Cornell University Law Library The Moak Collection PURCHASED FOR The School of Law of Cornell University And Presented February 14, 1893 IN nEnORY OF JUDGE DOUGLASS BOARDMAN FIRST DEAN OF THE SCHOOL By his Wife and Daughter A. M. BOARDMAN and ELLEN D. WILLIAMS Cornell University Library K 1054.R19 1886 V.2 A treatise on the law of commercial pape 3 1924 021 967 306 ajcrttfU IGam ^rljnol Etbrarg Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924021967306 A TREATISE ON THE LAW OF Commercial Paper CONTAINING A FULL STATEMENT OF EXISTING AMERICAN AND FOREIGN STATUTES, TOGETHER WITH THE TEXT O^ THE COMMERCIAL CODES OF GREAT BRITAIN, FRANCE, GERMANY AND SPAIN. JOSEPH F. RANDOLPH, • e f OF THE NEW JERSEY BAR. ^■' . ('^. ( IN THREE VOLUMES, WITH APPENDIX. VOL. IL JERSEY CITY, N. J. : FREDERICK D. LINN & CO. 1886. Entered, according to the Act of Congress, in the year 1886, by Joseph F. Randolph, In the Office of the Librarian of Congress, at Washington. J. L. MCKPHY, PEINTEB, TRENTON, N. J. CONTENTS. CHAPTER XIII. CONSIDERATION — SUFFICIENCY. Section I. General Principles, 445 II. Money Considerations 456 III. Considerations other than Money, 477 CHAPTER XIV. CONSIDEEATION — ILLEGAL. I. Against Public Policy, 494 II. Against Express Sljfituife, ' 517 CHAPTER XV. CONSIDERATION — FAILURE — DEFENSE. I. Failure of Consideration, 538 II. Defenses Relating to Consideration, 556 CHAPTER XVI. PRESENTMENT FOR ACCEPTANCE. I. American Law of Presentment, 568 II. Foreign Law 582 CHAPTER XVII. AOCEPTANCS. I. General Principles, 588 II. Form, 599' CHAPTER XVIII. ACCEPTANCE. I. Conditional or Qualified Acceptance 621 II. Acceptor's Liability, 628 III. Revocation and Discharge, 637 IV. Certified Checks 642 CHAPTER XIX. TRANSFER. I. What Instruments are Transferable 650 II. Parties to Transfer, 662 III. Time of Transfer, 668 Ciii) IV CONTENTS. CHAPTER XX. TKANSFEK BY INDORSEMENT. Section I. Delivery and Consideration, 688 II. Form of Indorsement, 700 III. Modified Indorsement, 715 CHAPTER XXI. TRANSFER BY INDORSEMENT. I. Effect of Indorsement, 729 II. Liability of Indorser, ' 739 CHAPTER XXII. indorser's liability. I. Discharge by Want of Demand or Diligence, .... 758 II. Discharge by Extension, Release, v. Daren, PAGE. 399 Bell r. Leggett, PAGE. 92 V. Little, 7, 8, 168 309, 314 V. Lent, 113, 121 Bay V. Coddington, 28, 32, 451 V. Manning, 632 Bayard v. Lathy, 219, 235 V. Morehead, 358 V. Shnnk, 394 V. Quinn, 80 Bayley v. Hazard, 554 V. Simpson, 39, 372 Baylies v. Trustees, 470 V. Welch, 552 Bayou Sara v. Harper, 17 V. Wood, 83 Beach v. Bates, 566 Bellasis v. Hester, 215, 216 V. State Bank, 235 Bellingalls v. Gloster, 401 Beak v. Beak, 468 Bellingham v. Bryan, 300 Beal V. Beal, 140 v. Frere, 624 V. Roberts, 399 Bellows V. Loveli, 628 V. Wood, 435 Belmont Branch Bank v. Hoge, 684, 692 Beale v. January, 165 Belshaw v. Bush, 29,31 Beall V. Brown, 147 Beltzhoover v. Blackstock, 689, 719 V. Leverett, 327 Bender v. Pryor, 59, 174 Bealle v. Southern Bank of Georgia, Benedict v. Cox, 574 31 458, 684 V. Sherrill, 551 Bean v. Arnold, 183 Benfield v. Solomons, 129 V. Jones, 119 Beninger v. Corwin, 136 Beard v. Beard, 88, 129 Benior v. Paquin, 708 V. Dedolph, 449 Benjapiin v. Arnold, 586 V. Livesay, 78 V. Tillman, 172 V. Boot, 420 Benner v. Van Norden, 92 Bearden v. Moses, 162, 314 315, 326 Bennett v. First Nat. Bank, 367 Beardsley v. Warner, 612, 674 V. Forlina, 167, 693 Beattie v. Browne, 434 Bennington v. Wallis, 101 Beatty v. Anderson, 294, 335 Bensley v. Bignold, 103 Beaumont v. Greathead, 322 Benthall v. Judkins, 3 491, 494 V. Reeve, 101 Bentinck v. Connop, 95 Beazley v. Gignilliat, 64 V. Dorrien, 248 271, 273 Bebee v. Moore, 3 Bentley v. Northouse, 291 Bechervaise v. Lewis, 45, 601 Benton v. Gibson, 299, 311, 512, 556, Bechner v. Willson, » 147 560, 565 Beck V. Robley, 322 V. Kline, 10 Becker v. Vrooman, 147 Berg V. Foster, 459 Beckley v. Munson, 670 Bernard v. Barry, 347, 348 Beckwith v. Angell, 506, 541 ,542,554,559 Bernitz v. Stratford, 413 V, Corral, 688 Berry v. Alderman, 724 V. Fa mum. 392 V. Pullen, 649, 653 Bedell v. Burlington Nat. Bank, 696 V. Robinson, 311 V. Carll, 430 Bertrand v. Barkman, 179, 685 Bedford v. Deakin, 624, 639 Besant v. Cross, 253 Beebe v. Brooks, 311 Best V. Crali, 453 V. Dudley, 559, 560 V. Hoppie, 494 V. West Branch Bank 614 V. Nokomis Nat. Bank, 45, 357, Beeker v. Saunders, 556, 561 377, 431 Beekman v. Wilson, 430 Bethel v. Franklin, 139 Beeler v. Frost, 440 Bethune v. Dozier, 617 Beeley v. Wingfield, 8C , 94, 107 V. McCrary, 12 Beeman v. Duck, 262, 263, 265 Betterton v. Roope, 462 Beers v. Williams, 145, 146, 174 Bettis V. Bristol, 304 Beeson v. Lippmau, 357 Beveridge v. Burgis, 196 Begbie v. Levi, •220 Bibb V. Hitchcock, 85 Beidman v. Gray, 507 Bickford v. First Nat. Bank, 279, 284 Belcher v. Ross, 416 V. Gibbs, 2, 526, 542, 560 V. Smith, 342, 532 Bicknall v. Waterman, 392 Bell V. Banks, 625 Bidmead v. Gale, 96 v. Bruen, 528 Bierce v. Stocking, 10, 138 V. Cafferty, 400 Bigelow V. Benton, 521 V. Dagg, 398, 399 V. Colton, 499, 509 V. Ingestre, 331, 439 Biggs V. Lawrence, 106 :!:n CASES CITED IN VOLUME TWO. Bilderbach v. McConnell, Billa V. Hecklebrath, Billing V. Devaux, Billings V. Collins, V. Everett, V. Jane, BiUingsley v. Niblett, Billington v. Wagner, Billa V. Comstock, Biuford V. Willson, Bingham v. Kimball, V. Stanley, Birch V. Jervis, PAGE. 679, 7U3 142 217, 221, 2-J3 681 168 448 148 420, 653 81 414 33 178, 179 92 Birchall v. Third Nat. Bank, 209 Birchard v. Bartlett, 503 Biruleback v. Wilkins, 170, 296 Bird V. Cockrem, 315 V. McElvaine, 228 Birkey v. McMakin, 431 Birkhead v. Brown, 521 Bisbee v. Torinus, 177 Bishop V. Dexter, 310 V. Hayward, 360, 427 V. Kowe, V. Yeazle, V. Young, Bissell V. Gowdy, v. Lewis, V. Morgan, Bivins v. Helsley, Black V. Fizer, V. Peele, V. Ridgway, Blackburne, Ex parte, Blackford v. Preston, 540, 555, 559 414 260 311, 315, 342, 533 235, 245 722 593 407 276 133 392, 400 79 Blackman v. Dowling, 156 V. Lehman, 295 Blackmar v. Thomas, 268 Blackmer v. Phillips, 162 Black River Sav. Bank v. Edwards, 178 Blackwood v. Brown, 432 Blake v. Harvey, 583 V. Sawin, 124 Blakely v. Grant, 342, 343, 429 Blakiston v. Dudley, 243 Blaine v. Bourne, 366 Blanchard v. McCuller, 626 V. Sheldon, 466 V. Williamson, 467 Blankenship v. Nimmo, 20 Blatchford v. Milliken, 347, 498, 501 Blaxton v. Pye, 96 Blazer v. Bundy, 650, 654, 655 Blackstone Bank v. Hill, 641 Bleaden v. Charles, 268, 369, 457 Blease v. Pratt, 141 Bleeker v. Hyde, 521 Blenn v. Lyford, 168, 317, 322 Blesard v. Hirst, 181 Blethen v. Lovering, 403 Bliss v. Clark, 140 V. Negus, 10 Block V. Wilkinson, 223 Blodgett V. Jackson, Blogg V. Piukers, Blood V. Northrup, Bloom V. Warder, Blount V. Burrow, V. Proctor, Bloxsome v. Neale, Blum V. Loggins, Blumenthal v. Jassoy, BIydeuburgh v. Thayer, Boaler v. Mayor, PAGD. 432 108 164, 294, 335 539 463 126 529 26, 721, 723 717 457 655 Board of Education v. Thompson, 600 Supervisors v. Paxton, 719 Boatman's Savings Bank v. Holland, 31 Boehm V. Campbell, 550 V. Garcias, 248, 256 V. Sterling, 189, 309, 315 Bbeka v. Nuella, 448 Bogart V. Nevins, 272 Boggs V. Lancaster Bank, 266, 698 Boggess V. Lilly, 98 Bogue V. Melick, 385, 500, 501, 513 Boit V. Whitehesd, 676 BoUand v. Bygrave, 20 Bolton, Ex parte, 237 Bolton V. Fuller, 369 V. Harrod, 188, 189, 191, 192 Bonbonus, Ex parte, * 709 Bond V. Central Bank, 28 V. Fitzpatrick, 312 V. Storrs, 361, 572, 591, 592 V. Wiltse, 458 Bondurant v. Bladen, 376 Bone V. Tharp, 25 Bonner. V, Nelson, 625, 650 Bonney v. Seely, 669 V. Smith, 48 Bonsor v. Cox, 629 Bonta V. Curry, 462 Boody V. Bartlett, 445, 679 Booker y. Lastrapes, 164 V. Robbins, 74 Bookstaver v. Jayne, 151 Boone v. Boone, 61 v. Queen, 150 Boot V. Franklin, 196 Booth V. Fitzer, 149 V. Quinn, 709 V. Wiley, 645 Booty V. Cooper, 430 Borden v. Clark, 363, 704 Borneman v. Sidlinger, 16, 464, 467 Borun v. King, 442 Bosanquet v. Anderson, 360 V. Dudman, 20, 312, 317, 457 Bosbyshell v. Ehninger, 496, 506, 509 Bosman v. Akely, 563 Bossange v. Ross, 12 Boston Bank v. Hodges, 407 Bostwick V. Dodge, 18 Bottomley v. Goldsmith, 695, 718, 723 Boultbee v. Stubbs, 633, 658 Boulton V. Coghlan, 95, 128 CASES CITED IN VOLUME TWO'. Boiinsall v. Harrison, Bourland v. Gibson, Bourne v. Ward, . Bouiell V. Cowdin, Bouts V. Ellis, Bowditch V. Green, Bowen v. Buck, V. Daggett, V. Darby, V. Hoskins, V. Thrall, Bower v. Hastings, Bowerbank v. Monteiro, Bowers v. Hurd, V. Trevor, Bowes V. Tierman, Bowie V. Duvall, Bowker v. Hill, V. Bandies, Bowles V. Wright, Bowling V. Flood, Bowman v. Curd, V. Hillier, v. Van Kuren, V. Wood, Bowser v. Eendell, Bowyer v. Brampton, Boyce v. Edwards, 235, V. Geyer, V. Nye, V. Tabb, Boyd V. Cleveland, V. Corbitt, V. Cumming, V. Emerson, V. McCann, V. Plumb, Boyer v. Boogher, Boyes v. Joseph, Boy n ton v. Biitterfield, V. Pierce, V. Twity, Boys, In re, Boyt V. Whitehead, Bozeman v. Allen, V. Bushing, Brabazon v. Seymour, Brackett v. Eich, Bradbury v. lUake, Bradford v. Corey, V. Hubbard, V. Pauly, V. Williams, Bradley v. Gary, V. Hunt, v. Marshall, V. Trammel, Bradshaw v. Combs, Brady v. White, Brainard v. Capelle, V. Harris, V. Eeynolds, PAGH. 312, 32a 153 172 17 468 .663 84 99 650 662 q « o 47, 313, 316 252, 253, 254 15, 172, 467 344 606 358 476, 489 134 358 656 569 401 32, 391 460 581 99, 402 236, 241, 245 683 446 126 440 367 60 305 677, 720 711 496 192 149 389, 502, 503, 505, 508 176 20, 176 160 77 78,87 252 559, 565 38 385, 389 627 501 296 523 468 311 292, 294 650 431 40 69 564 Braitliwaite v. Gardiner, PAGB. 265 Braraah v. Roberts, 162 Braraan v. Hess, 11 V. Howk, 653 Bramble v. Ward, 657 Bramhall v. Beckett, 32 Branch Bank v. Gaflfney, 310 V. James, 588 647, 650 BrandaoV. Barnett, 452 Brannin v. Henderson, 224, 256 Braxton v. Willing, 261 Bray v. Manson, 419, 644 V. Marsh, 537, 563 Breathwit v. Eogers,. 82 Breck v. Cole, 90 Breed v. Hillhouse, 527 555, 557 Breneman v. Furniss, 332 433 434, 438 Brengle v. Boshey, 625, 646 Brenner v. Gundersheimer, 2 V. Weaver, 537 Brett V. Marston, 537 V. Tomlinson, 82 Brewster v. McCardel, 308, 703 V. Silence, 40 549, 550 Briant v. Eeed, 476 Bridge v. Livingston, 168, 266 Bridgeport City Bank v. Welch, 26, 457 Bridges v. Winters, 618 Brick V. Freehold Nat. Banking Co., 646 Brickhouse v. Brickhouse, 464 Brickwood v. Annis, 650 Brigham v. Marean, 114 V. Potter, 123, 129, 130 Bright V. Carpenter, 497, 506 V. Judson, 30 Brightman v. Eeeves, 459 Briggs V. Boyd, 135, 659 V. Briscoe, 429 V. Downing, 4,598 V. Merrill, 681 V. Parsons, 190 Brill V. Tuttle, 284 Brinagari v. Phillips, . 641 Bringliam v. Leighty, 143 Brinkley v. Bethel, 141 V. Going, 359 Brinkman v. Hunter, 224, 243 Brinton v. Gerry, 634 Brierly v. Tanner, 63 Brisbane v. Adams, 89 V. Pratt, 430 Briscoe v. Kinealy, 62 Bristol V. Warner, 169, 170 Britt V. Lawson, 310 Brittain v. Anderson, 484 Britton v. Bishop 309, 319 V. Hall, 162, 311 V. Hughes, 90 V. Preston, 482 V. Webb, 360, 537 Broadway Sav. Bank v. Schmuck er, 423 Brocklebank v. Moore, 591 Brockman v. Sieverling, 619, 637 XIV CASES CilTED IN VOLUME TWO. PAGB. Brockway v. Comparee, 386 Bromage v. Lloyd, 324 Bromaagh v. Scott, 416 Bronson v. Alexander, 500, 515 Brookman v. Metcalf, 451 Brooks V. Avery, 121 V. Breeding, 416 V. (Jutter, 157 V. Hav, ' 45, 154 V. Hiatt, 50 V. Thatcher, 494, 587 V. Wright, 642 Broom v. Batchelor, 530 Brossat v. Sullivan, 77 Broughton v.' Manchester Water Works Co., 100 Brow V. Becnel, 130, 535 Brown v. Brooks, 566 V. Brown, 16, 467 V. Batchers' and Drovers' Bank, 340 Brown v. Butler, 494, 506, 508 V. Callaway, 684 V. Carr, 627 V. Curtis, 546, 554, 557 V. Davies, 168, 313, 317 V. Hagerty, 630 V. Harraden, 384 V. Hull, 309, 310, 327, 384 V. Jackson, 366 V. Kinsey, 101, 177 V. Leavitt, 21, 24 V. Leckie, 279, 281 v. Leeson, 95 V. McHugh, 323 V. Montgomery, 395 V. Mott, 12, 45, 168, 317, 391 V. North, 19 V. Penfield, 11, 332, 681 V. Prophet, 600, 653 V. Reasner, 503, 507 V. Spofford, 696, 721 V. Street, 134, 178 V. Taber, 701, 718 V. Tarkinton, 104 V. Turner, 98, 100, 312 V. Ward, 458, 459 V. Wright, 656 V. Wylle, 77 Browne v. Coit, 254 V. Lee, 662, 665 Browning v. Fountain, 595 V. Kinnear, 196 V. Merritt, 500, 503, 507 Brua's Appeal, 100 Bruce v. Bruce, 392 V. Lee, 92 V. Wright, 434 Eruen v. Marquaud, 422, 633 Brummel v. Enders, 116, 160 Branson v. Branson, 465 Brash v. Keeler, 94 V. Reeves, 292, 293 Brush V. Scribner, PAOS. 26, 345 Bryan v. Berry, 590 V. Philpot, 36 V. Primm, 315 Bryant v. Christie, 90 , V. Eastman, 494, 495 V. Pember, 145 V. Ritterbush, 322 Bryson v. Whitehead, 90 Buchanan v. Bordley, 641 T. International Bank, 455 Buck V. First Nat. Bank, 84 Buckalew v. Smith, 608, 650 Bucklen v. Huff, 649 Buckler v. Buttivant, 51 Buckley v. Beardslee, 549 V. Guildbank, 118 V. Jackson, 367 Buckner v. Clark, 62 V. Greenwood, 296 v. Jones, 687, 690 V. Liebig, 592 V. Real Estate Bank, 448 Buckstone v. Jones, 196 Bufford V. Sides, 373 Euhler v. Jennings, 170 Buhrman v. Baylis, 27, 145 Bulkeley v. Butler, 264 Bull V. Bliss, 558 V. Rice, 121 Ballard v. Bell, 293 V. Ledbetter, 617 V. Randall, 209 210, 280 BuUer v. Cripps, 292, 384 Bullet V. Bank of Pennsylvania 722 Bullitt V. Scribner, 390, 414 Bullock V. Nally, 359 V. Ogburn, 33 Banker v. Tafts, 667 Bunn V. Guy, 89,90 V. Winthrop, 60 Burbridge v. Harrison, 130, 167 V. Manners, 320, 323 Burdick v. Green, 443 Burgen v. Strangham, 60 Burgess v. Chapin, 392 V. Dewey, 653 V. Northern Bank, 265 Burke v. Bishop, 15 V. Cruger, 586, 639 v. Risley, 468 V. Whitcomb, 479 Burke's Case, 658 Burks V. Wonterline, 600 Burmester v. Hogarth, 294 Burnap v. Cook, 133 344, 345 Barnard v. Young, 121 Burnett v. Paine, 88 V. Smith, 133 Burnham v. Allen, 176 V. Gallentine, 539, 557 Burns v. Rowland, 219, 237 Burnham v. Tucker, 313, 320 CASES CITED IN VOLUME TWO. XV" • PAQK. PAGB. Barnliam y, Webster, 183 325, 440 Callisher v. Biachoffsheim, 61 V. Whittier, 303 Callow V. Lawrence, 322, 32* V. Wood, 325, 326 Calvert v. Good, 652, 653 Burr V. Boyer, 610 650, 655 V. Gordon, 625 T. Wilson, 153 V. Williams, 128, 165- Burrill v. Parsons, 57 Calvo V. Davies, 658 V. Smith, 402 Cambridge Inst. v. Littlefield, 63- Burritt v. Tidmarsh, 182, 40B Camden v. Doremus, 409, 565- Burroagh v. Moss, 168 318, 319 V. MoKoy, 584 Burroughs v. Keays, 450 Safe Deposit, &o.. Do. V .Ab- V. Nettler, 313 bott. 724 Burrows v. Jemino, 274 Cameron v. Chappell, 52 Burson v. Huntington, 330, 708 Camidge v. AUenby, 392, 393, 394, 395,. Burt V. Horner, 566 398 7. Place, 87 Cammack v. Gordon, 405 Burton v. Hansford, 497, 507 Camp V. Bostwick, 619, 663- V. Sohermerhorn, 135 V. Howell, 654 V. Slaughter, 44 V. Simmons, 384, 504, 505, 515,. y. Stewart, 173 578, 659- V. Wynne, 133, 485 V. Tompkins, 172 Bush V. Peckard, 26, 366 Camp's Appeal, 466 Bushey v. Eeynolds, 599 Campbell v. Baker, 518 563, 568 Bushnell v. Church, 525 V. Brown, 140 Butler V. Butler, 669 V. Butler, 506, 512 V. Gambs, 644 V. Farmers' Bani ; 299, 388 V. Murison, 313 V. Goodall, 673- V. Bawson, 428, 571 V. Knapp, 553 V. Slocomb, 372, 401 V. McCcrmac ) 169, 170 V. Slocum, 407 V. Nichols, 333, 379- V. Titus, 145 V. Pettengill, 255 Butterworth v. Peek, 209 280, 282 V. Bobbins, 434 Button V. Clark, 157 V. Skinner, 155, laa Butts V. Cuthbertson, 174 V. Sloan, 114 Byers v. Franklin Coal Co. 44 260, 577 V. Tate, 586 V. Harris, 5,391 Canadian Bank v. Coumbe, 260- Byington v. Simpson, 58 V. Gurley, 31 Byrd v. Bertrand, 170, 266 Canal Bank v. Bank of Albany, V. HoUoway, 35 262 264 265 397, 398 Byrne v. Grayson, 169 V. Terapleton, 170, 325 V. Schwing, 51, 266 Canfield v. Vaughn, Cannan v. Bryce, V. Canfield, 99 518 100, 126 682 C. V. Kreipe, V. MoDaniel, 373 372 Cabot Bank v. Morton, 398, 399, 400 Capital, &c., Ins. Co. v Quinn, 209 Cadwallader v. Hartley, 481 Caples V. Branham, 169, 172 Cady V. Goodnow, 626 Capps V. Gorham, 317 V. Shepard, 2, 501 ,507 508, 511 Cardell v. McNiel, 39:i Cahal V. Frierson, 386 Cardwell v. Hicks, 27,29 Cahn V. Dutton, 496, 507 Carew's Estate Act, In re. 686- Cain V. Southern Expresss Co., 83 Carkin v. Savory, 568, 569 v. Spann, 312 Carleton v. Woods, 129 Calder v. Biliingtoa, 444 Carlisle v. Chambers, 390 Caldwell v. Lawrence, 428 V. Hooks, 255 V. Meshew, 432 V. Wishart, 26 V. Eenfrew, 463 Carlon v. Ireland, 336, 696 V. Wentworth, 123 Carlton v. Bailey, 123 Calfee v. Burgess, 77 V. Buckner, 373- Calhoun v. Albin, 306, 312 Carman v. Pultz, 54 Callaghan v. Aylett, 258 Carmichael v. Bank of Penna., 182, 226 Callahan v. Bancroft, 68 Carnegie v. Morrison, 236, 245, 534 Callaway v. Harrold, 498 Carpenter v. King, 586, 597 V. Price, 645 V. Longan, 372, 721, 722: :xvi CASES CITED IX VOLUME TWO. ■Carpenter v. McLaughlin, PAGIl. 592 V. Murphree, 38 V. O^ks, 495, 511 'Carpentier v. Minturn, 50, 148 Can- V. Howard, 641, 650 V. Le Fevre, 293 V. Lewis, 577 V. Nat. Security Bank, 209, 280, 288 V. Rowland, 491, 494 V. Silloway, 15 •Carradine v. Wilson, 130 Carraway v. Odeii, 609 Carrick v. Vickeiy, 302 Cai-rillo v McPhillips, 366, 703 Carrol v. Meeks, 292 Carroll v. Weld, 502, 510 ■CarroUton Bank v. Tayleur, 237 Carruth v. Carter, 132 V. Walker, SOI •Carson V. Allen, 477 V. Hill, 53 V. Kerr, 254 V. Eussell, 182 ■Carstairs v. RoUeston, 423, 576, 582, 650 •Carter v. Flower, 194 V. Palmer, 292 V. White, 219 Cartmel v. Newton, 657 Cartwright v. Williams, 268, 330 -Caruthers v. West, 47, 316, 317 Carver v. Warren, 494, 497 Carvick v. Vickery, 294 Carville v. Crane, 228 ■Case V. Boughton, 131 V. Burt, 185, 215 V. Dennison, 466 V. (-J-errish, 91 V. Hawkins, 576 V. Henderson, 209, 280 V. Howard, 568 V. Marchand, 209, 280 V. Spaulding, 513 ■Cass County v. Green, 723 Cassebeer v. Kalbfleisch, 1 1 7 •Cassel V. Dows, . 218, 238, 241 Castille v. Offutt, 130 Castle V. Beardsley, 549 V. Candee, 299, 300, 439 Castrique v. Buttigieg, 432, 433 Caswell V. Central R. R. and Bank- ing Co., 333 •Caton V. Lenox, 296 V. Shaw, 523, 525 Cawley v. Gostello, 503, 516 •Caylus V. New York, &c. R. R. Co., 706 •Cayuga County Bank v. Hunt, 120, 188 Cazenove v. Prevost, 374 Cazet V. Field, 165 V. Mix, 491, 496 Cecil Bank v. Farmers' Bank, 367, 704 V. Heald, 28 •Central Ba^ak v. Davis, 347 V. Hammett, 680 PAOB. Central Bank of Brooklyn v. Lang, 335 Branch Co. v. Smith, 713 Nat. Bank v. Conn. Mut. Ins. Co., 281 Central Nat. Bank v. Valentine, 27, 686 Savings Bank v. Richards, 231, 239 Chadbourn v. Uilman, 472 Chaddock v. Van Ness, 39, 387, 436, 496, 501, 506, 508, 510, 595 Chaffe V. Memphis, &c., R. R., 496, 509 Chaffee V. Taylor, 429,431 Chalie v. Belshaw, 229 Challis V. McCrum, 361, 362, 403 Chalmers v. Harris, 400 V. Lanion, 312, 678 V. McMurdo, 386, 501 V. Page, 381 Chamberlain v. Hopps, 593 Chambers v. Falkner, 723 V. Hill, . 188, 189, 190 V. Union Nat. Bank, 397 Champion v. Griffith, 492, 503 V. Robertson, 582 Champney y. Blanchard, 468 Chanoely v. Bailey, 74 Chandler v. Drew, 319 V. Johnson, 82 V. Marsh, 144 V. Mason, 57 Chanter v. Hopkins, 403 Chapel V. Hicks, 134 Chapin v. Lincoln Sav. Bank, 122 V. Merrill, 528 V. Thompson, 439 Chapman v. Black, 115, 128, 129 V. Blank, 114 v. Cottrell, 271, 329 V. Eddy, 54 V. MoCrea, 405, 406 V. Rose, 696 V. White, 209, 280, 282 Chappell V. Raymond, 641 Charles v. Denis, 175, 434 V. Marsden, 45, 47, 168, 309, 316, 317 Chase v. Hathorn, 591, 595 V. Haughton, 470, 481 V. Redding, 469 V. Weston, 134 Chatauque Co. Bank v. Davis, 358, 359, 431 Chaters v. Bell, 360 Chaworth v. Beach, 463 Cheek v. Roper, 186 Chemung Canal Bank v. Bradner, 708, 721 722 Cheney v. City Nat. Bank, ' 143 V. White, 121 Cherry v. Miller, 409, 419, 462, 629, 642, 643, 650, 655 Chesbrough v. Wright, 27 Chesley v. Taylor, 346 CASES CITED IN VOLUME TWO. XVII ' PAGE. •Chester v. Bank of Kingston, G36 V. Dorr, 47, 316, 317 Chetlaio v. Republic Life Ins., 17 Chewning v. Gatewood, 344 Cliicago, &c., K. R. Co. v. Edson, 7'Jl, 7-25 M. & F. Ins. Co. V. Stanford, 2S2 ■Chichester v. Mason, 4il Chickasaw Co. v. Pitcher, 655 Chicopee Bank v. Chapin, 12, 161, 456, 721, 722 Child V. Eureka Powder Works, 44, 348, 669 V. McKean, 160 •Childs V. Davidson, 342 \ . Monin, 35 V. Wyman, 362, 495 Chilton V. Kobbins, 658 •Choteau v. Jones, 666 V. Allen, 702 Chrisman v. Tuttle, 651 Christie v. Peart, 217 Chrysler v. Eenois, 24 Church V. Brown, 528, 551 V. Tomlinson, 114 Churchill v. Gardner, 330 Churchman v. Martin, 119 <3hute V. Pattee, 650, 652 City Bank v. Nat. Bank, 397 of i^ew Haven v. Perkins, 11, 304, 696 of Aurora v. West, 713 Concord v. Pillsbury, 601 ■Citizens Bank v. Patterson, 665 V. Payne, 455, 686 V. Ryman, 682 V. Strauss, 162, 721, 727 V. Willis, 26 Nat. Bank v. Hooper, 696 Sav. Bank v. Oleson, 627 Claflin V. Briant, 523 V. Farmers' Bank, 286, 707 V. Wilson, 367 Clagett V. Salmon, 629', 655, 658 Clanton v. Barnes, 383 Clapp V. County of Cedar, 443 V. Rice, 494, 495, 499, 508 Claridge v. Dalton, 418, 638, 621 Clark V. Blackslock, 215 V. Bovce, 639, 655 V. Boyd, 324, 329 V. Bryce, 593, 594, 650 V. Cilley, 474 V. Conn. Peat Co., 471, 480 V. Dearborn, 724 V. Dederick, 311, 313 V. Devlin, 260, 575, 625, 656 V. Farmers Mfg. Co., 296 V. Gibson, 94 V. Hampton, 62, 549 V. Johnson, 102 V. Merriam, 437, 439, 502, 515, 558 V. Noel, 577 PAGE. Clark V. Pease, 723, 724 V. Pigot, 345, 347, 349 V. Pomeroy, 82 V. Eicker, 82, 84, 87, 129, 164, 719 V. Robert!, 390 .'. Sickler, 626 V. Sigourney, 324 V. Sisson, 12, 117 V. Small, 4 V. Thayer, 43, 717, 726 V. Viles, 474 V. Whitaker, 327, 444 V. Whiting, 343 V. Wilson, 638, 647, 650 V. Young, 409 Clarke v. Cock, 207, 231, 238, 254 V. Gordon, 256, 257 V. Holmes, 178 V. Smith, _ 157, 499, 503, 512 Co. V. Covington, 642, 650 Nat. Bank v. Nat. Bank of Albion, 288, 703 Clary v. Surrency, 21 Clason V. Morris, 673 Clauston v. Barbiere, 347 Clawson v. Gustin, 310, 347, 508 Claxton V. Smith, 645 V. Swift, 384, 627 Clay V. Cottrell, 313 V. Edgerton, 427, 552, 554, 558 Clayes v. White, , 412 Clayton v. Coburn, 502, 514, 512, 565 V. Jennings, 96 V. O'Conner, 411 Clement v. Leverett, 266, 452 V. Reppard, 169 V. Segur, 62 Clements v. Smith's Administrators, 146 V. Yeates, 210 Clendenin v. Southerland, 325 Cleneay v. Junction E.R., 478, 485 Cleveland v. Covington, 670 V. Loder, 121 Clair v. Barr, 414 Clippenger v. Hepbaugh, 58, 80 Clipperton v. Spettigue, 579 Clopper V. Union Bank, 583 Clopton v. Elkin, ' 130 V. Hall, 4, 171 V. Spratt, 610 Closson v. Stearns, 340 Clothier y. Adriance, 29, 505, 512 Clough V. Baker, 153 v. Buck, 371, 478 \. Patrick, 10, 188, 160 Clouston V. Barbiere, 500, 504, 506, 515 Cloyes V. White, 519 Clubb T. Hutson, 82 Coates T. Doran, 282 Coats V. McKee, 624 V. Swindle, 586, 618 Cobb V. Doyle, 31 V. Duke, 293 XVUl CASES CITED IN' VOLUME TWO. Cobb V. Little, V. Titus, Coburu V. Haley, V. Odell, V. ToUes, V. Ware, Cochran v. Atchison, V. Orr, V. Strong, V. Wheeler, Cooke V. Blackbourn, V. Hoffman, Cocks V. Nash, Cockshott V. Bennett, Codd V. Eathbone, CodwiseV. Gleason, Coes V. Callaham, Coffelt V. Wise, Coffman v. Campbell, V. Hopkins, V. Wilson, PAGE. 519, 527, 539, 558 51 142 129 526 19, 133 396 617 298 322 174 663 629 63, 90, 91, 92 119 300 164 596 231, 252, 253 591, 672 593 Coggill V. Amer. Exch. Bank, 335 Coghlan v. May, 316 Cogswell V. Hayden, 501 Cohen v. Prater, 166, 296 Cohoes V. Cropsey, 85 Colburn v. Averill, 2, 491, 494 Colby V. Lyman, 147 Colcord V. Daggett, 480 Cole V. Gushing, 348, 349, 359 V. Gill, 121 V. Gower, 102 T. Hills, 600 V. Merchants' Bank, 531, 534 V. Saulpaugh, 27 V. Smith, 438 Coleman v. Davies, 37 V. Lansing, 27 V. Norman, 584 V. Tully, 414 V. Walker, 606 Colerick v. McCleas, 617 Colgrove v. Tallman, 612 Collamer v. Day, 95 Collenridge v. Farquharson, 20, 319 Collger V. Francis, 683 Collier v. Baptist Education Society, 16 V. Hershey, 371, 477 V. Leonard, 607 V. Mahan, 363, 391 V. Waugh, 82 CoUiger v. Francis, 12 Collins V. Allen, 320 V. Blanteen, ■ 82 V. Butler, 196 V.Everett, 504,509,513 V. Frist, 504, 592 V. Gilbert, 326, 721, 722 V. Martin, 45, 162, 166, 167, 168, 177, 369, 452 V. Prosser, 665 Collis V. Emmett, 307 Collott V. Haigh, 577 PAGSI. Colman v. Post, 685- Colorado Nat. Bank v. Boettcher, 246, 280 Colquitt V. Stultz, 462 Colson V. Arnot, 356, 692, 706- Colt V. Barnard, 310, 311 Combe v. Woolf, 568 Combes v. Chandler, 379 Combs V. Ingram, 33 Comegys v. Booth, 656- Comly V. Hillegrass, 96 Commercial Bank v. Cunningham, 423 &c.. Bank v. First Nat. Bank, 285 Commercial Bank v. French, 591, 592. V. Pfeiffer, 374 of Keokuk v. Pfeif- fer, 241 Commercial Nat. Bank v. Henninger, 425- Press V. Crescent City Bank, 391 Commissioners of Berks Co. v. Boss, 631 Iredell Co. v. Wasson, 433, 435- Johnson Co. v. Mil- liken, 79 Commissioners of Marion Co. v. Clark, 677, 726- Commonwealth v. Butterick, 339 V. Chesapeake, &c.. Canal Co., 713 V. Johnson, 83, 84 V. Miller, 421 V. Pease, 82. Ins. Co. V. Whitney, 132 Comparree v. Brockway, 501 Compton V. Blair, 38 V. Davidson, 149 V. Jones, 151 Comstock V. Draher, 128 V. Farnum, 479 V. Hannah, 692, 694 V. Hier, 27, 4a Conaway v. Odert, 429 Conderman v. Hicks, 84 Condon v. Pearce, 349, 440 Condrey v. West, 141 Cone V. Baldwin, 162, 679, 690 Conery v. Webb, 480- Conklin v. Roberts, 97 Conkling v. Vail, 167 Conley v. Winsor, 723 Connell v. Bliss, 845 Connelly v. Bourg, 43& V. McKean, 215 Conmey v. Macfarlane, 58, 170, 177 Conn V. Coburn, 592 Connerly v. Planters', &c., Ins. Co,, 170 Conover v. Earl, 376 V. Stillwell, , 67 Conrad v. Gallery, 130 Continental Nat. Bank v. Townsend, 31 Converse v. Evins, 76- V. Foster, 12T CASES CITED IN VOLUME TWO. Xl± Conway v. Williams, Cook V. Baldwin, "^v. Bean, V. Bradley, V. Cockrill, V. Googins, V. Larkin, V. Lister, V. Miltenberger, V. Mix, V. Mutual Ins. Co., V. Shipman, V. Soutliwick, V. State Nat. Bank, V. Weirman, V. Whitfield, V. Wolfendale, V. Wright, Cooke V. Chaney, V. Nathan, Cooley V. Lawrence, Coolidge V. Brigham, V. Barnes, V. Inglee, V. Payson, V. Wiggin, Cooling V. Noyes, Coombs V. Dibble, Cooper V. Bailey, V. Chester, V. Cooper, V. Dedrick, V. Le Blanc, V. Livingston, V. Nock, V. Thompson, Coore V. Callaway, Cope V. Daniel, V. Smith, Copeland, Ex parte, Copis V. Middleton, Copland V. Stein, Cbpp V. McDougall, V. Sawyer, Coppock V. Bower, Corbett v. Clark, Corbit V. Bank of Smyrna, Core V. Wilson, Corgan v. Frew, Corielle v. Allen, Conine v. Junction, &c., K. Corlett V, Conway, Corser v. Craig, Cortelyou v. Hoagland, Corwith V. Colter, Costello V. Wilhelm, Costelo V. Crowell, Coster V. Mesner, Cotes V. Thayer, Cotten V. McKenzie, Cottle V. Cleaves, Cotton V. Sterling, PASK. 171 223, 226, 229 150 37 438 407, 515 678- 45, 622 238 8, 142 410 81 495, 508, 515 286 146 157 155, 250 61 461 541, 565 504, 507, 515 399 158 74 219, 235, 241 385, 386 90 96 303 265 359 531 263 57 330 554, 557 76 212 346 605, 613, 620 374 671 218 401 14, 160, 467 83, 87 250 393 386, 388 412 654 296 222, 230 209, 283 546 149 , 69, 418, 650 296 649 642 129 123, 124, 179 677 E., PAGE. Cottrell V. Conklin, 503 Ex parte, 101 V. Shandley, 500 Couch V. First Nat. Bank, 413 V. Waring, 603 Coulter V. Richmond, 500, 508, 512 V. Wyly, 462 County of Bates v. Winters, 713 Cass V. Gillett, 719 Dubuque v. Koch, , 608 V. Hinckley, 283 of Macon v. Shores, 719 Warren v. Marcy, 719 Coursin v. Ledlie, 169, 170 Courtney v. Doyle, 171, 527 V. Hogan, 434 Courtoy v. Vincent, 487 Coutant V. Schuyler, 16, 464, 467 Coventry v. Barton, 126 Covert V. Nelson, 479 Coward v. Hughes, 33 Cowdrey v. Vandenburgh, 297 Cowee v. Cornell, 6, 172 Cowell V. Edwards, 662 Cowing V. Altman, 21, 162 Cowles V. Gridley, 56 Cowley V. Dunlop, 51 Cowper V. Smith, 93, 570 Cowperthwaite v. SheflSeld, 210, 283, 462 Cowser v. Tatum, 292, 336 Cox V. Adams, 292 v. Coleman, 243 V. Mobile, &c., E. E. Co., 426 V. National Bank, 182, 207 V. Troy, 245, 271, 273, 329, 357 Coy V. Stiner, 344 Coykendall v. Constable, , 304 Craddock v. Armor, 536 Craft V. Fleming, 361 V. Isham, 523, 524 Craft's Appeal, 694, 696 Cragin v. Fowler, 138 Craig V. Andrews, 129, 165, 177 V. Brown, 35& V. City of Vicksburg, 336 V. Craig, 15, 467 V. Kittredge, 331 V. Parkes, 565, 567 V. Price, 182 V. Sibbett, 163 V. State of Missouri, 103- Craige v. Tingle, 304 Cramer v. Moore, 169- Cramlington v. Evans, 366 Crampton v. Perkins, 723' Crandall v. Vickery, 12, 699- Crane v. Benit, 408- V. Stickles, 607 V. Trudeau, 408, 504 Cranley v. Hillary, 275' Crans v. Hunter, 59^ 64 Crawford v. Lytle, 493 V. Millspaugh, 630 XX CASES CITED IN VOl/tTME TWO. Crawford v. Eobie, PAGS. 153 Cummings v. Henry, PAOB. 99 V. Shaw, 3 V. Little, 44, 47, 316 V. Storms, 96 V. Oglesby, 373 Crawley v. Crowther, 292 V. Taux, 104 Craythorn v. Swinburne, 660 V. Williams, 120 Crayton v. Clark, 478 Cumpston v. McNair, 561 Creath v. Sims, 608 ■Cundiff V. Herron, 77 Creech v. Byron, 317 Cundy v. Marriott, 402, 407 Creighton v. Gordon, 292 Cunliffe v. Whitehead, 338, 382 Cremer v. Higginson, 523, 529 Cunningham v.Wardwell, 208 Crenshaw v. Jackson, 540 Curan v. Colbert, 634 Creveling v. Bloomsbury Nat. Bank, 280 Cuiley V. Hand, 388 Crim V. Starkweather, 406 Currie v. Misa, 29, 686 Crippo V. Davis, 312 Currier v. Fellows, . 587 Cripps V. Davis, 326 Curry v. Bank of Mobile, 360 V. Hartnall, 667 V. Powers, 468 Crisman v. Swisher, 432, 449 Curtis V. Bemis, 324 Crist V. Burlingame, 529 V. Clark, 140 Critcher v. Holloway, 74 V. Mohr, 18, 454, 455, 634, 687 Critchlow v. Parry, 357 396, 401 V. Smallman, 562 Crocker v. Crane, 137 V. Sprague, 335, 343 344, 426 V. Getchell, 434 Gushing v. Gore, 55 V. Gilbert, 564 Cushman v. Dement, 503, 505 Crofts v. Beale, 33,40 V. Welsh, 443 Cromwell v. County of Sac, 702 Cuthbert v. Haley, 95 115, 116 V. Hewitt, 299, 300, 503, Cutler V. Welsh, 99 515, 557 V. Wjight, 111 Cronise v. Kellogg, 576 Cutter V. Collins, 61, 102 Crook V. Jadis, 691 Cutling V. Conklin, 345, 350 Crooks V. TuUy, 171 , 548, 550 Cults V. Perkins, 210 218, 262 Crosby v. Grant, , 706 Cuyler v. Sanford, 119 V. Morton, 181 V. Eoub, 441 V. Tanner, 318 D. y. Tucker, 138 V. Wyatt, 639 Dabney v. Bank of South Carol ina, 681 Croskey v. Skinner, 348 Da Costa v. Jones, 93, 94, 95 Cross V. Brown, 55 Dale V. Moffitt, 496 v. Haldeman, 478 Dalhoff V. Coffman, 481 V. Herr, 62 Dalrymple v. Hillenbrand, 161, 397 V. Wood, 654 Dalton V. Dalton, 475 Crossley v. Ham, 312, 318 V. Woburn Agric. Assoc. 634, 674 Crossman v. May, 3,527 City Co. V. Johnson, 432, 434, V. Wohlleben, 649 435, 4^9 Crosthwait v. Misener, 430 Daily v. Eobinson, 618 Croughton v. Duval, 610 Dair V. United States, 594 Crow v. Eichinger, 157 Dakin v. Anderson, 404 Crowder v. Eeed, 84 Damon v. Pardow, 589 Crowell v. Osborne, 5 Dana v. Conant, 565 v. Plant, 250 V. Sawyer, 195 V. Van Bibber, 219, 239 V. Third Nat. Bank, 210 Croydon Gas Co. v. Dickenson, 629 V. Underwood, 335 Crozer v. Chambers, 507 Dancey v. Sugg, 146 Cruett V. Jenkins, 483 Dane v. Corduan, 615 Cruikshanks v. Eose, 129, 130 Danforth v. Evans, 94 Crump V. Secrest, 96 V. Semple, 654 Crutchley v. Mann, 238 Daniel v. Andrews, 169 Cubber v. Emery, 661 V. Cartony, 113, 166 Cuff V. Browne, 153 V. Eawlings, 478 Culver V. Leovy, 387 Daniels v. Stone, 54 V. Parish, 485 V. Gower, 593 Cumberland Bank v. Hann, 319 V. Wilson, 161 Cummings v. Boyd, 32, 45 Dann v. Norris, 358 CASES CITED IS VOLUME TWO. XXI Darbishire v. Parker, Dare v. Hall, Darland v. Taylor, Darling v. March, V. Osborne, Darlington v. McCunn, Darmouth v. Bennett, PAGE. 189 650, 651, 652 • 464, 465 159 311 528 86 Darnell v. Williams, 42, 133, 159, 261, 266, 268 Dauber v. Blackney, 393, 546 Davenport T. Elliott, 19 V. Woodbridge, 444 David V. EUice, 639 Davidson v. Jordan, 148 V. Eobertson, 269 Davies v. Franklin, 114 1'. Stainbank, 582, 588 Daviess Co. Sav. Assoc, v. Sailor, 631 Davis V. Atlanta Nat. Bank, 595 V. Barrington, 586 v. Barron, 497, 511 v. Bartlett, 721, 727 V. Bauer, 664 V. Bradley, 313 V. Brown, 435 V. Campbell, 520 V. Carson, 18, 479 V. Clarke, 211, 212, 214 V. Clemson, 111 V. Converse, 600 V. Emerson, 664 V. Funk, 460 V. Garr, 112 V. Gowen, 440 V. Graham, 607, 641, 642 V. Gray, 716 V. Hardacre, 120 V. Holding, 92, 93 V. Humphreys, 662 V. Huggins, 611 V. Leitzman, 412 V. Mason, 90 V. Miller, 309, 311, 313, 314, 317, 323, 453 V. Morgan, 433, 438 V. McConnell, 267 V. McCready, 163,715 V. McVickers, 146 V. Neligh, 319 V. Pawlette, 478 V. Randall, 45 V. Stktts, 592 V. Stevens, 322 V. Stokes County, 600 V. Travis, 178 V. Wells, 525 V. Wilson, 327, 336 Davison v. Franklin, 95, 129 Dawson v. Kearton, 14 V. Morgan, 269 v. Prince, 706 Day V. Billingsby, 586 V. Cutler, 56 PAGE. Day V. Elmore, 550, 562 V. Nix, 133, 138 V. Saunders, 24 V. Stuart, 95, 100 V. Thompson, 434, 436 V. Whitney, 377 V. Zimmerman, 483 Deal V. Cochran, 642 Dean v. Carruth, 468 V. Crane, 62 V. Hall, 293, 497 V. Newhall, 650 V. Skiff, 55 V. Warnock, 358 Deardorff v. Foresraan, 594 Dearth v. Hide, &c., Nat. Bank, 421 De Barry v. Withers, 44, 26 De Beginis y. Armistead, 107 De Bernales v. Fuller, 270 Debesse v. Napier, 218, 262 De Bruhl v. Maas, 373 V. Patterson, 165 Deck V. Works, 558, 568 Dedman v. Williams, 664 Deering v. Chapman, 129 Deey v. Shee, 97 De Forest v. Strong, 120 De Groot v. Van Duzer, 126 Dehers v. Harriot, 309, 358 Dehuff V. Turbett, 613 Deitz V. Corwin, 389 Dekay v. Hackensack Water Co., 684, 697, 699 De la Chaumette v. Bank of England, 27, 32, 336, 699 Delano v. Bartlett, 178 Delany v. Mitchell, 396 De Lashmutt v. Everson, 379 Delaware Co. Bank v. Duncombe, 699 Bank v. Jarvis, 166, 404 &c., E. B. Co. V. Oxford Iron Co., 669 De Leon v. Trevino, 128 De Liquero v. Munson, 209, 225 De Mott V. Starkey, 313 Des Moines R. B. v. Graff, 17 Dendy v. Gamble, 589 Denegre v. Milne, 182, 208 Denham v. Pogue, 477 Denick V. Hubbard, 612, 654 Dennis v. Bider, 611 V. Table Mpuntaiu Water Co., 183 Dennison v. Brown, 156 Denniston v. Bacon, 438 Denny v. Elkins, 94 V. Lincoln, 81 Denters v. Townsend, 312, 324 Denton v. Duplessis, 337, 403 V. Lytle, 386, 438 V. Peters, 329, 331, 390 Depeau v. Waddington, 44 Depuy v. Clark, 461 V. Schuyler, 326 XXll CASES CITED IN VOLUME TWO. Depuy V. Swart, PAGE. 63 Dod V. Edwards, PAGB. 274, 308 Dering v. Earl of Winchelsea, 662 Dodd V. Doty, 325 Derosset v. Bradley, 574, 659, 664 Dodge V. Adams, 68 Deslia V. Stewart, 208, 210 V. Manchester, 66 De Tastett v. Crousillat, 238, 240 V. Nat. Exchange Bank, 282, 443 Detrick v. McGlone, 145 Doe V. Burnham, 165, 177 Dever v. Akin, 126 V. Warren, 118 Deversy v. Moor, 577 Dogan V. Dubois, 43 329, 357 Devlin V. Brady, 81 Doherty v. Bell, 68 De Voss V. City of Richmond, 713 V. Perry, 707 Devries v. Shumate, 698 Dole V. Weeks, 292, 294 Dewey v. Cochran, 595 V. Young, 561 V. Living, 676 Dollfue V. Frosch, 359, 431 De Witt V. Perkins, 12, 166, 683 Done V. Walley, 663 De Wolf V. Johnson, 65 Donley v. Camp, 557 De Zeug v. Fyfe, _ 45 V. CundifF, 377 Diamond v. Harris, 157, 311, 313, V. Tindall, 77 316, 403 Donly V. Bush, 520, 565 V. Lawrence, 719 Donohoe v. Gamble, 461 Dibble v. Duncan, 436 Doolin V. Ward, 89 Dick V. Works, 518 Doolittle V. Ferry, 434 Dicken v. Morgan, 149 V. Lyman, 123 124, 125 Dickerson v. Board of Com missioners, Dore V. Dawson, 483 585, 641 650, 652, 655 Doremus v. Bond, 140 V. Burke, 326 Dorn V. Parsons, 432 V. Turner, 578 Dorsey v. Abrams, 288, 679 V. Wason, 377 Doty V. Knox Co. Bank, 105 Dickey v. Fox, 480 Doud V. Wallen, 667 Dickin v. Morgan, 175 Dougal V. Cowles, 208 Dickinson v. Coates, 282 Doughty V. Savage, 91, 152 V. Derrickson, 554, 557 Douglass V. Dudley, 452 V. Edwards, 112 V. Eason, 154, 178 V. Hall, 10, 146 V. Howland, 550, 558 V. Lewis, 62 V. Reynolds, 523, 530, 541, 555, V. Strong, 474 560 Dickson v. Cunningham, 428, 442 V. Wilkeson, 295, 376 Ex parte, 395 Dovey's Appeal, 379 V. Gamble, 173 Dew V. Rowell, 383 V. Primrose, 710 Dowdy V. McLellan, 158 Didlake v. Uobb, 35 Dowe V. Schutt, 52 Diercks v. Koberts, 440 Dowling V. Blackman, 156 Dietrich v. Mitchell, 347 502, 504 Down V. Hallings, 688 Dietz V. Bejjnier, 668 Downer v. Chesebrough, 436 Digrall V. Wigley, 109 V. Tarbell, 485 Dillingham v. Blood, 677 Downes v. Church, 269 Dillon V. Russell, 645 Downing v. Gibson, 319 Dilton v. Russell, 69 Downs V. Church, 185 Diltz V. Sadler, 78 Doyle V. Carroll, 82 Dingman v. Amsink, 134 178, 721, 727 Drage v. Ibberson, | 83,87 Dingwall v. Dunster, 260, 276, 277 V. Netter, 274 Disborough v. Vanness, 405 Drake v. Chandler, 114 Disher v. Disher, 162 V. Markle, 500, 509 Ditchburn v. Goldsmith, 94 V. State of Ohio, 500 Ditlmar v. Myers, 78 Draper v. Cowles, 686 Diversy v. Moor, 617 V. Snow, 550 Dix V. TuUy, 452 V. Weld, 504, 509 V. Van Wyck, 121 Drayton v. Dale, 265 Dixon V. Clayville, 342, 406, 407 Dresser v. Missouri, &o., Ky., 12, 700 V. Dixon, 29, 686 Drew v. Phelps, 429 V. Nutall, 182 V. Towle, 133 , 134, 135 Dobbin v. Bradley, 522 Driggs V. Rockwell, 319 Dobson V. Espie, 275 Drinkhouse v. Surette, 106, 166 Dockray v. Dunn, 52 Drinkwater v. Tebbetts, 183 CASES CITED IN VOLUME TWO. SXlll PAGE. Driskell v. Mateer, 631 Druhe v. Christy, 385 Drummond v. Gager, 433 V. Prestman, 522 V. Yager, 386, 584, 660 Driiry v. De Fontaine, 107 v; Macaulay, 56 V. Smith, 463, 466 Dryden v. Britton, 328 Dryer v. Merchants' Bank, 702 Dubois V. Baker, 151 V. Mason, 498 Du Bois V. Stnner, 623 Dubuisson v. Folkes, 642, 652 Ducasse v. Keyser, 441 Ducker v. Eapp, 653 Dudley v. Butler, 82 Dufaur V. Oxenden, 219, 222, 230 Duffield V. Elwes, 463, 467, 468 Dugdale v. Marine, 413 Dugan V. Sprague, 454 V. United States, 358,359,360,431 Duke V. Clark, 318 Dull V. Brucker, 227 Dumond v. Williamson, 170, 362, 397 Dumont v. Pope, 182, 188, 191 Dunavan v. Flynn, 229, 245, 246 Dunbar v. Marden, 10 V. Tyler, 194 Duncan v. Berlin, 230, 282 V. Edgerton, 558, 568 V. Gilbert, 12, 52, 723 V. Gosche, 458 V. North and South Wales Bank, 576, 671 Duncan v. Scott, 159, 179, 724 Dunham v. Gould, 121 Dunlop V. Hamilton, 183 Dunn V. Ghost, 332, 435 V. Weston, 21, 316 Dunne v. Boyd, 464 Dunning v. Heller, 343 V. Merrill, 114 Dupays v'. Shepherd, 214 Duperier v. Darby, 125 Dupre V. Fall, 461 Durant v. Banta, 331 V. Iowa County, 719 Durbin v. McMichael, 76 Durden v. Smith, 194 Dnrgin v. Bartol, 446 Durham v. Craig, 671 V. Giles, 603 V. Manrow, 546 Dusendorf v. Oliver, 476 Dutchess County Ins. Co. v. Hach- field, 695, 723 D'Wolfv. Babaud, 2,228 Dwiglit V. Emerson, 311 V. Williams, 562, 568 Dye V. Dye, 591 V. Scott, 436 Dyei, Ex parte, 231, 238 PAGE. Dyer v. Gilson, 561, 565 V. Homer, 296 Dykers v. Leather Mfrs.' Bank, 209, 280 E. Eagle Bank v. Smith, Eagleson v. Shotwell, Earbee v. Wolfe, Earhart v. Gant, Earl V. Page, V. Peck, East V. Essington, Eastbrook v. Scott, Easter v. Minard, Easterly v. Barber, 400 119 360 304, 488, 693 138 6 340 94 458, 595 336, 579 Eastin v. Succession of Osborn, 266 East India Co. v. Tritton, 397, 401 Eastman v. Brown, 57 V. Cooper, 709 V. Plumer, 622 V. Shaw, 113, 159 Easton v. Easton. 57 V. Pratchett, 13, 162, 173 East Eiver Bank v. Butterworth, 47 Eastwood V. Bain, . 214 V. Kenyon, 62, 67 Eaton V. Alger, 378 V. Burns, 61, 157 V. Carey, 51 V. McMahon, 434 V. Millers, 396 V. Waite, 610, 649 Eberhart v. Page, 503, 507 Eccles V. Ballard, 293, 347 Ecton V. Harlan, 721 Eddy V. Bond, 292 V. Stanton, 563 Edelen v. White, 386, 577 Edie V. East India Co., 294, 839, 364, 365, 366, 368 Edison v. Frazier, 292, 427 Edge V. Bumford, 445 Edgecombe v. Eodd, 82, 86 Edgerly v. Emerson, 666 Edgerton v. Edgerton, 172 Edmondston v. Drake, 529 Edmunds v. Digges, . 393 V. Groves, 109, 177, 178 Edsell V. Briggs, 495 Edson V. Miller, 223 Edwards v. Davis, 13 V. Dick, 95, 99, 166, 391, 402 Ex parte, 263 v. Jevons, 551 V. Jones, 12, 378, 464 V. Porter, 133 V. Pyle, 146 V. Thomas, 695 Egan V. Threlfall, 689, 717 Ege V. Kyle, 371 Egerton v. Furzman, 95 XXIV CASES CITED IN VOLUJtE TWO. PAGE. .Eggan V. Briggs, 377, 430 Eggermaa v. Henschen, 421, 423, 630 Ehrman v. Union, &c., Ins. Co., 304 Eichelberger v. Pike, 406 Eilbert v. Finkbeiner, 501, 503, 507 Eisenlord v. Dillenbeck, 406 Eisner v. Keller, 26 Elam V. Keen, 465 Elder v. Dyer, ■ 637 Elford V. Teed, 195 Elgin V. Hill, 317 Elliot V. Abbot, 335 Elliott V. Armstrong, 442 V. Deason, 319 V. Giese, 549 Ellis V. Brown, 500 V. Clark, 4 V. Galindo, 276, 277 V. Ohio Life Ins. Co., 262 V. Wheeler, 293 V. Wild, 398, 399 V. Wilmot, 632 Ellison V. McCullough, 132 V. Tuttle, 474 Ellsworth V. Brewer, 428 V. Harmon, 531 EUwood V. Monk, 547 Elsass v. Moore's Hill, &c., Institute, 147 Elston V. Gillis, 371, 481 Eltham V. Kingsham, 94 Elting V. Brinkerhoff, 182, 188, 189, 190 Elworthy v. Bird, 82 Ely V. Bibb, 566 V. Webster, 127 Emanuel v. White, 24 Emerine v. O'Brien, 624 Emerson v. Burns, 179, 726 V. Cutts, 345 y. Patridge, 481 Emery v. Estes, 177 V. Hobson, 2 Eraly V. Lye, 392 Emmott V. Kearns, 527, 550 Empire Mfg. Co. v. Stuart, 429 English V. Board of Trustees of the Indiana Asbury University, 188 English V. Dariey, 418, 625, 628, 639, 645 English V. Wall, 182 Enix V. Hays, 601 Enos V. Tuttle, 484 Epler V. Funk, 371, 703 Ereskine v. Murray, 229 Erie Bank v. Gibson, 613 Erskine v. M'Lendon, 533 Erwin v. Downs, 401 V. Lamborn, 541, 542, 558, 560 V. Saunders, 63 Ervin v. Morris, 48 Espy V. Bank of Cincinnati, 263, 285, 286 Essex Company v. Edmands, 494, 506, 509 PAGE. Essex Co. Nat. Bank v. Bank of Mon- treal, 284 Estabrook V. Boyle, 178^ Ex parte, 692 Estep V. Burke, 22 Estes V. Simpson, IS Esty V. Brooks, 412 Etheridge v. Gallaher, 314, 315- V. Vernoy, 376 Eunson v. Healy, 484 European Bank, In re, 318, 456, 699, 701 Evans v. Bell, 541, 542, 561 V. Cook, 98 V. Cramlington, 366, 368 V. Darlington, 460 V. Druramond, 274 V. Gee, 346, 347 V. Jones, 94 V. Keeland, 595, 596 V. Kymer, 368 V. Sinith, 678 V. Whyle, 392, 522 V. Williams, 93, 133, 598 Evansville Nat. Bank v. Kaufman, 238,. 374, 532 Everhart v. Puckett, 88, 174 Everingham v. Waddell, 672 Eversole v. Maull, 378 Exchange Bank v. Butner, 12, 135, 455^ of St. Louis V. Rice, 217, 229, 239, 243 Eyre v. Everest, g05- V. M'Dowell, 69a Fairclough v. Pavia, 311, 357 Fairfield v. Adams, 349, 350' Faikney v. Eeynous, 9& Fairlie v. Herring, 224, 229, 244, 248,273 Fake v. Smith, 402 Falk V. Rothschild, 417 Fall River Sav. Bank v. Sullivan, 61& Union Bank v. Willard, 181, 185, 194 Fallis V. Howarth, 294 Fallows v. Taylor, 86- Fanshawe v. Peet, 257 Fansworth v. Clark, 528- Fant V. Miller, 11, 117 Fareira v. Gabell, lOO Farley v. Cleveland, 547 Farmer v. Sewell, ' 116 Farmers' Bank v. Blair, 421 &c., Bank v. Butchers' Bank, 162 V. Drury, 482 Bank v. Gilson, 673 &c., Bank v. Humphrey, 594 and Mech. Bank v. Jenks, 106 &c., Bank v. Kercheval, 525, 530, 555, 55S V. Lucas, 597 CASES CITED IN VOLUME TWO. Farmers' and Citizens' JSTat. Bank v. Noxon, 724 Farmers' Bank v. Eaynolds, 610, 650 and Mechanics' Bank v. Eatlibone, 576 Farmers', &c , Bank V. Sprague, 210 Farnsworth v. Boardman, 519 V. Garrard, 161 Farquhar v. Southey, 275, 276, 277 Farrar v. Davis, 82 V. Freeman, 135, 164 Farrington v. Frankfort Bank, 27, 30 V. Gallaway, 582 V. Park Bank, 312 Farris v. Catlett, 313 Farrow v. Respess, 554, 559 Farwell v. Importers', &c.. Bank, 453 Farrell v. Lovett, 692 Farwell v. Meyer, 349, 372, 654 Fassm v. Hubbard, 362 Faulkner v. Faulkner, 18, 408, 410, 414, 496, 507 V. Ware, 162, 721, 722 Favorite v.'Stidham, 598 Fawcett v. Freshwater, 652 Fawsett v. Nat. Life Ins. Co., 368, 369 Fay V. Fay, 90, 91 V. Jones, 297 - V. Sears, 370, 486 V. Smith, 477, 494 Fayle v. Bird, 258 Fear v. Dunlap, 497 Fearing v. Clark, 162 Fearn v. Filica, 177, 179 Feise v. Randall, 91 Fegenbush v. Lang, 500, 508, 512 Fell V. Cook, 92 Fellows V. Prentiss, 26, 420, 529, 568 Fenby v. Pritcliard, 19, 49, 460 Fenn v. Harrison, 392, 395, 398 Fennell v. McGowan, 424 Fenouille v. Hamilton, 25, 451 Penton v. Goundry, 258 V. Ham, 90 Fentum v. Pocock, 45, 168, 260, 267, 274, 576 Ferdon v. Jones, 39, 715 Ferguson v. Childress, 415 V. McCain, 141 V. Oliver, 137 V. Turner, 605, 634 Fernan v. Doubleday, 420, 653 Fernandey v. Glynn, 246 Fernandez v. Lewis, 182, 188, 189, 191 Fernon v. Farmer, 295 Ferrall v. Shean, 113 Ferris v. Adams, 79 Fickett, In re, 671 Field V. Cutler, 612 V. Hamilton, 673 V. Lawson, 487 V. New Orleans Delta Co., 499 V. New Orleans Newspaper Co., 515 PAGE. Field V. Nickerson, 188, 405, 406, 407 V. Tibbetts, 315 Fielder V. Marshall, 211 Fieldhouse v. Croft, 487 Fiero v. Fiero, 46() Fields V. Stunston, 318 Findlay v. Bank of the United States, 603, 674 Findley v. Hill, 612, 643 Fine v. High Bridge M. E. Church, 446 Fink V. Cox, 13, 467 Finley v. Green, 437 Firman v. Blood, 502 First Nat. Bank v. Bank of Richmond, 368 V. Bensley, 218, 2.54 V. Bentley, 24 V. Carpenter, 533 V. Ciu'istopher, 699 V. Clark, 231, 271 V. Coates, 281 V. Douglierty, 708 V. Dubuque Ry. Co., 283 V. Fourth Nat. Bank, 184 V. Fowler, 303, 581, 595 V. Gary, 434 V. Gish, 282 V. Grant, 316 V. Gregg, 32, 367 V. Green, 721, 723 V. Hatch, 223 V. Hendrie, 56 V. How, 140 V. Leach, 284 V. Leavitt, 646 V. Linneberger, 122, 655, 658 V. Loyhed, 431 V. Marshall, 494 V. McCann, 436 V. Morgan, 44, 582 V. Morris, 59, 260, 577 V. Nat. Marine Bank, 434 V. Need ham, 702 V. Petlir, 288 V. Pierce, 638 V. Reno County Bank, 367 V. Sim rues, 429 V. Smith, 341 V. Sti-ang, 443 V. Tisdale, 52 V. Werst, 315 V. Whitman, 209, 225, 280, 284, 285, 656 V. Wood, 423 of Biddeford v. Mc- Kenney, 634 Columbus V. Gar- linghouse, 599 New York v. Mor- ris, 600 XXVI CASES CITED IN VOLUME TWO. First Nat. Bank of Salem v. Grant, 309 ' Trenton v. Gay, 298 Fish V. First Nat. Bank, 400, 402 Fisher v. Beckwith, 185, 223, 227, 266 V. Bradford, 455, 461 V. Ellis, 17 V. Fisher, 31, 454, 455, 684 V. Murdock, 699 V. Kieman, 399 V. Samunda, 161 V. Stockebrand, 626 Fitch V. Jones, 96, 104 V. Sutton, 275, 650 V. Redding, 177 V. Waite, 474 Fitchburg Bank v. Greenwood, 361, 362 Savings Bank v. Eiee, 596, 707 Fitzgerald v. Barker, 48 Fitzroy v. Gwillian, 121, 129 Flanagan v. Post, 573 Flato V. Mulhall, 230, 241 Fletcher v. Chase, 32, 133, 458 V. Dickinson, 460 V. Fletcher, 474 V. Heath, 268 V. Menken, 669 V. Schaumberg, 705 Flight V. Reed, 65, 108, 128 Fling V. Goodall, 479 Flint V. Day, 659 V. Flint, 319, 376 V. Marble Company, 388 V. Pattee, 14, 467 Flower, Ex parte, 374 V. Sadler, 83, 161 Flowers v. Bitting, 405 Flynn v. Allen, 404 V. Mudd, 652 Fogarties- v. State Bank, 280, 281 Fogg V. Sawyer, 394 Foley V. Smith, 313 Folger V. Chase, 340 V. Donsuran, 631 Folsom V. Bartlett, 312 Foltjer V. Schroeder, 302 Fond du Lac Harrow Co. v. Bowley, 569 Foot V. Sprague, 580 Foote V. Brown, 556, 560 Forbes v. Espy, 399 V. Rowe, 565, 566 V. Williams, 14 Ford V. Angelbrodt, 118, 248, 254 v. Beech, 31 V. Hendricks, 171, 502, 510 V. Mitchell, 300, 540, 555, 558 V. Ragland, 76 Fordyce v. Nelson, 377 Foreman v. Beckwith, 444 Fores v. Johnes, 101 Forest V. Stewart, 415, 557, 566 Forward v. Harris, 52 Forwood V. Dehoney, 372 Fos3 V. Nutting, 447 Foster v. Barney, V. Clifford, V. Floyd, V. Jolly, V. Metts, V. Paulk, V. Pearson, V. Phaley, V. Purdy, V. Russ, V. Shattuck, V. ToUeson, V. Walker, V. White, V. Wise, PASB. 558, 566 175, 253 337 438 61 169 26, 379, 452, 696 133, 142 460 423 335 557, 563 478 478 68 Fourth Nat. Bank v. City Bank, 281 V. St. Louis Cot- ton Co., 452 Fourth Nat. Bank of St. Louis v. Henschen, 188 Foust V. Board of Publication, 13 Fowler v. Brantley, 694, 714 V. Brooks, 637 V. Clearwater, 526 V. Doyle, 472 Y. Palmer, ' 317 V. Shearer, 8, 9, 50 V. Strickland, 13, 670, 685 Fox V. Bank of Kansas City, 704, 686, 692 V. Hilliard, 336 V. Paine, 92 Foy V. Haughton, 144 Fraker v. Cullum, 27, 64 Francia v. Joseph, 25 Francis v. Miller, 133 V. Nash, 487 Frank v. Blake, 723 V. Kaigler, 375 V. Lanier, 398 V. Lilienfeld, 498, 692, 696 V. Longstreet, 311, 402 Franklin v. Franklin, 617, 618 V. Long, 147 V. Twogood, 442, 444 Bank v. Lynch, 236 Life Ins. Co. v. Cardwell, 49 Savings Inst. v. Reed, 590 Fraser v. Charleston, 338 V. City Council, 449, 452 V. McConnell, 581 Frazer v. D'luvilliers, 361, 400 V. Jordan, 655, 638 Freaner v. Yingling, 635 Frederick v. Winans, 1, 331 Free v. Hawkins, 396, 439 V. Kierstead, 412 Freeman v. Bingham, 383 V. Cheney, 578, 579 V. Ellison, 385, 492, 508, 516 V. Falconer, 431 V. Holliday, 50 Freeman's Nat. Bank V. Savery, 7)0 Freeman v. O'Brien, 405 CASES CITED IN VOLUME TWO. xxvu PAGE. Freeman v. Perry, 444, 447 V. Sutton,'' 431 Freeman's Bank v. Ruckman, 296, 330 V. Eollins, 605, 648, 649 French v. Gordon, 137, 721, 722 V. Grindle, 116 V. Jarvis, 309, 322 V. Marsh, 563, 567 V. Turner, 340, 442 V. Yawger, 536, 547 Freund v. Importers', &c., Bank, 286, 287, 445 Frevall v. Fitch, 298 Frevert v. Henry, 667 Friedenberg v. Robinson, 650 Friedtr(an v. Johnson, 17ti Friermood v. Rouser, 59 Frisbee v. Hoffnagle, 8, 142 Frois V. Mayfield, 611, 641 Frontier Bank v. Morse, 394 Fry V. Hill, 188, 189, 191 Fuller V. Bean, 125 V. Jewett, 473 V. Leonard, 260, 592 V. Loring, 669 V. McDonald, 440 T. Scott, 68, 527, 538, 542, 559 V. Smith, 392, 398, 399, 430 Fullerton v. Rundlett, 440 Fulton Y. Fulton, 172 Bank v. Phoenix Bank, 19, 686 Fultz V. Walters, 442 Fulweiller v. Hughes, 483, 715 Funkhouser v. How, 480 Fussell V. Brooks, 112 Fydell v. Clark, 392 G. Gaar v. Louisville Banking Co., 119, 345 Gabbert v. Schwartz, 372 Gaddis v. Richland County, 712 Gaff V. Sims, 560, 568 Gaffney v. Bradford, 476 Gage V. Kendall, 11, 267 V. Lewis, 131, 558 V. Mechanics' Nat. Bank, 522, 563 V. Sharp, 696 Gahn v. Niemcewicz, 646 Galbraith v. Fullerton, 653 Galceran v. Noble, 436 Gale V. Miller, 29 V. Rector, 430 V. Tanpan, 186 Gallagher V. Black, 225, 253 V. White, 529, 565 Gallery v. Prindle, 255 Galliher v. Galliher, 673 Galton V. Taylor, 82 Galway v. Fullerton, 444 Gamage v. Hutchins, 559, 568 Gamble v. Grimes, 129, 133 248, Gammell v. Paramore, Gammon v. Plaisted, V. Schmoll, Gansevoort v. Williams, Gard V. Neff, Gardiner v. Watson, Gaj-dner v. Ferree, V. Fisher, V. Gager, V. Gardner, ■V. Lloyd, V. Mathews, V. Maxey, V. Maynard, V. Nat. City Bank, V. Parker, V. Watson, Gardom, Ex parte, Garfield v. Berry, Garland v. Jacomb, Garlick V. James, Garnet v. Clarke, Garnett v. Woodcock, Garr v. Louisville Bkg. Co., Garrett v. Crosson, V. Puckett, V. Woodcock, Garrison v. Combs, Garrott v. Jaffray, Gaiton V. Union City Nat. Bank PAGE. 558 130 254, 257 709 652 650 613 623 391, 459, 684, 717 464, 465 523 489 83, 86, 129, 175 322 281 16, 468 642, 650 215 Garvin v. Wiswell, Gascoigne v. Smith, Gatch V. Simkins, Gates V. Beecher, V. Eno, V. Hamilton, V. MoKee, V. Parker, V. Union Bank, Gatton V. Dimmitt, Gatzmer v. Pierce, Gauldin v. Sliehee, Gay V. Lander, V. Mott, Gaylord v. Soragen, GayoEs Sav. Inst. v. Fellows Gazzam v. Armstrong, Geary v. Gore Bank, V. Physic, Gee V. Brown, Gear v. Putnam, Geiger v. Cook, Geisreiter v. Sevier, George v. Harris, V. Stanley, V. Surrey, V. Terry, Gerard v. De Costa, Gerber v. Sharp, German Sav. Assn. v. Helmrick, Inst. V. Adae, Germania Bank v. Frost, Nat. Bank v. Taaks, 294 265 461 34 258 350 110 373 195 340 370, 480 648 294, 335, 430 357 603 187 246 652 551 237 22 441 68 139 339 3, 598 127 441 168 637 340 425 107 10, 67 332 16 95, 128, 129 340 70, 530, 235, 76 295 672 655 281 632 231, 252 xxvm CASES CITED IX VOLUME TWO. Gerrish v. Bragg, PAGE. 169,714 Getty V. Binsse, 581 Gibb V. Merrill, 62 Gibbon v. Scott, 252 Gibbs V. Cannon, 557 558, 5t)0 Gibson v. Conner, 31 V. Cooke, 210, 284 V. Dickie, 88, 101 V. Hawkins, 705 V. Miller, 444, 446 V. Minet, 305, 384 V. MiiUer, 678 V. Niblett, 128 V. Parlin, 407, 408 V. Powell, 340 V. Kix, 626 Giddings v. Giddings, 62 Giffert v. West, 398, 404 Giflbrd V. Allen, 643 Ex parte. 627 Gihon V. Stanton, 268 Gilbert v. Nantucket Bank, 293 V. Seymour, 299 V. Sharp, 450 V. Sykes, 93,94 V. Vachon, 601 Gilder v. Jetter, 654 Gile V. Churchill, 639 Giles V. Ackles, 68 V. Perkins, 368 Gill V. Creed, 76 V. Cubitt, 688, 689 V. Morris, 600 Gillenwaters v. Miller, 373 Gillett V. Ballou, 34, 176 Gillham v. State Bank, 334, 346, 430 Gilliam v. Brown, 75 Gilligan v. Boardman, 549 Gilligham V. Boardman, 526, 564 Gillilan v. Ludington, 619 V. Myers, 266 Gilman v. Peck, 394 Gilmore v. Green, 9 V. Spies, 497 Gilraour v. Thompson, 91 Gilpin V. Marley, 491, 494 Giison V. Stevens Machine Co., 494, 510 GLovanovich v. Citizens' Bank, 31, 378, 451 Girard Bank v. Bank of Penn Town- ship, 280, 284 Girard Bank v. Coraley, 435 Girardy v. Richardson, 101 Gist V. Drakely, 433, 434 V. Gans, 78 Givens v. Merchants' Nat. Bank 385 Glasgow V. Copeland, 182 Glasscock v. Glasscock, 69, 170 V. Smith, 312 Glassford v. Laing, 118 Glaxier v. Douglass, 409, 424 Glen Cove M. Ins. Co. v. Harrold, 548 Glendinning, Ex parte. 658 Glenn v. Farmers' Bank, V. Porter, Glennie v. Imri, Glickauf v. Kaufman, Globe Bank v. Small, PAGE. 74, 165, 677 • 428 132 502 560 Mut. Ins. Co. V. Carson, 41 8 Glossop V. Jacob, 219 Gloucester B»nk v. Salem Bank, 40O V. Worcestei-, 422, 633 Glover v. Chase, 151 Goddard v. Cunningham, 357 V.Lyman, 161,162,303,704,707 V. Merchants' Bank, 262 Godfrey v. Coulman, 190 Godwin v. Crowell, 84 Goetchius v. Calkins, 661 Goggerley v. Cuthbert, 439 Gold V. Eddy, 313 V. Phillips, 546 Goldman v. Blum, 375 Goldsmid v. Lewis Co. Bank, 30 Goldsmidt v. First Methodist Church, 459, 715 Goldsmith v. Hampton, 104 Gomersall, In re, 683 Gompertz v. Bartlett, 398, 404 Good v. Allen, 107 V. Elliott, 93, 97 V. Martin, 3, 325, 494, 495, 506, _ 527, o37, 538, 653, 578 Goodale v. Holdridge, 81 Goodall V. DoUey, 181 V. Ray, 318, 718 Goodburn v. Marley, 96 Goodenough v. Huff', 177 Goodman v. Fleming, 296 V. Griffin, 614, 628 V. Harvey, 369, 396, 692, 701 V. Litaker, 587 v. McGehee, 76 V. Simonds, 692 Goodrich v. De Forest, 219 V. Gordon, 235, 237, 238 V. Reynolds, 17 V. Stanley, 442 Goodwin v. Conklin, 168 V. Davenport, 310, 329 V. McCoy, 252, 253 Goodwyn v. Hightower, 591, 592, 605 Gordon v. Boppe, 12, 44, 455 V. Calvert, 625 V. Casey, 94 V. Clapp, 90 V. Nelson, 357 V. Wansey, 322 Gore V. Clisby, 474 Goree v. Wilson, 49 Gorgerat v. McCarty, 431 Gorgier v. Milville, 369 Gorham v. Keyes, 84, 160 Goring v. Edmonds, 569 Gorman v. Ketcham, 300, 339, 493, 512 Gorsuth V. Butterfield, 124 CASES CITED IN VOLUME TWO. Goshen Turnpike v. Hurtin, Goss V. Emerson, Gotlirupt V. Williamson, Gough V. Findon, Gould V. Chase, PAGE. 169 460 593 467 319 V. Eobson, 626, 645, 646, 650 V. Segee, 28, 686 V. Stevens, 683, 691, 717 V. Town of Sterling, 712 Goulding v. Davidson, 65 Goupy V. Harden, 191, 361 Gourley v. Linsenbigler, 464 Gowan v. Jackson, 188, 192 Gowen V. Shute, 105 Grabbe v. Bosse, 331 Grabfelder v. Willis, 641 Grafton Bank v. Kent, 586 V. Woodward, 651 Graham v. Maguire, 126, 402 V. Eingo, 534 Grammel v. Cauner, 282 V. Paramore, 527 Grand Gulf Bank v. Wood, 444 V. Stanborough, 132 Grandiu V. Le Roy, 316 Grannis v. Miller, 520, 554 Grant v. Austen, 209 V. Chambers, 66 V. EUicott, 45, 168, 267 V. Hotchkiss, 520, 563 V. Hunt, 238, 244, 271 V. Kidwell, 12, 455 V. Ryan, 76 V. Shaw, 217, 228, 238, 251 V. Vaughan, 292, 293, 294, 378 717 V. Welchman, 108, 153^ 156 Graul V. Strutzel, 311 Graves v. Am. Exch. Bank, 398 Gray v. Bank of Kentucky, 178, 721 V. Briscoe, 442 V. Brown, 325, 656 V. Cox, 136, 161 V. Donahoe, 298 V. Fowler, 113 V. Hook, 80 V. Milner, 188, 212, 222 V. Seckham, 672 Great Falls Bank v. Farmington, 164 Greathead v. Walton, 383 Greathouse v. Kline, 632 Greatlake v. Brown, 187 Great Western Tel. Co., In re, 719 Greele v. Parker, 218, 241 Greeley v. Dow, 651 Green v. Bickford, 716 V. Burroughs, 531 V. Burrows, 539 V. Gillet, 483 V. Goings, 270 V. Jones, 3 V. Kennedy, 26 V. Louthain, 313 Green v. Price, PAGE. 90 V. Raymond, 254 V. Shepherd, 4,527 V. Thornton, 3 Greenawalt v. Kreider, 613 Greenbaum v. McGibbeu, 32 Greene v. Bates, 420 V. Dodge, 527, 555, 559 v. Thompson, 557 Greenhow v. Boyle, 269 Greening, Ex parte. 450 V. Patlen, 621 Greenland v. Dyer, 95 Greenleaf v. Cook, 134 V. Kellogg, 118 Greenough v. McClelland, 585, 588 V. Smead, 350, 499 Greenwood v. Lowe, 52 Greer v. Bush, 530 v. George, 177 V. Powell, 476 v. Yoste, 689, 716, 721 Gregg V. Johnson, 295 V. Wilson, 632 Gregory v. Higgins, 476, 477 V. King, 94 V. Mack, 134 V. Walcup, 217 Grencoux v. Wheeler, 293, 693, 695 Gresham v. Morrow, 126 Gridley v. Capen, 521 Griffey v. Payne, 133 Griffin v. Cowan, 175, 442 Griffith V. Gary, 416 V. Hanks, 164 V. Read, 261 V. Reed, 572 V. Trabue, 132 V. Wells, 104, 123 Griffiths V. Parry, 19 Griffijn v. Jacobs, 344 Grimes v. Hillenbrand, 90, 164, 360 Grimm v. Warner, 330 Grindall v. Ruby, 619 Griswold v. Davis, 18, 453 V. Slocum, 512 Grocers' Bank v. Penfleld, 25, 26, 31, 45 Grotf V. Hansel, 147 Gross V. La Page, 90 Grosvenor v. Farmers', &c.. Bank, 479 Grover v. Grover, 16, 444, 447, 465, 467 V. Hoppock, 650 Groves v. Clark, 125 V. Ruby, 377 Grymes v. Hone, 464 Guardians of Lichfield Union v. Greene, . 336, 392 Guerry v. Ferryman, 296 Guice V. Sellers, 142, 144 Guidrey v. Vives, 581 Guild V. Belcher, 130, 133 V. Butler, 422, 587, 583, 633, 672 V. Eagar, 323 XXX CASES CITED IN VOLUME TWO. Guilfbrt V. Parish of Ascension, PAGE. 381 Hall V. Steel, PAQB. 246 Guldin V. Liuderman, 499 500, 512 Hallett V. Dewis, 139, 268 Gulick V. Ward, 80 V. Holmes, 648 Gullett V. Hoy, 319 Hallum y. State Bank, 492 Gunn V. Madigan, 520, 539 Halsay v. Lange, 317 Gunnaldson v. Nyhus, 107 Halsey v. De Hart, 295 Gunning v. Eoyal, 61 Halstead v. Brown, 610, 617, 650, 651, 653 Gurney v. Womersly, 392, 398, 399 V. Mayor, &c., of New York, 208 Guthrie v. Jones, 54 Haly V. Lane, 168, 401 Gutwillig V. Stumes, 177 Ham V. Smith, 79 Guy V. Bibend, 40 Hamburger v. Miller, 439 Guyman v. Burlingame, 94 Hamill V. Mason, 706 Gwinnell v. Herbert, 884, 494 Hamilton v. Catchinga, 260 Gwyn V. Patterson, 594 V. Conyers, 139 H. Habersham v. Lehman, 344, 359, 721 Hackensack Water Co. v. De Kay, 711, 716, 722 Hacket v. Lenares, 385 Hackett v. Pickering, 59 Hackney v. Jones 295, 300 V. Vrooman, 468 Hadden v. Kodkey, 444 Haenssler v. Greene, 319 Hageu V. Bowery Nat. Bank, 285, 305, 719 Hagey v. Hill, 419 Hahn v. Hull, 500 Haight V. Joyce, 164 Hailey v. Falconer, 362 Haines v. Dubois, 339 Haldeman v. Woodward, 605 Hale V. Andrews, . 670 V. Danforth, 385 V. Forbes, 642 V. Huston, 76 V. Eice, 63, 444 Haley v. Congdon, 319 V. Lane, 384 Halford v. Kymer, 97 Halifax v. Lyle, 265 Hall V. Allen, 334, 721 V. Baldwin, 485 V. Bowker, 719 V. Clopton, 39 V. Cole, 418, 621, 638, 639, 647 V. Earnest, 379 Ex parte, 91 V. Farmer, ' 3, 511 V. Franklin, 107 V. Fuller, 263, 397 V. Haggart, 120 V. Hale, 689 V. Henderson, • 53, 151 V. Howard, 467 V. Keese, 126 V. Newcomb, 497, 515 V. Potter, 700 V. Eodgers, 546, 560 V. Smith, 595, 666 V. Johnston, 503, 507, 580 V. Le Grange, 118 V. Marks, 690, 692, 723 V. Prouty, 418, 643, 654 V. Scull, 90 V. Vought, 692 Hammatt v. Emerson, 19 Hammett v. Barnard, 139 Hammond v. Chamberlin, 520 Ex parte, 632 V. Myers, 602 Hammonds y. Barclay, 218 Hamor v. Moore, 13, 467 Hanauer v. Doane, 75, 718 V. Gray, 129 V. Woodruff, 76 Hance v. Miller, 370, 527, 558, 563 Hancock v. Bryant, 619 V. Colyer, 475 V. Hale, 162, 725 Hand v. Armstrong, 158 Handy v. Dobbin, 475, 487 Hank v. Crittenden, 555 Hannah v. Beardsley, 534 Hannum v. Richardson, 361, 403 Hansbrough v. Gray, 583 Hansford v. Mills, 132 Hapgood V. Polley, 5 Harbert v. Dumont, 654 Harbison v. State Bank, 178 Hardie v. Mills, 337, 446 Hardin v. Johnston, 627 V. Wright,, 14 Harding v. Cooper, 82 T. Dilley, 408 V. Waters, 501, 502, 504, 505 Hardy v. Pitcher, 213 V. Boss, 173, 177 V. White, 437 Harger v. Worrall, 721, 725 Hargreave v. Smee, 530 Harlan v. Ely, 574, 580 Harley v. Thornton, 394 Harmer v. Steele, 322 Harnsberger v. Geiger, 642 Harper v. West, 224 Harrell v. Tenant, 18, 598 Harrhy v. Wall, 275 Harrington v. Brown, 4 CASES CITED IN VOLUME TWO. XXXI Harrington v. Dorr, , •V. Kloprogge, V. Lee, V. Stratton, V. Wright, PAGE. 310 79 135, 148 133, 147, 161 587 Harris v. Bradley, V. Brooks, V. Cato, V. Clark, V. Fawcett, V. Harris, V. Moberly, V. Newell, V. Roof, V. Warner, Harrison v. Courtald, V. ETenderson,* V. McClelland, V. McKitu, V. Pike, V. Sheirbourne V. Smith, V. Wright, Harrod v. Black, Hart Y. Hudson, V. Potter, V. Stickney, V. Windle, Harter v. Johnson, V. Moore, Harthey v. O'Flaherty, Hartley v. Rice, Harlman v. Burlingame, V. First Nat. Bank, V. Shafifer,- Harvey v. Cane, Ex parte, V. Gibbons, V. Hunt, V. Martin, V. Towers, Harwood v. Johnson, V. Kiersted, Hascall v. Whitmore, 2, 161, 168, 396 587, 628 169 15, 209, 280, 467 529 14 602 611, 614, 671, 672 80 573 423, 576, 629, 658 601 35 433 31 332 251, 254 282 34 26, 568 179 702 359, 431 61, 102 650 660 88 610, 614 562 169 219 658 94 91 246 173, 179 4 598 167, 677 Hasey v. White Pigeon Beet Sugar Co , 183, 208 Haskell v. Brown, 296, 704 V. Mitchell, 450 Hassams v. Dompier, 142 Hasting v. Wiswell, 118 Hastings v. McKinley, 345 Hatch V. Brewster, 460 V. Burroughs, 103 V. Calvert, 480 V. Mann, 82 V. Searles, 269, 680 Hatcher v. McMorine, 291 V. Stalworth, 223 Hathcock v. Owen, 293 Hatheway v. Mead, 62 Hauer v. Patterson, 437 Haussoulier v. Hartsink, 367 Haven v. Hobbs, 60 PAQE. 238 309, 322, 323 296 497 552 4, 492, 512 62 375 97 2,161 630 411 100 55 461 150 96, 104, 128 19 165 495, 501, 507, 515, 532, 538, 547 614, 674 421, 425, 628 424 378, 451 86 148 346, 430- 433 60, 101 410 346, 430 > 65 313,325 314 627 419, 646 70 Hazzard v. Citizens' State Bank, 402- V. Duke, 174, 438 Head v. Dubuque County Bank, 539 Headlee v. Jones, • 647 Headley v. Good, 154 Heaps V. Dunham, 61 Heard v. Dubuque Co. Bank, 390, 708 V. Swift, 76 Hearst v. Sybert, 68 Heath v. Derry Bank, 574 v. Key, 644 V. Sansom, 173, 178, 724 V. Silverthorn Mining, &c., Co., ■ 6, 24 Heath v. Van Cott, 498, 509 Heaton v. Hulbut, 539 V. Myers, 140 Heaverin v. Donnell, 253 Hedges v. Sealy, . 444 Heenan v. Nash, 213, 2U Hefford v. Morton, 655 Heffron v. Hanaford, 41 Heidenheimer v. Blumenkron, 440, 509 V. Mayer, 527 Heidenreich v. Leonard, 74 Havens v. GriflSn, V. Huntington, V. Potts, Haviland v. Haviland, Hawes v. Armstrong, Hawkes v. Phillips, V. Saunders, Hawkins v. Cardy, V. Cox, V. Neal, ^ VOLUME TWO. PAGE. Heintz v. Cahn, 505, 510 Heintzelman v. L'Amoroux, 332 Heist V. Hart, 165, 716 Heifer v. Alden, 300 Hellen v. Crawford, 613 Helm V. Meyer, ' 210 Helms V. The Wayne Agricultural Co., 591 Helwege v. Hibernia Nat. Bank, 286 Hemery v. Marksberry, 650 Henderson v. Ackelmire, 342 V. Benson, 104, 115, 159 V. Bondurant, 593 V. Dodgson, 650, 655 V. Fox, 401 V. Girandeau, 177 V. Johnson, 549 V. Marvin, 645 V. Palmer, 83 Hendricks v. Judah, 326 Hendrie v. Berkowitz, 681 Henkin v. Guerss, 94 Heanebury v. Morse, 132, 714 Henneman v. Thoiupson, 448 Henry v. Lee, 195 Henshaw v. Dutton, 153 Hentz V. Jewell, 100 Herbage v. McEntee, 494 Herbert v. Chastant, 130 V. Daraont, 638 V. Servin, 419, 423, 622 Hereth v. Merchants' Nat. Bank, 677, 682, 707 Herman v. Edson, 80 Hernandez v. Stillwell, 520 Herod v. Snyder, 296 Herrick v. Borst, 612 V. Carman, 501, 513, 532 V. Orange Co. Bank, 603 V. Swomley, 430, 722 V. Whitney, 396 V. WoodhuU, 339 Herring v. Woodhull, 339, 342, 375 Herron v. Debard, 177 Hersey v. Elliott, 444, 449 Hesser v. Doran, 430 Hetherington v. Hayden, 488 V. Hixon, 36 Hevener v. Berry, 673 Hewitt V. Goodrich, 626, 644 V. Kaye, 14, 468 Heydon v. Thompson, 162 Heylyn v. Adamson, 260, 396, 400, 401 Heywood v. Watson, 33 V. Wingate, 381 Hibernian Bank v. Everman, 318 Hibler V. Shipp, ■ 608,618 Hichborn v, Fletcher, 573, 663 Hickerson v. Eaignel, 27 Hickok V. Farmers', &c., Bank, 611 Hicks V. Gregory, 60 V. Jennings, 681 V. Eandolph, 593 PAGE. Hidden v. Bishop, 568 V. Waldo, 266, 268 Higgins V. Miner, 98 V. Sirong, 10 V. Walson, 539, 542 Higginson v. Gray, 51 Hilborn v. Art us. 294 Hill V. Bane Nat. Bank, 117 V. Bostick, 624 V. B'uckminster, 35, 172 V. Calvin, 524 V. Ely, 43^, 439 V. Enders, 151 V. Hanney, 475, 481 V. Heap, 183 V. Johnson, 656 V. Kroft, 483 485, 719 V. Lewis, 295 298, 384 V. Morse, 663 V. Northrup, 164 179, 725 V. Shields, 314 362, 434 V. Smith, 50 V Spencer, 101 V. Wilson, 13 Hillegas v. Stephenson, 575 Hills V. Hills, 463 Hilton V. Smith, 174 V. Waring, 453 Hindhaugh v. Blakey, 227, 230 Hindle v. O'Brien, 129 Hinds V. Chamberlain, 82 V. Ingham, 657 Hine v. Allely, 196, 197 Hiner v. Newton, 146 Hinesborough v. Sumner, 82, 84 Hinkley v. Fourth Nat. Bank, 331 Hindsdill V. Safford, 481 ,484, 485, 486 Hinton v. Bank of Columbus, 268 V. Scott, 134 Hinton's Case, 292 Hitchcock V. Humphrey, 527, 530, 551, 554, 557, 658 Hoag V. Parr, 150 Hoagland v. Erck, 250 Hoare v. Dresser, 221 V. Graham, 253, 439 Hobhouse, Ex parte, 374 Hockenbury v. Meyers, 39, 598 Hockett V. Jones, 64 Hodgdon V. Golder, 140 HodfAGE. 97 Kingsbury v. Suit, V. Lowen, 51 Kingsland v. Pryor, V. Walton, 115 Kinney v. Kruse, Kenworthy v. Hopkins, 426 Kinniken v. Dulaney, V. Sawyer, 45, 4m 629 Kinsman v. Birdsall, Keohane v. Smith, 375 Kirby v. Cogswell, Kerchner v. Gettys, 157 V. Landis, Kern v. Von Phul, 434 Kirk V. Strickwood, Kerney v. Gardner, 141 Kirkham v. Boston, 151, Kernot v. Pittis, 93 Kirkpatrick v. Howk, Kerr v. Cowen, 699 V. McCuUough, Kershaw v. Cox, 294 V. Muirhead, Kester v. Hulman, 69 653 V. Taylor, Kestner v. Spath, 413 Kirschner v. Conk'lin, Ketchell v. Burns, 531 Kiskadden v. Allen, Ketchum v. Barber, 119 Kittle V. Delamater, V. Bank of Commerce, 398 V. Wilson, V. Duncan, 336 Klein v. Buckner, V. Scribner, 73 V. Currier, 491, Key V. Fielding, 461 V. Keiser, V. Flint, 685 Klepper v. Borchenius, V. Knott, 136 V. Spahr, Keymer v. Laurie, 270 Kuapp V. Lee, 8, Keystone Bridge Co. v. Britton, 528 V. Parker, Kidder v. Blake, 123 Kneeshaw v. Collier, V. Mcllhanney, 372 Knight V. Bowley, Kidson v. Dilworth, 432 433 V. Chambers, Kieffer v. Ehler, 483 719 V. Criddle, Kiersted v. Rogers, 349 V. Dunsmore, Kilbourn v. Bradley, 114 V. Fitch, Kilgore v. Bulkley, 384 V. Gregg, Killian v. Ashley, 495, 504, 505 ,515 V. Hunt, Kilpatrick v. Heaton, 415 T. Hurlbut, Kimball v. Donald, 210 ,283 V. Priest, V. Gay, '481 V. Pugh, 134, 169, 178, V. Huntington, 429 V. Putnam, V. Newell, 592 Kniseley v. Evans, Kim^e v. Plant, 479 Knott V. Venable, Kimbrough v. Lane, 82 Knowles v. Parker, Kimmel v. Lowe, 668 Ktiowlton V. Spring Co., Kimmell v. Bittuer, 391 Knox V. Clifford, Kimmey v. Campbell, 294 V. Goodwin, Kimmins v. Wilson, 17 v. Reeside, King V. Baldwin, 612 V. White, yf. Carnall, 76 County Bank v. Lloyd, V. Faber, 709 Koch V. Howell, V. Gorslin, 283 V. Levy, V. Gottschalk, 432 V. Meehorn, V. Hannah, 519 Kohn V. National Bank, V. Haynes, 642 V. Watkins, V. King, 71 Kost V. Bender, v. Milsom, 721 Kottwitz V. Bagby, V. Pitt, 79 Kouts V. Dickson, V. Ritchie, 510 Koutz V. Vanclief, V. Sheriff of Surrey, 647 Kracht v. Obst, V. Summitt, 401 ,546 Kramph v. Hatz, V. Upton, 68 Kreiss V. Seligman, V. Vance, 486 Kritzer v. Mills, v. Wilson, 548 Krugman v. Soule, Kingsbury v. Ellis, 5,81 Kuhns V. Bankes, V. Fleming, 74 V. Gettysburg Nat, Bank, V. Gooch, 74 Kuntz V. Tempel, V. Lyon, 23 Kurtz V. Holbrook, PAGB. 74 25 333, 677 337 5 303 630 82,86 , 438, 439 634 301 32 13 385, 579 511 329 69, 418 382 , 503, 510 299, 390 660 49 , 134, 144 546, 563 87 475 129 487 423, 516 129 98 90 594 61 , 721, 723 113 370, 486 188, 189 57 129 24, 686 120 249, 250 164 595 246 157 565 546 447 678 400 107 643 2,511 518, 561 127 589 667 373 721, 723 300, 494 315 XXXVIU CASES CITED IN VOLUME TWO. Kurtz V. Sponable, Kyle V. Bostick, T. Thompson, " PAGE. 372 653 431 L. Labadie v. Chouteau, Labrou v. Woram, Lacaussade v. White, Lachance v. Loeblein, Lackey v. Curtis, Lacy V. Brown, V. Lofton, 415 504 94 344, 430 443 122 44, 583 Lafayette Sav. Bank v. Stoneware Co., 331, 692 Laflin v. Pomeroy, 505, 512 Powder Co. v. Sinsheimer, 227 La Forge v. Herter, 604 Laing v. Barclay, 244 V. Fidgeon, 136, 161 V. Lee, 526, 549, 551 V. McCaU, 1«7 Lake v. Hayes, 396, 400, 401 V. Eeed, 692 V. Stetson, 510 Lamayer v. liter, 420 Lamb v. Matthews, 334 Lambert v. Heath, 705 V. Oakes, 347, 396, 401 V. Pack, 343, 347, 396, 401 V. Sanford, 576 V. Taylor, 295, 341 Lamberton v. Windom, 607 Lamoille County Nat. Bank v. Bing- ham, 599 L'Amourieux: v. Hewit, 532, 533 Lamson v. First Nat. Bank, 640 V. French, 253 Lanata v. Bayhi, 8 Lancaster v. Harrison, 364 Nat. Bank v. Taylor, 327, 449, 679 Land Credit Co. of Ireland, In re, 696 Lane v. Evans, 692 V. Felt, 475 V. Krekle, 679, 717, 723 V. Stacy, . 387 V. Steward, 440, 537, 555 Lang V. Brevard, 609, 610 Langdale v. Parry, 627 Langdon v. Baxter Nat. Bank, 705 Langston v. Aderhold, 599 V. Corney, 255, 256 Langton v. Hughes, 103, 107, 127 Lanmau v. Nichols, 640 Lanning v. Lockett, 677, 686 Lansing v. Lansing, 94, 168, 312 Lanusse v. Barker, 540 Lapene v. Delaporte, 142 Lapham v. Barnes, 659 V. Head, 50 Lapice V. Bowman, 125 PAGB. Lapice v. Clifton, 693 Lamed v. OgUby, 42 Lassiter v. Bnssy, 473 Latham v. Clark, 78 Lathrop v. Donaldson, 721 V. Harlow, 235 V. Hickson, 174 Latoache v. Latouone, 62 Lattin v. Vail, 134 Laub V. Eudd, 599, 679 Tiaughridge v. Bowland, 666 Lawrance v. Fussell, 339, 367 Lawrason v. Mason, 533 Lawrence v. Clark, 27 V. Dobyns, 435 V. Griswold, 150 V. Langley, 405 V. McCalmont, 530 v; Stonington Bank, 436 V. Walmsley, 607 Lawson v. Lawson, 466, 468 V. Miller, 78 V. Snyder, 626 V. Townes, 524, 555, 560 Lawton v. Howe, 403 Laxton v. Peat, 260, 576 Lazarus v. Cowie, 316, 322 Lazier v. Nevin, 453 Lay V. Wissman, 6, 12, 682 Laying v. -Paine, 79,81 Lea V. Cassen, 59 Leach v. Buchanan, 223, 262 V. Lewis, 267 Leaf V. Gibbs, 593 Leaman v. Sample, 664 Leary v. Blauchard, 366, 436 Leather v. Simpson, 162, 163 Leavitt v. Curtis, 105 V. Palmer, 104 V. Putnam, 309, 310, 365 Le Breton v. Peirce, 24,30 Letohford v. Kichard, 405 Ledger v. Ewer, 139 Ledwich v. MoKim, 398, 400 Lee V. Baldwin, 462 V. Boak, 465 V. Buford, 186 V. ChiUicothe Bank, 367 V. Dick, 517, 523, 541 Ex parte, 683 V. Muggeridge, 62 V. Pile, 11, 434, 435 V. Smith, 707 V. Turner, 311 V. White, 141 V. Zagury, 312, 315 Leech .v. Hill," 347 Leeper v. McGuire, 652 Leftley v. Bailey, 195 Leggett v. Goodrich, 169 V. Kaymond, 532, 549 Lehman v. Tallassee Mfg. Co., 721,722, 724 CASES CITED IN VOLUME TWO. XXXIX Xieicester v. Rose, Xeidy v. Tammany, Xieightou V. Grant, Leitch V. Wells, Leitaer v. Miller, Xieland v. Farnham, V. Parriott, Xiemmon v. Whitman, PAGE. 90,91 296, 298 136 719 431 326 325, 349, 368 638, 649, 654 Lemoine v. Bank of North America, 711 X/emon v. Grosskopf, 97, 130 Lenheim v. Wilmarding,; 27, 40 Lenox v. Prout, 606 Lponard v. Duffln, 33 V. Eobbins, 52 V. Sweetzer, 2, 526 V. Vredenburgh, 2, 3, 526, 550 V. Wildes, 494 V. Wilson, 118, 228, 342 Leslie v. Hastings, 236 V. Langham, 51 V. Merrill, 485 Lester v. Fowler, 154 V. Georgia R. R. & Bkg. Co., 225 V. Given, 280, 281 V. Paine, 501 V. Palmer, 10 V. Webb, 9 Levi V. Mendell, 503, 505, 507, 532, 559 Levy V. Bank of the United States, 262 V.Drew, 311 V. Gremillion, 125 Lewis V. Armstrong, 411 V. Bowen, 448 V. Bradley, 560 V. Brewster, 524, 560 V. City of Shreveport, 711 V. Cosgrove, 139, 145, 149 V. Dunlap, 363, 435 V. Hanchmaa, 636 V. Harvey, 493, 507 V. Jones, 93, 702 v. Kramer, 235, 237, 242 V. Lady Parker, 326 V. Littlefield, 97 V. Rogers, 26 V. Traders' Bank, 283 V. Varnum, 459 V. Welch, 97 V. Williams, 42, 433 V. Wilson, 166 Liddell v. Grain, 721, 723 Lickbarrow v. Mason, 307 Liggett V. Weed, 182, 254 Light V. Powers, 240 Lightbody v. Ontario Bank, 394 Lightfoot V. Tenant, 90, 106 Lime Rock Bank v. Hewett, 159 V. Mallett, 69, 642, 652 Lincoln v. Bassett, 627 V. Hinzey, 503, 507 V. Stevens, 46 Lindsay v. Price, 372, 375 Lindsey v. Rot taken, 711 Lindell v. Ropes, Lindas v. Brad well. Lines v. Mack, V. Smith, Lingg V. Blummer, Linton v. Porter, Lintz V. Howard, Litchfield v. Falconer, Bank v. Peck, Littauer v. Goldman, Litterer v. Page, Little V. Cooper, V. Hale, V. Little, V. Nabb, V. O'Brien, V. Riley, V. Thurston, Littlefield v. Hodge, V. Shee, Lively v. Eobbins, Livermore v. Blood, Livingston v. Bain, V. Hastie, V. Roosevelt, Lloyd V. Howard, V. Jewell, V. Rowland, V. Willan, Lobb V. Stanley, Lobdell V. Baker, PAOS. 55, 172 211 112 33 333 142 24, 637 167, 175, 176 681 404 414 313 484 20 549 17, 345 112 150 476 65 157 313 136 5,709 709 330 8 213 276 63 403 V. Merchants, &c., Bank, 454 V. Niphler, 644 Lock V. Fulford, 311 Locke V. Leonard Silk Co., ' 358 Locker v. McVean, 522 Lockhart v. HuUinger, 94 Lockwood V. Bfownson, 252, 255 V. Crawford, 530 V. Ewer, 458 V. Uaderwood, 430 Lodge V. Bicas, 639 Loftus V. Clark, 337 Logan V. Plummer, 76 V. Small, 64 V. Smith, 372 Loggins V. Buck, 158 Lomas v. Bradshaw, 156 Lomax v. Plcot, 363 V. White, 345 London, &c.. Bank v. Groome, 694 V. Terry, 570 Bank, In re, 42, 52 Long V. Crawford, 309 V. Hopkins, 50 V. Rhavon, 318, 319 V. Smyser, 298 V. Spencer, 177 Longley v. Griggs, 518, 519 Lonsdale v. Brown, 68, 359, 431 V. Lafayette, 245 Loomis V. Cline, 87 V. Fay, 635 xl CASES CITED IN VOLUME TWO. Lord V. Favorite, PAGE. 313 Lyon V. Martin, PAGE. 326: V. Moody, 584 V. Sundius, 258. V. Ocean Rank, 684 Lyons v. Miller, 397 Lorentz v. Conner, 108 V. Stephens, 58 Loring v. Otis, 157 Lysaght v. Bryant, 329- V. Sumner, 15 Lytle V. Whicher, 125- Losee v. Bissell, 444, 446, 501, 514, 678 Lothrop V. Snell, 143 Lott V. Dysart, 22 Louden v. Birt, 10 Lough V. Bragg, 139 Loughmiller v. Syler, 161 Loughridge v. Bowland, 602 V. Dorville, 61 Louisiana Bank v. Gaiennie, 457 Nat. Bank v. Citizens' Bank, 286 V. Schuchardt, 236 State Bank v. Orleans Nav. Co., 713 State Bank v. Senecal, 594 Louisville Mfg. Co. v. Welch, 559, 561 Love V. Brown, 423 Lovejoy v. Citizens' Bank, 438, 440 V. Lee, 475 Loveland v. Shepard, 561 Lovell V. Everteon, 346, 348, 349 Loving V. Dixon, 594 Lovinger v. First Njlt. Bank, 624 Low V. Copestake, 358 Lowe V. Peers, 88 V. Waller, 115 Lowell V. Gage, 325, 491, 496 Lowery v. Steward, 283 Lowes V. Mazzaredo, 104, 115, 166 Lowry v. Murrell, 395 Lowther v. Share, 412 Loyd V. McCaffrey, 282 Lucas V. Bryne, 348 V. Haynes, 343, 370 V. Marsh, 346 V. Pico, 57 Ludlow V. Bingham, 470, 483 Ludwig V. Iglehart, 422 Luff V. Pope, 209, 230, 244 Lugrue v. Woodruff, 239 Luke V. Fisher, 52 V. Hayes, 384 Lulston V. Norton, 79 Lumley v. Palmer, 226, 229, 243, 251 Luning v. Wise, 331 Lunt V. Bank of North America, 209, 282 V. Silver, 580 Lupton V. Cutler, 479 Luqueer v. Prosser, 519, 531 Lyle V. Burke, 334 Lyual V. Longbotham, 96 Lynch v. Baxter, 143 V. Bragg, 601 V. Goldsmith, 387, 436 V. Levy, 511 Lyon V. Ewings, 111, 348, 684 V. Holt, 655 M. Maas V. Chatfield, 53- Mabie v. Johnson, 715 Mabin v. Kirby, 329- Mabry v. Matheny, 323 Macdonald v. Bovington, 425 V. Whitfield, 384 MacDonald v. Wagner, 88 Macgregor v. Ehodes, 396 Mackey v. St. Mary's Church, 302: Macungie Sav. Bank v. Hottenstein, 115 Macy V. Kendall, 42, 43 Maddox v. Graham, 291 Maddy v. Sulphur Springs Tpk. Co. 148 Magee v. Badger, 66, 692, 696 V. Leggett, 670, 674 Maggs v. Ames, 527, 548 Magruder v. Admire, 662, 665 Mayhew v. Crickett, 657 Maher's Appeal, 122. Maher v. Lanfrom, 69, 599, 652 Mahoney v. Ashlin, 229- Mahwein v. Pearson, 601, 611 Main v. Hilton, 303- Maine Bank v. Butts,. 122 F. & M. Ins. Co. V. Weeks, 47^ Ins. Co. V. Farrar, 174 Mut. Ins. Co. V. Blunt, 38 Mainer v. Reynolds, ' 293 Maitland v. Chartered Mercantile Bank of India, 708 Maitland v. Citizens' National Bank of Baltimore, 31, 696 Makay v. Holland, 313 Malbon v. Southard, 449, 496 Mallan v. May, 90 Mallard v. Aillet, 31 Mallett V. Thompson, 45, 422. Mallory v. Gillett, 171 Malone v. Keener, 546 Maltby v. Carstairs, 422 Mammon v. Hartman, 496, 50T Manchester Iron Co. v. Sweeting, 612: Mandeville v. Welch, 171, 283 Manhattan Co. v. Osgood, 118 V. Eeynolds, 32, 358 Maniort v. Eoberts, 335 Manley v. Boycot, 575, 580, 582, 588 V. Geagan, 228 Mann v. Lent, 108, 153, 173 V. National Bank, 698 V. Second Nat. Bank of Spring- field, 68ft Mann v. Smyser, 175. CASES CITED IN VOLUME TWO. xli PAGE. Manning v. McClure, 31, 687 V. Shotwell, 608, 611 Manny v. Gleudinning, 146 Manrow v. Durham, 546, 549 Mansfield v. Corbin, 37 V. Edwards, 584 Manter v. Churchill, 68 Manufacturers' Bank v. Cole, 595 V. Follett, 515 Union Co. v. Todd, 622 Maples V. Browne, 179 Marberger v. Pott, 572 Marbled Iron Works v. Smith, 28 Marcal v. Melliett, 313 March y. Putney, 558 Marchant v. Dodgin, 114 Marchioness of Annandale v. Harris, 101 Mare v. Charles, 213 Margeston v. Aitken, ■ 275 Marienthal v. Taylor, 497, 512 Marine Bank v. Vail, 453, 454 Nat. Bank v. Nat. City Bank, 285, 286 Mariners Bank v. Abbott, 585, 650, 652 Markel v. Evans, 413 Markham v. Hazen, 213, 214 Markle v. Hatfield, 130, 400 Markley v. Hull, 678 Marlow y. King, ^ 140 Marr v. Johnson, 41, 168 Marrett v. Equitable Ins. Co., 486 Marschuetz v. Wright, 462 Marsh v. Day, 523 V. Dunkel, . 612 V. Fulton County, 712 V. Low, 146, 161, 260 V. Marshall, 313 V. Martindale, 118 V. Newell, 324, 455 V. Pedder, 394 V. Putney, 527 V. Thompson Nat. Bank, 711 Marshall, Ex parte, 260, 261 V. Aiken, 603 V. Clary, 254 V. Baltimore and Ohio E. K., 58, 82 V. Sloan, 672 Marston v. Allen, 329, 330, 427 V. Carr, ' 473 V. Forward, 179 Martin v. Bacon, 225 V. Bailey, 182 V. Boyd, 491, 494, 512, 516 V. Cole, 434 V. Donovan, 178 V. Foreman, 134 V. Hazard, 521 V. Hazard Powder Co., 552 V. McMillan, 74 V. Eeed, 458 V. Skehau, 614 V. Tucker, 177 Martin v. Wade, PAGE. 79,80 Marvine v. Hymers, 119 Marzetti v. Williams, 209 Mason v. Barfi", 246 V. Burton, 412, 434 V. Campbell, 63; V. Dousay, 223, 229 V. Franklin, 196 V. Hunt, 251, 254, 274 V. Jordan, 52 V. Noonan, 326, 483- V. Peters, 651 V. Pritchard, 530 V. Eumsey, 213, 214 Massey v. Turner, 494, 512 Massick v. Roxborough, 31 Masters v. Barrets, 32& V. Ibberson, 162, 167, 677 Mastiu Bank v. Hammerslough, 595 Matheny v. Hughes, 483, 719 Mather v. Lord Maidstone, 725 Mathews, Ex parte, 260 V. Chrisman, 525 V. Eutherford, 2 Matlack v. Hendrickson, 296 Matteson v. Morris, 169, 444 V. Moulton, 247 Matlock V. Livingston, 173, 176 Matthews v. Bloxome, 30O V. Bluxsome, 537 V. Crosby, 161 V. Dunbar, 158 V. Hale, 293 V. Hall, 293 V. Poythress, 179, 677, 696, 722 V. Eutherford, 455, 715 V. Smith, 137 V. Williams, 62 Mattock V. Gibson, 145 Mattoon v. McDaniel, 319 Mauldin v. Branch Bank, 41 Maule V. Crawford, 295 MauU V. Vaughan, 36, 598 Maupin v. Compton, 402 Mauran v. Lamb, 345 Maxim v. Morse, 63 Maxwell v. Campbell, 61, 102 V. Gundrum, 295 V. Van Sant, 347, 433 May V. Boisseau, 43 ~ • • 32» V. Chapman, 677 V. Kelly, 211, 214 V. Quimby, 30 V. Williams, 107 Mayberry v. Bainton, 560 V. Morris, 18 483, 719 Mayer v. Chattahoochee Nat. Bank, 282 V. Isaac, 529 V. Jadis, 36a V. Mode, 27 Mayfield v. Wheeler, 238, 522, 524 Mayhew v. Boyd, 610 xlii CASES CITED IN VOLUME TWO. PAQB. Mayhew v. Crickett, 421, 595, 631, 636 V. Prince, 235 Maynard v. Ninth Nat. Bank, 30 V. Sixth Nat. Bank, 687 Mayo V. Moore, 377 Mays V. CoUison, 403 MoAlister v. Eeab, 134 McAUester v. Haden, 96 McAllister v. Hoffman, 97 MoBride v. Farmers' Bank, 19 V. Hunter, 602 McCall V. Witkouski, 310 McCamant v. Miners, 409 MoCarter v. Turner, 582, 586 McCartney v. Greenway, 77 MoCarty v. Eoots, 32, 323, 385 McCaskell v. Ballard, 162 MoCasky v. Sherman, 28 McCaughrin v. Williams, 388 McCausland v. Ralston, 93 McCay v. Barber, 401 McCelvy V. Noble, 68, 507 McClain v. Davis, 718 V. Weidemeyer, 442 McClatchie v. Durham, 668 McClees v. Burt, 59 McClelland v. Hubbard, 488 McClosky V. Indianapolis Mfg. Union, 640 MeClure v. Pringle, 314 V. Township of Oxford, 712 McComb V. Kittridge, 652 V. Thompson, 496 McConnell v. McConnell, 467 McCoofi V. Biggs, 438 McCord V. Crooker, 135 McCormick v. Webster, 604 V. Williams, 680 McCoy V. Lockwood, 617 V. Payne, 581 McCramer v. Thompson, 706 McCrary v. King, 454, 617 McCreary v. Bird, 492, 495, 512 McCrum v. Corby, 455 McCulloch V. Hoffman, 34 McCullough V. Hellman, 454 V. Houston, 313 McCune v. Belt, 385, 575, 578, 635, 641, 643, 663 McCutcheon v. Eice, 229, 254 McDoal V. Yeomans, 532, 533 McDonald, In re, 630 V. Bailey, 344, 345, 367 V. Magruder, 385 V. Stokey, 408 Mfg. Co. V. Thomas, 714 McDonough v. Goule, 676 V. Lambert, 433 McDougald v. Eutherford, 410 McDowell V. Goldsmith, 326 V. Milroy, 143 McDuffie V. Dame, 313 McElvain v. Mudd, 141 McElven v. Sloan, McEowen v. Scott, McEvers v. Mason, MoFadden v. Parker, McFall V. Wilson, McGavook v. Puryear, MoGee v. Connor, V. Prouty, V. Eiddlesbarger, MoGehee v. Cherry, McGill V. Burnet, McGonnell v. Murray, MoGowen v. Bush, PAOX. 37 227 231 421 10 127 494, 497, 515 584 443, 448 488 57 466 85 McGrade v. German Sav. Inst., 280, 281 McGrath v. Barnes, 35 V. Eeynolds, 464 McGuiness v. Bligh, 130 McGuire v. Bosworth, 389 V. Wagnon, 448 McHenry v. Eidgely, 344 V. Yokum, 142 McHard v. Ives, 657 Mclntire v. Darley, 384 Mclntyre v. Michigan, &c., Ins. Co., 387 McKee v. Campbell, 660 MuKechnie v. Ward, 644 McKegney v. Widekind, 176 McKelvey v. Davis, 579 M'Kenny v. Waller, 608 McKensie v. Branch Bank, 32 McKenzie v. Downing, 464, 468 McKernan v. Hite, 10 McKesson v. Jones, 76 V. Stanberry, 723 McKim V. Smith, 237 McKinnell v.'Eobinson, 95, 99, 100, 126 McKinney v. Crawford, 310 McKnight v. Kinsely, 488 V. Wheeler, 116, 378, 383 McLaren v. Watson, 531, 533 McLaughlin's Exr. v. Beard, 78 McLean v. Jones, 662 McLemore v. Curran, 179 V. Hawkins, 358 McLeod V. First Nat. Bank, 32 McMahan v. Geiger, 526, 587 McMahon v. Crockett, 169 V. Smith, 84 McManus v. Scott, 23 McMath v. Johnson, 49, 78 McMicken v. Webb, 585 McMillan v. Causey, 158 McMillion v. Pigg, 146 McMinn v. Freeman, 444 McMullau V. Eichards, 476 McMuUen v. Eafferty, 493 McMurray v. Wood, 414 McMurtry v. Eamsey, 74 McNair v. Gilbert, 63 McNamara v. Condon, 372 McNaught V. McClaughry, 4 McNealy v. Gregory, 125 McNeil V. Knott, 402 CASES CITED IN VOLUME TWO. xliii McNeil V. Roach, McNeilly v. Patchin, McNitt V. Hatch, McPherson v. Weston, McSherry v. Brooks, McSpfirran v. Neely, McWhirt V. McKee, McWilliams v. Bridges, V. Mason, Meacham v. Dow, Meacher v. Fort, Mead v. Small, V. Young, PASS. 477, 478 579 337 331 152,309,318 702 436 1,377 568 79 263 323 302, 339 Meador v. Dollar Sav. Bank, 433, 435 Meadow v. Bird, 57, 87 Meadows v. Cozart, 472, 721, 723 Meads v. Merchants' Bank, 24, 279, 288 Mears v. Wapleo, 696 Mechanics' Bank v. Crow, 21, 24, 721, 727 v.Frazer, 154 V. Livingston, 217 V. Valley Pkg. Co., 356, 367 Banking Ass'n v. New York, &c.. White Lead Co., 45 Building Ass'n v. Fergu- son, 372 and Farmers' Bank of Al- bany V. Wixson, 39 Mecorney v. Stanley, 3, 502, 528 Mecutchen v. Kennady, 709 Meech v. Churchill, 535 Meggett V. Baum, 267, 445, 577, 581, 587, 640 Megrath v. Gray, 632 Meiswinkle v. Jung, 653, 655 Melick V. First Nat. Bank, 596, 597 Melliah v. Eawdon, 189, 190, 191, 193 V. Simeon, 212 Melton V. Gibson, 344, 442 Meltzer v. Doll, 68 Melvin v. Fellows, 20 Menaugh v. Chandler, 574 Mendel v. Cairnes, 617 Mendenhall v. Banks, 359, 431 V. Baylies, 329 V. Davis, 433, 435 Meudizabal v. Machado, 238, 251 Menifee v. Clark, 653 Mennet v. Grisard, 649 Menzies v. Kennedy, 663 Mercantile Bank v. Cox, 243 Mercein v. Andrus, 547 Mercer v. Lancaster, 70 Merchants' Bank v. Comstbck, 424, 677 V. Exchange Bank, 397 V. Griswold, 111, 235, 237, 252 V. Eudolf, 622 V. Spalding, 105 V. State Bank, 279, 280, 289 PACE. Mechanics' Bank v. U. E. R. & T. Co., 336 and Planters' Nat. Bank V. Trustees Masonic Hall, 167, 179, 430, 700, 701, 722 Exchange Nat. Bank v. Cardozo, 235 Exchange Nat. Bank v. Savings Institute, 723 Ins. Co. v. Hauck, 657 Loan Co. v. Bank of the Metropolis, 285 N. Bank v. McNulty, 676 &c., Bank v. Freeholders, 711 Meriam v. Eundlett, 471 Meriden Steam Mill v. Guy, 370 Merle v. Wells, 530 Mernam v. Eockwood, 594 Merriam v. Bayley, 63 v. Granite Bank, 32, 678 V. Wolcott, 399 Merrick v. Butler, 124, 168, 311, 313 V. Phillips, 167 Merriken v. Godwin, 671 Merrill v. Carr, 83 V. Gamble, 139, 158 V. Smith, 432 Merritt v. Bagwell, 700 V. Benton, 119 V. Cole, 336 V. Duncan, 162, 253, 690 V. Fleming, 60, 102 V. Lincoln, 612 V. Merle, 130 Merz V. Kaiser, 358 Metcalf V. Yeaton, 430 Meux V. Humphries, 106 Meyer v. Beardsley, 253 V. Hibscher, 500, 512 V. Spencer, 22 Michael v. Myers, 648 Michel V. Vanentine, 400, 403 Michigan State Bank v. Leavenworth, 237, 645 V. Pecks, 237, 238 Mickles v. Colvin, 51, 60 Middlebury v. Case, 1 Middlesex v. Davis, 49 Middleton v. Barned, 721 Milford V. Walcott, 217 Milks V. Eice, 393, 546 Mille V. Hebert, 473 Miller v. Arnold, 605, 642 V. Berkey, 565 V. Bingham, 312 V. Bledsoe, 375, 376, 377 V. Bomberger, 296 V. Boykin, 684 V. Butler, 222 V. Consolidation, 710 V. Cook, 550 V. Deaver, •« 413 V. Finley, 714, 721 xliv CASES CITED IN VOLUME TWO. Miller V. Gardner, V. Gaston, V. Gibbs, V. Howell, V. Hubbard, V. Knight, V. Mackenzie, V. McKenzie, V. Mellier, V. Miller, V. Neihaus, V. Pollock, V. Race, V. Ritz, V. Stem, V. Streeder, V. Struder, V. Talcott, V. Tharel, V. Thomson, V. Wisner, V. Wood, Millerd v. Thorn, Miles V. Linnell, V. Eeiniger, Millikin v. Dinning, Million V. Ohnsorg, Millis V. Barber, Mills V. Barber, V. Barney, V. Oddy, V. Porter, V. Stewart, V. Williams, Miln V. Graham, V. Prest, Milnes v. Dawson, 119 532, 534 142 154 283 610, 625, 628 56 6, 174 409 466 228 684 378 151 642, 650 486 476 311, 390 446, 680 208, 209 326 149 639, 645 62, 528, 566 443 602 371 43, 725 177, 178 401 147, 173 678 485 705 291 218, 239, 242, 244 13, 162 Milton V. De Gampert, 497 Mims V. McDowell, 672 V. West, 483, 719 Minell v. Read, 718 Miner v. Paris Exchange Bank, 118 Mishler v. Reed, 715 Missouri Loan Bank v. Garner, 580 Mitchel V. Mitchel, 350 T. Reynolds, 90 Mitchell V. Baring, 196 V. Catchlngs, 695 V. Clark, 408 V. Cockburne, 107 V. English, 579 V. Rome R. R. Co., 172 V. Stinson, 149 V. Tomlinson, 723 V. Vance, 82 Mitcherson v. Dozier, 154 Mix V. Nat. Bank of Bloomington, 31 Mizner v. Spier, 562, 565 Moakley v. Riggs, 561, 568 Mobile Savings Bank v. Supervisors, 162 &c., R. R. Co. V. Jones, 546 Mobley v. Ryan, 326 Moffett V. Bickle, 402 Moffett V. Buckle, Moggridge v. Jones, Mohawk Bank v. Broderick, V. Corey, V. Van Home, PAGK. 116 153 189 24 647 Nat. Bank v. Van Slyck, 709 Moies V. Bird, 4, 347, 492, 494, 538 Moiese v. Knapp, 219 MoUoy V. Delves, 218, 219 Molson's Bank of Montreal v. Howard, 239 Moncure v. Dermott, 117 Monroe v. Cooper, 179 v. Hoff, 394 Monson v. Drakeley, 598, 660 Montague v. Myers, 228, 477 V. Perkins, 253 Montelius v. Charles, 193 V. Wood, 132 Montgomery v. Kasson, 158 V. Kellogg, 524, 560, 561 V. Lampton, 63 V. Morris, 66 Co. Bank v. Albany City Bank, 215 Montross v. Clark, 21, 46, 168 Monument Nat. Bank v. Globe Works, 45 Moody V. Findley, 385, 579 V. Kyle, 283 v. Leavitt, 58, 66 Mooklar v. Lewis, 10 Moor V. Folsom, 542, 548 V. Whitby, 224 Moore v. Britton, 409, 419 V. Broussard, 605 V. Clopton, 125 V. Cross, 500, 512 v. Darton, 463 V. Folsom, 418, 493 V. Gray, 581, 620 V. Green, 477 V. Hall, 382 V. Hershey, 160, 162 V. Holt, 517, 534 V. Howland, 119 V. Lackey, 373 V. Lanhan, 133 V. Maple, 348, 356 V. Moore, 10, 466, 678 V. Paine, 632 V. Pendleton, 346, 349 V. Pillow, 473 V. Topllff, 580, 671 V. Viele, 63 V. Warren, 394 V. Willey, 2-19 V. Worthington, 404 Moorehead v. Gilmore, 710 Mordecai v. Dawking, 99, 165 More V. Manning, 339, 346, 365 Moreau v. Branson, 427 Morford v. Davis, 402 Morgan v. Bank of State of N. Y., 398 V. Fallenstein, 133 CASES CITED IIT VOLUME TWO. xlv Morgan v. Knox, 87 V. Pebrer, 97 V. Richardson, 6, 134, 136 V. Thompson, • 640, 642 Morgner v. Bigelow, 309 Morley v. Boothby, 387, 548, 550 V. Culverwell, 323, 680 Mornyer v. Cooper, 692 Morrill v. Brown, 475 Morris v. Bethell, 263 V. Faurot, 438 V. Foreman, 358 V. Poillon, 349, 35b, 359, 443, 448 T. Preston, 344, 378 V. Stacey, 215, 527 V. Stacy, 551 V. Taylor, 65 V. Walker, 861, 511 V. Webb, 366 V. White, 162 Canal v. Lewis, 458 Co. V. Van Vorst, 645 Eun Coal Co. v. Barclay Coal Co., 89 Morrison v. Buchanan, 217 V. Currie, 399 V. Harbman, 608 V. Inhabitants of Bernar-ds, 711, 712 V. Jewell, 134 V. Lovell, 383 Morrow v. Brown, 141 Morse v. Huntington, 419, 658 V. Mason, 33 V. Mass. Nat. Bank, 228, 288 Morss V. Gleason, 583 Mortimer v. McCallan, 100 Morton v. Coons, 659 Moses V. Franklin Bank, 209, 280, 282 Mosher v. Carpenter, 396 V. Hotchkiss, 521, 550 Mosier v. Waful, 567 Moss v. Hall, 648 Mott V. Hicks, 361 V. Wright, 329, 340 Mottram v. Mills, 358 Moulton V. Posten, 643, 646, 654 Mountjoy v. Mullikin, 154 Mourain v. Devall, 359 Mower v. Stickney, 489 Mowery v. Mast, 534 Mowry v. Bishop, 118 Moxon V. Pulling, 328, 829, 450 Moynahan v. Hanaford, 494, 496, 514 Mt. Pleasant Branch Bank v. McLaran, 187 Mnckenburg v. Holler, 88 Mudd V. Eeeves, 400 Mueller v. Dabschuetz, 632 Muggab V. Tucker, 177 Muilman v. D'EgUino, 182, 188, 189, 190, 191 PAGB. Muirheid v. Kirkpatrick, 22, 68, 87 Muldrow V. Caldwell, 294 Mulford V. Walcot, 257 Mull V. Bricker, 228 V. Van Trees, 36 Mullen V. Rutland, 13 Mullendore v. Wertz, 582 Muller V. Pondir, 678 Mullick V. Eadakissen, 182, 188, 189, 193, 194 MuUiken v. Boyce, 173 V. Chapman, 392 Mullikin v. Latchem, 10 Muncy School Board v. Common- wealth, - 189, 192 Munford, Ex parte, 101 Munn V. Burch, 281 Munro v. King, 173 Munroe v. Bordier, 53, 162 Munson v. Adams, 39 Murdock v. Mills, 219 Murford v. Walcot, 309 Murphy v. Bottomer, 82 V. Hubble, 693 V. Keyes, 37 V. Lucas, 66 V. Robbins, 643 V. Weems, 74 Murray v. Beckwith, 482, 681, 696 V. Cannon, 466 V. Judah, 577 V. Lardner, 378, 692, 721 V. McKee, 548 V. Beeves, 92 Murrell v. Jones, 345, 379 V. Marshall, 344 Murrow v. Stuart, 367 Musgrove v. Hudson, 238 Musselman V. McElhenny, 8 Mussey v. Eagle Bank, 289 V. Eayner, 523, 530 Mutual Benefit Life Ins. Co. v. Eliza- beth, 713 Mutual Life Ins. Co. v. Davies, 612 Loan Fund v. Ludlow, 624 Nat. Bank v. Rotge, 285, 419 Muzzey v. Cable, 170 My brants v. Rice, 477 Meyer v. Beardsley, 222 Myer v. Hart, 119 Myers v. Beeman, 483 V. Conway, 145 V. First Nat. Bank, 654 V. James, 447 V. Phillips, 53, 54 V. Standart, 257 V. Turner, 10 V. Van Wagoner, 37 V. Welles, 420 V. Wells, 418 V. Willis, 645 Myrick v. Hasey, 342, 532, 538 xlvi CASES CITED DT VOLUME TWO. V. Skinner, 495, 512 Nathan v. Sloan, 494, 495 Nat. Bank v. Brooklyn, &c., E. E. Co., 687 Nat. Bank v. Brush, 160 V. Green, 11, 383 V. Kirby, 179 V. Marbourg, 521 V. Nat. Bank, 286 V. Peck, 10 V. Place, 68 V. Second Nat. Bank, 280, 282 Exchange Bank V. Silliman, 375 Newark Banking Co. v. Second Nat. Bank, 192 Bank of Commerce v. Nat. Me- chanics' Bank, 285, 286 Gloversville v. Place, 13, 420, 654 Mich. V. Green, 554, 557, 564 North America v. Kirby, . 703, 721, 723 Oxford V. Kirk, 84 Eockville v. Second Nat. Bank, 210, 226 Washington v. State of Texas, 309, 680 the Commonwealth v. Law, 499, 514 Park Bank v. Ninth Nat. Bank, 262 Pemberton Bank v. Lougee, 491, ' 494, 498, 505, 572 Security Bank v. McDonald, 703, 711 Nations v. Thomas, 133 Naylor v. Moody, 605 Neal V. Freeman, 592, 605 Neale v. Beid, 223 Needhams v. Page, 347 Neelson v. Sanborn, 549, 550 Neff's Appeal; 635 Neil V. Ciimmings, 676 Nellis V. Clark, 93 Nelson v. Bostwick, 556 V. Boynton, 548 V. Dubois, 350, 494, 504, 506, 527 V. Eaton, 448 N. Nelson v. Edwards, -PAGE. 453, 461 PAGE. V. First Nat. Bank, 227, 240, Nabb V. Koontz, 171, 526 288 Nadin v. Battie, 418 V. Fotterall, 186, 196 Nagle V. Homer, 254 V. Harrington, 492, 504, 513 Naglee v. Lyman, 241, 360, 457 V. Lovejoy, 36 Nantes v. Thompson, 97 V. Munch, 610 Nantucket, &c.. Bank v Stebbins, 454 V. Serle, 35 Napier v. Schneider, 269 y. Wellington, 454 Nash V. Brown, 12 V. White, 643 V. Harrington, 310 Nerot V. Wallace, 86, 92, 103 V. Lull, 10 Nesbit V. Bradford, 565, 566 V. Eussell, 49 Nevison v. Whitley, lis Nevius V. Bank of Lansingburgh, 532 V. Chapman, 177 V. De Grand, 357 New Bedford Inst, for Sav. v. Hatha- way, 664 Sav. Bank v. Union Mill Co., - 627 Buffalo V. Iron Company, 372 Newcomb v. Eaynor, 421, 630 Newell V. Fowler, 562 V. Gregg, 320 V. Hamer, 608, 641 V. Salmons, 601 V. Williams, 437 Newhall v. Clark, 250, 254 New Hampshire Sav. Bank v. Calcord, 652 V. Ela,- 649 &c., Co. V. Piatt, 474 Newman v. Frost, 51 V. Kaufman, 592 New Orleans Bkg. Co. v. Bailey, 346 &c., E. E. Co. V. Missis- sippi College, 696- Canal, &c., Co. v. Mont- gomery, 326, 721 Newson v. Thighen, 107, 175 Newton v. Forster, 134 Wagon Co. v. Diers, 390, 526, 560 New York, &c.. Bank v. Gibson, 179, 209, 239 270" Exch. Co. V. De Wolf, ' 30 Ins. Co. V. Ely, 104 V. Slurges, 138 Iron Mine v. Citizens Bank, 182 State Bank v. Fletcher, 671 Niagara Dist. Bank v. Fairman Mfg. Co., 249, 257 Niblock V. McGregor, 579 Nichol V. Bate, 24 Nichols V. Allen, 171, 548, 550 V. Blackmore, 188, 191, 19a, V. Diamond, 211, 213, 214 V. Douglass, 650 V. Gross, 447 V. Hill, 14a V. Hunton, 137 V. McDowell, 606, 618 CASES CITED IN VOLUME TWO. xlvii Nichols V. Mudgett, PAGE. 79 V. Nichols, 157 V. Norris, 583 V. Parsons, 639 V. Porter, 416 V. Woodruff, 170 Nicholson v. Chapman, 705 V. Patton, 689 721, 722 V. Kevin, 621, 627 V. Sedgwick, 292, 293 Nickerson v. Hayward, 38 V. Euger, 46,52 721, 724 Nightingale v. Barney, 49 V. Meginnis 648, 655 V. Withington, 717 Nisbett V. Brown, 174 V. Smith, 647 Niver v. Best, 93 Noble V. Cornell, 105 V. Scofield, 632 V. Walker, 41 Nobles V. Bates, 90 Noe V. Christie, 283 Nolan V. Bank of New York, 287 N. Y. Bkg. Assn., 279 Noland v. Einggold, 295, 381 Norman v. Cole, 57 Norris v. Aylett, 625 V. Badger, 347, 359 V. Crummey, 641 y. Langley, 164 Norris v. Norris, 676 North V. Wakefield, 633 V. Walker, 641 Northern, &c., Market Company v. Kelly, 61 Northumberland Co. Bank v. Eyer, 532, 535 Norton v. Coons, 662 V. Downer, 41 V. Eastman, 523, 569 V. Hall, 602, 578 V. Knapp, ' 226 V. Pickens, 77, 679 V. Piscataqua Ins. Co., 295, 486 V. Eeid, 615 V. Eoberts, 646 V. Soule, 672 V. Waite, 28 Nourse v. Pope, 124 Novelli V. Eossi, 273 Now3k V. Excelsior, 266 V. Excelsior Stone Co., 161 Noxon V. De Wolf, 325 Noyes v. Day, 89 V. Gilman, 441 V. Nichols, 524, 527, 558 V. White, 375 Nunez v. Winston, 125 Nurre v. Chittenden, 594 Nutter V. Stgver, 32, 690 Nutting V. Sloan, 221 Nye V. Mosely, 101 o. Oakford v. Johnson, Oakley v. Boorman, V. Ooddeen, Oaks V. Weller, Oates V. Nat. Bank, Obbard v. Betham, Ober V. Goodridge, O'Callaghan v. Sawyer, Odell V. Greenly, Odiorne v. Howard, Odlen V. Greenleaf, O'Donnell v. Smith, Offord V. Davis, Ogden V. Blydenburgh, PAGE. 32 503, 511 694, 698 524 25, 26, 699 6, 136, 161 323, 362, 403 312 52 313 667 223 591 401 V. County of Daviess, 712 V. Gillingham, 235, 237 Ogle V. Turpin, 375 O'Hara v. Haas, 375, 672 Ohio V. Harrison, 106 O'Keefe v. Dunn, 99, 181, 308, 701 V. Handy, 21 Okie V. Spencer, 26, 623 Oldhafli V. Brown, 583, 584, 585 v. Ledbetter, 479 Olendorff v. Union Bank, 633 V. Union Bank of Baltimore, 626 OUivier v. Andry, 396 Olmstead v. Greenly, 547 Olshausen v. Lewis, 191 Omaha Nat. Bank v. Walker, 533, 561, 565 O'Mulcahy v. HoUey, 678 O'Neal V. Bacon, 136 Ontario Bank v. Schermerhorn, 119 V. Worthington,27,238,242 Ord V. Portal, , 345 Ordeman v. Lawson, 542, 548, 549, 553 Orchard v. Hughes, 136 Orcutt V. Symonds, • 124 Oriental Commercial Bank, Ex parte, 707 Finance Co. v. Overend, 640 Orme v. Young, 605 Ormond v. Moye, 478 Ormsbee v. Howe, 62, 695 Orr v. Maginnis, 181 Orrick v. Colston, 348, 542 Orvis V. Newell, 587 Osborn v. Donald, 369 V. Kistler, 166 V. Nicholson, 126 V. Noble, ' 671 V. Eobbins, 596 Osborne v. Bryce, 527 Osgood V. Artt, 342, 444, 445, 450 V. Thompson Bank^ 687 Otis V. Adams, 698 V. Cullom, 403 V. Storch, 585 V. Van Storch, 634, 672 Otto V. Belden, 405 Oughton V. Trotter, 275 xlviii CASES CITED IN VOLUME TWO. PAGE. Oulds V. Harrison, 107, 318; 319, 320 Outhwaite v. Luntley, 249 Outhwite V. Miner, 26 V. Porter, 34 Orerman v. Hobolsen City Bank, 215, 240, 246 Overstreet v. Nunn, 453 Oyerton v. Sawyer, 468 Owen V. Iglanor, 255 V. Lavine, 254 V. Moody, 296 T. Van Uster, 213, 214 Owens V. Miller, 42 V. Porter, 129 Owenson v. Morte, 394, 400 Owings V. Baker, 495, 496, 497, 500, 507 V. Tliompson, 141 Owsley V. Philips, 62 Oxford Bank v. Haynes, 518, 555, 560 V. Lewis, 649 Iron Co. V. Spradley, 76 Ozarne v. Haber, 84 P. Pabodie v. King, Pace V. Marsli, V. Kobertson, V. Wilmerding, Pacific Guano Co. v. Mullen, Packard v. Richardson, Packer v. Willson, Packwood v. Grid ley, Paddleford v. Thacher, 55, Padford v. Padford, Page V. Bank of Alexandria, V. Lathrop, V. Webster, Pahlman v. Taylor, Pain V. Packard, Paine v. Furnass, 332, V. Jones, V. Noelke, Palmer v. Gardiner, V. Grant, V. Marshall, V. Minar, V. Nassau Bank, V. Wardens, V. Whitney, Parish v. Stone, 15, 16, Park V. McDaniels, Bank v. Watson, 627, Parker V. Bargeas, V. Enslow, V. Gordon, V. Greele, V. Kennedy, V. Leigh, V. Lewis, V. Marston, V. McKelvain, 189, 651 552 669 348 130 549 549 718 630 11 428 358 644 503 612 382, 459 634 493 430 505, 374 345 165, 715 346 711 378 172, 467 43 24 710 58 195, 248 241 301 275, 276 42, 261 464, 467 540 PAGS. Parker v. Nation, 416, 604 V. Pitts, 601 V. Riddle, 298, 493, 515 V. Stallings, 702 V. Tuttle, 325 Parkin v. Moon, 326 Parkhurst v. Dickinson, 227 V. Vail, 503, 510, 515 Parkman v. Brewster, 517, 552, 558 Parks V. Cooke, 414 V. Brinkerhoff, 537, 545 V. Brown, 358 V. Ingram, 666 Parmelee v. Williams, 534 Parnell v. Price, 641, 642 Parr v. Eliason, 113, 166 V. Jewell, 316, 317 Parrott v. Farnsworth, 146 Parry v. Spikes, 548, 550 Parshley v. Heath, 407 Parsons v. Alexander, 96, 97, 104 V. Armor, 236 V Clark, 48 V. Jackson, 702 V. Pendleton, &c.. Turnpike Co., V. Thompson, Partridge v. Colby, V. Davis, Pashby V. Mandigo, Pasmore v. North, Passenger v. Brooks, Patch V. Washburn, Paterson v. Hardacre, Patience v. Townley, Paton V. Coit, V. Stewart, V. Winter, Patten v. Gleason, V. Pearson, Patterson v. Carrell, V. Cave, V. Gile, V. Todd, Patteson v. Carrell, Patton V. Nicholson, V. Shanklin, V. Violett, Paul V. Berry, V. Logansport Nat, Bank, Paulette v. Brown, 705 Paulin V. Kaighn, 639 Pauling V. Pauling, 118 Paulman v. Claycomb, 432 !]^ayne v. Bensley, ) 31 V. Commercial Bank, 650 V. Cutler, 133, 137, 145, 173 V. Eden, 92, 703 V. Powell, 653 Payson v. Coolidge, 219, 235, 237, 241 V. Whitcomb, 50 Peabody v. Harvey, 548 67 79 537 341, 342, 387, 518, 531, 538 662 308 173 501, 506, 507, 511 173, 179, 723 194 123, 124, 179 92 249, 256 715 42, 159, 435 325 444 173 406, 435, 437 413, 414 74 654 307 583, 585, 661 633 CASES CITED IN VOLUME TWO. xlix FAQB. BPeabody v. McAvoy, 721, 726 " V. Kees, 311, 678 Guardian v. Peabody, 14 Peacock v. Purcell, 462 V. Rhodes, 343, 378 Pearoe v. Kennedy, , 502 V. Shorter, 475 Pearl v. Deacon, 634 Pearson v. Cummings, 151 V. Parker, 667 V. Pearson, 67 V. Stoddard, 492, 494, 508 Pease v. Dwight, 303, 499 V. Hirst, 20, 268, 381, 447 V. McClelland, 698 Peck V. Barney, 525, 527, 558 V. Bllgh, 446, 680 V. Cochran, 223 V. Maynard, 483 V. Eequa, 57, 80 V. Walton, 482 Pecker v. Kennison, 83, 130 Peckham v. Gilman, 494, 509, .512, 515 V. Hendren, 379 Peddicord v. Whittam, 299 Peden v. Moore, 133 Peirce v. Rowe, 118 Peltier v. Babillion, 304 Peltou V. Prescott, 2 Peltz V. Long, 77 Pemberton v. Hoosier, 69 V. Vaughan, 90 Pemigewasset Bank v. Rogers, 106 Pence v. Gale, 635 Pendleton v. Bank of Kentucky, ' 289 Penn v. Bennett, 63 Bank v. Prankish, 724 Pennington v. Gittings, 15, 466 V. Hamilton, 412 Penny v. Crane, &c., Mfg. Co., 563, 569 V. Innes, 361, 384, 494 V. Purham, 578 Penrose v. Martyr, 213 People V. Auditors, 489 V. Bank of North America, 345, 706 V. Merchants' Bank, 282 Peoples' Bank v. Bogart, 395, 402 Peoria, &c., R. R. Co. v. Neill, 262 Percival v. Frampton, 26, 177, 178 Perfect, Ex parte, 374 V. Murgrave, 275, 582, 633 Perkins v. Barstow, 494, 496 V. Bumford, 8 V. Catlin, 300, 502, 503, 507, 508 V. Cummings, 67, 72, 129 V. Eaton, 97 V. Lyman, 89 V. Prout, 721, 723 V. White, 379, 699 Perley v. Balch, 9, 161 Perreira v. Jepp, 185 Perrin V. Broad well, 414 V. Russell, 482 Perry v. Barret, PAGB. 496, 503 V. Crammond, 168 V. Hadnett, 587 V. Harrington, 255 V. Hill, 174 V. Seitz, 448 Pesant v. Pickersgill, 22 Peterborough R. R. v. Chamberlin, 161 Peters v. Linenschmidt, 618 Peterson v. Hubbard, 224, 225, 227 V. Johnson, 141 Pettigrew v. Chave, 45 Petillo V. Hopson, 133 Petillon V. Noble, 164 Petit V. Benson, 208, 248, 254, 256 Peto V. Reynolds, 212 Petre v. Buncombe, 670 V. Hannay, 99 Petrie v. Clark, 32 Pettee v. Prout, 430 Pettis V. Westlake, 326 Petty V. Cook, 622 V. Douglass, 618, 651 V. Hannum, 12, 684 V. Long, 78 Peyton v. Hallett. 262 Phelan v. Moss, ' 692 Phelps V. Dennett, 63 V. Northrup, 228 V. Phelps, 15 V. Pond, 15, 467 V. Vischer, 500, 512, 513 V. Younger, 66 Fhila. Loan Co. v. Towner, 113 Philpot V. Bryant, 181, 260, 639, 641 Phillips V. Astling, 197, 522, 556, 557, 560 V. Cockayne, 113 V. Cox, 572 V. Frost, 225 V. Lnr Thum, 262 V. Myers, 56, 88 V. Preston, - 386, 434, 659 V. Webster, 412 Phoenix Bank v. Bank of America, 287, 288 Cotton Mfg. Co. V. Fuller, 494, 514 Ins. Co. V. Allen, 188, 189, 191 V. Church, 25, 30 Pickard v. Banks, 487 Pickens v. Eskridge, 74 V. Preston, 77 Pickering v. Cording, 343 Pickett V. Hawes, 503, 504, 515 V. Land, 612 V. Merchants Nat. Bank, 113 Picking v. Yarborough, 454, 462, 614 Picquet v. Curtis, 359 Pidcock V. Hinton, 93 Pier V. Bullis, 704 Pierce v. Crafts, 293 V. Goldsberry, 652 CASES CITED IK VOLUME TWO. Pierce v. Hight, T. Irvine, V. Kennedy, v. Kibbee, V. Kittredge, V. Mann, V. Eandolph, V. Short, T. Struthers, Pierson v. Dunlop, Pigott V. Cubley, Pike V. Irwin, V. Street, V. Sweet, Pilkington v. Green, V. Wood, Pillans V. Van Mierop, PAQB. 175 496, 507 515 167, 694 39, 229 498 67 411 195, 196 226, 239, 243, 252 458 240 433, 434 640 94, 107 346 224, 240, 245 Pilmer v. Branch Bank, 358 Pindar v. Barlow, 165 Pine River Bank v. Swazey, 409, 423 Pinkerton v. Bailey, 326 V. Marshall, 218 Pinkney v. Hall, 213 Pinnes v. Ely, 499 Pintard v, Davis, 610 Pitcher v. Burrows, 381 Pitkin V. Frink, 154 Pitt V. Chappelow, 265 V. Pursord, 666 Piltmau V. Chesholm, 411 Pitts V. Keyser, 358' Pixley V. Boynton, 177 Place V. Mcllvaine, 420 Planters' Bank v. Douglass, 261 V. Houser, 439 V. Merritt, 280, 281 &c., Ins. Co. V. Tunstall, 442; 444, 456 Plato V. Reynolds, 181 Piatt V. Beebe, 19, 456, 684 Pleasants v. Kemp, 473 Plimley v. Westley, 298, 299 Plumb V. Niles, 154 Plamer v. Smith, 83 Plumraer v. Lyman, 38, 240 Poindexter v. Davis, 75 Poirier v. Morris, 28, 401 Polak V. Everett, 629 Pole V. Ford, 419, 640, 644 Polhemus v. Ann Arbor Sav. Bank, 161 Polhill V. Walter, _ 214 Polkinghorne v. Hendricks, 653 Pollard V. Scholey, 113 Pollen V. James, 174 Pollock V. Helm, 237 Polydras v. Polydras, 158 Pomeroy v. Burnett, 144 f. Clark, 385 V. Tanner, 42, 261, 418, 420 Pond V. Lock wood, 30 V. Waterloo Agric, 27 Pool V. Watson, 724 Pooley V. Browne, 399, 404 PAQB. Pooley V. Harradine, 687, 655- Poorman v. Mills, 334 Pope V. Bank of Albion, 288 V. Hays, 151 V. Huth, 224 V. Luff, 244 Popley V. Ashley, ' 394 Popple V. Day, 37 Popplewell V. Wilson, 33, 45, 168 Porter v. Cushman, 349, 359 V. Drennan, 294, 502 V. Havens, 82 V. Hodenpuyl, 657 V. Jones, 79 V. Knapp, 723 V. McCollum, 336 V. Sandidge, 261 Porthouse v. Parker, 262 Potter V. Earnest, 37 V. Greene, 422 V. McDowell, 483 V. Thompson, 459 Potter V. Tyler, 314 Potts V. Gray, 77, 129 V. Mayer, , 32. V. Reed, 367, 368 Poulton V. Lattimore, 134, 161 Powell V. Commonwealth, 302 V. Duff, 219 V. Groves, 177 V. Henry, 462 V. Inman, 90, 159 V. Jones, 225 V. Monnier, 219, 226 V. Morrison, 705 V. Smith, 74, 667 V. Subers, 149 V. Thomas, 493 V. Waters, Power V. Finnie, Powers V. French, V. Lynch, V. Nelson, V. Waters, Pownall V. Ferrand, Prather v. Gammon, V. Young, Pratt V. Chase, V. Coman, V. Hedden, V. Thomas, 117, 317, 605, 698 366 2 383, 405, 425 309 409, 419' 260, 269 651 642, 655 423 22,24 4, 598 295, 296, 301 V. Trustees of Bapt. Soc, 17 Pray v. Maine, 322 Prescott Bank v. Caverly, 188, 189, 192, 401, 440- Ex parte, 374 V. Hull, 295, 296, 486 V. Ward, 58 Presler v. Stallworth, 602 Prentice v. Zane, 684 Prentiss v. Danielson, 300, 361, 539, 565 V. Graves, 31 Preston v. Case, 372, 373^ CASES CITED IN VOLUME TWO. IF Preston v. Ellington, V. Henning, V. Jackson, Prettyman v. Short, Price V. Brady, V, Edmunds, V. Emerson, V. Green, V. Lavender, V. Neal, V. Shute, V. Summers, V. Truesdell, Priddy v. Henbrey, Prideaux v. Collier, Pridgen v. Buchannon, V. Cox, Priest V. Watson, Primrose v. Browning, Prince v. Brunatte, Pring V. Glarkson, Pringle v. Phillips, Pritehard v. Hitchcock, Proctor v. McCall, V. Whitcomb, Produce Bank v. Bache. Prosser v. Luqueer, Prout V. Grout, Prouty V. Eoberts, Providence Thread Co. Pryor v. Bowman, V. Coulter, Puget de Brag v. Forbes, Pugh V. Durfie, V. Grant, Puller V. Koe, PuUiam v. Withers, Pulsifer v. Hotchkiss, Pusey V. Pyle, Purcell V. AUemong, Purchase v. Mattison, Purkett V. Gregory, Puryear v. McGavock, Putnam v. Crymes, V. Lewis, V. Schuyler, V. Sullivan, V. Tash, Q. Quarles v. Porter, Quigley v. Duffey, Quin v. Hapford, V. Sterne, Quinn v. Fuller, V. Hapley, V. Hard, V. Heard, 374, 434 R 649 PAGE. 114, 128 Rabberman v. Muehlhausen, 294 399 Eaborg v. Peyton, 171, 227, 265 485 Eacine Co. Bank v. Lathrop, 655- 576, 582, 588, Raggett v. Axmore, 576 647, 648 Eahm v. Bridge Co., 161, 32& 162 Eahter v. First Nat. Bank, 49, 123 90 Eaikes v. Todd, 548, 552.. 385, 497, 514 Railroad v. Chamberlin, 38 262 Co. V. Nat. Bank, 31 256 V. Sohutte, 401 87 Eailton v. Matthews, 59& 386, 671, 672 Eaines v. Dooley, 147 260 ^alli V. Dennistoun, 271 183 V. Surell, 256- 585 Ramsbottom v. Cator, 369* 226 Ramsdell v. Edgarton, 93 421 V. Soule, 122. 41, 332, 388 Ramsey v. Young, 174 262 Rand v. Dovey, 341, 40?. 26, 625 Randall v. Lunt, 444 689 V. Peckham, 468- 622 Eandlett v. Jordan, 47 4r 314 Eandolph v. Fleming, 407, 419- 460 V. Peck, 39- , 159 Eanger v. Carey, 326 531 V. Sergeant, 529 473 Rankin v. Childs, 524, 539, 554 113 V. Knight, 52 V. Aldrich, 330 v. Weguelin, 466, 467 311 V. Woodworth, 293- 177 Rann v. Hughes, 162 160 Ranney v. Purvis, 618 687 Ransom v. Miner, 490 111, 320, 721, 723 v. Sherwood, 300, 502. 159 v. Turley, 44, 697 598 Rapelye v. Anderson, 116 147 Raper v. Birkbeck, • 272 427 Raphael v. Bank of England, 720 280, 281 Rapp v. Latham, 159- 28 Ratcliflfe v. Planters' Bank, 197 133 Raubitschek v. Blaiik, 54 74,75,127 Raven V. Rubino, 100- 293, 336 Rawson v. Beach, 254 420 Ray v. Brenner, 632 568 V. Faulkner, 255- 307 V. McMurtry, 122 519, 676 V. Smith, 405- Raymond v. Middleton, 295, 298, 300- V. Sellick, 15, 467 V. Sherwood, 300 Rayne v. Ditto, 361 480 Rayner v. Fussey, 641 129 Rayswicke, Ex parte, 260- 228 Rea v. Owens, 826 339, 340 Read v. Abbott, 707 42, 160, 698 Y. Cutts, 555, 557, 558, 564- 261 V. Evans, 555, 557 721, 723 V. Hutchinson, 392: 26 V. Marsh, 219, 237, 238, 242. Ill CASES CITED IN VOLUME TWO. Kead v. Wilkinson, PAGB. 254 Biddle v. Bowman, PAGH. 635 Beading v. Beardsley, 358, 377 V. Gage, 142 V. Weston, 122 V. Stevens, 508, 513 Beagan v. Burton, 143 Bider v. Duvall, 430 Eeakert v. Sanford, 313 V. Taintor, 430 Beamer v. Bell, 339, 724 Bidgely Nat. Bank v. Patten, 281 Beay v. White, 275 Bidlou V. Davis, 66 Eector v. Former, 170 Ridout V. Bristow, 33, 39, 162 Beddick v. Jones, 27, 686 Rice V. Cook, 494, 536, 572 Beddish v. Bitohie, 296, 334 V. Goddard, 142 Bedlon v. Churchill, 709 V. Mather, 52 Bedman v. Marvil, 581 V. Maxwell, 91,92 Eedmond v. Stansbury, 432, 449 V. Morton, 628 Bedwine v. Glover, 125 V. Ragland, 215, 256 Beed v. Garr, 427 V. Raitt, 457, 687 V. Garvin, 631, 623 V. Rice, 13, 667 V. Murphy, 295 V. Stearns, 362, 368 V. Prentiss, 9,145 Rich V. Hathaway, 526, 563 V. Smith, 121 V. Starbuck, 344, 382 V. Stoddard, 643 Richards v. Barton, 212 V. White, 274 V. Betzer, 145, 326 Eees V. Berrington, 645 V. Daily, 319 V. Conocheague Bank, 345 V. Darst, 358 V. Marquis of Headfort, 179, 723 V. Davis, 459 V. Warwick, 221, 223 V. Frankum, 342 Reese v. Gordon, 134 V. Learning, 373 Keeve v. Doughty, 77 V. Macey, 20 Beeves v. PuUiam, 602 V. Stevenson, 443 Beg V. Kinnear, 208 V. Thomas, 151 Regina v. Sewell, 113 V. Warring, 299, 300, 506, 512, Begney v. Vanzandt, 577 515 Reid V. Flippen, 600, 670 Richardson v. Comstock, 61 V. Furnival, 377 V. Daniels, 182 V. Nunnelly, 628 V. Fenner, 188 •189, 191, 193 Remsen v. Beekman, 612, 669 V. Lincoln, 345, 363 Benner v. Bank of Columbia, 440 V. Mellish, 73, 79 Benwick v. Williams, 316 V. Sanborn, 135, 137 Eevers v. Hovfe, 560 Ricard v. Harrison, 430 Bevis V. Blackstone, 77 Richdale, Ex parte. 687 Bex V. Bigg, 339 Richmond v. Heapy, 159, 160 V. Box, 298 V. Patterson, 170 V. Lambton, 329 Ricketston v. Wood, 415 Bey V. Simpson, 506, 511 Bicketts v. Harvey, 83 Reynolds v. Davis, 382 V. Pendleton, 439 V. Dechaums, 593, 596 Bickey v. Dameron, 499 V. Douglass, 523, 524, 525, 559, Bickie V. Dow, 5 560 Reegel v. Cunningham, 316 V. Doyle, 670 Rigby V. Norwood, 552 V. Horn, 473 Biggs V. Hatch, 686 V. Jones, 413 V. Lindsay, , 245, 521 V. Nichols, 105 V. Waldo, 502, 510, 515 V. Peto, 221 Bigsbee v. Bowler, 69, 420, 651 V. Ward, 651 Biker v. Corley, 350 V. Wheeler, 660 Biley v. Anderson, 686 Ehawm v. Grant, 112 V. Gerrish, 494, 506, 512 Bhea v. Allison, 27 V. Johnson, 27 V. Preston, 668 V. Schwacker, 677 Bhoads v. Megonigal, 474, 490 Bimini v. Van Praagh, 64 Bhode V. Alley, 326 Rindskopf v. Doman, 596 Bhodes, Ex parte, 450 Ringgold V. Newkirk, 560 V. Hart, 623 Ringling v. Kohn, 293 V. Seymour, 502, 514 Ripley v. Greenleaf, 641 Bhyan v. Dunnigan, 447 Risley v. Phoenix Bank, 288, 230 CASES CITED IN VOLUME TWO. llil Eittenhouse v. Amerman, PAOB. 35 Eobinson v. Eeynolds, PAOE. 162, 16S Eitchie v. Gibbs, 647 V. Smith, 31 V. Moore, 359 V. Wilkinson, 446 Kivers v. Moss, 78 V. Yarrow, 264, 265 V. Thomas, 505, 508 Eobison v. Lyle, 583 Eives V. Kumler, 411 Eobson V. Bennett, 222 Eizer v. Callen, 666 V. Calze, 92 Eoark v. Turner, 11 V. Hall, 96 Eobarts v. Tucker, 270 V. McKoin, 19 Eobuins v. Brooks, 492 V. Eolls, 368 V. Maidstone, 177 Roby V. West, 97 V. Eichardson, 24 Eoohe V. Ladd, 106, 16& Eoberls v. Bane, 582, 588 V. Eoanoke Seminary, 16 V. Bethell, 218, 220 Eock County Bank v. Hollister, 367, 43fr V. Cobb, 16 v. Heald, 141 V. Corbin, 280, 281 V. Nichols, 141 V. Cunningham, 311 Eockinghara Bank v. Claggett; 322^ V. Eden, 379, 718 Eockwell V. Charles, 116, 164 Ex parte, 392 Eodabaugh v. Pitkin, 406, 502 504, 515 V. Fisher, 394 Eodenbarger v. Bramlett, 669 V. Frisby, 55 Eodes V. Patillo, 78 V. Goff, 121 Eodgers v. Eosser, 174 V. Hall, 681 V. Ware, 302 V. Haskell, 346, 412 Eodney v. Wilson, 440' V. Jacks, 373 Eoe V. Hallett, 493, 539 V. Kilpatrick, 408 Eoebuck v. Hamerton, 97 V. Lane, 680, 70S, 724 Eogers v. Blum, 424 V. Masters, 413, 434, 587 V. Broadnax, 168 V. Miles, 426 V. Gibbs, 504, 51^ V. Eichardson, 69, 650 V. Kingston, 92 V. Eiddle, 564 V. Kneelaud, 2 V. Eoberts, 88 V. Langford, 393, 395^ V. Stewart, 650, 651, 653 V. Maxwell, 170- V. Tkompson, 462 V. McKnight, 137 V. Wilkinson, 426 V. Morton, 178 Eobertshaw v. Harway, 35 v. Poston, 258. Eobertson v. Allen, 420 V. Eeeves, 81 V. Breed love, 319 V. Eogers, 148 V. Deatherage, 661 V. School Trustees, 585, 645 V. Dunn, 346, 430 V. Stevenson, 63 V. French, 274 V. Warner, 529 V. Kensington, 254, 364 V. Waters, 33 V. Scates, 480 Eolfe V. Caslon, 51 V. Shores, 77 Eolin V. Stewart, 270 V. Williams, 45 EoU V. Eaguet, 82 Eobinson v. Abell, 497, 503 Eollins V. Lashus, 5 V. Ames, 188, 190, 249 Eolls V. Pearce, 463, 468 V. Bartlett, 495 Eoman v. Terna, 244 f. Bland, 95, 99, 129 Eome Savings Bank v. Kramer, 3& V. Brown, 341 Eood V. Jones, 39 V. Crenshaw, 60 Eooker v. Eooker, ft v. Gilman, 540 Eoosa V. Christ, 294 V. Gould, 68 Eoots V. Merriwether, 131 V. Hodgdon, 722, 723 Eoper V. Day, 37a V. Lair, 28, 343, 518 Eoquemore v. Alloway, 75 V. Little, 331 Roquest v. Pickett, 310 V. Lyle, 575 Eordasus v. Leach, 345- V. Lyman, 319, 320 Eosa V. Brotherson, 27 V. Miller, 654 Eoscow V. Hardy, 309' V. Mitchell, 488 Eose V. Dickson, 120' V. Miiller, 638, 639 V. Madden, 572: V. Perry, 320 V. Main, 93 V. Eeed, 347, 572 V. Mortimer, 17a liv CASES CITED IN VOLUME TWO. JKose V. Park Bank, V. Phillips, V. Sims, V. Truax, V. Williams, Uosewarne v. Billing, Boss V. Bedell, V. Drinkard, V. Espy, PAGE. 412 174 51, 328 80 655 129 179, 723, 725 726 386, 433 V. Jones, 389, 409, 410, 419, 423, 617 V. Pitts, 484 V. Saulsbury, 389 V. Smith, 432, 449 V. Terry, 404 Kossiter v. Marsh, 170, 173 Both V. Calvin, 689, 709 Eothschild V. Corney, 312, 314, 688 V. Grii, 493 Rounds V. Smith, 279, 284 Bouseh V. Duff, 247 jEowe V. Blanchard, 10 V. Haines, 18 V. Young, 249, 257, 260 Uowland v. Fowler, 697 V. Harris, 37, 172 Boxborough v. Meesick, 32 Boyal V. Lindsay, 69, 420, 652 Eoyer y. Keystone Nat. Bank, 27, 45 Eubey v. Cnlbertson, 430 Eucker v. Wadlington, 34 Euckman y. Bryan, 99 V. Lightner, 75 Euddell V. Landers, 75, 327 Eudderow v. Huntington, 138 Euddick v. Lloyd, 32 Eugely V. Davidson, 310 Euggles V. Holden, 613 V. Snanwick, 59, 160 Eumsey v. Leek, 55 V. Silimitz, 134, 146, 432, 443 Eupert V. Gr.int, 650 Eushforth, Ex parte, 260 Eushworth v. Moore, 428 Eussel V. Ball, 363, 703 Eussell V. Adderton, 631 V. Buck; 528, 562 V. Cook, 61 V. Epler, 453 V. Hadduck, 28, 686, 689 V. Hester, 462 V. Phillips, 207, 251, 257 V. Klink, 342 V. Langstaffe, 219, 307 V. Mosely, 551 V. Perkins, 568 V. Scudder, 678 V. Splater, 26 V. Swan, 306 V. V/iggin, 219, 235, 237, 241, 245 Bust V. Gott, 94 V. Hauselt, 38 V. Eeives, 51 Butland y. Brister, 5 Rutledge v. Townsend, Ryan v. Chew, Ryland v. Brown, PASB. 70 32 691 Sabin v. Harris, Sackett y. Johnson, V. Kellar, Sadler, Ex parte, Safford v. Wyckoff, Sage V. Wilson, Sainter v. Ferguson, Salander v. Lockwood, Saline Co. v. Buie, Salisbury v. Hale, V. Eenick, Salmon v. Downs, Salter v. Salter, Sample v. Cochran, V. Martin, V. Eowe, Samson v. Thornton, Samstag v. Couley, Samuel v. Evans, v. Howarth, Sanborn v. Little, Sanders v. Bacon, V. Gillespie, Sanderson v. Collmann, V. Goodrich, 552, 559, 564 31 714 90 689 649 90 696 635 559 189 375 573 634 539, 563, 569 373 492, 494 298 81 568 296 383 23, 439 262 123 Sandford v. Norton, ' 179, 541, 560, 691 Sandidge v. Sanderson, 130 Sandilands v. Marsh, 159 Sands v. Smith, 111 Sanford v. Allen, 565 Sanger v. Cleveland, 143 Sanner v Smith, 600 Saratoga Bank v. King, 89, 129 Sargent v. Appleton, 577 V. Southgate, 313, 320 Satterfleld v. Spurlock, 130 Saunders v. Howe, 149 V. Wakefield, 215, 548, 550, 552 Savage v. Aldren, 364 V. Ball, 51 V. Mallory, 127 Savannah Nat. Bank v. Hoskins, 238, 245 Savery v. Hays, 488 Savings Association v. Hunt, 18 Bank of New Haven v. Bates, 686 Sawyer v. Bradford, 608 V. Chambers, 133 v. Fernald, 3 V. Haskill, 567 V. Hoovey, 315 V. Macauley, 100 V. McLouth, 6 V. Phaley, 719 V. Vaugban, 177 V. Wiswell, 160 CASES CITED IN VOLUME TWO. Iv Sayer v. Kitchen, Sayles v. Sayles, V. Sims, Baylor v. Bushong, V. Daniels, ■Sayre v. King, V. Lucas, V. McEwen, •Scaife v. Beall, Scammon v. Adams, ■Scarfe v. Morgan, FAGB. 212 88 573 280, 281 26, 117 625 337 423 174 438 107 Schafer v. Farmers', Ac, Bank, 499, 501, 509 Schepp V. Carpenter, 45 ■Scherer v. Upton, 158 Schimmelpennich v. Bayard, 238, 241 •Schindel v. Gates, 602 Schlattner v. Nickodemus, 170 •Schlicker v. Gordon, 581 ■Schneco v. Meier, 63 Schneider v. Schiffman, 496, 508 Schnell v. Northside Mill Co., 434, 436 -Schcen v. Houghton, 12, 693 Schofield V. Bayard, 193 V. Eichelberger, 73 V. White, 474 Schollenberger v. Nehf, 500, 502, 503, 513 ^chooley v. Fletcher, 579, 662, 665 Schoonmaker v. Boosa, 34 Schroeder v. Central Bank, 282 Schroeppell v. Shaw, 605 Schryver v. Hawks, 593 Schuchardt v. Hall, 186, 210 Schuchmann v. Knoebel, 142 5chultz V. Klenk, 505 Schuster v. Koerner, 317 Schwarzansky v. Averill, 511, 512 Scionneaux v. Wagnespack, 343, 345 Soollons V. Flynn, 98 Scott V. Ocean Bank, 29, 686 V. Belts, 687 V. Calkin, 538 V. Davidson, 78 V. Doneghy, 384 V. First Nat. Bank, 310 V. Gilmore, 129, 130 V. Hall, 653 Y. Harris, 654 V. Hawkins, 371, 486 V. Hill, , 477 V. Lewis, 114 V. Liflford, 275 V. Saffold, 654 V. Seely, 161 V. Shirk, 592 Scotten V. Eandolph, 151 Scouton V. Eislord, 63 Scoville V. Landon, 432 Scruggs V. Gass, 394 Scudder v. Andrews, 8, 140 V. Thomas, 77 V. Union Nat. Bank, 229, 240 Scull V. Edwards, 294 Sea V. Glover, J 'AUiS. 521 Seabury v. Hungerford, 537 542 Seaman v. Seaman, 59 Search v. Miller, 176 Searing v. Tye, 49 Sears v. Brink, 549 550 V. Lantz, 342 V. Van Dusen, 567 Sebag V. Abithol, 248, 249, 257 Sebring v. Kathbun, 312 Second Nat. Bank v. Brady, 166 v. GayJord, 558, 559 V. Hill, 636 V. Boucher, 419, 426 V. Smoot, 111 V. Western Nat. Bank, 287 V. Williams, 14, 468 Security Bank v. Nat. Bank, 279, 285, 286 Seddons v. Stratford, 97 Seibert v. Thompson, 663 Selby V. Eden, 258 Self V. Herrington, 174 Seligman v. Wells, 281 Selover v. Snively, 405 Selser v. Brock, 591, 595, 597, 599 Semple v. Atkinson, 652 V. Turner, 496 Seneca Co. Bank v. Neass, 456 V. Schermerhorn, 119 Senter v. Continental Bank, 280, 281 Senzeneau v. Saloy, 77 Serle v. Waterworth, 35, 173 Sessions v. Mosely, 16, 464, 465 Seton V. Seton, 162 Seventh Nat. Bank v. Cook, 221, 285 Seward v. Garlin, 482 Sexton V. Fleet, 531 Seybel v. Nat. Currency Bank, 696 Seyfert v. Edison, 2, 316, 326 Seymour v. Farrell, 496, 503, 507 V. Leyman, 513 V. Mickey, 347, 503, 506, 507 v. Prescott, 37 V. Van Slyck, . 299, 300 Shackleford v. Hooker, 253, 254 Shand v. Du Buisson, 282 Shane v. Lowry, 1 Shannon v. Langhorn, 53 Sharp V. Teese, 92 V. Wright, 80 Sharpe v. Drew, 186 Sharts v. Await, 297 Shaver v. Western Union Tel. Co., 224, 250, 262 Shaw V. Clark, 100, 677 V. First Presb. Ch., 25 v. Knox, 385 V. Kailroad, 694 V. Spencer, 365, 704 V. Spooner, 84 Shealy v. Toole, 68 Ivi CASES CITED IN VOLUME TWO. PAGB. PAGE. Shearer v. Smith, 158 Silverman v. Bullock, 37 »■ Sheedy v. Boach, 466 Silvis V. Ely, 39- Sheehan v. Taft, 634 Sime, In re. 701 Sheets v. Culver, 476 Simmonds v. Parminter, 261 Shelby v. Judd, 310 Simmons v. Blackman, 135- Shelden v. Hentley, 292 V. Camp, 437, 661 V. Parker, 328 V. Cincinnati Sav Soo , 14, 282, Sheldon v. Butler, 171, 547 468. V. Button, 14 V. West, 92. V. Horton, 2 Simon v. Huot, 471 V. Middleton, 453 V. Merritt, 677 Shelton v. Darling, 213 Simons v. Morris, 316 V. Kurd, 421, 423 V. Steele, 2, 559- V. Sherfey, 293 721, 722 Simpson Centenary College V. Bryan, 16, Shenk v. Mingle, 101 152 V. Phelps, 83 V. Clark, 12 V. Bobeson, 500 V. Hall, 314, 444 Shepard v. Phears, ', 567 V. Henning, 632 Shephard v. Watrous, 60 V. Lauderdale, 78- Shepherd v. Chester, 129 V. Moulder, 301 V. Harrison, 269 V. Nichols, 107 V. Temple, 9,146 V. Stah, 619 Sherrer v. Bullock, 50 Sims V. Parks, 413 Sherman v. Black, 573 Singer Mfg. Co. v. Hester, 558 V. Blackman, 695 V. Troutman, 612 Sherwin v. Bingham, 151, 239 Sinker v. Fletcher, 383, 427 Sherwood v. Archer, 38, 113 Sir John Needham's Case, 275- Shetler v. Thomas, 481 Sisson V. Barrett, 573 Shewell v. Knox, 525 Sistermanns v. Field, 179, 726 Shields v. Farmers Bank, 405 Sitgreaves v. Farmers', &c.. Bank, 425, V. Middleton, 228 636- V. Moore, 604 Sizer v. Heacock, 647 V. Beynolds, 64-1 Skelton v. Dustin, 434 Shillito V. Theed, 96 Skidmore v. Clark, 695 Shink V. Bobeson, 513 Skilding v. Warren, 716 Shipp V. Stacker, 313 Skillman v. Titus, 706 Shippey v. Henderson, 63 Skinner v. Church, 349, 363, 434 Shipton V. Casson, 275 V. Jones, 613- Shirley v. Howard, 165 V. Moore, 476 V. Sankey, 95 Skip V. Huey, 629- Short V. Coffeen, 387 Skofield V. Haley, 541 554, 558 V Trabue, 388, 414 Slack V. Kirk, 500 Shorlrede v. Cheek, 551 V. McLagan, 8- Shreeves v. Allen, 696, 721 Slacum V. Pomeroy, 383 Shrevport v. Gooch, 260 Slagle V. Bust, 386 Shriver v. Lovejoy, 580 Slater v. West, 689' Shute V. Bobins, 189 192, 193 Slayback v. Jones, 601 Shuttleworth, Ex parte, 349 392 393, 450 Slevin v. Morrow, 462 Sibley v. McAUaster, 619 Sloan V. Union Banking Co ,699,721,72a T. Muskegon Nat. Bank, 494 Small V. Clewley, 178 V. Stull, 554, 558 V. Jones, 89' V. Van Horn, 502 504, 515 V. Older, 580- Sice V. Cunningham, 189 V. Sloan, 506, 531 Sidford v. Chambers, 360 V. Smith, 46, 379, 716. Sigell V. Jebb, 97 Smalley v. Doughty, 115 Siggers v. Nichols, 258 V. Wight, 446 Sigoumey v. Lloyd, 365, 366, 368, 703 Smallwood v. Vernon, 298, 384 V. Wetherell, 569 V. Woods, 609- Sikes, In re. 268 Smarr v. Schnitter, 647 Sill V. Leslie, 500, 508, 512 Smith V. Abbot, 248, 254r V. Bood, 9 V. Abbott, 251 Silliman v. Fredericksburg, Ac, E. V. Ackerman, 133, 134 E. Co., 711 V. Applegate, 59, 8T CASES CITED IN VOLUME TWO. Ivii Smith V. Bainbridge, 555, 560 Smith V. Pearson, 4^:0 V. Bartholomew, 629 V. Pickering, 450 V. Bank of New South Wales, 190 V. Popular Loan, &c. , Assn., 724 T. Becket, 347 •V. Kawson, 162, 293, 679 V. Blatohford, 481 V. EichaWs, 33, 101 V. Boruff, 62 V. Sac County, 723- V. Bovier, 100 T. Schanck, 430 T. Bromley, 92 V. Shelden, 624, 645, 6«6 V. Brooks, 156 V. Smith, 77, 467 V. Brown, 235, 237, 244, 245 V. Steele, 658. V. Caro, 310, 434 V. Strong, 711 V. Carter, 175, 438 V. Taylor, 22 V. Caldwell, 603 V. Turney, 326 V. Chester, 262, 265 V. Union Bank of London, 700 V. Childress, 436 V. Van Loan, 2a T. Clarke, 344 357, 474 V. Vertue, 251 V. Clopton, 326 V. Ware, 6T V. Columbus State Bank, 164 V. Winter, 649, 657 V. Cultoii, 696 V. Wood, 252 V. Dann, 523 V. Wyckoff, 43- T. Day, 635 Smock V. Pierson, 156 V. De Witts, 27, 29, 268 Smurr v. Forman, 298- V. Doty, 174 Smyley v. Head, 593 V. Edgeworth, 179 Snaith v. Mengay, 307 V. Erwin, 409 Snee v. Presoott, 364, 366, 368 V. Ferry, 325 Sneed v. White, 605, 609 610, 623, 656 V. Finch, 505, 546 Snellgrove v. Baily, 16, 468 V. Foster, 479 Snelling v. Boyd, 302 V. Frye, 436, 541 Snevily v. Ekel, 535 V. Goff, 525 V. Johnston, 526 V. H»le, 454 V. Peed, 63, 64 V. Harlow, 693 Snow V. Peacock, 396, 688 V. Harper, 623 Snyder v. Hargus 9 V. Hiscock, 12, 163 311 678, 684 V. Hummel, 350 V. Hogeland, 27 V. Kurtz, 10 V. Hyde, 654 V. Oatman, 298, 434, 499, 508, 509 V. Ide, 551 V. Reno, 398 V. Irwin, 608 V. "Riley, 315, 326 T. Isaacs, 31, 684 V. Willey, 84, 129 V. Ives, 171 548, 549 Snyderbottom v. Smith, 425 V. James, 638 Soares v. Glyn, 364 T. Johnson, 305 Sohier v. Loring, 422, 423, 633 V. Kendall, 298, 366 Solarte v. Melville, 112 V. Kennebec, 476, 489 Solly V. Hinde, 131, 139, 154 V. Kessler, 510, 513 Solomon V. Gregory, 409, 656 V. Kittridge, 14 172, 467 Solomons v. Turner. 145 V.Knox, 45, 168 260,267,816,418, V. Bank of England, 457, 689, 621 647, 715 721 V. Lawson, 312, 679 Somerville v. Brown, 484 V. Livingston, 723 Somersworth Sav. Bank v. Worcester, 609- V. Lockridge, 26, 215 Sorrells v. McHenry, 50 V. Long, 406 Boule v. Bonny, 83 V. Marsack, 264, 361 v. Shotwell, 2& V. Martin, 177 178, 725 South Boston Iron Co. v. B ■own, 34 V. McNair, 398 Suuthall V. Rigg, 66, 128, 148 V. Mo Waters, 130, 405 Southard v. Porter, 313, 327, 444, 679 v. Mercer, 392, 397 Southerland v. Southerland 465 V. Miller, 184, 279 V. Whitaker, 595 V. Milton, 214, 225 Southwick V. First Nat. Bank, 686 V. Morrill, 386, 433 Sowerby v. Butcher, 33 V. Muncie Hat. Bank } 112, 269 Spalding v. Vandercook, 133, 147 V. Nevlin, 325 Sparrow v. Chisman, 42, 159, 160, 254, V. Nissen, 226 268. Iviii CASES CITED IN VOLUME TWO. Spaulding v. Andrews, 223, 227 PAGE. 228, 240 Stark V. Alvord, PAQB. 274 V. Davis, 116 Starlings v. Kions, 170 V. McKay, 215 Star Wagon Co. v. Swezy, 526, 559, 561, V. Putnam, 494, 512 570 Spear v. Fuller, 50 Fire Ins. Co. v. New Hampshire V. Myers, 29 Bank, 397 V. Pratt, 227 Starr y. Torrey, 131 145, 167 Spencer ,v. Ballou, 41 Starret y. Biirkhalter, 651 V. Blaisdell, 489 State V. Bank of Washington, 448 V. Tilden, 120 V. Burton, 476 Spering's Appeal, 456, 700 V. Cobb, 702 Sperry v. Spaulding, 179, 721 722, 723 V. Loomis, 336 Speyers v. Lambert, 549 V. Mc Williams, 494 Spicer v. Norton, 548, 549 Bank v. Ayres, 65 V. Smith, 428 V. Fearing, 397 Spies V. Gilmore, 497 V. Hurd, 428 V. Eoberts, 137 V. McCoy, 682 Spiller V. Westlake, 140, 153 V. Watkins, 616 Spitz V. Fourth, 65 V. Wilson, 408, 418 Splivallo V. Patten, 167, 714 of Missouri v. Mo Williams, 438 Spooner v. Gardiner, 51 Saving Association v. Boatman's V. Holmes, 677 Savings Bank, 280 Sprague v. Graham, 313 Savings Association v Hunt, 453, 676 V. Hosmer, 230 Stead v. Liddard, 551 Sprigg V. Bank of Mt. Pleasant, 597, 638 Steadwell v. Norris, 161 Springer v. Hutchinson, 532 Steckel v. Steckel, 659 V. Toothaker, 634, 636 Stedman v. Carstairs, 26 Springfield Bank y. Merrick, 104 V. Jillson, 319 Ins. Co. V. Peck, 282 Steele v. Dixon, 663 Sproat V. Matthews, 228 248, 250 V. Harmer, 277, 381 Sproule y. Merrill, 81 V. McKinlay, 223 Sprowl V. Simpkins, 293, 294 V. Souder, 602 Spurgin v. McPheeters, 46 Steere v. Benson, 455 Spurrett v. Spiller, 90 Steers y. Lashley, 98, 167 Spyker v. Hart, 130 Stein V. Passmore, 495 Squier y. Stockton, 359 V. Yglesias, 217, 316 Squires y. Whisken, 95 Steinhart v. Boker, 691 Staats V. Hewlett, 528, 551 Steman v. Harrison, 219 238, 242 Stack V. Beach, 434 Stephens, Ex parte. 532 Stackpole v. Earle, 79 V. Foster, 696 Stacy V. Kemp, 133 V. Lanier, 177 Stadt y. Lill, 551 V. Monongahela Nat. Bank, 44, Staflford V. Anders, 135 437 V. Bacon, 63 V. Spiers, 61,64 V. Fargo, 313, 315 V. Thacker, 276 Stagg V. Linnenfelser, 304, 504 V. Wilkinson, 156 Stainback v. Bank of Virginia, 186 V. Winn, 552 St. Albans Bank v. Dillon, 81 Sterling v. Marietta, 409 Staley y. Matheny, 318 V. Sinnickson, 88 Stalker y. McDonald, 29, 32 Sternberg v. Provost, 59 Stall V. Catskill Bank, 41 Sternburg v. Bowman, 93 Stallings v. Bank of Americas, 425, 634 Sterne v. McKinney, 628 Stamper v. Hayes, 312 V. Tallis, 428 Stanford v. Davis, 150 V. Vincennes Bank, 628 Staniland v. Willott, 464 Stettheimer v. Myer, 24 Stanley v. Farmers' Bank, 405 Steuben County Bank v. Matthewson, 82 Stannus v. Stanous, 313, 319 Stevens v. Alexander, 413 Stanton y. Allen, 89 V. Androscoggin Water Co.,. 255 V. Maynard, 153 v. Campbell, 24, 30, 31, 684 Stapler v. Burns, 435, 436 V. Corn Exch. Bank, 24, 285 Starey v. Barnes, 388 V. Lynch, 656, 657 Staria v. Town of Genoa, 712 V. Stevens, 465, 466, 467 Stark V. Alford, 137 V. West, 664 CASES CITED IN VOLUME TWO. lix Stevenson v. Edwards, PAGE. 35 V. Heyland, 686 V. Hyland, 28 V. O'Neal, 363, 703 Stewart v. Ahrenfeldt, 64 V. Anderson, 155 V. Bosley, 74 V. Bramhall, 113, 402 V. Eden, 422, 631 7. Hidden, 59 V. Insall, 140 y. Lansing, 723 V. Parker, 656 V. Small, 27 V. Smith, 325 V. Street, 169, 170 V. Vaughan, 667 V. West, 484 Stickney v. Jordan, 111 V. Mohler, 52 Stiles 7. Easman, 578 Stillwell V. Aaron, 69, 582, 652, 654 V. How, 385 Stimson v. Whitney, 710 Stinson v. Brennan, 668 Stirewalt v. Martin, 632 Stirling v. Forester, 629 St. John V. Roberts, 311 St. Joseph, &c., Ins. Co. v. Hauck, 69, 419 652 St. Louis Stock Yards v. O'Eeilly, ' 229 St. Maries v. Polleys, 653 Stockdale v. Onwhyn, 101 Stockwell V. Bramble, 217, 228 Stoddard v. Kimball, 12, 31, 332, 455, 684 V. Penniman, 494 Stone V. Compton, 93, 597 V. Dean, 477 V. Elliott, 719 V. Fowle, 142 V. Hooker, 126 V. Peake 133 v! Eocke'feller, 539, 564, 565 V. Smith. 336 V. White, 3 V. Young, 162 Stoney v. Beaabien, 492 Stookey v. Hughes, 176 Stoops V. Wittier, 603 Storer v. Logan, 227, 229, 237, 238, 242 V. Millikin, 597 Storms V. Thorn, 604, 640 Story V. Lamb, 299 Stotts V. Byers, 685 Stoudenmire v. Ware, 34 Stoughton V. Kilmorey, 173 Stout V. Stevenson, 556 Stoutenburgh v. Lybrand, 88 Stovin V. Taylor, 269 Stowell V. Raymond, 503 V. Richardson, 388 StraflTord Bank v. Crosby, 607 County V. Jackson, 60 paoe;. Strahn v. Hamilton, 50 Straker v. Graham, 188, 189, 191, 194 Strange v. Ellison, 396 V. Wigney, 689 Straughan v. Fairchild, 687 Streever v. Bank of Fort Edward, 421 Streit V. Sanborn, 165 Strickler v. Burkholder, 613 Strohecker v. Cohen, 228, 240 Strong V. Foster, 588, 636 V. Riker, 496, 507 V. Strauss, 705 • V. Wright, 33 Struthers v. Blake, 408 V. Kendall, 27 Stuart V. Greenleaf, 326 Stubbs V. Goodall, 440 Stuber v. Schack, 69, 420, 651 Studebaker v. Cody, 558 Mfg. Co. V. Dickson, 714 Stumps V. Cooper, 387 Sturges V. Bank of Circleville, 524 V. Fourth Nat. Bank, 323 V. Metropolitan Nat. Bank of N. Y.. 690 V. Miller, 163, 446, 679 Sturtevant v. Ford, 47, 316 V. Randall, 386, 496, 508 Stutsman v. Thomas, 169 Suokley v. Furse, 74, 623 Sugars V. Brinkworth, 107 Sullivan v. Collins, 62, 67 V. Langley, 723 V. Violett, 494 Sully V. Goldsmith, 12, 682 Summerhill v. Tapp, 583, 608 Summers v. Hutson, 295 Sumner v. Brady, 92 V. Gay, 494 V. Summers, 82, 84 Sumter v. Welsh, 140, 143 Sumwalt v. Ridgely, 33 Sarghnor v. Beauchamp, 374, 375 Suse V. Pompe, 405 Susquehanna Bridge Co. v. Evans, 433 Valley Bank v. Loomis, 397 Sutton v. Owen, 296, 300 V. Toomer, 182 Suydam v. Bartle, 120 V. Combs, 261 V. Vance, 648 V. Westfall, 120, 261, 578, 579, 591 Swaine v. Ware, 665 Swan V. Chandler, 82, 86 V. Cox, 253, 256 Ex parte, 316 V. North British Company, 692 V. Steele, 699 Swank v. Nichols, 154 Swansey v. Breck, 251, 256 Swanzer v. Mayberry, 50 Swanzey v. Parker, 398 Ix CASES CITED IN VOLUME TWO. Swartout v. Payne, PAQK. 113 Taylor v. Newman, PAQB. 249' Swartz V. Kedfield, 311 V. Page, 165 Swarlz's Appeal, 100 V. Patrick, 61 Swayze v. Hull, 79 V. Pickett, 129^ Sweeney v. Easter, 367 V. Reese, 443, 448 Sweet V. Chapman, 12 V. Eeynolds, 663 V. McAllister, 385 V. Eoss, 557 Sweeting v. Halse, 273, 274 V. Scott, 636 Sweetzer v. French, 161 ,298 299, 347 V. Soper, 562 Swett V. Hooper, 726 V. Surget, 432 Swift V. Beers, 104, 527 V. Taylor, 281 V. Crocker, 666 V. Turley, 78 V. Fletcher, 424 V. Wetmore, 524, 533 V. Smith, 721 Teague v. Perry, 98 V. Tyson, 28 686, 721 Temple v. The People, 412, 426 Swope V. Jefferson F. Ins. ao.. 83 Templeton v. Poole, 701 V. Ross, 208, 223 Tenant v. Tenant, 616 Sykes v. Columbus, 711 Ten Eyck v. Vanderpoel, 34 Sylvester v. Crapo, 167 Tenney v. Foote, 100, 165 v. Downer, 496 506, 514 V. Price, 3 V. Stapler, 257, 269 V. Prince, 504, 511 Syme v. Brown, 385, 579 Terry v. Allis, V. Bissell, V. Hickman, 444 396, 398 145 T. V. Olcott, V. Eagsdale, 177 170 Taber v. Cannon, 213 Texas v. Hardenberg, 311, 313 Taft V. Montague, 134 Banking Co. v. Turnley, 430 Taggart v. Eice, 163 thacher v. Dinsmore, 36 Talamon v. Myers, 429 Tharp V. Parker, 640 Talbot V. Gay, 556, 561 Thatcher v. West Eiver Nat. Bank, 45, 715 Tallis V. Tallis, 90 Thedford v. McClintock, 74 Tallmadge v. Wallis, 131 Theed v. Lovell, 359 Talmage v. Williams, 236 Thetford v. Hubbard, 79 Tappan v. Ely, 364 Thiedmann v. Goldschmidt, 162, 163 Tarbell v. Sturtevaut, 163, 455 Thielman v. Gueble, 389 Tarleton v. Southern Bank, 76 Thimbleby v. Barrow, 422 Tassell v. Lewis, 300, 384, 626 Third Nat. Bank v. Blake, 70 Tassey v. Church, 252 V. Clark, 367, 436 Tate V. Hilbert, 13, 162, 218, 467, 468 V. Harrison, 100, 159 Tatum V. Bonner, 538 V. Lange, 704 V. Kelly, 75, 164 V. Nat. Bank, 366 Taunton Bank v. Eichardson, 440 V. Tinaley, 100 , 165, 699 Taylor v. Allen, 26 Thomas v. Bishop, 254 V. Atchison, 694 V. Davis, 560, 562 V. Beck, 611 V. Dodge, 546, 547 V. Binney, 431, 531, 533 v. Jennings, 496 V. Briggs, 394 V. Kinsey, 311, 313 v. Bruce, 11 V. Newton, 179 V. BuUen, 563 V. Ruddell, 678 V. Burgess, 583 V. Stetson, 643 V. Croker, 264 V. Todd, 395 V. Crowland Gas Co } 106 V. Watkins, 159 V. Dansby, 60, 592 V. Woods, 566 V. Davis, 618 Thompson v. Armstrong, 178 V. French, 433 V. Boden, 642 V. Gillean, 474 v. Brown, 476, 639 V. Hare, 10 V. Clubley, 42, 159 V. Heriot, 614 V. Davies, 89 V. Jaques, 84 V. Emery, 445 V. Lohman, 591 v. Glover, 524 V. Mather, 168, 315, 723 V. Gray, 26,39 V. McCune, 500, 513, 515 v. Hale, 168 313, 710 CASES CITED IN VOLUME TWO. Ixi Thompson v. Hanson, PAGE. 51 y. Hodgson, 463 V. Mansfield, 134 V. Maagh, 35 V. McClelland, 296 V. McCuUough, 398, 399 V. Milligan, 97 V. Percival, 274 V. Poston, 46, 687 V. Shelby, 478 V. Shepherd, 47, 168, 311, 379 V. Taylor, 583 V. Thompson, 56, 666 V. Wharton, 58 V. Wheeler Mfg. Co., 146 Thomson v. Bank of British North America, 280, 284, 285 Thornburg v. Harris, 76 Thorne v. Youtz, 80, 164 Thornton v. Crowther, 448 V. Wynn, 147 Thoroaghgood v. Clark, 318 Thorpe v. Booth, 182 V. White, 67 Thorton v. Dick, 271 Thrall v. Horton, 135 V. Newell, 403 Thrasher v. Ely, 557, 562 Thurman v. Van Brunt, 267 Thivsby V. Gray, 605 Thurston v. James, 625, 644, 646 V. M'Kown, 313 Ticonic Bank v. Smiley, 362, 403 Tiddy v. Campbell, " 419 Tiernan v. Jackson, 222 V. Woodruff, 641 Tift V. Phcenix Ins. Co., 150 Tilden v. Barnard, 698 V. Blair, 164, 681 Tiller v. Shearer, 493 Tillinghast v. Wheaton, 466 Tillman v. Ailles, 293, 391 V. Walkup, 333 V. Wheeler, 501, 513 Tillotson V. Grapes, 150 V. Eose, 602 V. Tillotson, 112 Timmins v. Gibbins, 393 Tindal v. Brown, 189, 639 Tinker v. McCauIey, 539, 5&1, 558 Tinkum v. Duncan, 554 Tinson v. Francis, 47, 312, 314, 316 Tipton V. Carrigan, 619 Tirrell v. Canada, 474 Titcomb v. Thomas, 447 Titus V. Seward, 413 Tobey v. Ellis, 422, 633 Tobler v. Stubblefield, 51 Tod V. Wick, 682, 714 Todd V. Bank of Kentucky, . 