendant and another and delivered to the plaintiff to enable him to get them discounted. Thereafter plaintiff returned these notes to defendant, who thereupon gave the plaintiff, for his accommodation, two other notes, signed by defendant alone, and when they were delivered defendant asked for and obtained a receipt stating that the amount of the notes was in part payment of the play. These notes were kept until maturity, and not being paid, suit was brought thereon and the defense of want of con- sideration was set up. It was not claimed that the sister ever re- quested defendant to give the notes, and she had no knowledge about their being given. It was decided that the notes could not be en- forced.^^° § 235. Note given to promote peace between husband and wife — Note of stranger. — A written promise by a stranger, in the form of a note, not given in satisfaction of any legal obligation, but given to a husband in order that he might deliver the same to his wdfe to secure domestic peace between them, is not in law a good promise in con- sideration of marriage, and such note is without consideration in the hands of the wife against the maker and cannot be collected, even though there was an ante-nuptial agreement, but not in writing, whereby the intended husband was to give the wife a certain sum of money, and the note was given about two and one-half years after their marriage.^^^ ^^ Tyler v. Jaeger, 93 N. Y. Supp. Har. & J. (Md.) 409, considered un- 558. The case of Kramer v. Kramer, der § 193 herein. 90 App. Div. 176, 86 N. Y. Supp. 129, ■'' Kramer v. Kramer, 181 N. Y. considered by the court in the prin- 477, 74 N. E. 474, revg. 90 App. Div. cipal case was subsequently reversed 176, 86 N. Y. Supp. 129, Gray, J., in 181 N. Y. 477. See §§ 235, 244 dissenting. See §§ 234, 244 herein, herein. Examine Wyman v. Gray, 7 CHAPTER XI. WANT OR FAILURE OF CONSIDERATION CONTINUED. Sec. Sec. 236. Assignees — Consideration of as- 249. signment. 237. Assignees — Want or failure of 250. consideration. 238. Bona fide indorsees or holders 251. —Rule. 239. Transfer after maturity. 252- 240. Rule as to payment of value; its basis and qualifications — Bona fide indorsees or hold- 253. ers. 241. Rule as to value continued — 254. Payment of pre-existing debt 255. — Bona fl,de indorsees or hold- ers. 256. 242. Same subject — Decisions contra 257. or qualifications. 243. Bank s — Distinctions between 258. crediting amount of note on 259. undrawn deposit and credit 260. on pre-existing indebtedness — Bona fide holder. 261. 244. Parting with value — Surrender 262. by creditor of debtor's own not e — Receiving negotiable 263. note of third person. 245. Joint note of husband and wife 264. — Outlawed debt of husband — Indorsee for past indebted- 265. ness — Indorsement by presi- dent payee to bank. 266. 246. Rule as to value — Collateral se- curity for pre-existing debt — Bona fide indorsees or hold- 267. ers. 247. Same subject — Particular deci- sions. 248. Same Subject — Specific excep- tions. 281 Security for pre-existing debt — Additional consideration. Intermediary party — H older from bona fide holder. Paper issued by corporation — Bona fide holder. Want or failure of considera- tion subsequent to transfer — Bona fide holder. Suit in name of original party — bona fide holder. Lex Fori. Indorsement for transfer mere- ly or to pass title. Same subject — Instances. Purchase-price notes — Original parties. Same subject — Acceptor. Same subject — Guarantors. Same subject — Bona fide holder or assignee. Effect of judgment — Assignees. Purchase-price notes — Property useless or of no value. Vendor or seller without title — Loss of title. Purchase-price notes — Land — Warranty. Purchase-price notes — Personal property — Warranty. Where property for which note given is of some value — No failure of consideration. Rights of holder where prior indorsee held note as collat- eral security and for continu- ing credit — Lien. 236] ■WANT OR FAILURE OF CONSIDERATION". 282 Sec. 268. Purchase-price notes — In- stances in general of want or failure of consideration. 269. Accommodation paper — Consid- eration as between original or immediate parties. 270. Bojia fide holders — Assignees — Notice or knowledge. 271. Same subject — Particular deci- sions. 272. Accommodation acceptor — Gen- eral rules and illustrations. 273. Same subject — Continued. 274. Same subject continued — Ex- ceptions and qualifications. 275. Bill payable to order. 276. Taking before acceptance. 277. Accommodation p a p e r — Con- flict of laws — Acceptance. 278. Accommodation check — B a n k check. Sec. 279. Accommodation indorsers — Availability of defense s — General rule. 280. Same subject — Application of rule. 281. Same subject — Qualifications of and exceptions to rule. 282. B07ia fide holder — Accommoda- tion paper taken after matur- ity — Want of consideration. 283. Accommodation of other par- ties in general. 284. Payment of pre-existing debt — Bona fide holder against ac- commodation maker. 285. Same subject — Particular rul- ings and opinions. 286. Same subject — Bona fide in- dorsee against indorser. 287. Same subject — Drafts and bills — Payee — Accommodation ac- ceptor. ■ § 236. Assignees — Consideration of assignment.^ — The assignment of a note is itself a contract which imports a consideration, and that consideration, prima facie, is the amount of the note.^ The consider- ation of an assignment cannot be questioned by the maker of a note when sued by an assignee.^ And if a failure of consideration is so ^ As to assignments generally see Daniels on Neg. Inst. (5th ed.), §§ 729-748a. 2 Lee V. Pile, 37 Ind. 107, 109. ^Arkansas. — Geisreiter v. Sevier, 33 Ark. 522, 531 ("whether the note was sold by the assignee for little or much did not concern Geisreiter, the maker of the note. * * * The maker of the note, when sued upon it by an assignee, cannot question the consideration given by the as- signee to the assignor for the trans- fer of the note"). Indiana. — Shane v. Lowry, 48 Ind. 205, 206, 207. ("The answer alleges that there was no consideration for the assignment of the note. This is no reason why the defendants should not pay the note. If the payees as- signed it, it is not for them to ques- tion the consideration paid for the assignment. If the payees gave it to the plaintiff, it is no concern of theirs. If the action were on the as- signment the rule would be differ- ent"); Musselman v. Hays, 28 Ind. App. 360, 62 N. E. 1022 (holding that answer is demurrable which avers in action by indorsee, that nothing was paid for assignment). New York. — Oishei v. Craven, 11 Misc. (N. Y.) 139, 31 N. Y. Supp. 1021, 24 Civ. Proc. R. 301, 65 N. Y. 283 ASSIGNEES — CONSIDERATIOX OF ASSIGXMEXT. [§ 236 insufficiently pleaded that a demurrer will be sustained it is not a good defense in an action by an assignee.* But if the assignee knows the facts, so that the note cannot be said to have been assigned bona fide, the maker may set up such facts in defense.^ And if a note is given without any consideration, and is indorsed by the payee without con- sideration, the maker will not, it is held, be precluded from showing these facts by way of defense to a suit brought by the assignee.^ St. R. 114 (consideration is not nec- essary to an assignment as against the maker. "It is not necessary to allege consideration for the as- signment for, if it be the fact that it is assigned, it is of no conse- quence whether it he for value or not. Certainly the maker cannot complain." Per Hatch, J.); Snyder V. Gruniger, 77 N. Y. Supp. 234 ("it is no defense to a party sued upon commercial paper to show that the transfer under which plaintiff holds it is without consideration or sub- ject to equities between him and his assignor or colorable and merely for the purpose of collection, or to secure a debt contracted by an agent without sufficient authority. It is sufficient to make the plaintiff the real party in interest, if he has the legal title, either by written trans- fer, as in the case at bar, or by de- livery whatever may be the equities between the plaintiff and his as- signor"). Assignment: See as to defenses generally : Colorado. — Cannon v. Serrel, 15 Colo. App. 99, 61 Pac. 187 (Gen. Stat., § 107, provides that every assignor of a note becomes liable to the as- signee, if the latter, by the use of due diligence in the institution and prosecution of the proper suit has failed to collect the money due, pro- vided that, if the suit would be un- availing, it need not be brought and the assignor may be sued in the first instance. This statute was held to afford no protection and it was also held that the assignor was liable to the holder before suit brought and that the holder, in order to fall back upon the indorsers, was obliged to seek a recovery outside of the terms of the note since the indorser war- rants the genuineness of the instru- ment in every respect and engages that it may be recovered upon and collected according to its terms, cit- ing 1 Daniel Neg. Inst, §§ 669, 672). Illinois: Wilson v. Van Winkle, 2 Gil. (111.) 684 (a case of an assign- ment by A. of a note to C. made by B. a recovery thereon against B., an injunction obtained by B., and a re- scission of the contract, A. died and C. obtained a judgment against A.'s estate for the money originally paid A. for the note). North Carolina. — Finch v. Gregg, 126 N. C. 176, 35 S. E. 251 (a case of assignment of bills of lading with drafts attached and liability for de- fective condition of consignment). As to rights of purchaser before and after notice of assignment un- der Burn's Rev. Stat. 1894, § 277, see Rosenthal v. Rambo, 28 Ind. App. 285, 62 N. E. 637. ^ Couch V. McKee, 1 Eng. (Ark.) 484, 496. = Hammond v. Kingsley, 12 111. 343. " Martin v. Kercheval, 4 McLean (U. S.) 117, Fed. Cas. No. 9163. § 237] WANT OR FAILURE OF CONSIDERATIOISr. 284 § 237. Assignees — ^Want or failure of consideration. — If there is a subsisting consideration at the time of the assignment, and there is no defense, a subsequent failure of consideration cannot affect the rights of an assignee of a note. Statutory provisions may, however, affect the question of availability of defenses against an assignee.'^ And, if a statute so provides, the maker of a promissory note after as- signment will be entitled to the benefit of all want of lawful consider- ation and of failure of consideration.^ So where assignees occupy the same position as the payee would, had he sued, the rule permitting a defense of failure of consideration, as between original parties, would apply.^ And it would seem that this defense ought to be available un- der laws which make an assignee take subject to all defenses or equities.^" It was said in a recent case that: "A negotiable instru- ^ Woodruff V. Webb, 32 Ark. 612, 615, 616. "According to the statute, oh. 15, § 3, Gould's Dig., in force when the assignment was made, and until the Act of April 24, 1873, the assignee of a note, unless it was ex- pressed therein to be payable 'with- out defalcation' (and the note sued on was not such), took it at his peril, and at the risk of any defense that the maker could set up against the payee. But * * * whilst there was a subsisting consideration * * * the defendant had no de- fense to it, the subsequent failure of consideration, could not, therefore, affect the plaintiff's right." ^Mississippi. — Hamer v. Johnston, 5 Miss. (6 How.) 698, 721, per Sharkey, C. J. As to defenses generally against assignee under statutes see the ear- lier decisions of Colorado. — Dunn v. Ghost, 5 Colo. 134; Nowak v. Excelsior Stone Co., 78 111. 309. Illinois. — Peoria v. Neill, 6 Peck (111.) 269. Indiana. — Sayres v. Linkhart, 25 Ind. 145; Bubler v. Pullen, 12 Ind. 567; Bowles v. Newby, 2 Blackf. (Ind.) 364. Kentucky. — Spencer v. Biggs, 2 Mete. (Ky.) 123; Kelly v. Smith, 1 Mete. (Ky:) 313. Louisiana. — Watt v. Rice, 1 La. Ann. 280. Iowa. — Examine also Jack v. Hos- mer, 97 Iowa 17, 65 N. W. 1009. Mississippi. — Brown v. Union Bank, 62 Miss. 754. See second following note herein. See Bowles v. Newby, 2 Blackf. (Ind.) 364, under Rev. Code 1824, p. 295, (1) making notes negotiable and giving same defenses against the assignee as against the original payee, failure of consideration is a defense to an action on the note by an assignee against the maker. ^ Blood v. Northrup, 1 Kan. 28. See generally as to assignments, etc., Daniels on Neg. Inst. (5th ed.), §§ 729-748a. i"That assignee of non-negotiable paper takes subject to all equities. See Pennsylvania. — Howie v. Lew- is, 14 Pa. Super. Ct. 23; Zeis v. Potter, 44 C. C. A. 665, 105 Fed. 671. That transferee or assignee with- 285 BONA FIDE IXDORSEES OR HOLDERS. [§ 238 ment, payable to orclcr, must be indorsed by the payee in order to pre- serve its negotiability in the hands of a subsQquent holder. A trans- fer without indorsement destroys its negotiable character, and the as- signee takes it subject to all such defenses as might have been availa- ble against it in the hands of the payee."" If a note is expressed to be non-negotiable the assignee takes it subject to the maker's existing rights and other rights accruing prior to notice of the transfer.^- § 238. Bona fide indorsees or holders — Rule. — The original want of consideration, or the original failure of consideration for negotia- ble paper between the parties to it constitutes no defense against it in the hands of a bona fide indorsee or holder without notice or knowl- edge of any facts tending to invalidate the note.^^ out indorsement, takes subject to all defenses, see Gray Tie Lumber Co. Y. Farmers' Bank, 22 Ky. Law Rep. 1333, 60 S. W. 537. Ohio. — Henniger v. Wager, 4 Ohio Dec. 242, 1 Clev. Law Rep. 150. When bona fide holder for value of note payable to order may be subject to all equities where note is taken without indorsement, see: Idaho. — Warren v. Stoddart, 6 Idaho 692, 59 Pac. 540. Utah. — Lebcher v. Lambert, 23 Utah 1, 63 Pac. 628. Wisconsin. — Galusha v. Sherman, 105 Wis. 263, 81 N. W. 495. That purchaser for value takes subject to all defenses against orig- inal holder, see Wade v. Foster, 24 Ky. Law Rep. 1292, 71 S. W. 443. But as to assignability of nego- tiable instrument and latent de- fenses being cut off under statute, see Mann v. Merchants' Loan & Trust Co., 100 111. App. 224. See also, Ohio. — Loudermann v. Judy, 48 Ohio Cir. Ct. R. 351, 29 N. E. 181 (as to "equitable defense" un- der Code, § 93). Texas. — Wilson v. Denton, 82 Tex. 531, 18 S. W. 620 (under Rev. Stat., Art. 265, protecting bona fide hold- ers against equities). Kentucky. — Power v. Hambrick, 25 Ky. Law Rep. 30, 74 S. W. 660. (As- signee of note is subject to de- fenses.) Illinois. — Harphane v. Haynes, 30 111. 405, 410 (assignee of note with- out consideration held to take it sub- ject to all infirmities, the same as if he had had actual notice of them, or as if the note had been assigned after due. Note was alleged to have been duly indorsed without consider- ation). When assignee of mortgage notes takes subject to defenses, see Ray v. Baker (Ind.), 74 N. E. 619. See second preceding note herein. "Cornish v. Wolverton (Mont., 1905) , 81 Pac. 4, 9, per Brantley, C. J. '- Barker v. Barth, 88 111. App. 23. See also second last preceding note herein. ^ Arkansas. — Cagle v. Lane, 49 Ark. 465, 5 S. W. 790 (failure with- out fraud no defense). California. — Splivallo v. Patten, 38 Cal. 138, 99 Am. Dec. 358. (Simple failure in whole or in part no de- fense in suit by bona fide assignee 239] WANT OR FAILURE OF CONSIDERATION. 286 § 239. Transfer after maturity. — As a general rule, in all cases where a note overdue is indorsed, the indorsee takes it subject to all before maturity against maker, even though assignee had full knowledge of original consideration on which note given prior to purchase and receiving transfer. Citing Story on Prom. Notes, § 191.) Colorado. — Parsons v. Parsons, 17 Colo. App. 154, 67 Pac. 345 (fail- ure) ; Hand v. Pantagraph Co., 1 Colo. App. 270, 28 Pac. 661 (failure of consideration without notice no defense). Cojinecticut. — Middletown Bank v. Jerome; 18 Conn. 443 (want). Delaware. — McCready v. Cann, 5 Harr. (Del.) 175 (want or failure); Waterman v. Barratt, 4 Harr. (Del.) 311 (want); Bush v. Peck- ard, 3 Harr. (Del.) 385 (want). Florida. — White v. Camp, 1 Fla. 109 (want; compare McKay v. Bel- lows, 8 Fla. 31, as to failure, partial failure and want). Georgia. — Parr v. Erickson, 115 Ga. 873, 42 S. E. 240 (bona fide holder for value before maturity pro- tected against defense of want of consideration); Keith v. Pork (Ga., 1898), 31 S. E. 169 (failure without notice or reasonable ground to sus- pect defects) ; Smith v. Rawson, 61 Ga. 208 (failure) ; Faulkner v. Ware, 34 Ga. 498 (failure); Scott v. Coop- er, Ga. Dec, pt. 2.163 (failure). . Illinois. — Matson v. Alley, 141 111. 284, 31 N. E. 419 (failure); Good- rich V. Reynolds, 31 111. 490, 83 Am. Dec. 240 (want); Kepley v. Schmidt, 21 111. App. 402 (want); Cassell v. Morrison, 8 Bradw. (111.) 175 (want); Taylor v. Thompson, 3 Bradw. (111.) 109 (failure in whole or part). Indiana. — First Nat. Bank v. Ruhl, 122 Ind. 279, 23 N. E. 766 (want); Proctor V. Baldwin, 82 Ind. 370 (want); Bremmerman v. Jennings, 61 Ind. 334 (failure); Kline v. Spahr, 56 Ind. 296 (failure; note payable in bank) ; Hankins v. Shoup, 2 Ind. (2 Cort.) 342 (holding that pleas of want or failure of consideration are insufficient under the law merchant unless they al- lege that the indorsement was made without consideration or after the maturity of the note or bill, and that the statute did not intend to alter the law as to these pleas. Rev. Stat. (843, pp. 577, 578); Midland Steel Co. v. Citizens' Nat. Bank, — Ind. App. 1904, 72 N. E. 290. (In an action by a hona fide purchaser the defense of want or failure of consideration is not available un- less want of notice of such defense is negatived; there should be a de- nial of want of notice or some equiv- alent averment.) Voris v. Harsh- barger, 11 Ind. App. 555, 39 N. E. 521 (want); Potter v. Sheets, 5 Ind. App. 506. 32 N. E. 811 (want). Iowa. — Council Bluffs Iron Works V. Cupper, 41 Iowa 104 (want, note without defalcation) ; Mornyer v. Cooper, 35 Iowa 257 (failure, case of second indorsee). Kentucky. — Spencers v. Biggs, 2 Mete. (Ky.) 123 (total or partial failure, without notice. Rule not al- tered by Civ. Code, § 31, or Rev. Stat, Ch. 22, § 6); Kelly v. Smith, 1 Mete. (Ky.) 313 (same as last case) ; Luckett v. Triplett, 2 B. Mon. (Ky.) 39 (failure); Bement v. Mc- Clarlen, 1 B. Mon. (Ky.) 296 (want); Grey v. Kentucky Bank, 2 Litt. (Ky.) 378 (want, note to 287 TRANSFER AFTER MATURITY. [§ 239 the equities of the maker, and it is always competent for the defend- ant in such cases, whether as against the payee or holder, to prove bank) ; Tuggle v. Adams, 3 A. K. Marsh. (Ky.) 429 (want). Louisiana. — Morris v. White, 28 La. Ann. 855 (failure); Battalora v. Earth, 25 La. Ann. 318 (want). Maine. — Burrill v. Parsons, 71 Me. 282 (want); Hascall v. Whitmore, 19 Me. 102, 36 Am. Dec. 738 (want, purchaser from indorsee) ; Lewis v. Hodgdon, 5 Shep. (Me.) 267. Michigan. — Polhemus v. Ann Ar- bor Sav. Bank, 27 Mich. 44 (cannot inquire into or contest considera- tion ) . Minnesota. — Wilderman v. Don- nelly, 86 Minn. 184, 90 N. W. 366, 367, per Collins, J. (of course such a defense cannot be asserted against a remote holder of a negotiable promissory note who is a bona fide holder for value) ; Daniels v. Wil- son, 21 Minn. 530 (want). Mississippi. — Davis v. Blanton, 71 Miss. 821, 15 So. 132 (failure); Harrison v. Pike, 48 Miss. 46 (as to a Louisiana note). Missouri. — First Nat. Bank v. Skeen, 101 Mo. 683, 14 S. W. 732 (failure); Merrick v. Phillips, 58 Mo. 436; Clark v. Potter, 90 Mo. App. 143 (failure); First Nat. Bank V. Skeen, 29 Mo. App. 115. Nebraska. — Blue Valley Lumber Co. V. Smith, 48 Neb. 293, 67 N. W. 159 (want). New Hampshire. — Trask v. Win- gate, 63 N. H. 474, 3 Atl. 926 (want). New York. — Farwell v. Hibner, 15 Hun (N. Y.) 280 (failure); Val- lett V. Parker, 6 Wend. (N. Y.) 615 (want, except where note void by statute); Brooks v. Christopher, 5 Duer (N. Y.) 216; Baker v. Ar- nold, 2 Cai. Cas. (N. Y.) 279. Pennsylvania. — Bullock v. Wilcox, 7 Watts (Pa.) 328 (failure). Tennessee. — Stone v. Bond, 2 Heisk. (Tenn.) 425 (want of consid- eration for guaranty). Texas. — Stone v. Wright, 83 Tex. 345, 18 S. W. 615 (want); Herndon V. Bremond, 17 Tex. 432. Virginia. — Payne v. Zell, 98 Va. 297, 36 S. E. 379 (failure); Robert- soii V. Williams, 5 Munf. (Va.) 381 (valuable consideration passed). Vermont. — Powers v. Ball, 1 Wil- liams (Vt.) 662. Wisconsin. — Stillwell v. Kellogg, 14 Wis. 461 (failure). Federal. — Pease v. McClelland, 2 Bond (U. S.) 42, Fed. Cas. No. 10,882 (failure); Union Bank v. Crine, 33 Fed. 809 (accommodation note and agreement for non-ability not avail- able against bona fide indorsee) ; Mobile Sav. Bank v. Board of Sup'rs, 22 Fed. 580; Fogg v. Stickney, Fed. Cas. No. 4898 (want). See Mississippi. — Robertson v. Britton, 74 Miss. 873, 21 So. 523 (as to want or failure of consideration and false representations or fraud under code 1892, § 3503); Etheridge V. Gallagher, 55 Miss. 458 (Code 1871, § 2228, changes law merchant so as to enable defense by promisor before notice of assignment against remote holder by indorsement be- fore maturity, same as could have been made against payee.) Vermont. — Ellis v. Watkins, 73 Vt. 371, 50 Atl. 1105 (lack of considera- tion based upon immoral or illegal consideration may be shown against indorsee) ; Baker-Boyer Bank v. Hughson, 5 Wash. St. 100, 31 Pac. 423 (where want o-f consideration § 239] WANT OR FxULUKE OF CONSIDERATION. 288 either a "want or failure of consideration.^* If a note is taken after maturity by an assignee of the payee such note is subject to all de- was averred and answer held in- sufficient defense against payee, and therefore that plaintiff need not prove that he was innocent pur- chaser). Federal. — McCullough v. Houston, 1 Ball. (U. S.) 441, 11 L. ed. 214, de- cided 1789, holding that indorsee of promissory note takes it subject to all equitable consideration to which subject in original indorser or payee's hands). Washington. — Allen v. Chambers, 13 Wash. 327, 43 Pac. 57 (want). " Maryland. — Renwick v. Williams, liams, 2 Md. 336, 363, per Mason, J. California. — Risley v. Gray, 98 Cal. 40, 32 Pac. 884 (note was pur- chased after maturity, at sheriff's sale) ; Folsom v. Bartlett, 2 Cal. 163. Delaware. — McCready v. Cann, 5 Harr. (Del.) 175 (want or failure of consideration or other equities may be set up against indorsee after maturity). Georgia. — Carter v. Christie, 30 Ga. 813; Scott v. Cooper, Ga. Dec. pt. 2, 163 (holding that failure of consideration, in a negotiable note, is no defense to an action, in favor of a "bona fide holder without notice, unless he took the note after it be- came due). /Ziinots.— Stafford v. Fargo, 35 111. 481 (assignee after maturity, held subject to defense of want of con- sideration) ; Root V. Irwin, 18 111. 147 (statute allowing defenses against indorsee after maturity) ; Sargeant v. Kellogg, 5 Gilm. (111.) 273 (where note is assigned after due maker is permitted to inter- pose same defense against assignee as he might make in action brought in name of payee) ; Griffin v. Ketchum, 8 Peck (111.) 392 (fail- ure of warranty is good defense against mala fide assignee) ; Hayes V. Gorham, 2 Scam. (111.) 429 (want of consideration). Iowa. — Freittenberg v. Rubel, 123 Iowa 154, 98 N. W. 624 (failure of considerations is available) ; Bar- low V. Scott, 12 Iowa 63 (con- sideration may be inquired into as a defense where plaintiff takes it, even for value, after it is due). Louisiana. — Clement v. Sigur, 29 La. Ann. 798 (consideration may be inquired into the hands of payee or of any third person who has taken it after maturity). Maryland. — Wyman v. Gray, 7 Harr. & J. (Md.) 409. Massachusetts. — Fish v. French (Mass.), 15 Gray 520 (indorsee of note secured by mortgage, without notice of want of consideration, who takes it from payee when overdue is subject to all defenses) ; Thompson v. Hale, 23 Mass. 259 (6 Pick.) (note was held taken subject to all equities existing against it in the payee's hands). Islew York. — Chester v. Door, 41 N. Y. 279, rev'g 26 N. Y. Super. Ct. (3 Rob.) 275 (defenses of want of consideration available against any person into whose hands note comes after maturity) ; Wiltsie v. North- am, 3 Bosw. (N. Y.) 162 (rule ap- plied where facts show either want or failure of consideration in action by one receiving note after matur- ity). Pennsylvania. — Barnet v. Offer- man, 7 Watts (Pa.) 130 (want or failure of consideration may be shown). South Carolina. — Bell v. Wood, 1 289 TRANSFER AFTER IIATURITY. LS 239 fenses against the assignor.^'^' Knowledge by an assignee of notes that they were past due when he took- the assignment, even though the notes are negotiable instruments, precludes a recovery by him, as he is not an innocent purchaser without notice, and the same de- fenses are available against him as though the action had been prose- cuted in the name of the original payee, especially so when the as- signee also knew at the time that the consideration for the note had wholly failed; and knowledge may be imputed to such holder where another instrument, a mortgage securing the note, was also purchased, and said mortgage by its very terms showed that the paper was past due and dishonored.^" But where one has acquired a negotiable note after its maturity he is entitled to protection if the immediate party who transferred the note to him took it by indorsement bona fide be- fore it was due.^*** Bay (S. C.) 249 (indorsement after note due permits parties to go into consideration); McNeill v. McDon- ald, 1 Hill L. (S. C.) 1 (note trans- ferred after due is subject to all equities between original parties, and true consideration may be in- quired into, though expressed to be for value received). Texas. — Kalamazoo Nat. Bk. v. Sides (Tex. Civ. App., 1894), 28 S. W. 918 (indorsee against maker; after maturity; conditions unper- formed; failure of consideration a defense \^here evidence exists to impeach due and regular indorse- ment of note). Federal. — Lipsmier v. Vehslage, 29 Fed. 175 (want of consideration not enforced by indorsee after matur- ity). See Georgia. — Camp v. Matheson, 30 Ga. 170, 172. /ndiana.^Thomas v. Ruddell, G6 Ind. 326 (case of negligence in maker and plea von est factum and transfer after maturity on note re- covered ) . Massachusetts. — Perkins v. Gil- man, 25 Mass. (8 Pick.) 229 (hold- ing that a covenant by the payee of Joyce Dkfexse.s — 19. a promissory note not to sue the maker within a limited time cannot be pleaded in bar to an action brought within the time by a per- son to whom the note was indorsed after due. But see chap. — herein as to conditions). Texas. — Branch v. Traylor (Tex. Civ. App., 1896), 36 S. W. 592 (ques- tion of fraud was also involved). Preston v. Breedlove, 36 Tex. 96 (notes were assigned after maturity with notice of dishonor, and defense was held good pro tanto) ; Rhode V. Lodge, 15 Tex. 446 (held note sub- ject to plea of failure of consider- ation). '" May V. First Nat. Bank of Men- dota (Neb., 1905), 104 N. W. 184. ^^ Stoy V. Bledsoe, 31 Ind. App. 643, 68 N. W. 907. i«* Howell V. Crane, 12 La. Ann. 126, 68 Am. Dec. 765. See Chapter herein as to bona fide holders. See Jones V. Caswell, 3 Johns. Cas. (N. Y.) 29, 2 Am. Dec. 134 (second in- dorsee took note after maturity and with knowledge; consideration was permitted to be inquired into, but it was against public policy, and note was held void). g 240] WANT OR FAILURE OF COXSIDERATIOX. 290 § 240. Rule as to payment of value, its basis and qualifications — Bona fide indorsees or holders. — By his contract the indorser of a note warrants the instrument's genuineness in every respect and engages that it may be recovered upon and collected in accordance with its terms. ^' And it is a legal presumption that all indorsements are for value and for a proper purpose/* and that one who is a pur- chaser for value of a note holds it bona fick.^^ It is also another gen- eral rule that mere possession of a negotiable paper is prima facie sufficient evidence of ownership of title. ^'^ In other words, the mere ^' Cannon v. Serrel, 15 Colo. App. 99, 61 Pac. 187. See Neg. Inst. Law, §§ 114-117, appendix herein. "Geisreiter v. Sevier, 33 Ark. 522 (where the maker was not allowed to question the consideration paid in purchasing the note from the as- signee of the bankrupt payee, al- though it was thought that he could have shown the bankruptcy assign- ment to have been fraudulent) ; Luning v. Wise, 64 Cal. 410, 1 Pac. 485, 874 (raises a presunlption of value.) Lafayette Sav. Bank v. St. Louis Stoneware Co., 4 Mo. App. 276, 283 (holding also that this rule applies to paper indorsed by a cor- poration in the prosecution of its business and the regular course of its affairs); Cotton v. Graham, 84 Ky. 672, 2 S. W. 647 ("value re- ceived" and in "consideration of love and affection" imports a considera- tion). See Frederick' V. Winans, 51 Wis. 472, 8 N. W. 301; McClintick v. Johnston, 1 McLean (U. S.) 414, Fed. Cas. No. 8,700. (For "if the indorsement of a bill should be held not to import a consideration it must shake the credit of commer- cial paper and produce injurious consequences in commercial trans- actions. And we think the principle has been too long and too benefi- cially settled to be now ques- tioned.") ••■'Duncan v. Gilbert, 29 N. J. L. 521 (holder is not bound to prove value where no other defense is raised than that of its being origi- nally accommodation paper). See Hunter v. Parsons, 22 Mich. 96. But examine Prentice v. Zane, Fed. Cas. No. 11,383 (decided 1846), goes to support Citizens' Bank v. Strauss, 26 La. Ann. 736 (holding that while one is in the attitude of a bona fide holder before the court he can le- gally object to any inquiry into the consideration of a note). ^^ Colorado. — Gumaer v. Sowers, 31 Colo. 164, 71 Pac. 1103. Connecticut. — New Haven Mfg. Co. V. New Haven Pulp & Bond Co., 76 Conn. 126, 131, 55 Atl. 604, Gen. Stat., § 4221. Illinois. — Perry State Bank v. El- ledge, 109 111. App. 179, 184; Ryan v. Illinois Trust & Sav. Bk., 100 111. App. 251, case aff'd, 64 N. E- 1085; Mann v. Merchants' L. & T. Co., 100 111. App. 224; Metcalf v. Draper, 98 111. App. 399. Kansas. — Parker v. Gilmore, 10 Kan. App. 527, 63 Pac. 20. Massachusetts. — Massachusetts Nat. Bk. V. Snow, 187 Mass. 159, 72 N. E. 959. Minnesota. — Huntley v. Hutchin- son, 91 Minn. 244, 97 N. W. 97, Gen. Stat. 1894, § 5751. Missouri. — Lowry v. Danforth, 95 Mo. App. 441, 69 S. W. 39. Nebraska. — Gandy v. Bissells' Est. 291 BONA FIDE INDORSEES OR HOLDERS. [§ 240 possession of a negotiable note imports, prima facie, that the holder acquired it bona fide, for value, in the usual course of business, with- out notice of any circumstances impeaching its validity, and that he is the owner thereof, entitled to receive the contents of the same from all prior parties thereto. -^ Therefore, it constitutes no defense in be- (Neb., 1904), 100 N. W. 803, rev'g 97 N. W. 632; Michigan Mut. L. Ins. Co. V. Klatt (Neb., 1902), 92 N. W. 325. New York. — Poess v. Twelfth Ward Bank, 43 Misc. 45, 86 N. Y. Supp. 857, Neg. Inst. Law 1897, p. 719, c. 612. North Dakota. — Brynjolfson v. Osthus, 12 N. D. 42, 96 N. W. 261. Oklahoma. — Price v. Winnebago Banlt, 14 Oltla. 268, 79 Pac. 105. South Carolina. — Watford v. Wind- ham, 64 S. C. 509, 42 S. E. 597. See 'Illinois. — Gilmore v. German Sav. Bk., 89 111. App. 442. Compare Kansas. — James v. Black- man, 68 Kan, 723, 75 Pac. 1017. Kentucky. — Turner v. Mitchell, 22 Ky. L. Rep. 1784, 61 S. W. 468. Neiv York. — Manawaring v. Keen- an, 86 N. Y. Supp. 262. =' Federal. — Bank of British North America v. Ellis, 6 Sawy. (U. S.) 96, Fed. Cas. No. 859, 8 Amer. L. Rec. 460, citing 1 Daniel on Neg. Inst., § 812, 1 Parsons' Notes & Bills 184; Collins V. Gilbert, 94 U. S. 754. Illinois. — Perry State Bank v. Ellidge, 109 111. App. 179, 184; Mann v. Merchants' L. & T. Co., 100 111. App. 224. Indiana. — Thomas v. Ruddell, 66 Ind. 326 (a note that has been trans- ferred by indorsement imports a consideration). Kansas. — Parker v. Gilmore, 10 Kan. App. 527, 63 Pac. 20. Kentucky. — Beattyville Bank v. Roberts (Ky. Ct. App. 1904), 25 Ky. L. Rep. 1796, 78 S. W. 901, 902 ("the law presumes a consideration for the execution of bills of exchange and negotiable notes placed upon the footing of bills of exchange by the statute, for the benefit of the holder, in an action against the maker or in- dorser of such paper," per Burnham, C. J.). New York. — Heuertematte v. Mor- ris, 101 N. Y. 63, 4 N. E. 1 (acceptor cannot show acceptance without con- sideration by indorsee). Oklahoma. — Price v. Winnebago Bank, 14 Okla. 268, 79 Pac. 105. Pennsylvania. — Gray v. Bank of Kentucky, 29 Pa. St. 356 (indorsee of negotiable paper is presumed to have received it bona fide and for a valuable consideration). Wisconsin. — Frederick v. Winans, 51 Wis. 472, 8 N. Y. W. 301 (where there is an indorsement of a note before delivery no consideration for the indorsement need be averred by payee against the maker and in- dorser). The transfer of a promissory note .by indorsement furnishes a suffi- cient consideration for a promise by the indorsee to pay the indorser an equivalent sum. Litchfield v. Allen, 7 Ala. 779, 782. Negotiable notes in the hands of a third person are presumed until the contrary appears to have been acquired in good faith and for value before maturity. Hillard v. Taylor (La. 1905), 38 So. 594. Every person whose signature ap- pears thereon is deemed prima facie to have become a party thereto for value. Neg. Inst. Law, § 50. see also id., § 96, Eng. Bills of Exch. Act, 240] WAXT OR FAILURE OF CONSIDERATIOX. 293 half of the maker and he has no concern with the fact whether or not the holder of commercial paper paid value, or that it was indorsed without consideration, unless he has thereby been deprived of his rights or has been defrauded or has lost some defense of which he might have had against the original holder or payee had he retained it.-- The preceding rule has been applied, even though the purchaser of the note has paid less than its face value,-^ or one-half thereof,^* for if value has been given it is immaterial as a defense what amount was actually paid except as far as notice is concerned.^^ So it is held § 30. See also id., § 27. See Ap- pendix herein. -- Georgia. — Ray v. Anderson, 119 Ga. 926, 47 S. E. 205; Civ. Code, § 3698. (The defendant in a suit on a note cannot inquire into the title of the holder, unless it is necessary for his protection, or to let in the defense which he seeks to make.) Illinois. — Burnap v. Cook, 32 111. 168 (or that there was a failure of consideration). Michigan. — Vinton v. Peck, 14 Mich. 287 (a purchaser of a note at less than its face is not the less a bona fide holder and is entitled to recover the full amount). Missouri. — Powers v. Nelson, 19 Mo. 190 (or that it was indorsed without consideration and after due to plaintiff) ; Bannister v. Kenton, 46 Mo. App. 462. Neiv York. — Forestville Society v. Farnham, 15 Hun (N. Y.) 381; As- pinwall V. Meyer, 2 Sandf. (N. Y.) 180 (unless maker has been de- frauded or has lost some defense against payee which he might have had, had he retained it). Oregon. — Brown v. Feldwert (Ore. 1905), 80 Pac. 414 (failure of con- sideration cannot be availed of as against an innocent purchaser). Soiith Carolina. — Stoney v. Jo- seph, 1 Rich. Eq. (S. C.) 352. See Middlebury v. Case, 6 Vt. 165. Wisconsin. — Holden v. Kirby, 21 Wis. 149 (as against indorsee no de- fense by maker that indorsee paid no consideration). Federal. — In re Great Western Tel. Co., 5 Biss. 363, Fed. Cas. No. 5740. Examine further Illinois. — Jones V. Nellis, 41 111. 482, 89 Am. Dec. 389 (as to statute not changing common-law rule as to bona fide holders); Lord v. Favorite, *29 111. 149 (as to statute allowing defenses against indorsee). Georgia. — Grooms v. Oliff, 93 Ga. 789, 20 S. E. 655 (code as to § 2785. protecting bona fide purchaser ex- cept as to fraud in procurement), Virginia. — Lynchburg Nat. Bank v. Scott, 91 Va. 652, 22 S. E. 487, 29 L. R. A. 827 (Code 1887, § 2818, as to defenses, bona fide holder). "^ Lay V. Wissman, 36 Iowa 305 Sully V. Goldsmith, 32 Iowa 397 Daniels v. Wilson, 21 Minn. 530 United States Nat. Bank v. McNair, 116 N. C. 550, 21 S. E. 389 (except where note is void in whole or part from its inception and except as to limited recovery when original con- sideration is illegal or fraudulent or it is taken as collateral security). Examine §§ 188-196 herein. =' McNamara v. Jose, 28 Wash. 461, 68 Pac. 903 (Sess. Laws 1899, p. 350. § 57). "Gould V. Sigel, 5 Duer (N. Y.) 260. 293 BONA FIDE INDORSEES OR HOLDERS. [§ 240 that evidence is inadmissible to show that the amount paid by the indorsee was a certain amount of about one-twentieth of the face value of the note.-*' But it is decided that a maker of a note not governed by law merchant, by selling his note for less than its face cannot, except in case of estoppel, preclude himself from setting up want of consideration to the amount of the discount.-^ And it is also determined that where a bona fide holder purchases a note for a sum less than its face he is only entitled to recover to the extent of the con- sideration paid by him or some prior holder from whom he obtained title.^^ Generally, however, some value in money or property must have been given, or some responsibility or liability have been in- curred, or some right parted with, to preclude equitable defenses on the ground of being a bona fide holder. ^'^ So in a Xew York case the court, per Andrews, J., says : "It has been the established law of this state that to constitute an indorsee of negotiable paper a holder for value, so as to exclude the equities of antecedent parties, it is not sufficient that the transfer should be valid as between the indorser and indorsee, but in addition the latter must have relinquished some right, incurred some responsibility, or parted with value upon the credit of the paper at the time of the transfer."^" Again it has also been decided that all defenses against the original holders may also Defense of failure of consideration fide holder to the extent of the is admissible against a holder where amount paid). there is evidence which tends even ^^'''McQiiade v. Irwin, 39 N. Y. slightly to impeach the due and reg- Super. Ct. (7 J. & S.) 396; Phoenix ular indorsement of the note. Kala- v. Church, 56 How. Pr. (N. Y.) 29, mazoo Nat. Bank v. Sides (Tex. Civ. 493 id., 81 N. Y. 218, 59 How. Pr. App. 1894), 28 S. W. 918. (N. Y.) 293. Compare §§ 188-19G, If an indorsee take a bill with no- 241, 242, 246 herein, tice of failure of consideration his The rule is well settled that a right to recover cannot be superior valid consideration is necessary to to that of his indorser. Davis v. support the liability of an in- Wait, 12 Ore. 425, 428, 8 Pac. 356. dorser of a negotiable note. Pea- =" Ellis V. Watkins' Estate, 73 Vt. body "v. Munson, 211 111. 324, 326, 371, 50 Atl. 1105. Compare §§ 188- 71 N. E. 1006, per Boggs, J. "It is a 196 herein. general rule that an indorsement is -• Musselman v. McElhenny, 23 a contract and that, like every other Ind. 4, 85 Am. Dec. 445. contract, it requires a considera- "Holcomb v. Wycoff, 35 N. J. L. tion." Farmers' Savings Bank v. 35, 10 Am. Rep. 219; Noble v, Carey, Hausmann, 114 Iowa 49, 51, 86 N. 64 Hun (N. Y.) 635 (Mem.), 19 N. W. 31, per Sherwin, J. Y. Supp. 58 (the purchaser is a &OH.a ™ Phoenix Ins. Co. v. Church, 81 N. Y. 218, 222, 37 Am. Rep. 284. § 241] WAXT OR FAILURE OF CONSIDERATION. 294 be available against one who is not a purchaser of the notes for value.^^ The consideration must, however, have been paid before no- tice of any defenses.^- And as against an innocent holder who, upon inquiry of the maker, had been informed that the note was good and that it would be paid at maturity, the maker cannot set up failure of consideration, even though the latter was ignorant of such failure of consideration at the time he gave such assurance of payment, since the fact of making such inquiries of the drawer was sufficient to put him on his guard.^^ Again, knowledge of an agreement constituting the consideration of a note, without knowledge of the breach thereof, does not make such breach available as a defense against an indorsee for value in due course.^* And it is held that defenses and equities based upon a want or failure of consideration are available against a holder without indorsement.^^ § 241. Rule as to value continued — Payment of pre-existing debt — Bona fide indorsees or holders. — It is a well settled rule that where the essentials constituting one a hona fide holder exist, want or failure of consideration between the original parties cannot be suc- cessfully set up against him to defeat a recovery on negotiable paper taken in payment of a pre-existing debt. This rule also extends to and includes, as against such holder, all defenses and equities gener- ally existing as between original parties.^*' And one who has given '^ Sturges V. Miller, 80 111. 241; bwm /ide purchaser without notice) ; Harpham v. Haynes, 30 111. 404; Baily v. Smith, 14 Ohio St. 396, 402, Martindale v. Hudson, 25 Mo. 422 403, 84 Am. Dec. 385 (it is not neces- ( paper was fraudulently assigned by sary to protect hona fide holder that indorsement not for value but to he should have paid face of paper, prevent set-off of demand against but he must have paid fair and rea- payee). See Clark v. Gallagher, 20 sonable value). How. Pr. (N. Y.) 308 (check was =^ Hamer v. Johnston, 5 Miss. (6 transferred for debt due to in- How.) 698. dorser). See §§ 188-196 herein. ^* Black v. First Nat. Bank, 96 - Haescig v. Brown, 34 Mich. 503 Md. 399, 54 Atl. 88. (a case of purchaser of securities ^Ingram v. Morgan, 23 Tenn. (4 not delivered to him and nominal Humph.) 66, 40 Am. Dec. 626. payment only was made before de- ^^ Alabama. — Gates v. Morton livery); Colby v. Parker, 34 Neb. Hardware Co. (Ala., 1906), 40 So. 510, 52 N. W. 693; De Mott v. 509; Marks v. First National Bank, Starkey, 3 Barb. (N. Y.) 403 (some 79 Ala. 550, 58 Am. Rep. 620; Mo- part of purchase money must have bile R. Co. v. Heirath, 67 Ala. 189; been paid or something of value Mayberry v Morris. 62 Ala. 113; been parted with before notice of Mobile Bank v. Hall, 6 Ala. 639, 41 prior right or equity to make one a Am. Dec. 72. 295 PAYMENT OF PRE-EXISTIXG DEBT. [§ 241 liis note for a legal and valuable consideration cannot avoid payment because the payee has transferred it in payment of a debt whicli the Arkansas. — Evans v. Speer Hard- \vare Co., 65 Ark. 204, 67 Am. St. Rep. 919, 45 S. W. 370; Tabor v. Merchants' Nat. Bank, 48 Ark. 454, 3 S. W. 805; Bertrand v. Bankman, 13 Ark. 150. California. — Sackett v. Johnson, 54 Cal. 107 (not an open question in this state. Civ. Code, § 14, Subd. 28 as originally adopted did not change former rule). Connecticut. — Rockville National Bank v. Citizens' Gas Light Co., 72 Conn. 576, 45 Atl. 36 (negotiable bonds) ; McCasky v. Sherman, 24 Conn. 605. Delaware. — Bush v. Peckard, 3 Harr. (Del.) 385. District of Columhia. — Leach v. Lewis, 1 McArthur (D. C.) 112 (there was also additional consider- ation). Georgia. — Atlanta Bottling Co. v. Hutchinson, 109 Ga. 550, 35 S. E. 124; Bond v. Central Bank, 2 Kelly (Ga.) 92. Illinois. — Mix v. Bloomingdale Bank, 91 111. 20, 33 Am. Rep. 44; Worcester Nat. Bank v. Cheeney, 87 111. 602; Manning v. McClure, 36 111. 490; Foy c. Blackstone, 31 111. 538, 83 Am. Dec. 246; Bemis v. Horner, 62 111. App. 38. Indiana. — Fulton v. Loughlin, 118 Ind. 286, 20 N. E. 796; Proctor v. Baldwin, 82 Ind. 370. The authori- ties are not quite agreed as to whether the purchase of a note for a previously existing debt is such a consideration as protects the in- dorsee or holder of commercial pa- per, purchased against existing equi- ties. "It is now quite well settled," says Parsons, "that where negotia- ble paper is received in payment and extinguishment of a pre-existing debt, the holder is entitled to pro- tection." Iowa. — Robinson v. Lair, 31 Iowa 9 (received in part payment). Kansas. — Draper v. Cowles, 27 Kan. 484. Kentucky. — Frank & Sons v. Quast, 86 Ky. 649, 6 S. W. 909, 9 Ky. L. Rep. 781; May v. Quimby, 3 Bush (Ky.) 96. Louisiana. — Citizens' Bank v. Gil- man, 18 La. Ann. 222, 89 Am. Dec. 650 (but recovery limited to debt and not face value of note). Maine. — Breckenridge v. Lewis, 84 Me. 349, 30 Am. St. Rep. 353, 24 Atl. 864; South Boston Co. v. Brown, 63 Me. 139; Norton v. Waite, 20 Me. 175; Hascall v. Whitmore. 19 Me. 102, 36 Am. Dec. 738; Lewis v. Hodg- son, 17 Me. 267 (difference between decisions in New York and Maine explained in Homes v. Smyth, 16 Me. 177. If a negotiable note be trans- ferred to an indorsee before it be- comes payable, without notice of a defense, in payment of a pre-existing debt, want of consideration on the failure of it cannot be given in evi- dence in defense) ; Dudley v. liittle- field, 8 Shep. (Me.) 418; Homes v. Smyth. 4 Shep. (Me.) 177, 33 Am. Dec. 650. Maryland. — Buchanan v. Mechan- ics' Loan & Savings Institution, 84 Md. 430, 35 Atl. 1099; Cecil Bank v. Held, 25 Md. 562 (in part payment). Massachusetts. — Woodruff v. Hill, 116 Mass. 310; Ives v. Farmers' Bank, 84 Mass. 236, 241 (by the set- tled law of Massachusetts, a party who takes a negotiable instrument in payment of a pre-existing debt is regarded as entitled to the same pro- § 241] WAXT OR FAILURE OF CONSIDERATION. 29G tection as any other taker for a valu- able consideration); Blanchard v. Stevens, 57 Mass. (3 Cush.) 162, 50 Am. Dec. 723. • Michigan. — Outhwite v. Porter, 13 Mich. 533; Bostwick v. Dodge, 1 Doug. (Mich.) 413, 41 Am. Dec. 584. Minnesota. — Stevenson v. Hyland, 11 Minn. 198 (Gil. 128). Mississippi. — Carridine v. Wilson, 61 Miss. 573; Emanuel v. White, 34 Miss. 56, 69 Am. Dec. 385. Missouri. — Fitzgerald v. Barker, 96 Mo. 661, 9 Am. St. Rep. 375, 10 S. W. 45 (there was also an addi- tional consideration) ; Clark v. Lo- ker, 11 Mo. 97. Montana. — Yellowstone National Bank v. Gagnon, 19 Mont. 402, 61 Am. St. Rep. 520, 48 Pac. 762, 44 L. R. A. 243 (to extent of claim). Nebraska. — Lashmett v. Prall (Neb. 1902), 96 N. W. 152. (An indorsee of paper taken as collat- eral security for another existing or antecedent debt is, by the weight of authority In this country and England, a hona fide holder for value within the intent of the law merchant where he has so accepted it without notice of defenses. ("In Martin v. Johnson, 34 Neb. 797, 52 N. W. 819, it was held that one who accepted a negotiable note, without notice of defenses, in payment of an antecedent debt, was a bona fide holder for value and precisely the same principles must apply to one who receives such an instrument as collateral security. Such is also, we think, the weight of authority in this country and in England. Cole- brook on Collat. Securities, § 18, et seq. and notes," per Ames, C); Barker v. Lichtenberger, 41 Neb. 751, 60 N. W. 79. New Hampshire. — Williams v. Lit- tle. 11 N. H. 66. . Neio Jersey. — Mechanics' Bank &c.. V. Chardavoyne, 69 N. J. L. 256; Armour v. McMichael, 36 N. J. L. 92; Allaire v. Hartshorne, 21 N. J. L. 665, 47 Am. Dec. 175. Neiv York. — Ward v. City Trust Co., 102 N. Y. Supp. 50; Milms v. Kauffman, 93 N. Y. Supp. 669; Brown V. Leavitt, 31 N. Y. 113 (received in payment of note overdue) ; Magee v. Badger, 30 Barb. (N. Y.) 246, aff'd 34 N. Y. 247, 90 Am. Dec. 691 (case of second note given in settlement of action brought to recover amount due on original note) ; Yungs v. Lee, 18 Barb. (N. Y.) 187, aff'd in 12 N. Y. 551; Purchase v. Matti- son, 13 N. Y. Super. Ct. (6 Duer) 310; Brookman v. Metcalf, 18 N. Y. Super. Ct. (5 Bosw.) 429; New York," etc.. Works v. Smith, 11 N. Y. Super. Ct. (4 Duer) 362; White v. Spring- field Bank, 5 N. Y. Super. Ct. (3 Sandf.) 222; Scott v. Betts, 1 Hill & Den. Supp. (Lalor, N. Y.) 363 (if the transfer of a check works a pay- ment of a pre-existing debt, or causes some new responsibility to be incurred, or some valuable benefit to be relinquished by the person to whom it is made, the check is to be deemed as purchased for value) ; St. Albans Bank v. Gulliland, 23 Wend. (N. Y.) 311, 35 Am. Dec. 566 (receiving a note for a precedent debt is receiving it for value within the law merchant, if it be taken in satisfaction of such precedent debt and the indebtedness be cancelled) : North Carolina. — Singer Mfg. Co. V. Summ.ers (N. C, 1906), 55 S. E.' 522; United States National Bank of N. Y. V. McNair, 116 N. C. 550, 21 S. E. 389 (rule applies with cer- tain exceptions) ; Reddick v. Jones, 6 Ired. (N. C.) 107, 44 Am. Dec. 68. North Dakota. — Dunham v. Peter- son. 5 N. D. 414. 67 N. W. 293, 57 Am. St. Rep. 556. 36 L. R. A. 232. Ohio. — Carlisle v. Wishart, 11 Ohio 297 PAYMENT OF TKE-EXISTIXG CEBT. [§ 241 172; White v. Francis, 5 Ohio Dec. 323. Pennsylvania. — Bardsley v. Delp, 88 Pa. St. 420, 6 Wkly. Notes Gas. (Pa.) 479, rev'g 6 Wkly. Notes Gas. (Pa.) 366. South Dakota. — Iowa Nat. Bank of Ottumwa V. Sherman & Bratager (S. D. 1903), 97 N. W. 12. Tennessee. — Sugg v. Powell, 38 Tenn. (1 Head) 221. Texas. — Raatz v. Gordon (Tex. App. 1899), 51 S. W. 651; Herman v. Gunter, 83 Tex. 66, 18 S. W. 428, 29 Am. St. Rep. 632. See Howe v. Gohl- man (Tex. Civ, App., 1907), 98 S. W. 1077. Vermont. — Russell v. Splater, 47 Vt. 273; Dixon v. Dixon, 31 Vt. 450, 76 Am. Dec. 129. Virginia. — Payne v. Zell, 98 Va. 294, 36 S. E. 379. West Virginia. — Mercantile Bank V. Boggs, 48 W. Va. 289, 37 S. E. 587. ( Pre-existing debt is a valuable con- sideration prima facie in hands of bona fide holder.) Wisconsin. — Knox v. Clifford, 38 Wis. 651, 20 Am. Rep. 28; Stevens v. Campbell, 13 Wis. 375. Federal. — Brooklyn City R. Co. v. Republic Bank, 102 U. S. 14, 26 L. ed. 61; Swift v. Tyson, 16 Pet. (U. S.) 1, 10 L. ed. 865; Drexler v. Smith, 30 Fed. 754 (transferred by one of payee firm in payment of in- dividual debt) ; Riggs v. Hatch, 16 Fed. 838. English. — M'Lean v. Clydesdale Banking Co., 9 App. Gas. 95, 50 L. T. Rep., N. S. 457. See Connecticu t. — ^Waters v. White, 75 Conn. 98, 52 Atl. 401. Federal.— Safe Deposit & Trust Co. v. Wright, 105 Fed. 155, 44 C. C. A. 421. New York. — Bookheim v. Alexan- der, 64 Hun (N. Y.) 458, 19 N. Y. Suppl. 776. A moral obligation to pay a pre- existing legal debt is a good con- sideration for the execution of a note in its payment: Fourth Na- tional Bank of Cadiz v. Craig (Neb. 1901), 96 N. W. 185. "The current and weight of au- thority sustain the doctrine that a do7ia fide holder, taking a negotiable note in payment of or as security for a pre-existing debt, is a holder fiOr a valuable consideration, en- titled to protection against all the equities between antecedent par- ties." Jewett v. Home, 1 Woods (U. S. G. C.) 530, 534, Fed. Gas. No. 7311, per Woods, Cir. J. If the transfer is made without delivery or indorsement, and with- out notice to the maker, an antece- dent debt or existing liability is sufficient to support the assignment. Planters' Ins. Co. v. Tunstall, 72 Ala. 142. Antecedent debt or liability as a valid consideration. Neg. Inst. Law, § 51, Eng. Bills of Exch. Act, § 27. Pre-existing debt of maktr is suffi- cient consideration for note. Gates V. Morton Hardware Co. (Ala. 1906), 40 So. 509. Holder of note taken before ma- turity in payment of indebtedness, largely in excess, is not holder for value in due course of trade so as to cut off the maker's equities and defenses, where the transactions in- volved occurred prior to the passage of the Negotiable Inst. Law, which provides that "an antecedent or pre- existing debt constitutes value, and is deemed such whether the instru- ment is payable on demand or at a future time." Bank v. Johnston, 105 Tenn. 521, 59 S. W. 131; Negotiable Inst. Law, Art. II, § 25; Shannon's Supp. Code Tenn., p. 579. Transferee taking in part pay- ment of pre-existing debt is bona § 242] WANT OR FAILURE OF CONSIDEKATIOX. 298 law would not have compelled him to pay.^'^ It is also decided that the indorsee of a negotiable promissory note, to whom the same is transferred by the maker in payment of a pre-existing debt, is en- titled to enforce payment of the same against the indorser, irrespec- tive of the equities existing between the original parties.^^ Again, the fact that an assignee receives a bond in payment of a pre-existing debt due him by a corporation can make no difference in his rights to a recovery upon it, where he is the assignee for a valuable considera- tion and so entitled to all rights as such.^^ But whether the giving of notes for an existing indebtedness shall be regarded as an absolute payment or treated as evidence of the original debt, which shall con- tinue in force, is within the control of the parties, and the effect of the transaction is to be determined by their intention and agreement. The common law rule is that a promissory note made by the debtor does not discharge a pre-existing debt for which it was given unless it be the express agreement of the parties.*" § 242. Same subject — Decisions contra or qualificative. — Notwith- standing the weight of authority sustaining the preceding rule, the contrary rule has been asserted in numerous cases. Many of these de- terminations, however, cannot be relied on as establishing a controlling arbitrary rule, since they rest rather upon the circumstances than upon principle, even though upon their face they assert the doctrine of availability of defenses, and in addition they do not all of them posi- tively or in terms negative the general rule first stated, but may be deemed to be exceptions or qualifications thereof.*^ So where the fide holder. Smith v. Thompson New York. — Phoenix Ins. Co. v. (Neb. 1903), 93 N. W. 678. Church, 81 N. Y. 218, 37 Am. Rep. =' Gould v. Leavitt, 92 Me. 416. 284 (Andrews, J., says: "It is the '- Blanchard v. Stevens, 57 Mass.' settled law of this state, that prior (3 Cush.) 162, 50 Am. Dec. 723. equities of antecedent parties to ne- ^^ Fox V. Blackstone, 31 111. 538. gotiable paper transferred in fraud *°Topeka Capital Co. v. Merriam, of their rights will prevail against 60 Kan. 397, 56 Pac. 757. an indorsee who has received it *^ Alabama. — Jordon & Son v. merely in nominal payment of a Thompson, 117 Ala. 468, 23 So. 157. -precedent debt, there being no ev:- Illinois. — Forbes v. Williams, 13 dence of an intention to receive the Bradw. (111.) 280. paper in absolute discharge and Michigan. — Ingerson v. Stark- satisfaction beyond what may be weather. Walk. Ch. (Mich.) 346. inferred from the ordinary trans- Mississippi. — Woodsen v. Owens action of accepting or receipting (Miss., 1892), 12 So. 207; Holmes v. it in payment, or crediting it on Carman, 1 Freem. Ch. (Miss.) 408. account. The law regards the pay- 299 PAYMENT OF PRE-EXISTING DEBT. [§ 243 holder, who had a claim against the drawer for the conversion of certain bonds, took a bill in satisfaction thereof, it was decided that there was a precedent liability and as, at the time it was delivered, nor at any time afterwards, the holder had surrendered nothing held by him for the bill, he was not such a bona fide holder as to preclude a defense of want or failure of consideration.*- And if no valuable security or lien is relinquished by the holder of negotiable paper. ment under such circumstances as conditional only, and the right of the creditor to proceed upon the original indebtedness after the ma- turity of the paper is unimpaired") ; Lawrence v. Clark, 36 N. Y. 128; Scott v. Ocean Bank, 23 N. Y. 289; Tredwell v. Lincoln, 52 Hun (N. Y.) 614, 5 N. Y. Suppl. 341, aff'd, 127 N. Y. 674, 28 N. E. 255; Rochester Co. V. Loomis, 45 Hun (N. Y.) 93; Bur- ham V. Baylis, 14 Hun (N. Y.) 608; Bright V. Judson, 47 Barb. (N. Y.) 29. (Accepting a bill or note in pay- ment of a precedent debt is not parting with value, so as to make the holder a bona fide holder for value) ; White v. Springfield Bank, 1 Barb. (N. Y.) 225; Philbrick v. Dal- lett, 34 N. Y. Super. Ct. 370, 43 How. Pr. (N. Y.) 419, 12 Abb. Pr. N. S. (N. Y.) 419 ("our courts held at quite an early day that the receipt of commercial paper, fraudulently put in circulation or diverted from the purpose for which it was origi- nally issued, merely as payment or security for a precedent debt, no new credit or other thing of legal value being given on the faith thereof, and no security being relin- quished or discharged, nor any new responsibility incurred on the credit thereof, is not parting with value, such as to enable the holder to en- force such commercial paper against an accommodation party, or to hold it against the true owner, or to hold it free of equities existing upon it against the transferer at the time of the transfer. This rule has been firmly maintained, both at law and in equity, by a long and uninter- rupted series of adjudications, and is beyond question the settled law of this state," id. 387, per Freeman, J.) ; Bell V. McNiece, 17 N. Y. Suppl. 846. (Note was received subject to defenses where it does not appear that anything of value was parted with or relinquished) ; Stalker v. McDonald, 6 Hill (N. Y.) 93, 40 Am. Dec. 389; Ontario Bank v. Worthing- ton, 12 Wend. (N. Y.) 593. Tennessee. — Bank v. Johnston, 105 Tenn. 521, 59 S. W. 131; Vatterlieve V. Howell, 37 Tenn. (5 Sneed) 441; Rhea v. Allison, 40 Tenn. (3 Head) 176; King v. Doolittle, 38 Tenn. (1 Head) 77; Ingram v. Morgan, 23 Tenn. (4 Humph.) 66, 40 Am. Dec. 626; Ferress v. Tavel, 87 Tenn. (3 Pick.) 386, 11 S. W. 93, 3 L. R. A. 414. That one who takes a draft in payment of pre-existing debt is not a bona fide holder for value, no re- lease having been given and nothing of value having been relinquished. See: Webster v. Howe Machine Co., 54 Conn. 394, 8 Atl. 482. See Credit Co., Ltd., V. Howe Machine Co., 54 Conn. 357, 8 Atl. 472, 1 Am. St. Rep. 123. *- Linden v. Beach, 6 Hun (N. Y.) 200. 243] WANT OR FAILURE OF COXSIDERATION. 300 who has taken it for an antecedent indebtedness, the fact that he takes the note in good faith is held not to protect him either in law or equity against the true owner. ^^ So, where a note is taken for a subsisting indebtedness, it is decided that the holder cannot recover thereon where he is not a holder for a valuable consideration.** And payments made to an assignor of a note for a pre-existing debt may operate to reduce the amount of recovery.*^ So the defense of want or failure of consideration is held to be available against a creditor who takes a note originally signed in blank, although filled up before delivery to such holder, especially where he has not incurred loss by gi^^ng credit to the paper or by paying a fair equivalent for it and the notes were not received in the usual course of trade for a valuable consideration.*^ § 243. Banks — Distinction between crediting amount of note on undrawn deposit and credit on pre-existing indebtedness — Bona fide holder. — An indorsee bank is a bo7ia fide holder of a note given for past indebtedness.*^ And if a note is given to a bank for a pre-existing debt the bank is a bona fide holder to the extent of the debt due and not to the amount of the note.** Again after a note has been negotiated in a bank the consideration thereof, whilst the note is the property of the bank, cannot be questioned by the payor.*^ And where a bank receives and discounts negotiable pa2:»er, places the proceeds to the credit of the holder, and charges over against him and cancels other notes upon which are responsible parties, but which are overdue and lie under jDrotest, such cancellation is equivalent to paying value at the time, and precludes all defenses existing as between the original parties.^" A distinction exists, however, between a case where a bank gives a depositor credit on a pre-existing indebtedness, such as for "Clark v. Ely, 2 Sandf. Ch. (N. Y.) 166. "Petrie v. Clark, 11 Serg. & R. (Pa.) 377, 14 Am. Dec. 636. *^Bond v. Fitzpatrick, 72 Mass. (6 Gray) 536. "Riley v. Johnson, 8 Ham. (Ohio) 526 (decided 1838). ■*" Mechanics' Bank v. Charda- voyne, 69 N. J. L. 256, 55 Atl. 1080. But the note was indorsed in blank and given to another to get dis- counted who indorsed it to the bank in payment of his debt then due to the bank. The question, however, was determined under the law of New York as the lex loci contractus. *^ Citizens' Bank v. Payne, 18 La. Ann. 222, 89 Am. Dec. 650. " Tuggle v. Adams, 3 A. K. Marsh. (Ky.) 429. ^'"Salina Bank v. Babcock. 21 Wend. (N. Y.) 499 (the contention was that no value had been given and diversion). 301 BAXKS — BOK^A FIDE HOLDERS. [§ 213 money loaned, or for an overdraft of his account, or the like, and a case where a bank discounts paper for a depositor, and gives him credit upon its books for the proceeds thereof, since in the latter case the bank is not a bona fide holder for value so as to be protected against infirmities of the paper, unless in addition to the mere fact of credit- ing the depositor with the proceeds of the paper, some other and valuable consideration passes. Such a transaction simply creates the relation of debtor and creditor between the bank and the depositor, and so long as that relation continues and the deposit is not drawn out, the bank stands in the same position as the original party to whom the papw was made payable, even though the bank took the paper before maturity and without notice. By giving credit to the indorser of the note on his deposit account, the bank in effect agrees to pay him that amount of money on demand by check or order, and parts with nothing of value. When it receives notice of defenses to the note, it is still in a situation, provided the amount thus credited has remained undrawn by the depositor, to return the note to him and cancel the credit.^^ So it is decided in New York that the mere cred- iting to a depositor's account, on the books of a bank, of the amount of a check drawn upon another bank, wliere the depositor's account continues to be sufficient to pay the check in case it is dishonored, does not constitute the bank a holder in due course within the law mer- chant, as that term is now defined in the negotiable instruments law so as to render its title superior to the defenses which the drawer of the check may have against the payee.^- So in another case in that state it is held tliat a bank is not a holder of a note in due course, when the proceeds of the note are simply credited to the person from whom it was purchased, and not paid out until the bank has notice of an infirmity in tlie instrument or defect in the title of the person from whom the note was purchased. The negotiable instruments law seems declaratory of the law as uniformly stated in the decisions of Xcw York and other states, and notice to the bank of an infirmity in " City Deposit Bank of Columbus case the court, per Werner, J., cites V. Green (Iowa 1905), 103 N. W. 96, Albany County Bank v. People's Co- per McClain, J., also charge of trial Operative Ice Co., 92 App. Div. N. Y. court affirmed. 47; Dykman v. Northbridge, 80 Hun '= Citizens' State Bank v. Cowles, (N. Y.) 258; Central Nat. Bank v. 180 N. Y. 346, 348, 349, 73 N. E. 33; Valentine, 18 Hun (N. Y.) 417; Neg. Inst. Law, 1897, ch. 612, § 91; Thompson v. Sioux Falls Nat. Bk., case reversed 89 N. Y. App. Div. 281, 150 U. S. 231, 244. 86 N. Y. Supp. 38. In the principal § 244] WANT OK FAILURE OF COXSIDERATION. 302 r the instrument in suit or of defect in the title, before it has paid out the full amount agreed to be paid therefor, entitles the maker to avail himself of the defense of failure of consideration,^^ Where a bank has notes of an individual on which he was indebted and it be- comes expedient for a corporation to purchase his personal property and the bank. desiring that adequate provision should be made for the payment of its debts an agreement was reached between the parties whereby, with the bank's consent, the individual's notes were retired with new notes of the corporation, such notes were based upon a suffi- cient consideration.^* Again, the partial or total failure of considera- tion or fraud, in the execution and negotiation of a note made payable at an incorporated bank, which had been discounted before maturity by a bank of the commonwealth of Kentucky or organized under the laws of the United States, is not available as a defense to it, if pur- chased in good faith by the bank without notice of such infirmity; especially so where there is nothing in a written contract executed simultaneously with the execution of the note which suggests any lack of consideration for the execution of the note.^^ g 244. Parting with value — Surrender by creditor of debtor's own note — Receiving negotiable note of third person. — When a creditor '^^ Albany County Bank v. People's Co-Operative Ice Co., 86 N. Y. Supp. 773, 777, 92' N. Y. App. Div. 47 (Ches- ter, J., dissented), per Chase, J., quoting from New York County Bank v. Massey (U. S.), 24 Sup. Ct. 199, 48 L. Ed. 138, N. Y. Law Jour., Jan'. 14, 1904; ^tna National Bank v. Fourth National Bank, 46 N. Y. 82, 7 Am. Rep. 314; Thompson v. Sioux Falls National Bank, 150 U. S. 231, 14 Sup. Ct. 94, 37 L. Ed. 1063; Central National Bank v. Valentine, 18 Hun (N. Y.) 417; Dykman v. Northbridge, 80 Hun (N. Y.) 258, 30 N. Y. Supp. 164; Sixth National Bank v. Lorillard Brickworks Co., 18 N. Y. Supp. 861; Clark National Bank v. Bank of Albion, 52 Barb. (N. Y.) 592; Negot. Inst. Law 1897, p. 732, c. 612, §§ 93, 96; Daniel on Neg. Inst. (5th ed.), §§ 779b, 782; Eaton & Gilbert on Commercial Pap., p. 306; 7 "Cye," p. 929; 4 Amer. & Eng. Ency. of L. 298. The court, in the principal case, said, however: "Whether notice of dishonor of a note is alone sufficient in all cases to constitute notice of an infirmity or defect in the title of the person negotiating the same is not neces- sary now to determine," per Chase, J. "Flour City National Bank v. Shire. 84 N. Y. Supp. 810, 88 App. Div. 401. ^Beattyville Bank v. Roberts (Ky. Ct. App. 1904), 25 Ky. L. Rep. 1796, 78 S. W. 901, 902, citing Ky. Stat. 1903, § 483; Clark v. Tanner, 100 Ky. 275, 38 S. W. 11; Moreland V. Citizens' Savings Bank, 97 Ky. 211, 30 S. W. 637; Harigs v. Louis- ville Trust Co. (Ky.), 30 S. W. 637; Kelly V. Smith, 58 Ky. 313. 303 JOINT NOTE OF HUSBAND AND WIFE. [§ 245' takes from his debtor the note of a third person before maturity, in good faith, in payment of, or as collateral security for the debt, and in consideration thereof gives up collateral securities held therefor, he becomes, to the extent of the collaterals surrendered, a holder for value of the paper, and takes it free from the defenses of antecedent parties, and it is regarded as the settled doctrine of the state of New York, that the surrender by a creditor of the past due notes of a debtor, upon receiving from him, in good faith before maturity, the note of a third person in place of the note surrendered, constitutes the creditor a holder for value of the note thus taken, and protects him against the defenses and equities of the antecedent parties, and it is immaterial whether the note surrendered was given to the creditor for goods sold, or money loaned, or under circumstances which would leave the original debt represented by the note in existence, enforceable against the debtor, or whether by surrendering the note, the creditor parted with his entire right of action. The surrender of a prior note to the maker may be under certain circumstances an unequivocal evi- dence of an intention, on the part of the parties to the transaction, to extinguish the note surrendered, and so be equivalent to an express agreement to that effect. The actual extinguishment and discharge of a prior debt, upon the transfer of a note of a third person by the debtor to the creditor, is a parting with value by the former. But there is little ground for holding that the surrender by a creditor of a past due note of a debtor, especially when his remedy upon the original debt remains, is a parting with value.^** § 245. Joint note of husband and wife — Outlawed debt of husband — Indorsee for past indebtedness — Indorsement by president payee to bank. — A wife joined with her huslDand in the execution of a negotiable note secured by mortgage and the only consideration therefor was a past indebtedness of the husband which, had an action been brought therefor, would have been barred by the statute of limi- tations. The note was regularly indorsed and delivered long before its maturity by the payee to a banking company to which the payee was indebted in an amount much larger than the amount of the note and it, with the mortgage, was received by said indorsee as part pay- ment of the indebtedness and the full amount of the note was credited. The court below found that the indorsee purchased the note and mort- '" Phoenix Ins. Co. v. Church, 81 drews, J. See Taylor's Appeal, 45 N. Y. 218, 37 Am. Rep. 294, per An- Pa. St. 71. See §§ 233-235 herein. ? § 2-i6] WANT OR FAILURE OF CONSIDERATION. 304 gage, in good faith, in the ordinary course of hnsiness and for value before its maturity, and in ignorance of the fact that it was given without consideration or for a debt barred by the statute of limita- tions. The payee Avas the president of the bank and knew of the con- sideration of the note. The note and mortgage were accepted at a meeting of the board of directors of the bank at which the president was not present, and none of those present knew that the considera- tion of the note was an outlawed indebtedness. It was held that the finding should not be disturbed ; that when the president procured the bank to take the note as part payment of his indebtedness, he was acting individually and his knowledge was not the knowledge of the bank ; that the further fact that some of the directors knew, or should have known, that shortly before the making of the note and mortgage the property covered by the mortgage had been conveyed by the hus- band to the wife, it formerly having been community property, and that the conveyance had been recorded, was of no significance. The action was brought by the wife to cancel her note and mortgage for want of consideration, and it was held that it could not be main- tained.^'^ § 246. Rule as to value — Collateral security for pre-existing debt — Bona fide indorsees or holders. — The right to show a want or fail- ure of consideration, or the availability of defenses and equities gen- erally, existing between the original parties, as against a transferee or indorsee who takes commercial paper as collateral security for a pre- existing debt, has been a subject of constant controversy. In many of the states such transferee' or indorsee is held to be a bona fide holder for value where the other essentials constituting one a bona fide holder exist.^^ So in a West Virginia case^^ it is held that where a negotia- " McDonald v. McDonald, 139 Cal. 246, 72 Pac. 997, Beatty, C. J., dis- sented. As to constructive notice to bank, see also, Iowa Nat. Bank of Ot- tumwa V. Sherman & Bratager (S. D. 1903), 97 N. W. 12. ^^ Calif ornia. — Robinson v. Smith, 14 Cal. 94 (note taken as collateral security is not subject to defenses existing between original parties). Colorado. — Merchants' Bank v. Cleveland, 9 Colo. 608, 13 Pac. 723. One who takes in payment or secur- ity of pre-existing debt is purchaser for value); Murphy v. Gumaer, 12 Colo. App. 472, 55 Pac. 951 ("the law has been followed in this state, and it is the law of Colorado, as in most other state jurisdictions, that the taker of notes as collateral security as amply and abundantly protects the rights of the holder as though "" Hotchkiss V. Fitzgerald Co., 41 W. Va. 357, 23 S. E. 576. 305 COLLATERAL SECURITY FOR PRE-EXISTING DEBT. [§ 24G ble instrument is transferred as collateral to secure a valid pre-exist- ing debt, by being properly indorsed and delivered, or by delivery only he had bought and discounted the paper in the usual and ordinary course of business," per Bissell, J.). Connecticut. — Rockville Nat. Bank V. Citizens' Gas Light Co., 72 Conn. 576, 581, 45 Atl. 361 (rule applies both to payment and collateral se- curity. A case of negotiable bonds) ; Bridgeport Bank v. Welch, 29 Conn. 475. Georgia. — Kaiser & Brother v. United States National Bank, 99 Ga. 258, 25 S. B. 620 (syllabus cites Cole- brook on Collateral Securities, § 18, I Morse Banks and Banking, § 600) ; University Bank v. Tuck, 96 Ga. 456, 23 S. E. 467 (to extent of debt due) ; Laster v. Stewai't & Co., 89 Ga. 181, 15 S. E. 42. Illinois. — First National Bank of Joliet v. Adam, 138 111. 483, 28 N. E. 955. (In this case the pledger of notes, who was the maker and also the payee, was allowed possession of the notes to sell them, but he did not do so and pledged them as col- lateral to another creditor and they were received bona fide and without notice) ; Mix v. National Bank of Bloomington, 91 111. 20, 24, 33 Am. Rep. 44. Indiana. — Spencer v. Sloan, 108 Ind. 183, 58 Am. St. Rep. 35, 9 N. E. 100; Proctor v. Baldwin, 82 Ind. 370. Kansas. — Best v. Krall, 23 Kan. 482, 33 Am. Rep. 185. (Quoting from Daniel on Neg. Inst., § 824, as follows: " 'When a note or bill of a third party, payable to order, is indorsed as collateral security for a debt contracted at the time of such indorsement, the indorsee is a bona fide holder for value in the usual course of business, and is entitled Joyce Defenses — 20. to protection against equities, off- sets, and other defenses, available between antecedent parties, pro- vided, of course, that the bill or note transferred as- collateral security is itself, at the time, not overdue'"). Louisiana. — Levy v. Ford, 41 La. Ann. 873, 6 So. 671; Saloy v. Bank, 39 La. Ann. 90, 1 So. 657 (for over- drawn bank account) ; Giavanovitch V. Citizens' Bank of Louisiana, 26 La. Ann. 15. Maryland. — Buchanan v. Mechan- ics' Loan & Savings Institution, 84 Md. 430, 35 Atl. 1599 (holding this to be the settled law of the state since Maitland v. Citizens' National Bank, 40 Md. 540, 17 Am. Rep. 620) ; Maitland v. Citizens' Nat. Bank, 40 Md. 540, 17 Am. Rep. 620. (Indorsee of paper to whom transferred as collateral security by payee in ex- cess of his authority is entitled to protection unless he had knowledge that payee exceeded his authority). Massachusetts. — National Revere Bank v. Morse, 163 Mass. 383, 40 N. E. 180. Minnesota. — Haugan v. Surwall, 60 Minn. 367, 62 N. W. 398 (following and applying Rosemond v. Graham, 54 Minn. 323, 40 Am. St. Rep. 336, 56 N. W. 38). Nevada. — Fair v. Howard, 6 Nev. 304 (note and mortgage were exe- cuted for antecedent debt). New Jersey. — Armour v. Mitchell, 36 N. J. L. 92. Ne^o York. — Continental Nat. Bk. V. Townsend, 87 N. Y. 8 (indorsee for collateral security for antecedent debt is holder for value and entitled to protection as such). North Carolina. — Brooks v. Sulli- van, 129 N. C. 190, 39 S. E. 822 (so 246] WANT OR FAILURE OF CONSIDERATION, 30G when indorsed in blank or made payable to bearer, so that the trans- feree becomes a party to the instrument, and he takes the same before maturity in good faith, and without notice of equities, he thereby be- under "Negotiable Instruments" stat- ute, Acts 1899, Chap. 733, §§ 25-27, to extent of debt, but the law was previously otherwise). Rhode Island. — Cobb v. Doyle, 7 R. I. 550. South Carolina. — Bank of Charles- ton V. Chambers, 11 Rich. (S. C.) 657. Tennessee. — Gosling v. Griffin, 85 Tenn. 737, 744, 3 S. W, 642. Texas. — Wright v. Hardie & Co., 88 Tex. 653, 32 S. W. 885 (innocent holder is protected only to extent of his interest or amount of debt for which held as collateral); Bruce v. First Nat. Bank of Weatherford, 25 Tex. Civ. App. 295, 60 S. W. 1006 (citing Swift v. Tyson, 16 Pet. (U. S.) 1, 10 L. Ed. 865). Vermont. — People's Nat. Bank v. Clayton, 66 Vt. 541, 546, 29 Atl. 1020. Virginia. — Prentice & Weissinger V. Zane, 2 Graft. (Va.) 262 (quali- fied to the extent, however, that if the party from whom the holder re- ceived it took it for value without notice, the holder is entitled to re- cover, but also holding that the holder of a negotiable note taken as collateral security holds it subject to all the equities of the maker against the party from whom the holder re- ceived it). Washington. — Peters v. Gay, 9 Wash. 383, 37 Pac. 325. Federal. — American File Co. v. Garrett, 110 U. S. 288, 28 L. Ed. 149, 4 Sup., etc., 40 (bonds were taken as collateral security for pre-exist- ing debt). English. — Currie v. Misa, L. R. 10 Exch. 153 (title of bona fide holder. without notice, to negotiable secur- ity for pre-existing debt is inde- fensible whether the security be pay- able at a future time or on demand). Lord Coleridge, C. J., dissented). Canadian. — Canadian Bank of Commerce v. Gurley, 30 U. C. C. P. 583. See District of Columbia. — Leach v. Lewis, 1 MacArthur (D. C.) 112 (a case of payment and additional security, although there was a con- tention that the paper passed as se- curity for an antecedent debt). Louisiana. — Pavey v. Stauffer, 45 La. Ann. 353, 12 South. 512, 19 L. R. A. 716 (assignee; collateral security for a running account of the maker with the payee held not liable to equities between parties). Holder of note as collateral se- curity for debt is bona fide holder for value. Randall v. Rhode Island Lumber Co., 20 R. I. 625, 40 Atl. 763, citing Cobb v. Doyle, 7 R. I. 550; Bank v. Carrington, 5 R. I. 515. Pre-existing debt constitutes value for the transfer of negotiable paper, whether the instrument is payable on demand or at a future time. This is so under the Virginia statute, al- though the question may not have been previously settled in that state; and one who is a holder in good faith, before maturity, without no- tice of infirmities, even though the transfer is made merely as col- lateral, is a holder for value to the extent of the amount due him. Payne v. Zell, 98 Va. 294, 36 S. E. 379; Acts 1897, 1898, pp. 896, 918, §§ 25, 27. 307 COLLATERAL SECURITY FOR PRE-EXISTING DEBT. [§ 346 comes without more, a holder for value in the usual course of business. And in a Kansas decision it is determined that an indorsee of a nego- tiable note taken as collateral security for a pre-existing debt, there being no extension of time of payment or other new consideration, except such as may be deemed to arise from acceptance of the paper, is a holder for value and in due course of business, and in the ab- sence of any circumstance charging him witli notice, is protected against a claim of payment made to the original payee. The court, per Mason, J., said: "The rule in the federal courts, as well as in those in England and Canada, is that the holder of a negotiable note taken as collateral security for a pre-existing debt is a holder for value in due course of business, and, as such, is protected against all latent equities of third parties. The state courts that have passed upon this question are in irreconcilable conflict."*'" Although it would seem that the above rule ought to be deemed the true and better one, never- theless, as stated in the al)ove extract from the opinion of Mason, J., there is an "irreconcilable conflict" in the state courts and a number of states have held to the contrary.''^ But the courts asserting this ""Birket v. Edward (Kan. 1904,) 74 Pac. 1100. The case of Bank v. Dakin, 54 Kan. 656, is stated to have been wrongly placed among the states committed to the rule, and that case is explained. The state de- cisions, as well as certain codes, are also considered at length. AlaMma. — Thompson v. Maddox, 117 Ala. 468, 23 So. 157. (One who takes negotiable paper as collateral security for the payment of a pre- existing or antecedent debt is not a purchaser for value in the usual course of trade; such paper is open in the hands of the assignee to all defenses which could have been made against it, while in the hands of the assignor or original owner. But one who honestly receives a ne- gotiable bill or note before matur- ity, as collateral security for a debt contracted simultaneously, or in pursuance of a previous agreement, made at the time the debt was con- tracted, is entitled to protection against secret equities or defects of which he had no notice, per Haeral- son, J.) ; Vann v. Marbury, 100 Ala. 438, 46 Am. St. Rep. 70, 14 So. 273, 23 L. R. A. 325; Haden v. Lehman, 83 Ala. 243, 3 So. 528. Arkansas. — Bertrand v. Barkman, 13 Ark. 150. Iowa. — Keokuk County Bank v. Eunice Hall, 106 Iowa 540, 76 N. W. 832; Noteboom v. Watkins, 103 Iowa 580, 72 N. W. 766. Kentucky. — May v. Quimby & Co., 3 Bush (Ky.) 96 (distinction is made between receiving bill in ab- solute payment of antecedent debt and receiving it as collateral secur- ity only). Michigan. — Maynard v. Davis, 127 Mich. 571, 36 N. W. 1051, 8 Del. L. N. 46. Mississippi. — First National Bank of Meridian v. Strauss, 66 Miss. 479, 14 Am. St. Rep. 579, C So. 232 (the court said that the reason of the rule that one who accepts negotia- 246] WANT OR FAILURE OF CONSIDERATIOX. 508 opposing rule are evidently bound by the rule stare decisis which pre- cludes the probability of a change except such as may be brought about by statute. Thus it is said by Libbey, J., in a Maine case:"^ "The rule which requires some new consideration to protect the indorsee who takes the note as collateral for a pre-existing debt, against such a defense as is set up here, is admitted as the settled law of this state when the note in suit was made.^^ But it is claimed by counsel for the plaintiff that it is in conflict with the rule established by the fed- eral courts, court of Massachusetts and many of the other states, which ble paper before maturity as secur- ity merely for a pre-existing debt is a holder for value, is the sanctity of negotiable paper and the policy of leaving it unfettered in commercial transactions. "But it can find no ap- plication in this state where by ex- press legislative provision negotia- bility (in the sense in which the word is used in the law merchant) is withdrawn from all bills of ex- change and promissory notes except those payable to bearer"). Nebraska. — Smith v. Kinney, 32 Neb. 162, 49 N. W. 341 (note was in- dorsed to mortgagee as collateral and had passed to plaintiff with the mortgage; may show note without consideration). NeiD Hampshire. — Rice v. Raitt, 17 N. H. 166. New York. — Potts v. Mayer, 74 N. Y. 594; Comstock v. Hier, 73 N. Y. 269, 273, 29 Am. St. Rep. 142 (per Allen, J., who says: "This is the well-established rule in this state"). North Dakota. — Porter v. Andrus, 10 N. D. 558, 88 N. W. 567 (held not to be holders for value or holders in due course under §§ 4884, 5130, Rev. Codes). Ohio. — Roxborough v. Messick, 6 Ohio St. 448, 67 Am. Dec. 346 (trans- feree of note as collateral, without any new consideration, etc., is not holder for value). Pennsylvania. — Altoona Second National Bank v. Dunn, 151 Pa. St. 228, 232, 25 Atl. 80, 31 Am. St. Rep. 742; Appeal of the Liggett Spring and Axle Co., Ltd., Ill Pa. St. 291, 2 Atl. 684 (applied to pledge to bank of negotiable securities). Tennessee. — Vatterlein v. Howell, 37 Tenn. (5 Sneed) 441 (if paper is taken in payment of or as collateral security for a pre-existing debt, it is not negotiated in due course of trade, and the holder stands in no better position than the payee and would be subject to all defenses available against the payee). Wisconsin. — Burnham v. Mer- chants' Exchange Bank, 92 Wis. 277, 281, 66 N. W. 510. See Ohio.—SecoT v. Witter, 39 Ohio St. 218, 232, 233 (this case, however, is only a qualified author- ity, as the notes were taken with actual notice of that which made them a fraudulent transfer) ; Pitts V. Foglesong, 37 Ohio St. 676, 680, 41 Am. Rep. 540 (where the court said it was not disposed to question the proposition, but the principle was not applicable to the case before it). Virginia. — Prentice & Weissinger V. Zane, 2 Graft. (Va.) 262 (rule qualified, however). == Smith V. Bibber, 82' Me. 34, 19 Atl. 89, 17 Am. St. Rep. 464. "^Citing Nutter v. Stover, 48 Me. 169; Smith v. Hiscock, 14 Me. 449. 309 COLLATERAIy SECURITY TOR I'lIE-EXISTlXU DEBT. [§ 24G is well shown by the many authorities cited on their brief ; and they urge the court to overrule the cases in tliis state, and establish here the rule held by them which requires no new consideration, and thereby bring this state in accord, upon the question of commercial law, with what is claimed to be tlie rule established by the greater Aveight of au- thority. If the question were an open one here we should be inclined to adopt the federal rule as the one best sustained by principle and authority, but it has been so long settled the other way and acted upon in this state, we do not feel we should be justified in reversing it." So in a Missouri decision**^ the court admits that the first stated rule "seems to be in accord with the decided weight of authority," but ad- heres to its own state decisions. In a New York case it is decided that as against a holder in due course a note which is unrestricted in its terms is not subject to the defense of want or failure of consideration, even though it was taken as collateral security for an antecedent debt, as such holder is a holder for value ;"*' especially so when there is also an agreement to forbear action on the existing indebtedness founded upon a consideration which was the delivery of the security."'^ In a North Dakota case the court, per Morgan, J., says: "Upon the ques- tion of the rights of holders of negotiable paper taken in due course before maturity as collateral security for a pre-existing debt, there is a radical conflict of authority. The courts sustaining the rights of the holders to recover in such cases as against equities or defenses in favor of the holders, do so, generally, upon the ground that by becoming holders of such negotiable paper through indorsement, they become parties to it, and as such assume obligations in reference to the en- forcement of the same. Those courts denying the rights of such hold- ers to recover as against defenses in favor of the makers do so upon the ground that the holders parted with nothing in the nature of a new consideration when they acquired such note or other negotiable paper ; that merely accepting the note as collateral security for a pre- existing debt, without any agreement for extension of time or for- '^Loeween v. Forsee, 137 Mo. 29, Am. Rep. 231; McSpedon v. Troy, 38 S. W. 712, 59 Am. St. Rep. 489. Bank, 41 N. Y. 35; Grandin v. Le ""Milius V. Kauffmann, 93 N. Y. Roy, 2 Paige (N. Y.) 509; Tinsdale Supp. 669, citing Neg. Inst. Law, v. Murray, 9 Daly (N. Y.) 446; Fur- 1897, p. 729, c. 612; First National niss v. Gilchrist, 1 Sandf. (N. Y.) Bank v. Wood, 128 N. Y. 35, 27 N. E. 53. 1020; Continental National Bank v. «■ Milius v. Kauffmann, 104 N. Y. Townsend, 87 N. Y. 8; Grocers' App. Div. 442, 93 N. Y. Supp. 669. Bank v. Penfield, 69 N. Y. 502, 25 § 247] WANT OR FAILURE OF CONSIDERATION. 310 bearanee of some kind, and without making any new promise, so far as the original debt is concerned, or any new obligation, is not receiv- ing the collateral for anything of 'value' within the meaning of that term as laid down in the statute of the law merchant.'"^^ § 247. Same subject — Particular decisions. — A pre-existing debt is not such a valuable consideration as will protect the holder of a ne- gotiable note wrongfully pledged as collateral security by the payee.*''^ If notes are assigned by a separate instrument, but are not indorsed, as security for a pre-existing indebtedness, the assignee is not a bona fide holder and is subject to all defenses available against the payee had they remained in his hands. '^^ And where a note, payable to a person named, or bearer, was transferred by the payee to his creditor as collateral security for a debt due from the payee to him, and a suit was brought by the creditor in his own name against the maker, it was held that it furnished no defense, if the latter could show that the p-iyee had paid his own debt to the plaintiff, and so was entitled to have the note returned to him before the commencement of the suit.'^^ If a note is transferred to secure a pre-existing debt in consideration of an extension of time of payment of a debt there is a valuable considera- tion.'^- So the fact that the bona fide holder of a note, with whom it was deposited before maturity as collateral security for a debt, knew that it was accommodation paper and that the indorsement was with- out consideration, does not preclude recovery against the indorser, even though the debt secured was that of the husband of the maker of the note.'^^ Again, where a suit was brought in Mississippi on a note made in Tennessee the lex loci contractus was held to govern and it being taken as collateral was therefore subject to all defenses between the maker and the payee. ^* "'Porter v. Andrus, 10 N. D. 558, v. Hanna, 124 Iowa 374, 100 N. W. 562, 563, 88 N. W. 567, per Mor- 57. gan, J. "'Woodson v. Owens (Miss., 1892), "^ Union Trust Co. v. McClellan, 40 12 So. 207. W. Va. 405, 21 S. E. 1025. As to lex loci contractus and note '"Sathre v. Rolfe (Mont., 1904), transferred as collateral security 77 Pac. 431. for antecedent debt, see National " Silbley v. Robinson, 10 Shep. Bank of Commerce v. Kenney (Tex. (Me.) 70. Sup. Ct, 1904), 83 S. W. 368, rev'g '= First National Bank v. Johnson, 80 S. W. 555. See also §§ 258, 277, 97 Ala. 655, 11 So. 690. 284, and chapter on collateral herein. ''^ German-American Savings Bank 311 INTERMEDIARY PARTIES. [§§ 248-250 § 248. Same subject^Specific exceptions.— The following excep- tions have been noted: (1) A note or bill negotiated in security for a debt not yet due, is not upon sufficient consideration, ordinarily, un- less the creditor wait in faith of the collateral after his debt becomes due. (2) If the holder is notoriously insolvent before the note or bill is negotiated as collateral security, it is said the creditor can only stand upon the rights of his debtor. (3) If a note or bill is taken merely to collect for the debtor, to apply when collected, the creditor not becoming a party by indorsement so as to be bound to pursue the rules of the law merchant in making demand of payment and giving notice back, the holder is merely the agent of the owner. (4) So, too, probably, if it were shown positively that the holder gave no credit to the indorsed bill and did, in no sense, conduct differently on that account, he could not be regarded as a holder for value." In an action by an indorsee before maturity against the payee it may be shown that the note was given as security merely and that this was known to the indorsee and so let in all the equities between the maker and the payee.'^'' § 249. Security for pre-existing debt — Additional consideration. Although one who takes a note as security for an antecedent debt is a holder for value, yet, in addition, an agreement to forbear action on the existing indebtedness for a time, founded upon a good considera- tion, such as the delivery of security, would make tlie holder one in good faith for -value, and such note not having been diverted, but be- ing unrestricted as to its use, would not he sul)ject in such holder's hands to the defense of want or failure of consideration.'^' § 250. Intermediary party — Holder from bona fide holder.— The want of consideration, in whole or in part, cannot be insisted on, if the plaintiff or any intermediary party between him and the defend- ant took the bill or note bona fide and upon a valid consideration.'^ "Atkinson v. Brooks, 26 Vt. 569, 35, 27 N. E. 1020; Continental Na- 584, 62 Am. Dec. 592. tional Bank v. Townsend, 87 N. Y. '"Grew V. Burditt, 26 Mass. (9 8; Grocers' Bank v. Penfield, 69 N. Pick.) 265. Y. 502, 25 Am. Rep. 231; McSpedon "Milius V. KaufEmann, 93 N. Y. v. Troy Bank, 41 N. Y. 35; Grandin Supp. 669; Court, per McLaughlin, v. Le Roy, 2 Paige (N. Y.) 509; J., cites, on the first proposition Tinsdale v. Murray, 9 Daly (N. Y.) above stated. Negotiable Inst. Law, 446; Furniss v. Gilchrist, 1 Sandf. § 91, Laws 1897, p. 729, C. 612: First (N. Y.) 53. National Bank v. Wood, 128 N. Y. "Mallard v. Aillet, 6 La. Ann. 92. 251-253] WAXT OK FAILURE OF CONSIDERATIOX. 112 If negotiable notes are traded before maturity to one who has no no- tice of any defect, such as failure of consideration, that defense can- not be availed of as against an innocent holder who subsequently takes such notes without knowledge.'^ And a holder from a bona fide holder of title to a note is entitled to recover thereon, even though he has notice or knowledge of defenses available as against the payee.*" § 251. Paper issued by corporation — Bona fide holder. — The con- sideration of negotiable paper issued by a corporation with authority to issue the same cannot be inquired into in an action by a bona fide indorsee for value before maturity as against the maker," and the rule has been held to apply, even though the note was issued for an un- authorized purpose.*^ § 252. Want or failure of consideration subsequent to transfer — Bona fide holder. — Failure of consideration subsequent to the transfer of a negotiable note, such transfer being made before maturity, is no defense to an action by the indorsee ; and, in the absence of evidence to contrary, the presumption is that the note was not transferred after maturity.*^ If notes are exchanged by the parties, a bona fide holder, for a good consideration, without notice, cannot be defeated by a show- ing of want of consideration or a failure of consideration subsequent to the transfer.** § 253. Suit in name of original party — Bona fide holder. — Want or failure of consideration is a defense against an indorsee or holder of a note or bill when the action can be treated as one against the original parties to the note.*^ "Burch v. Pope (Ga., 1902), 40 S. "Dexter Sav. Bank v. Friend, 90 E. 227. Fed. 703. ^oHolliman v. Karger (Tex. Civ. •*" Bearden v. Moses, 75 Tenn. (7 App., 1902), 71 S. W. 299. See also Lea) 459. Prentiss v. Strand, 116 Wis. 647, 93 '' Trustees v. Hill, 12 Iowa 462. N. W. 816. See also Neg. Inst. Law " Hartwell v. McBeth, 1 Harr. N. Y., § 97. (Del.) 363; Quincy Union Bank v. "Cooks V. Pearce, 23 S. C. 239; Tutt, 8 Mo. App. 342; Sutherland v. Blair v. Rutherford, 31 Tex. 465; Whitaker, 50 N. C. 5 (the indorse- Pas. Dig. Art. 222. Note 285; Cornell ment was in blank by the payee, V. Hichens, 11 Wis. 353. See Wright without any value, and could not V. Pipe Iron Co., 101 Pa. St. 204, 47 he recovered in the name of the Am. Rep. 701. payee or his indorsee for the want of consideration). 313 LEX FORI — INDORSEMENT FOR TRANSFER MERELY. [§$ 254-255 § 254. Lex fori. — In determining the form of pleas of want of consideration and trial the lex fori will control.^'' And this rule has been applied where the distinction between simple contracts and contracts under seal has been abolished by statute.**^ So the form of pleading and trial and the quality and degree of the evidence, and the mode of redress will be according to the lex fori.^^ § 255. Indorsement for transfer merely or to pass title. — That the indorsement was wholly and entirely without consideration and' was merely for transfer of title in accordance with a bank custom is a good defense in an action by the indorsee against the indorser.'*^ The court, in sustaining this rule, said : "In the case of Doolittle v. Ferr}',"" Mr. Justice Brewer, in speaking for the court of the indorse- ment of negotiable paper, said: 'Where the law furnishes such apt, brief, and well-known expressions for the making the indorsement ac- complish exactly what the parties may desire, wise policy demands that each form of indorsement should conclusively carry with it the liability which it implies/ Again, 'that these implications should be ^^ Williams v. Haines, 27 Iowa 251, 1 Am. Rep. 268. See Stevens v. Nor- ris, 30 N. H. 466; Green v. Sarmi- ento, 3 Wash. (C. C.) 17, Fed. Cas. No. 6760. " Williams v. Haines, 27 Iowa 251, 1 Am. Rep. 268. *' Harrison v. Edwards, 12 Vt. 648, 36 Am. Dec. 364. Lex fori — Lex loci contractus — Equitable defenses. " 'The principle is that whatever relates merely to the remedy and constitutes a part of the procedure is determined by the law of the forum, for matters of process must be uniform in the courts of the same country; but whatever goes to the substance of the obligation and affects the rights of the parties, as growing out of the contract itself, or inhering in it or attaching to it, is governed by the law of the contract. * * * So, if by the law of the place of a contract equitable defenses are allowed in favor of the maker of a negotia- ble note, any subsequent indorse- ment will not change his rights in regard to the holder. The latter must take it cum onere' (citing Pritchard v. Norton, 106 U. S. 124, 129, 133, 1 Sup. Ct. 102, 27 L. Ed. 104; Story Conflict of Laws, § 332). * * * Where the statute where the contract is made and to be per- formed operates to extinguish the contract or debt itself, the case no longer falls within the law in re- spect to the remedy, and when such a contract is sued upon in another state, the lex loci contractus, and not the lex fori, governs." Creston National Bank v. Salmon (Mo. App. 1906), 93 S. W. 288, 289, per Elli- son, J. Compare Kaufman v. Bar- bour (Minn. 1906), 107 N. W. 1128; Barry v. Stover (S. D. 1906), 107 N. W. 672. ^''Lovejoy v. Citizens' Bank, 23 Kan. 331. "» Doolittle V. Ferry, 20 Kan. 230. § 255] WANT OR FAILURE OF COXSIDERATIOX, 314 as conclusive upon all the parties as though the full contract were re- duced to writing.' While the general rule applicable to such cases has been stated so strongly and clearly, yet certain limitations and ex- ceptions are noted in the opinion, — as where the indorsement was without consideration, or upon trust for some special purpose, or where there was an 'equity arising from an antecedent transaction, including an agreement that the note should be taken in sole reliance upon the responsibility of the maker, and that it was indorsed in order to trans- fer the title in pursuance of such agreement, and where the attempt to enforce it would be fraud. We think these limitations and deci- sions are justly and wisely recognized in the authorities."^^ So upon a hona fide sale of a note the vendor may indorse it in order to pass title and he does not in such case become liable for its payment.^- And it is competent for the indorser of a negotiable note in blank to show that he indorsed such paper merely to pass title, and that he as- sumed no liability conditional or otherwise and that this was in ac- cordance with the understanding between the parties.^^ Again, if the plaintiff's right to sue as the bona fide holder of an indorsed note is contested, and it is shown that he became possessed of it as agent and not in the usual course of business, the indorsers may show that they indorsed it only as agents and without ultimate responsibility.®* So where one acting in a fiduciary capacity indorses in blank and the circumstances so show, such indorsement must be regarded as noth- ing more than a mere transfer of the right of action on the notes.®^ But it is also held that words clearly expressing such intention must be inserted in the contract to relieve one who indorses paper from his liability on his indorsement, and that where the facts of the case do not so warrant the position cannot be sustained that the form of the indorsement is one for the mere purpose of transferring title and such as to preclude the idea of assuming liability as an indorser.®° And it is further decided that in an action by an indorsee against his in- dorser, 'prima facie the face of the note fixes the sum to be received, and it is no defense to the action that the note was delivered to the plaintiff and then, at his request and solely for the purpose of parting with any apparent title thereto, defendant indorsed the note."^ As "^ Lovejoy v. Citizens' Bank, 23 Kan. 331, 333, per Horton, C. J. «=Cowles V. McVickar, 3 Wis. 725. »= Patten v. Pearson, 57 Me. 428. "McDonough v. Goule, 8 La. 472. See Byers v. Harris, 56 Tenn. (9 Heisk.) 652, as to necessity of intent of agent to bind himself personally in making indorsement. "= Wade v. Wade, 36 Tex. 529. '" Fassen v. Hubbard, 55 N. Y. 485. " Lee V. Pile, 37 Ind. 107. 315 INDORSEMENT FOR TRANSFER MERELY OR TO PASS TITLE. [§ 256 against the maker an indorsement and transfer by the payee for col- lection is sufficient, even though without consideration.''^ § 256, Same subject — Instances. — Where the payee indorsed on the note the receipt of a certain part of the amount and also the words "Pay the within note to" the plaintiff, it was held that the payee was neither an indorser nor a guarantor, but that his indorsement merely passed the property in the note to the person to whom it was thus made payable.'"' In a Pennsylvania case the affidavit of defense was: that the defendant at the urgent request of a member of the firm, who were the makers of the note, and without any consideration whatever wrote his name upon the back of the note for the sole accommodation of the firm and upon the agreement that they would see that it was paid, that said indorsement was irregular and not a negotiable instru- ment and said note was made by said firm payable to their own order as payees, and it was first indorsed by defendant and subsequently transferred by indorsement by the payees. It was held that the reason of the rule, that unless the payee is the first indorser there can be no recourse against him, did not apply because the payees were also the makers of the note, and the defendant, though entitled to the position of second indorser, was deprived of no valuable rights, as he could sue the payees as makers of the note, and that their responsibility to him was precisely the same as if they had indorsed the note as payees before he placed his indorsement upon it; therefore the defense was insufficient.^"" Under another decision, the form of the instruments made them checks and not bills of exchange, being orders drawn upon a bank, signed by one as agent, indorsed in blank, and upon present- ment were paid by the bank. It was determined that no obliga- tion could be inferred on the part of the indorser to repay the bank in default of repayment by the drawer.^"^ So where the defendant's in- dorsement was intended only to transfer to another, with whom he stood in known confidential relations, the legal right to receive money and not to become responsible for the ultimate payment of a draft, such indorser is not liable."- '' McPherson v. Weston, 64 Cal. Nat. Bank of Lebanon v. Bachman, 3 275, 30 Pac. 842. Pa. Dist. 460. ^ Crawford v. Lyttle, 70 N. C. 385. "" Westminster Bank v. Wheaton, ""Central Nat. Bank v. Dreydop- 4 R. I. 30. pel, 134 Pa. St. 499. 19 Atl. 689, 19 "= Kimmell v. Bittner, 62 Pa. St. Am. St. Rep. 713. Followed in First 203. 257] WANT OR FAILURE OP CONSIDERATION. 316 § 257. Purchase price notes — Original parties. — In an action upon purchase price note, between the original parties thereto, an inquiry may be made into the consideration, and a want or failure thereof constitutes a good defense.^"^ So a due bill cannot be collected where it recites that the consideration is for a certain share in a store and the payee fails to deliver the goods.^°* There are, however, decisions which are opposed to the general rule, or which are exceptions to or qualifica- tions thereof, or which perhaps fall within the rule, but by reason of the circumstances the defense of want or failure of consideration is not available.^"^ If the purchaser of a note had no notice of the al- "^Ohio Thresher and Engine Co. V. Hensel, 9 Ind. App. 326, 36 N. E. 716 (total want of consideration is a defense; buyer entitled to defense of failure of warranty) ; Snyder v. Hargue, 26 Kan. 416 (want of con- sideration is good defense) ; Key- stone Mfg. Co. V. Forsythe, 126 Mich. 98, 85 N. W. 262 (warranty had failed and total failure of con- sideration was permitted to be shown. Examine same case, 123 Mich. 626, 82 N. W. 521—115 Mich. 51—72 N. W. 1109). As to warranty, see §§ 264, 265, herein. As to the value of property be- ing fraudulently misrepresented and constituting a total failure of consideration under the Negotiable Instruments Act, §§ 9, 10, see Taft V. Myerseough, 197 111. 600, 64 N. E. 711, rev'g 92 111. App. 560. Failure of consideration by mis- conduct of the payee, without the fault of the maker, will discharge the latter from his obligation. Ker- nion V. Jumonville de Villier, 8 La. 547. Examine Swain v. Ewing, 1 Mor- ris (Iowa) 344, a case of total want of consideration. The notes were given to secure a part of the pur- chase money for a certain lot of land purchased at a public sale, and by fraud or mistake of the acting commissioner a receipt was given for a different lot, and the one actu- ally purchased was sold to another person. ^" Burns v. Ross, 17 Ky. L. Rep. 181, 30 S. W. 641; Shoe and Leather Bank v. Wood, 142 Mass. 563, 8 N. E. 753; under Ky. Genr. Stat., C. 22, §§6, 21, notes in hands of indorsee are subject to any defense maker has against payee before notice of transfer. So that failure of consider- ation in purchase-price note by non- delivery of goods is a defense to note not negotiable by law of state where made. i»^ McNeel v. Smith, 106 Ga. 215, 32 S. E. 119 (plea thereby set up an agreement and condition, not only not contained in the note, but in direct contradiction of the written contract) ; Heard v. De Loach, 105 Ga. 500, 30 S. E. 940 (there was no evidence that the notes were in fact given as claimed); McCormick Harvesting Mach. Co. v. Yoeman, 26 Ind. App. 415, 59 N. E. 1069 (no evidence showing the claimed breach of warranty was offered) ; Wright v. Benjamin, 5 La. Ann. 179 (note was given for purchase of certain char- ter rights, but although causes of forfeiture were claimed to exist at date of purchase, yet there had been 317 PURCHASE-PRICE NOTES — ACCEPTOR GUARANTORS. [§§ 258, 259 Icged failure of consideration before paying the purchase price such defense is not available to preclude his recovery."" Again, if per- formance of conditions or a tender by defendant is a prerequisite, com- pliance therewith is necessary in order that a defense of want or failure of consideration may be of avail. ^°^ § 258. Purchase price notes — Acceptor. — If an article is uncon- ditionally sold by the payee to the drawer with a warranty super- added, want or failure of consideration is not available as a defense in an action for the purchase price. The remedy is for a breach of the warranty or by way of recoupment or counterclaim, so that a breach of warranty cannot be set up by the acceptor as a defense to an action against him, upon his acceptance of the purchase price draft.^*'^ But where the purchaser accepts a draft on him by the vendor before the goods arrive and on arrival receives and retains the goods, he is obligated to pay, even though the goods are not merchantable or in accord with contract.^*"' In an action by the payee, who was the holder of a draft against the drawee, who was the acceptor, it constitutes a good defense that the draft was drawn and accepted in payment of good sound merchantable goods, which the drawer, through his agent, sold and had agreed to deliver, but that said goods were not delivered and those which were delivered were worthless and unmerchantable.^ ^° § 259. Purchase price notes — Guarantors. — A breach of warranty by the principal in a transaction cannot be set up by a guarantor when sued on his contract of guaranty, and this rule applies where the de- fenses interposed do not arise upon a failure of the consideration of the contract on which the jilaintiff's action is founded, but are to be regarded as the setting off of distinct causes of action one against the other; and the non-performance of the plaintiff's engagement to the makers of the note is not to be regarded as a failure of consideration, but as an independent cause of action which the makers of the note and they only can assert.^^^ And where, before the note is delivered or accepted by the payee, the payment of the purchase price note is no judicial decree of forfeiture); Ind. 168; Acme Co. v. Erne, 83 Kan. Dickson v. Tingstall, 3 C. P. Rep. 858, 66 Pac. 1004; Hoag v. Parr, 13 (Pa.) 128 (given for property which Hun (N. Y.) 95. third party was bound to deliver). "^ Marsh v. Low, 55 Ind. 271. ""' Burt V. Bennett, 116 Ga. 430, 42 ^"^ Walton v. Black, 5 Houst. 149. S. E. 740. ""Frence v. Gordon, 10 Kan. 370. "" Howard v. Higgins, 137 Cal. 227, "^ Osborne v. Brice, 23 Fed. 171. 69 Pac. 1060; O'Kane v. Kiser, 25 IGO] WANT OR FAILURE OF COXSIDERATION. 318 guaranteed by the guarantor in writing, the consideration to the mak- ers would support the guarant}-. And even if the guaranty was given in accordance with the contract between the vendor and vendee reserv- ing title in the vendor until payment of the note, there would exist a sufficient consideration to support it.^^' But the writing of a guaranty for the payment of the mortgage only, upon the mortgage only and not upon the notes, is not an indorsement of the notes. And if the guaranty were written upon the notes themselves the guaranty would not be negotiable, and there is no consideration for such a guaranty as that first stated, and the guaranty not being a negotiable contract the guarantor could set up against a bona fide purchaser a want of con- sideration for the guaranty."^ § 260. Purchase price notes — Bona fide holder or assignee. — The defense of want or failure of consideration is not available against one who is, within the rule as to essentials, a bona fide holder of a purchase price note.^^* And where a vendor of land took several negotiable "- Winans v. Manufacturing Co., 48 Kan. 777; Stanley v. Miles & Ad- ams, 36 Miss. 434. "^ Briggs V. Latham, 36 Kan. 205. "* California. — Siebe v. Joshua Handy Mach. Works, 86 Cal. 390, 25 Pac. 14 ("it is contended that there was a failure of consideration for this note * * * But findings show that the plaintiff was an inno- cent purchaser of the note for value before maturity"). Iowa. — Whittaker v. Kuhn, 52 Iowa 315, 3 N. W. 127 (note here was given for amount of assessment of capital stock subscribed). Nebraska. — Stedman v. Rochester Loan and Banking Co., 42 Neb. 641, 60 N. W. 890 (note given for stock in milling corporation); Coakley v. Christie, 20 Neb. 509, 31 N. W. 73 (note for purchase price of personal property, and claim of non-compli- ance with warranty) ; Western Cot- tage Organ Co. v. Boyle, 10 Neb. 406, 6 N. W. 473 (proof of worthless character of property as defense was not permitted). New Hampshire. — Green v. Bick- ford, 60 N. H. 159 (a note given for a worthless patent or for an ar- ticle not patented is good in the hands of a bona fide indorsee for value, without knowledge or notice of such facts or of any infirmity in the note). North Carolina. — Blackmer v. Phil- lips, 67 N. C. 340 (failure; purchase money negotiable notes in hands of bona fide indorsee before maturity are taken free from all equities or drawbacks except indorser's pay- ments). South Carolina. — Bank v. Ander- son, 32 S. C. 538, 11 S. E. 379 (inno- cent indorsee and holder of pur- chase-price note takes free from any defense of the maker against the payee). Vermont. — Brockway v. Mason, 3 Williams (Vt.) 519. See Kansas. — Keith v. Thisler (Kan., 1889), 61 Pac. 758 (note was for horses warranted to be sound, but it was not ) . But see : Pennsylvania. — Hawley v. Hirsch, I 319 puKCHASE-rmcE xotes — bona fide holders. [§ 2G0 notes for the payment of the purchase money, one of which Avas ne- gotiated in the usual course of trade and the others were not; it was lield that, although the holder of the note so negotiated was not sub- ject to an equity existing against the vendor, such equity could be en- forced against the holders of the other notes and that the vendor could not be required to apportion the loss.^^^ The general rule especially applies, where the maker has teen fully indemnified against loss by the payee ;"'^ or where some consideration, no matter what the sum,^^^ or a valuable one at the time of the transfer is shown ;^^* or where the maker had knowledge at the time of purchase of the character and condition of the vendor's title and of the facts alleged in defense;"® or where the vendee had knowledge of the transfer of the note to the holder and of the facts relied on as a failure of consideration.^-" Again, if a note is written for value received, negotiable and payable without defalcation, it is no defense against a bona fide holder, that it was without consideration.^-^ Nor is it a defense to a purchase price note for land, having a lawful consideration, that the property was estimated in a depreciated or unlawful currency, or that a previous holder was willing to take an unlawful currency in payment. ^^- An assignee, however, even though a bona fide purchaser without notice, has been held subject to such a defense,^ ^^ especially where the law governing mercantile paper has no application;^-* or where the cir- cumstances are sucli that he was obligated to use such precaution and make such inquiry as would be expected from men of ordinary pru- dence.^^^- But an assignee for value has, nevertheless, been brought within the general rule.^-*' Under the Civil Code of Georgia the as- 2 Woodw. Dec. (Pa.) 158 ( a pur- "' Rees v. Sessions, 41 Ohio St. chase-price note for real estate, and 234. misrepresentations of the vendor "" Green v. McDonald, 21 Miss. were allowed against the indorsee (13 S. & M.) 445. See also Myer v. upon the ground that where a case Hettinger, 94 Fed. 370. of fraud is made out between the ^-"Wiggins v. McGimpsey, 21 Miss. original parties, the assignee or in- (13 S. & M.) 532. dorsee is put upon proof that he is '-^ Smith v. Giegrich, 36 Mo. 369 an innocent purchaser for value). (under Rev. Code 1855, p. 320-3). "= Andrews v. McCoy, 8 Ala. 920, ^"Crosby v. Tucker, 21 La. Ann. 42 Am. Dec. 669. 512. See Conwell v. Pumphrey, 9 ""Myer v. Hettinger, 94 Fed. 370 Ind. 135, 68 Am. Dec. 611 (depre- (note was given in payment of ciated bank bills), stock; defense of failure of con- ^-'' Lucas v. Kernoddle, 2 Ala. 199. sideration not allowed). '" Liuville v. Savage, 58 Mo. 248. "■Howe V. Potter, 61 Barb. (N. ^-"' Sims v. Bice, 67 HI. 88. Y.) 356. ^-"Dye v. Grover, 17 Ky. L. Rep. § 260] WANT OR FAILURE OF COXSIDERATIOX. 320 signee or holder of a note given for the purchase money of land, may, in appropriate proceedings, subject the land to the pa'yment of his debt; so that in a suit brought on a promissory note of such a char- acter and payable to named persons or bearer, it is not a good defense that title to the notes (since the act of 1894 codified as above) has been transferred without indorsement to other persons ; and an amend- ment to a plea seeking to set up this defense, and claiming that the alleged owners of the notes would not, in a suit against the defendant, be entitled to a lien upon the land for the purchase money of which the notes were given was properly allowed. ^-^ In a recent Connecticut case a defense to an action on a note was that the note was delivered to the payee on an express condition that its payment should be con- tingent on the acceptance of certain engines, which it had delivered to defendant, with a warranty that they should work satisfactorily — and they had proved unsatisfactory. Certain machinery was furnished and guaranteed but was found not to work satisfactorily ; subsequently there was a compromise agreement whereby a certain amoimt of money and a note were to be given and certain new parts of the machinery Avere to be furnished, and the note in suit was given but with a reservation as to the machinery complying with requirements, but the note was a direct tender in payment for certain of the machines and the reservation was not put forward as a qualification of the tender but of the manner in which the note was to be held or used, the tender remained unqualified and unconditional. It was made to pay the debt and if accepted the debt would be extinguished and was in ful- fillment of a contract dut}^, so that the defense would he unavailing even if the vendor could be considered as having, by accepting the note, assented to the proposed modification of the contract. The note was indorsed by the plaintiff before maturity to a bank and deposited with it for collection. It was protested and then returned to plaintiff. The bank received the title for the sole benefit of the plaintiff. When it returned the note 'protested, the plaintiff became an indorsee in pos- session and invested with the rights belonging to all holders of com- mercial paper and one of these was to cancel the indorsement which it had made, whether it exercised this right or not was immaterial. Itr mere possession of the note was sufficient evidence of ownership to support a suit, and in an action by the indorsee against the maker a 685, 32 S. W. 294; People's Bank of ^=^ Ray v. Anderson, 119 Ga. 926, 47 New Orleans v. Tredeau, 38 La. S. E. 205. Ann. 898. 321 PROPERTY USELESS OR OF XO VALUE. [§§ 261, 2u2 judgment was rendered for the plaintiff.^-^ If one purchases a note and it is assigned to him he acquires the right to enforce the vendor's lien against the land for the balance of the purchase money by a suit in his own name. But if he purchases the note after its maturity ho takes it subject to every legal or equitable defense that it was subject to in the hands of the payee. ^-'' Again, where the maker, when first applied to, refused to acknowledge the validity of the note, alleging that there was some difficulty about the consideration, but subsequently declared that the difficulty was removed and the note would be paid, he was held to have waived his right to set up failure of consideration against an assignee who had purchased the paper upon the faith of such assurance.^^'' § 261. Effect of judgment — Assignees.^^''* — A judgment against a garnishee in an attachment proceeding against the payee is a good de- fense, to the extent of such judgment, to an action against the maker by an assignee upon such notes where the maker had no notice of the assignment at the date of the judgment. ^^^ It is also a good reply to a defense of a breach of warranty pleaded to a suit upon a promissory note given for personal proport}^ that a judgment has ])een recovered by the maker of a note for the damages sustained by such breach of warranty.^^^ § 262. Purchase price notes — Property useless or of no value.^"-* It has been asserted as a rule that if the consideration utterly fails by reason of the thing for which the note is given being useless, or be- cause the note is based upon a void consideration, such failure of con- sideration may be availed of as a defense in an action upon the note.^^^ '-'New Haven Mfg. Co. v. New 9, 1891; Sand & H. Dig., § 492, case Haven Pulp & Board Co., 76 Conn, was reversed and remanded because 126, 55 Atl. 604 substantially the of error in excluding evidence which opinion of Baldwin, J. tended to show a total want of con- '^ Williams v. Baker (Mo. App., sideration, etc.). 1903), 93 S. W. 339. District of Columbia.— Hodge v. '^"'Land v. Lacoste, 5 Miss. (6 Mason, 21 D. C. 181. How.) 471 (a purchase-money note). Illinois. — Bailey v. Cromwell, 3 '"'*See §§ 236, 237, herein as to Scam. (111.) 71; Kinzie v. Chicago, assignees generally. 2 Scam. (111.) 187, 33 Am. Dec. 443 '■*' Canady v. Detrick, 63 Ind. 485. (in this case a lease was null and "- Herod v. Snyder, 48 Ind. 480. void and a plea setting up such facts '"=*See §§ 210, 211, herein. was held good). ^^"^ Arkansas. — Tilson v. Gatling, 60 Indiana. — New v. Walker, 108 Ark. 114, 29 S. W. 35. (Act of April Ind. 365, 9 N. E. 386, 58 Am. Rep. Joyce Defenses — 21. 262] WANT OR FAILURE OF CONSIDERATION. 322 The consideration of a contract is always open to inquiry in a suit for its enforcement ; and where the answer sets up that the note sued on was for the purchase price of certain saw-mill timber, and that part of the land conveyed had no timber on it at all, that as to other portions a paramount outstanding title existed in other parties, and that the defendants had never been in possession thereof, such answer is good as a plea of failure of consideration.^^* So the sale of an ab- solutely void chose in action will not form any consideration for a promise. If void, no legal obligation is created by it ; and it is, in the view of the law, as if it did not exist. The principle is the same, not- withstanding the chose in action is salable in market for even the full value that would attach to it if valid. If the law does not recognize it as having some binding force, and will not enforce it, a note given upon the sale of it wull be invalid for want of consideration.^^^ Again, if upon the sale of property the vendor receives a note with an indorse- ment for a greater amount than the purchase money and gives his o^vn note to the vendee for the payment of the excess at a day certain, the vendor, when sued upon his note, may show in defense to the action 40 (void as to a purchaser with no- tice unless he shows that his in- dorser was a good purchaser in good faith); Mulliken v. Latchen, 7 Blackf. (Ind.) 136; Huggins v. Strong, 4 Blackf. (Ind.) 182. Kansas. — First Nat. Bank v. Peek, 8 Kan. 660. Massachusetts. — Aldrich v. Stock- well, 91 Mass. (9 Allen) 45; Bierce V. Stocking, 77 Mass. (11 Gray) 174; Dickinson v. Hall, 31 Mass. (14 Pick.) 217, 25 Am. Dec. 390. Minnesota. — Slater v. Foster, 62 Minn. 150, 64 N. W. 160. Missouri. — Marker v. Brown, 81 Mo. 68 (consideration had wholly failed) ; Fenwick v. Bowling, 50 Mo. App. 516 (but chattel must be worthless for all purposes) ; Joliffe V. Collins, 21 Mo. 338; Rowe v. Blanchard, 18 Mo. 441, 86 Am. Dec. 783. Nebraska. — Schroeder v. Nielson, 39 Neb. 335, 57 N. W. 993. New Hampshire. — Green v. Bick- ford, 60 N. H. 159 (defense of want of consideration or that the article purchased was worthless — a patent — cannot be made against a bona fide indorsee without notice or knowledge; Dunbar v. Marden, 13 N. H. (Patent). New York. — Sill v. Rood, 15 John. (N. y.) 230 (there was, however, the element of fraud); Hand v. Feld, Anth. N. P. (N. Y.) 87 (so, where the fact of worthlessness was fraudulently concealed. Vermont. — Smith v. Smith, 30 Vt. 139 (consideration was for a part- nership interest which was worth nothing). Wiscotisin. — Rowe v. Blanchard, 18 Wis. 441, 86 Am. Dec. 783. "* Butler & Co. v. McCall, 119 Ga. 503, 46 S. E. 647. See also Wells v. Gress, 118 Ga. 566, 45 S. E. 418; Civ. Code, § 3555, considered in § 265 herein. "'^ Sherman v. Barnard, 19 Barb. N. Y.) 291. 323 VENDOR OR SELLER WITHOUT TITLE. [§ 2G3 that the maker of the indorsed note was insolvent and that a suit against him would have been unavailing and this, although no action was brought.^^'' But it is also decided that it is no defense as between the original parties to a purchase price note for goods that the goods turned out to be of no value, by reason of which the consideration wholly failed without proof of an express and fraudulent warranty of the goods."'^ And it is held that a bona fide indorsee of a note is not subject to defense of want of consideration, although the note was given for a worthless article, such indorsee having no knowledge of the facts.^^* So a person who has bargained with one in possession for a license to dig and carry away minerals, cannot, after enjoying the privilege, refuse to pay on the ground that somebody else had a better right to the possession. In these cases the title to land is not involved.^^^ And the interest of a retiring partner in the good will of a business is a good consideration for a note and it constitutes no failure of consideration that the business, which is purchased after- ward, proves not so successful as before.^'*" §263. Vendor or seller without title or interest — ^Loss of title. The general rule permitting a defense of want or failure of considera- 1^" Litchfield v. Allen, 7 Ala. 779. defense that the article for which "^Delaware. — O'Neal v. Bacon, 1 the note was given was of no value. Houst. (Del.) 215. But had the property never passed, Illinois. — Myers v. Turner, 17 111. or had fraud been practiced or an 179 (even though patent practically express warranty broken, the action of no value recovery may be had on might be defeated'), note given therefor). North Carolina. — Fair v. Shelton, 7n(Ziana.— Kerwodle v. Hunt, 4 128 N. C. 105, 38 S. E. 290 (cannot Blackf. (Ind.) 57 (no defense that set up as total failure of considera- patent right sold was not useful and tion that patent worthless, valuable). Vermo7it.— Bryant v. Pembler, 45 Massachusetts. — Gilmore v. Allen, Vt. 487 (it is no defense to an action 118 Mass. 94 (where part of con- upon a note given for the price of sideration valid as to several pat- personal property that it was worth- ents, note valid, even though reissue less at the time of the sale if the of one of the patents invalid) ; Nash sale was without fraud or warranty V. Lull, 102 Mass. 60, 3 Am. Rep. 435 on the part of the vendor), (valid patent without regard to its "'^ Careen v. Bickford, 60 N. H. 159. pecuniary value is good considera- "^Rhoades v. Patrick, 27 Pa. St. tion). 323. New Hampshire.— Reed v. Pren- ""Smock v. Pierson, 68 Ind. 405, tiss, 1 N. H. 174, 8 Am. Dec. 50 (it 34 Am. Rep. 269. is as between original parties, no § 263] WAN"! OR FAILURE OF CONSIDERATION. 324 tion has also been applied, as between original parties, where the vendor or seller had no title and could convey none.^*^ "1 California. — Fisher v. Salmon, 1 Cal. 413, 54 Am. Dec. 297 (vendor had no title or color of title or pos- session). Illinois. — Davis v. McVickers, 11 111. (1 Peck) 327 (there is a failure of consideration where vendor has no title and can acquire none) ; French v. Carr, 7 111. (2 Gil.) 664 (sale was made after bankruptcy and after title was gone and the promise was therefore wholly with- out consideration and precluded re- covery on note). Indiana. — Kernodle v. Hunt, 4 Blackf. (Ind.) 57 (sale of patent right of which payee had no owner- ship or authority to sell). Kansas. — Vickroy v. Pratt, 7 Kan. 238 (note for title to Indian lands and vendor did not own or possess except by virtue of an unlawful claim). Kentucky. — Crawford v. Beard, 4 J. J. Marsh. (Ky.) 187 (a sale of personal property). Massachusetts.— Roc^ v. Nichols, 85 Mass. (3 Allen) 343 (shares sold were not owned by payee when he undertook to sell them). Minnesota. — Durment v. Tuttle, 50 Minn. 426, 52 N. W. 909 (title to part of land failed, a case of partial failure of consideration). Missouri. — Hacker v. Brown, 81 Mo. 68 (consideration wholly failed as represented and taken at time of exchange) ; Wellman v. Dismukes, 42 Mo. 101 (where contract remains executory purchaser may demand clear title and vendor to recover must show an ability to comply with stipulations of covenants). Texas. — Garrison v. King, 35 Tex. 183 (notes were for house and lot and vendor had no title and ac- quired none and made no deed. Held a good defense) ; Roehl v. Pleasants, 31 Tex. 45, 98 Am. Dec. 514 (administrator sold land with- out good title; plea of failure of consideration sustained); Richard- son V. McFadden, 13 Tex. 278 (that title to personal property not in seller a good defense). But see Iowa. — Findley v. Rich- ardson, 46 Iowa 103 (holding that a purchaser having acquired all the interest of the owner in the land he cannot defend on the ground of failure of consideration, the land being purchased at a guardian's sale). Minnesota. — Lough v. Bragg, 18 Minn. 121 (Gil. 106). Holding that the vendor's want of title is not a ground of want of failure of con- sideration of a purchase price note given for the agreed price. Texas. — Ward v. Williams, 45 Tex. 617 (a case of purchase at ad- ministrator's sale the rule caveat emptor applying). Examine further the following cases: Alabama. — Stark v. Anderson, 30 Alf.. 438 (note for land purchased at administrator's sale held to be without consideration). Connecticut. — Clark v. Sigourney, 17 Conn. 511. Illinois. — Linton v. Porter, 31 111. 107. Indiana. — Mullen v. Hawkins, 141 Ind. 363, 40 N. E. 797 (failure of title no defense where there are no covenants of warranty). Louisiana. — Byrd v. Craig, 1 Mart. N. S. (La.) 625 (failure of consider- ation and failure to make title). 325 PURCHASE-PRICE NOTES — LAND — WARRANTY. [§ 264 § 264. Purchase price notes — Land — Warranty. — A breach of war- ranty of title may be set up as a defense to a purchase price note for land.^*^ So it is decided in a federal case that a loss of title under a contract of bargain and sale may constitute a partial failure of con- sideration."^ And in North Dakota a total or partial failure of con- sideration or want of consideration may be shown as a complete or par- tial defense in an action on a note given for the purchase price of land sold with covenants where the title has failed or partially failed ; and in case of a breach pf covenant against incumbrances the purchaser is entitled to a credit on a note given for the purchase price of real estate of the amount paid by him to protect his title against such in- cumbrance by paying such incumbrance.^** For a long time a rule prevailed in Maine to the effect that a partial failure of title con- stituted no defense to a suit given on a note given for real estate. This doctrine became so firmly established and was reiterated in so many decisions that the state legislature in 1897 deemed it wise and ex- pedient to abrogate it by legislation which appears in Eev. Stat. C. 84, § 40, as follows : "In any proceeding in law or in equity in which the amount due on a promissory note given for the price of land conveyed, is the question, and a total failure of consideration would be a good defense, a partial failure of consideration may be shown in reduction of damages." But this rule has never prevailed in respect to a note given for another consideration. The rule then in that state is this : whenever a promissory note is given for two or more independent con- Mississippi. — Billingsley v. Nib- the lessor makes title under an In- lett, 56 Miss. 537 (trust deed and dian, plaintiff cannot recover), note; no defense that title worth- Texas. — Earnest v. Moline Plow less). Co., 8 Tex. Civ. App. 159, 27 S. W. Missouri. — Hudson v. Busby, 48 734. Mo. 35. As to coverture affecting the con- Montana. — First Nat. Bk. v. How, sideration in action by husband of 1 Mont. 604 (a failure of considera- deceased wife against maker, see tion does not exist where the maker Campbell v. Moulton, 30 Vt. 667 (in delivered over the property without this case the legal title was not legal necessity to a claimant). passed at the time but subsequently. New Hampshire. — Perkins v. Bum- "= Williams v. Baker (Mo. App. ford, 3 N. H. 522. 1903), 73 S. W. 339. Ohio. — Chaffee v. Garrett, 6 Ham. '" American National Bank v. Wat- (Ohio) 421 (where the considera- kins (U. S. C. C. A., Wis.) 119 Fed. tion of a note is a lease of lands 545. within an Indian reservation, and '" Dahle v. Starke (N. D. 1903), 96 N. W. 353. 265] WANT OR FAILURE OF CONSIDERATION. 326 siderations, and there is a failure of consideration as to one, as -where the title to the articles sold is not in the vendor at the time of the sale, or where there is a breach of warranty or a misrepresentation as to quality, for the purpose of avoiding circuity of action, the law will allow the defendant, in an action between the original parties, or be- . tween others standing in no better position, to show such partial failure of consideration in reduction of damages. '^'^^ Again, under a Missouri decision, a failure or partial failure of consideration for the pur- chase price of land on warranty may be interposed to defeat a suit to enforce a vendor's lien for the balance of the purchase price evi- denced by a note.^*'' But an outstanding title in a stranger is held to be no defense where the purchaser of land is in possession under a deed with covenants of warranty. ^*^ Nor is it any defense that land was not free from but was subject to incumbrances contrary to cove- nant."8 § 265. Purchase price notes — Personal property — Warranty. — The plea of failure of consideration of the purchase price for personal property sold on a warranty is available as a defense in a suit to re- cover such price.^*'' And a breach of warranty for goods sold consti- tutes a good defense to an action upon it by the payee of a promissory note for the price. ^^^ So where the plea of total failure of considera- ^*^ Hathorn v. Wheelwright, 99 Me. 351, 59 Atl. 517, per Wiswell, C. J. ""Williams v. Baker, (Mo. App. 1903), 73 S. W. 339. "' Winstead v. Davis, 40 Miss. 785. "^Lattin v. Vail, 17 Wend. (N. Y.) 188. ""Williams v. Baker (Mo. App. 1903), 73 S. W, 339 ("is the well- settled law of this state," per Bland, P. J.). ""Aldrich v. Stockwell, 91 Mass. (9 Allen) 45; Sturges v. Miller, 80 111. 241 (failure of consideration. In this case the notes were given for the purchase of a propeller with the title warranted and the vessel was libeled and sold for old debts which were liens upon it at the time of sale, and it was held that the con- sideration had wholly failed, the vessel having been wholly lost to defendant) ; Hoopes v. Northern Nat. Bank, 102 Fed. 448. (Failure of consideration; a note in part pay- ment of machinery and failure of guaranty in respect thereto. The action was against the indorser on his irregular indorsement, so that the plaintiff was not the bona fide holder but sued thereon for the ben- efit of the payee and it was held that the case was to be treated as if the suit was by the payee, the nomi- nal plaintiff standing upon the rights of the payee and the defend- ant being an original accommoda- tion indorser and the case was held, therefore, to be subject to the rule that the consideration of every promissory note is open to inquiry between any of the immediate par- ties to the note.) 337 PURCHASE-PRICE NOTES — PERSONAL PROPERTY. [§ 265 tion in that the article is worthless is available as a defense to a pur- chase price note given for the property, in a suit for a breach of war- ranty of personal property it is" not error for the court to charge under the code to the effect that in ordinary sales there is an implied war- ranty that the article sold is merchantable and suitable for the use intended.^'^^ In Kentucky, upon an executed sale, the purchaser of personal property has a right to retain it and make defense by way of recoupment, and if a warranty be proven, credit should be given on the purchase price note for the difference between the agreed price and the actual value of the property at the time it was received. If the claim has been assigned, the assignee, where the statute so provides, is subject to the same defenses as might have been used against the original payee.^^- Again, where a defense was set up that a note was given in part payment of a machine purchased upon a contract of warranty which had wholly failed a judgment was rendered for de- fendant.^ ^^ So one of two partners, the other having defaulted, may plead the defense of breach of contract of warranty.^^* And where goods were warranted but were deficient in quality and the defects were not discoverable until after delivery and use, it was held that plaintiff acquired title after maturity with full notice, and the defense was held good.^^^ But the maker of a promissory note executed and delivered in renewal of one previously given for the purchase of per- sonal property, cannot defeat a recovery thereon because of alleged failure of consideration based on the ground that the property was de- fective, when it appears that such maker had full and complete knowl- edge of the defects in the property at the time of signing the note.^^® If, however, a renewal note is given in consideration of a promise by a seller of a warranted article to repair defects, and such promise is not performed, the breach of such promise and the damage sustained in consequence of said breach, may properly be alleged in an action against the maker on the note.^''^ ''^^ Wells v. Gress, 118 Ga. 566, 45 "'Hays v. Kingston (Pa. 1899), 16 S. E. 418; Civ. Code, § 3555. See AtL 745, 23 Wkly. Not. Cas. 277. § 262 herein. '=« Atlanta R. Co. v. American Car '"Harrigan v. Advance Thresher Co., 100 Ga. 254, 28 S. E. 40. Co., 26 Ky. L. Rep. 317, 81 S. W. '=>• Atlanta City Street Ry. Co. v. 261, Ky. Rev. Stat. 1903, § 474. American Car Co., 103 Ga. 254, 29 "'Wardner, Bushnell & Glessner S. E. 925; distinguishing Electric Co. v. Myers (Neb. 1903), 96 N. W. Co. v. Blount, 96 Ga. 272, 23 S. E. 992. 306. See also Blount v. Edison Co.. '"Braley v. Goff, 40 Iowa 76. 106 Ga. 197, 32 S. E. 113. § 266] WANT OR FAILURE OF CONSIDERATION. 328 § 266. Where property for which note is given is of some value — No failure of consideration. — In the absence of fraud a party will not be allowed to interpose as a defense, to an action for the purchase price, the fact that the property was not pecuniarily worth what he supposed it to be. And when the consideration of a promissory note consists of the payee's agreement to transfer to the maker certain stock in a corporation, the agreement is no less valid because the value of the stock becomes depreciated by subsequent events. Such a de- preciation no more gives the defendant a right to avoid his obligation to pay the stipulated price than an enhanced value would avail the plaintiff as an excuse for the non-fulfillment of his agreement.^^^ Again, the fact that the property for which the note was given is not as valuable as the purchaser hoped or believed and he received what he contracted for and there is no fraud on the vendor's part and the representations are as to the value of property to ascertain which the usual methods of business men would have been sufficient and the rep- resentations were, if relied on, at the purchaser's risk, there is no want or failure of consideration.^ °" So where a note is given as a part of the entire consideration for the purchase by one partner of his co- partner's interest in the partnership, the contract is entire and it not being disputed that the stock and accounts mentioned in the con- tract were valuable, there exists a good and valuable consideration for the note which precludes sustaining a defense of failure of considera- tion.^"'* If a note is admitted to have been given for certain goods and it is not denied that such goods are of value, the fact that they arc not such goods as to meet the demands of the defendant's trade as represented by plaintiff's agent, such representations being nothing more than the expression of such agent's opinion, does not constitute a failure of consideration.^*'^ It is also decided that if the article, for the price of which the note was given, is not wholly worthless the payee may recover the full amount thereof.^"^ So where a note is given for land it is held that the defect of title must be entire so that nothing valuable passes by the conveyance. If anything valuable does pass it becomes a case for unliquidated damages, the remedy for whicli is by action for covenant broken. ^''^ Again, defendants entered "'Furber v. Fogler, 97 Me. 585, 55 "" Shiretzki v. Kessler (Ala. 1904), Atl. 514. 37 So. 422. ^'^^ Harness v. Home, 20 Ind. App. . ^"- Clark v. Peabody, 9 Shep. (Me.) 134, 50 N. E. 395. 500. i»» Taylor v. Ford 131 Cal. 440, 63 ^"^ Jenness v. Parker, 11 Shep. Pac. 770. (Me.) 289. 329 EIGHTS OF HOLDER AXD PRIOR INDORSEE. [§§ 267, 2G8 into an agreement to pay a stated price for each share of stock in a specified company then being formed, and a note was given pursuant to the terms of the agreement ; that is, the note was accessory to said written agreement. The company was never formed and no shares of stock in such company were ever issued and it was decided that the note never became a binding obligation between the makers and payee, and one not an innocent purchaser of such notes was bound by the facts and could not recover.^*** But where in a suit by the payee of a prom- issory note, against the makers, the defendants pleaded that the note was given in consideration for part of the purchase money of an in- surance-agency business, sold by him to them, and the consideration of the contract had failed to an extent equal to the amount of the note, because the plaintiff "represented to defendants that he had made cer- tain profits out of said business for the three years previous to said purchase, and said purchase was based upon the amounts alleged to have been made, but said representations as defendants have since discovered were untrue" a demurrer to the plea upon the ground that it "failed to set forth how much profits plaintiff represented he had made * * * or how much damage had resulted to defendants," by reason of the alleged misrepresentations of the plaintiff, should be sustained.^® ^ § 267. Rights of holder where prior indorsee held note as collateral security and for continuing credit — ^Lien. — One who is an indorsee and who is holder of a note and the owner of the indebtedness which it was indorsed to secure, has all the rights of a prior indorsee or party through whom he holds, whether the holder is in due course or not and where such prior indorsee held the note as collateral security for such indebtedness to "it" as the payee might incur upon a continuing credit extended to him for property sold and to be sold it became a lien holder and as such was both originally and at the maturity of the note a holder for value to the extent of the lien and to that extent a holder ip due course. ^*^® § 268. Purchase price notes — Instances in general of want or failure of consideration. — A person wlio lias given his promissory note ""'^ Howe V. Raymond, 74 Conn. 68, ""' Mersick v. Alderman, 77 Conn. 49 Atl. 854. 634, 635, 60 Atl. 109, per Prentice, J. "'^'McCrary v. Pritchard, 119 Ga. 876, 47 S. E. 341. f 269] WANT OR FAILURE OF COXSIDERATIOX. 330 for the purchase price of personal property cannot avoid payment be- cause of the alleged failure of consideration by reason of the fact that such property has been taken on a judgment in replevin where it ap- pears that the purchaser of such property has permitted judgment to be entered by default and it does not appear that the seller had knowl- edge of the suit or notice to defend.^*'' If one party to an exchange of lands refuses to deliver the deed unless notes are given for a claimed equivalent in value of an excess in quantity over that understood to be conveyed, and the grantee, being obliged to have the land to fulfill a contract of his own, executes the notes under protest and takes the deed ; in an action on the note evidence of such facts is admissible to prove or as tending to show want of consideration.^®^ A failure of consideration also exists as to a note given for the conveyance of title to land where it is to be reconveyed if the maker fails to perform cer- tain acts for the payee and they are not performed.^ ®^ Again, where the consideration of a note was the conveyance of land which was fully tendered at the date of the deed, and the note was secured by a trust deed, a subsequent sale of the land under the trust deed does not constitute a failure of consideration, as there could be no failure other- wise than for some defect or deficiency in the consideration at the time of its rendition and such effect is not given by a sale subsequently made in accordance with an agreement between the parties.^^" § 269. Accommodation paper — Consideration as between original or immediate parties. — As between the original or immediate parties the want of consideration of an accommodation note may be shown ;^'^ that is, as between such parties the maker may set up as a defense that he signed the note for accommodation merely;^'- or merely as surety for accommodation and upon no other consideration;^"^ or that tlie notes were for accommodation merely and that there was no considera- tion, and that the notes were given for the purpose of increasing the apparent assets of a bank ;^'* or that the indorsement was for the ac- '"Moul V. Pfeiffer, 23 Pa. Super. Ct. 280. '•^Holland v. Hoyt, 14 Mich. 238. ^""Holmes v. Farris, 97 Mo. App. 305. 71 S. W. 116. '™Thurgood v. Spring (Cal. 1903), 73 Pac. 456. "' Batterman v. Butcher, 95 App. Div. 213, 88 N. Y. Supp. 685. ''= Tuggle v. Adams, 3 A. K. Marsh. (Ky.) 429. ^■=Day V. Billingsly, 66 Ky. (3 Bush) 157;' holding that there was no binding consideration in this case. '■^Chicago Title and Trust Co. v. Brady (Mo., 1901), 65. S. W. 303. De- fense held good as against receiver. 331 BONA-FIDE IIOLDERS^ASSIGXEES — NOTICE. [§ 270 commodation of a bank and defendant received no benefit whatever from the note.^'^^ § 270. Bona fide holders — Assignees — Notice or knowledge. — A benefit accruing to the person accommodated is a sufficient considera- tion to sustain the liability of an accommodation maker or indorser."'' As a rule, therefore, it constitutes no defense, in an action by a bona fide holder who took the note before maturity and for value in due course, to show the accommodation character of a*note or indorsement, or that the defendants were accommodation makers, even though said note was received by plaintiff with a knowledge of the character of the paper."'^ So where the payee indorses a non-negotiable note for '" Higgins V. Ridgway, 153 N. Y. 130, 132, 47 N. E. 32, aff'g 90 Hun 398, 35 N. Y. Supp. 944. ""First National Bank of St. Cloud V. Lang (Minn. 1905), 102 N. W. 700. "^Alabama. — Rudulph v. Brewer, 96 Ala. 189, 11 South. 314 (one signing a note after delivery to en- able the payee to negotiate it cannot set up in a suit on the note that there was no consideration for his signature); Marks v. First National Bank, 79 Ala. 550, 58 Am. Rep. 620 (an accommodation indorser of a note is liable to the holder, who has taken the note for value bona fide before maturity, even though the holder knew at the time that the indorsement was for accommodation merely) ; Connerly v. Planters & Merchants' Ins. Co., 66 Ala. 432 (holding also that maker cannot show that he could have protected himself from loss if he had been notified that notes were unpaid, the payee being solvent at their matur- ity). Colorado. — Pendleton v. Smissart, 1 Colo. App. 508, 29 Pac. 521 (the defendant testified that he deliv- ered the note as accommodation pa- per for the purpose of saving the credit of the payee under a promise that it should not be used in any way except to show it, and this was held no defense). Delaioare. — Maher v. Moore (Del. 1898), 42 Atl. 721 (the fact that a note was made for the payee's ac- commodation and on his represen- tation that defendant would never be held liable upon it does not re- lieve the maker from liability there- on to a bona fide indorsee for value before maturity). District of Columbia. — Willard v. Crook, 21 App. D. C. 237; Code D. C, § 1333. (The defense in an ac- tion by an indorsee against the maker that he was an accommoda- tion maker within the knowledge of the indorsee and holder is in di- rect opposition to the Negotiable Se- curities Act of the District of Co- lumbia and is therefore not avail- able. Georgia. — Jones v. Bank of New York, 90 Ga. 334, 17 S. E. 88. Illinois. — Hodges v. Nash, 43 HI. App. 638; Dawson v. Tolman, 37 111. App. 134; Waite v. Kalurisky, 22 111. App. 382; Miller v. Larned, 103 111. 562, 570, 571 (it is no defense as against the maker in an action by a holder into whose hands an ac- ro] WANT OR FAILURE OF COXSIDERATIOX. 33* commodation note may have come in the usual course of business for a valuable consideration that said holder may have taken the notes with knowledge that it was accom- modation paper, per Scott, J.) ; Har- low V. Boswell, 5 Peck (111.) 56; Hall V. Bank, 13 111. 234, 24 N. E. 546. Iowa. — Bankers Iowa State Bank V. Mason Hand Latfie Co. (Iowa 1902), 90 N. W. 612; Winters v. Home Ins. Co., 30 Iowa 172. Maryland. — Maitland v. Citizens' National Bank of Baltimore, 40 Md. 540, 562, 17 Am. Rep. 620. Massachusetts. — Kenworthy v. Saw- yer, 125 Mass. 28; Davis v. Randall, 115 Mass. 547 (no defense that draft was accepted for accommodation) ; Monument Nat. Bank v. Globe Works, 101 Mass. 57, 3 Am. Rep. 322. Michigan. — Van Etten v. Hemann, 35 Mich. 513 (cannot defend against new notes in hona fide holder's hands. The factor of knowledge also entered into the decision) ; Thatcher v. West River Nat. Bank, 19 Mich. 196 (holding also that agreement between maker and payee no defense). Minnesota. — First Nat. Bank of St. Cloud V. Lang (Minn. 1905), 102 N. W. 700 (that a note was made solely for the accommodation of a third person, for no valid considera- tion passing to the maker, is no de- fense in an action by the holder thereof with notice of those facts at the time of delivery, who has in the regular course of business and for value taken it before maturity); Tourtelot v. Bushnell, 66 Minn. 1, 68 N. W. 104. Mississippi. — Hawkins v. Neal, 60 Miss. 256 (no difference in this re- spect between a promissory note and bill of exchange). Missouri. — Edwards v. Thomas, 66 Mo. 468 (a case of paper in- dorsed by an unauthorized agent) ; Chaffe V. Memphis, C. & N. W. R. Co., 64 Mo. 193; Macy v. Kendall, 33 Mo. 164. New Jersey. — National Bank of Republic v. Young, 41 N. J. Eq. 531, 7 Atl. 488 (unless paper was taken with actual knowledge, mere notice of facts to put holder on inquiry not sufficient) ; Duncan v. Gilbert, 29 N. J. L. 521. New York. — National Bank of North America v. White, 19 N. Y. App. Div. 390, 46 N. Y. Supp. 555; Arnson v. Abrahamson, 30 N. Y. St. R. 657, 16 Daly 72, 9 N. Y. Supp. 514; Moynihan v. McKeon, 74 N. Y. St. R. 316, 16 Misc. 343, 38 N. Y. Supp. 61; First National Bank of Portland v. Schuyler, 39 N. Y. Super. Ct. (7 J. & S.) 440; Lincoln Nat. Bank v. Butler, 74 N. Y. St. R. 116, 16 Misc. 566, 38 N. Y. Supp. 776. See Grant & Gary v. Ellicott, 7 Wend. (N. Y.) 227 (there being no fraud) ; Brown v. Mott, 7 Johns (N. Y.) 361 (there being no fraud) Mechanics' Banking Assoc, v. New York & Sau- gerties White Lead Co., 35 N. Y. 505; Holland Trust Co. v. Waddell, 75 Hun (N. Y.) 104, 26 N. Y. Supp. 980 (certificate of deposit) ; Pierson V. Boyd, 2 Duer (N. Y.) 33. (Suit was against maker and indorser) ; Pettigrew v. Chave, 2 Hilt. (N. Y.) 546 (rule applied where note given without restriction as to its use) ; Bridgeport City Bank v. Empire Stone Dressing Co., 19 How. Prac. (N. Y.) 51. (Rule applied to holder without notice of defenses). Ohio. — Pitts V. Foglesong, 37 Ohio St. 676 (rule that accommodation indorser liable applied where note without restriction, and not induced by fraud). i 333 BONA-riDE HOLDERS — ASSIGNEES — NOTICE. [§ 270 Oregon. — White v. Savage (Or. 1906), 87 Pac. 1040. Pennsylvania. — Philer v. Patter- son. 168 Pa. St. 46, 32 Atl. 26, 36 Wkly. Notes Cas. 47 Am. St. Rep. 896; Newbold v. Boraef, 155 Pa. St. 227, 26 Atl. 305. (Where no con- sideration has passed from the maker to an accommodation in- dorser, it will not prevent a recov- ery by one who discounts the same before maturity); Garden City Nat. Bank v. Fitler, 155 Pa. St. 210, 26 Atl. 372, 35 Am. St. Rep. 874. (There was no allegation that plain- tiff was not a hona fide holder); Ashton V. Spro'ule, 35 Pa. St. 492. Failure of consideration intended to be given an accommodation in- dorser for his becoming surety will not release him if the holder is not at fault) ; Halloway v. Quin, 18 Wkly. Notes Cas. (Pa.) 284; Laib V. Lanagan, 2 Leg. Chron. (Pa.) 386 (following Moore v. Baird, 30 Pa. St. 138). North Carolina. — Norfolk Nat. Bank v. Griffin, 107 N. C. 173, 11 S. E. 1049, 22 Am. St. Rep. 868. Federal. — United States v. Me- tropolis Bank, 15 Pet. (U. S.) 377, 10 L. ed. 774; Earle v. Enos, 130 Fed. 467. (Even though the holder who discounts an accommodation note knew its character at the time such fact does not permit the maker to avail himself of the defense of want of consideration); Perry v. Crammond, 1 Wash. (C. C.) 100, Fed. Cas. No. 11005 (accommo- dation bill). English. — Collins v. Martin, 1 Bos. & P. 651 (bills were indorsed in blank. Held, that trover could not be maintained for the bills) ; Mallett V. Thompson, 5 Esp. 178; Smith V. Knox, 3 Esp. 46. As to knowledge or notice see also the following additional cases: Illinois. — Diversy v. Moor, 22 111. 331, 74 Am. St. Rep. 157. Indiana. — Reed v. Trentman, 53 Ind. 438. Maryland. — Schwartz v. Wilmer, 90 Md. 136, 44 Atl. 1059; Yates v. Donaldson, 5 Md. 389, 61 Am. Dqo. 283. Massachusetts. — Lincoln v. Ste- vens, 7 Mete. (Mass.) 529. Neio York. — Brown v. Mott, 7 Johns. (N. Y.) 361; Beall v. Gen- eral Electric Co., 16 Misc. Rep. 611, 38 N. Y. Supp. 527. Ohio. — Second Nat. Bank v. Mor- rison, 3 Ohio Dec. 534. Pennsylvania. — Stephens v. Mo- nongahela Nat. Bank, 7 Wkly. Notes (Pa.) Cas. 491. (Liable, al- though holder have notice of want of consideration) ; Bonsall v. Bauer, 2 Wkly. Notes (Pa.) Cas. 298. Federal. — Perry v. Crammond, 1 Wash. (C. C.) 100; Fed. Cas. No. 11005; Israel v. Gale, 77 Fed. Rep. 532; Armstrong v. Scott, 36 Fed. 63. But see: Delaivare. — Nailor v. Daniel, 5 Houst. (Del.) 455. Missouri. — Wagner v. Diedrich, 50 Mo. 484. New York. — Prall v. Hinchman, 6 Duer (N. Y.) 351; Holbrook v. Mix, 1 E. D. Smith (N. Y.) 154; Small v. Smith, 1 Denio (N. Y.) 583; Powell v. Waters, 8 Cow. (N. Y.) 669, aff'g 17 Johns. N. Y. 176. Ohio. — Stone v. Vance, 6 Ohio 246; Moulton v. Posten, 52 Wis. 169. The making of an accommodation note is a loan of the maker's credit with no restriction as to its use, and in an action thereon by an in- dorsee for value before maturity, want of consideration, even though known to the indorsee on receiving the note, constitutes no defense. First National Bank v. Dick, 22 Pa. Super. Ct. Rep. 445; Penn. Safe De- 271] WANT OR FAILURE OF CONSIDERATION. 334 the maker's accommodation the assignor has been held bound as against a bona fide holder for value. "^ And as against a bona fide holder of an accommodation check the defense that no consideration passed to the drawer -is not open to the latter.^'^'^ Misapplication of the note may, however, affect the extent of the recovery.^*" § 271. Same subject — Particular decisions. — The rule is thus stated in an Illinois case : Where a bill or note is given with no restriction as to the mode or time of using it by the party accommodated and the same has been transferred in good faith in the usual course of business, the holder for a valuable consideration is entitled to recover the full amount, although he had full knowledge that it was accommodation paper.^*^ And in another case in that state it is decided that one who takes negotiable paper before maturity and for value is not affected by the fact that it is accommodation paper, even if he knew such fact, unless notice is brought to him of restrictions placed upon its use by the maker."^ So in a Missouri case it is held that negotiable notes or indorsements in the hands of indorsees, though made simply for the accommodation of original debtors, may be enforced against such makers or indorsers, although procured by misrepresentations made by the debtor to such makers or indorsers, if the indorsees or holders were not privy to the misrepresentation or fraud or unfulfilled promise of the debtor.^^^ And under a Georgia decision it is determined that a note payable to a named person or order and indorsed by a payee, though under seal, and therefore not negotiable according to the strict commercial law prevailing in Alabama, if made and indorsed for the accommodation of a person not a party thereto and by him put in cir- posit Co. v. Kennedy, 175 Pa. 164, 34 Atl. 660, per the court. '"Macy V. Kendall, 33 Mo. 164. Examine Munson v. Cheesborough, 6 Blackf. (Ind.) 17. (Plea of notice held good.) 1'° Metropolitan Printing Co. v. Springer, 90 N. Y. Supp. 376; Neg. Inst. Law 1897, p. 728, c. 612, § 55. ''"Williapis V. Smith, 2 Hill (N. Y.) 301. See Weill v. Trosclari, 42 La. Ann. 171, 7 So. 232. A bona fide holder of accommodation paper without notice or knowledge of de- fenses or equities is entitled to pro- tection. Held, however, that the de- fense that the note was executed as accommodation for the payee and suing holder must be clearly proved. Examine Bank v. Rider, 58 N. H. 512. Holding that an indorsee is bound by knowledge of such facts as should put him on inquiry. ^'1 Waite V. Kalurisky, 22 111. App. 382, citing Miller v. Larned, 103 111. 562. '«= Holmes v. Bemis, 25 111. App. 232, affd. 124 111. 453, 17 N. E. 42. i**^ Whittemore v. Obear, 58 Mo. 280. 335 BONA-FIDE HOLDERS — ASSIGNEES — NOTICE. [§ 270 dilation for value, is not without consideration between the holder, who paid value, and the accommodation maker or indorser. The con- sideration which the parties contemplated when the note was executed and indorsed was realized and the plea of want of consideration will not prevail in such case.^®"* It is also decided in Massachusetts that the cases which hold that knowledge of a consideration by one putting his name on a note for the accommodation of another is necessary to bind him, are where a note had previously taken effect as a contract, and a new and independent consideration is required for the new con- tract.^^^ Where a note indorsed by the cashier of defendant corpora- tion was discounted by plaintiff, who was informed at the time by the cashier that the money was not for the defendant, but for another corporation, it was held that as there was no evidence that the cashier had anything to indorse for accommodation, and the defendant was, therefore, not liable, in the absence of proof of authority or of proof that defendant could bind itself by such an indorsement.^^** A note of a private corporation in the hands of a bona fide holder who took the same before maturity without knowledge that the maker did not receive full consideration, can be enforced provided the corporation had power to make notes.^®^ Again, if two parties exchange accommo- dation notes with the understanding that each shall take care of the notes received and hold the other harmless for notes discounted by him, one of them who has taken up the notes received is not a bona fide creditor of the other.^** If a firm note is given generally for accom- modation of another a partner who did not assent to the loan is not liable unless the holder shows that he paid value. ^**'' In case the holder of a note had notice at the time of its transfer to him that it was an accommodation note subscribed by the maker for the exclusive benefit of the payee, the maker must be regarded as a surety of the latter.^'"' If an action is brought upon a note executed by two persons as makers it cannot be set up in defense by one of them that the payee knew him to be an accommodation maker, and that such payee obligated himself '^ Farrar v. New York Bank, 90 "^ Monument Nat. Bank v. Globe Ga. 331, 17 S. E. 87; Jones v. New Works, 101 Mass. 57, 3 Am. Rep. 332. York Bank, 90 Ga. 334, 17 S. E. 87, ^^ Wolverton v.- George H. Taylor 88. & Co., 157 111. 485, 42 N. E. 49. '"^ Robertson v. Rowell, 158 Mass. ^'^ Tobias v. Sadler, 5 N. Y. Leg. 94, 32 N. E. 898, 35 Am. St. Rep. 466. Obs. 100. ""Fox v. Rural Home Co., 90 Hun ""Adle v. Metoyer, 1 La. Ann. 254. 365, 35 N. Y. Supp. 896, aff'd 157 N. Y. 684. § 272] WANT OR FAILURE OF CONSIDERATION. 336 with the other maker to give him time.^'*^ An accommodation maker of non-negotiable paper may set up want of consideration as a defense against a bona fde holder who purchased it for value before maturity, even though the note was given to the payee to obtain money thereon. ^^^ In Pennsylvania it is held that such maker can defend only on ground of actual pa3'ment.^''^ Where a note made by one who was an infant at the time of its execution is indorsed to a third party for the accommodation of the maker to enable him to purchase a busi- ness, formerly conducted by him and his mother as co-partners, which she, without his consent, had sold to the payee of the note, the transfer thus acquired from the mother of her interest in such business (as it might ultimately be determined on an accounting between the part- ners) is a sufficient consideration to sustain the obligation of the ac- commodation indorser of the note.^^* Again, a defense of failure of consideration personal to the maker of a note cannot be availed of by an accommodation indorser.^ ^^ If an indorser signs, for the accommo- dation of the maker, before the payee indorses the note, such indorser is liable to the first holder of the note aiter it takes effect and to all subsequent parties, and in such case defenses as to the legality or con- sideration are as open as they would be in a suit against the maker.^**" § 272. Accommodation acceptor — General rules and illustrations. If the drawee of a bill of exchange pays a consideration to the drawer its acceptance by another for the drawer's accommodation is supported thereby.^^^ While the drawer and acceptor are immediate parties to the consideration, yet the payee holds a different relation ; he is a stranger to the transaction between the drawer and acceptor, and is therefore in a legal sense a remote party. The payee or holder gives value to the drawer, and if he is ignorant of the equities between the drawer and acceptor, he is in the position of a bona fide indorsee.^"^ An accommodation acceptor occupies precisely the same position as one who accepts with funds, as to all persons who receive the bill for "1 Anthony v. Fritts, 45 N. J. L. 1. 628, 65 N. E. 1116, aff'g 60 N. Y. App. "= Wetter v. Kiley, 95 Pa. St. 461. Div. 201, 69 N. Y. Supp. 1099. "^ Philler v. Patterson, 168 Pa. St. ^^ Leonard v. Draper, 187 Mass. 468, 32 Atl. 26, 36 Wkly. Notes Cas. 536, 73 N. E. 644; Rev. Laws, c. 73, 416, 47 Am. St. Rep. 896. § 8L 1"^ Waterman v. Waterman, 42 "^ Meggett v. Baum, 57 Miss. 22. Misc. 195, 85 N. Y. Supp. 377. '^^ Laflin & Rand Powder Co. v. "= Fleitman v. Ashley, 172 N. Y. Simsheimer, 48 Md. 411, 30 Am. Rep. 472. 337 ACCOMMODATION ACCEPTOR. [§ 2' value, whether they knew that it was an accommodation acceptance or not."® If the action is against the acceptor, he cannot defend against the payee on the ground that the acceptance was for accommodation merely, without consideration, and that the payee had knowledge thereof, and this rule also applies to an indorsee,-*^" for the acceptance of a drawee of a bill binds him, though the payee knew the acceptor had no funds of the drawer.^'^i Knowledge at the time of indorsement that the acceptance was for accommodation will not preclude a re- covery against an accommodation acceptor by an accommodation in- dorser of a bill who becomes a holder for value by meeting the obliga- tion of the debt when legally charged therewith.- °- Thus, in an action "»Cronise v. Kellogg, 20 111. 11, 14. per Caton, C. J. '"^Illinois. — Diversy v. Moore, 22 111. 331, 74 Am. Dec. 157. (Holding also tbat acceptor for accommoda- tion of drawer is principal debtor and the drawer a surety merely) ; Diversy v. Loeb, 22 111. 393. (Holds that accommodation acceptor cannot set up fact that he never received any consideration, even though the person receiving the instrument knew that he was accommodation ac- ceptor, provided such holder gave a bona fide consideration for the paper) ; Cronise v. Kellogg, 20 111. 11. Indiana. — Spurgin v. Pheeters, 42 Ind. 527. , Kentucky. — Anderson v. Ander- son, 4 Dana (Ky.) 352. (No de- fense that acceptance was for ac- commodation since written accept- ance implies a consideration.) Massachusetts. — Arpin v. Owens, 140 Mass. 144, 3 N. E. 25. Minnesota. — Vanstrum v. Liljen- gren, 37 Minn. 191, 33 N. W. 555. Mississippi-— Meggett v. Baum, 57 Miss. 22; Hamilton v. Catchings, 58 Miss. 92. New Jersey. — Meyer v. Beardsley, 30 N. J. Law (1 Vroom.) 236. New York. — First Nat. Bank v. Joyce Defenses — 22. Schuyler, 39 N. Y. Super. Ct. (7 Jones & S.) 440; Iselin v. Chemical Nat. Bank, 16 Misc. Rep. 437, 40 N. Y. Supp. 388; Boiler Co. v. Foutham (Sup.), 50 N. Y. Supp. 351; Grant V. Ellicot, 7 Wend. (N. Y.) 227. Pennsylvania. — Stewart v. Moore, 12 Phil. (Pa.) 225. South Carolina. — Israel v. Ayer, 2 Rich. (S. C.) 344. Vermont. — Arbold v. Sprague, 34 Vt. 402. Federal. — Townsley v. Sumrall, 2 Pet. (U. S.) 170; Levy & Co. v. Kauffman, 114 Fed. 170; Jewett v. Hone, 1 "Woods (U. S.) 530, Fed. Cas. No. 7311. See Illinois. — Wineman v. Oberne, 40 111. App. 269. Colorado. — Law v. Brinker, 6 Colo. 555. Georgia. — Flournoy v. Bank, 79 Ga. 810, 2 S. E. 547. Illinois. — Nowak v. Excelsior Stone Co., 78 111. 307. =01 Townsley v. Sumrall, 2 Pet. (U. S.) 170, 183. Defendants become simply sure- ties for payment of draft accepted for the accommodation of the drawer. First National Bank of N. Y. V. Morris, 1 Hun (N. Y.) 680. =»^ Gillespie v. Campbell, 39 Fed. 724, 5 L. R. A. 698; Smith v. Knox, § 273] -R-AXT OR FAILURE OF COXSIDEEATIOX. 338 by two accommodation indorsers against an acceptor it is no defense, even though the plaintiffs were notified that the acceptance was an accommodation acceptance, to the claim of plaintiffs for pa^Tnent of the bill that the proceeds of the original draft when discounted were applied in whole or in part by the drawer to the payment of paper on which the plaintiffs, or one of them, was an indorser.^o^ So an accommodation acceptor who pays or retires the bill may look for re- imbursement or indemnity- to the drawer accommodated.^"* Again, if several drawees of a bill accept it jointly, they are jointly bound as between liiemselves and each is bound to the holder for the full amount, and one cannot defeat recovery on the ground that he accepted it for the accommodation of the drawer and tliat such fact was well kno\sni to him, and subsequent to the acc-eptance by the others. ^^"^ So a co- partner, even if his consent cannot be shown, will be obligated to a bona fide indorsee for value upon an accommodation acceptance made by another partner.-"® And it is no defense to an action by a holder for value as against an acceptor or other person who received no con- sideration that at the time the plaintiff took the bill he knew that no value had been received; but an exception exists in a case where the paper was taken from a person who held it for a particular purpose and was therefore gtiilty of a breach of duty in transferring it to the plaintiff and the latter, at the time of taking it, was cognizant of the facts.-" § 273. Same subject — Continued. — Although where a bill has been delivered to a lona fide holder for a valuable consideration and in ignorance of the circumstances he may sue the acceptor, notwithstand- ing any want of consideration received by him, yet where the acceptor of such accommodation bill delivers it to another for a special purpose and the latter, without performing his trust, commits an act of bankruptcv and is pursued by a creditor who obtains the bill from him in ignorance of the bankruptcy and of the circumstances of ac- ceptance, such acceptor is not liable upon the bill at the suit of such 3 Esp. 46 (it is no defense to an =« Martin v. Muncy, 40 La, Ann. action by a iona fide holder of a 190. 3 So. 640. bill that the bill was an accommo- ''* McXabb v. Tally, 27 La. Ann. dation one, and that known to the 640. holder). -" Beach v. State Bank, 2 Ind. 48S. '^'^ Gillespie v. Cambpell, 39 Fed. -'Stewart v. Moore, 12 Phila. 724, 5 L. R. A. 698. (Pa.) 225. 1 ;;39 accommodation acceptou. [§ 273 creditor.^"^ But wlicre a bill of exchange is drawn and indorsed for the accommodation of the acceptors, upon the condition that it shall be discounted at a particular bank, a purchaser of the bill before maturity, without notice of the secret agreement, is not affected by it, and he may recover upon the bill in an action against the drawersj^^*^ nor is the drawer of a bill entitled to the aid of equity to restrain a bona fide holder from collecting the bill of an accommodation acceptor on the ground of fraud in the payce.^^" The acceptor of a bill is the principal debtor and the drawer the surety and nothing will discharge the acceptor but payment or release, he is bound, though he accept without consideration and for the sole accommodation of the drawer ;-^^ that is, the parties of a bill or note are bound by the character which they assume upon the face of the bill, if by that they are liable as primary debtors, or as principal, then, as to the holder, they are bound as such and his knowledge at the time when he takes the bill, that they or either of them are accommodation parties, will not vary the case.^^2 And if bills are received and discounted by holders before their maturity, without notice that they were for accommodation, such holders have a right to treat the acceptor as the principal debtor, and the drawer is liable only on his default. In such cases there is no difference between accommodation bills, and bills for value; in either case, a release of the drawer from any farther liability to the holder will have no effect, as a discharge of the acceptor from his primary liability on the bill ; and this right, so to treat the parties on the bill, remains unaffected by any notice subsequently given, that the bill was for accommodation.-^^ Where the payee is obligated to take up a bill and accept a renewal tliereof, such payment by him constitutes a valu- '"' Smith V. De Witts, 6 Dowl. & ^= Citing Montgomery Bank v. Ry. 120, 16 Eng. Com. Law 256. As Walker, 9 Serg. & R. (Pa.) 229, 12 to misapplication or diversion of pa- Serg. & R. (Pa.) 382; Farmers' and per accepted for accommodation as Mechanics' Bank v. Rathbone, 26 defense and liability of acceptor, see Vt. 33, 58 Am. Dec. 200. Gray v. Bank of Kentucky, 29 Pa. =" Farmers' and Mechancs' Bank St. (insufficient defense); Gillespie v. Rathbone, 26 Vt. 19, 33, 35, 36, 58 V. Campbell, 39 Fed. 724, 5 L. R. A. Am. Dec. 200, per Isham, J. As to 698. (When no defense.) liability of acceptor as principal ="» Frank v. Quast, 86 Ky. 649, 6 S. debtor, see further, Bradford v. W. 909. See § 199 herein. Hubbard, 8 Pick. (Mass.) 155; ='"Winn V. Wilkins, 35 Miss. 186. Childs v. Eureka Powder Works, 44 "> Wilson v. labell, 45 Ala. 142, N. H. 354; McKirdy v. Hare (Pa.), 147, citing 3 Kent's Comm. 86 7 Atl. 172; In re Babcock, 3 Story (Marg). (U. S.) 393, Fed. Cas. No. 696. § 274] WANT OR FAILURE OF COXSIDERATION. 340 able consideration as between himself and the acceptor so as to con- stitute the latter who had accepted the first bill for the accommodation of the drawer the principal debtor and not a mere surety on the new bill'" § 274. Same subject continued — Exceptions and qualifications.— Altliough there is no doubt but that the acceptor of a draft is liable to an innocent bona fide holder, even though he made the note or accepted the draft for the accommodation of the payee or drawer, nevertheless the general rule has been qualified to the extent that it may be otherwise where the holder did not receive it in the ordinary- course of business, and for a valuable consideration, or after notice of facts available as a defense as between the drawer and ac- ceptor.-^^ And notice to a bank which had discounted paper before acceptance that it is accepted only for accommodation affects the bank only in case it makes arrangements with some of the parties without consulting others, which will affect the acceptor's liability .^^® If the liability of an accommodation acceptor has not been changed by subsequent dealings to his prejudice or against his rights he may be sued. An accommodation acceptance stands upon its legal form if the drawee has not had notice that it is only for accommodation, but if he has had notice he cannot treat the maker as surety and the acceptor as principal for the purpose of choosing his form of action on the acceptance. So where paper drawn upon a bank, and accepted for accommodation and discounted by it has been taken up by the drawer, or some one for him, it cannot be sued as belonging to the bank, or sued on at all if known to be accepted for accommodation. ^^^ Again, if a bill is an accommodation bill or in the nature thereof, and is in- dorsed to the holder, and he has notice of the relations of the parties when he receives the bill and also of the fact of payment by the drawer, he cannot recover.^^^ So, where the original consideration for the acceptance has failed, and the indorsee, having taken the draft before maturity, in due course and having notice, has funds of the =" Israel v. Ayer, 2 Rich. (S. C.) ^^^ Canadian Bank v. Coumbe, 47 344. Mich. 358, 11 N. W. 196. ='=Boggs V. Lancaster Bank, 7 ='' Canadian Bank v. Coumbe, 47 Watts & S. (Pa.) 331, 332, per Hus- Mich. 358, 11 N. W. 196. See Pease ton, J. (notice to cashier of bank v. Horst, 10 Barn. & Cr. 122, 21 that draft would not be paid). Eng. Com. Law 61; Field v. Carr, 5 Bing. 13, 15 Eng. Com. Law 447. 1 341 ACCOMMODATION ACCEPTOR EXCEPTIONS. [§ 274 drawer sufficient for payment of the bill, cannot recover.-^^ And no- tice is held to be a good defense, upon the ground that if an indorsee takes a bill with notice of the failure, or partial failure of consider- ation, his right to recover cannot be superior to that of his indorser."'' So in a Kentucky case it is held that a bill drawn for the accommoda- tion of the drawee and for the purpose of enabling him to sustain his credit and to aid him in his banking operations cannot be enforced against the drawer except at the suit of a holder who purchased it bona fide for a valuable consideration, and without notice of the purpose for which it was drawn.-^i -q^^^^ jf the acceptor of a non-negotiated bill is not liable to the payee, because the latter knows that he was only an accommodation acceptor, then it follows that the drawer is liable.^" And where the drawer of a bill accepted for his accommoda- tion indorses for value to his bankers, and the latter have knowledge of its character, they cannot, to prevent circuity of action, recover from the acceptor more than the amount of their balance as between them and the drawer at the time the drawer becomes bankrupt.--^^ It is also declared that the exceptions to the general rule that an acceptor of a bill can never be discharged except by payment or re- lease, are rare, and only when to enforce the payment by the ac- ceptor, would be in violation of the agreement of the parties at the time of the acceptance, as where a bill is accepted for the accommoda- tion of the indorser, who., after putting it in circulation, afterwards receives it in the course of business. There, as between the original parties to the bill, it was his primary duty to pay it, and he cannot collect it of the acceptor, and should he again put it in circulation it is probable that the acceptor would not be liable to any one who should receive it with notice.^-* There are, also, other qualifications and ex- ceptions existing by reason of circumstances, or the intervention of other legal or equitable rules generally or peculiarly applicable. Thus where a bill is accepted and indorsed for the accommodation of the drawer, with a knowledge of all the circumstances, and the indorser is fully indemnified by an assignment, and the assignee has sufficient funds, and the indorser pays the bill, he cannot resort to the ^'Cook v. Lister, 13 C. B. N. S. "^ Thompson v. Poston, 62 Ky. 389. 543, 106 Eng. Com. Law 543. =« Lewis v. Parker, 33 Tex. 121. ''" Van Winkle Gin & Mach. Co. v. "' Jones v. Hibbert, 2 Starkie 304. Citizens' Bank of Buffalo, 89 Tex. "' Cronise v. Kellogg, 20 111. 11, 14, 147, 33 S. W. 862. per Caton, C. J. ^^^ Davis V. Wait, 12 Or. 425, 8 Pac. 356. SS 275-277] avaxt or failure of consideratiox. 342 acceptor, but must resort to the funds in the assignee's hands, al- though the acceptor has protected himself by attaching other funds of the drawer.--^ And if drafts are drawn and accepted for the payee's accommodation, under an express agreement between the payee and acceptors that the acceptors shall look to the payee for indemnity, the presumption that the drawee has funds will be rebutted.^^^ And where a partner, the maker of a note, procures the discount thereof by his own firm, after the maker's death, a recovery can only be had by the sur\dving partner, who had indorsed the note as accommoda- tion payee by proving the insufficiency of such maker's interest in the firm's assets, after payment of debts of the firm, to satisfy the note.^^^ § 275. Bill payable to order, — A purchaser for value, without in- dorsement, of a bill of exchange payable to order, can sue thereon in the name of the payee, and the acceptor in such case is liable al- though he accepted for the drawer's accommodation. But he can prove that being a surety he is released by the purchaser's contract of forbearance to the drawer, made by the purchaser with knowledge of the fact.==2« § 276. Taking 'before acceptance. — Where accommodation paper is drawn upon a manufacturing corporation not authorized to accept a bill for the accommodation of the drawer a holder who discounts it for the drawer before acceptance, notwithstanding he receives the bill and for value, expecting in good faith that it will be accepted, but in ignorance of its accommodation character cannot recover against the company thereon, even though it be afterwards accepted, as he is presumed to have discounted on the credit of .the drawer and not of that of the acceptor.^^^ § 277. Accommodation paper — Conflict of laws — ^Accptance. Wliere a note was written and signed in Illinois by the makers and sent to the payee in Louisiana, and he indorsed and returned it to the makers for their accommodation, and they negotiated and delivered it in Illinois, before due, to the appellee, and he had no knowledge that the note had ever been elsewhere than in the hands of the appellant =^ Bradford v. Hubbard, 25 Mass. "-^ Meggett v. Baum, 57 Mjss. 22. (8 Pick.) 155. =^^ Farmers' and Mechanics' Bank ^ Thurman v. Van Brunt, 19 v. Empire Stone-Dressing Co., 18 N. Barb. (N. Y.) 409. Y. Super. Ct. (5 Bosw.) 275, 10 Abb. -' Patten V. Carr, 117 N. C. 176, 23 Prac. 47. See Webster v. Howe S. E. 182. Mach. Co., 54 Conn. 394, 8 Atl. 482. 343 ACCOMMODATION PAPER — CONFLICT OF LAWS. [§ 277 and makers, it was held to be an Illinois contract ; that the note being made there and indorsed in Louisiana for the accommodation of the makers, and delivered to them so indorsed in Illinois, the indorse- ment was governed by the laws of the state where delivered and negotiated.-^'' In another case a party was indebted to a person in Georgia who agreed to take the former's note with another, who re- sided in Alabama, as security ; said note was drawn, dated at a place in Georgia, carried by the makers to the party intended to secure the same, who indorsed the note for accommodation and returned it to tlie maker, who delivered it to the creditor, and the indorsement was held a Georgia and not an Alabama contract, although the maker and indorser resided in Alabama when the suit on the note was brought.^^^ But where a firm residing in New York accepted for the accommoda- tion of the drawer a draft, drawn upon them by a corporation in j\Iassachusetts, and said draft was subsequently discounted by a bank- ing institution in the latter state, and it was thereafter transferred to the plaintiff, it was held that such plaintiff was entitled to re- cover, notwithstanding that, under the laws of the state where it was accepted and where by its terms the bill was payable, it would have been subject to disability. Daniels, J., said in this case: "By the acceptance of the draft for the accommodation of the drawer, the inference would seem to be natural and proper that it must have l:)een intended that the drawer could use it in any manner which might l)e lawful at the place of its residence, for without that privilege it is obvious that the drawer could not be secured the full benefit of the paper accepted. Its business was in another state, and the presump- tion would be that the acceptance was procured to be used where it was transacted, and its ordinary corporate functions were exercised; and from such a design, a valid use of the paper there ought to be maintained by the courts of tbis state. * * * j^ ^r^g accepted to be used by the drawer, carrying on its operations there, and no restric- tion imposed as to what should be done with it. The drawer was entitled to make any lawful use which it could of the acceptance, and one mode of making such use of it was to render it available for the drawer's benefit, in any way in which that could be done consistent with the laws of the place under which, as a corporation, it ex- isted."^^^ And where a bill of exchange was drawn in another state, -"Gay V. Rainey, 86 111. 221, 31 =-= First National Bank of N. Y. v. Am. Rep. 76. Morris, 1 Hun (N. Y.) 680, criticiz- -'' Stanford v. Pruet, 27 Ga. 243, ing and doubting Jewell v. Wright, 73 Am. Dec. 734. 30 N. Y. 259, and approving Bank of il § 277] W4.NT OR FAILURE OF CONSIDERATION. 344 upon a person residing in New York, and the contract was between parties subject to the laws of the former state, and the whole transac- tion took place there and was performed there, so far as the drawer had anything to do with it, and the money was paid there under an agreement to transfer to the plaintiff funds which the drawer had in New York, the plaintiff's remedy would be according to the law of the place where the contract was made, and the acceptor in New York, having funds of the drawer, cannot refuse payment on the ground of the invalidity of the contract under the law of New York.-" There last two cases-^* are, however, distinguished in the case of Dickinson v. EdwardSj^^s where the defense by the maker was that the note in suit was made for the accommodation of the payee named in it, that it was by him loaned to them, without any consideration re- ceived by him from them, and that they transferred it to the as- signor of the plaintiff at a greater rate of discount than was lawful in New York. The note was signed in New York, was dated and made payable there and was put in the hands of the payees there, nor was there anything to show that the maker knew or intended that it was to be taken out of the state for its first use. But the facts were also set up that the note first passed into the holder's hands for a consideration and had its inception in Massachusetts, in which state the discount taken was lawful. The court, however, affirmed a judgment in favor of defendant and asserted the rule that a purely personal contract is to be governed by the law of the place where by its terms it is to be performed.-^*^ In connection with the foregoing de- cisions it may be stated that the general rule as to acceptors generally Georgia v. Lewin, 45 Barb. (N. Y.) governed by the law of the place of 340; Bowen v. Bradley, 9 Abb. N. performance as to validity, nature S. (N. Y.) 395. and effect; cited also in discussion, ^'' Bank of the State of Georgia v. in opinion of Haight, J., in Wilson Lewin, 45 Barb. (N. Y.) 340. v. Lewiston Mills Co., 150 N. Y. 314, -* First National Bank v. Morris, 323, 44 N. E. 959, 55 Am. St. Rep. 1 Hun (N. Y.) 680; Bank of the 680, as to the difficulty if not im- State of Georgia v. Lewin, 45 Barb, possibility of formulating a general (N. Y.) 340. rule upon the question of what law -^= Dickinson v. Edwards, 77 N. Y. controls generally. 573, cited in dissenting opinion of =^° The court considered the case Vann, J., in Bath Gas Light Co. v. of Jewell v. Wright, 30 N. Y. 259, Claffy, 151 N. Y. 24, 48, 82 N. Y. and said: "We are satisfied that the Supp. 843, 84 N. Y. App. Div. 565, ground is stable on which the ad- 45 N. E. 390, 36 L. R. A. 664, to the judication in that case rests. We general principle that the presump- follow it as an authoritative prece- tion is that a contract should be dent and well decided." Id. 587. 345 ACCOMMODATION PAPER — CONFLICT OF LAWS. [§ 277 is, that the liability of acceptors of a bill of exchange is regulated by the law of the place where the contract of acceptance is to be per- formed.^^'^ So where a bill of exchange for the price of personal prop- erty was drawn and delivered in Louisiana, payable in Kentucky, and it was addressed to a party in the latter state, it must be presumed to have been accepted there in the absence of proof to the contrary, and the defenses to which it is liable in the hands of an innocent holder are to be controlled by the laws of the place of acceptance and performance.-^** And where the drawer of a bill who indorsed it was a citizen of Ohio, and it was drawn for the accommodation of a New York firm, who accepted it upon its being transmitted to them, and they negotiated it with the plaintiffs, who were citizens of New York, it was decided that the laws of that state controlled the contract.-^^ Again, if a bill of exchange is drawn in one state upon a person in an- other state, and accepted by the latter for the drawer's accommodation and returned to the drawer in his state, where he negotiates the same, the validity of the contract is governed by the law of the latter state, as it had its origin there, was consummated there, the money loaned and the security delivered in that place, where it was also dated, and no other place of performance was designated. And an accommodation acceptor is not liable until the paper is transferred to a holder for value before it becomes due. It then becomes an enforceable con- tract.^*° So bills of exchange drawn in New York upon a London house, and there accepted and paid, if, in connection with other cir- cumstances, they create a claim by the acceptor against the drawer, are to be considered as creating one in London, which is the place of contract.-*^ And the law of the state where a bill is verbally accepted and where it is drawn governs, although drawn upon a firm in another state.-^^ So in an action in Illinois, upon the breach of a verbal -'Frazier v. Warfield, 17 Miss. (9 ==' Kelly & Co. v. Smith & Shot- S. & M.) 220. In this case the bill well, 1 Mete. (Ky.) 313, citing was placed in the payee's hands by Chitty on Bills, §§ 131-158; Story the drawers as collateral security on Conflict of Laws, § 286. for the liabilities incurred by them. =3" Davis v. Clemson, 6 McLean (U. The payee indorsed the bill before S.) 622, Fed. Cas. No. 3630. maturity to a bank as security for =*" Gallaudet v. Sykes, 1 McArthur a note discounted; the bill was (D. C.) 489. drawn at New Orleans and directed =" Lizardi v. Cohen, 3 Gill (Md.) to the acceptors at Lexington, Ken- 430. tucky, and by them accepted gener- ''- Scudder v. Union National ally. The firm of drawers was estab- Bank, 91 U. S. 106, 23 L. Ed. 245. lished at New Orleans, but one of the partners resided in Mississippi. § 278] WANT OR FAILURE OF CONSIDERATION". 346 agreement made in Missouri, to accept and pay, in Illinois, drafts drawn upon the promisor by the promisee, the contract being one upon which no action by a Missouri statute could be maintained in that state, but which was valid in Illinois, it was held that nothing in the case showed that the parties had in view, in respect to the execution of the contract, any other law than that of the place of performance, and therefore that law must determine the parties' rights.^*^ But it is also asserted as a rule that contracts are to be governed, as to their nature, their validity and their interpretation, by the law of the place where they were made, unless the contracting parties had some other law in view ; and that a contract to accept drafts is governed by the law of the state where made where it is clearly apparent that the par- ties did not have in view, in respect to the execution of the contract, the law of another state.-** And it is held that a bill of exchange, payable in New York City and accepted in Indiana, is a contract to be performed in New York, and is governed by the laws of that state,^*^ Again, where a draft was made by a London company upon a manufacturing corporation of Connecticut, and it was accepted for the corporation, payable at its principal office in New York, the contract was held governed by the law of New York.^*^ It has also generally been held that the law of the state where a note is payable governs as to the maker's liability.^*^ In a recent decision it is de- clared that while the common law is presumed to be of force in most of the American states, if either party claims that the statute or com- mon-law rule obtaining in such state is different from the law laid down in the code, he must, by pleading, evidence or a request to charge, call the attention of the court to such difference. As to this presumption, while there is a conflict in the authorities, according to many cases the "legal presumption is that the lex loci is the same as our own" ; that is, that the law of another state as to warranty is sub- stantially the same as that of the state where the case is tried.^*^ § 278. Accommodation check — Bank check. — As against a bona fide holder for value, without notice, of an accommodation check, a "-"^ Hall v. Cordell, 142 U. S. 116, ^*^ Webster & Co. v. Howe Machine 35 L. Ed. 956, 12 Sup. Ct. 154. Co., 54 Conn. 394, 8 Atl. 482. -"Hubbard v. Exchange Bank, 72 ='' Midland Steel Co. v. Citizens' Fed. 234, 18 C. C. A. 525. Nat. Bank of Kokomo, 34 Ind. App. ='= Bright v. Judson, 47 Barb. (N. 107, 72 N. E. 290. Y.) 29. -^'^ Wells V. Gress, 118 Ga..566, 45 S E. 418; Civ. Code, § 3555. 347 ACCOMMODATION INDORSEES. [§ 279 defense that .would not be available had the drawer received value for the check when he delivered it cannot be set up by the drawer against such holder,24o jj. ijeinor declared that the drawer of such a check stands upon the same basis as the drawer of regular commercial paper.^^'' Again the defense of failure of consideration cannot be successfully availed of to preclude recovery by an indorser of a bank check for the payee's accommodation where he was ignorant of the drawer's equitable defenses, and payment had been enforced against him.-^^ Nor is it any defense that the holder had delayed presentment for a month of a check, payable to bearer, which was drawn for the accommodation of the originat payee, and the latter had failed before presentment, it appearing also that the holder was ignorant of the relation of the parties.-^^ § 279. Accommodation indorsers — Availability of defenses — Gen- eral rule. — A party who makes or indorses a note without considera- tion, and for the purpose of thereby lending his credit to another, is an accommodation maker or indorser, and after the note has passed into circulation, and the indorser's liability has become fixed, he can- not make the defense of a want of consideration against any one ex- cept the accommodated party. The note is supposed to be taken by third persons upon the credit given to him, and he is expected to pay it, and this rule seems to be applicable to other defenses.^^^ So under a Pennsylvania decision it is held that in that state, as well as in all other commercial countries, an indorser who gives credit to a note or bill by his indorsement, whether with or without consideration, is bound to make the paper good in the hands of any subsequent in- dorsee, who receives it for value and in the ordinary course of busi- ness. ^^* And in a Missouri case it is decided that it does not avail ='»Harbeck v. Craft, 11 N. Y. Cas. No. 859, 8 Am.-L. Rec. 460, per Super. Ct. 122. See Davis v. Day- Deady, D. J.; Archer v. Shea, 14 ton, 7 Misc. Rep. 488, 27 N. Y. Supp. Hun (N. Y.) 493. (It constitutes no 969. Examine Charuoch v. Ander- defense by an indorser that as be- son, 11 N. Y. Supp. 639. tween maker and payee the pa- -'"Deener v. Brown, 1 MacArthur per was accommodation paper.) See (D. C.) 350. Hamburger v. Miller, 48 Md. 317. ^^ Andrews v. Meadows (Ala.), 31 (It was held that recovery may be So. 971. had against the maker and first in- ^- Stewart v. Smith, 17 Ohio St. dorser.) 83. -■' Struthers v. Kendall, 41 Pa. St. ^' Bank of British North America 214, 80 Am. Dec. 610. V. Ellis, 6 Sawy. (U. S.) 96, Fed. § 280] WANT OR FAILURE OF COXSIDERATION. 348 as a defense except as between the indorser and the person to whom he grants the use of his name, that no consideration is received for lending his credit, nor that such fact is known to liim when the paper is discounted; that it is sufficient to support the contract of indorse- ment that tlie accommodation party has lent his credit and upon the faith of that the money has been loaned or the discount effected.^^^ In the federal court it has also been determined that there can be no objection to the want of consideration in an action by the holder.-^® If a corporation's indorsement of negotiable paper is ultra vires, and it incurs no liability thereby, its effect, nevertheless, is to pass the property therein; for whether or not a preceding indorser has the power to make an accommodation indorsement merely is a question of no importance, so far as the last indorser's liability under a sub- sequent indorsement is concerned, and it constitutes no defense to a subsequent indorser and the subsequent indorsement constitutes a warranty of the genuineness of the paper, of the indorser's title thereto, and of the capacity of all the preceding parties to the con- tract; so that such want of corporate power is no defense to a subse- quent indorser. ^^^ § 280. Same subject — Application of rule. — The above rule has been applied to preclude showing that the indorsement was anything else than an ordinary one.^^^ And in a suit against the accommodation indorser the payee cannot set up a breach of warranty.-^^ Nor is it a good defense where plaintiff obtained title from a subsequent indorser before maturity and w^ithout notice.-'^*' The rule also applies where a party has received and discounted a bill hona fide and there was noth- ing to put him on inquiry.-*^^ And where the proceeds of a note, ^ Miller v. Meller, 59 Mo. 388-. party acting upon the faith of that ^ Bank of Columbia v. French, 1 indorsement had no notice of the Cranch (C. C.)' 221, Fed. Cas. No. fact. This was the situation of Wil- 867, rev'd 4 Cranch (U. S.) 141. lard" (the last indorsee), "as shown ^'Willard v. Crook, 21 App. D. C. by his affidavit, and the same has 237; Code D. C, §§ 1326, 1369, 1370. not been denied," per Shepard, J. The court said g.lso that it was un- ^^Thacher v. Stevens, 46 Conn. necessary to consider whether an 561, 33 Am. Rep. 39. ordinary trading corporation, a -™ Variscope Co. v. Brady, 77 N. Y. prior indorser, had the implied Supp. 159. power under the laws of the district ^^ Meyers v. Kasten, 9 Misc. Rep. to make an indorsement of negotia- (N. Y.) 221, 29 N. Y. Supp. 677. ble paper for accommodation only. =" Bank of Genesee v. Patchin "Assuming the want of power, the Bank, 19 N. Y. 312. defense is unavailable where the 349 ACCOMMODATION INDORSERS. [§ 280 which is afterwards discoimted in bank, are applied to the maker's benefit, the accommodation indorser cannot, on non-payment of the note at maturity, plead a want of consideration for the indorsement.^''^ So in a suit against an accommodation indorser, a payee who is an indorser may recover, even though his indorsement is, in form, sul)- sequent to that of the payee. -''^ And recovery may be had by a subse- quent indorsee from a prior indorsee where the note was in the hands of the maker before due.^*** And even though an indorser purchased a note from the payee at a discount greater than the legal rate of in- terest, the indorsee may recover from the indorser.^^^ The rule has also been applied where a note was indorsed for the maker's accom- modation for a premium, to be paid by the maker.-'"' And a. bank has been held bound as against a purchaser in good faith, for value, be- fore maturity, where the indorsement was made by the bank's cashier.^^^ So a breach of warranty as to chattels sold cannot be availed of by an accommodation indorser of a purchase-price note.^°* Nor is want of consideration for such indorsement any defense, even though the plaintifE knew the purpose of the indorsement, nor does the circumstance that the note was not put in circulation make any difference. ^^^ Nor can an accommodation indorser avail himself of the defense of want of consideration, even though the note was acquired with knowledge that the defendant was such accommodation in- dorser.^^" And where a note was indorsed for the accommodation of a firm, mere notice to the transferee at the time he took such note that the indorser would not be liable therefor, or a notice that the makers had dissolved partnership, constitutes no defense.^^^ So re- covery may be had by a holder, for value, against an indorser for the payee's accommodation, even though he knew that the indorsement was for accommodation only.-''- The fact that an indorsement was =«= Union Bank v. Morgan, 2 La. Prac. 462; Id., 17 N. Y. Super. Ct. Ann. 418. 36; Id., 25 N. Y. 306, Am. Dec. 355. ="' Moore v. Cross, 19 N. Y. 227, 75 =<^'' Niles v. Porter, 6 Blackf. (Ind.) Am. Dec. 326. 44. =" Erwin v. Shaffer, 9 Ohio St. 43, -™ Bankers' Iowa State Bank v. 72 Am. Dec. 613. Mason Hand Lathe Co. (Iowa 1902), ="^ Burpee v. Smoot, 4 Wkly. Notes 90 N. W. 612. Cas. (Pa.) 186. ='i Smith v. Mulock, 24 N. Y. ^''^Kitchel V. Schenck, 29 N. Y, Super. Ct. 569, 1 Abb. Prac. N. S. 515. 374. '" Houghton V. First Nat. Bank, 26 "'- Lincoln Nat. Bank v. Butler, 16 Wis. 663, 7 Am. Rep. 107. Misc. Rep. 566, 38 N. Y. Supp. 776, '''Gillespie v. Torrance, 7 Abb. rev'g 14 Misc. Rep. 464, 36 N. Y. Supp. 1112. § 281] WANT OR FAILURE OF CONSIDERATION. 350 procured by false representations of the maker is no defense by an accommodation indorser where the note in suit was given in lieu and as part renewal of a former note, which was surrendered and on which such maker was liable, and which was presented to plaintiff in the usual course of business, with the name of such indorser written thereon, and plaintiff was without knowledge of any prior invalidating circumstances.^''^ Again, it is held in a New York decision that re- covery may be had by an indorsee without knowledge or notice of defenses, notwithstanding an accommodation indorsement for the plaintiff. It was said in this case that if there had been any fraud or the plaintiff had not made any advances upon the note, the taking of it by him with knowledge of defenses would preclude a recovery.^'* The general rule has always been applied, although the note was void for fraud and want of consideration in the hands of the maker. ^'^^ And knowledge of circumstances does not amount to a fraud.^^^ Nor is it any defense, in a suit brought against the maker by an ac- commodation indorser, who has been compelled to take up the note when due, that as between the maker and payee the paper is an ac- commodation one.^^^ § 281. Same subject — Qualifications of and exceptions to rule. — It is decided that the position of an accommodation indorser is that of surety and that he is entitled to all defenses available to the princi- pal,^'^ including subrogation to rights which the maker would have.^'" An accommodation indorser may, by agreement, however, render him- self liable to a subsequent holder, with knowledge, as an actual in- dorser,^^" There are also other decisions which are contrary to, or at least not in harmony with the principal rule, or which are exceptions to or qualifications thereof. Thus it is held that in a suit between in- dorsers and their indorsee with notice, the consideration may be in- "^Cristy v. Campau, 107 Mich, ley, 114 Pa. St. 191, 6 Atl. 465. (The 172, 65 N. W. 12. decision, however, rested . largely ="* Brown v. Mott, 7 Johns. (N. Y.) upon the fact of the plaintiff below 361. not being a tona fide holder and his ^° Codwise v. Gleason, Fed. Cas. failure to comply with the contract No. 2939 (Brunner, Col. Cas. 40). on which he received the note.) ='' Powell v. Waters, 17 John. (N. ="'• McDonald Mfg. Co. v. Moran, 52 Y.) 176. Wis. 203, 8 N. W. 864. "^Post V. Tradesman's Bank, 28 =*» Leeke v. Hancock, 76 Cal. 127, Conn. 420. ' 17 Pac. 937. *'*Gunnis Barrett & Co. v. Weig- \ I 351 ACCOMMODATION INDOESERS. [§ 281 quired into.-^^ And want of consideration may be shown in a case where the debtor's wife indorsed a note for the debtor's accommoda- tion and without consideration, that the note might appear as regular business paper.^^- Again, in an action against the maker and in- (lorser, it is held to be a good defense as against a demurrer that the defendant indorsed the note for the accommodation of the plaintiff.-^^ And it is decided that an accommodation indorser of a renewal note may defend on the ground that the note was without consideration, where such indorser was in ignorance of the fact that the debt had been discharged.^** So in an action by a receiver of a national bank, it is a valid defense that the note in suit, and former notes which were renewed by it, were given for the use of the bank, to be paid at ma- turity, and that the bank would retain and protect the note.^*^ And failure of consideration is available as a defense where the nominal plaintifE stood upon the rights of the payee. ^^'^ Want of consideration, and that the paper was indorsed to enable the plaintiff to carry out an agreement, may also be shown in an action by the indorsee against the indorser where the suit is not between an innocent holder and an indorser, but as between the parties, however, and others having no- tice, want of consideration may be shown.^*^ If a note is given in the name of a firm by one of its partners for the private debt of such partner, and it is known to be so by the partner taking the note, the other partners are not bound by such notes unless they have been previously consulted and consent to the transaction, and a person tak- ing such note cannot recover on it against one who indorsed it without consideration, believing it to be the firm note.^^* Again, where the maker upon an accommodation note becoming due, procures, with the knowledge of the accommodation indorser, from a stranger, without consideration, a note to the firm of which both the original maker and indorser are members, and the new note is indorsed by the firm and again by the original indorser, and is discounted and the proceeds ap- ^* Brown v. Fort, 1 Mart. O. S. action was against the indorser as (La.) 34. maker. '^ Produce Bank v. Bache, 30 Hun ^^"^ Hoopes v. Northern Nat. Bank, (N. Y.) 351. 102 Fed. 448. '^ Simms v. Field, 1 Cleve. Law =«' National Bank of Rising Sun v. Rep. (Ohio) 337. Brush, 10 Biss.(U. S.) 188, 6 Fed. ^ Price County Bank v. McKenzie, 132. 91 Wis. 658, 65 N. W. 507. '^ Chaxournes v. Edwards, 20 =*= Simons v. Fisher, 17 U. S. App. Mass. (3 Pick.) 5. 1, 5 C. C. A. 311, 55 Fed. 905. The § 282] WANT OR FAILURE OF CONSIDERATION. 352 plied to the payment of the original note, such new note is not prima facie accommodation paper between the maker and indorser, although it is as to the maker of the old note. The new note being an indepen- dent security for the original accommodation note, no dealings short of payment and release would affect a claim against the maker of the new note, and a mortgage given to the indorser as security for the new note would be inadmissible as a defense to the note; and an agreement of two remaining partners to pay firm debts is not an assumption by one of the remaining partners of a note on which he became indorser for the accommodation of the retiring partner.-^^ § 282. Bona fide holder — Accommodation paper taken after matur- ity — ^Want of consideration. — It seems by the evident weight of au- thority to be the rule that where there are no limitations or restric- tions as to time, use or purpose, qualifying accommodation paper, and there is no fraud, the fact that defendant is an accommodation party, without consideration, is not of itself a defense as against a pur- chased after maturity and the character of the paper was known at the time of the purchase. So in an Alabama case the court, per Brickell, C. J., says: "Nor would the title of the holder be affected, because he may have acquired the paper after its maturity. When accommodation paper is not made for a specific purpose, when there is by the understanding of the parties no restriction upon its use, there can be no inference or presumption that it is to become value- less, or that the authority of the party intrusted with its use ceases, if it is not negotiated before maturity. Negotiation after maturity may serve the very purpose of its making — in that way only, it may be, the intended law of credit can be made effectual; and certainly, putting in circulation accommodation paper, after its maturity, can- not be esteemed fraudulent, or mala fides attributed to the party who has the right of using it."^^'* And in a comparatively recent Connecti- cut case. Prentice, J., asserts that: "The courts of England and of many of our states have adopted, and the text-writers with general unanimity have approved of, the doctrine which declares that, unless accommodation paper is shown to have been misappropriated by the accommodated party to some purpose other than that for which it was given, the accommodation makers may not set up the want of consideration in an action b}', one who has acquired it in good faith. =«»Mosser v. Criswell, 150 Pa. St. =»" Connerly v. Planters' & Mer- 409, 24 Atl. 618. chants' Ins. Co., 66 Ala. 432. I 353 ACCOMMODATION PAPER TAKEN AFTER MATURITY. [§ 283 in the ordinar}' course of business and for value, although after ma- turity."-"^ It was also declared by the court asserting the above rule that: "The cases holding otherwise, in so far, at least, as the rule laid down by them is made to embrace situations where, as here, the holder for value parted with the consideration without notice of the accommodation character of the paper, do not have the support of sound reason or safe policy. We are not prepared to introduce into the commercial law a, principle so repugnant to its spirit and so fraught with danger." Again, in an Illinois decision, Scott, J., says tliat : "The very purpose of making accommodation paper is that the party favored ma}^ dispose of it, and unless restricted he may trans- fer it either before or after maturity, and the maker will be equally bound. The usage in this regard is sanctioned by the practice that has prevailed in mercantile transactions eveiywhere, in this country and in England. That usage now has the consistence of law. Any other rule would permit the maker of such paper to practice a fraud on persons who should take the paper he had put out to be negotiated in the usual course of business.''-"- In a Maryland case the rule is laid down that accommodation notes are an exception to the rule which lets in the defenses of want or failure of consideration in cases where a regular note is indorsed when overdue : "Cases of the highest authority recognize a wide distinction between accommodation notes or bills, and those which are wholly without consideration or fraudu* lent, and as such nudum pactum at law. Some of the cases go to the length of asserting that though the holder of a note, claiming by virtue of an indorsement made after the same was due, knew when -"^Connecticut. — Mersick v. Alder- English. — Sturtevant v. Ford, 4 man, 77 Conn. 634, 636, 60 Alt. 109, Man. & G. 102; Stein v. Yglesias, citing: 1 Cromp. M. & H. 565; Charles v. Illinois. — Miller v. Larned, 103 Marsden, 1 Taunt. 223; Carruthers 111. 570. v. West, 11 Q. B. 143; Atwood v. Maine. — Dunn v. Weston, 71 Me. Crowdie, 1 Stark. 485; Daniels on 270, 36 Am. Rep. 510. Neg. Inst, §§ 726, 786, 790; Story Maryland. — Maitland v. Bank, 40 on Promissory Notes 194; Clutty on Md. 540, 17 Am. Rep. 520. Bills 218; 2 Parsons on Notes & Is'eio Jersey.— Seyfert v. Edison, Bills 28; Byles on Bills 285; Eaton 45 N. J. L. 343. & Gilbert on Commer. and Paper Neio Yorfc.— East River Bank v. (Ed., 1903), p. 312, § 55f; Redfield Butterworth, 45 Barb. (N. Y.) 476; & Bigelows Lead. Cas. 216. Harrington v. Dorr, 3 Rob. (N. Y.) ^''^ Miller v. Larned. 103 111. 562, 275. 570, 571, per Scott, J. Virginia. — Davis v. Miller, 14 Grat. (Va.) 1. Joyce Defense.s — 23. § 282] WANT OR FAILURE OF CONSIDERATION. 354 he received it that it was an accommodation paper, still such fact would not defeat his right to recover against the maker. "^^^ So in a Maine decision-^* it is declared that the fact that such a note "was indorsed after due, without some equity in the maker, will not de- feat the rights of the holder. The maker of an accommodation note holds himself out to the public to be absolutely bound to every per- son who shall take the same for value — 'a party who lends his note without limitation as to the time of its use,' observes Robertson, C, J., ^cannot, therefore, be presumed in law to have limited such time to that before its maturity.'-"" The authorities are decisive on this question." And in another case in that state^"° the rule is as- serted that: "One who takes an accommodation note after its dis- honor may recover from the maker or indorser if it be used for the purpose for which it was given. -'*" The party giving the accommoda- tion must show he was injured by the misappropriation, 'If the in- dorsee knew of the fact of the paper being made for accommodation at the time he received it there could be no difference whether he re- ceived it before or after due; * * * j-j^g proper question seems to be whether the paper was misapplied by the party accommodated,' * * * unless there is an agreement Restraining the transfer of an accommodation note after due, and it is used for the purpose for which it is given, it is immaterial whether the holder advances money upon it before or after its maturity," provided also that such note is delivered without any restriction or limitation upon the payee's authority to use it. And a subsequent holder from the payee, who be- comes the owner of an accommodation note after its maturity, may recover, in the absence of proof of payment of the note, from the maker of such note, where it has been discounted by the payee, who received the money on it.^"^ So the rule making an accommodation note negotiable after its maturity, and obligatory iipon the parties thereto when taken for value, has been applied in a New Jersey case,-'''' where there was no pretense of any misapplication of the note =°^ Renwick v. Williams, 2 Md. 356, 274, 36 Am. Rep. 310, per Appleton, 363, per Mason, J. C. J. ^ First National Bank of Salem v. -•'' Citing 2 Parsons on Bills & Grant, 71 Me. 374, 376, 36 Am. Rep. Notes, 28 et seq. 334, per Appleton, C. J. -"* Warder, Bushnell & Glessner ^"'^ Harrington v. Dorr, 3 Rob. (N. Co. v. Gibbs, 92 Mich. 29, 52 N. W. Y.) 283. 73. ^''Dunn v. Weston, 71 Me. 270, ="' Seyfert v. Edison, 45 N. J. L. 393. 355 ACCOMMODATION PAPER TAKEN AFTER MATURITY. [§ 283 and nothing in the terms of the agreement prohibiting its use after the pay-day of the instrument. In a New York case""" it is held that accommodation notes, or bills without limitation as to time or purpose, may be negotiated when past due, so as to bind accommo- dation makers or acceptors, and this rule applies even though the holder had knowledge of its origin.^*^^ In an English case^°- it is held that it is not of itself a defense to an action by the indorser to a bill of exchange to plead that it was accepted for the accommodation of the drawer without consideration, and was indorsed after it be- came due, there being no allegation of fraud and no averment that plaintiff did not give a valuable and full consideration for the bill; that it was not necessarily to be inferred, because it was an accommoda- tion bill, that there was an agreement not to negotiate it after it be- came due, and if there was such an agreement, it was the defendant's own fault that the bill was outstanding.^''^ So in another English case it is decided that a plea by the acceptor of a bill to an action by the indorsee that the bill was accepted before it became due and for accommodation and without any value or consideration for the ac- ceptance or for the payment, and that the bill was indorsed to the plaintiff after it became due, is bad.^"* Again, the indorsee of a note, who receives it for value from the second indorser, after it has been dishonored by the maker, can recover thereon against the maker, although he knew when he received it, that as between the maker and the first indorser, it was an accommodation note.^°^ So in a Pennsyl- vania case it is held that it is no defense to an accommodation note that it came into the plaintiff's hands after maturity, if he acquired it from one who acquired it for value before maturity.^"" Notwith- standing the preceding authorities, there are many decisions both in this country and in England which have been relied on as sustaining the contrary rule, to the effect that if the accommodated party trans- fers accommodation paper after its maturity it is subject, in the hands '°" Harrington v. Dorr, 26 N. Y. '°* Sturtevant v. Ford, 4 Man. & G. Super. Ct. (3 Rob.) 275. 101, 43 Eng. Com. L. 61. See Stein '"East River Bank v. Butter- v. Yglesias, 1 Cromp. M. & R. 565; worth, 30 How. Pr. (N. Y.) 444, 45 Carruthers v. West, 112 B. 143. Barb. (N. Y.) 476, affd. 51 N. Y. ■"'•Thompson v. Shepherd, 12 637. Mete. (Mass.) 311, 46 Am. Dec. 676. '"^Charles v. Marsden, 1 Taunt. • ■'''<' Riegely v. Cunningham, 9 Phila. 224, per Mansfield, Ch. J. (Pa.) 177. See Tinson v. Francis, ^"^ Examine Watkins v. Maule, 2 1 Camp. 19, Jac. & W. 237, 244. 282] WANT OR FAILURE OF CONSIDERATION. 35G of the transferee, to the same defenses as would be available against the accommodated party; many of these cases, however, rested also upon other factors.""^ So in a New York case, the rule is dissented ^"''Alabama. — Battle v. Weems, 44 Ala. 105 (bill drawn and indorsed by defendant for accommodation of acceptors) ; Glasscock v. Smith, 25 Ala. 474 (delivered after indorser's death and legal title did not pass). California. — Coghlin v. May, 17 Cal. 515 (note reissued and diverted after it had answered its purpose; there was also the factor of col- lateral security). Georgia. — Strauss v. Friend, 73 Ga. 782 (under Code, § 1783— de- fendant also frequently demanded return of note — action was by in- dorsee against maker). Kentucky. — Gazzam v. Armstrong, 3 Dana (Ky.) 554 (action by holder against acceptor; plaintiff paid the bill for drawer's honor at maturity). Louisiana. — Whitwell v. Crehore, 8 La. (0. S.) 540, 28 Am. Dec. 141 (action by holder against indorser; note was received as collateral for debt; it was agreed that indorser was never to be liable). Maine. — Gumming v. Little, 45 Me. 183 (action by indorsee against several persons as defendants; no- tice held implied by indorsement after maturity and purchaser and indorsee held subject to defenses. Holder had collateral securities of the principal and surrendered them to the latter with the securities' as- sent. Massachusetts. — Kellogg v. Bar- ton, 94 Mass. (12 Allen) 527 (con- tract against indorser; written agreement as to payment in consid- eration of indorsement). Michigan. — Simons v. Morris, 53 Mich. 155, 18 N. W. 625 (suit against indorser; note was payable to order of indorser and indorsed in blank and was transferred about five years after maturity). Pennsylvania. — Peale v. Addicks, 174 Pa. St. 549, 34 Atl. 203 (no recovery can be had from indorser for accommodation of payee by in- dorsee after maturity) ; Long v. Rhawn, 75 Pa. St. 128 (suit by in- dorsee against maker held a good defense that note was taken up and reissued, and so diverted). Hoff- man V. Foster, 45 Pa. St. 137 (fraud- ulently obtained and fraudulently circulated by payee; action by in- dorsee against maker and note in- dorsed in blank); Bower v, Hast- ings, 36 Pa. St. 285 (action by in- dorsee against maker). Rhode Island. — Bacon v. Harris, 15 R. I. 599, 10 Atl. 647 (suit against makers by indorsee; a de- mand note and question of reason- able time arose, note being nego- tiated nearly two years after date. The rule as to defenses was, how- ever, affirmed). Virginia. — Cottrell v. Watkins, 89 Va. 801, 17 S. E. 328, 37 Am. St. Rep. 897, 19 L. R. A. 754 (paid by real debtor and reissued). English. — Parr v. Jewell, 16 C. B. 684, 13 C. B. 909 (a case of accom- modation acceptance for drawer; the drawee paid note at maturity and, in violation of his express agreement with acceptor, reissued the note) ; Overend, Gurney & Co., In re, L. R. 6 Eq. 344 (bill was taken up supra protest for honor of drawer) ; Lazarus v. Cowie, 3 Q. B. 459, 2 G. & D. 487, 11 L. J. Q. B. 310 (reissued in violation of 55 Geo. in, C. 184, § 19); Wrixon v. Macoboy, 6 Vict. Law R. 350. 357 PAYMENT FOR PKK-EXISTIXG DEBT. [§§ 283, 284 from which places an accommodation note, indorsed after due, upon a different basis from other notes, indorsed after maturity, and it is held that the fact even that a transferee paid full value for such note does not render the accommodation indorser, without consideration, liable where the note is taken after maturity from the person for whose accommodation it was indorsed, and that to a note so taken the defense of want of consideration is available against any per- son into whose hands it may come, and if the indorsement of the payee is given after the note is overdue to enable the person for whose accommodation the note is indorsed to get such accommodation in- dorsement from the defendant, a subsequent holder cannot recover.^"^ § 283. Accommodation of other parties in general. — It constitutes no defense to a suit brought against the maker and indorser of a note, on paper given for accommodation of the maker's husband that plain- tiff had knowledge of such fact, it not appearing that there were any restrictions as to the use which might be made of the indorsement; nor can the defense of coverture, it is decided, be availed of to pre- vent a recovery, the note being in the usual form.^"^ And a payee may recover from his immediate indorsee the amovmt which an in- nocent holder has compelled him to pay by reason of his indorsement, where such immediate indorsee has received the benefit of the note, the nominal ownership having passed to the latter and being merely by said indorsement without consideration between the parties,^^* It has also been decided that a guarantor is liable to a bona fde holder under a guaranty of payment expressly indorsed on a note for accommodation of the payee, and the contention that it was intended by the parties to give the benefit of the guaranty to a mere surety for the maker cannot be maintained. ^^^ § 284. Payment of pre-existing debt — Bona fide holder against ac- commodation maker. — If a note is witliout restriction as to its use tlic fact that an accommodation note was taken in ])aymcnt of a pre- existing debt constitutes no defense in favor of the maker against a bona fide indorsee or holder without notice.-''^- And if an accommoda- =°* Chester v. Dorr, 41 N. Y. 279, ^"Baldwin v. Dow, 130 Mass. 416. 284. Two judges dissented. ='- Grocers Bank v. Penfield, 69 N. ^Archer V. Shea, 14 Him (N. Y.) Y. 502, 25 Am. Rep. 231, aff'g 7 493. Hun N. Y. 279; Schepp v. Carpen- "» Abraham v. Mitchell, 112 Pa. St. ter, 51 N. Y. 602, aff'g 49 Barb. (N. 320, 3 Atl. 830. Y.) 542; Purchase v. Mattison, 6 285] WANT OR FAILURE OF CONSIDERATION. 358 tion indorser of a note, transferred in part payment, has received the proceeds thereof, part payment of such note by the maker constitutes no defense, the holder of said note being a bona fide holder.^^^ Again unless the note was originally made for the payee's accommodation, or he had fraudulently put it in circulation after it was satisfied in his hands, a demand which the maker had against the payee at the time of transfer cannot be set off against a note taken as collateral.^" But, although the fact that accommodation paper has been diverted to a different purpose than that agreed upon between the maker and the payee, may be set up as a defense,^^^ still the fact that the use of the note is not in exact conformity with the purpose for which the accommodation was intended, does not make an indorsement and transfer of paper, without restriction, in payment of an antecedent debt a fraudulent diversion.^^** The general rule first stated also applies, even though the plaintiff had knowledge of the accommoda- tion character of the paper.^^^ § 285, Same subject — Particular rulings and opinions. — In Ala- bama it is held that a creditor taking a note with an accommodation indorsement in payment of an antecedent debt is a purchaser for value. ^^^ In Illinois it is declared that it is a principle of general application that the beneficiary of an accommodation note, without restriction as to the mode of its use, may transfer it either in payment of his indebtedness or as collateral security for a concurrent or even an antecedent debt, and the maker will have no defense.^ ^^ In a Maine decision it is said that a holder of an accommodation note, which is without any restriction or limitation as to the payee's au- thority to use it, may recover thereon, even though he received the note in payment of a precedent debt, or received it as collateral secur- ity for such indebtedness.^^" So, under a Maryland ruling, a person Duer (N. Y.) 587; Montross v. Clark, 2 Sandf. (N. Y.) 115; Pitts v. Foglesong, 37 Ohio St. 676; Sny- der v. Elliot, 2 Penny. (Pa.) 474; Crosby v. Lane, Fed. Cas. No. 3425. ='"Ward v. Howard, 88 N. Y. 74. But see Lintz v. Howard, 18 Hun (N. Y.) 424. ^" Smith V. Van Loan, 16 Wend. (N. Y.) 659. ^" Schepp V. Carpenter, 51 N. Y. 602, 604, aff'g 49 Barb. (N. Y.) 542; Pitts V. Foglesong, 37 Ohio St. 676; Coon V. Moore, 2 Pa. Co. Ct. R. 246. 8'" Graf V. Smith, 62 Hun, 621, 16 N. Y. Supp. 892. ^"Montross v. Clark, 2 Sandf. (N. Y.) 115. ^^'^ Marks v. First Nat. Bank, 79 Ala. 550, 58 Am. Rep. 620. ^'"Miller v. Lamed, 103 111. 562, 570, per Scott, J. ^•^"Dunh V. Weston, 71 Me. 270, 274, 36 Am. Rep. 310, per Appleton, I 359 PAYMENT FOR PKE-EXISTIXG DEBT. [§ 28G is entitled to protection as a bona fide holder for value, even though he takes an accommodation note in payment of a precedent debt or has taken it as collateral security for a precedent debt, or for future as well as past advances.^^^ In a New York case the court says: "'It is universally conceded that the holder of an accommodation note, without restriction as to the mode of paying it, may transfer it either in payment, or as collateral security for an antecedent debt, and the maker will have no defense. It is only where the note has been diverted from the purpose for which it was entrusted to the payee, or some other equity exists in favor of the maker, that it is necessary that the holder should have parted with value on the faith of the note in order to cut off such equities of the maker.' "^^ Again, under a federal decision, the transferee, before maturity and without knowl- edge of its character, of an accommodation note taken in settlement of a pending suit, is a bona fide holder, and the defense that said note was an accommodation note is not available.^-^ § 286. Payment of pre-existing debt — Bona fide indorsee against indorser. — An indorsee who purchases before maturity and without no- tice a bill drawn and indorsed for the accommodation of the ac- ceptors may recover thereon in an action against the drawers, al- though such indorsee may have taken the bill in payment of a pre- existing debt.^^* So a bona fide indorsee, without notice, may recover against an accommodation indorser in case the payee could recover, notwithstanding the transfer was made for a precedent debtf-^ C. J., quoting from Robbins v. Rich- dent debt the holder may recover, ardson, 2 Bosw. (N. Y.) 253, per The rule is otherwise where the note Woodruff, J. has been obtained by fraud, or was ^^ Maitland v. Citizens' National given for a specific purpose or is Bank of Baltimore, 40 Md. 540, 562, void in the hands of the payee on 17 Am. Rep. 620, citing Story on grounds of public policy. In such Bills, § 192, Story on Promissory cases the precedent debt is not a Notes, § 195. consideration and the holder cannot '^Leslie v. Bassett, 59 N. Y. recover. Super. Ct. (27 J. & S.) 403, 14 N. Y. ^"Tollman v. Quincy, 129 Fed. Supp. 380, quoting from Grocers' 974. Bank v. Penfield, 69 N. Y. 504. See "' Frank v. Quast, 86 Ky. 644, 6 S. Schepp v. Carpenter, 49 Barb. (N. W. 909. Y.) 542, aff'd in 51 N. Y. 602.- Where '=' Marks v. First Nat. Bank, 79 the rule is asserted that if an ac- Ala. 550, 58 Am. Rep. 620 (action by commodation note, not restricted as payee against indorser); Uchtmann to the mode of its use. has been v. Tonyes, 64 Hun 634, 18 N. Y. transferrea to pay or secure a prece- Supp. 889; Varnum v. Ballamy, 4 § 287] WANT OR FAILURE OF CONSIDERATION". 360 cspeciall}' so, where the paper was indorsed without restriction,"-*' and even though the indorsement was procured by fraud, such fact is lield to be no defense ;^-^ nor, it is determined, are proceedings in bankruptcy a defense. ^-^ But where the debt, which the indorsement was given to secure, was from the maker to the plaintiff, and was based upon an agreement that a suit brought by the latter to recover the debt should be discontinued, it constitutes a good defense that the plain- tiff had violated such agreement and had obtained judgment and levied execution on the property of the maker whereby he was pre- vented from eventually paying the note."-^ If an overdue check, which represents part of the indebtedness, is surrendered and the balance thereof is canceled, the creditor becomes a bona fide holder for value, as against an accommodation indorser of a note made for the entire debt."^° ^ 287. Payment of pre-existing debt — Drafts and bills — Payee — Accommodation acceptor. — If a draft is taken by the payee in pay- ment and satisfaction of the drawer's indebtedness to him, and with- out notice on his part of any fraudulent circumstances inducing the acceptance, and it is accepted for the accommodation of the drawer, the payee is a bona fide holder and entitled upon established prin- ciples to recover upon the draft, especially where it is accepted with- out restriction. And although such draft is in form in favor of the payee, yet the case stands on the same footing in contemplation of law as if the draft had been drawn in favor of the debtor and in- dorsed Ijy him to the payee.^^^ And bona fide holders without notice of a bill of exchange transferred before maturity can recover against accommodation acceptors, although the bill was given to the plain- tiffs in liquidation of a pre-existing debt from the drawers to them, even though they knew that defendant was an accommodation ac- ceptor, especially so as the paper was transferred to accomplish the very purpose had in view in making the acceptance, and, therefore, a recovery against such acceptor would only compel him to do Avhat lie McLean (U. S.) 87, Fed. Cas. No. -^ Ken worthy v. Hopkins, 1 John 16886. See Rowe v. Gohlman (Tex. Cas. (N. Y.) 107. Civ. App. 1907), 98 S. W. 1077. "=' Bookstaver v. Jayne, 60 N. Y. ==« Molson V. Hawley, 1 Blatchf. 146, revg. 3 Thomp. & Co. 397. (U. S.) 409, Fed. Cas. No. 9702. •'» Burkhalter v. Pratt, 1 City Ct. ="Uchtinann v. Tonyes, 64 Hun R. (N. Y.) 22. (N. Y.) 634, 18 N. Y. Supp. 889. ""' Pugh v. Durfee, 1 Blatchf, (C. But see Farrington v. Frankfort C.) 412, Fed. Cas. No. 11460. Bank, 31 Barb. (N. Y.) 183. f 361 PAYMENT FOR PRK-EXISTING DEBT, [§ 387 agreed to do when he put his name to the hiU.-''''- And secret agree- ments, of which a purchaser has no notice, will not preclude his re- covery, against an accommodation drawer, upon a hill drawn and indorsed for the accommodation of acceptors, even though he may have taken the bill in payment of a pre-existing debt.^^^ But the rule is also asserted that one who indorses a bill, without consideration and for accommodation of the maker, has the right to annex such terms and conditions as he pleases, and if the maker does not comply with the full terms of an agreed upon condition with the indorser, but uses the bill in payment of an execution, the indorsee, who has notice and knowledge of such conditioii, cannot recover, even though the indorsement was also made to enable the maker to obtain the money to pay off such execution. The bill was also received in pay- ment of a pre-existing debt, and it was therefore held upon this point that it was taken subject to all equities and defenses which the in- dorser could lawfully set up against the liability in the hands of the maker-^^** In a Connecticut case a drawer of a bill was largely in- debted to a corporation at the time of the acceptance by its treasurer, and said acceptance was solely a loan of its credit to the drawer for accommodation and was an abuse of the power conferred upon the treasurer, and the corporation had no power to give such accept- ance. Thereafter a creditor of the drawer, having indorsed the drafts, sold them for the drawer and gave him credit therefor on account, and such creditor, one of the drafts having been duly protested, took up said draft as payee and indorser, the debt was not discharged or released, nor was anything of value relinquished by the plaintiffs, but the fact that the paper was solely for accommodation was not known to them. Upon these facts it was held that plaintiffs were not hona fide holders, and were subject to any defense which could have been availed of had the drawer been the plaintiff, even though they "'Jewett V. Hone, 1 Woods (C. C.) where new notes are given by the 530, 536, Fed. Cas. No. 7311. Woods, same or other parties by way of re- C. J., said in this case: "To hold newal or security to banlts, in lieu that because Hone was an accommo- of old securities discounted by them, dation acceptor, and the plaintiffs which have arrived at maturity?" knew it, therefore the bill is not ''= Frank v. Quast, 86 Ky. 649, 6 good, would be to strike a fatal S. W. 909. blow at all discounts of negotiable "'^ Hickerson v. Raiguel & Co., 49 securities for pre-existing debts. Tenn. (2 Heisk.) 329. Compare, Upon such a doctrine what would however, chapter herein on Diver- become of that large class of cases sion and Fraudulent Transfer. 287] WANT OR FAILURE OF COXSIDERATIOX. 362 had taken up and paid said draft; but it was also asserted that if a person holds an acceptance without notice that it is for the accommo- dation of the drawer, and it is by an officer authorized to accept if the drawer has funds, he is not to be affected by the intrinsic want of funds, and can enforce it if he holds bona fide; for as between such holders of negotiable paper without notice, and stockholders of a corporation, the law gives preference to the former.^^^ ^ Webster & Co. v. Howe Machine Co., 54 Conn. 357, 8 Atl. 472, 1 Am. Co., 54 Conn. 394, 8 Atl. 482. See St. Rep. 123. Credit Co., Ltd. v. Howe Machine CHAPTER XII. ILLEGAL OR IMMORAL CONSIDERATION. Sec. 288. Illegal consideration — Original parties — Bona fide holders. 289. Same subject — Exceptions and qualifications — Notice — Knowledge — Fraud, etc. 290. Illegal considerations — Effect on surety. 291. Paper given for consideration in violation of statute. 292. Same subject. 293. Where constitution and laws violated — Enemy aided. 294. Illegal sales. Sec. 295. Compounding criminal acts. 296. "Where consideration is money or property won at gambling device. 297. Same subject — Statutory pro- hibitions. 298. Same subject — Qualifications of rule — Other instances. 299. Illegal and immoral considera- tions. 300. Same subject — Decisions. 301. Same subject — Decisions con- tinued. § 288. Illegal consideration — Original parties — Bona fide holders. — A note is unenforceable a.s between the immediate parties where it is based upon a consideration which is illegal in the law or by reason of a statute, or because it is against public policy, religion or morals.^ ^Ball V. Putnam, 123 Cal. 134, 55 Pac. 773, holding that where the consideration is against public pol- icy or good morals or the express mandate of the law the note is void. Bill or note is illegal and void when given in consideration of ab- duction of person (Barker v. Par- ker, 23 Ark. 390) ; when given to an afiianced husband because of seduc- tion or alienation of affections of his betrothed (Case v. Smith, 107 Mich. 416, 65 N. W. 279); when for sur- render of other void notes (Kuhl V. Galley Universal Press Co., 123 Ala. 452, 26 So. 535). So a note is held void when made on Sunday (Reeves v. Butcher, 31 N. J. L. [2 Vr.] 224); or when in settlement of account for goods sold and deliv- ered, some of the items being for goods sold on Sunday and some for the price of liquors (Wadswarth v. Dunnam, 117 Ala. 661. 23 So. 699); when for the price of goods sold of which the sale is prohibited by law (Carlton v. Bailey, 27 N. H. 230); where part of consideration is for liquors sold contrary to statute (Widoe V. Webb, 20 Ohio St. 431); when for intoxicating liquors sold without a license or in violation of a statute (Snyder v. Koehler, 17 Kan. 432; Bick v. Seal, 45 Mo. App. 475; Gammon v. Plaisted, 51 N. H. 444; Kidder v. Blake, 45 N. H. 530; 363 288] ILLEGAL OR IMMORAL COXSIDERATION. 3G4 But the fact that a negotiable instrument was, as between the immedi- ate parties thereto, based upon an illegal consideration, will not Coburn v. Odell, 30 N. H. 540; Fuller V. Bean, 30 N. H. 181; see Garland v. Lane, 46 N. H. 245; Doo- little V. Lyman, 44 N. H. 608; Os- wald V. Moran, 8 N. D. Ill, 77 N. W. 281; Craig & Co. v. Proctor, 6 R. L 547; Gorsuth v. Butterfield, 2 Wis. 237. Compare Doe v. Burn- ham, 31 N. H. 226; Carleton v. Woods, 28 N. H. 290, as to beer sold in violation of law, see Sheary v. O'Brien, 77 N. Y. Supp. 378, 75 N. Y. App. Div. 121, aff'd, 76 N. E. 1108). So a note given to a mu- nicipality to enable the maker to carry on the liquor business, the license therefor being postponed contrary to the provisions of the city charter under the statute, is il- legal and void (Meyers-Marx Co. v. City of Ennessley, 141 Ala. 602, 37 So. 639); and rule applies to paper given for rebating insurance pre- miums (Tillinghast v. Craig, 9 Ohio Cir. Dec. 459; see Heffron v. Daly, 133 Mich. 613, 95 N. W. 714, 10 Det. L. N. 344); or for insurance pre- mium where insurance company had not complied with state re- quirements (Swing V. Cider & Vine- gar Co., 77 Mo. App. 391) ; or a note given to an unlicensed physician (Coyle v. Campbell, 10 Ga. 570); when given for import duties in violation of the act admitting a state into the Union (City of Natchez v. Trimble, Walker [Miss.] 376); in case of a bond in consid- eration of certain tickets, notes, or checks, with intent to circulate the same as currency in lieu of money (Yeates v. Williams, 5 Ark. 684); a note given in furtherance of a contract, void as against public pol- icy and good morals (Parsons v. Randolph, 21 Mo. App. 353); a note given bank in consideration of transaction violating statute as to withdrawal or payments of capital stock by directors (City Bank v. Barnard, 1 Hall [1 N. Y. Super. Ct.] 70) ; or where note discounted in unauthorized banking business (Ru- ber V. German Congregation, 16 Ohio St. 371); a note based upon contract violating the national bankrupt law (Clafflin v. Torlina, 56 Mo. 369); illegal banking notes in the similitude of bank post-notes (Attorney Gen'l v. Life & Fire Ins. Co., 9 Paige [N. Y.] 470); and where the consideration is fictitious stock of a corporation (Alabama Nat. Bk. V. Halsey, 109 Ala. 196, 19 So. 522. See Haas v. Hall & Farley, 111 Ala. 442, 20 So. 78). So a note given in compromise of a suit by scire facias to condemn land under a lottery law, violates the statute, and is contrary to public policy' and void as between maker and payee; but otherwise as to an indorsee be- fore due and without notice, and as to the maker such fact is no de- fense (Poe v. Justices of the Peace, Dudley [Ga.] 249). The rule also applies to a note given in pursu- ance of an agreement between hus- band and wife in respect to ali- mony, to facilitate procuring a di- vorce by making no defense to an action pending or about to be com- menced (Viser v. Bertrand, 14 Ark. 267, 283, 284; Everhart v. Puckett, 73 Ind. 409; Adams v. Adams, 25 Minn. 72, 79; Sayles v. Sayles, 21 N. H. 312; Stoutenberg v. Lybrand, 13 Ohio St. 228, 232. See Stokes v. Anderson, 118 Ind. 533); to an as- signing debtor's note given to one i 365 ORIGINAL PARTIES — BONA FIDE HOLDERS. [§ 288 creditor to induce acceptance of assignment (Brown v. Everett Rid- ley Ragan Co., Ill Ga. 404, 36 S. E. 813); to a note received to induce one creditor to sign composition deed without knowledge of other creditors, parties to deed (Winn v. Thomas, 55 N. H. 294; to paper given by insolvent to creditor to sign his petition, the note being in blank to be filled up after the debt- or's exoneration (Payne v. Eden, 3 Caines [N. Y.] 213. See also Yea- mans v. Chatterton, 9 Johns. [N. Y.] 295); to a note made for prop- erty transferred to drawer to de- fraud payee's creditors (Church v. Muir, 33 N. J. L. [4 Vr.] 318). A note is also void as in restraint of trade, as creating monopoly and contrary to public policy where based upon a consideration not to engage in a competitive business (Tuscaloosa Co. v. Williams [Ala.] 28 So. 669. But see Moore v. Hand- ley Hardware Co. v. Towers Hard- ware Co., 87 Ala. 207, 6 So. 41). So drafts based upon an assign- ment to equalize prices, or a com- bination in restraint of trade are illegal and unenforceable (Morris Run Coal Co. v. Barclay Coal Co., 68 Pa. St. 173). The rule also ap- plies to paper based upon a threat of the payee to oppose the allow- ance by the city council of the mak- er's claim for street paving, as such transaction is contrary to public policy (French v. Talbot Paving Co., 100 Mich. 443, 59 N. W. 166); to a note given, by applicants for a public road, to a caveator to with- draw his opposition (Smith v. Ap- plegate, 23 N. J. L. [3 Zabr.] 352. Examine Burkhart v. Hart, 36 Ore. 586, 60 Pac. 205) ; to paper received for any sum, the payment of which by the petitioners therefor is made a condition of laying out a high- way (Dudley v. Cilley, 5 N. H. 558); when note given upon con- dition that payee would not bid at judicial sale (Jones v. Caswell, 3 Johns. Cas. [N. Y.] 29); when pa- per is for lease of lands within In- dian reservation and lessor makes title under an Indian (Chaffee v. Garrett, 6 Ohio 421. That it is no defense that maker was an Indian, see Warnock v. Itawis, 38 Wash. 144, 80 Pac. 297); or in considera- tion of the sale of a claim to pub- lic lands while title still in United States (Jarvis v. Campbell, 23 Kan. 370); or a note based upon a con- sideration of a sale of an interest, where the vendor can sell none, in an Indian trader's license, in viola- tion of the public policy of the gov- ernment and of the statute (Hob- ble V. Zaepffell, 17 Neb. 537); or paper made to procure or corruptly influence officer to violate his oflB- cial duty (Devlin v. Brady, 36 N. Y. 531); or to bribe a public officer (Collier v. Waugh, 64 Ind. 456); or to secure the consideration agreed to be paid for a sale of a public ofl!ice (Meredith v. Ladd, 2 N. H. 517); or for sale of ofl^ce of deputy sheriff (Carleton v. Whitcher, 5 Vt. 196); when based upon consideration to give to can- didate for election the payee's in- terest (Swanze v. Hull, 8 N. J. L. [3 Halst.] 54; when based upon consideration to resign public office in favor of another and 'to use in- fluence in appointment of successor (Meachem v. Dow, 32 Vt. 721); when in consideration that -candi- date for election withdrawn from ticket in favor of another candi- date (Ham V. Smith, 87 Pa. St. 63); or for appointment to office of dep- uty sheriff (Ferris v. Adams, 23 Vt. 136); when based upon an agreement to procure and have a 288] ILLEGAL OR IMMORAL CONSIDERATION. 366 person appointed administrator (Porter v. Jones, 52 Mo. 399). Nor can a surety upon a promissory note be legally defrauded by a promise made to another to have the principal appointed to a public office; as such a promise is contrary to the policy of the law and unen- forceable (Graham v. Marks & Co., 98 Ga. 67, 25 S. E. 931). So a note given by a trustee of a savings as- sociation, for a consideration mov- ing to himself, to secure the elec- tion of another to the office of trustee is void as against public policy and is based upon an illegal consideration (Dickson v. Kittson, 75 Minn. 168, 74 Am. St. Rep. 447, 77 N. W. 820); likewise so when given to secure payment of money won on election (Russell v. Pyland, 2 Humph. [21 Tenn.] 131). So a bet on a foot race constitutes gam- ing (Jones V. Cavanaugh, 149 Mass. 124, 21 N. E. 306); and note is ille- gal when for the sales of products understood to be solely a specula- tion on chances (Pearce v. Dill, 149 Ind. 136, 48 N. E. 788; Plank v. Jackson, 128 Ind. 424, 26 N. E. 568, 27 N. E. 1117. See Farmers' & Drovers' Bk. of La. v. Unser, 13 Ky. L. Rep. 965) ; or when given on grain options ("Wade v. Wicker- sham, 27 Neb. 457, 43 N. W. 259); or when for services in aiding sale of personal property to be delivered in future (Kahn, Jr., v. Walton, 46 Ohio St. 195, 20 N. E. 203). See Rogers v. Corre, 6 Ohio Cir. Dec. 602); or in consideration of "Bo- hemian Oats" contract (Schmueckle V. Waters, 125 Ind. 265, 25 N. E. 281; Payne v. Raubinek, 82 Iowa 587, 48 N. W. 995). And a note given for sale of "prolific oats * * as a speculation," though not a gambling contract is against public policy (Merrill v. Packer, 80 Iowa 542, 45 N. W. 1076). So a wager as to the collection of an execution, while not gaming within a stat- ute, is void as against public policy between the original parties, but valid as to a bona fide holder or transferee of a check given there- for (Boughner v. Meyer, 5 Colo. 71, 40 Am. Rep. 139). And a note for price of slot machine is illegal (Kuhl v. M. Galley Universal Press Co., 123 Ala. 452, 26 So. 535). The rule also applies to paper received in satisfaction of a personal injury if compromise of public offense in- cluded (Bailey v. Stiles, 3 N. J. Eq. [2 Green.] 249) ; to a note intended to defeat execution of the criminal law (Baker v. Paris, 61 Mo. 389, 390) ; or to favor, protect, or not to prosecute a criminal (Brittin v. Chegary, 20 N. J. L. [Spenc] 625); when given for money lent know- ingly to suppress the prosecution or the evidence (Plummer v. Smith, 5 N. H. 553); or in consideration that payee use his influence to se- cure acquittal in prosecution for felony (Ricketts v. Harvey, 106 Ind. 564,- 6 N. E. 325; when intend- ed to influence one not to appear as a witness in a fraud investigation (Hoyt V. Macon, 2 Colo. 502); or when only to aid in suppression of criminal prosecution, even though note under seal (Morrill v. Goode- now, 65 Me. 178) ; when based upon an agreement to indemnify the maker against a voluntary escape (Ayer v. Hutchins, 4 Mass. 370) ; or where consideration is not to search plaintiff's house for stolen property, and to secure its restora- tion (Merrill v. Carr, 60 N. H. 114) ; when based upon agreement not to prosecute maker for adultery (Clark V, Ricker, 14 N. H. 44); or when received in consideration of bond to indemnify against any pub- II 3G7 ORIGINAL PARTIES BONA FIDE HOLDERS. [§ 288 lie prosecution (Hinds v. Chamber- lin, 6 N. H. 225). When bill or note is not illegal and void. Knowledge that notes to be used for unlawful purpose does not invalidate (Henderson v. Wag- goner, 2 Lea [70 Tenn.] 133). And paper is held valid when executed on Sunday (Wilkie v. Chandon, 1 Wash. 355, 25 Pac. 464). So a note is held not illegal which is given for paper in the similitude of bank notes circulated as money (Wright V. Hughes, 13 Ind. 109). A note given to legislature in divorce leg- islation may also be valid (Day v. Cutler, 22 Conn. 632, 633); nor is paper given for one of the parties' benefit during pendency of divorce suit, after adultery testified to, against public policy (Adams v. Ad- ams, 91 N. Y. 381) ; nor is note ille- gal when given to discontinue pro- ceedings in bankruptcy (Repplier v. Bloodgood, 1 Sweeny [31 N. Y. Super. Ct.] 34); and when given instead of cash for a liquor license note is collectible (Appling -County y. McWilliams, 69 Ga. 840); nor is paper void when based on consider- ation of loan to maker of state notes used by borrower (Gowen v. Shute, 4 Baxt. [63 Tenn.] 57); nor when for the sale of diseased sheep (Vining v. Bricker, 14 Ohio St. 331); and a liquor dealer's note given county treasurer for loan made by latter out of his private funds for the amount of a liquor tax, is not void as being based upon a transaction against public policy (Hatch V. Reid, 112 Mich. 430. 70 N. W. 418, dist'g Doran v. Phillips, 47 Mich. 228); nor is paper invalid when based upon a condition that payment be made when horse pur- chased had won a race, part of the purchase money having been -paici. (Treacy & Wilson v. Cbinn, 79 Mo. App. 648) ; nor a note given for use of billiard table, unless payee kept a tavern (Northrup v. Minturn, 13 Johns. [N. Y.] 85). So a note is valid when taken as security for appearance in court in one state of person arrested in another state (Harp V. Osgood, 2 Hill [N. Y.] 216; and it is not void when for pay- ment of money resulting in release of accused (Armstrong v. Southern Express Co., 4 Baxt. [63 Tenn.] 376) ; nor when given for oats sold at fictitious price with bond to buy more at same price (Kurz v. Fish, 58 Hun [N. Y.] 602, 11 N. Y. Supp. 209, 33 N. Y. St. R. 674). "The general principle is well es- tablished that a contract founded on an illegal consideration, or which is made for the purpose of furthering any matter or thing prohibited by statute, or to aid or assist any party therein, is void. This rule applies to every contract which is founded on a transaction malum in se, or which is prohibited by statute, on the ground of public policy," and includes a note given for part of the purchase money for timber growing on public lands, to which the payee claimed a possessory right. Swanger v. Mayberry, 59 Cal. 91. Although mere knowledge of lender of use for illegal or immoral purpose will not prevent recovery, yet aiding or participating in un- lawful scheme or design precludes recovery. Singleton v. Bank of Monticello, 113 Ga. 527, 38 S. E. 947. Where part of consideration of entire contract illegal, contract is void and unenforceable as to imme- diate parties having knowledge oth- erwise as to negotiable note in hands of bona fide holder without 288] ILLEGAL OR IMMORAL CONSIDERATION. 3G8 prevent a bona fide holder or purchaser, for value before maturity without notice or knowledge of the illegality from recovering thereon.^* And it is held that the taint of illegality in the old note knowledge. Bozeman v. Allen, 48 Ala. 512. See also Frick v. Moore, 82 Ga. 163, 8 S. E. 80. Payee's unsigned memorandum on back of note is invalid as a testa- mentary disposition and constitutes no defense to a note payable on de- mand, where such memorandum di- rects the amount of the note unpaid at the testator's death to be expend- ed by the maker for a monument and funeral expenses, even though so expended. Moore v. Weston (N. D.), 102 N. W. 163. Note originally invalid may sub- sequently become valid by the con- duct of the maker so as to render him liable thereon. Curtin v. Sal- mon River Hydraulic Gold Mining & Ditch Co., 141 Cal. 308, 74 Pac. 851. Examine Central Nat. Bank V. Copp, 184 Mass. 328. 68 N. E. 334. ^* Alabama : Bozeman v. Allen, 48 Ala. 512; Saltmarsh v. Tuthill, 13 Ala. 390. Georgia: Rhodes v. Beall, 78 Ga. 641; Meadow v. Bird, 22 Ga. 246. Illinois: Eagle v. Kohn, 84 111. 292; Hemenway v. Cropsey, 37 111. 357. Indiana: Johnston v. Dickson, 1 Blackf. (Ind.) 256. Iowa: Payne v. Raubinek, 82 Iowa 587, 591, 48 N. W. 995 (but void in other hands. "Bohemian Oats Contract"); Merrill v. Pack- er, 80 Iowa 543, 45 N. W. 1076; Hanks v. Brown, 79 Iowa 560, 44 N. W. 811; Lake v. Streeter, 34 Iowa 601; Anderson v. Stark- weather, 28 Iowa 409. Kansas: Draper v. Cowles, 27 Kan. 484. Kentucky: Maddox v. Graham. 2 Mete. (Ky.) 56 (negotiable bonds). Louisiana: Succession of Weil, 24 La. Ann. 139; Knox v. White, 20 La. Ann. 326. Maine: Hapgood v. Needham, 59 Me. 442; Nutter v. Stover, 48 Me. 163. Maryland: Gwyn v. Lee. 1 Md. Ch. 445. Massachusetts: Robertson v. Cole- man, 141 Mass. 231, 4 N. E. 619, 55 Am. Rep. 471; Williams v. Cheney. 3 Gray (Mass.) 215. Michigan: Macomb v. Wilkinson, 82 Mich. 486, 47 N. W. 336. Missouri: Third National Bank v. Tinsley, 11 Mo. App. 498. New York: Rockwell v. Charles. 2 Hill (N. Y.) 499; Gould v. Arm- strong. 2 Hall (N. Y.) 266. North Carolina: Glenn v. Farm- ers' Bk. of North Carolina, 70 N. C. 191 (negotiable security). Tennessee: Ferris v. Tavel, 87 Tenn. 886, 11 S. W. 93, 3 L. R. A. 414. Vermont: Converse v. Foster, 32 Vt. 828. United States: Goodman v. Si- monds, 20 How. (U. S.) 343, 15 L. Ed. 934; Atlas Bank v. Holm, 34 U. S. App. 472, 19 C. C. A. 94, 71 Fed. 489. See Iowa: First Nat. Bk. v. Getz, 96 Iowa 139, 64 N. W. 799. Michigan: Hunt v. Rumsey. 83 Mich. 136. 47 N. W. 105, 9 L. R. A. 674 ("Red Cyon Wheat Note"). Mississippi: Hart v. Machine Co.. 72 Miss. 809, 834, 17 So. 769. New York: Devlin v. Brady, 36 N. Y. 581, 2 Transc. App. 271, aff'g 32 Barb. 518 (note to procure official to violate his duty). Pennsylvania: Albertson v. Laugh- lin, 173 Pa. St. 525, 34 Atl. 216. i 369 NOTICE OR KNOWLEDGE — FRAUD. [§ 289 does not affect a renewal note." Again, if notes based upon an illegal consideration pass into a hona fide assignee's hands, and he, on re- peated promises of payment, repeatedly indulges the obligor, and ultimately surrenders such notes to the latter and takes a new note payable to his own creditor, the obligor waives the original considera- tion and is liable.^ So a new note from the obligor is valid in the hands of a lona fide assignee without notice of the illegal considera- tion of the original.-* And a bona fide indorsee of notes of a municipal corporation sold below par may be valid in the hands of such holder for value where the circumstances of the sale justify it.