[§ 689] 3. Necessity for Indorsement.88 Where paper is made payable to the order of the payee, an indorsement by him is necessary to constitute the transfer one in the usual course of business, and mere delivery to the holder will not suffice.89 This is also true under the Negotiable Instruments Law,90 Bank v. Henry, 156 Ind. 1, 58 NE 1057.

86. American Bank v. McComb, 105 | discount there for A's benefit, which Va. 473, 54 SE 14.

87. See supra this section.
88. Cross references:
Generally see supra § 529.
Indorsement in form of assignment
as making holder a holder in due
course see supra § 522.
Restrictive indorsements see infra §
724.

Transferee before maturity but
where indorsement not until after
maturity as holder in due course
see supra § 523.
89.

S 925.

Ala.-Clark v. Thompson, 69 Ark.-Harrison V. Morgan-Curry Co., 115 Ark. 44, 170 SW 578, 580 [quot Cyc]; Webster v. Carter, 99 Ark. 458, 138 SW 1006.

Cal-More v. Finger, 128 Cal. 313, 60 P 933; Hays v. Plummer, 126 Cal. 107, 58 P 447, 77 AmSR 153; Reese v. Bell, 7 Cal. Unrep. Cas. 73, 71 P 87 (statute).

Ga.-Herring v. Vienna First Nat. Bank, 13 Ga. A. 492, 79 SE 359.

Ind.-Huntington First Nat. Bank v. Henry, 156 Ind. 1, 58 NE 1057. Compare Meeker v. Shanks, 112 Ind. 207, 13 NE 712.

Iowa.-Builders' Lime, etc., Co. v.
Weimer, 170 Iowa 444, 151 NW 100;
Condon v. Barnum, 106 NW 514.
Kan.-Nelson V. Southworth, 93
Kan. 532, 144 P 835.
Ky.-Foster

v. Metcalfe, 144 Ky.

385, 138 SW 314.
Mass.-Prescott v. Brinsley, 6 Cush.
233. See also Adams Bank v Jones,
16 Pick. 574.

Minn. Kiefer v. Tolbert, 128 Minn. 519, 151 NW 529; Minneapolis First Nat. Bank v. McNairy, 122 Minn. 215, 142 NW 139, AnnCas1914D 977; Cochran v. Stein, 118 Minn. 323, 136 NW 1037, 41 LRANS 391.

Mont.-Sathre v. Rolfe, 31 Mont. 85, 77 P 431.

N. Y.-Mills v. Porter, 5 Thomps. & C. 63.

N. C.-Mayers v. McRimmon, 140
N. C. 640, 53 SE 447, 111 AmSR 879;
Bresee v. Crumpton, 121 N. C. 122, 28
SE 351.
Or-Witt v. Campbell-Lakin Segar
Co., 66 Or. 144, 134 P 316.
Tex.-Green v. Eddins,
167 SW 196.

Utah.-Lebcher

Utah 1, 63 P 628.

(Civ. A.)

V. Lambert, 23

Wis.-Thorp v. Mindeman, 123 Wis. 149, 101 NW 417, 107 AmSR 1003, 68 LRA 146.

Wyo.-Chadron Bank v. Anderson, 6 Wyo. 518, 48 P 197.

[e] Holders of notes and mortgages sought to be canceled because procured by fraud were held to have no better right than the payee, where one note was nonnegotiable and the other transferred by assignment only. Nelson v. Southworth, 93 Kan. 532, 144 P 835.

being refused A sold the note to C
without the knowledge of B, and
without any indorsement by the
bank. After the note matured in
C's hands the note was indorsed by
the president of the bank without
recourse. It was held that B was
not liable; C having received the
note with evidence on its face that
it was intended to be used at the [f] Where a negotiable note was
bank, and without any reason to sup- assigned by a separate instrument,
pose such bank had put it in cir- and not by indorsement, such holder
culation. Prescott v. Brinsley, 6 is not a purchaser of negotiable paper
Cush. (Mass.) 233. (3) Where de- in due course, so as to estop the mak-
fendant, in an action to recover dam-er to plead the defense of failure of
ages for the failure of title to a note, consideration. Hays v. Plummer, 126
had in his possession a promissory Cal. 107, 58 P 447, 77 AmSR 153.
note belonging to A and payable to
A's order, but not indorsed by him,
and assigned the same to B without
other consideration than that if B
collected the note he should pay de-
fendant the face amount, it was held
that the want of indorsement was a
notice of the defect in title. Mills v.
Porter, 5 Thomps. & C. (N. Y.) 63.
(4) A note was indorsed "For value
received, I hereby sell, transfer and
assign the within note and the inter-
est coupons thereto attached
without recourse." It was held that
it was a commercial indorsement,
and not a mere assignment, and that
the transferee did not take it subject
to all equities. Thorp v. Mindeman,
123 Wis. 149, 101 NW 417, 107 AmSR
1003, 68 LRA 146.

[b]

"In due course of business" involves indorsement to the holder before maturity, where the instrument is payable to order. Cochran v. Stein, 118 Minn. 323, 136 NW 1037, 41 LRANS 391.

