but proof of a want or failure of consideration does not, in most jurisdictions, operate to shift the burden of proof to the plaintiff.73 d. Application as to party prior to defective title.- Where a person became bound on an instrument prior to some act or circumstance which affected its title and produced a defect therein, he cannot, by proving such subsequent defect, shift the burden of proof and require the holder to show affirmatively that he is a bona fide holder for value. Dixon, Ch. J., said: "The fraudulent putting in circulation of a negotiable instrument which operates to change the burden of proof and to call upon the plaintiff to prove his title as a bona fide holder, is where this is done fraudulently as to the defendant or maker, and not where it is so done as to the payee, or some intermediate holder or party to the paper." 75 Cal. 173, 23 Pac. 286; Terry v. Taylor, 64 Iowa, 35, 19 N. W. 841; Holden v. Cosgrove, 12 Gray (Mass.), 216; Smith v. Edgeworth, 3 Allen (Mass.), 233; Emerson v. Burns, 114 Mass. 348; Porter v. Knapp, 6 Lans. (N. Y.) 125. Usury. Where usury in the original transaction is proved the burden is upon the plaintiff to show that he is a bona fide holder for value, and without notice. McDonald v. Aufdengarten, 41 Neb. 40, 59 N. W. 762; Colby v. Parker, 34 Neb. 510, 52 N. W. 693; Smith v. Mohr, 64 Mo. App. 39; Seymour v. Strong, 1 Hill (N. Y.), 563. N. Y. 85. See also Commissioners v. Clark, 94 U. S. 285; Collins v. Gilbert, 94 U. S. 753, 24 L. Ed. 170; In re Tallassee Mfg. Co., 64 Ala. 593; McCann v. Lewis, 9 Cal. 246; Bank of Pittsburgh v. Neal, 22 Ind. 96; Kellogg v. Curtis, 69 Me. 212; Baxter v. Ellis, 57 Me. 180; Magee v. Badger, 34 N. Y. 247; Belmont Branch Bank v. Hoge, 35 N. Y. 65; Harger v. Worrall, 69 N. Y. 370; Sloan v. Union Banking Co., 67 Pa. St. 479; Cook v. Helms, 5 Wis. 107. The indorsee in an action by him against the maker cannot be called on to prove consideration until the defendant has shown that the note 73. Want or failure of considera- was obtained or put in circulation by tion.- Proof of want or failure of fraud or undue means. Kelly v. Ford, consideration between a maker and 4 Iowa, 140; Knight v. Pugh, 4 payee of a promissory note does not Watts & S. (Pa.) 445, 39 Am. Dec. change the presumption that one to whom the latter has indorsed and delivered the note is a bona fide holder for value, but the burden of proof is upon the maker. Mechanics & Traders' Nat. Bank v. Crow, 60 183. 99; Gray v. Bank of Kentucky, 29 74. Neg. Inst. L. (N. Y.), § 98. CHAPTER VII. Liabilities of Parties. § 80. Liability of Maker. a. Statutory provision. b. In general. c. Where maker signs as surety. § 81. Liability of Drawer. a. Statutory provision. b. Liability in general. c. Words limiting liability. § 82. Liability of Acceptor. a. Statutory provision. b. Liability to pay. c. Admission of existence of drawer. d. Admission of genuineness of signature. e. Admission of capacity and authority of drawer. g. Liability of holder acquiring before acceptance. § 83. Contract of Indorsement; Who Deemed Indorser. a. Contract of indorsement. b. Who deemed indorser; statutory provision. § 84. Liability of Irregular Indorser. a. Statutory provision. b. General rule. c. Effect of statute. § 85. Warranties where Instrument is Negotiated by Delivery or Quali fied Indorsements. a. Statutory provision. b. Warranty of genuineness. c. Warranty of title. d. Warranty of capacity to contract. e. Knowledge of fact that would impair validity or render it valueless. § 86. Liability of General Indorser. a. Statutory provision. b. Warranty of genuineness, title and capacity of parties. c. Warranty of validity of instrument. d. Engagement to pay. e. Liability of indorser on instrument negotiable by delivery; statutory provision. § 87. Order in which Indorsers are Liable. a. Statutory provision. b. Presumption as to order. c. Agreement between indorsers. d. Indorsement by joint payees and indorsees. § 88. Liability of Agent or Broker. a. Statutory provision. b. General rule. § 89. Llability of Accommodation Indorsers. b. Contract of indorsement; liability in general. § 80. Liability of maker. a. Statutory provision.