207, 258 V. Shelbourne, 684 Tompkins v. Little Eock Ey. Co., 397, 401 V. Tigner, 156 PAGB. 90 145 426 80 165 160 Took V. Tuck, Tooke V. Bonds, V. Taylor, Tool Co. V. Norris, Torbett v. Worthy, 23, Torinus v. Buckham, Torrance v. Bank of British North America, 269 Torienoe v. Alexander, 586 Totten V. Bucy, 723, 725 Totteridge v. Mackally, 81 Tower v. Eichardson, 163 Towles V. Towles, 36 Town of Eagle v. Kohn, 165 Middleport v._JEtna Life Ins. Co., 711 South Ottawa v. Perkins, 713 Towne V. Eipe, . 116 Townsend v. Bank of Eacine, 394 V. Corning, 118 V. Cowles, 519 V. Derby, 169 V. Eiddle, 608 Township of East Oakland v. Skin- ner, 713 Townsley v. Sumrall, 181, 228, 243, 267 Trabue v. Short, 383 Traoey v. Town of Phelps, 723 Tracy v. Quillen, 642 V. Talmage, 126 Trader v. Chidister, 725 Traders' Bank v. Bradner, 30 Trafford v. Hall, 319 Train v. Jones, 524, 554 Trammell y. Swan, 595 Trask v. Vinson, 54 Traver v. Stevens, 53, 154 Treadway v. Cobb, 176, 342, 427 V. Schnauber, 711 Treadwell v. Archer, 113 V. Commissioners, &c., of Hancock Co., 714 Treat v. Gilmore, 388 V. Smith, 655, 656 Tredwell v. Blount, 326 Trego V. Lowrey, 266 Trent Navigation Co. v. Harley, 605, 638 Treuttel v. Barandon, 849, 366, 368, 703 Trickey v. Larne, Trirabey v. Vignier, Trimmer v. Oddy, Trist V. Child, Trotter v. Curtis, Trovinger v. McBurney, Troy City Bank v. Lauman, True V. Fuller, V. Harding, V. Triplett, Trueman v. Fenton, Truesdell v. Thompson, Trumball y. Tilton, Trust Co. V. Nat. Bank, Trustees v. Hill, 6, 136, 149 343, 383 271 80 120 101 257 532 536, 556 381 63 293, 430 63 342, 389, 518 32, 51, 177 Ixii CASES CITED IN VOLUME TWO. Trustees of Iowa College v. Orphan School ing, Tryon v. De Hay, Tucker t. English, V. Horner, V. Jenckes, V. Morrill, V. Eobarts, V. Eouk, V. Smith, V. Tucker, V. Wilson, Tuckerman v. French, Tudor V. Goodloe, Tufts V. Shepherd, Turck V. Eichmond, Tumbull V. Bowyer, V. Brock, Turnley v. Black, Turner v. Armstrong, V. Browder, V. Da vies, V. Hale, V. Hayden, V. Hulme, V. Keller, V. O'Neal, v. Eogers, V. Stones, V. Treadway, V. Vaughan, V. Williams, Turpin v. Thompson, Tuton V. Thayer, Tuttle V. Bartholomew, V. Becker, Twogood, Ex parte. Twopenny v. Young, Tye V. Gwynne, Tyler v. Busey, V. Givens, V. Gould, V. Stevens, v. Young, Tyree v. Lyon, u. Ulen V. Kittridge, 503, 504, 553 Ulmer v. Eeed, 590 Ulster County Bank v. McParlan, 235, 238, 241, 522 Union Bank v. Barber, 27 V. Carr, 356 V. Coster, 525, 526, 546, 564 V. Fowlkes, 197 V. Philips, 429 V. Koster, 559 V. Eoss, 169 V. Eyan, 723 V. Willis, 3, 187, 491, 494, 496 PAGB. Hill, 692 V. Flem- 16, 177 540 301 76 168 179 265 62,87 168 447 458 525 653 43, 113 123 . 396, 397 69, 420, 651 432 478 46, 260, 267 660 614 258 65 398 63 55 393 27, 686 101 643 463, 466, 467 519, 563 342, 532, 539 430 346 274, 625 6, 134, 136 169 553 209, 280, 282 546, 547 310, 311 709 Union Ins. Co. v. Eodd, 406 Nat. Bank v. Cooley, 424 ,634 635 V. Lee, 407 V. Oceana Co. Bank, 281 V. Eoberts, 455 V. Underbill, 709 Trust Co. V. Eigdon, 461 United States v. Bank of the Metropo- lis, 162,212, 253, 255, 266 708 V. Barker, 73, 190, 194, 350, 358 V. Nelson, 590 V. Simpson, 605 V. Vermilye, 701 V. White, 381 Universal Permanent Building Soc. v. Kilpatrick, 244 Unseld v. Stephenson, 319 Updegraft v. Edwards, 372 Upham v. Prince, 519, 531 Upshaw V. Booth, 51 Usher v. Dauncey, 307 Usry V. Saulsbury, 388 Uther V. Eich, 369, 396 Utica Ins. Co. v. Caldwell, 104 V. Tilman, lis V. Vairin v. Hobson, 690 Valentine v. Farrington, 612 V. Foster, 64 V. Holloman, 325 Valette v. Mason, 684 Vall4 V. Cerr^, 235, 241 Vallett V. Parker, 103, 163, 723, 724 Valley Nat. Bank v. Meyers, 583 Van Allen v. American Nat. Bank, 281 Van Alstyne v. Sorley, 260, 575, 576 Van Amee v. Jackson, 473 Van Bibber v. Bank of Louisiana, 281 Van Buskirk v. Day, Vance v. Ward, Vancil v. Hagler, Vandercook v. Baker, Vanderveer v. Wright, Van Diemans Bank v. Victoria Bank, 216 Vaii Doren v. Tjader, 502, 510, 515 Vandyck v. Hewitt, 106 Van Eman v. Stinchfleld, 428, 432, 449 Van Etten v. Trbudden, 645 Van Hoesen v. Van Alstyne, 310, 311 Van Orden v. Van Orden, Van Ostrand v. Eeed, Van Patton v. Beals, Van Eeimsdyk v. Kane, Van Eiper v. Baldwin, Van Staphorst v. Pearce, Vantrot v. MeCuUoch, 188, 189, 190 Van Valkenburgh v. Stupplebeen, 433 439 235 614 372 14, 64, 535, 567 56,88 10 27 214, 227 444, 448 384 CASES CITED IN VOLUME TWO. Ixiii PAGE. Van Wart v. WooUey, 183, 393, 557 Vastine v. Wilding, 432 Vanzant v. Arnold, . 342, 410, 518 Varnum v. Mauro, 139 V. Milford, 648 Vary v. Norton, 580, 586, 640, 642, 650, 654 Vatterlein v. Howell, 457, 458 Vaughan v. Dean, 251, 254 Veach v. Thompson, 510, 534 Veal V. Veal, 466, 467 Veazie v. Carr, 418, 651 V. Willis, 523 Veeder v. Lima, 712 Vere v. Lewis, 266 Verley v. Saunders, 315 Vermilye v. Adams Exp. Co., 719 Verplank v. Sterry, 55 Vert V. Voss, 672 Vickney v. State Sav. Assn., 367 Vickroy v. Pratt, 51 Vila V. Weston, 324 Vilas V. Jones, 654 Villars v. Palmer, 602 Vinal V. Richardson, 559 Vincent v. Groom, 82 V. Horlock, 349 Vining v. Bricker, 108 Vinton v. King, 315 V. Peck, 681 Violett V. Patton, 41, 307, 409, 528 Vogel V. Melins, 546 Voinche v. Villemarette, 77 Voltz V. Harris, 559 Von Phul V. Sloan, 241 Von Windisch v. Klaus, 85 Voorhees v. Woodhull, 467 Voorhies v. Atlee, 567 Vose V. Handy, 336 V. Hurst, 499, 509 Voss V. German Am. Bank, 636 Vredenburg v. Lagan, 41 w. Wade v. Guppinger, 328 V. Killough, 144 V. Staunton, 625 V. Wade, 362 Wadleigh v. Bevelling, 148 Wadsworth v. Allen, 525, 561 V. Sharpsteen, 719 Wagner v. Diedrich, 697 Wain V. Warlters, 215, 548, 550, 552 Wainwright v. Bridges, 130 V. Webster, 394 Wait V. Day, 101 Waiie V. Poster, 361 Wakefield v. Greenhood, 238 Wakeman v. Gowdy, 462 Walan v. Kerby, 124 Walbridge v. Arnold, 58 Walbridge v. Harroon, V. Kibbee, Waldron v. Harring, V. Young, Wales V. Webb, Walker v. Atwood, V. Bank of State of V. Davis, V. Ducros, V. Forbes, V. Geisse, V. Jeffries, V. Johnson, V. Kee, V. Krebaum, V. Lide, V. Macdonald, V. Perkins, V. Schreiber, V. Sherman, V. Smith, V. Stetson, V. Walker, V. Wigginton, Wall V. Bry, Wallace v. Agry, 182, 188, V. Bank of Mobile, V. Branch Bank, V. Goold, V. Hardacre, V. Lark, V. McConnell, V. Keed, , V. Souther, Wallesklare v. Searles, Walmsley v. Child, Walnut V. Wade, Walpole V. Pulteney, Walrath v. Thompson, Walsh V. Blatchley, V. Dart, Walter v. Ford, Walters v. G. H., &c., Co., V. Smith, Walton V. Masoall, V. Williams, Walwyn v. St. Quentin, Walz V. Alback, Ward V. Allen, V. Byrne, V. Evans, V. Fryer, V. Haggard, V. Perrigo, V. Turner, V. Vass, V. Whitney, V. Wick, Wardell v. Howell, Warder v. Tucker, Wardrop v. Dunlop, PAGE. 6» 318 632 59a 115- 256. New York, 183, 213 325 130 560' 703 75 108 373, 710 342. 228 344 101 37^ 39, 175, 266 134 182 55 410 439 189, 191, 193 179 41 389, 390, 503 82,86 75 258 428 585 613 292 293 276 522 185, 193 189, 190, 193 468 228 176 554, 557 214, 387 606, 626, 643, 650 494 223, 228, 263 90 394 562 441 176. 464 609 599 583, 643 32, 723 65 44a Ixiv CASES CITED IX VOLUME TWO. Ware V. Adams, V. City Bank, V. Morgan, v. Bussell, V. Street, PAGE 3,527 385, 410 159 374, 460 394 Wareham Bank v. Lincoln, 161, 299, 347 Waring v. Edmonds, 468 Wartie v. Kendall, 483 Warner v. Beardsley, 612 V. Crouch, 9 Warren v. Branch, . 595, 596 V. Campbell, 652 V. Chapman, 130 V. Crabtree, 114 V. Durfee, 15, 468 V. Haight, 318 V. Scott, 293, 295 V. Whitney, 63 Warrensburg Building Association v. Zoll, 285, 634 Warring, Ex parte, 374 Warrington v. Furbor, 554, 557 Warwick v. Nairn, 136 V. Rogers, 272 Washband v. Washband, 48 Washburn v. Picot, 133 V. Ramsdell, 325 Washington v. Hobart, 337 Bank v. Krum, 44, 45, 456 V. Shurtleff, 530 Waterbury v. Sinclair, 500, 511 Waterhouse v. Kendall, 53, 55, 154 Waterman v. Barratt, 60 V. Clark, 601 Water Power Co. v. Brown, 437, 583, 668 Waters v. Simpson, 590, 638, 650 Watervliet Bank v. White, 335, 357 Waterville Bank v. Bedington, 574 Watkins v. Cason, 483 V. Hewlett, 102 V. Kirkpatrick, 505, 507 V. Maule, 312, 317, 325, 449, 450 Watkinson V. Root, 118 Watson V. Alcock, 607 V. Cabot Bank, 700 V. Cheshire, 362, 402 V. Flanagan, 164, 325, 326, 677 V. Fletcher, 81 V. Hahn, 410 V. Hurt, 503 V. McLaren, 533 V. Poague, 622 V. Randall, 527, 548 V. Reynolds, 36 V. Russell, 53, 149, 685 Watt V. White, 373 Watts V. Jefferies, 487 V. Shuttleworth, 631 Way V. Butlerworth, 491, 494, 503, 509 V. Lamb, 314, 319 V. Sperry, 62 Waymack v. Heilman, 23 Waymell v. Reed, 103 PAGB. Waynam v. Bend, 292, 293, 294, 428 Wayne Agricultural Co. v. Cardell, 591, 597 Weare v. Sawyer, 591 Weaver v. Barden, 12, 27 V. Waterman, 91 Webb V. Brooke, 73 v. Hewitt, 658 V. Hears, 208, 227 V. Smith, 79 Webster v. Bainbridge, 25 V. Calden, ' 326 V. Cobb, 491, 503, 505 V. Lee, 326 V. MuQger, 127 V. Sanborn, 72 Wedlake v. Hurley, 270 Weed V. Carpenter, 428 V. Clark, 527, 550 Weeks V. Gogerly, 114 V. Mcdler, 448, 449 Wegerslosse v. Keene, 256 Weinstock v. Bellwood, 209, 282, 284 Welch V. Carter, 9 V. Lindo, 359, 361 V. Sage, 695 Weller v. Hawes, 557 Wells V. Brigham, 229, 253 V. Claflin, 411 V. Davis, 525, 570 V. Girling, 428 V. Hopkins, 131, 139, 148 V. Jaekaon, 507, 512 V. Morrow, 373 V. Tucker, 16, 464, 468 Welsh V. Carter, 138 V. Ebersole, 437, 503, 507 Welt6n V. Scott, • 299 Wendling v. Taylor, 650 Wennall v. Adney, , 62 Wesleyan Seminary v. Fisher, 16 West V. Cavins, 13 I Boston Sav. Bank v. Thompson, 305 London, &c., Bank v. Kitson, 213 Westerlo v. DeWitt, 468 Western Building Assoc, v. Wolff, 496, 515 Westervelt v. French, 645 Westfall V. Braley, .394 Westmoreland v. Foster, 373 Weston V. Hight, 331, 386, 466 Wetter v. Kiley, 297 Wetzel V. Sponsler, 613, 614 Whaley v. Payot, 96 Wharton v. Walker, 209 Whately v. Tricker, 276 Wheat V. Kendall, 654 Wheaton v. Wilmarth, 35 Wheeler v. Bailey, 81 V. Barret, 312 v. Emerson, 373 V. Lewis, 567 V. Maillot, 721 CASES CITED IN VOLUME TWO. Ixv Wheeler v. Newbould, 452, 459 V. Slooumb, 68 V. Standley, 140 V. Washburn, 651 V. Webster, 212, 227 V. Wheeler, 332 Wheelock v. Barney, 6 Wheelwright v. Sylvester, 61,81 Whilden v. Merchants', &e., Bank, 183, 229, 231, 242 Whipple V. Powers, 120 Whistler v. Forster, 444, 446, 449, 450 Whitacre v. Culver, 135 Whitaker v. Edmunds, 162 V. Kirby, 559, 622 V. The Bank of England, 270 V. Whitaker, 14 White V. Case, 563 V. Continental Nat. Bank, 263, 285, 286, 397 V. Heylman, 57, 296 V. Howland, 545 V. Joy, 293 V. Kibling, 718 V. Low, 298 V. Miners' Nat. Bank, 366, 436 V. Piatt, 454 V. Springfield Bank, 52 V. Van Horn, 580 V. Weaver, 325, 493, 503, 504 V. Webster, 404 v. White, 527 V. Wright, 120 V. Yarbrough, 99 Whiteford v. Burckmyer, 350 Whitehead v. Walker, 168, 308, 318, 319 Whitehouse v. Hanson, 384, 575, 669 Whiteman v. Childress, 30i, 492 v. Harriman, 663 Whitenack v. Ten Eyck, 58 Whitesides v. McGrath, 98 Whitfield V. Fulford, 23 v. Kiddle, 23 Whiting V. Burke, 659 V. Western Stage Co., 418 Whitney v. Allaire, 147 V. Bunnell, 262 V. Eliot Nat. Bank, 283 V. Groot, 529 V. Potsdam Nat. Bank, 398 Whiton V. Mears, 538, 559 Whittaker v. Charleston Gas Co., 372, 452, 454, 458, 461 v. Edmunds, 177, 178 V. Kuhn, 314, 318 Whitten v. Wright, 405 Whittier v. Eager, 51 V. Graffam, 196 Whittmer v. Ellison, 641 Whitwell V. Crehore, 160, 316 Whitworth v. Carter, 158, 593 Wickersham v. Altom, 411 V. Jarvis, 431 PAGE. Wicks V. Branch Bank, 478 Widoe V. Webb, 123, 129 Wiffin V. Roberts, 12, 45, 159, 166, 168, 455, 685 Wiggin V. Bush, 92 V. Damrell, 296, 445 Wiggins V. Cleghorn, 137 V. Keizer, 64 Wilbour V. Turner, 293, 429 Wilcox V. Beat, 215 V. Draper, 524 V. Howland, 69 V. Turner, 304 Wilcoxen v. Logan, 448 Wild V. Howe, 654 V. Eenwards, 258 Wilder v. Cowles, 399 V. De Wolf, 294, 349, 408 Wilders v. Stevens, 34, 361 Wildes V. Nahant Bank, ' 475 V. Savage, 219, 241, 243, 525, 560 Wiley V. Howard, 140 Wilkie V. Koosevelt, 115 Wilkins V. Casey, 218 V. Eiley, 84, 129 Wilkinson v. Cook, 158 V. Dodda, 121 V. JeSers, 319 V. Johnson, 247, 262, 271, 272, 357 V. Lutwidge, 252, 262 V. Sargent, 326 V. Unwin, 389 Willets V. Phtenix Bank, 284 Willey V. Gatling, 448 Williams v. Banks, 51 V. Bosson, 43 V. Boyd, 583, 653, 657 V. Cheney, 31 V. Clarke, 361 V. Connor, 177 V. Drexel, 262, 265 V. Everett, , 270 V. Field, 384 V. Granger, 527, 554, 558, 563 V. Hicks, 10, 173 V. James, 322 V. Jensen, 652 V. Lake, 553 V. Little, 28, 457 V. Matthews, 309, 311, 345, 349 V. Nesbit, 413 V. Nichols, 35 V. Norton, 337 V. Obat, 389, 414, 501, 515 V. Osbon, 413, 427 V. Osborn, 442 V. Perkins, 4, 598 V. Potter, 358, 366 V. Scott, 652 V. Shepherd, 482 V. Smith, 12, 94, 357, 386, 420, 456, 685 5 Ixvi CASES CITED IN VOLUME TWO. FAQS. Williams v. Stewart, 167 V. Tishomingo Savings In- stitute, 396, 397, 400 V. Wade, 383 V. Walker, 33 V. Warnell, 135 y. Williams, 75 V. Winans, 217, 218, 221, 229 Williamson v. Brown, 691 V. Doby, 311, 315 Williard v. Moies, 448 Willing V. Peters, 63 Willis V. Barber, 177 V. Green, 500 V. Johnson, 76 V. Twombly, 297 Willison V. Patteson, 73 V. Whitaker, 647, 650 Willson V. Binford, 392, 609 Wilson V. Albright, 473 V. Allen, 672 V. Binford, 401 V. Black, 434 T. City of Shreveport, 711 V. Clements, V. Codman, V. Foot, V. Green, V. Hentges, V. Holmes, V. Jordan, V. Lazier, V. Little, V. McVey, 242, 243 172 582 596, 597 10, 138 366 140, 143 159, 178, 379, 721 458 626 V. Mech. Sav. Bank, 311 V. Mullen, 299, 300, 540, 558 V. Powers, 642, 650, 651 V. Ealph, 298 V. Senier, 194, 405 V. Stratton, 128 V. Tebbetts, 616 Wimberly v. Adams, 628 Winchell v. Doty, 520, 557 Winchester v. Doty, 554 Windham v. Childress, 93 V. Doles, 163 Windheim v Ohlendorf, 347, 411, 506 Wing V. Terry, 578 Wingo V. McDowell, 171 Winkelman v. Choteau, 19 Winn V. Thomas, 91 Winne v. Colorado Springs Co., 626, 641 Winslow V. Wood, 156 Winstead v. Davis, 721, 727 Winston v. Bichardson, 405 Winter v. Jones, 23 Winterbottom's Case, 302 WiDtermute v. Post, 254, 255, 276 Winters v. Home Ins. Co., 168 Wise V. Neal, 175 Wiseman v. Chiappella, 186 Wisner v. Bardwell, 84, 129 v. McBride, 56 PAGE. Wiston V. Westfeldt, 71» Withall V. Masterman, 657 Witham v. Lee, 128 Witherell v. Ela, 358 Withers v. Berrv, 514, 537, 538, 567 Witt V. Amis, 469- Witte V. Williams, 677, 680 Wittiers v. Berry, 561 Wodehouse v. Farebrother, 577 Wolcot V. Van Santvoord, 258 Wolfe V. Brown, 559 V. Jewett, 195, 197 Wolford v. Powers, 55 Wood V. Allegheny County, 712 v. Bodwell, 476 V. Bret, 633 y. Grimwood, 113, 121 y. Matthews, 438, 461 y. Merchants', &c., and Trust Co., 284, 288 v. Seitzinger 686, 687 y. Steele, 333, 379 y. Surrells, 411 v. Tyson, 359 v. Wellington, 430 Woodbridge v. Spooner, 13, 162 Woodbury v. Larned, 641 y. Woodbury, 325, 446- Woodhull v. Holmes, 723 Woodland v. Fear, 393 Woodman v. Boothby, 494 y. Churchill, 311, 677 Woodrofif y. Hayne, 20, 267 Woodrow y. O'Conner, 20, 632 Woodruff V. Hinman, 129 y. King, . 334, 372, 430 y. Leonard, 511 v. Monroe, 360 v. Webb, 156 Woods y. Sherman, 566 y. Woods, 494 Woodson y. Moody, 559' Woodsworth v. Huntoon, 721, 722 Woodward v. Echols, 373 y. Foster, 434, 439, 440 y. Harbin, 429^ V. Pell, 323 v. Severance, 385 Wookey v. Pole, 369 Woolen y. Ulrich, 714 Wooley y. Van Volkenburg, 556 Woolford V. Dow, 652 Woolfolk V. Plant, 599, 608, 644 Woollen y. Van Kirk, 725 WooUey v. Sergeant, 554, 557 Wooster v. Jenkins, 51 Wooten V. Maultsby, 324 Worcester Bank v. Wells, 231 Co. Bank v. Dorchester Bank, 179, 696, 722 Co. Institution y. Davis, 52^ Mechanics' Sav. Bank v. Hill, 567 CASES CITED IN VOLUME TWO. Ixvii PAGB. Worcester Nat. Bank v. Cheeney, 25 &o., Bank v. Hill, 39, 621 Worden v. Nourse, 470, 481, 482 V. Salter, 436 Workman v. Wright, 65 Wormer v. Waterloo Agric. Works, 31 Worsham v. Goar, Worthington v. Cowles, Wren v. Hoffman, Wright V. Austin, V. Bartlett, V. Brosseau, V. Dyer, V. Garlinghouse, V. Hart, V. Hay, V. Hughes, V. Irwin, V. Latham, V. McDonald, V. Morse. V. Heed, V. Shorter, V. Simpson, V. Stacey, V. Stockton, V. Storrs, V. Watt, Y. Wheeler, V. Wriglit, Wrixon v. Macoboy, Wulff V.Jay, Wulschner v. Sells, Wyatt V. Bulmer, V. Campbell, T. Evins, Wyburn v. Stanton, Wyckoff V. Eunyon, Wyer v. Dorchester, &c.. Bank, Wyke V. Kogers, Wylie V. Brice, Wyman v. Colorado Nat. Bank, V. Fiske, V. Goodrich, Wynam v. Bend, Wynn v. Patrick, V. Poynter, 410 399 37 601 654 723 520, 554, 557 578 9 364 38 56, 721, 723 440 140 492, 494, 503, 507, 508 487 521 605, 606, 638 74 619 656 607 114, 167 16, 55, 467 316 635 329 97, 164, 177 179 78,87 80 133, 136 723 658 256 334, 721 100, 177 526 360 23, 315 534 Wynne v. Callander, 98, 111, 114, 128 V. Kaikes, 217, 231, 238, 239, 243, 244 V. Whisenant, 83, 129 X. Ximenes v. Jacques, Yallon V. Ebers, 260 Yarborough v. Thompson, 479 Yates V. Bell, 270 Ex parte, 339, 539 V. Donaldson, 582, 589, 629, 639 V. Valentine, 461 Yeaton v. Bank of Alexandria, 41, 168, 416 York V. Landis, / 672 V. Pearson, 25, 39 County V. Small, 104 Young V. Adams, 398, 400 V. Bryan, 405 V. Cole, 392, 404 V. Glover, 339 V. Grote, 263 V. Hockly, 261 V. Lehman, 264 V. Moore, 95 V. Triplett, 8 Youngs V. Lee, 24 Younker v. Martin, 444 Zabriskie v. Spielman, 379, 676 Zahn V. First Nat. Bank, 562 Zane v. Zane, i 61 Zebley v. Sears, _ 140, 373, 718 Zelle V. German Savings Institute, 280, 281 Zellweger v. Gaffe, 498 Zook V. Simonson, 178, 726 COMMERCIAL PAPER. CHAPTER XIII. CONSIDERATION— SUFFICIENCY. I. General Principles. II. Money Considerations. III. Considerations Other than Money. 445. General Principles — Accommodation. 446. Subsequent Indorsement — Guaranty. 447. Consideration — To whom Given. 448. Adequacy — When Necessary — Evidence of Good Faith. 449. Currency — Confederate Notes — Advances. 450. Property Purchased— Bad Title— Quality. 451. Void Patent — Notes Exchanged — Fraudulent Invoice. 452. How it Affects Indorsement. 453. Love and Affection. 454. Donatio Causa Mortis. 455. Subscriptions. § 445. General Principles — Accommodation. — All com- mercial paper, like other contracts, requires the support of a valid consideration. The rules governing other contracts in this respect apply also to negotiable instruments.^ In general the consideration between intermediate parties, or between the holder and his immediate assignor, does not affect the maker or other party sued upon the instrument. Thus the maker cannot set up in his defense that no consid- eration was paid for the paper by the holder, in the absence of other defenses touching its validity.^ Indeed, if the note was merely transferred to the holder without any considera- tion for the purpose of bringing suit, this fact alone would furnish no defense to the maker.^ Except where otherwise provided by statute, any holder in possession may bring suit upon a bill or note for the use of the owner, and want of value paid by such holder is of itself no matter of defense.* ^But in Chili negotiable drafts and notes require a consideration growing out of a mercantile transaction (1865 Code Com. Art. 767). 'Shane v. Lowry, 48 Ind. 205. •McWilliams v. Bridges, 7 Neb. 419 (1878). The original consideration for the note is suflBcient consideration for the indorsement, Frederick v. Winans, 51 Wis. 472 (1881). 'Middlebury v. Case, 6 Vt. 165 (1834). VOL. n. A I CONSIDERATION — SUFFICIENCY. An instrument is often indorsed by way of accommodation to the maker and is thus apparently without consideration. Such instrument is, however, binding upon the indorser except at suit of the party accommodated ;^ provided the indorsement is contemporaneous with the making of the note and not subsequent to it.'^ In such case the loan of credit to the maker constitutes a sufficient consideration for the indorsement.^ And it is immaterial that the indorse- ment was made after the paper was signed by the maker, if before its delivery. In all such cases the indorsement forms part of the original agreement and shares in the original consideration.* In like manner a check may be indorsed by a third party at the time of its delivery for the purpose of accommodation.* Every contract in a negotiable instrument, whether that of the maker, drawer, acceptor, indorser or surety, requires the support of a valid consideration. Where, however, a note after being signed by a surety is altered by his consent,, no fresh consideration is necessary for this consent.* So, if an indorser agree to an extension of a note indorsed by him and thereby waive notice of protest, this agreement will not require a fresh consideration.'' § 446. Subsequent Indorsement — Guaranty. — Although an 'Cady V. Shepard, 12 Wis. 713 (1860) ; Harris v. Bradley, 7 Yerg. 310 (1885) ; Hawkins v. Neal, 60 Miss. 256 (1882). And he is liable to one who takes the- note as collateral in pledge, Mathews v. Rutherford, 7 La. An. 225 (1852); but not to a holder with notice who is not a holder for value, Powers v. French, 1 Hun 582 (1874). But a holder for value may recover on it, although it was not negotiated until after maturity, Seyfert v. Edison, 16- Vroom 393 (1883). 'Brenner v. Gundersheimer, 14 Iowa 82 (1862), 'Kracht v. Obst, 14 Bush 34 (1878). •Austin V. Boyd, 24 Pick. 64 (1835). 'Emery v. Hobson, 62 Me. 578 (1873) ; Colburn v. Averill, 30 Me. 310- (1849) ; Bickford v. Gibbs, 8 Cush. 154 (1851). The rule as to a contempo- raneous guaranty is the same, Leonard v. Vredenburgh, 8 Johns. 29 ; Bailey V. Freeman, 11 76. 220; D'Wolf v. Rabaud, 1 Pet. 476; Simons «. Steele, 36. N. H. 73; Rogers v. Kneeland, 10 Wend. 218; S. C, 13 lb. 114; Leonard v. Sweetzer, 16 Ohio 1 (1847). 'Pelton V. Prescott, 13 Iowa 567 (1862). 'Sheldon v. Horton, 43 N. Y. 93 (1870). But a new promise to pay an old note, except as a ground for extending the Statute of Limitations, requires' a, firesh consideration to support it, Gilmore v. Green, 14 Bush 772 (1879). SUBSEQUENT INDORSEMENT. 3 indorsement by a third person at the time of the delivery of a bill or note is supported by the consideration for the orig- inal promise, nevertheless if such indorsement is made after delivery, the plaintiff must prove a consideration for it.^ An indorsement by a third person for the purpose of guaranteer ing a bill or note is presumptively contemporaneous with the making of the instrument.^ But where it is shown to have been made after the delivery of the instrument, a new and independent consideration is necessary to give it force.' Thus, an indorsement by a wife, at her husband's death-bed and on his request, of a note made by him eighteen months before, without any fresh consideration, is not binding upon her.* Nor will a subsequent admission by such an indorser that he has had security for so indorsing be sufficient of itself to render him liable.® As in other cases, however, the consideration to be a valid one need not move directly to the indorser or surety signing an instrument after its delivery, but an indorsement of this character will be binding upon the indorser if there be a sufficient consideration for it between the principal debtor and the holder.* But it is held that the surety or indorser must be cognizant at least of such consideration, and will not be bound by an indorsement without his knowledge 'Good V. Martin, 5 Otto 90 (1877). So, of a guaranty indorsed on a note, as we have seen, Leonard v. Vredenburgh, 8 Johns. 29 (1811), and other cases above cited. Although it has since been held that such guaranty is not itself a note and must express the consideration in order to comply with the Statute of Frauds, Hall v. Farmer, 5 Denio 484 (1848). 'Benthall v. Judkins, 13 Mete. 265 (1847). 'Grossman v. May, 68 Ind. 242 (1879) ; Williams v. Williams, 67 Mo. 661 (1878). So, a guaranty given after making the note or bill, Bebee v. Moore, 3 McLean 387 (1844) ; Pfeififer v. Kingsland, 25 Mo. 66 (1857) ; Green v. Jones, 7 Jones 581 (1860) ; Green v. Thornton, 4 lb. 230 ; Joslyn v. Collinson, 26 111. 61 (1861). And a prior promise by the maker to give such guaranty or indorsement to the subsequent indorsee will not suflSce, Howard v. Jones, 10 Mo. App. 81 (1881). *Sawyer v. Fernald, 59 Me. 500 (1871) ; Mecorney v. Stanley, 8 Cush. 85 (1851); Union Bank v. Willis, 8 Met-c. 504; Benthall v. Judkins, supra; Tenney v. Price, 4 Pick. 385 (1826) ; Stone v. White, 8 Gray 589 (1857). In like manner a guaranty indorsed after delivery of the note requires for its validity a fresh consideration. Ware v. Adams, 24 Me. 177 (1844). 'Tenney v. Price, 7 Pick. 243 (1828). •Gay V. Mott, 43 Ga. 252 (1871) ; Crawford v. Shaw, 18 Ind. 495 (1862). 4 CONSIDERATION — SUFFICIENCY. made in consideration of an agreement for further time be- tween the maker and payee.^ The signature of a co-maker likewise after the delivery of a bill or note requires a fresh consideration.* And this must be proved by the holder to entitle him to recover against such co-maker.' So, a contract of suretyship, made after delivery of the paper to the payee, requires a new considera- tion.* But a previous agreement to furnish such surety or indorser is a sufficient consideration.^ Although, as we have seen, this agreement should be known to the person signing or indorsing as surety. So an agreement made at the execu- tion of a note, that the surety would afterwards sign it, will support the subsequent contract of the surety without fresh consideration.* And it has been held in a recent case, that a promise by the maker of a note that another person should sign it, made to a person taking the note for valuable con- sideration on the strength of such promise, will support the promise of such third person made two years afterward, although he had no knowledge of the maker's agreement with the payee for his signature ; the question whether such act amounted to an authority for or a ratification of the maker's promise being left as a question of fact to the jury.'' § 447. Consideration — To Whom Given. — Although com- mercial paper, like other contracts, must be supported by a legal consideration, it is not necessary that the consideration •Pratt V. Hedden, 121 Mass. 116 (1876). The consideration or motive of the promise must be known to the promisor, Ellis v. Clark, 110 Mass. 392 (1872). •Green v. Shepherd, 5 Allen 589 (1863); Clopton v. Hall, 51 Miss. 482 (1875). 'Green v. Shepherd, supra. «Briggs V. Downing, 48 Iowa 550 (1878) ; Clark v. Small, 6 Yerg. 418 (1834). Where the contract on which the note was given waa about to be rescinded for fraud, and was re-aflSrmed upon the surety afterward signing the n(jte, such re-aflSrmance is sufficient consideration to hold the surety, Harwood v. Johnson, 20 111. 367 (1858). 'Moies V. Bird, 11 Mass. 436 (1814). •McNaught V. McClaughry, 42 N. Y. 22 (1870); Williams v. Perkins, 21 Ark. 18 (1860). Although the maker knew nothing of the agreement, Hawkes v. Phillips, 7 Gray 284 (1856). •Harrington v. Brown, 77 N. Y. 72 (1879). CONSIDERATION — TO WHOM GIVEN. 5 should be one moving to the party himself. Thus, a consid- eration to one of two joint makers is sufficient to bind both.^ So, a joint note may be supported by debts due the joint payees, jointly and severally.^ So, a note may be given to the seller's wife for real estate purchased, but in such case it is not enforceable as a security by way of vendor's lien.' In some States a note may be given to a public officer for the consideration of a debt due to the public or to the State ; for instance, a note to a district attorney for a judgment rendered against the maker on a forfeited recognizance ;* or to a county treasurer in payment of a sentence of fine and costs.* But it has been held that a note given to a magistrate for a fine imposed by him on the maker is without consideration.* And so, likewise, a note given to a public officer for a claim of the State against the maker for tolls, fines, &C.;'' or to a city treasurer for taxes due to the city is without sufficient consideration.* Where a draft is purchased by an agent for his principal and indorsed simply for the purpose of transfer to the prin- cipal the indorsement is without consideration, and the in- Green v. Lowry, 38 Ga. 548 (1868) ; and see Georgia Code 22 2700, 2701. » De Witt V. Perkins, 22 Wis. 474 (1868) ; Murrav v. Beckwith, 48 111. 391 <1868). 'In re Gomersall, L. R. 1 Ch. Div. 137 (1875) ; affirmed, Jones v. Qordon. L. R. 2 App. Gas. 616 (1877). 'Smith V. McKinney, 22 Ohio St. 200 (1871). "Cox V. Smith, 1 Nev. 161 (1865). •Hastings v. Johnson, 2 Nev. 190 (1866). ' Williams v. Boozeman, 18 La. An. 532 (1866). 8 CONSIDERATION — SUFFICIENCY. maturity.* A maker cannot, however, sell his own note for less than its face and thereby bar himself from the defense of want of consideration.^ § 450. Property Purchased — Bad Title — Quality. — Where a note or bill is_ given in payment for property purchased, the seller's title to the property, as well as the value or worth- lessness of the property itself, sometimes comes into question as affecting the sufficiency of the consideration and the valid- ity of the promise. Thus, if a note is given for the pur- chase of lands, the title to which is not in the payee but in the United States government, the note is without considera- tion.* This is true of such a note, although the land in question may have been conveyed to the maker of the note with covenants of warranty. Although it is said that the damages for breach of the covenant, if it was part of the consideration for the note, may be available to reduce the amount of recovery on the note.* It is said, however, by Professor Parsons that the sale of land to which the payee has no title, will, in the absence of fraud, constitute a suffi- cient consideration for a note to him for the purchase-money, and this view is supported by some authority.® But it has been held in Massachusetts that a note given to a married woman in consideration of a deed of land by her, which was void on account of her coverture, is without consideration ; even though the purchaser had possession of the land, and 'Lanata v. Bayhi, 31 La. An. 229 (1879). 'Musselniattv. McElhenny, 23 Ind. 4 (1864). 'Scudder v. Andrews, 2 McLean 464 (1841). So, where the title totally failed by reason of a subsequent sale under an earlier judgment, no recov- ery was allowed on the note given for the purchase-money, Frisbee v. Hoff- nagle, 11 Johns. 50 (1814). So, in case of failure by reason of the cov- erture of the grantor rendering the deed void. Fowler v. Shearer, 7 Mass. 22 (1810). In this case the deed contained covenants, but the grantor was not liable on them. So, too, Knapp v. Lee, 3 Pick. 452 (1826), the deed contain'- ing a covenant of warranty, but the vendor having died insolvent and the purchaser having suffered an eviction. *Cook V. Mix, 11 Conn. 432 (1836). n Parsons 210; Perkins v. Bumford, 3 N. H. 522 (1826). Especially if the purchaser be in jiossession without an eviction, Hoy v. Taliaferro, 8 Sm. & M. 727 (1847) ; or if there be a covenant of warranty and no fraud, Young V. Triplett, 5 Litt. 247 (1824) ; Lloyd v. Jewell, 1 Me. 360 (1821) ; or if there be a covenant of warranty and no eviction, Vining v. Leeman, 45 111. 248 (1867), overruling Slack v. McLagan, 15 lb. 242 (1853). VOID PATENT. 9 tad, while in possession, cut wood upon it equal in value to the purchase-money for which the note was given.^ If a note is given for the purchase of goods which are absolutely without value, it is without consideration.^ The contrary was held, however, in the case of a note given for decayed mulberry trees sold to the maker, which were of no market value by reason of the decay. But in this case the property purchased was still admitted to have a value.* So, a note given for the purchase of a lottery ticket, which was rumored to have drawn a prize, but had actually drawn a blank, the drawing being not yet published and the lottery being authorized by law, was held to be upon sufficient con- sideration,* But a check given in a frolic for a watch worth but a twentieth part of the face of the check, which the maker of the check offered to return at the time of the trial, is without consideration.* On the other hand, a note given for a policy of insurance in an insolvent company, not then known to be insolvent, is valid.^ § 451. Void Patent — Notes Exchanged — Fraudulent In- voice. — If a note is given for the purchase of a patent right which is void, it will not be binding upon the maker for 'Fowler v. Shearer, 7 Mass. 22 (1810); Warner v. Crouch, 14 Allen 163 (1867). 'Sill V. Rood, 15 Johns. 230 (1818) ; Arnold v. Wilt, 86 Ind. 367 (1882) ; or worthless mining stock, Snyder v. Hargus, 26 Kans. 416 (1881). And it need not be shown that the goods were returned, Shepherd v. Temple, 3 N. H. 455 (1826). Although if it have any value, there should be at least an offer to return it, Perley v. Balch, 23 Pick. 283 (1839). But in Reed v. Prentiss, 1 N. H. 174 (1818), recovery was had on such a note, in the absence of war- ranty and of fraud. 'Johnson v. Titus, 2 Hill 606 (1842). In this case Cowen, J., quotes with approval from Perley v. Balch, 23 Pick. 286 : " If a chattel mortgage be of no value to any one, it cannot be the basis of a bargain ; but if it be of any value to either party, it may be a good consideration for a p)romise. If it is beneficial to the purchaser, he certainly ought to pay for it. If it be a loss to the seller, he is entitled to remuneration for his loss." To this Cowen, J., adds : " There is something which the vendor may be said to part with, of some value to him, however worthless to the defendant." See, too, Welch V. Carter, 1 Wend. 185; Wright v. Hart, 18 lb. 454. *Barnum v. Barnum, 8 Conn. 469 (1831). In the words of Daggett, J., in this case: "This ticket was, at the time of the sale, worth its original price, and probably would have then sold for that sum. There was a bene- iit to the promisor, and that is always a good consideration." 'Keller v. Holderman, 11 Mich. 248 (1863). •Lester v. Webb, 5 Allen 569 (1863). 10 CONSIDERATION — SUFFICIENCY. want of consideration.^ So, also, a note for a license to sell a patented article manufactured under a void patent.* But in Vermont the fact that a patent is both useless and void, is held to be merely a partial failure of consideration and as such no defense to a note given for that consideration.* If, however, a note be given for an interest in a valid patent, it will be good notwithstanding any inadequacy in the value of the patent;* and even, it has been held, although the patent have no value.^ Many authorities hold, however, that a note given for the purchase of a useless patent is without consideration,® even though the patent was thought to be good at the time of the sale.'' And in such case the maker may avail himself of the want of consideration without offer- ing to rescind the sale.* The renewal of a note given for a worthless patent has no better consideration to support it than the original note.® In all such cases the question of worthlessness and consequent failure or want of consideration is one of fact for the jury to determine.^" 'Van Ostrand v. Reed, 1 Wend. 225; Jolliffe v. Collins, 21 Mo. 338 (1855) ; Dunbar v. Harden, 13 N. H. 317 (1842) ; National Bank v. Peck, 8 Kans. 661 (1871) ; Snyder v. Kurtz, 61 Iowa 593 (1883). So, Dickinson v. Hall, 14 Pick. 217 (1833), notwithstanding a covenant of title, Shaw, C. J., saying that the consideration was " not a mere covenant, but the conveyance of a patent right," and notwithstanding the vendor's belief in the validity of the patent. So, too, although the sale of the patent included a covenant warranting " all the right and privilege conveyed," Bliss v. Negus, 8 Mass. 46 (1811) ; and although certain materials, &c., were included in the sale, useful only for work under the patent, lb. And it has been held in Indiana that an assign- ment of patent and a note given therefor are both void, if the assignment be not recorded, as required by the Act of Congress, Higgins v. Strong, 4 Blackf. 182 (1836) ; McFall v. Wilson, 6 lb. 260; Mullikin v. Latchem, 7 lb. 136 ; Louden v. Birt, 4 Ind. 568. But see, contra, McKernan v. Hite, 6 Ind. 428. ' Wilson V. Hentges, 10 Cent. L. J. 56 (Minn. 1879). 'Williams y. Hicks,' 2 Vt. 36 (1829). And it has been held that money paid for a void patent, both parties being innocent of all fraud, cannot be recovered by the purchaser, Taylor v. Hare, 4 Bos. & P. 260. In this case, however, the purchaser had paid for, and had the use of, the patent for seven years. 'Nash V. Lull, 102 Mass. 60 (1869). ' Myers v. Turner, 17 111. 179 (1855). «Mooklar v. Lewis, 40 Ind. 1 (1872); Rowe v. Blanchard, 18 Wis. 441 (1864) ; Bierce v. Stocking, 11 Gray 174 (1858 ; Clough v. Patrick, 37 Vt. 423 (1865). ' Lester v. Palmer, 4 Allen 145 (1862). ' Moore v. Moore, 39 Iowa 461 (1874). "Geiger v. Cook, 3 Watte &S. 266 (1842). "Benton v. Kline, 42 Mo. 97 (1867). ADEQUACY. 11 Where a note is given for the purchase of other notes, the consideration is a sufficient one, whether the notes purchased are afterwards paid or not.^ So, if a bill be accepted for honor in consideration of an assignment to the acceptor of a bill of lading, which proved to be fraudulent and of little value, this is still a legal, though it may be an inadequate, consideration ; and the acceptor cannot avail himself of the ■defense at suit of a bona fide holder for value.^ § 452. Adequacy — ^How it Affects Indorsement. — The rule as to adequacy of consideration, applied already to bills and notes, extends also to the contract of indorsement.' And inadequacy of consideration is no ground for avoiding the transfer of a note or bill otherwise valid.* So, too, a broker may transfer commercial paper for less than its face, and the indorsee, taking it without knowledge of the character of the indorser as an agent for the maker, will not be affected by the statute against usury .^ The amount paid for a transfer by indorsement is not, in the absence of other defense, the measure of recovery on a note ;* although between the immediate parties to an indorse- ment only the amount paid to the indorser can be recovered against him.^ It may now be regarded as an established rule of commercial law that a purchaser of commercial paper at a discount from its nominal value, having no knowledge of existing defenses, is not a bona fide holder for value beyond the amount actually paid by him, but is only protected against such defenses to the extent of the consideration paid 'Padford v. Padford, 68 111. 210 (1873). 'Kelly V. Lynch, 22 Cal. 661 (1863). 'Eoark v. Turner, 29 Ga. 455 (1859). * Brown v. Penfield, 36 N. Y. 473 (1867) ; City Bank of New Haven v. Per- kins, 29 N. Y. 554 (1864). And the holder of a promissory note may bring suit on it in his own name, for the use of the real party in interest, even without his knowledge or consent. Gage v. Kendall, 15 Wend. 640 (1836). 'Taylor v. Bruce, Gilm. 42 (1820). »Lee V. Pile, 37 Ind. 107 (1871). 'Ingalls V. Lee, 9 Barb. 647 (1850) ; Braman v. Hess, 13 Johns. 52 (1816) ; Pant V. Miller, 17 Gratt. 77 (1866). But see, contra, National Bank v. Green, 33 Iowa 140 (1871). 12 CONSIDERATION — SUFFICIENCY. by him.^ And where the purchaser of a bill or note has only paid part of the amount before receiving notice of fraud affecting it in the hands of the seller, and afterwards pays the balance, he will only be protected against the de- fense of fraud as a bona fide holder for value to the extent of the amount paid by him before receiving notice of the fraud.^ So, where negotiable paper is given as collateral for a loan, the taker is only a holder for value to the amount loaned ;* or to the amount secured, if it be given as collateral for an indorsement to be made ;* or, if for moneys to be ad- vanced, only to the extent of the advances made.* It has been held, on the contrary, however, that a purchaser of commercial paper at a discount, with no notice of fraud in it, may recover the face .of the paper.* So, too, of one who takes such paper in good faith as collateral for a smaller sum due.^ And where a bank has discounted a note at a usurious rate of interest and the indorser afterward takes it up at its •1 Parsons 191; Edwards v. Jones, 7 C. & P. 633; S. C, 2 M. & W. 413; Wiflfen V. Boberts, 1 Esp. 261 ; Jones v. Hibbert, 2 Stark. 204 ; Simpson v, Clark, 2 0. M. & R. 342; Holcomb v. Wyckofif, 6 Vroom 35 (1870) ; Allaire V. Hartshorne, 1 Zab. 665 (1847); Duncan v. Gilbert, 5 Dutch. 527 (1862); Dresser v. Missouri & Iowa Ey. Co., 93 U. S. 92 (1876) ; Nash v. Brown, Chitty 89 n.; CoUiger v. Francis, 2 Baxt. 422 (1873); Petty v. Hannum, 2 Humph. 102 (1840); Holeman v. Hobson, 8 lb. 127 (1847); Bethune v. McCrary, 8 Ga. 114 (1850). See, too. Brown v. Mott, 7 Johns. 361 (1811) ; Baily v. Smith, 14 Ohio St. 402 (1863). So, too. Sweet v. Chapman, 7 Hun 576 (1876), Noxon, J., saying that a note delivered in violation of a condi- tion on which it was to take effect, " cannot be rendered valid' by a sale to a bona fide purchaser at a rate of interest exceeding seven per cent." To the same effect, see De Witt v. Perkins, 22 Wis. 473 (1868), where the amount paid by the indorsee was merely nominal, and there was no recovery, the note being originally without consideration. See, too, Clark v. Sisson, 22 N. Y. 312 (1860) ; Bossange v. Ross, 29 Barb. 576 (1859). But see, contra, Sully V. Goldsmith, 32 Iowa 397 (1871). •Dresser v. Missouri, &c., Ry. Co., 93 U. S. 92 (1876) ; Crandell v. Vickery, 45 Barb. 156; Weaver v. Barden, 49 N. Y. 291. 'Stoddard v. Kimball, 6 Cush. 469 (1850) ; Chicopee Bank v. Chapin, 8 Mete. 40 (1844) ; Exchange Bank v. Butner, 60 Ga. 654 (1878) ; Ga. Code J 2788; Grant v. Kidwell, 30 Mo. 455 (1860). 'Williams v. Smith, 2 Hill 301 (1842). 'Hubbard v. Chapin, 2 Allen 328 (1861). In like manner an accommoda- tion maker is in such case liable to the extent only of the money advanced by the plaintiff, Gordon v. Boppe, 55 N. Y. 665 (1874). 'Lay V. Wissman, 36 Iowa 305 (1873). And as such bona fide holder, he takes the note independent of a defense of payment made to his assignor, Schoen v. Houghton, 50 Cal. 528 (1875). 'Smith V. Hiscock, 14 Me. 449 (1837). LOVE AND AFFECTION. 13 maturity, he is a bona fide holder for value, notwithstanding the taint of usury in the title of the bank.^ And in like manner an indorser for the maker's accommodation, who purchases a note at its maturity for one-half of the amount of its face from a bona fide holder for value, can recover the whole amount against the maker in the absence of other defense to the note.^ § 453. Consideratiou — ^Love and Affection. — A maker can- not make a gift of his own note or bill without other con- sideration than mere love or friendship, and such a gift, at least inter vivos, furnishes no consideration for the paper. It is therefore not enforceable against the maker.' Neither is natural affection a sufficient consideration for commercial paper.* Thus, a note given to the maker's mother for her support is without consideration and not binding upon the maker.* So, a father's affection for his son is no sufficient consideration for a note to him.' And even the necessaries which have been furnished to an indigent father form no consideration for a note by the son.'' So, acts of kindness and hospitality which have been rendered gratuitously form no consideration for a subsequent note.* So, a check intended for a gift of the fund on which it is drawn is incomplete until its acceptance or payment, and is revoked by the death 'National Bank of Gloversville v. Wells, 15 Hun 51 (1878). 'Fowler v. Strickland, 107 Mass. 552 (1871). »Bylesl26; Chitty89; Milnest). Dawson, 5 Exch. 948; Hill v. Wilson, L.B. 8 Ch. App. 894 (1873). But see Holliday v. Atkinson, 5 B. & C. 501 ; S. C, 8 D. & E. "163 ; Woodbridge v. Spooner, 3 B. & Aid. 235 ; Tate v. Hibbert, 2 Ves. Jr. 111. This rule applies also to an indorsement for the purpose of gift, Easton v. Pratchett, 1 C. M. & E. 798; S. C, 3 Dowl. 472; S. C, 2 C. M. Archer v. Shea, 14 Hun 493 (1878). 'Chitty 96; Mallett v. Thompson, 5 Esp. 178; Smith v. Knox, 3 lb. 46; Bank of Ireland v. Beresford, 6 Dowl. 237 ; Collins v. Martin, 1 Bos. & P. 651 ; Mechanics' Bkg. Association v. New York, &c.. White Lead Co., 35 N. Y. 505 (1866) ; Monument Nat. Bank v. Globe Works, 101 Mass. 57 (1869) ; Kenworthy v. Sawyer, 125 Mass. 28 (1878) ; Davis v. Eandall, 115 Mass. 547 (1874). 'Schepp V. Carpenter, 51 N. Y. 602 (1873),' affirming 49 Barb. 542. ♦De Zeugv. Fyfe, 1 Bosw. 335 (1857); Grocers' Bank v. Penfield, 7 Hun 279, affirmed 69 N. Y. 502 (1877). But see, conira, Cummings v. Boyd, 83 Penna. St. 372 (1877). 'Royer v. Keystone Nat. Bank, 83 Penna. St. 248 (1877). 'Brooks V. Hay, 23 Hun 372 (1881); Robertson v. Williams, 5 Munf. 381 (1816). 'Byles 131; Chitty 96; 1 Daniel 193; 1 Parsons 183; Story on Prom. Notes I 194; Smith v. Knox, 3 Esp. 47; Charles v. Marsden, 1 Taunt. 224; Bank of Ireland v. Beresford, 6 Dow. 237 ; Fentum v. Pococke, 5 Taunt. 193 ; S. C, 1 Marsh. 14. See, too, Wiffen v. Roberts, 1 Esp. 261 ; Popplewell v. Wil- son, 1 Stra. 264; Jewell v. Parr, 16 C. B. 684, L. R. 2 Exch. 56; Pettigrew v. Chave, 2 Hilt. 546 (1859) ; Brown v. Mott, 7 Johns. 361 (1811) ; Thatcher v. West River Nat. Bank, 19 Mich. 196 (1869) ; Best v. Nokomis Nat. Bank, 76 111. 608 (1875) ; Grant v. Ellicott, 7 Wend. 227 (1831) ; Arnold v. Sprague, 34 Vt. 402 (1861 ) ; Washington Bank v. Krum, 15 Iowa 53 (1863). 46 CONSIDEEATION — SUFFICIENCY. ties to the paper, can hold them liable notwithstanding that relation.^ Thus, where the acceptance of a bill has been made for the accommodation of the drawer, this fact, though known to the payee, will not affect his right to recover against the acceptor.^ On the other hand, it has been held that an accommodation joint drawer is not liable on a bill to an accommodation acceptor with knowledge of that fact.^ But although, as has been said, the relation between the accommodation parties is or resembles that of principal and surety, yet the accommodation maker, becoming liable- to a bona fide holder for value, will not be discharged by an extension of time given by the holders with knowledge of the accommodation/ Again, it is no defense that commercial paper was given for accommodation at suit even of ond who took it for an existing debt and with knowledge of its accommodation character/ And the fact that the holder of such paper took it with knowledge of its character does not shift from the defendant the burden of proving fraud in the paper, where that is set up in defense/ Where, however, it is shown that the accommodation note was made for a special purpose and has been diverted from that purpose, the burden is on the plaintiff of showing himself a bona fide holder for value/ And if a purchaser of such paper knows at the time that it has been fraudulently diverted from its proper purpose, he is not in the position of a bona fide holder for value/ So, too, . where paper has been executed for accommodation with the 'Spurgin v. McPheeters, 42 Ind. 527 (1873). But at suit of a payee with knowledge of the relation of the parties, an accommodation acceptor may set up in his defense a payment by the drawer to the payee, applied by the latter on another indebtedness, Cook v. Lister, 13 C. B. (n. s.) 543. And in a like case an accommodation co-maker may set up against the payee an oflset growing out of the same business between the principal debtor and the payee, Bechervaise v. Lewis, L. R. 7 C. P. 372 (1872). 'Israel v. Ayer, 2 So. Car. 344 (1870). 'Turner v. Browder, 5 Bush 216 (1868). *Hoge V. Lansing, 35 N. Y. 136 (1866). 'Montross v. Clark, 2 Sandf. 115 (1848). •Lincoln v. Stevens, 7 Mete. 529 (1844). 'Nickerson v. Ruger, 76 N. Y. 279 (1879). * Small i;. Smith, 1 Denio 583 (1845). ACCOMMODATION. 47 payee s name left blank, and such blank has been filled by the party accommodated aftier he became insolvent, and the paper delivered to his sister, who knew of its accommodation character, in settlement of a previous debt owing her, she cannot hold the accommodation maker liable upon it.^ More- over, at suit of a purchaser after maturity, the accommoda- tion character of the paper forms a perfect defense ; ^ espe- cially if known to the purchaser at the time.^ 'Thompson v. Poston, 1 Duv. 389 (1864). *Tinson v. Francis, 1 Campb. 19; Jewell v. Parr, 16 C. B. 684; Bower «. Hastings, 36 Penna. St. 285 (1860) ; Kellogg v. Barton, 12 Allen 527 (1866) ; Bower v. Hastings, 36 Penna. St. 285 (I860) ; Cummings v. Little, 45 Me. 187 (1868). 'Chester v. Dorr, 41 N. Y. 279 (1869). The opinion of WoodrufT, J., in this case ignores all distinction between an accommodation and other want of consideration. " It is not," in his words, p. 286, " according to the intent or meaning of an indorsement for another's accommodation to say that the indorser intends to give the use of his credit for any other period than that limited in the note, or that such an indorsement imports authority to use it, when that period has, elapsed." This case further expresses disapproval of Charles v. Marsden, 1 Taunt. 224; Sturtevant v. Ford, 4 Man. & G. 101 ; S. C, 4 Scott 608 ; and Caruthers v. West, 11 Q. B. 143. See, too. East Kiver Bank v. Butterworth, 45 Barb. 476 (1866). But this rule does not apply to an indorsee after maturity from a bona fide holder for value before maturity, Thompson v. Shepherd, 12 Mete. 811 11847). 48 CONSIDERATION — SUFFICIENCY. ni. CONSIDERATIONS OTHER THAN MONET. 477. Property Purchased. 478. Void Transfer of Property. 479. Exchange of Notes. 480. Contracts of Exchange— How far Independent. 481. Other Agreements. 482. Contract for Services. 483. Belease of Liability. 485. Bastardy Proceedings. 486. Doubtful Claims. 487. Claims Barred by Statute. 488. Discharged Voluntarily — By Law. 489. Invalid Claims— Coverture— Fraud and Mistake. ' 490. Mutual Accounts— Wager — Illegal Claims. 491. Forbearance — Extension. 492. Consideration Necessary to Extension. 493. Indemnity. § 477. Property Purchased. — ^The consideration for a bill or note often consists in property purchased or rights in property acquired. A note given for real estate purchased subject to a mortgage, is none the less valid by reason of the mortgage, the presumption being that the equity of redemp- tion is a valuable one.^ In like manner a quitclaim for land has been held sufficient to support a note.* And even a quit- claim by a former and remote owner, under whose title a bill m equity has been filed and is pending, has been held to be a good consideration for a note given by the purchaser of the land to such former owner.* So, a note given for an im- provement, erected by permission on the property of a third person and transferred to the maker of the note, has been held to be sufficiently supported by the equitable title so transferred.* So, a note given for land, the title of which 'Hoyt V. Bradley, 27 Me. 242 (1847). So, a transfer coupled with the assumption of a mortgage not yet delivered, Fitzgerald v. Barker, 13 Mo. App. 192 (1863). So, a title in part legal and in part equitable is sufficient, Ervin v. Morris, 26 Kans. 664 (1881). But a mortgagee's right to redeem from a sheriff's sale does not proceed from his mortgagor and will not sup- port a note to the mortgagor payabk if he redeems, Jessup v. Trout, 77 Ind. 194 (1881) ; especially if there is no redemption, lb. 'Bonney v. Smith, 17 111. 531 (1856). And land transferred as security to one who gives his note for the debt of the person transferring the land is a sufficient consideration, Parsons v. Clark, 132 Mass. 569 (1882). •Bachelder v. Lovely, 69 Me. 33 (1879). *Washband v. Washband, 24 Conn. 500 (1866). VOID TRANSFER OF PKOPEETY. 49 was to pass under the contract on payment of the last install- ment of purchase-money, is upon sufficient consideration and not dependent upon the performance of the contract.^ But a note given for the difference between exchanged lands and extorted on a false pretense as to the quantity of land, the maker of the note being under the necessity of procuring his deed at once in order to perform another contract on his part, is without valid consideration.* Again, a note or bill for the sale of spirituous liquor is a sufficient consideration;* even though it be made to a town agent who is authorized to sell, but not expressly authorized to give credit on such sale.* And even a note given for the sale of whiskey by a distiller, under a broker's license and subject to a statutory penalty, is valid.* So, too, a note may be given for a policy of life insurance to be issued for the value of the note, although the actual value of the note may be unknown until it is paid.' So, a note may be given for the purchase of a patented arti- cle ;^ or as collateral for goods purchased and delivered ;' or for the good will in a carting business;* or for membership fees in a society;^" or for an initiation fee in a medical society." But not to an officer of a benevolent society for a member's initiation fee ;^^ nor for like fee to an officer of an unincorpo- rated Masonic Lodge,^* § 478. Void Transfer of Property. — A negotiable instru- ment has been held to be supported by a valid consideration^ •McMath V. Johnson, 41 Miss. 439 (1867). 'Holland v. Hoyt, 14 Mich. 238 (1866). 'Holmes v. Ebersole, 12 Ind. 392 (1859). *Andover v. Kendrick, 42 N. H. 324 (1861). . "Bahter v. First Nat. Bank, 92 Penna. St. 393 (1880). «Franklin Life Ins. Co. v. Cardwell, 65 Ind. 138 (1879). 'Kline v. Spahr, 56 Ind. 296 (1877). sFenby v. Pritchard, 2 Sandf. 151 (1*848). •Searing v. Tye, 4 E. D. Smith 197 (1855). "Middlesex v. Davis, 3 Mete. 133 (1841). "Goree v. Wilson, 1 Bailey 597 (1830). " Nash V. Eussell, 5 Barb. 556 (1849). "Nightingale v. Barney, 4 G. Greene 106 (1853). veil. 11. ^ 50 CONSIDERATION — SUFFICIENCY. though given for the purchase of a grant of a ferry franchise^ granted ultra vires by a municipal corporation.^ But not for a conveyance by a married woman which is void at law and furnishes no remedy even on the covenants contained in it.^ On the other hand, the assignment of a lease is a suffi- cient consideration for a note, although the lease contain a. covenant against assignment, there having been no re-entry for breach of this covenant.' But the transfer of an untrans- ferable liquor license is no consideration for a note given for it.* Neither is the transfer of the payee's "legal right to cut timber, &c.," a good consideration for a note, the payee having no legal right of the sort.° But where a mortgage has been given in fraud of creditors, its assignment to a bona fider assignee, being sufficient to cut off such defense, is sufficient consideration for a note given for it.* So a note may be- valid, though given for a deed of land which contains, by fraud or mistake, a condition avoiding the deed, if the note be paid at the time mentioned.'' Where a note has been given for an improvement erected on public lands and a relinquishment of the payee's claim,, the maker taking the government warrant in his own name is estopped from denying a sufficient consideration for the note.' And in Iowa, in such case, the defense of want of con- sideration is prohibited by statute.® And in general, as we have seen, a note for an improvement erected on the lands of another, has a sufficient consideration.^" But the sale of 'Carpentier v. Minturn, 6 Lans. 56 (1872). 'Fowler v. Shearer, 7 Mass. 14 (1810), and mere possession under a void conveyance is not sufficient, Sorrells v. McHenry, 38 Ark. 127 (1881). 'Spear v. Fuller, 8 N. H. 174 (1835). *Strahn v. Hamilton, 38 Ind. 57 (1871). 5 Long V. Hopkins, 50 Me. 318 (1862); Swanzer v. Mayberry, 59 Gal. 91 (1881). «Payson v. Whitcomb, 15 Pick. 212 (1834). ' Hodsdoft V. Smith, 14 N. H. 41 (1843). In this case the condition was strictly construed and a payment after the time mentioned in the deed was held not to be the payment at such time, against which the condition was- framed. "Sherrer v. Bullock, 23 Ark. 729; Lapham v. Head, 21 Kana. 332 (1878) ; Brooks V. Hiatt, 13 Neb. 503 (1882). »Hill V. Smith, 1 Morris 70 (Iowa 1840). '"Freeman v. HoUiday, lb. 80. EXCHANGE OF NOTES. 51 Indian lands to a citizen of the United States, being expressly prohibited by law, cannot support a note given for the pur- chase-money.^ Questions have arisen since the emancipation of slaves in the United States as to negotiable instruments given for the hiring or purchase of slaves. Such questions fall more prop- erly under the head of failure of consideration, to be discussed hereafter. In Texas a note given for slave hire since the emancipation proclamation has been held valid, where the slaves had not in fact become free, nor failed to perform the labor for which the note was given.^ And such note has been upheld in Alabama as late as May, 1865, slavery having actually ceased at that time in that State.* And in Arkansas emancipation before demand made for payment of the note has been held to be no defense to a note given for the purchase of slaves.* § 479. Exchange of Notes. — It happens not infrequently that negotiable instruments are given in exchange for other commercial paper, either by way of accommodation or for the purchase of such paper. In either case the commercial paper given forms a sufficient consideration for that which is received in exchange.^ This is true even of a note given by the maker to the payee for the payee's notes of a different amouEft.^ And a note thus obtained in exchange for another 1 Vickroy v. Pratt, 7 Kans. 238 (1871) ; Jarvis v. Campbell, 23 lb. 370 (1880). But the surrender of an entry on public lands has been held sufficient in Minnesota, Thompson v. Hanson, 28 Minn. 484 (1881). ^Tobler v. Stubblefield, 32 Tex. 188 (1869) ; Upshaw v. Booth, 37 Tex. 124 (1872). 'Leslie v. Langham, 40 Ala. 524. *Eust V. Eeives, 24 Ark. 359 (1866). 'Byles 127; Chitty87; Coiiyley i). Dunlop, 7 T. R. 565; Buckler u. Butti- vant, 3 East 72 ; Eose v. Sims, 1 B. & Ad. 521 ; Mickles v. Colvin, 4 Barb. 304 (1848); Williams v. Banks, 11 Md. 198 (1857); Whittier v. Eager, 1 Allen 499; Eolfe v. Caslon, 2 H. Bl. 571; Kent v. Lowen, 1 Campb. 179; Hprnblower v. Proud, 2 B. & Aid. 437 ; Spooner v. Gardiner, R. & M. 84 ; iSavage v. Ball, 2 C. E. Green 142 (1864) ; Newman v. Frost, 52 N. Y. 422 (1873) ; Bassett v. Bassett, 55 Barb. 505 (1870) ; Cobb v. Titus, 10 N. Y. 198 (1854); Backus v. Spaulding, 116 Mass. 418 (l875); Wooster v. Jenkins, 3 Denio 187 (1846) ; Byrne v. Schwing, 6 B. Mon. 199 (1845) ; Eaton v. Carey, 10 Pick. 211 (1830). And it makes no difference that the note received in exchange was returned unused, unless the note in question was intended as a mere receipt for the note returned. Trustees v. Hill, 12 Iowa 462 (1861). •Higginson v. Gray, 6 Mete. 212 (1843). 52 CONSIDERATION — SUFFICIENC"?:. may be sold at a discount by the payee without usury .^ So, the exchange of checks furnishes a sufficient consideration, each for the other.^ And in an exchange of notes neither maker is a mere surety for the other.' So, if a bill or note is given for an open letter of credit, this is a sufficient consideration without any proof of pay- ment made on the letter.* So, a partner may give a valid note to his firm for bills receivable of the firm transferred to him.* So, an unaccepted draft of a third person is a suf- ficient consideration for the discount of a note.® So, the transfer of a draft and the surrender of another note of the maker furnish a good consideration for a note.'' And the giving of a note by the purchaser of a negotiable instrument is a sufficient consideration to make him a bona fide holder for value.* So, the giving of part note and part cash;' or of the purchaser's own draft.^" So, too, the surrender of a note of the payee for another note transferred by him makes the purchaser of such latter note a holder for value.^^ § 480. Contracts of Exchange — ^How far Independent. — In an exchange of commercial paper each instrument forms an independent contract and is, as we have seen, a sufficient con- »Eice V. Mather, 3 Wend. 62 (1829) ; Cameron v. Chappell, 24 lb. 94. But this is not true of a note given for the accommodation of the payee with security furnished on his part to the maker in an agreement for transfer of books and accounts, Dowe v. Schutt, 2 Denio 621 (1846j. "Rankin v. Knight, 1 Cincin. 515 (1871). 'Stickney v. Mohler, 19 Md. 506 (1862). Nor is a bill taken in such ex- change accommodation paper, but it may be proved as a debt in bank- ruptcy, In re London, &c., Bank, L. R. 9 Ch. App. 686 (1874). ♦Duncan v. Gilbert, 5 Dutch. 521 (1862). 'Leonard v. Robbins, 13 Allen 217 (1866). «White V. Springfield Bank, 3 Sandf. 222 (1849). 'First Natl Bank v. Tisdale, 84 N. Y. 655 (1881) ; Nickerson v. Ruger, lb. 675. 'Odell V. Greenly, 4 Duer 358 (1855). •Adams v. Soule, 33 Vt. 538 (1860) ; Luke v. Fisher, 10 Gush. 271 (1852). '"Greenwood v. Lowe, 7 La.An. 197 (1852). "Bacon v. Holloway, 2 E. D. Smith 159 (1853) ; Baldwin v. Van Deuisen, '37 N. Y. 487 (1868). See, too, First National Bank v. Tisdale, 84 N. Y. 655 (1881), where surrender of the maker's own note was held to be sufficient consideration for a second note given to take it up. But this would not be BO if the original note was without consideration, Mason v. Jordan, 13 B. I. 193 (1881). OXHEK AGREEMENT. 53 sideration for the other.^ And where a bill of exchange has been sold and actually delivered, an action lies for the price agreed on, irrespective of the question whether the bill is paid or not.* So, an acceptance, although rendered worth- less by the acceptor's subsequent insolvency, is a valid con- sideration for a transfer of the drawer's property given for the original acceptance or to secure it and held by the acceptor's assignee.^ Although, however, exchange notes form inde- pendent contracts, a note received by the defendant and not paid may be set off in an action on the other note between the original parties.* But if a note is made as collateral for an acceptance to be afterwards given by the payee, it becomes good only when the bill has been accepted as agreed.^ And in Louisiana an acceptance for the benefit of A., given in consideration of an accommodation acceptance by him, is without consideration unless the latter acceptance be paid by A.® So, in Illinois, if a note is given for a draft under an express condition for a release in case of non-payment of the draft, the contracts are rendered dependent upon one another, and no collection of the note can be made if the draft be not paid.'' § 481. Consideration — Other Agreement. — Again, a nego- tiable instrument may be founded upon an agreement of a different character, and such agreement, if lawful, will be a sufficient consideration for it.* In such case the validity of the negotiable instrument is not dependent upon the per- formance of the agreement which forms its consideration.* Thus, the agreement for delivery of a deed is sufficient con- 'Dockray v. Dunn, 37 Me. 442 (1854). ^Forward v. Harris, 30 Barb. 338 (1857). •Holbrook v. Allen, 4 Fla. 87 (1851). •Backus V. Spaulding, 116 Mass. 418 (1875). 'Carson v. Hill, 1 McMullen 76 (1840). 'Shannon v. Langhorn, 9 La. An. 526 (1854). 'Hall V. Henderson, 84 111. 611 (1877). 'Myers v. Phillips, 7 Gray 508 (1856); Maas v. Chatfield, 90 N. Y. 803 (1882). 'Munroe v. Bordier, 8 C. B. 862 (1849); Watson v. Russell, 3 B. & S. 34 (1862) ; Ja<;kman v. Doland, 116 Mass. 550 (1875) ; Waterhouse v. Kendall, 11 Cush. 128 (1853) ; Traver v. Stevens, lb. 167. M CONSIDEEATIOX — SUFFICIENCY. sideration for a note;' or even a contract to convey land •which the payee supposes erroneously to be his property.* And if such agreement to convey land is for a conveyance on' full payment of purchase-money, it still forms a suflBcient consideration for the note given, and the note may be sued before delivery of the deed.^ And a note given for such a contract for land will support an action without reference to the title to the land;* and is valid, even though the land belong at the time of making the contract to some other person, it being afterward conveyed to the payee.* And where a note is given to a banking corporation for a deed to be afterward delivered, it has been held that an as- signee of the bank may make a tender of the deed.' And an agreement by one of two partners purchasing lands in fore- closure of a mortgage, has been held sufficient to support a note given for the whole mortgage debt, although it exceeds in amount the value of the land.'' And a check given for dif- ference in value in an exchange of lands is valid, although supported only by a verbal agreement for the exchange. And in such case the burden of showing a failure of consid- eration rests on the maker.* A promise, however, by the owner of a lot to build a hotel upon it, made to one having no interest in the matter except as an inhabitant of the town where the lot was, is not a sufficient consideration for the extension by him of a note of the promisor.® Other instances of a contract forming an independent con- sideration for a note, not rendering the note conditional on the performance of the contract, are an agreement to sell a 'Carman v. Pultz, 21 N. Y. 547 (1860). 'Trask v. Vinson, 20 Pick. 105 (1838). 'Daniels v. Stone, 6 Blackf. 450 (1843); Chapman v. Eddy, 13 Vt. 205 (1841). * Guthrie v. Jones, 1 Rice 444 (1839). 'Trask v. Vinson, 20 Pick. 105 (1838). •Bank of Salem v. Caldwell, 16 Ind. 469 (1861). 'Myers v. Phillips, 7 Gray 508 (1856), and the fact that the agreement may not be binding on a partner, who did not sign it, is no defense, after it had been accepted by the maker of the note. "Raubitschek v. Blank, 80 N. Y. 478 (1880). •Hogan V. Crawford, 31 Tex. 633 (1869). OTHER AGREEMENT. 55 machioe;^ or to perform certain work.^ Again, an agree- ment to unite with co-legatees in resisting the probate of a will and also to release a legacy and to compromise a claim against the testator's estate is a sufficient consideration for a note, as indeed the release or compromise would be of itself.^ So, a note given for a promise of marriage is valid;* if given before and in consideration of marriage.^ But a note given after marriage for the use of the wife in consideration of her living with her husband is not valid.* And an agreement for arbitration, made by a married woman and not binding upon her, furnishes no consideration for a note given by her to abide the issue of the arbitration.'' A pledge to abstain from intoxicating liquor has been held to be a sufficient con- -sideration for a note.' So, an agreement to pay a debt of the maker of the note, whether performed or not.® So, an «,greement by an accommodation indorser to take up the notes indorsed by him will support a new note made to him by the person accommodated.^" So, an agreement to dis- <5harge a debtor will be supported by a similar agreement of other creditors.^^ But an agreement to support the payee may be insufficient to render an indorsement made by him Talid as against his other creditors.^^ § 482. Consideration — Contract — Services. — The consid- 'Hawley v. Bingham, 6 Oi'egon 76 (1876).' 'Walker i). Walker, 29 N.Y. 375 (1864); Waterhouse v. Kendall, 11 Gush. 128 (1853). 'Austell V. Rice, 5 Ga. 472 (1848). *Banfield v. Rumsey, 2 Hun 112 (1874). Or for a breach of promise. Dean ■V. Skiff, 128 Mass. 174 (1880). ^Wright V. Wright, 54 N. Y. 437 (1873), affirming 59 Barb. 505. So, a ■daughter's marriage is sufficient consideration for a deed from her father ito her, Verplank v. Sterry, 12 Johns. 536 (1815). "Roberts v. Frisby, 38 Tex. 219 (1873). 'Rumsey v. Leek, 5 Wend. 20 (1830). ^Lindell v. Ropes, 60 Mo. 249 (1875). 'Turner v. Rogers, 121 Mass. 12 (1^76); Hubon v. Park, 116 Mass. 541 <1875). '"Gushing v. Gore, 15 Mass. 69 (1818). "Paddleford v. Thacher, 48 Vt. 574 (1876). '^Gross V. Brown, 51 N. H. 486 (1871). But such a promise, coupled with the naming of a child by the payee after the maker, is sufficient considera- tion for a note, Wolford v. Powers, 85 Ind. 294 (1882). 56 CONSIDEEATION — SUFFICIENCY. eration of a bill or note is often some agreement for service, or for tlie doing of something for the maker, and such agreement is a sufficient consideration, if lawful. Even a note given to a trustee for the support of the maker's wife, in order to enable the maker to obtain a divorce from the legislature, has been held sufficient.^ So, a promise to eman- cipate a slave, made by the payee of a note, has been held to be a sufficient consideration for it, although he was not the sole owner of the slave.^ So, an agreement as to the location of a State reform school;' or by a railroad company for a change of location, such change not being against the public interest.* And, in like manner, a note may be given by a municipal corporation to aid in the construction of a railroad, and if the corporation has power to make the note, the con- struction of the road will be a sufficient consideration for it.*^ And it has even been held that a note given to a corporation by a stockholder to enable the corporation to certify that its stock is paid up is for sufficient consideration, although there was an understanding for the return of such note after the certificate had been made.* But past services which have been rendered gratuitously, as well as future services which are not so stipulated for as to become obligatory, are not a sufficient consideration for a bill or note.'' And it has been held that an executory con- tract, to be performed in future, renders the paper given for it conditional, and is, therefore, insufficient.* But a note given to an attorney for legal instruction i» 'Day V. Cutler, 22 Conn. 625 (1853). To a note given by a husband to hi» wife for the wife's return to her husband, and in settlement of a divorce- suit brought by her, has been held to be sufficient, Adams v. Adams, 24 Hun 401 (1881). But see, as to this, Van Orden v. Van Orden, 8 Hun 315; Phil- lips V. Myers, 82 111. 67. ^Thompson v. Thompson, 4 B. Mon. 502 (1844).; ' Wisner v. McBride, 49 Iowa 220 (1870). ♦First Nat. Bank v. Hendrie, 49 Iowa 402 (1878). ^Wright V. Irwin, 35 Mich. 347 (1877). •Cowles V. Gridley, 24 Barb. 301 (1857). 'Hulse V. Hulse, 17 C. B. 711. But subsequent valuable services rendered without a binding prior agreement were held to be a sufficient consideration in Miller v. Mackenzie, 95 N. Y. 575 (1884). «Drury v. Macaulay, 16 M. & W. 146 (1846). SERVICES. 57 valid.' So, information as to witnesses in a suit brought by the maker of a note, is a sufficient consideration for the note.^ Likewise, information as to an outstanding title to real estate, adverse to the person in possession, will uphold a note given for it by him.^ So, where an agent sells goods upon a del credere commission, a note given him for his commissions by the buyer of the goods is valid.* So, a note given to a widow for services rendered by her before her husband's death in expectation of payment.* And a note by an employer paya- ble at his death to his employe is sufficient, although given only in consideration of a natural obligation for services ren- dered.® Even a note given to a bank president in considera- tion of his resigning his office has been held valid, and that, notwithstanding an unperformed agreement made by him before his election to resign on request.'' But if the service has been already paid for, it will form no consideration for a further promise. Thus, service in obtaining land warrants already paid for, will not support a note subsequently extorted by the agent as a condition for giving the maker possession of the warrants.* . It has been debated whether, as a question of public policy, services rendered in obtaining a pardon for one who has been convicted of crime are sufficient to support a valid note given therefor. But it seems that such services are lawful and suffi- cient consideration for a note.'' Especially where they have been rendered with the object of preventing the execution of a 'Knowles v. Parker, 7 Mete. 30 (1843). But an agreement to cure a sick man by " conjuring," is not sufficient, Cooper v. Livingston, 19 Fla. 684 (1883). 'Chandler v. Mason, 2 Vt. 193 (1829). 'Lucas V. Pico, 55 Cal. 126 (1880). •Eastman v. Brown, 32 111. 53 (1863). See, too, Earcus v. Elliott, 95 Ind. 661 (1884). So, for the agency of a patent, Burrill v. Parsons, 71 Me. 282 (1880). 'Eaaton v. Easton, 112 Mass. 438 (1873), although there may have been a different agreement with the husband as to compensation. 'Barthe v. Succession of Lacroix, 29 La. An. 326 (1871). 'Peck V. Requa, 13 Gray 407 (1859). "White V. Heylman, 34 Penna. St. 142 (1859). 'Meadow v. Bird, 22 Ga. 246 (1857) ; McGill v. Burnet, 7 J. J. Marsh. 640. But see Norman v. Cole, 3 Esp. 253. 58 CONSIDERATION — SUFFICIENCY. prisoner by an unlawful military court.^ But services as a lobbyist in procuring legislation are against public policy, and are not sufficient consideration for negotiable paper or other contracts.^ As to other services of this and more doubtful character, questions more generally arise and are more appropriately treated in connection with the subject of illegality of consideration. § 483. Consideration — Release of Liability. — Another con- sideration similar to that of money due or loaned is the lia- bility already incurred by a person for damages. Thus, a valid note may be given for a release from damages claimed against the maker for an assault instigated by him ;* or for an assault made by him. And it will not render the note void that the amount of such damage is excessive.* So, a note may be given for an unreasonable delay by the maker in performing a promise of marriage ; * or in settlement of an action for breach of warranty.^ So, if a note is given contemporaneously with an agreement, and on the condition that it shall be destroyed if the agreement be performed, the satisfaction for the breach of agreement, constituting a bar to a suit on it, is a sufficient consideration to support the note.^ Again, where notes have been given for land purchased, and the signature of the grantor's wife was wanting in the 'Thompson v. Wharton, 7 Bush 563 (1870). In this case it is said of the court in question : " Its sentence was a nullity and the infliction of punish- ment upon the prisoner under such sentence would have been not only un- warranted, but in direct violation of the laws of Kentucky." ^Marshall v. Baltimore & Ohio R. R., 16 How. 314, 334 (1853) ; Clippenger V. Hepbaugh, 5 Watts & 8. 315 (1843). » Walbridge v. Arnold, 21 Conn. 425 (1852). But the tort of a third person is not suflScient of itself, Conmey v. Macfarlane, 97 Penna. St. 361 (1881). * Whitenack v. TenEyck, 2 Green Ch. 249 (1835) ; or even that the payee's right to recover interest be questioned, Parker v. Enslow, 102 111. 272 (1882). ^Prescott B.Ward, 10 Allen 203 (1865). "Lyons v. Stephens, 45 Ga. 141 (1872). In this case the note was for release of damages for breach of warranty in the sale of a slave, and was distin- guished from a note for the price of the slave, which would have been illegal by statute. So a note for breach of a building contract is valid, lE^yington v. Simpson, 134 Mass. 145 (1883). And, in general, for the discon- tinuance of a pending action, Jones v. Rittenhouse, 87 Ind. 348 (1882). 'Moody V. Leavitt, 2 N. H. 171 (1820). RELEASE OF LIABILITY. 59 ■deed, this defect is a sufficient consideration for an agreement on the grantor's part to cancel one note and pay the others.^ Bo, the release of a right to avoid the compromise of a debt on account of false representations made is sufficient to sup- port a note given for the balance due on the debt.^ So, where money has been paid on an illegal contract, the rescis- sion of the contract is sufficient consideration for a note given for the return of the money.* Where, on the other hand, a note is compromised for a less sum and the smaller sum paid ^nd accepted, this amounts to a gift of the difference to the maker, and, being executed by delivery, requires no further •consideration.* But a note given for a compromise among the maker's creditors which is not carried out is without consideration.^ § 484. The withdrawal of a caveat to a will by an heir is, in like manner, sufficient consideration for a promise by a devisee named in the will.^ So, the release of an attachment is sufficient consideration for a note.'' So, the release of a judgment, although the sheriff had paid it and taken an -assignment of it to escape liability for his laches on the exe- •cution, and the note was given to him.* So, a note given for half of the amount of a judgment recovered against the maker and others, on a receipt for half of the judgment, is for :& sufficient consideration.' But where a note by one of seven 'Friermood v. Eouser, 17 Ind. 461 (1861). 'Crans v. Hunter, 28 N. Y. 389 (1863). So, a mortgagee's forbearing to •contest an administrator's sale of the mortgaged premises is a valid consid- eration, Bender v. Pryor, 31 Tex. 341 (1868). 'Lea V. Cassen, 61 Ala. 312 (1878). ♦Stewart v. Hidden, 13 Minn. 43 (1868). 'Kuggles V. Swanwick, 6 Minn. 526 (1861). ^Seaman v. Seaman, 12 Wend. 381 (1834). But the withdrawal of a caveat filed to an application for a public road, being a proceeding of a public character, has been held not to be a legal consideration for a note, Smith v. Applegate, 3 Zab. 352 (1852). 'Hackett v. Pickering, 5 N. H. 19 (1829). So, a release of a possible de- fense to an attachment, First National Bank v. Morris, 1 Hun 680 (1874). 'Sternbergh v. Provoost, 13 Barb. 365 (1851), such case not falling within the statutory prohibition as to " ease and favor under color of oflSce " (2 N. y. R. 8. 286 i 59). 'McClees v. Burt, 5 Mete. 198 (1842). 60 CONSIDERATION — SUFFIOIENCY. joint judgment debtors was made in escrow to be delivered with other securities to the judgment creditor for a release- of the judgment, and was delivered to such creditor without the other securities and without obtaining the release, it is- invalid for want of consideration.^ Again, the discontinuance of supplementary proceedings and payment of the judgment in dispute is suflBcient consid- eration and constitutes the indorsee a holder for value.^ So,. a release from arrest is sufficient consideration for a note given to the plaintiff;* or to an arbitrator, to whom the dis- pute was submitted on the maker's discharge from arrest, the arbitrator afterward awarding and transferring the note to the plaintiff.* And it seems that in New Hampshire a note may be given by a prisoner to the county in settlement of a fine and costs.® And this is provided for by statute in Maine.* § 485. Discontinuance of Bastardy Proceedings. — The sup- port of a bastard child is a good consideration for a note given by the father to the mother of the child.' So, the double consideration of the child's support and the preven- tion of proceedings against the father.* And the compro- mise of such proceedings is of itself sufficient consideration for a note by the father.' So, too, the damages in such a pro- ceeding and indemnity against farther trouble.^" 'Mickles v. Colvin, 4 Barb. 304 (1848). 'Boyd V. Cummings, 17 N. Y. 101 (1858). 'Waterman v. Barratt, 4 Harring. 311 (1845). 'Shephard v. Watrous, 3 Gaines 166. 'Strafford County v. Jackson, 14 N. H. 16 (1843). 'R. S. Me. 1841 c. 175. But the transfer of such notes by the county treas- urer to a private collector is not within the intention of such statute, Bates V. Butler, 46 Me. 387 (1859). 'Hook V. Haskin, 14 Hun 398 (1878) ; Hook v. Pratt, 78 N. Y. 371 (1879). So, any simple promise. Hicks v. Gregory, 8 C. B. 378 (1849) ; Jennings v. Brown, 9 M. & W. 496 ; or a trust deed, Bunn v. Winthrop, 1 Johns. Ch. 329 (1815). 'Hays V. McParlan, 32 Ga. 699 (1861); Jackson v. Finney, 33 lb. 512 (1863) ; Burgen v. Strangham, 7 J. J. Marsh. 583 (1832). 'Haven v. Hobbs, 1 Vt. 238 (1828); Robinson v. Crenshaw, 2 Stew. & P. 176 (1832). So, too, Merritt v. Flemming, 42 Ala. 234 (1868), although the child was afterward still-born. "•Taylor v. Dansby, 42 Mich. 82 (1879). BASTARDY PROCEEDINGS. 61 But while a note given in settlement of a bastardy proceed- ing is for sufficient consideration, it is otherwise with a note given to the mother of the child in settlement of the seduc- tion, for which she had no right of action.^ The sufficiency of a note given in settlement of a bastardy proceeding is not affected by the fact that the town afterward required bonds of the father for the support of the child.^ Nor is such note affected by the subsequent death of the child.^ It has been held also that the discontinuance of bastardy proceedings is sufficient consideration for a note by the putative father of the child to the father of the girl ;* but not to a public officer without her consent.® § 486. Consideration — Compromise of Doubtful Claim. — It is not uncommon that a disputed claim is compromised by a bill or note, and such compromise even of a doubtful claim is a sufficient consideration for the instrument;® whether the claim is good or not.'' So, the compromise of a doubtful claim against an estate together with forbearance to bring suit is a good con- sideration for a note by a legatee.* The sufficiency of such consideration is irrespective of the result to which the claim, if not compromised, would have led.* And it has been held in 'Heaps V. Dunham, 95 111. 583 (1880). 'Knight V. Priest, 2 Vt. 507 (1830) ; Maxwell v. Campbell, 8 Ohio St. 265 (1858). 'Maxwell v. Campbell, supra. Nor a note for release of father and sup- port of child, Eaton v. Burns, 31 Ind. 390 (1869). Although it might be otherwise if the note were given for the child's support only, Harter v. Johnson, 16 Ind. 271 (1861). •Cutter V. Collins, 12 Cush. 233 (1853). 'Wheelwright v. Sylvester, 4 Allen 59 (1862). »Byles 129 ; Cook v. Wright, 30 L. J. Q. B. 321 (1861) ; S. C, 1 B. & S. 559 ; Callisher v. Bischoffsheim, L. R. 5 Q. B. 449 ; Loughridge v. Dorvilie, 5 B. & Aid. 117 (1821) ; Boone v. Boone, 58 Miss. 822 (1881) ; Foster v. Metts, 55 lb. 77 ; Zane v. Zane, 6 Munf. 406 (1849) ; Eichardson v. Comstock, 21 Ark. 68 (I860) ; Stephens v. Spiers, 25 Mo. 386 (1857). 'Keefe v. Vogle, 36 Iowa 87 (1873). So notes given to take up other notes for a twenty-year market lease, it being a question whether the corporation could give such lease or not. Northern, &c.. Market Company v. Kellv, 5 S. C. Rep. 422 (U. 8. S. C. 1885). 'Austell V. Rice, 6 Ga. 472 (1848). •Russell V. Cook, 3 Hill 504 (1842) ; Taylor v. Patrick, 1 Bibb 168 (1808). But the maker of the note may show that he was not liable at all for a dis- puted injury to land for which the note was given, Gunning v. Royal. 59 Miss. 45 (1881). 62 CONSIDEBATION — SUFFICIENCY. England that moral or honorable obligations are sufficient consideration for sjich paper.^ It is not necessary to the validity of a consideration arising from compromise of a claim that it should be in suit, or that a suit should be threatened; but if the claim is illegal and wholly unfounded^ it can be no consideration for a valid note.^ § 487. Release of Claims Barred by Statute. — A valid note may, however, be given for a claim which cannot be prose- cuted by reason of the Statute of Limitations or other defense of the sort. Thus, a debt barred by the Statute of Limita- tions is a sufficient consideration for a bill or note;^ although the maker may not at the time of giving the note know that the debt is barred.* And in Louisiana a debt so barred is sufficient consideration for the note of the debtor's son.^ So, the liability of a surety on a note which is barred by the Statute of Limitations is sufficient consideration for a fresh guaranty.* But the guaranty of another person's note already barred by the statute has been held to be insufficient and of no effect in the absence of* any existing liability on the part of the guarantor.'' In Louisiana it is said that a debt which ' Chitty 87 ; Hawkes v. Saunders, Cowp. 290 ; Lee v. Muggeridge, 5 Taunt. 36 ; Gibb v. Merrill, 3 lb. 311. So an equitable obligation to pay capitalized interest, Hatheway v. Mead, 19 Cent. L. J. 237 (Oreg. 8. C. 1884). 'Tucker v. Rouk,. 43 Iowa 80 (1876) ; Sullivan v. Collins, 18 lb. 228 (1865) ; Ormsbee v. Howe, 34 Vt. 182 (1881). And if it is partly invalid, the note will be void pro tanto, Briscoe v. Kinealy, 8 Mo. App. 26 (1879). So an account stated including a fraudulent overcharge, Dickinson v, Lewis, 34 Ala. 638 (1859). So where the maker's name has been signed to a note without his authority, this constitutes no consideration for his subsequent promise to pay it, Owsley v. Philips, 78 Ky. 517 (1880). So if a debt has been satisfied, the surrender of a note and cancellation of a mortgage given for it are no consideration for a new note, although the payee claimed that the former one had not been paid, Smith v. Boruff, 75 Ind. 412 (1881). 'Chitty 87 ; Wennall v. Adney, 3 Bos. & P. 249 ; Eastwood v. Kenyon, 11 Ad. & El. 438 ; Hyling v. Hastings, Ld. Kaym. 389 ; Dean v. Crane, 6 Mod. 309; Latouche v. Latouche, 3 H. & C. 576; Way v. Sperry, 6 Cush. 238 (1850) ; Giddings v. Giddings, 51 Vt. 227 (1878). A payment of such debt cannot be recovered back, Hubbard v. City of Hickman, 4 Bush 204 (1868). *Buckner v. Clark, 6 Bush 168 (1869). But fraudulent receipts bringing it within the statute will avoid the note, Cross v. Herr, 96 Ind. 96 (1884). ^Matthews v. Williams, 25 La. An. 585 (1873). But see contra, Clement v. Segur, 29 lb. 798 (1877), although the note was given by a guardian to his "ward and formally approved by the court. •Miles V. Linnell, 97 Mass. 298 (1867). 'Clark V. Hampton, 1 Hun 612 (1874). CLAIMS DISCHAEGED VOLUNTARILY OK BY LAW. 63 is barred by the statute is not a sufficient consideration for a new note;^ but a plea setting up such defense to a renewal of a note which was barred must show at least the date of maturity of the original note.^ In like manner, a verbal promise, which is ineffectual by the statute of frauds, forms a sufficient consideration for a valid note.^ So, a debt discharged by the debtor's insolvency or bankruptcy is sufficient consideration for a new note.* But a new promise to pay such debt must be an unequivocal one.* Where, however, a debt has been discharged by a capias ad satisfaciendum, although a check given for the debtor's release from imprisonment would be valid, a subsequent promise to pay the debt is ineffectual for want of considera- tion.^ § 488. Claims Discharged Voluntarily or by Law. — A dis- tinction is to be observed between debts discharged by act of law and those discharged or released by voluntary compro- mise or act of the parties themselves. In the latter case after a voluntary compromise and release of a debt, a nott given for the part released is without consideration;^ ever. 'Brierly v. Tanner, 28 La. An. 245 (1876). ^Turner v. O'Neal, 24 La. An; 543 (1872). »Byles 129; 1 Daniel 183; Jones v. Jones, 6 M. & W. 84; Eogers v. Stev enson, 16 Minn. 68 (1870) ; Hooker v. Knab, 26 Wis. 511 (1870) ; Schneco v-. Meier, 4 Mo. App. 566 (1877). *Trueman v. Fenton, Cowp. 544 (1777) ; Scouton v. Eislord, 7 Johns. 36 (1810) ; McNair v. Gilbert, 3 Wend. 344 (1829) ; Erwin v. Saunders, 1 Cow. 249 (1823) ; Walbridge v. Harroon, 18 Vt. 448 (1846). As to the propriety of bringing the action in such case upon the original debt, see Shippey v. Henderson, 14 Johns. 178 (1817). And it seems thafa debt discharged in bankruptcy will not support a promise to pay, if induced by a previous cor- rupt agreement on the payee's part, Trumball v. Tilton, 21 N. H. 129 (1850). See, too, Cockshot v. Bennett, 2 T, R. 763 ; Penn v. Bennett, 4 Campb. 205 ; Lobb V. Stanley, 1 Dav. & Mer. 635; Maxim v. Morse, 8 Mass. 127. "Merriam v. Bayley, 1 Gush. 77 (1848). See, too, Depuy v. Swart, 3 Wend. 135 (1829) ; Moore v. Viele, 4 lb. 420 (1830). And mere payment of interest on a note that has been discharged by insolvency is not of itself sufficient to revive the obligation, Cambridge Inst. v. Littlefield, 6 Cush. 210 (1850). ^Snevily v. Eeed, 9 Watts 396 (1840). ' 'Hale V. Rice, 124 Mass. 292 (1878) ; Phelps v. Dennett, 57 Me. 491 (1870) ; Warren v. Whitney, 24 lb. 561 (1845) ; Montgomery v. Lampton, 3 Mete. 519 (Ky. 1861) ; Stafford v. Bacon, 1 Hill 538 (1841) ; Mason v. Campbell, 27 Minn. 54 (1880) ; Ingersoll v. Martin, 58 Md. 67 (1881). But see, contra. Willing V. Peters, 12 Serg. & R. 177 (1824), where a debt, voluntarily released 64 CONSIDERATION — SUFFICIENCY. although the release of the debt was given merely in order to render the creditor competent as a witness.^ But where ' it is claimed that a voluntary release was obtained by an insolvent through false pretenses, this claim is sufficient consideration for a note given for the released balance of the debt.'' Where loss has been incurred by the payment of a note in Confederate currency, this loss is no sufficient considera- tion for a new note for the amount lost.* So, a note given in settlement of a suit against the maker on a previous in- dorsement is without consideration, if the payee then had in hand sufficient money belonging to the maker to pay the amount due.* Again, the settlement of a suit on a note, which had been already really settled and released but was fraudulently represented to be still due, is no considera- tion for a new note.* So, a note is invalid which is given under false representations to take up a former note, on which the maker had been discharged by reason of an altera- tion.' And, in like manner, a new promise by a guarantor who has been discharged by laches of the holder, or by an in- dorser discharged by failure to give notice of protest, is without consideration,^ the maker of the new note not know- to render the debtor competent as a witness, was held sufficient considera- tion for a subsequent promise to pay. This case has been substantially overruled by Snevily v. Reed, 9 Watts 896 (1840). And a debt barred by a discharge in bankruptcy has been held sufficient to support a note subse- quently given, Hockett v. Jones, 70 Ind. 229 (1880) ; Wiggins v. Keizer, 6 lb. 252. By the English Bankruptcy Act of 1861, a promise to pay a debt barred by a discharge in bankruptcy was made void, 24 and 25 Vict. c. 134 § 164. This act was repealed in 1869, 32 and 33 Vict. o. 83 ? 20. It is, how- ever, applicable to a bill of exchange made while it was in force, Bimini v. Van Praagh, L. E. 8 Q. B. 1. 'Valentine v. Foster, 1 Mete. 520 (1840). 'Grans v. Hunter, 28 N. Y. 389 (1863). 'Beazley v. Gignilliat, 61 Ga. 187 (1878). 'Stewart v. Ahrenfeldt, 4 Denio 189 (1847). 'Stephens v. Spiers, 25 Mo. 386 (1857). 'Fraker v. Cullum, 21 Kans. 555 (1879). 'Van Derveer v. Wright, 6 Barb. 547 (1849). But such discbarge, opera- ting as a want of consideration, should be specially averred in the pleading. Bank of Logan v. Small, 2 T. B. Mon. 88 (1825). INVALID CLAIMS. 6^ ing of his discharge at the time.^ On the other hand, a note given for rent of part of the premises originally demised, is sufficient, although the legal liability for rent had been discharged by the tenant's eviction from another part of the premises.^ § 489. Invalid Claims — Coverture — Fraud and Mistake. — So, under the disabilities of coverture (still existing in some States), the purchase of goods by a married woman creates no personal liability sufficient to make valid her note therefor, and such purchase by her cannot be declared on as a consid- eration for a subsequent promise.* And the fact that she has been deserted by her husband does not alter the liabil- ity.* But a married woman's note for goods bought by her during coverture has been held, in New York, to be a suffi- cient consideration for a promise of payment made after her husband's death.^ Since the repeal of the usury laws in England a note given for a debt, which was previously void under such laws, aas been held valid." So, in the United States, a note given for a balance on a usurious note, after payment of part, is for valid consideration.'' So, a note given in settlement of Hccounts including other usurious notes.* But a promise to pay a forged note is without considera- tion and of no effect, unless there be some fresh consideration or an estoppel on the maker's part.® Where, however, the 1 Warder v. Tucker, 7 Mass. 452 (1811). ''Anderson v. Chicago, &c., Ins. Co., 21 111. 601 (1859). 'Littlefield v. Shee, 2 B. & Ad. 811 (1831). *Hayward v. Barker, 52 Vt. 429 (1880). And even a subsequent promise by her after divorce granted and before her remarriage, neither renders her nor her subsequent husband liable for the debt, lb. "Goulding v. Davidson, 26 N. Y. 604 (1863). So, in Tennessee, a note by her as widow in renewal of her note made during coverture for a loan ob- tained by discount, Spitz v. Fourth Nat. Bank, 8 B. J. Lea 641 (1881). ^Flight V. Reed, 22 L. J. Exoh. 265; 1 H. & C. 708. And before such re- peal it was held that where the maker of a usurious note had- been arrested in a suit upon it, his release was a good consideration for a note given for the amount by a third person. Turner v. Hulme, 4 Esp. 11 (1801). 'State Bank v. Ayres, 2 Halst. 130 (1822). 'Morris «. Taylor, 6 C. E. Green 439 (1871), aflBrmed lb. 606. See, too, Da Wolf V. Johnson, 10 Wheat. 367. •Workman v. Wright, 33 Ohio St. 405 (1878). TOL. II. E 66 CONSIDEEATION — SUFFICIENCY. defense of forgery is set up to a suit on a note, the compro- mise of the suit is sufficient consideration for a new note.^ So, the surrender of a contract obtained by fraud is suffi- cient consideration for a note.^ And this is true, with greater reason, of a note given in settlement of a compromise which had been induced by fraud but was already in part executed.* So, a note given to take up a former fraudulent note in the- hands of a bona fide holder is for valuable consideration,, although obtained through fraudulent representations as to the amount paid by such holder for the first note.* On the other hand, in the absence of fraud, a supposed liability,, having no real existence, is no consideration for a note which the maker has been induced to give by false representations.*^ A note, however, given under a mistake of law for medical services, burial expenses, and other charges for which the maker supposed himself liable, has been held to be sufficient,, even though the note was for a larger amount than was actu- ally due.* But the soundness of this conclusion is, at least,, doubtful. § 490. Mutual Accounts — Wager — Illegal Claims. — Settle- ment of mutual accounts also, in the absence of fraud, fur- nishes sufficient consideration for a bill or note.'' So, the settlement of a suit on a note given for a stock subscription ;* or a claim for breach of covenant, even without an express,, formal release." So, a note is valid, if given in settlement of a contract and for the amount due on it, although the contract was subsequently broken and foiled in its entirety.^* •Grant v. Chambers, 1 Vroom 323 (1863). Aa to the legaiUy of such & consideration, see infra. 'Montgomery v. Morris, 32 Ga. 173 (1861). "Dodge V. Manchester, 58 Ind. 429 (1877). * Murphy v. Lucas, 58 Ind. 360 (1877). 'Southall V. Rigg, 11 C. B. 481 (1851). •Ridlon V. Davis, 51 Vt. 457 (1879). 'Phelps 1). Younger, 4 Ind. 450 (1853). 'Magee v. Badger, 30 Barb. 246 (1859). •Moody V. Leavitt, 2 N. H. 171 (1820). And without a release Buoh note "would bar an action on the covenant broken, lb. "Thorpe v. White, 13 Johns. 53 (1816). INVALID CLAIMS. 67 And in Texas it seems that a forfeiture of money in a horse race is sufficient consideration for a note.^ But where a note is given in settlement of a false charge, e. g., a charge of arson, it is a mere gift without considera- tion.^ So, a note given by the seller of a horse to the pur- chaser, who had unnecessarily given up the horse in a replevin suit brought by a third person on the strength of false representations as to its having been stolen, is without consideration.^ And although, as we have seen, a note may be given for a breach of warranty, a mere claim, without actual breach and without release, is no consideration for a note.* And where land has been conveyed without any covenant as to quantity, a subsequent promise by the grantor to pay for a deficiency in the quantity was held to be without consideration.* So, even a sealed note, given for a balance due on a former note which was without consideration, is invalid.® So, if a note is given by a surety in payment of a debt of his principal, which was illegal and void by statute, it will be no consideration to support a claim against the principal.'' So, a note given for an illegal assessment without knowledge of the illegality, is void for want of consideration, there being in such case no estoppel against the maker.* A claim by the guardian of a minor, for expenses of her maintenance while single, is no consideration for a promise made by her husband after her marriage.® Neither is a father liable on a promise to pay for the board of his chil- dren, who have been taken from him, pending a divorce suit 'Pierce v. Randolph, 12 Tex. 290 (1854). For other cases relating to the legality of this and other wager considerations, see infra. 2 Pearson v. Pearson, 7 Johns. 26 (1810). 'Sullivan v. Collins, 18 Iowa 228 (1865). *Conover v. Stillwell, 5 Vroom 54 (1869). 5 Smith V. Ware, 13 Johns. 257 (1816). «Geiger v. Cook, 3 Watts & S. 266 (1842). 'Perkins v. Cummings, 2 Gray 258 (1854). 'Parsons v. Pendleton, &c.. Turnpike Co., 59 Ind. 36 (1877). 'Eastwood V. Kenyon, 11 Ad. & El. 438 (1840). 68 CONSIDERATION — SUFFICIENCY. against him, without consent or default on his part.' So, a note given to a mother for an injury to her child, for which she had no right of action, is without consideration.^ § 491. Forbearance — Extension. — As has been already- said, the extension of a debt or forbearance on it is sufficient consideration for a note or bill;^ or for a guaranty of a note.* So, too, an agreement for delay on an execution already issued.^ And it is sufficient that the forbearance be for a reasonable time instead of some more definite period.^ In such case what is " reasonable time " is a question for the jury to determine.' So, the surrender of a former note, on which the maker of the new note is surety, together with for- bearance given to the principal, is sufficient consideration for a new note.* Where a note has been originally induced by fraud, an extension by the indorsee will be a sufficient consideration for a ratification of the note and will make it good.^ But forbearance to collect a note at its maturity has been held insufficient to support a promise to pay an increased rate of interest.'" So, indefinite forbearance has been held insuffi- cient support for an agreement to pay compound interest on » Dodge w. Adams, 19 Pick. 429 (1837). » Hearst v. Sybert, Cheves 177 (1840). ' Foster v. Wise, 27 La. An. 538 (1875) ; Meltzer v. Doll, 91 111. 365 (1883) ; Atherton v. Marcy, 59 Iowa 650 (1882). So, for the transfer of an accom- modation note, Callahan i;. Bancroft, 28 Hun 684 (1883) ; or for an accom- modation indorsement, National Bank v. Place, 86 N. Y. 444 (1881). And, a fortiori, forbearance as to some parties and release of others is good consideration for a new note given as collateral security, Muirhead v. Kirk- patrick, 21 Penna. St. 237 (1853.) So, an extension to the maker and release of the indorser of a promissory note is a good consideration for a new note, and want of consideration for the original note is no defense, Gatzmer v. Pierce, 13 Phila. 88 (1883). But mere forbearance without any agreement to forbear is no consideration, Manter v. Churchill, 127 Mass. 31 (1879). *King V. Upton, 4 Me. 387 (1826) ; Fuller v. Scott, 8 Kans. 25 (1871). ^Robinson v. Gould, 11 Cush. 55 (1853) ; or delay on an execution against another person, Giles v. Ackles, 9 Penna. St. 147. And the very fact of giv- ing a note for a, debt already in judgment implies an agreement for forbear- ance, Baker v. Walker, 14 M. & W. 465. 'Lonsdale v. Brown, 4 Wash. C. C. 148 (1821). 'McCelvy v. Noble, 13 Rich. 330 (1866). « Wheeler v. Slocumb, 16 Pick. 52 (1834). •Doherty v. Bell, 55 Ind. 205 (1876). "Shealy v. Toole, 56 Ga. 210 (1876). CONSIDERATION FOK EXTENSION. 69 a note after its maturity.^ Where, however, a note was ex- tended and renewed after the war, the extension was held suflScient consideration for a new promise to pay the note with interest accrued on it during the war, for which the maker was not liable.*^ And an extension given to the maker of a note has been held sufficient to support a promise by an additional note to pay collection fees.^ § 492. Consideration for Extension. — An agreement for an extension in its turn requires a consideration in order to be of any force and will not be binding without it, nor have any effect in discharging an indorser or surety.* The pay- ment of interest in advance is sufficient consideration for such extension ;° or an agreement to pay a higher rate of interest ; * but not a mere payment of interest already due.'' Likewise, the payment of another debt not yet matured is sufficient consideration for the extension of a note.* And it has even been held that the payment of part of the sum already due on the note was sufficient to support a valid ex- tension of the balance.* Where land has been sold subject to the payment of a note secured by mortgages on the land, the agreement by the purchaser to pay the note is sufficient consideration for an agreement on the part of the holder to extend the. time of payment.'" So, the giving of a renewal note with additional security will support an agreement for 'Glasscock v. Glasscock, 66 Mo. 627 (1877). But compound interest al- ready accrued and forbearance on an execution already issued for principal and simple interest are sufficient to support a note for such interest, Wilcox V. Rowland, 23 Pick. 167 (1839). ''Hutton V. Edgerton, 6 So. Car. 485 (1875). 'Brainard v. Harris, 14 Ohio 107 (1846). ♦Costello V. Wilhelm, 13 Kans. 229 (1874) ; Roberts v. Richardson, 39 Iowa 290 (1874) ; Dilton v. Russell, 5 Neb. 484 (1877). ''Maher v. Lanfrom, 86 111. 513 (1877); Lime Rock Bank v. Mullett, 84 Me. 547 (1852) ; St. Joseph Ins. Co. v. Hauck, 71 Mo. 465 (1880) ; Stillwell v. Aaron, 69 lb. 539. 'Royal V. Lindsay, 15 Kans. 591 (1875) ; Kittle v. Wilson, 7 Neb. 76 (1878). 'Stuber v. Schack, 83 111. 191 (1876). "Rigsbee v. Bowler, 17 Ind. 167 (1861).' 'Turnbull v. Brock, 31 Ohio St. 649 (1877). See, contra, Pemberton v. Hoosier, 1 Kans. 108 (1862). '"Kester v. Hulman, 65 Ind. 100 (1878). 70 CONSIDEEATION — SUFFICIENCY. forbearance.^ And so, the extension of a note by the holder is sufficient consideration for its extension by the indorser.* But merely giving a note for an existing debt is not sufficient consideration for an indefinite promise " to allow the loan to remain a little longer."* § 493. Indemnity. — The indemnity of a surety or of an accommodation party is often the consideration for a note or bill given to him and is sufficient as such ; although only the amount actually paid by him can be recovered by him on such paper given for his indemnity.* And an agreement to indemnify an accommodation co-maker is a sufficient con- sideration for his signature.^ The real consideration in such case is, however, in general the credit loaned by him to the party accommodated and the credit given to the party accom- modated on his account. Again, the demand of the surety upon a note for his discharge is sufficient consideration for a note given him by his principal for his security.* But it has been held that indemnity against possible loss •on the contract of suretyship is not sufficient consideration to Tender the taker of a note for that purpose a bona fide holder for value.'' So, too, where a note was given by A. to B. to indemnify him against loss on a note on which they were co-sureties, and B. afterwards paid the original debt and released the original principal therefrom at the request of A. and upon A.'s agreement that the liability of B. should not be affected thereby, the new note for indemnity was held to be without consideration, A.'s liability to B. as co-surety on the original debt remaining unaffected.' And if a note be given to the sureties on a bail bond for their indemnity, 'Gates V. Hamilton, 12 Iowa 50 (1861). ■» Third Nat. Bank v. Blake, 73 N. Y. 260 (1878). "Atlantic Nat. Bank v. Franklin, 55 N. Y. 235 (1873). *Hazeltine v. Guild, 11 N. H. 390 (1840). 'Rutledge v. Townsend, 38 Ala. 706 (1863). "Mercer v. Lancaster, 5 Penna. St. 160 (1847). ' Bank of Mobile v. Hall, 6 Ala. 639 (1844) ; Andrews v. McCoy, 8 lb. 920 '(1846). "Hutchinson v. Thacher, 49 Vt. 486 (1877). INDEMNITY. 71 and they afterwards themselves procure the bond to be for- feited and pay the amount, they cannot recover in an action for their indemnity on the note, being estopped by their con- duct from bringing such action.^ On the other hand, a note ^iven to a mutual insurance company under the statute for the purpose of securing policyholders in the company is upon sufficient consideration.'^ 1 King V. King, 69 Ind. 467 (1880). 'Although in anticipation of a policy to be issued, Howland v. Myer, 3 N. Y. 290 (1850), and although the company became insolvent before the policy was issued, Howard v. Palmer, 64 Me. 86 (1874). 72 CONSIDEKATION — ILLEGAL. CHAPTER XIV. CONSIDERATION— ILLEGAL. I. Against Pvhlic Policy. II. Against Express Statute. I. CONSIDEKATIONS AGAINST PUBLIC POLICY. 494. Illegal Considerations — Classification. 1. Against Public Safety. 495. Contracts with Alien Enemies. 496. Aiding the Confederacy. 497. Confederate Currency. 498. Sale of Public Office or Contracts. 499. Services as Lobbyist. 500. Official Action or Negligence. S. Against PubKc Justioe, 501. Compounding Crime." 502. Money Embezzled. 603. Equitable Belief— Kecovery of Payment. 504. Suppressing Evidence — Costs — Pardon. 505. Private Misdemeanors^— Divorce. 5. Against Social Institviions. 506. Restraint of Marriage. 507. of Trade. 508. Defrauding Creditors — Bankruptcy. 510. Wagers — At Common Law. 511. By Statute. 512. On Racing. 513. Policies — Lotteries. 514. Gambling Defenses. 515. Stock Gambling. 616. J^. Against Morality and Religion. § 494. Illegal Considerations — Classification. — It is neces- sary not only that the consideration of commercial paper should be suflBcient, as we have seen, but also that it should be a legal one. If the consideration be illegal, the bill or note is void between the parties.^ Questions as to the legal- ity of a consideration fall chiefly into the following classes : First, considerations which are void at common law, as being against public policy ; second, considerations which are made 'Perkins v. Cummings, 2 Gray 258 (1854) ; Holden v. Cosgrove, 12 Gray 216 (1858) ; Hubbell v. Flint, 13 Gray 277 (1859) ; Baker v. Collins, 9 Allen 253 (1864) ; Webster v. Sanborn, 47 Me. 471 (1869). FIEST, OFFENSES AGAINST PUBLIC SAFETY. 73 illegal by statute. Under the first of these classes may be enumerated, first, offenses against the public safety ; second, offenses against public justice ; third, offenses against trade, marriage and other institutions protected by public policy ; fourth, offenses against public morality, decency and religion. To render an instrument void as against public policy the fact that it is so must clearly appear.^ If this is doubtful, the instrument cannot be held void on that account.^ § 495. First, Offenses against Public Safety — Contracts with Alien Enemies. — At common law and by the universal public law, as a necessary protection of the State against its enemies, contracts made with an enemy in time of war are, with some exceptions, illegal and void.^ An exception to this rule is a contract by a prisoner of war for ransom, or a contract for ransom of a captured vessel or captured goods.* Commercial paper, in respect to this principle, follows the same rule as other contracts. Thus, a bill drawn by an alien enemy during the war upon a British subject, accepted by the drawee, and indorsed to another British subject resident in the hostile country, is invalid, although no action be brought on it until after the establishment of peace.® But a bill drawn by a British prisoner for necessaries in favor of an alien enemy can be sued upon after the war is ended.* A bill of exchange drawn by a citizen upon an alien enemy, not being open to the same objection as a bill or other con- tract effecting remittances to an enemy, has been held not to be illegal;'' especially where it is drawn for supplies fur- ' Byles 138 ; 1 Daniel 195 ; 1 Parsons 214 ; Richardson v. Mellish, 2 Bing. 229 ; S. C, 9 Moore 435. 'Byles 137. "Byles 139; Chitty 99; 1 Edwards ? 473; Story on Prom. Notes ? 189; 1 Parsons 216; Schofield v. Eichelberger, 7 Pet. 586 (1833); Ketchum v. Scribner, 1 Boot 98 (1789). And see, mpra, I 248 et seq. 'Contracts to ransom British ships or goods are void in England by stat- ute, 45 Geo. III. c. 72; Webb v. Brooke, 3 Taunt. 6. But a bill or note for the ransom of a ship is now valid in the hands of a bona fide holder for value, 5 and 6 Wm. IV. c. 411. 'Willison V. Patteson, 7 Taunt. 440. 'Antoine v. Morshead, 6 Taunt. 237 ; S. C, 1 Marsh. 558. 'United States v. Barker, 1 Paine C. C. 156 (1820). 74 CONSIDERATION — ILLEGAL. nished the enemy's vessel under authority of an act of Congress/ It was formerly held that a note given for the purchase of a British sailing license during the war with Great Britain was valid.^ Such sale has, however, been held by the United States Supreme Court to be unlawful." § 496. Aiding the Confederacy. — Most questions that have arisen on this subject in the American courts have grown out of transactions occurring during the recent war in the United States. Thus, it has been held that a note given for money loaned for the purpose of raising volunteers to resist the United States Army in Tennessee could be sued upon even by an indorsee for value who knew of the illegal pur- pose.* But in general such instrument is illegal and void. So, too, a note or bill given to procure a substitute in the Con- federate army, is illegal.^ So, too, a note made for a loan for that purpose, even though the money obtained on it be other- wise applied.^ But a note given to a surety for money actually paid by him as surety on such a note has been held to be valid.'' In like manner, a- note given for the purchase of horses for the Confederate service is illegal and void.* But the fact that such note was given by a Confederate officer for the purchase of a horse, apparently for army use, has been held not of itself sufficient to render the note invalid.' And 'Buckley v. Furse, 15 Johns. 338 (1818). 'Coolidge V. Inglee, 13 Mass. 26 (1816). 'Patton V. Nicholson, 3 Wheat. 204 (1818). *Puryear v. McGavock, 9 Heisk. 461 (1872) ; James v. Planters' Bank, lb. 455 ; Bank of Tennessee v. Cummings, lb. 470. And a note given for the purpose of aiding the Confederacy is valid in the hands of a bona fide holder, Glenn v. Farmers' Bank, 70 N. C. 191 (1874). ^Chancely v. Bailey, 37 Ga. 532 (1868) ; Critcher v. Holloway, 64 N. 0. 526 (1870) ; Stewart v. Bosley, 19 La. An. 439 (1867) ; Wright v. Stacey, lb. 449; Heidenreich v. Leonard, 21 76. 628 (1869) ; Pickens v. Eskridge, 42 Miss. 114 (1868). « Kingsbury v. Fleming, 66 N. C. 524 (1872) ; Kingsbury v. Goooh, 64 lb. 528 (1870). So, too, a note for money borrowed to pay off such a note, Kingsbury v. Suit, 66 N. C. 601 (1872). 'Powell V. Smith, 66 N. C. 401 (1872). *McMurtry v. Ramsey, 25 Ark. 350 (1869) ; Booker v. Robbins, 26 lb. 660 (1871) ; Martin v. McMillan, 63 N. C. 486 (1869). Not so, however, a new note given after the war was over on a new valuation at that time of a horse sold and used before for such service, Murphy v. Weems, 69 Ga. 687 (1882). 'Thedford v. McClintock, 47 Ala. 647 (1872). AIDING THE CONFEDERACY. 75 where a note was given in Virginia for cattle purchased, -evidence that the purchaser of the cattle and maker of the note was an agent of the Confederate government, and that the purchase was made for the purpose of aiding the rebellion, has been held to be inadmissible.^ So, it has been held that the guarantor of a note under seal could not set up in his ChittylOO. 'Meadow v. Bird, 22 Ga. 246 (1857). 'Keefe v. Vogle, 36 Iowa 87 (1872); Wyatt v. Eviris, 52 Ala. 285 (1875); Bozeman v. Eushing, 51 Ala. 529 (1874) ; Muirhead v. Kirkpatrick, 21 Penna. St. 237 (1868), the consideration in this case being forbearance to prosecute a claim and release of indorser and co-maker on a former note given for it. *Byles 139; 1 Daniel 198; 1 Parsons 215; Drage v. Ibberson, 2 Esp. 643; •Coppock V. Bower, 4 M. & W. 361 ; Clark v. Ricker, 14 N. H. 44 (1843) ; Kneeshaw v. Collier, 30 U. C. C. P. 265 (1879). So, a bond given in satisfac- tion of damages for assault and battery and to prevent a prosecution, Price ■V. Summers, 2 South. 578 (1819); or a note in settlement of a charge on suspicion against the maker's slave for setting fire to the payee's property, there being no agreement to compound the felony, if any, Morgan v. Knox, 15 La. An. 176 (1860). ^Tucker v. Eonk, 43 Iowa 80 (1876). "Loomis V. Cline, 4 Barb. 453 (1848). 'Burt V. Place, 6 Cow. 431 (1826). 'Smith V. Applegate, 3 Zab.~352 (1852). So, an agreement not to prose- cute a caveat filed for alleged fraud against an application for a land patent. Hoyt V. Macon, 2 Col. 502 (1875). 88 CONSIDERATION — ILLEGAL. pending a divorce suit, to provide alimony for the wife, i» upon sufficient consideration and valid ;^ but not if given for the purpose of facilitating divorce.* On the other hand, a note given in consideration of the withdrawal of a defense in a divorce suit, is illegal.^ So, a note for an agreement not to defend such suit* And where a divorce suit has been dis- missed on the reconciliation of the parties to it, and a note has been given by the husband to the attorney of the wife for services rendered in the matter to both, it is illegal as to the husband's share of the services, inasmuch as the attorney cannot lawfully render services in the matter to both con- tending parties.^ § 506. Third, Offenses Injurious to Institutions Protected by Public Policy — Restraint of Marriage. — The institution of marriage being under the protection of the law, contracts in general restraint of marriage are at common law illegal and void.® So, too, even contracts in restraint of marriage for a limited period, e. g., for six years.'' So, a sealed bill for the payment of money provided that the drawer is not law- fully married in six months is illegal ; * or on condition that the drawer, a widow, shall not marry again.' So, contracts for the procurement of marriage are illegal ; and a note or bill given for such agreement is void.^" § 507. Contracts in Restraint of Trade. — The institutions 'Burnett v. Paine, 62 Me. 122 (1874). So, a note by husband to wife for her return to him and in settlement of a divorce suit has been held valid, Adams v. Adams, 24 Hun 401 (1881), affirmed 91 N. Y. 381 (1883). But see Van Orden v. Van Orden, 8 Hun 315; Phillips v. Myers, 82 111. 67. 'Adams v. Adams, 25 Minn. 72 (1878). 'Stouten burgh v. Ly brand, 13 Ohio St. 228 (1862) ; Sayles v. Sayles, 21 N. H. 312 (1850). *Everhart v. Puckett, 73 Ind. 409 (1881) ; Muckenburg v. Holler, 29 lb. 139; Beard v. Beard, 19 Cent. L. J. 78 (Cal. S. C. 1884). *MacDonald v. Wagner, 5 Mo. App. 56 (1878). "Byles 138; Chitty 101; 1 Edwards H78; 1 Parsons 214; Story on Prom. Notes § 189; Lowe v. Peers, 4 Burr. 2225; Hartley v. Bice, 10 East 22; Gib- son V. Dickie, 3 M. & S. 463. 'Hartley v. Rice, 10 East 22. "Sterling v. Sinnickson, 2 South. 756 (1820). 'Baker v. White, 2 Vern. 215. '»Bylesl38; 1 Daniel 195; Chitty 101; Co. Lit. 206 6/ 1 Parsons 214; Hall •e. Potter, 3 Lev. 411 ; Roberts v. Roberts, 3 P. Wm. 66. CONTRACTS IN RESTRAINT OF TRADE. 89 of trade are also under the protection of the law and a con- tract in general restraint of trade is unlawful.^ An agree- ment not to engage in trade or in a particular business in any part of England is a general restraint and illegal.^ So, coal combinations are in restraint of trade, and a check given for a balance due on such a combination agreement is illegal.* So, a bill or note given to further the objects of an association having for its object the regulation of freight and passage rates on the Erie Canal is illegal.* So, contracts to prevent competition at an auction or other public sale are illegal and void.* So, a contract not to bid at an auction, in consideration of the one who bids and buys in the property dividing it with the others,* or selling it again and satisfying a debt out of the surplus,^ is illegal. And this has been held to be the case even where one purchased land subsequent to a judgment, which was at the time a lien upon it unknown to him, and afterward paid off the execution issued under the judgment and gave his note for an additional sum to prevent the judgment creditor from bidding on the property at the sheriff's sale;' although the judgment creditor claimed to have another claim, not in judgment, against the prior owner of the land, represented by the amount of the note. On the other hand, while a contract in general restraint of trade is illegal, it is lawful to make one in partial and limited restraint of trade.' Such restriction may be as to 'Chitty99; 1 Daniel 195; 1 Edwards § 478; Story on Prom. Notes § 189. 'Bylesl38; Chitty 99. 'Morris Run Coal Co. v. Barclay Coal Co., 68 Penna. St. 173 (1871). ♦Stanton v. Allen, 5 Denio 434 (1848). 'Brisbane v. Adains, 3 N. Y. 129 (1849) ; Noyes i;. Day, 14 Vt. 384 (1842). •Doolin V. Ward, 6 Johns. 194 (1810). 'Thompson v. Davies, 13 Johns. 112 (1816). 'Jones V. Caswell, 3 Johns. Cas. 29 (1802) ; Doolin v. Ward, 6 Johns. 194 ; Thomson v. Davies, 13 lb. 112. But several persons may agree to purchase property together at an auction sale appointing one to bid for all with restrictions as to price. Small v. Jones, 6 Watts & S. 122 (1843). '1 Daniel 198; Bunn v. Guy, 4 East 190; Perkins v. Lyman, 9 Mass. 522 (1813); Jenkins v. Temples, 39 Ga. 655 (1869). But a general promise not to carry on a certain trade for thirty years is illegal, and a note given in consideration of it cannot be enforced, Saratoga Bank v. King, 44 N. Y. 87 (1870). 90 CONSIDERATION — ILLEGAL. the limit of space within which the business in question may not be carried on ;^ or for the exclusive use of a trade secret;* or not to carry on a trade with certain customers;^ or not to trade against the laws of a certain company, such as the Eussian Company or East Indian Company.* § 508. Contracts in Fraud of Creditors. — The protection of legitimate trade naturally implies a prohibition of fraud in all its forms, and it may be laid down as a general prin- ciple that contracts in fraud of the rights and interests of third persons, as well as contracts in fraud of a party to them, are void, except where by the rules of commercial paper the defense is excluded.^ It follows that a note or bill made in fraud of other creditors is void between the parties.' This is especially the case in proceedings under the bank- ruptcy law. Thus, a note given to a creditor for more than his share of the assets in fraud of the bankrupt law is ille- gal.^ So, a note given to a creditor to induce him to join in a composition deed in bankruptcy is illegal,* even though 'Chitty 99; 1 Edwards ? 478; Hulock v. Blacklowe, 2 Saund. 156 n. 1; Mitchel V. Reynolds, 1 P. Wm. 190; Davis v. Mason, 5 T. R. 118 ; Bunn v. <3uy, 4 East 190; Horner v. Graves, 7 Bing. 735; Ward v. Byrne, 4 M. & W. 548; Horner v. Ashford, 3 Bing. 323 (1825) ; Nobles v. Bates, 7 Cow. 307 (1827). ^Bryson v. Whitehead, 1 Sim. & St. 74 (1822). 'Byles 138; Mitchel v. Reynolds, supra; Davis v. Mason, 5 T. R. 118; Tallis V. Taliis, 1 El. & Bl. 391 ; Mallan v. May, 11 M. & W. 653; Green v. Price, 13 lb. 695; Price v. Green, 16 lb. 346; though for an unlimited time, Pemberton v. Vaughan, 12 Q. B. 87 ; Sainter v. Ferguson, 7 C. B. 716. *Gro88 V. La Page, Holt 105 ; Lightfoot v. Tenant, 1 Bos. & P. 552. 'Chitty 102; 1 Daniel 193, 197; 1 Edwards § 483; Story on Prom. Notes ^ 189; Gordon v. Clapp, 113 Mass. 335 (1873). »Fay V. Fay, 121 Mass. 561 (1877); Fenton v. Ham, 35 Mo. 409 (1865); Hamilton v. Scull, 25 lb. 165 (1857) ; Powell v. Inman, 7 Jones 28 (1859). 'Chitty 92, 102; 1 Edwards H82; 1 Parsons 216; Grimes v. Hillenbrand, 4 Hun 354 (1875) ; Cockshott v. Bennett, 2 T. R. 763 ; Leicester v. Rose, 4 East 372; Spurrett v. Spiller, 1 Atk. 105; Jackson v. Lomas, 4 T. R. 166; Cooling V. Noyes, 6 T. R. 263; Bryant v. Christie, 1 Stark. 329 ; Jackson v. Davison, 4 B. & Aid. 695; Lewis v. Jones, 4 B. & C. 511; Ex parte Sadler, 15 Ves. 55 ; Knight v. Hunt, 5 Bing. 432 ; Britton v. Hughes, 5 Bing. 400 ; Took Atwood V. Weeden, 12 R. I. 293 (1879). 'Lewis V. Littlefield, 15 Me. 233 (1839). 'Conklin v. Roberta, 36 Conn. 461 (1870). *Hoit V. Hodge, 6 N. H. 104 (1833). So, a stake deposited on a wager that A. B. could not break jail, Perkins v. Eaton, 3 N. H. 152 (1825) ; or on an election, McAllister v. Hoffman, 16 Serg. & R. 147 (1827). ^Byles 144; Chitty 113; Kent v. Bird, Cowp. 583; Nantes v. Thompson, 2 East 285 ; Halford v. Kymer, 10 B. & C. 724 ; Roebuck v. Hamerton, Cowp. 737; Good v. Elliott, 3 T. R. 690; Morgan v. Pebrer, 4 Scott 230. «Sigell V. Jebb, 3 Stark. 1. 'Parsons v. Alexander, 2 El. & Bl. 263 (1855). ^Thompson v. Milligan, 2 Cranch C. C 207 (1820); Hawkins v. Cox, 15. 173; Hunt v. Knickerbocker, 5 Johns. 327 (1810). But not a note for money received by the maker from the payee's agent for such illegal sales made by the agent. Lemon v. Grosskopf, 22 Wis. 447 (1868). 'Roby V. West, 4 N. H. 285 (1828). So, too, a prohibition under a penalty, of sales of liquor without license, Lewis v. Welch, 14 N. H. 294 (1843). 1° Chitty 113, 116; Deey v. Shee, 2 T. R. 617; Seddons v. Stratford, Peake 215; Wyatt v. Bulmer, 2 Esp. 538. VOL. n. ^ 98 CONSIDERATION — ILLEGAL. given to insure a prize in a lottery was held to be valid/ lot- teries not being then prohibited in the State of Connecticut. On the other hand, a contract for the purchase of goods or trinkets, to be sold on the lottery plan, is void where lotteries are prohibited.'' § 514. Gambling Defenses. — Where gaming is prohibited,, a note given for winnings at cards or other games is illegal and void.' So, a note given to a fellow-loser for a share of the gambling loss is illegal,* But where one of two losers by gaming pays the debts jointly incurred, this has been held to be a legal consideration for a note afterwards given to him by the other loser for his share.^ And it has been held in a recent case in North Carolina that where a judg- ment had been won at cards, a note afterwards given for it was not therefore illegal.' But where a bill is drawn in France to take up English bills given for money lost in gaming in England, the taint of illegality still remains and avoids the instrument in the hands of the original payee,, although not prohibited by French law.^ In general, a bill or note given for a wager is invalid not only in the hands of the original parties but of all subse- quent holders taking it after maturity or with notice.* Thus,, where A, gave a check for a gambling debt which was after- wards indorsed and eventually paid by B. with knowledge of its illegal character, no recovery could be had against A.* Although, however, a bill or note for a gaming debt might 'Bacon v. Goodsell, 2 Root 283 (1795). 'Hull V. Buggies, 56 N. Y. 424 (1874). So, a note for work and material* in preparing a lottery, Higgins v. Miner, 13 Ind. 346 (1859). 'Knight V. Gregg, 26 Tex. 506 (1863); Evans v. Cook, 11 Nev. 69 (1876). But not so a note for the repurchase of a horse which had been lost on a bet, Windham v. Childress, 7 Ala. 357 (1845). * Whitesides v. McGrath, 15 La. An. 401 (1860). 'Boggess V. Lilly, 18 Tex. 200 (1856). •Teague v. Perry, 64 N. C. 39 (1870). 'Wynne v. Collander, 1 Russ. 293. 'Brown v. Turner, 7 T. R. 630 ; 8. C, 2 Esp. 631 ; Aubert v. Maze, 2 Bos. & P. 374; Steers v. Lashley, 6 T. R. 61, 533; Amory v. Meryweather, 2 B. & C. 573; S. C, 4 D. & R. 86. •ScoUans v. Flynn, 120 Mass. 271 (1876). STOCK GAMBUl^G. 99 be illegal or even void in the hands of a bona fide holder for value against the original loser, it would still be valid against indorsers.^ But where the consideration is a doubtful one and the note on its transfer represents two debts, one of which is illegal, it will be itself valid. Thus, where A. owed a gambling debt to B., and B. owed a legal debt to C, and A. gave his note to C. in discharge of the illegal debt to B., the note, being accepted by C in discharge of the legal debt from B., is valid in C.'s hands.^ In like manner and for like reasons a note or bill given for money lent to game with is void by force of the statute even in the hands of a holder for value.^ And money which has been lent for such illegal purpose cannot be recovered again by the lender.* So, a renewal note, given for such loan to the payee of the original note, is likewise void between the parties.^ So, too, a note for money loaned to be staked on a horse-race.' So, too, a bill of exchange, given partly for money lost at play and partly for money loaned for gaming purposes, is void as to both, but as to the latter there might formerly be a recov- ery under the common counts in England.'' § 515. Stock Gambling. — Stock jobbing and stock gam- bling are essentially of the same general character as other gambling, although not generally prohibited by statute. It was formerly held that money paid out in settling differences on a stock jobbing transaction could be recovered.* And it 'Byles 141; Chitty 117; Edwards v. Dick, 4 B. & Aid. 212; Bowyer v. Brampton, 2 Stra. 1155; O'Keefe v. Dunn, 6 Taunt. 315. 'Bowen v. Daggett, 2 Nott & McCord 127 (1819). 'Chitty 110: Byles 141 ; 1 Daniel 204; 1 Parsons 214; Bowyer v. Bramp- ton, mipra; Mordecai v. Dawkins, 9 Rich. 262 (1856). *Cannan v. Bryce, 3 B. & Aid. 179; McKinnell v. Robinson, 3 M. & W. 434. 'Cutler V. "Welsh, 43 N. H. 497 (1862). 'Ruckman v. Bryan, 3 Denio 340 (1846). But not for the purchase of a horse to run in a race, Cummings v. Henry, 10 Ind. 109 (1858) ; and as to money loaned for an illegal purpose and securities given therefor, see Jones V. Planters' Bank, 9 Heisk. 455 (1872) ; White v. Yarbrough, 16 Ala. 109 (1849). 'Robinson v. Bland, Burr 1077 (1760). •Byles 142; Faikney v. Reynous, 4 Burr. 2069; Petre v. Hannay, 3 T. R, 418. 100 CONSIBERATION — ILLEGAL. has been held that contracts for the purchase or sale of stocks are lawful, although the seller is not at the time possessed of such stock.^ By the statute of George II. payment for dif- ferences in stock jobbing was prohibited, and such payments and loans made for that purpose might be recovered back.'' But this act has since been repealed.* As bills and other securities given for such differences have not been declared void by statute, it seems that an indorsee may recover thereon against the acceptor,* or drawer.^ But the indorsee of such a note after maturity cannot recover against the drawer upon it or upon a bond subsequently given by him in settlement of it." In Massachusetts a note given to a broker in settlement of losses on a stock transaction has been held valid, although the transaction itself was void by statute.'' On the other hand, notes given for losses in stock .gambling,* or for mar- gins in stock operations,' have been held to be founded upon illegal consideration and not recoverable. And in Wiscon- sin notes given for a broker's services in a gambling transac- tion in grain, which was illegal by statute, have been held to be void, both as to maker and indorser, and at suit of a subsequent indorsee.^" 'Mortimer v. McCallan, 7 M. & W. 20, affirmed 9 M. & W. 636. '7 Geo. II. c. 8; Carman v. Bryce, 3 B. & Aid. 179; McKinnell v. Eobin- son, 3 M. & W. 434. »23and24Vict. c. 28. *Broughton v. Manchester Water Works Co., 3 B. & Aid. 10. 'Day V. Stuart, 6 Bing. 109; S. C, 3 M. & P. 334. «Amory v. Meryweather, 2 B. & C. .573 ; S. C, 4 D. & E. 86. Nor against the acceptor. Brown v. Turner, 7 T. R. 630 ; S. C, 2 Esp. 631. ' Wyman v. Fiske, 3 Allen 238 (1861). »Fareira v. Gabell, 89 Penna. St. 89 (1879); Brua's Appeal, 55 lb. 294 (1867). But see Smith v. Bouvier, 79 lb. 326 (1872), where a distinction is based on the delivery of the stocks afterward. 'Swartz's Appeal, 3 Brewst. 