timé does not relieve the holder of the duty to sue the maker. Likewise, if the request not to sue is revoked, due diligence to sue the maker must then be exercised.1 Under some statutes, a waiver is required to be in writing.2 by consent to delay or the like;96 or by any act, request, or promise of the indorser or the assignor inducing the holder to delay suit against the maker.97 However, consent to delay in suing is not a waiver of the necessity for suit at some future time.98 So a waiver in a note of objections to extensions of 250; Huston v. Centerville First Nat. | Share, 44 Ind. 390; Brown v. Robbins, | the assignee of a note, shortly after Bank, 85 Ind. 21; Hoffman v. Hol-1 Ind. 82; Nance v. Dunlavy, 7 Blackf. lingsworth, 10 Ind. A. 353, 37 NE 172; Brown v. Robbins, Smith 14. 960; Krachts v. Obst, 14 Bush (Ky.) 34; Stafford v. Bruce, 10 KyL 187. a Iowa.-Friend v. Beebe, 3 Greene 279. Ky.-Stafford v. Bruce, 12 SW 280, 14 SW 374, 12 KyL 374. See also Smallhouse v. American Nat. Bank, 77 SW 1113, 25 KyL 1435; Cravens v. Hopson, 4 Bibb 286 (holding, however, that a sealed assignment, reciting that if the obligor of a chose assigned "should not be good, we stand good for him and responsible for the same," did not excuse the assignee, as a condition precedent to a recovery from the assignor, from showing that he had used due diligence by suit against the obligor). Tex.-Cummings v. Rice, 9 Tex. 527; Hastings First Nat. Bank V. Bonner, (Civ. A.) 27 SW 698. [a] Thus (1) where the holder of note was induced to delay suit against the maker by the request of the indorsers and by their promise to pay the note, in a suit against them thereon, evidence of the solvency and property of the maker of the note at its maturity is irrelevant. Brown v. Fowler, 133 Ala. 310, 32 S 584. (2) Where the assignor of a promissory note requested the as signee thereof not to bring suit against the maker of the same at its maturity or afterward and to give such maker time to pay the note, such request was a reasonable and valid excuse for the failure of the assignee to use due diligence in the [a] Illustrations.—(1) Where an collection of the note against the indorser agrees to "stand good six maker. Huston v. Centerville First months" from the date of his inNat. Bank, 85 Ind. 21. (3) Where an dorsement, due diligence to collect indorser and an indorsee of a note the amount of the note from the maksecured by mortgage agreed that the er need not be exercised for six latter should forego suit on the note months. Lomax v. White, 83 Ind. and mortgage until he was requested 439. (2) Where the payee of a note to sue by the indorser, such indorser not payable in bank assigned it for could not complain that, when the value, and bound himself "for the mortgage was foreclosed, the mort- payment of the same until paid," the gaged premises were sold at sher- necessity of suit against the maker iff's sale for one dollar, and that at at the first court to which the suit the time of the indorsement the land could be brought was thereby waived, was worth one thousand dollars over and his liability was complete whenand above the encumbrances, since it ever the indorsee exhausted his legal must be presumed that the disad- remedy against the maker. Lockett vantageous sale resulted from the de- v. Howze, 18 Ala. 613. (3) In a suit lay in instituting the foreclosure by the assignee of a note against the suit. Schmied v. Frank, 86 Ind. 250. assignor, it was evidence from which (4) If, on the failure of the maker a jury might infer that the delay of of a note to meet the obligation, an plaintiff in suing the 'maker was auindorser told the holder not to pro-thorized by defendant, that when he ceed to collect it, but to try to induce assigned the note he told plaintiff payee to discharge it, and the holder that the maker was an honest man, was induced to forego taking the and that by waiting awhile he would necessary steps to fix the indorser's get his money. Brown v. Robbins, liability, there was a waiver by the Smith (Ind.) 14. indorser of the necessity for taking such steps, and his liability attached. Hoffman v. Hollingsworth, 10 Ind. A. 353, 37 NE 960. (5) Where defendants signed their names on the back of a note, and when it fell due begged for time and promised to pay when the money was obtained, they could not subsequently take advantage of plaintiff's failure to sue at the maturity of the note, such failure being at their solicitation. Krachts v. Obst, 14 Bush (Ky.) 34. (6) The assignor of several notes, after requesting the assignees not to sue the makers, wrote a letter to the assignees asserting that he was not liable, but calling upon them to unite with him in an effort to make the notes out of certain property mortgaged to him by the maker of the notes, to indemnify him against loss. It was held that this letter was but the expression of a willingness to trust the equity proceeding as the only suit which could be instituted, or was at all necessary, to ascertain what sum could be coerced out of the makers of the notes, and that it was not a withdrawal of his previous request not to sue. Stafford v. Bruce, 10 KyL 187. 96. Ala.-Walker v. Wigginton, 50 Ala. 579; Lodor v. Gayle, 29 Ala. 412; Lockett v. Howze, 18 Ala. 613; Foster v. Stafford, 14 Ala. 714; Litchfield v. Allen. 7 Ala. 779. Ill-Morgan v. Peet, 32 Ill. 281; Telford v. Garrells, 31 Ill. A. 441 [aff 132 III. 550, 24 NE 573]. Ind.-Schmied v. Frank, 86 Ind. 250; Huston v. Bank, 85 Ind. 21; Lomax v. White, 83 Ind. 439; Davis v. Leitzman, 70 Ind. 275; Lowther v. [b] Waiver does not prevent suit. A waiver by the indorser of suit against the maker at the first term of court, which is accepted by the indorsee, does not prevent the indorsee from suing the maker and the indorser at the first term. Cummings v. Rice, 9 Tex. 527. [c] Explaining waiver.