^ If the con- sideration of a note was the loan of state notes valuable as money at the date of the loan such note cannot be avoided on the ground of unlawful issuance where the maker used them as money at the time and was benefited thereby.^ § 289. Same subject — Exceptions and qualifications — Notice or knowledge — Fraud, etc.— The above general rule is, however, subject to certain exceptions and qualifications, and may be thus stated : Ille- gality between original parties will not affect an innocent indorsee ex- cept under the statutes of gaming and usury, unless he had notice or took the bill after it became due, and in order to render negotiable security void for illegality in the hands of an innocent holder for value without notice, and before due, the statute which makes the South Carolina: Carroll County lently issued by employe of a bank Sav. Bank v. Atrother, 28 S. C. 504, may hold the proceeds, where the 6 S. E. 313; Bell v. Weed, 1 Bay (S. bank has been negligent in leaving ^•) 249. blank drafts signed by the cashier Tennessee: First Nat. Bk. of Mas- in such employe's hands. Clifford sillon V. Coughron (Tenn. 1899), 52 Banking Co. v. Donovan Commis- S. W. 1112 (note held void; for- sion Co. (Mo., 1906), 94 S. W. 527. eign corporation had not complied => Buchanan v. Drovers' Nat. Bk., with state laws as to terms of do- 6 U. S. App. 506, 5 C. C. A, 83, 55 ing business). Fed. 223; Seventh Ward Nat. Bk. Federal: Hamilton v. Fowler, 99 v. Newbold, 2 City Ct. Rep. (N. Y.) Fed. 18. 125. Note founded on illegal or im- • ^ shreve v. Olds, 2 A. K. Marsh. moral consideration is valid in (Ky.) 141. hands of bona fide holder unless * Woolridge v. Gates, 2 J. J. statute makes note invalid. Henry Marsh. (Ky.) 222. v. State Bank of Laurend (Fidelity ''Rockwell v. Charles, 2 Hill (N. Savings Bank of Iowa, 1906), 107 Y.) 499. N. W. 1034. "Goweb v. Shute, 4 Baxt. (Tenn.) Bona fide payee of drafts fraudu- 57. Joyce Defenses — 24. §§ 290, 291] ILLEGAL OR IMMORAL CONSIDERATION. 370 contract illegal and void must make the same a crime, or the act itself must be immoral and contra hones mores.^* Such paper has also been held not collectible when the statute declares negotiable securities void under certain circumstances.'^** So knowledge of the illegality will defeat a recovery.'^ And a note, the consideration of which was valid and legal as between the original parties, may become void for illegality as to subsequent parties who are also parties to the illegality, and even as to a hona fide holder, if he be compellable to trace his title through the parties to the illegal consideration, and such passage of title is void by law.'^* So where two parties enter into a contract for a fraudulent purpose, they being in pari delicto, the law will leave them where it finds them and will not enforce the collection of a note given for such a consideration.* Other exceptions and qualifications exist and are noted herein under subsequent sections.^ § 290. Illegal considsration — Effect on surety. — Sureties may set up the illegality of a transaction as a defense in an action by a payee where the note is made to a public officer in contravention of public policy and against the statute for the private and illegal use or loan of public funds. ^° Nor is a surety bound by an illegal contract not obligatory upon the principal. ^^ § 291. Paper given for consideration in violation of statute. — The consideration of a note may be so far illegal as to invalidate it, even in a hona fide holder's hands, where such note is given in violation of the express terms of a statute.^- So the general rule as to illegality «* Rhodes v. Beall, 73 Ga. 641. "Gill v. Morris, 11 Heisk. (Tenn.) »** Eagle v. Kohn 84 111. 292. 614, 27 Am. Rep. 744. But see Da- ^ Norton & Macauiey v. Pickens, vis v. Board, 74 N. C. 374, 72 N. C. 21 La. Ann. 575; Gould v. Leavitt, 441. 92 Me. 416, 43 Atl. 17; Macomb v. "Irwin v. Marquet, 26 Ind. App. Wilkinson, 83 Mich. 486, 47 N. W. 383, 59 N. E. 38. See also the fol- 336; Brisbane v. Lesterjette, 1 Bay lowing cases: (S. C.) 113. Alahama.—KvLhl v. Press Co., 123 ^* Adams v. Rowan, 8 Smedes & Ala. 452, 26 So. 535; Hanover Bank M. (Miss.) 624. v. Johnson, 90 Ala. 549, 8 So. 42. *Cowell v. Harris, 2 Ohio Cir. Ct. Arkansas. — Wyatt v. Wallace, 67 R. 404. Ark. 575, 55 S. W. 1105. "See §§ 291, 292, 298, 300, 301 Georflria.— Cunningham v. Bank, herein. 71 Ga. 400, 51 Am. Rep. 266; Weed ^0 Board of Education v. Thomp- v. Bond, 21 Ga. 195. son, 33 Ohio St. 321. See § 288, note Connecticut. — Conklin v. Roberts, 1, herein. 36 Conn. 461. 371 VIOLATION OF STATUTE. 291 of consideration and bona fide holders^-* does not apply where the note is postively made wholly and utterly void by statute.^^** But where Illinois. — Town of Eagle v. Kohn, 84 111. 292; Chapin v. Dake, 57 111. 295; Bank v. Vankirk, 39 111. App. 23. Iowa. — Bank v. Alsop, 64 Iowa 97, 19 N. W. 863. Kentucky. — Morton v. Fletcher, 2 A. K. Marsh. (Ky.) 137, 12 Am. Dec. 366. Louisiana. — Groves v. Clark, 21 La. Ann. 567 (Const. 1868, Art. 128). Maine. — Sproule v. Merrill, 16 Shep. (Me.) 260. Maryland. — Emerson v. Town- send, 73 Md. 224, 20 Atl. 984. Massachusetts. — Bayley v. Taber, 5 Mass. 286. Nevada. — Evans v. Cook, 11 Nev. 69. New York. — Vallett v. Parker, 6 Wend. (N. Y.) 615. North Carolina. — Glenn v. Bank, 70 N. C. 191. Ohio. — Bank v. Portner, 46 Ohio St. 381, 21 N. E. 634. South Carolina. — Mordecai v. Dawkins, 9 Rich. L. (S. C.) 262. Tennessee. — Snoddy v. Bank, 88 Tenn. 573, 13 S. W. 127, 7 L. R. A. 705. Virginia. — Woodson v. Barrett, 2 Hen. & M. 80, 3 Am. Dec. 612. United States. — Root v. Merriam, 27 Fed. 909. England. — Hitchcock v. Way, 6 Adol. & E. 943, 33 E. C. L. 249; Shillito v. Theed, 7 Bing. 405, 20 E. C. L. 181; Henderson v. Benson, 8 Price 281. . Canada. — Summerfeldt v. Worts, 12 Ont. 48. Examine Durkee v. Conklin, 13 Colo. App. 313, 57 Pac. 486; Noble v. Cornell, 1 Hilt. (N. Y.) 98. Where notes were given for com- mercial fertilizer, which fertilizer was not tagged as required by law, such notes rest upon a void con- tract and are not valid in the hands of a bona fide purchaser- for value. Alabama Nat. B'k. v. C. C. Parker & Co. (Ala., 1906), 40 So. 987. That invalidity of notes for fertilizers may be set up as a defense, see Boyett V. Standard Chemical and Oil Co. (Ala., 1906), 41 So. 756. Void notes — Illegality as to brand- ed or marked fertilizers. See Kirby V. Huntsville Fertilizer & Milling Co., 105 Ala. 529, 17 So. 38; Merri- man & Co. v. Knox, 99 Ala. 93, 9 So. 427; Steiner v. Ray, 84 Ala. 93, 4 So. 172, note here valid; Holt v. Nevassa Guano Co., 114 Ga, 666, 40 S. E. 735; Allen v. Pearce, 84 Ga. 606, 10 S. E. 1015; Conley v. Sims, 71 Ga. 161; Reeves v. Grafting, 67 Ga. 512. "* § 288 and note 1 herein. ^-** Alabama. — Bozeman v. Allen, 48 Ala. 512. New York. — ^Vallett v. Parker, 6 Wend. (N. Y.) 615; Grimes v. Hil- lenbrand, 6 Thomp. & C. (N. Y.) 620, 4 Hun 354. North Carolina. — Glenn v. Farm- ers' Bank of North Carolina, 70 N. C. 101. South Carolina. — Brisbane v. Les- terjette, 1 Bay (S. C.) 113 (indorsee cannot recover if he appears to have had knowledge or if he did not give valuable consideration). United States. — Hatch v. Bur- roughs, 1 Woods (U. S.) 439, Fed. Cas. No. 6203. See Shank v. Bank, 124 Ga. 508. See as to Massachusetts statute: Kendall v. Robertson, 12 Cush. >92] ILLEGAL OR IMMORAL CONSIDERATION. 372 paper is given for a loan of money it is enforceable even though a license is a prerequisite to engaging in the loaning business, the loan of money being neither an act malum in se nor malum prohibitum, ^^ and if a bank violates a federal statute in certifying paper it cannot avail itself of such violation to avoid its liability.^* And where the law has been violated by the issuance of state notes, which are received as a loan by the maker of a note and used by him as money, he is liable, notwithstanding the illegal issue ;^^ and where tona fide holders have not been parties to the illegal transaction on which the note was based an exception has qualifiedly been made.^*^ So where a statute merely declares a note illegal it has been decided that the note is good in the hands of an innocent holder, the distinction being made between such a provision ajid one declaring the note void.^'^ Again a subse- quent illegal contract does not prevent recovery upon a note otherwise enforceable and valid at its inception.^* § 292. Same subject. — Although a statute provides that notes given for a patent right shall express upon its face its consideration, such note is not void because of non-compliance with such requirement, and a hona fide holder thereof is protected. It is only where the considera- (Mass.) 156; Rev. Stat. Mass. 35, § 2. But see as to English statute: Fitch V. Jones, 5 El. & Bl. 238; Henderson v. Benson, 8 Price 281 (5 & 6 Wm. IV, c. 41, 8 & 9 Vict, c. 109) ; Hay v. Ayling, 16 Q. B. 423; Parsons v. Alexander, 5 El. & Bl. 263. Where there is plea of illegal con- sideration and some evidence to sustain it onus of proof is on plaintiff to show that he is indorsee and holder for valuable considera- tion. Bozeman v. Allen, 48 Ala. 512, 516. "Vermont Loan Co. v. Hoffman, 5 Idaho 376, 49 Pac. 314. See Meyer- Marx Co. v. Ensley City, 141 Ala. 602, 37 So. 639; American Ins. Co. V. Wellman. 69 Ind. 413. See § 288, note 1 herein. "Thompson v. Bank, 146 U. S. 240, 13 Sup. Ct. 66 (violating Rev. St. U. S., § 5208. Statutory penalty is the only remedy. Thompson v. Bank, 113 N. Y. 325, 21 N. E. 57). i^Gowen v. Shute, 4 Baxt. (Tenn.) 57. See § 288, note 1, herein. " Sproule v. Merrill, 16 Shep. (Me.) 260, Stat., c. 158, § 16. See also Maine. — Cattle v. Cleaves, 70 Me. 256. Massachusetts. — Cazet v. Field, 9 Gray (Mass.) 329. New Hampshire. — Norris v. Lang- ley, 19 N. H. 423; Doe v. Burnham, 11 Fost. (N. H.) 426. New York. — Cowing v. Altman, 71 N. Y. 435, 27 Am. Rep. 70 [reversinff 1 Thomps. & Co. (N. Y.) 494]. Texas. — Campbell v. Jones, 2 Tex. Civ. App. 263, 21 S. W. 723. "Ward V. Sugg, 113 N. C. 489, 18 S. E. 717, 24 L. R. A. 280. " Wilcoxon V. Logan, 91 N. C. 449. 373 VIOLATION OF STATUTE. [§ 292 tion is expressed in the note that the indorsee before maturity and for value takes it subject to all defenses. ^^ It is also decided, however, that where a statute provides that a negotiable instrument given in payment for an interest in a patent riglit shall be absolutely void when it does not show upon its face that it was executed for such considera- tion, it is void in the hands of a bo7ia fide holder for a valuable con- sideration.2° But a "peddler's note" is not necessarily void for non- compliance with a statutory requirement, but the principle of estoppel ^^ Georgia. — Parr v. Erickson, 115 Ga. 873, 42 S. E. 240, under act of 1897, Van Epps' Code Supp., § 6650, et seq.; Smith v. Wood, 111 Ga. 221, 36 S. E. 649. Indiana. — Tescher v. Merea, 118 Ind. 586, 21 N. E. 316. Mitchell, J., said in this case that a promis- sory note fair upon its face con- taining the requisite words of ne- gotiability, although taken by a payee in violation of such a statute, is nevertheless a valid obligation in the hands of an innocent holder for value. New v. Walker, 108 Ind. 365, 9 N. E. 386. Nebraska. — Moses v. Comstock, 4 Neb. 516. Islew York. — Canajoharie Nat. Bank v. Diefendorf, 4 N. Y. Supp. 262 (compare this case in 123 N. Y. 191 as to good faith and burden of proof). Vosburgh v. Diefendorf, 48 Hun (N. Y.) 619, 1 N. Y. Supp. 58 (compare this case in 119 N. Y. 357). Pennsylvania. — Hunter v. Hennin- ger, 93 Pa. St. 373; Haskell v. Jones, 86 Pa. St. 173; Metropolitan Bank v. Sieber, 33 Leg. Int. 193, 11 Phila. 558. Tennessee. — Harmon v. Haggerty, 88 Tenn. 705, 13 S. W. 690.- Fermon^.— Pendar v. Kelley, 48 Vt. 27. =* Arkansas.— \Nya.\.t v. Wallace. 67 Ark. 575. 55 S. W. 1105, decided un- der Sand. & H. Dig. Ark.. §§ 493- 496. See the following cases: Georgiia.— Rhodes v. Beall, 73 Ga. 641; Weed v. Bond, 21 Ga. 195. Indiana. — Aurora v. West, 22 Ind. 88, 85 Am. Dec. 413. Louisiana. — Baldwin v. Sewell, 23 La. Ann. 444; Levy v. Germillion, 21 La. Ann. 635; Coco v. Callihan, 21 La. Ann. 624; Groves v. Clark, 21 La. Ann. 567. Massachusetts. — Bayley v. Taber, 5 Mass. 286, 4 Am. Dec. 57. Nebraska. — Kittle v. DeLamater, 3 Neb. 325. New York. — Claflin v. Boorum, 122 N. Y. 385, 25 N. E. 360. North Carolina. — Ward v. Sugg, 113 N. C. 489, 18 S. E. 717, 24 L. R. A. 280. Texas. — Andrews v. Hoxie, 5 Tex. 171. Note given for patent rights; va- lidity of, see United States. — Pe- grau V. American Alkali Co., 122 Fed. 1000. Indiana. — Jones v. Peoples' State Bank, 32 Ind. App. 119, 69 N. B. 466. A'ansas.— Pinney v. First National Bank, 68 Kan. 223, 75 Pac. 119. Kentucky. — Hays v. Walker, 25 Ky. L. Rep. 1045, 76 S. W. 1099. Maine. — Hathorn v. Wheelwright, 99 Me. 951, 59 Atl. 517. Pennsylvania. — Troxell v. Malin, 9 Pa. Super. Ct. 483, 43 W. N. C. 547. Wisconsin. — J. H. Clark Co. v. Rice (Wis. 1906), 106 N. W. 231. § 292] ILLEGAL OR IlIMORAL COXSIDERATIOK, 374 arising from acts of the maker may preclude him from claiming a de- fense on the grounds that the statute has been violated, the purchaser having no notice that the payee was a peddler.-^ In a Georgia case it is held that though it may be declared by statute that all contracts, covenants or security based on the consideration of permitting a bank- rupt to be discharged are void, yet where a negotiable note was given by a bankrupt debtor to his creditor for the amount of his debt in consideration that the creditor would withdraw his objections to the discharge of the debtor, such note was not void in the hands of a hona fide purchaser before due and without notice. ^^ So under a New York decision it is decided that a check given to carry out an agreement made in contravention of the. bankrupt act as to fees of officers of courts is not absolutely void, even though founded on an illegal con- sideration, but is valid in the hands of a hona fide holder for value taking it before it was dishonored and without notice of its illegality.^^ But a note given for a balance due on a transaction itself void by stat- ute or for money lent to pay bills which the person taking the note had illegally assisted to circulate cannot be enforced.^* Nor is a note en- forceable when issued by a bank in violation of the general law.~^ If the defense of illegal consideration is set up the whole statute must be examined to see whether the legislature intended to prevent enforcing a contract relating to the thing prohibited.^^ Again, it is held that the repeal of the statute before action brought precludes the defense of the original prohibition.^^ But a subsequently enacted statute pro- hibiting an act will not preclude recovery Avhere the consideration of the note was lawful. ^^ ^ Billington v. McColpin, 22 Ky. Examine Bacon v. Lee, 4 Iowa 490. L. Rep. 1281, 60 S. W. 923. =" Nichols v. Gee, 30 Ark. 135; - Rhodes v. Beall, 73 Ga. 641. See Holmes v. French, 68 Me. 525; § 125, herein. Smith v. Glanton, 39 Tex. 365. But =" Cowing v. Altman, 71 N. Y. 435, see Pond v. Home, 65 N. C. 84; 27 Am. Rep. 70, rev'g 1 Thomp. & C. Ayres v. Probasco, 14 Kan. 175. 494. See § 125 herein. ^Arkansas. — Newton v. Wilson, 31 =* Brown v. Tarkington, 3 Wall. Ark. 484. (U. S.) 377. See § 288, note 1, here- Connecticut.— RnhhSiT A v. Calla- in. han, 42 Conn. 524. ^Root v. Wallace, 4 McLean (U. Massachusetts. — North Bridge- S.) 8, Fed. Cas. No. 12039. Examine water Bank v. Copeland, 7 Allen Oneida Bank v. Ontario Bank, 21 (Mass.) 139. N. Y. 490. Virginia.— Cecil v. Hicks, 29 Grat. ^^ Harris v. Runnels, 12 How. (U. (Va.) 1. S.) 79. See Darby v. Institution, 1 United States. — Boyce v. Tabb, 18 Dill. (U. S.) 141, Fed. Cas. No. 3571. Wall. (U. S.) 546. But see Weed v. 375 CONSTITUTION AND LAWS VIOLATED ENEMY AIDED. [§ 293 § 293. Where constitution and laws violated — Enemy aided. Where a note is given for a debt created by a municipality in violation of the constitution it cannot be enforced and is invalid even in the hands of a bona fide indorsee for value before it became due.-^ The constitution and laws of the United States made in pursuance thereof are the supreme laAV of the land, and any contract or undertaking of any kind which destroys or impairs its supremacy or operates to aid or encourage any attempt to that end, is unlawful and violates the su- preme paramount law of the land, and no court sitting under the constitution and exercising authority by virtue of its provisions will treat such acts as a meritorious consideration for the promise of any one. Such a transaction is palpably illegal and contrary to public policy. This principle- applies to notes given in aid of the enemy or in aid of a rebellion or treasonable combination against the United States, in which case all the illegal facts and the entire transaction may be shown in defense to an action on such instrument even by a transferee for value.^** Kecovery has been allowed in some cases on the ground Snow, 3 McLean (U. S.) 265, Fed. Cas. No. 17347. ^ Town of Wadley v. Lancaster, 124 Ga. 354. ■-" Alabama. — Oxford Iron Co. v. Spradley, 46 Ala. 98; Oxford Iron Co. V. Quinchett, 44 Ala. 487. Arkansas. — Booker v. Robbins, 26 Ark. 660 (horse bought by the maker for the confederate service with payee's knowledge held a good de- fense in suit by payee); Portis v. Green, 25 Ark. 376; McMurtry v. Ramsey, 25 Ark. 350; Ruddell v. Landers, 25 Ark. 238 ("there can be no question but the whole transac- tion was not only contrary to public policy, but was palpably illegal and treasonable from its inception, and all attempted obligations made or passed between the parties were ab- solutely void") ; Tatum v. Kelley, 25 Ark. 209. Georgia. — Murphy v. Weems, 69 Ga. 687; O'Byrne v. City of Savan- nah, 41 Ga. 331 (a note given for a tax assessed during the existence of the confederate government but not collected is void, but there may be two considerations which are sever- able and the note be good as to part) ; Chancely v. Bailey, 37 Ga. 532. North Carolina. — Lewis v. Latham, 74 N. C. 283 (illegal consideration exists and vitiates a note given for a horse with knowledge of its treason- able use); Logan v. Plummer, 70 N. C. 388; Cronly v. Hall, 67 N. C. 9 (il- legality appeared upon face of in- strument and so bound subsequent holders) ; Kingsbury v. Fleming, 66 N. C. 524 (if money be lent to aid in the accomplishment of an illegal purpose such illegality is not purged by the borrower failing so to apply the money) ; Kingsbury v. Gooch, 64 N. C. 528. Tennessee. — Gill v. Creed, 3 Coldw. (43 Tenn.) 295; Thornburg v. Har- ris, 3 Coldw. (43 Tenn.) 157. Texas. — Roquemore v. Alloway, 33 Tex. 461 (such illegal contract can acquire no validity by transfer be- fore or after maturity). West Virginia. — Slifer v. Howell's § 293] ILLEGAL OR IMMORAL CONSIDERATION. 376 that the mere knowledge by the vendor that the purchaser intends to make an illegal or immoral use of the article purchased does not in- validate the note given in payment for such article, that there must be something to show participation in the illegal transaction or an intent to aid and promote the illegal purpose f^ and that mere knowledge that the funds might possibly or probably be used in advancing such illegal purpose is insufficient, the borrower being engaged in business which was also not illegal f^ and where a note in the usual form was given for a loan of money which the lender knew was intended to be used for the equipment of cavalry to serve the confederate states, but that by the contract the borrower was not restricted in any way as to the use of the money, but might use it as he saw fit, it was held that the loan could be recovered.^^ So, if the contract be unconnected with the il- legal act, but is founded on a new consideration, the courts will enforce it, especially if the party is in possession of all the gains and profits.^* So, where a note was given after the war for money borrowed to pay a debt incurred during the war for such illegal purpose, the illegality was held to be too remote.^^ So, where a note was given for the lease of a tract of land and the purpose of the lease was to raise food for laborers in manufacturing iron for the confederate government, it was held that such indirect and remote consequences would not be con- sidered.^® So, where a note was given in connection with partnership interests by some of the firm members to others the fact that it had, with other business, a contract for the enemy's government, does not render the note illegal, though based upon the proceeds of the general Admr., 9 W. Va. 391 (where a con- ^^^ Wallace v. Lark, 12 S. C. 576. tract is connected by its consider- ^^ Oxford Iron Co. v. Spradley, 51 ation with an illegal transaction of Ala. 171; Jones v. Bank, 9 Heisk. such a character it cannot be en- (56 Tenn.) 455. See Cooper v. forced). Thompson, 20 La. Ann. (La.) 182; United States. — Taylor v. Thomas, Walker v. Jeffries, 45 Miss. 160. 22 Wall. (89 U. S.) 479; Hanauer v. =^ Walker v. Jeffries, 45 Miss. 160. Woodruff, 15 Wall. (82 U. S.) 439, Examine Bank of Tennessee v. 442, per Field, J.; Hanauer v. Doane, Cummin gs, 9 Heisk. (56 Tenn.) 465. 12 Wall. (79 U. S.) 342. But see ■* Gilliam v. Brown, 43 Mis?. 641. Murphy v. Weems, 69 Ga. 687; Glenn See Williams v. Alexander, 79 N. V. Bank, 70 N. C. 191; Kingsbury v. C. 411; Powell v. Smith, 66 N. C. Suit, 66 N. C. 601 (a case of a single 401; Thornburg v. Harris, 3 Coldw. bill given for money borrowed to pay (43 Tenn.) 157; Puryear v. Mc- a debt theretofore contracted) ; Bank Gavock, 9 Heisk. (56 Tenn.) 461. of Tennessee v. Cummings, 9 Heisk. -'^ Poindexter v. Davis, 67 N. C. (Tenn.) 465; Hatch v. Burroughs, 112. 1 Woods 439, Fed. Cas. No. 6203. '" McKesson v. Jones, 66 N. C. 258. J 377 ILLEGAL SALES — COMPOUNDING CRIMINAL ACTS. [§§ 294, 295 business.^^ And notes given in consideration of bonds issued by the enemy during the civil war in aid of the rebellion, commonly known as war bonds, are not based upon a valid consideration, the is- suing of the bonds being an open act of liostility to the United States, especially where every holder of the paper knew the object for which it was issued.^* § 294. Illegal sales. — The fact that goods sold in violation of the law constitutes the consideration of a note is not a defense available against one who holds the paper for a valuable consideration before maturity and without notice of the illegality.^^ Such a defense, however, may be available against the payee or his transferee after maturity.*" But the rule does not apply to illegal sales made by an agent who receives a note in payment, but gives the payee his own note, the last note not being open to the defense that the law was violated by such sales.*^ If a sale of certain property is void under a statute, because of non-com- pliance with the laws of the state, it has been decided that such non- compliance constitutes a good defense to an action on a note given for the purchase price of property of the particular class specified." § 295. Compounding criminal acts. — Notes given for the purpose of compounding or procuring the dismissal of a criminal prosecution are not enforceable, as they are contrary to public policy and void, and therefore such a settlement is a good defense to an action thereon by the payee.*^ But, as will appear hereafter, a distinction exists between " Gullatt V. Thrasher, 42 Ga. 429. New York.— Allen v. McFadden, 20 '^ Tucker v. Horner, 28 Ark. 335; N. Y. Supp. 360. Thornburg v. Harris, 3 Coldw. (43 reo-as.— Campbell v. Jones, 2 Tex. Tenn.) 157; Gill v. Creed, 3 Coldw. Civ. App. 263, 21 S. W. 723. (43 Tenn.) 295 (note given for con- Yermon?.— Converse v. Foster, 32 federate treasury notes); Grant v. Vt. 828; Pindar v. Barlow, 31 Vt. Ryan, 37 Tex. 37; Hanauer v. Wood- 529. See § 288, note 1, herein, ruff, 15 Wall. (82 U. S.) 439. ^» Glass v. Alt, 17 Kan. 444; Mer- '■" Maine.— Cottle v. Cleaves, 70 Me. rick v. Butler, 2 Lans. (N. Y.) 103. 256; Hapgood v. Needham, 59 Me. ■"Domestic Sewing Mach. Co. v. 442; Field v. Tibbetts, 57 Me. 358, Hatfield, 58 Ind. 187. 99 Am. Dec. 779 ; Baxter v. Ellis, 57 " Hanover Nat. Bank v. Johnson, Me- 178. 90 Ala. 549, 8 South. 42; Streit v. Massachusetts.— Cazet v. Field, 9 Sanborn, 47 Vt. 702. Gray (Mass.) 329. "Kirkland v. Benjamin, 67 Ark. New Hamjyshire.— Great Falls 480, 55 S. W. 840; Rogers v. Blythe, Bank v. Farmington, 41 N. H. 32; 51 Ark. 519, 11 S. W. 822; Woodham Doe V. Burnham, 11 Fost. (N. H.) v. Allen, 130 Cal. 194, 62 Pac. 398; 426; Norris V. Langley, 19 N. H. 423. Bell v. Wood, 1 Bay (S. C.) 249. § 296] ILLEGAL OR IMMORAL CONSIDERATION. 378 a private and a public suit, as in case of seduction or bastardy.*^* And it has been decided that an indorser of a note signed by the maker to avoid a criminal prosecution is not within the rule as to such a de- fense.*^ It is also held that the rule permitting such a defense does not apply as against an innocent indorsee for value, there being no statute to that effect.*^ And as against such an indorsee without no- tice before maturity of a note based upon a consideration which was a forbearance to sue the maker for slander in stating that a written order of the maker held by the payee was forged, there can be a re- covery, even if said order was forged.*^ § 296. Where consideration is money or property won at gambling device. — In the absence of a statutory provision that a bill or note given for a wagering contract shall be void, the defense that it was for such a consideration cannot be sustained against a hana fide holder thereof for value before maturity and without notice;*^ and where See also Turley v. Bartlett, 10 Heisk. (Tenn.) 221. See § 288, note 1, herein. *** See §§ 299-301 herein. "Bowman v. Hiller, 130 Mass. 153, 39 Am. Rep. 442. "Wentworth v. Blaisdell, 17 N. H. 275; Clark v. Ricker, 14 N. H. 44; Hill v. Northrup, 1 Hun (N. Y.) 612, 4 Thomp. & C. 120. But see Bell v. Wood, 1 Bay (S. C.) 249. ** Herrick v. Swomley, 56 Md. 439. ^^ California. — Haight v. Joyce, 2 Cal. 64, 56 Am. Dec. 311. Colorado. — Boughner v. Meyer, 5 Colo. 71, 40 Am. Rep. 139. Illinois. — Shirley v. Howard, 53 111. 455; Adams v. Wooldridge, 3 Scam. (111.) 255; Biegler v. Mer- chants Loan & Trust Co., 62 111. App. 560. Indiana. — Schmueckle v. Waters, 125 Ind. 265, 25 N. E. 281. Rhode Island. — Atwood v. Weeden, 12 R. I. 293. Texas. — Thompson v. Samuels (Tex.), 14 S. W. 143. See § 288, note 1, herein. A defense that notes had been given on Sunday and on account of a stock-gambling transaction is not available, where the notes are regu- lar upon their face, as against a pur- chaser in good faith for value, be- fore maturity and without notice. Myers v. Kessler (C. C. A.), 142 Fed. 730. Bet at billiards for game and liquors. If plaintiff kept a billiard saloon and played with the defend- ant upon the terms that the defend- ant should pay for the use of the table by both parties in case he lost, but otherwise he should pay nothing, it is gaming. It is also gaming if the parties played together upon the terms that the defendant, in case he lost, should pay the plaintiff for liquors and cigars to be used by the plaintiff but otherwise not, and the same would apply to the price of the use of table or to the price of the liquors, so that a note given for the amount therefor would be void both as to the original note and the re- newal thereof where such acts are 379 STATUTORY PROHIBITIONS. [§ 297 paper is signed at the maker's request by accommodation indorsers to be discounted at a certain bank, which has no knowledge that the pro- ceeds are to be used for gambling purposes, such use will constitute no defense to an action on the paper.*^ As a general rule, however, paper based upon such a consideration is open to a defense showing that the actual consideration was a Avager or gambling where the action is brought by an original party or by subsequent holders taking it after maturity or with notice.*^ It is also held that the general rule also governs what are known as "Bohemian Oats" notes ;^" and the same rule governs as to the assignee of a note given for wagers intentionall}^ lost at cards to enable the obligee to sell it for the joint benefit of the obligor and himself.^ ^ § 297. Same subject — Statutory prohibitions. — Wliere a statute provides that all judgments by confession, conveyances, bonds, bills, notes and securities, when the consideration is money or property won at any game or gambling device, shall be void and may be set aside and vacated by any court of competent jurisdiction upon suit brought for that purpose by the person so confessing, giving, entering into or ex- ecuting the same, or by his executors, etc., purchaser or other person interested therein, the main purpose of such an act is to discourage contrary to the statute against gam- Term R. 630, 2 Esp. 631; Aubert v. ing, and so even though the plaintiff Maze, 2 Bos. & P. 374; Steers v. was licensed to sell such goods. Lashley, 6 T. R. 61, 533; Amory v. Murphy v. Rogers, 151 Mass. 118, Merry weather, 2 Barn. & C. 573; 120, 24 N. E. 335; Holden v. Cos- Amory v. Merry weather, 4 Dowl. & grove, 12 Gray (78 Mass.) 216. R. 86. Gambling — That statute constitu- =■" Schmueckle v. Waters, 125 Ind. tional as to assignment of bill or 265, 25 N. E. 281; Payne v. Raubi- note based on gambling considera- nek, 82 Iowa 587, 48 N. W. 995; tion see Higgenbotham v. McGready, Merrill v. Packer, 80 Iowa 542, 45 183 Mo. 96, 81 S. W. 883. N. W. 1076; Ward v. Doane, 77 "'Birdsall v. Wheeler, 62 App. Mich. 328, 43 N. W. 980; Davis v. Div. (N. Y.) 625, 71 N. Y. Supp. 67. Seeley, 71 Mich. 209, 38 N. W. 901; ^'^ Indiana. — Spray v. Burk, 123 McNamara v. Gargett, 68 Mich. 454, Ind. 565, 24 N. E. 588. 36 N. W. 218; Jacobs v. Mitchell, 46 /OTTO.— Peoples Sav. Bank v. Gif- Ohio St. 601, 22 N. E. 768. Com- ford, 108 Iowa 277, 79 N. W. 63. pare Stewart v. Simpson, 2 Ohio Massachusetts. — Scollans v. Flynn, Cir. Ct. R. 415. See § 288, note 1, 120 Mass. 271. herein. Rhode Island. — Atwood v. Weeden, " Thompson v. Moore, 4 T. B. 12 R. I. 293. Mon. (Ky.) 79. England. — Brown v. Turner, 7 298] ILLEGAL OK IMMOliAL COXSIDEKATION. 380 and suppress gaming by preventing retention of the spoils by the gambler, or the successful transfer of them to his colleagues. And where a transfer or indorsement is made of drafts given as security for money loaned and to be loaned for the purpose of gambling with the lender, such indorsement is within the inhibitions of the statute, as it is to be regarded either as a security or as a new bill, nor in such case does the rule as to parties in pari delicto apply ;^- and generally such express statutory prohibitions as to notes or paper given for such wagering or gambling considerations, or based upon such gaming transactions, precludes a recovery, it being a good defense that it was so given, even against a lona fide holder.^^ § 298. Same subject — Qualifications of rule — Other instances. — In determining whether a note given in an option or "future" deal shall be subject in the hands of a bona fide holder to the defense of an illegal consideration, it seems that the inhibition in the statute must be suffi- "* Morton v. Provident Nat. Bank of Waco, Tex. Civ. App. 1906, 93 S. W. 189 (under Rev. Stat. Mo. 1899, § 3426), considering Williams v. Wall, 60 Mo, 318 (which cites 2 Bouv. L. Diet. 493; Slacum v. Pom- eroy, 6 Cranch (U. S.) 221, 3 L. Ed. 204; Coffee v. Planters' Bank of Tenn., 13 How. (U. S.) 183, 14 L. Ed. 105; Van Stophorst v. Pearce, 4 Mass. 258; Chapin v. Duke, 57 111. 295, 11 Am. Rep. 15) ; Savings Bank of Kansas v. National Bank of Com- merce, 38 Fed. 800, and distinguish- ing Higginbotham v. McCready (Mo.), S. W. 883. '-^Alabama. — Ivey v. Nicks, 14 Ala. 564. Colorado. — Ayer et al. v. Younker, 10 Colo. App. 27, 50 Pac. Rep. 218. Connecticut. — Conklin v. Roberts, 36 Conn. 461. Illinois. — Williams v. Judy, 8 111. 282, 44 Am. Dec. 699; Pope v. Hanke, 52 111. App. 453; International Bank v. Vankirk, 39 111. App. 23; Tenney V. Foote, 4 111. App. 594. Indiana. — Irwin v. Marquett, 26 Ind. App. 383, 59 N. E. 38. Iowa. — Koster v. Seney, 99 Iowa 584, 68 N. W. 824; Traders' Bank v. Alsop, 64 Iowa 98, 19 N. W. 863. Kentucky. — Pace v. Martin, 2 Duv. (Ky.) 522; Early v. McCart, 2 Dana (Ky.) 414. Mississippi. — Lucas v. Waul, 12 Smedes & M. (Miss.) 157. Ohio. — Lagonda Nat. Bank v. Port- ner, 46 Ohio St. 381, 21 N. E. 634. Pennsylvania. — Harper v. Young, 112 Pa. St. 419, 3 Atl. 670; Unger v. Ross, 13 Pa. St. 601. South Carolina. — Mordecai v. Daw- kins, 9 Rich. Law. (S. C.) 262. Tennessee. — Snoddy v. American Nat. Bank, 88 Tenn. 573, 13 S. W. 127, 17 Am. St. Rep. 918, 7 L. R. A. 705. Texas. — Stewart v. Miller, 3 Will- son (Tex. Civ. App.), § 292. Wyoming. — Swinney v. Edwards, 8 Wyo. 54, 55 Pac. 306. United States. — Pearce v. Rice, 142 U. S. 28, 12 Sup. Ct. 130. But see Crawford v. Spencer, 92 Mo. 498, 4 S. W. 713. See § 288, not« 1, herein. ■ 381 ILLEGAL AXD IMMORAL COXSIDl- RATIOX. [§ 299 ciently specific to cover cases of this character to warrant such a de- fense being sustained ; so that the general rule governing in cases of statutes as to gambling must be qualified to the above extent;^* al- though where the statute expressly and in sufficiently specific terms makes such notes void it constitutes an available and good defense even against a bona fide holder f^ but the note may not be subject to such a defense as that of a gambling consideration where the transaction is valid, in that the intent of one of the parties was an actual purchase and sale of stocks, the gambling purpose being only that of the other party.^^ Again, a certificate of deposit may be based upon a gambling transaction and be iAdorsed and assigned in a foreign state, and still the indorser or assignor be liable at the suit of a bona fide holder for value, although such negotiable paper be void in such bona fide holder's hands under express declaration of the statute of the state where suit is brought.^'^ § 299.' Illegal and immoral considerations. — It is a well settled rule that contracts based upon a consideration in furtherance of immorality are illegal, against public policy, vicious and void, and this applies to bills and notes, but a distinction has been made between a note given as a compensation for an injury committed, although an immoral act, and a note given to encourage future immorality, it being held that the paper is valid in the former case, although it is void in the latter, another distinction is also made in this connection between bonds and deeds and instruments under seal, and those not under seal, it being held that the rule governing in the former case has no application in the latter. These distinctions will fully appear in the next following sections. '•* Indiana. — Sondheim v. Gilbert, Fed. 592; Jackson v. Foote, 12 Fed. 117 Ind. 71, 18 N. E. 687, 10 Am. St. 37; Third Nat. Bank v. Harrison, 3 Rep. 23, 5 L. R. A. 432. McCrary (U. S.) 316, 10 Fed. 243. Michigan.— Shaw v. Clark, 49 But see Hawley v. Bibb, 69 Ala. 52; Mich. 384. Cunningham v. Bank, 71 Ga. 400. ITtssoMn.— Crawford v. Spencer, See § 288, note 1, herein. 92 Mo. 498, 4 S. W. 713; Third Nat. ^=*Pope v. Hanke, 155 111. 617, 40 Bank v. Tinsley, 11 Mo. App. 498. N. E. 839; Snoddy v. Bank, 88 Tenn. New York.— Provost v. McEnroe, 573. 13 S. W. 127; Root v. Merriam, 102 N. Y. 650, 5 N. E. 795. 27 Fed. 909. Pennsylvania.— Northern Nat. Bk. '^'' Bangs v. Hornick, 30 Fed. 97. of Lancaster v. Arnold (Pa. Sup.), "Sullivan v. German Nat. Bank, 40 Atl. 794. 18 Colo. App. 99, 70 Pac. 162. United States.— Uentz v. Jewell, 20 300] ILLEGAL OR IMMORAL COXSIDERATION. 382 § 300. Same subject — Decisions. — Future cohabitation is a vicious consideration, and contracts upon it may be rescinded by the party or those claiming in priority under him, but a meretricious connection between a man and a woman does not disable her from receiving of him by gift or contract.^"* A distinction is made, however, between con- tracts under seal and not under seal as to past cohabitation as a con- sideration, although future cohabitation as a consideration makes the contract utterly void.^^ So, a bond or note under seal is not invalid be- cause based upon past cohabitation as a consideration, it not appearing that there was any stipulation for future cohabitation, even though cohabitation continues after the execution of theT)ond, the onus being upon defendant to prove the immoral consideration in such case.^® So, a bond for cohabitation with a woman seduced by the obligor and for maintenance after his death is illegal and void in law, where it is the price of prostitution, prwmium prostitutionis, especially where by the condition in the bond if she became virtuous she was to lose the an- nuity.^° Again, where a statute forbids a person having a wife or lawful children from giving a woman with wliom he lives in adultery, or to his bastard children, more than one-fourth the clear value of his estate, either by deed or will, "or by any other ways or means what- soever," a promissory note is within such proviso, and when given to such paramour can only be recovered to that amount in case the statute is applicable. And where the jury were instructed that if the consid- Weisiger, 3 T. "* Winebrinner v. B. Men. (19 Ky.) 33. "Contracts made in furtherance of immorality, or designed to facili- tate and continue an immoral course of life, are illegal and void at com- mon law; as where rooms are let for the purpose of prostitution, or notes or bonds are given to secure the continuance of an illicit inter- course. But where there is an ex- isting obligation, either legal or moral, arising out of past illicit in- tercourse, to recompense the injured party, it is held that a bond or other specialty executed for that purpose alone is a valid instru- ment." Edwards on Bills & Prom. Notes (2d ed.) 321. "A bond given in consideration of future illicit cohabitation is void. but not so if given for past cohabi- tation, nor is it void if given to support a putative child; but a bill or note as between immediate par- ties would not be enforced if given for past cohabitation because not founded upon a consideration." Daniel on Neg. Inst. (5th ed.), § 195. =« Potter & Son v. Grade, 58 Ala. 303, 29 Am. Rep. 748. Future illicit intercourse as con- sideration makes contract void. Walker v. Gregory, 36 Ala. 180. A promissory note based on past cohabitation is not supported by a sufficient consideration. Singleton V. Bremar, 1 Harp. (S. C.) 201, dis- tinguishing between notes and bonds or deeds. '-^ Brown v. Kinsey, 81 N. C. 245. «" Walker v. Perkins, 3 Burr. 1568. 383 ILLEGAL OR IMMORAL CONSIDERATION. [§ 301 eration thereof was solely for past cohabitation they should find for the plaintiff to the full amount thereof, and if for future cohabitation then they should find for the defendant, and they found for the latter, the Judgment was affirmed.''^ And where a married man living with his wife cohabited for several years with another woman who knew he was married, and upon ceasing to cohabit with her he gave her a bond to secure an annuity to her for life and the payment of a sum of money to provide for her children borne to him by her during co- habitation, an action at law was sustained. Upon such bond Bayley, J., said : "It is clearly established that a bond given to a single woman by a single man, as a prcemium pudicitiae, at the time he determines the illicit connection is valid between the parties * * * j^ having been once established that a bond given to secure a provision to a wom- an who has lived with a man in a state of fornication is valid, my pres- ent impression is that we ought not to hold that a bond given to a wom- an who has lived with a man in a state of adultery is void, because in one case the woman has been guilty of a greater degree of immorality than in the other."^^ gg^ j^ ^^ action on an annuity bond, given by a man to a woman with whom he cohabits, it is for the jury to deter- mine whether at the time it was given there was or was not an inten- tion and agreement to continue the connection in future, for if such intention existed the bond was given in furtherance thereof, and no recovery can be had thereon,"^ § 301. Same subject — Decisions continued. — "^Tiere a note is given after seduction and as a compensation for the injury caused thereby, and not in settlement of a criminal prosecution, the consideration is valid independently of the compromise of the suit.*'* Again, a prom- issory note given in compromise of bastardy proceedings is valid and of sufficient consideration for a recovery at law, even though the off- spring comes into the world stillborn after a compromise has been effected ;«' and so even though the child lived but a few days after birth.«« And in another similar case it is held that where the law au- •>• Massey v. Wallace, 32 S. C. 149, " Friend v. Harrison, 2 Carr. & P. 10 S. E. 937. 584, 12 Eng. C. Law 276. "Nye v. Moseley, 6 Barn. & Cr. "Smith v. Richards, 29 Conn. 232. 133. See People v. Hayes, 70 Hun See Shenk v. Mingle, 13 Serg. & R. (N. Y.) Ill, 54 N. Y. St. R. 184; (Pa.) 29. aff'd, 140 N. Y. 484, 35 N. E. 95, 37 '^ Merritt v. Flemming, 42 Ala. 234 Am. St. Rep. 573, 23 L. R. A. 83. (action by payee against maker). Examine Gray v. Mathias, 5 Ves. ^ Maxwell v. Campbell, 8 Ohio St. Jr. 286, 294. 265. § 301] ILLEGAL OR IMMORAL COXSIDEEATIOK. 384 thorizes no one but the mother of a bastard to institute a prosecution against the putative father, she may or may not, at her option, com- rnence such prosecution. So that a note given by the father of the bastard in consideration of her promise not to commence such a suit is valid and collectible, and the death of the child in such a case can- not in any degree affect the consideration of the note, as such a note is given not to secure a maintenance of the child, but to avoid a prose- cution for bastardy.®^ If a promissory note recites two considerations for promise therein contained, and either of them is inconsistent with law, morality or public policy, it is held that the whole contract is vicious and void; yet a promissory note for past cohabitation, or based upon the obligation to support defendant's bastard child, is legal and valid even though the mother agrees not to prosecute the defend- ant under the statute.®^ In an English case it is held that where the statute only authorizes the parish officers to take security from the putative father of a bastard to indemnify the parish, and they take a promissory note absolute for a sum certain, and there is a tender of a lesser sum as the amount of the charge actually sustained by the parish, no further recovery can be had. The security being given for indemnity excludes every other consideration. The parish officers are not to speculate, but to take the security as a matter of public duty in the form prescribed in the statute. Lord Ellenbourgh said : "I am of opinion that the plaintiffs are not entitled to recover beyond the sum paid into court, whether considering the contract as void upon prin- ciples of public policy, or considering it with relation to the individ- uals with whom it was made, as a contract for gain or loss by persons clothed with a public trust upon the subject-matter of their trust, and giving them an interest in the mal-execution of it."®^ Again, where a lodging under a weekly tenancy was not originally let for the pur- poses of prostitution, but it was subsequently so used with the plain- tiff's knowledge recovery was denied for such subsequent rental.'^" But where plaintiff was employed to wash clothes for defendant, who was a prostitute, knowing her to be such, it was decided that the use to which the clothes might be applied could not bar a recovery in an action for work and labor.''^ "Harter v. Johnson, 16 Ind. 271. Examine Hoit v. Cooper, 41 N. H. ^ Burgen v. Straughan, 7 J. J. 111. Marsh. (30 Ky.) 584. See also '"Jennings v. Throgmorton, 21 Hays V. McFarlan, 32 Ga. 699, 79 Eng. C. Law 744. Am. Dec. 317; Jackson v. Finney "Lloyd v. Johnson, 1 Bos. & P. and Riley, 33 Ga. 512. 340. "Cole v. Garver, 6 East. 109, 110. CHAPTER XIII. USURY. Sec. 302. Usury — Generally. 303. Bona fide holders — Paper based on usurious contract between original parties. Sec. 304. Maker and transferee — Dis- count and transfer. 305. Renewal bill or note — Exten- sions. 306. Corporations. § 302. Usury — Generally. — The general rule that contracts to pay usurious interest are void and unenforceable, or at least voidable at the option of the borrower or those in privity with him, since that which the statute declares unlawful and void can have no validity to the extent specified,^ applies to an action by a nayee on a note tainted ^ Arkansas. — Sapp v. Cobb, 60 Ark. 367, 30 S. W. 349. Florida. — Maxwell v. Jacksonville Loan & Imp. Co., 45 Fla. 425, 468, 34 So. 255; Lyle v. Winn, 45 Fla. 419, 34 So. 158. Georgia. — Howell v. Pennington, 118 Ga. 494, 45 S. E. 272. Kentucky. — Guenther v. Wisdom, 27 Ky. L. Rep. 230, 84 S. W. 771. Michigan. — George N. Fletcher & Sons v. Alpena Cir. Judge, 136 Mich. 511, 99 N. W. 748, 11 Det. Leg. N. 105. Missouri. — Missouri Real Estate Syndicate v. Sims, 179 Mo. 679, 78 S. W. 1006; Vette v. Geist, 155 Mo. 27, 55 S. W. 871; Osborn v. Payne, 111 Mo. App. 29, 85 S. W. 667; Cow- gill V. Jones, 99 Mo. App. 390, 73 S. W. 995. Nebraska. — Hare v. Hooper, 56 Neb. 480, 76 N. W. 1055. New Jersey. — Clarke v. Day (N. J.), 60 Atl. 39. Neio York. — Union Credit & In- vestment Co. V. Union Stockyard & Market Co., 92 N. Y. Supp. 269; Reich V. Cochran, 85 N. Y. Supp. 247, 41 Misc. 621. North Carolina. — Erwin v. Morris (N. C), 40 S. E. 53; Churchill v. Turnage, 122 N. C. 426, 30 S. E. 122, Oklaho m a. — Metz v. W i n n e (Okla.), 79 Pac. 223. West Virginia. — Lorentz v. Pin- nell, 55 W. Va. 114, 46 S. E. 796. Ex- amine Matz v. Avick, 76 Conn. 388, 56 Atl. 630. If one is financially embarrassed and he employs another to assist him, and the value of his services is afterward agreed upon and paid by a promissory note it is not usury. Noyes v. Landon, 59 Vt. 569, 10 Atl. 342. Joyce Defenses — 25. 385 302] USURY. 386 with usury and such a defense is good as to him,- and a scheme or de- vice to evade the usury laws brings the note within the rule.^ Such a defense extends not only to parties but to privies ;* and where one seek- ing relief was neither a party nor privy it was refused.^ But such de- fense, it is declared, is available against personal representatives.® It is, however, so it is determined, a personal defense limited to immedi- ate parties or the debtor,'^ and a purchaser of mortgaged property can- * Georgia. — Howell v. Pennington, 118 Ga. 494, 45 S. E. 272; Angler V. Smith, 101 Ga. 844, 28 S. E. 167. Illinois. — Armour v. Moore, 5 111. App. 433. Iowa. — Pardoe v. State Nat. Bk., 106 Iowa 345, 76 N. W. 800. Minnesota. — Johnson v. Joyce, 90 Minn. 377, 97 N. W. 113. Missouri. — Citizens' Nat. Bk. v. Donnell, 172 Mo. 384, 72 S. W. 925, aff'd 195 U. S. 369, 49 L. Ed. 238, 25 Sup. Ct. 49. Nebraska. — Allen v. Dunn (Neh.), 99 N. W. 680. New York. — Strickland v. Henry, 66 N. Y. App. Div. 23, 73 N. Y. Supp. 12; Dunham v. Day, 13 Johns. (N. Y.) 40; Ketchum v. Barber, 4 Hill (N. Y.) 224, 234. Texas. — Webb v. Galveston & H. Inv. Co. (Tex. Civ. App.), 75 S. W. 355. United States. — McLean v. Lafay- ette Bank, 2 McLean (U. S.) 587. Examine Scott v. Kennedy, 201 Pa. 462, 51 Atl. 384; Peterson v. Berry, 125 Fed. 902, 60 C. C. A. 610. = Missouri K. & T. Trust Co. v. Krumseig, 172 U. S. 351, 19 Sup. Ct. 179, 43 L. Ed. 474, aff'g 23 U. S. C. C. A. 1, 40 U. S. App. 620, 77 Fed. 32, which affirmed 71 Fed. 350. *Laux V. Gildersleeve, 23 N. Y. App. Div. 352, 48 N. Y. Supp. 301. See Crawford v. Nimmons, 180 111. 143, 54 N. E. 209, rev'g 80 111. App. 543. Examine generally Ford v. Washington Building &c. Asso., 10 Idaho 30, 76 Pac. 1010. ''Vette V. Geist, 155 Mo. 27, 55 S. W. 871. See generally Missouri Real Estate Syndicate v. Sims, 179 Mo. 679, 78 S. W. 1006. » Fox V. Whitney, 16 Mass. 118. ''Alabama. — Stickney v. Moore, 108 Ala. 590, 19 So. 76; Cain v. Gimon, 36 Ala. 168. Connecticut. — Loomis v. Eaton, 32 Conn. 550. Idaho. — Anderson v. Oregon Mortg. Co., 8 Idaho 418, 69 Pac. 130. Illinois. — Crawford v. Nimmons, 180 111. 143, 54 N. E. 209, rev'g 80 111. App. 543. loiva. — Conger v. Babbet, 67 Iowa 13, 24 N. W. 569. New Hampshire. — Savage v. Fox, 60 N. H. 17. New York. — Bullard v. Raynor, 30 N. Y. 197. North Carolina. — Faison v. Grandy (N. C. 1901), 38 S. E. 897. South Carolina. — Zeigler v. Maner, 53 S. C. 115, 30 S. E. 129. West Virginia. — Smith v. McMil- lan, 46 W. Va. 577, 33 S. E. 283. But see Prather v. Smith, 101 Ga. 283, 28 S. E. 85; Akers v. Demond, 103 Mass. 318. Examine generally Bacon v. Iowa Savings & Loan Ass'n, 121 Iowa 449, 96 N. W. 977; People's Building & Loan Ass'n v. Pickard (Neb.), 96 N. W. 337; People's Building & Loan Ass'n V. Palmer (Neb.), 89 N. W. 316; Bird v. Kendall, 62 S. C. 178. 40 S. E. 142; Harper v. Middle States Loan. Building & Construc- tion Co., 55 W. Va. 149, 46 S. E. 817. 387 USURY GENERALLY. [§ 30; not avail himself of the defense f nor as against an indorser can usury between maker and payee be set up;" nor, as against the payee, is usury between the payee and acceptor of a bill a defense ;^" althougli it is held that usury on the part of the maker is available in behalf of an accommodation indorser," or of an acceptor of a bill in an action by the holder.^^ But as against a surety an usurious contract between the principal and holder of a note constitutes no defense,^^ although if collateral has been pledged by a surety for payment he may set up this defense;^* although where tlie principal has obtained an extension by an usurious contract the surety is entitled to the benefit of the pay- ments made/^ but an indorser has been denied such a defense,^*' though it has been held available to a surety against one who pur- chases the paper after maturity." But in construing the language used the words will not be strained to sustain such a defense/^ Again, where a usurious loan has been obtained by a pledge of notes fraudu- lently obtained the owner may set up the defense of usury under a statute making a pledge based on usury illegal and void.^** So, a mort- gage given to secure a usurious note will, so it is decided, be likewise I Receivers may set up defense. Short V. Post, 58 N. J. Eq. 130, 42 Atl. 569. *Town of Reading v. Town of Weston, 7 Conn. 409; Read v. East- man, 50 Vt. 67. "Challis V. McCrum, 22 Kan. 157; McKnight v. Wheeler, 6 Hill (N. Y.) 492; Ely v. Bank, 79 Pa. St. 453. '"Woolfolk V. Plant, 46 Ga. 422. " Newport Nat. Bank v. Tweed, 4 Houst. (Del.) 225; Nat. Bank of Auburn v. Lewis, 75 N. Y. 516 [re- versing 10 Hun (N. Y.) 468]. '= Jackson v. Fassit, 33 Barb. (N. Y.) 645, 21 How. Prac. (N. Y.) 279, 12 Abb. Prac. (N. Y.) 281. 111. 123. " Illinois. — Sanner v. Smith, 89 111. 123. Kansas. — Jenness v. Cutler, 12 Kan. 500. Kentucky. — Burks v. Wonterline, 6 Bush (Ky.) 20. Mississippi. — Brown v. Prophit, 53 Miss. 649. New Hampshire. — Cole v. Hills, 44 N. H. 227. Ohio. — First Nat. Bank of Colum- bus V. Garlinghouse, 22 Ohio St. 492; Selser v. Brock, 3 Ohio St. 302. Vermont. — Lamoille County Nat. Bank v. Bingham, 50 Vt. 105; Davis V. Converse, 35 Vt. 503; Ward v. Whitney, 32 Vt. 89. "Buquo V. Bank of Erin (Tenn.), 52 S. W. 775. " Lemmon v. Whitman, 75 Ind. 318. •"Stewart v. Bramhall, 74 N. Y. 85 [affirming 11 Hun (N. Y.) 139]; Union Nat. Bank v. Wheeler, 60 N. Y. 612. " Maher v. Lanfrom, 86 111. 513. ^^ Hamilton v. Le Grange, 2 H. Bl. 144. '"Keim v. Vette, 167 Mo. 389, 67 S. W. 223. Examine Chambers v. Gilbert, 68 Minn. 183, 70 N. W. 1077. See generally Osborn v. Payne, 111 Mo. App. 29, 85 S. W. 667. § 302] USURY. • 388 affected,-" and so discharge the mortgagor from paying interest in cer- tain cases.- ^ So, the defense of usury is open to a trustee who has mortgaged the trust estate.^^ But the fact that a larger per cent has heen charged than the usual time prices does not make usurious a bond and mortgage given for personalty purchased f^ and in case of a junior mortgagee, the debtor being insolvent, it is held that the former can- not avail himself of the defense of usury against a prior incum- Ijrancer.-* So an agreement, based upon usurious interest, to extend the time for payment does not taint with usury the original note and mortgage which were not so tainted ;^^ nor does the receiving,* after maturity, usurious interest invalidate a note and mortgage not other- wise tainted with usury f^ for receiving such usurious interest on a note after it becomes due does not constitute usury, such note not being originally tainted with usury.^'^ So, a note for prior advances and a mortgage for future advances will be valid as to such of the secured debts as are not usurious.-® Again, the validity of a note is not de- stroyed by the taking of a separate note under a usurious contract.^" If an agent is authorized to make a loan to a person and is entrusted with a certain sum of money for that purpose, and he violates the usury laws, the principal is responsible for such unlawful exactions by his agent, and cannot maintain that the contract was not usurious.^" =»J«inois.— Kleeman v. Frisbie, 63 =' Churchill v. Turnage, 122 N. C. 111. 482. 426, 30 S. E. 122. Nebraska. — Farm Land Security -* Stickney v. Moore, 108 Ala. 590, Co. v. Nelson, 52 Neb. 624, 72 N. W. 19 So. 76. 1048. -^ Morse v. Welcome, 68 Minn. 210, North Carolina.— Beard v. Bing- 70 N. W. 978. ham, 76 N. C. 285. -" McEwin v. Humphrey (Ind. Sotith Carolina. — Erhardt v. Yarn, Ty.), 45 S. W. 114. 51 S. C. 550, 29 S. B. 225. =' Dell v. Oppenheimer, 9 Neb. 454, Federal. — Krumbieg v. Missouri, 4 N. W. 51; Mahler v. Merchants' K. & T. Trust Co., 71 Fed. 350. See Nat. Bk., 65 Minn. 37, 67 N. W, 655. Bouker v. Galligan (N. J. Eq.), 57 =« Atkinson v. Burt, 65 Ark. 316, Atl. 1010. Examine Kellogg, In re, 45 S. W. 987. 113 Fed. 120; Sherwood v. Haney, =" Cooper v. Tappan, 4 Wis. 362. 63 Ark. 249, 38 S. W. 15; Elder v. '"Robinson v. Sims, 85 Minn. 242, Elder, 119 Ga. 174, 45 S. E. 990; 88 N. W. 845. See Short v. Pullen, Burdette v. Robinson, 97 Ga. 612, 63 Ark 385, 38 S. W. 1113; Beach v. 25 S. E. 349. Lattner, 101 Ga. 357, 28 S. E. 110; =^May V. Folsom, 113 Ala. 198, 20 Ridgway v. Davenport, 37 Wash. So. 984. Examine Wallace v. Good- 134, 79 Pac. 606. Compare Whaley lett, 104 Tenn. 670. 58 S. W. 343. v. American Freehold Land Mort- "Wagnor v. Pease, 104 Ga. 417, gage Co., 74 Fed. 73, 20 C. C. A. 306, 30 S. E. 895. 42 U. S. App. 90. I 389 USURY GENERALLY. [§ 302 So a principal may be bound by notice to his agent that a note pur- chased by the latter is tainted with usury.^^. But a mortgage note may provide for a greater than a legal rate of interest after its maturity.^- The question of the availability of the defense of usury in actions on bills, notes, etc., is so largely a matter of statutory regulation in dif- ferent jurisdictions, and is so largely dependent thereupon that re- course must be had to those statutes to determine who is entitled and who not to make such a defense, and the relative and respective rights of the parties.^^ It may be stated, however, that the repeal "Haynes v. Gay, 37 Wash. 230, 79 Pac. 794. '*Sloane v. Lucas (Wash.), 79 Pac. 949. " Georgia. — Lanier v. Cox, 65 Ga. 265 (Ga. Acts 1875, p. 105). Idaho. — Anderson v. Oregon, 8 Idaho 418, 69 Pac. 130 (Idaho Rev. St. 1887, Sec. 1266). Illinois. — Carter v. Moses, 39 111. 539 (111. Acts 1845 & 1857); Hemen- way v. Cropsey, 37 111. 357 (111. Acts 1849). Maine. — Tuxbury v. Abbott, 59 Me. 466 (Me. Rev. St. 1857, c. 45) ; Wing v, Dunn, 24 Me. 128 (Me. Rev. St., c. 69, Sec. 6). Massachusetts. — North Bridge- water Bank v. Copeland, 7 Allen JMass.) 139 (Mass. St. 1863, c. "242 ); Kendall V. Robertson, 12 Cush. (Mass.) 156 (Mass. Rev. St., c. 35, Sec. 2; Mass. Rev. St. 1846, c. 199). Michigan. — Coatsworth v. Barr, 11 Mich. 199 (Mich. Comp. Laws, Sec. 1316). Mississippi. — Rozelle v. Dickerson, 63 Miss. 538 (Miss. Code 1880, § 1141). New York. — Claflin v. Boorum, 122 N. Y. 385, 25 N. E. 360 (4 N. Y. Rev. St., p. 2513, § 5); Aeby v. Rapelye, 1 Hill (N. Y.) 9 (1 N. Y. Rev. St., p. 772, § 5). North Carolina. — Ward v. Sugg, 113 N. C. 489, 18 S. E. 717, 24 L. R. A. 280 (N. C. Code, § 3836). South Carolina. — Gaillard v. Le Seigneur, 1 McMullan (S. C.) 225 (S. C. Acts 1777 & 1831). Virginia. — Lynchburg Nat. Bank v. Scott, 91 Va. 652, 22 S. E. 487, 29 L. R. A. 827 (Va. Code 1887, § 2818) ; Moffet V. Bickle, 21 Gratt. (Va.) 280 (Va. Code, ch. 177, § 19, p. 733). Upon this subject of the effect of statutory provisions and the rights of parties with relation to defenses under usurious contracts see gen- erally the following cases: Alabama. — Turner v. Merchants' Bank, 126 Ala. 397, 28 So. 469 (Code' 1886, § 4140, Discount by banks). Connecticut. — Matz v. Arick. 76 Conn. 388, 56 Atl. 630 (Gen. Stat. 1902, § 4599). Idaho. — First Nat. Bank v. Glenn, 10 Idaho 224, 77 Pac. 623 (Rev. St. 1887, § 425); Finney v. Moore. 9 Idaho 284, 74 Pac. 806 (Rev. Stat. 1887, § 1266). Kentucky. — Tomlin v. Morris, 26 Ky. L. Rep. 681 (Ky. Stat. 1903, § 2219). Michigan. — Becker v. Headstein (Mich.), 100 N. W. 752 (Comp. Laws, § 4857); Green v. Grant, 134 Mich. 462, 96 N. W. 583, 10 Det. Leg. N. 546 (Comp. Laws 1897, § 4857). Minnesota. — Lee v. Melby, 93 Minn. 4, 100 N. W. 379 (Laws 1877, p. 52, c. 15). Missouri. — Vette v. Geist. 155 Mo. 27, 55 S. W. 871 (Laws 1891, p. 170) ; § 303] USURY. 390 of a statute which validates an usurious note does not make the note invalid and subject to the defense of usury ;^* and where a subsequent statute reduces the rate of interest, continuing to pay the former legal rate does not constitute usury f^ nor does the enactment of a statute with reference to usury make it retroactive as to contracts existing at the time it became a law,^** Under the New York statute, which makes it lawful to receive, or to contract to receive and collect, any sum agreed upon in writing by the parties, for making advances of money repayable on demand to an amount not less than five thousand dollars, upon bills of exchange or other negotiable instruments as col- lateral security for such repayment, it is held that such excess of the legal rate of interest upon loans so made are not usurious even though orally agreed upon.^'^ Again, actions at law and in equity are within the meaning of the term "action" in a usury statute.^^ § 303. Bona fide holders — Paper based on usurious contract be- tween original parties. — Whether paper based on a usurious contract between the original parties is or is not subject to the defense of usury as against a bona fide holder before maturity, without notice, and for value, is a question upon which the decisions are far from being in harmony. The general rule, however, seems to be that such a defense Davis, McDonald & Davis v. Tandy, ley, 55 S. C. 132, 32 S. E. 531, 33 S. 107 Mo. App. 437, 81 S. W. 457 (Rev. B. 1 (Rev. Stat.. § 1390). Stat. 1899, § 3710. Washington.— Ridgway v. Daven- Nebraska.— Allen v. Dunn (Neb.), port, 37 Wash. 134, 79 Pac. 606 (1 99 N. W. 680 (Cobbey's Ann. St. Ballinger's Ann. Codes & St., 1903, § 6725). § 3669). New York. — Samuel Wilde's Sons, '* First Ecclesiastical Soc. v. In re, 133 Fed. 562 (Laws N. Y. 1882, Loomis, 42 Conn. 570. p. 290, c. 237, warehouse receipts '^ Mastin v. Cochran, 25 Ky. L. clause). Rep. 712, 76 S. W. 343. North Carolina. — Faison v. Grandy, ^' North Bridgewater Bank v. 186 N. C. 827, 36 S. B. 276 (Code, Copeland, 7 Allen (89 Mass.) 139. § 3635; Acts 1895, c. 69). See Hackley v. Sprague, 10 Wend. North Dakota.— Waldner v. Bow- (N. Y.) 113. den State Bank (N. D.), 102 N. W. =^ Samuel Wilde's Sons, In re, 133 169 (Rev. Codes 1899, § 4066). Fed. 562; Laws N. Y. 1882, c. 237; Oklahoma. — Metz v. Winne (Okla.), 2 Cumming & Gilbert's Gen'l Laws 79 Pac. 223 (Wilson's Rev. & Ann. N. Y., p. 1994. Stat. 1903, § 848). ^^ Coatsworth v. Barr, 11 Mich. South Carolina. — Newton v. Wood- 199, construing Mich. Comp. Laws, § 1316. I f 391 BONA FIDE HOLDERS. [§ 303 is not available against such holder in the absence of a statutory pro- vision making such paper absolutely void.^^ In several jurisdictions, ^'Alabama. — Orr v. Sparkman, 120 Ala. 9, 23 So. 829. Arkansas. — Tucker v. Wilamouicz, 8 Ark. (3 Eng.) 157. Illinois. — Hemenway v. Cropsey, 37 111. 358; Sherman v. Blackman, 24 111. 347; Conkling v. Underhill, 3 Scam. (111.) 388. Indiana. — See Harbaugh v. Tan- ner, 163 Ind. 574, 71 N. E. 145. Iowa. — Dickerman v. Day, 31 Iowa 444; Brown v. Wilcox, 15 Iowa 414. Kansas. — Gross v. Funk, 20 Kan. 655. Kentucky. — Roby v. Sharp, 6 T. B. Mon. (Ky.) 375; Owings v. Grimes, 5 Litt. (Ky.) 331. Maryland. — Gwynn v. Lee, 9 Gill (Md.) 137; Burt v. Gwinn, 4 Har. & J. (Md.) 507. Massachusetts. — Towne v. Rice, 122 Mass. 67; Ayer v. Tilden, 15 Gray (Mass.) 178. Minnesota. — Robinson v. Smith, 62 Minn. 62, 64 N. W. 90; First Nat. Bank v. Bentley, 27 Minn. 87, 6 N. W. 422. Nebraska. — Cheney v. Janssen, 20 Neb. 128, 29 N. W, 289; Sedgwick V. Dixon, 18 Neb. 545, 26 N. W. 247; Darst v. Backus, 18 Neb. 231, 24 N. W. 681; Evans v. De Roe, 15 Neb. 630, 20 N. W. 99; Cheney v. Cooper, 14 Neb. 415, 16 N. W. 471; State Sav. Bank v. Scott, 10 Neb. 83, 4 N. W. 314; Wortendyke v. Meehan, 9 Neb. 221, 2 N. W. 339. See Bovier V. McCarthy, 4 Neb. (unofficial) 490, 94 N. W. 965. New Hampshire. — Young v. Berke- ley, 2 N. H. 410. Neto York. — Long Island Bank V. Boynton, 105 N. Y. 656, 11 N. E. 837; Chatham Bank v. Betts, 37 N. Y. 356, affirming 9 Bosw. (N. Y.) 552, 23 How. Prac. (N. Y.) 476; Farmers' & Merchants' Bank of Gen- esee v. Parker, 37 N. Y. 148; Kitchel V. Schenk, 29 N. Y. 515; Bank v. Flanigan, 39 Leg. Int. (N. Y.) 264; Hackley v. Sprague, 10 Wend. (N. Y.) 113; Munn v. Commission Co., 15 Johns. (N. Y.) 44, 8 Am. Dec. 219; Odell v. Greenly, 4 Duer (N. Y.) 358. See McWhirter v. Long- street, 81 N. Y. Supp. 334, 39 Misc. 331. North Carolina. — Coor v. Spicer, 65 N. C. 401. Pennsylvania. — Bly v. Second Nat. Bank, 79 Pa. St. (29 P. F. Smith) 453; Creed v. Stevens, 4 Whart. (Pa.) 223. South Carolina. — Foltz v. Mey, 1 Bay (S. C.) 486. Tennessee. — Bradshaw v. Van Val- kenburg, 97 Tenn. 316, 37 S. W. 88. Virginia. — Lynchburg Nat. Bank V. Scott, 91 Va. 652, 22 S. E. 487. United States. — Tilden v. Blair, 21 Wall. (U. S.) 241, 22 C. Ed. 632; Palmer v. Call, 2 McCrary (U. S. C. C.) 522. See Fleckner v. United States Bank, 8 Wheat. (U. S.) 339. Examine Wilson v. Knight, 59 Ala. 172; Saylor v. Daniels, 37 111. 339; Robinson v. Smith, 62 Minn. 62, 64 N. W. 90; Holmes v. Bank, 53 Minn. 350, 55 N. W. 555; Mason v. An- thony, 42 N. Y. (3 Keyes) 609, 35 How. Pr. 477, 3 Abb. Dec. 207; Holmes v. Williams, 10 Paige (N. Y.) 326; Ramsey v. Clark, 4 Humph. (Tenn.) 244; Fant v. Miller, 17 Gratt. (Va.) 77; Otto v. Surgee, 14 Wis. 571. Action against payee as indorser by bona fide holder, the originally usurious contract is not available 303] USURY. 392 liowever, such a defense is good against a bona fide holder*" where such an instrument is expressly declared void by statute,*^ although the term "unlawful" in a statute is held not to have such an effect.*^ Again, although there has been a waiver of all defenses as against a ho7ia fide holder, the statutory defense of usurious contract may be sustained,*^ and knowledge or notice of this statutory infirmity in the paper pre- cludes recovery.** as a defense. McKnight v. Wheeler, 6 Hill (N. Y.) 492. Usurious contract between inter- mediate holders of paper transferred before maturity can not be set up against indorsee without notice. King V. Johnson, 3 McCord (S. C.) 365. ^"Alabama. — Orr v. Sparkman, 120 Ala. 9, .23 So. 829; Pearson v. Bai- ley, 23 Ala. 537. Connecticut. — Townsend v. Bush, 1 Conn. 260. Georgia. — Walton Guano Co. v. Copeland, 112 Ga. 319, 37 S. E. 411; Clarke v. Havard, 111 Ga. 242, 36 S. E. 837; Angler v. Smith, 101 Ga. 844, 28 S. E. 167; Laramore v. Bank, 69 Ga. 722. Iowa. — Bacon v. Lee, 4 Iowa (Clarke Rept.) 490. Kentucky. — True v. Triplett, 4 Mete. (Ky.) 57; Early v. McCart, 2 Dana (Ky.) 414. Maryland. — Cockey v. Forrest, 3 Gill & J. (Md.) 482; Burt v. Gwinn, 4 Har. & J. (Md.) 507. Massachusetts. — Whitten v. Hay- den, 7 Allen (Mass.) 407; North Bridgewater Bank v. Copeland, 7 Allen (Mass.) 139; Sylvester v. Swan, 5 Allen (Mass.) 134; Knapp v. Briggs, 2 Allen (Mass.) 551. Islew York. — Union Bank of Roch- ester V. Gilbert, 83 Hun (N. Y.) 417, 31 N. Y. Supp. 945; Clark v. Loomis, 5 Duer (N. Y.) 468; Clark V. Sisson, 4 Duer (N. Y.) 408; Pow- ell v. Waters, 8 Cow. (N. Y.) 669. North Carolina. — Faison v. Grandy, 128 N. C. 438, 38 S. E. 897. United States. — Hamilton v. Fow- ler, 99 Fed. 18. England. — Young v. Wright, 1 Camp. 139. Examine further, Ro- decker v. Littauer, 8 C. C. A. 320, 59 Fed. 857; Aeby v. Rapelye, 1 Hill (N. Y.) 9; Lynchburg v. Nor- vell, 20 Gratt. (Va.) 601; Ackland v. Pearce, 2 Camp. 599; Lowe v. Wal- ler, 2 Doug. 736; Lowes v. Mazzare- do, 1 Starkie 385; Chapman v. Black, 2 Barn. & Aid. 590; Hender- son V. Benson, 8 Price 288. ^'^ Alabama. — Pearson v. Bailey, 23 Ala. 537; Paris v. King, 1 Stew. (Ala.) 255. Kentucky. — True v. Triplett, 4 Mete. (Ky.) 57. Massachusetts. — Bridge v. Hub- bard, 15 Mass. 96, 8 Am. Dec. 86. Neio York. — Claflin v. Boorum, 122 N. Y. 385, 25 N. E. 360. South Carolina. — Solomons v. Jones, 3 Brev. (S. C.) 54, 5 Am. Dec. 538; Payne v. Trezevant, 2 Bay (S. C.) 23. United States. — Kellogg. In re, 113 Fed. 120 (under laws of New York) ; Rodecker v. Littauer, 59 Fed. 857, 8 C. C. A. 320. *^ Pickaway Co. Bank v. Prather, 12 Ohio St. 497. See Ewell v. Daggs, 108 U. S. 143. "Union Nat. Bank v. Fraser, 63 Miss. 231. "Torrey v. Grant, 10 Smedes & M. (Miss.) 89; Berry v. Thompson, 393 DISCOUNT AND TRANSFER — RENEWAL NOTE. [§§ 304, 305 § 304. Maker and transferee — Discount and transfer. — In a suit by the transferee against the maker it constitutes no defense that the paper was indorsed and discounted under a usurious contract at an un- lawful rate of interest.*^ But it seems, under a comparatively recent decision, that such a rule would not apply to a bill or note which had its inception only at the time of being discounted under such usurious contract.**' § 305. Renewal bill or note — Extensions. — A renewal note is taint- ed with usury where the original note was so tainted,*'^ for a note is not purged of the taint of usury by a mere renewal of the note without changing the contract or restoring the overcharge of interest ;** so 3 Johns. Ch. (N. Y.) 395, aff'd 17 Johns. 436. *'^ Alabama. — Capital City Ins. Co. V. Quinn, 73 Ala. 558. Georgia. — See Campbell v. Mor- gan, 111 Ga. 200, 36 S. B. 621. Iowa. — Dickerman v. Day, 31 Iowa 444, 7 Am. Rep. 156. Maine. — Clapp v. Hanson, 15 Me. (3 Shep.) 345. Massachusetts. — Knights v. Put- nam, 3 Pick. (Mass.) 184. Mississippi. — Newman v. Wil- liams, 29 Miss. 212. New Jersey. — Importers & Trad- ers' Nat. Bank v. Littell, 47 N. J. L. 233; Durant v. Banta, 27 N. J. L. 624. New York. — Archer v. Shea, 14 Hun (N. Y.) 493; Stewart v. Bram- hall, 11 Hun (N. Y.) 139; Cameron V. Chappell, 24 Wend. (N. Y.) 94; Dowe V. Schutt, 2 Denio (N. Y.) 621. Pennsylvania. — Gaul v. Willis, 26 Pa. St. (2 Casey) 259. Vermotit. — Cady v. Goodnow, 49 Vt. 400. United States. — Nichols v. Fear- son, 7 Pet. (U. S.) 103. England. — Parr v. Eliason, 1 East 92; Daniel v. Cartony, 1 Esp. 274. Compare Clark v. Sisson, 4 Duer (N. Y.) 408; Fish v. De Wolf, 17 N. Y. Super. Ct. (4 Bosw.) 573. "Simpson v. Hefter, 87 N. Y. Supp. 243, 42 Misc. 482. See also the following cases: Arkansas. — German Bank v. De Shon, 41 Ark. 331. Delaware. — Nailor v. Daniel, 5 Houst. (Del.) 455. Maine. — Tufts v. Shepherd, 49 Me. 312. Massachusetts. — Whitten v. Hay- den, 7 Allen (Mass.) 407. New York. — Eastman v. Shaw, 65 N. Y. 522; Clark v. Sisson, 22 N. Y. 312; French v. Hoffmire, 43 N. Y. Supp. 496, 19 Misc. Rep. 714; Pratt V. Adams, 7 Paige (N. Y.) 615; Clark V. Sissons, 5 Duer (N. Y.) 468; Bennett V. Smith, 15 Johns. (N. Y.) 355. United States. — Rodecker v. Lit- tauer, 8 C. C. A. 320. 59 Fed. 857. " Pardoe v. Iowa State Nat. Bank, 106 Iowa 345, 76 N. W. 800; Clark V. Sisson, 4 Duer (N. Y.) 408; Ma- cungie Sav. Bank v. Hottenstein, 89 Pa. St. 328. See Ives v. Bosley, 35 Md. 262; Union Nat. Bank v. Fra- ser, 63 Miss. 231; Wild v. Howe, 74 Mo. 551; Derrick V. Hubbard, 27 Hun (N. Y.) 347; Niblack v. Champeny, 10 S. D. 165, 72 N. W. 402; Fay v. Tower, 58 Wis. 286, 16 N. W. 558. ^'Nicrosi v. Walker, 139 Ala. 369, 37 So. 97. § 305] USURY. 394 the original transaction is not purged by taking a renewal note, no rights of ho7ia fide holders being involved;*'' and a transaction may be usurious as to a renewal note although it bears the legal rate of interest where the note is but an agreement to pay an old debt with usurious interest.^" But an accommodation note delivered in payment of an- other and usurious note is not a renewal of the latter so as to permit of the defense of usury f ^ and if a new note, not tainted with usury, is substituted for another but usurious note, the new security is held to be valid in a bona fide holder's hands.^^ ^nd a note may be purged of usury by the repeal of a statute so that a renewal note given there- after, will not be affected by the taint ;^^ nor will the usurious contract as to the original note be a defense to a renewal note while in the hands of a bona fide holder, where such holder could otherwise be free from such defense of usury. ^* A bonus for extending the time of payment of a note then bearing the full legal rate of interest precludes recovery of the bonus ;^^ and if the time of payment is extended the test of whether the contract is usurious or not is the rate of interest borne by the debts for which there is a forbearance.^*' But the taking of usury for forbearance in extending the time is held not to make usuri- ous a note and mortgage originally valid.^^ ^''Nicrosi v. Walker, 139 Ala. 369. (N. Y.) 291; Powell v. Waters, 8 ^"Citizens' Nat. Bank v. Donnell, Cow. (N. Y.) 669. 172 Mo. 384, 72 S. W. 925. Texas. — Smith v. White (Tex. Civ. "Palmer v. Carpenter, 53 Neb. App.), 25 S. W. 809; Keys v. Cle- 394, 73 N. W. 690. burne B. & L. Assn. (Tex. Civ. "Powell V. Waters, 8 Cow. (N. App.), 25 S. W. 809. Y.) 669. See Masterson v. Grubbs, United States.— Palmer v. Call, 7 70 Ala. 406; Faison v. Grandy, 128 Fed. 737, 2 McCrary (U. S.) 522. N. C. 438, 38 S. E. 897. England. — Cuthbert v. Haley, 8 '^^Houser v. Bank, 57 Ga. 95; Term R. 390. Flight V. Reed, 1 Hurl. & C. 703. '= Missouri Real Estate Syndicate " AZo&ama.— Masterson v. Grubbs, v. Sims, 179 Mo. 679, 78 S. W. 1006. 70 Ala. 406; Mitchell v. McCul- See Green v. Lake, 2 Mackey (D. lough, 59 Ala. 179. C.) 162. Examine Ganz v. Lancas- I^e&rasfca.— Palmer v. Carpenter, ter, 169 N. Y. 357, 62 N. E. 413, rev'g 53 Neb. 394, 73 N. W. 690. 63 N. Y. Supp. 800; Fay v. Tower, 58 Neio Yorfc.— Kent v. Walton, 7 Wis. 286; Vary v. Norton, 6 Fed. Wend. (N. .Y.) 256; Smalley v. 808. Doughty, 6 Bosw. (N. Y.) 66; Odell =" Kassing v. Ordway, 100 Iowa V. Greenly, 4 Duer (N. Y.) 358; 611, 69 N. W. 1013. Brinckerhoff v. Foote, 1 Hoff. Ch. " Morse v. Welcome, 68 Minn. 210, 70 N. W. 978. ■I 395 CORPORATIONS. [§ 306 § 306. Corporations. — Corporations are generally subject to the usury laws to the same extent as in the case of individuals,^® although there are exceptions f° and where this defense is not available to a cor- poration it will not be sustained when urged by indorsers in actions against them.^" Again, by the national bank act the local law as to the rates of discount controls banking associations, unless a special rate is allowed to banks of issue organized under the state laws, or unless no rate is specified, in which case the rate is fixed by the revised stat- utes, and if a rate is charged in violation of these provisions it will be a good defense to the recovery of interest ;'^^ but the note cannot be '^^ Iowa. — National Bank of Win- terset v. Eyre, 52 Iowa 114, 2 N. W, 995. Massachusetts. — Maine Bank v. Butts, 9 Mass. 49. Missouri. — Farmers' & Traders' Bank v. Harrison, 57 Mo. 503. New York. — Bank of Utica v. Hil- lard, 5 Cow. (N. Y.) 153. Ohio. — Niagara Co. Bank v. Baker, 15 Ohio St. 68. Tennessee. — Chafin v. Bank, 7 Heisk. (Tenn.) 499. '° Freese v. Brownell, 35 N. J. L. 285; Ex parte Aynsworth, 4 Ves. 678. See 2 Cummings & Gilberts Genl. Laws N. Y., p. 1994, Laws N. Y. 1850, ch. 172; Freese v. Brownell, 35 N. J. L. 285. *"' Massachusetts. — Maine Bank v. Butts, 9 Mass. 49. New York. — Union Nat. Bank v. Wheeler, 60 N. Y. 612; Rosa v. But- terfield, 33 N. Y. 665; Stewart v. Bramhall, 11 Hun (N. Y.) 139; Lud- dington v. Kirk, 16 Misc. Rep. 301, 37 N. Y. Supp. 1141. Tennessee. — Chafin v. Bank, 7 Heisk. (Tenn.) 499. But see Bock V. Lauman, 24 Pa. St. 435; Hunger- ford's Bank v. Potsdam & W. R. Co., 10 Abb. Prac. (N, Y.) 24, rev'g 9 Abb. Prac. (N. Y.) 124; Hunger- ford's Bank v. Dodge, 30 Barb. (N. Y.) 626. As to sureties, see Freese v. Brownell, 35 N. J. L. 285. As to accommodation acceptor who is liable as a surety, see First Nat. Bank of New York v. Morris, 1 Hun (N. Y.) 680. ^^ Nebraska. — Tomblin v. Higgins, 53 Neb. 92, 73 N. W. 461; Norfolk Nat. Bank v. Schwenk, 46 Neb. 381, 64 N. W. 1073. North Carolina. — Wachovia Nat. Bank v. Ireland, 122 N. C. 571, 29 S. E. 835. Pennsylvania. — Guthrie v. Reid, 107 Pa. St. 251. South Dakota. — See First Nat. Bank v. McCarthy (S. D.), 100 N. W. 14. Texas. — First Nat. Bank v. Ledbet- ter (Tex. Civ. App.), 34 S. W. 1042. United States. — U. S. Rev. St., §§ 5197, 5198. See Citizens' Nat. Bank v. Donnell, 195 U. S. 369, 49 L. Ed. 238, 25 Sup. Ct. 49, aff'g 172 Mo. 384, 72 S. W. 925; First Nat. Bank v. Lasater, 196 U. S. 115, 49 L. Ed. 408, 25 Sup. Ct. 206, rev'g (Tex. Civ. App.) 72 S. W. 1054. This act supersedes state usury laws as to rtational banks. Nat. Bank of Winterset v. Etre, 52 Iowa 114, 2 N. W. 995; Davis v. Randall, 115 Mass. 547; Central Nat. Bank V. Pratt, 115 Mass. 539; Bramhall v. Bank, 36 N. J. L. 243; First Nat. 306] USUKY. 39G Bank of Columbus v. Garlinghouse, 22 Ohio St. 492. Compare Hinter- mister v. Bank, 3 Hun (N. Y.) 345, or an act declaring the contract void for usury. Importers & Traders Nat. Bank V. Littell, 46 N. J. L. 506. Compare First Nat. Bank of White- hall V. Lamb, 50 N. Y. 95, rev'g 57, Barb. (N. Y.) 429, or prohibiting it as a misdemeanor. Slaughter v. Bank, 109 Ala. 157, 19 South. 430. Accommodation and business pa- per are within the intent of the U. S. statutes. New York. — Johnson v. Bank, 74 N. Y. 329. Ohio. — Barbour v. Bank, 45 Ohio St. 133, 12 N. E. 5. Tennessee. — Barrett v. Bank, 85 Tenn. 426, 3 S. W. 117. Vermont.— Um v. Bank, 56 Vt. 582. United States.— Rey. St. U. S., §§ 5197, 5198. Defense of usury is not available against a state or national bank. Schlesinger v. Lehmeier (City Ct. N.Y.), 99 N. Y. Supp. 819. Federal and state usury laws — National state banks and private bankers. In the late case of Schle- singer v. Kelly (N. Y. App. Div. 1906), 99 N. Y. Supp. 1083, it is de- cided that the federal statutes cover the whole question of usury as to banks and are exclusive of the oper- ations of the state usury law, so far as national banks are concerned, and repeal the usury law by implication so far as state banks are concerned, not only where the bank has di- rectly participated in the usurious transaction, but also where it is the innocent holder of paper void in the hands of private parties for usury in its inception. The decision is of im- portance and we give the opinions of the court in full, as follows: "Clarke, J. This action was brought by the plaintiff, as receiver of the Federal Bank of New York, to re- cover upon two promissory notes, amounting, in the aggregate, to the sum of $2,798, made by the defend- ant. The Federal Bank was a state bank. The notes in suit were ac- quired by the receiver as part of the assets of said bank when he took possession thereof under his ap- pointment by the court. The plain- tiff concedes that the notes were usurious notes at their inception, and that the defendant's dealings which resulted in the giving of the notes were had with one David Rothschild or Louis Rothschild, do- ing business as J. Gould & Co., or the Globe Security Company, or one Muirhead, and not directly with the Federal Bank, and the notes so given were given to one of the afore- said persons, and at no time did the defendant have dealings with or bor- row directly from the Federal Bank. The defendant concedes that the bank was a bona fide holder of the notes in due course; that the notes were complete and regular upon their face; that the bank became such holder before maturity, and without notice of any infirmity in the instruments, or defect in the title of the person negotiating them. The defendant claims that the notes in suit, not having been given di- rectly to the plaintiff's assignor, and being admittedly usurious in their inception, were absolutely void, no matter into whose hands they came. The plaintiff claims that the Fed- eral Bank, having been a state bank, was on a parity by express statute with national banks, and was not subject to the provisions of the usury law declaring usurious notes void, and that, being the holder in due course for value without notice, it held the instruments free from 597 CORPORATIONS. [§ 306 any defect of title of prior parties, and free from defenses available to prior parties among themselves, and is entitled to enforce payment for the full amount thereof against all parties liable thereon. It is now set- tled beyond controversy, as the re- sult of a series of cases in the court of appeals and in the Supreme Court of the United States, that because of the federal legislation now em- braced in §§ 5197 and 5198 of the revised statutes of the United States (U, S. Comp. St. 1901, p. 3493), and of the statutory law of this state, first embodied in chapter 163, p. 437, of the laws of 1870, and now appear- ing substantially without change in § 55 of the banking law (chapter 689, p. 1869, of the laws of 1892), that the provisions of the usury law (1 Rev. St. [1st Ed.], pp. 771, 772, pt. 2, c. 4, tit. 3, § 5) declaring usurious notes void have been re- pealed by implication when said notes had been given to, and said usurious interest received by, a na- tional bank or state bank or pri- vate banker. Section 5197, Rev. St. U. S., provides that any banking as- sociation may take and charge upon any note interest at the rate allowed by the laws of the state, territory or district where the bank was lo- cated, and no more, and § 5198, Rev. St. U. S., provides that the taking or charging a rate of inter- est greater than that allowed by the preceding section, when know- ingly done, should be deemed a for- feiture of the entire interest which the note carried with it, or which had been agreed to be paid thereon, and that, in case a greater rate of interest had been paid, there could be recovered back twice- the amount of the interest thus paid, provided such action was commenced within two years from the time the usuri- ous transaction occurred. Section 55 of the banking law of this state makes substantially the same pro- visions, and concludes as follows: 'The true intent and meaning of this section is to place and continue banks and private and individual bankers on an equality in the par- ticulars herein referred to with the national banks authorized under the act of congress entitled "An act to provide a national currency, secured by pledges of United States bonds, and to provide for the circulation and redemption thereof," approved June 30, 1864.' "In Whitehall v. Lamb, 50 N, Y. 95, 10 Am. Rep. 438, the court of appeals held that national banks in this state were subject to the usury laws of the state, and that the pro- visions of the national bank act lim- iting forfeitures for taking usury applied only to banks located in states and territories where no usury law existed. "In Farmers' Bank v. Hale, 59 N. Y. 53, following the decision in the former case, and applying the prori- sions as to parity, the court held that, it having been decided that national banks located in this state are subject to the usury laws there- of, those laws were not repealed by chapter 163, p. 437, of the laws of 1870, as to state banks, but that they were also subject thereto. "Thereafter, the Supreme Court of the United States, in Farmers' & Mechanics' National Bank v. Bear- ing, 91 U. S. 29, 23 L. Ed. 196, in a case originating in this state, over- ruled the doctrine as laid down by the court of appeals, and held that the only forfeiture was that pro- vided by the act of congress, and that no loss of the entire debt was incurred by a national bank, as a penalty or otherwise, by reason of 306] USURY. 398 the provisions of the usury law of the state. The court said: 'These clauses, examined by their own light, seem to us too clear to admit of doubt as to anything to which they relate. They form a system of regulations. All the parts are in harmony with each other, and cover the entire subject. * * * The na- tional banks organized under the act are instruments designed to be used to aid the government in the administration of an important branch of the public service. They are means appropriate to that end. Of the degree of the necessity which existed for creating them congress is the sole judge. Being such means, brought into existence for this pur- pose, and intended to be so em- ployed, the states can exercise no control over them, nor in any wise affect their operation, except in so far as congress may see proper to permit,' "Thereafter, the Court of Appeals, in Hintermister v. First National Bank, 64 N. Y. 212, held that, since the Supreme Court of the United States had given its interpretation to the act of congress, the cases of the National Bank of Whitehall v. Lamb, and Farmers' Bank of Fay- etteville v. Hale, supra, could no longer be considered as furnishing a rule of decision in cases within the principle of adjudication by the federal court, and said: 'It follows that in order to give effect to the evident intention of the legislature of this state, the statute enacted in 1870 to put the state banks upon an equality with the national banks should have the same interpretation and effect as is given to the act of congress. Any other interpretation would do violence to the clearly ex- pressed will of the legislature, do injustice to the state institutions, and give undue effect to the legisla- tion of congress, so far as it is hos- tile to the state banks. Both cases may, therefore, be regarded as over- ruled.' "Exclusive control over national banks and their freedom from the operation of state laws, as laid down in the Bearing case, supra, has been reasserted in Haseltine v. Central National Bank, 183 U. S. 131, 22 Sup. Ct. 49, 46 L. Ed. 117, and Easton v. Iowa, 188 U. S. 220,* 23 Sup. Ct. 288, 47 L. Ed. 452. The effect of these decisions and these statutes is that, if an usurious note is directly given to a state bank, and said bank takes, receives, or re- serves interest beyond the amount allowed by law, that nevertheless the note is not void, and the sole forfeiture is that provided in regard to the interest, and the right of ac- tion to recover double the amount of interest paid within two years. The amount of the note is a valid and enforceable debt. "The appellant concedes the force and effect of the foregoing cases, but asserts that the principle there- in laid down applies only when the usurious transaction is made di- rectly with the bank, and the bank receives, or reserves, charges, or is paid the usurious interest. The ar- gument is that the usury law has not been repealed as between pri- vate parties, and that, as a note usurious in its inception between private parties is by the statute void, it never can acquire validity; and cites Claflin v. Boorum, 122 N. Y. 385, 25 N. E. 360, where the court said: 'A note void in its inception for usury continues void forever, whatever its subsequent history may be. It is as void in the hands of an innocent holder for value as it was in the hands of those who made i 399 CORPORATIONS. [§ 306 the usurious contract. No validity can be given to it by sale or ex- change, because that which the stat- ute has declared void cannot be made valid by passing through the channels of trade.' "That case was not a case involv- ing a bank, but was between private individuals, and involved the sale of accommodation paper, which the court held was merely a loan of money, the purchaser being the lend- er and the seller the borrower. None of the cases or statutes affect- ing banks hereinbefore alluded to were cited or were involved in that case, and the result of applying the rule there laid down to the case at bar would be this: That whereas, when the bank was the wrong-doer, and took the usurious interest, that although the usury statute declared the note void, the banking statutes made it valid as to its face value, and the wrong-doer escaped all for- feiture except in so far as the inter- est was concerned; while if the bank were an absolutely innocent party, and had taken the note in good faith for valuable considera- tion and without notice, receiving therefor only the legal interest, yet nevertheless it would be punished for the illegal act of others by the loss of the full amount advanced by it. Such a result would be so in- equitable and illogical as to demon- strate that the reasoning must be fallacious. The answer to it is clearly found in the cases already cited. "In Farmers' Bank v. Hale, 59 N. Y. 53, the court said: 'It may be conceded that the first section of the act, standing alone, would super- sede the usury laws, and operate as a repeal by implication, so far as applicable to banking associations.' "That statement of the effect of the statute becomes effective by rea- son of the Bearing case, supra, and the reiteration of the doctrine by the Supreme Court of the United States that the federal statutes were exclusive in their application to national banks, and absolutely withdrew such banks from the oper- ation of the state laws. That being true, no provision of the state law declaring an usurious law void would affect a national bank, not only if it were guilty of usury, but also if it bought or discounted usu- rious paper. "The supreme court, in the Easton case, 188 U. S. 220, 23 Sup. Ct. 288, 47 L. Ed. 452, after citing the Bearing case, as follows: 'The states can exercise no control over national banks, or in any wise affect their operation, except in so far as congress may deem proper to permit. Anything beyond this is an abuse, because it is the usurpation of power, which a single state cannot give.' And Bavis v. Elmira Savings Bank, 161 U. S. 275, 16 Sup. Ct. 502, 40 L. Ed. 700: 'National banks are instrumentalities, and, as such, necessarily subject to the para- mount authority of the United States. It follows that an attempt by a state to define their duties or control the conduct of their affairs is absolutely void, wherever such attempted exercise of authority con- flicts with the laws of the United States, and either frustrates the purpose of the national* legislation, or impairs the efficiency of those agencies of the federal government to discharge the duties for the per- formance of which they were en- acted. These principles are axio- matic, and are sustained by the re- peated adjudications of this court" — stated: 'Our conclusions, upon principle and authority, are that § 306] USURY. 400 congress, having power to create a system of national banks, is the judge as to the extent of the powers which should be conferred upon such banks, and has the sole power to regulate and control the exercise of their operations.' "Therefore, applying the parity principle, as the United States stat- utes cover the whole question of usury as affecting banks, and there- fore being exclusive so far as na- tional banks are concerned, and ex- cluding from their operations our state law in that regard, it follows that the usury statute has been re- pealed by implication so far as state banks are concerned, not only where the bank itself has been a direct participator in the usurious trans- action, but where it is the innocent holder in due course of the paper which, in the hands of private par- ties, would be void for usury in its inception. The argument that a void note could never acquire va- lidity applies with as much force and effect to the usurious note taken by the bank, but, as we have seen, such a note, by the operations of the state and federal statutes, is not void; in other words, the man- date of the state has yielded to the superior command of the nation as to national banks, and by its own statutes the state has assimilated such rule to its own banks. "It follows that the judgment ap- pealed from should be affirmed, with costs." O'Brien, P. J., and Mc- Laughlin, and Houghton, J. J., con- cur. "I^aughlin, J. (concurring) : I agree with Mr. Justice Clarke that the judgment should be affirmed, but for different reasons than those expressed in his opinion. I doubt whether section 5197 of the Revised Statutes of the United States, regu- lating the charge of interest by na- tional banks, and section 55 of the banking law of our state (chapter 689, p. 1869, Laws 1892), in effect extending the same rights and privi- leges to state banks as are conferred upon national banks by the act of congress, are susceptible of the con- struction that they relate not only to discounts of paper by a bank, but also to discounts by any party prior to the time the bank becomes a holder. I am of opinion, however, that the effect of the enactment of section 96 of the Negotiable Instru- ments Law (Laws 1897, p. 732, c. 612), which provides that 'A holder in due course holds the instrument free from any defect of title of prior parties and free from defenses available to prior parties among themselves, and may enforce pay- ment of the instrument for the full amount thereof against all parties liable therefor,' is to render the de- fense of usury inapplicable to a hona fide holder of negotiable paper acquiring the same in due course. "Mr. Crawford, in the preface of the first edition of his Annotated Negotiable Instruments Law, states that the first draft of the law was prepared by him for a sub-com- mittee of the committee on com- mercial law for the commissioners of the different states on uniformity of law; that the draft was submit- ted to the commissioners on uni- formity of laws at the conference in Saratoga, in 1896, at which twenty- seven commissioners, representing fourteen different states, were pres- ent; that his draft was revised by the commissioners in a manner to make changes in the existing laws which he had not felt at liberty to incorporate in the original draft, and, as thus amended, adopted. In an explanatory note to the Negotia- 401 CORPORATIONS. [§ 306 ble Instruments Law, as reported to the legislature in 1897 by the com- missioners of statutory revision, it appears that the Negotiable Instru- ments Law, as prepared by the com- mission on uniformity of law in the United States, was introduced in the senate of the state of New York by Senator Lexow, and that at the re- quest of the judiciary committee of the senate the commission of statu- tory revision rearranged the bill, and added several statutes relating to negotiable instruments which were not included in the bill as orig- inally introduced, but which were in the commercial paper law prepared by this commission.,' It thus ap- pears that the legislature, in enact- ing the Negotiable Instruments Law, had in mind that there was a concerted move to have that law adopted in the various states and territories, and it has been enacted in practically the same form in most of the states and some of the territories of the Union. The only case to which our attention has been called in which a court of re- view has been called upon to decide whether the Negotiable Instruments Law supersedes, as to b07ia fide holders in due course for value, local laws declaring negotiable pa- per tainted with usury null and void, is Wirt v. Stubblefield, 17 App. D. C. 283. In that case, Alvey, C. J., delivering the opinion of the court, construing the same provision of the Negotiable Instruments Law enacted by congress for the District of Columbia, said: 'We know, more- over, that the great and leading ob- ject of the act, not only with con- gress, but with the large number of the principal commercial states of the Union that have adopted it, has been to establish a uniform system of law to govern negotiable instru- JoYCE Defexses — 26. ments wherever they might circu- late or be negotiated. It was not only uniformity of rules and princi- ples that was designed, but to em- body in a codified form, as fully as possible, all the law upon the sub- ject, to avoid conflict of decisions, and the effect of mere local laws and usages that have heretofore prevailed. The great object sought to be accomplished by the enact- ment of the statutes to free the ne- gotiable instrument, as far as pos- sible, from all latent or local in- firmities that would otherwise in- here in it to the prejudice and dis- appointment of innocent holders as against all the parties to the instru- ment professedly bound thereby. This clearly could not be effected so long as the instrument was ren- dered absolutely null and void by local statutes, as against the origi- nal maker or acceptor, as is the case by the operation, indeed, by the ex- press provision, of the statutes of Charles and Anne.' "I agree with the views expressed in that opinion. It is, I think, evi- dent that the purpose of the com- mission representing the various states of the Union in preparing the draft of the Negotiable Instruments Law, and of the various legislatures in enacting it, will be thwarted if section 96 is to receive the con- struction that, even as against bona fide holders in due course for value, the maker of the note may success- fully defend, upon the ground that in the inception of the note some local law was violated. The force and effect of the statute against usury will not be seriously impaired by the construction which I think should be given the Negotiable In- struments Law. The usury laws re- main in full force, but to facilitate the free circulation of negotiable § 306] USURY. 402 avoided by reason of usury charged by a national bank;®- nor can a bank, by offering to remit the excess, evade the statute as to forfeiture of the entire interest.®^ But it is held that an action for the statutory penalty is the only remedy for the recovery of usury.®* paper by protecting holders thereof in due course for value in their right to enforce the same, the usury- laws are to that extent superseded by the provisions of section 96 of the Negotiable Instruments Law (Laws 1897, p. 732, c. 612). Of course, it was perfectly competent for the legislature to do this. The only question is whether or not it so intended, and I am of opinion that it did. "The case of Strickland v. Henry, 66 App. Div. 23, 73 N. Y. Supp. 12, does not hold that the Negotiable Instruments Law has not to any ex- tent superseded the usury law. It was there merely held that a hold- er of commercial paper, who re- ceived the same at a usurious dis- count, is not protected under the Negotiable Instruments Law, where it appears that the note never had a legal inception, and that its first transfer was at the usurious dis- count. The court there say: 'The holder is bound to know the char- acter of the paper he is dealing with, and, if it turns out to be ac- commodation paper, the transaction is usurious.' Of course, a person taking negotiable paper must deter- mine at his peril whether or not it has had an inception, but, having ascertained that fact, I think that it was the purpose and intent of the legislature to relieve him from any latent infirmity, as by a discount at a usurious rate of interest at its inception, or other analogous latent infirmities. "I therefore vote to aflBrm the judgment." The case of Farmers' & Mechan- ics' National Bank v. Bearing, 91 U. S. 29, 23 L. Ed. 196 (cited in the above opinion) is also cited in Christopher v. Norvell, 201 U. S. 216, 225, to the point that "The bank, although its shares of stock were private property, was an in- strumentality of the general govern- ment in the conduct of its affairs." The latter case also cites Davis v. Elmira Savings Bank, 151 U. S. 275, 16 Sup. Ct. 502, 40 L. Ed. 700 (quot- ed from in the above opinion), quoting the words: "National banks are instrumentalities of the federal government, created for public pur- poses, and as such are necessarily subject to the paramount authority of the United States," citing also. Eastern v. Iowa, 188 U. S. 220, 237. "-Chase Nat. Bank v. Faurot, 149 N. Y. 536, 44 N. E. 164; Stephens v. Bank, 111 U. S. 197, 4 Sup. Ct. 337; Cox V. Beck, 83 Fed. 269. See Sec- ond Nat. Bk. V. Fitzpatrick, 27 Ky. L. Rep. 483, 84 S. W. 1150. "^ Citizens' National Bank v. Don- nell, 195 U. S. 369, 49 L. Ed. 238, 25 Sup. Ct. 49, aff'g 172 Mo. 384, 72 S. W. 925; Rev. Stat. U. S., § 5198, U. S. Comp. Stat. 1901, p. 3493. "* Kentucky. — Marion Nat. Bank v. Thompson, 101 Ky. 277, 40 S. W. 903. Nebraska. — Montgomery v. Bank, 50 Neb. 652, 70 N. W. 239; Lanham V. Bank, 46 Neb. 663, 65 N. W. 786; Norfolk Nat. Bank v. Schwenk, 46 Neb. 381, 64 N. W. 1073. Pennsylvania. — Nat. Bank of Fay- ette Co. V. Dushane, 96 Pa. St. 340. • Texas. — Comanche Nat. Bank v. 403 CORPORATIONS. [§ 306 Dabney (Tex. Civ. App.), 44 S. W. nell, 195 U. S. 3C9, 25 Sup. Ct. 49, 413. 49 L. Ed. 238, aff'g 172 Mo. 384, 72 United States. — Driesbach v. Bank, S. W. 925. 104 U. S. 52; Bamet v. Bank, 98 U. Demand is unnecessary to recover S. 555; Cox v. Beck, 83 Fed. 269. penalty. First Nat. Bank v. Turner Examine Citizens' Nat. Bk. v. Don- (Kan. 1895), 42 Pac. 936. CHAPTER XIV. EFFECT OF CONDITIONS OR AGREEMENTS. Sec. Sec, 307. Collateral conditions or agree- 325. ments — General rules. 308. Same subject — Illustrations. 309. Evidence explanatory of con- tract. 326. 310. When note and contempora- neous agreement are mutual 327. and dependent. 311. Conditions precedent — Gener- 328. ally. 312. Conditional delivery— Maker to 329. payee — Effect of. 313. Same subject continued — Appli- 330. cation of rule. 331. 314. Same s u b j e c t — Effect upon 332. third parties — Bona fide hold- 333. ers. 315. Condition that other signatures 334. be procured. 335. 316. Same subject continued. 317. Delivery in escrow. 336. 318. Same subject — Payee without notice. 337. 319. Same subject — Where paper 338. taken as security for ante- cedent debt. 320. That instrument is to be void 339. or payable on contingency. 340. 321. Same subject — Happening of contingency prevented by act 341. of maker. . , 322. Conditions affecting considera- tion. 342. 823. Same subject — Application of rule generally. 343. 324. Same subject — When not a de- 344. fense. 345. 404 Same s u b j e c t — Performance prevented by maker — Non- performance prevented by maker. Same subject — Agreement not to do certain acts. Same subject — Purchase-price notes. Same subject — Purchase-price notes — Subsequent holder. Same subject — Agreement to render services or labor. Note not to be negotiated. As to place of payment. As to amount. As to mode or manner of pay- ment. Same subject continued. Same subject — Note to admin- istrator. Executed agreement as a de- fense. Agreements not to sue. Same subject — Where simulta- neous or subsequent and for a limited time. As to time of payment. Subsequent agreements extend- ing time. Same subject — What essential to render such an agreement a defense. Agreements to release from or limit liability. Effect of conditions in note. Same subject continued. Same subject — Substantial per- formance of condition. 405 COLLATERAL CONDITIONS OR AGREEMENTS. [§ 307 SEC. SEC. 346. Same subject — Condition that 348. Conditional or restricted in- contract be completed to ac- dorsement. ceptance of agent. 349. Indorsement of condition to en- 347. Conditional acceptance. force which would be illegal. 350. Waiver of conditions. §307. Collateral conditions or a^eements — General rules. — The right of a bona fide holder of commercial paper to recover thereon against a maker, drawer, or iudorser cannot be defeated by the fact that a condition or agreement to which the defendant was a party has not been performed or complied with, where it was not contained in the instrument or is not a part thereof and the holder had no notice of the same.^ As has been said in reference to an acceptance of an instru- ^ Alabama. — Bank of Luverne v. Birmingham Fertilizer Co. (Ala. 1905), 39 So. 126; Garner v. Fite, 93 Ala. 405, 9 So. 367; Hair v. La Brouse, 10 Ala. 548. Colorado. — Mcintosh v. Rice, 13 Colo. App. 393, 58 Pac. 358; Kinkel V. Harper, 7 Colo. App. 45, 42 Pac. 173. Connecticut. — Goodrich v. Stan- ley, 23 Conn. 79. Georgia. — Wooten v. Inman, 33 Ga. 41. Illinois. — Metropolitan Nat. Bank V. Merchants' Nat. Bank, 182 111. 367, 55 N. E. 360; Hodges v. Nash, 141 111. 391, 31 N. E. 151; Foy v. Blackstone, 31 111. 538. Indiana. — Clanin v. Esterly Har- vesting Mach. Co., 118 Ind. 372, 21 N. E. 35; Strough v. Gear, 48 Ind. 100. Iowa.— Grafl v. Logue, 61 Iowa 704, 17 N. W. 171; Skinner v. Church, 36 Iowa 91; Gage v. Sharp, 24 Iowa 15. Kentucky. — Frank v. Quast, 86 Ky. 649, 6 S. W. 909; Gano v. Fin- nell, 13 B. Mon. (Ky.) 390; Roby v. Sharp, 6 T. B. Mon. (Ky.) 375. Maine. — "Wait v. Chandler, 63 Me. 257; Gushing v. Wyman. 44 Me. 121. Massachusetts. — Patten v. Glea- son, 106 Mass. 439; Carrier v. Sears, 4 Allen (Mass.) 336, 81 Am. Dec. 707. Minnesota. — First National Bank V. Campo. Board Mfg. Co., 61 Minn. 274, 63 N. W. 731. Mississippi. — Hart v. Taylor, 70 Miss. 655. Missouri. — Jennings v. Todd, 118 Mo. 296, 24 S. W. 148, 40 Am. St. R. 373; Henshaw v. Button, 59 Mo. 13». New Hampshire. — Matthews v. Crosby, 56 N. H. 21. New Jersey. — Haines v. Dubois, 30 N. J. L. 259; Gulick v. Gulick, 16 N. J. L. 186. New York. — Maas v. Chatfield, 90 N. Y. 303; Adams v. Blancan, 6 Rob. (N. Y.) 334; Moore v. Miller, 6 Lans. (N. Y.) 396; Harbeck v. Craft, 4 Duer (N. Y.) 122. North Carolina. — Potts v. Dublin, 125 N. C. 413, 34 S. E. 514. Ohio. — First National Bank v. Fowler, 36 Ohio 524. Pennsylvania. — Mishler v. Reed, 76 Pa. St. 76. Tennessee. — Merritt v. Duncan, 7 Heisk. (Tenn.) 156; Bowers v. Douglass, 2 Head (Tenn.) 376. Texas. — Heffron v. Cunningham, 76 Tex. 312, 13 S. W. 259. Wisconsin. — Gillman v. Henry, 53 308] EFFECT OF CONDITIONS OR AGREEMENTS. 40G ment : "If one purpose making a conditional acceptance only, and com- mit the acceptance to writing, he should be careful to express the con- dition thereon. He cannot use general terms, and then exempt himself from liability by relying upon particular facts which have already happened, though they are connected with the condition expressed. Why? Because the particular fact is, of itself, susceptible of being made a distinct condition. It matters not what the acceptor meant by a cautious and precise phraseology, if it be not expressed as a condi- tion."^ The rule is equally applicable though the condition or agree- ment referred to is in writing.^ This is also the general rule even as between the maker and payee or other parties who are not bona fide holders, parol evidence not being admissible to contradict or vary the terms of a written contract.* Certain exceptions, however, exist, as in the case of a conditional delivery or a delivery in escrow, in which case such evidence is admissible for the purpose of showing that the in- strument never became a binding one, and also where the condition goes to the consideration of the paper. '^ § 308. Same subject continued — Illustrations. — Where a person's name appears on an instrument as a joint promisor he cannot show as against a bon{i fide holder that by agreement of the parties he signed the note as surety merelj^ and this has been held true though the holder was a purchaser after maturity where he purchased without Wis. 465, 10 N. W. 692; Murdock v. Arndt. 1 Pin. (Wis.) 70. United States. — McMurray v. Mo- ran, 134 U. S. 150, 10 Sup. Ct. 427; Burnes v. Scott, 117 U. S. 582, 9 Sup. Ct. 865; Brown v. Spofford, 95 U. S. 474; Forsythe v. Kimball, 91 U. S. 291. Indian Territory. — Compare Meh- lin v. Mutual Reserve Fund L. A., 2 Ind. Terr. R. 396. 51 S. W. 1063. So it is said by the United States Supreme Court: "The general rule that a written contract cannot be contradicted or waived by evidence of an oral agreement between the parties before or at the time of such contract, has been often recognized and applied by this court, especially in cases in which it was sought to deprive bona fide holders of, or par- ties to, negotiable securities of the right to which they were entitled according to the legal import of the terms of such contract." Per Mr. Justice Harlan in Burke v. Dulaney, 153 U. S. 228, 232, 14 Sup. Ct. 816. ''La Wayne, J., in United States Bank v. Bank of the Metropolis, 15 Pet. (U. S.) 377. ^Hoare v. Graham, 3 Camp. 57; Montague v. Perkins, 22 Eng. L. & Eq. 516. See Kervan v. Townsend, 25 App. Div. 256, 49 N. Y. Supp. 137; Bowerbank v. Monteiro, 4 Taunt. 844. * See sections following in this chapter. ■^ See §§ 312-319 herein. 407 ' "^ EVIDENCE EXPLANATORY OF CONTRACT. [§309 notice;® and where a note, the property of a married woman, is in- dorsed by her in blank, without restriction, and delivered to a creditor of her husband as security for the latter's debt, she cannot show, in an action by a lona fide purchaser, without notice, from such. cred- itor, that her assignment was other than what it purports to be from the instrument itself ;^ and an acceptance in the following terms : "ac- cepted on condition that his contracts be complied with," will not retroact to embrace forfeiture which had been incurred at the time, so as to relieve the acceptor from liability on the paper f and where drafts are indorsed in blank by the owner to a person for collection who trans- fers to another purchasing without notice of the want of ownership, the latter becomes a bona fide holder and may retain the proceeds as against the true owner.** §■309. Evidence explanatory of contract. — Where it is apparent that a bill or note is incomplete or contains but part of the agreement of the parties, evidence is admissible for the purpose of proving the en- tire contract.^ ^ So, in a suit on an instrument, in form a conditional note, evidence is admissible that the note was signed by the maker on distinct admission by payee that it did not contain the terms of their contract, and that it was agreed that they should subsequently meet and draw another instrument which would truly express their con- tract." Such evidence must not, however, be repugnant to or incon- sistent with the intention of the parties, as is already shown by the instrument itself.^ ^ '■'Lewis V. Long, 102 N. C. 206, 9 in these instruments passed by de- S. E. 637, 11 Am. St. R. 725. livery as the property in bank notes, ' Shirk V. North, 138 Ind. 210, 37 exchequer bills, or bills of exchange N- E. 590. payable to bearer, and that a ' United States v. Bank of the Me- pledgee, taking such paper from an tropolis, 15 Pet. (U. S.) 377. agent of the owner without knowl- 'Coors V. German National Bank, edge of the ownership or agency, 14 Colo. 202, 23 Pac. 328, 7 L. R. A. obtained a good title thereto. 845. See Rainsbotham v. Cator, 1 "West v. Kelly's Exrs., 19 Ala. Starkie 228; Gorgier v. Mieville, 3 353, 54 Am. Dec. 192; Ruggles v. Barn. & C. 45, holding that where a Swanwick, 6 Minn. 526; Hill v. Hun- foreign prince gave bonds, whereby tress, 43 N. H. 480; Juilliard v. he declared himself and his sue- Chaffee, 92 N. Y. 529. See Gorrell v. cessors bound to every person who Home Life Ins. Co., 63 Fed. 371, 24 should for the time being be the U. S. App. 188, 11 C. C. A. 240. holders of the bonds for the pay- " Hopper v. Eiland, 21 Ala. 714. ment of the principal and interest "West v. Kelly's Exrs., 19 Ala. in a certain manner, the property 353, 54 Am. Dec. 192. 310] EFFECT OF CONDITIONS OR AGREEMENTS. 408 § 310. Where note and contemporaneous agreement are mutual and dependent. — The rule that parol evidence of a contemporane- ous agreement is not admissible to contradict the terms of a bill or note does not operate to exclude evidence of such an agreement in all cases. It is a general rule in the construction of contracts that two contemporaneous writings, where they are between the same parties and relate to the same subject matter and are mutually dependent, con- stituting, in fact, but one contract, of which each is evidence of a part only thereof, may be read and construed as one contract in actions be- tween the parties or their representatives. And this rule has been frequently applied in the case of a bill or note and a contemporaneous agreement in writing, such agreement being construed as a part of the same contract for the purpose of explaining or controlling the terms of the former or as a condition precedent. ^^ The cases in which evi- dence of such an agreement has been admitted have generally been those where the agreement constituted the consideration for which the note was given.^* So, a contract of sale and a note may be construed together where executed under such circumstances ;^^ and where a note and a lease were each the consideration for the other, both are to be construed as one contract, and if upon breach of the lessor's agreement to make certain improvements or repairs upon the premises the lessee refuses to accept possession, in an action against the latter on the note ^^ Arkansas. — Richardson v. Thom- as, 28 Ark. 387, 391. California. — Prouty v,. Adams, 141 Cal. 304, 74 Pac. 545; Goodwin v. Nickerson, 51 Cal. 166. Georgia. — Montgomery v. Hunt, 93 Ga. 439. Illinois. — Bailey v. Cromwell,' 4 111. 71, 21 N. E. 59. Indiana. — Hickman v. Rayl, 55 Ind. 551. Maryland. — Duvall v. Farmers' Bank of Maryland, 9 Gill & J. (Md.) 31. Michigan. — Fink v. Chambers, 95 Mich. 508, 55 N. W. 375; Sutton v. Beckwith, 68 Mich. 303, 36 N. W. 79, 13 Am. St. R. 344. New Hampshire. — Hill v. Hunt- ress, 43 N. H. 480. New York. — Rogers v. Smith, 47 N. Y. 324; Hoag v. Parr, 13 Hun (N. Y.) 95. North Carolina. — Sydnor v. Boyd, 119 N. C. 481, 26 S. E. 92, 37 L. R. A. 734; Carrington v. WafE, 112 N. C. 115, 16 S. E. 1008. Ohio. — Jacobs v. Mitchell, 46 Ohio St. 601, 22 N. E. 768. Oregon. — Sayre v. Mohney, 30 Oreg. 238, 47 Pac. 197. Texas.— Kelly v. Webb, 27 Tex. 368; Glass v. Adone (Tex. Civ. App. 1905), 86 S. W. 798. English. — Webb v. Salmon, 19 L. J. Q. B. N. S. 34; Savage v. Aldren, 2 Starkie 232. " See cases in preceding note and §§ 322-329 herein. "May v. Cole, 8 Blackf. (Ind.) 479; Hoag v. Parr, 13 Hun (N. Y.) 95. ii 409 CONDITIONS PRECEDENT. [§ 311 given for the rent he may avail himself of such failure by the lessor as a defense.^^ So evidence has been held admissible, in an action on a note to the creditor of the maker, of a contemporaneous written agree- ment which is a part of the same contract by which the payee agreed to give work to the maker at a certain price per day until such note was paid and that there has been a breach of such agreement. ^^ And in an action on purchase-money notes it was decided that a deed, con- taining covenants to the effect that plaintiff would look to no other property for the satisfaction of his debt than that mentioned therein, was to be construed with the note as parts of one contract and that the vendor should be confined in his recovery to the property named in the deed.^** And where a note and the contract, in pursuance of which it was executed, are a part of the same transaction and may be taken to- gether in determining the intent of the parties it may be shown that by the terms of the contract the obligation of the signers of the note, though in form joint and several, was not in fact to be such but each was to be liable for his proper share.^^ But in the case of mortgage notes it has been decided that the indebtedness is represented by the notes to which the mortgage is collateral and that it refers to them for the purpose of identification of the contract and that therefore, in the case of an irreconcilable contradiction between the mortgage and the note as to the time of payment, the terms of the latter instrument must control.^'' The breach of such an agreement may be shown in defense to an action by an indorsee after maturity,^ ^ or by an assignee with notice or knowledge thereof. -^ Where, however, a defendant re- lies upon an agreement of this kind as a bar to an action against him and pleads it as such, it is decided that it must be alleged to be in writ- ing. ^^ § 311. Conditions precedent — Generally. — In many cases an in- strument for the payment of money is dependent either as to the time "Hickman v. Rayl, 55 Ind. 551. -Thomas v. Page, 3 McLean (U. "Minzey v. Marcy Mfg. Co., 25 S.) 167. Ohio Cir. Ct. R. 593. "-^ Osborne v. Taylor, 58 Conn. 439, "'Richardson v. Thomas, 28 Ark. 20 Atl. 605. 387. If plaintiff counts upon a writing "*City Deposit Bank Co. v. Green and the plea shows an agreement (Iowa 1905), 103 N. W. 96. contemporaneous and modifying its ™ Ferris v. Johnson (Mich. 1904), terms, it must show that this agree- 98 N. W. 1014. ment was also in writing. Peddie v. =" Munro v. King, 3 Colo. 238. Donnelly, 1 Colo. 421, 423, per Wells, J. 312] EFFECT OF CONDITIONS OR AGREEMENTS. 410 of payment or as to the rights and liabilities of the parties upon the performance of some condition or the happening of some contingency which is in the nature of a condition precedent.^^* In order, however, that a condition or contingency should so control the operation of such an instrument it is essential that it should either be expressed therein or contained in a contemporaneous agreement which is to be construed with the instrument as one contract.-^ And if the performance of such a condition by the party obligated to perform is prevented by the other party, the latter cannot avail himself of such non-performance as a defense.-'' In some cases a request or demand of the thing claimed may constitute a condition precedent to the obligation of the defend- ant. When this is the case, such demand, before suit brought, should be averred and proved to enable the plaintifE to maintain the action and to preclude the defense of want or failure of consideration." Non- performance of a condition precedent may be a good defense to an ac- tion against the maker by an assignee'^ or indorsee, where it is pro- vided by statute that any defense which a maker has against a payee before notice of the transfer is available against an indorsee.^^ § 312. Conditional delivery — Maker to payee — Effect of. — Al- though it is held in many cases that a delivery of a note to the payee by the maker will operate as an absolute delivery, though it is agreed that its taking effect is dependent upon a condition or contingency, on the ground that such an instrument cannot be delivered as an escrow to the payee,^" yet the weight of authority supports the rule that in an ^ California. — McLaughlin v. Clau- sen, 85 Cal. 322, 24 Pac. 636. Georgia. — Keaton v. Read, 32 Ga. 493. Massachusetts. — Tufts v. Kidder, 8 Pick. (Mass.) 537. Michiga/n. — Sutton v. Beckwith, 68 Mich. 303, 36 N. W. 79, 13 Am. St. R. 344. New York. — Coffin v. Grand Rap- ids Co., 61 N. Y. Super. Ct. 51, 18 N. Y. Supp. 782. Pennsylvania. — Massey v. Blair, 176 Pa. St. 34, 34 Atl. 925. SEE cases cited in § 322 herein as to "conditions affecting consider- ations." =^ See §§ 307, 308 herein. =" Massey v. Blair, 176 Pa. St. 34, 34 Atl. 925. -' Rowland v. Edmonds, 24 N. Y. 307. See Edgerton v. Aspinwall, 3 Conn. 445. =8 Jefferson v. Hewitt, 103 Cal. 624, 37 Pac. 638; Johnson v. First Na- tional Bank, 24 111. App. 352. See Billings v. Everett, 52 Cal. 661. ^Shoe & Leath. Nat. Bank v. Wood, 142 Mass. 563, 8 N. E. 753. =" Converse v. Moulton, 2 Root (Conn.) 195; Neely v. Lewis, 10 111. 31; Stewart v. Anderson. 59 Ind. 375; Roche v. Roanoke Semi- nary, 56 Ind. 198; Robb v. Victory, 6 I 411 CONDITIONxiL DELIVERY — MAKER TO PAYEE. [§ 313 action by the payee of a note against the maker, the latter may show that he delivered the instrument to the payee, it being agreed that it should not take effect until the happening of a certain contingency or the performance of a certain condition and that neither the contin- gency has occurred nor the condition been performed. ^^ "Such parol evidence does not contradict the note or seek to vary its terms. It merely goes to the point of its non-delivery. The note in its terms is precisely what both the maker and the payee intended it to be. No Blackf. (Ind.) 47; Jones v. Shaw, ,G7 Mo. 667; Henshaw v. Button, 59 Mo. 139; Massman v. Holscher, 49 Mo. 87. See Underwood v. Simonds, 12 Mete. (Mass.) 275; Porter v. Pierce, 22 N. H. 275, 55 Am. Dec. 151. "' Connecticut. — M cFarland v. Sikes, 54 Conn. 250, 7 Atl. 408, 1 Am. St. R. 111. Illinois. — Belleville Savings Bank V. Bornman, 124 111. 200, 16 N. E. 210; Harding v. Commercial Loan Co., 84 111. 251. Indiana. — Carlisle v. Terre Haute &c. R. R. Co., 6 Ind. 316. Indian Territory. — Mehlin v. Mu- tual Reserve Fund L. A., 2 Ind. Terr. 396, 51 S. W. 1063. Iowa. — Oakland Cemetery Assn. v. Lakins (Iowa 1904), 101 N. W. 778; Ware v. Smith, 62 Iowa 159, 17 N. W. 479; Williams v. Donaldson, 8 Clarke (Iowa) 109. • Maine. — Goddard v. Cutts, 11 Me. 440. Maryland. — Devries v. Shumate, 53 Md. 211. Massachusetts. — Wilson v. Powers, 131 Mass. 539; Watkins v. Bowers, 119 Mass. 383. Minnesota. — Mendenhall v. Ulrich (Minn. 1905), 101 N. W. 1057; Smith v. Mussetter, 58 Minn. 159, 59 N. W. 995; Holt v. Mclntire, 50 Minn. 466, 52 N. W. 918. Missouri. — Hert v. Ford (Mo. 1896), 36 S. W. 671. Netv Hampshire. — Porter v. Pierce, 22 N. H. 275, 55 Am. Dec. 151; Congregational Society v. God- dard, 7 N. H. 430. New York. — Seymour v. Cowing, 4 Abb. Dec. (N. Y.) 200; Claflin v. Tushler, 66 Barb. (N. Y.) 649. North Carolina. — Carrington v. Waff, 112 N. C. 115, 16 S. E. 1008. Rhode Island. — Sweet v. Stevens, 7 R. I. 375. South Carolina. — Barton v. Ander- son, 4 Rich. (S. C.) 507. South Dakota. — McCormick Har- vesting Mach. Co. V. Faulkner, 7 S. D. 363, 64 N. W. 163, 58 Am. St. R. 839. Tennessee. — Alexander v. Wilkes, 11 Lea (Tenn.) 221; Breedon v. Grigg, 8 Baxt. (Tenn.) 163. Utah. — State Bank v. Burton, 14 Utah 420, 48 Pac. 402. Vermont. — Jarvis v. Rogers, 3 Vt. 336. Wisconsin. — Hillsdale College v. Thomas, 40 Wis. 661. United States. — Burke v. Dulaney, 153 U. S. 228, 14 Sup. Ct. 816; Ware V. Allen, 128 U. S. 590, 9 Sup. Ct. 174, 32 L. Ed. 565; Burnes v. Scott, 117 U. S. 582; Quebec Bank v. Hell- man, 110 U. S. 178, 4 Sup. Ct. 76, 28 L. Ed. 111. See Jennings v. Moore (Mass. 1905), 75 N. E. 214. 313] EFFECT OF CONDITIONS OR AGREEMENTS. 412 one desires to vary its terms or to contradict them."^^ So it is said in another case : "Of course, no rule is more elementary than that parol contemporaneous evidence is inadmissible to contradict or vary the terms of a valid written instrument. But the rule is almost equally well settled that parol evidence may he given to prove the existence of any separate parol agreement constituting a condition precedent to the attaching of any obligation under the written instrument. This is not to vary a written instrument, but to prove that no contract was ever made, — that its obligation never commenced."''^ That a delivery should be conditional, it is not necessary that express words to that ef- fect should be used at the time. That conclusion may be drawn from ' all the circumstances which properly form a part of the entire trans- action, whether in point of time they precede or accompany the de- livery.^* But while it is competent for a maker to show by parol that the note was to become a binding agreement only on the happening of a certain contingency and that the contingency has not happened, yet his proof must be reasonably certain to that end.^^ § 313. Same subject continued — Application of rule. — In the ap- plication of the general rule it has been decided that a maker may show in defense to an action by the payee of a note that such note was to become a valid contract only upon the performance of a condition that a certain building should be leased to the defendant by a third - person and that such lease was never made,^^ or that it was to be valid only on the condition that the transaction in which it was given was approved by a certain attorney and that such attorney has refused to approve thereof." And in an action on a note given to an agent of an insurance company by the maker at the time of his making an applica- tion for insurance evidence is admissible to show that the delivery was not absolute but that the note was to take effect only upon the arrival of the policy and its being satisfactory and accepted by the defend- ant.^^ And it may be shown that the note was given to become an ab- solute obligation of the maker in the event of his electing, upon ex- "McFarland v. Sikes, 54 Conn. 250, 252, 7 Atl. 708, 1 Am. St. R. Ill, per Park, C. J. ^ Smith V. Mussetter, 58 Minn. 159, 161, 59 N. W. 995, per Mitchell, J. =^ Wilson V. Powers, 131 Mass. 539, 541, per Devens, J. ^=Elwell V. Turney (Wash. 1905), 81 Pac. 1047. '"Smith V. Mussetter, 58 Minn. 159, 59 N. W. 995. "Ware v. Allen, 128 U. S. 590, 9 Sup. Ct. 174, 32 L. Ed. 563. '* Graham v. Remmel (Ark. 1905), 88 S. W. 899. 413 CONDITIONxVL DELIVERY — BONA FIDE HOLDERS. [§ 314 amination or investigation, to take a certain interest in property, and was delivered and accepted only as a memorandum of what the maker was to pay in case he decided to take such interest and that he never decided to accept the interest referred to.^° So where subscription notes were executed to an institution on conditions which were not expressed therein, it was decided that, in an action against the receiver to determine the liability of the makers to creditors, it might be shown by the subscribers what the conditions were on which such notes were given, and that they were not performed, such evidence not being con- tradictory or avoiding their effect, but going to show that the notes never went into effect.'**' Where, however, a bill or note is not to be- come a binding obligation upon the maker until the performance of a certain condition, and by the connivance or consent of the maker it is not performed, he cannot avail himself of non-performance as a de- fense to an action on the instrument.*^ One who relies on such a de- fense has the burden of establishing it.*^ §314. Same subject — Effect upon third parties — Bona fide hold- ers. — It is no defense to an action by a bona fide holder of a note against the maker that the latter delivered the instrument to the payee under an agreement that it was to take effect only upon the happening of a certain event or the performance of some condition and that it was transferred to the holder prior to tlie occurrence of the event or the performance of the condition upon which its taking effect depended.*^ ™ Burke v. Dulaney, 153 U. S. 228, Minnesota. — Mendenhall v. Ulrich 14 Sup. Ct. 816, 38 L. Ed. 698. (Minn. 1905), 101 N. W. 1057. "» Catt V. Oliver, 98 Va. 580, 36 S. Missouri.— Dono\a.n v. Fox, 121 E. 980. Mo. 236, 25 S. W. 915; Jennings v. ^'Batavian Bank v. North, 114 Todd, 118 Mo. 296. 24 S. W. 148, 40 Wis. 637, 90 N. W. 1016. Am. St. R. 373; Henshaw v. Dutton, "Perley v. Perley, 144 Mass. 104, 59 Mo. 139. 10 N. E. 726. ISlew Yorfc.— Chase National Bank *^ Georgia. — Goodman v. Fleming, v. Faurot, 149 N. Y. 532, 44 N. E. 57 Ga. 350. 164; Cowles v. Gridley, 24 Barb. (N. Illinois.— Foj v. Blackstone, 31 Y.) 301. 111. 538, 83 Am. Dec. 246. Compare Dodd v. Dunne, 71 Indiana.— Clanin v. Esterly Har- Wis. 578, 37 N. W. 430, holding vesting Mach. Co., 118 Ind. 372, 21 where one executed a note for a N. E. 35, 3 L. R. A. 863. purchase of land, it being agreed Iowa. — Grafif v. Logue, 61 Iowa that the note should take effect 704, 17 N. W. 171; Gage v. Sharp, 24 when the contract for the sale of Iowa 15. the land was consummated, and the Maine. — Wait v. Chandler, 63 Me. payee took the note from the mak- 257; Adams v. Smith, 35 Me. 324. er's desk, though without objection I § 315] EFFECT OF CONDITIONS OR AGREEMENTS. 414 This rule is based upon the familiar principle that where one of two parties must suffer by reason of the fraud or misconduct of another the loss must be borne b}^ the one who has put it in the power of such third person to so act.** Upon proof, however, of the fact that a note was delivered to the payee to take effect upon the performance of some condition or the happening of some contingency the burden then rests on a plaintiff to show that he is a bona fide holder without notice/^ And as against an assignee, with notice of the condition attending the delivery of a bill or note, the defense of non-performance is availa- ble.*^ And an assignee who takes a note for indemnity is held to take it subject to equities existing between the original parties, and there- fore to the defense of a failure of the contingency or conditions upon which the note was to take effect.'*^ § 315. Condition that other signatures be procured. — Where a note is signed by a person upon the condition that it is not to take effect until the signature of another has been procured it may be shown in defense to an action on the paper by a payee or holder with notice of such fact that there has been a breach of the condition upon which defendant affixed his signature to the paper.*^ So where a person signs by the latter, that a hona fide pur- chaser could not recover thereon, as there was no delivery of the note. See § 13 herein as to "Execution or Delivery Procured by Force or Fraud." See § 20 herein as to "Want of Delivery." "Galvin v. Syfers, 22 Ind. App. 43, 52 N. E. 96, per Wiley, J. *^Mendenhall v. Ulrich (Minn. 1905), 101 N. W. 1057. ^« Shufeldt V. Gillilan, 124 111. 460, 16 N. E. 879; French v. Wallack, 12 N. Y. St. R. 159. See Stricklin V. Cunningham, 58 111. 293. '■Brooks V. Whitson, 7 Sm. & M. (Miss.) 513. *^ Alabama. — First National Bank V. Dawson, 78 Ala. 67. Georgia. — Clark v. Bryce, 64 Ga. 486; Cleghorn v. Robison, 8 Ga. 559. Illinois. — Stricklin v. Cunning- ham, 58 111. 293. Iowa. — Daniels v. Gower, 54 Iowa 319, 3 N. W. 424. 6 N. W. 525. KentuCrcy. — Murphy v. Hubble, 2 Duv. (Ky.) 247; Bivins v. Helsley, 4 Mete. (Ky.) 78; Coffman v. Wil- son, 2 Mete. (Ky.) 542. Minnesota. — German-Amer. Nat. Bank v. People's Gas & Elec. Co., 63 Minn. 12, 65 N. W. 90; Yellow Medi- cine County Bank v. Tagley, 57 Minn. 391, 59 N. W. 486. Neiv York. — Twenty-Sixth Ward Bank v. Stearns. 148 N. Y. 515, 42 N. E. 1050; Miller v. Gamble, 4 Barb. (N. Y.) 146; Alexander v. Wilkes, 11 Lea (Tenn.) 221. Texas. — Reynolds v. Dechaums, 24 Tex. 174. Washington. — Seattle v. Griffith Realty & Bkg. Co., 28 Wash. 605, 68 Pac. 1036; Young v. Smith, 14 Wash. 565, 45 Pac. 45. English. — Leaf v. Gibbs, 4 Car. & P. 466. Compare Garrison v. Nel- son (Tex. 1892), 19 S. W. 248. hold- ing that a maker cannot defend against a note payable to a creditor II 415 TflAT OTHER SIGNATURES BE PROCURED. [§ 316 a note as surety and leaves it with the principal pa3'or, on condition that the signature of another be obtained before delivering the same, it may be shown in an action by the payee or holder with notice that the instrument was delivered in violation of such condition, as the payor will be regarded as the agent of the surety in such a case.*® And where a note is signed by a surety for a principal who is to sign as maker, and it is delivered to the payee to obtain such signature and to hold for his debt when so signed, the failure to obtain the signature of the principal will discharge the surety as between the parties.^" And the discharge of a surety on account of the breach of such a condition will operate as a discharge of subsequent co-sureties.^^ Again the fact that paper has been so delivered may be shown as against a transferee without a valuable consideration or after maturity. '^^ So the transfer of a note by the maker, with the name of an indorser thereon, to a third party, without any act of transfer from the payee and witliout his knowledge, does not impress upon the signature of the indorser the legal quality of a full indorsement or invest the holder with a legal title thereto, and in an action by him against the indorser, the latter may show that the note was intrusted to the maker upon the express condition that the signature of the defendant was not to be considered as an indorsement unless the indorsement of the payee should also be procured at once.^^ § 316. Same subject continued. — This question as to the liability of a party who has signed negotiable paper on the condition that the signature of another person be obtained where it has been delivered in violation of sucli condition has generally arisen where a person has affixed his name to a note as a surety under an agreement that another on the ground that a condition, that of opinion that they cannot claim another party was to sign the note immunity from liability upon the as maker, had been broken and dis- ground that other parties equally tinguishing between the case of liable with them failed to sign the sureties and indorsers and those note as obligors." primarily liable. The court said in ''"Hubble v. Murphy, 1 Duv. (Ky.) this case, per Davidson, J.: "The 278. distinction in such cases between ^° Knight v. Hurlbut, 74 111. 133. one originally liable for the debt " Daniels v. Gower, 54 Iowa 319, and partners or indorsers primarily 3 N. W. 424, 6 N. W. 525. liable, is, in our opinion, one of a "Merchants' Exchange Bank v. most material character. As to Luckow, 37 Minn. 542, 35 N. W. 434. such former parties, that is, parties ^^ Gibson v. Miller, 29 Mich. 355, primarily liable for the debt, we are 18 Am. Rep. 98. I 317] EFFECT OF CONDITIONS OR AGEEEMEN'TS. 41G person shall sign the same before it is to become binding against the former as surety. In this class of cases it is a general rule that such a defense is not available to defeat an action by a payee without notice or a hona fide holder against a party to the instrument who has signed the same upon such a condition.^^ Where, however, a non-negotiable note is signed by a surety on the condition that the signatures of other persons as sureties be obtained if the note is delivered to the payee without a compliance with such condition and comes into the hands of a holder without notice it is held that the delivery in violation of the agreement may be shown as a defense even in an action by such a holder.^^ § 317. Delivery in escrow. — It may be shown in defense to an ac- tion by the payee that the instrument was delivered in escrow to a third party, who has delivered the same to the payee in violation of the conditions imposed and of which the payee had knowledge. Evidence to this effect does not contradict or vary the terms of the written in- strument but rather shows that as between the parties thereto it has " Arkansas. — Craighead v. Build- ing & Loan Ass'n, 69 Ark. 332, 63 S. W. 668; Tabor v. Merchants' Na- tional Bank, 48 Ark. 454, 3 S. W. 805, 3 Am. St. R. 241. Georgia. — Clark v. Bryce, 64 Ga. 486; Bonner v. Nelson, 57 Ga. 433. Indiana. — Whitcomh v. Miller, 90 Ind. 384; Deardorff v. Foresman, 24 Ind. 481. loiva. — Micklewait v. Noel, 69 Iowa 344, 28 N. W. 630. Kentucky. — Smith v. Moberly, 10 B. Mon. (Ky.) 266, 52 Am. Dec. 543. Minnesota. — "Ward v. Hackett, 30 Minn. 150, 14 N. W. 578, 44 Am. Rep. 187. Missouri. — North Atcheson Bank v. Gay, 114 Mo. 203, 21 S. W. 479; Bank of Missouri v. Phillips, 17 Mo. 29. Nebraska. — Brumbach v. Bank, 46 Neb. 540, 65 N. W. 198. Nem Hampshire. — Merriam v. Rockwood, 47 N. H. 81. North Carolina. — Gwyn v. Patter- son, 72 N. C. 189. Tennessee. — Lookout Bank v. Aull, 93 Tenn. 645, 27 S. W. 1014, 42 Am. St. R. 934. Texas. — Davis v. Gray. 61 Tex. 506. Vermont. — Farmers' & M. Bank v. Humphrey, 36 Vt. 554, 86 Am. Dec. 671; Dixon v. Dixon, 31 Vt. 450, 76 Am. Dec. 128; Passumpsic Bank v. Goss, 31 Vt. 315. See Dair v. United States, 16 Wall. (U. S.) 1. Compare Ayres v. Milroy, 53 Mo. 516, 14 Am. Rep. 465. Effect of Subsequent Verbal Prom- ise. — Where a note has been de- livered in violation of such a condi- tion a subsequent verbal promise by a surety to pay the note, made with- out any consideration, will not be sufficient to bind him. Loving v. Dixon, 56 Tex. 75. ^^ Daniels v. Gower, 54 Iowa 319, 6 N. W. 525. ■I 417 DELIVERY IX ESCROW. [§ 317 never acquired any binding force by reason of the fact that there has been no legal delivery thereof.^** And such a defense may also be avail- able against an indorsee with notice.'^'^ But where a payee is ignorant of a condition attached to the delivery of such, paper, as where the signature of another is to be obtained before it is delivered and it is delivered without obtaining such signature, it is held to be no defense against the payee, who, in such a case, is said to occupy the position of a bona fide holder,^^ against whom the defense that a note was placed in escrow to be delivered on the performance of some condition or the occurrence of some event and that it has been delivered in vio- lation of the conditions imposed, cannot be set up.^^ So it has been declared that: "It is perfectly well settled that any arrangement made between parties that a bond or instrument is to be held in escrow and not to be delivered except in certain contingencies would be bind- ing between tlie parties to the arrangement ; but the law, as applied to negotiable paper, is equally well settled that if the note passes for value to a third person without notice of such arrangement, he is to be pro- tected."®" And if a note when executed is by agreement of the parties " Davis V. Bower, 29 Colo. App. 422. 68 Pac. 292; Mills v. Williams, 16 S. C. 593. "It is well settled that where a writing obligatory is placed in the hands of a third party to be held in escrow, and to be delivered to either party upon conditions to be performed by him, a delivery to him without such performance will not constitute a delivery as to the other party, and as to such party the instruments will be without force." Per Zollars, C. J., in String- er V. Adams, 98 Ind. 539, 541. Com- pare Martin v. Witty, 104 Mo. App. 262, 78 S. W. 829. "Boutelle v. Wheaton, 13 Pick. (Mass.) 499; Brown v. Willis, 13 Ohio 26. ''Jordan v. Jordan, 10 Lea (Tenn.) 124, 43 Am. Rep. 291. '■"District of Columbia. — Hutchin- son V. Brown, 19 Dist. Col. 136. Indian Territory. — Garrett v. Campbell, 2 Ind. Terr. 301, 51 S. W. 956. Joyce Defenses — 27. Iowa. — Graff v. Logue, 61 Iowa 704, 17 N. AV. 171. Massachusetts. — Fearing v. Clark, 16 Gray (Mass.) 74, 77 Am. Dec. 394. Nebraska. — Morris v. Morton, 14 Neb. 358, 15 N. W. 725. New York. — Vallett v. Parker, 6 Wend. (N. Y.) 615; Moore v. Miller, 6 Lans. (N. Y.) 396; Woodhull v. Holmes, 10 Johns. (N. Y.) 231. In some ca^es, however, it is held that delivery is essential to render the instrument operative and that in such a case there has never been a delivery of such a character as will bind a party, in the absence of further facts which would charge him with negligence in allowing the instruments to be negotiated. Wisconsin. — See Roberts v. Wood, 38 Wis. 60; Roberts v. McGrath, 38 1 Wis. 52; Chipman v. Tucker, 38 Wis. 43, 20 Am. Rep. 1. ""Hutchinson v. Brown, 19 Dist. Col. 136, per Mr. Justice Cox. 318] EFFECT OF CONDITIONS OR AGREEMENTS. 418 delivered to a third person by whom delivery is to be made to the payee upon the performance of a condition precedent, the delivery is held to become complete upon the performance of the condition, though this does not occur until after the death of the maker.®^ Upon proof that a bill was delivered in escrow the holder then has the burden of show- ing that he is a bona fide holder.^^ § 318. Same subject — Payee without notice.- — The fact that there was an agreement between a maker and his co-makers or an indorser, surety or guarantor that the instrument is to be delivered to the payee upon the performance of some condition or happening of some event will be no defense to an action by the payee on the instrument to whom it was delivered with no notice or knowledge of such agreement.*^^ The " Gandy v. Bissell's Estate (Neb. 1904), 100 N. W. 803, citing Wheel- wright V. Wheelwright, 2 Mass. 447, 3 Am. Dec. 66. BUT SEE In re Helfenstein, 77 Pa. St. 328, 18 Am. Rep. 449, hold- ing that where a note is delivered to a third person to be in force upon the acceptance by the payee of cer- tain conditions and such conditions are not accepted by the payee until after the maker's death, it is to be construed as an offer merely which is countermanded by the death of the maker and that there can be no recovery on the same. "Vallett V. Parker, 6 Wend. (N. Y.) 615. See Flour City Bank v. Connery, 12 Man. R. 305, wherein, under the Bills of Exchange Act, 1890, § 3Q, sub sec. 2 (53 Vict. 33), providing that "every holder of a bill is prima facie deemed to be a holder in due course; but, if in an action on a bill, it is admitted or proved that the acceptance, issue or subsequent ne- gotiation of the bill is affected with fraud, duress or force and fear, or illegality, the burden of proof that he is such a holder in due course shall be on him, unless and until he proves that, subsequent to the al- leged fraud or illegality, value has in good faith been given for the bill by some other holder in due course," it was decided that in an action by the indorsee against the maker of a note the latter was entitled to de- fend without giving evidence to re- but presumption that plaintiff was not a holder in due course where he had filed an affidavit that the note had been handed by him to another to hold in escrow until certain ac- counts between him and the payee had been settled and that it had been delivered over to the payee in violation of such condition. And it was decided also that in such a case the burden rests on the plain- tiff to show both that he had given value and had done so in good faith. ^^ Alabama. — Sharp v. Allgood, 100 Ala. 183, 14 So. 16. Georgia. — Clark v. Bryce, 64 Ga. 486. Indiana. — Whitcomb v. Allen, 90 Ind. 384; Deardorff v. Foresman, 24 Ind. 481. Iowa. — Nicklewait v. Noel, 69 Iowa 344. Kansas. — Carter v. Moulton, 51 Kan. 9, 32 Pac. 633. i 419 DELIVERY IN ESCROW. [§§ 319, 3 "30 following from the opinion in a case in Kansas, in which this question is considered, is pertinent in this connection; "Where a negotiahle promissory note, perfect in form, executed by a number of persons, is entrusted to one of the makers by all, we think there is a presumption that the party so holding the note has authority to deliver it to the payee. When a note so executed is presented by the principal to the payee without any notice to the payee of any understanding between the makers affecting the right of the principal to deliver to the payee, we tliink he is justified in assuming that the parties who so signed the note intended to be bound thereby, and that he may receive the note and deliver to the principal the consideration therefor, without first making inquiries of the other parties to the instrument for the pur- pose of learning whether there are any secret agreements or under- standings affecting the instrument."®* § 319. Same subject — Where paper taken as security for an ante- cedent debt. — As against one who has taken paper merely as security for an antecedent debt, without any other consideration, it has been decided that an indorsee may set up the defense that he signed the pa- per under an agreement in respect to its delivery on the performance of some condition, and that it has been delivered in violation of such condition, the holder in this case being declared not to be a bona fide holder for value.® '^ § 320. That instrument is to be void or payable on contingency. A note which is absolute upon its face, providing unconditionally for the payment of a specified sum of money, and which is a complete and perfect instrument cannot be varied by parol evidence of an inde- pendent collateral agreement showing that it was to be either void or Kentucky. — Gano v. F a r m e r s' Texas. — Davis v. Gray, 61 Tex. Bank. 103 Ky. 508, 45 S. W. 519. 506. Missouri. — North Atchison Bank Compare Dunn v. Smith, 12 Sm. V. Gay, 114 Mo. 203, 21 S. W. 479. & M. (Miss.) 602. Nebraska. — Brumback v. Bank, 46 "^ Per Allen, J., in Carter v. Moul- Neb. 540, 65 N. W. 198. ton, 51 Kan. 9, 32 Pac. 63, 27 Am. New HampsMre.—M e r r i a m v. St. R. 259, 20 L. R. A. 309. Rockwood, 47 N. H. 81. "=■ Prentiss v. Graves, 33 Barb. (N. South Carolina. — Fowler v. Allen, Y.) 621. 32 S. C. 229, 10 S. E. 947, 7 L. R. A. See as to such transfer, § 246 745. herein. Tennessee. — Jordan v. Jordan, 10 Lea (Tenn.) 124. 320] EFFECT OF CONDITIONS OR AGREEMENTS, 420 payable only upon the performance of some condition or the happen- ing of some contingency.®*' So in an action on a note evidence is not admissible of an oral agreement that the note should be void in case there was a total failure of crops on the land for the rent of which the obligation was given. ®^ And a verbal agreement at the time notes were executed that in case the makers should dissolve partnership the notes should be returned to them and that the partnership was subse- quently dissolved is held not admissible in evidence to defeat an action by the payee.®^ So it was held proper to exclude evidence of an agree- ment that the note sued upon "was not to be paid unless called for during the lifetime of" the payee, •'^ or, in the case of a note given for money advanced to carry on a partnership business, that the note was only to be paid in tlie event that the affairs, of the co-partnership should prove to be prosperous,''^ or, in an action upon notes given to attorneys, that they were not to be paid unless the payees should be successful in a suit they were to bring, and for the bringing of which the note was given,'' ^ or, in the case of a note and mortgage given to secure the purchase money for certain real estate upon which there was a mill, that the maker was only to be liable if the property should ^Federal. — Gorrell v. Home Life Ins. Co., 63 Fed. 371, 11 C. C. A. 240. Connecticut. — Converse v. Moul- ton, 2 Root (Conn.) 195. Georgia. — Stafford v. Staunton, 88 Ga. 298, 14 S. E. 479; Adams v. Rob- inson, 69 Ga. 627. Illinois. — Walker v. Crawford, 56 111. 444, 8 Am. Rep. 701; Foy v. Blkckstone, 31 111. 538, 83 Am. Dec. 246; Harlow v. Boswell, 15 111. 57; Remy v. Graves. 12 111. 287. Michigan. — Hyde v. Tenwinkel 26 Mich. 85. Minnesota. — Curtice v. Hokanson, 38 Minn. 510, 38 N. W. 694. Missouri. — Henshaw v. Button, 59 Mo. 139, 143. Nebraska. — Western Mfg. Co. v. Rogers, 54 Neb. 456, 74 N. W. 849; Van Etten v. Howell, 40 Neb. 850, 59 N. W. 859. New York. — Erwin v. Saunders, 1 Cow. (N. Y.) 249, 13 Am. Dec. 520; Ely V. Kilborn, 5 Denio (N. Y.) 514. Pemisylvania.— Rogers v. Dono- van, 13 Phila. (Pa.) 51. Vermont. — Hatch v. Hydes, 14 Vt. 25, 39 Am. Dec. 203; Farnhani v. Ingham, 5 Vt. 514. EnglisU. — Rawson v. Walker, 1 Starkie 161; Free v. Hawlcins, 8 Taunt. 92, 1 Moore 535. But see Lyons v. Stills, 97 Tenn. 514, 37 S. W. 280. " Neverman v. Bank of Cass County, 14 Okla. 417, 78 Pac. 382 (action by holder with notice). *' Oppenheimer v. Kruckman (N. Y. App. Div. 1903), 84 N. Y. Supp. 129. ""Boody v. McKenney, 23 Me. 517, 522. '" Jones V. Shaw, 67 Mo. 667. "West v. Kelly's Ex'rs, 19 Ala. 353, 54 Am. Dec. 192. 421 PAYABLE ON HAPPENING OF CONTINGENCY. [§ 321 • be destroyed by fire,'- or, that the payment of the note should be condi- tional upon the allowance by the ordinar}' of a claim against the es- tate by the payee," or that the makers would not be called upon to pay it unless the money should be actually needed and required for the support of the payee during her lifetime/* or that at the time the maker signed and delivered the note it was agreed that the same should not be payable unless he should be found to have certain funds suffi- cient to pay it,^^ or that he would not be obliged to pay it unless he received the amount thereof from a third party.'^^ Again where a contemporaneous contract is to be construed as a part of a note a de- fendant cannot introduce evidence in an action by the payee of a col- lateral understanding or agreement, inconsistent with the terms of the contract, that the note is to be payable only upon the happening of a contingency.'^^ But where a person took paper with notice of an agree- ment that it was not to be paid by the acceptors until the maker should collect a certain claim from the county for building a courthouse, which condition was omitted from the instrument by mistake, and the claim had not been collected, and due diligence was b'eing used by the maker to collect it, it was held that the indorsee could not recover against the acceptor. '^^ Again where an order for the payment of money is payable out of a certain payment to which the maker will be entitled under a contract with the acceptor the latter may show in de- fense to an action thereon that the maker was never entitled to such payment by reason of his failure to perform certain conditions which were conditions precedent to his right thereto. '** § 321. Same subject — Happening of contingency prevented by act of maker. — If the time of the payment of a note is actually dependent "Farmer v. Perry, 70 Iowa 358, paid "unless it was established" in 30 N. W. 752. court that the plaintiff was the own- "McGrath v. Barnes, 13 S. C. 328, er of the land for the rent of which 36 Am. Rep. 687. . it was given. "Osborn v. Taylor, 58 Conn. 439, "Greer v. Bently, 19 Ky. Law R. 20 Atl. 605. 1251, 43 S. W. 219. The court, how- " Adams v. Wilson, 12 Met. ever, declared in this case that it did (Mass.) 138, 45 Am. Dec. 240. not decide that there could eventu- "Torpey v. Tebo, 184 Mass. 307, ally be no recovery if the claim was 68 N. E. 223. not paid. "Prouty. V. Adams, 141 Cal. 304, '"Glidden v. Massachusetts Hos- 74 Pac. 545, so holding where the pital L. I. Co., 187 Mass. 538, 73 N. defendant sought to introduce evi- E. 538. See §§ 343-346 herein as to dence, outside of the contract, of an conditions in note, agreement that the note need not be § 323] EFFECT OF CONDITIONS OR AGREEMENTS. 422 * upon the happening of some contingency either by reason of a con- temporaneous agreement which may be construed with the note, or from the terms of the note itself, and the happening of such contin- gency is prevented by some act of the maker he cannot avail himself of the fact that it has not happened as a defense to an action against him.^^ So where there was an agreement between the parties that a note was not to be paid if certain mines belonging to the maker should yield no profits and before they had yielded any he sold and conveyed them to a stranger it was held that he had voluntarily committed an act which rendered it impossible for the contingency upon which the note would become due and payable to ever arise and that when he did that he violated his contract and the note at once became due and pay- able.^ ^ And where it was conditioned that payment of a note need not be made in case a certain decision was rendered against the maker, it was decided that the latter could not avail himself of such condition as a defense to an action on the instrument where he had rendered the fulfillment of such condition impossible by a compromise of the suit by his own voluritary act.^- And in this connection it has been decided that one who accepts a bill on the condition that he can, prior to its maturity, sell certain goods of the drawer, may show in defense to an action against him on his acceptance that the goods have been attached by the drawer's creditors.®^ § 322. Conditions affecting: consideration. — While parol evidence is not admissible to vary the terms of an instrument yet it is compe- tent to show a want or failure of consideration in actions between the parties and therefore in an action on a note by a payee evidence will be admitted, for such a purpose, of a failure to perform a contempo- raneous agreement which was the consideration for the note.^* It is '" Crocker v. Holmes, 65 Me. 195, California. — Stockton Savings & 20 Am. Rep. 687; Vandemal v. L. Soc. v. Giddings, 96 Cal. 84, 30 Dougherty, 17 Mo. 277; Clark v. Pac. 1016, 21 L. R. A. 406, 31 Am. Condit, 11 Mo. 79. St. R. 181; Braly v. Henry, 71 Cal. "Wold v. Marsh, 54 Cal. 228. 481, 11 Pac. 385, 12 Pac. 623, 60 Am. *^Rightor v. Aleman, 4 Rob. (La.) Rep. 543; Goodwin v. Nickerson, 51 45. Cal. 166. «=> Brown v. Coit, 1 McCord (S. C.) Georgia. — Lightfoot v. West, 98 408. Ga. 546, 25 S. E. 587. ^* Alabama. — Barlow v. Fleming, 6 Idaho. — Maydole v. Peterson, 7 Ala. 146. Idaho 502, 63 Pac. 1048. Arkansas. — Gale v. Harp, 64 Ark. Illinois. — Hill v. Enders, 19 111. 462, 43 S. W. 144. 163; Penny v. Graves, 12 111. 287. 433 CONDITIONS AFFECTING CONSIDERATION. [§ 32-3 said in this connection that although a note is absolute in its terms, it is competent for the maker in an action brought on it, either by the payees or their indorsees, with notice of the original agreement under which it was made, to avail himself of any defense of want or failure of consideration growing out of such agreement and consequently to show what were the terms thereof.*^ And a transferee after maturity Indiana. — Booth v. Fitzer, 82 Ind. 66; Jeffries v. Lamb, 73 Ind. 202. Iowa. — Simpson College v. Bryan, 50 Iowa 293. Kansas. — Dodge v. Oatis, 27 Kans. 762. Kentucky. — McVicker v. Shrop- shire, 6 J. J. Marsh (Ky.) 328. Massachusetts. — Shoe & Leather National Bank v. Wood, 142 Mass. 563, 8 N. E. 753; Hawks v. Trues- dell, 12 Allen (Mass.) 564. Michigan. — Brown v. Smedley, 136 Mich. 65, 98 N. W. 856; Fink v. Chambers, 95 Mich. 508, 55 N. W. 375; Sutton v. Beckwith, 68 Mich. 303, 36 N. W. 79, 13 Am. St. R. 344. Minnesota. — Slater v. Foster, 62 Minn. 150, 64 N. W. 160; Wager v. Brooks, 37 Minn. 392, 34 N. W. 745. New Hampshire. — Shepherd v. Temple, 3 N. H. 455. Nexo York. — Juilliard v. Chaffee, 92 N. Y. 529; O'Brien v. McDonald, 78 Hun (N. Y.) 420, 60 N. Y. St. R, 748, 29 N. Y. Supp. 191; Small v. Smith, 1 Denio (N. Y.) 583. North Carolina. — Sydnor v. Boyd, 119 N. C. 481, 26 S. E. 92. 37 L. R. A. 734; Sayre v. Mohney, 30 Oreg. 238, 47 Pac. 197. Pennsylvania. — Clinch Valley Coal & I. Co. V. Willing, 180 Pa. St. 165, 36 Atl. 737, 57 Am. St. R. 626; Clar- idge V. Kleet, 15 Pa. St. 255. Wisconsin. — Smith v. Carter, 25 Wis. 283. United States. — Brown v. Noyes, 2 Woodb. & M. (U. S.) 75, Fed. Cas. No. 2023. See Weeks v. Medler, 20 Kan. 57. If a collateral agreement which forms the consideration of a note is not performed, and the condition is that upon non-performance, the note shall be returned, the terms of the condition should be performed. If the note is transferred to another, the maker may pay the same and recover as damages from the trans- ferer the amount so paid not in ex- cess of the principal and interest. Serviss v. Stockstill, 30 Ohio St. 418. ^Dulles v. De Forest, 19 Conn. 190, per Storrs, J. See also Small v. Smith, 1 Denio (N. Y.) 583. But see Jennings v. Todd, 118 Mo. 296, 24 S. W. 148, 40 Am. St. R. 373, in which the court distinguished be- tween notice of a condition to be performed and knowledge at time of purchase of a breach of such a condition and says: "We think, however, that no well considered case can be found in which a col- lateral contemporaneous agreement,- providing that the note should not be paid in the event that an execu- tory contract, which was considera- tion of the note, should not be per- formed, has been allowed to defeat the negotiability of the note in the hands of an indorsee, though he had notice of such agreement. A great part of the improvement of the country, and of business generally, is carried on with money raised by the discount of notes given upon executory contracts, and if the maker could be allowed to defend against such notes, in case of a § 323] EFFECT OF CONDITIONS OR AGREEMENTS. 42-1 is also subject to this defense.^ ^ So a maker of a note may also show in defense to an action thereon that it was given in consideration of an executory contract by the payee which, is impossible of perform- ance.^^ If, however, the consideration of a note is an agreement by the payee to subsequently perform some act at the request of the maker, the latter must, in order to establish the defense of want or failure of consideration, show that he requested the payee to do such act and that he failed to do it. This is subject, however, to the excep- tion that it is sufficient to show an incapacity on the part of the payee to do the promised act, constituting the consideration, and if the payee was legally incapable of doing the act, it would be unnecessary to make the request.^* In such cases the burden does not rest upon the payee to show that he has performed the condition which was the consideration for the note but upon the maker to show that he has not.^® § 323. Same subject — Application of rule generally. — Where a promissory note was given in consideration of an agreement to furnish a policy of insurance on the life of the maker's wife of which the hus- band was to be the beneficiary, the failure to perform such agreement will be a good defense to an action against the maker on the note.^** And where a note and bond are to be construed as forming parts of the one and same contract and it is apparent that the note would not have been given without the bond, which formed the principal if not the entire inducement to the making of the note, and the stipulations of the bond have not been performed, it constitutes a failure of consideration which may be shown to defeat an action by any one not a bona fide breach of contract, on the ground *' Billings v. Everett, 52 Cal. 661; that the indorsee, though in other Perkins v. Oilman, 8 Pick. (Mass.) respects bona fide, had knowledge of 229; Hill v. Huntress, 43 N. H. 480; the transaction out of which the Rogers v. Broadnax, 24 Tex. 538. notes grew, all confidence in such " German American Security Go's notes as negotiable paper would be Assignee v. McCulloch (Ky. C. A. destroyed and such, business would 1905), 89 S. W. 5. be paralyzed. By making and deliv- ^ Nelson v. Lovejoy, 14 Ala. 568. ering a negotiable note the maker *' Jennison v. Stafford, 1 Gush, is held to intend that it may be put (Mass.) 168, so holding where the in circulation and that no defenses consideration for the note was an against it exist. * * * if the agreement to forbear to sue a third breach had occurred to the knowl- person for a certain period, edge of the indorsee when he pur- '"' Sydnor v. Boyd, 119 N. C. 481, chased, he would not, of course, be 26 S. E. 92, 37 L. R. A. 734. protected." Per Macfarlane, J. II 425 CONDITIONS AFFECTING CONSIDERATION. [§ 324 holder."^ So where a surety signed a note upon a condition that the payee should advance the principal a sum of money which he failed to do it was held that there was a failure of consideration, of which the surety might avail himself as a defense to an action by the payee.°^ And where a person indorsed a note under an agreement that certain collateral should be deposited to secure the payment of the note it was decided that, in an action by the indorsee, who was a party to such agreement, it might be shown that such collateral had not been de- posited.^^ And in such an action against an indorser it has been held improper to exclude evidence showing that the defendant indorsed the note as collateral security for a debt owing to the plaintiff by the maker upon the former agreeing to discontinue a suit therefor against the maker which, however, he did not do but proceeded to obtain a judg- ment and execution ajid to have a levy made upon the goods of the debtor.^* Again it has been decided, where a note was given for part of the consideration for the lease of certain lands and by the terms of the lease contract the entire possession and use of the leased premises was guaranteed for a certain time, that in an action on the note the de- fendant, upon proof of a breach of such agreement, was entitled to an offset therefor.^^ § 324. Same subject — When not a defense. — Where the promises are independent of each other and the collateral agreement did not constitute the whole consideration for the note but is separable from the other parts thereof it has been decided that a non-performance of such agreement, not amounting to an entire failure or want of con- " Griffith V. Shipley, 74 Md. 591, son, 17 Ark. 254, holding, where a 601, 22 Atl. 1107, 14 L. R. A. 405. note was given for the purchase of '*Bushley v, Reynolds, 31 Ark. land, that the breach of an agree- 657. ment to release certain encum- »* Baumgardner v. Reeves, 35 Pa. brances thereon was no defense. St. 250. Clough V. Baker, 48 N. H. 254, hold- •* Bookstaver v. Jayne, 60 N. Y. ing, where a note was given for the 146- purchase price of a dentist's busi- ■" Stirling v. Gray (Tex. Civ. ness, that the breach of an agree- App. 1904), 81 S. W. 789. ment not to practice dentistry with- »• Comelander v. Bird, 11 Ala. 913, in certain limits was no defense, holding where a note was given for SEE Stewart v. Anderson, 59 Ind. the purchase of a brickyard, that 375; Gibson v. Newman, 1 How. the breach of an agreement not to (Miss.) 341; Plumb v. Niles, 34 Vt. make bricks in the same town, will 230. not defeat recovery. Key v. Hen- § 324] EFFECT OF CONDITIONS OR AGREEMENTS. 42G sideration, will not be a defense to an action on the instrument."" So it has been said that : "There is a class of cases where the agreement does not go to the whole consideration on both sides, and where the supposed condition is distinctly separable from other parts of the agreement, so that much of the contract may be performed on both sides, as though the condition were not there, it will be held as a stipu- lation, the breach of which only gives an action to the injured party/'"'^ So where a promissory note was payable absolutely it was held to be no defense that the consideration therefor was a sale of a horse upon the condition that if the purchaser was dissatisfied with the horse he might return it within three months and that he was dissatisfied and had offered to return it within the time specified. The transfer of the possession of the horse in this case was declared to be sufficient con- sideration for the note, it being said that the consideration had never failed and that the evidence of such agreement would, if competent, prove an agreement to give up the note on the happening of a contin- gency thus engrafting a condition upon an absolute promise and by force thereof defeating a recovery.''^ And where a new agreement is en- tered into by the original parties to a note as a substitute for the old one the failure of the original consideration will be no defense to an action by a bona fide holder against the maker.®® ISTor are defenses of this character available to defeat an action by a hoj2u fide holder.^"*' It has also been held to be no defense to an action against one who has accepted a bill of exchange in consideration of certain payments being made by the payee that he has violated the agreement, it being de- clared that there is no failure of consideration so long as he is by such promise legally obligated to make the payments.^®^ And similarly "Hickman v. Rayl, 55 Ind. 551, ing that, where paper is of a char- 558, per Biddle, J. acter which maltes it a common law °^ Allen V. Furbish, 4 Gray obligation and it is not placed upon (Mass.) 504, 64 Am. Dec. 87. the footing of bills of exchange, it "'Young V. Grundy, 7 Cranch (U. may be shown even as against a S.) 548, 3 L. Ed. 435. bona fide holder that there has been ^"* Cowing V. Cloud, 16 Colo. App. a non-performance of the conditions 326, 65 Pac. 417; Martina V. Muhlke, in consideration of which it was 186 111. 327, 57 N. E. 954; Beatty- given. That non-performance of ville Bank v. Roberts, 25 Ky. Law agreement or condition is no de- Rep. 1796, 78 S. W. 901; Cunning- fense against a bona /Ide holder gen- ham V. Potter, 23 Ky. Law Rep. 847, erally, see §§ 307, 308, herein. 64 S. W. 493. Compare Schnabel v. ^"'Vanstrum v. Liljengren, 37 German-American Title Co.. 21 Ky. Minn. 191, 33 N. W. 555. Law Rep. 1063, 53 S. W. 1031, hold- 427 CONDITIONS AFFECTING CONSIDERATION. [§ 325 where a note is given to a person in consideration of liis promise to pay a certain note due from the maker to a third person it has been decided that the payment of the latter note is not a condition to be performed before the payee can sue on the note to him.^*'- § 325. Same subject — Performance prevented by maker — Non- performance by maker.^And a maker cannot avail himself of a fail- ure of consideration by reason of the non-performance of such an agreement where he was the cause of such failure.^*^^ So where a bond was given for the conveyance of certain lands to the obligee upon his payment of certain notes when they came due, and upon his failure to pay such notes the obligor conveys away the land he cannot enforce the notes, since having elected to claim a forfeiture by conveying the land, he cannot subsequently enforce notes given in consideration of such a conveyance to the maker, ^°* And it is no defense to an action on a note given on account of a claim under an agreement that a cer- tain judgment should be discharged "when notes to be agreed upon are given" that there has been no satisfaction of the judgment entered, it not having been proven that such other notes had been given.^"^ Again where the consideration for a note is an agreement that there shall be a stay of proceedings against the maker and that a satisfaction on the judgment shall be entered when certain notes to be agreed upon are given it is held that an action on the note cannot be defeated by proof of such agreement and that it has not been performed by the payee where there is no evidence showing that the other notes have been given.^*"* "^ Logan v. Hodges, 6 Ala. 699. fore, without consideration. * * * ^*"Cook V. "Whitfield, 41 Miss. 541; The moment one party fails to per- Wheeler v. Bancroft, 18 N. H. 537, form, he forfeits the right to exact so holding where a note was given the consideration from the other; for a conveyance of a right of flow- but that does not deprive the latter age, such conveyance to be void on of the power of enforcing a corn- failure of the maker of the note to pliance; nor does it absolve him, pay certain sums secured thereby having enforced it, from rendering at the times specified, and the con- the equivalent that would have been dition of the conveyance was broken due upon a prompt and seasonable by his failure to pay. The court compliance." Per Gilchrist, J. said in this case: "If the purchaser ^"* Little v. Thurston, 53 Me. 86. omit to pay, the vendor may enforce See McKeen v. Page, 18 Me. 140; the contract by a suit upon the Arbuckle v. Hawks, 20 Vt. 538; Por- notes, and the defendant cannot ter v. Vaughn, 26 Vt. 624. say that, by failing to pay at the "' Klett v. Claridge, 31 Pa. St. 106. day, he has lost the benefit of the ^"^ Klett v. Claridge, 31 Pa. St. 106. purchase, and the notes are, there- See Shepherd v, Merrill, 20 N. H. I §§ 326, 327] EFFECT OF CONDITIONS OR AGREEMENTS. 428 §326. Same subject — Agreement not to do certain acts. — Where a note is given in consideration of an agreement not to do certain acts the non-performance of such agreement will constitute a failure of consideration which will be a good defense to an action on the note by the payee. Thus it has been so held in the case of a note given in consideration of an agreement not to sell any more patent rights dur- ing the life of the payor ;^^'' or not to sell a certain class of merchan- dise at a specified place ;^°^ or not to take possession of mortgaged property or foreclose the same for a certain length of time."® Such a defense, however, cannot be set up against a bona fide holder for value and without notice. ^^'^ § 327. Same subject — ^Purchase price notes. — In the case of a pur- chase price note evidence is often admissible of a contemporaneous agreement, which is to be construed with the note as one contract, for the purpose of showing that there has been a failure of consideration as a defense to an action thereon.^ ^^ So in such an action evidence was held admissible of a contemporaneous agreement that if part of the trade should fail the whole contract should terminate and that the notes need not be paid unless the trade was consummated.^^^ And where a purchaser of a threshing machine had given a note therefor, he was permitted to show that there was an agreement between him and the seller that the latter would take the machine back if it did not work satisfactorily and that it had not so worked, and that he had so noti- fied the plaintiff and had offered to return it.^^^ And where an action is brought on a note given in consideration of a contract to convey lands by the payee, the latter cannot recover without showing a per- formance of the contract, that is, the execution and delivery of a deed 415, in which it is declared that in ^"^ Mader v. Cool, 14 Ind. App. 299. all mutual covenants or agreements, 42 N. E. 945. if the party who is the first to per- ^°" Kenney v. Wells, 23 Ind. App. form fails, he becomes by such fail- 490, 55 N. E. 774. ure disenabled to require the other "" Mader v. Cool, 14 Ind. App. 299, party to perform, who is thereby in 42 N. E. 945. a position in which he may elect to "^Bailey v. Cromwell, 4 111. 71; abandon the contract entirely or to Jessup v. Trout, 77 Ind. 194; Hub- sue the delinquent party or to ac- bard v. Galusha, 23 Wis. 398. cept his tardy compliance with its "^ Ela v. Kimball, 30 N. H. 126. terms, if tendered. Per Gilchrist, J. "' Marion Mfg. Co. v. Harding, 155 '0' Ray v. Moore, 24 Ind. App. 480, Ind. 648, 58 N. E. 194. See Westing- 56 N. E. 937. house Co. v. Gainor, 130 Mich. 393, 90 N. W. 52. 439 CONDITIONS AFFECTING CONSIDERATION. [§ 328 as called for by the contract or a tender of performance such as the law requires.^^* So where the agreement under which notes are given is rescinded by the payee the whole transaction is terminated and he can- not recover thereon as the consideration for which they were given has failed."^ Again where the consideration of a note was a lease under seal, of a machine, and both instruments together with an oral agree- ment as to the time and place of delivery of the machine were all parts of one transaction it was decided that the presence of the seal on the lease would not operate to prevent the defendant from showing a fail- ure of consideration by non-delivery of the machine within the time specified."^ On the other hand, where it is a condition of the contract that it shall be void if the notes are not paid when due, if the payee elects to confirm the contract and brings suit on the notes, it is decided that the defendant cannot set up the fact that they were not paid.^^^ If, however, a notice of the failure of consideration is by the agree- ment a condition precedent to the right to set it up as a defense, such notice must be given.^^^ And if one makes a written contract as agent of another, for the conveyance of an interest in lands, on the payment of a promissory note, which is given as a consideration therefor, and the contract does not bind the principal to make the conveyance, but the agent is personally responsible for damages for the breach of the contract, the payment of the note cannot be avoided for want or fail- ure of consideration."'' In an action, however, on a note given in pursuance of a covenant it has been held that the maker cannot im- peach the consideration thereof.^ ^^ § 328. Same subject — Purchase price notes — Subsequent holders. Evidence of the breach or non-performance of a collateral condition or agreement for the purpose of showing a want or failure of consider- ation is not admissible to defeat an action on a purchase price note by one who is a ho7ia. fide holder. ^-^ And it has also been held that an as- "*Hoag V. Parr, 13 Hun (N. Y.) "^ Lane v. Manning, 8 Yerg. 95, 98. See also May v. Cole, 8 (Tenn.) 435, 29 Am. Dec. 125. Blackf. (Ind.) 479. "** Pritchard v. Johnsonr 60 Ga. "' Campbell Printing Press & Mfg. 288. Co. V. Hickok, 140 Pa. St. 290, 21 "» Dyer v. Burnham, 25 Me. 9. Atl. 362; Flewellin v. Hale, 6 Yerg. ""Fay v. Richards, 21 Wend. (N. (Tenn.) 515. See also Ewing v. Y.) 626. Wightman, 28 App. Div. (N. Y.) '=' Wilensky v. Morrison (Ga. 326, 51 N. Y. Supp. 268. 1905), 50 S. E. 472; Handy v. Wil- "' Burns v. Goddard (S. C, 1905), son, 75 Ga. 840; Bates v. Kemp, 13 51 S. E. 915. Iowa 223; Louisiana Mutual Ins. Co. 329] EFFECT OF CONDITIONS OR AGREEMENTS. 430 signee before maturify is not subject to such a defense.^^^ But it is available against an assignee of non-negotiable paper,^^^ or against one who is not a hofia fide holder/ ^^ or an assignee with notice.^^^ § 329. Same subject — Agreement to render services or labor. Where the consideration for a note is an agreement to perform certain labor or services in the future a non-performance of such agreement constitutes a failure of consideration which will defeat a recovery on the note by the payee. ^^'^ Performance is a condition precedent in such cases and if prevented by the death of the one obligated to perform there can be no recovery.^^'^ It is no defense, however, to an action on ' such a note that the amount specified therein is in excess of the value of the services rendered.^-"* And it has been decided that a bona fide V. Bait, 22 La. Ann. 621; Allen v. Furbish, 4 Gray (Mass.) 504, 64 Am. Dec. 87; Coakley v. Christie, 20 Neb. 509, 31 N. W. 73; Brockway v. Ma- son, 29 Vt. 519. ^=^ Baldwin v. Killian, 63 III. 550; Nebraska National Bank v. Pen- nock, 55 Neb. 188, 75 N. W. 554. Compare Weber v. Orton, 91 Mo. 677, 4 S. W. 271. ^^ Benton v. Klein, 42 Mo. 97. See Second National Bank v. Wheeler, 75 Mich. 546, 42 N. W. 963. *^ Westinghouse Co. v. Gainor, 130 Mich. 393, 90 N. W. 52; Wright v. Irwin, 33 Mich. 32. ^ Johnson v. First National Bank, 24 111. App. 352; Gorham v. Peyton, 3 111. 363. See Pope v. Hays, 19 Tex. 375. ^^Corbin v. Sistrunk, 19 Ala. 203; Wood v. Kendall, 7 J. J. Marsh. (Ky.) 212. See Easton Packing Co. v. Kennedy, 131 Cal. XVIII, 63 Pac. 130; Richardson & Morgan Co. v. Gudewill, 61 N. Y. Supp. 1120. "'Voe V. Smith, 1 Smith (Ind.) 88. Compare Hardin v. McKitrick, 5 J. J. Marsh. (Ky.) 667, holding, where a note was given to an attor- ney in consideration of his defend- ing a certain suit, that his death be- fore a decision was rendered did not show a failure of consideration, it appearing that the case was decided in favor of his client, and there be- ing no evidence that other counsel were employed, or that the suit was not fully prepared by the attorney, or that he could have done anything further. 127* Forbes v. Williams, 13 111. App. 280. It was declared in this case that where a note is given, without fraud or imposition, for property or services which are not of certain value fixed by law, market or cus- tom, nor exactly ascertainable by comparison with others of like gen- eral character, the maker will be bound by his own estimate of it, however extravagant or capricious, and though such amount is based upon an estimate by the party for whom they are rendered, far beyond the value of others of general like kind, since one may bind himself to pay a larger sum to one person than that for which he could procure like services from another. Per Pleas- ants, J. See Headley v. Good, 24 Tex. 232. 431 NOTE NOT TO BE NEGOTIATED. [§ 330 holder of a note given for services of a physician cannot be defeated in an action to recover thereon by proof that the physician is not quali- fied to practice.^"** N^or will it be any defense to an action on such a note that there has been a failure of consideration by reason of the non-performance of the agreement to render services where perform- ance has been prevented by the act of the maker.^-^ And the death of the maker before the services were rendered is held to be no defense. ^^9 So where a person indicted for a crime employed counsel and executed his note for the amount of the fee, and then before his trial committed suicide, the fact that the lawyer did not perform the principal service for which the note was executed, that is, the defense of the criminal on his trial, was held to be no ground for the impeachment of the con- sideration either at law or in equity because the non-performance re- sulted from the act of the obligor himsell^^" It has also been decided that if, at the request of the party with whom he deals, one makes his promissory note, which is to be a partial payment for a piece of work to be done for him, payable to a third party, who is a creditor of the party with whom he contracts for the work, and it is credited by the payee to such party, in good faith, the maker cannot set up a failure of consideration as Between himself and the party with whom he deals, in defense of a suit upon such note in the name of the payee. ^^'^ § 330. Note not to be negotiated. — A contemporaneous oral agree- ment that a note, payable to a certain person, shall not be transferred by the payee, cannot be shown in defense to an action on the instru- ment, as to allow such proof would be to contradict the written con- tract. ^^^ ^Qj. gjjjj ^Yie makers of a note defeat a recovery by the payee by showing that it has been negotiated contrary to its terms or the agreement of the parties where the makers themselves have put it into circulation. ^^^ '=•** Roach v. Davis (Tex. App. "' South Boston Iron Co. v. Brown 1900), 54 S. W. 1070. 63 Me. 139. '''Adam v. Johnson, 11 Ky. Law »= Johnson v. Washburn, 98 Ala. Rep. 137, so holding where a note 258, 13 So. 48; Dolson v. De Ganah, was given to an attorney under an 70 Tex. 620, 8 S. W. 321; Knox v. agreement that he should defend the Clifford, 38 Wis. 651, 20 Am. Rep. maker in a certain criminal action 28. and the latter left the state and was Compare State Bank of Indiana never tried. v. Cook, 125 Iowa 111, 100 N. W. 72. "'Hoadley v. Good, 24 Tex. 232. '=^Wardell v. Hughes, 3 Wend. (N. "" Mitcherson v. Dozier. 7 J. J. Y.) 418. Marsh. (Ky.) 53, 22 Am. Dec. 116. §§ 331, 332] EFFECT OF COXDITIONS OR AGREEMENTS. 432 § 331. As to place of payment. — Where a bill or note contains no place for payment it will be presumed that it was to be paid in the state in which it was executed and delivered and parol evidence is not admissible to show that it was to be paid in another state. In such a case the laws of the state, of execution and delivery, control both as to interest and otherwise, and to permit the introduction of such evidence would be a violation of the rule that parol evidence is not admissible to vary or contradict the terms of a written contract.^^* So in an ac- tion brought in Georgia on a note in which no place of payment was designated it was held that evidence that the note was by agreement to be paid in Chicago where the payee resided was properly excluded.^^^ § 332. As to amount. — Where the amount of a note is specified therein parol evidence is not admissible to show that by an agreement between the parties a different sum than that stated was to be paid.^^'^ So it cannot be shown that in a certain event only one-half of the amount stated therein is to be paid,^" or that by such an agreement a certain sum was to be indorsed thereon as paid,^^^ or that an account which the maker held against the payee should be deducted there- from,"^ or that it was agreed that, though the note bears interest at a specified rate, none would have to be paid.^*" And a maker of a note cannot show in an action against him that there was an oral agree- ment that a certain sum should in the future be credited thereon and that the note should only be obligatory upon him for the balance."^ 1^^ Moore v. Davidson, 18 Ala. 209. ^^' Smith v. Thomas, 29 Mo. 307. Examine Specht v. Howard, 16 Wall. ''* Walters v. Armstrong, 5 Minn. (U. S.) 564. 448. See Featherston v. Wilson, 4 "'^Ray V. Anderson, 119 Ga. 926, Ark. 154. 47 S. E. 205. "° Eaves v. Henderson, 17 Wend. "« AZa&ama.— Caldwell v. May, 1 (N. Y.) 190. Stew. (Ala.) 425. ""Tinsdale v. Mallett (Ark. 1904), Indiana. — Potter v. Earnest, 45 88 S. W. 481. Ind. 418; Swank v. Nichols, 24 Ind. "* "Whatever appellant may be 199. ready to say about the terms of his Iowa.— Atherton v. Dearmond, 33 promise is but descriptive of that Iowa 353. which is before the court in physi- Massachusetts.—Shed v. Pierce, 17 cal form, descriptive of itself; no Mass. 623. matter soever what he may claim Minnesota. — Harrison v. Morri- about promises to pay, and amounts, son, 39 Minn. 319. the senses of the court cannot fail Missouri. — Lane v. Price, 5 Mo. to discover that he has promised to 67. pay $840 'three months after date,' Wisconsin. — Gregory v. Hart, 7 and this being written, permits the Wis. 532. proof of no contrary oral promise as 433 MODE OR MANNER OF PAYMENT. [§ 333 § 333. As to mode or manner of payment. — A collateral inde- pendent agreement that a note is to be discharged or paid by doing something other than by paying money or in a manner different from that specified therein, so long as it remains unperformed is inopera- tive and will be no defense to an action on the note by the payee/*- or by an assignee.^*^ It is neither payment nor accord and satisfaction until performed.^** So it has been held proper to exclude oral testi- mony to show an executory agreement that a note was to be paid only out of a certain fund,"^ or in labor/ ^"^ or by an exchange of other a substitute." Knight v. Walker Brick Co., 23App. D. C. 519, 524, per Mr. Justice Wright. ^*- Alabama. — Tuscaloosa Cotton Seed Oil Co. v. Perry, 85 Ala. 158, 4 So. 635; Powe v. Powe, 42 Ala. 113; Thompson v. Rawles, 33 Ala. 29; Hair v. La Brouse, 10 Ala. 548. Georgia. — Harper v. Wrigley, 48 Ga. 495. Illinois. — Moore v. Prussing, 165 111. 319, 46 N. E. 184. Indiana. — Goldthwait v. Bradford, 36 Ind. 149. Maine. — Cushing v. Wyman, 44 Me. 121; Merrill v. Mowry, 33 Me. 455. Neio York. — Woodin v. Foster, 16 Barb. (N. Y.) 146. North Carolina. — McRae v. Mc- Nair, 69 N. C. 12. Texas. — Haley v. Harvey, 1 White & W. Civ. Cas. (Tex. Ct. App.), § 1096. Vermont. — Follett v. Eastman, 16 Vt. 19. See Harmon v. Adams, 120 U. S. 363; Brown v. Spofford, 95 U. S. 474. Compare State Bank v. Whit- low, 6 Ala. 135. ^*^ Alabama. — Sawyer v. Hill, 12 Ala. 575. Indiana. — Goldthwait v. Bradford, 36 Ind. 149. Missouri. — Bircher v. Payne, 7 Mo. 462. Joyce Defenses — 28. New Hampshire. — Odiorne v. Sar- gent, 6 N. H. 401. New York. — Tredwell v. Lincoln, 52 Hun (N. Y.) 614, 5 N. Y. Supp. 341; Franc v. Dickinson, 52 Hun (N. Y.) 373, 5 N. Y. Supp. 303. Compare Braly v. Henry, 71 Cal. 481, 11 Pac. 385, 60 Am. Rep. 543. Though the note was acquired by the holder after its maturity such an agreement has been held no defense. Crosly V. Tucker, 21 La. Ann. 512. But see Shore v. Martine, 85 Minn. 29, 88 N. W. 254. '" Tuskaloosa Cotton Seed Oil Co. V. Perry, 85 Ala. 158, 167, 4 So. 635. "= Gorrell v. Home Life Ins. Co., 63 Fed. 371, 11 C. C. A. 240. The court here said: "The contract before us — the note in suit — is complete in its terms. It contains an absolute promise to pay on demand a stated sum, and the consent of the maker is expressed that several commis- sions accruing to his account may be retained by the company and ap- plied in liquidation of the obliga- tion. The rule that where an oral agreement has been but partially re- duced to writing the whole agree- ment is open to proof is not appli- cable. The proof proposed here was of an agreement inconsistent with the writing, which in itself is com- plete and unambiguous. The writ- "" Odiorne v. Sargent, 6 N. H. 401. § 334] EFFECT OF CONDITIOXS OR AGREEMENTS. 434 notes held by the maker against the payee,"' or by any legal claim which the maker might obtain against the payee.^*^ Where, however,, the agreement and note are mutual and dependent and are to be con- strued as one contract such a defense is held to be available as against an indorsee of an overdue note who does not occupy the position of a lona -fide holder,"^ or against the payee.^^** And an agreement made at the maturity of a note may be available as a defense where made upon a sufficient consideration.^^^ § 334. Same subject — Continued. — Such an agreement with the at- torney of the payee by which the maker was to perform certain serv- ices for the attorney and the money due therefor was to be applied in payment and discharge of the note cannot be set up in defense to an action thereon.^^^ Nor can the maker defeat recovery on a note by proof that it was given in payment for stock of a corporation and that it was to be paid out of dividends on such stock and that no dividends had ever been declared or paid.^^^ Nor can it be shown that the note in suit was to be paid in trade, the payee to have the privilege of hir- ing or otherwise using the horses and carriages belonging to the maker and of not paying cash for such use, but the price therefor to be charged up against the payee from time to time until the full amount of the note was paid.^^* Again, the non-performance of a contemporaneous ten promise to pay is absolute. By ^" Gleason v. Saunders, 121 Mass. the proposed proof that promise 436. would have been nullified, and the "= Pioneer Press Co. v. Gossage, note converted into an agreement 13 S. D. 624, 84 N. W. 195. that the sum named should be paid "= Fuller v. Law, 207 Pa. St. 101, out of accruing commisions and not 56 Atl. 333. otherwise." Per Woods, C. J. ^"Zinsser v. Columbia Cab Co., 66 But see Saffer v. Lambert, 111 App. Div. (N. Y.) 514, 73 N. Y. 111. App. 410. Supp. 287. In this case the court '"Sawyer v. Hill, 12 Ala. 575. said: "If there is ahything left of "^Goldthwait v. Bradford, 36 Ind. the rule that a contemporaneous 149. verbal agreement, which contra- "" Hill v. Huntress, 43 N. H. 480. diets in terms a written obligation ''"State Bank of Indiana v. Cook sought to "be enforced, is not valid 125 Iowa 111, 100 N. W. 72, holding as a defense to an action to enforce that in such an action evidence is the obligation, it would seem that admissible of a contemporaneous this ruling of the court below was written agreement that the notes correct. By it the defendant agreed were to be paid by dividends from to pay so many dollars at a time and the stocks for which they were place specified. The obligation is in given. writing signed and delivered, and 435 NOTE TO ADMINISTRATOR. [§§ 335, 336 parol agreement, made at the time of the execution of a note, given for the amount of a mortgage, to secure the reduction of interest there- on, whereby the payee agreed to deliver the bond and mortgage to the maker upon payment by the latter of the note has been held no de- fense to an action on the note where it did not appear that there had been a tender of the money due thereon and a demand for the assign- ment according to the agreement.^^^ And in an action on a note which is absolute in its terms, evidence is not admissible, to bind the plain- tiff, to an agreement, signed by special agents of his in their individual capacity, and which does not purport to bind him, that if the maker is unable to pay the note at maturity he may surrender a life insurance policy for the premium of which the note was given and thus cancel the latter obligation.^^° And it has been held that an action by an in- dorsee after maturity cannot be defeated by showing that the note was a voluntary subscription to a college and was to be paid only as his daughter should obtain the worth of it by way of yearly tuition.^ ^^ §'335, Same subject — Note to administrator. — An administrator at a sale made by bin] of property belonging to the estate can make no terms with a purchaser which the orders of the court or the laws of the land do not warrant, and an unauthorized condition made by hini as to the mode in which a note given by a purchaser at such a sale shall be paid will be no defense to an action thereon.^'^^ § 336. Executed agreement as a defense. — A distinction is made between those cases where there is a merely executory agreement that the making, execution, and delivery ant the full amount of this note, of this obligation is admitted. The promised when the note was given contemporaneous oral agreement that it should not be payable ac- sought to be proved contradicts this cording to its tenor. But this oral written obligation. By it the de- agreement was entirely without con- fendant was not to pay this sum of sideration. * * * There seems money at the time and place speci- to me to be no doubt but that such fied, but was to pay it by hiring an agreement was entirely insuffi- horses and carriages to the plain- cient as a defense to an action upon tiff and applying the amounts the note." Per Ingraham, J. charged therefor to the payment of "=* Story v. Kinzler, 73 App. Div. the note. * * * There is no (N. Y.) 372, 77 N. Y. Supp. 64. question as to the liability of the ^^'' Thomas v. Bagley & Co., 119 defendant to pay the plaintiff this Ga. 778, 47 S. E. 177. sum of money, but it is alleged that ^" Jewett v. Salisbury, 16 Ind. 370. the plaintiff, who was concededly "' Hamilton v. Pleasants, 31 Tex. entitled to recover from the defend- 638, 98 Am. Dec. 551. § 336] EFFECT OF COXDITIOXS OR AGEEEilENTS. 436 the note may be discharged in a manner other than by the payment of money as specified in the instrument/^° and those where such an agree- ment has been executed. In this hitter chiss of cases it is a general rule that where there is a contemporaneous oral agreement that a bill or note is to be discharged by the doing of something other than the pay- ment of money and it appears that such agreement has been performed it will operate as a discharge of the written obligation and as a de- fense to an action by the payee or holder with notice to recover the money. It is a payment not in money but in something which has been received as substitute therefor.^**** So where a note was given in satisfaction of an injury done to the plaintiff by the circulation of in- jurious reports, supposedly by the defendant, in reference to the plain- tiff's wife, it was held that the defendant might show by parol that at the time he gave the note it was agreed between him and the payee that the latter would give up the note to the former if he would satisfy the payee that he did not originate such reports and that he had satis- fied the plaintiff in accordance with such agreement.^*'^ And where de- fendant, having subscribed for certain stock, deposited some cash and gave his note for the balance, it was held in an action against him on the note that he might show, except as against a hona fide holder, that there was an agreement that he might within one year forfeit the cash ^^' Such an agreement is no de- not originate, as was alleged, re- fense. See §§ 333-335 herein. ports injurious to the character of '""Patrick v. Petty, 83 Ala. 420, the plaintiff's wife, he, the plaintiff, 3 So. 779; Bradley v. Marshall, 54 would give up said note to the de- 111. 173; Saunders v. Richardson, 2 fendant, was legally and properly Sm. & M. (Miss.) 90; Juilliard v. admitted. And, as it was proved to Chaffee, 92 N. Y. 529; Gilson v. Gil- the jury that the plaintiff was satis- son, 16 Vt. 464; Stevens v. Thacker, fied that the defendant did not origi- 1 Peake's Gas. 187. See Mitchell v. nate such reports, the defendant Sullivan, 5 Md. 376. was clearly entitled to a verdict, A defense of this kind is frequent- which ought not to be disturbed, ly spoken of as an accord and satis- The evidence did not at all contra- faction. Patrick v. Petty, 83 Ala. diet the note but proved that the 420, 3 So. 779. parties had agreed on a mode by "* Sanders v. Howe, 1 D. Chip, which the defendant might satisfy (Vt.) 363, in which the court said: the note by the performance of a ^'The evidence admitted by the judge, future act; and when that act was to prove the contract made at the performed by the defendant the time the note was executed, that in note was as clearly paid and satis- case the defendant would make it fied as though the defendant had appear to the satisfaction of the paid the amount in money." plaintiff, that he, the defendant, did 437 AGREEMENTS XOT TO SUE. [§ 337 paid and the shares of stock and be discharged of all liability on the note if be so elected, and that notice of said right to elect a forfeiture had been duly given.^*^^ So it may be shown that the note sued upon was given to secure the performance of an agreement to support and take care of another in consideration of the conveyance of certain prop- erty, and that such agreement has been performed by the maker,^*^^ or that merchandise was to be accepted in payment of the note and that it has been so paid,^*''* or that the defendant was to dispose of certain property held by him and that upon the payment of the avails thereof to the payee the note would be satisfied and discharged and that the defendant has performed such contract.^''^ And in an action against the maker of a note, payable on the death of a widow, brought by the administrator of the promisee, evidence was held admissible of an agreement between the latter and the defendant that the note was to be void if an estimated value of one-third of the land of which the widow was dowerable was expended by defendant in her support, and that such amount had been expended.^'^'' Again it has been held that it may be shown in an action by the payee of a note against the maker that the note was to be paid by the application, in satisfaction of the note, of the first money the maker should earn as agent of the payee and that sufficient has been earned by the former but has not been ap- plied according to such agreement.^*' ^ The fact, however, that there has been a part performance of an agreement will not be a bar to a re- covery on the instrument though a party may be entitled to an allow- ance therefor in some cases, as where the maker bound himself, his heirs, executors and assigns, to make certain quarterly payments amounting in all to the amount of the note, in which event the note should be cancelled, and he made such payments up to the time of his death and none were afterward made, in which case it was held the note was a valid obligation against his estate, but that such payments as had been made might be deducted on account of the debt.^°^ § 337. Agreements not to sue. — It may be shown in defense to an action on a note against a maker or indorser that the plaintiff had en- "' Lancaster v. Collins, 7 Fed. 338. '''■•' Crosman v. Fuller, 17 Pick. "'Howard v. Stratton, 64 Cal. 487, (Mass.) 171. 2 Pac. 263. ^" New York Life Ins. Co. v. '"Buchanan v. Adams, 49 N. J. L. Smucker (Mo. App. 1904), SO S. W. 636, 10 Atl. 662, 60 Am. Rep. 666. 278. '"^ Carpenter v. McClure, 37 Vt. '*=' Blake v. Blake, 110 Mass. 202. 127. § 338] EFFECT OF CONDITIONS OR AGREEMENTS. 438 tered into an agreement with the defendant that he would never sue him.^^^ And it has been decided that it may be shown in defense to an action on a note that tlie plaintiff had agreed not to sue the defendant except on future contracts, where it appears that the note was indorsed prior to such agreement but not taken up by the plaintiff until after such time."" But a covenant by an indorsee with one maker never to sue the latter, with a reservation of all rights as to other parties, has been held no defense to an action against such parties,"^ nor will a covenant by one joint holder not to sue a party on a debt due him be a release in bar of an action by such holder and another for a debt due them jointly. ^^^ § 338. Same subject — Where simultaneous or subsequent and for a limited time. — An agreement entered into without consideration at the time of the execution of a note or subsequent thereto by which the payee or holder agrees not to sue on the instrument until a time subse- quent to its maturity is to be regarded as a collateral and merely execu- tory agreement which will be no defense to an action on the paper. "^ So in an action where the defendant set up in defense a covenant not to sue for a limited time after the maturity of the note the court said : "This covenant, to be a bar to the action, must be construed to be in the nature of a release. But it will not bear that construction. If it were a covenant never to sue the defendant on the two notes it would have the effect of a release on the principle of avoiding a multiplicity ^''^Clopper V. Union Bank, 7 Har. Maryland.— Clo-pv^r v. Union & J. (Md.) 92, 16 Am. Dec. 294; Bank, 7 Har. & J. (Md.) 92. Simmons v. Thompson, 29 App. Div. Massachusetts. — Allen v. Kimball, (N. Y.) 559, 51 N. Y. Supp. 1018; 23 Pick. (Mass.) 473; Walker v. Pike V. Street, Moody & M. 226. Russell, 17 Pick. (Mass.) 280; Per- ""Cuyler v. Cuyler, 2 Johns. (N. kins v. Oilman, 8 Pick. (Mass.) 229. Y.) 186. Mississippi. — Herndon v. Hender- "1 Kenworthy v. Sawyer, 125 son, 41 Miss. 584. Mass. 28. Missouri.' — Bridge v. Tiernan, 36 "-Walmseley v. Cooper, 11 Adol. Mo. 439; Atwood v. Lewis, 6 Mo. & E. 216. 392. ''^ Illinois.— urn v. Enders, 19 111. New YorA-.— Peabody v. King, 12 163. Johns. (N. Y.) 426. JncZiana.— Williams v. Scott, 83 English.— Thimhledy v. Barron, 3 Ind. 405; Murphy v. Robbins, 17 Mees. & W. 210. Ind. 422; Smith v. Grabill, 15 Ind. Compare Hutchins v. Nichols, 267; Lowe v. Blair, 6 Blackf. (Ind.) 10 Cush. (Mass.) 299; Brick v. 282. Campbell, 50 N. J. L. 282, 13 Atl. 255. 439 AS TO TIME OF PAYMENT. [§ 339 of suits.^^"* It is not, however, a covenant of that description. It is only an agreement not to sue for a limited time ; and the law is settled that such an agreement is no bar to an action brought before the ex- piration of the time given. Damages may be recovered for a breach in such case but the covenant cannot have the effect of a release."^"^ So "where, at the maturity of a note, a bank indorsed thereon the words "renewed for three months" and no new note was given it was held that the bank was not thereby prevented from suing on the note prior to the expiration of the three months.^ '° But where the holder of an overdue note agrees for a valid consideration not to sue thereon for a specified time it is held that such agi'eement will be" a defense to an action brought within such time."^ §' 339. As to time of payment. — Wliere a bill or note is payable un- conditionally and at a time certain parol evidence is not admissible to prove that the plaintiff entered into an agreement contemporaneous with or antecedent to the execution of the instrument, stipulating that it might be paid at a time later than that specified therein.^''® So where a note is payable on demand it cannot be varied by evidence of an agreement entered into contemporaneous with its execution that the money shall not be demandable at the time the note purports.^'^^ And "* Citing 5 Bac. Abr. 683; Berry Massachusetts. — Dow v. Tuttle, 4 V. Bates, 2 Blackf. (Ind.) 118; 2 Mass. 414, 3 Am. Dec. 226. Wms. Saund. 48, note. Missouri. — Blackburn v. Harrison, '■= Mendenhall v. Lenwell, 5 39 Mo. 303; Bond v. Worley, 26 Mo. Blackf. (Ind.) 125, 33 Am. Dec. 458, 253; Atwood v. Lewis, 6 Mo. 391. per Blackford, J. Nebraska. — Van Etten v. Howell, "" Central Bank v. Willard, 17 40 Neb. 850, 59 N. W. 389. Pick. (Mass.) 150, 28 Am. Dec. 284. New Yorfc.— Skiller v. Richmond, '"Pearl v. Wells, 6 Wend.' (N. Y.) 48 Barb. (N. Y.) 428; Fleury v. Ro- 291, 21 Am. Dec. 328. get, 5 Sandf. (N. Y.) 646. "' Federal. — Kessler & Co. v. Peril- Pennsylvania. — Clark v. Allen, 132 loux, 132 Fed. 903. Pa. St. 40, 18 Atl. 1071. Alabama. — Doss v. Peterson, 82 Tennessee. — Ellis v. Hamilton, 36 Ala. 253. 2 So. 644. Tenn. 512; Campbell v. Upshaw, 26 Arkansas. — Borden v. Peay, 20 Tenn. 184, 46 Am. Dec. 75. Ark. 293. Wisco7isin. — Union National Bank Illinois.— Davison v. Bank, 5 111. v. Cross, 100 Wis. 174, 75 N. W. 992. 56. English. — Webb v. Salmon, 19 L. Indiana. — Trentman v. Fletcher, J. Q. B. N. S. 34; McQueen v. Mc- 100 Ind. 105; Irons v. Woodfill, 32 Queen, 9 Up. Can. Q. B. 536. Ind. 40. ^'° Sice v. Cunningham, 1 Cow. Maine.— Ockington v. Law, 66 Me. (N. Y.) 397; Mosely v. Hanford, 10 551; Eaton v. Emerson, 14 Me. 335. Barn. & Cr. 729. § 339] EFFECT OF COXDITIOXS OR AGREEMENTS. 440 where no time of payment is specified in a note it is held the law judges it payable immediately and parol evidence is not admissible to show a different time.^^'' So it is no defense to an action by a subse- quent indorsee that there was an agreement between the maker and the payee that the note should be renewed. ^^^ And evidence is not ad- missible of an alleged contemporaneous agreement that a note may be paid by the payee before maturity.^ ^- It has, however, been deter- mined that the time when a bill or note is payable may be controlled as between the parties by the terms of a contemporaneous agreement which is to be construed with the former instrument as a part of the same eontract.^*^ ' So where a party sent to his creditor a note in set- tlement of his indebtedness but blank as to time of payment, and the latter sent it back with a request that the time for payment be speci- fied therein by the debtor, who again returned it blank but accompanied by a letter stating that he would pay it as soon as able, it was held that the letter and note were to be construed together and that the obliga- tion was one to pay when he was able.^^* And where, by a contempo- raneous agreement, the payee may enforce the note if another note is not paid by a certain day, payment of the latter note on or before the date specified is a condition precedent to the right of the maker to de- iso Thompson v. Ketcham, 8 Johns, fendants have signed. Such an (N. Y.) 190, 5 Am. Dec. 332. agreement rests in confidence and "1 Hoare v. Graham, 3 Camp. 57. honor only, and is not an obligation Lord Ellenborough here said: "I of law. There may, after a bill is don't think I can admit evidence drawn, be a binding promise for a of this sort. What is to become of valuable consideration to renew it bills of exchange and promissory when due, but if the promise is con- notes if they may be cut down by temporaneous with the drawing of a secret agreement that they shall the bill the law will not enforce it. not be put in suit? The parol con- This would be incorporating with a dition is quite inconsistent with the written- contract an incongruous written instrument. This purports parol condition — which is contrary to be a promissory note payable two to just principles." months after date. You say it w^as '" Strachan v. Muxlow, 24 Wis. 21. not payable at the end of that time, '*' Duvall v. Farmers' Bank of and that when the two months had Maryland, 9 Gill & J. (Md.) 31; expired the payees, instead of the Jacob v. Mitchell, 46 Ohio St. 601, money, were to have another prom- 22 N. E. 768. issory note. I will receive evidence Compare Robinson v. Smith, 14 that the note was indorsed to the Cal. 94. plaintiffs as a trust; but the condi- ^^ Glass v. Adone (Tex. Civ. App. tion for a renewal entirely contra- 1905), 86 S. W. 798. ■ diets the instrument which the de- 441 SUBSEQUENT AGREEMENTS EXTENDING TIME. [§ 340 feat recovery on the former by setting up such condition.^ ^^ And it has been decided that in an action against sureties on notes and to fore- close a mortgage that evidence is admissible of a contemporaneous agreement, between the plaintiff and the principal as a part of the con- sideration of the mortgage sought to be foreclosed, extending the time of the payment of said notes.^®^ § 340. Subsequent agreements extending time. — A valid agree- ment subsequent to the execution of a note or after its maturity by which an extension of time for its payment is given to one party to the instrument may operate as a discharge of other parties whose sig- natures have been affixed thereto in reliance upon the terms and condi- tions as expressed in the original contract and they may avail them- selves of such an agreement in an action against them. In the appli- cation of this rule it has been decided that a drawer of a bill may set up in defense to an action against him an extension of time so given to the acceptor, ^^'^ or to the maker,^^^ or a surety an extension to the prin- cipal debtor ;^®^ or an accommodation maker an extension to the ac- 1" Tufts v, Kidder, 8 Pick. (Mass.) 537. '^Moroney v. Coombes (Tex. Civ. App. 1905), 88 S. W. 430. The court declared in this case: "We think there was no error in the ad- mission of this testimony. It is settled law that the liability of a surety or guarantor is limited to and controlled by the very terms of the contract out of which his obli- gation arises. If the contract be materially changed by the princi- pals thereto without his consent, he will be released, without regard to whether he has been benefited or prejudiced by such change, and it follows that parol evidence is ad- missible under proper pleadings to show such change. * * * Fall- ing within the above rule is a con- tract by the principal obligor in a promissory note extending the time of payment of such note upon a valuable consideration, without the consent of the surety sought to be held. Such an extension creates a new and binding contract, and is such an alteration of the old con- tract as will release a surety there- on if made without his consent." Per Talbot, J. ^"High V. Cox, 55. Ga. 662. ^^' Nightingale v. Meginnis, 34 N. J. L. 461; Gould v. Rolson, 8 East 576. ^'^ Georgia. — Parmelee v. Williams, 72 Ga. 42. Idaho. — Maydole v. Peterson, 7 Idaho 502, 63 Pac. 1048. Indiana. — Starrett v. Burkhalter, 86 Ind. 439. Louisiana. — Adle v. Metoyer, 1 La. Ann. 254. Missouri. — St. Joseph Fire & M. I. Co. V. Hauck, 71 Mo. 465. l^eio Hampshire. — Bailey v. Ad- ams, 10 N. H. 162. IVett? YorTi. — Hubbard v. Gurney, 64 N. Y. 457. Washington. — Nelson v. Flagg, 18 Wash. 39, 50 Pac. 571. § 341] EFFECT OF COXDITIOXS OR AGREEMENTS. 442 commodation payee by a holder with knowledge of the accommoda- tion;^^*' or an accommodation acceptor an extension to the drawer who is the principal debtor.^^^ An extension of time, however, to an ac- ■commodation payee will be no defense to an action against the accom- modation maker where he was not known to have signed as such.^^- And it is held that an extension of time to a surety will be no defense to an action against the principal brought before the expiration of the period allowed/'*^ Nor will the fact that time has been so given to one of several joint makers discharge the others, though the latter are, in fact, sureties, where the party granting it had no knowledge thereof. ^^* § 341, Same subject — ^What essential to render such an agreement a defense. — In order that an agreement for an extension of time to one party may operate as a discharge of another and therefore be a de- fense to an action against the Mter, it is essential that it should be based on some consideration and be a valid binding one ; that is, such as will preclude the party granting the extension from enforcing the obligation prior to the expiration of the extended period. It must have the effect of disabling him from suing.^^^ So in order that a surety Federal. — Vary v. Norton, 6 Fed. 808. English. — Pooley v. Harradine, 7 El. & Bl. 430. ^^ Taylor v. Burgess, 5 Hurl. & N. 1. Compare Bank of Montgomery Co. v. Walker, 9 Serg. & R. (Pa.) 229, 11 Am. Dec. 709. "^Davies v. Stainbank, 6 DeGex, M. & G. 679; Laxton v. Reat, 2 Camp. 185, holding that if an in- dorsee of a bill of exchange having notice it was accepted without con- sideration, receives part payment from the drawer and gives him to pay the residue he thereby dis- charges the acceptor. See Bank of Upper Canada v. Jardine, 9 Up. Can. C. P. 332. ^"^Hoge v. Lansing, 35 N. Y. 136, holding that a l)ona fide holder tak- ing paper with no other knowledge than it furnishes has the right to treat the parties thereto in the same order and to same extent as they appear on the paper. See Pinney v. Kimpton, 46 Vt. 80. "^ Williams v. Scott, 83 Ind. 405. ^''^ Mullendore v. Wertz, 75 Ind. 431, 39 Am. Rep. 155; Nichols v. Par- sons, 6 N. H. 30, 23 Am. Dec. 706. See Anthony v. Fritts, 45 N. J. L. 1, holding it is no defense even in action by payee with knowledge. Pintard v. Davis, 20 N. J. L. 205; Davidson v. Bartlett, 1 Up. Can. Q. B. 50. ^''^ Arkansas. — Key v. Fielding, 32 Ark. 56. Connecticut. — Boardman v. Larra- bee, 51 Conn. 39; Continental Life Ins. Co. V. Barber, 50 Conn. 569. Florida. — Fridenberg v. Robinson, 14 Fla. 130. Illinois.— Payne v. Weible, 30 111.- 166. Indiana. — Davis v. Stout, 126 Ind. 12, 25 N. E. 862, 22 Am. St. R. 865;. I 443 SUBSEQUENT AGREEMENTS EXTENDING TIME. [§ 341 may be released by an extension of the time of payment it is declared that there must be an agreement between the payee or holder of the instrument and the principal maker for a definite and fixed time of ex- tension, made without the knowledge or consent of the surety, founded upon a new consideration and with a knowledge of the suretyship on the part of such payee or holder.^^*' So an indorser or surety will not be discharged by an agreement which has no consideration to support it,^^^ or which is based upon a consideration which is not good.^°* Such an agreement, however, to operate as a defense, need not be in express words, it being sufficient if tliere is a mutual understanding and in- tention to the effect that the claim is not to be enforced for a definite, certain and specific time and is based upon a valuable consideration,^®^ But a mere forbearance or indulgence which does not amount to such an agreement will be no defense.-'^'^ As is said in one case of such a Nelson v. White, 61 Ind. 139; New- kirk V. Neild, 19 Ind. 194, 81 Am. Dec. 383. Massachusetts. — Central Bank v. Willard, 17 Pick. (Mass.) 150, 28 Am. Dec. 284; Hunt v. Bridgham, 2 Pick. (Mass.) 581, 13 Am. Dec. 458. Michigan. — Ferris v. Johnson (Mich. 1904), 98 N. W. 1014. Missouri. — Warrenburg Co-Opera- tive Bldg. Assn. v. Zoll, 83 Mo. 94. New Hampshire. — Bailey v. Ad- ams, 10 N. H. 162. Neto York. — Kellogg v. Olmsted, 28 Barb. (N. Y.) 96; Myers v. "Welles, 5 Hill (N. Y.) 463; Curry v. Van Wagner, 32 Hun (N. Y.) 453; Miller v. Holbrook, 1 Wend. (N. Y.) 317. Ohio. — Holzworth v. Koch, 26 Ohio St. 33. Pennsylvania. — H umberger v. Golden, 99 Pa. St. 34; Ashton v. Sproule, 35 Pa. St. 492; Dundas v. Sterling, 4 Pa. St. 73. Rhode Island. — Thurston v. James, 6 R. I. 103. Tennessee. — Robertson v. Allen, 3 Baxt. (Tenn.) 233; Cherry v. Miller, 7 Lea (Tenn.) 305. English. — McManus v. Bark, L. R. 5 Exch. 65; Hewett v. Goodrick, 2 Car. & P. 468; Margesson v. Goble, 2 Chit. 364; Orme v. Young, 1 Holt's N. P. 87; Price v. Edmunds, 10 Barn. & Cr. 578; Thompson v. Mc- Donald, 17 Up. Can. Q. B. 304; Shaw V. Crawford, 16 Up. Can. Q. B. 101. See Zobel v. Bauersachs, 55 Neb. 20, 75 N. W. 43; Britton v. Fisher, 26 Up. Can. Q. B. 338. An agreement to give time made between the holder and one not a party to the instrument will not operate as a release of other par- ties. Frazer v. Jordan, 8 El. & B. 303. See also Low v. Warden, 77 Cal. 94, 19 Pac. 235. "" Starrett v. Burkhalter, 86 Ind. 439, 441, per Zollars, J. ^" Tuskaloosa Cotton Seed Oil Co. v. Perry, 85 Ala. 158, 4 So. 635; Ives V. Bbsley, 35 Md. 262; Russ v. Hobbs, 61 N. H. 93. See Howard v. Fletcher, 59 N. H. 151. '"^Jennings v. Chase, 10 Allen (Mass.) 526. "» Brooks V. Wright, 13 Allen (Mass.) 72. -'^ Massachusetts. — Haydenville § 342] EFFECT OF CONDITIONS OR AGREEMENTS. 444 plea : "It states only that the holder of the note has given time to the principal debtor, not that he has by any agreement bound himself to do so. What is set np is a mere forbearance or indulgence shewn to the principal debtor, and this alone has never been held to discharge the surety."-"^ Again it has been decided that the fact that previous obligors are released will not release one who signs an existing note in consideration of an extension of payment, the latter being bound as on a new contract. ^*^^ § 342. Agreement to release from or limit liability. — Parol evi- dence is not admissible, in an action on a bill or note by a bona fide holder against a maker, indorser, or suret}^ of any declaration or inde- ]3endent collateral agreement which is inconsistent with the terms of the instrument. This rule is founded upon the principle that the writ- ing is presumed, when complete, to embody therein the agreement of the parties and that resort can only be had to the instrument itself to determine the rights and liabilities of the parties.^°^ So a mere agree- ment between an indorser and indorsee that the words "without re- course" shall be written over the signature of the former, will be no de- fense to an action by one who is an indorsee of the paper for value and. without notice.-"* And where a note was given to a director of a bank Savings Bank v. Parsons, 138 Mass. North Carolina. — Hill v. Shields, 53; Hunt v. Bridgham, 2 Pick. 81 N. C. 250, 31 Am. Rep. 499. (Mass.) 581, 13 Am. Dec. 458. Pennsylvania. — Lindsey v. Cassel- Missouri. — Benson v. Harrison, 39 berry, 3 Wkly. Notes Cas. (Pa.) 42. Mo. 303. Tennessee. — Rice v. Ragland, 10 Nexo York. — Atlantic National Humph. (Tenn.) 545, 53 Am. Dec. Bank v. Franklin, 55 N. Y. 235. 737. Ohio. — Ward v. Wick, 17 Ohio St. Texas. — Dwiggins v. Merchants' 159. National Bank (Tex. Civ. App.), 27 United States. — McLemore v. Pow- S. W. 171. ell, 12 Wheat. (U. S.) 554. Wisconsin.— Bavey v. Kelly, 66 Federal— AUen v. O'Donald, 28 Wis. 452, 29 N. W. 232. Fed. 17. Federal. — Union Bank v. Crine, 33 ^"^ Thompson v. McDonald, 17 Up. Fed. 809. Can. Q. B. 304. '"' Lewis v. Dunlap, 72 Mo. 174. =''-Rumley Co. v. Wilcher, 23 Ky. See § 348 herein. Law Rep. 1745, 66 S. W. 7. But where it was agreed that an -^^ Missouri. — Ewing v. Clark, 8 indorsement should be without re- Mo. App. 570. course it was held that it might be New York. — Mayer v. Mode, 14 shown, in an action by a holder Hun (N. Y.) 155; Bruce v. Carter, with notice, that the indorsement 7 Daly (N. Y.) 37. was by ^mistake written "with re- 445 TO RELEASE OR LIMIT LIABILITY. [§ 3-13 it was decided, in an action thereon by the receiver of the bank, which was owner of the note, that evidence was not admissible of a parol agreement between the defendant and such director that the former was not to be held liable thereon.-"^ And the fact that there was such an agreement is held to be no defense to an action by an indorsee with knowledge thereof;-^'' or by an assignee after maturity,^"'' and this is also the generally accepted rule in action by a payee of a note or bill.^°* The words of the court in a leading case in New Jersey, in which such a defense was set up, are pertinent in this connection as showing the principle underlying this class of cases. It was there said : "There is no rule better settled than that evidence of contemporaneous parol declarations is inadmissible to vary the terms of a written contract. In the enforcement of this rule there is often a strong tendency to dis- course" instead of without recourse as was intended. Johnson v. Wil- liard, 83 Wis. 420, 53 N. W. 776. ^°^ Western Carolina Bank v. Moore (N. C. 1905), 51 S. E. 79. -^ Pennsylvania Safe Dep. & T. Co. v. Kennedy, 175 Pa. St. 160, 34 Atl. 659, 38 Wkly. Notes Cas. 177. Compare Shufeldt v. Gillilan, 124 111. 460, 16 N. E. 879. 20' Jewett v. Salisbury, 16 Ind. 370. But see Bircleback v. Wilkins, 22 Pa. St. 26, holding that such a de- fense may be set up to an action on a non-negotiable note by an in- dorsee. -'^Illinois. — Weaver v. Fries, 85 111. 356. Indiana. — Moore v. Beem, 83 Ind. 219. Kentucky. — Deposit Bank v. Peak, 23 Ky. Law Rep. 19, 62 S. W. 268. Massachusetts. — Smith v. Barthol- omew, 1 Mete. (Mass.) 276, 25 Am. Dec. 365. Missouri. — Ewing v. Clark, 76 Mo. 545; Reed v. Nijcholson, 37 Mo. App. 646; Frissell v. Mayer, 13 Mo. App. 331. New York. — Mead v. Pawling Na- tional Bank, 89 Hun (N. Y.) 102, 34 N. Y. Supp. 1054; Cowles v. Gridley. 24 Barb. (N. Y.) 301. Texas. — Todd v. Roberts, 1 Tex. Civ. App. 8, 20 S. W. 722. Vermont. — Gillett v. Ballou, 3 Williams (Vt.) 296. But see Barber v. Gordon, 2 Root (Conn.) 95, holding a covenant never to demand or to deliver up a note to the promissor is a good bar to an action on the note. Porter v. Webb, 22 Ky. Law R. 917, 59 S. W. 1, holding, where a note was given to a wife for money borrowed which was in fact the property of the husband, that in an action by the wife against the maker he might show an agreement between him and the husband that he would look to a third party for payment. So it has been held no defense that the note and a mortgage were executed on the understanding that the money was not to be collected as long as certain dues mentioned in two policies of insurance and the interest on the loan were paid, such an agreement being incon- sistent with the written conti'act. Allen V. Thompson, 23 Ky. I-^w Rep. 164, 56 S. W. 823. § 342] EFFECT OP CONDITIONS OR AGREEMENTS. 446 regard its effect induced by a feeling of the inequity of holding a party to the strict performance of an agreement into which he has entered, upon assurance that it would not be enforced according to its terms. This feeling has led the courts sometimes to recognize the parol decla- ration, upon the ground that it amounted to an equitable estoppel.^*'^ But the rule of evidence that when the contract is reduced to writing, the writing is the only evidence of the contract, excludes any evidence of the parol declarations. The rule is recognized as a wholesme doc- trine by which men are enabled to place their agreements in shape un- disturbable by the uncertainty of oral testimony. The weight of au- thority is overwhelming in favor of holding, in the language of the American editors of the Duchess of Kingston's case that 'a person who is so ill advised as to execute a written contract in reliance upon an as- surance that it shall not be literally enforced, must submit to the loss if he is deceived, and cannot ask that a principle of great moment to the community shall be made to yield for the sake of relieving him from the consequences of his indiscretion.' "-^° In an action, however, by the payee of a note with notice against an accommodation maker or indorser, it is decided that it may be shown in defense thereto that there was no consideration for the note and that it was agreed between the parties that the defendant should not be held liable.-^ ^ And where a surety on an accommodation note expresses a willingness to pay the same after maturity, if he is to be held liable, as he can at the time get security therefor from the maker, he may show in defense to a sub- sequent action by the payee that the latter stated at such time that he would exonerate the defendant and look to the principal.^^- Again where a maker may be discharged from liability by electing to do some act it is decided that he must make such election prior to the maturity of the note.^^^ =°'' Notes to Duchess of Kingston's holding that in an action against Case, 3 Smith's Lead. Cas. 729. an accommodation indorser on the ■^° Per Reed, J,, in Wright v. Rem- firm the statement of one member ington, 41 N. J. L. 48, 54, 32 Am. of a firm that he had the means to Rep. 180. pay the note and would pay it and ^1 Higgins V. Ridgway, 153 N. Y. release the plaintiff, was not the 130, 47 N. E. 32; Garfield National statement of the firm, and would be Bank v. Colwell, 57 Hun (N. Y.) no defense to the action. 169; Brenerman v. Furniss, 90 Pa. =" Harris v. Brooks, 21 Pick. St. 186, 35 Am. Rep. 651; First Na- (Mass.) 195, 32 Am. Dec. 254. tional Bank v. Cleaver, Fed. Cas. ""Draper v. Fletcher, 26 Mich. No. 4800. 154. See Upham v. Smith, 7 Mass. But compare Webber v. Alder- 265. man, 102 Mich. 638, 61 N. W. 57, 447 COXDITIOXS IX NOTE. [§ 343 §343. Effect of conditions in note. — Where conditions are ex- pressed in a note the promises therein are mutual and dependent and should be construed as a whole.-^* Though it may be payable at a speci- fied time yet if it contains a condition that it is not to take effect as a binding obligation except upon the happening of a certain contin- gency, it will be a defense to an action on the instrument that such contingency has never happened, such condition being in the nature of a condition precedent. ^^^ So though the first part of a note may by it- self show a promise to pay in a specified time, yet if added stipulations or conditions clearly manifest the intention that the note is an instal- ment note payable monthly, the time of payment will be controlled by such provisions.^^'' And a note may by its terms be payable upon a certain contingency and it may be shown in defense to an action there- on that such contingency has never hapjDcned.^^'^ So where a con- ^* Lasher v. Union Central L. I. Co., 115 Iowa 231, 88 N. W. 375; Costelo V. Crowell, 134 Mass. 280. -^^ Indiana. — McComas v. Haas, 107 Ind. 512, 8 N. B. 579. loiva. — Clark v. Ross (Iowa), 60 N. W. 627; Thompson v. Oliver, 18 Iowa 417. Kentucky. — Hodges v. Coleman, 2 Dana (Ky.) 396. Massachusetts. — Gleason v. Saun- ders, 121 Mass. 436. Nebraska. — Grimison v. Russell, 20 Neb. 337, 30 N. W. 249. New York. — Gildersleeve v. Pel- ham R. Co., 11 Daly (N. Y.). 257. Pennsylvania. — B enninger v. Hawkes, 61 Pa. St. 343. Application of rule. It may be shown that there has been no per- formance of a condition that cer- tain services should be rendered. Taylor v. Rhea, Minor (Ala.) 414; or that a certain title should be confirmed. Sanders v. Whitesides, 10 Cal. 89; or certain incumbrances removed. Williams v. Benton, 10 La. Ann. 158; or a certain note paid. Henry v. Coleman, 5 Vt. 402; or that the payee should assist in a . criminal prosecution. Drawer v. Cherry, 14 La. Ann. 694. •Such a note is non-negotiable and an equitable assignee takes it sub- ject to defenses existing between the original parties, and it may be shown in an action by him that such a contingency has not happened un- less he has made inquiry of the debtor and the latter is estopped from setting up such defense. Faull V. Tinsman, 36 Pa. St. 108. See also McComas v. Haas, 107 Ind. 512, 8 N. E. 579; Brooks v. Whitson, 7 Sm. & M. (Miss.) 513. ^^' Crowe V. Beem (Ind. App. 1905), 75 N. E. 302. ^" Hempler v. Schneider, 17 Mo. 258. A plaintiff cannot recover on such an instrument in the absence of proof that the event referred to has occurred. Quinn v. Aldrich, 70 Hun (N. Y.) 205, 24 N. Y. Supp. 33. See McComas v. Haas, 107 Ind. 512, 8 N. E. 579. Such a provision is binding on the maker and upon the happen- ing of the contingency referred to he will be bound. So where a purchaser of belting was dissat- isfied with the same and the seller gave him a note in compromise of his claim with a condition there- § 343] EFFECT OF COXDITIOXS OR AGREEMENTS. 448 tractor who was erecting a building gave an order for the payment of a certain sum of money providing that said sum was due when the house was plastered and referred to a building contract which provided for the making of the second payment at such time it was decided that the order was to be construed as payable when the amount of the sec- ond payment on the contract became due as specified therein and that such payment was never earned, never became due, and the order never became payable.^^^ And the rule has been applied in the case of a due bill which states that the amount specified is to be paid on the "final settlement" of a certain transaction between the parties.-^^ Where, however, the happening of a contingency referred to in a note has been prevented by the agency of the defendant he cannot avail himself of the fact that it has not happened as a defense.--^ If the instrument contains a condition that a certain act is to be done, the condition should be construed with reference to the facts existing at the date of the note and a fact based upon a change of circumstances cannot be set up to defeat an action on the note.^^^ Nor can a condition be extended by implication so as to include matters which are not clearly within the contract.^^^ And a condition in the body of a check to which the payee is not a party will not be binding on him.^^^ in that if he should decide after by the payee where the work was three years' use that he was not finished by another to whom the satisfied with it the note was to building was sold by the defendant. be payable on demand, it was held =='' Rhodes v. Pray, 36 Minn. 392, that, in the absence of fraud, the 32 N. W. 86. maker was bound thereby. Ten- "-"Vandemal v. Dougherty, 17 nessee Mfg. Co. v. Haines, 16 R. I. Mo. 277. 204, 14 Atl. 853. --^ Davenport R. Co. v. Rogers, 39 =" Fuller v. Wilde, 151 Mass. 412, Iowa 298, so declaring where a note 24, N. E. 209. See Glidden v. Mas- was payable on the condition "that sachusetts Hospital L, I. Co., 187 a depot be established within eighty Mass. 538, 73 N. E. 538. rods of present town of Wheatland" Compare Robbins v. Blodgett, 124 and the limits of the town were sub- Mass. 279, holding that where an sequently extended, it being held order given by a contractor pro- that the contract was to be governed vides for payment when certain by the recorded plat at the tinie of work is finished and the owner ac- the execution of the note, cepts the order without qualiflca.- ^"Blackman v. Dowllng, 63 Ala. tion, he cannot set up in defense to 304. an action thereon that such work ^Citizens' Bank of Louisiana v. was not finished by the contractor Grand, 33 La. Ann. 976. and that there may be a recovery 449 COXDITIOXS IX XOTE. [§ 344 § 344. Same subject — Continued. — Where a note contains a condi- tion that it may.be paid or satisfied otlier than by the payment of money, the maker is obligated to do the act which will exonerate him if he desires to avail himself of the benefit of such condition. There must either be a performance by him or a sufficient tender and a fail- ure to make a demand will not release him therefrom.'"* If there is a provision in a note that if it is not paid at maturity certain collateral shall be forfeited or the payee may at his option return the collateral to the maker and sue him, it has been decided that the return of the collateral is not a condition precedent to the right to sue.^^^ Again where a note provides that it is to be paid out of the proceeds of the sale of certain property, such provision is held not to be such an appro- priation as will create a lien thereon and it is no defense to an action by an indorsee against the payee that the property was removed after the maturity of the notes and the maker subsequently became insolv- ent."*^ § 345. Same subject — Substantial performance of condition. — A substantial compliance with the condition on a note may in some cases be sufficient to enable a payee to recover thereon.--^ So where the lia- bility of the makers of a note was dependent upon a condition that the payees should sustain their case against certain persons and should find such persons indebted to them to the amount of the note, it was decided that the condition was .sufficiently fulfilled if the case was legally sustained, though certain formalities were not complied with, -^^'Biscoe V. Moore, 12 Ark. 77, so v. Clausen, 85 Cal. 322, 24 Pac. 636; liolding where there was a stipu- Bellows v. Folsom, 2 Rob. (N. Y.) lation that a note might be dis- 138. charged in Arkansas bank paper at This principle has been most fre- its value. Borah v. Curry, 12 111. quently applied in the case of notes 66, so holding where note could be which have been given to aid in discharged by payment in personal the construction of railroads. See property. Dumas v. Hardwick, 19 Fraser v. Stuart, 46 Iowa 15; Gard- Tex. 238, so holding where a note ner v. Burch, 101 Mich. 261, 59 could be discharged in groceries at N. W. 613; Gardner v. Walsh, 95 cash prices. But see as to making Mich. 505; Toledo & Ann Arbor R. demand. Smith v. Corn, 3 Head R. Co. v. Johnson, 55 Mich. 456. (Tenn.) 116. Compare Jefferson v. Hewitt, 103 -^ Knipper v. Chase, 7 Iowa 145. Cal. 624, 37 Pac. 638. --"Franklin v. Browning (Ind. In this class of cases, however, Terr. 1901), 64 S. W. 563. each case must be determined from --' Stowell V. Stowell, 45 Mich, its own particular facts. Fraser. v. 364, 8 N. W. 70. See McLaughlin Stuart, 46 Iowa 15. Joyce Defenses — 29. SS 346, 34:71 effect of coxditioxs oe agreements. 450 as where the judgment and decree was rendered on an agreed state- ment of facts.'^* § 346. Same subject — Condition that contract be completed to ac- ceptance of agent. — If a note is conditioned upon the completion of a contract to the acceptance of an agent it will be no defense to an action thereon that it was not completed in strict compliance with the terms of the contract, where the agent has accepted performance and there was no fraud on the part of the plaintiff.--^* §'347. Conditional acceptance. — One who accepts an instrument conditionally may, in an action against him, show a non-performance of the condition or non-occurrence of the contingency upon which his liability was dependent, provided the condition upon which he ac- cepted constitutes a part of the contract either by reason of express words in the instrument or by a contemporaneous agreement which is to be construed as a part thereof."^ In such a case the performance of the condition or the Iv^ppening of the event is generally regarded as a condition precedent to the liability of the acceptor.-^" So where an acceptance was conditioned to be paid out of money coming into the hands of the acceptor as assignee it was held that plaintiff must show that funds had been received and were sulDJect to the claim of the drawer."^^ An acceptor cannot, however, set up such a defense where it appears that the performance of the condition or the happening of the contingency has been prevented by him.-^- -"-^ Sawyer v. Child, 68 Vt. 360, 35 S'ansas.— Liggett v. Weed, 7 Kan. Atl. 84. 273. -^* Shed V. Miller, 12 Me. 318. Mississippi. — Shackleford v. Hook- ^ Crowell V. Plant, 53 Mo. 145 er, 54 Miss. 716. (holding that where one accepts an Missouri. — Ford y. Angelrodt, 37 instrument stating it is payable out Mo. 50, 88 Am. Dec. 174. of a certain fund he may show that Federal.— Rea.d v. Wilkinson, 2 such fund never became due). See Wash. C. C. 514, Fed. Cas. No. Lindon v. Beach, 6 Hun (N. Y.) 200. 11611. See also Rice v. Porter, 16 An acceptance which is upon its N. J. L. 440; Lamon v. French, 25 face absolute cannot be shown to be Wis. 37. conditional by parol evidence. =^ Cummings v. Hummer, 61 111. Haines v. Nance, 52 111. App. 406; App. 393. Heaverin v. Donnell, 7 Sm. & M. =^Herter v. Goss & Edsall Co., 57 (Miss.) 244, 45 Am. Dec. 302. N. J. L. 42, 30 Atl. 252; Risley v. '^"Illinois. — Cummings v. Hum- Smith, 64 N. Y. 576. mer, 61 111. App. 393. 451 CONDITIONAL OR RESTRICTED IXDORSEIMEXT. [§ 348 § 348. Conditional or restricted indorsement. — A conditional or re- stricted indorsement operates as a notice, to a subsequent holder, of such condition.^^^ And an indorsement that the instrument will be payable on a contingency is held not to affect the negotiation of the pa- per but to operate as a notice to subsequent parties of such fact.^^* In this class of cases parol evidence is not admissible to charge the or- dinary and popular meaning of the term or words used,^^^ though where a restrictive indorsement is ambiguous it may be shown by parol, as between the parties, what their intent was.^^*^ In the appli- cation of the general rule it has been decided that where the indorse- ment provides that the indorser is in no way liable as such, the indorsee takes it subject to any legal defense against the indorser,^^'^ And this is also the rule in case of an indorsement to the payee's own use,^*^ or to another for the "account of" the payee,^^^ or to the holder "for collec- tion."-**' And an acceptor who pays the drawer in disregard of the condition imposed by the payee when indorsing the. instrument before acceptance may be liable to also pay the payee.^*^ The fact, however, that one indorses a note without recourse will not be a complete de- fense to an action on a note as even in such case he is held to warrant that the instrument is the valid legal obligation of those whose signa- tures appear on the paper.-*^ The right, however, of a bona fide holder "^Leary v. Blanchard, 48 Me. 269; Tappan v. Ely, 15 Wend. (N, Y.) 362; Sigourney v. Lloyd, 8 Barn. & Cr. 622. See in this connection Neg. Instr. Law, § 69 in appendix. ^* Tappan v. Ely, 15 Wend. (N. Y.) 362. Compare Aniba v. Yeomans, 39 Mich. 171, holding that the nego- tiable character of a note is de- stroyed by an indorsement by the payee transferring only "his right, title and interest" in it to another, and the indorsee is not a hona fide holder without notice of the de- fenses thereto. =''^Leary v. Blanchard, 48 Me. 269. ^^^^ United States Bank v. Geer, 53 Neb. 67, 73 N. W. 266. ="Ayer v. Hutchins, 4 Mass. 370. But see Russell v. Ball, 2 Johns. (N. Y.) 50. =^' Wilson v. Holmes, 5 Mass. 543; Sigourney v. Lloyd, 8 Barn. & Cr. 622. '»»Leary v. Blanchard, 48 Me. 269. See Treutel v. Barandon, 8 Taunt. 100. Compare U. S. Nat. Bank v. Geer, 55 Neb. 462, 75 N. W. 1088, 70 Am. St. Rep. 390. ^^" Barker v. Prentiss, 6 Mass. 430. As to an indorsement by the payee "for collection" it is said in a recent case that it "is not strictly •a contract of indorsement, but rather the creation of a power, the indorsee being the mere agent of the indorser to receive and en- force payment for his use." Smith V. Boyer (Greg. 1905), 79 Pac. 497, 498, per Bean, J. ^^ Robertson v. Kensington, 4 Taunt. 30. "^ Illinois. — Drennan v. Burne, 124 111. 184, 16 N. E. 100. loioa. — Watson v. Cheshire, 18 Iowa 202, 87 Am. Dec. 382. A'a??sas. — Challis v. McCrum, 22 Kan. 157, 31 Am. Rep. 181. § 349] EFFECT OF COXDITIOXS OR AGREE:MEXTS. 452 cannot be affected hj any secret agreements or undisclosed restrictions between the parties.^*^ So where a note is indorsed in blank for col- lection, the want of ownership of the indorsee cannot be shown against such a holder.-** ISTor is evidence admissible of a i>arol agreement to show that the indorsement was to be without recourse.^*^ Nor can an indorser who, by his own unauthorized act, has prevented the perform- ance of the condition or the happening of the contingenc)'' upon which the taking effect of the instrument was conditioned avail himself of such a defense.^*^ § 349. Indorsement of condition to enforce which would be illegal. Where an indorsement is made uj^ou a note of a condition to enforce which would be in violation of the law, the fact that such condition has not been complied with will be no defense to an action against the maker. So in an action by a receiver of an insurance company to en- force a capital stock note, declared to be such on its face and providing that "payment thereof is subject to the conditions and obligations of the insurance law of the state of J^ew York" which law was specifically referred to by designation of the particular statute, it was held that the maker could not set up in defense thereto the breach of a condition indorsed on the back of the note, that unless his property should be kept insured for five years the note should be null and void.-*^ Vermont. — Hannum v. Richard- son, 48 Vt. 508, 21 Am. Rep. 152. Federal. — Seeley v. Reed, 28 Fed. 164. SEE Collier v. Mahan, 21 Ind. 110; Fitchburg Bank v. Greenwood, 2 Allen (Mass.) 434. ^ Fawcett v. Insurance Co., 97 111. 11. ^Coors V. Bank, 14 Colo. 202, 23 Pac. 328. =^= Skinner v. Church, 36 Iowa 91; Lewis V. Dunlap, 72 Mo. 174; Hill V. Shields, 81 N. C. 250. See Sec- ond National Bank v. Woodruff, 113 111. App. 6; Smith v. Boyer (Oreg. 1905), 79 Pac. 497. ^' United States "Wind Engine &c. Co. V. Simonton, 84 Wis. 545, 54 N. W. 1021. ^' Regener v. Warner, 56 N. Y. Supp. 310. The court said, per Mc- Adam, J.: "To sustain such a con- tention would be to sanction a fraud upon the insurance laws of the state, as well as the creditors whom such notes were intended to secure. The representatives of the corpora- tion, as special agents thereof, could not by any act of theirs assent that any condition be attached to the capital stock notes which would con- travene the operation of the laws of the state, and the defendant must have known this as well as the of- ficers of the company. Capital stock notes given under the insurance laws cannot have strings to pull them back from creditors when seeking their lawful remedy upon them, and the legerdemain condi- tions indorsed upon the back of the note herein must be regarded as in- 453 WAIVER OF COXDITIOXS. [§ 350 § 350. Waiver of conditions. — One who is to receive the benefit of a valid and enforceable condition or agreement attending the execu- tion, delivery or terms of a note may waive the same and in case of a waiver by him he cannot avail himself of the non-performance of such agreement or condition as a defense to a subsequent action on the in- strument.-*^ But where a person signs a note conditionally there is held to be no waiver of his right to avail himself of a breach of such condition as a defense by the fact that he had an agency or was active in getting a payment indorsed thereon.^'*'* And it has been decided that the fact that one who promised to accept an instrument condi- tionally has received and retained a sum raised thereon, which is less than its amount will not operate as a waiver of his right to refuse to ac- cept the same because of a non-compliance with the condition.-^*^ effectual against creditors and the receiver who represents them, be- cause contrary to the policy and the spirit of the legislative enactment, whose benefits the defendant in- volved when he made the obligation. There is no merit in the defense, and nothing to commend it to ju- dicial favor." '^^ Federal. — First National Bank V. Portland & 0. R. Co., 2 Fed. 831. California. — Witmer Bros. v. Weid, 108 Cal. 569, 41 Pac. 491. Illinois. — Iglehart v. Gibson, 56 111. 81. Louisiana. — Wimbish v. Wade, 21 La. Ann. 180. Minnesota. — Stout v. Watson, 45 Minn. 454, 48 N. W. 195. Missouri. — Whittemore v. Ohear, 58 Mo. 280. Nebraska. — Westheimer v. Phil- lips, 11 Neb. 54, 7 N. W. 525. ^"Miller v. Gamble, 4 Barb. (N. Y.) 146. *=" Lewis V. Kramer, 3 Md. 265. CHAPTEE XV. COLLATERAL SECURITY. Sec. 351. Original parties. 352. Surety — Guaranty — Indemnity. 353. Accommodation paper — Maimer — Bona fide holder. 354. Accommodation p a p e r — In- dorser — Bona fide holder. 355. Bills — Accommodation acceptor. 356. Form of assignment, when im- material — Bona fide holder. 357. When note not collateral se- curity but independent obli- gation. 358. Note payable to order, assigned but not indorsed. 359. Contemporaneous or future loans — Advances — Bona fide holder. 360. Same subject — Instances. 361. Agreements and conditions. 362. Same subject. 363. Security for the performance of illegal contract. 364. Note secured by mortgage — Mortgagee against maker — Surety. 365. Note secured by mortgage or other instrument — Bona fide holder — Pledgee. 366. Same subject. Sec. 367. Same subject — Knowledge or notice. 368. Transferee of note and mort- gage — Payment of or col- lateral security for pre-exist- ing debt. 369. Receiving or surrendering col- lateral — Exhausting collat- eral. 370. Paper given or indorsed for specific purpose — Principal and agent. 371. Defense subsequent to indorse- ment — Bona fide holders. 372. Transferee after maturity — Pledgee. 373. Pledgor and pledgee — Laches, negligence or tortious acts — Statute of limitations. 374. Priority of transfer — Different notes. 375. Renewals — Continuance of se- curity — Extinguishment of debt. 376. Extent of recovery — Bona fide holders. 377. Same subject — Collateral for pre-existing debt. 378. Same subject — Accommodation paper. § 351. Original parties.^ — Upon the principle that any instrument, though absolute upon its face, may be shown by parol to be a security only, it is competent, in an action by an indorsee from the payee of the note as collateral security, to show that the payee had himself ^As to collateral security for pre- existing debt — bona fide holders, see §§ 246-249 herein. 454 455 SURETY — GUARAXTT — INDEMNITY. [§ 352 taken the note as collateral security merely for the repayment of a loan or advances, and the plaintiffs having taken the note after ma- turity and as collateral for a prior indebtedness they had no better rights than the payee and were subject to the defenses of the maker against the payee, so that their recovery was limited to the payee's interest.^ So it may be shown that as between the original parties the note was given to be used as collateral.^ But it is also decided that in an action by the payee against the maker a plea which sets up the execution and delivery of the notes as collateral security is subject to demurrer.* Again, notes may be validly transferred as security for indorsements previously rnade.^ § 352. Surety — Guaranty — Indemnity. — If the indorsee of a prom- issory note receives it without notice of equities, before maturity as col- lateral security in consideration of his becoming surety for another note, which he afterward was compelled to pay, he is a holder for a valuable consideration in the ordinary course of business and is dis- charged from such equities.^ And where a note and mortgage are as- As to payment of pre-existing debt, see §§ 241, 242, 243, 287 herein. ^ Kelly V. Ferguson, 46 How. Pr. (N. Y.) 411. ^McCrady v. Jones, 36 S. C. 136, 15 S. E. 430. * Moore v. Prussig, 165 111. 319, 322, 46 N. E. 184. The court, per Phillips, J., said: "The second plea attempted to set up that the execu- tion and delivery of the notes were as collateral security merely, and set up substantially the same facts as pleaded in the plea failure of consideration. Whilst a person signing a note has a right to prove by parol the capacity in which he signs the paper, and such proof is not an attempt to vary the terms of the written instrument, yet where the note is accepted as a separate and independent contract an attempt to vary the terms oLthe contract by parol is not admissible. and the plea attempting to set up that the note signed was accepted as collateral security could not change the legal effect of the instru- ment, as a liability would exist ac- cording to the terms of the con- tract, and the attempt to set up such an agreement constituted no defense. As the sole makers of the note, defendants cannot show that they only signed as sureties. To permit proof of that fact would be to vary by parol the contract itself and contradict its terms. Harris v. Galbraith, 43 111. 309; Miller v. Wells, 46 111. 46." "^Noyes v. Landon, 59 Vt. 569, 10 Atl. 342. As to becoming absolute owner of accommodation note pledged as col- lateral, see Beacon Trust Co. v. Rob- bins, 173 Mass. 261, 53 N. E. 868. " Stotts V. Byers, 17 Iowa 303. See Winship v. Bank, 42 Ark. 24; 353] COLLATERAL SECURITY. 456 signed to a person as indemnity for performing an act, as in case of indemnifying sureties in a recognizance of bail, it may be shown that the liability of the sureties has been discharged without their being indemnified, and the assignee in such case is a bona fide holder for the purpose of indemnity only, and neither he nor his assignee after maturity can recover.'^ But a negotiable instrument received from the payee, before maturity, as an indemnity against future losses on a suretyship then existing on the part of the holder for the payee, is not a transfer in the usual course of trade so as to preclude the maker from availing himself of a latent equity between him and the payee.^ §353. Accommodation paper — Maker — Bona fide holder.^ — If a note is made merely for the accommodation of a person for the purpose ■ of giving him credit and such note is transferred as collateral security and upon its faith a large discount is obtained, the transfer being made before maturity of the note, the transferee becomes the holder in good faith, for value.^" But while want of consideration is not a de- Trustees V. Hill, 12' Iowa. 462; Rox- borough V. Meesick, 6 Ohio St. 448. But examine Bertrand v. Bertram, 13 Ark. 150; Ruddick v. Lloyd, 15 Iowa 441. 'Coleman v. Post, 10 Mich. 422, 82 Am. Dec. 49. *Bank of Mobile, Hallett v. Hall, 6 Ala. 639, 41 Am. Dec. 72. » See §§ 883-391 herein. " Louisiana. — President, etc., of Louisiana State Bk. v. Gaiennie, 21 La. Ann. 555 (holding also that the pledgee of a promissory note, payable to the drawer's own order and by him indorsed in blank, may sue and recover on the note without the indorsement of the pledgor). Maryland. — Maitland v. Citizens' Nat. Bank, 40 Md. 540, 17 Am. Rep. 629 (an agreement between maker and indorser that note is not to be used for precedent debts, but only to secure future discounts, and the rule does not apply unless the in- dorsee has knowledge of the infirmi- ties or invalidating facts). Neio York. — Schepp v. Carpenter, 51 N. Y. 602, affirming 49 Barb. 542; Grocers' Bank v. Penfield, 7 Hun (N. Y.) 279, affirmed, 69 N. Y. 502 (if accommodation paper is divert- ed to another purpose, the holder must show that it was taken in good faith, and for value. But if the paper is used for a purpose con- sistent with the object for which it was executed, an action lies by the holder even though it is based on no new consideration and is held only as collateral security) ; Atlan- tic National Bank v. Franklin, 64 Barb. (N. Y.) 449, 453; in this case the court, per Fancher, J., said: "Conceding that the notes in ques- tion are accommodation paper, loaned by the defendant to Van Suan & Co., in the absence of evi- dence showing a restriction as to the mode of using them, it was com- petent for that firm to pledge them as security for their debt, and in such case the maker of the notes has no defense against their pay- 457 ACCOililODATIOX PAPER — BONA FIDE HOLDER. [§ 553 ment. The plaintiff is a tona fide holder for value, sufficient to en- able the plaintiff to recover on the notes. Schepp v. Carpenter, 49 Barb. (N. Y.) 542; Cole v. Saul- paugh, 48 Barb. (N. Y.) 104; 1 Pars, on Bills, 226; Rutland Bank V. Buck, 5 Wend. (N. Y.) 66; Grand- in V. LeRoy, 2 Paige (N. Y.) 509; Lathrop v. Morris, 5 Sand. (N. Y.) 7; Mohawk Bank v. Corey, 1 Hill (N. Y.) 513; Boyd v. Cummings, 17 N. Y. 101; De Zeng v. Fyfe, 1 Bosw. (N. Y.) 335; Lord v. Ocean Bank, 2 Penn. 384. In the latter case it was held that the maker of an ac- commodation note cannot set up the want of consideration as a defense against it in the hands of a third person, though it be there as col- lateral security merely"); Cole v. Saulpaugh, 48 Barb. (N. Y.) 104 (where there is no limitation or re- striction the rule applies) ; East River Bank v. Butterworth, 45 Barb. (N. Y.) 476, 30 How. Prac. (N. Y.) 44, affirmed, 51 N. Y. 637 (rule applied where no restric- tion); DeZeng v. Fyfe, 1 Bosw. (N. Y.) 335 (rule applied in cases ex- empt from fraud) ; Mechanics' & Traders' Bank v. Livingston, 6 Misc. Rep. 81, 26 N. Y. Supp. 25, aff'g 4 Misc. Rep. 255, 23 N. Y. Supp. 814; Continental Nat. Bank v. Cros- by, 1 N. Y. Supp. 256, 48 Hun (N. Y.) 621; Moyer v. Urtel, 9 N. Y. St. Rep. 667; Wallach v. Bader, 7 N. Y. St. Rep. 375; Inglis v. Kennedy, 6 Abb. Prac. 32. See Brewster v. Shrader, 57 N. Y. Supp. 606, 609, 26 Misc. 403, where the changes in the New York law and the prior rule are considered. Pennsylvania. — Second Nat. Bank v. Dunn, 151 Pa. St. 228, 25 Atl. 80, 31 Wkly. Notes Cas. 112 (as to ac- commodation judgment note, it may be taken as collateral for precedent debt in the absence of restrictions; otherwise where there are restric- tions, as in such latter case any de- fense except want of consideration is available as to original party) ; National Union Bank v. Todd, 132 Pa. St. 312, 19 Atl. 218; Hart v, U. S. Trust Co., 118 Pa. St. 565, 12 Atl. 561 (agreement here not per- formed; plaintiff had no notice thereof; there was no such fraudu- lent diversion as to constitute a de- fense, and recovery was allowed) ; Lord v. Ocean Bank, 20 Pa. St. 384, 59 Am. Dec. 728 (also deciding that it constitutes no defense that holder had other collateral securities for same debt, but from which the debt had not been realized) ; Beckhaus v. Commercial Nat. Bank (Pa. 1888), 12 Atl. 72, 22 Wkly. Notes Cas. 53. Yerinont. — Pinney v. Kimpton, 46 Vt. 80. But see Bramhall v. Beckett, 31 Me. 205; Royer v. Keystone Nat. Bank, 82 Pa. St. 248 (diversion of note; the intervention of fraud in procurement or use, precludes pledgee from holding as security for antecedent debt, from sustain- ing claim that he is holder for value, nor can recovery be had on renewal note). Pledgee as garnishee cannot de- fend although drawer might where accommodation paper pledged for specific purposes. Kirkpatrick v. Oldham, 38 La. Ann. 553. Note not strictly accommodation paper, maker is precluded from de- fense where paper is based on valu- able consideration, even though given as security for a pre-existing debt. Barker v. International Bank of Chicago, 80 111. 96. I 353] COLLATERAL SECURITY. 458 fense in such case," and, although the payment of a security debt is held a sufficient consideration for the transfer of an accommodation note where no consideration had passed between the payee and the makers, still a bona fide indorsee for value may recover thereon.^- It is also decided, however, that some consideration must have passed from the holder.^^ Again, where there are no restrictions as to a note for the indorser's accommodation, such note may be used by him for accommodation, and a recovery may be had upon it by the holder to any amount to which he holds it as security, not exceeding the sum named in the note, even though he knew its origin,^* But it is also determined that one who receives such a note is not a bona fide holder " Schepp V. Carpenter, 51 N. Y. 602, aff'g 49 Barb. (N. Y.) 542; Smith V. Hine, 179 Pa. St. 260, 36 Atl. 221 (where an accommodation note is held by a third party as col- lateral for a precedent indebtedness, want of consideration is not avail- able as a defense; but the maker or indorser of such paper may avail himself of fraud in the procuring or use of the note, since in this re- spect the rules are applicable that apply to commercial paper general- ly, but the latter parties cannot set up as a defense that the note was given without consideration and pledged for a pre-existing debt) ; Carpenter v. Bank, 106 Pa. St. 170; "Work V. Kase, 34 Pa. St. 138. "Bondurant v. Bladen, 19 Ind. 160. In this case the maker and in- dorser were defendants. i^Bank v. Vanderhorst, 1 Rob. (N. Y.) 211, 216 (declaring that the law of New York is settled that a prom- issory note, taken in payment of an antecedent debt, and the prior in- debtedness extinguished is deemed to be taken for value so as to con- stitute it a valid security in the hands of the holder. The court also said the principle is, that if the holder parts with something at the time he receives the note, it affords a sufficient consideration to make his holding hona fide. If, therefore, he extinguishes the prior debt, or surrenders the prior security, or ad- vances money upon the credit of the new, it will constitute him a holder for value. But it does not ap- pear that merely receiving a promis- sory note or bill of exchange of a third person, as security for a prece- dent debt, without extinguishing the prior debt, or parting with any money or security at the time, is sufficient to constitute a holding for value) ; Grocers' Bank v. Penfield, 7 Hun (N. Y.) 279, aff'd, 69 N. Y. 502 (the holder would have no greater rights than the payee, in the ab- sence of a consideration, and a bank which has surrendered nothing of value, nor parted with money or property for such notes, nor sus- pended its remedy for the debt se- cured thereby, cannot recover there- on; an implied agreement, however, for the extension of time of credit of an existing debt is a sufficient consideration). See Atkinson v. Brooks, 26 Vt. 569, 575, 584, 62 Am. Dec. 592. "East River Bank v. Butter- worth, 46 Barb. (N. Y.) 476, 30 How. Pr. 444, aff'd, 51 N. Y. 637. ■I 459 ACCOMMODATIOlSr PAPEK — ^INDORSEE. [§ 354 for value, and that fraud may be availed of to impeach the paper. ^^ And if, after maturity of an accommodation note, a new note is given as independent security therefor, the claim against the maker of the latter note is not affected, except there be a payment or release between the accommodation indorser and the original maker, and it is no de- fense thereto that a mortgage was given to the indorser as security therefor.^^ § 354. Accommodation paper — Indorser — ^Bona fide holder. — If a note indorsed for accommodation of the maker is transferred as col- lateral to secure a pre-existing debt, an indorser cannot defend against a bona fide holder on that ground, there being neither fraud or diver- sion in such transfer, and no restriction;^'^ and the rule has been ap- "Cummings v. Boyd, 83 Pa. St. 372; Royer v. Keystone Nat. Bank, 83 Pa. St. 248. "Mosser v. Criswell, 150 Pa. St. 409, 24 Atl. 618. " Connecticut. — Bridgeport City Bank v. "Welch, 29 Conn. 475. New York. — Boyd v. Cummings, 17 N. Y. 101; Weaver v. Farrington, 7 Misc. 405, 27 N. Y. Supp. 971, aff'g 6 Misc. Rep. 54, 26 N. Y. Supp. 78. Ohio. — Pitts V. Foglesong, 37 Ohio St. 676, 41 Am. Rep. 540. Pennsylvania. — Newbold v. Boraef, 155 Pa. St. 227, 26 Atl. 305. United States. — Molson v. Haw- ley, 1 Blatchf. (U. S. C. C.) 409, Fed. Cas. No. 9702. See German-American Savings Bk. of Burlington v. Hanna, 124 Iowa 374, 100 N. W, 56, 59, relying upon Iowa State Bank v. Mason Hand Lathe Co. (Iowa), 90 N. W. 612. But examine First National Bank V. Schnur, 57 Mo. App. 176 (where the maker's notes are held by the payee for the amount of his indebt- edness and are not surrendered and no other consideration exists for the new notes, an accommodation in- dorser is not obligated thereby); Prentiss v. Graves, 33 Barb. (N. Y.) 621 (where a draft was due and un- paid, and in order to take it up the drawer procured an indorsement of a note for accommodation to the holders of the draft, but it was ac- cepted merely as collateral security and not as payment, and there was no new consideration, nor any agreement to extend the draft, but the drawer was still held liable to its prosecution, it was decided that they were not holders for value); Cummings v. Boyd, 83 Pa. St. 372 (a holder of accommodation paper pledged as collateral security for an antecedent debt without restriction is not a holder for value, and is sub- ject to defenses for fraud in its mak- ing or procurement. But the proposi- tion that accommodation paper may be pledged as collateral security for an antecedent debt where the paper contains no restrictions as to the manner of its use, was admitted by the court). Examine also §§ 383- 391 herein. § 355] COLLATERAL SECURITY. 