So in case of negotiable paper of such a character, as where it is indorsed in blank and payable to bearer, one who has taken it in the usual course of business and occupies the position of a bona fide holder, is not subject to the defense that it has been lost or stolen; nor, where he has collected the amount due thereon, can the owner recover such amount from him.15 "The ities, transferable by delivery, was established at an early period. It is founded upon principles of commercial policy, and is now as firmly fixed as the rule to which it is an exception. It was applied by Lord Holt to a bank bill in Anon, 1st Salkeld, 126. This is the earliest reported case upon the subject. He held that the action must fail by reason of the course of trade, which creates a property in the assignee or bearer.' The leading case upon the subject is Miller v. Race, 1 Burrow 452, decided by Lord Mansfield. The question in that case also related to a bank note. The right of a bona fide holder for a valuable consideration was held to be paramount against the loser. He put the decision upon the grounds of the course of business, the interests of trade, and especially that bank notes pass from hand to hand, in all respects, like coin. The same principle was applied by that distinguished judge in Grant v. Vaughan, 3 Burrow 1516, to a merchant's draft upon his banker. He there said: In 'Miller v. Race, 31st Geo. II, B. R., the holder of a bank note recovered against the cashier of a bank, though the mail had been robbed of it and payment had been stopped, it appearing that he came by it fairly and bona fide, and upon a valuable consideration, and there is no distinction between a bank note and such a note as this.' In Peacock v. Rhodes, 2 Douglas 633, he said: "The law is settled that a holder coming fairly by a bill or note has nothing to do with the transaction between the orig inal parties, unless, perhaps, in the single case, which is a hard one, but has been determined, of a note for money won at play.' The question has since been considered no longer an open one in the English law, as to any class of securities within the category mentioned." Monk v. Twenty-Third Ward Bank, 100 Misc. 488, 165 N. Y. S. 1055. 15 Atlanta Nat. Bank v. Bateman, 21 Ga. App. 624, 94 S. E. 853; Brantley v. Merchants & Farmers Bank, 22 Ga. App. 667, 97 S. E. 109; Mann v. Merchants Loan & Trust Co., 100 Ill. App. 224; Consolidated Association of Planters v. Avegno, 23 La. Ann. 552; Wheeler v. Guild, 20 Pick. (Mass.) 545, 32 Am. Dec. 231; Seybel v. Natl. Currency Bank, 54 N. Y. 288, 13 Am. Rep. 283; Nolan v. Bank of New York, 67 Barb. (N. Y.) 24; Empire Trust Co. v. Manhattan Co., 97 Misc. 694, 162 N. Y. S. 629; Kuhns v. Gettysburg Nat. Bank, 68 Pa. St. 445; Ehrlich v. Jennings, 78 S. Car. 269, 58 S. E. 922; Whiteside v. First Nat. Bank (Tenn. Ch. App.), 47 S. W. 1108; Jefferson Bank v. Chapman-White-Lyons Co., 122 Tenn. 415, 123 S. W. 641; Greneaux v. Wheeler, 6 Tex. 515; First Nat. Bank v. Beck, 2 Tex. App. Civ. Cas., § 832; Warren v. Smith, 35 Utah 455, 100 Pac. 1069; Peacock v. Rhodes, 2 Doug. 611. See Garvin v. Wiswell, 83 Ill. 215; Merriam v. Granite Bank, 8 Gray (Mass.) 254; Franklin Sav. Inst. v. Heinsman, 1 Mo. App. 336; Morris Canal & Banking Co. v. Fisher, 9 N. J. Eq. 667; Miller v. Race, 1 Burrows 452. One of the consequences law in regard to bills of exchange and promissory notes is so framed as to give confidence and security to those who receive them, for valuable consideration, in the ordinary course of business, when payable to bearer or indorsed in blank so as to be transferable by delivery; and in general a party taking such a bill under such circumstances has only to look to the credit of the parties to it, and the regularity and genuineness of the signatures and indorsements. So that if such a bill or note be made without consideration, or be lost or stolen, and afterwards be negotiated to one having no knowledge of these facts, for a valuable consideration and in the usual course of business, his title is good and he shall be entitled to receive the amount."16 And in this connection it was said in a case in the United States Supreme Court, in which this question arose in an action on bonds payable to bearer: "We are well aware of the principle involved in this inquiry. These securities are found in the channels of commerce everywhere, and their