-Where an indorser of a note wrote on the back of it, "I bind myself, and my representatives, not to take advantage of the statute by which indorsers are released from liability after the first court ensuing the maturity of this note," it was held, in an action against such indorser, that the writing was unambiguous, and that its terms could not be varied by parol proof. Foster v. Stafford, 14 Ala. 714, 716. 97. Caulfield v. Finnegan, 114 Ala. 39, 21. S 484; Huston v. Centerville First Nat. Bank, 85 Ind. 21; Davis v. Leitzman, 70 Ind. 275; Lowther v. Share, 44 Ind. 390; Sims v. Parks, 32 Ind. 363; Friend v. Beebe, 3 Greene (Iowa) 279; Dotson v. Owsley, 141 Ky. 452, 132 SW 1037; Smallhouse v. American Nat. Bank, 77 SW 1113, 25 KyL 1435; Stafford v. Bruce, 12 SW 280, 14 SW 374, 12 KyL 280. [a] Thus, where the assignor of a note repeatedly assured the holders that he would see the makers and would have the note either paid or secured, thereby causing the holders to postpone suit on the note, he could not rely on their delay to prosecute, to escape liability. Smallhouse v. American Nat. Bank, 77 SW 1113, 25 KyL 1435. its maturity, informed the assignor that he could find no property of the maker out of which to make the debt and asked if he should sue him and the assignor told him he had better "coax it out of him," it was held, in a suit by the assignee against the assignor, that this was sufficient to estop the latter from insisting that suit should have been brought against the maker and a tacit admission that a suit would have been unavailing. Wickersham v. Altom, 77 Ill. 620. [c] In Alabama, (1) by statute, the holder is excused from bringing suit or issuing execution when, by any act or promise of an indorser, plaintiff is induced to delay bringing such suit. Brown v. Fowler, 133 Ala. 310, 32 S 584; Caulfield v. Finnegan, 114 Ala. 39, 21 S 484. (2) This includes a promise of the indorser to pay, made after maturity. Marshall v. Bishop, 140 Ala. 206, 37 S 324. (3) Such a promise need not be in writing. Brown v. Fowler, 133 Ala. 310, 32 S 584. (4) There is a sufficient consideration for the promise. Brown v. Fowler, supra. (5) The fact that the holder afterward recovered judgment against the maker was not a waiver of such promise. Brown v. Fowler, supra. (6) Code §§ 17781780 provide that, where the amount due on nonnegotiable paper assigned exceeds one hundred dollars, the assignment may be converted into an absolute undertaking by suit against the maker at the first term of court, unless the time for bringing it has been extended or waived by the indorser in writing, and that suit is excused "when, by any act or promise of the indorser, the plaintiff is induced to delay bringing" it, etc. It is held that a "promise" is not shown by evidence that one of the holders told the indorser that nothing could be made out of the maker, and that the indorser said that he did not expect them to make anything out of him, but wanted them to wait until the maker died and see if the maker's wife would not pay it out of the insurance money she would then receive. Caulfield v. Finnegan, 114 Ala. 39, 21 S 484. 98. Thomason v. Cooper, 57 Ala. 560; Walker v. Wigginton, 50 Ala. 579; Bates v. Ryland, 6 Ala. 668. [a] Illustration.-An indorsement, by payee, of paper not commercial, as follows, "I indorse the within until paid," is a waiver of suit against the maker for an indefinite period but does not dispense with the suit against the maker and render him primarily liable; and the indorser is discharged if suit is not brought against the maker before the statute of limitations bars an action on the note. Thomason v. Cooper, 57 Ala. 560. 99. Matchett V. Anderson Fdy., etc., Works, 29 Ind. A. 207, 64 NE 229, 94 AmSR 272. [a] That a nonnegotiable note, not governed by the law merchant, waives all defenses of the extension of the time for payment given the drawers or the indorsers does not relieve the holder from the rule requiring diligence against the maker, in order to hold an indorser, but when the note falls due after the extension, the rule as to diligence applies. Matchett V. Anderson Fdy., etc.. Works, 29 Ind. A. 207, 64 NE 229, 94 AmSR 272. 1. Free v. Kierstead, 16 Ind. 91. [b] Estoppel to deny that suit 2. Caulfield v. Finnegan, 114 Ala. would have been unavailing. Where 39, 21 S 484; Litchfield v. Allen, 7 Ala. Waiver after discharge. Even after an indorser or an assignor is discharged by the laches of the holder, he may waive the prior delay so as to bind him, provided he had knowledge of the facts;* but the intent to waive, in order to be effective, must be clear.5 XX. WHO ARE HOLDERS IN DUE COURSE [§ 682] A. Scope of Subdivision. This subdivision treats merely of who are holders in due course. The defenses which can or cannot be set up against the holders in due course are considered hereafter, as are questions relating to presumptions and burden of proof in connection with holders in due course. What law governs the determination of the question has already been noted." [ 683] B. Importance of Question. The rule that a holder in due course holds the instrument free from any defects of title of prior parties and free from defenses available to prior parties among themselves,10 10 while a holder not in due course is subject to the same defenses as if the instrument was nonnegotiable,11 reiterated by the Negotiable Instruments Law,12 makes it important to determine whether a holder is one in due course, since he is greatly protected against defenses by the maker if he is such a holder while he stands in the shoes of 779. To same effect Kampmann v. Williams, 70 Tex. 568, 8 SW 310; McKenzie v. Harris, 2 Tex. Unrep. Cas. 180. But see Brown v. Fowler, 133 Ala. 310, 32 S 584 supra note 97 [c] (1). [a] In Alabama the act of 1828 requiring the written consent of the indorser to authorize delay in the indorsee in suing the maker of a note applied only where the sum due did not exceed fifty dollars, and in other cases a verbal consent was binding on the indorser. Litchfield v. Allen, 7 Ala. 779. 