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which contravenes public policy." Considerations impeding the course of public justice, as dropping a criminal prosecution for a felony or misdemeanor, or suppressing evidence are illegal as against public policy. 42 It would be impossible, within the scope of this work to exhaustively discuss the many questions relating to considerations contravening public policy. Such a discussion belongs more properly to works on contracts, and reference should be made to the principles contained in such works relating to considerations for ordinary contracts, to determine the rules controlling the legality of the consideration of commercial paper.

d. In violation of statute.- Statutory enactments have made many acts illegal as considerations for the support of commercial paper. Usurious provisions contained in commercial paper render them void and unenforceable against the maker, in all those 41. In New York it was held at an 418; Morril v. Goodenow, 65 Me. 178; early date that if an insolvent give Taylor v. Jacques, 106 Mass. 291; his note for the debt to a creditor, Clark v. Ricker, 14 N. H. 44; Haynes upon the understanding that the cred- v. Rudd, 102 N. Y. 372, 7 N. E. 287, itor sign the insolvent's petition, the 55 Am. Rep. 815. note is void, as being against the policy, and in fraud of the law. Payne v. Eden, 3 Caines (N. Y.), 213; Waite v. Harper, 2 Johns. (N. Y.) 386; Wiggin v. Bush, 12 Johns. (N Y.) 306. And the same is true of a note given by a third person to a creditor of the bankrupt. Yeomans v. Chatterton, 9 Johns. (N. Y.) 295; Bell v. Leggett, 7 N. Y. 176.

In other States the following cases support the illegality of such a consideration: Marble v. Grant, 73 Me. 423; Case v. Gerrish, 15 Pick. (Mass.) 49; Harvey v. Hunt, 119 Mass. 279; Blasdel v. Fowle, 120 Mass. 447, 21 Am. Rep. 533; Walker v. Mayo, 143 Mass. 42; Winn v. Thomas, 55 N. H. 294; Sharp v. Teese, 9 N. J. L. 352; Fulton v. Day, 63 Wis. 112, 23 N. W. 99.

And a note given for money loaned to be applied, with the knowledge of the lender, to suppress a prosecution for a crime, is void. Plumer v. Smith, 5 N. H. 553, 22 Am. Dec. 478; as is also a note to suppress a search of a certain time. maker's house for

Merrill v. Carr, 60 N. H. 114.
Nature of offense must be public,
involving moral turpitude and affect-
ing public morals. Bowen v. Buck, 28
Vt. 308.

Notes to compound misdemeanors void, Jones v. Rice, 35 Mass. 440, 29 Am. Dec. 612; Gray v. Siegler, 2 Strobh. (S. C.) 117; to prevent prosecution for adultery, Drennan v. Douglas, 102 Ill. 341, 40 Am. Rep. 595; in satisfaction of damages for an assault is valid, Matthison v. Hanks, 2 Hill (S. C.), 625; but to suppress prosecution for forgery is void, Oxford Bank v. Kirk, 90 Pa. St. 49; Welborn v. Norwood, 1 Tex. Civ. App. 614, 20 S. W. 1129; Ring v. Windsor Co. Mut. Fire Ins. Co., 51 Vt. 563; for seduction or rape, Smith v. Richards, 29 Conn. 232; Armstrong v. Lester, 43 Iowa, 159; for embezzlement, Crowder v. Reed, 80 Ind. 1; Smith v. Steely, 80 Iowa, 738, 45 N. W. 912; Roll v. Raquet, 4 Ohio, 400, 22 Am. Dec. 759; Groesbeck v. Marshall, 44 An agreement based on compounding S. C. 538, 22 S. E. 743; Peckham v. a crime is void. Winne v. Whisenant, Van Bergen, 10 N. Dak. 43, 84 N. W. 37 Ala. 46; Wolf v. Fletemeyer, 83 Ill. 566.

