And the production of the paper establishes prima facie that there was a consideration. Dawson v. Wombles, 123 Mo. App. 340; Bank of Monticello v. Dooly, 113 Wis. 590, 593; Hickok v. Bunting, 92 App. Div. (N. Y.) 167; Bringman v. Von Glahn, 71 Id. 537; Lynchburg Milling Co. v. Nat. Exchange Bank, 109 Va. 639; Carter v. Butler, 264 Mo. 306; Murphy v. Estate of Skinner, 160 Wis. 554; Hamilton v. Diefenderfer, 21 Wyo. 66. But when this presumption is met by proof tending to rebut it, then, on the question whether there was a consideration, the burden of proof is on the holder throughout the trial. Lombard v. Byrne, 194 Mass. 236, 238. As to the effect of a failure to deny that the paper was given for value, see Benedict v. Kress, 97 App. Div. (N. Y.) 65.

§ 25. What constitutes value-antecedent debt.Value is any consideration sufficient to support a simple contract. An antecedent or pre-existing debt constitutes value; and is deemed such whether the instrument is payable on demand or at a future time.

Variant readings.—In Illinois the second sentence reads as follows: "An antecedent or pre-existing claim, whether for money or not, constitutes value where an instrument is taken either in satisfaction therefor or as security therefor, and is deemed such, whether the instrument is payable on demand or at a future time." In Wisconsin the words "discharged, extinguished or extended are interpolated after the words "pre-existing debt;" and the following is added at the end of the section: "But the indorsement or delivery of negotiable paper as collateral security for a pre-existing debt, without other consideration, and not in pursuance of an agreement at the time of delivery, by the maker, does not constitute value."

Non-negotiable bills and notes. While the statute applies only to instruments which are negotiable, yet by the law merchant a bill of exchange, though it lacks the words payable "to order" or to "bearer," which are essential to negotiability (see section 2) imports a consideration, and the statute has not altered this rule, since it provides that in any case not provided for in the act, the law merchant shall govern. (Section 196.) But as regards the presumption of consideration in the case of non-negotiable notes,

the law of New York and some of the other states has been changed. See note to section 184.

What constitutes value.-See Conover v. Stillwell, 34 N. J. Law, 54; Eaton v. Libbey, 165 Mass. 218; Whitney v. Clary, 145 Mass. 156; Shawmut Nat. Bank v. Manson, 168 Mass. 425; Raymond v. Sellick, 10 Conn. 480.

Antecedent debt-Common-law rule.-The general rule is that where a conveyance is made or security taken, the consideration of which is an antecedent debt, the grantee or the person taking the security is not regarded as a purchaser for a valuable consideration. People's Savings Bank v. Bates, 120 U. S. 556, 565; Weaver v. Borden, 49 N. Y. 286; Cary v. White, 52 N. Y. 138; Wood v. Robinson, 22 N. Y. 567; Mingus v. Condit, 23 N. J. Eq. 313. But in the Supreme Court of the United States, and in many of the State courts, a distinction was made in favor of commercial paper, and the rule adopted that a bona fide holder taking a negotiable instrument in payment of, or as security for, an antecedent debt, is a holder for a valuable consideration entitled to protection against all the equities between the antecedent parties. Railroad Company v. National Bank, 102 U. S. 14; Swift v. Tyson, 16 Pet. 1; National Revere Bank v. Morse, 163 Mass. 381; Rockville Nat. Bank v. Citizens' Gas Light Co., 72 Conn. 576; Roberts v. Hall, 37 Conn. 205; Bridgeport City Bank v. Welch, 29 Conn. 475; Harrold v. Kays, 64 Mich. 439; Fitzgerald v. Booker, 96 Mo. 661; Spencer v. Sloan, 108 Ind. 183; Quinn v. Hoord, 43 Vt. 375; Armour v. McMichael, 36 N. J. Law, 92; Fisher v. Fisher, 98 Mass. 303; Roberts v. Hall, 37 Conn. 205; Giovanovich v. Citizens' Bank, 26 La. Ann. 15; Maitland v. Citizens' Nat. Bank, 40 Md. 540; Robins v. Lair, 31 Iowa, 9; Hotchkiss v. Fitzgerald Patent, etc., Co., 41 W. Va. 357; Fair v. Howard, 6 Nev. 304; Levy v. Ford, 41 La. Ann. 873. This exception to the general rule was based upon considerations of commercial policy, and was peculiar to commercial paper. But prior to the adoption of the statute, it was well settled in New York and several other states, that one who acquired commercial paper as collateral security for a pre-existing debt was not a holder for value. Comstock v. Hier, 73 N. Y. 269; McBride v. Farmers' Bank, 26 N. Y. 450; Coddington v. Bay, 20 Johns. 637; Schaeffer v. Fowler, 111 Pa. St. 451; Martin v. Bank, 94 Tenn. 176; Roach v. Wodall, 91 Tenn. 206; Jenkins v. Schnaub, 14 Wis. 1; Brooks v. Sullivan, 129 N. C. 190.

This rule produced many subtle refinements, and it would be impossible to reconcile all the decisions on the subject. See note to next section. For the former law in the case of accommodation paper pledged as security, see Stephen v. Monongahela National Bank, 88 Pa. St. 157; National Union Bank v. Todd, 132 Pa. St. 312.

Draft purchased for antecedent debt.-Under this section a bank which acquires a draft by purchase from another bank for an existing indebtedness is a holder for value. Murchison Nat. Bank v. Dunn Oil Mills, 150 N. C. 718, 719.

Exchange of notes.-One promissory note is a good consideration for another given in exchange. Franklin Bank v. Roberts, 168 N. C. 473; Mehlinger v. Harriman, 185 Mass. 245.