[c]

The transfer without indorsement (1) of a negotiable instrument payable to order does not pass the legal title, and hence the transferee is not a bona fide holder, but takes the note subject to defenses available against the transferor (Webster v. Carter, 99 Ark. 458, 138 SW 1006; Kiefer v. Tolbert, 128 Minn. 519, 151 NW 529; Bresee v. Crumpton, 121 N. C. 122, 28 SE 351; Witt v. CampbellLakin Segar Co., 66 Or. 144, 134 P 316), (2) even though the transferor was a bona fide holder for value (Lebcher v. Lambert, 23 Utah 1, 63 P 628). (3) Where, in an action on drafts bearing the payee's indorsement, the latter testified that the drafts had been "discounted" to plaintiff by the payee before maturity for value and without notice, but it did not appear that the drafts had been "indorsed" under such circumstances, plaintiff was but the equitable owner of the instruments which were, therefore, subject to any valid defense open against the drawer. Mayers v. McRimmon, 140 N. C. 640, 53 SE 447, 111 AmSR 879.

"Undoubtedly the indorsement and delivery of the note to the plaintiff passed title to it. But even so, in order to protect the holder against the equities of the maker, it must have been acquired in due course of business. That means more than an acquisition by assignment or by other means of transfer of title, short of an indorsement under the law merchant. An essential prerequisite to being a bona fide holder of a negotiable instrument is a valid indorse-of ment." Minneapolis First Nat. Bank v. McNairy, 122 Minn. 215, 219, 142 NW 139. AnnCas1914D 977.

[a] Illustrations.—(1) The fact that the maker who first signed a note, which it thereafter altered so as to be payable to bearer, indorsed the note with two others before delivering it to plaintiff, did not make plaintiff an indorsee as to the other maker. Builders' Lime, etc., Co. v. Weimer, (Iowa) 151 NW 100. (2) A procured B's signature as a surety to his note, payable to a bank or order, for the purpose of obtaining a

[d] A simple delivery of negotiable notes as collateral security, (1) without indorsement, vests in the pledgee a contingent, equitable interest only, subject to the prior equities third persons as against the pledgor, and subject to all defenses existing between the payee and the maker. Chadron Bank v. Anderson, 6 Wyo. 518, 48 P 197. (2) Where the holder of a note payable at a bank received it as a pledge before maturity to secure debts due it from the payee without indorsement, in an action thereon against the maker he may set up want of consideration as a defense, since the note was not indorsed before maturity, its quality of negotiability was lost, and a transfer thereof did not cut off the equities of the maker. Huntington First Nat.

[g] In Alabama, under Code (1907) §§ 5007-5014, to be holder in due course of a note given by husband and wife for money loaned to the husband, and so free of the wife's defense that she was a surety only, the holder must have acquired the paper by negotiation to him by indorsement. Clark v. Thompson, 69 S 925.

[h] In California, under Code Civ. Proc. § 3123, defining an indorsee in due course as one who in good faith, in the ordinary course of business, for value, before its maturity or presumptive dishonor, and without knowledge of actual dishonor, acquires a negotiable instrument "duly indorsed," to him or indorsed generally, and § 3124, giving an indorsee in due course an absolute title to a note, notwithstanding any defect in the title in the hands of the one from whom he acquired it, defendants who secured possession of a note by mere delivery without indorsement, and with knowledge that the person transferring it had parted with his title, and while such person was intoxicated, were not indorsees, and hence not entitled to the protection given by the statute to indorsees. More v. Finger, 128 Cal. 313, 60 P 933.

[i] Indorsement to third person.The indorsement of a negotiable note, making it payable simply to the order of A who has no personal interest in the transaction, the indorsement being really made for the benefit of B, is not a transfer to B in the usual course of business, so as to exclude defenses by the maker as against the payee. Elias v. Finnegan, 37 Minn. 144, 33 NW 330.

[j] Effect of unnecessary indorsement.-Indorsement by the actual payee of paper made payable to a designated party or bearer will not affect the character of the indorsee as a holder in good faith in the ordinary course of business, such indorsement being regarded as merely superfluous, since paper of this character will pass by delivery. Smith v. Rawson, 61 Ga. 208; Lane v. Krekle, 22 Iowa 399. See also supra § 574.

[k] Indorsement by agent without authority.-Hamilton Nat. Bank v. Nye, 37 Ind. A. 464, 77 NE 295, 117 AmSR 333.

90. U. S.-Pensacola State Bank v. Thornberry, 226 Fed. 611, 141 CCA 367.

Ida.-Craig V. Palo Alto Stock
Farm, 16 Ida. 701, 102 P 393.
Kan. Offenstein v. Weygandt, 89
Kan. 739, 132 P 991
Ky. Foster v. Metcalfe, 144 Ky.
385, 138 SW 314.
Mo.- Miners', etc., Bank V. St.
Louis Smelting, etc., Co., (A.) 178 SW
211.

N. C.-Mayers v. McRimmon, 140
N. C. 640, 53 SE 447, 111 AmSR 879.

[a] In Kentucky, under St. § 3720b subs 52, 190, a bank from

but if the instrument has been transferred by indorsement before maturity there need not be a further indorsement by the indorsee on a subsequent transfer.91 Moreover a holder in due course, where he bases his rights on an indorsement, must have a valid indorsement, since a holder is not one in due course unless the indorsement is such as is sufficient under the law merchant.92 By statute, however, in Texas, a transfer other than by indorsement has the same effect as a transfer by indorsement.93

But where the paper is payable to bearer, a good title may be acquired therein without the payee's indorsement, either from himself or from a third which its cashier took funds to discharge his debt to another institution cannot be held a holder in due course of a note fraudulently pledged by the cashier as collateral for his debt. Pensacola State Bank v. Thornberry, 226 Fed. 611, 141 CCA 367.