131 (1869) ; Raven v. Rubino, 20 N. Y. Weekly Dig. 124 (1884). So, in Alabama for cotton margins, Hawley v. Bibb, 69 Ala. 52 (1881) ; and in Illinois even in the hands of a bona fide holder, Ten- ney v. Foote, 4 Bradw. 594 (1879). But see Hentz v. Jewell, 20 Fed. Rep. 692 (1881) ; Sawyer v. Macauley, 18 So. Car. 543 (1882) ; Shaw v. Clark, 49 Mich. 384 (1882) ; Third National Bank v. Harrison, 3 McCreary 316 (1882) ; Third Nat. Bank v. Tinsley, 11 Mo. App. 498 (1882). '"Barnard v. Backhaus, 52 Wis. 593 (1881). OFFENSES AGAINST MOKALITY AND EELIGION. 101 § 516. Fourth, Offenses Against Morality and Religion. — Contracts in violation of the principles of the Christian relig- ion are illegal and void at common law;^ as also contracts which are contrary to sound Christian morals;* or which are prejudicial to the community at large.^ Thus, as we have seen, a contract for libeling another or for the sale of libelous or immoral books is illegal and void.* So, too, a contract or note having for its consideration future illicit cohabitation;* although it is otherwise, if the illicit act be already a past transaction.^ At least an executed deed or contract will not be rendered void by such consideration, though it might not be sufficient to support a promise.'' In like manner, a note given for rent of lodgings taken for purposes of prostitution is void.* And where a house is purchased for such unlawful purpose, there is ,a resulting trust in favor of the purchaser's creditors, the title being taken in the name of the woman with whom the intercourse was carried on.' So, too, a note given by the father of an illegitimate child to prevent bas- tardy proceedings is illegal ;^° but not so a contract for the child's support in consideration of such proceedings being dropped." And a note given for such purpose and consid- ' 1 Parsons 214. '1 Parsons 214; Story on Prom. Notes 2 189. "Chitty 99, 102; Jackson v. Duchaire, 3 T. R. 551. *Chitty 102; 1 Daniel 197; Stockdale v. Onwhyn, 5 B. & C. 173; Fores v. Johnes, 4 Esp. 97 (1802). 'Byles 137; ChittylOl; 1 Daniel 195; 1 Parsons 214; Story on Prom. Notes 1 189. 'Ex parte Munford, 15 Ves. 289; Gibson v. Dickie, 3 M. & S. 463; Walker V. Perkins, Burr. 1568; Marchioness of Annandale v. Harris, 2 P. Wm. 432; Turner v. Vaughan, 2 Wils. 839; Hill v. Spencer, Arab. 641; Me parte Cot- trell, Cowp. 742; Shenk v. Mingle, 13 Serg. & R. 29 (1825) ; Smith v. Richards, 29 Conn. 232 (1860) ; Brown v. Kinsey, 81 N. C. 245 (1879). 'Byleal37; ChittylOl; 1 Daniel 195; 1 Edwards H74; 1 Parsons 214; Bennington «. Wallis, 4 B. & Aid. 651; Gibson v. Dickie, supra; Nye v. Mosely, 6 B. & C. 133; S. 0., 9 D. & R. 165; Beaumont v. Reeve, 15 L. J. Q. B. 141; S. C, 8Q. B. 483. ^Jennings v. Throgmorton, Ry. & M. 251 ; Girardy v. Richardson, 1 Esp. 13. 'Wait V. Day, 4 Denio 439 (1847); Trovinger v. McBurney, 5 Cow. 253 (1855). "Hays V. McFarlan, 32 Ga. 699 (1861). "Jackson v. Finney, 33 Ga. 512 (1863). 102 CONSIDERATION — ILLEGAL. eration is valid, although the child die within a few hours.* And in case of seduction, a note given for such consideratioa to the girl's father or mother is good.* So, too, a note given to the selectman of a town in compromise of a bastardy pro- ceeding;^ but not a note for a gross sum given to indemnify the parish.* 'Maxwell v. Campbell,, 8 Ohio St. 265 (1858). 'Cutter V. Collins, 12 Gush. 233 (1853); Harter v. Johnson, 16 Ind. 271 (1861) ; Merritt v. Flemmiiig. 42 Ala. 234 (1868). 'Hoit V. Cooper, 41 N. H. Ill (1860). •Byles 139; Chitty 101 ; 6 Geo. II. c. 31; Cole v. Gower, 6 East 110; Wat- kins V. Hewlett, 1 B. & B. 1; S. C, 3 Moore 211; Clark v. Johnson, 3 Bing, 424; S. C, 11 Moore 319. STATUTOKY PEOHIBIXION. 103 n. CONSIDERATIONS ILLEGAL BY STATUTE. 517. Statutory Prohibition — Penalty. 618. Banking Acts. 619. Revenyie iind License Laws. 520. Sunday Laws— Otiier Statutes. -521. Usury Laws— English and American Statutes. 522. what Local Law Governs. •623. in Transfer or Renewal. 524. Substitution of New Contract. 525. as Affecting Bona Fide Holders. 526. in Discount. 527. Compound Interest. 628. Exchange — Fees — Commissions. 529. Loan' of Chattels —Sale. 530. by Agent — In Collateral or Payment. 531. Usage — Defense Personal. 532. Liquor Laws. 633. Repeal — Foreign Law. 534. Former Slave Laws. 635. Knowledge of Illegal Intention. -636. Renewal and Merger. 637. Recovery of Payments — Partial Illegftlity. § 517. Statutory Prohibition — Penalty. — All contracts whicli violate the provisions of the statute law either ex- pressly or by implication are void.^ And this is true, although the prohibition of the statute be not expressed but must be implied from its nature and objects.* Where a statute expressly declares the contract which forms the con- sideration of the note or bill to be void, the note or bill is illegal and void even in the hands of a bona fide holder for value.* So, where the legislature has prohibited a transac- tion, a bill or note given for it is void.* And penal statutes annexing a penalty to the performance of an act are in effect a prohibition of the act.* And a note or bill given for a consideration prohibited under a penalty is in like manner 'Holman v. Johnson, Cowp. 341; Nerot v. Wallace, 3 T. R. 17; Waymell V. Reed, 6 lb. 699. So, a bjU of credit issued by a State in violation of the United States constitution, 'Craig v. State of Missouri, 4 Pet. 410 (1830). "Story on Prom. Notes g 189. '1 Daniel 199; 1 Parsons 218; Hatch v. Burroughs, 1 Woods 439 (1870); Vallett V. Parker, 6 Wend. 615 (1831). *Chitty 114; Bensley v. Bignold, 5 B & Aid. 335; Hodgson v. Temple, 5 Taunt. 181 ; Langton v. Hughes, 1 M. & S. 693 ; Baok of Louisville v. Young, 37 Mo. 398 (1866). '1 Parsons 213. 104 CONSIDERAttON — ILLEGAL. Yoid.^ Where, however, a bond has been given for the pay- ment of notes which, though issued in violation of the stat- ute of another State, constitute a legal liability in the State where the action is brought, it is valid in such latter State/ And by English statute, bills and notes, though given for a consideration declared void by statute, are now made valid in the hands of a bona fide holder for value without notice.* If the holder of a bill or note was compelled to make title through those who were parties to the illegal consideration and the transfer was void as between them, the holder could not recover against any of the antecedent parties in England prior to the statute just referred to.* Thus, if a bill was tainted with usury and the holder was obliged to make title through the guilty party, he could not recover against the drawer or acceptor." Where the consideration of a note is the transfer of a con- tract which is prohibited by statute, it is void in the same manner that it would be if the making of the contract were the consideration.* § 518. Banking Acts. — If a note is given for a debt con- tracted illegally by a bank in violation of the banking acts, it is illegal and void between the immediate parties.'' Thus, corporation " post notes " prohibited by statute are an illegal 'Griffith V. Wells, 3 Denio 226 (1846). 'York County v. Small, 1 Watts & S. 315 (1841). 'Byles 141 ; 5 and 6 Wm. IV. c. 41 ; 8 and 9 Vict. c. 109 ; Hay v. Aylinp;, 16 Q. B. 423 ; Fitch v. Jones, 5 El. & Bl. 238 ; Goldsmith v. Hampton, 5 C. B. (n. 8.) 94; Parsons v. Alexander, 5 El. & Bl. 263. See, too, for a similar statute in Massachusetts, Kendall v. Robertson, 12 Cush. 156 (1853) ; Mass. E. S. 35 2 2. * Story on Prom. Notes 2 193; Henderson v. Benson, 8 Price 281. 'Lowes V. Mazzaredo, 1 Stark. 385. But now by 58 Geo. III. c. 93 no bill or note, though given for usurious consideration, is void in the hands of a holder for value without notice. »Cummings v. Taux, 30 La. An. 207 (1878). 'Brown v. Tarkinton, 3 Wall. 377 (1865) ; Swift v. Beers, 3 Denio 70 (1846). So, a note payable in a prohibited currency, Springfield Bank v. Merrick, 14 Mass. 322 (1817). So, too, a note by an insurance company for a loan not authorized by statute. New York Ins. Co. v. Ely, 2 Cow. 678 (1824) ; Utica Ins. Co. V. Caldwell, 3 Wend. 296 (1829). So, a trust deed given to secure the payment of notes illegally issued by a banking company, Leavitt i>. Palmer, 3 N.Y. 19(1849). BANKING ACTS. 105 consideration.^ So, by statute in New York, notes or certifi- cates of deposit made by a banking association payable to order a certain time after date,** or negotiable drafts intended for circulating medium.* But the restrictions of New York banking laws have been held not to apply to sealed bonds issued by a banking company, although registered as prom- issory notes.* But where a note has been given on an agree- ment for delivery of foreign bank bills under five dollars, which are prohibited by New York statute, and the agree- ment has not been performed but the consideration paid in other lawful money, the note is valid notwithstanding the unlawful agreement.* And where a note has been discounted in New Jersey, in bills under five dollars, with the intention of using them with the indorser's knowledge in New York, where such bills were prohibited by statute, the note was still held in New York to be a legal one, the New York statute being a positive prohibition and not expressive of any malum in se and having no ex-territorial force.* If a note be given in renewal of another note, part of the consideration of which was small bills prohibited by statute, the renewal note is void pro tanto? But if the maker of a note has received for it a loan of State notes, which were issued in violation of law, but were made use of by him as money, it has been held that he cannot avail himself of the illegality of the notes as a defense.* Where a statute pro- hibits banking corporations from making loans to the stock- holders in excess of one-half the amount of their stock, a note made by a stockholder in excess of such amount for a debt already owing to the bank is not within the statute and 'Eeynolds v. Nichols, 12 Iowa 399 (1861). >1 Edwards § 485; Bank of Chillicothe v. Dodge, 8 Barb. 283; S. 0., 15 N. Y. 58. '1 Edwards § 485. *Leavitt v. Curtis, 15 N. Y. 10 (1857). »Noble V. Cornell, 1 Hilt. 98 (1856). •Merchants' Bank v.. Spalding, 9 N. Y. 53 (1858). 'Doty V. Knox Co. Bank, 16 Ohio St. 133 (1865). «Gowen v. Shute, 4 Baxt. 57 (1874). 106 CONSIDERATION — ^ILLEGAL. is not illegal.* So, if a note is given in payment for stock in violation of a banking act, it has been held to be good between the maker of the note and the bank." But where notes given for premiums of insurance largely in excess of the cash premiums for similar insurance are prohibited by statute, such notes are void.* So, if a note is given to a for- eign insurance company for premiums in business done by it in violation of the law of the State where the note was made, such note will be illegal.* But such a note has been held in Indiana not to be void, where the right of the company to do business depended on a certificate which had not been filed ; but the remedy on the note was sus- pended until the requirements of the law had been com- plied with.^ § 519. Revenue and License Laws. — A frequent instance of the violation of statutes is in the case of contracts repug- nant to, or in invasion of, the customs and excise laws. Agreements of this character are void.* Thus, a contract for purchasing and selling goods, to be smuggled into the coun- try and the profits to be divided, is illegal and void.^ But where money has been paid by a surety for duties on goods illegally imported by his principal and for the expenses of a defense of prosecution, it can be recovered by the surety against his principal.* And it has even been held in Eng- ' land that the release by an excise oflBcer of a person arrested for violation of the excise laws is a good consideration for a 'Pemigewasset Bank v. Rogers, 18 N. H. 255 (1846). 'Farmers' & Mech. Bank v. Jenks, 7 Mete. 592 (1844). "Ohio V. Harrison, 36 Barb. 210 (1862). ' Roche V. Ladd, 1 Allen 436 (1861) ; Drinkhouse v. Surette, lb. 443 n. "American Ins. Co. v. Wellman, 69 Ind. 413 (1879). •Byles 138; Chitty 100; 1 Parsons 213; Biggs v. Lawrence, 3 T. R. 454; Banks w. Colwell, lb. 81 ; Vandyck v. Hewitt, 1 Bast 97 ; Lightfoot v. Tenant, 1 Bos. & P. 551; Johnstone v. Sutton, Dougl. 254; Hodgson v. Temple, 5 Taunt. 181 ; Meux v. Humphries, 3 C. & P. 79 ; Taylor v. Crowland Gas Co., 10 Exch. 293. 'Holman v. Johnson, Cowp. 341. So, too, a note given for goods exported for the payee under an illegal contract, Alexander v. Lewis, 47 Tex. 481 (1877). 'Armstrong v. Toler, 11 Wheat. 258 (1826). SUNDAY LAWS. 107 note given for the penalties incurred, although the officer had no authority to release the offender in such way/ Again, notes or bills given in violation of license laws are unlawful. Thus, the acceptance of a bill of exchange to secure the payment of money taken at, or expended for, an unlicensed theater is void in the hands of a payee who knew the theater to be unlicensed.'^ § 520. Sunday iaws — Various Statutes. — So, contracts in violation of Sunday laws are illegal and void.^ In Massa- chusetts such contracts were formerly held valid, although the offense was made punishable by the statute.* If a Sun- day contract is made in violation of the statute, it seems that a due bill given in consideration of that contract on a week day is also void between the parties.^ In England, where gambling is prohibited by statute and negotiable instruments given for gambling losses are void, the maker who is obliged to pay such bill or note to a sub- sequent holder for value, may by statute recover the amount paid from the original payee^ Where a statute prohibits clergymen from trading, a banking company in which a clergyman is a stockholder cannot recover as indorsee of a bill of exchange transferred to it.^ But it has been held that a note given for an attorney's bill is valid, although the bill was not delivered pursuant to the requirements of the statute.' ' Sugars V. Brinkworth, 4 Campb. 46 ; Pilkington v. Green, 2 Bos. & P. 151 ; Beeley v. Wingfield, 11 East 46. But see, Good v. Allen, 15 Bradw. 663 (1884). So, Newson v. Thighen, 30 Miss. 414 (1855), as to note to county treasurer for liquor license. 'De Beginis v. Armiatead, 10 Bing. 107 ; 8. C, 3 M. & P. 511 ; Mitchell v. Cockburne, 2 H. Bl. 379; Langton v. Hughes, 1 M. & S. 596. So, a note for the medical services of an unlicensed physician has been held void, May v. Williams, 27 Ala. 267 (1855). But not so a note for an auction bid to an unlicensed auctioneer, Gunnaldson v. Nyhus, 27 Minn. 44 (1881). 'Chitty 115; 1 Parsons 213 ; Drury v. Be Fontaine, 1 Taunt. 131 ; Josephs V Pebrer, 3 B. & C. 233; S. C, 5 D. & R. 84; Scarfe v. Morgan, 4 M. & W, 270; Simpson v. Nichols, 3 lb. 240. ♦Geer v. Putnam, 10 Mass. 312 (1813). 'Kouts V. Dickson, 40 Miss. 341 (1866). "Quids V. Harrison, 10 Exch. 572. '57 Geo. III. c. 99; Hall v. Franklin, 3 M. & W. 259. «Jeffreys v. Evans, 14 M. & W. 210. 108 CONSIDERATION — ILLEGAL. So, a note which is given for an indenture of apprentice- ship for less than seven years, antedated and voidable by- statute, is valid.^ But a note given for an apprentice's fees is void, if the indenture itself be void by statute for want of the expression of premium in it.* So, a note given for the assignment of an apprentice's time is illegal and void.* So,, a note' given in payment for fertilizers not branded and tagged as required by statute.* But where an act prohibits apothecaries from recovering for medicines, unless they are certified apothecaries, a note given for drugs purchased will sustain a recovery without evidence that the payee has such certificate.^ So, a note is valid which is given for diseased sheep, the statute prohibiting trade in such sheep under a penalty, and reserving actions and defenses to persons suffer- ing damage.® § 521. Usury Laws — Engflish and American Statutes. — The most frequent defense for statutory illegality occurs under those statutes prohibiting usury. The usury laws are now abolished in England except as to securities upon real prop- erty.'' Formerly it was enacted in England that contracts in which more than five per cent, was agreed upon for for- bearance of money for one year, should be utterly void under a penalty of three times the value of the money loaned.* By the banking act of 3 and 4 Wm. IV. bills and notes payable within three months were exempted from the usury laws.* And by the later act of 2 and 3 Vict, such exemption was extended to bills and notes payable within twelve months."* 'Grant v. Welchman, 16 East 207. '8 Anne c. 9; Jackson v. Warwick, 7 T. R. 121 ; Mann v. Lent, 10 B. & 0. 877. 'Walker v. Johnson, 2 Cranch C. C. 203 (1820). *Lorentz v. Conner, 69 Ga. 761 (1882). Even in the hands of a bona fide holder for value, Johnston v. McConnell, 65 Ga. 129 (1880)'. »55 Geo. III. c. 194 i 21 ; Blogg v. Tinkers, Ry. & M. 125. •Vining v. Bricker, 14 Ohio St. 331 (1863). 'BylesliO; Chitty 104. 'Chitty 105; 12 Anne c. 16. And a bill of exchange illegal under this statute is not a good consideration for a subsequent bill given after its re- peal, Flight V. Reed, 1 Hurlst. & C. 703, Barons Pollock and Wilde dissenting. » Chitty 106 ; 3 and 4 Wm. IV. c. 98 ? 7. '"Chitty 106; 2 and 3 Vict. c. 37. USURY LAWS. 109 By the act of 5 and 6 Wm. IV. bills and notes for usurious consideration are made no longer void, but are to be deemed given for an illegal consideration ; which would make them void between original parties or those having notice.^ Prior to this act a broker's receiving exorbitant brokerage on the discount of a bill did not affect its validity in the hands of a bona fide holder for value.^ In many of the United States there are no statutes against usury. Others simply fix a maximum rate of interest to be .recovered, while New York and some other States retain a strict usury law.^ 'Chitty 106; 5 and 6 Wm. IV. o. 41; Edmunds v. Groves, 2 M. & W. 642; S. C, Dowl. 775. 'Chitty 117 ; Digrall v. Wigley, 11 East 43 ; Jones v. Davison, Holt 256. 'The usury statutes of the different States are made the subject of fre- quent alterations and the author attempts nothing more than to give a statement in brief of the law as it appeared in the last revision or compila- tion of laws in each State. In Alabama contracts for usurious interest exceeding eight per cent, are enforceable only for the principal sum due (1876 Code ?? 2088-2092). In Arkansas any rate of interest may be agreed upon. In the absence of agreement the rate is six per cent. (1874 R. S. ?§ 4277, 4278). In California any rate may be agreed upon and if not fixed by agreement the rate is ten per cent. (1876 Code Civ. | 1917). So in Colo- rado (1877 G. L. 1 1366). In Connecticut the legal rate is seven per cent, un- less otherwise agreed (1875 G. S. 351 ?? 1, 2). In Delaware taking more than six per cent, subjects the taker to a forfeiture equal in amount to the whole loan (1874 R. C. 354 1 1). In Florida the legal rate is eight per cent., but any rate may be agreed upon (McGlellan's Dig. 585 §§ 1, 2). In Georgia the legal rate is seven per cent, but any rate may be agreed upon if inserted in a written contract (1873 Code i 2050). In Illinois only the principal is recoverable in contracts for more than eight per cent., the legal rate in the absence of agreement being six per cent. (1880 R. S. 635 ii 1, 2). In Indiana an agreement may be made for ten per cent., otherwise the rate is six per cent. (1876 R. S. 599 ? 1). In Iowa the law is the same, but taking more than ten per cent, is prohibited under a penalty. And a hona fide assignee of a usurious contract may recover from his assignor all moneys paid by him over and above the amount of the original loan, with lawful interest (1880 Code ?f2077, 2081). In Kansas the legal rate is seven per cent., but parties may agree upon 12 per cent. Usury paid is credited upon the prin- cipal (1881 C. L. 509 il 1-3). In Kentucky the legal rate is six per cent. Contracts for a higher rate are void as to tha excess (1881 G. S. 969 §? 1, 2). In Louisiana the legal rate is five per cent., but eight per cent, may be agreed upon. Agreements for more are prohibited under a penaly of for- feiture of the whole amount loaned. If more than eight per cent, be paid, it may be recovered; Banks are expressly made subject to this act (1876 R. S. ii 1883-1887). In Maine the legal rate is six per cent., but any rate may be agreed on and recovered (1871 R. S. 391 ? 1). So, in Massachusetts (1882 Stats. 426 ^ 3). In Maryland the legal rate is six per cent. The exaction of all interest in excess of that rate is forbidden under penalty of forfeiture of such excess and legal interest, but the original loan with interest is still recoverable, and a hona fide holder is not affected by usury in the inception of a contract (1878 Rev. Code 301 H 1-4). In Michigan the legal rate of 110 CONBIDEKATION — ILLEGAL. § 522. Usury — What Local Law Governs. — In questions of usury relating to commercial paper not made payable in any particular place, the law of the place of contract governs the interest is seven per cent., but a higher rate may be agreed upon, not exceeding ten per cent. In case of usury only the excess over prin- cipal and legal interest is forfeited (1871 Comp. L. ?2 1632, 1634). In Minnesota the legal rate is seven per cent., but parties may agree to pay twelve per cent. Nothing above that rate can be enforced (1878 Stats, p. 314 I 1). In Mississippi the legal rate is six per cent., but ten per cent, may be reserved by agreement. If more is reserved, all interest is forfeited (1880 Eev. Code 2 1141). In Missouri the legal rate is six per cent., but by agreement parties may take ten per cent. If more is reserved, judgment is rendered for ten per cent., the interest recov- ered being applied to the benefit of the public schools (1879 K. S. H 2723, 2728). In Nebraska the legal rate is ten per cent., but twelve per cent, may be agreed on. In case of usury no interest can be recovered (1873 G. S. 446 ii 1, 5). In Nevada the legal rate is ten per cent., but any rate may be agreed on in writing (1873 C. L. Vol. 1 p. 10). In New Hampshire the legal rate is six per cent, and no more can be recovered. In case of usury the principal and legal interest can be recovered, but the person tak- ing the usury is liable to a penalty of forfeiture of treble the amount of the usury to any one prosecuting for it (1878 G. R. 538 ?§ 1, 5). In New Jersey the legal rate is six per cent, (since 1878, Laws of 1878 p. 30), and taking more than that rate is prohibited as usury. But the principal loaned may be recovered on all usurious contracts without costs or interest (1874 Rev. 519), except contracts in Monmouth county, for more than seven per cent, which are void since 1875 (Rev. 520 ; 1875 P. L. 248). In New Ym-k the legal rate of interest is six per cent., and contracts for a greater rate are void (1882 3 R. S. p. 2253). By the original revised statutes of 1830 bona fide in- dorsees for value were protected, but this provision was repealed in 1837 (Tyler on Usury 67). In North Chrolina the legal rate is six per cent., but eight per cent, may be agreed upon by writing signed by the party. If a higher rate is reserved, no interest can be recovered (Battle Rev. 835 § 10). In Ohio the legal rate is six per cent., but eight per cent, may be reserved by agreement. All interest in excess of this rate is usurious, and, if paid, is to be credited on the principal. Bona fide holders for value are not aflfected by usury in the original contract (1880 R. S. §J 3179-3183). In Oregon the legal rate is ten per cent., but contracts may be made for twelve. Any con- tract for a higher rate is usurious and entails the forfeiture of the whole debt to the school fund. Bona fide holders may recover the amount paid by them (1872 G. L. 623). In Pennsylvania the rate is six per cent. No higher rate can be collected, and if such rate is voluntarily paid it can be recovered again. Bona fide holders of negotiable paper are not affected by usury in the original contract (1871 Purd. Dig. 561). In Rhode Island six per cent, is the legal rate, but any rate may be agreed on (1882 Pub. Stats. 342). So in South Carolina, the legal rate being seven per cent. (1873 R. 8. 318). In Ten- nessee the legal rate is six per cent., but parties may contract for ten. If more is contracted for, it is usurious and the excess above six per cent, is forfeited under a penalty (1871 Stats. ? 1944, a., b.) In Texas the legal rate is eight per cent., but twelve may be reserved by contract. If more is re- served no interest can be recovered (1879 R. S. Arts. 2976-2979). In Ver- mont the le^al rate of interest is six per cent., and all excess paid may be recovered with interest (1880 R. S. J 1996). In Virginia the legal rate is six per cent., but eight per cent, may be reserved in contracts so specifying. All amounts reserved in excess of eight per cent, are forfeited (1873 Code 977). In West Virginia the legal rate is six per cent., and no more can be reserved, all contracts being void aa to the excess (1879 R. 8. c. 136 § 4, 5). In Wi»- consin the legal rate is seven per cent., but ten per cent, may be stipulated TISTJRY LAWS. Ill paper.* But where the contract for a loan was made in New York and notes were given for it in Nebraska at a rate of interest which would have been usurious in New York, it was held that the contract was a New York one and gov- erned by the New York law, and that the place where the notes were actually executed was immaterial.^ Where, how- ever, a bill of exchange was drawn in Ohio upon a citizen of New York and accepted by him, and afterward negotiated in New York for a consideration which was usurious there, the drawer in Ohio was allowed to avail himself of the de- fense of the New York usury .^ So, a note made and signed in the District of Columbia, but dated and discounted in Kansas, is governed by the Kansas laws as to usury.* But it has been held that a bill drawn in Ohio, specifying no place of payment and indorsed under a previous agreement by a surety in Virginia, and providing for a rate of interest which was lawful in Ohio but usurious in Virginia, was not subject to a plea of usury on the surety's part, as the princi- pal could no't have availed himself of such plea, and the con- tract was in reality an Ohio contract.* Where a note secured by mortgage is made to a corpora- tion in payment for stock and afterward attached by the company to one of its bonds and negotiated in another State, the law of the State where it was made governs as to the question of usury.* And the law of the place where a cor- poration contract was made will govern the contract in this for in writing. In contracts for a greater rate only principal without inter- est is recoverable, and all excess paid may be recovered again (1878 R. S. 1 1688-1691). Finally it is provided by Act of Congress that national banks shall be restricted to the rate of discount fixed by law of the State or Terri- tory where they are located ; and where none is fixed, shall receive seven per cent., which may be taken in advance. Knowingly taking a greater rate entails a forfeiture of the entire interest (1878 U. S. R. 8. J? 5197, 5198). 'Cutler V. Wright, 22 N. Y. 472 (1860); Merchants' Bank v. Griswold, 72 lb. 472 (1878) ; Stickney v. Jordan, 58 Me. 106 (1870). But a bill made in France as a substitute for an English bill, which was illegal on account of a, gaming consideration, is void in England, Wynne v. Callander, 1 Russ. 293. 'Sands v. Smith; 1 Neb. 108. 'Davis V. Clemson, 6 McLean 622 (1855). < Second National Bank v. Smoot, 2 MacArth. 371 (1876). »Pugh V. Cameron, 11 W. Va. 523 (1877). •Lyon V. Ewings, 17 Wis. 63 (1863). 112 CONSIDERATION — ILLEGAL. respect, although the company was incorporated in a State in which such contract would be usurious.^ On the other hand, if a bill or note is made in one State payable in another, the law of the latter State will govern as to the rate of interest.^ And such a note may be enforced in the State where it was made, although made to bear a higher rate of interest than is lawful there.* And it has been held that where a note is made in one State but dated in another where the makers had a place of business, it is presumably payable in the latter State and governed by its laws as to usury.* If a note is made in Pennsylvania at a rate of interest valid there but not valid in the District of Columbia, a note afterwards given in part payment of it in the District of Columbiawould be governed by the Pennsyl- vania law and be valid.® There being no usury at common law, no presumption can be made as to foreign usury laws, but such laws must be proved.* And even if a note bears a higher rate of interest than is legal in the place where the suit is brought, it will not be presumed to be usurious, unless shown to be so where it was made.'' So, it seems, if a contract is void in one State for usury, it may be a valid basis for a new contract made in another State.* In England it has been held that taking excessive interest is prima facie evidence of an original ille- gal contract.* But where an instrument is capable of two constructions, by one of which it would be valid, it is a well known princi- ple of law that that one will be adopted in the absence of 'Bard v. Poole, 12 N. Y. 495 (1855). " Little V. Eiley, 43 N. H. 109 (1861) ; Dickinson v. Edwards, 13 Hun 406; S. C, 77 K Y. 573 (1879). "Lines v. Mack, 19 Ind. 223 (1862). 'Tillotson V. Tillotson, 34 Conn. 335 (1867). 'Rhawm v. Grant, 1 MacArth. 31 (1873). 'Smith V. Muncie Nat. Bank, 29 Ind. 158 (1867). 'Davis V. Garr, 6 N. Y. 124 (1851). 'Jacks V. Nichols, 5 Barb. 38 (1848). •Chitty 107; Solarte v. Melville, 1 M. & Ry. 204; S. 0., 7 B. & 0. 416; Fu»- Bell V. Brooks, 2 C. & P. 318. USURY IN TRANSFER OR RENEWAL. 113 proof to the contrary. And it seems that although a contract be affected with usury, it may be subsequently ratified for a legal consideration and made valid.^ § 523. Usury in Transfer or Renewal. — On the other hand, if a contract is originally legal, it will not be rendered in- valid by a subsequent usurious contract in regard to it.* Thus, a valid note will not be rendered invalid by a subse- quent usurious transfer, so as to prevent recovery by the in- dorsee against the maker.^ So, if a note which is originally legal is renewed for a usurious consideration, the new secur- ity will be void but the original debt will remain.* And such renewal is usurious and void, although the usurious premiums charged be put into a separate note.' In like manner, a valid debt is not rendered invalid by the subse- quent taking of usurious interest on it.* Where, however, a valid note is pledged as security for payment of an usurious loan, no title is acquired by the usurious lender by this transfer.^ In England, before the recent acts abolishing the usury laws, any security given as a substitute for a usurious bill or note, or in renewal of it, was void like the original instru- >1 Edwards H90. "Pollard V. Scholey, Cro. Eliz. 20; S. C, 1 Saund. 294. See, too, Phillips V. Cockayne, 3 Campb. 119 ; Wood v. Grimwood, 10 B. & C. 679. 'Parr v. Eliason, 1 East 92; Daniel v. Cartony, 1 Esp. 274; Knight v. Put- nam, 3 Pick. 184 (1825) ; Stewart v. Bramhall, 11 Hun 139 (1877) ; Archer v. Shea, 14 lb. 493 (1878). This is true also of other defenses, such as fraud between indorser and indorsee not being available to a prior party, Prouty V. Roberts, 6 Cush. 19 (1850). If, however, the contract really had ite inception in the transfer, it is affected ab initio by usury in such transfer, Eastman v. Shaw, 65 N. Y. 522 (1875); Tufts v. Shepherd, 49 Me. 312 (1860). *Gray v. Fowler, 1 H. Bl. 462. ^Swartout v. Payne, 19 Johns. 294 (1822). And although the renewal note be given to a subsequent indorsee other than a bona fide holder for value, Treadwell v. Archer, 76 N. Y. 196 (1879), reversing Sherwood v. Archer, 10 Hun 73. In like manner a note, given in settlement of an account which includes a usurious note, is usurious, Pickett ■;;. Merchants' Nat. Bank, 32 Ark. 346 (1877). 'Chitty 107; Ferrall v. Shean, 1 Saund. 291; Phila. Loan Co. v. Towner, 13 Conn. 249 (1839). And a subsequent agreement to pay more than legal interest will not vitiate a bond given for the principal, Regina v. Sewell, T Mod. 118. 'Bell V. Lent, 24 Wend. 230 (1840). VOL. n. H 114 CONSIDEEATION — ILLEGAL. ment;^ even though the old securities were given up and canceled.^ In like manner, under the usury laws in the United States, a mortgage given for a loan covering former usurious loans,^ or a note given to take up other usurious notes,* is itself usurious and void. This is true likewise, where a note payable in goods or a contract for goods is sub- stituted for the original usurious note or given as collateral for it.^ So, if money be loaned on a usurious note and par- tially paid on its maturity, and a new note be given for the balance, it will be void for usury.* And a new security or promise to pay the principal sum loaned was not valid in England before the recent statute, unless all payments be- yond legal interest already made had been first repaid or deducted.'' § 524. Usury — Substitution of New Contract. — If the usu- rious contract is rescinded and a renewal bill or note given for the principal and interest justly due, it will be valid.* But merely changing the security in a renewal, e. g., giving another note with another security, leaves the contract still usurious and void.' And a note given in renewal of an usu- rious note is illegal, although there had been between the original note and this renewal an intervening note given to a third person which had been canceled.'" But where a usurious note has been transferred for value to a purchaser without notice and a new note has been given •Chitty 107; Chapman v. Blank, 2 B. & Aid. 588; Wynne v. Callander, 1 Kuss. 293 ; Preston v. Jackson, 2 Stark. 237 ; Davies v. Franklin, 1 B. & Ad. 142 ; Marchant v. Dodgin, 2 Moore & S. 632. ' Preston v. Jackson, 2 Stark. 267. 'Jackson ■». Packard, 6 Wend. 415 (1831). ^Brigham v. Marean, 7 Pick. 40 (1828). 'Dunning v. Merrill, 1 Clarke 252 (1840). •Warren v. Crabtree, 1 Me. 167 (1821). ' Chitty 107 ; Weeks v. Gogerly, Ry. & Moo. 123. 'Barnes v. Headley, 2 Taunt. 184; Wright v. Wheeler, 1 Campb. 165; 2 Stark. 238 ; Marchant v. Dodgin, 2 Moore & S. 632 ; Kilbourn v. Bradley, 3 Day 356 (1809) ; Scott v. Lewis, 2 Conn. 132 (1816) ; Church v. Tomlinson, Ih. 134 n. (1811) ; Bank of Monroe v. Strong, Clarke Ch. 76 (1839). ' Campbell ■». Sloan, 62 Penna. St. 481 (1869). '"Archer v. McCrary, 59 Ga. 547 (1877). But see Drake «. Chandler, 18 Gratt. 909 (1868). USURY. 115 to him in payment, the usury in the first note cannot be set up against him in defense to the second.^ And where the bond of a third person has been substituted for a usurious note, in consideration of the maker of the note promising to pay the amount to the maker of the bond, which he after- ward did, this was held to amount to a voluntary waiver of the statute by the maker of the note and the bond was held to be valid.^ So, if a note made by A. and indorsed by B. is given in renewal of a usurious note made by C. and in- dorsed by A., the new security is valid and free from all taint of the original usury .^ § 525. Usury — As Affecting Bona Fide Holders. — Under the usury act of 12 Anne it was held that a bill or note founded on a usurious consideration was void even in the hands of a bona fide holder for value.* This has been held to be the case also in New York under the New York statute." And in England a bill of exchange has been held to be void in the hands of a bona fide holder for value, if drawn to carry oiit an agreement for a usurious discount, although the drawer to whose order it was playable had no knowledge of this agreement.* In like manner, where a usurious note is transferred for a valid consideration, the purchaser's good faith and ignorance of the law will be of no avail to render the transfer valid or to give him a right of action on the original contract.^ By the English act of 58 Geo. III. evidence that a bill or note was founded on usurious consideration threw upon the plaintiff the burden of proving himself to be a holder for value and the burden then fell on the defendant to show that 'Cuthbert v. Haley, 8 T. E. 890; Kent v. Walton, 7 Wend. 256 (1831); Smalley v. Doughty, 6 Bosw. 66 (1860). » Wales V. Webb, 5 Conn. 154 (1823). 'Macungie Sav. Bank v. Hottenstein, 89 Penna. St. 328 (1879). *12 Anne c. 16 ; Lowe v. Waller, Dougl. 736 ; Lowes v. Mazzaredo, 1 Stark. 385; Chapman v. Black, 2 B. & Aid. 590; Henderson v. Benson, 8 Price 288. 'Wilkie V. Boosevelt, 3 Johns. Cas. 66, 206. "Ackland v. Pearce, 2 Campb. 599. 'Attenheimer v. Cook, 11 Heisk. 309 (1872). 116 CONSIDERATION — ILLEGAL. the plaintiflF had notice of the usury .^ Where, however, a note was dated at Boston but actually made in New York and void by the usury laws of New York, these facts cannot be set up to avoid the note in the hands of a bona fide holder for value.^ And the bona fide purchaser of mortgaged prop- erty sold under a power in the mortgage is not affected by usury in the original contract.* If a note originally usurious be indorsed to a bona fide holder for value, the usury cannot be set up as a defense in a suit brought against the payee as indorser.* And where a joint action can be brought against maker and indorser, the indorser is liable in such an action.* § 526. Usurious Discount. — If a note is free from usury at its inception, the subsequent sale of it at a greater discount tlian legal interest will not render it usurious.* Nor will the sale of a valid bond or mortgage for less than its face be usurious, although accompanied by a bond on the part of the seller guaranteeing the payment of the face of the in- strument.'' And even where a note has been issued for the purpose of borrowing money with the payee's name in blank and a discount is afterward procured by the person to whom it was intrusted for that purpose at more than legal rate of interest, and the payee's name then filled in, the note has been held not to be usurious and the payee so named was allowed to recover.* So, where notes of a municipal corpo- ration are sold below par, they will still be valid in the hands of a bona fide holder for value.* A bona fide holder for value, however, purchasing a note at a discount is only a >Chitty 106; 58 Geo. III. c. 99. •Towne v. Eice, 122 Mass. 67 (1877). 'Jackson v. Henry, 10 Johns. 195 (1813). Nor, on the other hand, can the purchaser of property covered by a usurious mortgage, set up the defense of usury against it, Spaulding v. Davis, 51 Vt. 77 (1878). ♦McKnight v. Wheeler, 6 Hill 492 (1844). "Moffett V. Buckle, 21 Gratt. 280 (1871). •French v. Grindle, 15 Me. 163 (1838) ; Farmer v. Sewall, 16 Me. 456 (1840). And a bond subsequently given by the maker of the note to such bona fide holder will be valid, Cuthbart v. Haley, 8 T. E. 390. 'Eapelye v. Anderson, 4 Hill 472 (1842).. »Brummel v. Enders, 18 Gratt. 873 (1868). •Eockwell V. Charles, 2 Hill 499 (1842). USURY. 117 holder for value to tlie extent of the price paid by him with legal interest.^ Where a note is made to be discounted and is indorsed for accommodation for that purpose, and is in its inception nego- tiated at a usurious rate to a party having knowledge of the circumstances, such party is not an innocent holder and cannot sue the indorser either on the original note or a re- newal of it.'' But if accommodation paper is sold at an illegal discount to a bona fide purchaser, with a representa- tion that it is business paper belonging to the seller, usury cannot be set up in defense by the seller.^ And where a bond is given by the payee to the maker of an accommodation note to provide for the payment of such note, he cannot after- wards set up at suit of. the payee or his personal representa- tives the defense of usury in the transfer of the note by him.* So, if an accommodation note has been discounted at a usuri- ous rate without the knowledge of the accmmodation indorser and afterward paid by him, this payment would be a sufficient consideration for a new note given him by the party accom- modated.* The provision of the United States statutes lim- iting rates of discount in the case of the National Banks applies to both accommodation and business paper.' § 527. Usury — Compound Interest. — It has sometimes been thought that the rule of the common law against compound- ing of interest was the outgrowth of the the usury laws. But such rule is not founded upon laws of usury, but upon the principles of a sound public policy. The taking of com- pound interest has, however, been said to be usurious. An »rant V. Miller, 17 Gratt. 77 (1866) ; Saylor v. Daniels, 37 111. 331 (1865). 'Powell V. Waters, 8 Cow. 668 (1826), affirming 17 Johns. 179 (1819) ; al- though its accommodation character was not known to the buyer, Clark v. Bisson, 22 N. Y. 312 (1860). 'Holmes v. Williams, 10 Paige 326 (1843). 'Moncure v. Dermott, 13 Pet. 345 (1839). 'Cassebeer v. Kalbfleisch, 11 Hun 119 (1877). «U. S. R. S. II 5197, 5198; Johnson v. Nat. Bank of Gloversville, 74 N. Y. 329 (1878). The recovery of a penalty under this act bars the subsequent recovery of excess of interest paid, Hill v. Barre National Bank, 56 Vt. 582 (1884). A creditor of the borrower may sue for the penalty, Barrett v. Shelbyville Nat. Bank, 20 Cent. L. J. 183 (Tenn. S. C. 1884). 118 CONSIDERATION — ^ILLEGAL. agreement to pay such interest, made after the interest to be compounded has accrued, is not so.^ Thus, a note given for a balance of account, on which compound interest has been charged and added in, is not usurious.^ An agreement, how- ever, to pay interest upon interest not yet accrued, although not usurious, is against public policy and cannot be enforced.* But the soundness of the distinction as to compound interest between interest already accrued and interest noj; yet accrued has been questioned.* It frequently happens, however, that compound interest is allowed by way of damages for the de- tention of interest long accrued and due.° And the practice of charging trustees and other fund-holders with such inter- est upon annual or other stated rests is not uncommon; although it has been held that where the interest is payable annually, interest upon that interest cannot be recovered in a suit upon the original contract.® It has also been held that taking interest in advance upon a loan is usurious. This would be the case where the interest i;aken in advance was for a term of years.^ But, in general^ the deducting of interest in advance for short periods, for the time which the principal has to run, is not usurious.* l^either will a mistake in reckoning the interest in a bill or note constitute usury.' But it has been held that it is usury to discount a bill or note at a rate based upon the calculation of 360 days to the year.'" •Hamilton v. LeGrange, 2 H. Bl. 144; Fobea v. Canfield, 3 Ohio 17 (1827); Watkinson v. Root, 4 Ohio 373 (1829). 'Leonard v. Mason, 1 Wend. 521 (1828). 'Townsend v. Corning, 1 Barb. 627 (1847) ; Miner v. Paris Exch. Bank, 53 Tex. 559 (1880). ♦Pauling V. Pauling, 4 Yea. 220 (1805). 'Peirce v. Eowe, 1 N. H. 179 (1818); Greenleaf v. Kellogg, 2 Mass. 568 (1803); Kennon v. Dickens, Cam. & N. 357 (1801). 'And this is provided for by statute in Missouri, on yearly rests (1879 R. S. § 2728). 'Hasting v. Wiswall, 8 Mass. 455 (1812) ; Doe v. Warren, 7 Me. 48 (1830). 'Marsh v. Martindale, 3 B. & P. 154. * New York Ins. Co. v. Sturges, 2 Cow. 664 (1824); Mowryv. Bishop, 5 Paige 98 (1835) ; Manhattan Co. v. Osgood, 15 Johns. 168 (1848). 'Nevison v. Whitley, Cro. Car. 501; Buckley v. Guildbank, Cro. Jac. 678; Glassford v. Laing, 1 Campb. 149. '"Bank of Utica v. Wagner. 2 Cow. 769 (1824) ; S. C, 8 Cow. 398 (1826); Utica Ins. Co. v. Tilman, 1 Wend. 555 (1828). USITEY BY WAY OF EXCHANGE. 119 § 528. Usury by Way of Exchange — Fees — Commissions. — As we have seen, it is not unlawful to include exchange in a bill or note payable at a different place from that where it is drawn ; ^ although if the rate of exchange be used as a mere device to cover usury, it is illegal.^ Nor, on the other hand, is it usury to omit a provision for exchange, where the rate is in favor of the place of payment.* But an agreement to pay a note by drafts on New York to be delivered at their par value, although they are worth a premium, is usurious.* On the other hand, a person may agree to take uncurrent bills in payment at a higher rate than their actual market value, if no usury is intended by the agreement.® So, if notes are given in payment of checks which were made payable in Canadian and Western bank bills, received and paid out at less than par, they are valid in the absence of a prior agree- ment for drawing and paying the checks in that way.* On the other hand, an agreement requiring a borrower to take shares of stock or uncurrent notes at more than their actual current value is usurious.^ As has been already observed, it is a question about which different State courts differ, whether it is usury to include attorney's fees or costs in a commercial instrument. In some States this is held to be usury,* in others not.® The fact that an indorser or guarantor receives more than a legal rate of interest for his compensation will not render the instrument void for usury, even at suit of a holder with notice." Nor will a mortgage be held usurious which is •Marvine v. Hymers, 12 N. Y. 223 (1855) ; Merritt v. Benton, 10 Wend. 117 (1833). 'Ontario Bank v. Schermerhorn, 10 Paige 109 (1843) ; Churchman v. Mar- tin, 54 Ind. 380 (1876). 'Cuyler v. Sanford, 18 Barb. 339 (1851). 'Seneca Co. Bank v. Schermerhorn, 1 Denio 133 (1845). 'Bank of United States v. Waggener, 9 Pet. 378 (1835). «Codd V. Eathbone, 19 N. Y. 37 (1859). 'Eagleson v. Shotwell, 1 Johns. Ch. 536 (1815). »Myer v. Hart, 40 Mich. 517 (1879) ; Miller v. Gardner, 49 Iowa 234 (1878) : Bean v. Jones, 8 N. H. 149 (1835). •Gaar v. Louisville Banking Co., 11 Bush 180 (1874). "Ketchum v. Barber, 4 Hill 224 (1843) ; Barber v. Ketchum, 7 Hill 444 <1844) ; Moore v. Howland, 4 Denio 264 (1847). 120 CONSIDERATION — ILLEGAL. given to an agent to secure a high rate of commissions for the acceptance of bills drawn on him by his principal, even though drawn against moneys to be furnished by the prin- cipal.^ So, commissions at a higher rate than legal interest,, charged by a commission merchant for accepting drafts in advance, are not usurious.* Neither is it usurious to discount a bill of exchange at legal rates and give in payment for it a certificate of deposit maturing fifteen days later;' or a draft on New York, equal in value at the time of the discount to the bill, less the legal interest for the time it had to run.* § 529. Loan of Chattels. — Neither is it usury to agree t» return a loan of chattels with a payment for their use, or with an increase in quantity which amounts to more than legal interest on their value.' But where a borrower is com- pelled to take goods in payment, it has been held that a pre- sumption of usury arises in the transaction and that the burden of proving the value of the goods is thrown upon the lender.* And if the contract be merely in appearance for chattels as a device to cover up the usury in a loan, it is usu- rious, like every other device of the sort, and void.'' So, an agreement to repay a debt with legal interest, or to transfer to the creditor at his option as much stock as the money would have produced on the day it was payable, is usurious.' This is also the case, where a note bearing legal interest is secured by stock certificates, with an agreement giving the holder an option to take a certain amount of the stock at the 'Suydam v. Bartle, 10 Paige 94 (1843); Suydam v. Westfall, 4 Hill 211 (1843) ; Trotter v. Curtis, 19 Johns. 160 (1821). »De Forest v. Strong, 8 Conn. 513 (1831). 'Knox V. Goodwin, 25 Wend. 643 (1841). *Cayuga Co. Bank v. Hunt, 2 Hill 625 (1842). 'Cummings v. Williams, 4 Wend. 679 (1830); Spencer v. Tilden, 5 Cow. 144 (1825) ; Holmes v. Wetmore, 5 Cow. 149 (1825) ; Hall v. Haggart, 17 Wend. 280 (1837). •Davis V. Hardacre, 2 Campb. 375. 'Rose V. Dickson, 7 Johns. 196 (1810); Whipple v. Powers, 7 Vt. 457 <1835). •Barnard v. Young, 17 Ves. 44; White v. Wright, 5 D. & R. 110. USURY BY AGENT. 121 time of maturity in payment of the note.' An agreement, however, to pay interest on the ascertained value of chattels loaned is not usurious, unless intended to cover an actual loan of money .^ And a note may be given for goods for the purpose of raising money with an agreement for redelivery of the goods upon payment of the money actually raised.' Where a usu- rious debt has been satisfied by a conveyance of land by the debtor, the usury is no ground for avoiding the deed.* And a mortgage for $12,000, given to secure the purchase-money of land which the seller would sell for $10,000 in cash, he agreeing to hold the bond and mortgage until he can realize that amount, is valid in the hands of an assignee." § 530. Usury by Agent — In Collateral or Payment. — If money is loaned by an agent who takes usurious interest for his principal, it is usurious and void." So, a note given for the purchase of other notes, the maker of these taking more than legal interest as commissions, is illegal and void between the payee and a subsequent holder.'' So, a note given as col- lateral security for a usurious loan is illegal.* But the doc- trine once held, that collaterals for a usurious loan which had been repudiated might be retained in defiance of an action of trover until the holder had received the amount legally due him, has been overruled.' And a judgment at law founded on a warrant of attorney securing a usurious con- tract, will be set aside without requiring the debtor to make payment of the amount lawfully due from him.'" > Cleveland v. Loder, 7 Paige 557 (1839). 'Bull V. Rice, 5 N. Y. 315 (1851). 'Barker v. Vansommer, 1 Bro. Ch. 149. 'Wilkinson v. Dodds, 1 Johns. Gas. 158 (1799). 'Brooks V. Avery, 4 N. Y. 225 (1850). •Eeed v. Smith, 9 Cow. 647 (1823) ; Cheney v. White, 5 Neb. 261 (1876). 'Dunham v. Gould, 16 Johns. 367 (1819). 'Bell V. Lent, 24 Wend. 230 (1840). So, too, a collateral mortgage, Dix v. Van Wyck, 2 Hill 522 (1842). •Chitty 118; Fitzroy v. Gwillian, 1 T. R. 153; S. C, 7 Bing. 97; Wood v. Grimwood, 10 B. & C. 679; Burnard v. Young, 17 Ves. 44. "Roberts v. GofF, 4 B. & Aid. 92; Cole .v. Gill, 7 Moore 353; S. C, 1 Boa. & P. 270; S. 0.. 1 Taunt. 413. 122 CONSIDEKATION — ILLEGAL. The payment of usurious interest being illegal constitutes no sufficient consideration, as we have seen, for the extension of a note or bill.^ So, too, a bill or note which is void for usury is no payment of a prior debt, and if a former note which is valid is given for such usurious note, the original note will still remain as a subsisting debt.^ § 531. Effect of Usage — Usury a Personal Defense. — Where statutes against usury exist, they are not to be controlled by any usage of trade or custom of merchants.* And a bank of discount or other corporation is subject to such laws in the absence of statutory exemptions in the same manner as an individual.* The defense of usury, except in the case of successive holders of commercial paper, is confined, in general, to the immediate parties to the transaction. Thus, where a deed is made for usurious consideration, a stranger to it or a subse- quent purchaser of the property cannot avail himself of the defense.* Inasmuch as voluntary payments of usury cannot be re- covered, it follows that if two usurious notes are both secured by one judgment, and one of them has been paid and the other not, the usurious interest can only be deducted on the latter in making payment.* If, on the other hand, the maker of the usurious note pays a judgment recovered on it by a bona fide holder for value, this is not a voluntary payment, and he may recover the amount of the usurious interest paid by him in an action against the payee.^ § 532. OfTenses against Liquor Laws. — Among the statutes, 'Ray V. McMurtry, 20 Ind. 307 (1863) ; First Nat. Bank v. Linneberger, 83 N. C. 454 (1880). And a surety will not be discharged by reason of an ex- tension based on such consideration, Howell v. Sevier, 1 B. J. Lea 360 (1878) ; First Nat. Bank v. Linneberger, supra. 'Ramsdell v. Soule, 12 Pick. 126 (1831). 'Ex parte Aynsworth, 4 Ves. 678. 'Maine Bank v. Butts, 9 Mass. 49 (1812) ; Chapin v. Lincoln Sav. Bank, T Heisk. 499 (1872). * Reading v. Weston, 7 Conn. 409 (1829). "Maher's Appeal, 91 Penna. St. 516 (1879). 'Lacy V. Brown, 67 Ind. 478 (1879). OFFENSES AGAINST LIQUOR LAWS. 123 tte violation of which gives rise most frequently to questions on notes and bills, are those prohibiting the sale of liquor or prescribing license as necessary to a legal sale. Contracts in violation of such statutes are void and so are commercial and other instruments founded on them.^ So, too, would be a mortgage securing a note of this sort.'^ Notes given for liquor sold in violation of the existing license law are illegal.^ So, if in violation of a statute against selling liquor to be drunk on the premises ;* or for a permit to sell liquor under a, license granted to the payee, such license not being trans- ferable.^ But it has been held in Pennsylvania that a note ^iven for whiskey sold without a United States license is good, the statute being a penal one, but not expressly making such sales void.® In Vermont the statute is more stringent and no action is maintainable under it for the possession or value of intoxicating liquors sold without statutory authority.^ In Michigan, a note given for liquor sold contrary to law, is made void by statute, except in the hands of a bona fide holder for value, the burden of proof being on the holder to show himself such holder for value without notice.^ Where a note given for sale of liquor is illegal and has been surrendered and a new note taken for it, the illegality renders the new note also void.' And it has even been held that where A. owes money to B. for an illegal sale of liquor, and B. owes a lawful debt to C, and both debts are adjusted by a note given by A. to C, who knows of the 'Hubbell V. Flint, 13 Gray 277 (1859). 'Brigham v. Potter, 14 Gray 522 (1860). 'Turck V. Kichmond, 13 Barb. 533 (1852) ; Griffith v. Wells, 3 Denio 226 <1846); Caldwell v. Wentworth, 14 N. H. 431 (1843); Carlton v. Bailey, 27 lb. 230 (1853). Even though the parties supposed themselves to be within the act, Inhabitants of Webster v. Sanborn, 47 Me. 471 (1859). * Widoe V. Webb, 20 Ohio St. 431 (1870). 'Sanderson v. Goodrich, 46 Barb. 616 (1866). 'Eahter v. First Nat. Bank, 92 Penna. St. 393 (1880). ' Vermont G. S. 94 2 32 ; 1880 R. L. § 3801. 'Paton V. Coit, 5 Mich. 505 (1858). So, too, in Maine, Cottle v. Cleaves, 70 Me. 256 (1879), and in New Hampshire, Doolittle v. Lyman, 44 N. H. «08 (1863). •Kidder v. Blake, 45 N. H. 530 (1864). 124 CONSIDEEATION — ^ILLEGAL. illegal character of B.'s claim against A., the note thus given is void.^ So, a note is illegal which is given for the purpose of indemnifying against a mortgage given to the maker of the note to prevent collection of penalties under the liquor laws.* And where a note given for liquor sold in violation of the statute has been paid by the maker, the amount so paid may be recovered from the payee.* So, a credit of this character given in the settlement of mutual accounts may be recovered, as so much money paid.* The illegality of a note given for liquor sold in violation of the statute affects a surety's liability and releases him, although he may have been indemnified for becoming surety." There is, in general, no presumption of illegality in a note because it was given for a sale of liquor, but the burden is on the defendant to show the want of license or other violatioa of the statute.* In New Hampshire, however, there is such a presumption since the statute of 1855, and the burden is on the holder of the note to prove a license.'' § 533. Liquor Laws — Repeal — Foreign Law. — Where a note has been given for a sale which is illegal at the time, the note remains illegal and void though the statute be after- wards repealed.' And such subsequent repeal of the act will not prevent a recovery of money previously paid on the illegal contract.' In like manner, the sale of liquor under a statutory license granted for one year, will not be rendered illegal by the repeal of the license law during the year and before the making of the sale.^" 'Baker v. Collins, 9 Allen 253 (1864). •Merrick v. Butler, 2 Lans. 103 (1869). •Orcutt V. Symonds, 107 Mass. 382 (1871). 'Walan v. Kerby, 99 Mass. 1 (1868). »Nourse v. Pope, 13 Allen 87 (1866). •Blake v. Sawin, 10 Allen 340 (1865). 'Doolittle V. Lyman, 44 N. H. 608 (1863). And Chia is also the case fa some other States, Baton v. Coit, 5 Mich. 505 (1858) ; Cottle v. Cleaves, 70 Me. 256 (1879). ' * Banchor v. Mansel, 47 Me. 58 (1859) ; Gorsuth v. Butterfield, 2 Wis. 237 (1853). •Adams v. Goodnow, 101 Mass. 81 (1869). "Adams v. Hackett, 27 N. H. 289 (1853). STATUTES AGAINST DEALINa IN SLAVES. 125 And where a note was made in another State, in violation of the statutes of that State as to sales of liquor, it is a good defense to the note.' Put the burden of proof is upon the defendant in such case to show the violation of the foreign statute.*^ § 534. Statutes Against Dealing in Slaves. — Since the war statutes and constitutional provisions have been adopted in some of the Southern States rendering void all contracts grow- ing out of the sale of slaves. Such contracts are declared to be null and void by the Louisiana constitution of 1868.* And a note given for the purchase of a slave is now illegal and void in the State of Louisiana even in the hands of a bona fide holder for value.* It has, however, been held that the indorsement of such a note forms a new contract upon which a recovery could be had by the indorsee.* But this case has been since overruled.* A like prohibition exists in the State of Mississippi, and where a bill of exchange has been given for such prohibited sale, a plea setting up the illegality was held to be sufficient without making any offer to return the slave.'' And a note given in Mississippi for such consideration, and illegal there, was held to be illegal in Arkansas.* There is a similar pro- vision in the constitutions of Arkansas, Florida and Georgia. And under such provision it has been held that a judgment rendered on such a note may be set aside as void.' But in Georgia this provision has been held not to extend to an iFi^ller V. Bean, 30 N. H. 181 (1855). 'Doolittle V. Lyman, 44 N. H. 608 (1863). •Const. La. 1868, Art. 128 ; Austin v. Sandel, 19 La. An. 309 (1867) ; Lapice V. Bowman, 20 lb. 234 (1868) ; Lytle v. Whicher, 21 lb. 182 (1869) ; Nunez v. Winston, lb. 666. •Groves v. Clark, 21 La. An. 567 (1869) ; Levy v. Gremillion, lb. 635. 'Weil, Succession of, 24 La. An. 139 (1872). «Duperier v. Darby, 25 La. An. 477 (1873). ' Baker v. Justice, 41 Miss. 241 (1866). "Moore v. Clopton, 22 Ark. 125 (1860). •McNealy v. Gregory, 13 Fla. 417 (1870). But a note, given by an admin- istrator in settlement of a judgment against his intestate on a note given for the purchase of a slave, has been held not to be illegal, Eedwine v. Glover, 45 Ga. 135 (1872). 126 CONSIDERATION — ILLEGAL. indorsement of such illegal note for a new and lawful con- sideration.' And where A. owed B. for slaves purchased and B. was indebted to C. for land purchased, a note given by A. to C. in satisfaction of such debts was held to be for good consideration and valid.'* So, a new note given by B. to C, in satisfaction of an old note for such illegal considera- tion given by A. to B., has been held to be rendered valid by the novation.^ So, a note given for a slave in 1861, before the emancipation proclamation and the amendment of the United States Constitution, has been held to be valid.* And in Texas such a note made before the close of the war, although after the emancipation proclamation, has been held to be valid .^ § 535. Knowledge of Illegal Intention. — ^It may be laid down as a general rule of law that a contract is illegal and void, if it leads directly to a violation of the law;® or if it furnishes another with the means of breaking the law, and is entered into for that purpose.' And money lent to accom- plish such illegal purpose cannot be recovered again by the lender.* Nor can there be a recovery upon a contract for the purchase and use of property for such illegal purpose.' In like manner, a contract to indemnify any one against the consequences of a trespass or other unlawful act is void.'" Although such a contract would be good, if the payee did not know at the time that the act contemplated was a trespass." • Graham v. Maguire, 39 Ga. 531 (1869). ' Dever v. Akin, 40 Ga. 423 (1869). 'Gresham v. Morrow, 40 Ga. 487 (1869). ♦ Boyce v. Tabb, 18 Wall. 548 (1873) ; Osborn v. Nicholson, 13 lb. 654 (1871). But before the war such a note was presumed to be void in Illinois, Hone V. Ammons, 14 111. 29 (1852). *Hall V. Keese, 31 Tex. 504 (1868). ' 1 Parsons 214. ' De Groot v. Van Duzer, 20 Wend. 390 (1838). So, a note given for bills known to be counterfeit, Blount v. Proctor, 5 Blackf. 265 (1840). «Byles 141; 1 Daniel 204; 1 Parsons 216; Cannan v. Bryce, 3 B. & Aid. 179; McKinnell v. Robinson, 3 M. Drew V. Towle, 27 N. H. 455 (1853) ; Chase v. Weston, 12 lb. 413 (1841). But in Runaseyy. Sargent, 21 N. H. 397 (1850), the defendant was allowed to set off partial failure in personal property sold for the note with a warranty. See, too, Knapp v. Lee, 3 Pick. 452 ; Taft v. Montague, 14 Mass. 285 ; McAl- ister V. Eeab, 4 Wend. 492. 'Greenleaf v. Cook, 2 Wheat. 13 (1817). So, too, in a similar case where the land has been conveyed with covenant of warranty, Chase v. Weston, 12 N. H. 413 (1841). ' Jenness v. Parker, 24 Me. 289 (1844) ; Thompson v. Mansfield, 43 Me. 490 (1857) ; Reese v. Gordon, 19 Cal. 147 (1861) ; Smith v. Ackerman, 5 Blackf. 541 (1841) ; Lattin v. Vail, 17 Wend. 188 (1837). ♦Martin v. Foreman, 18 Ark. 249 (1856). '1 Parsons 210; Morrison v. Jewell, 34 Me. 146 (1852). "Dingman v. Amsink, 77 Penna. St. 114 (1874); Albrecht v. Strimpler, 7 lb. 476 (1848) ; Knight v. Pugh, 4 Watts & S. 445; Brown v. Street, 6 lb. 221. 'Chitty92; 1 Parsons 207; 1 Daniel 207 ; Morgan v. Richardson, 1 Campb. 40 n.; Tye v. Gwynne, 2 lb. 346; Allen v. Bank of United States, Spenc. 621 (1846) ; Walker v. Smith, 2 Vt. 539 (1830) ; Hinton v. Scott, Dudley 245 (Ga. 1833). 'Chapel V. Hickes, 2 Or. & M. 214; Poulton v. Lattimore, 9 B. & C. 259; Newton v. Forster, 11 M. & W. 772; Gregory v. Mack, 3 Hill 380; Bowker V. Randies, 2 Vroom 335 (1865). FAILURE IN VALUE. 135 heen held that unliquidated damages due to a fraudulent rep- resentation as to the quantity of land sold cannot be set up in defense to a note given for the land.' And the same rule has been applied to a surety, not permitting him to set up an indefinite partial failure of consideration between the origi- nal principal parties.^ In many of the States, where this rule was originally fol- lowed, it has been changed by statute so as to permit the -defense of partial failure.^ In Vermont, the statute passed for this purpose in 1867 applies only to defense -in action, between the original parties to the instrument;* and creates no defense to a bill or note in the hands of an indorsee, although he knew of the original consideration.* § 541. Failure in. Value — Quality. — The most common in- stances of failure in consideration occur where the thing received proves of less value than the consideration called for, or where the amount of money constituting the consid- eration is insufficient. Thus, if a note be given for a debt due for money loaned, and be made for too large an amount, there is a failure pro tanto, which constitutes a good defense between the parties 'themselves.* So, if it be given as col- lateral for a loan, there is a failure of consideration so far as it exceeds the amount due on the loan.'' But it has been held that where several notes have been given for a balance •due on the settlement of an account, and the balance has been made too large, this excess in the aggregate amount of ^Drew V. Towle, 27 N. H. 412 (1853). 'Briggs V. Boyd, 37 Vt. 534 (1865) ; Kichardson v. San-born, 33 lb. 75 (1860) ; Burton v. Schermerhorn, 21 lb. 289; Harrington v. Lee, 33 lb. 249 (1860). 'Colorado (1877 G. L. p. 112 ? 97) ; Florida (1850 P. L. 125 ; McClellan's Dig. 1881 p. 833) ; Stafford v. Anders, 8 Fla. 38 (1858) ; Georgia (1873 Code .? 3471) ; Simmons v. Blackman, 14 Ga. 318 (1853) ; Illinois (1880 E. S. p. 727 ^9); Indiana (2 Davis E. S. 1876 p. 76 ? 81); Iowa (McClain's Stats. § 2114) ; New Hampshire (1878 G. L. 509 | 13) ; Texas (1879 E. S. p. 47 Art. 272) ; Williams v. Warnell, 28 Tex. 610 (1866). 'Farrar v. Freeman, 44 Vt. 63 (1871) ; Act 1880 E. L. ? 911. "Thrall v. Horton, 44 Vt. 386 (1872). •McCord V. Crooker, 83 111. 556 (1876); Whitacre v. Culver, 9 Minn. 295 <1864). 'Exchange Bank v. Butner, 60 Ga. 654 (1878). 136 CONSIDERATION — FAILURE. the notes cannot be set up as a failure of consideration in defense to any one note, even at suit of the payee.^ On the other hand, where a note has been given for borrowed money and part of the amount borrowed is a forged bank bill, this has been allowed as a defense in equity to the extent of the bill forged.^ In general it may be laid down as the rule of the common law, that a mere defect in the price, quality or amount of property making up the consideration of a bill or note is no failure of consideration and cannot be set up as a defense;* even though the goods sold were to be " of good quality and moderate price " and proved to be worth less than was agreed on/ So, if the goods for which the note is given are partly worthless, this, in the absence of fraud, has been held to be no defense even at suit of the payee.* And the worthlessness of the consideration, it is said, must be absolute and entire, in order to constitute a failure.* So, that where a note was given on an exchange of horses for a diflFerence in value be- tween them, the fact that there was no such actual difference was held to be no defense to the note.'' The unsoundness of the goods sold, where the contract has not been rescinded nor the goods returned to the seller, is no defense.* And 'Leighton v. Grant, 20 Minn. 345 (1874). =Key V. Knott, 9 Gill & J. 342 (1837). 'Byles 133; 1 Parsons 205; Morgan v. Richardson, 7 East 482 n. ; Tye v. Gwynne, 2 Campb. 346 ; Obbard v. Bethain, M. & M. 483 ; Warwick v. Nairn, 10 Exch. 762 ; Trickey v. Larne, 6 M. & W. 278. *Obbard v. Betham, Mood. & M. 483; Gray v. Cox, 4 B. & C. 108; Laing V. Fidgeon, 6 Taunt. 108; S. C, 4 Campb. 169; Jones v. Bright, 5 Bing. 533 ; S. C, 3 M. & P. 155. Per Lord Tenterden, C. J., in Obbard v. Betham, supra: " If the consideration fails partially, as by the inferiority of the article fur- nished to that ordered, the buyer must seek hia remedy by a cross action. The ivarranty relied on in this case makes no difference." 'O'Neal V. Bacon, 1 Houst. 215 (1856). •Johnson v. Titus, 2 Hill 606 (1842). Thus a note given for a supposed slave who is actually a freeman cannot be enforced by the payee, Livingston V. Bain, 10 Wend. 384 (1833). But even where the consideration received for a mortgage was a worthless note, it was held to be no defense on the mortgagor's part, he having disposed of the note without suffering any loss. Orchard v. Hughes, 1 Wall. 73 (1868). 'Beninger v. Corwin, 4 Zab. 257 (1854). This case is virtually overruled by Wyckoff V. Runyon, 4 Vroom 107. 'Chitty 92; Morgan v. Richardson, 1 Campb. 40 n., 7 East 482. FAILURE IN VALUE. 137 even where a horse for which the note was given was re- turned within a week after the sale, on a parol agreement for the return of the horse and the note if the buyer should be dissatisfied, this is no failure of consideration and constitutes no defense to a note absolute in its terms.^ So, if the un- soundness of the article sold is partial and unliquidated in amount, it is no defense.'* And where a note has been given for the purchase of an article of no value, and afterward paid with full knowledge of that fact, the money paid cannot be recovered by the maker.' But it has been held that where a bill given for machinery which proved defective, was paid by the acceptor before its maturity, this payment will be no bar to a defense on the maker's part by reason of the defect.* § 542. On the other hand, where the goods for which a note is given prove to be of no value whatever, this is a failure of consideration which constitutes a good defense;* and such defense may be shown under the general issue.* So, if a note is given for the purchase of a slave, who was then mortally sick and died soon after, this constitutes a failure of consideration, and is a bar to an action by the payee against the maker's assignee.' If, on the other hand, a note is given for property to be inspected by the buyer, both parties agreeing to be bound by the inspection, the buyer cannot afterwards set up the worthlessness of the property in defense.* If the thing sold is perfectly valueless for the purpose for which it was sold, this has been held to constitute a total 'Allen V. Furbish, 4 Gray 504 (1855). 'Eichardson v. Sanborn, 33 Vt. 75 (1860); Nichols v. Hunton, 45 N. H. 470 (1864). 'Matthews v. Smith, 67 N. C. 374 (1872). * Stark V. Alford, 49 Tex. 260 (1878). 'Crocker v. Crane, 21 Wend. 211 (1839) ; French v. Gordon, 10 Kans. 370 (1872). In the case of Crocker v. Crane, supra, a check was given for stock issued by commissioners not lawfully organized and it was held to be void in the payee's hands. See, too. Spies v. Roberts, 18 Jones & S. 301 (1884). •Payne v. Cutler, 13 Wend. 605 (1835). 'Kogers v. McKnight, 4 J. J. Marsh. 154 (1830) ; Ferguson v. Oliver, 8 Sm. & M. 332 (1847). 'Wiggins V. Cleghorn, 61 Ga. 364 (1878). 138 CONSIDERATION — ^FAILURE. failure of consideration, although the property may still have some value for other purposes.^ And it has been held in a recent case in England that where a note is given for goods to be delivered, which are rendered of no use by a failure to deliver the entire quantity contracted for, the con- sideration of the note fails, and the failure can be set up in defense, except at suit of a bona fide holder for value.* Where, however, a note has been given for land purchased at a valuation made in depreciated or unlawful currency, its failure to reach this estimate is no failure of consideration for the note.* § 543. And if an article, sold without a warranty, proves not to be genuine but still has some value, in the absence of fraud on the part of the seller the want of genuineness in the article is no failure of consideration.* Where a note is given for a patent which proves worthless, this has been held to be a failure, making a good defense between the original parties.* And if it has been given for a mill with the ex- clusive use of a patent which proved to be void, this is a partial failure.® So, if given for a right to sell a machine constructed under a worthless patent, there is a failure;^ or if given for a void patent and for patented goods which are worthless except for the patent.* Again, if a note be given on a dissolution of partnership for a share of the partnership assets at their face value, and a part of such assets afterward prove to be worthless, there is a failure pro tanto, which can be set up in defense to the note without the need of a bill in equity for a partnership 'Barr v. Baker, 9 Mo. 840 (1846). ''Agra, &c.. Bank v. Leighton, L. B. 2 Exch. 56 (1866). ' Crosby v. Tucker, 21 La. An. 512 (1869). 'Welsh V. Carter, 1 Wend. 185 (1828) ; Eudderow v. Huntington, 3 Sandf. 252 (1849). '^Clough V. Patrick, 37 Vt. 421 (1865); Bierce v. Stocking, 11 Gray 174 (1858). But see, coraira, Wilson V. Hentges, 26 Minn. 288 (1879). And it is no defense that the invention was of less value than expected, Day v. Nix, 9 Moore 159. ^Earl V. Page, 6 N. H. 477 (1834). ' Cragin v. Fowler, 34 Vt. 326 (1861). '1 Parsons 206; 1 Daniel 207. FAILURE IN QUANTITY. 139 settlement.^ So, if a note be given for the stock of a pro- jected railroad which is watered and of no value, there is a failure of consideration.^ So, if a note be given for a con- tract for the sale of property which is afterward rescinded ;' or for goods purchased on the receipt of a bill of lading, and the contract is altered in the bill of lading, the fact of such -alteration being a question for the jury.* So, if a note be given on a contract of partnership for capital in the partnership, and the contract prove worthless and there be no perform- ance, there will be a failure in whole or part.^ So, if a note be bequeathed to a person named as executor in the will for his services as such executor, his death before that of the testator will constitute a failure of consideration of the note.* But if a note be given to a member of a firm for the purchase of his interest in it, the refusal of the other members to ad- mit the purchaser into the firm will constitute no failure of -consideration for the note.'' § 544. Failure in Quantity. — Failure in whole or part sometimes occurs in respect to the quantity of property sold. "Thus, it has been held that where a note was given for the conveyance of twenty-six acres of land and the land contained only twenty-five acres, there was a partial failure of consideration.' So, if the quantity be warranted fraudu- lently in the deed.® But if a note be given for a contract for land erroneously supposed to include a lot not conveyed, tind there be no rescission of the contract, this will not consti- tute a failure." On the other hand, it has been held that if a ' Bethel v. Franklin, 57 Mo. 466 (1874). 'Merrill ■;;. Gamble, 46 Iowa 615 (1877). ' Chitty 95 ; 1 Parsons 204 ; Lewis v. Cosgrove, 2 Taunt. 2 ; Ledger v. Ewer, Peake 216; Hallett v. Dewis, 1 Moo. & P. 79. *Hammett v. Barnard, 1 Hun 198 (1874). * Ledger v. Ewer, Peake 216. •Solly ■;;. Hinde, 2 C. & M. 516; S. C, 6 C. & P. 316; Wells v. Hopkins, 5 M. & W. 9. ' Varnum v. Mauro, 2 Cranch C. C. 425 (1823). 8 Hamilton v. Conyers, 28 Ga. 276 (1859). •Gauldin v. Shehee, 20 Ga. 531 (1856). "Lough V. Bragg, 18 Minn. 121 (1871). 140 CONSIDEKATION — FAILURE. note be given for one-half of an inherited estate, conveyed! under a mistaken belief that the vendor was entitled to such share, when in reality he was only entitled to one-quarter of" the estate, there will be a partial failure of consideration.^ § 545. Failure in Title. — Failure of consideration is ofteni due to want of title in the vendor to property sold, for which the bill or note is given. Total want of title constitutes ai total failure of consideration ;^ whether the defect be due to the seller's want of authority to sell;* or to his incapacity by reason of infancy, &c.;* or to his own want of title. And if the note given for the property matures before the buyer is entitled to his deed, the failure of title is nevertheless a^ good defense to the note.* If a note be given for the pur- chase of land, and the purchaser pay off a judgment, which was recovered before the conveyance and constituted an in- cumbrance on the land, there is a failure of consideration fro tanto^ And it has been held, and this seems to be the better opinion, that an eviction is not necessary in case of failure of title, in order to make the defense available.'' So,, if a note be given for a patent right, the previous sale of the 'Marlow v. King, 17 Tex. 177 (1856). 'Scudder v. Andrews, 2 McLean 464 (1841) ; Heaton «. Myers, 4 Col. 59' (1878) ; Wright v. McDonald, 44 Ga. 452 (1871) ; Curtis v. Clark, 33 Mass. 509 (1882). But a prospective failure of title on an unperformed agreement for sale of land is no defense to a note given for it, Wiley w. Howard, 15 Ind. 159 (1860). So, a partial failure of title is no defense, Hodgdon v. Golder^ 75 Me. 293 (1883). But see, contra, in Indiana notwithstanding that the deed was for a married woman's property and her covenants of title were- not binding on her, Beal w. Deal, 79 Ind. 280 (1881). 'Bliss V. Clark, 88 Mass. 60 (1860) ; Campbell v. Brown, 6 How. 106 (Miss. 1842). This is plainly the case where a note was given for land conveyed! by an attorney acting under a fdrged power of attorney for a pretended owner, Wheeler v. Standley, 50 Mo. 509 (1872). 'Stewart I). Insall, 9 Tex. 397 (1853). But it is not a failure of title that the title is incomplete at the time of the maturity of the note, Spiller «., Westlake, 2 B. & Ad. 155. 'Garrett v. Crosson, 32 Penna. St. 373 (1859). 'Holman v. Creagmiles, 14 Ind. 1T7 (1860); Doremus v. Bond, 8 BlackL 368 (1847). So, as to an outstanding dower right, Zebley v. Sears, 38 Iowa 507 (1874). And in Indiana ^uch failure may be set up against any holder,, Holman v. Creagmiles, supra; Doremus v. Bond, supra. But an unneces- sary surrender of possession without legal proceedings will not constitute a failure of title, First National Bank v. How, 1 Mont. 604 (1872). ' Sumter v. Welsh, 1 Brev. 539 (1805). Cbntra, Wilson v. Jordan, 3 Stew. & P. 92 (1832). FAILUBE OF TITLE. 141 «ame right for the same territory constitutes a failure of con- sideration for the note.* So, if a note be given for stock sold by the payee, which was not his property." So, if a note be given for property purchased pending an attachment suit and garnishee proceeding, with a verbal agreement that any judgment recovered against the garnishee may be deducted from the amount of the note, such judgment afterward recov- ered will constitute a failure of consideration fro tanto} But, if a note be given for the purchase of a slave after the emancipation proclamation, it has been held that this constitutes no failure, if there be no actual emancipation.* Again, if a note be given for land purchased at an adminis- trator's sale, which has been confirmed by the court, the mere want of a deed for the land is no failure of consideration un- less the tiile prove defective.' Nor, in such case, is irregu- larity in the administrator's proceedings a defense.® Nor is it a defense that the deed of the land for which the note was given was inoperative in law for want of a seal, the title passing in equity.' And if the note be given merely for an agreement to convey all the payee's right and title to a piece of land, his want of title will not constitute a failure of con- sideration in the absence of fraud.* So, in the case of a note given for a pre-emption right to land, the fact that this right is rendered of no value by an adverse title constitutes no failure.* § 546. Failure of Title— Warranty — Eviction. — The fact that land for which a note is given is conveyed with cove- ' Morrow v. Brown, 31 Ind. 378 (1869). 'Rock V. Nichols, 3 Allen 342 (1862). 'Peterson v. Johnson, 22 Wis. 21 (1897); and parol evidence is admissi- ble to prove such agreement, lb. *Blease v. Pratt, 3 So. Car. 513 (1872); McElvain v. Mudd, 44 Ala. 48 (1870). 'Bock V. Heald, .27 Tex. 523 (1864). «Lee V. White, 4 Stew. & P. 178 (1838). ' Brinkley v. Bethel, 9 Heisk. 786 (1872). •Kerney V. Gardner, 27 III. 162 (1862) ; Condrey 1). West, 11 lb. 146 (1849); Owings V. Thompson, 4 lb. 602 (1842). •Ferguson v. McCain, 23 Ark. 210 (1861). i42 CONSIDERATION — FAILURE. Hants of warranty has been held not to affect the question of failure of consideration by reason of want of title/ or partial failure by reason of incumbrances on the land.^ On the other hand, if a note be given for the purchase of land with an agreement on the payee's part to indemnify the buyer against an outstanding dower right of his wife, the non-performance of this agreement constitutes no defense ta the note.^ It is, however, a good defense to a note given for the purchase of property, that the contract of sale falsely represented the vendor to be possessed and seized in fee of the property,* Where a note has been given for the purchase of land sold with a warranty, the failure of title accompanied by dispos- session of the purchaser is a failure of consideration of the note.* But if the title failed after two years' occupancy, the failure would be only partial and therefore until recently no defense in Vermont.® So, if a note be given for machinery purchased and part of it is afterwards sold under a prior attachment, there is a partial failure of consideration.' So, if it is given for land and the land is afterwards sold to satisfy am incumbrance against the vendor, this is a failure of consideration.* So, if a note is given for land sold with a covenant of warranty, and a mortgage incumbrance greater than the amount of the note is afterwards discharged by the purchaser, the vendor being insolvent.' So, if a note be given ' 1 Edwards §462; 1 Parsons 210 ; Cook v. Mix, 11 Conn. 432 (1836) ; Pris- bee V. Hofnagle, 11 Johns. 50 (1814). But a diflferent rule is followed,, it seems, in Mississippi, if the covenantor is solvent, Guice v. Sellers, 43 Miss. 52 (1870). And see, as to a like sale of personal property, Linton v. Porter, 31 111. 107 (1863). 'Schuchmann v. Knoebel, 27 111. 175 (1862) ; McHenry v. Yokum, lb. 160. But see, contra, Hassams v. Bompier, 28 Vt. 32 (1855). 'Billa V. Hecklebrath, 23 Ind. 71 (1864). ♦Coburn v. Haley, 57 Me. 346 (1869) ; Stone v. Fowle, 22 Pick. 166 (1839). 'Rice V. Goddard, 14 Pick. 293 (1833). ° Foster v. Phaley, 35 Vt. 303 ; unless indeed the occupancy had been ren- dered valueless by necessary repairs equal to it in value, lb. So, if the failure of title occurs after the property had passed into the maker's posses- sion and been destroyed by fire, Horton v. Arnold, ll Wis. 212 (1864). 'Riddle v. Gage, 37 N. H. 519 (1859). "Lapene v. Delaporte, 27 La. An. 252 (1875). •Miller v. Gibbs, 29 Ind. 228 (1867)-. FAILURE OF TITLE. 143 for the purchase-money of land which is afterward paid in open court to a third party .^ But, where a note is given for land purchased with a warranty and an existing incumbrance is afterwards bought in by the purchaser at less than its face value, only the amount actually paid by him can be set up in defense to the note.^ Where, however, a note is given for a deed of land con- taining a covenant against incumbrances, a breach of the covenant, without accompanying damage by payment of the incumbrances, is no defense to the note.* And where A., in consideration of a contract for indemnity against certain debts, quit-claims a piece of land to his co-tenant, who con- veys it to B., and B. gives A. a note for his interest in the land, the fact that B. is afterwards compelled to pay the debts in question as incumbrances on the land constitutes no defense to his note.* Where, on the other hand, a note is given for land purchased of two grantors and the title of one proves defective, and the deed is thereupon rescinded by the purchaser as to both, the note has been held to be without consideration, and therefore void, as to the defective title only,* § 547. Failure of Title — Eviction — Fraud. — It has been held, indeed, that there is no failure of consideration of a note by reason of want of title in the land conveyed, unless there be an eviction from the land ;' and that where the land is conveyed with a warranty of title, an adverse claim with- out any disturbance of possession, constitutes no failure of consideration.^ So, if a note be given for land, of" which the purchaser holds possession under a warranty deed, a mistake as to the land constitutes no defense against an indorsee of the note, although he had notice of it.* And it 'Keagan v. Burton, 67 Ind. 347 (1879). "McDowell V. Milroy, 69 111. 498 (1878). "Cheney v. City National Bank, 77 111. 562 (1875). 'Sanger v. Cleveland, 10 Mass. 415 (1813). 'Bringham v. Leighty, 61 Ind. 524 (1878). 'Wilson V. Jordan, 3 Stew. & P. 92 (1832). Contra, Sumter v. Welsh, 1 Brev. 539 (1805). 'Lothrop V. Snell, 11 Gush. 453 (1853) ; Lynch v. Baxter, 4 Tex. 431 (1849). •Nichols V. Hill, 32 Tex. 516 (1870). 144 CONSIDERATION — FAILIJKE. has been held that where a note was given for a deed of land with a covenant against incumbrances, the existence of a mortgage was no defense until eviction or payment of the mortgage by the purchaser.^ So, if a note is given for the purchase of land held under a contract, a clause in the con- tract providing for re-entry at the vendor's option on non- payment of the note constitutes no failure of consideration for the note without an actual re-entry .'^ In apparent opposition to the authorities above cited, it has been held in a recent case in North Carolina that the rule of caveat emptor applies to such cases, and that where a note is given for land, the want of title to the land is no de- fense in the absence of fraud.^ And it is said that the buyer must rescind the contract in order to avail himself of a de- fense arising out of a want of title.* And where a note is given for land purchased, the contract providing for a war- ranty deed to be given, the pendency of a suit against the title, known at the time to the maker of the note, is no bar to a suit on the note ; and such action can be brought with- out waiting for the termination of the earlier suit as to the title.' A distinction has been made, as already seen, in some cases, between transfers of land with a warranty by an in- solvent grantor and like transfers where the grantor is solvent. In the former case want of title has been held to constitute a failure of consideration.* In the latter case it has been held that the purchaser must seek his remedy by an action on his covenants.' This distinction, however, does not seem to be supported by the weight of authority in the cases already cited. It has also been held that where a note is given by A. for land conveyed to B., the want of title can iPomeroy v. Burnett, 8 Blackf. 142 (1846). 'Chandler v. Marsh, 3 Vt. 162 (1831). Toy V. Haughton, 85 N. C. 168 (1881). ♦Wade V. Killough, 3 Stew. & P. 431 (1833). » Baldridge v. Cook, 27 Tex. 565 (1864). •Knapp II. Lee, 3 Pick. 452 (1826). 'Guice V. Sellers, 43 Miss. 52 (1870). FAILTJEE BY FRAUDULENT WARRANTY. 145 only be set up in defense between the parties to the deed.^ And in Texas it seems that failure for want of title to the land sold must be especially pleaded, with an averment either of want of title or of an eviction.* § 548. Failure by Fraudulent Warranty. — Where a note is given for goods fraudulently warranted, and the goods are afterward returned and the contract rescinded, there is plainly a failure of the consideration.' But, in general, either a warranty or a false representation is necessary to consti- tute a failure by reason of defect in the value or quality of the goods sold.* And in Indiana, it seems, such failure must be specially pleaded with an averment of warranty or fraud.^ It has been stated as the common law rule that although goods are sold with a warranty, the breach of warranty con- stitutes no failure of the consideration of a note given for the goods, unless they are entirely worthless." In the United States, however, a breach of warranty amounting to a partial failure has been held to be a good defense pro tanto? And where goods sold have been warranted for a particular pur- pose, and are worthless for that purpose, there is a failure of the consideration, although the property may have a value for other purposes.* So, where a slave is warranted sound and is returned within a reasonable time for unsoundness, this is sufficient defense to a note given for it without proof ifiass V. Randall, 1 Minn. 404 (1867). ^Tooke V. Bonds, 29 Tex. 419 (1867). ' Chitty 94 ; 1 Parsons 205 ; Lewis v. Cosgrove, 2 Taunt. 2 ; Solomons v. Turner, 1 Stark. 51. *Reed v. Prentiss, 1 N. H. 174 (1818); Richards v. Betzer, 53 111. 466 (1870) ; Detrick v. McGlone, 46 Ind. 291 ; Bryant v. Pember, 45 Vt. 487 (1873 ; Buhrman c. Baylis, 14 Hun 608 (1878). Breach of warranty of soundness is a sufficient failure. Mattock v. Gibson, 8 Rich. 437 (1832). So, that an insurance company, for insurance in which the note was given, had no real capital, Terry v. Hickman, 1 Mo. App. 119 (1876). ' Myers v. Conway, 62 Ind. 474 (1878). ' 1 Parsons 204. So stated by Judge Daniel also as the rule in England and in many of the States, 1 Daniel 206. ' Payne «.• Cutler, 13 Wend. 605 (1835) ; Butler v. Titus, 13 Wis. 479 (1861) : Beers v. Williams, 16 111. 69 (1854). 8 Starr v. Torrey, 2 Zab. 190 (1849). VOL. n. ^ 146 CONSIDERATION — FAILURE. of an immediate return of the slave.^ But where a breach of warranty is held to be a good legal defense by way of fail- ure of consideration, an injunction will not be granted in equity to restrain the transfer of the note.* A note given for a worthless patent which is warranted, is subject to defense for the worthlessness of the patent and the breach of warranty.^ And, notwithstanding the covenant of warranty, such worthlessness is a defense.* So, it is a good defense that the patent warranted is bad for want of original- ity, although not repealed ;* or that a machine, warranted as to its quality, is not as warranted;' especially where there is an agreement for refunding the money if it does not work as warranted.'' So, where a note is given for a hedge war- ranted for five years and the hedge dies within that time,, there is a failure of consideration.' But where a note is- given for goods sold with a warranty to the maker of the note, an accommodation indorser cannot set up the breach of warranty as a defense.* Where, however, a note is given for a machine sold with a warranty ^nd the machine is returned as useless, and accepted by the seller, the consideration for the note fails, even though the machine answers fully the purpose for which it was warranted.^" ' Clements v. Smith's Adm'rs, 9 Gill 156 (1850). See, too, as to such breach of warranty constituting a defense between the original parties to the note-, Dancey v. Sugg, 46 Miss. 606 (1872). 'McMillion v. Pigg, 3 Stew. 165 (Ala. 1830). 'Johnson v. McCabe, 37 Ind. 535 (1871). 'Dickinson v. Hall, 14 Pick. 217 (1833). And a failure of consideration of this sort is not waived by making a payment on account after receiving- notice of the defect in the goods, Atkins v. Cobb, 56 Ga. 86 (1876). But such worthlessness of goods sold with a warranty constitutes no failure in the acceptance of a bill of exchange drawn by the buyer on a third person^ Marsh v. Low, 55 Ind. 271 (1876). 5 Parrot «. Famsworth, Brayt. 174 (1817). •Aldrich v. Stockwell, 9 Allen 45 (1864) ; Thompson v. Wheeler Mfg. Co.,. 29 Kans. 476 (1883) ; Beers v. Williams, 16 111. 69 (1854). But a contempo- raneous agreement of warranty has been held in Iowa to constitute no de- fence to a negotiable note, Cook v. Weirman, 51 Iowa 561 (1879). 'Rumsey v. Sargent, 21 N. H. 399 (1850). •Edwards v. Pyle, 23 111. 354 (1860) ; Davis v. McVickers, 11 111. 327 (1849). And, in general, as to breach of warranty constituting a failure of consid- eration, see Shepherd v. Temple, 3 N. H. 455 (1826). •Hiner v. Newton, 30 Wis. 640 (1872). "Manny v. Glendinning, 15 Wis. 59 (1862). UNSOTTlirDNESS WITHOUT FRAUD. 147 § 549. Unsoundness without Fraud — False Representa- tions. — On the other hand, if there be no fraud in the war- ranty and no return of the property, the unsoundness con- stituting a breach of the warranty can only be availed of in an action on the covenant and not by way of defense to the note.^ And it has been held that the settling and stating of an account estops the maker of a note given for a balance due on a contract from setting up a failure of consideration by reason of breach of warranty .'^ But the mere giving of a renewal note is not of itself conclusive evidence of a waiver on the maker's part of a defense founded on a breach of war- ranty in the sale of the property for which the original note was given,^ Again, where a note is given for the purchase of property, fraudulent representations as to it constitute a failure of con- sideration ;* especially if the sale be rescinded on account of the fraud and the goods returned.* So, the worthlessness of a patent and fraudulent representations as to it constitute good defense to a note given for it without a return or re- transfer.' But not a mere partial failure by reason of the patent being less valuable than was represented, the loss of value not being ascertainable by computation.'' Again, if a note is given for property purchased by sam- ple, the failure of the property to correspond with the ' Thornton v. Wynn, 12 Wheat. 183 (1827). But see, contra, Harrington v. Stratton, 22 Pick. 510 (1839). •Colby V. Lyman, 4 Neb. 429 (1876). 'Aultman v. Wheeler, 49 Iowa 647 (1878). ' Mills V. Oddy, 2 C. M. & E. 103 (1835) ; S. C, 5 Tyrw. 571 ; Beall v. Brown, 12 Md. 550 (1858). So, a material misrepresentation as to improvements, Hodges V Torrey, 28 Mo. 99 (1859) ; or liability to flooding, Jones v. Hath- away, 77 Ind. 14 (1881). But fraudulent misrepresentation in the sale of goods without a warranty has been held not to p.mount to failure of consid- eration of the note given for them, Raines v. Dooley, 23 Ark. 329 (1861). See, however, as to a note for the endowment of a scholarship, Elsass v. Moore's Hill, &c.. Institute, 77 Ind. 72 (1881). *Bechner v. Willson, 68 Ind. 533 (1879). •Becker v. Vrooman, 13 Johns. 302 (1816); Spalding v. Vandercook, 2 Wend. 432 (1829) ; Whitney v. Allaire, 4 Den. 554 (1847) ; Franklin v. Long, 7 Gill & J. 419 ( 1836) ; GroflF v. Hansel, 83 Md. 161 (1870). 'Pulsifer v. Hotchkiss, 12 Conn. 233 (1837). 148 CONSIDEKATION — FAILURE. sample constitutes a total failure of consideration.^ And if a bill accepted for such sale be paid by the acceptor, he may recover the amount paid against the drawer.* Where a note has been given for the purchase of property at cost price, and this has been misrepresented, it is said that fraud in the sale and an offer to rescind are necessary to constitute a fail- ure of consideration, and also that the amount be capable of computation.^ On the other hand, where a note is given for a debt of the maker on a false representation that the amount was due, there being nothing due, there is a failure of consideration.* So, where goods have been sold with a fraudulent warranty, and their full value has been already paid, a bill given by the purchaser for the balance is without consideration and the drawer cannot be held.° § 550. Failure by Mistake. — Sometimes the failure of con- sideration is due to a mistake, e. g. where a note is given in discharge of a supposed liability f or, in payment of an ille- gal assessment, the maker being ignorant of the illegality;'' or, on dissolution of a partnership, for the supposed value of the partnership accounts." In this case, however, it has been held that the defense can only be made in equity, and not hj pleading failure of consideration. A mistake on the maker's part, to constitute a failure of consideration, must not be a mistake of law.* And where a note has been given to compromise a suit against the maker's title, it is no defense that the suit could not have prevailed.^" So, where a note is 'Wells V. Hopkins, 5 M. & W. 7; S. C, 3 Jur. 797. But see, as to repre- sentations on the information of another without profession of personal t^nowledge, Davidson v. Jordan, 47 Cal. 351 (1874). "Hooper v. Treflfry, 1 Exch. 17 (1847). ' Harrington v. Lee, 38 Vt. 249 (1860). ^Southall V. Rigg, 11 C. B. 481 (1851). ^Archer v. Bamford, 3 Stark. 175. «Haynes v. Thom, 28 N. H. 386 (1854). ' Maddy v. Sulphur Spgs. Tpk. Co., 57 Ind. 148 (1877). Or fbr a threshing machine prohibited by law, Wadleigh v. Bevelling, 1 Bradw. 596 (1878). »Eogers v. Rogers, 1 Hall 391 (1829). •Carpentier v. Minturn, 6 Lans. 56 (1872). "Billingsley v. Niblett, 56 Miss. 537 (1879). MISTAKE — UNPEflFOBMED AGREEMENT. 149 given for an award rendered, an objection to the award con- stitutes no defense.^ If a note be given in compromise of a bastardy proceeding, the maker cannot set up in defense that he could afterward prove he was not the father of the child.^ But where a note has been given in settlement of a charge of slandering the payee's wife, with an agreement that it shall be canceled if the charge be proved true, the falsity of the charge may be shown by parol, as well as the agreement for canceling the note, not, however, it was held, as establish- ing a failure or want of consideration but as a payment of the note.* § 551. Failure — Unperformed Agreement. — Failure of con- sideration frequently consists in the non-performance of an agreement for which the bill or note is given ;* whether the agreement be one under seal, or a mere verbal agreement.* So, where the consideration is partly an agreement to sell goods its non-performance constitutes a partial failure.^ So, an unperformed agreement to indemnify a surety by the sur- render of another note.'' So, an unperformed agreement for the delivery of flour on a certain day.* And where a note is given for land and is made payable on the day fixed for ' Boynton v. Butterfield, 6 Allen 67 (1863). ^Compton V. Davidson, 31 Ind. 62 (1869). 'Saunders v. Howe, 1 D. Chip. 363 (1821). 'Watson V. Russell, 3 B. & S. 34 (1862). So, the non-delivery of property purchased as agreed, Mitchell y. Stinson, 80 Ind. 324 (1881). And no de- mand is necessary. Booth v. Fitzer, 82 Ind. 66 (1882). Such performance is a condition precedent, Chitty 91 ; Irving v. King, 4 0. & P. 309 ; although the damages may be uncertain, Lewis v. Cosgrove, 2 Taunt. 2. But if an acceptance be given for a balance of work to be done on a contract, which is never completed beyond the amount already paid for in cash, the failure to perform the contract is a partial failure only, as though the acceptance had been for the entire contract price, Trickey v. Larne, 6 M. & W. 278 (1840). 'Miller v. Wood, 23 Ark. 546 (1861); Dioken v. Morgan, 54 Iowa 684 (1880). 'Barnes v. Stevens, 62 Ind. 226 (1878). ■Jeffries v. Lamb, 73 Ind. 202 (1880). So, where the consideration of the note is the assignment of A.'s debts to the payee and the payee has failed to deliver to the maker one of A.'s notes held by him, Powell v. Subers, 67 Ga. 448 (1881). 'Corwith V. Colter, 82 111. 585 (1876)'. But in Kelly v. Webb, 27 Tex. 368 (1864), the holder of the note was held to be entitled to payment before delivery of the goods. 150 CONSIDEKATION — FAILURE. delivery of the deed, the agreements are dependent one on the other, and there can be no recovery on the note without performance of the agreement/ Especially if the non-per- formance of the agreement for a deed is accompanied by a sale of the land to another.^ So, where a note is given to the payee for an agreement on his part to name a price which he would give or take for an interest in land held by him jointly with the maker, his subsequent refusal to accept the price named by him is a failure of consideration for the note." So, if a note be given for an agreement by the payee to convey land, or to buy it if he was not then owner and convey it, the payee's death before performance of the con- tract causes a total failure of consideration for the note.* So, if a note be given to the payee for rent of premises, of which he failed to give possession as agreed.* So, if a note be given for goods with a verbal agreement to procure the rent of a store, breach of this agreement is a failure of the considera- tion of the note.' So, if a note be given for a policy of in- surance and the policy be not delivered;^ or for a policy of insurance to be delivered with certain conditions, and a dif- ferent policy be tendered. And in such case if the maker has already been obliged to pay the note to a bona fide holder, he may have an action for the amount paid against the payee.* It has been held, however, that if a note is given for a contract of sale to be delivered, and the contract when de- livered is different "from what was agreed on, this will not constitute a total failure.' Again, if a note is given for stock ' Hoag V. Parr, 13 Hun 95 (1878) ; Cook v. Bean, 17 Ind. 504 (1861). •Little V. Thurston, 58 Me. 86 (1870). 'Hawks V. Truesdell, 12 Allen 564 (1866). *Tillotson V. Grapes, 4 N. H. 444 (1828). 'Andrews v. Woodcock, 14 Iowa 897 (1862). "Stanford v. Davis, 54 Ind. 45 (1876). 'Lawrence v. Griswold, 30 Mich. 410 (1874). •Tift V. Phoenix Ins. Co., 6 Lans. 198 (1871). •Boone v. Queen, 2 Cranch C. C. 371 (1823). But it seems that if the defects in the contract were by reason of fraudulent instructions of the payee the note would be void, lb. So, if the draft to be accepted was a UNPEKFORMED AGKEEMENT. 151 to be issued when ready, and the corporation is never organ- ized nor the stock issued, there is a failure of consideration.^ § 552. In like manner, the non-performance of an agree- ment to discontinue a suit is a failure of consideration of a note or indorsement given therefor.'* So, too, it has been held, the non-performance of an agreement to return an old note on the giving of a renewal note;' or to surrender a mortgage on giving a note for a mortgage debt.* So, if a note be assigned in consideration of an agreement to pay the assignor's debts, the payment of the debts by the assignor himself causes the consideration of the note to fail." So, if a note be given for services, a subsequent receipt given for the same services shows a failure of consideration for the note.* So, if an indorsement be made for an agreement to buy up a mortgage incumbrance, the breach of the agree- ment constitutes a failure of consideration.^ So, the breach of an agreement to indemnify the maker against partnership ^ebts, a judgment being subsequently rendered against both partners and not paid by the payee of the note.* So, if a note is given for the purchase of a draft, with a written agreement for a release if the draft be not collected, failure to collect the draft constitutes a failure of considera- tion for the note.' So, where a note is given under a compo- sition agreement with creditors, and indorsed for the debtor's accommodation, upon an agreement that the transaction should be void unless all the creditors signed, the failure to get the ■different draft, Sherwin v. Bringham, 39 Ohio St. 137 (1883), or the deed delivered was for a different piece of land from that agreed on, Glover v. €hase, 3 McCrary, 599 (1882). 'Hope Iron Works v. Holden, 58 Me. 146 (1870). So if the stock was never issued as agreed, Scotten v. Randolph, 96 Ind. 581 (1884). 'Bookstaver v. Jayne, 60 N. Y. 145 (1875). So, if part of the considera- tion is an agreement for definite delay in a suit, non-performance will be a partial failure, Hill v. Enders, 19 111. 163 (1859). "Miller v. Eitz, 3 E. D. Smith 253 (1854). * Bichards v. Thomas, 1 C. M. & B. 772 (1834). 'Compton V. Jones, 66 Ind. 117 (1878). •Dubois V. Baker, 40 Barb. 556 (1863). 'Kirkman v. Boston, 67 111. 599 (1873). 'Pope V. Hays, 19 Tex. 170 (1857). 'Hall V. nendevapn, 84 111. 611 (1877). 152 CONSIDERATION — FAILURE. signature of all the creditors constitutes a failure of consid- eration for the indorsement.^ Again, if a note is given on a partnership settlement, with a contemporaneous Written agreement, that if a certain partnership account was not paid, the maker should be credited with his share of the account, the failure to pay such account may be shown in defense by the maker, the burden of proof in suoh case rest- ing on him.^ Where a note held by a husband is transferred' to his wife in consideration of her agreement not to defend a divorce suit, the breach of this agreement is a failure of con- sideration for the transfer ; and payment of the note to the husband will defeat an action subsequently brought upon it by the wife.^ § 553. Non-Performance — Not a Failure of Consideration. — It is said, however, -by Professor Parsons, that non-perform- ance of an agreement forming the consideration of a bill or note is no failure unless the agreement be rescinded.* In many cases the intention to make the agreement and the promise founded on it independent of one another is appa- rent. Where an agreement to accept a bill of exchange has been made in consideration of another agreement, the non- performance of the latter has been held to constitute no defense to the agreement for acceptance.* So, where a note has been given for a college endowment, the non-perform- ance of a contemporaneous agreement not to diminish the principal fund of such endowment constitutes no failure of consideration for the note." And where a note is given for an agreement for the sale of land, to be conveyed on condi- tion that the note is paid, the giving up of the land by the maker and its sale to another person, will not prevent a recovery on the note.^ Nor will the rescinding of such con- ' Doughty V. Savage, 28 Conn. 146 (1859). 'McSherry v. Brooks, 46 Md. 103 (1876). 'Pearson v. Cummings, 28 Iowa 344 (1869). n Parsons 203. * Jones V. Council Bluffs Bank, 34 111. 313 (1864). 'Simpson Centenary College v. Bryan, 50 Iowa 293 (1878). 'Bacon v. Porter, 1 Root 370 (1792) ; Bacon v. Pettibone, 2 lb. 284 (1795). NON-PEKFOEMANCE. 153 tract by the maker bar a recovery on the note.^ And where a note is given for the purchase of land, the fact that it is not conveyed before the maturity of the note, constitutes no defense, there being no refusal to convey.^ So, if a note be given for land to be conveyed on payment of the note, non- delivery of a deed for the land is no failure of consideration for the note.' So, it is held in England that the failure to perform an agreement for a lease is no failure of the consid- eration of a note given for it, but can only be availed of by a cross action.* So, in Indiana, the non-performance of an agreement to transfer an agency indefinite in its term of duration.® And where a note is given for the purchase of railroad bonds, with an agreement for their indorsement by another corporation, the failure to perform this agreement is no fail- ure of consideration for the note.* So, where a note is given for a share of partnership assets with an agreement on the maker's part to procure a release of the payee from certain liabilities, his failure to do this is no defense to the note.'' Where a note has been given for the purchase of a business, with a bond on the seller's part not to carry on a like busi- ness within certain limits, the breach of this latter stipulation does ndt constitute a failure of consideration of the note.' So, where the note is given for repairs to be made on a machine, non-performance on the payee's part constitutes no defense 1 Crawford v. Kobie, 42 N. H. 162 (1860). 'Spiller V. Westlake, 2 B. & Ad. 155. So, refusal to execute an assignment of a lease for which a bill was accepted is no defense as a failure of consid- eration, if the purchaser is in possession of the land, Chitty 94 ; Moggridge V. Jones, 3 Campb. 38. So, where a note was given for land sold, to be con- veyed on payment of the note, dispossession under proceedings by the vendor is not a failure of the consideration of the note, the agreement making no provision for possession by the purchaser, Babcock v. Hamende, 3 Bradw. 426 (1878). • »Bourland v. Gibson, 91 111. 470 (1879). *Moggridge v. Jones, 14 East 486 ; S. C, 3 Campb. 38 ; Spiller v. Westlake, 2 B. & Ad. 155; Mann v. Lent, 10 B. & C. 877; Grant v. Welchman, 16 East 207 ; Cuff V. Browne, 5 Price 297. 'Burr V. Wilson, 26 Ind. 389 (1866). 'Stanton v. Maynard, 7 Allen 335 (1863). 'Henshaw v. Button, 59 Mo. 139 (1875). *Clough V. Baker, 48 N. H. 254 (1860), under Gen. Stat. ch. 201 1 11. 154 CONSIDEEATION — FAILURE. until demand and refusal.^ If, however, sucli note is given for an exchange in machines and repairs to be made, and there is a failure in the latter, the damages on account of the failure will be measured by the cost of making the repairs.* § 554. Other cases in which non-peformance of the agree- ment for which a note or bill was given has been held to constitute no failure of consideration are : an agreement to show the maker certain property out of which he could col- lect a debt due him;^ or to render certain services as attor- ney in defense of a suit, the attorney being absent from court at the time required;* or having died before trial of the case;° or judgment having been rendered against the maker notwithstanding the attorney's advice.* So, an agreement that the maker might collect a certain debt due to the payee from a third person, the collection being prevented afterward by the insolvency of such person.'' And where a note of A. is guaranteed by B. in consideration of indulgence shown to A. and of A.'s agreement to make a certain cash payment, this latter agreement being brorken on his part and his cred- itor losing priority by reason of the extension, A.'s breach 'Mountjoy v. MuUikin, 16 Ind. 226 (1861). 'Howe Machine Co. v. Eeber, 66 Ind. 408 (1879). 'Plumb V. Nil 63, 34 Vt. 230 (1861). So, the non-performance of an agree- ment to apply in a apecified manner the proceeds of an accommodation discount, Brooks v. Hay, 23 Hun 372 (1881). Or to surrender a mortgage note, which had been released but was afterward foreclosed against the property, Hutson v. Presanall, 83 Ind. 163 (1882). Or to make certain im- provements on property sold at auction, for which the note was given, Miller V. Howell, 2 111. 499 (1838). * Douglass V. Eason, 36 Ala. 687 (1860). The question in this case was rather as to the burden of proof, which lay on the defendant, and was not satisfied by mere evidence of the payee's absence from court. ^Headley «. Good, 24 Tex. 232 (1859). So, where the services were pre- vented by the suicide of the maker of the note before trial, Mitcherson v. Dozier, 7 J. J. Marsh. 53 (1831). Or where an agreement to cure for $200 was waived by giving a note for the amount before the cure was effected. Swank v. Nichols, 20 Ind. 198 (1863). But a note for anticipated services as executor has been held to fail on the services of the payee being prevented by his death before the maker, Byles 208; Chitty 83; Solly v. Hinde, 2 0. & M. 516; S. C, 6 C. & P. 316. 'Lester v. Fowler, 43 Ga. 190 (1871). 'Hodgkinsi;. Moulton, 100 Mass. 809 (1868); Waterhouse v. Kendall, 11 Cush. 128 (1853) ; Traver v. Stevens, 11 Gush. 167 (1853) ; Pitkin v. Frink, 8 Mete. 12 (1844). FAILURE AFTEB CONSIDERATION RECEIVED. 155 of agreement is no defense to an action by the payee against the guarantor.^ Again, where a note is given for another note transferred to the maker, and is afterwards surrendered, this surrender -constitutes no defense to the note transferred, although it ^as so transferred on an oral agreement that it should be payable conditionally upon the other note being paid.** So, where a note was made partly in compromise of a suit against A. and B, and partly for a note of A., and was not to be de- livered to B. until the note of A. had been paid, but was ■delivered to B, without notice of that condition, the breach of the condition constitutes no failure.* So, where a draft by a contractor on the owner of a building is given to a materialman and is accepted by the owner, payable "when the house is ready for occupancy," the fact that the contract "was broken by the drawer and the house finished by the drawee himself, constitutes no failure of consideration, the actual consideration for the draft being the material fur- nished by the payee and not the completion of the drawer's -contract.* Where, on the other hand, a note is given for an agreement to convey land, the payee to have possession un- ■der the agreement on default of payment of the note, the payee may upon default have his election to sue on the note ■or to rescind the note and sue in equity on the agreement.* § 555. Subsequent Failure After Consideration Once Be- •ceived. — ^Where the apparent failure is due to a subsequent change in the consideration, this is not in law such failure of consideration as can be made available in defense. But if a note be given in part payment of a judgment and the judgment be afterwards settled in another way, this is a fail- ure of consideration. * So, if a note be given in satisfaction 'Mechanics' Bank v. Frazer, 86 111. 133 (1877). •Adams v. Wilson, 12 Mete. 138 (1846). •Stewart v. Anderson, 59 Ind. 375 (1877). 'Cook V. Wolfendale, 105 Mass. 401 (1870). *Arbuckle v. Hawks, 20 Vt. 538 (1848). < Campbell v. Skinner, 30 Mich. 32 (1874). 156 • CONSIDERATION — FAILURE. of a judgment which is afterwards reversed on appeal;^ or in satisfaction of a rule for the payment of money on an execution, which rule is afterwards discharged.^ Where, on the other hand, a note was given by a surety for an extension of his principal's debt, and was fraudulently negotiated, and the original debt was subsequently paid by the principal, this could not be set up in defense as failure of consideration at suit of bona fide purchaser.^ It is, however, a partial failure of the consideration of a note given for the hire of a servant for a year with provision for a reduction upon his death within the year, if he so die.* So, if a slave so hired be retaken by the hirer before the year's end.^ On the contrary, it has been held that where a note was given for goods purchased, subsequent dispossession would not of itself amount to a failure of consideration.* Nor would a retaking of the goods by an act of trespass two months after their delivery.'' So, if a note be given for pur- chase of a mule, which afterwards dies of a latent disease, in the absence of fraud and of warranty this is not a failure of consideration,* So, if a note be given for the good-will of a business, and its value is subsequently destroyed by a panic* Or for an apprentice fee, the apprenticeship being afterwards brought to an end by the misconduct of the master.'" So, a note for the purchase of land which afterwards became •Dennison v. Brown, 3 Vt. HO (1831). 'Barron v. Chipman, 4 Ga. 200 (1848). 'Woodruff V. Webb, 32 Ark. 612 (1877). 'Smith V. Brooks, 18 Ga. 440 (1855). "Tompkins v. Tigner, 17 Ga. 103 (1855). "Byles 133; Stephens v. Wilkinson, 2 B. & Ad. 820; Jones v. Jones, 6 M. & W. 84; Lomas v. Bradshaw, 9 0. B. 620. 'Stephens v. Wilkinson, 2 B. & Ad. 320. 'Winslow V. Wood, 70 N. C. 430 (1874). "Smock V. Pierson, 68 Ind. 405 (1879). So, for an interest in a mail con- tract subsequently rendered valueless by the contractor's failure to pay, Blackman v. Dowling, 63 Ala. 304 (1879) ; Bowling v. Blackman, 70 lb. 303 (1881). •"Grant v. Welchman, 16 East 207. The case would have been otherwise^ if there had been an original agreement for the return of the fee on the dis- charge of the apprentice, Chitty 95. FAIJ.UKE AFTER CONSIDERATION RECEIVED. 157 'worthless/ And if a note be given for land which is de- scribed as bounding on a proposed road, and the grantor of the land afterwards fails to join in constructing the road as agreed, this will not amount to a failure of consideration for the note.* So, if a note be given for the future rent of a house, and the house be afterwards destroyed by fire, this is no failure.^ And even where a note has been given for the surrender of a lease, containing a provision that the rent should cease on the destruction of the premises by fire, the subsequent destruction of the property by fire constitutes no failure of consideration of the note.* So, if a note be given for the services of a substitute in the army, to be void if the maker should be drafted, the note will be binding, although the makei; was afterwards drafted and discharged from the draft as a miller.^ So, if a note be given for a patent-right, the subsequent granting of another patent for the same in- vention will not constitute a failure of consideration.® So, if it be given for the assignment of a patent, with an agreement that the commissioner should be required to issue a new patent to the assignee, and this re-issue was prevented by the act of the assignor in surrendering the patent.'' So, if a note be given to found a scholarship, or endow an institution, which fails on account of the maker's default in paying the note, this is not a failure of the consideration of the note.* So, a note for an award in a bastardy case does not fail of consideration by reason of the death of the child.' So, a note given for railroad stock is not rendered unavailable by 'Button V. Clark, 16 Ohio 297 (1847). Or for stock which became worth- less, Kerclner v. Gettys, 18 So. Car. 521 (1882). So, a wife's divorce for adultery is no failure in the consideration of a note previously given for her release of dower, Nichols v. Nichols, 18 Cent. L, J. 378 (Mass. S. C. 1884). ^Loring v. Otis, 7 Gray 563 (1856). 'Diamond v. Harris, 33 Tex. 634 (1870). •Brooks't). Cutter, 119 Mass. 132 (1875). "Lively v. Bobbins, 39 Ala. 461 (1864). •Crow V. Eichinger, 34 Ind. 65 (1870). 'Clark V. Smith, 21 Minn. 539 (1875). *Cook V. Whitfield, 41 Miss. 541 (1867). Especially if expenses have beea already incurred on the strength of it, Koch v. Levy, 38 Mo. 147 (1866). 'Eaton V. Burns, 31 Ind. 390 (1869). 158 CONSIDER ATION — FAILUBE. the failure of the railroad to make a certain valuable connec- tion, which the company had agreed to make.^ Again, where a note was given for the purchase of a slave,, his subsequent emancipation is not a failure of consideration;'*' although he had been warranted for life.^ In such case, the maker of the note cannot be held as mere hirer of the slave- until emancipation.* And where the vendor's title proved to be a defective one, but the slave was emancipated before- that fact was discovered, even this was held to constitute no- failure of consideration.* Nor yet the fact that the slaves^ were sold subject to the provision of a will which directed their enfranchisement, there having been no actual emanci- pation.* And even where a note was given in 1860 partly for rent of land and partly for hire of slaves in the year 1863, the fact that they were then of no value was held to be no defense to the note.' So, where a note was given for the hire of a slave, his subsequent escape without fault of the owner was held to be no failure of consideration.* > Merrill v. Gamble, 46 Iowa 615 (1877). 'Dowdy V. McLellan, 52 Ga. 408 (1874) ; Matthews v. Dunbar, 3 W. Va. 188 (1869). And, a fortiori, a subsequent unconstitutional statute against a grantor's title will not defeat a purchase-money note, Montgomery v. Kas- son, 16 Cal. 189 (1860). 'Hand v. Armstrong, 34 Ga. 232 (1866) ; Bass v. Ware, lb. 386 ; Whitworth V. Carter, 43 Miss. 61 (1870) ; Wilkinson v. Cook, 44 lb. 367 (1870). It ha» been held, however, that in the case of a bill of exchange given for slaves- warranted for life, their emancipation is a good defense for the drawer, although not for the acceptor, Coolidge v. Burnes, 25 Ark. 241 (1868). *Shearer v. Smith, 35 Tex. 427 (1871). 'McMillan v. Causey, 43 Miss. 227 (1870). •Polydras v. Polydras, 25 La. An. 405 (1873). 'Loggins V. Buck, 33 Tex. 113 (1870). "Scherer v. Upton, 31 Tex. 617 (1869) ; Hughes v. Todd, 2 Duv, 188 (1865). ADMISSIBILITY OF DEFENSE. 159 II. DEFENSES KELATING TO CONSIDERATION. 556. Admissibility — Parties with Notice. 667. Bona jRrf« Holder — Defense: Want of Consideration. 558. Failure. 559. Illegality. 560. Affected by Inadequacy — Notice. 561. Accommodation Paper — Estoppel. 562. Presumption of Consideration. 568. Consideration Expressed — " Value Keceived." 564. Pleading and Evidence. 565. • Parol Evidence. 566. Burden of Proof. 567. As to Good Faith — Holders for Value. § 556. Admissibility of Defense — Parties Having Notice. — Defenses growing out of the absence or failure of considera- tion or its illegality are good between the immediate parties to the bill or note.^ Thus, between the original parties to a bill the defendant may show that he drew or accepted it for the accommodation of the plaintiff and that as between them there is no consideration.^ So, in general, any want or fail- •Byles 131; Story on Prom. Notes g 190; Chitty82; Duncan v. Scott, 1 Campb.lOO; Ingersoll d. Martin, 58 Md. 67 (1881) ; Kennedy d. Goodman, 14 Neb. 585 (1883), unless barred by estoppel or waiver, Ware v. Morgan, 67 Ala. 461 (1880). And equity will grant relief between such parties notwithstand- ing a subsequent transfer of the note to a bona fide holder, Wilson v. Lazier, 11 Gratt. 477 (1854). A fraudulent attempt to create apparent assets may be shown as against the payee. Lime Rock Bank v. Hewett, 50 IfTe. 267 (1861). So, an acceptor may show at suit of the drawer of a bill that the acceptance was made for too large a sum by mistake. Third National Bank v. Harrison, 3 McCrary 316 (1882). So, an accommodation party may show at suit of the party accommodated the character of the paper, Thomas v. Watkins, 16 Wis. 549 (1863) ; Eastman v. Shaw, 65 N. Y. 522 (1875). So, the original holder, although he takes as indorsee of the payee, is subject to defense on the ground of want of consideration. Produce Bank v. Bache, 80 Hun 351 (1883) ; or usury, Darling v. March, 22 Me. 184 (1842) ; Eastman v. Shaw, supra. So, an indorsee for collection, Powell v. Inman, 7 Jones 28 (1859). ''Allaire v. Hartshorne, 1 Zab. 665 (1847); Patten v. Pearson, 55 Me. 39 (1867) ; Darnell v. Williams, 2 Stark. 166; Wiffen v. Robert's, 1 Esp. 261, 536; Jones v. Hibbert, 2 Stark. 804; Sparrow v. Chisman, 9 Barn. & C. 304; Richmond v. Heapy, 1 Stark. 202; Jacaud v. French, 12 East 328, 789; San- dilands v. Marsh, 2 B. & Aid. 673 ; Rapp v. Latham, 2 B. & Aid. 795 ; Puller V. Roe, Peake, 197, 611; Jones v. Gates, 9 Barn. & C. 539, 1433; Thompson V. Clubley, 1 M. & W. 212. And the original consideration of a bill may be valid but the acceptance be based on an illegal consideration, which will furnish the acceptor with a defense, Henderson v. Benson, 8 Price, 281. But in an action by payee against acceptor failure or want of consideration is no defense, unless it applies both to the consideration received by the acceptor and that paid by the holder, Hoffman v. Bank of Milwaukee, 12 Wall. 191 (1870). 160 CONSIDERATION — DEFENSE. ure of consideration may be shown between the immediate parties.^ So, the executor of the maker may set up want of consideration against such holder.*^ And, in general, any holder with notice of the defect in consideration, as well as any iolder who is in privity with the original payee, takes the paper subject to such defense.' Thus, if a note in pay- ment of goods sold is made to the seller's agent and by him transferred to the seller himself, the seller will be subject to the same defense for the want or failure of consideration that his agent would be subject to.* So, where a bill is indorsed by several persons jointly, the acceptor may set up in defense against them all that the acceptance was given for the accom- modation of one of them.® So, if an accommodation note be transferred by the payee to his firm, the firm takes it subject to the defense that it was accommodation paper only.' So, if a note subject to the defense of failure of consideration be transferred by the payee to a bona fide holder, and afterward bought back by him, the defense is still available against him.'^ On the other hand, although the maker of a note might set up a defense of want of consideration moving to himself, he cannot avail himself as a defense of any want or failure of consideration between subsequent holders.^ So, a drawer of a bill given for goods purchased cannot set up in defense against the acceptor that the consideration has failed between •Clough V. Patrick, 37 Vt. 421 (1865) ; Campbell v. Skinner, 30 Mich. 32 (1874) ; Buggies v. Swanwick, 6 Minn. 526 (1861) ; Child v. McKean, 2 Miles 192 (1838). "Copp V. Sawyer, 6 N. H. 386 (1833). 'National Bank v. Brush, 6 Fed. Rep. 132 (1881); Gorham v. Keyes, 137 Mass. 583 (1884) ; Moore v. Hershey, 90 Penna. St. 196 (1879) ; Torinus v. Buckham, 29 Minn. 128 (1882) ; Whitwell v. Crehore, 8 La. 540 (1835). *Boyt V. Whitehead, 50 Ga. 76 (1873). So, if the failure was due to the default of the payee's agent, Byles 131 ; Puget de Bras v. Forbes, 1 Esp. 117 ; Astley V. Johnson, 29 L. J. Exch. 161; S. C, 5 H. & N. 137. 'Sparrow v. Chisman, 9 B. & 0. 241 ; Eichmond v. Heapy, 1 Stark. 202. «Quinn v. Fuller, 7 Gush. 224 (1851). 'Sawyer v. Wiswell, 9 Allen 39 (1864). 'Johnston v. Josey, 34 Tex. 533 (1870). And it makes no difference that a party purchasing the paper at more than legal rate of discount writes his own name as payee in the blank left for that purpose, Brummell v. En- ders, 18 Gratt. 873 (1868). BONA FIDE HOLDER. 161 liim and the payee by reason of the worthlessness of the goods/ Nor can an acceptor set up in defense against the payee of a bill any want of consideration for the acceptance between himself and the drawer.^ Nor can the guarantor of a note escape his liability to the payee on the ground of the consideration between maker and payee being illegal.* And where a note is given for a consideration moving from some other person than the payee and at the request of such person, the maker cannot at the suit of the payee avail him- self of the defense of failure in such consideration.* § 557. Bona Fide Holder — Defense — Want of Considera- tion. — On the other hand, no defense arising out of a defect in the consideration of a bill or note can be set up against a bona fide holder for value before maturity and without no- tice.® And this is true, even though the paper has been transferred to such a holder for the express purpose of cut- ting off such defense.* This is true also, where the instru- iChitty 63; Obbard v. Betham, Mood. & M. 488; Gray v. Cox, 4 B. & C. 108; Laing v. Fidgeon, 6 Taunt. 108; S. C, 4 Campb. 169; Jones v. Bright, 6 Bing. 533; Harrington v. Stratton, 22 Pick. 510; Perley v. Balch, 23 Pick. 283; Poulton v. Lathmore, 4 M. & Ey. 208; Basten v. Butler, 7 East 479; Farnsworth v. Garrard, 1 Campb. 38 ; Fisher v. Samunda, lb. 190. ^Nowak V. Excelsior Stone Co.. 78 111. 307 (1875) ; or between the drawer and the payee. Marsh v. Low, 55 Ind. 271 (1876). So, the acceptor cannot set up at the suit of an indorsee that the indorsement was in consideration of the suppression of a criminal prosecution, Flower v. Sadler, L. R. 9 Q. B. D. 83 (1882) ; S. C, 10 lb. 572 (1883). "Loughmiller v. Syler, 7 Coldw. 158 (1869); Steadwell v. Norris, 61 Ga. 47 (1878). 'Peterborough R. R. v. Chamberlin, 44 N. H. 494 (1863). But in Connec- ticut a purchaser of land, who gives a note for it to a creditor of the vendor at the vendor's request, may afterward set up against such payee a partial failure, by reason of false representations as to the property, Andrews v. Wheaton, 23 Conn. 112 (1854). ^Chicopee Bank v. Chapin, 8 Mete. 40 (1844) ; Sweetser v. French, 13 lb. 262 (1847) ; Baker v. Arnold, 3 Caines 279 ( 1805) ; Dalrymple v. Hillenbrand, 2 Hun 488 (1874) ; Wareham Bank v. Lincoln, 3 Allen 192 (1861) ; Daniels v. Wilson, 21 Minn. 530 (1875) ; Polhemus v. Ann Arbor Sav. Bank, 27 Mich. 44 (1873) ; Hunter v. Parsons, 20 Mich. 96 (1870) ; Matthews v. Crosby, 56 N. H. 21 (1875) ; Scott v. Seely, 27 La. An. 95 (1875) ; Goddard v. Lyman, 14 Pick. 268 (1833) ; Harris v. Bradley, 7 Yerg. 310 (1835) ; Hawkins v. Neal, 60 Miss. 256 (1882) ; Rahm v. Bridge Co., 16 Kans. 530 (1876). And this is ex- pressly provided in many statutes authorizing a plea of partial failure of consideration, Colorado (1877 G. L. 112) ; Georgia (1873 Code § 3471) ; Illinois (1880 R. S. 727) ; Indiana (1876 R. S. vol. 2 p. 76) ; Iowa (McClain's Stats, i 2114) ; Texas (1879 R. S. 47); Vermont (1880 R. L. | 911). °Price V. Emerson, 16 La. An. 95 (1861). VOL. n. ^ 162 CONSIDER ATION — DEFENSE. ment was originally delivered to the payee as a mere gift^ although this was once doubted.^ So, where the teller of a bank has certified a check for the drawer's accommodation to an amount exceeding his account, a bona fide holder for value can recover on such certificate against the bank,, although the teller so certifying has exceeded his authority and violated his duty.^ So, an acceptor cannot set up want of consideration for his acceptance at suit of a bona fide holder for value.^ But where a note has been made by a lunatio without consideration, even a bona fide holder for value can- not recover upon it against the maker.* And as we have already seen, in the case of an illegal consideration which is declared by statute to be void, there can be no recovery even by a bona fide holder for value. § 558. Bona Fide Holder — Failure When Admissible. — Failure of consideration, like want of consideration, is na defense to commercial paper in the hands of a bona fide holder for value.^ So, it is no defense against such holder that a note was given as collateral for a less amount than its 'Chitty 89; Holliday v. Atkinson, 5 B. & C. 501; 8 Dowl. & Ey. 163; Woodbridge v. Spooner, 3 B. & Aid. 235 ; Tate v. Hilbert, 2 Ves. Jr. Ill, 4 Bro. C. C. 286, ed. by Belt; Kann v. Hughes, 7 T. R. 351 ; Eidout v. Bristow, 1 Tyrw. 84; Seton ii. Seton, 2 Bro. C. C. 610; Disher v. Disher, 1 P. Wms. 204 ; Easton v. Pratchett, 1 C. M. & E. 798 ; Heydon v. Thompson, 3 Nev. & M. 319; Whitaker v. Edmunds, 1 Ad. & El. 638; Milnes v. Dawson, 20 L. J. (n. s.) Exch. 81. 'Farmers', &c.. Bank v. Butchers' Bank, 16 N. Y. 125 (1857). ' Collins V. Martin, 1 Bos. & P. 651 ; United States v. Bank of Metropolis^ 15 Pet. 393. *Moore v. Hershey, 90 Penna. St. 196 (1879). 5 Bramah v. Eoberts, 1 Bing. N. C. 469 ; Eobinson v. Reynolds, 2 Q. B. 196 ;. Masters v. Ibberson, 8 C. B. 100; Munroe v. Bordier, 16. 