Promise to pay debt.-The promise to pay an already existing debt, or the actual payment thereof, is not "value" within the meaning of this section. Morris County Brick Co. v. Austin, 79 N. J. Law, 273.

Giving credit. Under this section a bank which merely gives a customer credit on its books for paper deposited does not become a holder for value, but in order to have this effect, the credit must be drawn upon. Commercial Nat. Bank v. Citizens' State Bank, 132 Iowa, 706; Miller v. Norton, 114 Va. 610; Elgin City Banking Co. v. Hall, 119 Tenn. 548. See note to section 52.

Accommodation paper.-A pre-existing debt, without extension or forbearance, is a sufficient consideration upon which to hold an accommodation party where there has been no restriction placed upon the use of the paper. Lehrenkrauss v. Bonnell, 199 N. Y. 240; Maurice v. Fowler, 78 Misc. (N. Y.) 357.

§ 26. Value given by prior holder.-Where value has at any time been given for the instrument, the holder is deemed a holder for value in respect to all parties who become such prior to that time.

Consideration for subsequent acceptance.-If a party becomes a bona fide holder for value of a bill before acceptance, it is not essential to his right to enforce it against a subsequent acceptor

that an additional consideration should proceed from him to the drawee. The bill itself implies a representation by the drawer that the drawee is already in receipt of funds to pay, and his contract is that the drawee shall accept and pay according to the terms of the draft. The drawee can, of course, upon presentment refuse to accept, and in that event the only recourse of the holder is against the prior parties thereto; but in case the drawee does accept the bill, he becomes primarily liable for its payment, not only to the indorsees, but also to the drawer himself. Heuertematte v. Morris, 101 N. Y. 70; National Park Bank v. Saitta, 127 App. Div. (N. Y.) 624.

§ 27. Lienor a holder for value to what extent.Where the holder has a lien on the instrument, arising either from contract or by implication of law, he is deemed a holder for value, to the extent of his lien.

Effect of the statute.-In New York for some time after the adoption of the statute, there was a tendency in the Appellate Divisions of the First and Second Departments to hold that the statute had not changed the rule which had prevailed in this state since the decision in Coddington v. Bay (20 Johns. 637), that one who had acquired commercial paper as collateral security for a pre-existing debt was not a holder for value. Sutherland v. Mead, 80 App. Div. (N. Y.) 103; Roseman v. Mahony, 86 App. Div. (N. Y.) 377; Bank of America v. Waydell, 103 App. Div. (N. Y.) 25, 33. But the later New York cases, without expressly overruling these decisions, have held that the statute established the rule which had prevailed in the Federal Courts, viz.: that the transfer of a bill or note as security for an antecedent debt is sufficient to constitute the transferee a holder for value. King v. Bowling Green Trust Co., 145 App. Div. 398, 402; Maurice v. Fowler, 78 Misc. Rep. 357; Martin L. Hall Co. v. Todd, 139 N. Y. Supp. 111; Broderick & Bascom Rope Co. v. McGrath, 81 Misc. 199, 200. See also Brewster v. Shrader, 26 Misc. Rep. 480. In the case last cited, Judge Werner, now of the New York Court of Appeals, said: "The language of this section, when given its usual and ordinary signification, ought to leave no room for doubt upon the subject. There is, however, such a universal disposition among lawyers to look for some hidden or subtle meaning in the

most simple language, that it has become quite the fashion to require the courts to construe statutes, which, to the average lay mind, seem to require no construction. If the language of the section under consideration were not obviously clear and unequivocal, and there were need of ascertaining the legislative intent in order to give proper effect to such language, the history of the subject, of the judicial decisions in England and the states of this country, and of the proceedings of the commission on uniformity of laws, leave no possible doubt as to the purpose of this section." And after reviewing the history of the statute the learned judge continued: "It seems evident, therefore, from the history of this subject, as well as from the obvious purpose for which this statute was enacted, no less than from the language of the statute itself, that the New York rule, so called, has been modified so as to conform to the rule in England and in our Federal court of last resort." And in all the other states where the question has arisen, the courts have held that the legislative intent to establish the federal rule is clear. Bruner v. New Universal Fertilizer Co., 218 Mass. 300; Lowell v. Bickford, 201 Mass. 543; Voss v. Chamberlain, 139 Iowa, 569; Graham v. Smith, 155 Mich. 65; Elk Valley Coal Co. v. Third Nat. Bank, 157 Ky. 617; Brooks v. Sullivan, 129 N. C. 190; Payne v. Zell, 98 Va. 294; Felt v. Bush, 41 Utah, 467; German Amer. State Bank v. Lyons, 127 Minn. 390; National Bank of Commerce v. Morris, 156 Mo. App. 51, 52; Smathers v. Toxaway Hotel Co., 162 N. C. 346; GermanAm. Bank v. Wright, 148 Pac. Rep. (Wash.) 769; Melton v. Pensacola Bank & Trust Co., 190 Fed. Rep. 126, 111 C. C. A. 166; Lust Co. v. Markee, 179 Fed. 764. When the provisions of section twenty-seven are considered together with the provisions of section twenty-five the intent seems to be clear. The holder, who has taken the paper as collateral security, very plainly has a lien upon it, and, therefore, is within the terms of section twenty-seven. The only question then is, whether he must be excluded from the operation of this section merely because his lien was acquired for an antecedent indebtedness. But as the statute in another place expressly declares that " an antecedent or pre-existing debt constitutes value" (sec. 25) there is no warrant for reading any such exception into the section.

Extent of lien. Thus, a bank, having in its possession negotiable securities of its customer, would be, by virtue of its general