460 plied, even though knowledge of the circumstances^® or notice of the character of the indorsement exists on the part of the transferee.^^ And a creditor holding the paper for value is entitled to recover from the indorser, notwithstanding an agreement not to negotiate the note, where he is not chargeable with notice of said agreement.-*' Again, where one of two joint accommodation indorsers has satisfied a judg- ment on a note so indorsed, in a suit for contribution it is no defense that there was an independent agreement as to collateral security whereby a discount was enabled to be obtained upon a note by the party for whose accommodation the paper was made.-^ And where negotiable notes are indorsed over as collateral security for other notes then and there discounted by the indorsee for the indorser on the faith and credit of the notes indorsed as collateral the indorsee of such notes- is to be regarded as a purchaser for value ; therefore no prior indorser, as against such indorsee, can avail himself of the fact that he is an accommodation indorser only. If a suit is brought by such indorsee against such prior indorser, the defendant can introduce no evidence which does not prove or tend to prove actual payment of the notes to the indorsee. ^- § 355. Bills — Acconmiodation acceptor. — Where a bill is drawn for the accommodation of the drawee for the special and sole purpose of sustaining his professional business and financial credit, and of aiding him in his operations connected therewith, the legal consequences of such facts is that such paper is not enforceable as between drawer and drawee ; nor as between drawer and payee unless the latter purchased it bona fide for a valuable consideration and without notice of the pur- pose for which it was drawn. A payment of a pre-existing debt being inconsistent with the vital spirit of the drawer's sole object, a pawnee who receives such bill as collateral security for a debt is not a bona fide holder.^^ Again, it is decided that where a note or bill is taken in ^^ Varnum v. Bellamy, 4 McLean =- Miller v. Pollock, 99 Pa. St. 202. (U. S. C. C.) 87, Fed. Cas. No. == Thompson v. Poston, 1 Duv. (62 16886. Ky.) 389, 392. ''^Bonsall v. Bauer, 2 Wkly. Notes That transferee is not holder for Cas. (Pa.) 298; Molson v. Hawley, value in Kentucky, where he takes 1 Blatchf. (U. S. C. C.) 409, Fed. Cas. it before maturity as collateral se- No. 9702. curity for an antecedent debt, see ^"Boyd V. Cummings, 17 N. Y. Alexander & Co. v. Springfield Bk., 101. 2 Mete. (59 Ky.) 534; Lee v. Smead, ='Newcomb v. Gibson, 127 Mass. 1 Mete. (58 Ky.) 628. Examine 396. Kentucky Nat. Bk. v. Martin, 15 461 for:\i of assigx^iext. [§§ 356-358 due course of business as collateral security for a pre-existing debt by the indorsee, he is prima facie a holder for value and may recover against an accommodation acceptor, whom he did not know was such acceptor when the bill was taken by him.--* And where plaintiffs had received a draft as collateral security for a pre-existing debt and it was accepted for their own accommodation, upon an agreement that they should protect it, it was determined that in an action against the acceptor that all equities between the maker and acceptor were avail- able and precluded a recovery.-^ § 356. Form of assignment, when immaterial — Bona fide holder. — Under the law of Texas it matters not how a negotiable note has been assigned. Though the transfer be not evidenced by a writing it is placed upon the same footing as a transfer by indorsement. If trans- ferred without notice of any defenses as against the transferor it is subject to none, and this applies to the holder of such a note trans- ferred or deposited with him as collateral security for a loan to the payee. -^ § 357. When note not collateral security but independent obliga- tion. — A note is not collateral security but an independent obligation, and is a promise in writing to pay the debt of another, where it is given to release a levy upon chattels under execution, issued in an action to which the maker of the note was not a party, said note being given upon the understanding that it should be paid at maturity and the exeeiition held in the meantime ; not that the execution would bo paid and the note held as security. In such case the note is the pri- mary obligation and the execution the secondary.^" § 358. Note payable to order, assigned but not indorsed. — Where a promissory note, payaljie to order of a named payee and not indorsed or otherwise assigned in Avriting so as to vest the legal title in the per- son to whom the same is delivered as collateral, is, by the payee, be- fore its maturity, delivered to another who takes the same bona fide, either as a purchaser or for the purpose of holding it as collateral se- curity, but by mistake or inadvertence, the note is not indorsed or Ky. L. Rep. 646, 24 S. W. 1067. See =» National Bk. of Commerce v. further §§ 246-249, 383-391 herein. Kenney, 98 Tex. 293, 83 S. W. 368, ^Atkinson v. Brooks, 26 Vt. 569, rev'g 80 S. W. 585. 62 Am. Dec. 592. ^ So held in Lockner v. Holland ^Fale v. Dart, 19 N. Y. Supp. 389. (County Court), 81 N. Y. Supp. 730. § 358] COLLATERAL SECURITY. 463 otherwise transferred in writing, tlie liolder takes it subject to all the equities between the original parties to the note existing at the time of such delivery and which arose out of the transaction upon which the note was given. This is true, although at the trial the note was transferred in writing by the original payee to the usee.^^ ^ Benson v. Abbott, 95 Ga. 69, 75- 78, 22 S. E. 127. The court said: "It has been for a long time well- settled law that one who, without indorsement, though for value and without notice, takes a note payable to order, takes it subject to all de- fenses which would have prevailed against the original payee. It will be observed that the rule under con- sideration, and which protects the holder against such equities, applies only to commercial paper which is negotiable. Unless a promissory note is made payable to bearer, it is not propria vigore negotiable in the strict legal sense; it is wanting in the final requisite, which imparts to it the quality of negotiability, name- ly, indorsement. By this act alone can it become negotiable; and there- fore it follows that he who receives it before indorsement does not take it as a negotiable paper, and not be- ing thus negotiable, he takes subject to the equities between the parties. Except in case of negotiable securi- ties, the law indulges no presump- tions in favor of the holder; he is not presumed to be such either 'b07ia fide or for value; but, on the contrary, it charges him with no- tice of, and he takes subject to, all defenses which, originating in the contract, might be set up by the maker. Not only is this true where the purpose is to invest the holder with the absolute unqualified title to the paper, but it is likewise true where it is intended only to pledge it as collateral to another liability. In either case the negotiability of the paper is the very essence of the holder's claim to protection against equities. * * * The code, § 2138, declares that promissory notes and other evidences of indebtedness may be delivered in pledge; and § 2139 declares the receiver in pledge of promissory notes is such a bona fide holder as will protect him under the same circumstances as a purchaser, from equities between the parties. Section 2788 declares that the holder of a note as collat- eral security for a debt stands upon the same footing as a purchaser. He is thus placed upon the same plane as a purchaser. The right of a purchaser for value is to be pro- tected against equities only when, by indorsement, the paper is ren- dered negotiable, and he is invested with the legal title. So with a pledgee. So with the person who holds the paper as collateral secur- ity; — they all stand upon the same footing. In each case indorsement is the condition of absolution. It is true that notes of the character now under consideration may be pledged as collateral security by manual tra- dition only, but for such delivery to be effective as against pre-existing equities it must be accompanied with the legal requisites to trans- mission of title. The pledgee must be a holder, a bona fide holder in due course of trade; and a regular indorsement by the payee is neces- sary to constitute him such. Our attention is directed to the case of Smith et al. v. Jennings, reported in 74 Georgia Reports, page 551, as I 463 CONTEilPORANEOUS OR FUTURE LOANS — ADVANCES. [§ 359 § 359. Contemporaneous or future loans — Advances— Bona fide holder. — It is held in certain jurisdictions that one who accepts a ne- gotiable note without notice of defense as collateral security for a pre- existing debt in excess of the note is a hona fide holder for value f^ and also that an indorsee is a purchaser for value of a note where he holds the same as collateral to secure a debt, where he has no notice bearing upon and ruling a principle otherwise than is herein expressed. In that case the proceeding was in equity to enforce the alleged lien of a judgment against certain land, a deed to which, together with a promissory note for the purchase money thereof, had been delivered in pledge. Whether or not the deed alone could have been delivered in pledge so as to vest an interest in the pledgee is not material. When accompanied, however, by the note for the purchase money, its delivery had the effect to vest in him an equity, and in a contest between this judgment creditor and the pledgee, the latter was entitled, under the rule that he who seeks the aid of a court of equity in vindication of a supposed equitable right, must do equity to have his debt first paid before the thing pledged could be appropriated to the payment of other debts of the pledgor. As be- tween the judgment creditor and the pledgee, the equity of the latter was superior. His interest in the thing pledged had vested prior to the rendition of the judgment. The lien of the judgment, assuming that it could attach at all, would attach only to the interest of the defendant in execution in the thing bailed, and that interest was an equity of re- demption. In that case the equities of the judgment creditor arose out- side the contract. In this the equity of the surety inheres in the contract itself. In that case notice or want of notice could not affect the lien of. the judgment. In this case notice or want of notice is the one poten- tial circumstance to charge the holder of this paper with, or ab- solve him from, the equities between the parties. In that case the right of the maker to make his defenses to an unindorsed promissory note was not called in question. Here it is the direct issue between the par- ties. So it appears that there is no conflict between the principle there declared and that here ruled. In- deed, it is apparent that the two cases involve the application of dis- tinct principles, each equally well established. The views herein ex- pressed, defining the rights of the holder of an unindorsed promissory note made payable to order, are in perfect harmony with the great cur- rent of approved authority; and we are thus led to conclude that in the case now under review, the paper in question having gone into the hands of the usee without indorsement or assignment (whether this occurred through inadvertence or otherwise is immaterial), they took it charged with notice of, and subject to, the pre-existing equities, and though an assignment was in fact executed at the trial, this could not avail as against equities in favor of the maker which sprang out of and in- hered in the contract itself." =»Lashmet v. Prall (Neb. 1902), 96 N. W. 152, 153. § 359] COLLATERAL SECURITY. 464 of any fraud or misrepresentation inducing the execution of the note, or that the consideration had f ailed.^*^ In other jurisdictions, however, the contrary rule prevails.^^ It is also decided that persons are not indorsees in due course for value of a note taken for a pre-existing debt where they assume no new obligation, duty or responsibility and part with no value when taking the note, and the debt very largely exceeds the amount of the note, and the latter is not an immediate ob- ligation and the payee has indorsed the note by a written guaranty of payment before maturity.^- But notwithstanding those decisions which hold that indorsees who take a note as collateral security for a pre-existing debt are not bona fide holders, it is. a conceded rule that a transferee is a holder for value where the negotiable paper is received as collateral security for a present or contemporaneous loan or for fresh advances or upon a new consideration afterwards, in due course, without notice and in good faith.^^ Or, to state the rule in other =" Watzlavick v. D. & A. Oppen- heimer (Tex. Civ. App. 1905), 85 S. W. 855. See §§ 246-249 herein. '' See §§ 246-249 herein. "Porter v. Andrus, 10 N. D. 558, 88 N. W. 567. See §§ 246-249 herein. ^Arkansas. — Estes v. German Na- tional Bank, 62 Ark. 7, 34 S. W. 85 (where there is a sale of land the lien of the purchase money passes with the notes as collateral secur- ity) ; Brown v. Callaway, 41 Ark. 418 (holding also that when there are defenses to the note as against the transferer, the holder can re- cover on it not exceeding the amount of his loan note. The court, per Eakins, J., said: "Such a bona fide holder of paper taken as col- lateral at the time of the loan, or upon a new consideration afterward, is, by all the authorities, held en- . titled to the protection of an in- dorsee. The only conflict of author- ity, and that is very great, arises in cases of paper taken as additional security for a pre-existing debt without new consideration. In this case the collateral was taken at the time of the loan"). Georgia. — Partridge v. William's Sons, 72 Ga. 807; Exchange Bank v. Butner & Edgeworth, 60 Ga. 654; Code, § 2788. (Indorsee of note be- fore due, as collateral security for money loaned, is bona fide holder, and not subject to plea of failure of consideration as a defense) ; Bonaud V. Genesi, 42 Ga. 639. Illinois. — Humble v. Curtis, 160 111. 193, 43 N. E. 740 (party is also no less a bona fide holder because note secured by mortgage or deed of trust). Indiana. — Valette v. Mason, 1 Ind. 288. Iowa. — Wendlebone v. Parks, 18 Iowa 546 (a case of transfer of old securities). ^a?7,sas.— Best v. Crall, 23 Kan. 482, 33 Am. Dec. 185; State Sav. Assoc, v. Hunt, 17 Kan. 532. Louisiana. — Louisiana State Bank V. Gaiennie, 21 La. Ann. 555; King V. Gayoso, 8 Mart. N. S. (La.) 370. Maryland. — Gwynn v. Lee, 9 Gill (Md.) 137. Missouri.— L>ee v. Turner, 89 Mo. 489, 14 S. W. 505 (transferee from apparent owner will be protected) ; 4G5 CONTEMPORANEOUS OR FUTURE LOANS — ADVANCES. [§ 359 words, when the note of a third person is transferred hona fide before due as collateral security and for value, such as a loan or further ad- vancement, or a stipulation, express or implied, of further time to pay Deere v. Marsden, 88 Mo. 512, 514 (the court, per Black, J., said: "One who takes a note as collateral security for a debt then created is a holder for value. Logan v. Smith, 62 Mo. 455. As to a pre-existing debt, if there is an express agree- ment on the part of the creditor to forbear suit until the collateral shall mature, the agreement to delay con- stitutes the transferee a holder for value. Dan. Neg. Inst. (3 Ed.), § 829; Gates v. National Bank, 100 U. S. 247. The extension of time for the payment of the past indebt- edness, if for a day only, constitutes a new and sufficient consideration. Smith v. Worman, 19 Ohio St. 148. The agreed facts in this case are far from being clear, but taking them in connection with the pleadings, we conclude some time was given Jones by the note taken from him by Marsden for the past indebted- ness. This being so, Marsden was clearly a purchaser for value. Good- man V. Simonds, 19 Mo. 107, only holds that one who takes a bill merely as a collateral security for a pre-existing debt, having given no value or consideration for it, holds it liable to the equities of the orig- inal parties"). Logan v. Smith, 62 Mo. 455. Nebraska. — Connecticut Trust & Safe Deposit Co. v. Trumbo (Neb. 1902), 90 N. W. 216 (contemporane- ous loan); Connecticut Trust & Safe Deposit Co. v. Fletcher, 61 Neb. 166, 172, 85 N. W. 59; Hayden v. Lincoln City Elec. Ry. Co., 43 Neb. 680, 62 N. W. 73; Helmer v. Com- mercial Bank, 28 Neb. 474, 44 N. W. 482. Joyce Defenses — 30. NeiD Hampshire. — National State Capitol Bank v. Noyes, 62 N. H. 35. Neio York. — American Exchange Nat. Bank v. New York Belting & Packing Co., 148 N. Y. 698, 43 N. E. 168 (in substitution for other notes is holder for value of substituted notes); Brookman v. Metcalf, 32 N. Y. 591; aff'g 5 Bosw. (N. Y.) 429; Bank v. Vanderhorst, 32 N. Y. 553, aff'g 1 Rob. (N. Y.) 211; Atlantic National Bank v. Franklin, 64 Barb. (N. Y.) 449, 453; Crook v. Mali, 11 Barb. (N. Y.) 205; Williams v. Smith, 2 Hill (N. Y.) 301 (future indebtedness) ; Scott v. Johnson, 5 Bosw. (N. Y.) 213; Ogden v. Andre, 4 Bosw. (N. Y.) 583; Watson v. Cabot Bank, 5 Sandf. (N. Y.) 423; Pearce & Miller Eng. Co. v. Brouer, 10 Misc. (N. Y.) 502, 31 N. Y. Supp. 195 (bona fide holder to extent of loan); Irving Nat. Bank v. Duryea, 1 City Ct. R. (N. Y.) 317. Pennsylvania. — Miller v. Pollock, 99 Pa. St. 202 (holding that where negotiable notes are indorsed over as collateral security for other notes then and there discounted by the indorsee for the indorser, on the faith and credit of the notes in- dorsed as collateral, the indorsee of said notes is to be regarded as a purchaser for value) ; Smith v. Hogeland, 78 Pa, St. 252; Housum V. Rogers, 40 Pa. St. 190; Work v. Kase, 34 Pa. St. 138; Munn v. Mc- Donald, 10 Watts (Pa.) 270. Rhode Island. — Trafford v. Hall, 7 R. I. 104, 82 Am. Dec. 580. South Carolina. — M c C r a d y v. Jones, 36 S. C. 136, 15 S. E. 430. Tennessee. — Memphis Bethel v. Bank, 101 Tenn. 130, 45 S. W. 1072; 560] COLLATERAL SECURITY. 46S a pre-existing debt, or a further credit, or a change of securities of a pre-existing debt, or the like, the assignee of such collateral will be protected from infirmities affecting the instrument before it was trans- ferred.^* So it is declared in an Alabama case that "where one hon- estly receives a negotiable bill or note before maturity as collateral security for a debt contracted simultaneously or in pursuance of a previous agreement made at the time the debt was contracted, it is quite well settled that he is entitled to protection against secret equities or defects of which he had no notice. "^^ § 360. Same Subject — Instances. — When a bank in good faith and before maturity advances money upon municipal coupon bonds, and their negotiability is not rescinded and there are no circumstances necessitating inquiry, such pledgee may assert a special property there- in to the extent that they stand as security for the moneys loaned. ^^ So where a bank has been accustomed to make loans to a customer and to take promissory notes as collateral security, the fact that it has permitted him to draw upon moneys paid in upon maturing collater- ally upon depositing other collaterals to take their place, is no proof that the bank is not the bona fide holder of a collateral note so taken Gosling V. Griffin, 1 Pick. (Tenn.) 737, 3 S. W. 642; First National Bank v. Stockell, 1 Pick. (Tenn.) 252, 21 S. W. 523. Texas. — Kauffman & Runge v. Robey, 60 Tex. 308, 48 Am. Rep. 261 (case of money advanced in addi- tion to pre-existing debt). Vermont. — Tarbell v. Sturtevant, 26 Vt. 513. Washington. — Peters v. Gay, 9 Wash. 383, 37 Pac. 325. Wisconsin. — Curtis v. Mohr, 18 Wis. 615; Lyon v. Ewings, 17 Wis. 61; Crosley v. Roub, 16 Wis. 616; Bond v. Wiltse, 12 Wis. 611. United States. — Black v. Reno, 59 Fed. 917; Doane v. King, 30 Fed. 106. England. — Foster v. Pearson, 1 Cromp. M. & R. 849, 5 Tyrw. 255. See: Louisiana. — McPherson v. Boud- reau, 48 La. Ann. 431, 19 So. 550. North Dakota. — Security Bank v. Kingsland, 5 N. D. 263, 65 N. W. 697 (sub-pledgee). Vermont. — Pinney v. Kimpton, 46 Vt. 80. Contra, see Williams v. Little, 11 N. H. 66. As to illegality being defense to a note so taken, see Caswell v. Rail- road Co., 50 Ga. 70. ^ Roxborough v. Messick, 6 Ohio St. 448, 453, 67 Am. Dec. 346, per Swan, J. =^ Miller & Co. v. Boykin, 70 Ala. 469, 477, citing 1 Parsons' Bills & Notes, 219; Watts v. Burnett, 56 Ala. 340; Coleman v. Smith, 55 Ala. 368. '^Manhattan Sav. Inst. v. New York Nat'l Exch. Bk., 170 N. Y. 58. 88 Am. St. Rep. 147, 59 N. Y. Supp. 51, aff'g 53 App. Div. 635. i 467 AGREEMENTS AND CONDITIONS. [§ 361 before maturity ; although such may not be the bank's method of doing business with its other customers. ^^ And where one of the notes of defendant was pledged by his bank with a clearing house committee to secure the daily balance, and the bank failed, the committee was held to be holder of the note for value and that he could apply it in payment of additional loans.^^ So an agreement to forbear action on a pre-existing indebtedness founded on a consideration of a delivery of the security makes the holder a bona fide holder for value.^** § 361. Agreements and conditions. — A holder and a party to a note cannot defend upon the ground that the note was payable, under a contemporaneous parol agreement, out of a surplus of certain assets from goods pledged to secure the payor, it appearing that the assets were less than the debt.*** And where a note with others has been de- livered to secure plaintiff as to the payee's indebtedness, the writing evidencing such fact cannot be varied by parol proof of different con- ditions.*^ It is also decided, in an action by the payee against the maker, that it cannot be shown by parol that the note was conditional or delivered as a pledge or collateral security for the performance of a parol agreement.'*- But if a note is given as collateral security for a certain agreement, after the expiration of the time in which the note is payable, and after its breach by the maker, he is liable thereon, he having received advances for the amount of the paper. '^^ Where, how- ever, a note is deposited by one party in the hands of a third person as collateral security on a contract to secure its fulfillment, the other party to the contract has no right to bring suit upon such note merely for his fulfillment of th^ contract so long as it is not agreed that the note shall be liquidated damages for non-performance, and the dam- ages have not been determined in a suit on the contract.''* And where a contract between the transferor and transferee of a demand note does not show that the note was held as collateral security but appears to be an absolute transfer with a conditional guaranty, the transferee is not subject to the defense of failure of consideration.*^ ^' Mahaska Bank v. Crist, 87 Iowa ''' Hardie v. Wright, 83 Tex. 345, 415, 54 N. W. 450. 18 S. W. 615. '^Philler v. Jewett & Co., 166 Pa. ^= Walker v. Crawford, 56 111. 444. St. 456, 31 Atl. 204. ■*■ Costelo v. Crowell, 134 Mass. "'Milins v. Kauffmann, 104 App. 280. Div. 442, 93 N. Y. Supp. 669. " Rumney v. Coville, 51 Mich. 186, "Guy v. Bibend, 41 Cal. 322. 16 N. W. 372. « Sawyer v. Phaley, 33 Vt. 69. §§ 362, 363] COLLATERAL SECURITY. 468 § 362. Same subject. — Although the pledgor fraudulently sup- presses certain facts as a means to obtain the indorsement, and the in- dorsee or pledgee had no knowledge thereof, he can recover notwith- standing he failed to make inquiries.*® And even though a note is entrusted to one upon condition and in violation thereof and without authority he transfers it to another in payment or as security for a , debt, the transferee without notice is protected as a bona fide holder for value.*^ Again, under a "syndicate" and '^bondholder's" agreement a certain amount was agreed to be loaned as specified, secured by notes. The terms of the notes were to control the times of payment subject to certain contingencies, certain bonds were attached as collateral, but the notes were the principal obligations and the bonds merely incidents in the nature of security for their payments. The defendant had the privilege of substituting as collateral for the notes a certain new and contemplated issue of bonds ; such new bonds, however, were not issued so that any covenant of the syndicate concerning them ever became the subject of default on the part of the plaintiffs. There was therefore no breach of condition or duty by the plaintiffs and no default by them which precluded enforcing the obligations owned by them and no rea- son why they should be held liable to defendants. Under a clause in the "syndicate" agreement in the event of the non-purchase of a cer- tain waterworks system and non-payment of defendant's note then the syndicate was to act as a unit for their miitual interests. The pur- chase not being made, the defendants urged that the loans could be enforced by the syndicate only after all the members thereof had voted to enforce them. It was held that the syndicate agreement was no bar to the action on the notes and was immaterial as a matter of de- fense.*^ § 363. Security for the performance of illegal contract. — It is a good defense to an action by an indorsee against the indorser of a note, indorsed for the accommodation of the maker, that the indorsee re- ceived the note as security for the performance of an illegal contract between him and the maker.*'' ^»Lee V. Whitney, 149 Mass. 447, 21 N. E. 948. " National Bank of St. Joseph v. Dakin, 54 Kan. 656, 45 Am. St. Rep. 299, 39 Pac. 180. *' CofSn V. President &c. of Grand Rapids Hydraulic Co., 18 N. Y. Supp. 783, aff'd. 136 N. Y. 655, 32 N. E. 1076. *" Dunscombe v. Bunker, 2 Mete. (Mass.) 8; Weimer v. Shelton, 7 Mo. 237. 469 NOTE SECURED BY MORTGAGE, [§§ 3G4, 365 § 364. ITote secured by mortgage — Mortgagee against maker — Surety. — Where ordinarily a mortgagee cannot sue and obtain judg- ment on a note secured by collateral mortgage, except by foreclosure of the mortgage, if he, by his own act or neglect, deprives himself of the right to foreclose the mortgage, he at the same time precludes him- self from a right of action upon the note. He will not be permitted, without the consent of the mortgagor, to release the mortgage in order to sue upon the note^. He cannot waive the security and bring an action on the indebtedness.^*' In another case a mortgagee consented to the sale of the mortgaged property by the mortgagor, with the understand- ing between the mortgagee and the mortgagor and the purchaser that the purchaser should give his note to the mortgagor, with a given person thereon as surety for the purchase price of the property ; that the mortgagor should indorse the note to the mortgagee, and that upon its payment it should be credited on the mortgage; and the sale was made, the note given and indorsed by the mortgagor to the mortgagee, in pursuance of such arrangement, the mortgagee taking the note be- fore maturity and without notice of any defects in the property sold, it was held that in suit brought by the mortgagee on the note against the maker and the surety, a failure of consideration could not be set up as a defense.^ ^ § 365. Note secured by mortgage or other instrument — ^Bona fide holder — Pledgee. — It is held that the assignee of mortgages or other securities collateral to negotiable paper takes the collateral subject to defenses* in a court of equity, although the paper secured is not sub- ject to defenses at law.^^ And as against a purchaser of a non-ne- "^"Hibernia Sav. & Loan Soc. v. him); Bryant v. Vix, 83 111. 11 (ex- Thornton, 109 Cal. 427, 50 Am. St. emption as to innocent holder does Rep. 52 and note, 42 Pac. 447. not attach to mortgage given to se- Examine Savings Bank of San cure payment of note) ; Haskell v. Diego County v. Central Market Co., Brown, 65 111. 29; White v. Suther- 122 Cal. 28, 35, 54 Pac. 273; Donald- land, 64 111. 181; Olds v. Cummings, son V. Grant, 15 Utah 231, 241, 49 31 111. 188. Pac. 779. Louisiana. — Securities Co. v. Tal- " Graham v. Cambell, 105 Ga. 839, bert, 49 La. Ann. 1393, 22 So. 762; 32 S. E. 118. Butler v. Slocomb, 33 La. Ann. 170; '^■Illinois. — Towner v. McClelland, Rouligny v. Fortier, 17 La. Ann. 110 111. 542; Miller v. Larned, 103 121. 111. 562 (holding also that rule does Massachusetts. — Bacon v. Abbott, not apply to one pledging a note se- 137 Mass. 397. cured by mortgage not payable to § 366] COLLATERAL SECURITY. 470 gotiable note and mortgage the equities of the maker against the payee are available against such purehaser.^^ It is also held to be no defense to an action on a note by the payee that the defendant delivered to a third person with the plaintiff's authority another note secured by chattel mortgage as security for the note in suit, and that such third person collected the collateral note by foreclosure where he had no au- thority from plaintiff to collect it.^* And it has been decided that in this respect there is no distinction between mortgages on realty and those on personal property, as the privileged character of negotiable paper does not extend to the mortgage by which it is secured,^ ^ al- though, it is held that the purchaser of negotiable notes secured by chattel mortgage may take free of defenses.^^ §366. Same subject. — In Wisconsin it is held that an ordinary promissory note secured by a real estate mortgage is negotiable, al- though it provides that on default in the payment of interest or on non-compliance with the conditions of the mortgage the whole prin- cipal shall, at the mortgagee's option, become due and payable. Such note and mortgage each relates to its ovm. subject-matter and does not interfere with the other, even though they form parts of the same transaction, and covenants and conditions in the mortgage are simply agreements for the preservation of the security and are not intended to qualify or affect, and do not enter into the promises of the note or change it, or affect its negotiability, so that a transferee, by in- dorsement before maturity, takes the note free from all equities.^^ Ohio. — Bailey v. Smith, 14 Ohio "Walker v. Thompson, 108 Mich. St. 396. 686, 2 Det. L. N. 987, 66 N. W. 584. South Carolina. — Dearman v. "St. Paul Co. v. Rudd, 102 Iowa Trimmier, 26 S. C. 506, 2 S. E. 501. 748, 71 N. W. 417. When no defense That the real assignee fraudu- generally, see also W^endlebone v. lently managed sale of property is Parks, 18 Iowa 546. a defense on a note secured by " Oster v. Mickley, 35 Minn. 245, mortgage. Howard v. Ames, 3 Mete. 28 N. W. 710. (44 Mass.) 308. "Myers v. Hazard, 50 Fed. 156. Assignee when not bona fide ^ Thorp v. Mindeman, 123 Wis. holder— mortgage. Nashville Trust 149, 101 N. W. 417, 68 L. R. A. 146. Co. V. Smythe, 94 Tenn. 513, 29 S. The court, at pp. 160-162, per Wins- W. 903, 27 L. R. A. 663. low, J., says: "While we have con- Where note secured by mortgage sidered this question as absolutely ■or deed of trust, purchaser not a settled "Sy the negotiable instru- iona fide holder. Humble v. Curtis, ments law, it must not be supposed 160 111. 193, 43 N. E. 749. that we have failed to examine and 471 NOTE SECURED BY MORTGAGE. [§ 366 But while the assignee of a note secured by mortgage may hold un- carefully consider the numerous cases cited by the appellants, mostly from western courts, as having some bearing upon this question. We have been unable to find that any of these cases really conflict with the general proposition laid down in the beginning, namely, the prop- osition that the ordinary provisions of a real estate mortgage requiring payment of taxes and other acts by the mortgagor for the preservation of the mortgaged property are not imported into the accompanying note simply because the papers are simultaneously executed as a part of the same transaction. A number of them are cases decided by the Kansas court of appeals, and are, in substance, to the effect that, where a bond or note in terms re- fers to the mortgage, and declares it to be 'a part of this contract,' and the mortgage contains cove- nants to pay taxes, insure, keep buildings in repair, and the like, and that the entire sum shall be- come due in case of default in any of such agreements, this renders the bond or note non-negotiable. Such are the cases of Lockrow v. Cline, 4 Kan. App. 716, 46 Pac. 720; Chap- man v. Steiner, 5 Kan. App. 326, 48 Pac. 607, and Wistrand v. Parker, 7 Kan. App. 562, 52 Pac. 59. It goes without saying that such cases have no bearing on the present case, be- cause here there is no clause in the note making the mortgage a part thereof, or adopting its provisions, except the provision authorizing the whole amount to be declared due upon certain contingencies. An- other line of cases from Nebraska holds that where a mortgage pro- vides that the mortgagor shall pay the taxes levied on the mortgagee for or on account of the mortgage, this agreement destroys the nego- tiability of the note, because it ren- ders the amount uncertain. Garnett V. Meyers (Neb.), 94 N. W. 803; Consterdine v. Moore (Neb.), 96 N. W. 1021; Allen v. Dunn (Neb.), 99 N. W. 680. Such seems also to be the effect of the case of Brooks v. Struthers, 110 Mich. 562, 68 N. W. 272. Without stopping to consider whether these decisions should be approved or not, it is enough to say that they are not at all in conflict with the present decision. The agreement to pay taxes was to pay taxes which might be levied on the mortgagee, not the taxes on the mortgaged property; hence the agreement had no connection with the preservation of the security, and was construed by the courts as an agreement to pay an indefinite sum as a part of the note. In the cases of Donaldson v. Grant, 15 Utah 231, 49 Pac. 779, and Gilbert v. Nelson, 5 Kan. App. 528, 48 Pac. 207, notes containing stipulations very similar to those found in the present case are pronounced negotiable upon what seems to us very unsatisfac- tory reasoning, which we feel no inclination to follow, especially in view of the positive provisions of our Negotiable Instruments Law be- fore cited. The cases of Dilley v. Van Vie, 6 Wis. 209, and Elmore v. Hoffman, 6 Wis. 68, are also cited as sustaining appellants' contention, but it is evident that they do not. In the Dilley case the note con- tained an express clause subjecting it to the provisions of another I § 366] COLLATERAL SECUEITY. 47^ affected by equities,^^ yet he is not a bona fide holder, as between him- self and a prior assignee, where he became the purchaser of one or- more of a series of mortgage notes transferred with a preference lien contract.^® Where, however, a bank in good faith takes a transfer of a certificate as security for money loaned at the time it acquires a title to the certificate as against the plaintiff as security for the money so loaned upon repayment of the money and interest, the bank would be obligated to return the certificate to the party entitled. The doc- trine of estoppel also applies to preclude the real owner from asserting his title against a bona fide purchaser from one upon whom the plain- tiff has conferred apparent ownership of a non-negotiable chose in action and apparent absolute authority to convey.'''^ Again, it is con- sidered in certain jurisdictions that the collateral is not only negoti- able but is free from equities existing in behalf of the mortgagor.®^ agreement, made on the same day, by which, it appeared that the pay- ment was subject to certain equi- ties between the parties. The clause was rightly held to deprive the pa- per of its negotiable character. In the Elmore case it was held that a collateral agreement made between the parties contemporaneously v/ith a note, by which the payee agreed to give day of payment on the note till the happening of a certain named contingency, was admissible In evidence to defeat an action on the note in the hands of one who purchased the note with notice of the contemporaneous agreement. We hold, therefore, that under the present Negotiable Instruments Law the note in the present case is ne- gotiable, and in so holding it is evi- dent that the cases of Continental Nat. Bank v. McGeoch, 73 Wis. 332, 41 N. W. 409, and W. W. Kimball Co. V. Mellow, 80 Wis. 133, 48 N. W. 1100, are overruled so far, at least, as they hold that such agreements create an uncertainty in the time of payment." Examine § 368 herein. ^ When one is a bona fide holder of negotiable note secured by mort- gage, see Humble v. Curtis, 160 111. 193, 43 N. E. 749; Christianson v. Farmers' Warehouse Assn., 5 N. D. 438, 32 L. R. A. 730, 67 N. W. 300. >>' Nashville Trust Co. v. Smythe, 10 Pick. (94 Tenn.) 513, 29 S. W. 903. °° Moore v. Metropolitan Nat. Bank, 55 N. Y. 41, 44-46. "^ Alabama. — Thompson v. Mad- dux, — Ala. — , 23 So. 157; Hart v. Adler, 109 Ala. 467, 19 So. 894; Spence v. Railway Co., 79 Ala. 576. Indiatia. — Gabbert v. Schwartz, 69 Ind. 450. Michigan. — Cox v. Cayan (Mich.), 76 N. W. 96; Barnum v. Phenix, 60 Mich. 388, 27 N. W. 577; Helmer v. Krolick, 36 Mich. 371. Missouri. — Borgess Inv. Co. v. Vette, 142 Mo. 560, 44 S. W. 754; First Nat. Bank of Mauch Chunk V. Rohrer, 138 Mo. 369, 39 S. W. 1047; Maj^es v. Robinson, 93 Mo. 114, 5 S. W. 611; Hagerman v. Sutton, 91 Mo. 519, 4 S. W. 73. New York. — Gould v. March, 1 Hun (N. Y.) 566. United States. — Carpenter v. Long- an, 16 Wall (U. S.) 271; Swett v. 473 NOTE SECURED BY MORTGAGE. [§ 367 So the terms of a contract or agreement may be such that the holder in pledge of a note and mortgage will be a bona fide holder for value with the rights and privileges thereof. ''^ § 367. Same subject — Knowledge or notice. — In a Nebraska case it is decided that while a note otherwise negotialjle is not rendered non-negotiable merely by a provision for or reference to collateral se- curity, still when executed together and as part of one transaction, a note and a mortgage securing it are to he construed together, and as one instrument ; so that provisions as to the terms and manner of pay- ment contained in the iportgage may be such as to make the note non- negotiable as to all persons chargeable with notice thereof; and, al- though the note does not refer to the mortgage, indorsees who take with notice of its provisions are bound thereby, as where the plaintiff obtained the mortgage at the same time he acquired the note.*^^ So Stark, 31 Fed. 858 (declining to fol- low the rule of the state courts in an Illinois case). "Connecticut Trust & Safe De- posit Co. v. Fletcher, 61 Neb. 166, 172, 85 N. W. 59, Nerval, C. J., said: "The contract between the loan company and the trust company, • * * made the trust company the holder for the mortgage and note in trust as security for the payment of the debenture bonds of the loan company. The note and mortgage being held in pledge, that fact entitled the holder, the trust company, to all rights and privi- leges of a holder for value before maturity. Koehler v. Dodge, 31 Neb. 328. It is also doubtless true that a transfer of collateral security may be made to a third party as trustee by agreement. City Bank V. Perkins, 29 N. Y. 554. But it is claimed by defendant that because the agreement between the two com- panies obligated the loan company, if the note and mortgage were not paid at maturity, to take them up and substitute others in their place, the transfer was conditional, and for that reason it could not be con- sidered a holder for value. We can- not so conclude from that fact. The condition was not complied with and the trust company was entitled to hold the papers and to proceed to collect the debt from the mort- gagor, exactly as it would have been entitled to collect any note held as collateral security, if the loan se- cured by them was not paid. Hence we cannot reach the conclusion that the condition was such as to make the trust company any less a holder for value than would be the holder of any paper held as collateral se- curity. The evidence fails to show any act or agreement on the part of the trust company from which a legal conclusion can be reached, that either the loan company or Foss was its agent to collect the principal of this note. The prior foreclosure was not a bar to this suit. Todd v. Cromer, 36 Neb. 430." "^ Roblee V. Union Stockyards Nat. Bk. (Neb., 1903), 95 N. W. 61, citing on the first point, Fleckner v. United States Bk., 8 Wheat. (21 U. S.) 338, 5 L. Ed. 631; Knipper v. 368] COLLATERAL SECURITY. 474 under another decision in that state a note and a mortgage executed at the same time and as part of the same transaction will be con- strued together and the purchaser of the note and the mortgage will he charged with knowledge of the contents of the mortgage, and such a note being non-negotiable the holder or transferee is in no better position than the payee in the note.®* But where a note and mortgage were deposited as collateral security for an indorsee's debt, said in- dorsee being the husband of the maker, the fact that the pledgee had knowledge of the character of the note as accommodation paper and that the indorsement was without consideration, will not help a de- fendant who had also indorsed said note for accommodation.®^ § 368. Transferee of note and mortgage — Payment of or collateral security for pre-existing debt. — It is held that a transferee of a note and mortgage in payment of pre-existing debt takes free of defenses,®" and of collateral vendor's liens.® '^ It is also declared that "the ques- tion whether a mortgagee, in a mortgage given for the security of a pre-existing debt, is to be regarded as a purchaser for a valuable con- sideration, has been decided differently by different courts."®^ But where a note and mortgage given to secure a payment of part of the Chase, 7 Iowa 145; Towne v. Rice, 122 Mass. 67; Blumenthal v. Jassoy, 29 Minn. 177, 12 N. W. 517; Stark V. Olsen, 44 Neb. 646, 63 N. W. 37; Dobbins v. Oberman, 17 Neb. 163, 22 N. W. 356; Heard v. Dubuque County Bk., 8 Neb. 10, 30 Am. Rep. 811. Citing to the second point, Lincoln Nat. Bk. v. Perry, 66 Fed. 887, 14 C. C. A. 273; Phelps v. May- ers, 126 Cal. 549, 58 Pac. 1048; Wood V. Ridgeville College, 114 Ind. 320, 16 N. E. 619; Muzzy v. Knight, 8 Kan. 456; Cabbell y. Knote, 2 Kan. App. 68, 43 Pac. 309; American Exch. Bk. v. Blanchard, 7 Allen (89 Mass.) 333; Goodenow v. Curtis, 18 Mich. 298; Brownlee v. Arnold, 60 Mo. 79; Edling v. Bradford, 30 Neb. 593, 46 N. W. 836; Hill v. Huntress, 43 N. H. 480; Berry v. Wisdom, 3 Ohio St. 241; Continental Nat. Bk. v. Wells, 73 Wis. 332, 41 N. W. 409. See also Garnett v. Myers (Neb., 1903), 94 N. W. 803, rev'g 91 N. W. 400. Where note transferred as inde- pendent instrument, purchaser is put on guard. Haskell v. Brown, 65 111. 29. •^ Allen V. Dunn (Neb., 1904), 99 N. W. 680. '^ German American Saving Bank V. Burlington & Hanna (Iowa, 1904), 100 N. W. 56, 59, relying upon Iowa State Bank v. Mason Hand Lathe Co., — Iowa — ■, 90 N. W. 612. «» Bailey v. Seymour, 42 S. C. 322. 20 S. E. 62 (the question was as to estoppel by recital in a collateral mortgage). •"Pullen v. Ward, 60 Ark. 90, 28 S. W. 1084. «*Work v. Brayton, 5 Ind. 396, quoted in Straughan v. Fairchild, 80 Ind. 598, 600. I 475 RECEIVIXG OR SURRENDERING COLLATERAL. [§ 369 purchase price of a tract of land, are assigned as collateral security for a lesser debt, without notice to the assignees of a guaranty by the mortgagee that the land will cut a certain amount of timber, and of his agreement to refund a thousand feet for all shortage, the assignees will be protected as hona fide holders of the securities as against any claim under the guaranty to the amount of their debt only.''^ § 369. Receiving or surrendering collateral — Exhausting collat- eral. — It is decided that the fact, that as appears on the face of a note, collateral security was given for its payment, does not destroy negotia- bility. The giving of such collateral in no wise interferes with the necessary characteristics of the instrument as a promissory note. The promise to pay is still certain and for a certain amount.'^" Nor are the rights of the holder of a negotiable note, taken in the usual course of business, before it was due, impaired by his holding collateral security for its payment.'^^ And the holder who transfers the note will not be discharged, although the indorsee takes security from the maker, and afterward surrenders it.^^ So if two partners give a joint bill of ex- change for a partnership demand and when the bill becomes due, the holder takes the separate bill of the one, the other is discharged.'^^ Nor is it any defense to a suit on a promissory note that the plaintiif holds the note of a third party as collateral security for the note sued on, and that the maker of the collateral note is solvent and the collateral of greater value than the amount due on the note in suit. Such a creditor cannot be compelled to exhaust the collateral security as a condition precedent to suing the debtor on his note.'^'* Again, if land is conveyed to the payee to secure a note, and he gives his bond pro- viding for a reconveyance upon payment of the note, and the payee devised the land without specifying that the note was to be discharged thereby and the intent to have such devise operate as a release or ex- tinguishment of the debt was not apparent from the words of the will, still extrinsic evidence to show such intent was admitted in connec- tion with the surrounding: circumstances and it was held that the debt "Anderson v. Bank, 98 Mich. 543, "Pitts v. Congdon, 2 N. Y. 352. 57 N. W. 808. " Evans v. Drummond, 4 Esp. 89, '" Mumford V. Tolman, 54 111. App. 91. 471, 478. '* Carson v. Buckstaff, 57 Neb. 262. See § 366 herein. 77 N. W. 670, 16 Bkg. L. J. 103. "Bank of Woodstock v. Kent, 15 N. H. 579. I 369] COLLATERAL SECURITY. 47& I was discharged.'^^ So where shares of stock are given as collateral se- curity, and there is no request by defendant that they should be sold, the plaintiff is not obligated to sell, even though, if sold within a reasonable time after maturity of the note, they would have been suffi- cient to pay the note, and such non-sale does not preclude a recovery.''' And in equity if the holder surrenders collateral to the principal .debtor it will discharge the surety to the amount of property surrendered, where such property given as pledge or security for the debt is parted with against the will of the surety or without his knowledge.'''^ It may also operate to discharge the indorser of another collateral note, whose indorsement was obtained by fraudJ^ ^Holmes v. Holmes, 36 Vt. 525. "Wood Sons Co. v. Schaefer, 173 Mass. 443, 445, 53 N. E. 881. " Kirkpatrick v. Howk, 80 111. 122. ^'Haas V. Bank, 41 Neb. 754, 60 N. W. 85. In this case the Bank of O. Indorsed to the Bank of C. cer- tain promissory" notes as collateral security for an indebtedness in- curred in favor of the Bank of C. Among these was a note of H., upon which suit was brought. H. claimed that the note had been procured from him by the Bank of O. by fraud, and the evidence tended to prove that fact. It was decided: (1) That In the action upon the note H. could not require the Bank of C. to first exhaust its other col- lateral; (2) that the fraud being established, the Bank of C. was only entitled to recover to the extent of the unpaid portion of the indebted- ness for which the note was pledged; (3) the Bank of C, having surrendered one of the collateral notes and taken in exchange other notes, secured by mortgage, drawn to the order of itself, it was bound to account as if the original note had been paid in full. The court, per Irvine, C, said: That it was "well established that a creditor holding two or more securities for the same debt may proceed to en- force either or all of them, and will not, as a general proposition, be re- quired to proceed in any particular order. * * * 'a surety cannot compel the holder to proceed against others before proceeding against himself, and exhaust such other remedies as he may have (quot- ing from Proul v. Dorner, 79 111. 331). * * * There is very re- spectable authority to the effect that It is no defense to a note that it had been pledged with other se- curities equal in amount, which se- curities had been, by the pledgee, exchanged and ultimately found worthless, unless it were also shown that the exchange caused a loss to the owner of the collateral (Girard Fire and Marine Ins, Co. v. Marr, 46 Pa. St. 504); but we think that the weight of authority is to the effect that if a pledgee, without the consent of the debtor, renews or ex- tends a note pledged as collateral, or surrenders such note and takes new security, he must account to his debtor as if he had collected it in full (Gage v. Punchard, 6 Daly [N. Y.] 229; Nexsen v. Lyell, 5 Hill [N. Y.] 466; South wick v. Sax, 9 Wend. [N. Y.] 122; Depuy v. Clark, 12 Ind. 427). It is quite well set- n 477 PAPER GIVEX OR INDORSED FOR SPECIFIC PURPOSE. [§ 370 § 370. Paper given or indorsed for specific purpose — ^Principal and agent. — Although a principal may, under certain circumstances, be- come liable on negotiable paper where his agent has exceeded his au- thority, yet the rule has no application when the circumstances are such as necessarily j)ut the holder upon inquiry; as where the note was taken as security for a pre-existing debt and the holder knew that the principal had assigned all his property for the benefit of creditors and also that the note showed that it was issued Ijy the agent to him- self that it was used for his personal benefit, and in such case the holder being put upon inquiry was chargeable with the equities at- tached to the note.'^^ Again, if the maker who was also the payee and tied that where a note is valid as between the original parties, the pledgee may recover the whole amount of the note, retaining any surplus as trustee for the party ben- eficially entitled; but where the note is invalid as between the original parties, the pledgee may recover only the amount of his advances, provided there be no other party in interest (Wiffen v. Roberts, 1 Esp. [Eng.] 261; Allaire v. Hartshorne, 21 N. J, Law 665; Chicopee Bank v. Chapin, 49 Mass. 40; Union Nat. Bank v. Roberts, 45 Wis. 373)." " Randall v. Rhode Island Lum- ber Co., 20 R. I. 625, 40 Atl. 763, the court (at p. 628), per Stiness, J., said: "The plaintiff knew that, both at the date of the note and at the time of the transfer to him, all of the property of the company was in the hands of an assignee for the benefit of creditors. It could not have had assets in its hands with which to make payment, and the testimony shows that it did not have any. The plaintiff, as a business man engaged in banking, must have known that under such circum- stances negotiable paper could not be issued in the ordinary course of business. The company was not in condition to do ordinary business. The plaintiff testified that he knew the business of the company had stopped; but it appears that in Feb- ruary, 1894, without assets, stock or supplies, except what was in the hands of the assignee, business had been resumed, in a small way, in the company's name. The fact, how- ever, that the plaintiff knew that all the assets of the company were in the hands of an assignee was suf- ficient to put him upon inquiry. Moreover, the note showed that it was issued by the treasurer to him- self, which has been held to be enough to put a holder upon inquiry as to the authority to issue it, when it is used for the personal benefit of the agent. Chemical Bank v. Wagner, 93 Ky. 525; West Bank v. Shawnee Bank, 95 U. S. 557; Wilson V. Metropolitan R. R. Co., 120 N. Y. 145; Claflin v. Farmers Bank, 25 N. Y. 293. The principle of these cases, and many others which might be cited to the same effect, is that the paper shows upon its face that the agent, in making it, is dealing with himself, and the holder knows that the agent is not using the pa- per in the ordinary course of busi- ness to pay a debt of the principal, but for the agent's own debt, and hence that the holder is bound to §§ 371-373] COLLATERAL SECURITY. 478 pledgor of certain notes secured to the pledgee by a deed of trust is entrusted with such notes for a specific purpose, but violates the con- fidence imposed and assigns said notes before maturity as collateral security for a bona fide debt, the latter transferree holds bona fide as against secret equities of the pledgee.^" So where an indorsee receives notes as collateral for money due and some of the notes are past due when taken by said holder, the defense is available as to the payee and the first indorser that such notes were indorsed in blank for collection only and delivered to the indorsee without authority to otherwise use them.^^ This subject is, however, more fully considered in another chapter.^^ § 371. Defenses subsequent to indorsement — Bona fide holders. Equities existing between the original parties to a promissory note, which originated subsequent to the indorsement thereof to the holder as collateral security, are not available by the maker in an action by the indorsee on the note.^^ § 372. Transferee after maturity — Pledgee. — The rule that the transferee of negotiable paper after maturity acquires nothing but the actual right and title of the transferor and takes the paper subject to equities between the maker and the payee has no application to an in- dorsee who takes the paper from the pledgee after it is due, without actual notice of equities or that the note was held merely as collateral between the payee and his pledgee.^* And if a note is indorsed as col- lateral security for a precedent indebtedness by the payee to the in- dorsee after maturity, it is not subject to the plea of failure of con- sideration in favor of the maker. ^^ § 373. Pledgor and pledgee — ^Laches, negligence or tortious acts — Statute limitations. — That a pledgee may become liable through his gross negligence or by his tortious dealings with the pledge where the pledgor is injured thereby and that the pledgee of negotiable paper inquire into the agent's authority. "See Chap. XVI, §§ 379-392 here- This is a sound and necessary prin- in. clple." " Becker v. Sandusky City Bank, »" First Nat. Bk. of Joliet v. Adam, 1 Minn. 311 (Gil. 243). 138 111. 483, 28 N. E. 955. ^' Young Men's Christian Ass'n " Mayfield Grocer Co. v. Andrew Gymnasium Co. v. Rockford Nat. Price & Co. (Tex. Civ. App., 1906), Bank, 179 111. 599, 54 N. E. 297. 95 S. W. 31. ^^'Rohde v. Lodge, 15 Tex. 446. 479 PKIORITY OF TRANSFER — RENEWALS. [§§ 374, 375 as collateral security is bound to use ordinary diligence in preserv- ing the legal validity of the pledge, and is answerable for a loss through a corresponding degree of negligence to the extent of such loss, are propositions well established.'^'^ It has been held also that where, by the negligence of the pledgee, the collection of collateral se- curities has been lost by operation of the statute of limitations, and such statutory defense has become perfect, the pledgor may, by a coun- terclaim, recover .the value of his collateral, even though it be not known that his debtor will, when sued on such collateral, plead the statute in defense. ^^ § 374. Priority of transfer ; different notes. — If a creditor, holding his debtor's note and also the note of another person as collateral, transfers them to different persons, after the notes are due, the rights of the transferees will depend on the priority of the transfers. A first transfer of the collateral operates to extinguish the original debt fro tanto, and the party taking a subsequent transfer of the original note takes it subject to a credit pro tanto. But, if the original note is first transferred, the collateral will follow it into whomsoever hands it passes, being subject in them to any defense the maker might have made in first hands.^^ § 375. Renewals — Continuance of security — Extinguishment of debt. — Where collateral to secure a note is placed in the hands of the creditor and the note is renewed at the same rate of interest with the same parties, the debt is the same and the collateral security remains as securing it.^^ So it is said in a Maryland decision that : "Wherever collateral security is given for the payment of a debt, the collateral will continue as a security until the debt is satisfied, unless both the parties to the original contract agree to its surrender or the pledgee in some other way discharges or releases it. If the debt be evidenced by «» Citing Coleb. Coll. Sec, § 114 377, 51 N. W. 162, 35 Am. St. Rep. and notes; Lamberton v. Windom, 313; McQueen's Appeal, 104 Pa. St. 12 Minn. 232 (Gil. 151), 90 Am. Dec. 595, 49 Am. Rep. 592; Miller v. 301; Jemison v. Parker, 7 Mich. 355; Bank, 8 Watts 192, 34 Am. Dec. 451, Griggs V. Day, 136 N. Y. 152, 32 N. note. E. 612, extended note, 32 Am. St. '^'Ware v. Russeli, 57 Ala. 43, 29 Rep. 718; Cal. Civ. Code, § 1714. Am. Rep. 710. "Hawley Bros. Hardware Co. v. ""Partridge v. Williams, 72 Ga. Brownstone (Cal. 1899), 56 Pac. 468, 807. citing Bank v. O'Connell, 84 Iowa § 375] COLLATERAL SECURITY. 480 a promissory note and upon the maturity of that note the parties in- tend by a renewal merely to extend the time for payment and nothing more, then a simple renewal so made will not extinguish the original debt.^° The same debt will still remain. Consequently, the collateral pledged for it in the first instance will not be released where the re- newal transaction is, and was meant by both parties to be, a mere ex- tension of the time for payment.^ ^ It equally follows that the ex parte unexpressed intention of the pledgor that the collateral shall not apply to and secure a renewal which is, in fact, a mere extension of the time for payment, and not an extinguishment of the original debt, cannot defeat the right acquired by the pledgee under the contract made by both of them when the debt was created. The right so ac- quired is the right of a Ijona fide holder for value. ^- And it is a right to retain the collateral until the debt shall be paid or extinguished.'"'^ And in a Wisconsin case a note was indorsed in blank and had been de- posited with a person for safe keeping and he gave plaintiff the note as collateral security for borrowed money such pledgee receiving the same in good faith without knowledge of defects in the title of the pledgor. "When the note became due the other collaterals in the pledgee's hands were of sufficient value to discharge the indebtedness but it was not discharged. Thereafter the pledgor obtained other loans from the pledgee agreeing that all collaterals in the latter's hands should remain as security for the last as well as for the preceding loans. Subsequently the makers paid the pledgor the amount of the note and took his receipt upon his claim that the note had been mis- laid and that he would send it wdien found. The pledgor became in- solvent and the collaterals were insufficient to satisfy his indebtedness to the pledgee. It was decided that the latter might apply the other collaterals • to the payment of the second loan and Tiold the note in question to secure the first for which it was pledged before its ma- turity.®* Under a Maine decision the defendant signed his name on the back of a note at its inception and before its negotiation by the payee, and his signature was above the indorsement of the payee, and the note was discounted by the plaintiff in the regular course of busi- ness for its customer, the payee, and without knowledge that the true '"Citing Flanagan v. Hambleton, "Williams v. National Bank of 54 Md. 222. Baltimore, 72 Md. 441, 20 Atl. 191. " Citing 3 Rand. Com. Pa., § 1371. "* Strong v. Bowes, 102 Wis. 542, '^^ Citing 1 Danl. Neg. Inst., § 824. 78 N. W. 921, a question of applica- tion of payments. 481 EXTENT OF RECOVERY — BONA FIDE HOLDER. [§ 376 facts and relations of the parties were othcnvisc than as disclosed hy the note itself. This note was a second renewal of a note of like tenor, • by the same parties and in the same order. Upon its maturity a re- newal note was executed except that it did not bear the name thereon of the defendant and the holder was requested to continue to hold the note as collateral security for the new note and it was held that the plaintiff could do this without thereby releasing the defendant from the liability which it had assumed as indicated by the note.^^ § 376. Extent of recovery — ^Bona fide holder. — Upon the question of the extent of recovery by a bona fide holder upon a note held by him as collateral security the general rule seems to be that his recovery is limited to the extent of the amount due on the debt, claim, advances, payments or loan made, and which it was intended to secure by such collateral.®'' So a party receiving negotiable paper as collateral secur- °= Merchants' Co. v. Jones, 95 Me. 335, 50 Atl. 48. "" Arkansas. — Brown v. Callaway, 41 Ark. 418 (may recover not ex- ceeding amount). Georgia. — Laster v. Stewart, 89 Ga. 181, 15 S. E. 42; Partridge v. Williams, 72 Ga. 807; Exchange Bank v. Butner & Edgeworth, 60 Ga. 654 (bona fide holder to extent of money loaned); Bealle v. Bank, 57 Ga. 274. Illinois. — Lull v. Stone, 37 111. 224. Indiana. — Valette v. Mason, 1 Ind. 288 (can only recover debt actually due). Iowa. — First National Bank v. Werst, 52 Iowa 684, 3 N. W. 711 (but this was an accommodation note in- dorsed after maturity). Louisiana. — Gardner v. Maxwell, 27 La. Ann. 561. Maine. — Smith v. Hiscock, 14 Me. 449. Massachusetts. — Stoddard v. Kim- ball, 6 Cush. (Mass.) 409; Chicopee Bank v. Chapin, 8 Mete. (Mass.) 40. Missouri. — International Bank v. Joyce Defenses — 31. German Bank, 71 Mo. 183, 36 Am. Rep. 408. Montana. — Yellowstone Nat. Bank of Billings v. Gagnon, 19 Mont. 402, 48 Pac. 762. Nebraska. — Barmby v. Wolfe, 44 Neb. 77, 62 N. W. 318. Nevada. — Haydon v. Nicoletti, 18 Nev. 290, 3 Pac. 473. New York. — Manhattan Sav. Inst, v. New York Nat. Exch. Bank, 170 N. Y. 58, 88 Am. St. Rep. 147, 59 N. Y. Supp. 51, aff'g 53 App. Div. 635 (to extent of security for advance) ; Mechanics', etc.. Bank v. Livings- ton, 4 Misc. (N. Y.) 257, 23 N. Y. Supp. 813 (but note was for accom- modation). North Carolina. — Kerr v. Cowen, 17 N. C. (2 Dev. Eq. 356) 356. Ohio. — Sutton v. Kautzman, 6 Ohio Dec. 910. Tennessee. — Memphis Bethel v. Bank, 101 Tenn. 130, 45 S. W. 1072 (to extent of amount justly due on debt secured). Texas. — Wright v. Hardie. 88 Tex. 653, 32 S. W. 885; Texas Banking & Insurance Co. v. Turnley, 61 Tex. 365. 376] COLLATERAL SECURITY. 482 ity is entitled to be protected as a hona fide holder to the same extent as one who becomes an absolute owner and may sue in his own name as the real party in interest. The only difference between the rights of an absolute bona fide owner for value and a bona fide holder as col- lateral security, as against the maker, is that the former may recover in full, and the latter, if there be equities, is restricted to the extent of his advances. ^^ Again the extent of recovery is held to be the amount of the original pledgee's debt to his transferee ; not otherwise paid or realized from other securities f^ or an amount only which is not beyond what will cover indorsements to be made and against which it was designed as security.^ ^ So the balance actually due from the payee to creditors, where he holds as collateral in trust for the payment of said debts, is the limit of recovery. 1°'' Eecovery is also limited to the extent of the advances made, coupled with interest, also with costs of suit where there is a judgment in case of a pledge by the payee of ac- commodation paper as collateral. And as against an assignee pur- chaser, of a judgment recovered' by the pledgee defenses and equities are available to limit a recovery to an amount not greater than as above stated."^ It is further determined that a pledgee in good faith and Wisconsin. — Union Nat. Bank v. Roberts, 45 Wis. 373; Stevens v. Campbell, 13 Wis. 375; Bond v. Wiltse, 12 Wis. 611. Examine Steere v. Benson, 2 111. App. 560. lovxi. — Mahaska County State Bk. V. Crist, 87 Iowa 415, 420, 54 N. W. 450. Kansas. — Claflin v. Rowlinson, 2 Kan. App. 82, 43 Pac. 304. Louisiana. — Mechanics' Building Assn. V. Ferguson, 29 La. Ann. 548; Citizens' Bank v. Payne, 18 La'. Ann. 222, 89 Am. Dec. 650. Nebraska. — Holmer v. Commercial Bank, 28 Neb. 474, 44 N. W. 482. New Jersey. — Allaire v. Hart- shorne, 21 N. J. Law 665, 47 Am. Dec. 175. New York. — Fourth Nat. Bank v. Snow, 3 Daly (N. Y.) 167; Pearce & Miller Eng. Co. v. Broner, 10 Misc. (N. Y.) 502, 31 N. Y. Supp. 195. Wisconsin. — Curtis v. Mohr, 18 Wis. 615; Watson v. Russell, 3 Best & S. 34; Wiffen v. Roberts, 1 Esp. 261. "" Hayden v. Nicoletti, 18 Neb. 290, 295, per Leonard, J. "s Kinney v. Kruse, 28 Wis. 183 (note here was put into circulation by fraud). "^ Williams v. Smith, 2 Hill (N. Y.) 301. ^'>'> California.— Bell v. Bean, 75 Cal. 86; Vauliew v. Mason, 1 Cart. (Ind.) 288; Valette v. Mason, 1 Smith (Ind.) 89. Massachusetts. — Williams v. Che- ney, 3 Gray (Mass.) 215. Minnesota. — St. Paul Nat. Bank v. Cannon, 46 Minn. 95. 48 N. W. 526. Missouri. — Crawford v. Spencer, 92 Mo. 498, 4 S. W. 713. Texas.— Wright v. Hardie, 88 Tex. 653, 32 S. W. 885. "» Blydenburgh v. Thayer, 3 Keyes (N. Y.) 293, 1 Abb. Dec. (N. Y.) 156, 1 Transcr. App. (N. Y.) 483 EXTENT OF RECOVERY — BONA FIDE HOLDER. [§ 370 for value of promissory notes transferred to him before maturity can prove them for their full amount against the assets in bankruptcy of the promisors, whatever may have been the equities between the prom- isors and the pledgor, but if there are such equities which would pre- vent the pledgor from proving, then the pledgee can receive in divi- dends only the amount for which he holds the notes in pledge, and where such a pledgee, after the bankruptcy of the promisors, settled with the pledgor who was insolvent, and in the arrangement took the notes as payment for a certain sum and the arrangement appeared to have been made in good faith, it was held that he might still prove for the face of the notes and receive dividends to the extent of the sum paid for them.^°^ A hona fide holder for value may, however, recover at least the amount actually paid or credited on the faith of the paper, although bad faith existed in obtaining the paper. ^°^ So the entire amount is recoverable when the note is pledged as security on an ad- vance of money equal thereto. ^*'^* Money overdrawn upon the pledge should, however, be excluded.^'** Notwithstanding the first stated rule it is also decided that as between the maker and the transferee from the payee the amount due when the note was given cannot be in- quired into.^"^ And if a negotiable note has been indorsed and trans- ferred, hona fld& before its maturity, as collateral security for a de- mand short of its nominal value, payment afterward by the maker to the payee cannot be given in evidence in an action thereon against the maker by the indorsee to reduce the amount of the judgment to the sum then actually due to him.^°^ Under other decisions the whole sum due on the note, even though it is in excess of the demand or face 221, 34 How. Pr. (N. Y.) 88. See »<» Mechanics' & Traders' Bank v. Mechanics' & Traders' Banlc v. Bar- Barnett, 27 La. Ann. 177. nett, 27 La. Ann. 177; Mechanics' & "" McCrady v. Jones, 36 S. C. 136, Traders' Banli v. Livingston, 4 Misc. 15 S. E. 430 (the syllabus in this Rep. 257, 23 N. Y. Supp. 813; Hole- case is: "Where A holds the legal man v. Hobson, 8 Humph. (Tenn.) title to land which is a security for 127; Wiffen v. Roberts, 1 Esp. 261. all indebtedness of B to him, and B But see Fowler v. Strickland, 107 gives his note for an amount due, Mass. 552. and this note is transferred by A to ^'"Ex parte Kelly, 1 Low (U. S. C, in action which involves a specific Dist. Mass.) 394, Fed. Cas. No. 7,681. performance between A and B, no •"'Beckhaus v. Commercial Nat. inquiry should be allowed as be- Bank, — Pa. — , 12 Atl. 72. tween B and C of the real amount "*'* Crooke & Fowkes v. Mali, 11 due when such note was given"). Barb. (N. Y.) 205. '"« Gowen v. Wentworth, 5 Shep. (17 Me.) 66. § 376] COLLATEEAL SECURITY. 484 of the note, may be recovered.^"'^ If, however, such recovery is had of the whole amount the surplus over and above the claim or amount due is, it is decided, held in trust for the parties entitled. ^°^ In Nebraska it is determined that if notes, accompanied by real estate mortgages by which the payments of the notes are secured, are pledged as col- lateral security for the payment of a debt and the mortgages are fore- closed by the pledgee, in actions to which the pledgor is not made a party, and the pledgee at the foreclosure sales purchases the properties, if it appear that such action was with the intent to acquire complete titles thereto, the pledgor may affirm the sales and demand credit on the principal debt for the amounts bid and expenses of the fore- closures, and if said sums in the aggregate exceed the debt may re- cover the excess."^ Again, if a person holding a note as collateral to a debt due him transfers it so that in legal presumption he receives a benefit therefrom, then, unless he regains it and has it ready to de- liver to the defendant, his recovery will be limited or defeated accord- ing as the paper transferred may be for a less or greater sum than the debt intended to be secured ; as the creditor who receives a note as col- lateral security and transfers it to another must be understood to have elected that mode of payment and have made the security a substitute for the debt.^^** So a note which is taken when overdue as collateral security for a smaller debt may be reduced by the amount of any pay- ment specially proven to have been made to the assignor or by the amount of a payment where the assignor had declared that the note ^"Tooke V. Newman, 75 111. 215; bers, 11 Rich. Law (S. C.) 657 (may Smith V. Isaacs, 23 La. Ann. 454 recover amount of note against par- (may recover the whole amount, ties liable when note taken, even notwithstanding equities between though he has not yet sustained maker and payee collateral security actual loss nor given credit to his holder stands the same as any inno- immediate debtor), cent third party holding negotiable "^ Exchange Bank v. Butner & paper); Gowen v. Wentworth, 5 Edgeworth, 60 Ga. 654; Tarbell v. Shep. (17 Me. 66, 69) (notwith- Sturtevant, 26 Vt. 513 (may recover standing the note pledged as col- whole amount, but holds the surplus lateral security was of greater value after payment of his claim as trustee than the amount of the liability first of the payee or his assignee). Saw- assumed the plaintiff has a right to yer v. Cutting, 23 Vt. 486 (may re- recover and receive in his own name cover full amount, although note the amount of the note (Story on was collateral security for payment Bailments, § 321) and he is not of less sum). limited to the sum for which it was "" Ross v. Barker, 58 Neb. 402, 78 pledged"); Berenbroick v. Stephens, N. W. 730. 8 Daly (N. Y.) 249; Bank v. Cham- ^i" Cocke v. Chaney, 14 Ala. 65, 67. 485 COLLATERAL SECURITY EOR PRE-EXISTING DEBT. [§ 37^ was paid.^^^ Under a Yermont decision if the payee himself paid the debt secured and received the note he cannot recover thereon, for his own benefit, no consideration having passed between said payee and the defendant, where they had consented to its transfer to a third person as collateral security.^^^ And a second assignee, to whom the note and mortgage are assigned by the mortgagee with notice of the guaranty has the right to pay the balance due the first assignees, and, on receiving an assignment from them and their securities, will be subrogated to their rights as a bona fide holder to the amount paid, but no further.^ ^^ § 377. Same subject — Collateral security for pre-existing- debt. — The extent to which a recovery may be had upon a note taken as col- lateral security for a pre-existing debt must necessarily rest largely upon the validity of such contract as against defenses and equities.^^* It is held, however, that paper so taken is valid in the bona fide in- dorsee's hands to the extent of his claim.^^^ '"Bound v. Fitzpatrick, 8 Gray (74 Mass.) 536. See First National Bank v. Werst, 52 Iowa 684, 3 N. W. 711 (purchaser can recover only so much of the debt as was unpaid). '^Sargeant v. Sargeant, 18 Vt. 371. "'Anderson v. Bank, 98 Mich. 543, 57 N. W. 808. "*See §§ 246-249, 353-355 herein. "° Yellowstone Bank v. Gagnon, 19 Mont. 402, 405-407, 48 Pac. 762, 61 Am. St. Rep. 520, 44 L. R. A. 243. In this case the court, per Hunt, J., quotes from and considers certain text-books as follows: "Daniel on Negotiable Instruments (§ 832a) ex- presses the rule in this language: 'When it appears that the bill or note was acquired by the holder as collateral security for a debt, and he is deemed entitled to recover upon it, he is still limited to the amount of the debt which it secures, if there be a valid defense against his trans- feror being regarded as, at all events, a bona fide holder, and en- titled to stand upon a better footing only pro tanto. Thus, such a holder could recover against an accommo- dation party no more than the con- sideration actually advanced, but, in the absence of proof, he will be deemed to have advanced the full amount of the paper.' * * * Cole- brooke on Collateral Securities (sec- tion 92) cites several * * * cases * * * * and deduces the following text from them: 'Where negotiable promissory notes, without consider- ation or subject to an equitable set- off, or, in cases of misappi-opriation, as between the makers and payees and indorsers thereof, and the col- lateral securities are of greater amount than the loan represented by the principal evidence of indebted- ness, the recovery of the pledgee against the makers upon an action thereon is limited to the amount of his advances. The pledgee in such cases of fraud is a holder for value of the collateral notes as against the makers of such paper, to the ex- § 378] COLLATERAL SECURITY. 486 § 378. Same subject — Accommodation paper. — In case a promis- sory note is executed without any consideration actually passing from' the maker to the payee, and as an accommodation to the payee for the express purpose of enabling the latter to pledge the same as collateral security for an anticipated indebtedness to a third person in pursu- ance of an agreement to that effect, the same in the hands of the latter can be realized upon against the maker to the extent of the secured indebtedness of the payee and pledgor and no further. ^^® So an ac- tent only of his interest at the time he acquires the title or has notice of the defenses to it.' This doctrine is also followed in Bank v. Barnett, 27 La. Ann. 177. * * * Tiedeman on Commercial Paper (section 304) states that where a pledge of a ne- gotiable note is made for the pur- pose of securing the payment of a debt, the better rule is that the pledgee can recover the whole of the face value of the note, and hold the balance over and above the amount of his own claim as a trustee for the pledgor. It would seem, therefore, as if he took a different view of the law from that taken by Daniel, al- though he expressly states in a sub- sequent part of his text that the pledgee in such a case is a bona fide holder only in respect to the amount of his claim against the pledgor; and, if there be a good defense to an action on the collateral by the pledgor, the recovery of the pledgee is limited to the amount of his claim against the pledgor. But we think that if the pledgee is to be regarded in such a case (as he undoubtedly should be) as a bona fide holder only to the amount of his claim against the pledgor, and if he be limited in his recovery to the amount of his claim, it is most reasonable that the controversy over the balance be liti- gated by those directly interested, and that ordinarily the pledgee is not to be held as a trustee for the pledgor. We are aware that there is a contradiction of opinion as to the attitude of the pledgee who seeks to recover the full amount of the col- lateral where such amount is in ex- cess of the debt secured to him; but we are content to adopt the rule sustained by the decisions already cited, which limit his recovery to the amount due to him. In addition to the cases above cited, we may in- clude Steere v. Benson, 2 111. App. 560, and Second Nat. Bank of Cin- cinnati V. Hemingway, 34 Ohio St. 381." The court also cites Valette V. Mason, 1 Smith (Ind.) 89 (which limits the recovery to the debt ac- tually due, if payment had been pre- viously made to the payee) ; Farm- ers' State Bank v. Blevins, 46 Kan. 536, 26 Pac. 1044 (holding that re- covery is limited to the amount of the pre-existing debt where there are equitable defenses against the transferor) ; Mechanics' & Traders' Bank v. Barnett, 27 La. Ann. 177 (which was an accommodation note) ; Maitland v. Citizens' National Bank of Baltimore, 40 Md. 540 (re- covery is amount due on debts) ; Fisher v. Fisher, 98 Mass. 303; Stoddard v. Kimball, 6 Cush. (60 Mass.) 469; Duncan v. Gilbert, 29 N. J. L. 521; Huff v. Wagner, 63 Barb. (N. Y.) 215; Williams v. Smith, 2 Hill (N. Y.) 301. "'Forstall v. Fussell, 50 La. Ann. 249. 23 So. 273. 487 COLLATERAL SECURITY FOR PRE-EXISTING DEBT. [§ 378 commodation party is held liable to an accommodation holder to the same extent as if that value were personally advanced to himself, and he cannot resist payment to a pledgee where the holder had been authorized to sell,"^ Again, where an accommodation note, held as collateral, is sold for the amount of the debt secured by it, the pur- chaser is limited to a recovery from the maker to the amount paid.^^* '"Matthews v. Rutherford, 7 La. "* First Nat. Bank v. Werst, 52 Ann. 225. Iowa 684, 3 N. W. 711. CHAPTER XVI. DIVERSION" AND FRAUDULENT TRANSFER. Sec. 379. As a defense generally. 380. Where paper is taken in ordi- nary course of business — Bona fide holders. 381. Same subject — Evidence — Bur- den of proof. 382. Same subject — Transfer in vio- lation of statute. 383. Accommodation paper — Bona fide holders. 384. Same subject continued. 385. Accommodation paper — Other holders. 386. Accommodation paper — Where purpose substantially effected or no restrictions imposed. Sec. 387. Negotiation of accommodation paper to party not contem- plated. 388. Same subject — Paper to be dis- counted at a particular bank. 389. Paper to be discounted at par- ticular bank continued — Rule illustrated. 390. Where transferred or applied as security for an antecedent debt. 391. Same subject continued. 392. Diversion of proceeds of paper. 393. Effect of waiver. § 379. As a defense generally. — A fraudulent transfer or diver- sion of negotiable paper will, as a general rule, be a good defense to an action thereon between the parties or by a holder with notice.^ So where one with whom a bill or note is deposited, to be kept for the depositor, fraudulently transfers the same, such fact may be shown as a defense to an action by one with notice thereof.- And a fraudulent diversion of negotiable paper by the principal will operate as a dis- charge of a surety where done without his knowledge. or consent.^ Such a defense may also be available against an assignee of non-nego- tiable paper.* So where a note not negotiable but designed for procur- ing a loan of money of the payee was signed by one as surety under an ' See subsequent sections in this And compare Smith v. First Na- chapter. tional Bank, 21 Ky. Law Rep. 953, = Marston v. Allen, 8 Mees. & W. 53 S. W. 648. 494. " Rawlings v. Fisher, 24 Ind. 52; ^ Johnston v. May, 76 Ind. 293. Weyman v. Perry, 42 S. C. 415, 20 S. See Hidden v. Bishop, 5 R. I. 29. E. 287. 488 i 489 PAPER TAKEN IN ORDINARY COURSE OF BUSINESS. [§ 380 agreement that a certain sum of the amount raised on the note should be applied by the maker in payment of a debt he owed the surety and the payee refused to discount the note, and the maker then let a third party have it under an agreement that he should indorse it and get it discounted, and apply the money so obtained upon a debt due him from the maker, and such third party, who took the note in ignorance of the agreement between the surety and maker, paid the note when protested against him, it was decided that he could not maintain an action against the surety in the name of the payee.^ An intention merely on the part of the payee to convert to his own use a note given to him for the benefit of another will, however, be no defense to an action against the maker, it appearing that the note was, in fact, not diverted, but used in accordance with the maker's intentions.® Again, where a fraudulent diversion of an instrument is relied on as a defense the facts constituting the alleged fraud should be pleaded, and an allegation that the instrument was wrongfully converted by a third person, with whom it was deposited, and fraudulently delivered to the plaintiff without the knowledge or assent of the defendants, states a mere conclusion of law and is demurrable.'^ § 380. Where paper is taken in ordinary course of business — ^Bona fide holders. — Where the maker or owner of negotiable paper entrusts it to another and puts it in the power of the latter to deceive a third ^ Farmers' & Mechanics' Bank v. sideration advanced in good faith at Hathaway, 36 Vt. 539. The court the time he took the note, nor in our said: "It is impossible for us to apprehension should he be regarded see upon what principle, either of as a holder unaffected with notice, law of equity, Adams can be held — for, as before said, the note im- to have immunity by virtue of re- ported that it was designed to be ceiving that note in that manner, used for obtaining a loan of money, against the real transaction and When therefore he took it of the agreement between the defendant principal maker to apply on an old and Osgood in and in pursuance of debt, we think he should be re- which the defendant signed the not© garded as assuming the peril of the as surety. Certainly no principle of perversion of the note from the pur- commercial or mercantile law can pose of it as shown by the instru- be invoked for such a purpose, for ment itself." Per Barrett, J. the transaction did not place Adams " Elias v. Finnegan, 37 Minn. 144, in the character and position, under 33 N. W. 330. that law, which would protect him ^Rogers v. Morton (N. Y. Sup. against equitable defenses by the Ct., Special Term, 1905), 95 N. Y. surety. He was not payee, nor in- Supp. 49. dorser, nor was he holder for a con- § 380] DIVERSION AND FRAUDULENT TRANSFER. 490 person he must bear the loss of any deception resulting from the power so conferred. This rule is based upon the principle that where one of two innocent persons must bear a loss he must bear it who has by his own act rendered such loss possible. Therefore, where negotiable paper comes into the hands of a person in the ordinary course of busi- ness, for a valuable consideration and without notice, he will be re- garded as a bona fide holder, and an action by him on the paper will not be subject to the defense that it was fraudulently transferred or diverted by the one to whom it was entrusted or delivered.^ Thus such a defense is not available in the case of an instrument indorsed in blank which comes into the possession of one in the ordinary course ^Indiana. — Stoner v. Brown, 18 Ind. 464. loiva. — Laub v. Rudd, 37 Iowa 617. Kansas. — National Bank v. Dakin, 54 Kan. 656, 39 Pac. 180, 45 Am. St. R. 299. Kentucky. — Barry v. Holderman, 6 J. J. Marsh. (Ky.) 471. Louisiana. — Cochrane v. Dicken- son, 40 La. Ann. 127, 3 So. 841. Maine. — Nutter v. Stover, 48 Me. 163. Massachusetts. — Scollans v. Rob- bins, 179 Mass. 346, 60 N. E. 983; White V. Duggan, 140 Mass. 18, 20, 2 N. E. 110; Sweetser v. French, 2 Cush. (Mass.) 309, 48 Am. Dec. 666. Michigan. — Birch v. Fisher, 51 Mich. 36, 16 N. W. 220. Minnesota. — Pence v. Arbuckle, 22 Minn. 417. Missouri. — American National Bk. V. Harrison Wire Co., 11 Mo. App. 446. New Hampshire. — Clement v. Leverett, 12 N. H. 317. New Jersey. — Halsted v. Colvin, 51 N. J. Eq. 387, 26 Atl. 928. New York. — Benjamin v. Rogers, 126 N. Y. 60; Wilson v. Roche, 58 N. Y. 642; McNeil v. Bank, 46 N. Y. 325, 7 Am. Rep. 341; Park Bank v. Watson, 42 N. Y. 490, 1 Am. Rep. 573; Woodhull v. Holmes, 10 Johns. (N. Y.) 231. Pennsylvania. — Burton's Appeal, 93 Pa. St. 214; Bardsley v. Delp, 88 Pa. St. 420; Long v. Rawn, 75 Pa. St. 128. Tennessee. — Merritt t. Duncan, 7 Heisk. (Tenn.) 156, 19 Am. Rep. 612. Texas. — Whittle v. Hide & Leather Bank, 7 Tex. Civ. App. 616, 26 S. W. 1011. Washington. — Peters v. Gay, 9 Wash. 383, 37 Pac. 325. Wisconsin. — Kinney v. Kruse, 28 Wis. 183. Federal.— Svfitt v. Smith, 102 U. S. 442, 26 L. Ed. 193. The words of the court in an Eng- lish case are pertinent in this con- nection: "Whilst courts of justice ought to repress all such dealings with bills as amount to mere swin- dling, the importance to a commer- cial country of a free circulation of bills ought not to be forgotten. A man who takes a bill cannot ascer- tain the intention of previous par- ties whose names appear on the bill." Per Pollock, C. B., in Barker V. Richards, 20 Law J. Exch. 135, 136. In case of stock certificates, see Trust Co. V. Gray, 12 App. D. C. 276, 287. 491 PAPER TAKEN IN" ORDINARY COURSE OF BUSINESS. [§ 380 of business with no notice or knowledge of any fact to put him upon inquiry or excite his suspicion. As is said in a case where this ques- tion arose : "All know that bank bills, treasury warrants, notes paya- ble to bearer, and bills and notes indorsed in blank, pass by mere delivery. Nor, when such paper is offered for payment or for sale, is the person receiving or purchasing it required to inquire as to the title of the holder unless he has notice or is put on inquiry. If he purchases in good faith the law will protect him. With all such paper possession is evidence of ownership, and the commercial value of such paper would be greatly impaired and its negotiability would be destroyed if the taker was required to investigate the title and to seek for latent equities before receiving it. But the law has imposed no such burden upon him until he has notice, or knowledge of facts which on inquiry would lead to notice."^ So where a note is indorsed with recourse by an agent of the payee and with the knowledge of the latter is left in the possession of the indorsee, who transfers it to a bona fide purchaser, the right of the purchaser to recover in an action against the payee cannot be defeated by such a defense.^" And this has also been declared to be the rule in the case of a non-negotiable note, upon the ground that, though the assignee of a chose in action can take no better title than that of his assignor, yet such doctrine is to be taken in connection with another, which is that the original owner ' Per Mr. Chief Justice Walker in went to the holder of the paper and Morris v. Preston, 93 111. 215, 221. had some conversation with him, in See also National Bank v. Dakin, which it appears it was admitted a 54 Kan. 656, 39 Pac. 180, 45 Am. St. mistake had been made and there R. 299. was something said about correcting "Andrews v. Butler, 46 III. App. it, but it was not done, and the note 183, wherein it was said by the in this condition was permitted to court: "It appears the indorsement remain in the hands of the pur- was actually written by one Hicks, chaser, who soon after traded it to who was the agent of Andrews for another, and he in turn traded it to collecting notes and claims due him. Butler. Butler bought on the It may be admitted that Hicks had strength of Andrew's indorsement, no specific authority to make this knowing the maker was not good, indorsement, yet we are inclined to and gave value for it in trade. An- think that Andrews, by his conduct drews, by his own act, after he knew after learning of the indorsement, the character of the indorsement, has estopped himself from making suffered the note to remain in that the defense. He insisted that the in- condition until it passed to a bona dorsement should have been without fide holder. He should not be al- recourse, and after hearing that it lowed to deny the indorsement." had been indorsed with recourse he Per Wall, J. § 381] DIVERSION AND FRAUDULENT TRANSFER. 493 may so act as to estop himself from asserting his rights.^^ Where, however, it appears that, though a person may be a hona fide holder, he has not paid full value therefor, it has been decided that the re- covery will be limited to the amount which he has actually paid with interest. ^^ And if a transferee, at the time of taking such paper, had knowledge or reasonable ground of suspicion to believe that the per- sons from whom he received the instrument had limited authority and had acted in fraud of the actual owner or diverted the paper from the purpose for which it was given, he will not be regarded as a bona fide holder. ^^ Nor will one be regarded as such a holder where he takes the paper without valuable consideration.^* §381. Same subject — Evidence — Burden of proof. — Where in an action upon a bill or note against the maker or indorser it is shown that the paper has been diverted from the purpose for which it was given the burden is then cast upon the plaintiff of showing that he is a hona fide holder or has succeeded to the rights of such a holder.^^ Thus in a case in West Virginia it is declared that : "It is the settled rule of commercial law that where a negotiable note is given for a specific purpose, is indorsed and used by the payee for an entirely dif- ferent purpose, without the knowledge or consent of the maker, the burden of proof is on the holder of such note to show that he received it in the ordinary course of business before maturity for a valuable consideration, and without notice of its misuse by the payee, before he can recover from the maker."^^ So in an action upon a promissory note it has been held error to sustain an objection to the admission of evidence showing that the note was executed by the defendants as makers without any consideration and for the purpose of taking up another note given as collateral security for the benefit of the payee, " Combes v. Chandler, 33 Ohio St. "^ Farmers' & Citizens' Bank v. 178. But see preceding section. Noxon, 45 N. Y. 762, 765; American 1 "Faulkner v. White, 33 Neb. 199, Exchange Nat. Bank v. New York 49 N. W. 1122; First National Bank Belting & P. Co., 74 Hun (N. Y.) v. Haulenbeck, 65 Hun (N. Y.) 54, 446, 6 N. Y. Supp. 822, aff'd, 148 N. 19 N. Y. Supp. 567. Y. 698; Davis v. Bartlett, 12 Ohio "Haynes v. Foster, 2 Cromp. & M. St. 584, 80 Am. Dec. 375; Smith v. 237. Popular Loan & Bldg. Ass'n, 93 Pa. ' " Theurer v. Schmidt, 10 La. Ann. St. 19. 293; Lincoln v. Fitch, 42 Me. 456; ^« Union Trust Co. v. McClellan, 40 Victor V. Bauer, 11 N. Y. St. R. 531; W. Va. 405, 411, 21 S. E. 1025. Per Carpenter v. National Bank of the Dent, J. Republic, 106 Pa. St. 170. 493 ACCOMMODATION PAPER — BONA FIDE HOLDER. [§§ 383, 383 and that he did not take up such note, the ground of the objection be- ing that it had not been shown that plaintiffs were not innocent holders for value, it being declared that if the offered proof had been made the burden would then rest on the plaintiffs to show that they were bona fide holders for value. ^^ § 382. Same subject — Transfer in violation of statute. — Where a note, deposited as collateral security with a person, has been trans- ferred by him to an innocent holder, an action by the latter against the maker or indorser cannot be defeated by the fact that such transfer was in violation of a statute making it a criminal offense to dispose of collateral security before the maturity of the debt secured, where there is nothing in the statute providing that the title of an innocent holder in such a case shall be affected by the fraudulent transfer.^^ § 383. Accommodation paper — Bona fide holder. — It is no defense to an action by a bona fide holder that there has been a misappropria- tion or fraudulent diversion or transfer of accommodation paper.^® " Nickerson v. Ruger, 76 N. Y. 279. "Gardner v. Gager, 1 Allen (Mass.) 502. The statute in this case provided that if any person who shall hold, any collateral se- curity, deposited with him for the payment of any debt which may be due to him, shall, before such debt shall have become due and payable, and without the authority of the party who shall have deposited with him such collateral security, sell, pledge, loan, or in any way dispose of the same, he shall be deemed to be guilty of a criminal offense and shall be punished by fine or im- prisonment. Mass. St. 1855. c. 213. ^^ Alabama. — Bunzel v. Maas, 116 Ala. 68, 22 So. 568. Connecticut. — Brush v. Scribner, 11 Conn. 388, 29 Am. Dec. 303. Illinois. — Miller v. Larned, 103 111. 570. Iowa. — Tomblin v. Callen, 69 Iowa 229, 28 N. W. 573; Winters v. Home Ins. Co., 30 Iowa 172; Iowa College Trustees v. Hill, 12 Iowa 462. Kentucky. — Frank v. Quast, 8 Ky. Law Rep. 780. Louisiana. — Hutchinson v. Mitch- ell, 15 La. Ann. 326. Maine. — Breckenridge v. Lewis, 84 Me. 349, 24 Atl. 864; Nutter v. Sto- ver, 48 Me. 163. Maryland. — Maitland v. Citizens' National Bank, 40 Md. 540, 17 Am. Rep. 620. Massachusetts. — Woodruff v. Hill, 116 Mass. 310; Clark v. Thayer, 105 Mass. 216, 7 Am. Rep. 511; Sweetser V. French, 14 Mete. (Mass.) 262; Wareham Bank v. Lincoln, 3 Allen (Mass.) 192. Nebraska. — Faulkner v. White, 33 Neb. 199, 49 N. W. 1122. New York. — Merchants' National Bank v. Comstock, S5 N. Y. 24; Bank of New York v. Vanderhorst, 32 N. Y. 553; Blair v. Hagemeyer, 2G App. Div. (N. Y.) 219, 49 N. Y. Supp. 965; Brooks v. Hey, 23 Hun (N. Y.) § 384] DIVERSION AND FRAUDULENT TRANSFER. 494 Thus in an early case it is said : "When negotiable paper is made for a particular object, as when it is indorsed for a specific purpose, the indorser lending his name to accommodate the maker, as to renew another note, and the maker applies it to a different purpose, to the prejudice of the indorser, and this is known to the person receiving it, he shall stand upon no better ground than the fraudulent assignor. But if the assignment of such note or bill is a fraud upon the indorser, yet a horuf, fide holder for a valuable consideration, without notice, to whom such note or bill has been transferred, will be protected in re- ceiving such paper in the usual course of business."^" And in a case in New York, where the defendant sought to avail himself of such a' defense, the court declared that: "The fact that the note in suit, of which the defendant was an accommodation indorser as the surety for the makers, was diverted from the purpose for which it was made and indorsed, to the prejudice of the indorser, is fully met and overcome as a defense by the fact, also proved, that the plaintiff became the holder and owner of the note before its maturity for value actually paid, and without notice of any defense to the note, or defect in the title of its immediate indorser."-^ § 384. Same subject continued. — In an action by an indorsee against the indorsers of negotiable promissory notes, where the defense relied on by the defendants was that they were accommodation in- dorsers and that the indorsements were made upon the promise of the maker of said notes that, by the use of said indorsements, he would pay off an indebtedness for which collaterals were pledged, and de- liver such collaterals to the defendants together with a written guaranty of a certain firm as further security, and that the maker had fraudu- lently diverted the indorsements and failed to keep said promises, it was decided that the jury should be instructed that the plaintiff was entitled 372; Tinsdale v. Murray, 9 Daly (N. Virginia. — Etheridge v. Parker, 76 Y.) 446. Va. 247. North Carolina. — Ray v. Banks, 6 Washington. — Peters v. Gay, 9 Jones L. (N. C.) 118. Wash. 383, 37 Pac. 325. South Carolina. — Witte v. Wil- Federal. — Gillespie v. Campbell, 39 liams, 8 S. C. 290. Fed. 724. Texas. — Brown v. Thompson, 79 =" Brush v. Scribner, 11 Conn. 388, Tex. 58, 15 S. W. 168. 390, 29 Am. Dec. 303, per Williams, Vermont. — Quinn v. Hard, 43 Vt. C. J. 375 ; Farmers' & Mechanics' Bank v. ^ Merchants' National Bank v. Humphrey, 36 Vt. 554. Comstock, 55 N. Y. 24, 26, per Al- len, J. 495 accOjVIMOdatiox paper — other holders. [§ 385 to recover if the jury believe from the evidence that he purchased the notes before maturity in good faith, without notice that the in- dorsements were without consideration or had been procured by fraud, or that the notes or the proceeds thereof had been misapplied or dealt with in any manner which would impeach their validity. ^^ It is, however, decided that, under some circumstances, a bona fide holder in good faith will be limited in his recovery to the amount which he has actually paid for the same.^^ In such a case, however, upon proof of the fact that there has been a diversion of negotiable paper the bur- den is then held to rest upon the holder to show that he is a bona fide holder.^* §385. Accommodation paper — Other holders. — The maker of, or surety on, an accommodation note has the right to determine what use shall be made of the same and may impose material or immaterial conditions or terms in regard to its use, and one who takes the paper with knowledge of the terms and conditions imposed will be subject to the defense that there has been a diversion of the instrument from the use contemplated.^^ Thus it is said that : "If accommodation paper is given for a particular purpose, and that purpose is known to the holder at the time it is taken, a diversion of the paper from that pur- pose or misappropriation of it will release the party giving the accom- modation from all responsibility."^** And such a defense is, as a gen- eral rule, available against all parties except one who occupies the position of a bona fide holder.-^ So where defendant signed a note and =*Bunzel v. Maas, 116 Ala. 68, 22 lor, 23 Barb. (N. Y.) 18. Compare So. 568. Ransom v. Turley, 50 Ind. 273. ^Chicopee Bank v. Chapin, 8 =" Per Barbour, J., in Olds Wagon Mete. (Mass.) 40; Stoddard v. Kim- Works v. Bank of Louisville, 10 Ky. ball, 6 Cush. (Mass.) 469; Faulkner Law Rep. 235. v. White, 33 Neb. 199, 49 N. W. 1122; =^ /ndiana.— Johnston v. May, 76 Brown v. Mott, 7 Johns. (N. Y.) Ind. 293. 361; First National Bank v. Fowler, Kentucky. — Thompson v. Boston, 36 Ohio St. 524, 38 Am. Rep. 610. 1 Duv. (Ky.) 389. 'Mves v. Jacobs, 21 Abb. N. C. (N. Neio York.— Brown v. Taber, 5 Y.) 151. Wend. (N. Y.) 566; Tinsdale v. Mur- == Brush v. Scribner, 11 Conn. 388, ray, 9 Daly (N. Y.) 446; Garfield 390, 29 Am. Dec. 303; Maitland v. National Bank v. Colwell, 57 Hun Citizens' Nat. Bank. 40 Md. 540, 17 (N. Y.) 169, 10 N. Y. Supp. 864. Am. Rep. 620; Benjamin v. Rogers, Pennsylvania. — Cozen v. Middle- 126 N. Y. 60; McAdam v. Cooke, 6 ton, 118 Pa. St. 622, 12 Atl. 566. Daly (N. Y.) 101; Rochester v. Tay- § 386] DIVERSION AND FRAUDULENT TRANSFER. 49G put it into the hands of the plaintiff for the purpose of having it in- dorsed by the promisee and then paying with it a debt due from the promisee to a stranger, on the condition, however, that the plaintiff should procure a certain chattel of the promisee and hold it for the defendant's use, but the plaintiff paid the debt with his own funds and took the note himself as indorsee and procured the chattel of the promisee, but afterwards restored it to him, it was held that such facts constituted a good defense.-^ In this class of cases the question whether the plaintiff had such knowledge or not is one of fact for the jury.^'' § 386. Acconiinodation paper — Where purpose substantially ef- fected or no restrictions imposed. — Where a person affixes his name to accommodation paper either as maker or indorser, and has no interest in the way in which such paper or the proceeds therefrom are to be used, it will be no defense to an action against such party that it has been diverted from the precise use contemplated where the purpose for which the accommodation was given has been substantially ef- fected.^** So where one accepted a bill of exchange under an agreement that it should be used to raise money and to pay an indebtedness to the plaintiff, and instead of using it in the manner designated it was transferred to the plaintiff in payment of such indebtedness and in consideration of further advances and of forbearance, it was decided Tennessee. — Jordan v. Jordan, 10 v. Armstrong, 39 N. H. 583; Cross Lea (Tenn.) 124. v. Rowe, 22 N. H. 77. Wisconsin. — Bowman v. Van Ku- Islew Jersey. — Jackson v. Bank, 42 ren, 29 Wis. 209. N. J. L. 177; Rogers v. Sipley, 35 Federal. — Quebec Bank v. Hell- N. J. L. 86; Duncan, Sherman & Co. man, 110 U. S. 178, 4 Sup. Ct. 76. v. Gilbert, 29 N. J. L. 521. =»Boutelle v. Wheaton, 13 Pick. New York. — Hay v. Jaeckle, 90 (Mass.) 499. Hun (N. Y.) 114, 35 N. Y. Supp. =^Maitland v. Citizens' Nat. Bank, 650; New Central Coal Co. v. Cum- 40 Md. 540, 17 Am. Rep. 620. ings, 66 Hun (N. Y.) 626, 21 N. Y. ""District of Columbia. — Leach v. Supp. 17; Wheeler v. Allen, 59 How. Lewis, 1 MacArthur (D. C.) 112. Prac. (N. Y.) 118; Corbitt v. Mil- /ncZiana.— Fetters v. Bank, 34 Ind. ler, 43 Barb. (N. Y.) 305; Ward ell 251, 7 Am. Rep. 225. v. Howell, 9 Wend. (N. Y.) 170; Maryland. — Maitland v. Citizens' Bank of Rutland v. Buck, 5 Wend. National Bank, 40 Md. 540, 17 Am. (N. Y.) 66. Rep. 620. Texas. — First National Bank v. Nebraska.— Morris v. Morton, 14 Wood, 8 Tex. Civ. App. 554, 28 S. W. Neb. 358, 15 N. W. 725. 384. New Hampshire. — Trask v. Win- Compare Wisconsin. — Thomas v. gate, 63 N. H. 474, 3 Atl. 926; Perry Watkins, 16 Wis. 549. 497 NEGOTIATION OF ACCOMMODATION PAPER NOT CONTEMPLATE that the plaintiff might recover thereon. ^^ And where a note was in- dorsed to be "used" only at a certain bank, and it was deposited with such bank as collateral security for advances, it was held that the bank might recover on the instrument.^- And where an accommodation note was given upon the understanding that it was to be deposited temporarily as collateral for a loan, to be made to the payee, and the latter instead of obtaining a new loan and depositing the note with the lender as collateral, deposited it with a bank as security for money which he already owed that institution, it was decided that such use did not constitute a misappropriation, though it was not the precise use contemplated, since the substantial purpose for which the note was given was effected.^^ The court said : "In the present case it is difficult to see how the defendant has been injured by the particular use that has been made of this note. It was given for the general purpose of accommodating the payee, and the particular mode in which it was to subserve that end was of no account to the maker ; whether such payee raised the money upon it, which was the use indicated at the time, and with that money paid off an old debt, or, without the security of a new loan applied the note directly to the satisfaction or security of such old debt, could be of no consequence to, the defendant. He lost no right by such a diversion of the paper, nor was he subjected to any additional risk."^* § 387. Negotiation of accommodation paper to party not contem- plated. — Though a party affixes his name to accommodation paper with an understanding that it is to be negotiated to a particular party, it will be no defense to an action thereon by a bona fide holder that it was negotiated to another party than the one contemplated.^^ =' Leach V. Lewis, 1 MacArthur (D. (Ky.) 13; Whitaker v. Crutcher, 5 C.) 112; Corbitt v. Miller, 43 Barb. Bush (Ky.) 621. (N. Y.) 305. Mississippi. — Commercial Bank v. ''^ Proctor V. Whitcomb, 137 Mass. Claiborne, 5 How. (Miss.) 301. 303. New Hampshire. — Hunt v. Al- '' Jackson v. First National Bank, drich, 27 N. H. 31. 42 N. J. L. 177. New Jersey. — Duncan v. Gilbert, ** Per Beasley, C. J. 29 N. J. L. 521. ^''Indiana. — Reed v. Trentman, 53 New York. — Mitchell v. Oakley, 7 Ind. 438. Paige (N. Y.) 68; Wardell v. Hughes, Kentucky.— Ward v. Northern 3 Wend. (N. Y.) 418. Bank of Kentucky, 14 B. Mon. (Ky.) North Carolina. — Parker v. Sut- 351; Browning v. Fountain, 1 Duv. ton, 103 N. C. 191, 9 S. E. 283, 14 Joyce Defenses — 32 § 388] DIVERSION AND FKAUDULENT TRANSFER. 498 § 388. Same subject — Paper to be discounted at a particular bank. The fact that a bill or note was to be discounted at a particular bank, but was negotiated in a manner other than was intended, will be no defense to an action thereon by one who is a bona fide holder.^® So recovery on a note cannot be defeated by the fact that it was discounted by another bank or party than the one contemplated,^^ nor by the fact that such bank did not discount the note where it appears that money was drawn at different times from the l^ank on the credit of the paper which was retained as collateral.^* And this has been held to be true in the case of one who purchases such a note, though he had knowledge of the restriction upon its negotiation at the time of purchase. So it was declared in a case where this question was raised : "The note sued upon was plainly a negotiable instrument, and might, by indorsement of the payee thereof, be put upon the market and bought and sold indefinitely. The original parties to it treated it as 'accommodation jjaper,' and the facts show that the chief and material part of their purpose was to enable the maker thereof to borrow money upon it. It was expected that he would get the money from one of the banks in Fayetteville, but not necessarily from a bank or in that town. If it had been so intended some particular restriction in this respect would have been set forth in or about the note, but it was left at large — en- Am. St. R. 795; Parker v. McDowell, New Jersey. — Duncan, Sherman & 95 N. C. 219, 59 Am. Rep. 235. Co. v. Gilbert, 29 N. J. L. 521. Vermont. — Bank of Newberry v. 2^w York. — Hay v. Jaeckle, 90 Richards, 35 Vt. 281. Hun (N. Y.) 114, 35 N. Y. Supp. 650. Virginia. — Robertson v. Williams, North Carolina. — Parker v. Mc- 5 Munf. (Va.) 381. Dowell, 95 N. C. 219, 59 Am. Rep. '"'Thompson v. Armstrong, 5 Ala. 235; Sutherland v. Whitaker, 50 N. 383; First National Bank v. Wood, 8 C. 5; Dewey v. Cochran, 49 N. C. 184. Tex. Civ. App. 554, 28 S. W. 384. Ohio.— Knox County Bank V " ETeniMcfct/.— Frank v. Quast, 86 Lloyd, 18 Ohio St. 353. Ky. 649, 6 S. W. 909; Browning v. Vermont. — Briggs v. Boyd, 37 Vt. Fountain, 1 Duv. (Ky.) 13. 534; Bank of Middlebury v. Bing- Maine.—Dunn v. Weston, 71 Me. ham, 33 Vt. 621. 270, 36 Am. Rep. 310; Chase v. Compare Rogge v. Cassidy, 10 Ky. Hathorn, 61 Me. 505; Granite Bank Law Rep. 396. V. Ellis, 43 Me. 367. '" Proctor v. Whitcomb, 137 Mass. Missouri. — Mastin Bank v. • Ham- 303. See Piatt v. Beebe, 57 N. Y. 339 merslough, 72 Mo. 274. holding that where money is so Nebraska. — Morris v. Morton, 14 drawn it is in effect a discount of Neb. 358, 15 N. W. 725. the note for such amount. New Hampshire. — Elliott v. Abbot, 12 N. H. 549. 499 PAPEE TO BE DISCOUXTED AT PARTICULAR BAXK. [§ 389 tirely without such restriction — to be sold to any person who might buy it. If a bank had purchased it it could at once have sold it to the intestate of the plaintiff or any other person in the course of business. There was nothing in its nature, or in the purpose of the parties in connection with it, that rendered the sale of it to a bank necessary or at all material to its sufficiency or efficiency as a negotia- ble instrument; nor would the sale of it to a bank have given the payee, who indorsed it, any material legal advantage. There was no reason — certainly none appears — why the intestate of the plaintiff should not have bought it on the same footing as a bank or any other person might have done. The simple fact that he had knowledge of the 'understanding,' that the money was to be obtained from a bank in the town mentioned, did not render it in any sense fraudulent on his part to buy it."^** § 389. Paper to be discounted at particular bank, continued — Rule illustrated. — Where a note which was payable to the plaintiff bank was handed to the president, who received it individually, and ad- vanced money thereon for the amount of the note, paying therewith certain claims which he held as a lawyer against the principal, and he intended to discount it immediately, but forgot to do so until about two years later, when he discounted it with the bank, it was decided that the bank was a bona fide holder and that the delay did not vitiate the note.*" So if a note be made and signed by sureties to enable tlie principal to raise money of a bank, and made payable to a bank or order, and not discounted, yet if an individual advance money upon the note the sureties will be bound to the holder of the note for its payment.*^ Where, however, it is agreed that the paper shall be ^^ Parker v. Sutton, 103 N. C. 191, of Kentucky, to whom the note was 193, 9 S. E. 283, 14 Am. St. R. 795, made payable, this expectation was per Merrimon, J. founded upon the idea that it was *« Farmers' Bank v. Couch, 118 N. the proper business and interest of C. 436, 24 S. E. 737. the bank to discount notes and thus "Ward v. Northern Bank of Ken- employ its capital; but it does not tucky, 14 B. Mon. (Ky.) 351. The follow that because it was expected court said: "The main purpose for or designed to have the paper dis- which they signed the note was to counted by the bank, that the au- give it credit, and to enable John- thority to the principal was neces- son to realize the money by its sale, sarily so restricted and limited as and, although the defendants doubt- that it might not be purchased, and less expected that the money would the money paid upon it by any in- be procured from the Northern Bank dividual who should give credit to § 389] DIVERSION AND FRAUDULENT TRANSFER. 500 returned in case a certain bank refuses to discount the same, it may be shown, in an action thereon, that such bank refused to discount the note and that it was not returned, but was transferred to the plaintiff, who took it with notice of the condition imposed.*^ And where a depositor took a note executed by himself and another as the paper on account of the signa- tures to it. * * * To raise money was the most important object, and the bank was named as the payee because it was supposed the money could be most readily and speedily pi'ocured from that quarter, and not because it could be considered a mat- ter of controlling importance that the bank only should become the creditor in the transaction. * * * The defendants cannot escape re- sponsibility upon such unsubstantial and flimsy pretext; they gave it credit by signing their names to the paper, and put it in Johnson's pos- session to raise money upon it. It was intended for circulation, as is manifest from its face, being nego- tiable and payable to the bank or order. It was within the knowledge of the defendants that the note was transferable by law, and that it was liable, by successive assign- ment, to pass through hundreds of hands. They knew that by making the note payable to the bank that they had not and could not have been secured thereby against subse- quent transfers of the paper, or have prevented other persons, as as- signees, from becoming their cred- itors." Per Hise, C. J. *" Hickerson v. Raignel, 2 Heisk. (Tenn.) 329. This case was an ac- tion to enjoin the execution of a judgment which had been recovered by default against the indorser who alleged that he signed it on the con- dition stated. The court said: "The proof shows that when complainant indorsed the bill, he did so upon the express condition that if the Plant- ers' Bank did not discount the bill on that day, his liability as indorser was to cease, and the bill was either to be returned or destroyed. It is wholly immaterial whether com- plainant knew the use which Sheid proposed to make of the money, or not. He was indorsing without con- sideration, and for the accommoda- tion of Sheid, and had the right to annex such terms and conditions to his liability as he saw proper. Per- kins V. Anent, 2 Head 110; Bank of Tennessee v. Johnson, 1 Swan 217. It is clear that when the Planters' Bank refused to discount the bill, and the day had expired, during which it was to be presented, the liability of the complainant was ter- minated. The only liability which could then be created must have arisen, from the transfer of the bill, in the due course of trade, to some innocent purchaser, for value. But the proof shows that when Sheid offered to transfer the bill to Clem- ments, * * * he informed him of the terms and conditions which com- plainant had annexed to his indorse- ment. It follows that Clemments took the bill with full notice that Sheid had no authority to use it for any purpose and in any way. As Clemments was acting as the agent of Raignel & Co., they would be af- fected with the notice which their agent had." Per Nicholson, C. J. See Adams Bank v. Jones, 16 Pick. (Mass.) 574; Williams v. Bosson, 11 Ohio 62. J 501 TRANSFERRED AS SECURITY FOR ANTECEDENT DEBT. [§ 390 surety to a bank to be discounted and the bank refused, wliereupon the maker left it in his private pocketbook in the bank vault, and, on his insolvency, the cashier, without the former's knowledge, took it out and discounted it and credited the proceeds to his account against an overdraft at the bank by him, it was held that the surety was re- leased.*^ Again, where a note was to be discounted at a particular bank to take up a matured note by the same maker to the same payee, and the latter instead of using it in the manner agreed re- tained possession of it, there was held to be a diversion of the paper which would defeat an action by him.** § 390. Where transferred or applied as security for an antecedent debt. — The question as to the rights and liabilities of the parties where paper has been transferred as security for an antecedent debt has been the subject of much discussion.*^ The question has frequently arisen where a note is made or indorsed merely for accommodation without any restriction as to its use and is so transferred. In such cases it is a general rule that the one to whom it is transferred may recover thereon.*^ And where paper is entrusted or delivered to one for a *^St. Louis National Banlt v. Flan- agan, 129 Mo. 178, 31 S. W. 773. " Armstrong v. Cook, 30 Ind. 22. *=See §§ 246-249, 353-355 herein, where this question is considered. "Upon the question of the rights of holders of negotiable paper taken in due course before maturity as col- lateral security for a pre-existing debt, there is a radical conflict of authority. The courts sustaining the right of the holders to recover in such cases as against equities or de- fenses in favor of the holders, do so, generally, upon the ground that, by becoming holders of such negotiable paper through indorsement, they be- come parties to it, and as such as- sume obligations in reference to the enforcement of the same. * * * Those courts denying the rights of such holders to recover as against defenses in favor of the makers do so upon the ground that the holders parted with nothing in the nature of a new consideration when they acquired such note or other negoti- able paper; that merely accepting the note as collateral security for a pre-existing debt, without any agree- ment for extension of time or for- bearance of some kind, and without making any new promise, so far as the original debt is concerned, or any new obligation, is not receiving the collateral for anything of value, within the meaning of that term as laid down in the statute or the law merchant." Porter v. Andrus, 10 N. D. 558, 562, 88 N. W. 567, per Mor- gan, J. *" Georgia. — Davis v. Bank, 60 Ga. 651. Indiana. — Fetters v. Bank, 34 Ind. 251, 7 Am. Rep. 225. Maryland. — Maitland v. Citizens' National Bank, 40 Md. 540, 17 Am. Rep. 620. Neio York. — Farmers' & Citizens' 390] DIVERSION AND FRAUDULENT TRANSFER. 502 specified purpose or use and is not used in the manner designated, but is, instead, transferred to a creditor of the holder as security for an antecedent debt, the weight of authority supports the rule that one who takes the paper under such circumstances, before maturity and without notice of the particular iise contemplated will be regarded Bank v. Nixon, 45 N. Y. 762; Grand- in V. Le Roy, 2 Paige (N. Y.) 509. Tennessee. — Kimbro v. Little, 10 Yerg. (Tenn.) 417, 31 Am. Dec. 585. Vermont. — Bank of Montpelier v. Joyner, 33 Vt. 481. England. — Collins v. Martin, 1 Bos. & P. 648. In a recent case where it appeared that notes were given by the defend- ant to a company for its accommo- dation and were indorsed by the lat- ter as collateral security for its in- debtedness to the plaintiff under a contract between them the court said: "We do not doubt that if the jury believed the testimony put in at the trial they would have been required to find a verdict for the plaintiff. The fact that the plain- tiff held other security from the Quimby Company would not pre- vent it from enforcing this secur- ity for its protection. Creditors have a right to hold and enforce all their security until they shall have been paid in full. New Bed- ford Savings Bank v. Union Mill Co., 128 Mass. 27; Lincoln v. Bassett, 23 Pick. (Mass.) 154; Lee v. Butler, 167 Mass. 427, 46 N. E. 52, 57 Am. St. R. 466; Allen v. Woodard, 125 Mass. 400, 28 Am. Rep. 250; Crocker v. Gil- bert, 9 Cush. (Mass.) 131; Commer- cial Bank v. Clarke, 180 Mass. 249, 62 N. E. 670. But while this is so, it yet remains true that this is a question of consideration and must be passed upon by the jury. The bur- den was on the plaintiff to show that it was a holder for value." Mer- cantile Guaranty Co. v. Hilton (Mass. 1906), 77 N. E. 312, per Shel- don, J. There are, however, several de- cisions which sustain the proposi- tion that where a restriction is im- posed upon the use to be made of a bill or note the one who takes such paper as security for a pre-existing debt is not a bona fide holder. United States Nat. Bank v. Ewing, 131 N. Y. 506, 30 N. E. 501, 27 Am. St. R. 615; Grocers' Bank v. Pen- field, 69 N. Y. 502, 25 Am. R. 231; New York National Bank v. Coyden- dall, 58 Hun (N. Y.) 205, 12 N. Y. Supp. 334; Ayers v. Doying, 42 Hun (N. Y.) 630; Duncan v. Gosche, 8 Bosw. (N. Y.) 243, 21 How. Prac. 344; Tinsdale v. Murray, 9 Daly (N. Y.) 449; Union Trust Co. v. McClel- lan, 40 W. Va. 405, 21 S. E. 1025. In North Dakota it has been de- cided that one who takes a note with a written guaranty of payment in- dorsed thereon by the payee as col- lateral security for the payment of a pre-existing debt is not a holder in due course within the meaning of the § 4884, of the Rev. Codes, which defines an indorsee in due course as "one who in good faith, in the ordi- nary course of business and for value before its apparent maturity or presumptive dishonor and with- out knowledge of its actual dishonor, acquires a negotiable instrument duly indorsed to him or indorsed generally, or payable to the bearer or one other than the payee who ac- quires such an instrument of such indorsee thereof." Porter v. Andrus, 10 N. D. 558, 88 N. W. 567. 503 TRANSFERRED AS SECURITY FOR AXTECEDEXT DEBT. [§ 391" as a holder for value, and the fact that it has been so used will he no defense to an action thereon by him.*^ § 391. ■ Same subject continued. — This question as to the right of a holder of negotiable paper, indorsed to him as security for an antece- dent debt, to recover thereon is considered at length by the United .States Supreme Court,'*'^ which says: "Our conclusion, therefore, is, that the transfer, before maturity, of negotiable paper as security for an antecedent debt merely, without other circumstances, if the paper be so indorsed that the holder becomes a party to the instrument, al- though the transfer is without express agreement by the creditor for indulgence, is not an improper use of such paper and is as much in the usual course of such commercial business as its transfer in pay- ment of such debt. In either case the hona fide holder is unaffected by equities or defenses between prior parties of which he had no notice. This conclusion is abundantly sustained by authority. A different de- termination by this court would, we apprehend, greatly surprise both the legal profession and the commercial world." So where a note indorsed in blank was delivered to a person for discount such fact was held to be no defense to an action by one to whom it was transferred as payment for an antecedent debt, the latter having no knowledge of the restriction.^^ And thus it has been held no defense to an action by one who took paper as security for an an- tecedent debt that it was given for the purpose of having it discounted " Illinois. — Morris v. Preston, 93 " Burch v. Scribner, 11 Conn. 388, 111. 215. 29 Am. Dec. 303. Iowa. — Tomblin v. Callen, 69 Iowa See Mechanics' Bank v. Charda- 229, 28 N. W. 573. voyne, 69 N. J. L. 256, where it is Kansas. — National Bank of St. Jo- said that "one who indorses a prom- seph v. Dakin, 54 Kans. 656, 39 Pac. issory note in blank and entrusts it 180, 45 Am. St. R. 299. to another to fill it up and have it New Hampshire. — Clement v. discounted for his (the indorser's) Leverett, 12 N. H. 317. benefit, is liable upon it to a bona Ohio. — First National Bank v. fide holder for value, who receives it Fowler, 36 Ohio St. 524, 38 Am. Rep. before maturity, in the usual course 610. of business, from the person to Pennsylvania. — Bardsley v. Delp, whom it was entrusted, notwith- 88 Pa. St. 420. standing that the latter has filled it ^' Brooklyn City & Newtown R. R. up for and fraudulently converted it Co. V. National Bank of the Repub- to a purpose entirely different from lie, 102 U. S. 14, 26 L. Ed. 61, per that for which he was authorized to Mr. Justice Harlan. use it." Per Gummere, C. J. § 391] DIVERSION AND FRAUDULENT TRANSFER. 504 at a particular bank and that it was transferred to the holder in vio- lation of such purpose, where the holder took it in good faith and without knowledge of the restriction.^'* And in a recent ease in New York it was decided that one who takes an accommodation note as se- curity for an antecedent debt is, under the Negotiable Instruments Law, to be regarded as a holder for value.^^ So where the maker of a note delivers it to the payee, to be used by the latter as collateral for a particular indebtedness, and instead of using it as designated the payee ™ Evans v. Hardware Co., 65 Ark. 204, 45 S. W. 370; Dawson v. Good- year, 43 Conn. 548; Duncan v. Gil- bert, 29 N. J. L. 521; Wheeler v. Allen, 59 How. Pr. (N. Y.) 118; Mc- Guire v. Sinclair, 47 How. Pr. (N. Y.) 360. But see Smith v. Willing (Wis. 1904), 101 N. W. 692, wherein it is held that, where a note was given by a father to a son, who was presi- dent of a corporation, to be dis- counted at a particular bank for a specified purpose, namely to buy out the interest of his partner with whom he was associated as a cor- poration, such fact might be shown as a defense to an action to enforce the note as security for antecedent debts of such corporation after it be- came insolvent. (Two judges dis- senting.) " Milius v. Kauffman, 104 App. Div. (N. Y.) 442, 93 N. Y. Supp. 669; see Neg. Inst. Law, § 51, Laws of 1897, chap. 612. In this case it ap- peared that one Manheim had given his notes to Kauffman as an accom- modation for both parties. There was a written agreement which re- cited the giving of the notes and stated that they were given under the condition that the said Kauff- man should discount them and pay to Manheim forty per cent, of the proceeds, the balance of sixty per cent, to be retained by Kauffman, who was to give his own therefor to Manheim. The agreement also pro- vided that each party was then to take prompt care of his own notes at maturity. In an action by one to whom one of the notes had been indorsed, against Kauffman, the lat- ter contended that the note could not have been enforced by Manheim as he had defaulted in the payment of his note given in pursuance of the agreement, and that as the plain- tiff had taken the note as security for an antecedent debt he was not a J)ona fide holder and that the note in his hands was subject to any de- fense that existed against its collec- tion by Manheim. The court said: "The note not having been diverted, but being unrestricted as to its use, would not be subject in plaintiff's hands to the defense of want or fail- ure of consideration, or that Man- heim had subsequently failed to per- form his obligation of paying his own note, and the plaintiff having taken it as security for an antece- dent debt is regarded as a holder for value." Per Laughlin, J., citing Neg. Inst. Law [Laws 1897, ch. 612], § 51; First Nat. Bank v. Wood, 128 N. Y. 35; McSpedon v. Troy City Bank, 2 Keyes (N. Y.) 35; Grandin v. Le Roy, 2 Paige (N. Y.) 509; Tinsdale V. Murray, 9 Daly (N. Y.) 446; Fur- niss V. Gilchrist, 1 Sandf. (N. Y.) 53; Grocers' Bank v. Penfield, 69 N. Y. 502; Continental Nat. Bank v. Townsend, 87 N. Y. 8. 505. DIVERSION OF PROCEEDS OF PAPER. [§ 392 transfers it as collateral for another indebtedness, it has been decided that the indorsee, if he takes it without notice or knowledge of such restrictions, may recover thereon.^- But where a bill is indorsed for discount it has been decided that the indorsee cannot misappropriate it as collateral for a debt due to him and recover thereon against the acceptor.^^ § 392. Diversion of proceeds of paper. — In an action by a bona fide purchaser of commercial paper against a maker, drawer or indorser thereof, it will be no defense that the proceeds therefrom were to be applied to a particular purpose by the one negotiating it and that they have not been applied in the manner contemplated, but have been di- verted to another and different purpose.^* So in an action against the maker of a note it is no defense that the agent of the maker, who nego- tiated the note, was to use tlie proceeds in purchasing United States bonds to be used in organizing a bank in which the defendant was inter- ested and that they were not so applied.^ ^ And an accommodation maker cannot defeat recover by a bona fide holder by showing that the proceeds were diverted by his co-maker from the purpose intended. ^^ And where a bank advanced money in good faith on corporate notes without any knowledge or reason to believe that the proceeds would be used by an officer of the corporation for other than the legitimate purposes of the maker, it was decided that in an action by the bank on such notes the corporation could not defeat a recovery on the ground that the proceeds had in fact been used in an improper man- ner.^^ Again, where a bank discounted an accommodation bill of ex- '*=Maitland v. Citizens' Bank, 40 Hey, 23 Hun (N. Y.) 372; Mohawk Md. 540, 17 Am. Rep. 620. Bank v. Corey, 1 Hill (N. Y.) 513. "Delauney v. Mitchell, 1 Starkie Pennsylvania. — Garden City Na- 439. tional Bank v. Fitler, 155 Pa. St. " AZa&ama.— Clapp v. Mock, 8 Ala. 210, 26 Atl. 372; Lingg v. Blummer, 122. 88 Pa. St. 518. Illinois. — Mclntire v. Yates, 104 Yirginia. — Clifton Forge v. Bank, 111. 491. 92 Va. 283, 23 S. E. 284. Kentucky. — Moreland v. Citizens' Federal. — Germania Bank v. La Savings Bank, 97 Ky. 211, 30 S. W. Follette, 72 Fed. 145. 637; Olds Wagon Works v. Bank of '^^ Arman v. First National Bank, Louisville, 10 Ky. Law Rep. 235. 36 Fla. 398, 18 So. 786. Massachusetts. — Wood v. Boylston '^'' Evans v. Speer Hardware Co., National Bank, 129 Mass. 358, 37 65 Ark. 204, 45 S. W. 370. Am. Rep. 366. "Reagan v. First National Bank, New Yorfc.— Parker v. McLean, 134 157 Ind. 623, 62 N. E. 701. N. Y. 255, 32 N. E. 78; Brooks v. § 393] DIVEKSIOX AND FRAUDULENT TRANSFER. 506 change and the payee was induced by its cashier, who knew of the use contemplated by the accommodation maker, to apply the proceeds in payment of an insurance premium to a company in which the cashier was interested as agent, it was held that the bank might recover thereon, as it was a bona fide holder, not being affected by the act of its officer, whose agency for the bank ceased when the bill of exchange was purchased by it.^^ But where several notes are executed to a bank by the same party, and there is an agreement that upon the sale of collateral held by the payee, the proceeds are to be applied to a certain note upon which a person's name appears as surety, such person has the right to have the proceeds applied according to the agreement, and in an action against him it may be shown that they were not so ap- plied.^» § 393. Effect of waiver. — Where a note is given for the accommo- dation of another, to be used in a particular manner, the defense that it was not used in the manner contemplated may be expressly waived by the maker or indorser, or such a party may be estopped by his acts and conduct, after knowledge of the use of the paper, from insisting upon such defense.^" ^' Moreland v. Citizens' Savings makes no great difference. Still we Bank, 97 Ky. 211. 30 S. W. 637. think he had the right to have it ^^ Brown v. First National Bank, applied according to the agreement. 112 Fed. 901, 50 C. C. A. 602. The But especially as to the other de- court said: "The proceeds of the fendants who signed as surety to judgment should have been applied Brown, they had the right beyond according to the agreement of the all question to have the money ap- parties, and not otherwise. It is plied upon the note in suit, if that true it was applied upon another was the agreement." Per Bunn, D. J. note of Brown which the bank held, ""^ Mastin Bank v. Hammerslough, and so far as he was concerned it 72 Mo. 274. i CHAPTER XVII. LOST OR STOLEN INSTRUMENTS. Sec. Sec. 394. Lost or stolen instruments — 398. General rules and principles. 399. 395. Same subject — Application of rule. 400. 396. Statutory provision as to holder in due course construed. 401. 397. Non-negotiable paper. Bank and treasury notes. City or county certificates — Stolen after cancellation. Action under statute by owner of lost instruments. Evidence — Burden of proof. § 394. Lost or stolen instruments — General rules and principles. — Though it was a rule established by the early common, law that one could not, except by a sale in market overt, give a better title to per- sonal property than he had himself, an exception has generally been rec- ognized in the case of securities transferrable by delivery.^ In the case ^Murray v. Lardner, 2 Wall. (U. S.) 110, 118, wherein it is said: "The general rule of the common law is, that, except by a sale in market overt, no one can give a better title to personal property than he has himself. The exemption from this principle of securities, transferable by delivery, was established at an early period. It is founded upon principles of commercial policy, and is now as firmly fixed as the rule to which it is an exception. It was ap- plied by Lord Holt to a bank bill in Anon, 1st Salkeld, 126. This is the earliest reported case upon the sub- ject. He held that the action must fail 'by reason of the course of trade, which creates a property in the assignee or bearer.' The leading case upon the subject is Miller v. Race, 1 Burrow 452, decided by Lord Mansfield. The question in that case also related to a bank note. The right of a bona fide holder for a valu- able consideration was held to be paramount against the loser. He put the decision upon the grounds of the course of business, the inter- ests of trade, and especially that bank notes pass from hand to hand, in all respects, like coin. The same principle was applied by that dis- tinguished judge in Grant v. Vaughan, 3 Burrow 1516, to a mer- chant's draft upon his banker. He there said: In 'Miller v. Race, 31st Geo. II, B. R., the holder of a bank note recovered against the cashier of a bank, though the mail had been robbed of it, and payment had been stopped, it appearing that he came by it fairly and bona fide, and upon a valuable consideration, and there 507 394] LOST OR STOLEN INSTRUMENTS. 508 of negotiable paper of such a character, as where it is indorsed in blank or payable to bearer, one who has taken it in the usual course of business and occupies the position of a bona fide holder, is not subject to the defense that it has been lost or stolen, nor, where he has collected the amount due thereon, can the owner recover such amount from him.^ "The law in regard to bills of exchange and promissory notes is so framed as to give confidence and security to those who receive them, for valuable consideration, in the ordinary course of business, when payable to bearer or indorsed in blank so as to be transferable by delivery; and in general a jjarty taking such a bill under such cir- cumstances has only to look to the credit of the parties to itj and the ' regularity and genuineness of the signatures and indorsements. So is no distinction between a bank note and such a note as this.' In Peacock v. Rhodes, 2 Douglas 633, he said: 'The law is settled that a holder coming fairly by a bill or note has nothing to do with the transaction between the original par- ties, unless, perhaps, in the single case, which is a hard one, but has been determined, of a note for money won at play.' The question has since been considered no longer an open one in the English law, as to any class of securities within the category mentioned." Per Mr. Jus- tice Swayne. - Illinois. — Mann v. Merchants' Loan & T. Co., 100 111. App. 224. Louisiana. — Consolidated Associa- tion of Planters v. Avegno, 23 La. Ann. 552. Massachusetts. — Wheeler v. Guild, 20 Pick. (Mass.) 545, 32 Am. Dec. 231. New York. — Seybel v. National Currency Bank, 54 N. Y. 288, 13 Am. Rep. 283; Nolan v. Bank of New York, 67 Barb. (N. Y.) 24. Pennsylvania. — Kuhns v. Gettys- burg National Bank, 68 Pa. St. 445. Tennessee. — Whiteside v. First Na- tional Bank (Tenn. Ch. App. 1898), 47 S. W. 1108. Texas. — Greneaux v. Wheeler, 6 Tex. 515; First National Bank v. Beck, 2 Tex. App. Civ. Cas., § 832. English. — Peacock v. Rhodes, 2 Doug. 611. See Garvin v. Wiswell, 83 111. 215; Merriam v. Granite Bank, 8 Gray (Mass.) 254; Franklin Sav. Inst. V. Heinsman, 1 Mo. App. 336; Morris Canal & Banking Co. v. Fisher, 9 N. J. Eq. 667; Miller v. Race, 1 Burrows 452. Effect of blank indorsement. One of the consequences resulting from the power to pass a bill or note with a blank indorsement by mei-e deliv- ery is "that if such a bill or note be lost or stolen or fraudulently mis- applied any person who may become the holder of it in good faith for value and without notice, is entitled to recover the amount thereof and hold the same against the rights of the true owner at the time of the loss or theft," per Stites, J., in Ca- ruth V. Thompson, 16 B. Mon. (Ky.) 572, 63 Am. Dec. 559. In the case of an assigned note whether it is indorsed by the owner or not it has been held that he may recover it even of a purchaser in good faith. Prather v. Weissiger, 10 Bush (Ky.) 117. 509 APPLICATIOX OF RULES. [§ 395 that if such a bill or note he made without consideration, or be lost or stolen, and afterwards be negotiated to one haying no knowledge of these facts for a valuable consideration and in the usual course of business, his title is good and he shall be entitled to receive the amount."^ And in this connection it was said in a case in the United States Supreme Court, in which this question arose in an action on bonds payable to bearer : "We are well aware of the principle involved in this inquiry. These securities are found in the channels of commerce everywhere, and their volume is constantly increasing. They represent a large part of the wealth of the commercial world. The interest of the community at large in the subject is deep rooted and wide branching. It ramifies in every direction, and its fruits enter daily into the affairs of persons in all conditions of life. While courts should be careful not so to shape or apply the rule as to invite aggression or give an easy triumph to fraud, they should not forget the considerations of equal importance which lie in the other direction."* And where bonds payable to bearer are offered to one for purchase he is held to be under no obligation to make any inquiry of the persons offering them as to their right or title thereto or to take any special precau- tionary measures in the purchase of such securities by which the in- terest of other parties would be protected.^ And it has also been de- cided that one is not deprived of his character as a bona fide holder of such bonds by an omission on his part to examine and regard notices of their theft which have been left at his place of business, in the ab- sence of actual knowledge or notice of the fact that they have been lost or stolen.® A bona fide holder does not, however, acquire such an absolute property in negotiable paper which has been stolen that he can transmit it to a purchaser, who takes it with knowledge of the fact that it has been stolen. '^ And where such paper has never taken effect as a binding obligation on account of a want of delivery, the fact that it was stolen may be a good defense to an action thereon.^ § 395. Same subject — Application of rule. — In the application of the general rule it is decided that recovery by a bona fide holder cf a 'Wheeler V. Guild, 20 Pick. (Mass.) " Seybel v. National Currency Bk., 545, 551, 32 Am. Dec. 231. 54 N. Y. 288, 13 Am. Rep. 583. * Murray v. Lardner, 2 Wall. (U. '' Olmstead v. Winsted Bank, 32 S.) 110, 122. Per Mr. Justice Swayne. Conn. 278, 85 Am. Dec. 260. ^ Seybel v. National Currency Bk., ^ Salley v. Terrill, 95 Me. 553, 50 54 N. Y. 288, 13 Am. Rep. 583, per Atl. 896, 55 L. R. A. 730, 85 Am. St. Lett, Ch. C. R. 433; Hall v. Wilson, 16 Barb. (N. Y.) 548. §§ 39G, 397] LOST OR STOLEN INSTRUMENTS. 510 note indorsed in blank cannot be defeated by the fact that it was stolen.^ And where a person drew a check to his own order, indorsed it in blank and had it certified, and it was subsequently stolen from him and came into the possession of one who was a bona fide holder, it was held that the fact that the check had been stolen was no defense to an action by such holder.^" So where a check payable to bearer was received during banking hours of the day on which it was drawn, in the usual course of business, under circumstances not calculated to ex- cite suspicion, and no negligence was shown from which bad faith could be inferred, it was decided that the holder could recover the amount thereof against the drawer, though it was lost or stolen from the real owner.^^ And where a bill was indorsed in blank, the fact that it was lost and its loss advertised in a newspaper, was no defense to an action thereon against the maker by one who discounted it for the finder in good faith and without notice. ^^ So coupon bonds payable to bearer pass by delivery, and where such bonds were stolen from the safe of the owner and negotiated to a bona fide holder it was decided that the latter obtained a good title thereto and could maintain an action on the same.^^* § 396. Statutory provision as to holder in due course construed. — Under a provision of statute that "where the instrument is in the hands of a holder in due course, a valid delivery thereof by all the parties prior to him, so as to make them liable to him, is con- clusively presumed," it is decided that such presumption exists as well when a note is taken from a thief as in any other case, where it is a complete negotiable promissory note, palyable to bearer .^^ §397. Non-negotiable paper. — The rule, as to the rights of a bona fide holder in respect to paper which has been lost or stolen does not extend to cases where the paper is non-negotiable. So it has been de- cided that a certificate of stock is not negotiable and that a purchaser of such a certificate acquires no rights thereto where it was stolen without •Mann v. Merchants' Loan & T. S.) 110. See Consolidated Associa- Cc, 100 111. App. 224. tion of Planters v. Avegno, 28 La. ^° Nolan V. Bank of New York, 67 Ann. 552. Barb. (N. Y.) 24. '= Massachusetts National Bank v. •^ Marsh v. Small, 3 La. Ann. 402, Snow (Mass. 1905), 72 N. E. 959, de- 48 Am. Dec. 452. cided under § 33 of Negotiable In- ^^ Lawson v. Weston, 4 Esp. 56. struments Act, embodied in Rev. "* Murray v. Lardner, 2 Wall. (U. Laws, c. 73, §§ 18-212, inclusive. »11 BAXK AND TREASURY XOTES. [§ 398 tlic fault or negligence of the owner though it was regularly in- dorsed.^* And where tax bills indorsed in blank were stolen and trans- ferred to another it has been decided that the latter acquires no better title than the thief.i^ §398. Bank and treasury notes. — Bank notes, though stolen or otherwise fraudulently put into circulation, become the property of one who gives a valuable consideration therefor, having no notice or knowl- edge of the robbery.^® So in the case of a stolen bank bill a bona fide holder may recover thereon against the bank from which it was stolen.^'' But where the holder of a United States treasury note exer- cises an option given to him of having it converted into government bonds and indorses it in blank for that purpose and forwards it by an express company, from which it is stolen, the indorsement erased and the note negotiated, it has been decided in an action for the conversion of the note that its negotiability was destroyed by the acts of the owner and that a purchaser acquired no title thereto. ^^ " Barstow v. Mining Co., 64 Cal. 388, 1 Pac. 349, 49 Am. Rep. 705. See Sherwood v. Meadow Valley- Mining Co., 50 Cal. 412. The words of the court in Ban- gor Electric Light & Power Co. v. Robinson, 52 Fed. 520, 523, are per- tinent in this connection. It is there said: "Certificates of stock indorsed in blank are so far of a negotiable character that they ordinarily pass from hand to hand, that they are subject to lis pendens, and that in order to effectuate the ends of jus- tice and the intention of the parties, the courts ordinarily decree a better title to the transferee than actually existed in the transferor. Neverthe- less we do not find that any court of authority has ever gone so far as to hold that the holder of them may lose the title to such as may be stolen from him, as he may of ne- gotiable promissory notes, bills, scrip, or bonds, payable to bearer or indorsed in blank. * * * At first it occurred to the court that, inas- much as Robinson had seen fit to leave this certificate in such condi- tion as to indicate that somebody was authorized to acquire it and fill in the indorsement, he was barred; but the court is unable to find any authorities sustaining this sugges- tion, and is compelled to treat this certificate, indorsed in blank and stolen, as it would any other stolen property, aside from strictly negotia- ble securities." Per Putnam, C. J. ^^ Young V. Brewster, 62 Mo. App. 628, 1 Mo. App. Repr. 577. '" Robinson v. Bank of Darien, 18 Ga. 65; Sinclair v. Piercy, 5 J. J. Marsh. (Ky.) 63; United States v. Read, Fed. Cas. No. 16125, 2 Cranch C. C. 159; Miller v. Race, 1 Burr. 452. "Olmstead v. Winsted Bank, 32 Conn. 278, 85 Am. Dec. 260. "Dinsmore v. Ducan, 57 N. Y. 573, 15 Am. Rep. 534. § o99] LOST OR STOLEN INSTRUMENTS. 512 § 399. City or county certificates — Stolen after cancellation. — Where certificates which are issued by a city or county for tlie pay- ment of legitimate obligations and which acquire no validity unless issued for the purpose authorized by law, and which do not possess the character of commercial paper so as to render them good in the hands of a purchaser for value and without notice, without regard to fraud in their issuance, are lawfully cancelled, it may be shown in de- fense to an action by such a purchaser that they were subsequently stolen, the marks of cancellation erased, and that they were then put into circulation. Thus it was so held in an action against the Dis- trict of Columbia on certificates of indebtedness called sewer certifi- cates which had been redeemed according to law and cancelled by stamping across their face the words "cancelled by the Board of Audit." These certificates were then inclosed in bundles, filed away and the fact of redemption entered in the proper books. Subse- quently they were stolen, the marks of cancellation erased, and were sold to a purchaser for value, in good faith without notice, who brought an action thereon. The court said in this case: "When the maker of a negotiable instrument lawfully cancels it before maturity, his liability upon it is extinguished, and cannot be revived without his consent. It is immaterial whether the cancellation is by destroying the instrument, or by writing or stamping words or lines in ink upon its face, provided the instrument, in the condition in which he puts it, unequivocally shows that it has been cancelled. * * * These certificates having been lawfully extinguished by stamping across their face marks of cancellation as clear and permanent as the orig- inal signatures, the liability of the District upon them as negotiable paper could not be revived by its omission to take additional precau- tions against their being stolen and fraudulently restored to their original condition by such means as ingenious wickedness might de- vise. * * * Considering the nature of these certificates, the method in which they had been cancelled, and the means by which they were afterwards put in circulation, we are of opinion that there is no ground for holding the District of Columbia liable to this claimant."^* § 400. Action under statute by owner of lost instruments. — Where a statute permits an action on an instrument which has been lost by the owner,2° the establishment of a lost note under such a statute is no ^' District of Columbia v. Cornell, "" A loss by theft is a loss by acci- 130 U. S. 655, 9 Sup. Ct. 694, 32 L. dent within the meaning of a stat- Ed. 1041. Per Mr. Justice Gray. ute authorizing a suit to be brought 513 EVIDENCE BURDEN OF PROOF. [§ 401 bar to any defense that might be set up to the original note.-^ So in an action upon a copy of a promissory note, regularly established in lieu of the lost original as provided by statute, a payment of the orig- inal note prior to the judgment establishing the copy may be pleaded.-^ The rule that upon a plea of payment the burden of proof is upon the defendant is not altered by the fact that the note was lost after suit.^^ § 401. Evidence — Burden of proof. — In an action on negotiable paper which is shown to have been lost or stolen the burden rests on the plaintiff to show that he is a hona fide holder.^* And in such a upon a bond, note, bill of exchange or other mercantile instrument which has been lost or destroyed by accident. Mobile County v. Sand, 127 Ala. 493, 29 So. 26, construing Ala. Code, § 31. Pleading in action on lost instru- ment. In an action by the payee on a note which has been lost it is only necessary to allege the execution of the note to the plaintiff. It need not be alleged that he is the owner, as such fact will be presumed until the contrary is shown. Embree v. Em- merson (Ind. App. 1905), 74 N. E. 44. Where a note is sued on as a lost instrument and is accurately de- scribed in the declaration, and the execution is not specially denied, and it appears from the evidence that the note was payable to bearer, had been acquired by plaintiff before maturity and lost after maturity, it is held that a case is made out en- titling the plaintiff to have the merits of the controversy submitted to the jury. Champenois v. Collins (Miss. 1904), 36 S. E. 72. Injunction to restrain mainte- nance of action. A provision of a negotiable instruments law that an action at law may be brought upon any negotiable instrument which is lost, "but any court of law shall give judgment in the same manner as if such note was not lost," has been held to leave it questionable whether it was the intention of the legislature to have the act apply to any negotiable instrument other than a note. Where, however, the act contains a further provision that any court of law may make the same order as a court of equity would to indemnify the party charged against the repayment thereof, a court of equity is not thereby deprived of its original jurisdiction in such matters and may enjoin the maintenance of an action at law by the payee upon certain cashier's checks which have been lost where there has been an offer to pay the same upon the giv- ing of the indemnity which would be required in any court of law or equity. Clinton National Bank v. Stiger, 67 N. J. Eq. 522, 58 Atl. 1055, construing N. J. Gen. St., p. 2605, § 7. "Prescott V. Johnson, 8 Fla. 391; Jenkins v. Forbes (Ga. 1904), 49 S. E. 284. "Jenkins v. Forbes (Ga. 1904), 49 S. E. 284. == Walston V. Davis (Ala. 1906), 40 So. 1017. =' Nolan V. Bank of New York, 67 Barb. (N. Y.) 24; Kuhns v. Gettys- burg National Bank, 68 Pa. St. 445. Joyce Defenses — 33. g -iOl] LOST OR STOLEN INSTKUilENTS. . 511 ease, unless the one who has obtained tlie money on the paper can show that he was a holder for value, he will be liable to the real owner in an action for money had and received.-^ But under a code provision authorizing the bringing of a suit on lost commercial paper and pro- viding that where an affidavit is made by the plaintiff of such loss and of the contents and that the same has not been paid or discharged and such affidavit accompanies the complaint it must be received as pre- sumptive evidence of the facts stated unless the defendant by plea ac- companied by affidavit denies the execution of the paper, or the in- dorsement, acceptance or contents, in which case proof of the fact denied must be made by the plaintiff, a suit may be brought without affidavit in which case the plaintiff has the burden of proving the loss and contents but if accompanied by affidavit this burden is then held to shift onto the defendant who may, by denying the execution by verified plea, again shift such burden onto the plaintiff.^^ Upon proof, however, of the fact that a note has been lost a plaintiff cannot be re- quired to prove in whose possession it is.^^ Again where the evidence fairly warrants the conclusion that a note is lost and there is no evi- dence to show that it was payable in a bank of the state it will not be presumed that it was so payable.^^ But see Murray v, Lardner, 2 Wall. 493, 29 So. 26, construing Ala. Code, (U. S.) 110. § 31. ^Kuhns V. Gettysburg National " Champenois v. Collins (Miss. Bank, 68 Pa. St. 445. 1904), 36 So. 72. ^ Mobile County V. Sands, 127 Ala. =^Embree v. Emmerson (Ind. App.), 74 N. E. 44. CHAPTEE XVIII. WANT OF TITLE OR INTEREST. Sec. 402. Possession as evidence of title. 403. Right of holder or owner to sue — Real party in interest. 404. Right to recover generally — Legal and equitable title. 405. Payees. 406. Indorsee against indorser. 407. Assignee. 408. Agency. 409. Recovery for benefit of holder — Beneficial interest. Sec. 410. Transfer of title or interest after suit commenced. 411. Character of title or interest. 412. Void or voidable title or trans- fer. 413. Checks. 414. Bill of lading. 415. To protect maker or let in his defense. 416. Same subject. 417. Denial of ownership or title. 418. Same subject. § 402. Possession as evidence of title. — Possession of a note is prima facie evidence of title and ownership.^ This rule has been ap- ^ California. — Bank of California v. J. L. Mott Iron Works, 113 Cal. 409, 45 Pac. 674. Colorado — Gumaer v. Sowers, 31 Colo. 164, 71 Pac. 1103; Reed v. First Nat. Bank, 23 Colo. 380, 48 Pac. 507; Perot v. Cooper, 17 Colo. 80, 28 Pac. 391. Connecticut. — New Haven Mfg. Co. v. New Haven Pulp & Board Co., 76 Conn. 126, 55 Atl. 604. Georgia. — Bomar v. Equitable Mort. Co., Ill Ga. 143, 36 S. E. 601. Illinois. — Henderson v. Davisson, 157 111. 379, 41 N. E. 560; Wellman V. Highland, 87 111. App. 405. Indiana. — Taylor v. Hearn, 131 Ind. 537, 31 N. E. 201. Kansas. — O'Keeffe v. Frankfort First Nat. Bank, 49 Kan. 347, 30 Pac. 473. Massachusetts. — Massachusetts Na- tional Bank v. Snow, 187 Mass. 159, 72 N. E. 959. Minnesota. — Kells v. Northwestern Live Stock Ins. Co., 64 Minn. 390, 67 N. W. 215, 25 Ins. L. J. 627, 64 Minn. 393, 71 N. W. 5; Robinson v. Smith, 62 Minn. 62, 64 N. W. 90. Nebraska. — Ryan v. West, 63 Neb. 894, 89 N. W. 416; First National Bank v. McKibbin, 50 Neb. 513, 70 N. W. 38; City National Bank v. Thomas, 46 Neb. 861, 65 N. W. 895. Neio York. — Poess v. Twelfth Ward Bank, 86 N. Y. Supp. 857, 43 Misc. 45; Neg. Inst. Law, Laws 1897, p. 719, c. 612. North Dakota. — Brynjolfson v. Osthus (N. D.), 96 N. W. 261. Virginia. — Dashiell v. Merchants' & P. Savings Bank (Va.), 22 S. E. 169. Washington. — Citizens' Nat. Bk. v. 515 § 402] WANT OF TITLE OR INTEREST. 516 plied to a non-indorsed note,- payable to a third person's order ;^ a note indorsed in blank;* a bill of exchange payable to drawer and in- dorsed in blank f in favor of the bearer of a note payable to bearer ;" a note indorsed to another when coupled with evidence of payment of value ;'^ a duly indorsed note in possession at time of death f and to a note in possession of heirs of the holder.* So production of notes is held sufficient without proof of who are the holders/" and also that Wintler, 14 Wash. 558, 45 Pac. 38, 4 Am. & Eng. Corp. Cas. N. S. 146; Yakima Nat. Bank v. Knipe, 6 Wash. 348, 33 Pac. 834. Examine the following cases: United States. — Pana v. Bowler, 107 U. S. 529, 27 L. Ed. 424; New Orleans Canal & Bkg. Co. v. Mont- gomery, 95 U. S. 16, 24 L. Ed. 346. Alabama. — Paige v. Broadfoot, 100 Ala. 613, 13 So. 426. Kansas. — Cobleskill First Nat. Bk. V. Emmitt, 52 Kan. 603, 35 Pac. 213. Kentucky. — Holton v. Alley, 15 Ky. L. Rep. 529, 24 S. W. 113. Minnesota. — Huntley v. Hutchin- son, 91 Minn. 244, 97 N. W. 971, Gen. Stat. 1894, § 5751; Estes v. Lovering Shoe Co., 59 Minn. 504, 61 N. W. 674, 12 Bkg. L. J. 148; Bahm- sen V. Gilbert, 55 Minn. 334, 56 N. W. 1117. Missouri. — Hair v. Edwards, 104 Mo. App. 213, 77 S. W. 1089. Nebraska. — Gandy v. Bissell (Neb.), 100 N. W. 803, rev'g 5 Neb. (unofficial) 184, 97 N. W. 632. Neia Jersey. — Halstead v. Colvin, 51 N. J. Eq. 387, 26 Atl. 928. New York. — People v. Bradner, 108 N. Y. 659, 15 N. E. 445, 15 Cent. Rep. 474; Goetting v. Day, 87 N. Y. Supp. 510; Manawaring v. Keenan, 86 N. Y. Supp. 262; Frankenstein v. Levini, 65 N. Y. Supp. 562. North Dakota. — Shepard v. Han- sor, 9 N. D. 249, 83 N. W. 20. Oklahoma. — Price v. Winnebago Nat. Bank, 14 Okla. 268, 79 Pac. 105. Rhode Island. — Third National Bank v. Angell, 18 R. I. 1, 29 Atl. 500. South Dakota. — Heffleman v. Pen- nington County, 3 S. D. 162, 52 N. W. 851. Tennessee. — Memphis v. Bethel (Tenn.), 17 S. W. 191. Utah. — Voorhees v. Fisher, 9 Utah 303, 34 Pac. 64. ^Dickerson v. Cass County Bank (Iowa), 89 N. W. 15. ^ Martin v. Martin, 174 111. 371, 51 N. E. 691, aff'g 74 111. App. 215. ^Battersbee v. Calkins (Mich.), 87 N. W. 760, 8 Det. Leg. N. 778; Ames & F. Co. v. Smith, 65 Minn. 304, 67 N. W. 999; Bank of Spencer V. Simmons, 43 W. Va. 79, 27' S. E. 299. =^ Gillespie v. Planters' Oil Mill Mfg. Co., 76 Miss. 406, 24 So. 900. "Massachusetts Nat. Bank v. Snow, 187 Mass. 159, 72 N. E. 959. ^ Menzie v. Smith, 63 Neb. 666, 88 N. W. 855. ^ Eyermann v. Piron, 151 Mo. 107, 52 S. W. 229. »Magel V. Milligan, 150 Ind. 582. 50 N. E. 564. 10 Williams v. Holt, 170 Mass. 351, 49 N. E. 654. Ownership of the notes sued on may be prima facie established in the indorsee's favor by putting in evidence the note with its indorse- ments thereon. Murto v. Lemon (Colo. App.), 75 Pac. 160. 517 RIGHT OF HOLDER OR OWNER TO SUE. [§ 403 a non-averment of ownership by the payee as plaintiff does not render the complaint defective ;^^ although it is decided that the title to a note must be sufficiently shown by the pleadings.^^ But the rule as to possession is inapplicable as to paper indorsed in blank and non-ne- gotiable.^^ And it is held that a party not the payee will not be pre- sumed to be the owner of an unindorsed note not payable to bearer, merely because it was found amongst his papers after his decease.^* § 403. Right of holder or owner to sue — Real party in interest. — A statutory right to have an action brought by the real person in in- terest is an important factor in the determination of the question of the right to dispute plaintiff's title or ownership and of the right of the defendant to protection against other claimants.^^ But the holder of commercial paper may sue in his own name.^*^ And an indorsee in possession can cancel an indorsement by him to a bank for collection.^'' So the indorsee of a note for collection may sue thereon in his own name, under a statute so permitting in case of a transferee under a restrictive indorsement.^^ And the owner of the equitable title by reason of payment made after dishonor, may maintain an action in his own name without formal indorsement back.^^ Nor will the sur- render of a note preclude the holder from recovering against the maker, where the surrender was a mere formality under an agreement that the holder might sue.^° And an indorsement of paper payable to bearer is unnecessary, where the statute so permits, to enable the holder to sue thereon as he has a prima facie right to recover.-^ But the holder of a note indorsed in blank, who has not title or interest cannot maintain an action thereon.^^ " Ullery v. Brohm, 20 Colo. App. " New Haven Mfg. Co. v. New Ha- 389, 79 Pac. 180. ven Pulp & Board Co., 76 Conn. 126, '-National Life & Trust Co. v. Gif- 55 Atl. 604; Gen. Stat. 1902, § 4218. ford, 90 Minn. 358, 96 N. W. 919. '« Smith v. Bayer (Oreg.), 79 Pac. "Mitchell V. St. Mary, 148 Ind. 497. Ill, 47 N. E. 224. '» Hartzell v. McClurg, 54 Neb. 316, "Hair v. Edwards, 104 Mo. App. 74 N. W. 626. 213, 77 S. W. 1089. =» Clark v. Butts, 73 Minn. 361, 76 " Giselman v. Starr, 106 Cal. 651, N. W. 199. 657, 40 Pac. 8. See §§ 415-418 =' Buck v. Troy Aqueduct Co., 76 lierein. Vt. 75, 56 Atl. 285. '"Bomar v. Equitable Mort. Co., "Hart v. West, 16 Tex. Civ. App. Ill Ga. 143, 36 S. E. 601; McDaHiel 395. 41 S. W. 383, aff'd 91 Tex. 184, V. Chinski, 23 Tex. Civ. App. 504, 5.7 42 S. W. 544. S. W. 922. § 404] WANT OF TITLE OR INTEREST. 518 § 404. Right to recover generally — Legal and equitable title. — In- dorsement or transfer are not necessary to enable a purchaser for value to recover,^' and the holder by delivery of a note payable to a certain person or order and indorsed in blank has the title thereto.^* Nor is it necessary in order to recover on a note, transferable by delivery only, to prove the transfer.^^ But title cannot rest upon proof of indorse- ment alone where the note is returned by the indorser without de- livery to the claimant and he denies delivery.-® If, however, the payee indorses a note, and the indorsee recovers judgment against the maker, and upon a return upon execution of "no property found" a subse- quent judgment against the indorser is satisfied by him, he can trans- fer the claim against defendant, and an averment by the transferee as plaintiff of these facts states a good cause of action and the in- dorsement or transfer can only be denied by a sworn plea.^^ So the legal title of a note being in the plaintiff, the fact that the payee may have been the equitable owner constitutes no defense.^^ Nor is it a defense that the note is held as trustee for a third party.^® Again, in an action by an administrator on a note given him for land bought at an administrator's sale, a plea that heirs at law are alone interested in the note and that after the sale they had sued defendant to recover the land for the purchase of which the note was given, and so put him to great expense, is not good as a defense.^*' But a transferee, be- fore maturity of commercial paper not indorsed at the date of its transfer, acquires an equitable but not a legal title, and equities of which the transferee had notice are not excluded by a subsequent in- dorsement before maturity.^ ^ If, however, it is intended by an in- dorsement to pass the title to a note, and it is designed that it shall circulate as negotiable paper transferable by delivery as a note payable to order and duly indorsed by the payee, the contract must take effect according to the intent of the parties, and the indorsee before maturity without notice takes the legal title for value free from all equities on the part of the payee, even though the latter did not assume the lia- bility of an indorser -or guarantor, and even though the indorsement is "•^ Lyman v. Warner, 113 Fed. 87. =' Smith v. Harrison, 33 Ala. 706. See § 413 herein. =' Caldwell v. Lawrence, 84 111. -' Heard v. De Loach, 105 Ga. 500, 161. 30 S. E. 940. ^ Nicolay v. Fritschle, 40 Mo. 67. =' Gumaer v. Sowers, 31 Colo. 164, '" Story v. Kemp, 51 Ga. 399. 71 Pac. 1103. =1 Pavey v. Stauffer, 45 La. Ann. "-' Moehn v. Moehn, 105 Iowa 710, 353, 12 So. 512, 19 L. R. A. 716. 75 N. W. 521. 519 PAYEES. [§ 405 on another paper attached to and made part of the note, called an allonge.^^ It is also determined that the indorsee is not affected by his indorser's want of title.^^ § 405. Payees. — The party to whom a note is made payable being priina facie the owner, it is held that his right to maintain an action cannot be questioned, except the defendant pleads payment or offset against the party who he alleges is the true owner of the note. So it is no defense to an action on a note that it was given to the payee, in lieu of three other notes, given to the husband of the payee. The widow might be acting as executrix in her own wrong, or might be the heir; in either case the notes surrendered would be satisfied.^* And in an action upon a promissory note made by the defendant, pay- able to order, it is no defense that the payee and nominal plaintiff pledged the note without indorsement to another as collateral security for a debt due to the latter, and that before the debt became due the payment of the debt was tendered by such payee but that the pledgee _ refused to receive it or to give up tlie note, and that after its maturity the pledgee commenced the action without the authority or consent of == Crosby v. Roub, 16 Wis. 616, 84 Am. Dec. 720. '^ Grant v. Vaughan, 3 Burrows 1516 (an action where the bearer of a bill of exchange, who had come by it honestly and for value, was held entitled to recover against the drawer, even though the note had been lost and the person who found it, or who at least was in possession of it, had transferred it to the holder, the latter hav- ing taken it after inquiry as to the standing of the transferor); Miller v. Race, 1 Burrows 452 (hold- ing that a bank note payable to a person named, or bearer, on demand, becomes the property of him who gives value therefor without notice of defenses) ; Peacock v. Rhodes, Dougl. 633 (holding that an inno- cent indorsee of an inland bill of exchange with a blank indorsement may recover upon it against the drawer. Lord Mansfield said: "The holder of a bill of exchange is not to be considered in the light of an assignee or payee. * * * The law is well settled that a holder, coming fairly by a bill or note, has nothing to do with the transactions between the original parties. * * * i see no difference between a note in- dorsed in blank and one payable to bearer; they both go by delivery, and possession proves property in both cases. The question of mala fides was for the consideration of the jury. The circumstances that the buyer and also the drawers were strangers to the plaintiff, and that he took the bill for goods on which he had a profit, were grounds of sus- picion very fit for their considera- tion. But they have considered them and have found that it was re- ceived in the course of trade, and therefore the case is clear"). =* Riley v. Loughrey, 22 111. (12 Peck) 98. § 405] WANT OF TITLE OR I^STTSREST. 520 the payee; although if the promisees came in and disclaimed it would be different.^ ^ So a plea that the note has been assigned should be supported by proof that the right to the note is in the assignee.^" But where a joint and several promissory note was executed and left in the hands of one of the promisors, for delivery to the payee, when he should demand it, in exchange for a note of the same amount, but of a previous date, and signed alone by such promisor, with whom said note had been left in escrow, and no demand was made upon him, be- fore said promisor's death, by the payee ; it was held that the new note did not operate de facto as a payment of the old note, that the prop- erty of such new note had not vested in the payee, and that he could not recover possession of it from the administrator of the deceased promisor, it being presumed that the accrued interest upon the old note was to be paid upon making the exchange. ^^ A note discounted in bank, however, assumes the dignity of a foreign bill, and if the note was made by the payor and loaned for the accommodation of the .payee and it has been negotiated, the bank alone can main-tain an action against the payor, who cannot question the consideration ; but upon a plea that the note is the property of another than the plaintiff the latter will be precluded from maintaining an action in his own name, and although the holder who is prima facie the owner may strike ^° Wolcott v. Boston Faucet Co., 9 sible to consider Miles Bartholomew Gray (75 Mass.) 376. as the agent of the plaintiff; he was ^Conant v. Wills, 1 McLean (U. himself a promisor and a party. S. C. C.) 427, Fed. Cas. No. 3,087. * * * ^ could not have been un- ^^Canfield v. Ives, 18 Pick. (35 derstood by the parties: that the Mass.) 253, the court, per Shaw, C. new note was to enure and operate J., said: "The single question in de facto, as payment of the old one; this case is, whether the property or that the new note was to be left in the note, which is the subject of with Miles Bartholomew for any the action (trover), had vested in other purpose than to be exchanged the plaintiff at the time of the de- for the old one; that is, to be de- mand and refusal. The court are all livered when the old one should be of the opinion that it had not. The given up. The further considera- transaction was inchoate and in- tion, that the interest was to be paid complete, and until the exchange on the old note, on such exchange, M^as made pursuant to the agree- renders it quite clear that the trans- ment the old note was not dis- action was not to be understood as charged, nor did the plaintiff be- closed, so as to vest the property in come entitled to the right of prop- the new note in the plaintiff, until erty in the new one. It was a prop- such exchange, which was never osition, an executory agreement, made," never in fact executed. It is impos- 521 INDORSEE. AGAIXST INDOKSER ASSIGNEE. [§§ 40G, 407 out the indorsements tlie payor may, nevertheless, show that the note is the property of one of the indorsers.^* §406. Indorsee against indorser. — In an action by the indorsee against the indorser of a note the relation between such parties may be shown, and the presence of the defendant's name in blank upon the back of the note is prima facie evidence of a contract of indorse- ment, which is not wholly overcome by showing that the name was previously written for another purpose. The apparent indorser should not be concluded contrary to the true meaning and intent of the parties, and the question is issuable and provable whether such blank indorsement was made in the usual course of trade to transfer title.^^ So, in an action by an indorsee against his immediate indorser, a plea that, before the commencement of the suit, the plaintiff transferred the note to a third person, who since then had been and continued to be the true and lawful owner and possessor of the note is a bar to the recovery.*" If tlie action is by the third indorsee against the second indorser, an affidavit of defense is sufficient to carry the cause to the jury, where it sets forth the ability to prove that the suit is brought for the use and benefit of the payee and first indorser, and that he is the real owner and holder of the note and that the plaintiff is merely the nominal holder; as the payee and first indorser, being responsible to every subsequent indorser, the second indorser, upon recovery against him, would have his remedy against the preceding indorser.*^ But in an action by an indorsee against an indorser, a plea setting up that defendant assigned the note, after maturity, "for the purpose of transferring" the same, "and for no other purpose" is bad on demurrer since it is only equivalent to an averment that he assigned the note not intending that he should be liable as an as- signor, such a plea being a simple denial of the legal import of the assignment.*^ § 407. Assignee. — Suit may be brought by the legal assignee ;" by an assignee without indorsement wlien he is the real party in inter- '» Tuggle V. Adams, 3 A. K. Marsh. " Oberle v. Schmidt, 86 Pa. St. 10 Ky.) 429. 221. ™ Hudson V. Wolcott, 39 Ohio St. *■ Dunn v. Ghost, 5 Colo. 134. 618. "Gladstone Baptist Church v. "Waggoner v. Colvin, 11 Wend. Scott, 25 Ky. L. Rep. 237, 74 S. W. (N. Y.) 27. See §§ 415-418 herein. 1075. § 407] WANT OF TITLE OR INTEREST. 522 est;^* and by an assignee of a non-negotiable note.*^ So an assignee may sue in his own name and is subject to defenses against the payee.**^ A wife as assignee may also maintain suit in her own name, though the assignor has an interest in the note.*^ And where a surety has paid a note and received the assignment thereof his successor in interest may recover thereon from the maker.*^ So the maker may be sued by a surety who was paid the note and it is assigned to him.*^ And so where a single bill is indorsed in blank and delivered, the transferee is entitled to fill out the assignment to himself and bring an action against the maker in his own name.^° Again, the written assignment of a note payable to the testator, made and executed by the executors, confers upon the assignee the title to the note and the right to sue thereon, and constitutes ample protection to the defendant as maker and debtor of the estate, and whatever equities may exist in such case between the assignors and assignee of the note cannot interest the de- fendant nor defeat a recovery, so long as he is protected from any subsequent action by such recovery.^ ^ So an indorsement or transfer of a negotiable note does not constitute an agency. It is an assign- ment, and if the assignment is made by its owner and holder, with a limitation not appearing upon the note itself it can in no way affect the maker who has paid it while he is ignorant thereof as such maker is not bound to understand an assignment limited by some act of the parties instead of by virtue of some law which he might be presumed to understand.^ ^ And in a suit on a promissory note, by the assignee of the payee against the maker, the defendant's plea that the note was assigned for collection only, the proceeds to be credited on certain notes given by the assignor, is insufficient as a defense. ^^ But the assignee " Vinson v. Palmer, 45 Fla. 630, 34 " Huck v. Kraus, 99 N. Y. Supp. So. 276. 490. See §§ 415, 416 herein. "Barry v. Wachosky, 57 Neb. 534, °=Lamb v. Matthews, 41 Vt. 42, In 77 N. W. 1080. this case a note payable to bearer ^ Power V. Hambrick, 25 Ky. L. was delivered by the owner and Rep. 30, 74 S. W. 660. holder to collect and to use the " Lodge v. Lewis, 32 Wash. 191, 72 avails thereof as needed, and there Pac. 1009. was an express understanding at ^^ Bay View Brew. Co. v. Tecklen- the time of its delivery that if un- berg, 19 Wash. 469, 53 Pac. 724. collected it should, upon decease of " Stratton v. Heuser, 19 Ky. L. the person giving the note, be sur- Rep. 1019, 42 S. W. 1133, Ky. Stat., rendered to his executor. §§ 4665-4667. ^ "Butler v. Sturges, 6 Blackf. '"Dickey v. Pocomoke City Nat. (Tnd.) 186. Bk., 89 Md. 280, 43 Atl. 33. 523 AGENCY — RECOVERY FOR BENEFIT OF HOLDER. [§§ 408, 409 of a sealed note is held to be a holder subject to the infirmities against the original obligee.^* § 408. Agency. — i\.n agent, in case of a note indorsed to himself, may sue thereon in his own name, even though said note was pur- chased with his principal's money.^^ But in a suit between the orig- inal parties to a due bill it is held that the maker may show that the apparent payee was the agent of the real payee, or that the person, in favor of whom the bill was indirectly given was his debtor and that the plaintiff's name was a borrowed one, only where such facts tend to prove that there was really no consideration.^*' And where an agent, having such power, accepts a bill in the name of his principal the latter is liable as acceptor, and cannot escape liability on the ground that he had no interest in the transaction in which the bill was given and that he had received no consideration, unless he proves that his agent, to the knowledge of the holder of the bill, had abused his power or the confidence reposed, and had availed himself of the power for his own benefit or purposes." But it is also decided that if the transferee is to be considered as the agent of a foreign merchant, he cannot recover upon his title only, where such title is bad.^^ And in an action by the second indorsee against his immediate indorser de- fendant may prove that the plaintiff had given no consideration for the note, but held it as the agent merely of the payees, or first in- dorsers, to collect the amount for them, and therefore had no right to bring the suit.^'* So in an action, brought since the code in New York, on a note payable to bearer or indorsed in blank it may be shown that the plaintiff is not the real owner of the note ; so his want of in- terest, or that he holds the note merely as agent for the payee, against whom the maker has a good defense, may be proven.®*' §409. Recovery for benefit of holder — Beneficial interest. — Tlio lawful possessor of a note may recover for the benefit of the holder of " J. C. Stevenson & Co. v. Bethea, grounds being to enable the plain- 68 S. C. 246, 47 S. E. 71. tiff to show that his transferer had "Cochran v. Siegfried (Tex. Civ. paid value for the note, it being a App.), 75 S. W. 542. foreign one. "'Lauve v. Bell, 1 La. (1 La. O. S. ■'» Herrick v. Carman, 10 Johns. 191) 73. (N. Y.) 224. But see: Case v. Me- " Broadway Sav. Bank of St. chanics' Banking Assoc, 4 N. Y. Louis V. Vorster, 30 La. Ann. 587. 166. ''De la Chaumette v. Bank of »" Eaton v. Alger, 57 Barb. (N. England, 9 Barn. & C. 208, but there Y.) 179. was a new trial granted, one of the § 410] WANT OF TITLE OR INTEREST. 524 the legal title. °^ And a want of beneficial interest in the proceeds of a note will not preclude the holder of the legal title from suing on the note, where the assignment is made in order that he may realize on the paper in the original payee's interest.*'^ ISTor will the bene- ficial interest of the indorsee preclude recovery by the payee of a note, indorsed as collateral security, where the payee has possession, without fraud.''^ Nor is it a valid objection to a suit that it is brought for the benefit of the principal in a note, which is sued as against a surety only and two other persons as executors of an estate.®* Nor is it a defense that the purchaser took only the nominal title to a note and that another was to benefit by the purchase.*'^ But it is held that an " answer that the note had been delivered to another party with author- ity to collect the same and apply the proceeds on a debt due to him, shows the beneficial interest to be in such party and constitutes a good defense.®^ § 410. Transfer of title or interest after suit commenced. — It is held that in a suit on a bill or note, a plea puis darrein continuance, that since suit commenced plaintiff has transferred to another the legal interest in the bill or note, is a good bar.*^^ But, under an Iowa decision, after an action has been commenced the plaintiff may sell and dispose of the judgment he may recover without investing the person purchasing it with the legal interest to the chose in action, and under such an assignment it would be improper for the court to substitute the holder of it as plaintiff in the action with power to prose- cute in his own name. And where, in an action on a promissory note, the answer denies that plaintiff holds against him any such notes as are described in his petition, such a denial, without more, relates to the time of commencing the action, and means only that it " Hyde v. Lawrence, 49 Vt. 361. "^ Hatchings v. Reinhalter, 23 R. Plaintiff was the beneficial owner I. 518, 51 Atl. 429. wheji the suit was brought. The as- " Hampton v. Shehan, 7 Ala. 295. signee, who was the mere legal title ^^ Anderson v. Johnson, 106 Wis. holder, subsequently appeared and 218, 82 N. W. 177, aff'g Anderson v. admitted plaintiff's ownership and Chicago Title & Trust Co., 101 Wis. disclaimed title in himself, and it 385, 77 N. W. 710. was decided that the defense that ^^ Gillispie v. Ft. Wayne & South- plaintiff was not the owner of the ern R. Co., 12 Ind. 398. paper was unsustained. Simon • v. "^ Beebe v. Real Estate Bank, 5 Wildt, 84 Ky. 157. Pike (Ark.) 183; following Gray v. °=Manley v. Park, 68 Kan. 400, 75 Real Estate Bank, 5 Pike (Ark.) Pac. 557, 76 Pac. 1130. 93. I 525 CHARACTER OF TITLE OR INTEREST. [§§ 411, 413 is denied that plaintiff holds such notes as are described. If in such, case the notes offered in evidence are not indorsed, and it is claimed that the assignment shows that the action was not prosecuted in the name of the real party in interest ; it is held error to instruct the jury- to find for the defendant, and that the assignment did not invest the assignee with the legal interest in the notes, being only a transfer of the judgment the assignor expected to recover.*^ §'411. Character of title or interest. — It is decided that the holder of the legal title is not obligated, in order to recover, to show in what capacity he holds the note.'^'* And, ordinarily, the character and ex- tent or nature of the interest of the legal holder of negotiable paper cannot constitute a defense as to the amount recoverable from the maker, provided he is entitled to any recovery whatever.'^" Nor, it is decided, can the maker, when sued on a note by an indorsee from the payee, defend as to the character in which the plaintiff sues, and which is alleged to arise from a guaranty made by the indorsee to a bank where he had discounted the note.'^^ § 412. Void or voidable title or transfer. — Any illegality in the transfer will vitiate the title of one who derives it through a violation of law to which he was a party, although one not a party to such vio- lation and holding it bona fide might recover.''^ And while it is gen- erally true as a rule that if a promisor induces a person to take an assignment of a note, by admitting the justice of the debt, or by de- claring that he has no defense, he cannot afterward deny it to the prejudice of the assignee, yet such a rule has no application to a case of usury where the assignee has knowledge of the same, and es- pecially where such declarations are obtained the more effectually to cover and hide the same.'^^ If a note has been actually and regularly indorsed and delivered by the payee to the indorsee the legal title be- "' Allen v. Newberry, 8 Clarke England, 13 East 135. Lord Kenyon, (Iowa) 65. C. J., said: "There is no doubt that »" Graham v. Troth, 69 Kan. 861, 77 the holder of a bank note is entitled Pac. 92. prima facie to prompt payment; but "Ellis V. Watkins, 73 Vt. 371, 50 if the other party has been plun- Atl. 1105. dered of it before," and there is " Finney v. Pennsylvania Iron some suspicion of priority in the Works Co., 22 App. D. C. 476. fraud, it is a proper question for "Sproule V. Merrill, 16 Shep. (29 the jury. See §§ 288, et seg., herein. Me.) 260. See Solomons v. Bank of "Nichols v. Levins, 15 Iowa 362. § 413] WANT OF TITLE OR INTEREST. 526 comes thereby transferred to such indorsee with the right to enforce payment without regard to the relations between him and his imme- diate indorser, and such right to recover cannot be successfully chal- lenged by either the maker or his creditors upon the grounds that the indorsement was made causa mortis and that there had been a subse- quent revocation by the recovery by the donor. The gift is not void, but voidable, and that only by the donor or his legal representative. The note is the property of the indorsee, except possibly as to some offset by the maker against the payee or except as to creditors hin- dered, delayed or defrauded by such assignment made and accepted.'^'* The character of the paper, however, as in case of certificates of in- debtedness issued by a municipality, may be such that its ultimate payment depends upon contingencies which must happen before any right of action can accrue, these conditions precedent being imposed under ordinance. In such case the paper, not being a negotiable or transferable instrument, the holder thereof acquires no enforceable title where there has been no compliance by him with the prerequisites upon which title must rest.'^^ But if an assignment is voidable only at the instance of other parties than the maker, the latter cannot set up such assignment to destroy the title of the indorsee in a suit by him.'^® And although a cashier of a bank can indorse negotiable paper and convey the legal title to any person but himself, yet an indorse- ment to himself would be voidable merely at the instance of the bank, and until avoided by the bank would pass legal title to the cashier.''^ § 413. Checks. — An assignee in due course of a check may sue thereon.''^ And in a recent case in New York the rule is affirmed as settled that title to a check, like title to any other chose in action, can be transferred by indorsement, and by delivery and parol; but by such transfer its negotiability is destroyed and the transferee takes simply the title which the transferor had which is subject to equities existing between the drawer of the check and the payee; and under the Negotiable Instruments Law, where the holder of an instrument payable to his order transfers it for value without indorsing it, the '*Hulley V. Chedic, 22 Nev. 127, 36 Pac. 1036. per Henshaw, J.; Preston Pac. 783. v. Cutter, 64 N. H. 461, 463; Haugan '^Newgrass v. City of New Or- v. Sunwall, 60 Minn. 367, 62 N. W. leans, 42 La. Ann. 163, 7 So. 565. 398. ™ Tyson v. Bray, 117 Ga. 639, 45 S. '' Kemp v. Northern Trust Co., 108 E. 74. 111. App. 242. "Dyer v. Sebrell, 135 Cal. 597, 67 537 BILL OF LADING. [§ 414 transfer vests in the transferee such title as the transferor had there- in, and the transferee acquires in addition the right to have the in- dorsement of the transferor; and a bank certifying a check so de- livered without indorsement is liable, though it had no knowledge as to who was owner of the check.''^ § 414. Bill of lading. — It is decided that the fact that goods were taken from the possession of the carrier by one having title para- mount to that of the consignor is a good defense to an action by the consignee or indorsee of the bill of lading for the non-delivery of the property. ^° The statute making bills of lading negotiable does not put them upon the footing of bills of exchange and charge the negotia- tion of them with the consequences which attend or follow the nego- tiation of bills or notes, but merely prescribes the mode of trans- ferring or assigning them, and provides that such transfer and de- livery by these symbols of property shall for certain purposes be equivalent to an actual transfer and delivery of the property itself. ^^ " Mueur v. Phoenix Nat. Bk., 88 N. Y. Sup. 83, 94 App. Div. 331, aff'g 86 N. Y. Supp. 701, 42 Misc. 341, aff'd 183 N. Y. (Mem.) 511. See Freund V. Importers' & Traders' Nat. Bank, 76 N. Y. 352. *" See next following note. ^^ National Bank of Commerce v. Chicago, B. & N. R. Co., 44 Minn. 224, 232-237. The court, per Mitch- ell, J., said: "There is an unbroken line of authorities in England that, even as against a bona fide con- signee or indorsee for value, the carrier is not estopped by the state- ments of the bill of lading, issued by his agent, from showing that no goods were in fact received for transportation. Grant v. Norway, 10 C. b: 665; Coleman v. Riches, 16 C. B. 104; Hubbersty v. Ward, 8 Exch. 330; Brown v. Powell Coal Co., L. R. 10 C. P. 562; McLean v. Fleming, L. R. 2 H. L. Sc. 128; Cox v. Bruce, 18 E. B. Div. 147; Meyer v. Dresser, 16 C. B. (U. S.) 646; Jessel v. Bath, L. R. 2 Exch. 267. And this has not been at all changed by the 'bills of lading act' (18 and 19 Vict., c. Ill, § 3). It is also the settled doctrine of the federal courts. Schooner Freeman V. Buckingham, 18 How. (U. S.) 182; The Lady Franklin, 8 Wall. (U. S.) 325; Pollard v. Vin- ton, 105 U. S. 7; St. Louis, etc., Ry. Co. V. Knight, 122 U. S. 79 (7 Sup. Ct. Rep. 1132); Friedlander v. Texas & Pac. Ry. Co., 130 U. S. 416 (8 Sup. Ct. Rep. 570). What was said on the subject in Schooner Freeman v. Buckingham was proba- bly obiter, for in that case it was sought to hold the interest of the general owner in a ship liable on a bill of lading issued by the special owner, who was not the agent of the former. But what is there said is important both as being the utter- ance of so eminent a jurist as Curtis, J., and also because so often quoted with approval by the same court in subsequent cases. The case of the Lady Franklin did not in- volve the question of a bona fide 415] WANT OF TITLE OR INTEREST. 523 § 415. To protect maker or let in his defense. — If the maker has a good defense, as between him and the payee, but is prevented from purchaser, but is important as an- nouncing that the principle is the same, whether the false bill of lad- ing is issued fraudulently or by mistake. But, in view of the later cases cited above, there is no room to doubt that that court is firmly committed to the doctrine in its broadest scope. The same rule ob- tains in Massachusetts, Maryland, Louisiana, Missouri, North Caro- lina, and apparently Ohio. Sears v. Wingate, 3 Allen 103; Baltimore & Ohio R. Co. V. Wilkins, 44 Md. 11; Fellows V. Steamer Powell, 16 La. Ann. 316; Hunt v. Miss. Cent. R. Co., 29 La. Ann. 446; Louisiana Nat. Bank v. Laveille,- 52 Mo. 380; Wil- liams v. Wilmington & Weldon R. Co., 93 N. C. 42; Dean v. King, 22 Ohio St. 118. The text writers all agree that the overwhelming weight of authority is on this side. See 38 Am. Dec. 410 (note to Chandler v. Sprague). The reason by which this doctrine is usually supported is that a bill of lading is not negotiable in the sense in which a bill of exchange or promissory note is negotiable, where the purchaser need not look beyond the instrument itself; that so far as it is a receipt for the goods it is susceptible of explanation or contradiction, the same as any other receipt; that the whole question is one of the law of agency; that it is not within the scope of the author- ity of the shipping agent of a car- rier to issue bills of lading where no property is in fact received for transportation; that the extent of his authority, either real or appar- ent, is to issue bills of lading for freight actually received; that his real and apparent authority — i. e., the power with which his principal has clothed him in the character in which he is held out to the world — is the same, viz., to give bills of lad- ing for goods received for transpor- tation; and that this limitation upon his authority is known to the com- mercial world, and therefore any per- son purchasing a bill of lading is- sued by the agent of a carrier acts at his own risk as respects the ex- istence of the fact (the receipt of the goods) upon which alone the agent has authority to issue the bill, the rule being that, if the authority of an agent is known to be open for exercise only in a certain event, or upon the happening of a certain contingency or the performance of a certain condition, the occurrence of an event, or the happening of a con- tingency, or the preponderance of the condition must be ascertained by him who would avail himself of the results ensuing from the exer- cise of the authority. An examina- tion of the authorities also shows that they apply the same principle whether the bill of lading was issued fraudulently and collusively, or merely by mistake. The only States that we have found in which a con- trary rule has been adopted are New York, Kansas, Nebraska, apparently Illinois, and perhaps Pennsylvania. Armour v. Mich. Central R. Co., 65 N. Y. Ill; Bank of Batavia v. N. Y. L. E. & W. R. R. Co., 106 N. Y. 195 (12 N. E. 433); Sioux City & Pac. R. Co. V. First Nat. Bank, 10 Neb. 556 (7 N. W. 311) ; St. Louis & Iron Mt. R. Co. V. Larned, 103 111. 293; Brook V. New York, etc., R. Co., 108 Pa. St. 529 (1 Atl. 206). The rea- soning of these cases is in substance 529 TO PROTECT MAKER OR LET IN" HIS DEFEXSE. [§ 415 making it in consequence of the note having passed into tlie hands of an indorsee, it may be proper to show the circumstances under which that the question does not at all de- pend upon the negotiability of bills of lading, but upon the principle of estoppel in pais; that where a prin- cipal has clothed an agent with power to do an act in case of the existence of some extrinsic fact, necessarily and peculiarly within the knowledge of the agent, and of the existence of which the act of executing the power Is itself a rep- resentation, the principal is estopped from denying the existence of the fact, to the prejudice of a third per- son who has dealt with the agent or acted on his representation in good faith in the ordinary course of busi- ness. This rule this court in effect adopted and applied in McCord v. Western Union Telegraph Co., 39 Minn. 181 (39 N. W. 315, 318). It is urged that force is added to this reasoning in view of the fact that bills of lading are viewed and dealt with by the commercial world as quasi negotiable, and consequently it is desirable that they should be viewed with confidence and not dis- trust; and that for these considera- tions it is better to cast the risk of the goods not having been shipped upon the carrier, who has placed it in the power of agent^ of his own choosing to make these representa- tions, rather than upon the inno- cent consignee or indorsee, who, as a rule, has no means of ascertaining the fact. If the question was res Integra, we confess that it seems to us that this argument would be very cogent. But, on the other hand, it may be said that carriers are not in the business of issuing and dealing in bills of lading in the same sense in which bankers issue and deal in Joyce Defenses — 34. bills of exchange; that their busi- ness is transporting property, and that if the statements in the receipt part of bills of lading issued by any of their numerous station or local agents are to be held conclusive upon them, although false, it would open so wide a door for fraud and collusion that the disastrous conse- quences to the carrier would far out- weigh the inconvenience resulting to the commercial world from the opposite rule. It is also to be ad- mitted that it requires some temer- ity to attack either the policy or the soundness of a rule which seems to have stood the test of experience, which has been approved by so many eminent courts, and under which the most successful commer- cial nation in the world has devel- oped and conducted her vast com- merce ever since the inception of carriers' bills of lading. But on questions of commercial law it is eminently desirable that there be uniformity. It is even more impor- tant that the rule be uniform and certain than that it be the best one that might be adopted. Moreover, on questions of general commercial law the federal courts refuse to fol- low the decisions of the state courts, and determine the law according to their own views of what it is. It is therefore very desirable that on such questions the state courts should conform to the doctrine of the fed- eral courts. The inconvenience and confusion that would follow from having two conflicting rules on the same question in the same state, one in the federal courts and an- other in the state courts, is of itself almost a sufficient reason why we § 415] WAXT OF TITLE OR INTEREST. 530 the indorsement was made, as that it was indorsed to him when past due, or that he is not for other reasons the hona fide holder of the note. Such evidence may be admissible in many cases in order to sub- ject the note in the hands of the indorsee to a defense existing between the original parties. Aside from that consideration, in the absence of should adopt the doctrine of the fed- eral courts on this question. To do otherwise, so long as the jurisdic- tion of those courts so largely de- pends on the citizenship of suitors, would really result in discrimination against our own citizens. In defer- ence, therefore, to the overwhelming weight of authority, but without committing ourselves to all the rea- soning of the decided cases on the subject of the law of agency, we deem it best to hold that a bill of lading issued by a station or ship- ping agent of a railroad company or other common carrier, without re- ceiving the goods named in it for transportation, imposes no liability upon the carrier, even to an inno- cent consignee or indorsee for value, and that the rule is the same whether the act of the agent was fraudulent and collusive, or merely the result of mistake. Of course this presumption is predicated upon the assumption that the authority of the agent is limited to issuing bills of lading for freight receivable be- fore, or concurrent with the issuing of the bills, which would be the presumption In the absence of evi- dence to the contrary. No doubt a carrier might adopt a different mode of doing business by giving his agents authority to issue bills of lading for goods not received, so as to render him liable in such cases to third parties." As to negotiability of bills of lad- ing and rights on transfer thereof see further: — United States. — Farmers' Loan & Trust Co. v. Northern P. R. Co., 120 Fed. 873, 57 C. C. A. 533, rev'g 112 Fed. 829. Connecticut. — Mather v. Gordon Bros., 77 Conn. 341, 59 Atl. 424. Georgia. — Commercial Bank v. J. K. Armsby Co., 120 Ga. 74, 65 L. R. A. 443, 47 S. E. 589; Raleigh & G. R. Co. V. Lowe, 101 Ga. 320, 28 S. E. 867, 10 Am. & Eng. R. Cas. N. S. 398. Kentucky. — Temple Nat. Bank v. Louisville Cotton Oil Co., 26 Ky. L. Rep. 518, 82 S. W. 253. Maryland. — National Bank of Bristol V. Baltimore & O. R. Co., 99 Md. 661, 59 Atl. 134. Minnesota. — Ryan v. Great North- ern R. Co., 90 Minn. 12, 95 N. W. 758. Missouri. — American Zinc L. & S. Co. V. Marble Leadworks, 102 Mo. App. 158, 76 S. W. 668; Smith v. Missouri P. R. Co., 74 Mo. App. 48. Neiv Hampshire. — Hart v. Boston & M. R., 72 N. H. 410, 56 Atl. 920. New Jersey. — National Newark Bkg. Co. V. Delaware L. & W. R. Co., 70 N. J. L. 774, 58 Atl. 311. North Carolina. — Willard Mfg. Co. V. G. H. Tierney & Co., 133 N. C. 630, 45 S. E. 1026. • Texas. — Grayson County National Bank V. Nashville C. & St. L. R. (Tex. Civ. App.), 79 S. W. 1094: First Nat. Bank v. San Antonio & A. P. R. Co., 97 Tex. 201, 77 S. W. 410, 72 S. W. 1033. Washington. — Seattle Nat. Bank v. Powles, 33 Wash. 21, 73 Pac. 887. 531 TO PROTECT MAKER OR LET IN HIS DEFENSE. [§ 416 illegality in the transaction, such testimony would proljably be inad- missible. But if the maker justly owes the debt and has no defense legal or equitable which should shield him from payment of the note to some one, it is immaterial to him to whom he pays it or who re- covers upon it, provided that when the payment is made, or a recovery had, it will bar any further claim on the note by others.^" So where the holder has legal title to a demand, and the defendants would be protected in payment to, or recovery by him, it is enough to entitle him to maintain an action on the note and to preclude defendant from questioning the conditions or considerations on which the transfer was based.*^ And the maker of a negotiable note has no interest in raising the question of the right of the payee to indorse it, as a payment to the indorsee and holder will protect him.^* But the defendant maker has a right to have the judgment rendered against him in favor of the legal holder, so as to become a bar to a future recovery on the same instrument.^^ §416. Same subject. — It is held that the general rule is that, in the absence of 7nala fides, plaintiff's prima facie title from possession may not be rebutted by the debtor by evidence that the title is in some other party so long as he is protected against the claim of such party by the payment of the judgment which may be rendered against him.^® It is also determined that unless the title of the plaintiff is necessary for a defense against the one asserted to be the owner, it cannot be disputed, in the absence of a showing of a fictitious or fraud- ulent transfer, made to deprive the maker of his defense against the true owner ; that it is not a good plea to allege that the note sued on is the property of another and not of the plaintiff, without showing some substantial matter of defense against the one asserted to be the owner, and which could not be set up against the plaintiff.^^ It is de- '^Tarbell v. Sturtevant, 26 Vt. note had full knowledge of all the 513, 517, per Isham, J. proceedings in the suit, and had *= Hunter v. Allen, 94 N. Y. Supp. not in any manner asserted any 880, 106 N. Y. App. Div. 557. right to interfere, it was held that ** Taylor v. Littell, 21 La. Ann. a payment of the judgment to the 665. plaintiff, if permitted by the real ''Burnap v. Cook, 32 111. 168. owner of the note, would be a suf- ^^Dyer v. Sebrell, 135 Cal. 597, 67 ficient protection to the defendant. Pac. 1036, per Henshaw, J. Hackett v. Kendall, 23 Vt. 275. "Where it appeared that the per- " Gushee v. Leavitt, 5 Cal. 160, 63 son who was claimed by the de- Am. Dec. 116, approved in Giselman fendant to be the real owner of the v. Starr, 106 Cal. 651, 657, 658, 41C] WANT OF TITLE OR INTEREST. 532 where the court, per Henshaw, J., said: "The defendant has a statu- tory right to have a cause of action against him prosecuted by the real person in interest (Code Civ. Proc, § 307), and it was in the exercise of that right that he pleaded lack of title in plaintiffs and asked to have determined the conflicting claims of those whom he asserted to be the owners. But the purpose of the statute is readily discerni- ble, and the right is limited to its purpose. It is to save a defendant, against whom a judgment may be obtained, from further harassment or vexation at the hands of other claimants to the same demand. It is to prevent a claimant from making a simulated transfer, and thus de- feating any just counter-claim or set-off which defendant would have to the demand if pressed by the real owner. But where the plaintiff shows such a title as that a judg- ment upon it satisfied by defend- ant will protect him from future annoyance or loss, and where, as against the party suing, defendant can urge any defenses he could make against the real owner, then there is an end of the defendant's concern and with it of his right to object; for, so far as he is in- terested, the action is being prose- cuted in the name of the real party in interest. The cases which seem- ingly lay down the broad rule that it is not a good plea to allege that the note sued upon is the property of another and not of plaintiff, with- out showing some substantial mat- ter of defense against the one as- serted to be the owner, are to be read in the light of their facts, and so read they will be found to be in strict accord with what is here said. These are cases where prima facie legal title is shown in plaintiff. such a title as would protect de- fendant if judgment were obtained upon it. If, under such circum- stances, the defendant claims an- other to be the real owner, he must support his right to make that claim by showing that he has some equity or defense against the real owner which he cannot maintain against the prima facie legal owner. Such is the meaning of Price v. Dunlap, 5 Cal. 483, and Gushee v. Leavitt, 5 Cal. 160, 63 Am. Dec. 116." The Giselman case is cited in Philbrook v. Superior Court, 111 Cal. 31, 35, a case of mandamus to compel substitution of assignee and the right of a disbarred attorney at law to prosecute cause of action, and availability of defenses against him; also cited in Herman v. Hecht, 116 Cal. 553, 560, 561, where it was declared that the assignment vested the legal title to the note in plain- tiff and carried with it the original debt, and that it was immaterial whether the money consideration mentioned in the assignment was re- ceived by plaintiff's assignors or whether they expected to obtain a benefit from a recovery by the plain- tiff. That the writing imported a consideration sufficient to sustain the assignment, "and as the defend- ants do not show that they have some equity or defense against plaintiff's assignors which they do not have against the plaintiff, or show that a judgment against them in favor of the plaintiff would not protect them, they are not con- cerned with what the plaintiff may do with the fruits of such judg- ment." The Giselman case, ante, is also cited in Seybold v. Bank, 5 N. D. 460, 465, to the point that an assignee having naked legal title may sue, though whole beneficial interest be in assignor. 533 DENIAL OF OWNERSHIP OR TITLE. [§ 417 cided in Georgia that the holder's title cannot be made the subject of inquiry unless necessary for the maker's protection and to let in his defense/^ or the defense which he seeks to make.^^ § 417. Denial of ownership or title. — Upon this point the decisions are not in harmony. In the federal courts it is held that one who has not a meritorious defense cannot be permitted to show that the nominal plaintiff, in whose name the suit is brought, is no longer the real party in interest.'"' But it is also decided that a denial that plaintiff is the lawful owner of the note in suit is a good defense.''^ Under an Alabama decision if the consideration on which the note is based moves entirely from a third person to one assuming to act for him, any defense of the maker against the party in interest is admis- sible where no interest in the note is disclosed in the person to whom it is made.''- In California it is held that it may be shown in an action by the transferee that one is not the legal owner of a note for value."" In Indiana it is determined that the maker of a note cannot show, as a defense to an action thereon, that the payee was not tlie real party in interest at the time the note was executed.""* And under another decision the executor can maintain an action on notes and mortgages given to the testator and it is no defense that they were specifically bequeathed to another and that the suit should have been brought in his name."^ But it is also held in that state that a defense is good which shows that no administration was taken out on the estate ^Ray v. Anderson, 119 Ga. 926, 47 citing this, amongst other cases, the S. E. 205; Civ. Code 1895, § 3698. court, in City of Cleveland v. Cleve- '"Bomar v. Equitable Mort. Co., land C. C. & St. L. Ry. Co., 93 Fed. Ill Ga. 143, 36 S. E. 1101; Varner 113, 123, says. In discussing the V. Lamar, 9 Ga. 589 (there was in point of estoppel in that case: "The this case no evidence that defend- Supreme Court of the United States, ant had any defense to the note by seemingly, loosened its ancient way of set-off or otherwise and rule moorings upon the subject of admit- was aflBrmed as settled); Hall v. ting equitable defenses in actions at Carey, 5 Ga. 239 (the defendants law." were indebted for money advanced, »- McClure v. Litchfield, 11 Ala. for which notes were given, and it 337. was not necessary for their defense *= Woodsum v. Cole, 69 Cal. 142, 10 that they should inquire into the Pac. 331. Examine § 416 herein, validity of plaintiff's title); Nisbet "Johnson v. Conklin, 119 Ind. V. Lawson, 1 Kelly (Ga.) 275. 109, 21 N. E. 462, 12 Am. St. Rep. »*Lum V. Robertson, 6 Wall. (73 371. U. S.) 277, 18 L. Ed. 743. "^ Crist v. Crist, 1 Ind. 570, 50 Am. ■» Boggs V. Wann, 58 Fed. 681. In Dec. 461. § 417] "WANT OF TITLE OR INTEREST. 534 of an assignee of the note, that it came by assignment and indorse- ment into plaintiff's hands through the widow and another and that defendant was a creditor of the estate; the note being first indorsed in blank.^*' In Iowa it is decided that the maker must show that he had a defense against the payee where he seeks to avail himself of a defense of the payee's breach of agreement not to transfer the note.®'' Under a Kansas decision it must be shown, where it is averred as a defense that the holder is not the real party in interest and who is the unconditional assignee, that the defendants would be unprotected against other liability in case of a payment to such transferee.*^* Un- der a Louisiana decision the maker or indorser, in the absence of an equity existing against the payee, cannot question the holder's title; and the equities which the defendant is entitled to plead are such as operate in his own favor and not those which belong to a party to whom he is himself liable. ®® So in another case in that state it is held that the maker of a note cannot set up, in defense to its payment, that the holder is not the true owner unless he shows that the assignment or transfer is fictitious and fraudulent and made to deprive him of a substantial defense against the true owner.^*''' It is also decided that, in case of notes indorsed in blank, it is immaterial to inquire whether plaintiff is the absolute owner or not, where defendant denies that plaintiff is the owner without suggesting that he has any defense, which could be set up against such notes in the hands of any person whomsoever which would not be available against the plain- tiff.^°^ In Maine it is decided that a person may retain title to a ne- gotiable note and order its contents paid to another who may sue upon it, and the maker cannot dispute the title, because he had promised to pay, not necessarily the owner but to the order of the payee in a note payable on demand to such order. This rule was applied where the payee ordered the contents of the note undue to be paid to a third »' Stebbins v. Goldthwait, 31 Ind. La. Ann. 283, 288. See Taylor v. Lit- 159. tell, 21 La. Ann. 665. " State Bank of Indiana v. Ment- The simple denial of plaintiff's zer (Iowa), 100 N. W. 69. right to sue as the holder of a ne- '' Greene v. McAuley (Kan.), 79 gotiable instrument cannot author- Pac. 133. ize the maker to contest his title to »' Ran V. Latham, 11 La. Ann. 276. it when he holds by a blank indorse- ^"°Case V. Watson, 21 La. Ann. ment, unless the note was lost or 731. stolen. McKinney v. Beeson, 7 La. "^Scionneaux v. Wahuespack, 32 (14 La. O. S. 254) 530. 535 DENIAL OF OWNERSHIP OR TITLE. [§ -ilS person by the maker after the death of the payee. ^*'- Under anotlier case in that state if one brings a suit in the name of another person, the same defense may be made as if he were a party to the record. ^''^ § 418. Same subject. — Under a Massachusetts decision, the mere isolated fact that a bank for whose benefit the suit is brought has no interest in or legal title to the note is wholly immaterial to the defend- ant, in a suit brought in the name of the person who has the legal title to its use, unless a foundation is laid for the introduction of such evidence, as in the case of an offer to prove an offset against the nomi- nal plaintiff or payment to him."* In Missouri it is held that an averment is good which positively and specifically denies that the note was assigned by indorsement and that the legal ownership of the paper is not in the plaintiff. ^°^ Under a jSTebraska decision the denial of in- dorsement and ownership is a good defense."'' It is held in New York, in an action against the maker by an indorsee, an answer is frivolous which denies that plaintiff lawfully holds or owns the note or that the lawful owner transferred or delivered it to him."^ But it is also de- cided in that state that it may, under certain circumstances, be shown or alleged in defense that plaintiff is not the real party in interest."* "== Downing v. Wheeler, 93 Me. (holding that the maker cannot in 570, 45 Atl. 836. suit by holder allege that latter did 1"' Sproule V. Merrill, 16 Shep. (29 not pay value or that it was not law- Me.) 260. fully transferred unless he can '"Brigham v. Marean, 7 Pick. (24 show that he was defrauded or has Mass.) 40. lost some d,efense he might have "''Mechanics' Bank v. Fowler, 36 had against the payees had they Mo. 33, 35. See Cocker v. Cocker, 2 retained it; nor is it any defense Mo. App. 451. that the property of the note is in "'Central City Bank v. Rice, 44 a third person unless plaintiff's Neb. 594, 63 N. W. 60. possession is mala fide or defend- "' First National Bank v. Jen- ant's defense prejudiced); Guern- nings, 89 N. Y. Supp. 995, 44 Misc. sey v. Burns, 25 Wend. (N. Y.) 411 374. See Rowland v. Bates, 48 N. (substantially same ruling as in Y. St. Rep. 642, 1 Misc. (N. Y.) 91, last case); Andrews v. Bond, 16 20 N. Y. Supp. 373, aff'd in 3 Misc. Barb. (N. Y.) 633 (holding that the 609, 22 N. Y. Supp. 557, 51 N. Y. St. lawful possession of a negotiable Rep. 857 (holding that it is imma- note operates as a full authority to terial where holder obtained note the holder so far as innocent third indorsed by defendants in blank). parties are concerned, to negotiate "'Wood V. Wellington, 30 N. Y. and transfer all right, title and in- 218. See Aspinwall v. Meyer, 2 terest). Sandf. (4 N. Y. Super. Ct.) 180 § 418] WANT OF TITLE OR INTEREST. • 536 So in another case it is held that the defendant may, since the code, prove that plaintiff is not the real owner of the note sued on,^**'' where such defense goes entirely to disprove any ownership or interest what- ever or even right to possession."*' Under a Xorth Carolina decision, if the drawer has come into possession, without indorsement, of a bill which has been accepted by the drawee in favor of another, he cannot recover without showing that the bill had been indorsed to him or in blank, or that he had been obliged to pay the money as such drawer, or that the acceptor on account had, was indebted to him to the amount of the bill.^^^ In an Oklahoma case it is decided that a denial of ownership is no defense, where the facts on which a pre- sumption of ownership exists are alleged in a suit on a note payable to a certain person or his orders. ^^^ In Pennsylvania it is held that an affidavit of defense may be set up by the maker, in a suit by the in- dorsee, where it alleges ownership of the note in suit by a bank against whom a set-off exists on the note under a collateral contract.^^^ So in that state it is held to be a sufficient affidavit of defense that the note is actually the payee's property, and that the indorser's name was used by the plaintiffs to avoid the defense of usury.^^^ So an indorser of a negotiated note may prove that he has paid it, and that the plaintiff is but a trustee for him, and that ownership is in another to, let in creditors' claims may also be shown.^^^ And in an action for debt on a single bill, evidence may be given tending to show that another is really the owner, and that it was held in ti-ust for him by the plaintiff, ^o' Eaton V. Alger, 57 Barb. (N. "^ Smith v. Bryan, 33 N. C. (11 Y.) 179. Ired. L.) 416. . ""Hays V. Hathorn, 74 N. Y. 486, "^ Berry v. Barton, 12 Okla. 221, 71 dist'g Sheridan v. Mayor, etc.. New Pac. 1074. York-, 68 N. Y. 30; Eaton v. Alger, "= Long v. Long, 208 Pa. 368, 57 47 N. Y. 345; Allen v. Brown, 44 N. Atl. 759. See Graphic Co. v. Marcy, Y. 228; Brown v. Penfield, 36 N. Y. 12 Phila. (Pa.) 218, holding that an 473; City Bank of New Haven v. affidavit of defense is good which Perkins, 29 N. Y. 554; Cummings v. sets up that the party in whose fa- Morris, 25 N. Y. 625, holding that vor the note is drawn is still the code has changed rule in Gage v. owner and real holder thereof, to Kendall, 14 Wend. (N. Y.) 640, and whose use the plaintiff holds it, and reversing Hays v. Southgate, 10 that suit is brought in plaintiff's Hun (N. Y.) 511. See, further, name to prevent the defense of set- Gerding v. Welch, 51 N. Y. Supp. off. 1064, 30 N. Y. App. Div. 623; Hughes "*Eyre v. Yohe, 67 Pa. St. 477.. V. Wilcox, 17 Misc. 32, 39 N. Y. "^Maynard v. Nekervis, 9 Pa. St. Supp. 210; Clark v. Tryon, 23 N. Y. 81. Supp. 780, 786, 4 Misc. 63. ■I 537 DENIAL OF OWNERSHIP OR TITLE. [§ 418 and that said owner was indebted to the defendant in a greater amount, thereby enabling the defendant to set off a debt due from the equitable owner.^^* So under another decision in the same state it may be shown that the note was only delivered to be held until return was demanded, which demand had been made and refused on the ground that the note was lost.^^^ But it is also deterniined in another case that in a suit against the drawers on a negotiable note indorsed in blank, the defendants have no concern with the question of the actual ownership of the note, except where the defense turns upon points involving the personal conduct of the true owner or of those who pre- ceded him, inasmuch as the owner of such note may fill it up with what name he pleases, and the person whose name is inserted is deemed the legal owner, for the purposes of the action.^^^ Under a South Caro- lina decision, in an action by the bearer on a note payable to a certain person or bearer, the defendant, that he may be let into his defense against the payee, may show that the plaintiff is not the owner of the note, or has no interest, or that he gave no consideration for it.^^® In a South Dakota case it is held that the want of authority of a national bank to purchase a note cannot be availed of by the maker in a suit against him.^^° In Texas it is decided that the fact alone that plaintiff is not the real owner of the note constitutes no defense either in bar or in abatement, and that the plea that plaintiff was a bankrupt, and that the note belonged to his creditors, who had not been paid, was bad on demurrer, where it was not alleged that the assignee in bankruptcy had reduced the note to possession or that defendant was a creditor.^-^ Under a Vermont decision the defendant cannot contest plaintiff's "' Childerston v. Hammond, 9 "« Lee v. Ware, 3 Rich. L. (S. C.) Serg. & R. (Pa.) 68. 193. "'Carskaddon v. Miller, 25 Pa. '-"First National Bank v. Smith, Super. Ct. 47. 8 S. D. 7, 65 N. W. 437, aff'd 8 S. D. '"Brown v. Clark, 14 Pa. St. 469, 101, 65 N. W. 439. a case of a partnership note and "' Brown v. Chenoworth, 51 Tex. dissolution of the firm. See Rice v. 469. See Sanders v. Atkinson, 1 Tex. Abbeles (Pa.), 1 Wkly. Notes Cas. Ct. App. Civ. Cas. (White & W.), 38, holding that an affidavit of de- § 1326, holding that "it has been fense is insufficient which sets forth frequently held by this court that a that the defendant was an accom- debtor cannot resist a suit on a modation maker and that payee note by a party in possession of it was still the true owner and that with the apparent legal right, on the indorsement was made to pre- the ground that he is not in fact the vent a defense which defendant had owner, but that in equity it belongs against the payee. to some one else." 418] WANT OF TITLE OR INTEREST. 538 title to sue except for the purpose of protecting himself from a sub- sequent suit, in the name of some one having a better title and who has not acquiesced in the suit commenced.^-- But it is also decided in that state that the prima facie evidence of legal interest of a holder in a note may be rebutted by showing that he is wrongfully in possession and has no real ricrht or title to the note.^-* i^Hackett v. Kendall, 23 Vt. 275. In an action against members of firm on a note executed to one of them by all for value, an indorser for collection can recover, even though the wife of the payee is the owner. Ormsbee v. Kidder, 48 Vt. 361. "^Fletcher v. Fletcher, 29 Vt. 98. I CHAPTER XIX. PURCHASERS AFTER MATURITY. Sec. Sec. 419. General rule. 430. 420. Same subject — Continued. 421. Application of rule — Generally. 422. Application of rule, continued 431. — Set-off and recoupment. 423. Where series of notes mature 432. on failure to pay any one. 433. 424. Where payable on default in payment of interest. 434. 425. Application to particular paper. 426. Same subject — Coupon bonds. 435. 427. Certificate of deposit. 436. 428. Where transferred before but not indorsed until after ma- turity. 437. 429. Non-negotiable note. Effect of statute providing that suit by assignee shall be without prejudice. Limitations of rule — In gen- eral. Pro tanto recovery. Purchaser from hona fide holder — General rule. Same subject — Application of rule. Demand paper. Defenses and equities between maker and indorsee or inter- mediate holder. Secret equity in favor of entire stranger. § 419. General rule. — It is a general rule that one to whom com- mercial paper is indorsed after its maturity takes it subject to such defenses as existed against it in the hands of his indorser.^ The dis- '^ Alabama. — Battle v. Weems, 44 Ala. 105; Glasscock v. Smith, 25 Ala. 474; Robertson v. Breedlove, 7 Port. (Ala.) 541. California. — Templeton v. Poole, 59 Cal. 286; Hayward v. Stearns, 39 Cal. 58; Coghlin v. May, 17 Cal. 515; Sherman v. Rollberg, 11 Cal. 38; Fuller v. Hutchings, 10 Cal. 523, 70 Am. Dec. 746; Vinton v. Crowe, 4 Cal. 309; Folsom v. Bartlett, 2 Cal. 163. Connecticut. — Bissell v. Gowdy, 31 Conn. 47. Georgia. — Harrell v. Broxton, 78 Ga. 129, 3 S. E. 5; Burton v. Wynne, 55 Ga. 615; Howard v. Gresham, 27 Ga. 347; Smith v. Lloyd, Charit. T. U. P. (Ga.) 253. Illinois. — Melendy v. Keen, 89 111. 395; Eagle v. Kohn, 84 111. 292; First National Bank v. Strang, 72 111. 559; Bissell v. Curran, 69 111. 20; Stricklin v. Cunningham, 58 111. 293; Lock v. Fulford, 52 111. 166; Stafford v. Fargo, 35 111. 481; Lord V. Favorite, 29 111. 149; Bryan v. Primm, 1 111. 59; McCaffrey v. Dus- tin, 43 111. App. 34; Bradley v. Linn, 19 111. App. 322; Cooper v. Nock, 17 Peck (111.) 301; Griffin v. Ketchum, 8 Peck (111.) 392; Bryan v. Primm, 539 § ^19] PURCHASERS AFTER MATURITY. 540 tinction to be observed between a bill indorsed before and after matur- ity is that in the former case it comes to the indorsee with no sus- Breese (111.) 59; Reichert v. Koer- ner, 54 111. 306; Morgan v. Bean, 100 111. App. 114. Indiana. — Cross v. Herr, 96 Ind. 96. Iowa. — Leach v. Funk, 97 Iowa 576, 66 N. W. 768; Hedge v. Gibson, 58 Iowa 656, 12 N. W. 713; Clute v. Frazier, 58 Iowa 268, 12 N. W. 327; McCormick v. Williams, 54 Iowa 50, 6 N. W. 138; Schuster v. Marsden, 34 Iowa 181; McNitt v. Helm, 33 Iowa 342; Stannus v. Stannus, 30 Iowa 448; Hay ward v. Minger, 14 Iowa 516; Kurz v. Holbrook, 13 Iowa 562; Bates v. Kemp, 12 Iowa 99; Barlow v. Scott's Adm'rs, 12 Iowa 63. Kansas. — Eggan v. Briggs, 23 Kan. 710; Hadden v. Rodkey, 17 Kan. 429. Kentucky. — Greenwell v. Haydon, 78 Ky. 332. Louisiana. — State v. Sutherland, 111 La. 381, 35 So. 608; Lanata v. Bayhi, 31 La. Ann. 229; Henderson V. Case, 31 La. Ann. 215; Davis v. Bradley, 26 La. Ann. 555; Walton v. Young, 26 La. Ann. 164; Marcal V. Melliet, 18 La. Ann. 223; Wil- liams v. Benton, 10 La. Ann. 158 Sawyer v. Hoovey, 5 La. Ann. 153 Ford V. Dosson, 1 Rob. (La.) 39 McKown V. Mathes, 19 La. 542 Shipmans v. Archinard, 19 La. 471 Stetson v. Stackhouse, 18 La. 119 Lapice v. Clifton, 17 La. 152; Bur- roughs V. Nettles, 7 La. 113; Turcas V. Rogers, 3 Mart. N. S. (La.) 699; Herriman v. Mulhellan, 1 Mart. N. S. (La.) 605. Maine. — Cummings v. Little, 45 Me. 183; Davis v. Briggs, 39 Me. 304; Tucker v. Smith, 4 Me. 415; "Sprague v. Graham, 16 Shep. (Me.) 160; Burnham v. Tucker, 6 Shep. (Me.) 179. Maryland. — Herrick v. Swomley, 56 Md. 439, 465; Clark v. Dederick, 31 Md. 148. Massachusetts. — Holland v. Make- peace, 8 Mass. 418; Ayer v. Hutch- ins, 4 Mass. 370, 3 Am. Dec. 232; Gold V. Eddy, 1 Mass. 1; American Bank v. Jenness, 2 Mete. (Mass.) 288; Kellogg v. Barton, 12 Allen (Mass.) 527; Thompson v. Hale, 6 Pick. (Mass.) 259. Michigan. — City Bank of Dowa- giac V. Dill, 102 Mich. 305, 60 N. W. 767; Simons v. Morris, 53 Mich. 155, 18 N. W. 625; Church v. Clapp, 47 Mich. 257, 10 N. W. 362; Comstock v. Draper, 1 Man. (Mich.) 481, 53 Am. Dec. 78. Mississippi. — Money v. Ricketts, 62 Miss. 209; Ainsworth v. Ains- worth, 24 Miss. 145. Missouri. — Kellogg v. Schnaake, 56 Mo. 136; Mattoon v. McDaniel, 34 Mo. 138; Farris v. Catlett, 32 Mo. 469; Wheller v. Barret, 20 Mo. 573; Shipp v. Stacker, 8 Mo. 145; Wil- liams V. Baker, 100 Mo. App. 284, 73 S. W. 339. Nebraska. — May v. First National Bank (Neb. 1905), 104 N. W. 184; Davis V. Neligh, 7 Nebr. 78, 84; Kit- tle V. De Lamater, 3 Nebr. 325. New Hampshire. — Southard v. Porter, 43 N. H. 379; McDuffie v. Dame, 11 N. H. 244; Odiorne v. Howard, 10 N. H. 343. New Jersey. — Cumberland Bank V. Hann, 18 N. J. L. 222; Youngs v. Little, 15 N. J. L. 1. Neio York. — Northampton Nat. Bank v. Kidder, 106 N. Y. 221, 12 N. E. 577; Cowing v. Altman, 79 N. Y. 167; Chester v. Dorr, 41 N. Y. II 541 GENERAL RULE. [§ 419 picion on the face of it and lie receives it on its own intrinsic credit, wliile in the latter case it is transferred out of the common course of dealing, which gives rise to suspicion.^ The principle upon which this general rule is founded does not have reference to the title to the paper. Whether a person acquires such paper before or after ma- turity is not material, so far as his title is concerned. "These rules re- late to the right of the holder growing out of his ownership of the paper, and not to his title to the paper itself. In either case he acquires 279; Cummings v. Morris, 25 N. Y. '625; Merrick v. Butler, 2 Lans. (N. 'Y.) 103; Newell v. Gregg, 51 Barb. (N. Y.) 263; Farrington v. Bank, 39 Barb. (N. Y.) 645; Havens v. Hint- ington, 1 Cow. (N. Y.) 387; Lan- sing V. Lansing, 8 Johns. (N. Y.) 354; O'Callaghan v. Sawyer, 5 Johns. (N. Y.) 118; Lansing v. Gaine, 2 Johns. (N. Y.) 300, 3 Am. Dec. 422; Johnson v. Bloodgood, 2 Cai. Cas. (N. Y.) 302; Sehring v. Rathbun, 1 Johns. Cas. (N. Y.) 331; De Mott V. Starkey, 3 Barb. Ch. (ISi. Y.) 403; Reed v. Warner, 5 Paige (N. Y.) 650. North Carolina. — Griffin v. Hasty, 94 N. C. 438; Pugh v. Grant, 86 N. C. 39; Capell v. Long, 84 N. C. 17; Baucom v. Smith, 66 N. C. 537;. Haywood v. McNair, 2 Dev. & Bat. (N. C.) 283; Turner v. Beggarly, 11 Ired, (N. C.) 331; Mosteller v. Bost, 7 Ired. Eq. (N. C.) 39. Pennsylvania. — March v. Mar- shall, 53 Pa. St. 396; Maples v. Browne, 48 Pa. St. 458; Hoffman v. Foster, 43 Pa. St. 137; Bower v. Hastings, 36 Pa. St. 285; Clay v. Cottrell, 18 Pa. St. 408; Snyder v. Riley, 6 Pa. St. 164; Rtakert v. Sanford, 5 Watts & S. (Pa.) 164; Cromwell v. Arrott, 1 Serg. & R. (Pa.) 180; McCullough v. Houston, 1 Dall. (Pa.) 441. South Carolina. — British Ameri- can Mortg. Co. V. Smith, 45 S. C. 83, 22 S. E. 747; Gibson v. Hutchins, 43 S. C. 287, 21 S. E. 250; McNeill v. McDonald, 1 Hill (S. C.) 1; Cain v. Apann, 1 McMull. (S. C.) 258. Tennessee. — Smith v. Lurry, Cooke (Tenn.) 325. Texas. — Walker v. Wilson, 79 Tex. 188, 14 S. W. 798, 15 S. W. 402; Mayfield Grocer Co. v. Price & Co. (Tex. Civ. App. 1906), 95 S. W. 31; Goodson V. Johnson, 35 Tex. 622; Diamond v. Harris, 33 Tex. 634; Huddleston v. Kempner, 3 Tex. Civ. App. 252, 22 S. W. 871; Bennett v. Carsner, 1 Tex. App. Civ. Cas. Sec. 618. Yermont. — Bowen v. Thrall, 28 Vt. 382. Virginia. — Arents v. Com, 18 Gratt. (Va.) 750; Davis v. Miller, 14 Gratt. (Va.) 1. West Virginia. — Smith v. Lawson, 18 W. Va. 212. Federal. — Central Trust Co, v. First Nat. Bank, 101 U. S. 68, 25 L. Ed. 876; Smyth v. Strader, 4 How. (U. S.) 404, 11 L. Ed. 1031; Fossitt V. Bell, 4 McLean (U. S.) 427; Gwathney v. McLane, 3 McLean (U. S.) 371; Lipsmeier v. Vehslage, 29 Fed. 175. English. — Crossley v. Ham, 13 East 498; Easley v. Crockford, 3 Moore & S. 700, 10 Bing. 243; Brown v. Davies, 3 Term. R. 80; Taylor v. Mather, 3 Term. R. 83, note; Cripps v. Davis, 12 Mees. & W. 159; Lee v. Zagury, 8 Taunt. 114. ''Brown v. Davies, 3 Term. R. 80. § 420] PURCHASERS AFTER MATURITY. 543 a valid title to the obligation and is entitled to recover on it in the one case whatever is justly due from the parties to the paper, and in the other case whatever the paper calls for, whether it is justly due from the parties or not. In cases belonging to either of these classes no ques- tion arises as to the title of the holder. He is conceded to be the owner of the obligation. The question is, what is the extent of his right of recovery? If he took it overdue, he cannot recover unless the person from whom he received it could have recovered, and if that person could only have recovered a part, he can recover no more; if that person could have recovered all, he may recover all, for he stands in that person's place."^ § 420. Same subject continued. — A note overdue or a bill dishon- ored is a circumstance of suspicion to put those dealing for it on their guard.* It suggests inquiry, which the intending purchaser is bound to make, and, not making it, he buys at his peril,^ and he is held to have notice of what by proper effort he could have learned.® So it is said by Lord Ellenborough in an early English case that: "After a bill or note is due, it comes disgraced to the indorsee, and it is his duty to make inquiries concerning it. li he takes it, though he gives a full consideration for it, he takes it on the credit of the indorser and sub- ject to all the equities with which it may be incumbered."^ And in an early case in Massachusetts it was said : "He who takes it with notice of grounds of defense, or after it is due, which the law charges as no- tice, is holden to take it altogether on the credit of the indorser, know- ing, or being presumed to know, that if the promisor had any dealings with the payee which would justify a defense, the note is chargeable with that defense in his hands."® So again, in a recent case in Texas, it is declared: "The transferee of overdue commercial paper gets no better title than that of the transferor. The holder of such paper for value before maturity takes it discharged of every defense against it, but when dishonored it is in respect to the title acquired by a subsequent holder, degraded to the rank of a personal chattel, the ^Greenwell v. Haydon, 78 Ky. 332, son v. Bloodgood, 1 Johns. Cas. (N. 336, per Cofer, J. Y.) 51, 1 Am. Dec. 93. ^Fowler v. Brantly, 14 Pet. (U. ''Zeis v. Potter, 105 Fed. 671. S.) 318, 10 L. Ed. 473. '^ Tinson v. Francis, 1 Campb. 19. ^ Phillips v. Runnels, 1 Morris * Sargent v. Southgate, 5 Pick. (Iowa) 391, 43 Am. Dec. 109; John- (Mass.) 312, 16 Am. Dec. 409. I 543 APPLICATION OF RULE. [§ 421 purchaser of which acquires only such title as the seller had/"* And the general rule has been affirmed in similar language by other courts.^" § 421. Application of rule — Generally. — In the application of the general rule as to purchasers after maturity it has been decided that as against such a purchaser evidence is admissible to show usury in connection with the note/^ and it may be shown that a transfer from the payee to such purchaser was in fraudulent violation of an agree- ment between the maker and the payee.^- So where a note was executed for a particular purpose, which was accomplished, and the note was taken up by the payee in accordance with the agreement between him and the maker, but was not returned to the latter on demand, the payee stating to him that the note had been destroyed, when in fact it had not, it was decided that such facts could be shown in defense to an action by one to whom the payee had transferred the note after maturity. ^^ And where the owner of a note, which was secured by a deed of trust to a third person, agreed, before its maturity, with the maker that a certain sum should be paid and the time for the payment * Mayfield Grocer Co. v. Andrew Price & Co. (Tex. Civ. App., 1906), 95 S. W. 31, per James, C. J., quot- ing from Walker v. Wilson, 70 Tex. 188, 14 S. W. 798, 15 S. W. 402. The court also said: "This case was ap- proved in Kempner v. Huddleston, 90 Tex. 185, 37 S. W. 1066, where a different rule was held to be appli- cable when the Indorsement is in such language and terms as evi- dence ownership of the notes in the person to whom they are trans- ferred, in which case the transferor would not be allowed to dispute this as against a subsequent purchaser who had acted upon such theory." " "A note in circulation after it is due carries suspicion upon its face. It suggests inquiry, and places the purchaser in privity with his in- dorser and subject to any defense available against him. It is better to require one who would purchase a negotiable note after its maturity to ascertain whether it is a subsist- ing demand, than to subject the an- tecedent parties to the necessity of tracing to him a knowledge that it is not." Atkins v. Knight, 46 Ala. 539, per Saffold, J. "The principle is certainly well established, and not to be denied, that the indorsee of a negotiable promissory note, indorsed after due. is considered as receiving dishon- ored paper, and takes it subject to all the infirmities and equities and, some cases say, defenses, to which it was liable in the hands of the payee." Robinson v. Lyman, 10 Conn. 30, 25 Am. Dec. 52, per Church. J. "The plaintiff took this bill after dishonor of it by the drawees; he therefore took it with all the exist- ing infirmities belonging to it at the time." Crossley v. Ham, 13 East 498, per Lord Ellenborough. ^' Tufts V. Shepherd, 49 Me. 312. " Williamson v. Doby, 36 Ark. 689. " Frazer v. Edwards, 5 Dana (Ky.) 538. § 422] PURCHASERS AFTER MATURITY. 544 of the balance extended, and such an agreement was drawn up by a clerk of the trustee, who indorsed the payment on the note, and also a reference to the agreement for extension, but the agreement was only signed by the maker of the note and not by the owner, it was decided that one who took the note from the trustee, after maturity, as col- lateral security for his debt was not protected by such agreement, there being nothing in the papers showing who was the owner of the note and it not appearing that the legal title was in the trustee.^* But it has been decided that, where a note purports to be executed upon a secular day, it cannot be shown against a hon^i. fide assignee after maturity that it was in fact executed on a Sunday, it being de- clared that it is only against a person in equal fault that a defendant can be allowed to allege his own turpitude, ^^ And where a note has been executed by a firm to one of its members it is held that an as- signee after maturity does not take it subject to the disability of the payee to sue, this being declared not to be one of the equities which an indorsee assumes. ^^ § 422. Application of rule, continued — Set-off and recoupment. — A bill or note in the hands of a purchaser after maturity may be subject to a set-off which would have been available in favor of the maker against the one from whom the instrument was purchased.^^* So, where it was agreed between the original parties to a negotiable promis- sory note, while it was in the hands of the payee, that a sum then as- certained to be due from the payee to the maker, payable in futuro, should be applied on the note, and it was afterwards negotiated, wlien overdue, it was held in an action by the indorsee against the maker that such sum being an equity which attached to the note itself, be- fore its transfer, ought to be set off or applied on the note." And where a note was given by a corporation to a stockholder, and it was agreed that assessments to be laid upon his stock in the corporation should, when payable, be considered as payments upon the note by the corporation to him, and the assessments made amounted to more than the face of the note, thus constituting a payment of it, one whq took the note as indorsee after maturity took it subject to the defense " Merchants' Loan & Trust Co. v. ^'* Baker v. Kinsey, 41 Ohio St. Welter, 205 111. 647, 68 N. E. 1082. 403. '^^ Leightman v. Kadetska, 58 Iowa " Robinson v. Lyman, 10 Conn. 30, 676, 12 N. W. 736, 43 Am. Rep. 129. 25 Am. Dec. 52. "Young v. Chew, 9 Mo. App. 387. 545 NOTES MATURE ON FAILURE TO PAY ONE OF SERIES, [§ 423 of payment.^ ^ So where a note payable to an insolvent bank was long past due when assigned to plaintiff by the bank's assignee for creditors, the maker was held entitled to set off against the note the amount of his deposit account with the bank.^^ Again, where notes secured by a mortgage were given for the unpaid purchase price of land, and one of the notes, the first to fall due, was assigned, after its maturity, it was decided that the assignee took it subject to the right of the vendee to recoup from the unpaid purchase money, as against his warrantor, whatever sum he had been compelled to pay to clear his title. ^^ And where, by statute, a maker can avail himself of moneys paid, goods sold and delivered, or services rendered, in an action on a promissory note by the payee, this is held to be in fact a defense legal and equita- ble, which may be shown in defense to an action by a purchaser after maturity. ^^ § 423. Where series of notes matures on failure to pay any one. "Wliere it is provided in each note of a series of notes that all the notes will be matured upon a failure to pay any one of the series, one who purchases the notes after such a failure is a purchaser after maturity, and in such a case it is decided that where the notes were secured to- gether by a vendor's lien, the purchaser is chargeable with notice of homestead rights existing as a defense against them all.-^ And where '* Paine v. Central Vermont R. R. then becomes very clear that Wolf Co., 118 U. S. 152, 6 Sup. Ct. 1019. would have the right to recoup from "Little V. Sturgis, 127 Iowa 298, the unpaid purchase money, as 103 N. W. 205. against his warrantor, whatever =°Wolf v. Shelton, 159 Ind. 531, 65 sum he had been compelled to pay N. E. 531, in which the court said: to clear his title. Watts v. Fletcher, "The note went to appellee discred- 107 Ind. 391; Doss v. Ditmars, 70 ited upon its face by non-payment Ind. 451, 457; Holman v. Creagmiles, at maturity. It was a broken con- 14 Ind. 177. As we have seen appel- tract when appellee purchased it, lant has this same right against the and he was bound to take notice of appellee who purchased the note the defense, and to know that he charged with notice that the maker would have no greater right to en- had a defense against it. Green v. force payment than the payee had Louthain, 49 Ind. 139; First Nat. and that it would be open to the Bank v. Henry, 156 Ind. 1, and cases same defenses in his hands that it cited." Per Hadley, C. J. would have been subject to if it had ^ Sargent v. Southgate, 5 Pick, remained the property of the payee. (Mass.) 312, 16 Am. Dec. 409. Suppose Foreman had not assigned " Lybrand v. Fuller, 30 Tex. Civ. the note at all, and himself had App. 116, 69 S. W. 1005. The court brought this suit as plaintiff. It said: "In the case at bar the notes Joyce Defenses — 35. 433] PDRCHASEKS AFTER MATURITY. 546 five notes were given which showed upon their face that they were installment payments of one common consideration, and each pur- ported to be for a part of the purchase money of a named and certain tract of land, and showed that they were not only parts of the same transaction, but that they in fact constituted but one contract, it was decided that a purchaser of the notes who purchased them after the first note had matured and was unpaid took them subject not only to any defenses which existed against the first note but to such defenses as might exist against them all.-^ The court said in this case: "The effect of notice by the dishonor of the note overdue was to call atten- tion to the fact that the maker had some defense against the note arising out of the original transaction, which defense must apply equally to each of the other notes, which represent parts of a common consideration. What we decide upon this point is that, all of the notes being together, and acquired at the same time by the assignee, it appearing in each note that they were parts of one consideration and constitute one contract, the dishonor of the first note being overdue and unpaid charged Claflin & Co. with notice that the same defense existed in favor of the makers against the notes not due as against were dated July 1, 1896, and the first note matured January 1, 1897, the second, January 1, 1898, and the third, January 1, 1899. They show upon their face that they were given as a part of the consideration for the conveyance from J. M. Lybrand and wife to R. N. Lybrand, and each stipulated that the failure to pay any one of the notes when due should mature the others. When ap- pellee acquired the notes the first two were past due, and the third had matured by contract making failure to pay any one of the notes when due mature the others. Thus all of the notes, under their very terms, were past due when they were conveyed to appellee. Associa- tion V. Stewart, 27 Tex. Civ. App. 299, 61 S. W. Rep. 386. Again it is held in the case of Harrington v. Claflin, 91 Tex. 295, 42 S. W. 1055, that where several notes secured by a lien upon a homestead show upon their face that they were given as parts of the same transaction and as installments of one common consid- eration, the first being overdue when transferred to plaintiffs, it was sufficient to charge them with notice of the defense as to all the other notes. We are of the opinion that the principle announced in that case is applicable to the case at bar, although the party resisting the en- forcement of the lien In that case was the maker of the notes, while here it is the payee. We conclude that the appellee was not an inno- cent purchaser of the notes, he hav- ing acquired them after their matur- ity. Not being an innocent pur- chaser of the notes, the appellee was chargeable with such infirmities in their execution as resulted in a want of consideration." "Harrington v. Claflin, 91 Tex. 295, 42 S. W. 1055. 547 NOTE PAYABLE ON DEFAULT OF PAYMENT OF INTEREST. [§ 434 the overdue note." So in the case of a mortgage which provides that upon the failure to pay any one of the notes secured by it all of the notes are to become due and collectible, an assignee of the notes and mortgages is chargeable with knowledge of such provision, and where one of the notes is past due and dishonored the others are due by the terms of the mortgage, and the same defense may be made against them as if the action was by the original payee and mort- gagee.24 § 424. Note payable on default in payment of interest. — Where a note provides that it shall become due and collectible or payable upon default in the payment of any installment of interest due by the terms of such note it becomes a matured note upon failure to pay as pro- vided, and one who takes it after that time is a holder after maturity, subject to such defenses as could be made against the transferer or indorser. Thus it has been so held in the case of a note which provided that "such delinquency shall cause the whole note to become immedi- ately due and collectible." The court said: "The case presented is clearly distinguishable from those where the stipulation for accelerat- ing the maturity of the note or notes on non-payment of interest or other default is contained in a mortgage or trust deed given to secure the same, and which mortgage or trust deed and notes are construed in some jurisdictions as one instrument in law. In such a case the note or notes may be transferred without the transferee having any knowl- edge of such stipulation in the mortgage or trust deed. Here the stipulation is in the notes themselves, and every transferee of the same necessarily took them with knowledge of such stipulation. So the case presented differs from those where one of a series of notes or an in- stallment of interest has become due and unpaid, with no stipulation as here, that 'such delinquency shall cause the whole note to immedi- ately become due and collectible.' * * * The case presented is distinguishable from those where the stipulation for accelerating the maturity of the note or notes contained therein is made optional with the payee or mortgagee, or his representatives or assigns. * * * On the contrary it is expressly and clearly declared therein that 'such delinquency shall cause the whole note to immediately become due and collectible.' To construe such language as merely optional or permissive would be to destroy the clearly expressed contract which the ^* Stoy V. Bledsoe, 31 Ind. App. 643, 68 N. E. 907. §§ 425, 426] PURCHASERS AFTER MATURITY. 548 parties made for themselves and to force upon them a contract to which neither of them ever gave their consent. * * * -^g must hold that by the express terms of the stipulation and the default in paying the annual interest * * * the whole of each note 'imme- diately became due and collectible.' It follows from what has been said that the plaintiffs took the notes after they became due and paya- ble and subject to the equities between the original parties."^' § 425. Application to particular paper. — The general rule as to one who purchases paper after maturity has been applied in the case of bank bills/^ and to a due bill not negotiable.^^ It has, however, been decided in an English case that although this applies to bills and notes it is not applicable in the case of checks.^* § 426. Same subject — Coupon bonds. — The general rule also ap- plies to coupon bonds which are negotiable.^^ So it has been decided that 9. party buying bonds of the United States with overdue and un- paid coupons is to be taken as affected with knowledge of prior equities when he purchases them after the date when they are redeemable and for which the coupons run.^" So where coupon bonds which were issued by the United States, payable to the state of Texas, were alienated by the insurgent government during the rebellion, it was de- cided that purchasers of such bonds after the date at which they be- came redeemable were affected with notice of want or defect of title in the seller.^^ And where bonds were stolen before the maturity of certain coupons thereon, which were detached and sold to a person after maturity, it was decided in an action of replevin by the owner that such person took them with notice of every defect which in fact existed and subject to all the defenses which the promisor might make to them. And the court held that though the coupons had passed through several hands there was no presumption that they were negotiated by the thief before maturity.^ ^ Though, as stated above, this case was an ac- tion of replevin, yet the following quotation is of value as showing ^ Hodge V. Wallace (Wis., 1906), (U. S.) 72; Greenwall v. Haydon, 108 N. W. 212, per Cassoday, C. J. 78 Ky. 332. ^ Burroughs v. Bank, 70 N. C. 283. ^ Texas v. Hardenberg, 10 Wall. =^ Thompson v. McClelland, 29 Pa. (U. S.) 68. St. 475. ^ Texas v. White, 7 Wall. (U. S.) ^Rothchild v. Corney, 9 Barn. & 700. C. 388. ^- Hinckley v. Bank, 131 Mass. 147^ =* National Bank v. Texas, 20 Wall. 549 CERTIFICATE OF DEPOSIT. [§ 427 the application of the general rule to coupon bonds. The court here said: ''The claim of the defendant is that, inasmuch as the coupon had not matured when the bonds were stolen, it is to be presumed that the thief negotiated them before maturity, so that they were in the market under the protection' of the law merchant before maturity; and thus that the true owner had lost his right of property in them. No authority is cited which supports this proposition, and it is not sound in principle. * * * jj^ h^q (.a,se at bar every known holder received the coupons after maturity, and it is not important to decide whether a previous holder took them before or after maturity, when there is no evidence that there ever was a previous holder after they were taken from the plaintiff except the thief. It is never to be as- sumed that facts exist which do not appear. * * * By the facts agreed the plaintiff was at one time the absolute owner of the coupons. He remains in law the owner until the contrary appears. Nothing ap- pears in reference to a claim of title in any other person till a time when it was too late for such person to acquire title ; and, in the ab- sence of any evidence tending to show that any other person but the thief had any possession of them until they were purchased, as de- scribed in the agreed statement, the presumption, which is one of fact, is that they remained in the possession of the thief until thus sold. \Yhen they were purchased they were detached from the bonds, were overdue, and carried to the purchaser notice of every defect which in fact existed, and he took them subject to all the rights which any other than the vendor had to them, and to all the defenses which the promisor might make to them."^^* § 427. Certificate of deposit. — The general rule as to a purchaser after maturity being subject to defenses available against his indorser has been applied in the case of a certificate of deposit. So where on the face of a certificate of deposit in the usual form, payable to the order of the payee, on the return of the certificate properly indorsed, were stamped the words : "This certificate, payable three months after date with six per cent, interest per annum for the time specified," it was decided that one to whom it was transferred more than thre(^ months after its date took it dishonored and subject to defenses which could have been made to it m the hands of the payee.^^ ="* Per Lord, J. Bank, 34 Neb. 71, 51 N. W. 305, 33 ^ First Nat. Bank v. Security Nat. Am. St. R. 618. §§ 428-430] PURCHASERS AFTER MATURITY. 550 § 428. Where transferred before but not indorsed until after ma- turity. — "WHiere paper is indorsed after maturity the fact that it was transferred or assigned before maturity will not relieve it from the operation of the general rule as to equities or defenses being available against a purchaser after maturity.^* So the fact that there was an equitable assignment of a note before its maturity will not except it in the hands of the assignee from the operation of the general rule as to its being subject to defenses in the hands of one who takes it after maturity, where it is not indorsed to such person until after maturity. Thus under the California civil code, which defines a holder in due course as one who takes the paper in the ordinary course of business and for value before its apparent maturity without knowledge of dishonor and duly indorsed,^^ one to whom a note is equitably assigned before maturity, is not a holder in due course where it is not duly indorsed to liini until after maturity, and is, in such a case, subject to any equita- ble defense.^® §429. Non-negotiable note. — Wliere a non-negotiable note is as- signed by the payee after maturity it is subject to all equities and de- fenses of the maker against the payee.^^ § 430. Effect of statute providing that suit by assignee shall be without prejudice. — The general rule that the holder of a note, trans- ferred after maturity, takes it subject to all equities arising out of the note itself, such as payment, want of consideration, or fraud, but not subject to any independent set-off, is not affected by a statutory pro- vision which applies to the assignee of a chose in action and provides that a suit in his name, which at common law he could not maintain, shall be without prejudice to any set-off or other defense existing before notice of the assignment. And the fact that the transfer was not by indorsement or delivery, but by a formal written assignment, will not abridge the rights of the transferee, though it is provided by statute that: "N'otes in writing, made and signed by any person promising to pay to another person or his order, or bearer, or to bearer only, any "Pavey v. StaufEer, 45 La. Ann. =^ Cal. Civ. Code, § 3123. 354, 361; Savage v. King, 17 Me. =" Reese v. Bell, 138 Cal. xix, 71 301; Clark v. Whittaker, 50 N. H. Pac. 87. 474; Southard v. Porter, 43 N. H. =' Graves v. Mining Co., 81 Cal. 379; Goshen Bank v. Bingham, 118 303, 22 Pac. 665. N. Y. 349; Gilbert v. Sharp, 2 Lans. (N. Y.) 412. 551 LIMITATION RULE. [§ 431 sum of money, are negotiable by indorsement or delivery in the same manner as inland bills of exchange, according to the custom of mer- chants."^® So in considering this question in the case of an action upon notes payable to a designated payee or bearer the court said : "If they had been passed to plaintiff by mere delivery, without any writing, after maturity, they would not have been subject, in his lumds, to the set-off pleaded, which is an independent cause of action existing in favor of the maker against the payee, having no reference whatever to the notes in question. Now, are the rights of the plaintiff abridged by the fact that the notes were transferred by a formal writ- ten assignment, and not by mere delivery? We know of no principle of law or reason why this should be so. The written assignment merely gives formal expression to what the law, by the mere delivery of paper payable to bearer, implies, to wit: An intention to vest in the holder the absolute ownership. And if the law gives effect to this unexpressed intention, so far as to vest in the holder a title unincumbered with rights of mere set-off, why should not the expressed intention have equal effect? Had the paper been a non-negotiable chose in action, so that the simple delivery thereof would have conferred upon the holder no right at common law to sue in his own name, the assignee, whether by mere delivery or by written assignment, would take it subject to the set-off or other defenses mentioned in section 2760. And the same is true of a negotiable note, payable to order and transferred by delivery after maturity."