862; Fearing v. Clark, 16 Gray 74 (I860); Thiedmann v. Goldschmidt, 1 DeG. F. & J. 4; Leather v. Simpson, L. R. 11 Eq. 398; Hoffman v. Bank of Milwaukee, 12' Wall. 181 (1870) ; Cone v. Baldwin, 12 Pick. 545 (1832) ; Goddard v. Lyman, 14 lb. 268 (1833) ; Cowing v. Allman, 71 N. Y. 435 (1877), reversing 5 Hun 556; Britton v. Hall, 1 Hilt. 528 (1858) ; Blackmer v. Phillips, 67 N. C. 340 (1872) ; Smith v. Rawson, 61 Ga. 208 (1878) ; Faulkner v. Ware, 34 lb. 498 (1866) ; McCaskell v. Ballard, 8 Rich. 470 (1832) ; Hancock ■». Hale, 17 Fla. 808 (1880) ; Morris i;. White, 28 La. An. 855 (1876) ; Citizens' Bank v. Strauss,. 26 lb. 736 (1874) ; Howell v. Crane, 12 lb. 126 (1857) ; Stone v. Young, 5 Kans. 229 (1869) ; Merritt v. Duncan, 7 Heisk. 156 (1872) ; Mobile Sav. Bank v. Supervisors, 22 Fed. Rep. 580 (1884). Especially if the failure is after trans- fer of the note, Bearden v. Moses, 7 B. J. Lea 459 (1881). BONA FIDE HOLDER. 163 face;^ or for a bill of lading which has proved to be a forgery.'' And where an acceptance has been made on the strength of a forged bill of lading, an injunction will not be granted against a transfer of the bill by a bona fide holder for value.' Nor can such acceptor after payment of the bill recover against the bank collecting the same, there being no warrant of its genuineness on the part of such bank.* So, it is uo defense at suit of a bona fide holder for value that the note was given for a patent which proves to be void;* or for goods, sold with a warranty against prior liens, which prove to be subject to such liens;* or for the purchase of lands to which the title fails ;^ or lands which prove de- ficient in quantity;' or for goods which were to be paid for in installments and have been retaken by the seller on account of a prior default in such payment;® or for goods purchased which have been only partly delivered.^" So, the acceptors of a bill cannot set up against such holder the non- performance of an agreement that a certain vessel, for which the bill was given, should be made seaworthy." So, where a note is given in consideration of the guarantee of another note, an agreement that it should not be paid until the first note was paid is no defense against such holder for value.^'^ So, an agreement for the surrender of a note, if the maker should not be discharged by his creditors, is no defense in such case.'' iTarbel] v. Sturtevant, 26 Vt. 513 (1854). ^ Robinson v. Reynolds, 2 Q. B. 196 (1841) ; Craig v. Sibbett, 15 Penna. St. 238 (1850). ' ' Thiedmann v. Goldschmidt, 1 DeG. F. & J. 4 (1859). 'Leather v. Simpson, L. R. 11 Eq. 398 (1871), although the bank on pre- senting the bill for acceptance had informed the acceptor that it held the bill of lading, which the acceptor neglected to examine. * Smith V. Hiscock, 14 Me. 449 (1837). 'Sturges V. Miller, 80 111. 241 (1875). ' Vallett V. Parker, 6 Wend. 615 (1831). ' Windham v. Doles, 59 Ga. 265 ( 1877), although the note in suit was really a renewal note with an additional indorser. •Houghtaling v. Randen, 25 Barb. 21 (1856). "Baldwin v. Killian, 63 IH. 550 (1872). "Davis V. McCready, 17 N. Y. 230 (1858). "Taggart v. Rice, 37 Vt. 47 (1864). "Tower v. Richardson, 6 Allen 351 (1863). 164 CONSIDERATION — DEFENSE. And where the statute expressly provides, as io Vermont, for setting up partial failure of consideration by way of de- fense, it does not apply to the case of a subsequent holder for value.* One who takes an instrument from a bona fide holder for value acquires his rights and is not subject to de- fense for want or failure of the original consideration." It seems to be a question whether a mortgage or other collateral securing negotiable paper in the hands of a bona fide holder for value enjoys the same immunity from defense as the bill or note secured. It is held in Michigan that this is the case;* but the contrary is held in Illinois.* § 559. Bona Fide Holder — Illegality When Admissible. — The same restriction applies in general to the defense of illegality of consideration, such defense not being available against a bona fide holder for value before maturity, except in the case of instruments expressly made void by statute.* In some States, however, the negotiable character of com- mercial paper is so far destroyed by statute as to subject the assignee in general to all such defenses.^ But where the transfer of a note given for the purchase of a patent right is prohibited by Pennsylvania statute for want of the words "given for a patent right," required by statute to appear on the face of the note, a note made in Pennsylvania and trans- ^Farrar v. Freeman, 44 Vt. 63 (1871). In some of the statutes of this character hona fide holders for value are expressly protected. This is so in Texas (1879 R. S. Art. 272); Iowa (McOlain's Stats. § 2114); Indiana (1876 Davis R. S. vol. 2 p. 76) ; Illinois (1880 Kurd's R. S. 727) ; Gevrgia (1873 Code i 3471) ; Colorado (1877 G. L. §112). ^Watson V. Flanagan, 14 Tex. 354 (1855). 'Judge V. Vogel, 38 Mich. 568 (1878). *Petillon V. Noble, 73 111. 567 (1874). ^Byles 145; Chitty 81; 1 Daniel 199; 1 Edwards ? 472; Wyat v. Bulmer, 2 Esp. 538; Tilden v. Blair, 21 Wall. 241 (1874) ; Rockwell v. Charles, 2 Hill 499 (1842) ; Grimes v. Hillenbrand, 6 T. & C. 620 (1875) ; Hill v. Northrup, 4/6. 120 (1874) ; Clark v. Ricker, 14 N. H. 44 (1843) ; Norris v. Langley, 19 lb. 423 (1849) ; Great Falls Bank v. Parmington, 41 lb. 32 (1860) ; Knox v. White, 20 La. An. 326 (1868) ; Smith v. Columbus State Bank, 9 Neb. 31 (1879) ; Johnston v. Dickson, 1 Blackf. 256 (1873) ; Thorne v. Youtz, 4 Cal. 321 (1854) ; Haight v. Joyce, 2 lb. 64 (1852). •Tatum V. Kelly, 25 Ark. 209 (1868) ; Coes v. Callaham, 21 La. An. 624 (1869) ; Booker v. Lastrapes, 2 Miller (O. S.) 52; Griffith v. Hanks, 46 Tex. 217 (1876); Blood v. Northrup, 1 Kans. 28 (1862); Jefferson County v. Arrghi, 51 Miss. 667 (1875) ; Miss. Code 2 2228. BONA FIDE HOLDEK. 165 ferred in New York to a bona fide holder for value will not be subject to the defense of such statutory prohibition.^ So, it is no defense against a bona fide holder for value that the note in suit was given for the purpose of aiding the rebellion ;" or in violation of the statutes against selling liquor f unless, indeed, as now in Vermont, the sale be declared void by the statute.* Nor can it be set up against a bona fide holder for value that a note was given for an election wager;* or for a fraudulent consideration.* Although, under the Illinois stat- ute, fraud in procuring the execution or delivery of a paper is available as a defense against such holder.' But a declaration on the part of a deceased holder that the consideration of a note was for losses in gaming is not ad- missible against a bona fide holder to impeach the validity of the note.* On the other hand, where a municipal bond or other instrument is issued under a statute and fails to comply with the conditions and requirements of the statute, it is void even in the hands of a bona fide holder for value.® The illegality of the original consideration for a note or bill will not in general prevent a recovery by the holder against 'Palmer v. Minar, 8 Hun 342 (1876). 'Glenn v. Farmers' Bank, 70 N. C. 191 (1874) ; and this applies to a new note given to a bona fide holder of a note originally made for such considera- tion, Torbett v. Worthley, 1 Heisk. 107 (1870). "Cazet V. Field, 9 Gray 329 (1857) ; Taylor v. Page, 6 Allen 86 (1863) ; Doe V. Burnham, 31 N. H. 426 (1855) ; Pindar v. Barlow, 31 Vt. 529 (1859) ; and the interests of a bona fide holder are expressly saved by the statute in Iowa, (McGlain's Stats. 1880 ? 1550). *Streit V. Sanborn, 47 Vt. 702 (1874). The statute provides in case of such sale that " no action shall be had or maintained for the recovery or possession of intoxicating liquor or the value thereof." 'Shirley v. Howard, 53 111. 455 (1870); Adams v. Wooldridge, 4 lb. 255 (1841). Although the rule in Iowa is otherwise, Craig v. Andrews, 7 Iowa 17 (1868). So, as to gambling in South Carolina, Mordecai v. Dawkins, 9 Rich. 262 (1856) ; but not in North Carolina, Calvert v. Williams, 64 N. C. 168. So, in Illinois it is a good defense even against a bona fide holder that the note was given for the purchase of an "option," Tenney v. Foote, 4 Bradw. 594 (1879). But in Missouri " futures " do not come within the stat- ute against gaming, Third National Bank v. Tinsley, 11 Mo. App. 498 (1882). •Heist V. Hart, 73 Penna. St. 286 (1873). 'Hayden v. dinger, 5 Bradw. 632 (1880). And see Beale v. January, 62 Mo. 434 (1876). ^Barough v. White, 4 B. & C. 326 (1825) ; De Bruhl v. Patterson, 12 Rich. 363 (1859). •Town of Eagle v. Kohn, 84 111. (1876). 156 CONSIDEEATION — DEFENSE. his immediate indorser.^ But even a bona fide holder for value, in order to recover in such case against the maker, should be able to make title without the intervention of any illegal transfer," Where, however, the second indorsement under wiiich he claims is for an illegal consideration and there is a blank first indorsement, he may escape the inter- vening illegality by making title directly from the first in- dorser.^ The immunity from defense allowed to the bona fide holder ■of negotiable paper does not extend to non-negotiable instru- ments, although the holder be a purchaser for value without notice and before maturity.* So, if a note be transferred by delivery without the requisite indorsement, the holder takes it subject to defense, although he may file a bill in chancery to compel an indorsement.® So, in Ohio, a sealed note pay- able to a certain person "or bearer" and transferred by mere •delivery, is subject to defenses on the part of the maker.' § 560. Bona Fide Holder — Affected by Inadequacy — Notice. — If the consideration paid by the holder is grossly inade- quate, he will not be considered a holder for value so far as to exclude defense for want of consideration.^ But the pledgee of a note or bill holding it as collateral for a debt due him is, as we have seen, a holder for value,* unless the debt, for which he is holding it as collateral, has been paid since the transfer to him." The holder of such paper as collateral is not sulyect to an action of trover for its recovery > Edwards v. Dick, 4 B. & Aid. 212; Delaware Bank v. Jarvia, 20 N. Y. 226 (1859). 'Lowes V. Mazzaredo, 1 Stark. 385. So held in case of usury in a prior transfer. But see in general, 1 Parsons 218; Parr ■». Eliason, 1 East 92; Daniel v. Cartony, 1 Esp. 274. ^1 Parsons 217. ••Cohen V. Prater, 56 Ga. 203 (1876). *Lewis V. Wilson, 1 Edw. Ch. 305 (1832). "Osborn v. Kistler, 35 Ohio St. 99 (1878) ; Second Nat. Bank v. Brady, 96 Ind. 498 ^884). 'Anderson v. Nicholas, 28 N. Y. 600 (1864) ; DeWitt v. Perkins, 22 Wis. 451 (1868). And in general a bona fide holder is not protected against defenses beyond the amount actually paid by him, Wififen v. Roberts, 1 Esp. 261. 'Collins V. Martin, 1 Bos. & P. 648. 'Roche V. Ladd, 1 Allen 436 (1861) ; Drinkhouse v. Sarette, lb. 443 n. BONA FIDE HOLDER. 167 on the ground that the paper was originally stolen from the owner ;^ or given for the accommodation of one who has since become bankrupt.^ As we have seen, one who takes such paper for a precedent debt due him, is entitled to the privileges of a bona fide holder for value in excluding such •defenses.' If, however, the holder, although a purchaser for value, knew of the defense at the time of taking the paper, he takes it subject to such defense.* But he is still in the posi- tion of a holder without notice, if he derives his title from a prior party who' took the paper for value before maturity without notice." A notice of defense must be well proved in order to affect a purchaser for value before maturity.* Although it has been held in Missouri that any notice suffi- cient to put a purchaser on inquiry authorizes the admission of evidence of want of original consideration.'' But where a note was given for liquor illegally sold, mere knowledge on the purchaser's part that the payee was called "Whiskey Smith," is no proof of notice to him of the character of the Kimball v. Donald, 20 Mo. 577 (1855). "Gibson v. Cooke, 20 Piok. 15 (1838) ; Bullard v. Randall, 1 Gray 605 (1854);. Dana v. Third Nat. Bank, 13 Allen 445 (1866). Several checks, therefore, aggregating more than the drawer's entire deposit take it without priorities pro rata, Dana v. Third Nat. Bank, mi/pra. 'Schuchardt v. Hall, 36 Md. 590 (1872). •Helm V. Meyer, 30 La. An. 943 (1878). 'Clements v. Yeates, 69 Mo. 623 (1879). 'Covyperthwaite v. Sheffield, 3 N. Y. 243 (1860) ; but see, amtra, Cutta «.. Perkins, 12 Mass. 209 (1815). 'National Bank of Rockville v. Second Nat. Bank, 69 Ind. 479 (1880). •Farmers', &c., Bank v. Sprague, 52 N. Y. 605 (1873). •Desha v. Stewart, 6 Ala. 852 (1844). BY WHOM. 211 to accept it or to give the holder his reasons for refusal.^ But, by the statute of the Argentine Republic, although he has received security for his acceptance, he will be relieved from his obligation to accept by news of the drawer's insolv- ency." But in such case he cannot retain the security re- ceived, unless he has already accepted the bill before getting news of the insolvency.^ The statutes of Holland and Por- tugal require the drawee of a bill of exchange to accept it, if he have in hand funds of the drawer which have been expressly drawn against.* And the Danish statute makes it obligatory between merchants to accept a bill, where the drawee has in his hands at the time funds of the drawer which become due before the maturity of the bill.* And even where the bill is not drawn between merchants, it raises such an obligation from a custom on the drawee's part of paying his debts to the drawer by acceptances, in the absence of evidence of the discontinuance of such custom and of notice of its discontinuance.® § 591. Acceptance — By Whom Given. — The acceptance of a bill of exchange should be by the drawee named in it, and by him only.' The acceptance of a stranger to it may be treated by the holder as the promissory note of such acceptor.* This is expressly provided by statute in Utah, all prior par- ties being thereby exonerated.' Where no drawee is named in a bill, one who writes his name across the face of it with the word " accepted " may be 'Bolivia (1834 Code Com. Art. 387) ; Colombia (1853 Code Com. Art. 412); Costa Rica (1853 Code Com. Art. 402) ; Mexico (1854 Code Com. Art. 458) ; Salvador (1855 Code Com. Art. 409) ; Spadn (1829 Code Com. Art. 455). 'Argentine Republic (1862 Code Com. Art. 822). 'Argentine Republic (1862 Code Com. Art. 822-3). ^Holland (1838 Exch. Law Art. 113) ; Portugal (1853 Code Com. Art. 334). ^Denmark (1825 Exch. Law ? 21). 'Denmark (1825 Exch. Law I 21). 'Byles 189; 1 Daniel 445; Nichols v. Diamond, 9 Exch. 157; Lindns v. Bradwell, 5 C. B. 583; Davis v. Clarke, 6 Q. B. 16; May v. Kelly, 27 Ala. 497 (1855). And an acceptance by a stranger cannot be declared on as though the bill had been directed to, and accepted by, such person, Davis v. Clarke, supra. See, too, Jackson v. Hudson, 2 Campb. 447. 'Fielder v. Marshall, 9 C. B. 606 (n. s. 1861) ; 30 L. J. C. P. 1858. *Vtah (1882 P. L. 65 2 108). 212 ACCEPTANCE. held liable as the acceptor.* And where no drawee is named but only the place of payment, an admission on the part of any one that he was the drawee intended will amount to acceptance." Where the drawee of a bill has no legal capac- ity to accept it, as in the case of an infant, the bill will be treated as dishonored by non-acceptance.* § 592. Acceptance — By Agent. — Acceptance is frequently made by the drawee's agent. By the commercial law, and in Hungary by statute, the holder may in such case require evidence of the agent's authority;* and such authority must be shown when required.^ The refusal on the agent's part to show it will amount to a dishonor of the bill.* The man- ner of execution of commercial paper by an agent and the liability arising out of such execution have been already considered. The rules there laid down apply, in general, to the case of acceptances. Even the government of the Uni- ted States may be bound by the acceptance of an agent, although it cannot be sued upon such acceptance.^ It has been doubted whether the holder of a bill of ex- change is bound to receive the acceptance of an agent, inas- much as more evidence is made necessary on his part on account of such acceptance.' Some foreign statutes require all acceptances by an agent to express the authority under which he acts.' It has been held, although not without conflict of authori- ties, that the, agent who accepts a bill of exchange without 'Gray v. Milner, 3 Moore 91; 8 Taunt. 739; Wheeler v. Webster, 1 E. D. Smith 1 (1850). 'Byles 189; Gray v. Miltier, 8 Taunt. 739; Davis v. Clarke, 6 Q. B. 16; Peto V. Reynolds, 9 Exch. 410. 'Byles 189; Chitty 320; 1 Daniel 445; Mellish v. Simeon, 2 H. Bla. 378, where the incapacity was by a prohibition by the statute of the acceptor's domicil. ^Hungary (1861 Exch. Law | 59). 'Sayer v. Kitchen, 1 Esp. 209. •Chilty320; 1 Daniel 447. 'United States v. Bank of the Metropolis, 15 Pet. 377 (1841). "Chitty 321; 1 Daniel 448; Coore v. Callaway, 1 Esp. 116; Eichards v. Bartpn, lb. 269. 'Argentine. Republic (1862 Code Com. Art. 785 ; Cfuatemala (1774 Ordinances of Bilbao i 36). BY AGENT — BY PAKTNEES. 213 authority will be liable himselfi as an acceptor.^ And it is said that the taking of an unauthorized agent's acceptance without subsequent ratification on the part of his principal will amount, on the holder's part, to a discharge of the prior parties to the bill.* Where the bill of exchange is drawn by a principal upon his agent, and accepted in the name and in the presence of the principal, the agent signing "A. B., agent for C. D,," this will be a note of the principal and the agent will not be liable upon it.^ So, it has been held that a bill drawn upon, and accepted by, the agent of a company, describing himself as such, will not render the agent individually liable on the acceptance.* But an agent has been held individually liable for accepting, in his own name, a bill drawn upon " the agent and owners " of a certain ship.' And in accordance with the rule that the bill of exchange must be accepted by the drawee, it has been held insufficient to accept a bill in the name of a company " by A. B., Treasurer," where the bill was drawn by the company on A. B. in his individual name,' For other cases on this subject, the reader is referred to an earlier chap- ter upon the execution of commercial paper by agents. § 593. Acceptance by Partners. — "Where a bill of exchange is drawn upon a partnership, it should be accepted in the firm name. But an acceptance by one partner will be sufficient ;^ 'Owen V. Van Uster, 10 0. B. 316 ; .20 L. J. 61 ; West London, &o., Bank v. Kitson, L. R. 13 Q. B. D. 360 (1884) ; Penrose v. Martyr, El. Bl. & El. 499; Nichols V. Diamond, 9 Ex. 164 ; Mare v. Charles, 5 El. & Bl. 978. But, con- tra, where he uses his individual name only, Heenan v. Nash, 8 Minn. 407 (1863). So far as the individual liability is presumed from, or determined by, the form of the signature, the reader is referred to the earlier chapter of this work relating to the Name op Maker and Drawer. '1 Daniel 448. 'Hardy v. Pitcher, 57 Miss. 18 (1879). And parol evidence is admissible to show the relation of the parties in such case, lb, *Shelton v. Darling, 2 Conn. 435 (1818). 'Taber v. Cannon, 8 Mete. 456 (1844). •Walker v. Bank of the State of New York, 9 N. Y. 582 (1854). In this case the holder's agent, receiving such acceptance without notice to his principal, was held liable for his negligence. 'Chitty 321, 331 ; 1 Daniel 449 ; Mason v. Eumsey, 1 Campb. 384 ; Lloyd V. Eowland, 2 B. & Ad. 23. But this authority extends only to the partner- ship business, Pinkney v. Hall, 1 Salk. 126 ; Markham v. Hazen, 48 Ga. 570 (1873). 214 ACCEPTANCE. •even if he accept it in his individual name.^ In Sweden, however, the statute requires such a bill to be accepted in the partnership name or to be protested for non-acceptance ;'^ but it provides that after refusal to accept and protest, the holder must receive an acceptance by one partner in his individual name, if oflPered.'' In Guatemala it is required in a firm acceptance that the names of at least half of the partners should appear.* Where there are several drawees named in the bill, who ure not partners, it should be accepted by all of them.* And the refusal by one is, in such a case, made ground for protest in Hungary.* But by mercantile law an acceptance by a part only of the drawees named in the bill will bind those who accept.'' And where a bill is drawn upon several per- sons in the alternative, it may be accepted by either of Ihem.* § 594. Acceptance for Honor. — A bill of exchange may •also be accepted by a stranger for the honor of the drawee or of any other party.' And different persons may accept supra protest for the honor of different parties to the bill.^" Where a bill is drawn on A. and accepted by A. and B., B. will not be liable on the bill as an acceptor, whatever his ' Mason v. Rumsey, 1 Campb. 384. And the same has been held as to the liability of the firm on a bill drawn by its authority and on its account in the name of one partner only, Van Eeimsdyk v. Kane, 1 Gall. 630 (1813). But in Heenan v. Nash, 8 Minn. 407 (1863), an acceptance by one partner in his own name of a bill drawn on the firm was held to be binding neither on the firm nor on the individual partner. 'Sweden (1851 Exch. Law ? 22). ^Sweden (1851 Exch. Law ? 22). ^Guatemala (1774 Ordinances of Bilbao § 32). ''Byles 189 ; Chitty 321 ; 1 Daniel 449 ; Story on Bills ? 229 ; 1 Pardess. 383 ; Dupays v. Shepherd, Holt 297. '^Hungary (1861 Exch. Law I 62). 'Byles 189; Chitty 321; 1 Daniel 449; Owen ■«. Van Uster, 10 C. B. 318; Nichols V. Diamond, 9 Exch. 154; Smith v. Milton, 133 Mass. 369 (1882). '1 Daniel 449. 'Byles 189; Chitty 321 ; 1 Daniel 445; Jackson v. Hudson, 2 Campb. 447; Polhill V. W^alter, 3 B. & Ad. 114 ; Eastwood v. Bain, 3 H. & N. 738 ; Davis v. Clarke, 6 Q. B. 16; Jenkins v. Hutchinson, 13 Q. B. 744; May i). Kelly, 27 Ala. 497 (1855); Markham v. Hazen, 48 Ga. 570 (1873), obiter; Walton v. Williams, 44 Ala. 347 (1870). '"Byles 190; Jackson v. Hudson, 2 Campb. 447. WHEN MADE. 215 • liability may Otherwise be.^ So, where a public official ac- <3epted a bill drawn upon his deceased predecessor and after the conditional acceptance by such predecessor, the second acceptance was held not to be binding.^ The force of a sec- ond acceptance by one not named in the bill as drawee is generally that of a guaranty.' And under the Statute of Prauds the consideration for such acceptance must be ex- pressed in order to hold the acceptor in any form.* It has been said that a second acceptance added by a stranger to the bill of exchange without the consent of the first and proper acceptor, will amount to an alteration, discharging the first acceptors. But it seems that such alteration is not material and cases are wanting in which it has been held to be sufficient ground for discharge.' I 595. Acceptance — When Made — Foreign Statutes. — The •drawee is allowed a reasonable time within which to accept a bill of exchange.® And this is generally held to be twenty- four hours,'' unless it has been shortened by previous accept- ance or refusal on his part.' The time for acceptance is also 2. Expressions Refusing Acceptance. 603. Acceptance — By Signature Only — Statute of Frauds. 604. In Writing— By Parol— British Statutes. 605. American Statutes. 606. Signature by Letter — Telegram. 607. Foreign Statutes. 609. Authority to Draw Bill. 610. Must be Known and Relied on. 611. Agreement for Acceptance — Existing Bills. 612. Written Agreement — Telegram. 613. Verbal Agreement. 614. Bills to be Drawn — Written Agreement: 615. Must be Relied on. 616. Verbal Agreement. 617. SufiSciency. 618. Benefit — Breach — Delivery. 619. Foreign Statutes. 620. Detention— Acceptance When Implied. § 599. Acceptance — Form — Implication. — Unless otherwise required by statute, no particular form of words is necessary to make a valid acceptance, but any words showing a clear intent to accept the bill will be sufficient.' An acceptance may even be implied from the conduct of the drawee, or from other circumstances.'' But ^such circumstances must fairly amount to a contract to accept the bill. Thus, after refusal to accept, an offer on the drawee's part to let the holder of the bill have some of the drawer's goods to sell will not amount to an acceptance.* But where an agent draws on his principal for advances made on cotton purchased for him, and the principal receives the proceeds of the cotton but refuses the draft, acceptance on his part has been held to be implied.* It has been questioned, however, in Massachusetts, • Byles 195 ; Story on Bills § 251 ; 1 Parsons 282 ; Billing v. Devaux, 3 Man. & G. 565. "Byles 193 «.; 1 Daniel 458; Story on Bills § 243; Williams v. Winans, 2 Green 339 (N. J. 1834). So, from charging the amount to the drawer's ac- count on a settlement as a paid check, Seventh Nat. Bank v. Cook, 73 Penna. St. 483 (1873). 'Chitty 337. And see Rees v. Warwick, 2 B. & Aid. 113; 2 Stark. 411; Reynolds v. Peto, 11 Exch. 418 ; Hoare v. Dresser, 7 H. L. C. 290. ♦Nutting V. Sloan, 57 Ga. 392 (1876). 222 ACCEPTANCE. whether a receipt of goods by the consignee after an express refusal to accept a bill drawn upon him against the goods,, will amount to an acceptance.^ And it has been held in the United States Supreme Court that where a draft is drawn upon one having no funds of the drawer in his hands, the drawee's subsequently receiving a consignment of goods, not expressly drawn against, will not amount to an agreement for acceptance of the draft.^ § 600. "Accepted"— "Seen"— Other Expressions.— Th& word "accepted," written on a bill of exchange without sig- nature of the acceptor, is a sufficient acceptance by the com- Viercial law in the absence of other statutory requirements.' And such acceptance has been held to be sufficient under the English Statute of 1 and 2 Geo. IV., which requires an ac- ceptance to be in writing.* So, it is said that such words as "seen," or "presented," or even the mere date, if so intended, will be a sufficient acceptance.* So, by the usage of London banks, the marking of a bill of exchange after banking hours to show that the drawer has funds to that amount, has^ been construed to be an acceptance.® In like manner, the word "excepted," written by mistake for accepted, is suffi- cient.' So, writing one's name across the face of a bill, in which no drawee is named, with the word "accepted" over the signature, is sufficient.* But where a person procures advances for another and adds his name by indorsement on the bill drawn by the lender upon the borrower, and accepted by the borrower, 'Allen V. Williams, 12 Pick. 297 (1832). 'Tiernan v. Jackson, 5 Pet. 580 (1831). In this case, however, the goods were consigned with an assignment to the holder of the bill of exchange of a part of the proceeds indorsed on the bill of lading, and this was held to bind the goods, although it had not been assented to, nor the bill of ex- •change accepted, by the drawee. 'Chitty 830; 1 Daniel 455; 1 Parsons 282. See, too, Corlett v. Conway, 5 M. & W. 653. * Dufaur v. Oxenden, 1 Moo. & R. 90. In such case the intention to ac- cept is a question for the jury. 'Chitty 333; 1 Daniel 455; 1 Parsons 283; Story on Bills ? 243. •Byles 193; Chitty 331; Robson v. Bennett, 2 Taunt. 388. ' Miller v. Butler, 1 Cranch C. C. 470 (1807) ; Meyer v. Beardsley, 1 Vroom 236 (1863). •Chitty 333; Gray v. Milner, 3 Moore 91; 8 Taunt. 789. FORM. 223 such indorsement will not amount to a co-acceptance of the bill within the meaning of the present British statute.^ The acceptance of a bill must be direct, positive and un- ambiguous in its character. Thus, it is not enough to say- that "the bill shall have attention;"^ nor to say, "I take notice of the above," accompanying the words with a verbal refusal to accept;^ nor to say on refusing to accept, that he would answer in about sixty days, the agent presenting the bill saying that he would return it to the holder, and pre- sentment being made and the bill refused four months after- wards.* A bill may, however, be accepted without being actually seen by the acceptor.® And where an acceptor says "that is my signature and I will pay the bill," this is a suffi- cient acceptance by hira.* So, an agreement to pay a bill at maturity amounts to an acceptance;' especially where the drawee procures the bill for his own accommodation and gets it discounted on a promise to pay it at maturity.* And it has been held that writing a letter saying "I am prepared to pay your bill," is an acceptance of the bill;' or saying "the bill is correct and shall be paid ; " '" or that he had promised the payee to pay in thirty or sixty days and it was all right.*^ And if an agreement in writing to accept and pay a bill > Steele v. McKinlay, L. E. 5 App. Gas. 754 (1880) ; 19 and 20 Vict. c. 60 § 11. »Eees V. Warwick, 2 B. & Aid. 113; 2 Stark. 411; Neale v. Eeid, 1 B. & C. 659; 3D. &E. 158. »Cook V. Baldwin, 120 Mass. 817 (1876). *Peck V. Cochran, 7 Pick. 34 (1828). ' Fisher ». Beckwith, 19 Vt. 31 (1846) ; First Nat. Bank v. Hatch, 78 Mo. 13 (1883). 'Leach v. Buchanan, 4 Esp. 226; Edson v. Miller, 22 N. H. 183 (1850). So, a promise of payment made both before and after the bill is drawn, Sturges V. Fourth Nat. Bank, 75 111. 595 (1874). Or a promise by letter to pay the bill, Hatcher v. Stalworth, 26 Miss. 376 (1853). So, indorsing "payment guaranteed," Block v. Wilkinson, 42 Ark. 258 (1883). 'Spaulding v. Andrews, 48 Penna. St. 411 (1864) ; O'Donnell v. Smith, 2 B. D. Smith 124 (1853). *Bank of Eutland v. Woodruff, 34 Vt. 89 (1861). But where the drawee himself discounts the bill this is neither acceptance nor payment on hi» part, and he may sue drawer and payee as a simple indorsee, Swope v. Boss, 40 Penna. St. 186 (1861). •Billing V. Devaux, 3 Man. & G. 565 (1841). "Ward V. Allen, 2 Mete. 53 (1840). "Mason v. Dousay, 35 111. 424 (1864). 224 ACCEPTANCE. designate a smaller amount than the face of the bill, it has been held that this would be a good acceptance pro ianto for an existing bill, but not for a bill of exchange not yet drawn.^ Where a bill is discounted on the strength of a verbal promise on the drawee's part to see it paid, this will constitute a sufficient acceptance.' So, it will be sufficient to write on the draft "I will see the within paid eventually."* And if the drawee says "I must delay payment until iu receipt of funds," it will amount to a conditional acceptance to pay on receipt of funds, especially if he retain the bill in his hands.* So, if the drawee requires the drawer to put him in funds and, after this is done, informs the drawer's agent that his firm has received the money and the bill ought to be paid, but he must see his partner about it, this will amount to an acceptance in favor of an indorsee who is in privity with the drawer.^ § 601. Insufficient Expressions — Part Puymeut. — An agree- ment to pay an order to be drawn payable out of the draw- er's salary, " if he continue in the drawee's employ and the order be not revoked," is conditional and will not amount to an acceptance of such order under the New York statute, which requires such a promise to be uncoifiditional.® But, in general, an order by the drawee written on the bill, request- ing a third person to pay it, is a sufficient acceptance.^ A •statement, however, of the amount due on an account with an order for its payment is a mere acknowledgment of in- debtedness, and will not be deemed an acceptance on the 'Brinkman v. Hunter, 73 Mo. 172 (1880). ^Bank of Rutland d. Woodruflf, 34 Vt. 89 (1861). 'Brannin v. Henderson, 12 B. Mon. 61 (1851). 'Pope V. Huth, 14 Cal. 404 (1859). ''Fairlie v. Herring, 3 Bing. 625; S. C, 11 Moore 520. See, too, Howland V. Carson, 15 Penna. St. 453 (1850). "Shaver v. Western Union Tel. Co., 57 N. Y. 459 (1874); R. S. 768 ? 8 (Ed. 1882 p. 2243). 'Chitty333; 1 Daniel 455; 1 Parsons 282; Story on Bills ? 243; Moor «. Whitby, Bui. N. P. 270; Peterson v. Hubbard, 28 Mich. 197 (1873). So, be- fore 1 and 2 Geo. IV. c. 78, a receipt acknowledging the receipt of the bill and promising to pay if a third person named did not, Wilkinson v. Lut- widge, Stra. 648. See, too, Pillans v. Van Mierop, Burr. 1663; Harper v. West, 1 Cranch C. C. 192 (1804). INSUFFICIENT EXPRESSIONS. 225 debtor's part.^ So, saying to a stranger, " I must pay the bill," or "I will have to pay it," will not amount to an acceptance.^ Neither will an unaccepted offer on the part of a bank to pay in Confederate funds a check drawn upon it against a deposit made in such funds. And the bank will not be liable to the holder of the check if it subsequently pay out the drawer's funds upon other checks.^ So, it has been held that it is not an acceptance to say " There is your bill; take it, it is all right."* On the other hand, a cashier's statement that a check is good has been held to be a suffi- cient acceptance.^ Paying part of the bill and indorsing on it a calculation as to the balance due will not amount to an absolute accept- ance of the whole bill.® Although in a recent case in Michi- gan where the drawee wrote across the face of a bill, " Paid on this order $40," and signed it, it was held that this was a good acceptance and that it was not intended to limit the acceptance to the amount named.'' But a part payment re- ceipted on a bill of exchange in the drawee's handwriting has been held not to be an acceptance.* A different conclusion, however, was reached in a case where, in addition to such part payment, the drawee indorsed on the bill the following words : " It being all the drawee agrees to pay unless the drawer intended the order to be exclusive of twenty dollars which the drawee had previously paid without order," the drawee having intended the order to exclude the former pay- ment.* And where the drawee of a bill paid part of it in cash and gave a certificate of deposit for the balance, it was 'De Liquero v. Munson, 11 Heisk. 15 (1872). ''Martin v. Bacon, 2 Mills 132 (1818). 'Lester v. Georgia K. R. & Bkg. Co., 42 Ga. 244 (1871). * Chitty 329, 337 ; Powell v. Jones, 1 Esp. 17. Nor a mere acknowledg- ment of the receipt of an order. Smith v. Milton, 133 Mass. 369 (1882). s^Barnet v. Smith, 30 N. H. 266 (1855). 'Hunter v. Cobb, 1 Bush 239 (1866). 'Peterson v. Hubbard, 28 Mich. 197 (1873). Payment is not acceptance, e. g. on a forged indorsement, First Nat. Bank v. Whitman, 4 Otto 343. ' Bassett v. Haines, 9 Cal. 260 (1858). But see Gallagher v. Black, 44 Me. 99 (1857). "Phillips V. Frost, 29 Me. 77 (1848). VnT. TT " 226 ACCEPTANCE. ield to be a good acceptance.^ Making a payment on a bill is not, however, of itself conclusive evidence of an intention to accept it.^ § 602. Expressions Refusing Acceptance. — Any words in- dicating a refusal, though used inadvertently, will negative- the idea of an acceptance. Thus, it will amount to a refusal to say "I will not accept."^ And the refusal may be made by letter.* To say " I protest the within " is a refusal.* Receiving a bill by mail and entering it like all other bills in the drawee's bill book, and returning it after ten days with the date indorsed on it and a number which had been written on it at the time of its receipt by the drawee, coupled with an express refusal to accept the bill, will be a refusal and not an acceptance.® So, if the bill is canceled by mis- take and returned for irregularity in its form, this will not amount to an acceptance.' So, if the drawee replies that he cannot accept without further direction from the drawer, and afterward (on receiving direction from the drawer to accept the bill and draw in turn on B.) draws upon B., this is no acceptance, at least until such second bill is accepted by B.* If he says that he cannot accept " until certain stores^ are paid for," this has been held to be an acceptance when, such payment is made.* But if the drawee says, after re- fusal and protest of the bill, " this bill will be paid, but we- cannot allow you for a duplicate protest," and this offer is refused by the holder of the bill, and afterwards revoked by the drawee, it will not amount to an acceptance.^" Nor will ' Andressen v. First Nat. Bank, 2 Fed. Eep. 122 (1880) ; 8. C, 1 JilcCrary 252. 'Cook V. Baldwin, 120 Mass. 317 (1876). ' Chitty 337. Although the contrary had been held as to such declaration- made in writing in Lumley v. Palmer, Gas. temp. Hardw. 72. *Carmichael v. Bank of Penna., 4 How. 567 (Miss. 1840). ' Pridgen v. Cox, 13 Tex. 257 (1855). So, writing across the bill " Kiss my foot," with the drawee's signature, Norton v. Knapp, 30 Alb. L. J. 22; 19- Cent. L. J. 61 (Iowa Sup. Ct. 1884). 'Chitty 338; Powell v. Moianier, 1 Atk. 611. 'National Bank of Eock villa v. Second Nat. Bank, 69 Ind. 479 (1880). •Chitty 337; Smith v. Nissen, 1 T. R. 269. •Pierson v. Dunlop, Cowp. 571. "Chitty 337; Anderson v. Heath, 4 M. & S. 803. STATUTE OF FKAUDS. 227 it be an acceptance if the bill is held by the drawee, after refusal on his part, with the promise " to try and save the amount for the holder." ^ Nor if he returns a draft, which is marked " acceptance waived," saying by letter that there are no funds but probably will be, and that he " will try and arrange to have it satisfactorily provided for."^ § 603. Acceptance by Signature Only — Statute of Frauds. — As has been already said, the mere writing of the drawee's name across the face of a bill is a sufficient written acceptance within the English statute of 1 and 2 Geo. IV. c. 78.^ But under the later English act of 19 and 20 Vict., and until the passage of the present Statute of 41 and 42 Vict. c. 13, such acceptance was not sufficient.* It is again made so, however, by the existing statute just referred to. And such acceptance has been held to be sufficient in the United States.' And where the di-awee has written his name across the face of a bill, he cannot relieve himself from liability as an acceptor by parol evidence showing that he refused to write the word " accepted " over his signature.* On the other hand, the words " Paid on this order $40," added to the drawee's sig- nature, will not affect the sufficiency of an acceptance.'' The Statute of Frauds does not apply to the acceptance of a bill of exchange.* An acceptance may, therefore, be by parol and not be invalidated for want of funds in the drawee's hands.' So, a conditional acceptance by retaining 'Parkhurst v. Dickinson, 21 Pick. 307 (1838); McEowen v. Scott, 49 Vt. 376 (1877). 'Webb V. Hears, 45 Penna. St. 222 (1863). 'Byles 193; 1 Daniel 456. *Hindhaugh v. Blakey, L. K 3 0. P. D. 136 (1878). 'Spear v. Pratt, 2 Hill 582 (1842) ; Wheeler v. Webster, 1 E. D. Smith 1 (1850) ; Kaufman v. Barringer, 20 La. An. 419 (1868). 'Kaufman v. Barringer, supra. 'Peterson v. Hubbard, 28 Mich. 197 (1873). "Byles 199 n.; Chitty 329 ; 1 Daniel 511 ; 1 Parsons 282; Browne on Stat. Frauds § 172 ; Raborg v. Peyton, 2 Wheat. 385 (1817) ; Storer v. Logan, 9 Mass. 55 (1812) ; Fisher v. Beckwith, 19 Vt. 31 (1846) ; Laflin Powder Go. v. Sinsheiraer, 48 Md. 411 (1877) ; Nelson v. First Nat. Bank, 48 111. 36 (1868) ; Spaulding v. Andrews, 48 Penna. St 411 (1864) ; Jarvis v. Wilson, 46 Conn. 90 (1878) ; Dull v. Brucker, 76 Penna. St. 255 (1874). See, too. Van Beima- dyk V. Kane, 1 Gall. 630 (1813). •Jarvis v. Wilson, 46 Conn. 90 (1878). 228 ACCEPTANCE. a bill with a promise to pay it if the drawer's contract is finished, is not within the Statute of Frauds; and its validity is not affected by a subsequent payment made by the drawee under an attachment against the drawer.^ In like manner, an agreement for acceptance is not within the Statute of Frauds, such agreements and acceptances being original promises, not promises to pay the debt of another.'' An agreement for acceptance is, in any case, not within the Statute of Frauds, where the drawee has put himself under an estoppel by inducing another to act upon his agreement.' Thus, an agreement to accept a bill of exchange is not within the statute, if it has been relied upon by the purchaser and goods sold by him on the strength of it.* But where there is no privity between the holder of the bill and the drawee, it has been held that a mere agreement for acceptance is within the Statute of Frauds." So, too, where there is no consideration for an agreement to accept ; as where it is for an accommodation acceptance.* And, in like manner, a mere accommodation acceptance is within the statute.^ § 604. Acceptance in Writing — By Parol — British Statutes. — ^Where a written acceptance is not required by statute, a Terbal acceptance of a bill of exchange is sufficient.* So, a i 'Montague v. Myers, 11 Heisk. 539 (1872). •Spaulding v. Andrews, 48 Penna. St. 411 (1864). 'Shields v. Middleton, 2 Oranch C. C. 205 (1820); Stroheoker v. Cohen, 1 Spears 349 (1843). ♦■Townsley v. Sumrall, 2 Pet. 170 (1829) ; D'Wolf v. Babaud, 1 Pet. 476 (1828). 'Manley v. Geagan, 105 Mass. 445 (1870). •Quin V. Hanford, 1 Hill 82 (1841). So, too, a promise to indorse a note for goods sold to another, although the goods are sold on the faith of the promise. Carville v. Crane, 5 Hill 483 (1843). 'Browne on Stat. Frauds ? 174. This is true also of a promise by a bank having no funds of the drawer, to pay his check if presented through the clearing house, Morse v. Mass. Nat. Bank, Holmes C. C. 209 (1873). *Chitty 326 ; 1 Daniel 454, 462 ; 1 Parsons 285 ; Story on Bills ? 242 ; Bird v. McElvaine, 10 Ind. 40 (1857) ; Stockwell v. Bramble, 3 lb. 428 (1852) ; Julian V. Shobrooke, 2 Wils. 9 ; Ward v. Allen, 2 Mete. 53 (1840) ; Leonard v. Mason, 1 Wend. 522 (1828) ; Walker v. Lide, 1 Rich. 249 (1845) ; Mull v. Bricker, 76 Penna. St. 255 (1874); Sproat v. Matthews, 1 T. R. 182; Grant v. Shaw, 16 Mass. 341 (1820) ; Phelps v. Northrup, 56 111. 156 (1870) ; Miller v. Neihaus, 51 Ind. 401 (1875) ; Walters v. G. H., &c. Co., 1 Tex. App. Cas. 753 (1880) ; Ban- croft V. Denny, 5 Houst. 9 (1875) ; Spaulding i;. Andrews, 48 Penna. St. 411 AMERICAN STATUTES. 229 verbal acceptance to pay a bill out of the proceeds of certain goods to be sold is sufficient/ But it seems that the holder of a bill is not obliged to take a verbal acceptance and his assent to it is therefore necessary.^ But in declaring against an acceptor it is not necessary to aver that the acceptance was in writing and signed by him.^ Under the Statute of Anne inland bills of exchange could not be protested against the acceptor unless accepted by the drawee in writing.* This did not, however, affect the sufficiency of other verbal accept- ances.^ But the statutes of Great Britain have since required acceptances of foreign bills of exchange to be in writing, and they cannot now be protested unless so accepted.* And it is now required ia Great Britain that the acceptance be in writ- ing on the bill of exchange and signed by the acceptor.' § 605. American Statutes. — Some American statutes re- quire the acceptance of a bill to be in writing.* And the Code of California requires it to be in writing and signed by (1864) ; Jarvis v. Wilson, 46 Conn. 90 (1878) ; McCutcheon v. Rice, 56 Miss. 455 (1879) ; Williams v. Winans, 2 Green 339 (N. J. 1834) ; Whilden v. Merchants', &c., Bank, 64 Ala. 1 (1879) ; Kennedy v. Geddes', 8 Port. 263 (1838) ; Wells v. Brigham, 6 Gush. 6 (1850) ; Storer v. Logan, 9 Mass. 55 (1812) ; Pierce v. Kittredge, 115 Mass. 374 (1874) ; Mason v. Dousay, 35 111. 424 (1864) ; Fisher V. Beckwith, 19 Vt. 81 (1846) ; Arnold v. Sprague, 34 76. 402 (1861) ; Hunter V. Cobb, 1 Bush 239 (1866) ; Cook v. Baldwin, 120 Mass. 317 (1876) ; Duna- van V. Flynn, 118 lb. 537 (1875); St. Louis Stock Yards v. O'Reilly, 85 111. 546 (1877); Exchange Bank of St. Louis ■;;. Rice, 98 Mass. 288, obiter. So, too, in Illinois, Scudder v. Union Nat. Bank, 1 Otto 406 (1875). 'Kane v. Robertson, 26 La. An. 335 (1874). n Daniel 465; Story on Bills § 247. 'Byles 193; Chitty 335; Chalie v. Belshaw, 6 Bing. 529; 4 M. & P. 275; Ereskine v. Murray, 2 Stra. 817. * Chitty 327; 8 and 4 Anne c. 9 § 5; Fairlie v. Herring, 3 Bing. 625; 11 Moore 320. *3 and 4 Anne c. 9 ? 5; Lumley v. Palmer, Stra. 1000; Cas. temp. Hard- wicke 72. •Chitty 327; 9 and 10 Wm. III. c. 17. '19 and 20 Vict. c. 97 g 6 (1856). The earlier Act of 1 and 2 Geo. IV. c. 78 g 2, contained a similar provision as to inland bills only, and the still earlie^ Statute of 3 and- 4 Anne c. 9 § 5, failed to accomplish the same thing by the obscurity of its language. This last act, although extending to foreign bills, probably cannot be applied to acceptances abroad of foreign bills, Byles 298. The Act of 1 and 2 Geo. IV. c. 78, has been held to apply to every part of the United Kingdom, Mahoney v. Ashlin, 2 B. & Ad. 478. It vfas extended to Ireland by the Act of 9 Geo. IV. c. 24 ? 8. 'Arkansas (1874 R. S. § 549) ; Georgia (1880 1 P. L. 62 No. 117). 230 ACCEPTANCE. the drawee or acceptor for houor/ Other States require aa acceptance to be in writing and signed by the acceptor or his agent.* And under the New York statute a parol acceptance of a check is insufficient.' So, refusal to accept a bill coupled with a verbal promise to pay it is not a sufficient acceptance in New York.* But when an acceptance is merely a collat- eral fact, it may be proved in New York by parol.* A verbal promise to accept a draft cannot be enforced under the Mis- souri statute by the payee.^ And it has been held in Alabama that a verbal acceptance of an order requiring one to make payment on a contract is valid, such instrument not being a •bill of exchange.'' § 606. Acceptor's Signature— By Letter— ►Telegram. — In England, under the statute of 19 and 20 Vict., a mere signa- ture by the drawee was not a sufficient acceptance.* On the 'Other hand, before that statute the signature itself was un- necessary to an acceptance, the completeness of the accept- ance being in such case a question for the jury to determine.* The position of the acceptor's signature on the paper is immaterial.^" The California Code expressly provides that an acceptance may be made by writing the acceptor's name ^California (1880 1 Hittell's Codes & Stats. § 8193) ; JDakofa (1877 Ber. Code 5 1875) ; New York (Proposed Civil Code ? 1787) ; Utah (1882 P. L. 60 ? 73). 'Alabama (1876 Code § 2101, Act of 1840) ; ^nzoraa (1877 C. L. ?? 3469-3471) ; District of Columbia (1857 E. C. 134) ; Idaho (1874 R. L. 653) ; Kansas (1879 C L. c. 14 ? 8) ; Maine (1871 R. S, c. 32 i 10) ; Michigan (1871 1 C. L; 516 § 7) ; Minnesota (1878 G. S. 316 i 13) ; Mississippi (1880 Rev. Code i 1133) ; Nevada (1873 1 C. L. c. 5'§ 6); New York (R. S. 768 § 6; 1882 R. S. 2242); Oregon (1872 Deady G. L. 718 ? 7); Pennsylvania (1881 P. L. 17, if for more than $20) ; Washington Territory (1881 Code M 2302-2306) ; Wisconsin (1878 R. S; I 1681). 'Duncan v. Berlin, 60 N. Y. 151 (1875) ; Risley v. Phoenix Bank, 83 lb. 318 (1881). ♦LufFw. Pope, 5 Hill 413 (1843), affirmed 7 lb. 577 (1844). ^ *Sprague v. Hosmer, 82 N. Y. 466 (1880). ^Flato V. Mulhall, 72 Mo. 522 (1880). But one who has'taken a draft or bill on the faith of such promise is protected by the Missouri statute (1879 1 R. S. ? 537). 'Auerbach v. Pritchett, 58 Ala. 451 (1877). ^Hindhaugh v. Biakey, L. R. 3 C. P. D. 136 (1878). •Dufaur v. Oxenden, 1 Moo. & R. 90. So, too, Corlett v. Conv^ay, 5 M. & W. 653. "1 Daniel 457. acceptoe's signature. 231 across the face of the bill/ And where not otherwise pro- vided by statute, an acceptance may be written upon another paper than the bill." Or it may be by a telegram/ And there is a special provision in Oregon for bills drawn by telegram, putting them on a footing with other bills of ex- •change, but restricting the operation of the statute to tele- grams by the drawer of a bill or the maker of a note.* In general, an acceptance which is not written on the bill itself is without effect, except as to persons receiving the bill on the strength of it.^ And in some of the United States it is provided by statute that the refusal to write an acceptance on the bill when so required shall be equivalent to the dis- honor of the bill.* The statute of Dakota requires accept- ance to be in writing on the face of the bill.'' That of South Carolina requires it to be indorsed or underwritten on the bill.® But the Codes of California and Dakota allow the holder of a bill to receive an acceptance written on any part of the bill or on another paper, without discharging prior parties from liability.* Many American statutes provide that an acceptance written on another paper than the bill itself shall only be binding on the drawee in favor of one who has ^California (1880 1 Hittell's Codes & Stats. ? 8193) ; Dakota (1877 Rev. Code i 1895) ; New York (Proposed Civil Code ^ 1787) ; Utah (1882 P. L. 60 § 73). 'Chitty 327 ; 2 Daniel 454, 462 ; 1 Parsons 285 ; Story on Bills ? 242 ; Clark V. Cock, 4 East 57; Wynne v. Raikes, 5 East 514; Ez parte Dyer, 6 Ves. 9; Oermania Nat. Bank v. Taaks, 31 Hun 260 (1883). 'OofiFman v. Campbell, 87 111. 98 (1877) ; Whilden v. Merchant's, &c. Nat. Bank, 64 Ala. 1 (1879) ; First Nat. Bank v. Clark, 61 Md. 401. So, an agree- ment by telegram to accept will suflBce, Central Savings Bank v. Richards, 109 Mass. 413 (1872). 'Oregon (1872 G. L. 774 ? 12). 'Chitty 325; 1 Parsons 286; Worcester Bank «. Wells, 8 Meto. 107 (1844) This is true also of a written promise to accept, McEvers v. Mason, 10 Johns, 207 (1813). ■'^to6aTOO-(1876 Code 5 2103 Act of 1843) ; Arizona (1877 C. L. ?? 3469-3471) Arkansas (1874 R. S. § 552) ; Califomia (1880 1 Hittell's Codes & S^ats. § 8193) District of Columbia (1857 Rev. C. 134 § 9) ; Idaho (1874 R. L. 653 ? 9) ; Kan JO.S (1879 C. L. c. 14 i 11) ; Mississippi (1880 Rev. C. ? 1133) ; Missouri (1879 1 B. S. § 536) ; New York (1882 3 R. S. 2243 ? 9) ; Washington Territory (1881 •Code ?? 2302-2306). "•Dakota (1877 Rev. Code 1 1896). ^South Carolina (1873 R. S. 320 ? 11). ^California (1880 1 Hittell's Codes & Stats I 8195) ; Dakota (1877 Rev. Code 1 1897) ; New York (Proposed Civil Code i 1789). 232 ACCEPTANCE. taken the bill and paid value for it on the faith of such ac- ceptance.^ And the right of such purchaser to recover dam- ages for non-acceptance is expressly reserved where he has taken the bill on the faith of a promise to accept it.^ § 607. Foreign Statutes. — Many foreign statutes require acceptance of a bill of exchange to be in writing.' In Brazil it must be written on the face of the bill;* in other States, on the bill ;* in Hungary, on the bill or a copy of it.® In Russia it may be on any part of the bill.^ If the acceptance be written on one part and the acceptor pay another part, he will not be discharged from his liability to a bona fide holder of the accepted part by Nicaragua statute.* And the Danish statute requires that, where one part is ac- cepted and another part of the bill is transferred, the latter shall show where the accepted original is to be found.® If the several parts of a bill are all accepted, the several accept- ances will all be binding in Hungary, unless there is an ^Arizona (1877 C. L. ? 3469-3471) ; Arkansas (1874 R. S. § 550) ; California (1880 1 Hittell's Codes & Stats. ? 8196) ; Dakota (1877 Rev. C. § 1898) ; Dis- tnct of Columbia (1857 R. C. 134 ? 7) ; Idaho (1874 R. L. 653 ? 7) ; Kamas (1879 C. L. c. 14 § 9) ; Nevada (1873 1 C. L. c. 5 n) ; New York (1882 R. 8. 2242, also by the proposed Civil Code i 1790) ; Utah (1882 P. L. 60 I 75) ; Washington Territory/ (1881 Code ?? 2302-2306). 'Kansas (1879 C. L. c. 14 g 12) ; Nevada (1873 1 C. L. c. 5 § 10) ; Missouri (1879 1 R. S. U 536, 537) ; Washington Territory (1881' Code § 2306). ^Argeniine Republic (1862 Code Com. Art. 816); Austria (1850 E.xch. Law Art. 21) ; Brazil (1850 Code Com. Art, 394) ; Chili (1865 Code Com. Art. 668) Colombia (1853 Code Com. Art. 413 ); Costa Rica (1853 Code Corn. Art. 403) Ecuador (1829 Code Com. as in Spain) ; Germany (1848 Exch. Lavir Art. 21) Holland (1838 Exch. Law Art. 115) ; Hungary (1861 Exoh. Law ? 70) ; Lower Canada (1867 Civ. Code Art. 2292) ; Mexico (1854 Code Com. Art. 459) ; Portu- gal (1833 Code Com. Art. 336); Salvador (1855 Code Com. Art. 410) ; Spain. (1829 Code Com. Art. 456); Switzerland (Exch. Laws, 1859 Berne, 1863 B«sle, I 20) ; Upper Canada (1859 Consol. Stats. § 7) : Uruguay (1865 Code Com. Art. 834). ^Brazil (1850 Code Com. Art. 394). ''Argentine Republic (1862 Code Com. Art. 816) ; Amtria (1850 Exch. Law- Art. 21) ; adli (1865 Code Com. Art. 668) ; Denmark (1825 Exch. Law ? 24) ; Germany (1848 Exch. Law Art. 21); Holland (1838 Exch. Law Art. 115); Lower Canada (1867 Civ. Code Art. 2292) ; Portugal (1833 Code Com. Art. 336); Sweden (1851 Exch. Law ? 21); Switzerland (Exch. Laws, 1859 Berne, 1863 Basle, ? 20) ; Upper Canada (1859 Consol. Stats. ? 7) ; Uruguay (1865 Code Com. Art. 834). 'Hungary (1861 Exch. Law ? 70). ^Russia (1862 Exch. Law Art. 581). 'Nicaragua (1869 Code Com. Art. 279). ^Denmark (1825 Exch. Law ? 16). FOKEIGN STATUTES. 233 express stipulation to the contrary/ And in Brazil, while the acceptor will remain liable to the holder of such part, his right of redress against the person transferring the bill without authority is expressly reserved.^ Many foreign statutes require the acceptance to be not only written on the bill but signed with the acceptor's name.' And the Argentine Republic requires that such signature shall be without any addition to the name.* In some foreign States it is expressly provided that the mere signature of the drawee's name on the bill shall amount to an acceptance of it.® And this is an unconditional acceptance in Germany, unless other- wise expressed.® In Holland and Portugal the acceptance must be expressed in words.'' In Hungary and Chili, by the word "accepted," or its equivalent.' In many foreign States, by the words "I (or we) accept," or "accepted," no other form being sufficient in such States.' And this is true in Guate- mala as to bills payable a certain number of days or usances after date.^" In Holland the word "seen," written on a draft payable after sight, is not an acceptance.^^ In some States it is provided that an acceptance by letter or in any other way ^Hungary (1861 Exch. Law i 69). ^Brazil (1850 Code Com. Art. 396). "Bolivia (1834 Code Com. Art. 388); Denmark (1825 Exch. Law | 24); France (1807 Code Napoleon Art. 122) ; Hayti (1826 Code Napoleon Art. 120) ; Holland (1838 Exch. Law Art. 115) ; Hungary (1861 Exch. Law § 70) ; Italy (1865 Code Com. Art. 208) ; Portugal (1833 Code Com. Art. 336) ; Rusda (1862 Exch. Law Art. 578) ; Sweden (1851 Exch. Law 5 21) ; Venezuela (1862 Code Com. Art. 21). ^Argentine Republic (1862 Code Com. Art. 816). ^Chili (1865 Code Com. Art. 668) ; Switzerland (Exch. Laws, 1859 Berne, 1863 Basle, ? 20) ; Uruguay (1865 Code Com. Art. 834). ^Austria (1850 Exch. Law Art. 21) ; Germany (1848 Exch. Law Art. 21). ^Holland (1838 Exch. Law 115) ; PoHugal (1833 Code Cora. Art. 336). ''Chili (1865 Code Com. Art. 668) ; Hungary (1861 Exch. Law § 70). 'Bolivia (1834 Code Com. Art. 388) ; Brazil (1850 Code Com. Art. 394) Colombia (1853 Code Com. Art. 413) ; Costa Rica (1853 Code Com. Art. 403) France (1807 Code-Napoleon Art. 122) ; Hayti (1826 Code Napoleon Art. 120) Italy (1865 Code Com. Art. 208) ; Mexico (1854 Code Com. Art. 459) ; Nicara- gua (1869 Code Com. Art. 256) ; Russia (1862 Exch. Law Art. 579) ; Salvador (1855 Code Com. Art. 410) ; Spain (1829 Code Com. Art. 456) ; Venezuela (1862 Code Com. Art. 21). '"Ouaiemala (1774 Ordinances of Bilbao g 33). "Holland (1838 Exch. Law Art. 214). 234 ACCEPTANCE. except by writing on the bill is not transferable as an acceptance and can only be sued by the person receiving it.* § 608, In some foreign countries it is required that the acceptance be dated, if the bill is payable after sight." In many countries the bill must be protested and its maturity reckoned from the time of protest.* In Hungary the accept- ance of such bill must be dated, or the bill becomes due immediately.* In many other States the acceptor, failing in such case to date his acceptance, becomes liable as if the bill were drawn payable after date instead of after sight.^ In Bolivia the maturity of a bill is reckoned in case of such dishonor from the earliest possible time for its presentment." It is also required in many foreign statutes that the accept- ance shall specify where the bill shall be paid, if a diflFerent place than the acceptor's residence is intended.^ Other for- eign statutes require the acceptor in such case to name a per- son at such place of payment to be there charged with its payment.* And in Hungary the failure to do so subjects the bill to protest.' While in many other countries it merely ^Argentine Republic (1862 Code Com. Art. 816) ; Uruguay (1865 Code Com. Art. 834). ^Quatemala (1774 Ordinances of Bilbao I 32) ; Russia (1862 Exch. Law- Art. 580). 'Argpntim Rrpublio (1862 Code Com. Art. 817) ; Brazil (1850 Code Com. Art. 395) ; Chili (1865 Code Com. Art. 673) ; Colombia (1853 Code Com. Art. 414) ; Costa Rica (1853 Code Com. Art. 404) ; Mexico (1854 Code Com. Art. S51) ; Salvador (1855 Code Com. Art. 411) ; Spain (1829 Code Com. Art. 457) ; Sweden (1851 Excii. Law ? 21) ; Switzerland (Excli. Laws, 1859 Berne, 186S Basle, ? 21) ; Uruguay (1865 Code Com. Art. 835). ^Hungary (1861 Exch. Law § 71). ^Denmark (1825 Exch. Law § 24) ; France (1807 Code Napoleon Art. 122) ; Hayti (1826 Code Napoleon Art. 120); Holland (1838 Excli. Law Art. 115); Italy (1865 Code Com. Art. 208) ; Portugal (1833 Code Com. Art. 336) ; Ven- ezuela (1862 Code Com. Art. 24). ^Bolivia (1834 Code Com. Art. 389). 'Argentine Republic (1862 Code Com. Art. 818) ; Bolivia (1834 Code Com. Art. 390) ; Chili'(lSG5 Code Com. Art. 6751 ; Colombia (1853 Code Com. Art. 415) ; Costa Rica (1853 Code Com. Art. 405) ; Holland (1838 Exch. Law Art. 117) ; Mexico (1854 Code Com. Art. 352) ; Peru (1853 Code Com. Art. 416) ; Portugal (1833 Code Com. Art. 338); Salvador (1855 Code Com. Art. 412) ; Spain (1829 Code Com. Art. 4.58) ; Uruguay (1865 Code Com. Art. 836) ; Ven- ezuela (1862 Code Com. Art. 27). 'Denmoj-k (Exch. Law § 24) ; France (1807 Code Napoleon Art. 123) ; Hayti (1826 Code Napoleon Art. 121) ; Italy (1865 Code Com. Art. 209). 'Hungary (1861 Exch. Law 2 73). ATJTHOKITY TO DRAW. 235 Tenders the acceptor himself presumptively liable as the person to make payment of the bill at such place.^ § 609.. Acceptance — Authority to Draw. — An authority to draw a bill of exchange upon the person giving it amounts to an agreement for acceptance, upon which an action will lie.^ Such authority is indeed, by the mercantile law, equiv- a,lent to an acceptance.^ But to be so, it must be express and special in its character and must describe the bill to be drawn with sufficient certainty.* It has been held that the authority to draw upon one for advances on grain, in amounts that may be necessary "and on such terms as you may make advantageously for us," is a sufficient unconditional accept- ^nce,° So, in New York, under the present Revised Statutes, a letter saying "we can at present only authorize you to draw at sight for $5,000, at the very outside, and then do not make any more sight drafts until you hear from us," is a sufficient acceptance of the bill afterward drawn under that authority." So, in Louisiana, an authority by letter "to value against us upon any cotton which he may ship to us."' But in Mary- land a telegram saying " you may draw on me for $700," has ■been held not to be sufficiently particular to amount to an r ^Austria (1850 Exch. Law Art. 24) ; Germany (1848 Exch. Law Art. 24) ; Guatemala (1774 Ordinances of Bilbao ? 34) ; Sweden (1851 Exch. Law ^ 23) ; Switzerland (Exch. Laws, 1859 Berne, 1863 Basle, § 23). ■■'Smith V. Brown, 2 Marsh. 41. So, a telegram to that effect, AUentown Nat. Bank v. Kimes, 12 Phila. 329 (1882). = Byles 191 n.; Chittj' 323; 1 Daniel 500; 1 Parsons 298; Bissell i;. Lewis, 4 Mich. 450 (1857) ; Bayard v. Lathy, 2 McLean 462 (1841) ; Ulster County Bank v. McFarlan, 3 Denio 553 (1846) ; Payson v. Coolidge, 2 Gallison 233 (1814); Coolidge v. Payson, 2 Wheat. 66 (1817); Goodrich t). Gordon, 15 -Johns. 6 (1818); Kussell v. Wiggin, 2 Story 213 (1842); Vance v. Ward, 2 Dana 95 (1834) ; Ogden v Gillingham, 1 Baldw. 38 (1829) ; Gates v. Parker, 43 Me. 544 (1857) ; Lewis v. Kramer, 3 Md. 265 (1852) ; Beach v. State Bank, ■2 Ind. 488 (1851) ; Lathrop v Harlow, 23 Mo. 209 (1856) ; Johnson v. Blake- more, 28 La. An. 140 (1876) ; Merchants' Bank v. Griswold, 72 N. Y. 472 (1878). So, too, obiter, Banorgee v. Hovey, 5 Mass. 11; Mayhew ■;;. Prince, il lb. 53. And where the holder has taken a bill of exchange on the faith' of an authority to draw for a certain part of the value of consignments to he shipped, it has been held that the drawee is liable to an action, although his authority may have been exceeded, Valle v. Cerre, 36 Mo. 591 (1865). *1 Parsons 298; Boyce v. Edwards, 4 Pet. Ill (1830). * Bissell V. Lewis, 4 Mich. 450 (1857). 'Merchants' Exch. Nat. Bank v. Cardozo, 3 Jones & S. 162 (1872). Uohnson v. Blakemore, 28 La. An. 140 (1876). 236 ACCEPTANCE. acceptance, although sufficient to render the drawee liable upon it as a promise to a bona fide holder taking the draft upon the faith of the telegram.' And in New York a tele- gram stating a sale, and authorizing the person addressed "to^ make draft payable through the clearing house," has been held to be equivalent to an acceptance of a draft altered so as to accord with the direction in the telegram and discounted on the faith of the telegram.^ And in Louisiana it has been held that an authority to draw in favor of creditors will cover a bill of exchange drawn by the person so authorized for dis- count, if the proceeds of the discount be used in paying the creditors.^ So, authority to draw a bill, amounting in effect to an acceptance, may be given by a blank acceptance, leav- ing the bill to be drawn on the same paper.* And where one promises a credit in favor of a third person, who receives it in settlement of a precedent debt of the promisee, and there- upon draws a bill for the amount upon the promisor, he will be liable as acceptor.* So, if one authorizes the drawing of a bill on himself and afterwards refuses to accept it, he will be liable to an action for non-acceptance.' But such an agreement or authority, although rendering the promisor liable to an action, is to be distinguished from an acceptance proper, especially where it does not comply ■with the requirements of an acceptance by sufficient particu- larity in describing the bill to be drawn. And this distinc- tion has been maintained in the case of an authority by letter "to draw on us for the amount of any lots of cotton he may buy and ship to us as soon after as opportunity may offer," adding "such drafts will be duly honored."' § 610. Authority — Must be B^nown and Relied On. — And 1 Franklin Bank v. Lynch, 52 Md. 270 (1879). 'Louisiana Nat. Bank v. Schuchardt, 15 Hun 405 (1878). 'Talmage v. Williams, 27 La. An. 653 (1875). And in this case any devia- tion from the authority was held to have been waived by the drawee's acceptance of a similar draft drawn under the same authority. * Leslie v. Hastings, 1 Moo. & R. 119. "Carnegie v. Morrison, 2 Mete. 381 (1841). •Parsons v. Armor, 3 Pet. 413 (1830). 'Boyce v. Edwards, 4 Pet. Ill (1830). ATJTHOEITY TO DRAW. 237 the authority to draw a bill only amounts to an acceptance of the bill drawn, when the authority has been known to the holder of the bill and relied on by him in purchasing it.* A mere receipt for money " which we promise to hold sub- ject to the order of A.," will be treated as an acceptance in favor of a person taking the order on the faith of the receipt.^ So, a promise to notify a person when he may draw has been held to be an acceptance.' And the authority to draw " on us or either of us," adding, " we jointly and severally hold ourselves accountable," has been held to render both persons liable on one another's acceptances.* Where authority has been given to draw a bill and has been relied on in its pur- chase, parol evidence is inadmissible on the part of the drawee to contradict the authority and to show that he was not in funds or had no intention of giving a letter of credit.^ But where a letter of credit is given to a particular person on the express condition that "it shall be covered by satis- factory remittances," it does not lay the drawee under any obligation to another holder to accept the bill.* Authority to draw bills of exchange, like a power of attor- ney, is revoked by the death of the drawee,^ or by his bank- ruptcy.* On the other hand, such authority may be a continuing one equivalent to a continuing guaranty, as in the case of the authority to draw for a certain sum named, in 'Merchants' Bank of Canada v. Griswold, 9 Hun 561 (1877); Baring v. Lyman,! Story 396 (1841) ; Burns v. Rowland, 40 Barb. 368 (1863) ; Payson v. Coolidge,2Galli8on 233(1814i; S.C.,2Wheat 66(1817); Goodrich i). Gordon, 15 Johns. 6 (1818) ; Storer v Logan, 9 Mass. 55 (1812) ; Russell v. Wiggin, 2 Story 213 (1842); Gates v. Parker, 43 Me. 544(1857); Lewis v. Kramer, 3 Md. 265 (1852) ; Pollock v. Helm, 54 Miss. 1 (1876). But see, contra, Read V. Marsh, 5 B. Mon. 8 (1844). See, too, Ex parte Bolton, 2 Dea. 537 (1837), 3 Mont. & Ayr. 367. where such a holder was not allowed to prove his claim in bankruptcy against the drawee. 'McKim V. Smith, 1 Am. L. J. 486 (1808). 'Smith V. Brown, 2 Marsh. 41, 6 Taunt. 340. «1 Daniel 461; 1 Parsons 299; Michigan State Bank v. Pecks, 28 Vt. 200 (1855). 'Pollock V. Helm, 54 Miss. 1 (1876). 'Carrollton Bank v. Tayleur, 16 La. 490 (1840). 'Michigan State Bank v. Leavenworth, 28 Vt. 209 (1855). "Ogden V. Gillingham, 1 Baldw. 38 (1829). 238 ACCEPTANCE. such amounts and on such terms as required ; and such authority will not be satisfied by a single acceptance for the amount named.^ § 611. Agreement for Acceptance — ^As to Existing Bills. — A promise to accept and pay an existing bill of exchange has the force of an acceptance by the mercantile law.* So, in New York, under the Kevised Statutes, if the promise be in writing.* And this is true, in general, of written prom- ises to accept existing bills where there is no statute to the contrary.* But a letter saying that the writer will " indorse if necessary, for the amount of purchases " of another person will not amount to an acceptance, if the indorsements are not actually given." And what seems to be a promise to accept a bill, in a letter containing other statements, which, con- strued together, show an intention not to accept it, will not amount to an acceptance.' § 612. Written Agreements — Telegrams. — A promise in writing to accept an existing bill, communicated to the holder of the bill and relied on by him in its purchase is a sufficient acceptance of the bill, unless the statute requires something further.' In many of the United States it is ex- ' Michigan State Bank v. Pecks, 28 Vt. 200 (1855). 'Byles 193; Chitty 323, 335; 1 Parsons 293; Ez parte Dyer, 6 Ves. 9; Crutchley v. Mann, 1 Marsh. 29; S. C, 5 Taunt. 529; Clark v. Cock, 4 East 57 ; Wynne v. Raikes, 5 East 514 ; Mendizabal v. Machado, 3 C. & P. 218 ; 8. C, 3 Moore & S. 841 ; Savannah Nat. Bank v. Hoskins, 101 Mass. 370 (1869) ; Bead v. Marsh, 5 B. Mon. 8 (1844) ; Schimmelpennich v. Bayard, 1 Pet. 264 (1828) ; Wakefield v. Greenhood, 29 Cal. 597 (1866) ; Grant v. Shaw, 16 Mass. 341 (1820); De Tastett v. Crousillat, 2 Wash. C. C. 132 (1807). In Grant v. Shaw, supra, the drawee had previously refused to accept the bill for want of funds, but on receipt of goods of the drawer after the bill had been returned, he promised the holder to pay it, if he would send for it, which he did. So, a letter saying "any drafts you may draw we guarantee to be paid," Evansville Nat. Bank v. Kaufmann, 24 Hun 612 (1881). "Johnson v. Clark, 39 N. Y. 216 (1868), 2 R. S. N. Y. 768 2 8. 'Goodrich v. Gordon, 15 Johns. 6 (1818) ; Cook v. Miltenberger, 23 La. An. 377 (1871)s 'Mayfield v. Wheeler, 37 Tex. 256 (1872). •Musgrove v. Hudson, 2 Stew. 464 (Ala. 1830). 'Clarke v. Cock, 4 East 57; Grant v. Hunt. 1 C. B. 44; Ulster County Bank i;. McFarlan, 5 Hill 432 (1843) ; Ontario Bank v. Worthington, 12 Wend. 593 (1834) ; Bank of Mich. v. Ely, 17 Wend. 508 (1837) ; Steman v. Harrison, 42 Penna. St. 49 (1862) ; Cassel v. Dows, 1 Blatchf. 335 (1848) ; Storer v. Logan, 9 Mass. 55 (1812) ; Havens v. Griffin, N. Chip. 23 (1789) ; VEKBAL AGREEMENTS. 239 pressly provided by statute that an unconditional promise in writing to accept a bill shall be deemed an acceptance as to all persons purchasing the bill on the faith of the promise.* An agreement by telegram to accept a bill has been held to be a sufficient acceptance.'' And such an agreement has been held to amount to an acceptance in writing, where the bill has been taken on the strength of it.'^ And in general, unless otherwise required by statute, an agreement for the acceptance of a bill amounts to an acceptance, if the bill be taken on the faith of the agreement.* But this is only true where such agreement is communicated to the purchaser of the bill and relied on by him in taking the bill.* Thus, where such agreement is made with- the drawer after the bill has been negotiated and dishonored, it will not be equivalent to an acceptance.^ A letter promising payment of a bill amounts, as we have seen, to an acceptance of the bill, even though the letter was not received until after the maturity of the bill, and though no one was induced by it to take the bill.'' In Illinois an agreement for acceptance has been held to be equivalent to the acceptance of an existing bill in favor of any holder, although he did not take the bill on the credit of it.* But this case does not appear to be supported by the general run of modern authorities. § 613. Verbal Agreements. — Even a verbal promise to accept a bill of exchange amounts to an acceptance, unless especiallywhere value has been given on the faith of such promise, Crowell V. Van Bibber, 18 La. An. 637 (1866). 'Alabama (1876 Code ? 2102 Act of 1841); Arkansas (1874 E. S. ? 551); Idaho (1874 and 1875 E. L. 653 ? 8) ; Dakota (1877 Eev. C. § 1899) ; Califor- nia (1880 Hittell's Code & Stats. ^ 8197). So, hy the proposed Civil Code in New York (§ 1791). 'Molson's Bank of Montreal v. Howard, 8 Jones & S. 15 (1875); Central Savings Bank v. Eichards, 109 Mass. 413 (1872). 'Central Savings Bank v. Eichards, supra. ^Exchange Bank of St. Louis v. Eice, 98 Mass. 288 (1867). ^Byles 191 ; Chitty 322, 323 ; 1 Daniel 500 ; Story on Bills ? 249 ; 1 Parsons, 294; Miln v. Brest, 4 Campb. 393; Johnson v. Collings, 1 East 98. So, too. Lord Mansfield in Pierson v. Dunlop, Cowp. 573; New York, &c., Bank v. Gibson, 5 Duer 574 (1856) ; Sherwin v. Bingham, 39 Ohio St. 137 (1883). »Lugrue v. Woodruff, 29 Ga. 648 (1860). ' Chitty 336 ; Wynne v. Eaikes, 5 East 514. "Jones V. Council Bluffs, &c., Bank, 34 111. 313 (1864). 240 ACCEPTANCE. more is required by statute.' And although the statute, as in Kansas, requires an acceptance to be in writing, such agreement will still support an action.^ And it has been held in Pennsylvania that a verbal promise to accept a bill may be enforced even by the holder who knew nothing of it at the time of taking the bill.* A verbal promise on the part of a bank to pay a check will bind the bank at suit of one selling goods on the strength of the promise and taking the check in payment.* But a parol promise to pay an existing bill, as has been already said of promises in general, will not be binding on the promisor as an acceptance, unless the bill be taken on the faith of it.* § 614. As to Bills to be Drawn — Written Agreements. — In the case of a written promise to accept a bill not yet drawn, the fact that the bill is taken by the holder on the faith of the promise constitutes a sufficient consideration to support it.' And in such case it is unnecessary that the promisor have funds of the drawer in his hands.'' We have already spoken of the necessity for consideration in case of acceptance, and of the availability of want of con- sideration as a defense. But in general it will not constitute a defense against a bona fide holder for value.' A promise to accept also requires a valid consideration, and this require- ment, it has been held, is not satisfied by the fact that a mechanic's lien claim would be discharged by mere opera- tion of law when the acceptance is actually given.' A verbal promise to accept a bill of exchange for the accommodation of another will not be binding on the promisor.'" So, a verbal ' Scudder v. Union Nat. Bank, 1 Otto 406 (1875) ; Spaulding v. Andrews, 48 Penna. St. 411 (1864). 'Light V. Powers, 13 Kans. 96 (1874) ; Kansas (1868 G. S. c. 14 23 8, 12). 'Spaulding v. Andrews, 48 Penna. St. 411 (1864). 'Nelson v. First Nat. Bank, 48 111. 36 (1868). 'Overman v. Hoboken City Bank, 2 Vroom 564 (1864), affirming 1 lb. 61 ; Strohecker v. Cohen, 1 Spears 327 (1843). •Pillans V. Van Mierop, 3 Burr. 1669. 'De Tastett'w. Crousillat, 2 Wash. C. C. 132 (1807). 'And see British Bills of Exchange Act of 1882 I 28. •Pluminer v. Lyman, 49 Me. 229 (1860). "Pike V. Irwin, 1 Sandf. 14 (1847). AS TO BILLS TO BE DRAWN. 241 promise to accept a bill of exchange not yet drawn in con- sideration of advances to be made by the promisee, is within the Statute of Frauds in Missouri and no action can be main- tained on it.^ Where an agreement for an acceptance is made dependent upon some contract on the promisee's part, until the performance of such contract there can be no breach of the agreement to accept.^ Since the Statute of 1 and 2 Geo. IV. c. 78, even a written agreement for the acceptance of an inland bill not yet drawn is not equivalent in England to an acceptance. This is true also of foreign bills by the Statute of 19 and 20 Vict. c. 97.* And, irrespective of statutory requirement, an agreement for the acceptance of a bill must clearly describe the bill in order to amount to an acceptance of it.* The agreement must be particular and plain in its terms.^ But although this is re- quired by statute in Missouri, a general letter of credit will support an action by the holder of a bill taken on the faith of it.® And if the bill in contemplation is plainly described and afterwards taken on the faith of the agreement for ac- ceptance, this will, in general, amount to an acceptance.'' A promise by letter saying "I have no objection to accepting for you at three or four months for f2,500, on the terms you propose," has been held sufficiently certain and uncondi- tional.* And even a letter returning an informally drawn 'Flato V. Mulhall, 4 Mo. App. 476 (1877). 2 Commercial Bank of Keokuk v. Pfeiflfer, 22 Hun 327 (1880). 'Johnson v. Collings, 1 East 98 ; Bank of Ireland v. Archer, 11 M. & W. 383. *Coolidge V. Payson, 2 Wheat. 66 (1817), afllrming Payson v. Coolidge, 2 Gall. 233 ; Schimmelpennich v. Bayard, 1 Pet. 264 (1828) ; Cassel v. Dows, 1 Blatchf. 335 (1848) ; Ulster County Bank v. McFarlan, 3 Den. 553 (1846) ; Von Phul V. Sloan, 2 Kob. 148 (La. 1842). 'Boyce v. Edwards, 4 Pet. Ill (1830). « Vall6 V. Cerr6, 36 Mo. 575 (1865) ; Missouri (E. C. 1855 p. 293 ? 3). 'Payson v. Coolidge, 2 Gallison 233 (1814) ; Coolidge v. Payson, 2 Wheat. 66 (1817); Johnson v. Clark, 39 N. Y. 216 (1868); Ulster County Bank ■!;. McFarlan, 3 Den. 553 (1846) ; Parker v. Greele, 2 Wend. 545 (1829) ; Greele V. Parker, 5 lb. 414 (1830) ; Bovce v. Edwards, 4 Pet. Ill (1830) ; Russell v. Wiggin, 2 Story 213 (1842) ; Barney v. Newcomb, 9 Gush. 46 (1851) ; Von Phul V. Sloan. 2 Rob. 148 (La. 1842) ; Cassel v. Dows, 1 Blatchf. 335 (1848) ; Naglee v. Lyman, 14 Cal. 451 (1859). « Parker v. Greele, 2 Wend. 545 (1829) ; affirmed, 5 lb. 414 (1830) ; Wildes V. Savage, 1 Story 22 (1839). VOL. 11. Q 242 ACCEPTANCE. bill with the request to "send a correct one and we will accept it," has been held suflScient/ By the lex mercatoria a promise in writing to accept an undrawn bill, communicated to the holder and relied on by him in taking the bill, is equivalent to an acceptance.** And this is further provided by statute in many States, if th& promise is an unconditional one.' But such a promise must be acted on in a reasonable time in order to be binding, and it has been held that two years after it was made is not a reasonable time.* Such a promise will be binding in favor of any holder taking the bill on the faith of it;* but not, in general, of a holder who knew nothing of it.^ § 615. Agreement for Acceptance — Must be Relied on. — A. written promise to accept a bill of exchange which is not in existence will not be an acceptance, unless it is communicated to the holder of the bill.' And it must be acted on, as we^' have seen, within a reasonable time. Thus, where a letter authorized the person addressed to "make out a statement according to your own wishes and draw on me for the bal- ance, which shall be punctually honored," a bill drawn two- years afterward in favor of the drawer laid the writer of the letter under no obligation to accept it.' So, an agree- ment to accept a bill on receipt of a collateral bill of lading; 'Steman v. Harrison, 42 Penna. St. 49 (1862). -Miln V. Prest, Holt 181; S. C, 4 Campb. 393; Johnson v. Collings, 1 East. 98 ; Whilden v. Merchants', &c., Nat. Bank, 64 Ala. 1 (1879) ; Kendrick v. Campbell, 1 Bailey 522 (1830) ; Storer v. Logan, 9 Mass. 55 (1812) ; Steman V. Harrison, 42 Penna. St. 49 (1862) ; Kennedy v. Geddes, 8 Port. 263 (1838) ; S. C, 3 Ala. 581 (1842). But not otherwise, Ontario Bank v. Worthington, 12 Wend. 593 (1834). ^Arizona (1877 C. L. ? 3471) ; District of Columbia (1857 Eev. Code 134 §? 6, 7, 8) ; Kansas (1879 C. L. c. 14 ? 10) ; Nevada (1873 1 C. L. c. 5 S 8) ; New York (1829 1 R. S. 768 ? 8; 3 R. S. 1882 p. 2223); Mississippi (1880 Rev. Code § 1133); Utah (1882 L. 60 § 76) ; Washington Territory (1881 Code ^ 2302). 'Wilson V. Clements, 3 Mass. 1 (1807). »Steinan v. Harrison, 42 Penna. St. 49 (1862). ^Howland v. Carson, 15 Penna. St. 453 (1850). 'Lewis V. Kramer, 3 Md. 265 (1852). But see Read v. Marsh, 5 B. Mon. 8. (1844). * Wilson V. Clements, siwpra. AGEEEMENT FOR ACCEPTANCE. 243 will not amount to an acceptance, where the bill of exchange has not been taken on the faith of the agreement.^ § 616. Verbal Agreements for Acceptance of Non-Existing Bills. — In England a verbal agreement for the acceptance of a bill of exchange not yet drawn will not have the force of an acceptance.^ And this has been held to be so as to a foreign bill, although the promise has been communicated to the purchaser and the bill purchased on the faith of it.^ But in the United States, where not otherwise required by stat- ute, such agreement, communicated to the purchaser and relied on by him, is a sufficient acceptance of the bill.* In New York such a promise is void by statute.^ And in Missouri the statute has been held to apply to, and forbid, only parol promises to accept a bill.^ And in general, as we have seen, where such promise is not communicated to the holder, it does not amount to an acceptance.' § 617. Agreement for Acceptance — Sufficiency. — The rule which makes an agreement to accept a bill equivalent to an acceptance of it has been held to apply only to bills which are drawn payable at a certain time after date, not to those drawn payable after sight.^ Where the drawee requests the holder to leave the bill with the promise to accept it, this has been held to be a good acceptance.' So, where he prom- ises to accept a bill which he returns for correction, " when it shall come back," the bill being afterwards sent back.^" ' "A mere chose in action, not negotiable and upon which no one but he to whom it was made could maintain an action," Gray, J., in Exchange Bank of St. Louis v. Eice, 107 Mass. 37 (1871) ; S. C, 98 lb. 288. ^ 1 Parsons 292. 'Bank of Ireland v. Archer, 11 M. & W. 383; Kennedy v. Geddes, 8 Port. 263 (1838) ; Mercantile Bank v. Cox, 38 Me. 500 (1854). •Townsley v. Sumrall, 2 Pet. 170 (1829). ^Blakiston v. Dudley, 5 Duer 373 (1856). «Brinkman v. Hunter, 73 Mo. 172 (1880) ; Misaouri (R. 8. 1879, ? 537). 'Wilson V. Clements, 3 Mass. 1 (1807). ^1 Daniel 508 ; Story on Bills ? 249; Wildes v. Savage, 1 Story 22 (1839). ' Chitty 336 ; Pierson v. Dunlop, Cowp. 573. But not if the bill be not left or sent as requested, Anderson v. Hick, 3 Campb. 179 ; Wynne v. Raikes, 5 East 514. " Chitty 336 ; Cox v. Coleman, cited in Lumley v. Palmer, Hardw. 74. 244 ACCEPTAlSrCE So, even where a bill is drawn against a cargo and tbe con- signee says "he will not accept until the ship arrives," the ship having afterward arrived/ So, an agreement to give notice to a party when he may draw on the promisor, is equivalent to an agreement to accept his bill when drawn.* And the agreement to .accept a bill of exchange will be readily presumed from the fact of the drawee having funds of the drawer in his hands.' But if the drawee promises to pay a bill, and refuses to accept it though he has funds of the drawer in his hands, there will be no presumption of an acceptance by him.* § 618. Agreement for Acceptance — For Benefit of Whom — Breach — Delivery. — Where a promise for an acceptance is made to the holder of the bill, it will be sufficient, although the bill has been already transferred or dishonored.^ So, it is enough if it be made to the party for whose account the bill was drawn, although he may not be a party to the bill.* And in such case the agreement will inure to the benefit of subsequent holders, although not known to them until after- ward.^ But a mere certificate, to the effect that " the bearer leaves in my hands $50, which sum I hold subject to his order," will not be a negotiable agreement.* In order to constitute a breach of an agreement to accept a bill, the bill must be tendered to the drawee for acceptance.* And whether the agreement amounts in itself to an accept- ance or not, the person agreeing to accept a bill will be liable ' Chitty 336 ; Miln v. Prest, 4 Campb. 393. *Chitty 319; Smith v. Brown, 2 Marsh. 41; S. C, 6 Taunt. 34'0. In this case a consignee of goods, on being informed of their shipment, replied in writing " that tlie moment the goods arrived the consignor might depend on hearing from him, when he might draw upon him, or he would send him a banker's draft," and this was held to be a promise to accept a bill or to send a draft at the option of the consignor. •Laing v. Barclay, 1 B. & C. 398, 2 Dow. & E. 530. *Pope V. Luff, 7 Hill 577 (1844), affirming Luff v. Pope, 5 Hill 413 (1843). "Byles 194; Wynne v. Eaikes, 5 East 514. •Pairlie v. Herring, 3 Bing. 625; Grant v. Hunt, 14 L. J. C. P. 106; S. C, 1 C. B. 44. 'Byles 194; 1 Daniel 508. "Roman v. Terna, 40 Tex. 306 (1874). 'Universal Permanent Building Society v. Kilpatrick, 7 V. R, L. 58 (1881). FOKEIGN STATUTES. 245 for the breach of his agreement.^ And if it rests on a suf- ficient consideration, he will be liable for exchange and statutory damages.^ Where a bill of exchange has been discounted on such an agreement and afterward lost by the holder, the agreement may be enforced in equity in favor of such purchaser.^ But if such agreement has been obtained from the promisor by fraud it will create no liability on his part except in favor of a bona fide purchaser of the bill for value, who has taken the bill on the faith of the promise.* It is to be remembered, moreover, that delivery is neces- sary to make a complete acceptance.* And the mere indors- ing of an acceptance upon a bill after its presentment and without the holder's knowledge will not make a good accept- ance.* § 619. Foreign Statutes. — By the Code of the Argentine Bepublic, an agreement to accept a bill of exchange, whether verbal or in writing, amounts to an acceptance of the bill only in favor of the person to whom the promise is made.^ While in some States such an .agreement will by statute not constitute an acceptance, but simply render the promisor liable for damages occasioned to the drawer of the bill.* In the Argentine Republic and in Brazil an agreement to accept a bill of exchange not yet drawn, without express authority to draw on the promisor, will only render him liable for damages if he refuse to accept the bill.* But a written authority from a merchant to draw upon him will render ^Boyce v. Edwards, 4 Pet. Ill (1830) ; Eussell «. Wiggin, 2 Story 213 (1842) ; Lonsdale v. Lafayette Bank, 18 Ohio 126 (1849) ; Bissell v. Lewis, 4 Mich. 450 (1857) ; Carnegie v. Morrison, 2 Mete. 881 (1841). 'Smith V. Brown, 2 Marsh. 41; 6 Taunt. 440; Kiggs v. Lindsay, 7 Cranch 500 (1813). "Savannah Nat. Bank v. Hoskins, 101 Mass. 870 (1869). •Chitty 336 ; Pillans v. Van Mierop, 3 Burr. 1669. n Daniel 451 ; Cox v. Troy, 5 B. & Aid. 474. *Dunavan v. Flynn, 118 Mass. 537 (1875). ''Argentine Republic (1862 Code Com. Art. 814). Holland (1838 Exch. Law Art. 114) ; Portugal (1883 Code Com. Art. 886) ; Uruguay (1865 Code Com. Art. 882). ^Argentine Republio (1862 Code Com. Art. 813) ; Brazil (1850 Code Com. Art. 892). 246 ACCEPTANCE. Ihim liable to accept and pay the bill drawn, and subject hiin to all the liability of a drawer.^ § 620. Detention — When it Implies Acceptance. — An inten- tion to accept a bill is generally inferred from its prolonged detention by the drawee, and in such case the detention of the bill is equivalent to a positive acceptance; e. g. where the drawee was told by the payee that he would so consider it and thereupon admitted that he had neglected to write, 'thinking it immaterial as he intended to pay the bill.^ So, "where a drawee, receiving a draft upon him by mail, detained it and said to a third person thsCt it would be disposed of, this is sufficient; even though he had previously demanded a personal presentment of the bill.^ Detention of a bill by the drawee beyond a reasonable time amounts to an accept- ance;* especially if it be long and contrary to established custom; but not if it be only for the usual and ordinary time.^ But after refusal to accept a bill its detention and destruction will not amount to an acceptance.^ So, it will not be an acceptance, if the. bill be detained twenty-four hours and then returned marked " not good ; "^ or if detained for ten or twelve days to enable the drawee to see whether he would receive funds to meet it as promised by the drawer.* So, it will not be an acceptance, if the bill be detained under a special custom existing between the drawer and the drawee to await the regular monthly estimate of work done on a con- tract between them;' or if partly paid and detained by consent as a voucher for the payment made.^" And even the detention of a bill until the trial of the action brought upon it has been 'Argentine Republic (1862 Code Com. Art. 813) ; Brazil (1850 Code Com. Art. 392). 'Harvey v. Martin, 1 Campb. 425. 'Hough V. Loring, 24 Pick. 254 (1837). *Hall V. Steel, 68 111. 231 (1873). ^Dunavan v. Flynn, 118 Mass. 537 (1875). Detention for six days was held not to be an acceptance in Colorado Nat. Bank v. Boettcher, 5 Col. 185 (1879). •Byles 195; Chitty 334; Jeune v. Ward, 1 B. & Aid. 653; 2 Stark. 326. 'Overman v. Hoboken City Bank, 2 Vroom 563 (1864), affirming 1 lb. 61. « Chitty 334; 1 Daniel 459; Mason v. Barflf, 2 B. & Aid. 26. »Hall V. Steel, 68 111. 231 (1873). "Gates V. Eno, 4 Hun 96 (1875) ; 3 R. S. N. Y. 68. DETENTION OF BILL. 247 teld not to be conclusive evidence of acceptance.^ By the usage of London a check may be detained until 5 o'clock in the af- ternoon and then returned to the holder, and the fact that it has been canceled by mistake will not render this an acceptance.^ In Massachusetts and Rhode Island it is provided by stat- ute that the drawee shall have until 2 p. m. of the following business day to accept a bill, but if the bill be held over for cause, it shall, when accepted, reckon its maturity from the time of presentment.* The Code of California gives the drawee twenty-four hours in which to accept a bill or refuse it.* Other States provide that the drawee shall be deemed to have accepted the bill, if he refuse to return it within twenty-four hours after its delivery for acceptance, or within such further time as may be allowed by the holder.^ But the New York statute has been held to contemplate only the wrongful refusal of the bill and does not apply to the case of a bill willingly left by the holder to be accepted on a con- tingency and not afterwards demanded again by him.® By the statute of Missouri, the willful destruction of a bill, as in New York, or its detention for more than twenty-four hours, amounts to an acceptance on the drawee's part.^ And by the Code of California, upon refusal by the drawee of a bill to return it to the holder, it becomes payable immediately without regard to its terms.* 'Koch V. Howell, 6 Watts & S. 350 (1843). In this case the detention had been originally by the drawee's agent for the purpose of submitting to his principal, who kept the bill but declined to accept it. 'Chitty 335, 348 ; Pernandey v. Glynn, 1 Campb. 426 n. See, too, Wilkin- son V. Johnson, 3 B. & C. 428. 'Massachusetts (1882 Pub. Stat. 428 § 17 ; 1878 G. S. 85) ; Rhode Island (1882 Pub." Stats, c. 142 g 5; 1876 P. L. c. 551). *ChliJbmia (1880 1 Hittell's Codes & Stats. | 8186) ; Dakota (1877 Rev. C. ^ 1891) ; Utah (1882 P. L. 59 § 68). See, too, proposed Civil Code for New York (? 1783). '•Alabama (1876 Code ? 2105) ; Arizona (1877 C. L. | 3474) ; Arkansas (1874 B. S. ? 554) ; Idaho (1874 and 1875 R. L. 653 i 11) ; District of Columbia (1857 Rev. c. 135 § 11) ; Kansas (1879 C. L. c. 14 ? 13) ; Nevada. (1873 1 C. L. c. 5 ? 11) ; Missouri (1879 1 R. S. § 538) ; New York (1882 3 R. S. 2243 ? 11) ; Washington Territory (1881 Code § 2307). «Matteson v. Moulton. 11 Hun 268 (1877) ; affirmed 79 N. Y. 627 (1879). 'Rousch V. Duff, 35 Mo. 312 (1864). « California (1880 1 Hittell's Codes & Stats. § 8195) ; Dakota (1877 Rev. C. 1 1897) ; Utah (1882 L. 60 1 74). So, by the proposed Civil Code of New York U 1789). 248 ACCEPTANCE. CHAPTER XVIII. ACCEPTANCE. /. Conditional or Qualified Acceptance. II. Acoq>tor's lAability. III. Revocation and Discharge. IV. Certified Checks. I. CONDITIONAL ACCEPTANCE. 621. Conditions in General. 622. Out of Certain Fund— On Certain Event. 623. Conditional Expressions. 624. Contemporaneous Conditions — Parol Evidence. 625. Liability of Conditional Acceptor. 626. Partial Acceptance. 627. Foreign Statutes. § 621. Conditional Acceptance. — The holder of a bill has the right to insist upon an absolute and unconditional acceptance of the bill, and may treat it as dishonored for want of such an acceptance.^ He may refuse to receive a qualified or conditional acceptance, in that case protesting the bill for non-acceptance.^ By the Code of California he may demand an unqualified acceptance written on the face of the bill and treat the bill as dishonored for want of it.' Where a qualified acceptance is offered and made known to the holder, his protest of the bill is equivalent to a refusal of the offer.* Not so, however, if the offer had not been commu- nicated to the holder of the bill at the time of protesting it.* 'Chitty 326, 339; 1 Parsons 330; 1 Daniel 465; 1 Edwards i 582; Story on Bills ? 240; Smith v. Abbot, 2 Stra. 1152; Petit v. Benson, Comb. 452; PaAer v. Gordon, 7 East 387; Gammon v. Schmoll, 5 Taunt. 344; Boehm v. Garcias, 1 Campb. 425 ; Sebag v. Abithol, 4 M. & S. 466 ; Andrews v. Baggs, ■ Minor 173 (1823) ; Ford v. Angelrodt, 37 Mo. 50 (1865). 'Chitty 340; 1 Daniel 466; Story on Bills ? 240. ^California (1880 1 Hittell's Codes & Stats. ?? 8193, 8194) ; Utah (1882 L. 60 173). •Chitty 340; 1 Daniel 467; Sproat v. Matthews, 1 T. E. 182; Bentinck v. Dorrien, 6 East 200. "Chitty 340; 1 Daniel 468; Fairlie v. Herring, 3 Bing. 625; S. C, 11 Moore 520. CONDITIONAL ACCEPTANCE. 249 The liability of the drawer of a bill to the holder is not affected by a qualified acceptance, or by a direction in the bill itself to charge it to a particular account or fund.^ If the holder takes a qualified acceptance, it becomes his duty at once to notify all previous parties to the paper.^ It is his duty, indeed, to give such notice to prior parties as soon as a qualified acceptance is offered by the drawee.* And since the Statute of 1 and 2 Geo. IV., he cannot in England take a qualified acceptance without getting the previous con- sent of all prior parties to the paper ; although, perhaps, this does not apply to an absolute acceptance for the payment of part of the amount of the bill.* If the qualified acceptance is received by the holder of the bill without the consent of prior parties, they will be discharged thereby .* And it is said by some authorities that this will be the ease, even where the qualification in the acceptance relates only to payment of the bill in part, or is a condition already performed and made absolute before the maturity of the bill.* An excep- tion to the rule, discharging such parties where a qualified acceptance is received without notice or consent, is made against a drawer having no funds in the drawee's hands to draw against and no right to draw.^ And it is to be remem- bered that if the holder of a bill consents to receive a quali- 'Knox V. Eeeside, 1 Miles 294 (1836). In this ease the bill was drawn chargeable "to my account for transportation of U. S. mail," and accepted "provided the drawer should perform his contract." 'Chitty 339; 1 Daniel 467; 1 Parsons 352; Story on Bills § 240; Byles 195; Paton V. Winter, 1 Taunt. 422. 'Chitty 339; Sebag v. Abithol, 4 M. & S. 466; S. C, 1 Stark. 79. If the drawer has funds in the drawee's hands, he should be notified, Robinson v. Ames, 20 Johns. 146 (1822). *Byles 195 ; Chitty 339 ; 1 Parsons 352. And this has been held to be the rule as to an acceptance payable at a particular place other than that named in the bill, Howe v. Young, 2 Brod. & B. 166; 2 Bligh 391. See, too, Sebag V. Abithol, supra; Outhwaite v. Luntley, 4 Campb. 179 ; Niagara Dist. Bank 1). Fairman M%. Co., 31 Barb. 403 (1860). n Daniel 471; 1 Edwards | 583; Byles 196; Story on Bills ? 240. And such notice and consent must be specially averred in a suit against the drawer, Taylor v. Newman, 77 Mo. 257 (1883). •1 Daniel 468; Story on Bills i 272. But see 1 Parsons 352; Bay ley on Bills c. 7 I 2. '1 Daniel 468; 1 Edwards ? 596; Robinson v. Ames, 20 Johns. 146 (1822). 250 ACCEPIANCE. fied acceptance from the drawee, he must not protest the bill for non-aceeptance, since a protest would discharge the acceptor.^ § 622. Conditions — Out of Certain Fund — On Certain Event. — Qualified acceptances are either conditional or par- tial.^ Whether an acceptance is conditional or not is a ques- tion of law.^ An acceptance in terms, " payable when house is ready for occupancy," has been held to be conditional.* So, an acceptance to pay " out of the amount to be advanced when the house I am now erecting on your land is completed according to contract.'" And where a bill has been made payable out of the amount due on a building contract and accepted unconditionally, the acceptance is conditional on the performance of the contract; and if the contract is never finished, the acceptor will not be liable." But where an order is drawn in the ordinary manner, with a direction to " take the sum out of our share of the firm grain," and is accepted unconditionally, it has been held only to refer to the designated fund for re-imbursement and not as a condition.'' On the other hand, in New York in a recent case where an order was drawn payable out of the drawer's salary, and the drawee agreed to pay it if the salary should continue and the order should not be revoked, this was held to be a condi- tional agreement and not an acceptance.^ And it is provided by statute, in Georgia, that where an acceptance is drawn, and made payable out of a certain fund, the acceptor shall 'Byle8l95. ^Byles 196; Knox v. Reeside, 1 Miles 294 (1836). 'Byles 196; Chitty 326; 1 Parsoni 301; Sproat v. Matthews, 1 T. R. 182. In this case an acceptance was at first refused because the drawee did not know "whether the ship would arrive at London" and a subsequent state- ment on his part that the bill would be paid, "even if the ship were lost," was held to be conditional only. *Cook V. Wolfendale, 105 Mass. 401 (1870). 'Newhall v. Clark, 3 Gush. 376 (1849). And in such case performance is necessary to a recovery, lb. ^Hoagland v. Erck, 11 Neb. 580 (1881) ; Crowell v. Plant, 53 Mo. 145 (1873). 'Corbett v. Clark, 45 Miss. 403 (1878). ^Shaver v. Western Union Tel. Co., 57 N. Y. 459 (1874). And the drawee will not be liable on such order after its revocation by the drawer, 75, CONDITIONAL EXPRESSIONS. 251 iave a lien for its payment on the drawer's funds in his hands/ Where a bill has been accepted on condition of its renewal for a certain time, without interest, this has been held in JEngland to be good as a conditional acceptance.^ So, the acceptance of a bill " as remitted for " has been held to be conditional;^ or "on account of the ship Thetis, when in cash for the said vessel's cargo."* So, an agreement to accept a bill (which the drawee returns to the drawer) " when it .shall come back;"® or to accept a bill if it is sent to the drawee's counting house.* So, an acceptance " when cargo of equal value is consigned to me;"'' or on giving up a bill of lading which accompanies the bill of exchange.* So, an agreement to accept a bill drawn against, and accompanied by, a bill of lading " for the first cost " of the goods con- signed is conditional on the bill of lading accompanying the bill to be accepted, and on the bill of exchange correspond- ing as to amount with the terms of the agreement.* § 623. Conditional Expressions. — A. promise to accept a bill "as soon as he shall sell the goods," is conditional.^" So, it is conditional to say he would have accepted the bill if he Jiad had certain funds from France and would accept it when he received them ;" or to say he would pay an order "when <;ollected;"^^ or after all prior liabilities assumed on account 'Georgia (1873 Code ? 2779). 'Russell V. Phillips, 14 Q. B. 891.' 'Byles 196; Chitty 340; 1 Daniel 466; Banbury v. Lissett, 2 Stra. 1212. ^Chitty 340; Julian v. Shobrooke, 2 Wils. 9. 'Chitty 340; Lumley v. Palmer, Hardw. 74. But see Grant v. Shaw, 16 Mass. 341 (1820). *And it must be sent there to be binding, Anderson v. Hick, 3 Campb. 179. 'Maaon v. Hunt, 1 Doug. 297. 'Byles 196 ; Smith v. Vertue, 9 C. B. (n. s.) 214 (1860). And such surrender ■of the bill of lading is not necessarily to be made when the bill of exchange falls due, lb. 'Harrison v. Smith, 2 Sweeny 669 (1870). •"Chitty 340; Byles 196; Smith v. Abbott, Stra. 1152. " Byles 196 ; Mendizabal v. Machado, 6 C. & P. 218 ; S. C, 3 M. & Scott 841. "Swansey v. Breck, 10 Ala. 533 (1846). And receipt after acceptor's ■death by his personal representative is in such case sufficient, lb. And see Vaughan v. Dean, 32 Ga. 502 (1861), as to liability on such acceptance after lapse of a reasonable time. 252 ACCEPTANCE. of a contract had been satisfied, the acceptance becoming; absolute in such case when there is sufficient balance to pay the bill.^ But a promise to pay a bill if d, certain other per- son did not is not conditional, where the circumstances show an absolute acceptance to have been intended.* Neither is an authority to draw such drafts "as may be necessary for the purchase of lumber," conditional ;^ nor an agreement to pay a certain draft to be drawn "for stock."* But where A. gives a letter of credit to B., saying that he is directed by C. "to pay all your drafts for cattle purchased," and that he- would "furnish all funds for these purchases, taking your drafts for them," there was an implied condition that B. should cover A. by giving a similar draft in his favor on C* It does not render an acceptance conditional to add the word "administrator" to the acceptor's signature.* So, an absolute acceptance of an order to "pay if in funds," is unconditional.'' So, a promise to honor a bill "as it would be due before the stores were paid for."' § 624. Contemporaneous Conditions — Parol Evidence. — The acceptance of a bill may be absolute in form, the condition being contained in a contemporaneous instrument.^ But a receipt given as collateral for the payment of a note, with a contemporaneous receipt agreeing to surrender such first re- ceipt when the note is paid, is not a condition but merely a means for proving the consideration. ^° An acceptance once 'Brabazon v. Seymour, 42 Conn. 551 (1875). 'Chitty 341; Wilkinson v. Lutwidge, Stra. 648, the acceptor having said that he did not expect such other persons to pay the bill, but that they would be first applied to and he would remit if they did not. 'Merchants' Bank v. Griswold, 72 N. Y. 472 (1878). *Coffman v. Campbell, 87 111. 98 (1877); or "against shipments to be de- scribed * * * on account of subsequent remittances, which you will have to send within a week," Germania Nat. Bank v. Taaks, 31 Hun 260 (1883). 'Lockwood V. Brownson, 53 Tex. 523 (1880). °Tassey v. Church, 4 Watts & S. 346 (1842). 'Kemble v. Lall, 3 McLean 272 (1843). But see Smith v. Wood, Saxt. 74 (1830). *Pierson v. Dunlop, Cowp. 571. 'Byles 196; Chitty342; 1 Daniel 472; Bowerbank «. Monteiro, 4 Taunt. S44; Gibbon v. Scott, 2 Stark. 286. "Goodwin v. McCoy, 13 Ala. 271 (1848). CONTEMPORANEOUS CONDITIONS. 253 given absolutely cannot be rendered conditional by a condi- tion subsequently added.^ And if an acceptance is absolute on its face, a contemporaneous condition cannot be shown by parol.^ Thus, it cannot be shown that the bill was accepted on condition of the surrender of a note by a third party.* So, if an acceptance be expressly conditioned on the comple- tion of a certain contract of a given date, it cannot be shown by parol to have been conditioned on any other unfinished contract unknown to the payee at the time.* And even though the contemporaneous condition be in writing, it will not be admissible to defeat a bona fide holder for value having no knowledge of it* Thus, the breach of a condition against negotiating a bill of exchange cannot be set up against such a holder.* But an acceptance which is itself ambiguous may be explained by parol.^ But in the case of the promise already referred to, "to pay a draft for stock," it was held that parol evidence was inadmissible to show that usage meant a purchase and consignment of stock to the acceptor, there being no ambiguity on the face of the acceptance.* •1 Daniel 472-; 1 Edwards I 592; Wells v. Brigham, 6 Gush. 6 (1850). In this case it was held that the drawer's saying he would not be able to pay until he got returns from certain goods did not amount to a conditional acceptance. 'Byles 196; 1 Daniel 472; 1 Edwards I 590; 1 Parsons 801; Adams v. Wordley, 1 M. & W. 374; Hoare v. Graham, 3 Campb. 57; Besant v. Cross, 10 C. B. 895 ; Meyer v. Beardsley, 1 Vroom 236 (1863) ; Heaverin v. Donnell, 7 Sm, & M. 244 (1846) ; Goodwin ■u.McCoy, 13 Ala. 271 (1848). "Foster v. Cliflford, 44 Wis. 569 (1878). ♦Hunting v. Emmart, 55 Md. 265 (1880). *Bylesl96; 1 Daniel 472; 1 Parsons 801; Story on Bills I 240; Bower- bank V. Monteiro, 4 Taunt. 844; United States v. Bank of the Metropolis, 15 Pet. 377 (1841) ; Montague v. Perkins, 22 Eng. L. & Eq. 516. 'Merritt v. Duncan, 7 Heisk. 156 (1872). 'Chitty 342; 1 Daniel 470; 1 Parsons 301; Swan v. Cox, 1 Marsh. 179; Gallagher v. Black, 44 Me. 99 (1857). So, held of an acceptance " payable when the lumber is run to market," Lamson v. French, 25 Wis. 37 (1869) ; or "when the contracts of the drawer are complied with," United States v. Bank of the Metropolis, 15 Pet. 377 (1841); or ''after my advances are paid," Shackleford v. Hooker, 54 Miss. 716 (1877). But such parol evidence would not be admissible against a bona fide holder for value to show that what might fairly be taken for an acceptance was not so intended, Gal- iHgher V. Black, swpra. In this case the writing was a receipt indorsed on the bill. 'Coflfman v. Campbell, 87 111. 98 (1877). 254 ACCEPTANCE. § 625. Liability of Conditional Acceptor. — Where an ac- ceptance is upon a condition not written on the bill itself, the burden of proving the condition is upon the .acceptor.* But when proved, both acceptor and holder of a conditional or qualified acceptance are bound hy its terms.^ And the acceptor is not liable in such case until the happening of the event provided for in the condition.* So, if there is a con- dition annexed to an indorsement prior to the acceptance,, the acceptor will only be liable on its performance.* One who accepts a bill on condition will not be liable if the per- formance of the condition is prevented by operation of law ; e. g. where a sale of goods provided for in the condition is prevented by their seizure in attachment.^ The burden of proving that the condition has been per- formed is on the holder of the bill.® And whether a condi- tion has been performed or not is a question for the jury.'' It has been held that where a bill is accepted to be paid as soon as certain insurance is settled, payment of part of 'Chitty 341; 1 Edwards ? 590; Clarke v. Cock, 4 East 57; Zaines v. Knightly, Skin. 54 ; Thomas v. Bishop, Cas. temp. Hardw. 1 ; Mason v. Hunt, Dougl. 296 ; Bowerbank v. Monteiro, 4 Taunt. 846 ; Ford v. Angelrodt, 37 Mo. 50 (1865). n Daniel 466; 1 Edwards | 582; Story on Bills i 240; Petit v. Benson, Comb. 452 (1697); Smith v. Abbot, 2 Stra. 1152; McCutcheon v. Rice, 56 Miss. 455 (1879) ; Wintermute v. Pobt, 4 Zab. 423 (1854) ; Green v. Raymond, 9 Neb. 295 (1879) ; Ford v. Angelrodt, 37 Mo. 50 (1865) ; Andrews v. Baggs, Minor 173 (1823). 'Chitty 341; Sparrow v. Chisman, 9 B. & C. 241; Clarke v. Cock, supra; Newhall v. Clark, 3 Cush. 376 (1849) ; Shackleford v. Hooker, 54 Miss. 716 (1877) ; Harrison v. Smith, 2 Sweeny 669 (1870) ; Browne v. Coit, 1 McCord 408 (1821); Carson v. Kerr, 7 Kans. 268 (1871); Liggett v. Weed, lb. 273. And see Rawson v. Beach, 13 R. 1. 151 (1880), where an agceptance to pay " out of the money collected " on a certain judgment was held not to apply to a subsequent verdict on a new trial. But an acceptance payable " when the money is collected " has been held to be due after a reasonable time allowed for collection, Vaughan v. Dean, 32 Ga. 502 (1861). So, an agreement to accept a bill to be drawn implies the condition that it be pre- sented for acceptance within a reasonable time, First Nat. Bank v. Bensiey, 2 Fed. Rep. 609 (1880). *Chitty 343; Robertson i;. Kensington, 4 Taunt. 30. = Brown v. Coit, 1 McCord 408 (1821). n Daniel 466, 470; 1 Edwards g 582 ; 1 Parsons 301 ; Read d. Wilkinson, 2 Vfa&h.. C. C. 514 (1811); Gammon v. SchmoU, 5 Taunt. 344; Nagle v. Homer, 8 Cal. 353 (1857) ; Marshall v. Clary, 44 Ga. 511 (1871) ; First Nat. Bank v. Bensiey, mipra; Owen v. Lavine, 14 Ark. 389 (1854); Andrews v. Baggs, mpra; Atkinson v. Manks, 1 Cow. 691 (1823) ; Ford v. Angelrodt, mi/pra. 'Nagle V. Homer, 8 Cal. 353 (1857). LIABILITY ON CONDITION. 255 the insurance is not a fulfillment which will render the acceptance absolute.^ Where a draft is accepted on the im- plied condition of a similar draft to be given by the drawer on another person in favor of the acceptor, the accepted draft being drawn at sight, the other draft made pay- able twenty days after is no sufficient performance of the condition.^ And where a bill is accepted on condition "that the drawer's contract be complied with," this will not include previous forfeitures known to the acceptor and not mentioned by him to the holder.^ An acceptance " when in funds " has been held to mean available funds and not mere laborers' wages received ; * and to mean cash and not available securities.^ And it is paya- ble out of the first moneys received after deducting advances already made on such fund.^ And if the bill be accepted " payable out of the first moneys received," the acceptor will be liable to pay from time to time as moneys are received, and may be sued on receipt of any sum of money by himJ Again, it has been held that an acceptance "for the full amount, provided there is this amount in my hands," will be absolute as to the funds in hand, not exceeding the full amount of the order accepted.' And that an acceptance "if on settlement there is anything over," will render the ac- ceptor liable for the balance remaining after the settlement referred to.* Where a bill has been accepted conditionally, the drawer is only liable to pay on failure of the acceptor to pay accord- ing to the term of the acceptance.^" If the condition of an 'Langston v. Corney, 4 Campb. 176. 'Lockwood V. Brownson, 53 Tex. 523 (1880). 'United States v. Bank of the Metropolis, 15 Pet. 397 (1841). *Wintermute v. Post, 4 Zab. 423 (1854) ; nor other property of sufficient value, Carlisle v. Hooks, 58 Tex. 420 (1883). "See Campbell v. Pettengill, 7 Me. 129 (1830). 'Owen V. Iglanor, 4 Coldw. 15 (1867) ; but not after deducting amount of a prior debt, Hunton v. Ingraham, 1 Strobh. 271 (T847). 'Perry v. Harrington, 2 Mete. 368 (1841). «Eay V. Faulkner, 73 111. 469 (1874). •Stevens v. Androscoggin Water Co., 62 Me. 498 (1874). '"Campbell v. Pettengill, 7 Me. 126 (1830) ; Andrews v. Baggs, Minor 173 (1828) ; Gallery v. Prindle, 14 Barb. 186 (1851). 256 ACCEPTANCE. acceptance has been performed and the acceptor is dead, his personal representatives will be liable on the acceptance.^ And if a bill is accepted conditionally, both the condition and the performance of it should be averred in the declara- tion.^ § 626. Partial Acceptance. — A partial acceptance to pay part of the amount for which a bill is drawn is sufl&cient by the mercantile law.^ But one who receives such an accept- ance should protest the bill for the balance not accepted.* An acceptance may be to pay part in money and part in bills.^ But where a bill is drawn payable in one sort of cur- rency and accepted payable in another, it is not valid as an absolute acceptance.* An acceptance, however, may be made payable in installments.' So, an acceptance changing the time for payment is good.' And where the drawee offers to pay a bill in a certain time, and the offer is communicated to the holder, it will bind the acceptor from the time he receives the notice that the holder has acquiesced in the offer.* A promise to see a bill " paid eventually " means within a reasonable time.^" An accept- 'Swansey v. Breck, 10 Ala. 533 (1846). "Byles 196 ; Chitty 841 ; 1 Daniel 466 ; 1 Parsons 301 ; Langston v. Corney, 4 Campb. 176 ; Swan v. Cox, 1 Marsh. 176 ; Ralli ■;;. Surell, Dow. & Ry. N. P. C. 83. 'Byles 197 ; Chitty 342 ; 1 Daniel 471 ; Wegerslosse v. Keene, 1 Stra. 214 ; Petit V. Benson, Comb. 452. '1 Daniel 471. 'Chitty 842; 1 Daniel 471 ; Petit v. Benson, Comb. 452. *Boehm v. Garcias, 1 Campb. 425. 'Kice V. Ragland, 10 Humph. 545 (1850). *Byles 197; Chitty 342; 1 Daniel 464; Paton v. Winter, 1 Taunt. 423; Walker v. Atwood, 11 Mod. 190 (although such acceptance without consent of prior parties might discharge them, Byles 304 n.) ; or to pay, if presented at a particular time, Clarke v. Gordon, 3 Rich. 311 (1882) ; or "according to contract dated 2ist Murch, 1843," Kellogg v. Lawrence, Hill & Den. 832 (1844). And in such case it is not necessary to aver presentment for pay- ment at such time, Clarke v. Gordon, supra. It seems to have been held in Price V. Shute, cited in Chitty 342, that an acceptor having changed the time of payment of a bill from January to March, was liable on such acceptance to a holder who changed the time of payment back to January and, on refusal to pay then, restored the acceptance to its original form payable in March. This case, if correctly reported, is questioned in Paton v. Winter, supra, and in Master v. Miller, 4 T. R. 820. »Wylie V. Brice, 70 N.'c. 422 (1874). "Brannin.i;. Henderson, 12 B. Mon. 61 (1851). PAETIAL ACCEPTANCE. 257 ance payable on the last day of grace means payable accord- ing to the terms of the bill and is a general acceptance.' On the other hand, an acceptance which misstates the time of the maturity of the bill, when the bill is expressly made pay- able at a given time, has been held not to be a varying acceptance, but repugnant to the body of the bill, and there- fore to be rejected, so far as it differs from the terms of the bill." An acceptance containing a condition that the bill be renewed up to a certain time is a partial acceptance only.* An acceptance may also be qualified as to the place of payment by making the bill payable at a particular place named in the acceptance.* Such a qualification will not affect the drawer's liability- to the payee, where the place named in the acceptance is the acceptor's residence.^ But, in general, where an acceptance is made payable at a place different from that named in the bill, this is a material de- parture from the tenor of the bill.® If, however, a bill is made payable at a place generally without naming any par- ticular address in such town, a general acceptance may be payable at a certain bank in the town and should be so made.'' And the California Code provides that such an acceptance shall not affect the rights of prior parties.* Where a blank acceptance is filled up payable at a particu- 'Kenner v. Creditors, 7 Mart. 540 (n. s. 1829). The bill in this case was payable sixty days after sight and accepted payable sixty-three days from the date of acceptance. So, an acceptance "to pav when due " is unquali- fied, Sylvester v. Staples, 44 Me. 496 (1858). 'Byles 197; Fanshawe v. Peet, 2 Hurlst. & N. 1 (1857). 'Eussell V. Phillips, 14 Q. B. 891 (.1850); Clarke v. Gordon, 3 Eich. 311 (1832). *Chitty 331; Rowe v. Young, 2 Bligh 301; 2 Brod. & B. 165; Sebag v. Abithol, 4 M. & S. 462 ; 1 Stark. 79 ; Gammon v. Schmoll, 5 Taunt. 344 ; 1 Marsh 80. * Myers v. Standart, 11 Ohio St. 29 (1860). 'Niagara District Bank v. Fairman Mfg. Co., 31 Barb. 403 (1860). 'Byles 196 n.; Chitty 331; 1 Daniel 471; 1 Edwards § 593; Mutford v. Walcot, 1 Ld. Eaym. 574 ; Troy City Bank v. Lauman, 19 N. Y. 477 (1859) ; Myers v. Standart, 11 Ohio St. 29 (1860). See, too, Niagara District Bank v. Fairman Mfg. Co., supra. A general acceptance of a bill which is drawn payable at a particular place is an acceptance to pay at that place, Alden v. Barbour, 3 Ind. 414 (1852). ^California (1880 1 Hittell's Codes & Stats. § 8195); Utah (1882 P. L. 60 i 74). So, by the proposed Civil Code of New York (? 1789). VOL. II. ^ 258 ACCEPTANCE. lar place, it is not an alteration of the acceptance which will discharge prior indorsers.' As regards the acceptor's liability, an acceptance payable at a particular place is a general one by the English statute, unless it is made payable there " only and not otherwise or elsewhere."^ This statute has not been generally enacted in the United States.' In the absence of such special acceptance it is not necessary to aver present- ment at the particular place named.* § 627. Foreign Statutes as to Conditional Acceptance. — Conditional acceptances are forbidden by statute in many foreign countries.^ Other foreign statutes provide that con- ditional acceptances, other than acceptances partial only as to amount, shall be equivalent to a refusal to accept the bill.* Others provide that where a bill is accepted conditionally without the holder's consent, the condition shall be void.'' But if the conditional acceptance is received, the holder takes the bill subject to it,* and is himself liable for damages to 'Todd V. Bank of Kentucky, 3 Bush 626 (1868); or at a particular time, Bogers v. Poston, 1 Mete. 643 (Ky. 1858). '1 and 2 Geo. IV. c. 78. And under this act an acceptance omitting the word only, and payable at a particular place and not elsewhere, is a special acceptance, Siggers v. Nichols, Q. B. 1839, 3 Jur. 34. See, also, as to this- act, Selby v. Eden, 3 Bing. 613; Fayle v. Bird, 6 B. & C. 531; S. C, 9 D. & Ky. 639; S. C, 2 C. & P. 303; Turner v. Hayden, 4 B. & C. 1 ; S. C, Ky. & Moo. 215. 'The Code of Virginia requires presentment to be made at the place named, if the bill is drawn or accepted payable there " only," Virginia (1873 Code 986 J 1) ; West Virginia (1879 1 R. S. c. 12 § 1). A bill payable at a place named may be accepted generally, Wolcott v. Van Santvoord, 17 Johns. 248 (1819). And where a note is made payable at a particular place, in a suit against the maker, it is not necessary to aver presentment there, Wild V. Renwards, 1 Campb. 425 «.; Wallace v. McConnell, 13 Pet. 136 (1839). *Feuton v. Goundry, 13 East 459; Lyon v. Sundius, 1 Campb. 423 (1808). But see Callaghan v. Aylett, 3 Taunt. 397 ; Garnett v. Woodcock, 1 Stark. 475. ^France (1807 Code Napoleon Art. 124) ; Guatemala (1774 Ordinances of Bilbao § 23) ; Hayti (1826 Code Napoleon 122) ; Italy (1865 Code Com. Art. 210); Nicaragua (1869 Code Com. Art. 256) ; iJw«m (1862 Exch. Law Art. ' 585) ; Uruguay (1865 Code Com. Art. 838) ; Veaemela (1862 Code Com. Art. 21). * Austria (1850 Exch. Law Art. 22); Germany (1848 Exch. Law Art. 22); Sweden (1851 Exch. Law g 24). 'Denmark (1825 Exch. Law § 25) ; Holland (1838 Exch. Law Art. 120) ; Portugal (1833 Code Com. Art. 341) ; SwUeerland (Exch. Laws, 1859 Berne, 1863 Basle, i 22). ^Argentine Republic (1862 Code Com. Art. 837). FOEEIGIT STATUTES. 259 any party injured.^ If, the holde.r consents to receive the conditional acceptance, he is required in some States to pro- test the bill on pain of losing his right of redress against the drawer and prior indorsers.^ If a conditional acceptance is received, the acceptor is bound by many foreign statutes- according to its terms.' In some foreign countries an acceptance for part payment of the amount of the bill is allo-wed by statute.* Many States allow this while prohibiting other conditional accept- ances, but require in such case that the bill be protested for the balance over and above the amount accepted.* And in Chili such an acceptance must be at least for half of the amount drawn for and the bill protested for the balance.* In Holland and Portugal if an acceptance be offered for part of the amount of the bill, it must be received by the holder and the bill protested for the balance.'' In other States it is provided by statute that such partial acceptances may be refused.* And in the Argentine Republic the statute ex- pressly permits the holder to refuse any acceptance qualified as to time, place or manner of payment.^ ^Uruguay (1865 Code Com. Art. 855). 'Denmark (1825 Exch. Law | 25) ; Holland (1838 Exch. Law Art. 120) ; Portugal (1833 Code Com. Art. 341) ; Svntzerland (Exch. Laws, 1859 Berne, 1863 Basle, § 22). 'Austria (1850 Exch. Law Art. 22) ; Germany (1848 Exch. Law Art. 22) ; Lower Canada (1867 Civ. Code Art. 2293) ; Nicaragua (1869 Code Com. Art. 256) ; Swe4en (1851 Exch. Law § 24) ; Switzerland (Exch. Laws, 1859 Berne, 1863 Basle, i 22). *English Bills of Exch. Act 1882 ? 19; Austria (1850 Exch. Law Art. 22) ; Germany (1848 Exch. Law Art. 22) ; Holland (1838 Exch. Law Art. 120) ; Portugal (1833 Code Com. Art. 341) ; Sweden (1851 Exch. Law § 24) ; Swit- zerland (Exch. Laws, 1859 Ber.ne, 1863 Basle, § 22); Uruguay (1865 Code Com. Art. 838). ^Argentine Republic (1862 Code Com. Art. 820) ; Bolivia (1884 Code Com. Art. 391) ; Brazil (1850 Code Com. Art. 375) ; Colombia (1853 Code Com. Art. 416) ; Costa Rica (1863 Code Com. Art. 406) ; Denmark (1825 Exch. Law ? 25) ; France (1807 Code Napoleon Art. 124) ; Hayti (1826 Code Napoleon 122) ; Hungary (1861 Exch. Law § 86) ; Italy (1865 Code Com. Art. 210) ; Mexico (1854 Code Com. Art. 353); Peru (1853 Code Com. Art. 417); Russia (1862 Exch. Law Art. 585) ; Salvador (1855 Code Com. Art. 413) ; Spain (1829 Code Com. Art. 459) ; Venezuela (1862 Code Com. Art. 28). 'Chili (1865 Code Com. Art. 671). ''Holland (1838 Exch. Law Art. 120) ; Portugal (1833 Code Com. Art. 341). 'Argentine Republic (1862 Code Com. Art. 820) ; Hungary (1861 Exch. Law i 86) ; Uruguay (1865 Code Com. Art. 838). 'Argentine Republic (1862 Code Com. Art. 820). 260 ACCEPTANCE. n. acceptor's liability. 628. Acceptor— Principal Debtor. 629. Acceptance — Admits Drawer's Signature. 630. Genuineness of Bill. 681. Drawer's Capacity and Authority. 632. Indorsements. 633. Implies Consideration. 634. Want of Consideration — Accommodation. 635. Construction and Effect. 636. Payable at a Banker's. § 628. Principal Debtor. — The acceptance of a bill of ex- change is an engagement to pay it and renders the acceptor the principal debtor, the other parties to the bill being sureties for its payment.' The acceptor is not, however, of necessity primarily liable in the origin of the bill of exchange as debtor to the drawer." As to other parties than the drawer he is lia- ble as the principal debtor, although the consideration for his acceptance fail.^ Thus, where he accepts the bill for the drawer's accommodation and is merely a surety as to him, he is still the principal debtor as to subsequent holders, al- though they may have taken the acceptance with full knowl- edge of its accommodation character.* Where he accepts for ^Byles 199; Chitty 343; 1 Daniel 483; 1 Edwards g 597; Jarvis v. Wilson, 46 Conn. 90 (1878) ; Hamilton v. Catchings, 58 Miss. 92 (1880) ; Shreveport V. Gooch, 15 La. An. 474 (1860) ; Heylyn v. Adamson, 2 Burr. 674; Ding- wall V. Dunster, Dougl. 249; Smith v. Knox, 3 Esp. 47 ; Clark v. Devlin, 3 Bos. & P. 366; Pownall v. Ferrand, 6 B. & C. 442; 9 Dowl. & Ry 603 ; Phil- pot V. Bryant, 4 Bing. 720 ; 1 Moo. & P. 754 ; 3 C. & P. 244 ; Ex parte Young, 8 Ves. & B. 40. So, Fentum v. Pocock, 1 Marsh. 16, 5 Taunt. 192, and Yal- lop V. Ebers, 1 B. & Ad. 703, both overruling Laxton v. Peat, 2 Campb. 445, where Lord Ellenborough had held a contrary doctrine. And as principal debtor he is not discharged by want of due protest or notice of protest. Ful- ler V. Leonard, 27 La. An. 635 (1875). « Chitty 343 ; 1 Edwards ? 598 ; Bishop v. Young, 2 Bos. & P. 83 ; Priddy v. Henbrey, 1 B. & C. 679; Rowe v. Young, 2 Bligh 391; Turner v. Browder, 5 Bush 216 (1868). 'Marsh v. Low, 55 Ind. 271 (1876). ♦Byle8l99; Chitty 343; 1 Edwards ? 597; jBa; parte Rayswicke, 2 P. Wms. 89; Ex parte Mathews, 6 Ves. 283; Ex parte Rusliforth, 10 ft. 409; Ex parte Marshal, 1 Atk. 129; In re Babcock, 3 Story 399 (1844) ; Byers v. Franldin Coal Co., 106 Mass. 131 (1870) ; First Nat. Bank v Morris, 1 Hun 680 (1874) ; Anderson v. Anderson, 4 Dana 852 (1836). In such case an accommodation acceptor may in Texas require the holder to sue the drawer of the bill at the first term. Van Alstyne v. Sorley, 32 Tex. 518 (1870). And in Michigan, he is in such case only to be regarded as the principal debtor so far as respects the form of action, Canadian Bank v. Coumbe, 47 Mich. 358 (1882). PRINCIPAL DEBTOE. 261 sufficient consideration, he is principal as to the drawer also and liable to pay the drawer, if he has taken up the bill.' But on an accommodation acceptance he is, of course, not liable to the party accommodated, unless he has since been put in funds to meet the bill.^ The accommodation acceptor, as surety, has a right of action against the drawer, as prin- cipal debtor, for his indemnity after he has paid the bill, but not until then.^ If one who has agreed to accept a bill for the accommodation of another refuses to do so, the damages for which he becomes liable will be measured by the incon- venience and loss to the drawer, while the bill is still in his hands, and not by the amount for which it was drawn.* In all cases of accommodation acceptance the law implies a con- tract of indemnity on the drawer's part.^ But no contract to indemnify the acceptor against costs of action is implied in an acceptance, where bills are drawn against goods purchased and shipped and are accepted in ignorance on the acceptor's part of the balance then actually due to him from the drawer.* But the acceptor must either pay the bill or discharge the drawer from his liability on it, before he can charge the amount of the bill in an account against the drawer.' The mere acceptance is not itself sufficient to found an action against the drawer.^ 'Sinomonds v. Parminter, 1 Wils. 185. And this is true of an acceptor without funds, who had accepted the bill of the drawer under an agreement made with a third person, £x parte Marshal, 1 Atk. 131. But before the drawer can recover he must prove that he was obliged to pay the bill, Quinn v. Hanley, 5 Beadw. 51 (1879). 2 Darnell v. Williams, 2 Stark. 145; Parkers. Lewis, 39 Tex. 394 (1873). 'DeBarry v. Withers, 44 Penna. St. 356 (1863) ; Porter v. Sandidge, 32 La. An. 449 (1880). *Il8ley V. Jones, 12 Gray 260 (1858). spomeroy v. Tanner, 70 N. Y. 647 (1877) ; Griffith v. Read, 21 Wend. 502 (1839). And this implied contract extends to a joint drawer signing as a surety and known by the acceptor to be such, Suydam v. Westfall, 2 Denio 205 (1845) ; Story on Bills ^ 420. Although the contrary was held in the case of a joint drawer signing expressly as " surety," Griffith v. Read, supra. But such liability is not provable as a debt in bankruptcy nor discharged by the discharge of the bankrupt drawer. Young v. Hockly, 3 Wils. 346. ^Bagnall v. Andrews, 7 Bing. 217. 'Braxton v. Willing, 4 Call 288 (1795). 'Planters' Bank v. Douglass, 2 Head. 699 (1859). And payment by the ac- ceptor's administrators after action begun by them against the drawer will not support a recovery in such action, Suydam v. Combs, 3 Green 133 (1835). 262 ACCEPTANCE. Where a bill is drawn against funds in the hands of an agent and accepted by him, it amounts to an assignment of the fund and will not be revoked by the subsequent death of the drawer.^ But an order payable out of the drawer's salary and accepted on condition that the drawer's employ- ment by the acceptor continue and the order be not revoked, is not an assignment of such salary.^ § 629. Acceptance Admits Signature of Drawer. — The ac- ceptance of a bill implies in general an admission by the drawee of the drawer's signature.^ This is expressly pro- vided by the code in force in California and Dakota.* So, ^here the acceptor has innocently paid a forged bill to an innocent holder for value, he cannot recover the amount paid.® A forgery, it has been held, cannot be ratified;® but the acceptor may be estopped from setting up the forgery of his signature by his own admission and payment of similar ac- ceptances.^ The maker of a note, who forges the payee's 'Cutts V. Perkins, 12 Mass. 206 (1815) ; Debesse v. Napier, 1 McCord 106 (1821). See, too, Peyton v. Hallett, 1 Cai. 363 (1803), obiter. 'Shaver v. Western Union Tel. Co., 57 N. Y. 459 ^1874). 'Byles 202; 1 Daniel 485; 1 Edwards ? 600; Porthouse v. Parker, 1 Campb. 82 ; Prince v. Brunatte, 1 Bing. N. C. 434 ; Phillips v. Im Thurn, L. E. 1 C. P. 463;, Wilkinson v. Lutwidge, Stra. 648; Jenys v. Fawler, lb. 946; HofTman v. Bank of Milwaukee, 12 Wall. 181 (1870) ; Hortsman v. Henshaw, 11 How. 177 (1850) ; Bank of the United States v. Bank of the State of Ga., 10 Wheat. 333 (1825) ; Goddard v. Merchants' Bank, 4 N. Y. 147 (1850) ; Canal Bank v. Bank of Albany, 1 Hill 287 (1841) ; Bank of Commerce v. Union Bank, 3 N. Y. 230 (1850) ; Levy o). Bank of the United States, 1 Binn. 27 (1801) ; S. C, 4 Call. 234 (1802) ; Peoria, &c., R. B. Co. v. Neill, 16 111. 269 ,(1855) ; Ellis v. Ohio Life Ins., &c., Co., 4 Ohio St. 6-28 (1855) ; Whitney v. Bunnell, 8 La. An. 429 (1853) ; Price v. Neal, 3 Burr. 1354 ; Smith v. Chester, 1 T. E. 654; Wilkinson v. Johnson, 3 B. & C. 428; Sanderson v. Collmann, 4 Man. & G. 209; Nat. Park Bank v. Ninth Nat. Bank, 46 N. Y. 77 (1871) ; Williams v. Drexel, 14 Md. 566 (1859) ; Beeman v. Duck, 11 M. & W. 251. So, English Bills Exch. Act 1882, g 54. But see Wilkinson v. Lutwidge, supra, where such admission was held not to be conclusive on the acceptor. '■California (1880 1 Hittell's Codes & Stats, g 8199); Dakota (1877 Rev. C. ^ 1901) ; Utah (1882 L. 61 i 78). * Price V. Neal, 3 Burr. 1354. And this is true likewise of a bill put into cir- culation by the drawer with the payee's indorsement forged, Hortsman v. Henshaw, 11 How. 177 (1850), and the bankruptcy of the drawer in such case will not aflfect the rights of an innocent holder who has received pay- ment from the acceptor. But a bank which pays a forged check drawn upon it to one who was guilty of negligence in taking the check without customary inquiry, may recover the money paid by it, Ellis v. Ohio Life Ins. Co., 4 Ohio St. 628 (1855). 'Byles 203; Brook v. Hook, L. R. 6 Exch. 89. •Byles 203; Chitty 392, 347; Leach v. Buchanan, 4 Esp. 226. So, too, an ADMITS SiaNATUKE AND GENUINENESS OF BILL. 263 signature and circulates the note in that condition, is estopped from questioning the genuineness of such indorsement.^ So, where the maker of a bank note receives it without dis- covering fraudulent alterations until nineteen days after crediting the note to an innocent holder and depositor, it cannot then set up the forgery and recover the amount cred- ited and paid.^ But the payment of one forged acceptance raises in gen- eral no estoppel against setting up forgery in defense against other pretended acceptances.' Nor will one, whose name has been forged to an acceptance, become liable to pay it by merely acknowledging his liability and promising to pay if the forger did not, in order to obtain his discharge from arrest on account of the forgery.* § 630. Acceptance Admits Genuineness of Bill — When. — Although an acceptance admits the genuineness of the drawer's signature, it is no admission that the body of the bill is genuine and unaltered, since the reason which holds the acceptor fairly responsible for a knowledge of the drawer's signature cannot apply to those parts of the bill which are often, if not usually, in other handwriting.^ But if the bill was altered by the drawer before its accept- ance, and before it had been negotiated, the acceptor would be held liable to a bona fide holder for value, since the drawer would be liable in such case.