[b] In Missouri, under Rev. St. (1909) § 10001, the transferee of a bank check does not become a holder thereof in due course where the indorsement was forged. If the indorsement is a forgery the indorsee is not a bona fide holder in due course. Miners', etc., Bank V. St. Louis Smelting, etc., Co., (Mo. A.) 178 SW 211.

party, even though the paper may never have passed through the payee's hands. However, the indorsement by the payee of a note or a bill payable to himself or to bearer is not out of the ordinary course of business.95

[690] 4. Necessity for Delivery. In order to constitute a party a holder in due course of trade there should be a delivery or some positive act showing an actual transfer of the paper itself or a parting with the right to dispose of it.96

[691] 5. Taking Up by Indorser. The taking up of an instrument at maturity by the indorser himself is a purchase in due course of business," actual notice. Laub v. Rudd, 37 Iowa 617; Gage v. Sharp, 24 Iowa 15. (2) But in Texas, where the maker delivers to a third person a note payable to another person or bearer, it is not taken in the due course of business, and it is the duty of the purchaser to make inquiry. Battle v. Cushman, (Tex. Civ. A.) 33 SW 1037. See also supra text and note 93.

[a] An indorsement by the original payee, containing words of guaranty alone without words of transfer, does not constitute the holder such a purchaser for value as to protect him from defenses already accrued to the maker against the original payee. Lowry Nat. Bank v. Maddox, 4 Ga. A. 329, 61 SE 296.

[b] An indorsement of a note written on a separate piece of paper. reciting that the note, with deed of trust accompanying, was placed as collateral security for a loan on another note, and attached to the original and collateral notes by a pín, where there is plenty of room on the note for the indorsement, was insufficient to invest the transferee with the rights of a bona fide purchaser. Bishop v. Chase, 156 Mo. 158, 56 SW 1080, 79 AmSR 515.

corporation. Minneapolis First Nat.
Bank v. McNairy, 122 Minn. 215, 142
NW 139, AnnCas1914D 977.

[c] In North Carolina Revisal (1905) 2198 declares that, when the holder of an instrument payable to his order transfers it for value without indorsing it, the transfer vests in the transferee such title as the [c] The omission of the word transferor had, and the transferee "Car" in the name of the payee, a acquires in addition the right to corporation, in a note does not dehave the indorsement of the transfer- stroy the validity of the indorsement or, but for the purpose of determin-made under the true name of the ing whether the transferee is a holder in due course, the negotiation takes effect as of the time when the indorsement is actually made. Section 2208 provides that every holder is deemed prima facie a holder in due course, etc., and § 2340 declares that a "holder" is the payee or indorsee of a bill or note, who is in possession of it, or the bearer thereof, and defines "bearer" as the person in possession of a bill or note payable to bearer. It was held that the holder of a draft payable to order, in the absence of proof of indorsement by the payee, was not a bona fide purchaser for value without notice. Mayers v. McRimmon, 140 N. C. 640, 53 SE 447, 111 AmSR 879.

[d] Assignment on a separate paper of a partial interest in a mortgage on real property does not negotiate the instrument or debt secured thereby so as to render the transferee a holder in due course. Offenstein v. Weygandt, 89 Kan. 739, 132 P 991.

91. Smith v. Nelson Land, etc., Co., 212 Fed. 56, 128 CCA 512 [refusing to foll Pomeroy First Nat. Bank v. McCullough, 50 Or. 508, 93 P 366, 126 AmSR 758, 17 LRANS 1105 and note].

[a] In Kansas, under Gen. St. (1909) §§ 5302, 5311, and Negotiable Instruments Law § 2, the word "holder," in the beginning of the last clause of § 5311, was held to include any transferee of negotiable paper, so that where negotiable notes were indorsed before maturity and the indorsee transferred them to defendant S without indorsement, he was a holder in due course. Smith v. Nelson Land, etc., Co., 212 Fed. 56, 128 CCA 512 [refusing to foll Pomeroy First Nat. Bank v. McCullough, 50 Or. 508, 93 P 366, 126 AmSR 758, 17 LRANS 1105 and note].

92. Lowry Nat. Bank v. Maddox, 4 Ga. A. 329, 61 SE 296; Hatch v. Barrett, 34 Kan. 223, 8 P 129; Minneapolis First Nat. Bank v. McNairy, 122 Minn. 215, 142 NW 139, AnnCas 1914D 977; Bishop v. Chase, 156 Mo. 158, 56 SW 1080, 79 AmSR 515.

£3. Word v. Elwood, 90 Tex. 130, 37 SW 414; Springfield Third Nat. Bank v. National Bank of Commerce, (Tex. Civ. A.) 139 SW 665. See also supra § 570.

[a] In Texas Rev. St. (1895) art 307, declaring that any person to whom a negotiable instrument has been "assigned" may maintain any action in his own name which the original obligee might have brought, and if he obtained such instrument before maturity, for value, and "without notice of any discount or defense against it, then he shall be compelled to allow only the just discounts against himself," is available to any bona fide transferee, before maturity, whatever the form of the transfer, and whether it is written or verbal. Word v. Elwood, 90 Tex. 130, 37 SW 414; Springfield Third Nat. Bank v. National Bank of Commerce, (Civ. A.) 139 SW 665.