42. Byles on Bills (16th ed.), P. 162. See Nerot v. Wallace, 3 T. R. (Eng.) 17; Fallows v. Taylor, 7 T. R. (Eng.) 475; Edgcombe v. Rodd, 5 East (Eng.), 294. Merely refraining from prosecution, on taking from a defaulting debtor a bill indorsed by him, is not necessarily compounding a crime. Flower v. Sadler, L. R., 9 Q. B. D. (Eng.) 83.

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jurisdictions where usury laws have been enacted;43 but a bill or note which is not usurious at its inception will not be affected, as far as the liability of the maker is concerned, by any subsequent usurious transaction in respect to such bill or note between other than the original parties.* Wagers are declared by statute in most States to be illegal, and notes or bills given therefor are based upon illegal considerations and are void.45 A note for money loaned for gambling purposes with the knowledge of the lender is generally held within the prohibition.46 Although it is otherwise where the money loaned was used for the payment of a gambling debt.47 A bill or note for liquors sold contrary to the revenue or

43. Wilkie v. Roosevelt, 3 Johns. Gregg, 26 Tex. 506; Swinney v. Ed(N. Y.) 206, 2 Am. Dec. 149; Young wards, 8 Wyo. 54, 55 Pac. 306, 80 Am. v. Berkely, 2 N. H. 410; Lynchburg St. Rep. 916. Nat. Bank v. Scott, 91 Va. 652.

44. Cram v. Hendricks, 7 Wend. (N. Y.) 569. In the case of Munn v. Commission Co., 15 Johns. (N. Y.) 44, 8 Am. Dec. 219, it was held that if a bill be free from usury as between the immediate parties to it, no after transaction with another person can, as respects those parties, invalidate it. So that such a bill may be sold to a purchaser for an amount less than the face and legal interest thereon for the time it has to run, and such purchaser may recover the full amount of the maker or acceptor. See also Oakley v. Boorman, 21 Wend. (N. Y.) 593; Curtis v. Leavitt, 15 N. Y. 173, 218; Nichols v. Fearson, 7 Pet. (U. S.) 107; Corcoran v. Powers, 6 Ohio St. 19; King v. Johnson, 3 McCord L. (S. C.) 365; Armstrong v. Gibson, 31 Wis. 61, 11 Am. Rep. 599.

Renewal notes.- If notes secured by mortgage, given for the purchase price of slot machines, are void, because such sale constitutes an illegal gambling contract, and are subsequently surrendered, and new notes secured by the mortgage are given in lieu of the originals, the new notes are also illegal and void, and subject to the same defenses as the original notes. Kuhl v. Gally Universal Press Co., 123 Ala. 452, 26 South. 535.

Notes, etc., for dealing in futures are generally held to be based on illegal considerations. See Pearce v. Foote, 113 Ill. 228, 55 Am. Rep. 414; Scheider v. Turner, 130 Ill. 28, 22 N. E. 497, 6 L. R. A. 164; Davis v. Davis, 119 Ind. 511, 21 N. E. 1112; Sprague v. Warren, 26 Neb. 326, 41 N. W. 1113, 3 L. R. A. 679; Story v. Salomon, 71 N. Y. 420; Snoddy v. American Nat. Bank, 88 Tenn. 573, 13 S. W. 127, 17 Am. St. Rep. 918, 7 L. R. A. 469; Seeligson v. Lewis, 65 Tex. 215, 57 Am. Rep. 215; Oliphant v. Markham, 79 Tex. 543, 15 S. W. 569, 23 Am. St. Rep. 363. It must be shown that