^® § 431. Limitations of rule — In general. — The only defenses against which an indorsee has to guard in accepting overdue bills are de- clared to be, first, those which have arisen subsequent to the execution of the note, and which are not collateral but which relate to the note itself; and secondly, those which are inherent in the note, and show it to have been void ab initio, such as fraud, mistake and absence of a sufficient consideration.'*'^ And it has been determined that the equi- ties are such as are connected with the note itself and not such as grow out of distinct and independent considerations between the original parties.*^ "When it is said in the books that the holder of a negotiable ^' Sec. 1794 of Iowa Revision. *^ Alabama. — Robertson v. Breed- '» Richards v. Daily, 34 Iowa 427, love, 7 Port. (Ala.) 541. 429, per Day, J. Connecticut. — Fairchild v. Brown, *°Renwick v. Williams, 2 Md. 356, 11 Conn. 26. 364, per Mason, J. § 431] PURCHASERS AFTER MATURITY. 552 promissory note, transferred after maturity, takes it as dishonored and subject to all the equities between the original parties, whether he has notice of the same or not, it must be understood that the equities meant are such only as attach to the particular note, and such as be- tween the parties to it would control, qualify or extinguish any rights arising thereon. Equities between the parties to the note arising from other and independent transactions between them are not available against the note in the hands of the assignee."*- So, though a note may, in the hands of such a holder, be subject to a set-off, in accordance with an agreement between the maker and the payee, made while the note was in the latter's hands, that a sum then ascertained to be due from the payee to the maker, payable in futuro, should be applied on the note, yet the note cannot be affected by an agreement as to a set-off made after it has been transferred.*^ Again, it is decided that the infirmity, equity or defense which may be available against an indorsee after maturity must be one which attaches to the paper prior to its transfer.** The right, however, of a party to avail himself as against a purchaser after maturity of a defense arising out of collateral mat- ters or independent transactions may be conferred by statute.*^ Florida. — Kilcrease v. White, 6 Fla. 45. Indiana. — Hankins v.' Shoup, 2 Ind. 342. Maryland. — Annan v. Houck, 4 Gill (Md.) 325, 45 Am. Dec. 133. Missouri. — Barnes v. McMuUins, 78 Mo. 260; Cutler v. Cook, 77 Mo. 388; Arnot v. Woolburn, 35 Mo. 98; Unseld v. Stephenson, 33 Mo. 161; Gullett v. Hoy, 15 Mo. 399; Henley v. Holzer, 19 Mo. App. 245; Grier v. Hinman, 9 Mo. App. 213; Haeussler V. Greene, 8 Mo. App. 451. New York. — Titus v. Himrod, 39 Barb. (N. Y.) 581. Pennsylvania. — Long v. Phawn, 75 Pa. St. 128; Hughes v. Large, 2 Pa. St. 103; Evans v. McHugh, 2 Woodw. Dec. (Pa.) 21. Rhode Island. — Trafford v. Hall, 7 R. I. 104, 82 Am. Dec. 589. South Carolina. — McAlpin v. Win- gard, 2 Rich. L. (S. C.) 547. Vermont. — Armstrong v. Noble, 55 Vt. 428. But see Davis v. Neligh, 7 Nebr. 78, 84. ^= Shipman v. Robbins, 10 Iowa 208. Per Wright, C. J. ^^ Robinson v. Lyman, 10 Conn. 30, 25 Am. Dec. 52. *^ Robinson v. Lyman, 10 Conn. 30, 25 Am. Dec. 52. "'La Due v. First Nat. Bank, 31 Minn. 33, 16 N. W. 426, decided un- der Minn. Gen. St. 1878, c. 66, § 27. wherein the court says: "According to the commercial law of England, and in probably all those states where a different rule has not been fixed by statute, an indorsee of an overdue bill or negotiable note takes it subject only to such equities or defenses as attach to the bill or note itself, and not to claims aris- ing out of collateral matters or in- dependent transactions, whether >53 PRO TANTO RECOVERY. [§§ 432, 433 § 432. Pro tanto recovery. — A purchaser after maturity, who has not paid full value, can, it is decided, only recover to the extent paid, unless he would be liable over for the difference between what he has thus paid and the original amount of the note.**' So where an ac- commodation note, executed to be used by the payees as collateral se- curity, was indorsed by them for that purpose after maturity, and afterwards sold by the indorsee to satisfy an unpaid balance of their debt, it was held that it could be enforced, in the hands of the pur- chasers, only to the same extent as though still held by the first indorsees, that is, to the amount of the unpaid portion of the debt which it was executed to secure.*^ § 433. Purchaser from bona fide holder — General rule. — One who purchases negotiable paper after its maturity from an innocent holder, who acquired the same before maturity for value and without notice of any defense or equities, takes the same free from such defenses as the maker might avail himself of in an action by the payee.*^ Such they are against the payee or an intermediate holder; the idea being that such commercial paper, al- though overdue, did not lose its ne- gotiability. Our state, following the example of many others, has by stat- ute entirely changed this rule." Per Mitchell, J. ■*" Bond v. Fitzpatrick, 8 Gray (Mass.) 536; Preston v. Breedlove, 36 Tex. 96. « First Nat. Bank v. Werst, 52 Iowa 284, 3 N. W. 711. In this case it appeared that a note of $3,000 was given as an accommodation note to be used as collateral security for an indebtedness of $2,500, which was evidenced by a note for that amount. Subsequently the in- debtedness was reduced by a pay- ment of $500 and a new note was given. The renewal note was also reduced by payments so that the debt was only $1,317.68, principal and interest. The note was sold by the creditor, under authority given it in writing to sell it and apply the proceeds upon the debt and costs of sale. The plaintiff in this action was the purchaser. The court said: "The note was executed for the pur- pose of securing the indebtedness of the payees to the Chicago Bank. Under the contract between the maker and the payees it was valid and could be enforced only to the extent necessary to secure the bank. It was indorsed after maturity, and the holders under such indorsement took it with notice of the equities and defenses of the maker. The debt for which it was made as se- curity was paid in part, the note re- mained valid only for the part of the debt remaining unpaid. The plaintiff acquired no higher right than the Chicago Bank; the cir- cumstances under which it was transferred to plaintiff created no right other than those of the in- dorsee of overdue paper. It is very plain that plaintiff can recover no greater sum than was due the Chi- cago Bank." Per Beck, C. J. ^'^ Illinois. — Matson v. Alley, 141 111. 284, 31 N. E. 419. ;§ 434, 435] PURCHASERS AFTER MATURITY. 554 a purchaser stands, in this respect, in the place of the one from whom he took the paper.*" So it has been declared that : "Notwithstanding the plaintiff purchased the note after maturity he holds it free from any and all defenses available to the makers against the payee, for it has become the settled law of this country that where a negotiable note is purchased after due from an innocent holder, the purchaser takes the title of and is entitled to the same protection as his indorser."^" § 434. Same subject — Application of rule. — A purchaser after ma- turity of negotiable paper will not, in an action thereon, be subject to the defense of usury where the one from whom he took it acquired the same before maturity, without notice or knowledge of such taint and occupied the position of a bona fide holder. ^^ ISTor under such cir- cumstances can the defense of want of consideration be set up.^^ An exception, however, to the general rule is held to exist where the payee becomes the purchaser.^^ § 435. Demand paper. — In determining the respective rights of the holder of, and of prior parties to, commercial paper which is paya- ble on demand, it is declared that the meaning of the word "overdue," as used in connection with such paper, is to be considered and that the distinctions made as to the different sense in which this word may be used are to be borne in mind. The test whether a purchaser took such paper subject to equities and defenses is said to be the period of time which it had been outstanding at the time he took it and not to depend upon the question whether it has been presented for payment. If it has been outstanding such a length of time as to put the purchaser upon inquiry he will then be regarded as taking it, charged with notice of defenses thereto.^* Louisiana. — Howell v. Crane, 12 La. Ann. 126, 68 Am. Dec. 765. Michigan. — Host v. Bender, 25 Mich. 515. Nebraska. — Barker v. LicMen- berger, 41 Neb. 751, 60 N. W. 79. New York. — Weems v. Shaugli- nessy, 70 Hun (N. Y.) 175, 24 N. Y. Supp. 271; Beall v. General Electric Co., 16 Misc. (N. Y.) 611, 38 N. Y. Supp. 527; Britton v. Hall, 1 Hilt. (N. Y.) 528; Benedict v. De Groat, 45 How. Pr. (N. Y.) 384. North Carolina. — Lewis v. Long, 102 N. C. 206, 9 S. E. 637, 11 Am. St. R. 725. ^'Matson v. Alley, 141 111. 284, 31 N. E. 419. ^"Koehler v. Dodge, 31 Neb. 328, 47 N. W. 913. "Woodwarth v. Huntoon, 40 111. 131, 89 Am. Dec. 340. ^- Cook v. Larkin, 19 La. Ann. 507. "Koehler v. Dodge, 31 Neb. 32S, 47 N. W. 913. "La Due v. First Nat. Bank, 31 555 DEFENSES AND EQUITIES, [§ 436 § 436. Defenses and equities between maker and indorser or intermediate holder. — In determining what equities or defenses may be set up against a purchaser after maturity it may be stated that, as a general rule, such a purchaser takes the paper subject to such equities or defenses as exist between the original parties, to the extent that they were available as against the one from whom he received it.^'* Minn. 33, 16 N. W. 426. In this case it was said in reference to a bill of exchange: "The term 'over- due' as applied to a demand bill of exchange is used in different con- nections, in each of which it has a different meaning; and the failure to keep these distinctions in mind has perhaps led to some misappre- hension regarding the present case. Sometimes it is used in reference to a right of action against a drawer or indorser. In that connection a bill is not overdue until presented to the drawer for payment and pay- ment refused. Sometimes the term is used in considering whether an indorser has been released by a fail- ure of the holder to present the bill for payment, and to give the in- dorser notice of its dishonor within a reasonable time. Again, the term is applied to a bill which has come into the hands of an indorser so long after its issue as to charge him with notice of its dishonor, and thus subject it in his hands to the defenses which the drawer had against it in the hands of the as- signor. It is in this last connection that the term 'overdue' is consid- ered in the present case. That in this case a bill may be said to be overdue, although it has never, in fact, been presented to the drawee for payment, is recognized every- where throughout the books. Sup- pose a draft had been held by the payee for five years, without ever having been presented to the drawee for payment, and is then indorsed to another party. It would not be due so as to give a right of action against the drawer, because his con- tract is only to pay in case it is not paid by the drawee on presentation. But there would be no doubt that it would be overdue and dishonored, so as to charge it in the hands of the indorsee with any defenses which the drawer had against it in the hands of the payee, although when he took it it had never been presented for payment. The reten- tion of a demand draft for so long a time without presentment, when no defense exists against it, is so unusual and contrary to business usages that this circumstance would be held to charge the indorsee with notice, when he purchased the draft, that it was dishonored. The lapse of time would in such a case be so great as to put a purchaser upon inquiry as to the reason why it was still outstanding and unpaid. * * * In determining whether an indorsee takes such paper as overdue paper, subject to such defenses or equities, the question of actual demand and dishonor does not enter into the discussion. The point of inquiry is, had the paper been outstanding so long after its date as to put the purchaser upon inquiry and charge him with notice that there is some defense to it." Per Mitchell, J. See De Mott V. Starkey, 3 Barb. Ch. (N. Y.) 403. ^^ Alaltama. — Glasscock v. Smith, 25 Ala. 474. 437] PUECHASERS AETER MATURITY. 55G This rule operates to subject paper in the hands of such a purchaser to those equities and defenses which were available against his immediate indorser, without regard to whether such indorser is the payee of the paper or an intermediate party. ^® It has, however, been determined that this rule does not permit the maker of paper to set up against a purchaser after -maturity an equity or defense which may exist in his favor against any intermediate holder, but which is not available against his immediate indorser.^^ § 437. Secret equity in favor of entire stranger. — A purchaser for value of negotiable paper after maturity is not bound by a secret equity Georgia. — Thomas v. Kinsey, 8 Ga. 421. Illinois. — Lord v. Favorite, 29 111. 149. Indiana. — Green v. Louthain, 49 Ind. 139. Iowa. — Duncan v. Finn, 79 Iowa 658, 44 N. W. 888; Bates v. Kemp, 12 Iowa 99. Louisiana. — Stern v. Bank, 34 La. Ann. 1119. Maine. — Sprague v. Graham, 29 Me. 160; Burnham v. Tucker, 18 Me. 179. Massachusetts. — Mackay v. Hol- land, 4 Mete. (Mass.) 69; Howard V. Ames, 3 Mete. (Mass.) 308; Sar- gent v. Southgate, 5 Pick. (Mass.) 312. Michigan. — Simons v. Morris, 53 Mich. 155, 18 N. W. 625. Missouri. — Turner v. Hoyle, 95 Mo. 345, 8 S. W, 157; Julian v. Calk- ins, 85 Mo. 202; Ford v. Phillips, 83 Mo. 530; Livermore v. Blood, 40 Mo. 48; Wheeler v. Barret, 20 Mo. 573; Shipp v. Stacker, 8 Mo. 145. New Jersey. — Little v. Cooper, 11 N. J. Eq. 224. Vermont. — Miller v. Bingham, 29 Vt. 82. Federal. — Andrews v. Pond, 13 Pet. (U. S.) 65; Foley v. Smith, 6 Wall. (U. S.) 492. English. — Bounsall v. Harrison, 1 Mees. & W. 611, 2 Gale 113. BUT SEE Eaton v. Corson, 59 Me. 510, wherein it is decided that a purchaser of a note can acquire no greater rights than his vendor can enforce, and that the general rule extends to defenses available against all prior holders. Zeis v. Potter, 105 Fed. 671, in which it is declared that a reasonable rule would seem to be that purchasers of paper which is overdue or non- negotiable take it subject to the equities of all who appear or are known to have had an interest in it. Want of title in any of the par- ties acquiring the instrument after its maturity can be set up by the drawer. Davis v. Bradley, 26 La. Ann. 555. ^^ Butler V. Murison, 18 La. Ann. 363; Shipp v. Stacker, 8 Mo. 145. See also cases cited in preceding note. "Hayward v. Sterns, 39 Cal. 58, 60; Vinton v. Crowe. 4 Cal. 309; Perry v. Mays, 2 Bailey (S. C.) 354; Nixon V. English, 3 McCord (S. C.) 549. See Favorite v. Lord, 35 111. 142; Root V. Irwin, 18 111. 147; Hooper v. Spicer, 2 Swan (Tenn.) 494. 557 SECRET EQUITY IN FAVOR OF ENTIRE STRANGER. [§ 437 which may exist in favor of one who is an entire stranger to the paper, where the purchaser had no knowledge of such equity or notice of any facts which should put him upon inquiry.^^ ^Fairchild v. Brown, 11 Conn. 26; Hibernian Banli v. Everman, 52 Miss. 500. SEE Crosly v. Tanner, 40 Iowa 136. In Mohr v. Byrne, 135 Cal. 87, 67 Pac. 11, it is said by the court in this connection: "Nor does the fact that plaintiff took the note after maturity make him any the less a bona fide purchaser as against the equities of intervener herein set up. The rule that indorsees after ma- turity take with notice of prior equities applies only as between the parties thereto, and does not apply as to third persons occupying the position of intervener herein, where rights are merely latent, and do not appear from an inspection of the note or the indorsements thereon. The note, though due when assigned to plaintiff, carried with it the same presumptions as any other chose in action, and quoting from the well- considered case of Duke v. Clark, 58 Miss. 465 (at page 474): 'It is true that the assignee of a chose in ac- tion takes it subject to all the equities to which it was subject in the hands of the assignor, but the equities meant are such as obtained in favor of the debtor, and not those claimed by a third person against the assignor.' The supreme court of Mississippi cite many cases in support of this proposition, includ- ing the case from this state, Wright V. Levy, 12 Cal. 257. See also First Nat. Bank of Bridgeport v. Ferris Ir- rigation District, 107 Cal., at page 62, 40 Pac. 47, wherein it is said: 'The law does not require that the as- signee for value of a thing in action shall take it subject to the latent equities of third persons of which he has no notice, but only that the , assignment shall be subject to the equities existing in favor of the debtor, in this case the defendant.' In Bank v. Everman, 52 Miss. 506, it is said: 'A purchaser of nego- tiable paper, even after maturity, cannot be bound by any secret equity in favor of an entire stranger to the paper, of which he neither had knowledge, nor anything to put him on inquiry.' To the same effect see Crosley v. Tanner, 40 Iowa 136, where some authorities are cited, and the reason for the rule quoted from an opinion by Chancellor Kent. It seems clear that the note in plaintiff's hands is not subject to the latent claims of the appellant, and for that reason, so far as Mohr and Kowalsky are concerned, the conclusion of the court that the lat- ter should take nothing was cor- rect." Per Gray, C. I CHAPTER XX. BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. Sec. 438. Bona fide holders — Preliminary- statement. 439. Bona fide holders — Rule. 440. Essentials of rule. 441. Exceptions to and qualifications of rule — Generally. 442. Bona fide holder generally — Decisions. 443. Certified bank checks — Dis- counting paper. 444. Notes under seal. 445. Equities generally. 446. Holder, transferee or assignee — Non-negotiable paper — Equities and defenses. 447. Defenses against assignees. 448. Assignee — Equities — Construc- tion and essentials of rule — Generally. 449. Assignee — Negation and quali- fications of rule. 450. Assignee of void note- -For- bearance to sue. 451. So-called assignments — Not subject to equities. Sec. 452. Assignment by parol — Suit in own name — Equities. 453. Suit for use or benefit of as- signee. 454. Subsequent defenses and equi- ties. Note payable to order or bearer. Transferee without indorse- ment. Agents and trustees. Agent's unauthorized acts. Corporate certificates of indebt- edness issued in restraint of trade — Anti-trust law. 460. Guarantor — Guaranty. Same subject. Pledge of note by holder — Pledgee's rights. 463. Note payable to order or bearer. 464. Under statutes and codes — No- tice or knowledge — Bad faith. 465. Same subject. 466. Joint and several notes. 455. 456. 457. 458. 459. 461. 462. § 438. Bona fide holders — Preliminary statement. — The subject of bona fide holders, transferees and assignees has been treated so fully throughout this work that only such general rules, principles and de- cisions will be considered here as are necessary to supply matters omitted or not fully dealt with elsewhere herein. § 439. Bona fide holders — Rule. — It is a general and constantly as- serted rule that a bona fide holder of negotiable paper holds it by a good title clear of all equities and defenses between the original or 558 m 559 BONA FIDE HOLDERS — RULE. [§ 439 intermediate parties.^ Another form of the rule is as follows : A per- son who takes net^otiablc securities before due for a valuable consider- •^ United States. — Brown v. Spof- ford, 95 U. S. 474, 24 L. Ed. 508. "The bona /?de holder of a negotiable instrument for value, if acquired be- fore maturity and without notice of any facts which impeach its validity between the antecedent parties, has a good title to the instrument, un- affected by any such prior transac- tion and may recover the amount," per Clifford, J. Goodman v. Si- monds, 20 How. (61 U. S.) 343, 15 L. Ed. 834; Fossitt & Co. v. Bell, 4 McLean (U. S. C. C.) 427, Fed. Cas. No. 4,958; Crosby v. Lane, Fed. Cas., No. 3,423 (applied to a note re- ceived in payment of a pre-existing debt, even though an accommoda- tion note); National Exch. Bank v. White, 30 Fed. 412 (applied to com- mercial paper made by one of the members of a partnership, but case is reversed in Bowling v. Exchange Bk. of Boston, 145 U. S. 512, upon the ground that the other partners were entitled in an action by the holder bank to recover on the notes, to have it submitted to the jury, whether, under the circumstances, they were estopped to dispute the authority of their partner to make and put such paper in circulation. Examine on last point Hardie & Co., In re, 143 Fed. 553); Johnson V. Lewis, 6 Fed. 27. (Holding that the rule that the purchaser of a chattel acquires no better title than his vendor passed, has no applica- tion to negotiable paper, as the pos- session of such paper carries the title with it to the holder for value without knowledge and in good faith and that such title is good against all the world.) Alabama. — Pond v. Lockwood, 8 Ala. 669. Georgia. — Jenkins v. Jones, 108 Ga. 556, 34 S. E. 149; Haskins v. Throne, 101 Ga. 126, 28 S. E. 611; Bedell v. Scarlett, 75 Ga. 56; Smith V. Lloyd, Charlt. (Ga.) 253; Bond V. Central Bank, 2 Kelly (Ga.) 92. See Haug v. Riley, 101 Ga. 372, 40 L. R. A. 244, 29 S. E. 44. Illinois. — Bemis v. Horner, 165 111. 347, 46 N. E. 277, aff'g 62 111. App. 38. Indiana. — Morrison v. Fishel, 64 Ind. 177; Bremmerman v. Jennings, 60 Ind. 175. loica. — Council Bluffs Iron Works V. Cuppey, 41 Iowa 104. Kansas. — Holden v. Clark, 16 Kan. 346. Kentucky. — Clarke v. Tanner, 100 Ky. 275, 19 Ky. L. Rep. 590, 38 S. W. 11. Louisiana. — Taylor v. Bowles, 28 La. Ann. 294; Gardner v. Maxwell, 27 La. Ann. 561; Kohlman v. Lud- wig, 5 La. Ann. 33; Pralon v. Ay- mard, 12 Rob. (La.) 486; Bush v. Wright, 10 Rob. (La.) 23; Maurin V. Chambers, 6 Rob. (La.) 62; Me- lancon v. Melancon, 4 Rob. (La.) 33; Bordelon v. Kilpatrick, 3 Rob. (La.) 159; Robinson v. Shelton, 2 Rob. (La.) 277; Jones v. Young, 19 La. 553; Van Pelt v. Eagle Ins. Co., 18 La. 64; Hagan v. Caldwell, 15 La. 380; Crosby v. Heartt, 15 La. 304; Lanclos v. Robertson, 3 La. 259; Abat v. Gormley, 3 La. 238; Le Blanc v. Sanglair, 12 Mart. 0. S. (La.) 402, 13 Am. Dec. 377; Hub- bard V. Fulton, 7 Mart. 0. S. (La.) 241; Thompson v. Gibson, 1 Mart. N. S. (La.) 150. Maine. — Hobart v. Penny, 70 Me. 248; Wait v. Chandler, 63 Me. 257. Massachusetts. — Pettee v. Prout, 3 Gray (Mass.) 502, 63 Am. Dec. 778; § 439] BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. 5G0 ation without knowledge of any defect of title and in good faith holds such paper by a valid title good as against all the world.^ Again: Cone V. Baldwin, 12 Pick. (Mass.) 545. Michigan. — Bostwick v. Dodge, 1 Doug. (Mich.) 413, 41 Am. Dec. 584. Minnesota. — Merchants' Sav. Bank V. Cross, 65 Minn. 154, 67 N. W. 1147; Gale v. Birmingham, 64 Minn. 555, 57 N. W. 659. Mississippi. — Mercien v. Cotton, 34 Miss. 64; Craig v. Vicksburg, 31 Miss. 216. Nebraska. — First Nat. Bk. v. Pen- nington, 57 Neb. 404, 77 N. W. 1084. New Hampshire. — Doe v. Burn- ham, 11 Fost. (N. H.) 426. New Jersey. — Price v. Keen, 40 N.- J. L. 332. New York. — Perth Amboy Mut. Loan, Homestead & Bldg. Assn. v. Chapman, 178 N. Y. 558, 70 N. E. 1104, aff'g 81 N. Y. Supp. 38, 80 App. Div. 556; Citizens' State Bank v. Cowles, 80 N. Y. Supp. 598, 39 Misc. 571; Smith v. Weston, 88 Hun (N. Y.) 25, 24 N. Y. Supp. 557; Elwell V. Dodge, 33 Barb. 336. North Carolina. — Toms v. Jones, 127 N. C. 464, 37 S. E. 480; Little v. Dunlap, 44 N. C. 40; Reddick v. Jones, 28 N. C. 107, 44 Am. Dec. 68. Ohio. — Kitchen v. Loudenback, 48 Ohio St. 177, 29 Am. St. Rep. 540, 26 N. E. 979 [affirming 3 Ohio Cir. Ct. R. 228]; Johnson v. "Way, 27 Ohio St. 374; Second Nat. Bank v. Hemingray, 31 Ohio St. 168; Baily V. Smith, 14 Ohio St. 402. Pennsylvania. — Northern National Bank v. Arnold, 187 Pa. 356, 15 Lane. L. Rev. 345, 31 Chic. Leg. N. 36, 15 Bkg. L. J. 529, 40 Atl. 794; Bullock V. Wilcox, 7 Watts (Pa.) 328. South Carolina. — King v. Johnson, 3 McCord (S. C.) 365. Texas. — Rotan v. Maedgen (Tex. 1900), 59 S. W. 585; Blair v. Ruth- erford, 31 Tex. 465. Virginia. — Lomax v .Picot, 2 Rand. (Va.) 247. West Virginia. — Quaker City Nat. Bank v. Showacre, 26 W. Va. 48. Wisconsin. — Johnson v. Meeker, 1 Wis. 436. See Thorpe v. Minde- man (Wis.), 101 N. W. 417, 68 L. R. A. 146. But as to rule under statute in Kentucky, see Wade v. Foster, 24 Ky. L. Rep. 1292, 71 S. W. 443. ^ Perth Amboy Mut. Loan, H. & B. Assn. V. Chapman, 81 N. Y. Supp. 38, 80 App. Div. 556, aff'd (Mem.), 178 N. Y. 558, 70 N. E. 1108. See Myers v. Kessler, 142 Fed. 730. In this case the notes were regular upon their face and plain- tiff had purchased them in good faith and for value before maturity, and without notice of any defense whatever. It was held that the de- fense was not available, that the notes had been given on Sunday and for a stock gambling transac- tion. See §§ 288-301, herein. The popular meaning of "negoti- ate" is the same as that of the ne- gotiable instruments law, 1897, p. 728, c. 612, § 60, which provides that "an instrument is negotiated when it is transferred from one person to another in such manner as to con- stitute the transferee the holder thereof. If payable to bearer it is negotiated by delivery; if payable to order it is negotiated by the in- dorsement of the holder completed by delivery." Rogers v. Morton, 95 N. Y. Supp. 49. 50, 46 Misc. 494. As to governing principle, see Van 561 ESSENTIALS EXCEPTIOXS AND QUALIFICATIONS. [§§ 440, 441 "It is firmly imbedded in jurisprudence that a hona fide purchaser for a consideration before maturity is protected, at least to the ex- tent of the amount paid by him; the note he holds is clear of all equities between the parties."^ § 440. Essentials of rule. — To bring the holder within the protec- tion of the rule the paper must have been acquired by him before ma- turity, in due course of business, in good faith, for value, and without knowledge or notice of any defects, infirmities or defenses or of facts which impeach its validity, subject, however, to such qualifications and exceptions as are hereinafter specified.* § 441. Exceptions to and qualifications of rule — Generally. — The rules precluding defenses and equities against hofia fide holders for value have been made subject to certain exceptions and qualifications f as in cases where the note is void at its creation f or where it is based on an illegal, immoral and void consideration or its circulation is prohibited under the law, or the maker had no power to issue it f as Winkle, etc., Co. v. Citizens' Bank (Tex.), 33 S. W. 862. Bona fide holder not subject to equities, etc., see Walker v. Wilson, 79 Tex. 188, 14 S. W. 798, 15 S. W. 402, per Gaines, J. 'Clark v. Whitaker, 117 La. 298, 41 So. 580, 581, per Breaux, C. J. * United States. — National Exch. Bank v. White, 30 Fed. 412. Colorado. — Rand v. Pantagraph Co., 1 Colo. App. 270, 28 Pac. 661. Connecticut. — Standard Cement Co. V. Windham, 71 Conn. 668, 42 Atl. 1006. Georgia. — Keith v. Fork, 105 Ga. 511, 31 S. E. 169; Bedell v. Scar- lett, 75 Ga. 56. Maine. — Hobart v. Penny, 70 Me. 248. Minnesota. — Daniels v. Wilson, 21 Minn. 530. New York. — Claflin v. Farmers' Bank, 25 N. Y. 293, rev'g 36 Barb. (N. Y.) 540. Ohio. — Kitchen v. Loudenback, 48 Joyce Defenses — 36 Ohio St. 177, 29 Am. St. Rep. 540, 26 N. E. 979, aff'g 3 Ohio Cir. Ct. Rep. 228; Bailey v. Smith, 14 Ohio St. 402. Texas. — Rotan v. Maedgen (Tex. 1900), 59 S. W. 585. Virginia. — Payne v. Zell, 98 Va. 294, 36 S. E. 379. Washington. — McNamara v. Jose, 28 Wash. 461, 68 Pac. 903. See also citations in last preceding note. " Hillhouse v. Adams, 57 Conn. 153, 17 Atl. 698; Barker v. Valen- tine, 10 Gray (Mass.) 341; Patter- son v. Wright, 64 Wis. 289, 25 N. W. 10. 'Baker v. Arnold, 3 Cai. Cas. (N. Y.) 279. ' Jenkins v. Jones, 108 Ga. 556, 34 S. E. 149; Bedell v. Scarlett, 75 Ga. 56; Kitchen v. Loudenback, 48 Ohio St. 177, 26 S. E. 979, 29 Am. St. Rep. 540, aff'g 3 Ohio Cir. Ct. Rep. 228. As to illegal consideration see §§ 288-301, herein. § 442] BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. 563 in case of bonds issued without authority and so invalid f or where title is acquired by fraud and without consideration f or where there is a plea of non est factum^° Again, a certificate of deposit may be subject to equities and defenses/^ as may also notes which are not for the payment of money.^^ Other exceptions exist and are noted elsewhere herein. § 442. Bona fide holder generally — Decisions. — The case of Good- man V. Simonds^-* holds that a hojia fide holder of a negotiable in- strument for a valuable consideration, without notice of facts which impeach its validity between the antecedent parties, if he takes it un- der an indorsement made before the same became due, holds the title unaffected by these facts and may recover thereon, although as between the antecedent parties the transaction may be without any legal valid- ity. In Georgia, a ho7ia fide holder of a negotiable promissory note, purchased for value and before maturity, is protected against a defense that the note was without consideration, and where a negotiable note was payable at a future date was indorsed by the payee to the plaintiff, in the absence of proof to the contrary the law will presume that the plaintiff took before maturity, for value and without notice. So where, in defense to a suit upon a note, the defendant pleads that the plaintiff purchased after maturity, and there is no evidence to sustain the plea, a verdict in favor of defendant is contrary to law.^^ It is held in New York that under the negotiable instruments law, "where value has at * Oswego County Sav. Bk. v. Town of Genoa, 72 N. Y. Supp. 786. »Keegan v. Rock (Iowa), 102 N. W. 805. See also Deppen v. German- American Title Co., 24 Ky. L. Rep. 1110, 70 S. W. 868, 72 S. W. 868. Defense of fraud when not avail- able against holder taking negotia- ble paper in good faith, without no- tice, before maturity and for value. Douglas v. Matting, 29 Iowa 498, 4 Am. Rep. 238; Clarke v. Tanner, 100 Ky. 275, 10 Ky. L. Rep. 590, 38 S. W. 11; Park Bank v. Watson, 42 N. Y. 490, 1 Am. Rep. 573; Phelan v. Moss, 67 Pa. St. 59, 5 Am. Rep. 402. Defense of fraud available when not taken in regular course of busi- ness, as where A. obtained the pa- per by fraud and before maturity indorsed it to plaintiff, who had no knowledge of the fraud, in trust for A.'s creditors and the balance for A.'s wife. Roberts v. Hall, 37 Conn. 205, 9 Am. Rep. 308. ^"Bedell v. Scarlett, 75 Ga. 56. , " Gregg V. Union County Nat. Bank, 87 Ind. 238; Reed v. Stapp, 9 U. S. App. 34, 3 C. C. A. 244, 52 Fed, 641. See Shute v. Pacific Nat. Bank, 136 Mass. 487. ^- Shamokin Bank v. Street 16 Ohio St. 1. ^^■* 20 How. (61 U. S.) 343. 15 L. Ed. 934. " Parr v. Erickson, 115 Ga. 873, 42 S. E. 240. Il 563 BOXA FIDE HOLDERS GENERALLY — DECISIONS. [ §442 any time been given for the instrument, the holder is deemed a holder for value in respect to all parties who become such prior to that time/' and one of the conditions which constitute one a holder in due course is, "that he took it in good faith and for value;" therefore, an ad- mission in the defense that the note was ever negotiated for value would be fatal to a demurrer and the allegation of the defense in a suit by the holder that there was no consideration for the execution and indorsement of the note is insufficient.^* The statute of Iowa, provid-. " Rogers v. Morton, 95 N. Y. Supp. 49, 46 Misc. 494. The court, per Clarke, J., said: "Two actions are brought on promissory notes by an indorsee; one against the maker and payee, and the other against the maker. The complaints set forth the notes and contain the usual averments. The answers are alike, and each contain a general denial, and three separate defenses, and a counter-claim. The plaintiff demurs to each defense on the ground that the same is insufficient in law upon the face thereof, and also to the counter-claim, as hereinafter stated. The facts admitted by the demurrer to the second defense (the first separate defense) are: Defendants were heavily interested in a rail- road company, and, in order to fur- nish money to said company, exe- cuted and indorsed the note, as maker, payee, and indorser, placed the same with a third party for the purpose of having it discounted for the benefit of said company, and the third party informed these de- fendants after maturity that the note was in her possession, and de- fendants believe the note now to be in her possession. If these were all the allegations of this defense, it is clear that the demurrer would have to be sustained; but the plea con- tinues, 'and denies that said note was ever duly negotiated or dis- counted for value.' Plaintiff con- tends that this denial is a state- ment of a conclusion of law. I am of opinion that the denial that the note was ever duly negotiated for value is the statement of an ulti- mate fact, and not of a conclusion of law. * * * The allegation, with reference to this note, which is pay- able to order, is therefore equiva- lent to a denial that the note was ever duly indorsed and delivered for value. A denial in these same words was held by Schnitzer v. Gordon, 28 App. Div. 342, 51 N. Y. Supp. 152, to be a negative preg- nant, but nevertheless sufficient to raise an issue calling for proof upon the trial. It admits the delivery and indorsement, but denies that any value was ever given for the note. * * * An admission that the note was ever negotiated for value is therefore fatal to the demurrer. This determination is not in accord with a ruling in the second depart- ment of this court." The court then quotes frorh Green v. Brown, 49 N. Y. Supp. 163, 22 Misc. 279, and Car- ter V. Eighth Ward Bank, 67 N. Y. Supp. 300, 33 Misc. 128, and says: "These decisions are inconsistent with the rule laid down by Judge Andrews in Douglas v. Phoenix Ins. Co., 138 N. Y. 209, 33 N. E. 938, 20 L. R. A. 118. 34 Am. St. Rep. 448. * * * A defense differs from -a de- nial, in that the denial puts the plaintiff to his proof, and the de- 442] BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. 564 ing that if a negotiable note is procured of the maker by fraud and is afterward indorsed before maturity, for value, to an innocent pur- chaser, yet such innocent purchaser can only recover the sum he paid for the note, enters into and becomes a part of the contract evidenced by a note made in Iowa, and such limitation of the amoimt payable to fense is a plea by way of confes- sion and avoidance. General de- •nials are inconsistent with confes- sion, and therefore not properly part of a defense. But to state a valid defense, one that will avoid the cause of action alleged, it may be necessary to deny specific alle- gations of the complaint which, un- der our rules of pleading, would otherwise be admitted. All denials in a defense are not, therefore, ne- cessarily surplusage or immaterial. If the plaintiff cannot with safety demur to a pleading containing an immaterial allegation or denial of fact, he has his remedy under the code. He should first move to strike out such allegation or denial. Steif- fel V. Tolhurst, 55 App. Div. 532, 67 N. Y. Supp. 274; Blant v. Blant, 41 Misc. Rep. 572, 85 N. Y. Supp. 146. The court should not be required to determine on demurrer matters which may be disposed of on mo- tion. The second demurrer must be sustained. The allegation that 'plaintiff is not a bona fide holder in due course of said note' is a conclusion of law. It is impossi- ble to determine which of the con- ditions specified in section 91 of the negotiable instruments law, consti- tuting a holder in due course, have not been complied with. The alle- gation 'that said note was executed and indorsed without any consider- ation' is of itself insufficient. This defense admits the allegation of the complaint that the payee indorsed and delivered the note for value before maturity. Value having been given prior to the delivery to plaintiff, he is a holder for value (negotiable instruments law, laws 1897, p. 727, § 52), and the fact that there may have been an in- dorsement without consideration is immaterial. The allegation that the note 'had, before its delivery to said plaintiff, no legal inception,' is a conclusion of law, and is not helped by the immaterial allegation that the 'transfer to plaintiff was made after maturity,' and the insufficient allegation, 'at a rate of discount greater than legal interest, and not in the ordinary course of business, and is usurious and void.' The de- fense of usury must set up the usurious contract, specifying its terms and the particular facts re^ lied upon to bring it within the pro hibition of the statute. Western T & Coal Co. V. Kilderhouse, 87 N. Y, 430, 435; Manning v. Tyler, 21 N, Y. 567; Degal v. Simmons, 23 N Y. 491; Whitehead v. Heidenheimer 57 App. Div. 590, 595, 68 N. Y. Supp 704. The third demurrer must be sustained on the same grounds as the second. "The additional allegation in this separate defense that 'said note was wrongfully converted by said Agnes Ford, and fraudulently delivered to said plaintiff without the knowledge and assent of these defendants, or either of them,' is a mere conclu- sion of law. The authorities have long established the rule that the facts constituting the alleged fraud must be pleaded." I 565 BOXA FIDE HOLDERS GEXEHALLY — DECISIONS. [§ 442 the indorsee in such case applies in an action in Missouri on the note.^" Again, it is declared that commercial necessity requires that only- slight evidence should be insisted upon to establish an estoppel in pais as to the validity of commercial paper ; therefore, the face of the paper itself, when free from suspicion, is sufficient evidence, in the absence of notice, against all who aid to put it into circulation in that condi- tion, unless the note is void by the positive command of a statute.^® In an action upon a promissory note an affidavit of defense is insuffi- cient in which the defendant admits that he made a note identical with the copy filed in date, in amount, in payee and in time and place of payment, and that the note passed by indorsement to the plaintiff in renewal of his prior note which the plaintiff had discounted, and the only difference averred between the copy filed, and the note al- leged to have been made is that the latter contained the words and figures "In renewal of $5,000 note."" Though a person holds a note as collateral security, in the absence of any defense against it, even if it was still in the hands of the payee, judgment may be had for the whole amount due on the note with liability to account for the surplus to the owner of the note.^.* If notes are acquired in good faith for value before maturity they are not vitiated in the hands of the holder " Creston Nat. Bank v. Salmon dence in the absence of notice, (Mo. App. 1906), 93 S. W, 288. against all who aided to put it into " Chemical National Bank v. Kel- circulation, unless the note is void logg, 183 N. Y. 92, aff' g 87 App. Div. by the positive command of a stat- 633. The court, per Vann, J., said: ute, such as the act against usury. "The business of this country is No other rule would work well, for done so largely by means of com- it would be intolerable if every bank mercial paper that the interests of had to learn the true history of commerce require that a promissory each piece of paper presented for note, fair on its face, should be as discount before it could act in negotiable as a government bond, safety. It is better that there Every restriction upon the circula- should be an occasional instance of tion of negotiable paper is an in- hardship, than to have doubt and jury to the state, for it tends to distrust hamper a common method derange trade and hinder the trans- of making commercial exchanges." action of business. Commercial '"Yardley Nat. Bank v. Vansant, necessity requires that only slight 214 Pa. 250, 63 Atl. 544. evidence should be insisted upon to '* Camden Nat. Bank of Camden establish an estoppel in pais as to v. Fries-Breslin Co. (Supreme Ct. the validity of commercial paper. Pa. 1906), 63 Atl. 1022, citing 4 Am. The only practicable rule is to make & Eng. Ency. of Law (2d Ed.), p. the face of the paper itself, when 347, see § 351 et seq., herein, free from suspicion, suflScient evi- §§ 443, 444] BONA FIDE HOLDERS AND EIGHTS OX TRANSFER. 566 "by subsequent information of the infirmity of their origin/® and an equity arising subsequent to the transfer is no defense in favor of the maker against the transferee.-" § 443. Certified bank checks — Discounting^ paper. — This rule as to bona fide holders has been applied to certified bank checks ;^^ and it is held that the fact that a check on the bank has been certified by the bank at the request of the indorsers and before delivery to the holder will not discharge the indorsers, such a certification arouses no implication that the holder intended to release the indorser and look only to the bank.^^ The rule has also been applied to one dis- counting the paper in good faith. ^^ So where a note is sued on which was payable to and discounted by a bank, it is incompetent, for the purpose of diminishing the amount recoverable, to show that the bills of the bank were at a depreciation when the note matured, as the bank is entitled to recover the full amount.^* § 444. Notes under seal. — The general rule has been applied in equity to a due bill under seal purporting on its face to have been given for a valuable consideration. Thus where a due bill is a merely voluntary contract without consideration it will not be enforced in equity and even though under seal and purporting on its face to be for value received a court of equity may inquire into the real con- sideration.^^ And under a system which permits law and equity to be blended in one action fraud or mistake in the consideration of a bond may be shown and it may also he proven that part of the con- sideration was usurious interest, but while fraud in the factum might "Hillard v. Taylor, 114 La. 883, 38 8 Fed. 1; First Nat. Bank v. Schuy- So. 594. ler, 39 N. Y. Super. Ct. (N. Y.) ="" Campbell v. Rusch, 9 Iowa 337. 440; Salina Bank v. Babcock, 21 See Elwell v. Dodge, 33 Barb. (N. Wend. (N. Y.) 499. But see Mer- Y.) 336. chants', etc.. Bank v. Millsaps, 71 =' Farmers' Bank v. Butchers' Miss. 361, 15 So. 659; National Park Bank, 28 N. Y. 425, 26 How. Pr. (N. Bank v. German-American Security Y.) 1; s. c. Farmers', etc., Bank v. Co., 116 N. Y. 281, 22 N. E. 567, 5 Butchers', etc.. Bank, 14 N. Y. 623. L. R. A. 673, rev'g 53 N. Y. Super. See Mutual Nat. Bk. v. Rotge, 28 Ct. 367, a corporation note. La. Ann. 933, 26 Am. Rep. 126. =* Commercial Bank v. Atherton, 1 =^Willetts V. PhcEnix Bank, 2 Smedes & M. (Miss.) 641. Duer (N. Y.) 121. === Snyder v. Jones, 36 Md. 542. ^ Waynesville Nat. Bank v. Irons, 567 EQUITIES GEXEIUVLLY NOX-NEGOTIABLE PAPER. [§§ 445, 446 avoid a bond altogether, fraud or mistake in the consideration, so far as the consideration is legal, may be shown. -*^ §445. Equities generally. — Generally those equities only can be pleaded by defendant which operate in his favor ; he cannot rely upon those which belong to the party to whom he is liable.^^ And secret equities will not he of any avail against a bona fide holder of a note transferred before maturity.^''* If the defense relates simply to the consideration and can be availed of at law, equity will refuse its aid to reform the instrument.-^ But where conspiracy in obtaining a note is relied upon and plaintiff can show that certain defendants co- operated in the alleged wrongful acts, equity will give relief to the ex- tent so proven.-" An answer may be compelled to interrogatories to show what consideration defendant received and also that received by other parties to the extent of his knowledge.^" But defenses of an ac- ceptor against the drawer cannot be availed of in equity against such bona fide holder.^ ^ § 446. Holder, transferee or assignee — Non-negotiable paper — Equities and defenses. — In case of non-negotiable paper the equities and defenses between prior parties may be such as will preclude a re- covery by the holder, transferee or assignee, even though such party obtained the paper before maturity, for value, and without notice or knowledge of such equities or defenses, as non-negotiable paper rests upon a different rule from that which governs negotiable paper in so far as its transfer and the rights of holders are concerned. ^- =« Hughes V. Boone, 102' N. C. 137, Ranch Co. v. San Jose Land & W. 9 S. E. 286. Co., 132 Cal. 582, 64 Pac. 1097; "Ran V. Latham, 11 La. Ann. 276. Bouche v. Souttit, 104 Cal. 230, 37 "* Clark V. Whitaker, 117 La. 298, Pac. 902; Graves v. Mining Co., 81 41 So. 580, 582. Cal. 303, 22 Pac. 665; McGarvey v. ^Hausbrandt v. Hofler, 117 Iowa Hall, 23 Cal. 140. 103, 90 N. W. 494. ^"^oncZa.— Reddish v. Ritchie, 17 -»More v. Finger, 128 Cal. 313, 60 Fla. 867. Pac. 933, 58 Pac. 322. Georgia.— Cohen v. Prater, 56 Ga. ^ Culverhouse v. Alexander, 2 203. Younge & C. Exch. 218; Glengall v. Illinois.— Uas\ie\\ v. Brown, 65 111. Edwards, 2 Younge & C. Exch. 125. 29. See Barker v. Barth, 192 111. '' Morrison v. Farmers' Bank, 9 460, 61 N. E. 388, aff'g 88 111. App. Okla. 697, 60 Pac. 273. 23. "^California. — Neale v. Head, 133 Indiana. — Henry v. Gilliland. 103 Cal. 42, 65, Pac. 131; San Jose Ind. 177; Herod v. Snyder, 48 Ind. 447] BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. 568 § 447. Defenses against assignees. — Defenses or equities existing against the payee at the time of the assignment or before notice thereof are available against the assignee to preclude his recovery on the paper. ^^ And the maker may show the true consideration as 480. See Rosenthal v. Rambo, 165 Ind. 584, 76 N. E. 404. Kansas. — South Bend Iron Works V. Paddock, 37 Kan. 510, 15 Pac. 574; Graham v. Wilson, 6 Kan. 489. Kentucky. — Gaines v. Bank, 19 Ky. L. Rep. 171, 39 S. W. 438. Massachusetts. — Dyer v. Homer, 22 Pick. (Mass.) 253; Willis v. Twambly, 13 Mass. 204. Missouri. — Smith v. Busby, 15 Mo. 388, 57 Am. Dec. 207. New Hampshire. — Sanborn v. Lit- tle, 3 N. H. 539. New York. — Meuer v. Phoenix Nat. Bk., 88 N. Y. Supp. 83, 94 App. Div. 331, aff'g 86 N. Y. Supp. 701, 42 Misc. 341; Kohn v. Consolidated Butter & Egg Co., 63 N. Y. Supp. 265, 30 Misc. 725; Chamberlain v. Gorham, 20 Johns. (N. Y.) 144. North Carolina. — Havens v. Potts, 86 N. C. 31; First Nat. Bank v. By- num, 84 N. C. 24, 37 Am. Rep. 604. North Dakota. — See Massachu- setts Loan & Trust Co. v. Twichell, 7 N. Dak. 440, 75 N. W. 786. Oklahoma. — Dickerson v. Higgins (Okla.), 82 Pac. 649; Cotton v. John Deere Plow Co., 14 Okla. 605, 78 Pac. 321. Pennsylvania. — Welter v. Kiley, 95 Pa. St. 461; Miller v. Kreiter, 76 Pa. St. 78; White v. Heylman, .34 Pa. St. 142; Thompson v. McClel- land, 29 Pa. St. 475; Bircleback v. Wilkins, 22 Pa. St. 26. Texas. — Sonnenthiel v. Skinner, 67 Tex. 453, 3 S. W. 686. ^ United States. — Omaha Nat. Bank v. Walker, 5 Fed. 399, 403; Bradley v. Trammel, 1 Hemp. (U. S.) 164, Fed. Cas., No. 1,788a. Alabama. — Clemens v. Logglns, 1 Ala. 622; Hudson v. Tindall, 1 Stew. & P. (Ala.) 237. Arkansas. — Coolidge v. Burns, 25 Ark. 241; Tatum v. Kelly, 25 Ark. 209, 94 Am. Dec. 717; Oldham v. Wallace, 4 Pike (Ark.) 559. California. — Wright v. Levy, 12 Cal. 257. Illinois.— ?>ims, v. Rice, 67 111. 88; Jeneson v. Jeneson, 66 111. 259; Bradley v. Marshall, 54 111. 173. Compare Mann v. Merchants' Loan & Trust Co., 100 111. App. 224. Indiana. — Second Nat. Bank v. Brady, 96 Ind. 498; Sheffield School V. Andress, 56 Ind. 157; Shane v. Lowry, 48 Ind. 205; Marshall v. Bil- lingsley, 7 Ind. 250; Henry v. Scott, 3 Ind. 412; Doremus v. Bond, 8 Blackf. (Ind.) 368. See First Nat. Bk. V. Beach, 34 Ind. App. 80, 72 N. E. 287. Iowa. — Hecker v. Boylan, 126 Iowa 162, 101 N. W. 755; Sayre v. Wheeler, 31 Iowa 112; Pearson v. Cummings, 28 Iowa 344; Merchants', etc.. Bank v. Hewitt, 3 Clarke (Iowa) 93. Kentucky. — Harrigan v. Advance Thresher Co., 26 Ky. L. Rep. 317, 81 S. W. 261; Power v. Hambrick, 25 Ky. L. Rep. 30, 74 S. W. 660; Huber V. Egner, 22 Ky. L. Rep. 1800, 61 S. W. 353; Rogge v. Cassidy (Ky. 1890), 13 S. W. 716; Garrott v. Jaf- fray, 10 Bush. (Ky.) 413; Bement V. McClaren, 1 B. Mon. (Ky.) 296; Triplett v. Holly, 4 Litt. (Ky.) 130; Chiles V. Corn, 3 A. K. Marsh. (Ky.) 230; Highbaugh v. Hubbard, 6 Ky.- L. Rep. 511. Examine Cunningham 569 DEFENSES AGAINST ASSIGNEES. [§ 447 against the assignee of a note as in case of a peddler's note.^* If a note has been given by the vendee, for purchase money, and the vendor is unable to make title, equity will allow, against the assignee equitable defenses which were available against the assignor.^^ And where a rail- road company negotiated one of its bonds and delivered with it the note of the defendant as security, even had the note been indorsed in the usual mode, before maturity, the assignee, by a proceeding in V. Potter, 23 Ky. L. Rep. 847, 64 S. W. 493. Louisiana. — Kugler v. Taylor, 19 La. Ann. 100. Maine. — Litchfield v. Dyer, 46 Me. 31; Calder v. Billington, 3 Shep. (Me.) 398. Maryland. — Steele v. Sellman, 79 Md. 1, 28 Atl. 811. Massachusetts. — Stevens v. Par- ker, 5 Allen (Mass.) 333. Mississippi. — Scott v. Searles, 7 Smedes & M. (Miss.) 498, 45 Am. Dec. 317. Missouri. — Munday v. Clements, 58 Mo. 577; Thompson v. Roatcup, 27 Mo. 283. Montana. — Helena Nat. Bk. v. Rocky Mountain Teleg. Co., 20 Mont. 379, 63 Am. St. Rep. 628, 8 Am. & Eng. Corp. Cas. N. S. 782, 51 Pac. 829. Nebraska. — See Gaylord v. Ne- braska Sav. & Exch. Bk., 54 Neb. 104, 74 N. W. 415. New York. — Chase v. Kellogg, 59 Hun (N. Y.) 623, 13 N. Y. Supp. 351. Pennsylvania. — Lancaster Bank v. Huver, 114 Pa. St. 216, 6 Atl. 1; Weaver v. Lynch, 25 Pa. St. 449, 64 Am. Dec. 713; Edgar v. Kline, 6 Pa. St. 327; Baker v. Nipple, 16 Pa. Co. Ct. 659. South Dakota. — Searles v. Seipp, 6 S. D. 472, 61 N. W. 804. Tennessee. — Vatterlein v. Howell, 5 Sneed (Tenn.) 441; Robinson v. Keyes, 9 Humphr. (Tenn.) 144; Wormley v. Lowry, 1 Humphr. (Tenn.) 468. Texas. — Petigrew v. Dix, 33 Tex. 277; Boyd v. Tarrant, 14 Tex. 230; Weathered v. Smith, 9 Tex. 622, 60 Am. Dec. 186. Examine National Bk. of Commerce v. Kenney (Tex.), 83 S. W. 368, rev'g 80 S. W, 555. Vermont. — Sanford, etc., Co. v. Hull; Brayt. (Vt. 231; Wetmore v. Blush, Brayt. (Vt.) 55. Certificates of deposit non-negoti- able and assignee subject to de- fenses. Humboldt Safe-Deposit & Trust Co., 3 Pa. Co. Ct. R. 621. When agreement that payee would not hold maker responsible may be shown, in action by assignee after maturity. Citizens' Nat; Bk. v. Cammer (Tex. Civ. App.), 86 S. W. 625. Purchaser of note, when recovery limited to price paid, see Theard v. Gueringer, 115 La. 242, 38 So. 579. Defense of usury available against assignee. Stokeley v. Buckler, 22 Ky. L. Rep. 1740, 61 S. W. 460. Note purchased at execution sale is subject to equities. Neale v. Head, 133 Cal. 32, 65 Pac. 131. Defense of fraud available against assignee of note payable to order. Kennedy v. Jones (Miss.), 29 So. 819. 2* Burns v. Sparks, 26 Ky. L. Rep. 688, 82 S. W. 425. ^= Smith V. Pettus, 1 Stew. & P. (Ala.) 107. 447] BONA FIDE HOLDEES AXD EIGHTS OX TEAXSFEE. 570 equity to collect the same by foreclosure of a mortgage given to secure it, which is not negotiable, will take, subject to any defenses the maker had as against the original mortgagees, because in such suit the mort- gage is a foundation of the suit and the note is only the incident or evidence of the debt.^^ So the payment to the assignor by the maker of a non-negotiable instrument may constitute a good defense to an ac- tion thereon by the assignee when such payment was made without no- tice of the assignment and in good faith." ' So an action on a note may . be barred by a release by the payee before notice given of assign- ment.^* Under a Missouri decision if a negotiable instrument is as- signed only those equities may be availed of as are apparent upon the paper.^'' Again, in an action by the assignee it is unnecessary to con- sider the question whether a written assignment of certain notes was properly executed or admitted in evidence, where the complaint alleged the assignment and delivery of the notes to the plaintiff and the testi- mony showed that the said noies were transferred and delivered to the plaintiff long before the written assignment was made; no objection being interposed to the admission of this testimony it was declared to be prima facie sufficient under the pleadings to sustain the right to recover.*" The holder of negotiable paper indorsed in blank to which he has no legal title, or in which he has no beneficial interest, may maintain after maturity a suit thereon against the maker, with the consent of the real owner to whom, when recovered, he is accountable for the proceeds.*^ •" Haskell v. Brown, 65 111. 29. ^^ Cornish v. Woolverton, 32 Mont. 456, 81 Pac. 4, Code Civ. Proc, §§ 570, 571, Civ. Code, § 1982. See also Sykes v. Citizens' Nat. Bk. 69 Kan. 134, 76 Pac. 393; Dickerson V. Higgins, 15 Okl. 588, 82 Pac. 649. Payment of overdue interest to payee by maker before notice of as- signment when available against as- signee, see Hecker v. Boylan, 126 Iowa 162, 101 N. W. 755. Compare Walter v. Logan, 63 Kan. 193, 65 Pac. 225. ^ Lowrey v. Danforth, 95 Mo. App. 441, 69 S. W. 99. =° Caldwell v. Dismukes, 111 Mo. App. 570, 86 S. W. 270. « First National Bank of Council Bluffs v. Moore (C. C. A.), 137 Fed. 505. *^Jump V. Leon (Mass. 1906), 78 N. E. 532, declaring that this rule has been settled by repeated deci- sions beginning with Little v. O'Brien, 9 Mass. 423, and citing with other cases Fay v. Hunt, 190 Mass. 378, 77 N. E. 502; Haskell v. Avery, 181 Mass. 106, 63 N. B. 15, 92 Am. St. Rep. 401; New England Trust Co. V. New York Belting & Packing Co., 166 Mass. 42, 45, 43 N. E. 928. Jurisdiction of federal court — as- signee— bona fide holders. The pro- visions of the act of August 13, 1888, 25 Stat, at L. 433, 434, pro- vides that no circuit court shall 571 ASSIGNEE — EQUITIES. [§ 448 § 448. Assignee — Equities — Construction and essentials of rule — Generally. — The equities within the rule are such as existed in favor of the original debtor and not a collateral matter not growing out of the notes*- and such as the holder ought to have ascertained by such inquiry as the facts and the law require.''^ So the equities must be ex- isting ones between the maker and payee in order to be available by the maker to defeat the assignee ;*■* the equities must also be such as attach to the particular contract*^ in connection with which the note is given. And the rule applies, even though the note is secured by col- have cognizance of any suit to re- cover the contents of any promis- sory note in favor of any assignee, or subsequent holder if such instru- ment be payable to bearer, unless such suit might have been prose- cuted in such court to recover, if an assignment or transfer had not been made. Notes were made by a cor- poration payable to the order of its own treasurer, a citizen of the same state as a matter of custom and convenience and he indorsed and delivered them to a citizen of an- other state, a bona fide holder, who furnished directly to the corpora- tion the money evidenced by the note. It was decided that the treas- urer was not in fact the assignee of the note within the statute and that the holder could maintain suit in the federal circuit court of com- petent jurisdiction, even though as to the treasurer diversity did not exist; "as the notes were made pay- able to the order of 'Markham B. Orde, Treas.,' and there is no alle- gation that Orde was not a citizen of the state of Illinois, of which state the defendant companies were corporations and citizens, it is in- sisted that the jurisdiction must fail, under the provisions of the statute just referred to. Assuming without deciding that this question could be raised by way of defense to the ancillary bill, we think the objection must fail, for under the allegations of the declaration the money was furnished directly to the defendants by the Guaranty Trust Company, and that company was the first taker of the notes. In Falk V. Moebs, 127 U. S. 597 (32 L. Ed. 266, 8 Sup. Ct. 1319), it was held that notes made in this form, pay- able to the treasurer, indorsed be- fore delivery by him are notes of the company. And when it appears that the indorser is not in fact an assignee of the paper, suit may be brought in a federal court by a holder having the requisite diverse citizenship, notwithstanding the in- dorser might have been a citizen of the same state with the defend- ant. Holmes v. Goldsmith, 147 U. S. 150 (37 L. Ed. 118, 13 Sup. Ct. 288)." Blair v. Chicago, 201 U. S. 400, 447, 448, 26 Sup. Ct. 427, per Day, J. *=Fairchild v. Brown, 11 Conn. 26; Duke V. Clark, 58 Miss. 465, 474. " Fairchild v. Brown, 11 Conn. 26. See Summers v. Hutson, 48 Ind. 228. "Reece v. Knott, 3 Utah 451, 24 Pac. 757. «= Wright V. Levy, 12 Cal. 257. • I gg 449-451] BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. 572 lateral.*" The maker must also have some interest to justify an in- quiry into the validity of the assignment.*^ § 449. Assignee — Negation and qualification of rule. — Notwith- standing the preecding general rule, there are decisions which hold to the contrary, either upon principle or by reason of the par- ticular circumstances, or which are, at least, qualificative.** Said general rule may also be subject to qualification by code provision.'*® § 450. Assignee of void note — Forbearance to sue. — A note given for an improvement on public land, where there is no right of pre- emption, is for an illegal consideration and void, and where, subse- quent to Ihe assignment of the note, there is a promise to pay on con- dition of forbearance to sue, it is held that such note is subject to de- fenses, as, the note being void, the forbearance to sue could not give it validity.^* § 451. So-called assignment — Not subject to equities. — Where a so- called assignment is written on the back of a note, acknowledges the receipt of a consideration, employs apt words to transfer the full and complete title to the paper, and actually purports to make such trans- " Reddish v. Ritchie, 17 Fla. 867. Sandf. Ch. (N. Y.) 333; Snyder v. See §§ 364-367, herein. Gruniger, 77 N. Y. Supp. 234. *'TerrilI v. Gamblin, 10 La. Ann. Ohio. — Ehrman v. Union Cent. 623. Life Ins. Co., 35 Ohio St. 324; Pan- *^United /Sia^es.— Arthurs v. Hart, coast v. Ruffin, 1 Ham. (Ohio) 381; 17 How. (U. S.) 6, 15 L. Ed. 30. Block v. Espy, 6 Ohio Dec. 833. Arkansas. — McLain v. Coulter, 5 Pennsylvayiia.—UarTisonhurg Bk. Pike (Ark.) 13. v. Meyer, 6 Serg. & R. (Pa.) 537. Colorado. — Parkinson v. Boddiker, Virginia. — M'Neil v. Baird, 6 10 Colo. 503, 15 Pac. 806. Munf. (Va.) 316. Illinois.— Yan Buskirk v. Day, 32 Equities against assignee may be 111. 260. cut off by assignment under stat- Indiana. — Glover v. Jennings, 6 ute. Peck v. Bligh, 37 111. 317. Blackf. (Ind.) 10. "Adams v. Robinson, 69 Ga. 627 Iowa. — Schleissman v. Kallenberg, (this case makes a distinction be- 72 Iowa 338, 33 N. W. 459. tween a negotiable and a non-nego- Kentucky. — Walker v. McKay, 2 tiable paper under code, § 2244. It Mete. (Ky.) 294; Reid v. Cain, 3 also distinguishes the case of Co- Ky. L. Rep. 329. hen v. Prather, 56 Ga. 203). See Missouri. — Powers v. Heath, 20 § 446, herein. Mo. 319. ^"Lindsey v. Sellers, 4 Cushm. (26 New York.— Cooke v. Smith, 3 Miss.) 169. I 573 ASSIGNMENT BY PAROL SUIT IN OWN NAME. [§§ 452, 453 fer it is not merely an assignment of a chose in action, subject in the assignee's hands to defenses available against the assignor, but is in all essential respects, the equivalent of a blank indorsement and re- lieves an innocent holder from equities existing between the maker and payee; especially so when there are no words of a conditional or restrictive character employed, and the state statute makes a note, whether payable to a person or his assigns, or to a person or his order, equally negotiable. And any one receiving the paper with a transfer in blank may treat it as a blank indorsement and transfer it by delivery, or may so fill it up as to make a special indorsement.^^ § 452. Assignment by parol — Suit in own name — Equities. — In the absence of a statute to the contrary an assignment by parol of a note payable to order is sufficient, a written assignment being unneces- sary to transfer the equitable title to the assignee. In such case the title so transferred being equitable it is subject to defenses which the maker might have made prior to the transfer and although irrespec- tive of the code an action to recover on the note could be prosecuted only by the holder in the name of the payee, yet under the code system a negotiable unindorsed promissory note, payable to order, may, for a valuable consideration, be assigned by mere delivery, so as to give the transferee a right to recover thereon in his own name.^^ § 453. Suit for use or benefit of assignee. — Defenses and equities are available the same as if the note had not been assigned where the action is brought for the use or benefit of the assignee.^^ "Leahy v. Haworth, 141 Fed. 850, Rep. 547; Markey v. Corey, 108 859-861; Neb. Comp. Stat. 1901, Mich. 184, 66 N. W. 493, 62 Am. St. § 3380. The so-called assignment Rep. 698, 36 L. R. A. 117; Maine read: "For value received the Da- Trust & Banking Co. v. Butler, 45 kota Mortgage Loan Corporation Minn. 506, 48 N. W. 333, 12 L. R. A. hereby assigns and transfers the 370; Everett v. Tidball, 34 Neb. 803, within note and coupons, together 52 N. W. 816; Lovell v. Evertson, with all its right, title and interest 11 Johns. (N. Y.) 52; Davidson v. under the real estate mortgage se- Powell, 114 N. C. 575, 19 S. E. 601; curing the same, without recourse Bisbing v. Graham, 14 Pa. 14, 53 to . [Signed.] The Dakota Am. Dec. 510; Merrill v. Hurley, 6 Mortgage Loan Corporation, by Al- S. D. 593, 63 N. W. 958, 55 Am. St. lison Z. Mason, Treasurer." The Rep. 859. , court cites and considers Evans v. " First National Bank of Council Gee, 11 Pet. (36 U. S.) 80, 9 L. Ed. Bluffs v. Moore (C. C. A.) 137 Fed. 639; Sears v. Lanz, 47 Iowa 658; 505. Adams v. Blethen, 66 Me. 19, 22 Am. " Gildersleeve v. Caraway, 19 Ala. gg 454— 4:5G] BONA FIDE HOLDERS AND EIGHTS ON TKANSFEK. 574 § 454. Subsequent defenses and equities. — Equities arising be- tween the maker and assignor of a note after the assignment cannot avail against the assignee.^* § 455. Note payable to order or bearer.-=— Where a note payable to order or to bearer is assigned defenses in equity are available against the assignee. ^^ This rule has been also applied to a writing payable to order.^^ § 456. Transferee without indorsement. — A note may be trans- ferred by delivery when payable to the maker's order and indorsed in ' blank.^' So a note may pass by delivery in due course of business."^ ■ The title to warehouse receipts may also pass by delivery without formal indorsement.^" And a check payable to a certain person may pass title by its delivery.''** It is held, however, that the legal title does not pass by the delivery only of negotiable paper, though indorsed to the "order of over the holder's signature.*^^ It is also decided that a consideration must be proven to warrant a recovery by a transferee without indorsement of a negotiable instrument. ''- If a note is trans- ferred without the payee's indorsement the transferee cannot hold a person as indorser thereof where his signature had been procured on the promise of the maker to procure the payee's indorsement before negotiating the note.'^^ And it is decided that one is not a bona fide holder of paper payable to order transferred to him by delivery only without indorsement, although he acquires title thereto by the pay- ment of value.^* Under the negotiable instruments law of New York "where the holder of an indorsement, payable to his order, 246; Dunning V. Say ward, 1 Greenl. ^^ Sloan v. Johnson, 20 Pa. Super. (Me.) 366; Dyer v. Homer, 22 Pick. Ct. 643. (Mass.) 253. «° Meuer v. Phenix Nat. Banli, 86 ''^ Daviess v. Newton, 5 J. J. N. Y. Supp. 701, 42 Misc. 341, aff'd Marsh. (Ky.) 89. 88 N. Y. Supp. 83, 94 App. Div. 331. '-'■ Woodward v. Mathews, 15 Ind. " Gaylord v. Nebraslca Sav. & 339; Kennedy v. Jones (Miss.), 29 Exch. Bk., 54 Neb. 104, 74 N. W. So. 819. 415. '" Chase v. Kellogg, 59 Hun (N. ' "- Farris v. Wells, 68 Ga. 604. Y.) 623, 13 N. Y. Supp. 351. "^Gibson v. Miller, 29 Mich. 355, "Meyer v. Roster, 147 Cal. 166, 18 Am. Rep. 98. 81 Pac. 402. See Swenson v. Stoltz, ""Moore v. Miller, 6 Oreg. 254, 25 36 Wash. 318, 78 Pac. 999. Am. Rep. 518. See Breese v. Crump- ■^^ Barnard State Bank v. Fesler, ton, 121 N. C. 122, 28 S. E. 351. 80 Mo. App. 217. AGENTS AND TRUSTEES. [§ 457 transfers it for value without indorsing it, the transfer vests in the transferee such title as the transferrer had therein, and the transferee acquires, in addition, the right to have the indorsement of the trans- ferrer. But for the purpose of determining whether the transferee is a holder in due course, the negotiation takes effect at tlie time when the indorsement is actually made."^° In case a bill is not transferable by delivery, defenses which may be set up against the payee may be availed of as against a transferee without indorsement.***' This rule has been applied where a co-partnership holds a note without indorse- ment payable to one of its members f'' where a note has been trans- ferred for the benefit of creditors by assignment from the payee;®* where the transfer is not by indorsement and the note is ostensibly given for a pretended conveyance in fraud of the rights of creditors f^ and where a person is the transferee in the first instance without in- dorsement of a note payable to another.'^'' § 457. Agents and trustees. — An indorsee for collection only with- out an interest other than to apply the money collected on his in- dorser's debt holds subject to equities.^^ So an indorsement to a bank of a draft "for collection" is such a restricted indorsement as vests no general property to the paper in the indorsee but only constitutes him an agent for the purpose of collecting the paper.''^ And the payee's collecting agent is likewise subject to equities.''^ So an agent '"'Negot. Inst's Law 1897, ch. 712, § 79; 3 Gumming & Gilbert's Annot. Gen'l Laws & Stat. N. Y., p. 2550. Warranty when negotiation by de- livery, etc. See Negot. Inst's Law, § 115, appendix herein. «' United States.— Tvnst Co. v. Na- tional Bank, 101 U. S. 68; Lyman v. Warner, 113 Fed. 87. Alabama. — Ferguson v. Hill, 3 Stew. (Ala.) 485. Indiana. — Foreman v. Beckwith, 73 Ind. 515. Kentucky. — Gray v. Farmers' Bank (Ky.), 60 S. W. 537. Michigan. — Gibson v. Miller, 29 Mich. 355. Missouri. — Weber v. Orten, 91 Mo. 677, 4 S. W. 271. Nebraska. — Camp v. Sturdevant, 16 Neb. 693, 21 N. Y. 449. New Hampshire. — Dunn v. Me- serve, 58 N. H. 429. Tennessee. — Ingram v. Morgan, 4 Humphr. (Tenn.) 66, 40 Am. Dec. 626. But see Central Bank v. Lang, 1 Bosw. (N. Y.) 202. " Norton v. Pickens, 21 La. Ann. 575. "^ Sims v. Wilson, 47 Ind. 226. "" Davis V. Sittig, 65 Tex. 497. . ■""Boody V. Bartlett, 42 N. H. 558; Marvin v. McCullum, 20 Johns. (N. Y.) 288. " Solomons v. Bank of England, 13 East 135, note. ~- First Nat. Bk. of Hastings v. Farmers' & Merchants' Bank (Neb. 1901), 95 N. W. 1062. Plaintiff was an assignee of the check. " Sinnot v. Schlater, 22 La. Ann. 201. §§ 458-460] BOXA FIDE HOLDERS AND RIGHTS OX TRANSFER, 576 to sell holds the purchase-money note taken in his own name subject to defenses.'^* And where an agent holds a note payable to him as trustee but not indorsed by him, equitable defenses are available against such note in the principal's hands. "^ Again the rule allowing defenses applies to a payee who is partner and agent of plaintiff.'^'^ Xor does the repurchase of a note from a hona fide holder aid the payee to pre- clude defenses originally available against himJ^ § 458. Agent's unauthorized acts. — Where an agent, without ap- parent authority, individually executes notes to the creditor for the purchase of property, assuming the vendor's debts, and indorses the name of the non-resident corporation for which he was agent on each note, and the creditor releases the debtor, such notes are in excess of the agent's power, even though he was the sole official representative of the company in the state, and the corporation was not liable as principal on the notes ; otherwise if the agent acted upon due author- ity.^« § 459. Corporate certificate of indebtedness issued in restraint of trade — Anti-trust law. — Where certificates of indebtedness of a cor- poration are negotiable paper it is no defense that they were executed as a part of a scheme in restraint of trade prohibited by an anti-trust law of a state as against a purchaser of the certificates who had bought them before maturity and without notice of the invalidating facts. '^^ § 460. Guarantor — Guaranty. — The determination of the ques- tion whether equities and defenses between original parties are availa- ble against a hona fide holder in case of a contract of guaranty, must rest largely upon the construction placed upon that contract in the different jurisdictions, and where it is determined that a payee or holder, who writes above his indorsement of negotiable paper a guar- anty of payment, stands in the position of an indorser with an enlarged liability, such a transfer constitutes an indorsement of the paper.®** "Rutherford v. Newsom, 30 Ga. 1906), 94 S. W. 1117; Manhattan 728. Liquor Co. v. German National '= Thomson Co. v. Capital Co., 56 Bank (Tex. Civ. App. 1906), 94 Fed. 849. S. W. 1120. ^« Kelley v. Pemher, 35 Vt. 183. " National Salt Co. v. Ingraham "Kost v. Bender, 25 Mich. 515. (C. C. A.), 143 Fed. 805, 807, per " Manhattan Liquor Co. v. Joseph Wallace, C. J. A. Magnus & Co. (Tex. Civ. App. ^^ Dunham v. Peterson, 5 N. D. 577 GUARANTOR GUARANTY. [§ 4G0 The Nebraska Statute" modifies the law merchant concerning what is a negotiable instrument, since the statute extends negotiability to a 414, 419, 67 N. W. 293, 57 Am, St. Rep. 556, 36 L. R. A. 232. But see contra, Tuttle v. Bartholomew, 12 Mete. (Mass.) 454; Belcher v. Smith, 7 Cush. (Mass.) 482; Lamourieux V. Hewitt, 5 Wend. (N. Y.) 307; Trust Co. V. National Bank, 101 U. S. 70; Dunham v. Peterson, 5 N. D. 414, 419, 67 N. W. 293, 57 Am. St. Rep. 556, 36 L. R. A. 232. See Robinson v. Lair, 31 Iowa 9; Hel- mer v. Commercial Bank, 28 Nebr. 474, 44 N. W. 482; State Nat. Bank V. Haylen, 14 Nebr. 480, 16 N. W. 754; Partridge v. Davis, 20 Vt. 499. Transfer of title to note in form of guaranty when and when not an indorsement. See note 36, L. R. A. 232. In Georgia it is held that a guar- anty "for a consideration not here- in named" for the payment of a claim payable to order of the per- son to whom the guaranty is made constitutes a guaranty and not an indorsement. Geysor Mfg. Co. v. Jones, 90 Ga. 307, 17 S. E. 81. Un- der the Illinois statute providing that every indorser of paper pay- able to bearer shall, unless other- wise expressed, be deemed a guar- antor, one who writes his indorse- ment below that of the maker on a negotiable instrument payable to order is liable as second iiidorser and not as guarantor. Chicago Trust & S. Bank v. Nordgren, 157 111. 663, 42 N. E. 148. Under other decisions in that state a guarantor of a note is not regarded as a surety but as an original promisor. Dun- canson v. Kirby, 90 111. App. 15. See Davis v. Wolff Mfg. Co., 84 111. App. 579. And under another de- cision a contract of indorsement Joyce Defenses — 37. and not of guaranty is created by the words "indorsed by" written above the name of one not a party to the note. Delameter v. Kearns, 35 111. App. 634. Under a Missouri decision the rights of the first indorsee pass to a bona fide purchaser of a note in- dorsed in blank by the payee, and having a written assignment and guaranty of payment, even though not a technical indorsement. Hawes V. Mulholland, 78 Mo. App. 493, 2 Mo. A. Rep. 279. Under a Kansas decision if a guaranty is written in blank by the payee before delivery it passes by such delivery for value. Crissey v. Interstate Loan & T. Co., 59 Kan. 561, 53 Pac. 867, 8 Am. & Eng. Co. Corp. Cas. N. S. 781. Again, guarantors will be obligated by a guaranty of prompt payment of a corporation note, even though the corporation is not bound. Holm v. Jamieson, 173 111. 295, 59 N. E. 702, rev'g 69 111. App. 119. In case a ne- gotiable note is transferred by de- livery an action on a guaranty for its payment is not within the terms of a statute making liable only those persons whose signature appears on negotiable paper. Swenson v. Stolz, 36 Wash. 318, 78 Pac. 999. *'Comp. Stat. Neb. 1901, § 3380, reads as follows: "All bonds, promissory notes, bills of exchange, foreign and inland, drawn for any sum or sums of money certain, and made payable to any person or order, or to any person or assigns, shall be negotiable by indorsement ' thereon, so as absolutely to trans- fer and vest the property thereof in each and every indorsee succes- sively, but nothing in this section § 461] BOXA FIDE HOLDERS AND RIGHTS ON TRANSFER. 578 note payable to some person or his assigns, while under the law mer- chant a note to be negotiable must be payable to the order of some person or to bearer. The statute further provides that in case a note is payable to some person or his assigns the assignment may be made by a blank indorsement. Therefore, under the laws of that state a guar- anty signed by the payee, before its maturity, on the back of a note payable to his order, constitutes in itself a transfer of the legal title, equivalent to a blank indorsement, and is such a transfer as entitles the transferee or subsequent holder to maintain suit upon the note for its collection free from equities existing between the maker and the payee. ^^ § 461. Same subject. — If one guarantees notes given in settlement of a claim against him he is precluded as against a bona fide holder from availing himself of defenses between himself and the original transferee, and defenses available against the immediate payee cannot be urged against a bona fide holder by a guarantor.^^ Under a North Dakota decision an innocent purchaser of a note transferred before maturity by an indorsement of guaranty waiving notice of protest and demand is not subject to defenses available between the original par- ties.^* Again, the fact that the maker of a note payable to his own order has never indorsed it does not avail a guarantor to defeat a re- covery in an action against him, neither party having any knowledge of the fact as to said indorsement until after date of payment.^"* But it is also decided that all the equities available in behalf of the maker can be urged by a guarantor who is not a party to the instrument.^® A failure of consideration constitutes a defense available by guar- antors who have not received a consideration direct from creditors. ^^ shall be construed to make negotia- " Jackson v. Foote, 12 Fed. 37. ble any such bond, note or bill of ** Dunham v. Peterson, 5 N. Dak. exchange, drawn payable to any 414, 36 L. R. A. 232, 67 N. W. 293. person or persons alone, and not '^ Jones v. Thayer, 12 Gray drawn payable to order, bearer or (Mass.) 443, 74 Am. Dec. 602. assigns: Provided, That all such '''' Brou v. Becnel, 20 La. Ann. 254. bonds, promissory notes and bills *^ Walter A. Wood Mowing" & R. of exchange, made payable to Mach. Co. v. Laud, 98 Ky. 516, 17 bearer, shall be transferable by de- Ky. L. Rep. 791, 792, 32 S. W. 607, livery without indorsement there- 608. Examine Evansville National on * * * ." Bank v. Kaufman, 93 N. Y. 273, 45 «= Leahy v. Haworth (C. C. A.), Am. Rep. 204. 141 Fed. 850, 856-859. See §§ 212, 352, herein. i 579 NOTE PAYABLE TO OUDER OR BEARER. [§§ 4G2-4G-1- § 462. Pledge of note by holder — Pledgee's rights. — The holder of a note may pledge a note, secured by eolhiteral, as security for his own note, and the security given the pledgor passes with his note into the pledgee's hands, who may collect the pledged note by suit thereon or sale of the collateral or both.^* § 463. Note payable to order or bearer. — Under the rule by which equities and defenses between original parties are not available against hona fide holders generally such holder of a note payable to order or bearer is entitled to protection.^^ A transfer by indorsement has, how- ever, been held necessary to preclude defenses which might be avail- able where a note is payable to order.'*'^ And where a note is payable to a person or bearer, it is determined that the maker can avail him- self of any defenses which might have been set up against the payee in an action on such note by a transferee by delivery brought in his name.^^ And it is decided that a transfer by delivery only of nego- tiable paper payable to order and secured by mortgage vests in the assignee of tlie note and mortgage an equitable and not the legal title and subjects him to all equitable defenses available as against such note and mortgage.'*^ r § 464. Under statutes and codes — Notice or knowledge — Bad faith. — One who has taken an instrument complete and regular upon its face is a holder in due course under the negotiable instruments law of New York.^^ But one who takes an incomplete instrument is not a holder '^Eddy V. Fogg (Mass. 1906), 78 73 Miss. 96, 15 So. 138; Winona N. E. 548. See §§ 351 et seq., herein Bank v. Wofford, 71 Miss. 711, 14 as to collateral security. So. 262; Central Bank v. Lang, 14 ^ Musselman v. McElhenny, 23 N. Y. Super. Ct. 202. Ind. 4, 85 Am. Dec. 445; Potter v. "" Younker v. Martin, 18 Iowa 143; Sheets, 5 Ind. App. 506, 32 N. E. Hadden v. Rodkey, 17 Kan. 429; 811; Winstead v. Davis, 40 Miss. Lehchar v. Lambert, 23 Utah 1, 63 785; Stokes v. Winslow, 31 Miss. Pac. 628. 518; Dunham v. Peterson, 5 N. D. "' Rabberman v. Muchlausen, 3 414, 417, 67 N. W. 293, 57 Am. St. Bradw. (111.) 326, Rev. Stat, c. 96, Rep. 556, 36 L. R. A. 232. § 4; Osborn v. Kistler, 35 Ohio St. When such note not within stat- 99. See § 358 herein, ute allowing defenses, see: Robin- °= McCriim v. Corby, 11 Kan. 464. son V. Crenshaw, 2 Stew. & P. See §§ 364-368, 376, herein. (Ala.) 276; Sweetzer v. First Nat. »= Elias v. Whitney, 98 N. Y. Supp. Bank, 73 Miss. 96, 15 So. 138; Co- 667, Neg. Inst. Law, Laws 1897. pp. lumbus Ins. Co. v. First Nat. Bank, 732, 745, c. 712, § 91; 2 Camming & § 465] BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. 580 in due course.®* And paper payable on demand should be negotiated within a reasonable time after its issue to constitute one such a holder.®^ Again, the rule which precludes those defenses against bona fide holders which might be available between prior parties is ex- pressly made applicable to holders in due course under the New York statute above noted.®** And the title of a bona fide holder will not be defeated by construction of the terms of a statute not expressly in- validating the paper.®'^ So one who purchases a note for less than its face value is none the less a bona fi.de holder because of such fact.®^ And the fact that a note was not stamped as required by a revenue law when received by the assignee, does not subject him to equities between prior parties.®® Under the negotiable instruments law of congress, (act of congress, January 12, 1899) one purchasing a note for value without notice has a good title, even though such note is based on a gambling transaction. ^*''' §465. Same subject. — One is a holder in due course who dis- counts, in good faith, without knowledge of infirmities in the paper, a note payable to bearer. ^"^ And one may be a bona fide holder of negotiable paper, though tainted, under a statute, with illegality in the hands of the payee."^ If the circumstances, though, sufficient to put a reasonably prudent man on inquiry, do not show bad faith a purchaser of a check is a bona fide holder under the Montana code.^"^ And mere suspicion, or even gross negligence not amounting to bad faith will not prevent recovery by an assignee under a statute provid- Gilbert's Annot. Genl. Laws and "' McNamara v. Jose, 28 Wash. 461, Stat. N. y., p. 2551. See Appendix, 68 Pac. 903; Sess. Laws 1899, p. 350, herein. § 57. Examine Orr v. Sparkman, "^ Davis Sewing Machine Co. v. 120 Ala. 9, 23 So. 829. See § 188 Best, 105 N. Y. 59, 6 N. Y. St. R. et seq., 240, 376, herein. 779, 26 W. D. 182. '^ Ebert v. Gitt, 95 Md. 186, 52 Atl. ^^Negot. Inst. Law, N. Y. Laws 900; U. S. Int. Rev. Act 1898. 1897, c. 712, § 92; 2 Gumming & ^o" Wirt v. Stubblefield, 17 App. D. Gilbert's Annot. Genl. Laws and C. 283. Stat. N. Y., p. 2551. See also Grim ^"^ Massachusetts Nat. Bk. v. V. Starkweather, 88 N. Y. 339. Ex- Snow, 187 Mass. 159, 72 N. E. 959; amine McLean v. Bryer, 24 R. I. Rev. Laws, c. 73, §§ 69-76. 599, 54 Atl. 373. i"' National Bk. of Commerce v. ""Broadway Trust Co. v. Man- Pick (N. Dak.), 99 N. W. 63; Rev. helm, 95 N. Y. Supp. 93, 47 Misc. Codes, 1899, § 3265. 415, 34 Civ. Proc. 310. ^^^ Harrington v. Butte & Boston "Citizens' State Bk. v. Nore Min. Co. (Mont.), 83 Pac. 467. 67 Neb. 69, 93 N. W. 160. 581 NOTICE on KNOWLEDGE — BAD FAITH. [§ 465 ing that actual knowledge or bad faith are necessary to defeat such title. ^"^ Again, a merchant who accepts a check, which had been in- dorsed, in blank and lost, is not guilty of bad faith in receiving it from a customer, although a stranger to him, a few days after it was drawn, without the latter's identification."^ But a holder of a note not duly indorsed before its apparent maturity is subject to defenses.^"^ And certificates of deposit may give such actual notice of infirmity as to necessitate inquiry or subject the holder to the charge of bad faith.^"' So bad faith or knowledge may constitute one not a holder in due course under the statute."^ And, under the Iowa statute an assignee of a note and mortgage, whose title is based upon fraud and is with- out consideration, is not a bona fide holder. ^°^ ^•^ Valley Savings Bk. v. Mercer 97 Md. 458, 55 Atl. 435. ^"''Unaka Nat. Bk. v. Butler 113 Tenn. 574, 83 S. W. 655; Negot. Inst. Law, Acts 1899, c. 94, § 56, p. 150. "•^ Reese v. Bell, 138 Cal. 1, XIX, 71 Pac. 87. i<" Ford V. H. C. Brown & Co., 114 Tenn. 467, 1 L. R. A. N. S. 188, 88 S. W. 1036; Negot. Inst. Law, Acts 1899, c. 94, § 56, p. 150. ^"^Keene v. Behan, 40 Wash. 505, 82 Plac. 884; Negot. Inst. Law, Sess. Laws 1899, p. 350, c. 149, § 56. '°»Keegan v. Rock (Iowa), 102 N. W. 805; Negot. Inst. Act, 29th Genl. Assemb., c. 130, § 52, Code Supp., § 360a, 52. Who is and is not holder in due course under Bills of Exchange Act 1882, § 29. See Lewis v. Clay (Q. B.), 77 Law T. R. 653, 67 L. J. Q. B. N. S. 224, 30 Chic. Leg. N. 211. .When defenses not available un- der codes or statutes, see: Arkansas. — Worthington v. Curd, 22 Ark. 277 (after 1873). Indiana. — Hankins v. Shoup, 2 Ind. 342. Massachusetts. — Thayer v. Buf- fum, 11 Mete. (Mass.) 398. ■ Mississippi. — Winona Bank v. Wofford, 71 Miss. 711, 14 So. 262; Meggett v. Baum, 57 Miss. 22; CofE- man v. Bank, 41 Miss. 212; Win- stead V. Davis, 40 Miss. 785; Mer- cien V. Cotton, 34 Miss. 64; Stokes V. Winslow, 31 Miss. 518. Washington. — McNamara v. Jose, 28 Wash. 461, 68 Pac. 903 (Wash. Sess. Laws 1899, p. 350, §§ 56, 57). Defense under code when one is not a bona fide holder. Van Val- kenburgh v. Stupplebeen, 49 (N. Y.) 99. When defenses available under codes or statutes, see: Woodruff v. Webb, 32 Ark. 612 (unless the note contained the words "without de- falcation"); Worthington v. Curd, 22 Ark. 277; Hankins v. Shoup, 2 Ind. 342 (Rev. Stat. 1843, pp. 577, 578); Aldrich v. Stockwell, 9 Al- len (Mass.) 45; Spring v. Lovett, 11 Pick. (Mass.) 417 Robertshaw v. Britton, 74 Miss. 873, 21 So. 523; Merchants' &c. Bank v. Millsaps, 71 Miss. 361, 15 So. 659 (Code, § 3503) ; Union Nat. Bank v. Fraser, 63 Miss. 231; Etheridge v. Gal- lagher, 55 Miss. 458 (under code Miss., § 3503). See further as to defenses under codes and statutes the following cases: § ^G(^] BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. 582 § 466. Joint and several notes. — Where one not appearing to be a party to a negotiable promissory note, either as payee or indorsee, puts his name on the back of it in blank, at its inception and before its negotiation, is presumed by the law of the state to be a joint and several promisor, such presumption will prevail in favor of an inno- cent indorsee who receives the note for value before due and in the ordinary course of business, and his rights cannot be infringed by proof of any extrinsic facts which might affect the original parties to the contract or those occupying their position and having their rights only.^^*^ It is also decided that where a note is payable to several jointly and they unite in indorsing it to one of their number the indorsees will stand in the same position in respect to the defense of United States. — Gates v. Mont- gomery Bank, 100 U. S. 239, 25 L. Ed. 580 (immunity from set-off, dis- count, or equities, Act Ala. 1873, p. 111). Alabama. — Bostick v. Scruggs, 50 Ala. 10 (Rev. Code, § 2542, as to set-off). Indiana. — Shirk v. North, 138 Ind. 210, 37 N. E. 500 (Burns' Rev. Stat. 1894, § 6962; Rev. Stat. 1881, § 5117, when married women bound by estoppel in pais against bona fide purchaser). Iowa. — Jack v. Hosmer, 97 Iowa 17, 65 N. W. 1009 (code as to as- signment counter-claim and de- fense) ; Richards v. Monroe, 85 Iowa 359, 52 N. W. 339, 39 Am. St. Rep. 301 (Code 1873, § 2114, as amended. Acts 22d General Assem., c. 90, as to bona fide purchaser of note tainted with fraud); Bowling V. Gibson, 52 Iowa 517, 5 N. W. 620 (Code, § 2546, as to counter-claim or defense). Kentucky. — Spencers v. Biggs, 2 Mete. (Ky.) 123 (statute as to as- signee defenses, discount, or set- off) ; Kelly V. Smith, 1 Mete. (Ky.) 313 (statute as to assignment, de- fenses, discount, or set-off). Massachusetts. — Shoe & Leather Bank v. Wood, 142 Mass. 563, 8 N. E. 753 (statute as to defenses, dis- counts, and off-sets) ; Thayer v. Buf- fum, 11 Mete. (Mass.) 398 (Stat. 1829, c. 121, allowing defenses against indorsee on demand note does not apply to firm note payable to member or order). Minnesota. — Savage v. Laclede Bank, 62 Minn. 586 (Code 1880, § 1124, as to set-offs on assigned bill of exchange). Neio Jersey. — Youngs v. Little, 15 N. J. L. 1 (Rev. Laws 396 offsets and discounts against payees and indorsees; note payable "without defalcation or discount"). Neio York. — Smith v. Van Loan, 16 Wend. (N. Y.) 659 (2 Rev. Stat., p. 354, § 18, subd. 10, as to right of set-off ) . Tennessee. — Snoddy v. American Bank, 88 Tenn. 573, 13 S. W. 127, 17 Am. St. Rep. 918, 7 L. R. A. 705 (Code 1884, §§ 2444, 5708, gaming or wagering consideration; bona fide holder). Vermont. — Alden v. Parkhill, 18 Vt. 205 (Act 1836, set-off against in- dorsee). ""Merchants' Trust & Bkg. Co. v. Jones, 95 Me. 335, 50 Atl. 48. 583 JOINT AXD SEVERAL NOTES. [§ 466 want of consideration as a payee where the note is to him alone by the other payees without alleging notice of such want to him. So another person, by becoming a holder jointly with the payee, is held to be subject to the same defense."^ So a negotiable note, payable to two or more persons jointly, indorsed by one only of two joint payees, is subject to any equities existing in favor of the maker, the same as if it had not been indorsed by either ; such a note is payable to all the payees or to their joint order and cannot be transferred except by the joint indorsement of all the payees.^ ^- "^Saxton V. Dodge, 57 Barb. (N. "= Haydon v. Nicolette, 18 Nev. Y.) 116. 290, 3 Pac. 473. I CHAPTER XXI. BONA FIDE HOLDERS AND RIGHTS ON TRANSFER CONTINUED. Sec. 467. Overdue paper. 468. Overdue paper — Default in pay- ment of interest. 469. Overdue paper — Demand notes. 470. Delivery of paper to impostor or wrong party — Liability to drawee or bona fide holder. 471. Application by bank of pro- ceeds to credit of depositor. 472. Notice or knowledge — Gener- ally. 473. Notice or knowledge — Contin- ued. 474. Notice or knowledge — Matters apparent from the paper it- self. 475. Notice or knowledge — Sus- picious circumstances — Gross negligence — Bad faith. 476. Same subject — Decisions. Sec. 477. Same subject — Rule in Ver- mont. 478. Indorsement subsequent to no- tice. 479. Notice — Fraud. 480. Notice — Fraudulent alteration. 481. Erasures — Forgery — Notice — Negligence — Recovery. 482. Knowledge — Purchaser of mar- ried woman's note. 483. Notice — Accommodation paper. 484. Notice — Notes of a series. 485. Notice — Corporation — Agency. 486. Same subject. 487. Corporation indorsement — Ac- commodation paper. 488. Notice — Purchaser of bonds. 489. Transferee of hona fide holder — Notice. § 467. Overdue paper, ^ — Ordinarily the indorsee or transferee of overdue commercial paper obtains no better title than that of the trans- ferrer.^* Under the negotiable instruments law, one of the require- ^See § 239, herein. ^* United States. — Fowler v. Brant- ley, 14 Pet. (U. S.) 318; Foley v. Smith, 6 Wall. (U. S.) 492. AZa&ama.— Marshall v. Shiff, 130 Ala. 545, 30 So. 335. Georgia. — Harrell v. Citizens' Bkg. Co., Ill Ga. 846, 36 S. E. 400; Steed V. Groves, 103 Ga. 550; 30 S. E. 626. Illinois. — Morgan v. Bean, 100 111. App. 114. Missouri. — Williams v. Baker, 100 Mo. App. 284, 73 S. W. 339; Mayer v. Columbia Sav. Bk., 86 Mo. App. 108. Nebraska. — May v. First Nat. Bk. (Neb.), 104 N. W. 184. Louisiana. — Metropolitan Bk. v. Bouny, 42 La. Ann. 439, 7 So. 586. New Hampshire. — Quimby v. Stoddard, 67 N. H. 283, 35 Atl. 1106. Texas. — Walker v. Wilson, 79 Tex. 188, 14 S. W. 798, 15 S. W. 402, per Gaines, J.; Mayfield Grocer Co. v. Andrew Price & Co. (Tex. Civ. App. 1906), 95 S. W. 31. 84 585 OVERDUE PAPER. [§ 467 ments of a holder in due course is that he became a holder of the in- strument "heiore it was overdue without notice that it had been previ- ously dishonored, if such was the fact;" and "In the hands of any other than a holder in due course, a negotiable instrument is subject to the same defenses as if it were non-negotiable/'^ So the purdiaser from a bank, of overdue paper, is subject to equities, even though he had no actual notice of the bank's want of authority to sell, and only knowledge of circumstances which ought to have put him on inquiry.^ Washington. — Gordon v. Decker, 19 Wash. 188, 52 Pac. 856. See Mer- chants' Loan & Trust Co. v. Welter, 205 111. 647, 68 N. E. 1082. Rights of holder of negotiable pa- per transferred after maturity. See note 46 L. R. A. 753, under the fol- lowing headings: "(I.) Effect of transfer after maturity on negotia- bility; (II.) rights acquired under transfer: (a) the general doctrine; (&) different statements of the rule; (c) the correct rule; (III.) de- fenses which maker may make: (a), general rules as to right to de- fend; (b) want or failure of con- sideration; (c) illegal considera- tion; (d) usury; (e) fraud in incep- tion; (f) violation of contemporane- ous agreement; (g) that it was partnership paper; (h) that it was accommodation paper; (i) that it was intended for collateral secur- ity; (;■) that it had been lost or stolen; (fc) that transfer was un- authorized; (l) that debt had been attached or garnished; (m) pay- ment: (1) as a defense generally; (2) payment by person only second- arily liable; (3) effect of reissue after payment; (n) right of the transferee to sue; (IV.) equities of intermediate holders; (V.) ex- ception as to paper taken from bona fide holder; (VI.) exception as to collateral matters: (a) the general rule; (b) what matters are col- lateral—instances; (VII.) excep- tions as to set-offs and counter- claims: (a) the general rule; (b) under statutes as to set-off of mu- tual claims; (c) under special stat- utes; (d) equitable set-offs; (e) in- terposition of set-off against set-off; if) effect of agreement for set-off; (VIII.) exception as to instruments drawn payable without defalcation or discount; (IX.) effect of dis- honor as to interest, instalments, or part of a series; (X.) effect of transfer and indorsement at differ- ent times; (XI.) effect of extension of time; (XII.) effect of renewal of note; (XIII.) effect of action brought; (XIV.) rights of holder against indorser: (a) general rules as to effect of transfer; (b) demand and notice to charge indorser: (1) on time notes; (2) on demand notes; (XV.) special rules based on character of the instrument: (a) checks; (b) certificates of deposit; (c) negotiable bonds; (XVI.) ac- tions against transferees to enforce equities; (XVII.) proof with refer^ ence to equities." " Negot. Insts. Law N. Y., Laws 1897, c. 712, §§ 91 (subd. 2), 97; 2 Gumming & Gilbert's Annot. Genl. Laws & Stat. N. Y., pp. 2551, 2553. See Lawrence v. Glark, 36 N. Y. 127. " Cussen v. Brandt, 97 Va. 1, 5 Va. Law Reg. 98, 1 Va. Sup. Ct. Rep. 193, 32 S. E. 791. § 468] BOXA FIDE HOLDERS AXD EIGHTS OX TRAXSFER, 58G This rule is, however, subject to qualifications and exceptions, or at least there are certain cases in which purchasers of overdue paper have not been precluded from recovering thereon.* And it is held that the equities to which a purchaser of overdue paper is subject are limited to those which arise out of tlie note itself and not out of independent transactions between prior parties.^ A purchaser from the transferee of a note secured by mortgage may, it is decided, obtain a title free from equities where he pays value therefor in good faith, even though the paper was obtained by fraud and was overdue in the owner's hands before it was assigned to the transferee.^ Again, where a negotiable promissory note has been, before its maturity, duly indorsed and de- livered in escrow, with the contract of its purchaser to convey in con- sideration of it certain land, and proceedings were necessary to enable the purchaser of the note to convey the land and carry out the contract for which the note was taken, the fact that such proceedings were not completed, and the contract not fulfilled and the note not delivered by the depositary to the purchaser until after it matured, will not deprive the buyer of the rights of the bona fide purchaser before maturity, where he has completed the transaction in ignorance of any defense.'^ § 468. Overdue paper — Default in payment of interest. — The rule that one who takes notes after they become due and payable, or after maturity, is not a holder in due course, and takes the paper subject to the equities between the original parties, applies to a person who takes notes after they have become due and collectible for default in * Examine the following deci- sions: California. — Reese v. Bell, 138 Cal. 1, XIX, 71 Pac. 87. Colorado. — Beach v. Bennett, 16 Colo. App. 459, 66 Pac. 567. Illinois. — Young Men's Christian Association Gymnasium Co. v. Rockford Nat. Bk., 179 III. 599, 54 N. E. 297, 46 L. R. A. 753, affg. 78 111. App. 180. Nebraska. — C uniningham v. Holmes, 66 Neb. 723, 92 N. W. 1023; Shabata v. Johnson, 53 Neb. 12, 73 N. W. 278. New York. — Fealey v. Bull, 163 N. Y. 397, 57 N. E. 631, aff'g 50 N. Y. Supp. 1126. Tennessee. — Equitable Ins. Co. v. Harvey, 98 Tenn. 636, 40 S. W. 1092. "Hunleath v. Leahy, 146 Mo. 408, 48 S. W. 459. " Gardner v. Beacon Trust Co., 190 Mass. 27, 76 N. E. 455. See Whitney Nat. Bk. v. Cannon, 52 La. Ann. 1484, 27 So. 948. Note indorsed after maturity but taken before maturity. Transferee may be holder in good faith. Ft. Dearborn Nat. Bk. v. Berrott, 23 Tex. Civ. App. 662, 57 S. W. 340. ■ Cunningham v. Holmes, 66 Neb. 723, 92 N. W. 1023. 587 OVERDUE PAPER — DEMAND NOTES. [§§ 469, 470 payment of the annual interest, said notes expressly stipulating that any delinquency in the payment of interest should cause the whole note to become immediately due and collectible.^ § 469. Overdue paper — Demand notes. — The general rule above stated as to overdue paper** applies to a note payable on de- mand.® But a demand note is not overdue and subject, as against the indorsee or transferee, to equities between the parties, where it is kept alive for a period of time beyond which it would otherwise have been overdue, by continuous payments of monthly interest to the original payee, and it also appears that if payments were made as principal the note was to run for a certain period, which period ex- tended beyond the time of the transfer. And in such case the special equity that payments made as principal had been credited as interest amounting in all to enough to pay the notes, with interest, was held not available where the maker knew that the payments were applied as interest.^" § 470. Delivery of paper to impostor or wrong party — ^Liability to drawee or bona fide holder. — The drawer of a check, draft, or a bill 'Hodge V. Wallace ("Wis. 1906), promissory note, which shows that 108 N. W. 212. The court, per Cas- interest on the principal sum there- sody, C. J., declared this case distin- in named is past due and unpaid, guishable from those cases "where takes it subject to all equities be- the stipulation for accelerating the tween the original parties.' Hart v. maturity of the note or notes on Stickney, 41 Wis. 630, 22 Am. Rep. non-payment of interest or other 728. That case followed Newell v. default is contained in a mortgage Gregg, 51 Barb. (N. Y.) 263. To the or trust deed given to secure the same effect: First National Bank same" from "those where one of a v. Forsyth, 67 Minn. 257, 69 N. W. series of notes or an instalment of 909, 64 Am. St. Rep. 415. Such rul- interest has become due and un- ing, however, was out of harmony paid, with no stipulation as here, with the decisions of this court al- that 'such delinquency shall cause ready cited, and goes beyond what the whole note to immediately be- was necessary to sustain the con- come due and collectible;'" from tention of the defendants in this those cases "where the stipulation case, based on such express stipula- for accelerating the maturity of the tion." Laws 1899, p. 705, c. 356, note or notes contained therein is §§ 1676-22. made optional with the payee or ** See § 467, herein, mortgagee, or his representatives or * Causey v. Snow, 122 N. C. 326, assigns," and the court also says: 29 S. E. 359. See §§ 464, 465 herein. "It was held by this court, several '" McLean v. Bryer, 24 R. L 599, 94 years ago, that 'one who takes a N. W. 695. 470] BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. 588 of exchange, who delivered it to an impostor, supposing him to be the person whose name he has assumed, must, as against the drawee or a bona fide holder, bear the loss where the impostor obtains payment of, or negotiates the same. In such a case the fact that the check was drawn by the trust department of a trust company on its own bank- ing department and payment of it refused by the banking depart- ment, because of lack of identification of the person presenting the check immediately after it was issued, is immaterial.^ ^ Again, a telegraph company which, upon order by telegraph, issues and de- livers its check by mistake to the wrong party, is liable in the amount thereof to an innocent purchaser for value, who takes the same upon his indorsement. Prima facie such indorser is the payee intended, and a purchaser who takes the check from him in good faith, believing him to be the payee, is not called upon to inquire any further than may be necessary to establish the identity of the indorser and the party to whom the check was delivered as payee.^^ " Land Title & Trust Co. v. North- western National Bank, 211 Pa. 211, 60 Atl. 723 (Dean, J., and Potter, J., dissenting). The court relied upon Land Title & Trust Co. v. North- western National Bank, 196 Pa. 230, 46 Atl. 420, 50 L. R. A. 75, 79 Am. St. Rep. 717, which holds that a bank is not liable for the payment of a check on a forged indorsement where the person who committed the forgery and received the money was in fact the person to whom the drawer delivered the check, and whom he believed to be the payee named. In this case the facts were as follows. A person calling liim- self A called on B, a property owner, under the pretense of de- siring to purchase real estate, and secured from his title papers. A took the papers to a responsible conveyancer, to whom he applied for a loan on mortgage, represent- ing himself as B. The conveyancer, believing the man to be B, negoti- ated the loan, and a settlement was made through a trust company, to which the conveyancer introduced A as B. A signed the mortgage as B, and received the trust company's check drawn on itself to the order of B. This check, indorsed with B's name, was deposited in a bank by a person who had opened an ac- count with it as R, and was col- lected by the bank of the trust com- pany in the usual course of busi- ness. It did not appear that A and R were the same person. The fraud was discovered six months later, when B was called upon to pay the interest on the mortgage. The money was drawn out of the bank by R four weeks after it was de- posited. A and R disappeared, and were not heard of afterwards, It was held that the trust company could not recover from the bank the amount of the check. (Green, C. J., and Dean, J., dissented.) " Burrows v. Western Union Tel- egraph Co., 86 Minn. 499, 90 N. W. 1111. The court, per Lewis, J., said: "This presents a question somewhat difficult of solution. We have found 589 APPLICATIOX OF PROCEEDS TO CREDIT OF DEPOSITOR. [§ 471 § 471. Application by bank of proceeds to credit of depositor. — We have considered elsewhere the case where a bank discounts paper no case in the books presenting ex- actly the same facts. It is well set- tled that a bank has no authority to pay out the money of its deposit- ors upon a check where the name of the payee has been forged. It is also the law that where the entire transaction is fictitious, and the payee and check have no existence in fact, and at no time does such check obtain legal status, no matter whether parties deal with it in good faith or not. It has been decided that when a check has been issued, payable to a certain party as payee, and another party of the same name comes into possession of it either by mistake or fraud, and forges the signature of the real party, this does not give the check any legal status, so as to protect a bank against which it was drawn. Mead V. Young, 4 Term R. 28; Graves v. American, 17 N. Y. 205; Famous v. Crosswhite, 124 Mo. 34, 27 S. W. 397. The authorities on this subject are quite thoroughly reviewed in the note to Land v. Northwestern, 196 Pa. St. 230, 50 L. R. A. 75, 84, and thus * * * the test to be applied is whether, by the usual custom with reference to identification, ap- pellant was negligent in failing to have the party presenting the check identified as the party to whom it was given. It was said in the case of Estes V. Lovering Shoe Co., 59 Minn. 504, 61 N. W. 674, that a check is within the purview of G. S. 1878, c. 73, § 89, which provides that possession of a note or bill is prima facie evidence that the same was indorsed by the person by whom it purports to be indorsed, and checks were brought within this provision of the statute for the reason that they are negotiable in- struments, much used and growing in use in business ti'ansactions, and possessing all of the characteristics of inland bills. If, therefore, a check is indorsed when presented, it is to be received as prima facie evidence that it is the indorsement of the payee, because such rule is required by the necessities of the business. For like reason, when the person indorsing the check as payee, and presenting it, has been identi- fied as the party who received it from the maker, and whom the maker designated as payee, he is presumed to be the payee, and en- titled to receive the proceeds. Ap- pellant was required to do no more in this instance. He was required to determine whether the party pre- senting the check to him was the person to whom it had been de- livered as the payee by the tele- graph company. He could have as- certained that fact by accompanying the indorser across the street to the office of the telegraph company and asking them if this was the party entitled to the check. Or Bellevean, who was waiting at the door of the store, might have been called in, and repeated the identifi- cation made to the telegraph com- pany. In such case appellant would have been justified in taking the check. Instead of so doing he took his chances as to his being the same man. He was the same, and hence inquiry was unnecessary. Respon- dent sent the man out with the check, and with the authority to dispose of it in the usual course of business to any one who in good I § 472] BONA FIDE HOLDER AND RIGHTS ON TRANSFER. oi;o for one of its depositors, giving him credit therefor upon its hooks for the proceeds, it being held that it is not a bona fide holder unless some other and valuable consideration passes, as such a transaction simply creates the relation of debtor and creditor, A distinction is also made between crediting the amount of a note on undrawn de- posits and a credit on a pre-existing indebtedness.^^ Where, however, a bank discounts a note to extinguish a debt due from it to the holder, or the proceeds are applied towards discharge of his liability, such acts are equivalent to paying value at the time and constitute the bank a holder for a valuable consideration.^* § 472. Notice or knowledge generally.^** — It may be stated gener- ally that if the purchaser has a sufficient notice or knowledge of defects or infirmities, or of defenses or equities against the paper, he is not such a bona fide holder as to be entitled to protection against equities and defenses which would be available against the payee. ^^ A person faith believed him to be the party to whom the check had been de- livered as payee; and, as against such innocent purchaser, it is estopped from denying the validity of the instrument which it set afloat in the commercial world. However, it is claimed that appel- lant was negligent in taking no steps to make inquiry about the personality of the party present- ing the check, for the reason, if he had, he might possibly have dis- covered that the party was not the real Jerome. We have already an- swered this objection. It was not the duty of appellant to go beyond the necessities of identification as above outlined, and the mere fact that he might have discovered more than he was required to cannot be charged against him as* an act of negligence unless there were facts which should put him upon inquiry. The facts in this case are undis- puted. There was nothing to arouse suspicion, and appellant is entitled to the relief sought as a matter of law." " See § 243 herein considering City Deposit Bank of Columbus (Iowa 1906), 106 N. W. 942. See Symonds v. Riley, 188 Mass. 470, 74 N. E. 926; Citizens' State Bank V. Cowles, 180 N. Y. 346, 73 N. E. 33, rev'g 86 N. Y. Supp. 38, 89 App. Div. 281, and other cases. Compare United States Nat. Bank v. First Nat. Bank, 79 Fed. 296, 49 U. S. App. 67; Israel v. Gale, 77 Fed. 532, 45 U. S. App. 219, 23 C. C. A. 274, aff'd 174 U. S. 391, 19 Sup. Ct. 768, 43 L. Ed. 1019. See §§ 243, 284-287, here- in, as to antecedent indebtedness. " Bank of Sandusky v. Scoville, 24 Wend. (N. Y.) 116. "* See §§ 464, 465, herein. 15 United States. — Fowler v. Brant- ly, 14 Pet. (U. S.) 318. Ala'bama. — Gilman v. Railroad Co., 72 Ala. 566. Illinois. — Belleville Sav. Bank v. Bornman (111.), 10 N. B. 552. Maine. — Burrill v. Stevens, 73 Me. 395. Massachusetts. — Chelsea Bank v. Goodsell, 107 Mass. 149; Robb v. i 591 NOTICE OR KNOWLEDGE GENERALLY. [§ 472 is not a hona fide purchaser who, before purchase, is told that the maker refuses to pay it.i« But although there is fraud in the transac- tion constituting the consideration of a note, yet the fact that an- other note given for the same consideration was due, or that the in- terest on the notes remained unpaid, is no such notice as to affect the hona fides of a plaintiff's purchase.^^ So notes indorsed in blank are payable to bearer, and when the bearer presents them for discount to a bank the presumption is . raised that the bearer is the owner of them, and if the bank discounts the note without actual knowledge of any infirmity or defect, or knowledge of such facts that its action in taking the instrument amounts to bad faith, it is a hona fide holder in due course." But if a bank to whom a note is transferred has knowledge of the usurious character of the note in the hands of its transferer, the bank is not a holder in due course,' and such facts constitute a good defense to an action on said note.^^ Evidence, however, that the holder paid value for a check is not conclusive evidence of the fact of hona fides, although entitled to great weight-^** It is held in New York that where a check is without consideration and the original holder could not have recovered thereon, it is immaterial upon the transferee suing thereon to show the circumstances under which he came into possession Mudge, 14 Gray (Mass.) 534; Fisher Washington. — Murray v. Reed, 17 V. Leiand, 4 Cush. (Mass.) 456. Wash. 1, 48 Pac. 343. Minnesota. — Daniels v. Wilson, 21 Wisconsin. — Knott v. Tidyman, Minn. 530. 86 Wis. 164, 56 N. W. 632; Case, etc., Missouri. — Wagner v. Diedrich, Co. v. Wolfenden, 63 Wis. 185, 23 50 Mo. 484. N. W. 485; Moulton v. Posteu, 52 New Jersey. — Zabriskie v. Spiel- Wis. 169. man, 46 N. J. L. 35. England. — Lloyd v. Davis, 3 L. J. New York. — Frail v. Hinchman, 6 K. B. 38. Duer (N. Y.) 351; Holbrook v. "Old National Bk. of Ft. Wayne Mix, 1 E. D. Smith (N. Y.) 154; v. Marcy (Ark. 1906), 95 S. W. 145. Small v. Smith, 1 Den. (N. Y.) 583; "Patterson v. Wright, 64 Wis. Powell V. Waters, 8 Cow. (N. Y.) 289, 25 N. W. 10. 669 [affirming 17 Johns. (N Y.) '^Massachusetts National Bank v. 176]; McFadden v. Maxwell, 17 Snow, 187 Mass. 159, 72 N. E. 959; Johns. (N. Y.) 188; Wiggin v. Bush, R. L., c. 73, § 26, cl. 5, id., §§ 69, 76, 12 Johns. (N. Y.) 306; De Mott V. 207. Starkey, 3 Barb. Ch. (NY.) 403. " Schlesinger v. Lehmaier (Sup. O/iJo.— Jacobs V. Mitchell, 46 Ct. App. Term), 99 N. Y. Supp. 389, Ohio St. 601, 22 N. E. 768; Stone v. 50 Misc. 610; Negot. Inst. Law 1897, Vance, 6 Ohio 246. p. 732, c. 612, § 91; Banking Laws Tennessee.— Tennessee Bank v. 1892, p. 1869, c. 689, § 55. Johnson, 1 Swan (Tenn.) 217. =°Tischler v. Shurman, 97 N. Y. Supp. 360. I 473] BONA TIDE HOLDERS AND EIGHTS ON TRANSFER. 592 of the paper and that he acted in good faith. ^^ It is also decided in that state that it devolves upon the defendant to show that plaintiff is not a bona fide holder, and he can be examined by the defendant to enable him to frame his answer since he must allege the fact that the plaintiff is not a ho7ia fide holder in his answer in order to avail him- self of the defense.^- If a note is based upon a consideration which is illegal and against public policy it is held to be invalid in the hands of a transferee with notice and knowledge."^ Defenses or equities are also especially available where an assignee is chargeable with knowl- edge or notice thereof.-* § 473. Notice or knowledge continued. — A person is not a bona fide holder of pajaer when he has actual notice or knowledge, or con- structive notice amounting to actual notice or knowledge of infirmities constituting valid defenses and equities between prior parties,^^ and "Tischler v. Shurman, 97 N. Y. Supp. 360. "Koppel V. Hatch, 98 N. Y. Supp. 619. See Smith v. Weston, 159 N. Y. 194, 54 N. E. 38, aff'g 34 N. Y. Supp. 557, 88 Hun 25. Burden of proof, see notes 17 L. R. A. 326; 10 L. R. A. 676. ^ Dickson v. Kittson, 75 Minn. 168, 74 Am. St. Rep. 447, 77 N. W. 820. ^Alabama. — Griggs v. Woodruff, 14 Ala. 9. California. — More v. Finger (Cal.), 58 Pac. 322, 128 Cal. 313, 60 Pac. 933. Connecticut. — Beecher v. Buck- ingham, 18 Conn. 110, 44 Am. Dec. 580. Illinois. — Haskell v. Brown, 65 111. 29; Jay v. Reed, 56 111. 130. Indiana. — Black v. Mitchell, 14 Ind. 397. Ohio. — Bradford v. Beyer, 17 Ohio St. 388. Tennessee. — Ryland v. Brown, 2 Head. (Tenn.) 270. Vermont. — Pierce v. Kibbee, 51 Vt. 559. Examine also the following cases: AlabaTua. — Gildersleeve v. Cara- way, 19 Ala. 246. Arkansas. — Tatum v. Kelley, 25 Ark; 209, 94 Am. Dec. 717. Indiana. — Bostwick v. Bryant, 113 Ind. 448, 16 N. E. 378; Tellon v. City Bank, 9 Ind. 119 (1 Rev. Stat., p. 378, § 3); Bartholomew v. Hen- drix, 5 Blackf. (Ind.) 572; West- brook V. Robinson, 5 Blackf. (Ind.) 105. Iowa. — Allison v. Barrett, 16 Iowa 278. Kentucky. — Walker v. McKay, 2 Mete. (Ky.) 294; Chiles v. Corn, 3 A. K. Marsh. (Ky.) 230. Massachusetts. — Murphy v. Bar- nard, 162 Mass. 72, 38 N. E. 29, 44 Am. St. Rep. 340. Pennsylvania. — Reed v. Mitchell, 18 Pa. St. 405. == United States. — Hutch v. John- son Loan & T. Co., 79 Fed. 828. Arkansas.— Old Nat. Bk. of Ft. Wayne v. Marcy (Ark.), 95 S. W. 145; Evans v. Speer Hardware Co., 65 Ark. 204. 3 Chic. L. J. Wkly. 282, 45 S. W. 370. d 593 NOTICE OR KNOWLEDGE. [§ 474 matters apparent on the instrument itself, coupled with other facts, may necessitate inquiry.^*^ And knowledge may arise from papers de- livered with the note.^^ §474. Notice or knowledge — Matters apparent from the paper itself. — If the instrument itself contains matters sufficient, within the rules governing the question of notice or knowledge, to necessitate California. — Russ Lumber & Mill Co. V. Muscupiabe Land & W. Co., 120 Cal. 521, 52 Pac. 995. Georgia. — Shelden v. Heard, 110 Ga. 461, 35 S. E. 707; Snyder v. Webb, 100 Ga. 793, 28 S. E. 976. Indiana. — Irving v. Guthrie (Ind. App.), 62 N. E. 709. lovxi. — state Bank of Indiana v. Meutzer, 125 Iowa 101, 100 N. W. 69; Wray v. Warner, 111 Iowa 64, 82 N. W. 455. Minnesota. — See First Nat. Bk. v. Buchan, 79 Minn. 322, 82 N. W. 641. Missouri. — Vette v. Sacher, 114 Mo. App. 363, 89 S. W. 360. Nevada. — Swinney v. Patterson 25 Nev. 411, 62 Pac. 1. North Carolina. — Loftin v. Hill, 131 N. C. 105, 42 S. E. 548. Oregofi. — Benson v. Keller, 37 Ore. 120, 60 Pac. 918. Pennsylvania. — Troxell v. Malin, 9 Pa. Super. Ct. 383, 43 W. N. C. 547. Texas. — Kersey v. Fuqua (Tex. Civ. App.), 75 S. W. 56. West Virginia. — M erchants' & Mfrs. Nat. Bk. v. Ohio Valley Fur- niture Co. (W. Va.), 50 S. E. 880. Wisconsin. — Collins v. Schmidt, 126 Wis. 227, 105 N. W. 671. Wyoming. — Kinney v. Hynds, 7 Wyo. 22, 49 Pac. 403, 52 Pac. 1081. When knowledge that note given for land and that there was a lien thereon does not preclude recovery. Merchants' & P. Bank v. Penland, 101 Tenn. 445, 47 S. W. 693, 9 Am. & Eng. Corp. Cas. N. S. 298. Exam- Jo yce Defenses 38. ine Campbell v. Brown, 100 Tenn. 245. See Biegler v. Merchants' Loan & T. Co., 164 111. 197, 45 S. E. 512. When knowledge not given by newspaper advertisement. English- American Loan & Trust Co. v. Hiers, 112 Ga. 823, 38 S. E. 103. When pendency of suit not con- structive notice. Fulton v. Andres, 70 Minn. 445, 73 N. W. 256. Knowledge that guaranty was con- sideration of note does not put on notice. Hudson v. Best, 104 Ga. 131, 30 S. E. 688. Failure to inquire as to maker's financial condition when does not prevent being bona fide holder. Christianson v. Farmers' Warehouse Assoc, 5 N. D. 438, 67 N. W. 300, 32 L. R. A. 730. See Germania Bank V. La Follette, 72 Fed. 145. Knowledge as to parties when pre- vents being bona fide holder. Mer- chants' Nat. Bk. v. Sullivan, 63 Minn. 468, 65 N. W. 924. Examine Hardy v. First Nat. Bk., 56 Kan. 493, 43 Pac. 1125; American Exch. Nat. Bk. V. New York Belting Co., 148 N. Y. 698, 43 N. E. 168. ^ Orr V. South Amboy Terra Cotta Co., 94 N. Y. Supp. 524, 47 Misc. 604; Wisconsin Yearly Meeting of Freewill Baptists v. Babler, 115 Wis. 289, 91 N. W. 678. "" Bristol Bank & T. Co. v. Jones- boro Bkg. & T. Co., 101 Tenn. 545. 48 S. W. 228, 9 Am. & Eng. Corp. Cas. N. S. 790. 474] BOXA FIDE HOLDERS AXD EIGHTS OX TRANSFER. 594 inquiry on the part of the taker, liis failure to make such inquiry will prevent him from claiming the protection and rights of a bona fide holder. ^^ Where a check is not complete and regular upon its face at the time it is taken, and a mere inspection shows its defect and that it had been changed or altered, the holder has notice of its in- firmity when he takes it and is not a holder in due course.^" A trans- feree is not charged with notice of equities by the fact that the note is insufficiently stamped, as required by a revenue statute.^" ^Illinois. — Chicago Title & Trust Co. V. Brugger, 196 III. 96, 63 N. E. 637; Lang v. Metzger, 86 111. App. 117. Kentucky. — Gaskill v. Huffaker, 20 Ky. L. Rep. 1555, 49 S. W. 770. Massachusetts. — North Ave. Sav- ings Bk. V. Hayes, 188 Mass. 135, 74 N. E. 311. Minnesota. — Fuller v. Quesnel, 63 Minn. 302, 65 N. W. 634. Missouri. — See Bishop v. Chase, 156 Mo. 158, 56 S. W. 1080. Nebraska. — First Nat. Bank v. Farmers' & Merchants' Bank (Neb.), 95 N. W. 1062; Stough v. Ponca Mill Co., 54 Neb. 500, 74 N. W. 868, 8 Am. & Eng. Corp. Cas. N. S. 285. New York. — Spero v. Holoschutz, 74 N. Y. Supp. 852, 36 Misc. 764. North Carolina. — Breese v. Comp- ton, 121 N. C. 122, 28 N. E. 351. Pennsylvania. — Brown v. Pettit, 178 Pa. 17, 35 Atl. 865, 34 L. R. A. 723. South Dakota. — Rochford v. Mc- Gee (S. Dak.), 94 N. W. 695. Tennessee. — Ford v. H. C. Brown & Co., 114 Tenn. 467, 1 L. R. A. (N. S.) 188, 88 S. W. 1036. Wisconsin. — Pelton v. Spider Lake Sawmill & Lumber Co., 117 Wis. 569, 94 N. W. 293. When matters apparent on instru- ment itself do not charge with no- tice or knowledge. See United States. — Troy & Cohoes Shirt Co., In re, 136 Fed. 420. Colorado. — Posey v. Denver Nat. Bk., 24 Colo. 199, 49 Pac. 282. Georgia. — Post v. Abbeville & W. R. Co., 99 Ga. 232, 25 S. E. 405. Illinois. — Merritt v. Boyden, 93 111. App. 613, afl'd 191 111. 136, 60 N. E. 907. Minnesota. — American Trust & S. Bk. V. Gluck, 68 Minn. 129, 70 N. W. 1085; Collins v. McDowell, 65 Minn. 10, 67 N. W. 845. New York. — Hathaway v. Dela- ware County, 93 N. Y. Supp. 436, 103 App. Div. 179. Tennessee. — ^Tradesman's Nat. Bk. V. Looney, 99 Tenn. 278, 42 S. W. 149, 38 L. R. A. 837. ^ Elias V. Whitney, 98 N. Y. Supp. 667. ^"Ebert v. Gitt, 95 Md. 186, 194- 196, 52 Atl. 900, act congress, June 13, 1898 (U. S. Inter. Rev. Act). The court, per Jones, J., said: "Proof of the note established prima facie the right of the plaintiff to recover upon it. When the circum- stances attending the origin of the note and its transfer to the plain- tiff (appellee) were made to appear in evidence, the burden of proof was put upon him to show that he ac- quired title to the note in the usual course of business, before maturity, for a valuable consideration, and bond fide. Totten v. Bucy, 57 Md. 452; Williams V. Huntington, 68 Md. 590, 13 Atl. 336, 6 Am. St. Rep. 477; McCosker v. Banks, 84 Md. 292, 297, I 595 NOTICE OK KNOWLEDGE. [§ 474 35 Atl. 935, and cases there cited. Whether the plaintiff in any case gratifies this burden of proof is a deduction from the facts and cir- cumstances in evidence. It is not perceived how it can be predicated of any one circumstance, as matter of law, which the prayer in question does, that it is sufficient to prove notice of infirmity of title by which negotiable paper is held. Especially is it not perceived how the particu- lar fact relied upon in the prayer in question to have such effect could give notice here to the appellee (plaintiff below) of the circum- stances attending the origin and the fraud in the transfer of the note here in suit. At best it could only be a circumstance to excite suspicion and lead to inquiry, and could only be allowed such probative force, as reflecting upon the question of no- tice as might attach to it in connec- tion with other evidence. In Totten V. Bucy, supra, it was said: 'The transferee of the note was not bound to show that he had acted vigilantly, or even cautiously, in inquiring into the origin and history of the instru- ment, in order to sustain his posi- tion as bona fide holder for value. The question is not what are facts the knowledge of which will or will not be sufficient to put the party on inquiry? but the question is whether the party had knowledge of the infirmity of the note at the time of the transfer to him, or, in other words, whether he procured the note in good faith, for valuable consider- ation.' This statement of the law was cited and reaffirmed in the case of Williams v. Huntington, supra, where it was also said, adopting the language of the United States Supreme Court: 'Suspicion of defect of title, or the knowledge of circum- stances which would excite suspi- cion in the mind of a prudent man, or gross negligence oa the part of the taker at the time of the transfer, will not defeat his title. That re- sult can be produced only by bad faith on his part.' And in the case of Cover v. Myers, 75 Md. 406, 23 Atl. 850, 32 Am. St. Rep. 394, a prayer granted by the court below was approved by this court, which affirmed that 'merely suspicious cir- cumstances sufficient to put a pru- dent man upon inquiry, or even gross negligence on the part of the plaintiff at the time of the purchase and delivery of said note, are not sufficient of themselves to prevent a recovery by the plaintiff, unless the jury find from the evidence that in taking said note the plaintiff acted in bad faith.' Now in this case the proof in the facts admitted, shows that the appellee acquired title to the note in suit in the usual course of business, before maturity, for a valuable consideration, and without any actual notice of any infirmity in the title of Alteman, the payee, who transferred it to him. It also appears from the proof that the omission of the proper amount of stamps from the note was not due to any attempted fraud upon the revenue act of the United States government. In the bill filed by the appellant in the equity case, which has been referred to, there appears the express averment that, 'through mistake or inadvertence, and with- out any attempt to defraud the gov- ernment of the United States, an in- sufficient amount of stamps were put on said note.' It is further ad- mitted as a fact that at the time of the transfer of the note in suit to him the appellee 'overlooked the fact that the note was insufficiently § 475] BOXA FIDE HOLDERS AXD RIGHTS OX TRAXSFER. 596 § 475. Notice or knowledge — Suspicious circumstances — Gross negligence — Bad faith. ^^ — Merel}' suspicious circumstances^^ or care- lessness are insufficient to necessitate inquiry and prevent a person from being a hona fide holder/^ nor is mere suspicion evidence of negligence vrliich will defeat a right to recover as a bona fide holder.^* So under a California decision such suspicion is insufficient without circumstances creating a presumption that facts impeaching the va- lidity of the paper were kno^n by the holder.^^ And in Connecticut it is held that the holder of negotiable paper is not put upon inquiry by a knowledge of facts which, although capable of supporting a sus- picion of some unknown defect, are fully consistent with a valid title in the vendor.^^ So under other decisions the acts of the holder in failing to make inquiry must have amounted to bad faith to preclude recovery.^'' And even gross negligence without bad faith is insuf- ficient.^^ But if the acts of the holder in obtaining the paper consti- tute bad faith he will not be entitled to protection as a hona fide holder.^" It may therefore be stated as a rule that suspicious cir- cumstances alone, even though sufficient to put an ordinarily prudent man on inquiry, will not, in the al^sence of bad faith, or a wilful disregard of the facts showing an infirmity in the paper, destroy the title of a taker of negotiable paper as that of a ho7ia fide holder.*" stamped.' There was, therefore, York Nat. Exch. Bk. v. Crowell, 177 proof going to establish every requi- Pa. 313, 39 W. N. C. 228, 35 Atl. 613; site to sustain the title of the ap- Unapa Nat Bank v. Butler, 113 pellee to the note in controversy." Tenn. 574, 83 S. W. 655. ^^See §§ 464, 465. =^ McCarty v. Louisville Bkg. Co., '=> Brewer v. Slater, 18 App. D. C. 100 Ky. 4, 18, Ky. L. Rep. 569, 37 S. 48; Lehman v. Press, 106 Iowa 389, W. 144. 76 N. W. 818. =» Robbins v. Swinburne Print. Co. ==> Lehman v. Press, 106 Iowa 389, 91 Minn. 491, 98 N. W. 331, 867; 76 N. W. 818. Keene v. Behan, 40 Wash. 505, 82 =*Bank of Ind. Ty. v. First Nat. Pac. 884. Bank, 109 Mo. App. 665, 83 S. W. *" United States.— Boe v. North- 577. See Setzer & Russell v. Deal, western Coal & T. Co., 78 Fed. 62; 135 N. C. 428, 47 S. E. 406. Atlas Nat. Bk. v. Holm, 71 Fed. 489, == Sinklar v. Siljan, 136 Cal. 356, 34 U. S. App. 472. 68 Pac. 1024. Colorado.— St. Joe & M. F. Consol. ^ Rockville Nat. Bank v. Citizens' Min. Co. v. First Nat. Bank, 10 Colo. Gas Light Co., 72 Conn. 576, 582. App. 339, 50 Pac. 1055, s. c. 24 Colo. See Mack v. Starr, 78 Conn. 184, 187. 537, 52 Pac. 678. " Massachusetts Nat. Bk. v. Snow, Georgia. — Montgomery v. Hunt, 93 187 Mass. 159, 72 N. E. 959; Goet- Ga. 438, 21 S. E. 50. ting V. Day, 87 N. Y. Supp. 510; New JZIinois.— Metcalf v. Draper, 98 111. I 597 NOTICE OR' KNOWLEDGE. [§ 476 § 476. Same subject — Decisions. — In a case in the United States Supreme Court, where an accepted and indorsed bill of exchange was placed by the drawer as collateral security for his own debt in the hands of his creditor, and the latter sued the acceptor, an instruction was held erroneous "that if such facts and circumstances were known to the plaintiff as caused him to suspect, or that would have caused one of ordinary prudence to suspect, that the drawer had no interest in the bill, and no authority to use the same for his own benefit, and by ordinary diligence he could have ascertained these facts/' then the jury should find for defendant.'*^ In Maryland if the indorsements App. 309; Merritt v. Boyden, 93 111. App. 613, aff'd 191 111. 136, 60 N. E. 907. Maine. — Wing v. Ford, 89 Me. 140, 35 Atl. 1023. Minnesota. — Tourtelot v. Reed, 62 Minn. 384, 64 N. W. 928. See Bur- rows V. Western Union Teleg. Co., 86 Minn. 499, 91 Am. St. Rep. 380, 90 N. W. 1111, 58 L. R. A. 433. Missouri. — Bergen Invest. Co. v. Vette, 142 Mo. 560, 44 S. W. 754, 64 Am. St. Rep. 567; First State Bk. V. Hammond, 104 Mo. App. 403, 79 S. W. 493; Wilson v. Riddler, 92 Mo. App. 335; Schroeder v. Seittz, 68 Mo. App. 233. Examine Brown v. Hof- felmeir, 74 Mo. App. 385, 1 Mo. App. Rep'r 303. Montana. — Harrington v. Butte & Boston Min. Co. (Mont.), 83 Pac. 467. Pennsylvania. — Lancaster County Nat. Bk. V. Garber, 178 Pa. 91, 39 W. N. C. 55, 13 Lane. L. Rev. 377, 35 Atl. 848. Texas. — Hynes v. Winston (Tex. Civ. App.), 40 S. W. 1025. West Virginia. — Merchants' & Mfrs. Nat. Bk. v. Ohio Valley Fur- niture Co. (W. Va.), 50 S. E. 880. " Goodman v. Simonds, 20 How. (61 U. S.) 343, 15 L. Ed. 934. This leading case is cited in the following decisions in the federal courts: Lytle V. Lansing, 147 U. S. 59, 71, 37 L. Ed. 78. (Negotiable securities, holding that it is the duty of one who purchases municipal bonds from litigating parties with actual notice of a suit must do so at their peril; "no rule of law protects a purchaser who wilfully closes his ears to information, or refuses to make inquiry when circumstances of grave suspicion imperatively de- mand it") ; King v. Doane, 139 U. S. 166, 173, 35 L. Ed. 84, 11 Sup. Ct. 465 (to the point that the payment of value being established, the indorsee will be entitled to recover unless it is proved that he purchased with actual knowledge of defect in the title, or in bad faith, implying guilty knowledge or wilfiil ignor- ance) ; Montclair v. Ramsdell, 107 U. S. 147, 158, 27 L. Ed. 431, 2 Sup. Ct. 391 (to the point that the holder of bonds is presumed to have acquired them in good faith and for value); Swift v. Smith, 102 U. S. 442, 444, 26 L. Ed. 193 (to the point that where mercantile paper is not due and there is nothing upon it or in the indorsement to show want of good faith the purchaser of such paper from one apparently the owner, who gives consideration, ob- tains a good title, though he may know facts and circumstances that 476] BONA FIDE HOLDERS AND EIGHTS ON TRANSFER. 598 1 on paper are the only suspicious circumstances they are not sufficient to constitute bad faith and prevent recovery on a note taken before cause him to suspect, or would cause one of ordinary prudence to suspect, that the person from whom he ob- tained it had no interest in it, or authority to use it for his own bene- fit, and though by ordinary dili- gence he could have ascertained those facts. "He can lose his right only by actual knowledge or bad faith. It is true that if the bill or note be so marked on its face as to show that it belongs to some other person than the one who offers to negotiate it, the purchaser will be presumed to have knowledge of the true owner and his purchase will not be bona fide'') ; Brooklyn City & Newtown R. Co. v. National Bank of the Republic, 102 U. S. 14, 38, 41, 26 L. Ed. 61. In concurring opinion: "Possession of such an instrument before maturity, if indorsed in blank and payable to bearer, is privia facie evidence that the holder is the owner and lawful possessor of the same; and nothing short of proof that he had knowledge, at the time he took it, of the facts which im- peach the title as between antece- dent parties, not even gross negli- gence, if unattended with mala fides, is sufficient to overcome the effect of that evidence, or to invalidate the title of the holder supported by that presumption," and also that the doctrine of Gill v. Cubett, 3 Barn. & Cress. 466, holding that the trans- feree could not recover if the cir- cumstances under which the trans- fer took place were such as would naturally have excited the suspi- cion of a prudent and careful man, although erroneously followed by state court decisions in many cases, "has been authoritatively overruled in the tribunal where it had its origin, and the old rule as re-estab- lished by the later adjudications, has been in repeated instances adopted by this court and by the highest courts of the state where the controversy arose"); Shaw v. Railroad Co., 101 U. S. 557, 564, 25 L. Ed. 892 (cited to the point that the transferee of a bill or note may hold it, though he took it negli- gently and when there were suspi- cious circumstances attending the transfer. "Nothing short of actual or constructive notice that the in- strument is not the property of the person who offers to sell it; that is, nothing short of mala fides will defeat his right, * * * the pur- chaser is not bound to look beyond the instrument. * * * The reason can have no application to the case of a lost or stolen bill of lading. The function of that instrument is entirely different from that of a bill or note," even though a statute makes a bill of lading negotiable by indorsement) ; Gates v. First Na- tional Bank of Montgomery, 100 U. S. 239, 247, 248, 25 L. Ed. 580 (cited upon the point that one taking ne- gotiable paper before its maturity as collateral security for a preexist- ing debt, without knowledge of facts impeaching the title between ante- cedent parties is a holder in due course, at least to the extent of the debt) ; Brown v. Spofford, 95 U. S. 474, 478, 481, 483, 24 L. Ed. 508 (to the point that possession of paper payable to bearer or indorsed in blank is prima facie evidence of lawful ownership and possession; and nothing short of fraud, not even gross negligence, if unattended with 599 NOTICE OR KNOWLEDGE. [§ 470 mala fides, is sufficient to overcome the effect of that evidence, or to invalidate the title of the holder so supported; and that the holder must be shown to have had knowl- edge of the impeaching facts and circumstances at the time the trans- fer was made) ; Cromwell v. County of Sac, 94 U. S. 362, 24 L. Ed. (to the point that presumption is that note payable to bearer was nego- tiated at time of execution in the usual course of business for value and without notice of equities be- tween prior parties) ; Commission- ers of Marion County v. Clark, 94 U. S. 278, 286, 24 L. Ed. 59 (to same point as last case and that nothing short of fraud, not even gross negligence, will overcome this presumption and invalidate his title); Angle v. Northwestern Mut. L. Ins. Co., 92 U. S. 330, 341, 23 L. Ed. 556 (to the point that holders of negotiable securities are charge- able with notice where the marks on the instrument are of a char- acter to apprise one of the alleged defect. The case was one of ma- terial alteration); Hotchkiss v. Na- tional Bank, 21 Wall. (88 U. S.) 354, 359, 22 L. Ed. 645 (to the point that "a suspicion that there is a defect of title in the holder, or a knowledge of circumstances that might excite such suspicion in the mind of a cautious person, or even gross negligence at the time, will not defeat the title of the pur- chaser. That result can be produced only by bad faith, which implies guilty knowledge or wilful ignor- ance, and the burden of proof lies on the assailant of the title"); Chambers County v. Clewes, 21 Wall. (88 U. S.) 317, 323, 22 L. Ed. 517 (to the point of transferee being presumptively a holder for value without notice) ; National Bank of Washington v. Texas, 20 Wall. (87 U. S.) 72, 90, 22 L. Ed. 295 (cited generally in a case of overdue pa- per; burden of proof and presump- tion of being holder bona fide) ; Sawyer v. Prickett and Wife, 19 Wall. (86 U. S.) 146, 166, 22 L. Ed. 105 (cited to point that part con- sideration sufficient to constitute h07ia fide holder who receives note before maturity without notice of defenses) ; Smith v. Sac County, 11 Wall. (78 U. S.) 139, 150, 153, 20 L. Ed. 102 (cited in a case of fraud and negotiable security in dissent- ing opinion to the point that trans- feree, without notice, etc., has pre- sumptively good title, free from equities); Merchants' National Bank v. State National Bank, 10 Wall. (77 U. S.) 604, 671, 19 L. Ed. 1008 (cited in dissenting opinion: "Where the defect or infirmity ap- pears on the face of the instrument, the question whether the party who took it had notice or not is a ques- tion of law" for the court) ; The Lulu, 10 Wall. (77 U. S.) 192, 201, 19 L. Ed. 906 (a case of master's authority to obtain credit for repairs of ship in foreign port; to the point that express knowledge is not neces- sary to maintain the charge of bad faith; that where a party's rights are liable to be injuriously affected by notice he cannot wilfully shut his eyes to the means of knowledge which he knows are at hand; "or, in other words, the general rule is that knowledge of such facts and circumstances as are sufficient to put a party upon inquiry, and to show that if he had exercised due diligence he would have ascertained the truth of the case, is equivalent to actual notice of the matter in re- spect to which the inquiry ought to have been made"); Supervisors v. Schenck, 5 Wall. (72 U. S.) 772, 784, I 476] BONA FIDE HOLDERS AXD RIGHTS ON TRANSFER. 600 18 L. Ed. 556 (county bonds: "It is well settled that a negotiable se- curity of a corporation which, upon its face appears to have been duly issued by such corporation, and in conformity with the provisions of its charter, is valid in the hands of a bona fide holder thereof, without notice, although such security was in point of fact issued for a pur- pose, and at a place not authorized by the charter of the corporation") ; Murray v. Lardner, 2 Wall. (69 U. S.) 110, 121, 17 L. Ed. 857 (coupon bonds; cited to point that suspicion of defect of title or knowledge which would excite suspicion in mind of prudent man, or gross negligence of taker at time of transfer will not defeat his title; only bad faith can produce that result; and burden of proof is on person assailing title) ; Bank of Pittsburgh v. Neal, 22 How. (63 U. S.) 96, 108, 16 L. Ed. 323 (cited to point that hona fide holder, without notice of facts which im- peach validity between antecedent parties, may recover) ; Ferris Irri- gation District v. Thompson, 116 Fed. 832, 834, 54 C. C. A. 336, 341, in error, dismissed for want of juris- diction, 196 U. S. 637 {bona fide holder of bonds of irrigation dis- trict; cited to point: "It was not enough that the circumstances might have been such as to create suspicion in the mind of one ordi- narily prudent. In order to render the transaction invalid, facts must have come to the notice of the de- fendant in error or his agent of such a nature that to refrain from pursuing further inquiry would of itself amount to evidence of bad faith"); Pickens Tp. v. Post, 99 Fed. 659, 662, 41 C. C. A. 1 (bona fide holder of municipal bonds; to the point that "to impeach the title of a holder for value of nego- tiable paper, by proof of any facts and circumstances outside of the in- strument itself, it must be first shown that he had knowledge of such facts and circumstances at the time the transfer was made"); D'Esterre v. City of Brooklyn, 90 Fed. 586, 592 (to the point that a person is a bona fide purchaser of bonds where he surrenders other bonds held as collateral and substi- tutes the bonds in suit, as there exists a good consideration in such case) ; John Hancock Mut. Life Ins. Co. V. City of Huron, 80 Fed. 652, 653 (negotiable bonds; to the point of presumption that one holds in good faith without notice, etc. But presumption was overcome by proof of invalidity); Kaiser v. First Nat. Bank of Brandon, 78 Fed. 281, 284 (to the point that purchaser for value, before maturity, from ap- parent owner obtains a good title, though he may know facts and cir- cumstances that would cause him to suspect, or would cause one of ordinary prudence to suspect, that the person from whom he obtained it had no interest in or authority to use it for his own benefit, and though by ordinary diligence he could have ascertained those facts) ; Doe V. Northwestern Coal & Trans- portation Co., 78 Fed. 62, 68 (cor- poration notes: "In the federal courts it is the well-settled rule that the purchaser of a promissory note is not deprived of his character of purchaser in good faith by proof that he took the note with knowl- edge of such circumstances as ought to put an ordinarily prudent man upon inquiry to ascertain the facts. The proof must go further and show that he had, at the time of the trans- fer, knowledge of facts that would impeach the title as between the antecedent parties to the note, or GOl NOTICE OR KNOWLEDGE. [§ 47G knowledge of such facts that his abstention from further inquiry will be tantamount to a wilful closing of the eyes to the means of knowl- edge which he knows are available, and therefore presumptive evidence of bad faith on his part") ; Atlas Nat. Bank v. Holm, 71 Fed. 489, 491, 492, 19 C. C. A. 94— aff'd Holm v. Atlas Nat. Bank, 84 Fed. 119— (to the point that an assignee of com- mercial paper, before maturity, for value without notice of infirmity is bona fide holder, that it is not enough that he neglected to make inquiry which a prudent man ought to make or would have made; that it is not a question of negligence but of bad faith; that the question is, did the purchaser have knowl- edge? and that every one must con- duct himself honestly and not wil- fully shut his eyes to the means of knowledge at hand, as such con- duct would be evidence of bad faith. The note in this case was held in- valid except in the hands of an in- nocent purchaser) ; Long Island Loan & Trust Co. v. Columbus & Indianapolis Cent. Ry. Co., 65 Fed. 455, 457 (negotiable railroad bonds and bona fide holder; to the point that mere suspicion or gross negli- gence or knowledge suflficient to ex- cite the suspicion of a prudent man will not affect the title of the holder "nothing short of bad faith on the part of the purchaser of negotiable bonds passing by delivery, and which are fair upon their face, will destroy their validity; and the bur- den of proof lies upon the party who assails the title of the party in possession"); Thomson-Houston Electric Co. v. Capitol Electric Co., 65 Fed. 341, 350, 12 C. C. A. 643 (generally to the point of notice and rights of pledgee of negotiable paper as collateral); Bank of Edge- field V. Farmers' Co-operative Mfg. Co., 52 Fed. 98, 103, 2 C. C. A. 637 (to the point that it is well settled in the courts of the United States since this leading case, "that one who acquires mercantile paper be- fore maturity from another who is apparently the owner, giving a con- sideration for it, obtains a good title, though he may know facts and cir- cumstances that would cause him to suspect, or would cause one of or- dinary prudence to suspect, that the person from whom he obtained it had no interest in or authority to use it for his own benefit, and though by ordinary diligence he could have ascertained these facts." In this case three of the notes were taken before maturity and three others then taken were past due protested notes by the same makers and indorsers and the court apply- ing the above principle said: "It follows that, although the three notes of the same date as those ac- quired by the plaintiff were past due, and that the plaintiff was in- formed of that fact, still that would not be notice that the three notts not yet due were in any wise tainted by defective consideration, or for any other cause"); Sawyer v. Equi- table Accident Ins. Co. of Cincin- nati, 42 Fed. 30, 36 (to the point that: "Even holders of negotiable securities taken before maturity, in the usual course of business, are • held chargeable with notice when the marks on the instrument are of a character to apprise one to whom the same is offered of the al- leged defect." Applied to a case of misstatements by an agent made by alteration of answers in an appli- cation for insurance by such agent without the applicant's knowledge, such alteration being patent upon the face of the paper) ; Anderson v. ^< 47G] BONA FIDE HOLDERS AXD EIGHTS OX TRANSFER, 602 1 maturity and for value, especialh' so where inquiry would not have disclosed fraud, or failure of consideration or defect of title.*^ So in Minnesota, where the only circumstance from which the suspicion Kissam, 35 Fed. 699, 704 (to the point that defendants were given full benefit of the distinction be- tween negligence and mala fides in the purchase of negotiable paper, and that the jury were instructed that mere suspicion was insufficient to charge defendants with notice that the agent from whom they were obtained was using them with- out authority. In this case the checks were made by a bank cashier without authority, and the pur- chaser was held charged with no- tice or rather that there was an ob- ligation to ascertain the cashier's authority. The case was reversed in Kissam v. Anderson, 145 U, S. 435, 36 L. Ed. 765, 12 Sup. Ct. 960) ; Third Nat. Bank v. Harrison, 10 Fed. 243, 248 (cited generally to the point that the bank was a b07ia fide holder of a note, no evidence being given that it had notice of the infirmity of the paper, said note be- ing based on an illegal contract or "option deal") ; Bank of Sherman v. Apperson, 4 Fed. 25, 28 ("In the courts of the United States, where the rule is that there must be ac- tual notice, or bad faith, to charge the holder for value, there can be no question that the recitals of this note are not sufficient to charge the plaintiff with any equities between the defendants and the payee." The note recited value received and also that the consideration was for land, "being for a part of the third pay- ment on the Goree plantation as per agreement"). The doctrine of Goodman v. Si- monds (at the head of this note) is declared by Carpenter, J., to be the law of Connecticut and also of this country. Credit Company v. Howe Machine Co., 54 Conn. 357, 384, 8 Atl. 476, 1 Am. St. Rep. 129. The rule of the principal case is applied to bonds in Gilman Sons & Co. v. New Orleans & Selma R. Co. & Im- migrant Assoc, 72 Ala. 566, 582, 583, 585. It is also applied to purchaser before maturity of note in posses- sion of payee. Winship & Bros. v. Merchants' Nat. Bk., 42 Ark. 22. Bank had right to treat paper as property of payee and was not obliged to inquire whether held as agent or owner. ^-"Valley Savings Bk. of Middle- town v. Mercer, 97 Md. 458, 55 Atl. 435. The court, per Fowler, J., in considering certain instructions and requests to charge the jury, says: "In the leading case of Totten v. Bucy, 57 Me. 446, the former learned chief justice of this court said: 'The question is not what facts will or will not be sufficient to put the party on inquiry, but the question is whether the party had knowledge of the in- firmity of the note at the time of the transfer to him; or, in other words, whether he procured the note in good faith for valuable consider- ation.' Maitland v. Bank, 40 Md. 568, 17 Am. Rep. 620; Bank v. Hooper, 47 Md. 88; Williams v. Huntington, 68 Md. 590-601, 13 Atl. 336, 6 Am. St. Rep. 477. And so in the case last cited the present chief justice quotes the language of Judge Alvey, with approval and says: 'The question is one of fraud or bad faith on the part of the taker of the note.' In Cheever v. Pitts- burg R. R. Co., 150 N. Y. 65-67, 44 N. E. 701, 34 L. R. A. 69, 55 Am. St. Rep. 646, it is said: 'The rights of 603 NOTICE OK KNOWLEDGE. [§ 476 could arise that one discounting negotiable paper was not a bona fide purchaser is the fact that he purchased them from his son, such evi- dence will not impeach the character of his holding in good faith/^ And in that state bad faith in the purchase for value of an invalid and void bank check may be partly evidenced by the gross negligence of the purchaser; and it may also be shown by a variety of circum- stances, some of them slight in character and others of a greater sig- nificance. But whether a purchaser has notice or knowledge, or has means of knowledge, which he wilfully disregards, is usually for the jury rather than the court. A distinction has also been made between banking houses and individuals not engaged in banking in respect to good faith in discounting paper.** In Missouri neither suspicion nor negligence in its purchase will destroy the title of a purchaser of a note. Such indorsee must be held an innocent purchaser unless he had actual knowledge of infirmities.*^ In New Hampshire mere suspicion on the part of the plaintiff that there was infirmity in the notes sued on would not be sufficient to show that he was not a hona fide holder. I the holder are to be determined by the simple test of honesty and good faith and not by a speculative issue as to his diligence or negligence.' Equally clear, simple and broad is the rule expressed in § 75, of Art. 13 (our Negotiable Instruments Act) by which, of course, we must be governed. The notice, that section provides, which will prevent a holder of a note from recovering is 'actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith.' " The action in the principal case (97 Md. 458) was by a savings bank against the makers upon a joint and several note. The following indorse- ments were upon its face: "Received of J. W. Downey thirty-three 33-100 dollars on within note, and he is hereby released from any further payment on the same," and "Re- ceived of E. D. Hobbs thirty-three 33-100 dollars on within note." Neither of these was signed, then followed the indorsement written when the note was delivered to plaintiff. The note was one of three, each for a like amount, and were re- ceived by the bank as collateral se- curity for money loaned. The mak- ers of the note were thirteen de- fendants and another. «Monat V. Wells, 76 Minn. 438, 79 N. W. 499. " Drew V. Wheelihan, 75 Minn. 68, 77 N. W. 558. ^^Creston National Bank v. Sal- mon (Mo. App. 1906), 93 S. W. 288. Ellison, J., said: "The policy of the law is to encourage commercial af- fairs and to facilitate the transac- tion of that class of business. To that end it protects indorsees of commercial paper unless they have actual knowledge of its infirmity." Citing Borgess Investment Co. v. Vette, 142 Mo. 560, 573, 44 S. W. 754, 64 Am. St. Rep. 567. (Where Burgess, J., said: "Nor will mere suspicion alone that the note is without consideration brought home to the transferee before he acquires the note be sufficient to defeat a re- 476] BONA FIDE HOLDERS AND EIGHTS ON TRANSFER. G04 or to put him upon inquiry concerning their original character. To constitute a person a bona fide holder of a note he is not required, as a matter of law, to make inquiries concerning the character and financial standing of the parties to the notes, nor to act as a reasona- bly prudent man would act in making the purchase, and although, the circumstances may be such as to excite his suspicion concerning the validity of the notes, he is not required to desist from the purchase on that account, nor to investigate the matter with a view to ascer- taining whether his suspicion is well grounded or not. The law only requires him to act honestly and in good faith, and if he so acts his rights and title will be upheld even though his action was imprudent and unusual.**' In New Jersey*'^* it is held that suspicious circum- covery upon the note by him. Bad faith alone upon the part of the holder in taking the note will not defeat a recovery by him against the party thereto"); Mayes v. Rob- inson, 93 Mo. 114, 5 S. W. 611; Ham- ilton V. Marks, 63 Mo. 167. ^Hallock V. Young, 72 N. H. 416, 419, 420, 57 Atl. 236, per Chase, J. The evidence was in substance that the plaintiff purchased the notes be- fore their maturity with no knowl- edge concerning the character and financial ability of the makers ex- cept what the seller gave him, and no knowledge of the latter's finan- cial ability, and slight and appar- ently very unreliable knowledge of his character, and gave therefor a horse and $500 in money, and it was held that this did not prevent his being a bona fide holder. The court also said: "It was said in the leading case on the subject in this country, that 'every one must con- duct himself honestly in respect to the antecedent parties when he •takes negotiable paper, in order to acquire a title which will shield him against prior equities. While he is not obliged to make inquiries, he must not wilfully shut his eyes to the means of knowledge which he knows are at hand * * * for the reason that such conduct, whether equivalent to notice or not, would be plenary evidence of bad faith.' Goodman v. Simonds, 20 How. (61 U. S.) 343, 366, 15 L. Ed. 934. See also Lytle v. Lansing, 147 U. S. 59, 71, 13 Sup. Ct. 254, 37 L. Ed. 78. While negligence of the holder, though gross, will not of itself de- prive him as matter of law of the character of a bona fide holder, it may be evidence of bad faith. Good- man V. Harvey, 4 A. & E. 870. See also, Canajoharie Nat'l Bk. v. Dief- endorf, 123 N. Y. 191, 25 N. E. 402. 10 L. R. A. 676. Suspicious circum- stances attending the transaction, though, as above stated, insufficient in and of themselves to prevent the holder from having the rights of a bona fide holder, are proper matters for the consideration of the jury on the question of his good faith. Smith V. Livingston, 111 Mass. 342. 345; Sullivan v. Langley, 120 Mass. 437. In applying the general rule by which such evidence is compe- tent upon questions of good faith, the law does not except a case of this kind." The evidence as to the character of the holding came most- ly from the plaintiff and his witness. *"* Hamilton v. Vought, 34 N. J. L. 187. The court said: "An examina- ■I 605 NOTICE OR KNOWLEDGE. [§ 47G stances are not sufficient unless such circumstances prove mala fides, and that mere carelessness in taking a note fraudulent in its inception will not of itself impair the title, but carelessness may, however, be so gross that bad faith may be inferred therefrom. So in New York it is declared in a recent case that mere surmise or suspicion is no longer sufficient to put a purchaser of negotiable paper upon inquiry ; the facts necessary to cause such inquiry must be such as to show dishonesty or bad faith on his part in refraining from making the inquiry, and that this rule applies to negotiable bonds and coupons held by one who de- rived his title through a holder in due course, who is an innocent pur- chaser for value not affected as a party to any fraud or illegality in the paper.*^ And in another case in that state the rule that suspicion of defect of title, or the knowledge of circumstances such as would ex- cite suspicion in the mind of a prudent man, or gross negligence on the part of a taker at the time of the transfer, will not defeat his title, as such a result can only be produced by bad faith on his part, and that the question is one of honesty or dishonesty and that guilty knowledge and wilful ignorance involve the result of bad faith, and fraud established is fatal to the title applies to negotiable securities, and this is declared to be settled law in Kew York.** tion of the American reports will can be produced only where he has disclose a similar mutation of judi- taken title in bad faith") ; in Heb- cial opinion upon this subject. For herd v. Southwestern Land and Cat- a time, in several of the states, the tie Co., 55 N. J. Eq. 18, 29, 36 Atl. rule broached in the case of Gill v. 132 (bonds payable to bearer and Cubitt, 3 Barn. & Cress, 466, has transferable by delivery); in Hack- been acted upon; but now in most ettstown Nat. Bank v. Wing, 52 of them, and in those of the most N. J. Eq. 156, 161, 27 Atl. 920 commercial importance, that rule (married woman's note discounted has been entirely discarded." Id., by bank and bank official had notice 191. The principal case is cited in that note was made without consid- Second Nat. Bk. v. Hewitt, 59 N. J. eration and for discount, and wife L. 57, 58; in Dowden v. Cryder, 55 was held estopped to defend that N. J. L., 329, 331 ("this legal rule is she was surety only). See also Na- thoroughly established"): Fifth tional Bank of Republic v. Young, Ward Sav. Bk. v. First Nat. Bank, 48 41 N. J. Eq. 531, 7 Atl. 488. N. J. L. r.l3, 516 (coupon bonds paya- ^^ Hibbs v. Brown, 98 N. Y. Supp. ble to bearer and issued under legis- 353. lative authority: "Proof that such a ''Perth Amboy Mut. Loan H. & holder took the securities under sus- B. Assn. v. Chapman, 81 N. Y. Supp. picious circumstances is not suffi- 38, 80 App. Div. 556, aff'd (mem.), cient to defeat his title. That result 178 N. Y. 558 70 N. E. 1108. § 477] BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. GOG § 477. Same subject — Rule in Vermont. — In Vermont it is de- clared that the purchaser of negotiable paper must exercise reasonable prudence and caution in taking it, if the circumstances are such as ought to excite the suspicion of a prudent and careful man as to the validity of a paper as between the parties to it, or the propriety of the transfer, and if the purchaser takes it without inquiry he does not stand in the position of a bona fide holder, but in the position of the party from whom he takes it, though he may have paid value for it.*** This declaration is quoted in a comparatively recent case, which holds that when the payee of a check, which, on account of his fraud, is invalid as between him and the drawer, transfers it to a third per- son, who brings suit thereon against the drawer, the burden is on the plaintiff to show that he took the check in the usual course of busi- ness, for a valuable consideration, without knowledge of facts which impeached its validity as between the original parties thereto, and without knowledge of facts or circimistances which would lead a" care- ful and prudent man to suspect that the check was invalid as between the antecedent parties. In such case, if the circumstances would excite the suspicion of a prudent man as to the validity of the paper as be- tween the antecedent parties to it, and the purchaser takes it without inquiry, he is not a hond fide purchaser, though he paid value for it; and whether the plaintiff, as a careful and prudent person, had reason to suspect when it took the check, that it was invalid as between the parties thereto, is a question of fact. The facts of this case were as fol- lows: A check for $1,000 was invalid as between the drawer and payee because of the latter's fraud. The payee, for valuable consider- ation, transferred the check to the plaintiff, who brought suit thereon against the drawer. The trial court found that when the plaintiff took the check its officers knew that the payee was financially irre- sponsible and a forger; that he had four days before defrauded the plaintiff by procuring it to discount, as genuine, a note for $300, on which he had forged the name of the surety and the approval of plaintiff's president ; that the plaintiff's president had reason to sus- pect — what was the fact — that the payee had forged the name of the surety to a $1,700 note which he had fraudulently procured the plain- tiff to discount as genuine, and which it then owned. It was held that the failure of the trial court to find that plaintiff, as a careful and prudent person, had no reason to suspect, when it took the check, that '' Bromley v. Hawley, 60 Vt. 50, 12 Atl. 222. 607 NOTICE OR KNOWLEDGE — VERMONT RULE. [§ 477 the same was invalid as between the original parties thereto would not be reversed ; and that it could not be said that the equities were with the plaintiff and it was entitled to recover the amount of the check notwithstanding the failure of the trial court to make said fmdinjr.^" ''"Capital Savings Bank & Trust Co. v. Montpelier Savings Bank & Trust Co., 77 Vt. 189, 190, 59 Atl. 827. The court, per Stuart, J., said: "The plaintiff insists that it is enti- tled to a judgment on the facts found and relies upon the case of Bank v. Goss, 31 Vt. 315, and Brom- ley V. Hawley, 60 Vt. 46, 12 Atl. 220. But the facts as reported in those cases are unlike those in the case at bar. In Bank v. Goss, the defend- ant, Goss, procured the defendant, Page, to sign the note in suit for the purpose of enabling Goss to ob- tain a loan at the bank in the usual course of business. At the time the note was signed it was agreed by Goss that he would not use it, un- less he could also procure the signa- ture of one Brown upon it. Goss, in violation of this agreement, pro- cured the plaintiff to discount the note, without the signature of Brown. Neither the bank nor any of its officers had any knowledge or notice of the alleged agreement. In Bromley v. Hawley, the trial court rendered judgment for the plaintiff and this court said that the fact that the note was overdue; that it amounted to over four thousand dollars; that it had different num- bers on it, one placed there by the maker and the other by the bank, were not sufficient to put the plain- tiff upon inquiry; it appearing that he took the note in good faith; and that the party with whom he nego- tiated was a man of extensive busi- ness, and his character and financial standing high, and, in so doing, quoted with approval the rule, here- in referred to, respecting the duty of the purchaser of negotiable paper. In the case at bar, the plaintiff, in negotiating for the check was dealing with a party known to it to be irresponsible and a forger. Harkness had only four days before perpetrated a fraud upon the plain- tiff by procuring it to discount, as genuine, a note for three hundred dollars in which he had forged the name of the surety, and the ap- proval of the plaintiff's president. Also, the plaintiff, in negotiating for the check, was dealing with a party who had before defrauded the plain- tiff in procuring it to discount, as genuine, a note for $1,700, to which the party had forged the name of a surety appearing thereon, and it is found that, at the time of the transfer of the check, the plaintiff's president had reason to suspect that the name of the surety on this note was forged. In view of these and other facts and circumstances and ap- pearing from the findings of a court might well consider that the plain- tiff's officers knew of the fraudulent and dishonest methods resorted to by Hawkins to obtain money and credit; that they had reason to sus- pect that the check was obtained from the defendant by the same methods, and hesitate to find that the plaintiff had no reason to sus- pect that Harkness had procured the check from the defendant by fraud. In these circumstances it cannot be said that the equities are with the plaintiff, or that it is enti- tled to recover the amount of the check notwithstanding the failure I § 478] BONA FIDE HOLDERS AXD RIGHTS OX TRANSFER. G08 §478. Indorsement subsequent to notice. — An indorsement made subsequent to notice of the payor's defense, will not relate back to the of the court to find that it had no reason to suspect, when it took the check, that the same was invalid as between the original parties thereto. The case of Ormsbee v. Howe, 54 Vt. 182, was for the benefit of one Healey, who purchased the note be- fore due of one Preston the payee. The note was given in settlement of a fraudulent debt and was wholly without consideration. The case was tried by the court, and it was found that Healey had such knowl- edge, in regard to the way in which orders and notes for wire were ob- tained by Preston that he might reasonably expect that the note in suit was obtained in the same man- ner. Notwithstanding this finding the trial court rendered judgment for the plaintiff to recover on the note, but this court on the finding reversed the judgment and rendered judgment for the defendant to re- cover his costs. See Limerick Nat. Bk. V. Adams, 70 Vt. 133, 40 Atl. 166. Bona fide holder — Suspicious cir- cumstances — Gross negligence — Bad faith — Opinions of text writers. — Mr. Bigelow says: "Negligence only, even though gross, according- ly, was and still is in England held insufficient to defeat the claim of one whose right to recover is other- wise perfect; nothing short of bad faith will suffice to subject him to the equities which the defendant seeks to set up. And that has long been the prevailing rule in this country, the most of our courts which had at first accepted the ear- lier doctrine, having, since 1836, abandoned that doctrine for the one just stated * * *. Proof of bad faith will subject the plaintiff to equities, if such exist; and bad faith may be shown, for instance, by evidence that he himself ac- tually had reasonable suspicion, from facts within his knowledge, that the prior holder's title was somehow tainted or defective, and still went forward and purchased the instrument, closing his eyes to the facts and not making inquiry. To that extent the doctrine of con- structive notice, a term which may cover cases of bad faith as well as negligence, obtains in the law of bills, notes, and checques, and to that extent only, except in the few states in ~which the courts still adhere to the English doctrine of 1824." Bigelow on Bills, Notes and Cheques (2d ed. 1900), pp. 235, 236. In Byles on Bills it is said: "A wilful and fraudulent abstinence from inquiry into the circumstances where they are known to be such, as to invite inquiry, will (if a jury think that the. abstinence from, in- quiry arose from a belief or suspi- cion that inquiry would disclose a vice in the bill) amount to general or implied notice. But mere negli- gence, however gross, not amount- ing to wilful or fraudulent blind- ness and abstinence from inquiry, will not of itself amount to notice, though it may be evidence of it." Byles on Bills (6th Amer. ed., 1874), p. 195 [*122]. Mr. Chalmers says: "The test bona fides as regards bill transac- tions has varied greatly. Previous to 1820 the law was much as it is under the act. But under the in- fiuence of Lord Tenterden due care and caution was made the test, and this principle seems to be adopted 609 INDORSEMENT SUBSEQUENT TO NOTICE. [§ 478 by section 9 of the Indian Negotia- ble Instrument Act. In 1834 the Court of King's Bench held that nothing short of gross negligence could defeat the title of a holder for value. Two years later Lord Denman states it as settled law that bad faith alone could prevent a holder for value from recovering. Gross negligence might be evidence of bad faith, but was not conclusive of it. This principle has never since been shaken in England, and it seems now firmly established in the United States." Chalmers on Bills of Exch. (6th ed., 1903), p. 276. Mr. Daniel says: "The circum- stances of the transaction may be of such a character as to intimate strongly a defect in the title, and if they are such as to invite inquiry they will suffice, provided the jury think that abstinence from inquiry arose from a belief or suspicion that inquiry would disclose a vice in the paper. Then indeed his hona fides would be impeached. But further than this, gross negligence, which is not in itself proof of mala fides, may be so great as to amount to proof of notice * * * the more cor- rect opinion as it' seems to us, that the circumstances must be so point- ed and emphatic as to amount to proof of viala fides in the abstinence of inquiry, or such as to be prima facie inconsistent with any other view than that there is something wrong in the title, and thus amount to constructive notice. In other words, we would say that if the cir- cumstances are of such a character as to create such a distinct legal presumption and prima facie proof of fraud, or of some equity between prior parties, it would operate as le- gal information and constructive notice to the transferee. This rule fixes a criterion for judgment which Joyce Defenses — 39. is definite, and seems to us the one which should be adopted. The proof of the existence of the circum- stances amounting to implied notice must be clear." Daniel on Negot. Inst. (5th ed., 1903), §§ 795b, 796. Messrs. Eaton and Gilbert say: "Suspicious circumstances are not, in themselves, sufficient to consti- tute one who takes an assignment of commercial paper before maturi- ty, paying value therefor, a pur- chaser in bad faith; nor is it enough that he neglected to make the inquiry, which, under the cir- cumstances, a prudent man would or ought to have made." Eaton & Gilbert's Commercial Paper (ed. 1903), p. 371, § 75. Mr. Edwards says: "The question is, not whether the holder took the bill or note negligently and without exercising sufficient prudence and care, but whether he took it under such circumstances as to charge him with receiving it viala fide. For, un- less he is chargeable with notice of the misuse or misappropriation of the paper, even gross negligence will not affect his right of recovery, passed to the plaintiff, without any proof of bad faith in him, there is no objection to his title." Edwards on Bills and Promissory Notes (2d ed., 1863), p. 300, *318. See also id., p. 353, *372, p. 651, *688. Mr. Justice Maclaren cites the statute as follows: "A thing is deemed to be done in good faith, within the meaning of this act, where it is in fact done honestly whether it is done negligently or not. Imp. Act, § 90, and says: 'The old rule in England was similar to that laid down in the recent cases and adopted by the act. ■ Some American authorities followed Gill v. Cubitt, 3 B. & C. 466. * * * Tbi« rule has been generally recognized 478] BONA FIDE HOLDERS AND EIGHTS ON TRANSEEK. 610 in Canada; although there are ex- pressions in certain cases that are not quite consistent with it." Mac- laren on Notes, Bills and Cheques (3d ed., 1904, Bills of Exch. Act, 1890, and Admts., Canada), § 89, p. 428. See id., § 29, pp. 175 et seq. Mr. Norton says: "It is now the rule of the law merchant that mere knowledge of any facts sufficient to put. a reasonably prudent man on inquiry is not sufficient, but that to defeat his claim to be considered a bona fide holder he must be guilty of bad faith. Actual mala fides must be shown to the satisfaction of the jury to deprive a holder for value of the character of bona fide holder, and negligence in not in- quiring into facts which ought to have put him on inquiry is not suf- ficient. Gross carelessness, even, on the part of the holder is not con- clusive of notice, though it is, of course, perfectly competent evidence to go to the jury on the question of bad faith. * * * The question is simply one of good faith in the pur- chaser; and unless the evidence makes out a case upon which the jury would be authorized to find fraud or bad faith in the purchaser, it is the duty of the court to direct a verdict for the holder." Norton on Bills and Notes (3d ed., 1900), pp. 319-321. Mr. Parsons says: "The 'good faith' required of the holder certain- ly does not require reasonable care and diligence on his part to ascer- tain the right of the transferrer to give him the paper. There was, however, a period, though not a long one, when this requirement was a part of the English law of negotia- ble paper. Then gross negligence was adopted as the rule. After- wards gross negligence was held merely to be evidence of mala fides, and not the thing itself. And now, to use the emphatic words of Lord Denman, the last remnant of that doctrine is shaken off. It may now be said to be the law in that coun- try, that the holder of negotiable paper does not lose his rights by proof that he took the paper negli- gently, nor unless fraud be shown. The doctrine of Gill v. Cubitt, 3 B. & C. 466, has been followed in sev- eral cases in this country, but on principle and on high authority we incline to the opinion that the rule of the late English cases is better adapted to the free circulation of negotiable paper, and the true in- terests of trade. But it must still be true that while gross or even the grossest negligence is a dif- ferent thing from fraud, negli- gence may be such,' and so accom- panied, as to afford reasonable and sufficient grounds for believing that it was intentional and fraudulent. Thus, although notice or knowledge of defeating circumstances may not be proved, the facts of the case, the relations between the parties and their method of dealing may be such as to show that there was either knowledge or an intentional and careful avoidance of knowledge; this, we should say, must have the same effect in law as knowledge." 1 Parsons on Notes & Bills (ed. 1869), pp. 258-260. Mr. Selover says: "To constitute notice of an infirmity in the instru- ment or defect in the title of the person negotiating the same, the per- son to whom it was negotiated must have had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith. A mere suspicion of infirmity 611 NOTICE — FRAUD. [§ 479 time of purchase, so as to cut off the equities of the pa3'or against the payee. ^^ § 479. Notice — Fraud. — Where it has been judicially adjudged by a competent court that dividends were regularly declared and that thereupon a corporation note was given, thus admitting that said note was given in payment or part payment of such dividends, an affidavit of defense, in a suit upon the note, is insufficient which sets up that said dividends had not been earned but had been made to appear as due and earned by means of fictitious inventories, when in fact they had not been earned, said judgment establishing their regularity not having been opened, modified or reversed and there being no averment that said judgment was not still standing, even though if the note had been procured by fraud the holder would be put to proof of consider- ation that it had acted fairly, paid value and had no notice of the alleged fraud ; and the fact that the defendant company had been en- joined from paying to the payee of the notes certain alleged profits is immaterial as long as the judgment declaring the regularity of the dividends stands unimpeached.^^ will not constitute notice." Selover's Negotiable Instrument Law (ed. 1900), § 183, p. 221. Mr. Story says: "It is agreed on all sides that express notice is not indispensable; but it will be sufficient if the circumstances are of such a strong and pointed character as necessarily to cast a shade upon the transaction and to put the holder upon inquiry. For a considerable length of time the doctrine prevailed, that, if the holder took the note under suspi- cious circumstances, or without due caution and inquiry, although he gave value for it, yet he was not to be deemed a holder bona fide with- out notice. But this doctrine has been since overruled and abandoned, upon the ground of its inconve- nience, and its obstruction to the free circulation and negotiation of exchange and transferable paper." Story on Promissory Notes (7th ed., 1878), § 197. Mr. Tiedeman says: "It is not every suspicion that good faith would require to be investigated. * * * The purchaser cannot claim to be a bona fide holder, if he is guilty of gross negligence not pur- suing an inquiry that would, under the circumstances, be suggested to a reasonably prudent man. But the better opinion is that the suspicion must be so well-grounded as to be almost proof of mala fides." Tiede- man on Commercial Paper (ed. 1889), § 300. ••=0.sgood V. Artt, 17 Fed. 575; Pa- vey V. Stauffer, 45 La. Ann. 353, 12 So. 512, 19 L. R. A. 716. But com- pare Beard v. Dedolph, 29 Wis. 136. " Camden Nat. Bank of Camden v. Fries-Breslin Co., 214 Pa. 395. 63 Atl. 1022. Plaintiff averred that it was the holder of the note in suit for §§ 480, 481] BOXA FIDE HOLDERS AXD RIGHTS ON TRANSFER. G12 §480. Notice — Fraudulent alteration. — An indorsee, even with- out notice, is not siicli a horm fide holder as to enable him to recover on an instrument which is, without negligence on the maker's part, so vitiated by fraudulent alteration as to change the relation of the immediate parties and the identity and legal effect of the instrument.^* Where the statute provides that the indorsement of all the payees is necessary to give good title to the transferee ; that every indorser who indorses without qualification warrants to all subsequent holders in due course that the instrument is genuine and in all respects what it purports to be; and that if "a negotiable instrument is materially al- tered without the assent of all the parties liable thereon, it is avoided, except as against a party who has himself made, authorized or assented to the alteration and subsequent indorsers ;" and the maker of a note to which there are several payees alters it by substituting, without au- thority, his own name in place of one of the payees, and as thus al- tered, without the indorsement of the payee whose name is thus changed, negotiates the note, said note is not enforceable according to its "tenor" against an indorser who had no knowledge of such alter- ation, even though the plaintiff be assumed to be a holder in due course, and even if the maker in such a case could be assumed to be an agent of the indorser to alter the note the agency would, to the knowledge of the plaintiff, be of such a limited character as to preclude the defend- ant being barred by any departure from the strict terms of the agency.^^ § 481. Erasures — Forgery — Notice — Negligence — Recovery. — The mere erasure of a signature made by a rubber stamp upon a corporation note, otherwise regular upon its face, does not give notice to a pur- chaser of the note of any defect therein or notice of any agreement between an indorser and the corporation tending to relieve the former of liability, or notice that the note would be used for any improper purpose or that the corporate funds obtained by the negotiation of ,said note would be wrongfully used. This rule was applied in a case where one of the members of a corporation who was about to leave the state for a time was informed by the secretary and treasurer of the corporation of its need to borrow money for corporation purposes and was requested, with another member of the company, to indorse a note in blank to be drawn by the corporation and used by it as its value before maturity, and without ^* Rochford v. McGee, 16 S. D. 606, notice of any defense that the maker 94 N. W. 695. might have. °= First National Bank v. Gridley, 613 ERASURES — FORGERY — XOTICE — XEGLIGENCE RECOVERY. [§ 481 secretary should determine. This was refused, but said member agreed to sign a note which bore a rubber stamp signature of the corporation name with a dotted line below and the word "Treasurer" at the end of such line, the corporate signature being made complete by the name of the treasurer and it was not complete until it bore said treasurer's name. The note was in the latter's possession, indorsed by the cor- poration and each of its officers, the proceeds of the note were credited to the corporation and the funds were paid in upon the checks of the corporation in the regular course of business and were placed in the manner above stated, with said treasurer, for the purpose of raising funds for the corporation. It was claimed that the erasure constituted a forgery and notice of the defect and of the agreement, but the defense was held not sustained and as the evidence did not show that the cor- poration ever signed the note as maker that it was for the indorsers to pay the obligation.'^*' It is held in a recent case in North Dakota that the drawee of a check who has paid the same without detecting the forgery, may, upon discovery of the forgery, recover the money paid from the party who received the money, even though the latter was a good faith holder, provided the latter had not been misled or preju- diced by the drawee's failure to detect the forgery.^'^ 112 App. Div. 398, 98 N. Y. Supp. 445; Negot. Inst. Law, Laws 1897, ch. 612. §§ 71, 116, 205; Laws 1898, ch. 336, 333. » ^ Nassau Trust Co. v. Matherson (Sup. Ct. App. Div.), 100 N. Y. Supp. 55, 113 App. Div. 693. " First National Bank of Lisbon V. Bank of Wyndmere (N. D., 1906), 108 N. W. 546. The court, per En- gerud, J., said: "Most of tbe courts now agree that one who purchases a check or draft is bound to satisfy himself that the paper is genuine; and that by indorsing it or pre- senting it for payment or putting it into circulation before presenta- tion he impliedly asserts that he has performed this duty. Consequently it is held that if it appears that he has neglected this duty, the drawee who has, without actual negligence on his part, paid the forged demand may recover the money paid from such negligent purchaser. The re- covery is permitted in such cases, because, although the drawee was constructively negligent in failing to detect the forgery, yet if the pur- chaser had performed his duty, the forgery would in all probability have been detected and the fraud defeat- ed. * * * While all these authori- ties agree that negligence on the part of the purchaser in taking a forged check subjects him to liabil- ity for the loss, they are not in ac- cord as to what constitutes such neg- ligence. * * * It must be conceded that the majority of the courts that have passed on the question are com- mitted to the doctrine that the drawee who has paid a spurious check can recover the payment from a good faith holder only when the latter has been negligent. If the 482] BOXA FIDE HOLDERS AND EIGHTS ON TRANSFER. 614 § 482. Knowledge — Purchaser of married woman's note. — Where a statute makes certain provisions as to the debts which a married woman may contract it is obligatory upon the purchaser of a negotiable paper issued by her, and he must take notice of the coverture and the existence or the want of existence of the circumstances and facts that would authorize her to execute a contract such as the statute author- izes.^^ If the seller of corporate stock knows that it is worthless and carries on negotiations for its sale with the husband who obtains his wife's signature for the purchase price, the circumstances are suffi- cient to put the seller upon notice that the husband or some one else must have misrepresented the value of the stock or that she was in- competent to protect herself in a business transaction.^^ A married woman who, at her residence in the state of New Jersey, indorses in blank and solely for the benefit of her husband's promissory note, dated and payable in the state of Xew York, where it is discounted in good faith, without notice that the indorser was a non-resident, or that the indorsement was made in another state, is estopped from de- nying that her indorsement is a New York contract and from claim- ing that it is a New Jersey contract, the laws of which state do not law of this state is to be deter- mined by the mere weight of author- ity alone, as evidenced by the deci- sions in other states, then we should be constrained to hold that this com- plaint shows no liability on defend- ant's part, because it does not show that the defendant has been in any degree negligent. However valuable the decisions of courts in other ju- risdictions may be as guides to aid us in coming to a correct decision, it can not be admitted that such de- cisions, however numerous and uni- form, conclusively establish the law for this jurisdiction. They are, after all, only arguments in support of the views entertained by the judges who uttered them. Unless the doc- trines advocated by them have be- come part of the law of this state by the adoption of them by positive law or general usage and opinion, they must be received and consid- ered by us merely as arguments to be weighed, and adopted or rejected according as we deem them sound or unsound. If, in our opinion, a doctrine advocated by the courts of other states is an unwarranted de- parture from the fundamental prin- ciples of law, it is our duty to reject it, unless the rule so advocated, even though fundamentally erroneous, has become part of our common law by general usage and custom; or has been expressly or impliedly made part of our law by statute." "'^ Haas V. American Nat. Bank of Austin (Tex. Civ. App., 1906), 94 S. W. 439, 440. ^^ Ditto V. Slaughter (Ky. Ct. App., 1906), 92 S. W. 2. As to obligation of purchaser of note of married woman to take notice of coverture, see Haas v. American Nat. Bk. of Austin (Tex. Civ. App., 1906). 94 S. W. 439. 615 NOTICE — ACCOilMODATION PAPER. [§ 483 permit a married woman to become a simple accommodation in- dorser.^" §•483. Notice — Accommodation paper. — The manner of discount- ing a note may sufficiently apprise the discounter that the indorse- ment is for accommodation, as where it is discounted by the maker for his own benefit.'^^ If notes are presented for discount by a cus- tomer of a trust company at its banking house and such agent states that they were made and delivered to his principal for advances made and there is nothing upon the notes or in the facts known to the com- pany to show that such was not the truth, and there is nothing im- probable in the fact, there is nothing to charge the party so discounting the notes with notice of their true character, as notes executed by a corporation for accommodation and so unenforceable against it; nor would such notice be chargeable from the form of the execution and in- dorsement where the notes were payable to the corporation's order and indorsed with the name of the corporation, and then with the names of the president and treasurer individually, although said corporation was one having its place of business in another state and said notes having been thus made and indorsed were delivered to the vice-president who, without consideration, indorsed and delivered them to a firm and co- partnership in the same state, composed solely as to membership of the said three corporation officers, but carrying on a separate and dis- tinct business from that of the corporation ; nor would the fact that the discounting company knew the relations of the corporation officers as members of the co-partnership, that fact appearing on the face and back of the notes in question, charge such holder with notice of the character of the notes. ''- " Chemical National Bank of New Company for discount with the York V. Kellogg, 183 N. Y. 92, aff'd statement that he desired the money 87 App. Div. 633. See §§ 30 et seq. for his own purposes, or that he was herein. procuring the discount for himself ^ First National Bank v. Gridley, and not for the maker, this would 112 App. Div. 398, 98 N. Y. Supp. have been notice to the Interna- 445. tional Trust Company of the inval- "Hn re Troy & Cohoes Shirt Co., idity of the notes; but the notes 136 Fed. 420; aff'd on opinion below, were not presented for discount by 142 Fed. 1038. Ray, Dist. J., said: any officer of the maker. On the "It is probably true that, had either other hand, each note was presented the president or secretary and treas- on the day of its date by an agent urer taken these notes, indorsed as * * * of an independent company, they were, to the International Trust doing an independent business, who I § 484] BONA FIDE HOLDERS AXD RIGHTS ON TRANSFER. 616 § 484. Notice — Notes of a series. — A bank which has discounted from time to time a series of notes upon the representations of the sought to discount the note for the benefit of this independent com- pany. * * * In Wilson v. the Met- ropolitan E. R. Co., 120 N. Y. 145 (30 N. Y. St. R. 787), the court says, at page 150 (24 N. E. 385, 17 Am. St. Rep. 625) : 'Undoubtedly the gen- eral rule is that one who receives from an officer of a corporation the notes or securities of such corpora- tion in payment of or as security for, a personal debt of such ofllcer, does so at his own peril. Prima facie the act is unlawful, and, unless specially authorized, the purchaser will be deemed to have taken them with notice of the rights of the cor- poration. Garrard v. Pittsburgh & Connellsville R. Co., 29 Pa. 154; Pendleton v. Fay, 2 Paige (N. Y.) 202; Shaw v. Spencer, 100 Mass. 388, 97 Am. Dec. 107, 1 Am. Rep. 115.' The cashier of a bank is not pre- sumed to have power to bind it as an accommodation indorser on his individual note, and the payee can- not, unless he proves authority to make the indorsement, recover against the bank. West St. Louis Bank v. Shawnee Bank, 95 U. S. 557, 24 L. Ed. 490. It is conceded that such are the rules. In Collins v. Gilbert, 94 U. S. 753, 24 L. Ed. 170. * * * The headnotes are: '(1) A negotiable instrument, payable to bearer, or indorsed in blank, pro- duced by a transferee suing to re- cover its contents, is, when received in evidence, clothed with the prima facie presumption that he became the holder of it for value at its date in the usual course of business, without notice of anything to im- peach his title. (2) The title of a bona fide holder for value of an ac- cepted draft, indorsed in blank, is not affected by the fact that the par- ty from whom he received it before its maturity had possession of it for certain purposes, and misappro- priated it.' And in that case, at page 758 of 94 U. S. (24 L. Ed. 170), the court said: 'Where the supposed defect or infirmity in the title of the instrument appears on its face at the time of the transfer, the ques- tion whether the party who took it had notice or not is, in general, a question of construction, and must be determined by the court as a mat- ter of law. Andrews v. Pond, 13 Pet. (38 U. S.) 65, 10 L. Ed. 61; Fowler v. Brantley, 14 Pet. (39 U. S.) 318, 10 L. Ed. 473; Brown v. Da- vis, 3 T. R. 86.' In Chemical Na- tional Bank v. Colwell (Sup.), 9 N. Y. Supp. 285, * * * it was held that: 'The fact that Jones was a director of the company, and that the proceeds of the note were ap- plied by him to his own use, does not show that the note was made for his accommodation, nor did the possession of the note by him natu- rally give rise to the question as to whether he was not confederating with the president of the company to make an improper use of the credit and the paper of the com- pany. The note was signed "New York Lumber Company, Limited, D. C. Wheeler, Pres.," and was drawn to the order of "New York Lumber Co., Lim.," and it was in- dorsed exactly as it was signed. Such a note, so indorsed, though presented for discount by a director of the company twenty days after it bore date, did not, upon its face, suggest that it was an accommoda- I G17 NOTICE — NOTES OF A SERIES. [§ 484 payee and of the firm which made them, that they were given for value, and which were promptly paid, is not chargeable with negligence or tion note; nor did the possession of it by a director argue that it was used for a dishonest purpose. If, in point of fact, the proceeds of the note went into the company busi- ness; or if the note, after Laving been used in the business of the company, had found its way into the hands of a director (and the bank had nothing before it to show that either state of affairs was un- likely), what reason was there why it should not be discounted?' The sec- ond headnote is as follows: 'A note of such a company, drawn to its own order, and signed and indorsed by the president when presented for discount, although so presented by a director some time after its date, does not, on its face, suggest that it was an accommodation note, nor does the possession of it by the di- rector tend to show that it was used for a dishonest purpose.' " The court cites and considers, also, Goetz v. Bank of Kansas City. 119 U. S. 551, 7 Sup. Ct. 318, 30 L. Ed. 515 (to the point that " 'The bad faith in the taker of negotiable paper which will defeat a recovery by him must be something more than a mere failure to inquire into the consideration upon which it was made or accept- ed, because of rumors or general reputation as to the bad character of the maker or drawer'"); Hotch- kiss V. National Banks, 21 Wall. (88 U. S.) 354, 22 L. Ed. 645; Atlas Nat. Bank v. Holm, 71 Fed. 489, 19 C. C. A. 94 (to the point that " 'In order to deprive one of the character of a bona fide purchaser, it is not enough that he neglected to make the in- quiry which a prudent man would or ought to have made, but he must have acted in bad faith. There is no presumption that a purchaser of a note was aware of existing de- fenses thereto' ") ; Tod v. Kentucky Union L. Co., 57 Fed. 52; Richmond R. & E. Co. V. Dick, 52 Fed. 379, 3 C. C. A. 149 (to the point that " 'a manufacturing corporation received negotiable notes for property sold. The notes were discounted by a banking firm, in which the president of the corporation was a partner, but he had no actual knowledge as to the consideration for the notes, or of the transaction in which they were given. Held, that the mere fact of his connection with the two concerns was not sufficient to affect the banking firm with constructive notice of the consideration for the notes and of an alleged failure thereof'"); National Park Bank of New York v. Remsen (C. C), 43 Fed. 226; Shaw v. Spencer, 100 Mass. 382, 97 Am. Dec. 107, 1 Am. Rep. 115; Bank of Monongahela Val- ley V. Weston, 159 N. Y. 201, 54 N. E. 40, 45 L. R. A. 547; Smith v. Weston, 159 N. Y. 194, 54 N. E. 38 (to the point that "'When a prom- issory note was not received by the holder from any party prior in order of liability or possession to the in- dorser, it is not within the rule that when a note is presented by the maker the purchaser has, from that fact, notice that the Indorsements were not made in the ordinary course of business'"); Cheever v. The Pittsburg, Shenango & Lake Erie R. Co.. 150 N. Y. 59. 44 N. E. 701, 34 L. R. A. 69. 55 Am. St. Rep. 646; American Exchange Nat. Bk. v. New York Belting & Packing Co., 148 N. Y. 698, 43 N. E. 168; National 484] BOXA FIDE HOLDERS AXD RIGHTS ON TRANSFER. 618 bad faith, and a verdict is properly directed in its favor on that issue, wliere it subsequently discounted accommodation notes executed to the same payee by a member of the same firm, in the name of the firm, but after its dissolution, of which fact no sufficient notice was given, where the payee represented that the notes were based upon a valid consideration, and the purchase by the bank of notes at a discount of eight per cent, per annum, when the legal rate of interest is six per cent., is not such an excessive rate of discount as to warrant the in- ference of bad faith.^^ If there are several notes constituting one transaction but due at different times, the fact that one is overdue and unpaid is notice to the purchaser of all to put him on his guard as to each.®'* Where certain notes have serial numbers on their face and the cashier of a bank knew that the notes were the last of a series, and the consideration thereof and the course of business of the payee were sufficient to justify the conclusion that the notes were given for a single consideration, the bank is not a purchaser for value of such notes. ®^ Knowledge that notes were the first of a series may be im- puted to the cashier of a bank which was assignee by purchase of the notes, where the face of the notes showed that they were of a series and the cashier knew for what the notes were given and the Park Bank of New York v. German American M. W. & S. Co., 116 N. Y. 281, 22 N. E. 567, 5 L. R. A. 673; Hart v. Potter, 4 Duer (N. Y.) 458; 3 Cook on Corp. (5th ed.), § 761, p. 1978; 1 Cook on Corp. (5th ed.), § 293, p. 640. "^ Second National Bank v. Weston, 172 N. Y. 250, 64 N. E. 949, rev'g 61 N. Y. S. 1147. The court, per Cul- len, J., said: "While after proof had been given on behalf of defendants that the notes were fraudulently and illegally issued, it became in- cumbent upon the plaintiff, in order to succeed, to establish that it had acquired the notes in good faith for value, still the question was solely one of good faith. 'The rights of a holder are to be determined by the simple test of honesty and good faith, and not by a speculative issue as to his diligence or negligence.' Magee v. Badger, 34 N. Y. 247; Can- ajoharie National Bank v. Deefen- dorf, 123 N. Y. 202; American Ex- change National Bank v. New York Belting & P. Co., 148 N. Y. 698. Neg- ligence of the holder is simply ma- terial so far as it goes to show lack of good faith. 'The holder's rights cannot be defeated without proof of actual notice of the defect in title or bad faith on his part evidenced by circumstances. Though he may have been negligent in taking the paper and omitted precautions which a prudent man would have taken, nev- ertheless, unless he acted mala fide, his title, according to settled doc- trine, will prevail.' " Cheever v. Pittsburgh, S. & L. E. R. R. Co., 150 N. Y. 59, 66, 44 N. E. 701. "Harrell v. Broxton, 78 Ga. 129, 3 S. E. 5. •^Old Nat. Bk. of Ft. Wayne v. Marcy (Ark. 1906), 95 S. W. 145. 619 NOTICE — CORPORATION — AGENCY. [§ 485 payee's course of business; and, although tlie authorities are not in harmony as to the effect of notice of dishonor in cases of series of notes based upon the same consideration, yet an instruction in an action by the indorsee is not improper that "In order for you to find for the defendant in this case you must find that the plaintiff bank knew that all of these notes were given for a single consideration, or that the bank had such notice of that fact as would amount to bad faith on its part in the purchase of the last three notes."*'® § 485. Notice — Corporation — Agency. — A corporation may confer upon its officers or agents larger powers than ordinarily belong to them by holding them out to the public as possessing such powers by habitu- ally permitting them to exercise them, so contracts made by the presi- dent or other officers of the corporation may be subsequently ratified and validated.*''^ A person, however, taking negotiable paper of a cor- poration in payment of the individual obligation of an officer is charge- able with notice and is put upon inquiry as to the authority upon which the paper was issued. But the rule applicable to notes made by officers of a corporation to their own order and used to pay their in- dividual obligations has no application to notes made by the duly au- thorized officers and payable to a director. Officers of a corporation may not lawfully contract with themselves or use the credit of the cor- poration for their own benefit individually, but directors not infre- quently have business dealings with the corporation and may legiti- mately do so if they do not vote or use their personal influence with the other directors for their own personal advantage at the expense of the corporation.*'^ This decision reversed and remanded a case in which it was declared that a note or other obligation given by a corporation to an officer is not necessarily void on that account. It may be perfectly lawful and valid. But as it is out of the usual course of business for a corporation to issue its obligations to its officers, the fact that an obligation is so made suggests that it may be irregular, and consequently a third person taking such an obliga- tion, and knowing that the payee is an officer of the maker cor- poration, is put upon his inquiry as to whether or not the obligation has been lawfully issued. There is no reason why this rule should not ""Old National Bk. of Ft. Wayne Co.. 113 App. Div. 103, 98 N. Y. V. Marcy (Ark., 1906), 95 S. W. 14.5. Supp. 1026; rev'g 94 N. Y. Supp. "Carrington v. Turner (Md., 524. Substantially the language of 1905), 61 Atl. 324. Laughlin, J. ®' Orr V. South Amboy Terra Cotta § 485] BONA FIDE HOLDERS AND EIGHTS ON TRANSPER. 620 apply as well to directors as to any other officer. When the note or obligation shows upon its face that it is made to an officer, the note itself conveys the notice to all persons into whose hands it may come. When,, as in this case, it is made to a person without designation indicating that he is an officer, the transferee may or may not know the fact from other sources. If he does know it, as the appellants did in this case, he is put upon his inquiry ; and if it afterward turns out that the obligation was subject to legal infirmity at its inception, he cannot avoid the effect of the infirmity by claiming to be a bona fide holder without notice.*''* Again, the question of bona fides has been applied to bank or cashiers'^ drafts which are declared to have almost acquired the characteristics of money. So long as they are drawn on behalf of a solvent bank and upon a solvent drawee and signed by one of the officers usually signing such instruments, and the fact that such a draft was drawn by a cashier directly in favor of his own creditor and sent to that creditor by him, would not naturally give rise to the suspicion that there was anything irregular, fraudulent or wrong in the conduct of the cashier. This principle was applied to a case where a county treasurer owed the state money for taxes which he had collected from the county and neglected to pay over and pay- ment had been demanded. He was also cashier of a national bank and under his authority as such cashier he drew a draft upon blanks in his possession upon a correspondent bank in New York, payable to the order of the comptroller and sent it to him in payment of the taxes so due from him to the state. The comptroller took the draft in good faith and without knowledge of its wrongful and unauthorized issuance, indorsed the draft, and obtained the amount from the said drawee and credited it to said treasurer in discharge of taxes. It was paid by said drawee from moneys belonging to the bank of which the debtor for taxes was cashier, who drew such draft without paying therefor or without any charge against himself in favor of the bank. He thereafter absconded and the bank made a claim against the state to recover back the amount and the court held that the state was not liable to refund the amount of the draft. The court, however, said that the question whether the state was a holder of the draft for value •^Opinion of court, per Scott, P. said: "I am of the opinion that the J., in Orr v. South Amboy Terra law ought to be as MacLean, J., sug- Cotta Co., 94 N. Y. Supp. 524, 47 gests, but that it is as Scott, P. J., Misc. 604, aff'g 92 N. Y. Supp. 521, decides." Case was, however, re- MacLean, J., dissenting. Dugro, J., versed, see last preceding note. 621 NOTICE — CORPORATION — AGENCY. [§ 486 or not did not arise and that the case was not one of the diversion of commercial paper signed by one for the accommodation of another. ''*' §•486. Same subject. — A transferee of a note is held to be entitled to recover thereon, even though it was given by a corporation to its president for advancements of moneys and payments of subsisting notes indorsed by him and upon which he was liable, said advance- ments and payments being merged in the note given to him and con- stituting an actual indebtedness.'^^ But where the president of a bank '"Goshen Nat. Bank v. State, 141 N. Y. 379, 57 N. Y. St. R. 597. 36 N. E. 316. Considered, quoted from and principle applied to a similar case in Hathaway v. Delaware County, 93 N. Y. Supp. 436, 103 App. Div. 179, Houghton, J., dissenting. The court in this case also cites, in its opinion, Campbell v. Upton, 73 N. Y. Supp. 1084, 66 App. Div. 434, aff'd 171 N. Y. 644, 63 N. E. 1115. But the court says, however, "I rec- ognize the fact that a very large amount of the business of the coun- try is done through drafts pur- chased from banks, and which are made payable directly to the cred- itor of the one who makes the pur- chase, and yet I would be inclined to hold that upon its face such a draft discredits the claim that the alleged purchaser has any owner- ship in it, were it not for the deci- sion in the Goshen case above cited. " First National Bank of Bing- hamton v. Commercial Travelers' Home Assoc, 108 N. Y. App. Div. 78; aff'd (mem.) 185 N. Y. 575. Inthis case, in addition to the point above decided, there was a ratification by the corporation. The court, per Houghton, J., said: "With respect to the consideration, irrespective of any presumption which arises in plaintiff's favor by reason of the ne- gotiability of the instrument, and the taking of it without notice, there is no question. * * * The president of a corporation, in the absence of bad faith, has the right to take obli- gations or security from his corpo- ration for an actual indebtedness to himself (Duncomb v. New York, Housatonic & N. R. Co., 88 N. Y. 1). * * * Defendant was a member- ship corporation without stock. * * * If the defendant can be deemed a business corporation there can be no question but its board of managers would have power to appoint an executive com- mittee of their own number to transact business of the corporation during the interval between meet- ings of the board, and that this busi- ness might involve the giving of ne- gotiable notes for legitimate indebt- edness incurred (Sheridan Electric Light Co. V. Chatham Nat. Bank, 127 N. Y. 517, 522, 40 N. Y. St. R. 31, 28 N. E. 467, aff'g 52 Hun 575, 24 N. Y. St. R. 622, 5 N. Y. Supp. 529). * * * Stockholders of a cor- poration may subsequently ratify the acts and validate the originally unauthorized transactions of its of- ficers (Kent V. Quicksilver Mining Co., 78 N. Y. 159; Martin v. Niagara Falls Paper Mfg. Co., 122 N. Y. 165, 172, 33 N. Y. St. R. 318, 25 N. E. 303, aff'g 44 Hun 130, 8 N. Y. St. R. 265, 26 W. D. 251). If this be so of the stockholders of an ordinary stock corporation, it is doubly true § 486] BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. 622 and payee of a note in procuring its purchase by the bank acts solely and individually in his own behalf and at arm's length to the bank his knowledge is not the knowledge of the bank so as to afEect it with any constructive notice of defenses as a purchaser, even though the purchase was made by vote of the directors, the president being ab- sent, and no actual knowledge of defenses being chargeable to the bank. The same rule also applies to a former secretary who obtained his knowledge while acting for the bank and who was absent at the direct- ors' meeting, and also applies to the secretary elected in his place on the day the bank acted and who presented the note as agent of the president.''^ Again, where the president of a corporation was vice-presi- dent of a bank and a stockholder therein and the secretary of said cor- poration was a director and stockholder of the bank and the bank discounted paper of the corporation, but in discounting the same it was represented by its president and the corporation was represented by its secretary, such facts do not militate against the bona fide character of the bank's holding of such paper, where there was nothing else to put the bank on inquiry, since the officers of the corporation must be held as strangers to the bank who would conceal from the bank any knowledge possessed by them as to any infirmity in the note. If an " officer of a corporation is thus dealing with them in his own inter- est opposed to theirs, he must not be held to represent them in the transaction, so as to charge them with the knowledge he may possess but which is not communicated to them, and which they do not other- wise possess of facts derogatory to the title he conveys. "^^ So the facts that the president of a bank is a stockholder, and the cashier a of a membership corporation. * * * board of managers had been author- The defendant had had Green's ized to even execute a mortgage up- ( president) money. It had obtained on the defendant's property to se- credit by his indorsements of its cure the same indebtedness. In- notes. Those notes, as well as the stead of doing that, a man was money advanced by him, were rec- found willing to take a simple ognized as subsisting obligations promissory note, which it would against the corporation. Payment appear in fairness the defendant of the money loaned and of the should pay." notes outstanding could have been '- McDonald v. Randall, 139 Cal. enforced. The giving of the note to 246, 72 Pac. 997, Beatty, C. J., dis- him upon his paying the outstand- senting. Ing obligations upon which he was " Holm v. Atlas Nat. Bk., 84 Fed. liable as indorser cast no additional 119, aff'g Atlas Nat. Bank v. Holm, burden upon the corporation and 71 Fed. 489. took away none of its property. The G23 CORPORATION INDORSEMENT — ACCOMMODATION PAPER. [§ 487 stockliolder and secretary, of a corporation which is the payee of a note transferred to the bank does not charge the bank with constructive notice of defenses of the maker against the corporation payee, when cither the president or cashier had actual notice.'* Where an agent is in lawful possession of checks of his principal with a clear right to in- dorse them in the latter's name and after indorsing them he unlaw- fully diverts them to his own use by delivering them to a broker to be credited to his own speculative stock account, and they are transferred to a bank in the regular course of business for collection and the bank receives them in good faith, without notice, knowledge, or suspicion tending to impeach the checks, and collects the proceeds and without notice pays them over to the broker, an action for conversion will not lie against said bank in favor of the principal ; but the broker who had knowledge and notice of the agent's unlawful act is liable for the amount of the checks to the principal. In such a case the indorse- ments were held not forgeries under the negotiable instruments law.'^ § 487. Corporation indorsement — Accommodation paper. — Where a corporation engaged in business has implied power to make negotiable paper for use within the scope of its business, but it has no power, express or implied, to become a party to bills or notes for the accom- modation of others, such paper is valid and enforceable only in the hands 'of a holder taking the same before maturity, bona fide and without notice. The general doctrine of the law is that where a cor- poration has power under any circumstances to issue negotiable paper, a bona fide holder has the right to presume that it was issued under the circumstances which give the requisite authority, and such paper is no more liable to be impeached for any infirmity in the hands of such a holder than any other commercial paper. This doctrine is applied to commercial paper made by a corporation for the accommo- dation of a third party when in the hands of a bona fide holder, who has discounted it before maturity on the faith of its being business paper, ■^'^ So when a person receives a note for the debt of another " Iowa Nat. Bk. of Ottumwa v. pue, J., citing Supervisors v. Sherman & Bratager, 17 S. D. 396, Schenck, 5 Wall. (72 U. S.) 772, 784, 97 N. W. 12. 18 L. Ed. 556; Gelpcke v. City of ''■Salen v. Bank of State of New Dubuque, 1 Wall. (68 U. S.) 175, York, 97 N. Y. Supp. 361; Negot. 203, 17 L. Ed. 520; Monument Na- Inst. Law 1897, c. 612, § 42. tional Bank v. Globe Works, 101 '"National Bank of Republic v. Mass. 57; Bird v. Daggett, 97 Mass. Young, 41 N. J. Eq. 531, 535, per De- 494; Hackensack Water Co. v. De § 488] BONA FIDE HOLDERS AND EIGHTS ON TRANSFER. 624 which bears the indorsement of a third person or corporation not in the chain of title is charged with notice that the indorsement is an accommodation indorsement, and a person receiving such paper either knowing or charged with knowledge of the fact that it is accommoda- tion paper cannot recover of a corporation in an action against it as indorser, an officer of a corporation having no power in the absence of special authority to execute accommodation paper in the corporate nameJ^ § 488. Notice — Purchaser of bonds. — If a person has distinct no- tice of the fact that the pledgor of negotiable securities is not the owner of the bonds nor entitled to pledge them for personal advances made to him and he makes advances subsequent to such notice he is not a hona fide holder ; but it is not necessary in order to attack the lona fides of the holder of negotiable securities that he should have express notice of the particular individual who is the real owner of the securities. If the transferee or pledgee had notice that such bonds had been stolen or fraudulently misapplied he is chargeable with bad faith, even though he had no notice from the particular individual from whom they had been fraudulently obtained, nor need the pur- chaser have notice of the particular fraud, and if the proof shows that paper has been fraudulently, illegally or feloniously obtained from its owner or maker, then the burden of proving good faith is upon the party asserting title as a hona fide holder. The question of good faith or hona fides is the issue, not the nature of a third party's title to the paper, and if facts are proven which, before the actual advances had been made, would sustain a finding of bad faith or fraiid as against the true owner, the person receiving the paper or securities is not a hona fide holder.'^® In a case in the United States Circuit Court of Ap- peals the following points were decided: (1) An innocent purchaser of municipal bonds, which recite that they are issued in pursuance of Kay, 36 N. J. Eq. 548; Mechanics' 38, 43, 80 App. Div. 556, per Ingra- Bkg. Assn. V. White Lead Co., 35 N. ham, J. (case aff'd [mem.], 178 N. Y. 505; 1 Daniel Neg. Inst, §§ 382, Y. 558, 70 N. E. 1108), citing Can- 386; Green's Brice's Ultra Vires, ajoharie Nat. Bk. v. Diefendorf, 123 255, 272. N. Y. 191, 25 N. E. 402, 10 L. R. A. "Pelton V. Spider Lake Sawmill 676; Vosburgh v. Diefendorf, 119 N. and Lumber Co., 117 Wis. 569, 94 N. Y. 357, 23 N. E. 801, 16 Am. St. Rep. W. 293. 836, 1 Daniel Negot. Inst., § 799; 4 "Perth Amboy Mut. Loan, H. & Am. & Eng. Ency. of Law (2d ed.) B. Assn. V. Chapman, 81 N. Y. Supp. 303. 625 NOTICE — PURCHASER OF BONDS. [§ 488 an act of the legislature, which authorized their issue for a lawful purpose, and which also recite that they are issued in pursuance of an ordinance or resolution of a given date or title, which, if read, would disclose the fact that they are issued for an unlawful purpose, is not chargeable with notice of the terms or contents of the ordinance or resolutions. (2) A recital in school district bonds, that they are is- sued in pursuance of a lawful refunding act and of a resolution of a proper board, designated by its date, imports that they were issued in pursuance of a lawful resolution and of just and proper action of the board; and it estops the district, as against an innocent purchaser, from defeating the bonds, on the ground that they were issued for a fictitious, invalid, or unconstitutional claim, although that fact was disclosed by the resolution, the date of which was recited in the bonds. (3) A recital in the bonds of a school district, that they are issued in pursuance of a lawful refunding act, which authorizes the issue of bonds to fund the debt of the district, conclusively estops the quasi municipality from defeating the bonds in the hands of an innocent purchaser, on the ground that it had no fundable debt, or that the debt refunded was unconstitutional, fictitious, or invalid. (4) Fund- ing bonds neither create nor increase the indebtedness of a munici- pality, but merely change its form. (5) The certificate upon the face of municipal bonds, that they have been issued in pursuance of legis- lative authority, for the purpose of funding the indebtedness of the municipality, is a declaration that they have been issued for the pur- pose of funding a valid debt in the method prescribed by law, and that they neither create nor increase any indebtedness of the munici- pality, and, as against a bona fide purchaser, they estop the munici- pality from denying this declaration." The court, per Sanborn, C. J., said : "Is a bona fide purchaser of municipal bonds, which recite that they were issued in pursuance of a statute autliorizing the municipality to issue them for a lawful purpose, and in conformity with an ordi- nance or a resolution of a specified date, which disclosed the fact that they are issued for an unlawful purpose, charged with notice of the terms and contents of the ordinance or resolution? Tlie question is not new, and the answer to it is to be found in the opinions of the federal courts. In the earlier decisions of this court, and in at least one of those of the circuit court of appeals of the seventh circuit, this question was answered in tlie affirmative.*" But after the decision of ^° Fairfield v. Rural Independent «" Citing National Bank of Com- School District, 116 Fed. 838, 54 C. merce v. Town of Granada, 54 Fed. C. A. 342, s. c. 187 U. S. 643. 100," 4 C. C. A. 212; Hinkley v. City Joyce Defenses — 40. § 488] BONA FIDE HOLDERS AXD RIGHTS ON" TRANSFER. 626 the supreme court in Town of Evansville v. Dennett,'^^ and after a careful reconsideration of the question, in view of the opinion in tliat case, those earlier cases were overruled, and the proposition was an- nounced to which this court has since adhered. It is that the recital in municipal bonds that they were issued in accordance with the pro- visions of the enabling statute imports that they were sent forth in pursuance of a lawful and proper resolution or ordinance, and of just and proper action by the governing boards of the municipality. It relieves the innocent purchaser of all inquiry, notice, and knowl- edge of the actual action and record of the board or council, and es- tops the municipality from denying that proper action was taken and that a lawful resolution or ordinance was passed."®^ Where the bonds of an irrigation district contained recitals showing that they were regularly issued by authority of, pursuant to, and after a full compli- ance with all the requirements of the statute, the holder of such bonds is protected by the recitals and had a right to purchase them from any one who could lawfully have been the owner thereof, nor would the fact that the bonds stood in the name of the president of the cor- poration constitute a suspicious circumstance necessitating inquiry nor impeach the bona fide character of the purchaser's ownership, nor in such case would the defense be available that there were irregularities in the issuance of the bonds rendering tliem invalid, since the rule applies that the circumstances must be such as not merely to create suspicion in the mind of an ordinarily prudent man, but facts must have come to the notice of the holder or his agent of such a nature that a neglect to further inquire would in itself constitute evidence of bad faith. ^^ Again, a bank to which stolen coupon bonds, payable to bearer, have been pledged, as collateral security for a loan, by the thief in the ordinary course of business, without notice to the bank of any infirmity in the title, and without any circumstances to put the bank of Arkansas City, 69 Fed. 768, 773, 99 U. S. 86, 95, 25 L. Ed. 363; Town 16 C C. A. 395, 400; Port v. Pu- of Evansville v. Dennett, 161 U. S. laski Co., 1 C. C. A. 405, 49 Fed. 434, 439, 16 Sup. Ct. 613, 40 L. Ed. 628. 760; Waite v. City of Santa Cruz, 22 «il61 U. S. 434, 439, 443, 16 Sup.' Sup. Ct. 327, 333, 46 L. Ed. 552; Ct. 613, 40 L. Ed. 760. Wesson v. Saline Co., 73 Fed. 917, ^Citing Board of Commissioners 919, 20 C. C. A. 227, 229. of Haskell Co. v. National Life Ins. *^ Perris Irrigation District v. Co., 32 C. C. A. 591, 594, 90 Fed. Thompson, 116 Fed. 832. 54 C. C. A. 228, 231; Hackett v. City of Ottawa, 336, dismissed in error 196 U. S. 637. G27 TRANSFEREE OF BOXA FIDE HOLDER NOTICE. [§ -189 on inquiry, takes a good title thereto as against him from whom the}' were stolen.^* §489, Transferee of bona fide holder — Notice. — The innocent liolder of negotiable paper may transfer the same for value to one with notice of defenses, and the transferee, where he is not himself a party to any fraud or illegality affecting the paper, will take it free from equities and defenses to the extent that he has all the rights of and obtains as good a title as his immediate indorser possessed. ^^ So, un- der a Louisiana decision, where a bona fide holder who took the note for value, in good faith, before maturity, transfers the same, and the transferee is possessed of information as to the infirmity of the origin of the note, still the latter acquires as good a title as his immediate indorser had, who, subsequently to becoming possessed of the note, learned of its infirmities, and the note is not thereby vitiated-.®^ But a payee does not, by repurchasing paper from a bona fide holder to whom he had sold or transferred it, obtain any better title or rigiit ** Cochran v. Foxchase Bank, 209 Pa. 34, 58 Atl. 117. *^ United States. — Gunnison Coun- ty V. E. H. Rollins & Sons, 173 U. S. 255. 19 Sup. Ct. 390, 43 L. Ed. 689, rev'g 80 Fed. 692, 49 U. S. App. 399. Georgia. — Weil v. Carswell, 119 Ga. 873, 47 S. E. 217, under Civ. Code 1895, § 3938. See this case also as to when rule not applicable. Illinois. — Central School Supply- House v. Donovan, 70 111. App. 208. Indiana. — Thomas v. Ruddell, 66 Ind. 326. Iowa. — Riegel v. Ormsby, 111 Iowa 10, 82 N. W. 432. Kansas. — McFarland v. State Bk., 7 Kan. App. 722, 52 Pac. 110. Louisiana. — Hillard v. Taylor, 114 La. 883, 38 So. 594. Maryland. — Black v. First Nat. Bank, 96 Md. 399, 54 Atl. 88. Massachusetts. — Symonds v. Riley, 188 Mass. 470, 74 N. E. 926. Missouri. — Griswold v. Bueckle, 72 Mo. App. 53; Longford v. Varner, 65 Mo. App. 370. Nebraska. — Jones v. Wlesen, 50 Neb. 243, 69 N. W. 762. New York. — Jennings v. Carlucci, 87 N. Y. Supp. 475. Pennsylvania. — Liebig Mfg. Co. v. Hill, 9 Pa. Super. Ct. 469, 16 Lane. L. Rev. 121, 43 W. N. C. 497. Texas. — Hollimon v. Karger, 30 Tex. Civ. App. 558, 71 S. W. 299. Virginia. — Aragon Coffee Co. v. Rogers (Va.), 52 S. E. 843. See this case also (noted in this sec- tion) as to when rule does not ap- ply. Washington. — Donnerberg v. Op- penheimer, 15 Wash. 290, 46 Pac. 254. Wisconsin. — Prentiss v. Strand, 116 Wis. 647, 93 N. W. 816. Canada. — Bellemare v. Gray, 16 Rap. Jud. Que. C. S. 581. ^"Hillard v. Taylor, 114 La. 883,38 So. 594. § 489] BONA FIDE HOLDERS AND RIGHTS ON TRANSFER. 628 than he originally possessed.®^ Nor does an agent of the payee, by be- coming the transferee of a holder in due course, take free from equi- ties.^ ^ "Hoye V. Kalashian, (R. I.), 46 "'Battersbee v. Calkins, 128 Mich. Atl. 271; Aragon Coffee Co. v. Rog- 569, 87 N. W. 760, 8 Det. Leg. N. ers (Va.), 52 S. E. 843; Andrews v. 778. Robertson, 111 Wis. 334, 87 N. W. 190, 54 L. R. A. 673. II CHAPTER XXII. WANT OP presentment; presentment for acceptance. Sec. 490. "When presentment must be made — Fixing maturity of instrument. 491. Agreement as to acceptance or presentment — Want of funds — Promise to accept. 492. Acceptance not refused — Time desired — Want of funds. 493. Presentment after refusal to accept. 494. When presentment unneces- sary. Sec. 495. Effect of presentment made unnecessarily — Presentment before due. 496. Release of drawer and indorser — Presentment or negotiation in reasonable time. 497. Presentment how made — By whom. 498. Same subject — Time and place. 499. Same subject — To whom. 500. Acceptance of order on commit- tee. 501. Where presentment is excused. § 490. When presentment must be made — Fixing maturity of instrument. — Presentment for acceptance must be made: where the bill is payable after sight, or in any other case where presentment for acceptance is necessary in order to fix the maturity of the instrument ; or where the bill expressly stipulates that it shall be presented for acceptance; or where the bill is drawn payable elsewhere than at the residence or place of business of the drawee. In no other case is pre- sentment for acceptance necessary in order to render any party to the bill liable.^ No debt accrues upon a bill payable after sight until a presentment for payment.^ And where a bill is payable at a certain ^Negot. Inst. Law, § 240; Bills of Exch. Act, § 39, Appendix herein. = Holmes v. Kerrison, 2 Taunt. 323. It is necessary to have bills pay- able after sight presented for ac- ceptance to give them a date. Cros- by V. Morton, 7 La. 227, 13 La. (O. S.) 357. A promissory note made in the following form: "I promise to pay 62 to M. A. D. or bearer on demand the sum of £16 at sight," necessitates presentment for sight before an ac- tion is maintainable. Dixon v. Nut- tall, 1 Crompt. Mees. & Ros. 306, 4 Tyrwh. 1013. Before a bill payable one day after sight can be legally protested for non-payment it must be pre- sented for acceptance, then one day 9 § 491] WANT OF I'RESENTMENT FOR ACCEPTANCE. G30 time after date, it is not absolutely necessary to have it accepted, an acceptance being only necessary to fix the period of payment where a bill is payable at sight, or at so many days after sight or demand, or after a certain event. It will suffice that a demand be made of the drawees at maturity, and notice given to the drawer in case of their default.^ A post-dated draft, purporting to be payable at sight, is for all the legal purposes of presentment, demand, protest and pay- ment, a draft payable a certain time after date. But a post-dated bill differs also from a bill payable a corresponding number of days after it is drawn, and although the question of the right to days of grace might be settled by the terms of the bill itself, an important difference would exist in this that the time bill would be subject to be forwarded for acceptance while the post-dated bill would not. The latter must rest upon the drawer's responsibility until the time of date arrives. It could not be dishonored by refusal to accept it before its date, because the drawer does not undertake to have funds in the drawee's hands to meet it before that day arrives; and the drawee, if he were in funds to meet it, could not retain them for the purpose as against -/ other bills drawn and payable before the date arrived.^ Again, if in pursuance of an agreement that insurance premiums are to be paid by sight drafts, a draft is put in the form of a sight draft, and the paper is to every legal intent a draft for acceptance, it is not due until the expiration of days of grace which are to be allowed after presentment and acceptance, as the time of payment cannot be known until acceptance, so that presentment for acceptance is due before default in payment will be incurred.^ § 491. Agreement as to acceptance or presentment — ^Want of funds — Promise to accept. — If the holder of a bill of exchange, at the time of taking the bill, knew that the drawee had not funds in his hands belonging to the drawer, and took the bill on the promise of the drawee to accept it, expecting to receive funds from the drawer; the promise of the drawee to accept the bill constitutes a valid con- allowed for the bill to mature, after Bank, 44 Mich. 344, 357, 358, per it was shown to the drawee, and Cooley, J., citing Godin v. Bank of three days of grace. Craig v. Price, Commonwealth, 6 Duer (N. Y.) 76, 23 Ark. 633. 70 Pa. St. 474, 476. ^ Commercial Bank of Natchez v. ^ Burrus v. Life Insurance Com- Perry, 10 Rob. (La.) 61, 43 Am. pany of Virginia, 124 N, C. 9, 32 S. Dec. 168. E. 323. *New York Iron Mine v. Citizens' 631 WANT OF FUNDS PROMISE TO ACCEPT. [§ 491 tract between the parties, notwithstanding the failure of tlie drawer to place funds in his hands. The acceptance of the drawee of a bill, binds him, although it is known to the holder that he has no funds in his hands. It is sufficient that the holder trusts to such accept- ance.® And where sight drafts were purchased under an agreement that if not used for a specified purpose they could be returned to the bank drawing the same and credit given, the drafts being drawn in April, the drawee being solvent until July of that year, but no pre- sentment was made at any time, nor any offer to return the drafts to the bank until the succeeding December, it was held that -as the drafts had neither been presented nor returned to the bank in a rea- sonable time the holder must bear the loss.^ A letter written to the drawer within a reasonable time before or after the date of a bill of exchange, describing it in terms not to be mistaken, and promising to accept it, is, if shown to the person who takes the bill on the credit of the letter, a virtual acceptance, and binds the person who makes the promise, even though there are no funds in his hands belonging to the drawer, if the bill be drawn payable at a fixed time, and not at or after sight. If in such case the bill be drawn payable at or after sight, and is for the entire amount named in the letter, the payee can maintain an action against the drawee as the equitable assignee of the fund ; as it seems in such case the drawee would not be liable as acceptor, unless the draft was drawn in precise accordance with the terms of the letter.^ But where one indorsed a bill of exchange, for •Townsley v. Sumrall, 2 Pet. (U. S.) 170. 'Collingwood v. The Merchants' Bank, 15 Neb. 118. Agreement to accept — Payment of debt of another. — If a person under- take to accept a bill, in considera- tion that another will purchase one already drawn, or to be thereafter drawn, and as an inducement to the purchaser to take it; and the bill is purchased upon the credit of such promise for a sufficient consid- eration, such promise to accept is binding upon the party. It is an original promise to the purchaser, not merely a promise for the debt of another; and having a sufficient consideration to support it, in rea- son and justice as well as in law, it ought to bind him. Townsley v. Sumrall, 2 Pet. (U. S.) 170. '^ Nimocks v. Woody, 97 N. C. 1, 2 S. E. 249, 2 Am. St. Rep. 268. Letter promising to accept draft to be drawn — Acceptance to fix ma- turity — Necessity of presentment. — "It must be admitted that there is some diversity in the rulings in England and in this country as to whether a promise made in writing to accept and pay a draft for a specified amount, yet to be drawn, and communicated to one who, upon the faith of such promise, becomes the payee of it, when drawn for value, is an acceptance in law, so that an action upon it can be main- 491] WANT OF PRESENTMENT FOR ACCEPTANCE, 632 the accommodation of the drawer, who negotiated it on an agreement, not assented to nor known by the indorser, that it should not be pre- sented to the drawee for acceptance, until maturity, and it was ac- tained by the latter. In the case of The Bank of Ireland v. Archer, 11 M. & W. (Ex.) 383, it is decided that such a result does not follow, and there are decisions in some of the state courts to the same effect. But in the well-considered and elaborate opinion of Chief Justice Marshall in Cooledge v. Payson, 2 Wheat. 63- 75, speaking in reference to the dis- tinction between the cases of a bill drawn upon, and a bill drawn after such promise, it is said: 'The court can perceive no substantial reason for this distinction. The prevailing inducement for considering a prom- ise to accept as an acceptance is that credit is thereby given to the bill. Now, this credit is given as ■entirely by a letter written before the date of the bill as by one writ- ten afterwards.' The general rule is then declared in these words: 'Upon a review of the cases which are reported, the court is of opinion, that a letter written within a rea- sonable time before or after the date of a bill of exchange, describ- ing it in terms not to be mistaken, and promising to accept it, is, if shown to the person who afterwards takes the bill on the credit of the letter, a virtual acceptance, binding the person who makes the promise.' The same doctrine is laid down in Townsley v. Sumrall, 2 Peters 170- 185, by Justice Story, and it is said to prevail when there are no funds of the drawer in the drawee's hands, and the action may be brought, says Wilson, J., in Cassell v. Davis, 1 Black's C. C. Reports, by any one who makes advances on the bill upon such assurance of payment. To the same effect is 1 Daniel Neg. Instruments, §§ 559, 560, 561; and 1 Edw. on Bills, Notes, etc., § 567, and following; Plummer v. Leyman, 49 Me. 229; Stiman v. Harrison, 42 Penn. St. 49. We are referred, how- ever, to § 562, in Mr. Daniel's first volume, who says: 'It seems ap- plicable (the rule) to the cases of bills payable on demand, or at a fixed time after date, and not to bills payable at or after sight, for in order to constitute acceptance in the . latter, a presentment is indis- pensable, since the time the bill is to run cannot otherwise be ascer- tained.' This may be true in a strict sense, an actual presentment and ac- ceptance being necessary to deter- mine the time of payment, as in a single draft, days of grace are al- lowed; but the presentation in this case has been made, and not only acceptance refused, but liability de- nied altogether. The present draft is in precise accord with the direc- tion in the letter, and the plaintiff has advanced his money upon the assurance of its being met, and the governing general rule is, that the drawee thereby undertakes the ob- ligations of the acceptor, and we see no reason why it should not be so in any form of a draft, made in pursuance of the terms of the prom- ise, though in the exceptional cases an actual presentation may be nec- essary to fix the time of payment and authorize the action upon it as an acceptance." Nimocks v. Woody, 97 N. C. 5, 6, 2 S. E. 249, 2 Am. St. Rep. 269, per Smith, C. J. I I [ 633 ACCEPTANCE NOT REFUSED, [§§ 492-494 cordingly first presented to the drawee at maturity, and there dis- honored; it was held that the indorser was not thereby discharged.* § 492. Acceptance not refused — Time desired — ^Want of funds. — If a drawee of a bill of exchange does not refuse acceptance, but desires time to examine into the state of his accounts before deciding, he is held entitled to twenty-four hours for that purpose.^" And where the drawee, on being applied to by the holder of a bill on the day be- fore it became due, informed such holder that he had no effects of the drawer's in his hands, but that they would probably be supplied be- fore the next day, and on the next day the drawer informs the holder that he will endeavor to provide effects and will call upon him again, such facts do not supersede the necessity of a presentment on that day." § 493. Presentment after refusal to accept. — An acceptance being once refused, the holder need not present the bill for payment at the time appointed on its face for its maturity ; the liability of the par- ties is already fixed by the non-acceptance and notice.^^ And if a bill of exchange, payable in a specified length of time after date or on a day certain, be presented for acceptance on the day it is due, and if acceptance is then refused, no further demand of payment is necessary to charge the drawer or indorser.^^ § 494. When presentment unnecessary. — Presentment for accept- ance is unnecessary in case of a bill of exchange payable at a future time on a day certain or at a certain period or given time after date, but payment may be at once demanded at its maturity.^* In a Mary- » Fall River Union Bank v. Wil- Georgia. — Davies v. Byrne, 10 Ga. lard, 5 Mete. (Mass.) 216. 329. (It is not necessary to present ^"Case V. Burt, 15 Mich. 82. a foreign bill for acceptance, when "Pjideaux v. Collier, 2 Stark. 57. it is payable at a time certain.) '^ Evans V. Bridges, 4 Port. (Ala.) Illinois.— Taylor v. Bank of Illi- 351. nois, 7 T. B. Mon. (Ky.) 576. (A bill " Plato V. Reynolds, 27 N. Y. 586. payable so many days after date, ^* United States. — Townsley v. need not be presented till due; but Sumrall, 2 Pet. (U. S.) 170. (Bills if presented for acceptance before, of exchange, payable at a given time and dishonored, there must be im- after date, need not be presented mediate notice.) for acceptance at all; and payment Missouri. — Harrison v. Copeland, may at once be demanded at their 8 Mo. 268. maturity.) Pennsylvania. — House v. Adams § 495] WAXT or presentment — for acceptance. 634 land case the defendants drew a bill of exchange, payable in London, dated the 22d of May, 1868, at sixty days' sight, on Joseph and Charles Sturge, Birmingham ; the bill, on its face, was drawn against a cargo of wheat per the "Ocean Belle ;" on the day of the date of the bill the drawers sold and indorsed it to the plaintiffs, and on the same day, by letter of hypothecation, lodged the bill of lading for the cargo with them, as collateral security for the acceptance and payment of the bill, and authorized them, in case they thought it necessary, to place said wheat on its arrival in the hands of their brokers for im- mediate sale, and to apply the proceeds toward the payment of the bill. The drawees declined to accept the bill, unless they were put in possession of the bill of lading of the cargo against which it was drawn. On the non-acceptance of the bill, the cargo was sold by the London agents of the plaintiffs, and the net proceeds were applied toward the payment of the bill, but being insufficient, suit was brought against the defendants to recover the deficiency and statutory dam- ages, after notice to them of all the facts, and demand of payment. It was held that the drawees were not bound to accept the bill of ex- change, without the delivery to them of the bill of lading; that the defendants gave the plaintiffs the legal right to retain the bill of lad- ing until the maturity of the bill of exchange; and the defendants were not entitled to require formal presentment of the bill of exchange for acceptance, and notice of its non-acceptance.^^ § 495. Effect of presentment made unnecessarily — Presentment before due. — Although it is not necessary to present a bill made pay- able at a given time after date l^efore its maturity, yet if presentment is made and acceptance refused, the bill must be protested and no- tice given to all parties.^'' The undertaking of the parties drawing & Co., 48 Pa. St. 261, 266. (Present- is not bound to present it to the ment for acceptance is not necessary drawee for acceptance until it be- in the case of a bill of exchange comes due.) payable at a certain period after Bills of exchange payable after date, and in Pennsylvania the date are not required to be pre- drawer is not discharged for want sented for acceptance as between the of notice of non-acceptance pro- holders and indorsers. Crosby v. Tided he receives notice of non-pay- Morton, 7 La. 227, 13 La. (O. S.) ment. Per Read, J.) 357. Yermont. — Bank of Bennington ^^ Schuchardt v. Hall & Leoney, 36 V. Raymond, 12 Vt. 401. (The holder Md. 590, 591. of a bill of exchange, payable at a '" Carmichael v. Bank of Pennsyl- future time, and on a day certain, vania, 4 How. (Miss.) 567. ■ 635 RELEASE OF DRAWER AXD INDORSER. [§ 496 and indorsing a bill of exchange, when it is thrown into circulation, is that the drawee shall both accept and pay it. This engagement of the drawer and indorsers does not oblige the holder to present it for acceptance. If, however, he does present it, and acceptance is refused, it is considered as dishonored, and due notice must be given to all prior parties whom it is desired to charge.^^ Though the holder of a bill of exchange, payable at any number of days after date, is not bound to present the bill for acceptance, but may wait until it be- comes due, and then present it for payment, yet if he does present I the bill for acceptance, and acceptance is refused, he must give notice to those parties to whom he means to resort for payment, or they will be discharged from all liability.^^ § 496. Release of drawer and indorser — ^Presentment or negotia- tion in reasonable time. — Under the negotiable instruments law, sub- ject to the exceptions therein, it is provided that the holder of a bill which is required by it to be presented for acceptance must either pre- sent it for acceptance or negotiate it within a reasonable time ; and if he fails to do so the drawer and all indorsers are discharged.^'' A bill of exchange payable at sight, or a certain number of days after sight, must, in order to charge the drawer, be presented for acceptance within a reasonable time or the bill should be negotiated or put in circulation. What constitutes a reasonable time depends upon the circumstances of each particular case, such as the nature of the bill, the places where drawn and to be presented, the accessibility of the parties or place, as where the parties are when the bill was drawn, and the distance between the place of drawing the bill and the payee ; whether the payee is to be himself the bearer ; delay arising from the sickness of the payee ; the political condition of the country ; or other accident not arising from his own misconduct, and various other cir- cumstances difficult to enumerate. But the consideration upon which the bill arose can have no influence upon the question of diligence.^" "Evans v. Bridges, 4 Port. (Ala.) entitled to days of grace, and a de- 350. mand of payment, and notice to the '^ Harrison v. Copeland, 8 Mo. 268. drawer, without a previous presenta- '" Negot. Inst. Law, § 241 ; Bills tion for acceptance, are insufficient of Exch. Act, § 40, Appendix herein, to charge him); Dumont v. Pope, 7 '"Aymar v. Beers, 17 Cow. (N. Blackf. (Ind.) 367 (holding that Y.) 705; Hart v. Smith, 15 Ala. 807, to authorize the payee to recover 50 Am. Dec. 161 (holding that a against the drawer of a bill of ex- bill of exchange, payable at sight, is change in which no time for pay- 496] WANT OF PRESENTMENT FOR ACCEPTANCE. 636 Where a bill was drawn by a banker in the country on a banker in the town in favor of a certain person, payable after sight, and he indorsed ment is specified, he must present the bill to the drawee for accept- ance or payment within a reason- able time after it is received.) See Allen v. Luydam, 20 Wend. (N. Y.) 321, 32 Am. Dec. 655, (hold- ing that an agent receiving for col- lection before maturity, a bill pay- able on a particular day after date, is held to strict vigilance in making presentment for acceptance; and if chargeable with negligence, is sub- ject to the payment of all damages sustained by the owner.) In the United States it is declared that no absolute rule can be laid down as to the time within which a bill payable a certain number of days after sight must be presented for acceptance, the only rule is that it must be presented within a rea- sonable time dependent upon the circumstances of the particular case. There is a difference between the case of a bill of exchange, drawn payable at so many days after date, and one drawn payable at so many days after sight, as in the former case it must be presented by the period of its maturity; in the latter it is sufficient if it be presented in a reasonable time. "There is one other limitation or rather illustra- tion of the principle, which is very material. It is thus that the holder is not at liberty to lock up the bill for any length of time in his own possession; but he may put it into circulation, and though it may re- main a considerable time iu circu- lation, if there be no unreasonable delay in any of the successive hold- ers of presentment for acceptance is not fatal to the party in case of dishonor." Wallace v. Agry, 4 Mason (U. S. C. C.) 336, 345; Fed. Cas. No. 17,096, per Story, J., citing Muilman v. D'Eguino, 2 H. Bl. 565; Goupy V. Harden, 7 Taunt. 159; Field V. Nickerson, 13 Mass. 131; Kyd on Bills 117; Bayley on Bills (2d ed.) 60; Chitty on Bills (5th ed.) 208. In Alabama a bill of ex- change, whether foreign or inland, payable at sight, must be presented for acceptance within a reasonable time before payment thereof can be demanded, and what is a reasonable time depends upon the circum- stances of each particular case. Knott V. Venable, 42 Ala. 186. 194. In Illinois it has been declared to be a general rule that the holder of a sight draft must put it in circula- tion or present it for payment at furthest the next business day after its reception, if within the reach of the person on whom it is drawn. Montelius v. Charles, 76 111. 303, 306. In this case the court quotes as fol- lows from Muilman v. D'Eguino, 2 H. Black. 565, Eyre, C. J., said: "Courts have been very cautious in fixing any time for an inland bill, payable at a certain period after sight, to be presented for ac- ceptance, and it seems to me more necessary to be cautious in respect to foreign bills payable in that man- ner. If, instead of drawing their foreign bills, payable at usances in the old way, merchants choose, for their own convenience, to draw them in this manner, and make the time commence when the holder pleases, I do not see how the courts can lay down any precise rule on the subject. I think, indeed, the holder is bound to present the bill in a reasonable time, in order that 637 RELEASE OF DRAWER AKD IKDORSER. [§ 496 it to the defendants, who indorsed it to the plaintiffs seven days after the date of the bill, and the plaintiffs delayed presentment for four the period may commence from which the payment is to take place. The question, what is a reasonable time, must depend on the peculiar circumstances of the case, and it must always be for the jury to de- termine whether laches is imputable to the plaintiff." In Louisiana a bill must be presented in a reasonable time; what constitutes such time de- pends upon the circumstances of each particular case. The holder of a sight draft should not put it in his pocket and delay presentment unnec- essarily, confiding in the solvency of the drawee; if he do so, and there is a loss in consequence thereof, he must bear it, and the drawer will be discharged. But the bill may be put in circulation, and in that case much time may elapse whilst it is passing from hand to hand, before present- ment, without releasing the drawer. Richardson v. Fenner, 10 La. Ann. 600. In Massachusetts it is declared that "The draft being payable at sight, it was necessary to present it within a reasonable time after it was received from the indorser by the plaintiffs. They were not bound to forward it immediately, but only to use reasonable diligence in trans- mitting it. If guilty of no unrea- sonable or improper delay in its presentation, then, upon its non- payment by the drawees, they had a right to have recourse to the de- fendant as indorser. Byles on Bills 139; Mellish v. Rawdon, 9 Bing. 416, and 2 Moore & Scott 570; Mullick V. Radakissen, 9 Moore P. C. 66; Bridgeport Bank v. Dyer, 19 Conn. 136. Ordinarily the question whether a presentment was within a reason- able time is a mixed question of law and fact, to be decided by the jury under proper instructions from the court. And it may vary very much, according to the particular circumstances of each case. If the facts are doubtful, or in dispute, it is the clear duty of the court to submit them to the jury. But when they are clear and uncontradicted, then it is competent for the court to determine whether the reasonable time required by law for the pre- sentment has been exceeded or not. Gilmore v. Wilbur, 12 Pick. 124; Holbrook v. Burt, 22 Pick. 555; Spoor V. Spooner, 12 Met. 285." Pres- cott Bank v. Caverly, 7 Gray (73 Mass.) 221. In Michigan a draft payable at sight should be presented for payment within a reasonable time, and a court cannot, as matter of law, say that any delay is rea- sonable beyond that which is re- quired in the ordinary course of business without special inconveni- ence to the holder; or by the spe- cial circumstances of the particular case. The Phoenix Ins. Co. v. Allen, 7 Cooley (11 Mich.) 501. In Ne- braska it is said that: "A bill must be presented to the drawee for ac- ceptance within a reasonable time, even though the drawer or indorser has sustained no actual loss by the delay, and has continued solvent up to the time of presentment." Col- lingwood V. The Merchants' Bank, 15 Neb. 118, 122, per Maxwell, J. In New York it is also declared that: "Though it does not clearly appear whether the drawer had funds of the defendant, at the time of the drawing of the bill, yet he had a right to expect that his bill would be accepted and paid; and it is in k 49G] WAXT OF PRESENTMENT — FOR ACCEPTANCE. 638 days, the question of unreasonable delay was left to the jury. Lord Tenterden saying in summing up that it might be reasonably inferred evidence, that it would have been paid, on sight, if it had been pre- sented. Under these circumstances it was necessary for the holders of the bill to present it for acceptance within a reasonable time, and to give due notice of its dishonor to the drawer." Elting & Shook v. Brinkerhoff, 2 Hall (N. Y.) 459, per Oakley, J. In South Carolina when a bill is drawn, payable within a specified time after sight, it is nec- essary, in order to fix the period when the bill is to be paid, to pre- sent it to the drawee for acceptance. In other cases, it is not incumbent on the holder to present it before it is due. (Chitty on Bills 67.) The rule in relation to bills, whether payable at sight or so many days after sight, or in any other manner, is, that due diligence must be used. The holder has no privilege to re- tain the bill in his possession for such a length of time as may occa- sion a loss to the drawer, but ought to present the bill as soon as possi- ble, and it must be done within a reasonable time. What is reason- able time depends upon the par- ticular circumstances of the case; and it is for the jury to determine whether any laches is imputable to the holder. As it was incumbent upon the holder of this bill to have presented it for acceptance within a reasonable time; so on refusal to accept, notice must be given as soon as possible to the persons on whom the holder means to resort for pay- ment, or they will, in general, be totally discharged from responsibil- ity. Fernandez v. Lewis, 1 McCord (S. C.) 323. In Texas it is said that: "It is well settled that in case of a draft drawn at sight, or so many days after sight, the holder must present it for payment within a rea- sonable time. And in determining the question of reasonable time, the courts will consider all the circum- stances by which the question of diligence can be affected, as, for in- stance, the distance between the place of residence of the drawer and the place of residence of the drawee, the mail facilities of the country, etc. The general usage of the country in respect to such pa- per will, also, enter into the con- sideration of the question. It is also to be remarked that the idea of rea- sonable time is opposed to the idea of great diligence or promptitude. The question is one of a large class which frequently produce great em- barrassment, from the extreme diffi- culty in many cases of drawing a line by which reasonable time can be separated from laches. One period of time is pronounced, with- out any hesitation, as reasonable time within which to make presenta- tion of this description of paper; with as little hesitation, a delay to make presentation for another period of time, will be pronounced laches; and, between the two peri- ods, there must necessarily be a tract of time which will fall within the idea of reasonable diligence or laches, according to circumstances, and as to which the law must some- times pronounce its decisions some- what arbitrarily." Nichols v. Black- more, 27 Tex. 587, per Bell, J. In West Virgi7iia it is the duty of the holder of a bill of exchange payable at sight and entitled to days of grace to put the same into circula- 639 RELEASE OF DRAWER AND INDORSEE. [§ 496 that it was neither expected or considered necessary to present such a bill as speedily as if it were a bill of any private party ; that bills of tion within a reasonable time or pre- sent it to tlie drawee for acceptance and payment, otherwise the drawer will be discharged from liability. Thornburg & Sons v. Emmons, 23 W. Va. 325. The court said in this case: "The courts have, in cases of bills payable at sight, or at any given time after sight, declined to lay down any rule prescribing what is a reasonable time in which they must be presented for acceptance, leaving the question in every case as it arises, to be determined by its own peculiar circumstances, and if the bill be not presented within a reasonable time, the drawer is dis- charged, although the parties con- tinue solvent, and there is no dam- age caused by the delay. Daniel's Neg. Instruments, § 465; 1 Wait's Actions and Defenses, p. 619; Chitty on Bills 274; 1 Parsons' Notes and Bills, pp. 263, 338, 383. But one of the circumstances affecting the question of what is reasonable time in such case is, whether the bill has been put in, and kept in circulation, for if it has been kept in circula- tion, the delay of a year or even more would not necessarily amount to negligence. But if the holder re- tains possession of the bill for an unreasonable time, and thus locks it up from circulation, he makes it his own, and will have no remedy against antecedent parties from or through whom he derived title. Chitty on Bills 275; Robinson v. Ames, 20 Johns. 