94. Hale v. Citizens' Bank, 111 Ark. 258, 163 SW 775; Paris Bank v. Pearson, 66 Ark. 310, 50 SW 692; Laub v. Rudd, 37 Iowa 617; Gage v. Sharp, 24 Iowa 15; Cone v. Baldwin, 12 Pick. (Mass.) 545. See also supra § 566.

[a] Thus, where a note payable to payee or bearer was transferred by the payee without indorsement, and at the time of transfer he told the transferees that they must take it at their own risk, it was held that such a transfer was not so out of the usual course of business as to charge the holders with notice that the note was given without any valid consideration, or that it had been obtained by fraud. Cone v. Baldwin, 12 Pick. (Mass.)_545.

[b] Paper never in hands of payee.-(1) Where a note is made payable to a certain payee or bearer, the negotiation of it to a person other than the payee is not out of the usual course of business, and the holder will be entitled to recover free of defenses of which he has no

95. Smith v. Rawson, 61 Ga. 208. See also supra § 559.

96. Ill. Cooper v. Nock, 27 Ill. 301.

Minn.-O'Mulcahy V. Holley, 28 Minn. 31, 8 NW 906 (where the note was in possession of the assignor at the time of the alleged assignment).

N. Y.-Muller v. Pondir, 55 N. Y. 325, 14 AmR 259 [aff 6 Lans. 472]; Russell v. Scudder, 42 Barb. 31.

Pa.-Evans v. Smith, 4 Binn. 366. Tex.-Green v. Eddins, (Civ. A.) 167 SW 196; Eck V. Schuermeyer, (Civ. A.) 29 SW 241. See also Battle v. Cushman, (Civ. A.) 33 SW 1037. Wis.-Burnham V. Merchants" Exch. Rank, 92 Wis. 277, 66 NW 510; Beard v. Dedolph, 29 Wis. 136.

See Grimm v. Warner, 45 Iowa 106 (sufficient if transfer is made before maturity).

"The evidence of ownership of negotiable bills is their possession, properly indorsed, so as to pass the title to the holder. There is no such thing as a symbolical delivery of negotiable instruments; and the law does not recognize, for commercial purposes, a right of possession as distinct from the actual possession." Muller v. Pondir, 55 N. Y. 325, 335, 14 AmR 259.

[a] Equitable assignment.-(1) Where a party made a loan on a bill of exchange to arrive by an incoming steamer and took an equitable assignment of it without îndorsement or delivery, it was held that he was not to be protected as a bona fide holder in due course of business. Muller v. Pondir, 55 N. Y. 325, 335, 14 AmR 259. (2) Neither an equi table assignee of notes, nor those claiming under him, could claim as innocent purchasers, where the assignee never had possession of the notes. Green v. Eddins, (Tex. Civ. A.) 167 SW 196.

V. U. S., 3

97. U. S.-Dugan Wheat. 172, 4 L. ed. 362. Ala.-Andrews v. Meadow, 133 Ala. 442, 31 S 971.

Kan.-Lill v. Gleason, 92 Kan. 754, 757, 142 P 287 [cit Cyc].

Ky.-Coyne v. Anderson, 73 SW 753, 24 KyL 2156; Spencers v. Briggs, 2 Metc. 123; Feland v. Stirman, 15 KyL 271.

La.-Squier v. Stockton, 5 La. Ann. 120, 52 AmD 583; Hill v. Holmes, 12 La. 96.

Me.-Breckenridge V. Lewis, 84 Me. 349, 24 A 864, 30 AmSR 353. See also Eaton v. McKown, 34 Me. 510; Green v. Jackson, 15 Me. 136.

Md. Rhinehart v. Schall, 69 Md. 352, 16 A 126; Yates v. Donaldson, 5 Md. 389, 61 AmD 283; Wood v. Repold, 3 Harr. & J. 125.

Mass.-Shaw v. Knox, 98 Mass. 214;

check and not as a bill of exchange payable on time. On the other hand, a note is not complete and regular on its face where it is signed in blank, payable to a certain person, and sent to another or to a bank, where it was subsequently filled up as to date, amount, and maturity, as occasion required, and the proceeds placed to the credit of the payee. So where a bill, otherwise complete except for the drawer's signature, was accepted and sent to the payee to be used for a certain purpose, who diverted it from such purpose after indorsing it but neglected to sign it as drawer until after it was overdue and dishonored, the bill was not complete and regular on its face when taken by the holder, so that he could not recover. Likewise, a holder of a note payable "four" after date is not a holder in due course, where the blank has not been filled in, since the instrument is not "complete and regular upon its face." So, on the theory that a note coming into the hands of a third person with the name of the payee left blank is an incomplete instrument and not regular on its face, such third person who obtains it from the payee is not a holder in due course.10 Where, at the time of the purchase of a note, it was incomplete and irregular on its face, the effect of the irregularity cannot afterward be avoided by its correction. The fact that, at the time when a bill of exchange was negotiated, it had not been accepted does not prevent the transferee from being the plete and regular on its face," or unless the same was filled up and made complete and regular strictly in accordance with the authority given by the maker. Manussier v. Wright, 158 Ill. A. 214.

