rule may be concisely stated in another form as follows: A per-
son who takes negotiable securities before due for a valuable
Law, 202 Ill. App. 88; Morey v. Simp-
son, 197 Ill. App. 55; Morrison v.
Fishel, 64 Ind. 177; Bremmerman v.
Jennings, 60 Ind. 175; Bright Nat.
Bank v. Hartman, 61 Ind. App. 440,
109 N. E. 846; Johnson County Savings
Bank v. Capitol, 47 Ind. App. 461, 94
N. E. 797; Union Trust Co. v. Adams,
54 Ind. App. 166, 101 N. E. 741; Hal-
stead v. Woods, 48 Ind. App. 127, 95
N. E. 429; Judy v. Warne (Ind. App.),
100 N. E. 483; Krieg v. Palmer Nat.
Bank (Ind. App.), 111 N. E. 31 (cer-
tificate of deposit); Parker v. Hick-
man, 61 Ind. App. 152, 111 N. E. 649;
Harris v. Pate, 7 Ind. Ter. 493, 104
S. W. 812; Council Bluffs Iron Works
v. Cuppey, 41 Iowa 104; Holden v.
Clark, 16 Kans. 346; Clarke v. Tan-
ner, 100 Ky. 275, 19 Ky. L. 590, 38
S. W. 11; Pratt v. Rounds, 160 Ky.
358, 169 S. W. 848; American Nat.
Bank v. Madison, 144 Ky. 152, 137 S.W.
1076, 38 L. R. A. (N. S.) 597; Gaert-
ner v. Kraft, 164 Ky. 712, 176 S. W.
207; Taylor v. Bowles, 28 La. Ann.
294; L. H. Gardner & Co. v. Maxwell,
27 La. Ann. 561; Kohlman v. Ludwig,
5 La. Ann. 33; Pralon v. Aymard, 12
Rob. (La.) 486; Bush v. Wright, 10
Rob. (La.) 23; Maurin v. Chambers,
6 Rob. (La.) 62; Melancon v. Me-
lancon, 4 Rob. (La.) 33; Bordelon v.
Kilpatrick, 3 Rob. (La.) 159; Robin-
son v. Shelton, 2 Rob. (La.) 277; Jones
v. Young, 19 La. 553; Van Pelt v.
Eagle Ins. Co., 18 La. 64; Hagan v.
Caldwell, 15 La. 380; Crosby v. Heartt,
15 La. 304; Lanclos v. Robertson, 3 La.
259; Abat v. Gormley, 3 La. 238; Le
Blanc v. Sanglair, 12 Mart. (O. S.)
(La.) 402, 13 Am. Dec. 377; Hubbard
v. Fulton, 7 Mart. (O. S.) (La.) 241;
Thompson v. Gibson, 1 Mart. (N. S.)
(La.) 150; Bank of Morgan City v.
Herwig, 121 La. 513, 46 So. 611; Ho-
bart v. Penny, 70 Maine 248; Wait v.
Chandler, 63 Maine 257; Pettee v.
Prout, 3 Gray (Mass.) 502, 63 Am. Dec.
778; Cone V. Baldwin, 12 Pick.
(Mass.) 545; De Riset v. Loughery,
205 Mass. 86, 91 N. E. 297; Dolph v.
Stubblefield, 135 Md. 147, 108 Atl.
488; Bostwick v. Dodge, 1 Doug.
(Mich.) 413, 41 Am. Dec. 584; Mer-
chants Sav. Bank v. Cross, 65, Minn.
154, 67 N. W. 1147; Gale v. Birming-
ham, 64 Minn. 555, 57 N. W. 659;
Mercien v. Cotton, 34 Miss. 64; Craig
v. Vicksburg, 31 Miss. 216; First Nat.
Bank v. Pennington, 57 Nebr. 404, 77
N. W. 1084; Doe v. Burnham, 11 Fost.
(N. H.) 426; Price v. Keen, 40 N.
J. L. 332; Perth Amboy Mut. Loan,
Homestead & Bldg. Assn. v. Chapman,
178 N. Y. 558, 70 N. E. 1104, affg. 80
App. Div. 556, 81 N. Y. S. 38; Citizens
State Bank v. Cowles, 39 Misc. 571, 80
N. Y. S. 598; Smith v. Weston, 88
Hun 25, 24 N. Y. S. 557; Elwell v.