* The acceptor would, however, admission of an indorsement may estop one from alleging it to be a forgery, Cooper V. LeBlanc, Stra. 1051. ' Beeman v. Duck, 11 M. & W. 251 ; Meacher v. Fort, 3 Hill 227 (1837 So. Car.) The drawer is liable in such case to the acceptor of a bill who is obliged to pay it to an innocent holder, Hortsman v. Henshaw, 11 How. 177 (1850). 'Bank of the United States v. Bank of Georgia, 10 Wheat. 333 (1825). 'Byles 203; Morris v. Bethell, L. K. 5 C. P. 47. ^Ex parte Edwards, 10 L. J. Bank. (n. s.) 62. s White V. Continental Nat. Bank, 64 N. Y. 316 ; Espy v. Bank of Cincin- nati, 18 Wall. 604 (1873). So, if the amount be raised by a subsequent holder and the check afterward paid by the drawee, he cannot recover from the drawer, Hall v. Fuller, 5 B. & C. 750. •Ward V. Allen, 2 Mete. 53 (1840). So, where the amount has been fraudulently raised by the drawer's agent before negotiation, and the drawer has been guilty of negligence by which the alteration became possible. Young V. Grote, 4 Bing. 253; S. C, 12 Moore 484. 264 ACCEPTANCE. have no remedy against the drawer, if he accepted and was obliged to pay a bill which was genuine but had been raised in amount after its negotiation by the drawer and without negligence on his part.^ So, where authority was given to draw for three-fourths of a bill of lading to be attached, and the bill of lading was fraudulently made for an excessive amount and a bill of exchange drawn accordingly and ac- cepted, the acceptor was not allowed to set up the fraud in defense against one who had taken the bill for value on the faith of the acceptance.* In these Cases the acceptor's lia- bility arose from negligence or conduct on his part raising an estoppel against him. § 631. Acceptance Admits Drawer's Capacity and Author- ity. — The acceptor admits by his acceptance the capacity and authority of the drawer. Thus, if the bill be drawn by an agent, his authority to act for the drawer is admitted by the acceptance.' But this rule has been restricted in Louisiana so as to operate only in favor of a bona fide holder for value before maturity.* So, it seems that an acceptance admits the authority of one who draws a bill as executor.* In like manner, it admits the existence of a firm in whose name a bill is drawn. ^ It also admits the drawer's legal capacity at the time of drawing the bill ;'' as well as that of the payee.* Thus, the acceptor cannot avail himself of the infancy of the payee,* or of the fact that the drawer is a married woman.'" Nor can he set up that the drawer and payee of a bill of exchange 'Chitty 319, 346; 1 Edwards ? 600; Bulkeleyi). Butler, 2 B. & C. 434; 3 D. &Ry. 625; Canal Bank v. Bank of Albany, 1 Hill 287 (1841). "Young V. Lehman, 63 Ala. 519 (1879). '1 Daniel 487 ; Eobinson •;;. Yarrow, 7 Taunt. 455 ; S. C, 1 Moore 150. So, English Bills Exch. Act 1882 § 54. *Agnel V. Ellis, 1 McGloin 57. 'Aspinall v. Wake, 10 Bing. 51 (1833). •Ba«s V. Clive, 4 M. & S. 13. ' Byles 202 ; 1 Daniel 485 ; 1 Edwards g 600. So, too, proposed Civil Code of New York (i 1793). »1 Daniel 486. So, English Bills Exch. Act ? 54. 'Taylor v. Croker, 4 Esp. 187; Jones v. Darch, 4 Price 300. "Smith V. Marsack, 18 L. J. C. P. 68; 8. C, 6 C. B. 486. ADMISSIONS AS TO INDOKSEE. 265 ■was a corporation and incapable of indorsing the bill;' or that the payee was a bankrupt and so incapable of indors- ing.*^ Nor can he plead that the bill, which he accepted, was drawn and indorsed in the name of a deceased person.'' § 632. Admissions as to Indorser. — An acceptance does not, however, in general admit the signature of the indorser.* Although if the acceptor knowingly accepts a bill with a forged indorsement, he will be estopped from afterward deny- ing its sufficiency.^ In other cases, even where the bill is payable to the order of the drawer, his indorsement is not admitted by the acceptance to be genuine or valid, although we have seen that both circumstances are admitted as to his signature as drawer.^ If the indorser purports to be an existing person, his handwriting is not admitted by the ac- ceptance.' But where a bill is drawn in a fictitious name, payable to the drawer's own order, an acceptance of it is an agreement to pay the bill upon its indorsement in the writing of, and by the person signing as, drawer." In like manner, an agent's authority to indorse a bill is not admitted by the acceptor, although indorsed before acceptance ;' and although payable to the drawer's order and purporting to be indorsed by the same person who signed it as the drawer's agent.'" 'Halifax v. Lyle, 19 L. J. Exch. 197; S. C, 3 Exch. 446. "Drayton v. Dale, 2 B. & C. 293; S. C, 3 D. & Ry. 534; Braithwaite v. Gardiner, 8 Q. B. 373. Even though the bankruptcy had vested the bank- rupt's property in his assignee, Pitt v. Chappelow, 8 M. & W. 616. 'Ashpitle V. Bryan, 32 L. J. Q. B. 91; 3 Best & S. 474, affirmed in error, 33 L. J. Q. B. 328. *Byle8 203 ; 1 Daniel, 488 ; 1 Edwards ? 600 ; Smith v. Chester, 1 T. K. 654 ; Williams v. Drexel, 14 Md. 566 (1859) ; Canal Bank v. Bank of Albany, 1 Hill 287 (1841) ; Holt v. Ross, 54 N. Y. 472 (1873), affirming 59 Barb. 554; Hortsman v. Henshaw, 11 How. 177 (1850). Neither its genuineness nor its validity is admitted. Tucker v. Robarts, 16 Q. B. 560. ^Beeman v. Duck, 11 M. & W. 251. * Garland v. Jacorab, L. R.* 8 Exch. 216. But see Burgess v. Northern Bank, 4 Bush 600 (1868), where the contrary was held of such an indorse- ment forged by one member of the accepting firm in fraud of his partners and without their knowledge. So, English Bills Exch. Act § 54. 'Smith V. Chester, 1 T. R. 654. 'Cooper V. Meyer, 10 B. & C. 468. •Robinson v. Yarrow, 7 Taunt. 455 ; Prescott v. Plinn, 9 Bing. 19. '•Robinson v. Yarrow, supra. It was remarked in this case as worthy of consideration that the date of the indorsement did not appear. 266 ACCEPTANCE. § 633. Consideration — Presumptions — Defense. — Every acceptance raises the presumption of funds in the drawee's hands applicable to the payment of the bill;^ especially if the bill request the drawee to pay "if in funds."" But this presumption is only conclusive in favor of a bona fide holder for value, and it may be rebutted between the acceptor and drawer.^ And so far as the acceptance is for the payee's accommodation, the acceptor will not be liable to him.* In like manner, a failure of the consideration between the drawer and acceptor will furnish the acceptor with no defense against a bona fide holder for value ;^ as in the case of the acceptance of a bill drawn against a fraudulent bill of lading which was of little or no value.' So, too, original want of considera- tion between the drawer and acceptor is no defense against a holder for value without notice.'' Nor can such defense be raised against one who purchased the bill after its acceptance, but before maturity, from one to whom it had been indorsed before acceptance ; * nor even against the payee of a bill accepted for the accommodation of the drawer.^ A debt owing from the acceptor to the drawer of a bill is sufficient consideration for an acceptance.^" And so is a debt owing from the acceptor to the payee." So, if an accommo- ' Chitty 344 ; 1 Daniel 484 ; 1 Edwards ? 599 ; 1 Parsons 323 ; Vere v. Lewis, 3 T. R. 183 ; Kendall v. Galvin, 15 Me. 131 (1888) ; Gillilan v. Myers, 81 111. 525 (1863) ; Byrne v. Schwing, 6 B. Mon. 199 (1845) ; Eastin v. Succession of Osborn, 26 La. An. 153 (1874) ; Jordan v. Tarkington, 4 Dev. 357 (1833) ; Byrd V. Bertrand, 7 Ark. 327 (1847) ; Hortsman v. Henshaw, 11 How. 177 (1850) ; Eaborg v. Peyton, 2 Wheat. 385 (1817) ; Kemble v. Lull, 3 McLean 272 (1843); Jarvis «. Wilson, 46 Conn. 90 (1878); Trego v. Lowrey, 8 Neb. 238 (1879). But this presumption is confined to the acceptance of mercan- tile bills and does not apply to a mere letter of request, Gillilan v. Myers, supra. ^Kemble v. Lull, 3 McLean 272 (1843). 'Hidden v. Waldo, 55 N. Y. 294 (1873). 'Darnell v. Williams, 2 Stark. 145. * Arden v. Watkins, 3 East 327. ^Kelly V. Lynch, 22 Oal. 661 (1868). 'United States v. Bank of Metropolis, 15 Pet. 377 (1841) ; Boggs v. Lancas- ter Bank, 7 Watts & S. 331 (1844) ; Clement •». Leverett, 12 N. H. 317 (1841). * Bridge v. Livingston, 11 Iowa 57 (1860). 'Nowak V. Excelsior Stone Co., 78 111. 307 (1875). '"Fisher v. Beckwith, 19 Vt. 31 (1846). "Walker v. Sherman, 11 Mete. 170 (1846). "WANT OF CONSIDERATION. 267 dation acceptance is given to enable the drawer to pay a debt owing by him to A., it will be binding on the acceptor, although transferred to A. in consideration of such debt and further advances.* That an acceptance was given for the drawer's accommodation is no defense on the acceptor's part j'^ •even against the payee, as we have seen, or other party know- ing the fact.* And such an acceptance, taken by a holder for value with full knowledge of its character, may be held by him as security for subsequent balances, if not withdrawn before.* § 634. Want of Consideration — Accommodation. — Where the drawer of a bill of exchange pays it upon its dishonor by the acceptor, he may bring an action upon it in the payee's name against the acceptor.^ On the other hand, if the presumption of funds in the acceptor's hands is rebutted, a presumption is raised of a promise on the drawer's part to put him in funds.^ And if a bill is drawn upon a letter of ■credit to enable the drawer to buy goods, this will overcome the presumption of funds in the acceptor's hands ; and the acceptor, knowing this fact, cannot hold a joint-drawer who has signed the bill for the accommodation of his co-drawer.^ If a bill is drawn against merchandise in the acceptor's hands, notwithstanding the presumption of funds made against the acceptor in favor of a holder for value, there is an implied contract on the drawer's part to indemnify the 1 Leach v. Lewis, 1 MacArth. 112 (1873). ^Meggett V. Baum, 57 Miss. 22 (1879); Hamilton v. Catchings, 58 lb. 92 <1880). 'Chitty 344; Smith v. Knox, 3 Esp. 46; Grant v. Elliott, 7 Wend. 227 ^1831) ; Israel v. Ayer, 2 So. Car. 344 (1870). So, if the payee took the bill on the faith of the acceptance, though he knew the acceptor had no funds of the drawer, Townsley v. Sumrall, 2 Pet. 183 (1829). And taking a eogno- •vit from the drawer will not discharge an accommodation acceptor or an acceptor for value, Fentum v. Pocock, 1 Marsh. 16. *Atwood V. Crowdie, 1 Stark. 483 ; Woodroff v. Hayne, 1 C. & P. 600. ^Davis V. McConnell, 3 McLean 391 (1844). And see Gage v. Kendall, 15 Wend. 640. 'Thurman v. Van Brunt, 19 Barb. 409 (1853). But if drawing and accept- ance are both for the payee's accommodation under an agreement that tne acceptor shall look to the payee for indemnity, the presumption will be rebutted, lb. 'Turner v. Browder, 5 Bush 216 (.1868). 268 ACCEPTANCE. acceptor, upon which he will be liable to the acceptor if the goods received prove insufficient to cover the bill.^ But if the acceptor puts the bill again into circulation, after he has paid it, he cannot set up such payment in his own defense against a holder for value.^ He may, however, set up tkat the acceptance was given to be used for a partic- ular purpose, which has been satisfied, where the holder has received it knowingly for such purpose and afterward re- tained it and used it for other purposes.^ So, if an accom- modation acceptance is transferred to the drawer's bankers with knowledge of its character, they can only hold the acceptor for the amount of their balance against the drawer at that time, and not, on his subsequent bankruptcy for later balances.* And where, in such case, the bankers themselves become bankrupt and are indebted to the drawer of the bill, their assignee cannot recover upon the acceptance,^ So, if an accommodation acceptance is transferred to a creditor of the drawer to secure a debt which is afterwards paid, and is then retained by such creditor for a prior balance of account due him and is surrendered to the drawer on his promise to to settle such account, the drawei' cannot thereupon recover against the acceptor.® And it is always a good defense pro tantq against a party accommodated, that the acceptance was given in whole or part for his accommodation.' "Where a bill of exchange is drawn against goods in an annexed bill of lading, the drawee will not be entitled to the goods, and cannot dispose of them, until he has accepted 'Hidden v. Waldo, 55 N. Y. 294 (1873) ; Blackmar «. Thomas, 28 lb. 67 (1863). But to recover against the accommodated drawer, he must first prove the insufficiency of the goods sold, that being his primary fund for re-imbursement, Gihon v. Stanton, 9 N. Y. 476 (1854). 'Hinton v. Bank of Columbus, 9 Port. 463 (1839). 'Chitty 345 ; Cartwright v. Williams, 2 Stark. 840 ; Fletcher v. Heath, 7 B. & C 517; S. C, 1 Man. & Ky. 335; Bleaden «. Charles, 7 Bing. 246. * Jones V. Hibbert, 2 Stark. 304; Chitty 345. See, too, Smith v. De Witts, 6 Dowl. & Ry. 120; By. & M. 212; 5 Bing. 13; Pease v. Hirst, 10 B. & C. 122: 5M. &Ry. 88. "In re Sikes, 4 L. J. Ch. 195. "Hallett V. Dewes, 1 Moore & P. 79. 'Chitty 344; Story on Bills i 187; Sparrow v. Chisman, 9 B. & 0. 241; 8, C, 4 Man. & Ey. 206 ; Darnell v. Williams, 2 Stark. 166. CONSTRUCTION AND EFFECT. 269 the bill.^ So, if the drawer sends a check to the acceptor in payment for a promised renewal of the acceptance, the ac- ceptor cannot take the check without renewing the bill.'' § 635. Acceptance — Construction and Effect. — An accept- ance is, in general, to be construed most strongly against the acceptor.* And he will be liable according to the terms of the bill, e. g. for attorneys' fees included in the face of the bill.* But his liability will not extend beyond the terms of the bill, e. g. for re-exchange;^ or costs of action brought against other parties.^ It is sufficient if one set of a bill of exchange be accepted.'' But if he accepts two different sets of one bill, he will be liable upon both of them in the hands of a bona fide holder for value before maturity.* A bill cannot be indorsed partly to one person and partly to .another so as to subject the acceptor to several actions by different indorsees. But he may be liable for part, paid by an indorser, to him, and for the balance to the holder of the bill.' If an acceptance is written upon blank paper, no action will lie against the acceptor until the blank is filled up.^" And if the purchaser of an acceptance knows that it was given in blank and afterwards filled up, this will put him upon inquiry as to the circumstances." But an acceptor cannot set up against a bona fide holder for value that the 'Byles 204 ; Shepherd v. Harrison, L. R. 5 H. L. 116 ; S. C, 40 L. J. Q. B. 149. 'Torrance v. Bank of British North America, L. R. 4 P. C. 246. 'Sylvester v. Staples, 44 Me. 496. ♦Smith V. Muncie Nat. Bank. 29 Ind. 158 (1867). 'Chitty 343; Napier v. Schneider, 12 East 420; Dawson v. Morgan, 9 B. & C. 620. 'Dawson v. Morgan, supra ; Stovin v. Taylor, 1 Nev. & Man. 250. 'Story, J., in Downes v. Church, 13 Pet. 205 (1839). 'Byles 198 ; 1 Daniel 445 ; Story on Bills ? 226 ; Davidson v. Robertson, 3 Dow. P. C. 228; Holdsworth v. Hunter, 10 B. & C. 450. So, Bank of Pitts- burgh V. Neal, 22 How. 110 (1859), notwithstanding the words on the bill "second of exchange, first unpaid," and notwithstanding that the accept- ances be given on blanks which are fraudulently filled in difierent manner. "Chitty 343; Pownall v. Ferrand, 6 B. & 0. 439; S. C, Ry. & Mood. 407; 9 D. & R. 603. "Greenhow v. Boyle, 7 Blackf. 56. "Byles 191; Hatch v. Searles, 2 Sm. & G. 147. 270 ACCEPTANCE. acceptance was induced by fraud or deceit, or given after the drawer's death in ignorance of that fact.^ § 636. Acceptance Payable at Bankers'. — An acceptance may be made payable at a banking house, which amounts to an authority to the bankers to pay it out of the acceptor's funds in their hands.^ And the banker is in such case liable to the acceptor, if he is in funds and fails to pay the bill ;* or if, on the other hand, he pays such acceptance on a forged indorsement.* He is not, however, liable to the holder of the acceptance, unless he has assented to its being made payable at his banking house.^ Although it has been held that such assent is to be implied from the fact of his having funds.* Where an acceptance is made payable at a particular place, the acceptor is the principal debtor and is liable to be sued as such without demand of payment at the place named. He may, however, show in his defense that he was ready to pay at that place.' 'Chitty 344. But against a holder with notice such defense is admisiible. New York & 0. Bank v. Gibson, 5 Duer 574 (1856). =Byles 198; Keymer v. Laurie, 18 L. J. Q. B. 218. 'Byles 188; Whitaker v. The Bapk of England, 6 C. & P. 700, and 1 C. M. & R. 744; S. C, 1 Gale 54; Rolin v. Stewart, 14 C. B. 595. *Kobarts v. Tucker, 16 Q. B. 560. 'Byles 188; Williams v. Everett, 14 East 582; Yates v. Bell, 3 B. & Aid. 643 ; Wedlake v. Hurley. 1 C. & J. 83. 'Byles 189; De Bernales v. Fuller, 14 East 590; S. 0., 2 Campb. 426. 'Green v. Goings, 7 Barb. 652 (1850). REVOCATION OF ACCEPTANCE. 271 III. REVOCATION AND DISCHARGE. 637. Revocation of Acceptance. 638. Cancellation of Acceptance. 639. Discharge by Payment — Release. 640. Waiver. 641. Foreign Statutes. § 637. Revocation of Acceptance. — An acceptance may be revoked at any time before its delivery.^ So, an agreement to accept a draft may be revoked before it is actually pre- sented for acceptance.'' The California Code permits revo- cation of an acceptance any time before the acceptance is delivered to the holder and transferred by him with the acceptor's consent to a purchaser for value taking the bill on the faith of the acceptance.^ But an acceptance is irre- vocable when once complete.* And where a letter accepting a bill has been communicated to the holder of it, the accept- ance cannot afterward be revoked by a verbal message to the person for whose account it was given,^ Where, however, an offer to accept has been refused by the holder, it is still incomplete and may be altered of revoked notwithstanding the holder's subsequent willingness to take it as originally offered.* But an acceptance is not complete and irrevocable by mere writing without delivery.'' 'Byles 198; Chitty 347; 1 Daniel 451; 1 Edwards ? 601 ; 1 Pardessus 401; Cox V. Troy, 5 B. & Aid. 474; S. C, 1 Dowl. & Ry. 38; Wilkinson v. John- son, 5 Dowl. & Ry. 408; S. C, 3 B. & C. 428; Trimmer v. Oddy, 6 East 200; Ralli V. Dennistoun, 6 Exch. 483; Chapman v. Cottrell, 34 L. J. (n. s.) 186. Although the agreement to accept and the revocation are by telegrams to the drawer, who fraudulently suppressed the latter in obtaining a discount on the faith of the former, First Nat. Bank ■;;. Clark, 61 Md. 401. ' Ilsley V. Jones, 12 Gray 260 (1858), where the revocation was by letter to the drawer. "California (1880 1 Hittell's Codes & Stats. ? 8198) ; Dakota (1877 Rev. C. 1 1900) ; Utah (1882 L. 61 § 77). So, by the proposed Civil Code of Nmo York {1 1792). *Byles 198; Chitty 34Y; 1 Daniel 452; Thornton v. Dick, 4 Esp. 270; An- NOIT-NEGOTIABLE INSTRUMENTS. 297 a subsequent surrender or release by an infant payee on receiving satisfaction is a good defense, if the satisfaction and release were made in good faith.^ Such defenses are admis- sible even against a bona fide holder of non-negotiable paper for value and before maturity.^ Thus, if such paper is pledged by a blank indorsement, even a bona fide holder will take it afterward subject to the pledgor's riglits.^ And an accom- modation maker may set up want of consideration as a de- fense against a bona fide holder of such paper who purchased it for value before maturity.* But a payment by the maker on account of a non-negotiable note, made after notice of its transfer, will not avail him, although made in pursuance of a prior agreement that a debt of the payee to a third person should be paid by the maker and credited on his note, such agreement not being binding on the maker for want of con- sideration/ Notes given for the purchase of patent rights, by force of the statute in some States, must express that fact on their face, and their transfer with that expressed is subject to equities, and knowingly transferring or purchasing such paper without such expression is a misdemeanor.^ The holder's knowledge may be proved by the maker, and he takes in such case subject to defenses, although the words are omitted.^ And in Wisconsin there are similar provisions as to certain notes " given in payment for a policy of insur- ance."* 119 (1849). In like manner, a mortgage collateral to the note may be de- feated by an attachment and sale of the mortgaged premises under a gar- nishee process against the payee of the note before notice of its assignment, Sharts v. Await, 73 Ind. 304 (1881). 'Willis V. Twombly, 13 Mass. 204 (1816). 'Bank v. Bynum, 84 N. C. 24 (1881). 'Cowdrey v. Vandenburgh, 11 Otto 572 (1879). 'Wetter v. Kiley, 95 Penna. St. 461 (1880). ^Fay V. Jones, 18 Barb. 340 (1854). "■Michigan (1871 1 C. L. 519 2? 1565, 1566) ; Nebraska (1881 C. S. 372 ? 4) ; New York (1882 K. S. 2248-9 ; 1877 P. L. p. 68) ; Ohio (1869 P. L. p. 93 ; 1880 E. S. I 3178) ; Pennsylvania (1872 Brightly's Purd. Dig. 1173 II 3, 4) ; Vermont (1880 E. L. II 4325, 2008). 'Hunter v. Henninger, 93 Penna. St. 373 (1880). ^Wisconsin (1878 E. S. U 1044-5). 298 TRANSFER. § 658. Non-negotiable Instruments — Liability of Indorser. — The indorser of a non-negotiable note or bill is liable to his immediate indorsee, as in the case of negotiable paper .^ The indorsee may sue the indorser in his own name,^ even though the indorsement was in blank and after maturity.' But in England, since the present stamp act, the indorse- ment of a non-negotiable note fails for want of a stamp, the original drawing of such instrument having exhausted it.* In Indiana, the mere indorsement of a non-negotiable obli- gation, e. g. a judgment rendered on a note, has been held not to render the indorser liable to his indorsee.^ So, in Oeorgia, it has been held that the indorser of a non-negoti- able contract for value is not liable to his indorsee as indorser or guarantor, and cannot therefore be sued jointly with the maker of the contract,*' And in general the indorser of a non-negotiable note cannot be sued jointly with the maker, as in the case of negotiable paper.' § 659. Not Liable as Indorser. — The indorser of such paper is not liable at all as indorser ;^ unless he has made the note " with recourse," or in some other way clearly indi- 'Byles 149; Chitty 226; 1 Daniel 591; 1 Edwards 2 350; Story on Prom. Notes g 128; Hill v. Lewis, 1 Salk. 132; Smallwood v. Vernon, 1 Stra. 478; Smith V. Kendall, 6 T. R. 123; Rex v. Box, 6 Taunt. 325; Jones v. Fales, 4 Mass. 245 (1808) ; Sweetzer v. French, 13 Mete. 262 (1847) ; Aldis v. John- eon, 1 Vt. 136 (1828) ; Parker v. Riddle, 11 Ohio 102 (1841) ; Snyder v. Oat- man, 16 Ind. 265 (1861); Smurr v. Porman, 1 Ohio 272(1824).; White v. Low, 7 Barb. 204 (1849) ; Long v. Smyser, 3 Iowa 266 (1856) ; Wilson v. Ralph, lb. 450 (1856). While the obligation of such indorser to subsequent holders may be very different, if any exist, Plimley v. Westley, 2 Bing. N. 0. 249. His liability is prima. fade that of an indorser, Snyder v. Oatman, supra; Leidy v. Tammany, 9 Watts.353 (1840). But he cannot sue a remote indorser, Raymond v. Middleton, 29 Penna. St. 529 (1858). ''Jones V. Fales, 4 Mass. 245 (1808). 'Leidy v. Tammany, 9 Watts 853 (1840). *Byles 150 ; Chitty 226, 277 ; Plimley v. Westley, 2 Bing. N. 0. 249 ; 2 Scott 423 ; 1 Hodges 324. ^Kelsey v. McLaughlin, 76 Ind. 379 (1881). « Cochran v. Strong, 44 Ga. 636 (1872). 'First National Bank of Trenton v. Gay, 71 Mo. 627 (1880), the note in this case being non-negotiable because it contained a provision for the pay- ment of attorney's fees. ' Prevail v. Fitch, 5 Whart. 325 (1840) ; Gray v. Donahoe, 4 Watts 400 (1835) ; Samstag v. Conley, 64 Mo. 476 (1877). NOT LIABLE AS INDORSER. 299 <5ating his intention to bind himself as indorser.^ Otherwise, he is only liable as assignor.^ Thus, if the maker of such note be insolvent, the indorser will be liable to his indorsee for the consideration paid.^ His liability amounts to an absolute promise,* or guaranty ,* and is not conditioned, like that of an indorser, on demand and protest.^ And, in Connecticut, such indorsement is prima facie a guaranty that the note is collectible by due diligence, and that the maker is able to pay at maturity^ The indorser of such paper is only liable on due diligence against the maker, and this may be proved by parol. On* the other hand, want of due diligence will not discharge the -original debt.** § 660. Blank Indorsements of Non-negotiable Instruments. — The indorsee of such note may fill a blank indorsement with a promise to pay the contents to himself and maintain an action on such promise against the indorser.'" And even a remote holder under a blank indorsement of such paper by the payee may write over the indorsement an absolute promise." But it has been held that the indorsee of such 1 Klein v. Keiser, 87 Penna. St. 485 (1878). '^ Campbell v. Farmers' Bank, 10 Bush 152 (1873) ; Story v. Lamb, 52 Mich. -625 (1884). ^Whisler v. Bragg, 31 Mo. 124 (1860). ^Peddicord v. Whittam, 9 Iowa 471 (1859). * Cromwell v. Hewitt, 40 N. Y. 491 (1869) ; Seymour v. Van Slyck, 8 Wend. 403 (1832) ; Gilbert v. Seymour, 44 Ga. 63 (1871). " Plimley v. Westley, 2 Scott 423 ; Peddicord v. Whittam, 9 Iowa 471 (1859) ; Seymour v. Van Slyck, 8 Wend. 403 (1832) ; Cromwell v. Hewitt, 40 N. Y. 491 (1869) ; Gilbert v. Seymour, 44 Ga. 63 (1871). But the contrary has been held where the indorsement is made after the maturity of the paper, Aldis V. Johnson, 1 Vt. 136 (1828). 'Castle V. Candee, 16 Conn. 223 (1844) ; Welton v. Scott, 4 lb. 527 (1823). So, an indorsement, agreeing to make a non-negotiable note good, "if it was not," is a guaranty, Wilson v. Mullen, 3 McCord 236 (1825). But proof that the maker has left the State before the maturity of the note will, in ■such case, dispense with proof of diligence in seeking payment from him, Benton v. Gibson, 1 Hill 56 (So. Car. 1833). 'Castle V. Candee, supra'. 'Plimley v. Westley, 2 Bing. N. C. 249. '° Josselyn v. Ames, 3 Mass. 274 (1807) ; Richards v. Warring, 1 Keyes 576 ,(1864). "Sweetzer v. French, 13 Mete. 262 (1847); Wareham Bank v. Lincoln, S Allen 192 (1861). 300 TRANSFER. paper under a blank indorsement cannot fill it up with a guaranty.^ The blank indorsement of such a bill is equivalent to the drawing of a new bill payable to bearer.^ But this is not true as to subsequent parties.* Such indorsement may be either a new bill or a guaranty.* An indorser in blank has been held in North Carolina to be liable only as guarantor on notice of the maker's default.^ So, the indorsement of a non-negotiable certificate of deposit is a guaranty.® § 661. Liability to Subsequent Holders. — It has been held that such indorsement renders the indorser liable also to subsequent holders.'' But its effect as an indorsement is limited, in general, to the immediate indorsee and does not extend to subsequent holders.* Only an express contract will render such indorser liable to subsequent holders." And ' Josselyn v. Ames, supra. ''Byles 149; Chitty 226; Story on Prom. Notes § 121; Matthews v. Blox- ome, 33 L. J. Q. B. 209; Castle v. Candee, 16 Conn. 223 (1844); Kuntz v. Tempel, 48 Mo. 71 (1871); Aldis v. Johnson, 1 Vt. 136 (1828); Tassell v. Lewis, 1 Ld. Kaym. 743 ; Bellingham v. Bryan, 10 Iowa 317 (1860) ; and the indorser's liability is not, in such ease, dependent on due presentment and notice, lb. 'Story on Bills ? 111. *" The indorsement and transfer of a non-negotiable note is good, so as to make the indorsers liable to the indorsees, although it will not give an in- dorsee a right of action in his own name against the maker. The indorse- ment in such a case is equivalent to the making of a new note. It is a guar- anty that the note will be paid. It is a direct and positive undertaking on the part of the indorser to pay the note to the indorsee and not a condi- tional one to pay, if the maker does not, upon demand after due notice, "^ Sutherland, J., in Seymour v. Van Slyck, 8 Wend. 403 (1832). So, too, Crom- well V. Hewitt, 40 N. Y. 491 (1869) ; Prentiss v. Danielson, 5 Conn. 175 (1823) ; Perkins v. Catlin, 11 lb. 213 (1836) ; Castle v. Candee, 16 76. 223 (1844) ; Hunt- ington V. Harvey, 4 lb. 124 (1821) ; Gorman v. Ketcham, 3 Wis. 427 (1873) ; Bellingham v. Bryan, 10 Iowa 317 (1860) ; Wilson v. Mullen, 3 McCord 236 (1825). So, if indorsed by a stranger before delivery to the payee by way of guaranty to the payee, Richards v. Warring, 1 Keyes 576 (1864). ^Sutton V. Owen, 65 N. C. 123 (1871). »Ford V. Mitchell, 15 Wis. 334 (1862). 'Chitty 183, 226; Codwise v. Gleason, 3 Day 12 (1808) ; Josselyn v. Ames, 3 Mass. 274 (1807) ; Seymour v. Van Slyck, 8 Wend. 421 (1832). *Helfer v. Alden, 3 Minn. 332 (1859); Ransom v. Sherwood, 26 Conn. 437 (1857). And see Story on Bills § 202; Story on Prom. Notes ? 128; Jones V. Wood, 3 A. K. Marsh. 162 (1820) ; Raymond v. Middleton, 29 Penna. St. 629 (1858). 'Chitty 226 ; 1 Daniel 591 ; Hackney v. Jones, 3 Humph. 612 (1842). But aee Story on Bills § 202 ; Story on Notes ? 128. LIABILITY TO SUBSEQUENT HOLDERS, 301 \ , , , no liability arises by implication out of such indorsement/ He is liable only as he specially contracts.^ He may render the instrument negotiable as to subsequent parties by indors- ing it specially to the order of A. B.* And he will be liable also in case of fraud for the consideration received by him.* ' Whiteman v. Childress, 6 Humph. 302 (1845) ; Pratt v. Thomas, 2 Hill 654 (So. Car. 1835). So, too, the indorser of a sealed note, Tucker v. Eng- lish, 2 Spears 673 (1844) ; or of a bond under seal, Parker v. Kennedy, 1 Bay 398 (1794). ^Kirkpatrick v. McCuUough, 3 Humph. 171 (1842). 'Carruth i;. Walker, 8 Wis. 103 (1858). 'Simpson v. Moulder, 3 Ooldw. 429 (1866); Kirkpatrick v. McCuUough, »upra. 302 TKANSFEK. n. PABTIES TO TRANSFER. 662. Transfer— By Whom Made. 663. Joint-Payees. 664. Agent. 665. Executor — Assignee. 666. Unauthorized — Fictitious Payee. 667. To Acceptor — Drawer — Payee. § 662, Transfer — By Whom Made. — The questions of per- sonal capacity to make, accept or transfer commercial paper and of the authority of a person acting in a representative capacity to bind others have been already considered, as well as the form in which bills and notes should be signed by such persons. The rules already laid down and authorities cited will not be repeated here, but the reader is referred to the earlier part of this work in which they are stated.^ Mere identity of name will not make a transfer by one wha is not the payee or owner, valid, and parol evidence is ad- missible to show that such transfer was made by the wrong person.^ A forged indorsement is of course no transfer and passes no title.^ And the drawer of a bill cannot be held without proof of the indorsement.* § 663. Transfer by Joint-Payees. — If there are several joint-payees, the indorsement should be by all, unless they are partners.* Although it has been suggested, that where they are joint-owners, the indorsement of one may transfer the bill or note;' especially if it is a note made by two 'See Chapters VIII. to XII., mpra. 'Mead v. Young, 4 T. R. 28. 'Kodgers v. Ware, 2 Neb. 29; Poltier v. Schroeder, 19 La. An. 17 (1867) ; Indiana Nat. Bank v. Holtshaw, 98 Ind. 85 (1884). *Foltier v. Schroeder, supra. * 2 Parsons 4; Chitty261; Story on Notes ? 125 ; Carrick d. Vickery, Doug. 653, the usage of bankers and merchants in London to this effect being admitted as evidence for the jury. So, English Bills of Exch. Act 1882 § 20. Nevertheless an indorsement in the name of one of four payees will sustain an indictment for the forgery of an "indorsement" on a bill of exchange, Winterbottom's Case, 1 Denison 41. So, too, an indorsement of a third person's name by way of guaranty, Powell v. Commonwealth, 11 Gratt. 822 (1854). 'Snelling v. Boyd, 5 T. B. Mon. 172 (1827). So, the indorsement by one of two administrators of a note made to both for their intestate's debt, Mackey v. St. Mary's Church, 1 Eastern Reporter 476 (B. L 1885). TRANSFER BY JOINT-PAYEES. 303 TQakers but expressed in the singular number, e. g. " I prom- ise to pay * * * to the order of myself."' So, an in- dorsement by two joint-payees who are not partners, in the form of a partnership, "A. and B." is sufficient.'^ If one who is named in the bill as a payee is not really such and neither received nor indorsed the bill, but was named as a payee by mistake with the intention of procur- ing the additional security of his indorsement, an indorsee who takes the bill under an indorsement of all of the actual payees may recover, on parol evidence of such facts.^ So, if a note is made to A., B. and C, and indorsed by A. and B. to C. and D., and by C. to D., it is sufficient, it not being necessary that any holder should join in a transfer to him- self.* So, a note made by A. and B. to B. and C. for the purpose of taking up another note made by A., B. and C, may be indorsed and delivered by C. alone.® A partner, as we have seen, has authority to transfer notes belonging to his firm. So, a note payable to a partnership and indorsed by one partner in the firm name to himself will pass by such indorsement with the right to sue on it.* After dissolution he has no longer such power of transfer. But the unauthorized transfer by him after dissolution will not prevent his recovering from a subsequent holder to whom the bill was transferred, and from whom he subsequently purchased it.'' In Uruguay, only a partner whose name is in the firm, or who has express authority to sign for it, can transfer negotiable paper in its name.* § 664. Transfer by Agent. — If the transfer be by an agent acting without authority, it will be of no effect, and the note 'First Nat. Bank v. Fowler, 36 Ohio St. 524 (1881). » Cooper V. Bailey, 52 Me. 230 (1863). 'Pease v. Dwight, 6 How. 190 (1848). ^Goddard v. Lyman, 14 Pick. 268 (1833). 'Main v. Hilton, 54 Cal. 110 (1880). 'Kirby v. Cogswell, 1 Caines 505 (1804); Burnham v. Whittier, 5 N. H. 834 (1831). 'Hubbard v. Matthews, 54 N. Y. 43 (1873). » Uruguay (1865 Code Com. Art. 828). 304 TKAHSFER. can be recovered by the owner ;^ although the agent's authority, if it exists, need not expressly appear.^ But the maker cannot question the authority of the payee's agent at suit of a bona fide holder for value before maturity." Nor can the maker question the payee's corporate authority to transfer a bill under a special agreement made with the purchaser,* § 665. Transfer by Executor — Assignee. — If the title to a bill or note passes by will or by death and intestacy of the last owner, it should be formally transferred by his execu- tor or administrator. And it has been held that a transfer by the specific legatee of the instrument, who was appointed executor, but had not qualified as such, was not sufiicient.^ On the other hand, a note payable " to the order of J. V. M. Estate," has been held sufficiently transferred by the legatee who was also executor.® And even an assignment by the widow before administration has been held to pass the equitable title to a contract, enabling the assignee to bring suit upon it.' But where a note is made to a. feme covert, it has been held that her surviving husband cannot sue on it without a transfer by her or administration on her estate.* By statute in Uruguay the husband of a feme payee may transfer her bills or notes after marriage as at common law.* And transfer by insolvent assignees and by executors is pro- vided for by the same statute.^" In Iowa, a sheriff may levy on a note and transfer it by his indorsement." 'Wilcox V. Turner, 46 Ga. 218 (1872), unless ratified by the principal, Coy- kendall v. Constable, 1 Eastern Reporter 166 (N. Y. 1885), revg. 19 Wky. Dig. 169. 'Bettia v. Bristol, 56 Iowa 41 (1881). 'City Bank of New Haven v. Perkins, 29 N. Y. 554 (1864). 'Ehrman v. Union, &c., Ins. Co., 35 Ohio St. 324 (1880). 'Stagg V. Linnenfelser, 59 Mo. 336 (1875). •Peltier v. Babillion, 45 Mich. 384 (1881). 'Auerbach v. Pritchett, 58 Ala. 451 (1877). "Craige d.. Tingle, 63 Ga. 274 (1879). 'Uruguay (1865 Code Com. Art. 826). ^"Uruguay (1865 Code Com. Art. 827). "Earhart v. Gant, 32 Iowa 481 (1871). TRANSFER TO ACCEPTOR. 305 § 666. Transfer Without Authority — Fictitious Payee. — An indorsement may in some cases suffice to transfer the ti'tle to a bill, when it is not sufficient to impose a liability on the indorser, e. g. if made by an infant, or by corporate officers in an irregular manner.^ So, if a drawer negotiates a bill with the indorsement of a fictitious payee, the acceptor will be liable on it to a bona fide holder, as if payable to bearer.^ So, a bank, certifying a forged check, will be liable on its •certificate to a bona fide holder, whether the indorsement is real or fictitious.^ § 667. Transfer to Acceptor — Drawer — Payee. — Even one ■who is a party to a bill may become its owner by subsequent transfer. Thus, a bill may be transferred before maturity to the acceptor and again transferred by him, without extin- guishing it or discharging the liability of the parties upon it.* The bank on which a check is drawn takes it, however, prima Jacie as agent of the indorser, if he has an account in the bank ;^ and will not be liable to him upon it after due notice of dishonor.^ But money paid by the drawer into his ac- count in the bank must be appropriated by it to the payment of such bill rather than to any balance due to itself.' It is expressly provided by some foreign statutes that a bill may be transferred to the drawer or acceptor or to a prior indorser.* And a retransfer to the payee in the course of business will not of itself discharge a second .indorser.' If the original indorsement by such payee was without recourse, he will take it on retransfer to him as an ordinary indorsee, * Byles 243 ; Story on Bills I 196 ; Smith v. Johnson, 27 L. J. Exch. 363 ; S. C, 3 Hurlst. & N. 222. ''Gibson v. Minet, 1 H. Bl. 605. 'Hagen v. Bowery Nat. Bank, 6 Lans. 490 (1872). * Byles 174; Attenborough v. Mackenzie, 25 L. J. Exch. 244. * Byles 172; Boyd v. Emerson, 2 Ad. & El. 184; S. C, 4 N. & M. 99. « Byles 172. 'Byles 172; Chitty 860; Kilsby v. Williams, 5 B. & Aid. 815; S. C, 1 D. & K. 476. ^English Bills of Exch. Act 1882 § 87; Amtna (1850 Exch. Law Art. 10) ; Oermany (1848 Exch. Law Art. 10); Switzerland (Exch. Laws, 1859 Berne, 1863 Basle, ? 10). 'West Boston Sav. Bank v. Thompson, 124 Mass. 506 (1878). VOL. ir. IT 306 TRANSFER. subject (if he takes it after maturity) to defenses.^ So, as "we have seen, a partnership holding a bill of exchange or note may transfer it by indorsement to a member of the firm.*^ And in general, unless restrained by statute, any one can take a bill or note by transfer. But in New York an attor- ney-at-law cannot buy or become interested in a bond, bill or note for the purpose of bringing an action on it. * 'Calhoun v. Albin, 48 Mo. 304 (1871). 'Kussell V. Swan, 16 Mass. 314 (1820). 'New York (1882 Code Civ. Pro. ?| 73, 75, 76, 77). •INDORSEMENT BEFOEE MAKING. 307' III. TIME OF TEANSFEK. 668. Before Making— Date. 669. Acceptance — After Acceptance or Non-acceptance. 670. After Maturity— Eflfect on Prior Parties. 671. Liability of Indorser. 672. Demand and Notice. 673. Eights Transferred. 674. Defenses Admissible. 675. Original Equities — Bona Fides. 676. Fraud — Want of Consideration. 677. Accommodation Paper. 678. Payment— Release. 679. Set-ofiF. 680. Payment before Maturity. 681. Maturity— Foreign Statutes. 682. and Payment. 683. Re-issue by Drawer — Indorser — Acceptor. 684. Action Brought. 685. Death of Owner. 686. Date of Transfer — Presumption. 687. Indorsement does not Relate Back. § 668. Indorsement before Making — Date. — The indorse- ment may be written on a blank paper before the bill is drawn, and in such case the indorser makes himself liable for any amount for which the bill is drawn.^ Such indorse- ment is a letter of credit for an indefinite sum;^ or, when completed, a bill for the amount then written.^ So, an in- dorsement may be a partly completed bill, leaving blanks to be afterward filled.* And such instrument will be an indefi- nite letter of credit binding in the hands of a purchaser in good faith, even though he knew that it had been indorsed before the blanks were filled.' Moreover a bill may be post-dated and transferred by in- 'Byles 167; Chitty 243; 1 Edwards § 377; 2 Parsons 10; Russell v. Lang- staffe, 2 Dougl. 514; Collis v. Emmett, 1 H. Bl. 313; Liokbarrow v. Mason, 6 East 22, note; Schultz v. Astley, 2 Bing. N. C. 544; Mitchell v. Culver, 7 Cow. 336 (1827); Putnam v. Sullivan, 4 Mass. 45 (1808). So English Bills of Exch. Act 1882 § 20. ^Patton V. Violett, 1 Cranch C. C. 463 (1807), affirmed as Violett v. Patton, 5 Cranch 142 (1809). 'Chitty 243; Snaith v. Mingay, 1 M. & S. 87. * Story on Prom. Notes ? 122. 'Byles 167; Story on Prom. Notes | 122; Eussell v. Langstaffe, 2 Dougl. 514 ; Usher v. Dauncey, 4 Campb. 97. 308 TRANSFER. dorsement before its date.^ And although the indorser may afterward die before the date of the bill arrives, the drawer of the bill will still be liable to the indorsee.^ But indorse- ment of post-dated bills or notes under £5 is now prohib- ited by statute in England.^ § 669. Before Acceptance — After Acceptance or Non- Acceptance. — In like manner a bill may be transferred either before or after acceptance.* And transfer after de- mand and acceptance is expressly provided for by statute in some foreign States.* Where a bill has been indorsed after demand made and acceptance refused before its maturity, it will be no defense at suit of a bona fide holder that the drawer and indorser were discharged as to such intermediate indorser by his laches in failing to give proper notice of dis- honor.* So, if the drawer releases the acceptor of a bill before maturity, this will be no defense on the acceptor's part against a subsequent bona fide purchaser taking the bill for value before maturity.^ The non-acceptance is a dis- honor of the bill, and the purchaser under subsequent in- dorsement may bring his action on the bill at once without waiting for its dishonor at maturity.* "There can be no distinction in principle between a bill transferred after it is dishonored for non-acceptance and one transferred after it is dishonored for non-payment."" Therefore an indorsee with knowledge of the fact of refusal to accept the bill is not a bona fide holder in the commercial sense of the term.^° And the drawer and indorser may claim 'Byles 167; 2 Parsons 27; Pasmore v. North, 13 East 517; Brewster v. McCardel, 8 Wend. 478 (1832). ^Chitty 244; Pasmore v. North, 13 East 517. ^Chitty 244; 17 Geo. III. c. 30 | 1, made perpetual by 27 Geo. III. c. 16, and 7 Geo. IV. c. 6, and see Pasmore v. North, eupra. *Byles 167. ^Russia (1862 Exch. Law Art. 562) ; Venezuela (1862 Code Com. Art. 35). "Chitty 244; 1 Edwards | 378; O'Keefe v. Dunn, 6 Taunt. 305; 1 Marsh. 613, affirmed 5 M. & S. 282. 'Chitty 245; Dod v. Edwards, 2 C. & P. 602. «Byles 169 ; Whitehead v. Walker, 9 M. & W. 606. 'Taney, C. J., in Andrews v. Pond, 13 Pet. 65 (1839). "By lea 167. AFTER MATUEITY. 309 a discharge for want of notice of non-acceptance against such holder with knowledge of the circumstances/ So, if the drawer or indorser has been discharged by want of notice of refusal to accept, he will not be liable to an indorser, to whom the bill was returned at its maturity, and by whom it was then paid without knowledge of such earlier laches of the holder who had returned it.'^ Noting on the face of a bill is not, however, equivalent to notice, and the purchaser of such paper in good faith will not be subjected, by reason of gross neglect even, to the defense of laches available before maturity against his indorser.^ § 670. After Maturity — Effect on Prior Parties. — Commer- cial paper may be transferred after its maturity by indorse- ment or otherwise.* And accommodation paper is no excep- tion to this rule.' In England such indorsement is prohibited by statute in the case of overdue bills under £5.® The indorsement of a bill or note after maturity follows the nature of the original contract.' If the bill or note was originally negotiable, it still remains so.* And an indorser before maturity is liable to subsequent and remote purchasers by indorsement after maturity.® So, an indorser before maturity repurchasing the bill and trans- ferring it after its maturity remains liable on his original iChitty245. •'Chitty 245; Eoscow v. Hardy, 12 East 434 ; 2 Campb. 458. 'Chitty 245. ^Byles 168; Chitty 245; 1 Daniel 658; 1 Edwards ? 377; Story on Bills ^ 220 ; Story on Prom. Notes ? 178 ; Dehers v. Harriot, 1 Show. 163 ; Boehm u. Sterling, 7 T. K. 423; Havens v. Huntington, 1 Cow. 387 (1823) ; French V. Jarvis, 29 Conn. 387 (1860) ; Davis v. Miller, 14 Gratt. 1 (1857); Brown v. Hull, 83 Gratt. 23 (1880); Baxter v. Little, 6 Mete. 7 (1843); Britton v. Bishop, 11 Vt. 70 (1839) ; Leavitt v. Putnam, 3 N. Y. 494 (1850), reversing 1 Sandf. 199 (1848) ; Powers v. Nelson, 19 Mo. 190 (1853) ; Long v. Crawford, 18 Md. 220 (1861) ; McSherry v. Brooks, 46 Md. 103 (1876) ; Morgner v. Bigelow, 3 Mo. App. 592 (1877) ; James v. Chalmers, 6 N. Y. 209 (1852). So, too, obiter, Murford v.Walcotj 1 Ld. Kaym. 574; Charles v. Marsden, 1 Taunt. 224; Nat. Bank of Washington v. State of Texas, 20 Wall. 72 (1873). ^First Nat. Bank of Salem v. Grant, 71 Me. 374 (1880). ^Chitty 245 ; 17 Geo. III. c. 30 | 1. 'Leavitt v. Putnam, 3 N. Y. 494 (1850). 8 Davis V. Miller, 14 Gratt. 1 (1857) ; McSherry v. Brooks, 46 Md. 103 (1876) ; Nat. Bank of Wash. v. State of Texas, 20 Wall. 72 (1873), obiter by Swayne, J. 'Williams v. Matthews, 3 Cow. 252 (1824). 310 TRANSFER. indorsement.^ So, an accommodation indorser before matur- ity will be liable to the holder under an indorsement which was made after maturity to the party accommodated,^ § 671. Liability of Indorser After Maturity. — The indorse- ment of a bill or note after maturity is equivalent to the drawing of a new bill payable at sight,' or to a renewal pay- able on demand,* or a negotiable demand note,* which the indorser cannot evade by parol evidence of contemporaneous declarations that he would not pay the note.® Such indorsement after maturity is still an indorsement, and the indorser is liable on it as such,' although the indorsed note was payable to bearer.* Such an indorsement, as between the immediate parties to it, is equivalent to the indorsement of a note on the day of its maturity.' But it does not amount to a guaranty,^" and if indorsed in blank, cannot be filled with a guaranty." And this is true, although the note was indorsed specially and was retained by the indorser for safe keeping, and supposed by the indorsee to be a guaranty .^^ § 672. Indorsement After Maturity — Demand — Notice of Protest. — A note so transferred is payable on demand within a reasonable time,^* and the indorser is entitled to notice of dishonor if payment is refused." Demand must be made 'Scott V. First Nat. Bank, 71 Ind. 445 (1880). "Harrington v. Dorr, 3 Kobt. 275 (1865). "Byles 169 n.; Chitty 245; Bishop v. Dexter, 2 Conn. 419 (1818) ; Bank of North America v. Barriere, 1 Yeates 360 (1794) ; McKinney v. Crawford, 8 Serg. & R. 351 (1822) ; Rugely v. Davidson, 2 Mill 33 (1818) ; Colt v. Bar- nard, 18 Pick. 260 (1836); Branch Bank v.Gaffney, 9 Ala. 153 (1846); Tyler V. Young, 30 Penna. St. 143 (1858) ; Buown v. Hull, 33 Gratt. 23 (1880) ; Smith V. Caro, 9 Oreg. 278 (1881). «Van Hoesen -y. Van Alstyne, 3 Wend. 75 (1829). '2 Parsons 13; Goodwin v. Davenport, 47 Me. 112 (1860). 'Goodwin v. Davenport, supra. 'Britt V. Lawson, 15 Hun 123 (1878). ^Allwood V. Haseldon, 2 Bailey 457 (1831). 'Nash V. Harrington, 2 Aik. 9 (1826). "> Request v. Pickett, 20 La. An. 546 (1868) ; McCall v. Witkouski, 16 lb. 179. "Clawson v. Gustin, 2 South. 821 (1820). "Shelby v. Judd, 24 Kan. 161 (1880). "1 Edwards § 377 ; Leavitt v. Putnam, 3 N. Y. 494 (1850). "Request v. Fickett, 20 La. An. 546 (1868) ; McCall v. Witkouski, 16 lb. 179. INDOKSEMENT AFTER MATURITY. 311 "within a reasonable time and be followed in case of non-pay- ment by notice of dishonor.^ And this is required, although 4;he indorsement contains a guaranty.*^ And a delay of twenty-five days has been held an unreasonable one.' But if the bill or note has been already demanded and payment refused and due notice given, the indorser, after maturity, will not be entitled to fresh demand and notice.* And in Judson V. Goodwin, 37 111. 286 (1865). BLANK INDOKSEMENT. 343 the instrument.^ So, too, an agreement to pay damages to the holder on dishonor, indorsed on a note.^ But indorsing 3, receipt for interest on a note will not be sufficient to render the signer of the receipt liable as an indorser, in the absence of evidence showing such intention on his part.^ In general, at common law it is neither necessary nor •customary to date indorsements. But in Arkansas assign- ments of written instruments must be dated, and if not dated, the date is presumed to be that which is most favorable to the defendant.* § 705. Blank Indorsement — Special Indorsement After- ward.^A blank indorsement consists, in general, merely of the signature of the indorser written on the back of the in- strument.^ Such indorsement is insufficient in France, and, as we shall see, is made so by many foreign statutes. Thus, where a bill was drawn and indorsed in blank in France, the indorsee was not allowed to maintain an action upon it in ^England against the acceptor.* A blank indorsement, until it is filled up and made special, is equivalent to a bill of exchange payable to the bearer.'' 'Robinson v. Lair, 31 Iowa 9 (1870). '■'Blakely ■;;. Grant, 6 Mass. 386 (1810) ; and such agreement may be made special, like an indorsement in blank, lb. ^ Clark V. Whiting, 45 Conn. 149 (1877). So, a statement indorsed by the payee (who is also the maker) as to his property is not an indorsement, Pickering v. Cording, 92 Ind. 806 (1883). But a certificate indorsed by such payee that the note was given for value and that there was no defense to it, has been held to be a good indorsement and transfer, Dunning v. Heller, 19 ■Cent. L. J. 96 (Penna. 1884). ^Arhamaa (1874 E. S. § 569-70). ^Byles 151; Chitty 259; 1 Edwards | 388; Lambert v. Pack, 1 Salk. 127. Although it was said, in Lucas v. Haynes, 1 Salk. 130, that the " bare in- -dorsement without other words purporting an assignment does not work an alteration of the property, for it may still be filled up either with a receipt or an assignment." This was, however, on a mere question of competency of an agent as witness for the owner in an action of trover for the bill, which had been indorsed by the owner and sent by the agent to the drawee for acceptance and lost before any actual transfer. « Chitty 257 ; Trimbey v. Vignier, 1 Bing. N. C. 151 ; S. C, Moore & S. 695 ; 6 C. & P. 25. 'Byles 151; Chitty 260, 264; 1 Daniel 618; 1 Edwards ? 388; 2 Parsons 19; Story on Bills ? 208; Peacock v. Rhodes, Dougl. 633; Curtis v. Sprague) 51 Cal. 239 (1876) ; Johnson v. Mitchell, 50 Tex. 212 (1878) ; Hubbard v. Wil- liamson, 4 Ired. 266 (1844) ; Scionneaux v. Wagnespack, 32 La. An. 285 344 TBANSFER BY INDORSEMENT. This is true as to the indorser and all prior parties, although it is afterward indorsed in full by a subsequent holder.^ Such subsequent special indorsement does not in any way- affect or limit the liability of the indorser in blank,'' But by the California Code special indorsements are forbidden after an indorsement in blank.^ Where such special indorse- ment follows a general indorsement, it restricts the liability of the special indorser to those who hold under the indorse- ment of his indorsee,* But the bill which is once indorsed in blank, remains, as to prior parties, transferable by deliv- ery,^ And after a blank indorsement further indorsement is unnecessary,* but is, of course, permissible.^ A blank, indorsement may follow a special one and the instrument then becomes transferable by delivery.' § 706. Holder may Sue. — A blank indorsement gives the transferee and every subsequent holder the right to sue in his own name.' And this is true even of remote holders (1880). This is true although the bill be stolen and the innocent holder's title derived through the thief, Peacock v. Rhodes, mpra; or though it be indorsed in blank to an agent for sale and pledged by him in fraud of his- principal, Morris v. Preston, 93 111. 215 (1879). And a subsequent re-assign- ment of the note and its transfer by delivery to another will not change the character of the blank indorsement, Curtis v. Sprague, supra. 'Byles 152 ; Chitty 260 ; 1 Daniel 621 ; Smith v. Clarke, Peake 225 ; Walker V. Macdonald, 2 Exch. 527; Habersham v. Lehman, 63 Ga. 380 (1879). '2 Parsons 26; Story on Bills i 207. 'California (1880 1 Hitt. Codes ^ 3114); Dakota (1877 Eev. Codes 472. ? 1842) ; Utah (1882 L. c. 41 ? 22). *Byles 152; Story on Bills | 208. ''Chitty 260; Smith v. Clarke, Peake 225; McDonald v. Bailey, 14 Me. 101 (1836) ; Murrell v. Marshall, 60 111. 289 (1871). •Hunt V. Stone, 19 La. An. 526 (1867) ; Lachance v. Loeblein, 15 Mo. App. 460 (1884) ; Banks v. Eastin, 3 Mart. (n. s.) 291 (La. 1825). And it need not be averred in the declaration if such indorsement has been made, Story on Prom. Notes § 132. 'Story on Bills ? 208; Melton v. Gibson, 97 Ind. 158 (1884) ; Indiana (R. 8.. 1881 g 5501). * Story on Prom. Notes ? 139. "Chitty 262; Chewning v. Gatewood, 5 How. 552 (Miss. 1841); McHenry- V. Ridgely, 3 111. 309 (1840) ; Burnap v. Cook, 32 lb. 168 (1863) ; Griffon v. Jacobs, 2 Miller 192 (La. 1830) ; Bowers v. Trevor, 5 Blackf. 24 (1838) ; Rich V. Starbuck, 51 Ind. 87 (1875); Habersham v. Lehman, 63 Ga. 380 (1879). So, a blank indorsement for collection to an agent, who afterward pays the amount of the note to his principal, will enable him to sue on it in his own. name. Coy v. Stiner, 53 Mich. 42 (1884). BLANK INDORSEMENT TRANSFEES TITLE. 345 acquiring the bill after its maturity.^ A remote holder under a blank indorsement may sue on the instrument as the im- mediate indorsee.^ So, several holders after a blank indorse- ment may all sue without proof of any partnership existing between them.* In like manner, an agent receiving a note for collection by delivery after maturity under a blank indorsement may bring suit in his own name.* The holder may treat such an indorsement either as a transfer to himself or as a power to him as agent to collect payment.^ And in- the absence of other defense it is un- necessary to inquire whether such holder is the beneficial owner.® The blank indorsement of a bill or note to an agent is a power to transfer, and a bona fide purchaser from such agent will be protected against any claim of the principal 5^^ and may hold the instrument against him, whether he pur- chased it before or after its maturity.' § 707. Blank Indorsement Transfers Title. — A blank in- dorsement is a transfer of the title as well as a power to transfer it.' At common law it has been said that a blank 'Williams v. Matthews, 3 'Cow. 252 (1824). And such indorsement inures to the benefit of a bona fide holder after suit brought, Lomax v. White, 83- Ind. 439 (1882). 'Emerson v. Cutts, 12 Mass. 78 (1815) ; and need not trace his title from such indorser, Little v. O'Brien, 9 Mass. 422 (1812) ; or show in what capac- ity he holds the note, Mauran v. Lamb, 7 Cow. 174 (1827). 'Byles 151; Chitty 262, 275; Ord v. Portal, 3 Campb. 239; Rordasus v. Leach, 1 Stark. 446. This is true although the original holders under the blank indorsement were partners and the plaintiffs are the surviving part- ners, Attwood V. Rattenbury, 6 Moore 579 ; in which case it is not necessary to describe themselves as such, lb. 'Little V. O'Brien, 9 Mass. 423 (1812). 'Rees 1). Conocheague Bank, 5 Rand. 326 (1827). And such indorsement will vest title in the indorsee, though not filled up before judgment, lb. A suit in his own name is prima fade evidence of an absolute transfer, Richardson v. Lincoln, 5 Mete. 201 (1842). If, on the other hand, he sues in the indorser's name he manifests his intention to treat it as a mere agency, Clark v. Pigot, 12 Mod. 192. ^Soionneaux v. Wagnespack, 32 La. An. 283 (1880). 'People V. Bank of North America, 75 N. Y. 547 (1879) ; Murrell v. Jones, 40 Miss. 565 (1866) ; Palmer v. Marshall, 60 111. 289 (1871). «Connell V. Bliss, 52 Me. 476 (1864). "Brush V. Scribner, 11 Conn. 388 (1836) ; Jacoby v. Ross, 12 Mo. App. 577 (1882) ; McDonald v. Bailey, 14 Me. 101 (1836) ; Cutting v. Conklin, 28 111. 606 (1862) ; Burnap v. Cook, 32 III. 168 (1863) ; Gaar v. Louisville Bkg. Co., 11 Bush. 180 (1874). And this is true whether the note indorsed be nego- tiable or not, Hastings v. McKinley, 1 E. D. Smith 273 (1871). 346 TEANSFER BY INDOESEMENT. indorsement is an incomplete authority to the holder, who may complete it, and make himself the assignee by filling it with an order to pay to himself.^ As such it is not an as- signment, but convertible into one.^ It is now held, however, that such blank indorsement is prima fade a complete trans- fer, until shown to be a mere deposit for a special purpose.* Nor is it necessary, in general, to an action by the holder, that the blank indorsement should be filled up by him.* And the Maryland code provides that no judgment on a bill or other negotiable instrument shall be ^et aside for want of such special indorsement.^ A blank indorsement of a bill or note, coupled with possession, is presumptive evidence of title to the instrument.^ This is true likewise of a certificate of deposit indorsed in blank, and such indorsement carries prima facie the power to pledge the certificate.^ Even where the drawer is in possession of a bill with the blank indorse- ment of the payee, it is presumed, as against the acceptor, that the bill has been put into circulation and taken up and paid by the drawer.^ § 708. Blank May be Filled.— The holder of a bill or note may make the blank indorsement a special one.' And such 'Chitty 262; More v. Manning, I Comyns 311; Lucas v. Marsh, Barnes 463. So, by statute in Maryland (1878 R. C. Art. 35). 'Cope V. Daniel, 9 Dana 415 (1840). "Chitty 263; 1 Edwards I 390; Bx parte Twogood, 19 Ves. 229. *Moore u. Pendleton, 16 Ind. 481 (1861). 'Maryland (1878 Rev. Code 296 § 8). « Palmer v. Nassau Bank, 78 111. 380 (1875) ; Roberts v. Haskell, 20 lb. 59 <1858) ; Gillham v. State Bank, 3 lb. 245 (1840) ; New Orleans Bkg. Co. v. Bailey, 18 La. An. 676 (1866) ; Hays v. Southgate, 10 Hun 511 (1877). Even after subsequent transfer by delivery and re-assignment to the jjlaintiff, Roberts v. Haskell, supra. This title is, however, only presumptive, and may be overcome by evidence that the legal title is actually in another, Hays V. Hathorn, 74 N. Y. 486 (1878), reversing Hays v. Southgate, aupm. And it seems that in North Carolina this presumption follows possession ■even without an indorsement of the paper, Robertson v. Dunn, 87 N. C. 191 (1882). 'International Bank v. German Bank, 71 Mo. 183 (1879). But the pledgee ■can only hold the instrument against the indorser and owner to the extent of the balance actually due him and secured by his pledge, lb. ^Pilkington v. Wood, 10 Ind. 432 (1858). »Bylesl52; Chitty 263; 1 Daniel 618; 1 Edwards 2 388; 2 Parsons 19; Story on Bills i 207 ; Lovell v. Evertson, 11 Johns. 52 (1814) ; Evans v. Gee, 11 Pet. 80 (1837) ; Chesley v. Taylor, 3 Gill 251 (1845). And this is expressly BLANK MAY BE FILLED. 347 indorsement then becomes a contract in writing signed by the indorser within the meaning of the statute of frauds."^ The holder under a blank indorsement may fill it with any consistent contract.^ He may write over the signature an assignment of the instrument.^ As a collecting agent he may fill it with a receipt of payment.* And in the case of a non-negotiable note he may write an absolute promise of payment.^ But he cannot write " security " over it,° or fill it with a waiver of demand or of notice of protest,' or with a guaranty ; * although the indorsement was made " as security."^ provided by statute in some of the United States, California (1880 Hitt. •Codes § 3114) ; Dakota (1877 R. C. 472 ? 1842) ; Utah (1882 L. o. 41 ? 22). So, too, English Bills of Exch. Act 1882 ? 34. And an indorsement so filled up at the trial will not be a variance, although declared on as an indorsement in blank, Norris v. Badger, 6 Cow. 449 (1826). 'Bernard v. Barry, 1 Greene 388 (Iowa 1848). ^1 Daniel 618; 1 Edwards I 390; Story on Prom. Notes § 138; Lambert v. •Oakes, 12 Mod. 244; Lambert v. Pack, 1 Salk. 127; Evans v. Gee, 11 Pet. 80 (1837) ; Moies v. Bird, 11 Mass. 436 (1814) ; Hubbard v. Williamson, 4 Ired. ■266 (1844) ; Maxwell v. Vansant, 46 111. 58 (1867) ; Andrews v. Simms, 33 Ark. 771 (1878). 'Hunt V. Armstrong, 5 B. Mon. 399 (1845) ; Needhams v. Page, 3 lb. 465 (1843). By the statute of Kentucky, passed in 1866 (Myer's Supp. 741 § 2), "whenever a person or persons shall sign his or their name in blank on the toack of a promissory note without being the payee in such note or the -assignee thereof, and deliver the same, such signature and delivery shall authorize the bona fide holder of the same to fill up the same with words of guaranty to himself or order." This statute is, however, now replaced by the later provision (1881 G. S. § 14), that " every person who shall sign his name upon the back of a promissory note, shall be deemed and treated as an assignor as to the party holding it, unless, in writing, a different pur- pose be expressed, or the note can be legally placed on the footing of a bill of exchange." * Clark V. Pigot, 1 Salk. 126; S. C, 12 Mod. 192. ^Sweetzer v. French, 13 Mete. 262 (1847); Wareham Bank v. Lincoln, 3 Allen 192 (1861) ; Josselyn v. Ames, 3 Mass. 274 (1807). But not a guaranty, -Josselyn v. Ames, supra. "Robinson v. Reed, 46 Iowa 219 (1877). 'Andrews v. Simms, supra. And such waiver, written by a second in- -dorser over the indorsements of himself and the payee, will affect only his own liability as indorser, Central Bank v. Davis, 19 Pick. 373 (1837). ^Blatchford v. Milliken, 35 111. 434 (1864) ; Dietrich v. Mitchell, 43 111. 40 (1867) ; Eccles v. Ballard, 2 McCord 388 ; Seymour v. Mickey, 15 Ohio St. -515 (1864) ; Needhams v. Page, 3 B. Mon. 465 (1843) ; Clawson v. Gustin, 2 South. 821 (1820) ; Clouston v. Barbiere, 4 Sneed 336 (1857) ; unless such Tvas the agreement between the parties to the indorsement, Leech v. Hill, 4 "Watts 448 (1835) ; or unless there is an express agreement to that effect, Windheim v. Ohlendorf, 3 Bradw. 436 (1878). 'Allen V. Coffll, 42 111. 293 (1866). 348 TRANSFER BY INDORSEMENT. But in Iowa the statute makes a blank indorsement equiv- alent to a guaranty.^ And in Illinois a blank indorsement could have been filled formerly with an assignment and guaranty.^ So, we have seen that an indorsement written on blank paper may be filled either as an indorsement or as a guaranty.^ And where a note is payable to the maker and indorsed by him in blank, a power to pay may be written over his signature/ For a statement of the law as to filling up irregular in- dorsements made by a stranger to the paper before its de- livery to the payee, the reader is referred to a subsequent chapter of this work. § 709. Who May Fill Blank— What Name.— A blank in- dorsement may be filled by any subsequent holder, however remote;* or it may be filled by an equitable holder in pos- session of the paper.* So, the administrator of a deceased holder may fill the blank indorsement.^ But it should not be filled by an attorney holding the instrument merely for collection.* Such an indorsement, however, made by a prin- cipal to his agent and filled up by the agent with his own name, will be good against all persons but the principal." Filling a blank indorsement payable to a remote holder is no discharge of intervening indorsements, unless they are struck out.^° Where there are such intermediate indorsements Uowa (1880 R. C. ? 2089). 'Croskey v. Skinner, 44 III. 321 (1867). 'Orrick v. Colston, 7 Gratt. 189 (1850). 'Pace V. Wilmerding, 12 Bush 141 (1876) ; Act of 1866, Myer's Supp. 741 ; Q. S. c. 22 §13 ; 1881 G. S. 251. 'Lovell V. Evertson, 11 Johns. 52; Lyons v. Ewings, 17 Wis. 63 (1863); Hunter v. Hempstead, 1 Mo. 67 (1821); Bernard v. Barry, 1 Greene 38S (Iowa 1845). 'Moore v. Maple, 25 111. 341 (1861). 'Lucas V. Bryne, 35 Md. 485 (1871). 'Child V. Eureka Powder Works, 44 N. H. 354 (1862). 'Story on Prom. Notes § 126.« "1 Daniel 620; Cole v. Cushing, 8 Pick. 48 (1826) ; Bank of British North America v. Ellis, 2 Fed. Rep. 44 (U. S. C. C. Oregon 1880). In this case it was suggested by Deady, J., that such special indorsement was " not written over the signature of the first indorser exclusively, and under the circum- stances, may be regarded as made with reference to those of the subsequent EFFECT OF FILLING IND0K8EMENT. 349 following an indorsemen-t ia blank, the holder may fill the blank indorsement and make title directly through it or through one or more of the intervening indorsers/ The holder of a bill or note may fill the blank indorsement with his own name.^ And if he derives his authority from a separate assignment to himself, he may even erase the in- dorsee's name in a special indorsement for collection and insert his own.^ So, one partner may fill his own name in a blank indorsement indorsed for his own firm and bring suit on it in his own name.* In like manner a bank cashier may write his name in a blank indorsement to his*bank.^ § 710. Effect of Filling Indorsement — When to be Filled. — "When a blank indorsement is made special, an action can no longer be brought on the instrument in the indorser's name, unless such indorsement is stricken out.* A holder may fill the blank indorsement under which he holds, with a special indorsement to a third person, and thus avoid both liability and risk of loss.'' And such indorsement furnishes a pro- tection against fraudulent pledge or sale of the paper.* indorsers as well as that of the former." He also condemns the dictum to the contrary in 2 Parsons 19. And it has been held as a consequence of this principle that if the maker of a note be sued by a holder, who has filled specially to himself an early indorsement in blank, any intermediate in- dorser, paying the same and not having been discharged by such act, may sue the maker or any other prior party, Cole v. Gushing, supra. 'The indorsement was formerly held to be incomplete as a transfer until filled up, and until then the holder might sue in the name of his indorser, or if the blank indorsement were the holder's own, he might sue without regarding it, Kiersted v. Rogers, 6 Harr. & J. 282 (1824). = Byles 153; Chitty 263; Farwell v. Meyer, 36 111. 510 (1864) ; Wilder v. De Wolf, 24 lb. 190 (1860) ; Williams v. Matthews, 3 Cow. 262 (1824) ; Leland V. Parriott, 85 Iowa 454 (1872) ; Moore v. Pendleton, 16 Ind. 481 (1861) ; Skinner v. Church, 36 Iowa 91 (1872) ; Condon v. Pearce, 43 Md. 83 (1875). 'Morris v. Poillon, 50 Ala. 403 (1874). But such act will amount to an alteration and defeat the holder's recovery in the absence of such authority. Porter v. Cushman, 19 111. 572 (1858). •Lovell V. Evertson, 11 Johns. 52 (1814). 'Fairfield v. Adams, 16 Pick. 381 (1835). «Byle8 153 ; Chitty 263; Clark v. Pigot, 1 Salk. 126; 12 Mod. 193. ' Byles 153 ; Chitty 264 ; Vincent v. Horloftk, 1 Campb. 442. So, in case of subsequent bankruptcy of the transferor. Ex parte Shuttleworth, 3 Ves. 368. Nor is such transferor an indorser who can take up the bill after tl*e acceptor's bankruptcy and recover against the estate as an indorser, Ex parte Isbester, 1 Hose 20. * Chitty 264; Treuttel v. Barandon, 8 Taunt. 100. 350 TRANSFEK BY INDORSEMENT. It is not too late to fill a blank indorsement specially at the time of the trial.^ And it has been held that the holder must fill the indorsement then, if not before.^ And a blank indorsement may even be filled after the death of the in- dorser.* § 711. Foreign Statutes — Blank Indorsement. — In some foreign States blank indorsements are expressly forbidden ;* while others do not permit such an indorser even to recover the consideration paid by him.^ In other countries, however, such indorsements are permitted,* and may be filled and made special by the holder.' In Holland a blank indorsement is sufficient to transfer title.* In some countries it is equivalent to an indorsement to the order of the holder ;' and in others,, only if signed and dated by the indorser.^" In Portugal a blank indorsement is sufficient if dated." And in Denmark,^ if written on the instrument and if the consideration is ex- pressed.^^ And in the latter State it is presumptive evidence •Fairfield v. Adams, 16 Pick. 381 (1835) ; Nelson v. Dubois, 13 Johns. 175- (1816) ; United States v. Barker, 1 Paine C. C. 156 (1820) ; Jackson v. Has- kell, 3 111. 565 (1840) ; Snyder v. Hummel, Pen. 38 (N. J. 1806) ; Kiker v. Corley, lb. 911 (1811) ; Hunt v. Armstrong, 5 B. Mon. 399 (1845) ; Mitchel V. Mitchel, 11 Gill & J. 388 (1841) ; Whiteford v. Burckmyer, 1 Gill 127 (1843) ; Gutting v. Gonklin, 28 111. 506 (1862). ^Snyder v. Hummel, Pen. 38 (N. J. 1806) ; Riker v. Corley, lb. 911 (1811). And see Johnson v. Martinus, 4 Halst. 144 (1827). But see contra, Green- ough V. Smead, 3 Ohio St. 416 (1854). 'Garr v. Louisville Bkg. Co., 11 Bush 180 (1874); Mitchel v. Mitchel, 11 Gill & J. 388 (1841) ; Barnes v. Eeynolds, 4 How. 114 (Miss. 1839). *GhMtemala (1774 Ordinances of Bilbao § 3) ; Honduras (same as Guate- mala). ^Bolivia (1834 Code Com. Art. 385) ; Colombia (1853 Code Com. Art. 428) ; Costa Rica (1853 Code Com. Art. 418) ; Mexico (1854 Code Com. Art. 364); Peru (1853 Code Com. Art. 429) ; Salvador (1855 Code Com. Art. 425) ; Spain (1829 Code Com. Art. 471). ^Austria (1850 Exch. Law Art. 12); Germany (1848 Exch. Law Art. 12); Switzerland (Exch. Laws, 1859 Berne, 1863 Basle ? 11) ; Uruguay (1865 Code Com. Art. 823). So, too, British Bills of Exch. Act 1882 ? 32. ^Austria (1850 Exch. Law Art. 13) ; Germany (1848 Exch. Law Art. 13) ; Switzerland (Exch. Laws, 1859 Berne, 1863 Basle § 12). So, British Bills of Exch. Act § 34. "Holland (1838 Exch. Law Art. 136). ^Argentine Republic (1862 Code Com. Art. 804) ; Chili (1865 Code Com. Art. 661) ; PoHugal (1833 Code Com. Art. 356) ; Uruguay (1865 Code Com. Art. 823). '"Brazil (1850 Code Com. Art. 362). ^'PoHugal (1833 Code Com. Art. 355). "JJenmark (1825 Exch. Law § 12). FOREIGN STATUTES. 361 of ownership in the holder.' In Lower Canada such indorse- ments are sufficient, as at common law, and the instrument is there transferable by delivery.^ And in Hungary such indorser is estopped from denying his authority, if the in- dorsement is made special by the holder;^ but such indorse- ment is a mere power to collect the bill or note.* Some foreign statutes require the indorsee's name to be ex- pressed.' And some render the indorsement void without it.* And a few make it so with the exception of blank indorse- ments.'' Some require the name of the person furnishing: the consideration to appear also.* At least in special indorse- ments.® § 712. Foreign Statutes — Signature — Forgery. — The in- dorser's signature, although naturally implied, is especially required by statute in some States," either by the indorser in Denmark (1825 Exch. Law ? 12). ^Lower Canada (1867 Civ. Code Art. 2286). 'Hungary (1861 Exch. Law ? 35). - ^Hungary (1861 Exch. Law | 34) ; RusHa (1862 Exch. Law Art. 557). "Argentine Republic (1862 Code Com. Art. 803) ; Belgium (1851 Code Napo- leon) ; BoUvia (1834 Code Com. Art. 381) ; Brazil (1850 Code Com. Art. 361) ; Chili (1865 Code Com. Art. 658) ; Colombia (1853 Code Com. Art. 424) ; Costa Rica (1853 Code Com. Art. 414) ; Eeuador (1829 Code Com., as in Spain) ; France (1807 Code Napoleon Art. 137) ; Greece (1835 Code Napoleon) ; .Chiate- mala (1774 Ordinances of Bilbao ? 3) ; Hayti (1826 Code Napoleon) ; Holland (1838 Exch. Law Art. 134) ; Honduras (same as Guatemala) ; Hungary (1861 Exch. Law ^ 30) ; Italy (1865 Code Com. Art. 223) ; Mexico (1854 Code Com. Art. 360) ; Nicaragua (1869 Code Com. Art. 261) ; Peru (1853 Code Com. Art. 425); Salvador. {1855 Code Com. Art. 421); San Domingo (1829 Code Napo- leon); Spain (1829 Code Com. Art. 467); Switzerland (Geneva, Code Napoleon) ; Turkey (Code Napoleon) ; Venezuela (1862 Code Com. Art. 34). So, in the case of special indorsement, Portugal (1833 Code Com. Art. 355); Russia (1862 Exch. Law. Art. 559); Uruguay (1865 Code Com. Art. 822). ^Bolivia (1834 Code Com. Art. 383) ; Colombia (1853 Code. Com. Art. 426) ; Costa Rica (1853 Code Com. Art. 416) ; Ecuador (1829 Code Com., as in Spain) ; Mexico (1854 Code Com. Art. 362) ; Pent (1853 Code Com. Art. 427) ; Salvador (1855 Code Com. Art. 423) ; Spain (1829 Code Com. Art. 469). 'Chili (1865 Code Com. Art. 659). ^Argentine Republic (1862 Code Com. Art. 803) ; Bolivia (1834 Code Com. Art. 381); Brazil (1850 Code Com. Art. 361); Chili (1865 Code Com. Art. 658) ; Colombia (1853 Code Com. Art. 424) ; Costa Rica (1853 Code Com. Art. 414) ; Guatemala (1774 Ordinances of Bilbao i 3) ; Holland (1838 Exoh. Law Art. 134) ; Honduras (same as Guatemala). ^Portugal (1833 Code Com. Art. 355) ; Uruguay (1865 Code Com. Art. 822). ^"Great Britain (1882 Bills of Exch. Act ? 23) ; Venezuela (1862 Code Com. Art. 34). 352 TRANSFER BY INDORSEMENT. person or by his attorney.^ And in the latter case it is required in Mexico that the indorser's name precede that of the attorney.^ Some States require the indorser's full signa- ture,^ And some expressly render an indorsement void if the signature is wanting.* In some a forged indorsement is void except between the immediate indorsee and his real indorser.* But it will not render subsequent indorsements void;^ nor prior indorsements.'' § 713. Foreign Statutes — Position — Date. — In Portugal, an indorsement must be on the bill;* in Honduras, on the back of the bill ;' in Holland, oh the bill or a duplicate ; ^^ in Germany and Hungary, on the back of the bill or a copy of it;^^ or in Germany on an allonge ;^^ in Switzerland, on the bill or a copy, or on an allonge}^ In Russia, it may be partly on an allonge and partly on the bill.^* In Hungary, it may "■Bolivia (1834 Code Com. Art. 381) ; Chili (1865 Code Com. Art. 658) ; Co- lombia (1853 Code Com. Art. 424) ; Costa Rica (1853 Code Com. Art. 414) ; Ecuador (1829 Code Com. as in Spain) ; Holland (1838 Exch. Law Art. 134) ; Hungary (1861 Exch. Law § 30) ; Mexico (1854 Code Com. Art. 360) ; Nicara-, gua (1869 Code Com. Art. 261) ; Peru (1853 Code Com. Art. 425) ; Russia (1862 Exch. Law Art. 558) ; Salvador (1855 Code Com. Art. 421) ; Spain (1829 Code Com. Art. 467) ; Switzerland (Exch. Laws, 1859 Berne, 1863 Basle ? 11) ; Uruguay (1865 Code Com. Art. 822). 'Mexico (1854 Code Com. Art. 360). ^Guatemala (1774 Ordinances of Bilbao I 3) ; Honduras (same as Guate- mala). ^Bolivia (1834 Code Com. Art. 383) ; Chili (1865 Code Com. Art. 659) ; Co- lombia (1853 Code Com. Art. 426) ; Costa Rica (1863 Code Com. Art. 416) ; Ecuador (1829 Code Com. as in Spain) ; Mexico (1854 Code Com. Art. 362) ; Peru (1853 Code Com. Art. 427) ; Salvador (1855 Code Com. Art. 423) ; Spain (1829 Code Com. Art. 469). ^Argentine Republic (1862 Code Com. Art. 806) ; Uruguay (1865 Code Com. Art. 825). ^Brazil (1850 Code Com. "Art. 363); Holland (1838 Exch. Law Art. 137); Portugal (1833 Code Com. Art. 358) ; Russia (1862 Exch. Law Art. 567). ^Uruguay (1865 Code Com. Art. 825). "PoHugal (1833 Code Com. Art. 355). 'OuatemaJa (1774 Ordinances of Bilbao ? 3) ; Honduras (same as Guate- mala). ^"Holland (1838 Exch. Law Art. 134). ^^ Austria (1850 Exch. Law Art. 11); Brazil (1850 Code Com. Art. 361); Chili (1865 Code Com. Art. 656) ; Denmark (1825 Exch. Law ? 17) ; Oermany (1848 Exch. Law Art. 11) ; Hungary (1861 Exch. Law ? 28). ^'Austria (1850 Exch. Law Art. 11); Germany (1848 Exch. Law. Art. 11). So, British Bills of Exch. Act 1882 ? 32. ^Switzerland (Exch. Laws, 1859 Berne, 1863 Basle ? 11). ^'Russia (1862 Exch. Law Art. 556). FOREIGN STATUTES. 353 he on an allonge only if it is mentioned in the original bill ^nd attached by seal to it.^ Foreign indorsements are usually dated, and this is re- quired by many statutes, as to bills ;"* and by some as to promissory notes.* In others it is required for special indorsements.* And in others the omission of the date renders the indorsement a mere power for collection.® In Russia, if the date is omitted, it may be proved by parol.* In Italy, the word " data," referring to the next preceding ■date, is sufficient.' Ante-dating is prohibited by many statutes.* And in some the party who ante-dates an indorsement is liable for xlamages, and for forgery if the act is fraudulent.* 'Hungai-y (1861 Exch. Law § 46). ^Argentine Republic (1862 Code Com. Art. 803) ; Belgium (1851 Code Napo- leon) ; Bolivia (1834 Code Com. Art. 381) ; Brazil (1850 Code Com. Art. 361) ; Ohili (1865 Code Com. Art. 658) ; Colombia (1853 Code Com. Art. 424) ; Costa Mica (1853 Code Com. Art. 414) ; Ecuador (1829 Code Com. as in Spain) ; jFrance (1807 Code Napoleon Art. 137) ; Oreece (1835 Code Napoleon) ; Hayti (1826 Code Napoleon) ; Holland (1838 Exch. Law Art. 134) ; Hungary (1861 Jlxch. Law ^ 3U) ; Italy (1865 Code Com. Art. 223) ; Mexico (1854 Code Com. Art. 360) ; Nicaragua (1869 Code Com. Art. 261) ; Peru (1853 Code Com. Art. 425); Portugal (1833 Code Com. Art. 355); Salvador (1855 Code Com. Art. 421) ; San Domingo (1829 Code Napoleon) ; Spain (1829 Code Com. Art. 467) ; ■Switzerland (Geneva, Code Napoleon) ; Tarkey (Code Napoleon) ; Venezuela (1862 Code Com. Art. 34). 'Chiatemala (1774 Ordinances of Bilbao § 3) ; Honduras (same as Guate- xnala). ^Russia (1862 Exch. Law Art. 559) ; Uruguay (1865 Code Com. Art. 822). 'Bolivia (1834 Code Com. Art. 382) ; Colombia (1853 Code Com. Art. 425) ; . & L. 122. But see Edmunds v. Digges, 1 Gratt. 367 (1845), where it was held that there was no implied warrant of the solvency of the bank, both parties acting in good faith and the bank having failed the same daj'. 'Byles 164; Woodland v. Fear, 7 El. & Bl. 519. 'Byles 164; Timmins v. Gibbins, 18 Q. B. 722. But see contra, Corbit v. Bank of Smyrna, 2 Harring. 235 (1837). *Chitty 281 ; Ex parte Shuttleworth, 3 Ves. 368. So, 2 Parsons 41, unless the transferor knew of the drawer's insolvency. ^Chitty 282 ; Camidge v. Allenby, 6 B. & C. 373. n Daniel 683; Milks v. Rich, 80 N. Y. 269 (1880), affirming 15 Hun 178; Cardell v. McNiel, 2 N. Y. 336 (1860). And such guaranty is not a promise to pay the debt of another within the meaning of the statute of frauds^ Cardell v. McNiel, supra; Milks v. Rich, supra. So, if in writing but not expressing the consideration as required by the statute of frauds, Johnson V. Gilbert, 4 Hill 178 (1843) ; Dauber v. Blackney, 38 Barb. 432 (1862). 'Cbitty 280; Story on Prora. Notes § 117. * Story on Prom. Notes J 117. 'Byles 163; Story on Prom. Notes § 117 ; Van Wart v. WooUey, 3 B. & C, 439, 446. "In the case of a pre-existing debt paid by notes, if the notes be 394 TKAKSFEK BY INDORSEMENT. maker's solvency, which is void by the Statute of Frauds, an action will lie for the value of goods so paid for, on evidence that absolute payment was not intended.' Payment by bills of a bank which fails leaves the purchaser still liable for the goods purchased, unless the seller expressly took the risk as to the bills.^ Payment by a bill, note or check is condi- tioned on the payment of the paper at its maturity/ If bank notes are used in payment and the bank of issue has failed, neither party knowing of such failure at the time of the transfer, the transferor must bear the loss and remain liable on the original consideration.* So, if he delivers in payment and in good faith the note of a third person who is then in- solvent.* And this is true, a fortiori, if the maker of the note was insolvent at the time it was made and the transferor knew him to be in failing circumstances.* It has been held, however, that the delivery of a bank note of a bank which had failed unknown to either party is a good payment.' So, by the bill of an out-of-town bank which was supposed to be good but failed the day after the transfer.* not paid and the debtor is held liable, there is no doubt as to the original debt for which he is held liable, and there is no need to invent or imply any contract to make ovit the debt. But where goods are exchanged against money, if the payer is held liable it is difficult to imply a contract for goods sold and delivered, to be paid for on request," Byles 163 n. 1 Monroe v. Hoff, 5 Denio 360 (1848). ^Chitty 279, 281; Owenson v. Morse, 7 T. E. 65; Popley v. Ashley, Holt 122. 'Byles 163; Chitty 278; Ward v. Evans, 2 Ld. Raym. 928; Camidge v. Allenby, 6 B. & C. 373 ; Moore v. Warren, 1 Stra. 415 ; Holme v. Barry, 1 Stra. 415 ; Marsh v. Pedder, 4 Campb. 259 ; Taylor v. Briggs, Moody & M. 28. * Story on Prom. Notes ^ 119; Byles 162; Wainwright «. Webster, 11 Vt. 576 (1839) ; Fogg v. Sawyer, 9 N. H. 365 (1838) ; Frontier Bank v. Morse, 22 Me. 88 (1842) ; Harley v. Thornton, 2 Hill 509 (So. Car. 1833) ; Lightbody v. Ontario Bank, 13 Wend. 101, affirming 11 lb. 1 (1833) ; Westfall v. Braley, 10 Ohio St. 188 (1859). So, Townsend v. Bank of Racine, 7 Wis. 185 (1858), where the payment was made at a distance from the bank and the bank failed on the same day. So, Gilman v. Peck, 11 Vt. 516 (1839), where the giver had assured the receiver that the bank note was good. ^Roberts v. Fisher, 43 N. Y. 159 (1870). "Holt, C. J., in Popley v. Ashley, 6 Mod. 147; S. C, Holt 121. 'Scruggs V. Gass, 8 Yerg. 175 (1835). This case was followed by Gibson, C. J., in Bayard v. Shunk, 1 Watts & S. 92 (1841), where a judgment was paid off in notes of a bank that had failed on the previous day unknown to both parties. See, too, 19 Cent. L. J. 427. * Ware v. Street, 2 Head 609 (1859). WABKANTY OP GOOD FAITH. 395 So, where the bank had failed without the knowledge of either party, and the bills were paid as current cash without any warranty, there being no diligence on the holder's part in prosecuting the bank nor any offer to return the bills/ But, in general, payment in bills which are bad will not discharge the debtor, unless the person receiving them is guilty of laches.^ After due presentment and notice of non-payment the original debt revives,^ and the person receiving such notes must return them within a reasonable time.* And where bank bills were paid in good faith and the bank was insolvent at the time, and the bills were not returned within two months, although received from a person living in the same town, this was held to be an unreasonable delay which ■discharged the transferor.^ § 751. Warranty of Good Faith. — When one transfers by delivery bills or notes payable to bearer, he undertakes that he has no knowledge of any facts which prove the paper to be worthless.* And this is a statutory implication in California and Georgia.' The transfer of a bill which is known to be bad, is a fraud and the transferor will be liable in such case, whether the notes are given in payment for goods at the time of the purchase or afterward.' So, if the transferor of a check knew of the drawer's failure to pay another check on the same day, it will bar his right to recover on a note pur- chased with such check.' So, in an assignment of a claim against the government, it has been held that the assignor 'Lowry v. Murrell, 2 Port. 280 (1835). ^ Chitty 279 ; Ex parte Dickson, 6 T. E. 142. ^Byles 163 ; Story on Prom. Notes ? 117. *Byles 164; Rogers v. Langford, 1 Cromp. & M. 637. ^Thomas v. Todd, 6 Hill 340 (1844). n Daniel 679; 1 Edwards i 358; Story on Prom. Notes ? 118; Story on Bills § 225; Fenn v. Harrison, 3 T. R. 757; Camidge v. Allenby, 6 B. & C. ■373; Brown v. Montgomery, 20 N. Y. 287 (1859). See, too, remarks of Brady, J., in People's Bank v. Bogart, 6 Hun 270 (1878). 'California (1880 1 Hitt. Codes ? 6774) ; Georgia (1882 Code g 2778). 'Byles 165 ; 1 Daniel 681 ; Story on Prom. Notes \ 118 ; Camidge v. Allenby, ^upra; Fenn v. Harrison, swpra. •Brown v. Montgomery, 20 N. Y. 287 (1859). 396 TRANSFER BY INDORSEMENT. contracts that he has done nothing, and will do nothing, to prevent or impede its collection.^ The necessity for good faith in such transfers does not require due care or caution, except so far as the want of them may affect the question of good faith. Negligence alone is not equivalent to malajides? But it may amount under the circumstances of the case to bad faith, e. g. where a bank note for a large amount is changed for a stranger at a coun- try bank without inquiry.^ And it has been said that the one who discounts a bill should exercise more caution than the one who pays.* And, as we have seen, a person who receives a bill knowing that it was made to be discounted for certain purposes and on certain terms, takes it subject to those conditions,^ and he cannot appropriate it to a debt due to himself and bring an action against the acceptor.' § 752. Indorsement Guarantees Signatures and Bill Genu- ine. — An indorsement warrants the signatures of prior par- ties to be genuine.' And this is sometimes provided by statute ;' and in Pennsylvania the indorser is expressly made '2 Parsons 40; Eaton v. Millers, 7 Gray 566 (1856). 'Chitty 275; Byles 166; Goodman v. Harvey, 4 Ad. & El. 870; Uther v. Eich, 10 lb. 784. 'Byles 165; Snow v. Peacock, 2 C. & P. 221, Best, C. J., saying in this case that " the party's caution should increase with the amount of the note which he is called upon to change." * Byles 166. ^Chitty 272. 'Delany v. Mitchell, 1 Stark. 439. 'Byles 155; 2 Parsons 25; Story on Prom. Notes ^35; 1 Daniel 599; Lambert v. Oakes, 1 Ld. Eaym. 443; 12 Mod. 244; Lambert v. Pack, 1 Salk. 127; Critchlow v. Parry, 2 Camp. 182; Free v. Hawkins, Holt N. P. 550; Macgregor v. Rhodes, 25 L. J. Q. B. 318; Lake v. Hayes, 1 Atk. 281 ; Bal- lingalls V. Gloster, 3 East 483; Heylyn v. Adamson, 2 Burr. 666; Aldrich v. Jackson, 5 R. I. 218 (1858) ; Harris v. Bradley, 7 Yerg. 310 (1835) ; Williams V. Tishomingo Sav. Inst. 57 Miss. 633 (1880); Terry v. Bissell, 26 Conn. 23 (1857) ; Cochran v. Atchison, 27 Kans. 728 (1882) ; Strange v. Ellison, 2 Bailey 385 (1831) ; TurnbuU v. Bowyer, 40 N. Y. 456 (1869), affirming 2 Rob- ertson 411 ; Mosher v. Carpenter, 13 Hun 602 (1878). An indorser cannot therefore plead that he was himself defrauded and deceived as to the gen- uineness of a previous indorsement, Harris v. Bradley, supra; Ollivier v. Andry, 7 La. 496 (1834). And as such warrantor he was incompetent as a witness at common law on account of his interest, Herriek v. Whitney, 15 Johns. 240 (1818). ^British Bills of Exchange Act 1882 ? 55; California (1880 1 Hitt. Codes ? 8116) ; Dakota (1877 R. C. 472 § 1844) ; Georgia (1882 Code i 2778). INDOKSEMENT GUAKANTEES GENUINENESS. 397 liable for the amount paid him on a forged bill or indorse- ment.^ Even an indorser " without recourse " is liable for the genuineness of the prior signatures on the paper.^ The indorsement implies a warranty that the instrument is itself genuine.^ Thus, the indorser of a check which has been raised is liable for it.* So, if a prior indorsement has been forged.^ And where the transfer of a bill with a forged indorsement is made by an agent without disclosing his principal and he receives the consideration for the transfer, he will be liable for such forged indorsement.^ If the first indorsement is forged, the second indorser will be liable to a drawee who afterward paid the bill in good faith,^ or to a subsequent bona fide holder.* So, an indorsement warrants the genuineness of a prior indorsement made by a firm.® But it does not warrant the authority of an agent, by whom such indorsement was made.^" An accommodation indorser, however, known as such to his indorsee, has been held not to be liable on his indorse- ment for the genuineness of a draft which had been raised in amount without his knowledge." And, in general, an in- ^Pennsylvania (1872 1 Brightly's Purd. Dig. 159 ? 5; 1174 ? 8). =Dumond i;. Williamson, 18 Ohio St. 515 (1869). , 'Lyons v. Miller, 6 Gratt. 427 (1849) ; Tompkins v. Little Rock Ry. Co., 15 Fed. Rep. 6 (1882). 'City Bank v. National Bank, 45 Tex. 203 (1876). * Chambers v. Union Nat. Bank, 78 Penn. St. 205 (1875); Williams v. Tishomingo Sav. Inst. 57 Miss. 683 (1880). « Canal Bank v. Bank of Albany, 1 Hill 287 (1841), although he had received no notice of it for two months after the transfer and had then paid over to his principal the money received by him. 'Star F. I. Co. v. New Hampshire Bank, 19 Cent. L. J. 452 (N. H. 1884). 'State Bank v. Fearing, 16 Pick. 533 (1835), although he received the note directly from the maker. 'Dalrymple v. Hillenbrand, 62 N. Y. 5 (1875), affirming 2 Hun 488. •"Chitty 277; 1 Daniel 603; nor that a power of attorney, under which a prior indorsement is made, is sufficient. East India Co. v. Tritton, 3 B. & C. 280. And see Smith v. Mercer, 6 Taunt. 76. "Susquehanna Valley Bank v. Loomis, 85 N. Y. 207 (1881). This case contains a review by Danforth, J., showing that the recent cases which appear to hold otherwise are all based upon the fact that the indorser, charged as guarantor, had received full value and was only compelled to repay moneys received by him without adequate consideration. To this effect, see Hall v. Fuller, 5 B. & C. 750; Merchants' Bank v. Exchange Bank, 16 La. 457 ; Turnbull v. Bowyer, 40 N. Y. 456 ; White v. Continental Nat, 398 TRANSFER BY INDORSEMENT. dorser may by express reservation negative all such implied warranty of the signatures on a bill and refuse to make' such warranty.' And where the holder himself procures an indorsement, knowing the prior indorsement to be forged, he cannot hold the later indorser as warranting the genu- ineness of the first indorsement.^ So, indorsing a note at the maker's request on payment by him will not render the indorser liable for a collateral stock certificate, deliv- ered with it and afterward found to be spurious.^ § 753. Delivery Warrants Genuineness. — Whenever a bill or note is transferred for value, the assignor impliedly war- rants it to be genuine ;* although he delivers it without indorsement.^ If the bill is not what it professes to be, the purchaser may recover the price paid under mistake as to the facts.* Thus, one who sells a forged United States treas- ury note in good faith is liable to the purchaser, if there is no negligence on his part, although he had no notice of the facts for several months after the transfer.' So, too, the sale of a forged navy bill,* or of a stolen railroad bond.' Bank, 64 lb. 316; Graves v. Am. Exch. Bank, 17 lb. 205; Morgan v. Bank of State of N. Y., 11 lb. 404; Canal Bank v. Bank of Albany, 1 Hill 287. See, too, 1 Daniel 597 ; Story on Prom. Notes ?? 135, 879. 'Bell V. Dagg, 60 N. Y. 528 (1875), on the ground, in this case, that the in- dorsee was himself better acquainted with the maker's signature and such) refusal being taken into account in fixing upon a high rate of discount. 'Turner v. Keller, 66 N. Y. 66 (1876). 'Ketchum v. Bank of Commerce, 19 N. Y. 499 (1859). 'Fuller V. Smith, 1 C. & P. 197; Jones v. Kyde, 5 Taunt. 488; Camidge ». Allenby, 6 B. & C. 373. ''2 Parsons 37 ; Story on Bills g 111 ; Story on Prom. Notes ? 118 ; Allen v. Clark, 49 Vt. 390 (1877) ; Bankhead v. Owen, 60 Ala. 457 (1877) ; Snyder v. Eeno, 38 Iowa 329 (1874); Swanzey v. Parker, 50 Penna. St. 441 (1865); Thompson v. McC\illough, 31 Mo. 224 (1860) ; Young v. Adams, 6 Mass. 181 (1810); Ellis V. Wild, lb. 321; Terry v. Bissell, 26 Conn. 23 (1857); Cabot Bank v. Morton, 4 Gray 156 (1855) ; Giffert v. West, 37 Wis. 115 (1875), affirming 33 lb. 617; Smith v. McNair, 19 Kans. 330 (1877). And this has- been held in Kansas to be the rule, independent of any implied collateral warranty. Smith v. McNair, supra. •Gurney v. Womersly, 4 El. & Bl. 133 ; Gompertz v. Bartlett, 2 E. & B. 489 : Fenn v. Harrison, 3 T. R. 757 ; Camidge v. Allenby, 6 B. & 0. 373. As well as his costs incurred in prosecuting the note against the supposed maker,. Whitney v. Potsdam Nat. Bank, 45 N. Y. 303 (1871). 'Frank v. Lanier, 91 N. Y. 112 (1883). 'Jones V. Eyde, 5 Taunt. 487; S. C, 1 Marsh. 157. 'Ledwich v. McKim, 53 N. Y. 307 (1873), the bond being incomplete and non-negotiable. DELIVERY WAREANTS GENUINENESS. 399 If the sale of a forged note is made by an agent, the prin- cipal for whom he acts will be liable.^ And it is not neces- sary that all the prior signatures should be forged, but if any of them are spurious the purchaser may return the bill or note within a reasonable time and recover the amount paid by him.^ A transfer by assignment or delivery warrants the genuineness of the prior indorsements, as well as of the in- strument itself;^ unless the forged indorsement is sold in good faith and outright without indorsement or warranty.* If the sale is made by a broker he will be liable for the money received, although he has paid it over to his principal;* and although he was known to be but an agent;* especially if the principal was not disclosed.' But in Maryland such sale by an agent has been held to warrant only the title and not the genuineness of the bill.* We have seen that such warranty may be expressly ex- cluded.* On the other hand, he may be estopped from denying the signature of a later indorsement, e. g. where one indorses and delivers a bill to A. supposing him to be B., and A. personates B. and forges an indorsement in his name.^" But the holder of a bill, who receives payment in •Thompson v. McCullough, 31 Mo. 224 (1860). ^Byles 164; 1 Daniel 669; Story on Prom. Notes 1 118; Pooley v. Browne, 31 L. J. C. P. 135 ; Gurney v. Womersly, 4 El. & Bl. 133. Especially where the assignor knew the character of the signatures, Hurst v. Chambers, 12 Bush 165 (1876). 'Coolidge V. Brigham, 1 Mete. 547 (1840) ; Cabot Bank v. Morton, 4 Gray 156 (1855) ; Worthington v. Cowles, 112 Mass. 30 (1873) ; Thompson v. McCullough, 31 Mo. 224 (1860). So, too, where an indorsed note was for- warded by mail to be passed to the writer's credit, Coolidge v. Brigham, iwpra. *Baxter v. Duren, 29 Me. 434 (1849) ; Ellis B.Wild, 6 Mass. 321 (1810). ^Puller V. Smith, Ry. & Mood. 49; S. C, 1 C. & P. 197. ^Merriam ii. Wolcott, 3 Allen 258 (1861). And this is true although the broker had sold the bill for less than its face and paid over the proceeds to his undisclosed principal, Merriam v. Wolcott, supra. But see Worthington V. Cowles, 112 Mass. 30 (1873) ; Wilder v. Cowles, 100 lb. 487 (1868). 'Morrison v. Currie, 4 Duer 79 (1854) ; Merriam v. Wolcott, supra. «Fisher v. Rieman, ]2 Md. 497 (1858). 'Bell V. Dagg, 60 N. Y. 528 (1875) ; or the purchaser may agree to " take his chances," Beal v. Roberts, 113 Mass. 525 (1873). But one who assigns a note " without recourse," is still liable for fraud or misrepresentation in the transfer, Prettyman v. Short, 5 Harring. 360 (1852). '"Forbes v. Espy, 21 Ohio St. 474 (1871). 400 TRANSFEE BY INDORSEMENT. good faith from the acceptor, is not liable to him if the drawer's signature is forged, the acceptor being presumed to know the drawer's signature.^ If the maker of a note delivers it with the payee's indorsement forged, he is liable as if the note were made payable to a fictitious person." § 754. If an antecedent debt is paid by a bad bill, it is no payment.' So, if goods are purchased and forged bank notes paid in good faith for them.* A payment in bank notes implies that they are genuine.' And especially if the trans- feror knew that the bills had been questioned, he will be liable for them.* But negligence on the receiver's part to return them within a reasonable time after discovering their character will discharge the transferor.'' His warranty of genuineness is not, however, merged in, or waived by, a parol promise on his part that the note was good and he would see it paid.* § 755. Warranty of Title. — The transfer of a bill or note implies a warranty of title in the transferor.' So, too, the transfer of a railroad bond or of a treasury note.'" So, the indorsement, " without recourse," of a United States note which had been stolen." And an agent by indorsing guar- ^ Howard v. Mississippi Bank, 28 La. An. 727 (1876). ^Hortsman v. Henshaw, 11 How. 177 (1850). 'Ex parte Blackburne, 10 Ves. 204; Baker v. Bonesteel, 2 Hill 397 (1859) ; Kottwitz V. Bagby, 16 Tex. 656 (1856). 'Owenson v. Morse, 7 T. R. 64; Markle v. Hatfield, 2 Johns. 455 (1807) ; Young V. Adams, 6 Mass. 182 (1810) ; Eagle Bank v. Smith, 5 Conn. 71 (1823) ; Keene v. Thompson, 4 Gill & J. 463 (1832) ; Mudd v. Reeves, 2 Harr. & J. 368 (1808). And it seems that the vendor may in such case avoid the sale and recover the goods, as long as they are in the hands of the original purchaser, Bell v. Caflferty, 21 Ind. 411 (1863). = Kottwitz V. Bagby, 16 Tex. 656 (1856). "Chalmers v. Harris, 22 Tex. 265 (1858). 'Gloucester Bank v. Salem Bank, 17 Mass. 33 (1820). In this case fifteen days was held to be an unreasonable delay. 'Cabot Bank v. Morton, 4 Gray 156 (1855). "1 Daniel 678; 1 Edwards ? 354; Story on Prom. Notes ? 118; 2 Parsons 37 ; Lake v. Hayes, 1 Atk. 281 ; Heylyn v. Adamson, 2 Burr. 669 ; Ballin- galls V. Gloster, 3 East 483 ; Fish v. First Nat. Bank, 42 Mich. 203 (1879) ; Williams v. Tishomingo Sav. Inst., 57 Miss. 633 (1880). "Ledwich v. McKim, 53 N. Y. 307 (1873); Michel v. Vanentine, 10 Bob. 404 (La. 1845). "Frazer v. D'Invilliers, 2 Penna. St. 200 (1845). WAEEANTY OF VALIDITY. 401 antees his principal's title.' But in the case of a foreign principal it is said that the purchaser looks prima fade to the title of the agent offering the bill.^ An indorsement is sometimes declared by statute to imply a warranty of title.' § 756. Warranty of Validity. — An indorser is also liable for the validity of the instrument indorsed by him.* And in the case of a St-ate or municipal bond he warrants its con- stitutionality.^ His indorsement admits that prior indorse- ments have been duly made,* and guarantees the capacity of the parties prior to himself on the paper.' In California the statute expressly provides for this.* An indorser cannot set up as a defense that the maker was a married woman and the note an accommodation for her husband.' And an express -warranty by the indorser of the capacity of an infant maker is not within the Statute of Frauds.^" But an indorser does not warrant the authority of an agent who signed a prior indorsement." Although if the indorsement is in a firm 'Mills V. Barney, 22 Cal. 240 (1863). ''Byles 164; Poirier v. Morris, 2 El. & Bl. 103. 'British Bills of Exch. Act 1882 § 55 ; California (1880 1 Hitt. Codes § 8116) ; Dakota (1877 Rev. Codes 472 i 1844) ; Georgia (1882 Code § 2778). *Lake v. Hayes, 1 Atk. 281 ; Heylyn v. Adamson, 2 Burr. 669; BaMingalls V. Gloster, 3 East 483 ; British Bills of Exch. Act 1882 | 55 ; Henderson v. Fox, 5 Ind. 489 (1854) ; Howell v. Wilson, 2 Blackf. 418 (1831) ; Willson v. Binford, 81 Ind. 588 (1882) ; Huston v. First Nat. Bank, 85 lb. 21 (1882). To the extent of what appears on its face, Tompkins v. Little Rock Ry. Co., 15 Fed. Rep. 6 (1882). If it is illegal and payment is refused' on that account, lie is liable without formal demand or notice of dishonor, Gopp v. McDoug- all, 9 Mass. 1 (1812). ^Railroad Companies v. Schutte, 13 Otto 118 (1880). ■ So, one who transfers coupons of a municipal corporation by delivery, McCay v. Barber, 37 Ga. 423 (1867). «Chitty 277; 1 Edwards ? 406; Lambert v. Pack, 1 Salk. 127. 'Byles 155; 2 Parsons 25 ; Story on Prom. Notes I 135 ; Lambert v. Oakes, 1 Ld. Raym. 443; 12 Mod. 244; Lambert v. Pack, 1 Salk. 127; Critchlow v. Parry, 2 Camp. 182; Haly v. Lane, 2 Atk. 181; Prescott Bank v. Caverly, 7 Oray 217 (1856) ; Archer v. Shea, 14 Hun 493 (1878) ; Erwin v. Downs, 15 N. Y. 575 (1857). The indorser cannot set up the duress of the maker which was known to him at the time of indorsing, Bowman v. Hillier, 130 Mass. 153 (1881) ; nor the coverture of a prior indorser, Ogden v. Blydenburgh, 1 Hilt. 182 (1856) ; Butler v. Slocomb, 33 La. An. 170 (1881). ^California (1880 1 Hitt. Codes § 8116) ; Dakota (1877 Rev. Code 472 ? 1844). 'Archer v. Shea, 14 Hun 493 (1878). "•King V. Summitt, 73 Ind. 312 (1881). "Eaat India Co. v. Tritton, 3 B. & C. 280. See, too, Smith v. Mercer, 6 Taunt. 76. But see, contra, and that notwithstanding the previous death of VOL. n. 2a 402 TRANSFER BY INDORSEMENT. name, he cannot set up the dissolution of the firm to invali- date the indorsement.^ The indorser guarantees the instrument to be valid in respect to its consideration/ e. g. that it is not usurious.* And in New York a corporation indorsing cannot, under the statute, set up usury in the transfer.* But in general an indorsee who is privy to the illegal consideration cannot sue the indorser.^ An indorsement does not, however, warrant the considera- tion of the bill or note to be sufficient, e. g. that it is not accommodation paper.* Nor can he avail himself of the non-negotiable form of a prior corporation indorsement under seal.'' And he cannot attack the validity of the bill on the ground that it had been paid before transfer.* So, if in payment of a debt he indorses a bill to his creditor, which is invalid for want of a proper stamp, he is still liable for the debt as unpaid .* § 757. Warranty of Validity — By Assignment. — An in- dorser without recourse is liable on the same implied war- ranties as a transferor by delivery.^" He guarantees the the principal, unknown to the agent or the indorser, Burrill v. Smith, 7 Pick. 291 (1828). 'Fish V. First Nat. Bank, 42 Mich. 203 (1879). 'Chitty 98; 1 Daniel 600; 1 Parsons 218; Edwards v. Dick, 4 B. & Aid. 212; Bowyer v. Bampton, 2 Stra. 1156; Moflfett v. Bickle, 21 Gratt. 280 (1871). Thus, usury in making of note cannot be set up by the indorser, Morford v. Davis, 28 N. Y. 481 (1864) ; Frank v. Longstreet, 44 Ga. 179 (1871) ;. Fake v. Smith, 7 Abb. Pr. (n. s.) 106 (1869). Nor can he set up that the iiote was made for other illegal consideration, Graham v. Maguire, 39 Ga. 531 (1869). 'Hazzard v. Citizens' State Bank, 72 Ind. 130 (1880). *Stewart v. Bramhall, 74 N. Y. 85 (1878), affirming 11 Hun 139. 'Ackland v. Pearce, 2 Campb. 599. "People's Bank v. Bogart, 81 N. Y. 101 (1880), affirming 16 Hun 270. 'Band v. Dovey, 83 Penna. St. 280 (1876). «Maupin v. Compton, 3 Bibb 214 (1813). So, McNeil v. Knott, 11 Ga. 142 (1852), even though the indorser had been discharged in bankruptcy before the payment to his indorser was discovered. 'Gundy v. Marriott, 1 B. & Ad. 696. "And he is liable even to a remote indorsee for fraud or for consideration actually received, where the paper transferred is avoided by the maker for fraud, Watson v. Chesire, 18 Iowa 202 (1865). WARRANTY OF VALIDITY. 403 competency of prior parties,^ the validity o( the instrument as to consideration, <^c.,^ and its subsisting character as evi- dence of a debt not paid.* So, an indorser of overdue paper without recourse warrants it not to be subject to existing set- offs ;* but not against defense by a prior indorser for want of due notice of protest.* So, an assignor by delivery or otherwise is liable for the validity of the instrument assigned.^ But this warranty, unlike that of an indorsement, is limited to the legal exist- ence of the debt, which the paper represents/ Thus, an assignment of a municipal bond by way of a sale, and made in good faith, does not guarantee its constitutionality.* But in a sale of school certificates the assignor is presumed to warrant their validity.^ So, the title to a treasury note, although a guaranty had been refused.^" An assignment warrants the capacity of prior parties ;^^ although such impli- cation was held to be excluded in the case of an infant maker, where the note was transferred with an express warranty as to its genuineness.^^ '1 Daniel 598. 'Hannum v. Eichardson, 48 Vt. 508 (1875) ; Challiss v. McCrum, 22 Kans. 157 (1879). But such implied warranty is subject to the Statute of Limita- tions running from the date of the indorsement, Blethen v. Lovering, 58 Me. 437 (1870). 'Mays V. Collison, 6 Leigh 230 (1835), being decided as a question of intention by the jury.' * Where the indorsement was "indorser not holden," Ticonic Bank v. Smiley, 27 Me. 225 (1847). 'Ober V. Goodridge, 27 Gratt. 878 (1876), the transfer being made with such understanding and for a consideration less than the face of the note. •Chanter v. Hopkins, 4 M. & W. 399. 'Denton v. Duplessis, 12 La. 83 (1838), So, one who transfers a bill by delivery after maturity is not liable to his transferee, although he knew that the maker claimed to have a defense because of failure of consideration. Diamond v. Harris, 33 Tex. 634. "Otis V. Cullom, 2 Otto 447 (1875). 'Lawton v. Howe, 14 Wis. 241 (1861). So, too, Hurd v. Hall, 12 Wis. 125 (1860), where the land certificates transferred were invalid on account of a previous sale of the lots certified. "Michel V. Vanentine, 10 Rob. 404 (La. 1845). "So held, in case of a written assignment without express warranty, the note having been made by an insane maker, Thrall v. Newell, 19 Vt. 202 (1847). And such warranty is available at suit of a remote transferee, Lob- dell V. Baker, 3 Mete. 469 (1842), affirming 1 lb. 193. "Baldwin v. Van Deusen, 37 N. Y. 487 (1868). 404 TEANSFER BY INDORSEMENT. § 758. The assignor of a bill warrants that it is valid, e. g. properly stamped;^ or, if made abroad, that it was stamped according to the law where it was made ; '^ but not that such foreign stamp was properly canceled.^ So, the assignor guar- antees the sufficiency of the consideration of a bond given to procure a military substitute;* or the validity of a bill assigned, e. g. as to usury between the original parties.* And in such case even a verbal warranty is sufficient to render the indorser liable, if the maker is discharged by such usury.* But in New York a transfer without indorsement does not imply a warranty that the bill is not usurious ; ^ although an express warranty to that effect as to a mortgage, will be extended by implication to the bond secured by it.* And where such warranty is implied, as in Wisconsin, it will not be defeated by the fact that the transfer was made at a dis- count below the fair value of the paper.* In general, no warranty will be implied against express stipulations, e. g. that a debt should be paid in particular bills, which after- ward prove to be illegal ;^'' especially if the creditor taking the bills has disposed of them at par and the original debtor has redeemed them in the hands of later holders.^^ '^ Young V. Cole, 3 Bing. N. 0. 724. But, in general, an assignment of a treasury note without indorsement will imply no warranty, if the treasury regulations require indorsement, Moore v. Worthington, 2 Duv. 307 (1865). 'Byles 164; Gompertz v. Bartlett, 23 L. J. Q. B. 65; 2 El. & Bl. 854. See, too, 33 and 34 Vict. c. 27 § 52. 'Byles 164; Pooley v. Browne, 11 C. B. (n. s.) 566. *riynn v. Allen, 57 Penna. St. 482 (1868). And such assignor cannot set up that the original consideration has failed, lb. »aiflfert V. West, 37 Wis. 115 (1875), affirming 33 16. 617. So, Delaware Bank v. Jarvis, 20 N. Y. 226 (1859), where the transferor knew that the note was tainted with usury. — "White V. Webster, 58 Ind. 233 (1877). 'Littauer v. Goldman, 72 N. Y. 506 (1878), reversing 9 Hun 231. 8 Boss V. Terry, 63 N. Y. 613 (1875). •Giffert v. West, 37 Wis. 115 (1875), affirming 33 lb. 617. "Dakin v. Anderson, 18 Ind. 52 (1862). "Alexander v. Byers, 19 Ind. 301 (1862). CONTINGENT ON DEMAND AND NOTICE. 405 CHAPTER XXII. INDOESEE'S LIABILITY. I. Discharge by Want of Demand or Diligence. II. Discharge by Extension, Release, &e. III. Pleading and Evidence. I. DISCHARGE BY WANT OF DEMAND OR DILIGENCE. 758. Contingent on Demand and Notice. 759. American Statutes. 760. Demand and Notice — Not Necessary. 761. Diligence against Maker. 762. American Statutes as to Diligence. 763. Illinois Rule. 764. Indiana Rule. 765. Statutes of other States. 766. Foreign Statutes as to Indorsement. § 758. Indorsement Contingent on Demand and Notice. — The indorser's contract for payment is by the law merchaat conditioned on due presentment for payment and notice of dishonor, and failure to make such presentment or give such notice will discharge him.^ And such demand and notice must be averred by the holder in pleading.^ Inland bills of exchange do not require formal protest, but the indorser of such a bill is entitled to notice of its dishonor.^ If the dishonor is by refusal to accept the bill on presentment for that purpose, want of notice will discharge him in like man- ' Byles 154 ; Story on Bills ? 225 ; Suse v. Pompe, 8 C. B. (n. s.) 538 ; Law- rence V. Langley, 14 N. H. 70 (1843) ; Field v. Nickerson, 13 Mass. 131 (1816) ; Powers V. Lynch, 3 lb'. 77 (1807) ; Ray v. Smith, 17 Wall. 411 (1873) ; Bank of Old Dominion v. McVeigh, 29 Gratt. 546 (1877); Chapman v. McCrea, 63 Ind. 360 (1878) ; Freeman v. O'Brien, 38 Iowa 406 (1874) ; Wilson v. Senier, 14 Wis. 411 (1861); Winston v. Richardson, 27 Ark. 34 (1871); Whitten v. Wright, 34 Mich. 92 (1876) ; Letchford v. Richard, 20 La. An. 138 (1868) ; Cammack v. Gordon, 20 La. An. 213 (1868) ; Smith v. Mc Waters, 22 lb. 431 (1870) ; Flowers v. Bitting, 45 Ala. 448 (1871) ; Hooks v. Anderson, 58 lb. 238 (1878) ; Selover v. Snively, 24 Kans. 672 (1881) ; Stanley v. Farmers' Bank, 17 lb. 592 (1877) ; Shields v. Farmers' Bank, 5 W. Va. 254 (1871). ^Disborough v. Vanness, 3 Halst. 231 (1825). An averment of due dili- gence is not sufficient, even after verdict, lb. 'Young V. Bryan, 6 Wheat. 146 (1821). 406 indorsee's liability. ner.' So, demand must be made strictly in accordance with, the requirements of the law merchant, and the indorser will be discharged by laches in making presentment of the bill or note for payment.^ To hold the drawer and indorsers, every bill must be pre- sented for acceptance or for payment, and, if accepted, must be presented for payment, unless presentment is excused or waived.* A payee who indorses is not a surety but an in- dorser, and is entitled to notice of dishonor.* So, one who indorses a bill or note for collection.^ So, an indorser after maturity will be discharged, if demand is not made and notice of dishonor given in a reasonable time.* So, the indorser of a demand note,' or an indorser in blank.* § 759. American Statutes. — Some States have provided by statute that an indorser shall be liable only on notice of dis- honor.® In Utah the indorser of a demand note is discharged if demand is not made within six months from date;" and the indorser of a check is discharged by laches in present- ment to the extent of all damage occasioned thereby." In Vermont the indorser of a demand note is entitled to notice of dishonor as in the case of a note payable at a time certain." In Iowa a blank indorser is not discharged by want of notice of dishonor, unless he is damaged by it.^* In Massachusetts 'Bartlett v. Benson, 14 M. & W. 733. 'Eisenlord v. Dillenbeck, 15 Hun 23 (1878) ; Crim v. Starkweather, 88 N. Y. 339 (1882) ; Otto v. Belden, 28 La. An. 302 (1876) ; Union Ins. Co. v. Eodd, 26 lb. 715 (1874). 'Burritt v. Tidmarsh, 5 Bradw. 341 (1879). 'Eichelberger v. Pike, 22 La. An. 142 (1870). 'Chapman v. McCrea, 63 Ind. 360 (1878). In this case failure to protest the note was held to discharge the indorser. •Dixon V. Clayville, 44 Md. 573 (1876) ; Patterson v. Todd, 18 Penna. St. 426 (1852) ; Aldis v. Johnson, 1 Vt. 136 (1828). 'Field V. Nickerson, 13 Mass. 131 (1816). 'Smith V. Long, 40 Mich. 555 (1879), want of notice being prima fade evi- dence of damages in such case. 'California (1880 1 Hitt. Codes I 8116) ; Dakota (1877 Eev. Code 472 1 1844) ; Montana (1879 E. S. 424 ?? 102, 103) ; Utah (1882 P. L. o. 41 ? 24). ^"Utah (1882 L. c. 41 § 109). "t/taA (1882 L. c. 41 H 110, 111). ^Vermont (1880 E. L. § 2014). "Eodabaugh v. Pitkin, 46 Iowa 544 (1877) ; 1880 Code ? 2090. DEMAND AND NOTICE. 407 a,n indorser in blank is now entitled to notice, but was not so prior to 1874.^ Other provisions, both of foreign and American statutes, relating to demand and notice of dishonor, «re left for more particular consideration in a later chapter. § 760. Demand and Notice — Not Necessary. — Notice of •dishonor is necessary, notwithstanding the indorser's subse- quent knowledge of the fact.'* But in England the indorser of an unstamped bill is not entitled to notice.* And in •Georgia the indorser of a note is only entitled to notice of dishonor if it is payable or to be negotiated at a bank.* One who indorses as surety is not entitled to notice;* nor one who assigns without indorsement.* So, an indorser, for whose accommodation a bill or note was given, is not dis- charged by want of notice.^ So, an indorser, by his implied ■warranty that the maker has capacity to contract, waives protest, if the maker is not liable by reason of coverture or other incapacity.* An indorser .who waives demand and notice may be sued forthwith on the maturity of the instru- ment,* and becomes absolutely liable for its payment.^" And it has been held that a written waiver applies to all subse- quent indorsers below it." To hold an indorser, demand must be made in the usual time and manner.^* In Pennsyl- 'The act of 1874 not being retrospective, Cook v. Googins, 126 Mass. 410 ■(1879) ; 1882 Pub. Stats, p. 427. 'Bank of Old Dominion v. McVeigh, 29 Gratt. 546 (1877). 'Cundy v. Marriott, 1 B. & Ad. 696. •Falk V. Rothschild, 61 Ga. 595 (1878) ; Randolph v. Fleming, 59 Ga. 776 <(1877). Intention to negotiate at a particular bank will be presumed from the note being made payable there, Randolph v. Fleming, supra. The ■Georgia Code (? 2781) requires notice of dishonor if the paper is made to be negotiated at a chartered bank, and protest if it is payable or discounted •or left for collection at a bank or banker's office. ^Adams v. Gordon, 22 La. An. 41 (1870). 'Unless he can show himself injured by the holder's negligence. Hunter V. Moul, 98 Penna. St. 13 (1881). 'Black V. Fizer, 10 Heisk. 48 (1872), even though he has charged the •amount of the note to the maker on his book?, ^Butler V. Slocum, 33 La. An. 170 (1881). 'Gibson v. Parlin, 13 Neb. 292 (1882). "Union Nat. Bank v. Lee, 33 La. An. 301 (1881). "Parshley v. Heath, 69 Me. 90 (1877). "Boston Bank v. Hodges, 9 Pick. 420 (1830). So, as to time. Field v. Nick- •erson, 13 Mass. 131 (1816) ; Dixon v. Clayville, 44 Md.,573 (1876). 408 indorser's liability. vania it was at one time provided by statute that protest made at any time before suit begun would bind the indorser^ but this law was soon afterward repealed.^ It is not necessary that the holder should give notice of dishonor to all successive indorsers, but it is sufficient a& against his immediate indorser, if given to him, and he must protect himself by notice to his immediate indorser.^ An indorser, being entitled to notice of dishonor, cannot be held liable without proof of such notice,* which must appear in the certificate of protest or otherwise.* But the discharge of one indorser for want of due notice of dishonor will not discharge other indorsers,® nor affect a collateral security.® In Illinois diligence against the maker is substituted for demand or notice ;' and so, too, in Alabama and Texas, if suit is brought against the maker at the next term.* In Mon- tana the indorser of a check is liable without notice of dis- honor.® And this is true generally, where the drawer has na account or funds in the bank drawn upon. § 761. Diligence against Maker. — It is the indorser's duty, on receiving notice of dishonor, forthwith to pay the bill or note. He can then protect himself against prior parties. But he cannot by the law merchant require the holder to proceed against the maker ;'^° and failure to sue the maker, without a binding extension of time for payment, is no discharge of the indorser.-'^ So, if a judgment is recovered and execution 'Act of 1849 repealed in 1851 ; Ashton v. Sproule, 35 Penna. St. 492 (1860). 'Struthers v. Blake, 30 Penna. St. 139 (1858). 'Abott V. Borge, 20 La. An. 372 (1868). ♦Crane v. Benit, 20 La. An. 228 (1868). "Crane v. Trudeau, 19 La. An. 307 (1867). 'Mitchell V. Clark, 38 Vt. 104 (1862), unless its collection is prevented by such laches. 'Harding v. Dilley, 60 111. 528 (1871) ; Wilder v. De Wolf, 24 lb. 191 (1860) ; 1885 Annotated Stats, c. 98 § 7. 'Roberts v. Kilpatrick, 5 Stew. & Port. 96 (1833). Leaving the State ex- cuses such diligence, but not leaving the country, lb. So, Texas (1879 E. S. Arts. 262, 273). 'McDonald v. Stokey, 1 Mont. 388 (1871). "Faulkner v. Faulkner, 73 Mo. 327 (1881), an indorser differing in this- respect from a surety ; Gibson v. Parlin, 13 Neb. 292 (1882). "Allen V. Brown, 124 Mass. 78 (1878); Agricultural Bank v. Bishop, 6 Gray 317 (1856) ; Home v. Bodwell, 5 lb. 457 (1855) ; State Bank v. Wilson, 1 Dev. AMEKICAN STATUTES AS TO DILIGENCE. 409 issued against the maker, and the levy held without enforc- ing the lien, it will not discharge the indorser.^ So, mere delay in suing the maker, after giving due notice of dishonor will not discharge an indorser;^ especially if the delay is at the indorser's own request.* The maker's having had prop- erty at maturity or afterward, before suit was brought against the indorser, will not avail to discharge him.* And although a note is indorsed as conditional payment of the indorser's debt, he will remain liable on its dishonor, even if the holder does not sue the maker.* So, too, though he is an accommo- dation indorser,' and though the holder neglects to enforce a set-off against the maker.' And if " reasonable and due- diligence " is expressly stipulated for, it will be sufficient to bring suit against the makers and indorsers, although the latter have removed from the State.* § 762. American Statutes as to Diligence. — In many of the United States, diligence against the maker is required by 484 (1828). The only condition of the indorser's contract for liability is that " the holder shall do no act to suspend, impair or destroy his right to indemnity from such other parties to the instrument as are bound to save him harmless," and mere delay is not such an act, Clifford, J., in Boss v. Jones, 22 Wall. 576 (1874). 'Smith V. Erwin, 77 N. Y. 466 (1879). In this case the indorser .had taken an assignment of the maker's personal property and given a mortgage on his own real estate to enable the holder of the note to raise money for its payment, but the indorser had procured the cancellation of the mortgage by the maker of the note before any money was raised on it. 'Ross V. Jones, supra; Moore v Britton, 22 La. An. 64 (1870) ; Powers v. Waters, 17 Johns. 176 (1819) ; Bank of Smith Carolina v. Myers, 1 Bailey 412 (1830); Cherry «. Miller, 7 B. J. Lea 305 (1881). Although the holder has taken collateral from the maker, Sterling v. Marietta, &c., Company, 11 Serg.& 11.179 (1824). ^Chitty 448; Story on Bills | 419; Pine River Bank v. Swazey, 47 N. H. 154 (1866). So, a delay of execution against the maker pending his eflfort to raise the necessary funds by a subscription, to which the indorser was a party, followed by an acceptance of the money subscribed and a new note for the balance and a release of the levy, will not discharjje the indorser, especially after payment by him on a subsequent execution, Solomon v. Gregory, 4 Harr. 112 (N. J. 1842). *Violett V. Patton, 5 Cranch 142 (1809). 'Clark If. Young, 1 Cra-nch 181 (1803). 'Miller v. Mellier, 59 Mo. 388 (1875). The indorser's remedy is to take up the note and proceed against the maker himself, McCamant v. Miners', Ac, Bank, 19 Cent. L. J. 318 (Penna. S. C. 1884). 'Glazier v. Douglass, 32 Conn. 393 (1865). 'Camden v. Doremus, 3 How. 515 (1845). 410 INDOESER S LIABILITY. statute. Thus, in Alabama the holder must proceed against the maker by suit and execution, in the case of a non-nego- tiable note.^ But the indorser may waive his right to have the maker first sued.^ And his own delay in paying the note is no defense to an action brought by him afterward against his indorser.' In Arkansas the statute requires prosecution of the principal debtor on the demand of a " person bound as security," but this has been held not to apply to indorsers of commercial paper.* In Colorado the holder must use due diligence in prosecuting the suit against the maker, unless he can prove that the suit would have been unavailing, or that the maker had absconded or left the State before the maturity of the paper." Failure to sue the maker at the first term amounts to a discharge, but not so a delay of two months in issuing execution.* In Georgia the indorser is discharged if the holder neg- lects to proceed against the maker for three months after he is notified in writing so to do.'' And this statute has been held to apply to an indorsement containing a guaranty and waiver of demand and notice.* The statutory notice must contain the maker's address, mere city or county being suffi- cient.® And the maker must be prosecuted to insolvency, 'McDougald v. Rutherford, 30 Ala. 253 (1857) ; Cook v. Mutual Ins. Co., 53 lb. 37 (1875). The Alabama statute (Code 1876 ?§ 2112-2115) requires suit to be brought against the maker at the next term of the court, if the amount exceed $50, and within thirty days in other cases, except in case the maker is dead or cannot be found. But if the suit is once brought according to the statute, a subsequent adjournment of the trial by consent or other legal delay, is not laches that will discharge the indorser, Hays v. Myrick, 47 Ala. 335 (1872). ■'Walker v. Wigginton, 50 Ala. 579 (1874). And a general waiver will con- tinue in force durmg the time set for the running of simple contracts by the statute of limitations, lb. » Worsham v. Goar, 4 Port. 441 (1837). •Ross V. Jones, 22 Wall. 576 (1874); Arkansas (1874 R. S. ? 5696). So, under the Missouri act, Faulkner v. Faulkner, 73 Mo. 327. ^Colorado (1877 G. L. ? 94). "Watson V. Hahn, 1 Col. 386 (1871), no damage being caused by delay. ''Georgia (1882 Code ? 2156). The notice must state the county of the principal debtor's residence. 'Vanzant v. Arnold, 31 Ga. 210 (1860). "Ware v. City Bank, 59 Ga. 840 (1877). ILLINOIS EXILE AS TO DILIGENCE. 411 unless already notoriously insolvent.^ But an indorser, who expressly warrants a note, knowing it to be worthless, will not be discharged by laches on the holder's part in proceed- ing against the maker, after he has rescinded the contract and offered to return the note to the indorser." An ordinary indorser will be discharged, however, even after judgment 4igainst him, by a dismissal of the indorsee's action against the maker.* But to constitute such dismissal of suit a dis- charge of the indorser, it must have been by the holder and voluntary.* § 763. Illinois Rule as to Diligence. — In Illinois also the statute makes the indorser's liability contingent on the hold- er's proceeding against the maker with due diligence, unless the maker has absconded from the State or resides out of it ^t the maturity of the paper, or unless the suit would be unavailing.* If a suit could be of no avail, it need not be brought.^ Delay of execution against the maker for two months after recovery of judgment discharges the indorser under this statute.'' But, in general, diligence is a question for the jury,' and will be excused if the indorser tells the holder to "coax it out of the maker.'" If the maker was insolvent at the time the note was in- dorsed, it is unnecessary to bring suit against him.^" So, if he was adjudged a bankrupt before suit could be begun.'^ His insolvency as an excuse may be shown by the return of 'Pittman v. Chisholra, 43 Ga. 442 (1872), the indorsement in this case feeing " to be liable only in the second instance." "Clayton v. O'Conner, 29 Ga. 687 (1860). 'Lewis V. Armstrong, 47 Ga. 287 (1872). * Armstrong v. Lewis, 61 Ga. 680 (1878). . 'Illinois (1883 R. S. c. 98 i 7). « Windheim ■». Ohlendorf, 3 Bradw. 436 (1878) ; Pierce v. Short, 14 111. 144 ^1852). But this statute does not apply to a suit brought by the assignee of A bill of exchange against the drawer. Wood v. Surrells, 89 111. 107 (1878). 'Rives V. Kumler, 27 111. 291 (1862). 8 Judson V. Goodwin, 37 111. 286 (1865). » Wickersham v. Altom, 77 111. 620 (1875). '"Hawkinson v. Olson, 48 111. 277 (1868). "Wells V. Glaflin, 2 Otto 135 (1875). 412 indoesee's liability. executions in other cases "nulla bona"^ But the mere fact that his property is incumbered for less than its value is no excuse.^ Neglect for three years to sue the maker works a discharge under this statute, unless the suit would be una- vailing.^ It is not, however, necessary to sue a non-resident maker,* especially where he is insolvent and the security given has been exhausted by other and prior claims.^ The indorser is liable to his indorsee on proof that the maker is insolvent and that suit against him would be unavailing.* But this must be proved, and evidence that his property is insufficient is not enough, if no execution has been issued against it.' § 764. Indiana Rule as to Diligence. — The Indiana statute ^also requires due diligence against the maker of a note as a condition of the indorser's liability;' but this does not include similar diligence against prior indorsers.® If the holder forbears at the indorser's request to sue the maker, the required diligence will be excused as to such indorser.^* But a failure to prosecute the maker for three months after the revocation of such request will discharge the indorser," If, on the other hand, the indorser requests the holder not to sue the maker at the first term of court, suit begun a year after is within a reasonable time and sufficient.^^ But a suit against the maker is unnecessary, unless he has 'Phillips V. Webster, 85 111. 146 (1877). ^Roberts v. Haskell, 20 111. 59 (1858). The presumption being that the property is sufficient, lb. 'Temple v. The People, 6 Bradw. 378 (1880). ♦Bamber v. Bell, 77 111. 490 (1876) ; Mason v. Burton, 54 111. 349 (1870). *Esty V. Brooks, 54 111. 879 (1870). •Corgan v. Frew, 39 III. 31 (1865). 'Clayes B.White, 83 111. 540 (1876). "Holton V. McCormick, 45 Ind. 411 (1873) ; Rose v. Park Bank, 20 lb. 94 (1863) ; Huston v. First Nat. Bank, 85 lb. 21 (1882) ; Indiana (1881 B. S. I 5504), but this does not alter the law of bills of exchange, lb. I 5505; and notes to order or bearer, payable at a bank within the State, are put on the footing of inland bills, g 5506. 'Pennington v. Hamilton, 50 Ind. 397 (1875) ; Rose v. Park Bank, supra. "Lowther v. Share, 44 Ind. 390 (1873). "Free v. Kierstead, 16 Ind. 91 (1861). "Davis V. Leitzman, 70 Ind. 275 (1880). INDIANA EULE AS TO DILIGENCE. 413 property over and above the amount exempted by law from «xeeution.^ So, if the maker was insolvent at the time the note was indorsed and remained so for two years afterward ; ^ or if he is notoriously insolvent at the maturity of the paper,* or becomes so before judgment could have been obtained.* If diligence has been used, it is immaterial what the estate of a bankrupt maker will pay.^ But his removal from the State is a sufficient excuse for want of diligence,* provided the removal is after the transfer and before the maturity of the note.^ The holder is only bound to use ordinary diligence, and it will be enough if he prosecutes the maker by suit and execution without recourse to extraordinary remedies ; * even though the maker's assets are in a shape that is beyond the reach of a writ of execution.^ The holder is not obliged to proceed against the maker by attachment.^" If he proceeds to judgment and execution within twenty-three days, it will be prima facie due diligence, although after the adjournment of court." But if he fails to sue the maker at the next term after the note matures, although it begins in ten days after such maturity, it will discharge the indorser.^^ In the case of a non-negotiable note it is sufficient if suit is begun and 1 Williams v. Osbon, 75 Ind. 280 (1881). ^Kestner v. Spath, 63 Ind. 288 (1876). 'Couch V. First National Bank, 64 Ind. 92 (1878) ; Dugdale v. Marine, 11 lb. 194 (1858). 'Reynolds v. Jones, 19 Ind. 123 (1862), the note in this case not being gov- erned by the lex mercatoria. 5 Williams v. Nesbit, 65 Ind. 171 (1879). «Patteson v. Carrell, 60 Ind. 128 (1877); Holton v. McCormick, 45 lb. 411 (1873). 'Stevens v. Alexander, 82 Ind. 407 (1882). But it would be otherwise if the maker were a non-resident at the time of the transfer, lb. The holder need not proceed in such case against the maker by attachment, Bernitz v. Seratford, 22 lb. 320 (1864). 'lies ^.Watson, 76 Ind. 359 (1881). So, the diligent foreclosure of a col- lateral mortgage will be sufficient, Markel v. Evans, 47 lb. 326 (1874). »£. g. premium notes, Hubler v. Taylor, 20 Ind. 446 (1863). "•Titus V. Seward, 68 Ind. 456 (1879) ; Sims v. Parks, 32 lb. 363 (1869). "Miller v. Deaver, 30 Ind. 371 (1868). "Roberts v. Masters, 40 Ind. 461 (1872), the indorser becoming insolvent a few days later. 414 indorsee's liability. execution issued with reasonable promptness.^ But a delay of six months between judgment and execution will dis- charge an indorser, if not explained.^ Judgment and execu- tion, however, constitute jon'wa /acie due diligence;' but not so a mere proving of the debt against the administrator of the deceased maker.* Laches upon another contemporane- ous note will not discharge the maker, where the non-prose- cution of the maker of the note in question is excused by his insolvency.