[692] G. Instrument Complete and Regular upon Its Face.1 The Negotiable Instruments Law expressly provides that a holder, in order to be a holder in due course, must have taken the instrument when complete and regular on its face. This provision is not altogether clear, but in so far as it has been construed by the courts, it seems that an instrument comes within it if there is nothing on the face thereof to show that it has been altered or to awaken suspicion; and that the instrument is complete, where it includes all the matters necessary to be contained therein according to the rules laid down by the Negotiable Instruments Law in order to render the instrument negotiable, as herein before referred to. For instance, it has been held that a note partly printed and partly written, with the words "payable with interest" in the same handwriting as the other written portions of the note, except the maker's name, and following the words "value received," at the most appropriate place on the note at which they could be written without underlining them, was complete and regular upon its face. So in England a postdated check is complete and regular on its face, although it is stamped as a Clapp v. Rice, 13 Gray 403, 64 AmD | parties and rendered it indefinite as 639; Howe v. Merrill, 5 Cush. 80; Church v. Barlow, 9 Pick. 547. Mo.-Glasgow v. Switzer, 12 Mo.

395.

to time of payment. Such a request, however, was not binding on the payee. It did not vary the terms of the writing. It added nothing to it Or.-Sheahan v. Davis, 27 Or. 278, and took nothing from it that was 40 P 405, 50 AmSR 722, 28 LRA 476. essential to its character as a nego[a] Reacquisition by innocent tiable instrument. From such a holder.-Where the payee has in- quest one would usually and rightly dorsed commercial paper to an inno-infer that the maker had not funds cent indorsee and the latter, after on deposit to meet the check when discounting at a bank, on its ma-issued, but would deposit sufficient turity takes it up, he occupies, as far funds within the time, and, by the as defenses against it are concerned, use of such language, notice of that as good a position as the bank did. fact might be given; but it is not Feland v. Stirman, 15 KyL 271. calculated to carry notice of any infirmity in the contract.' " Matlock v. Scheuerman, supra,

98. See supra § 686.

99. Putnam V. Tash, 12 Gray (Mass.) 121.

[b] Leaving name of payee blank. re-(1) That an instrument does not designate any payee raises no presumption of circulation without authority, and one who accepts it need not, at his peril, ascertain if the person tendering it has authority to complete it or to authorize another to do so. Peo. v. Gorham, 9 Cal. A. 341, 99 P 391 (where, however, no reference was made to the rule that an instrument must be complete and regular on its face). (2) A bona fide holder of a bill or a note in which the name of the payee has not been inserted has a right to fill up the blank left for the payee's name with that of an indorser, or he may subject the indorser in a count on his indorsement, or as the drawer of a bill of exchange on the maker. Lawrence v. Mabry, 13 N. C. 473, 21 AmD 346. 5. American Bank v. McComb, 105 Va. 473. 54 SE 14.

[a] Codification of law merchant. "When the court said, in Washing- "By the express provisions of the ton Bank v. Shurtleff, 4 Metc. (Mass.) Negotiable Instruments Law (L. 1897, 30, that the holders of a note paid by chap. 612, § 91, subd. 1) one can be the guarantor would be bound to de- a holder in due course of a negotiable liver the note to him to his use, they instrument only where the instrudid not mean that he would be sub-ment is 'complete and regular upon stituted to the rights of the last its face.' This statutory provision holder and payee. He would be en- is but a codification of the rule of titled to the note as evidence of his the law merchant, which was that a payment. Beyond this, it is not easy party buying commercial paper which to see for what useful purpose he is remains in some essential particular substituted to the rights of him for incomplete and imperfect, does not whom he pays." Putnam v. Tash, 12 acquire the character of a bona fide Gray (Mass.) 121, 122. holder." Hunter v. Bacon, 127 App. Div. 572, 111 NYS 820.

1. Irregularities, erasures, uncertainties, or peculiarities in a bill or a note, as notice see infra §§ 721-724. 2. Ida-South Omaha Union Stock Yards Nat. Bank v. Bolan, 14 Ida. 87, 93 P 508, 125 AmSR 146.

N. Y.-Hunter v. Allen, 127 App. Div. 572, 111 NYS 820; Elias v. Whitney, 50 Misc. 326, 98 NYS 667.

N. C.-Hardy v. Mitchell, 161 N. C. 351, 77 SE 225.

Or.-Matlock v. Scheuerman, 51 Or. 49, 55, 93 P 823, 17 LRANS 747. Pa.-Citizens' Nat. Bank v. Stein, 21 Pa. Dist. 1070.

Wash.-Hughes v. Flint, 61 Wash. 460, 112 P 633.

"It is necessary that the instrument be complete and regular on its face, and it is argued by the defendant that Swaggart's remark at the time of the negotiation that Scheuerman had asked him to wait for two or three days for presentation of the check, disclosed to plaintiff that the instrument did not represent on its face, all of the contract between the

[b] One who receives & check made payable to a contractor "on contract," which check has been transferred by the contractor, is not a holder in due course. Hughes v. Flint, 61 Wash. 460, 112 P 633.

3. American Bank v. McComb, 105
Va. 473, 54 SE 14.

[a] Thus, where a mere inspection
of a check showed that it had been
altered, a purchaser thereof took
with notice of the infirmity and was
not a holder in due course. Elias v.
Whitney, 50 Misc. 326, 98 NYS 667.
4. Manussier v. Wright, 158 Ill. A.
214.
What must be included in bill or
note to make it negotiable see supra
§ 206.

[a] Thus a bank which acquires
a note from the original payee to
whom it is given is not "a holder in
due course,' within the meaning of
the act of 1907, L. (1907) p 405 § 14,
unless at the time when it became the
owner thereof such note "was com-

6. Hitchcock v. Edwards, 60 L. T. Rep. N. S. 636. See also infra § 723.

7. Hunter v. Allen, 127 App. Div. 572, 111 NYS 820. See Dumbrow v. Gelb, 72 Misc. 400, 130 NYS 182 (where one taking a note with knowledge that an indorser had signed the printed forms before they were filled out and signed by the maker is not a bona fide holder for value with respect to the indorser).