Dodge, 33 Barb. 336; Equitable Trust
Co. v. Taylor, 146 App. Div. 424, 131
N. Y. S. 475; Equitable Trust Co.
v. Newman, 146 App. Div. 953, 131 N.
Y. S. 1113; Equitable Trust Co. v. Gom-
pert, 74 Misc. 467, 132 N. Y. S. 321;
Toms v. Jones, 127 N. Car. 464, 37 S.
E. 480; Little v. Dunlap, 44 N. Car.
40; Reddick v. Jones, 28 N. Car. 107,
44 Am. Dec. 68; Kitchen v. Louden-
back, 48 Ohio St. 177, 26 N. E. 979,
affg. 29 Am. St. 540, 3 Ohio Cir. Ct.
228; Johnson v. Way, 27 Ohio St. 374;
Second Nat. Bank v. Hemingray, 31
Ohio St. 168; Baily v. Smith, 14 Ohio
St. 396; Showalter v. Webb, 42 Okla.
297, 141 Pac. 439; Hodgins v. North-
western Finance Co., 46 Okla. 95, 148
Pac. 717; Norman v. Lambert (Okla.),
153 Pac. 1097; Cedar Rapids Nat. Bank
v. Bashara, 39 Okla. 482, 135 Pac. 1051;
Conqueror Trust Co. v. Bayless Drug
consideration without knowledge of any defect of title and in
good faith holds such paper by a valid title good as against all
Co., 75 Okla. 288, 183 Pac. 419; West-
lake v. Cooper, 69 Okla. —, 171 Pac.
859, L. R. A. 1918D, 522; First Nat.
Bank v. Burns, 88 Ohio 434, 103 N. E.
93, 49 L. R. A. (N. S.) 764; Northern
Nat. Bank v. Arnold, 187 Pa. 356, 40
Atl. 794, 15 Lanc. L. Rev. 345, 31 Chic.
Leg. N. 36, 15 Bkg. L. J. 529; Bullock
v. Wilcox, 7 Watts (Pa.) 328; Peoples
Nat. Bank v. Hazard, 231 Pa. 552, 80
Atl. 1094; King v. Johnson, 3 McCord
(S. Car.) 365; Commerce Trust Co.
v. Grimes, 98 S. Car. 220, 82 S. E.
420; Central Nat. Bank v. Grimes, 98
S. Car. 218, 82 S. E. 420; Citizens
Trust & Sav. Bank v. Stackhouse, 91
S. Car. 455, 74 S. E. 977; Rotan v.
Maedgen, 24 Tex. Civ. App. 558, 59
S. W. 585; Blair v. Rutherford, 31
Tex. 465; Gaston & Ayres v. J. I.
Campbell Co., 104 Tex. 576, 140 S. W.
770, revg. (Tex. Civ. App.), 130 S. W.
222; Hall & Tyson v. First Nat. Bank,
102 Tex. 308, 116 S. W. 47; Landon
v. Wm. E. Huston Drug Co. (Tex.
Civ. App.), 190 S. W. 534; Flynn v.
Bank of Mineral Wells (Tex. Civ.
App.), 118 S. W. 848; Iowa City State
Bank v. Milford (Tex. Civ. App.), 200
S. W. 883; Commercial Credit Co. v.
Giles (Tex. Civ. App.), 207 S. W. 596;
First Nat. Bank v. N. Nigro & Co.
(Tex. Civ. App.), 110 S. W 536; Com-
mercial Guaranty State Bank v. Crews
(Tex. Civ. App.), 196 S. W. 901; Fors-
ter v. Enid, O. & W. R. Co. (Tex. Civ.
App.), 176 S. W. 788; Lomax v. Pi-
cot, 2 Rand. (Va.) 247; Fisk Rubber
Co. v. Pinkey, 100 Wash. 220, 170 Pac.
581; Quaker City Nat. Bank v. Show-
acre, 26 W. Va. 48; Dollar Savings &
Trust Co. v. Crawford, 69 W. Va.
109, 70 S. E. 1089, 33 L. R. A. (N. S.)
587; Johnson v. Meeker, 1 Wis. 436;
Brown v. Spofford, 95 U. S. 474, 24
L. ed. 508. "The bona fide holder of a
negotiable instrument for value, if ac-
quired before maturity and without
notice of any facts which impeach its
validity between the antecedent par-
ties, has a good title to the instrument,
unaffected by any such prior transac-
tion and may recover the amount."