^ § 765. Statutes of other States. — In Iowa an indorser in blank is in effect a guarantor and liable to subsequent holders only on due diligence against the maker.' In Kan- sas due diligence against the maker or drawer is required^ but this is defined to be demand and notice of dishonor.' In Kentucky due diligence is required both against maker' and prior indorsers.' And suit must be brought in time to per- mit service of process at the first term after maturity.^" The maker's insolvency at the time the note falls due is not an excuse for want of prosecution in Kentucky." In Mississippi the indorser is only discharged by the holder's laches, where the debt is thereby lost." In Missouri the statute authorizes a surety to require immediate proceed- ings against the principal debtor.^^ The former statute requir- 'Pafteson v. Carrell, 60 Ind. 128 (1877). 'Bishop V. Yeazle, 6 Blackf. 127 (1842). ^Bullitt V. Scribner, 1 Blackf. 14 (1818). *Litterer v. Page, 22 Ind. 337 (1864). Proof against two successive admin- istrators is not sufficient, but he should have sued the maker's heirs or applied for a third administration, Jb. ^Binford iJ.Willson, 65 Ind. 70 (1878). Uowa (1880 E. C. ? 2091). 'Kansas (1881 C. L. ?§ 544, 545). ^Coleman v. Tully, 7 Bush 72 (1869); Parks v. Cooke, 3 lb. 168 (1867) ; Williams v. Obst, 12 lb. 266 (1876) ; unless it be otherwise expressed or the note be put on the legal footing of a bill of exchange (1881 G. S. c. 22 i 14). "Short V. Trabue, 4 Mete. 299 (Ky. 1863). '"Perrin v. Broadwell, 3 Dana 596 (1835). But delivery of the writ to the sheriflf eight days before the term is sufficient, McMurray v. Wood, 9 Dana 45 (1839). "Clair V. Barr, 2 Marsh. 255 (Ky. 1820). ^'Mississippi (1880 Eev. Code ? 1124). "Missouri (1879 E. S. ? 3896). But this act does not apply to indorsers, Paulkner v. Faulkner, 73 Mo. 327 (1881). Under this statute, where one STATUTES OF OTHER STATES. 415 ing due diligence against the maker of a note and dispens- ing with notice of dishonor left thd burden of proof of dili- gence unchanged.^ And the assignee can only recover such part of the note as could not be recovered with due diligence from the maker.'^ In Nebraska due diligence is required against the drawer, maker or obligor.^ In Ohio he must use " all diligence in collecting " against the maker, drawer or acceptor,* but it will be sufficient to sue at the next term and obtain judgment without resorting to extraordinary process of attach ment.° In South Carolina an indorser was formerly discharged by the holder's laches in receiving part payment and delaying for a year to apply to the indorser for pay- ment.* In Tennessee the holder's failure to sue the maker for thirty days after request to do so discharges the indorser.^ And the indorser is likewise discharged if the holder gives the maker an extension or a stay of execution, unless both maker and indorser are insolvent, or the indorser joined in granting the stay to the maker.* But a stay of execution on a confessed judgment against the maker until the time when judgment could have been obtained by suit is no ground for discharge.® Laches in prosecuting the drawer will discharge the indorser, even though the holder had taken a new bill drawn and indorsed by the same parties in order to save their credit and dispense with the notice of dishonor.-^" In court ■would render judgment soonest, but another court opens first, prose- cution in the former will be sufficient, Bailey v. Smock, 61 Mo. 213 (1875). 'Labadie v. Chouteau, 37 Mo. 413 (1866). 'Ricketston v. Wood, 10 Mo. 547 (1847), the maker's insolvency not being an excuse, if he had sufficient property to be worth the expenses of a suit. ' Nebraska {1S81C. 8.309^2). 'Ohio (1879 K. S. § 3172). And unless otherwise expressed, demand at maturity and notice of non-payment within a reasonable time shall be adjudged due diligence (76. | 3176). 'Forest v. Stewart, 14 Ohio St. 246 (1863). 'Kilpatrick v. Heaton, 3 Brev. 92 (1812). But see Bank of South Caro- lina V. Myers, 1 Bailey 412 (1830), where the common law rule was followed. ^Tennessee (1884 Code ii 2725, 2728). m. I 2730. 'Ferguson v. Childress, 9 Humph. 382 (1848). "Bank of East Tenn. v. Hooke, 1 Coldw. 156 (1860). 416 indoesee's liability. Texas, in like manner, the holder of a note must sue the maker at the first term, or with sufficient excuse at the second term,' unless he is non-resident or otherwise out of reach.^ If the note is sued more than two terms after its maturity, it will be presumed, in the absence of special aver- ment to the contrary, that a blank indorsement was made within the two terms and that it was therefore not discharged by lapse of time before suit brought.^ Delay of execution against the maker until his insolvency will discharge the in- dorser.* In Virginia it was formerly necessary for the holder to bring suit against the maker in due form to support a recovery,^ unless the maker was insolvent.® So, in West Virginia due diligence against the maker is necessary in order to hold the indorser.'' § 766. Foreign Statutes as to Indorsement. — Some foreign statutes expressly provide that the indorser shall be liable to subsequent holders," as the drawer of a new bill,* and that, too, although the bill indorsed by him is void.'" He is liable for the face of the bill on due presentment and pro- test," unless he is an agent indorsing to his principal.'^ And 'Brooks V. Breeding, 32 Tex. 752 (1870) ; Griffith v. Gary, 31 lb. 168 (1868). This appears to be intended as an alternative for protest and notice of dis- honor, and either course will fix the drawer of a bill or indorser of a note (1879 R. S. Arts. 262, 273). A waiver or release of due diligence cannot be proved by parol (lb. Art. 268). ^Texas (1879 R. S. g 1208). Residence unknown or beyond the reach of process, or maker dead or insolvent, or not to be found, is sufficient ex- cuse, lb. 'Belcher v. Ross, 33 Tex. 12 (1870). *Parker v. Nations, 33 Tex. 210. 'Bromaugh v. Scott, 5 Call 78 (1804). "Yeaton v. Bank of Alexandria, 5 Cranch 49 (1809). 'Nichols V. Porter, 2 W. Va. 13 (1867). 'Argentine Republic (1862 Code Com. Art. 803). 'Argentine Republic (1862 Code Com. Art. 801) ; Brazil (1850 Code Com. Art. 360) ; Denmark (18i5 Exch. Law g 13) ; Switzerland (Exch. Laws, 1859 Berne, 1863 Basle, ? 13) ; Uruguay (1865 Code Com. Art. 821). ^"Russia (18'62 Exch. Law Art. 566). "CMt (1865 Code Com. Art. 663) ; Colombia (1853 Code Com. Art. 430) ; Cogla Rica (1853 Code Com. Art. 420) ; Ecuador (1829 Code Com. as in Spain) ; Mexico (1854 Code Com. Art. 366) ; Peru (1853 Code Com. Art. 431) ; Salvador (1855 Code Com. Art. 427) ; Spain (1829 Code Com. Art. 473). ^'Denmark (1825 Exch. Law ? 14) ; Russia (1862 Exch. Law Art. 569). FOREIGN STATUTES. 417 lie is liable in such case, unless it was expressly agreed that the indorsement should be without recourse or personal responsibility.' So, though the drawer or prior indorser was under a disability.^ And in Switzerland it is provided that an indorsement carries all prior rights under the bill.^ ^Austria (1850 Exch. Law Art. 14) ; Germany (1848 Exch. Law Art. 14). ^Hungary (1861 Exch. Law 2§ 43, 44). 'Smtzerland (Exch. Laws, 1859 Berne, 1863 Basle, J 10). ■VOL. n. ^B 418 indorseb's liability. II. DISCHARGE BY EXTENSION, RELEASE, AC. 767. EflFect of Extension. 768. What Amounts to an Extension. 769. Discharge by Release of Prior Parties 770. Release — When not a Discharge. 771. Holder's Duty as to Collaterals. 772. Discharge by Payment. § 767. Effect of Extension to Maker or Acceptor. — The indorser, as we have seen, becomes in effect a surety for the maker of a note or the drawer and acceptor of a bill. And as such he will be discharged from his liability by any defi- nite and binding extension granted by the holder to them.* Such extension must, however, be upon a valid agreement, for a valid consideration, and without the consent of the indorser.^ And to be a valid and binding agreement it must be definite. Giving the maker a definite time for payment and taking his note payable at the end of such time is such an extension.^ And it is immaterial whether such extension be given before or after the maturity of the paper,* or whether the note extended be the principal debt or merely collateral to it.^ But the agreement for extension must be made by the holder with the maker or acceptor. Thus, an agreement between the holder of the paper and a creditor of the maker, the maker not being a party to it, will not dis- 1 Chitty 472 ; 1 Edwards HH ; 2 Parsons 242 ; Story on Prom. Notes i 413 ; Smith V. Knox, 3 Esp. 47 ; English v. Darley, 2 Bos. & P. 62. So, an exten- sion to the first and last indorsers will discharge intermediate indorsers. Hall V. Cole, 4 Ad. & El. 577. But an earlier party will not be discharged by giving time to a subsequent one, Claridge v. Dalton, 4 M. & S. 232; Nadin v. Battie, 5 East 147; Whiting v. Western Stage Co., 20 Iowa 555 (1866). An extension "for twenty or thirty days" is sufficiently. definite, Hamilton v. Prouty, 50 Wis. 592 (1880). But mere delay in collecting an overdue note does not amount to an extension, State Bank v. Wilson, 1 Dev. 484 (1828). 2 Story on Prom. Notes § 415; Kittle v. Wilson, 7 Neb. 76 (1878). Not so an agreement Which is not in itself binding, Costello v. Wilhelm, 13 Kans. 229 (1874). 'Globe Mut. Ins. Co. v. Carson, 31 Mo. 218 (1860). * Story on Prom. Notes § 413 ; Veazie v. Carr, 3 Allen 14 (1861) ; Hamilton V. Prouty, 50 Wis. 592 (1880) ; Moore v. Folsom, 14 Minn. 340 (1869). sPomeroy v. Tanner, 70 N. Y. 547 (1877) ; Myers v. Wells, 5 Hill 463 (1843). "WHAT AMOUNTS TO AN EXTENSION. 419 charge the indorser.^ So, an agreement between indorser and indorsee, without the privity of the maker, will not dis- charge, other indorsers.^ And an extension to the maker will not discharge the indorser, after his liability has been fixed by protest and notice,^ or by judgment rendered against him.* If the extension to the maker expressly reserves the holder's rights against the indorser, he will not be dis- charged/ And the indorser may waive his discharge, e. g. by a new promise made subsequently with full knowledge of the extension.® § 768. What Amounts to an Extension. — Mere delay or indulgence without a binding agreement is not an extension within the meaning of this rule.' So, the extension of an- other note secured by the same mortgage is not a discharge ;' nor the certifying of a check.' So, the payment of interest in advance is not necessarily an extension.^" It, will, how- ever, be presumed to be such, if it is made after maturity for interest not accrued." An agreement to " carry " a note for a certain time is a provision for renewal and not for its extension.^^ But an agreement for extension will be implied from tak- ing the note of a third person and agreeing to hold the 1 Herbert v. Servin, 12 Vroom 225 (1879), where the agreement was for the satisfaction of the debt at fifty per cent, of its face. 'Bagley v. Buzzell, 19 Me. 88 (1841). "Tiddyv. Campbell, 1 So. Car. 451 (1806). * Story on Prom. Notes \ 417; Pole d. Ford, 2 Chitt. 125; Bray «. Manson, 8 M. & W. 668. s Morse v. Huntington, 40 Vt. 488 (1868) ; Hagey v. Hill, 75 Penna. St. 108 (1874). 8 Hazard v. White, 26 Ark. 155 (1870) . " '1 Edwards ? 413; 2 Parsons 246; Boss v. Jones, 22 Wall. 596 (1874); Powers V. Waters, 17 Johns. 176 (1819) ; Cherry v. Miller, 7 B. J. Lea 305 (1881) ; Moore v. Britton, 22 La. An. 64 (1870). "Hopkins v. Gray, 51 Iowa 340 (1879). 'Mutual Nat. Bank v. Botge, 28 La. An. 933 (1816). '»St. Joseph, &c., Ins. Co. v. Hauck, 71 Mo. 465 (1880), although it would be a good consideration to support an agreement for extension. "Eandolph v. Fleming, 59 Ga. 776 (1877). "Second Nat. Bank v. Boucher, 56 N. Y. 348 (1874). 420 indoesek's liability. original note until it is paid;^ or from taking time drafts as security for an overdue note and agreeing to wait until their maturity;* or from taking a bond and mortgage with six months to run, agreeing that the note shall be paid out of the proceeds of the bond and mortgage, or shall be reduced in amount if the maker pays it sooner.^ So, receiving a post- dated check in payment of a note and holding the note until the maturity of the check;* or, after the maturity of a note, taking another note payable at a future day ;° or giving time on receiving collateral which would not mature until after the note.® If the agreement for extension is without consideration, it will not discharge the indorser.^ So, if the consideration is usurious, it will not be a valid extension or discharge.* But the holder is himself estopped from setting up the usury in such contract.' But money actually paid as "additional interest " may be a valid consideration, where it would have been usurious as an executory contract.'" So, payment of an instalment on the note before maturity is sufficient consid- eration for an extension;" or agreeing to pay a higher rate of interest than that stipulated.'^ But if the extension is on an unfulfilled condition that all creditors consent to it, it will not amount to an extension or discharge.'^ •Greene v. Bates, 74 N. Y. 333 (1878). ^Pomeroy v. Tanner, 70 N. Y. 547 (1877). » Beard v. Root, 4 Hun 356 (1875). "Place V. Mcllvaine, 38 N. Y. 96 (1868). ^Myers v. Welles, 5 Hill 463 (1843) ; Putnam v. Lewis, 8 Johns. 389 (1811). So, to discharge the surety on a bond, Barnum v. Grilman, 27 Minn. 466 (1861) ; or the guarantor on a note. Fellows v. Prentiss, 3 Denio 512 (1846). •Kobertson v. Allen, 59 Tenn. 233 (1873). 'Huie V. Bailey, 16 La. 212 (1840) ; Jennings v. Chase, 10 Allen 526 (1865). « Williams v. Smith, 48 Me. 135 (1858). •National Bank of Gloversville v. Place, 15 Hun 564 (1878) ; Billington v. Wagoner, 33 N. Y. 31 (1865). But he might set up that the consideration failed, being an unperformed usurious contract, Fernan v. Doubleday, 3 Lans. 216 (1870). '"Smith V. Pearson, 52 Gal. 339 (1877). "Rigsbee v. Bowler, 17 Ind. 167 (1861). But not a payment already due, Stuber v. Schack, 83 111. 191 (1876). See, however, Turnbull v. Brock, 31 Ohio St. 649 (1877). "Royal V. Lindsay, 15 Kans. 591 (1875). "Lamayer v. Uter, 22 La. An. 45 (1870). RELEASE. 421 § 769. Discharge by Release of Prior Parties. — If the holder releases the maker or acceptor, or any other party on the paper, it will effect the discharge of all subsequent par- ties, indorsers or others;^ unlese his rights against such sub- sequent parties are expressly reserved.^ Thus, the release of a prior indorsement discharges subsequent indorsers.^ So, if the holder, after recovering judgment against the maker and obtaining a sufficient levy upon his property, releases it, he will also release an accommodation indorser.* So, if he discharges the maker from arrest on a writ of capias, he will discharge the indorser also.® So, if on receiving part pay- ment of a note he surrenders it to the maker.® So, where the first indorser has signed for the accommodation of the second, he will be discharged by the holder surrendering the note to such second indorser, even though the holder has already taken judgment against the first indorser.^ So, if the holder, after proving his claim against an insolvent in- dorser, surrenders the note to the maker and takes a new note from him, he will discharge the indorser.* In like manner, if the holder of a bill signs a composition deed as a creditor of the drawer, he will thereby, in general, release the indorser.® § 770. Release — When not a Discharge. — But the holder may release the maker or one joint maker without discharg- 'Byles 384; 2 Daniel 310; 1 Edwards I 411; Story on Prom. Notes I 428. So, by a release of maker and co-indorser, Farmers' Bank v. Blair, 44 Barb. 641 (1865). n Edwards HH ; 2 Parsons 248 ; Story on Prom. Notes § 416. 'Newcomb v. Eaynfir, 21 Wend. 108 (1839). So, the cancellation of a prior indorsement without the knowledge or consent of the defendant, Bank of Tennessee v. Johnson, 1 Swan 217 (1851). *Priest V. Watson, 75 Mo. 310 (1882). So, too, Mayhew v. Crickett, 2 Swanst. 185 ; Commonwealth v. Miller, 8 Serg. & R. 457 ; Chichester v. Mason, 7 Leigh 244. *McFadden v. Parker, 4 Dallas 275 (1803). But the contrary is not true, that discharge of the indorser on a ca. sa. will discharge the maker, Chitty 472; Hayling v. Mulhall, 2 W. Blackst. 1235. «Streever v. Bank of Fort Edward, 34 N. Y. 413 (1866). 'Shelton v. Hurd, 7 E. I. 403 (1863). 'Dearth v. Hide, &c., Nat. Bank, 100 Mass. 540 (1868). 'Eggerman v. Henschen, 56 Mo. 123 (1874). 422 indoeser's liability. ing the indorser, if he expressly reserves all rights against him.^ And even where the holder and the indorser join in a release of the maker, the indorser's liability to the holder will not be discharged, where the release was expressly drawn " not to affect any lien or pledge created or obtained as secur- ity for a debt or claim due " from the maker.* So, if the holder discharges the acceptor of a bill from arrest on execu- tion and reserves all his rights against the indorser, he will not discharge him.' In like manner, a covenant not to sue the maker of the note, reserving such rights against the indorser, will not relieve him.* So, a composition deed re- leasing a bankrupt maker and reserving all rights against other parties.* The holder's consent to the maker's discharge in bank- ruptcy, or to a bankrupt composition, is not in itself a dis- charge of the indorser.* So, where the indorsers join in a general release given to the maker of a note by his creditors, their consent to one another's action will be presumed and a first indorser will not be discharged by such action on the part of the second.' On the other hand, it has been held that the discharge of the maker of a note by a composition deed, executed by the holder of the note with the indorser 'Stewart v. Eden, 2 Cai. Cas. 121 (1804). 'Gloucester Bank v. Worcester, 10 Pick. 527 (1830). »Huie V. Bailey, 16 La. 212 (1840). •Kenworthy v. SaWyer, 125 Mass. 28 (1878). An absolute covenant not to sue the maker discharges the indorser, who derives his title through the maker, 2 Parsons 238 ; 2 Daniel 311 ; but not a covenant not to sue him for a limited time, Byles 241; Thimbleby v. Barrow, 3 M. & W. 210; although the holder would be liable to the maker for his breach of covenant, lb. And a covenant with an accommodation payee not to sue him is no dis- charge of the maker, for whose accommodation the payee indorsed, Mallett V. Thompson, 5 Esp. 178; Maltby v. Carstairs, 7 B. & C. 735. 'Tobey v. Ellis, 114 Mass. 120 (1873) ; Sohier v. Loring, 6 Cush. 537 (1850). So, a release of one joint maker, the principal debtor, reserving all right against the other (the surety), will not discharge the latter, Potter v. Green, 6 Allen 442 (1863). So, an agreement not to sue the maker at all and not to sue the indorser for nine months has been held to imply a reservation of rights against the indorser, and to suspend but not discharge such rights, Hutchins v. Nichols, 10 Cush. 299 (1852). 'Guild V. Butler, 122 Maas. 498 (1877). 'Bruen v. Marquand, 17 Johns. 58 (1819); Ludwig v, Iglehart, 43 Md. 39 (1875). holder's duty as to collaterals. 423 and at his request, without expressly reserving his rights against him, will discharge the indorser.' In general, the involuntary discharge of another party as an insolvent will not affect an indorser's liability.'' Nor even his discharge in bankruptcy under a voluntary composition with creditors, if the note has not been proved as a debt under it.* So, an agreement, as we have seen, between the holder of a note and other creditors of the maker, to receive a less security in satisfaction of the holder's claim on the «ote against the maker, will not discharge the indorser, by reason of the maker not being a party to such agreement.* The release of a subsequent indorser on his part payment of a note or bill will not affect prior indorsers.® And payment by a later indorser will not discharge an earlier one.* So, releasing the indorser will not release the maker of a note.' And if the first indorser is merely an accommo- dation indorser for the second, and therefore not primarily liable, he will be released by surrender of the note to the second indorser.* § 771. Holder's Duty as to Collaterals. — An indorser, even Ihough he is an accommodation party, cannot at common law compel the holder of a bill to first exhaust any coUat- ■erals that he may hold for its security.' Thus, if the holder is secured by a vendor's lien, he need not first proceed upon that ;'" and his failure to enforce such a lien will not discharge 'Broadway Sav. Bank v. Schmucker, 7 Mo. App. 171 (1879), affirming Eggerman v. Henschen, 56 Mo. 123. ^Pine Eiver Bank v. Swazey, 47 N. H. 154 (1866). ^ Pratt V. Chase, 122 Mass. 262 (1877); U. S. Eev. St. § 5118. And see •Commercial Bank v. Cunningham, 24 Pick. 270; Sohier i;. Loring 6 Cush. •537. ♦Herbert v. Servin, 12 Vroom 225 (1879). "Knight V. Dunsmore, 12 Iowa 35 (1861). 'Bank of Kentucky v. Floyd, 4 Mete. 159 (Ky. 1862). 'Poster V. Russ, 14 Iowa 61 (1862) ; Love v. Brown, 38 Penna. St. 307 (1861). Although the maker was a mere surety, unknown to the holder, Chitty 478 ; ■Carstairs v. Rolleston, 5 Taunt. 551. And notwithstanding the fact was known to the holder at the time of the release, if not known at the time of the transfer to him, Harrison v. Courtald, 3 B. & Aid. 36. "Shelton v. Hurd, 7 E. I. 403 (1863). •First Nat. Bank v. Wood, 71 N. Y. 405 (1877) ; Eoss v. Jones, 22 Wall. 576. ■"•Sayre v. McEwen, 41 Ind. 109 (1872). 424 indorsee's liability. the indorser.^ But in Minnesota the statute requires the- holder to exhaust collaterals before proceeding against the indorser.^ And in Indiana the indorser is liable only on condition of diligent prosecution by the maker of collaterals- held by him.^ The holder of a bill is not obliged to enforce- by way of set-off" a debt that may be due to his firm against the acceptor or drawer, and his failure to do so will not affect the indorser's liability.* If, however, the holder suffers col- lateral in his hands to be barred by the Statute of Limita- tions, it has been held that he will thereby discharge an indorser of the paper, which the collaterals were intended to secure.^ But a special assignment of a mortgage held as collateral, without the intention of releasing it, will not effect such discharge.' Neither will the holder's mere omission to- refer to collateral held by him, in making proof of his debt against a bankrupt maker, discharge the indorser of the note, the collateral not having been released and the holder'^ omission being merely passive.' But in Georgia it has been held that where the holder of a note proves a judgment recovered by him against maker and indorser as a claim against the bankrupt maker's estate, without reserving the collateral lien of the judgment, the indorser will be dis- charged by the omission so far as he is injured thereby, and only so far.' Where the holder actually surrenders the collateral, it will discharge the indorser.' But this will not be the case where the collateral was itself received from the drawer of a bill after the indorser's liability had been fixed upon the dishonor 'Rogers v. Blum, 56 Tex. 1 (1881). 'Swift V. Fletcher, 6 Minn. 550 (1861) ; Laws of 1860 p. 216. 'Hayne v. Fisher, 68 Ind. 158 (1879). 'Glazier v. Douglass, 32 Conn. 393 (1865). ^Fennell v. McGowan, 58 Miss. 261 (1880). And this was held even in a case where the collateral note had been improperly paid to the payee named in it after its transfer by him and its pledge as collateral by his indorsee, lb. "Bank of Red Oak v. Orvis, 42 Iowa 691. 'Merchants' Nat. Bank v. Comstock, 55 N. Y. 24 (1873). 'Jones V. Hawkins, 60 Ga. 52 (1878). 'Union Nat. Bank v. Cooley, 27 La. An. 202 (1875). DISCHARGE BY PAYMENT. 425 of the bill, no extension of time being granted by the holder to the drawer.^ If, indeed, the holder discharges or releases an indorser upon a collateral note, it will discharge the indorser of the note secured by it.'^ And if the holder makes an improper sale of collaterals or an improper appropriation of the proceeds, he will thereby discharge the indorser and probably the maker.* And it has been held in a recent case that a banker's failure to apply deposits of the maker, which are sufficient for the purpose, to the payment at maturity of a note held by him will discharge the indorser from further liability on it.* So, if the holder of a note given for the purchase-money of land and secured by a deed, accepts the land, it will be a satisfaction of the note which will inure to the indorser's benefit.^ § 772. Discharge by Payment — ^In General. — The obliga- tion of an indorser, although it may be in itself irrevocable, is liable to be discharged like that of the drawer or acceptor by payment or satisfaction.* If the bill is paid by a prior party, the indorser will be discharged.'' But payment by a subsequent indorser will not affect hira.^ So, if an indorse- ment is altered, although the alteration may discharge such indorsement, it will not affect prior indorsements.^ It seems that in Demerara an indorser is discharged, if the holder demands payment of the drawer after protesting the bill.^* And if the holder informs the indorser of a note that it has been paid under an agreement, which called for payment by the maker in work, it has been held that he will thereby discharge the indorser, although he suffered no loss by such ^Hurd V. Little, 12 Mass. 502 (1815). "Stallings v. Bank of America, 59 Ga. 701 (1877). •Sitgreaves v. Farmers', &c., Bank, 49 Penna. St. 359 (1865). •Commercial Nat. Bank v. Henninger, 105 Penna. St. 496 (1884). 'Ives V. Bank of Lansingburgh, 12 Mich. 361 (1864). "Chitty 282; Synderbottom v. Smith, Stra. 649; Gee v. Brown, lb. 792. 'Hayling v. Mulhall, 2 W. Bla. 1235 ; Macdonald v. Bovington, 4 T. R. 825. 'Bank of Louisiana v. Roberts, 4 Miller 530 (La. 1831). 'Kennion v. McRea, 7 Porter 175 (1838).. "Powers V. Lynch, 3 Mass. 77 (1807). 426 indoeser's liability. statement;^ but in this case the holder's own default in per- forming his contract was the occasion of the non-payment of the note. Even after judgment recovered against the indorser and maker, the indorser may be discharged by a promise on the holder's part not to hold him liable, if by reason of it he neglected to secure himself as he might other- wise have done.'' But the holder may, after notice of dishonor, receive addi- tional guaranties without discharging the indorser;* or may request the maker to apply on another note a payment made by him;* or may take proceedings in bankruptcy against a foreign acceptor.* And the indorser may waive his discharge by promising afterward and with full knowledge to pay the holder.® But making a voluntary payment after such dis- charge will not amount to a waiver by him.'' These and other defenses, belonging to the indorser in common with other parties to bills of exchange, will be more fully consid- ered hereafter in treating of matters of defense. •Roberts ■W.Wilkinson, 34 Mich. 129 (1876). 'Roberts v. Miles, 12 Mich. 297 (1864). So, if the holder gives time to the maker, saying he looked only to him, Cox v. Mobile, &o., B. R, Co., 44 Ala. «11 (1870). 'Tooke V. Taylor, 31 Tex. 1 (1868). * Second Nat. Bank v. Poucher, 56 N. Y. 348 (1874). ^ Ken worthy v. Hopkins, 1 Johns. Cas. 107. « Curtis V. Sprague, 51 Cal. 239 (1876). 'Temple v. The People, 6 Bradw. 378 (1880). AVERMENTS AS TO INDOKSEMENT. 427 III. PLEADING AND EVIDENCE. 773. Averments as to Indorsement. 774. Indorsement Must be Proved. 775. Proof of. 776. Possession Prima Fade Title. 777. Indorsement and Possession. 778. Parol Evidence — When Admissible. 779. " Without Recourse " Intended. 780. For Transfer or Collection only. 781. As Guaranty — Surety — Maker. 782. As to Consideration. 783. Fraud. 784. Waiver. § 773. Averments as to Indorsement. — The rules of plead- ing, as changed by statute, will be more fully considered in a later chapter. At common law the plaintiff should aver all indorsements necessary to support his title.^ In Delaware, as against the maker of a note, indorsements which are neither averred nor denied in the pleading are presumed to have been made.^ In Indiana the indorsee is not required to set out the indorsements in an action against the maker.* But if the action is on the indorsement, he should set it out.* A holder suing an indorser need not, however, in any case set out subsequent indorsements.^ An averment that the defendant is liable as an indorser includes prima facie an allegation of transfer for sufficient consideration.® So the word "assigned" in an averment will cover the delivery of a note payable to bearer.' But in Indiana the averment that a note was " assigned in writing," is not equivalent to the statutory requirement that it should be "assigned by indorsement in writing."* 'Chitty 643; 2 Edwards ?? 927, 928; Bishop v. Hay ward, 4 T. R. 471. ^Pusey V. Pyle, 4 Houst. 98 (1869). ^Treadway v. Cobb, 18 Ind. 36 (1862) ; Keith v. Champer, 69 16. 477 (1880). *Moreau v. Branson, 37 Ind. 195 (1871) ; Sinker v. Fletcher, 61 lb. 276 (1878). ^Bank of America v. Senior, 11 R. I. 376 (1876). 'Clay V. Edgerton, 19 Ohio St. 549 (1869). So, the denial of indorsement ■denies signature, delivery and transfer, Marston v. Allen, 1 Dowl. n. s. 442 ; 8 M. & W. 491. 'Edison v. Frazier, 9 Ark. 219 (1848). 8Reed v. Garr, 59 Ind. 299 (1877) ; 2 R. S. 1876 p. 35. And proof of an assignment will not support an averment of indorsement, Williams v. Osbon, 75 Ind. 280 (1881). 428 indorsee's liability. The declaration need not state the date of an indorsement* If a note is specially indorsed to a person named, it cannot be set out in pleading as indorsed to bearer.^ But even under the common law rules of pleading recovery may be had by a remote indorsee upon the common money counts^ instead of pleading the indorsement specially.' § 774. Indorsement Must be Proved. — An indorsee in an action against maker or acceptor must prove the indorse- ments under which he holds.* And this is true even though he is not required, as in Indiana, to plead them.'^ On a plea of general denial in an action against the maker the indorse- ments must be proved.* The indorsement must also be proved in an action against an indorser by a remote holder.'^ And where the plaintiff sees fit to aver an indorsement, he must prove it as alleged;* even though the note sued upon was payable to A. or bearer and did not require an indorse- ment.® Where the indorsement is made by an agent, both his signature and authority must be proved.^" But if the indorsement is in the maker's own handwriting, his authority to indorse may be shown by circumstances, to be determined by the jury.*^ If the transfer is made by a pledgee, the holder must prove a transfer of the debt as well as a trans- fer of the instrument.^^ But one who sues his immediate ^Caldwell v. Lawrence, 84 111. 161 (1876). ^Dickson v. Cunningham, 1 Mart. & Yerg. 203. 'Ellaworth v. Brewer, 11 Pick. 316 (1831) ; Austin v. Burlington, 34 Vt. 506 (1861) ; State Bank v. Hurd, 12 Mass. 172. So, at suit of his immediate in- dorsee, Rushworth v. Moore, 36 N. H. 188 (1858). And the payee may recover against the acceptor on such counts, Johnson v. Catlin, 27 Vt. 87 (1864). But, as to the liability of an accommodation indorser on such counts, see Page v. Bank of Alexandria, 7 Wheat. 35 (1822) ; Butler v. Raw- son, 1 Denio 105 (1845) ; and as an accommodation joint-maker, Wells v. Girling, 8 Taunt. 737. ^Byles 438; Chitty 715; 2 Edwards ? 969. ^Keith V. Champer, 69 Ind. 477 (1880). « Wallace v. Reed, 70 Ind. 263 (1880). 'Sterne v. Tallis, 24 La. An. 118 (1872). •Waynham v. Bend, 1 Campb. 175; Glenn v. Porter, 49 Ind. 500 (1875). 'Waynham v. Bend, supra. '"Spicer v. Smith, 23 Mich. 96 (1871). "Weed V. Carpenter, 10 Wend. 403 (1833). "Van Eman v. Stanchfleld, 13 Minn. 75 (1868), affirming 10 lb. 255. PROOF OF INDOESEMENT. 429 indorser need not prove either the making of the note or its transfer to the defendant.^ § 775. Proof of Indorsement. — An indorsee who brings suit against the maker, drawer or acceptor must prove the signature of all prior indorsers;^ unless his action is against the maker of a note payable to the maker's own order and indorsed by him in blank.^ But ordinarily, whether the indorsement is special or general, the holder must prove it in an action against the maker.* If, however, the note is payable to A. or bearer, the holder under A.'s blank indorse- ment need not prove his signature (except in States which require such notes to be indorsed), since he can recover on the note as the bearer.^ Where the action is brought by a drawer, who has paid the bill, against the acceptor, his pos- session of the bill is presumptive evidence of title without prbof of its indorsement.^ The signature of an indorser, like signatures in general, may be proved by a witness who has seen other signatures of the party properly identified as his;' or who has written to him and received letters from him in answer to his let- ters.* So, the admission by an indorser of a transfer made to another is sufficient evidence against his own claim of title.' And if an indorsed bill or note is put into circula- tion by the maker himself, it is an admission on his part of the payee's indorsement, which had been made for his accommodation." On the other hand, even a judgment re- covered against an indorser is not conclusive evidence of his signature in a subsequent action against a prior indorser.^^ 'Woodward v. Harbin, 1 Ala. 104 (1840). ^Blakely v. Grant, 6 Mass. 386 (1810). 'First Nat. Bank v. Simmes, 26 La. An. 147 (1874). *Brigg8 V. Briscoe, 12 La. An. 468 (1838), as to an indorsement in blank; Talamon v. Myers, 15 lb. 257 (1860), as to a special indorsement. ^Wilbour V. Turner, 5 Pick. 526 (1827). «Drew V. Phelps, 18 N. H. 572 (1847). 'Empire Mfg. Co. v. Stuart, 46 Mich. 482 (1881). » Chaffee v. Taylor, 3 Allen 598 (1862). 'Kimball v. Huntington, 10 Wend. 675 (1833). i» Union Bank v. Philips, 4 Humph. 388 (1843). "Conaway v. Odert, 2 W. Va. 25 (1867). 430 indokser's liability. § 776. Possession Prima Facie Title. — Where one holds a note payable to bearer, his title to it will be presumed from his possession of it ; ' even though the note has been specially- indorsed and not further indorsed by the special indorsee to the holder.^ In like manner, possession is, in general, pre- sumptive evidence of title to a note payable to A. or bearer.' So, too, possession under a blank indorsement.* And under such an indorsement any one may sue, irrespective of the character of his possession, as receiver, executor, &c.' But possession under a blank indorsement is only presumptive evidence of title and may be rebutted.* The defendant may show that the plaintiff acquired title after suit brought.'' So,^ evidence of fraud in making the note or transferring it, will throw upon the plaintiff the burden of proving his title.* And the presumption in favor of mere possession is of no avail against the real owner.* In like manner, possession by the indorsee under a special '2 Daniel 759 ; Story on Prom. Notes § 381 ; Holcomb v. Beach, 112 Mass. 450 (1873) ; Beekman v. Wilson, 9 Mete. 434 ; Jones v. Westcott, 2 Brev. 166 ; Woodruff V. King, 47 Wis. 261 (1879); Jewett v. Cook, 81 111. 260 (1876); Booty V. Cooper, 18 La. An. 565 (1866) ; Kider v. Duvall, 28 Tex. 622 (1866) ; Crosthwait v. Misener, 13 Bush 543 (1877); Gale v. Rector, 5 Bradw. 481 (1879) ; Garvin v. Wiswell, 83 111. 215 (1876) ; Texas Bkg. Co. v. Turnley, 61 Tex. 365 (1884) ; Lachance v. Loeblein, 15 Mo. App. 460 (1884) ; Banks v.. Eastin, 3 Mart. N, S; 291 (1825). So, Smith v. Schanck, 18 Barb. 344 (1854), overruling Brisbane v. Pratt, 4 Denio 63. ''Rider v. Taintor, 4 Allen 356 (1882). 'Pettee v. Prout, 3 Gray 502 (1855). And this is true irrespective of the addition "said note to be kept in the hands of A. B." (the actual holder and plaintifif ), Truesdell v. Thompson, 15 Mete. 565 (1847). ^Gillham v. State Bank, 3 III. 245 (1840) ; Palmer v. Gardiner, 77 16. 143 (1875) ; Bedell v. Carll, 33 N. Y. 581 (1865) ; Wood v. Wellington, 30 lb. 218 (1864) ; James v. Chalmers, 6 lb. 209 (1852); Rubey v. Culbertson, 35 Iowa 264 (1872) ; Fuller v. Smith, 5 Jones Eq. 192 (1859) ; Hyde v. Lawrence, 49 Vt. 361 (1877) ; Eggan v. Briggs, 23 Kans. 710 (1880) ; Metcalf v. Yeaton, 51 Me. 198 (1864). * Baker v. Stinchfield, 57 Me. 363 (1869) ; Ricard v. Harrison, 19 La. An. 181 (1867). •Hays V. Hathorn, 74 N. Y. 486 (1878), reversing Hays v. Southgate, 10 Hun 511. So, Herrick v. Swomley, 56 Md. 439 (1881) ; Hesser v. Doran, 41 Iowa 468 (1875) ; Lock wood v. Underwood, 16 Hun 592 (1879). 'Hovey v. Sebring, 24 Mich. 232 (1872). "Merchants' Bank v. Masonic Hall. 62 Ga. 271 (1879). 'Robertson v. Dunn, 87 N. C. 191 (1882). And, without indorsement, the presumption is against such holder in favor of the payee, Tuttle v. Becker,. 47 Iowa 486 (1877). INDOESEMENT AND POSSESSION. 431 indorsement is presumptive evidence of his title.^ And if a note payable to a partnership, and indorsed with its name, is found among the papers of a deceased partner, this will be a sufficient possession to raise the presumption of delivery to,, and title in, him.^ § 777. Indorsement and Possession. — If a note is held by the payee, with his own indorsement upon it, he will still be presumed to be the owner.* And this is true of any other holder whose indorsement appears on a bill or note held by himself;* whether the indorsement be conditional or abso- lute.' And if a note is held by the indorser's agent to be discounted, possession under the indorsement will not be presumptively a title in the agent.* So, if a guaranty is indorsed on a note, for payment if it cannot be collected in a given time, possession under such an indorsement will not be prima facie evidence of title in the indorsee.' It has also been said, and provided in Minnesota by statute, that possession of an indorsed note is prima facie evidence that the indorsements were made as they purported to be.* And this is true, where the holder brings an action against the maker of a note payable to a firm, and indorsed in the firm name by one who represented himself to be a 'Freeman v. Falconer, 12 J. & S. 132 (1878). 'Birkey v. McMakin, 64 Penna. St. 343 (1870). The reader is referred to the chapter on Delivery, in the early part of this work, for other similar cases of possession. 'Chaffee v. Taylor, 3 Allen 598 (1862); Lonsdale v. Brown, 3 Wash. 404 (Va. 1818) ; Chatauque Co. Bank v. Davis, 21 Wend. 584 (1889) ; Dollfus v. Frosch, 1 Denio 367 (1845). *Best V. Nokomis Nat. Bank, 76 111. 608 (1875) ; Brady v. White, 4 Baxter 382 (1874) ; Leitner v. Miller, 49 Ga. 486 (1873) ; Mendenhall v. Banks, 16 Ind. 284 (1861); Wickersham d. Jarvis. 2 Mo. App. 279 (1876); Dugan v. United States, 3 Wheat. 172 (1818). But see Hart v. Windle, 15 La. 265 (1840), requiring the holder to prove that such indorsement was for collec- tion only. And if there are several special indorsements after his own, he must explain them, Gorgerat v. McCarty, 2 Dall. 144. And an indorser can- not sue in disregard of his own indorsement, if the legal interest is really in his indorsee and the suit brought for his use, Kyle v. Thompson, 3 111. 432 (1840). ^Abbott V. Joy, 47 Me. 177 (1859). •Freeman v. Sutton, 3 Houst. 264 (1866). 'Taylor v. Binney, 7 Mass. 479 (1811). •First Nat. Bank v. Loyhed, 28 Minn. 396 (1881) ; 1878 G. 8. c. 73 ? 89. 432 indokseb's liability. member of it/ Oa the other hand, possession of a non-nego- tiable note does not raise a presumption of title,^ if there is neither indorsement nor assignment.^ So, the possession of a note payable to order and not indorsed by the payee is not evidence of title in the holder;* even though the payee is dead and the possession derived from his executors.^ But in Alabama a note found among the papers of a deceased per- son without the indorsement of the payee, who is also dead, has been presumed to be' the property of the person among whose papers it was found.* And in Indiana the possession of a note without the payee's indorsement is presumed to show authority on his part to collect it;' and, in North Carolina, to bring suit upon it.* § 778. Parol Evidence — When Admissible. — The indorse- ment as written, although a necessary part of the contract, is not the whole of it. The entire contract is the writing as understood, delivered and received"; and is to be gathered from the language, usage, course of business and relation of the parties.^" The rights of the immediate indorsee are affected by the actual contract with his indorser, but subse- quent purchasers without notice are entitled to look to the 'Blodgett V. Jackson, 40 N. H. 21 (1859), although the firm name is fic- titious. ^Barrick v. Austin, 21 Barb. 241 (1855) ; Merrill v. Smith, 22 Tex. 53 (1858) ; Blackwood v. Brown, 32 Mich. 104 (1875). 'Dalton City Co. v. Johnson, 57 Ga. 398 (1876). *1 Daniel 759; Crisman v. Swisher, 4 Dutch. 149 (1859) ; Ross v. Smith, 19 Tex. 171 (1857) ; Van Eman v. Stinchfield, 13 Minn. 255 (1868), afiirming 10 lb. 255; Dorn v. Parsons, 56 Mo. 601 (1874) ; Redmond v. Stansbury, 24 Mich. 445 (1872) ; Caldwell v. Meshew, 44 Ark. 564 (1884) ; Rumsey v. Schtnitz, 14 Kans. 542 (1875). So, of a certificate of deposit paj'able to order, Vastine v. Wilding, 45 Mo. 89 (1869). 'Taylor v. Surget, 14 Hun 116 (1878). But see, contra, King v. Gottschalk, 21 Iowa 512 (1866), where the persons in possession purported to be the payee's heirs ; and Scoville v. Landon, 50 N. Y. 686 (1872), where the holder was the payee's executor. 'Turnley v. Black, 44 Ala. 159 (1870). 'Paulman v. Claycomb, 75 Ind. 64 (1881). 'Jackson v. Love, 82 N. C. 405 (1880) ; the statute requiring actions to be brought by the party in interest, 1888 Code ? 55. "Byles 154. '"Byles 155; Kidson v. Dilworth, 5 Price 564; Castrique v, Buttigieg, 10 Moore P. C. 94. ■ PAEOL EVIDENCE. 433 indorsement for all that it appears to be on the paper.^ Parol evidence of the actual contract has on this ground been held to be admissible between the immediate parties,* or against subsequent holders with notice.' And on the theory that a blank indorsement is a contract only so far expressed in writing as to raise a presumption of a certain undertaking, which is not conclusive except in favor of subsequent bona fide holders for value, parol evidence is admitted to explain the true contract between the original and immediate parties.* And this is unquestionably true of the blank indorsement of a non-negotiable bill or note.' Indorsements at the making of a note and before that of the payee, made by one who is not otherwise a party of the note, are to be distinguished from ordinary commercial indorsements and are considered by themselves in a later chapter. In Georgia it is expressly provided by statute that all blank indorsements may be explained by parol evidence as against immediate parties and parties with notice.^ On the other hand, most authorities hold that the impli- •cations and intendments which the law merchant has attached to blank indorsements of negotiable commercial paper render them express and complete contracts which cannot be ex- •Byles 155. ^2 Parsons 22; Hays v. May, Wright 80 (1832) ; Lewis v. Williams, 4 Bush ■678 (1868) ; Drummond v. Gager, 10 Bradw. 380 (1882). And this applies to a holder who took the note from the defendant's immediate indorsee with knowledge of the circumstances, or as agent for such indorsee, McDonough 1). Lambert, 8 La. 472 (1835). » Van Valkenburgh v. Stupplebeen, 49 Barb. 99 (1867). *Pike V. Street, 1 Mood. & Malk. 226; Kidson v. Dil worth, 5 Price 564; ■Castrique v. Buttigieg, 10 Moore P. C. 94; Susquehanna Bridge Co. v. Uvans, 4 Wash. C. C. 480 (1824) ; Ross v. Espy, 66 Penna. St. 481 (1870) ; Breneman v. Purniss, 90 lb. 186 (1879) ; Maxwell v. Van Sant, 46 111. 58 <1867) ; Mendenhall v. Davis, 72 N. C. 150 (1875); Davis v. Morgan, 64 lb. 570 (1870); Taylor v. French, 2 B. J. Lea 257 (1879); Commissioners of Iredell Co. v. Wasson, 82 N. C. 312 (1880); Iser v. Cohen, 1 Baxter 421 {1872) ; Smith v. Morrill, 54 Me. 48 (1866). So, on the ground of fraud, Harrison v. McKim, 18 Iowa 485 (1865). See, too, 1 Daniel 650; 2 Parsons 519, 521 ; 18 Cent. L. J. 382. "Gist V. Drakely, 2 Gill 330 (1844) ; Jacques v. McKnight, 2 Dutch. 92 n. <1848). <^ Georgia (1882 Code § 3808). So, Meador v. Dollar Sav. Bank, 56 Ga. 605 '(1876). VOL. n. ^G 434 indoesek's liability. plained or varied by parol.* This rule, as we shall see, has many exceptions. It has been applied even to an indorse- ment in blank made after maturity.^ Under it such evi- dence has been held to be inadmissible, even against an immediate indorsee, to contradict the indorsement by show- ing that the indorser was not liable.^ But an indorser may show in an action by his immediate indorsee an agreement on his part to sue the acceptor only and not to look to tha indorser.* § 779. Parol Evidence — " Without Recourse " Intended. — One who indorses a bill or note in blank cannot, in general,, even in a suit by his indorsee, show that the indorsement was really without recourse.^ And this is without question •1 Daniel 651; 2 Parsons 520; Johnson v. Ramsey, 14 Vroom 279 (1881),. overruling Johnson v. Martinus, 4 Halst. 144 (1827) ; Gist v. Drakely, 2 Gill 330 (1844) ; Day i;. Thompson, 65 Ala. 269 (1880) ; Stack v. Beach, 74 Ind. 571 (1881) ; Preston v. Ellington, 74 Ala. 133 (1883) ; Doolittle v. Ferry, 20 Kans. 230 (1878) ; Crocker v. Getchell, 23 Me. 392 (1844) ; Charles v. Denis,. 42 Wis. 56 (1877) ; Schnell v. Northside Mill Co., 89 111. 581 (1878) ; Barry v. Morse, 3 N. H. 132 (1824) ; Bank of Albion v. Smith, 27 Barb. 489 (1858) ; Skelton v. Dustin, 92 111. 49 (1879) ; Woodward v. Foster, 18 Gratt. 200 (1868) ,- Barnard v. Goslin, 23 Minn. 192 (1876) ; Bartlett v. Lee, 33 Ga. 491 (1863) - Holton V. McCormick, 45 lb. 411 (1873); Roberts v. Masters, 40 lb. 461 (1872) ; Beattie v. Browne, 64 111. 360 (1872) ; Snyder v. Oatman, 16 lb. 265 (1861). And a fortiori, such evidence is not admissible to explain a full written assignment, Holton v. McCormick, supra. But see remarks of Wood- bury, J., in Phillips v. Preston, 5 How. 291 (1847), where such an agree- ment was admitted in an action brought on it by the indorser who had paid the note against the indorser, who had promised to share the loss. 'Smith V. Caro, 9 Oregon 278 (1881). 'Mason v. Burton, 54 111. 349 (1870) ; Courtney v. Hogan, 93 lb. 101 (1879) ;: First Nat. Bank v. Nat. Marine Bank, 20 Minn. 63 (1873). Except in case of fraud or mistake. First Nat. Bank v. Gary, 18 So. Car. 282 (1880). So, the defendant who signed as joint-maker cannot show that he was only a surety ^ Barnstable Sav. Bank v. Ballon, 119 Mass. 487 (1876). And this is of course true as to subsequent holders without notice. Bank of the United States v.. Dunn, 6 Pet. 51 (1832) ; Hill ■;;. Shields, 81 N. C. 250 (1879). *Byle8 154; Pike v. Street, M. & M. 226. The indorser may show an agreement on the part of his indorsee not to sue him, Bruce v. Wright, 3 Hun 548 (1875). And in Pennsylvania an indorser has been permitted to show at suit of his indorsee an agreement that he should incur no liability, Breneman v. Furniss, 90 Penna. St. 186 (1879). ^Martin v. Cole, 14 Otto 30 (1881) ; S. C, 3 Col. 113 (1876) ; Charles v. Denis, 42 Wis. 56 (1877) ; Eaton v. McMahon, lb.; Dale v. Gear, 38 Conn. 15 (1871), reversed, 39 lb. 89; Mason v. Burton, 54 111. 349 (1870) ; Beattie v. Browne, 64 lb. 360 (1872) ; Wilson v. Black, 6 Blackf. 509 (1843) ; Skinner v. Church, 36 Iowa 91 (1872) ; American Emigrant Co v. Clark, 47 Iowa 671 (1878) ; Kern v. Von Phul, 7 Minn. 426 (1862) ; Doolittle v. Ferry, 20 Kans. 230 (1878) ; Campbell v. Robbins, 29 Ind. 271 (1868) ; Lee v. Pile, 37 lb. (1871).. So held, in case of trust or fraud, in Hill v. Ely, 5 Serg. & R. 363 (1819). INDOESEMENT FOR TKANSFEK ONLY. 435 the rule, as against a bona fide holder for value before maturity.' And it has even been held inadmissible to show as against an immediate indorsee that the words " without recourse" were omitted by mistake.^ As against a bona fide holder he cannot, of course, show an agreement, of which the holder had no notice, that the witness who was present at the indorsing had agreed to wjite those words over the indorsement and had failed to do so,* On the other hand, and against his immediate indorsee, an indorser may prove a contemporaneous written agreement that the indorsement should be without recourse.* So, he may prove by parol that the note indorsed by him in blank was taken as agent for the plaintiff, for goods sold by the indorser as such agent, and was indorsed to the plaintiff in accordance with his instructions.' In like manner, he may prove that the words " without recourse," after being omitted by mistake, were added by consent, and were subsequently stricken out without the indorser's consent.* § 780. Indorsement for Transfer Only — ^For Collection. — It has also been held that an indorser cannot show at suit of his immediate indorsee that his indorsement was made for the purpose of a transfer only.^ But a contrary rule prevails in some States.* And this is so, in Georgia at least, if the ' Lewis V. Dunlap, 72 Mo. 174 (1880). Nor can an indorser, who signed by an agent, with the words " without recourse " written below his name and above that of the agent, show at suit of a bona fide holder for value that the words were intended and understood at the time to apply to his signature, Lawrence v. Dobyns, 30 Mo. 196 (1860). i'Lee V. Pile, 37 Ind. 107 (1871). ' Lewis V. Dunlap, supra. * Davis V. Brown, 4 Otto 423 (1876). 5 Dale V. Gear, 39 Conn. 89 (1872), reversing 38 lb. 15. «Beal V. Wood, 5 Mo. App. 591 (1878). 'Lee V. Pile, mpra; Dunn v. Ghost, 5 Col. 134 (1879)." 8 Commissioners of Iredell County v. Wasson, 82 N. C. 308 (1880) ; Patten V. Pearson, 57 Me. 428 (1869); Patterson v. Todd, 18 Penna. St. 426 (1852) ; Girard Bank v. Comley, 2 Miles 405 (1840) ; or for the purpose of transfer and as a guaranty against confiscation by the government, Mendenhall v. Davis, 72 N. C. 150 (1875). Except at suit of a 6ona fide holder, Lewis v. Dunlap, 72 Mo. 174 (1880) ; Meador v. Dollar Sav. Bank, 56 Ga. 605 (1876) ; Stapler v. Burns, 43 lb. 382 (1871). Between indorser and indorsee an un- standing on the indorser's part that his indorsement was to take effect merely as a transfer, has been held to be available under the Code in 436 indorsee's liability. indorsement was made after the maturity of the note.' In Alabama, however, such evidence has been held inadmissible «ven between principal and agent, in a remittance by tlie agent in accordance with the principal's instructions.*^ In general, an indorser may prove, as against his indorsee, that his indorsement in blank was made for the purpose of ■collection.' But the indorsee "for account of A." cannot show as against A., the indorser, that the transfer was made to him for any other purpose than as agent for collection ;* or that an indorsement "for collection," ° or "for account of A.," was really intended to be an absolute transfer.® § 781. Indorsement Intended as Guaranty — Surety — Maker. — An indorsee in blank cannot show in a suit against his indorser that he intended to make himself liable as a guarantor.'' But if an express contract of guaranty has been written over the blank indorsement, parol evidence has been held to be inadmissible to charge the indorser as an indorser.* Georgia as a defense, if known to the indorsee at the time and not objected to by him, Lynch v. Goldsmith, 64 Ga. (1879) ; Code Ga. § 2756 ; Stapler v. Burns, 43 Ga. 382 (1871). ^Galceran v. Noble, 66 Ga. 367 (1881). ''Day V. Thompson, 65 Ala. 369 (1880). '1 Daniel 655; 2 Parsons 24; 1 Edwards ? 400; Story on Prom. Notes 1 146 n.; Downer v. Chesebrough, 36 Conn. 39 (1869) ; McWhirt v. McKee, 6 Kans. 412 (1870). And on such evidence the indorser may recover from his indorsee the money collected by him, Lawrence v. Stonington Bank, 6 Conn. 521 (1827). So, too, as we have seen, on striking out an indorsement made for collection on a retransfer of the note, Smith v. Childress, 27 Ark. 328 (1871). But see, contra, Chaildock «. Vanness, 6 Vroom 521 (1871); Johnson v. Ramsey, 14 lb. 279 (1881), overruling Johnson v. Martinus, 4 Halst. 144 (1827). And such evidence is said not to be admissible in New York, Downer v. Chesebrough, supra. *White V. Miners' Nat. Bank, 12 Otto 658 (1880). See, too. Armour Bkg. Co. V. Eiley Co. Bank, 30 Kans. 163 (1883). ^And the indorsee in such case has no title on which he can maintain an action on the note, Rock Co. Bank v. HoUister, 21 Minn. 385 (1875) ; Third Nat. Bank v. Clark, 23 lb. 263 (1877). It iias, however, been held that even such an indorsement may be shown to have been made for value. First Nat. Bank v. McCann, 4 Bradw. 250 (1879) . «Leary v. Blanchard, 48 Me. 269 (1860). 'Howe V. Merrill, 5 Cush. 80 (1849) ; Schnell v. Northside, &c., Mill Co., 89 111. 581 (1878). But see, contra, Dibble v. Duncan, 2 McLean 553 (1841); Dye V. Scott, 35 Ohio St. 194 (1878) ; Barrows v. Lane, 5 Vt. 162 (1832). See also, Worden v. Salter, 90 111. 160 (1878), where the blank was filled with a contract of guaranty and evidence of such intention admitted without objection. "Smith V. Frye, 14 Me. 457 (1837). INDORSEMENT INTENDED AS GUARANTY. 437 In Connecticut, however, it may be shown that an indorser in blank guaranteed the note to be collectible within a rea- sonable time.^ So, in Virginia, where the payee indorsed and delivered the note, without having been otherwise inter- ested in it or a party to the transaction represented by it.^ And in Tennessee it has been held that a blank indorsement creates prima fade the liability of indorser, and cannot be filled with a guaranty, but may be shown by clear evidence to have been so intended.* An indorser in blank cannot, as against his immediate indorsee, prove that he signed the note as a surety for the maker.* In like manner, an accommodation maker, although known to be such, cannot at suit of the original holder show himself to be a mere surety for the indorser and therefore released by laches of the holder in proceeding against the indorser.* On the other hand, where several sign as indors- ers for the security of another, one cannot show himself to be a mere indorser as against the others without proving that such was the intention and understanding of all.* But the real contract, as co-sureties or otherwise, may be shown as between themselves.'' The holder under a blank indorsement cannot prove his indorser to be a joint maker.* But it seems that in Pennsyl- vania he may show that an absolute promise was intended by the indorser.' The liability of successive indorsers is prima facie successive, in the order in which their names •Clark V. Merriam, 25 Conn. 578 (1857). 'Welsh V. Ebersole, 75 Va. 651 (1881). 'Newell V. Williams, 5 Sneed 208 (1857). *So held under the Statute of Frauds, in Hauer v. Patterson, 84 Fenna. St. 274 (1877). 'Stephens v. Monongahela National Bank, 88 Penna. St. 157 (1878). . •Simmons v. Camp, 64 Ga. 726 (1880). 'Water Power Co., v. Brown, 23 Kans. 676 (1880). And evidence that one of the indorsers offered collateral security to the others, is not conclusive proof that he was principal and they sureties. 'And saying he will pay if the maker does not will not avail to charge him as a maker, Pinley v. Green, 85 111. 535 (1877). But see, contra, at suit of an immediate indorsee or a purchaser, with notice, Hardy v. White, 60 Ga. 454 (1878). "Patterson v. Todd, 18 Fenna. St. 426 (1852). 438 indoesek's liability. appear.^ But their real relation, as jointly liable or other- wise, may be shown inter se by parol evidence." So, where a bill is drawn and indorsed for the accommodation of the acceptor, the indorser may show as against the drawer an agreement for their joint liability.^ § 782. Evidence as to Consideration. — As against his im- mediate indorsee, an indorser in blank may introduce parol evidence going to show the consideration of the transfer or to prove fraud or breach of trust.* The exclusion of such evidence would make the courts themselves an engine of fraud. But the exception, once allowed, admits nearly all the controverted cases of parol evidence. Thus, the indorser may show that his indorsement was wholly without consid- eration;* or that he was merely the agent of the indorsee;' or indorsed for his accommodation ;' or that the considera- tion for the transfer has failed;* or that the indorsement was intended as a receipt and given on payment of the note ;' or, as a measure of damages, that the real consideration was less than the face of the note ;" or that it was intended as a security for certain payments, the balance being payable to the indorser after such payments were satisfied.^^ But merely pleading that the note was indorsed as collateral raises no 'State of Missouri v. McWilliams, 7 Mo. App. 99 (1879); Connelly v. Bourg, 16 La. An. 108 (1861). »See ?? 740, 741, supra. 'Denton v. Lytle, 4 Bush 597 (1868). •1 Daniel 654; 1 Edwards g 400; 2 Parsons 23; Story on Prom. Notes ? 146 n.; Kirkham v. Boston, 67 111. 599 (1873); Denniston v. Bacon, 10 Johns. 198 (1813). 5 Foster v. Jolly, 1 C. M. & R. 703. 'Lovejoy v. Citizens' Bank, 23 Kans. 331 (1880). 'Breneman v. Purniss, 90 Penna. St. 186 (1879). ^ Smith V. Carter, 25 Wis. 283 (1870). "Cole V. Smith, 29 La. An. 551 (1877) ; Morris v. Faurot, 21 Ohio St. 155 (1871) ; Davis v. Morgan, 64 N. C. 570 (1870). As to the admissibility of evidence to show that an indorsement in the form of a receipt was intended for a transfer, see McCoon v. Biggs, 2 Hill 121 (1841). '"Cook V. Cockrill, 1 Stew. 475 (Ala. 1828). "Scammon v. Adams, 11 111. 575 (1850) ; Wood v. Matthe>V8, 73 Mo. 477 (1881). And in such case the indorser might recover the proceeds of sale of the note, Hazzard v. Duke, 64 Ind. 220 (1878). PAKOL EVIDENCE OF FEAUD. 439 presumption of such fact and the burden of proving it is on the indorser.^ § 783. Parol Evidence of Fraud. — The indorser may in like manner prove that the transfer was induced by fraud,^ or upon a special trust and for a particular purpose.^ So, a £rst indorser may bring an action against a second indorser ■on a parol agreement to deliver certain goods to him on his payment of the note, and may prove such agreement not- "withstanding his formal unqualified indorsement.* So, an indorser has been allowed to show against his immediate indorsee or a latesr holder with notice, that the indorsement ■was delivered in escrow only;^ or under an agreement that s, collateral mortgage should be first exhausted." So, the indorsee may show an agreement on the indorser's part for forbearance against the maker, as evidence of a waiver of the •diligence otherwise requisite.' On the other hand, an indorser cannot show that he was only to be liable when certain lands were sold ;* or that the indorsee had agreed to renew the note at maturity;' or that the proceeds of goods purchased with a bill of exchange should be retained until it was paid;^° or that the indorsement in an individual name was intended as the indorsement of a »Chapin v. Thompson, 7 Bradw. 288 (1880). '1 Daniel 656 ; 1 Edwards g 400 ; Story on Prom. Notes ? 146 n. ; Ham- burger V. Miller, 48 Md. 317 (1877) ; Hill v. Ely, 5 Serg. & R. 363 (1819) ; Van Buskirk v. Day, 32 111. 260 (1863) ; Kirkham v. Boston, 67 lb. 599 (1873) ; But in Illinois a general allegation of fraud,' not setting out the particular fraud relied on for such defense, is insufiBcient, Jones v. Albee, 70 111. 36 <1873). n Daniel 655; 1 Edwards ? 400; 2 Parsons 24; Bell v. Ingestre, 12 Q. B. 317 ; Adams v. Jones, 12 Ad. & El. 455 ; Hamburger v. Miller, 48 Md. 317 <1877). And see obiter, Dale v. Gear, 38 Conn. 15 (1871). ♦Sanders v. Gillespie, 59 N. Y. 250 (1874). " Goggerley v. Cuthbert, 2 Bos. & P. N. R. 170 ; Bell v. Ingestre, 12 Q. B. 317 ; Hicketts V. Pendleton, 14 Md. 320 (1859). 'Planters' Bank v. Houser, 57 Ga. 140 (1876). Or to exhaust remedies against the maker first, Wall v. Bry, 1 La. An. 312 (1846). 'Castle V. Candee, 16 Conn. 223 (1844) ; Clark v. Merriam, 25 lb. 578 (1857). "Free v. Hawkins, 8 Taunt. 92; Holt 550. 'Hoare v. Graham, 3 Campb. 57. And after paying the note, the indorser oannot recover the amount paid in an action on such agreement, Gardner- 3) ; Osgood v. Artt, 17 Fed. Rep. 575 (1883). "Davenport v. Woodbridge, 8 Me. 17 (1831). 'Hughes V. Nelson, 2 Stew. Eq. 547 (1878) ; Galway v. Fullerton, 2 C. E. Green 394. ^Grover v. Grover, 24 Pick. 261 (1837) ; Hale v. Bice, 124 Mass. 292 (1878). "1 Daniel 687; 1 Edwards § 404; Jones v. Witter, 13 Mass. 305 (1816) Allum V. Perry, 68 Me. 232 (1878) ; Foreman v. Beckwith, 73 Ind. 515 (1881) Terry v. Allis, 16 Wis. 478 (1863) ; Losee v. Bissell, 76 Penna. St. 459 (1874) Patterson v. Cave, 61 Mo. 439 (1875) ; Gibson v. Miller, 29 Mich. 355 (1874) Osgood V. Artt, supra. Failure of consideration may be set up against such holder, Hedges v. Sealy, 9 Barb. 214 (1850). Or want of authority in the agent making the transfer, McMinn v. Freeman, 68 N. C. 341 (1873). So, fraud in obtaining possession originally of the paper, Younker v. Martin, 18 Iowa 143 (1864). So, usury, Hadden v. Bodkey, 17 Kans. 429 (1877). So, a set-oflf, Simpson v. Hall, 47 Conn. 417 (1879). 'Whistler v. Forster, 14 C. B. n. s. 248 ; Clark v. Whitaker, 50 N. H. 474 (1871) ; Southard v. Porter, 43 76. 379 (1861) ; Calder v. Billington, 15 Me. 398 (1839). But if indorsed before maturity and before notice, the defense (e. g. want of consideration) is inadmissible, Baker v. Arnold, 3 Caines 279 (1805). * Franklin v. Twogood, 18 Iowa 515 (1865) ; Planters', &o., Ins. Co. v. Tun- stall, 72 Ala. 142 (1882). 'Matteson v. Morris, 40 Mich. 52 (1879). DELIVEKY WITHOUT INDOESEMENT. 445 given by the payee/ So, if an accommodation check is delivered by the payee without his indorsement, it may be stopped by notice from the drawer to the bank, and the holder by delivery will be bound by such notice.^ Or if a note is drawn for an expected loan from the payee, and after the loan is refused it is put in circulation by the maker with- out the payee's indorsement, even a bona fide holder for value will take it subject to defenses existing between the original parties.^ And, in general, under a transfer without indorsement, the accommodation acceptor of a bill may defend even against a bona fide holder on the ground that he is dis- charged as a surety by forbearance toward the principal debtor.* So, where a bill payable to the drawer's own order is accepted and transferred without indorsement and after- ward sent to the drawer for indorsement and destroyed by him, the acceptor will' not be liable to such assignee on his acceptance.® But a bill so transferred is not subject to fresh equities arising after notice to the drawer of such transfer." And if the maker of a note ;nakes a new promise of payment to the assignee, without reservation of equities in his favor against the assignor, he cannot avail himself of them after- ward, although the suit is brought in the name of the assignor.'' § 789. Indorsement — Necessary to Bona Fides of Holder. — An indorsement of a bill or note by the payee is necessary to constitute the holder a bona fide holder in due course of business, and the absence of such indorsement amounts to a ^Osgood V. Artt, 17 Fed. Kep. 575 (1883), the defense in this case being fraud and failure of consideration. ^Freund v. Importers', &c., Nat. Bank, 3 Hun 689 (1875) ; affirmed, 76 N. Y. 352 (1879). See, too, same case, 12 Hun 537. 'Boody V. Bartlett, 42 N. H. 558 (1861). *Meggert v. Baum, 57 Miss. 22 (1879). sEdge V. Bumford, 31 Beav. 247 ; S. 0., 31 L. J. Ch. 805. '2 Parsons 46. ' Wiggin V. Damrell, 4 N. H. 69 (1827) ; Thompson v. Emery, 27 lb. 269 (1853). 446 TBANSFEE BY ASSIGNMENT, PLEDGE, &C. notice of equities and leaves the paper subject to defense ii* the hands of such holder.^ In like manner, an oral assign- ment is insufficient to constitute a bona fide holder in the- commercial sense of the term.'^ So, where the payee of a note includes a transfer of it with a guaranty of payment in a bond given by him, the holder will not be a bona fider holder.^ In like manner, an assignment of a note reciting a valuable consideration, but executed on a separate paper, and without indorsement or delivery of the note, will be insuffi- cient to make the holder such.* § 790. Delivery without Indorsement — Action by Holder. — Where the payee's indorsement is wanting, the holder can- not sue in his own name any one but his immediate trans- feror.* If the note is payable to A. or order, an indorsement is necessary to enable the purchaser to bring an action.* And even where it is made thus payable and the payee dies- without indorsing it, his executor cannot bring suit in hi& own name except as the payee's executor.'' In like man- ner, where a note is payable " to the order of A. B., Treas- urer of the Methodist Episcopal Church," a church which is- not named, although the equitable owner of the note, cannot, sue on it in its own name without A. B.'s indorsement.* The holder of a note payable to order without indorsement has in equity all of the payee's or assignor's rights, and may sue prior parties at law in the payee's or assignor's name, and perhaps in equity in his own name.' His interest under such 'Gibson v. Miller, 29 Mich. 355 (1874) ; Sturees v. Miller, 80 III. 241 (1875) j. Losee v. Bissell, 76 Penna. St. 459 (1874). 'Miller v. Tharel, 75 N. C. 148 (1876). »Peck v. Bligh, 87 111. 317 (1865). 'Hull -v. Swartout, 29 Mich. 249 (1874). 'Bylesl57; Chitty 275. •Durgin v. Bartol, 64 Me. 473 (1874) ; Smalley -o. V^^ight, 44 lb. 442 (1857) ; Boyce v. Nye, 52 Vt. 372 (1B80). So, Kobinson v. Wilkinson, 38 Mich. 299' (1878), the Michigan statute authorizing suit by the holder of non-negotia- ble paper (C. L. ? 5775) not covering this case. Nor can the transferee of a sealed bond payable to A. or order sue on it in his own name without in- dorsement, Hardie v. Mills, 20 Ark. 153 (1859). 'Woodbury ?;. Woodbury, 47 N. H. 11 (1866). sFine v. High Bridge M. E. Church, 15 Vroom 148 (1882). •Whistler v. Forster, 14 0. B. N. 8. 248. DELIVERY WITHOUT INDOESEMENT. 447 m case is an equitable one only.^ And even if a bill of ex- change is payable to the drawer's own order and lacks hi& indorsement, it is said that an action upon it should be brought in the drawer's name.^ But in Indiana where a note is made payable to one person and delivered to another, the payee named having had no interest in it, the original taker is allowed to sue upon it in his own name.^ This is upon the theory that the payee may, in such case, be treated as a fictitious person. If, however, the payee is a real person,, although his name is used without his knowledge, the real holder cannot, it has been held, indorse his name and re- cover upon such forged indorsement as indorsee against the maker.* Between the parties to the transfer a delivery with- out indorsement is often sufficient, as in the case of a gift by the payee; and the person to whom the note is delivered without indorsement may afterwards bring suit upon it in the name of the payee's administrators? § 791. Assignment — Parties to Action. — Where a bill or note is assigned by deed, the holder should, sue upon it in the name of his assignors.^ So, too, the purchaser of many notes and bills, taking them by one deed of assignment, cannot sue on them in his own name.'' This is true also of a statutory assignment for the benefit of creditors, and such assignment is, therefore, no bar to the entry of judgment in 'Freeman v. Perry, 22 Conn. 617 (1853). So, where the holder by delivery is a new firm of the same name as the old firm, to which the note was made payable, it should sue in the name of the old firm, Pease v. Hirst, 10 B. & C. 122. And the assignor is liable in such action for costs, Myers v. James, 2 Bailey 547 (1831). ''Titcomb v. Thomas, 5 Me. 282 (1828). 'Ehyan v. Dunnigan, 76 Ind. 178 (1881). ^Kohn ■«. Watkins, 26 Kans. 691 (1882). ^Grover v. Grover, 24 Pick. 261 (1887). '2 Parsons 46 ; Amherst Academy v. Cowls, 6 Pick. 427 (1828) ; Tucker v. Tucker, 119 Mass. 79 (1875). Especially where the transfer was made merely for the purpose of collection, Nichols v. Gross, 26 Ohio St. 425 (1875). And the New York statute, requiring actions to be " prosecuted in the name of the real party in interest," will not govern an action brought in Massa- chusetts on such a transfer made in New York, Foss v. Nutting, 14 Gray 484 (1860). By the civil law, as by statute in many States, the assignee may su© in his own name, Story on Prom. Notes 1 131. 'Hopkirk v. Page, 2 Brock. 20, 41 (1822). 448 TRANSFER BY ASSIGNMENT, PLEDGE, &C. a suit previously begun by the payee in his own name.^ So, a trustee, taking a bond by separate assignment, should sue in the name of his assignors.* But it seems that the drawer of a draft payable to A. can sue the drawee for non-accept- ance without having the draft transferred to him by the payee.' In Indiana it is held that the assignor of a bill or note, where there is no indorsement, should be a party de- fendant.* And in Kentucky the assignee, without indorse- ment, must join the payee in his suit.* In some States the holder of a bill or note by assignment may sue in his own name.® So, too, a holder by delivery without indorsement.'' And this is allowed also in the case of the assignment of a note under seal by a separate instru- ment,* or of a note or bill by a trust deed.* And in New York, one who takes a note by way of pledge, without indorsement, may sue on it in his own name.^" But the statute, which authorizes the joinder in one action of maker and indorsers, will not include one who assigns the instrument by a deed.^"^ In New York the purchaser of a note, taking it by deliv- ery before maturity, need not aver an indorsement by the payee.^^ § 792. Presumption of Title — Indorsement Relates Back. — At common law the possession of a note payable to order 'Buckner v. Eeal Estate Bank, 5 Ark. 536 (1844). ^ State V. Bank of Washington, 18 Ark. 554 (1857). 'Henneman v. Thompson, 8 So. Car. 115 (1876). *Keller v. Williams, 49 Ind. 504 (1875). 'Perry v. Seitz, 2 Duv. 122 (1865). «McGee v. Riddlesbarger, 89 Mo. 365 (1867) ; Morris v. Poillon, 50 Ala. 403 (1873); Wilcoxen v. Logan, 91 N. C. 449 (1884). And see chapter on Actions, infra. 'Boeka v. Nuella, 28 Mo. 180 (1859) ; Lewis v. Bowen, 29 lb. 202; Williard V. Moies, 30 lb. 142 (1860) ; Taylor v. Reese, 44 Miss. 89 (1870) ; Willey v. Gatling, 70 N. C. 410 (1874) ; Andrews v. McDaniel, 68 lb. 385 (1873) ; Weeks V. Medler, 20 Kans. 57 (1878) ; Texas (1879 R. S. ? 265). 8 Thornton v. Growth er, 24 Mo. 164 (1857). "Nelson v. Eaton, 26 N. Y. 410 (1863). "Van Riper v. Baldwin, 19 Hun 344 (1879). "McGuire v. Wagnon, 59 Ga. 591 (1877). "Billings V. Jane, 11 Barb. 620 (1852). SUBSEQUENT INDOESEMEJfT. 449 without the payee's indorsement is not prima facie evidence of title iu the holder/ Such holder must prove his title.^ But if the indorsement has been omitted by mistake, negligence or fraud, a subsequent indorsement will in equity relate back to the time when the transfer was made.* And if a note is transferred and delivered by the payee, but not indorsed until after his bankruptcy, it will still transfer the legal title.* So, if it is indorsed after the bankruptcy and death of the payee, although the payee was an accom- modation party, the maker will still be liable to the holder, if the transfer was for a valuable consideration.^ So, where a note is transferred without indorsement, and subsequently indorsed, set-off's arising in the meanwhile outside of the instrument will constitute no defense.® It will be sufficient, if a note delivered by the payee without indorsement is indorsed by his administrator at any time before its matur- ity.' On the same principle, a certificate of stock, indorsed and delivered before the seller's death, may be transferred on the books of the company after his death." § 793. Subsequent Indorsement — Lets in Defenses. — And if a bill or note is transferred without indorsement as collat- eral security, its subsequent indorsement will pass the legal title.' But if the transfer of such an instrument is without indorsement, its indorsement after maturity will only pass the title subject to equitable defenses that may exist.'^" Even where, at the time of transfer, there is an agreement for in- 'Hull V. Conover, 85 Ind. 372 (1877) ; Van Eman v. Stanchfield, 10 Minn. 255 (1865) ; Kedmond v. Stansbury, 24 Mich. 445 (1872) ; Ross v. Smith, 19 Tex. 171 (1857). ^Crisman i;. Swisher, 4 Dutch. 149 (1859). 'Watkins v. Maule, 2 Jac. & Walk. 237; Weeks v. Medlar, 20 Kans. 5T (1878). *Hersey v. Elliot, 67 Me. 526 (1878). ^Watkins v. Maule, supra. «Beard v. Dedolph, 29 Wis. 136 (1871). 'Malbon v. Southard, 36 Me. 147 (1853>). "Eraser v. City Council, 11 So. Car. 486 (1878). 'Baggarly v. Gaither, 2 Jones Eq. 80 (1854). "Whistler v. Forster, 14 C. B. N. s. 248 ; Lancaster Nat. Bank v, Taylor, lOO Mass. 18 (1868). VOL. n. 2d 450 TRANSFER BY ASSIGNMENT, PLEDGE, &C. dorsement, if the indorsement is not made until the paper is overdue, the maker may set up the defense that it was an accommodation note.^ So, where an indorsement, made without the payee's authority, is not ratified by him until after maturity, the transfer will be subject to defense.^ If the transferee gets notice of fraud in the making of the instrument between the time of its transfer by delivery to him and the time of its indorsement, he will take subject to it.^ So, where the assignment of a note is included in a bond given by the payee, fraud and failure of consideration which come to the purchaser's knowledge before indorsement may be set up by the maker.* Where a bill is purchased of a bankrupt before his bankruptcy and paid for in cash, and a subsequent offer of indorsement by him is refused by the purchaser, it seems that the bankrupt will not be liable for the offense of selling the bill after his bankruptcy.* But if an insolvent payee executes a transfer of a bill payable to order without indorsement, his assignee may recover it in an action of trover.^ If an indorsement is intended, but omitted by mistake or accident, it may afterwards be compelled by suit in equity against the transferor or his personal represen- tatives.' Such equitable relief is based upon the implied or express agreement for indorsement.* But the purchaser of a bill has no authority himself to supply the missing in- dorsement for the transferor.® ^Haskell v. Mitchell, 53 Me. 468 (1866). ^Gilbert v. Sharp, 2 Lans. 412 (1869). 'Whistler v. Forster, 14 C. B. n. s. 248 (1863). 'Osgood V. Artt, 17 Fed. Eep. 575 (1883). ^Ex parte Shuttleworth, 3 Ves. 368. "Burroughs v. Keays, 37 Mich. 430 (1877). ' Watkins v. Maule, 2 Jac. & Walk. 237 ; Ex parte Greening, 13 Ves. 206. 'Byles 157. And the assignees of the bankrupt transferor may be directed to make such indorsement on a petition for that purpose. Ex parte Rhodes, 8 Mont. & Ayr. 217 ; Ex pa/rte Greening, 13 Ves. 206. Or the bankrupt may himself indorse it. Smith v. Pickering, Peake 50. 'Byles 157; Chitty 271; Moxon v. Pulling, 4 Camp. 50. GENERAL PKINCIPLES. 451 II. PLEDGE OF COMMEKCIAL PAPER. 794. General Principles — Pledge by Agent. 795. Power to Collect Collateral. 796. to Sue upon Collateral. 797. Amount of Recovery by Pledgee. 798. Pledge taking EflFect after Maturity. 799. not Subject to Equities. 800. Accommodation — Fraud. 801. Transfer by Pledgee. 802. Sale by Pledgee— Notice, &c. 803. Equity Powers— Effect of Sale. 804. Surrender of Pledge — Diligence. § 794. General Principles — Pledge by Agent. — Commercial paper is often transferred by way of pledge or collateral security. And the rules of the civil law are in this respect the same as those of the law merchant.^ In Louisiana deliv- ery to the pledgee is by statute the only formality required for such purpose.^ The note or bill pledged must, however, in all cases be that of a third person and not of the pledgor himself.^ The absolute ownership of a bill or note implies power to pledge as well as power to transfer it. Thus, a corporation, having authority to receive notes for premiums, may trans- fer them absolutely or by way of pledge.* On the other hand, an agent's authority to sell a bill or note for his prin- cipal is not an authority to pledge it.' If he takes it to obtain a discount for his principal, he cannot pledge it for an existing debt of his own,* e. g. for rent then due.'' If, however, a note, in the hands of an agent for sale, is pledged by him for an existing debt of his own, the pledgee will be protected as a holder for value against the principal,* 'Byles 177. ' Louisiana Code I 3125. ^Atlantic F. & M. Ins. Co. v. Boies, 6 Duer 583 (1857). *Brookman v. Metcalf, 32 N. Y. 591 (1865). 'Bank of Bengal v. Macleod, 7 Moo. P. C. 35. ^Byles 36 ; Haynes v. Foster, 2 Cromp. & M. 232. 'And in such cases the pledgee is not a bona fide holder, Fenouille v. Hamilton, 35 Ala. 319 (1859). 'Giovanovich v. Citizens' Bank, 26 La. An. 154 (1874). But see, contra, Bay V. Coddington, 5 John. Ch. 54 (1821). See, also, chapter on Sufficiency OF CONSIDEEATION, ^? 461-465. 452 TKANSFEK BY ASSIGNMENT, PLEDGE, &C. provided he took the note from the agent in good faith.* This is true especially of a bill payable to bearer and pledged by an agent who held it for sale, the bill containing on its face no notice of the principal's title.'' In like manner, where a bill is drawn by the agent, and accepted by the principal for the purpose of having it discounted, and fraudulently pledged by the agent to a bona fide holder, the principal will be liable to such holder on his acceptance.* A bill broker has prima fade no authority to pledge in mass the bills or notes of various principals. But such authority has been implied from local usage in London.* And where such broker fraudulently pledged stock of one principal and notes of another, they are liable pro rata in the hands of a bona fide holder for the amount paid by him.® So, too, a banker has a general lien on all negotiable securities de- posited with him and taken without notice of the principal's title or the agent's want of authority to make such deposit.* § 795. Power to Collect Collateral. — The pledgee of com- mercial paper takes it as a trustee for the holder and pledgor.^ As such it is his duty to hold the collateral and collect it at its maturity.* And when collected, he may, of course, apply the proceeds without further authority to the satisfaction of •Clement v. Leverett, 12 N. H. 317 (1841); Dix v. TuUy, 14 La. An. 456 (1859). *Byles 166; Barber v. Richards, 20 L. J. Exch. 135; and the pledgee will not be liable in trover to the real owner, Collins v. Martin, 1 Bos. & t. 648 ; S. C, 2 Esp. 520. So, a cotton note or warehouse receipt which has come into the hands of a pledgee through the negligence of the rightful owner. Fourth Nat. Bank v. St. Louis Cotton Co., 11 Mo. Apj). 333 (1882). As to the effect of hypothecating stock without indorsing it, see Eraser v. City Council, 11 So. Car. 486 (1878). 'Clement v. Leverett, 12 N. H. 317 (1841). *Byles 36; Foster v. Pearson, 1 C. M. & R. 849; S. C, 5 Tyrw. 255; and such usage is a question of fact for the jury, lb. 'Douglass V. Dudley, 48 N. Y. 688 (1872). *Byles 176; Barnett v. Brandao, 6 Man. & G. 630; but not on bills of ex- change which are expressly deposited for a special purpose, Brandao v. Barnett, 3 C. B. 519. 'Byles 177. "1 Daniel 787; Byles 177; Wheeler v. Newbould, 16 N. Y. 392 (1857); Joliet Iron Co. v. Scioto Brick Co., 82 111. 548 (1876) ; Whittaker v. Charleston Gas Co., 16 W. Va. 717 (1880). POWEK TO SUE UPON COLLATERAL. 453 the principal debt secured by it.^ And he need not defer its collection until the maturity of the original debt,^ although he cannot appropriate the proceeds to such debt until it becomes due.* When the collateral note is collected and the proceeds received by the pledgee, it operates as a payment pro tanto of the debt secured.* On the other hand, after a note is once pledged, payment to the pledgor will not discharge or satisfy it ; ^ and will not constitute a defense on the maker's part against the pledgee, although made in ignorance of the pledge,® and even after maturity and on the pledgor's receipt for the money.' But payment by the pledgor of his original debt to the pledgee discharges the lien created by the pledge.* And if the collateral has been collected by the pledgee, the proceeds may be recovered by the pledgor on his payment of the debt secured.' § 796. Power to Sue upon Collateral. — One who receives commercial paper as a pledge may on its maturity proceed to collect it by suit.'" And his holding a note of the pledgor for the original debt is no bar to his recovery against in- dorsers on the collateral note."^^ And in such suit it is not necessary to join the pledgor as a party or to set out the plaintiff's interest as that of a pledgee.'^ In States where the statute requires suit against the prin- cipal debtor on notice by an indorser or surety to the 'Nelson v. Edwards, 40 Barb. 279 (1863). = Jones V. Hawkins, 17 Ind. 550 (1861). 'Farwell v. Importers', &c., Bank, 15 J. & S. 409 (1881). * Marine Bank v. Vail, 6 Bosw. 421 (1860). estate Sav. Assoc, v. Hunt, 17 Kans. 533 (1877) ; Best v. Crall, 23 Kans. 482 (1880). ^Griswold v. Davis, 31 Vt. 390 (1858). 'Davis V. Miller, 14 Gratt. 1 (1857). 8 Russell V. Epler, 10 Bradw. 304 (1881). 'Overstreet v. Nunn, 36 Ala. 666 (1860). '"2 Parsons 443 ; Nelson v. Edwards, 40 Barb. 279 (1863) ; Sheldon v. Mid- 8hire he is subject to defenses which are available against his pledgor.^ If, indeed, the indorsee is a mere agent without an interest, as in the case of a naked authority to collect a note for his indorser and apply the proceeds to his debt, he takes it subject to equities.* § 800. Accommodation — Fraud. — An accommodation ac- ceptor is liable to a bona fide pledgee, it has been held, even though the pledge was given after maturity and after pay- ment by the drawer to the pledgor, the bill not having been surrendered or canceled.' If, on the other hand, after pay- ing the pledgee, such acceptor is obliged to pay the bill a second time to a bona fide purchaser from the pledgee, he may recover the original payment made by him.' That the defendant is an accommodation maker, is, in general, no defense even against a holder who takes the note as security ^ for an existing debt.^ But it is a good defense against him after his debt is paid, as well as against one who purchases from the payee the judgment recovered by the pledgee.^" And failure of consideration has been held to be a good "Naglee v. Lyman, 14 Cal. 451 (1859). ' Georgia (Code 1882 J 2139). Although such fraud is unknown to the pledgee. 'Bridgeport City Bank v. Welch, 29 Conn. 475. *Vatterlein v. Howell, 5 Sneed 441 (1858). "Williams v. Little, 11 N. H. 66; Kice v. Raitt, 17 lb. 116 (1845). ^E. g. a bank note stolen from the true owner, Solomons v. Bank of Eng- land, 18 East 135 n. 'Bosanquet v. Dudman, 1 Stark. 1. "Bleaden v. Charles, 7 Bing. 246. 'Inglis V. Kennedy, 6 Abb. Pr. 32 (1858) ; Louisiana Bank ■». Gaiennie, 21 La. An. 555 (1869). "Blydenburgh v. Thayer, 3 Keyes 293 (1867). 458 TEAlfSFEK BY ASSIGNMENT, PLEDGE, &C. defense, in New Hampshire, against one who holds a note merely as collateral.^ If the owner has been deprived of the instrument by fraud, one who takes it in good faith as collateral may hold it until his debt is paid.^ So, a maker cannot in equity obtain the cancellation of a note, for fraud of the payee, against such holder/ But in some States a fraudulent diver- sion of the paper may be set up in defense against one who takes it as security for an existing debt.* And such defense is admissible generally after payment to the pledgee of the debt secured.^ § 801. Transfer by Pledgee. — At common law chattels pledged for a debt maturing at a day certain, may, on default, be sold by the pledgee.* And this power to sell extended to stocks and annuities.' But it has been held that stock transferred to secure a note, which was payable imme- diately without demand, although accompanied by an express power of sale without notice, cannot be sold by the pledgee without a previous demand of the debt,* Railroad and other coupon bonds, being in their nature marketable securities at established values, have been distinguished in this respect from commercial paper and may be sold by the pledgee on .notice,^ and after demand of payment.^" This rule applies also to coupon bonds issued by a county ^^ or municipality. 'Fletcher v. Chase, 16 N. H. 38 (1844). ^Bealle v. Southern Bank, 57 Ga. 274 (1876.) »Bond V. Wiltse, 12 Wis. 683 (1860). *Duncan v. Gosche, 21 How. Pr. 344 (1861). So, too, payment made to the assignor after assignment and before notice of assignment, Vatterlein v. Howell, 5 Sneed 441 (1858). 'Easter v. Minard, 26 111. 494 (1861). "Byles 177; Tucker v. Wilson, 1 P. Wms. 261; 8. C, 1 Bro. P. C. 494; Pigott V. Cubley, 15 0. B. (n. s.) 701 ; Martin v. Reed, 31 L. J. C. P. 126. 'Tucker «. Wilson, supra; Lockwood v. Ewer, 2 Atk. 303. » Wilson V. Little, 2 N. Y. 443 (1849). 'Brown v. Ward, 3 Duer 660 (1854). But see, contra, as to railroad bonds, Joliet Iron Co. v. Scioto Brick Co., 82 111. 548 (1876) ; and as to municipal corporation orders, Whittaker v. Charleston Gas Co., 16 W. Va. 717 (1880). " Such sale being obviously contemplated and intended by the pledgor, Morris Canal v. Lewis, 1 Beas. 322 (1868). "And knowledge of the sale is equivalent to notice, Alexandria, &o., Eail- road V. Burke, 22 Gratt. 254 (1872). SALE BY PLEDGEE. 459 And the pledgee may sell a negotiable bond held by him as collateral, although the pledgor has become bankrupt.^ But a pledge of commercial paper does not, in general, carry the power to sell or dispose of it.^ Even on the matur- ity of the debt secured the pledgee cannot sell such collat- eral, but must wait until it matures and collect it.* After maturity of the collateral, however, it has been held that he may sell it at public sale and on public notice* But in a recent case in Pennsylvania, one who held an oil receipt as collateral for a note and sold it before the maturity of the note, was held to be liable to the owner in an action of trover.* If the pledgee of a note sells it unlawfully, the purchaser may nevertheless recover against prior parties.® And even if the purchaser knew that the note was held as collateral, and purchased it for an inadequate consideration before its maturity, he can hold it against the pledgor, if the sale was made by his authority.^ After demand of the debt secured, the pledgee may sell the collateral.* It has been held, how- ever, that if the collateral note matures long after the debt secured by it, it may be sold at once on default in such pay- ment on due notice to the pledgor,* § 802. Sale by Pledgee — Notice, &c. — Notice of sale must in general be given to the pledgor, even where there is an express power of sale;^" much more in the absence of such "Jerome v. McCarter, 4 Otto 734 (1876). ^Byles 177; Story on Prom. Notes i 284 note 3; 1 Daniel 787; 2 Edwards ^ 666 n. Especially if sold before maturity and without notice to the owner and paid when due, Wheeler v. Newbould, 16 N. Y. 892 (1857). In the words of Brown, J., in this case, p. 397, "A creditor holding auch property in trust for the use of his debtor and offering it for sale in satisfaction of his debt, can hardly fail to sacrifice it." 'Brown «. Ward, 3 Duer 660 (1854). *Potter V. Thompson, 10 K. I. (1871). ^Berg V. Foster, 20 C. L. J. 94; Penna. St. 1884. ^Gardner v. Gager, 1 Allen 502 (1861). 'Brightman v. Beeves, 21 Tex. 70 (1858). 'Paine v. Furnas, 117 Mass. 290 (1875); but not until demand and a re- fusal of payment of the original debt, Lewis v. Varnum, 12 Abb. Pr. 305 (1861). »Kichards v. Davis, 7 Am. Law Keg. 483 (1859). "Goldsmidt v. First Methodist Church, 25 Minn. 202 (1878). 460 TEANSFER BY ASSIGNMENT, PLEDGE, &C. express power.^ Without such notice the sale has been held to be void, and the collateral note still subject to attachment as property of the pledgor.^ It has been held in New York, however, that objections to a sale by the pledgee on account of want of notice or of demand of the original debt, if they constitute a suflScient defense, must be specially averred in the pleading.* The pledgee of a note cannot sell it for less than its value, knowing it to be the purchaser's intention to relieve his real estate from a mortgage by canceling such note and the mort- gage securing it.* If the holder of a note, which is secured by collaterals, transfers it, he may, of course, transfer the collateral with it, and should in general do so.® And even where a pledge of notes is made with authority to collect or settle them, or return them without suit to the owner within two months, a purchaser from the pledgee long after matur- ity may recover upon them.* And although the pledge is made for the express purpose of a sale and payment out of the proceeds, the pledgee may sue upon it for his debt.'' So, if the pledgee of a note pledges it again for a new and valid consideration to a bona fide holder, such holder will take it clear of equities arising out of a payment to the original payee and pledgor.* And the pledgee may even, it has been held, purchase the collateral note himself at public sale and sue upon it.®. In general a bona fide purchaser from the pledgee may recover upon a collateral note purchased.^" And »Davis V. Funk, 89 Penna. St. 343 (1861). 'Evans v. Darlington, 5 Blackf. 320 (1840), 'Hatch V. Brewster, 53 Barb. 276 (1869). ^Fletcher v. Dickinson, 7 Allen 23 (1863). "Goss V. Emerson, 23 N. H. 38 (1857). •Foster v. Purdy, 5 Mete. 442 (1843). 'Proctor v.Whitcomb, 137 Mass. 303 (1884). "Fenby v. Pritchard, 2 Sandf. 151. 'Bowman v. Wood, 15 Mass. 534 (1819). '"Ayer v. Tilden, 15 Gray 178 (1860) ; Bancroft v. McKnight, 11 Rich. 663 (1858). Even where the secured and collateral notes were transferred sepa- rately, the latter being first transferred to the plaintiff, Ware v. Bussell, 57 Ala. 43 (1876). EQUITY POWERS. 461 the pledgor cannot recover a payment made to such a holder, although after renewal of the original note.^ § 803. Equity Powers — Effect of Sale. — Where the mak^r of the collateral note is a non-resident having no property within the State, it has been held that a court of equity will order a sale of the note after demand of the original debt and on due notice." But this power has been denied in a later case in West Virginia, unless an express power to sell has been conferred by the pledgor.^ Where the pledgee transfers a note held as collateral, the transfer is said to be a payment of the debt irrespective of the value of the collateral,* the holder by such act electing to take the collateral as an absolute payment.* On the other hand, the pledgor may transfer the note, although then out of his possession, and his indorsee may recover, if the note returns to his possessiou before trial dis- charged from the lien.° And the pledgor may sell his equity of redemption,' subject to the lien of the pledge.* § 804. Surrender by Pledgee — Diligence. — Under an ex- press power of sale the pledgee cannot compromise a note and surrender it to the maker on payment of his debt* And such action will render him liable to the pledgor for the face of the note, so far as it exceeds the debt paid.^" So, the pledgee cannot lawfully extend the time for payment of a collateral note." He is bound to use ordinary diligence in collecting the •Yates D.Valentine, 71 111. 643 (1874). 'Donohoe v. Gamble, 38 Cal. 840 (1869). » Whittaker v. Charleston Gas Co., 16 W. Va. 717 (1880). * Cooke V. Chaney, 14 Ala. 65 (1848). 'Hawks V. Hinchcliff, 17 Barb. 492 (1854). •Fisher v. Bradford, 7 Me. 28 (1830). 'Dupre V. Fall, 10 Cal. 430 (1858). ^Nelson v. Edwards, 40 Barb. 279 (1863). 'Union Trust Co. v. Rigdon, 93 111. 458 (1879). "Garlick v. James, 12 Johns. 146 (1815) ; Depuyi). Clark, 12 Ind. 427 (1859) j Wood V. Matthews, 73 Mo. 477 (1881). "Key V. Fielding, 32 Ark. 56 (1877). 462 TRANSFER BY ASSIGNMENT, PLEDGE, &C. collateral.^ He is liable for any laches whereby an indorser is discharged.'^ So, too, for refusal to bring suit upon the collateral or to surrender it, on notice of the maker's embar- rassed condition.^ What is laches in such case is a question of law, it is said, to be determined by the facts and circum- stances of the case.* And his duty may be affected by a special agreement to do nothing but hold the note during the pledgor's absence.* But merely retaining the collateral note, which was not collected at maturity, is no negligence which will bar his action against the debtor on the original note.' On the other hand, failure to make due presentment for payment is a negligence which discharges the indorser and the original debt.^ The pledgee should make demand when due and give notice of dishonor.* But this notice may be given by the pledgor.^ If a collateral draft is not presented for payment at maturity, and the drawee subsequently becomes insolvent, the drawer will be thereby discharged.^"* And if the pledgee negligently omits to do some act agreed on, or surrenders or releases the collateral, he will thereby discharge one who is surety for the pledgor ; but mere delay will not amount to such negligence.^' 'Pickens v. Yarborough, 26 Ala. 417 (1855) ; Powell v. Henry, 27 Ala. 612 (1855) ; Roberts v. Thompson, 14 Ohio St. 1 (1862) ; Colquitt v. Stultz, 65 Ga. 305 (1880). But see, contra. Coulter v. Wyly, 34 Ga. 239 (1866). ^Russell V. Hester, 10 Ala. 535 (1846). 'Bonta V. Curry, 3 Bush 678 (1868) ; Slevin v. Morrow, 4 Ind. 425 (1853). *Wakeman v. Gowdy, 10 Bosw. 208 (1863). In this case delay for three months after intimation of defense and without notice to the pledgee and until the maker had become insolvent was held to be negligence. ^Lee V. Baldwin, 10 Ga. 208 (1851). 'Marschuetz v. Wright, 50 Wis. 175 (1880). 'Byles 292; 1 Daniel 776; Peacock v. Pursell, 14 C. B. (n. b.) 728. 'Jennison v. Parker, 7 Mich. 355 (1859). '2 Edwards § 839; Story on Bills § 303; Cowperthwaite v. Shefl&eld,.l Sandf 447 (1848). "Betterton v. Roope, 3 B. J. Lea 216 (1879). "Cherry v. Miller, 7 B. J. Lea 305 (1881). GENERAL PKINCIPLES. 463 III. DONATIO CAUSA MORTIS. 805. General Principles. 806. Requisites of Valid Donatio Causa Mortis. 807. Delivery— What Sufficient. 808. Constructive. 809. What may be given Causa Mortis. 810. Donor's Own Note — Check. § 805. General Principles. — Gifts causa mortis are recog- nized both in the United States and in Great Britain. In the latter country they were not abolished by the Statute of Wills (1 Vict, c.,26).^ Prior to this statute an indorsement without delivery might be proved as a testamentary act.^ For obvious reasons, however, gifts of this character are not favored, and are therefore strictly construed by the courts.* A donatio causa mortis may be in trust or subject to condi- tions.* In some respects it resembles a legacy. Like a legacy, it is revocable during the donor's life.^ In like manner, it is subject to the donor's debts and of no avail against his cred- itors.* And in England it is by statute liable to legacy duty.^ And such a gift may be made by a wife to her hus- band.* On the other hand, unlike a legacy, it requires no probate, nor any assent on the executor's part.^ § 806. Requisites of Valid Donatio Causa Mortis. — A dona- tio causa mortis must be made in expectation of impending death ; it must be accompanied by delivery actual or symbol- 'Byles 179; Moore v. Darton, 4 De G. & Smale 519. And on the general subject of donatio causa mortis, see ^ 454, supra. . 'Chitty 260; Cha worth v. Beach, 4 Ves. 585. 'See remarks of Lord Eldon in Duffield v. Elwes, 1 Bligh N. R. 633 ; S. C, 7 Taunt. 221. *Byles 179; Blount v. Burrow, 4 Bro. C. C. 72; Hills v. Hills, 10 L. J. Exch. 440; S. 0., 8 M. & W. 401. 'Byles 179 ; Drury v. Smith, 1 P. Wras. 404. «Byles 179; 1 Daniel 33 ; House v. Grant; 4 Lans. 296 (1871). '8 and 9 Vict. c. 76. ^Byles 179; Caldwell v. Renfrew, 33 Vt. 214 (1860). So, a donatio causa mortis by husband to wife, Turpin v. Thompson, 2 Mete. 420 (1859) ; Rolls v, Pearce, L. R. 5 Ch. Div. 730 (1877). 'Byles 179; Thompson v. Hodgson, 2 Stra, 777. 464 TEANSFEB BY ASSI&NMENT, PLEDGE, &C. ical ; and it must take effect, if at all, on the donor's death.^ A general or remote expectation of death is not sufficient, e. g. a gift of notes by a soldier on going to the war, in wliich he perished some months afterward;^ or by a sailor setting out on a voyage, with the words " to keep if I neve-r return."* So, an imperfect assignment (not under seal) indorsed on, and delivered with, a sealed bond payable to the donor, without clear evidence of contemplation of death on the donor's part, is not a sufficient gift* Oi\ the other hand, the destruction of the donee's note held by the donor about three weeks before her death, the donor saying that " if she died, she ■wished," &c., is a sufficient gift of the note.^ The death of the donor being an essential element of such gift, the donor's recovery, of course, defeats the gift.* And the gift is revocable, and may therefore be revoked at any time before the donor's death and displaced by a later gift of the same character.'' § 807. Delivery — ^What SuflScient. — Delivery, or some act equivalent to delivery, either to the payee himself or to some person for him, is necessary to the validity of such a gift.' And the intention to deliver must be clear,' It may, how- ever, be made to one person for another or for several others.^" And the intended donee may afterward recover it from such depositary .^^ Or a note may be given to one to be collected ^Grymes v. Hone, 49 N. Y. 17 (1872). So. Sessions v. Mosely, 4 Cash. 87 (1849), as to apprehension of death. 'Gourleyi). Linsenbigler, 51 Penna. St. 345 (1865); Irish v. Nutting, 47 Barb. 370 (1867). ^Brickhouse v. Brickhouse, 11 Ired. 404 (1850). •Edwards v. Jones, 1 My. & Or. 226. '^Darland v. Taylor, 52 Iowa 503 (1879); Gardner v. Gardner, 22 Wend. 526 (1839). ^Staniland v. Willott, 3 MacN. & G. 664. 'Parker v. Marston, 27 Me. 196 (1847). «1 Daniel 336; Ward v. Turner, 2 Ves. Sr. 431; Jones v. Deyer, 16 Ala. 221 (1849) ; McKenzie v. Downing, 25 Ga. 669 (1858). A written promise or memorandum, referring to intended gift of money will not suffice, McGrath v. Reynolds, 116 Mass. 566 (1875). 'Dunne v. Boyd, Ir. R. 8 Eq. 609. '"Borneman v. Sidlinger, 15 Me. 429 (1839). "Coutant V. Schuyler, 1 Paige 316 (1829); Wells v. Tucker, 3 Binney 366 (1811). CONSTEUCTIVE DELIVERY. 465 for himself and another.^ And the delivery to the intended •donee by the intermediate holder may be made after the giver's death.^ Such a gift may even be handed back to the donor to keep or to collect for the donee/ § 808. Constructive Delivery. — It has been held that a dying wife's words to her husband, " You may have the money," will carry a note belonging to her, then accessible in a bureau drawer in the house, but not a note out of her possession in the hands of a pledgee.* On the other hand, a note belonging to the donor, in the hands of a trustee, may pass without actual delivery by a direction to the trustee to hold it for the donee.^ So, a bond in suit and in the hands of the donor's attorney, by a delivery of the attorney's receipt for it.* So, the surrender to the donee of his own obligation, with intention of releasing him if the donor should not recover, is a sufficient delivery.' So, the destruction of the donee's note, saying "if she died, she did not want the donee to pay," although this was done several weeks before her death,^ or even several months before.' And where a bond was in the hands of a borrower and the donor made a verbal gift of it, with a promise to give the donee the borrower's receipt, it was held to be sufficient evidence of delivery for the jury to consider.^" But if A. leaves among her papers, at her death, a note which was made payable to her, " if she called for it before she deceased, and if not, to be paid to B.," this is not a dona- tio causa mortis by A. to B., although B. may claim the note 'Brunson v. Brunson, Meigs 630 (1838). ■'Sessions v. Moseley, 4 Cush. 87 (1849). 'Grover w.Grover, 24 Pick. 261 (1837).^ And the donee may afterward sue upon it in tiie name of the donor's administrator, lb. 'Stevens v. Stevens, 2 Hun 470 (1874). ^Southerland v. Southerland, 5 Bush 591 (1869). »Elam V. Keen, 4 Leigh 333 (1833). 'Hurst V. Beach, 5 Madd. 351 ; Lee v. Boak, 11 Gratt. 182 (1854). ^Darland v. Taylor, 52 Iowa 503 (1879). 'Gardner v. Gardner, 22 Wend. 526 (1839). "Hunt «. Hunt, 119 Mass. 474 (1876). VOL. n. 2e 466 TBANSFEB BY ASSIGNMENT, PLEDGE, 40. from A.'s administrator.^ And under the rule which re- quires delivery of such gifts, manual delivery of a stock cer- tificate has been held to be insufficient for a gift of the shares of stock represented.^ § 809. What may be given Causa Mortis. — It has often been questioned whether money deposited in a bank can pass as a donatio causa mortis by delivery of the bank book. This question has been decided by respectable authorities in the negative,^ and by others, as respectable, in the affirma- tive.* If the donee actually takes the bank book after the donor's death, under the donor's dying direction to take the book, settle her debts and divide the balance among her chil- dren, it will not be a valid gift causa mortis.^ But a gift of money to deposit in the donor's name, with direction to keep the book and the money, if not called for, has been held to be a valid gift inter vivos.^ Negotiable instruments are generally treated as money and regarded as fit subjects of gift causa mortis? This ap- plies to bank notes and to bills and notes either specially indorsed or payable to bearer.* But the indorsement by the donor for the purpose of such gift will not render his estate liable.* And it was formerly thought that a note payable to 'Blanchard v. Sheldon, 43 Vt. 512 (1871). '' Pennington v. Gittings, 2 Gill & J. 208 (1830) ; Moore v. Moore, L. R. 18 Eq. 474 (1874). 'McGonnell v. Murray, Ir. R. 3 Eq. 460; Piero v. Fiero, 5 Thomps. & C. 151 (1874) ; Murray v. Cannon, 41 Md. 466 (1874). *Tillinghast v. Wheaton, 8 R. I. 536 (1867). So, where it waa accomplished by a written order for the money, Sheedy v. Roach, 124 Mass. 472 (1878). 'Case V. Dennison, 9 R. I. 88 (1868). « Camp's Appeal, 36 Conn. 88 (1869). 'Byles 178 ; Rankin v. Weguelin, 27 Beav. 309 ; Veal v.. Veal, lb. 303. And a gift of " money " will carry a note in the house belonging to the donor (no money being found), but not a note held by a creditor as collateral, Stevens v. Stevens, 2 Hun 470 (1874). 'Byles 178; ChittyS; 1 Daniel 28; 1 Edwards ? 457 ; 2 Parsons 92; Drury V. Smith, 1 P. Wms. 405; Lawson v. Lawson, 76. 411 ; Miller v. Miller, 3 P. Wms. 356; Turpin v. Thompson, 2 Mete. 420 (Ky. 1859) ; Weston v. Hight, 17 Me. 287 (1840) ; House v. Grant, 4 Lans. 296 (1871). But delivery of the note is necessary to make the gift valid, Jones v. Deyer, 16 Ala. 221 (1849). °1 Daniel 28; 2 Parsons 56; Weston v. Hight, supra. dokok's own note. 467 order could not properly be transferred by such gift.^ It is now, however, established that such gift will pass such instruments as well as those payable to bearer." And a note payable to order may be given causa mortis without being indorsed.' The delivery of such paper without indorsement passes the equitable title,* and the donee may bring suit upon it in the name of the donor's personal representatives.* Or a court of equity may treat the executor as a trustee for the donee and require him to indorse it.^ § 810. Donor's Ovni Note — Check. — But a donor cannot include in such gift his own I O U,' or promissory note,* for want of a consideration to support such promise. Nor can he bind his estate by his note for charitable purposes indi- cated by an accompanying writing;' or by like note for A., to be delivered after his death,^" or left in a sealed envelope for the donee ; " or delivered in a sealed envelope, the donor 4 'Chitty 3; 1 Daniel 28; 1 Wms. Exr. 779. ^1 Story Eq. I 607a; 1 Edwards ? 457; 1 Parsons 179; Grover v. Grover, 24 Pick. 261 (1837) ; Coutant v. Schuyler, 1 Paige 315 (1829) ; McConnell •;;. McConnell, 11 Vt. 290 (1839) ; Parker v. Marston, 27 Me. 196 (1847) ; Kenis- ton V. Sceva, 54 N. H. 24 (1873) ; Stevens v. Stevens, 2 Hun 470 (1874) ; Turpin V. Thompson, 2 Met. 420 (Ky. 1859). 'Byles 179 ; 2 Parsons 54 ; Veal v. Veal, 27 Beav. 303 ; Rankin v. Weguelin, lb. 309; Bates v. Kempton, 7 Gray 382 (1856) ; Borneman v. Sidlinger, 15 Me. 429 (1839). And such transfer carries with it a collateral mortgage aa against the donor's administrator, Brown v. Brown, 18 Conn. 409 (1847). ♦Ashbrook v. Eyon, 2 Bush 228 (1867). »2 Parsons 54, 446; 1 Daniel 28. "1 Daniel 29; Byles 178; Duffleld v. Elwes, 1 Bligh N. E. 409. 'Byles 178; Tate v. Hilbert, 2 Ves. Jun. Ill; 4 Bro. C. C. 286. '1 Parsons 179; 2 Parsons 55; 1 Daniel 31; Fink v. Cox, 18 Johns. 145 (1820); Copp V. Sawyer, 6 N. H. 386 (1833); Blanchard v. Williamson, 70 111. 647 (1873) ; Smith 'v. Smith, 3 Stew. Eq. 564 (1879) ; Voorhees v. Wood- hull. 4 Vroom 494 ; Raymond v. Sellick, 10 Conn. 480 (1835) ; Flint v. Pattee, 33 N. H. 520 (1856) ; Holly v. Adams, 16 Vt. 206 (1846) ; Parish v. Stone, 14 Pick. 198 (1833) ; Smith v. Kittridge, 21 Vt. 238 (1849) ; Hall v. Howard, Rice 310 (S. C. 1839) ; De Pouilly Succession, 22 La. An. 97 (1870). So, Craig V. Craig, 2 Barb. Ch. 76 (1848), and Harris v. Clark, 2 Barb. 94, 3 N. Y. 93 (1849), overruling Wright v. Wright, 1 Cow. 598 (1828). But while not available as a donatio causa mortis, the action has been sustained on a note thus given without other consideration than affection for the payee and gratitude for services rendered gratuitously, Bowers v. Hurd, 10 Mass. 427 (1813). But see, wntra, Holliday v. Atkinson, 8 D. & Ry. 163. 'Phelps V. Pond, 23 N. Y. 69 (1861). "Hamor v. Moore, 8 Ohio St. 239 (1858). ^'Gough V. Findon, 7 Exch. 47. 468 TEANSFEK BY ASSIGliTMENT, PLEDGE, AC. saying that it contained "something which would provide for" the donee, whom he expected to marry, in case of his death.* In general, the same rule has been applied to the donor's own check upon a deposit in bank, his death revoking the authority of the bank to pay such order.* Such check must be cashed or presented in the donor's lifetime,* but may be valid as a gift inter vivos, although not cashed until after the giver's death.* And such a check, given to buy mourning goods, has been sustained as a donatio causa mortis? And it may be enforced in the hands of a bona fide holder, who took it before the donor's death, but did not present it until afterward,' The donor's promise to pay the donee's note, is not a valid gift causa mortis^ Neither is his own certificate of deposit in favor of the donee.* But a certificate of deposit payable to the donor may be so given.® So, too, a bond held by him;*" and that, indeed, by delivery only without written assignment.** And this is true also of a bond and mortgage.*^ 'Warren v. Durfee, 126 Mass. 338 (1879). But a similar gift was upheld as a valid note inter vivos for sufficient consideration (services) proved, in Dean v. Carruth, 108 Mass. 242 (1871). ^Byles 178; 1 Daniel 32; 2 Parsons 56; 1 Wms. Exrs. 779; Curry v. Powers, 70 N. Y. 212 (1877); Simmons v. Cincinnati Sav. Soc, 31 Ohio St. 467 (1877). A fortiori, such check will be without eflfect if not delivered to the payee before the donor's death, McKenzie v. Downing, 25 Ga. 669 (1858). 'Bouts V. Ellis, 17 Beav. 121, 4 DeG. M. & G. 249; Beak v. Beak, L. R. 13 Eq. 489; Hewitt v. Kaye, 6 lb. 198 (1868) ; Second Nat. Bank v. Williams, 13 Mich. 282 (1868) ; De Pouilly Succession, 22 La. An. 97 (1870). If once paid by the bank before notice of the drawer's death, it becomes irrevocable, Tate V. Hilbert, 2 Ves. Jr. Ill ; S. C, 4 Bro. C. C. 280. * Burke v. Risley, 27 La. An. 465 (1875). And see Walter v. Ford, 74 Mo. 195 (1881). 'Byles 178; Lawson v. Lawson, 1 P. Wms. 441. «Rolls V. Pearce. L. R. 5 Ch. D. 730 (1877). 'Randall v. Peckham, 11 R. I. 600. »Bradley v. Hunt, 5 Gill & J. 54 (1832). 'Amis V. Witt, 33 Beav. 619; Moore v. Moore, L. R. 18 Eq. 474 (1874); Westerlo v. DeWitt, 36 N. Y. 340 (1867) ; Champney v. Blanchard, 39 lb. Ill <1868). '"Byles 178; Snellgrove v. Baily, 3 Atk. 214; Gardner v. Parker, 3 Madd. 184; Wells D.Tucker, 3 Binney 366 (1811). But see, contra, Overton v. Sawyer, 7 Jones 6 (1859). "Waring v. Edmonds, 11 Md. 424 (1857). "Byles 178; Duffield v. Elwes, 1 Bligh N. R. 497; Hackney v. Vrooman, 62 Barb. 650 (1862). donor's own note. 469 So, a note payable to the donor may be given causa mortis by delivery accompanied with the assignment of a collateral mortgage.^ In like manner, a policy of life insurance may be the subject of such gift by delivery or assignment.'' •Chase v. Redding, 13 Gray 418 (1859). 'Amis V. Witt, 33 Beav. 619; Witt v. Amis, 1 B. & S. 110 (1861). 470 XKANSFER BY LEGAL PROCESS. CHAPTER XXIV. TEANSFER BY LEGAL PROCESS. I. Attaohment. II. Execution. I. ATTACHMENT. Sll. What Law Governs. 812. American Statutes. •813. Commercial Paper — Itself Attached. *14. Promissory Notes — Not Attachable. «15. Bank Notes— Bills— Checks. 816. Garnishment of Maker. 817. Debt to Defendant— Transfer. 818. Answer of Garnishee. 819. Transfer before Attachment. 820. Notice of Transfer— When Required. 821. Vermont Law. 822. Subsequent Transfer before Maturity. § 811. Attachment — What Law Governs. — Attachment of commercial paper often gives rise to questions of conflict of local laws. In general, as we have seen in an early chap- ter of this work, the place of contract determines the nego- tiability of the instrument. If negotiable where it is made, its being non-negotiable in another State will not subject it to attachment there, as against a bona fide holder for value.* Thus, if a note is made, and therefore prima facie payable, in Massachusetts, it will not be subjected to attachment under another law of the maker's domicil.^ And, on the contrary, if made and payable in Vermont, although to a citizen of Massachusetts, it will be governed by Ver- mont law and subject in that State to attachment in the absence of the required notice of transfer.^ But the place of delivery, and not the place of signing the note, is the real place of contract in this as in other respects.* 'Drake on Attachment ? 581. 'Baylies v. Trustees, 15 Vt. 626 (1843). 'Worden v. Nourse, 36 Vt. 756 (1864); Chase v. Haughton, 16 Vt. 594 (1844). *Ludlow V. Bingham, 4 Dall. 47 (1799). AMERICAN STATUTES AS TO ATTACHMENT. 471 On the other hand, a transfer made in Massachusetts, and good there without notice to the maker, has been recognized as valid in Connecticut against an attachment there, although the note was a Connecticut contract and the laws of that State required such notice to be given.' But an attachment, made while the note still belonged to the payee, in a State where the note was made and payable, and which had the payee then within its jurisdiction, is valid against a subse- quent transfer in another State to a bona fide purchaser for value before its maturity.^ And payment, made by the maker under the judgment of a foreign State rendered against him as garnishee, will be a good defense against a subsequent holder in another State ;^ even though it is made after the transfer.* The judgment, however, if not already paid, is no defense, but may be the ground for a stay of pro- ceedings by the subsequent holder.' § 812. American Statutes as to Attachment. — In view of the frequent occurrence of questions of local law, and of the divergence between the different States in this respect, the various attachment statutes are to be considered. Some make express mention of commercial paper. Thus, in New York " any bond, note or other instrument for the payment of money only, negotiable or otherwise, past due or yet to become due," is subject to attachment.* So, in Missouri, bills and notes generally;^ and in Minnesota and Nebraska, " bills, notes and other evidences of indebtedness belonging to the defendant."* In Connecticut notes are subject to attachment, reserving, however, the rights of bona fide hold- ers for value before maturity.' So, in Vermont, with like reservation as to such holder, if he gives notice of the trans- • Clark V. Conn. Peat Co., 35 Conn. 303. ^ Simon v. Huot, 8 Hun 378 (1876). 'Meriam v. Rundlett, 13 Pick. 511 (1838). ^Hull V. Blake, 13 Mass. 153 (1816). ^Meriam v. Rundlett, supra. ^New York (1882 Code Civ. Proc. ? 648). ''Missoun (1879 R. 8. 2 416). ^Minnesota (1878 G. S. 729 ? 150) ; Nebrcuka (1885 0. S. 655 H 212, 214). ^Connecticut (1875 G. S. 409 2 40). 472 TKANSFER BY LEGAL PB0CE8S. fer to him before the attachment, and as to banks, insurance companies and trust companies purchasing such paper hj transfer before its maturity.' But in Tennessee negotiable paper is subject to attachment only where it is actually delivered up to the officer, or where the garnishee is fully indemnified.^ And in Khode Island "debts secured by bills of exchange or negotiable promissory notes " are now ex- pressly exempt from attachment.^ In other States various expressions are used more or less applicable to commercial paper or debts secured by it ; e. g. property;* real and personal property;* "all real and per- sonal estate liable to be taken on execution " ® (or " all goods and chattels'") "except such as from its nature or situation has been considered as exempt from attachment according to the principles of the common law, as adopted in this com- monwealth;" all property not exempt from execution;* debts;® debts or effects;^" debts, credits and effects;" debts, rights and credits;'^ debts, credits and other personal prop- erty not capable of manual delivery ;^^ debts or other prop- erty incapable of manual delivery;" debts and choses in Wermont (1880 E. L. ? 1069). ''Tennessee (1884 Code I 4236). "Rhode Island (1882 Pub. Stat. c. 209 § 4). "■Indiana (1881 E. S. ? 913). ^'Georgia (1882 Code ? 3287) ; Nm) Hampshire (1878 G. L. 617 o. 224 i 1), which includes since 1867 only negotiable paper made and payable in this State, Chadbourn v. Gilman, 1 Eastern Eep. 614 (1885) ; Texas (1879 E. S. Art. 167). "Massachusetts (1882 Pub. Stat. 925 c. 161 ? 38). maine (E. S. 676 i 24). 'Oregon (1872 G. L. 137 § 146) ; Wisconsin (1878 E. S. § 2738). "Alabama (1876 Code ? 3268) ; Arkansas (1884 Dig. Stats. | 320) ; Califomia (1885 Code Civ. Pro. § 542) ; Colorado (1883 G. S. | 2007) ; Florida (1881 McClel. Dig. 550 § 13) ; Iowa (1880 E. Q. § 2967), and if already transferred to another, there is no attachable debt to the payee. Fowler v. Doyle, 16 Iowa 534 (1864) ; Pennsylvania (1885 Purd. Dig. 745 j 37) ; Virginia (187S Code 1011 i 9). '"West Virginia (1884 Amd. Code 648 § 5). '■'South Carolina (1882 Code Civ. Pro. I 253). "Kansas (1885 C. L. ?? 4002, 4015). "Nevada (1873 C. L. § 1189). '*NoHh Carolina (1883 Code Civ. Proc. g§ 349, 363). But such attachment is of DO avail against a prior bona fide holder before maturity, Meadows v. Cozart, 76 N. C. 450 (1877). COMMERCIAL PAPER — ITSELF ATTACHED. 473 action;^ "effects," inclusive of bill or note before due actu- ally in the hands of the garnishee;^ rights and credits, moneys and effects f rights and credits ;* goods, chattels and credits.® § 813. Commercial Paper — Itself Attached. — A note or bill, belonging to the defendant in attachment, and held by another for him, has been held to be a mere evidence of debt and not subject as such to attachment;* although it would be otherwise, when collected, as money of the defendant.^ So, a note in the hands of a depositary for the payee, and not yet due, has been held not to be attacliable as property of the payee.* But in Vermont, where a legacy was made to A. in trust for the equal distribution of certain moneys among the heirs, and A. gave his note to a third person for one of the heirs, it was held to be attachable as against such heir, if anything was legally due upon it, but not if it was merely voluntary in its character.' And in Louisiana a note may be attached as the property of the payee in the hands of a depositary,^* or even of the clerk of the court ;" but the sheriff must take it into his possession.^^ On the other hand, where an agent receives money of his principal and invests it with his own funds in a note pay- able to his own order or to bearer, it will not be subject to attachment in his hands as property of the principal.^* So, ^Misdtaippi (1880 R. C. § 2423). "Michigan (1871 C. L. ?? 6460, 6471, 6488). 'New Jersey (1874 Rev. p. 42) ; Ohio (1880 R. S. ? 5524). ^Delaware (1852 R. S., amd. 1874) ; Illinoit (1885 Annot. Stats. 313 c. 11 1 8), but this does not include promissory notes, Prout v. Grout, 72 111. '456. ^Maryland (1878 R. C. 673 ? 8). «Drake on Attachment § 481; Moore v. Pillow, 3 Humph. 448 (1842). 'Marston v. Carr, 16 Ala. 325 (1849). "Wilson V. Albright, 2 Greene 125 (Iowa 1849). »Van Amee v. Jackson, 35 Vt. 173 (1862). "Lassiter v. Bussy, 14 La. An. 699 (1859). "Mille V. Hebert, 19 La. An. 58 (1867). "Pleasants v. Kemp, 28 La. An. 124 (1876); Reynolds v. Horn, 4 76. 187 (1849) ; Mille v. Hebert, supra. "Fuller V. Jewett, 37 Vt. 473 (1865). 474 TKANSFEE BY LEGAL PEOCESS. too, where he holds a note given for money of his principal, unless the money itself is in his hands after the issuing of the attachment.^ § 814. Promissory Notes — Not Attachable. — An attach- ment will not reach notes belonging to the defendant in the hands of a receiver;^ or of an assignee for the benefit of creditors;^ or of a trustee, who has power to collect and out of the proceeds pay a note, on which he is liable as surety.* Nor will it reach a note held by an agent under contract for its delivery to his principal within a given time.^ And a judgment rendered on a note is not attachable as a credit of the defendant, if the note itself was not.^ So, a note in the hands of an agent for collection has been held not to be subject to attachment against the owner ;^ especially if left to be applied, when collected, in a particular manner,* e. g. for the benefit of a pledgee.' And it has been held that a note in the hands of a collecting agent does not even become attachable by a voluntary surrender of it to the attaching officer.^" But a collecting agent, who retains a note by reason of its attachment in his hands as the property of his principal, is not liable in trover." A note payable to a married woman, and sent to an agept for collection, is not subject to an attachment against hep husband, but it has been held to be otherwise with the proceeds when collected and in the agent's hands.^^ If, however, an executor takes in his own name a renewal of a note originally payable to his tes- •Schofield ii. White, 29 Vt. 330 (1857). ^Taylor v. Gillean, 23 Tex. 508 (1859). ^Gore V, Clisby, 8 Pick. 555 (1829). * Dickinson v. Strong, 4 Pick. 57 (1826). ^New Hampshire, &c., Co. v. Piatt, 5 N. H. 193 (1830). "Randlet v. Jordan, 3 Me. 47 (1824). 'Fitch V. Waite, 5 Conn. 117 (1823) ; Tirrell v. Canada, 25 Tex. 455 (1860) ; Ellison V. Tuttle, 26 Tex. 283 (1862). 8 Clark V. Cilley, 36 Ala. 652 (1860). 'Smith v. Clarke, 9 Iowa 241 (1859). "Rhoads v. Megonigal, 2 Penna. St. 39 (1845). "Fletcher v. Fletcher, 7 N. H. 452 (1835). "Clark D. Viles, 32 Me. 32 (1850). BANK NOTES — ^BILLS — CHECKS. 475 tator, and it is afterwards collected by an attorney, the pro- ceeds in such attorney's hands cannot be attached as property or credits of the executor.^ § 815. Bank Notes — Bills — Checks. — Current bank notes, on the other hand, are regarded as money and subject as such to attachment.'' But bank notes issued by the defend- ant and taken up for it by another bank in the usual course of business, are to be regarded as paid and no longer liable to attachment.* A bill of exchange, however, unlike a bank note, is always regarded as a chose in action, and cannot be attached where such choses are not attachable.* But in Louisiana, a draft in the hands of a collecting agent, transferred by delivery of his receipt with notice to him, but without the requisite notice of transfer to the drawer, may afterward be attached as the property of the transferor.^ In like manner, a chech is a chose in action and as such not attachable in the hands of an agent as the property of his principal;^ although received by the agent for property sold for the principal without instructions and under an agree- ment with the drawer that it should not be presented until a certain time.' But when a check has been collected by an agent, the proceeds are attachable as money in his hands.* Until collected such check is not a debt due from the bank and cannot be attached in an attorney's hands, although taken by him in payment of an execution in favor of the defendant in attachment.^ So, the attachment plaintiff's own check in the hands of a sheriff, who has taken it in payment of an execution against such drawer in favor of the 'Dalton V. Dalton, 51 Me. 170 (1863). ^Drake on Attachment U 244, 481 ; Handy v. Dobbin, 12 Johns. 220 (1815); Lovejoy v. Lee, 35 Vt. 430 (1862). 'Wildes V. Nahant Bank, 20 Pick. 352 (1838). *Pearce v. Shorter, 60 Ala. 318 (1873). 'Hijl V. Hanney, 15 La. An. 654 (1860). «Lane v. Felt, 7 Gray 491 (1856). 'Knight V. Eowley, 117 Mass. 551 (1875). "Morrill v. Brown, 15 Pick. 173 (1833). •Hancock v. Colyer, 99 Mass. 187 (1868). 476 TKAKSFER BY LEGAL PROCESS. attachment defendant, is not subject to attachment against such defendant.' § 816. Garnishment of Maker. — The courts of the differ- ent States are divided on the question of allowing an attach- ment creditor of the payee of a note or bill to reach the debt due on it by garnishee process against the maker or acceptor. The better opinion seems to be that while negotiable paper is still current and therefore liable to be transferred to a bona fide holder, it is not subject to attachment as a debt due to the payee.^ This is so, even though an exception be made to the rule, where the note is itself in the defendant's hands and within reach of the attachment.* And this exemption has been extended to negotiable certificates of deposit,* and interest coupons;* and to a receipt containing a promise to pay certain moneys when collected.^ And even where a note has been made in absolute payment of a debt, for the very purpose of avoiding an attachment, it has been held to be exempt.^ In Louisiana such debt can only be attached by taking the note itself into possession.* In New Jersey the debt due on negotiable paper before maturity is subject to attach- ment.^ And in North Carolina it is attachable as a debt due to the defendant on proof that it has not been transferred before maturity to a bona fide holder for yalue.^" But the debt evidenced by the acceptance of a bill is primarily to the payee, and payment to an attaching creditor of the 'Thompson v. Brown, 17 Pick. 462 (1835). 'Drake on Attachment ? 584, 588; Dusendorf v. Oliver, 8 Kas. 365 (1871) ; Greer v. Powell, 1 Bush 489 (1866) ; Bowker v. Hill, 60 Me. 172 (1872) ; Lit- tlefield V. Hodge, 6 Mich. 326 (1859) ; Hubbard v. Williams, 1 Minn. 54 (1851); Howe v. Hartness, 11 Ohio St. 449 (1860); Gaffney v. Bradford, 2 Bailey 441 (1831). 'Gregory v. Higgins, 10 Cal. 339 (1858). *McMullan v. Eichards, 9 Cal. 418 (1858). 'Smith V. Kennebec, &c., B. E. Co., 45 Me. 547 (1858). 'State V. Burton, 11 Wis. 50. 'Wood V. Bodwell, 12 Pick. 268 (1831). •Sheets v. Culver, 14 La. (o. s.) 449 ; Miller v. Struder, 18 La. An. 56 (1866). •Briant v. Eeed, 1 McCart. 271 (1862). "Skinner v. Moore, 2 Dev. & Bat. 138 (1836). DEBT TO DEFENDANT. 477 drawer will not constitute a defense against the payee.^ If the debt is due to the defendant, it is immaterial that the principal is made payable at the maker's option if the inter- est is duly paid.^ If a note is in the maker's own hands as depositary of the payee, it is within reach of an attachment against him.^ But as a debt to the payee, it is not subject to attachment, unless the note be proved to be then in his hands.* And in Florida it is said that it must be in the possession and under the control of the garnishee.* § 817. Debt to Defendant — Transfer. — There is no pre- sumption in favor of an attaching creditor of the payee that the debt originally owing to him, for which negotiable paper was given, is still owing to him, for the debt and the evi- dence of it are alike negotiable and may have been trans- ferred to another.^ It must therefore appear that the debt is still due, at the time of the garnishee proceeding, to the defendant in attachment.^ This, it has been held, must appear by admission of the garnishee himself in his answer.* And the note or bill must be shown to be the property of such defendant,* and this must appear by the garnishee's answer.^" If the bill or note has been already transferred, it is no longer (except by force of the statute in some States) attach- able as against the transferor ;-^^ unless the transfer is after- ward repudiated and the note re-transferred to the defendant,^ 'Montague v. Myers, 11 Heisk. 539 (1872). ^Fay V. Smith, 25 Vt. 610 (1853). 'Stone i;. Dean, 5 N. H. 502 (1831). 'Gregory v. Higgins, 10 Cal. 339 (1858) ; Denham v. Pogue, 20 La. An. 195 (1868). ^Huot V. Ely, 17 Fla. 775 (1880). , "Drake on Attachment ? 585. 'McNeil V. Roach, 49 Miss. 436 (1873). « Moore v. Green, 4 Humph. 299 (1843). 'Scott V. Hill, 3 Mo. 88 (1831). '"Carson i;. Allen, 2 Binney 457 (1850). "Kapp V. Teel, 33 Tex. 811 (1871) ; Basse'tt v. Garthwaite, 22 lb. 230 (1858) ; Iglehart v. Moore, 21 lb. 501 (1858) ; Mybrants v. Rice, 3 lb. 488 (1848). "Collier v. Hershey, 21 Ark. 482 (1860). 478 TEANSFEK BY LEGAL PKOCESS. or the transferee is party to a fraud upon the attaching creditor in the transfer.^ § 818. Answer of Garnishee. — Where the maker of a note is garnished as debtor of the payee, he will be discharged by a transfer made known at any time before judgment in the garnishee proceeding.^ If such transfer comes to his knowledge, it is his duty to make it known, and any admis- sion in his answer of a debt due to the payee is made at his own peril.^ If he answers or makes payment without dis- closing a transfer known to him, his payment will constitute no defense against such transferee.* He should deny his indebtedness to the payee until he be proved to be still the holder" of the note.' He cannot be adjudged to pay the plaintiff, if he admits the original debt and avers notice of transfer of the paper before he was garnished;* or if he simply avers the transfer and it is not disproved ;'' or admits making the note and avers that he has received information of a transfer without further proof of it,' or information that the payee has become bankrupt and that his assignee has transferred the note.' Or he may simply answer that he does not know whose property the note is,^" or whether it is owing to the payee or not." On the other hand, if he admits a debt to the payee, he will render himself liable by his answer.'^ And the maker's liability on a non-negotiable note is determined in like man- 'Drake on Attachment ? 588; Clough v. Buck, 6 Neb. 343 (1877) ; Junction B. R. V. Cleneay, 13 Ind. 161 (1859) ; Cleneay v. Junction E. E., 26 lb. 375 (1866). « Foster v. White, 9 Port. 221. 'Cross V. Haldeman, 15 Ark. 200. * Cray ton v. Clark, 11 Ala.«787 (1847) ; Bibb v. Tomberlin, 1 Duv. 186 (1864). ^Ormond v. Moye, 11 Ired. 564 (1850). 'Thompson v. Shelby, 3 Sm. & M. 296 (1844). 'Davis V. Pawlette, 3 Wis. 300 (1854). 'Foster v. Walker, 2 Ala. 177 (1841). "Wicks V. Branch Bank, 12 Ala. 594 (1847). "Turner i;. Armstrong, 9 Yerg. 412 (1836) ; Daniel v. Rawlings, 6 Humph. 403 (1846). "McNeil V. Roach, 49 Miss. 436 (1878). "Daniel v. Rawlings, 6 Humph. 403 (1846). TRANSFER BEFORE ATTACHMENT. 479 Der, and be cannot show, against the admissions of his an- swer, that the note had been transferred and that this was known to the plaintiff.^ But a judgment rendered against him before notice of the transfer,^ or, at least, payment by him of such judgment before notice of the transfer,^ has been held to be a good defense against the transferee, ^^^quity has, however, refused relief by interpleader to the maker of a note, against whom two separate judgments have been ren- dered (however wrongfully), notwithstanding his defense, in favor of an indorsee and of an attaching creditor of the payee.* § 819. Transfer before Attachment. — In general, if a nego- tiable note is transferred (and notice of the transfer given, if requisite,) before attachment, there is no longer a debt to the payee or other right or property of the payee to be attached.^ And the same is true of a non-negotiable note, where no notice of transfer is required,* or of a conditional note, transferred before attachment and while the condition still remains unperformed.' This is also true of the transfer of a note for a precedent debt;^ or to an assignee under an' insolvent's assignment;* or by a pledgee, subject to the pledgor's right to redeem ;^'' or, it has been held, although transferred as collateral for a debt of less amount.^^ So, a Sunday transfer, illegal on that ground, has been upheld against a subsequent attachment of the note as still due to the payee.^^ So, too, a transfer by order on the pledgee of a note who holds it as collateral.^^ 'Comstock V. Farnum, 2 Mass. 96 (1806). 'Covert V. Nelson, 8 Blatch. 265 (1846). 'Oldham V. Ledbetter, 1 How. 43 (Miss. 1834). *Yarborough v. Thompson, 3 Smedes & M. 291 (1844). 'Kimble v. Plant, 14 La. (o. s.) 511. 'Drake on Attachment ? 580. 