— The Negotiable Instruments Law provides that: "The maker of a negotiable instrument, by making "it, engages that he will pay it according to its tenor; and admits "the existence of the payee and his then capacity to indorse." 76 This is an elementary rule of commercial law. b. In general. It will be noticed by an examination of a following section of the Negotiable Instruments Law 77 that the liability of a maker of a promissory note and an acceptor of a bill of exchange are substantially the same. The maker of a promissory note is the principal debtor to be called upon before any of the other parties can be made liable.78 The maker "undertakes to pay the money stated in the note at the time when it becomes due, or, as the common phrase is, at its maturity, to the payee or other person entitled to receive the same, according to the tenor thereof. He is not bound to pay the note until its maturity; and if he pays it before, and it is not surrendered up, he will be liable to any subsequent bona fide holder for value without notice before it become due." The maker is bound by the express terms of the 9 79 76. Neg. Inst. L. (N. Y.), § 110. 78. 1 Parsons on Notes and Bills, For same section in statutes of other 229. States see Appendix. 79. Story on Promissory Notes, 77. Neg. Inst. L. (N. Y.), § 112. § 113. instrument; it must be paid by him in the manner and at the time and place specified therein. It is no defense in an action against the maker by an indorsee that the indorser had secured the payment of the note to the indorsee; by his execution of the note he has bound himself as principal debtor, and he is primarily liable;81 nor is a maker relieved from liability to a holder because of the error of a bank officer, in omitting to apply funds in the bank, to the payment of the note, when presented by the holder.82 If a note is payable to bearer or is indorsed in blank, the maker will be released from his liability by payment to a person in possession with an apparent lawful right of ownership;83 but if there are circumstances clearly showing that the holder is in unlawful possession of the note he would be justified in withholding payment." 80. Brown v. Noyes, Fed. Cas. No. 2,023. Place of payment.-Negotiable paper is personal property, the location of which is that of the owner, and hence, where no place of demand is stipulated, the maker must seek the holder to pay it. Ballard v. Webster, 9 Abb. Pr. (N. Y.) 404. In the case of Adams v. Rutherford, 13 Ore. 78, 8 Pac. 896, it was held that where a note is payable at a particular place, the payor must be at that place when the note matures, ready and willing to pay the same; and if the payee is not there to receive it, he must deposit the amount due in a bank or other place, to be paid or kept intact. 81. Hoyt v. Mead, 13 Hun (N. Y.), 327; Dickerson v. Burke, 25 Ga. 225; Dows v. McMichael, 6 Paige (N. Y.), 139. See also Jones v. Bristow, 51 App. Div. (N. Y.) 302, 64 N. Y. Supp. 892. 82. Hecksher v. Shoemaker, 47 Pa. St. 249. Nor can the maker refuse to pay because the holder has taken the note from the payee for a debt which the payee was not required to pay. Gould v. Leavitt, 92 Me. 416, 43 Atl. 17. 83. Grant v. Vaugh, 3 Burr. (Eng.) 1516; Miller v. Rose, 1 Burr. (Eng.) 452; Story on Promissory Notes, § 113. The possession of an instrument affords prima facie proof of the right to receive payment for the owner. Streeter v. Poor, 4 Kan. 412; Cothran v. Collins, 29 How. Pr. (N. Y.) 113; Paulman v. Claycomb, 75 Ind. 64. 