Goodman v. Simonds, 20 How. (U. S.)
343, 15 L. ed. 934; Fossitt & Co. v. Bell,
4 McLean (U. S.) 427, Fed. Cas. No.
4, 958; Crosby v. Lane, Fed. Cas. No.
3,423 (applied to a note received in
payment of a pre-existing debt, even
though an accommodation note); Na-
tional Exch. Bank v. White, 30 Fed.
412 (applied to commercial paper made
by one of the members of a partner-
ship, but case is reversed in Dowling
v. Exchange Bank, 145 U. S. 512, 36
L. ed. 795, 12 Sup. Ct. 928, upon the
ground that the other partners were
entitled in an action by the holder
bank to recover on the notes, to have
it submitted to the jury, whether, under
the circumstances, they were estopped
to dispute the authority of their part-
ner to make and put such paper in cir-
culation. Examine on last point, In
re Hardie & Co., 143 Fed. 553); John-
son v. Lewis, 6 Fed. 27. (Holding that
the rule that the purchaser of a chat-
tel acquires no better title than his
vendor passed, has no application to
negotiable paper, as the possession of
such paper carries the title with it to
the holder for value without knowl-
edge and in good faith and that such
title is good against all the world);
Melton v. Pensacola Bank & Trust Co.,
190 Fed. 126. See Thorp v. Minde-
man, 123 Wis. 149, 101 N. W. 417, 68
L. R. A. 146. But as to rule under
statute in Kentucky, see Wade v. Fos-
ter, 24 Ky. L. 1292, 71 S. W. 443. The
rule applies to a post-dated check ne-
gotiated before maturity. Triphonoff
the world.30 Again: "It is firmly imbedded in jurisprudence
that a bona fide purchaser for a consideration before maturity
is protected, at least to the extent of the amount paid by him;
the note he holds is clear of all equities between the parties."31
So it is held that fraud in procurement of the instrument,32
v. Sweeney, 65 Ore. 299, 130 Pac. 979.
Where a note was made payable to
order "15 after date" and was trans-
ferred within a reasonable time to a
holder in due course before demand,
held that it could not be revoked by
the maker on the ground that it was
in effect a testamentary gift. Maris v.
Adams (Tex. Civ. App.), 166 S. W.
475. The fact that a note was exe-
cuted in violation of the Rebate Act
held no defense in an action on the
note by a holder in due course. Book-
myer v. Davies, 69 Pa. Super. Ct. 240.
In a suit on a negotiable instrument by
a bona fide holder, evidence of a breach
of contract entered into between the
maker and the payee, is not admis-
sible, although the instrument was exe-
cuted in consideration of such con-
tract Page v. Ford, 65 Ore. 450, 131
Pac. 1013, 45 L. R. A. (N. S.) 247,
Ann. Cas. 1915A, 1048. A purchaser
before maturity and without notice, ac-
tual or constructive, that the consid-
eration for the instrument would fail
is a holder in due course. Prater v.
Baughman, 24 Ga. App. 298, 100 S. E.
647. To a claim of the defendant that
the certificate of deposit in suit was
issued without authority, it was a suffi-
cient reply that the certificate was ne-
gotiable, and that plaintiff purchased
it before maturity and for a valuable
consideration, in due course and with-
out notice of defenses. Bingham v.
Newtown Bank, 67 Ind. App. 266, 118
N. E. 318. A plea setting up a breach
of warranty is completely answered by
a reply that the plaintiff is a holder
in due course. Merchants Nat. Bank
v. Norris, 163 Ala. 481, 51 So. 15.
30 Hutchins v. Langley, 27 App. D.
C. 234; Perth Amboy Mut. Loan, H.
& B. Assn. v. Chapman, 80 App. Div.
556, 81 N. Y. S. 38, affd. 178 N. Y.
558, 70 N. E. 1104; Murphy v. Estle,
75 Okla. 75, 182 Pac. 83; Citizens Sav.
Bank v. Landis, 37 Okla. 530, 132 Pac.
1101; First State Bank v. Tobin, 39
Okla. 96, 134 Pac. 395; McPherrin v.