'Burke v. Whitcomb, 13 Vt. 421 (1841). •Davis V. Carson, 69 Mo. 609 (1879). =Lupton V. Cutler, 8 Pick. 298 (1829). '"Maine F. & M. Ins. Co. v. Weeks, 7 Mass. 438 (1811). "Grosvenor v. Farmers', &c.. Bank, 13 Conn. 104 (1839). But in New Hampshire such holder is subject to garnishment for the balance over and above his debt, Fling v. Goodall, 40 N. H. 208 (1860). "Smith V. Foster, 41 N. H. 215 (1860). "Howe V. Ould, 28 Gratt. 1. 480 TKANSFER BY LEGAL PKOCESS. But ia Louisiana an attachment is valid against an ac- cepted order upon an attorney holding the note for collection, to pay a creditor out of the proceeds;' or against an agree- ment by the defendant in attachment to appropriate the pro- ceeds to a particular creditor,^ such order and agreemfent not amounting to transfers in that State. If an indorsee seeks to enforce a collateral vendor's lien against property of the maker, he must join as a party defendant an attaching creditor, who claims adversely.'' But where payment has been made under an attachment begun before the maturity of the note, it has been held that an indorsee before matur- ity may recover from the creditor receiving the payment* In Missouri, it is now held, however, that he cannot sue the creditor, even though his indorsement was prior to the attachment,® but must betake himself to the maker, the payment being in such case no defense against him, and the maker having a right of action against the creditor for money paid.^ § 820. Notice of Transfer — When Required. — Some States require the assignee of a bill or note to give notice of the transfer to the maker or drawer and subject him to defenses, such as attachment, intervening before such notice. The law of the place of assignment and not that of the place of making governs the transfer, however, and if notice is not required by the law of the place of transfer, the law of the place where the note was made (and sued) will not let in an attachment as a defense.' Such notice is requisite and the note is otherwise subject to attachment in Connecticut,* and 1 Robertson v. Scates, 15 La. An. 545 (1860). ''Conery v. Webb, 12 La. An. 282 (1857). 3 Hatch v. Calvert, 15 W. Va. 90 (1879). *Garrott «. Jatfray, 10 Bush 413 (1874). ^Punkhouser v. How, 24 Mo. 44 (1856); Dickey v. Fox, lb. 217 (1857). Although the contrary was formerly held to be the rule, Colcord v. Daggett, 18 Mo. 557 (1853) ; Quarles v. Porter, 12 lb. 76 (1848). ^Funkhouser v. How, supra. 'Clark V. Conn. Peat Co., 35 Conn, 303. 'Clark V. Conn. Peat Co., supra. VERMONT LAW. 481 in Indiana.^ In Indiana it is sufficient if given after the attachment, provided the transfer precedes it.^ But if the maker sets up a notice of transfer before attachment and the transfer is contested for alleged fraud, the transferee is a necessary party .^ In Iowa if a note is transferred before garnishee proceedings are begun, knowledge of the transfer by the maker at any time before judgment against him as garnishee will be sufficient* In Louisiana the notice must be given to the drawer, and notice given only to the agent, in whose hands the draft was placed for collection, is of no avail.* In New Hampshire a note is attachable, even before it matures, until notice of transfer is given/ § 821. Vermont Law. — Notice of transfer has been re- quired as now, in Vermont, except for a short period prior to 1841, while the act of 1836 was in force. Under this act a bona fide holder for value before maturity was not subject to an attachment against the payee, although he gave no notice of the transfer to himself.'' But under the act of 1841, which is still in force, a bona fide holder before maturity other than a bank or insurance company is only protected against attaching creditors of the payee by giving notice of the transfer before service of the garnishee process.* And al- though the payee is a citizen of Massachusetts, a note is gov- erned by Vermont law, if made in that State and payable there expressly,' or by implication.^" But the notice is sufficient, if given to one of several joint and several makers," or to an accommodation indorser.^* 'Shetler v. Thomas, 16 Ind. 223 (1861) ; Elstori v. Gillis, 69 lb. 128 (1879). ''Smith V. Blatchford, 2 Ind. 184 (1850). 'Cadwallader v. Hartley, 17 Ind. 520 (1861). ^DalhofiF V. Coffman, 37 Iowa 283 (1873). *Hill V. Hannej', 15 La. An. 654 (1860). »Amoskeag Mfg. Co. v. Gibbs, 28 N. H. 316 (1854). 'Hinsdill v. SaflFord, 11 Vt. 309 (1839). 8 Kimball v. Gay, 16 Vt. 131 (1844). 'Chase v. Haughton, 16 Vt. 594 (1844). Even though transferred in Massa- chusetts, Emerson v. Patridge, 27 Vt. 8 (1854). I'Worden v. Nourse, 36 Vt. 756 (1864). "Ayott V. Smith, 40 Vt. 532 (1868). ■^Hunt V. Miles, 42 Vt. 533 (1870). vol.. n. 2f , 482 TBANSFER BY LEGAL PEOCESS. And notice to a surety is not necessary.^ The notice should be given by the indorsee, and notice by a stranger was for- merly held not to be sufficient.*^ And even where a note is re-transferred to the original payee, the note being made pay- able to A. or bearer and delivered to B., and by him trans- ferred to A., A. will be subject to an attachment against B. unless he notifies the maker of the transfer to himself.' The notice may be given by the collecting agent of the indorsee, but notice that it has been put into his hands for collection is not sufficient.* But where the notice is given by a pledgee, the surplus over and above the amount secured to him will still remain liable to attachment.^ Under both acts of 1836 and 1841 notice of transfer inures to the benefit of a subse- quent indorsee before attachment." Knowledge on the maker's part is equivalent to notice of transfer,'' but it is not sufficient notice of a discount by A. for the payee to tell the maker that he is going to transfer the note to A. as collateral.* An action by A., who holds a note for the use of B., and takes a transfer from B. pendente lite, is sufficient notice of the transfer to A. as against subsequent attaching creditors of B." But a notice of transfer will not avail against an attachment writ left at the maker's house before the notice, although actually received afterward.^" § 822. Subsequent Transfer — Bona Fide Holder. — The maker's contract is to pay in general not to the payee, but to the person, whoever he may be, who holds the paper at its maturity. And under such contract it is said that he is not properly the debtor of the payee at any time before iSeward v. Garlin, 33 Vt. 583 (1861). Peck V. Walton, 25 Vt. 33 (1852). 'Williams V. Shepherd, 33 Vt. 164 (1860). *Worden v. Nourse, 36 Vt. 756 (1864). sperrin v. Russell, 33 Vt. 44 (1860). «Britton v. Preston, 9 Vt. 259 (1837) ; Seward v. Garlin, 33 Vt. 583 (1861). 'Seward v. Garlin, supra. But see, contra, Peck v. Walton, 25 Vt. 33 (1852), ^Farmers', &c.. Bank v. Drury, 35 Vt. 469 (1863). 'Austin V. Ryan, 51 Vt. 110 (1878). "Barney v. Douglass, 19 Vt. 98 (1846). STJBSEQTTENT TKANSFEK. 483 maturity or subject to garnishment as such.^ In order to render him liable in such a garnishee proceeding the plaint- iff should prove that the note belonged to the defendant at its maturity and after the attachment.^ If it reaches the hands of an indorsee for value before maturity, it is no longer subject to attachment as a debt due to the payee.^ Decisions in various States have protected a hona fide holder of such paper for value before maturity, although the paper was transferred after the attachment. This has been held in Alabama,* Connecticut,^ Georgia,* Illinois,'' Maryland,* Missouri,® and North Carolina.'" So, too, in Pennsylvania," even though the transfer is made after service of the attach- ment writ upon the maker.-'^ An attachment is valid, how- ever, in Pennsylvania, against the payee of a note, unless it has come into the hands of a bona fide holder for value.'* But although unavailing against such holder, it would still take effect against a bona fide holder purchasing it after matur- ity." In Tennessee, likewise, transfer to a bona fide holder before maturity defeats an attachment, although made after the attachment; but such transfer may be prevented in equity at the instance of the attaching creditor,'* If, on the '1 Daniel 751; Drake on Attachment § 584. ^ Drake on Attachment ? 588. ^ Mason v. Noonan, 7 Wis. 609 (1859). *Mayberry v. Morris, 62 Ala. 113 (1878). But see, contra, Dore v. Dawson, 6 Ala. 712 (1844). 'Green v. Gillet, 5 Day 485 (1813). ^Mims i;. West, 38 Ga. 18 (1868). And a subsequent setting off as home- stead exemption before maturity will defeat a prior attachment, and pay- ment to the attaching creditor after notice thereof will constitute no defense, Watkins v. Cason, 46 Ga. 444 (1872). ' Warne v. Kendall, 78 111. 598 (1875). 'Cruett V. Jenkins, 53 Md. 217 (1879). 'Potter V. McDowell, 43 Mo. 93 (1868j. But the rule is otherwise as to a collateral mortgage, and it seems that a hona fide holder takes subject to an attachment in New Hampshire, Peck v. Maynard, 20 N. H. 183 (1849). "■Myers v. Beeman, 9 Ired. 116 (1848). "Ludlow V. Bingham, 4 Dallas 47 (1799) ; Adams v. Avery, 2 Pittsburg 77 (1859). But a check not due is subject to attachment in the hands of the payee, Fulweiler v. Hughes, 17 Penna. St. 440 (1852). "Kieffer v. Ehler, 18 Penna. St. 388 (1852). '^Day V. Zimmerman, 68 Penna. St. 72 (1871). "Hill V. Kroft, 29 Penna. St. 186 (1857). '^Matheny v. Hughes, 10 Heisk. 401 (1873), 484 TRANSFER BY LEGAL PROCESS. other hand, the maker suffers a judgment to go against him on his own admission of the debt as due to the payee, such judgment or his payment of it will be no defense against a bona fide purchaser of the note before its maturity.^ In Vermont, under the act of 1836, a bona fide holder purchas- ing a note before its maturity, although after attachment issued and garnishment of the maker, was not subject to the attachment." But this rule is changed, as we have seen, by the act of 1841. And even if the assignee of a bankrupt maker indorses it with a promise to be " accountable to ' bearer," the bearer will be subject to the rights of a prior attaching creditor.^ Payment by the maker of a judgment rendered in attach- ment against him will constitute a good defense against a subsequent purchaser.^ But the liability of an indorser, even after verdict but before judgment against him, has been held, in Massachusetts, not to be attachable as a debt due to the indorsee.* In Maryland, the maker of a note may be garnished for a debt due to the payee at any time before it is transferred, whether the transfer be made before or after maturity ;° saving, as we have already seen, the rights of a bona fide holder before maturity. In Connecticut, where a note has been transferred after attachment to a party having notice of it, and the note was itself made as an apparent payment for goods sold in order to evade attach- ment of the maker's debt to the payee, the debt secured by the note will still remain subject to attachment.'' In Maryland a purchaser, with notice of the attachment pend- ing, will take subject to it* And in Vermont, if a note has been transferred as collateral security for a debt and, after 'Brittain v. Anderson, 8 Baxt. 316 (1874). n^ittle V. Hale, 11 Vt. 482 (1839) ; Hinsdill v. Saflford, lb. 309. ^ Jones V. Gorham, 2 Mass. 375 (1807). -•Eoss V. Pitts, 39 Ala. 606 (1865). *Eunson v. Healy, 2 Mass. 82 (1806). Ashton V. Sproule, 35 Penna. St. 492 (1860) ; Camp v. Simmons, 62 Ga. 73 (1878) ; Collins v. Frist, 20 La. An. 348 (1868) ; Crane v. Trudeau, 19 La. An. 307 (1867) ; Cooley v. Lawrence, 4 Mart. is. a.) 639 (1817) ; Rogers v. Gibbs, 24 La. An. 467 (1872). "Labron v. Woram, 1 Hill 91 (1841). "Collins V. Everett, 4 Ga. 266 (1848). "Camp V. Simmons, 62 Ga. 73 (1878). So in Iowa before the statute. Picket V. Hawes, 14 Iowa 460 (1862) ; Rodabaugh v. Pitken, 46 lb. 544 (1877) ; Sibley v. Horn, 13 lb. 209 (1862). BLANK INDORSEMENTS BY STBANGEE. 505 surety to all holders, except in case of foreign and inland bills of exchange.^ And such indorser is a surety where an original agreement to that effect was made with his knowl- edge at the time of the indorsement;* or where he is called a surety in the body of the note.* But in Indiana he is held not to be surety without clear evidence of such agreement.* Other cases have held him to be prima fade a surety, leaving it to be determined as a question of intention whether he is surety or maker ;* or a surety on parol evidence of such contract,^ and liable on such evidence to the payee.'' And in Georgia successive indorsers of this sort have been held liable as co-sureties, and entitled as such to receive contribu- tion from one another.* § 840. Blank Indorsements by Stranger — How Filled. — ^The construction of such indorsements determines in general what contract may be written over the signature in blank as the indorser's contract. Thus, in some States it has been held that a guaranty may be written over the indorsement, as we have seen;' especially if the indorsement is after and not at the time of the making of the note.^" Other cases hold that a contemporaneous blank indorsement cannot be filled with 'Batt. Rev. c. 10 1 10. ' Jaffray v. Brown, 74 N. Y. 393 (1878) ; Clothier v. Adriance, 51 lb. 322 (1873). 'National Pemberton Bank v. Lougee, 108 Mass. 371 (1871) ; Palmer v. Grant, 4 Conn. 389 (1822). *Schulz V. Klenk, 49 Ind. 212 (1874) ; and in West Virginia a contract of suretyship cannot be written over the indorsement, Kearnes v. Mont- gomery, 4 W, Va. 29 (1870). 'Baker v. Briggs, 8 Pick. 122 (1829). •Watkins v. Kirkpatrick, 2 Dutch. 84 (1856), although the note was after- ward indorsed without recourse by the payee above such indorser. 'Having received commissions from the maker for such accommodation, Laflin v. Pomeroy, 11 Conn. 440 (1836). "Camp V. Simmons, 62 Ga. 73 (1878). 'This is the rule in Illinois, Boynton v. Pierce, 79 111. 145 (1875) ; Cushman V. Dement, 4 111. 497 (1842) ; Hemz v. Cahn, 29 111. 308 (1862) ; Webster v. Cobb, 17 111. 459 (1856) ; on proof of such agreement. Smith v. Pinch, 3 lb. 321 (1840). So, in other States, Arnold v. Bryant, 8 Bush 668 (1871) ; Elvers i;. Thomas, 1 B. J. Lea 649 (1878) ; Harding v. Waters, 6 lb. 324 (1880) ; Levi V. Mendell, 1 Duv. 77 (1863). See also, su^a, i 838. " "Killian v. Ashley, 24 Ark. 511- (1867). 506 IKKEGXJLAB INDOKSEMENTS. a guaranty ;' and that if such contract is written by mistake it may be canceled.^ Others hold that it may be so filled in pursuance of a special agreement,' or at suit of the payee.* In other States the holder can write an absolute promise to pay to the bearer ;^ or a joint promise to pay as co-maker;' or an original promise or indorsement/ In a suit by the payee the actual contract made by the parties may be written over the indorsement.* But if the indorsement was after maturity of the note, this could not be done in Massachu- setts;* but could be done in Connecticut.^" And where the blank was wrongly filled, and not in accordance with the contract actually made, it has been held that such filling of the indorsement might be disregarded on the trial." § 841. Parol Evidence — When Admissible. — Various and conflicting as are the views above expressed, it is quite ap- parent that the general and reasonable tendency of the courts is to avoid conclusive presumptions in interpreting such in- dorsements, treating them at best as having a prima facie meaning, dependent, however, on an actual intention of the parties and subject to be explained and controlled by parol evidence.^*^ Such evidence has been admitted at the suit of ^Hayden v. Weldon, 14 Vroom 128 (1881). "Allen V. Brown, 120 Mass. 78 (1878) ; Bosbyshell v. Ehninger, 3 Mo. App. 574 (1877) ; Seymour v. Mickey, 15 Ohio 515 (1864). 'Clouston V. Barbiere, 4 Sneed 336 (1857); Windheim v. Ohlendorf, 3 Bradw. 436 (1878). But in the absence of proof of a contrary agreement, such writing was allowed in Small v. Sloan, 1 Bosw. 353 (1857). 'Campbell v. Butler, 14 Johns. 349 (1817). See, too, Nelson v. Dubois, 13 Ih. 175 (1816). ^Barr v. Mitchell, 7 Oregon 346 (1879). This was a non-negotiable note. «Riley v. Gerrish, 9 Gush. 104 (1851). 'Bright V. Carpenter, 9 Ohio 139 (1839). But not a contract as surety, Kearnes v. Montgomery, 4 W. Va. 29 (1870). « Riley v. Gerrish, 9 Cush. 104 (1851); Richards v. Warring, 1 Keyes 576 (1864). 'Brown v. Butler, 99 Mass. 179 (1868). '"Beckwith v. Angell, 6 Conn. 315 (1823). "Sylvester v. Downer, 20 Vt. 355 (1848). "Good V. Martin, 6 Otto 90 (1877) ; Rey v. Simpsoil, 22 How. 341 (1859) ; Patch V. Washburn, 16 Gray 82 (I860) ; Essex Company v. Edwards, 12 Gray 273 (1858) ; Riley v. Gerrish, 9 Cush. 104 (1851) ; Chaddock v. Vanness, 6 PAROL EVIDENCE. 607 the payee to show that the indorser was a maker;' or a surety or maker ;^ or not a maker ;^ or a guarantor;* or an indorser;* or a second indorser;* or an indorser or guaran- tor;^ or a second indorser or guarantor;* or a surety.' Parol evidence may explain such indorsement, whether the note is negotiable or not;'" and although the indorsement ■was made after maturity;" and although the payee's in- dorsement without recourse was afterward placed above it.^ Such evidence has been held admissible to explain an indorsement of this character, even where it stood below Vroom 517 (1871); Johnson v. Kamsey, 14 Vroom 279 (1881); Watkins w. Kirkpatrick, 2 Dutch. 84 (1856) ; Ackerman v. Westervelt, 2 Dutch. 92 n. (1847); Crozer v. Chambers, Spencer 256 (N. J. 1844) ; Brown v. Eeasner, 5 Bradw. 45 (1879) ; Lincoln v. Hinzey, 51 111. 435 (1869) ; Eberhart v. Page, 89 lb. 550 (1878) ; Owinga v. Baker, 54 Md. 82 (1880) ; Jennings v. Thomas, 13 Sni. & M. 617 (1850); Cahn v. Dutton, 60 Mo. 297 (1875); Faulkner v. Faulkner, lb. 327 (1880) ; Baker v. Scott, 5 Rich. 305 (1852) ; Perkins v. Cat- lin, 11 Conn. 213 (1836) ; Strong v. Eiker, 16 Vt. 554 (1844) ; Pierse v. Irvine, 1 Minn. 369 (1867) ; Cooley v. Lawrence, 4 Mart. (o. s.) 639 (1817) ; Welsh v. Ebersole, 75 Va. 651 (1881), obiter. So, in Pennsylvania, prior to the act of 1855, Eilbert v. Finkbeiner, 68 Penna. St. 243 (1871) ; but not since, -Schafer V. Farmers and Mech. Bank, 59 lb. 144 (1868). Such evidence is admissible inter partes, but not against a bona fide holder for value, Houston v. Bruner, 39 Iiid. 376 (1872) ; and its admissibility between original parties has been denied, Wright v. Morse, 9 Gray 337 (1857). 'Lincoln v. Hinzey, 51 111. 435 (1869) ; or at the suit of the payee's imme- diate indorsee. Browning v. Merritt, 61 Ind. 425 (1878). ^Kealing v. Vansickle, 74 Ind. 529 (1881). ^Mammon v. Hartman, 51 Mo. 168 (1872). ♦Filbert v. Finkbeiner, 68 Penna. St. 243 (1871). So, at the suit of the payee's immediate indorsee. Browning v. Merritt, 61 Inci. 425 (1878) ; or at the suit of an indorsee after maturity, Seymour v. Farrell, 51 Mo. 95 (1872) ; Levi V. Mendell, 1 Duv. 77 (1863). So, at the suit of the payee, a guarantor and not a joint maker. Barrows v. Lane, 5 Vt. 161 (1833). *Oady V. Shepard, 12 Wis. 713 (1860); Hamilton u. Johnston, 82 111. 39 (1876) ; Eberhart v. Page, 89 lb. 550 (1878) ; Lewis v. Harvey, 18 Mo. 74 (1853) ; and not a joint maker, Beidman v. Gray, 35 lb. 282 (1864). So, at suit of the payee's immediate indorsee, Seymour v. Mickey, 15 Ohio St. 515 (1864). "Patch i;. Washburn, 16 Gray 82 (1860), unless it was taken by the payee as the contract of a joint maker and the indorser has estopped himself from setting up a different contract. 'Kellogg V. Dunn, 2 Mete. 215 (Ky. 1859). « Burton v. Hansford, 10 W. Va. 470 (1877), and not a maker. 'And not a guarantor, Baker v. Kobinson, 63 N. C. 191 (1869). "Wells V. Jackson, 6 Blackf. 40 (1841), "McCelvy v. Noble, 12 Eich. 167 (1859). "Watkins v. Kirkpatrick, 2 Dutch. 84 (1856). In this case the plaintiff was an indorsee of the payee after maturity and the defendant was allowed to show that he indorsed the note as a surety. 508 IKEEGULAR INDORSEMENTS. that of the payee ;^ as well as where the payee's indorse- ment was absent.^ But in the former case it is in general admissible only against original parties or purchasers after maturity or with notice,^ unless the paper is non-negotiable.* Parol evidence, where it is admissible, may show that such indorser is liable to the payee.® So, that the indorsement was made at the date of the note and intended as an original promise;* and that the payee afterward indorsed the note above such signature ;' or, on the other hand, that it was not contemporaneous with the note, and, therefore, not a joint promise;' or was indorsed at the maturity of the note as a guaranty.' Moreover, such indorser may show, at the suit of the original payee, that he had expressly refused to sign as joint maker ;^° or that he had signed with the payee's name blank under a special agreement, and that a diversion of the paper had been made contrary to tbe agreement." § 842. Parol Evidence — When Inadmissible. — On the other hand, parol evidence cannot be allowed in such cases to pre- judice a bona fide liolder.^^ Thus, the indorser of a note be- fore its delivery cannot show an agreement with the payee ■Brown v. Butler, 99 Mass. 179 (1868) ; Clawson v. Gustin, 2 South. 821 (1820). •'Snyder v. Oatman, 16 Ind. 265 (1861). '2 Parsons 125; Chaddock v. Van Ness, 6 Vroom 517 (1871) ; Owings v. Baker. 54 Md. 82 (1880) ; Houston i;. Bruner, 39 Ind. 376 (1872) ; Schneider D. Schififman, 20 Mo. 571 (1855). *Cook V. Southwick, 9 Tex. 615 (1853). 'Rivers v. Thomas, 1 B. J. Lea 649 (1878) ; Cady v. Shepard, 12, Wis. 713 (1860). So, as a joint maker. Ackerman v. Westervelt, 2 Dutch. 92 n. (1847) ; Baker v. Scott, 5 Rich. 305 (1852) ; Boynton v. Pierce, 79 111. 145 (1875) ; Jen- nings V. Thomas, 13 Sm. & M. 617 (1850) ; Sill v. Leslie, 16 Ind. 236 (1861). Or as a surety, Kealing v. Vansickle, 74 Ind. 529 (1881) ; Perkins v. Catlin, 11 Conn. 213 (1836) ; Fegenbush v. Lang, 28 Penna. St. 193 (1857). Or that such indorsers are co-sureties, inter ge, 1 Daniel 638; 1 Edwards § 392; 2 Parsons 123; Clapp v. Bice, 13 Gray 403 (1859), the payee not having in- dorsed in this case. ^Pearson v. Stoddard, 9 Gray 199 (1857), although below the payee's indorsement. 'Sturtevant v. Randall, 53 Me. 149 (1865). » Freeman v. Ellison, 37 Mich. 459 (1877) ; Wright v. Morse, 9 Gray 337 (1857). 'Coulter V. Richmond, 59 N. Y. 478 (1875), "Barrows v. Lane, 5 Vt. 161 (1832). "Riddle v. Stevens, 32 Conn. 346 (1865). "1 Edwards ^392; 2 Parsons 122. PAEOL EVIDENCE. 509 that he should only be liable as an accommodation indorser.^ But even at the suit of a holder with notice of the character of the indorsement such evidence has been held inadmissible to show that the indorser intended a joint making and not an indorsement.^ So, where the note was payable to the order of the maker; and indorsed by him above the defendant, it was held inadmissible to prove at the suit of the original holder that an indorsement and not a joint making was in- tended;^ or that anything but an accommodation indorse- ment was intended.* So, parol evidence has been held to be inadmissible even against the payee to change the nature of the contract by showing it to be an original promise as joint maker;* or to show that an indorsement (and not a guaranty) was intended;^ or otherwise to explain such in- dorsement.'' So, he cannot show an agreement with the maker unknown to the payee, by which his liability was to be that of an indorser ;* or that the maker was only author- ized to fill the indorsement with a contract of guaranty ;^ or that the maker and indorser were to be liable jointly upon a 'Chaffe V. Memphis, &c., R. R. Co., 64 Mo. 193 (1876). 'Where the note is indorsed by the payee and is held by a purchaser from him with notice. Vose v. Hurst, 13 Ind. 551 (1859) ; and see Snyder v. Oat- man, 16 lb. 265 (1861), allowing such evidence in the absence of the payee's indorsement and at the suit of the payee. 'Bigelow V. Colton, 13 Gray 309 (1859). ' 'Heidenheimer v. Blumenkron, 56 Tex. 308 (1882). In this case the de- fendant indorsed below the maker at the time of making the note and his indorsement did not fall properly within the class of original indorsements spoken of. 5 Heath v. Van Cott, 9 Wis. 516 (1859); Kellogg v. Dunn, 2 Mete. 215 (Ky. 1859). 'Essex Company v. Edmands, 12 Gray 273 (1858) ; Peckham v. Gilman, 7 Minn. 446 (1862). 'Collins V Everett, 4 6a. 266 (1848). « Ives V. Bosley, 35 Md. 262 (1871) ; Peckham v. Gilman, 7 Minn. 446 (1862) ; Allen V. Brown, 124 Mass. 78 (1878) ; or at the suit of the payee's indorsee, Way V. Butterworth, 108 Mass. 509 (1871). But see, contra, Bosbyshell v. Ehninger, 3 Mo. App. 573 (1877). "Draper v. Weld, 13 Gray 580 (1859) ; or that a guaranty and not an in- dorsement was intended, Drake v. Markle, 21 Ind. 434 (1863). So, the defendant being prima facie a second indorser in Pennsylvania, the plaintiff cannot show under the Pennsylvania statute of frauds that a guaranty and not an indorsement was intended, Schafer v. Farmers' &c. Bank, 59 Penna. St. 144 (1868). 510 IBBEGULAR INDORSEMENTS. joint consideration;^ or that the indorsement was merely made by the defendant, as an officer of the corporation which made the note, in order to show his approval of it.* § 843. Statute of Frauds — Consideration. — ^A difficulty in construing irregular indorsements, such as are here under discussion, as contracts of guaranty, lies in their non-com- pliance with certain requirements of the Statute of Frauds. On the other hand, many cases hold that the Statute of Frauds is not applicable to such an indorsement.' And this has been held, even where the indorsement was made some days after the note.* The statute has, however, been held in other cases to apply,* and to require a fuller e:^pression of consideration than the recital of the original considera- tion in the note.* But it seems that the original consideration of the note is a sufficient consideration for such contemporaneous indorse- ment as a guaranty;^ or at least prima facie so.* A loan from the payee to the maker is a sufficient consideration for ' 'Lake v. Stetson, 13 Gray 310 n. (1859), the note in this case being made to the maker's order and indorsed by him. 'Gilson V. Stevens Machine Co., 124 Mass. 546 (1878). »Chaddock v. Vanness, 6 Vroom 517 (1871) ; Houghton v. Ely, 26 Wis. 181 (1870) ; King v. Ritchie, 18 lb. 582 (1864). " When the party indorses upon the note a guaranty in writing, or his undertaking is subsequent to the making of the note and therefore requires a new consideration for its sup- port, it may be diflScult to fexcludethe agreement from the operation of the Statute of Frauds. But no such difiSculty will be experienced, when the in- dorsement is in blank and is made prior to or contemporaneous with the delivery of the note. If a defendant puts his name upon the back of a promissory note as a surety or guaranty for its payment, in pursuance of an original agreement entered into before or at the time of giving the note, in consideration of which the payee agrees to accept it, the payee may write over such signature a guaranty or promise to pay, which shall be a sufl&- cient memorandum within the Statute of Frauds," Depue, J., in Chaddock V. Vanness, swpra. *Ford V. Hendricks, 34 Cal. 673 (1868). "Smith V. Kessler, 44 Penna. St. 142 (1863) ; Van Doren v. Tjader, 1 Nev. 880 (1865). ' So the statute applies to a verbal promise given to the maker after the promisor's discharge by laches, Huntington v. Harvey, 4 Conn. 124 (1821). "Van Doren v. Tjader, gwpra. 'Carroll v. Weld, 13 HI. 682 (1852) ; Heinz v. Cahn, 29 lb. 308 (1862) ; Riggs V. Waldo, 2 Cal. 485 (1852) ; Klein v. Currier, 14 111. 237 (1852). »1 Daniel 640; Parkhurst v. Vail, 73 111. 343 (1874) ; Veach v. Thompson, 15 Iowa 380 (1863). LIABILITY TO PAYEE. 511 such guaranty of the maker's note,^ and the adequacy of the consideration of the original note is immaterial.'^ If, how- ever, the indorsement was subsequent to the making of the note, suflBcient consideration to support a guaranty must be shown.' And by the New York Statute of Frauds the consideration of a guaranty indorsed on a note must be expressed in it.* § 844. Liability to Payee. — ^The liability of such indorser to the payee is a question of intention to be determined by parol evidence.® He is so liable, if he indorsed for the pur- pose of guaranteeing the note* with the payee's knowledge,'' or with words or acts that were so understood.* And this is true, although the indorser had refused, without the knowl- edge of the payee, to become the maker's surety, and was ignorant of the effect of his indorsement,' and although the payee afterward indorsed above him without recourse.^** But it is held that if the payee would hold such an indorser, he must specially aver his liability to him." The Iowa statute makes such an indorser liable to the payee as a guarantor on his using due diligence in suing the maker.^^ And the California statute makes him liable to the payee as an indorser.'^^^ And this has been held to be the rule in New York and Wisconsin without resort to a stat- ute;^* while in Indiana a distinction has been made between iZracht v. Obst, 14 Bush 34 (1878) ; Schwarzansky v. Averill, 7 Daly 254 {1877). So, credit given by the payee to the maker is sufficient, Kiskadden V. Allen, 7 Col. 206 (1883). » Oakley v. Boorman, 21 Wend. 588 (1839). »Tenney v. Prince, 4 Pick. 385 (1826). *Hall V. Farmer, 5 Denio 484; affirmed, 2 N. Y. 553 (1849). »Rey V. Simpson, 22 How. 341 (1859). •Morris i). Walker, 15 Q. B. 589. ' Jaffray v. Brown, 74 N. Y. 393 (1878). 'Patch V. Washburn, 16 Gray 82 (1860). 'Carpenter v. Oaks, 10 Eich. 17 (1856). '»Lynch v. Levy, 11 Hun 145 (1877). "Woodruff V. Leonard, 1 Hun 632 (1874). "1 McClain's Ann. Stat. (1880) 587 g 2091. "1872 Civ. Code ? 3117. "1 Daniel 649; 1 Edwards 2 391; Cady v. Shepard, 12 Wis. 713 (1860); Davis V. Barron, 13 lb. 227 (1860); Waterbury v. Sinclair, 26 Barb. 455 512 IRREGULAR INDORSEMENTS. negotiable and non-negotiable paper, holding him liable to the payee on the former as indorser, on the latter as surety.' Other cases hold the liability to the payee to be that of maker and not indorser;'^ although only an indorsement was iotended by the maker and indorser ;^ and although the note was not indorsed until months afterward, under the original agreement, however ;* and although the payee indorsed above such indorser in order to negotiate the note/ So, too, under a special averment that the indorsement was made to induce the payee to take the note/ Before the Massachusetts statute of 1874, the indorser was liable in that' State to the payee as maker, notwithstanding a fraudulent representation by the maker to him, unknown to the payee, that the payee wanted him to indorse the note for his accommodation/ The indors- er's liability to the payee as a joint maker may be shown by parol evidence;* and in some States requires special proof.* This liability to the payee has been otherwise variously held to be that of a guarantor;" of a guarantor or maker;" and of a surety." (1857) ; Coulter v. Eichmond, 59 N. Y. 478 (1875) ; Meyer v. Hibscher, 47 N. Y. 265 (1872) ; Moore v. Cross, 19 N. Y. 227 (1859) ; Clothier v. Adriance, 61 N. Y. 322 (1873). 'Wells V. Jackson, 6 Blackf. 40 (1841). 'Ackerman v. Westervelt, 2 Dutch. 92 n. (1847); Peckham v. Gilman, 7 Minn. 446 (1862) ; Massey v. Turner, 2 Houst. 79 (1858). At least pnma facie, Benthall v. Judkins, 13 Mete. 265 (1847) ; Martin v. Boyd, 11 N. H. 385 -(1840). ' 'Nash V. Skinner, 12 Vt. 219 (1840), unknown to the payee. *Hawkes v. Phillips, 7 Gray 284 (1856). 'McCreary I). Bird, 12 Rich. 554 (1860), the indorsement being intended as security to the payee. ^Marienthal v. Taylor, 2 Minn. 147 (1858); Gorman v. Ketchum, 33 Wis. 427 (1873). 'Spaulding v. Putnam, 128 Mass. 363 (1880). ^Jennings v. Thomas, 13 Sm. & M. 617 (1850); Riley v. Gerrish, 9 Gush. 104 (1857) ; Richards v. Warring, 1 Keyes 576 (1864). 'Gulden v. Linderman, 38 Penna. St. 58 (1859); Phelps ti. Vischer, 50 N. Y. 69 (1872). "•Campbell v. Butler, 14 Johns. 349 (1817) ; Clayton v. Coburn, 42 Conn. 348 (1875) ; and as such provable by parol, Perkins v. Catlin, 11 Conn. 213 (1836) ; Clarke v. Smith, 2 Cal. 605 (1852) ; Fegenbush v. Lang, 28 Penna. St. 193 (1857). "Although strictly an indorser, Griswold v. Slocum, 10 Barb. 402 (1851). "Laflin v. Pomeroy, 11 Conn. 440 (1836) ; Rogers v. Gibbs, 24 La. An. 467 (1872) ; Sill v. Leslie, 16 Ind. 236 (1861) ; Schwarzansky v. Averill, 7 Daly LIABILITY TO PAYEE DENIED. 513 § 845. Liability to Payee Denied. — The character of in- dorser seems, as has been stated, to negative the idea of lia- bility to the payee. And on this ground it has been held that one who indorses before delivery to the payee, being himself an indorser, is not liable to the payee,^ or to one purchasing the note from him ;^ at least, not liable to a purchaser taking it without the payee's indorsement, and consequently with notice of the character of the defendant's indorsement.^ And this has been held to be the case, where the indorser intended to become an indorser, and refused to be a joint maker, with the knowledge of the payee ;* or where there is no special evidence of a different intention ;® or where the indorser was ignorant of the agreement on the maker's part to furnish a surety to the payee;* or where the indorsement was made to procure a discount which was not obtained ;'' or where the note, with an original blank for the payee's name, was diverted from the use intended;' or where it was in- dorsed, after transfer by the payee, for the security of his indorsee.' So, where the payee of a note, which has been first indorsed by another party under his own indorsement, takes it up at maturity, he cannot strike out his own prior indorsement and hold such other indorser as a guarantor.^" An indorsement of this character, in the absence of the 254 (1877) ; and by statute in Georgia since 1826, as we have seen, Collins v. Everett, 4 Ga. 266 (1848). ' Bogue V. Melick, 25 111. 91 (1860) ; Sealing v. Vansickle, 74 Ind. 529 (1881) ; Shenk v. Robeson, 2 Grant (Pa.) 372 (1858) ; Taylor v. McCune, 11 Penna. St. 460 (1849) ; Schollenberger v. Nehf, 28 76. 189 (1857). ^Herrick v. Carman, 12 Johns. 159 (1815). 'Barto V. Schmeck, 28 Penna. St. 447 (1857). •Seymour v. Leyman, 10 Ohio St. 283 (1859). 'Phelps V. Vischer, 50 N. Y. 69 (1872) ; and without special evidence his liability to the payee as a guarantor has been denied, Smith v. Kessler, 44 Penna. St. 142 (1863). "In such case he cannot be held by the payee as a second indorser, Hull V. Marvin, 2 Thomp. & C. 420 (1873) ; Tillman v. Wheeler, 17 Johns. 326 (1830). 'Badger v. Barnabee, 17 N. H. 120 (1845). ^Riddle v. Stevens, 32 Conn. 378 (1865). 'Nelson v. Harrington, 16 Gray 139 (1860). '"Case V. Spaulding, 24 Conn. 578 (1856). VOL. n. 2h 514 lEKEeHJLAS indobsements. payee's indorsement, puts an original creditor and holder on inquiry and deprives him of the character of a bona fide holder/ And the discount of the note, without the payee's indorsement, has been held to be notice of fraud to pur- chasers.* § 846. Necessary Diligence. — Where the indorser of a note before its delivery is held to be a guarantor, it is required in some States that the holder of the note should first pro- ceed with due diligence against the maker. Thus, in Con- necticut, it was formerly necessary to proceed against the maker by legal process, unless he . was insolvent,^ or had removed from the State before the maturity of the note, leav- ing no known property that could be reached by process.* And a subsequent verbal release of laches was held not to amount to a waiver.^ Neither could laches, which discharged the indorser, be afterward waived by his executor.® So, in other States, diligence against the maker is neces- sary before such indorser can be held as guarantor,' or as in- dorser.* And a plea that the note is " uncollectible " or that the holder is " unable to collect it," is not prima facie a sufficient excuse for the want of such diligence.* In Massa- chusetts, under the act of 1874, such indorser's liability is conditioned on the maker's failure to pay the note or bill;'* and a release of the acceptor as insolvent discharges the in- dorser." On the other hand, in Illinois, no diligence against 'Moynahan v. Hanaford, 42 Mich. 329 (1879). ''Losee v. Bissell, 76 Penna. St. 459 (1874). 'Bhodes v, Seymour, 36 Conn. 1 (1869). 'Clayton v. Coburn, 42 Conn. 348 (1875). But see Holbrook v. Camp, 38 lb. 23 (1871). 5 Huntington v. Harvey, 4 Conn. 124 (1821). "Ehodes v. Seymour, 36 Conn. 1 (1869). 'Kearnes v. Montgomery, 4 W. Va. 29 (1870) ; Withers v. Berry, 25 Kans. 373 (1881). sprice V. Lavender, 38 Ala. 389 (1862). 'Sylvester v. Downer, 18 Vt. 32 (1843). '"National Bank of the Commonwealth v. Law, 127 Mass. 72 (1879). "Phoenix Cotton Mfg. Co. v. Fuller, 3 Allen 441 (1862). DEMAND — NOTICE OF PEOTEST. 615 the maker is necessary in order to hold the indorser as guar- antor;^ nor, in other States, to hold him as surety.* § 847. Demand — Notice of Protest. — But such an indorser is held, in many States, to be entitled, like an ordinary in- dorser, to due presentment and notice of dishonor.' And this is now required by statute in Massachusetts.* And it has been held to be necessary even where the note is not nego- tiable,° and where the irregular indorsement is subsequent to the making of the note.® On the other hand, demand and notice of protest have been held to be unnecessary against such indorser;'' or unnecessary, unless he suffers damage for want thereof;* or if the agreement was to be surety for the maker, in which case his liability would be virtually that of the maker.' And in North Carolina such demand is dispensed with, except in cases of inland and foreign bills of exchange.^" In other States, he is entitled, as a guarantor, to reasonable notice of demand and dishonor.-'^ And a notice, five days after maturity of the note, has been held to be reasonable, iParkhurst v. Vail, 73 111. 343 (1874). 'Cooley V. Lawrence, 4 Mart. 639 (o. s. 1817) ; Cook v. Southwick, 9 Tex. 615 (1853) ; unless an agreement to that effect is shown, Williams v. Obst, 12 Bush 266 (1876). 'Hooks V. Anderson, 68 Ala. 238; Jones v. Goodwin, 39 Cal. 493 (1870) ; Riggs V. Waldo, 2 lb. 485 (1852) ; Taylor v. McCune, 11 Penna. St. 460 (l849) ; Bronson v. Alexander, 48 Ind. 244 (1874); Clouston v. Barbiere, 4 Sneed 336 (1857) ; Field v. New Orleans Newspaper Co.. 21 La. An. 24 (1869) ; Jones «. Goodwin, supra; Hall w. Newcomb, 7 Hill 416 (1844); Pierce v. Kennedy, 5 Cal. 138 (1855). *But the act is not retrospective, Cook v. Googins, 126 Mass. 410 (1879) ; 1882 Pub. Stats, c. 77 ? 15; Act of 1874. 5 Parker v. Riddle, 11 Ohio 102 (1841). "To hold him as indorser, Hayden v. Weldon, 14 Vroom 128 (1881). But not to hold him as guarantor, Killian v. Ashley, 24 Ark. 511 (1867). 'Manufacturers' Bank v. Follett, 11 R. I. 92 ; Peckham v. Oilman, 7 Minn. 446 (1862) ; Western Bldg. Association v. Wolff, 45 Mo. 104 (1869) ; McGee V. Connor, 1 Utah 92 (1873) ; Clark v. Merriam, 25 Conn. 576 (1857) ; Crom- well V. Hewitt, 40 N. Y. 491 (1869). *Camp V. Simmons, 62 Ga. 73 (1878) ; Picket v. Hawes, 14 Iowa 460 (1862) ; Rodabaugh v. Pitkin, 46 Iowa 544 (1877) ; Sibley v. Van Horn, 13 lb. 209 (1862). = Richards «. Warring, 1 Keyes 576 (1864). '»Batt. Rev. c. 10 2 10. "Van Doren v. Tjader, 1 Nev. 380 (1865). 516 lEEEGULAR INDORSEMENTS. where the maker was insolvent, and the guarantor suffered no damage.^ § 848. Action against Maker and Indorser. — Where one indorses a note before its delivery to the payee, he may, in some States, be sued jointly with the maker as an indorser.^ But this has been questioned, where the note is not negotia- ble f and does not appear to be necessary in case of a nego- tiable note.* And such a joint action cannot be brought where the indorsement is subsequent to the making of the note.* •Knight V. Dunsmore, 12 Iowa 35 (1861). 'Martin v. Boyd, 11 N. H. 385 (1840) ; Powell v. Thomas, 7 Mo. 440 (1842). 'Cawley v. Costello, 15 Hun 303 (1878). *Ambler v. Hillier, 9 Rich. 243. 'Freeman v. Ellison, 37 Mich. 459 (1877). GUAEANTOR NOT AN INDOESER OK SURETY. 517 CHAPTER XXVI. GUAEANTY I. Liability of Guarantor. II. Form of Guaranty. III. Discharge of Guaranty. I. LIABILITY OF GUARANTOR. 849. Guarantor not an Indorser or Surety. 850. Extent of Guarantor's Liability. 851. Guaranty after Maturity — Liability of Principal Co-extensive. 852. Construction of Guaranty. 853. Acceptance of Guaranty — Notice. 854. Notice of Acceptance — What SuflBcient. 855. Unnecessary — Waiver. 856. Consideration for Guaranty. 857. What Sufficient. 858. Continuance of Guaranty. 860. Negotiability of Guaranty. 862. Action — Joinder of Guarantor. § 849. Guarantor not an Indorser or Surety. — A guaranty- is a promise to answer for the payment of some debt or the performance of some duty in case of the failure of another person who is liable in the first instance.^ A guarantor dif- fers from a surety in this, that a surety is liable absolutely as principal upon default, while the guarantor becomes liable only on condition of reasonable demand and notice of de- '3 Kent Com. 121; 2 Daniel 768, cited from Story on Prom. Notes ? 4.57. "An undertaking by some one that another shall perform his promise or fulfill his obligation, and that if he does not the guarantor will do this for him," 2 Parsons 117. A guarantor is " one who engages that the note shall be paid, but is not an indorser nor a surety," 2 Parsons 117. The promise is "by another person, who himself remains liable to pay or perform Ihe same," Story on Prom. Notes 2 457. See, too, Thompson, J., in Lee v. Dick, 10 Pet. 482, 493, and Gibson, C. J., in Ayers v. Findley, 1 Penna. St. 501. "He undertakes to pay the note, if he is called upon to do so within a reasonable time after its maturity and dishonor," Merrick, J.,^in Parkman V. Brewster, 15 Gray 271 (1860). "A collateral engagement or undertaking to be responsible for the debt of another upon his failure to perform his engagement," Lee, J., in Moore v. Holt, 10 Gratt. 284 (1853). " The surety's promise is to pay a debt, which becomes his own debt, when the principal fails to pay it. * * * But the guarantor's debt is always to pay the debt of another," 2 Parsons 118. 518 GTJAKANTY. fault.^ One who guarantees payment is not a surety, but his contract as guarantor must be specially averred in pleading.^ A payee, who indorses with a guaranty that the notes shall be paid " when due," is a surety ; and it is not necessary, in order to hold him, to prove that the maker is insolvent.' On the other hand, if payment is made by a surety, a guarantor is not liable merely for contribution as a co-surety.* In like manner, a guarantor is not an indorser. An in- dorser is liable on due and formal presentment for payment and notice of dishonor, irrespective of damages. A guar- antor is liable on reasonable demand and notice of default, and not otherwise unless damaged by the holder's laches." A guaranty is not an indorsement, although itself indorsed on a note ; and the indorsee, under such guaranty, takes only the rights of the guarantor.* So, an express guaranty by the payee of a note is not an indorsement and the guarantee is not an indorsee.'' But if a guaranty of payment is in- cluded in an indorsement, the contract may be both an indorsement and a guaranty.* And if one indorses on a note that he " assigns said note, waiving demand and notice, and guaranteeing payment," he will be liable as an indorser.' So, an indorsement that " we guarantee payment of the within note and waive demand and notice of non-payment," has been held to be an indorsement with enlarged liability.^" But where the contract is both, and the holder has elected to sue the indorser as such, he cannot afterward hold him as *2 Daniel 769; 2 Parsons 117. "The surety undertakes to pay if the debtor does not, the guarantor undertakes to pay if the debtor cannot," Woodward, C. J., in Kranaph v. Hatz, 52 Penna. St. 525 (1866). 'Oxford Bank v. Haynes, 8 Pick. 423 (1829). See, too, 1 Edwards ? 312. 'Campbell v. Baker, 46 Penna. St. 243 (1863). 'Longley v. Griggs, 10 Pick. 121 (1830). '2 Daniel 769; 1 Edwards § 315; 2 Parsons 117; Story on Bills ? 372; Story on Prom. Notes g 460. 'Trust Company v. National Bank, 11 Otto 68 (1879) ; Tuttle v. Bartholo- mew, 12 Mete. 452 (1847) ; Belcher v. Smith, 7 Cush. 482 (1851). 'Canfield v. Vaughn, 8 La. 682 (1820). •Partridge v. Davis, 20 Vt. 499 (1848) ; Dick v. Works, 18 Hun 266 (1879). •Vanzant v. Arnold, 31 Ga. 210 (1860). "Robinson v. Lair, 31 Iowa 9 (1870). EXTENT OF GTTAKANTOR'S LIABILITY. 519 guarantor.^ One may be an indorser as to remote holders and a guarantor as to the person taking immediately from, him.* If, on the other hand, his undertaking is an original promise, he will be a maker and not a guarantor, although in form a guarantor.^ § 850. Extent of Guarantor's Liability. — Where a guaranty is indorsed after the note is made, the guarantor becomes liable both for the maker and his surety, and is not entitled to contribution as against the surety.* If the guarantor pays, he may recover from the principal on an implied promise of repayment.* But if his guaranty is for payment by the payee and first indorser, he cannot afterward, on paying the note, look to the maker for re-imbursement.' Having assumed payment of a, note, the guarantor must see that the maker pays it, or must take notice of his failure to do so and make payment himself A guaranty may be absolute, that is, for the payment of the bill or note ; or conditional, that is, a guaranty that it is collectible by due diligence.* One who guarantees payment becomes absolutely liable on any default of payment by his principal.^ So, on an agreement to indemnify, the guarantor will become liable before actual payment by the party guar- anteed.'" But, in general, if the maker is solvent and able to pay at the maturity of the note, the guarantor's liability iQloyes v. White, 83 111. 540 (1876). n Edwards ? 315; Upham v. Prince, 12 Mass. 14 (1815). ' 1 Edwards i 325 ; Story on Prom . Notes § 478 ; Luqueer v. Prosser, 1 Hill 256 (1841); affirmed, 4 lb. 420. So, Hunt v. Adams, 5 Mass. 358 (1809), where one indorsed his name "holden as surety." In such case the guar- anty is equivalent to a new note, 1 Edwards 22 315, 325; Story on Prom. Notes li 478, 484. *Longley v. Griggs, 10 Pick. 121 (1830). So he may indorse "' as security " for an indorser without being liable as a guarantor of the maker, Allen v. Coffil, 42 111. 293 (1866). 'King V. Hannah, 6 Bradw. 495 (1880). "Putnam v. Tash, 12 Gray 121 (1858). 'Cobb V. Little, 2 Me. 261 (1823). '2 Daniel 780, 781 ; 1 Edwards § 330 el »eq.; Story on Bills ? 215 ; Story on Prom. Notes 2 461. 'Townaend v. Cowles, 31 Ala. 428 (1858); Tuton v. Thayer, 47 How. Pr. 180 (1873). "Tarnsworth v. Boardman, 131 Mass. 115 (1881). 520 GUARANTY. ceases, although the benefit of an execution against the prin- cipal is afterward lost by laches of the officer having it in charge.^ In suing upon a guaranty of "ultimate payment," the maker's default must be averred.^ And it must be shown that demand was made of the maker, and that he has made default.^ The maker's inability to pay should also be proved in case of a conditional guaranty.* So, it must be proved in a suit upon a guaranty of collection ; and preliminary bankruptcy proceedings are not sufficient proof of that fact without evidence as to the insufficiency of the assets.^ A guaranty in an indorsement, to pay if the maker should fail to pay, refers to failure upon suit brought against him and not to a mere refusal/ But one who guarantees that pay- ment shall be made " promptly and in full," becomes abso- lutely liable, and is not entitled to demand or notice of dishonor^ § 851. Guaranty after Maturity — Liability of Principal Co-extensive. — A guaranty of payment of a note " when due," made after the note is issued, gives the holder an immediate cause of action.* So, a guaranty of " the within note," written upon it after maturity, guarantees payment and renders the guarantor liable without demand or notice.* It has, however, been held that a guaranty after maturity is simply a guaranty of collection, and that every legal en- deavor must be made to collect from the principal, before recourse can be had to the guarantor.^" Where a note matures by its terms at the holder's elec- • Hammond v. Chamberlin, 26 Vt. 406 (1854). 'Hernandez v. Stillwell, 7 Daly 300. 'Ilsley V. Jones, 12 Gray 260 (1858) ; Aldrich v. Chubb, 35 Mich. 350 (1877). ♦Grant v. Hotchkiss, 26 Barb. 63 (1857) ; Grannis v. Miller, 1 Ala. 471 (1840). "Aldrich v. Chubb, 35 Mich. 350 (1877). •Davis V. Campbell, 3 Stew. (Ala. 1831). 'Wright V. Dyer, 48 Mo. 525 (1871). »Gunn V. Madigan, 28 Wis. 158 (1871). 'Winchell v. Doty, 15 Hun 1 (1878). "Donly V. Bush, 44 Tex. 1 (1875). CONSTKUCTION OF GUARANTY. 521 tion, on default in payment of interest, the guaranty is co-extensive with the note.' So, if the guaranty is expressly one of payment, the guarantor is liable to the first bona fide holder, but not to a payee for whose accommodation the note was made.'' But a guarantor's liability may go beyond that of the principal ; e. g. where the maker has been discharged by a judgment in his favor at suit of the holder without fault of the holder, the guarantor may still remain liable to the holder.^ So, a guarantor, who makes himself liable " should the holder fail to collect," remains liable for the face of the paper, although the maker might be entitled to deduction of damages against the payee under a scaling act.* A guaranty of a bill or note, in general, includes interest.* And the measure of the guarantor's liability is the face of the bill together with the actual damages sustained.^ If a note contains a stipulation for liquidated damages, a guaranty indorsed upon it in general terms will include such damages.'^ It has been held that a guaranty of payment will not render the guarantor liable for expenses of collection against the maker,* but that a guaranty of collection will include costs of collection.' § 852. Construction of Guaranty. — The liability of a guar- antor being for the debt of another, his contract is, in gen- eral, to be strictly -construed in his own favor, and any variation from the exact liability assumed by him will amount to a discharge." If the guaranty is to " indorse if 'Sea V. Glover, 1 Bradw. 335 (1878). 'Baldwin v. Dow, 130 Mass. 416 (1881). 'Wright V. Shorter, 56 Ga. 72 (1876). * James v. Long, 68 N. C. 218 (1873). But to the effect that the rights and liabilities of the guarantor are precisely those of the party for whom he guarantees, see 2 Daniel 773 ; Story on Prom. Notes i 460. 'Byles 311 ; Ackermann v. Ehrensperger, 16 M. & W. 99 ; Martin v. Hazard Towder Co., 2 Col. 596 (1875). "Biggs V. Lindsay, 7 Cranch 500 (1813). 'Gridley v. Capen, 72 111. 11 (1874). 'National Bank v. Marbourg, 22 Kan. 535 (1879). 'Mosher v. Hotchkiss, 8 Abb. App. Dec. 326. '"Birkhead v. Brown, 5 Hill 634 (1843) ; affirmed, 2 Denio 375; Bigelow v, Benton, 14 Barb. 123 (1852). But such discharge may be waived, Sleeker V. Hyde, 3 McLean 279 (1843). 522 GTTAEANTT. necessary," the guarantor will be required to indorse.^ If it is for a certain amount, e. g. to accept a bill of exchange to that amount, he will not be liable upon a bill drawn for a larger sum.^ If he guarantees a note to be made payable at a bank, it will not be sufficient that the note is left for col- lection at the bank.' If he authorizes the party guaranteed to draw a bill " at ninety days," he will be liable only for a bill drawn ninety days after sight, not after date, although he has previously paid bills of the latter character.* If his agreement is to guarantee a note for six months without in- terest, and renewal for sixty days with interest, he will not be liable on a six months' note with interest.^ So, a guar- anty of payment, " if waiting till January 1 will answer," will not render him liable on a note made payable a week earlier.^ So, a guaranty to pay for gold, to be supplied for certain purposes to the party guaranteed, will not include a bill of exchange discounted for him and paid partly in bills used for other purposes, and partly in gold used as desig- nated.^ It has been said, however, that the guarantor's contract being an express one, upon which credit has been given by another, should be construed, whether strictly or liberally, according to the intention of the parties.* Thus, a guaranty to A. for liabilities incurred by the guarantor's son, has been held to include a guaranty of such liabilities to the firm of A. & B.° So, an indorsement in these words, " for value re- ceived we guarantee the payment of the within note," has been held to create a joint and several liability,'" So, a guar- anty of three months' credit for goods sold has been held to iMayfield v. Wheeler, 37 Tex. 256 (1872). 'Phillips V. Astling, 2 Taunt. 206. 'Dobbin v. Bradley, 17 Wend. 422 (1837). * Ulster County Bank v. McFarlan, 3 Denio 553 (1846). * Locker v. McVean, 33 Mich. 473 (1876). " Walrath v. Thompson, 6 Hill 540 (1844). ' Evans v. Whyle, 5 Bing. 485. » Story on Prom. Notes H79; 1 Daniel 770. 'Drummond v. Prestman, 12 Wheat. 515 (1827). "Gage V. Mechanics Nat. Bank, 79 111. 62 (1875). ACX3EPTANCE OF GUARANTY. 523 cover a three months' note entitled to grace,* A guaranty- that a debt is collectible " for two years," has been held to render the guarantor liable for two years after its maturity.* An agreement on a separate paper to guarantee a note, desig- nating the names of maker and indorser, will' cover a note which is the only one answering the description, although it may contain the names of additional indorsers.* So, a guaranty of a note, which is appended to the agreement, will cover such note, although the guaranty makes no reference to the note being attested or containing indorsements of in- terest paid.* § 853. Acceptance of Guaranty — Notice of Acceptance. — A guaranty to be binding must be accepted by the party to . whom it is offered.* Questions as to such acceptance gen- erally arise upon guaranties executed upon a separate paper, and relate to a credit to be given for the purchase of goods or to other mercantile transactions of that character. A guaranty should be accepted within a reasonable time in order to bind the guarantor.^ Whether it has been accepted is a question of fact, as in case of a loan made after a refusal, the letter of guaranty being filed away by the lender with the securities taken for the loan.' If the guaranty is ad- dressed specially and is given for a specific amount, notice of acceptance must be given to the guarantor,* as well as notice of the credit given on the strength of it.' So, if the letter is an offer to guarantee a credit, which is general in amount and in its terms.*" So, one who offers a guaranty by 'Smith V. Dann, 6 Hill 543 (1844). ''Marsh v. Day, 18 Pick. 321 (1836). = Veazie v. Willis, 6 Gray 90 (1856). ^Worcester County Institution v. Davis, 18 Gray 531 (1859). =^Lee V. Dick, 10 Pet. 482 (1836). See, too, Gardner v. Lloyd, 3 Eastern Rep. 145 (Penna. 1885). *ClH,flin V. Briant, 58 Ga. 414 (1877), which was an offer to indorse. 'Caton V. Shaw, 2 Harr. & G. 13 (1827). 'Douglass V. Reynolds, 7 Pet. 113 (1833); Reynolds v. Douglass, 12 Pet. 497 (1838); Craft v. Isham,,13 Conn. 28 (1838); Cremer v. Higginson, 1 Mason 323 (1817). 'Adams v. Jones, 12 Pet. 207 (1838) ; Bradley v. Gary, 8 Me. 234 (1832). '"Mussey v. Rayner, 22 Pick. 223 (1839); Norton v. Eastman, 4 Me. 52L (1827). 524 GUAEANTY. letter, accompanying a bill of exchange drawn against a ship- ment to be made, should have notice of its acceptance, unless the fact comes to his knowledge in some other manner.^ So, too, on an oflFer to guarantee certain specified notes ;^ or to indorse for A. in payment for goods to be sold him;' or, in general, any direct promise of guaranty.* § 854. Notice of Acceptance — What Sufficient. — Where notice of acceptance of an offer of guaranty is required, it is not necessary that it should be directly between the parties to the guaranty.' Any knowledge of the fact on the part of the guarantor amounts to a sufficient notice.^ And such knowledge may be shown by parol evidence.' So, an ac- knowledgment of a letter as "very satisfactory," which incloses a bill of exchange representing it to be " perfectly ' safe," is a sufficient guaranty and acceptance of it.* A guaranty of the payment of a bill entitles the guarantor to notice of acceptance within a reasonable time.' So, a let- ter of credit for goods to be sold, a delay of eight months being held in such case unreasonable.^" What is a reasonable time in such case is a question for the jury.^^ And a guar- antor, who gives a letter of credit for a specified time, as for two years, not addressed to any particular person, is in like manner entitled to notice of acceptance within a reasonable time.^^ So, too, one who gives a continuing guaranty for goods to be sold from time to time with a limit in the total 'Thompson v. Glover, 78 Ky. 193 (1879). '■'Montgomery v. Kellogg, 43 Miss. 486 (1870) ; Lewis v. Brewster, 2 McLean 21 (1839). 'Mayfield u. Wheeler, 37 Tex. 256 (1872). •Wilcox V. Draper, 12 Neb. 138 (1881). 'Oaks V. Weller, 13 Vt. 106 (1841). "Reynolds v. Douglass, 15 Pet. 497 (1838) ; Keith v. Dwinnell, 38 Vt. 286 (1865) ; Noyes v. Nichols, 28 lb. 160 (1855). But see Train v. Jones, 11 lb. 444 (1839) ; Craft v. Isham, 13 Conn. 28 (1838). 'Reynolds v. Douglass, supra; Noyes v. Nichols, supra. 'Sturges V. Bank of Circleville, 11 Ohio St. 153 (1860). 'Rankin v. Childs, 9 Mo. 665 (1846) ; Lawson v. Townes, 2 Ala. 373 (1841). "Taylor v. Wetmore, 10 Ohio 490 (1841). "Howe V. Nickels, 22 Me. 175 (1842). "Hill V. Calvin, 4 How. 231 (Miss. 1834). NOTICE OF ACCEPTANCE. 525 amount guaranteed.' So, one who gives a general letter of credit for goods to be purchased with no specific address.* § 855. Notice .of Acceptance — Unnecessary — Waiver. — Where a guarantor, by a general letter of credit, agrees to accept a bill, notice of the acceptance of his guaranty is unnecessary.^ So, where he guarantees the payment of drafts to be drawn, he is liable without notice of the precise amount of the drafts drawn.* So, if he writes his guaranty on the back of a note already drawn ;* or gives a guaranty contemporaneous with an agreement, for which it is the accepted consideration, such guaranty not being prospective.* So, if he guarantees payment of a certain amount at a certain time by an original undertaking;' or promises to pay a cer- tain bond, if surrendered ;* or addresses a letter of credit to a particular person referring to a designated loan to be made by him to another person.' If the guarantor agrees to indemnify " unconditionally at all times," this will be a waiver both of notice of acceptance and of laches on the holder's part.'" So, a guarantor waives notice of acceptance by undertaking to make payment on reasonable notice of default on the principal's part;" or by verbal acknowledgment of his liability after such default.'^ But a subsequent promise to pay, made under a mistake of facts, will not amount to such a waiver." § 856. Consideration for Guaranty. — Every guaranty, like iTuckerman v. French, 7 Me. 115 (1830). 'Shewell V. Knox, 1 Dev. 404 (1828), what is reasonable, being in such case a question for the jury. 'Union Bank v. Coster, 3 N. Y. 203 (1850). 'Wildes V. Savage, 1 Story 22 (1839). * Baker v. Kelly, 41 Miss. 696 (1868). "Bushnell v. Church, 15 Conn. 406 (1843). 'Mathews v. Chrisman, 12 Sm. & M. 595 (1849) ; Farmers', &c., Bank v. Kercheval, 2 Mich. 504 (1853). 'Smith V. GoflF, 2 Salk. 457 ; 11 Mod. 230. 'Caton V. Shaw, 2 Harr. & G. 13 (1827). '"Wells V. Davis, 2 Utah 411 ; affirmed as Davis ». Wells, 14 Otto 159 (1881). " Wadsworth v. Allen, 8 Gratt. 174 (1851). "Peck V. Barney, 13 Vt. 93 (1841). "Eeynolds v. Douglass, 12 Pet. 497 (1838). 526 GUAEANTY. other contracts of parties to commercial paper, requires a con- sideration.^ This is true of a guaranty of payment made by a stranger to the instrument.'' But a contemporaneous guar- anty, if supported by the original consideration for the paper, will not require any other.^ Thus, credit originally given to the guarantor as a surety is sufficient consideration.* So, an indorsement, made by a stranger to the paper before its delivery, amounts to an original promise and does not re- quire a separate consideration.* So, too, a like indorsement containing an express guaranty.* In like manner, if one who transfers a bill or note guarantees it by his indorsement, the consideration for the transfer will be sufficient for the guaranty also.' But if the guaranty is a collateral undertaking and by a separate writing, it requires a special consideration.* Whether it is a collateral contract or an original promise is a question to be determined not so much by the time or manner of making it, as by the circumstances which show it to be part of the original transaction or a different one.' In general, a guaranty made after the original contract requires a new consideration.^" This is true as to a joint-maker who signs a note after its delivery ;" or as to one who signs after 'Newton Wagon Co. v. Diers, 10 Neb. 284 (1880). 'Blanchard v. McCuller, 7 Bradw. 431 (1880) ; Coburn v. Tolles, 14 Conn. 341; Aldridge v. Turner, 1 Gill & J. 427 (1829). »2 Daniel 774; 1 Edwards ^? 318, 321 ; 2 Parsons 125 ; Leonard v. Vreden- burgb, 8 Johns. 29 (1811) ; Rich v. Hathaway. 18 111. 548 (1857) ; Joslyn v. Collinson, 26 lb. 61 (1861) ; Leonard v. Sweetzer, 16 Ohio 1 (1847) ; Laing v. Lee, Spencer 337 (1845) ; Snevily v. Johnston, 1 Watts & 8. 307 (1841) ; Star Wagon Co. v. Swezy, 63 Iowa 520 (1884). So a letter of credit providing for the acceptance and payment of bills of exchange to be drawn. Union Bank V. Coster, 3 N.Y. 515 (1850). *Baily v. Freeman, 11 Johns. 221 (1814). "Austin V. Boyd, 24 Pick. 64 (1835) ; Nabb v. Koontz, 17 Wend. 283 (1861). »Bickford v. Gibbs, 8 Cush. 154 (1851). 'Gillighan v. Boardman, 29 Me. 79 (1848) ; Wyman v. Goodrich 26 Wis. 21 (1870). Though transferred in settlement of the indorser's debte, Fowler v. Clearwater, 35 Barb. 143 (1861). «Chitty362. •1 Edwards ? 320. "l Edwards | 318; 2 Parsons 12b. "McMahon v. Geiger, 73 Mo. 145 (1880). WHAT COKTSIDEEATIOlSr IS SUFFICIENT. 527 delivery as a surety,^ or as guarantor of the note.* This ia true also of a guaranty which is contained in a merely formal transfer made without consideration by a nominal payee.* And a distinct consideration for the guaranty by indorsement should be averred in the pleadings.* § 857. What Consideration is SufiBcient. — It is not material that the original contract guaranteed should be based upon a consideration that is adequate in amount.® Thus, a counter- claim for breach of warranty in the original contract, and partial failure of the original consideration, is no defense in behalf of the guarantor." But if the note guaranteed is void for usury, the guaranty will be void also.' So, if the note is void under a banking statute.^ The consideration need not be a direct one to the guaran- tor.^ But the discharge of the principal debtor will be suf- ficient to support the guaranty.^" And, as we have seen, the transfer by the indorser is sufficient consideration for a guar- anty by him." So, forbearance shown to the principal is a sufficient consideration for a guaranty .^^ And this has been held to be sufficient to support a guaranty by a widow, where 'Anderson v. Norvill, 10 Bradw. 240 (1881); Green v. Shepherd, 5 Allen 689 (1863). ^Good V. Martin, 5 Otto 90 (1877) ; Courtney v. Doyle, 10 Allen 122 (1865) ; Joalyn v. Collinson, 26 111. 61 (1861); Orossan v. May, 68 Ind. 242 (1879); White V. White, 30 Vt. 338 (1857) ; Weed v. Clark, 4 Saadf. 31 (1850) ; How- ard V. Jones, 10 Mo. App. 81 (1881) ; affirmed, 13 lb. 596 (1883). 3 Ware v. Adams, 24 Me. 177 (1844) ; Nichols v. Allen, 23 Minn. 542 (1876). 'Greene v. Dodge, 2 Ohio 431 (1826). 'Hitchcock V. Humphrey, 6 Scott N. R. 540; Cobb v. Little 2 Me. 261 (1828) ; Peck •;;. Barney, 13 Vt. 93 (1841) ; Noyes v. Nichols, 28 Vt. 160 (1855) ; Marsh v. Putney, 56 N. H. 34 (1875) ; Williams v. Granger, 4 Day 444 (1810) ; Gammell v. Paramore, 58 Ga. 54 (1877) ; Hance v. Miller, 21 111. 636 (1859). 'Osborne v. Bryce, 23 Fed. Rep. 171 (1885). 'Heidenheimer v. Mayer, 10 J. & S. 506 (1877), affirmed, 74 N. Y. 607. ^Swift V. Beers, 3 Den. 70 (1846). "1 Edwards? 319. '"Maggs V. Ames, 4 Bing. 470. "Nelson v. Dubois, 13 Johns. 175 (1816). "Chitty 285; Morris v. Stacey, Holt 153 ; Emmott v. Kearns, 5 Bing. N. 0. 649; Watson v. Randall, 20 Wend. 201 (1838) ; Breed v. Hillhouse, 7 Conn. 623 (1829) ; Puller v. Scott, 8 Kans. 25 (1871). 528 GUAKANTY. the forbearance was granted in proceedings against lands of her deceased husband on a transfer by her son.^ The sufficiency of a consideration is not affected by its subsequent inadequacy or failure.^ So, the guarantor's for- mer liability as surety, although barred by the Statute of Limitations, will support his guaranty.^ So, any damage or loss to the purchaser of a note on the credit of the guaran- tor's blank indorsement will be sufficient to support the indorsement.* So, an indemnity against an indorsement to be made will support the indorsement afterward made.* So, any damage to one who proposes to sell goods on the credit of the guaranty .° So, the delivery by a workman of his completed work before receiving pay therefor.^ In like manner, commissions paid to the guarantor for his guaranty are a sufficient consideration, if not a mere cover for usury.* On the other hand, a guaranty of payment, provided the money is not called for until a certain time, without any binding agreement for forbearance or other consideration, is not binding.* And mere forbearance, without a definite agreement for it, is insufficient.^" So, liability already in- curred by A. as surety for another is not a sufficient consid- eration for a fresh guaranty by B.'^^ § 858. Continuing Character of Guaranties. — Whether a guaranty is a continuing contract, is to be determined by the circumstances of the case, which may be shown by parol.^^ The following have been held to relate to a single transaction •Johnson v. Wilmarth, 13 Mete. 416 (1847). ^Keystone Bridge Co. v. Britton, 17 Blatchf. 407 (1880). ^Miles V. LJnnell, 97 Mass. 298 (1867). * Violett V. Patton, 5 Cranch 142 (1809). 'Staate V. Hewlett, 4 Denio 559 (1847). «Chapin v. Merrill, 4 Wend. 657 (1830) ; Church v. Brown, 21 N. Y. 315 (1860). 'Darlington v. McCunn, 2 E. D. Smith 411 (1854). 'Barber v. Ketchum, 7 Hill 444 (1844). 'Russell V. Buck, 11 Vt. 166; S. C, 14 Vt. 147 (1842). "Mecorney v. Stanley, 8 Cush. 85 (1851). "Farnsworth v. Clark, 44 Barb. 601 (1865). "Bell V. Bruen, 1 How. 169 (1843). CONTINUING GUAKANTIES. 629 or amount and not to be such : e. g. an authority to draw for $600;^ or a draft under a letter of credit approved by the drawee and paid.* So, a note, given as a guaranty of an account and payable in a given time, is not presumably a continuing guaranty for subsequent balances accruing after its maturity.* So, if a note is taken up and re-issued, with a written guaranty on it not erased, the purchaser after maturity takes it at his own risk without the benefit of the guaranty.* In general, a guaranty of A.'s account to the amount of £100 does not continue to render the guarantor liable beyond the amount once contracted and paid.^ In like manner, a letter offering security for ^ credit to be given A. to a certain amount, will not be a continuing guaranty without express words to that effect.® So, a letter specially addressed offering to indemnify a proposed seller of goods " for all A. may want to use."^ And even a continuing guaranty, without previous executed consideration, given to secure purchases by A. until notice of revocation, will be revoked by the guarantor's death.^ And this is true, although the person to whom the guaranty was given himself became the guaran- tor's executor, and failed to give formal notice of revocation, as he should have done.' § 859. Continuing Guaranties. — The following guaranties, on the other hand, have been held to be continuing to the extent of the limit expressed, until regularly revoked, viz. : a guaranty to pay " any bills you may draw on A, to the amount of £200;"^° or a guaranty "for any goods you may 'Eanger u. Sergeant, 36 Tex. 26 (1871). '^Edmondston v. Drake, 5 Pet. 624 (1831). 'Chitty 349; Bloxsome t). Neale, K. B. 1832. * Gallagher ■;;. White, 31 Barb. 92 (1860). 'Allnutt V. Ashenden, 5 M. & Gr. 392; Cramer v. Higginson, 1 Mason 323 (1817) ; Fellows v. Prentiss, 3 Den. 512 (1846). 'Eogers v. Warner, 8 Johns. 119 (1811). ' Whitney v. Groot, 24 Wend. 82 (1840). "Jordan v. Dobbins, 122 Mass. 168 (1877). "Harris v. Fawcett, L. K. 15 Eq. 311; S. C, 8 Ch. Ap. 866. "•Mayer v. Isaac, 6 M. & W. 610; Crist v. Burliiigame, 62 Barb. 352 (1862). VOL. II. 2t ■530 GUARANTY. tupply " to a like amount;^ or a guaranty of "any sum that shall be due," in consideration of an extension given.^ So, a letter asking credit to a given amount for one who may require aid " from time to time," offering to be responsible " at any time " to that amount.* So, prima fade, a note given "as collateral security for all liability."* So, an offer to guarantee all bills drawn by A. and accepted by B. has been held to include all bills then running or afterward drawn, which answer the description of the guaranty.® If one guarantees payment of notes discounted within a certain time " to the amount of $3,000 only," he will be liable only for discounts to that amount, although the aggregate dis- counts exceed that sum.* An agreement to be responsible for goods generally " to whom it may concern," is a continuing guaranty until re- voked.'' So, a guaranty for goods " to be delivered accord- ing to the custom of trading with you."* So, a guaranty for goods purchased by indorsement of a note made payable on demand;^ or a bond of guaranty for three years, unless notice of revocation is given sooner."* So, if it is expressed " to be a standing and continuing guaranty," it extends to a renewal obtained without notice to the guarantor." So, a guaranty by way of an accommodation indorsement for continuing advances to a firm has been held to apply to advances to their successors, after payment of all advances to the original firm.^^ But an agreement to be answerable to a 'Merle v. Wells, 2 Camp. 413; Mason v. Pritchard, 12 East 227; Gates V. McKee, 13 N. Y. 232 (1855). 'Hitchcock V. Humphrey, 6 Scott N. E. 540. 'Douglass V. Keynolds, 7 Pet. 113 (1833). *Agawam Bank v. Strever, 18 K Y. 502 (1859). ^ Broom v. Batchelor, 1 H. & N. 255. « Washington Bank v. Shurtleff, 4 Mete. 30 (1842). 'Mussey v. Eayner, 22 Pick. 223 (1839). "Hargreavfe v. Smee, 6 Bing. 244. 'Lockwood V. Crawford, 18 Conn. 361 (1847). "Farmer's, &c., Bank v. Kercheval, 2 Mich. 504 fl853). "Lawrence v. McCalmont, 2 How. 426 (1844). "Greer v. Bush, 57 Miss. 575 (1880). WHEN NEGOTIABLE. 631 certain amount, notwithstanding an arrangement between the principals for a credit on a new account and for the applica- tion of all payments to the old account, whereby the balance on the old account was materially reduced, will not extend beyond such balance.^ § 860. Gruaranty — When Negotiable. — A guaranty of pay- ment contained in the transfer of a bill or note does not affect its negotiability.^ Thus, a non-negotiable guaranty indorsed on a negotiable note does not render the note non- negotiable.^ Many cases hold that a guaranty on a negotiable note is, in general, itself negotiable,* and inures to the benefit of the assignee;^ although the assignment is made after maturity of the note;® and even though the note is payable to the maker's order and not indorsed.' So, a guaranty passes pre- sumptively with the delivery of a note payable to bearer,* or to A. or bearer.^ One who indorses a guaranty of pay- ment on a negotiable note makes himself, in general, liable to any bona fide holder;^" and is practically an indorser in blank with the enlarged liability of a guarantor.-'^ A gen- eral guaranty of payment indorsed on a bill or note is nego- tiable, and the holder is prima facie the person to whom 'Bastow v. Bennett, 3 Campb. 220. ^Andrews v. Hart, 17 Wis. 306 (1863). '2 Parsons 135; Story on Bills ? 215; Upham v. Prince, 12 Mass. 14 (1815) ; Taylor v. Binney, 7 lb. 479 (1811). See, too, § 176 supra. 'McLaren v. Watson, 26 Wend. 430 (1841) ; Ketchell v. Burns, 24 16. 456 (1840). This view is favored as the correct rule in 2 Daniel 787, or what should be the rule in Story on Bills § 458; Story on Prom. Notes ? 484, and opposed on authority in 2 Parsons 133, 134, and 1 Edwards 2 314. For cases on this subject, see § 861 infra. ^Small V. Sloan, 1 Bosw. 353 (1857) ; Luqueer v. Prosser, 1 Hill 256 (1841) ; S. C, Prosser v. Luqueer, 4 Hill 420 ; Reed v. Garvin, 12 Serg. & E. 100 (1824) ; Sexton v. Fleet, 2 Hilton 477 (1859) ; Cole v. Merchants' Bank, 60 Ind. 350 (1878) ; Ellsworth v. Harmon, 101 111. 274 (1882). ^Ellsworth V. Harmon, 101 111. 274 (1882). 'Jones V. Thayer, 12 Gray 443 (1859). 8 Cooper V. Dedrick, 22 Barb. 516 (1856). 'Ketchell v. Burns, 24 Wend. 456 (1840), and the holder may sue in his own name. '"Upham V. Prince. 12 Mass. 14 (1815); Partridge v. Davis, 20 Vt. 499 (1848). "Green v. Burroughs, 47 Mich. 70 (1881). 532 GUAKANTY, the guaranty is made.^ So, too, a guaranty of collection in- dorsed on a note.'' This is true also of an express guaranty of payment indorsed on a note for the payee's accommoda- tion, but such guarantor is liable only to the first bona fide holder under his indorsement and his assignees.' Where a letter is written agreeing to guarantee the payment of drafts to be drawn, an action will lie in favor of any one as equit- able assignee who discounts the paper on the faith of the letter.* And, in general, an indorsement will carry the equitable title of the indorser to the guaranty." § 8l61. Guaranty — When not Negotiable. — But, as a gen- eral principle, a guaranty is not, strictly speaking, " nego- tiable," and only the rights of the original party to the guaranty pass to subsequent holders.* Thus, a guaranty to an acceptor will not extend to subsequent holders,' unless expressly made for that purpose.* Of course, the guarantor's own right of action is confined to his principal and prior parties, and he cannot sue a subsequent indorser, who be- came a surety or guarantor as to other parties.® A guaranty is not rendered negotiable by being indorsed on a negotia- ble note,^" although it is indorsed by the payee as a guaranty of payment." And even a general guaranty of payment in- dorsed on a note has been held to be non-negotiable.^* So, 'Nevius V. Bank of Lansingburgh, 10 Mich. 547 (1862). 'Waldron v. Harring, 28 Mich. 493 (1874), and the holder may sue on such guaranty subject to defense. •Baldwin v. Dow, 130 Mass. 416 (1881). *Evansville Nat. Bank v. Kaufmann, 24 Hun 612 (1881). 'Levi V. Mendell, 1 Duv. 77 (1863). •Byles 466; Chitty 286 ; 2 Parsons 133; 1 Edwards 2 314. "< Ex parte Stephens, L. R. 3 Ch. App. 753. « Jn re Agra Bank, L. R. 3 Ch. App. 756. •Herrick v. Carman, 12 Johns. 159 (1815). "True V. Fuller, 21 Pick. 140 (1838) ; Tuttle v. Bartholomew, 12 Mete. 452 (1847) ; Belcher v. Smith, 7 Cush. 482 (1851) ; Miller v. Gaston, 2 Hill 192 (1842); Leggett v. Raymond, 6 lb. 639 (1844); L'Amourieux v. Hewit, 5 Wend. 307 (1830); McDoal v. Yeomans, 8 Watts 361 (1839); Hayden v. Weldon, 14 Vroom 128 (1881). "Myrick v. Hasey, 27 Me. 9 (1847) ; Belcher v. Smith, .7 Cush. 482 (1851) ; Northumberland Co. Bank v. Eyer, 58 Penna. St. 97 (1868). "Springer v. Hutchinson, 19 Me. 359 (1841) ; True v. Fuller, 21 Pick. 140 (1838). WHEN NOT NEGOTIABLE. 633 a guaranty included in a special assignment;^ or a guaranty of payment " if not collected " in a given time, indorsed by the payee;" or even a guaranty of "collection indorsed on a note payable to A. or bearer f or an indorsement and trans- fer by the payee warranting the note " good and collectible."* A transfer including a guaranty of collection, it is said, is not a commercial indorsement, and subsequent holders, al- though purchasing for value and in good faith before matur- ity, are subject to defense as against the guarantor.' So, the ' indorsement of a non-negotiable note, proved by parol to be a guaranty, is not negotiable, and recovery upon it should be in the name of the original holder.* On the other hand, it has been held that an indorsement will carry the guaranty with it, although it is contained in a prior transfer, made by a separate instrument, instead of by indorsement of the note.' So, a guaranty by letter of A.'s accounts "in your favor" has been held to be assignable;* or a letter to A., offering to be his security " to the whole world."' Other cases hold that the transfer of a note will not carry a guaranty made on a separate paper.^" So, a letter of credit addressed to a particular firm is not negotiable." And a promise by a third person to pay a note, has been held not to inure to the benefit of a subsequent holder.^" In Iowa a guarantor by indorsement is, by statute, liable to an assignee or indorsee of. the paper, if due diligence has 'Erskine v. M'Lendon, 1 Stew. 30 (Ala. 1827). 'Taylor v. Binney, 7 Mass. 479 (1811). 'L'Amourieux v. Hewit, 5 Wend. 307 (1830) ; McDoal ». Yeomans, 8 Watts ' 361 (1839). ♦Bissell V. Gowdy, 31 Conn. 47 (1862). ^Omaha Nat. Bank v. Walker, 5 Fed. Kep. 399 (1881). 'Jacques v. McKnight, 2 Dutch. 92 n. '2 Daniel 785 ; In re Barrington, 2 Sch. & Lefroy 112. "First Nat. Bank v. Carpenter, 41 Iowa 518 (1875). 'Lawrason v. Mason, 3 Cranch 492. Anyone taking a note or selling goods on the strength of such promise may sue on it, 1 Edwards ? 314. So, too, a letter of credit addressed generally, Story on Prom. Notes § 482. "McLaren v. Watson, 26 Wend. 425 (1841) ; Watson v. McLaren, 19 Wend. 657 (1838). "Taylor v. Wetmore, ]0 Ohio 490 (1841). "Barlow v. Myers, 64 N. Y. 41 (1876). o34 GUARANTY. been employed in prosecuting the maker.' And in Wis- consin a guaranty of payment of a note passes by indorse- ment or transfer of the note, and the holder may sue in his own name, whether the guaranty is on the paper or by a separate instrument, subject, however, to equities between the original parties to the guaranty.^ § 862. Actions by and against Guarantor. — In general, the guarantor can bring no action against the principal until he has actually suffered damage by making payment in his stead. It seems, however, that in Virginia a guarantor may have an attachment proceeding against his principal before actual payment of the debt, as an equitable and preventive measure.^ Where the guaranty is by a letter of credit pro- viding for the acceptance of a bill which is not accepted, the drawer should sue the guarantor on the letter of credit and not on the bill.* And the guarantor of a note cannot be sued in Kentucky until after suit against the maker or prin- cipal.^ » The question is sometimes raised whether a guarantor can be sued jointly with the maker of a note, where such joint action would lie against maker and indorser. In most States it is held that even a guarantor, whose guaranty is* indorsed in express terms on the note, cannot be so sued.* • In Ohio, however, as in some other States, the guarantor may be sued jointly with the maker.' Where the action against the guarantor is brought by an . indorsee, it has been held that he should sue in the name 'Iowa (R. C. 1880 2 2091). ^Michigan (1882 G. S. § 1590). 'Moore v. Holt, 10 Gratt. 284 (1853). 'Carnegie v. Morrison, 2 Mete. 381 (1841). » Wynn v. Poynter, 3 Bush 54 (1867). •Miller v. Gaston, 2 Hill 188 (1842) ; Mowery v. Mast, 9 Neb. 445 (1879) ; Camden v. McKoy, 4 111. 437 (1842) ; Cole v. Merchants' Bank, 60 Ind. 850 (1878) ; Allen v. Fosgate, 11 How. Pr. 218 (1855) ; Barton v. Speis, 5 Hun 60 (1875) ; Graham v. Bingo, 67 Mo. 324 (1878) ; Parmelee v. Williams, 71 Mo. 410 (1880). 'Kautzman v. Weirick, 26 Ohio St. 330 (1875); Veach v, Thompson, 15 Iowa 381 (1863) ; Hannah v. Beardsley, 31 Minn. 314 (1883) : Minnesota (1878 G. 8. c. 66 I 36). ACTIONS BY AND AGAINST GUAEANTOE. 535 of the party to whom the guaranty was originally given.^ But the first holder who takes the paper on the credit of the guaranty will be presumed to be the party to whom the guaranty was originally made.^ Where judgment has been rendered against a guarantor, he will remain liable for the costs, notwithstanding the original debt be subsequently paid, by his principal.^ As regards his right to set up, against a bona fide holder for value, defenses which are available against his immediate payee, his position is the same as that of any other party to the paper, and such defenses will, in general, be inadmissi- ble.* But a guarantor who is not a party to the paper is not bound by the same commercial rule and may set up such defense.* 'Northumberland Co. Bank v. Eyer, 58 Penna. St. 97 (1868) ; Vanderveer «>. Wright, 6 Barb. 547 (1849) ; Snevily v. Ekel, 1 W. & S. 203 (1841). ''Northumberland Co. Bank v. Eyer, swpra. 'Meech v. Churchill, 2 Wend. 630 (1829). * Jackson v. Poote, 12 Fed. Eep. 37 (1882). *Brou V. Becnel, 20 La. An. 254 (1868). 536 QUAEANTY. n. FOKM OF GTIABANTY. 863. Guaranty by Joint-Making — Acceptance. 864. by Indorsement. 866. Overdue and Non-negotiable Notes. 867. by Separate Instrument. 868. Parol Evidence— Filling Blank. 869. Foreign Statutes as to Guaranty. 870. Statute of Frauds — English and American Statutes, 871. When not Applicable. 872. Guaranty in Transfer. 873. New Contract. 874. When Applicable — Debt of Another. 875. Consideration — Must be Expressed— English Eule. 876. When Sufficiently Expressed. 877. When Insufficiently Expressed. 878. Proof of. 879. Writing— What Sufficient. § 863. Form of Guaranty — Joint-Making — Acceptance. — A guaranty of commercial paper may be either on the in- strument or on a separate paper .-^ And it may also be either in express terms or implied, and it may be contained in a transfer or may be independent of any other contract. It may be implied as to a joint-maker or a joint and sev- eral maker.^ But one who signs a note as an additional maker is, in general, liable rather as a joint-maker or a surety than as a guarantor.* A subsequent signature, how- ever, as surety for the original maker has been held to be a guaranty and not a joint note, unless originally so intended.* So, one who signs a note on its face as "surety,"* or who "secures the within note,"® has been held to be a guarantor. But an additional maker, signing as " security for the fulfill- ment of the above," has been held not to be a guarantor, but a surety.^ One who writes upon a bill, " I bind myself to pay promptly after maturity if not paid by the drawer," has 'Chitty 362; 2 Daniel 780; 2 Parscins 119; Story on Prom. Notes § 468. 'Story on Prom. Notes S? 466, 467. 'Freeh v. Yawger, 18 Vroom 157 (1885), as a maker. ♦Ives V. McHard, 2 Bradw. 176 (1878). 'Eice V. Cook, 71 Me. 559 (1880). •True V. Harding, 12 Me. 193 (1835). »Craddock v. Armor, 10 Watte 258 (1841). GUAEANTY BY INDORSEMENT. 637 been held to be a guarantor.^ But one who signs under the maker of a note at the payee's request is, as to such payee, himself a maker.'^ In such contracts the question often arises whether the second signer is a maker or a surety ; and if his contract is that of a surety, the consideration for it must be expressed under the Statute of Frauds.* In like manner, any acceptance of a bill by one who is not the drawee amounts at common law to a guaranty of the bill.* § 864. Guaranty by Indorsement. — One who indorses his name on the back of a blank bill or note stamp with the intention of beceming a surety is a guarantor.' So, an in- dorsement " holden A. B." on a note payable to bearer has been held to be a guaranty.* But one who indorses a note at the time it is made with the words " holden on within " is not a guarantor but an original promisor.^ An in- dorsement by the holder of a note, "good to A. or order without notice," has been held not to be a guaranty.' So, an indorsement " I, A. B., backer," on a joint and several note is an indorsement and not a guaranty.^ So, an indorse- ment, "value received, I promise to pay the sum within mentioned," has been held to be an original promise.^" The effect of blank indorsements at the time of making the note by persons who are not otherwise parties to it has been already considered in the previous chapter. Such an indorsement by a stranger to the note or bill made after its issue is a guaranty," and as such requires an express con- ' Baker v. Kelly, 41 Miss. 697 (1868). » Partridge v. Colby, 9 Barb. 248 (1855); Parks v. Brinkerhoflf, 2 Hill 663 (1842). 'Story on Prom. Notes | 467. *Byles 198 ; Chitty 363 ; 2 Parsons 125 ; Jackson v. Hudson, 2 Campb. 447. But see Britton v. Webb, 2 B. & C. 483. 'Matthews v. Bluxsome, 38 L. J. Q. B. 209. "Irish V. Cutter, 31 Me. 536 (1850). So, an indorsement by a stranger, "holden without demand and notice," Bray v. Marsh, 75 Me. 452 (1883). 'Brett V. Marston, 45 Me. 401 (1858). 'Lane v. Steward, 20 Me. 98 (1841). •And parol evidence is inadmissible to the contrary, Seabury v. Hunger- ford, 2 Hill 80 (1841). "Brenner v. Weaver, 1 Kans. 488 (1863). So, an indorsement "I will see the within paid," Amsbaugh v. Gearhart, 11 Penna. St. 482 (1849). "Good V. Martin, 5 Otto 90 (1877) ; Howard v. Jones, 13 Mo. App. 596 (1883), affirming 10 lb. 81; Withers v. Berry, 25 Kans. 373 (1881). 538 GUAEANTY. sideration under the Statute of Frauds.^ In Illinois the statute makes a guaranty of all indorsements on instruments payable to bearer, unless it be otherwise expressed.^ And in Iowa a blank indorsement of any written instrument by any person other than the payee or indorsee is a guaranty.* A blank indorsement on a note after it is made is presumably a guaranty.* So, an indorsement in blank by a holder who himself took the note without indorsement from the payee.* But a stranger, who indorses a note after it is negotiated, and below a prior indorsement which has been forged, intends to become liable as a second indorser, and is liable as such and not as a guarantor.^ Where a note is indorsed by a stranger after its maturity in consideration of forbearance to prior parties, a guaranty may be written over the indorsement.'^ On the other hand, it has been held that a blank indorse- ment of this character written upon a note a few days after its issue for the accommodation of the maker was an original promise.* An indorsement by a third party in blank as a collateral undertaking confers no authority on the holder to write a guaranty over it.® But a guaranty may be indorsed on a bond with blanks unfilled, with authority to fill them and deliver it.'" § 865. Guaranty by Indorsement. — A transfer and guar- anty may both be contained in one instrument." Thus, if an express guaranty is indorsed on a note, it will operate as a transfer, at least so far as is necessary to pass the title, as 'Good V. Martin, supra; Howard v. Jones, supra. Ullinois (Kurd's R. S. 1883 ch. 98 i 8). ''Iowa (R. C. 1880 i 2089). *FulIer V. Scott, 8 Kans. 25 (1871). =^ Withers v. Berry, 25 Kans. 873 (1881); Whiten v. Hears, 11 Mete. 663 (1846). «Howe V. Merrill, 5 Gush. 80 (1849). 'Scott V. Calkin, 1 Eastern Rep. 312 (Mass. 1885). «Moies V. Bird, 11 Mass. 436 (1814). •Hayden v. Weldon, 14 Vroom 128 (1881). '"Bank of the State of South Carolina v. Hammond, 1 Rich. 281 (1845). "Myrick v. Hasey, 27 Me. 9 (1847); Partridge v. Davis, 20 Vt. 499 (1848). So, too, " I assume this note and indorse the prompt payment of it," Tatum. V. Bonner, 27 Miss. 760 (1854). INDOESEMENT AFTER MATURITY. 539 "well as a guaranty/ And such guaranty indorsed by the payee of a note has been held to be an indorsement as well as a guaranty;^ although the contrary has been held of a guaranty indorsed on a note by the payee and others.^ If an express guaranty is indorsed upon a note at the time it is made, it will not render the guarantor liable as a joint and several promisor with the maker.* So, an express guar- anty of payment indorsed on a bill is not a direct, but a col- lateral, promise.* And one who guarantees payment by his indorsement is a guarantor, and not a surety or indorser.' If the guaranty is for collection of the note, it is construed to mean that it is collectible at maturity by ordinary process of law.' If a guaranty of payment is indorsed, with a waiver of notice of protest, it will amount to an absolute promise to pay the note at maturity.* And, in general, a guaranty of payment at a certain time specified, indorsed on a note or bill, is an original and absolute undertaking on the part of the guarantor.^ § 866. Indorsement after Maturity — Non-negotiable Instru- ments. — A guaranty of payment indorsed by the payee of a note after its maturity, is an original promise.'" And the indorser is liable on it as a valid guaranty." In like man- ner, a guaranty may be implied, e. g. by the payee's in- dorsement in blank on a non-negotiable note ; '^ or by the indorsement of such note by a stranger;'* or by the payee's 'Heaton v. Hulbut, 4 111. 489 (1842). * Green v. Burrows, 47 Mich. 70 (1881) ; Head v. Dubuque County Bank, 8 Neb. 10 (1878). 'Tuttle V. Bartholomew, 12 Mete. 452 (1847). *Tinker v. McCauley, 3 Mich. 188 (1854), overruling Higgins v. Watson, 1 lb. 428 (1850). 'Rankin v. Childs, 9 Mo. 665 (1846). ^Sample v. Martin, 46 Ind. 226 (1874). 'Stone V. Rockefeller, 29 Ohio St. 625 (1876). « Bloom r. Warder, 13 Neb. 476 (1882). »Cobb V. Little, 2 Me. 261 (1828). '"Burnham v. Gallentine, 11 Ind. 295 (1858). "Gunn V. Madigan, 28 Wis. 158 (1871). So, by indorsement of a demand note some years after date, Ex parte Yates, 2 DeG. & J. 191. '^2 Parsons 119; Prentiss v. Danielson, 5 Conn. 175 (1823). "Roe V. Hallett, 34 Hun 128 (1884). 540 GUARANTY. indorsement of a non-negotiable certificate of deposit.* So, an indorsement on a non-negotiable note, promising " to mal^e it good if it is not," amounts to a guaranty of collec- tion.^ An indorsement upon a non-negotiable note, not having a strictly commercial character, may be shown by parol evidence to be a guaranty.^ But the payee's indorse- ment in blank on a sealed note has been held to be an assignment and not a guaranty.* § 867. Guaranty by Separate Instrument. — It is not neces- sary, as has been said, that the guaranty of a bill or note should be written upon the paper guaranteed. It may be written in a separate instrument, which must, however, plainly identify the paper guaranteed by its description.* Thus, a note may be assigned by the assignor for a debt and guaranteed by his separate agreement to be responsible for it.* In like manner, a contract, based on a valid considera- tion, to procure a note to be paid when due, is a guaranty.^ So, a verbal statement by one transferring a note to the effect that " the maker was good, and if he was not, he (the seller) was," is a guaranty.* So, a sealed agreement, upon the transfer of a note, that the maker should pay, together with a waiver of all forms of law, is an absolute guaranty of pay- ment.* So, an agreement to honor a bill of exchange is a guaranty." So, an agreement on a separate paper, on obtain- ing a discount of a note, promising "to be holden as if I had indorsed ;"" or a letter saying, "I am morally bound to pay, but these parties are good and if they do not pay I will."" •Ford V. Mitchell, 15 Wis. 334 (1862). 'Wilson V. Mullen, 3 McCord 236 (1825). 'Jacques v. McKnight, 2 Dutch. 92 (1848). *Tryon v. DeHay, 7 Rich. 12 (1853). '2 Parsons 119; Story on Prom. Notes | 464. •Johnston v. Mills, 25 Tex. 704 (1860). 'Robinson v. Gilman, 43 N. H.485 (1862). "Crenshaw v. Jackson, 6 Ga. 510 (1849). 'Parker v. McKelvain, 17 Tex. 157 (1856). "Lanusse v. Barker, 3 Wheat. 101 (1818), "And such guarantor on payment by him may sue all prior parties. Bishop V. Rowe, 71 Me. 263 (1880). "Allen V. Harrah, 30 Iowa 363 (1870). PAROL EVIDENCE. 541 ^ut a separate agreement by the directors of a bank to bear the loss on notes illegally discounted has been held to be an original contract, and not a guaranty or suretyship.^ On the other hand, an agreement that "if the bearer fails to collect, I will be responsible," is a guaranty of collection.^ So, a stipulation that a note is "good," means that it is collectible.^ § 868. Parol Evidence — Filling Blank. — Parol evidence is admissible to show the exteat of the contract entered into hj one who is a stranger to a note and indorses it in blank after it is made;* or to explain whether an original contract or a guaranty is intended by the indorsement "accepted pay- able ninety days from date with interest."* So, it is admis- sible to show that "good" meant valid and not merely col- lectible ;° or that a guaranty indorsed on a bill was intended to be a continuing contract ; ' or to show that a guaranty of payment of a $2,000 draft was intended to apply to an in- dorsement for $2,000 on a $4,000 draft, instead of one for the specific $2,000.* So, parol evidence is admissible to explain an indorsement in blank made after maturity f or to show that the maker of a note is insolvent, and that dili- gent prosecution against him is therefore unnecessary." But when an express guaranty is written over the indorser's name, parol evidence is inadmissible to charge him as an indorser." So, where a joint and several note is indorsed *'I, A. B., backer," it is an indorsement and not a guaranty, •Bank of Tennessee v. Barksdale, 5 Sneed 73 (1857). "Evans v. Bell, 45 Tex. 553; Erwin v. Lamborn, 1 Harr. 125 (Del. 1832). 'Cooke V. Nathan, 16 Barb. 342 (1853). *Sandford v. Norton, 14 Vt. 228 (1842). l*Hueske v. Broussard, 55 Tex. 201 (1881). * Cooke V. Nathan, 16 Barb. 342 (1853), as tending to show fraud. 'Douglass V. Reynolds, 7 Pet. 113 (1833). •Lee V. Dick, 10 Pet. 482 (1836). »Beckwith v. Angell, 6 Conn. 315 (1826) ; Skofield v. Haley, 22 Me. 164 (1842). '"Jones V. Greenlaw, 6 Coldw. 342 (1869). "Smith V. Frye, 14 Me. 457 (1837). 542 GUARANTY. and a contrary intention, it has been held, cannot be shown by parol.^ Where a signature is written on the back of a blank piece of paper, it has been held that a guaranty may be written over it, if that was the intention of the parties.** So, it has been held that an indorsement in blank may be filled up with a guaranty, if so agreed;* or with the contract agreed upon.* Where a guaranty is written upon a note and not dated, it is presumed to have been made at the date of the note.' And parol evidence is admissible to show that it was so made,* or to show when it was made.'' If there is no positive evidence as to the time of making, it is a question for the jury to determine on' the paper offered.* § 869. Foreign Statutes as to Guaranty. — A guaranty or, as it is called abroad, an aval must generally be in writing.' But by the statute of many foreign countries it may be writ- ten either on the bill itself or on a separate instrument.^" Some statutes provide that an aval may be made by the simple signature of the guarantor on the bill." In many countries a guaranty may be limited or qualified as to time, > Seabury v. Hungerford, 2 Hill 80 (1841). 'Orrick v. Colston, 7 Gratt. 189 (1850). 'Beckwith v. Angell, 6 Conn. 315 (1826) ; Fuller v. Scott, 8 Kans. 25 (1871) ; Moor V. Folsom, 14 Minn. 340 (1869). *Erwin v. Lamborn, 1 Harr. 125 (Del. 1832) ; Evans v. Bell, 45 Tex. 553. 'Higgins v. Watson, 1 Mich. 428 (1850). •Ordeman v. Lawson, 49 Md. 135 (1878). 'Baldwin v. Dow, 130 Mass. 416 (1881). 8Bickford v. Gibbs, 8 Cush. 154 (1851). ''Nicaragua (1869 Code Com. Art. 265). ^"Argentine Republic (1862 Code Com. Art. 856) ; Belgium (1851 Code Napo- leon) ; Bolivia (1834 Code Com. Art. 410) ; Chili (1865 Code Com. Art. 681) ; Colombia (1853 Code Com. Art. 433) ; Costa Rica (1853 Code Com. Art. 423) ; Ecuador (1829 Code Com. as in Spain) ; France (1807 Code Napoleon Art. 142); Greece (1835 Code Napoleon) ; Hayti (1826 Code Napoleon); Holland (1838 Exch. Law Art. 131) ; Italy (1865 Code Com. Art. 227) ; Mexico (1854 Code Com. Art. 469) ; Pent (1853 Code Com. Art. 434) ; Salvador (1855 Code Com. Art. 430) ; San Domingo (1829 Code Napoleon) ; Spain (1829 Code Com. Art. 476) ; Suntzerland (Geneva Code Napoleon) ; Turkey (Code Napo- leon); Uruguay (1865 Code Com. Art. 873); Venezuela (1862 Code Com. Art. 56). • "CMi (1865 Code Com. Art. 681) ; Switzerland (Exch. Laws, 1859 Berne, 1863 Basle, i 68). FOREIGN STATUTES. 543 circumstance, amount or payee.^ If not otherwise expressed, a guarantor is liable in Russia as a principal.^ In Sweden the guarantor and the party whom he guarantees are jointly and severally liable.^ In Russia several who sign as guar- antors become liable each for the whole amount.* And, in general, if the guaranty is unqualified in its terms, the guar- antor in most foreign countries assumes the same liability as the person for whom he became such.^ In Switzerland it is provided that the guarantor who pays a bill shall be entitled to all the rights of the holder against the party whom he guarantees.® In Chili an aval cannot be given by the drawer, indorser or acceptor of a bill.'' In Germany, where one joins in the execution of a bill by signing as an additional drawer, acceptor or indorser under another, the several signers are not guarantors.* But an aval may, in Germany, be included in a bill, indorsement or acceptance, or added either upon the same or a separate instrument.' If, however, several sign under one another as drawers, indorsers or acceptors, they will each become severally liable for the payment of the wh'^e. although signing expressly "as surety" or "per ^Argentine Repuhlio (1862 Code Com. Art. 858) ; Bolivia (1834 Code Com. Art. 411) ; Chili (1865 Code Com. Art. 682) ; Colombia (1853 Code Com. Art. 434) ; Costa Rica (1863 Code Com. Art. 424) ; Ecuador (1829 Code Com. as in Spain) ; Mexico (1854 Code Com. Art. 470) ; Peru (1853 Code Com. Art. 485) ; Salvador (1855 Code Com. Art. 431) ; Spain (1829 Code Com. Art. 477) ; Uru- guay (1865 Code Com. Art. 875). ""Russia (1862 Exch. Law Art. 635). ^Sweden (1851 Exch. Law § 91). *Russia (1862 Exch. Law Art. 634). ''Argentine Republic (1862 Code Com. Arts. 857, 858) ; Belgium (1851 Code Napoleon); Bolivia (1834 Code Com. Art. 411) ; Chili (1865 Code Com. Art. 683) ; Colombia (1853 Code Com. Art. 435) ; Costa Rica (1853 Code Com. Art. 425) ; Ecuador (1829 Code Com. as in Spain) ; France (1807 Code Napoleon Art. 142) ; Greece (1835 Code Napoleon) ; Hayti (1826 Code Napoleon) ; Hol- land (1838 Exch. Law Art. 132) ; Italy (1865 Code Com. Art. 227) ; Mexico (1854 Code Com. Art. 471) ; Nicaragua (1869 Code Com. Art. 266) ; Peru (1853 Code Com. Art. 436); Salvador (1855 Code Com. Art. 432); San Domingo (1829 Code Napoleon) ; Spain (1829 Code Com. Art. 478) ; Switzer- land (Exch. Laws, 1859 Berne, 1863 Basle, | 68; Geneva Code Napoleon); Turkey (Code Napoleon) ; Uruguay (1865 Code Com. Art. 875) ; Venezuela (1862 Code Com. Art. 57). ^Switzerland (Exch. Laws, 1859 Berne, 1863 Basle, §69), Whili (1865 Code Com. Art. 684). 'Thol's Wechselrecht ?? 144 et seq. 'lb. a 147 et seq. 544 GUABANTY. aval."^ In many countries guaranty by independent and separate agreement is expressly provided for by statute." § 870. Statute of Frauds — American Statutes. — The Eng- lish Statute of Frauds, passed in 1667 in the reign of Charles II., provides that where one undertakes to answer for the debt, default or miscarriage of another, " the agreement or some memorandum or note thereof shall be in writing " and tsigned by the parties to be bound by it.* Many of the United States have in their statutes followed the exact words of this provision.* In 1856 an act was passed in Great Britain providing that a contract to pay the debt or answer for the default of another, should not be invalid " by reason only that the consideration for such promise does not appear in writing or by necessary inference from a written docu- ment."* This provision has been substantially followed in some of the United States by an enactment that the " consid- eration need not be set forth in such writing, but may be proved."^ Others of the United States, reaching beyond •26. ? 144. 'Argentine Republic (1862 Code Com. Art. 855) ; Belgium (1851 Code Napo- leon) ; Bolivia (1834 Code Com. Art. 409) ; Chili (1865 Code Com. Art. 680) ; Colombia (1853 Code Com. Art. 432) ; Costa Rica (1853 Code Com. Art. 422) ; Ecuador (1829 Code Com. as in Spain) ; France (1807 Code Napoleon Art. 141); Greece (1835 Code Napoleon); Hayti (1826 Code Napoleon) ; Holland (1838 Exeh. Law Art. 130) ; Italy (1865 Code Com. Art. 226) ; Mexico (1854 Code Com. Art. 368) ; Nicaragua (1869 Code Com. Art. 265) ; Peru (1853 Code Com. Art. 433); Salvador (1855 Code Com. Art. 429); San Domingo (1829 Code Napoleon); Spain (1829 Code Com. Art. 475); Switzerland (Geneva Code Napoleon) ; Turkey (Code Napoleon) ; Uruguay (1865 Code Com. Art. 872) ; Venezuela (1862 Code Com. Art. 55). '29 Car. II. c. 3 H- *Arkansas (1874 R. S. ? 2951); California (1880 Codes & Stats. ? 6624); Colorado (1883 G. S. § 1521) ; Connecticut (1875 G. S. c. 11 i 40) ; Delaware (1852 R. C. and 1874 c. 63 J 7) as to promises exceeding twenty-five dollars) ; Florida (1881 McClel. Dig. c. 29 § 1) ; Georgia (1882 Code ? 1950) ; Illinois (1883 R. S. e. 59 U) ; Kansas (1881 C. L. ?§ 2663-4) ; Maryland (29 Car. II. c. 3, reported in force in 1809 by Chancellor Kilty) ;' Mississippi (1880 R. C. c. 49 i 1) ; Missouri (1879 R. S. c. 35 ? 2513) ; New Hampshire (1878 G. L. c. 220 ^ 15) ; New Jersey (1874 R. S. 444) ; New York (1882 R. S. (7 edit.) 2327 § 2 ; 1863 P. L. 802) ; North Carolina (1883 R. C. ? 1552) ; Ohio (1880 R. S. ? 4199) ; Pennsylvania (1885 Brightly's Dig. 723 i 4) ; Rhode Island (1882 Pub. Stat. c. 204 i 7) ; South Carolina (1882 G. S. ? 2019) ; Tennessee (1884 Code g 2423); Texas (1879 R. S. | 2464) ; Vermont (1880 R. L. i 981). So in Iowa, except that the word "contract" is used instead of agreement (1880 R. C. ^ 3663). 5 19 and 20 Vict. c. 3. ^Indiana (1881 R. S. c. 65 ?2 1, 2) ; Kentucky (1881 G. S. c. 22 ? 1) ; Maine (1883 R. S. c. Ill ? 1) ; Massachusetts (1882 Pub. Stat. c. 78 U 1, 2) ; Michigan STATUTE or FRAUDS. 645 the letter of the English Statute of Frauds, require for such contract an " agreement or some other note or memorandum * * * expressing the consideration * * * jq writing subscribed " by the parties to be bound/ § 871. Statute of Frauds — When not Applicable. — It is to be observed that the Statute of Frauds is only applicable to collateral contracts to pay the debt or answer for the default of another,^ and not to an original promise to pay the promisor's own debt.* Whether the contract is original or collateral is to be determined not by priority of time in the execution of the different stipulations, nor by the fact that the principal debtor does or does not continue liable, but simply by the question whether the promises of the guaran- tor and the party guaranteed are one transaction or several.* This is a question for the jury, and parol evidence is admis- sible in determining it.^ The following contracts are, in general, one transaction, and the contract of the guarantor is an original promise, viz. : First, contemporaneous guaranties upon the making of the original contract. Second, guaranties in the transfer of a bill or note. Third, guaranties based upon a novation or other independent consideration to the guarantor. First, contemporaneous and original guaranties, e. g. by the guar- antor's signature under that of the maker, are not within the Statute of Frauds.® So, a joint and several undertaking signed by both as makers.^ So, where A. wrote that by an (1882 Anndt. Stat. 5? 6185, 6189) ; Nebraska (1881 C. S. c. 32 §? 8, 24) ; Virginia (1873 Code c. 140 ? 1) ; West Virginia (1884 Amd. Code c. 98 ^ 1). ^Alahama (1876 Code i 2121) ; Minnesota (1878 G. S. c. 41 § 6) ; Nevada (1861 Laws c. 9 § 61) ; Oregon (1872 G. L. ? 775) ; Wisconsin (1878 R. S. § 2306). And this was originally the form of the statute in California (Laws of 1850) and until 1863 in New York (1830 B. S.) 2Chitty283, 363; 2 Daniel 776; 1 Edwards ?§ 319, 321, 328 ; Story on Prom. Notes, ii 457, 470. '1 Edwards §? 319, 321, 325; 2 Parsons 128, 132; 2 Daniel 776; Story oa Prom. Notes |? 464, 478. *1 Edwards § 320. "Hueske v. Broussard, 55 Tex. 201 (1881). «Parks V. BrinkerhofF, 2 Hill 663 (1842). 'White V. Howland, 9 Mass. 314 (1812). vol.. II. ■"K 546 GUARANTY. arrangement with B. he would be accountable for B.'s debt to C, it was held to be an original contract based upon the origi- nal consideration of his own debt to B. and that of B. to C.* So, the Statute of Frauds is not applicable to a parol agree- ment to pay a draft, on the strength of which the draft was accepted and cashed;^ or to a like agreement to indemnify against an indorsement, which is made on the strength of it ;* or to a blank indorsement made after the note was made under a prior agreement therefor, which was relied upon at the time of taking the note.* § 872. Statute not Applicable — Guaranty in Transfer. — Second, the statute does not apply to an express guaranty contained in the transfer of a bill or note;' such guaranty not being a promise to answer for the debt or default of an- other, although the maker still remains liable.^ And the guarantor may in such case be held liable upon the money counts only.'' So, a parol guaranty by an indorser at the time of transferring the note, has been held to be sufficient, if based upon a valid consideration, e. g. forbearance of a threatened suit.* The debt is in such case that of the trans- feror, and even his verbal promise is therefore valid.® So, the Statute of Frauds will not apply to an indorsement con- 'Gold V. Phillips, 10 Johns. 412 (1813). 'Kohn V. National Bank, 15 Kans. 428 (1878). One draft is in such case sufficient consideration for the promise, Union Bank v. Coster, 8 N. Y. 203 (1850). »Vogel V. Melius, 31 Wis. 306 (1872) ; Cortelyou v. Hoagland, 13 Stew. 1 (1885). * Rowland v. Aitch, 38 Cal. 133 (1869). ^2 Daniel 776; 1 Edwards ? 321 ; Cardell v. McNeil, 21 N. Y. 336 (1860) ; Brown v. Curtis, 2 lb. '235 (1849) ; Durham v. Manrow, lb. 533 (1849) ; Man- row V. Durham, 3 Hill 584 (1842) ; Mobile, &c., E. R. Co. v. Jones, 57 Ga. 198 (1876) ; How v. Kemball, 2 McLean 103 (1840) ; Huntington v. Wellington, 12 Mich. 10 (1863) ; Hall v. Rodgers, 7 Humph. 536 (1847) ; Knapp v. Parker, 6 Vt. 642 (1834) ; Thomas v. Dodge, 8 Mich. 51 (1860). 'King V. Summitt, 73 Ind. 312 (1881); Dauber v. Blaokney, 38 Barb. 432 (1862). 'Tyler v. Stevens, 11 Barb. 485 (1851). 'Smith V. Finch, 3 111. 321 (1840). 'Milks V. Rich, 80 N. Y. 269 (1880); Malone v. Keener, 44 Penna. St. 107 (1862) ; Aahford v. Robinson, 8 Ired. 114 (1847) ; Barker v. Soudder, 56 Mo. 272 (1874). STATUTE OF FRAUDS NOT APPLICABLE. 547 taining a guaranty added to give credit to the transfer.* And it is not necessary that the person to whom the guar- anty is made should be named in it in such case,^ or that the consideration should be expressed.' § 873. Statute of Frauds not Applicable — New Contract. — - Third, where the original debt is assumed by the guarantor by a novation, and the original 'debtor discharged, the guar- anty is an original contract based on a new and independent consideration, and is not within the statute.* Such contract is a question for the jury to pass on, and may be shown by •parol evidence.^ So, it is not necessary that the considera- tion of a contract of guaranty, based on the discharge of another obligation, should be expressed under the statute;® or that a parol promise by the guarantor to pay the princi- pal's debt, in consideration of the discontinuance of a levy against him, should be in writing^ So, the statute will not apply to a guaranty based on the consideration of forbear- ance to the principal;' or on forbearance, together with delivery of goods out of which to obtain a fund for payment of the note.^ So, the statute will not apply to an indorse- ment in blank after a note is made, in consideration of for- bearance to the maker.^" § 874, Statute Applicable — Debt of Another. — But the statute will, in general, apply to a guaranty by the blank indorsement of a note, after it is made, by one who is not a party to it ;" although it has been held that such an indorse- ' Hopkins v. Richardson, 9 Gratt. 485 (1852), "Thomas v. Dodge, 8 Mich. 51 (1860). . 'Tyler v. Stevens, 11 Barb. 485 (1851). •Anderson v. Davis, 9 Vt. 136 (1837). '^Hueske v. Broussard, 55 Tex. 201 (1881). •Sheldon v. Butler, 24 Minn. 513 (1878). 'Mercein v. Andrus, 10 Wend. 461 (1853). 'EUwood V. Monk, 5 Wend. 235 .(1830) ; Farley v. Cleveland, 4 Cow, 432 (1825) ; Freeh v. Yawger, 18 Vroom 157 (1885). ' »01mstead v. Greenly, 18 Johns. 12 (1820), ^"Fuller V. Scott, 8 Kans. 25 (1871) ; contra, Hodgkins v. Bond, 1 N. H. 284 (1818). "Hayden v. Weldon, 14 Vroom 128 (1881). 548 GTTARANTY. ment might have been filled in with a guaranty.^ So, a contemporaneous guaranty of a note by one fiot a party to it, written on a separate paper, has been held to be within the statute." So, too, even a guaranty indorsed on a note at its making to induce the payee to accept it;^ or subse- quently indorsed in a transfer of the note by the payee, who Lad taken it as agent, to his principal.'^ So, it applies to a guaranty of collection contained in a transfer;" or to a col- lateral verbal promise to pay an acceptance, if received and afterward dishonored/ A parol promise to pay the debt of another, although in consideration of forbearance to the other, is within the Statute of Frauds and therefore void/ 80, a parol promise for like consideration, made after the dishonor of a note, to be responsible for it;* or a like prom- ise to pay a note in consideration of a suit against the maker being discontinued,' or in consideration of forbearance to him.^" § 875. Former English Rule — Consideration Expressed. — It is said, in construction of the original English statute, that the consideration is an essential part of the " agreement," and must therefore be in writing, as well as other parts of the agreement ; and that a guaranty of the payment of a bill or note failing to express an adequate consideration on its face, is void under this statute." This rule has been followed in 'Moor V. Folsom, 14 Minn. 340 (1869). 'Ordeman v. Lawson, 49 Md. 135 (1878). 'Glen Cove M. Ins. Co. v. Harrold, 20 Barb. 298 (1855) ; Parry v. Spikes, 49 Wis. 384 (1880). So an indorsement as a surety, the principal indorsing above and below the surety, Murray v. McKee, 60 Penna. St. 85 (1868). 'Nichols V. Allen, 23 Minn. 542 (1877). "Spicer v. Norton, 13 Barb. 542 (1852). *Magg8 V. Ames, 4 Bing. 470. 'King V. Wilson, 2 Stra. 874. Writing, as well as consideration, being a requisite to such promise, Watson v. Randall, 20 Wend. 201 (1838). 'Peabody v. Harvey, 4 Conn. 119 (1821). 'Nelson v. Boynton, 3 Mete. 396 (1841). "Smith V. Ives, 15 Wend. 182 (1836) ; Crooks v. Tully, 50 Cal. 254 (1875) ; and forbearance will not be presumed in such case. Smith v. Ives, swpra. "Chitty 283, 363; Story on Prom. Notes H56; 1 Edwards 322; 2 Parsons 127 ; 2 Daniel 777 ; Browne on Stat. Frauds 386 ; Morley v. Boothby, 8 Bine. 107; Raikes v. Todd, 8 Ad. & El. 846; Saunders v. Wakefield, 4 B. & Aid. 695; Wain v. Warlters, 5 East 10. ENGLISH RULE. 549 some American cases, where the statute is worded as in Eng- land;' and is applicable in like manner to a guaranty upon a separate paper.'^ Other cases have refused to follow the English rule.^ And now in England and in some of the United States, as we have seen, the necessity for express- ing the consideration, if it existed, is done away with by statute ;* while other statutes as expressly require it/ Under the New York statute, which, prior to 1863, fol- lowed the language of 29 Charles II., the consideration must be expressed on the face of a guaranty for the payment of a note indorsed on it;® or in a guaranty of its collectibil- ity contained in a transfer.^ Although some cases have made a distinction between guaranties for collection and for payment, requiring the consideration to appear only in the former.* And even in the guaranty of an overdue note for- bearance to the maker will not be presumed, but the consid- eration must be expressed.* So, a guaranty indorsed on a note, to the effect that it is not outlawed, requires an express consideration in New York.'" The California statute, which has in its change followed that of New York and requires the consideration to appear, applies where the guaranty is an in- dorsement in blank by a stranger to the note at the time it 'Henderson v. Johnson, 6 Ga. 390 (1849) ; and see as to guaranty in gen- eral, Buckley V. Beardslee, 2 South. 570*(1819) ; Elliott v. Giese, 7 Harr. &. J. 457 (1826) ; but the consideration may be inferred, if the inference is plain, Laing v. Lee, Spencer 337 (1845) ; Neelson v. Sanborn, 2 N. H. 413 (1821). 'Ordeman v. Lawson, 49 Md. 135 (1878). 'Sage V. Wilson, 6 Conn. 81 (1826) ; Little v. Nabb, 10 Mo. 3 (1846). ^Packard v. Richardson, 17 Mass. 122 (1821) ; Gilligan v. Boardman, 29 Me. 79 (1848) ; and see i 870, mpra. 'Sears v. Brink, 3 Johns. 210 (1808); Leggett v. Raymond, 6 Hill 639 (1844). "Packer v. Willson, 15 Wend. 343 (1836) : Brewster v. Silence, 8 N. Y. 207 (1853). 'Spicer v. Norton, 13 Barb. 542 (1852). «Manrow v. Durham, 3 Hill 584 (1842) ; Hunt v. Brown, 5 Hill 145 (1843). But see Story on Prom. Notes | 478, as to the soundness of this distinction. 'Smith V. Ives, 15 Wend. 182 (1836). '"Clark V. Hampton, 1 Hun 612 (1874). The efifect of the act of 1863 being to restore the Statute of Frauds as formerly construed, t. e. requiring the consideration to be expressed, Caatle v. Beardsley, 10 Hun 343 (1877); not following Speyers v. Lambert, 37 How. Pr. 315 (1869), which decided other- 550 GUABANTY, wag made.^ And it Las been held necessary in Minnesota in the case of a guaranty contained in the indorsemfent of the payee (an agent) to his principal.^ So, it is necessary in the case of a guaranty, indorsed at the time of making a note, in order to obtain credit for the maker in a purchase of goods.' § 876. Consideration — When Sufficiently Expressed. — It is not necessary, in general, that the consideration should be expressed in words at length, but it is sufficient, it is said, if the court "can see it in the transaction."* And this has been held to be the case in a guaranty for payment half in six months and half in twelve, the guaranty being indorsed at the maturity of the paper, and the consideration implied being the forbearance.* So, it is sufficiently expressed by the words "value received."^ And these words are suffi- cient for a guaranty of collection indorsed on a note.' So, it is sufficient if one writes "A. B. having accepted the within bill, I hereby guarantee," &c.* So, if the guarantor indorses upon an acceptance, payable in the future, " I will see the bill paid for A. B. ;"' or if an agent receives the bill 'Crooks V. Tully, 50 Cal. 264 (1875). ^Nichols V. Allen, 23 Minn. 542 (1877). 'Parry v. Spikes, 49 Wis. 384 (1880). 'Douglass V. Howland, 24 Wend. 85 (1840). But the inference must be drawn by reasonable intendment from the instrument itself, 2 Daniel 778; 1 Edwards ?| 322, 328; Story on Prom. Notes ? 458; 2 Parsons 132. And the consideration cannot be shown by parol evidence, Wain v. Warlters, 5 East 10; Saunders v. Wakefield, 4 B. & Aid. 595; Jenkins v. Reynolds, 3 Brod. & Bing. 14; Morley v. Boothby, 3 Bing. 107; or even whether it was executory or already executed, Weed v. Clark, 4 Sandf. 32 (1850). It has been held, however, that if the consideration of the guaranty is that of the original note, this may be shown by parol evidence, where fully expressed in the original contract, Bailey v. Freeman, 11 Johns. 221 (1814) ; or ex- pressed by the words " value received," Leonard v. Vredenburgh, 8 lb. 29 (1811) ; or not expressed at all, 76., lb. But this has been denied both in earlier and later cases, Sears v. Brink, 3 Johns. 210 (1808) ; Brewster v. Si- lence, 8 N. Y. 211 (1853) ; Draper v. Snow, 20 lb. 331 (1859). "Neelson v. Sanborn, 2 N. H. 413 (1821). "Day V. Elmore, 4 Wis. 190 (1855). So, too, 2 D. 779; 1 Edwards ?? 328, 329; 2 Parsons 130; Story on Prom. Notes 458, 465. 'Miller v. Cook, 23 N. Y. 495 (1861) ; 22 How. Pr. 66; Mosher v. Hotchkiss, 3 Abb. App. Dec. 326 (1866). 'Boehm v. Campbell, 8 Taunt. 679; 3 Moore 15. 'Emmott V. Kearns, 5 Bing. N. C. 559. CONSIDERATION. 551 of exchange in payment of a debt due to his principal and writes a letter, saying that he " will see it paid, if not hon- ored when due."^ So, if one signs as joint-maker of a note, and procures credit to be given to the original maker by writing under the maker's signature, " I acknowledge myself holden as surety for the payment of the above note."* So, it is sufficient if the guaranty appears to be in consideration of credit given, to the principal debtor;' or of an indorse- ment, the guaranty being given as indemnity.* So, it is sufficient to write, "Please withdraw the note, and I will see you at Christmas, when you shall receive the amount from me."^ So, a guaranty for payment of " any goods which A. de- livers to B.," expresses the consideration sufficiently.' So, a guaranty to pay " any sum due you from A. B., not exceed- ing £100," nothing being then due, and the guarantor's intention being to procure a credit for A. B, in the purchase of goods.' So, the consideration sufficiently appears, where the guaranty is indorsed on a letter that makes mention of it;^ or when the guarantor writes, acknowledging that he had taken the principal's goods and would be security or indorser for him ;® or where a guarantor, by letter, promises to " warrant according to agreement," a prior contract form- ing the consideration." § 877. Consideration — When Insufficiently Expressed. — On the other hand, a letter from the guarantor, inclosing the bill of exchange, and saying that in default of the drawer he 'Morris v. Stacy, Holt 153. 'Hunt V. Adams, 5 Mass. 358 (1809). 'Edwards v. Jevons, 8 C. B. 436. *Staats V. Howlett, 4 Denio 559 (1847). "Shortrede v. Cheek, 1 Ad. & El. 57. •Stadt V. Lill, 9 East 348; Eussell v. Mosely, 3 Brod. & Bing. 211; Bene- dict V. Sherrill, Hill & D. 219 (1843) ; Church v. Brown, 21 N. Y. 315 (1860) ; Gates V. McKee, 13 N. Y. 232 (1855). 'Bainbridge v. Wade, 16 Q. B. 89. 'Stead V. Liddard, 1 Bing. 196. 'Laing v. Lee, Spencer 337 (1845). "Smith V. Ide, 3 Vt. 290 (1831), 552 GUARAKTY. "would " see it paid," has been held insufficient to satisfy the statute.^ So, a simple agreement in writing to pay a certain bill of exchange described in the agreement.* So, a guaranty of payment at a future time, indorsed on an overdue note.* So, a guaranty containing a written statement that the guar- antor had bought the land, which was mortgaged for the security of the note that he guaranteed.* So, it is not suffi- cient to specify that the guaranty is " on account of B. ;" * or to guarantee "to the amount of £100 considering the security on A.'s account;"* or to guarantee "any sums you have advanced or may advance to A."' So, an agreement to indemnify for £1,000 " advanced or to be advanced," does not sufficiently express the consideration, a larger sum being already advanced, and no future advances being necessarily implied.* So, it is not enough to undertake to pay A. B. a certain sum.' § 878. Proof of Consideration. — As we have seen, the words "value received," in an indorsement of guaranty, raise a presumption of consideration for it.^" And where a guaranty and indorsement are averred in the pleading, sufficient con- sideration for the guaranty will be presumed." And in Iowa, by force of the statute, an express guaranty implies a con- sideration.^* But where the guaranty is given after the making of the note or bill guaranteed, the burden of prov- ing a sufficient consideration rests, in general, on the holder.^* Thus, if the guaranty is by means of the blank indorsement ' Hawes v. Armstrong, 1 Bing. N. C. 761 ; 1 Scott 661. But see Chitty 285 ; Pace V. Marsh, 1 Bing. 216 ; S. C, 8 Moore 59. 'Saunders v. Wakefield, 4 B. & Aid. 595. »Rigby V. Norwood, 34 Ala. 129 (1859). ♦Parkman v. Brewster, 15 Gray 271 (1860). 'Stephens v. Winn, 2 Nott & McC. 372 (1812). •Jenkins v. Eeynolds, 3 Brod. & Bing. 14. 'Eaikes v. Todd, 8 Ad. & EI. 846. "Bellw.Welch, 9 0. B. 154. ' 'Wain V. Warlters, 5 East 10. "Martin v. Hazard Powder Co., 2 Col. 596 (1875). "Clay V. Edgerton, 19 Ohio St. 549 (1869). "Sabin V. Harris, 12 Iowa 87 (1861) ; Jones v. Berryhill, 25 lb. 289 (1868). "2 Parsons 126. WBiTiNa. 653 of a stranger to the paper after it is made and issued, a valid consideration for such guaranty must be proved.^ Where a note is indorsed before its maturity by the payee, to obtain credit or as an accommodation for the maker, the considera- tion is a question for the jury.* And the consideration for the guaranty may, in general, be proved by parol.^ § 879. Writing— What Sufficient. — The Statute of Frauds, where it applies, requires, as we have seen, that the guaranty shall be in writing. A blank indorsement, with an express authority to write a guaranty over it, has been held sufficient to satisfy this requirement.* But one who is a stranger to a bill cannot make himself liable as guarantor by a verbal request to another to become an accommodation indorser.* If, however, a guarantor, in consideration of forbearance to the maker of a note at its maturity, writes upon it " indorsed by A. B. due " at a future time named, this will be a suffi- cient writing.* On the other hand, a guaranty has been held insufficient without special address;^ or with the amount of the note designated as guaranteed left blank.* 'Good V. Martin. 5 Otto 90 (1877). 'Campbell v. Knapp, 15 Penna. St. 27 (1850). 'Baldwin v. Dow, 130 Mass. 416 (1881). *Ulen V. Kittredge, 7 Mass. 233 (1819). 'Kelsey v. Hibbs, 13 Ohio St. 340 (1862). •Tyler v. Givens, 3 Hill 48 (So. Car. 1836). 'Williams v. Lake, 2 El. & El. 349. •Ordeman v. Lawson, 49 Md. 135 (1878). 554 GUABANTT, III. DISCHAEGE OF GUAKANTOR. 880. Presentment for Payment — When not J^ecessary, 881. When Necessary. 882. Beasonable Demand. 883. Notice of Protest — ^Unnecessary. 884. Default. 885 and Damage. 886. Notice of Protest — When Necessary. 887. Diligence against Maker — When Necessary. 889. When not Necessary. 890. Damage by Neglect. 891. Due Diligence— What is. 893. What is not. 894. Discharge by Fraud — Extension. 895. taking Collateral — Eelease — Waiver. § 880. Presentment for Payment — When not Necessary. — Formal presentment for payment is not, in general, necessary in order to hold a guarantor;^ unless he is actually damaged by the want of it.^ It is unnecessary, if the principal is insolvent at the maturity of the bill or note;^ especially if his insolvency is known to the guarantor.* The liability of the guarantor differs in this respect from that of an indorser.* An absolute guaranty of payment does not require any for- mal demand of the principal.** So, too, an absolute guaranty contained in the assignment of a bond ;^ or a guaranty of a 'Byles 207 ; Hitchcock v. Humphrey, 5 Man. & G. 559 ; Walton v. Mascall, 13 M. & W. 453; Tinker v. McCauley, 8 Mich. 188 (1854) ; Clay v. Edgerton, 19 Ohio St. 549 (1869) ; Skofield v. Haley, 22 Me. 164 (1842). * Farrow v. Eespess, 11 Ired. 170 (1850); National Bank of Michigan v. Green, 33 Iowa 140 (1871). 'Holbrow V. Wilkins, 1 B. & C. 10; Warrington v. Furbor, 8 East 242; Skofield V. Haley, 22 Me. 164 (1842) ; Beckwith v. Angell, 6 Conn. 315 (1823). *Rankin v. Childs, 9 Mo. 665 (1846) ; but if solvent at matuirity and insolv- ent before demand and notice, damages are presumed, 2 Daniel 798. 5 2 Daniel 798; 1 Edwards ? 315; Story on Bills § 372 ; Grannis v. Miller, 1 Ala. 471 (1840). « Woolley V. Sergeant, 3 Halst. 262 (N. J. 1826) ; Allen v. Rightmere, 20 Johns. 336 (1823) ; Cooper v. Page, 24 Me. 73 (1844) ; Williams v. Granger, 4 Day 444 (1810) ; Dickerson v. Derrickson, 39 111. 574 (1864) ; Brown v. Curtiss, 2 N. Y. 225 (1849) ; Winchester v. Doty, 15 Hun 1 (1878) ; Wright v. Dyer, 48 Mo. 525 (1871) ; Train v. Jones, 11 Vt. 444 (1839) ; Tinkum v. Dun- can, 1 Grant 228 (Penna. 1855) ; Baker v. Kelley, 41 Miss. 697 (1868) ; Bayley V. Hazard, 3 Yerg. 487 (1832). So, a guaranty payment on a bond. Bank of South Carolina v. Hammond, 1 Eich. 281 (1845). 'rfibley V. Stull, 3 Green 332 (N. J. 1836). PBESENTMENT. 555 3bond for a term of years unless notice of revocation is given fcefore that time.^ Demand and notice of dishonor are likewise unnecessary in the case of an original promise, e. g. a guaranty indorsed on a note in consideration of a definite extension given;* or an indorsement of an absolute promise to pay within a given time.* So, a demand is unnecessary in case of an original promise by the guarantor in consideration of indemnity to liim and extension to his principal.* So, demand is not necessary to hold the payee of a non-negotiable certificate of ■deposit on his indorsement.* § 881. Presentment — When Necessary. — When a demand is necessary, as against the guarantor, it must be duly proved.^ Demand, but not formal presentment, is necessary to hold a guarantor by letter of credit, where the maker was solvent at the maturity of the bill, and subsequently became insolvent.'' And it is said that such demand is generally necessary, unless excused by the maker's insolvency.* It has been held necessary in the case of a letter of credit;® espe- cially one particularly addressed and for a definite amount.^" i^o, in the case of a guaranty of a debt to be paid by a bill of exchange." And such demand is not waived by an in- dorsement of a note as "good to A. or order without notice."^* A guarantor is also entitled to a demand of the principal, where his guaranty is included in an indorsement." So, too, 'Farmers', &c., Bank v. Kercheval, 2 Mich. 504 (1853). "•'Read v. Evans, 17 Ohio 128 (1848). ^ Breed v. Hillhouse, 7 Conn. 523 (1829). "Read w.Cutts, 7 Me. 186 (1881). *Ford V. Mitchell, 15 Wis. 334 (1862). *Il8ley V. Jones, 12 Gray 260 (1858). 'Smith V. Bainbridge, 6 Blackf. 12 (1841) ; Oxford Bank v. Haynes, 8 Pick. 423 (1829). 8 Hank «. Crittenden, 2 McLean 557 (1841), 'Lawson v. Townes, 2 Ala. 373 (1847). "■Douglass V. Reynolds, 7 Pet. 113 (1833). " Bishop V. Rowe, 3 M. & S. 362. "Lane v. Steward, 20 Me. 98 (1841). As to waiver in general, see chapter on Demand, infra. "Greene v. Dodge, 2 Ohio 431 (1826). ,So, where a guaranty of collection is included in an indorsement, Aldis v. Johnson, 1 Vt. 186 (1828). 656 GUAEANTY. one who indorses a note, " I guarantee the payment of the within to A. B. for value received," has been held to be entitled as an indorser to demand and notice of dishonor/ And a guarantor, who is not party to the bill, is entitled to have demand made of his principal.* So, too, one who agrees to pay a bond if the obligor does not.* § 882. Reasonable Demand Necessary. — Although formal presentment, such as an indorser may insist upon, is not generally necessary in case of a guarantor, he is usually enti- tled to a demand of the debt from the principal within a reasonable time after its maturity. This is so in the case of one who indorses and guarantees a note at its maturity.* And a year is not, in general, a reasonable time within which to make such demand.^ So, where a note is payable in four annual installments, and the holder has additional collateral security, his delay for two years to make a demand upon the principal will discharge the guarantor.* On the other hand, the sufficiency of a demand made four years after maturity of a sealed bill, in an action against one who guaranteed it by indorsement after maturity, has been held to be a ques- tion for the jury, and the guarantor was held liable on their determination of its sufficiency.' § 883. Notice of Protest — Unnecessary. — In like manner, strict notice of dishonor or notice of protest is not necessary against a guarantor, as in the case of an indorser.' And, therefore, it has been held that the costs of such notice are not recoverable against him.' Such notice is unnecessary in the case of an absolute guaranty of payment of a bill or •Barrett ■;;. May, 2 Bailey 1 (1830). 'Phillips V. Astling, 2 Taunt. 206; Jones v. Pierce, 35 N. H. 295 (1857). 'Nelson -w. Bostwick, 5 Hill 37 (1843). *Beeker v. Saunders, 6 Ired. 380 (1846). 'Benton V. Gibson, 1 Hill 56 (So. Car. 1833). •Talbot V. Gay, 18 Pick. 534 (1836). 'Stout V. Stevenson, 1 South. 178 (1818). "Byles 296; Chitty 363; 2 Daniel 798; 1 Edwards 2 315,344; Story on Bills i 305; Foote v. Brown, 2 McLean 369 (1841) ; True v. Harding, 12 Me. 193 (1835). ■ 'Wooley V. Van Volkenburg, 16 Kans. 20 (1876). KOTICE OF PROTEST. 557 note;^ or a guaranty of payment contained in the payee's indorsement;* or a guaranty of punctual payment;' or in the ease of one who, after the maturity of a bill or note, guar- antees its payment;* or of a guaranty indorsed on a note that it should be paid within four years;* or for its "pay- ment after final process."' So, in general, of any absolute guaranty;'' or of an express guaranty, equivalent to a joint promise.* So, too, a guaranty in consideration of an exten- sion to the principal, amounting to an original promise on the guarantor's part, does not require notice of dishonor.* So, it is not necessary as against the indorser of a non-nego- tiable note ;"" or to hold one on a guaranty, " Provided A. B. use all diligence in collecting." ^^ So, in the case of a collat- eral guaranty on a separate instrument, notice of protest, strictly speaking, is unnecessary, unless the want of it occa- sions damage to the guarantor.-^'* And it is not necessary, where the guarantor is not a party to the bill.'