45. Negotiable instruments for gambling debts.- A check given for a gambling debt is void. Cunningham v. Gans, 79 Hun (N. Y.), 434; Denniston v. Cook, 12 Johns. (N. Y.) 376; Irwin v. Marquette (Ind. App.), 59 N. E. 38. And so is a note neither party intended that the comgiven in the place of a protested check given for a gambling debt. Hollingsworth v. Moulton, 53 Hun (N. Y.), 91, 6 N. Y. Supp. 392, affd. in 119 N. Y. 612, 23 N. E. 1143. See also Shirley v. Howard, 53 Ill. 453; Brit- 46. Peck v. Briggs, 3 Den. (N. Y.) tain v. Duling, 15 B. Mon. (Ky.) 138; 107; Ruckman v. Bryan, 3 Den. (N. Crawford v. Storms, 41 Miss. 540; Turner v. Peacock, 13 N. C. 303; Lagonda Nat. Bank v. Portner, 46 Ohio St. 381, 21 N. E. 634; Giddens v. Lea, 3 Humph. (Tenn.) 133; Knight v.

modity purchased should be delivered at the future time specified. Thompson v. Ide, 6 R. I. 217; Eggleston v. Rumble, 66 Hun, 627, 20 N. Y. Supp. 819.

Y.) 340; Plank v. Jackson, 123 Ind. 424, 26 N. E. 568; White v. Buss, 3 Cush. (Mass.) 448.

47. Wyman V. Fiske, 3 Allen (Mass.), 238, 80 Am. Dec. 66; Hoyt

excise laws is based upon an illegal consideration;48 and in general, it may be said that any bill or note based upon the performance of an act which is expressly prohibited, or which is within the true meaning of such prohibition, is void.49

52. Fraud and mistake.

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a. Fraud.-Fraud avoids every contract.5 If the consideration of a note or bill can be shown to be vitiated by fraud, and the maker or drawer had no knowledge of such fraud, or received no benefit from the contract, but as soon as he discovered the fraud elected to repudiate the contract, he may successfully defend a suit brought against him by the party to whom such note or bill was given.51 If there is a total fraud in the consideration of a promissory note, it has been held that there was an adequate remedy at law by defense against the note in suit.52 If a person is induced by false representations to execute his note to another, the note is without consideration;53 but if the facts concerning a consideration

v. Cross, 108 N. Y. 76, 14 N. E. 801; Ballard v. Green, 118 N. C. 390, 24 S. E. 777; as to money paid at request of a loser, see White v. Yarborough, 16 Ala. 109; Jones v. Sevier, 1 Litt. (Ky.) 50, 13 Am. Dec. 218; but see Scollans v. Flynn, 120 Mass. 271.

48. Creekmore v. Chitwood, 7 Bush (Ky.), 319; Kessel v. Albetis, 56 Barb. (N. Y.) 362; Rahter v. Lancaster Bank, 92 Pa. St. 393; Adams v. Hackett, 27 N. H. 289, 59 Am. Dec. 376.

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129; Rash v. Farley, 12 Ky. L. Rep. 913, 15 S. W. 862; Van Meter v. Spurrier, 94 Ky. 22, 21 S. W. 337; Wheeler v. Russell, 17 Mass. 258; St. Paul & Minneapolis Trust Co. v. Jenks, 57 Minn. 248, 59 N. W. 299; Carlton v. Bailey, 27 N. H. 230; Utica Ins. Co. v. Cadwell, 3 Wend. (N. Y.) 296.

50. As was said by the Lord Chief Baron in the case of Rogers v. Hadley, 32 L. J. Exch. (Eng.) 248: "Fraud cuts down everything. The law states it is against fraud to the extent of breaking through almost every rule, sacrificing every maxim, getting rid of every ground of opposition. The law so abhors fraud that it will not allow technical difficulties of any kind to interfere to prevent the success of justice and truth."