volume is constantly increasing. They represent a large part of the wealth of the commercial world. The interest of the community at large in the subject is deep rooted and wide branching. It ramifies in every direction, and its fruits enter daily into the affairs of persons in all conditions of life. While courts should be careful not so to shape or apply the rule as to invite aggression or give an easy triumph to fraud, they should not forget the considerations of equal importance which lie in the resulting from the power to pass a bill or note with a blank indorsement by mere delivery is "that if such a bill or note be lost or stolen or fraudulently misapplied any person who may become the holder of it in good faith for value and without notice, is entitled to recover the amount thereof and hold the same against the rights of the true owner at the time of the loss or theft," Caruth v. Thompson, 16 B. Mon. (Ky.) 572, 63 Am. Dec. 559. In the case of an assigned note whether it is indorsed by the owner or not it has been held that he may recover it even of a purchaser in good faith. Prather v. Weissiger, 10 Bush (Ky.) 117. Where the cashier of a bank, who had access to the safety deposit box of a customer, abstracted certain notes therefrom and sold them, by obtaining and depositing other notes in their stead, it was held that the holder of the original notes which were abstracted and sold could impress a trust on the new notes so deposited in lieu of the original ones. Irwin v. Deming, 142 Iowa 299, 120 N. W. 645. 16 Wheeler V. Guild, 20 Pick. (Mass.) 545, 32 Am. Dec. 231. other direction."17 So it is held under the Negotiable Instruments Law that "Where the instrument is in the hands of a holder in due course, a valid delivery thereof by all parties prior to him so as to make them liable to him is conclusively presumed," it being no defense, in an action on the instrument by a bona fide holder for value, that the instrument had been stolen prior to its delivery.18 And where an action is based upon the promise of one to whom the note was delivered to return it if it did not answer his purposes, and the person to whom the note was delivered lost it, and the latter promised that if he could not return it he would pay the amount of the note to plaintiff; and the person to whom the note was delivered subsequently died without either returning the note or paying it; it was held that defendant's decedent having by his negligence lost the note defendant could not require strict proof of its identity.19 Plaintiff delivered two drafts payable to his order, and later they were presented to defendant who accepted them by writing the word "accepted" across the face of each, and signed his name thereto. Plaintiff then Plaintiff then indorsed the drafts and sent them to the A national bank which discounted them and placed the proceeds to the credit of plaintiff. Later the A national bank indorsed both drafts to the B national bank and placed them in an envelope addressed to the B national bank and deposited them in the United States mail, but the drafts were never received by the B national bank, having been either lost or destroyed in transit. After maturity of the drafts demand was made of defendant for payment of the drafts which was refused. And later, on demand of the A national bank plaintiff paid the amount of the drafts. It was held that when plaintiff liquidated the drafts the defendant became liable to plaintiff as acceptor, although the drafts were not barred by the statute of limitations.20 So the indorser of notes 17 Murray v. Lardner, 2 Wall. (U. S.) 110, 122. 18 Negot. Inst. Law, art. "Form and nterpretation," § 16; Schaeffer v. Marsh, 90 Misc. 307, 153 N. Y. S. 96; Cannon v. Dillehay, 17 Ala. App. 294, 84 So. 549; Angus v. Downs, 85 Wash. 75, 147 Pac. 630, L. R. A. 1915E, 351. 19 Sandefur v. Mattingley, 16 Ark. 237. 