146; Daniel on Negot. Inst. 434. And it has been held that a sight draft on New York, indorsed to the plaintiff in Wisconsin, and not mailed to New York for presentment for fourteen days, was prima facie evidence of laches, but might be rebutted. Walsh V. Dart, 23 Wis. 334." Thorn- burg V. Emmons, 23 W. Va. 325, 333, per Woods, J. In Wisconsin un- reasonable delay of the payee of a draft to present it to the drawee, or to notify the drawer of its non-ac- ceptance or non-payment, or to re- turn it to the drawer as refused by the payee, makes the paper the payee's own, and discharges the drawer. Allan v. Eldred, 50 Wis. 182. In England "The purchaser of a foreign bill of exchange, payable at a certain time after sight, which is publicly offered for negotiation, is not bound to send it by the earli- est opportunity to the place of its destination. There is no fixed time when a bill drawn payable at sight or a certain time after, shall be pre- sented to the drawee. But it must be presented within a reasonable time. What is a reasonable time is a question for the jury to decide, from the circumstances of the case. But if the holder of a bill so pay- able, neither presents it nor puts it in circulation, he is guilty of laches, and cannot recover upon it. It is sufficient, if notice of a bill drawn in England on a person in the East Indies, being dishonored, is sent to England by the first di- rect and regular mode of convey- ance, whether it be by an English or a foreign ship; the holder is not bound to send such notice by the accidental, though earlier convey- ance of a foreign ship not destined to this country." Muilman v. D'Eguino, 2 H. Bl. 565. A foreign bill of exchange, payable after sight, must be presented for acceptance §§ 497, 498] WANT OF PRESENTMENT FOR ACCEPTANCE. 640 this kind were considered a part of the circulation of the country, and that the nature of the bill itself as well as the time the ^defendants themselves had kept it unaccepted were to be considered upon the question of laches or unreasonable delay."^ § 497. Presentment, how made — ^By whom. — Presentment for ac- ceptance must be made by or on behalf of the holder. ^^ Where the holder of an indorsed bill of exchange, which is not accepted by the drawee, merely informs the drawee that he has the bill, but does not actually present it to him for acceptance, and the drawee thereupon tells him that the bill will not be accepted nor paid, the indorser is not thereby discharged, though no notice is given to him of the drawee's declarations.-^ If the holder of a bill of exchange transmits it to his agent for presentment to the drawee, such agent has no right to receive anything short of an explicit and unequivocal acceptance, without giving notice to the holder, as in case of non-acceptance ; and he will be liable for any loss the holder may sustain in consequence of his neglect so to do.^* § 498. Same subject — ^Time and place. — Presentment for accept- ance must be made on a business day and before the bill is over- due." A bill of exchange payable in a fixed period from the date. and even though there is no limited time defined by statute for present- ment and no usage of trade to fix the time, still such bill must be pre- sented within a reasonable time. This rule has been adopted for want of a better law not defining the time precisely. How, otherwise than by presentment, can the time a bill has to run be fixed, where it is payable after sight. "The court assumed that the correct principle was laid down fully in the cases of Mellish V. Rawdon, 9 Bing. 416, which is in accordance with the prior case of Muilman v. D'Eguino, 2 H. Bla. 565, and Fry v. Hill, 7 Taunt. 397, that in determining the question of 'rea- sonable time' for presentment, not the interests of the drawer only, but those of the holder must be taken into account; that the reasonable time expended in putting the bill into circulation, which is for the interest of the holder, is to be al- lowed; and that the bill need not be sent for acceptance at the very earliest opportunity, though it must be sent without improper delay." Mulick V. Radakissen, 9 Moore P. C. 46, 66, 67, per Baron Parke. -' Shute V. Robins, 3 Carr & P. 80. "Negot. Inst. Law, § 242; Bills of Exch. Act, § 41, Appendix herein. =^Fall River Union Bank v. Wil- lard, 5 Mete. (Mass.) 216. "^ Walker v. Bank of State of New York, 9 N. Y. 582. == Negot. Inst. Law, § 242; Bills of Exch. Act. § 41, Appendix herein. On what days presentment may be made, see Negot. Inst. Law, § 243, Appendix herein. Presentment where time insuffi- I 641 PRESENTMENT, HOW MADE — TO WHOM. [§ 499 may be presented for acceptance' at any time before it becomes due.-* And where bills payable at a particular time were enclosed by letter to the drawee, before they were due, and he advised his correspondent that they were not accepted, it was held a sufficient presentment and refusal to accept.-' But it is held that unless it is shown that the drawer of an order or inland bill sustained injury by the delay, it is sufficient to show presentment or demand at any time.^^ If a draft is payable at no particular place in a city or town it must be pre- sented at the maker's residence or place of business, if he has such, and if he has not, then the presence of the instrument in the place is a sufficient presentation.-'' Where a draft was drawn on a party having a place of business in a town, but was not made payable at any particular place, and the holder protested it and notified the drawer without having presented it to the acceptor, who had funds in his hands of the drawer sufficient to have paid the draft, it was held that the drawer was discharged from liability by the failure of the holder to present the draft to the acceptor.^"^ §499. Same subject — To whom. — Presentment for acceptance must be made to the drawee or some person authorized to accept or refuse acceptance on his behalf.^ ^ The presentment of a bill for ac- ceptance should be to the drawee himself, if he can be found. If to an agent or other person authorized to accept, the fact should appear.^^ "The presentment of a bill of exchange or draft must be made to the drawee or acceptor, or to an authorized agent. A per- sonal demand is not always necessary, and it is sufficient to make the demand at the residence or usual place of business of the drawee, where the presentment is for payment. This draft had not been ac- cepted, and therefore the presentment first to be made by the bank was cient, see Negot. Inst. Law, § 244, =•" People's Nat. Bank v. Lutterloh, Appendix herein. 95 N. C. 495. As to reasonable time, see §§ 496, '^ Negot. Inst. Law, § 242; Bills of 505-508 herein. Exch. Act, § 41, Appendix herein. ^''Bachellor v. Priest, 12 Pick. (29 Presentment to two or more Mass.) 399. drawees who are not partners, see "Carmichael v. Bank of Pennsyl- Negot. Inst. Law, § 242; Bills of vania, 4 How. (Miss.) 567. Exch. Act, § 41, Appendix herein. ^Tryon v. Oxley, 3 G. Greene Presentment where drawee dead, (Iowa) 289. or bankrupt or insolvent, see Negot. ^^ People's Nat. Bank v. Lutterloh, Inst. Law, § 242; Bills of Exch. 95 N. C. 495. Act, § 41, Appendix herein. ^ Sharps v. Drew, 9 Ind. 281. Joyce Defenses — 41. §§ 500, 501] WANT or presentment — for acceptance. 642 a presentment for acceptance. It was the duty of the bank collector to be careful, not only to present the draft at the usual place of busi- ness, but, if the plaintiff was not in, to assure himself that the person to whom he presented the draft for acceptance was the authorized agent of the plaintiff."^^ § 500. Acceptance of order on committee. — An order drawn upon a committee composed of several persons may be accepted by such persons individually.^* §501. Where presentment is excused. — Presentment for accept- ance is excused and a bill may be treated as dishonored by non-accept- ance in either of the following cases : ( 1 ) Where the drawee is dead or has absconded, or is a fictitious person or a person not having capacity to contract by bill; (3) where, after the exercise of reason- able diligence, presentment cannot be made; (3) where, although pre- sentment has been irregular, acceptance has been refused on some other ground.^^ A delay in the mail constitutes a sufficient excuse for not presenting for acceptance immediately.^'' If, however, there is a delay of fourteen days in mailing a sight draft for presentment for acceptance and payment, and it miscarries, such delay, without suffi- cient excuse, constitutes laches, as ordinary diligence must be exer- cised in such cases,^^ '^Burrus v. Life Insurance Co. of it will be a good acceptance as to Virginia, 124 N. C. 9, 32 S. E. 323. them. Byles on Bills (Tth Am. Ed.) "^ Smith v. Milton, 133 Mass. 369, 188; Bayley on Bills (6th Ed.) 58, C. Allen, J., said: "But it does not 181; Owen v. Van Uster, 10 C. B. appear that the committee differs 318; Tombeckbee Bank v. Dumell, 5 from any association of individuals; Mason (U. S. C. C.) 56." and an order drawn upon it is ^ Negot. Inst. Law, § 245 ; Bills of drawn upon a number of Individ- Exch. Act, § 41, Appendix herein, uals associated together, but not in- See §§ 521, 522 herein, corporated or ' co-partners. In such =° Walsh v. Blatchley, 6 Wis. 422. case, although a bill may be treated =^ Walsh v. Dart, 23 Wis. 334. 99 as dishonored if not accepted by all Am. Dec. 177. the drawees, if accepted by a part 1 CHAPTER XXIII. WANT OF PRESENTMENT CONTINUED — PRESENTMENT FOR PAYMENT. Sec. 502. Want of demand on principal debtor — When presentment necessary to charge drawer and indorsers. 503. Same subject continued — Agent — Acceptor — Instances. 504. Sureties and guarantors — Par- ties primarily liable — De- mand. 505. Time of presentment where note is not and is payable on demand — Reasonable time. 506. Same subject, continued. 507. Same subject — Notes payable with or without interest. 508. Demand note and demand note bearing interest, distinctions abrogated by statute — Pre- sentment — Reasonable time — Question of law or fact — Pleading — Burden of proof. 509. Time of maturity — Sunday or holiday — Saturday. 510. Same subject, continued. 511. Sufficiency of presentment — By whom made — Time when made. Sec. 512. 513. 514. 515. 516. 517. 518. Sufficiency of demand — Bring- ing suit. Sufficiency of presentment — Ex- hibition and delivery up of instrument. Place of presentment. Place of presentment, contin- ued. Presentment — Instrument pay- able at bank. Same subject, continued. Same subject, continued — In- solvency or suspension of bank. 519. Presentment to whom — Person primarily liable dead. 520. Presentment to whom — Per- sons primarily liable — Part- ners — Joint debtors. 521. Excuses for delay in present- ment. 522. Excuses — When presentment dispensed with — Drawer — In- dorser. 523. Same subject, continued. 524. Waiver of presentment and de- mand. 525. Same subject, continued. § 502. Want of demand on principal debtor — When presentment necessary to charge drawer and indorsers. — Tlic negotiable instru- ments statute of Washington/ which is the same as that of New York/ specifically declares that presentment for payment is not neces- sary in order to charge persons primarily liable. This is, however, a 'Sess. Laws, Wash. 1899, p. 353, = Negot. Inst. Law, § 130, see Ap- 70. pendix herein. 643 502] WANT OF PRESENTMENT — FOR PAYMENT. 644 mere declaration of the law.^ ISTo demand on co-makers is neces- sary ;* nor upon one who becomes a maker or original promisor by signing his name upon the back of a note before its delivery to the payee f nor upon a third person who signs his name on the face of tlie note." The statute provides, however, that "If the instrument is, by its terms, payable at a special place, and he is able and willing to pay it there at maturity and has funds there available for that pur- pose, such ability and willingness are equivalent to a tender upon his part."^ It is further as specifically declared by the statute that pre- ^ Galbraith v. Shepard (Wash. 1906), 86 Pac. 1114. See also as to maker and acceptor the following cases: Alabama. — Hunt v. Johnson, 96 Ala. 130, 11 So. 387. California. — Jones v. NichoU, 82 Cal. 32, 22 Pac. 878. Connecticut. — Jackson v. Packer, 13 Conn. 342. Illinois. — Oxnaan v. Garwood, 80 111. App. 658; YeatQn v. Burney, 62 111. 61. Indiana. — McCullough v. Cook, 34 Ind. 290. Kentucky. — Rice v. Hogan, 8 Dana (Ky.) 134. New York. — Bush v. Gilmore, 61 N. Y. Supp. 682, 45 App. Div. 89; Wolcott v. Van Santvoord, 17 Johns. (N. Y.) 248. South Carolina. — See McNair v. Moore, 55 S. C. 435, 33 S. E. 491. England. — Rhodes v. Gent, 5 Barn. & Aid. 244. *Legg V. Vinal, 165 Mass. 555, 43 N. E. 518. ^ Cherry v. Sprague, 187 Mass. 113, 72 N. E. 456, 67 L. R. A. 33. "Herrick v. Edwards, 106 Mo. App. 633, 81 S. W. 466. ■^ Negot. Inst. Law, § 130, see Ap- pendix herein. Examine further as to maker and acceptor the following cases: United States. — Wallace v. McCon- nell, 13 Pet. (U. S.) 136. Alabama. — Clark v, Moses, 50 Ala. 326; Montgomery v. Elliott, 6 Ala. 701. Arkansas. — Pryor v. Wright, 14 Ark. 189. Florida. — Greeley v. Whitehead, 35 Fla. 523, 28 L. R. A. 286, 17 So. 643. 48 Am. St. Rep. 258. Indiana. — Hartwell v. Chandler, 5 Blackf. (Ind.) 215. Louisiana. — Thiel v. Conrad, 21 La. Ann. 214. Maine. — Lyon v. Williamson, 27 Me. 149. See Heslan v. Bergerson, 94 Me. 395, 47 Atl. 896. Michigan. — Reeve v. Pack, 6 Mich. 240. New Hampshire. — Otis v. Barton, 10 N. H. 433. New York. — Hills v. Place, 48 N. Y. 520. England. — Dickinson v. Bowes, 16 East. 110; Spindler v. Grellett, 1 Exch. 384. "When a note or bill is payable at a particular bank, * * * it is well known that according to the usual course of business the note or bill is usually lodged in the bank for collection; and if the maker calls to take it up when it falls due, and it is delivered to him, and he pays the amount the business is closed; but if he does not find the note or bill at the bank, he can de- posit the money to meet the same when it shall be presented, and the 645 WAXT OF DEMAND OX TRIXCirAL DEBTOR. [§ 50^ sentment for payment is necessary in order to charge the drawer and indorsers.® This is, however, a well-settled rule.'^ proof of such tender and deposit, in case of a subsequent suit will ex- onerate him from all costs and dam- ages. Or should the note or bill be made payable at some other place than a bank, and no deposit should be made, or he should choose to re- tain the money in his own posses- sion, an offer to pay at the time and place would protect him against in- terest and costs on bringing the money into court. Rules of a differ- ent character have sometimes pre- vailed in other jurisdictions, but the principles to be applied in such a case are settled by this court, nor is it necessary, where the note or bill is payable at a specified time and place, to aver in the declaration or prove at the trial that a demand was made at that place in order to maintain the action, the established rule being that if the maker or ac- ceptor was at the place at the time designated and was ready and of- fered to pay the money it is a mat- ter of defense to be pleaded and proved." Cox v. National Bank, 100 U. S. 704, 714, per Clifford, J., citing Wallace v. McConnell, 13 Pet. (U. S.) 136, 150; 1 Daniel Negot. Se- curities (2d Ed.), § 643; Edwards Bills (2d Ed.) 150; Rowe v. Young, 2 Bli. 391, 395. ^Galbraith v. Shepard (Wash. 1906), 86 Pac. 1114; Sess. Laws Wash. 1899, p. 353, § 70; Negot. Inst. Law, § 130, see Appendix herein. English Bills of Exch. Act, § 45, see Appendix herein. * United States. — Magruder v. Union Bank, 3 Pet. (U. S.) 87, 7 L. Ed. 612. Arkansas. — Winston v. Richard- son, 27 Ark. 34; Jones v. Robinson, 11 Ark. 504; Ruddell v. Walker, 7 Ark. 457. Illinois. — Kimmel v. Wiel, 95 111. App. 15 (Laws 1895, p. 262, adopts the law merchant as to negotiable instruments and notes payable in money). Kansas. — Selover v. Snively, 24 Kan. 672. Louisiana. — Otto v. Belden, 28 La. Ann. 302. Maryland. — Brandt v. Mickle, 28 Md. 436. Massachusetts. — Browning v. Car- son, 163 Mass. 255, 39 N. E. 1037. Missouri. — Westbay v. Stone, 112 Mo. App. 411, 87 S. W. 34. New Hampshire. — Piscataqua Ex- change Bank v. Carter, 20 N. H. 246, 51 Am. Dec. 217. New York. — Parker v. Stroud, 98 N. Y. 379; Pardee v. Fish, 60 N. Y. 265; Merritt v. Todd, 23 N. Y. 28; Cayuga County Bank v. Warden, 1 N. Y. 413; Kelly v. Thiess, 72 N. Y. Supp. 467, 65 App. Div. 146; Filler v. Gallautcheck, 66 N. Y. Supp. 509; Smith v. Unangst, 46 N. Y. Supp. 340, 29 Misc. 564, aff'g 43 N. Y. Supp. 1164, 19 Misc. 711; Berry v. Robinson, 9 Johns. (N. Y.) 121, 6 Am. Rep. 267; Meise v. Newman, 76 Hun (N. Y.) 341; Wal- cott V. Van Santvoord, 17 Johns. (N. Y.) 248; Johnson v. Haight, 13 Johns. (N. Y.) 470; Ferner v. Wil- liams, 37 Barb. (N. Y.) 10. Ohio. — House v. Vinton Nat. Bk., 43 Ohio St. 343, 54 Am. Rep. 813, 1 N. E. 129; Hudson v. Walcott, 4 Ohio Dec. 459, 2 Cleve. L. Rep. 194. Pennsylvania. — Duncan v. McCul- lough, 4 Serg. & R. (Pa.) 180. Vermont. — Landon v. Bryant, 69 Vt. 303, 37 Atl. 297. § 503] WANT OF PRESEXTMEXT — FOR PAYMENT. 646 § 503. Same subject continued — Agent — Acceptor — Instances. — Due demand is not dispensed with by the fact that the indorser is made administrator of the maker's estate.^** And demand is not ex- cused, although, the note was paid before its purchase by the indorsee. ^^ So where a party, who procures the note to be discounted and volun- tarily takes it up at maturity, fails to make proper demand, the in- dorser is released.^^ Demand is also necessary to fix the liability of an indorser who indorses an insolvent's note at maturity,^^ as demand is necessary to charge an indorser of an overdue note.^* But if pre- sentment is made in a reasonable time and notice of dishonor given, an indorser of an overdue note transferred for indorsement will be liable.^^ Again, a demand must be made within a reasonable time after indorsement, in order to fix liability under an agreement to indorse a note after maturit}-.^*' And in case of an order upon a drainage district the indorser is not liable thereon in the absence of requisite diligence shown to collect such order, there being treasury assets sufiicient to meet the demand. ^^ So it is a prerequisite for re- course to the drawer of an order on another for a sum due that it should be duly presented for payment.^* It is also held that all drafts, whether foreign or inland bills, must be presented to the drawee "Magruder v. Union Bank, 3 Pet. Tennessee. — Rosson v. Carroll, 90 (U. S.) 87, 7 L. Ed. 612. Tenn. 90, 16 S. W. 66. "Moore v. Stelgel, 50 Mo. App. See Hampton v. Miller, 78 Conn. 308. 267, 61 Atl. 952, noted in § 506 ^ Martin v. Perqua, 20 N. Y. Supp. herein. 285, 47 N. Y. St. R. 518, 66 Hun 225. " Bassenhorst v. Wilby, 45 Ohio ^Hudson V. Walcott, 4 Ohio Dec. 333, 13 N. E. 75, 11 West. Rep. 270. 459, 2 Cleve. L. Rep. 194. " Sachs v. Fuller Bros. Toll. Lum- "Landon v. Bryant, 69 Vt. 203, 37 her & Box Co., 69 Ark. 270, 62 S. W. Atl. 397. See, also: 902. California. — Beer v. Clifton, 98 '^ First National Bank v. Drew, 93 Cal. 323, 33 Pac. 204, 35 Am. St. Rep. 111. App. 630, aff'd 60 N. E. 856. Ex- 172, 20 L. R. A. 580. amine Dennis v. Water Co., 10 Cal. Connecticut. — Bishop v. Dexter, 2 369; Pease v. Cornish, 19 Me. 191. Conn. 419. ^ Knott v. Whitfield, 99 N. C. 76, Znriiana.— Novel v. Hittle, 23 Ind. 5 S. E. 664. See Agee v. Smith, 7 346. Wash. 471, 35 Pac. 370. Compare Iowa. — Graul v. Strutzel, 53 Iowa Sinclair v. Johnson, 85 Ind. 527; 712, 6 N. W. 119, 36 Am. Rep. 250. Sweet v. Swift, 65 Mich. 90, 31 N. Maryland. — Dixon v. Clayville, 44 W. 767; Brown v. Teague, 52 N, C. Md. 573. 573. See § 522 herein. Xew York. — Berry v. Robinson, 9 Johns. (N. Y.) 121. 647 WAXT OF DEMAXD OX PRIXCIPAL DEBTOR. [§ 503 within a reasonable time and in case of non-payment notice must be promptly given to the drawer to charge him. What is a rea- sonable time depends upon the peculiaT facts of each case.^° And a draft on a third person given to settle an antecedent debt must be pre- sented by the holder to preserve the debt.-" And although one who in- dorses as collateral security is held entitled to demand,^ ^ still it is also decided that a damage, injury, prejudice or loss must be sus- tained by the pledgor to render one liable who holds the note as such collateral in case of non-presentment, and even then the liability is limited to the extent of the loss.-- It is further determined that hold- ers of a note of a third person as collateral are not liable for delay which does not amount to gross negligence and that they need to exercise only reasonable diligence in collection.-^ And where a note is given for the purpose of securing an antecedent debt of the maker and to enable it to be discounted by the payee, indorsers before delivery are held liable as joint makers without any demand being made.-* In case of non-negotiable notes demand is not necessary to charge the in- dorser.^^ Although if the immediate indorsee writes over a blank indorsement of a non-negotiable note words which evidence an intent to consider the signature as an indorsement on negotiable paper the in- dorser will be entitled to demand.-® Presentment and demand is not required in order to charge the acceptor of a draft. ^^ And where one indorses as agent and the principal is not disclosed, demand on the principal will not be sufficient to charge the indorser, but demand must be made upon the agent.-* ^*Montelius v. Charles, 76 111. 303, =*Bank of Jamaica v. Jefferson, 92 306. Presentment of draft to the Tenn. 537, 22 S. W. 211, 36 Am. St. drawee must be made in a reason- Rep. 100. See Williams v. Baltimore able time. Fugitt v. Nixon, 44 Mo. National Bank, 70 Md. 343, 17 Atl. 295. See § 496 herein. 382. * Mauney v. Coit, 80 N. C. 300, 30 =^ San Diego First National Bank Am. Rep. 80. See Dayton v. Trull, v. Babcock, 94 Cal. 96, 29 Pac. 415; 23 Wend. (N. Y.) 345. Smith v. Cromer, 66 Miss. 157, 5 "Nicholson v. Gouthit, 24 Bl. 609. So. 619. See Blanchard v. Boom, 40 Mich. =" Haber v. Brown, 101 Cal. 445, 566; Dayton v. Trull, 23 Wend. (N. 35 Pac. 1035. Y.) 345. =" Hunt v. Johnson, 96 Ala. 130, 11 '"Kennedy v. Rosier, 71 Iowa 671, So. 387. 33 N. W. 226. ^ Stinson v. Lee, 68 Miss. 113, 9 '' Johnson, Berger & Co. v. Down- L. R. A. 830, 8 So. 272, 4 Bkg. L. J. ing (Ark.), 88 S. W. 825. 15. §§ 504, 505J WANT OF PRESENTMENT FOR TAYMENT. 648 § 504. Sureties and guarantors — Parties primarily liable — De- mand. — It is held that where a note is indorsed, before its delivery to the payee, by one as surety he is an original promisor,^'* and that he is primarily liable.^" And he has not the rights of an indorser as to presentment and demand upon the principal where, although ap- parently one of the co-makers, he is in fact a surety and the payee knows him to be a surety.^^ So sureties are nevertheless liable, even though the note is not presented to the principal maker, there being no extension of time without their consent.^ ^ And where there is an absolute guaranty and contract to pay if the maker does not, the guarantors should pay without demand being made.^^ § 505. Time of presentment where note is not and is payable on demand — ^Reasonable time. — The negotiable instruments law pro- vides that where the instrument is not payable on demand, present- ment must be made on the day it falls due.^* But it is held that this ^Treadway v. Antisdel, 86 Mich. 82, 48 N. W. 956. '"Rouse v. Wooten, 140 N. C. 557, 53 S. E. 430; Negot. Inst. Law (Chap. 54 Revisal), §§ 2213, 2219, 2239, 3342 considered. See Beissner v. Weekes, 21 Tex. Civ. App. 14, 50 S. W. 138. " Chafoin v. Rich, 77 Cal. 476, 19 Pac. 882. See, also, Sibley v. Amer- ican Exch. National Bank, 97 Ga. 126, 25 S. E. 470; Marion National Bank v. Phillips, 16 Ky. L. Rep. 159, 35 S. W. 910. Examine First Na- tional Bank v. Eureka Lumber Co., 123 N. C. 24, 31 S. E. 348, 13 Am. & Eng. Corp. Cas. N. S. 727, 15 Bkg. L. J. 708. '= Wallace v. Richards, 16 Utah 52, 50 Pac. 804. See Eppens v. Forbes, 82 Ga. 748, 9 S. E. 723; Newman v. Kaufman, 28 La. Ann. 865, 26 Am. Rep. 114; First National Bank v. Adamson, 25 R. I. 73, 54 Atl. 930. '^ City Savings Bank v. Hopson, 53 Conn. 453, 5 Atl. 601. See further as to sureties and guarantors: Alabama. — Donley v. Camp, 22 Ala. 695, 58 Am. Dec. 274. Connecticut. — Tyler v. Wadding- ham, 58 Conn. 375, 20 Atl. 335, 8 L. R. A. 657; Bond v. Storrs, 13 Conn. 412. Georgia. — Hunnicutt v. Perot, 100 Ga. 312, 27 S. E. 787. Illinois. — Guge v. Mechanics' Na- tional Bank, 79 111. 62. Kansas. — Farrer v. People's Trust Co., 63 Kan. 881, 64 Pac. 1031. Louisiana. — Newman v. Kaufman, 28 La. Ann. 865, 26 Am. Rep. 114. Maine. — Cooper v. Page, 24 Me. 73. Minnesota. — Hungerford v. O'- Brien, 37 Minn. 306, 34 N. W. 161. New York. — Allen v. Rightmere, 20 Johns. (N. Y.) 365, 11 Am. Dec. 288. Ohio. — Castle v. Rickly, 44 Ohio St. 490, 9 N. E. 136, 58 Am. Rep. 839. West Virginia. — Miller v. Clen- denin, 42 W. Va. 416, 26 S. E. 512. =* Negot. Inst. Law, § 131; Bills ol Exch. Act, § 45, Appendix herein. See Pendleton v. Insurance Co., y ()49 WANT OF DEMAND OX PRINCIPAL DEBTOR. [-§ 506 section does not apply so as to prevent recovery on subsequent notes of a series although there is a failure to present the same after dis- honor of tlie first, and even though it is stipulated that upon failure to pay any of the notes the subsequent ones shall become due and payable immediately. =*^ And a bank certificate of deposit is due im- mediately, as it is in effect a promissory note. And actual demand need not be made in order to enable the statute of limitations to commence running.^'' But a note not on demand, which is payable at a place certain, is not within a statute precluding recovery on a demand note, payable at a certain place, unless a demand at that place, prior to suit brought, is proven to have been made." Where a note is payable on demand presentment must be made within a reason- able time after its issue, except that in case of a bill of exchange, presentment for payment will be sufficient if made within a reason- able time after the last negotiation thereof.^^ The time for present- ment of a demand note is the same under the Massachusetts statute, which also provides that in determining what is a reasonable time regard is to be had to the nature of the instrument, the usage of trade with respect to such instruments and the facts of the particular case, and within this enactment it is held that a demand made seventy-four days after the date of the note is not sufficient.^'' § 506. Same subject continued. — Within the above rule there must be a presentment within a reasonable time after date of a note pay- Fed. 238, 7 Fed. 169; Groatman v. Islexo Yorfc.— S c h 1 e si n ge r v. Delheim, 6 Me. 476; Garland v. Schultz, 96 N. Y. Supp. 383, 110 App. West, 68 Tenn. 315; Wilson v. Sen- Div. 356. ior, 14 Wis. 380. Pennsylvania. — Harrisburg Nat. ^ Creteau v. Foote & T. Glass Co., Bank v. Moffitt, 3 Dauphin Co. Rep. 57 N. Y. Supp. 1103, 40 App. Div. 69, 10 Pa. Dist. R. 22. 215. Virginia. — Bacon v. Bacon, 94 Va. ='° Mitchell V. Easton, 37 Minn. 335, 686, 27 S. E. 576, 14 Bkg. L. J. 495. 33 N. W. 910. Canada. — Banque du Peuple v. " Heslan v. Bergeron, 94 Me. 395, Denincourt, Rap. Jud. Quebec, 10 47 Atl. 896; Rev. Stat. Ch. 32, § 10. C. S. 428. =*Negot. Inst. Law, § 131; Bills of Examine Weland v. Hibbard, 65 Exch. Act, § 45, Appendix herein. N. Y. Supp. 790, 32 Misc. 749. See, also: ™ Merritt v. Jackson, 181 Mass. 69, Connecticut. — Hampton v. Miller, 62 N. E. 987, Stat. 1898, Ch. 533, §§ 78 Conn. 267, 61 Atl. 952. 71, 193. Same provision, see Negot. Michigan. — Home Savings Bank v. Inst. Law, § 4; Bills of Exch. Act, Hosie, 119 Mich. 116, 5 Det. L. N. § 45 (2), Appendix herein. 730, 77 N. W. 625, 16 Bkg. L. J. 104. § 507] WANT OF PRESENTMENT FOR PAYMENT. G50 able on demand after date ; and in' such case the controlling circum- stances upon the question of what constitutes a reasonable time are held to be limited to that of the holder's ability, irrespective of credit or indulgence to the maker.**^ And, notwithstanding a statute making a demand note overdue and dishonored where it remains unpaid four months, yet if the indorser understood from the circumstances that such a note was not intended to be paid until after that period had expired he is not within the terms of the statute so far as demand is concerned, but is entitled thereto within a reasonable time in accord- ance with the common-law rule.*^ If a note is indorsed after maturity it is also held to be within the rule as to demand notes and to re- quire presentment within a reasonable time after due in order to charge the indorser.*^* And the insolvency of the maker of a demand note constitutes no excuse for non-presentment within such reason- able time, although the question whether an injury or loss was sus- tained by want of demand is held to be a proper one for consideration in such a case.*^ Demand for payment delayed for two and one-half years where the parties reside within the same city is such an un- reasonable delay as to discharge the indorsers of a demand note.*^ So a delay of nearly three years is unreasonable where the maker is the holder's employe.** And a delay of thirty-three months operates to discharge the indorser.*^ And ten months' delay is unreasonable.*® § 507. Same subject-^Notes payable with or without interest. — Under a California decision the fact that the payee fails to make pre- **> State, Emerald & P. Brewing Co. Louisiana. — Thielman v. Gueble, V. Foley, 61 N. J. L. 428, 39 Atl. 650, 32 La. Ann. 260, 36 Am. Rep. 267. 15 Bkg. L. J. 216. Massachusetts. — Field v. Nicker- Examine Hitchings v. Edmands, son, 13 Mass. 131. 132 Mass. 338; Crim v. Stark- New Jersey. — Perry v. Green, 19 weather, 88 N. Y. 340, 42 Am. Rep. N. J. L. 61, 38 Am. Dec. 536. 250; Merritt v. Todd, 23 N. Y. 28, New Yorfc.— Merritt v. Todd, 23 80 Am. Dec. 243. N. Y. 28, 80 Am. Dec. 243. *^ Hampton v. Miller, 78 Conn. 267, Wisconsin. — Turner v. Iron Chief 61 Atl. 952. Min. Co., 74 Wis. 355, 5 L. R. A. 533, «* Kimmel v. Wiel, 95 111. App. 15. 43 N. W. 149. ^ O'Neill V. Meighan, 66 N. Y. ■" Banque du Peuple v. Denincourt Supp. 313, 32 Misc. 516. Rap. Jud. Quebec, 10 C. S. 428. *' Home Savings Bank v. Hosie, ^ Harrisburg National Bk. v. Mof- 119 Mich. 116, 5 Det. L. N. 730, 77 fit, 3 Dauphin Co. Rep. 69, 10 Pa. N. W. 625, 16 Bkg. L. J. 104. Dist. R. 22. Examine Iowa. — Leonard v. 01- ^"Turner v. Iron Chief Min. Co., son, 99 Iowa 162, 35 L. R. A. 381. 74 Wis. 355, 43 N. W. 149, 5 L. R. A. 533. 651 WANT OF DEMAND OX PRINCIPAL DEBTOR. [§ 507 sentment for payment after apparent maturity of a note payable at sight or on demand with interest does not release the indorser from liability.''^ In Iowa demand must be made within a reasonable time to render the indorser liable, whether a demand note does or does not bear interest, and a demand not made until after the lapse of nearly ten years is not a reasonable time, and if the makers have removed from the state, notice of that fact and of non-payment must be given the indorser within a reasonable time.*^ Under a Louisiana decision the fact that the note bears interest does not affect the indorser's right to notice within a reasonable time.*^ And presentation in ten days of a note payable to order on demand is held a sufficient presentment. **** Again, although a note payable on demand bears annual interest, de- mand should not be unreasonably delayed.^" So where a demand note contains no stipulation for interest and it is given partly for money due and partly for advances to be made, the indorser cannot be held where demand is not made for fourteen months after the last advance- ment.^^ If annual interest is provided for and the note is payable one day after date but the prinicipal is to be paid only on thirty days' no- tice, no action can be maintained on the principal until demand after thirty days.^^ And a certificate of deposit is not payable on demand but six months after date where it is to ''be left six months, no interest after maturity." In such a case demand must be made at the expiration of six months and on the last day of grace.^^ If a note is intended as a continuing security, as where it is given for an indebtedness with less than statutory interest, it is neither necessary nor unreasonable to fail to immediately demand payment.^* ^'Machado v. Fernandez, 74 Cal. Fish, 60 N. Y. 265, 19 Am. Rep, 176; 362, 16 Pac. 19. Herrick v. Woolverton, 41 N. Y. 581, ^Leonard v. Olson, 99 Iowa 162, 1 Am. Rep. 461; Salmon v. Gros- 35 L. R. A. 381, 61 Am. St. Rep. 230, venor, 66 Barb. (N. Y.) 160; Wethey 68 N. W. 677. V. Andrews, 3 Hill (N. Y.) 582; Sice ■"Thielman v. Gueble, 32 La. Ann. v. Cunningham, 1 Cow. (N. Y.) 397; 260, 36 Am. Rep. 267. Alexander v. Parsons, 3 Lans. (N. «* Schlesinger v. Schultz, 96 N. Y. Y.) 333, disfg Merritt v. Todd, 23 Supp. 383, 110 App. Div. 356. N. Y. 28, 80 Am. Dec. 243. '"Verder v. Verder, 63 Vt. 38, 21 ''^ Massie v. Byrd, 87 Ala. 672, 6 Atl. 611, 4 Bkg. & L. J. 362, under So. 145. Vt. R. L., § 2013. "■' Towle v. Starz, 67 Minn. 370, 69 "Wylie v. Cotter, 170 Mass. 356, N. W. 1098, 36 L. R. A. 463, 14 Bkg. 49 N. E. 746. Examine Parker v. L. J. 141. Case not within Gen. Stroud, 98 N. Y. 379, 50 Am. Rep. Stat. 1894, § 2231. 685; Crim v. Starkweather, 88 N. Y. '* Yates v. Goodwin, 96 Me. 90, 51 339, 42 Am. Rep. 250; Pardee v. Atl. 804. § 508] WANT OF PKESENTMEXT FOR PAYMENT. 652 § 508. Demand note and demand note bearing' interest, distinc- tions abrogated by statute — Presentment — Reasonable time — Question of law or fact — Pleading — Burden of proof. — The negotiable instru- ments law in effect abrogates the distinction between bills and notes, payable on demand and bearing interest, and those payable on de- mand merely, and that law established one rule applicable to all cases, that where an instrument is payable on demand presentment must be made in a reasonable time after issue and no distinction is made when the instrument is an interest-bearing obligation, but in deter- mining the question of reasonable time consideration is to be given to the nature of the instrument and any usage of trade as well also to the particular circumstances of each case. If a note is payable on demand it may be demanded at any time, as it is always mature. What constitutes reasonable time cannot, however, rest upon any fixed rules, since the circumstances may evince an intention as to its continuance. The question, therefore, whether a note or bill has been presented in a reasonable time, under the statute, and after its issue is, where the facts are ascertained and not in dispute, a question of law for the court, but the question, where the facts are in dispute, unsettled and the testimony conflicting, might be a mixed oiie of law and fact resting upon the decision of the jury under proper instruc- tions as to the law by the court. And where the facts were not in dispute and it appeared therefrom in an action upon a demand note bearing interest that the indorsement was made without considera- tion and for the maker's accommodation ; that its payment was secured by the deposit of certain securities; that notwithstanding that some two years after the note was made the plaintiff had made complaint to the indorser as to its non-payment, and twice a year later had written that the maker was in default as to the interest but no steps were taken to charge the indorser, by presentment of the note for payment and by protest for non-payment, until after the lapse of more than three years and a half and until the indorser had died intestate and after the appointment of an administratrix on his estate, the ques- tion of reasonable time as to presentment constitutes one of law for the court upon such ascertained facts, and a decision of the trial court, in such case, that the note was not presented in a reasonable time for payment, no notice of dishonor given in a reasonable time will be sustained. And the defense that a demand interest-bearing note was not presented in a reasonable time need not be specially pleaded to be available as against an indorser, as the question of presentment of a demand note within a reasonable time rests upon the statute, and G53 TIME OF MATUEITY- -SUNDAY OR HOLIDAY — SATURDAY'. [§ 509 the liability of an indorser to make good the maker's contract, un- like that of a guarantor, is conditional and depends upon the holder's having made a case under the statute of an obligation, which he has caused to mature and, by appropriate legal steps, to become an in- debtedness of the parties. The burden is on the holder of a note, when seeking to charge an indorser, to prove due and timely present- ment and the giving of notice of its dishonor to the indorser.^^ §509. Time of maturity — Sunday or holiday — Saturday. — Every negotiable instrument is payable at the time fixed therein without grace. When the day of maturity falls upon Sunday, or a holiday, the instrument is payable on the next succeeding business day. In- struments falling due or becoming payable on Saturday are to be presented for payment on the next succeeding business day, except that instruments payable on demand may, at the option of the holder, be presented for payment before twelve o'clock noon on Saturday when that entire day is not a holiday.^" If, having in view the days of grace, the presentation for payment, protest, and notice of dishonor of a note are premature no action lies thereon against an indorser.^^ And where a note was given while a statute was in force which al- lowed days of grace, a presentation is premature which does not make allowance therefor, even though prior to presentment days of grace are abolished.^® A note may be presented on the last day of ^"Commercial Nat. Bk. of Syra- for payment on the following Mon- cuse v. Zimmerman, 185 N. Y. 210. day." Demelman v. Brazier (Mass. ^"Negot. Inst. Law, § 145; Bills 1907), 79 N. E. 812, per Braley, J. of Exch. Act, § 14, Appendix herein. Grace abolished, by act of August "Demelman v. Brazier (Mass. 7, 1903, in Georgia. Patton v. Bank 1907), 79 N. E. 812. See Estes v. of Lafayette, 124 Ga. 965, 53 S. E. Tower, 102 Mass. 65, 3 Am. Rep. 664. A question in this case, how- 439. ever, of computation of interest and Days of grace. "By the law mer- usury, chant, which is part of our com- Days of grace constitutes part of mon law, each note was entitled to contract. Usage regulates. See days of grace. * * * Grace has Bank of Washington v. Triplett, 1 been abolished by St. 1896, c. 496, Pet. (U. S.> 25; Mills v. United now Rev. Laws, c. 73, § 103, and States Bank, 11 Wheat. (U.S.) 431; negotiable paper is deemed to be Renner v. Bank of Columbia, 9 payable at the time named therein. Wheat. (U. S.) 581. unless there is a stipulation for de- '^Wood v. Rosendale, 18 Ohio Cir. lay, and when falling due upon Ct. R. 247, 10 O. C. D. 66 abolished Saturday may be legally presented March 12, 1896. § 510] WAXT OF PRESENTMENT FOR PAYMENT. 654 grace.''^ Days of grace have, however, been abolished in many states while they are allowed in others. § 510. Same subject continued. — Under an Alabama decision, if a note falls due on Sunday the demand for payment and protest should be made on the succeeding business day.''*^ And this is so, where the next day is not a legal holiday, under the Michigan laws of 1893, under which certain holidays and Saturdays after twelve o'clock at noon until twelve at night are to be considered as Sundays, public holidays and half-holidays and making bills and checks and notes payable on such days presentable for acceptance or payment on the business day next succeeding and such rule obtains even though a bank may keep open on Saturday after twelve o'clock if it so votes by its directors.^^ In Nebraska it is held that where a bill or note, including days of grace, matures on Sunday it may be presented on the Monday following, and that if any of the public holidays occur on Monday, then bills or notes due on that day shall be payable the succeeding day.*^^ In Kew York, under the provisions of a statute making Saturday at noon a legal holiday,^^ the holder of a bill due or presentable on Saturday ma}', at his election, rest upon a demand and presentment made before noon on that day, and if he does, notice of demand and protest given on that day or on the next secular day is good ; or he may elect to make a demand on Monday, and if pay- ment is not then made, in order to hold the parties entitled to no- tice, he is required to give notice of dishonor on that day, and so, if there was a failure to present for payment on Saturday, as the draft was presented and demand made, and notice of protest mailed on Monday, plaintiffs were not chargeable with negligence or omission of duty, and were entitled to recover.®* So in Texas the following Monday, or if that is a legal holiday, the next business day is the day on which a note, without days of grace, falling due on Saturday be- comes payable.®^ In the absence, however, of statutory provisions to "'Guignon V. Union Trust Co., 156 McAllester, 33 Neb. 646, 50 N. W. 111. 135, 40 N. E. 556, aff'g 53 111. 1040, 6 Bkg. L. J. 217; Neb. Comp. App. 581. Stat, Ch. 41, § 8. ^-Brennan v. Vogt, 97 Ala. 647, "^ Laws 1887. chap. 289. 11 So. 893. "^ Sylvester v. Crohan, 138 N. Y. "'Hitchcock v. Hogan, 99 Mich. 494, 53 N. Y. St. R. 113, 34 N. E. 124, 57 N. W. 1095; Mich. Laws 1893, 273, aff'g 63 Hun 509, 45 N. Y. St. Act 185. R. 320, 18 N. Y. Supp. 546. '- Hastings First National Bank v. " Hirshfield v. Ft. Worth National I 655 SUFFICIENCY OF PRESENTMENT. [§ 511 the contrary presentment was required by the law merchant to be made on the preceding day of a bill or note which matured on Sunday or a holiday.*^*^ § 511. SuflBiciency of presentment — By whom made — Time when made. — Presentment for payment to be sufficient must be made by the holder or by some person authorized to receive payment on his behalf/'' or on behalf of his estate.®^ And one is a holder who is in possession of a note indorsed to himself or has a blank indorsement, and may make presentment.^® So a presentment by any person in pos- session of a bill hona fide is sufficient to charge .the parties to the bill. Thus where a bill of exchange indorsed in blank by the payees but made payable to a particular person by the last indorsement, was pre- Bank, 83 Tex. 452, 34 Cent. L. J. 350, 15 L. R. A. 639, 18 S. W. 743, 29 Am. St. Rep. 660, 6 Bkg. L. J. 345. See Carey-Lombard Lumber Co. v. Ballinger First National Bank, 86 Tex. 299, 24 S. W. 260, 10 Bkg. L. J. 122. ^ United States. — Bussard v. Lev- ering, 6 Wheat. (U. S.) 102. Kentucky.— Of£ut v. Stout, 4 J. J. Marsh. (Ky.) 332. Maine. — Homes v. Smith, 20 Me. 264. Massachusetts. — Farnum v. Fowle, 12 Mass. 89, 7 Am. Dec. 35. New Jersey. — Reed v. Wilson, 41 N. J. L. 29. New York. — Jackson v. Richards, 2 Caines (N. Y.) 343. •'^Negot. Inst. Law, § 132; Bills of Exch. Act, § 45 (3), Appendix here- in. See, also: United States. — United States v. Barker, 12 Wheat. (U. S.) 559. Illinois. — Ewen v. Wilbor, 99 111. App. 132. Iowa. — Mt. Pleasant Branch of State Bank v. McLeran, 26 Iowa 306. Massachusetts. — Hartford Bank v. Barry, 17 Mass. 94. Wisconsin. — Blakeslee v. Hewett, 76 Wis. 341, 44 N. W. 1105. England. — Coove v. Callaway, 1 Esp. 115. As to presentment by notary, see United States. — Nicholls v. Webb, 8 Wheat (U. S.) 326; Wiseman v. Chiapella, 23 How. (U. S.) 368. Alabama. — Donegan v. Wood, 49 Ala. 242. Louisiana. — Buckley v. Seymour, 30 La. Ann. 1341. Massachusetts. — Ocean National Bank v. Williams, 102 Mass. 141. Missouri. — Clough v. Holden, 115 Mo. 336, 37 Am. St. Rep. 393, 31 S. W. 1071, rev'g 20 S. W. 695. New York. — Crim v. Starkweather, 88 N. Y. 339. See sections herein as to protest. ■« White V. Stoddard, 11 Gray (Mass.) 258. See Yates v. Goodwin, 96 Me. 90, 51 Atl. 804. "^ Ewen V. Wilbor, 99 111. App. 132. Examine Agnew v. Bank, 2 Har. & G. (Md.) 478; Bachellor v. Priest, 12 Pick. (Mass.) 399; Shed v. Brett, 1 Pick. (Mass.) 413, 11 Am. Dec. 209; Sussex Bank v. Baldwin, 17 N. J. L. 487; Porter v. Thom, 57 N. Y. Supp. 479, 40 App. Div. 34; Bank of Utica V. Smith, 18 Johns. (N. Y.) 230. § 512] WANT OF PRESENTMENT FOR PAYMENT. 656 sented to the drawee for payment, by the last indorser, who was in possession of the bill hona fide, the presentment was held sufficient to charge the preceding indorsers.'*^ But if a person is wrongfully in possession and is not the lawfully authorized holder of the instru- ment, presentment by him will be ineffectual to charge the indorser.'^^ And sub-contractors, to whom checks have been indorsed, should present the same, and where they fail to do so within a reasonable time, there being funds in the bank to meet the obligation, and the maker becomes insolvent during such delay the indorsers are dis- charged.'^- Presentment should also be made at a reasonable hour on a business day.'^^ When a bill or note is not payable at a place where there are established business hours, a presentment for payment may be made at any reasonable hour of the day. A presentment of a bill or note in such case, however, for payment, a few minutes before twelve at night, is insufficient and unavailing, unless it should appear from an answer made to the demand that there was a waiver of any objection as to the time, or that payment would not have been made upon a demand at a reasonable hour.'^'* If a draft is to be considered as an inland bill of exchange, the drawer is discharged by the laches of the holder; but if it is treated as a mere banker's check, then a presentation for payment, at any time before suit brought, will be sufficient unless the drawer can show injury from the delay.'^^ § 512. Sufficiency of demand — ^Bringing' suit. — The bringing of a suit constitutes a sufficient demand in order to hold the maker or his estate f^ nor need a presentment be made at a bank, of a note payable ^"Bachellor v. Priest, 12 Pick. (29 Massachusetts. — Estes v. Tower, Mass.) 399. 102 Mass. 65. ^^Hofrichter v. Enyeart (Neb.), Missouri. — Clough v. Holden, 115 99 N. W. 658. Mo. 336, 37 Am. St. Rep. 393, 21 S. ^2 Brown v. Schintz, 202 111. 509, W. 1071, noted in § 514 herein. 67 N. E. 172, aff' g 98 111. App. 452, New York.— Salt Springs Bank v. 459. Burton, 58 N. Y. 430. "Negot. Inst. Law, § 132; Bills of Tennessee. — Union Bank v. Fowl- Exch. Act, § 45 (3), Appendix here- kes, 2 Sneed (Tenn.) 555. in. ^*Dana v. Sawyer, 22 Me. 244, 39 Examine the following cases: Am. Dec. 574. Kentucky. — Stivers v. Prentice, 3 "Elting & Shook v. BrinckerhofiE, B. Mon. (Ky.) 461. 2 Hall (N. Y.) 459. Louisiana. — Bank of Louisiana v. " Stevenson v. Scofield, 70 111. Satterfield, 14 La. Ann. 80. App. 299; Lamson Consol. Store Maine. — Dana v. Sawyer, 22 Me. Service Co. v. Conyngham, 32 N. Y. 244. Supp. 129, 65 N. Y. St. R. 271, 11 II 657 SUFFICIENCY OF PRESENTMENT. [§ 513 there, before instituting an action thereon ;" nor is demand necessary in order to maintain an action on a note payable on call;''® or upon a due-bill;''^ or upon a promissory note extended for an indefinite time f^ or upon a demand jiote.**^ Again, demand at a specified place of payment in a demand note is not a prerequisite to a suit by the payee against the maker.®- But in case of a certificate of deposit it is held that demand is necessary before action lies, where such paper matures on a certain date.®^ § 513. Sufficiency of presentment — Exhibition and delivery up of instrument. — The instrument must be exhibited to the person from whom payment is demanded, and when it is paid must be delivered up to the party paying it.®* By the law merchant it was necessary to exhibit a foreign bill when demand was made thereon.®^ Although it is held not necessary that the drawee or his agent should be seen personally.®^ But even though there should be an actual exhibition of a bill or note or some clear indication that it is present, in making presentment and demand, still such exhibition may be waived, as where the production of the instrument is not asked for or its non-exhibi- tion is not objected to at the time or payment is declined on other grounds.®^ Thus where a note was payable at no specific place and the Misc. 428. See First Nat. Bk. v. Beardsley v. Weber, 104 Mich. 88, 62 Bowner (Tex. Civ. App.), 27 S. W. N. W. 173; note to Rapid City First 698. National Bank v. Security National " Heslan v. Bergeron, 94 Me. 395, Bank, 34 Neb. 71, 15 L. R. A. 386. 47 Atl. 896. '* Negot. Inst. Law, § 134, Appen- " Mobile Savings Bank v. McDon- dix herein. See Farmers' Bank v. nell, 83 Ala. 595, 4 So. 346. Duvall, 7 Gill & J. (Md.) 78; Free- ^Bonsted v. Cuyler, 116 Pa. 551, man v. Boynton, 7 Mass. 483; Fisher 19 Week. N. C. 330, 8 Cent. Rep. 128, v. Beckwith, 19 Vt. 31; Hansard v. 8 Atl. 848. Robinson, 7 Barn. & C. 90. *" Finch V. Skilton, 29 N. Y. Supp. "^ Musson v. Lake, 4 How. (U. S.) 925, 79 Hun 531, 61 N. Y. St. R. 544. 262. "Mumford v. Tolman (111. App.), '"Wiseman v. Chiappella, 23 How. 8 Nat. 'Corp. Rep. 417; Field v. Sib- (U. S.) 368. See Fisher v. Beck- ley, 77 N. Y. Supp. 252, 11 N. Y. with, 19 Vt. 31. Ann. Cas. 187, 74 App. Div. 81, aff'd Physical presentation of note pay- 174 N. Y. 514, 66 N. E. 1108. able to bearer. See Citizens' Nat. «=Rigley v. Watts, 15 Ohio C. C. Bank v. Brown, 45 Ohio St. 39, 11 645. N. E. 799, 10 West. Rep. 485. ''Young V. American Bank, 89 N. "Legg v. Vinal, 165 Mass. 555, 43 Y. Supp. 915, 44 Misc. 308. But N. E. 518; Porter v. Thorn, 57 N. Y. compare Hunt v. Divine, 37 111. 137; Supp. 479, 40 App. Div. 34, aff'd 167 Joyce Defenses — 42. § 514] WANT OF PRESENTMENT-^FOR PAYMENT. 658 maker, having no place of business, demand was made upon him in the street, and the holder had the note with him but there was no request to produce the paper, it was decided that the demand was good and that an actual exhibition of the instrument was unneces- sary.®* § 514. Place of presentment. — Presentment for payment should be made at the place of payment specified in the instrument. If no place of payment is specified, but the address of the person to make payment is given in the instrument it should be there presented. If no place of payment is specified and no address is given the instru- ment should be presented at the usual place of business or residence of the person to make payment. In any other case it should be pre- sented to the person to make payment wherever he can be found, or presented at his last known place of business or residence.®^ N. Y. 584, 60 N. E. 1119; Waring v. Betts, 90 Va. 46, 17 S. E. 739, 17 Va. L. J. 370. «^King V. Crowell, 61 Me. 244, 14 Am. Rep. 560. ^'Negot. Inst. Law, § 133; Bills of Ex^h. Act, § 45, Appendix herein. See, also, United States. — Cox v. National Bank, 100 U. S. 704, 25 L. Ed. 739; Wiseman v. Chiappella, 23 How. (U. S.) 368, 16 L. Ed. 466; Wallace v. McConnell, 13 Pet. (U. S.) 136; McGruder v. Bank of Washington, 9 Wheat. (U. S.) 598. Alabama. — Isbell v. Lewis, 98 Ala. 550. California. — Wild v. Van Valken- burgh, 7 Cal. 166. Connecticut. — Hartford Bank v. Stedman, 3 Conn. 489. District of Columbia. — Wilkins v. McGuire, 2 App. D. C. 448. Indiana. — Hartwell v. Candler, 5 Blackf. (Ind.) 215. Kentucky. — Germans' National Bank v. Butchers' Hide & T. Co. 97 Ky. 34. Louisiana. — H. B. Claflin Co. v. Feibelman, 44 La. Ann. 518; Moore V. Britton, 22 La. Ann. 64. Maine. — King v. Crowell, 61 Me. 244, 14 Am. Rep. 560. Maryland. — People's Bank v, Brooke, 31 Md. 7, 1 Am. Rep. 11. Massachusetts. — Farnsworth v. Mullen, 164 Mass. 112, 41 N. E. 131. Michigan. — Holmes v. Roe, 62 Mich. 199. Missouri. — Townsend v. Heer Dry Goods Co., 85 Mo. 526; Bailey v. Sharkey, 29 Mo. App. 518. Nebraska. — Nicholson v. Barnes, 11 Neb. 452, 38 Am. Rep. 373. New Jersey.' — Freese v. Brownell, 35 N. J. L. 285, 10 Am. Rep. 239. New York. — Bacon v. Hanna, 137 N. Y. 379, 50 N. Y. St. R. 660, 33 N. E. 303, aff'g 17 N. Y. Supp. 430, 43 N. Y. St. R. 906; Myer v. Hibscher, 47 N. Y. 265; Adams v. Leland, 30 N. Y. 309; Nichols v. Goldsmith, 7 Wend. (N. Y.) 160. North Carolina. — Wittkowski v. Smith, 84 N. C. 671, 37 Am. Rep. 632. Rhode Island. — Hazard v. Spen- cer, 17 R. I. 561. Tennessee. — Bynum v. Apperson, 9 Heisk. (Tenn.) 632. Virginia. — Waring v. Betts, 90 Va. 46. ■I 659 PLACE OF PRESENTMENT. [§ 515 § 515. Place of presentment continued. — If a note is payable at a particular place, presentment or demand need only be made there, as presentment elsewhere or personal demand is by such designation im- pliedly dispensed with f^ as it is sufficient to make demand at the place specified as that of payment by the terms of the instruments^ If a note is payable at a specified business place, it is not a sufficient presentment for the notary to call there after the close of business hours for the day and exercise no other diligence to find the maker.®^ But a note is not payable at a place certain where it only specifies a town as the place payable but designates no particular place therein.®^ A presumption may, however, arise as to a subsequent holder, that the maker has a residence at a certain street and number thereon where they are written upon the note, before maturity, after the maker's name, and a demand at such specified place will be sufficient, but due diligence is required in making presentment in such case."* If a par- ticular city or town is specified as the place of payment without other specification as to place, the instrument is to be deemed and treated as payable generally, except it is expressly made payable at that city or town alone."^ And where no particular place of payment in a city or town is specified in a draft, then presentment should be made at the residence or place of business of the maker, but if he has none then the presence of the paper in the place is sufficient.^^ Presentation need not, however, be made at the corner of certain streets where they are the only place of payment specified."'^ Again, where the note is not payable at any particular place, and the maker cannot be found at the place where the note is dated, then presentment must be made at his last known place of residence. ^^ Where, however, no place of payment is specified, presentment is insufficient if it is made only at West Virginia.— Peahody Ins. Co. 22 Atl. 165; Me. Rev. Stat., Chap. 32, V. Wilson, 29 W. Va. 528. § 10. ""Ewen V. Wilbor, 99 111. App. 132; »* Farnsworth v. Mullen, 164 Mass. Nelson v. Grondahl, 13 N. Dak. 363, 112, 41 N. E. 131. 100 N. W. 1093. See Leonard v. 01- "= Leonard v. Olson, 99 Iowa 162, son, 99 Iowa 162, 67 Am. St. Rep. 67 N. W. 677, 35 L. R. A. 381, 67 230, 35 L. R. A. 381, 67 N. W. 677. Am. St. Rep. 230. °' Gulgnon v. Union Trust Co., 156 '" National Bank v. Lutterloh, 95 111. 135, 40 N. E. 556, aff'g 53 111. N. C. 495. App. 581. "^Wilkins v. McGuire, 2 App. D. ^'^ Clough v. Holden, 115 Mo. 336, C. 448, 22 Wash. L. Rep. 155. 37 Am. St. Rep. 393, 21 S. W. 1071, ■■" Haber v. Brown, 101 Cal. 445, 35 rev'g 20 S. W. 695. Pac. 1035. «' Greenlief v. Watson, 83 Me. 266, § 516] WANT OF PRESENTMENT FOR PAYMENT. GGO the former place of business of the maker without any inquiry for his residence or whereabouts, and the indorser will not be bound by such a demand."^ So in case of removal of the maker's place of business, demand must be made at the new place or at his residence where it is known or is ascertainable by the exercise of reasonable diligence, and a demand made only at the old place is insufficient.^*"' If the maker is a resident of the state, but before the maturity of the instrument he removes therefrom and takes up a permanent residence in another place, a presentment is sufficient if made at his last place of residence in the state where the note was made.^"^ But it is also hejd that if the maker has so removed from the state before maturity of the note and has left no representative there, no demand is necessary in order to bind the indorser.^"^ Where there is no place fixed for the payment of a bill, the holder must make a diligent search for the drawee, at his residence, or within the realm of England; but here drawee's ab- sence from the state excuses this duty.^^^ It is immaterial, however, whether the place of demand is the maker's place of business or not, where it is made upon him personally at an office during business hours, and the notes are produced, and he excuses payment upon the ground of inability to pay, and does not object to the place of de- mand.^*'* § 516. Presentment — Instrument payable at bank. — Where the in- strument is payable at a bank, presentment for payment must be made during banking hours, unless the person to make payment has no funds there to meet it at any time during the day, in which case presentment at any hour before the bank is closed on that day is suffi- cient. ^"^ Presentment at the particular bank specified is necessary to warrant a recovery against the indorser and presentment to the cashier will not be sufficient unless made to him at the bank.^*"* It is decided, "" Talbot V. National Bank of the Iowa 224, 41 Am. Rep. 99. Examine Commonwealth, 129 Mass. 67, 38 Salisbury v. Bartleson, 39 Minn. Am. Rep. 302. See also Trease v. 365, 40 N. W. 365. Haggin, 107 Iowa 458, 78 N. W. 58. "' Taylor v. Bank of Illinois, 7 T. i^oReinke v. Wright, 93 Wis. 368, B. Mon. (Ky.) 576. 67 N. W. 737. See Wood v. Rosen- "' Parker v. Kellogg, 158 Mass. 90, dale, 18 Ohio C. C. 247. 32 N. E. 1038. 101 Herrick v. Baldwin, 17 Minn. "'^ Negot. Inst. Law, § 135, Appen- 209, 10 Am. Rep. 161. dix herein. "= Leonard v. Olson, 99 Iowa 162, i">° Peabody Ins. Co. v. Wilson, 29 35 L. R. A. 381, 67 Am. St. Rep. 230, W. Va. 528, 2 S. E. 888. See Dailey 67 N. W. 677; Whitely v. Allen, 56 v. Sharkey, 29 Mo. App. 518. GGl IXSTKUMENT PAYABLE AT BAXK. [§ 517 however, in a Mississippi case, that because a note is made payable at a particular bank, it does not necessitate a demand of payment there.^°^ A demand, however, at maturity is. sufficient if made at the bank where the instrument is payable ;^*'^ and it is not necessary to wait until the close of banking hours, but the demand may be made at any time during such hours.^"^ It also constitutes a sufficient presentment and demand that the instrument is present at the bank where pay- able,^ ^° provided it is known to be physically there by such bank.^^°* So where the cashier of the bank has the note in his possession it shows that he is authorized to receive payment and it is unimportant that pre- sentment was not made at the bank.^^^ § 517. Same subject continued. — If the bank is closed it does not necessitate personal demand upon the debtor, even though a new bank is occupying the former place of business of the bank where the paper is payable. ^^^ A presentment may be good where admittance is ol> tained after the bank has closed and payment is then and there de- manded of the cashier.^^^ Again, where the banlv at which the note is '•"Hibernia Bank & Trust Co. v. Smith (Miss., 1906), 42 So. 345. "It was not necessary to present the note for payment at the Mobile Savings Bank, in order to fix the liability of the maker, although it was made payable there. If the maker was thei-e in readiness to meet his obligation, or had funds deposited there for this purpose, and he suffered loss by reason of the failure of the holder to make presentation at such place of pay- ment, this would be matter of de- fense, which should properly be set up in the answer, and need not have been anticipated by negative alle- gations on the part of the complain- ants in their bill. Connerly v. Planters', &c.. Insurance Co., 6'6 Ala. 432; Montgomery v. Elliott, 6 Ala. 701; Conn v. Gano, 1 Ohio 4.83, 13 Amer. Dec. 639; Weed v. Van Houten, 4 Halst. (N. J.) 489, 17 Amer. Dec. 468;" Sims v. National Commercial Bank, 73 Ala. 250. ^"^Dailey v. Sharkey, 29 Mo. App. 518. "^ Evans v. George D. Cross Lum- ber Co., 21 Ohio Cir. Ct. R. 80, 11 O. C. D. 543. "" Dykman v. Northridge, 36 N. Y. Supp. 962, 72 N. Y. St. R. 64, 1 App. Div. 26. Presentment by notary after close of bank where note present suffi- cient. See Metropolitan Bank v. Engel, 72 N. Y. Supp. 691, 66 App. Div. 273. ""* Chicopee Bank v. Philadelphia Bank, 8 Wall. (U. S.) 641. "^ Carrington v. Odom, 124 Ala. 529, 27 So. 510. '^ Hutchison v. Crutcher, 98 Tenn. 421, 39 S. W. 725, 37 L. R. A. 89. See Roberts v. Mason, 1 Ala. 373; Spann V. Baltzell, 1 Fla. 362, 46 Am. Dec. 346; Berg v. Abbott, 83 Pa. 177, 24 Am. Rep. 158, and note 160. "' Salt Springs National Bank v. Burton, 58 N. Y. 430, 17 Am. Rep. 265. § 517] WANT OF PRESENTMENT FOR PAYMENT. 662 payable is the holder, the proper officers of the bank may hand it to the notary after banking hours, informing him of the lack of funds to meet it, and it constitutes a sufficient presentment.^^* And in such case where the bank is the holder it is sufficient to make demand at the bank,^^^ A note may be payable at the place of delivery, even though signed by the maker at his place of residence, as where it is dated at the place where it is to be indorsed and delivered and it is there placed for collection. In such case where the note is merely payable at bank and does not specify any particular one it is sufficient to present it at any bank in the place of delivery.^^® If the specified bank, at which the note is made payable, is erroneously designated as located in a certain town and state, when in fact it is located in an adjoining state, but there is only a short distance between the place designated and the actual location of the bank, and the places are con- nected and have but one post office, it is sufficient to present the paper at the bank specified at the place where it is actually located.^^^ A presentment of a draft may also be good, although it is made at a bank some distance from the drawee's place of business specified in the paper, after the term "via" following the drawee's name and place of business.^ ^^ Presentment may also be properly made at a branch office of a bank at which the instrument is payable.^ ^^ And where agents of several banks meet for the settlement of accounts and pre- sentment is made at such meeting by the bank holding the note for collection to the agent of the bank at which the note is payable and such agent presents it to his bank during banking hours, the demand is good.^^° But a note payable at any bank in a certain place does not include in those terms a loan and trust corporation, even though em- powered to perform acts similar to those of banks of deposit and issue.^-^ In case the payee transfers a note as collateral to another bank than that specified as the one at which the note is payable and the collateral paper becomes due before the principal debt, such in- strument should be deposited with the specified bank for payment "* United States Bank v. Carneal, "^Bartholomew v. First National 2 Pet. (U. S.) 543. Bank, 18 Wash. 683, 52 Pac. 239. "^ Hildeburn v. Turner, 5 How, "'* Commercial Bank v. Bissett, 7 (U. S.) 69; United States v. Car- Manitoba Rep. 586. neal, 2 Pet. (U. S.) 543. ^=» Martin v. Smith, 108 M-ich. 278, "" Hazard v. Spencer, 17 R. I. 561, 2 Det. L. N. 841, 66 N. W. 61. 23 Atl. 729. ^"^ Nash v. Brown, 165 Mass. 384, "■ Pawcatuck National Bank v. 43 N. E. 180. Barber. 22 R. I. 73, 46 Atl. 1095. 663 INSOLVEXCY OR SUSPEXSIOX OF BANK. [§§ 518, 519 where no reason to doubt its solvency exists.^^^ ^ demand is not suffi- cient where it is made only l)y letter, written by the bank at which the note is payable in the absence of a showing that there were any funds of the maker in bank, or as to the character of the reply made, if any, to the letter. ^-2* If presentment is made during banking hours, hut before noon, and shortly thereafter, and also before noon, the maker deposits funds for payment, but the note is not again pre- sented, although it was the custom to allow until three o'clock to make payment, and the maker withdraws his funds, he is nevertheless liable at the suit of the holder. ^^^ § 518. Same subject continued — Insolvency or suspension of bank. — If the bank has become insolvent and the bank examiner is in pos- session, demand may be made upon him •,^-* or it must, in case of the insolvency of a national bank, be made upon the receiver, appointed by the comptroller of the currency, at the former's location in the city, where such location is known, even though not the place where the bank had conducted its business.^-^ Where the bank at which the instrument is payable has gone out of existence, thereby precluding presentment at its place of business during banking hours, the note may be presented to the residence of the indorser and last manager of the bank, as late as five o'clock in the afternoon, and the present- ment is good.^-*^ If, however, a bank has become insolvent and a re- ceiver has been appointed pendente lite, presentment and demand made upon him will not be sufficient to charge an indorser of a ne- gotiable certificate of deposit issued by the bank.^-^ §519. Presentment to whom — Person primarily liable dead. — Where the person primarily lial)le on the instrument is dead, and no place of payment is specified, presentment for payment must be made '"Mt. Vernon Bridge Co. v. Knox ^=' Hutchison v. Crutcher, 98 County Savings Bank, 46 Ohio St. Tenn. 421, 39 S. W. 725, 37 L. R. A. 224, 20 N. E. 339, 21 Ohio L. J. 168. 89. But compare Schlesinger v. '"* National Hudson River Bank Schultz, 96 N. Y. Supp. 383, 110 App. V. Moffett, 162 N. Y. 623, 57 N. E. Div. 356. 1118, aff'g 45 N. Y. Supp. 588, 17 ""Waring v. Betts, 90 Va. 46, 17 App. Div. 232. S. E. 739, 17 Va. L. J. 370. ^« Hills v. Place, 48 N. Y. 520, 8 "'Jackson v. Mclnnis, 33 Oreg. Am. Rep. 568. 529, 43 L. R. A. 128, 15 Bkg. L. J. "*Auten v. Manistee National 705, 54 Pac. 884, 55 Pac. 535. Bank, 67 Ark. 243, 54 S. W. 337. See note 61 L. R. A. 900. §§ 520, 521] WANT OF PRESENTMENT FOR PAYMEN^T. 6 64 to his personal representative, if such there be, and if, with the exer- cise of reasonable diligence, he can be found.^-^ g 520. Same subject — Persons primarily liable — Partners — Joint debtors.— Where the persons primarily liable on the instrument are liable as partners, and no place of payment is specified, present- ment for payment may be made to any of them, even though there has been a dissolution of the firm.^^g wj^ere there are several persons not partners, primarily liable on the instrument, and no place of payment is specified, presentment must be made to them all.^^* And this rule is held to apply whether the form of the note is joint or joint and several.^^^ § 521. Excuses for delay in presentment. — Delay in making pre- sentment for payment is excused when the delay is caused by circum- stances beyond the control of the holder and not imputable to his default, misconduct or negligence. When the cause of delay ceases to operate, presentment must be made with reasonable diligence.^^^ The matters which will excuse such delay are various and difficult to enu- merate, as they may be personal, as in case of serious illness under certain conditions and surroundings,^^'^ or public, as in case of an ^=^Negot. Inst. Law, § 136; Bills of Exch. Act, § 45 (7), Appendix here- in. See United States. — Magruder v. Union Bank, 3 Pet. (U. S.) 87. Maine. — Gower v. Moore, 25 Me. 16. Massachusetts. — Goodnow v. War- ren, 122 Mass. 79, 23 Am. Rep. 289. New York.— Reed v. Spear, 107 N. Y. App. Div. 1144. South Carolina. — Price v. Young, 1 Nott & McC. (S. C.) 438. i=»Negot. Inst. Law, § 137. See Brown v. Turner, 15 Ala. 832; Mt. Pleasant Branch of State v. Mc- Leran, 26 Iowa 306; Fourth Nat. Bk. V. Henschen, 52 Mo. 207. Dissoultion by bankruptcy — De- mand on partnership. See Gates v. Beecher, 60 N. Y. 518, 19 Am. Rep. 207. Dissolution of firm by war. See Hubbard v. Matthews, 54 N. Y. 43, 13 Am. Rep. 502. ^^"Negot. Inst. Law, § 138; Bills of Exch. Act, § 45, Appendix herein. See Closz v. Miracle, 103 Iowa 198, 72 N. W. 502; Shutts v. Finger, 100 N. Y. 539; Willis v. Green, 5 Hill (N. Y.) 232. "1 Benedict v. Schmieg, 13 Wash. 476, 43 Pac. 374, 36 L. R. A. 703. See Harris v. Clark, 10 Ohio 6. i^Negot. Inst. Law, § 141; Bills of Exch. Act, § 46, Appendix herein. Excuses for delay — Presentment to acceptor for honor or referee in case of need. Negot. Inst. Law, § 288, making § 141 applicable; Bills of Exch. Act, § 67, see Appendix herein. 1='^ See Newbold v. Boraef, 155 Pa. St. 227, 26 Atl. 305; Wilson v. Sen- ier, 14 Wis. 380. 6C5 EXCUSES — PKESEXTMEXT DISPENSED WITH. [§ 522 epidemic/^* or an existing war ;"^ or it may be any other impediment or obstruction beyond the holder's control rendering it impossible to make such presentment or demand during its continuance or exist- ence.^^" Although war or other political causes may constitute an ex- cuse for not making a demand at maturity, yet whenever the pre- venting cause or impediment ceases the holder must act promptly and with reasonable diligence, otherwise secondary parties will be re- leased.^^^ § 522. Excuses — Wlien presentment dispensed with — Drawer — In- dorser. — Presentment for payment is dispensed with where, after the exercise of reasonable diligence, presentment cannot be made; or where the drawee is a fictitious person ; or, by waiver of presentment, express or implied. ^^^ And presentment is not required (a) in order to charge the drawer where he has no right to expect or require that the drawee or acceptor will pay the instrument; (h) in order to charge an indorser where the instrument was made or accepted for his accommodation, and he has no reason to expect that the instrument will be paid if presented. ^^^ If the holder has the note ready for pre- sentment at the place where dated and makes diligent inquiry to as- certain the place of residence or business of the maker but is unsuc- cessful, demand upon the maker is excused;^*'' for the holder is only ^^Tunno V. Lague, 1 Johns. Cas. pends commercial intercourse; (6) (N. Y.) 1. public and positive interdictions "=Ray v. Smith, 17 Wall. (U. S.) and prohibitions of the state which 411; Peters v. Hobbs, 25 Ark. 67. obstruct or suspend commerce and "Judge Story, in' his Commenta- intercourse.' And in § 356 of the ries on the Law of Promissory same work the learned commentator Notes, § 257, has enumerated, enumerates them also as constitut- among the sulBcient excuses for ing sufficient excuses for the omis- non-presentment and demand at the sion of due and regular notice of time and place when and where the the dishonor." House v. Adams & promissory note is due and payable, Co., 48 Pa. St. 267. the following: '(3) The presence ""Violent storm. — When no ex- of political circumstances, amount- cuse. See McDonald v. Mosher, 23 ing to a virtual interruption and 111. App. 206. obstruction of the ordinary negotia- "^ Burden v. Smith, 44 Miss. 548. tions of trade, called the vis tnajor ; ^^As to waiver, see §§ 524, 525, (4) the breaking out of war be- herein. tween the country of the maker and ^^ Negot. Inst. Law, §§ 139, 140, that of the holder; (5) the occupa- 142; Bills of Exch. Act, § 46, Appen- tion of the country where the par- dix herein. ties live, or where the note is pay- "" Davis v. Eppler, 38 Kan. 629, 16 able, by a public enemy which sus- Pac. 793. § 523] WANT OF PRESENTMENT FOR TAYMENT. 6G6 required to exercise due or reasonable diligence to present or attempt to make presentment, and demand should be excused where he has done so and is unable to find the maker.^*^ And the holder has used the required diligence where he mails a note for collection to a bank in the city where the paper is payable and sends it in ample time, and upon its return by the postmaster with the indorsement that the bank had failed he immediately remails it to another agent in the same city and he at once makes presentment, although the note was past due when presented.^^^ ;But due diligence is not exercised where the notary making presentment failed to inquire of the cashier of the bank where he presented the paper as to the residence of the maker, when he could have obtained the necessary information by such in- quiry."^ And, although the holder is told that the maker has ab- sconded and his place of business is found closed, such facts do not excuse presentment and demand.^** And presentment is not dispensed with by the fact that the corporation maker has transferred its prop- erty to secure the indorser ; unless it appears that such corporation has ceased to exist."^ But demand is not necessary in order to charge the indorser of a forged bill.^*^ §523. Same subject continued. — Under the California code pre- sentment of a bill is excused where there is no reason to believe that it will be paid by the drawee."^ This is substantially similar to the rule above given ^^^ and both are but statements in different forms of the well-settled general rule, that if the drawer has no reasonable expectation that his bill will be honored he does not stand in the same position as to a right to demand and notice as he would had he reason to believe that his paper would be paid, for in the former case he cannot suffer by want of presentment and notice of dishonor. This point is involved with or involves that of drawing without funds or authority or reasonable expectation of funds, and applies in such case, although other circumstances may exist under which the rule would ^"^ Hazlett V. Bragdon, 7 Pa. Super. "= Moore v. Alexander, 68 N. Y. Ct. 581. See § 503 herein. Supp. 888, 33 Misc. 613. ^"^ Pier V. Heinrichshoffen, 67 Mo. "" Hamer v. Brainard, 7 Utah 245, 163, 29 Am. Rep. 501. 26 Pac. 299, 5 Bkg. L. J. 144, 12 L. "'Sweet V. Powers, 72 Mich. 393, R. A. 434. 40 N. W. 471. ""Cushman v. Harrison, 90 Cal. "*Glaser v. Rounds, 16 R. I. 235, 297, 27 Pac. 283. 14 Atl. 863, 6 N. Eng. Rep. 500. "' § 522 herein (a). 667 EXCUSES PRESENTMENT DISPENSED "WITH. [§ 523 also be applicable.^*" Since, therefore, the question of the drawer's right to presentment rests upon his right to expect or require, or his reason to believe, or his reasonable expectation that the paper will be paid, then if he has such right, reason or expectation it ought to fol- low that he should be entitled to demand and notice and it is so held.^''" "® United States. — Dickens v. Beal, 10 Pet. (U. S.) 572, 9 L. Ed. 538; Rekd V. Wilkinson, Fed. Cas. No. 11611; Brown, In. re, Fed. Cas. No. 1985. Alabama. — Stewart v. Desha, 11 Ala. 844; Armstrong v. Gay, 1 Stew. (Ala.) 175. Arkansas. — McRae v. Rhodes, 22 Ark. 315. Illinois. — Walker v. Rogers, 40 111. , 278, 89 Am. Dec. 348; Brower v. Ru- pert, 24 111. 182. Indiana. — Culver v. Marks, 122 Ind. 554, 17 Am. St. Rep. 377, 23 N. E. 1086, 7 L. R. A. 489. Iowa. — Kimball v. Bryan, 56 Iowa 632, 10 N. W. 218. Kentucky. — Baxter v. Graves, 2 A. K. Marsh. (Ky.) 152. Louisiana. — Blum v. Bidwell, 20 La. Ann. 43; English v. Wall, 12 Rob. (La.) 137. Maine. — Burnham v. Spring, 22 Me. 495; True v. Thomas, 16 Me. 36. Massachusetts. — Beuregard v. Knowlton, 156 Mass. 395, 31 N. E. 389. Mississippi. — Carson v. Alexan- der, 34 Miss. 528. Missouri. — Merchants' Bank v. Easley, 44 Mo. 286, 100 Am. Dec. 287. New York. — Mohawk Bank v. Broderick, 10 Wend. (N. Y.) 304; Healey v. Gilman, 1 Bosw. (N. Y.) 235; Franklin v. Vanderpool, 1 Hall (N. Y.) 78. Examine Brush v. Bar- rett, 82 N. Y. 400; Eichner v. Bow- ery Bank, 20 Misc. 90; Little v. Phoenix Bank, 2 Hill (N. Y.) 425; Murray v. Judah, 6 Cow. (N. Y.) 490. North Carolina. — Spear v. Atkin- son, 1 Ired. (N. C.) 262. Pennsylvania. — Callen v. Fawcett, 58 Pa. St. 113. South Carolina. — Hubble v. Fo- gartie, 3 Rich. (S. C.) 413, 45 Am. Dec. 775. Tennessee. — Planters' Bank t. Keese, 7 Heisk. (Tenn.) 200. Texas. — Armendiaz v. Serna, 40 Tex. 291; Kottwitz v. Alexander, 34 Tex. 689. Wisconsin. — 'Mehlberg v. Tisher, 24 Wis. 607. England. — Bailey v. Porter, 14 Mees. & W. 44; Cory v. Scott, 3 Barn. & Aid. 619; Crofton v. Crof- ton, 33 Gh. Div. 612; Dennis v. Mor- ris, 3 Esp. 158; Heath, Ex parte, 2 Ves. & B. 240; Hill v. Heap, 1 Dowl. & R. N. P. 517; Kemble v. Mills, 1 Man. & G. 757; Legge v. Thorpe, 2 Camp. 310; Orr v. Maginnis, 7 East 359; Rogers v. Stephens, 2 Term. R. 713. ^^ United States. — Knickerbocker Life Ins. Co. v. Pendleton, 112 U. S. 696. 28 L. Ed. 866, 5 Sup. Ct. 314; Mackall v. Gozler, Fed. Cas. No. 8835; Hopkirk v. Page, Fed. Cas. No. 6697. See French v. Bank of Co- lumbia, 4 Cranch (U. S.) 141, 2 L. Ed. 576; Oklhausen v. Lewis, Fed. Cas. No. 10507. Alabama. — Sherrod v. Rhodes, 5 Ala. 683; Shirley v. Fellows, 9 Port. (Ala.) 300. Illinois. — Willetts v. Paine, 43 111. 432. See Welch v. Taylor, 82 111. 523] WANT OF PRESENT:\IENT FOR PAYMENT. 668 It is declared in a New York case that : "It has been repeatedly de- cided that where there are any funds in the hands of the drawee, so that the drawer has a right to expect the bill will be paid, or where there are not any funds, yet if the bill was drawn under such circum- stances as induced the drawer to entertain a reasonable expectation that the bill would be accepted and paid, the person so drawing it is entitled to notice ; and a fortiori, he is entitled to have the bill duly presented."^^^ It is also said in a Mississippi case that : "No condition of things will excuse the holder from his duty to present the bill for payment if it be practicable for him to do so. Causes may intervene, beyond his control which suspend and postpone the performance of the act, but do not dispense with it when it becomes practicable. The want of funds, the absence of a right to draw, and of reasonable ex- pectation of payment, absolve from the necessity of giving notice to secondary parties. But these things furnish no pretext for not mak- ing demand of the drawer or acceptor. For the want of prompt dili- gence in making the demand the drawer and indorsers are dis- charged."^^^ The fact, however, that no funds were at the bank to 574; Walker v. Rogers, 40 111. 278, 89 Am. Dec. 348. Iowa. — Hamlin v. Simpson, 105 Iowa 125, 74 N. W. 906. See Kim- ball v. Bryan, 56 Iowa 632, 10 N. W. 218. Kentucky. — Clark v. Castleman, 1 J. J. Marsh. (Ky.) 69. Louisiana. — Urquhart v. Thomas, 24 La. Ann. 95; Lacoste v. Harper, 3 La. Ann. 385. Maine. — Campbell v. Pettingill, 7 Me. 126. Maryland. — Orear v. McSinald, 9 Gill (Md.) 350, 52 Am. Dec. 703. Massachusetts. — Stanton v. Blos- som, 14 Mass. 116, 7 Am. Dec. 198. Missouri. — Commercial Bank v. Barksdale, 36 Mo. 563. New Jersey. — United States Bank V. Southard, 17 N. J. L. 473. New York. — Schofield v. Bayard, 3 Wend. (N. Y.) 488; Robinson v. Eames, 20 Johns. (N. Y.) 146, 11 Am. Dec. 259. See Cruger v. Arm- strong, 3 Johns. Cas. (N. Y.) 5, North Carolina. — Austin v. Rod- man, 1 Hawks (N. C.) 194, 9 Am. Dec. 630. Ohio. — ^Miser v. Trovinger, 7 Ohio St. 281. Texas. — Cole v. Wintercost, 12 Tex. 118. England. — Cory v. Scott, 3 Barn. & Aid. 619; Robins v, Gibson, 3 Camp. 334; Rucker v. Hiller, 16 East 43; Walwyn v. St. Quintin, 2 Esp. 515; Wilson, Ex parte, 11 Ves. 411. '"Robinson v. Ames, 20 Johns. (N. Y.) 146, 149, per Spencer, Ch. J. The court also says: "The rule is correctly laid down in Claridge v. Dalton, 4 Maule & Selw. 229, by Lord Ellenborough. The principle which has been stated is very ably supported by Chief Justice Marshall in French v. The Bank of Columbia, 4 Cranch (U. S.) 153, where the principal authorities are reviewed." ^''-Durden v. Smith, 44 Miss. 548, 555, 556, per Simrall, J. 669 WAIVER OF PEESENTMEXT AND DEMAXD, [§ 524 meet payment of other, notes b}' the same maker and first indorser constitutes no excuse for non-presentment. ^^^ And the fact that an- other maker states that the maker of the note could not make pay- ment does not do away with the necessity of making demand ;^°* nor is the requirement of making a demand excused by the statement of the drawer to the payee tliat the drawee could not pay but that he, the drawer, would, where such information is not in conformity with the statute.^^'^ If the bill is drawn on the cashier of a bank without funds, or his authority, the bank holding the bill is not prejudiced by sending the cashier abroad, so that the demand could not be made of him in person.^^° Again, a demand is not necessary in the case of an indorser of a bill or note where such paper is given for his ac- commodation merely. ^^■^ But accommodation indorsers for the maker are within the general rule as to presentment being necessary.^^® Nor does the maker's insolvency of itself alone operate as a legal excuse for failure to make presentment and demand,^^'' And this rule applies to a corporation maker of paper,^''" and to a note payable on de- mand ;^*'^ and the acceptor's insolvency does not excuse presentment and demand.^ ^^ § 524. Waiver of presentment and demand. — Presentment for payment is dispensed with by waiver of presentment, express or im- '" Manning v. Lyon, 24 N. Y. ""Leonard v. Olson, 99 Iowa 162, Supp. 265, 54 N. Y. St. R. 6. 61 Am. St. Rep. 230, 35 L. R. A. 381, '=*Closz V. Miracle, 103 Iowa 198, 68 N. W. 677; Farwell v. St. Paul 72 N. W. 502. Trust Co., 45 Minn. 495, 48 N. W. ^""^Los Angeles National Bank v. 326; Bassenhorst v. Wilby, 45 Ohio Wallace, 101 Cal. 478, 36 Pac. 197; St. 333, 13 N. E. 75, 11 West. Rep. Cal. Civ. Code, § 3156. 270; Reinke v. Wright, 93 Wis. 368, ^■-"'Taylor v. Bank of Illinois, 7 T. 67 N. W. 737. B. Mon. (Ky.) 577. i"" Moore v. Alexander, 68 N. Y. "'Shriner v. Keller, 25 Pa. St. 61; Supp. 888, 33 Misc. 613, aff'd 71 N. American National Bank v. Lumber Y. Supp. 420, 63 App. Div. 100. & Mfg. Co., 94 Tenn. 624, 30 S. W. "^ O'Neill v. Meighan, 66 N. Y. 753. See Mayer v. Thomas, 97 Ga. Supp. 313, 32 Misc. 51. 772, 25 S. E. 761. '"- Hawley v. Jette, 10 Oreg. 31. 45 '=' Perry v. Friend, 57 Ark. 437. Am. Rep. 129. See Moody v. Keller, 127 Ala. 630, As between the holder of negotia- 29 So. 68; Thielman v. Gueble, 32 ble paper and the prior parties La. Ann. 260, 36 Am. Rep. 267. The thereto, the insolvency or bank- note in this case was payable on ruptcy of the maker or acceptor will demand and bore interest, and a constitute no excuse for want of delay of four years was held unrea- presentment or demand. Fugitt v. sonable. Nixon, 44 Mo. 295. 524] WANT OF PRESENTMENT FOR PAYMENT. 670 plied ;^*'^ as where the note stipulates for a waiver;^''* or has an in- dorsement thereon waiving presentment and demand f^^ and such an indorsement waives all legal steps required to charge the indorser;"" so the words "protest waived" or "waiver of protest" or a waiver of notice and protest by the indorsers of a note include a waiver of de- mand.^^^ Again, an indorser who signs a note underneath a waiver written upon the back thereof is bound thereby.^®* And this includes all the indorsers so signing. ^^'^ The same rule applies where the agree- ment of waiver is stamped on the back of the instrument,"" even though the blanks in such waiver are not filled out and a direction to pay the indorsee separates the signatures therefrom."^ The rule also applies where the waiver appears in the body of the note, where the in- dorsement is not qualified,"' or where the terms of the waiver are that ^^^Negot. Inst. Law, § 142; Bills of Exch. Act, § 46, Appendix herein. >" Leeds v. Hamilton Paint & G. Co. (Tex. Civ. App.), 35 S. W. 77. See State, Parks v. Hughes, 19 Ind. App. 266, 49 N. E. 393. ^^ Blanc V. Mutual National Bank, 28 La. Ann. 921, 26 Am. Rep. 119; Hammett v. Trueworthy, 51 Mo. App. 281; Seymour v. Francisco, 4 Ohio Dec. 12, 1 Cleve. Law Rec. 9. ^°° Hammett v. Trueworthy, 51 Mo. App. 281. See Wheeler v. Asher, 2 Mo. App. Rep'r 1236. ^"'Kansas. — Baker v. Scott, 29 Kan. 136, 44 Am. Rep. 628. Louisiana. — Harvey v. Nelson, 31 La. Ann. 434, 33 Am. Rep. 222. Massachusetts. — Johnson v. Par- sons, 140 Mass. 173, 1 N. Eng 381, 4 N. B. 196. Minnesota. — Wolford v. Andrews, 29 Minn. 250, 43 Am. Rep. 201. Mississippi. — Timberlake v. Thay- er, 76 Miss. 76, 23 So. 767. North Carolina. — Shaw v. Mc- Neill, 95 N. C 535. Washington. — Wilkie v. Chandon, 1 Wash. 355, 25 Pac. 464. But compare Sprague v. Fletcher, 8 Oreg. 367, 34 Am. Rep. 587. See further the following cases: Alabama. — Montgomery v. Cros- thwaite, 90 Ala. 553, 12 L. R. A. 140. California. — San Diego First Na- tional Bank v. Falkenhan, 94 Cal. 141, 29 Pac. 866, 7 Bkg. L. J. 105. District Columbia. — Portsmouth Savings Bank v. Wilson, 5 App. D. C. 8. Illinois. — Dunnigan v. Stevens, 122 111. 396, 13 N. E. 651. Missouri. — Hammett v. True- worthy, 51 Mo. App. 281. "** Farmers' Exchange Bank v. Al- tura Gold Mill & Mining Co., 129 Cal. 263, 61 Pac. 1077; Savings Bank V. Fisher (Cal.), 41 Pac. 490; Parsh- ley V. Heath, 69 Me. 90, 31 Am. Rep. 246. ^''' Farmers' Exchange Bank v. Al- tura Gold Mill & Mining Co., 129 Cal. 263, 61 Pac. 1077. ™ Savings Bank v. Fisher (Cal.), 41 Pac. 490; Loveday v. Anderson, 18 Wash. 322, 51 Pac. 463, 15 Bkg. L. J. 100. "^ Loveday v. Anderson, 18 Wash. 322, 51 Pac. 463, 15 Bkg. L. J. 100. See Farmers' Bank of Kentucky v. Ewing, 78 Ky. 264, 39 Am. Rep. 231. ''-Portsmouth Savings Bank v. Wilson (D. C), 22 Wash. L. Rep. 817. 671 WAIVER OF PRESENTMENT AND DEMAND. [§ 525 "each, of us, whether principal, surety or indorser, waive demand," etc. ;"^ nor is any new consideration necessary where the waiver was made on the day of maturity of the note.^'* One signing an indorse- ment and waiving demand waives it as an indorser, even though he is also a guarantor. ^^=^ If an indorser of a. note, when he signed a waiver, knew the facts which released him, his ignorance of its legal effect will not relieve him from the consequences of his waiver ;^^® although an indorser's knowledge of the facts which release him from liability are held to be necessary.^" But it is held, however, that even though the terms of the waiver expressly cover all notice of presentment, dishonor and protest, nevertheless the president of the corporation maker does not, as indorser, by such waiver include pre- sentment and demand. ^^^ And waiver of presentment does not result from the indorser's knowledge of the maker's insolvency."'' An exten- sion of the time of payment, granted at the request of the indorser, who agrees that his name may remain on the note, operates as a waiver."" But a mere request not to force payment as against the maker, made after the lapse of the time for presentment and demand, does not constitute a waiver;"^ nor does a mere request not to sue during the absence of payee.^^- § 525. Same subject continued. — If there has been no presentment or demand, and the indorser unconditionally acknowledges his lia- Examine Illinois.— Beering v. Wi- Co., 93 N. Y. Supp. 449, 105 App. ley, 56 111. App. 309. Div. 21. Indiana.— Pool v. Anderson, 116 ^~'> Kimmell v. Wiel, 95 111. App. 15. Ind. 88, 1 L. R. A. 712. ^«»Cady v. Bradshaw, 116 N. Y. Iowa.— Iowa Valley State Bank v. 188, 26 N. Y. St. R. 518, 22 N. E. Sigstad, 96 Iowa 491, 65 N. W. 407. 371, 5 L. R. A. 557, 2 Bkg. L. J. 84. Kentucky. — Bryant v. Merchants' Examine Glaze v. Ferguson, 48 Bank, 8 Bush (Ky.) 43. Kan. 157, 29 Pac. 396; Ross v. Hurd, Minnesota.— Bryant v. Lord, 19 71 N. Y. 14, 14 Am. Rep. 1; Sheldon Minn. 396. v. Horton, 43 N. Y. 93, 3 Am. Rep. Missouri.— Jacohs v. Gibson, 77 669; Bassenhorst v. Wilby, 45 Ohio Mo. App. 244, 2 Mo. A. Rep'r 6. St. 499, 13 N. E. 75, 11 West. Rep. "'Woodward v. Cowry, 74 Ga. 148. 274; McMonigal v. Brown, 45 Ohio "* Delsman v. Friedlander, 40 St. 333, 15 N. E. 860, 14 West. Rep. Oreg. 33, 66 Pac. 297. 147; Burnham, H. M. & Co. v. Mc- ™ First National Bank v. Adam- Cornick, 18 Utah 42, 55 Pac. 77. son, 25 R. I. 73, 54 Atl. 930. '"' Whittier v. Collins, 15 R. I. 44, ""Toole V. Crafts (Mass., 1906), 1 N. Eng. 135, 23 Atl. 39. See Brit- 78 N. E. 775. ton v. Milsom, 19 Ont. App. 96. "'Closz V. Miracle, 103 Iowa 198, '*- Button v. Bratt (Ky.), 11 S. 72 N. W. 502. W. 821. "^ Hayward v. Empire State Sugar § 525] WANT OF PRESENT:\IEXT FOR PAYMENT. 672 bility, or makes a binding promise to pay the note, or makes a partial payment, and at the time he has full knowledge of the laches and of all the material facts, he waives presentment and cannot afterward defend for want thereof .^"^ It is essential, however, in order to consti- tute a waiver and make binding the promise to pay, that the indorser should have at the time such full knowledge of the laches and of all "^ United States. — Sigerson v. Mathews, 20 How. (U. S.) 496, 15 L. Ed. 989; Thornton v. Wynn, 12 Wheat. (U. S.) 183, 6 L. Ed. 595; Donaldson v. Means, 4 Dall. (U. S.) 109. Alabama. — Alabama National Bank v. Rivers, 116 Ala. 1, 22 So. 580. Arkansas. — Hazard v. White, 26 Ark. 155. California. — Curtis v. Sprague, 51 Cal. 239. Illinois. — Givens v. Merchants' National Bank, 85 111. 442; Tobey v. Berley, 26 111. 426. Iowa. — Davis v. Miller, 88 Iowa 114, 55 N. W. 89; Cheshire v. Tay- lor, 29 Iowa 492; Hughes v. Bowen, 15 Iowa 446. Louisiana. — Hart v. Long, 1 Rob. (La.) 83. Maine. — Thomas v. Mayo, 56 Me. 40. Maryland. — Turnbull v. Maddux, 68 Md. 579; Beck v. Thompson, 4 Harr. & J. (Md.) 531. Massachusetts. — Glidden v. Cham- berlin, 167 Mass. 486, 46 N. E. 103; Rindge v. Kimball, 124 Mass. 209. See Hobbs v. Straine, 149 Mass. 212, 21 N. E. 365. Michigan. — Parsons v. Dickinson, 23 Mich. 56. Minnesota. — Amor v. Stoeckele, 76 Minn. 180, 78 N. W. 1046. Missouri. — State Bank v. Bartle, 114 Mo. 276, 21 S. W. 816; Working- men's Banking Co. v. Blell, 57 Mo. App. 410. Montana. — Quaintance v. Good- row, 16 Mont. 376, 41 Pac. 76. New Hampshire. — Rogers v. Hackett, 21 N. H. 100. New York. — Ross v. Hurd, 71 N. Y. 14, 27 Am. Rep. 1. See Cady v. Bradshaw, 116 N. Y. 188, 22 N. E. 371, 26 N. Y. St. R. 518. See Lin- thicum V. Caswell, 160 N. Y. 702, 57 N. E. 1115, aff'g 19 App. Div. 541, 46 N. Y. Supp. 610. North Carolina. — Shaw v. Mc- Neill, 95 N. C. 535. Oregon. — Smith v. Lownsdale, 6 Oreg. 78. Pennsylvania. — Oxnard v. Var- num, 111 Pa. 193, 56 Am. Rep. 255; Morgan v. Wolstencroft, 1 Super. Ct. 13, 37 Wkly. N. C. 293, 52 Phila. Leg. Int. 495. See Sieger v. Allentown' Second National Bank, 132 Pa. 307, 19 Atl. 217, 2 Bkg. L. J. 335. South Carolina. — Hall v. Freeman, 2 Nott & McC. 479, 10 Am. Dec. 621. Tennessee. — Bogart v. McClung, 11 Heisk. (Tenn.) 105, 27 Am. Rep. 737. See People's National Bank v. Dibrell, 91 Tenn. 301, 18 S. W. 626. Texas. — Stone v. Smith, 30 Tex. 138, 94 Am. Dec. 299. Vermont. — Blodgett v. Durgin, 32 Vt. 361. Virginia. — Tardy v. Boyd, 26 Gratt. (Va.) 637. But compare Huntington v. Har- vey, 4 Conn. 124; Sebree Deposit Bank v. Moreland, 96 Ky. 150, 28 S. W. 153, 29 L. R. A. 305. 673 WAIVER or PRESENTIMENT AND DEMAND, [§ 525 the material facts.^^* An ind®rser's promise to pa}^, if the maker does not, made by letter after maturity of the paper, is held to be a waiver of demand and to raise the presumption of knowledge on the part of such indorser that the note had not been protested.^^^ There is also a waiver where the promise is to pay whenever the holder shall require payment where such promise is an unconditional one;^^® or where the promise is to pay at maturity after days of grace, fol- lowed by subsequent promises and requests for delay ;^'^^ or where there is an agreement after maturity to reduce the amoimt of the note by the application of certain assets.^'^^ So the sufficiency of the notice of demand is admitted by the indorser by a promise to pay, made after seeking counsel's advice and being advised that such notice was in- sufficient.^®'^ Again, a request by the indorser for a renewal, coupled with part payment are not such acts as amount to a waiver where he has no knowledge of material facts which discharge him.^"" So there "* United States. — Thornton v. Wynn, 12 Wheat. (U. S.) 183, 6 L. Ed. 595; Martin v. Winslow, Fed. Cas. No. 9172. Alabama. — Kennon v. M'Rea, 7 Port. (Ala.) 175. Illinois. — Walker v. Rogers, 40 111. 278, 89 Am. Dec. 348. Kentucky. — Bank of United States V. Leathers, 10 B. Mon. (Ky.) 64. Louisiana. — James v. Wade, 21 La. Ann. 548. Maryland. — Lewis v. Brehme, 33 Md. 412, 3 Am. Rep. 190. Massachusetts. — Parks v. Smith, 155 Mass. 26, 28 N. B. 1044; Lan- drum V. Trowbridge, 2 Mete. (Mass.) 281. Mississippi. — Baskerville v. Har- ris, 41 Miss. 535. New Hampshire. — Norris v. Ward, 59 N. H. 487. New Jersey. — United States Bank V. Southard, 17 N. J. L. 473, 35 Am. Dec. 521. New York. — Meyer v. Hibsher, 47 N. Y. 265; O'Rourke v. Hanchett, 35 N. Y. Supp. 328, 69 N. Y. St. R. 717. Joyce Defenses — 43. North Carolina. — Lilly v. Pette- way, 73 N. C. 358. Ohio. — City National Bank of Dayton v. Clinton County National Bank, 49 Ohio St. 351, 30 N. E. 958, 27 Ohio L. J. 325, 6 Bkg. L. J. 515. Rhode Island. — Glaser v. Rounds, 16 R. L 235, 14 Atl. 863. South Carolina. — Fotheringham v. Price, 1 Bay (S. C.) 291, 1 Am. Dec. 618. Tennessee. — See Carnegie Steel Co. V. Chattanooga Const. Co. (Tenn. Ch. App.), 38 S. W. 102. Wisconsin. — Schiel v. Baumel, 75 Wis. 75, 43 N. W. 724. See McFatridge v. Williston, 25 N. S. 11. "= Davis V. Miller, 88 Iowa 114, 55 N. W. 89. ^'" State Bank v. Bartle, 114 Mo. 276, 21 S. W. 816. ^" Quaintance v. Goodrow, 16 Mont. 876, 41 Pac. 76. ^"'^ Brown v. Mechanics' & T. Bank, 44 N. Y. Supp. 645, 16 App. Div. 207. ^^^ Peoples' National Bank v. Dib- rell, 91 Tenn. 301, 18 S. W. 626. ^ Carnegie Steel Co. v. Chatta- § 525J "WANT OF PRESENTMENT — FOR PAYMENT. 67-i may be an implied waiver of presentment consequent upon an under- standing between the indorser and the holder in pursuance of which an assignment is made before maturity of the note.^®^ And any lan- guage which is intended to and does induce the holder not to make de- mand, as in case of a promise to pay the note when due and a request not to protest it, constitutes a waiver.^^- So directions, given by the indorser, that nothing shall be done with the instrument in case of default in payment, will be a waiver ;"^ as will also a statement by the indorser to the holder that it will be useless to make demand/''* And there may be a waiver where interest is paid on the note after it is due."^ Again, although the drawee procures and indorses a dupli- cate check, after laches of the indorsee in presentment of the original check, indorsed by the drawee, and the loss thereof, such act of the drawee does not constitute a waiver."'^ Under a Ehode Island decision the taking of security by the indorser from the maker is not a waiver. ^"^ A partner may waive demand, after the co-partnership is dissolved, of a note which is indorsed by and discounted for the firm."^ nooga Const. Co. (Tenn. Ch. App.), 38 S. W. 102. '»! Swift, In re, 106 Fed. 65. "- Seldner v. Mt. Jackson National Bank, 66 Md. 488, 6 Cent. Rep. 478, 8 Atl. 262. See Souther v. McKenna, 20 R. I. 645, 40 Atl. 736, 15 Bkg. L. J. 541. ^"^Markland v. McDaniel, 51 Kan. 350, 32 Pac. 1114. 1** Seldner v. Mt. Jackson National Bank, 66 Md. 488, 8 Atl. 262, 6 Cent. Rep. 478. ^5 Greeley v. Whitehead, 35 Fla. 523, 17 So. 643, 28 L. R. A. 286, 48 Am. St. Rep. 258. ^^"Eebi V. Bank of Evansville, 124 Wis. 73, 102 N. W. 329. "^Whittier v. Collins, 15 R. I. 44, 23 Atl. 39. See: Alabama. — Carlisle v. Hill, 16 Ala. 19. Maine. — Marshall v. Mitchell, 34 Me. 227- Maryland. — Walters v. Munroe, 17 Md. 154, 77 Am. Dec. 328. Massachusetts. — Creamer v. Perry, 17 Pick. (Mass.) 332, 27 Am. Dec. 297. New Hampshire. — Woodman v. Eastman, 10 N. H. 359. Ne^v York. — Spencer v. Harvey, 17 Wend. (N. Y.) 489. North Carolina. — Denny v. • Pal- mer, 27 N. C. 710. Pennsylvania. — Kramer v. Sand- ford, 4 Watts. & S. (Pa.) 328. See Selby v. Brinkley (Tenn.), 17 S. W. 479. Compare Stephenson v. Primrose, 8 Port. (Ala.) 155, 33 Am. Dec. 281. Beard v. Westerman, 32 Ohio St. 29. "'Seldner v. Mount Jackson Na- tional Bank, 66 Md. 488, 8 Atl. 262. 6 Cent. Rep. 478. Compare Presbrey V. Thomas, 1 App. D. C. 171, 21 Wash. L. Rep. 659. CHAPTER XXIV. PROTEST AND WANT OP PROTEST. Sec. 526. Protest defined. 527. In what cases protest necessary. 528. In what cases protest unneces- sary. 529. Same subject, continued. 530. How made — Form, contents and sufficiency of. 531. Same subject — Signature. 532. Same subject — Instances — Cer- tificate. 533. By whom made. 534. When to be made. Sec. I 535. Where made. 536. When protest dispensed with — Excuses. 537. Waiver of protest generally. 538. Same subject. 539. Same subject — What is in- cluded. 540. Same subject — Decisions, 541. Same subject — Parties. 542. Certificate of protest — Evi- dence. 543. Same subject. § 526. Protest defined. — There are numerous definitions of the term "protest,"^ but in a recent case it has been defined as "a formal statement in writing that the described instrument was, on a certain day, presented for payment or acceptance, and that such payment or acceptance was refused. It is a formal declaration executed by a no- tary which in its popular sense means all the steps and acts accom- panying the dishonor of a bill or note necessary to charge an indorser. The word signifies to 'testify before.' As said by Daniel,^ the testi- mony before the notary that proper steps were taken to fix the drawer's liability is the substance of the certificate of the notary, the formal evidence, to which the term 'protest' is legally applicable. The same idea is suggested by the language of the statute^ which calls the writ- ing made by the notary the 'instrument of protest.' * * * The ob- ject of protest is to fix the liability of indorsers."* And where an in- ^See Vol. 6 of "Words and Phrases," pp. 5742-5745. -2 Daniel Neg. Inst. (5th Ed.), § 929. = Rev. Laws Minn. 1905, § 2663. * Peabody v. Citizens' State Bank of St. Charles (Minn. 1906), 108 N. W. 272, 275, per Elliott, J. Protest "in a given case may in- clude all the acts which by law are necessary to charge an indorser on such (commercial) paper. * * * 675 537]' PROTEST AND WAXT OF PROTEST. 67Q dorser writes "upon a note an acknowledgment of receipt of notice of protest the word "protest" comprises all the acts necessary to charge indorsers and it has the legal effect to dispense with demand and no- tice on the part of the holder.^ §■ 527. In what cases protest necessary. — Where a foreign bill, ap- pearing on its face to be such, is dishonored by non-acceptance, it must be duly protested for non-acceptance, and where such a bill has not previously been dishonored by non-acceptance is dishonored by non- payment, it must be duly protested for non-payment. If it is not so protested, the drawer and indorsers are discharged.^ Under the gen- eral law merchant protest is only necessary on a foreign bill.^ So, un- der the Negotialile Instruments Law, where any negotiable instru- ment has been dishonored it may be protested for non-acceptance or non-payment, as the case may be ; but protest is not required, except in the case of foreign bills of exchange.* A bill drawn in one of the states of the union upon a resident of another is a foreign bill requir- ing protest.^ So, unless protest is waived, an indorser before delivery With business men includes all the steps necessary to charge an in- dorser. Demand of payment of a note in proper form and at a proper time; and in case of non-payment, due and reasonable notice to the in- dorsers, by any suitable person. In the popular sense, includes demand of the maker and notice of non-pay- ment to indorsers. * * * Protest includes, in a popular sense, all the steps taken to fix the liability of a drawer or indorser." Anderson's Diet, of Law "Protest." ^ City Savings Bank v. Hopson, 53 Conn. 453, 2 N. Eng. 556, 5 Atl. 601. As to waiver generally, see §§ 524, 525 herein. "Negot. Inst. Law, § 260; Bills of Exch. Act, § 51 (2), Appendix here- in. Alabama. — Cullum v. Casey, 9 Port. (Ala.) 131. Kentucky. — Plner v. Clarey, 17 B. Mon. (Ky.) 645. New York. — Amsinck v. Rogers, 93 N. Y. Supp. 87, 103 App. Div. 428. North Carolina. — Shaw v. McNeill, 95 N. C. 535. England. — Orr v. Maginnis, 7 East 49. ^ Burke v. McKay, 2 How, (U. S.) 66. See United States v. Bank of United States, 5 How. (U. S.) 382, under Maryland Statute 17815. 8 Negot. Inst. Law, § 189. See Bills of Exch. Act, § 51, Appendix herein. See § 528 herein. "Nelson v. First National Bank, 69 Fed. 798, 32 U. S. App. 554, 16 C. C. A. 425, 12 Bkg. L. J. 672. As to such bills being foreign bills see Armstrong v. American Ex- change Bank, 133 U. S. 433, 33 L. Ed. 747, 10 Sup. Ct. 450; Bank of United States v. Daniel, 12 Pet. (U. S.) 32; Mason v. Donsay, 35 111. 424, 85 Am. Dec. 368; American Express Co. V. Haire, 21 Ind. 4, 83 Am. Dec. 334; Commercial Bank of Kentucky V. Varnum, 49 N. Y. 269, rev'g 3 Lans. 86. A bill drawn in one state upon a resident of another, is a foreign bill. 677 WHEN" PROTEST UNNECESSARY. [§ 528 of the note is entitled to notice of protest, and it must be given in order to hold him liable.^" Xotice of protest must also be given in a reasonable time to indorsers for accommodation or value of a note payable at bank.^^ And protest is required to render an indorser liable, even though the note was paid before its purchase by the indorsee.^- But protest and notice of protest do not charge an indorser where no demand upon or attempt to collect from the maker is made,^^ § 528. In what cases protest unnecessary. — Where a bill does not appear on its face to be a foreign bill, protest thereof in case of dis- honor is unnecessary.^* Protest is not necessary by the law merchant to fix the liability of the parties to an inland bill.^^ So that, in the absence of a statute to the contrarv', protest of an inland bill or of •a domestic draft, operating entirely within the state, is not neces- sary; a presentation or demand of acceptance or payment and notice of non-payment are sufficient. ^° So it is held that protest in the case of inland bills is only necessary to enable damages to be recovered, as the indorser of such paper is liable to the holder for the amount and the interest upon proof of default and notice." A bill of exchange in form drawn on one government by another is not subject to protest and consequential damages. ^^ And where a drawee of a bill has ac- and the failure on the part of the i= Knott v. Venable, 42 Ala. 186, holder to have it protested for non- 194. payment is a discharge of the '" People's National Bank v. Lut- drawer, unless the drawer had no terloh, 95 N. C. 495; Knott v. Ven- funds in the hands of the drawee able, 42 Ala. 186, 194. See, also, and no authority to draw the bill. Burke v. McKay, 2 How. (U. S.) Aborn v. Pardon Bosworth, 1 R. I. 66; Union Bank v. Hyde, 6 Wheat. 401. (U. S.) 572; Young v. Bryan, 6 >° Burke v. Shreve, 2 N. J. L. 92; Wheat. (U. S.) 146; Murphy v. Citi- Carnegie Steel Co. v. Chattanooga zens' Savings Bank, 22 Ky. L. Rep. Const. Co. (Tenn. Ch. App.), 38 S. 1672, 61 S. W. 25, 62 S. W. 1028; W. 102. Shaw V. McNeill, 95 N. C. 535. " Apple V. Lesser, 93 Ga. 749, 21 Protest made necessary by statute S. E. 171. in case of inland bill. Ewen v. Wil- '= Moore v. Steigel, 50 Mo. App. bor, 99 111. App. 132, aff'd 208 111. 308. 492, 70 N. E. 575. "Williams v. Planters' & M. Na- '' Wanzer v. Tupper, 8 How. (U. tional' Bank, 91 Tex. 651, 45 S. W. S.) 234; Bailey v. Dozier, 6 How. 690, 15 Bkg. L. J. 346, rev'g 44 S. W. (U. S.) 23. 617. 's United States v. Bank of United "Negot. Inst. Law, § 260; Bills of States, 5 How. (U. S.) 382. Exch. Act, § 51 (2), Appendix here- in. See § 527 herein. § 529] PROTEST AXD WAXT OF PROTEST. 678 cepted it he is not entitled to notice of protest.^^ If the person pre- senting a bill agrees to present it again, no protest can be made with- out a new demand.-" No formal protest of a promissory note is re- quired, such note not being within the rules of the law merchant. ^^ An exception has been made, however, where the note is made by a resident of one state payable to a resident of another.^^ § 529. Same subject continued. — A note payable at a bank in In- diana need not be protested for non-payment ; all that is required, un- der a decision in that state, to fix the liability of those secondarily liable is a demand of payment and notice of non-payment.-^ Again, protest, or notice of protest, is unnecessary in case of a mere surety on a note payable at a chartered bank.-^ And where the signatures of third parties, who indorse a note by a creditor to his debtor, are ob- tained under an agreement for an extension of time, such indorsers are sureties and not entitled to notice of protest.^^ Nor is protest neces- sary in case of an indorsee who is not the payee, and whose signature is obtained at the inception of the note, as such person's liability is that of surety or original promisor.^® So an indorser is liable without protest where he indorses as surety before delivery of the note.^'^ And where a note is indorsed before delivery and the payee elects to " Garden City National Bank v. not necessary. Leeds v. Hamilton Fitler, 155 Pa. 210, 26 Atl. 372. Paint & G. Co. (Tex. Civ. App.), 35 "° Case V. Burt, 15 Mich. 82. S. W. 77. -^Alabama. — Knott v. Venable, 42 =^ Brown v. "Wilson, 45 S. C. 519, Ala. 186. 23 S. E. 630. See Bay v. Church, 15 Georgia. — Pattillo v. Alexander, Conn. 15; Louisville Banking Co. 96 Ga. 60, 22 S. E. 646. v. Asher, 23 Ky. L. Rep. 1180, 65 Illinois.— Bond v. Bragg, 17 111. 69. S. W. 133, 23 Ky. L. Rep. 1661, 65 Indian Territory. — Waples-Painter S. W. 831. Co. v. Bank of Commerce (Ind. Ty. "Green v. Louthain, 49 Ind. 139, 1906), 97 S. W. 1025. decided 1874. See, also, Pritchard v. Kentucky. — Louisville Banking Smith, 77 Ga. 463. Co. V. Asher, 23 Ky. L. Rep. 1180, " Sibley v. American Exchange 65 S. W. 133, 23 Ky. L. Rep. 1661, National Bank, 97 Ga. 126, 25 S. E. 65 S. W. 831. 170. See Hunnicutt v. Perot, 100 South Carolina.— Brown v. Wil- Ga. 312, 27 S. E. 787. son, 45 S. C. 519, 23 S. E. 630. ==Eppens v. Forbes, 82 Ga. 748, 9 Compare Hinsey v. Studebaker S. E. 723. Bros. Mfg. Co., 73 111. App. 278, 15 =" Beissner. v. Weekes, 21 Tex. Civ. Nat. Corp. Rep. 805; Merchants' Na- App. 14, 50 S. W. 138. tional Bank v. Standard Wagon Co., "' Tredway v. Antisdel, 86 Mich. 6 Ohio N. P. 264. 82, 48 N. W. 956. Protest "or" suit; protest and suit II 679 HOW MADE FORM, CONTEXTS, SUFFICIENCY. [§ 530 hold the indorser as a guarantor or joint maker no protast is re- quired. ^^ Again, where the indorsement is made before delivery, upon a note executed for an antecedent debt, for the purpoee of obtaining its discount and as additional security, such indorser is a joint maker and protest is unnecessary.'^ Protest is also no-t required to charge the indorser of a non-negotiable instrument,^** or of a note sent for "collection."^! § 530. How made — Form, contents and sufficiency of. — The pro- test must be annexed to the bill, or must contain a copy thereof, and must be under the hand and seal of the notary making it, and must specify: the time and place of presentment; the fact that present- ment was made and the manner thereof ; the cause or reason for pro- testing the bill, and the demand made and the answer given, if any, or the fact that the drawee or ax^ceptor could nat be found.^^ Ordi- narily the protest, or notice of protest, need not follow any particular or precise form of words, but it is sufficient where, as a whole, it con- veys a knowledge of the particular note by a true description or designation, clearly indicating what note is intended and showing its due presentment and dishonor, to whom it was presented, and that the holder looks for payment to the indorser. The paper should, how- ever, be sufficient to put the holder upon inquiry and should not be such that he is misled thereby.^^ If the notice sets out a copy of the bill, but erroneously states by whom there was an acceptance, it is nevertheless sufficient.^* So where the certificate recites that "the above" is a complete and true copy and also refers again to such copy, and states that presentment has been made and refused, and that the note has been protested and notice thereof served through the mail =» Miller v. Clendenin, 42 W. Va. 11 Wheat. (U. S.) 431, 6 L. Ed. 514; 416, 26 S. E. 512. See Rhett v. Poe, Rudd v. Deposit Bank, 20 Ky. L. 2 How. (U. S.) 457. Rep. 1276, 49 S. W. 207, aff'd 20 ='Bank of Jamaica v. Jefferson, 92 Ky. L. Rep. 1497, 49 S. W. 971; Wit- Tenn. 537, 22 S. W. 211, 36 Am. St. kowski v. Maxwell, 69 Miss. 56, 10 Rep. 100. So. 453; Glicksman v. Earley, 78 '"Kampmann v. Williams, 70 Tex. Wis. 223, 47 N. W. 272, 4 Bkg. L. J. 568, 8 S. W. 310. 58. See Bank of Alexandria v. "Waddell's Succession, In re, 44 Swan, 9 Pet. (U. S.) 33; Second La. Ann. 361, 10 So. 808. National Bank v. Smith, 118 Wis. ==Negot. Inst. Law, § 261; Bills 18, 94 N. W. 664. of Exch. Act, § 52, Appendix herein. ^' Dennistown v. Stewart, 17 How. ^^ Mills V. Bank of United States, (U. S.) 606. §§ 531, 532] PROTEST AXD WANT OF PROTEST. 680 upon the indorsers, such certificate is sufficient.^ ^ The requirement of a seal of the notary upon the protest must rest upon statutory provi- sions, at least it seems to he the rule that none is necessary unless the statute so provides, although it is decided in an Alabama case, where a bill was protested in a state where the law merchant was presumed to prevail, and the notarial certificate contained only an illegible mark made by some instrument in place of a seal, that such mark was not a sufficient seal and that the protest did not bind the indorser. Other points, however, entered into the decision, such as insufficiency of pre- sentment and demand, the want of authority of the notary, his in- ability to perform his duty by a deputy, and the insufficient service of notice.^® § 531. Same subject — Signature. — The signature to the protest need not necessarily be in writing and it may be appended by a prop- erly authorized clerk.^^ And the fact that the suffix "Jr." to the no- tary's name in the body of the certificate is omitted from his signa- ture does not warrant the implication that they are different officials.^® § 532. Same subject — Instances — Certificate. — The protest should state where the note was presented and not merely that it was pre- sented, and should show that every requisite has been complied with and performed to authorize the demand upon the indorser.^^ The cer- tificate, in order to be sufficient, should state that the place to which the notice was addressed was the indorser's residence or postoffice.*^ It must also contain a statement showing not only the place where, but also to what person the presentment was made and the manner of mak- ing it ;*^ although it is determined that a certificate need not show that ^^ Second National Bank v. Smith, See Second National Bank v. Smith, 118 Wis. 18, 94 N. W. 664. See 118 Wis. 18, 94 N. W. 664. § 542 herein. ^ Guianon v. Union Trust Co., 156 '•'Donegan v. Wood, 49 Ala. 242, 111. 135, 40 N. E. 556, aff'g 53 111. 20 Am. Rep. 275. See Bank of Roch- App. 581. ester v. Gray, 2 Hill (N. Y.) 227. '=' People's Bank v. Brooke, 31 Md. But compare Bank of Kentucky v. 7, 1 Am. Rep. 11. See McLean v. Pursley, 3 T. B. Mon. (Ky.) 238; Ryan, 55 N. Y. Supp. 232, 36 App. Lambeth v. Caldwell, 1 Rob. (La.) Div. 281, 16 Bkg. L. J. 102. 61; Carter v. Burley, 9 N. H. 558; '" Peabody Ins. Co. v. Wilson, 29 § 542 herein. W, Va. 528, 2 S. E. 888. " See Fulton v. Maccracken. 18 " Union National Bank v. Wil- Md. 528, 81 Am. Dec. 620; Bank of liams Milling Co., 117 Mich. 535, 76 Cooperstown v. Woods, 28 N. Y. 545. N. W. 1, 15 Bkg. L. J. 523, 5 Det. L. N. 336. G81 ' BY WHOM MADE. [§ 533 demand was made of any individual where it appears therefrom that demand of payment was made at the bajik where the note was payable and that payment was refused."*^ It is also decided that the place where presented and the inability to make presentment, by reason of such place being closed, and to find any person to whom the paper could be presented, sufficiently appear from the statement that the bill was duly presented.*^ Under another decision, if a certificate fails to desig- nate the person to whom the draft was presented, such deficiency may be obviated by the testimony of the notary, and he may state orally what the fact is.** A certificate which is otherwise sufficient is not . rendered insufficient by the fact that the statement as to notice is separated from the body of the certificate and is written below the official seal.*^ Again, it is held that, if the protest conform to the law and practice of the place where made, the notary is protected,**' § 533. By whom made. — Protest may be made by a notary public ; or by any respectable resident of the place where the bill is dishon- ored, in the presence of two or more credible witnesses.*'' Under a Texas decision a notary public may, upon the maker^s non-appearance, protest a note, payable at a certain city without more specific designa- tion of the place, where such maker has no residence or place of busi- ness in th&t city.*^ In Mississippi it is decided that the notar}^ who fills up and certifies the protest must present the bill himself, as it cannot be done by an agent.*'' Again, the indirect pecuniary interest of a notary in a note does not render him incompetent to protest it for non-payment.^" And it is also held that where a bank holds a note or bill, its cashier and stockholder, who is a notary public, has the legal right to protest such an instrument as the relation sustained by "Douglas V. Bank of Commerce, " Negot. Inst. Law, § 262, Appen- 97 Tenn. 133, 36 S. W. 874. See, dix herein. also, Witkowski v. Maxwell, 69 *"* Williams v. Planters' & M. Na- Miss. 56, 10 So. 453. tional Bank, 91 Tex. 651, 45 S. W. "Brown v. Jones, 125 Ind. 375, 25 690, 15 Bkg. L. J. 346, rev'g 44 S. N. E. 452, 3 Bkg. L. J. 442. W. 617. " Cook V. Merchants' National *" Carmichael v. Bank of Pennsyl- Bank, 72 Miss. 982, 18 So. 481, 13 vania, 4 How. (Miss.) 567. "The Bkg. L. J. 32. sufficiency of such presentment and '^Jordan v. Long, 109 Ala. 414, 19 noting seems to be a matter of So. 843. doubt in England." Id. 569, per '•'Musson V. Lane, 4 How. (U. S.) Sharkey, C. J. 262; Wiseman v. Chiappella, 23 ™ Patton v. Bank of Lafayette, 124 How. (U. S.) 368. Ga. 965, 53 S. E. 664. 534] PROTEST AND "WANT OF PROTEST. 682 him to the hank is not a disqualifying interest,^^ A person not law- fully authorized by the owner or holder or one who is wrongfully in possession cannot make a valid, binding protest.^^ § 534. When to he made. — ^When a bill is protested, such protest must be made on the day of its dishonor, unless delay is excused as provided by law. When a bill has been duly noted, the protest may be subsequently extended as of the date of the noting.^^ The formal pro- test need not be made at the time of the presentment of the bill for pa}Tnent.^* In cases where the paper carries days of grace the in- dorser is not charged by a protest of the note before the expiration of such days of grace,^^ as a bill may be prematurely protested where allowance is not made therefor.^" But in such case the protest is not premature when made on the third day of grace ;^'^ and the protest may be made on the last day thereof.^^ If an instrument entitled to days of grace matures on a Sunday protest must be made within three days thereafter.^^ And where, under a statute, paper is to be pro- tested according to the custom and usage of merchants, protest on the third day of grace is sufficient without waiting until the next day.*^" "Moreland v. Citizens' Savings Bank, 97 Ky. 211, 17 Ky. L. Rep. 88, 30 S. W. 637, 16 Ky. L. Rep. 860, 30 S. W. 19; Nelson v. First Na- tional Bank, 69 Fed. 798, 32 U. S. App. 554, 16 C. C. A. 425, 12 Bkg. L. J. 672. ^= Hof ricMer v. Enyeart (Neb.), 99 N. W. 658. =^ Negot. Inst. Law, § 263 ; Bills of Exch. Act, § 51, Appendix herein. "Bailey v. Dozier, 6 How. (U. S.) 23. See: Iowa. — Chatham Bank v. Allison, 15 Iowa 357. Kentucky. — Mattingly v. Bank of Commerce, 21 Ky. 1029, 53 S. W. 1043. Mississippi. — Grimball v. Mar- shall, 3 Smedes & M. (Miss.) 359. Neio York. — First National Bank V. Crittenden, 2 Thomp. & C. (N. Y.) 118. Texas. — Lombard Lumber Co. v. First National Bank, 86 Tex. 300, 24 S. W. 260. ^ Cruger v. Lindheim (Tex. App.), 16 S. W. 420. ^•'Bell V. First National Bank of Chicago, 115 U. S. 373, 29 L. Ed. 409, 6 Sup. Ct. 105. " Cary-Lombard Lumber Co. v. Ballinger First National Bank (Tex. Civ. App.), 24 S. W. 702, 86 Tex. 299, 24 S. W. 260, 10 Bkg. L. J. 122. '^ Guignon v. Union Trust Co., 156 111. 135, 40 N. E. 556, aff'g 53 111. App. 581. See Fenwick v. Sears, 1 Cranch (U. S.) 259. »" Morris v. Bailey, 10 S. Dak. 507, 74 N. W. 443. So held, notwithstand- ing statute (Comp. Laws S. Dak., § 4492) as to paper being due next business day where it matures on a holiday. '^° Cary-Lombard Lumber Co. v. Ballinger First National Bank, 86 Tex. 299, 10 Bkg. L. J. 122, 24 S. W. 260; Rev. Stat. Tex., Art. 273. 683 WHERE MADE. [§ 535 But a protest made on the fourth day of grace is held to be insuffi- cient in the absence of usage justifying it.**^ And it is held that the indorser is liable, even though protest is not made and notice given until the third day after that on which the note is by its terms to be paid, and although days of grace are abolished by statute, it appear- ing that the note bore date before, but was not made until after the statute was enacted."^ If a note is indorsed when overdue a second or subsequent demand and protest are of no force where protest was not made or notice given after the first demand.*'^ In case of a de- mand note, the day of its maturity cannot be fixed by a request for payment on a certain future date, made by letter from the bank where the note is payable, so as to necessitate protest.*'* Again it may prop- erly be left to the jury whether the refusal of the drawee to accept was within or after business hours so that the bill could be put in the no- tary's hands on that day or not until the next day.^^ § 535. Where made. — A bill must be protested at the place where it is dishonored, except that when a bill, drawn payable at the place of business or residence of some person other than the drawee, has been dishonored by non-acceptance it must be protested for non-pay- ment at the place where it is expressed tO' be payable, and no further presentment for payment to, or demand on, the drawee is necessary.®^ Protest may be made b}^ the notary wpon finding the doors of the ac- ceptor's usual place of business closed where presentment has been made there dviring proper hours of the day, as in such a case he is not obligated to make further inquiries at the acceptor's residence or other effort to locate him.*''^ And an indorser may be treated in a protest as continuing his residence in the place where he lived when he in- dorsed the note, where his name still remains in the city directory and his sign is retained at his former place of business, although he had removed from the city, but of that fact the notary was ignorant.'^® "Adams v. Otterback, 15 How. «= Nelson v. Fotteral, 7 Leigh. (U. S.) 539. (Va.) 179. "= Button v. Belding, 48 N. Y. «» Negot. Inst. Law, § 264; Bills of Supp. 981, 22 App. Div. 618. Exch. Act, § 51, Appendix herein. "'•' Rosson V. Carroll, 90 Tenn. 90, "^ Sulzbacher Bros. v. Bank of 16 S. W. 66, 43 Alb. L. J. 493. Charleston, 86 Tenn. 201, 6 Am. St. ** National Hudson River Bank v. Rep. 228, 6 S. W. 129. Kinderhook & H. R. Co., 45 N. Y. ^'^ Reier v. Strauss, 54 Md. 278, 39 Supp. 588, 17 App. Div. 232, 14 Bkg. Am. Rep. 390. L. J. 383. I §§ 536, 537] PROTEST AND WANT OF mOTEST. 684 If a note is payable in. one city but it is protested in another, such protest is insufficient.^'' §536. When protest dispensed with — Excuses. — Protest is dis- pensed with by any circumstances which would dispense with notice of dishonor. Delay in noting or protesting is excused when delay is caused by circumstances beyond the control of the holder and not imputable to his default, misconduct, or negligence. When the cause of delay ceases to operate, the bill must be noted or protested with rea- sonable diligence.'^" Substantially tlie same rule as that above stated in the first clause is held in Alabama to be the rule applicable to for- eign bills.'^^ And excuses applicable in cases of notice of dishonor will also generally apply in cases of protest.'^- If the drawer has failed to meet his obligation and the indorser obtains knowledge thereof on the day of maturity his liability becomes fixed without protest.'^^ Protest is unnecessary as to the acceptor.'^* But an indorser of a forged bill may be liable to a subsequent holder, even though the bill is not pro- tested, and the bill is paid and the money subsequently refunded. '^^ § 537. Waiver of protest generally. — It may be generally stated that whatever constitutes waiver of notice of dishonor as to inland bills is also applicable in determining whether there is a waiver of protest, in so far as an indorser of a foreign bill is concerned."" If the conduct of the indorser is such as is calculated to put the holder, when acting with reasonable prudence, off his guard, and to induce him not to insist upon his rights and to omit the step of protest, he is thereby relieved of the necessity of a protest.'^'^ So where the holder is misled to his injury by the indorser's act in writing over the in- '"H. B. Claflin Co. v. Feibleman, '^-y^ells F. & Co. v. Simpson Na- 44 La. Ann. 518, 10 So. 862. tional Bank, 19 Tex. Civ. App. 636, '"Negot. Inst. Law, § 267; Bills of 47 S. W. 1024, 16 Bkg. L. J. 35. Exch. Act, § 49 (9), Appendix here- ™ Alabama National Bank v. Riv- in. See § 570, et seq., herein. ers, 116 Ala. 1, 22 So. 580. ^1 Alabama National Bank v. Riv- "Boyd v. Bank of Toledo, 32 Ohio ers, 116 Ala. 1, 22 So. 580. St. 526, 30 Am. Rep., 624. See Seld- '- Alabama National Bank v. Riv- ner v. Mt. Jackson National Bank, ers, 116 Ala. 1, 22 So. 580. 66 Md. 488, 8 Atl. 62, 6 Cent. Rep. "Mutual National Bank v. Rotge, 478. As to principle involved see 28 La. Ann. 933, 26 Am. Rep. 126. Bank of Richland v. Nicholson, 120 '^Gillespie v. Planters Oil-Mill & Ga. 622, 48 S. E. 240. Mfg. Co., 76 Miss. 406, 24 So. 900. €85 WAIVER OF PROTEST. [§ 538 dorsement a waiver of protest, the latter is estopped thereby, even though the question of forgery of the indorsement is raised, but the evidence thereon is conflicting.'''*^ Protest may be expressly waived, or the circumstances may be such after the lapse of time as to justify an inference of waiver. '^^ So there may be a conditional waiver of protest, not binding where the terms and conditions thereof are not fulfilled.^" § 538. Waiver of protest, continued. — If an indorser has knowl- edge of the laches in not taking the prerequisite legal steps, and also of all material facts, and he subsequently promises to pay, he waives such laches and becomes bound.** ^ But want of knowledge as to the legal effects of the facts will not release him from the obligation of the waiver.^- And the promise must, it is held, be a new and valid one;^^ although it is also decided that no new consideration is required for a waiver of protest by an indorser on an overdue note.** And it is de- termined in Pennsylvania that from the nature of an indorser^s con- tract a new consideration is not required to support a waiver of pro- test before or after the maturity of the paper. Thus where the in- dorser, eighteen months after the maturity of a note, with knowledge that no demand for the payment of it had been made, and no notice of its dishonor had l^een given, without any new consideration, in- dorses on the note a waiver of protest, he will be bound by the waiver and be liable on the note.*** If the note or the body thereof contains a '' Robinson v. Barnett, 19 Fla. 670, *** Burgettstown National Bank v. 45 Am. Rep. 24. Nill, 213 Pa. 456, 63 Atl. 186. In tliis '"Murphy v. Citizens' Savings case Mr. Justice Mestrezat said: Banlt, 22 Ky. L. Rep. 1872, 62 S. W. "The indorser may waive protest 1028, 61 S. W. 25. after the date of maturity of the ^^ Lititz National Bank v. Siple, note with like effect as if done 145 Pa. 49, 222 Atl. 208, 5 Bkg. L. J. prior to that date. Barclay v. 140. Weaver, 19 Pa. 396; Hoadley v. *^ Alabama National Bank v. Riv- Bliss, 9 Ga. 303; Sheldon v. Horton ers, 116 Ala. 1, 22 So. 580. See (N. Y.), 3 Am. Rep. 669; Ross v. §§ 524, 525 herein. Hurd (N. Y.), 27 Am. Rep. 1 «= Toole v. Crafts (Mass. 1906), 78 Rindge v. Kimball, 124 Mass. 209 N. E. 775. 1 Parsons on Bills and Notes 594 "White V. Keith, 97 Ala. 668, 12 2 Randolph on Commercial Paper, So. 611. § 1456. In Barclay v. Weaver, this " Lockwood V. Bock, 50 Minn. 142, court said (p. 401): 'It seems, 52 N. W. 391. See Delsman v. Fried- therefore, that the duty of demand lander, 40 Oreg. 33, 66 Pac. 297. and notice, in order to hold an in- ^ 538] PROTEST AND WANT OF PROTEST. 686 dorser, is not a part of the contract, but a step in the legal remedy, that may be waived at any time in ac- cordance with the maxim quilibet potest renunciare juri pro se intro- ducto.' In some jurisdictions it is held that the waiver, when made after the maturity of the note, must be with full knowledge of the in- dorser's laches and that it requires a new consideration. But it is set- tled by numerous American author- ities that a waiver of protest need not be supported by a new consider- ation. Neal v. Wood, 23 Ind. 523; Hughes v. Bowen, 15 Iowa 446; Cheshire v. Taylor, 29 Iowa 492; Sheldon v. Horton (N. Y.), 3 Am. Rep. 669; Tebbetts v. Dowd, 23 Wend. 379; Wall v. Bry, 1 La. Ann. 312; Lane v. Steward, 20 Me. 98. We know of no decision in this court holding that such waiver must be supported by a new considera- tion. The contrary rule, however, is distinctly recognized in Barclay v. Weaver, 19 Pa. 396. In that case Mr. Justice Lowrie, in construing the contract of an indorser of ne- gotiable paper, says (p. 400): 'The most, therefore, that can be said of an indorsement of negotiable paper is, that from it there is implied a contract to pay, on condition of the usual demand and notice; and that this implication is liable to be changed on the appearance of cir- cumstances inconsistent with it, whether those circumstances be shown orally or in writing. But it may well be questioned whether the condition of demand and notice is truly part of the contract, or only a step in the legal remedy upon it. If it is part of the contract, how can it be effectually dispensed with without a new contract for a suffi- cient consideration, especially after the maturity of the note? Yet there are decisions without number that a waiver of it during the currency, or after the maturity of the note, will save from the consequences of its omission. This could not be if it was a condition of the contract, for then the omission of it would discharge the indorser both morally and legally; and no new promise afterwards, even with full knowl- edge of the facts, could be of any validity. If, however, an indorse- ment without other circumstances be regarded as an implied contract to pay, provided the holder use such diligence that the indorser loses nothing by his negligence or in- dulgence, then it accords with all these decisions. Then the law, and not the contract, declares the usual demand and notice to be in all cases conclusive, and in some cases neces- sary evidence of such diligence. * * * It (the law) therefore, is perfectly consistent in declaring that an indorser is bound by a new promise, after he knows of the omis- sion of demand and notice, for this is an admission that he was not en- titled to it, or has not suffered for want of it. It declares demand and notice necessary, in some cases, to save the indorser from loss and it declares that his own admission may be submitted for them.' It is mani- fest, therefore, that from the na- ture of the indorser's contract, a new consideration is not required to support a waiver of protest be- fore or after maturity of the paper." I 687 WAIVER OF PROTEST. [§ 539 waiver of protest, persons indorsing the note are bound thereby.^^ And indorsers who write on the note a waiver are likewise bound;®* and an indorser in blank is also obligated by a waiver of protest placed over his name.®'^ Protest may also be waived by indorsing a note on the back of which is a printed waiver thereof, even though the name is not in juxtaposition as to the memorandum;*^ and all the indorsers who sign a stamped waiver on the back of a note will be held thereby .®° § 539. Waiver of protest continued — ^What is included. — A waiver of protest, whether in the case of a foreign bill of exchange or other negotiable instrument, is deemed to be a waiver not only of a formal protest, but also of presentment and notice of dishonor.^** Again, protest may be waived by a guaranty to a bank,^^ So a written ^= Woodward v. Lowry, 74 Ga. 148; Iowa Valley State Bank v. Sigstad, 96 Iowa 491, 65 N. W. 407; Jacobs V. Gibson, 77 Mo. App. 244, 2 Mo. A. Rep. 6. See Portsmouth Savings Bank v. Wilson (D. C. App.), 22 Wash. L. Rep. 817; German-Amer- ican Savings Bank v. Hanna (Iowa), 100 N. W. 57. ^^ Blanc V. Mutual National Bank, 28 La. Ann. 921, 27 Am. Rep. 119. ^' Dunnigan v. Stevens, 122 111. 396, 13 N. E. 651; Davis v. Eppler, 38 Kan. 629, 16 Pac. 793. *^ Farmers' Bank of Kentucky v. Ewen, 78 Ky. 264, 39 Am. Rep. 231; Loveday v. Anderson, 18 Wash. 322, 51 Pac. 463, 15 Bkg. L. J. 100. See Savings Bank v. Fisher (Cal.), 41 Pac. 490. ^^ Farmers' Exchange Bank v. Al- tura Gold Mill Mining Co., 129 Cal. 263, 61 Pac. 1077. ~Negot. Inst. Law, § 182, Appen- dix herein. See also the following cases: California. — San Diego First Na- tional Bank v. Falkenhan, 94 Cal. 141, 29 Pac. 866, 7 Bkg. L. J. 105. Kansas. — Baker v. Scott, 29 Kan. 136, 44 Am. Rep. 628. Louisiana. — Harvey v. Nelson, 31 La. Ann. 434, 33 Am. Rep. 222. Massachusetts. — Johnson v. Par- sons, 140 Mass. 173, 4 N. E. 196, 1 N. Eng. 181. Minnesota. — Wolford v, Andrews, 29 Minn. 250, 43 Am. Rep. 201. Mississippi. — T imberlake v. Thayer, 76 Miss. 76, 23 So. 767, Missouri. — Bradley v. Asher, 65 Mo. App. 589; Hammett v. True- worthy, 51 Mo. App. 281; Johnson County Savings Bank v. Lowe, 47 Mo. App. 151; Wheeler v. Asher, 2 Mo. App. Rep'r. 1236. See Richards V. Harrison, 71 Mo. App. 224. North Carolina. — Shaw v. McNeill, 95 N. C. 535. Ohio. — Seymour v. Francisco, 4 Ohio. Dec. 12, 1 Cleve. Law Rec. 9. Washington. — Wilkie v. Chandon, 1 Wash. 355, 25 Pac. 464. But compare Blatchford v. Harris, 115 111. App. 160; Wilkins v. Gillis, 20 La. Ann. 538; Hay ward v. Em- pire State Sugar Co., 93 N. Y. Supp. 499, 105 App. Div. 21; Sprague v. Fletcher, 8 Oreg. 367, 34 Am. Rep. 587. "^ First National Bank of Lancas- ter V. Hartman, 110 Pa. St. 196, 1 Atl. 271. § 540] PROTEST AND WANT OF PROTEST. 688 agreement, made by the indorser, to become responsible for the amount of the note, is a waiver of protest, such agreement being made the day after maturity.^^ § 540. Waiver of protest continued — Decisions. — Protest may be waived by an agreement for or by an extension of time for payment;®^ or by an offer, before maturity, of a renewal note f^ or by an indorse- ment, before maturity, of such a note.°^ But a mere request for re- newal and a partial payment, without knowledge that protest had been made and notice given to all other parties, is not a waiver.^® And the indorsement of a subsequent note for a sum equal to the balance due on a prior note is not a sufficient evidence of waiver of protest, even though the indorsement was made on the same day on which the unpaid note matured, where there is no evidence of knowledge on the part of the indorser as to the intent in giving such second note.^'^ Again, there may be a waiver consequent upon a telegram to a collect- ing bank to pay and not protest and to draw on the sender of the message, who was one of the partners of a firm,''® If a letter, ambigu- ous in its terms, is claimed to constitute a waiver of protest, it must have been intended by the indorser to so operate.^^ Where an indorser permitted a note to become overdue and he by letter requested that no costs be incurred on another note and offered security, and there- after wrote asking if payment had been made, it was held that there was no waiver.^**** And an indorser's express waiver of protest will not bind him where it is sent to a person not then holding or owning the note, although it subsequently comes into such person's possession for collection, but it does not appear that the indorsee who had indorsed the note for collection knew of such waiver.^"^ The payment of inter- "^McLaurin v. Seguin, Rap. Jud. nooga Const. Co. (Tenn. Ch. App.), Quebec, 12 C. S. 63. 38 S. W. 102. "^ Glaze v. Ferguson, 48 Kan._ 157, "' R. & W. Jenkinson Co. v. Eggers, 29 Pac. 396; McMonigal v. Brown, 28 Pa. Super. Ct. 151. 45 Ohio St. 499, 15 N. E. 860; Bas- "'^ Seldner v. Mt. Jackson National senhorst v. Wilby, 45 Ohio St. 333, Bank, 66 Md. 488, 8 Atl. 262, 6 Cent. 13 N. E. 75, 11 West. Rep. 274. Rep. 478. ^ Jenkins v. White, 147 Pa. 303, 23 "^ First National Bank v. McCord Atl. 556. (Tex. Civ. App.), 39 S. W. 1003. "^ First National Bank v. Weston, ^~ Martin v. Perqua, 20 N. Y. Supp. 49 N. Y. Supp. 542, 25 App. Div. 414. 285, 47 N. Y. St. R. 518, 65 Hun See Hudson River National Bank v. 225. Reynolds, 10 N. Y. Supp. 669, 32 N. '"' National Bank of Poultney v. Y. St. R. 124. Lewis, 50 Vt. 622, 28 Am. Rep. 514, ^i" Carnegie Steel Co. v. Chatta- 689 WAIVER OF PROTEST. [§§ 541, 543 est on a note after its maturity will not constitute a waiver where it does not appear that the indorser knew of the want of protest."^ Again, an express waiver of protest of a note payable a certain time after demand made operates to dispense with demand and notice.^°^ § 541. Waiver of protest — Parties. — The fact that the indorser of a note payable at a chartered bank is a president and also director does not dispense with the necessity of notice and protest to charge the indorser. The relation which the indorser sustains to the bank does not amount to a waiver of his right to such notice.^"* But pro- test of a bill drawn and indorsed by a copartnership may be waived by one of its members, even though he is cashier of the bank which has discounted such bill;^^^ although a settling partner, after disso- lution of the firm, has no power to" waive protest of a draft then given to pay a partnership debt, and so bind a former dormant partner.^"" In case of notes indorsed by a corporation it is decided that its secre- tary may make a binding agreement to' waive protest. ^"^^ And a maker's general waiver of protest as to his paper in a bank is suffi- cient to justify recovery on an unprotested instrument held by such bank, notwithstanding other paper held by that bank had been pro- tested.^"^ Protest of a note of an insolvent indorser may also l)e waived by the curator. ^°^ But diligence must, it is held, nevertheless be exercised in l^ringing action against the maker, even though protest of a non-negotiable note has been waived by the assignor.^^'^ xA.nd although there is no protest or waiver of protest as to other indorsers, still a first indorser may orally waive protest and insist upon contri- bution if held liable and forced to pay.^^^ §542. Certificate of protest — Evidence. — It is declared that it is not disputed that, by the general custom of merchants in the United 102 "vVerr v. Kohles, 71 N. Y. Supp. "' Ludington v. Thompson, 38 N. 713, 64 App. Div. 117. Y. Supp. 768, 4 App. Div. 117. ^"= Cooke V. Pomeroy, 65 Conn. 466, '"* Valley National Bank v. Urich, 32 Atl. 935. 191 Pa. 556, 43 Atl. 354, 16 Bkg. L. "*Ennis v. Reynolds (Ga. 1906), J. 406. 56 S. E. 104. See § 533 herein. """ Boutin, In re. Rap. Jud. Quebec, "= Hays V. Citizens* Savings Bank, 12 C. S. 186. 101 Ky. 201, 40 S. W. 573, 19 Ky. "" Burke v. Ward (Tex. Civ. App.), L. Rep. 367, 14 Bkg. L. J. 327. 32 S. W. 1047. "" Mauney v. Coit, 80 N. C. 300, 30 '" Sloan v. Gibbes, 56 S. C. 480, 35 Am. Rep. 80. S. E. 408. Joyce Defenses — 44. 542] PROTEST AND WANT OF PROTEST. 690 States, bills of exchange, drawn in one state on another state, are, if dishonored, protested by a notary ; and the iDroduction of such protest is the customary document of dishonor. "^ The question, however, of evidence and the force and effect thereof in cases of notarial certifi- cates of protest is regulated to a great extent by statutory provisions. A properly attested and valid certificate of protest affords presump- tive or pi-ima facie evidence of the facts stated therein,^^^ and this applies as well to an inland as to a foreign bill;^^* but it is held to be only prima facie or presumptive evidence.^^^ The seal of a notary makes the certificate of protest at least presumptive evidence of the truth of the facts recited,^" and entitles it, so it is held, to full faith and credit.^ ^^ A certificate is held to be presumptive evidence that presentment tO' a banlv was made during banking hours where it con- tains a statement that the note was presented for payment on a cer- tain day and that the bank was found closed.^^^ In Wisconsin such certificate is not only prima facie or presumptive evidence, but when properly made is sufficient proof of notice.^^'' Under a Xew York decision a notarj-'s certificate, made in Pennsylvania, where such cer- '" Townsley v. Sumrall, 2 Pet. (U. S.) 170. "^ Arkansas. — Fletcher v. Ar- kansas National Bank, 62 Ark. 265, 35 S. W. 228. Georgia. — Patton v. Bank of La- fayette, 124 Ga. 965, 53 S. E. 664. Kentucky. — Mattingly v. Bank of Commerce, 21 Ky. 1029, 53 S. W. 1043. Maryland. — People's Bank v. Brooke, 31 Md. 7, 1 Am. Rep. 11. Massachusetts. — Legg v. Vlnal, 165 Mass. 555, 48 N. E. 518. Xeiv York. — Bank of United States V. Davis, 2 Hill (N. Y.) 551; Bell V. Lent, 24 Wend. (N. Y.) 230; De Wolf V. Murray, 2 Sandf. (N. Y.) 166; Townsend v. Auld, 31 N. Y. Supp. 29, 63 N. Y. St. R. 418, 24 Civ. Proc. 181, 10 Misc. 343, rev'g 28 N. Y. Supp. 746, 59 N. Y. St. Rep. 274. See McAndrew v. Radway, 34 N. Y. 511; Union Bank v. Gregory, 46 Barb. (N. Y.) 98; Bank of Ver- gennes v. Cameron, 7 Barb. (N. Y.) 143. North Dakota. — Ashe v. Beasley, 6 N. Dak. 191, 69 N. W. 188. See Sims v. Hundley, 6 How. (U. S.) 1; McAfee v. Doremus, 5 How. (U. S.) 53; Brandon v. Loftus, 4 How. (U. S.) 127. ^"Ashe V. Beasley, 6 N. Dak. 191, 69 N. W. 188. '"Mattingly v. Bank of Com- merce, 21 Ky. 1029, 53 S. W. 1043; Meise v. Newman, 76 Hun (N. Y.) 341; Townsend v. Auld, 31 N. Y. Supp. 29, 24 Civ. Proc. 181, 63 N. Y. St. R. 418, 10 Misc. 343, rev'g 28 N. Y. Supp. 746, 59 N. Y. St. R. 274. "•^ Second National Bank v. Smith, 118 Wis. 18, 94 N. W. 664. "' Pierce v. Indseth, 106 U. S. 546, 1 Sup. Ct. 418. See Dickins v. Beal, 10 Pet. (U. S.) 572. "' Schlesinger v. Schultz, 96 N. Y. Supp. 383, 110 App. Div. 356. "'' Second National Bank v. Smith, 118 Wis. 18, 94 N. W. 664. I G91 CERTIFICATE OF PROTEST — EVIDEXCE. [§ 543 tificates are evidence, may be admitted in an action in the former state to prove non-payment and notice.^-" In a Minnesota case the certifi- cate is held to be competent to prove the statements therein, where it is admitted without objection except as to the signatures.^-^ Under a Mississippi decision the certificate evidences the fact of presentment and that it was made in the manner set forth therein.^-- And in Xorth Dakota it is held sufficient evidence of a like fact and also that demand was made.^-^ So the receipt of notice of protest is sufficiently evidenced, under a ISTew York decision, by a certificate stating that it was mailed, there being no affidavit of denial of the fact.^^* Again, in a federal supreme court case it is declared that a notarial protest is of itself sufficient proof of dishonor of a foreign bill.^-^ § 543. Same subject. — If the certificate of protest is exclusively relied on, it should sufficiently set forth the doing of every essential act.^^'' Under a Pennsylvania decision a certificate of protest is not conclusive evidence and has merely the force of a deposition.^-'^ If the notary's testimony can be given, such certificate is held, in the absence of a statute, not to be even prima facie evidence of a statement therein that notice of dishonor was served, as the law merchant makes it no part of the notary's duty to give such notice.^^^ So it is also determined that the certificate of protest of an inland bill is not evidence of any fact stated therein. ^2'' Where it does not appear from the certificate that notice of protest was given, i|; is not evidence of that fact, even though it contains a recital that protest was made.^^'' ^"Persons v. Kruger, 60 N. Y. eign bills of exchange, the notarial Supp. 1071, 45 App. Div. 187, 7 N. certificate of protest is, of itself, Y. Ann. Cas. 100. sufficient proof of the dishonor of ^^Herrick v. Baldwin, 17 Minn, a bill, without any auxiliary evi- 209, 10 Am. Rep. 161. dence. '-Witkowski v. Maxwell, 69 Miss. ^"Berg v. Abbott, 83 Pa. St. 17, 56, 10 So. 453. 24 Am. Rep. 158. See Mason v. Kil- ^^Ashe V. Beasley, 6 N. Dak. 191, course, 71 N. J. 472, 59 Atl. 21. 69 N. W. 188. ^--' Farmers' National Bank v. "* McLean v. Ryan, 55 N. Y. Supp. Marshall, 9 Pa. Super. Ct. 621, 44 232, 36 App. Div. 281, aff'd 165 N. Y. W. N. C. 68. 620, 59 N. E. 1126. See First Na- ^-^ Schofield v. Palmer (U. S. C. tional Bank v. Briggs, 70 Vt. 599, C.) 134 Fed. 753. 41 Atl. 586, 16 Bkg. L. J. 40. '-" Union Bank v. Hyde, 6 Wheat. "'Townsley V. Sumrall, 2 Pet. (U. (U. S.) 572; Young v. Bryan, 6 S.) 170, where it is declared that it Wheat. (U. S.) 146. is admitted, that in respect to for- '=' Hobbs v. Chemical National § 543] PROTEST AXD WANT OF PROTEST. 693 A certificate may be attacked and impeached by proper and sufficient evidence contradicting a material fact recited therein.^^^ If the facts certified to are disputed by oral testimony, as in case of a recital that the bank where the presentment was made was closed, the question is one for the jury.^^^ Bank, 97 Ga. 524, 25 S. E. 348. See Am. St. Rep. 828. In this case, how- Peabody Insurance Co. v. Wilson, 29 ever, the evidence was held insuffi- W. Va. 528, 2 S. E. 888. cient. "iSulzbacher v. Charlestown ^^= Berg v. Abbott, 83 Pa. St. 177, Bank, 86 Tenn. 201, 6 S. W. 129, 6 24 Am. Rep. 158. I CHAPTER XXV. WANT OF NOTICE OF PROTEST AND DISHONOR. Sec. Sec. 544. To whom notice of dishonor 558. must be given — Discharge of drawer or indorser. 545. Same subject. 546. Notice to all other parties — 559. Necessary after non-accept- ance at holder's election, not- 560. withstanding subsequent ac- 561. ceptance. 562. 547. To whom notice may be given. 563. 548. Same subject — Notice of pro- test. 564. 549. By whom given. 550. Effect of notice given on be- 565. half of holder or by party en- titled to give notice. 551. When notice sufficient — Form 566. of notice — Notice personally or by mail. 552. Form, contents and sufficiency 567. of notice, continued. 553. Manner or mode — Oral, writ- 568. ten, and personal notice. 554. Manner or mode, continued — Notice by mail. 555. Manner or mode, continued — 569. Sufficiency of address and 570. mailing. 556. Manner or mode, continued — What is included in the term 571. mailing. 572. 557. Manner or mode, continued — Mailing notice — Usage or cus- tom. 573. Manner or mode, continued — • Mailing notice — When suffi- cient and insufficient — In- stances. To whom notice given — Where party dead. Notice to partners. Notice to persons jointly liable. Notice to bankrupt. Time within which notice must be given. Same subject, continued — Dili- gence — Reasonable time. Same subject, continue d — Where parties reside in same place. Same subject, continue d — Where parties reside in dif- ferent places. Time of notice — Subsequent and antecedent parties. Same subject — Notice received on Saturday — Form of notice sent by last indorser — Plead- ing. Where notice must be sent. When notice is dispensed with — Drawer — Indorser — Ex- cuses. Same subject. Delay in giving notice — Ex- cuses — Circumstances beyond holder's control. Waiver of notice. § 544. To whom notice of dishonor must be given — Discharge of drawer or indorser. — Except as otherwise provided by statute, when a negotiable instrument has been dishonored by non-acceptance or non- 693 5W] WANT OF XOTICE OF FROTEST AND DISHONOR. 694 payment, notice of dishonor must be given to the drawer and to each indorser, and any drawer or indorser to whom such notice is not given is discharged.^ The holder is not required to notify all the parties liable, but he may do so, or may give notice to any of them, but those not notified will not be bound ;^ although it is also held that an in- dorsee is entitled to serve notice of protest only upon those indorsers whom he intends and desires to hold liable.^ Under an Ohio decision any one of the successive indorsers may be given notice ;* and under a Michigan case the indorsee need only notify the immediate indorser.^ It is decided in Georgia that where notes are payable at a chartered bank and indorsed by the payee, it is immaterial whether he is an in- dorser for value or for accommodation. He is entitled to notice of dis- honor and can only be held liable as indorser in the event such notice is given; not only the indorsers for value, but all other persons whose indorsement is essential to a due transmission of title, as distinguished ^Negot. Inst. Law, § 160, Appen- dix herein. See §§ 490 et seq., 502 et seq. herein. See also the following cases: United States. — Mitchell v. De- grand, 1 Mason (U. S. C. C.) 176, 180. Delaware. — Standard Sewing Ma- chine Co. v. Smith, 1 Marv. (Del.) 330, 40 Atl. 1117. Florida. — See Robinson v. Aird, 43 Fla. 30, 29 So. 633. Georgia. — Ennis v. Reynolds, (Ga. 1906), 56 S. E. 104; Apple v. Lesser, 93 Ga. 749, 21 S. E. 171. Illinois. — I ndustrial Bank v. Bowes, 165 111. 70, 46 N. E. 10, rev'g 64 III. App. 300, 1 Chic. L. J. Wkly. 455; Kimmel v. Wiel, 95 111. App. 15. Kentucky. — See Murphy v. Citi- zens' Savings Bank, 22 Ky. L. Rep. 1672, 61 S. W. 25, 62 S. W. 1028. Massachusetts. — Browning v. Car- son, 163 Mass. 255, 39 N. E. 1037. Missouri. — Westby v. Stone, 112 Mo. App. 411, 87 S. W. 34. See Glas- gow, Harrison v. Copeland, 8 Mo. 268. New York. — Kelly v. Theiss, 72 N. Y. Supp. 467, 65 App. Div. 146. See Lawrence v. Miller, 16 N. Y. 235. North Carolina. — National Bank V. Bradley, 117 N. C. 526, 23 S. E. 455. Pennsylvania. — L i t i t z National Bank v. Siple, 10 Pa. Co. Ct. 391, aff' d 22 Atl. 208, 5 Bkg. L. J. 140. Tennessee. — Carnegie Steel Co. v. Chattanooga Const. Co. (Tenn. Ch. App.), 38 S. W. 102. Washington. — Galbraith v. Shep- ard (Wash. 1906), 86 Pac. 1114; Sess. Laws 1899, § 89, p. 356. ■ Standard Sewing Machine Co. v. Smith, 1 Marv. (Del.) 330, 40 Atl. 1117. ^ Lyddane v. Owensboro Banking Co., 21 Ky. L. Rep. 320, 51 S. W. 453. * City National Bank of Dayton v. Clinton County National Bank, 49 Ohio St. 351, 30 N. E. 958, 27 Ohio L. J. 325, 6 Bkg. L. J. 515. There was also a point in this case as to effect of giving notice to earlier in- dorser as to time and immediate in- dorser. = Wood V. Callaghan, 61 Mich. 402, 1 Am. St. Rep. 597, 28 N. W. 162. 695 DISCHARGE OF DRAWER OR INDORSEE. [§ 545 from mere sureties by indorsement, are entitled to notice of non-pay- ment and protest." § 545. Same subject. — ISTotice of non-acceptance must be given in the case of a bill of exchange, especialy so where it is payable at sight.'^ So the holder is bound to give notice to the drawer of non- acceptance, without which tlie original payee, to whom the bill is returned, cannot recover against the drawer.^ Again, the rule requir- ing notice of dishonor in order to render the indorser liable has been applied to a note payable in annual installments;® to one who sends paper for collection, irrespective of the fact of indorsement ;^° to demand notes ;^^ to indorsers of overdue notes ;^2 to an order for the payment of money ;^^ to notes of a series ;^* to one who indorses after its maturity the notes of an insolvent ;^^ to co-makers;^® and to in- dorsers whose names are necessary in order to transmit title to a note which it is purposed to negotiate at a chartered bank or which is there payable.^^ Where the other requisites exist notice of non-pay- "Ennis v. Reynolds (Ga. 1906), 56 S. E. 104. See, also, Apple v. Lesser, 93 Ga. 749, 21 S. E. 171. '' Smith V. Unangst, 46 N. Y. Supp. 340, 20 Misc. 564, aff'g 45 N. Y. Supp. 1164, 19 Misc. 711. «Orr v. Maginnis, 7 East. 359. "Reed v. Spear, 94 N. Y. Supp. 1007, 107 App. Div. 144. "Rosson V. Carroll, 90 Tenn. 90, 16 S. W. 66, 43 Alb. L. J. 493. "Leonard v. Olson, 99 Iowa 162, 61 Am. St. Rep. 230, 68 N. W. 677, 35 L. R. A. 381; Harrisburg National Bank v. Moffitt, 3 Dauph. Co. Rep. 69, 10 Pa. Dist. R. 22. ^Beer v. Clifton, 98 Cal. 323, 33 Pac. 204, 35 Am. St. Rep. 172, 20 L. R. A. 580; Kimmel v. Wiel, 95 111. App. 15; Landon v. Bryant, 69 Vt. 203, 37 Atl. 297. See Bassen- horst v. Wilby, 45 Ohio St. 333, 13 N. E. 75, 11 West. Rep. 270. Agreement after maturity to in- dorse notice necessary. Sachs v. Fuller Bros. Toll Lumber & Box Co., 69 Ark. 270, 62 S. W. 902. "Agee V. Smith, 7 Wash. 471, 35 Pac. 370. "Galbraith v. Shepard (Wash. 1906), 86 Pac. 1114. In this case there was no evidence at the trial in support of the allegation that the first note was at maturity presented to the makers with demand for pay- ment followed by notice to the in- dorser of its dishonor. This was held necessary in order to charge respondent as indorser, unless he had waived such presentment, de- mand, and notice. See Bank of Edgefield v. Farmers' Cooperative Mfg. Co., 52 Fed. 98, 2 U. S. App. 282, 2 C. C. A. 637, 18 L. R. A. 201. ^^ Hudson V. Walcott, 4 Ohio Dec. 459, 2 Cleve. L. Rep. 194. '" Legg V. Vinal, 165 Mass. 555, 43 N. E. 518. Under Mass. Pub. Stat, Chap. 77, § 15. But compare Bank of Jamaica v. Jefferson, 92 Tenn. 537, 36 Am. St. Rep. 100, 22 S. W. 211. " Sibley v. American Exchange National Bank, 97 Ga. 126, 25 S. E. 470. 545] WANT OF NOTICE OF PROTEST AND DISHONOR. 696 ment renders the indorsers or drawee of an inland bill liable ;^^ and if the drawer of a domestic bill is misled by statements of the holder, and he sustains a financial loss by reason thereof, he will be dis- charged to the extent of such loss or injury.^^ But want of notice to an indorser who has satisfied the note is not available to the maker as a defense in an action against him by such indorser.^'' A surety on a note is not discharged from liability by reason of the fact that he was not given notice of dishonor, as the liability of a surety is primary and he is absolutely required by the terms of the instrument to pay the same.^^ Nor is a mere surety entitled to notice, even though the note is payable at a bank.^^ It is also decided that a guarantor of a note is not entitled to notice of dishonor,^^ where the guaranty is unqualified and an absolute contract.-* So it is determined that a guarantor must prove damage sustained by failure to make demand and give notice, and even in such case he is discharged only to the amount of the damage sustained ; and that in case of a guaranty on a separate contract the rule as to notice is not so strict.^^ Notice of dis- honor need not be given the maker of a note;^^ nor to a third party who becomes a maker or original promisor by indorsing paper before ^^ Waples-Painter Co. v. Bank of Commerce (Ind. Ty. 1906), 97 S. W. 1025; Peoples' National Bank v. Lutterloh, 95 N. C. 495. ^^ Bank of Richland v. Nicholson, 120 Ga. 622, 48 S. E. 240; Stafford V. Yeates, 18 Johns. (N. Y.) 327. =" Stanley v. McElrath, 86 Cal. 449, 22 Pac. 673, 10 L. R. A. 545. "Rouse V. Wooten, 140 N. C. 557, 53 S. E. 430; Negot. Inst. Law (Chap. 54, Revisal), §§ 2213, 2219, 2239, 2342 considered. "Hunnicut v. Perot, 100 Ga. 312, 27 S. E. 787; Sibley v. American Exchange National Bank, 97 Ga. 126, 25 S. E. 470. -= Farrar v. Peoples' Trust Co., 63 Kan: 881, 64 Pac. 1031. " City Savings Bank v. Hopson, 53 Conn. 455, 2 N. Eng, 556, 5 Atl. 601. Guarantor "necessity of notice and default. — While there, is some con- flict among the authorities, the gen- erally accepted doctrine seems to be, that in case of an absolute and un- conditional guaranty the guarantor becomes liable upon default of the principal, without demand and no- tice of non-payment. And this rule is generally recognized whether the instrument guaranteed is negotiable or not. * * * A different doctrine appears to prevail in some jurisdic- tions, at least in case of a guaranty of negotiable instruments. * * * Where a person gives a continuing guaranty, or a guaranty relating to future transactions, demand and no- tice seem necessary to charge him." Note 105 Am. St. Rep. 516-518. -=Rhett V. Poe, 2 How. (U. S.) 457. ■'^ Guignon v. Union Trust Co., 156 111. 135, 40 N. E. 556, aff'g 53 111. App. 581. «l 697 TO WHOM NOTICE MAT BE GIVEN. [§§ 546-548 its delivery.-" So^ in a case where such a person placed the -word indorser after his name upon the face of the note it was held that notice need not be given to him.-^ § 546. Notice to all other parties necessary after non-acceptance at holder's election, notwithstanding subsequent acceptance. — If a bill is payable at so many days after sight and the holder presents the bill for acceptance and elects to consider that there has been a non- acceptance, even though what passes on presentment shows an accept- ance, and the bill is protested for non-acceptance, the holder is bound by such election as to all the other parties to the bill and must give them notice of dishonor or they will be discharged, and a subsequent acceptance the next day will not be sufficient to charge the drawer, in case no such notice is given, and the drawee fails before the day of payment. "When once a bill is dishonored the right of the other par- ties to notice immediately and absolutely attaches, and no subsequent acts between the holder and drawee can vary that right. Whatever is afterwards done by the holder is at his own peril, and cannot change the responsibility of others. A holder cannot elect to treat a bill as dishonored, and afterwards as duly honored. The consequences of such a doctrine would l^e most mischievous to the commercial world."-^ §547. To whom notice may be given. — jSTotice of dishonor may be given either to the party himself or to his agent in that behalf.^'* It is held that it must be shown that the agent upon whom notice was served had authority or was empowered to receive it.^^ . § 548. Same snbject — Notice of protest. — A notice of protest is sufficiently served when such service is made upon an agent of the indorser, where such agent not only has a power of attorney, but also general supervision and authority, and has been accustomed to exer- cise the same, in negotiations concerning drafts and notes and the transfer, indorsement, acceptance and discounting thereof in his principal's dealings with the plaintiff bank.^- So service may be "Cherry v. Sprague, 187 Mass. of Exch. Act, § 49 (8), Appendix 113, 72 N. E. 456, 67 L. R. A. 33. herein. See §§ 497, 499, 503, 517 ^ Herrick v. Edwards, 106 Mo. herein. App. 633, 81 S. W. 466. "" Robinson v. Aird, 43 Fla. 30, 29 =" Mitchell V. Degrand, 1 Mason So. 633. (U. S. C. C.) 176, 180, per Story, J. ^''Persons v. Kruger, 60 N. Y. ^'Negot. Inst. Law, § 168; Bills Supp. 1078, 45 App. Div. 184, 7 N. § 549] "WANT or NOTICE OF PROTEST AND DISHONOR. 698 made upon an indorser and a person signing as attorney.^ ^ And where an agent of a non-resident indorses an indorsed note of the latter, sent to such agent for delivery to another, if a certain agree- ment can be made, he is sufficiently authorized to receive notice of dishonor, so that notices of protest sent him, including notice for the non-resident, whose address was unknown to the holder, are sufficiently served."* § 549. By whom given. — The notice may be given by or on behalf of the holder, or by or on behalf of any party to the instrument who might be compelled to pay it to the holder, and who, upon taking it ujj, would have a right to reimbursement from the party to whom the notice is given. Such notice may also be given by an agent, either in his own name or in the name of any party entitled to give notice, whether that party be his principal or not. Where the instrument has been dishonored in the hands of an agent, he may either himself give notice to the parties liable thereon, or he may give notice to his principal. If he give notice to his principal, he must do so within the same time as if he were the holder, and the principal, upon the receipt of such notice, has himself the same time for giving notice as if the agent had been an independent holder.^^ Notice of dishonor must be given by the holder of a bill in order to charge the drawer where acceptance or payment has been refused ;^^ it may also be given by an agent or subagent holding that instrument for collection.^^ But it cannot be given by one acting without lawful authority or one vsTongfully in possession.^'* Although makers, who are members of a Y. Ann. Cas. 100, aff'd Kruger v. (Harris v. Robinson, 4 How. [U. S.] Persons, 66 N. Y. Supp. 1135, 52 336; Standard Sewing Machine Co. App. Div. 635. V. Smith, 1 Marv. [Del.] 330, 40 Atl. ==J. H. Mohlman Co. v. McKane, 1117; Lawrence v. Miller, 16 N. Y. 69 N. Y. Supp. 1046, 60 App. Div. 235), or by the latter in his own 546. name (Drexler v. McGlynn, 99 Cal. =*Billings' Estate, In re (Minn), 143, 33 Pac. 773). 85 N. W. 162. '" Morehouse & Wells Co. v. ^''Negot. Inst. Law, §§ 161, 162, Schwaber, 118 111. App. 44. 165; Bills of Exch. Act, § 49, Ap- =^Ashe v. Beasley, 6 N. Dak. 191, pendix herein. See SafEord v. Wyck- 69 N. W. 188. See note to § 550 off, 1 Hill (N. Y.) 11; Bank of Utica herein, v. Smith, 18 Johns. (N. Y.) 230. ^s jjofrichter v. Enyeart (Neb.), Notice by holder or agent. Al- 99 N. W. 658. Examine Viets v. though notice need not be given by Union National Bank, 101 N. Y. 563, the holder personally, still it may 5 N. E. 457, rev'g 31 Hun 454. be given by him or by his agent 699 NOTICE SUFFICIENT — FOIi:M OF NOTICE. [§§ 550, 551 firm and in the position of subsequent indorsers, are not entitled to give a valid notice of protest to another partner, who is an accommo- dation indorser, still they may act in behalf of the holder as his agent and forward by mail to such partner a notice inclosed to them by the notary.^^ Under a Kentucky decision, a statute, which imposes upon notaries the duty to give notice of dishonor to parties entitled to notice by law in order to bind them, does not change the law merchant as to an indorsee's right to give notice of protest to certain indorsers.*'' In a federal case it is declared that a notary is not bound under the law merchant to give to the indorser notice of dishonor in protesting a note.'*^ It is also held that notice that a notan- public had protested an inland bill of exchange is not equivalent to notice of the dishonor of the bill, and is insufficient.*^ § 550. Effect of notice given on behalf of holder or by party en- titled to give notice. — Where notice is given by or on behalf of the holder, it enures for the benefit of all subsequent holders and all prior parties who have a right of recourse against the party to whom it is given. Where notice is given by or on behalf of a party entitled to give notice, it enures for the benefit of the holder and all parties sub- sequent to the party to whom notice is given.*^ § 551. When notice sufficient — Form of notice — Notice personally or by mail. — A written notice need not be signed, and an insufficient written notice may be supplemented and validated by verbal communi- cation. A misdescription of the instrument does not vitiate the notice *" Traders' National Bank V. Jones, B. Men. (Ky.) 576. Examine ■93 N. Y. Supp. 768, 104 App. Div. Smedes v. Bank of Utica, 20 Johns. 433. (N. Y.) 372, aff'd 3 Cow. (N. Y.) " Lyddane v. Owensboro Banking 662. Co., 21 Ky. L. Rep. 320, 51 S. W. " Negot. Inst. Law, §§ 163, 164; 423; Ky. Stat, § 3725. Bills of Exch. Act, § 49, Appendix ^^ Schofield v. Palmer, 134 Fed. herein. Examine Beale v. Parish, 20 753. N. Y. 407. Bankers as collecting agents — Notice of dishonor given by a Notary as public officer — Bank's re- proper party may be availed of by sponsibility for acts of, and also every party entitled at the time to duties and liabilities of bank con- a like notice, as it enures to such sidered, see Britton v. Niccolls, 104 party's benefit. Ashe v. Beasley, 6 U. S. 757; Bird v. Louisiana State N. Dak. 191, 69 N. W. 188. Examine Bank, 93 U. S. 96. Swayze v. Britton, 17 Kan. 627. *= Taylor v. Bank of Illinois, 7 T. 553] WAXT OF NOTICE OF PROTEST AND DISHONOR. roo unless the party to whom the notice is given is in fact misled thereby. The notice may be in writing or merely oral, and may be given in any terms which sufficiently identify the instrument, and indicate that it has been dishonored by non-acceptance or non-payment. It may in all cases be given by delivering it personally or through the mails,^* A notary may be authorized to sign the notice, even though the de- mand was made by the holder."^ If the notice is unsigned by the notary sending it, it is held to be insufficient.*^ § 552. Same subject. — A notice of dishonor should so sufficiently describe the instrument as to identify and show with reasonable cer- tainty what paper is referred to and intended.*^ No particular form, however, is necessary.*^ The notice should indicate in clear terms, at least sufficiently so as to put the indorser on inquiry, that the instru- ment was presented and dishonored, and that the holder will resort to the indorser for paATuent." But it is sufficient if such notice recites a demand, a refusal to pay, the dishonor and protest, and an intention to so resort to the person to whom it is sent;^'' although the indorser will be charged, notwithstanding the intent to look to him for pay- ment is not stated in express and exact terms or words.^^ It is also held to be sufficient to describe, in the notice, the bill by its date, the date of its maturity, tlie drawer's name and the amount." The notice is not invalidated where the indorser is not misled thereby, even though the amount is not correctly stated and there are other indorsers **Negot. Inst. Law, §§ 166, 167; Bank v. Warden, 6 N. Y. 19; Donner Bills of Exch. Act, § 49, Appendix v. Renier, 23 Wend. (N. Y.) 670. herein. See §§ 552-558 herein. "" Standard Sewing Machine Co. v. Notice may be in writing. Stand- Smith, 1 Marv. (Del.) 330, 40 Atl. ard Sewing Machine Co. v. Smith, 1 1117. Marv. (Del.) 330, 40 Atl. 1117. « Witkowski v. Maxwell, 69 Miss. ^'-Meise V. Newman, 29 N. Y. Supp. 56, 10 So. 453. 201, 78 Hun 428, 60 N. Y. St. R. °» Legg v. Vinal, 165 Mass. 555, 43 756, rev'g 27 N. Y. Supp. 708, 76 N. E. 518. Hun 341, 59 N. Y. St. R. 143. " Nelson v. First National Bank, *« People's National Bank v. Dib- 69 Fed. 798, 32 U. S. App. 554, 16 C. rell, 91 Tenn. 301, 18 S. W. 626. C. A. 425, 12 Bkg. L. J. 672; Salo- *• Dodson V. Taylor, 56 N. J. L. 11, mon v. Pfeister & V. Leather Co. (N. 28 Atl. 316; Gates v. Beecher, 60 N. J.), 31 Atl. 602. Y. 518; Artisans' Bank v. Backus, "Brown v. Jones, 125 Ind. 375, 25 36 N. Y. 100, 107; Cayuga County N. E. 452, 3 Bkg. L. J. 442. 701 MANNER OR MODE ORAL AND WRITTEN NOTICE. [§ 553 in the state to wliicli it is sent.^^ Xor will a misdescription of the note void the notice where the indorser is not misled as to the identity of the paper. ^* Nor is the notice vitiated hy its not stating the holder of the bill, nor by the designation of the date in consecutive figures in- tended to represent the month, day and year.'^^ And a mistake as to the date will not make the notice insufficient where it conveys the neces- sary information as to the instrument intended. ^"^ So a notice is suf- ficient where it sets forth that a certain note was indorsed by the per- son to whom it was sent and also by his wife, with a statement that it has matured, that no surplus exists and that the note has not been renewed and also requests that a check be sent for discount. ^'^ Mere knowledge, obtained by the indorser through the maker, of the note's dishonor does not constitute notice as it should come from the party who intends to resort to the former for payment.^ ^ A notice of dis- honor is a sufficient and valid one where a letter, properly addressed and mailed, describes the note, states its non-payment, and that the indorser will be looked to for payment.^'' §553. Manner or mode — Oral, written and personal notice. — It is held that notice of protest or dishonor may be given orally to the indorser;''" so notice may be given orally or in writing where the parties reside in the same to^wn, or written notice may be left at the residence or place of business f^ although personal notice should ordi- ^'King V. Hurley, 85 Me. 525, 27 «> Kelly v. Theiss, 78 N. Y. Supp. Atl. 463. 1050, 12 N. Y. Annot. Cas. 206, 77 "Northup V. Cheney, 50 N. Y. App. Div. 81. Supp. 389, 27 App. Div. 418. See Alabama. — Martin v. Brown, "Brown v. Jones, 125 Ind. 375, 25 75 Ala. 422. N. E. 452, 3 Bkg. L. J. 442. Dates California.— Fierce v. Schaden, 55 were represented by figures, such as Cal. 406. 3-15-1884. Delaware. — Standard Sewing Ma- =» Mills V. Bank of United States, chine Co. v. Smith, 1 Marv. (Del.) 11 Wheat. (U. S.) 431; Bank of 330, 40 Atl. 1117. Alexandria v. Swann, 9 Pet. (U. S.) Iowa. — McKewer v. Kirtland, 33 33. Iowa 348. " Counsell v, Livingston, 2 Ont. Maine. — Ticonic Bank v. Stack- Law Rep. 582. pole, 41 Me. 321, 66 Am. Dec. 246. '^^ Jagger v. National German- Compare Union Bank v. Fonte- American Bank, 53 Minn. 386, 55 N. neau, 12 Rob. (La.) 120. W. 545. See State Bank v. Postal, "'Bowling v. Harrison, 6 How. (U. 34 N. Y. Supp. 18, 67 N. Y. St. R. S.) 248; Williams v. Bank of United 873. 12 Misc. 546. States, 2 Pet. (U. S.) 96. =" Cromer v. Piatt, 37 Mich. 132, 26 Am. Rep. 503. § 553] WAXT OF NOTICE OF PROTEST AND DISHONOR. 702 narily be given where the holder and indorser reside in the same town.®- And under a West Virginia decision the notice is required to be per- sonal or left at the residence or place of busLaess of the indorser if he resides in the same place where the demand of payment is made.*'* So in Virginia it is held that a surety is entitled to personal service of the notice, even though he resides outside the city limits and is absent therefrom, it appearing that he is located very near such limits,*'* But it is also decided that personal service of a notice of protest is not necessary, even though the note is payable at the same town in which the indorser resides, where such paper is held for col- lection by the bank at which it is payable but the owner resides in another place and all notices are sent to him, and in such case it is sufficient if he sends such notice by mail.®^ It is held sufficient, how- ever, although, the parties reside in the same place, that the notice is actually received in time, whether a personal delivery or notice by mail would or would not be otherwise sufficient.^® And if the notice is actually received in proper time by the indorser, there is a suffi- cient service when made at his store upon his wife, who was his assistant there.®^ So, where a notice is duly and properly sent by mail and is delivered to the indorser's wife at his residence, it is sufficiently served.*'® Again, service by mail may be equivalent to personal service, irrespective of place of residence.*'^ But a notice is not sufficiently served by delivering it at the window of the cashier of a hotel corporation, where it does not appear that the attention of any proper person was called thereto, or that any such party had received the same."" Nor, it is held, is personal service on the in- «= John v. City National Bank of 1120; First National Bank of North Selma, 62 Ala. 529, 34 Am. Rep. 35. Bennington v. Wood, 51 Vt. 473, 33 "^Peabody Insurance Co. v. Wil- Am. Rep. 692; Glicksman v. Earley, son, 29 W. Va. 528, 2 S. E. 838. 78 Wis. 223, 47 N. W. 272, 4 Bkg. L. ^ Brown v. Bank of Abington, 85 J. 58. Va. 95, 7 S. E. 357. «' Reed v. Spear, 94 N. Y. Supp. •"Big Sandy National Bank v. 1007, 107 App. Div. 144. Chilton, 40 W. Va. 491, 21 S. E. 774. *' Stanley v. McElrath, 86 Cal. 449, «" Carter v. Odom, 121 Ala. 162, 25 26 Pac. 800, 25 Pac. 161, 10 L. R. A. So. 774; M. V. Monarch Co. v. Farm- 549, 545. ers' & D. Bank, 20 Ky. L. Rep. 1351, ^ Glicksman v. Earley, 78 Wis. 49 S. W. 317, 16 Bkg. L. J. 160; 20 223, 47 N. W. 272, 4 Bkg. L. J. 58. Ky. L. Rep. 1275, 49 S. W. 310. See ™ American Exchange National Reed v. Spear, 94 N. Y. Supp. 1007, Bank v. American Hotel Victoria 107 App. Div. 144; Chapman v. Og- Co., 92 N. Y. Supp. 1006, 103 App. den, 56 N. Y. Supp. 73, 37 App. Div. Div. 372. 355, aff'd 165 N. Y. 642, 59 N. E. 703 JIAXXER OR MODE — NOTICE BY MAIL. [§§ 554, 555 dorser, who lived in the same city as the notary by whom it was pro- tested, evidenced by proof of mailing the notice. '^^ § 554. Same subject. — Notice by mail. — Xotice is sufficient to fix the indorser's liability if the certificate of notice of protest is served by mail, it being regular and valid in other respects.'^^ Such service by mail is valid and binding where notice is received, even though personal service might have been otherwise required ;'^^ and if the indorser receives such notice through the mail it cures an omission to address the notice itself.''* Again, a notice is properly given when sent by mail to an indorser residing in a city having a free postal delivery.'^ § 555. Same subject — Sufficiency of address and mailing. — Where notice of dishonor is duly addressed and deposited in the postoffice, the sender is deemed to have given due notice, notwith- standing any miscarriage in the mails. '^^ The notice should be sufficiently addressed to the proper postoffice of the indorser,'" al- though if the town or place is a small one it may be directed to the postoffice there;" and if no specific address is given by the indorser, it may properly be directed to the city in which he resides.'^'' If the " C. C. Thompson & W. Co. v. Ap- Wisconsin. — Glicksman v. Earley, pleby, 5 Kan. App. 680, 48 Pac. 933. 78 Wis. 223, 47 N. W. 272, 4 Bkg. L. " German-American Bank v. Mills, J. 58. 91 N. Y. Supp. 142, 99 App. Div. 312. '^ Carter v. Odom, 121 Ala. 162, 25 See, also, Alabama. — Carter v. So. 774; M. V. Monarch Co. v. Farm- Odom, 121 Ala. 162, 25 So. 774; ers' & D. Bank, 20 Ky. L. Rep. 1351, Brennan v. Vogt, 97 Ala. 647, 11 So. 1275, 49 S. W. 319, 317, 16 Bkg. L. 893. J. 160; Chapman v. Ogden, 56 N. Y. Kentucky. — M. V. Monarch Co. v. Supp. 73, 37 App. Div. 355, aff'd 165 Farmers' & D. Bank, 20 Ky. L. Rep. N. Y. 642, 59 N. E. 1120. 1351, 1275, 49 S. W. 319, 317, 16 Bkg. "' Glicksman v. Earley, 78 Wis. L. J. 160. 223, 47 N. W. 272, 4 Bkg. L. J. 58. New Jersei/.— Salomon v, Pfeister '= Brennan v. Vogt, 97 Ala. 647, 11 (N. J.), 31 Atl. 602. So. 893. Isfew Yorfc.— J. H. Molman Co. v. '" Negot. Inst. Law, § 176, Appen- McKane, 69 N. Y. Supp. 1046; Mc- dix herein. Lean v. Ryan, 55 N. Y. Supp. 232, 36 " Northwestern Coal Co. v. Bow- App. Div. 281, 16 Bkg. L. J. 102, man, 69 Iowa 150. aff'd 165 N: Y. 620, 59 N. E. 1126. " Morse v. Chamberlain, 144 Mass. Pennsylvania. — See Newbold v. 406, 11 N. E. 560, 4 N. Eng. 211. Boraef, 155 Pa. 227, 26 Atl. 305. "Webber v. Gotthold, 28 N. Y. Tennessee.— First National Bank Supp. 763, 59 N. Y. St. R. 416, 8 v. Reid (Tenn.), 58 S. W. 1124. Misc. 503. § 555J WANT OF NOTICE OF -PROTEST AXD DISIIOXOR. 704 envelope or cover containing the proper notice is correctly addressed, postage prepaid and duly deposited in tlie mail, it is ordinarily suffi- cient,®° even though it is never received by the indorser, as the holder cannot be held chargeable for miscarriage of the mail.^^ If notice is received in due time, it is sufficient, even though improperly ad- dressed.^2 So the fact that a notice properly addressed was received by another having the same name does not prevent the notice being eifectual.^^ And even though a notice of protest is not received by an indorser, it is sufficient where it is remailed to him by another indorser residing in the same place to whom both notices were sent under one cover.^* Again, a notice of protest is properly given, even though it is not received by the indorser and she has changed her residence before it is mailed, where it appears that the notary, acting upon information received as to her residence, sent the notice to that place by mail in care of the maker, although there was no postoffice at such place, and her residence had in fact been at another place, and she had been accustomed to receive her mail at the postoffice nearest to that to which the notice was sent and to which it was the duty of the postal agent to forward mail in such cases. ^^ If, how- ever, the notary of a bank to which notes are sent for collection mis- directs, the notice of protest, and in consequence thereof it is not received, and the indorser is not notified, no liability ensues.^^ Ad- s' Glicksman v. Earley, 78 "Wis. Tito.— Walker v. Stetson, 14 Ohio 223, 47 N. W. 272, 4 Bkg. L. J. 58. St. 89, 84 Am. Dec. 362. See, also, Manchester v. Van Brunt, Examine Apple v. Lesser, 93 Ga. 40 N. Y. St. R. 56, and cases cited 749, 21 S. E. 171. in the first note to § 533 herein. ^- Bank of United States v. Cor- '^ Liggett V. Wing, 1 Ohio Dec. 277, coran, 2 Pet. (U. S.) 121. 31 Ohio L. J. 85 ; Cook v. Forker, ^ Morse v. Chamberlain, 144 Mass. 193 Pa. St. 461, 44 Atl. 560. 406, 11 N. E. 560, 4 N. Eng. 211. See the following cases: »*Van Brunt v. Vaughn, 47 Iowa Maine.— Lord v. Appleton, 15 Me. 145, 29 Am. Rep. 468. 270. ^Central National Bank v. Ad- Massachusetts.— Morse v. Cham- ams, 11 S. C. 452, 32 Am. Rep. 495. herlain, 144 Mass. 406, 11 N. E. 560, *" Davey v. Jones, 13 Vroom (N. 4 N. Eng. 211; Munn v. Baldwin, 6 J.) 28, 36 Am. Rep. 505. Mass. 316. Not mailing to correct address. — Mimiesota.— Wilson v. Richards, See, also. Hart v. McLellan, 80 Me. 28 Minn. 337, 9 N. W. 872. 95, 13 Atl. 272, 6 N. Eng. 138; Al- Mississippi.— Ellis v. Commercial bany Trust Co. v. Frothingham, 99 Bank of Natchez, 7 How. (Miss.) N. Y. Supp. 343, 50 Misc. 598; How- 294, 40 Am. Dec. 63. ard v. Van Gieson, 61 N. Y. Supp. 349, 46 App. Div. 77. 705 MANNER OR MODE NOTICE BY MAIL. [§§' 556-558 dressing the notice to personal representatives or executors as "admin- istrators" does not invalidate it.^^ If due diligence is exercised in sending notice, another notice is not required, even though the exact address is ascertained.^^ Again, testimony of the notary that he deposited the notice in the postoffice constitutes sufficient proof of notice.^'* § 556. Same subject — ^What is included in the term mailing. — The right to deposit a notice in the postoffice is not limited, but ex- tends to all kinds of proper places f° so that a notice may be deposited in a mailing or postoffice box on the street, and it is effectual where such box is part of the mailing or delivery system.^^ A notice of pro- test properly inclosed, addressed and stamped may also be delivered to a letter-carrier on his route discharging his duty of delivering and collecting mail.^- § 557. Same subject — Mailing notice — Usage or custom. — The mode of giving notice may be affected by the usage of the bank at which the note is payable, and such usage may justify and make suf- ficient and binding a notice sent through the postoffice to indorsers residing in the place where the bank is located."^ Again, even though the holder and indorser reside in the same town, if it is customary to give notice of protest by mail it is sufficient, it appearing that such notice was received by the indorser.^* § 558. Same subject — Mailing notice — ^When sufficient and in- sufficient — Instances. — A notice of protest is sufficient if sent by mail to the indorser at his place of residence, even though he was absent at a temporary summer residence at another place, where the indorser had given instructions to address mail to him at the former " Drexler v. McGlynn, 99 Cal. 143, v. Callaghan, 61 Mich. 402, 28 N. W. 33 Pac. 773. 162, 1 Am. St. Rep. 597; Manchester ^^ Lambert V. Ghiselin, 9 How. (U. v. Van Brunt, 40 N. Y. St. R. 56. S.) 552. See, also, Negot. Inst. Law, § 177, ^ Dickins v. Beal, 10 Pet. (U. S.) Appendix herein. 572. °=Pearce v. Langfit, 101 Pa. St. ^ Morse v. Chamberlain, 144 Mass. 507, 47 Am. Rep. 737. 406, 11 N. E. 560. «' Carolina National Bank v. Wal- "^Casco National Bank v. Shaw, lace, 13 S. C. 347, 36 Am. Rep. 694. 79 Me. 376, 10 Atl. 67, 4 N. Eng. 673; "'Carter v. Odom, 121 Ala. 162, 25 Johnson v. Brown, 154 Mass. 105, So. 774. See Isbell v. Lewis, 98 Ala. 27 N. E. 994, 5 Bkg. L. J. 84; Wood 550, 13 So. 335. Joyce Defenses — 45. § 558] WANT OF NOTICE OF PROTEST AND DISHONOR. 706 place. ^^ Such a notice is also properly given and is sufficient where on the day of maturity it is mailed to the indorser to his former residence and on the day following it is forwarded to him by the same mail and is received by him at his residence. ^^ And prior indorsers are bound where the manifests of protest are forwarded to them by the last indorser, in due time after receiving all the notices from the notary, who had sent them all to him for the reason that the notary did not know the residence or place of business of any of the prior indorsers.''^ But if notices are thus sent to the last indorser, and he fails to perform his duty in forwarding to a prior indorser one of the notices so received, the latter is not bound, where no notice is served upon him in any other manner.^^ A notice is, however, sufficient when mailed to the indorser and to a person who signed the indorse- ment as her attorney and addressed to them at the town where the note was dated, and at the time of sending such notice the defend- ant's residence had not been changed.^^ And where it appears from the notarial certificate, that the notice was mailed to the indorser, a proper service thereof upon him is shown. ^°° But where a surety is entitled to personal service of a notice of protest, a drop-letter mailed to him at the same town, there being no mail carriers there, is insuffi- cient.^"^ If a note is received by a bank and forwarded by it for col- lection, and it neglects or fails to forward notices of protest sent to it by a notary, and the indorsers are thereby discharged, such bank will be responsible to the holder for loss so sustained by him.^°- It is sufficient, if the evidence shows that the letter was mailed, for the proof to be submitted to the jury.^"^ It is also evidence of notice that an insolvent indorser specifies the bill as part of his indebted- ness. ^''^ '= Lowell Trust Co. v. Pratt, 183 ^°° McLean v. Ryan, 55 N. Y. Supp. Mass. 379, 67 N. E. 363, under St. 232, 36 App. Div. 281, 16 Bkg. L. J. 1881, Ch. 77, § 16, p. 428. See, also, 102, aff'd 165 N. Y. 620, 59 N. E. First National Bank v. Reid 1126. See Peabody Insurance Co. v. (Tenn.), 58 S. W. 1124. Wilson, 29 W. Va. 528, 2 S. E. 888. »° First National Bank of North '"Brown v. Bank of Abington, 85 Bennington v. Wood, 51 Vt. 473, 33 Va. 95, 7 S. E. 357. Am. Rep. 692. ^"^ Bird v. Louisiana State Bank, " Metropolitan Bank v. Engel, 72 93 U. S. 96. N. Y. Supp. 691, 66 App. Div. 273. "' Lindenberger v. Beal, 6 Wheat. »» Henry v. Spengler, 12 Ohio C. (U. S.) 104. C. 153, 1 Ohio C. D. 362. '»* Hyde v. Stone, 20 How. (U. S.) ^''J. H. Mohlman Co. v. McKane, 170. 69 N. Y. Supp. 1046, 60 App. Div. "546. V07 TO WHOM NOTICE GIVEN — PARTY DEAD. [§§ 559, 5G0 § 559. To whom notice given — Where party dead. — When any party is dead, and his death is known to the party giving notice, the notice must be given to a personal representative, if there be one, and if with reasonable diligence he can be found. If there be nO' personal representative, notice may be sent to the last residence or last place of business of the deceased."^ It is held that in case the indorser is dead, notice of protest may be given to his executors or personal representatives, even before they are appointed."^ And if, on the death of the person primarily liable, no personal representative has been appointed, and no place of payment is specified, reasonable dili- gence has been exercised in making presentment and giving notice of dishonor, in the required manner and mode, the indorser will be charged."^ But the required degree of diligence should be exercised in giving notice to known personal representatives, and in case none is known or can be found, then the notice may be sent to the indorser's last known place of residence. ^''^ It is also decided that notice of protest must be given to the executor of an indorser who dies before the note matures, even though the maker is such executor."^ If the holder and notary have no knowledge of the death of the indorser who had died a short time prior to the note's maturity, and the notice of protest is sent to his address, such notice is sufficient to charge his estate where one of the heirs and the administrator actually receive the notice.^^° §'560. Notice to partners. — Where the parties to be notified are partners, notice to any one partner is notice to the firm, even though there has been a dissolution.^" So, upon the question of protest and '"^Negot. Inst. Law, § 169; Bills of Port Jefferson v. Darling, 36 N. of Exch. Act, § 49, Appendix herein. Y. Supp. 153, 91 Hun 236, 72 N. Y. ^""Drexler v. McGlynn, 99 Cal. 143, St. R. 54. 33 Pac. 773. "i Negot. Inst. Law, § 170, Appen- ^"Reed v. Spear, 94 N. Y. Supp. dix herein. See Maspero v. Pedes- 1007, 107 App. Div. 144. claux, 22 La. Ann. 227, 2 Am. Rep. '"^Dodson V. Taylor, 56 N. J. L. 727; Bank of America v. Shaw, 142 11, 28 Atl. 316. See this case, also, Mass. 290, 2 N. Eng. 572, 7 N. E. as to sufficiency of notice. 779; Gates v. Beecher, 60 N. Y. 518; ""Carolina National Bank v. Wal- Hubbard v. Matthews, 54 N. Y. 43; lace, 13 S. C. 347, 36 Am. Rep. 694. Bank of Vergennes v. Cameron, 7 ""Maspero v. Pedesclaux, 22 La. Barb. (N. Y.) 143. Ann. 227, 2 Am. Rep. 727. See, also, That protest and notice of protest Bank of Ravenswood v. Wetzel (W. may be given to one of partners in Va.), 50 S. E. 886. Examine Bank case of dissolution, see Fourth Na- 561] "WAXT OF NOTICE OF PROTEST AXD DISHONOR. 708 notice in case of a partnership, such notice is properly left at the residence of one of the firm or at its place of business with some one there in charge.^^^ If a bank holds a foreign bill and has notice of its non-payment, the fact that its cashier is one of the members of a firm which drew and indorsed the paper renders protest of such bill un- necessary to charge the partners.^^^ § 561. Notice to persons jointly liable. — jSTotice to joint parties who are not partners must be given to each of them, unless one of them has authority to receive such notice for the others.^^* And where by the state law the same notice should be given to joint makers as to indorsers the former are nevertheless entitled to notice, even though their names are on a corporation's note as such makers and they also are directors thereof and are a majority of the board.^^^ But notice need not be given to joint makers who are sureties.^^® And it has been decided that where one of the joint makers has knowledge that the note is unpaid, the fact that the other maker of the bill has not been noti- fied of the non-payment will not operate to release him from liability, even though the former's name is not signed to the paper.^^^ tional Bank v. Altheimer, 91 Mo. 190, 8 West. Rep. 562, 3 S. W. 858; Myer v. Withman, 41 Mo. App. 397. Notice may be directed to partner by individual name. United States National Bank v. Burton, 58 Vt. 426, 2 N. Eng. 206, 3 Atl. 756. Notice to drawers unnecessary where drawer and acceptor are firms with common partner. New York & Alabama Contracting Co. v. Selma Savings Bank, 51 Ala. 305, 23 Am. Rep. 552. Effect of waiver by one partner and holder's notice of fraud and want of authority and necessity of notice of protest. See Presbrey v. Thomas, 1 App. D. C. 171, 21 Wash. L. Rep. 659. ^^ Fourth National Bank v. Alt- heimer, 91 Mo. 190, 8 West. Rep. 562, 3 S. W. 858. "* Hays V. Citizens' Savings Bank, 101 Ky. 201, 19 Ky. L. Rep. 367, 14 Bkg. L. J. 327, 40 S. W. 573. See Citizens' Savings Bank v. Hays, 16 Ky. L. Rep. 505, 29 S. W. 20. "*Negot. Inst. Law, § 171; Bills of Exch. Act, § 49, Appendix herein. See Bowie v. Hume, 13 App. D. C. 286 (citing Shepard v. Hawley, 1 Conn. 368, 6 Am. Dec. 244; People's Bank v. Keech, 26 Md. 521, 90 Am. Dec. 118; Willis v. Green, 5 Hill (N. y.) 232, 40 Am. Dec. 351; Bank of United States v. Beirne, 1 Gratt. (Va.) 234, 42 Am. Dec. 551); Jarni- gen V. Stratton, 95 Tenn. 619, 32 S. W. 625, 30 L. R. A. 495. "' Phipps V. Harding, 70 Fed. 468, 34 U. S. App. 148, 17 C. C. A. 203, 30 L. R. A. 513. ""Marion National Bank v. Phil- lips, 16 Ky. L. Rep. 159, 35 S. W. 910. ^^" Citizens' Savings Bank v. Hays, 16 Ky. L. Rep. 505, 29 S. W. 20. See Hays v. Citizens' Savings Bank, 101 Ky. 201, 19 Ky. L. Rep. 367, 14 Bkg. L. J. 327, 40 S. W. 573. I 709 NOTICE TO BAXKRUPT. [§§ 562, 563 § 562. Notice to bankrupt. — Where a party has been adjudged a bankrupt or an insolvent, or has made an assignment for the benefit of creditors, notice may be given either to the party himself or to his trustee or assignee. ^^® So notice is held sufficient where received by the trustee or assignee at an insolvent firm's former place of busi- ness."^ And notice to parties secondarily liable is necessary notwith- standing tlie insolvency of the drawee and acceptor of a draft. ^^" § 563. Time within which notice must be given. — The negotiable instruments law provides that notice may be given as soon as the in- strument is dishonored; and unless delay is excused as provided by that enactment, it must be given within the times fixed by the act.^^^ It is held that after demand made for payment and refusal, notice should be immediately given^-^ without delay, even though the in- dorser lives in the place where the draft is presented for payment •,^^^ and where demand is made on the third day of grace notice given to the indorser on the same day is sufficient. ^^^ But it is also decided that notice of dishonor may properly be given on the day after ma- turity as evidenced by the actual date of the note and not by the date of its delivery.^25 g^ ^^ jg (determined in another case that notice sent by mail the next day after dishonor is sufficient. ^-° Immediate notice must be given after demand and refusal, to an indorser after ma- turity of negotiable paper.^" A notice to the indorser on the last day "'Negot. Inst. Law, § 172; Bills ^^^ Negot. Inst. Law, § 173; Bills of Exch. Act, § 49, Appendix herein, of Exch. Act, § 49, Appendix herein. See, also, Callahan v. Bank of Ken- ^"German-American Bank v. At- tucky, 82 Ky. 231; American Na- water, 165 N. Y. 36, 58 N. E. 763, tional Bank v. Junk Bros. Lumber aff'g 53 N. Y. Supp. 1104. See Bowes 6 Mfg. Co., 94 Tenn. 624, 30 S. W. v. Industrial Bank, 64 111. App. 300, 753, 28 L. R. A. 492, 40 Cent. L. J. 1 Chic. L. J. wkly., rev'd 165 111. 70, 450. 46 N. E. 10. Notice of protest— To whom given ^^ Manning First National Bank after receiver appointed. See note v. Farneman, 93 Iowa 161, 61 N. W. 61 L. R. A. 900. 424, 12 Bkg. L. J. 73. "" Case National Bank v. Shaw, 79 ^-* Lindenberger v. Beall, 6 Wheat. Me. 376, 10 Atl. 67, 4 N. Eng. 673; (U. S.) 104. Importers' National Bank v. Shaw, ^ Meyer v. Foster, 147 Cal. 166, 144 Mass. 421, 11 N. E. 666, 4 N. 81 Pac. 402. Eng. 344. See Bank of America v. '=« Bank of Alexandria v. Swann, Shaw, 142 Mass. 290, 2 N. Eng. 572, 9 Pet. (U. S.) 33. 7 N. E. 779. 1-"- Graul v. Strutzel, 53 Iowa 712, ""National Bank v. Bradley, 117 36 Am. Rep. 250. N. C. 526, 23 S. E. 455. Time for notice where indorsed § 564] WAXT OF NOTICE OF PROTEST AND DISHOXOR. 710 of grace is not premature.^-^ And although a notice bears a date of the day preceding its service it is insufficient when such service is made personally or by mail on the second day after maturity. ^^^ If a bank receives for collection a bill sent to it by another and branch bank, which had also received it for collection, the bank last receiving the bill gives due notice of dishonor where it directs such notice to the sending bank at a still different branch on the day following dishonor, and also sends a telegram to the sending bank on the day next there- after.i^'" §564. Same subject, continued — Diligence — Reasonable time. — A party upon whom falls the duty to give notice of dishonor is bound to use due diligence.^^^ "The time of giving notice is affected by differ- ent conditions and circumstances. If the residence of the party is unknown of course notice is an impossibility. But in such case it is incumbent upon the holder, and all other parties who are bound to give notice, to use reasonable diligence and make due inquiries as to the actual residence of the party so entitled to notice. What will be due and reasonable diligence in this respect must depend upon the circumstances of the particular case, for no invariable or definite rule after maturity same as when in- gence in ascertaining place of resi- dorsed before. Rosson v. Carroll, dence of indorser and to inform 90 Tenn. 90, 16 S. W. 66, 43 Alb. L. notary. Hazlett v. Bragdon, 7 Pa. J. 493. Super. Ct. 581. '^^ King V. Crowell, 61 Me. 244, 14 Diligence — Sundays, holidays and Am. Rep. 560. Saturdays. See Hitchcock v. Hogan, ^ Hirt V. Vincent, 29 N. Y. Supp. 99 Mich. 124, 57 N. W. 1095, 10 Bkg. 61, 59 N. Y. St. R. 687, 9 Misc. 87, L. J. 292; Sylvester v. Crohan, 138 rev'g 27 N. Y. Supp. 258, 58 N. Y. N. Y. 494, 53 N. Y. St. R. 113, 34 N. St. R. 36, 7 Misc. 237. E. 273, aff'g 63 Hun 509, 18 N. Y. ^'"Fielding v. Corry, 67 L. J. Q. B. Supp. 546, 45 N. Y. St. R. 320; Len- N. S. 7 [1898], 1 Q. B. 268 (C. A.), hart v. Ramey, 2 Ohio C. D. 77; 77 Law T. Rep. 453. Newbold v. Boraef, 155 Pa. 227, 26 "' Bank of Columbia v. Lawrence, Atl. 305. See § 568 herein. 1 Pet. (U. S.) 578; Hart v. McLel- Notary — Negligence in not giving Ian, 80 Me. 95, 13 Atl. 272, 6 N. Eng. sufficient notice of dishonor of in- 138; Billings Est., In re (Minn.), 85 land draft not chargeable to col- N. W. 162; Hazlett v. Bragdon, 7 lecting bank, of which notary is Pa. Super. Ct. 581. See Lambert v.- assistant cashier, even though part Ghiselin, 9 How. (U. S.) 52; Uni- of a notary's official duty to give versity Press, John Wilson & Son v. such notices. See First National Williams, 59 N. Y. Supp. 817, 28 Bank v. German Bank, 107 Iowa Misc. 52. 543, 44 L. R. A. 133, 78 N. W. 195, 16 Duty of holder to use due dili- Bkg. L. J. 220. I 711 WHERE PARTIES EESIDE IX SAME PLACE. [§ 565 can be laid down ; and what would be due and reasonable diligence in one case might fall far short in another."^^^ Where a note was pro- tested and notice was not received by the indorser for about three months after protest, it having been sent to a place which was not the last known address of defendant and the plaintiff not having exer- cised reasonable diligence to ascertain the actual address it was held that no recovery could be had by the payee against the indorser.^^^ A delay of thirty-three months/^* of more than ten months/ ^^ and of four and a half months is unreasonable.^^'' So a delay of two weeks will discharge the indorsers.^^^ § 565. Same subject, continued — ^Where parties reside in same place. — Where the j^erson giving and the person to receive notice re- side in the same place, notice must be given within the following times: (1) If given at the place of business of the person to receive notice, it must be given before the close of business hours on the day following; (2) if given at his residence, it must be given before the usual hours of rest on the day following; (3) if sent by mail, it must be deposited in the postoffice in time to reach him in usual course on the day following.^^® A notice of dishonor must be given in con- "= Fugitt V. Nixon, 44 Mo. 295, 299, citing Story on Prom. Notes, § 335. Notice must be given in reason- able time. Apple v. Lesser, 93 Ga. 749, 21 S. E. 171; Industrial Bank v. Bowes, 165 111. 70, 46 N. B. 10, rev'g 64 111. App. 300, 1 Chic. L. J. Wkly. 455; Leonard v. Olson, 99 Iowa 162, 68 N. W. 677, 35 L. R. A. 381, 61 Am. St. Rep. 230. See Hart v. Mc- Lellan, 80 Me. 95. 13 Atl. 272, 6 N. Eng. 138; Saco National Bank v. Sanborn, 63 Me. 340, 18 Am. Rep. 224; New York Belting & P. Co. v. Ela, 61 N. H. 352. Notice to indorser of demand note must be given in reasonable time. Harrisburg National Bank v. MofRtt, 10 Pa. Dist. R. 22, 3 Dauph. Co. Rep. 69. Notice received on following day is in reasonable time where in- dorser resided but a short distance from the place where note payable. Phelps V. Stocking, 21 Neb. 443. Reasonable time question for jury. See Bank of North America v. Pet- tit, 4 Ball. (U. S.) 127; Ball v. Den- niston, 4 Ball. (U. S.) 163. But compare Watson v. Terpley, 18 How. (U. S.) 517. "^ Albany Trust Co. v. Frothing- ham, 99 N. Y. Supp. 343. "^ Harrisburg National Bank v. Moffitt, 10 Pa. Bist. R. 22, 3 Bauph. Co. Rep. 69. "" Turner v. Iron Chief Mining Co., 74 Wis. 355, 43 N. W. 149, 5 L. R. A. 533. "" Pattillo V. Alexander, 96 Ga. 60, 22 S. E. 646, 29 L. R. A. 616. "" German-American Bank v. At- water, 165 N. Y. 36, 58 N. E. 763, aff'g 53 N. Y. Supp. 1104. "^Negot. Inst. Law, § 174; Bills of Exch. Act, § 49, Appendix herein. § 566] WANT OF NOTICE OF PROTEST AND DISHONOR. 71S fon^iity with a statutory requirement, and where the time is thereby limited to the close of business hours on the day following dishonor if it is given thereafter it is not in time.^^'' But it is held that the holder has all the day following that of dishonor within which to give notice,"" and if such notice is received on the first business day after protest it is sufficients*^ So where custom warrants sending such notice by mail, and it is sent in time, and the indorser receives it, it is sufficient, even though he resides in the same town.^*^ Again, it is a sufficient notice where it is mailed immediately after protest to the city residence of the indorser, even though she was away at a tempo- rary summer residence.^*^' § 566. Same subject, continued — ^Where parties reside in different places. — Where the person giving and the person to receive notice re- side in different places, the notice must be given within the following times: (1) If sent by mail, it must be deposited in the postoffice in time to go by mail the day following the day of dishonor, or if there be no mail at a convenient hour on that day, by the next mail there- after. (2) If given otherwise than through the postoffice, then within the time that notice would have been received in due course of mail, if it had been deposited in the postoffice within the time specified in the last subdivision.^** Where the parties to a bill reside at a distance and the ordinary mode of communication is by the general post, the universal rule seems to be that the holder or party to give the notice must forward it by the post of the next day after the dishonor, or after he received notice of such dishonor ; and if there be no post on such next day, then he must send off notice by the very next post that oc- curs after that day; but he is not legally bound on account of there being no post on the day after he receives notice, to forward it on the very day he receives it. If the notice be placed in the proper post- office in due time it is legal diligence ; the holder or party to give no- tice not being responsible for the irregularities of the mail.^*^ It is See, as to mailing, §§ 551, 553-558 tional Bank, 25 Neb. 127, 41 N. W. herein. 133. ^■'"Solomon v. Cohen, 94 N. Y. "= Carter v. Odom, 121 Ala. 162, 25 Supp. 502. So. 774. See Cassidy v. Kreamer "» Marks v. Boone, 24 Fla. 177, 4 (Pa.), 13 Atl. 744, 12 Cent. Rep. 286. So. 532. "= First National Bank v. Reid i"M. V. Monarch Co. v. Farmers' (Tenn. Ch. App.), 58 S. W. 1124. & D. Bank, 20 Ky. L. Rep. 1351, 1275, ^"Negot. Inst. Law, § 175; Bills 49 S. W. 319, 317, 16 Bkg. L. J. 160. of Exch. Act, § 49, Appendix herein. See Hendershot v. Nebraska Na- "= Knott v. Venable, 42 Ala. 186, I 713 TIME OF XOTICE. [§ 567 held that where the parties did not reside in the same place, and the bankers who held the note for collection mailed the notice of protest, on the day such protest was made, to the owners, who, on receiving the same, mailed it to the indorser at another place, such notice is valid and proper diligence is exercised, even though several days elapse between the date of protest and the date when the notice is re- ceived by the indorser, and although there is a daily mail between his place and the place where the bank is located, and the residence of the indorser was known to the parties but not to the notary.^**' § 567. Time of notice — Subsequent and antecedent parties. — Where a party receives notice of dishonor, he has, after the receipt of such notice, the same time for giving notice to antecedent parties that the holder has after the dishonor. ^^'^ Notice sent on the same day on which it is received is sufficient.^^® And if notice is sent to his prior indorser by each successive indorser the day after the latter receives such notice it is transmitted in time;^*" and it is held that notice in such case must be sent not later than the following day.^^" Again no- tices may be served upon prior indorsers whosei: residences are un- known by sending all notices to the last indorser whose duty in such 195, 196, per Judge, J. (citing Craw- North Carolina. — National Bank ford v. Branch Bank at Mobile, 7 v. Bradley, 117 N. C. 526, 23 S. E. Ala. 206; Whitman v. Farmers' 455. Bank of Chattanoochee, 8 Port. West Virginia. — Peabody Ins. Co. (Ala.) 258; Lord v. Appleton, 3 v. Wilson, 29 W. Va. 528, 2 S. E. 888. Shep. (Me.) 270; Bell v. Hagers- Notice by mail where parties re- town Bank, 7 Gill (Md.) 216; Ellis side in different places. See Car- v. Commercial Bank, 7 How. (Miss.) rington v. Odom, 124 Ala. 529, 27 So. 294; Bray v. Hadman, 5 Maule & S. 510; Sharpe v. Drew, 9 Ind. 281; 68; Chitty on Bills, M. p. 486. Wood v. Rosendale, 18 Ohio Cir. Ct. See the following cases: R. 247, 10 0. C. D. 66; see, also. United States. — Bussard v. Lever- §§ 551, 553-558 herein, ing, 6 Wheat. (U. S.) 102; Alexan- "« Seaton v. Scovill, 18 Kan. 433, dria Bank v. Swann, 9 Pet. (U. S.) 26 Am. Rep. 779. 33. "^Negot. Inst. Law, § 178; Bills Indiana. — Brown v. Jones, 125 of Exch. Act, § 49 (14), Appendix Ind. 375, 21 Am. St. Rep. 227, 25 N. herein. E. 452. '^ Smith v. Poillon, 87 N. Y. 590, Maine. — Goodman v. Norton, 17 41 Am. Rep. 402. Me. 381. "' Standard Sewing Machine Co. IVe&rasfca.— Phelps v. Stocking, 21 v. Smith, 1 Marv. (Del.) 330, 40 Atl. Neb. 443, 32 N. W. 217. 1117. New York. — Robinson v. Ames, 20 ''"Wolf v. Hostetter (Pa.), 13 Johns. (N. Y.) 146, 11 Am. Dec. 259. Lane. L. Rev. 201. § 568] WANT OF NOTICE OF PROTEST AND DISHONOR. 714 case is to forward tliem.^^^ And although the last indorser is only an agent for collection, notice is sufficient if sent to him by the first mail and one additional day should be allowed him in which to notify his immediate indorser,^^^ But an immediate indorser is not charged by notice, where a bank, which had discounted the paper and had re- ceived notice of its dishonor the day following such dishonor, sends notice at the close of business hours on that day by drop letter, at a place having no letter carrier system, so that such notice is not received until the next following day, making the time of receiving the notice the second day after the bank had received it.^^^ §568. Same subject — Notice received on Saturday — Form of no- tice sent by last indorser — Pleading. — In an important case decided in Nebraska it is held that notice of dishonor of a promissory note is sufficient if sent to the last indorser by the first mail of the day fol- lowing dishonor, even though such indorser is an agent for collection, merely, and he is entitled to one additional day to notify the in- dorser immediately preceding him. It is also decided that where such last indorser receives the notice of dishonor on Saturday, his notice to the next prior indorser is timely if served on the following Monday. It is further determined that the notice served by the last indorser need not be actually prepared by him, but he may adopt and utilize for that purpose a notice sent him by the protesting officer, addressed to the next prior indorser ; and that in an action on a note, an averment by the holder that he caused due notice of dishonor to be served on the last indorser but one, is sufficient, in the absence of a motion to make more specific, to admit evidence that the notice was given to the last indorser and by him transmitted to the one next prior.^^* 1=1 Metropolitan Bank v. Engel, 72 cuted and delivered by one U. O. N. Y. Supp. 691, 66 App. Div. 273; Anderson, of Seward, Nebraska, to Henry v. Spengler, 12 Ohio C. C. defendant in error, who is a resi- 153, 1 Ohio C. D. 362. dent of Lincoln, and who, before 1== Oakley v. Carr, 66 Neb. 751, 92 maturity of the note, indorsed it in N. W. 1000, 60 L. R. A. 431. blank and sold it to plaintiff in 1" Shelburne Falls National Bank error. By its terms the note became v. Townsley, 102 Mass. 177, 3 Am. due December 5, 1899, the three Rep. 445. days of grace expiring on December 1" Oakley v. Carr, 66 Neb. 751, 92 8. Some time before the first- N. W. 1000, 103 Am. St. Rep. 739. named date it was deposited for The opinion in this case is as fol- collection with the First National lows: "Lobingier, C. — This is an Bank of Lincoln, which forwarded action on a promissory note eze- it to a correspondent bank at Sew- 715 "WHERE NOTICE MUST BE SENT. [§ 569 § 569. Where notice must be sent. — Where a party has added an address to his signature, notice of dishonor must be sent to that ad- ard, having first indorsed as fol- lows: 'Pay any bank or banker or order. First National Bank, Lin- coln, Neb. H. S. Freeman, Cashier.' On the last day of grace a notary employed by the Seward bank pre- sented the note for payment at the maker's ofiice and residence, and, not finding him at either place, the note was duly protested. On the same day the notary mailed a notice of protest to the maker at Seward, another to the First National Bank at Lincoln, and a third directed as follows: 'John Carr, Lincoln, Nebr., care of First National Bank,' — all of these notices being deposited in the Seward postoffice not later than the evening of December 8. The first mail from Seward to Lincoln, if on time, was delivered at the Lincoln postoffice about 11 o'clock, and there was a regular delivery by carriers about 12 o'clock. The mail of the First National Bank, how- ever, was delivered by its own spe- cial messenger, and the letter ad- dressed to Carr was by this messen- ger carried with the bank's other mail, and appears to have reached the bank some time after noon of the 9th, which was Saturday. The cashier of the bank testifies that before 2 o'clock on that day a notice of dishonor from the Lincoln bank was mailed to defendant in error, but the latter testifies that he never received it. The notice from the notary at Seward, however, was given to the messenger of the Lin- coln bank and by him delivered to defendant in error on Monday fore- noon at 10:40, one of the clerks having previously noted in pencil on tlie envelope defendant in error's address, '52 Brownell Block.' This action is brought against the in- dorser alone, and the sole defense is that the notice of dishonor was not served in time. There was a trial to the court, a jury being waived, and a judgment for defend- ant, of which plaintiff now seeks a reversal by error proceedings. At common law, by weight of author- ity, the indorser of a dishonored note or bill was entitled to notice thereof on the day following the dishonor, if he resided in the same town with the maker; and if he resided elsewhere, the notice was required to be posted by the first seasonable mail sent on the day following dishonor. The rule was not universal. In Bank of North America v. McKnight, 1 Yeates (Pa.) 145, an indorser living in the same city with the maker was held, though not notified until the second day after dishonor. Moreover, we have in this state a statute govern- ing such cases, which provides that 'notice of non-payment or non-ac- ceptance thereof to the indorser within a reasonable time shall be adjudged due diligence.' Compiled Statutes, Ch. 41, § 3; Cobbey's Annot. Stat., § 8902. Whether this statute enlarges the common law liability of the indorser and re- stricts his rights as to notice, or whether it is intended merely to re-enact the rule of the lex merca- toria, is a question which we need not here determine, because, as we view it, the case at bar is governed by a different principle, presently to be discussed. Suffice it to say that the cases relied upon in the able and ingenious argument for 569] "WAXT OF XOTICE OF PROTEST AND DISHONOR. 71b' dress ; but if lie has not given such address, then the notice must be sent as follows: (1) Either to the post office, nearest to his place of defendant in error were decided in jurisdictions which are without such a statute as ours. But the same law merchant which required the notice of dishonor to be given or sent on the day following non- payment also limited the duty of the holder or protesting officer in this regard to notifying the last in- dorser, who in turn was allowed an additional day to send notice to the indorser Immediately preceding him, and so on until all had been notified. 2 Randolph Commercial Paper, § 1261. Thus, in the case before us, the notary was not legally bound to notify Carr at all. It would have been sufl5cient had he simply sent the one notice to the First National Bank, which was the last indorser, and the latter would have had until the following busi- ness day to notify Carr. As the bank received its notice on Satur- day, it would, under this rule, have until the following Monday to send its notice to defendant in error, for in such cases the intervening Sun- day is not to be counted. Eagle Bank v. Chapin, 3 Pick. (Mass.) 180; Agnew v. Bank, 2 H. & G. (Md.) 478, and many cases cited in Century Digest, Vol. 7, § 1169. It is claimed, however, that this doc- trine should not be applied to a case like this, where the last in- dorser had received and indorsed the note simply for collection. It will be remembered that the in- dorsements themselves were not such as to disclose that the Lincoln bank was an indorsee for collection only. Carr had indorsed the note in blank and the Lincoln bank had indorsed it merely so that its corre- spondent might collect, and there was nothing to indicate to the notary but that the Lincoln bank was the holder as well as the last indorser. But aside from this, no authority is cited for the exception contended for by plaintiff in error in the case of indorsers who hold for collection only. On the other hand, there is ample support for the proposition that it is sufficient to notify such indorsers in the same way as other last indorsers are noti- fied, and that prior indorsers may be held by virtue of the usual notice from them. Carmena v. Bank of Louisiana, 1 La. Ann. 369; Eagle Bank v. Hathaway, 5 Met. (Mass.) 212; Brown v. Ferguson, 4 Leigh (Va.) 37, 24 Am. Dec. 707; Linn v. Horton, 17 Wis. 151; 2 Randolph Commercial Paper, §§ 1241, 1262. Boyer v. Richardson, 52 Neb. 156, cited by defendant in error, in no way conflicts with the foregoing. The court there was simply consid- ering the effect of an indorsement for collection on the title to a note, and held that such an indorsee ac- quired no right of action against a prior indorser. But it is contended that the First National Bank has never so notified Carr. 'They sim- ply attended to the courtesy of see- ing that Carr eventually got a letter that was sent to him in their care without even knowing its contents.' If it had developed that the letter which the bank delivered to Carr by its messenger was not in fact a liotice of dishonor, and none other had been sent, he, of course, would have been released from liability. In taking the course it did, the bank might have been assuming II 7ir WHERE XOTICE MUST BE SENT. [§ 5G9 residence, or to the postoflfice where he is accustomed to receive his letters; or (2) if he live in one place, and have his place of business some risk, though it must be re- membered that its agent claimed to have mailed a separate letter to Carr, and testified that it was their custom, out of ample caution, to adopt in such cases both methods of notification. But since the letter delivered to Carr was complete and sufficient notice of dishonor, we are unable to see how it can profit de- fendant in error that it was not actually prepared by the clerks or officers of the Lincoln bank. The latter had a right to employ such agencies as it saw fit, both in the preparation and delivery of the notice; among others, it had a right to adopt and utilize the work of the notary employed by its correspond- ent bank at Seward. The form of the notice and the time of its de- livery are the important elements. Who may have prepared it, pro- vided it was done by authority, we deem unimportant. It seems to us, therefore, that this letter from the notary, received by the Lincoln bank in the due course of mail and sent by it with a notation of his office address to defendant in error on the next business day, was a sufficient compliance with the rules of the law merchant as well as with the requirements of our statute. But it is urged that plaintiff in error did not, in the trial court, rely upon this so-called doctrine of the 'sequence of notices,' but claimed to have notified Carr directly. What plaintiff in error's counsel may have urged in his argument below we have no means of knowing, nor do we deem it material. In the peti- tion, which is our only guide in determining what was the cause of action, it is alleged, after setting forth the non-payment of the note, that plaintiff 'caused due notice of such demand and non-payment to be forthwith served upon said de- fendant, said John Carr, and he duly received such notice.' It will be seen that this is not an aver- ment that plaintiff notified Carr directly, but merely that she 'caused due notice * * * to be served'; and it would seem to con- stitute a sufficient compliance with § 129 of the code, requiring the facts 'which fix liability' to be stated. Whether the allegation might not have been open to a mo- tion to make it more specific by stating the manner and means of service, we need not now inquire, for no motion of the kind was made; and, in its absence, the aver- ment was certainly sufficient to per- mit the introduction of evidence that the notice was served by an agent for collection employed by the plaintiff. At any rate, no ob- jection was made to the admission of such evidence, and we are unable to see how the alleged variance in the theory of recovery, even if it existed, could now avail defendant in error. The conclusions at which we have arrived might, we think, be reached in another way and still satisfy the strict requirements of the law merchant. Under that law, where a note or bill is sent by the holder to an agent in another town for presentment to the maker, the agent is allowed one day to post the notice of dishonor to his prin- cipal, and the latter is entitled to an additional day to send notice to the last indorser, and the agent is 569] WAXT OF NOTICE OF PROTEST AXD DISHONOE. 718- in another, notice may be sent to either place; or (3) if he is so- journing in another place, notice may be sent to the place where he is sojourning. But where the notice is actually received by the party within the time specified in this act, it will be sufficient, though not sent in accordance with the requirements of this section. ^^^ Notice may be sent to the residence^^*' last known,^^^ although changed ;^^* not required to notify the indorser directly, though this would afford him earlier notice. Ellis v. Com- mercial Bank, 7 How. (Miss.) 294, 40 Am. Dec. 63; Lawson v. Farmers' Bank, 1 Ohio St. 206; Church v. Barlow, 9 Pick. (Mass.) 547; United States Bank v. Goddard, 5 Mason (U. S. C. C.) 366, Fed. Cas. No. 917; State Bank v. Ayres, 7 N. J. L. 130, 11 Am. Dec. 535; 2 Randolph Com- mercial Paper, § 1262. If, therefore, in the case at bar, the notary had sent the notice of dishonor directly to plaintiff in error, and she had re- ceived it in due course of mail and had presented her notice to defend- ant in error by the time the bank's messenger reached him, she would have been within the letter of the lex viercatoria. Can it make any legal difference that her place in the transaction was taken by her agent, the First National Bank? The Seward notary might well have thought that he was complying with this rule in sending the notice to the Lincoln bank, for the indorse- ments were such as to indicate that it was the holder. And, as was well stated by Ross, J., in First Nat. Bank v. Wood, 51 Vt. 471, 31 Am. Rep. 692, where a notice of dis- honor, sent to the wrong address, and thence forwarded, was held suf- ficient: 'All the rules requiring the holder to use diligence to ascertain the residence of the indorser, and to leave notice at his place of business or residence, when they reside in the same town, or to mail notice as soon as the day following the day of the maturity of the note, addressed to him at his place of residence, when they reside in different towns, are made and enforced that the in- dorser may be informed that his liability on the note has not been discharged by the party whose duty it was to pay the note at maturity. When, therefore, the indorser in fact receives notice in due season that the note has been duly pre- sented for payment and protested, the purpose of the law has been ac- complished, although the holder of the note has not complied with one of the established rules in regard to the use of diligence in giving no- tice?' It seems to us that in this case both the purpose and the let- ter of the law have been complied with, and we are forced to the con- clusion that the learned trial judge erred in finding for the defendant. We recommend that the judgment be reversed and the cause remanded for further proceedings according to law." ^^Negot. Inst. Law, § 179, Appen- dix herein. ^^''Bank of Columbia v. Lawrence, 1 Pet. (U. S.) 578; Cornett v. Hafer, 43 Kan. 60, 22 Pac. 1015, 2 Bkg. L. "^ Cornett v. Hafer, 43 Kan. 60, 22 Pac. 1015, 2 Bkg. L. J. 233. ^=« Cornett v. Hafer, 43 Kan. 60, 22 Pac. 1015, 2 Bkg. L. J. 233; Import- ers & T. National Bank v. Shaw, 144 Mass. 421, 11 N. E. 666, 4 N. Bng. 344. 719 NOTICE DISPENSED WITH — DRAWER — EXCUSES. [§ 570 and the circumstances may be such as to show that a change of resi- dence was contemplated.^^^ Notice may also be sent to the indorser's place of business ;^^'* or to his address at the time the note was is- sued ;^'^^ or it may be left in his office when he is absent ;^®^ or at a room used as a place of business ;^^^ or it may be directed to the in- dorser's proper postoffice ;^'^* or to the postoffice at the place where the note was dated and indorsed ;^''^ or to the indorser's customar}' or principal place of receiving his mail;^^*' or to the place where it is found by the exercise of due and reasonable diligence that he will be most likely to receive it.^*'^ If the indorser resides in a place where the bank at which the note is payable is located, but the maker does not reside there and such bank goes out of existence it is sufficient and proper to protest the note at the successor bank's place, that being the only one in business in that town.^^^ § 570. When notice dispensed with — Drawer — Indorser — Excuses. — Notice of dishonor is dispensed with when, after the exercise of J. 233; Morse v. Chamberlain, 144 Mass. 406, 11 N. E. 560, 4 N. Eng. 211; Bank of America v. Shaw, 142 Mass. 290, 2 N. Eng. "^72. "Residence" not strictly construed and may include permanent, tem- porary or constructive residence. Wachusett National Bank v. Fair- brother, 148 Mass. 181, 19 N. E. 345, 5 R. R. & Corp. L. J. 354. Notice to permanent residence, though temporary removal is suffi- cient. Isbell v. Lewis, 98 Ala. 550, 13 So. 335. Notice left with servant having charge of house in Confederate lines when not sufficient. See Alexandria Savings Inst. v. McVeigh, 84 Va. 41, 3 S. E. 885. 150 Wood V. Rosendale, 18 Ohio Cir. Ct. R. 247, 10 Ohio C. D. 66. ^'^ Morse v. Chamberlain, 144 Mass. 406, 11 N. E. 560, 4 N. Eng. 211; Bank of America v. Shaw, 142 Mass. 290, 2 N. Eng. 572. '" Importers & T. National Bank v. Shaw, 144 Mass. 421, 11 N. E. 666, 4 N. Eng. 344. 1^= Hobbs V. Straine, 149 Mass. 212, 21 N. E. 365, under Mass. Pub. Stat., Chap. 77, § 16. ^•^ Lamkin v. Edgerly, 151 Mass. 348, 24 N. E. 49. ^°* Northwestern Coal Co. v. Bow- man, 69 Iowa 150. "5 Davis V. Eppler, 38 Kan. 629, 16 Pac. 793. 1°" Wachusett National Bank v. Fairbrother, 148 Mass. 181, 19 N. E. 345, 5 R. R. & Corp. L. J. 354; Burke V. Shreve, 2 N. J. Law J. 92. Ex- amine Citizens' National Bank v. Cade, 73 Mich. 449, 41 N. W. 500 (under How. Mich. Stat, § 1586); Phillip & William Ebling Brewing Co. V. Reinheimer, 66 N. Y. Supp. 458, 32 Misc. 594; University Press V. Williams, 62 N. Y. Supp. 986, 48 App. Div. 188, rev'g 59 N. Y. Supp. 817, 28 Misc. 52. "'Bank of America v. Shaw, 142 Mass. 421, 2 N. Eng. 572. ^•^Texarkana First National Bank V. Wever (Tex.), 15 S. W. 41, 11 L. R. A. 295, 4 Bkg. L. J. 181. ^0] WANT OF NOTICE OF PROTEST AND DISHONOR. 720 reasonable diligence, it cannot be given to or does not reach the par- ties sought to be charged.^*^^ And notice of dishonor is not required to be given to the drawer in either of the following cases : ( 1 ) Where the drawer and drawee are the same person. (2) Where the drawee is a fictitious person or a person not having capacity to contract. (3) Where the drawer is the person to whom the instrument is pre- sented for payment. (4) Where the drawer has no right to expect or require that the drawee or acceptor will honor the instrument. (5) Where the drawer has countermanded payment. Again, notice of dishonor is not required to be given to an indorser in either of the following cases: (1) Where the drawee is a fictitious person or a person not having capacity to contract, and the indorser was aware of the fact at the time he indorsed the instrument. (2) Where the in- dorser is the person to whom the instrument is presented for payment. (3) Where the instrument was made or accepted for his accommo- dation.^'^" We have considered the points stated in the preceding sec- tion.^ '^^ And it would seem that the same facts which would dispense with or excuse presentment for acceptance or for payment, or protest would ordinarily operate in a like manner as to notice of dishonor.^'^^ i-^Negot. Inst. Law, § 183; Bills of Exch. Act, § 50, Appendix herein. See §§ 544, 564 herein. See the following cases: United States. — Harris v. Robin- son, 4 How. (U. S.) 345, 11 L. Ed. 1004. Alabama. — Isbell v. Lewis, 98 Ala. 550, 13 So. 335. Indiana. — Palmer v. Whitney, 21 Ind. 58. Louisiana. — Franklin v. Verbois, 6 La. 727. Maine. — National Shoe & L. Bank v. Gooding, 87 Me. 337, 32 Atl. 967. Maryland. — Staylor v. Ball, 24 Md. 183. Missouri. — Shepard v. Citizens' Ins. Co., 8 Mo. 272. New Jersey. — Burke v. Shreve, 2 N. J. Law J. 42. New York. — Albany Trust Co. v. Frothingham, 99 N. Y. Supp. 343; Holtz v. Boppe, 37 N. Y. 634; Bank of Utica V. Bender, 21 Wend. (N. Y.) 645, 34 Am. Dec. 28L Pennsylvania. — Hazlett v. Brag- don, 7 Pa. Super. Ct. 58. South Carolina. — Central National Bank v. Adams, 11 S. C. 452, 32 Am. Rep. 495. Tennessee. — Ratcliffe v. Planters' Bank, 2 Sneed (Tenn.) 425. Wisconsin. — Turner v. Iron Chief Mining Co., 74 Wis. 355, 43 N. W. 149, 5 L. R. A. 533. ™Negot. Inst. Law, §§ 185, 186; Bills of Exch. Act, § 50, Appendix herein. "'See §§ 490, 494, 495, 501, 522, 523, 536 herein. "=See Hull v. Myers, 90 Ga. 674, 16 S. E. 653. That accommodation indorser en- titled to notice, see French v. Bank of Columbia, 4 Cranch (U. S.) 141; Ennis v. Reynolds (Ga. 1906), 56 S. E. 104; Aldine Manufacturing Co. 721 NOTICE DISPENSED WITH DRAWER — EXCUSES. [§ 570 If the drawer has a right to expect that his bill will be honored he is entitled to notice.^'^^ And it is no excuse for not giving notice of non- acceptance that the drawer had no effects in the drawee's hands at the time the bill was refused acceptance or afterward, if he had some ef- fects, to whatever amount, in the drawee's hands when the bill was drawn.^^* It is also decided that even though the drawer has no effects in the drawee's hands the indorser is entitled to notice. ^'^^ And it is held that want of funds in the hands of the drawee of an accommo- dation inland bill, is no excuse for not giving notice to an indorser entitled to recover on the drawer.^^° But, as above stated, a drawer is not entitled to notice where he is without funds, is not authorized v. Warner, 96 Ga. 370, 23 S. E. 404; St. Charles First National Bank v. Hunt, 25 Mo. App. 170; Carter v. Flower, 16 Mees. & W. 751. Compare Hull V. Myers, 90 Ga. 674, 16 S. E. 653; Boutin, In re, Rap. Jud. Que- bec, 12 C. S. 186. Accommodation maker — Indorser as principal debtor — Note for his ac- commodation not entitled to notice, see Carlton v. White, 99 Ga. 384, 27 S. E. 704; Mayer v. Thomas, 97 Ga. 772, 25 S. E. 761; McFetrich v. Wood- row, 67 N. H. 174, 38 Atl. 18; With- erow V. Slayback, 158 N. Y. 647, 53 N. E. 681; Be^le v. Parrish, 20 N. Y. 407. See National Bank v. Brad- ley, 117 N. C. 526, 23 S. E. 455. Notice is case of collateral secur- ity, see the following cases: United States. — Rhett v. Poe, 2 How. (U. S.) 457. Iowa. — Kennedy v. Rosier, 71 Iowa 671, 33 N. W. 226. Maryland. — Williams v. Baltimore National Bank, 70 Md. 343, 17 Atl. 382. Missouri. — Wright v. Andrews, 70 Mo. 86, 35 Am. Rep. 308. Holding that if the payment of the note is fully secured by money appropri- ated and pledged therefor, notice is unnecessary. Pennsylvania. — Holmes v. Briggs, Joyce Defenses — 46. 131 Pa. 233, '47 Leg. Int. 188, 25 W.' N. C. 255, 20 Pitts. L. J. N. S. 301, 18 Atl. 928, 18 Wash. L. Rep. 310. Notice unnecessary where note non-negotiable (San Diego Bank v. Babcock, 94 Cal. 96, 29 Pac. 415), unless circumstances evidence that signature deemed an indorsement of negotiable paper. Haber v. Brown, 101 Cal. 445, 35 Pac. 1035. That insolvency of maker does not excuse failure to give notice, see Phipps v. Harding, 70 Fed. 468, 34 U. S. App. 148, 17 C. C. A. 203, 30 L. R. A. 513; Moore v. Alexander, 68 N. Y. Supp. 888, 33 Misc. 613, aff'd 71 N. Y. Supp. 420, 63 App. Div. 100. See Hull v. Myers, 90 Ga. 674, 16 S. E. 653. That insolvency of drawee and ac- ceptor does not excuse failure to give notice, see National Bank v. Bradley, 117 N. C. 526, 23 S. E. 455; Hawley v. Jette, 10 Oreg. 31, 45 Am. Rep. 129. 173 prench v. Bank of Columbia, 4 Cranch (U. S.) 141. 1-4 Orr V. Maginnis, 7 East 359. "^Glasgow, Harrison v. Copeland, 8 Mo. 268. See Manning v. Lyon, 24 N. Y. Supp. 265, 54 N. Y. St. R. 6. ^'» Taylor v. Bank of Illinois, 7 T. B. Mon. (Ky.) 577. § 571] WANT OF NOTICE OF PROTEST AND DISHONOR, 722 to draw/'^^ and has no reasonable belief or expectation, or right to expect or require that the instrument will be honored.^^* § 571. Same subject. — If a bill is payable upon certain conditions and the drawer prevents their fulfillment he forfeits his right to no- tice ;^^® and if the drawer has discharged the maker by a release he is not entitled to notice.^®" Again, it is held that, in an action brought by the holder of a domestic bill discounted at a bank, it need not be shown, in order to render the drawer liable, that notice of dishonor was given him ; and that, in the case of the drawer of such a bill, the in- jury sustained by him determines the extent of his release and lia- bility, his contract, with this exception, being similar to or in the nature of one of suretyship.^ ^^ In an English case the following facts appear. In pursuance of a contract for the supply of bunker coal, made between the owners of a steamship, as buyers, and the agents of the suppliers of the coal at Colombo, as sellers, the defendant, the master of the steamship, drew a bill of exchange on the owners of the vessel in favor of the suppliers, concluding with the words "value re- ceived on three hundred tons of coal and disbursements * * * sup- plied to my vessel to enable her to complete this voyage from Mel- bourne to Hull, for which I hold my vessel, owners, and freight re- sponsible.'' The bill was duly accepted in London, but on presentation for payment at maturity on a Saturday was dishonored. The plain- tiffs, holders of the bill, learned, through their bankers on Mon- day, that the bill was not paid, and, having communicated with the agents of the suppliers of the coal, ascertained that the vessel had ar- rived in the Tyne; but not knowing definitely the whereabouts of the vessel they made further inquiries without obtaining further informa- tion, and on the following Thursday sent the defendant notice of dishonor by registered letter, addressing him as master of the vessel at Newcastle-on-Tyne, and that letter was actually delivered by the post-office on board the vessel and reached the master the second fol- lowing day : It was held that the defendant was liable as drawer, for the wording of the bill did not by implication relieve him of that lia- "^ Dickens V. Beal, 10 Pet. (U.S.) i"" Cashman v. Harrison, 90 Cal. 572; Rhett v. Poe, 2 How. (U. S.) 297, 27 Pac. 283. 457. 1^ Burke v. McKay, 2 How. (U. S.) "« Cashman v. Harrison, 90 Cal. 66. Compare Ray v. Smith, 17 Wall. 297, 27 Pac. 283. See Blendermann (U. S.) 411. V. Price, 50 N. J. L. 296, 12 Atl. 775, '"' Bank of Richland v. Nicholson^ 11 Cent. Rep. 349. See § 523 herein. 120 Ga. 622, 48 S. E. 240, 733 DELAY IN GIVING NOTICE — WAIVER OF NOTICE. [§§ 572, 573. bility; it was also held that he was not discharged by reason of the delay in giving notice of dishonor, as the special circumstances ex- cused that delay within the meaning of the Bills of Exchange Act, 1882.^*^ Notice to an indorser is not excused by the fact of destruc- tion by fire of the place of business of the bank holding the note for collection and that its business was carried on only in a tentative way in a temporary structure.^ ^^ §572. Delay in giving' notice — Excuses — Circumstances beyond holder's control. — Delay in giving notice of dishonor is excused when the delay is caused by circumstances beyond the control of the holder and not imputable to his default, misconduct or negligence. When the cause of delay ceases to operate, notice must be given with reasonable diligence.^^* The cessation of mails and commercial intercourse be- tween two states by reason of the blockade of one of the places by au- thority of one of the belligerents during a civil war constitutes a sufficient excuse for the omission of due and regular notice of the dis- honor of a bill of exchange drawn by a firm in one place on one in the other and the question then remains whether such notice is given in a due and reasonable time after the removal of the impediment.^ ®^ § 573. Waiver of notice. — Notice of dishonor may be waived either before the time of giving notice has arrived or after the omis- sion to give due notice, and the waiver may be express or implied. Where the waiver is embodied in the instrument itself, it is binding upon all parties ; but where it is written above the signature of an in- dorser, it binds him only.^^*^ Oral or written statements or circum- ^'-The Elmville (1904), Prob. Div. kirk v. Page, 2 Brockenbroughs 20. 319, 73 L. J. P. 104, 91 L. T. R. N. S. See, also, § 536 herein. 151. Gorell Barnes, J. Bills of ^'° Negot. Inst. Law, §§ 180, 181; Exch. Act 1882 (45 and 46 Vict, c. Bills of Exch. Act, § 50, Appendix 61). §§ 48, 49, sub-s. 12; § 50, herein. See §§ 511, 513, 524, 525, sub-s. 1. 536-541 herein. "^Merchants' State Bank v. State Waiver of notice may be express Bank, 94 Wis. 444, 69 N. W. 170, 14 or implied or inferred from circiim- Bkg. L. J. 80, held not an unavoid- stances. Murphy v. Citizens' Sav- able calamity. ings Bank, 22 Ky. L. Rep. 1872, 62 ^"*Negot. Inst. Law, § 184; Bills S. W. 1028. See Dunham v. De- of Exch. Act, § 50, Appendix herein, raismes, 52 N. Y. Supp. 871, 31 App. "= House v. Adams & Co., 48 Pa. Div. 627, 51 N. Y. Supp. 1097, 29 St. 261, considering Patience v. App. Div. 432, the latter rev'g 50 Townley, 3 Smith's Rep. 224; Hop- N. Y. Supp. 742, 22 Misc. 568. § 573] WANT OF NOTICE OF PROTEST AND DISHONOR. 724 stances may be of such a character as to constitute a waiver of no- tice. ^^^ So waiver of presentment waives notice.^^^ But it may be stated that ordinarily the statements, conversations, chiimed admis- sions, acts or circumstances relied on to establish a waiver of notice must clearly and unequivocally show such waiver, otherwise the in- dorser will not be held to have waived his rights to notice.^^^ So an acknowledgment of liability must, to operate as a waiver, be made with knowledge by the indorser of the laches in failing to give no- Waiver of notice on express terms on note; how construed. See Lock- wood V. Bock, 50 Minn. 142, 52 N. W. 391. Notice may be waived by terms of note. State, Parks v. Hughes, 19 Ind. App. 266. Waiver of notice embodied in note binds indorser. District of Columbia. — Portsmouth Savings Bank v. Wilson, (App D. C), 22 Wash. L. Rep. 817. Binds maker and indorser. Georgia. — Woodward v. Lowry, 74 Ga. 148. Iowa. — Iowa Valley State Bank v. Sigstad, 96 Iowa 491, 65 N. W. 407. See Phillips v. Dippo, 93 Iowa 35, 61 N. W. 216. Minnesota. — See Bryant v. Lord, 19 Minn. 396. Missouri. — Jacobs v. Gibson, 77 Mo. App. 244, 2 Mo. App. Rep'r 6. Texas. — Leeds v. Hamilton Paint & G. Co. (Tex. Civ. App.). 35 S. W. 77. See Smith v. Pickham, 8 Tex. Civ. App. 326. Indorsement of waiver of notice binds indorser. Alabama. — Montgomery v. Cros- thwait, 90 Ala. 558, 12 L. R. A. 140, 8 So. 498. California. — Farmers' Exchange Bank v. Altura Gold Mill & Mining Co., 129 Cal. 263, 61 Pac. 1077; Sav- ings Bank v. Fisher (Cal.), 41 Pac. 490. Illinois. — Duningan v. Stevens, 122 111. 396, 11 West. Rep. 371, 13 N. E. 651. Kansas. — Davis v. Eppler, 38 Kan. 629, 16 Pac. 793. Washington. — Loveday v. Ander- son, 18 Wash. 322, 51 Pac. 463, 15 Bkg. L. J. 100. That no new consideration neces- sary for waiver by indorser, see Lockwood V. Bock, 50 Minn. 142, 52 N. W. 391; Delsman v. Friedlander, 40 Oreg. 33, 66 Pac. 297. See § 538 herein. ^" Markland v. McDaniel, 51 Kan. 350, 32 Pac. 1114, 20 L. R. A. 96; Seldner v. Mt. Jackson National Bank, 66 Md. 488, 8 Atl. 262, 6 Cent. Rep. 478. i^Furth V. Baxter, 24 Wash. 608, 64 Pac. 798. ^^ California. — Wright v. Liesen- feld, 93 Cal. 90, 28 Pac. 849. Massachusetts.— G\\d.^eia. v. Cham- berlin, 167 Mass. 486, 46 N. E. 103. New York. — Congress Brewing Co. V. Habenicht, 82 N. Y. Supp. 481, 83 App. Div. 141, 13 N. Y. Ann. Cas. 144; Porter v. Thorn, 57 N. Y. Supp. 479, 40 App. Div. 34, aff' d 167 N. Y. 584, 60 N. E. 1119. Rhode Island. — Whittier v. Col- lins, 15 R. I. 44, 23 Atl. 39, 1 N. Eng. 135. Tennessee. — Rosson v. Carroll, 90 Tenn. 90, 16 S. W. 66, 43 Alb. L. J. 493. Canada.— Bvitton v. Milsom, 19 Ont. App. 96. ■I 735 WAIVER OF NOTICE. [§ 573 tice."° And it is held that merely taking or requiring security is not a waiver.^**^ But it is decided that notice to an indorser is waived by him by giving his note for his debt in a case where he had transferred the note of a third person as collateral security.^'-'- Notice of dishonor to the drawer is waived where he gives an order to the drawees not to pay the bill if presented but it constitutes no excuse for non-present- ment for payment. ^''^ Again, a valid, absolute and unconditional prom- ise to pay, subsequently and clearly made, with a full knowledge of the holder's laches and of all material facts constitutes a waiver of such want of notice. ^^* Where a second or renewal note was indorsed and sent before maturity to the maker of the first note by a party who was one of the accommodation indorsers and payees thereof and the maker had inserted his name as one of the payees and had discounted the second note and thereby had taken up the first note after maturity, and until that time the discounting bank was without knowledge of the fact of indorsement of the second note, it was held that such in- i^oRosson V. Carroll, 90 Tenn. 90, 16 S. W. 66, 43 Alb. L. J. 493. "iWhlttier v. Collins, 15 R. I. 44, 23 Atl. 39, 1 N. Eng. 135; Selby v. Brinkley (Tenn.), 17 S. W. 479. ^"^ Johnson-Berger & Co. v. Down- ing, 76 Ark. 128, 88 S. W. 825. "= Hill v. Heap, 1 Dowl. & Ry. 57. "* United States. — Yeager v. Far- well, 13 Wall. (U. S.) 6; Donaldson V. Means, 4 Dall. (U. S.) 109. Alabama. — Alabama National Bank v. Rivers, 116 Ala. 1, 22 So. 580. See White v. Keith, 97 Ala. 668, 12 So. 611. Iowa. — Davis v. Miller, 88 Iowa 114, 55 N. W. 89. Maryland. — Schwartz v. Wilmer, 90 Md. 136, 44 Atl. 1059. See Seld- ner v. Mt. Jackson National Bank, 66 Md. 488, 6 Cent. Rep. 478, 8 Atl. 262. Massachusetts. — Glidden v. Cham- berlin, 167 Mass. 486, 46 N. E. 103; Hobbs V. Straine, 149 Mass. 212, 21 N. E. 365. Minnesota. — Amor v. Stoeckle, 76 Minn. 180, 78 N. W. 1046, 16 Bkg. L. J. 407. Missouri. — State Bank v. Bartle, 114 Mo. 276, 21 S. W. 816. Montana. — Quaintance v. Good- row, 16 Mont. 376, 41 Pac. 76. New York. — Linthicum v. Caswell, 160 N. Y. 702, 57 N. E. 1115, aff'g 46 N. Y. Supp. 610, 19 App. Div. 541. North Carolina. — Shaw v. McNeill, 95 N. C. 535. Pennsylvania. — Sieger v. Allen- town Second National Bank, 132 Pa. 307, 19 Atl. 217, 2 Bkg. L. J. 335; Oxnard v. Varnum, 111 Pa. St. 193, 2 Atl. 224, 2 Cent. Rep. 53. Rhode Island. — Souther v. Mc- Kenna, 20 R. I. 645, 15 Bkg. L. J. 541, 40 Atl. 736. Tennessee. — People's National Bank v. Dibrell, 91 Tenn. 301, 18 S. W. 626. Indorser's knowledge that effect of want of notice was to release him does not change rule. Glidden V. Chamberlin, 167 Mass. 486, 46 N. E. 103. No waiver where offer conditional and not accepted. Isbell v. Lewis, 98 Ala. 550, 13 So. 335. 573] WANT or NOTICE OF TROTEST xVXU DISHONOR. ;26 dorser had not waived notice of dishonor of the first note by indors- ing before its maturity.^^^ But there may be a waiver of notice by ex- tending the time of payment or a request for such extension.^^^ 195 First National Bank of Brook- lyn V. Gridley, 112 App. Div. 398, 98 N. Y. Supp. 445. In this case the court said: "Prior to the negotiable instruments law, the decisions in this state were to the effect that de- mand and notice were unnecessary where the indorser was himself the principal debtor, where he had taken a general assignment of the maker's property, where the indorser had ex- pressly or by implication waived de- mand and notice, and where the fail- ure to make demand and give no- tice to the indorser could not possi- bly operate to his injury. Mechanics' Bank of New York v. Griswold, 7 "Wend. 166; Commercial Bank of Al- bany V. Hughes, 17 Wend. 94; Shel- don V. Horton, 43 N. Y. 93, 3 Am. Rep. 669; Ross v. Hurd, 71 N. Y. 14, 27 Am. Rep. 1; Cady v. Bradshaw, 116 N. Y. 188, 22 N. E. 371, 5 L. R. A. 557; National Hudson River Bank v. Reynolds, 57 Hun 307, 10 N. Y. Supp. 669; Smith v. Miller, 52 N. Y. 545. "Waiver, however, will not be implied from doubtful or equivocal acts or language (Ross v. Hurd and Cady v. Bradshaw, supra), and injury will be presumed until it is made to appear that no dam- age could have resulted (Commer- cial Bank of Albany v. Hughes and Smith V. Miller, supra) ; and where excuse for non-presentment and failure to give notice is relied upon, the facts furnishing such excuse must be alleged and proved (Clift V. Rodgers, 25 Hun 39)." ""Glaze V. Ferguson, 48 Kan. 157, 29 Pac. 396; Cady v. Bradshaw, 116 N. Y. 188, 26 N. Y. St. R. 518, 22 N. E. 371, 2 Bkg. L. J. 84, 5 L. R. A. 557; McMonigal v. Brown, 45 Ohio St. 499, 15 N. E. 860, 14 West. Rep. 147. See Bassenhorst v. Wilby, 45 Ohio St. 333, 13 N. E. 75, 11 West. Rep. 274; Burnham H. M. & Co. v, McCormick, 18 Utah 42, 55 Pac. 77. I CHAPTER XXVI. CHECKS. Sec. 574. Presentment — Reasonable time — Diligence. 575. Same subject continued. 576. Same subject continued — Mail — Collection through bank. 577. "When presentment is made. 578. Substituted check — Present- ment — Want of diligence. 579. Substituted presentment by copy or description. 580. Substituted checks — Local cus- tom of banks. 581. Effect of certification — Opera- tion of check as assignment or lien. Sec. 582. Necessary that drawer sustain actual loss or injury from laches in presentment. Where drawee becomes insol- vent or bankrupt — Collection through bank. Surety. Indorser. Reasonable expectation that check will be honored — Want of funds. 587. Protest. 588. Notice of non-payment. 589. Waiver of presentment for pay- ment. 583. 584. 585. 586. § 574. Presentment — Reasonable time — Diligence. — A check should be presented within a reasonable time after its issue. What constitutes such time must depend upon the attendant circumstances of the par- ticular case, principally such as the nature and purpose of the check, locality, distance, the relations of the parties, the mode and time of receiving the check, the nearness of a place for depositing or receiv- ing mail, the regularity or infrequency of mails, and various other circumstances difficult to enumerate.^ This rule especially applies ^ Tomlin v. Thornton, 99 Ga. 585, Illinois. — Industrial Bank v. Bowes, 27 S. E. 147; Parker v. Roddick, 65 Miss. 249, 3 So. 575, 7 Am. St. Rep. 646; Grange v. Reigh, 93 Wis. 552, 67 N. W. 1130, 13 Bkg. L. J. 564; Gifford V. Hardell, 88 Wis. 538, 60 N. W. 1064, 43 Am. St. Rep. 925, 12 Bkg. L. J. 29; Legare v. Arcand, 9 Quebec, Rap. Jud. 122. See the following cases: Alabama. — Morris v. Eufaula Na- tional Bank, 122 Ala. 580, 25 So. 499. 165 111. 70, 46 N. E. 10; North- western Iron and Metal Co. v. Na- tional Bank, 70 111. App. 245. Iowa. — Northwestern Coal Co. v. Bowman, 69 Iowa 150. Massachusetts. — Shawmut Nation- al Bank v. Manson, 168 Mass. 425, 47 N. E. 196, 14 Bkg. L. J. 378. Michigan. — Holmes v. Roe, 62 Mich. 199, 28 N. W. 664. Missouri. — Farmers' National Bank v. Dreyfus, 82 Mo. App. 399. 727 § 575] CHECKS. 728 where the person to -whom the check is given warns tlie drawer that the bank may suspend payment.- If no time of payment is specified the check is deemed payable on demand and the rule as to presentment in a reasonable time applies.^ The question of diligence in making presentment of a customer's bank check rests upon the circumstanccL and the dispatch requisite should be consistent therewith as well as with that used in commercial transactions,* And ordinarily a check should not be unreasonably delayed in its presentment and due dili- gence should be exercised.^ It is immaterial, in so far as the question of negligence is concerned, whether a check is sent by a direct or in- direct route where, by allowing the full time for mailing, it reaches the proper place as soon in the latter case as in the first.*' It is de- cided in a federal case that the doctrine of reasonable time does not impose any obligation upon the holder in the matter of presentment, in so far as the drawer is concerned, in the absence of injury, or loss of the fund by the drawee's insolvency.^* § 575. Same subject, continued. — It is held in a case in Arkansas that it is necessary that a check be presented for payment within a reasonable time which depends upon attendant circumstances. This is held to be dependent upon the location of the bank, if in the same place with the payee then the next following business day constitutes reasonable time ; or in cases of different localities, then the day after JVew York. — Carroll v. Sweet, 128 * Western Wheeled Scraper Co. v. N. Y. 19, 37 N. Y. St. Rep. 868, Sadilck, 50 Neb. 105, 69 N. W. 765, 27 N. E. 763, rev'g 25 N. Y. St. 14 Bkg. L. J. 139. 356, 5 N. Y. Supp. 572, 57 Supr. 100; = Farmers' National Bank v. Drey- Murphy V. Levy, 50 N. Y. Supp. 682, fus, 82 Mo. App. 399. See Nebraska 23 Misc. 147. National Bank v. Logan, 35 Neb. Pennsylvania.— Willis v. Finley, 182, 52 N. W. 808, 7 Bkg. L. J. 144; 173 Pa. 28, 27 Pitts. L. J. N. S. 33, Donlon v. Davidson, 39 N. Y. Supp. 34 Atl. 213. 1020, 7 App. Div. 461; Dion v. La- Termont. — Gregg v. Beane, 69 Vt. chance. Rap. Jud. Quebec, 14 C. S. 22, 37 Atl. 248, 14 Bkg. L. J. 319. 77. Canada. — Dion v. Lachance, Rap. "First National Bank v. Buck- Jud. Quebec, 14 C. S. 77. hannon Bank, 80 Md. 475, 12 Bkg. See § 582 herein; Negot. Inst. L. J. 193, 27 L. R. A. 332, 31 Atl. Law, §§ 4, 321, 322; Bills of Exch. 302. Compare Anderson v. Rodgers, Act, § 74, Appendix herein. 53 Kan. 542, 11 Bkg. L. J. 87, 36 = Legare v. Arcand, 9 Quebec Pac. 1067, 27 L. R. A. 248. Rapp. Jud. 122. "* Andrews v. Bradley, 102 Fed. 8 Parker v. Reddick, 65 Miss. 242, 54. See §§ 496, 498, 505-508 herein. 3 So. 575, 7 Am. St. Rep. 646. I 739 PEESENTMENT — KEASOXABLE TUIB — DILIGEXCE. [§ 575 it is received at the place where the bank is located. And a delay of five days, excluding Sunday, in presenting a check for payment is sufficient to discharge the drawer when there is no excuse for delay, and presentation in reasonable time is not waived." It is declared in a Connecticut case that the rule undoubtedly is, that it is th0 duty of the holder of a check, payable at a bank, on demand, to present it for pa3^ment within a reasonable time, and if not paid to give notice of non-payment to the drawer, and if the drawer had funds in the bank sufficient for its payment, which were lost in consequence of the holder's neglect, he will be exonerated from liability. But according to recent authorities this rule does not apply to a case where the drawer has sustained no loss or injury, by the neglect of the holder. Were it otherwise the drawer would profit by a neglect which did him no injury."* The negotiable instrument statute of Iowa classifies a bank check in the ordinary form as a bill of exchange payable on demand. That enactment also provides that it is sufficient to charge the indorser of a bill of exchange payable on demand that presentation to the drawee and demand of payment shall be sufficient if made within a reasonable time after its issue or after the last negotiation of such bill. It is further enacted that in determining what is a rea- sonable time within the statute regard must be had to the nature of the instrument, the usage of the trade or business, if any, with respect to such instruments, and the facts of the particular case. Contrary to the requirement for notice to the indorser of the dishonor of a check or bill upon presentation for payment, the holder of the indorsed paper is not held to any fixed or invariable limit of time in which to make such presentment and demand. He is required to act with rea- sonable promptness and diligence, taking into consideration the nature of the instrument, the usages of the business world and the peculiar facts, if any, attending the particular transaction, and also the usage of banks presumed to be known to those dealing with them.'' Again, it is said by the court in a Kansas case that: "It is the law that checks are payable instantly on demand, but it is not the law that payment of a check must be demanded instantly. Granting that a check has some features of a bill of exchange, under the statutes of this state it need not be presented until the day after it is given, if the party receiving ■^ Burns v. Yocum (Ark. 1906), 98 » Plover Savings Bk. v. Moodie S. W. 956. (Iowa 1906), 110 N. W. 29; Code «Hoyt V. Seeley, 18 Conn. 352, Supp. 1902, §§ 3060-a71, 3060-al03, 360, per Waite, J. 3060-al85, 3060-al93. 57G] CHECKS. 730 it and the bank upon which it is drawn are in the same place. If they are not in the same place, it is only necessary that the check be put in course of collection within the time otherwise allowed for presentation. It cannot be said to be due until demand for payment is made. If not forwardejl and presented within the time allowed by the rules of com- mercial law, the drawer must show the delay caused him to suffer loss, before he can defeat recovery by a bona fide holder. The same rule holds regarding protest and notice of non-payment."^" § 576. Same subject continued — Mail — Collection through bank. — The following important j)oints are decided in a West Virginia case^^ which holds that: (1) A person receiving a check, on a fund in ths hands of a bank, for the amount of a demand against the drawer there- of, is bound to exercise reasonable diligence in making presentment thereof for payment, if he wishes to avoid risk of loss by insolvency of the drawee. (2) If the payee of the check and the drawee reside, or have their places of business in the same city or town, presentment must be made before the expiration of business hours of 'the day next after the day of the receipt thereof.^- (3) If the person receiving a check and the " Cox V. Citizens' State Bank (Kan. 1906), 85 Pac. 762. " Lewis, Hubbard & Co. v. Mont- gomery Supply Co., 59 W. Va. 75, 52 S. E. 1017. "Where parties in same place. See Morris v. Eufaula Bank, 122 Ala. 580, 25 So. 499 (on first secu- lar day after check received, citing a number of cases) ; Holmes v. Roe, 62 Mich. 199, 28 N. W. 864 (must be presented same day, or at latest the following day) ; Grange V. Reigh, 93 Wis. 552, 13 Bkg. L. J. 564, 67 N. W. 1130 (must be pre- sented at latest on day following receipt of check); Gregg v. Beane, 69 Vt. 22, 37 Atl. 348, 14 Bkg. L. J. 319. If a check is received at the town or city where the bank at which it is payable is located it must be pre- sented the following day or the drawer will not be liable. Edmisten v. Herpolsheimer, 66 Neb. 94, 92 N. W. 138, 59 L. R. A. 934. As to the business or banking hours, see Niblack v. Park National Bank, 169 111. 317, 30 Chic. Leg. News 103, 48 N. E. 438, 15 Bkg. L. J. 33, rev'g 67 111. App. 583; Northwestern Iron & M. Co. v. Na- tional Bank of Illinois, 70 111. App. 245; Madderom v. Heath & M. Mfg. Co., 35 111. App. 588; McDonald v. Mosher, 23 111. App. 206; Murphy v. Levy, 50 N. Y. Supp. 682, 23 Misc. 147; Loux v. Fox, 171 Pa. 68, 37 W. W. C. 278, 12 Bkg. L. J. 667, 33 Atl. 190; Grange v. Reigh, 93 Wis. 552, 67 N. W. 1130, 13 Bkg. L. J. 564; Lloyd v. Osborne, 92 Wis. 93, 65 N. W. 859, 13 Bkg. L. J. 177. It is not necessary in order to constitute due diligence that a check should be presented outside of busi- ness hours, unless custom or spe- cial circumstances warrant a change I ^31 PRESEXTMEXT — MAIL — COLLECTIOX THROUGH BAXK. [§' 576 bank on which it is drawn are in different places, it must be forwarded, for presentment, by mail or other usual mode of transmission, on the next day after the receipt thereof at the place in which the payee resides or does business, if reasonably and conveniently practicable; and, if it is not so practicable, then by the next mail or other similar means of conveyance, leaving after said date.^^ But neither the payee nor his agent is required to transmit such check by the only or last mail of the day next after its receipt, if such mail closes or departs at an hour so early as to render it inconvenient for the holder to avail himself of it. What is an unreasonably early hour in such case de- pends upon all the circumstances of the transaction and situation of the parties; and, the facts being free from controversy and doubt, is a question of law for the court.^* (4) In the absence of any agree- ment to the contrary, and of any circumstance, known to the payee, making it imprudent to do so, he may indorse and deliver the check to a bank for collection; but this does not extend the time within in such rule. Temple v. Carroll (Neb.), 105 N. W. 989. Clearing house — A check should he presented or forwarded the day following its receipt, even though it is received after banking hours in a place where collection is made through a clearing house. Edmisten V. Herpolsheimer, 66 Neb. 94, 92 N. W. 138, 59 L. R. A. 934. ^' Where parties in different places, see Northwestern Coal Co. v. Bow- man, 69 Iowa 150 (should forward by mail on day received or on next following day) ; Holmes v. Roe, 62 Mich. 199, 28 N. W. 864 (must be forwarded at last day after its receipt and then presented the next day after its then receipt) ; Gregg v. Beane, 69 Vt. 22, 37 Atl. 248, 14 Bkg. L. J. 319, 37 Atl. 248 (on next secular day after receipt) ; Lloyd v. Osborne, 92 Wis. 93, 65 N. W. 859, 13 Bkg. L. J. 177 (forwarded by last mail same day as its receipt and presented next following day when there received). Check may be forwarded on day following its receipt where the bank is not located in the same town or city. Edmisten v. Herpolsheimer, 66 Neb. 94, 92 N. W. 138, 59 L. R. A. 934. " Where a debtor residing in an- other town, a few miles distant, sends his creditor a check, such debtor is not discharged although the check is not forwarded for pre- sentment either on the next day after its receipt or even on the third day thereafter, which was Saturday, and on that day at noon the bank stopped payment, it appearing that the postoffice nearest to the cred- itor's residence was three or four miles away and that the only mails to the debtor's town left early the next morning after the check was received and at the same time on the third day, so that if the cred- itor's agent had received the check on that day he would have been entitled to at least the whole of it in which to make presentment. Cox V. Boone, 8 W. Va. 500, 23 Am. Rep. 627. 07 6] CHECKS. 732 which it must he forwarded for presentment. The bank, however, in such case, is not required to forward it on the next day after its re- ceipt by the payee, if there be no reasonably convenient means of doing so, within the banking hours of that day.