84 And it has been held that the maker of a negotiable promissory note may rightfully pay it to any person holding the note if he acts in good faith, and has no reason to suspect that the holder is not the rightful owner. Vinson v. Vives, 24 La. Ann. 336; Ellsworth v. Fogg, 35 Vt. 355; Greve v. Schweitzer, 36 Wis. 554; Edwards v. Parks, 60 N. C. 598. This is especially true in case of notes payat e to bearer or indorsed in blank. Paris v. Moe, 60 Ga. 90; Merritt v. Cole, 14 Hun (N. Y.), 324; Lamb v. Matthews, 41 Vt. 42; Long v. Thayer, 150 U. S. 520, 14 Sup. Ct. 189, 37 L. Ed. 1167; Stoddard v. Burton, 41 Iowa, 582. But there are cases holding that mere possession is not sufficient to authorize payment, where the circumstances within the knowledge of the maker were sufficient to arouse a suspicion as to the authority of the holder to receive payment. Tarpley v. McWhorter, 56 Ga. 410; Nelson v. Tumlin, 74 Ga. 171; Netterville v. Stevens, 3 Miss. 642. 84. Lee v. Ware, 1 Hill (S. C.), 313. Payment to fraudulent holder releases the maker if he had no notice of the fraud. Alexander v. Rollins, 14 Mo. App. 109; Brennan v. Merchants & Mfrs.' Bank, 62 Mich. 343, 28 N. W. 881. And payment to thief or finder of note payable to order, even where the maker makes no inquiry as to rights of holder, will relieve the maker. Cothran v. Collins, 29 How. Pr. (N. Y.) 113. Payment by maker of note to the The possession by an assumed agent of a promissory note payable to the order of the payee, and not indorsed by him, is not alone sufficient evidence of his authority to authorize a payment thereof to him.85 87 c. Where maker signs as surety.- Where two or more persons execute a note, and one of them adds to his signature the word surety," all are to be regarded as makers of the note, and suit may be brought against them all.86 The only value of the word surety" is to show his right to reimbursement from the principal, and not to limit his liability to the payee. While the affixing of this word to the signature of one or more of the makers does not affect the terms or legal effect of the contract, it indicates the relation in which the parties stand to each other, and the payee and other subsequent parties to the note must deal with it with the knowledge that the makers occupy such position.88 The au payee in possession, with knowledge that he had been adjudged non compos mentis, and that a guardian had been appointed for him, is invalid and will not discharge the maker from liability to the guardian. Leonard v. Leonard, 14 Pick. (Mass.) 280. 85. Doubleday v. Kress, 50 N. Y. 410; Wangner v. Grimm, 169 N. Y. 421, 62 N. E. 569. 86. In New York the following cases are in point: Robinson v. Lyle, 10 Barb. (N. Y.) 512; Hoyt v. Mead, 13 Hun (N. Y.), 327; Beaman v. Lyon, 27 Weekly Dig. 168. He restrict his liability, and that this fact In other States the following cases may be cited: Aud v. Magruder, 10 Cal. 282; Southern Cal. Nat. Bank v. Wyatt, 87 Cal. 616, 25 Pac. 918; Bond v. Storrs, 13 Conn. 412; Rose v. Madden, 1 Kan. 445; Little v. Weston, 1 Mass. 156; Hunt v. Adams, 5 Mass. 358, 4 Am. Dec. 68; Inkster v. First Nat. Bank, 30 Mich. 143; Leonard v. Sweetzer, 16 Ohio, 1; Kleckner v. Klapp, 2 Watts & S. (Pa.) 44; Ballard v. Burton, 64 Vt. 387, 24 Atl. 769, 16 L. R. A. 664; Dart v. Sherwood, 7 Wis. 523, 76 Am. Dec. 228. Rebuttal of presumption. In the Gurney, 64 N. Y. 457, 463, the court case of Ballard v. Burton, 64 Vt. 387, 24 Atl. 769, 16 L. R. A. 664, it was insisted that the affixing of the word "surety" to the name of the defendant on the back of a certificate of deposit was notice to the plaintiff that the defendant intended to limit and 87. Aud v. Magruder, 10 Cal. 282. 88. Use of word "surety."— Harris V. Brooks, 21 Pick. (Mass.) 195. In the case of Hubbard v. said: "It would have been precisely the same contract if the defendant had added the word 'surety' to his name. The addition of that word would not have varied it in the slightest degree. The only service it would have performed would have been to give notice |