but not against D. For cases applying this provision of the section, see McMurray v. McMurray, 258 Mo. 405, 417; Horan v. Mason, 141 App. Div. (N. Y.) 89.

§ 59. Presumption-burden of proof-exception.— Every holder is deemed prima facie to be a holder in due course; but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as a holder in due course. But the last-mentioned rule does not apply in favor of a party who became bound on the instrument prior to the acquisition of such defective title.

Common-law rule. The rule adopted in the statute is the one which prevailed in New York and many other states. Canajoharie National Bank v. Diefendorf, 123 N. Y. 191; Joy v. Diefendorf, 130 N. Y. 6; Jordan v. Grover, 99 Cal. 194; Market and Fulton Nat. Bank v. Sargent, 85 Me. 349; Haines v. Merrill, 56 N. J. Law, 312; Sullivan v. Langley, 120 Mass. 437; Merchants' National Bank v. Haverhill Iron Works, 159 Mass. 158; Conant v. Johnston, 165 Mass. 450, 452; National Revere Bank v. Morse, 163 Mass. 381, 385; Williams v. Huntington, 68 Md. 590; Griffith v. Shipley, 74 Md. 591; Ellicott v. Martin, 6 Md. 509; Hutchinson v. Boggs & Kirk, 28 Pa. St. 294; Wilson v. Lazier, 11 Gratt. 477; Vathir v. Zane, 6 Gratt. 246. The rule which obtained in the Federal Courts imposed upon the defendant the burden of proving bad faith. First Nat. Bank v. Moore, 148 Fed. Rep. 953, 957; Murray v. Lardner, 2 Wall. 110; Hotchkiss v. National Bank, 21 Wall. 354; Collins v. Gilbert, 94 U. S. 753; King v. Doane, 139 U. S. 166.

Burden of proof.-Under this section it is not necessary for the holder to offer in the first instance any proof that he is a holder in due course. Kerr v. Anderson, 16 N. D. 36; Bruce v. Citizens' Bank, 185 Ala. 221. But when it is shown that the title of a prior holder was defective the burden shifts to the plaintiff. Interboro Brewing Co. v. Doyle, 165 App. Div. (N. Y.) 646; Peterson v. Fowler, 162 Id. 21; Eisenberg v. Lefkowitz, 142 Id. 570; GermanAmerican Bank v. Cunningham, 97 Id. 244; Mitchell v. Baldwin,

88 Id. 265, 269; Waxberg v. Stappler, 83 Misc. (N. Y.) 78; Justice v. Stoneciper, 267 Ill. 448; Arnd v. Aylesworth, 145 lowa, 185; McKnight v. Parsons, 136 Iowa, 390; Ireland v. Shore, 91 Kans. 326; Campbell v. Fourth Nat. Bank, 137 Ky. 555; Callahan v. Louisville Dry Goods Co., 140 Ky. 714; Asbury v. Taube, 151 Ky. 142; Muir v. Edelen, 156 Ky. 212; Lewiston Trust & S. D. Co. v. Shackford, 213 Mass. 432; Regester's Sons Co. v. Reed, 185 Mass. 226, 227; Phillips v. Eldridge, 221 Mass. 103; Harris v. Johnson, 89 Conn. 128; People's State Bank v. Miller, 152 N. W. Rep. (Mich.) 257; Hill v. Dillon, 176 Mo. App. 192, 198; Ostenberg v. Kanka, 95 Neb. 314, 316; Piper v. Neylon, 88 Neb. 253; Fidelity Trust Co. v. Ellen, 163 N. C. 45; American Nat. Bank v. Fountain, 148 N. C. 590; Fidelity Trust Co. v. Whitehead, 165 N. C. 74; Singer Mfg. Co. v. Summers, 143 N. C. 102; Standard Trust Co. v. Commercial Nat. Bank, 167 N. C. 260; Schulthers v. Sellers, 223 Pa. St. 516; Second Nat. Bank v. Hoffman, 229 Pa. St. 429; Cook v. Am. Tubing & Webbing Co., 28 R. I. 41; Leavitt v. Thurston, 38 Utah, 351; Keene v. Behan, 40 Wash. 505; Hodge v. Smith, 130 Wis. 326; Grebe v. Swords, 28 N. D. 330; Stotts v. Fairfield, 163 Iowa, 726; City of Adrian v. Whitney Central Nat. Bank, 180 Mich. 171. And the statute requires the holder to show affirmatively the facts constituting good faith on his part. Kecne v. Behan, 40 Wash. 505. See also other cases cited above. And where the plaintiff seeks to establish this by his own testimony, the credibility of such testimony, though it is undisputed, is for the jury. Joy v. Diefendorf, 130 N. Y. 6.

Inference as to good or bad faith.-Where an inference may be drawn from the surrounding circumstances that on the one hand tends to discredit plaintiff's testimony as to his lack of knowledge concerning the infirmity in the paper and his good faith in taking it, and on the other hand tends to establish his good faith, the question is for the jury. Matlock v. Scheuerman, 51 Ore. 49; McKnight v. Parsons, 136 Iowa, 390; M. Groh's Son's Co. v. Schneider, 34 Misc. (N. Y.) 195. In Massachusetts, the rule is well settled that when testimony warranting a finding that the plaintiff was a holder in due course of a note originating in fraud is given by witnesses called by the plaintiff, a verdict cannot be directed for the plaintiff as a matter of law. Phillips v. Eldridge, 221 Mass. 103.