8. South Wales, etc., Coal Co. v. Underwood, 15 T. L. R. 157.

9. In re Philpott, 169 Iowa 555, 151 NW 825.

10. Stone v. Sargent, 220 Mass. 445, 107 NE 1014; Munroe v. Stanley, 220 Mass. 438, 107 NE 1012; Tower v. Stanley, 220 Mass. 429, 107 NE 1010.

[a] In Massachusetts, under Rev. L. c 73 §§ 25, 31, 69, 73, the purchaser of negotiable instruments, who filled in blanks, was held not a bona fide purchaser without notice. Stone v. Sargent, 220 Mass. 445, 107 NE 1014; Munroe v. Stanley, 220 Mass. 438, 107 NE 1012; Tower v. Stanley, 220 Mass. 429, 107 NE 1010.

11. Losee v. Bissell, 76 Pa. 459.

holder in due course under the Negotiable Instruments Law, on the theory that the instrument was not complete because not accepted, since acceptance is not necessary to constitute an instrument a bill of exchange.12

12. National Park Bank v. Berggren, 110 L. T. Rep. N. S. 907.

[a] Illustration.-The P Co. sold some turpentine to defendants and in respect of the purchase price drew upon them a bill payable to the order of the P Co.'s bankers, to whom the P Co. then handed the bill. Subsequently plaintiff bought the bill from the agents of the P Co.'s bankers. It had not then been accepted by defendants, but it was eventually accepted by them unconditionally in the usual way. A dispute then arose between defendants and the P Co., and defendants refused to meet the bill. The P Co. thereupon requested plaintiffs to sue defendants in their (plaintiffs') own name, guaranteed the expenses, and agreed to pay the bill if plaintiffs failed to recover the amount from defendants. It was held, in an action brought by plaintiffs against defendants on the bill: (1) That the bill was a complete bill when purchased by plaintiffs, although it had not then been accepted, and that therefore plaintiffs were holders in due course; and (2) that plaintiffs were not suing as trustees for the P Co., that therefore defendants were not entitled to set up the same defenses as they would have been entitled to set up against the P Co., and that consequently plaintiffs were entitled to recover. National Park Bank v. Berggren, 110 L. T. Rep.

N. S. 907.

13. Cross references: Indorsement after maturity as relating back to transfer before maturity see supra § 523. Where transfer is by bona fide purchaser see supra § 685.

14. U. S.-Morgan v. U. S., 113 U. S. 476, 5 SCt 588, 28 L. ed. 1044; Washington First Nat. Bank v. Texas, 20 Wall. 72, 22 L. ed. 295; Foley v. Smith, 6 Wall. 492, 18 L. ed. 931; Fowler v. Brantly, 14 Pet. 318, 10 L. ed. 473; Lipsmeier v. Vehslage, 29 Fed. 175. See also Vermilye v. Adams Express Co., 21 Wall. 138, 22 L. ed. 609. Ala.-Marshall v. Shiff, 130 Ala. 545, 30 S 335.

Cal.-Cooke v. Mesmer, 164 Cal. 332, 128 P 917; Gordon v. Wansey, 21 Cal. 77.

Colo.-Dunn v. Ghost, 5 Colo. 134. Conn.-Fairfield County Nat. Bank v. Hammer, 95 A 31.

Del. Otis El. Co. v. Ford, 27 Del. 286, 88 A 465; McCready v. Cann, 5 Del. 175.

D. C. Commercial Nat. Bank v. Consumers' Brewing Co., 16 App. 186. Ga.-Park v. Daniel, (A.) 84 SE 483; Hall v. Coats, 2 Ga. A. 202, 58 SE 365.

Ill. Morgan v. Bean, 100 Ill. .A. 114; Mahon v. Gaither, '70 Ill. A. 434 (takes subject to defense of want of consideration).

Ind. Wolf v. Shelton, 159 Ind. 531, 65 NE 582; Carithers v. Stuart, 87 Ind. 424; Green v. Louthain, 49 Ind. 139; Ward v. Walton, 4 Ind. 75; Halstead v. Woods, 48 Ind. A. 127, 95 NE 429; Stoy v. Bledsoe, 31 Ind. A. 643, 68 NE 907.

Iowa.-Irwin v. Deming, 142 Iowa 299, 120 NW 645; Richards v. Daily, 34 Iowa 427.

Kan.-Dewey v. Bobbitt, 79 Kan. 505, 100 P 77.

Ky.-Price v. Gatliff, 110 SW 332, 33 KyL 324; Wilkins v. Usher, 123 Ky. 696, 97 SW 37, 29 KyL 1232.

La.-State v. Sutherland, 111 La. 381, 35 S 608; Hutchinson v. Rice, 105 La. 474, 29 S 898.

58.

[§ 693] H. Transfer after Maturity13-1. In General. The holder of a bill or a note, in order to be a holder in due course, so as to acquire a better title than the transferor, must have acquired the instrument before its maturity.14 The rule is usually exMass.-Symonds v. Riley, 188 Mass. | Transp. Co., 53 Wash. 77, 101 P 509, 470, 74 NE 926; Dyer v. Homer, 22 132 AmSR 1058. Pick. 253; Rice v. Goddard, 14 Pick. 293.