^^ (5) Though the courts of that state cannot have judicial knowledge of the existence of any particular bank, or of any mode of business peculiar to a given bank, they will take judicial notice that, in all cities and towns of large population and extensive business, within their jurisdiction, banks exist, and of the fact that their operations are governed by reasonable rules and regulations, to which parties dealing with them or in com- mercial paper are deemed to have subjected themselves. But courts cannot take judicial notice of the business hours of any particular bank, although the courts of that state judicially know that ordinarily banks in the cities and larger towns of the state do not open their doors for business at an earlier hour than nine o'clock in the morning. ( 6 ) The parties to a check drawn on a bank and sent to a distant place to be forwarded for presentation, are deemed in law to have acted with knowledge of the usual diligent method of making such pre- sentment through a bank at the place to which it is sent, and to have agreed to suffer any reasonable delay incident to such mode of pre- sentment. In such case, the drawer, by allowing his funds to remain in the drawee's bank, and the payee, by accepting the check, evince belief in the solvency of the bank, and the former voluntarily takes the risk of its solvency during the reasonable period necessary for pre- sentment of the check in the usual manner. (7) The drawer, in de- livering a check to an agent of the payee, having no authority to in- dorse it, at the place of business of the drawer, impliedly agrees to allow such additional time for presentment as may be necessary for the transmission of the check to the principal of the agent.^® It was " Check deposited in bank for collection and duty of bank, see Morris v. Eufaula Bank, 122 Ala. 580, 25 So. 499; Horingfort v. Veh- man, 2 Ohio Dec. 151; Rosenthal v. Ehrlicher, 154 Pa. 396, 32 W. N. C. 221, 26 Atl. 435; Gregg v. Beane, 69 Vt. 22, 37 Atl. 248, 14 Bkg. L. J. 319. See §§ 516-518, 583 herein. ^^The court, per Poffenbarger, J., said: Presentation of a "check for payment at the bank on which it is drawn must be made within a rea- sonable time, and what is a reason- able time depends upon the situa- tion of the parties with reference to one another and with reference to the bank, and all other material facts and circumstances entering into the transaction. "When the drawee and payee are in the same town or city presentation must be made not later than the next day after the reception of the check unless there is some understanding or agreement to the contrary or 733 PRESENTMENT MAIL COLLECTION THROUGH BANK. [§' 576 also declared that: "In some respects the rights of the parties to a, check, drawn by an individual on a hank, are governed by the princi- some circumstance intervenes or is connected with the transaction suf- ficient to vary the rule; but it is sufficient to present it at any time on the next day within business hours. Alexander v. Birchfield, 1 Car. & Marsh 75 (41 E. C. L. 47). In. that case Tindall, C. J., said: 'The only way in which I can state the rule to you is this, that, if a party receive a check on a particu- lar day, he may present it at any time during banking hours on the following day to that on which he received it.' See, also, to the same effect, Moule v. Brown, 4 Bing. N. C. 266 (33 E. C. L. 347); Cox v. Boone, 8 W. Va. 500; Simpson v. Ins. Co., 44 Cal. 139; Cawein v. Brewinski, 6 Bush. (Ky.) 457; Schoolfield v. Moon, 9 Heisk. (Tenn.) 171; Boddington v. Schlencker, 4 Barn. & A. 752; Holmes v. Roe, 62 Mich. 199; Lloyd v. Osborne, 92 "Wis. 93, 5 Am. & Eng. Ency. Law 1042. But when the person receiving the check is at a place different from that of the place of business of the drawee, additional time is allowed. The person receiv- ing it need not forward it for pre- sentment on the day of its reception, but may do so on the next day thereafter, and the person to whom it is forwarded for presentation need not present it on the day of reception, but may do so on the next day after he receives it. In this case two extra days are allowed, while in the other but one is al- lowed. 5 Am. & Ency. Law 1042; Moule V. Brown, 4 Bing. N. C. 266; Holmes v. Roe, 62 Mich. 199; Pri- deaux v. Criddle, L. R. 4 E. B. 455; Griffin v. Kemp, 46 Ind. 172, 176; Burkhalter v. Bank, 42 N. Y. 538; Parsons on Notes and Bills, 72. The reason for this indulgence is well stated by Story on Bills, section 290, in discussing the law of notice of dishonor and protest, in which the principle is generally held to be the same. He says: 'In the first place, then, it is not by our law necessary in any case to give notice, either by post or otherwise, on the very day on which the dishonor and protest took place, although the holder is at liberty to do so at his option. He is always allowed by law a whole day for this purpose, and is not compellable to lay aside all other business to devote himself to that particular purpose. For it would be most inconvenient and un- reasonable to require such strict- tiess, as it might interfere with other business and duties quite as pressing and important; and there- fore it is sufficient, if he sends notice by the post or otherwise by the next day.' The same reason which suffices to give tv/o days, one for reception and the other for pres- entation, when the payee and drawee are at the same place, justi- fies the general rule, allowing four days when they are at different places. * * * Enough has been stated to clearly demonstrate that the utmost diligence possible is not required. The payee is bound to exercise only reasonable diligence and need not do that which is con- trary to, or variant from, the ordi- nary and prudent mode of trans- acting business. But the law does seem to require such action, within reasonable limitations, determined by considerations of convenience, § 577] CHECKS. 734r pies applicable to the parties to an inland bill of exchange; but not in all respects. Notice of dishonor and non-payment of a check, and diligence in the presentation thereof, are required only when it is necessary to protect the drawer from loss by reason of the failure of the drawee, holding funds of the drawer sufficient to pay the check. Presumably the check is drawn upon funds in the hands of the drawee belonging to the drawer, and amounts to an appropriation thereof in favor of the payee on the check, and he owes to the drawer the duty of exercising a certain amount of diligence to obtain payment in order to prevent a loss to the drawer by reason of failure of the bank. 'In other words, if he fails to perform such duty, the loss falls upon him- self and he is barred by law of any right to recover against the maker of the check. If, by delay in presentation, a loss occurs, the payee or holder is deemed to have extended credit to the bank, and must suf- fer the consequences."^'^ § 577. When presentment is made. — Presentment of check for pay- ment is made when the holder or his agent produces and exhibits it to the proper official or agent of the bank so that he may have an opportunity to see that it is signed by the depositor, that it is so dated as to be payable at the time when it is presented, that it is properly filled out, that the party presenting it has the legal title to it by in- dorsement or otherwise, and that the indorsement, if any, is genuine.^^ but not of leisure, as is calculated, " Lewis, Hubbard & Co. v. Mont- in view of the possibilities of loss, gomery Supply Co., 59 W. Va. 80, by delay, to prevent it. Hence, the 52 L. E. 1017, per Poffenberger, J., two-day rule, allowed for forward- citing Cox v. Boone, 8 W. Va. 500; ing notices or paper from present- Compton v. Oilman, 19 W. Va. 312; ment, is subject to this qualification, Pursell v. Allemong & Son, 22 Grat. namely, that it must be sent by the 739, 5 Am. & Eng. Ency. Law 1030; mail of the second day. If there Parsons on Notes and Bills, Vol. be more than one mail on that day, II, pp. 58, 59; Bank v. Bank, 10 it need not go by the first, but, if Wall. 380. there be but one, it must go by it, ^^ Peabody v. Citizens' State Bank unless it leave or closes at an un- of St. Charles (Minn. 1906), 108 reasonably early hour. The whole N. W. 272, 274. Language of Elliott, of the second day is not allowed, J., citing Crawford v. West Side unless the last mail of that day goes Bank, 100 N. Y. 50, 2 N. E. 881, 53 at the close of business. To this Am. Rep. 152; Waring v. Betts, 90 point the American authorities seem Va. 46, 17 S. E. 739, 44 Am. St. to be unanimous." Lewis, Hubbard Rep. 890. The court also says in & Co. v. Montgomery Supply Co., the principal case: "The legal re- 59 W. Va. 80, 81, 82, 52 S. E. 1017. lation between a bank and a depos- 735 SUBSTITUTED CHECKS — WANT OF DILIGENCE. [§ § 578. Substituted checks — Presentment — Want of diligence. — The utmost diligence is required in malcing presentment of a substi- tuted check given to a collecting bank by the drawee bank upon sur- render of the original check by such collecting bank.^'' Where a sub- stituted check was taken before noon of a business day closing at three o'clock in the afternoon, and such check could have been collected within twenty minutes, and it was not presented for payment at all, but on the following day an attempt was made to collect it through the clearing house, and the drawer failed at the hour of two-forty-five in the afternoon of that day and the check was thrown out, it was held that no diligence in collecting it appeared.^" "The rule fixing the itor is in most respects that of debtor and creditor. The title to the specific money deposited passes to the banlt, which becomes indebted to the depositor in the amount of the deposit. The banlt is then obliged to pay, when a demand is properly made. The well-understood customs of the business enter into and become a part of the contract. The obligation of the bank is to a certain extent conditional. It is not like other debtors, obliged to seek its creditor and pay him wher- ever found. There is an implied limitation as to the time and place. It must pay in money at its bank- ing house upon demand during the customary hours of business. 'This being the understanding upon which the deposit is made, it is parcel of the bank's contract to repay — that is, a condition precedent to its duty to repay — that the depositor shall call upon it to do so at its banking house, and there is no default of the bank until such call is made.' Branch v. Dawson, 33 Minn. 399, 23 N. W. 552; Harrison v. Nicollet National Bank, 41 Minn. 488, 43 N. W. 336, 5 L. R. A. 746, 16 Am. St. Rep. 718." "Verbal demand good without phys- ical presence of check — Demand as owner's agent. See Garthwaite v. Bank of Tulare, 134 Cal. 237, 66 Pac. 326, a case of forged indorse- ment. ^"Anderson v. Gill, 79 Md. 312, 22 Wash. L. Rep. 569, 29 Atl. 527, 25 L. R. A. 200. ^» Noble V. Doughten, 72 Kan. 336, 83 Pac. 1048. The following ad- ditional points were decided in the above case. (1) Title to Check In- dorsed and deposited. If the payee of a check drawn on a bank in a city other than that of his residence indorse it and deposit it in his home bank in the usual and ordinary manner, and withot any agree- ment or understanding in reference to the transaction other than such as the law implies, the check becomes the property of the indorsee. (2) Dishonor of such check. Ownership not affected. The fact that the indorsee may have the right to charge the check to the depositor's account if it should be dishonored after due dili- gence has been exercised to collect it, does not affect the character of the transfer or render the bank any the less the owner of the check. (3) Indorsement to correspondent — Guaranty — Deposit — Title. If a bank holding title to a check under the circumstances stated indorse it to the order of its correspondent in 578] CHECKS. 736 close of business hours of the next secular day as a reasonable time within which a check may be presented, so as to hold the drawer when drawn on a bank in the same place where it is delivered, has relation only to the contract and liability of the parties to the instrument, and does not apply to a check given by the drawee to the payee, or to the agent of the payee, of the original check, upon its surrender. * * * The holder of a substituted check taken upon the surrender of the original check to the drawee thereof must use such diligence in pre- senting it for payment as a prudent man would under like conditions use. This imposes no hardship upon the person who voluntarily ac- cepts the drawee's check instead of cash. If he has had ample and abundant time to convert the drawee's check into money, and still omits to do so, he obviously has not used due diligence, and the results of such negligence should not be -sasited upon the original drawer, who was in no way responsible therefor. Whether a delay to present the city where the drawee hank is located, with a guaranty of the pre- vious indorsement, and forward it with a deposit slip attached for credit as a deposit to such corre- spondent, who accepts it on the terms proposed hy the indorsement and the deposit slip and undertakes to collect it, the title to the check, no further facts appearing, vests in the second indorsee. (4) Acceptance by correspondent of drawer's check in lieu of cash. If a bank holding title to a check under the circum- stances stated in the last paragraph presents it for payment on the day of its receipt to the drawee, who then has funds of the drawer on deposit to meet it and who is ready to pay it in money, but, instead of taking cash, surrenders the check for the drawee's own ch6ck on an- other bank, it must use the utmost diligence to collect the second check or bear any loss which may be oc- casioned by the delay in case the drawer should become insolvent. (5) Insolvency of first drawee — Second presentment — Discharge of parties. Under circumstances of the character indicated in the last paragraph the presentment for pay- ment of the first check and the substitution of the second check in lieu of payment in money, fixes the rights of the parties; and after the insolvency of the drawee of the first check has occurred the negligent holder cannot charge the drawer and indorsers with liability by re- possessing itself of the instrument, presenting it for payment a second time, and protesting it for non- payment; and this is true even al- though the first presentment might have been rightfully delayed, for a longer period of time than that dur- ing which the drawee remained solvent. (6) Second check — Mistake — Recovery by Drawer. Under the facts in this case a drawer whose check was not collected because of the negligence of an indorsee is equitably entitled to recover from the payee, on the ground of mis- take, the amount of a second check, issued on account of the supposed dishonor of the first one and duly paid. 737 LOCAL CUSTOM! OF BANKS. [§§ 579-581 the drawee's check till the close of business hours is due diligence cannot be asserted as an invariable rule. In some instances it might be, whilst in others it would manifestly not be. * * * That a higher degree of diligence is demanded under facts like those before US, than that which obtains between the parties to the instrument is obvious,- because, as we have said, the drawer of the original check must be held to have contemi:)lated that when presented it would be paid in money only, and the payee and drawee have no right, except at their own peril, to substitute some other mode of settlement which results in injury to the drawer. * * * We hold, then, that when the payee of a check, or his agent, takes from the drawee, who has ample funds of the drawer, a check of the drawee on some other bank or banker, instead of money, he, the payee, or his agent, must use the utmost diligence to present the substituted check for payment."-"* But where no degree of diligence could have obtained payment of a substituted check no liability is created as to the drawer of the original check. ^^ § 579. Substituted presentment by copy or description. — Where the holder of a check learns that its attempted presentment by mail has failed and that it is lost, at least for the purposes of immediate pre- sentment, and he has the opportunity so to do, he owes the duty to at once make substituted presentment and demand by means of a copy or sufficient description of the check, and in case of non-payment to give notice to the indorser.^- § 580. Substituted checks — Local custom of banks. — A local cus- tom of a bank to take np checks, drawn upon them by their deposi- tors, with their own checks on other banks will not excuse holders from exercising the utmost diligence in collecting the substituted checks.^^ § 581. Effect of certification — Operation of check as assi^ment or lien. — Where a check is certified Ijy the bank on which it is drawn ="* Anderson v. Gill, 79 Md. 312, 302, 27 C. R. A. 332, 12 Bkg. L. quoted in Noble v. Doughton, 72 J. 393. Kan. 336, 355, 83 Pac. 1048. -- Aebi v. Bank of Evansville, 124 ''First National ijank v. Buck- Wis. 73, 102 N. W. 329, 109 Am. St. hannon Bank, 80 Md. 475, 31 Atl. Rep. 324. =^ Noble V. Doughton, 72 Kan. 336, Joyce Defenses — 47. 83 Pac. 1048. 581] CHECKS. 738 the certificate is equivalent to an acceptance.^* By the law merchant of this country, the certificate of the bank that a check is good is equivalent to acceptance. It implies that the check is drawn upon, sufficient funds in the drawee's hands and that they have been set apart for its satisfaction and that they shall be so applied whenever the check is presented for payment. It constitutes an undertaking not only that the check is then good but that it will continue good. Such an agreement is as binding and obligatory upon banks as their notes of circulation, or any other valid obligation. The purpose of certify- ing a check as regards both parties is to enable the holder to use it as money. -° Certification of a check also guarantees the genuineness of =*Negot. Inst. Law, § 323, Appen- dix herein. As to certification and effect thereof, see, generally: United States. — Espy v. National Banli, 18 Wall. (U. S.) 605. Illinois. — Drovers' National Bank V. Anglo-American Packing Co., 117 111. 100, 57 Am. Rep. 855, 7 N. E. 601; Jackson Paper Mfg. Co. v. Commer- cial National Bank, 99 111. App. 108, rev'd 199 111. 151, 59 L. R. A. 657, 65 N. E. 136; Wright v. MacCarty, 92 111. App. 120; American Trust & Savings Bank v. Crowe, 82 111. App. 537; Strauss v. American Exchange National Bank, 72 111. App. 314. Massachusetts. — Minot v. Ross, 156 Mass. 458, 32 Am. St. Rep. 472, 31 N. E. 489, 16 L. R. A. 510. Missouri. — Muth v. St. Louis Trust Co., 82 Mo. App. 596. Nebraska. — Farmer's Bank v. Dunbar, 32 Neb. 487. New Hampshire. — Barnet v. Smith, 31 N. H. 256. New York. — Goshen National Bank v. Bingham, 118 N. Y. 349, 23 N. E. 180, 16 Am. St. Rep. 765, 7 L. R. A. 595; Lynch v. First Na- tional Bank, 107 N. Y. 179, 11 N. Y. St. R. 389, 27 Week. D. 328, 13 N. E. 775; Crawford v. West Side Bank, 100 N. Y. 50, aff'g 49 Supr. Ct. 68; Clews v. Bank of New York, 89 N. Y. 418; National Bank of Commerce v. National Mechanic's Bank, 55 N. Y. 211, 14 Am. Rep. 232; Farmers' and Mechanics' Bank v. Butchers' and Drovers' Bank, 28 N. Y. 425, 16 Am. Dec. 678; Schlesin- ger v. Kurztroh, 94 N. Y. Supp. 442, 47 Misc. 634; Meuer v. Phoenix Na- tional Bank, 86 N. Y. Supp. 701, 42 Misc. 341, aff'd 88 N. J. Supp. 83, 94 App. Div. 331; Herman Fur- niture and Plumber's Cabinet Works V. German Exchange Bank, 87 N. Y. Supp. 462; People v. St. Nicholas Bank, 77 Hun 157. Texas. — Henrietta National Bank V. State Bank, 80 Tex. 648. Canada. — La Banque Jacques- Cartier v. La Corporation de Limoi- lon, 17 Rap. Jud. Quebec, C. S. 211; Legare v. Arcand, 9 Quebec Rap. Jud. 122. -= Merchants' National Bank v. State National Bank, 10 Wall. (U. S.) 47, per Swayne, J. "The certification of a check, if written out, would contain a state- ment that the drawer had funds sufficient to meet it in the bank ap- plicable to its payment, and an agreement on behalf of the bank that these funds should be retained and paid upon the check whenever it was presented." Cooke v. State National Bank of Boston, 52 N. Y. ^39 EFEECT OF CERTIFICATION. [§' 581 96, 11 Am. Rep. 667; Thompson's Nat. Bank Cases, 698, 711, per Church, Ch. J. Cancellation of certification, see Dillaway v. Northwestern National Bank, 82 111. App. 71. Evidence of acceptance as cash — Entry in pass book of certified check, see Gaden v. Newfoundland Savings Bank (1899), App. Cas. 281, 68 L. J. P. C. 57, 80 Law T. N. S. 329. Effect of banker's oral agreement to accept checks. Drawers' want of funds; third person's agrement to supply them, see Leach v. Hill, 106 Iowa 171, 76 N. W. 667. Cashier's authority to certify — Same, when drawer has no funds. "The cashier has a right by virtue of his office to make this certificate, when the drawer has funds. He is the custodian of the bank and of the books; he receives money and gives vouchers therefor; and whether upon receiving a check he pays it in money or gives the holder a certificate of deposit or draft or a certificate that he will retain suf- ficient of the money standing to the drawer's credit to pay it when presented, he is in either case act- ing within the line of his duty and within the scope of the authority which necessarily attaches to his office. Whether the bank might not restrict this authority, so as to af- fect the rights of persons having notice, is not material. It is suf- ficient that the public have a right to regard his authority as coexten- sive with these duties, and that such authority is inherent in the office. This is substantially conceded by the learned counsel for the ap- pellants, but they insist that the cashier has no power to make the certificate when the drawer has no funds. I agree that he has not, as between him and the bank, and the liability of the bank is not based upon his power to bind them by such a contract without funds, but upon the ground that the bank can- not dispute the fact that there are funds, and hence the contract is en- forced as though there were funds to meet it. It follows that a bona fide holder only can enforce the lia- bility against the bank, where the certificate is given in the absence of funds. The bank having placed the cashier in the position which im- plies this inherent authority, those who deal with the bank have a right to infer that he possesses it, and although the exercise of it in a given case may not be warranted on account of the existence or non- existence of some extrinsic fact pe- culiarly within its official knowl- edge, yet the bank is responsible in- stead of an innocent party, upon every principle of reason and mor- ality. This principle applies to the ordinary relation of principal and agent, and, a fortiori, when the em- ployment concerns the general pub- lic, involving extensive commercial transactions. Farmers' & Mechan- ics' Bank of Kent County, Mary- land V. Butchers' & Drovers' Bank, 16 N. y. 125 (aff'g 4 Duer. 219); Schuyler's Case, 34 N. Y, 30. Ultra vires cannot be alleged for telling the truth, even by bank officers, nor can they insist upon a falsehood to the injury of one who has confided in their veracity. The import of a certification and the liability of the bank upon the principle here indi- cated legally result from the nature of the agreement and the applica- tion of well-settled rules of law and do not depend upon usage or cus- tom. Whether it is competent for banks, by usage or express agree- ment, to extend their liabilities so 581] CHECKS. 740 the signature.'*' But where there was a fraudulent alteration of the date, signature, and amount, and the drawee bank thereafter certifies the check and pays the amount thereof to another bank, recovery may be had by the former against the latter for money so paid.^^ If the parties to a check, certified as "good," reside in the same town it must also be presented for payment within business hours of the day after it is drawn.^^ It is held in New York that as between the drawer and as to include cases where certificates are issued without funds, to the knowledge of the holder, it is un- necessary to determine. Selden, J., in 16 N. Y. 125, 128, expressed the opinion that banks have no power to loan their credit in that form. It is clear, however, that where such a certificate is made without funds, by a cashier in fraud of the rights of the bank, no one but a bona fide holder can enforce it." Cooke v. State National Bank of Boston, 52 N. Y. 96, 11 Am. Rep. 667; Thomp- son's Nat. Bank Cases 698, 711, per Church, Ch. J. As to cashier's powers in general, see: United States. — Martin v. Webb, 110 U. S. 7; Merchants' National Bank v. State National Bank, 10 Wall. (U. S.) 604. United States Bank v. Dunn, 6 Pet. (U. S.) 51; Bank of United States v. Dandridge, 12 Wheat. (U. S.) 64; Farmers' & M. National Bank v. Smith, 77 Fed. 129, 40 U. S. App. 690, 23 C. C. A. 80, 14 Bkg. L. J. 69. Iowa. — Iowa State Savings Bank v. Black, 91 Iowa 490. Maine. — Franklin Bank v. Stew- ard, 37 Me. 519. Maryland. — Weckler v. First Na- tional Bank, 42 Md. 581. Massachusetts. — Jewett v. West Somerville Cooperative Bank, 173 Mass. 54, 52 N. E. 1085. Michigan. — First National Bank V. Stone, 106 Mich. 367, 2 Det. L. N. 463, 12 Bkg. L. J. 681, 64 N. W. 487. Minnesota. — Ft. Dearborn Na- tional Bank v. Seymour, 71 Minn. 81, 73 N. W. 724. New Hampshire. — Hanson v. Heard, 69 N. H. 190, 38 Atl. 788. New York. — Wiley v. First Na- tional Bank, 47 N. Y. 546; Barnes V. Ontario Bank, 19 N. Y. 156. South Carolina. — Pollock v. Caro- lina Interstate Bldg. & L. Assoc, 51 S. C. 420, 29 S. E. 77, 64 Am. St. Rep. 683, 8 Am. & Eng. Corp. Cas. N. S. 157. Wisconsin. — Houghton v. First National Bank, 26 Wis. 663, 7 Am. Rep. 107. "" Security Bank v. National Bank of the Republic, 67 N. Y. 458, 23 Am. Rep. 129. -' National Bank of Commerce v. National Mechanics' Banking Asso- ciation, 55 N. Y. 211, 14 Am. Rep. 232, and note 237. See Security Na- tional Bank v. National Bank of the Republic, 67 N. Y. 438, 23 Am. Rep. 129; Marine National Bank v. Na- tional City Bank, 59 N. Y. 67, 17 Am. Rep. 305 and note 314. Certification for greater amount than deposit, see Dillaway v. North- western National Bank, 82 111. App. 71. ^ Andrews v. German National Bank, 9 Heisk. (Tenn.) 211, 24 Am. Rep. 300, Right to correct such a certifica- tion, see Second National Bank of Baltimore v. Western National Bank of Baltimore, 51 Md. 128, 34 Am. Rep. 300. 741 EFFECT OF CERTIFICATION". [§' 581 the holder, a certification of the check operates as payment and dis- charges the former's liability in case of the subsequent insolvency of the drawee, even though presentment for payment is made in the afternoon of the day of certification.^'' In a Tennessee case it is de- cided that it is immaterial, in so far as the liability of the certifying bank is concerned, whether it had sufficient funds of the drawer or not.^'* Again, under the negotiable instruments law of New York, where the holder of a check procures it to be accepted or certified the drawer and all indorsers are discharged from liability thereon.^^ So, under a Tennessee decision, certification at the instance of the holder discharges the drawer's liability on the check, as it operates as a pay- ment of the debt. ^2 And if the drawee, before delivery of a check to the holder, certifies it at the indorser's request, the indorser is not thereby released.^ ^ But where the certification is made at the drawer's request before delivery of the check, and presentment is not made before suspension of the bank, the latter is liable only to the holder in due course and not to the drawer, so that a set-off by the drawer against a debt to the bank is precluded.^* And a promise to accept and pay a check, made by the drawee to the drawer, is not a sufficient ground of liability as to the holder where it does not appear that re- liance was placed by the holder upon such promise when he took the check.^^ The understanding of merchants and bankers as to the effect of a certification is not provable by extrinsic evidence.^*^ Again, the negotiable instruments law of New York also provides that a check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable "^ First National Banlt of Jersey =* Sctilesinger v. Kurzrolt, 94 N. Y. City v. Leach, 52 N. Y. 350, 11 Am. Supp. 442, 47 Misc. 634. Rep. 708. As to certification at drawer's re- ^^ Frencli v. Irwin, 4 Baxt. (Tenn.) quest, see also Metropolitan Na- 401, 27 Am. Rep. 769. See quotation tional Bank v. Jones, 137 111. 634, from opinion of Church, Ch. J., in 31 Am. St. Rep. 403, 27 N. E. 533, Cooke V. State Nat. Bk. of Boston 12 L. R. A. 492; Born v. First Na- given in note 25 to this section. tional Bank, 123 Ind. 78, 18 Am. St. '^Negot. Inst. Law, § 324, Appen- Rep. 312, 24 N. E. 123, 7 L. R. A. dix herein. See Meuer v. Phenix 442; Cullinan v. Union Surety & National Bank, 88 N. Y. Supp. 83, Guaranty Co., 80 N. Y. Supp. 58, 79 94 App. Div. 331. App. Div. 409. ^-French v. Irwin, 4 Baxt. (Tenn.) ^^Carr v. National Security Bank, 401, 27 Am. Rep. 769. 107 Mass. 45, 9 Am. Rep. 6. '■■' Mutual National Bank v. Rutge, "" Security Bank v. National Bank 28 La. Ann. 933, 26 Am. Rep. 126. of Republic, 67 N. Y. 458, 23 Am. Rep. 129. § 582] CHECKS. 742 to the holder, unless it accepts or certifies the check.^^ So, under a decision in that state, no part of the debt is transferred or assigned by a check, nor is any lien at law or in equity created thereby, nor can the holder derive any benefit from the bank's agreement to pay their customers' checks to the extent of the deposit to their credit, as no obligation rests upon the bank to pay checks in any particular order.^* § 582. Necessary that drawer sustain actual loss or injury from laches in presentment. — Unless actual loss or injury is sustained by the drawer through laches in presentment of a check he is liable, in so far as the holder is concerned, as delay in presentment is immaterial where the drawer is not injured, and he is discharged from liability to the extent of the loss so sustained.^^ ^' Negot. Inst. Law, § 325. '^ ^tna National Bank v. Fourth. National Bank, 46 N. Y. 82, 7 Am. Rep. 314. Examine also the following cases: United States. — Florence Mining Co. V. Brown, 124 U. S. 385, 31 L. Ed. 424, 8 Sup. Ct. 531. Colorado. — Colorado National Bank of Denver v. Boettcher, 4 Colo. 185, 40 Am. Rep. 142. Illinois. — Brown v. Schintz, 98 111. App. 452, 459, aff'd 202 111. 509, 67 N. E. 172. Indiana. — Harrison v. Wright, 100 Ind. 515, 58 Am. Rep. 805. New York. — First National Bank of Union Mills v. Clark, 134 N. Y. 368, 48 N. Y. St. R. 283, 32 N. E. 38, aff'g 30 N. Y. St. R. 1021, 9 N. Y. Supp. 952; O'Connor v. Mechan- ics' Bank, 124 N. Y. 324, 36 N. Y. St. Rep. 277, 26 N. E. 816, rev'g 54 Hun 272, 27 N. Y. St. Rep. 1, 7 N. Y. Supp. 380; Lynch v. First National Bank, 107 N. Y. 179, 11 N. Y. St. R. 389, 27 Week. D. 328, 13 N. E. 775; Jordan v. National Shoe & Leather Bank, 74 N. Y. 467, 30 Am. Rep. 319. Tennessee. — Akin v. Jones, 93 Tenn. 353, 42 Am. St. Rep. 921, 27 S. W. 669, 25 L. R. A. 523. But compare Wyman v. Ft. Dear- born National Bank, 181 111. 279, 72 Am. St. Rep. 259, 48 L. R. A. 565; Gage Hotel Co. v. Union National Bank, 171 111. 531, 63 Am. St. Rep. 270, 39 L. R. A. 479, 49 N. E. 420; Metropolitan National Bank v. Jones, 137 111. 634, 12 L. R. A. 492, 27 N. E. 533, 31 Am. St. Rep. 403; Farmers' Bank & Trust Co. v. New- land, 97 Ky. 464, 31 S. W. 38; Fonner v. Smith, 31 Neb. 107, 11 L. R. A. 528, 47 N. W. 632, 28 Am. St. Rep. 510; Raesser v. National Exchange Bank, 112 Wis. 591, 88 N. W. 618. ^^ United States. — Bull v. Kasson, First National Bank, 123 U. S. 105, 31 L. Ed. 97; Bowen v. Needles Na- tional Bank (U. S. C. C), 87 Fed. 430. Georgia. — Merritt v. Gate City Na- tional Bank, 100 Ga. 147, 38 L. R. A. 749. Illinois. — I ndustrial Bank v. Bowes, 165 111. 70, 46 N. E. 10, rev'g 64 111. App. 300, 1 Chic. L. J. Wkly. 455; Howes v. Austin, 35 111. 396; Marshall v. Freeman, 52 111. App. 42. Indiana. — See Henshaw v. Root, 60 Ind. 220. 743 DEAWEE INSOLVENT OR BANKRUPT. [§ 583 § 583. Where drawee becomes insolvent or bankrupt — Collection through bank. — A dela}^ of one day in presenting a check, during which time the drawee fails, may constitute laches.*" If a check is given for the amount of a draft hy the firm on which it is drawn, and such firm does business in the same city as the party to whom such check is given, it should be presented on the day on which it is re- ceived; and where the drawer had funds in the bank on which the check was drawn, and the check passed through another bank in which it was deposited and did not reach the drawer's bank until after fail- ure, the party sending the draft was held to be released from his in- debtedness.*^ And where a person sent a check to another in part payment of his indebtedness and it was duly mailed and should have been received the following day and it would have been honored if presented in a reasonable time after its receipt, but such presentment was not made because of the negligence of the party to whom the check was forwarded, and the amount thereof was lost by reason of the bank's failure, and the check was not returned to the sender, the latter's claim against the party receiving the check is not waived by the presentment of the sender's claim for his deposit to the trustee of the insolvent bank.*^ Under a Wisconsin decision where the draw- ers of a bank check drew out all their funds before failure of the bank but the holder had negligently delayed presentment until after such failure, the facts that the check would have been honored if it had Maryland. — See Exchange Bank v. Damages— When a bank check is Sutton Bank, 78 Md. 577, 23 L. R. wrongfully protested the drawer A. 173. may recover temperate compensa- Missouri. — Nelson v. Kastle, 105 tory damages without alleging and Mo. App. 187, 79 S. W. 730; Herider proving special damages. The right V. Phoenix Loan Assoc, 82 Mo. App. to recover such damages is not con- 427; Long Bros. v. Eckert, 73 Mo. fined to a trader in the restricted App. 445. sense in which the term is used in Virginia. — See Blair v. "Wilson, 28 the bankruptcy laws, but extends to Gratt. (Va.) 165. any person who is engaged in busi- West Virginia. — Compton v. Gil- ness and whose credit is thus neces- man, 19 W. Va. 312, 42 Am. Rep. sarily injured. Peabody v. Citizens' 776. State Bk. of St. Charles (Minn. Examine Andrews v. Bradley, 102 1906), 108 N. W. 272. Fed. 54; Carroll v. Sweet, 128 N. ^'' Smith v. Miller, 43 N. Y. 171. Y. 19, 37 N. Y. St. R. 868, 27 N. E. ^^ Smith v. Miller, 43 N. Y. 171, 3 763, 13 L. R. A. 43, rev'g 5 N. Y. Am. Rep. 690. Supp. 572, 25 N. Y. St. R. 356, 57 *- Pink Front Bankrupt Store v. Supr. Ct. 100. See Negot. Inst. Law, G. A. Mistrot & Co. (Tex. Civ. App.), § 322. 90 S. W. 75. 583] CHECKS. 744 been promptly presented and that the drawers were compelled to pay the bank's assignee in bankruptcy the money which they had drawn, out will not prevent recovery by holder of the paper from the draw- ers.** If the drawer uses a National bank check, but erases only part of the name describing or designating such bank and writes above it the name of a private banker, and the check is purchased two days thereafter from the party to whom the check was given, and the pur- chaser, who knew the private banker and had done some banking with him, delays presentment until after the drawee has failed, no recovery can be had of the drawer,** But if, through the drawer's acts, the holder has not lost his remedy af^ainst the drawer of a check, given him in settlement of an account for merchandise, such holder is still liable for the price of the goods, although the bank had failed before presentment, which had been delayed.*^ If a check, deposited by the ^^Kinyon v. Stanton, 44 Wis. 479, 28 Am. Rep. 601. «Cork V. Bacon, 45 Wis. 192, 30 Am. Rep. 712. *MVilliams v. Brown, 80 N. Y. Supp. 247, 80 App. Div. 628, 82 App. Div. 353. As to laches in presentment and insolvency of bank, see further the following cases: Alabama. — Watt v. Gans, 114 Ala. 264, 21 So. 1011 (no recovery by holder from drawer) ; Industrial Trust T. & Sav. Co. v. Weakley 103 Ala. 458, 15 So. 854 (no recov- ery against drawer). Georgia. — Tomlin v. Thornton, 99 Ga. 585, 27 S. E. 147 (payee cannot recover from drawer). Illinois. — Balkwill v. Bridgeport Wood Finishing Co., 62 111. App. 663, 1 Chic. L. J. Wkly. 102 (where payee not guilty of negligence). Iowa. — Hamlin v. Simpson, 105 Iowa 125, 44 L. R. A. 397, 74 N. W. 906, 15 Bkg. L. J. 343 (drawer was injured by laches and was released). Kansas. — Anderson v. Rodgers, 53 Kan. 542, 36 Pac. 1067, 27 L. R. A. 248, 11 Bkg. L. J. 87 (payee assumes risk of insolvency and loss by un- reasonable delay). Michigan. — Hamilton v. Winona Salt & L. Co., 95 Mich. 436, 54 N. W. 903 (holder not entitled to recover where negligent, even though prom- ise is made by drawer that he will pay, but the latter had then no knowledge of the laches). New York. — Williams v. Brown, 65 N. Y. Supp. 1049, 53 App. Div. 486 (debt discharged by the laches) ; Martin v. Home Bank, 52 N. Y. Supp. 464, 30 App. Div. 498, aff'd 160 N. Y. 190, 54 N. E. 717 (drawer and indorser discharged by the laches); Grant v. McNutt, 33 N. Y. Supp. 62, 66 N. Y. St. R. 719, 12 Misc. 20 (when drawer not dis- charged); Carroll v. Sweet, 37 N. Y. St. R. 868, 27 N. E. 763 (delay and consequent loss discharges in- dorser who had transferred check for antecedent debt, but only to amount of check). Pennsylvania. — Wagner v. Crook, 167 Pa. 259, 31 Atl. 576, 12 Bkg. L. J. 255 (drawer's non-liability not changed by sending duplicate check, on false statement that original lost. 745 DRAWEE INSOLVENT OR BANKRUPT. [§ 583 holder with a bank for collection, is not presented in proper time and not until after the failure of the drawee bank, and the delay and loss are consequent upon forwarding it by an indirect route for present- ment the holder is precluded recovery from the drawer.*° where latter received too late) ; Na- tional State Bank v. Weil, 141 Pa. 457, 21 Atl. 661, 4 Bkg. L. J. 331 (in absence of excusing circum- stances, payee or transferee assumes risk of delay). Vermont. — Gregg v. Beane, 69 Vt. 22, 37 Atl. 248, 14 Bkg. L. J. 319 (question of diligence and relative rights of drawer and payee where drawee suspends). Wisconsin. — Lloyd v. Osborn, 92 Wis. 93, 13 Bkg. L. J. 177, 65 N. W. 859 (when payee not precluded re- covery against maker — excuses). «Watt v. Gans, 114 Ala. 264, 21 So. 1011. Collection through bank — Rights, duties and liabilities, see the follow- ing decisions: United States. — Commercial Na- tional Bank v. Armstrong, 148 U. S. 50, 37 L. Ed. 363; Holder v. West- ern German Bank, 132 Fed. 187, aff'd 136 Fed. 90, 68 C. C. A. 554; First National Bank v. Wilmington & W. R. Co., 77 Fed. 401, 42 U. S. App. 232, 23 C. C. A. 200. Alabama. — Farley National Bank v. Pollock & Bernheimer (Ala.), 39 So. 612; Jefferson County Savings Bank v. Hendrix (Ala.), 39 So. 295, 1 L. R. A. N. S. 246; Josiah Morris & Co. v. Alabama Carbon Co., 139 Ala. 620, 36 So. 764. Arkansas. — K uder v. Greene 72 Ark. 504, 82 S. W. 836. Colorado. — Manhattan Life Ins. Co. V. First National Bank (Colo. App.), 80 Pac. 467. Georgia. — Tomlin v. Thornton, 99 Ga. 585, 27 S. E. 147; Georgia Na- tional Bank v. Henderson, 46 Ga. 487, 12 Am. Rep. 490. Illinois. — Bank of Commerce v. Miller, 105 111. App. 224. Indiana. — First National Bank of Crown Point v. First National Bank of Richmond, 76 Ind. 561, 40 Am. Rep. 261. /ot<;a.— Guelich v. National State Bank of Burlington, 56 Iowa 434, 41 Am. Rep. 110. Kansas. — Anderson v. Rodgers, 53 Kan. 542, 36 N. W. 1067, 27 L. R. A. 248; Stockton v. Montgomery, 9 Kan. App. 104, 57 Pac. 1059, 16 Bkg. L. J. 496. Kentucky. — Second National Bank v. Merchants' National Bank, 23 Ky. L. Rep. 1255, 55 L. R. A. 273, 65 S. W. 4; Long v. Bank of Commerce, 18 Ky. L. Rep. 922, 38 S. W. 886. Maryland. — Anderson v. Gill, 79 Md. 312, 25 L. R. A. 200, 29 Atl. 527, 22 Wash. L. Rep. 569. Minnesota. — Minneapolis Sash & D. Co. v. Metropolitan Bank, 76 Minn. 136, 44 L. R. A. 504, 78 N. W. 780, 16 Bkg. L. J. 399. Mississippi. — Continental National Bank v. First National Bank 84 Miss. 103, 36 So. 189; Third Na- tional Bank of Louisville v. Vicks- burgh Bank, 61 Miss. 112, 48 Am. Rep. 78. Missouri. — National Bank of Com- merce v. American Exchange Bank, 151 Mo. 320, 16 Bkg. L. J. 448, 52 S. W. 265. Nebraska. — Western Wheeled Scraper Co. v. Sadilep, 50 Neb. 105, 69 N. W. 765, 14 Bkg. L. J. 139. New York. — Bank of America v. 584, 585] CHECKS. 746 § 584. Surety. — It is held that the neglect to present a cheek and demand payment within a reasonable time does not release a surety from liability, as a presumption exists that he has knowledge that it is not to be used in the usual manner, but an exception exists where he also shows that the time has been extended to the principal debtor without his assent or specified limitation to himself.*'^ § 585. Indorser. — An indorser of a check is not liable where pre- sentment is not made in a reasonable time.*^ Where the payee of a check becomes chargeable as an indorser only, such check must be pre- sented for payment within a reasonable time. This applies in a case where a check upon another bank is indorsed by the payee and de- posited in the bank in which he keeps an account, and the bank ac- cepts it and credits the amount as cash on the depositor's account to be checked against as he sees fit, as such facts indicate a completed trans- Waydell, 92 N. Y. Supp. 666, 103 App. Div. 25, 94 N. Y. Supp. 135, 104 App. Div. 620; National Revere Bank v. National Bank of the Re- public, 66 N. Y. Supp. 662, aff'd 172 N. Y. 102, 64 N. B. 799; Williams v. Brown, 65 N. Y. Supp. 1049, 53 App. Div. 486; Martin v. Home Bank, 52 N. Y. Supp. 464, 30 App. Div. 498, aff'd 60 N. Y. 190, 54 N. E. 717; Briggs v. Central National Bank of City of New York, 89 N. Y, 182, 42 Am. Rep. 285; Ayrault V. Pacific Bank, 47 N. Y. 570, 7 Am. Rep. 489. Oregon. — Kershaw v. Ladd, 34 Oreg. 375, 56 Pac. 402, 44 L. R. A. 236, 16 Bkg. L. J. 273. Pennsylvania. — Morris v. First National Bank, 201 Pa. 158, 50 Atl. 1000; Wagner v. Crook, 167 Pa. 259, 31 Atl. 576, 12 Bkg. L. J. 225. South Carolina. — Gregg v. Bank of Columbia, 72 S. C. 458, 52 S. E. 195. Tennessee. — Bank of Louisville v. First National Bank of Knoxville, 8 Baxt. (Tenn.) 101, 35 Am. Rep. 691. *^ Newman v. Kaufman, 28 La. Ann. 865, 26 Am. Rep. 114. *^Aebi V. Bank of Evansville, 124 Wis. 65, 102 N. W. 329; Wis. Laws 1899, c. 356, §§ 1684-2, p. 746, id., p. 717, c. 356, § 1678-11; Fritz v. Kennedy, 119 Iowa 628, 93 N. W. 603. When indorsers bound, when not, see the following cases: Iowa. — Hough V. Gearen, 110 Iowa 240, 81 N. W. 463. Mississippi. — Parker v. Reddick, 65 Miss. 242, 7 Am. St. Rep. 646, 3 So. 575. Nebraska. — Nebraska National Bank v. Logan, 29 Neb. 278, 3 Bkg. L. J. 107, 45 N. W. 459. New York. — Cuminsky v. Kle- mier, 68 N. Y. Supp. 776, 34 Misc. 181; Carroll v. Sweet, 30 N. Y. Supp. 204, 61 N. Y. St. Rep. 673, 9 Misc. 382, 37 N. Y. St. R. 868, 27 N. E. 763. Tennessee. — Kirkpatrick v. Pur- year, 93 Tenn. 409, 24 S. W. 1130, 22 L. R. A. 785. Wisconsin.— Gifford v. Hardell, 88 Wis. 538, 43 Am. St. Rep. 925, 60 N. W. 1064, 12 Bkg. L. J. 29. ii 747 INDOESER. [§ 585 fer of the cheek by which the bank accepting it becomes the owner thereof and not a mere agent to collect, and the payee becomes charge- able only as indorser.*^ In order to charge an indorser upon a check or inland bill of exchange payable on demand, presentment must be made by the holder within a reasonable time after it comes into his possession. Where such reasonable time is not fixed by statute, then, in the absence of special circumstances of excuse, it is limited to the next business day, or if the bank upon which the check is drawn is at another place the check must be forwarded to the place of payment on the next business day, and presented at latest upon the day following its receipt at the place of payment.^" *»Aebi V. Bank of Evansville, 124 Wis. 65, 102 N. W. 329, 109 Am. St. Rep. 324. ^'Aebi V. Bank of Evansville, 124 Wis. 73, 102 N. W. 329, 109 Am. St. Rep. 324. CJheck — Rights, duties and liabili- ties of indorsee and indorser and effect of certification of the drawee bank. Where the dispute was be- tween the indorsee and the indorser of a check in a recent Michigan case the court, per McAlvay, J., said: "The following rules of the law merchant fixing the rights, duties and liabilities of indorsee and in- dorser each to the other, and the effect of certification by the drawee bank upon such rights, duties and liabilities are well settled. The un- dertaking of the indorser of a check is that, if not paid on pres- entation within a reasonable time he will pay it, provided he is prop- erly notified. Such reasonable time for presentation and demand for payment is admitted to be within the day following the indorsement. The indorsee, as between himself and the indorser, undertakes to de- mand payment within the day fol- lowing the indorsement, and, if pay- ment is not made, to give due notice of dishonor. This is his sole duty, and he does anything else at his peril. 2 Dan. Neg. Inst, par. 1601; People V. Cromwell, 102 N. Y, 477, 7 N. E. 413. The fact that there are no funds in the account against which the check is drawn does not relieve the holder from presentation and notice of dishonor to the in- dorser, unless it appears that the in- dorser knew it. 2 Dan. Neg. Inst, par. 1596; 1 Morse Banking, par. 262 (8). Nor are the rights of the indorser changed because he suf- fered no apparent damage by reason of failure to demand payment and give notice of dishonor to him with- in the required time. Mohawk Bank V. Boderick, 13 Wend. (N. Y.) 133, 27 Am. Dec. 192; Tiedeman, Com. Paper, § 442; Gough v. Staats, 13 Wend. (N. Y.) 549; First Nat Bank V. Miller, 37 Neb. 500, 55 N. W. 1064, 40 Am. St Rep. 499. The certifi- cation of a check by a bank that it is 'good' 'is similar to accepting of a bill, for he (the banker) admits hereby assets, and makes himself liable to pay.' Lord Mansfield, in Robson V. Bennett, 2 Taunt. 389. 'By the law merchant of this country the certificate of the bank that the check is good is equivalent to ac- ceptance; it implies that the check is drawn upon sufficient funds in the hands of the drawee, that they have been set apart for its satisfac- 586] CHECKS. 748 § 586. Reasonable expectation that check will he honored — ^Want of funds. — Presontmeiit of a check is unnecessary where the drawer has no funds and no reasonable expectation that the paper will he honored. ^^ And it is held that the drawer's want of funds at the time of drawing the check or his subsequent withdrawal thereof before pre- sentment made dispenses with notice of dishonor to him, notwith- standing want of diligence in making demand.^^ It is declared that it is not necessary that the drawer of a bill should have funds in the hands of the drawee, since if he has not a check would be a fraud.^^ tion, and that they shall be so ap- plied whenever the check is pre- sented for payment. It is an under- taking that the check is good then, and shall continue good, and this agreement is as binding on the bank as its notes of circulation, a certifi- cate of deposit payable to the order of depositor, or any other obligation it can assume.' Mr. Justice Swayne in Merchants' Bank v. State Bank, 10 Wall. (U. S.) 604, 19 L. Ed. 1008. Where the check is drawn against funds the certification, if procured by the payee or indorsee, discharges both maker and indorser, because equivalent to payment. 2 Dan. Neg. Inst, par. 1604; Metropolitan Bank V. Jones, 137 111. 634, 27 N. B. 533, 12 L. R. A. 492, 31 Am. St. Rep. 403. The important question in the case at bar is whether certification of a check on presentation by the indorsee, though there are no funds, is equivalent to payment. As a gen- eral proposition we think it is as to both the maker and indorser. 2 Dan. Neg. Inst., par. 1604, and cases cited. The rules of the law mer- chant are inflexible and arbitrary, and necessarily so. An indorser may always insist that the conditions requisite to make his undertaking enforceable shall be strictly com- plied with; namely, presentation for payment and notice of dishonor. As to the indorsee the certifying bank is bound by estoppel where he has changed his position or parted with value on the strength of the certifi- cation. Brooklyn Trust Co. v. Toler, 138 N. Y. 675, 34 N. E. 515. In this case the plaintiff parted with no value before certification, but re- lying upon the certification trans- ferred $50,000 to New York. We find then as between the plaintiff and the bank there was a new and enforceable contract created by the certification of the check. Ordinar- ily there would be no question but that such condition released the in- dorsers." First National Bank v. Currie (Mich. 1907), 110 N. W. 499. The court distinguishes Irving Bank V. Wetherald, 36 N. Y. 335. " Beauregard v. Knowlton, 156 Mass. 395, 31 N. E. 389. « Fletcher v. Pierson, 69 Ind. 281, 35 Am. Rep. 214. Examine the following- cases: Illinois. — Thom v. Sinsheimer, 66 111. App. 555, 1 Chic. L. J. 693. Indiana. — Culver v. Marks, 122 Ind. 554, 7 L. R. A. 489, 23 N. E. 1086. Iowa. — Hamlin v. Simpson, 105 Iowa 125, 15 Bkg. L. J. 343, 74 N. W. 906, 44 L. R. A. 397. New York. — Carroll v. Sweet, 37 N. Y. St. R. 868, 27 N. E. 763. Oregon. — First National Bank v. Linn County National Bank, 30 Oreg. 296, 47 Pac. 614. ^^ Merchants' National Bank v. State National Bank, 10 Wall. (U. 749 PROTEST — NOTICE OF NON-PAYMENT. [§§' 587-589 § 587. Protest. — Formal protest of a check is held to be unneces- sary to charge the indorser, such check being considered as an inland bill f^ although there may be a formal protest under a statutory pro- vision.^^ § 588. Notice of non-payment. — It is held that demand, refusal to pay, and notice of non-payment are necessary to render the drawer liable where he has not stopped payment of the check.^° § 589. "Waiver of presentment for payment. — The drawer's state- ments and acts may be such as to constitute a waiver of presentment for payment. ^^ S.) 47, per Swayne, J., citing Boehm poration de Limoilon, 17 Rap. Jud. V. Sterling, 7 Tenn. 430; Keen v. Quebec, C. S. 211. See § 528 herein Beard, 8 C. B. N. S. 373; Serle v. as to inland bills. Norton, 2 Mood. & Rob. 404n; Alex- '^German National Bank v. Bea- ander v. Berchfield, 7 Mann. & trice National Bank, 63 Neb. 246, 88 Gran. 1067; Grant on Banking 89, N. W. 480. 90. =«Ross V. Saron, 93 N. Y. Siipp. "Wood River Bank v. Omaha 553. See Garthwaite v. Bank of Tu- First National Bank, 36 Neb. 708, lare, 134 Cal. 237, 66 Pac. 326. 55 N. W. 239, 9 Bkg. L. J. 11; La " Compton v. Gilman, 19 W. Va. Banque Jacques Cartier v. La Cor- 312, 42 Am. Rep. 776. CHAPTER XXVII. SET-OFF, RECOUPMENT AND COUNTERCLAIM. Subdivision I. General rule as to §§ 590-617 Subdivision II. Availability in respect to parties and holders other than maker or drawer §§ 618-640 Subdivision I. GENERAL RULE AS TO. Sec. 590. What law governs. 591. What essential to allowance of a set-off. 592. Right to set off— Must have been acquired prior to com- mencement of suit. 593. Where claim or demand ac- quired subsequent to trans- fer. 594. Where claimed set-off was ac- quired after notice of assign- ment. 595. A mere contingent liability is not available. 596. What may be set off generally — Particular claims or de- mands. 597. Set-off of damages recoverable in an action of tort. 598. Same subject, continued — Ap- plication of rule. 599. Damages arising ex contractu and under same contract. 600. Damages arising ex contractu but under different contract. 601. Damages for breach of war- ranty or covenant. Sec. 602. Same subject — In action by an innocent holder. 603. Money paid to clear land of in- cumbrance. 604. Of bank deposits — Rule as to. 605. In action by depositor to re- cover bank deposit. 606. Of bill or note. 607. Same subject — Essentials to availability. 608. Same subject — Essentials to availability, continued. 609. Same subject — Where a fraud on plaintiff. 610. Same subject — As affected by statutes or laches. 611. Same subject — Want of title to notes will preclude. 612. Of bills or notes of bank. 613. Where collateral has been given. 614. Usurious interest — Rule as to recoupment of. 615. Same subject — Right as af- fected by federal statutes. 616. Right of set-off generally as af- fected by statutes. 617. Waiver of right to set off. § 590. What law governs. — ^Resort nnist be had to the law of the fonmi, and not to that of the place in which commercial paper was executed, for the purpose of determining the availability of a set-off 750 751 WHAT ESSENTIAL TO ALLOWANCE OF SET-OFF. [§ 591 in an action thereon.^ "Set-off is a mode of defense, essentially, not a part connected with the remedy, which, according to the well-settled and universal doctrine, is governed by the law of the forum, and not by the lex loci contractus. The forms of remedies, the modes of pro- ceeding and the execution of judgments are to be regulated solely and exclusively by the laws of the place where the action is instituted."^ § 591. What essential to allowance of a set-off. — Where a defend- ant seeks to avail himself of a set-off, it is decided that it is essential to its allowance that the demand or claim be one which is due between the same parties and in the same right.^ So, in an action against the maker of a promissory note, he cannot plead as a set-off an amount due from the plaintiff to a society, of whose funds the defendant, as an officer, is custodian.* And equities between the parties to a note arising from other and independent transactions between them, are held not available against the note in the hands of an assignee,^ So, in an action by an indorsee against the drawee of a bill of exchange, it was decided that a demand due from the payee to a partnership of which the defendant was a member, if available as a set-off in any case, was not so available without proof that the other partners con- sented to such use of the claim and that plaintiff had knowledge of their consent.® But where the claim sued on, as in the case of a note," and the one set up in the answer are liquidated demands, it is not necessary to enable defendant to set the latter up against the demand sued on that there should have been an agreement to that effect.'^ ^ Mineral Point R. Co. v. Barron, Pennsylvania. — U n i o n National, 83 III. 365; Bank of Galliopolis v. Bank v. Cannonburgh Iron Co. (Pa. Trimble, 6 B. Mon. (Ky.) 599; Gibbs Sup.), 6 Atl. 577, 23 Cent. Law J. V. Howard, 2 N. H. 296; Second Na- 526. tional Bank v. Hemingray, 31 Ohio See, also, Holland v. Makepeace, 8 St. 168. But see Bliss v. Houghton, Mass. 418. 13 N. H. 126. ^ Lewis v. Pickering, 58 Neb. 63, ■ Bank of Galliopolis v. Trimble, 6 78 N. W. 368. B. Mon. (Ky.) 599, per Breck, J. = Ryan v. Chew, 13 Iowa 589; Ship- ^ Alabama. — Manning v. Maroney, man v. Robbins, 10 Iowa 208; Cald- 87 Ala. 563, 6 So. 343, 13 Am. St. well v. Cook, 5 Litt. (Ky.) 180; Rep. 67. Bowman v. Halstead, 2 A. K. Marsh. Indiana. — Proctor v. Cole, 104 Ind. (Ky.) 200, 12 Am. Dec. 380. 373, 3 N. E. 106; Parks v. Zeek, 53 " Manning v. Maroney, 87 Ala. 563, Ind. 221. 6 So. 343, 13 Am. St. Rep. 67. Mississippi. — Walker v. Hall, 66 ' Ruzeoski v. Wilrodt (Tex. Civ. Miss. 390, 6 So. 318. App. 1906), 94 S. W. 142. North Carolina. — Roberts v. Jones, 1 Murph. (N. C.) 353. § 592] SET-OFF, RECOUPMENT AND COUNTERCLAIM. 753 § 592. Eight to set-off — Must have been acquired prior to com- mencement of suit. — One of the essentials to the right of a person to avail himself of a set-off in an action against him on commercial paper, is that the claim or demand which he seeks to set ofE should have been acquired by him prior to the commencement of the suit, for if it appear that it was acquired subsequent thereto, he cannot, as a general rule, avail himself of the same.^ So it is held in an early case in New Hampshire that if the defendant, after plaintiff's writ is made out and placed in an officer's hands, on the same day and before serv- ice, take by indorsement the promissory note of the plaintiff, it cannot be allowed as a set-off.^ And where a person had possession of a sealed note before suit was brought against him, but it was not trans- ferred to him until after suit was brought, it was held that he could not set it off against the plaintiff, though the assignment to him was dated back before the writ was issued.^*^ And this rule has been held to apply, though the plaintiff was an indorsee after maturity. ^^ But it has been decided that, in a suit against a firm, it is proper, on a bill in equity by the firm sued, to set off the note of a partner of the debtor firm made to the plaintiff, by whom it was sold and assigned to a third person, who transferred it to the defendants, where it was alleged that the maker of such note and the plaintiff suing at law ^Illinois. — Kelly v. Garrett, 1 Gil- 627. The court said: "The corn- man (111.) 649. plaint shows that the promissory Indiana. — Hadley v. Wray, 76 Ind. note, upon which the action is 476. brought, was indorsed to plaintiff Minnesota. — Northern Trust Co. after maturity. This entitled de- V. Hiltgen, 62 Minn. 361, 64 N. W. fendant to set up against it any de- 909. fense which he could have inter- Missouri. — Frazier v. Gilson, 7 posed against the assignor, and Mo. 271. which existed at the time or before New York,. — Jefferson Co. Bank v. notice of the assignment. The in- Chapman, 19 Johns. (N. Y.) 322. stitution of the action was notice Pennsylvania. — Speers v. Sterrett, of the assignment of the note, and 29 Pa. St. 192. yet defendant seeks to set up as South C arolin a. — Godley v. against plaintiff a defensive counter- Barnes, 13 Rich. (S. C.) 161. claim against the assignor, which, Compare Aldrich v. Campbell, 4 according to his sworn statement. Gray (Mass.) 284; Gaines v. ,Sal- 'has arisen since the commencement mon, 16 Tex. 311. of this action, and since the for- " Hardy v. Corliss, 21 N. H. 356. mer answer of defendant iwas filed. ^"Bishop v. Tucker, 4 Rich. L. (S. This he cannot be permitted to do." C.) 178. Per Searls, C. " Wood V. Bush, 72 Cal. 22, 13 Pac. 753 CLAIM OR DEMAND SUBSEQUENT TO TRANSFER. [§§ 593, 594 were insolvent, the court declaring that the firm assigning the note were liable upon their indorsement, and being insolvent, a court of equity would allow such set-off.^^ § 593. Where claim or demand acquired subsequent to transfer. — In actions on commercial paper it has also been generally determined that it is essential to the availability of a set-off that it should have been acquired by the defendant prior to the transfer. And this is held to be true, even though the action be by a purchaser after matur- ity.^^ There are, however, some cases in which it is decided that the maker of a note may, in an action against him by the indorsee or assignee, avail himself of the right to set off any claim or demand which existed against the payee prior to notice of the transfer or assignment.^* But in one of the states in which it was so decided it was also held that in an action on a note which is payable to bearer the maker cannot, as against the holder thereof, avail himself of such a set-off where it does not appear that the maker gave notice thereof to the purchaser. ^^ § 594. Where claimed set-off was acquired after notice of assign- ment. — It is a generally accepted rule that where a maker of com- mercial paper has received notice of an assignment or transfer thereof to a bona fide holder, he can not, in an action on such paper, avail himself, as against such holder, of a right to set off any claim or demand against the payee, indorser or assignor which was acquired subsequent to the notice of assignment or transfer.^*' So, in an action upon a note brought by the payee, for the use of his assignee against the maker — the note having been assigned, but not indorsed, after "Hall v. Kimball, 77 111. 161. Nebraska.— Davis v. Neligh, 7 " United States.— Fossitt v. Bell, Neb. 84. Fed. Cas. No. 4958 (4 McLean 427). New Hampshire. — Bliss v. Hough- Alabama.—Cra.yton v. Clark, 11 ton, 13 N. H. 126. Ala. 787. New York. — Fumiss v. Gilchrist, Indiana..— Weader v. Bank, 126 1 Sandf. (N. Y.) 53. Ind. Ill, 25 N. E. 887; Johnson v. Vermont. — Shef-wood v. Francis, Amana Lodge, 92 Ind. 150. 11 Vt. 204; Parker v. Kendall, 3 Vt. Massachusetts. — Backus v. Spaul- 540. ding, 129 Mass. 234. Virginia. — Davis v. Miller, 14 Minnesota. — Linn v. Rugg, 19 Gratt. (Va.) 1. Minn. 181 (Gil. 145). "Stewart v. Anderson, 6 Cranch Mississippi. — Northern Bank v. (U. S.) 203; King v. Conn, 25 Ind.. Kyle, 7 How. (Miss.) 360. 425; Martin v. Trobridge, 1 Vt. 477. "Parker v. Kendall, 3 Vt. 540. Joyce Defenses — 48. § 594] SET-OFF, RECOUP]"'ENT AND COUNTERCLAIM. 75-t due — and it not appearing that the payee was insolvent when he made the assignment, it has heen decided that the maker cannot set off money paid b}^ him as surety for the payee, after he received notice of the assignment, although the money paid was upon a liability entered into before the assignment, but which had not been reduced into a judgment against the surety before notice of the assignment was given. ^^ And it is decided in an early case that a demand for un- liquidated damages, arising from a breach of covenant of title, may be set off in equity against a note founded on an independent consid- eration, when the vendor is dead and his estate insolvent, but to make it available as a set-off against an equitable assignee of the note it must be shown to have accrued before notice of the assignment.^* And where a note held by a bank debtor against a third person was transferred by the holder to the bank as collateral security and a surety who had paid the debt to the bank took from it an assignment of such note, it was decided, in an action on the note by the surety,, that the maker could not set off a demand against the payee, or prin.- cipal debtor, which had been acquired subsequent to the notice of the transfer to the bank, and that the assignment to the surety related back to the time when the note was transferred to the bank, and clothed the assignee with the rights then held by the bank, against which subsequent equities could not be asserted.^'' ^^ United States. — H arrisburg Pennsiflvania. — Phillips v. Bank Trust Co. V. Shufeldt, 31 C. C. A. of Lewiston, 18 Pa. St. (6 Harris) 190, 87 Fed. 669, under 2 Hill's Code 394. Wash., § 806. Virginia. — Ritchie v. Moore, 5 Alabama. — Manning v. Maroney, Munf. (Va.) 388, 7 Am. Dec. 688. 87 Ala. 563, 6 So. 343, 13 Am. St. " Follett v. Buyer, 4 Ohio St. 5S6. Rep. 67; Wray v. Furniss, 27 Ala. The court said: "The general prin- 471; Crayton v. Clark, 11 Ala. 787. ciple, that, as against a bona fide California. — Wood v. Brush, 72 assignee, there can be no set off of Cal. 224, 13 Pac. 627. demands upon the assignor, ac- Indiana. — Johnson v. Amana quired after notice of the assign- Lodge, No. 82, Independent Order ment, and that a court of law is of Odd Fellows, 92 Ind. 150; Gold- fully competent to protect the as- thwaite v. Bradford, 36 Ind. 149. signee, is certainly well estab- Kentucky. — Small v. Browder, 11 lished." Per Thurman, J., citing B. Mon. (Ky.) 212; Wathen v. Pancoast v. Ruffin. 1 Ohio 381; Chamberlain, 8 Dana (Ky.) 164; Weakly v. Hall, 13 Ohio 174. Hunt v. Martin, 2 Litt. (Ky.) 82. ^^Wray's Adm'rs v. Furniss, 27 Louisiana. — Norwood v. Pettis, 10 Ala. 471. La. Ann. 259. ^' Lewis v. Faber, 65 Ala. 460. Massachusetts. — Backus v. Spauld- ing, 129 Mass. 234. I iH 755 WHAT MAY BE SET OFF GENERALLY. [§§ 595, 596 § 595. A mere contingent liability is not available. — It is a gen- eral rule of pleading that no matter of defense arising after action brought can be properly pleaded in bar of the action generally. It follows, therefore, that where a defendant seeks to avail himself of a set-off, the claim or demand relied upon for that purpose must be one in respect to which he could have maintained an action thereon at the time of the commencement of the suit against him, and that he cannot avail himself of a liability which is merely contingent and has not become fixed. ^° So it has been decided that in an action upon promissory notes, other notes indorsed by the plaintiff and held by the defendant, which did not mature until after the suit was brought, cannot be set off against the notes in suit.^^ It has, however, been decided that where a joint undertaking has been entered into, but before the maturity or payment one of the co-obligors makes an assignment for the benefit of his creditors, and the other afterwards pays the joint debt, the latter may, in an action against him by the assignees of a note executed by him to the assignor, his co-obligor, set off the latter's aliquot part of the joint debt, though it was declared in this case that the rule would probably be different if the action were by an assignee for value. ^^ § 596. What may be set off generally — Particular claims or de- mands. — In an action on a note it has been decided that the defend- ant may avail himself of a set-off arising from an agreement entered into for a valid consideration to pay to the defendant the debt of a third person owing to him.^^ And where services have been rendered by the defendant to the plaintiff, a bill therefor has been held to be a proper matter of set-off.^'* And it has also been decided that where a person has been induced to execute a note by false representations of the payee, damages resulting from such false representations may be set off in an action on the note.-^ So it has been held that a defendant may so avail himself of an open account which has been transferred to him by a third party.^*' And the defendant may, in ^oWood v. Steele, 65 Ala. 436 Houghton V. Houghton, 37 Me. 72 Hauston v. Fellows, 27 Vt. 634 " Graves v. Shulman, 59 Ala. 406. =*Briggs V. Moore, 14 Ala. 433. == Strickland v. Graybill, 97 Va. Lamb v. Pannell, 28 W. Va. 663. 602, 34 S. E. 475. ^ Hotchkiss v. Roehm, 181 Pa. St. =" Blount v. Rick, 107 Ind. 238, 5 65, 37 Atl. 119. N. E. 898, 8 N. E. 108; Ashby v. =^ Chenault v. Bush, 84 Ky. 528, 2 Carr, 40 Miss. 64. 6. W. 160. §■ 597] SET-OFF, RECOUPMENT, COUNTERCLAIM, 756 some cases, be entitled to a judgment in his favor for the amount of the set-off in excess of the claim of the plaintiff.^^ But in the case of a certified check it has been held that the banker upon whom it is drawn cannot set off against such check when it is presented the amount of an indebtedness to him from the holder of the instrument.^® And where a note is given for the purchase price of a machine the maker cannot avail himself of the breach of a subsequent promise of an agent of the seller to repair the same.^" Again in an action by a bank upon a note given to it, it has been decided that the defendant cannot avail himself by way of set-off of stock of the bank.^° § 597. Set-off of damages recoverable in an action of tort. — It is a general rule that in an action upon commercial paper the defendant cannot avail himself of a set-off of damages which are recoverable in an action of tort.^^ So where the defendant alleged that the notes were given in consideration of the purchase price of plaintiff's interest in partnership property and that before the maturity of the notes plaintiff entered the partnership premises and forcibly took posses- sion of the business and property of said partnership and had since retained possession, and it was contended by the defendant that the alleged tortious acts of the plaintiff were equivalent to and should be treated as a total failure of the consideration for which the notes were given, the court held that such tortious act grew out of a sep- arate transaction and that damages arising from such act could not be recouped by way of equitable defense.^ ^ =^Tuck v. Tuck, 5 Mees. & W. 109; kansas City v. Hasie, 57 Kan. 754, Moore v. Butlin, 7 Adol. & El. 595. 48 Pac. 22. ^ Brown v. Leckie, 43 111. 497. Maine. — Winthrop Sav. Bank v. '^Buntain v. Button, 21 111. 190. Jackson, 67 Me. 570. ^^ Harper v. Calhoun, 7 How. Missouri. — Brake v. Corning, 19 (Miss.) 203. See, also, Whittington Mo. 125. V. Farmers' Bank, 5 Har. & J. (Md.) Texas. — Riddle v. McKinney, 67 489. Tex. 29, 2 S. W. 748. *^ United States. — Central Ohio R. Virginia. — Harrison v. Wortham, Co. v. Thompson, 2 Bond (U. S.) 8 Leigh. (Va.) 296. 296, Fed. Cas. No. 2550. Wisconsin. — See Anderson v. AZaftowia.— Pulliam v. Owen, 25 Johnson, 106 Wis. 218, 82 N. W. 177. Ala. 492. But compare Cato v. Phillips, 28 Illinois. — Lyon v. Bryant, 54 111. Tex. 101. App. 331. '=Roth V. Reiter, 213 Pa. St. 400, J??fZia«o.— Blue v. Capital Nat. 65 Atl. 932. The court, per Elkin, J.. Bank, 145 Ind. 518, 43 N. E. 655. said: "It is conceded in this case, Kansas. — First Nat. Bank of Ar- and it is the law, that in an action 757 DAMAGES ATIISING EX CONTEACTU. [§§ 598, 599 § 598. Same subject, continued — Application of rule. — In an ac- tion upon a promissory note for borrowed money damages caused by a slander upon the credit of the maker cannot be made the subject of a counterclaim.^^ And where property is pledged as collateral security to a note it is decided that damages arising from the negligence of the plaintiff in its care and custody of the land are not a subject of re- coupment.^* Likewise unliquidated damages arising from negligence of the plaintiffs in a matter in which they acted as agents of the de- fendant is not a subject of set-off.^^ Nor can unliquidated damages caused by the act of the plaintiff in selling property of the defendant, in violation of a trust, for less than its value, be pleaded by the de- fendant in an action against him on a promissory note given for the purchase of other property..^® But it has been decided that the de- mand for the amount of a note received for collection and converted is not unliquidated damages, and is subject of set-off.^^ And it has been decided in an action of debt that an unliquidated demand for dam- ages for conversion of goods may be used as a set-off against a non- resident.^^ § 599. Damages arising ex contractu and under same contract. — In an action upon a bill or note damages arising from the same con- tract in which the instrument sued on was given and which result from a failure of consideration or a non-performance of Ihe obligations of the contract are, as a general rule, available as a set-off.^** So it is on a contract, unliquidated damages sible that there was a tort corn- arising out of a tort independent of, mitted against the malter of this and disconnected with the transac- note by the plaintiff in this case but tion sued on, cannot be recouped by it was not a part of this transaction way of equitable defense. This rule and therefore cannot be used to ex- of law needs no citation of author- tinguish this indebtedness.' " ities to support it. It is, however, ^ Blue v. Capital Nat. Bank, 145 earnestly contended that the defend- Ind. 518, 43 N. E. 655. ant in the present case had a right ^*Winthrop Sav. Bank v. Jackson, to recoup the damages arising from 67 Me. 570. the alleged tortious act against the '° Brake v. Corning, 19 Mo. 125. amount of the notes, because said ^"Riddle v. McKinney, 67 Tex. 29, tortious act was directly connected 2 S. W. 748. with the transaction in considera- ^^ Gunn's Adm'r v. Todd, 21 Mo. tion of which the notes were given. 303. The appellee asserts that the tor- ^^ Abernathy & Pinegar v. Myer- tious act complained of grew out of Bridges Coffee & Spice Co. (Ky. a separate transaction, and the C. A. 1907), 100 S. W. 862. court below has so found in the fol- ^Alabama. — Foster v. Bush, 104 lowing language: 'It appears pes- Ala. 662, 16 So. 625. § 600] SET-OFF, EECOUPMENT, COUNTERCLAIM. 758 declared in a late ease in "Wisconsin that damages arising from fraud, mistake, partial failure of consideration, or non-performance of some of the contract obligations may, in an action on a note given to evidence the consideration, be counterclaimed by way of recoupment, such practice being established to avoid circuity of action and multi- plicity of suits when such a claim can be adjusted without depriving any of the parties of their substantial rights.*** So in a recent case in Texas it has been decided that though a counterclaim to a note sued on is for unliquidated damages yet it is properly considered where it arises out of the same transaction in which the note declared on was executed.*^ So, where notes were given for an interest in a partnership business it was decided in an action on the notes that damages arising by reason of misstatement in the inventories on the basis of which the sale was made were available as a counterclaim.*^ § 600. Damages arising ex contractu but under different contract. — A defendant cannot, in an action on a bill or note, set off unliquidated California. — Snow v. Holmes, 71 Cal. 142, 11 Pac. 856. Maryland. — Haman v. Bannon, 71 Md. 424, 18 Atl. 862. Massachusetts. — Magee Furnace Co. v. Boston- Soapstone Furnace Co., 124 Mass. 409; Stacy v, Kemp, 97 Mass. 166. Rhode Island. — Hill v. Southwick, 9 R. I. 299. Pennsylvania. — Hubler v. Tamney, 5 Watts (Pa.) 51. Texas. — Tyson v. Jackson Bros. (Tex. Civ. App. 1905), 90 S. W. 930. *" Steckbauer v. Leykom (Wis. 1907), 110 N. W. 217. *i Tyson v. Jackson Bros. (Tex. Civ. App. 1905), 90 S. W. 930. ^= Steckbauer v. Leykom (Wis. 1907), 110 N. W. 217. The court, per Siebecker, J., said in this case: "If the statements of the inventory were in fact untrue, though the party making them at the time be- lieved them true, it is a legal wrong for which relief is awarded, upon the ground that the party making them must be held to respond for the injury done in assuming to know and to represent as facts things which did not actually exist, but on which the other party relied to his damage in making the pur- chase. Its operation is in the nature of a constructive fraud. We are not clear whether the trial court re- garded the evidence in this light or whether the stipulation of the par- ties was held to be an agreement that there was a partial failure of consideration, and that an allow- ance of damages on the basis of the items stipulated was to be made de- fendants by way of reduction of plaintiff's claim. However that may be, we are of the opinion that un- der the evidence and facts stipu- lated, the court was justified in pro- ceeding upon either theory. Which- ever one was followed would lead to the same result, namely, that de- fendants were entitled to a reduc- tion of the loss they sustained by reason of the errors in the inven- tory." 759 DAMAGES FOR BREACH OF WARRANTY OR COVENANT. [§ 601 damages which arise ex contractu but under a contract other than that in which the instrument sued on was given,*^ So where an actioii was brought on a promissory note which was secured by a mortgage of land it was held that the defendant could not recoup damages which had been sustained by him as a result of the mortgagor's negligence in procuring insurance upon a house covered by the mortgage, under an agreement made subsequent to the mortgage.^* The court said that the agreement as to insurance was not "an agreement made at the time the note was given, and was not a part of the same transaction. It was a subsequent independent contract. The answer sets up, there- fore, as a defense to the note, that the plaintiff has broken another contract which he entered into with the defendant, by which he has sustained damages. The defendant has no right to recoup such dam- ages, but his remedy, if he has any, is by a cross action."*^ And where an action was brought for a breach of a contract to deliver cans and the defendant set up as a counterclaim a note which it held against the plaintiff it was decided that only so much of said note should be allowed as a counterclaim as represented the cost of cans which had been delivered under the contract out of which the suit arose, and which was the foundation of plaintiff's claim.**' It has, however, been decided that in equity a defendant, who has acquired, prior to notice of transfer, a claim for unliquidated damages which arose out of another contract may avail himself of the same by way of set-off.*^ § 601. Damages for breach of warranty or covenant. — In an ac- tion upon a promissory note given in payment for personal property *' United States. — Armstrong v. Tennessee. — Bolinger v. Gordon, Brown, 1 Wash. C. C. (U, S.) 43, 11 Humph. (Tenn.) 61; Moore v. Fed. Cas. No. 542. Weir, 3 Sneed (Tenn.) 46. Alabama.— McCord v. Williams, 2 West Virginia.— McSmithee v. Ala. 71. Feamster, 4 W. Va. 673. Georgia.— Grimn v. Lawton, 54 But see Phillips v. Lawrence, 6 Ga. 104. Watts & S. (Pa.) 150; Kaskaskia Illinois. — Clause v. Press Co., 118 Bridge Co. v. Shannon, 6 111. 15. 111. 612, 9 N. E. 201. « Brighton Five Cent Savings Indiana.— West v. Hayes, 104 Ind. Bank v. Sawyer, 132 Mass. 185. 251, 3 N. B. 932; Smith v. Smith, ^= Per Morton, J., citing Sawyer v. 1 Ind. 476. Wiswell, 9 Allen (Mass.) 39; Bart- Massac7iMse«s.— Loring v. Otis, 7 lett v. Farrington, 120 Mass. 284. Gray (Mass.) 563; Pitts v. Holmes, ^^ California Canneries Co. v. Pa- 10 Cush. (Mass.) 92. cific Sheet Metal Co., 144 Fed. 886. Missouri. — Pratt v. Menkins, 18 *^Wray v. Furniss, 27 Ala. 471. Mo. 158; Mahan v. Ross, 18 Mo. 121. § 601] SET-OFF, EECOUPMENT, COUNTERCLAIM. 760 the maker of such note may introduce evidence of a breach of war- ranty in respect to such property and damages for such breach may be allowed by way of recoupment or set-off.*^ And though a person exe- cutes notes in payment for personal property with a knowledge of a breach of warranty in respect thereto, yet if they are executed in re- liance upon assurances by the vendor that the defect will be remedied, the former may, in an action on the notes, avail himself of the damages arising from such breach as a set-off, where the vendor has not fulfilled his promise to remedy the defect. Thus it has been so held where ma- chinery was sold with a warranty in respect thereto and after its de- livery the agents of the seller came to the purchaser and asked him to execute notes therefor as contemplated by the order on which the ma- chinery was sent out, wliich the purchaser after refusing because the machinery was not such as was required by the warranty, finally did on the understanding and promise of the agents that the machinery should be made to operate as it was warranted to do, which promise was not performed.*^ And it has been decided that in an action by a mortgagee against a mortgagor upon a note and mortgage given for the purchase money of the premises, the mortgagor may, as a defense, set up a counterclaim for damages by reason of the fraud of the mort- gagee, in concealing from him material facts as to the condition and extent of the premises.^'' But it is decided in another case that, in an *^ Alabama. — Weaver v. Shrop- title passed to him with, a warranty shire, 42 Ala. 230. for his protection, and if there was Illinois. — ^Wheelock v. Barkeley, a breach of that warranty he might 138 111. 153, 27 N. E. 942. have either of two remedies: First, Indiana. — Mills v. Rosenbaum, 103 after running and accepting the ma- Ind. 152, 2 N. E. 313. chinery he would be entitled to Massachusetts. — W entworth v. maintain an action for damages, in Dows, 117 Mass. 14. which he might recover not only a Minnesota. — Rugland v. Thomp- sum equal to the difference between son, 48 Minn. 539, 51 N. W. 604. the value of the defective thing and New York. — Loring v. Morrison, one of its kind not defective, but in 15 N. Y. App. Div. 498, 44 N. Y. which he might also recover any Supp. 526. such sum as, under the rules of law, Tennessee. — Phoenix Iron Works he might be entitled to as conse- V. Rhea (Tenn. Ch. App.), 38 S. W. quential damage. Second, when 1079. sued for the purchase money he may Compare Stockton Savings & L. set up the defective quality of the Soc. V. Giddings, 96 Cal. 84, 30 Pac. thing warranted in diminution of 1016. the price." Per Stayton, J. ** Aultman & Taylor Co. v. Hefner, ^ Pierce v. Tiersch, 40 Ohio St. 67 Tex. 54. The court said: "The 168; citing Baughman v. Gould, 45 761 ACTION BY INXOCENT HOLDER. [§§ 602, G03 action upon a note given for the price of land, the defendant cannot be allowed to prove, by way of recoupment in damages, that the plaintiff made false representations as to the quality and productiveness of the soil, and the number of acres contained within boundaries which were truly pointed out, by which the defendant was deceived and thereby induced to make the purchase.^ ^ And in an early case in Ohio it is decided that in that state the covenant against incumbrances is a real covenant running with the land and is not broken until eviction and that where promissory notes were given in part payment of real estate, conveyed by a deed containing the covenants of warranty and freedom from incumbrances, and at the time the land was mortgaged for more than its value, one to whom the notes were transferred before maturity for value, but with full notice of these facts, may recover against the maker of the notes, although, after the indorsement, an eviction occurred by the sale of the land upon foreclosure under the prior incumbrance.^^ The right to set off damages arising from a breach of warranty is held not to be one of which a guarantor or surety may avail himself. ^^ § 602. Same subject — In action by an innocent holder. — In an ac- tion by a bona fide holder of a bill or note the maker cannot avail himself of a set-off of damages arising from a breach of warranty or covenant on the part of the payee.^* It is, however, decided that where a note is not negotiable by the law merchant, there may, in an action against the maker, be a set-off of damages arising from a breach of warranty, even though the plaintiff is a bona fide holder or as- signee of the instruments^ §603. Money paid to clear land of incumbrance. — Where the maker of a note given for the purchase price of land conveyed by a warranty deed has been obliged to pay a sum of money in order to Mich. 481; Allen v. Shackleton, 15 306, as against an insolvent prin- Ohio St. 145. cipal. "Gordon v. Parmelee, 2 Allen "Gridley v. Tucker, 1 Freem. Ch, (Mass.) 212. (Miss.) 209; Blair v. Reed, 20 Tex. "Stiles v. Hobbs, 2 Disn. (Ohio) 310. Compare Holman v. Creag- 571. miles, 14 Ind. 177. "Mabie v. Johnson, 8 Hun (N. Y.) '^^ National Bank of Commerce v. 309; Hiner v. Newton, 30 Wis. 640; Feeney, 12 So. Dak. 156, 80 N. W. Osborne v. Bryce, 23 Fed. 171. But 186. see, Gillespie v. Torrence, 25 N. Y. § G04] SET-OFF, RECOUPMENT, COUNTERCLAIM. 762 free the land from an incumbrance, he may set off the amount so paid against the payee or an assignee with notice.'^'' So in a suit by the assignee against the maker of a promissory note given as the last payment on real estate conveyed by warranty deed, it was held that the purchaser, who had paid all the consideration money except the note in suit, was properly allowed to recoup an amount which he had been compelled to pay to discharge an incumbrance not excepted from the warranty, being a note secured by mortgage on said real estate, other notes secured by the same mortgage being so excepted in the deed.'^'^ And it has also been decided that where several notes have been so given, damages arising from a breach of warranty may be apportioned pro rata against the different notes instead of setting them off against one, so that a surety thereon will be exonerated. ^^ But where several promissory notes are given for the contract price of personal property it is decided that, in an action upon one of such notes, it will be presumed that the notes unpaid have not been transferred and are still in the hands of the payee, and that though the defendant may in such action recoup damages for a breach of warranty, yet if such damages are in excess of the amount of the note in suit, it is error to render a judgment for such excess.^® § 604. Of bank deposits — Eule as to. — Where a person who has funds deposited in a bank executes his note to that bank and the bank subsequently becomes insolvent before the maturity of the note, the maker may, in an action against him thereon, set off against the note the amount of his deposit. "^^ So it is said in this connection in a case *»Holley V. Younge, 27 Ala. 203; Michigan. — Thompson v. Union Packwood v. Gridley, 39 111. 388; Trust Co., 130 Mich. 508, 90 N. W. Davis V. Bean, 114 Mass. 358; Drew 294; Stone v. Dodge, 96 Mich. 514, v. Towle, 27 N. H. 412. 56 N. W. 75, 21 L. R. A. 280. ^' Stilwell V. Chappell, 30 Ind. 72. Minnesota. — Becker v. Seymour, =« Franklin Bank v. Cooper, 36 Me. 71 Minn. 394, 73 N. W. 1096. 221. Missouri. — Smith v. Spengler, 83 ^"Aultman v. Hetherington, 42 Mo. 408. Wis. 622; Aultman v. Jett, 42 Wis. Netv Jersey. — Van Wagoner v. 488. Paterson Gas Light Co., 23 N. J. L. ^"United States.— Scott v. Arm- 283. strong, 146 U. S. 499, 13 Sup. Ct. New Yorfc.— Smith v. Fox, 48 N. 148, 36 L. Ed. 1059. Y. 674; Smith v. Kelton, 43 N. Y. Illinois. — McCagg v. Woodman, 28 419; Jones v. Robinson, 6 Bosw. 627; 111. 84. Bank y. Tartter, 4 Abb. N. C. 215; Kentucky. — Finnell v. Nesbit, 16 In re. Receiver of Middle District B. Mon. (Ky.) 351. Bank, 1 Paige 585, 19 Am. Dec. 452; 763 ACTION BY DEPOSITOR TO RECOVER BANK DEPOSIT. [§ GO 5 in Michigan : "It is well settled that, in a suit by a receiver of an in- solvent bank upon a note or obligation due the bank, the defendant will be allowed to set off his deposit or a certificate of deposit held by him at the time of the suspension of the bank."^^ So it has been decided by the United States Supreme Court that a customer of a national bank, who in good faith borrows money of the bank and gives his note therefor and deposits the amount borrowed to be drawn against, any balance to be applied to the payment of the note when due, has an equitable, but not a legal, right in case of the insolvency and dissolution of the bank and the appointment of a receiver before the maturity of the note to have the balance to his credit at the time of the insolvency applied to the payment of his indebtedness on the note."^ It has, however, been decided that in order to render a set-off of an account or deposit available the defendant must have acquired the same by assignment or otherwise prior to the insolvency of the bank.*'^ § 605. In action by depositor to recover bank deposit. — A bank ob- taining commercial paper as indorsee, whether for collection or as owner, before an assignment by the maker for the benefit of creditors, may set off the amount thereof in a suit brought by the assignee to recover the maker's balance on deposit.^'* And where a depositor brings Miller v. Receiver, 1 Paige 444; Mc- citing National Bank of Newburgh Laren v. Pennington, 1 Paige 102. v. Smith, 63 N. Y. 271, 23 Am. Rep. Pennsylvania. — Skiles v. Houston, 48, as "a conclusive authority to the 110 Pa. St. 254, 2 Atl. 30; Jordan v. effect that, in the absence of any Sharlock, 84 Pa. St. 366, 24 Am. Rep. direction or agreement to that ef- 98. feet, it was optional with the plain- Rhode Island. — Clarke v. Haw- tiff v^rhether it would apply the kins, 5 R. I. 219. money or not upon the note in suit, England. — See Dickson v. Evans, and that it was under no positive 6 Term. R. 57. legal obligation to do so." Admissibility of evidence as to °' Stone v. Dodge, 96 Mich. 514, 56 bank deposit at time of maturity of N. W. 75, 21 L. R. A. 280, per Mc- note. In an action by a bank against Grath, J., quoted in Thompson v. an indorser of a note payable to the Union Trust Co., 130 Mich. 508, 90 bank it has been held proper in a N. W. 294. recent case in New York to exclude " Scott v. Armstrong, 146 U. S. evidence to show that the maker 499, 13 Sup. Ct. 148, 36 L. Ed. 1059, had, subsequent to the maturity of cited in Thompson v. Union Trust the note, a sufficient deposit in the Co., 130 Mich. 508, 90 N. W. 294. plaintiff bank to pay it, which the "^ Higgins v. Worthington, 90 Hun plaintiff failed to appropriate for (N. Y.) 436, 35 N. Y. Supp. 815. that purpose. Far Rockaway Bank v. "* Penn Bank v. Farmers' Deposit Norton, 186 N. Y. 484, 79 N. E. 709, Nat. Bank, 130 Pa. St. 209, 20 Atl. §' 606] SET-OFF, RECOUPMENT, COUNTERCLAIM. 764 an action against a bank to recover his deposit it has been decided that a judgment which has been obtained by the bank against the depositor on a note made by the latter to the former is available as a set-off.** § 606. Of bill or note. — In an action upon commercial paper the defendant may in many cases avail himself of a bill or note, executed by the plaintiff, as a set-off against the latter.^*' So it has been decided that the maker of a note may, in an action against him by the as- signee, avail himself by way of set-off of a note of the assignor which he purchased before notice of the assignment, though after knowledge of the assignor's death."^ And where a note was not due at time of notice of the assignment of the note upon which suit was brought, it was held that it was nevertheless available as a set-off where it be- came due before the note sued on.^^ Again it is held that the maker of a note, which is held as collateral for a sum in excess of the amount secured, is entitled to a set-off of such excess against the payee.®* Where, however, -it appears that there has been a failure of the con- sideration for a note, and defendant had knowledge of this fact at the time he purchased the instrument, it is not available as a set-off.'^" And in those cases where an indorsement is essential in order to render a transfer of a note effective so that the transferee may maintain an action thereon in his own name, it has been decided that one to whom 150; Farmers' Deposit Bank v. Penn Massachusetts. — Backus v. Spauld- Bank, 123 Pa. St. 283, 16 Atl. 761, 2 ing, 116 Mass. 418. L. R. A. 273. See, also, Kentucky New York. — Rice v. Grange, 131 Flour Co. V. Merchants' Nat. Bank, N. Y. 149, 30 N. E. 46; Geffchen v. 90 Ky. 225, 13 S. W. 910, 9 L. R. A. Slingerland, 1 Bosw. (N. Y.) 449. 108. Pennsylvania. — Penn. Bank v. <'=' Marsh v. Bank, 34 Barb. (N. Farmer's Nat. Bank, 130 Pa. St. 209, Y.) 298; Ford's Adm'r v. Thorton, 20 Atl. 150; Rider v. Johnson, 20 3 Leigh (Va.) 695. Pa. St. (8 Harris) 190. ^'^ United States. — Stettinus v. Tennessee. — Fields v. Carney, 4 Myer, 4 Cranch C. C. (U. S.) 349, Baxt. (Tenn.) 137. Fed. Cas. No. 13385. «^ King v. Conn, 25 Ind. 425. Alabama. — Gary v, James, 7 Ala. '^ Stewart v. Anderson, 6 Cranch 640. (U. S.) 203, 3 L. Ed. 199. Connecticut. — Bunnell v. Butler, "^ Jones v. Hawkins, 17 Ind. 550; 23 Conn. 65. Lacroix v. Derbigny, 18 La. Ann. Indiana. — Bedford Bank v. Acoam, 27; Moody v. Towle, 5 Greenl. (Me.) 125 Ind. 584, 25 N. E. 713, 21 Am. 415. St. Rep. 258, 9 L. R. A. 560. '"Messmore v. Larson, 86 111. 278. Kentucky. — Otwell v. Cook, 9 B. Mon. (Ky.) 357. 765 OF BILL OR NOTE ESSENTIALS TO AVAILABILITY. [§ 607 a note has been transferred by delivery merely, without any indorse- ment, is not entitled to a set-off of such note in an action against him on paper which he executed.^^ In this connection it is also decided in Massachusetts that a certificate of deposit is not a note and that it is not subject to a set-ofE of a note of the payee in the hands of the defendant." §607. Same subject — Essentials to availability. — Though a de- fendant may, in an action against him on commercial paper which he has executed, set off a bill or note which he holds against the plaintifiE, yet it is held to be an essential to the availability of such a set-oS that the bill or note should be due.'^^ And it is also decided that it must have become due before the action against the defendant was commenced,''* and that it is not available where it became due subse- quent to that date, though before plea was filed." In the application of these rules it is held in some earlier cases where a bill was ofEered as a set-off to a note that, though both the plaintiff and the acceptor of the bill were insolvent, it would not be allowed as a set-off, it not being due.'^" And in this connection it has been decided in a late case in New York, under the code provision of that state permitting the as- signee of any claim or demand to enforce the same in his own name "subject to any defense or counterclaim existing against the trans- ferer" prior to notice of transfer and under the further provision of the code that where an action is brought on a contract other than a negotiable note or bill of exchange any claim or demand ex- isting in favor of the defendant prior to notice of the assignment and against the party to, or an assignee of, the contract shall be allowable as a counterclaim, that, in an action on an assigned claim the defend- ant cannot set up as a counterclaim a note to him from the assignor of the plaintiff where such note was not due when the claim was as- "Ayres v. McConnel, 15 111. 230; 553; McAlpin v. Wingard, 2 Rich. Stickney V. Clement, 7 Gray (Mass.) Law (S. C.) 547; Evans v. Pros- 170; Trow v. Baley, 56 Vt. 560. ser, 2 Term Rep. 186; Braithwaite But see Hickerson v. McFadden, 1 v. Coleman, 4 Nev. & M. 654; Rich- Swan (Tenn.) 258; Sheppard v. ards v. James, 2 Exch. 471; Gled- Stites, 7 N. J. L. 90. stane's Case, 1 Ch. App. 538. Com- "Shute V. Bank, 136 Mass. 487. pare Griffin v. Chubb, 16 Tex. 219. " Citizens' Saving Bank v. " Deale v. Krofft, 4 Cranch C. C. Vaughan, 115 Mich. 156, 73 N. W. (U. S.) 448, Fed. Cas. No. 3698. 143; Ross v. Johnson, 1 Handy ""Lockwood v. Beckwith, 6 Mich. (Ohio) 388. 168; United States Trust Co. v. Har- '*Spaulding v. Backus, 122 Mass. ris, 2 Bosw. (N. Y.) 75. § 608] SET-OFF, RECOUPilEXT, COUXTEECLAIM. 766 signed."" But in a recent ease in Massachusetts it has been decided that courts proceeding according to the common law with jurisdiction of the subject-matter and of the parties may in some cases after ver- dict continue cases until a defendant can obtain judgment on his claim which for any suihcient reason could not have been pleaded in the suit, so that ultimately such set-off can be made. Thus it was so held in a recent case where a holder of certain notes brought an action thereon for the benefit of a decedent's estate and the defendant held valid outstanding notes against the estate, the solvency of which was doubtful, and he was unable to enforce the notes by reason of a special statute of limitations.'^^ So in a case in Iowa it is decided that in an action against a bank to recover the amount of a deposit, the bank is entitled to set off a note which is owing to it by the depositor, though such note is not due, where it appears that the depositor is insolvent.'^* § 608. Same subject — Essentials to availability, continued. — An- other essential to the availability of notes as a set-off is that they should be due in the same right. Thus where a suit is brought by a person in his representative capacity it is held that a note which was executed to him in his individual capacity is not available.*** Again where a person seeks to avail himself of a set-off, the claim or demand upon which he relies should, to be available, be one upon which he could maintain a suit. So a set-off of a bill or note will not be allowed where it appears that the instrument was transferred to the defendant for the purjDose of using it as a set-off, it being understood that it was to be returned to the indorser or accounted for to him.*^ Notes, to be so available, should also be those which are confined to transactions be- tween the same parties.®^ And a note will not be allowed as a set-off where it is shown that it is held by the defendant and another jointly.^^ "Michigan Savings Bank v. Mil- "Atkins v. Knoght, 46 Ala. 539; ler, 110 App. Div. (N. Y.) 670, 96 McDade v. Mead, 18 Ala. 214; Ad- N. Y. Supp. 568, decided under Code ams v. McGrew, 2 Ala. 675; Proctor Civil Proc, §§ 1909, 502, subd. 1. v. Cole, 104 Ind. 373, 4 N. E. 303; ''Jump v. Leon (Mass., 1906), McGowan v. Budlong, 79 Pa. St. 78 N. B. 532. 470. ™ Thomas v. Exchange Bank, 99 ^Holland v. Makepeace, 8 Mass. Iowa 202, 68 N. W. 780. See § 605 418. herein as to set-off in action by de- *^ Proctor v. Cole, 104 Ind. 373, 4 positor to recover bank deposit. N. E. 303. ^Roberts v. Jones, 1 Murph. (N. C.) 353. 767 BILLS OR NOTES OF BANK. [§§' G09-612' § 609. Same subject — Where a fraud on plaintiff. — A defendant will not be allowed to avail himself of a claim or demand as a set-off where it would operate as a fraud on the plaintiff. Thus the rule has been applied where two persons who were each indebted to the other each gave his individual notes to the other for the full amount of his indebtedness and one of them assigned one of his notes to a third party and subsequently failed and in an action by the assignee against the maker of the note the latter pleaded as a set-ofE one of the notes of the assignor.** § 610. Same subject — As affected by statute or laches. — The right of a person to set off a bill or note may be affected by statute. So where it is provided by statute that the claims of creditors shall be satisfied prior to those of a member of an insolvent firm it* is decided that in an action against a special partner to recover a balance due from him to the partnership on his account with it, he is not entitled to set off a note which he holds against the firm.^^ So the statute of limitations may operate to prevent a defendant from availing himself of the right to set off a bill or note.*^ x\nd in this connection it has been decided that the right may be barred, though the note itself is not barred.®'' Laches on the part of a defendant may also operate to pre- clude a set-off of a bill or note, where the laches are of such a char- acter as would prevent a recovery upon the instrument.®* §611. Same subject — Want of title to notes will preclude. — Where, in an action against a person, notes are pleaded by him as a set-off, it may be shown, for the purpose of defeating his right to the set-off claimed, that there is a want of title thereto in him.*® § 612. Of bills or notes of bank. — This right to set off a bill or note has been allowed in the case of an action by a bank upon commercial paper, it being held that the defendant may be entitled to a set-off of bills or notes which have been issued by the bank,®*^ except in those "Barbaroux v. Barker, 4 Mete. *^ Lyon v. Petty, 65 Cal. 322, 4 (Ky.) 47. Pac. 103. "Savage v. Carney (Tenn.), 47 ^ Reilly v. Rucker, 16 Ind. 303. S. W. 571. ""Coxe v. Bank, 8 N. J. L. 172; *> Harwell v. Steel, 17 Ala. 373; Bank of Niagara v. McCracken, 18 Lyon v. Petty, 65 Cal. 322, 4 Pac. .Johns. (N. Y.) 493; Niagara Bank 103. v. Roosevelt, 9 Cow. (N. Y.) 409; "'Nason v. McCulloch, 31 Me. 158. Blunt v. Windley, 68 N. C. 1; Ra- § 613] SET-OFF, RECOUPMENT, COUNTERCLAIM. 768 cases where it appears that the notes did not mature or were not pur- chased until after the bank had become insolvent, it being held under such circumstances that they were not so available.®^ And this right of set-off has been held to exist in an action upon a note which was transferred by the bank after it became insolvent.^^ § 613. Where collateral has been g^ven. — Where collateral has been given as security for the payment of a note in a suit upon the note the debtor may plead as a counterclaim or set-off the actual value of any of such collateral which the creditor has converted to his own use or the value of any such security which he has released, dissipated or diverted from the purpose for which he held it.^^ So where the maker of a note pledged other notes with the payee as collateral se- curity and these notes were repledged by the latter as collateral se- curity on a loan made to him, it was held that such act of the payee amounted to a conversion and that in an action by the administrator of the payee of the principal note, it appearing that the notes given as collateral could not be produced, the maker was entitled to a judg- ment against the estate of the deceased for the difference between the value of the collateral notes and the sum due from her.^* On the other hand, in an action by the maker of a note for its conversion and also the conversion of collateral given to secure it, it has been held that the defendant may set up by way of counterclaim the fact that such note was not paid at its maturity and ask for an allowance as a set-off of the amount of the note with interest.®^ And it has been held that where, by the negligence of the pledgee, the collection of col- lateral securities has been lost by the operation of the statute of limi- tations, and such statutory defense has become perfect, the pledgor may, by a counterclaim, recover the value of his collateral, even though it be not known that his debtor will, when sued on such collateral, cine Co. Bank v. Keep, 13 Wis. 209. ^'Hawley v. Brownstone, 123 Cal. Compare Hallowell & Augusta Bank 643, 56 Pac. 468; Jennings v. Moore, v. Howard, 13 Mass. 235. 189 Mass. 197, 75 N. E. 214; Rich- " Eastern Bank v. Capron, 22 ardson v. Ashby, 132 Mo. 238. 33 Conn. 639; Haxtun v. Bishop, 3 S. W. 806; Carson v. Buckstaff, 57 Wend. (N. Y.) 13; Clarke v. Haw- Neb. 262, 77 N. W. 670. kins, 5 R. I. 219; Farmer's Bank ^Richardson v. Ashby, 132 Mo. V. Willis, 7 W. Va. 31. But see 238, 33 S. W. 806. Morse v. Chapman, 24 Ga. 249. '= Empire Dairy Feed Co. v. Chat- '^ Merchants' Exchange Bank v. ham National Bank, 30 App. Div. Fuldner, 92 Wis. 415. 66 N. W. 691. (N. Y.) 476, 52 N. Y. Supp. 387. iG9 USURIOUS INTEREST — RULE AS TO RECOUPMENT OF. [§ 614 plead the statute in defense."*' And it has been held in this connec- tion that a defendant may set off a note held by him and which is secured by collateral without delivering up the collateral."^ Again, it has been decided that where an action is brought on a debt the de- fendant may set up by way of counterclaim bills due from the plain- tiffs of which the defendant is an indorsee and holder and that this right is not defeated by the fact that the defendant holds collateral security from a third party.''^ § 614. Usurious interest — Rule as to recoupment of. — Where usuri- ous interest has been paid on a note it has been decided that the taking and receiving of such interest is available as a defense by way of set-off in an action brought on the instrument, by the payee or an assignee with notice.^** And it is also held to be so available in an action upon a renewal of a note.^°° The right of a party to set off a payment of usury is held not to be affected by the fact that the amount so paid cannot be recovered in a separate action. ^"^ And in some states the rule prevails that usury can only be recouped.^ °^ Nor is the right "''Hawley Brothers Hardware Co. v. Brownstone, 123 Cal. 643, 56 Pac. 468; citing First National Bank v. O'Connell, 84 Iowa 377, 35 Am. St. Rep. 313; McQueen's Appeal, 104 Pa. St. 596, 49 Am. Rep. 592; Miller V. Gettysburg Bank, 8 Watts (Pa.) 192, note 34 Am. Dec. 451. "'Wallace v. Finnegan, 14 Mich. 170. "^McKinnon v. Armstrong Bros. & Co., L. R. 2 App. Cas. 531, wherein it is said by Lord Blackburn: "I think the law is tersely and accu- rately expressed by Lord Ormidale in the court below. He says 'I can neither find authority, nor see any good reason for holding, that the circumstance of a party having a collateral security for his debt is destructive of his right of compen- sation or set-off, supposing it to be otherwise well founded.' " "'' Georgia. — Wilkinson v, Wooten, 59 Ga. 584. Joyce Defenses — 49. Illinois. — House v. Davis, 60 111. 367. Indiana. — Bemmon v. Whitman, 75 Ind. 318. Kansas. — First National Bank v. Turner, 3 Kan. App. 352, 42 Pac. 936. Michigan. — Craig v. Butler, 9 Mich. 21. New York. — Caponigri v. Altiere, 48 N. Y. Supp. 808. Pennsylvania. — Thomas v. Shoe- maker, 6 Watts and S. (Pa.) 179. Vermont. — Lewis v. Jewett, 51 Vt. 378. ""McGee v. Long, 83 Ga. 156, 9 S. E. 1107; Harris v. Bressler, 119 111. 467, 10 N. E. 188; Morrison v. State Bank, 3 Kan. App. 201, 43 Pac. 441; Knapp v. Briggs, 2 Allen (Mass.) 551. ^"'Mitchell v. Lyon, 77 111. 525; compare Sims v. Squires, 80 Ind. 42. ^""Halcraft v. Mellott, 57 Ind. 549; Craig V. Butler, 9 Mich. 21. § 615] SET-OFF, EECOUPMEXT, COUXTERCLAIJI. 770 of a defendant to avail himself of a set-off of this character defeated hy the statute of limitations.^"* But where a surety pa3'S a debt of the principal upon the recjuest of the latter, who stands by and permits him to make such payment in ignorance of the fact that it is tainted with usury, the principal will not be permitted, in an action against him by the surety on an obligation subsequently given by the former to the latter to secure him for making such payment, to avail himself of a set-off of the usury contained in the original debt. Xor can the principal, in an action by the surety on a note paid by the latter, set ofT against such note usurious interest which was previously paid by him to the creditor and of which the surety had no notice or knowledge."^ Again, where several acceptances are given by joint makers for por- tions of the original obligation which contained usury, it is held that in an action on the acceptances so given there can only be a pro rata set-off of the usury which was paid by them jointly.^"^ Usury, to be available as a set-off, must attend the same contract. So where a party indorsed a note for the balance due on a usurious account between the maker and the payee, and he subsequently took up such note and gave his own to the payee therefor, it was decided in an action against him on his ow^n note he could not deduct the original usury. ^*''^ And an usurious payment made on a note will not be available as a set-off in an action upon another note, though the parties to the action and to the notes are the same.^"^ §615. Same subject — Right as affected by federal statutes. — It is a general rule that where a new right or offense is created by a stat- ute which provides a specific remedy or punishment therefor the pro- visions of such statute are alone applicable and exclusive of any other remedy or punishment. So it has been decided that the provisions of the federal statutes specifying the remedy where paj^ments of usurious interest have been made to national banks are exclusive and that in an action upon a note there cannot be a set-off of the interest or the penalty provided for therein.^**^ But where a claim for usurious in- "* Union National Bank v. Fraser, "" Haseltine v. Cent. Nat. Bank, 63 Miss. 231. 183 U. S. 132, 22 Sup. Ct. -50, 46 I'^'Blakely v. Adams, 113 Ky. 398, L. Ed. 118; Stephens v. Mononga- 68 S. W. 473. hela Bank, 111 U. S. 197; Driesbach "« Deposit Bank v. Robertson, 17 v. Nat. Bank, 104 U. S. 52; Barnet Ky. Law R. 1252, 34 S. W. 23. v. Bank, 98 U. S. 555; Danforth v. '°' Craig V. Butler, 9 Mich. 21. Bank, 1 C. C. A. 62, 48 Fed. 271; '"'Ewing v. Griswold, 43 Vt. 400; Lloyd v. First Nat. Bank, 5 Kan. Barnet v. Bank, 98 U. S. 555. App. 512, 47 Pac. 575; Nat. Bank 771 RIGHT OF SET-OFF GEXERALLY AS AFFECTED BY STATUTE. [§ G16 terest has been reduced to a judgment it has been decided that the provisions of the statute do not apply and that the judgment is avail- able as a set-off.^ ^^ § 616. Right of set-off generally as affected by statute. — Statutes have been passed in several states in regard to the right of set-off either specifying what is so available in actions generally or having refer- ence particularly to actions upon commercial paper. Where statutes of this character are in existence recourse thereto should be had in order to determine what may be available in actions upon such paper. So in some states it has been provided that, except where paper is negotiable, set-offs against the payee may also be available against an assignee or indorsee until notice of transfer.^^^ Again an exception has been made in the case of bona fide holders of such j)aper before maturity.^ ^^ In Mississippi it has been held that, under the statute of that state, there may, in an action on an indorsed bill or note, be a set-off of a claim or demand which was acquired prior to notice of the transfer.^^^ So in New York it has been decided under the code of Civil Procedure permitting a counterclaim to be interposed if it be "a cause of action arising out of the contract or transaction set forth in the complaint as the foundation of the plaintiff's claim, or con- nected with the subject of the action,""* that it is not essential in an action upon contract that the counterclaim should also be a cause of action upon contract, provided it arises out of the contract or trans- action set forth in the complaint or is connected with the cause of action, and it may therefore be a cause of action sounding in tort.^^^ And it has been declared in a case in Florida that under the statutes of Fayette Co. v. Dushane, 96 Pa. Madison v. Davis, 8 Biss. (U. S.) St, 340 (overruling Lucas v. The 100, Fed. Cas. No. 10,038. Bank, 28 P. F. Smith 228; Overhalt "« Lloyd v. First National Bank, V. The Bank, 1 Norris (Pa.) 490; 5 Kan. App. 512, 47 Pac. 575. Comanche Nat. Bank v. Dabney et "^Vann v. Marbury, 100 Ala. 438, al. (Tex. Civ. App.), 44 S. W. 14 So. 273; Brown v. Scott, 87 Ala. 413. But see Montgomery v. Al- 453, 6 So. 384; Prather v. Weissi- bion Nat. Bank, 50 Neb. 652, 70 N. ger, 10 Bush. (Ky.) 117; Bank v. W. 239; Lanham v. First Nat. Bank, Wood, 142 Mass. 563, 8 N. E. 753. 46 Neb. 663, 65 N. W. 786; Norfolk "= Drexler v. Smith, 30 Fed. 754. Nat. Bank v. Schwenk, 46 Neb. 381, "= Brown v. Bank, 62 Miss. 754; 64 N. W. 1073; National Bank of Phipps v. Shegogg, 30 Miss. 241. Auburn v. Lewis, 75 N. Y. 516, 31 "* § 501 Code Civ. Proc Am. Rep. 484 (reversing 10 Hun. "' Kneeland v. Pennell, 96 N. Y. (N. Y.) 468); National Bank of Supp. 403. § 617] SET-OFF, RECOUPMENT, COUXTERCLAIM. 772 of that state^^® all debts and demands naturally existing between the parties at the commencement of the action are proper subjects of set- off, but independent demands in no way connected with the transaction which forms the basis and constitutes the cause of action of plaintiff and not mutually existing between the parties to the action at the time of the commencement thereof, can not be set off in an action on a note.^^'^ The right of a person to set off a claim against a note or bill may also be prevented by the operation of the statute of limitations.^^^ It is, however, decided in this connection that if the right is not barred at the time of the commencement of the action, a set-off will be available though the period specified by the statute may have elapsed before the answer was filed in which it was set up.^^^ § 617. Waiver of right to set-off. — The right of a party to avail himself of a set-off may be waived by him. So it is decided that if upon notice of the assignment of a note being given to the maker, he promises to pay the note to the assignee, this will, in law, amount to a waiver of all right to the maker to plead in offset to the note any demand, which may have accrued to him against the payee prior to the assignment, such a promise being declared not to be a mere nudum pactum.'^^^ And a party may also be precluded from availing himself of a set-off where he has knowledge that a person is about to purchase a note but does not give the intending purchaser any notice thereof.^ ^^ But the failure of a defendant to avail himself of a right to a set-off prior to a verdict or judgment against him does not necessarily operate as a waiver of such right or estop him from subsequently availing "»§ 1069 Rev. Stat. 1892, § 1461 16 Mass. 398. But it is objected Gen. Stat. 1906. that there was no consideration for "'Hooker v. Forrester (Fla., the promise, that it was a mere 1907), 43 So. 241. nudum pactum, and therefore not "* Shields v. Stark (Tex. Civ. obligatory upon the defendant. This App.), 51 S. W. 540. objection is not well founded. It "° "Walker v. Fearhake, 22 Tex. is settled by numerous adjudged Civ. App. 61, 52 S. W. 629. cases that the assignment of a debt ^^ Stiles v. Farrar, 18 Vt. 444. The for a valuable consideration, with court said: "This promise, if bind- notice to the debtor, is a sufficient ing upon the defendant, does, in the consideration to sustain an express judgment of the court, amount to promise to pay the debt." Per Kel- an acquiescence in the assignment logg, J. See Wiggin v. Damreli, 4 and a waiver of all right or claim N. H. 69. in the defendant to interpose an ^='King v. Fowler, 16 Mass. 397. offset to the note. King v. Fowler, See Allee v. Little, 5 N. H. 277. AVAILABILITY IX RESPECT TO PARTIES GEXEEALLY. [§ G18 himself thoreof.^^- So where the payee of a due bill, at the time of his bringing suit thereon and rendition of the verdict, was solvent, but subsequently became insolvent, it was decided that a court of equity would restrain the collection of the judgment and compel the allowance of any set-off which the Judgment debtor might have against the judgment creditor, though such set-off existed when suit was brought and judgment rendered, where it appeared that the right thereto was not litigated in that suit.^^* Subdivision II. AVAILABILITY IN RESPECT TO PARTICULAR PARTIES AND HOLDERS OTHER THAN MAKER OR DRAWER. Sec. 618. 619. 620. 621. 622. 623. 624. 625. 626. 627. 628. 629. Availability in respect to par- ties generally. Acceptor. Administrators and executors. Agents and brokers. Agents continued — Collecting banks. Assignees and indorsees — What available generally. Assignees and indorsees — What available generally continued. Assignees and indorsees — Stat- ute as to set-off against in- dorsees. Bankrupts and insolvents. Bona fide purchasers — General rule as to. Husband and wife. Joint creditors and debtors. Sec. 630. Same subject — Where party sues in his sole right — Set- off of joint liability. 631. Same subject — Right as affect- ed by statute. 632. Same subject — Principal and surety. 633. Same subject — Joint and sev- eral note. 634. Partners. 635. Purchasers after maturity. 636. Purchasers after maturity — Continued. 637. Purchasers after maturity — Set-off arising out of other transactions. 638. State — No right of set-off against. 639. Sureties. 640. Sureties — Set-off of damages due to principal. § 618. Availability in respect to parties generally. — Where an ac- tion is brought upon a note in the name of the payee, if it appears that a third person is beneficially interested in the debt, any defense or set-off which the defendant may have against such third person ^ See Baskerville v. Brown, 2 ^"^ Chicago, Danville & Vincennes Burrows 1229. • R. R. Co. v. Field, 86 111. 270. 618] SET-OFF, RECOUPMENT, COUNTERCLAIM, 774 will be available, though the action is brought in the name of the one who has the legal title to the note/^* So where a note is executed to a person as guardian of an insane person and a suit is commenced upon the note by the guardian in his own name it has been decided that the defendant may plead by way of set-ofE a debt due him from the insane ward.^^^ And where a factor, acting for the principal, but concealing the principal, delivers goods in his own name, the person contracting with him has a right to consider him to all intents and purposes as the principal, and the purchaser of goods from one who represents himself as the owner, but who is in reality a mere agent, where there are no circumstances which would indicate to a reason- able man that the agency existed, or which would induce him to make inquiry, may set-off the note of such agent, held by him, in an action by the principal for the purchase price of the goods.^-*' Again, where a note is made to one "as assignee" it has been decided that in an action upon such instrument against the maker the latter will be entitled to a set-off of a claim assigned to him for rent during the time tlie l^ayee was carrying on the assigned business. ^-^ And where an action was brought on an account for the use of another it was held that a note by the plaintiff to the one for whose use the suit was brought and which the defendant acquired before notice of the assignment was avail- able as a set-off. ^-^ But in an action upon a sealed note drawn by the defendant and payable to the plaintiff as "agent of the creditors" of "*Farwell v. Tyler, 5 Clarke (Iowa) 535; Ward v. Martin, 3 Mo. 19. ^^ Nickerson v. Gilliam, 29 Mo. 456. The court said: "It is always admissible in an action by or against a trustee to plead a set-off of money due to or from the cestui que trust. It is made the duty of the guardian to prosecute and de- fend all actions instituted by or against his insane ward. His re- lation to the ward is a fiduciary one, and he is to all intents and purposes a trustee, having, subject to the supervision of the courts, the entire control and manage- ment of his ward's estate. Now, al- though the statement in the note of the fiduciary character of the plain- tiff is not conclusive evidence of the fact, or that a trust attaches with respect to the note, yet the plaintiff admits the fact of guardianship, and if the defendant can show that the transaction upon which the suit is founded was one in which the ward had the beneficial interest, as that the note was given, for example, for property of the ward, as the answer states, why may not the defendant have the benefit of his set-off with- out being driven to another action to recover it, when the result would have been the same?" Per Ewing, J. '"■• Pollacek v. Scholl, 51 App. Div (N. Y.) 319, 64 N. Y. Supp. 979. "' Tierney v. Peerless Shoe Co., 68 N. Y. Supp. 392, 33 Misc. R. 803. ^' Smith V. Ewer, 22 Pa. St. 116. 775 ACCEPTOR — ADMINISTRATORS AXD EXECUTORS. [§§ 619, G20 a third person, it has been held that the defendants cannot set off a sealed bill drawn by such third person in favor of the plaintiff and assigned to them before the commencement of the suit.^^^ Again in an action by the indorser of a note against prior indorsers it is held that there cannot be a set-off against him of an indebtedness due from him to a corporation which was not a party to the note.^^"' And where a note is made payable in a bank, it is decided that the maker thereby authorizes the bank to advance on his credit to the owner of the note the sum expressed on its face and that it would be a fraud upon the bank to set up off-sets against this note in consequence of any trans- actions between the parties.^^" § 619. Acceptor. — The acceptor of a bill cannot inquire into the consideration between the drawer and payee or between the latter and a subsequent indorsee, and in an action by such indorsee against the acceptor the latter cannot avail himself as a set-off of a debt due from the indorsee to the indorser or payee. And likewise in an ac- tion by the payee an acceptor cannot set up a debt due from the latter to the drawer.^^^ And in an action by the holder of a certified check against the banker upon whom it is drawn the latter cannot set off a debt due to him from such holder.^^^ But in a case in Kentucky in which it appeared that the drawer of a bill had died insolvent, it was decided in an action by the indorser who had paid the bill against the acceptor, who alleged that he had accepted such bill for the sole bene- fit of the drawer of the bill, who had died insolvent, that a plea of set- off of an indebtedness due from the indorser to the estate of the drawer should be allowed.^^'* § 620. Administrators and executors. — ^In an action brought by an executor in his own name upon a note given to him as executor for a debt due to the testator at the time of his decease it has been decided that the defendant cannot set off a demand which existed against the testator at the time of his death.^^^ i\.nd it has been held that where an estate is notoriously insolvent, a note which was not "" Stryker v. Beekman, 8 N. J. L. "= Smith v. Adams, 14 La. Ann. 209. 409. ™Russ v. Sadler, 197 Pa. St. 51, ^'' Brown v. Leckie, 43 111. 497. 46 Atl. 903. "* Bowman v. Wright, 7 Bush "'Mandeville v. Union Bank of (Ky.) 375. Georgetown, 9 Cranch (U. S.) 9, 3 i=^ Merritt v. Seaman, 6 N. Y. 168. L. ed. 639. § 620] SET-OFF, RECOUPilENT, COUXTERCLAIM. 776 due at the time of the testator's death cannot be set ofE against an action brought by the administrator to recover a bank deposit, though in this case it was held that if the estate were solvent, the fact that the note was not so due would not defeat the right where it became due before suit was commenced.^ ^'^ So in an action by an administra- tor a defendant is not entitled to set off a note which was purchased by him after the testator died insolvent.^^^ Nor, in an action by an administrator against one for a debt which was due the intestate before his death, can the defendant set off the amount of a payment made by him as surety for the intestate after his death.^^® And where a note was given to an executor for the purchase of the deceased's interests in a partnership, it was decided in an action on the note against the maker that the latter could not set up a prior partnership account which was already barred by statute.^^^ Again, where an action is brought by an administrator to recover for property which was purchased from him in his representative capacity it is decided that the defendant is not entitled to set off a note made to him by the testator, as to allow such a set-off would operate to give the de- fendant a preference and priority over the creditors of the estate."* So where lands belonging to an estate were sold by the administrator ^^° Bosler v. Exchange Bank, 4 Pa. receive their whole debt; if other- St. 32, wherein it was said by the wise they have a vested right to a court: "A set-off is allowed in a suit pro rata dividend. It is an unan- brought either by or against execu- swerable objection to the decision of tors or administrators, and the fact the court, that what they assert that the debt proposed to be set off will be that one creditor may re- was not due at the time of the death ceive the whole amount of his debt, of the testator or intestate, would whereas other creditors will receive make no difference if due when a pro rata only, lessened by the suit was commenced, and the estate sum which he has been permitted be solvent. But is a set-off allowable to set-off; this we conceive is not when the estate is notoriously in- in accordance with justice, for solvent? We think not, for the sim- equality is equity, nor consistent pie reason that it would disturb the with authority." Per Rogers, J. course of administration. At the "^ Irons v. Sayles, 5 R. I. 264. death of the testator or intestate "'Union v. Union's admr., 8 Grat. the executor or administrator is the (Va.) 1. trustee for the creditors, whose "* Grew v. Burditt, 9 Rich, right to the assets at that time be- (Mass.) 265. comes fixed and determined. Noth- "" Bizzell v. Stone, 12 Ark. 378; ing that the executor or administra- Bales v. Hyman, 57 Miss. 330; Mills tor can do can alter the course of v. Lumpkin, 1 Kelly (Ga.) 511; distribution. If the estate be sol- Ransom v. McClees, 64 N. C. 17. vent, the creditors are entitled to 777 AGENTS AND BROKERS. [§ 621 and a note therefor was given to him it was held that the defendant was not entitled to set off a claim which he purchased from the estate, expecting to use it as a set-off. ^*^ But where a legatee borrowed from executors the money of their testator and gave his note to them for the amount of the loan, it was held that, in an action upon the note, brought by an assignee who took it after maturity, the defendant could set up as a counterclaim against such note the amount due him from the estate of the deceased.^ *- § 621. Agents and brokers. — In an action on a note payable to a person named or bearer, the production of the note by the plaintiff, not being the payee named, is held to be sufficient evidence of his title, although he is the general agent of the payee, who is alleged in the answer to be the payee of the note, and the holder of such a note takes it sul)jeet to no equities or right of set-off which the maker would have against the original payee.^*^ And where a note ^" Floyd v. Rust, 58 Tex. 503. "=Whedlee v. Reddick, 79 N. C. 521. "^Tettee v. Prout, 3 Gray (Mass.) 502. It was said in this case: "The plaintiff in this case brings his ac- tion as bearer of a note made by the defendant to the Cheshire Iron Works or bearer. He therefore claims as the holder of a negotiable promissory note, payable on time, and not dishonored; and if he es- tablishes this title by proof he is entitled to the same privileges and immunities as an indorsee, having taken a note by indorsement in the course of business, before it has be- come due. He is not subject to any equities as between the promisor and the original payee, nor to the set-off of any debt, legal or equita- ble, which the promisor may after- wards acquire. Wheeler v. Guild, 20 Pick. (Mass.) 545. By giving a note payable to bearer at a future day, which is strictly a negotiable note, the defendant agreed to pay the amount to any person to whom it should be transferred, without claiming to set off any demand which he then had or might have against the promisee. It is in this respect like mercantile notes (in use, we believe in some of the states where the law allows set-offs and other equitable defenses, even against indorsees of promissory notes) payable without defalcation, thereby meaning, by force of the contract itself, to bind the maker to pay the amount abso- lutely to the regular holder, and re- nouncing any benefit of set-off or other equitable defense against the payee. Then the other question is, as to the proof. Where the plaintiff brings the note declared upon in his own hand, and offers it in evidence, this is not only evidence that he is the bearer, but also raises a pre- sumption of fact that he is the owner; and this will stand as proof of title, until other evidence is pro- duced to control it. Ordinarily, such bearer, relying on the general pre- sumption, has no means of proving the transfer of the note to himself. The defendant contends that, as the plaintiff was the general agent of § 622] SET-OFF^ RECOUPMENT, COUNTERCLAIM. 778 is made and delivered to a broker ''for sale or advance" and it is purchased by one who pays therc^for by advancing the amount by a credit given to the broker, the maker is not entitled in an action against him to a set-off of the amount of the claim alleged to be due from the holder to the Ijroker.^"** And where bills are remitted by one party to another to be discounted and applied to a particular jjurpose, and the party transmitting them becomes bankrupt before the proceeds are received by the parties to whom they are sent, it has been decided that the latter will not be entitled to set off the debt of the former against his assignee. ^*^ But where the holder of a note that is made payable to himself or bearer puts it into the hands of an agent for collection, the fact that the action thereon is brought in the name of the agent does not preclude the maker. from availing himself of any set-off which he might have against the principal, but he has the same right of set-off as if the action had been brought in the name of the principal.^*^ § 622. Agents continued — Collecting banks. — An indorsement "for collection" is held to convey no title to the paper, but is to be regarded as a notice to all persons subsequently dealing with the paper that the person indorsing it "for collection" did not part with the title or intend to transfer the ownership of the proceeds to another. The legal import and effect of such an indorsement is to notify the sub- sequent indorsee that the original indorser is the owner of the draft, that the one to whom it is indorsed "for collection" is merely his agent for collection and that a qualified title for this purpose only and no other is in such indorsee.^*^ So where a bank to whiqh a draft was indorsed "for collection" failed after again indorsing it to a third party who was to collect it, it was held that the collecting agent could not set off against the draft a balance against the bank to which it was originally indorsed "for collection."^** But where a bank to the corporation to whom the note "'Buchanan v. Findley, 9 Barn. was payable, and as such, had the & C, 738. custody of all their notes, his pos- "^Royce v. Barnes, 11 Mete. session may have been the posses- (Mass.) 276. sion of the corporation. But we "^ Central Railroad Co. v. First think this fact alone is not sufficient National Bank of Lynchburg, 73 Ga. to rebut the general presumption." 383; Cecil Bank v. Farmers' Bank, Per Shaw, J. 22 Md. 148. '" Carman v. Harrison, 13 Pa. St. '*^ Central Railroad Co. v. First 158. National Bank, 73 Ga. 383. 779 ASSIGNEES AXD INDORSEES, [§ 623 which a note is indorsed in blank subsequently indorses it to another bank "for collection and credit" without any notice that it does not belong to the former and there is a course of dealings between such banks by which there is a mutual crediting of proceeds of all papers sent to each by the other for collection, it has been determined that the bank to which it was so transmitted may have a lien thereon. ^*° § 623. Assignees and indorsees — What available generally. — Where an action is brought against the maker of a note by an assignee thereof it is held that a claim which the maker may have had against the payee before he received notice of the assignment is available by way of set-oflE against the assignee.^'^'' So where a note not payable to order was for a valuable consideration assigned to third persons, and an action brought for their benefit in the name of the payee, it was held that the maker might set-off a debt due to him at the time or the assignment from the payee,^^^ And an amount wrongfully with- held by the payee of mortgage coupon bonds has been held available as a set-off in an action by the assignee against the maker,^^^ as has also the amount of a time deposit made with the payee and which became due before notice of the assignment.^ ^^ And where it appears that the assignee or indorsee of a note by whom an action thereon is brought holds the paper in trust for the payee the maker is entitled to a set-off of any claim or demand whicli would be available against the payee.^^* And this is the rule where an action is brought by a collecting agent to whom the note was indorsed. ^^^ So also where a note is assigned by the payee for the purpose of avoiding the pay- "°Bank of Metropolis v. Bank of Per Richardson, J., citing Green v. New England, 1 How. (U. S.) 234; Hatch, 12 Mass. 195. Vickery v. Assoc, 21 Fed. 773. And "= Huber v. Egner, 22 Ky. Law see Wood v. Bank, 129 Mass. 358. Rep. 1800, 61 S. W. 353. Compare Hackett v. Reynolds, 114 "^ Huber v. Egner, 22 Ky. Law Pa. St. 328, 6 Atl. 689. Rep. 1800, 61 S. W. 353. ™ Huber v. Egner, 22 Ky. Law ^^^ Connecticut. — Hillhouse v. Ad- Rep. 1800, 61 S. W. 353; Sanborn v. ams, 57 Conn. 152, 17 Atl. 698. Little, 3 N. H. 539. /ndiana.— Henry v. Scott, 3 Ind. "'Sanborn v. Little, 3 N. H. 539. 412. The court said: "The interest of the Minnesota. — Felsenthal v. Hawks, assignee of a chose in action being 50 Minn. 178, 52 N. W. 528. merely equitable, he is to stand in Missouri. — McDonald v. Harrison, the situation of the assignor, at the 12 Mo. 447. time of the assignment, and subject England. — See Thornton v. May- to every defense, which might have nard, L. R. 10 C. P. 695. been set up against the assignment." '^^ Lewis v. Sheamen, 28 Ind. 427. § 724] SET-OFF, RECOUPMENT, COUXTERCLAIM. 780 ment of debts or obligations, it is held that the maker may avail him- self of any set-ofE which he would have against the payee,^^^ as is also the case where the assignment was made for the purpose of avoiding a set-off. ^^^ And if the surety for a debt pay the same before it is due it has been held that the payment will, after the debt has become due, be a legal set-off against his note payable to the principal and held by him or against such note in the hands of an assignee, if notice of the assignment was not given to the maker before the payment became a valid demand against the payee.^^® Again, where an accom- modation indorser is sued alone upon the indorsement it is held that he has the same right as the maker to the benefit by way of set-off or rebatement of the forfeiture given by statute in case of usury .^^* § 624. Assignees and indorsees — What available generally, con- tinued. — It may be stated as a general rule that in an action by an indorsee or assignee against the maker the latter cannot avail himself of a set-off which he may have against an intermediate indorser or holder. ^"^^ And it is decided that dividends which have accrued upon the bank stock of an insolvent and deceased stockholder are not avail- able as a set-off to an indorsement of his which is held by the bank,^" And where a party who had borrowed money of an insurance company gave an unconditional note to a third party, by whom it was indorsed to the company for the accommodation of the maker, it was held in an action against the indorser by the company that there could not be a set-off of the claims of the maker against the company on the policy of insurance.^^^ And where a party has given several different obligations, some of which are held b}-- the obligee and some by an assignee, and a right of set-off exists to some extent in favor of the debtor, but such right of set-off is general and not applicable by special agreement to any of the obligations in particular, it has been ^^Eason v. Locherer, 42 Tex. 173. Laclede Bank, 62 Miss. 586; Hooper "'Young V. Rodes, 5 T. B. Mon. v. Spicer, 2 Swan. (Tenn.) 494. (Ky.) 489. Compare Baxter v. Little, 6 Mete. i=« Jackson v. Adamson, 7 Blackf. (Mass.) 7, 39 Am. Dec. 707; Harris (Ind.) 597. V. Burwell, 65 N. C. 584. ^^^ National Bank of Auburn v. See § 627 herein on 6cma fide Lewis, 75 N. Y. 516, 31 Am. Rep. 484. holders. ^«>'' Goldthwaite v. National Bank, ^^ Brent v. Bank, 2 Cranch C. C. 67 Ala. 549; McKenzie v. Hunt, 32 (U. S.) 517, Fed. Cas. No. 1834. Ala. 494; Kennedy v. Manship, 1 '"-St. Louis Perpetual Ins. Co. v. Ala. 43; Stocking v. Toulmin, 3 Homer, 9 Mete. (Mass.) 39. Stew. & P. (Ala.) 35; Savage v. 781 BANKRUPTS AND IXSOLVEXTS. [§§ G2o, G26 held such set-off will not be available against any assignee while the original creditor still holds debt enough to extinguish the same, though if such set-off exceeds the sum remaining due to the original creditor the oldest assignee has the best equity.^*^^ § 625. Assignees and indorsees — Statute as to set-off against in- dorsee. — Where it is provided by statute that in a suit by an indorsee eT v. Meyer, 10 Y.) 645, 21 How. Prac. (N. Y.) 279. Barn. & C. 468; Phillips v. Im ^Espy v. Bank of Cincinnati, 18 Thurm, 18 C. B. N. S. 694; Beeman Wall. (U. S.) 605, 21 L. Ed. 947; V. Duck, 10 Mees. & W. 251; Hame- Louisiana National Bank v. Citi- lin V. Bruck, L. R. 9 Q. B. 306; zens' National Bank of Louisiana, Price V. Neal, 3 Burrows 1334. 28 La. Ann. 189, 26 Am. Rep. 92; -Griffith V. Reed, 21 Wend. (N. Clews v. Association, 89 N. Y. 418; Y.) 502, 34 Am. Dec. 267. See Dur- Hogen v. Bank, 6 Lans. (N. Y.) kee V. Conklin, 13 Colo. App. 313, 57 490; Merchants' Loan & Trust Co. Pac. 486. V. Metropolis Bank, 7 Daly (N. Y.) 795 BY ACCEPTANCE — BY SIGNATURE AND EXECUTIOX. [§§ 643, 644 as genuine of a forged certification.^ A certification, however, is de- clared to bind the bank only as to the genuineness of the signature of the drawer, that he has sufficient funds to meet it and that they will not be withdrawn and not to estop the bank from denying the genuine- ness of any otlier part of the check or of any names appearing thereon, or of the title of the holder, or the amount stated in the body of the check.® A bank may, however, by reason of negliegence in certifying a check be precluded from questioning the amount thereof.^" § 643. Same subject — Payment by bank of check. — A bank is presumed to know whether the signature of a depositor is genuine, and where it pays a check to a bona fide holder who in no way con- tributes to the deception it is held to have taken the risk of paying and to be estopped to subsequently question the signature in an action to recover back the amount. ^^ The drawee of a check by accepting it is regarded as occupying the position of a guarantor as to the genu- ineness of the signature affixed thereto. ^- § 644. By signature and execution. — One who issues negotiable pa- per to another for the purpose of his selling it and thus raising money upon it, is estopped to question the validity of the paper in the hands of an innocent purchaser. This principle has been applied where, for the purpose of raising money, coupon bonds are issued, it being held in such a case that the party issuing them will be estopped to question their validity in the hands of one purchasing them for value and with DO notice or knowledge of the purpose for which they were issued. ^^ So the drawer of a check, draft or bill of exchange who delivers it to an impostor, supposing him to be the person whose name he has assumed, must, as against the drawee or a bona fide holder, bear the 137; French v. Irwin, 4 Baxt. " Helwege v. Hibernia National (Tenn.) 401, 27 Am. Rep. 769. Bank, 28 La. Ann. 520. ^ Continental Bank v. Common- " Dedham National Bank v. Ever- wealth Bank, 50 N. Y. 575. lett National Bank, 177 Mass. 392, 59 "White v. Bank, 64 N. Y. 316; N. E. 62. Marine National Bank v. National " Farmers' & Merchants' Bank v. City Bank, 59 N. Y. 67; National Bank of Rutherford, 115 Tenn. 64, Bank of Commerce of New York v. 88 S. W. 939. National Mechanics' Banking Assoc. " Waggoner v. German American of New York, 55 N. Y. 211. Compare Title Co., 22 Ky. Law R. 215, 56 S. Louisiana National Bank of New W. 961. Orleans v. Citizens' Bank of Louis- iana, 28 La. Ann. 189. 645] WAIVER AND ESTOPrEL. 796 loss where the impostor obtains payment of, or negotiates the same.^* And a maker may be estopped from setting up in defense his own fraud, as where the note was given in connection with a transaction the purpose of which was to aid in defrauding his creditors.^^ But the fact that a defendant admits the genuineness of a note which is not identified as the note in controversy does not estop him from deny- ing the execution of the note sued on.^^ And the mere fact that a person had reason to believe that a note was to be used for an unlaw- ful purpose has been held not to be sufficient to estop him from de- fending on the ground of illegality or fraudulent representations by which the execution was obtained.^^ § 645. By indorsement. — Where a person either as indorser or surety affixes his signature to commercial paper below or after the signatures of others, he thereby sanctions and affirms the genuineness of the previous signatures and will be estopped in an action by a holder in good faith and for value from showing that they are forgeries.^* " Land Title & Trust Co. v. North- western National Bank, 211 Pa. St. 211, 60 Atl. 723. "Butler v. Moore, 73 Me. 151. " Glazier v. Streamer, 57 111. 91. " American National Bank of Aus- tin V. Cruger, 91 Tex. 446, 44 S. W. 278. See, also, Davis v. Sittig, 65 Tex. 497, wherein it was so held, though it appeared that the maker of the note had knowledge, at the time of its execution that it was given in connection with a transac- tion which was in fraud of the payee's creditors. ^^ Indiana. — Alleman v. Wheeler, 101 Ind. 141. Kentucky. — Burgess v. Northern Bank, 4 Bush. 600. Massachusetts. — Cabqt Bank v. Morton, 4 Gray 156; State Bank v. Fearing, 16 Pick. 533. New York. — Mosher v. Carpenter, 13 Hun 602; TurnbuU v. Bowyer, 2 Rob. 406, affirmed in 40 N. Y. 456, 100 Am. Dec. 523; Herrick v. Whit- ney, 15 Johns. 240. OTito.— Selser v. Brock, 3 Ohio St. 302. Pennsylvania. — Rapp v. Bank, 136 Pa. St. 426, 20 Atl. 508. A recovery of the consideration may be had by the purchaser from the one by whom the paper was transferred to him. Kansas. — Smith v. McNair, 19 Kan. 330. Massachusetts. — Brewster v. Bur- nett, 125 Mass. 68; Merriam v. Wol- cott, 3 Allen 258. Neto York. — Morrison v. Currie, 11 N. Y. Super. Ct. (4 Duer) 79. North Carolina. — ^^Hargrave v. Du- senberry, 9 N. C. 326. England. — Gurney v. Wormersley, 4 El. & Bl. 133; Jones v. Ryder, 5 Taunt. 488. So where money was paid to a broker for a note, the sig- nature to which was forged, it was held that an action would lie to re- cover the money paid therefor to the broker, although he had paid the amount to his principal, the name and identity of the principal 797 BY INDORSEMENT. [§ Gio "The language of the authorities is that by his indorsement he virtu- ally undertakes to every subsequent holder that the names of the maker and previous indorsers are really in the handwriting of those to whom they resi^ectively purport to belong/'^'' So in the case of the fraudulent transfer or disposition of a bill or note by an agent to whom the owner has indorsed it in blank and delivered it, the latter will be estopped from setting up the fraudulent conduct of his agent where an action is brought on the instrument by a bona fide holder.^** And where a merchant entrusts his clerk with blank indorsements and one by false pretenses obtains and uses them, it is held that it is not such a fraud as will discharge the indorser in an action by an indorsee.^ ^ Again, in the case of the blank indorsement, for the purpose of deposit, of a check which is subsequently repudiated and returned, if the blank indorsement is negligently left upon the check and it is transferred to a bona fide holder, the latter may recover thereon from the indorser who under such circumstances is estopped to set up the fraud. ^~ And where it is provided by statute that all notes are negotiable by indorsement, so as to vest the property in each indorsee successively, and the assignee is permitted to recover in his own name of the maker, in an action upon a note by an indorsee it is decided that a married woman who is bound by an estoppel in pais like any other person under the statute, and who has indorsed the note in blank, will be estopped, as against the indorsee who is a bona fide holder for 'value from claiming that the assignment was of a character other than, it appears to be by such indorsement.^^ not being disclosed at the time of feit bonds of the United States need sale. Merriam v. Wolcott, 3 Allen not return such bonds before bring- (Mass.) 258. And it has been de- ing an action to recover the amount cided that if a person receive in paid by him in purchasing them, payment a counterfeit or forged Brewster v. Burnett, 125 Mass. 68. bank note, he may treat it as a ^"Veazie v. Willis, 6 Gray (Mass.) nullity and recover back the 90, per Dewey, J. amount, though the person passing ^Connell v. Bliss, 52 Me. 476; the same may be guilty of no fraud. Weirick v. Bank, 16 Ohio St. 297. Hargrave v. Dusenberry, 9 N. C. 326. See Marston v. Allen, 8 Mees. & It is also held in such cases that it W. 494. is not necessary to offer to return ^ Putnam v. Sullivan, 4 Mass. 45. the worthless paper, the return be- "- Turnbull v. Bowyer, 40 N. Y. ing declared to be useless, since the 456, affirming 2 Rob. (N. Y.) 411. paper being forged it is entirely ^ Shirk v. North, 138 Ind. 210, 37 worthless to all parties. Smith v. N. E. 590; Long v. Crosson, 119 McNair, 19 Kan. 330. So it is de- Ind. 3, 21 N. B. 450; Lane v. Schlem- cided that a purchaser of counter- mer, 114 Ind. 297, 15 N. E. 454; § 6i6'\ "WAIVER AND ESTOPPEL. 798 § 646. By recitals. — When a sane man, knowingly and without restraint, delivers to another for a valuable consideration his obliga- tion in writing for the doing or refraining from doing any certain thing, he cannot be heard to say afterwards that he was deceived and by reason thereof he did not know the purport of such instrument.^'' The maker of commercial paper is subject to the application of this principle and may be estopped by recitals which are contained in the instrument. ^^ And likewise recitals oontained in a collateral mortgage may operate as an estoppel,^® as may also those contained in a contem- poraneous agreement which is construed as a part of the instrument.^^ And where a note has a certificate attached thereto in which it is stated that the note is for value received and that it will be paid at maturity, the party giving it will be estopped from falsifying his own statement as contained in his certificate.^^ An indorsee may also be estopped from contradicting recitals which are contained in his in- dorsement.'** The general rule that a party may be estopped by recitals in a bill or note has been applied in the case of recitals as to the con- sideration,^° as to the place at which the note was executed,^^ in regard to interest,^^ and that those who have signed the instrument as makers are all principals.^^ Also a clause describing the payee by a firm name has been held to operate as an estoppel.^* Again, it has been decided Moore v. Moore, 112 Ind. 152, 13 tional Bank v. Showacre, 26 W. Va. N. B. 673; Rogers v. Insurance Co., 48. Ill Ind. 343, 12 N. E. 495; "Ward =" Brandenburgh v. Three Forks V. Insurance Co., 108 Ind. 301, 9 Deposit Bank, 19 Ky. Law Rep. N. E. 361. 1974, 45 S. W. 108. =2* Hurt V. "Wallace (Tex. 1899), 49 =^ Chapman v. Skellie, 65 Ga. 124; S. W. 675. Reed v. Litsey, 17 Ky. Law Rep. ^United S^aies.— Silvert v. Kent, 1125, 33 S. "W. 827; Central Trust 105 Fed. 840. Co. v. Burton, 74 "Wis. 329, 43 N. W. Indiana. — Menaugh v. Chandler, 141. 89 Ind. 94. =^ Mechanics' Bank of Brooklyn v. Iowa. — James v. Dalbey, 107 Iowa Townsend, 17 How. Prac. (N. Y.) 463, 78 N. "W. 51. 569. Nebraska. — Bair v. People's Bank, ^ Kempner v. Huddleston, 90 Tex. 27 Neb. 597. 182, 37 S. "W. 1066. South Carolina.— White v. Golds- ™ Silver v. Kent, 105 Fed. 840. berg, 49 S. C. 530, 27 S. E. 517; Nott ^^ Quaker City National Bank v. V. Thompson, 35 S. C. 461, 14 S. E. Showacre, 26 "W. Va. 48. 940. =- James v. Dalbey, 107 Iowa 463, Terras.— Hurt v, "Wallace (Tex. 78 N. W. 51. 1899), 49 S. W. 675. "Menaugh v. Chandler, 89 Ind. 94. West Virginia.— Quaker City Na- '* Bair v. People's Bank, 27 Neb. 577, 43 N. W. 347. 799 RECITALS IN BONDS. [§ 64:7 that recitals in a note, executed by a married woman, to the effect that it is for the benefit of her separate estate, have been held to estop her from showing the contrary.^^ It has, however, been held that recitals in a mortgage that "we have purchased" and "we hereby acknowledge that we own the above described real estate in equal shares" do not estop a wife from showing that she in fact acted as surety for her husband.^*' And it has also been determined that a per- son is not estopped from availing himself of a counterclaim for dam- ages arising from a breach of warranty in respect to the article for the purchase of which the note was given, by the fact that there is an express waiver of defenses in the note.^'^ § 647. Recitals in bonds. — Where bonds issued by a municipality contain a recital that they have been properly issued in accordance with all the conditions and requirements imposed by the law and they also bear the certificate of the proper state official to the effect that they are regularly and legally issued, one who purchases them in the open market for full value and without any knowledge of facts which would impair their validity, may recover thereon, the municipality being estopped from showing, as against such a purchaser that the recitals are untrue.^^ ^= White V. Goldsberg, 49 S. C. 530, testimony below showed, without 27 S. E. 517; Nott v. Thompson, 35 contradiction, that the entire issue S. C. 461, 14 S. E. 940. of bonds in suit * * * was sold ^*Cole V. Temple, 142 Ind. 498, 41 in the open market for cash at a N. E. 942. small premium above their par =■' Osborne v. McQueen, 67 Wis. value * * * and that the pur- 392, 29 N. W. 636. chaser had no knowledge of any ^^ Board v. Comm'rs of Kearny Co. facts or circumstances impairing v. Vandriss, 115 Fed. 866, 53 C. C. A. their validity, save such as was dis- 192. The bonds referred to in this closed by the bonds themselves, case contained a recital as follows: when read in connection with the "It is hereby certified and recited act under which they had been is- that all acts, conditions and things sued. The original purchaser of the required to be done precedent to bonds, and all subsequent holders and in the issuing of said, bonds thereof, who succeeded to his rights, have been properly done, happened, must be regarded, therefore, as bona and performed in regular and due fide holders, unless the bonds them- form as required by law." The bank selves, or the act under which they also bore a certificate of the auditor were issued, or both, when read to- of the state of Kansas that "this gether, disclosed that they were is- bond has been regularly and legally sued without authority or not in issued, that the signatures thereto conformity with law, and were for are genuine." The court said: "The. that reason invalid. * * * jf ^j^ey §§ 648, 649] -WAIVER axd estoppel. 800 i 648. By bill or note. — One who gives a note for the pa^^ment of a debt after the same has been contracted waives all defenses of which he had full knowledge at the time such settlement was made.^" So where, upon the settlement of an open account between parties, a note is executed by the debtor to the creditor for a balance agreed to be due, the execution of the note is generally held to operate as a waiver of ob- jections to the account.^" And where a party, with knowledge of an alleged breach of a contract, accepts a substitute performance and subsequently executes his note in payment thereof, he will be con- sidered as having waived a strict performance and cannot set up the breach in defense to an action on the note.*^ So in the case of a note being given after the accrual of a cause of action which is alleged in a plea of set-off the note may operate as an estoppel in respect to the right of the party to avail himself of such set-off.*^ And where a party procures a satisfaction of a judgment against him by executing a nego- tiable note for the amount thereof he will be estopped in an action against him on the note from showing that the judgment was obtained upon a note which, was in part for illegal interest.*^ § 649. By giving of new note. — One who gives a new note with full knowledge of defenses which were available in respect to the original note is held by such act to waive all such defenses and to be estopped were 6ona fide holders, the recital *^Reid v. Field, 83 Va. 26, 1 S. E. in the bonds is obviously of such a 395. The court said: "In the case nature as will cure any irregularity here, the defendant in error, by his in the exercise of the power to issue own showing, after the alleged them which was conferred on the breach of the original agreement by municipality by the act of March 5, the plaintiff in error, by accepting a 1887. The recital also estops the substituted performance, and by his municipality from pleading that its subsequent promise — the note sued officers acted fraudulently in issuing on — waived the protection given by the bonds or in disposing of the pro- the law, relinquished his right to ceeds. These defenses are elimi- rely upon the rule provided for his nated by the recital, upon the as- protection, and consequently stands sumption that the securities were precluded from his otherwise valid sold to an innocent purchaser for defense thereunder." Per Richard- value." Per Thayer, J. son, J. ^Atlanta Consol. Bottling Co. v. "Borchenius v. Manutson, 7 111. Hutchinson, 109 Ga. 550, 35 S. E. App. 365. See Edison General Elec. 124. , Co. V. Blount, 96 Ga. 272, 23 S. E. ^'Andleur v. Kuffel,' 71 Ind. 54?; 306. Jenkins v. Levis, 25 Kan. 479; Knox " Gipson v. Shanklin, 83 Ind. 147. V. Whaley, 1 Esp. 159. 801 BY NEW PROMISE. [§ 650 from availing himself of the same in an action on the renewal. So a maker may in this manner be estopped from setting up the defense of a failure of consideration,** or of fraud or fraudulent representa- tions in connection with the execution of the original note.*^ So if the maker of a note gives the holder a new note, with another surety, and takes up the old one, it is decided that he is thereby precluded, when called on for payment, from entering into the original consideration, because he has, by his act, induced the holder to surrender the right which he has against the indorser, who was responsible on the original instrument.*** Again where a note has been accepted by a person in renewal of a prior one it has been decided that he will be thereby estopped from setting up that he did not accept it for the purpose for which it was given.*'' § 650. By new promise. — A party to commercial paper who has knowledge of matters which would be available to him as a defense to an action thereon may waive his right to set up such defense by a new promise subsequently made by him and upon the faith of which a party takes the paper.*^ So if a surety, with knowledge of the fact that an agreement for an extension of time has been made between the creditor and the principal, make a new promise to pay the debt, he cannot afterward avail himself of the agreement, as a discharge of his liability, notwithstanding there was no new consideration for his promise.*^ And it has been declared that a discharged bankrupt is ** Griffith V. Trabue, 11 Heisk. Tennessee. — Rosenplanter v. Toof, (Tenn.) 645. 99 Tenn. 92, 41 S. W. 336. "Ross v. Webster, 63 Conn. 64, Texas. — Selkirk v. McCormick, 33 26 Atl. 476; Isham v. Davidson, 1 Tex. 136. Hun (N. Y.) 114. Virginia. — Davis v. Thiomas, 5 " Coco V. Lacour, 4 La. 507. Leigh 1. *^ Dewey v. Bell, 5 Allen (Mass.) England. — Kerrison v. Cooke, 3 165. Camp. 362; Stevens v. Lynch, 12 *^ United States. — Young v. Grun- East 38. dy, 7 Cranch (U. S.) 548, 3 L. Ed. ^'Fowler v. Brooks, 13 N. H. 240. 435. The court said: "If, with a knowl- Mississippi. — Gilpin v. Smith, 11 edge of the fact, he had deemed it Smedes & M. 109. expedient to waive this right, a new Missouri. — Badger v. Stephens, 61 promise to pay would have contin- Mo. App. 387, 1 Mo. App. Repr. 627. ued his liability, without any new New Hampshire. — F o w 1 e r v. consideration. The right of dis- Brooks, 13 N. H. 240; Wiggin v. charge, in such case, from the mere Damrell, 4 N. H. 69. fact of the extension of time, is a Joyce Defenses — 51. § 651] WAIVER AND ESTOPPEL. 802 under a moral obligation to pay his debts in full, when he can, and that this obligation is, at common law, a sufficient consideration for a new promise, made after a discharge in bankruptcy to pay a note.'^'' A party is not, however, estopped by a new promise from setting up defenses which were available to him and of which he had no knowl- edge at the time of making such new promise. ^^ And where the maker of a note agreed to pay the assignee thereof, provided the latter would extend the time of payment, and the assignee thereupon released his assignor and then brought an action to enforce the notes against the maker before the expiration of the time agreed upon for the extension, it was decided that the maker was not estopped from availing himself of a defense which existed at the time such agree- ment was made.^^ § 651. Same subject — Limitations of rule. — In order to render a new promise, by a party to commercial paper, binding upon him it has been determined that the promise must be given to the creditor or to some one acting in his behalf .^^ And the promise must be un- ambiguous and explicit,^* and unconditional,^^ or if depending on a condition it must be shown that the condition has been performed.^^ So where a person promised that if successful in business he would commence paying a note it was held that the promise was a condi- tional one and that performance of the condition must be shown to authorize a recovery.^^ It has also been decided that a consideration is not necessary to support a subsequent promise,^^ though there are personal privilege of the surety, ^= Gilpin v. Smith, 11 Smedes & which he may waive; and he does M. (Miss.) 109. so, emphatically, if, with knowledge ^^Wakeman v. Sherman, 9 N. Y. of the fact, he notwithstanding re- 85. Compare Depuy v. Swart, 3 news his promise." Per Parker, J. Wend. (N. Y.) 135. =°Apperson & Co. v. Stewart, 27 ^* Huffman v. Johns (Pa. Sup.), 6 Ark. 619. Atl. 205. See Horner v. Speed, 2 Pat. " Arizona.— Barry v. Kirkland, 52 & H. (Va.) 616. Pac. 771. "Branch Bank at Mobile v. Boy- Eentucky. — Clay v. McClanahan, kin, 9 Ala. 320. 5 B. Mon. 241. =" Branch Bank at Mobile v. Boy- Louisiana. — Lambeth v. Kerr, 3 kin, 9 Ala. 320; Wakeman v. Sher- Rob. 144. man, 9 N. Y. 85. Massachusetts. — Mackay v. Hoi- "Wakeman v. Sherman, 9 N. Y. land, 4 Mete. 69. 85. Missouri. — Long v. Dismer, 71 Mo. ='Way v. Sperry, 6 Cush. (Mass.) 452. 238; Hobaugh v. Murphy, 114 Pa. Compare Lewis v. Hodgdon, 5 St. 358, 7 Atl. 139. Shep. (Me.) 267. 803 EEPEESENTATIOXS IN COXXECTIOX WITH TRANSFER. [§§ 652, 653 some cases which do not favor this doctrine. '^^ But though a con- sideration might be necessary it would seem that an extension of time would be a sufficient one."" § 652. By giving paper to cover shortage in accounts or to deceive state officials. — Parties who execute paper for the purpose of enabling an official who is short in his accounts or financially embarrassed to bridge over his financial reports, and who have knowledge of the pur- pose for which such paper is to be used, will not be allowed to hide themselves behind a violation of law in which they have participated and they are estopped to allege against an action on the paper such violation of law.**^ And one who gives to a corporation, such as an in- surance company, his note for the purpose of enabling the company to deceive the commissioners as to its financial condition, and upon the understanding that the note shall be surrendered when certain finan- cial straits have been passed is estopped from taking advantage of his own fraud.®^ § 653. By representations in connection with transfer — ^What operates as an estoppel. — Where a maker, by his representations to an- other that a note is good and is a valid and enforceable obligation, in- duces the latter to purchase it, the maker will be estopped in an ac- tion against him on the instrument from questioning its validity.®^ ™Henry v. Gilliland, 103 Ind. 177; Indiana.— Plummer v. Bank, 90 Ray V. McMurtry, 20 Ind. 307. Ind. 386; Rose v. Hurley, 39 Ind. ""Brown v. First National Bank, 77; Vanderpool v. Brake, 28 Ind. 115 Ind. 572, 18 N. E. 56; Fraley v. 130; Rose v. Teeple, 16 Ind. 37. Kelly, 79 N. C. 348; Henly V. Lanier, Iowa. — Shipley v. Reasoner, 87 75 N. C. 172; Jones v. Sennott, 57 Iowa 555, 54 N. W. 470; Callanan Vt. 355. V. Shaw, 24 Iowa 441. "^ Longmire v. Fain, 89 Tenn. 393, Kentucky. — Tichenor v. Owens- 18 S. W. 70. boro Sav. Bank & Trust Co., 24 Ky. "-New England Fire Insurance Co. Law Rep. 145, 68 S. W. 127; Blades v. Haynes, 71 Vt. 306, 45 Atl. 221. v. Newman, 19 Ky. Law Rep. 1062, «Ato&ama.— Wilkinson v. Seary, 43 S. W. 176; Smith v. Stone, 17 B. 74 Ala. 243; Brooks v. Martin, 43 Mon. 170. Ala. 360. Massachusetts. — Nye v. Chase, 139 Arkansas.— McL,am v. Coulter, 5 Mass. 379, 31 N. E. 736; Tobey v. Pike 13. Chipman, 13 Allen, 123. Connecticut. — See Middletown Michigan. — Sutton v. Beckwith, Bank v. Jerome, 18 Conn. 443. 68 Mich. 303, 36 N. W. 79. Georgia. — Henry v. McAllister, 99 Alississippi. — Torrey v. Grant, 10 Ga. 557, 26 S. E. 469. Smedes & M. 89. § 653] "WAIVER AND ESTOPPEL. 804 So where tlie maker of a promissory note, payable to a certain person or bearer, answered, in response to an inquiry by one to whom the payee had offered to sell it after its dishonor, that it was all right and that he would pay it, whereupon the purchase was made, it was decided that the maker was estopped from setting up want or failure of consideration, or any other equity existing between himself and the payee, as a defense to an action on the note by the purchaser or his privies,''* And where a bank, to which a non-negotiable note or order is presented for discount, is induced to discount the same by an an- swer which it receives from the maker in response to an inquiry made of him, the latter cannot subsequently deny liability on the note, and the fact that the bank gave no notice of the discount is held to be immaterial.*'^ So where a purchaser relies on a representation that the note is all right and will be paid the maker will be estopped from availing himself of a set-off which he may have against the payee.^^ This general rule of estoppel has also been applied in the case of repre- sentations by the maker that the paper is business paper.**'' And it has been decided that representations as to the priority of a mortgage given as collateral to secure the payment of notes may operate as an estoppel, although it could have been learned from an examination of the record that a prior mortgage was in existence. *'^ Again where a bank is induced by another bank to honor the draft of a third person so that he may pay a debt due to one of his creditors, it has been de- cided that the latter bank will be estopped, in an action on the draft, from asserting the claim that the maker did not owe to his creditor New York. — Fleiscliman v. Stern, him the plaintiffs below afterwards 90 N. Y, 110. acquired their title. * * * The Pennsylvania. — Edgar v. Kline, 6 maker of the note is estopped from Pa. St. 327. using the defense which he now sets England. — Davison v. Franklin, 1 up. He cannot use it against the Barn. & Adol. 142. person who purchased on the faith •^ Reedy v. Brunner & Co., 60 Ga. of his statement, nor against the 107, where in the court said: "The privies of that purchase." Per note being past due, the payee of- Bleckley, J. fered it for sale. The person to See, also, Davis v. Thomas, 5 whom it was offered, went to the Leigh. (Va.) 1. maker and inquired concerning it. "^ Strang v. MacArthur, 212 Pa. St. The maker answered that it was all 477, 61 Atl. 1015. right, and that he would pay it. "^ Wiggin v. Damrell, 4 N. H. 69. Acting upon this clear and explicit *" Fleischman v. Stern, 90 N. Y. answer, the individual to whom the 110; Lynch v. Kennedy, 34 N. Y. answer was made purchased the 151; 7n re, Many, Fed. Cas. No. 9054. note and paid value for it. Under ^^ Dodge v. Pope, 93 Ind. 480. 805 EEPRESEXTATIOXS IN COXXECTION WITH TRAXSFEE. [§ 65-i the amount of such draft.^^ A city may also be estopped to deny the validity of its warrants on the ground that they were not issued in pur- suance of an ordinance appropriating money to the payment thereof where, by the promises and misrepresentations of its officers, a holder of the same has been induced to permit them to remain uncollected until the cause of action on the debt is barred.'" The rule that a maker may, by his representations in connection with the transfer of paper, be estopped from asserting defenses against such paper in- cludes those cases where a note is executed and placed in the hands of an agent or broker for sale and a false representation inducing the purchase is made by the one so acting for the maker. ''^ And it would also seem that representations of such a character made by the maker would operate as an estoppel upon a receiver appointed for the maker.'^- § 654. Same subject, continued — ^When an estoppel does not arise. — An estoppel does not arise in favor of a purchaser of commer- cial paper where it appears that the representation relied upon was obtained by fraud on the part of such purchaser, '^^ or that the lat- ter neither relied upon nor was deceived by the statement of the maker."* So a representation that a note is all right and a prom- ise to pay the same has been held not to estop the maker from set- ting up the defense of usury where it is apparent that the pur- chaser knew of the usury and did not in good faith rely on such statements. '^^ And the fact that representations have been made by a maker of a note which may have influenced or induced the pur- "" Guthrie National Bank v. Dos- trust be violated, the innocent dealer baugh, 11 Okla. 664, 69 Pac. 797. must be protected. The choice of ™ Hubbell v. City of South Hutch- the medium rests with the seller, inson, 64 Kan. 645, 68 Pac. 52. and he must take the consequences." '^Ahern v. Goodspeed, 9 Hun (N. Per Brady, J. y.) 263, aff'd 72 N. Y. 108. As was "Armstrong v. American Ex- said in this case: "The broker change National Bank, 133 U. S. 433, could not be expected to sell notes 10 Sup. Ct. 450. or have them discounted, by silently " Hill v. Thixton, 94 Ky. 96, 23 presenting them to a purchaser. He S. W. 947; Lyndonville National must be expected to know some- Bank v. Fletcher, 68 Vt. 81, 34 Atl. thing of them, and what he assumes 38. to know legitimately connected with '* Spray v. Burk, 123 Ind. 565, 24 them, and necessarily a part of N. E. 588, so holding where a note them, if stated by him, is as bind- was given for a gambling debt and ing as if uttered by the principal, the purchaser had knowledge there- The latter has placed the broker in of. a position to do wrong, and if th« ^Watson v. Hoag, 40 Iowa 142. § 655] WAIVER AND ESTOPPEL. 806 chase of the paper will not operate as an estoppel to assert fraud where it appears that, at the time of making such representation, the maker had no knowledge of such defense and it also appears that the intending purchaser had full knowledge thereof.'^® Nor will he be es- topped by casual answers made to persons who have no interest in the subject-matter of their inquiries, though the instrument is subse- quently purchased by themJ^ And it has also been decided that an acceptor of a bill will not be estopped by representations made to the purchaser by the drawer for whose accommodation it was accepted.'^^ Again where a person indorses a note upon an agreement in writing with the payee that the latter shall not proceed against him until he has first exhausted all the property of the principal, the payee cannot proceed by suit against the indorser until he has first exhausted the property of the principal as agreed, and notice to sue the principal given to the indorser is not notice to sue the indorser himself, and does not estop the latter from setting up the defense that he is liable only after the property referred to has been exliausted.'^^ § 655. Effect of representations subsequent to transfer. — A maker or indorser of commercial paper is not estopped by representations, made subsequent to its transfer, in regard to its binding force or validity.®" A representation, however, made by the holder of a note ^^ Sackett v. Kellar, 22 Ohio St. ing required this, and the withhold- 554. It appeared in this case that ing of such information, under such one about to purchase notes and state of facts, was, in law and in having knowledge of fraud in con- good conscience, a fraudulent sup- nection with the procuring of their pression of the truth, and the plain- execution went to the maker and tiff took the notes subject to all inquired concerning them and was their infirmities, which had come to informed that they were all right his knowledge." Per Mcllvaine, J. and would be paid at maturity. See, also, Clements v. Loggins, 2 Having received this answer he pur- Ala. 514. chased the notes, without disclosing " Allum v. Perry, 68 Me. 232. to the maker his knowledge in re- "Jackson v. Fassitt, 33 Barb. (N. gard to the fraud, and of which the Y.) 645. maker had no knowledge at the "^ Planters' Bank v. Houser, 57 time. The court said of the pur- Ga. 140. chaser's conduct: "It was his plain ^Crossan v. May, 68 Ind. 242 duty, under the circumstances, to Stutsman v. Thomas, 39 Ind. 384 inform the defendant of the facts Windle v. Canaday, 21 Ind. 248 affecting the validity of the notes Traders' National Bank v. Rogers, which had come to his knowledge 167 Mass. 316, 45 N. E. 923. before purchasing them. Fair deal- 807 BY ADMISSION OR DECLAIfATION". [§ 656 after its maturity, wliicli is of such a nature as to induce an indorser to believe that no liability is claimed to exist against him, and by reason of which he is in fact induced to abstain from securing him- self when he might easily have done so, and such security is subse- quently lost to him, will operate as an estoppel in an action by such holder against the indorser.^^ And where a note had been discounted by a bank, under an agreement that it was to be paid by a third party, and at its maturity it was protested and notice sent to the maker and indorser, who immediately called at the bank and were informed that the one who was to have paid the note had requested that it be charged to his account, that this had been done, that it was all right, and that they need not trouble themselves any further, whereupon the maker returned to such third party funds of the latter which were sufficient to pay the note, it was held that the bank was by such representations and statements estopped to enforce the note against such maker and indorser.*^ § 656. By admission or declaration. — If the maker of a note, when applied to by one intending to purchase it to know if there is any defense against it, admits that he has none, he thereby estops himself from afterward setting up any defense, when sued on the note, which existed at that time within his knowledge, as it would be a fraud on the intended purchaser ; but this would not preclude a defense which might subsequently arise out of the original contract, such as total failure of consideration.^^ And where the maker of a note admitted in supplemental proceedings against the payee that he owed the latter the amount of a note, and at the time the proceedings were com- menced the note had been transferred to a bona fide holder, who was not a party to the proceedings, it was decided that such holder could recover in an action against the maker, as it was the maker's folly to admit that he owed the note to the payee before ascertaining whether the note had been negotiated.^* And where admissions were made after maturity by the indorser of a note upon which the holder relied and postponed bringing suit until after the maker had become insolvent it was decided that the indorser was by such admissions estopped from « Roberts v. Miles, 12 Mich. 297; ^Mawry v. Coleman, 24 Ala. 381, State Bank v. Wilson, 12 N. C. 484. 60 Am. Dec. 478; Clements v. Log- Compare DeMayer v. Bank, 8 Neb. gins, 2 Ala. 514. 105. ^* Rice V. Jones, 103 N. C. 226, 9 S. *^ Manufacturers' Bank of Troy v. E. 571. Scofield, 39 Vt. 590. §§ 657, 658] WAIVER axd estoppel. 808 denying his signature.^^ But where an action was brought on a note pledged to the plaintiff as collateral security it was decided that the defandant was not estopped by an admission that the plaintiff obtained the note before maturity from setting up the defense that he was not a hona fide holder and that there was a failure of consideration.*^ § 657. By admission or declaration, continued. — Though a party to commercial paper may be bound by declarations or admissions made by him while he is the owner and in possession thereof, yet such declara- tions or admissions will not as a general rule operate as an estoppel upon others who may be parties to the paper.*^ So a maker will not be bound by admission made by an indorser.** And admissions of one of two makers, where they are not partners, as to the validity of the paper have been held not to estop the other from setting up want of consideration, though the plaintiff in interest, or the person from whom he received it, purchased the note on the faith of the admis- sion.*^ And in an action against partners on a promissory note exe- cuted by one of them in the name of the firm, it has been decided that admissions of that partner are not admissible to prove the note a part- nership one.^'^ § 658. By admissions or declarations, continued. — Admissions by an assignor have in many cases been held binding upon an assignee,®^ or one who is a holder by delivery merely.®- Admissions of one party may also be binding upon another where there is an identity of in- terest,®^ as where an indorsee is the agent of the indorser with power »= Bates V. Leclair, 49 Vt. 229. ^'Andrews v. Campbell, 36 Ohio «« McDonald v. Mayer, 97 Ga. 281, St. 361. 23 S. E. 72. ^ Lewis v. Woodworth, 2 N. Y. 512. ^'United States. — Dodge v. Freed- ^ Tuttle v. Cooper, 5 Pick. (Mass.) man's Savings & Trust Co., 93 U. S. 414. 379. "1 Thorp v. Goewey, 85 111. 611; New York. — Paige v. Cagwin, 7 Shade v. Creviston, 93 Ind. 591; Hill 361; Whitaker v. Brown, 8 Stoner v. Ellis, 6 Ind. 152; Abbott Wend. 490. v. Muir, 5 Ind. 444; Blount v. Riley, Pennsylvania. — Camp v. Walker, 3 Ind. 471; Bond v. Fitzpatrick, 8 5 Watts 482. Gray (Mass.) 536; Sharp v. Smith, South Carolina.— T>Q Bruhl v. Pat- 7 Rich. L. (S. C.) 3. terson, 12 Rich. L. 363. "- Thorp v. Goewey, 85 111. 611. England. — Hemings v. Robinson, ®^ Welstead v. Levy, 1 Moody & R. Barnes 436; Beauchamp v. Parry, 1 138; Rocock v. Billing, 2 Bing. 269. Barn. & Adol. 89; Kent v. Lowen, 1 Camp. 177. 809 BY ACTS, CONDUCT OR WORDS. [§ 659 to sue for liira.°* And where paper is delivered into the possession of another who is authorized to treat and deal with it as his own, it is decided that admissions made by the latter may operate as an estoppel upon the one by whom the power was given.'^^ It has also been held that a purchaser after maturity may be estopped by admissions made by a prior holder while the instrument was in his possession.®^ § 659. By acts, conduct or words. — One who, by his words or con- duct, induces another to pursue a certain course of action in regard to commercial paper, and the words or conduct are of such a character as would justify a man of ordinary prudence in pursuing that course, may be estopped from showing that the facts, which the other party has been thereby led to believe exist, do not in fact exist, and conse- quently be precluded from availing himself of a defense which would be inconsistent with the existence of such facts.®^ So where paper is given or transferred in settlement of an account and the party giving or transferring it treats it as valid until the account has been barred, he will be estopped from denying his liability thereon in an action against him,"^ And where the maker of a note presents it for discount he should be estopped from setting up any defense affecting its validity against the party -discounting it with no notice or knowl- edge thereof.**^ So in the case where an acceptor's liability is made '^Welstead v. Levy, 1 Moody & R. Minnesota. — Yellow Medicine Co. 138. Bank v. Wiger, 59 Minn. 384, 61 N. "'Bank of Newbury v. Sinclair, 60 W. 452. N. H. 100; Reed v. Vancleve, 27 N. New York. — Weed v. Carpenter, 4 J. L. 352. Wend. 219. ^^Curtiss v. Martin, 20 111. 557; Pennsylvania. — Decker v. Eisen- Eaton V. Corson, 59 Me. 510. But hauer, 1 Ren. & W. 476. see Shober v. Jack, 3 Mont. 351; Texas. — Kolp v. Specht, 11 Tex. Paige V. Cagwin, 7 Hill (N. Y.) 361. Civ. App. 685, 33 S. W. 714. *^ United States. — Andrus v. Brad- "^ Carter v. Bolin, 11 Tex. Civ. ley, 102 Fed. 54; Many, In re, Fed. App. 283, 32 S. W. 123. Cas. No. 9054. "» Kitchell v. Schenck, 29 N. Y. Connecticut. — Middleton Bank v. 515, so holding where in an action Jerome, 18 Conn. 443. by one discounting a note against Indiana. — Musselman v. McElhen- the maker the latter sought to show ny, 23 Ind. 4, 85 Am. Dec. 445; Kuiss usury between him and an accom- V. Holbrook, 16 Ind. App. 229, 44 modation indorser. The court said: N. E. 563. "If in such a case as this, where the Iowa. — Bartle v. Breniger, 37 maker of a note having it in his Iowa 139. possession applies to an Innocent Maine. — Stratford v. Crosby, 8 Me. party to discount it, and receives 154. from him the face of the paper, the § 660] WAIVER AND ESTOPPEL. 810 dependent upon the performance of some contract obligation by a party to the paper and performance is prevented by the former, he "will be estopped in an action against him on the paper from setting up non-performance as a defense.^"** And it has been decided that an equitable estoppel may arise against a plaintiff from his permitting mortgaged property to be sacrificed at a mortgagee's sale for a sum less than its value, thereby creating a deficiency which would be suffi- cient to pay the amount of the note.^''^ Again the granting of an ex- tension of time, with full knowledge of facts which would constitute a good defense to an action on a note, may operate to estop a party from availing himself of such defense, though at the time of granting the extension he was ignorant of the legal effect of such facts.^*^^ It has, however, been decided that a maker does not, by permitting the holder of the note to retain the same, estop himself from setting up payment as a defense.^ ''^ Where a partnership note is given to a bank and one of the partners subsequently sells his interest to a third per- son who agrees to assume the liabilities of such partner, the fact that the bank subsequently accepts a part payment on the note from the incoming partner does not operate as an estoppel so as to prevent the bank from recovering the balance due from the retiring partner.^"* § 660. Same subject — Corporate transactions. — Where stockholders of a corporation have been guilty of laches in permitting corporation bonds to be issued and have availed themselves of the benefits, they will be precluded from the defense that the act of issuing them was ultra vires.^"^ And where a corporation receives the benefit of money which was borrowed by its president and notes of the corporation, se- cured by mortgage on its property, are executed therefor, and suc- cessive renewals of the notes are procured by the corporation with full knowledge of the facts, it will be estopped from denying its liability maker may afterwards set up a de- ^""Home Bank v. Drumgoole, 109 fense of usury founded on a trans- N. Y. 63, 15 N. E.'747. action between him and an accom- "^ Island Savings Bank v. Galvin, modation iudorser, there can be no 20 R. I. 158, 37 Atl. 809. safety in discounting negotiable pa- "^Rindskopf v. Doman, 28 Ohio per. On the contrary, where the St. 516. maker of a note thus presents his ^"^ Hardy v. Waddell, 58 N. H. 460. own paper for discount, he should "* Smart v. Breckenridge Bank be estopped from setting up any de- (Ky. C. A. 1906), 90 S. W. 5, 91 S. fense of such a character." Per In- W. 697. graham, J. ^"^ Tyrell v. Railroad Co., 7 Mo. App. 294. 811 BY LACHES. [§' 661 in a subsequent action on the paper so given.^"^ Again, where property is sold to a corporation or syndicate and the land is conveyed to an individual member whose notes are accepted .on the understanding that it is for the purpose of relieving a certain one of the purchasers from liability for the balance of the purchase money, the vendor is estopped to subsequently assert a liability against the latter on the notes or otherwise.^"^ § 661. By laches. — Where, owing to the carelessness or negligence of a maker in the execution of commercial paper, an alteration may be easily made, either by the filling in of blanks in an incomplete in- strument or by erasure without either defacing it or in such a manner as to excite the suspicions of a careful man, the maker may be estopped thereby from setting up the alteration as a defense to an action brought by a bona fide holder.^"^ So it has been held proper in such a case to instruct the jury in substance, that if the maker executed the note in controversy with a material portion written only in pencil, subject to be easily erased so as to leave no appearance of alteration on the face of the note, when, by ordinary care and prudence, he could have guarded against such erasures, he was guilty of negligence, and could not defeat its collection in the hands of an innocent holder who took it before maturity without notice of any alteration.^"'' And where a maker or acceptor attempts to destro}^ an instrument but it is done in such a negligent manner that there are no indications upon its face of an intention to destroy it, and a third party subsequently negotiates it, it has been decided that the maker or acceptor will be estopped from setting up either his attempt or the fraud of the third party in nego- tiating it, where the action is brought by a bona fide holder. So where the drawer of a bill picked it up in the presence of the acceptor, who had negligently torn it in half and thrown it down, and subsequently ^""Mining Co. v. First National Louisiana. — Isnard v. Torres, 10 Bank, 95 Fed. 23. La. Ann. 103. '"^ Underwood v. Patrick, 94 Fed. Pennsylvania. — Zimmerman v. 468. Rote, 75 Pa. St. 188; Phelan v. Moss, ^"Ullinois.—Seihel v. Vaughan, 69 67 Pa. St. 59. 111. 257; Harvey v. Smith, 55 111. Compare Walsh v. Hunt, 120 Cal. 224; Elliott v. Levings, 54 111. 213. 46, 52 Pac. 115. Indiana.— Noll v. Smith, 64 Ind. "" Seibel v. Vaughan, 69 111. 257. 511; Cornell v. Nebeker, 58 Ind. 425. See, also, Harvey v. Smith, 55 111. Kentucky. — Blakey v. Johnson, 13 224. Bush 197, 26 Am. Rep. 254; Wool- folk v. Bank, 10 Bush 504. § 663] WAIVER AND ESTOPPEL. 813 pasted the two pieces together and negotiated it to a bona fide holder, and the appearance of the bill was as consistent with its having been divided for the purpose of transmission by post as with its having been torn for the purpose of destroying it, the acceptor was held to be estopped from setting up the fraud of the drawer as a defense to an action by the bona fide holder.^^° But where a note given for prop- erty purchased was prepared by the payee, and the purchaser before signing the same and without the knowledge of the former erased a clause of the note making it negotiable and it was accepted by the payee, who did not know of or assent to the change, without an exami- nation, it was decided that he was not guilty of such negligence as would amount to an estoppel.^^^ § 662. By retaining consideration. — It is a general rule that a party who receives the consideration for which commercial paper was given or transferred and continues to retain the same is thereby es- topped from setting up a defense of which he might otherwise avail himself.^^^ So where the cashier of a bank sold a note, and the pro- ceeds were received and retained by the bank, it was decided that the bank and its receiver were estopped from denying the authority of the cashier to make such sale.^^^ And though a note may have been pro- "" Ingham v. Primrose, 7 C. B. N. "^ Hawkins v. Fourth National S. 82. Bank, 150 Ind. 117, 49 N. E. 957. "^Frum V. Keeney, 109 Iowa 393, It was said by the court in this 80 N. W. 507. case: "It is insisted that under the ^"^ United States. — People's Nation- statute of the United States, § 5209, al Bank v. National Bank, 101 U. R. S. U. S., the cashier for the In- S. 181; Weber v. Spokane National dianapolis Bank had no power to Bank, 64 Fed. 208, 12 C. C. A. 93; sell said note to the Knightstown Union Loan & Trust Co. v. South- Bank unless such authority was con- ern California Motor Road Co., 51 ferred upon such cashier by the Fed. 840; Waynesville National board of directors of said bank, that Bank v. Irons, 8 Fed. 1. the burden of proving such author- Indiana. — Hawkins v. Fourth Na- ity was upon the Knightstown Bank, tional Bank, 150 Ind. 117, 49 N. E. and as the special finding does not 957. state that such authority was con- Kentucky. — German National ferred by the board of directors Bank v. Louisville Butcher's Hide & upon the cashier, it is equivalent to Tallow Co., 97 Ky. 34, 29 S. W. 882. a finding that such was not con- Neiv Jersey. — Hackettstown Na- ferred by the board of directors of tional Bank v. Ming, 52 N. J. Eq. said bank. * * * But even if the 157, 27 Atl. 920. special finding stated that said Wisconsi?!. — Rogers v. Priest, 74 cashier was not authorized by the Wis. 538, 43 N. W. 510. board of directors to sell said note 813 BY ANOTHER ACTION OR PROCEEDING. [§ 663 cured by fraud or fraudulent representations a maker may, neverthe- less, be precluded from availing himself of such a defense by neither restoring nor making any offer to restore the consideration which he received. ^^* So in a case in which this question is considered it is said : "Conceding that the contract was procured by false and fraudulent representations, the party defaruded cannot rely upon such fraud as a defense unless he has rescinded the contract and offered to restore whatever of value he has received. A party cannot repudiate a con- tract on the ground of fraud and at the same time retain the benefits derived from it, but must, when he discovers the fraud, restore or offer to restore to the other party what he has received, and failing to do this he affirms the contract. When the consideration received is of any value to either party, its return must be tendered before the party can sustain an action for rescission of the contract or successfully defend an action based upon such contract. A party to a contract cannot treat it as good in part and void in part, but he must affirm it or avoid it as a whole ; nor can a contract, , either for mistake or fraud, be re- scinded in part and affirmed in part, but must be rescinded in toto or not at all."ii5 §■ 663. By another action or proceeding. — A party is not estopped from bringing a proceeding in a United States court upon commercial paper by the mere fact that there is a suit pending in a state court, pro- vided the action is one which may be properly brought before the former court, it being declared that the courts of the United States are bound to proceed to judgment and to afford redress to suitors before them in every case to which their jurisdiction extends and that they cannot abdicate their authority and duty in any case in favor of another jurisdiction."*' And where an action is brought against an individual as maker of a note it has been decided that the plaintiff will not be estopped from maintaining such action by the fact that he has brought another action against a corporation as maker, where the lat- on behalf of said bank, as it is "*Heaton v. Knowlton, 53 Ind. found that the said Indianapolis 357; Drake v. Lowry, 14 Iowa 125; Bank received $4,930 for said note Kenworthy v. Merritt, 2 Wash. Terr. and retained the same and has re- 155, 7 Pac. 62; City National Bank turned no part thereof, said bank v. Kusworm, 91 Wis. 166, 64 N. W. and its receiver are estopped from 843. denying that said cashier was au- "^Heaton v. Knowlton, 53 Ind. thorized by the board of directors to 357. Per Buskirk, J. sell said note, or that the sale was ""Hyde v. Stone, 20 How. (U. S.) ratified by said board." Per Monks, J. 170. § 663] TV^AIVER AND ESTOPPEL. 814 ter action has not gone to judgment and it does not appear that the acts of the plaintiff, which are relied on to create an estoppel, have caused the defendant to change his position or to take any action in regard to the note which would be injurious to him.^^'^ And where officers of a corporation executed a note in such a manner as to bind them individually it has been decided that the bringing of an action by the holder against the corporation upon a note similarly executed is no bar to an action against the makers of the note in suit as indi- viduals.^^^ So it is decided that a temporary injunction restraining the payment of a note by the makers and guarantors is no bar to an action on the note, it being declared that if such an injunction could be pleaded in bar it would amount to a complete satisfaction of the debt as much so as an actual payment.^^^ Nor in an action upon a note against an indorsee is it any defense that a bill in equity has been filed against the principal in said writing to enforce a vendor's lien on the property for which the obligation sued on was given, ^^^^ And it has also been decided that an action brought upon a note secured by a mortgage cannot be defeated by showing that the mortgagee has entered for the purpose of foreclosure and that the value of premises is in excess of the debt for which they are security.^^^ Nor is a bona fide indorsee of paper, who takes it from the payee for a valuable con- sideration, precluded from maintaining an action thereon by the fact that the payee had commenced an action against the maker, founded on the paper indorsed, and that he had attached real and personal property much beyond the amount thereof and afterwards, while the action was pending, had negotiated the note to the indorsee for the purpose of relinquishing the attachment, and that the latter, with knowledge of the purpose of the payee and that the maker was also insolvent and unable to pay his debt, had purchased the paper, it not, however, appearing that the transfer was fraudulent.^-- And it is de- cided that the rights of the holder of an order, which is payable out of the amount due on a builder's contract, to enforce the same cannot be affected by proceedings by him to enforce a mechanic's lien.^-^ Again, "^McClure v. Livermore, 78 Me. (Ky.) 672. Compare Porter v. 390, 6 Atl. 11. Knapp, 6 Lans. (N. Y.) 125. "« First National Bank of Brook- ^^ Speight v. Porter, 4 Cushm. lyn V. Wallis, 150 N. Y. 455, 44 N. (Miss.) 286. E. 1038, affirming 84 Hun 376, 32 ^^^ Portland Bank v. Fox, 19 Me. N. Y. Supp. 382. 99. "» Campbell V. Oilman, 26 111. 120; ^--Bellows v. Lovell, 4 Pick- Bryan V. Saltenstall, 3 J. J. Marsh. (Mass.) 153. 815 AS TO CONSIDERATION IN GENERAL. § 664 where an action upon a note is brought against the maker it is held that he will not be estopped from setting up a breach of warranty in regard to the property for the purchase of which the note was given by the fact that an action has been brought by him for damages on the contract.^^^ Nor will the pendency of a suit brought by the vendor on a purchase price note preclude the vendor from setting up a want of consideration for a note given by him to balancei the excess of the pur- chase price note over the purchase price.^^® § 664. As to consideration in general. — In an action against a pur- chaser of land upon tlie purchase price note given by him it has been decided that his acceptance of a deed with a warranty will estop him from setting up as a defense thereto a failure of consideration, it being declared that relief should be sought in a court of equity.^ -*^ And where a corporation is authorized by statute to accept premium notes in ad- vance to represent capital stock for the security of dealers, the signers of notes which are given under a statute and for the purpose stated will be estopped in an action against them from showing that the notes were without consideration because no insurance has been effected under the policies for which the notes were given. ^^^ So where the board of direc- tors of a bank, whose capital was impaired by bad loans, deemed it ad- visable to charge off these bad loans and substitute in lieu of the amount so charged off notes executed and indorsed by the individual members of the board, it was decided in an action upon a note so executed and indorsed brought by the receiver of the bank that the directors were estopped to set up a want of consideration.^-^ Again one who promises pay "without plea or offset" is held to be thereby estopped from setting up failure of consideration, it being declared that by these terms of the contract the party has al)solutely waived the right to resist payment at maturity. ^2^ It is, however, decided that, as against one who is not a holder for value, a party does not, either by his silence in claiming failure of consideration or by the execution of a new note to such ^Dunn V. Stokern, 43 N. J. Eq. "'Maine Mut. Marine Ins. Co. v. 401, 3 Atl. 349. Blunt, 64 Me. 95; Howard v. Palmer, "* Applegarth v. Robertson, 65 Md. 64 Me. 86. 493, 4 Atl. 896. ^^ State Bank v. Kirk (Pa. 1907), ^=« Litchfield v. Allen, 7 Ala. 779. 65 Atl. 932. "<= Starke v. Hill, 6 Ala. 785; Cul- i=« Grand Gulf Railroad & Banking lum V. Bank, 4 Ala. 21, 37 Am. Dec. Co. v. Stanbrough, 1 La. Ann. 261. 725. See, also, Horton v. Arnold, 18 Wis. 212. § 665] WAIVER AND ESTOPPEL. 816 holder, estop himself from setting up failure of consideration as a de- fense, it not appearing that such holder has been induced to change his situation in any way, or that he has been misled into the assump- tion of fresh liabilities, or has relinquished some advantage he might otherwise have availed himself of.^^° And where an action upon a non-negotiable note is brought in the name of the original promisee for the benefit of the assignee, want of consideration rendering the as- signment void is held to be available to the maker as a defense.^^^ And it is also declared that a man who, either by himself or Ins agent, sells his note for cash, especially if it is one not covered by the law mer- chant, for a price less than that expressed upon its face does not by such sale preclude himself from setting up want of consideration to the extent of a discount, unless, perhaps, a possible case of estoppel might arise, where the sale was by an agent.^^^ § 665. Where consideration illegal. — Where the consideration of a note is an agreement, or the doing of an act, which is illegal or in violation of public policy, a party will not be precluded by estoppel from showing such fact. And an obligor is not bound by the fact that a consideration is stated upon the face of a note which appears to be valid, from averring and proving that there was a further considera- tion which was illegal and against public policy, it being declared that the right of avoiding a contract having for its object or consideration the defeat of the law itself, is allowed not for the advantage of the party, but for the benefit of the public, and it cannot be precluded by estoppel or by express agreement.^^^ So where an indorsee of an usurious note had knowledge at the time he took it of the usury, the fact that the maker assured him when he took it that he would make no defense to it, does not, in an action against the maker, preclude him from setting up such defense, as, the consideration being an illegal one, the waiver of the defense was not binding as to a party having notice.^^* So in another case it is said that there can be no ratification ^=" Kirkpatrick v. Muirhead, 16 Pa. evidence in a judicial proceeding, is St. 117. unlawful as against public policy, "' Dunning v. Sayward, 1 Me. 366. though it be the evidence of the in- ^'-Musselman v. McEhenny, 23 jured party, and is not a valid con- Ind. 4, 85 Am. Dec. 445. sideration for a promise, either ver- ^" Gardner v. Maxey, 9 B. Mon. bal or written. (Ky.) 90, holding that the com- "* Torrey v. Grant, 10 Sm. & M. pounding of a prosecution for fel- (Miss.) 89. ony, or an agreement to suppress 817 SIGNING FOR ACCOMMODATION. [§§ 6G6-GG8 of contracts which are forbidden by statute or which are inconsistent with public policy, or where there is fraud of such a character as to involve a public wrong or a crime, in which case the ratification is also opposed to public policy and cannot be permitted,^^^ And a party is not precluded from availing himself of a defense of this character by the fact that the paper in controversy is under seal.'^® § 666. Signing for accommodation — Want or failure of consider- ation. — One who lends his credit to another, in the form of a note executed by him, to be sold so as to raise funds, cannot, against an assignee or indorsee who is a bona fide holder of the paper, set up want or failure of consideration,^^'' And one who, to enable the payee to negotiate a note, signs it after the other makers have signed and delivered it to the payee, is held to be precluded from setting up the defense that there was no consideration for his signature.^^^ § 667. By receipt of benefits — Failure of consideration. — One who, in the absence of fraud or mistake, gives his notes in settlement of a balance due for goods purchased by him is held to thereby waive a failure which is merely technical on the part of the payee to perform his contract and to be estopped from availing himself of the defense that there was a partial failure of consideration because the quality or quantity of the goods delivered and for which the notes were given was not in accordance with the terms of the contract,^ ^^ § 668. By conduct, representation or promise — Want or failure of consideration. — Failure of consideration is not available as a defense to a person where such failure is due to his own neglect or refusal to comply with his part of the agreement, as in such a case he has by his own conduct estopped himself to assert this defense.^*" And where a third person is induced by the maker of a note to purchase it the latter is thereby estopped to assert a want or failure of consideration, as to permit him in such a case to set up this defense would operate "=Lyon v. Phillips, 106 Pa. St. 57. "» Rudolph v. Brewer, 96 Ala. 189, Compare Kelly v. Allen, 34 Ala. 663. 11 So. 314. "" Calfee v. Burgess, 3 W. Va. 274. "" Colby v. Lyman, 4 Neb. 429. "'Ritchie v. Cralle, 108 Ky. 483, ""Cook v. Whitfield, 41 Miss. 541; 56 S. W. 963. See further as to Kolp v. Specht, 11 Tex. Civ. App. right of accommodation maker or 685, 33' S. W. 714. indorser to set up this defense, §§ 269-283, 342 herein. Joyce Defenses — 52. §§' 669, 670] WAIVER AND ESTOPPEL. 818 as a deception upon the purchaser. This rule, however, is held to apply only in those cases where the one taking the paper is an inno- cent purchaser and also takes it on the strength of the assurance of the maker, without notice of any defense in respect to the considera- tion.^*^ So a maker of a note who induces another to purchase it on the strength of his promise to pay the same at maturity is estopped in an action against him on the note to set up the defense of or want or failure of consideration.^*^ § 669. By knowledge or notice — ^Want or failure of consideration. — One who indorses notes to another with knowledge of a want or failure of consideration, and they are indorsed in payment of an in- debtedness which will be barred by the statute of limitations at the time suit may be brought upon such note, is estopped in an action by such indorsee to assert that there was a want of consideration.^*^ And , where a person could, at the time of executing a note in renewal of a former one, easily have obtained information affecting the consider- ation and which would be a defense to the original note, it has been decided that law will charge him with actual notice and knowledge of the facts which he could then have learned and that he will be es- topped from setting up a defense in respect to the consideration based on such f acts.^** § 670. As to capacity and authority generally. — ^A party, by exe- cuting a note as maker, warrants the capacity of the payee to accept and transfer it in the usual course of business and is estopped, in an action by a bona fide holder, to assert that the payee did not have such capacity,^*^ Likewise one who has procured a loan from another and executed his note therefor is precluded in an action on the note from showing that there was a want of capacity in the payee to make 111 Torrey v. Grant, 10 Smedes & M. "= Arkansas. — Winship v. Bank, 42 (Miss.) 89. Ark. 22. "= McCreary v. Parsons, 31 Kan. Indiana. — Wolke v. Kuhne, 109 447, 2 Pac. 570; Brown v. Daggett, Ind. 313, 10 N. B. 116; Wells v. 22 Me. 30. Sutton, 85 Ind. 70. '^Carter v. Bolln, 11 Tex. Civ. l^few York. — Nelson v. Eaton, 26 App. 283, 32 S. W. 123. N. Y. 410. ^"Montfort v. Americus Guano 07iio.— Ehrman v. Union Central Co., 108 Ga. 12, 33 S. E. 636. See, Life Ins. Co., 35 Ohio St. 324. also, McNeel v. Smith, 106 Ga. 215, Pennsylvania.— Honsum v. Ro- 32 S. E. 119. gers, 40 Pa. St. 190. See § 95 herein. 819 CAPACITY AND AUTHORITY. [ 670 the loan.^^° And where a note is made payable by a person to his own order and to that of another he will be estopped in an action upon the instrument from asserting that the indorsement was made without his authority where it is shown that it was used to take up a note of his own, liability upon which was not disputed by him.^*^ And where a note, which a firm was under an obligation to guaranty, was guar- anteed by one of the partners after the firm had dissolved, it was de- cided, in an action against the firm, that the defense that the partner was not authorized to so act could not be set up.^** Again where, after the dissolution of a firm, one of the members, without the author- ity of his partners, executed a note in the firm name, as a renewal of some firm notes and the individual debt of one of the members was included by mistake, it was held in an action on the note that the defendant, a member of the firm who had promised to pay the obliga- tion, supposing it simply a renewal, was estopped to deny his liability on the joint indebtedness, it appearing that he had shared in the benefit to the firm which had resulted from the surrender of the orig- inal notes.^*^ But where a partner indorsed paper in the firm name, but not in the course of the firm business, it was decided that his partner was not estopped from setting up want of authority to make such indorsement, although it appeared that he had knowledge of similar acts having been previously done by such partner, where it also appeared that he had on numerous occasions protested against this practice.^^" And where a disability on the part of a maker or in- dorser exists owing to want of mental capacity he will not be estopped from denying that he has acted, even as against a hona fide holder.^^^ :48 Florida. — Allen v. Freedman's bus City Bank v. Bruce, 17 N. Y. Savings & Trust Co., 14 Fla. 418. 507. Georgia. — Bond v. Central Bank United States. — Wyman v. Bank, of Georgia, 2 Kelly 92. 29 Fed. 734. Indiana. — Poock v. Association, 71 "'Main v. Hilton, 54 Cal. 110. Ind. 357, "«Star Wagon Co. v. Swezy, 59 Iowa.— Pleasant Valley District Iowa 609, 13 N. W. 749. Township v. Calvin, 59 Iowa 189, 13 "" Wilson v. Forder, 20 Ohio St. N. W. 80. 89, 5 Am. Rep. G27. Massachusetts. — Little v. O'Brien, ^^ Smith v. Weston, 88 Hun (N. 9 Mass. 423. Y.) 25, 34 N. Y. Supp. 557. Missouri. — McClintock v. Central '" Anglo-Californian Bank v. Bank, 120 Mo. 127, 24 S. W. 1052. Ames, 27 Fed. 727, wherein it was Neio York. — Rome Savings Bank so decided in an Insane indorser of V. Kramer, 32 Hun 270, affirmed in a certificate of deposit. The court 102 N. Y. 331, 6 N. E. 682; Colum- said: "Does this plaintiff, as a hona 671] WAIVER AXD ESTOPPEL. 820 § 671. Same subject — Corporate transactions. — One who executes a note to a corporation as payee thereby admits the existence of the corporation and its capacity to contract and cannot, in an action against him on the instrument, introduce evidence of facts which tend to impeach or contradict the force and effect of such admissions.^^^ So where a note was made payable in bank to an illegal corporation whose existence was subsequently annulled by the courts it was de- cided that the maker was estopped to deny its existence or capacity to accept or transfer the note where the action was brought by a bona fide holder.^^^ And one who has obtained the funds of a corporation and impaired the security of depositors by getting money advanced on commercial paper will not be permitted to consummate a fraud on the depositors and the public by setting up as a defense to an action on a note given for such loan that the act of the corporation was un- authorized.^^* Again, where a party makes a note payable to a de fide holder, occupy any better posi- tion than the wrongdoer from whom he purchased? Doubtless, it is en- titled to all the protection given to such a purchaser of negotiable pa- per; but such protection does not extend to an indorsement like this. There was no valid contract of in- dorsement created by defendant's signature on the back of the paper. It was no better than a signature written in a state of somnambulism, or even than a forgery. No negli- gence is Imputable, for one who is incapable of prudence cannot be guilty of negligence; nor can there be an estoppel. He who is legally disabled to act. cannot be estopped from denying that he has acted. An estoppel creates no power; and while, in favor of a bona fi,de pur- chaser, inquiry is denied as to equi- ties between prior parties, yet such protection does not cut off inquiry into the contractual capacity of those parties." Per Brewer, J. See, also, McClain v. Davis, 77 Ind. 419; Burke v. Allen, 29 N. H. 106; Wire- bach V. First Nat. Bank, 97 Pa. St. 543. ^" United States. — Lauter v. Jar- vis-Conklin Mortgage Trust Co., 88 Fed. 894, 29 C. C. A. 473; Gorrell v. Home Life Ins. Co., 63 Fed. 371, 11 C. C. A. 240; City Bank of Hartford V. Press Co., 56 Fed. 260, Affirmed in 58 Fed. 321, 7 C. C. A. 248. Arkansas. — Reynolds v. Roth, 61 Ark. 317, 33 S. W. 105. Indiana. — Brickley v. Edwards, 131 Ind. 3, 30 N. E. 708. Missouri. — Studebacker Bros. Mfg. Co. V. Montgomery, 74 Mo. 101; First National Bank v. Gillilan, 72 Mo. 77; Camp v. Bryne, 41 Mo. 525. Nebraska. — Bair v. People's Bank, 27 Neb. 577, 43 N. W. 347. Neio Hampshire. — Nashua Fire Ins. Co. V. Moore, 55 N. H. 48; Pine River Bank v. Hodsdon, 46 N. H. 114. See § 95 herein. '=^ Brickley v. Edwards, 131 Ind. 3, 30 N. E. 708. 1^* Allen V. Freedman's Savings & Trust Co., 14 Fla. 418; Brown v. United States Home & D. Ass'n (Ky.), 13 S. W. 1085. 821 CAPACITY AND AUTHORITY. [§ 673 facto corporation he will be estopped from setting up in defense to an action thereon a defect in its organization which it is claimed afEects its capacity to sue.^^^ jSTor can the maker of a note to a national bank or other corporation which was executed for a loan defeat recover}' thereon by showing that no security was taken as required by law.^°° Likewise the maker of a note cannot set up that the act of the cor- poration in purchasing the note was ultra \ares/°^ or that a corpora- tion in discounting a note acted in excess of the powers conferred upon it by its charter and the laws of the state or of the United States.^^* Again, a corporation which purchases notes cannot subsequently, after the contract has been performed and executed, rescind the contract on the ground that it had no authority to make the purchase, as, having placed itself in the position of a wrongdoer, it is subject to the lia- bilities which result from its act.^^® Nor can a corporation, which has executed a note in the corjjorate name in the usual course of business, defeat a recovery thereon by showing that it was not properly in- corporated.^^" § 672. Same subject, continued — Act of public or corporate official in violation of statute. — A maker or acceptor of commercial paper which is received by a public officer in his official capacity is estopped to set up in defense to an action thereon that such officer acted in vio- lation of his rights and duties in that he was required by statute to receive payment in money. ^^^ And where the charter of a bank requires a certain amount of stock to be paid in before the bank can go into operation, and the public statute requires the capital of banks to be "° Bank of Port Jefferson v. Dar- Maine. — Richmond Bank v. Robin- lin, 91 Hun (N. Y.) 236, 36 N. Y. son, 42 Me. 589. Supp. 153. Missouri. — St. Joseph Fire & Ma- "" Union Gold Min. Co. v. Rocky rine Ins. Co. v. Hauck, 71 Mo. 465. Mountain National Bank, 2 Colo. New York — Pra,tt v. Short, 53 248, affirming 1 Colo. 532. How. Prac. 506, affirmed in 79 N. Y. "'Merchants' National Bank v. 437, 35 Am. Rep. 531. Hanson, 33 Minn. 40, 21 N. W. 849, Compare Western Bank v. Mills, overruling First National Bank of 7 Cush. (Mass.) 539; Mills v. Rice, Rochester v. Pierson, 24 Minn. 140; 6 Gray (Mass.) 458; Vanatta v. Ehrman v. Union Central Life Ins. Bank, 9 Ohio St. 27. Co., 35 Ohio St. 324. "" Attleborough National Bank v. ^^^ Alabama.— Bates v. State Bank, Rogers, 125 Mass. 339. 2 Ala. 451. ^""Empire Mfg. Co. v. Stuart, 46 Da/cofa— Neilsville Bank v. Tut- Mich. 482, 9 N. W. 527. hill, 4 Dak. 295, 30 N. W. 154. ^" Miltenberger v. Cooke, 18 Wall. (U. S.) 421. 673] WAIVER AND ESTOPPEL. 822 pand in cash, if a subscriber for stock is allowed by the directors to give a note for his stock instead of paying cash, and the bank goes into operation in violation of the charter on a capital in which the note is reckoned as a cash payment for stock, it is held that the illegal- ity of the transaction cannot be set up in defense to an action by the bank on the note.^''^ i$ 673. As to forgery and alteration-^In general. — Where a bill or note has been put into circulation by a maker or drawee who has re- ceived the proceeds thereof he will be estopped to set up in defense to an action on the instrument that the signature of an indorser thereon is forged.^*'^ So where one of two partners drew a bill in the firm name upon another payable to the order of one whose name was forged as indorser upon the bill and such partner had it discounted in the regular course of business and ajDplied the proceeds to his private use it was held that, having received the avails of the bill, such party would be estopped from controverting the genuineness of the indorse- ment.^^* And where one to whom a bill is indorsed and delivered is acting under an assumed name of which fact the indorser is ignorant and the indorsee- afterward indorses and transfers it by indorsement under such assumed name to a bona fide holder, the original indorser will be estopped in an action against him by such holder from set- ting up that the indorsement is a forgery.^''^ Nor can indorsers of a note who have executed a release to the maker which amounts to a recogition of the instrument as a valid obligation, set up, as a defense to an action by a bona fide holder, that there is a material alteration in 1"- Pine River Bank v. Hodsdon, 46 N. H. 114. The court said: "The plaintiffs in claiming on these notes act for the general benefit of all par- ties interested in the assets of the bank ; for the innocent stockholders, whether they hold under the origi- nal subscriptions or by subsequent purchase, for the bill-holders, de- positors and other creditors of the corporation. The bank in this suit represents their interests. If a re- covery should be had, the amount recovered will be added to the as- sets of the bank for their benefit and security. "We think that the directors, if they were concerned in such cheat and crime, did not make the bank, representing such inter- ests and charged with such duties, party to the cheat and crime in such way as to prevent a recovery on these notes for the benefit of the parties whom the violated law was intended to protect." Per Perley, J. '"^Coggill V. Bank, 1 N. Y. 113; Meacher v. Fort, 3 Hill (S. C.) 227; Beekman v. Duck, 11 Mees. & W. 251. i" Coggill V. American Exchange Bank, 1 N. Y. 113. W5 Forbes v. Espy, 21 Ohio St. 474. 823 FORGERY AND ALTERATIONS. [§ CT3 the note.^®'' So where, at a time a j)erson signs an instrument as surety, there are no other signatures thereon, he is held to thereb}^ admit the genuineness of such signatures if it is accepted by the pa3'ee or obligee without notice.^"^ Where a person voluntarily erases his sig- nature as a maker or indorser he will not be permitted to prove that it was not genuine, as one, who voliuitarily, without mistake or accident, destroys primary evidence, thereby deprives himself of the production and use of secondary evidence.^^® Mere silence, however,, has been held insufficient to create an estoppcl.^^" And it has also been held that a party is not estopped from setting wp the defense that his signature is forged by the mere fact that he has paid previous notes forged by the same person.^'" In other eases, however, it has been held that a party may be estopped by such payment.^^^ Again it has been decided that written assent given by a party to an extension of time upon the giving by the maker of additional security to the holder does not operate as a waiver of the defense of forgery where it is provided by the writing that the party giving such assent holds himself liable "in the same manner and to the same extent" as it was at that time.^'^^ And it has been de- cided that acceptance by the drawee of a bill and his payment of the same does not estop to deny that the signature of an indorser is genu- ine, it being declared that though an acceptor is presumed to know ^""Conable v. Smith, 61 Hun (N. 135; People v. Bank of North Amer- Y.) 185, 15 N. Y. Supp. 924. ica, 75 N. Y. 547; Palm v. Watt, 7 "" Wayne Agricultural Co. v. Card- Hun (N. Y.) 317; Cohen v. Teller, well, 73 Ind. 555; Helms v. Agri- 93 Pa. St. 123; Morris v. Bethel, L. cultural Co., 73 Ind. 325; Wheeler R. 5 C. P. 47. V. Trades Deposit Bank, 107 Ky. ^"^ Neal v. First National Bank, 653, 55 S. W. 552; Chase v. Hathorn, 26 Ind. App. 503, 60 N. E. 164, hold- 61 Me. 505; Selser v. Brock, 3 Ohio ing that a payment by a husband St. 302. to a bank of checks forged by the "" Broadwell v. Stiles, 8 N. J. L. wife without any complaint on his 58. The court said: "The best evi- part, would preclude a recovery by dence is required, and if a party him from the bank of the amount having such in his power volunta- of future checks forged by her. rily destroys it, the law knows no Buck v. Wood, 85 Me. 204, 27 Atl. relaxation for him, whatever may 103, holding that payments on a be given to accident or misfortune, note to an innocent holder, without The fact of destruection excites sus- disclosing the forgery, for the pur- picion and unfavorable presump- pose of shielding the forger, when tion." Per Ewing, J. otherwise he would have been pros- '""Purmish v. Burge (Tenn.), 54 ecuted criminally, estopped defend- S. W. 90. ant from setting up the forgery. "» Whiteford v. Munroe, 17 Md. i'- Bell v. Shields, 19 N. J. L. 93. § 674] WAIVER AND ESTOPPEL. , 824 the signature of the drawer he is not supposed to know an indorser's signature and does not by his acceptance admit the genuineness of, or guaranty the same.^'^^ §674. Same subject — By admission of signature. — An admission by a party that a signature purporting to be his is genuine may operate to estop him from subsequently setting up the defense that it is a forgery.^^* So a maimer was held to be estopped from denying his signature on a note where the evidence went to show that he not only had adopted and ratified such signature but that by his admissions and declarations that the note was "all right" and that if plaintiff would "hold still" he would pay him, he had knowingly and designedly induced the plaintiff to omit taking any measures to collect the note of the co-maker at the time when the latter had ample property in his hands, and a resort to whom for the collection of the note would, in all probability, have been successful; and that afterwards, while the plaintiff continued to be misled by the assurances of the defendant, the co-maker failed in business and absconded, rendering the collection of the note from him impossible/ "^ It has, however, been determined that in order to create an estoppel by an admission of this character it is necessary that the instrument should have been produced or identified at the time the admission was made^^® and that the party to whom the admission was made acted thereon in such a manner as to create an equitable estoppel.^^'^ "^Kolt V. Ross, 54 N. Y. 472, 13 England. — Leach v. Buchanan, 4 Am. Rep. 615. Compare Phillips v. Esp. 226. Im Thurm, L. R. 1 C. P. 463, hold- Compare Workman v. Wright, 33 Ing that where one has been induced Ohio St. 405, 31 Am. Rep. 546; to part with his money by a party's Brook v. Hook, L. R. 6 Exch. 89. acceptance of a bill the latter is ^^"^ Hefner v. Dawson, 63 111. 403. estopped to deny the genuineness of "" Sheller v. McKenney, 17 111. indorsements thereon. App. 185. "'Illinois. — Hefner v. Dawson, 63 i" Sheller v. McKenney, 17 111. 111. 403; Hefner v. Vandolah, 62 App. 185, wherein the court said: 111. 483. "The foundation of the doctrine of Indiana. — Kuriger v. Joest, 22 equitable estoppel is the necessity of Ind. App. 633, 52 N. E. 764, 54 N. E. preventing the consummation of the 414. fraud which would result if a per- Kentucky. — Rudd v, Matthews, 79 son who, by his words or conduct, Ky. 479. has induced another to act so as Maine. — Casco Bank v. Keene, 53 to change his previous position. Me. 103. should afterward be permitted to 825 FORGERY AND ALTERATIONS. [§§' 675, 676 § 675. Same subject — Failure to give notice of forgery. — The drawer, maker, or indorser of a bill or note will not be estopped by a delay of a few days in giving notice of a forgery to a holder of the paper provided the position of the latter has in no way been altered for the worse. If, however, it appears that the one whose name is forged leads the holder to believe in the genuineness of the signature until he has lost some opportunity of recovering on the instrument which would have been available if he had known of the forgery it will be a sufficient alteration of the holder's position to estop him from setting up this defense.^'^® So where the drawer of a check discovers that it has been paid upon a forged indorsement notice of such fact should be given, without unnecessary delay to the bank which has paid it and if the drawer waits an unreasonable length of time before giving such notice he will not be permitted to recover the amount of such check from the bank.^^^ § 676. Same subject — As to checks. — A depositor, by his failure to examine his pass book and the returned checks, is not necessarily guilty of such negligence as will estop him from showing that a check which has been returned from the bank is a forgery, unless the bank has thereby sustained a loss.^*° But where a check is ratified by the drawer whose name is signed thereto he will be estopped to deny its validity or to show that his signature is forged where an action is brought against him by a holder in good f aith.^^^ And where a check which is presented to a teller of a bank and purports to be certified by deny the existence of the state of See, also, Starr v. Yourtree, 17 things upon the faith of which the Md. 341. other party has so acted. But it "^ McKenzie v. British Linen Co., would certainly be a novel doctrine 44 Law T. N. S. 431. to hold that a party may invoke the "° United States v. National Ex- rule of equitable estoppel, where he change Bank, 45 Fed. 163, holding has not been induced to change a delay of over thirty days unreason- iiis previous position, but only to able. change his previous condition of ^'^^ Janin v. London & San Fran- mind. By merely changing his con- Cisco Bank, 92 Cal. 14, 27 Pac. 1100; dition of mind or adopting a partic- Bank of British North America v. ular belief, no rights are lost or Mechanics' National Bank of New put in jeopardy, since by correcting York City, 91 N. Y. 106; Ogilvie v. his state of mind when the truth Mortgage Co., L. R. App. Cas. 257. is ascertained he is placed com- ''"^ Charles River National Bank pletely in statu quo." Per Bailey, J. v. Davis, 100 Mass. 413. § 677] WAIVER AND ESTOPPEL. 826 him is pronounced to be good, the bank will be estopped to subse- quently show that the certification was forged.^^- § 677. As to statute of limitations. — The statute of limitations in the case of a certified check begins to run from the time the bank re- fuses to pay the same and in an action on such an instrument it has been decided that the bank is not estopped to plead such statute by the fact that it has included the check as a part of its indebtedness in its annual statement made in compliance with a statute requiring a bank to make a statement annually of its accounts with its customers.^^* ^'= Continental National Bank v. *'*' Blades v. Grant County De- National Bank of Commerce, 50 N. posit Bank, 21 Ky. Law R. 1761, 56 Y. 575. S. W. 415. CHAPTER XXIX. DISCHAEGE. Sec. 678. What constitutes a discharge — Under statute. 679. Same subject — Maker. 680. Discharge of surety. 681. Discharge of guarantor. 682. Mortgage security. 683. Sale or surrender of collateral, or satisfaction of debt. 684. Agrreement and condition — De- cisions generally. 685. Same subject. 686. Payment by note or check of or by order on third person — Accord and satisfaction. 687. By payment of other indebted- ness. 688. By bill, note or check — Substi- tuted note — Renewal note. 689. By stock or bonds. 690. By conveyance of land or agreement to take deed. Sec. 691. By assignment, transfer or sur- render of property. 692. Surrender of valid notes for forged notes. 693. By work, labor or services per- formed or rendered. 694. Tender of payment. 695. Indorsements of payments — Receipts — Cancellation. 696. Whether a purchase or pay- ment. 697. Payment — By whom. 698. Same subject — To whom. 699. 700. 701. 702. Same subject. Renunciation by holder. Right of party who discharges instrument. Discharge — Miscellaneous deci- sions. § 678. What constitutes a discharge — Under statute. — The ne- gotiable instruments law provides that: A negotiable instrument is discharged (1) By payment in due course by or on behalf of the prin- cipal debtor; (2) by payment in due course by the party accommo- dated, where the instrument is made or accepted for accommodation; (3) by the intentional cancellation thereof by the holder. (4) By any other act which will discharge a simple contract for the payment of money; (5) when the principal debtor becomes the holder of the instrument at or after maturity in his own right. It is further pro- vided l)y that enactment that : A person secondarily liable on the in- strument is discharged: (1) By any act which discharges the instru- ment; (2) by the intentional cancellation of his signature by the holder; (3) by the discharge of a prior party; (4) by a valid tender of payment made by a prior party; (5) by a release of the principal 827 § 679] DISCHARGE. 828 debtor, unless the holders right of recourse against the party secon- darily liable is expressly reserved; (6) by any agreement binding upon the holder to extend the time of payment or to postpone the holder's right to enforce the instrument, unless the right of recourse against such party is expressly reserved.^ §679. Same subject — Maker. — A maker may be discharged by a release based upon a sufficient and valid consideration.^* Again, the satisfaction between the maker and the payee of a note not pay- able in bank may constitute a good defense in an action by the assignee against the maker, such satisfaction being agreed upon be- fore notice to the maker that the note has been assigned.^ And the maker may set up and rely upon any defense that he may have to a note in the hands of a purchaser by mere delivery, or who takes it after maturity, and this includes a defense that the note has been satisfied by an agreement of the grantor with his grantee rescinding a sale in connection with which the note was given.^ If the maker and the payee enter into the state of matrimony the marriage is held to ex- tinguish the former's liability.* So non-presentment or laches in pre- sentment of a claim against the maker's estate may constitute a good defense.^ And if a note is transferred after its maturity to a co- partnership of which one of the makers of the paper is a partner such transfer operates to extinguish the note as to all the makers.*' But where one of the joint makers of a note receives it under an order of distribution of the estate of the payee the other debtor's proportion ^Negot. Inst. Law, §§ 200, 201, = Shade v. Creviston, 93 Ind. 591. Appendix herein. Compare First National Bank v. ^*Ludington v. Bell, 77 N. Y. 138, Bynum, 84 N. C. 24; Wetmore v. rev'g 43 N. Y. Super. Ct. 557. Blush, Brayt. (Vt.) 55; Cowdrey v. When release not available by Vandenburgh, 101 U. S, 572. maker see: McCann v. Lewis, 9 = Shinn v. Fredericks, 56 111. 439. Cal. 246; Smith v. Smith, 80 Ind. ^Chapman v. Kellogg, 102 Mass. 267; "Washington College v. Duke, 246; Curtis v. Brooks, 37 Barb. '(N. 14 Iowa 14; Lewis v. Westover, 29 Y.) 476. Mich. 14. ° Marshall v. Perkins, 72 Me. 343; Release of insolvent maker, see: Pratt v. Lamson, 128 Mass. 529. Keeler v. Bartine, 12 Wend. (N. Y.) Examine Tinker v. Babcock, 107 111. 110. App. 78, aff'd 204 111. 571, 68 N. E. Maker released by election of cor- 445. poration to perfect stock instead of " Logan County National Bank v. enforcing note therefor, see: Ash- Barclay, 20 Ky. L. Rep. 773, 46 S. ton V. Burbank, 2 Dill. (U. S.) 435, W. 675. Fed. Gas. No. 582. 81^9 WHAT CONSTITUTES DISCHARGE. [§■ 679 of the obligation is not extinguished nor is the note thereby paid.'^ Co-debtors may, however, be discharged by a release which is unquali- fied clearly expressed and absolute in its terms. ^ But parties who in- dorse a note at the time of execution may be liable for contribution in the absence of a statute to the contrary.** A judgment against one of several joint debtors on a joint contract is at common law a bar to an action against them and this applies to a note, as there is a merger of the entire cause of action consequent upon such judgment and the joint liability is thereby extinguished.^" The acceptor will be ex- ^ Enscoe v. Fletcher, 1 Cal. App. 659, 82 Pac. 1075, under Cal. Civ. Code, § 1543. Examine Louis v. Triscony, 58 Cal. 304; Hawk v. Johnson (Pa.), 6 Atl. 725. ^Illinois. — Clark v. Mallory, 185 111. 227, 56 N. E. 1099. Michigan. — Stevens v. Hannan, 88 Mich. 13, 49 N. W. 874, aff' g 86 Mich. 305, 48 N. W. 951. New Hampshire. — Young v. Cur- rier, 63 N. H. 419. Texas. — Kneeland v. Miles (Tex. Civ. App.), 24 S. W. 1113. West Virginia. — Maslin's Ex'rs v. Hiett, 37 W. Va. 15, 16 S. E. 437. England. — Cocks v. Nash, 9 Bing. 341. See the following cases: Colorado. — Hochmark v. Richler, 16 Colo. 263, 26 Pac. 818. Maine. — Bradford v. Prescott, 85 Me. 482, 27 Atl. 461. Massachusetts. — Shaw v. Pratt, 22 Pick. (Mass.) 305. Oregon. — Crawford v. Roberts, 8 Oreg. 324. Tennessee. — Richardson v. McLe- more, 5 Baxt. (Tenn.) 586. England. — Nicholson v. Revill, 4 Adol. & E. 675, 6 Nev. & M. 192. But compare First National Bank V. Watkins, 154 Mass. 385, 28 N. E. 275; Potter v. Green, 6 Allen (Mass.) 442; Carrier v. Sears, 4 Allen (Mass.) 336; Smith v. Bar- tholomew, 1 Mete. (Mass.) 276; Ruggles V. Pattem, 8 Mass. 480; Young v. Currier, 63 N. H. 419; Line v. Nelson, 38 N. J. L. 358; Bowman v. Rector (Tenn.), 59 S. W. 389. "Caldwell v. Hurley, 41 Wash. 296, 83 Pac. 318., " United States. — Mason v. El- dred, 6 Wall. (U. S.) 231 (except in Michigan when the debtors are part- ners). See Eldred V. Bank, 17 Wall. 545. Indiana. — Cox v. Maddux, 72 Ind. 206; Archer v. Heiman, 21 Ind. 29. Massachusetts. — Ward v. Johnson, 13 Mass. 148. New Hampshire. — Farwell v. Hil- liard, 3 N. H. 318. Neiv York. — Candee v. Smith, 93 N. Y. 349. England. — King v. Hoare, 13 Mees. & W. 494. But see generally, Joyce v. Spaf- ford, 101 111. App. 422; Giles v. Canary, 99 Ind. 116; Bute v. Brain- erd, 93 Tex. 137, 53 S. W. 1017, un- der Rev. Stat. 1895, art. 1203; Ayrey v. Davenport, 2 Bos. & P. 474. That judgment on note merges cause of action, see the following cases: United States. — Harrison v. Rem- ington Paper Co., 140 Fed. 385. Alabama. — Brown v. Foster, 4 Ala. 282. Ulinois. — Brown v. Schurtz, 203 111. 136, 67 N. E. 767. k 680] DISCHARGE. 830 onerated if there are funds in the hands of the assignee of the drawer for whose accommodation the bill was accepted and such funds are available for satisfaction of the bill.^^ Again, satisfaction of a bill as between a drawer or indorser and an indorsee, whether made prior or subsequent to the bill becoming due, does not necessarily enure as a satisfaction on behalf of the acceptor, or operate to discharge him from liability to the indorsee.^^ A release by an indorser is not binding upon his immediate indorsee ;^^ although a release by the holder may be availed of as a bar.^* § 680. Discharge of surety. — A surety may be relieved of all lia- bility on a note by assigning a judgment owned by him to the payee Indiana. — Dunn v. Dills, 31 Ind. App. 673, 68 N. E. 1035. Kansas. — Redden v. First Na- tional Bank, 66 Kan. 747, 71 Pac. 578. New Mexico. — See First National Bank v. Lewinson (N. M.), 76 Pac. 288. New York. — Lytle v. Crawford, 74 N. Y. Supp. 660, 69 App. Div. 273. Ohio. — Erwin v. Lynn, 16 Ohio St. 539. Pennsylvania. — ^Work v. Prall, 26 Pa. Super. Ct. 104. When judgment is not a merger or bar, see the following cases: United States. — Clark v. Young, 1 Cranch (U. S.) 181. Georgia. — Taylor v. Jarrell, 104 Ga. 169, 30 S. E. 675. Illinois. — Mount v. Sholes, 120 111. 394, 11 N. E. 401. Indiana. — Yance v. English, 78 Ind. 80; Morrison v. Fishel, 64 Ind. 177; Smith v. Hunter, 33 Ind. 106. Massachusetts. — Burnham v. Win- dram, 164 Mass. 313, 41 N. E. 305; Stone V. Wainwright, 147 Mass. 201, 17 N. E. 301; Hunt v. Brown, 146 Mass. 253, 15 N. E. 587; Fisher v. Fisher, 98 Mass. 303; Andover Sav. Bank v. Adams, 1 Allen (Mass.) 28. Michigan. — Smith v. Curtiss, 38 Mich. 393. Missouri. — Orrick v. Dunham, 79 Mo. 174. Nebraska. — Sackett v. Montgom- ery, 57 Neb. 424, 77 N. W. 1083. New York. — Russel & Irwin Mfg. Co. V. Carpenter, 5 Hun (N. Y.) 162. Pennsylvania. — Rice v. Groff, 58 Pa. St. 116; Kirkpatrick v. Muir- head, 16 Pa. St. (4 Harris) 117. Tennessee. — Bowman v. Rector (Tenn.), 59 S. W. 389. Vermont. — T remont Bank v. Paine, 2 Williams (Vt.) 24. Canada. — McLennan v. McMonies, 25 U. C. Q. B. 114; Bank of Mon- treal V. Douglas, 17 U. C. Q. B. 208. England. — Tarleton v. Allhusen, 2 Adol. & E. 32; Claxton v. Swift, 2 Show 441. "Bradford v. Hubbard, 8 Pick (25 Mass.) 155. Examine Rolfe v. Wyatt, 5 Car. & P. 181. 1= Jones v. Broadhurst, 9 C. B. (0. S.) 173. Examine Williams v. Jones, 77 Ala. 294. ^^ Russell V. Cornwell, 2 Root (Conn.) 122. " Bauerman v. Radenius, 7 Term R. 663. i 831 DISCHARGE OF SURETY. [§ 680 of the note, it being agreed that such assignment shall so operate. ^•''' A surety will also be released by a valid binding contract extending time without the surety's notice or knowledge.^'' But there must be a clear and binding agreement for such extension of time in order that it shall operate as a release." Such extension must also be based upon a sufficient consideration.^^ And the shortness of time is immaterial provided the agreement is certain, clear and unconditional.^^ So the surety's liability may be affected by a contemporaneous parol agree- ment for the extension of time, when based upon a sufficient consider- ation.-** If a debt, for which a partner is surety, is increased or the character thereof changed by a note without such surety's consent the surety is discharged.^^ A surety is also discharged where, through the creditor's neglect to proceed against the principal, he has been precluded from recovering the debt or has sustained damage.-^ So the "First National Bank of Indian- 87, 64 App. Div. 331; Hummels- apolis V. New, 146 Ind. 411, 45 N. E. 597. " California. — Daneri v. Gazzola, 139 Cal. 416, 73 Pac. 179. Illinois. — Wyatt v. Dufrene, 106 111. App. 214. Kansas. — Bank of Horton v. Brooks, 64 Kan. 285, 67 Pac. 860. Kentucky. — Barber v. Ruggles, 27 Ky. L. Rep. 1077, 87 S. W. 785. Missouri. — Johnson v. Franklin Bank, 173 Mo. 171, 73 S. W. 391; Steele v. Johnson (Mo. App.), 69 S. W. 1065. Nebraska. — Shuler v. Hummel (Neb.), 95 N. W. 350. Wisconsin. — Fanning v. Murphy, 126 Wis. 538, 105 N. W. 1056. Texas. — Marshall Nat. Bank v. Smith, 33 Tex. Civ. App. 555, 77 S. W. 237. See People v. Grant (Mich.), 11 Det. L. News 474, 100 N. W. 1006; Lazelle v. Miller, 40 Oreg. 549, 67 Pac. 307; Westbrook v. Belden Nait. Bank, 97 Tex. 246, 77 S. W. 942; Guerguin v. Boone, 33 Tex. Civ. App. 622, 77 S. W. 630. Examine Parlin & Orendorff Co. V. Hudson, 198 111. 389, 65 N. E. 93; Brink v. Stratton, 72 N. Y. Supp. town Brownstone Co. v. Knerr, 25 Pa. Sup. Ct. 465. "Barber v. Ruggles, 27 Ky. L. Rep. 1077, 87 S. W. 785; Westbay v. Stone, 112 Mo. App. 411, 87 S. W. 34. Examine Bank of Morehead v. Blam, 24 Ky. L. Rep. 2425, 74 S. W. 209; Johnson v. Franklin Bank, 173 Mo. 171, 73 S. W. 391. Compare Revell V. Thrash, 113 N. C. 803, 44 S. E. 596. When surety not released by ex- tending credit in excess of stipu- lated amount in a contract made contemporaneously with a note given as collateral security for a debt, see Rouss v. King, 69 S. C. 168, 48 S. E. 220. " Higgins V. McPherson, 118 111. App. 464; Durbin v. Northwestern Scraper Co. (Ind. App.), 73 N. E. 297; Regan v. Williams, 185 Mo. 620, 84 S. W. 959. "Revell V. Thrash, 132 N. C. 803, 44 S. E. 596. ^ Moroney v. Coombes (Tex. Civ. App.), 88 S. W. 430. -^ Casey-Swazy Co. v. Anderson (Tex. Civ. App.), 83 S. W. 840. - Dampskibsaktieselskabet Habil v. United States Fidelity & Guar- 681] DISCHARGE. 832 surrender or release of securities operates to discharge him.^^ And the question whether payments have been properly applied may affect the surety's right to a discharge.^'* Again, where the maker is surety for the indorser, the transactions between the indorser and the holder may be of such a character as to discharge him.-^ But, if a note is in no way varied, he is not discharged by the mere payment by the principal of interest due;^® nor is he released by the mere surrender of the note for a worthless check.-" § 681. Discharge of guarantor. — A release of a guarantor's obliga- tions on a note must be based on a valid consideration.-^ But a guar- antor is exonerated where, without his consent the original obligation of the principal is altered by an act of the creditor, or where such creditor's rights or remedies against the principal are impaired.^® And so a guarantor who has given his mortgage to secure a part of the amount of a note, is discharged therefrom by the payment of the debt secured.^" A guarantor may also be released by an extension of time without his consent,^^ or bv neglect to take action against or to anty Co. (Ala.), 39 So. 54. Ex- amine Boiling V. Chambers, 20 Colo. App. 113, 77 Pac. 16; Burge v. Duden (Mo. App.), 78 S. W. 653; Robertson v. Angle (Tex. Civ. App.); 76 S. W. 317. ^ Molaka v. American Fire Ins. Co., 29 Pa. Super. Ct. 149. See Brown v. First National Bank, 132 Fed. 450, 66 C. C. A. 293; Tram- mell V. Swift Fertilizer Works, 121 Ga. 778, 49 S. E. 739; Gotzian & Co. V. Heine, 87 Minn. 429, 92 N. W. 398; Rouss v. King, 69 S. C. 168, 48 S. E. 220. " Eccleston v. Sands, 95 N. Y. Supp. 1107, 108 App. Div. 147. See Mitchell V. Wheeler, 122 Iowa 368, 98 N. W. 152. "' Jennings v. Moore, 189 Mass. 197, 75 N. E. 214. "-"Bitler's Estate, In re, 30 Pa. Super. Ct. 84. =^Hogan V. Kaiser, 113 Mo. App. 711, 88 S. W. 1128. When surety not discharged, see generally: Ingells v. Sutcliff, 36 Kan. 444, 13 Pac. 828; Prather v. Gammon, 25 Kan. 379; Deposit Bank of Sulphur v. Peak, 23 Ky. L. Rep. 19, 62 S. W. 268; First Na- tional Bank v. Marshall, 73 Me. 79; North Ave. Savings Bank v. Hays, 188 Mass. 135, 74 N. E. 311. Surety — as to right of contribu- tion, see Skiles' Estate, In re, 211 Pa. 631, 61 Atl. 245; Adams v. De- Frehn, 27 Pa. Sup. Ct. 184. ^Hale V. Dressen, 76 Minn. 183, 78 N. W. 1045. Examine Davis Sewing Machine Co. v. Buckles, 89 111. 237. =° Stanford v. Coram, 26 Mont. 285, 67 Pac. 1005. =« Carson v. Reed, 137 Cal. 253. 70 Pac. 89. ^•Loeff V. Taussig, 102 111. App. 398; American Iron & Steel Mfg. Co. V. Beal, 101 Md. 423, 61 Atl. 629; Bank v. Hunt (R. I.), 13 Atl. 115, 5 N. Eng. 777. When not so released, see Leon- 833 DISCHARGE OF GUARANTOR. [§■ 681 prosecute the principal with due diligence.^^ gut it is decided that the neglect to enforce a security, or the want of diligence in collecting the note, will not affect the liability of a guarantor where the guar- anty is an absolute one.^^ And it is held that it is obligatory upon a guarantor to ascertain whether payment of the instrument has been made und that his liability thereon arises immediately upon the default of the debtor ;3* nevertheless, it is also determined that he is entitled to notice of the maker's default within a reasonable time, otherwise he will be entitled to a discharge to the extent of his con- sequent or resulting damage.^^ If the payment of the note is dependent hardt v. Citizens' Bank, 56 Neb. 38, 76 N. W. 452; Bank of Buffalo v. Danziger, 65 N. Y. Supp. 981, 53 App. Div. 517; Providence Mach. Co. V. Browning, 70 S. C. 148, 49 S. E. 325. '= Getty V. Schantz, 101 Wis. 229, 77 N. W. 191. Examine the following cases: United States. — Getty v. Schantz, 100 Fed. 577, 40 C. C. A. 560. Georgia. — Nance v. Winship Ma- chine Co., 94 Ga. 649, 21 S. B. 901. Iowa. — Durand v. Bowen, 73 Iowa 573, 35 N. W. 644. Minnesota. — D. M. Osborne & Co. V. Gullickson, 64 Minn. 218, 66 N. W. 965. Nebraska. — Rice v. McCague, 61 Neb. 861, 86 N. W. 486. New York. — Chatham National Bank v. Pratt, 135 N. Y. 423, 48 N. Y. St. R. 478, 32 N. E. 236, rev'g 16 N. Y. Supp. 216, 40 N. Y. St. R. 789; Jackson v. Decker, 43 N. Y. Supp. 957, 14 App. Div. 415. North Dakota. — Roberts, Thorp & Co. V. Laughlin, 4 N. D. 167, 59 N. W. 967. South Carolina. — Carroll County Savings' Bank v. Strother, 28 S. C. 504, 6 S. E. 313. South Dakota. — Hanna v. Stroud, 13 S. Dak. 352, 83 N. W. 365. Texas. — Burrow v. Zapp, 69 Tex. 474, 6 S. W. 783. Joyce Defenses — 53. =' Warder-Bushnell & Co. v. John- son, 114 Mo. App. 571, 90 S. W. 392. Compare Fegley v. Jennings, 44 Fla. 203, 32 So. 873. " M. V. Monarch Co. v. First Na- tional Bank, 20 Ky. L. Rep. 1223, 49 S. W.-32, 16 Bkg. L. J. 151. See also Hoyt v. Quint, 105 Iowa 443, 75 N. W. 342. Compare German Savings Bank v. Drake (Iowa), 79 N. W. 121. =^Lemmert v. Guthrie Bros., 69 Neb. 499, 9E N. W. 1046. See Chap. XXIII herein. But examine the following cases: District of Columbia. — Hughes v. Heyman, 4 App. D. C. 444, 22 Wash. L. Rep. 737. Florida.— Ferst v. Blackwell, 39 Fla. 621, 22 So. 892. Georgia.— Rogers v. Burr, 97 Ga. 10, 25 S. E. 329. Illinois. — Taussig v. Reid, 145 III. 488, 32 N. E. 918. loiva. — Hoyt v. Quint, 105 Iowa 443, 75 N. W. 342; Davey v. Waughtal, 99 Iowa 654, 68 N. W. 904. Kansas. — Bonebrake v. King, 49 Kan. 296, 31 Pac. 1006. Kentucky.— Y&ger v. Kentucky Title Co., 23 Ky. L. Rep. 2240, 66 S. W. 1027. Maryland. — Heyman v. Dooley, 77 Md. 162, 20 L. R. A. 257, 26 Atl. 117. Massachusetts. — Bishop v. Eaton, 161 Mass. 496, 37 N. E. 665. § 682] DISCHARGE. 834 upon certain conditions, the guarantor of payment is discharged by acts of the maker which preclude the performance of such conditions.^*' So the surrender of one of several guaranteed notes and the taking of other notes therefor will release the guarantor to the amount of the surrendered note.-'*' The taking by the g-uarantee of additional secur- ity does not, it is decided, discharge a guarantor.^^ § 682. Mortgage security. — Where a mortgage is merely a col- lateral security for the debt and a separate obligation, the satisfaction thereof does not operate to discharge the bond where the debt itself is not satisfied, and a mortgage sale does not satisfy the bond although under the mortgage recitals the grant is for better security and in dis- charge of such obligation.^^ If a mortgagee of a negotiable mortgage note assigns it to an innocent party before due, as security for goods sold, he has no right to enter of record a satisfaction of the mortgage, although the note was given without any consideration and such a satisfaction will be vacated in equity and will constitute no defense to an action on the instrument.**' And where the drawer of a bill, before it became due, agreed with the acceptor, that on his giving a certain mortgage securing for the amount, he, the drawer, should deliver up to him the bill as discharged and fully satisfied; and the acceptor, executed the mortgage and received back the bill uncancelled, the drawer was held liable on the bill to the party to whom the acceptor afterward indorsed it for value before it became due, and a plea, in such an action, that the bill was paid by the acceptor before it became due, and afterward reissued by him, can be supported by proof only of actual payment in cash, and not by proof of an agreement between Michigan. — Roberts v. Hawkins, Sullivan v. Field, 118 N. C. 358, 24 70 Mich. 566, 38 N. W. 575, 14 West. S. E. 735; Myer v. Reedy, 115 N. C. Rep. 867. 538, 20 S. E. 521. Minnesota. — Fall v. Youmans, 67 Oregon. — Weiler v. Henarie, 15 Minn. 83, 69 N, W. 697. Oreg. 28, 13 Fac. 614. Nebraska. — Harvey v. First Na- ^'' Bagley v. Cohen (Cal.), 50 tional Bank, 56 Neb. 320, 76 N. W. Pac. 4. 870. =' First National Bank v. Bradley, New Yo?-fc.— Central Bank v. Kim- 61 Kan. 615, 60 Pac. 322. ball, 76 N. Y. Supp. 227, 73 App. '-^ Presbyterian Board of Publica- Div. 100; Glens Falls Insurance Co. tion & S. S. Work v. Gilliford Ind.), V. Temple, 51 N. Y. Supp. 948, 29 38 N. E. 404. App. Div. 577. '' Strieker v. McDonnell, 213 Pa. North Carolina.— A n d r e w s v. 108, 62 Atl. 520. Pope, 126 N. C. 472, 35 S. E. 817; ^"Gordon v. Mulhare, 13 Wis. 22. 835 MORTGAGE SECURITY. [§ 682 the drawer and acceptor wliercby the bill was to be deemed satisfied.*^ Again, where a mortgage is given as collateral security to be void upon the payment of certain bills of exchange there is no merger of the claim upon such bills/- especially so where the right to sue upon the note is expressly reserved.*^ And the giving of a mortg'age by one of two sureties on a note does not of itself discharge another sujety.** So where the indorsee sues the maker of a promissory note, a plea is bad which sets up a mortgage as payment of the note where the very terms of the mortgage show that it was taken as collateral security and not in satisfaction or as a merger of the notes.*^ And where notes were surrendered to their maker upon his executing a mortgage to secure the same indebtedness but there was no agreement that the mortgage was to be a satisfaction of the debt, or that the surrender of the original notes was to discharge the original obliga- tion to pay them, the original obligation was held not to be dis- charged nor the debt paid by the renewal of the obligation, and the surrender of the original notes, but in such case there was only an evidence of the extension of the time of payment, and not an abso- lute payment, in the absence of an agreement to the contrary.*" Again, where a note of a third party is taken from the debtor, and indorsed by the latter as security for a part of the debt, but the creditor after- ward takes a mortgage from the debtor for the entire sum due, fixing a longer time for payment than that evidenced by the note, such act extinguishes the remedy against the debtor as indorser of the note, where the mortgage does not refer to the note as being a security for the same debt.*'^ And where notes are overdue, if a mortgage is given and received as security for the total amount thereof, it is held that the remedy on the notes is extinguished by the merger of the lesser security in the higher.** So indorsers may be discharged from lia- bility on notes, even though not so intended by the plaintiff, by the latter's act in taking from the makers of the paper a mortgage on per- sonal property containing a power of sale in case of default in pay- " Morley v. Culverwell, 7 Mees. & ■'^Murray v. Miller, 1 Upp. Can. W. 174. Q. B. 353. "Gore Bank v. Eaton, 27 Upp. '"' Hance v. Holiman, 69 Ark. 57, Can. Q. B. 332; Gore Bank v. 60 S. W. 730. M'Whirter, 18 Upp. Can. C. P. 293. '' Mathewson v. Brouse, 1 U. C. Q. '= Commercial Bank v. Cuvillier, B. 272. 18 Upp. Can. Q. B. 378. ^' Fraser v. Armstrong, 10 U. C. C. '^Kerr v. Hereford, 17 Upp. Can. P. 506. Q. B. 158. § 682] WSCHAEGE. 836 ment of the notes.'*'' But where a mortgage includes property of the maker's wife and a foreclosure and sale is had thereof against the wife's protest, and the property did not belong to the mortgagor, such apparent payment is of no importance and docs not constitute a real payment so as to preclude recovery of the note against her husband's estate, and it is immaterial that she had not recovered judgment for the conversion at the time the action was brought on the note.'^'' Again, where a bill of exchange was given for a loan and it was agreed that the bill should be surrendered upon the borrowers' executing a mort- gage as security for payment, it was held that upon retention of the mortgage given and suing thereon, all recourse to the bill was lost.^^ And where there is found to be fraudulent misrepresentation as to the mortgage and it is not accepted in lieu of bills and notes, still there can be no suit upon the original cause of action except, at least, a reconveyance is tendered.^ ^ A mortgage executed and delivered by a married woman in payment of her husband's note will discharge the note.^^ And where a note is secured by a vendor's lien on real estate if the vendor takes a new and distinct security for the payment of the purchase money, as in case of taking a mortgage not only on the particular lots but also on others, he waives his lien and dis- charges the notes. ^* Where a series of notes are secured by mortgage and the latter is foreclosed it does not operate as payment except to the value of the property acquired. ^^ A remedy upon a joint and several promissory note is not taken away by reason of a higher security for the same debt, namely a mortgage with covenant to pay the debt, having been given by one of the makers, as the remedy given in such case by the special security, being confined to one of the debtors only is not coextensive with that which the creditor had upon the original paper, it not being proven that such higher security was accepted in place of such note.^® It is decided in a recent case that whether or not the note is secured by mortgage the maker must, in order to satisfy it, ^«Bank of British N. A. v. Jones, ''^ Adams v. Nelson, 22 U. C. Q. B. 8 U. C. Q. B. 86. See Smith v. Clop- 199. ton, 48 Miss. 66; Parker v. McCrea, ^= Caryl v. "Williams, 7 Lans. (N. 7 U. C. C. P. 124; Smith v. Judson, Y.) 416. 4 U. C. Q. B. (O. S.) 134. =* White v. Dougherty, Mart. & Y. ^ Handy v. Tracy, 150 Mass. 524, (Tenn.) 308. 23 N. E. 226. ■*= McKean v. Cook, 73 N. H. 410, " Johnson v. Watt, 15 La. Ann. 62 Atl. 729. 428. =»Ansell v. Baker, 15 Q. B. (Adol. & El. N. S.) 20. 837 AGREEMENTS AND CONDITIONS. [§§ 683, C84 make payment thereof eitlier to the then owner or to his authorized agent.^^ § 683. Sale or surrender of collateral, or satisfaction of debt. — Where a bank which holds stock as collateral security for notes sells the same without the consent of the pledgor, it thereby converts them to its own use and must credit the note secured before the sale with the value of the stock at the time of the conversion.^® And in a suit against the accommodation payee and indorser of a note, it is prima facie a defense, that the plaintiff, at the request of the makers, sold another note made by them, for the purpose of paying, and realized enough from such sale to pay the amount owing upon the note in suit.^^ Again, an agreement between the creditor and his debtor that the former will surrender one or more of the collateral notes pledged to secure the debt in consideration of a present payment thereon constitutes a valid contract. Such an agreement is not with- out consideration, even though the principal debt is due, and it is ''the duty of the debtor to pay it.*^" Payment of the collateral may operate as a payment of or defense to the original note.^^ And the satisfaction of the indebtedness or loan made on a collateral note by the ti'ansfer of property accepted in full satisfaction of money loaned extinguishes the obligation of the note and constitutes a defense to an action on the note by the apparent maker.®^ § 684. Agreements and conditions — Decisions generally. — An ex- ecutory agreement as to the payment of a note, constitutes no bar to a suit upon such paper, and it is necessary to sustain a plea of accord to prove an accord which is not executory only but one which ought to be and has been executed before the commencement of the action.*'^ If the payee's consent to an agreement to release is condi- tional upon the giving of new notes and such condition is never per- formed the release will not be operative.'^'* In case an agreement as to the mode of payment of a note is in the nature of a composition, a "Marling v. Milwaukee Realty ""Post v. Bank, 159 111. 421, 42 N. Co. (Wis. 1906), 106 N. W. 844. E. 976; Babbitt v. Moore, 51 N. J. L. '' Pauly v. Wilson, 57 Fed. 548. 229, 17 Atl. 99. ''" Burrall v. Jones, 20 N. Y. Super. "- Merrill v. Bank, 94 Cal. 59, 29 Ct. (7 Bosw.) 404. Pac. 242. •"* Lincoln Savings Bank & Safe "^ Gushing v. Wyman, 44 Me. 121. Deposit Co. V. Allen, 82 Fed. 148, "Jackson v. Lalicker (Neb.), 99 152, 27 C. C. A. 87. N. W. 32. § G85] DISCHARGE. 838 strict compliance with the conditions thereof is necessary.^^ If a person, at the request of an insolvent debtor, is induced to give to a purchaser of the latter's notes a note in place thereof, he is not dis- charged by an agreement not to j^rove the claim against the in- solvent's estate.®® Again, where a purchase price note is given for projjerty, the transferee of such note is not precluded from recovering from both makers thereof by reason of the sale by one of the makers of his entire interest in the propert}', and an agreement by such vendee to assume the obligation evidenced by the note where neither the transferee nor the payee had notice of such agreement.®^ A secret agreement between a national bank official and a director of such bank will not operate to defeat the latter's liability to the bank re- ceiver upon his purchase price note for shares of the stock of the bank."^ And an agreement between a bank on discounting a note and the payee whereby the fact of its being discounted is concealed from the payee is not of itself such a fraud as to justify its payment to the payee without production and surrender of the paper.®^ If, under an extrinsic agreement, certain conditions are to be performed before payment of a note to a transferee he cannot recover thereon where such conditions remain unperformed.''^ And where a note for insur- ance premiums is given under an agreement that if the policy should not be satisfactory the note would be returned such condition must be fulfilled or recovery on the note is precluded upon the offer to re- turn the policy and a demand made for the note."