Tittle, 36 Okla. 510, 129 Pac. 721, 44
L. R. A. (N. S.) 395. See Myers v.
Kessler, 142 Fed. 730. In this case the
notes were regular upon their face
and plaintiff had purchased them in
good faith and for value before matur-
ity and without notice of any defense
whatever. It was held that the de-
fense was not available, that the notes
had been given on Sunday and for a
stock gambling transaction. The pop-
ular meaning of "negotiate" is the same
as that of the Negot. Inst. Law, art.
"Negotiation," § 30, which provides that
"an instrument is negotiated when it is
transferred from one person to an-
other in such manner as to constitute
the transferee the holder thereof. If
payable to bearer it is negotiated by de-
livery; if payable to order it is nego-
tiated by the indorsement of the holder
completed by delivery." Rogers v.
Morton, 46 Misc. 494, 95 N. Y. S. 49.
As to governing principle, see Van
Winkle &c. Co. v. Citizens Bank, 89
Tex. 147, 33 S. W. 862. Bona fide
holder not subject to equities, etc., see
Walker v. Wilson, 79 Tex. 185, 14
S. W. 798, 15 S. W. 402.
31 Clark v. Whitaker, 117 La. 298,
41 So. 580.
32 Metropolitan Discount Co. V.
Stewart, 17 Ala. App. 223, 84 So. 565;
failure of consideration,33 and breach of confidence,34 are not
defenses in an action on the instrument by a holder in due
course. And the fact that the purchaser in due course and in
good faith of a note knows that it is a purchase-money note,
and that the seller warrants the property sold, is no defense,
if he did not know of a breach of the warranty.3 35 So one who
in good faith and in due course purchases for a valuable con-
sideration accommodation paper, without knowledge of any
restriction on its use, is a holder in due course.36 In order to
constitute one a holder in due course of a negotiable instru-
ment payable to order, it must be properly indorsed by the
payee.37 But the presumption which arises that the holder of
a negotiable instrument is a holder in good faith is a rebuttable
one.38 Under the Georgia code, a bona fide holder for value of
a promissory note or other negotiable instrument who receives
it before it is due, without knowledge of any defect or defense,
is protected from any defense set up by the maker, acceptor or
drawer, except non est factum, gambling or illegal considera-
tion, or fraud in its procurement.39 Under the Negotiable In-
struments Law of Congress (Act of Congress, January 12, 1899)
one purchasing a note for value without notice has a good title,
even though such note is based on a gambling transaction.40
§ 647. Holders in due course-Application of rule. There
are numerous decisions restating the statutory definition of
Navajo-Apache Bank & Trust Co. v.
Willis, 21 Ariz. 610, 193 Pac. 297;
Bovarnick v. Davis, 235 Mass. 195,
126 N. E. 380.
33 Despres, Bridges & Noel v. Hough
Drug Co., 123 Miss. 598, 86 So. 359.
34 Securities & Investment Corp. v.
Heron, 88 W. Va. 552, 107 S. E. 179.
35 Commercial Credit Co. v. M. Mc-
Donough Co., 238 Mass. 73, 130 N. E.
179; East Lansing State Bank v. Keil,
213 Mich. 17, 180 N. W. 347.
36 Elgin Nat. Bank v. Goecke, 295
Ill. 403, 129 N. E. 149.
37 In the following cases the indorse-
ment was held sufficient to constitute
a negotiation of the instrument and to
render the indorsee a holder in due
course: Benton Transfer Co. v. Marion
Nat. Bank, 26 Ga. App. 562, 106 S. E.
735; Jones County Trust & Sav. Bank
v. Kurt, 192 Iowa 965, 182 N. W. 409.
38 Naylor v. Lovell, 109 Wash. 409,
186 Pac. 855.
39 Pryor v. American Trust & Bank-
ing Co., 15 Ga. App. 822, 84 S. E.
312. In Georgia the holder of a nego-
tiable note is presumed to be bona
fide, and to hold it for value, and if
not dated that it was made before
maturity. Southeastern Rubber Works
v. National Discount Co., 27 Ga. App.
244, 107 S. E. 598.