3. Morgan v. Peet, 32 Ill. 281, 41 Ill. 347. But see Riggs v. Covenant Mut. L. Assoc., 49 SW 190, 20 KyL 1260 (holding that, where the assignor of a note has been released from liability by the laches of the assignee, his request for further indulgence does not revive his liability); Stafford v. Bruce, 12 SW 280, 14 SW 374, 12 Kyl 374. [a] Thus, when an indorser promises to pay, after such laches on the part of the holder as would operate to release him from his liability, with knowledge of the facts which would constitute such release, he will be held liable on his new promise, regardless of the question of the solvency or insolvency of the maker. Morgan v. Peet, 32 Ill. 281, 41 Ill. 347. 4. Morgan v. Peet, 41 Ill. 347. [a] Ignorance of facts. Where the liability of an indorser of a note has been discharged by the failure of the holder to bring suit against the maker in due time, and the holder relies on a new promise to pay, made by the indorser after such discharge, such new promise, to be binding, must have been made with knowledge of the facts from which the discharge arose. If, however, the indorser had knowledge of such facts, whether he knew that by the rules of law they would operate to discharge him is immaterial. Morgan v. Peet, 41 Ill. 347. 5. Prentiss v. Danielson, 5 Conn. 175, 13 AmD 52. his transferor if he is not such a holder. [§ 684] C. Definition.13 In the Negotiable Instruments Law the term "holder in due course" is used as an equivalent for the old expression "bona fide holder for value without notice," and inasmuch as such statute is in force in most of the states in this country the term "holder in due course" will be used herein instead of its equivalent "bona fide holder." Independent of statute, in order to constitute one a holder in due course of a bill or a note, so as to protect him from equities and defenses available between antecedent parties, either he or some one through whom he traces title must be a holder in good faith for value, before maturity, in the usual and ordinary course of business, and without notice of dishonor or of any fraud, defect of title, illegality, or other defense that would defeat recovery between such antecedent parties.15 To repeat, it is necessary that the instrument be taken by the holder not a waiver of diligence, so as to 6. Bona fide purchasers: Of personal property in general see Of warehouse receipts see Ware- 7. 8. 9. 10. See infra §§ 999-1066. See supra § 184. See infra § 1005. 11. See infra § 1004. 12. See statutory provisions. 13. [a] Under California statute 14. Bluthenthal v. Columbia, 175 15. U. S.-Washington First Nat. Ala.-Bluthenthal v. Columbia, 175 Ala. 398, 57 S 814; Rudulph v. Brewer, 96 Ala. 189, 11 S 314; State v. Cobb, 64 Ala. 127; Barney v. Earle, 13 Ala. 106; German-American Nat. Bank v. Lewis, 9 Ala. A. 352, 63 S 741. Ark.-Hogg v. Thurman, 90 Ark. 93, 117 SW 1070, 17 AnnCas 383; Reynolds v. Roth, 61 Ark. 317, 33 SW 105. V. Cal.-Russ Lumber, etc., Co. Conn.-Von Windisch v. Klaus, 46 57 Ill. 529; Mulford v. Shepard, 2 IIL 583, 33 AmD 432. Ind. Wayne Agricultural Co. v. Cardwell, 73 Ind. 555; Helms V. Wayne Agricultural Co., 73 Ind. 325, 38 AmR 147; Lawrenceburgh First Nat. Bank v. Lotton, 67 Ind. 256; Woollen v. Vankirk, 61 Ind. 497; Bremmerman v. Jennings, 60 Ind. 175; Hereth v. Merchants' Nat. Bank, 34 Ind. 380; Halstead v. Woods, 48 Ind A. 127, 95 NE 429. Iowa.-Keegan v. Rock, 128 Iowa 39, 102 NW 805; Wormer v. Waterloo Agricultural Works, 50 Iowa 262; Sully v. Goldsmith, 32 Iowa 397; Clapp v. Cedar County, 5 Iowa 15, 68 AmD 678; Stein v. Keeler, 4 Greene 86; Temple v. Hays, Morr. 9. See also Irwin v. Deming, 142 Iowa 299, 120 NW 645 infra this note. Ky.-American Nat. Bank v. Madison, 144 Ky. 152, 137 SW 1076, 33 LRANS 597; Jett v. Standafer, 143 Ky. 787, 137 SW 513; American Nat. Bank v. Minor, 142 Ky. 792, 135 SW 278; Deavenport v. Green River Deposit Bank, 138 Ky. 352, 128 SW 88, 137 AmSR 386; Campbell v. Cincinnati Fourth Nat. Bank, 137 Ky. 555, 126 SW 114; Choteau Trust, etc., Co. v. Smith, 133 Ky. 418, 423, 118 SW 279 [quot Cyc]; Spencers v. Briggs, 2 Metc. 123. La.-Pavey v. tauffer, 45 La. Ann. 353, 12 S 512, 19 LRA 716. 71 Me. Me.-Burrill v. Parsons, 282; Hobart v. Penny, 70 Me. 248; Farrell v. Lovett, 68 Me. 326, 28 AmR 59; Wait v. Chandler, 63 Me. 257. Md.-Crampton v. Perkins, 65 Md. 22, 3 A 300. Mass.-Smith V. Livingston, 111 Mass. 342; Patten v. Gleason, 106 Mass. 439; Estabrook v. Boyle, 1 Allen 412; Merriam v. Granite Bank, 8 Gray 254; Wheeler v. Guild, 20 Pick. 545, 32 AmD 231: Thurston v. MeKown, 6 Mass. 428. See also Briggs V. Cushing, 168 Mass. 71, 46 NE Del.-Otis El. Co. v. Ford, 27 Del. D. C.-Hutchins v. Langley, 27 App. Mich. Nichols v. Sober, 38 Mich. 678; Miller v. Finley, 2 Mich. N. P. 231. [a] Thus, where an indorser, after he had become discharged by the Ga.-English-American L. & T. Co Minn. Stephens v. Olson, 62 Minn. laches of the holder, took an assign- v. Hiers, 112 Ga. 823, 38 SE 103; 295, 64 NW 898; Robinson v. Smith, ment of property from the maker as Montgomery v. Hunt, 99 Ga. 499, 27 62 Minn. 62, 64 NW 90; Fredin v. security or indemnity for indorse- SE 701; Stewart County Bank v. Ad- Richards, 61 Minn. 490, 63 NW 1031; ments and liabilities on the maker's ams, 96 Ga. 529, 23 SE 496; Robinson Rochester First Nat. Bank v. Bentaccount, and it appeared that he was v. Darien Bank, 18 Ga. 65. ley, 27 Minn. 87, 6 NW 422. under indorsements and liabilities Ida. Brown v. Miller, 22 Ida. 307, Miss.