Mich.-Brown V. Smedley, 136 Mich. 65, 70, 98 NW 856, 857; Ashoff v. Van Brunt, 84 Mich. 575, 48 NW 151; Simons v. Morris, 53 Mich. 155, 18 NW 625. See also Dowagiac City Bank v. Dill, 84 Mich. 549, 47 NW 1109.

Minn.-Cochran v. Stein, 118 Minn. 323, 136 NW 1037, 41 LRANS 391.

Mo.-Turner v. Hoyle, 95 Mo. 337,
8 SW 157; Wright v. Mississippi Val-
ley Trust Co., 144 Mo. A. 640, 129 SW
407; Vandagrift v. Bates County Inv.
Co., 144 Mo. A. 77, 128 SW 1007;
Williams v. Baker, 100 Mo. A. 284, 73
SW 339; Mayer v. Columbia Sav.
Bank, 86 Mo. A. 108; New Albany
Woolen Mills v. Meyers, 43 Mo. A.
124.

Nebr.-May v. Mendoto First Nat.
Bank, 74 Nebr. 251, 104 NW 184.

N. H.-Quimby v. Stoddard, 67 N.
H. 283, 35 A 1106; Crosby v. Grant,
36 N. H. 273.

N. M.-Southard v. Latham, 18 N.
M. 503, 138 P 205.

79:

W. Va.-Smith v. Lawson, 18 W. Va. 212.

Wis.-Hodge v. Smith, 130 Wis. 326, 110 NW 192.

Eng. Tinson v. Francis, 1 Campb. 19; Parr v. Jewell, 16 C. B. 684, 81 ECL 684, 139 Reprint 928; Taylor v. Mather, 3 T. R. 83 note, 100 Reprint 467 note; Brown v. Davies, 3 T. R. 80, 100 Reprint 466.

Can.-Young v. MacNider, 25 Can. S. C. 272; MacArthur v. MacDowall, 23 Can. S. C. 571.

Man. Moore v. Scott, 16 Man. 492. N. B.-Thomas v. McLeod, 12 N. B. 598; McQuin v. Sorell, 7 N. B. 140.

Ont.-Merchants Bank v. Thompson, 26 Ont. L. 183, 3 DomLR 577, 21 OntWR 740 [allowing app 23 Ont. L. 502, 18 OntWR 582]; Ching v. Jeffery, 12 Ont. A. 432; Black v. Strickland, 3 Ont. 217; Britton v. Fisher, 26 U. C. Q. B. 338; West v. MacInnes, 23 U. C. Q. B. 357.

Que.-Levinoff v. Richard, 8 Que.

Pr. 72.

Sask.-Newton v. Husson, 20 Dom LR 617, 30 WestLR 99, 7 West Wkly

N. Y.-In re Clover, 154 N. Y. 443.726. 48 NE 892; Bacon v. Burnham, 37 N. W. Terr.-Fraser v. Ekstrom, 6 N. Y. 614; Jacobus v. Jamestown Terr. L. 464. Mantel Co., 149 App. Div. 356, 134 [a] Reason for rule.-"But where NYS 418; Cluett v. Couture, 140 App. a negotiable note is found in circuDiv. 830, 125 NYS 813; Michel v. Ell-lation after it is due, it carries suswanger, 58 App. Div. 616, 68 NYS picion on the face of it. The ques464; Beall v. Russell, 76 Misc. 244, tion instantly arises, Why is it in 134 NYS 633; Equitable Trust Co. v. circulation,-why is it not paid? here Lyons, 72 Misc. 49, 129. NYS is something wrong. Therefore, alMundy v. Pritchard, 22 Misc. 22, 47 though it does not give the indorser NYS 1073; Royal Bank v. Reinschreib- notice of any specific matter of deer, 126 NYS 749; Frank v. Wolff, 125 fence, such as set-off, payment, or NYS 530; Rosenblum v. Blaser, 115 fraudulent acquisition, yet it puts NYS 219; Cominsky v. Coleman, 114 him on inquiry; he takes only such NYS 875; Tucker v. Michaels, 112 title as the indorser himself has, and NYS 1044 (want of consideration); subject to any defence which would Havens v. Huntington, 1 Cow. 387; be made, if the suit were brought by Lansing v. Lansing, 8 Johns. 454; the indorser. The note does not cease O'Callaghan v. Sawyer, 5 Johns. 118; to be negotiable; the indorsee takes Lansing v. Gaine, 2 Johns. 300, 3 a title, and may sue, but he is so far AmD 422; Sebring V. Rathbun, 1 in privity with his indorser that he Johns. Cas. 331; Johnson v. Blood- takes only his title; and if the degood, 1 Johns. Cas. 51, 1 AmD 93, 2 fendant could make any defence Cai. Cas. 303. against a suit brought by such indorser, he can make it against the indorsee." Fisher v. Leland, 4 Cush. (Mass.) 456, 458, 50 AmD 805.

N. C.-Hardy v. Mitchell, 161 N. C. 351, 77 SE 225; Causey v. Snow, 122 N. C. 326, 29 SE 359.

Okl.-Roe v. Fleming, 32 Okl. 259, 122 P 496.

V.