40 Wirt v. Stubblefield, 17 App. D.
C. 283.
holder in due course substantially in the language of the stat-
ute,41 and the courts have declared that before one can be a
41 Lentz v. Landers, 21 Ariz. 117, 185
Pac. 821; Morehead v. Harris, 121
Ark. 634, 182 S. W. 521; Bank of
Monette v. Hale, 104 Ark. 388, 149
S. W. 845; Parsons v. Utica Cement
Co., 82 Conn. 333, 73 Atl. 785; Otis
Elevator Co. v. Ford, 4 Boyce (Del.)
286, 88 Atl. 465; Southwest Nat. Bank
v. Baker, 23 Idaho 428, 130 Pac. 799;
Southwest Nat. Bank v. Lindsley, 29
Idaho 343, 158 Pac. 1082; Lapp v.
Merchants Nat. Bank, 74 Ind. App.
527, 123 N. E. 231; Farnsworth v. Bur-
dick, 94 Kans. 749, 147 Pac. 863; Rob-
ertson v. Commercial Security Co., 152
Ky. 336, 153. S. W. 450; Jett v. Stand-
afer, 143 Ky. 787, 137 S. W. 513;
Thomas v. Goodrum (Mo.), 231 S. W.
571; First Nat. Bank v. Wilson, 57
Mont. 384, 188 Pac. 371; Fisher v.
O'Hanlon, 93 Nebr. 529, 141 N. W.
157; Montgomery Garage Co. v. Man-
ufacturers Liability Ins. Co., 94 N. J. L.
152, 109 Atl. 296; Smith, Kline &
French Co. v. Freeman, 93 N. J. L. 45,
106 Atl. 22; Mindlin v. Appelbaum, 62
Misc. 300, 114 N. Y. S. 908; Equitable
Trust Co. v. Were, 74 Misc. 469, 132
N. Y. S. 351; McCamant v. McCam-
ant (Tex. Civ. App.), 187 S. W. 1096;
Wilkirson V. Bradford (Tex. Civ.
App.), 200 S. W. 1094; Miller v.
Marks, 46 Utah 257, 148 Pac. 412;
Ratcliffe v. Costello, 117 Va. 563, 85
S. E. 469; Barker v. Sartori, 66 Wash.
260, 119 Pac. 611; Scandinavian Am-
erican Bank v. Johnston, 63 Wash. 187,
115 Pac. 102; Hodge v. Smith, 130 Wis.
326, 110 N. W. 192. To constitute one
a holder in due course of a negotiable
instrument, it must have been acquired
in good faith and be regular on its
face. Park v. Exum, 156 N. Car. 228,
72 S. E. 309. Where one purchased
a negotiable note in consideration of
land conveyed by him therefor, with-
out knowledge that the maker denied
liability thereon, he is a holder in due
course. Higby v. Bahrenfuss, 180 Iowa
316, 163 N. W. 247. The holder of an
accommodation note is a holder in due
course, where the note was complete
on its face, and the purchaser had no
knowledge of breach of condition that
another should also sign the note, or
that it had been filled out for a
larger amount than stipulated. Liberty
Trust Co. v. Tilton, 217 Mass. 462, 105
N. E. 605. A check in payment of a
pre-existing debt, in excess of the
debt, constitutes the acceptor a holder
in due course to at least the amount
of the debt. Fensterer v. Pressure
Lighting Co., 85 Misc. 621, 149 N. Y.
S. 49. A purchaser of negotiable pa-
per with notice of equities and de-
fenses thereto is not a holder in due
course, if he had knowledge thereof
at the time of the negotiation or be-
fore payment of the instrument. Hogg
v. Thurman, 90 Ark. 93, 117 S. W.
1070, 17 Ann. Cas. 383. Where the
holder of a note transfers it to a credi-
tor in payment of a pre-existing debt,
the transferee is a holder in due
course. E. C. Church Co. v. Heath-
man (R. I.), 106 Atl. 290. Where
an indorsee takes a check for value
without notice of any infirmities, or
that its payment had been stopped, he
is a holder in due course. Buzzell v.
Tobin, 201 Mass. 1, 86 N. E. 923. A
holder in due course is entitled to re-
cover the full amount due on a nego-
tiable instrument against all parties
liable thereon, notwithstanding any de-
fect or infirmity in the title of the
payee from whom he received it. Crit-
ser v. Steeley, 62 Okla. 203, 162 Pac.
795. A transferee and holder of a
note executed for a patent right, tak-
en in the usual course of business,
|