-Winstead v. Davis, 40 Miss. for the assignor to the full amount 125 P 981. of the property conveyed, aside from Ill-Hunter v. Clarke, 184 Ill. 158, Mo.-Neuhoff v. O'Reilly, 93 Mo. the note in question, it was held that 56 NE 297, 75 AmSR 160; Stoner v. 164, 6 SW 78; Corby v. Butler, 55 Ma the taking of such assignment was Millikin, 85 Ill. 218; Gridley v. Bane, I 398. 785. (1) in good faith,16 (2) in the ordinary or usual course of business," (3) for a valuable consideration,18 (4) before the maturity of the instrument,19 and (5) without notice of defenses.20 The Negotiable Instruments Law defines a holder in due course as a holder who has taken the instrument under the following conditions:21 (1) That it is complete and regular on its face;22 (2) that he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact;23 (3) that he took it in N. H.-Paige v. Chapman, 58 N. H. N. Y.-Central Bank v. Hammett, 50 N. Y. 158; Belmont Branch State Bank v. Hoge, 35 N. Y. 65; Brookman v. Metcalf, 32 N. Y. 591 [aff 18 N. Y. Super. 429]; State Bank v. Vanderhorst, 32 N. Y. 553; Perth Amboy Mut. Loan, etc., Bldg. Assoc. v. Chapman, 80 App. Div. 586, 81 NYS 38; Bailey v. Griswold, 36 N. Y. Super. 68. N. C.-Toms v. Jones, 127 N. C. 464, 37 SE 480; Reddick v. Jones, 28 N. C. 107, 44 AmD 68. V. N. D.-Porter v. Andrus, 10 N. D. 558, 88 NW 567; Christianson Farmers' Warehouse Assoc., 5 N. D. 438, 67 NW 300, 32 LRA 730; Dunham v. Peterson, 5 N. D. 414, 67 NW 293, 57 AmSR 556, 36 LRA 232. Oh-Kingsland v. Pryor, 33 Oh. St. 19; Farmers', etc., Bank v. Lucas, 26 Oh. St. 385; Selser v. Brock, 3 Oh. St. 302. Okl.-McPherrin v. Tittle, 36 Okl. 510, 129 P 721, 44 LRANS 395 and note; Hagan v. Bigler, 5 Okl. 575, 49 P 1011. Pa. Craig v. Sibbett, 15 Pa. 238; Bullock v. Wilcox, 7 Watts 328; Ridgway v. Farmers' Bank, 12 Serg. & R. 256, 14 AmD 681; Harrisburg Bank v. Meyer, 6 Serg. & R. 537; Third Nat. Bank v. McCann, 15 Phila. 326; Lindsey v. Casselberry, 3 Wkly NC 42. S. C.-Nott v. Thomson, 35 S. C. 461, 14 SE 940. Tenn.-Whiteside First Nat. Bank, 1108. V. Chattanooga (Ch. A.) 47 SW Tex.-Wilson v. Denton, 82 Tex. 531. 18 SW 620, 27 AmSR 908; Kersey v. Fuqua, (Civ. A.) 75 SW 56; Stephens v. Summerfield, 22 Tex. Civ. A. 182, 54 SW 1088. Vt.-Powers v. Ball, 27 Vt. 662. W. Va.-Perry v. Oerman, 63 W. Va. 566, 60 SE 604, 129 AmSR 1020, 15 LRANS 310; Hurlburt v. Straub, 54 W. Va. 303, 46 SE 163. Wis.-Burnham V. Merchants' Exch. Bank, 92 Wis. 277, 66 NW 510. Eng.-Robinson v. Reynolds, 2 Q. B. 196, 42 ECL 634, 114 Reprint 76; Grant v. Vaughan, 3 Burr. 1516, 97 Reprint 957; Miller v. Race, 1 Burr. 452, 97 Reprint 398, 3 ERC 626. Can.-Ross v. Chandler, 45 Can. S. C. 127 [dism app 19 Ont. L. 584, 12 OntWR 341, 13 OntWR 247, 14 OntWR 898]; Peters v. Parris, 42 Can. S. C. 244 [dism app 1 Alta. L. 201]; Union Inv. Co. v. Wells, 39 Can. S. C. 625, 11 AnnCas 33. Man.-First Nat. Bank v. McLean, 16 Man. 32. Ont.-Maxon v. Irwin, 15 Ont. L. 81, 10 OntWR 537. [a] Illustration.-Plaintiff and defendant both bought and sold securities which were kept in a safety deposit box in a bank to which C, the cashier, had access. C was authorized to collect for both, and, having sold notes to defendant, abstracted them from defendant's box and resold them to plaintiff. C, being thereafter required to collect them, procured new notes from the makers and deposited them in plaintiff's box, aft[8 C. J.-30] good faith and for value;24 and (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 from the person negotiating it.25 In Wisconsin the statute adds as a fifth condition the following: "5. That he took it in the usual course of business.''26 The Negotiable Instruments Law, in so far as it defines a holder in due course, does not, it would seem, change the common-law rule as to who is a bona fide holder except perhaps by eliminating the requirement that the transfer must be in the regular course of busi| er having forged defendant's indorse- | 27 Minn. 87, 6 NW 422. (2) An inment thereon. Plaintiff purchased dorsee suing on a note must, to be before maturity, and thereafter C entitled to the protection of the law committed suicide. It was held that as an innocent holder, show that he plaintiff was a bona fide purchaser of took the note before maturity in the the original notes, and was therefore usual course of business for a valuentitled to impress a trust on the new able consideration, without notice of notes taken in place thereof as facts affecting its validity or of a against defendant. Irwin v. Deming, defense on the part of the makers. 142 Iowa 299, 120 NW 645. Halstead v. Woods, 48 Ind. A. 127, 95 NE 429. [b] In North Dakota Rev. Codes § 4884 defines "an indorsee in due course" as "one who in good faith, in the ordinary course of business and for value before its apparent maturity or presumptive dishonor and without 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 acquires such an instrument of such indorsee thereof." Porter V. Andrus, 10 N. D. 558, 562, 88 NW 567. [c] A bona fide holder (1) has been defined as one who takes commercial paper for value, in good faith, in the usual course of business, and before its maturity. Smith v. Livingston, 111 Mass. 342. (2) A bona fide holder of negotiable paper is one who acquires the paper in good faith, for a valuable consideration, from one capable of transferring the paper, without notice of the consideration or of attending facts and circumstances which would naturally lead an honest man, using ordinary caution, to make further inquiries. Miller v. Finley, 2 Mich. N. P. 231. (3) Where the payee of a note notifies an indorsee not to transfer it, but he does so to a person ignorant of such notice, and before maturity, and for value, the last indorsee is entitled to protection as a bona fide holder. Briggs v. Cushing, 168 Mass. 71, 46 NE 401. (4) The purchaser of a note before its maturity, bona fide, and for value, without knowing what the consideration was, and without notice of the alleged failure thereof, and also without notice of facts sufficient to put him on inquiry which would lead to a knowledge of the truth, is entitled to recover the full amount of the note. Montgomery v. Hunt, 99 Ga. 499 27 SE 701. [d] A bona fide holder for value without notice is a holder for value who at the time he becomes the holder and gives value is really and truly without notice of any facts which if known would defeat his title to the bill. Benjamin Chalmers Bills & N. art 85. To same effect Raphael v. Bank of England 17 C. B. 161, 84 ECL 161. 