20 F. A. Decker Co. v. Donovan (R. I.), 117 Atl. 25. can not avoid his obligation to pay the same, on default of the maker, by securing their destruction.21 In an action at law on the lost or stolen note or bill, the lost or stolen instrument and its nonproduction is a good defense thereto.22 So, lost or stolen paper, when such fact is established, can have no more force than the original; and a written copy in evidence, when established, can not operate as an estoppel of any defense which might have been set up against the original, if the original had been put in evidence.23 And it has been held that a purchase from a thief of foreign paper money payable to bearer is within the protection of the Negotiable Instruments Act.24 So, where bonds payable to bearer are offered to one for purchase, he is held to be under no obligation to make any inquiry of the persons offering them as to their right or title thereto, or to take any special precautionary measures in the purchase of such securities by which the interest of other parties would be protected.25 And, it has also been decided that one is not deprived of his character as a bona fide holder of such bonds by an omission on his part to examine and regard notices of their theft which have been left at his place of business, in the absence of actual knowledge or notice of the fact that they have been lost or stolen. 26 A bona fide holder does not, however, acquire such an absolute property in negotiable paper which has been stolen that he can transmit it to a purchaser, who takes it with knowledge of the fact that it has been stolen.27 And, where such paper has never taken effect as a binding obligation on account of a want of delivery, the fact that it was stolen may be a good defense to an action thereon.28 21 Motley v. Darling, 88 N. J. Eq. 487, 102 Atl. 53, affd. Motley v. Darling, 90 N. J. Eq. 272, 106 Atl. 892. 22 Fells Point Sav. Inst. v. Weedon, 18 Md. 320. 23 Prescott v. Johnson, 8 Fla. 391. 24 Brown v. Perera, 176 N. Y. S. 215. 25 Seybel V. National Currency Bank, 54 N. Y. 288, 13 Am. Rep. 583. 26 Seybel v. National Currency Bank. 54 N. Y. 288, 13 Am. Rep. 583. 27 Olmstead v. Winstead Bank, 32 Conn. 278, 85 Am. Dec. 260. 28 Salley v. Terrill, 95 Maine 553, 50 Atl. 896, 55 L. R. A. 730, 85 Am. St. 433; Hall v. Wilson, 16 Barb. (N. Y.) 548; Cherbonnier v. Citizens Nat. Bank (Tex. Civ. App.), 199 S. W. 307; Commercial Security Co. v. Hull (Tex. Civ. App.), 212 S. W. 986; Wells, Fargo & Co. Express v. Bilkiss (Tex. Civ. App.), 136 S. W. 798. Under the Negotiable Instruments Law,29 which provides that "Where an incomplete instrument has not been delivered it will not, if completed and negotiated, without authority, be a valid contract in the hands of any holder, as against any person whose signature was placed thereon before delivery," it is held that notes which were signed by the maker but incomplete as to amount, date and payee, were not valid obligations in the hands of a holder in due course, from one who stole them from the maker without contributory negligence on the part of the latter.30 However, where the drawer of a check signed in blank negligently left it in his office, from whence it was stolen and negotiated to a holder in due course, it can be enforced against the drawer, on the principle that where one of two persons must suffer by reason of the act of a third person, the loss must be sustained by him who put it in the power of such third person to do the act which occasioned the loss.3 31 § 589. General rules and principles-Application of rules.— In the application of the general rule it is decided that recovery by a bona fide holder of a note indorsed in blank can not be defeated by the fact that it was stolen.32 And, where a person drew a check to his own order, indorsed it in blank and had it certified, and it was subsequently stolen from him and came into the possession of one who was a bona fide holder, it was held that the fact that the check had been stolen was no defense to an action by such holder.33 So, where a check payable to bearer was received during banking hours of the day on which it was drawn, in the usual course of business, under circumstances not calculated to excite suspicion, and no negligence was shown from which bad faith could be inferred, it 29 Negot. Inst. Law, art. "Form and Interpretation," § 15. 30 Holzman Cohen & Co. v. Teague, 172 App. Div. 75, 158 N. Y. S. 211, modifying 156 N. Y. S. 290. 31 Phillips v. A. W. Joy Co., 114 Maine 403, 96 Atl. 727. See also, S. S. Allen Grocery Co. v. Bank of Buchanan County, 192 Mo. App. 476, 182 S. W. 777 (where it is held that neg ligence in keeping a signed blank negotiable instrument which was stolen, filled out and negotiated, can not be regarded as the proximate cause of the loss). 32 Mann v. Merchants Loan & T. Co., 100 Ill. App. 224. 33 Nolan v. Bank of New York, 67 Barb. (N. Y.) 24. |