Testimony as to good faith.-The holder may testify that he acted in good faith. Smathers v. Taxaway Hotel Co., 167 N. C. 474.

Presumption when paper is stolen.-Where negotiable securities have been stolen and negotiated, the burden is upon the holder to show that he is himself a holder in due course, or that he claims under such a holder; and there is no presumption that the thief negotiated the securities before they became due. Northampton Nat. Bank v. Kidder, 106 N. Y. 221; Hinckley v. Merchants' Nat. Bank, 131 Mass. 147.

Where payee is described as trustee.-That the payee is described as 66 trustee" does not let in defenses against a bona fide holder for value. Bank v. Looney, 99 Tenn. 278.

Instruction limiting proof.-Under this section an instruction that the burden is on the holder to show "that some person under whom he claims acquired the title in good faith," is erroneous. Hawkins v. Young, 127 Iowa, 281.

Failure of consideration. The provision of this section which imposes upon the holder the burden of proof does not apply where the defense is failure of consideration, since section fifty-five, which defines a defective title, does not include such a case. Bank of Polk v. Wood, 189 Mo. App. 62, 67; Broderick & Bascom Rope Co. v. McGrath, 81 Misc. (N. Y.) 199; Cole Banking Co. v. Sinclair, 34 Utah, 454.

Breach of warranty. So, such provision does not apply where the defense is breach of warranty. Ireland v. Shore, 91 Kans. 326, 329.

Where fraud is subsequent to liability.-The last sentence is necessary to qualify the general statement. If A issues his note to B, and C gets possession of it and fraudulently negotiates it to D, the fraud of C in nowise affects A, and is no defense to him when sued on the instrument by D. Thus, it has been held that the fact that one who held possession of a note for the payee puts it in circulation in fraud of his rights is no defense in a suit by the holder against the maker; nor does it change the burden of proof, so as to require the plaintiff to show in the first instance that he is a bona fide holder for value. Kinney v. Kruse, 28 Wis. 183.

ARTICLE VI.

LIABILITY OF PARTIES.

Section 60. Liability of maker. 61. Liability of drawer.

62. Liability of acceptor.

63. When person deemed indorser.
64. Liability of irregular indorser.
65. Warranty where negotiation by delivery
or qualified indorsement.

66. Liability of general indorser.

67. Liability of indorser where paper negoti-
able by delivery.

68. Order in which indorsers are liable.
69. Liability of agent or broker.

§ 60. Liability of maker.-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.

Where there is more than one maker.-When a promissory note is executed by two persons jointly and severally the presumption is that the debt was created for their equal benefit, and the burden of proving that one of the makers signed the note as surety for the other is upon the party alleging it. Brady v. Brady, 110 Md. 656. But a joint action cannot be maintained against all the makers, where the note on its face states that the liability of each is limited to a proportional part of the amount. National Bank of Phoenixville v. Buckwalter, 214 Pa. St. 289.

Where note secured by collateral.-The fact that the holder had other collateral securities for the same debt more than sufficient to cover it, from which, however, the debt had not been realized, is not a ground of defense on the part of the maker. Lord v. Ocean Bank, 20 Pa. St. 384.

Where payment secured by indorser.-The fact that the indorser has deposited with the holder security for the payment of the note is no defense to the maker in an action by the holder. People's Nat. Bank v. Rice, 149 App. Div. (N. Y.) 18.

Liability of accommodation maker.-Under the statute the maker of a promissory note is "primarily liable" thereon, though he signs only for accommodation. Vanderford v. Farmers', etc., Nat. Bank, 105 Md. 164; Richards v. Market Exchange Bank, 81 Ohio St. 348; First State Bank v. Williams, 164 Ky. 143; Fritts v. Kirchdorfer, 136 Ky. 643; Murphy v. Panter, 62 Ore. 522; Hunter v. Harris, 63 Ore. 505; Cellers v. Meachem, 49 Ore. 186; Walstenholme v. Smith, 34 Utah, 300; Bradley Engineering, etc., Co. v. Heyburn, 56 Wash. 628; First Nat. Bank v. Meyer, 152 N. W. Rep. (N. D.) 657. See note to section 120.

Existence of payee.-Where the name of the payee is a trade or assumed name, and the instrument is issued for value, the maker is estopped from setting up that the instrument is payable to a fictitious payee, if by such averment the instrument would be defeated. Jones v. Home Furnishing Co., 9 App. Div. (N. Y.) 103.

§ 61. Liability of drawer.-The drawer by drawing the instrument admits the existence of the payee and his then capacity to indorse; and engages that on due presentment the instrument will be accepted or paid, or both, according to its tenor, and that if it be dishonored and the necessary proceedings on dishonor be duly taken, he will pay the amount thereof to the holder, or to any subsequent indorser who may be compelled to pay it. But the drawer may insert in the instrument an express stipulation negativing or limiting his own liability to the holder.

66

Variant readings.-In Colorado and Illinois, the word "subsequent near the end of the first sentence is omitted. In North Carolina, through what was doubtless an error in engrossing, the word negotiating is substituted for "negativing," near the end of the section. In New York, through an error in engrossing, the word "and" has been substituted for "or" between the words "accepted" and "paid."