33 EngL&Eq 276, 139 Reprint 1030; Whistler v. Forster, 14 C. B. N. S. 248, 108 ECL 248, 143 Reprint 441, 4 ERC 322. [e] "Bonâ fide" has been defined as meaning really and truly for value. Raphael v. Bank of England, 17 C. B. 161, 84 ECL 161, 33 EngL&Eq 276, 139 Reprint 1030. [f] "An innocent purchaser," (1) as the term is used in Minn. Gen. St. (1894) § 2214, means a bona fide indorser or bearer within the law merchant. Stephens v. Olson, 62 Minn. 295, 64 NW 898; Robinson v. Smith, 62 Minn. 62, 64 NW 90; Fredin v. Richards, 61 Minn. 490, 63 NW 1031; Rochester First Nat. Bank v. Bentley, ![[blocks in formation]](https://books.google.co.kr/books/content?id=8308AAAAIAAJ&hl=ko&output=html_text&pg=PA465&img=1&zoom=3&q=%22or+both,+according+to+its+tenor,+and+that+if+it+be+dishonored+and+the+necessary+proceedings+on+dishonor+be+duly%22&cds=1&sig=ACfU3U3jRszqNcS6Dg5a6t5I9Hrzvmgblg&edge=0&edge=stretch&ci=626,433,331,204) Ida.-Burdell v. Nereson, 152 P 576; Park v. Johnson, 20 Ida. 548, 119 P 52; Winter v. Nobs, 19 Ida. 18, 112 P 525, AnnCas1912C 302. Iowa.-Hawkins V. Young, 137 Iowa 281, 114 NW 1041; Vander Ploeg v. Van Zuuk, 135 Iowa 350, 112 NW 807, 124 AmSR 275, 13 LRANS 490. Ky.-Robertson v. Commercial Security Co., 152 Ky. 336, 153 SW 450; Wilkins v. Usher, 123 Ky. 696, 97 SW 37. Mass.-Christian Feigenspan V. McDonnell, 201 Mass. 341, 87 NE 624; Buzzell v. Tobin, 201 Mass. 1, 86 NE 923; Commonwealth Nat. Bank V. Snow, 187 Mass. 159, 72 NE 959; Boston Steel, etc., Co. V. Steuer, 183 Mass. 140, 66 NE 646, 97 AmSR 426. See Bass v. Wellesley, 192 Mass. 526, 78 NE 543. Mich.-Van Slyke v. Rooks, 181 Mich. 88, 147 NW 579. Mo.-Wright v. Mississippi Valley Trust Co., 144 Mo. A. 640, 129 Sw 407; Ozark Bank v. Hanks, 142 Mo. A. 110, 125 SW 221; Creston Nat. Bank v. Salmon, 117 Mo. A. 506, 93 SW 288. Nebr.-Fisher v. O'Hanlon, 93 Nebr. 529, 141 NW 157. N. Y.-Hibbs v. Brown, 112 App. Div. 214, 98 NYS 353 [aff 190 N. Y. 167, 82 NE 1108]. N. D.-McCarty v. Kepreta, 24 N. D. 395, 139 NW 992, 48 LRANS 65. Or.-Hull v. Angus, 60 Or. 95, 118 P 284. Pa.-Citizens' Nat. Bank v. Stein, 21 Pa. Dist. 1070. Tenn.-Elgin City Banking Co. v. Hall, 119 Tenn. 548, 108 SW 1068; Farmers', etc., Bank v. Rutherford Bank, 115 Tenn. 64, 88 SW 939, 112 AmSR 817. Va.-Ratcliffe v. Costello, 117 Va. 563. 85 SE 469. Wash.-Barker v. Sartori, 66 Wash. 260, 119 P 611; American Sav. Bank, etc., Co. v. Helgesen, 64 Wash. 54. 116 P 837, AnnCas1913A 390; Scandinavian American Bank v. Johnston, 63 Wash. 187, 115 P 102. 22. See infra § 692. See infra §§ 693-697. 24. ![[blocks in formation]](https://books.google.co.kr/books/content?id=8308AAAAIAAJ&hl=ko&output=html_text&pg=PA465&img=1&zoom=3&q=%22or+both,+according+to+its+tenor,+and+that+if+it+be+dishonored+and+the+necessary+proceedings+on+dishonor+be+duly%22&cds=1&sig=ACfU3U3jRszqNcS6Dg5a6t5I9Hrzvmgblg&edge=0&edge=stretch&ci=609,1339,347,39){kind=small} n ![[blocks in formation]](https://books.google.co.kr/books/content?id=8308AAAAIAAJ&hl=ko&output=html_text&pg=PA466&img=1&zoom=3&q=%22or+both,+according+to+its+tenor,+and+that+if+it+be+dishonored+and+the+necessary+proceedings+on+dishonor+be+duly%22&cds=1&sig=ACfU3U2rk0lthO7-Ew4pQv7jLma1rbiN5w&edge=0&edge=stretch&ci=51,70,464,140) 27. See infra § 687. 28. American Bank v. McComb, 105 Va. 473, 54 SE 14. 29. U. S.-Hickman v. Sawyer, 216 Fed. 281, 132 CCA 425; Smith V. Nelson Land, etc., Co., 212 Fed. 56, 128 CCA 512; In re Hopper-Morgan Co., 156 Fed. 525; Patent Title Co. v. Stratton, 89 Fed. 174. D. C.-Bryan v. Harr, 21 App. 190. Ga.-Weil v. Carswell, 119 Ga. 873, 47 SE 217. Ill. Central School Supply House v. Donovan, 70 Ill. A. 208. Ind.-Thomas v. Ruddell, 66 Ind. 326; Riley v. Schawacker, 50 Ind. 592. Iowa.-Simon v. Merritt, 33 Iowa 537. Kan.-Lill v. Gleason, 92 Kan. 754, 142 P 287; McFarland v. Chase State Bank, 7 Kan. A. 722, 52 P 110. Me.-Gregory v. Pike, 94 Me. 27, 46 A 793; Roberts v. Lane, 64 Me. 108, 18 AmR 242. Md.-Black v. Westminster First Nat. Bank, 96 Md. 399, 54 A 88. Mich.-Shaw V. Clark, 49 Mich. 384, 13 NW 786, 43 AmR 474. Mo.-Hawes v. Mulholland, 78 Mo. A. 493. Nebr.-Knight v. Finney, 59 Nebr. 274, 80 NW 912. N. Y.-Bacon v. Montauk Brewing Co., 130 App. Div. 737, 115 NYS 617. Pa.-Roesch v. Glenn, 21 Pa. Dist. €34. S. D.-Kahney v. Thayer, 154 NW 1103. Tex.-Hollimon v. Karger, 30 Tex. Civ. A. 558, 71 SW 299. Wash.-Donnerberg v. Oppenheimer, 15 Wash. 290, 46 P 254. Wis.