^ §685. Same subject. — Where it is stipulated in writing made by the payee contemporaneously with the execution of a note that the payment thereof should rest in the maker's discretion and that he would not be sued thereon, such an agreement is obligatory not only upon the payee but also upon his legal representatives, and operates as a release of the maker from all liability.'^^ And a stranger is bound ^ Makepeace v. College, 10 Pick. '" Wilson v. Wright, 116 Mich. 476, (27 Mass.) 298. 5 Det. L. N. 10, 74 N. W. 721. ^ Jennings v. Moore, 189 Mass. ^ Parker v. Bond, 121 Ala. 529, 25 197, 75 N. E. 214. So. 898. See also Bresee v. Cromp- " McCullough v. Pritchett, 120 Ga. ton, 121 N. C. 122, 28 S. E. 351. 585, 48 S. E. 148. Compare Maher v. Moore (Del.), 42 ^Atwater v. Smith, 73 Minn. 507, Atl. 721. 76 N. W. 253. '- Martin v. Monroe, 107 Ga. 330, «»Tuck V. National Bank of Ath- 33 S. E. 62. ens, 108 Ga. 446, 33 S. E. 983. 839 AGREEMENTS AND COXDITIOXS. [§ 685 by an agreement made between the parties to an instrument that it shall be paid and obligation extinguished, and this rule applies not- withstanding the money with which to satisfy the amount of the note is loaned to the maker by such third person." Again where, under an agreement, the acceptor is to be discharged from liability upon delivery before maturity of a warehouse receipt, such delivery consti- tutes a sufficient consideration for the released* In a Washington case it is decided that payment of a promissory note by a joint maker who claimed to have signed as surety onl}-, is not shown where it ap- pears that the surety, after giving notice to the bank of the surety- ship, and requesting suit to be instituted against the original maker, entered into a written agreement with the bank, and with its presi- dent acting as a trustee and not in his official capacity, under the terms of which the surety deposited with the trustee a sum sufficient to pay the note and costs of suit, to be held until final judgment against the principal maker, and the bank agreed to at once institute a suit thereon without making the surety a party defendant, the deposit to be returned in case of payment by the principal maker, and the judgment to be assigned to the surety if not paid ; it being a pre- requisite to the banks receiving the deposit that it should reduce the claim to judgment; and it being specifically stipulated that the transaction should not be considered a payment of the note, but that the deposit shall be held only as security for any judgment that might be obtained.'^^ Although the liability of an indorser becomes fixed by proper notice of dishonor, still it may be modified by an agree- ment giving the indorsee the right to require its redemption with other like notes of the indorser's own notes ; that is, he may elect to have the paper redeemed in that manner instead of insisting upon- payment.'''® A mere promise to accept currency which is rapidly dc- " Stevenson v. Short, 25 La. 967, " Capital National Bank v. Robin- 27 So. 350. son, 41 Wash. 454, 83 Pac. 1021, ^^Burch v. Hubbard, 48 111. 164; Root, J., dissenting. Lord v. Favorite, 29 111. 149. "If '"Strickland v. Lee, 65 Md. 384, the proposition of the makers to 387, 4 Atl. 884. discharge the note after its matur- See further as to agreements and ity with the certificate of deposit conditions affecting discharge satis- which they held on the payees, and faction and release of notes, etc., in before they parted with the note, general the following cases: constituted a satisfaction, the liabil- United States. — Harmon v. Ad- ity of the makers has not been re- ams, 120 U. S. 363, 7 Sup. Ct. 553. vived." A case of a note trans- Alabama. — Carpenter v. Mur- ferred after maturity. phree, 49 Ala. 84. §§■ 686, 687] DISCHARGE. 840 predating is without any consideration and is a mere privilege ac- corded to the debtor.'^^ § 686. Payment by note or check of or by order on third person — Accord and satisfaction. — While an agreement between a creditor and his debtor to accept the payment of less than the full amount due him in satisfaction of an ascertained debt is without consideration and not binding upon the creditor, yet a contract to accept a note of a third person for a greater or less amount than the face of the debt, or to accept any consideration other than current funds in satisfaction of the debt constitutes a valid and enforceable contract. '^^ It is also competent proof of accord and satisfaction and a good defense that a debt has been discharged in consideration of the payment of part of the amount by a third person's check.'^^ But it is held that a plea that the plaintiff accepted an order of the defendant on a third per- son for a certain sum in satisfaction constitutes no bar to an action for the original cause of indebtedness ; nor is a plea good as an accord and satisfaction that the plaintiff agreed to accept the note of a third l^erson which on being tendered to him he refused to accept.®" § 687. By payment of other indebtedness. — It is a good defense pro tanto, in an action upon a note by an assignee of a bankrupt promisee, that the promisor is obligated to pay a bond executed by him to a third person at the promisee's request upon condition that a balance should remain unpaid upon the note which the promisee would not claim if the promisor should be obliged to pay the bond.^^ So a verbal agreement, contemporaneous with the execution of a note, Connecticut. — Barber v. Gordon, Bos. & P. 630; Edwards v. Jones, 2 Root (Conn.) 95. 2 Mees. & W. 414, 7 Car. & P. 633, 5 Illinois.— Hart v. Strong, 183 111. Dowl. 585. 349, 55 N. E. 629. "Lewis v. Davisson, 29 Gratt. ilf awe.— First National Bank v. (Va.) 216, 227. Marshall, 73 Me. 79; Merrill v. Mow- "Lincoln Savings Bank & Safe- ry, 33 Me. 455. Deposit Co. v. Allen, 82 Fed. 148, Massachusetts. — Hanchett v. 151, 27 C. C. A. 87, per Sanborn, Birge, 12 Mete. (Mass.) 545; Nich- C. J. ols v. Holt, 9 Gray (Mass.) 202. "Guild v. Butler, 127 Mass. 386; Nebraska. — Collingwood v. Bank, Brooks v. White, 2 Mete. (43 Mass.) 15 Neb. 118, 17 N. W. 359. 283; Lapham v. Barnes, 2 Vt. 213. Wisconsin. — Jackson County Bank ^ Hawley v. Foote, 19 Wend. (N. V. Parsons, 112 Wis. 265, 87 N. W. Y.) 516. 1083. '^ Ward v. Winship, 12 Mass. 480. England. — Cheetham v. Ward, 1 841 BILL, XOTE OR CHECK. [§ 688 that the note should be satisfied by the payment of certain insurance premiums and orders to be drawn upon the payee, is a good plea in defense.®- But a verbal promise made to the maker of a note by the holder of it to surrender it in payment of an account the maker had against a third person and which the holder of the note was not liable for, will not, unless it is executed, affect the note as a payment. ^^ § 688. By bill, note or check — Substituted note — Renewal note. — It may be a good defense to an action upon commercial paper that the original note or draft has been paid and discharged by a subsequent n6te, as where it has been executed and accepted by the parties for the purpose of satisfaction. The question of the parties' intention in such case is an important factor.'^* If a note is given for a less sum in compromise of the original notes and upon express agreement that if not paid at maturity it might be surrendered to the maker, and thereupon the cause of action on the other notes should revive, the holder, though suing upon all the notes, is limited to a recovery upon the last note.®^ Again, where a note is executed to cover an indebted- ness from the maker to the payee and when the amount of indebted- ness is ascertained and a new note is substituted for the original in accordance wdth the terms of an agreement between the parties, a tender of the new note constitutes a pro tanto defense to an action on the original note by a purchaser after maturity with notice of the agreement.®" And in an action by an indorsee against the acceptor of a bill of exchange if a promissory note is given by the drawer of the bill in full satisfaction and discharge thereof the fact that the note was not paid when due will not enable a suit to be sustained upon the bill.®^ And where a note or bill on time is accepted in payment of the original debt, such acceptance suspends the right of action on the *^ Jones v. Snow, 64 Cal. 456. 23, holding that the acceptance of a ^ Noble V. Edes, 51 Me. 34. negotiable security may be in law ** Belleville Savings Bank v. Born- the satisfaction of a debt of a man, 124 111. 200, 16 N. E. 925. Ex- greater amount. See 8 Cent. Law amine Robertson v. Bank, 41 Mich. Jour. 350. 356, 1 N. W. 1033; Brown v. Kew- «° Murray v. Reed, 17 Wash. 1, 48 ley, 2 Bos. & P. 518; Crisp v. Grif- Pac. 343. fiths, 2 Cromp., M. & R. 159, 3 Dowl. " Sard v. Rhodes, 1 Mees. & W. 752. 153, 1 Tyrwh. & Gr. 298; Kearslake '* Northern Liberty Market Co. v. v. Morgan, 5 Term Rep. 513. See, Kelly, 113 U. S. 199, 5 Sup. Ct. 422; also, Da Costa v. O'Rourke, 12 Brooks v. White, 2 Mete. (43 Mass.) Phila. (Pa.) 223; Crisp v. Griffiths, 283; Sibree v. Tripp, 15 Mees. & W. 2 Cromp. M. & R. 159. § 638] . DISCIIAEGE. 842 original debt until the note or bill becomes due or is dishonored, and this is so even in the absence of an express agreement to that effect; but sureties on the original debt are released unless they assented to the arrangement,*® But in an action by a town, the payee, against the indorsers of a note, who had received the money thereon, it is de- termined that it constitutes no equitable defense thereto that the defendants have given the maker their own individual note as an off- set or protection for the one so discounted, and one of the defendants had paid part of such individual note.*'' But it is held in a New York case that a sufficient consideration exists in case of an agreement of the payee to accept in payment a note signed by only one of the parties to the original note.°° A widow's note for a debt evidenced by a note, however, is based upon no such sufficient consideration as to extin- guish the creditor's claim against an estate, even though he had de- stroyed the original note in reliance upon the substituted note.^^ And the giving of a new note by one of two joint and several makers, in- tended as a provision for a former note, not agreed to be taken in payment and not in fact paid, constitutes no defense to an action upon the original note.®^ So it is held to be a question of intention whether or not a renewal note operates as a payment, as the mere giving ^^ Alabama.-^MoMle Life Ins. Co. Bos. & P. 62; Gould v. Robinson, 8 v. Randall, 71 Ala. 220. East. 576. Michigan. — Smith v. Sheldon, 35 Payments by other notes, see Mich. 42. Sarraille v. Calmon. 142 Cal. 651, Minnesota. — Wheaton v. "Wheeler, 76 Pac. 497. 27 Minn. 464. «" Town of Northborough v. Wood, Neiv Jersey. — Morris Canal & 142 Mass. 551, 8 N. E. 591. Banking Co. v. Van Vorst, 21 N. J. »» Brink v. Stratton, 98 N. Y., Supp. L. 100. 421, 112 App. Div. 299. New York. — Millerd v. Thorn, 56 "^ Grimes v. Grimes, 28 Ky. L. N. Y. 402, 15 Abb. N. S. 371; Hen- Rep. 549, 89 S. W. 548. derson v. Marvin, 31 Barb. (N. Y.) »= Bates v. Rosekrans, 37 N. Y. 297; Myers v. Welles, 5 Hill (N. Y.) 409. This rule is declared to be 463. "well settled." Vermont. — Michigan State Bank Examine Leach v. Funk, 97 Iowa V. Leavenworth, 28 Vt. 209. 576, 66 N. W. 768; Agawam National Virginia. — Callaway v. Price, 32 Bank v. Downing, 169 Mass. 297, 47 Grat. (Va.) 1. N. E. 1016; Haas v. Bank of Com- Washington. — First National merce, 41 Neb. 754, 60 N. W. 85; Bank of Seattle v. Harris, 7 Wash. National Bank of Commerce v. 139, 34 Pac. 466. Guthrie, 11 S. Dak. 517, 78 N. W. England. — English v. Darley, 2 995. 843 BY STOCK OR BONDS. [§ C80 of such a note does not have that effect.''^ Again, where a corporation composed of a former co-partnership gives to the payee its notes in exchange for the partnership notes such substitution of the new notes operates as a payment of the co-partnership notes and precludes a re- covery thereon after the corporation's insolvency."* And where part- ners were lial^le on original bills retained by a creditor who agreed to take upon dissolution the separate notes of one of the partners for the entire amount of the bills, reserving his rights against the other partners, the taking and even the renewal of such notes does not con- stitute a satisfaction of the joint debt."^ In the absence of fraud or collusion payment may also be sufficiently made by the drawee's check on the collecting bank where there are funds to meet it."'^ But giving a worthless check does not constitute payment although the note is surrendered. "^ A check given in payment of a note is, however, held to be only a medium for securing payment and not a payment of itself.^^ Where a check sent for the amount of tbe discount on a note then due is forwarded by the maker with a request for renewal and such extension is not given, but the check is used, it constitutes a part payment to the amount of the check as of the time of its being received by the holder."" If an attorney gives his personal check in payment of a note, and presentment thereof is delayed by request of the attorney, the time when such check is given and the note sur- rendered fixes that of payment.^*"' § 689. By stock or bonds.— Where the payee sues the maker, upon the issue of payment, it may constitute a defense to the suit that by agreement^°^ certain shares of stock were taken in full satisfaction.^"" And where stock is held as collateral security for the payment of a note, its transfer to the pledgee may constitute payment of the note even though it has been transferred to another, where the latter is ^^ First National Bank v. Gridley, °' Hogan v. Kaiser, 113 Mo. App. 93 N. Y. Supp. 445, 112 App. Div. 711, 88 S. W. 1128. 398. See, also, Fuller Buggy Co. v. "' Cooney v. United States "Wringer Waldron, 99 N. Y. Supp. 561, 112 Co., 101 111. App. 468. App. Div. 814. ""Kelly v. Lawrence Bros., 79 N. »» Ellis V. Ballou, 129 Mich. 303, Y. Supp. 914, 78 App. Div. 484. 8 Det. L. N. 966, 88 N. W. 898. "" Upson v. Mt. Morris Bank, 92 "' Bedford v, Deking, 2 Barn. & N. Y. Supp. 1101, 103 App. Div. 367. Aid. 210. "" See §§ 684, 685 herein. ""North Carolina Corp. Commis- "= Brown v. Smith, 122 Mass. 589; sion v. Merchants' & Farmers' Bank, Baker v. Hawkins, 14 R. I. 359; 137 N. C. 697, 50 S, E. 308. Hawkins v. Baker, 14 R. I. 139. § 090] DISCHARGE, Si-i not a bona fide holder and had not acquired the note until a long period after its execution.^**^ Again, although a right to pay in bonds may exist under the terms of a note, yet it may be lost by want of tender at or before maturity so that a money payment is necessary.^"* And an independent oral agreement between the parties to a note that the defendant would sell and the plaintiff would buy a certain number of shares of specified stock at a named price and that the note should be taken as payment jjro tanto of such shares is not a satisfac- tion of the note nor a new contract substituted for the note and en- titling defendant to it, and is no defense to an action on the note nor is it within the principle Avhich allows parties in order to avoid circuity of action to avail themselves by way of defense in certain matters which might be the subject of a suit.^*'^ § 690. By conveyance of land or agreement to take deed. — It may constitute a good defense that land has been conveyed to the payee in satisfaction of the instrument ;^°*' or that a deed of certain lands has been executed to the payee's guardian by the maker after the former's incompetency.^"'^ But a deed made in view of bankruptcy in favor of the principal will not release the surety.^''^ If the vendor in an executory contract for the purchase of lands receives from the vendee a quit-claim deed of the lands, such act operates as a rescission of the contract, and he cannot afterwards maintain an action on notes which were given for the j^urchase price. Thus where the vendor in a land contract had taken notes payable to his own order for the purchase price, which notes he indorsed to a bank and at the same time gave the bank a deed of the lands as security for the payment of the notes, and the bank afterward took from the vendee a quit- claim deed of the lands, without the vendor's knowledge, it was held that such act operated as a rescission of the contract, and that the vendor was thereby discharged from his liability as indorser of the notes, at least to the extent of the value of the land. And an agree- ment between the vendee and the bank, at the time of the delivery ""Carrington v. Turner, 101 Md. ""Stephens v. Stephens, 66 Ark. 437, 61 Atl. 324. Examine Henry 356, 50 S. W. 874; Poor's Exr. v. "Wood's Sons Co. v. Schaefer, 173 Scott, 24 Ky. L. Rep. 239, 68 S. W. Mass. 443, 53 N. E. 881. 397; Jarratt v. Wilson, 70 N. C. 401. "*Reed v. Fleming, 102 111. App. "'Aikens v. Wilson, 7 Idaho 12, 59 668. Pac. 932. ^''^ Hayes v. Allen, 160 Mass. 286, "" Harner v. Batdorf, 35 Ohio St. 35 N. E. 852. 113. 845 BY ASSIGNMENT, TEANSFER OR SURRENDER OF PROPERTY, [§ 691 of the quit-claim deed, made withoxit the knowledge of the vendor, that such deed should not affect the liability of the vendee on his notes, will not prevent its having such an effect upon the rights of the vendor as indorser. To make such an agreement binding upon him he should have been made a party to it.^"^ § 691. By assignment, transfer or surrender of property. — If a discharge of a note is not intended by an assignment, it is held that it will not so operate.^^" And if property is assigned in trust to pay a note after certain other debts have been paid, such transfer con- stitutes no bar to an action by one who has not assented thereto nor claimed the benefit of such assignment and who had not executed the same or received any part of the proceeds ;^^^ nor does such a convey- ance operate as payment, or discharge a surety on the note.^^^ An order, however, for the delivery of personal property accepted in full satisfaction of the note sued on constitutes a good defense.^^^ But although a delivery of goods may constitute payment, yet such trans- fer must be a valid one in order to have that effect; so in case of bankruptcy before surrender of the notes where the sale is declared void the consideration for such surrender has failed. ^^* The per- formance of a contract constitutes a defense to an action on an agree- ment that the maker should sell goods delivered to him by the payee, and that the proceeds from the sale of such goods should be received by the latter in full payment of the note. So where one had in his possession another's goods as a mere cover to defraud creditors and for further protection conveyed them to another, taking his note therefor under an agreement between the parties that such prop- erty should be sold and the avails paid over to the real owner, and that this should operate as a payment of the note, it was held that a per- formance of the contract would constitute a defense to an action on the note by the party who originally held possession of the goods to aid the owner.^^^ Again, an agreement to accept an interest in a claim of the maker against the United States government, entered into prior to the revised statutes, in a certain stipulated proportion in satisfaction and discharge of notes, may operate as an extinguisli- """ Ives v. Bank of Lansingburgh, "- Harner v. Batdorf, 35 Ohio St. 12 Mich. 361. 113. ""Welch V. Kinney, 46 Oreg. 406, "^ Pettigrew v. Dix, 33 Tex. 277. 80 Pac. 648. "* Maxfield v. Jones. 76 Me. 135. "^Rice V. Catlin, 14 Pick. (31 "'^Carpenter v. McClure, 37 Vt. Mass.) 221. 127. 692, 693] DISCHARGE. 846 ment of the debt evidenced by such, notes without an actual transfer or assignment of such interest and acceptance thereof.^ ^^ So a trans- fer of other notes, together with the execution of a deed as security, made upon the purchase of defendant's note and in consideration thereof, operates pro ianto as payment even though it is not found that the property was accepted as a satisfaction.^^^ § 692. Surrender of valid notes for forged notes. — Valid notes of a town are not extinguished by surrendering them and taking other notes which subsequently prove to have been forged by the treasurer. ^^^ § 693. By work, labor or services performed or rendered. — If all the parties agree that a bill for work performed shall be indorsed on a note as part payment, it so operates and should be so applied, as such contract constitutes a good defense.^^*' So a note may be paid by rendering certain services of benefit to the payee, as where the "« Whitney v. Cook, 53 Miss. 551, Campbell, J., said: "The settled doc- trine is that, if the promise or agreement itself, and not its per- formance, is accepted in satisfaction and extinction of the demand, it is good as an accord and satisfaction without performance. If "Whitney- had a claim against the United States, and Cook agreed to accept an interest in this claim in certain stipulated proportion, in satisfac- tion and discharge of the notes sued on, and Whitney agreed that Cook should have in satisfaction of the notes the stipulated interest in the claim against the United States, there is no rule of law which pre- vents the notes from being thereby discharged and extinguished as a cause of action against Whitney. Cook had a right to accept an in- terest in the claim of Whitney against the United States in pay- ment of the notes, and, if he did this, cannot now maintain an action on them. If, however, the contem- plation of the parties was that per- formance of the contract for an in- terest in the claim should be a dis- charge of the notes, the mere agree- ment did not constitute an accord and satisfaction, but performance is necessary to complete it. Hevin v. Carron, 11 S. & M. 361; Pulliam v. Taylor, 50 Miss. 251; 2 Parsons on Contracts 681; Comyns's Dig., tit. Accord (B) 4; 1 Smith's Lead. Cas. (7th Am. Ed.) 595 et seq.; 2 Chitty on Contracts (11th Am. Ed.) 1122; 2 Story on Contracts, § 1354; 1 Addison on Contracts, § 378; Bab- cock V. Hawkins, 23 Vt. 561; Good- rich V. Stanley, 24 Conn. 613; Hall V. Smith, 15 Iowa 584. It was not necessary that there should have been any formal or written assign- ment by Whitney to Cook of an in- terest in tue claim. A distinct con- tract between the parties that the notes were paid by the right to share in the claim is all that was required." Id. 559, 560. "'Kerr v. Topping, 109 Iowa 150, 80 N. W. 321. "'Bass V. Inhabitants of Welles- ley (Mass. 1906), 78 N. E. 543. "=• Jennings v. Davis, 31 Conn. 134. 847 TENDER OF PAYMENT. [§ 694 payor is to obtain an assignment to himself of certain liens upon lands and hold them for the payors benefit, as in such case there is an accord and satisfaction,^-*' A non-negotiable note may also be paid by services rendered. ^^i jf ^^ agreement that a note may be paid by board furnished is fully executed, it constitutes payment.^" But an agreement to give credit on a note for the value of work per- formed, although enforceable as a contract, does not operate as pay- ment so far as to bind an estate, when such agreement is made by the administratrix, as it is either purely personal or without consider- ation.^2^ Again^ if a claim for services, board and. lodging, at re- quest, is relied upon as a counter-claim, such a request must, it is held, be proven.^^* § 694. Tender of payment. — A valid tender of payment made by a prior party discharges one secondarily liable.^-^ And, as we have stated elsewhere, where a note is payable at a particular place, an ability and readiness with funds to make payment there at maturity of the note is equivalent to a tender of payment. ^^"^ If a tender of the amount of a note then due is made by a guarantor to the holder, but it is not accepted, and the guarantor relies upon the promise of the holder, made at the time of the refusal, to resort to the maker and not to the guarantor, and in consequence thereof does not pursue his remedies, the extent of his damage thereby sustained admeasures the extent to which he is discharged. ^^^ But an unaccepted legal tender of an installment on a non-negotiable note will not defeat the maker's obligation on a note conditioned for return of the note if such in- stallment should be paid.^-** Again, where there exists an agreement to accept a deed for land in full settlement of all claims upon a note a performance of the agreement should be averred or there should be a tender of a deed in compliance therewith, and an allega- tion of readiness and willingness to perform without tender is in- '=» Treadwell v. Himmelmann, 50 Supp. 858, 49 Misc. 500; Negot. Cal. 9. Inst. Law N. Y., § 201 (4), Appen- "^Lowrey v. Danforth, 95 Mo. dix herein. App. 441, 69 S. W. 39. '=" See § 502 herein. See also un- "-Whittaker v. Ordway, 69 N. H. der Negot. Inst. Law N. Y., § 130. 182, 38 Atl. 789. '=' McAllister v. Pitts, 58 Neb. 424, ^-' Cook V. Cook, 24 S. C. 204. 78 N. W. 711. "*01pherts v. Kelly, 61 N. Y. '=** Wallace v. Randol (Cal.), 54 Supp. 1107, 30 Misc. 824. Pac. 842. ^ State Bank v. Kahn, 98 N. Y. § 695] DISCHAEGE. 848 sufficient in a law action where performance is the essence of the contract, and such allegation is not a defense. So in an action on a promissory note, the execution of which is admitted, where as a defense an accord and satisfaction is attempted to be pleaded, the plea is bad when the performance necessary to constitute the satisfac- tion is not alleged, and it appears upon the face of the plea that performance, and not the agreement to perform, was to be received in satisfaction.^^* § 695. Indorsements of payments — Receipts — Cancellation. — In- dorsements of payments may be shown to be erroneous. ^^*^ And in- dorsements of payments on a mortgage note do not necessarily estab- lish payment of such note;^^^ although if the payee of a past-due mortgage note indorses thereon the receipt of a note for the amount of the balance then due such indorsement is evidence of the discharge of the original note.^^^ So payment of interest may be evidenced by an indorsement of the receipt thereof on a note.^^^ Again, if there is no surrender or delivery of a note to the maker no discharge or release results from merely writing the word paid across the face of the instrument.^^* And receipts from the payee do not establish payment of a note indorsed to another where it does not appear that the money receipted for was sent as payments.^^^ If the maker makes a partial payment and obtains the note in order to compute the balance due and cancels the note upon a claim of services ren- dered equivalent to such balance, the note still exists as a binding ob- ligation of the unpaid portion of the debt and evidences the same.^^'^ Again, where an action is brought to obtain the possession of certain premises and notes for the rent thereof are surrendered to the lessee, and all matters in controversy are settled in the action, the lessor cannot confer any right of action upon an indorsee by a subsequent indorsement of the note,^^^ If the cancellation is made and renewal ^Perdew v. Tillma, 62 Neb. 865, "*Wittman v. Pickens, 33 Colo. 88 N. W. 123. 484, 81 Pac. 299. See McLemore v. ^^^ Grooms v. Lieurance, 98 111. Hawkins, 46 Miss. 715. App. 394. ^^ Silverstri v. Savieriano, 95 N. "1 McCaffrey v. Burkhardt, 97 Y. Supp. 580. Minn. 1, 105 N. W. 971. '" Liesmer v. Berg (Mich.), 2 Det. "= Cunningham v. Davis, 175 L. N. 266, 63 N. W. 999. Mass. 213. 56 N. E. 2. "' Campbell v. Nixon, 25 Ind. App. "= Iberia Cypress Co. v. Cristen, 90, 56 N. E. 248. 112 La. 451, 36 So. 491. 849 PAYMENT— BY WHOM. [§§' 696, 697 notes are given, but the signatures are forged, such forgery is a ground for setting aside the cancellation where the party making it has exer- cised proper diligence.^ ^® § 696. Whether a purchase or payment. — If the cashier of the collecting bank, who is not liable on the paper, pays it after it matures, it operates as a purchase, if so intended by him and is not a payment. ^^'^ But where a stranger to a note with the intention of purchasing it goes to a bank holding it, and a person there, who is not an officer of the bank stamps it as paid, and it is so taken away by the purchaser apd there is nothing to show that the bank intended a sale, it will be held to be a payment and not a sale so that a surety thereon will be released.^*" And if a check of a director and stock- holder in a corporation is given for the amount of a corporation note to a holder of such note, by the corporation's secretary and treasurer, and such creditor surrenders the note and also certain corporate funds of greater value than the face of the note, such check constitutes a payment even though the secretary was acting without the creditor's knowledge, as an agent for the purchase of the note, and there can be no recovery back of the sum so paid by the drawer of the check.^*^ § 697. Payment — By whom. — As stated in a prior section the negotiable instruments law provides for the discharge of negotiable instruments by payment by or on behalf of the principal debtor or the party accommodated.^*- It is held that if a note is paid by the "'Humboldt State Bank v. Ross- England. — Cooke v. Darwin, 18 ing, 95 Iowa 1, 63 N. W. 351. Beav. 60. As to cancellation and surrender "" Sturgis v. Baker, 43 Oreg. 236, of notes generally, see also the fol- 72 Pac. 744. lowing cases: When a purchase and not a pay- California. — Steinhart v. Bank, 94 ment, see further: Marshall v. Mey- Cal. 362, 29 Pac. 717. ers, 96 Mo. App. 643, 70 S. W. 927. Maine. — Maine Mutual Marine "» Riddle v. Russell, 117 Iowa 533, Ins. Co. V. Pickering, 66 Me. 130. 91 N. W. 810. Minnesota. — Stewart v. Hidden, "^Henderson v. Shafer, 110 La. 13 Minn. (Gil. 29) 43. Ann. 481, 34 So. 644. New Jersey. — Silvers v. Reynolds, "When a payment and not a pur- 17 N. J. L. 275. chase, see further: Robertson v. New Yorfc.— Larking v. Harden- Case, 8 Ohio S. & C. P. Dec. 386, 7 brook, 90 N. Y. 333; Garlock v. Ohio N. P. 127. Geortner, 7 Wend. (N. Y.) 198. ^^ See § 678 herein. Pennsylvania. — In re Campbell's Estate, 7 Pa. St. 100. Joyce Defenses — 54. G98] DISCIIAKGE. 850 indorse! and payee and it is subsequently paid by a party liable thereon and transferred to a person who loaned money for such last payment and it is assigned, the payee is not liable thereon to such assignee. ^*^ If a drawee, acting under a mistake as to funds in his hands pays a draft he is concluded thereby.^** Again, it is decided that a bill may be satisfied, at least by way of conditional payment, by a stranger, and if the condition to defeat it has not happened then there is an. absolute payment. ^*^ So under an Ohio decision the note may be extinguished by payment by a third person ;^*^ and a case in New Mexico determines that, in the absence of an agreement to purchase, a stranger may extinguish the note by paying the holder the money due thereon.^*'' But it is held that although a person pays a note for the maker's benefit he cannot sue thereon.^*^ § 698. Same subject — To whom. — The maker assumes the risk of payment of a note before its maturity to an agent of the payee where such agent has neither authority to collect nor possession of the paper.^*^ But if an agent is fully authorized to receive payment it may be made to him even though the note is not in his possession. ^^^ And a mortgage debt is satisfied by payment to an authorized agent.^^^ But a mere authority to collect interest, vested in one without pos- session of mortgage notes, does not empower him to receive payments on the principal.^^- And although a person has possession of interest coupons, with authority to collect the interest, he is not authorized to collect the principal. ^^^ Under a Missouri decision a note and 1" Rich V. Goldman, 90 N. Y. Supp. 364. Payment by indorser after suit brougtit: Mechanics' Bank v. Has- ard, 13 Johns. (N. Y.) 353; Concord Granite Co. v. French, 65 How. Prac. (N. Y.) 317. "* Bank of Indian Territory v. First National Bank, 109 Mo. App. 665, 83 S. W. 537. "•'Belshaw v. Bush, 11 C. B. (0. S.) 191, 207, 22 L. J. C. P. 24. See Kemp v. Balls, 10 Exch. 607; Grymes v. Blofield, Cro. Eliz. 541. ^^^ Robertson v. Case, 8 Ohio S. & C. P. Dec. 386, 7 Ohio N. P. 127. "^Lee V. Field, 9 N. M. 435, 54 Pac. 873. "« Riddle v. Russell, 108 Iowa 591, 79 N. W. 363. "'Walsh V. Peterson, 59 Neb. 645, 81 N. W. 853. See Englert v. White, 92 Iowa 97, 60 N. W. 224. ^^" Union Stock Yards National Bank v. Haskell (Neb.), 90 N. W. 233. ^^'Boyd V. Page (Neb.), 90 N. W. 646. ^^- Thompson v. Buehler (Neb.), 95 N. W. 854. "^Connecticut Trust Co. v. Trum- bo (Neb.), 90 N. W. 216. Burden of proof of authority to collect; payment to one not in pos- session of instrument, see: Thomp- 851 PAYMENT — TO WHOM. [§ G98 interest coupons attached, the coupons providing for payment of an attorney's fee in case of collection by suits, and the principal note authorizing judgment, not only for the amount thereof and the coupons, but for any taxes which the maker may not pay when due, are non-negotiable, so that under Revised Statutes 1889, § 8161, the maker is protected in making payments to the payee after assignment of which he had no notice. Again, the payee of a note with interest coupons attached, which assigned them with a guaranty of payment, is not made the agent of the assignee to collect the same by the slip attached thereto providing that "payment hereof, when made by this company (the payee), being made as guarantor only, it is desired that any bank or individual through whose hands these papers may pass * * * will refrain from placing on * * * (them) the word 'paid' * * * which might interfere with the collection by the company.""* But an assignee in possession of a note is not bound by a payment to the payee even though he is given authority to collect the interest coupons, ^^^ If a maker has notice that a note is lost, and without requiring evidence of title pays the same to one in possession, who makes presentment without authority to collect, he still remains liable thereon.^^'^ And it may be generally stated that a person should by universal custom have possession of the note or be vested with authorty to collect it.^^'^ If co-trustees are payees and one of them permits the other to have possession of a note and he collects the note the maker is released although the proceeds are mis- appropriated,^^^ Again, a payment to a bank in possession of a note is a payment to the payee where the latter has deposited it with a bank for collection and it had been sent to the bank where it was paid,^^^ But, the maker is not discharged by paying a note at a par- ticular bank at which it is payable where the latter has neither pos- son V. Buehler (Neb.), 95 N. W. ham v. McDonald, 98 Tex. 316, 83 S. 854. W. 372, rev'g 80 S. W. 871. When the evidence shows no au- ^^'' Page Woven Wire Fence Co. v. thority to collect by one not in pos- Pool, 133 Mich. 323, 10 Det. L. N. session, see: Lay v. Honey (Neb.), 208, 94 N. W. 1053. 89 N. W. 998. ^" Stockton v. Fortune, 82 111. App. '"Syllabus in Pace v. Gilbert 272, aff'd Fortune v. Stockton, 182 School (Mo. App. 1906), 93 S. W. 111. 454, 55 N. E. 367, 1124. ^■'^Barroll v. Foreman, 88 Md. 188, '■■=> Loizeaux v. Frender, 123 Wis. 40 Atl. 883. 129, 101 N, W. 423. See Cunning- ''"Porter v. Roseman, 165 Ind. 255, 74 N. E. 1005. §■ 699] DISCHARGE. 853 session thereof nor authority to collect it/"" So payments of a series of notes as they mature to a private banker not in possession thereof, though such notes are payable there, does not release the maker.^*'^ And where notes of a bank's customers are used by it as security to obtain loans from another bank, payment to the former does not bind the latter, there being no agency, even though when such notes were so paid the bank by its customers it was accustomed to send such moneys to the lender, which surrendered the notes paid to the bor- rower.^*'^ But either the payee or his authorized agent is entitled to receive payment even though it is indorsed to a bank for collection.^®^ § 699. Same subject. — Although a note was, prior to the negotia- ble instruments law, extinguished by payment by one who became a co-maker and joint promisor by indorsing a note prior to its de- livery, still he was entitled to recover against a joint promisor who was liable upon the paper, as between the two.^*** And payments made to the first assignees after the second transfer of a note does not release the maker where such assignee is not clothed with authority to receive such payments and has not possession of the note, and this applies even though the person who receives such payments is a trustee under a trust deed to secure the paper.^*'^ If the holder of a note requests that payment be made to a third person by the maker and it is so made it operates as a payment for which credit should be given by the administratrix of the holders' estate.^®® And in case a note is given to a married woman in consideration of the convey- ance of land and it is indorsed and deposited as collateral to secure a renewal of another note made by her, the proceeds being deposited with the pledgee bank to her credit, the maker may in good faith pay the collateral note to the pledgee and not lose his right to have the land conveyed as per his contract with the wife even though the pro- ceeds of the first note obtained by discounting the same were used to ""State National Bank v. J. J. Pool, 133 Mich. 323, 10 Det. L. N. Hyatt & Co., 75 Ark. 170, 86 S. W. 208, 94 N. W. 1053. 1002. ^^Quimby v. Varnum, 190 Mass. ^"Chapman v. Wagner (Neb.), 96 211, 76 N. E. 671. N. W. 412. "= Maguire v. Donovan, 108 Mo. ^"^ State National Bank v. J. J. App. 511, 84 S. W. 156. Hyatt & Co., 75 Ark. 170, 86 S. W. '*^ Baker, In re, 76 N. Y. Supp. 61, 1002. 72 App. Div. 211, aff'd, 172 N. Y. "'Page Woven Wire Fence Co. v. 617, 64 N. E. 1118. 853 PAYMENT — TO WHOM. [§ 699 discharge the husband's indebtedness.^®^ Payment is held to be suf- ficient when made to the payee in possession although he had indorsed it to another who had not indorsed it.^*^® So negotiable paper indorsed in blank by the payee is satisfied by payment to one in possession when made in good faith without notice of facts impeaching his title.^^^ So where the original payee of a note and the holder's assignor is authorized to collect it, money received by such agent constitutes payment even though not accounted for by him to his principal.^''" A debt may be discharged by payments to the original payee by the maker even though the former is not in possession thereof and the instrument is not surrendered or delivered to the maker. Thus, where the actual holder who became the transferee of a mortgage note be- fore maturity, consents to an extension of the debt at maturity and retains the benefits arising therefrom and holds the agreements be- tween the payor and the payee under which it is made, but the maker has never been notified of such transfer the doctrine of estoppel applies and precludes such transferee from disputing the validity or legality of the payments.^^^ And if the circumstances show that the holder authorized the payee to act as his agent in collecting a note and it is collected, recovery against the maker by the holder is precluded. ^^^ So a payment at the place of payment may be made without production of the note to the payee when justified by the entire course of dealings for years as to the collection of interest, permitting such payee to assert ownership, and failure to give no- tice of the facts as to the payee's actual authority or want of authority to act as agent for the holder.^'^ Payments by the maker to the payee of non-negotiable paper also operate as a discharge when such note has been transferrd without notice to the former.^"* But payment to payee when he is not the holder or in possession of the paper will not operate as a release even though such payee promises to obtain surrender of the note.^^^ And if the maker has knowledge as "Uohnston v. Gulledge, 115 Ga. '■= Doe v. Callow, 10 Kan. 581, 63 981, 42 S. E. 354. Pac. 603, aff'd 64 Kan. 886, 67 Pac. '"'Higley v. Dennis (Tex. Civ. 824. App.), 88 S. W. 400. ''-Fowle v. Outcalt, 64 Kan. 352, ""' Drinkall v. Morris State Bank 67 Pac. 880. (N. Dak.), 88 N. W. 724. ^"* Swan v. Craig (Neb.), 102 N. ^"Stuart v. Stonebraker, 63 Neb. W. 471. 554, 88 N. W. 653. '■' Hunt v. Bessey, 96 Me. 429, 52 "^Swan V. Craig (Neb.), 102 N. Atl. 905. W. 471. § 700] DISCHARGE. 854 to the actual ownership of a renewal note a payment by him to the original payee without title, possession or authority to receive such payment does not effect a release.^'''*' Again, payment to the original payee or intermediate party is no defense against a bona fide holder.^''^^ § 700. Renunciation by holder. — The holder may expressly re- nounce his rights against any party to the instrument, before, or after its maturity. An absolute and unconditional renunciation of '""Grimm v. Grimm, 65 N. Y. Supp. 1134. aff'd, 169 N. Y. 421, 62 N. E. 569. Payment by maker of note and mortgage to payee where former has not notice of transfer, see: Gar- nett V. Myers, 91 N. Y. Supp. 400, rev'd 94 N. Y. Supp. 803. "'Prim V. Hammel, 134 Ala. 652, 32 So. 1006; Jurden v. Ming, 98 Mo. App. 205, 71 S. W. 1075. See also the following cases: Alabama. — Capital City Ins. Co. V. Quinn, 73 Ala. 558; Barbour v. Washington Fire & Marine Ins. Co., 60 Ala. 433. Delaware. — Sudler v. Collins, 2 Houst. (Del.) 538. Florida. — Trustees of Internal Improvement Fund v. Lewis, 34 Fla. 424, 16 So. 325. Georgia. — Bank of University v. Tuck, 96 Ga. 456, 23 S. E. 467; Wil- cox V. Aultman, 64 Ga. 544, 34 Am. Rep. 92. Illinois. — Hunter v. Clarke (111.), 56 N. E. 297; Mobley v. Ryan, 4 Peck (111.) 51, 16 Am. Dec. 488; Avery v. Swords, 28 111. App. 202; McClelland v. Bartlett, 13 Bradw. (111. App.) 236. Iowa. — City Bank v. Taylor, 60 Iowa 66, 14 N. W. 128; Lathrop v. Donaldson, 22 Iowa 234; Wilkinson V. Sargent, 9 Iowa 521; Commis- sioners Jefferson County v. Fox, 1 Morris (Iowa) 48. Louisiana. — Flower v. Noble, 38 La. Ann. 938; Doll v. Rizotti, 20 La. Ann. 263, 96 Am. Dec. 399. Massachusetts. — Biggerstaff v. Mar- ston, 161 Mass. 101, 36 N. E. 785. Michigan. — Williams v. Keyes, 90 Mich. 290, 51 N. W. 520. Mississippi. — Coffman v. Bank of Kentucky, 41 Miss. 212, 90 Am. Dec. 371. Missouri. — Goodfellow v. Stiwell, 73 Mo. 17; Grant v. Kidwell, 30 Mo. 455; Holland v. Smit, 11 Mo. App. 6. Nebraska. — Yenney v. Central City Bank, 44 Neb. 402, 62 N. W. 872. New Hampshire. — Dow v. Rowell, 12 N. H. 49. New York. — Harpending v. Gray, 76 Hun (N. Y.) 351, 27 N. Y. Supp. 762; Smith v. Van Loan, 16 Wend. (N. Y.) 659; Mitchell v. Bristol, 10 Wend. (N. Y.) 492; Prior v. Ja- cocks, 1 Johns. Cas. (N. Y.) 169. North Carolina. — First Nat. Bank of Salisbury v. Michael, 96 N. C. 53. 1 S. E. 855. Ohio. — C happen v. Phillips, Wright (Ohio) 372. Pennsylvania. — Hocksher v. Shoe- maker, 47 Pa. St. 249. Tennessee. — Gosling v. Griffin. 85 Tenn. 737. 3 S. W. 642. England. — Glasscock v. Balls. 24 Q. B. Div. 13. Compare Murray v. Gibson, 2 La. Ann. 311; Sharps v. Eccles, 5 T. B. Mon. (Ky.) 69. 855 RIGHT OF PARTY WHO DISCHARGES INSTRUMENT. [§§ 701, 702 his rights against the principal debtor made at or after the maturity of the instrument, discharges the instrument. But a renunciation does not affect the rights of a holder in due course without notice. A renunciation must be in writing, unless the instrument is delivered up to the person primarily liable thereon."^ Under this statute it is held in New York that no valid renunciation is effected by a writing found amoung the deceased payee's papers signed by him and reading as follows: "The enclosed note I wish to be cancelled in case of my death, and if the law does not allow it, I wish you to notify my heirs that it is my wish and orders."^ ^^ In a recent case in Washington the word "renunciation" under the negotiable instruments act of that state is equivalent to the term "release" and parol evidence is inad- missible to show a release of a surety where the statute permits the holder to renounce his rights "against any party" to the instrument only "in writing."^ •'**^ § 701. Right of party who discharges instniment. — Where the instrument is paid by a party secondarily liable thereon, it is not dis- charged; but the party so paying it is remitted to his former rights as regards all prior parties, and he may strike out his own and all subsequent indorsements, and again negotiate the instrument, ex- cept: (1) Where it is payable to the order of a third person, and has been paid by the drawer; and (3) Where it was made or accepted for accommodation, and has been paid by the party accommodated."^ § 702. Discharge — Miscellaneous decisions. — Payment may be valid though not made in money.^**^ ^ pjg^^ jg ^^^i^ ^^^^ ^^ ^^ action on 178 ■ 'Negot. Inst. Law., § 203, Ap- Massachusetts.— Quiinhy v. Var- pendix herein. num. 190 Mass. 211, 76 N. E. 671. "^Leash v. Dew, 184 N. Y. 599, 77 New Jersey/.— Lawson v. Dunn N. E. 190. (N. J. Eq.), 49 Atl. 1087. ""Baldwin v. Daly, 41 Wash. 416, New Yorfc.— Twelfth Ward Bank 83Pac. 724; Laws 1899, p. 361, § 122. v. Brooks, 71 N. Y. Supp. 388, 63 "'Negot. Inst. Law, § 202, Appen- App. Div. 220. dix herein. Rhode Island.— Chairman v. Nian- As to rights of parties, see the tic National Bank (R. I.), 57 Atl. following cases: 934. California. — Bradley v. Bush, 1 Washington. — Carr v. Jones Cal. App. 516. 82 Pac. 560; Crystal (Wash.), 69 Pac. 646. V. Hutton, 1 Cal. App. 251, 81 Pac. "=Root v. Kelley, 80 N. Y. Supp. m^- 482, 39 Misc. 530. See, also, preced- Geor£;ia.— Woods v. Colony Bank, ing sections in this chapter. 114 Ga. 683, 40 S. E. 720. When bank draft not paid by pass- § 702] DISCHARGE. 856 a joint note that after it fell due the maker covenanted with the plaintiff to pay him a certain sum of money, even though not alleged to have been accepted in satisfaction and the sum secured was less than the note.^®^ But the indorser of a note may be liable for the debt although there is evidence that dividends out of assets of one of the insolvent makers have been paid to the plaintiff.^** A holder may by his own acts in precluding the indorser's remedy against the maker also deprive himself of the right to enforce the note against such in- dorser even though he has reserved such right at the time of trans- ing credits, see: Bernard v. Mercer, 54 Kan. 630, 39 Pac. 182. When payment or release not established, see sections throughout this chapter and also the following cases: Arkansas. — Carpenter v. Rosen- baum, 73 Ark. 259, 82 S. W. 1047. Kentucky. — Ewing v. Ewing, 26 Ky. L. Rep. 580, 82 S. W. 292; Ford- ville Banking Co. v. Thompson, 26 Ky. L. Rep. 534, 82 S. W. 251. Maine. — P\irber v. Fogler, 97 Me. 585, 55 Atl. 514. Missouri. — Slewing v. Tacke, 112 Mo. App. 414, 86 S. W. 1103. Virgi?iia. — Burnham v. James, 100 Va. 493. 42 S. E. 292. Wisconsin. — Milwaukee Trust Co. v. Warren, 112 Wis. 505, 87 N. W. 801. See, also, as to payment or release not being established, Garthwaite v. Bank of Tulare, 134 Cal. 237, 66 Pac. 326; Power v. Hambrick, 25 Ky. L. Rep. 30, 74 S. W. 660; Bar- ber V. Boyd, 24 Ky. L. Rep. 1389, 71 S. W. 528; Lewis v. North, 62 Neb. 552, 87 N. W. 312; Ashburn v. Evans (Tex. Civ. App.), 72 S. W. 242. Examine, also, as to payment or release not being established, Ox- ford State Bank v. Holscher, 115 Iowa 196, 88 N. W. 360; Golden v. Vyse, 115 Iowa 726, 87 N. W. 691; Shove V. Martine, 85 Minn, 29, 88 N. W. 254; Van Buren County Sav- ings Bank v. Mills, 99 Mo. App. 65, 72 S. W. 497. ^"McLeod V. McKay, 20 U. C. Q. B. 258. ^** Lyndon Savings Bank v. Inter- national Co., 78 Vt. 169, 75 N. E. 214. ^^ Spies v. National City Bank, 174 N. Y. 222, 66 N. E. 736, 61 L. R. A. 193, aff'g 74 N. Y. Supp. 64, 68 App. Div. 70. APPENDIX, 857 NEGOTIABLE INSTRUMENTS LAW. THIS LAW EXISTS IN" THE FOLLOWING STATES AND TERRITORIES. ARIZONA.— Rev. Stat. 1901, pp. 852-879 (title 49 of Civil Code, §§ 3304- 3491), took effect September 1, 1901, amended and corrected. Chap. 23, Laws 1905, pp. 24-27. COLORADO.— L,siws 1897, pp. 210-248, Chap. 64; 3 Mills Annot. Stat. (Rev. Supp. 1891-1905), pp. 103-134. As to holidays see Laws 1903, p. 245; 3 Mills Annot. Stat. (Rev. Supp. 1891-1905), p. 601. CONNECTICUT.— Genh Stat. Rev. 1902, pp. 1028-1052 (Act 1897). DISTRICT OF COLUMBIA.— Code (Garges, as amended to March 3, 1905, pp. 275-297), §§ 1304-1493. FLORIDA.— Genl. Stat. 1906, pp. 1147-1181 (Act 1897, Holidays, p. 1182). /DAffO.— Session Laws 1903, pp. 380-410. 70 WA.— Code Supp. Annot. 1902, pp. 352-394. Chap. 3-A, §§ 3060ai- 3060al98. Laws 1902, Chap. 130, pp. 81-99; Laws 1906, Chap. 149, p. 108. EANSAS.-Dassless Gen. Stat. 1905, pp. 967-990, Chap. 70, §§ 4533- 4732. In effect June 8, 1905. KENTUCKY.— Acts 1904, pp. 213-252, Chap. 102. LOUISIANA.— Acts 1904, pp. 147-174, Act No. 64. MARYLAND.— Code Pub. Gen. Laws, pp. 125-157, Art. XIII (Laws 1898, Chap. 119). MASSACHUSETTS.-Rev. Laws 1902, pp. 628-653, Chap. 73 (Laws 1898, Chap. 533). MICHIGAN.— Puh. Acts 1905, pp. 389-413, No. 265. MISSOURI.— L,aws 1905, pp. 243-265, Laws 1907, p. 366. MONTANA.— haws 1903, pp. 237-273, Chap. 121. NEBRASKA.— L,aws 1905, pp. 389-435, Chap. 83. NEW JERSEY.— I.avfs 1902, pp. 583-616, Chap. 184. NEW MEXICO.— L,aws 1907, pp. 161-191, Chap. 83. NEW YORK.— Cnmming & Gilbert's Gen. Laws & Stat., pp. 2534-2586 (Laws 1897, Chap. 712). NORTH CAROLINA.— Revisal of 1905, pp. 655-688, Chap. 54, §§ 2151- 2346 (Laws 1899, Chap. 733, §§ 1-197); Pub. Laws 1907, p. 1288, Chap. 897, amending § 2234 of Revisal. NORTH DAKOTA.— l.aws 1899, pp. 154-180, Chap. 113; Rev. Codes 1899, pp. 1039-1060, Chap. 100 (Chap. 88, Rev. Codes 1899, repealed. Laws 1905, 859 § 1] NEGOTIABLE INSTRUilENTS LAW. 8G0 p. 246, Chap. 138, "Provided, that all actions that are now pending under the provisions of said chapter shall in no manner be affected by this re- peal"). Oif/0.— Bates' Annot. Stat. (5th Ed., 1787-1906), pp. 1800a-1807, §§ 3171- 3178g. OREGON.— Behnger & Cotton's Annot. Codes & Stat., pp. 1440-1469, §§ 4403-4594 (Laws 1899, p. 18). PENNSYLVANIA.— L.aws 1901, No. 162, pp. 194-220. RHODE ISLAND.—Acts & Resolutions 1899, pp. 83-117, Chap. 674. TENNESSEE.— Acts 1899, pp. 139-172, Chap. 94, Shannon's Supp. Code (1897-1903), pp. 571-606. VTAH.—L,a.ws 1899, pp. 122-148, Chap. 83. YIRGINIA.-FoUsiTds' Annot. Code, 1904, pp. 1455-1490, Chap. 133A, § 2841a (Acts 1898, Chap. 866, pp. 896-918). WASHINGTON.— BsLlUngerB Code Supp. (1899-1903), § 3650, pp. 413- 438 (Laws 1899, pp. 340-373). WEST TIRGINIA.—Acts 1907, pp. 378-410, Chap. 81 (in effect January 1, 1908). WISCONSIN.— l.awa 1899, pp. 681-748, Chap. 356, §§ 1675-1684-6 (§§ 1681-9, p. 44, Chap. 41; §§ 1684-6-2, p. 524, Chap. 361; Amended Laws 1901, § 1675-24, p. 381, Chap. 262, added Laws 1905). WYOMING.— Tuaws 1905, pp. 39-64, Chap. 43. NEGOTIABLE INSTRUMENTS LAW OF NEW YORK. (Laws of New York, 1897, Chapter 612.) ARTICLE I. General provisions. (§§ 1-7.) IL Form and interpretation of negotiable instruments. (§§ 20-42.) in. Consideration. (§§ 50-55.) IV. Negotiation. (§§ 60-80.) V. Rights of holder. (§§90-98.) VI. Liabilities of parties. (§§ 110-119.) VII. Presentment for payment. (§§ 130-148.) VIII. Notice of dishonor. (§§160-189.) IX. Discharge of negotiable instruments. (§§ 200-206.) X. Bills of exchange; form and interpretation. (§§ 210-215.) XI. Acceptance. (§§ 220-230.) XII. Presentment for acceptance. (§§ 240-248.) XIII. Protest. (§§ 260-268.) XIV. Acceptance for honor. (§§ 280-290.) XV. Payment for honor. (§§300-306.) XVI. Bills in a set. (§§ 310-315.) XVII. Promissory notes and checks. (§§ 320-325.) tion. (§§ 330-332.) XIX. Laws repealed, when to take effect. (§§ 340-341.) 861 SHORT TITLE —DEFIXITIOX AXD MEAXIXG OF TERMS. [§§ 1-3 AETICLE L GENERAL PROVISIONS. SEC. SEC. 1. Short title. 5. Time, how computed; when last 2. Definitions and meaning of terms. day falls on holiday. 3. Persons primarily liable on in- 6. Application of chapter. strument. 7. Rule of law merchant; when 4. Reasonable time, what consti- governs. tutes. § 1. Short title. — This act shall be known as the negotiable instru- ments law. § 2. Definitions and meaning of terms. — In this act, unless the con- text otherwise requires : "Acceptance" means an acceptance completed by delivery or notifi- cation. "Action" includes counter-claim and set-off. "Bank" includes any person or association of persons carrying on the business of banking, whether incorporated or not. "Bearer" means the person in possession of a bill or note which is payable to bearer. "Bill" means bill of exchange, and "note" means negotiable promis- sory note. "Delivery" means transfer of possession, actual or constructive, from one person to another. "Holder" means the payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof. "Indorsement" means an indorsement completed by delivery. "Instrument" means negotiable instrument. "Issue" means the first delivery of the instrument, complete in form to a person who takes it as a holder. "Person" includes a body of persons, whether incorporated or not. "Value" means valuable consideration. "Written" includes printed, and "writing" includes print. §3. Person primarily liable on instrument. — The person "pri- marily" liable on an instrument is the person who by the terms of the instrument, is absolutely required to pay the same. All other parties are "secondarily" liable. §§ 4-20] FORM AND INTERPRETATION. 862 § 4. Reasonable time, what constitutes. — In determining what is a "reasonable time" or an "unreasonable time" regard is to be had to the nature of the instrument, the usage of trade or business (if any) with respect to such instruments, and the facts of the particular case. § 5. Time, how computed ; when last day falls on holiday. — Where the day, or the last day, for doing any act herein required or permitted to be done falls on Sunday or on a holiday, the act may be done on the next succeeding secular or business day. § 6. Application of chapter. — The provisions of this act do not ap- ply to negotiable instruments made and delivered prior to the passage hereof. § 7. Law merchant ; when governs. — In any case not provided for in this act the rules of the law merchant shall govern. AETICLE II. rORM AND INTERPRETATION. SEC. SEC, 20. Form of negotiable instrument. 34. Incomplete instrument not de- 21. Certainty as to sum; what con- livered. stitutes. 35. Delivery; when effectual; when 22. When promise is unconditional. presumed. 23. Determinable future time; what 36. Construction where instrument constitutes. is ambiguous. 24. Additional provisions not affect- 37. Liability of persons signing in ing negotiability. trade or assumed name. 25. Omissions; Seal; Particular 38. Signature by agent; authority; money. how shown. 26. When payable on demand. 39. Liability of person signing as 27. When payable to order. agent, et cetera. 28. When payable to bearer. 40. Signature by procuration; effect 29. Terms when sufficient. of. 30. Date, presumption as to. 41. Effect of indorsement by infant 31. Ante-dated and post-dated. or corporation. 32. When date may be inserted. 42. Forged signature; effect of. 33. Blanks, when may be filled. § 20. Form of negotiable instrument. — An instrument to be nego- tiable must conform to the f ollo-\ving requirements : 1. It must be in writing and signed by the maker or drawer. 863 CERTAINTY AS TO SUM — PROMISE UNCONSTITUTIONAL. [§§ 21-24 2. Must contain an unconditional promise or order to pay a sum certain in money ; 3. Must be payable on demand, or at a fixed or determinable future time; 4. Must be payable to order or to bearer ; and 5. Where the instrument is addressed to a drawee, he must be named or otherwise indicated therein with reasonable certainty. § 21. Certainty as to sum ; what constitutes. — The sum payable is a sum certain within the meaning of tliis act, although it is to be paid : 1. With interest ; or 2. By stated instalments ; or 3. By stated instalments, with a provision that upon default in payment of any instalment or of interest, the whole shall become due ; or 4. With exchange, whether at a fixed rate or at the current rate ; or 5. With costs of collection or an attorney's fee, in case payment shall not be made at maturity. § 22. When promise is unconditional. — An unqualified order or promise to pay is unconditional within the meaning of this act, though coupled with : 1. An indication of a particular fund out of which reimbursement is to be made, or a particular account to be debited with the amount ; or 2. A statement of the transaction which gives rise to the instru- ment. But an order or promises to pay out of a particular fund is not unconditional. § 23. Determinable future time ; what constitutes. — An instrument is payable at a determinable future time, within the meaning of this act, which is expressed to be payable : 1. At a fixed period after date or sight; or 2. On or before a fixed or determinable future time specified there- in; or 3. On or at a fixed period after the occurrence of a specified event, which is certain to happen, though the time of happening be uncertain. An instrument payable upon a contingency is not negotiable, and the happening of the event does not cure the defect. § 24. Additional provisions not affecting negotiability. — An in- strument which contains an order or promise to do any act in addition §§ 25-27] FOEM AND INTERPRETATION. 8G-i to the payment of money is not negotiable. But the negotiable char- acter of an instrument otherwise negotiable is not affected by a pro- vision which: 1. Authorizes the sale of collateral securities in case the instmment be not paid at maturity ; or 2. Authorizes a confession of judgment if the instrument be not paid at maturity ; or 3. Waives the benefit of any law intended for the advantage or pro- tection of the obligor ; or 4. Gives the holder an election to require something to be done in lieu of payment of money. But nothing in this section shall validate any provision or stipula- tion otherwise illegal. § 25. Omissions ; seal ; particular money. — The validity and nego- tiable character of an instrument are not affected by the fact that : 1. It is not dated ; or 2. Does not specify the value given, or that any value has been given therefor; or 3. Does not specify the place where it is drawn or the place where it is payable ; or 4. Bears a seal ; or 5. Designates a particular kind of current money in which payment is to be made. But nothing in this section shall alter or repeal any statute requir- ing in certain cases the nature of the consideration to be stated in the instrument. § 26. When payable on demand. — An instrument is payable on de- mand: 1. Where it is expressed to be payable on demand, or at sight, or on presentation ; or 2. In which no time for payment is expressed. •Where an instrument is issued, accepted or indorsed when overdue, it is, as regards the person so issuing, accepting or indorsing it, pay- able on demand. § 27. When payable to order. — The instrument is payable to order where it is drawn payable to the order of a specified person or to him or his order. It may be drawn payable to the order of: 1. A payee who is not maker, drawer or drawee; or 865 WHEX PAYABLE TO BEARER. [§§ 38-32 2. The drawer or maker ; or 3. The drawee ; or 4. Two or more payees jointly ; or 5. One or some of several payees ; or 6. The holder of an office for the time being. Where the instrument is payable to order the payee must be named or otherwise indicated therein with reasonable certainty. § 28. When payable to bearer. — The instrument is payable to bearer : 1. When it is expressed to be so payable ; or 2. When it is payable to a person named therein or bearer ; or 3. When it is payable to the order of a fictitious or non-existing per- son, and such fact was known to the person making it so payable ; or 4. When the name of the payee does not purport to be the name of any person ; or .5. When the only or last indorsement is an indorsement in blank. § 29. Terms, when sufficient. — The instrument need not follow the language of this act, but any terms are sufficient which clearly indi- cate an intention to conform to the requirements hereof. § 30. Date, presumption as to. — Where the instrument or an ac- ceptance or an}^ indorsement thereon is dated, such date is deemed prima facie to be the true date of the making, drawing, acceptance or indorsement as the case may be. § 31. Ante-dated and post-dated. — The instrument is not invalid for the reason only that it is ante-dated or post-dated, provided this is not done for an illegal or fraudulent purpose. The person to whom an instrument so dated is delivered acquires the title thereto as of the date of delivery. § 32. When date may be inserted. — Where an instrument ex- pressed to be payable at a fixed period after date is issued undated, or where the acceptance of an instrument payable at a fixed period after siglit is undated, any holder may insert therein the true date of issue or acceptance, and the instrument shall l)e payal^le accordingly. The insertion of a wrong date does not avoid the instrument in the hands of a subsequent holder in due course ; but as to him, the date so in- serted is to be regarded as the true date. Joyce Defexses — 55. §§ 33-36] roRii axd interpret ation. 866 § 33. Blanks ; when may be filled. — When the instrument is want- ing in any material particular, the person in possession thereof has a prima facie authority to complete it by filling up the blanks therein. And a signature on a blank paper delivered by the person making the signature in order that the paper may be converted into a negotiable instrument operates as a prima facie authority to fill it up as such for any amount. In order, however, that any such instrument, when com- pleted, may be enforced against any person who became a party thereto prior to its completion, it must be filled up strictly in accordance with the authority given and within a reasonable time. But if any such in- strument, after completion, is negotiated to a holder in due course, it is valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up strictly in accordance with the authority given and within a reasonable time. § 34. Incomplete instrument not delivered. — Where an incomplete instrument has not been delivered it will not, if completed and nego- tiated, -u^thout authority, ,be a valid contract in the hands of any holder, as against any person whose signature was placed thereon be- fore delivery. § 35. Delivery ; when effectual ; when presumed. — Every contract on a negotiable instrument is incomplete and revocable until delivery of the instrument for the purpose of giving effect thereto. As between immediate parties, and as regards a remote party other than a holder in due course, the delivery, in order to be effectual, must be made either by or under the authority of the party making, drawing, accept- ing or indorsing, as the case may be; and in such case the delivery may be shown to have been conditional, or for a special purpose only, and not for the purpose of transferring the property in the instrument. But where the instrument is in the hands of a holder in due course, a valid delivery thereof by all parties prior to him so as to make them liable to him is conclusively presumed. And where the instrument is no longer in the possession of a party whose signature appears thereon, a valid and intentional delivery by him is presumed until the contrary is proved. § 36. Construction where instrument is ambiguous. — Where the language of the instrument is ambiguous, or there are omissions there- in, the following rules of construction apply : 1. WTiere the sum payable is expressed in words and also in figures I I 867 SIGXATURE BY AGEXT. [§§ 37-40 and there is a discrepancy between the two, the sum donated by the words is the sum jDayable; but if the words are ambiguous or uncer- tain, references may be had to the figures to fix the amount ; 2. Where the instrument provides for the payment of interest, with- out specifying the date from which interest is to run, the interest runs from the date of the instrument, and if the instrument is undated, from the issue thereof; 3. Where the instrument is not dated, it will be considered to be dated as of the time it was issued ; 4. Where there is a conflict between the written and printed pro- visions of the instrument, the written provisions prevail ; . 5. Where the instrument is so ambiguous that there is a doubt whether it is a bill or note, the holder may treat it as either at his elec- tion; 6. Where a signature is so placed upon the instrument that it is not clear in what capacity the person making the same intended to sign, he is to be deemed an indorser. 7. Where an instrument containing the, words "I promise to pay" is signed by two or more persons, they are deemed to be jointly and severally liable thereon, § 37. Liability of person signing in trade or assumed name. — No person is liable on the instrument whose signature does not appear thereon, except as herein otherwise expressly provided. But one who signs in a trade or assumed name will be liable to tlie same extent as if he had signed in his own name. § 38. Signature by agent; authority; how shown. — The signature of any party may be made by a duly authorized agent. No particular form of appointment is necessary for this purpose; and the authority of the agent may be established as in other cases of agency. §39. Liability of person signing as agent, etc. — Where the in- strument contains or a person adds to his signature words indicating that he signs for or on behalf of a principal, or in a representative capacity, he is not liable on the instrument if he was duly authorized ; but the mere addition of words describing him as an agent, or as fill- ing a representative character, without disclosing his principal, docs not exempt him from personal liability. § 40. Signature by procuration; effect of. — A signature by "proc- uration" operates as notice that the agent has but a limited authority §§ 41-53] CONSIDERATION OF NEGOTIABLE INSTRUMENTS. 868 to sign, and the principal is bound only in case the agent in so sign- ing acted within the actual limits of his authority.. § 41. Effect of indorsement by infant or corporation. — The in- dorsement or assignment of the instrument by a corporation or by an infant passes the property therein, notwithstanding that from want of capacity the corporation or infant may incur no liability thereon. § 42. Forged signature ; effect of. — Where a signature is forged or made without authority of the person whose signature it purports to be, it is wholly inoperative, and no right to retain the instrument, or to give a discharge therefor, or to enforce payment thereof against any party thereto, can be acquired through or under such signature, unless the party, against whom it is sought to enforce such right, is precluded from setting up the forgery or want of authority. ARTICLE III. CONSIDERATION OF NEGOTIABLE INSTRUMENTS. SEC. SEC. 50. Presumption of consideration. 53. When lien on instrument consti- 51. What constitutes consideration. tutes holder for value. 52. What constitutes holder for 54. Effect of want of consideration. value. 55. Liability of accommodation party. § 50. Presumption of consideration. — Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration ; and every person whose signature appears thereon to have become a party thereto for value. § 51. Consideration, what constitutes. — Value is any consideration sufficient to support a simple contract. An antecedent or pre-existing debt constitutes value ; and is deemed such whether the instrument is payable on demand or at a future time. § 52. What constitutes holder for value. — "Wliere value has at any time been given for the instrument, the holder is deemed a holder for value in respect to all parties who became such prior to that time. i 8G9 EFFECT OF ^YAXT OF COXSIDERATIOX. [§§ Oo-GO § 53. When lien on instrument constitutes holder for value. — Where the holder has a lien on the instrument, arising either from contract or by implication of law, he is deemed a holder for value to the extent of his lien. §' 54. Effect of want of consideration. — Absence or failure of con- sideration is matter of defense as against any person not a holder in due course ; and partial failure of consideration is a defense pro tanto, whether the failure is an ascertained and liquidated amount or other- wise. § 55. Liability of accommodation party. — An accommodation party is one who has signed the instrument as maker, drawer, acceptor or in- dorser, without receiving value therefor, and for the purpose of lend- ing his name to some other person. Such a person is liable on the in- strument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party. ARTICLE IV. NEGOTIATION. SEC. SEC. 60. What constitutes negotiation. 72. Effect of instrument drawn or 61. Indorsement; how made. indorsed to a person as cash- 62. Indorsement must be of entire ier. instrument. 73. Indorsement where name is mis- 63. Kinds of indorsement. spelled, et cetera. 64. Special indorsement; indorse- 74. Indorsement in representative ment in blank. capacity. 65. Blank indorsement; how 75. Time of indorsement; presump- changed to special indorse- tion. ment. 76. Place of indorsement; presump- 66. When indorsement restrictive. tion. 67. Effect of restrictive indorse- 77. Continuation of negotiable char- ment; rights of indorsee. acter. 68. Qualified indorsement. 78. Striking out indorsement. 69. Conditional indorsement. 79. Transfer without indorsement; 70. Indorsement of instrument pay- effect of. able to bearer. 80. When prior party may negotiate 71. Indorsement where payable to instrument. two or more persons. § 60. What constitutes negotiation. — An instrument is negotiated when it is transferred from one person to another in such manner as §§ 61-66] NEGOTIATION. 870 to constitute the transferee the holder thereof. If payable to bearer it is negotiated by delivery ; if payable to order it is negotiated by the indorsement of the holder completed by delivery. § 61. Indorsement; how made. — The indorsement must be written on the instrument itself or upon a paper attached thereto. The signa- ture of the indorser, vt^ithout additional words, is a sufficient indorse- ment. § 62. Indorsement must be of entire instrument. — The indorse- ment must be an indorsement of the entire instrument. An indorse- ment, which purports to transfer to the indorsee a part only of the amount payable, or which purports to transfer the instrument to two or more indorsees severally, does not operate as a negotiation of the in- strument. But where the instrument has been paid in part, it may be indorsed as to the residue. § 63. Kinds of indorsement. — An indorsement may be either spe- cial or in blank ; and it m^qy also be either restrictive or qualified, or conditional. § 64. Special indorsement; indorsement in blank. — A special in- dorsement specifies the person to whom, or to whose order the instru- ment is to be payable ; and the indorsement of such indorsee is neces- sary to the further negotiation of the instrument. An indorsement in blank specifies no indorsee, and an instrument so indorsed is payable to bearer, and may be negotiated by delivery. § 65. Blank indorsement ; how changed to special indorsement. — The holder may convert a blank indorsement into a special indorsement by writing over the signature of the indorser in blank any contract consistent with the character of the indorsement. § 66. When indorsement restrictive. — An indorsement is restrict- ive, which either: 1. Prohibits the further negotiation of the instrument; or 2. Constitutes the indorsee the agent of the indorser-; or 3. Vests the title in the indorsee in trust for or to the use of some other person. But the mere absence of words implying power to negotiate does not make an indorsement restrictive. 1 8'M QUALIFIED INDORSEMENT. [§§' 67-73 § 67. Effect of restrictive indorsement ; rights of indorsee. — A re- strictive indorsement confers upon the indorsee the right : 1. To receive payment of the instrument; 2. To bring any action thereon that the indorser could brin^ ; 3. To transfer his rights as such indorsee, where the form of the indorsement authorizes him to do so. But all subsequent indorsees acquire only the title of the first in- dorsee under the restrictive indorsement. § 68. Qualified indorsement.— A qualified indorsement constitutes the indorser a mere assignor of the title to the instrument. It may be made by adding to the indorser's signature the words "without re- course" or any words of similar import. Such an indorsement does not impair the negotiable character of the instrument. §■69. Conditional indorsement.— Where an indorsement is condi- tional, a party required to pay the instrument may disregard the con- : dition, and make payment to the indorsee or his transferee, whether the condition has been fulfilled or not. But any person to whom an instru- ment so indorsed is negotiated, will hold the same, or the proceeds thereof, subject to the rights of the person indorsing conditionally. § 70. Indorsement of instrument payable to bearer. — Where an in- strument, payable to bearer, is indorsed specially, it may nevertheless be further negotiated by delivery ; but the person indorsing specially is liable as indorser to only such holders as make title through his in- dorsement. § 71. Indorsement where payable to two or more persons, — Where an instrument is payable to the order of two or more payees or in- dorsees who are not partners, all must indorse, unless the one indors- ing has authority to indorse for the others. § 72. Effect of instrument drawn or indorsed to a person as cash- ier. — Where an instrument is dra^ni or indorsed to a person as "casli- ier" or other fiscal officer of a bank or corporation, it is deemed prima facie to be payable to the bank or corporation of wliich he is sueli officer; and may be negotiated l)y either the indorsement of the bank or corporation, or the indorsement of the officer. §§ 73-80] NEGOTIATION-, 873 § 73. Indorsement where name is misspelled, et cetera. — Where the name of a payee or indorsee is wrongly designated or misspelled, he may indorse the instrument as therein described, adding, if he think fit, his proper signature. § 74. Indorsement in representative capacity. — Where any person is under obligation to indorse in a representative capacity, he may in- dorsee in such terms as to negative personal liability. § 75. Time of indorsement ; presumption. — Except where an in- dorsement bears date after the maturity of the instrument, every ne- gotiation is deemed prima facie to have been effected before the in- strument was overdue. § 76. Place of indorsement ; presumption. — Except where the con- trary appears every indorsement is presumed prima facie to have been made at the place where the instrument is dated. § 77. Continuation of negotiable character. — An instrument ne- gotiable in its origin continues to be negotiable until it has been re- strictively indorsed or discharged by payment or otherwise. § 78. Striking out indorsement. — The holder may at any time strike out any indorsement which is not necessary to his title. The in- dorser whose indorsement is struck out, and all indorsers subsequent to him, are thereby relieved from liability on the instrument. § 79. Transfer without indorsement ; effect of. — Where the holder of an instrument payable to his order transfers it for value without in- dorsing it, the transfer vests in the transferee such title as the trans- ferer had therein, and the transferee acquires, in addition, the right to have the indorsement of the transferer. But for the purpose of de- termining whether the transferee is a holder in due course, the nego- tiation takes effect as of the time when the indorsement is actually made. § 80. When prior party may negotiate instrument. — Where an in- strument is negotiated back to a prior party, such party may, subject to the provisions of this act, reissue and further negotiate the same. But he is not entitled to enforce payment thereof against any inter- vening party to whom he was personally liable. I I 873 EIGHT OF HOLDER TO SUE. [§§ 90-94 AETICLE V. RIGHTS OF HOLDER. SEC. SEC. 90. Right of holder to sue; payment. 95. What constitutes notice of de- 91. What constitutes a holder in due feet. course. 96. Rights of holder in due course. 92. When person not deemed holder 97. When subject to original de- in due course. fenses. 93. Notice before full amount paid. 98. Who deemed holder in due 94. When title defective. course. § 90. Right of holder to sue; payment. — The holder of a negotia- ble instr-ument may sue thereon in his own name ; and payment to him in due course discharges the instrument. § 91. What constitutes a holder in due course. — A holder in due course is a holder who has taken the instrument under the following conditions : 1. That it is complete and regular upon its face; 2. That he became the holder of it before it was overdue, and with- out notice that it had been previously dishonored, if such was the fact ; 3. That he took it in good faith and for value ; 4. That at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person ne- gotiating it. § 92. When person not deemed holder in due course. — Where an instrument payable on demand is negotiated an unreasonable length of time after its issue, the holder is not deemed a holder in due course. § 93. Notice before full amount paid. — Where the transferee re- ceives notice of any infirmity in the instrument or defect in the title of the person negotiating the same before he lias paid the full amount agreed to be paid therefor, he will be deemed a holder in due course only to the extent of the amount theretofore paid by him. § 94. When title defective. — The title of a person who negotiates an instrument is defective within the meaning of this act when he ob- tained the instrument, or any signature thereto, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration. §§ 95-98] LIABILITIES OF PARTIES. 874 or when he negotiates it in breach of faith, or under such circum- stances as amount to a fraud. §'95. What constitutes notice of defect. — To constitute notice of an infirmity in the instrument or defect in the title of the person ne- gotiating the same, the person to whom it is negotiated must have had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith. § 96. Rights of holder in due course. — A holder in due course holds the instrument free from any defect of title of prior parties and free from defenses available to prior parties among themselves, and may enforce payment of the instrument for the full amount thereof against all parties liable thereon. § 97. When subject to original defenses. — In the hands of any holder other than a holder in due course, a negotiable instrument is subject to the same defenses as if it were non-negotiable. But a holder who derives his title through a holder in due course, and who is not himself a party to any fraud or illegality affecting the instrument, has all the rights of such former holder in respect of all parties prior to the latter. § 98. Who deemed holder in due course. — Every holder is deemed prima facie to be a holder in due course; but when it is shown that the title of any person who has negotiated the instrument "jvas defect- ive, the burden is on the holder to prove that he or some person under whom he claims acquired the title as holder in due course. But the last-mentioned rule does not apply in favor of a party who became bound on the instrument prior to the acquisition of such defective title. ARTICLE VI. LIABILITIES OF PARTIES. SEC. SEC. 110. Liability of maker. 116. Liaility of general indorsers. 111. Liability of drawer. 117. Liability of indorser where pa- 112. Liability of acceptor. per negotiable by delivery. 113. "When person deemed indorser. 118. Order in which indorsers are 114. Liability of irregular indorser. liable. 115. "Warranty; where negotiation 119. Liability of agent or broker. by delivery, et cetera. ^ 875 LIABILITY OF IRREGULAR INDORSER. [§§ 110-115 §■ 110. Liability of maker. — The maker of a negotiable instrument by making it engages that he will pay it according to its tenor ; and admits the existence of the payee and his then capacity to indorse. § 111. Liability of drawer. — The drawer by drawing the instru- ment admits the existence of the payee and his then capacity to in- dorse; and engages that on due presentment the instrument will be accepted and paid, or both, according to its tenor, and that if it be dis- honored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent in- dorser who may be compelled to pay it. But the drawer may insert in the instrument an express stipulation negativing or limiting his own liability to the holder. § 112. Liability of acceptor. — The acceptor by accepting the in- strument engages that he will pay it according to the tenor of his ac- ceptance ; and admits : , 1, The existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the instrument ; and 2. The existence of the payee and his then capacity to indorse. § 113. When person deemed indorser. — A person placing his sig- nature upon an instrument otherwise than as maker, drawer or ac- ceptor is deemed to be an indorser, unless he clearly indicates by ap- propriate words his intention to be bound in some other capacity. § 114. Liability of irregular indorser. — Wliere a person, not other- wise a party to an instrument, places thereon his signature in blank before delivery, he is liable as indorser in accordance with the follow- ing rules t 1. If the instrument is payable to the order of a tliird person, he is liable to the payee and to all subsequent parties. 2. If the instrument is payable to the order of the maker or drawer, or is payable to bearer, he is liable to all parties subsequent to the maker or drawer. 3. If he signs for the accommodation of the payee he is liable to all parties subsequent to the payee. § 115. Warranty where negotiation by delivery, et cetera. — Every person negotiating an instrument by delivery or by a qualified indorse- ment, warrants : g§ 116-119] LIABILITIES OF PARTIES. 876 1. That the instrument is genuine and in all respects what it pur- ports to be; 3. That he has a good title to it; 3. That all prior parties had capacity to contract; 4. That he has no knowledge of any fact which would impair the validity of the instrument or render it valueless. But when the negotiation is by delivery only, the warranty extends in favor of no holder other than the immediate transferee. The pro- visions of subdivision three of this section do not apply to persons ne- gotiating public or corporate securities, other than bills and notes. • § 116. Liability of general indorser. — Every indorser who indorses without qualification, warrants to all subsequent holders in due course : 1. The matter and things mentioned in subdivisions one, two and three of the next preceding section ; and, 2. That the instrument is at the time of his indorsement valid and subsisting. And, in addition, he engages that on due presentment, it shall be accepted or paid, or both, as the case may be, according to its tenor, and that if it be dishonored, and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it. § 117. Liability of indorser where paper negotiable by delivery. — Where a person places his indorsement on an instrument negotiable by delivery he incurs all the liabilities of an indorser. § 118. Order in which indorsers are liable. — As respects one an- other, indorsers are liable prima facie in the order in which they in- dorse ; but evidence is admissible to show that as between or among themselves they have agreed otherwise. Joint payees or joint indorsees who indorse are deemed to indorse jointly and severally. § 119. Liability of agent or broker. — Where a broker or other agent negotiates an instrument without indorsement, he incurs all the liabilities prescribed by section one hundred and fifteen of this act, unless he discloses the name of his principal, and the fact that he is acting only as agent. \ 877 WANT OF DEMAND ON PRINCIPAL DEBTORS. [§§ 130-132 AETICLE VII. PRESENTMENT FOR PAYMENT. SEC. SEC. 130. Effect of want of demand on 140. When presentment not required principal debtor. to charge the indorser. 131. Presentment where instrument 141. When delay in making present- is not payable on demand. ment is excused. 132. What constitutes a sufficient 142. When presentment may be dis- presentment. pensed with. 133. Place of presentment. 143. When instrument dishonored 134. Instrument must be exhibited. by non-payment. 135. Presentment where instrument 144. Liability of person secondarily payable at bank. liable, when instrument dis- 136. Presentment where principal honored. debtor is dead. 145. Time of maturity. 137. Presentment to persons liable 146. Time; how computed. as partners. 147. Rule where instrument payable 138. Presentment to joint debtors. at bank. 139. When presentment not required 148. What constitutes payment in to charge the drawer. due course. § 130. Effect of want of demand on principal debtor. — Present- ment for paj^ment is not necessary in order to charge the person pri- marily liable on the instrument ; but if the instrument is, by its terms, payable at a special place, and he is able and willing to pay it there at maturity and has funds there available for that purpose such abil- ity and willingness are equivalent to a tender of payment upon his part. But except as herein otherwise provided, presentment for payment is necessary in order to charge the drawer and indorsers. § 131. Presentment where instrument is not payable on demand. — Where the instrument is not payable on demand, presentment must be made on the day it falls due. Where it is payable on demand, present- ment must be made within a reasonable time after its issue, except that in a case of a bill of exchange, presentment for payment will be sufficient if made within a reasonable time after the last negotiation thereof. §' 132. What constitutes a sufficient presentment. — Presentment for payment, to l)c sufficient, must be made : 1. By the holder, or by some person authorized to receive payment on his behalf ; §§ 133-137] PRESEXTilEXT FOR PAYMENT. 878 2. At a reasonable hour on a business day ; 3. At a proper place as herein defined; 4. To a person primarily liable on the instrument, or if he is absent or inaccessible, to any person found at the place where the presentment is made. § 133. Place of presentment. — Presentment for payment is made at the proper place : 1. Where a place of payment is specified in the instrument and it is there presented ; 2. Where no place of payment is specified, but the address of the person to make payment is given in the instrument and it is there presented ; 3. Where no place of payment is specified and no address is given and the instrument is presented at the usual place of business or resi- dence of the person to make payment ; 4. In any other case if presented to the person to make payment wherever he can be found, or if presented at his last-known place of business or residence. § 134. Instrument must be exhibited. — The instrument must be exhibited to the person from whom payment is demanded, and when it is paid must be delivered up to the party paying it. § 135. Presentment where instrument payable at bank. — Wliere the instrument is payable at a bank, presentment for j^ayment must be made during banking hours, unless the person to make payment has no funds there to meet it at any time during the day, in which case presentment at any hour before the bank is closed on that day is suflS- cient. § 136. Presentment where principal debtor is dead. — AVliere the person primarily liable on the instrument is dead, and no place of pay- ment is specified, presentment for payment must be made to his per- sonal representative, if such there be, and if with the exercise of rea- sonable diligence, he can be found. § 137. Presentment to persons liable as partners. — Wliere the per- sons primarily liable on the instrument are "liable as partners, and no place of payment is specified, presentment for payment may be made to any one of them, even though there has been a dissolution of the firm. 879 PRESEXTilEXT TO JOIXT DEBTORS, [§§' 138-145. § 138. Presentment to joint debtors. — Where there are several persons not partners, primarily liable on the instrument, and no place of payment is specified, presentment must be made to them all. § 139. When presentment not required to charge the drawer. — Presentment for payment is not required in order to charge the drawer where he has no right to expect or require that the drawee or acceptor will pay the instrument. § 140. When presentment not required to charge the indorser. — Presentment for payment is not- required in order to charge an in- dorser where the instrument was made or accepted for his accommo- dation, and he has no reason to expect that the instrument will be paid if presented. § 141. When delay in making presentment is excused. — Delay in making presentment for payment is excused when the delay is caused by circumstances beyond the control of the holder and not imputaljle to his default, misconduct or negligence. When the cause of delay ceases to operate, presentment must be made with reasonable diligence. § 142. When presentment may be dispensed with. — Presentment for payment is dispensed with : 1. Where after the exercise of reasonable diligence presentment as required by this act cannot be made ; 2. Where the drawee is a fictitious person ; 3. By waiver of presentment express or implied. § 143. When instrument dishonored by non-payment. — The in- strument is dishonored by non-payment when : 1. It is duly presented for payment and payment is refused or can- not be obtained ; or 2. Presentment is excused and the instrument is overdue and un- paid. § 144. Liability of person secondarily liable, when instrument dis- honored. — Subject to the provisions of this act, when the instrument is dishonored by non-payment, an immediate right of recourse to all parties secondarily liable thereon accrues to the holder. § 145. Time of maturity. — Every negotiable instrument is payable at the time fixed therein without grace. When the day of maturity ;§ 146-148] NOTICE OF DISHONOR. 880 falls upon Sunday, or a holiday, the instrument is payable on the next succeeding business day. Instruments falling due or becoming payable on Saturday are to be presented for payment on the next succeeding business day, except that instruments payable on demand may, at the option of the holder be presented for payment before twelve o'clock noon on Saturday when that entire day is not a holiday. § 146. Time; how computed. — Where the instrument is payable at a fixed period after date, after sight, or after the happening of a speci- fied event, the time of payment is determined by excluding the day from which the time is to begin to run, and by including the date of payment. § 147. Rule where instrument payable at bank. — Where the in- strument is made payable at a bank it is equivalent to an order to the bank to pay the same for the account of the principal debtor thereon. § 148. What constitutes payment in due course. — Payment is made in due course when it is made at or after the maturity of the in- strument to the holder thereof in good faith and without notice that his title is defective. AKTICLE VIII. NOTICE OF DISHONOR. I SEC. SEC. 160. To whom notice of dishonor 173. must be given. 161. By whom given. 174. 162. Notice given by agent. 163. Effect of notice given on behalf 175. of holder. 164. 'Effect where notice is given by 176. party entitled thereto. 165. When agent may give notice. 177. 166. When notice sufBcient. 167. Form of notice. 178. 168. To whom notice may be given. 169. Notice where party is dead. 179. 170. Notice to partners. 180. 171. Notice to persons jointly liable. 181. 172. Notice to bankrupt. 182. Time within which notice must be given. Where parties reside in same place. Where parties reside in differ- ent places. When sender deemed to have given due notice. Deposit in post-office, what con- stitutes. Notice to subsequent parties, time of. Where notice must be sent. Waiver of notice. Whom affected by waiver. Waiver of protest. 881 BY WHOM. GIVEX. [§§ lGO-165 SEC. SEC. 183. When notice dispensed with. 187. Notice of non-payment where 184. Delay in giving notice; how ex- acceptance refused. cused. 188. Effect of omission to give no- 185. When notice need not be given tice of non-acceptance. to drawer. 189. When protest need not be 186. When notice need not be given made; when must be made. to indorser. § 160. To whom notice of dishonor must be given. — Except as herein otherwise provided, when a negotiable instrument has been dis- honored by non-acceptance or non-payment, notice of dishonor must be given to the drawer and to each indorser, and any drawer or in- dorser to whom such notice is not given is discharged. § 161. By whom given. — The notice may be given by or on behalf of the holder, or by or on behalf of any party to the instrument wbo might be compelled to pay it to the holder, and who, upon taking it up would have a right to reimbursement from the party to whom the notice is given. § 162. Notice given by agent. — ISTotice of dishonor may be given by an agent either in his own name or in the name of any party en- titled to give notice, whether that party be his principal or not. §' 163. Effect of notice given on behalf of holder. — Where notice is given by or on behalf of the holder, it enures for the benefit of all subsequent holders and all prior parties who have a right of recourse against the party to whom it is given, § 164. Effect where notice is given by party entitled thereto. — Where notice is given by or on behalf of a party entitled to give notice, it enures for the benefit of the holder and all parties subsequent to the party to whom notice is given. § 165. When agent may give notice. — Where the instrument has been dishonored in the hands of an agent, he may either himself give notice to the parties liable thereon, or he may give notice to his prin- cipal. If he give notice to his principal, he must do so within the same time as if he were the holder, and the principal upon the receipt of such notice has himself the same time for giving notice as if the agent had been an independent holder. Joyce Defenses — 56. §§ 166-174] NOTICE OF DISHONOR. 882 § 166. When notice sufl&cient. — A written notice need not be signed, and an insufficient written notice may be supplemented and validated by verbal communication. A misdescription of the instru- ment does not vitiate the notice unless the party to whom the notice is given is in fact misled thereby. § 167. Form of notice. — The notice may be in writing or merely oral and may be given in any terms which sufficiently identif}^ the in- strument, and indicate that it has been dishonored by non-acceptance or non-payment. It may in all cases be given by delivering it person- ally or through the mails. § 168. To whom notice may be given. — iSTotice of dishonor may be given either to the party himself or to his agent in that behalf. § 169. Notice where party is dead. — When any party is dead, and his death is known to the party giving notice, the notice must be given to a personal representative, if there be one, and if with reasonable diligence, he can be found. If there be no personal representative, no- tice may be sent to the last residence or last place of business of the deceased. § 170. Notice to partners. — Where the parties to be notified are partners notice to any one partner is notice to the firm even though there has been a dissolution. §■ 171. Notice to persons jointly liable. — Notice to joint parties who are not partners must be given to each of them, unless one of them has authority to receive such notice for the others. § 172. Notice to bankrupt. — Where a party has been adjudged a bankrupt or an insolvent, or has made an assignment for the benefit of creditors, notice may be given either to the party himself or to hie trustee or assignee. § 173. Time within which notice must be g^ven. — Notice may be given as soon as the instrument is dishonored ; and unless delay is ex- cused as hereinafter provided, must be given within the times fijxed by this act. § 174. Where parties reside in the same place. — Where the person 883 PARTIES RESIDIXG IN DIFFERENT PLACES. [§§' 175-179 giving and the person to receive notice reside in the same place, notice must be given within the following times : 1. If given at the place of business of the person to receive notice, it must be given before the close of business hours on the day following ; 2. If given at his residence, it must be given before the usual hours of rest on the day following ; 3. If sent by mail, it must be deposited in the post-office in time to reach him in usual course on the day following. §' 175. Where parties reside in different places. — Where the per- son giving and the person to receive notice reside in different places, the notice must be given within the following times : 1. If sent by mail, it must be deposited in the post-office in time to go by mail the day following the day of dishonor, or if there be no mail at a convenient hour on that day, by the next mail thereafter. 2. If given otherwise than through the post-office, then within the time that notice would have been received in due course of mail, if it had been deposited in the post-office within the time specified in the last subdivision. § 176. When sender deemed to have g^ven due notice. — Where no- tice of dishonor is duly addressed and deposited in the post-office, the sender is deemed to have given due notice, notwithstanding any mis- carriage in the mails. § 177. Deposit in post-office; what constitutes. — Notice is deemed to have been deposited in the post-office when deposited in any branch post-office or in any letter-box under the control of the Post-office De- partment. § 178. Notice to subsequent party; time of. — Where a party re- ceives notice of dishonor, he has, after the receipt of such notice, the same time for giving notice to antecedent parties that the holder has after the dishonor. § 179. Where notice must be sent. — Where a party has added an address to his signature, notice of dishonor must be sent to that address ; but if he has not given such address, then the notice must be sent as follows : 1. Either to the post-office nearest to his place of residence, or to the post-office where he is accustomed to receive his letters ; or §§ 180-185] , NOTICE OF DISHONOR. 884 2. If he live in one place, and have his place of business in another, notice may be sent to either place ; or 3. If he is so sojourning in another place, notice may be sent to the place where he is sojourning. But where the notice is actually received by the party within the time specified in this act, it will be sufficient, though not sent in ac- cordance with the requirements of this section. ' § 180. Waiver of notice. — Notice of dishonor may be waived, either before the time of giving notice has arrived, or after the omis- sion to give due notice, and the waiver may be express or implied. § 181. Whom affected by waiver. — Where the waiver is embodied in the instrument itself, it is binding upon all parties ; but where it is written above the signature of an indorser, it binds him only. §' 182. Waiver of protest. — A waiver of protest, whether in the case of a foreign bill of exchange or other negotiable instrument, is deemed to be a waiver not only of a formal protest, but also of pj-esent- ment and notice of dishonor. § 183. When notice is dispensed with. — Notice of dishonor is dis- pensed with when, after the exercise of reasonable diligence, it can- not be given to or does not reach the parties sought to be charged. § 184. Delay in giving notice; how excused. — Delay in giving no- tice of dishonor is excused when the delay is caused by circumstances beyond the control of the holder and not imputable to his default, misconduct or negligence. "When the cause of delay ceases to operate, notice must be given with reasonable diligence. § 185. When notice need not be given to drawer. — Notice of dis- honor is not required to be given to the drawer in either of the follow- ing cases: 1. Where the drawer and drawee are the same person ; 2. Where the drawee is a fictitious person or a person not having capacity to contract ; 3. Where the drawer is the person to whom the instrument is pre- sented for payment; 4. Where the drawer has no right to expect or require that the drawee or acceptor will honor the instrument ; 5. Where the drawer has countermanded payment. 885 NOTICE NEED NOT BE GIVEN INDORSEE, [§§' 18G-200 § 186. When notice need not be given to indorser. — jSTotice of dis- honor is not required to be given to an indorser in either of the fol- lowing cases : 1. Where the drawee is a fictitious person or a person not having capacity to contract, and the indorser was aware of the fact at the time he indorsed the instrument; 2. Where the indorser is the person to whom the instrument is pre- sented for payment; 3. Where the instrument was made or accepted for his accommoda- tion. § 187. Notice of non-payment where acceptance refused. — Where due notice of dishonor by non-acceptance has been given, notice of a subsequent dishonor by non-payment is not necessary, unless in the meantime the instrument has been accepted. § 188. Effect of omission to give notice of non-acceptance. — An omission to give notice of dishonor by non-acceptance docs not preju- dice the rights of a holder in due course subsequent to the omission. § 189. When protest need not be made; when must be made. — Where any negotiable instrument has been dishonored it may be pro- tested for non-acceptance or non-payment, as the case may be; but protest is not required, except in the case of foreign bills of exchange. ARTICLE IX. DISCHARGE OF NEGOTIABLE INSTRUMENTS. SEC. SEC. 200. Instruments; how discharged. 204. Cancellation; .unintentional; 201. When persons secondarily lia- burden of proof. ble on, discharged. 205. Alteration of instrument; ef- 202. Right of party who discharges feet of. instrument. 206. What constitutes a material al- 203. Renunciation by holder. teration. § 200. Instrument ; how discharged. — A negotiable instrument is discharged : 1. By payment in due course by or on behalf of the principal debtor ; §§ 201-204] DISCHARGE OF NEGOTIABLE INSTRUMENTS. 886 2. By payment in due course by the party accommodated, where the instrument is made or accepted for accommodation ; 3. By the intentional cancellation thereof by the holder; 4. By any other act which will discharge a simple contract for the payment of money ; 5. When the principal debtor becomes the holder of the instrument at or after maturity in his own right. § 201. When persons secondarily liable on, discharged. — A person secondarily liable on the instrument is discharged : 1. By any act which discharges the instrument; 2. By the intentional cancellation of his signature by the holder; 3. By the discharge of a prior party ; 4. By a valid tender of payment made by a prior party. 5. By a release of the principal debtor, unless the holder's right of recourse against the party secondarily liable is expressly reserved ; 6. By any agreement binding upon the holder to extend the time of payment or to postpone the holder's right to enforce the instrument, unless the right of recourse against such party is expressly reserved. § 202. Eight of party who discharges instrument. — Where the instrument is paid by a party secondarily liable thereon, it is not dis- charged ; but the party so paying it is remitted to his former rights as regards all prior parties, and he may strike out his own and all sub- sequent indorsements and again negotiate the instrument, except 1. Where it is payable to the order of a third person, and has been paid by the drawer ; and 2. Where it was made or accepted for accommodation, and has been paid by the party accommodated. § 203. Renunciation by holder. — The holder may expressly re- nounce his rights against any party to the instrument at, before, or after its maturity. An absolute and unconditional renunciation of his rights against the principal debtor, made at or after the maturity of the instrument, discharges the instrument. But a renunciation does not affect the rights of a holder in due course without notice. A re- nunciation must be in writing, unless the instrument is delivered up , to the person primarily liable thereon. § 204. Cancellation ; unintentional ; burden of proof. — A cancel- lation made unintentionally, or under a mistake, or without the au- 887 BILL OF EXCHANGE DEFINED. §§ 205-210 thority of the holder, is inoperative ; but where an instrument or any signature thereon appears to have been canceled the burden of proof lies on the party who alleges that the cancellation was made uninten- tionally, or under a mistake or without authority. §205. Alteration of instrument; effect of. — Where a negotiable instrument is materially altered without the assent of all parties liable thereon, it is avoided, except as against a party who has himself made, authorized or assented to the alteration and subsequent in- dorsers. But when an instrument has been materially altered and is in the hands of a holder in due course, not a party to the alteration, he may enforce payment thereof according to its original tenor. § 206. What constitutes a material alteration. — Any alteration which changes: 1. The date; 2. The sum payable, either for principal or interest; 3. The time or place of payment ; 4. The number or the relations of the parties. 5. The medium or currency in which payment is to be made; Or which adds a place of payment where no place of payment is specified, or any otlier change or addition which alters the effect of the instrument in any respect, is a material alteration. AETICLE X. BILLS OF EXCHANGE FORM AND INTERPRETATION". SEC. SEC. 210. Bill of exchange defined. 213. Inland and foreign bills of ex- 211. Bill not an assignment of funds change. in hands of drawee. 214. "When bill may be treated as 212. Bill addressed to more than one promissory note. drawee. ' 215. Referee in case of need. § 210. Bills of exchange defined. — A bill of exchange is an uncon- ditional order in writing addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to order or to bearer. §§ 211-215] BILLS OF EXCHANGE. 888 § 211. Bill not an assignment of funds in hands of drawee. — A bill of itself does not operate as an assignment of the funds in the hands of the drawee available for the payment thereof and the drawee is not liable on the bill unless and until he accepts the same. § 212. Bill addressed to more than one drawee. — A bill may be addressed to two or more drawees jointly, whether they are partners or not ; but not to two or more drawees in the alternative or in succes- sion. §213. Inland and foreign bills of exchange. — An inland bill of exchange is a bill which is, or on its face purports to be, both drawn and payable within the state. Any other bill is a foreign bill. Unless the contrary appears on the face of the bill, the holder may treat it as an inland bill. § 214. When bill may be treated as promissory note. — Where in a bill the drawer and drawee are the same person, or where the drawee is a fictitious person, or a person not having capacity to contract, the holder may treat the instrument, at his option, either as a bill of ex- change or a promissory note. § 215. Referee in case of need. — The drawer of a bill and any in- dorser may insert thereon the name of a person tO' whom the holder may resort in case of need, that is to say, in case the bill is dishonored by non-acceptance or non-payment. Such person is called the referee !?? in case of need. It is in the option of the holder to resort to the referee in case of need or not as he may see fit. ARTICLE XI. ACCEPTANCE OF BILLS OF EXCHANGE. SEC. SEC. 220. Acceptance; how made; et 225. Liability of drawee retaining cetera. or destroying bill. 221. Holder entitled to acceptance 226. Acceptance of incomplete bill. on face of bill. 227. Kinds of acceptances. 222. Acceptance by separate instru- 228. What constitutes a general ac- ment. ceptance. 223. Promise to accept; when equiv- 229. Qualified acceptance. alent to acceptance. 230. Rights of parties as to quali- 224. Time allowed drawee to accept. fied acceptance. » 889 acceptance; how made, [§§ 220-226 § 220. Acceptance ; how made ; et cetera. — The acceptance of a bill, is the signification by the drawee of his assent to the order of the drawer. The acceptance must be in writing and signed by the drawee. It must not express that the drawee will perform his promise by any other means than the pajTnent of money. § 221. Holder entitled to acceptance on face of bill. — The holder of a bill presenting tlie same for acceptance may require that the ac- ceptance be written on the bill and if such request is refused, may treat the bill as dishonored. § 222. Acceptance by separate instrument. — Where an acceptance is written on a paper other than the bill itself, it does not bind the ac- ceptor except in favor of a person to whom it was shown and who, on the faith thereof, receives the bill for value. §223. Promise to accept; when equivalent to acceptance. — An unconditional promise in writing to accept a bill before it is drawn is deemed an actual acceptance in favor of every person who, upon the faith thereof, receives the bill for value. § 224. Time allowed drawee to accept. — The drawee is allowed twenty-four hours after presentment in which to decide whether or not he will accept the bill; but the acceptance if given dates as of the day of presentation. § 225. Liability of drawee retaining or destroying bill. — Wliere a drawee to whom a bill is delivered for acceptance destroys the same, or refuses within twenty-four hours after such delivery, or within such other period as the holder may allow, to return the bill accepted or non-accepted to the holder, he will be deemed to have accepted tlie same. § 226. Acceptance of incomplete bill. — A bill may be accepted be- fore it has been signed by the drawer, or while othenvise incomplete, or where it is overdue, or after it has been dishonored by a previous refusal to accept, or by non-payment. But when a bill payable after sight is dishonored by non-acceptance and the drawee subsequently ac- cepts it, the holder, in the absence of any different agreement, is entitled to have the bill accepted as of the date of the first present- ment. §§ 227-230] BILLS OP EXCHANGE. 890 § 227. Kinds of acceptances. — An acceptance is either general or qualified. A general acceptance assents without qualification to the order of the drawer. A qualified acceptance in express terms varies the effect of the bill as drawn. § 228. What constitutes a general acceptance. — An acceptance to pay at a particular place is a general acceptance unless it expressly states that the bill is to be paid there only and not elsewhere. § 229. Qualified accepance. — An acceptance is qualified, which is : 1. Conditional, that is to say, which makes payment by the acceptor dependent on the fulfillment of a condition therein stated ; 2. Partial, that is to say, an acceptance to pay part only of the amount for which the bill is drawn ; 3. Local, that is to say, an acceptance to pay only at a particular place; 4. Qualified as to time; 5. The acceptance of some one or more of the drawees, but not of all. § 230. Rights of parties as to qualified acceptance. — The holder may refuse to take a qualified acceptance, and if he does not obtain an unqualified acceptance, he may treat the bill as dishonored by non- acceptance. Where a qualified acceptance is taken, the drawer and in- dorsers are discharged from liability on the bill, unless they have expressly or impliedly authorized the holder to take a qualified ac- ceptance, or subsequently assent thereto. When the drawer or an indorser receives notice of a qualified acceptance, he must within a reasonable time express his dissent to the holder, or he will be deemed to have assented thereto. AKTICLE XII. PRESENTMENT OF BILLS OF EXCHANGE FOR ACCEPTANCE. SEC. SEC. 240. When presentment for accept- 245. When presentment is excused. ance must be made. 246. When dishonored by non-ac- 241. When failure to present re- ceptance. leases drawer and indorser. 247. Duty of holder where bill not 242. Presentment; how made. accepted. 243. On what days presentment may 248. Rights of holder where bill not be made. accepted. 244. Presentment; where time is insufficient. *f 891 presentment; how made. [§§ 240-243 § 240. When presentment for acceptance must be made. — Pre- sentment for acceptance must be made : 1. Where the bill is payable after sight, or in any other case where presentment for acceptance is necessary in order to fix the maturity of the instrument ; or 2. Where the bill expressly stipulates that it shall be presented for acceptance ; or 3. Where the bill is drawn payable elsewhere than at the residence or place of business of the drawee. In no other case is presentment for acceptance necessary in order to render any party to the bill liable. § 241. When failure to present releases drawer and indorser. — Ex- cept as herein otherwise provided, the holder of a bill which is re- quired by the next preceding section to be presented for acceptance must either present it for acceptance or negotiate it within a reasona- ble time. If he fails to do so, the drawer and all indorsers are dis- charged. § 242. Presentment ; how made. — Presentment for acceptance must be made by or on behalf of the holder at a reasonable hour, on a business day, and before the bill is overdue, to the drawee or some person authorized to accept or refuse acceptance on (his)* behalf; and 1. Where a bill is addressed to two or more drawees who are not partners, presentment must be made to them all, unless one has au- thority to accept or refuse acceptance for all, in which case present- ment may be. made to him only; 2. Where the drawee is dead, presentment may be made to his per- sonal representative; 3. Where the drawee has been adjudged a bankrupt or an insolvent, or has made an assignment for the benefit of creditors, presentment may be made to him or to his trustee or assignee. § 243. On what days presentment may be made. — A bill may be presented for acceptance on any day on which negotiable instruments may be presented for payment under the provisions of sections one hundred and thirty-two and one hundred and forty-five of this act. When Saturday is not otherwise a holiday, presentment for acceptance may be made before twelve o'clock noon on that day. * Word "his" not in original. §§ 244-248] BILLS OP exchange. 892 § 244. Presentment where time is insufficient. — Where the holder of a bill drawn payable elsewhere than at the place of business of the residence of the drawee has not time with the exercise of reasonable diligence to present the bill for acceptance before presenting it for payment on the day that it falls due, the delay caused by presenting the bill for acceptance before presenting it for pa}Tnent is excused and does not discharge the drawers and indorsers. § 245. Where presentment is excused. — Presentment for accept- ance is excused and a bill may be treated as dishonored by non- acceptance in either of the following cases : 1. Where the drawee is dead or has absconded, or is a fictitious per- son or person not having capacity to contract by bill ; 2. Where after the exercise of reasonable diligence, presentment cannot be made ; 3. Where although presentment has been irregular, acceptance has been refused on some other ground. § 246. When dishonored by non-acceptance. — A bill is dishonored by non-acceptance : 1. When it is duly presented for acceptance, and such an accept- ance as is prescribed by this act is refused or cannot be obtained; or 2. When presentment for acceptance is excused and the bill is not accepted. § 247. Duty of holder where bill not accepted. — Where a bill is duly presented for acceptance and is not accepted within the prescribed time, the person presenting it must treat the bill as dishonored by non-acceptance or he loses the right of recourse against the drawer and indorsers. § 248. Rights of holder where bill not accepted. — When a bill is dishonored by non-acceptance, an immediate right of recourse against the drawers and indorsers accrues to the holder and no presentment for payment is necessary. SEC. SEC. 260. In what cases protest neces- sary. 265. 261. Protest; how made. 266 262. Protest; by whom made. 263. Protest; when to be made. 267 264. Protest; where made. 268 893; peotest; how made. [§§' 260-26-i AETICLE XIII. PROTEST OF BILLS OF EXCHANGE. Protest both for non-acceptance and non-payment. 266. Protest before maturity where acceptor insolvent. When protest dispensed with. Protest; where bill is lost, et cetera. § 260. In what cases protest necessary. — Where a foreign bill ap- pearing on its face to be such is dishonored by non-acceptance, it must be duly protested for non-acceptance, and where such a bill has not previously been dishonored by non-acceptance is dishonored by non- payment, it must be duly protested for non-payment. If it is not so protested, the drawer and indorsers are discharged. Where a bill does not appear on its face to be a foreign bill, protest thereof in case of dishonor is unnecessary. §261. — Protest; how made. — The protest must be annexed to the bill, or must contain a copy thereof, and must be under the hand and seal of the notary making it, and must specify : 1. The time and place of presentment; 2. The fact that presentment was made and the manner thereof; 3. The cause or reason for protesting the bill ; 4. The demand made and the answer given, if any, or the fact that the drawee or acceptor could not be found. § 262. Protest; by whom made. — Protest may be made by: 1. A notary public ; or 2. By any respectable resident of tlie place where the bill is dis- honored, in the presence of two or more credible witnesses. § 263. Protest; when to be made. — When a l)il] is protested, such protest must be made on the day of its dislionor, unless delay is ex- cused as herein provided. When a bill has been duly noted, the pro- test may be subsequently extended as of the date of the noting. § 264. Protest ; where made. — A bill must be protested at the place where it is dishonored, except that when a bill dra\\'n payable at the §§ 265-268] BILLS OF exchange. 894 place of business or residence of some person other than the drawee, has been dishonored by non-acceptance, it must be protested for non- payment at the place where it is expressed to be payable, and no fur- ther presentment for payment to, or demand on, the drawee is neces- sary. § 265. Protest both for non-acceptance and non-payment. — A bill which has been protested for non-acceptance may be subsequently pro- tested for non-payment. § 266. Protest before maturity where acceptor insolvent. — Where the acceptor has been adjudged a bankrupt or an insolvent or has made an assignment for the benefit of creditors, before the bill ma- tures, the holder may cause the bill to be protested for better security, against the drawer and indorsers. § 267. When protest dispensed with. — Protest is dispensed with by any circumstances which would dispense with notice of dishonor. Delay in noting or protesting is excused when delay is caused by cir- cumstances beyond the control of the holder and not imputable to his default, misconduct, or negligence. When the cause of delay ceases to operate the bill must be noted or protested with reasonable dili- gence. § 268. Protest where bill is lost, et cetera. — Where a bill is lost or destroyed or is wrongly detained from the person entitled to hold it, protest may be made on a copy or written particulars thereof. ARTICLE XIV. ACCEPTANCE OF BILLS OF EXCHANGE FOR HONOR. SEC. SEC. 280. When bill may be accepted for 285. Maturity of bill payable after honor. sight; accepted for honor. 281. Acceptance for honor; how 286. Protest of bill accepted for made. honor, et cetera. 282. "When deemed to be an accept- 287. Presentment for payment to ac- ance for honor of the drawer. ceptor for honor; how made. 283. Liability of acceptor for honor. 288. When delay in making present- 284. Agreement of acceptor for ment is excused. honor. 289. Dishonor of bill by acceptor for honor. 895 ACCEPTANCE FOR HONOR; HOW MADE. [§§ 280-286 § 280. When bill may be accepted for honor. — Where a bill of ex- change has been protested for dishonor by non-acceptance or protested for better security, and is not overdue, any person not being a party already liable thereon, may, with the consent of the holder, intervene : and accept the bill supra protest for the honor of any party liable' thereon or for the honor of the person for whose account the bill is drawn. The acceptance for honor may be for part only of the sum for which the bill is drawn ; and where there has been an acceptance for honor for one party, there may be a further acceptance by a differ- ent person for the honor of another party. § 281. Acceptance for honor; how made. — An acceptance for honor supra protest must be in writing and indicate that it is an acceptance for honor, and must be signed by the acceptor for honor. § 282. When deemed to be an acceptance for honor of the drawer. — Where an acceptance for honor does not expressly state for whose honor it is made, it is deemed to be an acceptance for the honor of the drawer, § 283. Liability of acceptor for honor. — The acceptor for honor is liable to the holder and to all parties to the bill subsequent to the party for whose honor he has accepted. § 284. Agreement of acceptor for honor. — The acceptor for honor by such acceptance engages that he will on due presentment pay the bill according to the terms of his acceptance, provided it shall not have been paid by the drawee, and provided also, that it shall have been duly presented for payment and protested for non-payment and notice of dishonor given to him. § 285. Maturity of bill payable after sight ; accepted for honor. — Where a bill payable after sight is accepted for honor, its maturity is calculated from the date of the noting for r on-acceptancc and not from the date of the acceptance for bonor. § 286. Protest of bill accepted for honor, et cetera. — Where a dis- honored bill has been accepted for honor supra protest or contains a reference in case of need, it must be protested for non-payment before it is presented for payment to the acceptor for honor or referee in case of need. §§ 287-302J BILLS OF EXCHANGE. 896 § 287. Presentment for payment to acceptor for honor; how made. — Presentment for payment to the acceptor for honor must be made as follows : 1. If it is to be presented in the place where the protest for non- payment was made, it must be presented not later than the day fol- lowing its maturity ; 2. If it is to be presented in some other place than the place where it was protested, then it must be forwarded within the time specified in section 175. § 288. When delay in making presentment is excused. — The pro- visions of section 141 apply where there is delay in making present- ment to the acceptor for honor or referee in case of need. § 289. Dishonor of bill by acceptor for honor. — When the bill is dishonored by the acceptor for honor it must be protested for non- payment by him. AETICLE XV. ( PAYMENT OF BILLS OF EXCHANGE FOR HONOR. SEC. SEC. 300. Who may take payment for 304. Effect on subsequent parties honor. where bill is paid for honor. 301. Payment for honor; how made.(' 305. Where holder refuses to re- 302. Declaration before payment for ceive payment supra protest. honor. 306. Rights of payer for honor. 303. Preference of parties offering to pay for honor. § 300. Who may make paymeg]for honor. — Where a bill has been protested for non-payment, any'^ person may intervene and pay it supra protest for the honor of any person liable thereon or for the honor of the person for whose account it was drawn. §301. Payment for honor; how made. — The payment for honor supra protest in order to operate as such and not as a mere voluntary payment must be attested by a notarial act of honor which may be appended to the protest or form an extension to it. § 302. Declaration before payment for honor. — The notarial act of honor must be founded on a declaration made by the payer for 897 EIGHTS OF TAYER FOR IIOXOR. [§§' 303-311 honor or by his agent in that behalf declaring his intention to pay the bill for honor and for whose honor he pays. § 303. Preference of parties offering to pay for honor, — Where two or more persons offer to pay a bill for the honor of different par- ties, the person whose payment will discharge most parties to the bill is to be given the preference. § 304. Effect on subsequent parties where bill is paid for honor. — "Where a bill has been paid for honor all parties subsequent to the party for whose honor it is paid are discharged, but the payor for honor is subrogated for, and succeeds to, both the rights and duties of the holder as regards the party for whose honor he pays and all par- ties liable to the latter. § 305. Where holder refuses to receive payment supra protest. — Where the holder of a bill refuses to receive payment supra protest, he loses his right of recourse against any party who would have been dis- charged by such payment. § 306. Rights of payer for honor. — The payer for honor on pay- ing to the holder the amount of the bill and the notarial expenses incidental to its dishonor, is entitled to receive both the bill itself and the protest. ARTICLE XVI. BILLS IN A SET. SEC. SEC. 310. Bills in sets constitute one bill. 313. Acceptance of bills drawn in 311. Rights of holders where differ- sets. ent parts are negotiated. 314. Payment by acceptor of bills 312. Liability of holder who in- drawn in sets. dorses two or more parts of 315. Effect of discharging one of a a set to different persons. set. § 310. Bills in sets constitute one bill. — Where a bill is drawn in a set, each part of the set being numbered and containing a reference to the other parts, the whole of the parts constitute one bill. § 311. Rights of holders where different parts are negotiated. — Where two or more parts of a set are negotiated to different holders in Joyce Defenses — 57. §§ 312-320] PROMISSORY NOTES AND CHECKS. 898 due course, the holder whose title first accrues is as between such holders the true owner of the bill. But nothing in this section affects the rights of a person who in due course accepts or pays the part first presented to him. § 312. Liability of holder who indorses two or more parts of a set to different persons. — Where the holder of a set indorses two or more parts to different persons he is liable on every such part, and every indorsor subsequent to him is liable on the part he has himself in- dorsed, as if such parts were separate bills. § 313. Acceptance of bills drawn in sets. — The acceptance may be written on any part and it must be written on one part only. If the drawee accepts more than one part, and such accepted parts are nego- tiated to different holders in due course, he is liable on every such part as if it were a separate bill. § 314. Payment by acceptor of bills drawn in sets. — When the ac- ceptor of a bill drawn in a set pays it without requiring the part bear- ing his acceptance to be delivered up to him, and that part at maturity is outstanding in the hands of a holder in due course, he is liable to the holder thereon. § 315. Effect of discharging one of a set. — Except as herein other- wise provided, where any one part of a bill drawn in a set is discharged by payment or otherwise the whole bill is discharged. AETICLE XVII. PROMISSORY XOTES AND CHECKS, SEC. SEC. 320. Promissory note defined. 324. Effect where holder of check 321. Check defined. procures it to be certified. 322. Within what time a check must 325. When check operates as an as- be presented. signment. 323. Certification of a check; effect of. § 320. Promissory note defined. — A negotiable promissory note within the meaning of this act is an unconditional promise in writing 899 CHECK DEFINED. [§§ 321-330 made by one person to another signed by the maker engaging to pay on demand or at a fixed or determinable future time, a sum certain in money to order or to bearer. Where a note is drawn to the maker's own order, it is not complete until indorsed by him, § 321. Check defined. — A check is a bill of exchange drawn on a bank payable on demand. Except as herein otherwise provided, the provisions of this act applicable to a bill of exchange payable on de- mand apply to a check. § 322. Within what time a check must be presented. — A check must be presented for payment within a reasonable time after its issue or the drawer will be discharged from liability thereon to the extent of the loss caused by the delay. § 323. Certification of check; effect of. — Where a check is certi- fied by a bank on which it is drawn the certification is equivalent to an acceptance. § 324. Effect where the holder of check procures it to be certified. — Where the holder of a check procures it to be accepted or certified the drawer and all indorsers are discharged from liability thereon. § 325. When check operates as an assignment. — A check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder, unless and until it accepts or certifies the check. AETICLE XVIII. NOTES GIVEN FOR PATENT RIGHTS AND FOR A SPECULATIVE CON- SIDERATION. SEC. SEC. 330. Negotiable instruments given 332. How negotiable bonds are made for patent rights. non-negotiable. 331. Negotiable instruments given for a speculative considera- tion. § 330. Negotiable instruments given for patent rights. — A prom- issory note or other negotiable instrument, the consideration of which §§ 331, 332] NOTES GIVEN FOR PATENT RIGHTS. 900 consists wholly or partly of the right to make, use or sell any inven- tion claimed or represented by the vendor at the time of sale to be patented, must contain the words "given for a patent right" promi- nently and legibly written oy printed on the face of such note or in- strument above the signature thereto ; and such note or instrument in the hands of any purchaser or holder is subject to the same defenses as in the hands of the original holder ; but this section does not apply to a negotiable instrument given solely for the purchase-price or the use of a patented article. § 331. Negotiable instruments for a speculative consideration. — If the consideration of a promissory note or other negotiable instru- ment consists in whole or in part of the purchase-price of any farm product, at a price greater by at least four times than the fair market value of the same product at the time, in the locality, or of the mem- bership and rights in an association, company or combination to pro- duce or sell any farm product at a fictitious rate, or of a contract or bond to purchase or sell any farm product at a price greater by four times than the market value of the same product at the time in the locality, the words, "given for a speculative consideration," or other words clearly showing the nature of the consideration must be promi- nently and legibly written or printed on the face of such note or in- strument above the signature thereof ; and such note or instrument, in the hands of any purchaser or holder, is subject to the same defenses as in the hands of the original owner or holder. §332. How negotiable bonds are made non-negotiable. — The owner or holder of any corporate or municipal bond or obligation (except such as are designated to circulate as money, payable to bearer), heretofore or hereafter issued in and payable in this state, but not registered in pursuance of any state law, may make such bond or obligation, or the interest coupon accompanying the same, non-negotiable, by subscribing his name to a statement indorsed thereon, that such bond, obligation or coupon is his property; and thereon the principal sum therein mentioned is payable only to such owner or holder, or his legal representatives or assigns, unless such bond, obligation or coupon be transferred by indorsement in blank, or payable to bearer, or to order, with the addition of the assignor's place of residence. 901 . LAWS REPEALED. [§§ 340, 341 AETICLE XIX. LAWS repealed; WHEN" TO TAKE EFFECT. SEC. SEC. 340. Laws repealed. ' 341. When to take effect. §340. Laws repealed. — The laws or parts thereof specified in the schedule hereto annexed are hereby repealed. § 341. When to take effect. — This chapter shall take effect on the first day of October, 1897. Revised Statutes. Sections. Subject-Matter. R. S., pt. 11, ch. 4, tit 11.. All Bills and Notes. Laws of — Chap. Sections. Subject-Matter. 1835 141 All .... Notice of protest ; how given. 1857 416 All Commercial paper. 1865 309 All Protest of foreign bills, etc. 1870 438 All.... Negotiability of corporate bonds, how limited. 1871 84 All. ...Negotiable bonds; how made non- negotiable. 1873 595 All... .Negotiable bonds; how made nego- tiable. 1877 65 1, 3. .. .Negotiable instruments given for patent rights. 1887 461 All.... Effect of holidays upon payment of commercial paper. 1888 229 All One hundredth anniversary of the inauguration of George Washing- ton. 1891 262 1 Negotiable instruments given for a speculative consideration. 1894 607 All Days of grace abolished. BILLS OF EXCHANGE ACT. (45 and 46 Vict. c. 61.) AN" ACT TO CODIFY THE LAW RELATING TO BILLS OF EXCHANGE, CHEQUES AND PROMISSORY NOTES. PART I. PRELIMINAEY. SEC. 1. Short title. 2. Interpretation of terms. PART II. BILLS OF EXCHANGE. Form and Interpretation. 3. Bill of exchange defined. 4. Inland and foreign bills. 5. Effect where different parties to bill are the same person. 6. Address to drawee. 7. Certainty required as to payee. 8. What bills are negotiable. 9. Sum payable. 10. Bill payable on demand. 11. Bill payable at a future time. 12. Omission of date in bill payable after date. 13. Ante-dating and post-dating. 14. Computation of time of pay- ment. 15. Case of need. 16. Optional stipulation. 17. Definition and requisites of ac- ceptance. 18. Time for acceptance. 19. General and qualified accept- ances. 20. Inchoate instruments. 21. Delivery. Capacity and Authority of Parties. SEC. 22. Capacity of parties. 23. Signature essential to liability. 24. Forged or unauthorized signa- ture. 25. Procuration signatures. 26. Persons signing as agent or in representative capacity. The Consideration for a Bill. 27. Value and holder for value. 28. Accommodation bill or party. 29. Holder in due course. 30. Presumption of value and good faith. Negotiation of Bills, 31. Negotiation of bill. 32. Requisites of a valid indorse- ment. 33. Conditional indorsement. 34. Indorsement in blank and spe- cial indorsement. 35. Restrictive indorsement. 36. Negotiation of overdue or dis- honored bill. 37. Negotiation of bill to party al- ready liable thereon. 38. Rights of the holder. General Duties of the Holder. 39. When presentment for accept- ance is necessary. 40. Time for presenting bill payable after sight. 902 903 BILLS OF EXCHANGE ACT. [§ 1 41. Rules as to presentment for ac- ceptance, and excuses for non- presentment. 42. Non-acceptance. 43. Dishonor by non-acceptance and its consequences. 44. Duties as to qualified accept- ances. 45. Rules as to presentment for payment. 46. Excuses for delay or non-pre- sentment for payment. 47. Dishonor by non-payment. 48. Notice of dishonor and effect of non-notice. 49. Rules as to notice of dishonor. 50. Excuses for non-notice and de- lay. 61. Noting or protest of bill. 52. Duties of holder as regards drawee or acceptor. LiaHlities of Parties. 53. Bill not assignment of funds in hands of drawee. 54. Liability of acceptor. 55. Liability of drawer or indorser. 56. Stranger signing bill liable as indorser. 57. Measure of damages against par- ties to dishonored bill. 58. Transferor by delivery and transferee. Discharge of Bill. 59. Payment in due course. 60. Banker paying demand draft whereon indorsement i s forged. 61. Acceptor the holder at maturity. 62. Express waiver. ■ 63. Cancellation. 64. Alteration of bill. Acceptance and Payment for Honor. 65. Acceptance for honor supra pro- test. 66. Liability of acceptor for honor. SEC. 67. Presentment to acceptor for honor. 68. Payment for honor supra pro- test. Lost Instruments. 69. Holder's right to duplicate of lost bill. 70. Action on lost bill. Bill in a Set. 71. Rules as to sets. Conflict of Laws, 72. Rules where laws conflict. PART in. CHEQUES ON A BANKEB. 73. Cheque defined. 74. Presentment of cheque for pay- ment. 75. Revocation of banker's author- ity. Crossed Cheques. 76. General and special crossings defined. 77. Crossing by drawer or after is- sue. 78. Crossing a material part of cheque. 79. Duties of banker as to crossed cheques. 80. Protection to banker and drawer where cheque is crossed. 81. Effect of crossing on holder. 82. Protection to collecting banker. PART IV. PROMISSOUY XOTES. 83. Promissory note defined, 84. Delivery necessary. 85. Joint and several notes. 86. Note payable on demand. 87. Presentment of note for pay- ment. 88. Liability of maker. 89. Application of Part II to notes. §§ 1-2] PRELIMINARY. 904: PART V. SEC. 96. Repeal. 97. Savings. 98. Saving of summary diligence in Scotland. 99. Construction with other acts, &c. 100. Parol evidence allowed in cer- tain judicial proceedings in Scotland. SUPPLEMENTARY, SEC. 90. Good faith. 91. Signature. 92. Computation of time. 93. When noting equivalent tO protest. 94. Protest when notary not ac- cessible. 95. Dividend warrants may be SCHEDULES, crossed. fiest schedule. SECOND schedule. Be it enacted by the Queen's Most Excellent Majesty, by and with ithe advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled^ and by the authority of the same, as follows : PART I. PRELIMINARY. 1. Short title. — This act may be cited as the Bills of Exchange Act, 1882. 2. Interpretation of terms. — In this act, unless the context other- owise requires, — "Acceptance'' means an acceptance completed by delivery or notifi- cation. "Action" includes counter-claims and set-off. "Banker" includes a body of persons whether incorporated or not who carry on the business of banking. "Bankrupt" includes any person whose estate is vested in a trustee or assignee under the law for the time being in force relating to bankruptcy. "Bearer" means the person in possession of a bill or note which is payable to bearer. "Bill" means bill of exchange, and "note" means promissory note. "Delivery" means transfer of possession, actual or constructive, from one person to another. "Holder" means the payee or indorsee of a bill or note who is in possession of it, or the bearer thereof. "Indorsement" means an indorsement completed by delivery. "Issue" means the first delivery of a bill or note, complete in form to a person who takes it as a holder. 905 BILLS OF EXCHANGE ACT DEFINED. [§§ 3, "Person" includes a body of persons whether incorporated or not. "Value" means valuable consideration. "Written" includes printed, and "writing" includes print. PART II. BILLS OF EXCHANGE. Form and Interpretation. 3. Bill of exchange defined. — (1) A bill of exchange is an un- ,conditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is ad- dressed to pay on demand or at a fixed or determinable future time a sum certain in money to or to the order of a specified person, or to bearer. (2) An instrument which does not comply with these conditions, or which orders any act to be done in addition to the payment of money, is not a bill of exchange. (3) An order to pay out of a particular fund is not unconditional within the meaning of this section; but an unqualified order to pay, coupled with (a) an indication of a particular fund out of which the drawee is to reimburse himself or a particular account to be debited with the amount, or (b) a statement of the transaction which gives rise to the bill, is unconditional. (4) A bill is not invalid by reason — (a) That it is not dated ; (b) That it does not specify the value given, or that any value has been given therefor ; (c) That it does not specify the place where it is drawn or the place where it is payable. 4. Inland and foreign bills. — (1) An inland bill is a bill which is or on the face of it purports to be (a) both drawn and payable within the British Islands, or (b) drawn within the British Islands upon some person resident therein. Any other bill is a foreign bill. For the purposes of this act "British Islands" mean any part of the United Kingdom of Great Britain and Ireland, the islands of Man, Guernsey, Jersey, Alderney, and Sark, and the islands adjacent to any of them being part of the dominions of her Majesty. §§ 5-8] BILLS OF EXCHANGE. 906 (2) Unless the contrary appear on the face of the bill the holder may treat it as an inland bill. 5. Effect where different parties to bill are the same person. — (1) A bill may be drawn payable to, or to the order of, the drawer; or it may be drawn payable to, or to the order of, the drawee. (2) Where in a bill drawer and drawee are the same person, or where the drawee is a fictitious person or a person not having capacity to contract, the holder may treat the instrument, at his option, either as a bill of exchange or as a promissory note. 6. Address to drawee. — (1) The drawee must be named or other- wise indicated in a bill with reasonable certainty. (2) A bill may be addressed to two or more drawees whether they are partners or not, but an order addressed to two drawees in the al- ternative or two or more drawees in succession is not a bill of ex- change. 7. Certainty required as to payee. — (1) Where a bill is not payable to bearer, the payee must be named or otherwise indicated therein with reasonable certainty. (2) A bill may be made payable to two or more payees jointly, or it may be made payable in the alternative to one of two, or one of some of several payees. A bill may also be made payable to the holder of an office for the time being. (3) Where the payee is a fictitious or non-existing person the bill may be treated as payable to bearer. 8. What bills are negotiable. — (1) When a bill contains words prohibiting transfer, or indicating an intention that it should not be transferable, it is valid as between the parties thereto, but is not ne- gotiable. (2) A negotiable bill may be payable either to order or to bearer. (3) A bill is payable to bearer which is expressed to be so payable, or on which the only or last indorsement is an indorsement in blank. (4) A bill is payable to order which is expressed to be so payable, or which is expressed to be payable to a particular person, and does not contain words prohibiting transfer or indicating an intention that it should not be transferable. (5) 'Where a bill, either originally or by indorsement, is expressed to be payable to the order of a specified person, and not to him or his order^ it is nevertheless payable to him or his order at his option. 907 SUM PAYABLE — BILLS PAYABLE OX DEMAND. [§§ 9-12 9. Sum payable. — (1) The sum payable by a bill is a sum certain within the meaning of this act, although it is required to be paid — (a) With interest. (b) By stated instalments. (c) By stated instalments, with a provision that upon default in payment of any instalment the whole shall become due. (d) According to an indicated rate of exchange or according to a rate of exchange to be ascertained as directed by the bill. (2) Where the sum payable is expressed in words and also in fig- ures, and there is a discrepancy between the two, the sum denoted by the words is the amount payable. (3) Where a bill is expressed to be payable with interest, unless the instrument otherwise provides, interest runs from the date of the bill, and if the bill is undated, from the issue thereof. 10. Bill payable on demand. — (1) A bill is payable on demand — (a) Which is expressed to be payable on demand, or at sight, or on presentation; or (b) In which no time for payment is expressed. (2) Where a bill is accepted or indorsed when it is overdue, it shall, as regards the acceptor who so accepts, or any indorser who so indorses it, be deemed a bill payable on demand. 11. Bill payable at a future time. — A bill is payable at a de- terminable future time within the meaning of this act which is ex- pressed to be payable — (1) At a fixed period after date or sight. (2) On or at a fixed period after the occurrence of a specified event which is certain to happen, though the time of happening may be un- certain. An instrument expressed to be payable on a contingency is not a bill, and the happening of the event does not cure the defect. 12. Omission of date in bill payable after date. — Where a bill ex- pressed to be payable at a fixed period after date is issued undated, or where the acceptance of a bill payable at a fixed period after sight is undated, any holder may insert therein the true date of issue or ac- ceptance, and the bill shall be payable accordingly. Provided that (1) where the holder in good faith and by mistake inserts a wrong date, and (2) in every case where a wrong date is inserted, if the bill subsequently comes into the hands of a holder in §§ 13-15] BILLS OF EXCHANGE. '908 due course the bill shall not be avoided thereby, but shall operate and be payable as if the date so inserted had been the true date, 13. Ante-dating and post-dating. — (1) Where a bill or an ac- ceptance or any indorsement on a bill is dated, the date shall, unless the contrary be proved, be deemed to be the true date of the drawing, acceptance, or indorsement, as the case may be. (2) A bill is not invalid by reason only that it is ante-dated or post- dated, or that it bears date on a Sunday. 14. Computation of time of payment. — Where a bill is not pay- able on demand the day on which it falls due is determined as follows : (1) Three days, called days of grace, are, in every case where the bill itself does not otherwise provide, added to the time of payment as fixed by the bill, and the bill is due and payable on the last day of grace : Provided that — (a) When the last day of grace falls on Sunday, Christmas Day, Good Friday, or a day appointed by Koyal Proclamation as a public fast or thanksgiving day, the bill is, except in the case hereinafter provided for, due and payable on the preceding business day ; (b) When the last day of grace is a bank holiday (other than Christmas Day or Good Friday) under the Bank Holidays Act, 1871, and acts amending or extending it, or when the last day of grace is a Sunday and the second day of grace is a bank holiday, the bill is due and payable on the succeeding business day. (2) Where a bill is payable at a fixed period after date, after sight, or after the happening of a specified event, the time of payment is de- termined by excluding the day from which the time is to begin to run and by including the day of payment. (3) Where a bill is payable at a fixed period after sight, the time begins to run from the date of the acceptance if the bill be accepted, and from the date of noting or protest if the bill be noted or protested for non-acceptance, or for non-delivery. (4) The term "month" in a bill means calendar month. 15. Case of need. — The drawer of a bill and any indorser may insert therein the name of a person to whom the holder may resort in case of need, that is to say, in case the bill is dishonored by non-ac- ceptance or non-payment. Such person is called the referee in case of 909 OPTIOXAL STIPULATIONS. [§§ 16-19 need. It is in the option of the holder to resort to the referee in case of need, or not, as he may think fit. 16. Optional stipulations. — The drawer of a bill, and any in- dorser, may insert therein an express stipulation — (1) Negativing or limiting his own liability to the holder: (3) Waiving as regards himself some or all of the holder's duties. 17. Definition and requisites of acceptance. — (1) The accept- ance of a bill is the signification by the drawee of his assent to the or- der of the drawer. (2) An acceptance is invalid unless it complies with the following conditions, namely: (a) It must be written on the bill and be signed by the drawee. The mere signature of the drawee without additional words is suflB- cient. (b) It must not express that the drawee will perform his promise by any other means than the payment of money. 18. Time for acceptance. — A bill may be accepted — ( 1 ) Before it has been signed by the drawer, or while otherwise in- complete : (2) When it is overdue, or after it has been dishonored by a previ- ous refusal to accept, or by non-payment: (3) When a bill payable after sight is dishonored by non-accept- ance, and the drawee subsequently accepts it, the holder, in the ab- sence of any difi'erent agreement, is entitled to have the bill accepted as of the date of first presentment to the drawee for acceptance. 19. General and qualified acceptances. — (1) An acceptance is either (a) general or (b) qualified. (2) A general acceptance assents without qualification to the or- der of the drawer, A qualified acceptance in express terms varies the effect of the bill as drawn. In particular an acceptance is qualified which is — (a) Conditional, that is to say, which makes payment by the ac- ceptor dependent on the fulfillment of a condition therein stated : (b) Partial, that is to say, an acceptance to pay part only of the amount for which the bill is drawn : (c) Local, that is to say, an acceptance to pay only at a particular specified place: An acceptance to pay at a particular place is a general acceptance. §§ 20, 21] BILLS OF EXCHANGE. 910 unless it expressly states that the bill is to be paid there only and not elsewhere : (d) Qualified as to time: (e) The acceptance of some one or more of the drawees, but not of all. 20. Inchoate instruments. — (1) Where a simple signature on a blank stamped paper is delivered by the signer in order that it may be converted into a bill, it operates as a prima facie authority to fill it up as a complete bill for any amount the stamp will cover, using the signature for that of the drawer, or the acceptor, or an indorser; and, in like manner, when a bill is wanting in any material particular, the person in possession of it has a prima facie authority to fill up the omission in any way he thinks fit. (2) In order that any such instrument when completed may be enforceable against any person who became a party thereto prior to its coinpletion, it must be filled up within a reasonable time, and strictly in accordance with the authority given. Eeasonable time for this purpose is a question of fact. Provided that if any such instrument after completion is negotiated to a holder in due course it shall be valid and effectual for all purposes in his hands, and he may enforce it as if it had been filled up within a reasonable time and strictly in accordance with the authority given. 21. Delivery. — (1) Every contract on a bill, whether it be the drawer's, the acceptor's, or an indorser's, is incomplete and revoca- ble, until delivery of the instrument in order -to give effect thereto. Provided that where an acceptance is written on a bill, and the drawee gives notice to or according to the directions of the person en- titled to the bill that he has accepted it, the acceptance then becomes complete and irrevocable. (2) As between immediate parties, and as regards a remote party other than a holder in due course, the delivery — (a) In order to be effectual must be made either by or under the authority of the party drawing, accepting, or indorsing, as the case may be: (b) May be shown to have been conditional or for a special pur- pose only, and not for the purpose of transferring the property in the bill. But if the bill be in the hands of a holder in due course a valid 911 CAPACITY OF PARTIES. [§§ 22-25 delivery of the bill by all parties prior to him so as to make them lia- ble to him is conclusively presumed. (3) Where a bill is no longer in the possession of a party who signed it as drawer, acceptor, or indorser, a valid and unconditional delivery by him is presumed until the contrary is proved. Capacity and Authority of Parties. 22. Capacity of parties. — (1) Capacity to incur liability as a party to a bill is co-extensive with capacity to contract. Provided that nothing in this section shall enable a corporation to make itself liable as drawer, acceptor, or indorser of a bill unless it is competent to it so to do under the law for the time being in force re- lating to corporations. (2) Where a bill is drawn or indorsed by an infant, minor, or cor- poration having no capacity or power to incur liability on a bill, the drawing or indorsement entitles the holder to receive payment of the bill, and to enforce it against any other party thereto. 23. Signature essential to liability. — No person is liable as drawer, indorser, or acceptor of a bill who has not signed it as such : Provided that . (1) Where a person signs a bill in a trade or assumed name, he is liable thereon as if he had signed it in his own name : (2) The signature of the name of a firm is equivalent to the sig- nature by the person so signing of the names of all persons liable as partners in that firm. 24. Forged or unauthorized signature. — Subject to the provi- sions of this act, where a signature on a bill is forged or placed there- on without the authority of the person whose signature it purports to be, the forged or unauthorized signature is wholly inoperative, and no right to retain the bill or to give a discharge therefor or to enforce payment thereof against any party thereto can be acquired through or under that signature, unless the party against whom it is sought to retain or enforce payment of the bill is precluded from setting up the forgery or want of authority. Provided that notliing in this section shall affect the ratification of an unauthorized signature not amounting to a forgery. 25. Procuration signatures. — A signature by procuration operates as notice that the agent has but a limited authority to sign, and §§ 2G-29] BILLS OF EXCHANGE. 912 the principal is only bound by such signature if the agent in so sign- ing was acting within the actual limits of his authority. 26. Persons signing as agent or in representative capacity. — (1) Where a person signs a bill as drawer, indorser, or acceptor, and adds words to his signature, indicating that he signs for or on behalf of a principal, or in a representative character, he is not personally liable thereon; but the mere addition to his signature of words describing him as an agent, or as filling a representative character, does not ex- empt him from personal liability. (2) In determining whether a signature on a bill is that of the principal or that of the agent by whose hand it is written, the con- struction most favorable to the validity of the instrument shall be adopted. The Consideration for a Bill. 27. Value and holder for value. — (1) Valuable consideration for a bill may be constituted by — (a) Any consideration sufficient to support a simple contract; (b) An antecedent debt or liability. Such a debt or liability is deemed valuable consideration whether the bill is payable on demand or at a future time. (2) Where value has at any time been given for a bill the holder is deemed to be a holder for value as regards the acceptor and all par- ties to the bill who became parties prior to such time. (3) Where the holder of a bill has a lien on it arising either from contract or by implication of law, he is deemed to be a holder for value to the extent of the sum for which he has a lien. 28. Accommodation bill or party.— (1) An accommodation party to a bill is a person who has signed a bill as drawer, acceptor, or in- dorser, without receiving value therefor, and for the purpose of lend- ing his name to some other person. (2) An accommodation party is liable on the bill to a holder for value; and it is immaterial whether, when such holder took the bill, he knew such party to be an accommodation party or not. 29. Holder in due course. — (1) A holder in due course is a holder who has taken a bill, complete and regular on the face of it. Tinder the following conditions ; namely, (a) That he became the holder of it before it was overdue and 913 PRESUMPTION OF VALUE AND GOOD FAITH. [§§ 30, 31 without notice that it had been previously dishonored, if such was the fact: (b) That he took the bill in good faith and for value, and that at the time the bill was negotiated to him he had no notice of any defect in the title of the person who negotiated it, (2) In particular the title of a person who negotiates a bill is de- fective within the meaning of this act when he obtained the bill, or the acceptance thereof, by fraud, duress, or force and fear, or other unlawful means, or for illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud. (3) A holder (whether for value or not), who derives his title to a bill through a holder in due course, and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in due course as regards the acceptor and all parties to the bill prior to that holder. 30. Presumption of value and good faith. — (1) Every party whose signature appears on a bill is pnma facie deemed to have be- come a party thereto for value. (2) Every holder of a bill is prima facie deemed to be a holder in due course ; but if in an action on a bill it is admitted or proved that the acceptance, issue, or subsequent negotiation of the bill is effected by fraud, duress, or force and fear, or illegality, the burden of proof is shifted, unless and until the holder proves that, subsequent to the alleged fraud or illegality, value has in good faith been given for the bill. Negotiation of Bills. 31. Negotiation of bill. — (1) A bill is negotiated when it is transferred from one person to another in such a manner as to con- stitute the transferee the holder of the bill. (2) A bill payable to bearer is negotiated by delivery. (3) A bill payable to order is negotiated by the indorsement of the holder com,pleted by delivery. (4) Wliere the holder of a bill payable to his order transfers it for value without indorsing it, the transfer gives the transferee such title as the transferor had in the bill, and the transferee in addition ac- quires the right to have the indorsement of the transferor. (5) Where any person is under obligation to indorse a bill in a representative capacity, he may indorse the bill in such terms as to negative personal liability. Joyce Defenses — 58. §§ 32-34] BILLS OF EXCHANGE. 914 32. Requisites of a valid indorsement. — An indorsement in order to operate as a negotiation, must comply with the following conditions, namely, — (1) It must be written on the bill itself and be signed by the in- dorser. The simple signature of the indorser on the bill, without addi- tional words, is sufficient. An indorsement written on an allonge, or on a "copy" of a bill is- sued or negotiated in a country where "copies" are recognized, is deemed to be written on the bill itself. (2) It must be an indorsement of the entire bill. A partial indorse- ment, that is to say, an indorsement which purports to transfer to the indorsee a part only of the amount payable, or which purports to trans- fer the bill to two or more indorsees severally, does not operate as a negotiation of the bill. (3) Where a bill is payable to the order of two or more payees or indorsees who are not partners all must indorse, unless the one indors- ing has authority to indorse for the others. (4) Where, in a bill payable to order, the payee or indorsee is wrongly designated, or his name is misspelled, he may indorse the bill as therein described, adding, if he think fit, his proper signature. (5) Where there are two or more indorsements on a bill each in- dorsement is deemed to have been made in the order in which it ap- pears on the bill, until the contrary is proved. (6) An indorsement may be made in blank or special. It may also contain terms making it restrictive. 33. Conditional indorsement. — Wliere a bill purports to be in- dorsed conditionally the condition may be disregarded by the payer, and payment to the indorsee is valid whether the condition has been fulfilled or not. 34. Indorsement in blank and special indorsement. — (1) An in- dorsement in blank specifies no indorsee, and a bill so indorsed becomes payable to bearer. (2) A special indorsement specifies the person to whom, or to whose order, the bill is to be payable. (3) The provisions of this act relating to a payee apply with the necessar)'^ modifications to an indorsee under a special indorsement. (4) When a bill has been indorsed in blank, any holder may con- vert the blank indorsement into a special indorsement by writing above the indorser's signature a direction to pay the bill to or to the order of himself or some other person. 915 RESTRICTIVE IXDORSEMEXT. [§§ 35-37 35. Restrictive indorsement. — (1) An indorsement is restric- tive which prohibits the further negotiation of the bill or which ex- presses that it is a mere authority to deal with the bill as thereby di- rected and not a transfer of the ownership thereof, as, for example, if a bill be indorsed "Pay D. only," or "Pay D. for the account of X.," or "Pay D. or order for collection." (2) A restrictive indorsement gives the indorsee the right to re- ceive payment of the bill and to sue any party thereto tliat his indorser could have sued, but gives him no power to transfer his rights as in- dorsee unless it expressly authorize him to do so. (3) Wliere a restrictive indorsement authorizes further transfer, all subsequent indorsees take the bill with the same rights and subject to the same liabilities as the first indorsee under the restrictive in- dorsement. 36. Negotiation of overdue or dishonored bill. — (1) Where a bill is negotiable in its origin it continues to be negotiable until it has been (a) restrictively indorsed or (b) discharged by payment or other- wise. (2) Where an overdue bill is negotiated, it can only be negotiated subject to any defect of title affecting it at its maturity, and thence- forward no person who takes it can acquire or give a better title than that which the person from whom he took it had. (3) A bill payable on demand is deemed to be overdue within the meaning and for the purposes, of this section, when it appears on the face of it to have been in circulation for an unreasonable length of time. What is an unreasonable length of time for this purpose is a question of fact. (4) Except where an indorsement bears date after the maturity of the bill, every negotiation is prima facie deemed to have been effected before the bill was overdue. (5) Where a bill which is not overdue has been dishonored any person who takes it with notice of the dishonor takes it subject to any defect of title attaching thereto at the time of dishonor, but nothing in this sub-section shall affect the rights of a holder in due course. 37. Negotiation of bill to party already liable thereon. — Where a bill is negotiated back to the drawer, or to a prior indorser or to the acceptor, such party may, subject to the provisions of this act, reissue and further negotiate the bill, but he is not entitled to enforce pay- ment of the bill against any intervening party to whom he was previ- ously liable. §§ 38-40] BILLS OF EXCHANGE. 91G 38. Rights of the holder. — The rights and powers of the holder of a bill are as follows : (1) He may sue on the bill in his own name: (2) Where he is a holder in due course, he holds the bill free from any defect of title of prior parties, as well as from mere personal de- fenses available to prior parties among themselves, and may enforce payment against all parties liable on the bill : (3) Where his title is defective (a) if he negotiates the bill to a holder in due course, that holder obtains a good and complete title to the bill, and (b) if he obtains payment of the bill the person who pays him in due course gets a valid discharge for the bill. General Duties of the Holder. 39. When presentment for acceptance is necessary. — (1) Where a bill is payable after sight, presentment for acceptance is necessary in order to fix the maturity of the instrument. (2) Where a bill expressly stipulates that it shall be presented for acceptance, or where a bill is drawn payable elsewhere than at the resi- dence or place of business of the drawee, it must be presented for ac- ceptance before it can be presented for payment. (3) In no other case is presentment for acceptance necessary in order to render liable any party to the bill. (4) "V\liere the holder of a bill, drawn payable elsewhere than at the place of business or residence of the drawee, has not time, with the exercise of reasonable diligence, to present the bill for acceptance be- fore presenting it for payment on the day that it falls due, the delay caused by presenting the bill for acceptance before presenting it for payment is excused, and does not discharge the drawer and indorsers. 40. Time for presenting bill payable after sight. — (1) Subject to the provisions of this act, when a bill payable after sight is negotiated, the holder must either present it for acceptance or negotiate it within a reasonable time. (2) If he do not do so, the drawer and all indorsers prior to that holder are discharged. (3) In determining what is a reasonable time within the meaning of this section, regard shall be had to the nature of the bill, the usage of trade with respect to similar bills, and the facts of the particular case. 917 NON-ACCEPTANCE. [§§' 41-43 41. Rules as to presentment for acceptance, and excuses for non- presentment. — (1) A biil is duly presented for acceptance which is presented in accordance with the following rules : (a) The presentment must be made by or on behalf of the holder to the drawee or to some person authorized to accept or refuse accept- ance on his behalf at a reasonable hour on a business day and before the bill is overdue : (b) Where a bill is addressed to two or more drawees, who are not partners, presentment must be made to them all, unless one has au- thority to accept for all, then presentment may be made to him only : (c) Where the drawee is dead presentment may be made to his per- sonal representative : (d) Where the drawee is bankrupt, presentment may be to him or his trustee: (e) Where authorized by agreement or usage, a presentment through the post-office is sufficient. (2) Presentment in accordance with these rules is excused and a bill may be treated as dishonored by non-acceptance — (a) Where the drawee is dead or bankrupt, or is a fictitious person or a person not having capacity to contract by bill : (b) Where, after the exercise of reasonable diligence, such pre- sentment cannot be effected : (c) Where, although the presentment has been irregular, accept- ance has been refused on some other ground. (3) The fact that the holder has reason to believe that the bill, on presentment, will be dishonored does not excuse presentment. 42. Non-acceptance. — (1) When a bill is duly presented for ac- ceptance and is not accepted within the customary time, the person presenting it must treat it as dishonored by non-acceptance. If he do not, the holder shall lose his right of recourse against the drawer and indorsers. 43. Dishonor by non-acceptance and its consequences. — (1) A bill is dishonored by non-acceptance — (a) When it is duly presented for acceptance, and such an accept- ance as is prescribed by this act is refused or cannot be obtained ; or (b) When presentment for acceptance is excused and the bill is not accepted. (2) Subject to the provisions of this act, when a bill is dishonored by non-acceptance, an immediate right of recourse against the drawer §§ 44, 45] BILLS OF EXCHANGE. 918 and indorsers accrues to the holder, and no presentment for pajnnent is necessary. 44. Duties as to qualified acceptances. — (1) The holder of a bill may refuse to take a qualified acceptance, and if he does not ob- tain an unqualified acceptance may treat the bill as dishonored by non-acceptance. (2) Wliere a qualified acceptance is taken, and the drawer or an indorser has not expressly or impliedly authorized the holder to take a qualified acceptance, or does not subsequently assent thereto, such drawer or indorser is discharged from his liability on the bill. The provisions of this sub-section do not apply to a partial accept- ance, whereof due notice has been given. W^iere a foreign bill has been accepted as to part, it must be protected as to the balance. (3) When the drawer or indorser of a bill receives notice of a qualified acceptance, and does not within a reasonable time express his dissent to the holder he shall be deemed to have assented thereto. 45. Rules as to presentment for payment. — Subject to the provi- sions of this act a bill must be duly presented for payment. If it be not so presented the drawer and indorsers shall be discharged. A bill is dul}^ presented for payment which is presented in accord- ance with the following rules : — (1) Where the bill is not payable on demand, presentment must be made on the day it falls due. (2) Where the bill is payable on demand, then, subject to the provisions of this act, presentment must be made within a reasonable time after its issue in order to render the drawer liable, and within a reasonable time after its indorsement, in order to render the indorser liable. In determining what is a reasonable time, regard shall be had to the nature of the bill, the usage of trade with regard to similar bills, and the facts of the particular case. (3) Presentment must be made by the holder or by some person authorized to receive payment on his behalf at a reasonable hour on a business day, at the proper place as hereinafter defined, either to the person designated by the bill as payer, or to some person author- ized to pay or refuse payment on his behalf if with the exercise of reasonable diligence such person can there be found. (4) A bill is presented at the proper place: — (a) Where a place of payment is specified in the bill and the bill is there presented. 919 EXCUSES FOR XOX-PAYilEXT. [§ 46 (b) Where no place of payment is specified, but the address of the drawee or acceptor is given in the bill, and the bill is there presented, (c) Where no place of payment is specified, and no address given, and the bill is presented at the drawee's or acceptor's place of business if known, and if not, at his ordinary residence if known. (d) In any other case if presented to the drawee or acceptor wher- ever he can be found, or if presented at his last known place of busi- ness or residence. (5) Wliere a bill is presented at the proper place, and after the exercise of reasonable diligence no person authorized to pay or refuse pa}Tnent can be found there, no further presentment to the drawee or acceptor is required. (6) "\\T^iere a bill is drawn upon, or accepted by two or more per- sons who are not partners, and no place of payment is specified, pre- sentment must be made to them all. (7) Where the drawee or acceptor of a bill is dead, and no place of payment is specified, presentment must be made to a personal representative, if such there be, and with the exercise of reasonable diligence can be found. (8) Where authorized by agreement or usage a presentment through the postoffice is sufficient. 46. Excuses for delay or non-presentment for payment. — (1) De- lay in making jiresentment for payment is excused when the delay is caused by circumstances beyond the control of the holder, and not im- putable to his default, misconduct, or negligence. When the cause of delay ceases to operate presentment must be made with reasonable diligence. (2) Presentment for payment is dispensed with, — (a) Where, after the exercise of reasonable diligence, presentment, as required by this act, cannot l^e effected. The fact that the holder has reason to believe that the bill will, on presentment, be dishonored, does not dispense with the necessity for presentment. (b) Where the drawee is a fictitious person. (c) As regards the drawer wliere the drawee or acceptor is not bound, as between himself and the drawer, to accept or pay tlie bill, and the drawer has no reason to believe that the bill would be paid if presented. (d) As regards an indorser, where the bill was accepted or made §§ 47-49] BILLS OF EXCHANGE. 920 for the accommodation of that indorser, and he has no reason to ex- pect that the bill would be paid if presented. (e) By waiver of presentment, express or implied. 47. Dishonor by non-payment. — (1) A bill is dishonored by non-payment (a) when it is duly presented for payment and payment is refused or cannot be obtained, or (b) when presentment is excused and the bill is overdue and unpaid. (2) Subject to the provisions of this act, when a bill is dishonored by non-payment, an immediate right of recourse against the drawer and indorsers accrues to the holder. 48. Notice of dishonor and effect of non-notice. — Subject to the provisions of this act, when a bill has been dishonored by non-accept- ance or by non-payment, notice of dishonor must be given to the drawer and each indorser, and any drawer or indorser to whom such notice is not given is discharged ; Provided that — (1) Where a bill is dishonored by non-acceptance, and notice of dishonor is not given, the rights of a holder in due course subsequent to the omission, shall not be prejudiced by the omission. (2) Where a bill is dishonored by non-acceptance, and due notice of dishonor is given, it shall not be necessary to give notice of a sub- sequent dishonor by non-payment unless the bill shall in the meantime have been accepted. 49. Rules as to notice of dishonor. — Notice of dishonor in order to be valid and effectual must be given in accordance with the fol- lowing rules — (1) The notice must be given by or on behalf of the holder, or by or on behalf of an indorser who, at the time of giving it, is himself liable on the bill. (2) Notice of dishonor may be given by an agent either in his own name, or in the name of any party entitled to give notice whether that party be his principal or not. (3) Where the notice is given by or on behalf of the holder, it en- ures for the benefit of all subsequent holders and all prior indorsers who have a right of recourse against the party to whom it is given. (4) Where notice is given by or on behalf of an indorser entitled to give notice as hereinbefore provided, it enures for the benefit of the holder and all indorsers subsequent to the party to whom notice is given. 921 RULES AS TO NOTICE OP DISHONOR. [§ 49 (5) The notice may be given in writing or by personal communi- cation, and may be given in any terms which sufficiently identify the bill, and intimate that the bill has been dishonored by non-acceptance or non-payment. (6) The return of a dishonored bill to the drawer or an indorser is, in point of form, deemed a sufficient notice of dishonor. (7) A written notice need not be signed, and an insufficient writ- ten notice may be supplemented and validated by verbal communica- tion. A misdescription of the bill shall not vitiate the notice unless the party to whom the notice is given is in fact misled thereby. (8) Wliere notice of dishonor is required to be given to any per- son, it may be given either to the party himself, or to his agent in that behalf. (9) Where the drawer or indorser is dead, and the party giving notice knows it, the notice must be given to a personal representative if such there be, and with the exercise of reasonable diligence he can be found. (10) Where the drawer or indorser is bankrupt, notice may be given either to the party himself or to the trustee. (11) Where there are two or more drawers or indorsers who are not partners, notice must be given to each of them, unless one of them has authority to receive such notice for the others. (12) The notice may be given as soon as the bill is dishonored and must be given within a reasonable time thereafter. In the absence of special circumstances notice is not deemed to have been given within a reasonable time, unless — (a) Where the person giving and the person to receive notice re- side in the same place, and notice is given or sent off in time to reach the latter on the day after the dishonor of the bill. (b) Where the person giving and the person to receive notice re- side in different places, the notice is sent off on the day after the dis- honor of the bill, if there be a post at a convenient hour on that day, and if there be no such post on that day then by the next post there- after, 13) Where a bill when dishonored is in the hands of an agent, he may either himself give notice to the parties liable on the bill, or he may give notice to his principal. If he give notice to his principal, he must do so within the same time as if he were the holder, and tlie principal upon receipt of such notice, has himself the same time for giving notice as if the agent had been an independent holder. (14) Where a party to a bill receives due notice of dishonor, he has :§§ 50, 51] BILLS OF EXCHAXGE. 933 after the receipt of such notice the same period of time for giving notice to antecedent parties that the holder has after the dishonor. (15) Where a notice of dishonor is duly addressed and posted, the sender is deemed to have given due notice of dishonor, notwithstanding any miscarriage by the postoffice. 50. Excuses for non-notice and delay. — (1) Delay in giving no- tice of dishonor is excused where the delay is caused by circumstances beyond the control of the party giving notice, and not imputable to his default, misconduct, or negligence. "Wlien the cause of delay ceases to operate the notice must be given with reasonable diligence. (2) Notice of dishonor is dispensed with — (a) When, after the exercise of reasonable diligence, notice as re- quired by this act cannot be given to or does not reach the drawer or. indorser sought to be charged : (b) By waiver express or implied. Notice of dishonor may be waived before the time of giving notice has arrived, or after the omission to give due notice : (c) As regards the drawer in the following cases, namely, (1) where the drawer and drawee are the same person, (2) where the drawee is a fictitious person or a person not having capacity to contract, (3) where the drawer is the person to whom the bill is presented for pay- ment, (4) where the drawee or acceptor is as between himself and the drawer under no obligation to accept or pay the bill, (5) where the drawer has countermanded payment : (d) As regards the indorser in the following cases, namely, (1) where the drawee is a fictitious person or a person not Having capacity to contract and the indorser was aware of the fact at the time he in- dorsed the bill, (2) where the indorser is the person to whom the bill is presented for payment, (3) where the bill was accepted or made for his accommodation. 51. Noting or protest of bill. — (1) Where an inland bill has been dishonored it may, if the holder think fit, be noted for non-acceptance or non-payment, as the case may be; but it shall not be necessary to note or protest any such bill in order to preserve the recourse against the drawer or indorser. (2) Where a foreign bill, appearing on the face of it to be such, has been dishonored by non-acceptance it must be duly protested for non-acceptance, and where such a lull, which has not been previously dishonored by non-acceptance, is dishonored by non-pa3^ment it must 923 NOTING OR PROTEST OF BILL. [§ 51 be duly protested for non-payment. If it be not so protested the drawer and indorsers are discharged. Where a bill does not appear on the face of it to be a foreign bill, protest thereof in case of dishonor is unnecessary. (3) A bill which has been protested for non-acceptance may be subsequently protested for non-payment. (4) Subject to the provisions of this act, when a bill is noted or protested, it must be noted on the day of its dishonor. When a bill has been duly noted, the protest may be subsequently extended as of the date of the noting. (5) Where the acceptor of a bill becomes bankrupt or insolvent or suspends payment before it matures, the holder may cause the bill to be protested for better security against the drawer and indorsers. (6) A bill must be protested at the place where it is dishonored: Provided that — (a) When a bill is presented through the postoffice, and returned by post dishonored, it may be protested at the place to which it is re- turned and on the day of its return if received during business hours, and if not received during business hours, then not later than the next business day: (b) Wlien a bill drawn payable at the place of business or resi- dence of some person other than the drawee, has been dishonored by non-acceptance, it must be protested for non-payment at the place where it is expressed to be payable, and no further presentment for payment to, or demand on, the drawee is necessary. (7) A protest must contain a copy of the bill, and must be signed by the notary making it, and must specify — (a) The person at whose request the bill is protested: (b) The place and date of protest, the cause or reason for pro- testing the bill, the demand made and the answer given, if an}^, or the fact that the drawee or acceptor could not be found. (8) Where a bill is lost or destroyed, or is wrongly detained from the person entitled to hold it, protest may be made on a copv or writ- ten particulars thereof. (9) Protest is dispensed with by any circumstance which would dispense with notice of dishonor. Delay in noting or protesting is excused when the delay is caused by circumstances beyond the control of the holder, and not imputable to his default, misconduct, or negli- gence. Wlicn the cause of delay ceases to operate the bill must be noted or protested with reasonable diligence. §§ 52-55] BILLS OF EXCHANGE. 924 52. Duties of holder as regards drawee or acceptor. — (1) When a bill is accepted generally presentment for payment is not necessary in order to render the acceptor liable. (2) When by the terms of a qualified acceptance presentment for payment is required, the acceptor, in the absence of an express stipu- lation to that effect, is not discharged by the omission to present the bill for payment on the day that it matures. (3) In order to render the acceptor of a bill liable it is not neces- sary to protest it, or that notice of dishonor should be given to him. (4) Where the holder of a bill presents it for payment, he shall exhibit the bill to the person from whom he demands payment, and when a bill is paid the holder shall forthwith deliver it up to the party paying it. Liabilities of Parties. 63. Bill not assignment of funds in hands of drawee. — (1) A bill, of itself, does not operate as an assignment of funds in the hands of the drawee available for the payment thereof, and the drawee of a bill who does not accept as required by this act is not liable on the instru- ment. This sub-section shall not extend to Scotland. (2) In Scotland, where the drawee of a bill has in his hands funds available for the pajTuent thereof, the bill operates as an assignment of the sum for which it is drawn in favor of the holder, from the time when the bill is presented to the drawee. 54. Liability of acceptor. — The acceptor of a bill, by accepting it — (1) Engages that he will pay it according to the tenor of his ac- ceptance : (2) Is precluded from denying to a holder in due course: (a) The existence of the drawer, the genuineness of his signature, and his capacity and authority to draw the bill; (b) In the case of a bill payable to drawer's order, the then ca- pacity of the drawer to indorse, but not the genuineness or validity of his indorsement; (c) In the case of a bill payable to the oider of a third person the existence of the payee and his then capacity to indorse, but not the genuineness or validity of his indorsement. 55. Liability of drawer or indorser. — (1) The drawer of a bill by drawing it — (a) Engages that on due presentment it shall be accepted and -I 925 STRANGER LIABLE TO INDORSER. [§§ 56, 57 paid according to its tenor, and that if it be dishonored he will com- pensate the holder or any indorser who is compeled to pay it, provided that the requisite proceedings on dishonor be duly taken ; (b) Is precluded from denying to a holder in due course the ex- istence of the payee and his then capacity to indorse. (2) The indorser of a bill by indorsing it — (a) Engages that on due presentment it shall be accepted and paid according to its tenor, and that if it be dishonored he will compensate the holder or a subsequent indorser who is compelled to pay it, pro- vided that the requisite proceedings on dishonor be duly taken ; (b) Is precluded from denying to a holder in due course the genu- ineness and regularity in all respects of the drawer's signature and all previous indorsements ; (c) Is precluded from denying to his immediate or a subsequent indorsee that the bill was at the time of his indorsement a valid and subsisting bill, and that he had then a good title thereto. 56. Stranger signing bill liable as indorser. — Where a person signs a bill otherwise than as drawer or acceptor, he thereby incurs the liabilities of an indorser to a holder in due course. 57. Measure of damages against parties to dishonored bill. — Where a bill is dishonored, the measure of damages, which shall be deemed to be liquidated damages, shall be as follows: (1) The holder may recover from any party liable on the bill, and the drawer who has been compelled to pay the bill may recover from the acceptor, and an indorser who has been compelled to pay the bill may recover from the acceptor or from the drawer, or from a prior indorser — (a) The amount of the bill : (b) Interest thereon from the time of presentment for payment if the bill is payable on demand, and from the maturity of the bill in any other case : (c) The expenses of noting, or, when protest is necessary, and the protest has been extended, the expenses of protest. (2) In the case of a bill which has been dishonored abroad, in lieu of the above damages, the holder may recover from the drawer or an indorser, and the drawer or an indorser who has been compelled to pay the bill may recover from any party liable to him, the amount of the re-exchange with interest thereon until the time of payment. (3) Where by this act interest may be recovered as damages, such §§ 58-60] BILLS OF EXCHANGE. 92& interest may, if justice requires it, be withheld wholly or in part, and where a bill is expressed to be payable with interest at a given rate, interest as damages may or may not be given at the same rate as inter- est proper. 58. Transferor by delivery and transferee. — (1) Where the holder of a bill payable to bearer negotiates it by delivery without in- dorsing it, he is called a "transferor by delivery." (2) A transferor by delivery is not liable on the instrument. (3) A transferor by delivery who negotiates a bill thereby war- rants to his immediate transferee being a holder for value, that the bill is what it purports to be, that he has a right to transfer it, and that at the time of transfer he is not aware of any fact which renders it valueless. Discharge of Bill. 59. Payment in due course. — (1) A bill is discharged by payment in due course by or on behalf of the drawee or acceptor. "Payment in due course" means payment made at or after the ma- turity of the bill to the holder thereof in good faith and without notice that his title to the bill is defective. (2) Subject to the provisions hereinafter contained, when a bill is paid by the drawer or an indorser it is not discharged ; but (a) Where a bill payable to, or to the order of, a third party is paid by the drawer, the drawer may enforce payment thereof against the acceptor, but may not re-issue the bill. (b) Where a bill is paid by an indorser, or where a bill payable to drawer's order is paid by the drawer, the party paying it is remitted to his former rights as regards the acceptor or antecedent parties, and he may, if he thinks fit, strike out his own and subsequent indorse- ments, and again negotiate the bill. (3) Where an accommodation bill is paid in due course by the party accommodated the bill is discharged. 60. Banker paying demand draft whereon Indorsement is forged. — When a bill payable to order on demand is drawn on a banker, and the banker on whom it is drawn pays the bill in good faith and in the ordinary course of business, it is not incumbent on the banker to show that the indorsement of the payee or any subsequent indorsement was made by or under the authority of the person whose indorsement it purports to be, and the banker is deemed to have paid the bill in due 927 EXPRESS WAIVER — CANCELLATION. [§§' 61-G4 course, although such indorsement has been forged or made without authority. 61. Acceptor the holder at maturity. — "When the acceptor of a bill is or becomes the holder of it at or after its maturity, in his own right,. the bill is discharged. 62. Express waiver. — (1) When the holder of a bill at or after its maturity absolutely and unconditionally renounces his rights against the acceptor the bill is discharged. The renunciation must be in writing, unless the bill is delivered up to the acceptor. (2) The liabilities of any party to a bill may in like manner be renounced by the holder before, at, or after its maturity ; but nothing in this section shall affect the rights of a holder in due course without notice of the renunciation. 63. Cancellation. — (1) Where a bill is intentionally cancelled by the holder or his agent, and the cancellation is apparent thereon, the • bill is discharged. (2) In like manner any party liable on a bill may be discharged by the intentional cancellation of his signature by the holder or his agent. In such case any indorser who would have had a right of re- course against the party whose signature is cancelled, is also discharged. (3) A cancellation made unintentionally, or under a mistake, or without the authority of the holder is inoperative; but where a bill or any signature thereon appears to have been canceled the burden of proof lies on the party who alleges that the cancellation was made unintentionally, or under a mistake, or without authority. 64. Alteration of bill. — (1) Where a bill or acceptance is mate- rially altered without the assent of all parties liable on the bill, the bill is avoided except as against a party who has himself made, au- thorized, or assented to the alteration, and subsequent indorsers. Provided that. Where a bill has been materially altered, Init tlio alteration is not apparent, and the bill is in the hands of a holder in due course, such holder may avail himself of the bill as if it had not been altered, and may enforce payment of it according to its original tenor. (2) In particular the following alterations are material, namely, any alteration of the date, the sum payaldc, the time of payment, the §§ G5-C7J BILLS OF EXCHANGE. 928 place of payment, and, where a bill has been accepted generally, the addition of a place of payment without the acceptor's assent. Acceptance and Payment for Honor. 65. Acceptance for honor supra protest. — (1) Where a bill of ex- change has been protested for dishonor by non-acceptance, or pro- tested for better security, and is not overdue, any person, not being a party already liable thereon, may, with the consent of the holder, in- tervene and accept the bill supra protest, for the honor of any party liable thereon, or for the honor of the person for whose account the bill is drawn. (2) A bill may be accepted for honor for part only of the sum for which it is drawn. (3) An acceptance for honor supra protest in order to be valid must — (a) Be written on the bill, and indicate that it is an acceptance for honor : (b) Be signed by the acceptor for honor. (4) Where an acceptance for honor does not expressly state for whose honor it is made, it is deemed to be an acceptance for the honor of the drawer. (5) Where a bill payable after sight is accepted for honor, its ma- utrity is calculated from the date of the noting for non-acceptance, and not from the date of the acceptance for honor. 66. Liability of acceptor for honor. — (1) The acceptor for honor of a bill by accepting it engages that he will, on due presentment, pay the bill according to the tenor of his acceptance, if it is not paid by the drawee, provided it has been duly presented for payment, and protested for non-payment, and that he receives notice of these facts. (2) The acceptor for honor is liable to the holder and to all parties to the bill subsequent to the party for whose honor he has accepted. 67. Presentment to acceptor for honor. — (1) Where a dishonored bill has been accepted for honor supra protest, or contains a reference in case of need, it must be protested for non-payment before it is pre- sented for payment to the acceptor for honor, or referee in case of need, (2) Where the address of the acceptor for honor is in the same place where the bill is protested for non-payment, the bill must be presented 929 PAYMENT FOR HONOR SUPRA PROTEST, [§§ 68, 69 to him not later than the day following its maturity; and where the address of the acceptor for honor is in some place other than the place where it was protested for non-payment, the bill must be forwarded not later than the day following its maturity for presentment to him. (3) Delay in presentment or non-presentment is excused by any circumstance which would excuse delay in presentment for payment or non-presentment for payment. (4) When a bill of exchange is dishonored by the acceptor for honor it must be protested for non-payment by him. 68. Payment for honor supra protest. — (1) Where a bill has been protested for non-payment, any person may intervene and pay it supra protest for the honor of any party liable thereon, or for the honor of the person for whose account the bill is drawn. (2) Where two or more persons offer to pay a bill for the honor of different parties, the person whose payment will discharge most par- ties to the bill shall have the preference. (3) Payment or honors supra protest, in order to operate as such and not as a mere voluntary payment, must be attested by a notarial act of honor which may be appended to the protest or form an exten- sion of it. (4) The notarial act of honor must be founded on a declaration made by the payer for honor, or his agent in that behalf, declaring his intention to pay the bill for honor, and for whose honor he pays. (5) Where a bill has been paid for honor, all parties subsequent to the party for whose honor it is paid are discharged, but the payer for honor is subrogated for, and succeeds to both the rights and duties of, the holder as regard? the party for whose honor he pays, and all parties liable to that party. (6) The payer for honor on paying to the holder the amount of the bill and the notarial expenses incidental to its dishonor is entitled to receive both the bill itself and the protest. If the holder do not on demand deliver them up he shall be liable to the payer for honor in damages. (7) Where the holder of a bill refuses to receive payment supra protest he shall lose his right of recourse against any party who would have been discharged by such payment. Lost Instruments. 69. Holder's right to duplicate of lost bill. — Where a bill has been lost before it is overdue, the person who was the holder of it may apply Joyce Defenses — 59. §§ 70-72] BILLS OF EXCHANGE. 930 to the drawer to give him another bill of the same tenor, giving se- curity to the drawer if required to indemnify him against all persons whatever in ease the bill alleged to have been lost shall be found again. If the drawer on request as aforesaid refuses to give such duplicate bill he may be compelled to do so. 70. Action on lost bill. — In any action or proceeding upon a bill, the court or judge may order that the loss of the instrument shall not be set up, provided an indemnity be given to the satisfaction of the court or judge against the claims of any other person upon the instru- ment in question. Bill in a Set. 71. Rules as to sets. — (1) Where a bill is drawn in a set, each part of the set being numbered, and containing a reference to the other parts, the whole of the parts constitute one bill. (2) Where the holder of a set indorses two or more parts to differ- ent persons, he is liable on every such part, and every indorser subse- quent to him is liable on the part he himself indorsed as if the said parts were separate bills. (3) Where two or more parts of a set are negotiated to different holders in due course, the holder whose title first accrues is as between such holders deemed the true owner of the bill; but nothing in this sub-section shall affect the rights of a person who in due course ac- cepts or pays the part first presented to him. (4) The acceptance may be written on any part, and it must be written on one part only. If the drawee accepts more than one part, and such accepted parts get into the hands of different holders in due course, he is liable on every such part as if it were a separate bill. (5) When the acceptor of a bill drawn in a set pays it without re- quiring the part bearing his acceptance to be delivered up to him, and that part at maturity is outstanding in the hands of a holder in due course, he is liable to the holder thereof. (6) Subject to the preceding rules, where any one part of bill drawn in a set is discharged by payment or otherwise, the whole bill is discharged. Conflict of Laws. 72. Rules where laws conflict. — Where a bill drawn in one coun- try is negotiated, accepted, or payable in another, the rights, duties, and liabilities of the parties thereto are determined as follows: — 931 CHEQUE DEFINED. [§ 73 (1) The validity of a bill as regards requisites in form is deter- mined by the law of the place of issue, and the validity as regards requisites in form of the supervening contracts, such as acceptance, or indorsement, or acceptance supra protest, is determined by the law of the place where such contract was made. Provided that — (a) Where a bill is issued out of the United Kingdom it is not invalid by reason only that it is not stamped in accordance with the law of the place of issue : (b) Where a bill, issued out of the United Kingdom, conforms, as regards requisites in form, to the law of the United Kingdom, it may, for the purposes of enforcing payment thereof, be treated as valid as between all persons who negotiate, hold, or become parties to it in the United Kingdom. (2) Subject to the provisions of this Act, the interpretation of the drawing, indorsement, acceptance, or acceptance supra protest of a bill, is determined by the law of the place where such contract is made. Provided that where an inland bill is indorsed in a foreign country the indorsement shall as regards the payer be interpreted according to the law of the United Kingdom. (3) The duties of the holder with respect to presentment for ac- ceptance or payment and the necessity for or sufficiency of a protest or notice of dishonor, or otherwise, are determined by the law of the place where the act is done or the bill is dishonored. (4) Where a bill is drawn out of but payable in the United King- dom and the sum payable is not expressed in the currency of the United Kingdom, the amount shall, in the absence of some express stipulation, be calculated according to the rate of exchange for sight drafts at the place of payment on the day the bill is payable. (5) Where a bill is drawn in one country and is payable in an- other, the due date thereof is determined according to the law of the place where it is payable. PAET III. CHEQUES ON A BANKER. 73. Cheque defined. — A cheque is a bill of exchange drawn on a banker payable on demand. Except as otherwise provided in this part, the provisions of this Act applicable to a bill of exchange payable on demand apply to a cheque. §§ 74-77] CHEQUES ON A BANKER. 932 74. Presentment of cheque for payment. — Subject to the provi- sions of this Act — (1) Where a cheque is not presented for payment within a reason- able time of its issue, and the drawer or the person on whose account it is drawn had the right at the time of such presentment as between him and the banker to have the cheque paid and suffers actual damage through the delay, he is discharged to the extent of such damage, that is to say, to the extent to which such drawer or person is a cred- itor of such banker to a larger amount than he would have been had such cheque been paid. (2) In determining what is a reasonable time regard shall be had to the nature of the instrument, the usage of trade and of bankers, and the facts of the particular case, (3) The holder of such cheque as to which such drawer or person is discharged shall be a creditor, in lieu of such drawer or person, of such banker to the extent of such discharge, and entitled to recover the amount from him. 75. Revocation of banker's authority. — The duty and authority of a banker to pay a cheque drawn on him by his customer are deter- mined by — (1) Countermand of payment : (2) Notice of the customer's death. Crossed Cheques. 76. General and special crossings defined. — (1) Where a cheque bears across its face an addition of — (a) The words "and company" or any abbreviation thereof be- tween two parallel transverse lines, either with or without the words "not negotiable ;" or (b) Two parallel transverse lines simply, either with or without the words "not negotiable ;" that addition constitutes a crossing, • and the cheque is crossed gen- erally. (3) Where a cheque bears across its face an addition of the name of a banker, either with or without the words "not negotiable," that addition constitutes a crossing, and the cheque is crossed specially and to that banker. 77. Crossing by drawer or after issue. — (1) A cheque may be crossed generally or specially by the drawer. I 933 CROSSING MATERIAL PART OF CHEQUE. [§§ 78-80 (2) Where a cheque is uncrossed, the holder may cross it generally or specially. (3) Where a cheque is crossed generally the holder may cross it specially. (4) Where a cheque is crossed generally or specially, the holder may add the words "not negotiable." (5) Where a cheque is crossed specially, the banker to whom it is crossed may again cross it specially to another banker for collection. (6) Where an uncrossed cheque, or a cheque crossed generally, is sent to a banker for collection, he may cross it specially to himself. 78. Crossing a material part of cheque. — A crossing authorized by this act is a material part of the cheque ; it shall not be lawful for any person to obliterate or, except as authorized by this act, to add to or alter the crossing. 79. Duties of banker as to crossed cheques. — (1) Wliere a cheque is crossed specially to more than one banker except when crossed to an agent for collection being a banker, the banker on whom it is drawn shall refuse payment thereof. (2) Where the banker on whom a cheque is drawn which is so crossed nevertheless pays the same, or pays a cheque crossed generally otherwise than to a banker, or if crossed specially otherwise than to the banker to whom it is crossed, or his agent for collection being a banker, he is liable to the true owner of the cheque for any loss h may sustain owing to the cheque having been so paid. Provided that where a cheque is presented for payment which does not at the time of presentment appear to be crossed, or to have had a crossing which has been obliterated, or to have been added to or al- tered otherwise than as authorized by this act, the banker paying the cheque in good faith and without negligence shall not be responsible or incur any liability, nor shall the payment be questioned by reason of the cheque having been crossed, or of a crossing having been ob- literated or having been added to or altered otherwise than as author- ized by this act, and of payment having been made otherwise than to a banker or to the banker to whom the cheque is or was crossed, or to .his agent for collection being a banker, as the case may be. 80. Protection to banker and drawer where cheque is crossed. Where the banker, on wliom a crossed cheque is drawn, in good faith and without negligence pays it, if crossed generally, to a banker, and §§ 81-83] PROMISSORY NOTES. 934 if crossed specially, to the banker to whom it is crossed, or his agent for collection being a banker, the banker paying the cheque, and, if the cheque has come into the hands of the payee, the drawer, shall re- spectively be entitled to the same rights and be placed in the same position as if payment of the cheque had been made to the true owner thereof. 81. Effect of crossing on holder. — Where a person takes a crossed cheque which bears on it the words "not negotiable," he shall not have and shall not be capable of giving a better title to the cheque than that which the person from whom he took it had. 82. Protection to collecting banker. — Where a banker in good faith and without negligence receives payment for a customer of a cheque crossed generally or specially to himself, and the customer has no title or a defective title thereto, the banker shall not incur any lia- bility as to the true owner of the cheque by reason only of having re- ceived such payment. Amended, 6 Edw. 7, as follows: An Act to amend section eighty-two of the Bills of Exchange Act, 1882 [4th August, 1906]. Be it enacted by the King's most excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows : 1. A banker receives payment of a crossed cheque for a customer within the meaning of section eighty-two of the Bills of Exchange Act, 1882, notwithstanding that he credits his customer's account with the amount of the cheque before receiving payment thereof. 2. This Act may be cited as the Bills of Exchange (Crossed Cheques) Act, 1906, and this act and the Bills of Exchange Act, 1882, may be cited together as the Bills of Exchange Acts, 1882 and 1906. PART IV. PROMISSORY NOTES. 83. Promissory note defined. — (1) A promissory note is an un- conditional promise in writing made by one person to another signed by the maker, engaging to pay, on demand or at a fixed or determin- 935 DELIVERY NECESSARY NOTES PAYABLE OX DEMAND. [§§ 84^87 able future time, a sum certain in money, to, or to the order of, a specified person or to bearer. (3) An instrument in the form of a note payable to maker's order is not a note within the meaning of this section unless and until it is indorsed by the maker, (3) A note is not invalid by reason only that it contains also a pledge of collateral security with authority to sell or dispose thereof. (4) A note which is, or on the face of it, purports to be, both made and payable within the British Islands is an inland note. Any other note is a foreign note. 84. Belivery necessary. — A promissory note is inchoate and in- complete until delivery thereof to the payee or bearer. 85. Joint and several notes. — (1) A promissory note may be made by two or more makers, and they may be liable thereon jointly, or jointly and severally, according to its tenor. (2) Where a note runs "I promise to pay" and is signed by two or more persons it is deemed to be their joint and several note. 86. Note payable on demand. — (1) Where a note payable on demand has been indorsed, it must be presented for payment within a -reasonable time of the indorsement. If it be not so presented the indorser is discharged. (2) In determining what is a reasonable time, regard shall be had ' to the nature of the instrument, the usage of trade, and the facts of the particular case. (3) Where a note payable on demand is negotiated, it is not deemed to be overdue, for the purpose of affecting the holder with defects of title of which he had no notice, by reason that it appears that a rea- sonable time for presenting it for payment has elapsed since its issue. 87. Presentment of note for payment. — (1) Where a promissory note is in the body of it made payable at a particular place, it must be presented for payment at that place in order to render the maker liable. In any other case, presentment for payment is not necessary in order to render the maker liable. (2) Presentment for payment is necessary in order to render the indorser of a note liable. (3) Where a note is in the body of it made payable at a particular place, presentment at that place is necessary in order to render an in- §§ 88--91] SUPPLEMENTARY. 936_ dorser liable; but when a place of payment is indicated by way of memorandum only, presentment at that place is sufficient to render the indorser liable, but a presentment to the maker elsewhere, if suffi- cient in other respects, shall also suffice. 88. Liability of maker. — The maker of a promissory note by making it — ( 1 ) Engages that he will pay it according to its tenor ; (2) Is precluded from denying to a holder in due course the ex- istence of the payee and his then capacity to indorse. 89. Application of Part II to notes. — (1) Subject to the pro- visions in this part, and except as by this section provided, the pro- visions of this act relating to bills of exchange apply, with the neces- sary modifications, to promissory notes. (2) In applying those provisions the maker of a note shall be deemed to correspond with the acceptor of a bill, and the first indorser of a note shall be deemed to correspond with the drawer of an accepted bill payable to drawer's order. (3) The following provisions as to bills do not apply to notes; namely, provisions relating to — (a) Presentment for acceptance; (b) Acceptance; (c) Acceptance supra protest; (d) Bills in a set. (4) Where a foreign note is dishonored, protest thereof is un- necessary. PAET V. SUPPLEMENTARY. 90. Good faith. — A thing is deemed to be done in good faith, within the meaning of this act, where it is in fact done honestly, whether it is done negligently or not. 91. Signature. — (1) Where, by this act, any instrument or writing is required to be signed by any person, it is not necessary that he should sign it with his own hand, but it is sufficient if his signature is written thereon by some other person by or under his authority. (2) In the case of a corporation, where, by this act, any instru- 937 COMPUTATION OP TIME. [§§ 92-96 ment or writing is required to be signed, it is sufficient if the instru- ment or writing be sealed with the corporate seal. But nothing in this section shall be construed as requiring the bill or note of a corporation to be under seal. 92. Computation of time. — Where, by this act, the time limited for doing any act or thing is less than three days, in reckoning time, non-business days are excluded. "Non-business days" for the purposes of this act mean — (a) Sunday, Good Friday, Christmas Day : (b) A bank holiday under the Bank Holidays Act, 1871, or acts amending it : (c) A day appointed by royal proclamation as a public fast or thanksgiving day. Any other day is a business day. 93. When noting equivalent to protest. — For the purpose of this act, where a bill or note is required to be protested within a specified time or before some further proceeding is taken, it is sufficient that the bill has been noted for protest before the expiration of the speci- fied time or the taking of the proceeding; and the formal protest may be extended at any time thereafter as of the date of the noting. 94. Protest when notary not accessible. — Where a dishonored bill or note is authorized or required to be protested, and the services of a notary cannot be obtained at the place where the bill is dishonored, any householder or substantial resident of the place may, in the presence of two witnesses, give a certificate, signed by them, at- testing the dishonor of the bill, and the certificate shall in all respects operate as if it were a formal protest of the bill. The form given in Schedule 1 to this act may be used with neces- sary modifications, and if used shall be sufficient. 95. Dividend warrants may be crossed. — The provisions of this act as to crossed cheques shall apply to a warrant for payment of divi- dend. 96. Repeal. — The enactments mentioned in the second schedule to this act arc hereby repealed as from the commencement of this act to the extent in that schedule mentioned. §§ 97-100] SUPPLEMENTAEY. 938 Provided that such repeal shall not affect anything done or suf- fered, or any right, title, or interest acquired or accrued before the commencement of this act, or any legal proceeding or remedy in re- spect of any such thing, right, title, or interest. 97. Savings. — (1) The rules in bankruptcy relating to bills of exchange, promissory notes, and cheques, shall continue to apply thereto notwithstanding anything in this act contained. (2) The rules of common law including the law merchant, save in so far as they are inconsistent with the express provisions of this act, shall continue to apply to bills of exchange, promissory notes, and cheques. (3) Nothing in this act or in any repeal effected thereby shall affect — (a) The provisions of the Stamp Act, 1870, or acts amending it or any law or enactment for the time being in force relating to the revenue : (b) The provisions of the Companies Act, 1862, or acts amending it or any act relating to joint stock bank or companies : (c) The provisions of any act relating to or confirming the privi- leges of the Bank of Ireland respectively : (d) The validity of any usage relating to dividend warrants, or the indorsements thereof. 98. Saving of summary diligence in Scotland. — Nothing in this act or in any repeal effected thereby shall extend or restrict, or in any way alter or affect the law and practice in Scotland in regard to summary diligence. 99. Construction with other acts, &c. — Where an act or document refers to any enactment repealed by this act, the act or document shall be construed, and shall operate, as if it referred to the corresponding provisions of this act. 100. Parol evidence allowed in certain judicial proceedings in Scotland. — In any judicial proceeding in Scotland, any fact relating to a bill of exchange, bank cheque, or promissory note, which is relevant to any question of liability thereon, may be proved by parol evidence: Provided that this enactment shall not in any way affect the existing law and practice whereby the party who is, according to the tenor of I 939 PAROL EVIDENCE ALLOWED IN SCOTLAND. [§ 100 any bill of exchange, bank cheque, or promissory note, debtor to the holder in the amount thereof, may be required, as a condition of ob- taining a sist of diligence, or suspension of a charge, or threatened charge, to make such consignation, or to find such caution as the court or judge before whom the cause is depending may require. This section shall not apply to any case where the bill of exchange, bank cheque, or promissory note has undergone the sesennial prescrip- tion. SCHEDULES. FIEST SCHEDULE. Form of protest which may be used when the services of a notary cannot be obtained. Know all men that I, A. B. (householder), of , in the coun- try of , in the United Kingdom, at the request of C. D., there being no notary public available, did on the day of , 188 — , at demand payment (or acceptance) of the bill of exchange hereunder written, from E. F., to which demand he made answer (state answer, if any) Wherefore I now, in the presence of G. H. and J. K., do protest the said bill of exchange. (Signed) A. B. G. H. J. K. Witnesses, N. B. — The bill itself should be annexed, or a copy of the bill and all that is written thereon should be underwritten. SECOND SCHEDULE. Specifies what laws are repealed. INDEX 941 INDEX. {References are to Sections.} ABDUCTION, note in consideration of void, n. 288. ABSCONDED, where maker has, presentment, degree of diligence, 522. ACCEPTANCE, of instruments on Sunday, 29. of paper as an estoppel, 641. of bill of exchange by infant, infancy as a defense, 67. by corporation in violation of statute, 84. of bill of exchange by partner, want of authority, 90. estops to deny authority of agent, 641. forgery of, 99. estops to deny signature of drawer, 641. does not estop to deny signature of indorser, 673. want of consideration for, 199. estops to show want of consideration, 641. for accommodation, want of consideration, indorsement after ma- turity, 282. estops to show not sufficient funds, 641. presumption from as to funds may be rebutted, 199. binds acceptor to bona fide payee or holder for value, 199. for accommodation, want or failure of consideration, 272, 273, 274. discount of accommodation paper before, 276. of accommodation paper, conflict of laws, 277. where conditional, 347. absolute on face cannot be shown to be conditional, n. 347. of bill of exchange, condition affecting, diversion, 386. of order on committee, 500. where notice of protest contains erroneous statement as to who accepted, 530. banker's oral agreement to accept checks, n. 581. estops to show fraud in filling blank space for amount, 641. when does not estop to show usury, 641. certification of bank check, 642. of new note as an estoppel, 649. of deed with warranty as an estoppel, 664. See Acceptor; Checks; Notice ov Dishonor; Presentment foe Accep- tance. 943 I 944 INDEX. [References are to Sections."], ACCEPTOR, cannot allege payee fictitious person, 24. liability of married woman as, 50. cannot set up infancy of drawers of bill of exchange, 68. of bill cannot question authority of drawer, 95, fraud of drawer in use of proceeds not available in favor of, 134. violation of agreemeot between payee and drawer no defense, 134. v that paper altered before acceptance no defense, 136. released by alteration of date, 152. bound by his acceptance to bona fide payee or holder for value, 199. right to set up want of consideration generally, 199. precluded from inquiring into consideration between other parties, 199. failure of consideration as defense to action against, 203. of purchase price paper, cannot show want or failure of consider- ation, 258. may show knowledge of holder of breach of duty in transferring to him, 272. of paper for accommodation, bona fide holders, 273. for accommodation, want or failure of consideration, general rules and illustrations, 272, 273, 274. indorsement for accommodation of, conditions as to discount, bona ^" fide holder, 273. '' of accommodation paper, want or failure of consideration, con- flict of laws, 277. acceptance for accommodation, want of consideration, indorsement after maturity, 282. of accommodation paper taken in payment of pre-existing debt, action by payee, 287. of bills for accommodation, pledging of as collateral, 355. exceptions rare to general rule as to liability of, 274. of bill payable to order, purchaser without indorsement, 275. usury between payee and acceptor a defense, 302. where acceptance conditional, 347. cannot set up acceptance on condition where performance prevented by him, 347. when may show that payment by depended on condition, 320. breach of condition as to payments by payee no defense, 324. subsequent extension of time to may be shown by drawer, 340. defenses of against drawer not available against bona fide holder, 445. protest without presentment to, 498. presentment to for acceptance, 499. for payment, 503. of draft, presentment to for payment not necessary to charge, 503. insolvency of does not excuse failure to give notice of dishonor, n. 570. protest unnecessary as to, 536. IXDEX. 94,5 K [References are to Sections.^ ■ ACCEPTOR— Continued. insolvency of does not excuse failure to give notice of dishonor. 570. availablity of set-off in action against, 619. set-off of against drawer not available against bona fide holder, 627. not estopped by representations made by drawer to purchaser, 654. where performance prevented by, estoppel, 659. laches in attempting to destroy instrument, estoppel, 661. See Acceptance; Particular Defense. ACCEPTOR FOR HONOR OR REFEREE, excuses for delay in presentment for payment, n. 521. ACCIDENT, where alterations result of, 143. accidental omission of name and subsequent addition of, 175. erasure of indorsement by, 180. ACCOMMODATION, paper, want of consideration, as to parties generally, 283. paper falsely represented to be business paper, § 116. paper, want of consideration as between original or immediate parties, 269. check, bona fide holder, no consideration to drawer no defense, 270. note, making of is loan of maker's credit, n. 270. paper, discount of before acceptance, 276. conflict of laws, acceptance, 277. check, want or failure of consideration, 278. paper taken after maturity, want of consideration, bona fide holder 282, paper, misapplication of, 282. fraudulently put into circulation, 284. creditor taking is purchaser for value, 285. note in payment of pre-existing debt, bona fide indorsee against in- dorser, 286. usurious note, not affected by the usury, 305. paper as security for pre-existing debt, 247. paper, transfer of as security for antecedent debt, 390, 391. one taking as security for antecedent debt bona fide holder in New York, 391. transferred as collateral, bona fide holder against maker, 353. taken as collateral for pre-existing debt, bona fide holder, ex- tent of recovery, 378. diverted, bona fide holder, 383, 384. other than bo7ia fide holders, 385. diversion of, no restrictions imposed, 386. where purpose of substantially effected, diversion, 386. negotiated to party not contemplated, 387, 388, 389. to be discounted at particular bank, diversion, 388, 389. diversion of, waiver, 393. . notice as to, 483. Joyce Defenses — 60. 9-iG INDEX. [References are to Sections.'] ACCOMMODATION— Continued. notes, discount of by bank on representation, valid consideration, 484. paper, indorsement by corporation, bona fide holder, 487. paper for indorser, presentment for payment, 522. bill or note given for accommodation of indorser, when presenta- tion for payment dispensed with, 523. signing for, estopped as to want or failure of consideration, 666. See Acceptance; Accommodation Acceptor; Accommodation Indorsee; Accommodation Maker. ACCOMMODATION ACCEPTOR, of bills pledged as collateral, 355. want or failure of consideration, general rules and illustrations, 272, 273, 274. of draft or bill taken in payment of pre-existing debt, action by payee, 287. ACCOMMODATION INDORSER, availability of defenses, general rule, 6, 279, 280, 281. in blank, defense to action against, 10. fraud of maker toward no defense against payee without notice, 126. sufficiency of consideration, 270, 271. discharged by inserting rate of interest without his consent, 170. breach of warranty, 280. occupies position of surety, 281. indorsement of bill for accommodation of drawer, agreement not to present until maturity, 491. for maker, presentment for payment, 523. entitled to notice of protest, 527. entitled to notice of dishonor, n. 570. may set off usury, 623. paying note to bona fide holder not subject to set-off, 627. See Accommodation; Indorsement; Indorser. ACCOMMODATION MAKER, sufl5ciency of consideration, 270, 271. action by bona fide holder against, note taken in payment of pre- existing debt, 284, 285. may show alteration of date, 152. not released by addition of name where blank left, 175. may show subsequent extension of time to payee, 340. diversion of proceeds no defense against bona fide holder, 392. See Accommodation. ACCOMMODATION PARTY, See Accommodation. ACCOMMODATION PAYEE, sale of collateral, 683. I IXDEX. 947 {References are to Sections.^ ACCORD AND SATISFACTION, agreement to discharge note other than by paying money not 333 as discharge, 686. agreement to accept deed in settlement of amount of note, 694. covenant to accept less sum, 702. See Discharge; Payment; Release: Satisfaction ACCOUNT, note given in settlement of as an estoppel, 648. paper given to cover shortage in, estoppel, 652. treated as valid until account barred, estoppel, 659. discharge by payment of, 687. ACKNOWLEDGMENT, of receipt notice of protest written on note, 526. ACQUITTAL, note to use influence in procuring void, n. 288. ACTION, agreement to dismiss as consideration, 194. discontinuance of a sufficient consideration, 195. "action" in usury statute includes actions at law and in equity, 302. right of holder or owner to bring, 403. by real party in interest, 403. right to recover generally, legal and equitable title, 404. on note discounted in bank, 405. by pledgee in name of payee, 405, right of assignee to sue, 407. right of agent to sue, 408. by holder of paper indorsed in blank but who has no beneficial in- terest, 447. for statutory damages, deficiency after sale of collateral and ap- plication of proceeds on bill, 494. for deficiency on bill after sale of collateral, 494. when presentment, protest and notice of dishonor premature 509 on certificate of deposit before presentment for payment, 512.' brought before presentment for payment or demand, 512. as estoppel to another action on note, 663. before presentment for payment. See Presentment fob Payment ACTS, as estoppel. See Waiver and Estoppel ADDRESS, of indorser, notice of dishonor to wrong address, 564. of notice of dishonor, sufl^ciency of, 555. of maker, addition of to name, 172. See Presentment fob Payment. 948 INDEX. IReferences are to Sections.'] ADEQUACY, of consideration. See Consideration. ADMINISTRATOR, fraud of in execution of note, 78. want of authority of to give or transfer paper, 78. where transfer by fraudulent, 132. action by on note to testator for advancement of legacy, 231. paper to procure appointment as void, n. 288. note to, unauthorized condition by as to mode of payment, 335. demand necessary, though indorser is administrator of maker's es- tate, 503. demand necessary, though indorser made administrator of maker's estate, 503. availability of set-off in action by, 620. action by to recover bank deposit, when note not a set-off, 620. note purchased after testator died insolvent not available against as set-off, 620. note to for land purchased, claim purchased from estate not set-off, 620. payment by one as surety not set-off against administrator, 620. action on note for deceased's interest in partnership, what not set- off against, 620. right of set-off against in action against surety, 639. ADMISSION, as an estoppel, 656, 657, 658. of genuineness of note not identified as note in controversy, 644. by partner not binding on firm, 657. by indorser does not estop maker, 657. of maker does not estop co-maker, 657. by assignor binding on assignee, 658. by one having authority to deal with paper as his own, 658. of one binding on another where identity of interest, 658. by assignor binding on holder by delivery only, 658. of signature, estoppel to show forgery, 674. See Waiver and Estoppel. ADULTERY, note under agreement not to prosecute for, void, n. 288. ADVERTISING, loss of bill, no defense against one without notice, 395. AFFIDAVIT, of defense, sufficiency of, want of title, n. 418. held insufficient against bona fide holder, 442. "AFTER DATE," • altered to "after sight," 155. INDEX. 949 IReferences are to Sections.'] "AFTER DUE," striking out of in interest clause, 168. "AFTER MATURITY," striking out of in interest clause, 168. alteration of to "after date," 168. effect of adding, 168. "AFTER SIGHT," altered to "after date," 155. AGENT, when maker concluded by acts of, 5. violation by of instructions, 75. delivery by in violation of instructions, 21. where note indorsed in blank to, 23. want of authority of special agent, 75. with mere authority to collect cash, want of authority to indorse, 75. want of authority of no defense against 'bona fide holder, 75. of corporations, want of authority of, 80, 81. notice as to powers of, 485, 486. agent of owner of paper forging name, 103. fraud of no defense against bona fide holder, 121. of holder, alterations by, 141. alteration by under mistaken belief as to authority, 143. alteration by of place of payment before delivery, 163. of maker, addition of seal by, 176. note to, want or failure of consideration, 230. note for policy given to general agent of insurance company wanr of consideration, 230. note indorsed to, want of consideration, 255. check by to discharge debt of principal, 230. of payee taking note from purchaser of bona fide holder, 230. usury of, principal responsible, 302. notice to of usury, binds principal, 302. condition in note that contract be completed to acceptance of agent, 346. liability of principal, paper indorsed for a specific purpose, 370. want of title or interest, 408. defenses and equities against, 457. of payee for collection, defenses against, 457. to sell, defenses against, 457. where note executed by without authority, 458. for presentment, when liable, 497. must receive unequivocal acceptance or notify holder, 497. presentment to for acceptance, 499. for payment, 503. indorsement by, demand on principal and agent, 503. presentment to agent of bank at meeting of bank agents settle ac- counts, 517. 950 IXDEX. [References are to Sections.'] AGENT — Continued. notice of dishonor to, 547, 548. may give notice of dishonor, 549. demand of payment of check as owner's agent, n. 577. damages from negligence of plaintiff as, cannot be set off, 598. note to one as "agent of the creditors," set-off of sealed bill against, 618. set-off against note indorsed to general agent of payee, 621. notes to or in hand of, 621. right of set-off against note in hands of agent of holder for col- lection, 621. set-off against note indorsed to collecting agent, 623. acceptance estops to deny authority of, 641. representation by in connection with transfer, estoppel, 653. payment by, 698. AGREEMENT, not to present until maturity bill indorsed for accommodation of drawer, 491. with bank, sight draft, holder's loss, presentment, 491. to accept bill, payment of debt of another, n. 491. promise by letter to accept draft to be drawn, necessity of present- ment to fix maturity, n. 491. as to acceptance or presentment, 491. to indorse overdue note, demand in reasonable time, 503. to pay if maker does not, guarantor's, presentment for payment, 504. or understanding that 'demand notes not to be paid till expiration of certain time, 506. on back of note for waiver of presentment for payment, 524. by which assignment made as waiver of presentment for payment, 525. effect of oral agreement of banker to accept checks, n. 581. for extension of time, release of surety, 680. by parol to extend time, release of surety, 680. and conditions affecting discharge, 684. affecting discharge and release, 684, 685. verbal as to payment of other debts, discharge, 687. as to stocks and bonds in payment, independent agreement, 689. to take deed, discharge of note, 690. with bank by vendee unknown to vendor, as affecting discharge of notes, 690. to accept deed for note, averment of performance, 694. to accept less sum, 702. effecting discharge of note, see Discharge. See Collateral Conditions and Agreements; Contract; Presentment for Acceptance; Stipulation; Waiver. AGRICULTURAL IMPLEMENTS, coverture as defense to note given in purchase of. 57. INDEX. 951 [References are to Sections.l ALIENATION, of affections of wife, note given because of void, n. 288. ALLONGE, indorsement on, 404. ' ALTERATIONS, may be shown under plea of non est factum, 135. create a new contract, 135. in contract note is collateral to, 135. general rule as to, 135.. no allegation or proof of fraud necessary, 135. question whether material is one of law, 135. with consent of parties no defense, 135. in mortgage given to secure note, 135. where note restored to original form, 135. essentials to defense of, 135. availability of as a defense generally, 135. presumption as to time of making where apparent on face, 136. not apparent on face, burden of proof, 136. before acceptance no defense, action against acceptor, 136. statutory provisions as to bona fide holders, 136. rule as to bona fide holders, 136. by inserting word law implies, 137. where restored to original form, 137. which are immaterial not a defense, 137. addition of word "west" after "south" not material, 137. where mere spoliation no defense, 137. not rendered material by intent, 137. retracing pencil writing in ink, 137. party no right to make to correct mistake, 137. addition of words "with exchange" not material, 137. by co-maker or drawer, 138. by maker without consent of surety, 139. by payee or subsequent holder, effect on rights of surety, 140. by agent of holder, 141. by a third party, 142. when question for jury as to who made, 142. ■where holder with notice sues on instrument as altered by stranger, 142. by accidental erasure, 143. by mistake or accident, 143. by payee in ignorance of proper manner to transfer, 143. where bank cashier cancels note by mistake, 143. by accidental tearing off signature which was again pasted on, 143. accidental stamping of waiver of demand over indorsement, 143. by agent under mistaken belief as to authority, 143. rule as to filling in blanks where Instrument incomplete, 144, 145. burden of proof as to notice where paper executed with unfilled blanks, 144. 952 INDEX. [References are to Sections.} AluTERATWNS— Continued. where blanks left for date, 145. time or place of payment, 145. amount, 145. name of payee, 145. inserting words of negotiability in blank space of non-negotiable note, 146. where instrument complete though containing blank spaces, 146. as defense to action on original consideration or debt, 147, 148. not fraudulent to make paper conform to original agreement, 148. effect of consent or ratification, 149. what constitutes a consent to or ratification of, 150. new consideration not necessary to make consent to binding, 150. of number, 151. in date of demand note material, 152. of date, 152. of date of indorsement, 152. to conform to actual date, 153. of time of payment, 154, 155. excluding days of grace, 155. of time of payment by clause "Privilege of extension for thirty days given," 155. of clause "after sight" to "after date," 155. changing time note to demand note, 155. erasure of contemporaneous memorandum as to payment, 155. by inserting statement as to consideration, 156. in statement as to consideration, 156. in form of promise, 157. of joint and several note into joint one, 157. of joint note into joint and several note, 157. by adding surname of payee immaterial, 158. of name of payee, 158. in name of payee defense, though no fraud, 158. to correct mistake, 159. as to negotiable words, 160. of word "order" to "holder," 161. substitution of words "or order," 161. "or bearer," 161. of place of payment, 162. of place of payment by agent before delivery, 163. designating place of payment releases guarantor, 164. designation of place of payment where none specified, 164. in amount by stranger, 165. of amount, 165. in amount, where there are marginal figures, 166. in marginal figures expressing amount, 166. by inserting words "in gold coin," 167. in medium of payment, 167. I INDEX. 953 [References are to Sections.'] ALTERATIONS— Continued. in interest clause does not defeat recovery on original considera- tion, 168. of interest clause by stranger no defense, 168. of interest clause, 168. in interest clause to conform to intention, 168. of rate of interest to prejudice of party making, 169. in rate of interest, 169. in rate of interest, where consented to, 169. memorandum on back of note of reduction in rate of interest not material, 169. by addition of interest clause where none, 170. where interest clause added and erased, 170. by inserting legal rate of interest no defense, 170. erasure of words "upon condition," 171. by adding conditions, negligence of maker in executing, 171. of stipulation as to attorney's fees, 171. of conditions or stipulations, 171. of name of maker releases sureties, 172. or erasure of maker's signature, 172. by erasure of corporate signature, not notice to purchaser, 481. of name of maker by addition of address, 172. of signature of maker, rule applies to instrument of guaranty, 172. of name of maker, when not a defense, 173. by addition of signatures, 174. by adding name and liability not affected, 175. of corporation to note intended as corporation note, 175. when addition of signature not a defense, 175. by agent of maker adding seal, 176. by addition or destruction of seal, 176. by adding private seal, when not material, 176. erasure, or addition of names of witnesses, 177. by stamping note, 178. by addition or erasure of memoranda, 179. of indorsement, 180. of several indorsement to joint, 180. of indorsement does not release prior indorsers, 180. erasure of prior indorsement, 180. of indorsement "pay the bearer" to, formal assignment, 180. erasure of indorsement by stranger, 180. to correct signature of surety where misplaced, 181. or erasure of signature of surety, 181. addition of name as surety or guarantor, 182. notice of from face of check, 474. fraudulently made, notice of, 480. estoppel to show, 673, 674. AMBIGUITY, in indorsement may be explained by parol, 348. 95-i IXDEX. [References are to Sections.} AMOUNT, of note, when fraud as to is a defense, 127. * •where note left blank as to, 145, effect of alteration in, 165. where alteration made by stranger, 165. alteration in, where there are marginal figures, 166. paid for note extent of recovery where grossly inadequate, 191. of note, no defense that exceeds value of services which is consider- ation, 329. collateral conditions or agreements affecting, 332. parol evidence not admissible to change, 332. fraud in filling blank left for, acceptance estops to show, 641. "AND CO.," addition of to name of maker, 172. ANTECEDENT DEBT, taking of paper delivered in escrow as security for, 319. paper transferred as security for, diversion, 390, 391. note to be discounted at bank given as security for, 391. indorsed in blank for discount given in payment of, 391. accommodation paper taken as security for, boria fide holder. New York, 391. indorsers of notes for, to enable it to be discounted, liable as joint owners without demand, 503. draft to secure, presentment for payment, 503. not discharged by note in absence of agreement, 241. want or failure of consideration, b07ia fide holder, 241, 242. See Pre-existixg De^t. ANTI-TRUST LAW, corporate certificate of indebtedness issued in restraint of trade, 459. APPORTIONMENT, where consideration not susceptible of, 209. ARREST, where note given to procure release from lawful imprisonment, 108. paper procured from one under illegal arrest or restraint, 108. for assault, where note given in settlement of injury, 108. in civil suit, note given in settlement, 110. note by wife under threat of husband's arrest, 112. ARTICLES OF INCORPORATION, non-compliance with, 81. ARTICLES OF PARTNERSHIP, paper given in violation of, 93. ASSAULT, arrest for, where note given in settlement of injury received, 108. INDEX. 955 [References are to Sections.1 ASSESSMENTS, for campaign purposes, note for, good consideration, 228. on stock as set-off to note, purchaser after maturity, 422. ASSETS, of insolvent maker, dividends out of, indorser still liable, 702. ASSIGNEE, right of to sue on paper, 407. suit for use or benefit of, 453. defenses or equities against, 447, 448. against, construction and essentials of rule generally, 448. negotiation and qualification of rule as to defenses against, 449. of non-negotiable paper, defenses against, 446. note, duress of maker may be shown, 114. fraud as defense against, § 119. consideration of assignment generally, 236. want or failure of consideration, 237. action by, when maker of note may show want of consideration, 236. of peddler's note, consideration may be shown, 447. of accommodation paper, notice or knowledge. 270, 271. with notice, subject to defense of breach of condition, 314. of non-negotiable paper subject to defense of breach of condition, 328. with notice of agreement to release from or limit liability, 342. of mortgage notes, defenses against, n. 237. of non-negotiable paper, diversion defense against, 379. of bank, set-off of deposit against, 422. want of title or interest, 407. of sealed note, rights of, 407. of certificate of deposit, subject to defenses, n. 447. collateral agreement not to hold maker responsible, n. 447. subject to defense of usury, n. 447. of void note, effect of forbearance to sue, 450. not subject to equities arising after assignment, 454. of note payable to order or bearer, 455. of insolvent firm, notice of dishonor to, 562. set-off against of note of assignor, 606. note made to one "as assignee," 618. holding in trust for payee, set-off against, 623. set-off against of amount withheld by payee of mortgage coupon bonds, 623. of time deposit made with payee, 623. what available as set-off against generally, 623, 624. of bankrupt, right of set-off against. 626. in action by judgment against payee and third party may be set off 630. in insolvency, when surety no right of set-off against. 639. of drawer, want of funds in hands of, discharge of acceptor, 679. 956 INDEX. [References are to Sections.'] ASSIGNEE — Continued. payment to first assignee, 699. after maturity, see Purchaser After Maturity. See Discharge; Set-off, Recoupment and Counteeclaim. ASSIGNEE FOR BENEFIT OF CREDITORS, set-off against on note to assignor, 595. See Assignee; Assignment. ASSIGNMENT, consideration of generally, 236. of note a contract which imports consideration, 236. when form of immaterial, bona fide holder, collateral security, 356. made under agreement as waiver of presentment for payment, 525. operation of check as, 581. of note dated back, note cannot be set off, 592. set-off of claim acquired after notice of, 594. of property as affecting discharge of note, 691. See Assignees; Assignor. ASSIGNOR, admission by binding on assignee, 658. See Assignee; Assignment. ASSISTANT SECRETARY, of corporation, want of authority of, 81. ATTACHMENT, of property on groundless suit to compel giving of note, 109. relinquishment of a good constitution, 195. of goods preventing happening of contingency note payable on, 321. 'ATTORNEY, approval by of contract as condition affecting note, 313. cannot be shown that note to conditioned on success in litigation, 320. ATTORNEY AT LAW, purchase by of note for client, knowledge of attorney of defenses, 230. i- ATTORNEY'S FEES, • J alteration by stranger of provision as to, 142. striking out of clause as to, 171. AUTHORITY, want of, estoppel as to generally, 670. See Want of Authority. AVAILABILITY OF DEFENSES, J rule as to makers, 1. coverture of one maker does not release co-maker, 1. that transfer from payee procured by undue influence no defense to action against maker, 2. INDEX. 957 [References are to Sections.'] AVAILABILITY OF DEFENSES— Con^nwed. one joint and several maker cannot show he signed as surety, 3. in case of joint and several makers, 3. defense of maker not available to indorser, 4. where maker concluded by acts of agent, 5. rule as to accommodation indorser, 6. bankruptcy of indorser goes to his personal discharge, 6. in action on corporation note or indorsement, 7. when clearing house rules available, 8. rule as to guarantor, 9. where note indorsed in blank, 10. usurious discount by bank, 11. purchaser of note from bank not subject to defense of violation of statute in discounting, 11. where note purchased from bank, 11. obligors on bond, rule as to where note is given in consideration of extension of time, 12. who may urge coverture, 61. infancy, 68. insanity of payee available to maker against indorsee, 72. who may set up incapacity or want of authority, 95. who may urge forgery, 97, 98, 104. of duress as between parties, 113. against subsequent parties, 114. parties with notice, 115. of fraud in favor maker, 133. of parties other than maker, 134. consideration personal to maker, accommodation indorser cannot show, 271. of usury, 302. of set-off against third person beneficially interested, 618. note to one as "agent of the creditors," 618. factor concealing principal, 618. guardian, 618. note to one "as assignee," 618. of set-off generally, 618. in action against acceptor, 619. by administrator or executor, 620. against note to or in hands of agent, 621. where note indorsed to bank for collection, 622. of set-off in favor of accommodation indorser of forfeiture for usury, 623. generally against assignees and indorsees, 623, 624. in case of bankrupt and insolvents, 626. against bona fide holders, 627. husband or wife, 628. in case of joint creditors or debtors, 629, 630, 631, 632. 958 IXDEX. [References are to Sections.'] AVAILABILITY OF DEFENSES— Coniintte^Z. against note of partner or firm, 634. purchasers after maturity, 635, 636, 637. in actions against sureties, 639, 640. damages for breach of warranty not available to surety or guar- antor as set-off, 601. See THE PAETICULIAR DEFENSES. AWARD, note executed in pursuance of, 233. B BANK, purchaser of note from, not subject to defense of violation of stat- ute in discounting, 11, usury in discount of note by, 11. vote given to, organization of not subject of inquiry, 79. want of authority of officials of, 82. guarantee by of checks beyond deposits, 88. payment by where name of payee forged, 102. distinction between crediting amount of note on undrawn deposit and credit on pre-existing indebtedness, bona fide holder, 243. action by receiver on note for accommodation of, 281. note issued by in violation of law, 292. note to in transaction violating statute void, n. 288. charging of usury by does not avoid, 306. advancing money on municipal coupon bonds, right of, 360. taking note as collateral for loan, 360. note to be used only at certain bank, diversion, 386. paper to be discounted at particular bank, diversion, 388, 389. given as security for antecedent debt, 391. action on note discounted in, 405. indorsement by to cashier, voidable, 412. application by of proceeds to credit of depositor, 471. discounting notes of a series, bona fide holder, 484. or cashier's drafts, notice, 485. where note sold to by president, 486. agreement to return sight drafts to, on certain conditions, present- ment, 491. presentment by, for acceptance, 499. holder of note there payable, presentment for payment, 517. erroneously designated, presentment for payment, 517. closed and new bank located in its place, personal demand unneces- sary, 517. presentment for payment at any bank at place of delivery of note, 517. branch bank, 517. insolvency or suspicion of, presentment for payment, 518. INDEX. 959 [References are to Sections.'] BANK — Continued. receiver of, presentment to for payment, 518. inquiry of cashier of as to residence, diligence in presentment, 522. bill payable at, protest unnecessary in Indiana, 529. note payable at, notice of dishonor to payee indorsing, 544. cashier of may protest, 533. usage of as affecting mode of giving notice of dishonor, 577. liability of for failing to give notice of dishonor, 558. collecting bill, what is due notice of dishonor by, 563. local custom of, presentment, substituted checks, 580. stock of not set off in action by on note, 596. set-off of bills or notes of, 612. right of set-off in action against on certified check, 619. note indorsed to for collection, right of set-off, 622. dividends on stock of not available against, 624. right of set-off against receiver of, 626. certification of check, waiver, 642. payment by of check, waiver, 643. induced to discount note by representations, estoppel, 653. by representation to honor draft, estoppel, 653. accepting part payment not estoppel, 659. estopped to deny authority of cashier to sell paper, 662. notes given to, estoppel of directors signing same, 664. agreements as affecting -discharge generally, 684. secret agreement of official as affecting discharge of note, 684. payment to, discharge, 648. collection of check through, see Check. See Forgery; Payment; Presentment foe Payment. BANK BILLS, purchase of after maturity, 425. BANK CASHIER, indorsement by, 82. certificate of check by, 82. cancelling note by mistake, 143. cannot set off against bank claim purchased after its insolvency, 626. BANK CERTIFICATE OF DEPOSIT, See Certificate of Deposit. BANK CHECK, See Check. BANK COLLECTOR, duty of, presentment for acceptance, 499. BANK DEPOSITS, applicable to payment of city warrants, loss of does not affect, 232. distinction between crediting amount of note on and credit on pre- existing indebtedness, l)ona fide holder, 243. 960 INDEX. [References are to Sections.'] BANK B^FOSITS— Continued. right to set-off where bank insolvent, 604. what essential to right to set-off, 604. rule as to set-off of, 604. right of set-off equitable but not legal against insolvent bank, 604. evidence as to at time of maturity of note, 604. right of set-off in action by depositor to recover, 605. set-off of judgment in action by depositor to recover, 605. set-off of note not due in action to recover, depositor insolvent, 607. when note not set-off to action by administrator to recover, 620. BANK NOTES, fraudulently put into circulation — bona fide holder, 120. where stolen, 398. want of title to, n, 412. BANK OFFICIALS, want of authority of, 82. BANK TELLER, certification of check by, 82. BANKER, bill drawn by country banker on town banker differs from private bill of party, 496. bill drawn by country banker upon town banker, unreasonable de- lay, presentment, 496. See Bank. oral agreements to accept checks, note, 581. payment to private banker, 698. BANKER'S CHECK, where draft considered as, or as inland bill, laches in presentment, 511. See Checks. BANKING HOURS, See Presentment fok Payment. BANKRUPTCY, of indorser goes to his personal discharge, 6. proceedings, threat of against third person, 140. proceedings, note given to discontinue void, n. 288. of drawer before presentment of check; laches, 583. deed made in view of, discharge of note, 690. See Insolvency. f.' BANKRUPTCY ACT, V note in violation of as to fees of officers, 292. BANKRUPTCY LAW, note based on contract violating void, n. 288. BANKRUPTS, set-off of bills purchased after insolvency of drawer, 626. set-off against note of debt paid by surety, 626. INDEX. 