51. Byles on Bills (16th ed.), p. 157; Mills v. Oddy, 2 C., M. & R. (Eng.) 103.

49. Lewis v. Headley, 36 Ill. 433, 87 Am. Dec. 227. In the case of Foss v. Cummings, 149 Ill. 353, 36 N. E. 553, it was held that under Rev. Stats., chap. 38, § 130, which makes it a penal offense to corner the market, or attempt to do so," and declares all contracts made for that purpose void, no recovery could be had upon a note given for advances made, and expenses incurred in purchasing corn in pursu- 52. Barkhamsted v. Case, 5 Conn. ance of an agreement or understanding 528; see also Litchfield v. Peck, 29 to enhance the price of corn. And Conn. 384; Knotts v. Preble, 50 Ill. see generally as to considerations 226, 99 Am. Dec. 514; Fleming v. based upon acts in violation of statute, Brown v. Tarkington, 3 Wall. (U. S.) 377, 18 L. Ed. 255; Davidson v. Lanier, 4 Wall. (U. S.) 447, 18 L. Ed. 377; Pacific Guano Co. v. Mulleen, 66 Ala. 582; Coyle v. Campbell, 10 Ga. 570; Johnston v. McConnell, 65 Ga.

Greene, 48 Kan. 646, 30 Pac. 11; First
Nat. Bank v. Howe, 1 Mont. 604.

53. Conklin v. Vail, 31 Ill. 166; Hall v. Marks, 56 Ill. 125; Beall v. January, 62 Mo. 434; Jones v. Dana, 24 Barb. (N. Y.) 395; Hickson v. Early, 62 S. C. 42, 39 S. E. 782. But

were or should have been known to the maker from other sources, there is no valid defense.54 Where a note is given for a greater amount than that which is due, or which is lawfully payable, induced by the fraudulent representations of the payee, a recovery can be had only on the amount actually due or payable.55 We have already stated that gross inadequacy of consideration is admissible as evidence of fraud;56 and if the inadequacy of consideration and other circumstances prove the fraud, the note will be deemed void.57 b. Fraudulent as to creditors.- An instrument given in fraud of third persons is as invalid as in the case of instruments where the fraud directly affects the parties thereto. The cases most frequently arising under this head are those where bills or notes are given to defraud creditors. Such notes are fraudulent and void as to such creditors,58 and in many cases have been held to be void as between the parties themselves.59 A promissory note given in payment of the price of property for the purpose of defrauding creditors is illegal and void as to the consideration and the payee cannot recover upon such note.60

the fraud affecting the value of the consideration alone is not sufficient. Taft v. Meyerscough, 92 Ill. App. 560. 54. Sullivan v. Collins, 18 Iowa, 228; Sachleben v. Heintze, 117 Mo. 520, 24 S. W. 54; Daily v. Brennan, 87 Wis. 36, 57 N. W. 963. If the representations were a mere matter of opinion, the maker of the note being as well informed in regard to the facts as the payee, there is no fraud. Jackson v. Stockbridge, 29 Tax. 394, 94 Am. Dec. 290. See also Walton Guano Co. v. Copelan, 112 Ga. 319, 37 S. E. 411, 52 L. R. A. 268; State Bank v. Gates, 114 Iowa, 323, 86 N. W. 311.

55. Haycock V. Rand, 5 Cush. (Mass.) 26; Collins Iron Co. v. Burkam, 10 Mich. 283; Brown v. North, 21 Mo. 528; Bean v. Jones, 8 N. H. 149; Griffiths v. Parry, 16 Wis. 218; Still v. Snow, 66 Vt. 277, 29 Atl. 250. 56. See ante, § 50, c. 57. Byles on Bills, p. 57. Inadequacy of consideration. The case of Soloman v. Turner, 1 Stark. (Eng.) 51, was where the plaintiff gave a promissory note for some pictures. It was proposed to prove that the sum for which the note was given infinitely exceeded the value of the pictures. Lord Ellenborough said: "I will not admit the evidence for the

purpose of reducing the damages, by showing that the pictures were of an inferior value; but if you can, by the inadequacy of the value and other circumstances, prove fraud on the part of the plaintiff, so as to show that there was no contract at all, the evidence will be admissible. If it falls short of that, it will be unavailing."