-Prentiss v. Strand, 116 Wis. 647, 93 NW 816. [a] Other statements of rule. (1) One is an innocent holder of a note where it was sold and assigned to him by an innocent holder. Kahney v. Thayer, (S. D.) 154 NW 1103. (2) A purchaser of negotiable paper from a bona fide holder acquires all the latter's rights against the maker. Patent Title Co. v. Stratton, 89 Fed. 174. (3) One not a bona fide holder must show the good faith of his immediate transferor. In re HopperMorgan Co., 156 Fed. 525, 19 Am Bankr 518. (4) A holder who derives 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 to all parties prior to the latter. Roesch v. Glenn, 21 Pa. Dist. 634. (5) A purchaser of a note has been held not required to seek its maker to determine whether there was bad faith in the transaction in order to be a bona fide purchaser. Wells v. Duffy, 69 Wash. 310, 124 P 907. [§ 685] D. Purchasers from Bona Fide Holders. The rule as to who is a bona fide holder is subject to an exception where the holder takes from a bona fide holder, in which case he occupies the same position as his transferor,29 notwithstanding the subsequent holder has actual notice of defenses,30 was a [c] Illustrations (1) Where the payee was adjudged a bankrupt while the note was in the hands of a holder in due course, and the accommodation indorser was a creditor of the bankrupt and held collateral securities for his claim, and where, after he paid the note, he made composition with the trustee in bankruptcy, whereby he was allowed to retain the securities, including the note, that he acquired title from the trustee did not preclude his title from being one acquired from a holder in due course or constitute a defense in his action against the maker of the note. Lill v. Gleason, 92 Kan. 754, 142 P 287. (2) In a suit by the holder of a negotiable promissory note against the maker, where the note had been delivered by the payee for value and before maturity to a third person who delivered it to plaintiff before maturity for value,. where the evidence tended to show that the note was obtained by fraud, and that plaintiff ought to have suspected its fraudulent character when he purchased it, but where there was no evidence tending to impeach the good faith of the person from whom plaintiff acquired it, plaintiff was entitled to recover. Riley v. Schawacker, 50 Ind. 592. (3) Where plaintiff sued on defendant's notes to the E Co., indorsed before maturity by the payee and by the M Co.'s president to the D Co., and indorsed after maturity to plaintiff, defendant could not show an understanding between defendant's president and E's representative when the notes were made and transactions between defendant and E, where it was not shown that D had notice thereof. Bacon v. Montauk Brewing Co., 130 App. Div. 737, 115 NYS 317. [d] Rule applied to nonnegotiable instrument. Gregory v. Pike, 94 Me. 27, 46 A 793. [e] Where the indorser is merely the indorsee's agent, and the indorsee has notice of fraud in the procurement of the note, he cannot claim to be protected as a purchaser from one purchasing without notice, where his agent is not shown to have ever had title to the note himself. Vosburgh v. Diefendorf, 119 N. Y. 357, 23 NE 801, 16 AmSR 836 [aff 1 NYS 58]. [f] Evidence held sufficient to show that the purchasers of a note purchased as agents of the payee, who were indorsers, and hence could not claim the protection of a bona fide purchaser because the transferor was a bona fide purchaser. Hickman v. Sawyer, 216 Fed. 281, 132 CCA 425. [g] Use as collateral.-But a person is not a bona fide purchaser of a note and a mortgage securing it, because before he received them they had been used as collateral with a bank which was an innocent holder, possession having been regained by the person who used them with the bank, and who was not an innocent holder, and he having sold them to such purchaser after maturity. Booher v. Allen, 153 Mo. 613, 55 SW 238. [b] The reason for the rule (1) that a purchaser from a bona fide holder is also a bona fide holder is that "if a holder in due course could not invest his transferee with his own capacity to recover on the paper his property rights would be materially and prejudicially reduced." Lill v. Gleason, 92 Kan. 754, 142 P 287. (2) "One reason of the rule is obvious. The maker of the note would be liable to the transferrer; his condition is made no harder by the note coming into the hands of one having notice of its infirmities. We 96 U. S. 51, 24 L. ed. 681; Marion do not understand that there is any County v. Clark, 94 U. S. 278, 24 L. ed. conflict in the authorities upon this 59; Douglas County v. Bolles, 94 U. point." Simon v. Merritt, 33 Iowa S. 104, 24 L. ed. 46; New Paddock537, 539. Hawley Co. V. Fayetteville Wagon 30. U. S.-Scotland County v. Hill, 132 U. S. 107, 10 SCt 26, 33 L. ed. 261 [aff 25 Fed. 395, 34 Fed. 208]; Porter v. Pittsburg Bessemer Steel Co., 122 U. S. 267, 7 SCt 1206, 30 L. ed. 1210; Cromwell V. Sac County, Wood, etc., Co., 207 Fed. 786, 791 [cit Cyc]; Rollins v. Gunnison County, 80 Fed. 692, 26 CCA 91 [rev on other grounds 173 U. S. 255, 19 SCt 390. 43 L. ed. 689]; Butterfield v. Ontario, 32 Fed. 891. Ala.-Pearson v. Howe, 11 Ala. 370. Cal.-Graham v. Larimer, 83 Cal. 173, 23 P 286. Conn. Ketchum V. Packer, 65 Conn. 544, 33 A 499; Olmstead v. Winsted Bank, 32 Conn. 278, 85 AmD_260. D. C.-Braxton v. Braxton, 20 D. C. 355. Ga. Matthews v. Poythress, 4 Ga. 287; Wade v. Elliott, 11 Ga. A. 646, 75 SE 989; Day v. Rogers, 7 Ga. A. 535, 67 SE 279. See Weil v. Carswell, 119 Ga. 873, 47 SE 217. Ill. Woodworth v. Huntoon, 40 I11. 131, 89 AmD 340; Rice v. Van Ackere, 22 Ill. A. 588. Ind.-Thomas v. Ruddell, 66 Ind. 326; Riley v. Schawacker, 50 Ind. 592; Hereth v. Merchants' Nat. Bank, 34 Ind. 380; Hill v. Ward, 45 Ind. A. 458, 91 NE 38. Iowa.-Riegel v. Ormsby, 111 Iowa 10, 82 NW 432; Mornyer v. Cooper, 35 Iowa 257; Simon v. Merritt, 33 Iowa 537. Kan.-Underwood v. Fosha, 96 Kan. 240, 150 P 571; Hardy v. Newton First Nat. Bank, 56 Kan. 493, 43 P 1125; Bodley V. Emporia Nat. Bank, 38 Kan. 59, 16 P 88. La.-Hillard v. Taylor, 114 La. 883, 38 S 594; Cotton v. Sterling, 20 La. Ann. 282. Me.-Dillingham v. Blood, 66 Me. 140; Roberts v. Lane, 64 Me. 108, 18 AmR 242; Woodman v. Churchill, 52 Me. 58; Hascall v. Whitmore, 19 Me. 102, 36 AmD 738. Md.