90 1 [References are to Sections.] BANKRUPTS— Continued. assignee of not subject to set-off of note purchased after maturity 626. set-off of debt to surety where not transferred after payee insol- vent, 626. presentment to for acceptance, n. 499. notice of dishonor to, 562. notice to trustee or assignee of, 562. effect of new promise by after discharge, 650. See Bankruptcy; Insolvency; Insolvents, BASTARD, infancy no defense to note given for set-off, 65. BASTARDY, proceedings, note in compromise of, 301. BEER, sold in violation of laws, note for void, n. 288. BET, on election, note to secure void, n. 288. won at billiards, note for, void, n. 296. BILL AFTER SIGHT, See Presentment for Acceptance. BILL OP EXCHANGE, statute disabling married woman from accepting, 50. foreign or inland, presentment for payment, notice of dishonor. 503. payable certain time after date, presentment for acceptance, 490. certain number of days after sight, presentment for accept- ance, 490. one day after sight, presentment for acceptance, 490. so many days after certain event, presentment for accept- ance, 490. post-dated, same as draft payable certain time after date, 490. refusal to accept before date, not dishonored by, 490. differs from bill payable like number of days after drawn, 490. payable at sight, or so many days after sight, or demand, or after certain event, 490. See Notice of Dlshonor. indorsement of for accommodation of drawer, agreement not to present until maturity, 491. purchase of bill in consideration of acceptance of another note, 491. agreement to accept, payment of debt of another note, 491. drawer's promise to accept, want of funds, 491. holder's knowledge of want of funds, presentment for acceptance, 491. payable at future time on day certain, presentment for acceptance, 494. Joyce Defenses — 61. 962 INDEX. [References are to Sections."] BILL OF EXCUANGK— Continued. drawn by country banker upon town banker differs from bill of private party, 496. drawn by country banker upon town banker, unreasonable delay, presentment, 496. not subject to protest, 528. See Draft; Inland Bill; Presentment fob Acceptance; Pbesentment FOR Payment and the particular defense. BILL OF EXCHANGE ACT, who a holder in due course under, n. 465. BILL OF LADING, where forged and attached to bill of exchange, 99. want of title or interest, 414. where made negotiable by statute, 414. carrier not estopped by statements in, 414. as collateral security, acceptance, 494. BILLIARDS, note for bet won at void, n. 296. BILLIARD TABLE, note for use of valid, n. 288. BLANK, effect of filling, 144, 145. as to time of payment, 145, as to amount, 145. for name of payee, 145. as to place of payment, 145. where instrument complete though containing blank spaces, 146. left for name, filling of does not release accommodation maker, 175. in note as to time of payment, effect of letter as to, 339. indorsement, diversion, bona fide holders, 380. of paper for discount, diversion, 391. effect of where lost or stolen, n. 394. of note, iona fide holder of where stolen, 395. of tax bills, where stolen, 395. evidence as to, 406. may be under Nebraska statute, 460. left in paper, estoppel, 661. indorsement to agent, fraudulent transfer, estoppel, 645. negligently left on check, estoppel, 645. See Alteration; Blank Indorsement; Execution; Indorsement; Waiver and Estoppel. BLANK INDORSEMENT, as accommodation, defense to action against indorser, 10. right of parties, 22. 23. INDEX. 9G3 [References are to Sections.'] BLANK INDORSEMENT— Con^i?itted. of a bill of exchange, effect of, 23. of note to agent, 23. of non-negotiable demand, 23. See Axteration; Blank; Indorsement; Waiver and Estoppel. BOARD, where note of infant given for, 63. and lodging as counterclaim to note, 693. "BOHEMIAN OATS," notes, illegality of, 296. contract, paper in consideration of, void, n. 288. BONA FIDE HOLDER, no defense, payee signed at foot of note with maker's name, 15. of note signed after delivery, 16. mistake as to contents of note no defense to action by, 17. want of delivery, 20. delivery by agent in violation of instructions, 21. rights of where executed or indorsed in blank, 22, 23. of instrument payable to fictitious person, 24. paper executed or delivered on Sunday, 29. whether subject to defense that married woman signed as surety, 48. subject to defense of infancy, 63. defense of coverture at common law, 30. of note jointly executed by husband and wife, 41. indorsement without assent of husband as defense against, 54. of note by woman in business or sole trader, 55. not subject to defense of intoxication, 69. subject to defense of non compos mentis, 71. of note for insurance premiums where statute not complied with, 79. subject to defense note in violation of express statute, 79. want of authority of agent no defense against, 75. corporate want of authority as affected by illegality or statute, 79. want of authority of officer or agent of corporation, 80, 81. not subject to defense of non-compliance with by-laws of corpora- tion, 81. instruments of corporation ultra vires, 84. note of corporation in pursuance of contract prohibited by char- ter, 86. want of authority of municipality to issue paper, 87. of note transferred by a partner, 90. paper given in violation of articles of partnership, 93. forged paper, 96. of school bonds fraudulently issued, 98. where name of payee forged, 102. not subject to defense that prior indorsee's name forged, 104. note of married woman, duress, 114. 964 INDEX. ^References are to Sections.'\ BONA FIDE UOLiBKR— Continued. obtained by duress, burden of proof on to show good faith, 114. of paper obtained by duress, 114. injunction will not lie to restrain collection of note by, 119. where execution or delivery procured by force or fraud, 13. where note fraudulently written over a signature, 23. taking paper under suspicious circumstances not subject to defense of fraud, 119. paying less than value not necessarily subject to defense of fraud, 119. of non-negotiable note, fraud as defense to, 119. where fraud by payee, -plaintiff has burden of proof to show he is, 119. misrepresentations as to nature of instrument, 25, 26. fraud on maker unable to read English, 27. on maker no defense where negligent, 28. and fraudulent representations as defense against, 119, 120, 121. of bank notes fraudulently put into circulation, 120. rule as to fraud and fraudulent representations illustrated, 120. where misrepresentation to maker as to character of paper, 120. where note obtained by fraud deposited with as collateral, 120. of coupon bonds obtained possession of by fraud, 120. of warehouse receipts not affected by fraud of original holder, 120. fraud of partner toward firm no defense against, 121. pledgee no defense against, 121. surety upon maker no defense against, 121. maker towards co-makers no defense, 121. corporate officer to corporation no defense against, 121. principal towards guarantor no defense, 121. particular parties as a defense, 121. agent no defense against, 121. one holding paper in trust no defense, 121. availability against of false representations as to consideration, 123. of certified check, fraud in connection with, 124. of paper in fraud of creditors, 125. fraud in connection with procuring of indorsement, 126. one taking in payment of pre-existing debt is, not subject defense of fraud, 126. that surety induced by fraud to sign no defense against, 129. transfer in fraud of owner no defense against, 130. that pledged to without authority no defense, 130. that transfer was by partner in fraud of firm no defense, 131. rule as to in case of alterations, 136. statutes providing for recovery by in case of alterations, 136. of paper executed with unfilled blanks, 144. INDEX. 9G.') [References are to Sections.'^ BONA FIDE HOLDER— Ccnj«tnwe(Z. non-negotiable note, blank space filled with words of negotiability, 146. of instrument complete, but containing spaces filled by prior holder, 146. of negotiable bond, effect of alteration of number, 151. subject to defense of alteration of time of payment, 154. alteration of non-negotiable note to negotiable a defense, 160 place of payment a defense, 162. subject to defense of alteration in amount, 165. alteration in marginal figures no defense, 166. in rate of interest may be shown, 169. or addition of condition or stipulation, 171. no defense that no fair consideration between original parties, 191. when one not, owing to inadequacy of consideration, 191. taking at undervalue element in determining whether one is, 191. guarantor may show want of consideration against, 212. of check given by husband to wife, 214. of sealed, want of consideration no defense, 217. of note to agent, defenses affecting consideration not available, 230. want or failure of consideration no defense, 238. rule as to payment of value, its basis and qualifications, 240. purchase for less than face value, pro tanto recovery, 240. purchaser for value presumed to be, 240. one purchasing for less than face value, 240. paper in payment of pre-existing debt, want or failure of considera- tion, 241, 242. one taking draft in payment of pre-existing debt not, n. 242. distinction between' crediting amount of note on undrawn bank deposit and credit on pre-existing indebtedness, 243. of note given for outlawed debt of husband, 245. paper taken as collateral security for pre-existing debt, 246, 247, 248. paper taken from, want of consideration, 250. of corporation paper, want of consideration, 251. want or failure of consideration, subsequent to transfer, 252. suit in name of original party, want or failure of consideration, 253. action against guarantor, want of consideration, 259. of purchase-price notes, want or failure of consideration, 260. of note given for worthless article, 262. assignees, notice or knowledge, want or failure of consideration, 270, 271. of paper accepted for accommodation, 273. of paper indorser for accommodation of acceptor, condition as to discount, 273. accommodation check, want or failure of consideration, 278. paper taken after maturity, want of consideration, 282, 966 - INDEX. [References are to Sections.'\ BONA FIDE UO'LD'ER— Continued. against accommodation maker, note taken in payment of pre-exist- ing debt, 284, 285. of paper taken in payment of precedent debt, 285. against indorser, accommodation note in payment of pre-existing debt, 286. payee of accommodation paper is, 287. of note based on illegal or immoral consideration, 288. based on illegal consideration, exception to and qualifications of rule, 289. of paper for consideration in violation of statute, 291. of note in violation of constitution and laws, 293. given for goods sold in violation of law, 294. given to compound criminal acts, 295. of notes based on gambling transaction, right of as affected by statute. 298. of paper based on usurious contract between original parties, 303. breach of collateral conditions no defense, 307. cannot be shown against, 308. plaintiff has burden to show he is where breach of condition prece- dent shown, 314. breach of collateral condition no defense against, 314. surety cannot show other signatures were to be procured, 316.. of paper delivered in escrow, 317, 318. where conditions of bond not performed, 323. of renewal note, failure of consideration of original no defense, 324. not subject to defense, breach of collateral agreement not to do cer- tain acts, 326. action by not defeated by breach of collateral condition, 328. where consideration agreement to render services, 329. collateral agreement to release from or limit liability cannot be shown against, 342. not affected by secret agreements as to indorsement, 348. of accommodation paper taken as collateral, against maker, 353. accommodation paper taken as collateral for pre-existing debt, ac- tion against indorser, 354. whether one taking note as collateral for pre-existing debt is, 359, 360. pledgee of note secured by mortgage, 365, 366, 367. of paper indorsed as collateral, defense subsequent to, 371. of note taken as collateral, extent of recovery, 376, 377, 378. who has not paid full value for paper diverted, 380. diversion as defense against, 380. burden of proof to show where paper diverted, 381. paper transferred in violation of statute, 382. accommodation paper diverted, 383, 384. of accommodation paper negotiated to party not contemplated, 387, 388, 389. INDEX. 9GT [References are to Sections.] BONA FIDE 'RO'LDER—Cantinued. of paper to be discounted at particular bank, 388, 389. where paper taken as security for antecedent debt, diversion, 390, 391. one who takes accommodation paper as security for antecedent debt is in New York, 391. diversion of proceeds of paper no defense against, 392. where purchaser from has knowledge of theft, 394. that instrument lost or stolen no defense, 394. of stolen bonds payable to bearer, 394. of bill lost where loss advertised, 395. of note indorsed in blank and stolen, 39.5. of stolen coupon bonds, 395. certified check indorsed in blank, 395. rights of do not extend to stolen non-negotiable paper, 397. of stolen bank bill, 398. burden of proof to show where instrument lost or stolen, 401. assignee after maturity, execution on Sunday no defense, 421. purchaser after maturity from, general rule, 433, 434. from after maturity, usury, 434. after maturity, want of consideration, 434. from after maturity, application of rule, 434. preliminary statement, 438. general rule as to, 439. where title acquired by fraud and without consideration, 441. where note void at creation, 441. exceptions to and qualifications of rule, generally, 441. essentials of general rule, 440. bonds issued without authority, 441. of certificate of deposit, 441. where maker had no power to issue, 441. plea of no7i est factum., 441. note based on illegal or immoral consideration, 441. when fraud not available against, n. 441. plea that purchased after maturity, no evidence to sustain, 442. affidavit of defense insufficient, 442. generally, particular decisions, 442. right of not affected by subsequent information, 442. defenses against under negotiable instruments law, 442. certified bank checks, 443. one discounting paper in good faith, 443. notes under seal. 444. defenses of acceptor against drawer not available against, 445. equities against generally, 445. transferee or assignee of non-negotiable paper, equities and de- fenses, 446. defenses against assignees, 447, 448. assignee, equities, construction and essentials of rule generally, 448. 9G8 INDEX. [References are to Sections.'^ BONA FIDE HOLDER— Con^inwed. defenses against assignee, negation and qualification of rule, 449. assignee of void note, forbearance to sue, 450. so-called assignment, not subject to equities, 451. assignment by parol, suit in own name, equities, 452. suit for use or benefit of assignee, 453. subsequent defense or equities, 454. note payable to order or bearer, 455. of check by delivery, 456. where bill not transferable by delivery, 456. transferee without indorsement, 456. of warehouse receipts by delivery, 456. agents and trustees, 457. where repurchased from by payee, 457. agent's unauthorized acts, 458. corporate certificate of indebtedness issued in restraint of trade, anti-trust law, 459. guarantor, guaranty, 460, 461. pledgee of note by holder, pledgee's rights, 462. note payable to order or bearer, 463. of paper not stamped, 464. under negotiable instruments law in New York, 464. purchase of paper for less than face value, 464. of paper payable on demand, 464. of note based on gambling transaction, 464. under statutes or codes, notice or knowledge, bad faith, 464, 465. of note tainted with illegality, 465. one discounting is, 465. of note payable to several jointly, 466. of note indorsed in blank before negotiation, 466. where note indorsed by one of two joint payees, 466. joint and several notes, 466. overdue paper, 467, 468, 469. default in payment of interest, 468. demand notes, 469. of paper delivered to impostor, 470. application by bank of proceeds to credit of depositor, 471. effect of notice or knowledge generally, 472, 473. notice or knowledge, matter apparent from the paper itself, 474. one may be, though guilty of negligence, 475. duty as to making inquiry, 475. notice or knowledge, suspicious circumstances, gross negligence, bad faith, 475, 476, 477. where indorsement made after notice of payee's defense 478. notice, fraud, 479. of note of corporation given in payment of dividends, 479. notice, fraudulent alteration, 480. erasures, forgery, notice, negligence, recovery, 481. INDEX. gg() [References are to Sections.} BONA FIDE UOhDER— Continued. liable for money paid to him on forged check, 481. knowledge, purchase of married woman's note, 482. notice, accommodation paper, 483. notes of a series, 484. corporation, agency, 485. corporation indorsement, accommodation paper, 487. notice, purchase of bonds, 488. transferee of, notice, 489. not subject to set-off of claim acquired after notice of assignment, 594. availability against as a set-off of damages arising from breach of warranty or covenant, 602. not subject to set-off against payee, 627. set-ofe of acceptor against drawer not available against, 627. not subject to set-off in action by payee for use of, 627.' payment to payee or intermediate holder, 699. BONDS, of public corporations, want of authority to issue, 87. where school bonds fraudulently issued, 98. effect of alteration of number of, 151. stolen and numbers altered, no defense against bona fide holder, 151. forbearance to sue on as consideration, 194. as consideration, fraud, necessity of offer to return, 211. consideration not subject to inquiry, 217. given in payment of pre-existing debt, 241. to indemnify against public prosecution, note in consideration of void, n. 288. under seal based on past cohabitation, 300. non-performance of conditions of, 323. municipal coupon bonds, right of bank advancing money on, 360. payable to bearer, where lost or stolen, 394. stolen, in hands of bo7ia fide holder, 395. purchaser after maturity of coupon bonds, 426. issued without authority, bona fide holder, 441. recitals in, 488. notice to purchaser of, 488. recitals in as an estoppel, 647. discharge by taking, 689. BRANCH BANK, presentment at for payment, 517. BRIBE, paper given as to public officer void, 288. BROKER, set-oiT against notes to or in hands of, 621. where note put in hands of for sale or advance, set-off against, 621. 970 INDEX. [References are to Sections.} BROKER — Continued. when liable for money paid where signature forged, n. 645. representation by in connection with transfer, estoppel, 653. BROTHER, threatened prosecution of as Inducing note by sister, 112. BUILDING, leasing of as condition affecting note, 313. BUILDING CONTRACT, where referred to in note, 343. BURDEN OF PROOF, where want of delivery alleged, 20. statutory exception as to coverture, 37. on married woman to show she signed as surety, 45. in action by indorsee, check procured by fraud, 119. where alteration not apparent on face, 136. as to time of alteration where apparent on face, 136. as to notice where paper executed with unfilled blanks, 144. to establish collateral conditions, 313. to show plaintiff bona fide holder where breach of condition prece- dent alleged, 314. as to being bona fide holder on proof of delivery in escrow, 317. to show condition as to consideration not performed, 322. a bona fide holder of paper diverted, 381. bona fide holder, lost or stolen paper, 401. BUSINESS HOURS, See Check; Notice of Dishonor; Presentment for Acceptance; Pre- sentment FOR Payment; Protest. BUSINESS PLACE, See Presentment for Acceptance; Presentment for Payment. BY-LAWS, of corporation, no defense against bona fide holder, 81. as to manner of execution, non-compliance no defense, 85. C CALL NOTE, presentment for payment before suing on note payable on call, 512. CANCELLATION, equity may decree where instrument procured by duress, 106. city or county certificates stolen after, 399. of certification of check, n. 581. as discharge, 678. Indorsements of payment, receipts, 695. See Discharge. INDEX. 971 [References are to Sections.'^ CANDIDATE, for election, paper in consideration of withdrawal, void, 288. CAPACITY, want of, estoppel as to generally, 670. CAPITAL STOCK NOTE, indorsement on, of condition to enforce which would be illegal, 349. CARDS, note for wagers lost at, 296. CARRIER, not estopped by statement in bill of lading, 414. CASH, acceptance by correspondent of drawer's check in lieu of note, 578. CASHIER, of bank cancelling note by mistake, 143. indorsement to by bank, voidable, 412. of bank, draft issued by, notice, 485. inquiry of as to residence, presentment and demand, 522. may protest, 533. authority to certify check, n. 581. of bank cannot set off against bank claim purchased after its in- solvency, 626. bank estopped to deny authority of to sell paper, 662. addition of word "cashier" to name of payee, 158. acts of as purchase or payment of note, 696. CAUSA MORTIS, revocation of indorsement so made, 412. CAVEATOR, note to withdraw opposition to public road, void, n. 288. CERTIFICATE, of city or county stolen after cancellation, 399. of deposit, defenses against hona fide holder, 441. of corporate indebtedness issued in restraint of trade, anti-trust law, 459. of indebtedness issued by municipality, want of title, 412. on face of municipal bonds, effect of, 488. of protest, what should state, 532. should state person to whom presented, 532. as evidence, 542, 543. of notary as showing service of notice of dishonor, 558. See Certificate of Deposit. CERTIFICATE OF DEPOSIT, where indorsed by insane person, 72. recital in as to receipt of money, 205. based on gambling transaction, 298. 972 INDEX. ^References are to Sections.'] CERTIFICATE OF BKSPOSIT— Continued. where stolen, 397. defenses against bona fide holder, 441, purchaser of after maturity, 427. assignee of subject to defenses, n. 447. of bank, presentment for payment, 505. demand not necessary to start running of statute of limita- tions, 505. with no interest after maturity, presentment for payment, 506. payable after certain time, presentment for payment, 506. action on before presentment for payment, 512. not a note, 606. not subject to set-off of a note, 606. CERTIFICATION, of check, cashier's authority, note, 581. of forged check, 101. of check not indorsed, 413. cancellation of note, 581. bona fide holder, 443. fraud in connection with bona fide holder, 124. indorsed in blank, stolen, bona fide holder, 395. indebtedness of holder of not available against, 596. right of set-off in action against bank, 619. .certification as an estoppel, 642. of forged check, 101. See Certified Checks; Checks. CHARACTER, of title or Interest as a defense, 411. CHARTER, of corporation, note in pursuance of contract prohibited by, 86. CHATTELS, defective warranty as defense to note for guarantor, 212. CHECKS, want of authority to draw, 73. to certify, 82. guaranteed beyond deposits, 88. drawee obligated to know signature of drawei', 99. certified, bona fide holder, 443. forgery of, certification of, 101. certification of where not indorsed, 413. obtained by fraud, burden of proof in action by indorsee, 119. given by husband to wife in hands of bona fide holder, 214. gift of, presented for payment after death of drawer, 215. post-dated, accommodation agreement, 224. given by agent to discharge debt of principal, 230. given for notes or bills purchased, want or failure of consideration, 224. INDEX. 973 IReferences are to Sections.'\ CHECKS — Continued. bona fide holder of, want of consideration to drawer no defense, 270. for accommodation, want or failure of consideration, 278. for wages as to collection of execution, void, n. 288. where condition in body of, 343. indorsed In blank and certified, stolen, t)07ia fide holder, 395. want of title or interest to, 413. manner of transfer of, 413. transfer of by delivery, 456. purchaser after maturity, 425. lost, acceptance of not bad faith, 465. notice of defect from inspection, 474. sub-contractors as indorsees of, presentment for payment, 511. where draft considered as inland bill or banker's check, laches in presentment, 511. insolvency of maker during delay in presentment of for payment, 511. laches in presentment for payment, check lost, duplicate given, 525. presentment, reasonable time, diligence, 574, 575. deposited in bank for collection, 576, 583. mail, collection through bank, 576. presentment, parties in different place, 576, and note, following day, n. 576. where parties reside in same place, diligence, 576, n. 576. when presentment is made, 577. demand as owner's agent, n. 577. presentment, verbal demand good without physical presence of check, n. 577. substituted check, presentment, want of diligence, 578. mistake, recovery by drawer, note 578. insolvency of first drawee, second presentment, discharge of par- ties, n. 578. acceptance by correspondence of drawer's check in lieu of cash, n. 578. indorsement to correspondent, n. 578. guaranty, note 578. title to check indorsed and deposited, n. 578. substituted presentment by copy or description, 579. checks, local customs of banks, 580. effect of certification, operation of check as assignment or lien, 581. cashier's authority to certify, n. 581. want of funds, n. 581. cancellation of certification, n. 581. effect of banker's oral agreement to accept, n. 581. cancellation of certification, n. 581. necessary that drawer sustain actual loss or injury from laches in presentment of, 582. where drawee becomes insolvent or bankrupt, 583. 974 INDEX. [References are to SecUons.} CHECKS— Continued. presentment of, surety, 584. indorser, 585. rights, duties and liabilities of indorsee and indorser and effect of certification of drawee bank, n. 585. reasonable expectation that check will be honored, 586. protest of, 587. dishonor of check indorsed and deposited, ownership not affected, n. 587. notice of dishonor or non-payment, 588. waiver of presentment for payment, 589. where certified, indebtedness of holder of not available against, 596. certified, right of set-off in action against bank, 619. debt to wife of drawer of not a set-off against, 628. estoppel by certifying, 642. payment of by bank, waiver, 643. blank indorsement negligently left on, estoppel, 645. forged, estoppel to show, 676. payment by, 686. payment of note by, discharge, 688. of director and stockholder for corporation note, whether purchase or payment, 696. CHILD, infancy no defense to note given for support of bastard child, 65. note given under promise to name child after maker of note, 219. CITY CERTIFICATES, stolen after cancellation, 399. CLAIM, against United States, acceptance of interest in, as discharge of note, 691. CLEARING HOUSE, presentment of check, note 576. CLEARING-HOUSE RULES, availability of as a defense, 8. CLIENT, purchase by attorney of note for, knowledge of attorney of defenses, 230. CLOUD, on title, note given to remove, sufficiency of consideration, 195. CO-DEBTORS, - discharge of, 679. COHABITATION, in the future a vicious consideration, 300. in the past not illegal consideration, 300. INDEX. 975 [References are to Sections.'] COLLATERAL, mortgage, effect on note of alteration in, 135. matters, equities growing out of no defense against assignee, 448. See Collateral Conditions and Agreements; Collateral Security; Presentment for Payment. COLLATERAL CONDITIONS AND AGREEMENTS, general rules as to, 307. where note and contemporaneous agreement are mutual and de- pendent, 310. breach of no defense against bona fide holder, 307. assignment by married woman as affected by, 308. joint promisor cannot show he signed as surety, 308. where bill or note incomplete, 309. when deed may be construed with note, 310. contract of sale and note may be construed together, 310. note to take effect when contract of sale consummated, 314. when mortgage notes will control mortgage, 310. what must be alleged when breach of agreement relied on, 310. agreement to give work, 310. lease and note may be construed together, 310. conditions precedent generally, 311. what essential to rendition condition controlling, 311. affecting delivery to payeee, proof must be reasonably certain, 312. delivery may be conditional without express words, 312. conditional delivery by maker to payee, 312, 313. no defense where performance prevented by maker, 313. to lease of building as condition affecting note, 313. burden of proof to establish, 313. affecting subscription notes, 313. approval by attorney of contract as condition affecting note, 313. where note given for insurance premium, 313. assignee with notice subject to defense of breach of, 314. effect of upon bona fide holders, 314. plaintiff must show he is bona fide holder upon proof of breach of condition precedent, 314. that other signatures be procured, 315, 316. as to other signatures, surety may show breach of, 315, 316. that another indorsement be procured, 315. where breach of as to other signatures releases surety also releases co-sureties, 315. to creditor, cannot show breach of condition that another sign as maker, n. 315. as to other signatures, surety may show breach of against holder without notice of non-negotiable note, 316. as to other signature, delivery in escrow, 317. rule as to delivery in escrow, 317. violation of where delivered in escrow, 317. 97G INDEX. [References are to Sections.] COLLATERAL CONDITIONS AND AGREEMENTS— Confmuet?. burden of proof as to being bona fide holder on proof of delivery in escrow, 317. delivery in escrow no defense against bona fide bolder, 317. no defense against payee without notice, 318. where party takes as security for an antecedent debt, 319. evidence that partnership notes void if partnership dissolved not admissible, 320. that note payable on contingency, admissibility of evidence in par- ticular cases, 320. as to note payable on contingency, where paper taken with notice of, 320. that note void on contingency, admissibility of evidence in partic- ular cases, 320. that instrument to be void on contingency cannot be shown, 320. evidence that not void on failure of crops not admissible, 320. that instrument payable on contingency cannot be shown, 320. as to time of payment, dependent on contingency, 321. where happening of contingency prevented by act of maker, 321. affecting consideration, 322. where agreement forms consideration of note, n. 322. as consideration for note, indorsee with knowledge of, 240. performance of pre-requisite to liability, want or failure of con- sideration, 257. as to consideration, burden on maker to show not performed, 322. affecting consideration, when breach of not a defense, 324. affecting consideration, purchaser after maturity, 322. executory contract as consideration for note, 322. to furnish a policy of insurance, 323. to advance money to principal not performed, surety may show, 323. where conditions of a bond not performed, 323. that certain collateral should be deposited, 323. evidence as to indorsement of note as collateral on condition, 323. as to discharge of judgment not performed, 325. where performance prevented by maker, 325. non-performance by maker, 325. not to sell merchandise at a certain place, 326. not to do certain acts, 326. not to take possession of a foreclose-mortgage property, 326. not to sell patent rights, 326. purchase-price notes, 327. as affecting subsequent holders of purchase-price notes, 328. as to rendering services, performance prevented by act of obligor, 329. affecting consideration, breach of agreement to render services, 329. note not to be negotiated, 330. as to place of payment, 331. as to amount, 332. INDEX. 977 [References are to Sections.1 COLLATERAL CONDITIONS AND AGREEMENTS— Continued, changing interest clause no defense, 332. as to mode and manner of payment, 333, 334, 335. that note payable in services not admissible, 334. as to payment of note to administrator, 335. executed agreement as a defense, 336. not to sue, 337. where simultaneous or subsequent and for a limited time, 338, as to time of payment, demand note, 339. as to time of payment, 339. subsequent agreements extending time, 340. subsequent extension of time, what essential to render it a defense, 341. to release from or limit liability, 342. effect of conditions in note, 343, 344, 345, 346. condition in note as to forfeiting of it not paid at maturity, 344. substantial performance of condition in note may be sufficient, 345. conditional acceptance, 347. acceptance on condition, performance of condition prevented by acceptor, 347. conditional or restricted indorsement, 348. waiver of condition, 350. as to payment out of certain fund, no defense, 361. as to collateral security, 361, 362. not to hold maker responsible, assignee, n. 447. between indorser and payee as to proceeding against principal first, 654. See Collateral Security; Diversion and Fraudulent Transfer. COLLATERAL SECURITY, lex loci contractus govens where paper taken as, 247. original parties, 351. note may be shown to have been for original parties, 351. surety, guaranty, indemnity, 352. accommodation paper, maker, bona fide holder, 353. accommodation paper, indorser, bo7ia fide holder, 354. bills, accommodation acceptor, 355. form of assignment, when immaterial, bona fide holder, 356. when note not collateral security but independent obligation, 357. note payable to order, assigned but not indorsed, 358. contemporaneous or future loans, advances, bona fide holder, 359, 360. agreements and conditions, 361, 362. breach of condition as to depositing of, 323. security for the performance of illegal contract, 363. note secured by mortgage, mortgage against maker, surety, 364. note secured by mortgage or other instrument, bona fide holder, pledgee, 365, 366. Joyce Defenses — 62. 978 INDEX. [References are to Sections.'] COLLATERAL SECURITY— Co??ti«wed. same subject, knowledge or notice, 367. v for pre-existing debt, 'bona fide holder, 246, 247, 248. note wrongfully pledged as, 247. exceptions to rule as to paper taken as, 248. transferee of note and mortgage, payment of or collateral security for pre-existing debt, 368. receiving or surrendering collateral, exhausting collateral, 369. paper given or indorsed for specific purpose; principal and agent, 370. defense subsequent to indorsement, bona fide holders, 371. transferee after maturity, pledgee, 372. pledgor and pledgee, laches, negligence or tortuous acts, statute of limitations, 373. priority of transfer, different notes, 374. renewals, continuance of security, extinguishment of debt, 375. extent of recovery, b07ia fide holders, 376. extent of recovery, collateral for pre-existing debt, 377. extent of recovery, accommodation paper, 378, unauthorized collection of note given as, 76. note given for and diverted, 386. note diverted and used as, 386. note intended as for one indebtedness used for another, 391. ■wrongful transfer of no defense against bona fide holder, 121. alteration in contract to which note collateral, 135. giving of as ratification of alteration, 150. surrender of and taking note of third person, 244. where note assigned as by separate instrument, but not indorsed, 247. note transferred as, cases of sufficiency of consideration, 247. paper taken as, additional consideration, 249. right of holder where prior indorsee held note as lien, 267. beneficiary may transfer accommodation paper as, 285. evidence of indorsement of note as, 323. payee may recover on note indorsed as, 409. note to used as, purchaser after maturity, pro tanto recovery, 432. pledgee may sell, 462. bill of lading as for acceptance, 494. sold and proceeds applied on bill, suit for deficiency, 494. holders of, presentment for payment, gross negligence, reasonable diligence, 503. note held as, necessity of pledgor sustaining injury, etc., by non- presentment, 503. indorsement as collateral security, presentment for payment, 503. waiver of presentment for payment by taking, 525. notice of dishonor in case of, n. 570. damages for negligence in case of cannot be set-off, 598. INDEX. 979 [References are to Sections.'] COLLATERAL SECVRITY— Continued. set-off of value of converted by pledgee, 613. of note without delivering up, 613. of value of where sold or diverted, 613. of value of where collection lost by negligence of pledgee, 613. surety not entitled to set off amount collected on, 639. neglect to enforce discharge of surety or guarantor, 680, 681. surrender of, as affecting guarantor's discharge, 681. discharge of guarantor, 681. taking additional, release of guarantor, 681. higher security for debt, discharge, 682. sale or surrender of, discharge of debt, 683. stock held as, discharge, 689. married woman's note as, payment, 699. See Mortgage Security. COLLECTING AGENT, set-off against note indorsed to, 623. COLLECTING BANK, note indorsed to, right of set-off, 622. COLLECTION, against indorsee for, may show paper in fraud of creditors, 125. indorsee for may sue in his own name, 403. defense that note assigned for, 407. paper sent for, notice of dishonor, 545. of check through bank, laches, 583. "COLLECTOR," addition of, to name of payee, 158. COLLEGE, sufficient consideration for note to, 194. CO-MAKER, alterations by, 138. no demand on, for payment necessary, 502. payment by, 699. COMMENCEMENT, of suit, set-off must have been acquired prior to, 592. COMMERCIAL INTERCOURSE, cessation of between states as excuse for failing to give notice of dishonor, 572. COMMITTEE, acceptance of order on, 500. notes issued or held by, want or failure of consideration, 231. COMMON LAW, rule as to coverture, 30. indorsement by married woman, 51. duress relaxed, 105. 980 INDEX. [References are to Sections.'\ COMPOUNDING, criminal acts, note for void, 295. COMPROMISE, where note given is, consideration sufficient, 195. of unfounded or illegal claim not a good consideration, 196. CONCEALMENT, mere omission to state facts not necessarily defense, 118. where fraudulent, 118. defense against holder with notice, 118. of defect in article sold, 118. of facts as defense to action against surety, 128. of material facts by mortgagee, damages for as set-off, 601. See Fraud and Fkaudulent Representations; Misrepresentations. CONDITION, in note, effect of, 343, 344, 345, 346. cannot be extended by implication, 343. substantial performance of may be sufficient, 344. given to aid in construction of railroads, substantial per- formance, 345. in body of check, 343. in note as to time of taking effect, 343. happening of contingency prevented by act of defendant, 343. in note as to time of payment, installment note, 343. as to services, n. 343. as to confirming title, n. 343. as to removal of Incumbrances, n. 343. makes it non-negotiable, n. 343. that payee assist in criminal prosecution, n. 343. as to forfeiting collateral if not paid at maturity, 344. that is payable out of proceeds of sale of certain property, 344. that contract be completed to acceptance of agent, 346. in instrument affecting acceptance, 347. where indorsement conditional or restricted, 348. indorsed on note to enforce which would be illegal, 349. drawer preventing fulfillment of forfeits right to notice of dishonor, 571. addition of to note, 171. in note, alteration of, 171. performance of prerequisite to liability, want or failure of con- sideration, 257. payment of note for engines conditioned on acceptance of, 260. that bill be discounted at particular bank, indorsed for accommo- dation of acceptors, 273. affecting note, waiver of, 350. See Agreement; Collateral Conditions and Agreements; Contract; Discharge; Diversion and Fraudulent Transfer. INDEX, 981 [References are to Sections. 1 CONDITION PRECEDENT, where agreement to render services or labor the consideration, 329. where notice of failure of consideration is, 327. affecting acceptance, 347. want of title or interest, 412. See Collateral Conditions and Agreements; Conditions CONDUCT, as estoppel. See Waiver and Estoppel. CONFLICT OF LAWS, acceptance of accommodation paper, 277. CONSENT, to alteration, effect of, 149. what constitutes, 150. new consideration not necessary to render it binding, 150. by parties to alteration of time of payment, 154. to alteration by substitution of words "or order" or "or bearer," 161. of party to alteration in rate of interest, lb9. CONSIDERATION, generally, presumption as to, rules, 183. when it may be inquired into, 184. showing real consideration, rebutting presumption as to, 184. evidence rebutting, matters dehors contract, 185. "value received," consideration not expressed or expressed, re- butting presumption, 186. showing real consideration, to what parties rule applies, 197. defense of duress, not precluded by, 105. false representations as to, 122 bo7ia fide holder, 123. alterations as defense to action on, 147, 148. new consideration not necessary to render consent to alteration bind- ing, 150. alteration in statement as to, 156. by inserting statement as to, 156. recovery on not defeated by alteration of interest clause, 168. face of note prima facie evidence of between indorser and indorsee, n. 191. compromise settlement or relinquishment note, 195. intention of as an estoppel, 210, 211. seal imports, 217. of an assignment generally, 236. moral obligation to pay pre-existing debt good, n. 241. extension of time as for note transferred to secure pre-existing debt, 247. always open to inquiry, 262. contemporaneous agreement constituting, evidence of admissible, 310. 982 INDEX. [References are to Sections.l CONSIDERATION— Con^i«?ied. evidence of executory contract as consideration for, 322. collateral conditions or agreements affecting, 322. want or failure of growing out of collateral agreement, 322. collateral agreement forming, n. 322. failure of non-performance of conditions of bond, 323. failure of for original no defense to renewal note — bona fide holder, 324. when breach of conditions affecting is not a defense, 324. failure of, where performance of agreement prevented by maker, 325. failure of, breach of agreement not to do certain acts, 326. agreements affecting purchase-price notes, 327. breach of agreement to render services, 329. necessity of for extension of time of payment, 341. that none given but indorsee agent of indorser, 408. fraud or mistake in, note under seal, bona fide holder, 444. may be shown against assignee of peddler's note, 447. proof of essential, action by transferee without indorsement, 456. when not necessary for waiver of presentment for payment, 524. new consideration not necessary for waiver by indorser of notice of dishonor, n. 573. right of indorsee to recover from indorser, n. 645. recitals as to as an estoppel, 646. estoppel as to by new note, 649. whether essential to support new promise, 651. retaining of as an estoppel, 662. estoppel as to in general, 664. See Contract; Discharge; Presentment for Payment; Usury. adequacy or sufficiency of, inadequate or insufficient consideration distinguished from want or failure of consideration, 188. sufficient if consideration is a benefit or injury, 189. distinction between valuable consideration other than money and a money consideration, 190. slight consideration, purchasing paper at undervalue, 191. grossly inadequate, recovery only of amount paid, 191. adequacy in value unnecessary, 192. not valuable, not bona fide holder, division, 380. rule as to inquiry into, fraud, 193. inadequacy of will not support a plea of want of, 193. where inadequacy of creates presumption of fraud, 193. sufficient consideration, illustrations, 194. worthless patent right, 120. compromise, settlement or relinquishment note, 195. same subject, unfounded or illegal claim, 196. compromise of forgery claim, 197. INDEX. 983 [References are to Sections.'] CONSIDERATION— Coji^iwited. want or failure of consideration, total want of consideration, defense between original or im- mediate parties, 198. upon acceptance, between acceptor and other parties, want of consideration, 199. indorser and indorsee as immediate parties, want of consid- eration, 200, partial want of consideration, 201. total failure of consideration, defense between original or im- mediate parties, 202. upon acceptance, between acceptor and other parties, failure of consideration, 203. indorser and indorsee as immediate parties, failure of con- sideration, 204. consideration acknowledged, failure of consideration, 205. non-negotiable paper made at request of another, failure of consideration, 206. partial failure of consideration, defense, between original parties, 207. same subject, review of decisions, 208. where number of notes are given, partial failure of considera- tion. rescinding contract and restoring consideration, general rule, 210. same subject, exceptions to and qualifications of rule, 211. as to guarantors, 212. guarantor may show, 461. as to sureties, 213. as to donor and donee, 214. as to donor and doneee, negotiable check on bank, 215. joint and joint and several notes, 216. notes under seal, 217. notes under seal, gratuitous promise to pay, 218. renewal notes generally, 219. renewal notes, waiver by principal precluding defense of fail- ure of consideration, surety's defense, 220. implied or expressed consideration, 221. consideration for original paper, 222. of original note no defense to renewal — bona fide holder, 324. renewal notes, discount before maturity, 223. notes or checks given for other notes or bills purchased, 224. drafts accepted to extinguish other drafts, 225. when only part of consideration is good, action by payee. 226. defense to one note in action on another, 227. note given for political assessments, 228. where paper sued on is impossible to perform in reasonable time, 229. 984 INDEX. [References are to Sections.} CONSIDERATION— Oowiintted. as to agents, 230. as to trustees of committees, 231. as to holders of municipal warrants and coupons attached to bonds, 232. third persons as holders of notes, 233. note of third person, 234. note given to promote peace between husband and wife, note of stranger, 235. assignees, consideration of assignment, 236. want or failure of consideration, 237. want of consideration, bona fide holder, 441, 442, bona fide indorsees or holders, rule, 238. transfer after maturity, 239. against purchaser after maturity from b07ia fide holder, 434. rule as to payment of value, its basis and qualifications, bona fide indorsees or holders, 240. rule as to value continued, payment of pre-existing debt, bona fide indorsees or holders, 241. same subject, decisions contra or qualifications, 242. banks, distinctions between crediting amount of note on un- drawn deposit and credit on pre-existing indebtedness, bona fide holder, 243. parting with value, surrender by creditor of debtor's own note, receiving negotiable note of third person, 244. joint note of husband and wife, outlawed debt of husband, in- dorsee for past indebtedness, indorsement by president payee to bank, 245. rule as to value, collateral security for pre-existing debt, bona fide indorsees or holders, 246. same subject, particular decisions, 247. specific exceptions, 248. security for pre-existing debt, additional consideration, 249. intermediary party, holder from bona fide holder, 250. paper issued by corporation, bona fide holder, 251. want or failure of consideration subsequent to transfer, bona fide holder, 252. suit in name of original party, bona fide holder, 253. 2ex fori, 254. indorsement for transfer merely or to .pass title, 255. same subject, instances, 256. purchase-price notes, 327. original parties, 257. acceptor, 258. bona fide holder or assignee, 260. effect of judgment, assignees, 261. purchase-price notes, property useless or of no value, 262. Vendor or seller without title, loss of title, 263. INDEX. 985 [References are to iiections.1 CONSIDERATION— Continued. purchase-price notes, land, warranty, 264. personal property, warranty, 265. where property for which note given is of some value, no failure of consideration, 266. purchase-price notes, guarantors, 259. rights of holder where prior indorsee held note as collateral security and for continuing credit, lien, 267. purchase-price notes, instances in general of want or failure of consideration, 268. accommodation paper, consideration as between original or immediate parties, 269. in action against accommodation maker or indorser, 342. bona fide holders, assignees, notice or knowledge, 270. same subject, particular decisions, 271. accommodation acceptor, general rules and illustrations, 272, 273. same subject continued, exceptions and qualifications, 274. bill payable to order, 275. taking before acceptance, 276. accommodation paper, conflict of laws, acceptance, 277. check, bank check, 278. indorsers, availability of defenses, general .rule, 279. same subject, application of rule, 280. same subject, qualifications of and exceptions to rule, 281. bona fide holder, accommodation paper taken after maturity, want of consideration, 282. accommodation of other parties in general, 283. payment of pre-existing debt, bona fide holder against accom- modation maker, 284. same subject, particular rulings and opinions, 285. payment of pre-existing debt, botia fide indorsee against in- dorser, 286. payment of pre-existing debt, drafts and bills, payee, accom- modation acceptor, 287. where set up payee cannot show in rebuttal paper in fraud of creditors, 125. evidence to establish defense of, 185. growing out of failure of collateral agreement, 322. non-performance of conditions of bond, 323. to advance money — surety may share, 323. where performance of agreement prevented by maker, 325. where agreement not to do certain acts, 326. where notice of condition precedent, 327. breach of agreement no defense against bo7ia fide holder, 328. to render services or labor, 329. indorsee agent of indorser, 408. 986 INDEX. [References are to Sections.'] CONSIDERATION— Coniinwed. where note indorsed by joint payees to one of their number, 466, damages resulting from failure of may be set-off, 599. note taken with notice of not available as set-off, 606. acceptance estops to show, 641. new note as an estoppel to show, 649. estoppel to assert by representations in connection with transfer, 653. silence not an estoppel, 664. action in name of promisee for assignee, 664. signing for accommodation, estoppel, 666. estoppel by receipt of benefits, 667. conduct, representation or promise, 668. knowledge or notice, 669. illegal or immoral consideration, original parties, bona fide holders, 288, 441. exceptions and qualifications, notice, knowledge, fraud, etc., 289. particular cases when illegal or immoral, 288. effect on surety, 290. illegality of as a defense in action against joint and several . makers, 3. effect on surety, 290. of as a defense in action against joint and several makers, 3. effect of forbearance to sue, 450. paper given for consideration in violation of statute, 291, 292. where constitution and laws voilated, enemy aided, 293. illegal sales, 294. for note godos sold in violation of insolvent laws, bona fide holder, 120. compounding criminal acts, 295. where consideration is money or property won at a gambling device, 296. Same subject, statutory provisions, 297. qualifications of rule, other instances, 298. particular instances, 299, 300, 301. where transferee has notice of, 472. estoppel, 665. CONSPIRACY, in obtaining note, relief in equity, 445. CONSTITUTION, note for debt in violation of, 293. CONTINGENCY, See Collateral Coxditioxs axd Agreements; Conditions. CONTINGENT LIABILITY. not available as a set-off, 595. IXDEX. 987 [References are to Sections.l CONTRACT, void as against public policy, note in furtherance of void, n. 288. illegal, note as security for performance of, 363. purchase of bill in consideration of acceptance of another note, 491. di-awee's promise to accept bill, 491. drawer and indorser undertake that bill be accepted and paid, 495. breach of, substituted performance, note as an estoppel, 648. necessity of binding contract to discharge surety, 680. performance of conditions as affecting guarantor's discharge, 681. executing for purchase, deed to vendor, discharge of notes, 690. performance of as to sale of goods as dischargee of note, 691. work, labor or services performed as rendered, discharge of note, 692. by married women, see Coverture; Agreement; Presentment for Acceptance ; Stipulation. CONTRACT OF SALE. and note may be construed together, 310. note conditioned to take effect when consummated, n. 314. CONVERSION, bill in satisfaction of, want or failure of consideration, 242. of goods, damages for may be set off, 598. of note, set-off of damages for, 598. of collateral by pledgee, set-off of value of, 613. of paper, see Diversion and Fraudulent Transfer. CONVEYANCE, of land as a consideration, when no failure of, 202. as affecting discharge of note, 690. or agreement as to, as affecting discharge of note, 690, 691. when does not operate as payment of note, 691. See Sale. COPARTNERS, See Partnership. COPARTNERSHIPS, transfer to of note after maturity, discharge of note, 679. COPY, substituted presentment of checks by, 579. CORPORATION, availability to indorser of defense in action on note of, 7. powers of officers and agents of, 485. 486. taking paper of another corporation, same officers, notice, 486. want of authority of officers or agents, 80, 81. notes, diversion by officers of proceeds of no defense, 392. want of authority of bank officials, 82. of president of, 81. note to president, rights of transferee, 486. 988 INDEX. [References are to Sections.'] CORPORATION— Contimted. want of authority of treasurer of, 81. of secretary of, 81. of assistant secretary of, 81. where note signed by director of, n. 17. note by agent of without authority, 458. want of authority of as affected by illegality or statute, 79. note by in violation of express statute, bona fide holder, 79. paper of in contravention of statute, 84. certificate of indebtedness issued in restraint of trade, anti-trust law, 459. formed for illegal purpose, note given to, 79. note of under contract prohibited by charter, 86. noncompliance with articles of incorporation, 81. with by-laws of. no defense against bona fide holder, 81. by-law of as to execution, noncompliance with no defense, 85. instruments ultra vires. 84. when estopped to assert act ultra vires, 85, 86. where note given for money loaned to, 86. who may show want of authority of, 95. as maker cannot show payee a fraudulent association, 95. payee of note, maker cannot deny existence of, 95. note given for stock of, want of power of directors to sell, 95. signature of officer forged, 98. fraud toward by officer of no defense against bona fide holder, 121. name of omitted by accident, insertion of to correct mistake, 175. paper issued by, bona fide holder, want of consideration, 251. note, want of consideration, bona fide holder, 271. bond of given in payment of pre-existing debt, 241. indorsement of ultra vires, effect of, 279. subject to usury laws, 306. note to, set-off of assessment on stock, purchaser after maturity, 422. note of given in payment of dividends, bona fide holder, 479. erasure of signature of, not notice to purchaser, 481. stock of worthless, note of wife for, notice, 482. note in payment of individual debt, notice, 485. paper as an accommodation, notice, 487. indorsement, accommodation paper, bona fide holder, 487. note payable at any bank does not include loan and trust corpora- tion, 517. . maker, transfer of its property when presentment for payment dis- pensed with, 522. maker of note, insolvency of, when presentment for payment dis- pensed with, 523. secretary of may waive protest, 541. , notice of dishonor to, sufficiency of, 553. indebtedness to not a set-off where corporation not party to note, 618. IXDEX. 989 [References are to Sections,'^ CORPORATION— Cow«iwMe(Z. acts of creating estoppel, 660. action against officers of not bound by another action or similar note against corporation, 663. acceptance by of premium notes for stock, statute, estoppel, 664. estoppel to show want of capacity or authority, 671. act of officer of in violation of statute, estoppel to show, 672. CORRESPONDENT, , indorsement of check to, 578 n. COSTS, when maker by tender of payment of note exonerated from, n. 502. CO-TRUSTEES, agency of one to collect note, 698. COUNTERCLAIM, See Set-Off, Recoupment and Counterclaim:. COUNTY, want of authority to issue warrants of, 87. warrants, defenses generally, 232. bonds, coupons of, want of consideration, 232. COUNTY CERTIFICATES, stolen after cancellation, 399. COUPON BONDS, stolen and in hands of hona fide holder, 395. purchase of after maturity, 426. COUPONS, of city and county bonds and warrants, want or failure of consid- eration, 232. authority to collect interest coupons, collection of principal, 698. COURT, note to secure appearance in is valid, n. 298. COVENANT, against incumbrances, breach of, 264. as to incumbrances, when damages for breach of not a set-off, 601. damages for breach of as a set-off, 601. unliquidated damages arising from breach of, when available as set-off, 594. damages arising from breach of, availability as a set-off against hona fide holder, 602. not to sue, effect of, 337, 338. note given in pursuance of, cannot impeach consideration, 327. to accept less sum, 702. COVERTURE, rule at common law, 30. where note given for money and supplies, 30. 990 INDEX. [References are to Sections.l COVERTURE— Continued. where false representations made as to capacity, 30. effect of new promise after liusband's death, 31. rule in equity, English decisions, 32. United States decisions, 33. wife only charges property owned at time of signing, 33. defense of as affected by statute, 34. purchase of paper of married woman must take notice of, statute, 4^2. statute does not have retroactive effect, 35. a defense when transaction not within statutory exception, 36. statutory exception, pleading, 37. burden of proof, 37. assent of husband, 38. note given for insurance premiums, 39. where note made by wife to husband, 40. under New York laws permitting married woman to contract, 40. where statute provides wife may be sued jointly with husband, 40. where wife joint maker, not estopped to show, 41. a joint maker, 41. where statute permits husband and wife to contract, joint note, 41. in case of joint note by husband and wife for supplies, 41. where authorization of husband not shown, wife joint maker, 41. where wife elopes from husband, 42. where husband and wife live apart, English decisions, 42. rule where husband has left state or country, 43. where husband and wife live apart. United States decisions, 43. in case of divorce a mensa et thoro, 43. generally where wife signs as surety, 44. burden of proof on married woman to show she signed as surety, 45. where statute forbids married woman to become surety, 45, 46. when married woman cannot defend on ground she signed as surety, 47. whether defense against bona fide holder that married woman signed as surety, 48. rules as to determining whether principal or surety, 49. liability of married woman as acceptor, 50. (.ommon-law rule as to indorsement by married woman*, 51. necessity and effect of husband's assent to indorsement by wife, 52. particular statutes as to assent of husband to indorsement by wife, 53. indorsement without assent of husband, dona fide holder, 54. general rule as to assent of husband to indorsement by wife, 54. where "woman a sole trader, 55. in business, 55. separate estate, benefit, etc., as affecting, 56, 57, 58. note given in purchase of horse, 57. in purchase of lumber, 57. INDEX. 991 [References are to Secti07is.'] COVERTURE — Continued. for money and supplies, 57. for goods purchased by husband as wife's agent, 57. for sewing machine, 57. in purchase of mule, 57. note to creditor of husband, 57. where note given for property purchased, 57. note given for money loaned to pay off mortgage, 57. in purchase of stocks, 57. for money loaned to release lien, 57. for agricultural implements, 57. for money loaned to pay rent, 57. note for borrowed money, 58. parol evidence not admissible to s^jiow joint note intended to charge wife's estate, 59. estoppel from contents of note to assert, 59, intention to charge separate estate as affecting defense of, 59. intention to charge separate estate may be presumed, 59. as affecting, consideration, n. 264. what law governs, 60. who may urge, 61. a personal defense, 61. is a personal defense not available to co-defendant, 1. of maker, indorser cannot urge, 61. where there is a failure to plead coverture and judgment is ren- dered, 62. CREDIT, evidence of agreement as to upon not admissible, 332. of maker, right to set off damages caused by slander on, 598. as affecting surety's release, n. 680. when bank draft not paid by passing, n. 702. CREDITORS, paper in fraud of, 125. notes in fraud of void, n. 288. that paper in fraud of defense against indorsee for collection, 125. a defense to action against surety by executors of payee, 125. where debtor gives note of third person, want of consideration, 234. surrender by of debtor's own note, receiving note of third person, 244. taking accommodation note in payment antecedent debt, purchaser for value, 285. notes to founded on illegal consideration void. n. 288. note to to induce acceptance of an assignment void, n. 288. not subject to defense another was to sign as maker, n. 315. taking accommodation paper as collateral, action against indorser, 354. where note transferred for benefit of, 456. given for conveyance in fraud of, 456. 992 INDEX. [References are to Sections.'\ CREDITORS— Continued. note to one as agent of the creditors," set-off of sealed bill against, 618. note given to aid in defrauding, estoppel to show fraud, 644. goods transferred in fraud of, sale of as discharge of, n. 691. CRIMINAL, note not to prosecute void, n. 288. acts, note for purpose of compounding, void, 295. CRIMINAL LAW, note to defeat execution of, void, n. 288. CRIMINAL PROCESS, paper procured by abuse of, 109. CRIMINAL PROSECUTION, paper given under threat of, 112. condition in note that payee assist in, n. 343. CROPS, parol evidence that note void on failure of not admissible, 320. evidence that note void on failure of crops not admissible, 320. CURATOR, of insolvent indorser may waive protest, 541. CUSTODIAN, of society funds cannot set off against his note a debt due to society, 591. CUSTOM, local custom of banks, presentment, substituted checks, 580. See Usage. D DAMAGES, tort of infant, where note given in satisfaction of, 66. note given in settlement of, consideration sufficient, 195. action for statutory damages, deficiency on bill after sale of col- lateral, 494. when maker by tender of payment of note exonerated from, n. 502. when bank check wrongfully protested, n. 582. to drawer from laches in presentment of check, 582. recoupment of, 208. set-off of claim for unliquidated damages arising from breach of covenant, 594. for taking possession of property note given for right to set-off, 597, 598. recoverable in action of tort, right to set-off of, 597, 598. for conversion of note may be set-off, 598. INDEX. 993 [References are to Sections.'\ BAMAG'ES— Continued. arising from negligence of plaintiff as agent cannot be set off, 598. for conversion of goods may be set off, 598. for slander on credit of maker, right to set-off, 598. for negligence in case of collateral cannot be set off, 598. for selling property in violation of trust cannot be set off, 598. arising ex contractu and under same contract may be set off, 599. arising from fraud or mistake may be set off, 599. for misstatement in inventory as set-off to note for interest in part- nership, 599. for breach of contract to deliver cans as set-off, 600. arising ex contractu under different contract cannot be set off, 600. for negligence of mortgage in procuring insurance not a set-off, 600. for fraud of mortgage in concealing material facts as a set-off, 601. for breach of warranty or covenant as a set-off, 601. not available to surety or guarantor as set-off, 601. for false representations as to land, when not a set-off, 601. arising from breach of warranty as set-off where note given with knowledge but on promise to remedy, 601. for breach of covenant as to incumbrances not a set-off, 601. arising from breach of warranty or covenant, availability as set-off against bona fide holder, 602. for breach of warranty as set-off, apportioning of pro rata among several notes, 603. due to principal may be set off by surety, 640. See Injury. DATE, is a material part of contract, 152. effect of alteration of, 152. alteration in discharges, surety, 152. of releases, acceptor, 152. in bonds, parties who acquiesce, 152. of to conform to actual date, 152. in does not release surety where authorized by him, 152. of defense to action against accommodation maker, 152. of indorsement, effect of alteration of, 152. of demand, alteration of material, 152. alteration of by stranger a mere spoliation, 152. where space for left blank, 145. bill payable certain time after date same as part-dated bill. 490. bill payable certain time after, presentment for acceptance, 490. of paper, statement of in notice of his honor, 552. DAYS OF GRACE, See Grace. DEATH, as excuse for failure to tender back consideration. 211. of drawer, presentment for payment of check after, 215. Joyce Defenses — 63. 994 INDEX. [References are to Sections.'] DEATH — Continued. where performance of condition precedent prevented by, 329. presentment for payment on behalf of estate of holder, 511. of person primarily liable, present for payment, 519. See Estate. DEBT, sale or surrender of collateral or satisfaction of debt, discharge, 683. alterations in note as defense to action on, 147. of another, payment of, agreement to accept bill, n. 491. indorsers of note for antecedent debt to enable it to be discounted liable as joint owners without demand, 503. draft to secure antecedent debt, presentment for payment, 503. of third person, set-off arising from agreement to pay, 596. set-off against note assigned to avoid payment of, 623. DEBTOR, giving note of third person to creditor, want of consideration, 234. surrender by creditor of note of, receiving note of third person, 244. See Creditor; Joint Debtors. DECLARATION, as an estoppel, 656, 657, 658. DEED, to remove cloud on title as consideration, 194. when may be construed with note, 310. with warranty, acceptance of as an estoppel, 664. in view of bankruptcy, discharge of note, 690. agreement to take, discharge of note, 690. DEFINITIONS, protest, 526. DELAY, when unreasonable, presentment for payment, demand notes, 506. See Laches; Presentment for Acceptance; Presentment for Payment. DELIVERY, procured by force or fraud, 13. signing of note after, 16. want of as a defense, 20. want of, burden of proof, 20. by agent in violation of instructions, 21. of instruments on Sunday, 29. maybe conditional without express words, 312. to payee by worker, may be conditional, 312, 313. in escrow, rule as to, 317. burden of proof as to being b077a fide holder, 317. condition as to another signature, 317. no defense against payee without notice, 318. right of party taking as security for antecedent debt, 319. INDEX. 995 [References are to Sections.l BEhlYERY— Continued. want of, where stolen good defense, 394. assignment of note by, 452. paper may be transferred by, 456. when bill not transferable by, 456. transfer by, nature of title given, 463. of paper to impostor, liability to drawee or bona fide holder, 470. conditions affecting. See COLLATEBAL CONDITIONS AND AGREEMENTS. DEMAND, note, alteration in date of material, 152. changing time note to, 155. time of payment of cannot be varied by collateral agreement, 339. paper, purchaser of after maturity, 435. word "overdue" construed with reference to, 435. who is a bona fide holder, 464. notes, purchase of in good faith when overdue, 469. accidental stamping of waiver of over indorsement, 143. notes, notice of dishonor, 545. after sight, presentment for acceptance, n. 490. personal demand, presentment for payment, 499. note, presentment for payment in reasonable time, 505. payable at place certain, presentment for payment, 505, 506. presentment for payment, notes not to be paid till expiration of certain time, 506. unreasonable delay, presentment for payment, 506. necessity that injury or loss be sustained by want of demand, 506. maker's insolvency no excuse for non-presentment, 506. after date, presentment for payment, reasonable time, 506. indorsement after maturity, presentment for payment, rea- sonable time, 506. with interest, presentment for payment, 507. and demand note bearing interest, distinctions abrogated, pre- sentment, 508. presentment for payment before sent on, 512. presentment for payment, excuses, 523. time of making protest, 534. See Presentment for Acceptance; Presentment for Payment; Wai\-er. DEMURRER, to plea of want of consideration, when properly overruled, 199. DEPOSIT, set-off of against bank assignee, 422. certificate of, see Certificate of Deposit. 996 INDEX. [References are to Sections."] DEPOSITOR, application by bank of proceeds to credit of, 471. See Bank Deposits; Set-off, Recoupment and Counterclaim. DEPOSITS IN BANK, See Bank Deposits; Set-off, Recoupment and Counterclaim. DEPUTY SHERIFF, paper for appointment to ofBce of, void, n. 288. paper for sale of office of, void, n. 288. DESTRUCTION, of seal, alteration by, 176. DILIGENCE, to collect order on drainage district, presentment, 503. reasonable diligence, holders of collateral, presentment for pay- ment, 503. required after excusable cause for delay in presentment removed, 521. making note for collection, presentment for payment, 522. degree of, presentment for payment, holder told that maker has ab- sconded, 522. required generally, presentment and demand, 522. presentment for payment excused when cannot be made after exer- cise of reasonable diligence, 522. what degree of necessary, inquiry of cashier of bank as to residence, presentment, 522. in giving notice of dishonor, 564. presentment of check on following day, 576 and note. See Checks; Laches; Reasonable Time. DIRECTOR, of corporation, where note signed by, n. 17. of bank acting ultra vires, 82. notes given to bank, estoppel, 664. check as purchase or payment, 696. See Corporate Officers; Officers. DISCHARGE, accommodation party, 678. by agreement, 678. release by indorser not binding on immediate indorsee, 679. of acceptor by satisfaction of bill, 679. release by holder, 679. satisfaction of bill as between drawer or indorser and indorsee, 679. of acceptor, want of funds in assignee of drawer, 679. judgment against joint-debtors, 679. effect of judgment, 679. release absolute in terms, joint debtors, 679. of co-debtors, or joint debtors, 679. distribution of estate of maker, notice given to joint maker, dis- charge, 679. INDEX. 997 [References are to Sections.'\ DISCHARGE— Continued. of joint makers, 679. maker a member of partnership to which note transferred, dis- charge, 679. transfer to co-partnership of note after maturity, 679. what constitutes, maker, 679. by release based upon valid consideration, 679. satisfaction between maker and payee, 679. assignee against maker, defense, 679. maker's defense, purchaser by mere delivery, 679. maker's defenses, purchaser after maturity, 679. by marriage of parties, 679. satisfaction by agreement with grantor with grantee rescinding sale, 679. by release upon sufficient consideration, 679. and release of surety, 680. necessity of consideration for extending time of payment, release of surety, 680. of surety by neglect to proceed against principal, 680. of surety, 680. of guarantor, 680. extent of damage as affecting discharge of guarantor, 681. mortgage security, 682. of bills of exchange, mortgage security, 682. agreement, mortgage, drawer when liable on bill, 682. mortgage by one of two sureties, 682. of indorsers, mortgage security, 682. of maker, mortgage, 682. married woman's mortgage, 682. sale or surrender of collateral or satisfaction of debt, 683. payment of collateral, 683. agreements and conditions affecting, 684. mode of payment, agreements, 684. of maker, agreements affecting, 684. of acceptor, agreements, 685. satisfaction, release and payment, agreements affecting, 684, 685. payment by note or check or by order on third person, 686. accord and satisfaction, 686. for payment of other indebtedness, 687. by bill, note or check, substituted note, renewal note, 688. widow's note for debt, 688. by taking stocks and bonds, 689. by conveyance of land or agreement to take deed, 690. deed made in view of bankruptcy, 690. of surety, deed in view of bankruptcy in favor of principal, 690. quit-claim deed, discharge of purchase-price notes, 690. of purchase-price notes, deed from vendor to vendee, 690. by assignment, transfer or surrender of property, 691. 998 INDEX. [References are to Sections.'] DISCHARGE— Continued. of surety, conveyance of property, 691. conveyance when not payment of note, 691. payment of note by sale of goods held in fund of creditors, 691. acceptance of claim against United States, 691. by transfer of other notes, 691. of non-negotiable note by work, labor or services, 693. by work, labor or services performed or rendered, 693. tender of payment, 694. installment, 694. agreement to accept deed for amount of note, averment of perform- ance, 694. cancellation, indorsements of payment, receipts, 695. indorsement of payment of interest, 695. by maker without owner's consent, 695. attempt to indorse amount on note equivalent to claim for services, 695. whether act constitutes purchase or payment, 696. payment, by whom, 697. payment, to whom, 698. non-negotiable paper, payment to whom, 699. payment as affecting bona fide holder, 699. remuneration by holder, 700. right of party who discharges instrument, 701. payment valid though not in money, 702. covenant to accept less sum, 702. indorser still liable though dividends received out of assets of in- solvent maker, 702. holder's own acts may preclude rights against indorser, 702. when payment or release not established, n. 702. effect of extension of time, 340. See Notice of Dishonor; Payment; Release, • DISCONTINUANCE, of action as a consideration, 195. DISCOUNT, one taking good title by, right to recover on renewals, 223. of bills by holder without notice as to accommodation, 273. condition as to, indorsement for accommodation of acceptor, bona fide holder, 273. of accommodation paper before acceptance, 276. of bill bona fide, accommodation indorser of consideration, 280. note discounted in unauthorized banking business void, n. 288. usury in, no defense in suit by transferee against maker, 304. of paper at particular bank, condition as to, diversion, 388, 389. paper indorsed in blank for, diversion, 391. of note at particular bank, condition as to diversion, 391. of note in bank, action on, 405. INDEX. 999 IReferences are to Sections.] DI SCOUNT — Continued. of paper in good faith, b07ia fide holder, 443. in good faith, bona fide holder, 465. of note, manner of as notice that accommodation, 483. by bank of notes of a series, 484. of accommodation paper issued by corporation, bona fide holder, 487. of note induced by representations, estoppel, 653. See Presentment foe Payment. DISEASED, sheep, note for sale of valid, n. 288. DISHONOR, post-dated bill not dishonored by refusal to accept before date, 490. note overdue, presentment or demand, when necessary, 503. of check indorsed and deposited, n. 578. See Notice of Dishonor. DISMISS, agreement to dismiss action as consideration, 194. DISMISSAL, of legal proceedings as a consideration, 195. of known groundless contest no consideration, 196. DISSOLUTION, of partnership, paper given in firm name after, 94. DIVERSION AND FRAUDULENT TRANSFER, as a defense generally, 379. intention as to no defense, 379. facts showing should be pleaded, 379. by principal discharges surety, 379. against assignee of non-negotiable paper, 379. as against bona fide holder, 380. where paper taken in ordinary course of business, 380, 381, 382. evidence and burden of proof as to bona fide holder, 381. transfer in violation of statute, innocent holder, 382. of accommodation paper, 282. accommodation paper fraudulent put into circulation after satisfied, 284. accommodation note transferred as collateral, bona fide holder against maker, 353. to one as collateral, bona fide holder, 362. accommodation paper, bona fide holder, 383, 384. diversion of, other than bona fide holders, 385. where one signs as surety, 385. of note to be used as collateral, 386. where purpose of accommodation paper substantially effected, 386. note indorsed to be used only at certain bank, 386. of accommodation paper, where no instructions imposed, 386. to party not contemplated, 387, 388, 389. 1000 INDEX. {References are to Sections.} DIVERSION AND FRAUDULENT TRANSFER— Continued, paper to be discounted at particular bank, 388, 389. where transferred as security for antecedent debt, 390, 391. note intended as collateral for one debt used for another, 391. paper indorsed in blank for discount, 391. note to be discounted at bank, given as security for antecedent debt, 391. diversion of proceeds of paper, 392. corporation note, diversion by officers of proceeds no defense, 392. effect of waiver, 393. by payee to purchaser after maturity, 421. of collateral, set-off of value of, 613. where note indorsed in blank to agent, estoppel, 645. DIVIDENDS, evidence of agreement that note payable out of, not admissible, 334. note of corporation given in payment, bona fide holder, 479. out of assets of insolvent maker, indorser still liable, 702. DIVORCE, a mensa et thoro, effect on note executed prior to, coverture, 43. legislation, note to legislature is valid, n. 288. note given under agreement to facilitate, void, n. 288. DOMESTIC SERVICES, sufficient consideration for note, 194. DONATIO CAUSA MORTIS, note by donor payable to donee, defenses to, 214. DONEE, of note, want of consideration as defense against, 214. of check, right of, 215. DONOR, of note, want of consideration as defense, 214. DOWER, misrepresentation that necessary to sign note to release dower no defense, 117. release of by wife as a consideration, 194. DRAFT, forged draft as consideration, offer to return not necessary, 211. accepted to extinguish other drafts, failure of consideration, 225. taken in payment of pre-existing debt, n. 242. in payment of pre-existing debt, payee, accommodation acceptor, 287. time of payment of sight draft, etc., cannot be known until accept- ance, 490. sight draft, in legal intent draft for acceptance, 490. post-dated, presentment for acceptance, 490. to be drawn, promise to accept, necessary of presentment, n. 491. I INDEX. 1001 IReferences are to Sections.'] DRAFT — Continued. purchase of sight drafts, agreement to return on certain conditions, presentment, 491. to secure antecedent debt, presentment for payment, 503. foreign or inland, presentment for payment, notice of dishonor, 503. when considered as inland bill or banker's check, laches, present- ment, 511. See Bill of Exchange. DRAINAGE DISTRICT, order on, diligence to collect, presentment for payment, 503. DRAWEE, See Check. presentment at place of business of, 499. for payment at residence of, 499. at residence of, 499. to two or more not partners, n. 499. where drawee dead, n. 499. See Presentment for Payment; see the particular defense. DRAWER, * release of, presentment for acceptance, 496. undertakes for acceptance and payment of bill, 495. See Check; Presentment for Acceptance; particulab defenses DUE BILL, mistake in amount of, question for jury, n. 17. for costs before trial and where person subsequently acquitted, 196. consideration of a share in a store, failure to deliver goods, 257. where payable on final settlement, 343. not negotiable, purchaser after maturity, 425. under seal, bona fide holder, 444. presentment for payment before suing on, 512. DURESS, general rule as to, 105. common-law rule as to relaxed, 105. facts showing should be pleaded, 105. available though some consideration, 105. equity may decree cancellation, 106. threat of husband to commit suicide not, 107. taking advantage of necessities of party to a contract not, 107. what does not constitute, 107. coercion into performance of duty not, 107. of wife, when not established, 107. threat to remove property not, 107. where procured from one under illegal arrest or restraint, 108. where paper given to procure release from lawful imprisonment, 108. person arrested for assault, where note given in settlement of in- jury, 108. 1002 INDEX. [References are to Sections.1 DURESS — Continued. by abuse of legal process, 109. property attached to compel giving of note, 109. note to secure property unlawfully detained, 109. requisition procured to compel settlement of claim, 109. threat of bankruptcy proceedings against third person, 110. note in settlement by one under arrest in civil suit, 110. effect of threat to sue, 110, 196. effect of threat to lawfully invoke legal process, 110. threat of judgment creditor to levy execution, 110. may exist though not actual threats of violence made. 111. threats of violence to a third person at a distance. 111. giving of paper Induced by fear of violence. 111. note by wife under fear of husband's arrest, 112. where person has no means of carrying out threat of prosecution or arrest, 112. note by sister under threat to prosecute brother, 112. threatened criminal prosecution and imprisonment as inducing, 112. availability of as between parties, 113. note obtained by use of military force, 113. note given under may be ratified, 113. note obtained by, burden on plaintiff to show he is iona fide holder, 114. availability against subsequent parties, 114. of married woman may be shown against bona fide holder, 114. against bona fide holder, 114. of principal may be shown by surety, 114. of maker cannot be shown by indorser, 114. against purchaser after maturity, 114. of maker may be shown against assignee of non-negotiable note, 114. of principal, where surety signs with notice of, 115. availability against parties with notice, 115. E ELECTION, note to secure payment of money won on, void, n. 288. paper in consideration candidate withdraw, void, n. 288. to do act discharging from liability, duty as to, 342. . ENEMY, note in aid of, 293. ENGINES, payment of purchase-price notes conditioned on acceptance of, 260. EPIDEMIC, excuse for delay in presentment for payment, 521. INDEX. 1003 [References are to Sections.2 EQUITABLE ASSIGNMENT, operation of check as, 581. EQUITABLE LIEN, operation of check as, 581. EQUITY, when equity will relieve against mistake of law, n. 17. rule as to coverture, English decisions, 32. United States decisions, 33. may decree cancellation of instrument procured by duress, 106. ERASURE, of a signature or seal which is accidental, 143. of name of released guarantor, where consented to or ratified, 149. of contemporaneous memorandum as to time of payment, 155. of name of indorsee and inserting another, 158. of name of payee and insertion of another, 158. of interest clause added without consent, 170. of condition or stipulation, 171. of words "upon condition," 171. of maker's signature, 172. of words in connection with signatures, when not material, 173. of names of witnesses, 177. of memorandum, where material, 179. of prior indorsement, 180. of indorsement, where accidental, 180. of indorsement by stranger, 180. of word "surety" after name of a maker, 181. or alteration of signature of surety, 181. of signature of guarantor below maker's and placing it on back, 181. of indorsement on treasury note, where stolen, 398. of corporate signature, not notice to purchaser, 481. of parts of paper, when maker estopped to show, 661. of signature estops person to show forgery, 673. See Alteration. ESCAPE, note based on agreement to indemnify maker against void, n. 288. ESCROW, rule as to delivery in, 317. See Collateral Conditions and Agreements; Delivery. ESTATE, of maker, indorser made administrator of, demand necessary, 503. demand necessary though indorser is administrator of, 503. of holder, presentment for payment on behalf of, 511. of deceased, distribution of note to joint-maker, discharge, 679. 1004 INDEX. [References are to Sections.'] ESTOPPEL, by execution or indorsement in blank, 22, 23. by negligence to set up fraud, 28. to set up fraud by failing to read before signing, 28. married woman not estopped to show coverture by word "widow" after name, 30. wife a joint maker not estopped to show coverture, 41. by contents of note to assert coverture, 59. to set up want of authority does not arise from mere silence, 74. by ratification, name of surety forged, 74. to deny signature does not arise from mere promise to pay, 74. where unauthorized signature ratified, 74. by delivery of note to deny signature, 74. of corporation to show paper ultra vires, 85, 86. of maker to assert forgery of name of payee, 102. to show failure of consideration, representations by maker to purchaser, 240. See Wai\-er and Estoppel. EVIDENCE, want of delivery, burden of proof, 20. of misrepresentations admissible under plea of non est factum, 25. woman signing with husband prima facie charged, 32. burden of proof, statutory exception as to coverture, 37. on married woman to show she signed as surety, 45. parol evidence not admissible to show joint note intended to charge wife's estate, 59. burden of proof to show contract of married woman one authorized by statute to make, 59. of infancy admissible under plea of nil debet, 63. of ratification of infant's note admissible though not averred, 64. burden as to value of necessaries where mental Incapacity set up, 71. to show note binding where mental incapacity alleged, 71. as to indorser's mental incapacity, 72. sufficiency of as to mental incapacity of surety, 72. burden of proof to show authority of partner to sign firm's name, 73. admission of enlarged photographs of signature, 96. showing signature forged, 96. where duress shown plaintiff must show he is bona fide holder, 114. burden of proof to show plaintiff bona fide holder where fraud by payee shown, 119. in action by indorsee where check obtained by fraud, 119. as to time alteration made, where apparent on face, 136. where alteration not apparent on face, 136. as to notice where paper executed with unfilled blanks, 144. proof as to consideration seldom necessary, 183. to rebut presumption as to consideration, 184, 185. rebutting recital "value received," 185. INDEX. 1005 [References are to Sections.'] EVIDENCE — Continued. showing real consideration, to what parties rule applies, 187. admissible under an averment of want of consideration, 198. of partial want of consideration, when not admissible, n. 201. tending to prove partial failure of consideration, rule in Alabama, 208. of ownership, possession is prima facie, 240. as to amount paid by indorsee for paper, 240. note to suppress void, n. 288. parol evidence not admissible to vary terms of paper, 307. explanatory of contract where bill or note incomplete, 309. of contemporaneous agreement, when admissible, 310. of conditional as to delivery must be reasonably certain, 312. of condition affecting delivery to payee, 312, 313. burden of proof to establish collateral conditions, 313. plaintiff must show he is bona fide holder on proof of breach of condition precedent, 314. as to being hona fide holder on proof of delivery in escrow, 317. as to particular conditions that note void on contingency, 320. that partnership notes void if partnership dissolved not admis- sible, 320. parol evidence that instrument payable on contingency not ad- missible, 320. void on contingency not admissible, 320. as to particular conditions that note payable on contingency, 320. parol evidence of executory contract as consideration for note, 322. burden of proof to show condition as to consideration not per- formed, 322. parol evidence of conditions affecting consideration, 322. of agreements affecting purchase-price notes, 327. of agreement not to negtotiate note, 330. not admissible to show different place of payment, 331. changing interest clause not admissible, 332. of agreement as to credit upon note not admissible, 332. not admissible to show different amount, 332. of conditions as to mode or manner of payment, 333, 334, 335. of agreement that note payable in labor not admissible, 333. that note to be paid only out of certain fund not admissible, 333. of performance of agreement to support, 336. of executed agreement as a defense, 336. of collateral agreement to renew note not admissible, 339. varying time of payment of demand note, 339. parol evidence of agreements to release from or limit liability, 342. parol evidence not admissible to show absolute acceptance was conditional, n. 347. parol evidence not admissible to change meaning of indorsement, 348. to show note executed as collateral, 351. 1006 INDEX. [References are to Sections.'] EVIDENCE— Confinweti. of parol agreement or condition, collateral security, 361. burden of proof to show bona fide holder, diversion and fraudulent transfer, 381. lost or stolen instruments, 401. of title, possession as, 402. necessity of proving transfer, 404. to support plea that note assigned, 405. of circumstances under which indorsement made, 415. to rebut plaintiff's prima -facie title from possession, 416. of usury, purchaser after maturity, 421. not necessary to prove demand at particular place, but matter of defense, n. 502. presentment for payment, proof of tender, n. 502. burden of proof, presentment reasonable time, demand note and demand note bearing interest, 508. certificate of protest as, 542, 543. of notary as to deposit of notice of protest in postoffice, 555. of notice of dishonor, bill specified by insolvent indorser as part of indebtedness, 558. as to bank deposit at time of maturity of note, n. 604. of accord and satisfaction, 686. See BuEDEx of Proof; Pkesumptions. EXAGGERATION, does not constitute fraud, 122. EXCESS, of set-off over plaintiff's claim, right to judgment for, 596. EXCHANGE, of notes and checks for accommodation, bank purchasing has good title, 224. of note, each good consideration for other, 227. of notes, want or failure of consideration subsequent to transfer, bona fide holder, 252. EXCUSES, delay in presentment for acceptance, person without capacity to contract, 501. demand necessary though indorser made administrator of maker's estate, 503. demand not excused though note paid before purchase by in- dorsee, 503. for delay In presentment, epidemic, 521. for payment, war, 521. for payment, diligence after cause of delay removed or ceases, 521. for payment, political condition of country, 521 and note, acceptor's insolveny, presentment for payment, 523. INDEX. 1007 [References are to Sections.'] EXCUSES— Continued. note payable on demand, presentment for payment, 523. reasonable expectation that check will be honored, want of funds, 586. for delay, see Pbesentment foe Acceptance; Presentment fof. Payment. EXECUTED, agreement as a defense, distinguished from executory, 336. See Collateral Conditions and Agreements. EXECUTION, procured by force or fraud, 13. of note, fraud in connection with, 116. non est factum, 14. where payee signs at foot with maker's name, 15. signing after delivery, 16. mistakes, 17. mistake of law no defense, 17. when equity will relieve against mistake of law, n. 17. mistake as to amount of due bill question for jury; n. 17. where note signed by director of corporation, n. 17. place of execution not correctly recited no defense, 18. as to revenue stamp, 19. . . in blank, rights of parties, 22, 23. fraud in writing a note over a signature, 23. instruments payable to fictitious person, 24. misrepresentations as to nature of instrument, 25. evidence of misrepresentations admissible under plea of non est factum, 25. misrepresentations as defense against bona fide holder, 25, 26. to maker unable to read English,. 27. of paper, laches in estoppel, 661. negligence of maker precludes defense of fraud, 28. factors in determining question of negligence in, 28. when surety precluded from setting up defense of forgery, 28. negligence of maker unable to read English, 28. in failing to read before signing precludes defense of fraud, 28. of maker may preclude defense of fraud, 28. of instruments on Sunday, 29. of note on Sunday no defense against bona fide assignee after ma- turity, 421. of instrument as an estoppel, 644. recitals as to place of, estoppel, 646. by one as maker warrants capacity of payee, 670. effect of threat of judgment creditor to levy, 110. wager, on collection of, note to secure void, n. 288. 1008 INDEX. [References are to Sections.'] EXECUTOR, want of authority of to give a transfer paper, 78. of payee, in action by against sureties may show paper was in fraud of creditors, 125. note given to cover shortage in account as, consideration, 194. right of assignee of to sue, 407. action by, want of title, 417. notice to of dishonor, sufficiency of address, 555. of indorser, notice of protest to, 559. availability of set-off in action by, 620. EXECUTORY AGREEMENTS, See Collateral Conditions and Agreements. EXECUTORY CONTRACT, evidence of as consideration for note, 322. See Contract; Discharge. EXECUTRIX, want of authority to indorse note, 78. EXTENSION, of time as a consideration, 194. for payment based on usury does not taint original note and mortgage, 302. • of payment, usury, 305. not waiver of forgery, 673. demand notes, presentment for payment, 506. waiver of presentment for payment by request for, 524. as waiver of presentment for payment, 524. as an estoppel, 659. See Renewal. EYESIGHT, of maker impaired, fraud, 120. F FACTOR, concealing principal, set-off against, 618. FAILURE OF CONSIDERATION, See Consideration. FEDERAL STAUTES. right to set-off usury as affected by, 615. FEES, alteration by stranger of provision as to attorney's fees, 142. FELONY, note to secure acquittal in prosecution for void, n. 288. FEME COVERT, See Coverture; Married Women. INDEX. 1009 [References are to Sections.'] FERTILIZER, note tagged as required by law, note for void, n. 291. FICTITIOUS PERSON, where instrument payable to, 24. FIDUCIARY, indorsement by to transfer right of action, want of consideration, 255. FINAL SETTLEMENT, where due bill payable on, 343. FIRE, cannot show note payable only if property destroyed by, 320. destruction by of bank does not excuse notice of dishonor to indorser, 571. FIRM, See Partnership. "FIXED," effect of in note as to time of payment, 155. FORBEARANCE, to sue on bond as consideration, 194. to sue on unfounded claim not a good consideration, 196. to sue as consideration for surety signing, 213. to sue, additional consideration for note taken as collateral for pre-existing debt, 249. to sue for slander, note in consideration of, 295. to sue, effect on right of assignee of void note, 450. FORCE, in connection with execution or delivery, 13. "FOR COLLECTION," where paper so indorsed, 348. where note so indorsed, right conferred, 457. FORECLOSE, breach of condition not to, 326. FORECLOSURE, of mortgage, discharge of note, 682. FOREIGN BILLS, presentment for payment, notice of dishonor, 503. what is, 527. when protest of necessary, 527. FOREIGN DRAFTS, presentment for payment, notice of dishonor, 503. FORGED BILL. indorser of, when presentation for payment dispensed with, 522. See Forgery. Joyce Defenses — 64. 1010 INDEX. [References are to Sections.'i FORGERY, general rule as to, 96. of name as surety, ratification, estoppel, 74. defense against bona fide holder, 96. evidence to show, 96. question of genuineness of signature for jury, 96. comparison of genuine with disputed signature, 96. admission of enlarged photographs of signature in evidence, 96. of paper given as consideration for note not defense to action on lat- ter, 97. particular cases when no defense, 97. of name of maker or drawer, 98. of school bonds, 98. of signature of officer of corporation, 98. of a bank check, loss falls on bank, 99. of an acceptance, 99. where drawee obligated to know signature of drawer, 99. of bills of lading attached to bill of exchange, 99. payment of or by forged paper, duty as to notice, 100. effect of failure to give notice of, 675. money paid on, may recover from good-faith holder, 481. payment of previous forgeries does not estop to show, 673. where forged check certified, 101. bank bound by acceptance of forged certification, 642. of name of payee, 102. where name of payee forged and bank pays check, 102. when maker estopped to assert forgery of name of payee, 102. of name of payee, defense against bona fide holder, 102. by agent of owner, 103. of name of one of obligors cannot be set up by surety, 104. to whom defense available, 104. when not available to surety as defense, 28. indorser cannot set up forgery of prior indorser's name, 104. note given in settlement of suit upon forged note, 197. forged draft as consideration, offer to return not necessary, 211. silence does not estop to show, 673. estopped to show by erasing, 673. estoppel to show, 673, 674. by admission of signature, 674. as to checks, 676. FRAUD, See Dn-ERSiON and Fraudulent Transfer; Fraud and Fraudulent Representations ; Misrepresentations. FRAUD AND FRAUDULENT REPRESENTATIONS, may be shown in defense, 116. rule as to generally, 116. execution or delivery procured by, 13. fraudulent re-issue of municipal bonds, 13. • «| INDEX. 1011 [References are to Sections.'] FRAUD AND FRAUDULENT REPRESENTATIONS— Ccwiinue(Z. in connection with delivery, burden of proof, 20. in writing a note over a signature, 23. in procuring indorsement, 116. a defense against one not bona fide tiolder, 116. contract procured by fraud or deceit can not be enforced, 116. misrepresentations as to nature of instrument, 25. as to nature of instrument as defense against bona fide holder, 25, 26. where maker unable to read English, 27. on maker no defense where negligent, 28. of administrator in execution of note, 78. in issuance of school bonds, 98. inconsistent with plea of non est factum, 116. where set up by party participating in, 116. defense to action on renewal note, 116. extent of injury for which note given falsely exaggerated, 116. what constitutes a misrepresentation which is a defense, 117. as to liability on note signed, 117. that accommodation paper was business paper, 116. misrepresentation no defense unless damage sustained, 117. mere expression of opinion not a defense, 117. as to legal effect of order of arrest no defense, 117. as to bill of exchange being an ordinary note, 117. fraudulent concealment, 118. concealment of defect in article sold, 118. mere omission to state facts not defenses, 117. not available against pledgee without notice, 119. when person bona fide holder within rule excluding defense of, 119. against non-negotiable paper in hands of boi).a fide holder, 119. where shown on part of payee holder must show he is bona fide holder, 119. against assignee of note, 119. against purchaser receiving notice after payment of part of consid- eration, 119. where patent on face of instrument, 119. as against bona fide holders generally, 119, 120, 121. as against b07ia fide holder, rules illustrated, 120. in obtaining possession of coupon bonds no defense against bona fide holder, 120. quality of goods misrepresented, 120. of surety upon maker no defense against bona fide holder, 121. of one holding paper in trust no defense against bona fide holder, 121. of partner toward firm no defense against bona fide holder, 121. of pledgee no defense against bona fide holder, 121. of corporate officer toward corporation no defense against bona fide holder, 121. of agent no defense against bona fide holder, 121. 1013 INDEX. [References are to Sections.'] FRAUD AND FRAUDULENT REPRESENTATIONS— ConHnMed. of maker towards co-maker no defense against bona fide holder, 121. of principal towards guarantor no defense against boria fide holder, 121. of particular persons, bona fide holders, 121. mere exaggeration does not constitute fraud, 122, false representations as to consideration, 122. what essential to render false representation a defense, 122. as to value and character of property, 122. as to making of improvements, 122. where note non-negotiable defense against purchaser for value, 122. as to consideration, bona fide holder, 123. that paper in fraud of creditors defense against indorsee for collec- tion, 125. in connection with certified check, bona fide holder, 124. paper in fraud of creditors, 125. misrepresentations subsequent to transaction no defense, 126. not available against one taking in payment of pre-existing debt, 126. in connection with procuring of indorsement, 126. indorsement no defense against payee without notice, 126. in procuring indorsement to renewal no defense to original, 126. as to amount, 127. in procuring signature of surety, 128. inducing surety to sign no defense against bona fide holder, 129. that note pledged without authority no defense, 130. transfer in fraud of owner no defense against bona fide holder, 130. fraudulent transfer by partner no defense against bona fide holder, 131. fraud in transfer by administrator, 132. that made from proceeds of stolen property no defense to note, 133. availability o^ to maker, 133. availability in favor of parties other than maker, 134. no allegation or proof of fraud necessary to defense of alteration, 135. presumption of fraud created by inadequacy of consideration, 193. fraud in procuring note good defense in law or equity, 198. partial failure of consideration, 208. as defense where consideration retained, 210. inducing execution, necessity of offer to return consideration, 211. as to value of property purchased, failure of consideration, n. 257. concealment of facts to obtain indorsement, pledgee against pledgor, 362. when not available against holder in good faith, n. 441. fraud in consideration, note under seal, bona fide holder, 444. note for conveyance in fraud of creditors, 456. goods in possession of another to defraud creditors, discharge of note, 691. INDEX. 1013 [References are to Sections.'] FRAUD AND FRAUDULENT REPRESENTATIONS— Cow^inwecZ. damages arising from as a set-off, 599. of mortgagee in concealing material facts, damages for as a set-off, 601. set-off of note not allowed where fraud on plaintiff, 609. estoppel to assert, 116. in filling blank, acceptance estops to show, 641. estoppel to show where note given to aid in defrauding creditors, 644. not estopped to show though reason to believe intended to use note for unlawful purpose, 644. new note as an estoppel to show, 649. when representation no estoppel to show, 654. estoppel to show by retaining consideration, 662. See Alterations; Fraud; Fraud and Fraudulent Representations; Misrepresentations. FRAUDULENT TRANSFER, See Diversion and Fraudulent Transfer. FUNDS, deposit of, tender, presentment, 502. want of, presentment of check, 586. See Check; Discharge. want of, see Presentjjent for Acceptance; Presentment for Pay- ment. FUTURES, See Options. G GAMBLING, contract, note given to secure election bet void, n. 288. where consideration is money or property won at, 296, 297, 298. as consideration for note, 296, 297, 298. transaction, where note based on, bona fide holder, 464. GIFT, of note, rights acquired under, 214. of checks by husband to wife, 214. of checks, presented for payment after death of drawer, 215. GOODS, note for, warranty, failure of consideration, 265. quality of misrepresented, 120. sale of prohibited by law, note for void, n. 288. sold on Sunday, note for void, n. 288. sale of in violation of law, bona fide holder of note for, 294. attachment of preventing happening of contingency, note payable on, 321. 1014 INDEX. IReferences are to Sections.'\ GOODS— Continued. damages for conversion of goods may be set off, 598. in possession as cover to defraud creditors, sale of, discharge of note, 691. See Merchandise; Personal Property. GRACE, days of, presentment for acceptance, 490. protest premature, 509. presentment for payment and notice of dishonor when pre- mature, 509. GRAIN, options, note given on void, n. 288. GRANTEE, See Dischabge; Land; Vendor. GRANTOR, See Discharge; Land; Vendor. GROSS NEGLIGENCE, may not preclude one from being a hona fide holder, 475. See Negligence. GUARANTORS, no distinct line of demarcation between sureties, etc., 213. cannot set up coverture of maker, 61. alteration making liable as surety material, 180. name of signed below maker erased and placed on back, 181. effect of consent to or satisfaction of erasure of name of, 149. addition of name as, 182. released by alteration designating place of payment, 164. may show want or failure of consideration, 212. failure of consideration, 461. of purchase price notes, want or failure of consideration, 259. may show defective warranty, 212. fraud of principal towards no defense against guarantor, 121. fraud of maker no defense against payee without notice, 134. presentment for payment, 504. agreement to pay if maker does not, presentment for payment, 504. waiver as indorser, even though guarantor, of presentment for pay- ment, 524. not entitled to notice of dishonor, 545. damages for breach of warranty not available to as a set-off, 601. defenses available to, 460, 461. usury in inception as defense to action against, 9. discharge of, 681. See the particular defense. GUARANTY, must be a consideration to support, 212. bona fide holder in case of contract of, 460, 461. note executed as collateral, 352. INDEX. 1015 [References are to Sections.] GUARANTY— Con^iwited. rule as to alteration of signature of maker applies to, 172. of collection, surrender of as consideration, 194. writing of over indorsement releases, 182. check, presentment, n. 578. See GUARANTOE. "GUARDIAN," addition of to name of payee, 158. right of set-off against, 618. H HEIRS, note in possession of, evidence of title, 402. "HOLDER," alteration of word "order" to, 161. knowledge of want of funds, presentment for acceptance, 491. See Presentment for Acceptance; the particular defenses. HOLDER IN DUE COURSE, See Bona Fide Holder. HOLIDAY, time of maturity, 509, 510. HOMESTEAD RIGHTS, when purchaser after maturity charged with knowledge of, 423. HORSE, coverture as defense to note given for, 57. for treasonable use, note for void, 293. note given for, cannot show condition as to return, 324. HUSBAND, assent of essential to render wife's note valid, 38. indorsement by wife for accommodation of, 281. necessity and effect of assent to indorsement by wife, 52. statute requiring written assent of to indorsement by wife, 52. particular statutes as to assent of to indorsement by wife, 53. general rule as to assent of to indorsement by wife, 54. indorsement of wife without assent of, bona fide holder, 54. coverture as defense on note made by wife to, 40. living apart from wife, coverture as a defense, 42, 43. coverture as defense where wife elopes from, 42. leaving state or country, coverture as defense to wife's notes, 43. right to personal property of wife, 51. note by husband and wife, coverture no defense to action against husband, 61. coverture where wife signs as surety for, 44, 45, 46, 47, 48. unauthorized signing of wife's name by, 73. agreement to support and live with wife suflBcient consideration, 194. 1016 INDEX. [References are to Sections.'] HUSBAND— Continued. may transfer notes to wife by gift, 214. and wife, note of stranger given to promote peace between, 235. note given for outlawed debt of, bona fide holder, 245. right of set-off where note to wife merged in judgment recovered by husband, 628. not subject to set-off of debt of wife, action on note to her, 628. claim for medical services to not set-off against note owned by wife, 628. set-off against notes transferred to wife by, 628. liability of not a set-off in action by husband and wife on note to wife, 628. note to wife not set-off to action against, 628. threat of to comrpit suicide not duress, 107. note by wife under fear of husband's arrest, 112. note paid by wife's mortgage, 682. I ILLEGAL, claim, compromise of not a good consideration, 196. indorsement of condition to enforce which would be, 349. contract, note as security for performance of, 363. consideration, estoppel, 665. consideration, see Consideration, ILLEGAL ARREST, where paper procured from one under, 108. ILLEGAL LEVY, note given to secure release of, 109. ILLEGALITY, as affecting corporate want of authority, 79. in transfer vitiates title, 412. of consideration, bona fide holder, 441. forbearance to sue, 450. though taint of one may be bona fide holder, 465. of consideration, where transferee has notice, 472. estoppel, 665. ILLICIT INTERCOURSE, as consideration for note makes it void, 300. ILLITERACY, of maker as a defense, 27. IMMATERIAL, alterations no defense, 137. INDEX. . 101"^ [References are to Sections.'\ IMMORAL, consideration, iona fide holder, 441. consideration, see Considekation. IMPOSTOR, paper delivered to, liability to bona fide holder or drawee, 470. estoppel, 644, IMPRISONMENT, where lawful and note given to procure release, 108. threat of as inducing giving of paper, 112. IMPROVEMENTS, misrepresentation as to making of, 122. INCUMBRANCES, outstanding, 264. condition in note as to removal of, n. 343. partial failure of consideration, 208. when damages for breach of covenant against not a set-off, 601. availability as a set-off of money paid to clear land of, 603. INDIAN, no defense that maker is, n. 288. INDIAN NATION, right of occupancy of lands of as a consideration, 194. INDIAN RESERVATION, paper for lease of land within, void, n. 288. INDIAN TRADERS, license, note for sale of interest in where vendor can sell none, void, n. 288. INDORSEE, with notice of failure of consideration, n. 240. non-performance of condition precedent defense under statute, 311. without notice of equities, note executed as collateral, 352. may cancel his indorsement to bank for collection, 403. payment of note by before purchase, demand not excused, 503. after maturity, see Purchaser After Maturity. See Check; see the particular defense. INDORSEE AFTER MATURITY, See Purchase After Maturitt. INDORSEMENT, fraud in procuring, 116, 126. to renewal no defense to original, 126. where unauthorized, 73. by married woman, common-law rule as to, 51. necessity and effect of husband's assent to by wife, 52. by wife, particular statutes as to husband's assent, 53. where statute requires written assent of husband, 52. general rule as to assent of husband to, 54. 1018 INDEX. [References are to Sectio7is.1 INDORSEMENT— Confinwed. without assent of husband as defense against bona fide holder, 54. effect of alteration of, 180. alteration of does not release prior indorsers, 180. effect of alteration of date of, 152. writing of guaranty over releases, 180. where several, alteration to joint, 180. erasure of prior indorsement, 180. by stranger, 180. accidental erasure of, 180. "pay the bearer," change of to formal assignment, 180. fraud in procuring no defense against payee without notice, 126. transfer without, right of assignee, 237. valid consideration necessary to support, n. 240. presumption as to being for value and proper purpose, 240. holder without, want or failure of consideration, 240. for transfer merely or to pass title, want of consideration, 255, 256. for accommodation, want of consideration, 269. with knowledge that acceptance was for accommodation, 272. for accommodation of acceptor, condition as to discount, bona fide holder, 273. of corporation, ultra vires, effect of, 279. for accommodation, procured by false representations, 280. of paper given as security for money loaned for gambling, 297. upon condition that another be procured, 315. collateral be deposited, 323. of note as collateral on condition, 323. on note "renewed for three months," effect of, 338, if ambiguous may be explained, 348. where conditional or restricted, 348. "for collection," 348. for "account of" payee, 348. parol evidence not admissible to change meaning of, 348. of condition to enforce which would be illegal, 349. effect of want of, 358. fraudulent concealment of facts by pledgor to obtain, action by pledgee, 362. of paper for specific purpose, principal and agent, 370. as collateral security, defenses subsequent to, bona fide holders, 371. in blank, transfer as collateral, payment by maker to pledgor, 375. diversion, bona fide holders, 380. of paper for discount, diversion, 391. effect of where lost or stolen, n. 394. of note in blank, bona fide holder of where stolen, 395. in blank of tax bills, where stolen, 397. for collection, indorsee may sue, 403. after maturity of note transferred before, 404. in blank, evidence as to, 406. INDEX. 1019 [References are to Sections.'] INDORSEMENT — Continued. of note does not constitute an agency, 407. by bank to cashier, voidable, 412. causa mortis, subsequent revocation, 412. evidence of circumstances under which made, 415. of bill before and after maturity, distinction, 419. after maturity of paper transferred before, 428. transfer without, effect under negotiable instrument law, 456. transferee without, defense against, 456. may be in blank under Nebraska statute, 460. of guaranty, rights under, 460, 461. in blank before negotiation, presumption as to, 466. after notice of payee's defense, 478. by corporation, accommodation paper, 'bona fide holder, 487. on note before delivery, presentment for payment, 502.' of waiver of protest, effect of, 538. where essential to render transfer effects note transferred by de- livery cannot be set off, 606. as an estoppel, 645. in blank to agent, fraudulent transfer, estoppel, 645. aflBrms genuineness of prior signatures, 645. in blank, negligently left on check, estoppel, 645. , recitals in as an estoppel, 646. without authority, estoppel to show, 670. where unauthorized, see Want of Authority. of payments, see Discharge. See Waiver. INDORSER, warrants genuineness of prior indorsement, 104. personal defense of does not release maker, 1. defense of maker not available to, 4. valid consideration necessary to support liability of, n. 240. may show want of consideration against his indorsee, 200. may show failure of consideration against his indorsee, 204. indorsement merely to pass title, want of consideration, 255, 256. for accommodation, rule as to availability of defenses, 6. availability of defenses, general rule, 279, 280, 281. cannot set up defense of failure of consideration to maker, 271. for accommodation check, failure of consideration, 278. for accommodation, breach of warranty, 280. occupies position of surety, 281. action by hona fide holder, accommodation note in payment of pre- existing debt, 286. of accommodation paper taken as collateral to pre-existing debt, h(ma fide holder, 354. paper diverted, 384. bankruptcy of does not release second indorser, 6. on corporation note, availability to of defense, 7. 1020 IXDEX, [References are to Sections.'] INDORSEE— ConfinwefZ. in blank for accommodation, defense to action against, 10. defenses available where indorsed in blank, 22, 23. cannot show coverture of prior- indorser, 61. maker, 61. cannot set up infancy of original drawer, 68. intoxication of as defense, 70. evidence as to mental incapacity of, 72. mental incapacity of as defense, 72. cannot show note by corporation in violation of statute, 95. cannot set up forgery of prior indorser's name, 104. cannot show duress of maker, 114. cannot set up fraud between original parties, 134. may show alteration in name of payee, 158. released by erasure prior indorsement, 180. may show alteration of indorsement, 180. release of by alteration does not relieve prior indorsers, 180. writing of guaranty over indorsement releases, 180. may show breach of condition as to another indorsement, 315. that collateral be deposited, 323. action against by indorsee, want of title or interest, 406. liability under statute on altered note, 480. want of knowledge of, of agreement not to present bill for accommo- dation until maturity, 491. undertakes that bill be accepted and paid, 495. release of, presentment for acceptance, 496. when not discharged, presentment for acceptance, 497. of overdue note, demand when necessary, 503. made administrator of maker's estate, demand necessary, 503. of forged bill, when presentation for payment dispensed with, 522. of bill or note given for his accommodation, dispensing with pres- entation for payment, 523. waiver signed by, presentment for payment, 524. entitled to notice of protest, 527. when protest not required, 529. conduct of as waiver of protest, 537, 538. insolvent, curator may waive protest, 541. bound by waiver of protest in body of note, 538. president of bank note payable at, notice of protest, 541. discharge by want of notice of dishonor, 544, 545. notice to of dishonor, suflBciency of address and mailing, 555. by mail of dishonor, sufficiency of, 558. dead, to whom notice of protest should be given, 559. time of giving notice of dishonor to, 563, 564. notice to of dishonor sent to wrong address, 564. time of giving notice to prior indorser by successive indorsers, 567. notice of dishonor may be sent to place of business of, 569. when entitled to notice of dishonor generally, 570, 571. INDEX. 1021 [References are to Sections.] mBORSER— Continued. for accommodation, entitled to notice of dishonor, n. 570. bound by waiver of notice of dishonor above his signature, 573. waiver by of notice of dishonor, 573. new consideration not necessary for waiver of notice of dishonor by, n. 573. presentment of check, 585. when indorsee may recover consideration from, n. 645. admission by does not estop maker, 657. estoppel of by release, 673. See Accommodation; Accommodation Indorser; Check; Indorsement; KnowxEdge; Presentment fob Payment; see the pabticulab defense. INFANCY, as a defense generally, 63. principle on which plea of founded, 63. note of infant voidable and not void, 63. defense against bona fide holder, 63. fraudulent representation as to age does not exclude defense of, 63. ntoe given for board, 63. necessaries, 63. no defense against surety who pays note given for necessaries, 63. note given for money which is spent for necessaries, 63. of payee transferring non-negotiable note, 63. evidence of admissible under plea of nil debet, 63. evidence of ratification of infant's note admissible though not averred, 64. effect of ratification, 64. what constitutes a rati^cation by infant, 64. ratification after filing plea of, 64. note given for support of bastard child, 65. in satisfaction of tort, 66. where infant accepts bill of exchange, 67. where bill of exchange given for necessaries, 67. of drawer not available to indorser, 68. of one partner not available to others, 68. of payee not available to maker against indorsee, 68. of one of joint and several makers no defense for others, 68. of drawers of bill of exchange not available to acceptor, 68. defense of a personal privilege, 68. who may urge, 68. INFANTS, See Infancy. "IN GOLD," alteration by inserting, 167. "IN GOLD COIN," alteration by inserting, 167. 1022 IXDEX. [References are to Sections.'] INJUNCTION, will not lie to restrain collection of note by hona fide holder, 119. not bar to action on note, 663. INJURY, by laches in presentment for acceptance, 498. damage or loss, necessity of to pledgor from non-presentment, holder of note as collateral, 503. or loss, necessity of where want of demand on demand notes, 506. from laches in presenting draft, 511. to drawer from laches in presentment of check, 582. INK, retracing pencil writing with not material alteration, 137 retouching with of signature not material alteration, 173. INLAND BILL, presentment for acceptance of, or of order, 498. payment, notice of dishonor, 503. where draft considered as, or as banker's check, laches in present- ment, 511. necessity of protest, 528. See Presentment fob Payment. INNOCENT HOLDER, See Bona Fide Holder. INSANITY, See Mental Incapacity and Insanity. INSOLVENCY, notes of insolvent indorsed at maturity, presentment for payment, 503. of maker no excuse for non-presentment, demand notes, 506. during delay in presentment for payment of check, 511. of bank, presentment for payment, 518. of corporation maker of note, presentment for payment, when dis- pensed with, 523. of acceptor, excuses for presentment for payment, 523. when dispenses with presentment for payment, 523, of maker, indorser's knowledge of, presentment for payment, 524. does not excuse failure to give notice of dishonor, n. 570. of drawee or acceptor does not excuse failure to give notice of dis- honor, n. 570. of first drawee of check, second presentment, discharge of parties, n. 578. of drawee, presentment of check, laches, 583. See Bankrupt; Bankruptcy; Insolvency; Insolvent Bank; Insol-vent Laws. INSOLVENT, presentment to for acceptance note, 499. indorser, curator of may waive protest, 541. notice of dishonor to, 562. INDEX. 1023 [References are to Sections.'] INSOLVENT— Continued. indorser specifying bill as part of indebtedness, evidence of notice of dishonor, 558. exchange of note, discharge, 684. ' maker, dividends out of assets, indorser still liable, 702. See Bankrupt; Bankruptcy; Insolvency; Insolvent Bank; Insol\-ent Laws; Set-off. INSOLVENT BANK, set-off against of deposits in action on note to, 604. INSOLVENT, LAWS, consideration of note goods sold in violation of, l)ona fide holder, 120. INSTALMENT NOTE, when note so construed, 343. legal tender of amount of, discharge, 694. INSURANCE, policy, note given to general agent of company, want of considera- tion, 230. agency business, note for, failure of consideration, 266. premiums, premiums given for rebating of void, n. 288. note for where company not complied with state requirements void, n. 288. collateral agreement to furnish policy of, 323. damages for failure of mortgagee to procure not a set-off, 600. INSURANCE PREMIUMS, ■ coverture as defense on note given for, 39. non-compliance with statute as to notes taken for, 79. condition affecting note for, 313. INTENTION, to charge separate estate as affecting defense of coverture, 59. in making alteration does not render it material, 137. to divert paper no defense, 379. INTEREST, payment of as satisfaction of alteration, 150. alteration in clause as to, 168. alteration as to rate of, 169. inserting legal rate not material alteration, 170. addition of interest clause where none, 170. rate of stated, cannot show none to be paid, 332. in paper, transfer of after suit commenced, 410. note payable on default in payment of, purchase after maturity, 424. overdue, effect of payment of, n. 447. default in payment of, paper overdue, purchaser in good faith, 468. when tender of payment exonerates from, n. 502. on note, continuing security, presentment for payment, reasonable time, 506. 1024 INDEX. [References are to Sections.^ INTEREST— Continued. certificate of deposit with no interest after maturity, presentment for payment, 506. . on notes payable at sight or on demand, presentment for payment, 507. bearing demand note and demand note, distinctions abrogated, pre- sentment, 508. waiver of presentment for payment by paying, 525. where usurious, rule as to recoupment of, 614. recitals as to as an estoppel, 646. indorsements of payment of, discharge, 695. authority to collect, does not authorize collection of principal, 698. where usurious, see UsuRYy, want of, 402-418. See Want of Title ob Interest. INTEREST CLAUSE, alteration of, 168. addition of words "with interest," 168. effect of adding words "after maturity," 168. alteration in by stranger no defense, 168. altering "after maturity" to "after date," 168. alteration by changing from simple interest to annual or semi- annual, 168. striking out words "after maturity" in, 168. alteration in to prejudice of party making, 169. alteration in rate, 169. memorandum on back reducing rate not material, 169. alteration in rate with consent of party, 169. where added and subsequently erased, 170. addition of, where none, 170. evidence changing rate not admissible, 332. See Interest. INTERMEDIATE HOLDER, payment to, bona fide holder, 699. See PARTICULAR DEFENSES AND PARTIES. INTOXICATION, what essential to render intoxication a defense, 69. no defense against bona fide holder, 69. of drawer, 69. where note subsequently ratified, 69. of maker, 69. of indorser, 70. INVENTORY, damages arising from misstatement in as set-off to note for part- nership interest, 599. INDEX. 1025 ^References are to Sections.'] J JOINT AND SEVERAL MAKERS, availability of defenses in actions against, 3. one cannot show he was surety merely, 3. JOINT AND SEVERAL NOTE, infancy of one maker no defense for others, 68. alteration into joint one, 157. alteration of name of a maker, 172. failure of consideration, 216. defenses against bona fide holder, 466. right of set-off against, 629, 633. may be set off when, 633. notes, mortgage, discharge of, 682. JOINT CREDITORS, See Set-Off, Recoxjpment and Counterclaim. JOINT DEBTORS, presentment to for payment, 520. See Set-Off, Recoupment and Counterclaim. discharge of, 679. JOINT DEFENDANTS, one cannot avail himself of defense peculiar to co-defendant, 1. JOINT INDORSEMENT, not set-off to action by individual, 630. JOINT MAKERS, personal defense of one not available to other, 1. availability of defenses in actions against, 3. when one may show he signed as surety, 3. coverture as defense where wife a joint maker, 41. want of consideration to one no defense, 216. extension of time to one does not discharge others, 340. notice of dishonor to, 561. pro rata set-off of usury against, 614. set-off in favor of one not available to both, 629. discharge, 679. JOINT NOTE, alteration of into joint and several note, 157. presumption as to consideration, 216. of husband and wife, given for outlawed debt of husband, bo??a fide holder, 245. when not available as a set-off, 608. JOINT OWNERS, indorsers of note for antecedent debt to enable it to be discounted, liable as, without demand, 503. Joyce Defense^s — 65. 1026 INDEX. {References are to Sections."] JOINT PAYEES, defenses against indorsee of, 466. debt of one not set off against unless by agreement, 629. JOINT PROMISOR, payment by, 699. JUDGMENT, for breach of warranty reply to defense setting up, 261. against garnishee in attachment proceeding against payee, action by assignee, 261. collateral condition as to discharge of, not performed, 325. right of maker of note as to rendering of, 415. for excess of set-off over demand of plaintiff, 596. when error to render judgment for excess of set-off action on one of several notes, 603. set-off of against depositor in action to recover bank deposit, 605. for usurious interest may be set off, 615. collection of may be restrained to allow set-off, 617. recovered by husband, not to wife merged in, right of set-off, 628. note given to procure satisfaction of, estoppel, 648. surrender of notes for rent, discharge of notes, 695. See Discharge. JUDGMENT CREDITOR, threat of to levy execution, 110. JUDICIAL SALE, note on condition that payee does not bid at, void, n. 288. "JUNIOR," addition of to name of payee, 158. JURY, mistake in amount of due bill question for, n. 17. negligence in signing instrument question for, 28. question for, whether act of partner within scope of power, 89. question of genuineness of signature for, 96. whether alteration material not a question for, 135. when question for as to who made an alteration, 142. K KNOWLEDGE, by assignee of notes that they are overdue, effect of, 239. of l)ona fide holder, accommodation paper, 270, 271. of indorser that acceptance was for accommodation, 272. of holder, accommodation acceptance, 274. of use of note for unlawful purpose does not invalidate, n. 288. of illegality of consideration, 289. of statutory defense of usury precludes recovery, 303. of holder of mortgage note of provisions of mortgagee, 367. INDEX. 1027 [References are to Sections.'] KNOWLEDGE — Continued. that paper diverted, person not bona fide holder, 380. of infirmity subsequent to transfer to bona fide holder, 442. as affecting one claiming to be bona fide holder, 472, 473. from matters apparent from paper itself, 474. of purchaser of married woman's note, 482. indorser's want of as to agreement not to present bill indorsed for accomi^odation until maturity, 491. of holder, want of funds, presentment for acceptance, 491. of indorser of maker's insolvency, presentment for payment, 524. of material facts and laches as factor in waiver of presentment for payment, 524, 525. of dishonor not notice, 552. of want or failure of consideration, estoppel, 669. as affecting surety's release or discharge, 680. of vendor, of vendee's agreement with bank as affecting discharge of note, 690. Of maker, of ownership as affecting payment, 699. , See Notice. L LABOR, breach of agreement to perform, failure of consideration, 329. parol evidence that note payable in, not admissible, 333. performed, as discharge of note, 693. LACHES, Injury by delay in presentment for acceptance, 498. injury from in presenting draft, 511. knowledge of indorser of, waiver, presentment for payment, 524, 525. in presentment for payment, check lost and duplicate check given, waiver, 525. in presentment of check, loss or injury to drawer, 582. insolvency or bankruptcy of drawee before presentment of check, 583. as affecting right to set off note, 610. of stockholders of corporation as an estoppel, 660. as an estoppel, 661. in presentment, discharge, 679. See Diligence; Notice of Dishonor; Presentment fob Acceptance; Presentment for Payment; Protest; Waiver. LADING, bill of, want of title or interest, 414. LAND, purchase price notes for, want of consideration as defense, boiia fide holder, 260. breach of warranty as defense to purchase-price note for, 264. 1028 INDEX. [References are to Sections.'\ LAND — Continued. note for, defect of title not entire, 266. deed from vendee to vendor, discharge of purchase-price notes, 690. conveyance of, discharge of note, 690. LAW, mistake of no defense, 17. when equity will relieve against mistake of, n. 17. LAW MERCHANT, where guarantors not bound by, right as to defenses, 212. note not governed by may be subject to partial failure of considera- tion under statute, 217. note payable to bank governed by under statute, defenses, 219. bill or note negotiable by, holder with notice of want of considera- tion, 233. when plea of want or failure of consideration insufficient under, n. 238. note not governed by, where maker sells for less than face value, 240. receiving note for precedent debt is receiving it for value within, n. 241. paper as collateral for pre-existing debt, one taking receives no "value" within meaning of, 246. modified by Nebraska statute as to what is negotiable instrument, 460. protest not necessary by, 528. not changed by Kentucky statute as to notice of dishonor, 549. sale of note not covered by, may show want of consideration, 664. LAWYER, services of as consideration, when failure to render no defense, 329. LEASE, fraud, retention of consideration, 210. to be made of building, condition as to affecting note, 313. and note may be construed together, 310. seal on does not prevent showing failure of consideration for note, 327. LEGACY, action on note given for advancement of, 231. LEGAL EFFECT, of order of arrest, misrepresentation as to not a defense, 117. LEGAL PROCESS, paper procured by abuse of, 109. effect of threat to lawfully invoke, 110. LEGISLATURE, note to in divorce legislation valid, n. 288. INDEX. 1029 [References are to Sections.'\ LETTER, promise by to accept bill to be drawn, necessity of demand, n. 491. bill sent in letter before due, presentment, 498. promise by to pay as waiver of preseHtment for payment, 525. as waiver of protest, 540. as notice of dishonor, 552. LETTER BOX, ^ on street, deposit in of notice of protest a mailing, 556. LETTER CARRIER, delivery to of notice of dishonor a mailing, 556. LEVY, where illegal and note given to obtain release of, 109, LEX FORI, controls pleas of want of consideration, 254. LEX LOCI CONTRACTUS, governs vote taken as collateral, 247. LIABILITY, collateral agreement to release from or limit, 342. LICENSE, liquors sold without, note for void, n. 288. to sell liquor, note for valid, n. 288. though prerequisite for loaning business and not obtained, note for loan enforceable, 291. LIEN, note for money loaned to release lien, coverture, 57. note given to secure release of, consideration, 194. of prior indorsee holding note as collateral, 267. operation of check as, 580. See Vendor's Lien. LIMITATIONS, statute of, waiver, 677. See Statute of Limitations. LIQUOR, license, note for valid, n. 288. sold contrary to statute, note for void, n. 288. LIQUOR TAX, loan by county treasurer for — note for loan valid, n. 288. LOAN, of money for gambling, note for, statute, 297. LOAN AND TRUST CORPORATION, not included in note payable at any bank, 517. LODGING. furnished, counterclaim to note, 693. 1030 INDEX. [References are to Sections.} LOSS, or injury to drawer from laches in presentment of check, 582. of paper, see Lost or Stolen Instruments; Injuey. LOST INSTRUMENTS, See Lost or Stolen Instruments. LOST OR STOLEN INSTRUMENTS, good defense where want of delivery, 394. Indorsements in blank, effect where lost or stolen, n. 394. bonds payable to bearer, 394. that instrument lost or stolen no defense against bona fide holder, 394. general rules and principles, 394. in case of assigned note, n. 394. certified checks indorsed in blank, bona fide holder, 395. coupon bonds in hands of bona fide holder, 395. note indorsed in blank stolen, bona fide holder, 395. where loss advertised, bona fide holder, '395. application of general rules and principles, 395. statutory provision as to holder in due course construed, 396. non-negotiable paper, 397, tax bills, 397. stock certificate, 397. bank and treasury notes, 398. city or county certificates, stolen after cancellation, 399. action under statute by owner of, 400. burden of proof to show bona fide holder, 401. bonds stolen before maturity of coupons and sold after maturity, 426. acceptance of lost check, not bad faith, 465. LOTTERY LAW, note in compromise of suit by scire facias to condemn land under, void, n. 288. LOVE AND AFFECTION, as consideration for note, 214. LUMBER, coverture as defense to note given for, 57. M MACHINE, breach of subsequent promise to repair not available as set-off, 596. MACHINERY, breach of warranty, failure of consideration, 265. INDEX. 1^<^1 [References are to Sections.} MAIL, excuses for delay in, presentment for acceptance, 501. sending note by for collection, required diligence, presentment for payment, 522. notice of dishonor sent by, 553, 554. sufficiency of address and mailing of notice of dishonor, 555. what is included in term "mailing," notice and dishonor, 556. usage as affecting giving of notice of protested by, 557. mailing notice of dishonor, instances of when sufficient and in- sufficient, 558. notice of dishonor sent by — parties resident in same town, 565. notice of dishonor sent by, parties resident in different places, 566. cessation of as excuse for not giving notice of dishonor, 572. See Presentment foe Acceptance. MAILING, See Mail. MAKER, See the particular defense. MANAGING OFFICER, of corporation, want of authority of, 81. MARGINAL FIGURES, as to amount, alteration in, 166. MARKET OVERT, sale in gives no better title than seller had, 394. MARRIAGE, of parties to note, discharge, 679. MARRIED WOMAN, purchase of property valid consideration for note of, 194. purchase of note of, notice, 482. estoppel by indorsement in blank, 645. recital in note of that for benefit of separate estate estoppel, 646. mortgage in payment of husband's note, 682. payment of note, 699. See Cov-erture; Duress. MATURITY, presentment for acceptance to fix maturity, 490. voluntary taking up note at, presentment for payment, 503. note overdue, indorser, demand when necessary, 503. agreement to indorse overdue note, demand, liability, 503. presentment for payment of certificate of deposit with no interest after maturity, 506. time of, Sunday or holiday, Saturday, 509, 510. purchaser after, discharge, maker's defense, 679. overdue notes, mortgage security, 682. See Dlscharge. of sight draft secretary, see Presentment for Acceptance. of bill, see Presentment for Acceptance. 1032 INDEX, [References are to Sections.'^ MEDICAL SERVICES, claim for to husband not set off to note owned by wife, 628. MEDIUM, of payment, alteration in, 167. MEMORANDA, addition or erasure of, 179. MENTAL INCAPACITY AND INSANITY, admissibility of evidence to show note binding, 71. of maker, 71. where note given for necessaries, 71. hona fide holder subject of defense of, 71. evidence as to mental incapacity of indorser, 72. when undue influence no defense, 72. of indorser or surety, 72. maker may show insanity of payee in action by indorsee, 72. of surety, sufficiency of evidence as to, 72. to indorsement of certificate of deposit, 72. as a defense generally, 71. not estopped to show, 670. MERCHANDISE, note in consideration not to sell at certain place, 326. transfer or delivery of as discharge of note, 691. MERGER, in judgment, discharge, defenses, bar to action, 679. MILITARY FORCE, note procured by use of, 113. MISCONDUCT, of payee as failure of consideration, n. 257. MISREPRESENTATION, when a defense, 116, what essential to rendering misrepresentation a defense, 122. no defense unless damage sustained, 117. as to nature of instrument, 25. as defense against hona fide holder, 25, 26. as to legal effect of instrument no defense, 117. to maker unable to read English, 27. as to capacity does not prevent defense of coverture, 30, as to age does not exclude defense of infancy, 63. as to liability on note signed no defense, 117. that bill of exchange an ordinary note, 117. mere expression of opinion not a defense, 117. as to signature on note, 120. as to quality of goods sold, 120. to maker as to character of paper as defense against 'bona fide holder, 120. INDEX. 1033 [References are to Sections.'] MISREPRESENTATION— ConHnwed. as to value and character of property, 122. mere exaggeration not fraud, 122. as to making of improvements, 122. false representations as to consideration, 122. subsequent to transaction no defense, 126. as to amount of note, 127. inducing siJrety to affix his signature, 128. as to value of property purchased, failure of consideration, n. 257. in procuring accommodation paper, bona fide holder, 271. as to land, when damages for not a set-off, 601. See Fraud and Fraudulent Representations. MISTAKE, of law no defense, 17. in connection with execution, 17. of law, when equity will relieve, n. 17. question for jury in action on due bill, n. 17. in adjustment of account for which note given, bona fide holder, 120. right of party to make alteration to correct mistake, 137. where alterations made by, 143. of bank cashier in cancelling note, 143. in name of payee, alteration to correct, 159. in omitting name of corporation, insertion to correct, 175. in omitting name of witness, subsequent addition of, 177. in erasing indorsement, 180. i in signing as surety, alteration to correct, 181. against bona fide holder of note under seal, 444. in check, recovery by drawer, n. 578. damages arising from as a set-off, 599. MONEY, coverture as defense to note given for, 30. loaned, note given for, coverture, 57. borrowed, coverture as defense to note given for, 58. loaned to corporation, note given for, 86. paid to clear land of incumbrance, availability of as set-off, 603. payment valid though not made in, 702. "MONEY LOANED," effect of such statement in note, 205. MONOPOLY, note creating, void, n. 288. MORAL OBLIGATION, to pay pre-existing debt a good consideration, n. 241. MORTGAGE, money loaned to pay off, coverture as defense to note for, 57. execution of estoppel to deny execution of notes, 74. 1034 INDEX. [References are to Sections.l MORTGAGE — Continued. effect of alteration in where given to secure note, 135, to secure usurious note affected by usury, 302. when mortgage notes will control, 310. note, cannot show payable only on condition property destroyed by fire, 320. and note in connection, collateral agreement as to collection of, n. 342. note secured by, mortgagee against maker, surety, 364. bona fide holder, pledgee, 365, 366, 367. and note, transferee of, payment or collateral security for pre-exist- ing debt, 368. notes, all maturing on failure to pay one, purchaser after maturity, 423. action by joint holders of, note of one not a set-off, 629. recitals in as an estoppel, 646. when recitals in do not estop wife, 646. given to secure note, representations as to priority, estoppel, 653. estoppel by permitting sacrifice of property mortgaged, 659. payment of debt.secured, discharge of guarantor, 681. of married woman in payment of husband's note, 682. as payment, 682. See Collateral Security; Mortgaged Property; Mortgagee; Mortgage Note; Mortgage Sale; Mortgage Security; Mortgagor. MORTGAGED PROPERTY, condition not to take possession of a purchase, 326. See Collateral Security; Mortgage; Mortgagee; Mortgage Note; Mortgage Sale; Mortgage Security; Mortgagor. MORTGAGEE, damages for negligence of in procuring insurance not a set-off, 600. damages for fraud of in concealing material facts as a set-off, 601. discharge of note, mortgage security, 682. See Mortgage; Mortgaged Property; Mortgage Note; Mortgage Sale; Mortgage Security; Mortgagor. MORTGAGE NOTE, when mortgage controlled by, 310. evidence of contemporaneous agreement extending time of payment, 339. See Collateral Security; Mortgage; Mortgaged Property; Mortgagee: Mortgage Sale; Mortgage Security; Mortgagor, MORTGAGE SALE, discharge of note, 682. See Collateral Security; Mortgage; Mortgaged Property; Mortgagee; Mortgage Note; Mortgage Security; Mortgagor. IXDEX. 1035 [References are to Sections."] MORTGAGE SECURITY, discharge of note, 682. See Collateral Security; Mortgage; Mortgaged Property; Moetgagee; Mortgage Note; Mortgage Sale; Mortgagor. MORTGAGOR. discharge ©f note, mortgage security, 682. See Collateral Security; Mortgage; Morto.^ged Property; Mortgagee; Mortgage Note; Mortgage Sale. MULE, coverture as defense to note given for, 57. See Municipality. MUNICIPAL BONDS, fraudulently reissued after cancellantion, 13. MUNICIPAL CORPORATIONS, See Municipality. MUNICIPALITY, unauthorized paper issued by treasurer, 84. power of to issue paper generally, 87. want of authority to issue paper, 87. warrants and coupons attached to bonds of, want or failure of con- sideration, 232. warrants of, defenses generally, n. 232. note for debt of created in violation of constitution, 293. coupon bonds, right of bank advancing money on, 360. recital in bonds of, 488. effect of certificate on face of, 488. estopped by recitals in bonds, 647. N NAME, addition of words "and Co." to, 158, 172. of payee, where blank left for, 145. alteration in, 158. alteration in a defense though no fraud, 158. altered by adding word "cashier," 158. altered by adding word "collector," 158. altered by adding word "guardian," 158. altered by adding word "junior," 158. alteration by adding surname immaterial, 158- of indorsee erased and another inserted, 158. of partnership, immaterial alteration in, 158. of maker, alteration of, 172. addition of address to name of maker, 172. of maker, addition of "President A. B. Association," 172. of maker, when alteration not a defense, 173. alteration by addition of, 174. when addition of not a defense, 175. 1036 INDEX, [References are to Sections.'\ NAME — Continued. where addition of does not affect liability, 175. of witnesses, erasure of, 177. of surety, erasure or alteration of, 181. addition of, 182. of guarantor, addition of, 182. See Altebation. NATIONAL BANK, See Bank; Bank Deposits. NECESSARIES, coverture as defense to note for, 30, 41. infancy as defense to note for, 63. note of infant for, infancy no defense against surety, 63. where infant accepts bill given for, 67. where person n&n compos mentis gives note for, 71. See Supplies. NEGLIGENCE, of maker may preclude defense of fraud, 28. in signing, factors in determining, 28, of maker unable to read English, 27. of maker in executing note, so conditions may be added, 171. failure of maker to read before signing, 28. in signing instrument question for jury, 28, of pledge in respect to collateral, 373, mere suspicion not evidence of, 475. though gross does not prevent from being bona fide holder, 475. holders of collateral, delay in presentment must amount to gross negligence, 503. in case of collateral, damages for cannot be set off, 598. of plaintiff as agent, damages for cannot be set off, 598. of pledgee causing loss of collection of collateral, set-off of value of, 613. of mortgagee in procuring Insurance, damages for not a set-off, 600. of bank in certifying check, estoppel, 642. in leaving blank indorsement on check, estoppel, 645. See Diligence; Laches, NEGOTIABLE INSTRUMENTS LAW, pre-existing debt a good consideration, n. 241. defense under against bona fide holder, 442. effect under of transfer with indorsement, 456. who is holder in due course under, 464. of Congress, bona fide holder under, 464. necessity of protest under, 527. as to time of giving notice of dishonor, 563. See "Appendix," this volume. "NEGOTIATE," popular meaning of, n. 439, INDEX. 1037 [References are to Sections.1 NEGOTIATION, presentment or negotiation in reasonable time, 496. NEW PROMISE, after husband's death does not prevent defense of coverture, 31. to pay as waiver by indorser of protest, 538. estoppel by, 650. of bankrupt after discharge, 650. estoppel by, limitation of rule, 651. whether consideration necessary, 651. NEW YORK CODE, set-off of bill or note under, 607. NIL DEBET, evidence of infancy admissible under plea of, 63. NON COMPOS MENTIS, See Mental Incapacity and Insanity. NON EST FACTUM, as a defense, 14. evidence of misrepresentations admissible under plea of, 25. may show alterations of plea of, 135. defense of fraud inconsistent with plea of, 116. plea of against bona fide holder, 441. NON-NEGOTIABLE, note, fraud as defense to against purchase for value, 122. inserting words of negotiability in blank space, 146. change of to negotiable a material alteration, 180. paper made at request of another, failure of consideration, 206. note, defenses against assignee, 237. want of consideration bona fide holder, 271. Surety may show against -holder without notice that other signa- tures were to be obtained, 316. breach of condition may be shown against assignee of, 328. one containing condition is, 343. paper, diversion defense against assignee, 379. where lost or stolen, 397. note indorsed in blank, possession not evidence of title, 402. paper, purchaser after maturity, 425. note, purchaser after maturity, 429. paper, defense against assignee of, 446. when form of indorsement makes it negotiable to extent of re- quiring demand, 503. demand unnecessary, 503. note, notice of dishonor unnecessary, n. 570. discharge of by work, labor or services, 693. paper, payment of to whom, 699. 1038 INDEX. [References are to Sections.^ NON-PAYMENT, See Notice of Dishonor. NON-PERFORMANCE, performance of agreement to render services prevented by act of obligor, 329. NOTARY, presentment for payment by, n. 511. sufficiency of protest to protect, 532. protest may be made by, 533. certificate of protest of as evidence, 542, 543. duty under statute to give notice of dishonor, statute does not change law merchant, 549. may sign notice of dishonor, 551. evidence of as to deposit of notice of dishonor in postofBce, i55. certificate of notary as to mailing notice of dishonor, 558. NOTE ON DEMAND, See Demand Note. NOTES OF A SERIES, presentment for payment, 505. secured by mortgage, discharge, 682. See Series. NOTICE, duty as to in case of payment of or by forged paper, 101. that sureties signed for special purpose, 213. to bona fide holder, accommodation paper, 270, 271. to holder, accommodation acceptance, 274. of illegality of consideration, 289. to agent of usury binds principal, 302. of statutory defense of usury precludes recovery, 303. of failure of consideration, where condition precedent, 327. to holder of mortgage note of provisions of mortgage, 367. where one purchases after maturity, 420. to transferee of illegality of consideration, 472. as affecting one claiming to be bona fide holder, 472, 473. as to insufficient stamping of note, 474. by matter apparent from paper itself, 474. suspicious circumstances not, 475. of payee's defense, indorsement after, 478. of fraudulent alteration, 480. none where corporate signature erased, 481. one purchasing married woman's note, 482. that paper accommodation from manner of discount, 483. as to accommodation paper, 483. as to corporation paper, 485, 486. corporation taking paper of another corporation, same officers, 486. that corporation paper for accommodation, 487. purchaser of bonds, 488. I INDEX. 1039 [References are to Sections.l liOTlCE— Continued. where recitals in bonds, 488. to transferee of bona fide holder, 489. of assignment or transfer, cannot set off claim acquired after, 594. of want or failure of consideration, estoppel, 669. of forgery, effect of failure to give, 675. of protest, see Protest. of dishonor, see Notice of Dishonor; Protest. as affecting surety's release or discharge, 680. as affecting guarantor's discharge, 681. NOTICE OF DISHONOR, where bill payable at sight or so many days after sight or demand, or after certain event, 490. notice of non-acceptance, when unnecessary, 494. received by drawer, not discharged for want of notice of non-accept- ance, n. 494. when necessary to be given on bill, 495. notice to drawer without presentment to acceptor, 498. indorser of overdue note, 503. necessary on all drafts foreign or inland, reasonable time, 503. premature, days of grace, 509. when premature, 509. discharge of drawer or indorser, 544, 545. to whom must be given, 544, 545, 546. duty of holder as to, 544, 545. surety not entitled to, 545. notes of a series, 545. duty as to notice of non-acceptance, 545. to co-makers, 545. of note payable in annual installments, 545. of paper sent for collection, 545. guarantor not entitled to, 545. of order for payment of money, 545. to indorser after maturity, 545. notice to all other parties necessary after non-acceptance at holder's election, notwithstanding subsequent acceptance, 546. to agent, 547. to whom notice may be given, 547, 548. must be given by holder to charge drawer, 549. by whom may be given, 549. must be given by one with authority, 549. may be given by agent, 549. statute imposing on notaries duty to give, 549. by member of firm to partner, 549. effect of, given on behalf of holder by party entitled to give, 550, form of, 551. where unsigned by notary sending, 551. 1040 iin)EX. [References are to Sections.J NOTICE OF BISHO'NOR— Continued. when sufficient in general, 551. notary may sign, 551. notice personally or by mail, 551. may be in writing, n. 551. should describe instrument, 552. effect of misdescription of note, 552. form, contents and sufficiency of continued, 652. letter as, 552. knowledge of dishonor not notice, 552. no particular form necessary, 552. when personal notice necessary, 553. time of receiving as affecting sufficiency, 553. manner or mode, oral, written and personal notice, 553. to cashier of hotel corporation not sufficient, 553. should be personal to surety, 553. may be given orally, 553. manner or mode continued, notice by mail, 554. to personal representative or executors, 555. sufficient if received though improperly addressed, 555. manner and mode continued, sufficiency of address and mailing, 555. ' not mailing to correct address, n. 555. manner and mode continued, what is included in term mailing, 556. mailing notice to a customer, 557. liability of collecting bank for failing to give, 558. mailing of continued, instances of when sufficient and insufficient, 558. time of mailing as affecting sufficiency, 558. service of shown by notarial certificate, 558. to whom given, where party dead, 559. to one of several partners, 560. to partners, 560. waiver by one partner of, n. 560. to persons jointly liable, 561. to bankrupt, 562. to trustee or assignee of insolvent firm, 562. time within which notice must be given, 563. by collecting bank, what is due notice, 563. to indorser, sent to wrong address, 564. diligence as to giving, reasonable time, 564. circumstances affecting time of giving, 564. time of giving where parties reside in same place, 565. controlled by statute, 565. by mail where residing in same place, 565. where parties reside in different places, 566. subsequent and antecedent parties, 567. to prior indorser by successive indorsers, 567. where last indorser receives notice on Saturday, 568. INDEX. 1041 [References are to Sections.'] NOTICE OF BlSUOlSiOR— Continued. received on Saturday, form of notice sent by last indorser, pleading, 568. ' sufficiency of averment of, 568. may be sent to residence, 569. where notice must be sent, 569. may be sent to place of business, 569. necessity of to indorser generally, 570. ■when dispensed with, drawer, indorser, excuses, 570, 571. unnecessary where note non-negotiable, n. 570. accommodation indorser entitled to, n. 570. insolvency of drawee and acceptor does not excuse failure to give, n. 570. in case of collateral security, n. 570. insolvency of maker does not excuse failure to give, n. 570. right of drawer to, 571. to indorser not excused by destruction of bank by fire, 571. right to forfeited by drawer who prevents performance of condi- tions, 571. failure to give caused by cessation of commercial intercourse be- tween states, 572. caused by cessation of waste, 572. no new consideration necessary for waiver of by indorser, n. 573. delay in giving excuses, circumstances beyond holder's control, 572. waiver of by promise to pay, 573. where waiver of binds indorser only, 573. note waived by taking security, 573. what essential to establish waiver of, 573. waiver of, 573. waived by waiver of presentment, 573. of check, 588. NOTICE OF NON-ACCEPTANCE, See Notice of Dishonor. NOTICE OF PROTEST, See Notice of Dishonor; Protest. NUMBER, effect of alteration of, 151. O OFFICER, paper to corruptly influence void, n. 288. of corporation, diversion by of proceeds of corporate note, 392. of corporation, paper issued by, notice, 485, 486. of society cannot set off debt due to it in action on his note, 591. of corporation, act of in violation of statute, estoppel to show, 672. of corporations, see Corporations; Want of Authority. Joyce Defenses — 66. 1042 INDEX. [References are to Sections.'] OPTIONS, note given on grain options void, n. 288. note for, statute, bona fide holder, 398. ORAL AGREEMENT, see Agreement. "OR BEARER," effect of substitution of words "or bearer," 161. "OR ORDER," effect of substitution of words "or order," 161. ORDER, alteration of word "order" to "holder," 161. for payment of money which refers to building contract, 343. presentment for acceptance of, 498. on committee, acceptance of, 500. on another for sum due, presentment for payment, 503. upon drainage district, diligence to collect, presentment for pay- ment, 503. for payment of money, notice of dishonor, 545. on third person, payment by, 686. for delivery of personality as discharge of note, 691. OVERDUE, construed with reference to demand paper, 435. paper, bona fide holder, 467, 468, 469. OVERDUE NOTE, see Dishonor; Maturity. OWNER, see Agent. OWNERSHIP, see Title. P PAROL, assignment, suit in own name, equities, 452. See Assignments. PAROL AGREEMENTS, See Collateral Conditions and Agreements; Evidence; Parol Evidence. PAROL EVIDENCE, to rebut presumption as to consideration, 185. not admissible to vary terms of paper, 307. of condition affecting delivery to payee, 312, 313. that partnership notes void if partnership dissolved not admissible; 320. that instrument payable on contingency not admissible, 320. in particular cases that note payable on contingency, 320. void on contingency, 320. that instrument void on contingency not admissible, 320. that note void on failure of crops not admissible, 320. of conditions affecting consideration, 322. IXDEX. 1043 [References are to Sections.'] PAROL EYIBENCE— Continued. of executory contract as consideration for note, 322. as to place of payment, 331. of agreement as to credit upon note not admissible, 332. changing interest clause not admissible, 332. not admissib,le to change amount, 332. of conditions as to mode or manner of payment, 333, 334, 335. that note payable in labor not admissible, 333. to be paid only out of certain fund not admissible, 333. of executed agreement as a defense, 336. varying time of payment of demand note, 339. of collateral agreement to renew note not admissible, 339. to release from or limit liability, 342. not admissible to show absolute acceptance was conditional, n. 347. change meaning of indorsement, 348. to show note executed as collateral, 351. of conditions or agreements, collateral security, 361. See Evidence. PARTIAL PAYMENT, as waiver of presentment, 525. PARTNERS, infancy of one partner not available to other, 68. unauthorized indorsement by one of firm name, 73. where paper given in violation of articles of partnership, 93. accommodation note by in firm name, 89. want of authority of, 89. authority of to execute paper generally, 89. want of authority of a question for jury, 89. to give firm note for individual loan, 90. acceptance of bill of exchange by, 90. when want of authority of may be shown, 91. where note executed to firm by, 92. paper given in firm name after dissolution, 94. presentment to for payment, 520. waiver by of presentment for payment after dissolution of firm, 525. See PARTiN'EKSIIlP. PARTNERSHIP, fraud of partner toward firm no defense against hona fide holder, 121. fraudulent transfer by partner no defense against bona fide holder, 131. immaterial alteration in changing name, 158. interest of retiring partner in is good consideration, 262. note for purchase of co-partner's interest, failure of consideration, 266. accommodation of partner, want of consideration, 271. acceptance by one partner binds other, 272. discount of note of partner, 274. 1044 INDEX. [References are to Sections.^ PARTNERSHIP— ConimwecZ. note indorsed for accommodation of, transferee with notice, 280. note in name of for debt of a partner, want of consideration, 281. cannot show note of to be paid if firm prosperous, 320. notes, evidence that void in case of dissolution of partnership not admissible, 320. statement of one partner no release to indorser, n. 342. want of title in action against, n. 418. note by to member of, purchaser after maturity, 421. right of holding note to a member and not indorsed, 456. when member of may waive protest, 541. notice of dishonor to, 560. waiver by a partner of notice of protest, n. 560. insolvent, notice of dishonor to trustee or assignee, 562. debt due to not available against note of partner, 591. set-off of note of partner in suit against, 592. note given for interest, right to set off damages for plaintiff forcibly taking possession of, 597, 598. set-off of damages arising from misstatements, 599. what not a set-off to action on, 620. set-off against purchaser after maturity of firm note indorsed to partner, 634. right of set-off against partner's individual note, 634. account as a set-off, 634. admission by partner not binding on, 657. when bound by note of partner in firm name executed after dissolu- tion, 670. bound by guaranty of a partner, 670. when estopped to show forgery, 673. See Pabtkek; Want of AxJTHORrnr. PART PAYMENT, acceptance of not an estoppel, 659. PATENTED MACHINERY, defense to note given for, 210. PATENT RIGHT, which is worthless as consideration, 120. statute as to notes for, non-compliance with, 292. note in consideration of agreement not to sell, 326. PAYEE, infancy of not available to maker against indorsee, 68. payment to, 698, 699. See Discharge; see the particular defense. PAYMENT, of or by forged paper, duty as to notice, 100. where blank left for time or place of, 145. of interest, as ratification of alteration, 150. alteration shortening time of, 154. INDEX. 1^^^ [References are to Sections.'] PAYMENT — Continued. extending time of, 154. of time of, 154, 155. excluding days of grace, 155. of time note to demand note, 155. of "after siglit" to "after date," 155. erasure of contemporaneous memorandum as to time of, 155. alteration as to place of, 162. by agent before delivery, 163. alteration by designating place of payment where none specified. 164. inserting words "in gold," 167. in medium of, 167. contract to extend time does not necessarily import consideration, 222 to assignor of note for pre-existing debt may reduce recovery, 242. where time of dependent on contingency the happening of which maker prevents, 321. presumption as to place of where none stated, 331. evidence not admissible to show different place of, 331. effect of conditions as to mode or manner of, 333, 334, 335. only out of certain fund, parol evidence showing agreement not ad- missible, 333. of note to administrator, unauthorized condition as to mode ot, 66i). evidence of performance of agreement as to, 336. collateral conditions or agreement as to time of, demand note, 339. blank in note as to time of, effect of. letter as to, 339. collateral condition or agreement as to time of, 339. where no time of specified in note, 339. subsequent agreement extending time of, 340. extension of time of, necessity of consideration, 341. agreement extending time of, what essential to this defense, 341. conditions in note as to, 343, 344, 345, 346. of note in installments, 343. effect of conditions in note as to, 343. collateral agreement as to, out of certain fund, no defense, 361. of note to corporation by assessments on stock, set-off, 422. bill of lading as collateral security for, 494. of bill, drawer undertakes for acceptance and payment of bill, 495. of note by indorsee before purchase, demand not excused, 503. of part, acceptance of not an estoppel, 659. application of, discharge of surety, 680. extension of time of, release of surety, 680. mortgage as, 682. and discharge, mortgage security, 682. of collateral, discharge of debt, 683. See COLLATEKAL CONDITIONS AND AGREEMENTS; DISCHARGE; PRESENTMENT FOR PAYJIENT. 1046 INDEX. [References are to Sections.] PEACE, between husband and wife, note of stranger given to promote, 235. PEDDLER'S NOTE, validity of, 292. consideration may be shown against assignee, 447. PENCIL, retracing pencil writing in ink not material alteration, 137. paper written in, alteration, estoppel, 661. PERFORMANCE, of conditions, where prevented by maker, 325. of a collateral agreement as a defense, 336. of condition in note, where substantial may be sufficient, 344. prevented by acceptor, 347. of conditions prevented by drawer, right to notice of dishonor for- feited, 571. where prevented by acceptor, 659. PERSONAL PROPERTY, notes for, warranty, failure of consideration, 265. where property for which note is given has some value, no failure of consideration, 266. transfer, assignment or conveyance of as discharge of note, 691. See Goods; Machixery; Merchandise. PHOTOGRAPHS, enlarged photographs of signature as evidence, 96. PHYSICIAN, where services of consideration, that not qualified to practice no de- fense, 329. PLACE, of payment, evidence not admissible to show different place, 331. of making protest, 535. to which notice of dishonor may be sent, 569. of presentment, see Presentment for Acceptance; Presentment for Payment. PLACE OF BUSINESS, See Presentment for Acceptance; Presentment for Payment. PLEADING, statutory exception as to coverture, 37. infant's note, ratification may be proved though not averred, 64. of facts showing duress, necessary, 105. of want of consideration to part of cause of action, 201. partial want of consideration may be shown if properly pleaded, n. 201. what necessary to allege when breach of agreement relied on, 310. of facts showing fraudulent diversion, 379. must sufficiently show title, 402. INDEX, 1047 [References are to Sections."] PLEADING — Continued. denial of transfer, 404. that note assigned, proof to support, 405. in action by indorsee against indorser, 406. plea puis darrein continuance that title transferred since suit com- menced, 410. not necessary" to aver demand at particular place where note pay- able but matter of defense, n. 502. presentment for payment, demand not, reasonable time, 508. injury or loss from non-presentment for payment at particular place averment of due notice of dishonor, 568. performance of agreement to accept deed for note, 694. covenant to accept less sum, 702. PLEDGE, of notes fraudulently obtained, usury in loan, 302, See Collateral Security; Pledgee; Pledgor, PLEDGEE, without notice, fraud no defense against, 119. fraud of no defense against bona fide holder, 121. that note pledged without authority no defense, 130. of note secured by mortgage, b07ia fide holder, 365, 366, 367, of collateral, rights and duties of, 369. purchaser after maturity from, 372. must use ordinary diligence in preserving pledge, 373. bona fide holder, extent of recovery, 376, 377, 378. action by in name of payee, 405. of note, rights of, 462. set-off of value of collateral diverted by, 613. set-off of value of collateral where collection by negligence of, 613. not subject to set-off against wife of payee, 628. payment to, 699. See Collateral Security; Pledge; Pledgor; see the particular defense. PLEDGOR, concealment by of facts to obtain indorsement, action by pledgee, 362. and pledgee, laches, negligence or tortious acts, statute limitations, 373. necessity of loss, injury or damage to by non-presentment, holder of note as collateral, 503. See Collateral Security; Particular Defense. POLITICAL ASSESSMENTS, note given for, no want of consideration, 228. POLITICAL CONDITION, of country, excuses for delay, presentment for payment, 521 and note. 1048 INDEX. [References are to Sections.^ POSSESSION, as evidence of title, 402, prima facie evidence of ownership, 240. title, evidence to rebut, 416. POST-DATED BILL, differs from bill payable like number of days after drawn, 490. same as draft payable certain time after date, 490. POST-DATED DRAFT, protest, 490. drawee cannot retain funds to meet it as against other bills payable before, 490. presentment for acceptance, 490. POST-OFFICE, evidence of deposit of notice of dishonor in, 555. See Mail, PRE-EXISTING DEBT, constitutes value for transfer of paper, n. 246. one taking in payment of a bona fide holder, not subject defense of fraud, 126. debt of husband outlawed, note given for bona fide holder, 245. paper taken as collateral security, bona fide holder, 246, 247, 248. note taken in payment for, bona fide holder against accommodation maker, 284. 285. accommodation note in payment of, bona fide indorsee against in- dorser, 286. paper transferred as security for, bona fide holder, 354. whether one taking note as collateral for is bona fide holder, 359, 360. note taken as collateral for, bona fide holder, extent of recovery, 377. want or failure of consideration, bona fide holder, 241, 242. note transferred as security, cases of sufficiency of consideration, 247. not discharged by note in absence of agreement, 241. accommodation paper given as security for, 247. where note assigned by separate instrument but not indorsed, col- lateral security, 247. where note wrongfully pledged as collateral for, 247. paper taken as security for, exceptions to general rule, 248. paper taken as collateral for additional consideration, 249. drafts and bills in payment of, payee, accommodation acceptor, 287. accommodation acceptor, bills pledged as collateral for, 355. transferee of note and mortgage as payment of or collateral for, 368. See ANTECEDE^'T Debt; Collateral Security. INDEX. 1049 [References are to Sections.'] PREMIUMS, for insurance, coverture as defense to note given for, 39. non-compliance with statute as to notes taken for, 79. condition affecting note for, 313. PRESENTMENT FOR ACCEPTANCE, 490-501. where bill payable so many days after certain event, 490. presentment t© fix maturity of instrument, 490. where bill expressly stipulates for, 490. when unnecessary, 490, 494. no debt accrues on bill after sight until presentment, 490. when made, bill payable after sight, 490. where bill payable one day after sight, n. 490. at certain time after date, 490. when presentment must be made, 490. where bill payable so many days after sight, 490. post-dated bill differs from bill payable like number of days after drawn, 490. same as draft payable certain time after date, 490. cannot be dishonored by refusal to accept before date, 490. drawee cannot retain funds to meet post-dated draft as against other bills payable before, 490. time of payment of sight draft, etc., cannot be known until ac- ceptance, 490. sight draft, in legal intent draft for acceptance, days of grace, 490. in case of post-dated draft, 490. note on demand after sight, n. 490. where bill is drawn payable elsewhere than at residence or place of business of drawee, 490. sight drafts, when holder must bear loss, presentment, agreement with bank, 491. agreement with bank as to return of sight drafts, reasonable time for presentment, 491. agreement to accept, payment of debt of another, n. 491. bill taken on drawee's promise to accept, want of funds, 491. want of funds, holder's knowledge as to, 491. agreement as to acceptance or presentment, 491. indorsement of bill for accommodation of drawer, agreement not to present until maturity unknown to indorser, 491. when indorser not discharged, 491. promise by letter to accept draft to be drawn, necessity of present- ment, acceptance to fix maturity, n. 491. purchase of bill in consideration of acceptance of another, n. 491. acceptance not refused, time desired, want of funds, 492. presentment after refusal to accept, 493. of bill payable in fixed period from date; time of presentment, 494, 495, 498. bill of lading as collateral security; acceptance, 494. 1050 INDEX. [References are to Sections.'\ PRESENTMENT FOR ACCEPTANCE— CojiHJiwert. when presentment not necessary until maturity of bill, 494. refusal to accept; sale of collateral and proceeds applied on bill; suit for deficiency, 494. unnecessary when bill payable at certain period or given time after date, 494. unnecessary where bill payable at future time on day certain, 494. when unnecessary, 495. acceptance refused when bill presented before due, 495. effect of presentment made unnecessary, 495. when made before maturity, 495. what constitutes reasonable time as to presentment, 496. to fix maturity, presentment in reasonable time, 496. bill payable at sight or certain number of days after sight, present- ment or negotiation in reasonable time, 496. presentment or negotiation in reasonable time, 496. release of drawer and indorser, 496. bill drawn by country banker on town bank differs from bill of pri- vate party and is part of circulation, 496. on town banker payable after sight, question of unreasonable delay, 496. keeping of bill drawn by banker on banker; laches in presentment, 496. effect of unreasonable delay in presenting bill, n. 496. of sight drafts and the like, reasonable time, 496 and note. necessity for presentment or putting of bill in circulation, 496 and note. agent for presentment, when liable, 497. agent for presentment must receive unequivocal acceptance or notify holder, 497. when indorser not discharged, 497. where holder keeps indorsed bill without actual presentment, al- though informing drawee that he holds it, 497. how made, by whom, 497. before bill overdue, 498. place, 498. time, on business day, 498. draft on party with place of business but not payable at particular place, 498. when drawer discharged draft on party with place of business but payable at no particular place, 498. presence of instrument in place, when sufficient presentment, 498. at residence or place of business, 498. of order or inland bill, when made at any time, 498. bill sent in letter to drawee before due, 498. bill payable at particular time, 498. no particular place in city or town, 498. injury sustained by drawer by delay, 498. INDEX. 1051 [References are to Sections.^ PRESENTMENT FOR ACCEPTANCE— Confinued. must be made to drawee or some person authorized, 499, to two or more drawees not partners, n. 499. how made, to whom, 499. duty of bank collector, 499. presentment by bank, 499. at place of business of drawee, 499. at residence of "drawee, 499. personal demand, 499. to acceptor, 499. to agent, 499. where drawee bankrupt or insolvent, n. 499. where drawee dead, n. 499. acceptance of order on committee, 500. excuses, inability to make by reasonable diligence, 501. person without capacity to contract, 501. where drawee dead or absconded, 501. where drawee fictitious person, 501. where irregular and acceptance refused on other grounds, 501. delay in mail, 501. miscarriage in mail, laches, ordinary diligence, 501. PRESENTMENT FOR PAYMENT, of check after death of drawer, 215. presentment necessary only when bill due without presentment for acceptance, 494, 495. at place of business of drawee, 499. at residence of drawee, 499. personal demand, 499. necessary in order to charge drawer and indorsers, 502. no demand on co-makers necessary, 502. not necessary to one signing on back of note before delivery, 502. ability and willingness to pay at particular time, tender, 502. not necessary to charge persons primarily liable, 502. as to third person signing face of note, 502. want of demand on principal debtor, when presentment necessary to charge drawer and indorser, 502. deposit of funds at particular place where note payable, tender, 502. instrument payable at particular place, what equivalent to tender, 502. when tender exonerates from interest, costs and damages, n. 502. when not necessary to aver or prove demand at particular place but matter of defense, n. 502. demand necessary though indorser made administrator of maker's estate, 503. want of demand, agent, acceptor, instances, 503. demand when necessary, indorser of overdue note, 503. indorsers of note for antecedent debt to enable it to be discounted liable as joint owners without demand, 503. 1052 INDEX. [References are to Sections.^ PRESENTMENT FOR PAYMENT— Continued. indorsement by agent, demand on principal and agent, 503. acceptor of draft, not necessary to charge, 503. when form indorsement of non-negotiable paper makes it negotiable to extent of requiring demand, 503. holders of collateral, delay must amount to gross negligence, only reasonable diligence, 503. non-negotiable notes, demand unnecessary, 503. of draft to secure antecedent debt, 503. what is reasonable time for, 503. order on another for sum due, 503. necessity of pledgor sustaining damage, injury or loss, by non-pre- sentment, holder of new note as collateral, 503. indorsement as collateral security, 503. made in reasonable time, indorser of overdue note, 503. demand in reasonable time, liability under agreement to indorse overdue note, 503. voluntary taking up at maturity by party procuring note to be dis- counted, 503. necessary as to all drafts, foreign or inland, reasonable time, 503. order upon drainage district, diligence to collect, 503. not necessary, indorsement of insolvent's note at maturity, 503. demand not excused though note paid before purchase by indorsee, 503. sureties and guarantors, parties primarily liable, demand, 504. sureties, note not presented to principal maker, 504. time of presentment where note is not and. is payable on demand, reasonable time, 505, 506. of demand note, reasonable time, how determined, 505, 506. demand not necessary on bank certificate of deposit to start run ning statute of limitations, 505. demand note, presentment in reasonable time, 505. notes of a series, 505. on bill sufficient if made in reasonable time after last negotiation, 505. bank certificate of deposit, 505. demand note payable at place certain, 505. necessity that injury or loss be sustained by want of demand, 506. delay when unreasonable, 506. of certificate of deposit, with no interest after maturity, 506. of note payable on demand after date, reasonable time, 506. reasonable time, credit or indulgence to maker not a factor in de- termining what is a, 506. demand notes, indorsement after maturity, reasonable time, 506. of demand notes, understanding that note not to be paid till after expiration of certain time, 506. f INDEX. 1053 [References are to Sections.'] PRESENTMENT FOR PAYMENT— Continued. maker's insolvency no excuse for non-presentment in reason- able time, 506. note intended as continuing security with interest, reasonable time, 506. of certificate of deposit payable after certain time, 506. of notes payable at sight or on demand with interest, reasonable time, 507. "^ demand note and demand note bearing interest, distinctions abro- gated by statute, reasonable time, question of law of fact, pleading, burden of proof, 508. time of maturity, Sunday or holiday, Saturday, 509, 510. premature, days of grace, 509. on day preceding Sunday, etc., 510. injury from laches in presenting draft, 511. where draft considered as inland bill or banker's check, laches, 511. waiver as to time, 511. by person on behalf of estate of holder, 511. insolvency of maker during delay in presentment of check, 511. at reasonable hour on business day, 511. before twelve o'clock at night, 511. by sub-contractors as indorsees of checks, reasonable time, 511. by one wrongfully in possession, 511. by one in possession of bill, 511. by whom, holder or person authorized, 511. by holder in possession, 511. in case where no established business hours at place payable, 511. sufficiency of presentment, by whom made, time, when made, 511. by notary, n. 511. sufficiency of demand, bringing suit, 512. before suing, note payable at bank, 512. on note payable on call, 512. extended for indefinite time, 512. before suing on due-bill, 512. demand note, 512. certificate of deposit, 512. sufficiency of presentment, exhibition and delivery up of instru- ment, 513. waiver of exhibition of instrument, 513. place of presentment, 514, 515. where place for, specified, 514. where address given in instrument, 514. where no place specified, 514. where no address given, 514. at usual place of business or residence, 514. wherever person to pay can be found, 514. at last known place of business or residence, 514. 1054 INDEX. [References are to Sections.'] PRESENTMENT FOR PAYMENT — Continued. where city or town designated without other specification, instru- ment payable generally, 515. at residence or place of business of maker when no particular place is specified, 515. where town specified but not any particular place therein, 515. K place specified by terms of instrument, 515. calling at particular place after close of business hours insufficient, 515. personal demand unnecessary where note payable at particular place, 515. note payable at particular place, 515. presumption as to residence at certain place designated on note, 515. . at certain place, due diligence required, 515. need not be made at corner of street, 515. at last known place of residence, 515. at former place of business without further inquiry insufficient, 515. in case of removal of maker's place of business, 515. in case of removal from state, 515. made personally without objection to place of demand, 515. where instrument payable at bank, 516, 517. note in possession of cashier of bank, where payable, 516. sufficient where note presented at bank where payable, 516. to cashier of bank, 516. at particular place specified, whether necessary to be made there, 516. during banking hours, 516. at particular place specified, loss or injury by non-presentment a matter of defense, n. 516. where bank at which note payable is holder, 517. admittance obtained to bank after banking hours, 517. to bank entered, 517. when sufficient at any bank at place of delivery of note, 517. bank erroneously designated as located, 517. of draft at bank some distance from drawer's place of business, term "via" after drawer's name, etc., 517. at branch bank, 517. of note transferred as collateral to another bank, 517. to agent at meeting of agents of several banks for settlement of ac- counts, 517. demand made only by letter written by bank at which payable, 517. during banking hours before noon and subsequent deposit of money before noon, 517. note payable at any bank does not include loan and trust corpora- tion, 517. where bank closed and new bank in its place, personal demand un- necessary, 517. to receiver of bank, 518. insolvency or suspension of bank, 518. INDEX. 1055 [References are to Sections.'] PRESENTMENT FOR PAYMENT — Continued. to whom, person primarily liable dead, 519. persons primarily liable partners, joint debtors, 520. excuses, epidemic, 521. circumstances beyond holder's control, 521. for delay, presentment to acceptor for honor or referee, n. 521. reasonable diligence required after uncontrollable cause of de- lay ceases to operate, 521. for delay, existing war, 521. in presentment, 521. political condition of country, 521 and note, when presentment dispensed with, drawer, indorser, 522, 523. for delay, waiver, 522, 524, 525. when dispensed with, reasonable expectation that paper will be honored, want of funds, 522, 523. transfer of its property by corporation maker, 522. mailing note for collection, required diligence exercised, 522. degree of diligence required, 522. when dispensed with generally, 522. dispensed with, instrument made for accommodation of indorser, 522. indorser of forged bill, 522. excused where, after reasonable diligence, presentment cannot be made, 522. excuses, where drawee is fictitious person, 522. degree of diligence necessary, inquiring of cashier of bank as to residence, 522. holder told that maker has absconded, 522. when dispensed with where no right to require or expect that drawee or acceptor will pay, 522. indorser of bill or note given for his accommodation, 523. insolvency, 523. insolvency of corporation maker, 523. excuses, note payable on demand, 523. acceptor's insolvency, 523. when dispensed with, accommodation indorsers for the maker, 523. waiver of presentment and demand, 524, 525. signed by indorser, 524. indorsement of waiver on note, 524. "protest waived" and "waiver of protest" and the like include waiver of demand, 524. where note stipulates for waiver, 524. waiver, extension of time of payment, 524. mere request for time, 524. indorser's knowledge of maker's insolvency, 524. knowledge of indorser of material facts and laches, waiver, 524, 525. waiver as indorser even though guarantor, 524. when no consideration necessary for waiver, 524. 1056 INDEX. [References are to Sections.'i PRESENTMENT FOR PAYMENT— Continued. waiver in body of note, 524. agreement for waiver on back of note, 524. waiver by partner after dissolution of firm, 525. by taking security, collateral, 525. laches and check lost, duplicate check given, 525. by paying interest, 525. by request not to do anything with note, 525. by agreement by which assignment made, 525. request for renewal, 525. promise by letter to pay, 525. by acknowledging indebtedness, or by partial payment or promise to pay, knowledge of material facts, 525. protest must specify time and place of, 530. protest should specify fact that presentment made and manner of making, 530. protest should state place and manner of, 530, 532. waiver of waives notice of dishonor, 573. substituted presentment, see Checks. when dispensed with, see Excuses. PRESIDENT, of corporation, want of authority, 81. addition to name of maker of "President A. B. Association," 172. of bank selling note to bank, 486. of bank indorser of note, notice of protest, 541. PRESUMPTION, as to writing embodying agreement of parties, 342. as to consideration, 183. evidence rebutting, showing seal, consideration, 184. evidence rebutting, matters dehors contract, 185. raised by words "value received," 186. as to consideration, "value received," consideration expressed or not expressed, 186. of fraud created by inadequacy of consideration, 193. as to consideration, joint notes, 216. as to time of alteration where apparent on face, 136. as to place of payment where none stated, 331. by acceptance as to funds may be rebutted, 199. as to holder of non-negotiable note, consideration paid by another, 208. that purchaser for value is dona fide holder, 240. that all indorsements are for value and proper purpose, 240. that drawee has funds, when rebutted, 274. under statute as to valid delivery under statute, stolen paper, 396. where indorsed in blank before negotiation, 466. arising from certificate of protest of notary, 542, 543. INDEX. 1037 [References are to Sections.'] PRIMA FACIE, consideration for assignment is amount of note, 236. evidence of ownership, possession is, 240. face of note fixes sum received by indorser, 255. evidence of title, possession as, 402. right to recover, holder has, 403. evidence of contract of indorsement, name signed in blank, 406. title from possession, evidence to rebut, 416. See Burden of Proof; Evidence; Presumptions. PRINCIPAL, fraud of toward guarantor no defense against bona fide holder, 121. demand on, indorsement by agent, 503. set-off against factor who conceals, 618. right of set-off in actions by or against principal or surety, 632. neglect to proceed against, discharge of surety, 680. neglect to prosecute, discharge of guarantor, 681. See Agent; Principal and Surety; Surety. PRINCIPAL AND SURETY, right of set-off in action by or against, 632. See Principal; Sltiety. PRIVATE SEAL, when addition of not material, 176. "PRIVILEGE OF EXTENSION FOR THIRTY DAYS GIVEN," alteration of note by this clause, 155. PROCEEDINGS, collateral condition as to stay of not performed, 325. PROCEEDS, of paper, diversion of, 392. PROCESS, paper procured by abuse of legal process, 109. effect of threat to invoke legal process, 110. PROMISE, alteration in form of, 157. estoppel by new promise, 650. See New Promise; Waiver and Estoppex. PROSECUTION, note to suppress void, n. 288. for crime, note for dismissal of void, 295. PROSTITUTE, clothes washed for, may recover, 301. PROSTITUTION, paper as price of void, 300. Joyce Defenses — 67. 1058 INDEX. [References are to Sections.'\ PRO TANTO, recovery, where inadequate consideration, and transaction sus- picious, 191. where partial want of consideration, 201. defense, partial failure of consideration, 208. failure of consideration, 208, 209. recovery, one purchasing note for less than face value, 240. purchaser after maturity, 432. PROTEST, in case of post-dated draft, 490. without presentment to acceptor, 498. when premature, 509. premature, days of grace, 509. "protest waived" and "waiver of protest," etc., include waiver of de- mand, 524. and want of protest, 526-543. object of, 526. defined, 526. in what cases necessary, 527. indorsee entitled to notice of, 527. of foreign bill necessary, 527. necessity of under negotiable instruments law, 527. of promissory note unnecessary, 528. in what cases unnecessary, 528, 529. how made, form, contents and suflSciency of, 530. a notice of need not follow any particular form, 530. signature to need not be in writing, 531. statement in certificate as to place addressed, 532. what certificate should contain, 532. what sufiicient to protect notary, 532. by whom made, 533. made by a notary public, 533. cashier of bank may, 533. of paper maturing on Sunday, 534. of demand note, time of, 534. when to be made, 534. time of making as affected by statute, 534. where days of grace, 534. w^here to be made, 535. when dispensed with, excuses, 536. unnecessary as to -acceptor, 536. waiver of generally, 537-541. conditional waiver of, 537. waiver of by conduct of indorser, 537, 538. promise to pay, indorser, 538. where waiver of stamped on back of note, 538. waiver of in body of note binds indorser, 538. what waiver of includes, 539. INDEX. 10oi> [References are to Sections.'] PROTEST — Continued. particular cases of waiver of, 540. waiver of by extension of time, 540. of by letter, 540. of by offer of renewal note, 540. of consequent upon telegram, 540. parties, 541. secretary of eorporation may waive, 541. curator pf insolvent indorser may waive, 541. notice of to indorser who is president of bank note payable at, 541. when member of firm may waive, 541. certificate of as evidence, 542, 543. notice of to agent, 548. to whom notice of may be given, 548. notice of by mail sufficient, 554. giving notice of, where indorser dead, 559. damages when bank check wrongfully protested, n. 582. of check, 587. See Notice of Dishonor. PUBLIC, funds, note for illegal use of, surety may show illegality, 290. offense, note for personal injury and including compromise of, void, n. 288. PUBLIC CORPOHATIONS, See CoTTTrTT: Municipality. PUBLIC LANDS, when note in consideration of sale of void, n. 288. PUBLIC OFFICE, paper in consideration of resignation from void, n. 288. paper to secure consideration of sale of void, n. 288. paper to procure appointment to void, n. 288. PUBLIC OFFICER, only authorized to receive cash, receipt of paper by, 77. want of authority to issue paper, 83. paper to corruptly influence, void, n. 288. paper given to deceive, estoppel, 652. act of in violation of statute, estoppel to show, 672. PUBLIC POLICY, note void where consideration contrary to, 288, notes contrary to void, n. 288. note against, notice of to transferee, 472. PURCHASE, of sight drafts, agreement t9 return on certain conditions, present- ment, 491. of bill in consideration of acceptance of another, n. 491. by indorsee, note paid before, demand not excused, 503. or payment, what is, discharge of note, 696. 1060 INDEX. IReferences are to Sections.'] PURCHASE PRICE, paper, acceptor cannot show want or failure of consideration, 258. partial failure of consideration, 208. notes, action against guarantor, want or failure of consitleration, 259. bona fide holder or assignee, 260. property useless or of no value, 262. land, warranty, 264. personal property, warranty, failure of consideration, 265. instances in general of want or failure of consideration, 268. PURCHASE PRICE NOTES, original parties, want or failure of consideration, 257. effect upon subsequent holders of conditions, 328. collateral conditions and agreements affecting, 327. PURCHASER, by mere delivery, maker's defense, discharge, 679, PURCHASER AFTER MATURITY, general rule as to, 419, 420. principle on which rule founded, 419. buys at his peril, 420. note overdue, circumstance of suspicion, 420. general rules not founded on question of title, 419. distinction between bill indorsed before and after maturity, 419. limitation of general rule, 431. paper executed under duress, 114. want or failure of consideration, 239. of accommodation paper, want of consideration, 282. subject to defense of breach of condition, 310. as to other signatures, 315. evidence of conditions affecting consideration, 322. of note, cannot defeat by agreement as to liability, 334. where taken as collateral security by, 372. from pledgee, 372. of note by firm to a member of, 421. application of general rules generally, 421, 422. fraudulent transfer by payee, 421. usury may be shown, 421. » no defense note executed on Sunday, 421. set-off against under statute, 422. set-off and recoupment, 422. when charged with knowledge of homestead rights, 423. where series of notes mature on failure to pay one, 423. of note payable on default in payment of interest, 424. of bank bills, 425. of checks, 425. of non-negotiable due bill, 425. of coupon bonds, 426. INDEX. ' 10(!1 [References are to Sections.'] PURCHASER AFTER MATURITY— Continued. of certificate of deposit, 427. where transferred before but not indorsed until after maturity, 428. of non-negotiable note, 429. effect of statute providing that suit by assignee shall be without prejudice, 430. statute may provide for defense arising out of collateral matters, 431. pro tanto recovery by, 432. of note to be used as collateral, pro tanto recovery, 432>. from bona fide holder, general rule, 433, 434. usury, 434. application of rule, 434. want of consideration, 434. of demand paper, 435. word 'overdue" construed with reference to demand paper, 435. defenses and equities between maker and indorser or intermediate holder, 436. secret equity in favor of entire stranger, 437. plea that plaintiff was, no evidence to sustain, 442. in good faith, 467, 468, 469. overdue paper, default in payment of interest, 468. of demand notes, 469. claim as set-off against must have been acquired before suit com- menced, 592. of firm note indorsed to a partner, set-off against, 634. right of set-off against, 635, 636. 637. general rules as to set-off against, 635. subject to set-off available against his indorser, 635. not subject to set-off not available against his indorser, 635. no recovery against for excess of set-off, 636. not subject to set-off of indebtedness arising out of suit pending on appeal, 636. of note payable without defalcation or discount, right of set-off against, 636. bank draft payable on demand, right of set-off against, 636. set-off against note repurchased by payee after maturity, 636. not subject to set-offs arising out of other transactions, 637. estopped by admission of prior holder, 658. defense of maker, discharge, 679. Q QUESTION OF LAW, materiality of alteration is, 135. QUITCLAIM, agreement to as consideration, 194. 1062 • INDEX, [References are to Sections.'] QUITCLAIM DEED, See Deed. R RAILROADS, notes given to aid in construction of, performance of conditions in, 345. RATE OF INTEREST, effect of alteration in, 169. addition of by inserting where none stated, 170. See Interest; Interest Clause. RATIFICATION, by infant, what constitutes, 64. as affecting defense of infancy, 64. after filing plea of infancy, 64. of note executed by intoxicated person, 69. of unauthorized signature, estoppel,- 74. of note executed under duress, 113. of an alteration, effect of, 149. of alteration, by making partial payment, 150. by giving collateral, 150. by payment of interest, 150. by subsequent promise to pay, 150. by requesting and obtaining an extension of time, 150. by recognition of liability, 150. what constitutes, 150. by corporation of ofHcers' acts, 485. See Waiver and Estoppel. REASONABLE DILIGENCE, See Diligence. REASONABLE EXPECTATION, that paper will be honored, want of funds, presentment for pay- ment, 522, 523. REASONABLE TIME, for presentment for payment, what is, 503. how determined, demand notes, 505, 506. presentment in, demand notes, maker's insolvency, excuses, 506. credit or indulgence to maker not a factor in determining what is, presentment, 506. note as continuing security with interest, presentment for payment, 506. presentment for payment of notes payable at sight or on demand with interest, 507. demand note and demand note bearing interest, 508. See Checks; Presentment for Acceptance; Presentment fob Payment. f INDEX. 10G3 [References are to Sections.'] REBELLION, note in aid of void, 293. RECEIPT, cancellation, indorsement of payment, 695. RECEIVER, of payee bank, maker may show want of consideration in action by, 198. of bank, action liy on note for accommodation of bank, 281. presentment to for payment, 518. right of set-off against, 626. estopped by representation of maker in connection with transfer, 653. RECITALS, as to place of execution cannot be contradicted, 18. "value received," evidence to rebut, 185, 186. in certificate of deposit as to receipt of money, 205. in note that for "money loaned," 205. in renewal note expressing receipt of value, want of consideration, 221. of value received, want of consideration no defense, bona fide holder, 260. in municipal bonds, 488. in school district bonds, 488. suflBciency of in notice of dishonor, 552. as to consideration, estoppel, 646. in collateral mortgage as an estoppel, 646. that note by married woman for benefit of separate estate, estoppel, 646. as to place of execution, estoppel, 646. in contemporaneous agreement as an estoppel, 646. as to interest, estoppel, 646. in indorsement as an estoppel, 646. in mortgage, when not estoppel on wife, 646. as to signers being principals, estoppel, 646. in paper as an estoppel, 646. describing payee by firm name, estoppel, 646. expressly waiving defenses, does not waive counterclaim for dam- ages, 646. in bonds as an estoppel, 647. See Wai\-ku and Estoppel. RECOUPMENT, See Set-off, Recoupment and Countebclaim. REFEREE, See Acceptor for Honor. RELEASE, of dower by wife as a consideration, 194. of all claims and demands as a consideration, 195. 1064 INDEX. [References are to Sections.'] RELEASE — Continued. of drawer and indorser, presentment for payment, 502. estoppel of indorsers by, 673. See Discharge; Payment; Presentment for Acceptance; Presentment FOR Payment. RENEWAL NOTE, fraud defense to action on, 116. in procuring indorsement to no defense to original, 126. notes generally, want or failure of consideration, 219. notes, waiver by principal precluding defense of failure of consid- eration, 220. implied or expressed consideration, want or failure of consid- eration, 221. of voidable note, want of consideration, 222. notes, want or failure of consideration generally, 222. new consideration not necessary, 222. consideration for original note sufficient, 222. of one already paid is without consideration, n. 222. without consideration where original was, n. 222. discount before maturity, 223. in consideration of promise of seller to repair defects, 265. not affected by taint of illegality in old note, 288. bill or note, where original tainted with usury, 305. note held by l)ona fide holder, failure of consideration of original no defense, 324. collateral agreement to renew note no defense, 339. note, continuance of security, extinguishment of debt, 375. request for as waiver of presentment for payment, 525. offer of as waiver of protest, 540. note as an estoppel, 649. discharge by, 688. maker's knowledge of ownership of as affecting payment, 699. See Discharge; Extension. RENT, note given for money loaned for, coverture, 57. set-off of claim for against note to one "as assignee," 618. surrender of notes for, discharge, 695. RENUNCIATION, by holder, 700. See Discharge. REPLEVIN, to recover stolen coupons sold after maturity, 426. REPRESENTATIONS, See Fraud and Fraudulent Representations; Misrepresentations. REQUISITION, procured to compel settlement of claim, 109. • INDEX. 1065 [References are to Sections,'] RESCINDING, of contract and restoring consideration, general rule and exceptions to, 210, 211. RESCISSION, of contract and restoring consideration, general rule and exceptions to, 210, 211. of sale, discharge of note, 679. RESERVATION, ^ of right against indorser at time of transfer, 702. RESIDENCE, notice of dishonor may be sent to, 569. in same place, see Check; Notice of Disiioxob; Presentment foe Acceptance; Presentment for Payment; Protest. See Presentment for Acceptance; Presentment for Payment. RESTRAINT OF TRADE, note in, void, n. 288. RETRACING, pencil writing in ink not material alteration, 137. signature of maker in ink, 173. REVENUE LAWS, See Stamp. REVENUE STAMP, not affixed at time of execution, 19. RULES, of clearing-house, availability of as a defense, 8. SALES, illegal, note given for, bona fide holder, 294. contract of and note may be construed together, 310. of collateral and proceeds applied on bill, action for deficiency, 494. rescinded, discharge of note, 679. or surrender of collateral, discharge, 683. transfer or delivery of goods as discharge of note, 691. See Goods; Machine; Machinery; Merchandise; Mortgage Sale; Purchase; Vendee; Vendor. SATISFACTION, of note other than by payment of money, condition in note as to, 344. mortgage, 682. by conveyance of land or agreement to take deed, 690. See Discharge. 1066 INDEX. ^References are to Seetions.l SATURDAY, time of maturity, 509, 510. where last indorser receives notice of dishonor on Saturday, notice to prior indorser, 568. SAVINGS ASSOCIATION, paper to procure election of one as trustee of, void, n. 288. SCHOOL BONDS, where fraudulently issued, 98. SCHOOL DISTRICT, bonds, recitals, 488. SEAL, accidental erasure of, 143. addition of by agent of maker, 176. alteration by addition or destruction of, 176. when addition of private seal not material, 176. addition of changes character of note, 176. note under, want of consideration an equitable defense, 217. imports consideration, 217. note under, want or failure of consideration as defense to, 217. gratuitous promise to pay no defense, 218. on lease does not prevent showing failure of consideration for note, 327. notes under, bona fide holder, 444. on protest, necessity of controlled by statute, 530. makes certificate of protest of notary presumptive evidence, 542. SECRETARY, of corporation, want of authority of, 81. may waive protest, 541. SECURITY, breach of condition as to depositing collateral, 323. See Collateral Security; Mortgage Secueitt. SEDUCTION, of wife, note given because of void, n. 288. note given after and as compensation for, 301. SEPARATE ESTATE, of married woman as affecting defense of coverture, 56, 57, 58. intention to charge as affecting defense of coverture, 59. of married woman, recital as to estoppel, 646. See Coverture. SERIES, of notes maturing on failure to pay one, 423. notes of, one overdue as notice, 484. of notes, notice of dishonor, 545. payment of, to whom, 698. INDEX. 1067 [References are to Sections.'] SERVICES, note for amount in excess of value of, 192. rendered by daughter to mother not a consideration, 194. when failure to perform no defense, 202. rendering of the consideration, that amount of note exceeds value of no defense, 329. breach of agreement to render, failure of consideration, 329. condition that note payable in cannot be shown, 334. condition in note as to, n. 343. set-off of claim for, 596. rendered as discharge of note, 693. rendered attempt of maker to indorse amount of claim for on note, 695. SET-OFF, RECOUPMENT AND COUNTERCLAIM. what law governs, 590. is a mode of defense, 590. what essential to an allowance of, 591. must be of claim due between same parties, 591. where demands liquidated an agreement to set-off not necessary, 591. equities from other transactions not available, 591. a mere contingent liability not available, 595. notes not due when suit brought not available, 595. on compromise note counterclaim arising out of matters compro- mised not allowable, 195. partial failure of consideration, 208. of damages, 208. of one note against another, notes exchanged, 227. of breach of agreement as to possession of land, 323. of value of collateral lost by operation of statute of limitations, 373. of bank deposit against bank assignee, 422. of amount paid to clear title, 422. purchasers after maturity, 422. of assessment on stock against note to corporation, 422. demand due to partnership of which defendant a member not avail- able, 591. where acquired after writ made out and before service, 592. maker custodian of society funds, cannot set off debt due to society, 591. right must have been acquired prior to commencement of suit, 592, of note, where assignment dated back, 592. of partner in suit against firm, 592. where claim or demand acquired subsequent to transfer, 593. of demand against payee, when not available against surety, 594. where claim acquired after notice of assignment, 594. in action by payee for use of assignee, 594. of unliquidated damages arising from breach of covenant, 594. against assignee for benefit of creditors, 595. 1,068 INDEX. [References are to Sections.'] SET-OFF, RECOUPMENT AND COUNTERCLAIM— Co^ifinued. of claim for services rendered to plaintiff, 596. where note given for machine, breach of subsequent promise to re- pair not available, 596. of damages arising from false representations inducing execution of note, 596. in action by bank, stock of bank not available, 596. particular claims or demands which may be set off, 596. right to judgment for excess of set-off over plaintiff's claim, 596. arising from agreement to pay debt of third person, 596. indebtedness of holder of certified check not available against check, 596. of damages recoverable in an action of tort, 597. for forcibly taking possession of property note given for, 597, 598. arising from negligence of plaintiff as agent cannot be, 598. caused by a slander on credit of maker, 598. of demand for amount of note converted, 598. of unliquidated damages for selling property in violation of trust, 598. damages for conversion of goods may be set off, 598. for negligence in care of collateral cannot be, 598. against note given for interest in partnership of damages by rea- son of misstatements, 599. Of damages arising ex contractu and under same contract, 599. arising from nonperformance of contract obligations, 599. arising from fraud, 599. arising from mistake, 599. for breach of contract to deliver cans, 600. arising ex contractu but under different contract not availa- ble, 600. of mortgagee's negligence in not procuring insurance not available, 600. when breach of covenant against incumbrances not available, 601. of damages for fraud of mortgagee in concealing material facts, 601. for breach of warranty, where note given with knowledge of but on promise to remedy, 601. when damages for false representation as to land not, 601. damages for breach of warranty not available to surety or guar- antor, 601. of damages for breach of warranty or covenant, 601. damages for breach of warranty or covenant not available against bona fide holder, 602. when error to render judgment for excess, action on one of several notes, 603. apportioning damages pro rata among several notes, 603. of money paid to clear land of incumbrances, 603. of bank deposits, what essential to right, 604. INDEX. 1069 [References are to Sections.'] SET-OFF, RECOUPMENT AND COUNTERChAlM— Continued. rule as to bank deposits, 604. of bank deposits, right of equitable but not legal, 604. evidence as to bank deposit at time of maturity of note, n. 604. in action by depositor to recover bank deposit, 605. of judgment in action by depositor in action to recover bank de- posit, 605. note not available where taken with notice of failure of considera- tion, 606. of note not due at time of notice of assignment, 606. note cannot be set off against a certificate of deposit, 606. of note of assignor in action by assignee,' 606. of bill or note generally, 606. of note transferred by delivery where indorsement essential, 606. what essential to render bill or note available as, 607, 608. under the code in New York, 607. of bill or note, maker insolvent, power of court to continue case until defendant obtains judgment, 607. not due in action to recover bank deposit where depositor in- solvent, 607. bill not due, not available though plaintiff and acceptor insolvent, 607. note should be confined to transactions between same parties, 608. bill or note to be available must have been due when action com- menced, 607. must be due, 607. not allowed of note held by defendant and another jointly, 608. note transferred merely to use as set-off not available, 608. bill or note must be due in same right to be available, 608. of note not allowed where fraud on plaintiff, 609. as affected by statute, 610. may be prevented by statute of limitations, 610. as affected by laches, 610. want of title will preclude, 611. of bills or notes of bank, 612. of value of collateral converted by pledgee, 613. of note without delivering up collateral, 613. of value of collateral sold or diverted, 613. right of where collateral has been given, 613. of value of collateral where collection lost by negligence of pledgee, 613. of usury, when not available against surety, 614. usury in some states can only be recouped, 614. rule as to recoupment of usurious interest, 614. pro rata set-off of usury against joint makers, 614. of usurious interest in action on renewal of note, 614. of usury not defeated by statute of limitations. 614. to be available must attend same contract, 614. 1070 IXDEX. [References are to Sections.^ SET-OFF, RECOUPMENT AND COUNTERCLAIM— Confintted. of judgment for usurious interest, 615. of usury, right of as affected by Federal statutes, 615. right of generally as affected by statute, 616. under statute of demand acquired before notice of transfer, 616. statute of limitations may defeat right of, 616. in New York need not be upon contract, 616. waiver of right of by promise to {)ay at time of assignment, 617. right not waived by failure to set it up prior to verdict or judgment, 617. collection of judgment may be restrained to allow, 617. waiver of right of, 617. against note made to "as assignee," 618. against third person beneficially interested, 618. of sealed bill against note to one as "agent of the creditors," 618. against guardian of insane ward, 618. not of indebtedness due to corporation not a party to note, 618. ■ availability in respect to parties generally, 618. against factor concealing principal, 618. of note against action on account for use of another, 618. in action by holder of certified check against bank, 619. availability in favor of acceptor, 619. when note cannot be set off to action by administrator to recover bank deposit, 620. payment by one as surety not set off against administrator, 620. what not a set off against note for interest in partnership, action by administrator, 620. in action by administrator or executor, 620. note for land sold by administrator, claim purchased from estate not set oft', 620. note purchased after testator died insolvent not available against administrator, 620. against note indorsed to general agent of payee, 621. to person named or bearer, 621. in hands of agent of holder for collection, 621. against notes to or in hands of agent or broker, 621. against bills remitted for discount, 621. against note put in hands of broker for sale or advance, 621. indorsed to bank for collection, 622. what available generally against assignees and indorsees, 623, 624. against assignee of time deposit with payee, 623. by accommodation indorser of usury, 623. against assignee of amount withheld by payee of mortgage coupon bonds, 623. against note indorsed to collecting agent, 623. against assignee of debt paid by surety, 623. where note assigned to avoid a set-off, 623. against assignee holding in trust for payee, 623. INDEX. 1071 [References are to Sections.] SET-OFF, RECOUPMENT AND COUNTERCLAIM— Continued. against note assigned to avoid payment of debts, 623. against intermediate indorser not available generally, 624. bank not subject to set-off of dividends accruing on stock, 624. statute affecting right of against indorsee, 625. against bankrupts and insolvents, 626. right of against receiver of insolvent bank, 626. not permitted of claim purchased after insolvency of bank holding note, 626. of bills purchased after insolvency of drawer, 626. of debt due to surety where note transferred after insolvency of payee, 626. in favor of bankrupts and Insolvents, 626. not permitted against assignee of insolvent to set off note purchased after maturity, 626. accommodation indorser paying note to bona fide holder not subject to, 627. in action by payee for use of bona fide holder, 627. no right of against bona fide holders, 627. husband not subject to set-off of debt of wife before marriage, note to wife, 628. where note to wife merged in judgment recovered by husband, 628. against notes transferred by husband to wife, 628. note to wife not set-off to action against husband, 628. pledgee not subject to set-off against wife of payee, 628. debt to wife of drawer of check not set-off to action on, 628. note to wife, action by husband and wife, liability of husband not a set-off, 628. cannot set off claim for medical services to husband against note owned by wife, 628. in case of joint creditors and debtors, 629, 630, 631, 632. in action joint and several note, 629, 633. joint note not set-off against individual debt, 629. liability on joint indorsement not available against individual, 630. action by joint holders of mortgage, note of one not a set-off, 629. in favor of one maker not available in favor of joint makers, 629. debt of one payee not available against joint payees except by agree- ment, 629. of individual debt where note held by two for use of debtor, 629. in action by or against principal or surety, 632. of joint liability where party sues in his sole right, 630. right of in case of joint creditors and debtors as affected by statute, 631. of a joint and several note, 633. against purchaser after maturity of note indorsed to a partner, 634. of a partnership account, 634. in action by partner on individual note, 634. against purchasers after maturity, 635, 636, 637. 1072 INDEX. [References are to Sections.'] SET-OFF, RECOUPMENT AND COUNTERCLAIM— Continued. against purchasers after maturity, general rules as to, 635. date of bank draft payable on demand, 636. against one purchasing after maturity note payable without defalca- tion or discount, 636. indebtedness arising out of suit pending on appeal not available against purchaser after maturity, 636. ■ against note repurchased by payee after maturity, 636. excess of cannot be recovered against purchaser after maturity, 636. arising out of other transactions not available against purchaser after maturity, 637. no right of against state, 638. in favor of maker may enure to benefit of surety, 639. surety not entitled to set off amount collected on collateral, 639. in action against surety by assignee in insolvency, 639. in favor of drawer enures to benefit of indorser, 639. right of generally in actions against sureties, 639. by surety of damages due to principal, 640. no estoppel as to by clause in note waiving defenses, 646. giving of note as an estoppel to assert, 648. estoppel by representations in connection with transfer, 653. to note, board and lodging as, 693. SETTLEMENT, note given as, sufficient consideration, 195. SEVERAL, See Joint and Seveeal. SEWING MACHINE, coverture as defense to note given for, 57. SHEEP, diseased, note for sale of valid, n. 288. SHORTAGE, in husband's accounts, consideration, 194. in accounts, paper given to cover, estoppel, 652. SICKNESS, as excuse for failure to tender back consideration, 211. SIGHT, note payable at with interest, presentment for payment, reasonable time, 507. bill payable at or after, see Presentment fob Acceptance. SIGHT BILL, See Presentment for Acceptance. SIGHT DRAFT, in legal intent draft for acceptance, 490. time of payment of cannot be known until acceptance, 490. agreement to return on certain conditions, presentment, 491. INDEX. 1073 [References are to Sections.] SIGNATURE, where unauthorized, 73. of another party or note, misrepresentation, 120. accidental tearing off of, subsequently pasted on, 143. erasure of, 143. alteration by addition of, 174. when addition of not a defense, 175. conditions that ot^hers be procured, 315, 316. delivery in escrow conditioned on another signature, 317. of indorser in blank prima facie evidence of indorsement, 406. on condition that another be obtained, right of transferee, 456. to protest need not be in writing, 531. estoppel by acceptance to deny, 642. affixing of as an estoppel, 644. indorsement affirms genuineness of, 645, where unauthorized, see Want of Authority. See Altekation; Execution; Name; Waivee and Estoppel. SIGNING, See Execution. SILENCE, does not estop to show failure of consideration, 664. no estoppel as to forgery, 673. SISTER, note by under threat to prosecute brother, 112. SLANDER, note in consideration of forbearance to sue for, 295. on credit of maker, right to set off damages for, 598. SLOT MACHINE, note for illegal, n. 288. SOCIETY, maker of note custodian of funds of, cannot set off debt due to, 591. SOLE TRADER, woman as, 55. See Co\t:rtube. SPECIALTY, simple note changed to by adding seal, 176. SPECULATION, note in connection with void, n. 288. SPOLIATION, alteration a mere spoliation no defense, 137. by agent of holder regarded as, 141. by third party regarded as, 142. of date by stranger is, 152. Joyce Defenses — 68. 1074 INDEX. [References are to Sections.^ STAMP, revenue stamp not affixed at time of execution, 19. alternation of note by affixing, 178. failure to affix does not subject holder to equities, 464. on note insufficient, as to notice of, 474. STAMPING, of note, alteration by, 178. STATE, no right of set-off against, 638. officials, paper given to deceive, estoppel, 652, STATE NOTES, illegally issued, received as loan by maker of note and used as money, 291. STATUTE, affecting defense of coverture, 34. as to coverture have no retroactive effect, 35. coverture a defense when transaction not within statutory excep- tion, 36. burden of proof, statutory exception as to coverture, 37. pleading statutory exception as to coverture, 37. requiring assent of husband to render wife's note valid, 38. providing that wife may be sued jointly with husband, 40. of New York permitting married woman to contract construed, 40. permitting wife to contract, coverture, wife a joint maker, 41. forbidding married woman to become surety, 45, 46. where no defense that married woman signed as surety, 47. disabling married woman from accepting bill of exchange, 50. requiring written assent to indorsement by wife, 52. as to assent of husband to indorsement by wife, 53. as affecting corporate want of authority, 79. power of public corporation to issue paper generally regulated by, 87. as to note taken for insurance premiums, non-compliance with, 79. indorser cannot show note of corporation in violation of, 95. providing for recovery by bona fide holder when instrument al- tered, 136. permitting consideration of writings to be impeached, 208. may affect availablity of defenses against assignee, 237. cutting off latent defenses, n. 237. paper given for consideration in violation of, 291, 292. sale void under, note for, 294. liquors sold contrary to, note for void, n. 288. prohibting act, repeal of before action brought, 292. as to notes for patent, non-compliance with, 292. as to assignment of paper held on gambling consideration, n. 296. as to paper where consideration is based on gambling transaction, 297. as to gambling transactions and notes based on, construction of, 298, I INDEX. 1075 [References are to Sections.'] STATUTE— ConiinttefZ. availability of defense of usury largely affected by, 302. penalty under only remedy for recovery of usury, 306. paper transferred in violation of, innocent holder, 382. non-performance of condition precedent defense under, 311. as to holder in due course construed, stolen paper, 396. action under for lost instrument, 400. giving right of action to real party in interest, 403. making bills of^lading negotiable, 414. set-off under against purchaser after maturity, 422. providing that suit by assignee shall be without prejudice, pur- chaser after maturity, 430. may confer right to set up defense arising out of collateral matters against purchaser after maturity, 431. defenses under against bona fide holder, 442. of Nebraska modifies law merchant as to what is negotiable instru- ment, 460. as to notice or knowledge, bo^ia fide holder, 465. as to effect of alteration, 480. as to married woman, purchaser of note of must take notice, 482. as to making protest, 534. imposing upon notaries duty to give notice of dishonor, 549. as to notice of dishonor must be complied with, 565. affecting right of set-off note, 610. right to set off usury as affected by federal statutes, 615. affecting right of set-off generally, 616. against indorser, 625. as to personal property of wife, effect on right to set-off against husband, 628. affecting set-off in case of joint creditors and debtors, 631. as to notes being negotiable by indorsement, 645. authorizing premium notes for capital stock, estoppel, 664. act of public or corporate official in violation of, estoppel to show, 672. of limitation, waiver of, 677. See Negotiable Instruments Law^ in Appendix; Statute of Limitations. STATUTE OF LIMITATIONS, collection of collateral lost by operation of, negligence of pledgee, counterclaim, 373. demand not necessary on bank certificate of deposit to start run- ning of, 505. may prevent set-off of note, 610. does not defeat right to set off usury, 614. may defeat right to set off, 616. See Statutes. STATUTORY DAMAGES, action for, deficiency after sale of collateral, 494. 1076 IXDEX. [References are to Sectio7is.'] STAY OF PROCEEDINGS, where collateral condition as to not performed, 325. STEALING, of paper, see Lost oe Stolen Insteuments. STIPULATIONS, in note, alteration of, 171. addition of to note, 171. in bill for presentment for acceptance, 490. in note for waiver of presentment for payment, 524. See AoREEiiENT; Collateral Conditions; Contract; Presentment foe Acceptance. STOCK, coverture as defense to note given for, 57. of corporation to be formed, note for, corporation not formed, 266. agreement to transfer as consideration, depreciation by subsequent events, 266. of corporation fictitious, note in consideration of void, n. 288. note given in payment of, cannot show to be paid out of dividends, 334. of banks not set off in action by on note, 596. of bank, dividend on stock of not available against bank, 624. See Corporations; Stock Certificate. discharge by taking, 689. held as collateral, discharge of note, 689. STOCK CERTIFICATE, where stolen, 397. STOCKHOLDERS, of corporation, laches of as an estoppel, 660. check as purchase or payment, 696. STOLEN, bond numbers altered, no defense against bona fide holder, 151. property, agreement not to search house for, note consideration of void, n. 288. that loan made from proceeds of no defense to note, 133. STOLEN INSTRUMENTS, See Lost or Stolen Instruments. STRANGER, effect of alteration of paper by, 142. alteration of date by a mere spoliation, 152. in amount by, 165. act of writing on face of draft "Payable in United States gold coin" no defense, 167. alteration of interest clause by no defense, 168. erasure of indorsement by, 180. secret equity in favor of not available against purchaser after ma- turity, 437. See Alteration; Spoliation. INDEX. 1077 • [References are to Sections.} SUB-CONTRACTORS, as indorsees of checks, presentment for payment, reasonable time, 511. SUBSCRIPTION NOTES, conditions affecting, 313. SUBSTITUTED CHECK, See Check. SUBSTITUTED NOTE, • payment by, discharge, 688. See DiSCHABGE. SUE, effect of threat to, 110. note extorted by threats to not enforceable, 196. condition or agreement not to, 337. agreement to simultaneous or subsequent and for a limited time, 338. forbearance to, effect on right of assignee of void note, 450. See Duress; Forbeabaxce. SUFFICIENCY, of consideration, see Considebation. SUICIDE, threat of husband to commit suicide not duress, 107. SUIT, set-off must have been acquired prior to commencement of, 592. SUNDAY, instruments executed, accepted or delivered on, 29. note made on void, n. 288. goods sold on, note for void, n. 288. paper executed on valid, n. 288. that note executed on not a defense, n. 296. no defense against bo7ia fide assignee after maturity, 421. presentment for payment on day preceding, 510. time of maturity, 509, 510. protest of paper maturing on, 534. SUPPLEMENTAL PROCEEDINGS, admission made in by maker, estoppel, 656. SUPPLIES, coverture as defense to note for, 30, 41. note given for, coverture, 57. See Coverture; Infants; Necessaries. SUPPORT, note given to secure, evidence of performance, 336. See Consideration; Co^'ERTURE; Infants. . SURETY, ■when one joint maker may show he signed as, 3. one signing joint and several note can not show he signed as surety, 3. 1078 INDEX. [References are to Sections.'] SURETY— Continued. ■when precluded from setting up defense of forgery, 28. coverture as defense where wife signs as, 44. burden of proof on married woman to show she signed as, 45. where statute, forbids married woman to become, 45, 46. • when no defense that married woman signed as, 47. whether bona fide holder subject to defense that married woman signed as, 48. rules for determining whether married woman principal or surety, 49. right to recover of infant amount paid on note given for neces- saries. 63. mental incapacity of as defense, 72. sufficiency of evidence showing mental incapacity of, 72. can not set up forgery of name of one of obligors, 104. may show duress of principal, 114. where note signed by with notice of duress of principal, 115. fraud of upon maker no defense against bona fide holder, 121. may show note in fraud of creditors, action by executors of payee, 125. fraud in procuring signature of, 128. may show fraudulent concealment of facts, 128. misrepresentation to be defense must be an assertion of fact, 128. where fraud waived by, 128. induced to sign by fraud, no defense against bona fide holder, 129. alteration by maker without consent of, 139. effect on rights of In case of alteration by payee or subsequent holder, 140. not released by alteration in date authorized by him, 152. is discharged by alteration in date, 152. immaterial alteration in firm name no defense, 158. may show alteration in name of payee, 158. memorandum on back reducing rate not material, 169. released by erasure of name of maker, 172. signature misplaced, alteration to correct, 181. erasure of word "surety" after name of a maker, 181. effect of alteration or erasure of signature of, 181. addition of name as, 182. no exact line of demarcation between sureties and guarantors, 213. forbearance to sue as consideration for signature, 213. liability of a consideration for note by, 213. may show facts going to consideration, 213. may show he signed as accommodation maker, 213. signing note for special purpose, notice to parties taking, 213. one may show he signed as, no other consideration, 269. accommodation indorser occupies position of, 281. effect on of illegal consideration, 290. usury between principal and holder no defense, 302. IXDEX. 1079 [References are to 8ections.'\ SURETY — Continued. may show that other signatures were to be procured, 315, 316. discharge of for breach of condition as to signatures releases co- sureties, 315. on non-negotiable note, may show against holder without notice that other signatures were to be obtained, 316. action against by bona fide holder, no defense that other signatures were to be procured, 316. condition to advance money to principal not performed, 323. may show subsequent extension of time to principal debtor, 340. on note executed as collateral, 352. discharged by diversion by principal, 379. on accommodation note diverted, 385. assignment of note to, right to sue, 407. presentment for payment, 504. notice of protest unnecessary, 529. where notice of dishonor not given to, 545. entitled to personal notice of dishonor, 553. where joint makers are, notice of dishonor need not be given, 561. presentment of check, 584. when money paid by one as cannot be set off, 594. when set-off of demand against payee not available, 594. damages for breach of warranty not available to as a set-off, 601. when set-off of usury not available against, 614. payment by one as not set-off against administrator, 620. set-off against assignee of debt paid by, 623. set-off of debts to where note transferred after insolvency of payee, 626. set-off of debt paid by where principal insolvent, 626. joint note signed by one as surety and another as principal not available against individual debt of, 629. right of set-off in action by or against principal or surety, 632. set-off in favor of maker may enure to benefit of, 639. right of set-off against administrator, 639. generally in actions against, 639. not entitled to set off amount collected on collateral, 639. right to set-off damages due to principal, 640. when no right of set-off against assignee in insolvency, 640. estoppel of by new promise, 650. estoppel to show forgery by signing, 673. discharge and release of, 680. See THE PARTICULAR DEFENSE. SURNAME, of payee, alteration by adding immaterial, 158. SURRENDER, of note or collateral as consideration for note, 244. of void notes, note given for void, n. 288. will not preclude holder from suing, 403. 1080 INDEX. [References are to Sections.'] SURRENDER— Continued. of notes, discharge of guarantor, 681. on execution of mortgage, 682. of collateral, discharge of debt, 683. of property as affecting discharge of notes, 690, 691. of notes for rent, discharge of, judgment, 695. SURVEYS, note given for, that in excess of value of services no defense, 192. SUSPICIOUS CIRCUMSTANCES, as affecting one's standing as a 6ono fide holder, 475, 476, 477. T TAX BILLS, indorsed in blank and stolen, 397. TELEGRAM, waiver of protest consequent upon, 540. TENDER, back of consideration, when not necessary, 211. what equivalent to, presentment, 502. deposit of funds in particular place where not payable, 502. ability and willingness to pay, presentment for payment, 502. discharge of note, 678. of payment, discharge of note, 694. See Presentment for Payment. THEFT, See Lost or Stolen Instruments. THIRD PERSON, set-off arising from agreement to pay debt of, 596. THREATS, to sue, note extorted by not enforceable, 196. by payee to oppose allowance of claim, note based on void, n. 288. See Dlress. THRESHING MACHINES, note for conditioned that machine satisfactory, 327. TIME, of payment, condition or agreement as to, 399. of payment of sight draft cannot be known until acceptance, 490. desired, want of funds, acceptance not refused, 492. presentment on business day, 498. demand notes not to be paid till expiration of certain time, pre- sentment, 506. when presentment for payment made, 511. extension of as waiver of presentment for payment, 524. request for as waiver of presentment for payment, 524. INDEX. ^^^^ {Reference's are to Sections.'] TIME — Continued. when protest should be made, 534. extension of as an estoppel, 659. ^ of payment extended, release of surety, 680. extension of, discharge of guarantor, 681. of presentment, see Presentmkxt for Acceptance; Presentment FOR Payment; Reasonable Time. when bill payable, see Diligence; Presentment for Acceptance; Reasonable Time. TITLE, deed to remove cloud on as consideration, 194. note given for information of outstanding title, consideration 194. note given to remove cloud on, sufficiency of consideration, 19o. defect in as defense, 208. indorsement merely to pass, want of consideration, 255, 256. outstanding, failure of consideration, 262. where vendor has none, want or failure of consideration, 263. outstanding no defense where purchaser in possession under deed with covenant of warranty, 264. loss of as failure of consideration, 264. to vessel defective, failure of consideration, n. 265. to land, defects not entire, 266. set-off of amount paid to clear, 422. condition in note as to confirming, n. 343. want of, 402, 418. possession as evidence of, 402. cannot rest upon proof of indorsement, 404. one holding nominal title may recover, 409. transfer of after suit commenced, 410. vitiated by illegality in transfer, 412. possession prima facie shows, evidence to rebut, 416. to checks, how may be transferred, 413. denial of ownership of by plaintiff, 417, 418. acquired by fraud, hona fide holder, 441. to paper, transfer of by parol, 452. nature of given by transfer by delivery, 463. deposit, checks, n. 578. damages for breach of covenant, when available as set-off, 594. to check indorsed and deposited, n. 578. See Assignment; Lien; Want of Title or Interest. TORT where note of infant given in satisfaction of, 66. right to set-off damages recoverable in action of, 597, 598. in taking possession of property note given for, right to set off damages, 597, 598. 1082 INDEX. [.References are to Sections.'] TRADE, note in restraint of void, n. 288. cannot show note was to be paid in, 334. corporate certificate of indebtedness issued in restraint of, anti- trust law, 459. TRANSFER, of other notes as discharge, 691. of property as affecting discharge of notes, 691. precluding holder's recovery against indorser, 702. See Sale. where fraudulent, see Diversion and Fraudulent Transfeb. TRANSFEREE, See the particular defense. TREASON, note in aid of void, 293. TREASURER, of corporation, want of authority of, 81. of city, unauthorized paper issued by, 84. TREASURY NOTES, where stolen, 398. TREES, note given for price of, inadequacy of consideration no defense, 192. TRUST, selling property in violation of, damages for cannot be set off, 598. set-off against note held by assignee in trust for payee, 623. property assigned in, discharge of notes, 691. TRUST CORPORATION, not included in note payable at any bank, 517. TRUSTEES, want of authority to give note, 73. notes issued or held by, want or failure of consideration, 231. paper to secure election of one as, void, n. 288. who has mortgaged trust estate may set up usury, 302. that note held by one as, no defense, 404. equities ^nd defenses against, 457. of insolvent firm, notice of' dishonor to, 562. U ULTRA VIRES. instruments of corporations, 84. when corporation estopped to defend on ground of, 85, 86. indorsement by corporation, effect of, 279. act, corporation estopped to show, 671. See Corporations; Want of Authority. INDEX. 1083 [References are to Sections.'] UNAUTHORIZED PAPER, See Want of Authority. UNDUE INFLUENCE, in procuring transfer from payee, no defense to action against malier, 1. on person of alleged unsound mind, when no defense, 72. See Duress. UNFOUNDED. claim, compromise of not a good consideration, 196. UNITED STATES, acceptance of interest in claim against as discharge of note, 691. UNLIQUIDATED DAMAGES, arising from breach of covenant, when available as set-off, 594. from negligence of plaintiff as agent cannot be set off, 598. for selling property in violation of trust cannot be set off, 598. arising ex contractu but under different contract cannot be set off, 600. See Set-Off, Recoupment and Counterclaim. "UPON CONDITION," erasure of from note, 171. USAGE, of bank as affecting mode of giving notice of dishonor, 557. See Custom. USURY, generally, 302. bona fide holders, paper based on usurious contract between original parties, 303. maker and transferee, discount and transfer, 304. renewal bill or note, extensions, 305. in inception of note, as defense to action against guarantor, 9. in discounting note purchased from bank, 11. as defense, need not offer to return benefits received, 211. availability generally as to parties, 302. of largely controlled by statute, 302. action against payee as indorser by bona fide holder, n. 303. between intermediate holders no defense against indorsee, n. 303. accommodation note in payment of usurious note not tainted, 305. corporations, 306. ' local law controls banking associations, 306. statutory penalty only remedy for recovery of, 306. ' United States statutes apply to accommodation and business paper. n. 306. federal and state laws, national state banks and private bankers, n. 30G. not available against state or national banks, n. 306. against assignee with knowledge, 412. 108-i INDEX. [References are to Sections.'] USURY— Continued. evidence of against purchaser after maturity, 421. against purctiaser after maturity from bona fide holder, 434. available against assignee, n. 447. rule as to recoupment of, 614. in some states can only be recouped, 614. set-off of cannot be defeated by statute of limitations, 614. paid by joint makers, pro rata set-off, 614. when set-off of not available against surety, 614. that cannot be recovered in separate action does not affect right to set-off, 614. to be available as set-off must attend same contract, 614. right to set-off as affected by federal statutes, 615. judgment for may be set off, 615. accommodation indorser may set off, 623. when acceptor may show, 641. note purchased with knowledge of, representation not relied on no estoppel, 654. may show though representation there would be no defense, 665. V "VALUE RECEIVED," words not essential, 186. evidence to rebut, 185, 186. where note written for, no defense want of consideration, bona fide holder, 260. VENDEE, deed from, discharge of purchase-price notes, 690. See Consideration; Covenants; Damages; Goods; Land; Merchandise; Set-Off, Recoupment and Counterclaim; Vendor; Warranty. VENDOR, or seller without title or interest, loss of title, 263. equitable defense against in hands of assignee, 447. . want of knowledge of, as to vendee's agreement with bank as affect- ing discharge of notes, 690. deed to, discharges of purchase-price notes, 690. See Consideration; Covenants; Damages; Goods; Land; Merchandise; Set-Off, Recoupment and Counterclaim; Warranty. VENDOR'S LIEN, as affecting discharge of note, 682. VESSEL, title defective, failure of consideration, n. 265. VIOLENCE, actual threats of not necessary to constitute duress. 111. giving of paper induced by fear of. 111. INDEX. 1085 [References are to Sections.] VOID, consideration a defense, 262. W WAGER, on election, note to secure void, n. 288. on collection of execution, note to secure void, n. 288. as consideration "for note, 296, 297, 298. WAIVER AND ESTOPPEL, as to defense of fraud, 116. where surety signs with knowledge of fraud, 128. in case of alterations, 150. recital in certificate of deposit as to receipt of money, 205, hy retaining consideration, 210, 211. by principal precluding defense of failure of consideration, 220. in case of "peddler's note" to show violation of statute, 292. of conditions affecting note, 350. diversion of paper, 380. in case of diversion of paper, 393. carrier not estopped by statement in bill of lading, n. 414. by silence where knowledge of suit and permitting payment of judgment, n. 416. only slight evidence to establish estoppel in pais as to validity, 442. as to time, presentment for payment, 511. of exhibition of instrument, presentment for payment, 513. by knowledge of indorser of material facts and laches, presentment for payment, 524, 525. of presentment and demand, 524, 525. for payment by request for time, 524. when no new consideration necessary, 524. in body of note, 524. stipulation in note for, 524. of demand included in "protest waived" and "waiver of protest," etc., 524. of presentment for payment by extension of time, 524. indorsement of on note, presentment for payment, 524. signed by indorser, presentment for payment, 524. on back of note of presentment for payment, 524. as indorser even though guarantor, of presentment for payment, 524. of presentment for payment by promise by letter to pay, 525. by paying interest, 525. by request not to do anything with note, 525. of presentment by acknowledging indebtedness, or by partial pay- ment or promise to pay, knowledge of material facts, 525. of presentment for payment by agreement by which assignment made, 525. 1086 INDEX. [References are to Sections.^ WAIVER AND ESTOPFELr-Continiied. laches and check lost, duplicate check given, 525. by partner after dissolution of firm, 525. by request for renewal, 525. waiver of protest generally, 537-541. of protest by conduct of indorser, 537. conditional waiver of protest, 537. by indorsement of waiver of protest, 538. [waiver of protest stamped on back of note, 538. in body note binds indorser, 538. by indorser of protest by promise to pay, 538. what waiver of protest includes, 539. of protest by extension of time, 540. as to protest, instances of, 540. waiver of protest, parties, 541. by a partner of notice of protest, n. 560. as to failure to give notice of dishonor, 573. of presentment for payment of check, 589. of right to set-off, not by failure to set it up prior to verdict or judgment, 617. of set-off, 617. '' by promise to pay at time of assignment, 617. by acceptance generally, 641. by certification of bank check, 642. by bank by payment of check, 643. by signature and execution, 644. where paper delivered to an impostor, 644. by indorsement, 645. where note indorsed in blank to agent, 645. indorsement in blank by married woman, 645. by leaving blank indorsement on check, 645. by recitals in collateral mortgage, 646. in paper, 646. in contemporaneous agreement, 646. in indorsement, 646. in bonds, 647. by bill or note, 648. as to judgment where note given to procure satisfaction of, 648. by acceptance of new note, 649. by giving of new note, 649. by new promise, 650. new promise not where no knowledge of defenses, 650. by new promise, limitations of rule, 651. by giving paper to cover shortage in accounts, 652. to deceive state officials, 652. by representation that paper is business paper, 653. by representations inducing discount, 653. in connection with transfer, what constitutes an estoppel, 653. INDEX. 108T [References are to Sections.] WAIVER AND ESTOPPEL— Continued. toy agent in connection with transfer, 653. in connection with transfer, what does not constitute an estoppel, 654. casual answers not, 654. effect of representations subsequent to transfer, 655. by admission or declaration, 656, 657, 658. in supplemental proceedings, 656. admission by indorser does not estop maker, 657. by admission or declaration, limitations on rule, 657. admission by partner not binding on firm, 657. by maker does not estop co-maker, 657. purchaser after maturity estopped by admission of prior holder, 658. admission by one binding on another where identity of interest, 658. paper treated as valid until account barred, estoppel, 659. by acceptor preventing performance, 659. by permitting sacrifice of mortgaged property, 659. acceptance of part payment, 659. by acts or conduct, 659. by extension of time, 659. by action or conduct, corporate transactions, 660. by laches, 661. by retaining consideration, 662. by another action or proceeding, 663. as to consideration in general, 664. notes given by directors to bank, 664. by promise to pay "without plea or offset," 664. by acceptance of warranty deed, 664. where consideration illegal, 665. signing for accommodation, want or failure of consideration, 666. by receipt of benefits, failure of consideration, 667. by conduct representation or promise, want or failure of considera- tion, 668. knowledge or notice, want or failure of consideration, 669. no estoppel to show, mental incapacity, 670. as to capacity and authority generally, 670. want of capacity and authority, corporate transactions, 671. where act of public or corporate official in violation of statute, 672. by erasure to show forgery, 673. silence no estoppel as to forgery, 673. as to forgery and alteration, 673, 674. by admission of signature, 674. failure to give notice of forgery, 675. as to forged checks, 676. as to statute of limitations, 677. See Estoppel. 1088 INDEX. [References are to Sections.'\ WAIVER OP DEMAND, accidental stamping of over indorsement, 143. "WANT OF AUTHORITY, unauthorized signature or indorsement, 73. signing by husband of wife's name, 73. indorsement of firm name, 73. of trustee to give note, 73. of clerk to draw checks, 73. where unauthorized signature satisfied, estoppel, 74. name of surety forged, estoppel by ratification, 74. mere promise to pay does not estop from showing, 74. estoppel by delivery of note to deny signature, 74. of agent no defense against dona fide holder, 75. violation of instructions by agent, 75. where agent has only authority to collect cash indorsement by, 75. of special agent, 75. unauthorized collection of note given as collateral, 76. receipt of paper by public officer only authorized to receive cash, 77. paper given to or transferred by administrator or executor, 78. note to bank, organization of not subject of inquiry, 79. note by corporation in violation of express statute, 79. corporate want of authority as affected by illegality or statute, 79. of corporate officers or agents, 80, 81. non-compliance with articles of incorporation, 81. of managing officer of corporation, 81. of assistant secretary of corporation, 81. effect of -non-compliance with by-laws of corporation, 81. of secretary of corporation, 81. of president of corporation, 81. of treasurer of corporation, 81. of bank officials, 82. check certified by bank letter, 82. paper issued by public officers, 83. ultra vires instruments, 84. acceptance by corporation in violation of statute, 84. ultra vires instruments, bona fide holder, 84. when corporation estopped to assert act ultra vires, 85, 86. of corporation, non-compliance with by-laws as to manner of execu- tion no defense, 85. note in pursuance of contract prohibited by charter of corporation, 86. where paper issued by bank before certificate of banking commis- sioner received, 86. note given for money loaned to corporation, 86. to issue county warrants, 87. of municipal or public corporations, 87. power of municipality generally to issue paper, 87. guarantee of checks beyond deposits, 58. I INDEX. 1089 [References are to Sectlons.li "WANT OF AUTHORITY — Continued. of partner, 89, 90, 91. to sign accommodation note in firm name, 89. question for jury, 89. to give firm note for individual loan, 90. to accept bill of exchange, 90. when may be shown, 91. note between pa,rtner and firm, 92. paper given in violation of articles of partnership, 93. executed in firm name after dissolution, 94. to whom defense available, 95. estoppel as to generally, 670. of corporation, estoppel to show, 671. See Agent; Corporate Officers; Corporations; Officers; Public Officers. WANT OF CONSIDERATION, See Consideration. WANT OF FUNDS, See Presentment for Acceptance; Presentment foe Patment. WANT OF NOTICE OF PROTEST AND DISHONOR, See Notice of Dishonor. WANT OP PRESENTMENT, See Presentment for Acceptance; Presentment fob Payment. . WANT OF PROTEST, See Protest. WANT OF TITLE OR INTEREST, possession as evidence of title, 402. right of holder or owner to sue, real party in interest, 403. of indorser, does not affect indorsee, 404. right to recover generally, legal and equitable title, 404. payee named prima facie owner, 405. payees, 405. note discounted in bank, 405. action by pledgee in name of payee, 405. indorsee against indorser, 406. action by assignee, 407. transferee agent of foreign merchant, 408. agency, 408. recovery for benefit of holder, beneficial interest, 409. note indorsed as collateral, payee may recover on, 409. where plaintiff beneficial owner, n. 409. transfer of title or interest after suit commenced, 410. character of title or interest, 411. holder need not show in what capacity he holds, 411. indorsement by banks to cashier is voidable only, 412. conditions precedent, 412. Joyce Defenses — 69. 1090 INDEX, [References are to Sections.'] WANT OF TITLE OR INTEREST— Continued. void or voidable title or transfer, 412. indorsement causa mortis, revocation of, 412. illegality in transfer, 412. to certificates of indebtedness issued by municipality, 412. to bank note, n. 412. where assignment voidable only, 412. to checks, 413. to bill of lading, 414. where bill of lading made negotiable by statute, 414. carrier not estopped by statement in bill of lading, n. 414. to protect maker or let in his defense, 415, 416. where payment of judgment protects defendant, 416. prima facie title from possessor, evidence to rebut, 416. denial of ownership of title by plaintiff, 417, 418. where no adminstration taken out, 417. in action by executor, 417. sufficiency of affidavit of defense, n. 418. in action against members of firm, n. 418. will preclude set-off of note, 611. WAR, as excuse for delay in presentment for payment, 521. WARD, insane, set-off against guardian, 618. WAREHOUSE RECEIPTS, fraud toward v/arehouseman, bona fide holder, 120. transfer of by delivery, 456. WARRANTS, and coupons attached to bonds of municipality, want or failure of consideration, 232. WARRANTY, damages from breach of, partial failure of consideration, 208. defective, guarantor may show, 212. remedy for breach of, 258. breach of cannot be set up by acceptor, 258. cannot be set up by guarantor, 259. judgment for breach of good reply to defense setting up, 261. breach of as defense to purchase-price note for land, 264. personal property, failure of consideration, 265. breach of, accommodation indorser, 280. damages for breach of as set-off, where note given with knowledge but on promise to remedy, 601. damages for breach of as a set-off, 601. of not available to surety or guarantor as set off, 601. damages arising from breach of, availability as a set-off against bona fide holder, 602. I INDEX. 1091 [References are to Sections.'] WARRANTY — Contimied. damages for breach of as set-off, apportioning of among several notes, 603. WARRANTY DEED, acceptance of as an estoppel, 664. WHAT LAW GOVERNS, lex loci contractus governs note taken as collateral, 247. lex fori controls' plea of want of consideration, 254. as to place of payment where none stated, 331. "WIDOW," after name of married woman does not estop to show coverture, 30. WIFE, release of dower by as a consideration, 194. husband may transfer notes to by gift, 214. and husband, note of stranger given to promote peace between, 235. joint note of for outlawed debt of husband, bona fide holder, 245. accommodation indorsement by for husband, 281. as assignee may sue, 407. See Coverture; Duress; Married Woman. "WITH EXCHANGE," addition of these words not a material alteration, 137. "WITH INTEREST," effect of addition of. 168. WITHOUT RECOURSE, that indorsement was cannot be shown by parol, 348. breach of agreement to write over signature, 342. WITNESS, note to induce one not to appear as void, n. 288. erasure or addition of name of, 177. WORK, contract for, where note given in settlement of, 195. note given in consideration of agreement to perform, failure of consideration, 202. performed as discharge of note, 693. WRIT, claim acquired after issuance of cannot be set off, 592. Whole number of pag^es 1231. LAW LIBRARY UNIVERSITY O^ rATjFo^Rjs^A LOS Ai:cEij:s SOUTHERN REGIONAL LIBRARY FACILITY See Spine for Barcode Number OOSIDNVidJ NVS