58. Butler v. Miller, 73 Me. 151, 40 Am. Rep. 348; Bryant v. Mansfield, 22 Me. 360.

59. A promissory note given to one creditor in consideration of an agreement in fraud of the maker's other creditors is void as between the parties. Fay v. Fay, 121 Mass. 561; Howe v. Litchfield, 3 Allen (Mass.), 443; Walker v. Mayo, 143 Mass. 42, 8 N. E. 873; Hamilton v. Skull, 25 Mo. 165, 69 Am. Dec. 460; Harwood v. Knapper, 50 Mo. 456.

60. Notes in fraud of creditors.A note which is given for property transferred to the drawer for the purpose of defrauding the creditors of the payee cannot be enforced in the hands of the payee against the drawer. Church v. Muir, 33 N. J. L. 318.

In New York it was held, in an action on a promissory note, brought by one not a bona fide holder, that the maker may defend on the ground that

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c. Mistake. If, through the mutual mistake of the parties to a note, the consideration is wrongly expressed, or the note is based upon a consideration which does not exist, equity will grant relief to the maker as against the payee or any other holder having notice of such mistake, as where a note was executed by mistake for a debt not due by the maker, it was held that such mistake was a good defense in an action on such note as against the payee, but not as against an innocent purchaser for value before maturity.82

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$ 53. Presumption of consideration.

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a. Statutory rule.- The Negotiable Instruments Law provides that: "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." This seems to be a statutory declaration of the general rule that contracts under seal or executed pursuant to a statute, promissory notes, and inland bills of exchange enjoy a privilege not conceded to other instruments, of being presumed to be founded upon a valuable consideration.64

unless there is fraud or misrepresentation. Cartwright v. Gardner, 5 Cush. (Mass.) 273.

the note was given for lands sold to defraud creditors, though the maker himself was a party to the fraud. Nellis v. Clark, 4 Hill (N. Y.), 424; 62. Reardon v. Moriarty, 30 La. Johnson v. Moreley, Hill & Den. (N. Ann. 120; Beland v. Anheuser-Busch Y.) 29; Niver v. Best, 10 Barb. (N. Brewing Assn., 157 Mo. 593, 58 S. Y.) 369; Williams v. Schreiber, 14 W. 1. Hun (N. Y.), 38.

(N. Y.), § 50. statutes of other This section has

63. Neg. Inst. L. 61. Mistake as to consideration. For same section in In an action on a promissory note States see Appendix. given on a settlement of account, been construed and applied in Bringit is a good defense that the balance man v. Von Glahn, 71 App. Div. (N. was produced by a mistake, when in Y.) 537, 75 N. Y. Supp. 845. truth nothing was due. Mercer v. 64. In New York, the following are Clark, 3 Bibb (Ky.), 224. And the the leading authorities on this propodefendant may show in such a suit sition: Carnwright v. Gray, 127 N. Y. that the note was executed by mistake 91, 27 N. E. 835, 24 Am. St. Rep. 424, for too large an amount. Claxon v. Demaree, 13 Bush (Ky.), 172. See also Kennedy v. Goodman, 4 Neb. 585, 16 N. W. 834.

An expectation and belief of a great benefit to result to the promisor from the transaction which was the consideration for a promissory note, or the fact that it was given under a mutual mistake of fact on the part of the parties, not in reference to any material fact, but of some future, imaginary, or speculative event, does not constitute a defense to the action on such note,

12 L. R. A. 845; Hegeman v. Moon, 131 N. Y. 462, 30 N. E. 487; Raubitschek v. Blank, 80 N. Y. 478; Langley v. Wadsworth, 99 N. Y. 61, 1 N. E. 106; White v. Davis, 62 Hun (N. Y.), 622, 17 N. Y. Supp. 548. The following cases in other States are cited as supporting this proposition:

Alabama.- Bird v. Wooley, 23 Ala. 717; Martin v. Foster, 83 Ala. 213, 3 South. 422.

California.- Poyrier v. Gravel, 88 Cal. 79, 25 Pac. 962; Younglove v. Cunningham, 43 Pac. 755.

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