-Black v. Westminster First Nat. Bank, 96 Md. 399, 54 A 88; Cover V. Myers, 75 Md. 406, 23 A 850, 32 AmSR 394; Boyd v. McCann, 10 Md. 118. Mass.-Symonds v. Riley, 188 Mass. 470, 74 NE 926; Suffolk Sav. Bank v. Boston, 149 Mass. 364, 21 NE 665, 4 LRA 516; Thompson v. Shepherd, 12 Metc. 311, 46 AmD 676. Mich.-Anderson v. Northern Nat. Bank, 98 Mich. 543, 57 NW 808; Wood v. Starling, 48 Mich. 592, 12 NW 866. Compare Baker v. Union Trust Co., 129 Mich. 581, 89 NW 345. Minn. Robinson v. Smith, 62 Minn. 62, 64 NW 90. · See also Dispatch Printing Co. v. National Bank of Commerce, 109 Minn. 440, 124 NW 236, 50 LRANS 74 and note. Mo.-McMurray v. McMurray, 258 Mo. 405, 167 SW 513; Langford v. Varner, 65 Mo. A. 370; Cameron First Nat. Bank v. Stanley, 46 Mo. A. 440. Nebr.-Jones v. Wiesen, 50 Nebr. 243, 69 NW 762. N. Y.-Cleary v. Dykeman, 162 App. Div. 897, 146 NYS 611; Benedict v. De Groot, 1 Abb. Dec. 125, 3 Transcr. A. 66; Eckhert v. Ellis, 26 Hun 663; Groh v. Schneider, 34 Misc. 195, 68 NYS 862; Kruelwitch v. Meltsner, 13 Misc. 342, 34 NYS 451; Coppell v. Phillipson, 10 NYS 901. See also Flint v. Schomberg, 1 Hilt. 532. N. C.-Glenn v. Farmers' Bank, 70 N. C. 191. Oh.-Bassett v. Avery, 15 Oh. St. 299. Tex.-Herman v. Gunter, 83 Tex. 66, 18 SW 428, 29 AmSR 632; Watson v. Flanagan, 14 Tex. 354; Hollimon v. Karger, 30 Tex. Civ. A. 558, 71 SW 299. Va.-Citizens' Nat. Bank v. McDannald, 116 Va. 834, 83 SE 389; Aragon 32 1. purchaser after maturity,31 or is not a purchaser for | value.3 This rule does not apply, however, where Coffee Co. v. Rogers, 105 Va. 51, 52 SE 843, 8 AnnCas 623; Prentice v. Zane, 2 Gratt. (43 Va.) 262. Wash.-Wells v. Duffy, 69 Wash. 310, 124 P 907; Moyses v. Bell, 62 Wash. 534, 114 P 193. Wis.-Prentiss v. Strand, 116 Wis. 647, 93 NW 816; Verbeck v. Scott, 71 Wis. 59, 36 NW 600; Kinney v. Kruse, 28 Wis. 183. for illegal margins in stock and therefore void, except in the hands of a bona fide holder. Shaw v. Clark, 49 Mich. 384, 13 NW 786, 43 AmR 474. a [e] The fact that a note is made to the maker's order and bears only his indorsement, so that it passes by delivery, and the title is apparently See Comstock v. Buck-derived directly from him, does not ley, 141 Wis. 228, 124 NW 414, 135 affect the principle of law that AmSR 34. transferee with notice acquires a good title from his transferor if the latter is a holder in due course, if it is shown that the note was in fact purchased by the transferee's predecessor in good faith and for value of him to whom the maker first gave it. Roberts v. Lane, 64 Me. 108, 18 AmR 242. Eng.-London Joint Stock Bank v. Simmons, [1892] A. C. 201; Masters v. Ibberson, 8 C. B. 100, 65 ECL 100, 137 Reprint 446; May v. Chapman, 16 M. & W. 355, 153 Reprint 1225. Que.-Gauthier V. Reinhardt, 26 Que. Super. 134. [a] Other statements of rule.-(1) Where a note was good in the hands of the holder without notice, it was good in the hands of a purchaser thereof with notice. McMurray v. McMurray, 258 Mo. 405, 167 SW 513. (2) Where the bona fide purchaser for value of a negotiable note transfers it to another, his title and rights pass to such transferee, who takes the note free from equities, although the transfer was made after maturity and with actual notice of the equities. Langford v. Varner, 65 Mo. A. 370. [b] Illustration.-Defendant R. having given his check for four hundred and ninety-one dollars and twenty-five cents to defendant D, the latter indorsed it to defendant DeG who deposited it to her credit in a savings bank which in its turn accepted it and paid four hundred and fifty dollars to her, and credited her deposit with the balance. But payment had been countermanded by the maker the day after signing the check, and, as a consequence, when in the ordinary course of business of the bank, and without unreasonable delay, the check was presented at the bank on which it was drawn, and payment was refused, plaintiff, the teller who had received this check on deposit without its being marked "accepted," contrary to the rules, was held liable for the amount by the savings bank, but the latter handed over the check to him, thus subrogating him to its rights with a view to his having recourse against the parties. To this action the makers and the indorsers pleaded that plaintiff was not a holder in due course, since he became a holder after refusal of payment and after he had notice of it. It was held: (1) That the indorsers could not raise the question whether he was a holder in due course or not, the check not being tainted with any illegality; (2) that DeG was a holder in due course, since she had become a holder before the check could have been presented for payment, and, as a consequence, the savings bank and plaintiff taking title through her possessed all the rights of a holder in due course against the maker and indorsers; and (3) that the maker and prior indorsers must pay the whole amount of the check to have a right to it and to be discharged from it, although the savings bank had retained the balance of DeG's deposit, that was a personal matter between them. Gauthier v. Reinhardt, 26 Que. Super. 134. [c] This rule is founded on public policy to prevent stagnation of property, and for the relief of the bona fide purchaser who otherwise might be deprived of the benefit of selling his property for full value, consideration for the subsequent purchaser with knowledge having nothing to do with its adoption. Ketchum v. Packer, 65 Conn. 544, 33 A 499. [f] One who acquires paper from a bona fide holder through a fraudulent maker acting as his agent is protected. Hillard v. Taylor, 114 La. 883, 38 S 594. [g] Where a note given to raise money for stock gambling was valid in the hands of the payee, it may be enforced by an accommodation indorser, even though he knew the purpose for which the money was used. Citizens' Nat. Bank v. McDannald, 116 Va. 834, 83 SE 389. 