Pa.-Wilson
Mechanics' Sav.
Bank, 45 Pa. 488; Bower v. Hastings,
36 Pa. 285; Lancaster Bank v. Wood-
ard, 18 Pa. 357, 57 AmD 618; Tams v.
Way, 13 Pa. 222; Snyder v. Riley, 6
Pa. 164, 47 AmD 452; Barnet v. Offer-
man, 7 Watts 130; McKinney v. Craw-
ford, 8 Serg. & R. 351; Liebig Mfg.
Co. v. Hill, 9 Pa. Super. 469, 43 Wkly
NC 497; Citizens' Nat. Bank v. Stein,
21 Pa. Dist. 1070.

Porto Rico.-Martinez v. Garcia, 18
Porto Rico 708.

S. C.-Williams v. Weekley, 100 S.
C. 28, 84 SE 299; Freeman v. Bailey,
50 S. C. 241, 27 SE 686.

S. D.-Rowe v. Scott, 28 S. D. 145,
132 NW 695.

Tenn.-Elgin First Nat. Bank V.
Russell, 124 Tenn. 618, 139 SW 734,
AnnCas1913A 203.

[b] Thus, where payees of a note agreed that a certain sum was the balance due thereon and to accept the same in full payment thereof, and the maker tendered to them that sum before the transfer of the note to another, and such transfer was after maturity, the transferees took subject to such agreement. Hall v. Coats, 2 Ga. A. 202, 58 SE 365.

[c]. Agreements between prior parties.-A note given simply to be used by payee as collateral, payee agreeing to so take care of it that the maker would never hear of it again, is not enforceable in the hands of a purchaser after maturity. Brown v. Smedley, 136 Mich. 65, 70, 98 NW 856, 857.

[d] Maker may, however, revive the negotiability of an instrument by a writing, indorsed on the note, to the effect that it shall not be considered Tex.-Texas Banking, etc., Co. v. due. Whitney Nat. Bank v. Cannon. Turnley, 61 Tex. 365; Edwards V. 52 La. Ann. 1484, 27 S 948. White, (Civ. A.) 120 SW 914; Kamp- [e] Delivery in escrow.-Where a mann v. McCormick, (Civ. A.) 99 SW negotiable note has been, before its 1147 (failure of consideration); May-maturity, duly indorsed and delivered field Grocer Co. v. Price, 43 Tex. Civ. A. 391, 95 SW 31; Seay v. Fennell, 15 Tex. Civ. A. 261, 39 SW 181.

Va.-Cussen v. Brandt, 97 Va. 1, 32
SE 791, 75 AmSR 762; Davis v. Mil-

Me.-Woodman v. Churchill, 52 Me. ler, 14 Gratt. (55 Va.) 1.
Wash.-Spencer V. Alki Point

in escrow, with the contract of its purchaser to convey in consideration of it certain land, and proceedings were necessary to enable the purchaser of the note to convey the land and to carry out the contract for which the note was taken, the facts

Sutherland, 111 La. 381, 35 S 608; Burroughs v. Nettles, 7 La. 113.

Md. Avirett v. Barnhart, 86 Md. 545, 39 A 532.

Mass.-Hinckley v. Union Pac. R. Co., 129 Mass. 52, 37 AmR 297; Potter v. Tyler, 2 Metc. 58; Harris v Brooks, 21 Pick. 195, 32 AmD 254; Thompson v. Hale, 6 Pick. 259; Ayer v. Hutchins, 4 Mass. 370, 3 AmD 232.

Mich.-Comstock v. Draper, 1 Mich. 481, 53 AmD 78.

Mo.-Turner v. Hoyle, 95 Mo. 337, 8 SW 157; Chappell v. Allen, 38 Mo. 213; Wright V. Mississippi Valley Trust Co., 144 Mo. A. 640, 129 SW 407; Williams v. Baker, 100 Mo. A. 284, 73 SW 339; Mayer v. Columbia Sav. Bank, 86 Mo. A. 108; Dryer v. Mercantile Bank, 4 Mo. A. 599.

N. J.-Tillou v. Britton, 9 N. J. L. 120.

N. Y.-Newell v. Gregg, 51 Barb. 263.

Pa.-Peale v. Addicks, 174 Pa. 549, 34 A 203. See Wilson v. Mechanics' Sav. Bank, 45 Pa. 488; Liebig Mfg. Co. v. Hill, 9 Pa. Super. 469, 43 Wkly NC 497; Haun v. Trainer, 20 Pa. Co. | 625 (this case in obiter).

Tenn.-Elgin First Nat. Bank v. Russell, 124 Tenn. 618, 139 SW 734, AnnCas1913A 203.

Eng. In re European Bank, L. R. 5 Ch. 358; Tinson v. Francis, 1 Campb. 19; McClure v. Pringle, 13 Price 8, 147 Reprint 903. Aliter if this does not appear on the paper Dunn v. O'Keeffe, 5 M. & S. 282, 105 Reprint 1055 [aff 6 Taunt. 305, 1 ECL 626, 128 Reprint 1052].

Can.-MacArthur v. MacDowall, 23 Can. S. C. 571.

N. B. McQuin v. Sorell, 7 N. B. 140. Ont.-Ching v. Jeffery, 12 Ont. A. etc., Co.

17. Texas Banking, Turnley, 61 Tex. 365. 18. See infra § 1313. 19. See infra § 1313. 20. U. S.-Pensacola State Bank v. Melton, 210 Fed. 57. Ky.-Austin V. Scottsville First Nat. Bank, 150 Ky. 113, 150 SW 8. N. Y.-McGehee v. Cooke, 55 Misc. 40, 105 NYS 60.