31. U. S.-Montclair Tp. v. Ramsdell, 107 U. S. 147, 2 SCt 391, 27 L. ed. 431; Douglas County v. Bolles, 94 U. S. 104, 24 L. ed. 46; Texas v. White, 10 Wall. (U. S.) 68, 19 L. ed. 839; Dudley v. Lake County, 80 Fed. 672, 26 CCA 82. Ark.-Harrison V. Morgan-Curry Co., 115 Ark. 44, 170 SW 578, 580 [quot Cyc]; Miles v. Dodson, 102 Ark. 422, 144 SW 908, 50 LRANS 83 and note. Cal. O'Conor v. Clarke, 44 P 482; Eames v. Crosier, 101 Cal. 260, 35 P 873; Woodsum v. Cole, 69 Cal. 142, 10 P 331; Sonoma County Bank v. Gove, 63 Cal. 355, 49 AmR 92; Poorman v. Mills, 39 Cal. 345, 2 AmR 451; Coghlin v. May, 17 Cal. 515. 47. Conn.-Bissell v. Gowdy, 31 Conn. Ga.-Hogan v. Moore, 48 Ga. 156; Stamper v. Hayes, 25 Ga. 546. Ill.-Matson v. Alley, 141 Ill. 284, 31 NE 419; Reichert v. Koerner, 54 Ill. 306; Bradley v. Marshall, 54 Ill. 173; Lock v. Fulford, 52 Ill. 166; Woodworth v. Huntoon, 40 Ill. 131, 89 AmD 340; Rodriguez v. Merriman, 133 Ill. A. 372; Hurst v. Pearce, 130 III. A. 251; Canton First Nat. Bank v. McCann, 4 111. A. 250. Ind.-Thomas v. Ruddell, 66 Ind. 326. Iowa. Markley v. Hull, 51 Iowa 109, 49 NW 1050; Peabody v. Rees, 18 Iowa 571.. See also Wood v. McKean, 16 NW 218. La.-Levy v. Ford, 41 La. Ann. 873, 6 S 671; Cook v. Larkin, 19 La. Ann. 507; Howell v. Crane, 12 La. Ann. 126, 68 AmD 765. Me.-Roberts v. Lane, 64 Me. 108, 18 AmR 242; Woodman v. Churchill, 52 Me. 58; Smith v. Hiscock, 14 Me. 449. Mass.-Symonds v. Riley, 188 Mass. 470, 74 NE 926; Thompson v. Shepherd, 12 Metc. 311, 46 AmD 676. Mo.-Kellogg v. Schnaake, 56 Mo. 136; Langford v. Varner, 65 Mo. A. 370. Nebr.-Douglass v. Burton, 97 Nebr. 483, 150 NW 653; Jones v. Wiesen, 50 Nebr. 243, 69 NW 762; Barker V. Lichtenberger, 41 Nebr. 751, 60 NW 79; Koehler v. Dodge, 31 Nebr. 328, 47 NW 913, 28 AmSR 518; Kittle v. De Lamater, 3 Nebr. 325. chard, 22 Misc. 22, 47 NYS 1073; Beall v. General Electric Co., 16 Misc. 611, 38 NYS 527; Kruelwitch v. Meltsner, 13 Misc. 342, 34 NYS 451; Jennings v. Carlucci, 87 NYS 475; Benedict v. De Groot, 45 How Pr 384. N. C.-Lewis v. Long, 102 N. C. 206, 9 SE 637, 11 AmSR 725. Oh.-Perkins v. White, 36 Oh. St. 530; Bassett v. Avery, 15 Oh. St. 299; Sherman v. People's Inv. Co., 19 Oh. Cir. Ct. 26, 10 Oh. Cir. Dec. 33. Pa.-Marsh V. Marshall, 53 Pa. 396; Wilson v. Mechanics' Sav. Bank, 45 Pa. 488; Waln v. Haldeman, 2 Pearson 26; Riegel v. Cunningham, 9 Phila. 177. Tex.-Goodson v. Johnson, 35 Tex. 622. Va.-Arents v. Com., 18 Gratt. (59 Va.) 750; Davis v. Miller, 14 Gratt. (55 Va.) 1. 1 Wash.-Donnerberg v. Oppenheimer, 15 Wash. 290, 46 P 254. Eng.-Chalmers V.. Lanion, Campb. 383; Fairclough v. Pavia, 9 Exch. 690. Sask. Shore v. Mead, 20 DomLR 813, 29 WestLR 283. [a] A bona fide purchaser of an accommodation note can, even after maturity, transfer good title to another person, although the assignee has notice of defenses. Cleary v. Dykeman, 162 App. Div. 897, 146 NYS 611. [b] The indorsee of a check after maturity, with notice of defenses, is protected, where he received it from a party who received it before maturity, and without knowledge. Symonds v. Riley, 188 Mass. 470, 74 NE 926. [c] In Ohio Rev. St. § 3173, provides that if any bond, note, bill of exchange, or check is indorsed or delivered after the day on which it is made payable, and the indorsee institutes an action thereon against the maker, drawer, or acceptor, defendant shall be allowed to set up any defense he might have made had the action been instituted in the name, and for the use, of the person to whom the bond, note, bill, or check was originally made payable. It was held, in an action by a second indorsee, that the statute was applicable only to the first indorsement, and that it did not apply to an indorsement made after the liability of the maker had been fixed by an indorsement and transferred before maturity without notice. Sherman v. People's Inv. Co., 19 Oh. Cir. Ct. 26, 10 Oh. Cir. Dec. 33. [d] Knowledge of dishonor.-This has been held to be true, even where the purchaser knew that the paper had been dishonored but was not aware of the defenses existing against it. Markley v. Hull, 51 Iowa 109, 49 NW 1050. [e] Rule inapplicable.--(1) A delivery of securities which are overdue by a bona fide holder to a purchaser who pays off the old note and takes a new note from the maker, with the securities as collateral, does not constitute such purchaser a bona fide holder. Reed v. Stapp, 52 Fed. 641, 3 CCA 244. (2) And where a certificate was fraudulently issued and was without consideration to the knowledge of the holder who was found by the court to have been "a knowing and willing party to the fraud" sought to be perpetrated by the issue of the certificate, the party taking the certificate from such holder after dishonor could not be counted an innocent holder. Reed v. Stapp, 52 Fed. 641, 3 CCA 244. N. Y.-Northampton Nat. Bank v. Kidder, 106 N. Y. 221, 12 NE 577, 60 32. U. S.-Armstrong v. American AmR 443; Miller v. Talcott, 54 N. Y. Exch. Nat. Bank, 133 U. S. 433, 10 [d] This rule has been adhered to, 114; Cleary v. Dykeman, 162 App. SCt 450, 33 L. ed. 717; Montclair Tp. even where the indorser was a bank Div. 897. 146 NYS 611; Horan V. v. Ramsdel!, 107 U. S. 147, 2 SCt 391, of which the purchaser was a direct- Mason, 141 App. Div. 89, 91, 125 NYS 27 L. ed. 431; Douglas County V. or, and notwithstanding the facts 668 [cit Cyc]: Weems v. Shaughnes- Bolles, 94 U. S. 104, 24 L. ed. 46; that the purchaser was the payee's sy, 70 Hun 175, 24 NYS 271; Britton Hickman v. Sawyer, 216 Fed. 281, 132 father and that the note was given v. Hall, 1 Hilt. 528; Mundy v. Prit-' CCA 425; Dudley v. Lake County, 80 |