* 'Hitchcock V. Humphrey, 6 Scott N. R. 540; Walton v. Mascall, 13 M. & W. 72, 452; Taylor v. Ross, 3 Yerg. 330 (1832); Greene v. Thompson, 33 Iowa 293 (1871). So, a guaranty of payment of a bond, Bank of South Carolina v. Hammond, 1 Rich. 281 (1845). •Brown v. Curtis's, 2 N. Y. 225 (1849) ; Allen v. Rightmere, 20 Johns. 365 (1823) ; Baker v. Kelley, 41 Miss. 697 (1868). » Thrasher v. Ely, 2 Sm. & M. 139 (1844). *Burnham v. Gallentine, 11 Ind. 295 (1858) ; Winchell v. Doty, 15 Hun 1 (1878). * 'Breed v. Hillhouse', 7 Conn. 523 (1829). •Bashford v. Shaw, 4 Ohio St. 263 (1854). '2 Daniel 796; Allen v. Rightmere, 20 Johns. 336 (1823) ; Cooper v. Page, 24 Me. 73 (1844); Dickinson v. Derrickson, 39 III. 574 (1864); Donley v. Camp, 22 Ala. 659 (1853) ; Foster v. Tolleson, 13 Rich. 31 (1860) ; Wright v. Dyer, 48 Mo. 525 (1871). « Hough V. Gray, 19 Wend. 202 (1838) ; Woolley v. Sergeant, 3 Halst. 262 (1826). ' Bead v. Evans, 17 Ohio 128 (1848). So, a guaranty in consideration of an extension to the principal and an indemnity to the guarantor, Read v. Cutts, 7 Me. 186 (1831). >»Cromwell v. Hewitt, 40 N. Y. 491 (1869). "Forest v. Stewart, 14 Ohio St. 246 (1863). "Byles296; Chitty363; 1 Edwards ? 344 ; Story on Bills §? 372, 393; Story on Prom. Notes i 460; Warrington v. Furbor, 8 East 242; S. C, 6 Esp. 89; Phillips V. Astling, 2 Taunt. 306; Gibbs v. Cannon, 9 Serg. & R. 198 (1822) ; National Bank of Michigan v. Greene, 33 Iowa 40 (1871) ; Weller v. Hawes, 19 Iowa 443 (1865). "Hitchcock V. Humphrey, 5 Man. & G. 559; Van Wart v. Woolley, 3 B. & C. 439. 558 GUAKANTY. § 884. Notice of Maker's Default. — ^A guarantor is not, in general, entitled to notice of the maker's default.* At least,, this is true if the guaranty is an absolute one ;^ as well as in the case of an absolute guaranty of a bond.' So, notice of the maker's default is unnecessary, where the original debtor (maker or acceptor) is insolvent.* And such notice is un- necessary to hold the indorser of a non-negotiable instru- ment;* or the guarantor of a bond for a given time unless- terminated by earlier notice ; * or to hold one who guarantees a note to be "good and collectible" for a given time;'' or who guarantees payment on failure of the maker to pay.* So, if one promises to make a note " good, if it is not," it will be sufficient to notify him after failure of suit brought within a proper time against the maker.^ So, notice of the- maker's default is unnecessary in a case of a guaranty given in consideration of forbearance to the principal debtor and indemnity to the guarantor.^" But the necessity for notice may be affected by the presumption of a release of the guar- antor, from long delay to sue the principal debtor, or from; damages arising from such delay.** § 885. Notice of Default — Damage. — The want of notice 'Douglass V. Howland, 24 Wend. 35 (1840) ; Parkman v. Brewster, 15 Gray 271 {I860) ; Foster v. Barney, 3 Vt. 60 (1830) ; Clay v. Edgerton, 19 Ohio St. 649 (1869) ; Gage v. Lewis, 68 111. 604 (1873) ; Tinker.!). McCauley, 3 Mich, 188 (1854) ; Clark v. Merriam, 25 Conn. 576 (1857). 'Hitchcock V. Humphrey, 6 Scott N. R. 540; Cobb v. Little, 2 Me. 261 (1828) ; Noyes v. Nichols, 28 Vt. 160 (1855) ; Peck v. Barney, 13 76. 93 (1841) ; March v. Putney, 56 N. H. 34 (1875) ; Williams v. Granger, 4 Day 444 (1810) ;. Hance V. Miller, 21 111. 636 (1859) ; Gammell v. Paramore, 58 Ga. 54 (1877) ^ Jones V. Train, 11 Vt. 444 (1839) ; Singer Manuf. Co. v. Hester, 71 Mo. 91 (1879) ; Studebaker v. Cody, 54 Ind. 586 (1876). » Sibley v. Stull, 3 Green 332 (N. J. 1836). *Skofield i;. Haley, 22 Me. 164 (1842) ; Holbrow v. Wilkins, 1 B. & C. lOj Atkinson v. Carter, 2 Chit. 403 ; Gibbs v. Cannon, 9 Serg. & E. 202 (1822) j Erwin v. Lamborn, 1 Harring. 125 (Del. 1832). "Ford V. Mitchell, 15 Wis. 334 (1862). 'Farmers, &c.. Bank v. Kercheval, 2 Mich. 504 (1853). 'Bull V. Bliss, 30 Vt. 127 (1867). 'Deck «. Works, 18 Hun 266 (1879); Duncan v. Edgerton, 6 Bosw. 3ft (1860). •Wilson V. Mullen, 3 McCord 236 (1825). "Bead v. Cutts, 7 Me. 186 (1831). , "Second Nat. Bank v. Gaylord, 34 Iowa 246 (1872). NOTICE OF PEOTEST. 659 of maker's default is, in general, no defense to a guarantor unless it has occasioned damages to Hm.^ If he proves that he has sustained damage by such want of notice, he may be discharged thereby.* But his liability will remain, until he makes such proof ;^ and damaiges from want of such notice will not be presumed.* In like manner, the guarantor may waive any discharge for want of notice of the maker's de- fault by his subsequent promise to pay with knowledge of all the circumstances;^ or he may be discharged by a false statement to him on the part of the holder of the note to the effect that it was paid.® If he has waived notice of protest, the burden of proof will not be on the holder to show that the guarantor was not damaged.'' § 886. Notice of Protest — When Necessary. — A guarantor has been held sometimes to be entitled to formal notice of protest. This has been held to be the case, where the maker was solvent at the time of giving the note, and insolvent at its maturity.* So, where he guarantees the payment of a debt secured by bill of exchange;^ or indorses a guaranty of payment on a note.^° So, where the guarantor of a bill is lUnion Bank v. Koster, 3 N. Y. 203 (1850) ; Louisville Mfg. Co. v. Welch, 10 How. 461 (1850) ; Johnson v. Wilmarth, 13 Mete. 416 (1847); Simons v. Steele, 36 N. H. 73 (1858) ; Farrow v. Respess, 11 Ired. 170 (1850) ; Sabin v. Harris, 12 Iowa 87 (1861) ; Puller v. Scott, 8 Kans. 25 (1871) ; Salisbury v. Hale, 12 Pick. 416 (1832) ; Brackett v. Rich, 23 Minn. 484 (1877) ; Second Nat. Bank v. Gaylord, 34 Iowa 246 (1872) ; Levi v. Mendell, 1 Duv. 77 (1863). In Iowa reasonable notice is required by statute, but the guarantor is not discharged for want of notice unless he proves that he is damaged thereby, 1880 R. C. § 2090. 'Wolfe V. Brown, 5 Ohio St. 804 (1855); Woodson v. Moody, 4 Humph. 303 (1843). = Vinal V. Richardson, 13 Allen 521 (1866); Voltz v. Harris, 40 111. 155 (1866). «Beebe v. Dudley, 26 N. H. 249 (1853). ^Reynolds v. Douglass, 12 Pet. 497 (1838) ; Gamage v. Hutchins, 28 Me. 565 (1844). 'Whitaker v. Kirby, 54 Ga. 277 (1875). 'Star Wagon Co. v. Swezy, 63 Iowa 520 (1884). ^Beokwith «. Angell, 6 Conn. 315 (1823); Whiten v. Hears, 11 Mete. 568 (1846). 'Bishop V. Rowe, 3 M. & S. 362. "Greene v. Dodge, 2 Ohio 481 (1826). 560 GUAKANTY. not a party to it.* And it has been held that the want of such notice is presumably a want of due diligence.* Notice of the maker's default has been held in many cases necessary to the maintenance of an action against the guar- antor.^ This has been held in the case of a guaranty of col- lection.* And it is generally necessary, unless the maker is insolvent at the maturity of the paper;" or unless he is in- solvent, and, by reason of such insolvency, the guarantor suffers no damage for want of notice.® On the other hand, it has been held to be necessary, if the maker became insol- vent between the maturity of the paper and the time of demanding payment.'' And in such case the guarantor will be discharged to the extent of the damages sustained by him, and he will be presumed to have suffered damage by such neglect.* The better rule seems to be that in all cases a guarantor is entitled to reasonable notice of the original debtor's de- fault;® although he is not a party to, or named in, the paper guaranteed.^" If, however, he is not damaged by want of such notice, he will remain liable ; and this is provided by statute in lowa.^* What is reasonable notice of the maker's default is a question for the jury to determine under the cir- ' Phillips V. Astling, 2 Taunt. 206. 'Ringgold V. Newkirk, 3 Ark. 96 (1840). 'Gaff u. Sims, 45 Ind. 262 (1873); Lewis v. Bradley, 2 Ired. 203 (1842); Lawson v. Townes, 2 Ala. 373 (1841) ; Montgomery v. Kellogg, 43 Miss. 486 (1870) ; Erwin v. Lamborn, 1 Harring. 125 (Del. 1832). *Kevers v. Howe, 16 Cal. 152 (1860). ^ Lewis V. Brewster, 2 McLean 21 (1839); Gibbs v. Cannon, 9 S. & B. 198 (1822) ; Mayberry v. Sainton, 2 Harring. 24 (Del. 1835) ; Walker v. Forbes, 25 Ala. 139 (1854) ; affirmed, 31 Ala. 9 (1857). 'Reynolds v. Douglass, 12 Pet. 497 (1838), reversing Douglass v. Reynolds, 7 lb. 113. 'Oxford Bank v. Haynes, 8 Pick. 423 (1829) ; Smith v. Bainbridge, 6 Blackf. 12 (1841) I Globe Bank v. Small, 25 Me. 366 (1845). ^Newton Wagon Co. v. Diers, 10 Neb. 284 (1880). "2 Daniel 797; 1 Edwards | 344; Story on Bills ? 305; Thomas v. Davis, 14 Pick. 353 (1833) ; Sandford v. Norton, 14 Vt. 228 (1842) ; Beebe v. Dudley, 26 N. H. 249 (1853) ; Wildes v. Savage, 1 Story 22 (1839) ; Bickford v. Gibbs, 8 Cush. 154 (1851) ; Hall v. Rodgers, 7 Humph. 536 (1847) ; Benton v. Gibson, 1 Hill 56 (S. C. 1833). '"Foote V. Brown, 2 McLean 369 (1841). " Iowa R. C. 1880 g 2090. DILIGENCE IN PKOSECUTING THE MAEEB. 561 cumstances of the case.^ Thus, five or six days after the debt became due has been held to be sufficiently prompt.* On the other hand, a delay of four years, during which time the maker became insolvent, has been held not to be reason- able.* So, a delay of five years after the maturity of the last annual installment has been held to be unreasonable, although the holder of the note was secured by a collateral mortgage.* § 887. Diligence in Prosecuting the Maker — When Neces- sary. — The contract of the guarantor is, in general, condi- tioned upon reasonable diligence in prosecuting the maker or original debtor, and such diligence is, in many States, requisite to the continued liability of the guarantor.' This is so in the case of a guaranty of collection.* And such guarantor is entitled to a diligent prosecution both of the maker and prior indorsers.' And in a suit by one guarantor against another for contribution, laches in prosecuting the maker may be set up as a defense.* Diligent prosecution of the maker has been held necessary, in order to hold one who guarantees the payment of a note, " if the holder fails to re- cover" from the maker;' or who guarantees the payment ' Montgomery v. Kellogg, 43 Miss. 486 (1870) ; Louisville Mfg. Co. ■». Welch, 10 How. 461 ; Wadsworth v. Allen, 8 Gratt. 174 (1851) ; Howe v. Nickels, 22 Me. 175 (1842) ; Jackson v. Yandes, 7 Blackf. 526 (1845). 'Dole V.Young, 24 Pick. 250 (1837). 'Wittiers v. Berrv, 25 Kans. 373 (1881); or three years after maturity, Beeker v. Saunders, 6 Ired. 380 (1846). 'Talbot V. Gay, 18 Pick. 534 (1836). ''Isett V. Hoge, 2 Watts 128 (1833) ; Prentiss v. Danielson, 5 Conn. 175 (1823) ; Anderson v. Stevens, 2 Utah 538 (1879). In Iowa mere lack of diligence on the holder's part in enforcing payment from the maker does not estop the holder from looking to the guarantor. Star Wagon Co. v. Swezy, 63 Iowa 520 (1884). But by statute (Iowa R. 0. 1880 § 2091) the liability of one, who becomes guarantor by a blank indorsement to an in- dorsee or assignee, is conditioned on "due diligence in the institution and prosecution of suit against the maker." «1 Edwards | 331; Omaha Nat. Bank v. Walker, 5 Fed. Rep. 399 (1881); Oumpston v. McNair, 1 Wend. 457 (1828) ; Dyer v. Gilson, 16 Wis. 557 (1863) ; Evans v. Bell, 45 Tex. 553 (1876). 'Moakley v. Riggs, 19 Johns. 69 (1821) ; Loveland v. Shepard, 2 Hill 139 (1841). *Kramph v. Hatz, 52 Penna. St. 525 (1866). 'Jones V. Ashford, 79 N. C. 172 (1878), such guaranty being in effect a, guaranty of collection. VOL. n, ^I* 562 GUAKANTY. of a note "if not collectible by due course of law."^ So, a stranger, who indorses on a note at its maturity a guaranty of payment without protest, is discharged by the holder's failure to prosecute a prior indorser who had funds in the holder's hands sufficient for his payment.^ So, diligence against the maker of a note is necessary to the liability of one who warrants it to be " good,"' or who verbally declares it to be " as good as gold." * ' A distinction is made sometimes between a guaranty of payment and a guaranty of collection, diligence being re- quired in the latter case and not in the former.' On the other hand, it is said that one who guarantees by indorse- ment to pay a note makes himself liable to pay it only on the maker's inability to do so at its maturity, and is therefore entitled to have the maker diligently prosecuted if he is sol- vent.^ So, one who guarantees the collection and payment of a note, " unless it is paid before," is entitled to the use of diligence against the maker.' So, one who undertakes to " save harmless " a lender of money is only liable in case judgment and execution against the borrower fail of obtain- ing payment.* § 888. Diligence — When Necessary. — The guarantor is entitled to have the maker diligently prosecuted, unless he has waived such diligence.* Any negligence causing actual damage to him will effect his discharge ; ^° or any gross negli- gence on the holder's part." So, one who guarantees that a note is " collectible by due course of law," coupled with 'Dwight V. Williams, 4 McLean 581 (1849). 'Hartman i;. First Nat. Bank, 103 Penna. 581 (1883) ; Zahn v. First Nat. Bank, lb. 576. 'Curtis V. Smallman, 14 Wend. 281 (1835). ^Taylor v. Soper, 53 Mich. 96 (1884). "Day V. Elmore, 4 Wis. 190 (1855). «Mizner v. Spier, 96 Penna. 533 (1880). 'Russell V. Buck, 22 Vt. 166 (1839). 'Ward V. Fryer, 19 Wend. 494 (1838). »Newell V. Fowler, 23 Barb. 628 (1857). "Thrasher v. Ely, 2 Sm. & M. 139 (1844). "Thomas v. Davis, 14 Pick. 353 (1833). DILIGENCE. 663 an indemnity for costs, is entitled to have the maker sued, although he may be insolvent.^ And if the holder grants the maker a stay of execution, it is a question for the jury to determine, whether there is negligence amounting to a discharge, the burden being on the holder to prove that the guarantor was not injured by such indulgence.^ A guaran- tor of a note is entitled to have suit brought against the maker, although he is insolvent at the maturity of a note;* or has died insolvent, leaving no administrator;* or has left the State before the maturity of the paper (provided proceed- ings can be taken against him as an absent debtor).* § 889. Diligence — When not Necessary. — On the other hand, many cases hold that a prosecution of the maker is not necessary to the liability of the guarantor;^ or that one who guarantees a note or bill absolutely is not entitled to such diligence.' So, one who indorses a note, "holden with- out demand or notice," will be liable, although the maker continued solvent for some years after the maturity of the note, and was never prosecuted by the holder.* So, an in- dorser for whose accommodation a note was originally made, is an original promisor, and liable absolutely upon it without any previous suit against the maker.^ So, one who guaran- tees the payment and collection of a note " with costs, if any made," is liable immediately upon the principal's default, without any prior action against the principal.'^" So, one who 'Eddy V. Stanton, 21 Wend. 255 (1839). ^Johnston v. Mills, 25 Tex. 704 (I860)." 'French v. Marsh, 29 Wis. 649 (1872); Bosman v. Akely, 39 Mich. 710 (1878). *Taylor v. Bullen, 6 Cow. 624 (1827). * White V. Case, 13 Wend. 543 (1835). "Grant'?;. Hotchkiss, 26 Barb. 63 (1857) ; Eich v. Hathaway, 18 111. 548 (1857) ; Gage v. Mechanics' Nat. Bank, 79 111. 62 (1875) ; Foster v. Tolleson, 13 Rich. 31 (1860) ; Sample v. Martin, 46 Ind. 226 (1874). '1 Edwards ? 330; Williams v. Granger, 4 Day 444 (1810) ; Hance v. Miller, 21 111. 636 (1859) ; Penny v. Crane &c. Mfg. Co., 80 III. 244 (1875). And the holder need not show that the maker was insolvent, Campbell v. Baker, 46 Penna. St. 243 (1863). 'Bray v. Marsh, 75 Me. 452 (1883). 'Knapp V. Parker, 6 Vt. 642 (1834). "Tuton V. Thayer, 47 How. Pr. 180 (1873). 564 GTTAKANTT. guarantees the payment of a note, " according to its terms," becomes liable for its payment at maturity, irrespective of the maker's solvency, and without prior suit against him.' So, one who guarantees a note in consideration of forbear- ance to the maker and of indemnity to himself, is not affected by failure to prosecute the maker.^ So, one who guarantees a note after its maturity, in con- sideration of the transfer to him of land which was mort- gaged as collateral to secure it, is not entitled to have the security first exhausted, although the holder was then in possession of the land for condition broken.' And if one agrees that the person guaranteed shall take security in real estate and he does so, he may still prosecute the guarantor in the first instance without exhausting the security.* So, one who indorses an absolute guaranty of payment on a note is liable upon the maker's default, although the holder neg- lected to enforce a lien against the maker until he became insolvent.^ But where a note was transferred with a col- lateral lien on a boat, and a guaranty conditioned on the holder's " using all proper means for collection," it was held that the condition related to the enforcement of the lien, and that reasonable diligence in this regard was necessary in order to hold the guarantor.* § 890. Diligence — Damage by Negligence. — In many States it is held that a guarantor can only avail himself of want of diligence in prosecuting the maker, if he is damaged by such neglect.^ Thus, if the maker is insolvent at the maturity of the note, he need not be prosecuted to the extreme limit of 'Roberts v. Eiddle, 79 Penna. St. 468 (1875). 'Read v. Cutts, 7 Me. 186 (1831). "Crocker v. Gilbert, 9 Gush. 131 (1851). * Stone V. Rockefeller, 29 Ohio St. 625 (1876), the maker being in this case bankrupt. 'Adams &c. Harvester Co. v. Tomlinson, 58 Iowa 129 (1882). •Brainard v. Reynolds, 36 Vt. 614 (1864). 'Bashford v. Shaw, 4 Ohio St. 263 (1854) ; Gillisham v. Boardraan, 29 Me. 79 (1848); Sabin v. Harris, 12 Iowa 87 (1861); National Bank of Michigan V. Grew, 33 Iowa 140 (1871). See, too, Union Bank v. Coster, 3 N. Y. 208 (1850). WHAT IS DUE DILIGENCE. 565 issuing an execution, and having it returned nulla bona} And even though a note is payable on demand, it will not be necessary to prosecute the maker, if he is insolvent at its maturity.^ So, in the case of a guaranty that the note is "good and collectible."' So, it is not necessary to prosecute the maker by suit if he has absconded;* or has become insolvent and has left the State f or if he has left the State, and the holder is ignorant of his residence, although he might have learned it from the guarantor, and is unable to find any property in the State wnere the parties originally lived and the note was made.^ § 891. What is Due Diligence. — Where the guarantor is entitled to a diligent prosecution of the maker, such prosecu- tion should be begun in a reasonable time and carried on with due diligence.^ This has even been held to imply " the most rapid and vigorous methods of the law."* In another case it is said to mean " by the usual legal remedy."* The holder must exhaust his legal remedy against the maker.^* And in Texas, it is said, must use " every legal endeavor " against the maker, in order to hold a guarantor of collection." What is due diligence is a question of fact, it is said, for the determination of the jury.^^ The bringing of an action and the return of an execution against the maker unsatisfied are 12 Daniel 781; 1 Edwards | 333; Stone v. Rockefeller, 29 Ohio St. 625 (1876) ; Brackett v. Eich, 23 Minn. 484 (1877). And see Camden v. Doremus, 3 How. 515; Mizner v. Spier, 96 Penna. St. 533 (1880) ; Miller v. Berkey, 27 Penna. St. 317 (1856) ; Nesbit v. Bradford, 6 Ala. 746 (1844) ; Jones v. Green- law, 6 Coldw. 342 (1869) ; Koch v. Meehorn, 26 Penna. St. 89 (1855) ; Dana V. Conant, 30 Vt. 246 (1858). 'Forbes v. Rowe, 48 Conn. 413 (1880). 'Sanford v. Allen, 1 Gush. 473 (1848). *2 Daniel 782; 1 Edwards § 335; Cooke v. Nathan, 16 Barb. 342 (1853). 6 Benton v. Gibson, 1 Hill 56 (So. Car. 1833). •Clayton v. Coburn, 42 Conn. 348 (1875). 'Craig V. Parkes, 40 N. Y. 181 (1869); Gallagher v. White, 31 Barb. 92 (1860). * Prentiss v. Danielson, 5 Conn. 175 (1823). »Dyer v. Gilson, 16 Wis. 557 (1863). '"Omaha Nat. Bank v. Walker, 5 Fed. Rep. 399 (1881). "Donly V. Bush, 44 Tex. 1 (1875). "1 Edwards J 334; Jones v. Ashford, 79 N. C. 172 (1878). 566 GUARANTY. sufficient evidence on which a jury may find that due dili- gence has been used/ Due diligence, it is held in North Carolina, requires prosecution of the maker to execution and return of nulla bona} And such facts raise a presumption of due diligence in Pennsylvania to be passed upon by the jury.^ On the other hand, it has been held in New York that a prosecution there to judgment against a maker, who resided and had property in Canada, is not sufficient.* In Connecticut it is not necessary to proceed against the maker's property by attachment.^ And where a guaranty was made on condition of using " all diligence in collection," this was held in Ohio to require only the usual course of law and not proceedings by attachment.^ § 892. What is Due Diligence. — The lapse of a few days merely is not, in general, a want of du§ diligence.' But in some States the statute requires prosecution of the maker at the first term of court.* A guaranty of collection " by due process of law " does not require such prompt suit in the absence of a statute to that effect, but a delay in suing for several years will amount to a want of diligence.' In Ken- tucky a guaranty of " ultimate payment " is satisfied without prosecution commenced at the next term.^" And in Massa- chusetts, where a maker has moved away from the State insolvent, and has been poor and in debt ever since the ma- turity of the note, it has been held sufficient that the holder employed an attorney recommended by the guarantor, but suffered three years to elapse without any suit brought.^^ •Woods V. Sherman, 71 Penna. St. 100 (1872). 'Jones V. Ashford, 79 N. C. 172 (1878). ^Brown v. Brooks, 25 Penna. St. 210 (1855). «Burt V. Horner, 5 Barb. 501 (1849). 'Forbes v. Rowe, 48 Conn. 413 (1880). ^Forest v. Stewart, 14 Ohio St. 246 (1863). But if property attached is lost by defective service of the writ of attachment, it will discharge the guarantor, Beach v. Bates, 12 Vt. 68 (1840.) 'Foster v. Barney, 3 Vt. 60 (1830). 'Nesbit V. Bradford, 6 Ala. 746 (1844). 'Thomas v. Woods, 4 Cowen 173 (1825). '•Ely V. Bibb, 4 J. .T. Marsh. 71 (1830). "Miles V. Linnell, 97 Mass. 298 (1867). WHAT IS NOT DUE DILIGENCE. 567 The fact that the sureties on a note have been discharged by the Statute of Limitations will not avail a guarantor as a defense.^ § 893. What is not Due Diligence. — Under the rule requir- ing due diligence against the principal debtor, in order to bold the guarantor, the following acts have been held to be insufficient, and the guarantor in such case has been dis- charged, viz. : neglecting to publish a summons ordered to be published against the maker as an absconding debtor ;'^ neglecting to subpoena an important witness (although ad- vised of his importance by the guarantor) and thereby incur- ring an adverse judgment;* delaying to bring suit until the third term after the n\aturity of the paper, if damages by reason of such delay are proved by the defendant ;* neglect- ing to get judgment within a given time, for which a bill is expressly guaranteed to be collectible;® refusing a payment offered by the maker after maturity, and delaying suit against him until he had become insolvent.* So, the guarantor will be discharged, if the holder neglects to make demand of the maker, give notice of default, or take any proceeding for five years.'' In general, a delay of three or four years in pro- ceeding against the maker is a want of due diligence;* or even a delay of six months, it has been held, wherfe the maker resides in the same place with the holder.® So, too, a delay of several years, after which the maker has become insolv- ent or has left the State ; ^° or even a shorter period, e. g. ^Worcester Mechanics' Savings Bank v. Hill, 113 Mass. 25 (1872). »Mosier v. Waful, 56 Barb. 80 (1867), "due diligence" being in this caae expressly provided for, and the guaranty being one of payment. 'Sawyer v. Haskill, 18 How. Pr. 282 (1859). * Voorhies v. Atlee, 29 Iowa 49 (1870), against guarantor or maker. 'Wheeler v. Lewis, 11 Vt. 265 (1839). •Sears v. Van Dusen, 25 Mich. 351 (1872). 'Shepard v. Phears, 35 Tex. 763 (1872). 'French v. Marsh, 29 Wis. 649 (1872) ; Vanderveer v. Wright, 6 Barb. 547" (1849). •Craig V. Parkes, 40 N. Y. 181 (1869). "Withers v. Berry, 25 Kans. 373 (1881). 568 GUARANTY. a year or two, followed by the insolvency of the maker before suit.^ § 894. Discharge by Fraud — Extension. — Where a guaran- ^tor can set up fraud on the principal, coupled with want of consideration to himself, it will discharge him from liability to the original payee or his executor.^ So, where he agrees to accept a draft in consideration of another contract, which is broken, he will be discharged ; and in a suit brought by him for the breach of contract his failure to accept the draft cannot be used as a set-off.* So, fraud upon the guarantor^ e. g. by diversion of a check guaranteed for a different and specified purpose, will discharge the guarantor.* But mere failure (without fault of the holder) ,to secure an indorser as agreed will not amount to a discharge.* Nor can the guar- antor avail himself of the principal's fraud as a discharge at suit of a bona fide holder.* An extension granted by the holder to the principal debtor will discharge the guarantor, in general, as it would discharge a surety.' So, too, an extension arranged with the maker's agent.* So, where the maker becomes bankrupt afterward and the guarantor is thereby damaged.' An extension by renewing a bill without the guarantor's knowledge,^" or by taking a new note," will discharge him ; even though the note so taken is payable in one day.^^ So, he will be dis- 'Moakley v. Kiggs, 19 Johns. 69 (1821); Gamage v. Hutching, 23 Me. 565 (1844); Gaff v. Sims, 45 Ind. 262 (1873) ; Dwight v. Williams, 4 McLean 581 (1849). 'Putnam v. Schuyler, 4 Hun 166 (1875). 'Deck V. Works, 18 Hun 266 (1879); Duncan v. Edgertop, 6 Bosw. 36 (1860). •Hidden v. Bishop, 5 R. I. 29 (1857). 'Ashton V. Sproule, 35 Penna. St. 492 (1860). «Mc Williams v. Mason, 81 N. Y. 294 (1865) ; S. C, 6 Duer 276. '2 Daniel 799; 2 Parsons 135; Story on Prom. Notes ? 485; Campbell v. Baker, 46 Penna. St. 243 (1863) ; Hard v. Marple, 2 Bradw. 402 (1878), »Hurd V. Marple, 10 Bradw. 418 (1881). 'Combe v. Woolf, 8 Bing. 156. "Samuel v. Howarth, 3 Meriv. 272. "Hart V. Hudson, 6 Duer 294 (1857) ; Carkin v. Savory, 14 Gray 528 (1860) ; Eussell V. Perkins, 1 Mason 368 (1816). "Fellows V. Prentiss, 3 Denio 512 (1846). But not so a note for the exact term, for which the guaranty was given, Case v. Howard, 41 Iowa 479 (1875). DISCHAEGE BY OTHEB COLLATERAL. 569 charged, if the holder receives part payment and takes a new bill for the balance.^ But an extension for an indefinite time,^ or mere indulgence without definite agreement or con- sideration/ will not discharge a guarantor. An agreement for extension will, however, be presumed from a long delay of four or five years.* But a guarantor will not be discharged by an extension to the maker, if it is given at his own re- quest,^ or is subsequently ratified by him.® § 895. Discharge by other Collateral — Release — Waiver. — Taking part payment and receiving a new bill for the bal- ance has been held not to amount to an extension without some definite agreement for suspension of proceedings on the original debt.' So, taking collateral from the maker without any express extension of the debt will not discharge the guarantor.* Neither will the transfer by the holder of a note, collateral to the original debt guaranteed, amount to a dis- charge.* Where a guaranty relates to notes to be given in payment under a contract for goods to be sold at a place named, mere change of the contract, by changing the place at which the goods are to be sold, will not relieve the guarantor.^" So, the guarantor of an account will not be discharged by the fact that after the principal had died, with such account over- drawn, his executor opened a new account with the same parties, in which he was charged with the interest on the old balance, and deposited other moneys which were not appro- ' Howell V. Jones, 1 C. M. & R. 97. 'Sample v. Martin, 46 Ind. 226 (1874). 'Ashton V. Sproule, 35 Penna. St. 492 (1860). See next chapter as to what constitutes a valid extension. 'Bowman v. Curd, 2 Bush 565 (1866). 'Kennedy v. Goss, 38 N. Y. 330 (1868). •Carkin v. Savory, 14 Gray 528 (1860). 'Goring i;. Edmonds, 6 Bing. 94. For further authorities on this subject see the next chapter. •2 Daniel 799; 2 Parsons 135; Story on Prom. Notes ? 485; Sigourney v. Wetherell, 6 Mete. 553 (1842) ; Norton v. Eastman, 4 Me. 521 (1827). •Penny v. Crane &c. Mfg. Co., 80 111. 244 (1875). '»Fond du Lac Harrow Co. v. Bowley, 54 Wis. 425 (1882). 570 GUARANTY. priated or credited to the principal of such old account.' So, a guarantor will not be discharged by a composition made with the bankrupt principal with his consent or under a waiver of his objections.^ Where an agreement is made for a guaranty, the guarantor is not discharged or the agreement waived by the holder's taking the note without the guar- anty.* But an agreement by the guarantor to indemnify " unconditionally at all times " will amount to a waiver on bis part both of notice of acceptance and of laches.* 'London &c. Bank v. Terry, L. R. 25 Ch. D. 692 (1884). 'Cowper V. Smith, 4 M. & W. 519. 'Star Wagon Co. v. Swezy, 63 Iowa 520 (1884). 'Wells V. Davis, 3 Morr. Trans. 129 (1881) affirming 2 Utah 411. SURETYSHIP EXPRESSED. 571 CHAPTER XXVII. PEINCIPAL AND SUKETY. I. Form of Contract, JI. Liabilitiea of Surety. I. FOKM OF CONTRACT. «96. Express Suretyship—" Surety." S97. " Surety "—For whom. W8. in Instrument. S99. Implied — Character of Signature. 900. Acceptor — Prima Facie Principal. ■901. Accommodation Acceptor. 902. Drawer and Indorser — Joint-Drawers. 903. Accommodation Indorsers. ■904. Joint-Makers. 907. Accommodation Maker. 908. Parol Evidence. § 896. Suretyship Expressed — "Surety." — The relation of principal and surety existing between parties to commercial paper may be expressed in the instrument itself, or implied from the manner or order of the signatures, or left altogether undisclosed. Where it is expressed, this is generally and most naturally done by the use of the word " surety " either in the body of the instrument or as an addition to the signa- ture. The word " surety " added to the name of a party is notice to all subsequent parties of the character in which he signs the paper ; ^ and, it is said, is at least evidence that the paper is not given for value received by him." The liability, however, of a maker or of one of several makers to the payee and subsequent holder is not changed by such addition to his name.^ But where the word "surety" is used, it has been held that there can be no recovery against him without a special averment of his liability.* Where a •1 Parsons 233. «2 Edwards ? 779. ^1 Edwards || 348, 416. * Butler V. Kawson, 1 Demo 105 (1845). 572 PBINCIPAL A^D SUKETY. note is signed by several makers, one of whom adds to his signature the word "security," and another the word "surety," they will be joint-makers as to an indorsee of the note, although sureties between themselves and in their rela- tion to other makers.' The addition of such a word is not,, however, conclusive, and it may be shown by parol evidence that one who signs in such manner is in reality a principal.* Where one of two joint-makers signs with such an addition, both may be sued together by the holder as joint-makers.* So, where the body of the instrument describes one maker as principal and the other as surety, both can be treated as jointly liable to the holder.* So, if a joint note is signed by two makers described in it as principals, and indorsed by them and by two others who are described in the note as sureties, the note being made payable "to the order of our- selves," all of such parties will be liable to the holder as joint-makers.^ So, if one indorses a note as " surety," he will be liable on such indorsement as an original promisor.^ So, in Pennsyl- vania the word " security " written after an indorser's name makes a surety of him.' And the addition of such word has been held to be an alteration converting the indorsement into a suretyship and discharging the indorser.* Where such a word is added to the signature of one of several draw- ers of a bill of exchange, while it leaves him liable as a drawer to the payee and indorsee, it will not leave him so as to an accommodation acceptor;' the drawer's liability to the 'Bank of Orleans v. Barry, 1 Denio 116 (1845); Aud v. Magruder, 10 Cal. 282 (1858). ^Rose V. Madden, 1 Kans. 445 (1863). 'Bank of Orleans v Barry, 1 Denio 116 (1845) ; Hoyt v. Mead, 13 Hun 327 (1878); Inkster v. First Nat. Bank, 30 Mich. 143 (1874); Rice v. Cook, 71 Me. 559 (1880) ; Humphreys v. Crane, 5 Cal. 173 (1855) ; Aud i;. Magruder, 10 Cal. 282 (1858). *Bond V. Storrs, 13 Conn. 412 (1840). ^National Pemberton Bank v. Lougee, 108 Mass. 371 (1871). « Phillips V. Cox, 61 Ind. 345 (1878). 'Marberger v. Pott, 16 Penna. St. 9 (1851). 'Robinson v. Reed, 46 la. 219 (1877). ^Griffith V. Reed, 21 Wend. 502 (1839). " SURETY." 573 acceptor in such case not being on the bill itself, but on an implied contract for indemnity. § 897. " Surety " — For whom. — Where several sign a note as joint-makers, and the word " surety " is added to the sig- nature of the last maker, he is in general a surety for all whose names precede his own, and not a co-surety with the others for the first signer.^ But among themselves the real intention, whether to become surety for one or more of his co-makers, may be shown by parol evidence.^ And it has been held in such a case, that where the second signer was in reality a surety for the first and the note was paid in equal •shares by the second and third, the burden is upon the third signer, in an action for indemnity brought by him against the other two as principals, to show that the second was a principal instead of a surety.^ So, in an action between three persons signing a note in this manner, parol evidence is admissible to show that the last two were in reality sureties for the first.* If a note is signed by three persons. A., B. and C, and the word " sureties " is written opposite the sig- natures of B. and C, they are prima fade sureties for A., but in an action among themselves for contribution parol evidence is admissible to show their true relation.' So, if a note is signed by A., B., C, D. and E., B. adding the words ■" as surety," C. and D. each adding the word " surety," and E. adding the words " as surety for the above," E. is pre- sumptively not a co-surety with the others ; but in an action brought by B. against C, D. and E. for contribution, the contrary may be shown by parol.® So, if a note made by several partners. A,, B. and C, after dissolution of the firm, is signed by A. as principal and by B. and C. and a fourth iSayles v. Sims, 73 N. Y. 551 (1878) ; Salter v. Salter, 6 Bush 624 (1869) ; Sherman v. Black, 49 Vt. 198 (1877). 'Sayles v. Sims, supra. 'Sisson V. Barrett, 2 N. Y. 406 (1849) ; S. C, 6 Barb. 199; and see 2 Ed- wards ? 779. *Hichborn v. Fletcher, 66 Me. 209 (1877). 'Apgar V. Hiler, 4 Zab. 812 (1854) ; Flanagan v. Post, 45 Vt, 246 (1878). 'Harris v. Warner, 13 Wend. 400 (1835). 574 PKINCIPAL AND SURETY. person, D., as sureties, D. will be liable for contribution as a co-surety with B. and C.^ Where the surety adds, under the principal's signature as maker, " I acknowledge myself holden as surety for the payment of the above note," he will be liable as a maker of a joint and several note.'' § 898. Suretyship Expressed in Instrument. — The relation of principal and surety, as we have said, may be expressed in the body of the bill or note. So, the several parties, although bearing such relation to one another, may be described expressly as principals. Thus, several makers of a joint and several note, which describes them " each as prin- cipal," may be principal and surety between themselves, and all principals as to the payee or holder of the paper.^ In such case parol evidence is not admissible against the holder to show one of the makers to be a surety merely.* And the maker cannot in such case prove himself to be a surety, even as against the payee.* So, too, the makers of a note which describes them " all as principals," cannot set up as against the payee that some of them were sureties and known to him to be so.® § 899. Implied Suretyship — Character of Signature. — Where the relation of principal and surety is not expressed in the paper, it may often be implied from the ordinary legal relation of the .parties in their various capacities. Where the names of the parties of a note are placed is in one sense immaterial.'' "One may be a surety merely as between himself and his co-promisor, and yet as to the creditor, both his apparent and actual character be that of principal."* On 'Bain v. Wilson, 10 Ohio St. 14 (1859), although the last surety did not know of the dissolution of the partnership. ^Hunt V. Adams, 5 Mass. 358 (1809) ; 6 lb. 519 (1810). 'Benedict v. Cox, 52 Vt. 247 (1880). ^Benedict v. Cox, supra; Heath v. Derry Bank, 44 N. H. 174 (1862). * Waterville Bank v. Redington, 52 Me. 466 (1864) ; Menaugh v. Chandler, «9 Ind. 94 (1883). 8 Derry Bank v. Baldwin, 41 N. H. 434 (1860). 'Palmer v. Grant, 4 Conn. 389 (1822). *McKinBtry, J., in Harlan v. Ely, 55 Cal. 340 (1880). ACCEPTOE. 575 the other hand, every party to a bill is in the nature of a surety for all those whose liability on the bill is prior to his.^ The relation of the parties to a bill or note is presumed to be that -which is shown by the order in which their names appear.^ And, in the absence of special agreement between them, their relation and liabilities are to be determined by the face of the paper.^ Even where a note is transferred after its maturity, the relation of principal and surety will not be presumed to be known, if it is not disclosed by the instrument.* The par- ties to a bill or note may, however, be co-sureties, notwith- standing the form of the instrument indicates a different relation.^ But the intention to assume such a relation should be supported by an agreement between the parties to that effect.® What character they have agreed to assume towards one another is a question of fact for the jury to determine.'' But it is not enough to aver that the payee of a bill knew one of the drawers to be a surety for his co-drawer, without averring that the bill was actually delivered and received with that understanding.* § 900. Acceptor — Prima Facie Principal. — The ordinary relation, as we have seen, between the parties to a bill of exchange makes the acceptor for value the principal debtor and all other parties sureties for him.* If the holder, there- fore, discharges or releases the drawer of a bill, it will not release the acceptor.'" So, if he gives time to the drawer he will not discharge the acceptor." So, an accommodation drawer and an accommodation acceptor are not co-sureties, 'Abercrombie v. Knox, 3 Ala. 728 (1842). ^ Whitehouse v. Hanson, 42 N. H. 9 (1860). 'Hillegas v. Stephenson, 75 Mo. 118 (1881). *1 Parsons 240. sjenson v. Paxton, 22 U. C. C. P. 505; S. C, 23 lb. 489. «McCune V. Belt, 45 Mo. 174 (1869). 'Robinson v. Lyle, 10 Barb. 512 (1857). "Manley v. Boycot, 2 El. & Bl. 46. 'Chitty 463; Clark v. Devlin, 3 Bos. & P. 363. "Howard Banking Co. v. Welchman, 6 Bosw. 280 (I860)' "Van Alstyne v. Sorley, 32 Tex. 518 (1870). 576 PRINCIPAL AND SURETY. and the former is not liable to the latter for contribution.^ So, the indorser of a bill as a surety for the acceptor is enti- tled to exoneration or indemnity from him and to subroga- tion as to securities given by him to the holder of the bill." If the holder, after recovering judgment against the acceptor of a bill, releases him, he will thereby discharge one who drew and indorsed the bill for the acceptor's accommodation.' § 901. Accommodation Acceptor — Principal or Surety. — But if the acceptor is an accommodation party, his rela- tion to the drawer, accommodated by his acceptance, is more open to question. It is, however, established that at law the accommodation character of the acceptance does not change the position of the acceptor as principal debtor on the bill.* He is still principal as to the hglder of the bill,' even though his accommodation character is known to the holder.® And it is therefore held that giving time on the holder's part to the drawer will not discharge an accommo- dation acceptor.' And this is so, although the holder had notice of the accommodation character of the acceptance.* So, if the holder releases the drawer, he will not thereby dis- charge an accommodation acceptor,' especially if he did not know the character of the acceptance.^" But it was formerly held that an accommodation acceptor was a surety at law as well as in equity, and therefore dis- charged by an extension given to the drawer;" and that, on 'Barnet v. Young, 29 Ohio St. 7 (1875). 'Duncan v. North and South Wales Bank, L. R. 6 App. Gas. 1 (1880). "Case V. Hawkins, 53 Miss. 702 (1876.) 'Byles 248; Fen turn v. Pocock, 5 Taunt. 192, 1 Marsh. 14; Carstairs v. RoUeston, 5 Taunt. 551, 1 Marsh. 207. ''Van Alstyne v. Sorley, 32 Tex. 518 (1870). ^Byles 248; 2 Daniel 346; Pentum v. Pocock, supra; Price v. Edmunds, 10 B. & C. 578 ; Norris v. Norris, 3 B. & Ad. 41. 'Baggett V. Axmore, 4 Taunt. 730; Fentum v. Pocock, 5 lb. 192; Lam- bert V. Sanford, 2 Blackf. 137 (1828). 'Cronise v. Kellogg, 20 III. 11 (1858). 'Farmers' and Mechanics' Bank v. Eathbone, 26 Vt. 19 (1852). "Harrison v. Oourtauld, 3 B. & Ad. 36. ''Laxton v. Peat, 2 Campb. 185. DRAWEE AND INDOKSER. 677 the other hand, an extension to the acceptor in such case would not discharge the drawer, notwithstanding their appa- rent relation to one another on the paper.^ In equity an accommodation acceptor is a surety for the drawer as against all parties with notice of his accommodation character.^ And he has been held to be a surety for the drawer in this country.^ And therefore discharging him will not effect a discharge of the drawer.^ So, too, giving an extension to him will not discharge the drawer.* But giving an exten- sion to the drawer will discharge the accommodation ac- ceptor, if the character of the acceptance is known to the holder who gives the extension." So, if an accommodation acceptor pay the bill, he is entitled by subrogation to all securities received. by the holder of the bill from the drawer,'' as well as to re-imbursement or indemnity at the hands of the drawer,* § 902. Drawer and Indorser — Joint-Drawers. — In like manner the relation of drawer and indorser implies a surety- ship on the part of the indorser for the drawer or maker. An extension granted to an indorser will, therefore, not in general discharge the maker.' So, the accommodation drawer of a check will not be discharged by an extension to the accommodated payee.'" On the other hand, an accommo- dation drawer and an accommodation indorser have been held to be co-sureties for the acceptor, and, as such, entitled to contribution between themselves.^' If an accommodation 'Byles 248; Chitty 471; Collott ■;;. Haigh, 3 Campb. 281; Clark v. Noel, lb. 411. 'Byles 248; Bailey v. Edwards, 4 B. & S. 761 ; S. C, 34 L. J. Q. B. 41. 'Byers v. Franklin Coal Co., 106 Mass. 181 (1870); First Nat. Bank v. Morris, 1 Hun 680 (1874). *Sargent v. Appleton, 6 Mass. 85 (1809). ^Deversy v. Moor, 22 111. 330 (1859). "Meggett V. Baum, 57 Miss. 22 (1879). ' Wodehouse v. Farebrother, 5 El. & Bl. 277. See, too, 19 and 20 Vict. o. 97 § 5. «Kegney «. Vanzandt, 5 Grant U. Q. Ch. 494. "Carr v. Lewis, 20 N. Y. 138 (1859). "Murray v. Judah, 6 Cow. 484 (1826). "Edelen v. White, 6 Bush 408 (1869). T01-. II. ■^M 578 PEINCIPAL AlfD SURETY. acceptor pays a bill, knowing that one of tWo drawers is a surety for the other, it has been held that he may neverthe- less look to both as principals, and bring his action for re-imbursement against both.^ But this has been denied in New York, on the ground that the drawer was only liable on an implied contract to the accommodation acceptor, and that under the Statute of Frauds his sureties were not liable.* So, where a bill is drawn by A., B. and C, B, signing as " surety," and C. " as surety for the above surety," and the bill is taken up by the acceptor without funds, by arrange- ment with the principal drawer A. unknown to B., and is afterward paid by C, he cannot look to his co-drawer B., "the above surety."^ § 903. Accommodation Indorsers. — If one indorses a note for the maker's accommodation, he is a surety for the maker and not a guarantor.* And in Louisiana, where one who is not otherwise a party to a note puts his name on the back of it, he is prima facie a surety and not an accommodation indorser.* So, we have seen that in Georgia, at least, one who indorses a note at the time it was made, not being the payee, is by statute a surety.^ But in the absence of an express contract to that effect, accommodation indorsers are not co-sureties, and their liability is a successive one in the order of their signatures.' So the latter of two accommoda- tion indorsers is presumed to have indorsed on the strength of the earlier indorsement, and not as a co-surety with him for the maker.* In general, in the absence of an agreement changing their liability, they are liable to one another as 'Dickerson v. Turner, 15 Ind. 4 (1860); Suydam v. Westfall, 4 Hill 211 (1843) ; S. C, 2 Denio 205 (1845). 2 Wing V. Terry, 5 Hill 160 (1843). 'Wright V. Garlinghouse, 26 N. Y. 539 (1863). 'Norton v. Hall, 41 Vt. 471 (1868). 'Penny v. Purham, 1 La. An. 274 (1846). «Good V. Martin, 5 Otto 90 (1877) ; Camps v. Simmons, 62 Ga. 73 (1878) ; and see supra i 839. 'McCune v. Belt, 45 Mo. 174 (1869). ^Stiles V. Easman, 1 Ga. 206 (1846). But as to the effect of the recent statute, see Freeman v. Cheney, 46 Qa. 14 (1872). JOINT-MAKEBS. 579 indorsers as their names appear.^ And the fact that they are aware of the accommodation character of one another does not amount to an agreement between them for a joint liability as co-sureties.^ Each is liable to the holder in his order for the whole bill or note.^ And an accommodation indorser is not entitled to a summary judgment against the principal under a statute providing for such judgment in favor of a surety.* There is, therefore, no right of contribution between suc- cessive accommodation indorsers.^ But between themselves they may prove an agreement to that effect ; ° and will be co-sureties, if they indorse with that understanding.'' So, one may show as against the others an agreement with them that he should be liable only as surety for them on their default.* This has been shown in a case where the note sued upon was given in renewal of a note signed by the same indorsers in reverse order.^ Where such an agreement is proved, the several accommodation indorsers are entitled to contribution as against one another.^" And this has been held to be the case in Georgia under the statute." § 904. Joint-Makers. — Where it is intended that the surety who signs a note shall be liable only to the payee, and not to subsequent holders, he should indorse the note and not sign it as maker.'^^ If several sign as makers, they are all, on the face of the note, principals, and as such equally liable to the payee." On the other hand, if A., B. and C. sign a note for 'McNeilly v. Patchin, 23 Mo. 40 (1856). ''Kirschner v. Conklin, 40 Conn. 77 (1873), although the original note, which the one in question renewed, was signed by them in reverse order. ^Syme v. Brown, 19 La. An. 147 (1867). *Moody V. Findley, 43 Ala. 167 (1869). "Kirschnej: v. Conklin, supra. ^Easterly v. Barber, 66 N. Y. 433 (1876). 'Niblock V. McGregor, 12 U. C. C. P. 566. "Mitchell V. English, 17 Grant U. C. Ch. 303. 'Clipperton v. Spettigue, 15 Grant U. C. Ch. 269. '"McKelvey v. Davis, 17 Grant U. C. Ch. 355. "Freeman v. Cheney, 46 Ga. 14 (1872). "Suydam v. Westfall, 2 Denio 205 (1845). "Schooley v. Fletcher, 45 Ind. 86 (1873). 580 PRINCIPAL AND SURETY. money which is borrowed to take up a previous note made by A. to B. and indorsed by C, C.'s relation to the paper will be that of a surety, whether for A. or for A. and B.' Where several sign a note as joint-makers, and the surety- ship does not appear, and one who claims to be a surety makes no request to have a special judgment entered, it will not be error to enter up judgment against all as principals.^ So, where two give their joint note for money borrowed and received by them in equal shares, they will be liable jointly as principals, each, for the whole, and not as sureties for one another.^ So, if two persons make a joint and several note, they will be liable to the payee as principals, and cannot set up against him their relation to one another as principal and surety.* And this is true as against a bona fide holder of the note, even where two of four makers had already paid half of the note expressly "as their share." ^ And even if the relation of joint-makers to one another as principal and surety is known to a guarantor, who pays the note, they will all remain liable to him as principals.* The payee of a joint and several note cannot be required to treat one maker as principal and another as surety without his express assent as a part of his contract.' § 905. Joint-Makers. — Between themselves, however, joint- makers who were both originally principals may, by subse- quent agreement, assume the relation of principal and surety.* But one joint-maker does not become surety for his co-makers by agreeing that the note shall be paid out of funds due him 1 White V. Van Horn, 19 Iowa 189 (1865).* Toot V. Sprague, 12 Kans. 155 (1874). 'Small V. Older, 57 Iowa 326 (1881). *Shriver v. Lovejoy, 32 Cal. 574 (1867). 'Missouri Loan Bank v. Garner, 1 Mo. App. 200 (1876). 'Hamilton v. Johnston, 82 111. 39 (1876). 'Manley v. Boycot, 2 El. & Bl. 46; and where he signs a note after the others, he may make himself liable as principal to the payee, without get- ting the rights of a surety as to the others, Lunt v. Silver, 5 Mo. App. 186 (1878). 'Vary v. Norton, 6 Fed. Bep. 808 (1881) ; Moore v. Topliflf, 107 111. 241 (1883) ; Harlan v. Ely, 55 Cal. 340 (1880). JOINT-MAKERS. 581 upon a public contract, although the note was given for his benefit for the purpose of anticipating a payment on such contract not yet due.^ Where it appears that the payee refused to accept a note until it was signed by a second maker, it may be found by the jury as a fact that such sec- ond maker was a surety.^ So, where a note was given by two for goods sold to one, who gave part of them to his co-maker, the latter was held to be a surety/ So, where a second maker signs a note, reading " I promise to pay to the order of myself," in order to procure its acceptance as a col- lateral, he will be liable as a surety for the first signer.* But if the payee of a note already signed by two makers, of whom the latter is a surety, is required, on obtaining a dis- count of it, to add his signature as joint-maker, he will not thereby become a co-surety with the original surety, but can look to him as a principal for his indemnity.^ An accom- modation joint-maker is, however, a surety as regards his co-maker.* And there is no substantial distinction between their relation to one another and that of an accommodation acceptor to the drawer who is accommodated.' At common law, where two who are principal and surety become joint-obligors and the surety survives, he becomes liable to the holder for the payment of the whole debt on the death of the principal, as in the case of any other joint- obligor.* This rule is changed in Indiana by statute, and the death of a joint-maker who is a surety will not discharge his estate from liability on the joint note.® But if several ^Schlicker v. Gordon, 74 Mo. 534 (1881). ■* 'Guidrey «. Vives, 3 Mart. (n. s.) 659 (1825). 'Fraser v. McOonnell, 23 Ga. 368 (1857). 'First Nat. Bank v. Fowler, 36 Ohio St. 524 (1881). 5 Bowser v. Eendell, 31 Ind. 128 (1869). ^Barron v. Cady, 40 Mich. 259 (1879). 'Meggett V. Baum, 57 Miss. 22 (1879). 'Moore v. Gray, 26 Ohio St. 525 (1875). So, e converso, the principal on the death of the surety, Getty v. Binsse, 49 N. Y. 385 (1872) ; and if the surety is only liable on the instrument itself, his estate will be discharged from further liability by his death before that of the principal joint- maker, lb. '1876 K. S. 309; Redman v. Marvil, 73 Ind. 593 (1881) ; McCoy v. Payne, 68 lb. 327 (1879) ; Hudelson v. Armstrong, 70 lb. 99 (1880). '582 PRINCIPAL AND SURETY. give a note as joint-makers, the dftitnissal of a suit as to one will not effect a discharge of the others, unless the relation of principal and surety exists between them.^ Nor will an extension to one joint-maker discharge the others as such.* § 906. Joint-Makers. — Joint-makers will not be presumed to be sureties, and if they do not appear or are not known to be such, an extension to one who is principal will not dis- charge another who is surety;^ especially where the exten- sion is not founded upon a valid consideration.* Joint- makers are in law joint-debtors, although one is known to be a surety of the other. And the surety cannot set up as a defense at law that the holder granted an extension to the principal.^ Where the relation of suretyship is not disclosed on the face of the paper, the surety's remedy for an exten- sion granted to the principal is an equitable one.* And in equity he will be entitled to a discharge against a holder granting an extension with knowledge of the relation exist- ing between the makers.'' But it is held that knowledge of their relation on the part of the payee will be presumed, and that the surety will be prima facie discharged by an exten- sion to the principal maker as against the payee.* § 907. Accommodation Maker. — An accommodation maker of a note is, in like manner, a principal at common law f and liable, of course, to a bona fide holder as principal, and not as surety.^" He is therefore not entitled to a discharge by reason of want of diligence on the holder's part in prosecuting ' McCarter ji Turner, 49 Ga. 309. ^Roberts uBane, 32 Tex. 385 (1869). = Wilson V. Foot, 11 Mete. 285 (1846) ; Mullendore t). Wertz, 75 Ind. 431 (1881). •Albright v. Griffin, 78 Ind. 182 (1881). 5 Price V. Edmunds, 10 B. & C. 578; Perfect v. Murgrave, 6 Price 111; Manley v. Boycot, 2 El. & BI. 46 ; Anthony v. Pritts, 16 Vroom 1 (1883) ; Yates V. Donaldson, 5 Md. 389 (1854). i 'Farrington v. Gallaway, 10 Ohio 543 (1841). 'Byles 249; Hollier v. Eyre, 9 01. & F. 45; Davies v. Stainbank, 6 DeG. M. & G. 679 ; Barron v. Cady, 40 Mich. 259 (1879) ; Stillwell v. Aaron, 69 Mo. 539 (1879). ^Champion v. Robertson, 4 Bush 17 (1868). 'Carstairs v. RoUeston, 5 Taunt. 551; S. C, 1 Marsh. 207. "First Nat. Bank v. Morgan, 6 Hun 346 (1876). PAEOL EVIDENCE ADMISSIBLE BETWEEN PARTIES. 583 the payee, although a surety would be/ And he cannot, in a court of law, claim a discharge by reason of an extension given to the real principal.^ Even at the suit of a holder with notice he is in law a principal;* and an extension by such holder, it has been held, will not discharge him.* The contrary has, however, been held.° But, as in other cases, such extension will not amount to a discharge, unless there is a distinct agreement for time." If the accommodation maker is known to be such, it has been held that he is a surety, and therefore discharged by a surrender of collateral by the holder of the note to the principal and indorser.'' Where a new firm, on a change in the membership of the original firm, assumes the debts of the old partnership, and indorses in its own name a note made for such debt by the original firm, the makers of such note will be substantially accommodation makers and as such sureties for the in- dorser.' § 908. Parol Evidence Admissible Between Parties. — In general, the relation of parties to one another may be shown by parol in an action between themselves.^ Thus, where two appear on the face of a note as guarantors, it may be shown between themselves that one is principal and the other surety.^" So, where several. A., B. and C, sign a note as joint-makers, B. signing as a surety for A. and being induced 'Hansbrough v. Gray, 3 Gratt. 356 (1846). ^Anthony v. Tritts, 16 Vroom 1 (1883). ='Byles 248; Nichols v. Norris, 3 B. & Ad. 41. *Clopper V. Union Bank, 7 Harr. & J. 92 (1826). ^Taylor v. Burgess, 5 Hurlst. & N. 1 ; Valley Nat. Bank v. Meyers, 17 N. B. R. 257. "Ward W.Wick, 17 Ohio St. 159 (1867). 'Guild V. Butler, 127 Mass. 386 (1879). SMorss V. Gleason, 2 Hun 31 (1874) ; Williams v. Boyd, 75 Ind. 286 (1881). »2 Daniel 348; 1 Parsons 233; Eobison v. Lyle, 10 Barb. 512 (1857); Thompson v. Taylor, 12 E. 1. 109 (1878) ; Oldham v. Brown, 28 Ohio St. 41 (1875) ; Kennedy «. Evans, 31 111.- 268 (1863) ; Paul v. Berry, 78 lb. 158 (1875) ; Lacy v. Lofton, 26 Ind. 324 (1866) ; Summerhill v. Tapp, 52 Ala. 227 (1875) ; Blake v. Harvey, 1 U. C. C. P. 417 (1852). So, in an action for con- tribution on an official bond, the defendant may show that he was not a co-surety, but that the plaintiff had agreed to indemnify him, Barry v. Ean- eom, 12 N.Y. 462(1855). '"Water Power Co. v. Brown, 23 Kans. 676 (1880). 584 PRINCIPAL AND SURETY. to sign by A.'s fraudulent representation that C. would sign as his co-surety, and C. afterward actually signing as surety for A. and B., parol evidence is admissible between B. and C. to show their actual relation to one another.^ And such evidence is admissible inter partes, although their relation is prima facie that which appears on the face of the instru- ment,^ e. g. though they are apparently joint-makers.^ And where a joint and several note is signed by three persons, of whom the last signs as a surety, he may show as against the others that they were both principals.* So, where four persons sign a note, the two last adding the word " surety " to their signature, and the note being paid by the last of them, it may be shown in an action for contribution brought by him against the two first-named makers, who signed without any such addition to their names, that the second of them was a surety for the first and therefore not liable as co-principal to the plaintiff, although this fact was not known to the plaint- iff at the time the note was made.^ But where several sign a note after the principal at differ- ent times at his request, they are cO-sureties and liable as such to contribution, and at suit of one of their number who signed with that understanding, they cannot show a different relation by parol.® At suit of an immediate indorsee or of the original payee it has been held that a blank indorsement may be explained by parol.^ But where indorser and in- dorsee are alleged to be co-sureties, an agreement to that effect must be proved by the party making the allegation.* 'Adams v. Flanagan, 36 Vt. 400 (1863). 'Drummond v. Yager, 10 Bradw. 380 (1882); Lord v. Moody, 41 Me. 127 (1856). 'Oldham v. Brown, 28 Ohio St. 41 (1875). So, though both signed ex- pressly as sureties, Mansfield v. Edwards, 136 Mass. 15 (1883). •Coleman v. Norman, 10 Heisk. 590 (1873). 'McGee v. Prouty, 9 Mete. 547 (1845). 'Bobbitt V. Shryker, 70 Ind. 513 (1880) ; Norton v. Coons, 6 N. Y. 33 (1851). 'Greenwault v. McDowell, 65 Penna. St. 464 (1870).' For a full considera- tion of the admissibility of parol evidence to explain indorsements the reader is referred to \ 778 et. seq., supra. 'Sweet V. McAllister, 4 Allen 353 (1862). PAEOIi EVIDENCE ADMISSIBLE AGAINST THE PAYEE. 585 Several who sign a note may prove their relation to one another to be different from that which appears, in law as well as in equity, although the note is under seal.^ And a declaration of the intention of the party, made at the time of signing the paper, is admissible between the immediate parties as evidence of their relation.^ So, the declaration of one who signs as an agent, and whose authority is afterward ratified by his principal.^ § 909. Parol Evidence Admissible against the Payee. — At suit of the payee of a note parol evidence is admissible to show the relation of the original parties.* And the allega- tion of two out of three makers of a joint and several note that they were sureties for the first maker has been held not to contradict the note.^ So, where an extension of time has been granted to one debtor by the payee, it is competent for the others to show by parol evidence that they are mere sure- ties and entitled by such extension to a discharge from their liability.® Where all appear on the face of a note to be makers, an agreement changing any of them into sureties must be strictly and clearly proven. In proceedings of an equitable character such evidence is admissible at suit of the payee, and any change of the principal's liability by subse- quent agreement between the payees (one of whom was also the principal debtor and a co-maker of the note) will dis- charge the sureties.'' So one joint-maker may show as against the payee of a note that he is a surety, and therefore discharged by forbearance until the Statute of Limitation ^Rogers v. School Trustees, 46 111. 428 (1868). 'Oldham v. Brown, 28 Ohio St. 41 (1875). 'Paul V. Berry, 78 111. 158 (1875). *Dicker8on v. Board of Commissioners, 6 Ind. 128 (1855). 'Pridgen v. Buchannon, 27 Tex. 589 (1864) ; Otis v. Storch, 1 Eastern Kep. 461 (R. 1. 1885). "Mariners' Bank v. Abbott, 28 Me. 280 (1848) ; Wallace v. Souther, 2 Can. Sp. Ct. 598 (1878). 'McMicken v. Webb, 6 How. 292 (1848). So, in England, such defense may be made as an equitable plea by 17 and 18 Vict. c. 125 ; Greenough v, McClelland, 2 El. & El. 424; the surety claiming a discharge in this case by leason of an extension granted to the principal. 586 PRINCIPAL AND SURETY. ha-d run against his liability, his subsequent renewal being held to be without consideration and not binding upon him.^ But when a surety relies upon such discharge, he must not only prove that he was a surety, but that the payee had knowledge of that fact, if it does not appear on the paper.* If the fact is known to the payee, parol evidence is admissi- ble against him to show such party to be a surety.* This is true as to a joint and several note signed by two persons without disclosing such relation,* or a joint note.° And a surety may in such case show by parol that he is a surety, and as such discharged by an extension to his co-maker, who was the principal." And such evidence is admissible in case of a joint bond also,^ or of an agreement under seal,* or of an indorsement made with the intention and understanding that 'Day V. Billingsby, 3 Bush 157 (1867). 'Torrence v. Alexander, 85 N. C. 143 (1881). ^ Vary v. Norton, 6 Fed. Rep. 808 (1881) ; McCarter v. Turner, 49 Ga. 309. 'Carpenter v. King, 9 Mete. 511 (1845). 5 Coats V. Swindle, 55 Mo. 31 (1874) ; Grafton Bank v. Kent, 4 N. H. 221 (1827) ; Irvine v. Adams, 48 Wis. 468 (1879) ; Bank of St. Mary's v. Munford, 6 Ga. 44 (1849). " The evidence does not impair or defeat any of the plaint- iff's rights as growing out of the contract itself, but it establishes a fact which was well known to the plaintiff at the time the contract was made, and which, taken in connection with the other fact that he neglected to sue within the time prescribed by law, after notice to do so, defeats his remedy against the defendants," Warner, J., supra, 6 Ga. 56. «Hubbard v. Gurney, 64 N. Y. 457 (1876). "The confusion and appa- rent conflict in the authorities must, I think, have originated in tlie idea that defenses of this character were equitable in their nature and could only be available in a court of equity. When it was conceded that they were equally available in a court of law, it is difficult to find a reason for excluding the same evidence at law that is admissible in equity. However this may be, and without invoking any equitable ruIe,.A conclusive answer to the objection to this evidence in any court, in my opinion, is that it does not tend to alter or vary either the terms or legal effect of the written instrument. * * * 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 to the other party of the fact. If this is shown aliunde, it is equally effective," Church, C. J., supra, p. 463. The contrary was held in Campbell v. Tate, 7 Lans. 370 . (1873). So, at the suit of a payee with knowledge, where it is said by Gil- bert, J., that "it must be regarded as still an open question whether the evidence was not admissible," Benjamin v. Arnold, 2 Hun 447 (1874) ; 8. C, 5 Thomp. & C. 54. But these cases were both overruled in Hubbard v. Gurney, 64 N. Y. 457, supra. ' Davis V. Barrington, 30 N. H. 517 (1855). «Burke v. Cruger, 8 Tex. 66 ; S. C, 11 lb. 694 (1854). PAROL EVIDENCE, 587 the indorser should be a surety.^ So, where an indorsement by a third party at the time a note is made makes the indorser prima facie an original promisor, he may show by parol evidence that he is a surety as against a payee with notice of the fact.^ § 910. Parol Evidence Admissible against Party with No- tice. — In general, such evidence is available in favor of an undisclosed surety against any party to the bill or note who has notice of his actual character;^ although he may be in form and on the face of the note a joint-maker.* So, he may show that he is an accommodation maker, and was known to be such by the holder, and discharged by the act of such holder in releasing collateral securities held by him ;^ or that he is an accommodation acceptor, and known to be such, and discharged by an extension granted to the drawer, who was the principal debtor.* Such evidence is likewise available against a purchaser who takes the paper after its maturity with notice.' § 911. Parol Evidence — When Inadmissible. — Such evi- dence is, of course, inadmissible against a bona fide holder who takes the paper without notice of any such undisclosed relation between the parties.* In such case the apparent relation between indorsers cannot be varied by parol.* This has been held to be the case also as against a subsequent surety, who signs a note after other signatures, without ex- planation as to their character, and believing them to be joint-principals.'" So, parol evidence that one of several 'Brooks V. Thacher, 52 Vt. 559 (1880). ^Currier v. Fellows, 27 N. H. 366 (1853). '2 Daniel 350; 1 Edwards ? 419; 2 i6. ? 781; 1 Parsons 233; Pooleyv.^ Harradine, 7 El. & Bl. 431; Home v. Bodwell, 5 Gray 457 (1855) ; Goodman V. Litaker, 84 N. C. 8 (1881) ; Harris v. Brooks, 21 Pick. 195 (1838). •Harrington v. Wright, 48 Vt. 427 (1876). 'Guild V. Butler, 127 Mass. 386 (1879). «Meggett V. Baum, 57 Miss. 22 (1879). 'Perry v. Hadnett, 38 Qa. 103 (1869). «0rvi8 V. Newell, 17 Conn. 97 (1845). 'Roberts v. Masters, 40 Ind. 461 (1872). "McMahan v. Geiger, 73 Mo. 145 (1880). 588 PRINCIPAL AND SURETY. joint-makers is merely a surety, is not admissible against a payee who took the paper without any knowledge of such relation.^ It has been often questioned whether one of several mak- ers of a joint and several note can in any case show by parol in an action at law that he is merely a surety and as such entitled to be discharged by an extension given to his co-maker and principal;^ although the fact of the makers holding such relation to one another would constitute a good defense in equity.* This is rather a question as to form of defense than as to admissibility of evidence. It is not suffi- cient as against the original payee to aver that the makers stood in such relation and that this was known to the payee, without averring that the paper was actually delivered and received with that understanding.* Where law and equity procedure are strictly distinguished, it has been held that one joint-maker cannot show by parol, in a suit at law brought by the payee, that he was a surety and discharged by the payee's extension to the principal maker, although the relation of principal and surety was known to the payee at the time the note was made.° 'Roberts v. Bane, 32 Tex. 385 (1869). But see, contra, Branch Bank v. James, 9 Ala. 949 (1846) ; or against the obligee of a bond, Ashbee v. Pid- duck, 1 M. & W. 564. 'Chitty 470; Price v. Edmunds, 10 B. & C. 578 (1830). This has also been suggested in Strong v. Foster, 17 C. B. 201. Both of these cases were, how- ever, decided upon another point, viz., that the alleged indulgence or want of diligence was not such as would discharge a surety in any court. 'Davies v. Stainback, 6 DeG. M. & G. 679. *Manley v. Boycot. 2 El. & Bl. 46 (1853). "Evidence may be ^iven by parol of an agreement at the time a bill of exchange is drawn and indorsed which is consistent with the written instrument; as, for example, that a bill of exchange is indorsed and handed over for a particular purpose, with- out giving the bailee the usual rights of indorsee of the bill of exchange. But if the payee of a joint and several promissory note made in the com- mon form by two may be placed in the situation of treating the one as surety for the other, this can only be by his express assent to do so when the note was delivered to him," Lord Campbell, C. J., supra p. 56. But in Greenough ■ . McClelland, 2 El. & El. 424, the payee's assent was presumed from his knowledge of the relation of the makers, without other express agreement. 'The defendant being left in such case to his equitable remedy, Anthony V. Fritts, 16 Vroom 1 (1883). "The subject may be said to belong to the vexed questions of the law, for the decisions relating to the matter are much in conflict. It is said in the text books, and the observation appears PAROL EVIDENCE. 589 And a surety cannot show by parol that it was under- stood between him and the payee that he should not be liable to pay the note.^ So, one of the makers cannot, it has been held, show himself to be a surety, at suit of a payee having knowledge of that fact, and claim a discharge from liability for want of demand and notice of dishonor;^ even though in signing the note as a joint-maker he has added the word " surety " to his name.^ So, where several sign a joint and several note, without any suggestion of their character as surety, it has been held that they cannot set this up, even at suit of a payee who has notice of the fact.* to be justifiable, that the weight of American authorities is in favor of the admissibility of the defense interposed in this case. But this doctrine is, I think, in the main the product of the union of the legal and equitable sys- tems so generally prevailing in this country, and it is opposed not only to correct theory, but to a series of judgments in the English courts. * * * The plaintiff had knowledge that the defendant was an accommodation maker ; but he did not deal with him as such surety. If he had been asked to do so it is quite likely he would have refused to accept so irregular and imperfect an undertaking. What he did was to take from him a direct promise to pay this money at a given date," Beasley, C. J., supra. And see Yates V. Donaldson, 5 Tfid. 389 (1854). 'Dendy v. Gamble, 59 Ga. 434 (1877). This being plainly a variance of the contract. 'Kritzer v. Mills, 9 Gal. 21 (1868). "And V. Magruder, 10 Cal. 282 (1858). *Damon v. Pardow, 34 Cal. 278 (1867). 590 PKINCIPAL AND SURETY. II. LIABILITIES OF SURETY. 912. Liability — In General. 913. Admits Prior Signatures. ■ 914. Demand — Not Necessary. 915. Capacity of Principal — Affecting Surety. 916. Delivery — Conditions. 917. Diversion. 918. Fraud Discharges Surety. 919. as a Defense. 920. Consideration for Suretyship. 921. Defense of Usury. 922. Illegality. 923. Set-Off. 924. Statute of Limitations. 925. Judgment and Merger. § 912. Surety's Liability — In General. — The contract of a surety is, in general, to be strictly construed and not to be extended adversely to him beyond such construction. -"^ Thus, if a second maker adds to his signature the words "surety ninety days- from date," he will become liable for the solv- ency of the first maker for ninety days and no more.'^ So, if a note, made by A. as principal and B.'as surety, contains a memorandum below the signatures that A. is " not to be compelled to pay the note before April 1st," this will ,be a part of the contract, inuring to the benefit of the surety also.* If a surety authorizes an agent to sign a note for him as surety, it will not authorize the agent to sign his name as one of the makers of a joint and several note.* But if a surety, like any other party, signs an instrument leaving a blank for the amount or for the payee's name, it will be an authority to the holder to fill such blank.^ As we have seen, the surety's liability toward the holder is, in general, the same as that of the principal, although as between him and the principal he is liable only as a surety.* Thus, if he is surety for the drawer, he will be liable in the same 'Waters v. Simpson, 7 111. 570 (1845). ^Ulmer v. Reed, 11 Me. 293 (1834). 'Franklin Savings Inst. v. Reed, 125 Mass. 365 (1878). *Bryan v. Berry, 6 Cal. 394 (1856). * United States v. Nelson, 2 Brock. 64 (1822). n Edwards §415 ; 2 lb. i 724. DEMAND. 591 manner as the drawer.* So, he may be principal as to one party and surety as to another ; as where a surety, to procure his own discharge from an execution, puts his name to a new contract as principal with a new party as surety.^ § 913. Surety Admits Prior Signatures — Withdrawal. — A • surety who signs the note after the names of other co-sure- ties, admits, although he does not warrant, the genuineness of their signatures f and if the principal's name is forged, without the surety's knowledge and without fraud on the holder's part, it will be no defense to the surety.* So, the surety cannot set up that the principal's* name was signed without authority by an agent.^ So, a surety will be lia- ble to a bona fide holder, although the name of an earlier co-surety was forged without his knowledge.^ A surety, who has become such on a continuing guaranty for advances not yet made, may withdraw from further lia- bility therefor;' even though the guaranty was made for a specified time.* And if a surety has given notice of a desire to be relieved from his suretyship on a note, and the payee has agreed to release him, but has never actually done so, the surety will be discharged by the agreement.® § 914. Demand — Not Necessary. — In order to hold a surety, it is not necessary that the holder of a note should formally present it to the principal for payment.*" And a surety will not, in general, be discharged by want of such presentment, even though the principal afterward becomes insolvent." So, ^Suydam v. Westfall, 2 Denio 205 (1845), reversing 4 Hill 211 (1843). ^Coflfman v. Hopkins, 75 Va. 645 (1881). 'Selser v. Brock, 3 Ohio St. 302 (1854). *Chase v. Hathorn, 61 Me. 505 (1873). 5 Weare v. Sawyer, 44 N. H. 198 (1862). 8Helms V. The Wayne Agricultural Co., 73 Ind. 325 (1881) ; Wayne Agri-^ cultural Co. v. Cardell, lb. 555 (1881). 'Brocklebank v. Moore, 2 Stark. Ev. 371. «Byles 260; Offord v. Davis, 31 L. J. G. P. 319. 'Taylor v. Lohman, 74 Ind. 418 (1881). I'Bond V. Storrs, 13 Conn. 412 (1840). Nor is it necessary in order to hold his estate, Goodwyn v. Hightower, 30 Ga. 249 (1860) ; Dye v. Dye, 21 Ohio St. 86 (1871). "Commercial Bank v. French, 21 Pick. 486 (1830). 592 PRINCIPAL AND SURETY. a joint-m^ker, who adds to his signature the word " secur- ity," will not be discharged by the holder's failure to demand payment of his co-maker.^ So, a surety will remain liable, in Louisiana, on a check indorsed by him, although it is not •immediately presented to the drawee for payment. '^ In like manner a surety is not, in general, entitled to for- mal protest,^ or to formal notice of dishonor.* The holder of a note is not bound to notify the surety of default in pay- ment prior to the settlement of the deceased principal's estate, nor to prove a note against such estate.^ And the surety is not entitled to notice of protest, although the principal has become insolvent." In Louisiana a surety is not entitled to formal notice of protest.'' And if a stranger signs a note, he is presumed to do so as surety, and not to be enti- tled to notice of protest.* This is true also of one who indorses a note in Louisiana as a surety .* § 915. Capacity of Principal — Affecting Surety. — A surety will, in general, be liable on a bill or note executed by him as such, although his principal has not suflScient capacity or authority to contract. Thus, a surety for one who has not capacity by reason of infancy will be liable, although the principal is not so.^" And if such note was given for neces- saries, which would render the principal liable, the surety may recover from him on paying the note." So, a surety will be liable upon a cohtract which is void as to his princi- pal on account of her coverture ;^^ or for a contract executed iBuckner v. Liebig, 38 Mo. 188 (1866). ^Newman v. Kaufman, 28 La. An. 866 (1876). ^Scott V- Shirk, 60 Ind. 160 (1877). Even a note payable in bank, Bond V. Storrs, 18 Conn. 412 (1840). *1 Parsons 236; Carpenter v. McLaughlin, 12 K. L 270 (1879); Buckner V. Liebig, supra; Scott v. Shirk, supra; Neal v. Freeman, 85 N. C. 441 (1881). Or against his estate, Goodwyn v. Hightower, 30 Ga. 249 (1860). 'Jackson v. Benson, 54 Iowa 654 (1880). * Commercial Bank v. French, supra. 'Fuller V. Leonard, 27 La. An. 635 (1875). "Collins V. Trist, 20 La. An. 348 (1868). 'Adams v. Gordon, 22 La. An. 41 (1870). "Taylor v. Dansby, 42 Mich. 82 (1879). "Conn V. Coburn, 7 N. H. 368 (1834). "1 Parsons 244; 2 Daniel 323; Kimball v. Newell, 7 Hill 116 (1845) ; Davis DELIVERY. 593 "with a corporate principal which has no capacity, as a cor- poration, to make such contract;^ unless the contract is made absolutely void by statute.'^ § 916. Delivery — Conditions. — A contract of suretyship depends for its validity upon its completion by delivery. If, therefore, after a surety has signed a note, the principal refuses to deliver it, although it had been taken by him from the holder to get an additional surety, the surety who signed it will not be liable upon it.'' So, if a note is signed by a surety with a blank left for the amount, and this is filled for a greater sum than was agreed upon, the surety will not be liable to one who has notice of that fact.* But if a blank is filled by the maker without knowledge or fraud on the payee's part, the maker will be regarded as the surety's agent, and the agent will be held.° So, if the time of pay- ment is left blank by the surety and wrongly filled, he cannot set up such defense against a bona fide holder.^ If the delivery is conditional, the condition must be per- formed.' And delivery in violation of it will discharge the surety. So, discharge of a surety for condition broken will discharge other and subsequent co-sureties.* If a surety iigns a note on condition that others shall also sign it, he will not be liable to a holder who has notice of such condi- tion, unless it is waived by him.^ So, if a non-negotiable V. Statts, 43 Ind. 103 (1873) ; Jones v. Crosthwaite, 17 Iowa 393 (1864) ; Hicks 'V. Randolph, 3 Baxt. 352 (1874) ; Smyley v. Head, 2 Rich. 590- (1846) ; Whit- worth V. Carter, 43 Miss. 61 (1870). '2 Daniel 330. ' 1 Parsons 244. 'Chamberlain v. Hopps, 8 Vt. 94 (1836). ^Henderson v. Bondurant, 39 Mo. 369 (1867). *Gothrupt V. Williamson, 61 Ind. 599 (1878) ; Schryver v. Hawks, 22 Ohio St. 308 (1872). "Waldron v. Young, 9 Heisk. 777 (1872). 'Daniels v. Gower, 54 Iowa 319 (1880). ^Ibid. 'Leaf V. Gibbs, 4 C. & P. 466 (1830) ; Cofifman v. Wilson, 2 Meto. 542 (Ky. 1859) ; Reynolds v. Dechaums, 24 Tex. 174 (1859) ; Clark v. Bryce, 64 Ga. 486 (1880) ; Murphy v. Hubble, 2 Duv. 247 (1865) ; Bivins v. Helsley, 4 Mete. 78 (Ky. 1862). VOL. U. -"N 594 PRINCIPAL AND SURETY. note is delivered on condition of another surety signing it, a breach of such condition will discharge those who have signed.' And where an agreement is made by the principal with an accommodation co-maker for another co-surety, who is specified by name, one who signs afterward as an accom- modation indorser will not become co-surety on the strength of such agreement with the accommodation maker.^ If a note is delivered in violation of such condition for another surety, the surety who has signed will not be rendered liable by his subsequent verbal promise to pay it.^ But the breach of a condition providing for another co-surety will not be available against a bona fide holder ; * or against a payee who does not know of the condition.^ And it has even been held, that if the condition is not expressed in the paper, it will not avail as a defense against the payee, although it was known to him,' If a note is signed by a surety for a principal, who is to sign as maker, and it is delivered to the payee to obtain such signature, and to hold for his debt when so signed, the failure to obtain such principal's signa- ture will discharge the surety.' § 917. Condition — Diversion. — A surety will be discharged by a fraudulent diversion of the paper made without his knowledge or consent.* And he may show in Louisiana that he signed on condition that the note should not be negotiated, and that the holder knew of this condition,* If the instru- ment is delivered in violation of the agreement, under which 'Ayres v. Milroy, 53 Mo. 516 (1873). 'Nurre v. Chittenden, 56 Ind. 462 (1877). 'Loving V. Dixon, 56 Tex. 75 (1881). *Mernam v. Eockwood, 47 N. H. 81 (1866), the additional surety indors- ing the note in this case ; Dair v. United States, 16 Wall. 1 (1872) ; Farmers', &c., Bank v. Humphrey, 36 Vt. 554 (1864) ; Gwyn v. Patterson, 72 N. C. 189 (1875). 5 Clark V. Bryce, 64 Ga. 486 (1880). 'Hubble V. Murphy, 1 Duv. 278 (1864); Deardorff v. Foresman, 24 Ind. 481 (1865). 'Knight V. Hurlbut, 74 111. 133 (1874). ^Johnston v. May, 76 Ind. 293 (1881). As against a holder with notice, 1 Parsons 236. 'Louisiana State Bank v. Senecal, 16 La. 29 (1837). STJKETY DISCHAKGED BY FBAUD. 595 it was signed, and is held as collateral by a bona fide holder, the surety will be liable to him for the amount actually paid by, and secured to, him and for no more.^ But where a note, payable to A. or bearer, is signed and delivered by the surety in order to raise money for the principal, and is used in violation of his agreement as collateral security for another note of the same principal, the diversion will not amount to such a change of the surety's contract as will enti- tle him to a discharge.^ On the other hand, where a note is delivered by a surety to be discounted at a certain bank, and is not so discounted, but is negotiated elsewhere, this has been held to release him.^ But a subsequent promise by him to pay it, knowing of such discharge, would render him liable again.* If, however, it is delivered to be discounted by a certain person to raise money for a given purpose, and is actually discounted by another for the same purpose, the surety will not be discharged." But if a note is made expressly for discount at one bank, and is discounted at another, and the surety is thereby discharged, it will be immaterial that the note was transferred before its maturity to the bank originally intended." § 918. Surety Discharged by Fraud. — Any fraudulent concealment between the creditor and the principal debtor will discharge the surety.' And this is so, although the principal may still continue liable on the paper.* Thus, if 'First National Bank v. Fowler, 36 Ohio St. 524 (1881). = Davis V. Atlanta Nat. Bank, 66 Ga. 651 (1881) ; Bank of Montpelier v. Joyner, 33 Vt. 481 (1860). ^Manufacturers' Bank v. Cole, 39 Me. 188 (1855); Chase v. Hathorn, 61 Me. 505 (1873); Dewey v. Cochran, 4 Jones 184 (1856); Southerland v. Whitaker, 5 Jones 5 (1857). 'Mastin Bank v. Hammerslough, 72 Mo. 274 (1880). ^Bank of Middlebury v. Bingham, 33 Vt. 621 (1861) ; Browning v. Foun- tain, 1 Duv. 13 (1863). "Knox County Bank v. Lloyd, 18 Ohio St. 353 (1868). 'Byles 249; Chitty 103; 2 Daniel 325; 2 Edwards §767; 1 Parsons 236; Mayhew v. Crickett, 2 Swanst. 193 ; Jackson v. Duchaire, 3 T. B. 551 ; Easter V. Menard, 26 111. 494 (1861) ; Hall v. Smith, 14 Bush 604 (1879) ; Warren v. Branch, 15 W. Va. 21 (1879) ; Selser v. Brock, 3 Ohio St. 302 (1854) ; Tram- mell V. Swan, 25 Tex. 473 (1860). 'Evans v. Keeland, 9 Ala. 42 (1846). 596 PRINCIPAL AND SURETY. the facts tending to show the dishonesty of the principal are fraudulently concealed from the surety, he will be dis- charged by such fraud/ So, if the payee of a note makes a false representation to the surety to the effect that the principal is not otherwise indebted to him.^ But a surety will not be discharged by a false statement made by the payee by reason of his misunderstanding an inquiry, made by the surety after he had executed the paper.^ And a simple failure to communicate to the surety a fact which it is material for him to know, without any fraud- on the part of either creditor or principal, will not relieve the surety.* To amount to a discharge of the surety, the mis- representation must be a false statement of fact, and not a mere expression of opinion.^ Like his principal, the surety cannot defend on the ground of drunkenness, unless it is so complete as to amount to a case of fraud,^ and only then against a holder with notice. But a surety may, in general, avail himself of any defense that is available to the principal, e. g., that the principal executed the paper under duress.' If a surety is discharged by fraud, he may waive such discharge by parol, and such waiver will be binding on him if he knows the facts as to the fraud, although he may be ignorant of their availability as matters of defense.* If he has been defrauded by his principal, and so induced to execute the paper, such defense is, at common law, available as a bar to the action in a suit against him alone, but in a suit against him and the guilty principal jointly, his only remedy lies in a court of equity.' 'Eailton v. Matthews, 10 CI. & F. 934. 'Melick V. First Nat. Bank, 52 Iowa 94 (1879). ^Fitchburg Savings Bank v. Bice, 124 Mass. 72 (1878), no fraud being proved and the case being held to be one of natural misunderstanding and mistake, "F. and L. bonds" being talked of as collateral by one and "F. and L. notes " by the other. •Warren v. Branch, 15 W. Va. 21 (1879). 'Evans v. Keeland, 9 Ala. 42 (1846). ^Reynolds v. Dechaums, 24 Tex. 174 (1859). 'Osborn v. Robbins, 36 N. Y. 365 (1867); S. C, 37 Barb. 481; Coflfelt v. Wise, 62 Ind. 451 (1878). 'Rindskopf v. Doman, 28 Ohio St. 516 (1876). 'Wilson V. Green, 25 Vt. 450 (1853). CONSIDERATION FOR SURETYSHIP. 597 § 919. Fraud — As a Defense. — The defense of fraud can- not be set up by a surety against a bona fide holder for value before maturity.^ And against such a holder he can- not set up that he was induced to sign the note by the for- gery of the signature of another surety.^ In all cases where the defense of fraud or want of consideration is available to the surety, the burden of proving such fraud is on him.* If he has been induced to sign a note by fraud, and to con- fess judgment on it in ignorance of the fraud, he raay after- ward get the judgment set aside on that ground.* If he has been induced to execute a note by a false recital in a collateral mortgage of the payment of a prior debt, which had not been paid, it will amount to a fraud in law on the creditor's part, which will discharge the surety.^ In like manner, he will be discharged by a fraudulent representa- tion to the effect that the debt is paid, made after the maturity of the note by collusion between the creditor and the principal debtor, and for the purpose of inducing him not to take proceedings for his security.^ And even if such a statement is made by the creditor without any fraud on his part, it will, by way of estoppel, release a surety who has relinquished collaterals that he held, relying upon such statement.'' § 920. Consideration for Suretyship. — It is not necessary to the liability of a surety that he should receive, as consid- eration for his signature, any part of the money for which the paper is issued or discounted.* His agreement as surety '2 Daniel 325; 2 Edwards ? 767; Selser v. Brock, 3 Ohio St. 302 (1854); Farmers', &c., Bank v. Lucaa, 26 Ohio St. 385 (1875) ; Wayne, &c., Co. v. Cardwell, 73 Ind. 555 (1881) ; Anderson v. Warne, 71 III. 20 (1873). 'Storer v. Millikin, 85 111. 218 (1877). 'Barr v. Greenawalt, 62 Pa. St. 172 (1869). But if it is proved that a part- nership note was given for a debt of an individual partner, the burden is on the holder to show the knowledge and consent of the other partners, 1 Parsons 128, 132. *Melick V. First Nat. Bank, 52 Iowa 94 (1879). 'Stone V. Compton, 5 Bing. N. C. 142; S. C, 6 Scott 816. •Wilson V. Green, 25 Vt. 450 (1853). 'Carpenter v. King, 9 Mete. 511 (1845). *Sprigg V. Bank of Mount Pleasant, lO Pet. 257 (1836). 598 PRINCIPAL AND SURETY. will be binding upon him, if made in consideration of for- bearance to the principal.^ But if one becomes surety on commercial paper ^fter it is made and delivered, the original consideration for the instrument will not sufl&ce, but a new consideration will be needed to bind the surety." In such cJise, however, he may be bound by a consideration, of which he gets no benefit, between the creditor and the principal debtor.' Thus, if a note given for the purchase of personal property, and about to be rescinded by the payee for fraud, is made good and retained by the payee in consideration of the signature of an additional maker as surety, this will be sufficient consideration to bind such surety.* Bo, if there was an agreement at the time the note was made for certain addi- tional signatures, as sureties, and they are afterward added, the instrument not being accepted as complete until then, the surety will be bound by such consideration.® In general, an existing debt is sufficient consideration to support a new note as against both principal and surety on such note.^ But if a surety on an old note has been discharged from liability, his former liability will not be sufficient consideration for a new note afterward given by him.'' So, if a widow is induced to give a note with a surety by a fraudulent statement as to her existing liability for a debt of her deceased husband, the note will not be binding upon the surety.* But a surety may be held on a new promise to pay a note which has been barred as to him by the Statute of Limitations, although he is ignorant of that fact at the time of making the promise, and, although he ■Hockenbury v. Meyers, 5 Vroom 346 (1870) ; Pulliam v. Withers, 8 Dana 98 (1839). But such consideration is insufficient, if not known to the surety at the time, Pratt v. Hedden, 121 Mass, 116 (1876). 'Anderson v. Norvill, 10 Bradw. 240 (1881) ; Favorite v. Stidham, 84 Ind. 423 (1882) ; Briggs v. Downing, 48 Iowa 550 (1878). Without such considera- tion he cannot be a joint-promisor, Monson v. Drakely, 40 Conn. 552 (1873). "Gay V. Mott, 43 Ga. 252 (1871). ♦Harwood v. Kiersted, 20 II]. 367 (1858). 'Williams v. Perkins, 21 Ark. 18 (1860). "Harrell v. Tenant, 30 Ark. 684 (1875). 'Evans v. Williams, 1 Cromp. & M. 30; S. C, 3 Tyrw. 226. 'Maull D.Vaughn, 45 Ala. 134 (1871). USURY. 699 was induced to make the promise by a statement of the creditor, also made in ignorance of that fact.^ If a note is made by a surety in consideration of a promise to provide security for him by way of lien on the principal's property, the failure to make such provision will amount to a release of the surety.'* But such a defense will not be available on a note made to A. or bearer and transferred to a holder who, although h^ suspects the character of the surety, knows nothing of the agreement to secure him.* If the consideration accruing to the principal has failed, and he is thereby rendered no longer liable on a note, the surety will be discharged also.* Thus, if a note is given in consideration of advances to be made by the payee to the principal, and is retained by the payee, without making such advances, as security for another indebtedness of the princi- pal, the surety will not be liable on the note to such payee.® § 921. Usury — As a Defense. — In general, a surety will not be discharged from liability by the fact that the bill or note signed by him is subject to the defense of usury between the principal debtor and the holder.^ But he may set up such usury against a purchaser of the paper after maturity.^ If a joint note is signed by a principal and surety, and usury is paid by the principal to the creditor, it will be no defense for the surety.* So, usury between the payee and acceptor of a bill of exchange will not avail the drawer as a defense against the payee.* So, the surety cannot set up subsequent payment of usury by the principal under an agreement made 'Langston v. Aderhold, 60 Ga. 376 (1878). ''Jeffries v. Lamb, 73 Ind. 202 (1880). ^Laub V. Eudd, 37 Iowa 617 (1873). •Adams v. Cuny, 15 La. An. 485 (1860). 'Bushey v. Reynolds, 31 Ark. 657 (1877). « First Nat. Bank of Columbus v. Garlinghouse, 22 Ohio St. 492 (1872); Jenness v. Cutter, 12 Kans. 500 (1874) ; Selser v. Brock, 3 Ohio St. 302 (1854) ; Ward V. Whitney, 32 Vt. 89 (1859). 'Maher v. Lanfrom, 86 111. 518 (1877). "Lamoille County Nat. Bank v. Bingham, 50 Vt. 105 (1877). •Woolfolk V. Plant, 46 Ga. 422 (1872). 600 PKINCIPAL AND SURETY. for it with the payee unknown to the surety.^ So, under the Mississippi statute, the surety cannot set up payment of usury by the principal in the absence of a previous agreement for such payment.^ But in Illinois if a note is drawn expressly for more than legal interest, the surety will only be liable for the principal with lawful interest, and may have all usurious payments credited for his benefit on account of the principal debt.' Where an accommodation acceptor is liable as a surety, he cannot as such set up the defense of usury, if the drawer could not do so.* And in general where a prin- cipal, e. g. a corporation, is prohibited from setting up usury as a defense, the surety is under a like disability .° § 922. Illegality — As a Defense. — If the contract of the principal is an illegal one and not binding upon him, it will not be binding on the surety. And if the principal in an action against him has been discharged on such ground, however erroneously, by a court of competent jurisdiction, the surety cannot afterward be held.® So, where a note is made to a public officer in contravention of public policy for the private and illegal use or loan of public funds, a surety on such note cannot be held liable.' But it has been held, in North Carolina, that a note for money borrowed by a county to equip Confederate soldiers may be illegal as to the principal, but binding upon the surety, who had paid it and tried to recover the amount paid from the county.* If a note is executed by a surety in violation of the Sunday laws, 'Davis V. Converse, 35 Vt. 503 (1863); Burks v. Wonterline, 6 Bush 20 (1869). ^Brown v. Prophet, 53 Miss. 649 (1876). » Banner v. Smith, 89 111. 123 (1873) ; Cole v. Hills, 44 N. H. 227. *First Nat. Bank of New York v. Morris, 1 Hun 680 (1874). *1 Daniel 602. See New York Act of 1850 ch. 172. ^Gill V. Morris, 11 Heisk. 614 (1872). 'Board of Education v. Thompson, 33 Ohio St. 321 (1877). «Davis V. Stokes County, 72 N. C. 441 (1875) ; S. C, 74 lb. 374 (1876), Keade, J., saying : " While the county court had no power to give the bond, the plaintiff (surety) had power to do it, and there being no moral or politi- cal turpitude he is bound by it," 72 lb. 444; and referring to the surety as " acting for himself and not as agent for a county," 74 lb. 376. STATUTE OF LIMITATIONS. 601 it is void as to him in ludiana, even at suit of a payee who took it from the principal in good faith without knowing that it had been executed by the surety on Sunday.' § 923. Set-Off— As a Defense. — The surety is also entitled, in general, to any defense by way of a set-off which is avail- able to the principal, and he may plead it as an equitable defense.^ So, a note made by a principal and surety, it has been held, may be used as a set-off to an action brought by the principal alone.^ But in Iowa a joint note of principal and surety is not available as a set-off against a debt due to the principal alone.* In an action brought against a princi- pal and surety upon a note executed by them, either of them may claim, by way of recoupment, damages due to the prin- cipal arising out of the same contract.* So, if the payee brings an action against the surety, the surety may set up a debt due from the payee to the principal debtor,* with the consent of his principal.' And where the holder of a note died, and the maker, who was insolvent, became his admin- istrator and entitled to a share of his estate, the surety is entitled to have such share applied as a set-off to the pay- ment of the note.* If, however, a set-off is pleaded by the principal, and not by the surety, and only the surety takes an appeal, he cannot be heard on such appeal as to the judgment rendered on the set-off.' § 924. Statute of Limitations. — It will not, in general, be a defense to the surety, that the Statute of Limitations has •Parker v. Pitto, 73 Ind. 597 (1881) ; Gilbert «. Vachon, 69 lb. 372 (1879). "Byles 253; Bechervaise v. Lewis, L. R. 7 C. P. »72; Jarratt v. Martin, 70 N. C. 459 (1874). 'Andrews v. Varrell, 46 N. H. 17 (1865) ; Harrison v. Henderson, 4 Ga. 198 (1848). •Enix V. Hays, 48 Iowa 86 (1878). ^Waterman v. Clark, 76 111. 428 (1875); Slayback v. Jones, 9 Ind. 470 (1857); Newell v. Salmons, 22 Barb. 647 (1856). So, in an action on an official bond, City of Concord v. Pillsbury, 83 N. H. 310 (1856). 'Mahwein v. Pearson, 8 N. H. 539 (1837). And this is especially provided by statute in Indiana (1881 B. S. § 349). 'Lynch v. Bragg, 13 Ala. 773 (1848). "Wright V. Austin, 56 Barb. 13 (1865). ' •Home Security Building, &c., Association v. George, 57 Cal. 363 (1881). 602 PRINCIPAL AND SURETY. run against the estate of the principal.^ But, although the administrator of the deceased principal might defend on the ground that the note was barred as to him by the statute, the surety, who is not entitled to the benefit of such bar, and has been obliged to pay, may sue the estate of the prin- cipal for exoneration, or may bring an action for contribu- tion against a co-surety.^ By the Statute of Limitations in Kentucky, a surety is discharged from liability, if no action is brought against him within seven years.^ And the run- ning of the statute will not, in such case, be stayed by the fact that the note has been presented and proved against the estate of the deceased maker.* The Statute of Limitation runs against a maker on his liability to exonerate the surety from the time of payment made by the surety, and not from the making or maturity of the contract.' So, the statute runs against the surety's right to sue a co-surety for contribution from the time of his payment,^ although such payment was made in another State, and would not be barred by the Statute of Limita- tions there.'' If, however, the surety pays the note before it is due, the Statute of Limitations will not begin to run against the surety until the note falls due, and not from the time of payment, as he could not sue principal or co-surety before maturity of the note.* A payment made on a note by a surety will not interrupt the running of the statute in favor of the principal ; ° nor will payment by the principal bar the statute as to the surety;^" especially where the pay- ' Villars v. Palmer, 67 111. 204 (1873). ^Reeves v. PuUiam, 9 Baxt. 153 (1877). '1881 G. S. 637 i 4; Millikin v. Dinning, 6 Bush 646 (1869). * Harris v. Moberly, 5 Bush 556 (1869). ^Norton v. Hall, 41 Vt. 471 (1868), although such payment was made more than six years after the maturity of the note ; Loughridge v. Bowland, 62 Miss. 546 (1876). 'Presler v. Stallworth, 87 Ala. 402 (1861). ' Hammond v. Myers, 30 Tex. 375 (1867). * ^Tillotson V. Rose, 11 Mete. 299 (1846). "Succession of Voorhies, 21 La. An. 659 (1869). '"McBride v. Hunter, 64 Ga. 655 (1880) ; Schindel v. Gates, 46 Md. 604 (1877) ; Steele v. Souder, 20 Kans. 39 (1878). JUDGMENT AND MERGEK. 603 ment was made after the debt was already barred by the statute as to such principal.^ A mere verbal request, how- ever, on the surety's part for further time will not prevent his pleading the statute or bar its running in his favor.** § 925. Judgment and Merger. — It is often said that the relation of principal and surety is merged when once a judg- ment is rendered against them. But a judgment in an action by the holder against all parties, determining who is liable as principal and who as surety, is not conclusive between themselves.* A judgment, however, rendered against the principal maker, has been held to be conclusive upon the surety ; although, after his being made a party to the suit, it was dismissed as to him before trial.* If an indorser takes up a note after judgment rendered in favor of his indorsee against the principal maker, and in favor of the sureties as against such indorsee, such payment will not give him any right of action against the sureties, but they will be dis- charged as to him.' Although the relation of principal and surety be merged in a judgment at law, this will not be the case in equity.* But the surety must seek his remedy after judgment at law in a court of equity.^ Thus, the relation of principal maker and accommodation indorser merges in the judgment against them both, and the surety must seek relief by payment of the judgment and subrogation to the rights of the creditor.' In Indiana, such merger takes place unless the relation of the principal and surety is expressly established by the judgment, and in case of such merger the surety cannot 'Smith V. Caldwell, 15 Rich. 365 (1868). = Kennedy v. Foster, 14 Bush 479 (1879). ^Gatch V. Simkins, 25 Ohio St. 89 (1874). ■•Stoops V. Wittier, 1 Mo. App. 420 (1876). 'Durham v. Giles, 52 Me. 206 (1863). And if the payee, in recovering judgment against the principal, has laid his damages so low as not to cover his debt, it will merge the debt and discharge the sureties, Couch v. Waring^ 9 Conn. 261 (1832). •Marshall v. Aiken, 25 Vt. 327 (1853). 'Herrick v. Orange Co. Bank, 27 Vt. 584 (1855). ■Findlay v. Bank of the United States, 2 McLean 44l (1839). 604 PRINCIPAL AND SURETY. be subrogated on subsequently paying the judgment.^ lu Texas the relation of principal and surety is preserved after judgment by statute, and subsequent laches on the creditor's part will discharge the surety.^ In equity the character of principal and surety does not cease when judgment is rendered against them;* but the surety may afterward assert his rights as against the princi- pal.* And he may be discharged, after a judgment against the principal and surety as joint makers, by subsequent contract made by the creditor with the principal, such de- fense being available in an action at law brought against the surety.^ ^Shields v. Moore, 84 Ind. 440 (1882) ; 1881 R. S. 1214. And see as to the proper manner of pleading such defense, McCormick v. Webster, 89 Ind. 105 {1883J. ^Parker v. Nation, 33 Tex. 210 (1870) ; Pasch. Dig. 4789. =Hubbell V. Carpenter, 5 Barb. 520 (1849). *Storms V. Thorn, 3 Barb. 314 (1848). «La Forge v. Herter, 11 Barb. 159 (1850). INDULGENCE TOWAKD PRINCIPAL. 605 CHAPTER XXVIII. PEINCIPAL AND SUEETY. /. Diligence against Principal. II. Discharge by Release, &c. III. Extension to Principal. I. DILIGENCE AGAINST PRINCIPAL. , 926. Indulgence to Principal. ■928. Negligence in Proceeding against Principal. 930. as to Collateral. 931. Diligence in Prosecuting Principal. 932. New York Rule. 933. Pennsylvania Rule. 934. Other States— Equity, 935. Statutes Requiring. 936. Construction. 937. Indiana Statute. 938. Other States. 939. Estate of Deceased Principal. § 926. Indulgence toward Principal. — Mere delay in bring- ing suit against the principal debtor is not at common law a discharge of the surety on a bill or note,^ or on a bond.^ Nor will indulgence to the principal amount to a discharge of the surety in equity.^ So, delay in bringing suit against the maker of a note will not discharge an indorser.* Nor will an accommodation indorser be-discharged by failure on the holder's part to sue the maker in the most effective man- •Byles 250; Chitty 462; 2 Daniel 337; 1 Parsons 236; Orme D.Young, Holt 84; Eyre v. Everest, 2 Russ. 381 ; Trent Navigation v. Harley, 10 East 34; Wright ■!;. Simpson, 6 Ves; 714; Neal v. Freeman, 85 N. C. 441 (1881); Hunt V. Bridgman, 2 Pick. 580 (1824) ; Freeman's Bank v. Rollins, 13 Me. 202 (1836) ; Hunt v. Postlewait, 28 Iowa 427 (1870) ; Jordan v. Trumbs, 6 Gill & J. 103 (1834) ; Moore v. Broussard, 8 Mart. (n. s.) 277 (1839) ; Good- wyn V. Hightower, 30 Ga. 249 (1861) ; United States v. Simpson, 8 Penr. & W. 437 (1832) ; Cope v. Smith, 8 Serg. & R. 110 (1822) ; Humphreys v. Crane, 5 Cal. 173 (1855) ; Ferguson v. Turner, 7 Mo. 497 (1842) ; Miller v. Arnold, 65 Ind. 488 (1879) ; Haldeman v. Woodward, 22 Kans. 734 (1879). 'Naylor v. Moody, 3 Blackf. 92 (1882) ; Sneed v. White, 3 J. J. Marsh. 525 (1830) ; Thursby v. Gray, 4 Yeates 518 (1808). »SchroeppeIl v. Shaw, 3 N. Y. 446 (1850). * Powell V. Waters, 17 Johns. 176 (1819). 606 PRINCIPAL AND SUKETY. ner.^ In 'like manner, an accommodation maker will not be discharged by indulgence given to the indorser who was accommodated.* And especially, if the indulgence is with the knowledge and consent of the surety, he will not be relieved by it.* Even after the surety has informed the creditor that he will no longer be liable as such, he will not be discharged by mere delay on the creditor's part in suing the principal.* The creditor is not obliged to use any active diligence against the principal, although he is not at liberty to bijid himself to any absolute forbearance." Unless, there- fore, the indulgence given on his part debars him from the right to prosecute the principal, it will not release the surety.* § 927. And it is the same thing, whether the creditor remains merely passive, or agrees for forbearance without a binding promise or valid consideration therefor.' Thus, an agreement for forbearance after maturity upon payment by the principal of certain usurious interest originally agreed upon with the holder, will not be sufficient to release the surety.® So, indulgence to the maker on his confessing judgment, without a definite extension of time, will not dis- charge the surety.® And this is true, although the holder delays suit against the principal until he is discharged by the Statute of Limitations.^" In Kentucky, however, the lapse of seven years without bringing suit will discharge the surety by force of the statute, although the delay was at his own request and for his own accommodation.-" Even where the delay in suing the principal is followed 'Lenox v. Prout, 3 Wheat. 520 (1818). 'Bank of Montgomery v. Walker, 9 Serg. & R. 229 ; S. C, 12 16. 382 (1823). •Hunter v. Jett, 4 Rand. 104 (1826). *Hogaboom v. Herrick, 4 Vt. 131 (1832). "Chitty 466; Walwyn v. St. Quentin, 1 Bos. & P. 652; S. C, 2 Esp. 514; Wright V. Simpson, 6 Ves. 734. •Hunter v. Jett, 4 Rand. 104 (1826). 'Nichols V. McDowell, 14 B. Mon. 6 (1853). 'Hunt V. Postlewait, 28 Iowa 427 (1870). •Bowes V. Tierman, 3 Denio 378 (1846). "•Reid V. Flippen, 47 Ga. 273 (1872). "Coleman D.Walker, 6 Meto. 65 (Ky. 1860)* NEGLIGENCE IN PROCEEDING AGAINST PEINCIPAI/. 607 by his insolvency, it will not result in the surety's dis- charge.^ The creditor is not responsible for the loss occa- sioned by delay in prosecuting a collateral note until the insolvency of the maker, unless such loss was directly occa- sioned by the holder's negligence in regard to such collateral.** On the other hand, if there is an express agreement on the holder's part to sue the principal immediately on default of payment, his failure to do so will discharge the surety.* So, if he agrees with the surety to bring suii against the principal within a certain specified time, his failure to per- form the agreement may be set up by the surety as an equitable defense;* although the contrary has been held in Minnesota.® Even where the delay is in accordance with a bank usage, which allowed accommodation paper to remain overdue on payment of the interest in advance from time to time, a delay under such usage in prosecuting the principal until he became insolvent will not discharge the surety, who was a director of the bank and acquainted with the usage.^ § 928. Negligence in Proceeding against Principal. — A surety will not be discharged by the holder's failure to sue the maker and attach property, which had been assigned to the payee for security of the note, but afterward withheld by the maker.'' But it has been held that a surety will be discharged by negligence of the holder in entering up judg- ment against principal and surety in an erroneous form, where the principal became insolvent before the proceedings had been amended.* A surety will not be discharged, how- ever, by reason of the erroneous disallowance of the claim when presented against the estate of the deceased principal, 'Davis V. Graham, 29 Iowa 514 (1870) ; Wright v. Watt, 52 Miss. 634 (1876). 'Lamberton, v. Windom, 18 Minn. 506 (1872). 'Bank of Ireland v. Beresford, 6 Dowl. 283. *Chitty 251 ; Lawrence v. Walmsley, 31 L. J. C. P. 143; Watson v. Alcock, 22 L. J. Ch. 858; S. C, 4 DeG. M. & G. 242. 'Huey V. Pinney, 5 Minn. 310 (1861). "Strafford Bank v. Crosby, 8 Me. 191 (1832). 'Crane v. Stickles, 15 Vt. 251 (1843). «Collier v. Leonard, 59 Qa. 497 (1877). 608 PKINCIPAL AND SURETY. although the holder did not appeal from such judgment.' So, he will not be discharged because a suit brought by the payee against the maker is dismissed;^ or because the fore- closure of a collateral mortgage is dismissed for irregularity without prejudice to the surety.^ Discontinuance of a suit against the maker of a note, coupled with an extension of time to him, will discharge the surety, although mere want of diligence would not.* But a surety will not be discharged by mere discontinuance even of an attachment against the principal;* although the discontinuance was voluntary (and with the knowledge of the surety) and the maker afterward became insolvent." So, dismissing a suit on a warrant of attor- ney without prejudice to the surety will not discharge him.^ § 929. After a creditor has obtained judgment against the principal, he is not bound to any active diligence in order to entitle him to hold the surety.* A voluntary delay on his part in issuing execution against the principal, will not discharge the surety, since he could at any time pay off the judgment and proceed to secure himself* So, staying an execution before levy made does not amount to an extension which will discharge the surety ;" nor mere delay in making such levy.^^ So, too, a direction on the holder's part to the sheriff to stay proceedings on the execution,^^ or mere indul- gence (not binding the holder to any definite extension),^* will not discharge the surety. And the surety will not be 'Townsend v. Riddle, 2 N. H. 448 (1822). ^Hibler v. Shipp, 78 Ky. 64 (1879). 'County of Dubuque v. Koch, 17 Iowa 229 (1864). *Manning v. Shotwell, 2 South. 584 (1819). ''Bank of Montpelier v. Dixon, 4 Vt. 587 (1832). «Baker v. Marshall, 16 Vt. 522 (1844). 'Woolfolk V. Plant, 46 Ga. 422 (1872). ^Buckalew v. Smith, 44 Ala. 638 (1870). 'Hogshead i;.Williams, 55 Ind. 145 (1876) ; Abercrombie v. Knox, 3 Ala. 728 (1842) ; Creath v. Sims, 5 How. 192 (1847) ; Newell v. Hamer, 4 How. 684 (Miss. 1840). '"Morrison v. Harbman, 14 Penna. St. 55 (1850); Summerhill v. Tapp, 52 Ala. 227 (1875). "Smith V. Irwin, 19 Alb. L. J. 516 (1879). "Sawyer v. Bradford, 6 Ala. 572 (1844). "M'Kenny ■;;. Waller, 1 Leigh 434 (1829). NEGLIGENCE AS TO COLLATERAL. 609 -discharged by an agreement on the principal's part to suffer judgment to be rendered against him with a stay of execu- tion ;^ .or even, it has been held, by a stay of execution for six months on taking judgment.* So, the surety will not be discharged by a stay of execution, in order to enable the principal to sell the property levied on, under an agreement ■with the holder to apply the proceeds to the payment of the execution.^ And a surety cannot have relief in equity even for suspension of execution by the creditor, continued for a long time without any binding agreement therefor or defi- nite extension, although the principal and several co-sureties had in the meantime become insolvent.* In some States, however, the surety is discharged by want of due diligence in such, cases, e. g. in issuing a capias and taking proceedings against the principal's bail,^ or, in Indi- ana, in delaying execution for forty-five days upon a judg- ment in foreclosure of a collateral mortgage.* So, in an early case in Connecticut, an indorser was held to be dis- charged by an error of the clerk of the court in failing to secure timely return of an execution, whereby the benefit of it was lost.'' So, in Kentucky, a stay of execution after levy made, resulting in a loss of lien upon the principal's property, has been held to discharge the surety.* § 930. Negligence as to Collateral. -7- If a creditor does any act injurious to the surety, or omits to do any act which is enjoined upon him by ordinary rules of equity, the surety who is injured by such action or omission on the creditor's part will be discharged by it.° And it has been said that any ^Carraway v. Oden, 56 Miss. 223 (1878). ''Barker v. M'Clure, 2 Blackf. 14 (1826). « Ward V. Vass, 7 Leigh 135 (1836). *Alcock V. Hill, 4 Leigh 622 (1833). "Smallwood v. Woods, 1 Bibb 542 (1809). » Willson V. Binford, 54 Ind. 569 (1876). 'Horton v. Frink, 5 Day 530 (1813) ; Somersworth Sav. Bank v. Worcester, 76 Me. 327 (1884). 'Sneed v. White, 3 J. J. Marsh. 525 (1830). 'Lang V. Brevard, 3 Strob. Eq. 59 (1849). VOL. II. 2o 610 PKINCIPAL AND SURETY. dealings will discharge the surety, which amount to a de- parture from the contract or tend to vary it.^ And any active interference on the holder's part, by which the surety is injured, will discharge him.^ So, any laches on his part,, in dealing with collaterals, will discharge the surety to the extent of the loss occasioned.^ But mere delay on the holder's part in pursuing his remedies upon a lieu or col- lateral will not discharge the surety;* although he was urged by the surety to take the benefit of such collateral, and neglected to do so until the principal had become insolvent.® And where, in enforcing a collateral mortgage, the sale of the premises has failed, by reason of the purchaser becoming insolvent and being unable to take the deed, the holder may resell the premises and look to the surety for the deficiency on the notes secured by the mortgage.* But if the holder takes a chattel mortgage as collateral and neglects to file it, the surety will be discharged ;^ especially if such negligence has occasioned the loss of the security.* § 931. Diligence in Prosecuting Principal. — Even where the surety calls on the creditor to sue the principal, the creditor is not, at common law, bound by such request, and his disregard of it will not discharge the surety .* This is true also, where the request is made by a joint-maker who has added the word "surety" to his signature.^" And a creditor cannot be compelled to exhaust his remedy against •Mayhew v. Boyd, 5 Md. 102 (1853). ''Sneed v. White, 3 J. J. Marsh. 525 (1830). 'Nelson v. Munch, 28 Minn. 314 (1881). ♦Farmers' Bank v. Kaynolds, 13 Ohio 84 (1844); Clopton v. Spratt, 52 Miss. 251 (1876). ^Miller v. Knight, 7 Baxt. 127 (1874). «Fall Eiver Sav. Bank v. Sullivan, 131 Mass. 537 (1881). 'Atlanta Nat. Bank v. Douglass, 51 Ga. 205 (1874). But see, contra, Lang V. Brevard, 3 Strob. Eq. 59 (1849). «Burr V. Boyer, 2 Neb. 265. 'Pintard v. Davis, 1 Zab. 632 (1846), affirming Spencer 205; Eaton v. Waite, 66 Me. 221 (1877); Halstead v. Brown, 17 Ind. 202 (1861); Hartraan V. Burlingame, 9 Gal. 557 (1858). So, in Virginia, prior to act of 1794, Croughton v. Duval, 3 Call 70 (1801). "Inkster v. First Nat. Bank, 30 Mich. (1874). DILIGENCE IN PROSECUTING PRINCIPAL. 611 the principal before resorting to the surety, except under peculiar circumstances, which would justify the interference of a court of equity.^ A mere notice on the surety's part, requiring the creditor to proceed on account of the doubtful circumstances of the principal, will not be binding upon him at law, and the surety's remedy lies only in a court of equity.^ So, mere delay on the holder's part in prosecuting the maker after such request from the surety, will not relieve the surety.' And there is no sound reason for permitting the surety to discharge himself from liability by such request, it being always in his power to take up the note and proceed against the principal himself.* The contrary rule, which obtains in New York, has been disapproved in other States.' And it has been held that it is no defense for the surety to set up that, before the note was due, he urged the holder to take proceedings against the principal, as he was squandering his property .* So, if the holder, on being requested by the surety, sues the prin- cipal and afterward discontinues his suit on receiving part payment, the surety will not be discharged.' So, too, if the holder, in answer to such request by the surety, replies that he has received payment in part and will not call for the rest.* So, the surety will not be discharged by such request to proceed against the maker, although the maker is on the eve of bankruptcy and his property has been attached, unless the holder has agreed with the surety to proceed and the surety has been injured by his failure to do so.^ But the holder is not bound, even at the request of the surety, to include a note in proceedings already begun by him against the principal on certain other notes, although there 'Abercrombie v. Knox, 3 Ala. 728 (1842). 2 Dennis v. Eider, 2 McLean 451 (1841). ^Davis V. Huggins, 3 N. H. 231 (1825). *See remarks of Treat, C. J., Taylor v. Beck, 13 111. 376 (1851). "Harris v. Newell, 42 Wis. 689 (1877). «Prois V. Mayfield, 33 Tex. 801 (1871). 'Manning v. Shotwell, 2 South. 584 (1819). ■ 'Mahwein v. Pearson, 8 N. H. 539 (1837). •Hickok V. Farmers', &c., Bank, 35 Vt. 476 (1863). 612 PKINCIPAL AND SURETY. were subsequent attachments upon the principal's property, which would otherwise take precedence of the surety's note, and although the surety offered indemnity to the holder.^ And, in general, the fact that the principal debtor is solvent at the time the request is made and becomes, insolvent after- ward, will not affect the (Juestion.^ § 932. New York Rule. — In New York and in some other States the rule on this subject is different, as we have already said, and in New York a surety is discharged by the credit- or's refusal to sue the principal when requested so to do, such refusal being held to be equivalent to an agreement not to sue.^ But a mere request on the surety's part " to push the maker," although frequently made and disregarded, will not discharge the surety.* And where a formal request to sue the principal is made by the surety, he will not be discharged by disregard of it, without proving that he has suffered loss on that account.^ If the request has been disregarded, and he has suffered loss, as by the principal subsequently becom- ing insolvent, he will be discharged.® But if the principal is insolvent at the time the request is made, the surety will not be discharged.^ The request to proceed against the principal must be full and explicit, and must require pro- ceedings without delay.* It must state that he is required to take proceedings in the courts for the collection of the note.® But a request to proceed against the principal by dis- 'Adams Bank v. Anthony, 18 Pick. 238 (1836). = Pickett V. Land, 2 Bailey 608 (1832) ; Findley v. Hill, 8 Oregon 347 (1880). 'Manchester Iron Co. v. Sweeting, 10 Wend. 162 (1833). But see, contra, King V. Baldwin, 2 Johns. Ch. 554 (1817), reversed, 17 Johns. 384 (1819). * Singer v. Troutman, 49 Barb. 182 (1867). ''Huflfman v. Hulbert, 13 Wend. 377 (1835). «Pain V. Packard, 13 Johns. 174 (1816) ; King v. Baldwin, 17 Johns. 384 <1819) ; Kemsen v. Beekman, 25 N. Y. 552 (1862) ; Colgrove v. Tallman, 67 lb. 95 (1876). 'JMferritt v. Lincoln, 21 Barb. 249 (1855) ; Herrick v. Borst, 4 Hill 650 <1843), the question of insolvency being left to the jury ; Field v. Cutler, 4 Lans. 195 (1870) ; Marsh v. Dunkel, 25 Hun 167 (1881). 'Valentine v. Farrington, 2 Edw. Ch. 53 (1833). 'Denick v. Hubbard, 27 Hun 347 (1882), And see as to what constitutes sufficient notice. Mutual Life Ins. Co. v. Davies, 12 Jones & 8. 172 (1878); Warner v. Beardsley, 8 Wend. 194 (1831), affirmed in Beardsley v. Warner, lb. 613 (1831). PENNSYLVANIA KULE. 613 tress will not discharge the surety, if it is disregarded.^ The request to sue may be made verbally, but it must be clearly proved by the surety to entitle him to a discharge." § 933. Pennsylvania Rule. — The rule adopted in New York has been also generally recognized with some modifi- cation in Pennsylvania. But it is held there also, that at common law mere delay in suing the principal after a sim- ple request to sue will not discharge the surety.* The request must be accompanied by a declaration on the surety's part, that unless suit is brought, he will be discharged, in order to effect that result.* Thus, a notice saying, "I will no longer be bail. Please take another bond from A. B.," is not such a notice as will discharge a surety, since the notice must require suit, as well as declare that the surety will claim his discharge, if it is not brought.^ On the other hand, it has been held sufficient notice, if the surety tells the payee' " to collect the note as he would not stand bail any longer."* A notice by the surety to the creditor to collect a note, given before it is due, will not serve to discharge him.'' But the notice may be given by an agent or to one.* A married woman, however, is entitled to personal notice of such de- mand, and notice to her husband will not bind her.* The surety is not obliged on making such request to tender to the creditor the expenses of suit, unless the creditor puts his refusal on that ground.^" A delay of four months on the holder's part after such request to sue, it has been held, is 'Ruggles V. Holden, 3 Wend. 216 (1829). 'Cope V. Smith, 8 Serg.. & R. 110 (1822). 'Dehuff V. Turbett, 3 Yeates 157 (1801). ^Gardner v. Ferree, 15 Serg. & K. 28 (1826) ; Erie Bank v. Gibson, 1 Watts 143 (1832) ; Wallesklare v. Searles, 45 Penna. St. 45 (1863) ; Skinner v. Jones, 47 Penna. St. 268 (1864). ^Greenawalt v. Kreider, 3 Pa. St. 264 (1846). "Strickler v. Burkholder, 47 Penna. St. 476 (1864). But in this case the surety was not discharged because the principal was insolvent at the time the notice was given. 'Hellen v. Crawford, 44 Penna. St. 105 (1862). *Wetzel V. Sponsler, 18 Penna. St. 460 (1852). i 'Skinner v. Jones, 47 Penna. St. 268 (1864). '"Wetzel V. Sponsler, supra. 614 PKINCIPAL AND SURETY. not a reasonable time,* But it is the duty of the creditor upon such request to avail himself of every reasonable means of prosecuting the debtor.^ An indorser cannot, however, defend against his indorsee on the ground that he gave him a written notice after the protest of the note to sue the maker at once.* § 934. Other States — Equity. — The Pennsylvania rule has been followed in some other States. Thus, in Alabama the surety will be discharged, if he gives such notice and is afterward damaged by the principal's becoming insolvent.* And if the note is held by a pledgee, the request to sue must be made to him.^ So, a surety is discharged in Colorado by the holder's disregard of his request to proceed against a principal then solvent;* and in Kansas by a written request to the holder to commence suit against the principal or allow the Surety to do so in his name.' And a postal card may be suflBcient evidence of such demand and notice.* In some States it has been held that a surety may protect himself against delay on the creditor's part by applying to a court of equity to compel him to proceed against the princi- pal ;^ and that a court of equity may, upon such application, compel the principal to discharge the debt, although the surety has not paid the debt himself nor been sued for it.*" So, it has been held that a court of equity may compel a creditor to first exhaust a collateral security, even though it is in another State.^' But in California where a decree 'Wetzel V. Sponsler, 18 Penna. St. 460 (1852). Ubid. 'Beebe v. West Branch Bank, 7 Watts & S. 375 (1844). 'Goodman v. Griffin, 3 Stew. 160 (Ala. 1830). 'Pickens «. Yarborough, 26 Ala. 417 (1855). « Martin v. Skehan, 2 Col. 614 (1875). 'Turner v. Hale, 8 Kans. 38 (1871). ^Vancil v. Hagler, 27 Kans. 407 (1882). 'Hartman v. Burlingame, 9 Cal. 557 (1858); Harris v. Newell, 42 Wis. 689 (1877). "Norton v. Reid, 11 So. Car. 593 (1867) ; Taylor v. Heriot, 4 Desaua. 227 (1812). "Hayes v. Ward, 4 Johns. Ch. 123 (1819). STATUTES KEQUIKING DILIGENCE. 615 requires the creditor to proceed, and he fails to do so, it will not discharge the surety, if he has been ordered by the decree to tender the costs of such proceedings to the creditor, and has tendered an insufficient amount.^ § 935. Statutes Requiring Diligence. — In several States it is provided by statute that the surety may require the holder after maturity of the debt by notice in writing " forthwith to commence suit" against the principal.'^ In Georgia he may give such, notice in writing, and the creditor must there- upon sue within three months or discharge the surety.' In Kentucky he must proceed at the next term after such notice, and issue execution within ten days after recovering judg- ment.* In some States the statute provides that when the surety apprehends the insolvency or removal of the princi- pal, he " may in writing require the creditor forthwith to sue " on the contract.^ So, in Iowa, a notice requiring the creditor to sue or to permit the surety to bring suit at his own cost in the name of the creditor.® In Ohio the statute provides that such notice may be given by the surety's per- sonal representatives.'' Some of these statutes provide that the holder must, on receiving such notice, bring suit against the principal within thirty days, "and proceed with due diligence, in the ordinary course of law, to judgment and execution," and that the surety shall be discharged in de- fault of his so doing.* The Iowa statute provides that the •Dane v. Corduan, 24 Cal. 157 (1864). 'Arkansas (1884 Dig. Stats. ? 6398) ; Indiana (1881 R. S. ? 1210) ; Missis- sippi (1880 E. C. ? 997) ; Missouri (1879 E. S. ? 3896) ; North Carolina (1883 Code 2 2097) ; Tennessee (1884 Code | 2725) ; Texas (1879 R. S. Art. 3660), applying also to indorsers, guarantors and drawers (lb. Art. 3668). ^Georgia (1882 Code § 2156). *Kentuelcy (G. S. 797). ^Illinois (1885 Starr & Curt. An. Stats. 2372) ; Ohio (1880 R. S. ? 5833) ; Virginia (1873 Code 993); but if on a bond with collateral condition, he should specify the breach to be sued on. So, in West Virginia (1884 Amd. Code c. 101 ? 1). Uowa (1880 R. C. ? 2108). ' OAio (1880 R.S. ?5834). 'Arkansas (1884 Dig. Stats. ? 6399) ; Missisrippi (1880 R. C. 2 997) ; Mit- gouri (1879 R. S. i 3897) ; Tennessee (1884 Code § 2725). Only sureties who join in the note are discharged in North Carolina (1883 Code ? 2098) ; and not sureties who are secured by collaterals. 616 PEINCIPAL AND SURETY. surety shall be discharged if the creditor neglects, for tea days, to sue or to permit the creditor to sue, as requested, or refuses to furnish a copy of the contract, and, where neces- sary, to produce the original for purposes of evidence.^ In Texas, the creditor must sue the principal at the next term or the term following.'' In other States, the creditor must sue within a reasonable time after such request, and proceed with due diligence and prosecute the suit to judgment and execution/. In Indiana, he must sue in a reasonable time^ on such notice, and prosecute his suit to judgment and exe- cution.* And in many States, such action must be brought, upon such request, by or against the legal representatives of the original parties.® § 936. Construction of Statutes Requiring Diligence. — In considering the foregoing statutes, it is to be remembered that regard will be had, in general, to the law of the place of payment rather than to that of the place where the suit is brought. And a discharge of the surety, under the law of the place of contract and of payment, will discharge him, wi^out regard to a different law of the forum." In Arkansas, prior to the statute, such request would not avail to discharge the surety.'' But, under the present stat- ute, the surety may require the holder to proceed within thirty days, as we have seen, and his failure to do so will discharge the surety, and the surety may plead such dis- charge in bar.* But, where one surety gives such a ndtice, it will not effect the discharge of his co-surety.' And the ^lowa (1880 R. C. ? 2109). =■ Texas (1879 R. S. Art. 3661). ^lUinois (1885 Starr & Curt. An. Stats. 2372) ; Ohio (1880 R. S. ? 5833) ; Virginia (1873 Code 993) ; West Virginia (1884 Amd. Code c. 101 g 3). *Indiana (1881 R. S. ? 1211). ^Arkansas (1884 Dig. Stats. ? 6415) ; Illinois (1885 Starr & Curt. An. Stats. 2373); Iowa (1880 R. C. ? 2111); Mississippi (1880 R. C. ? 997); Missouri (1879 R. 8. ? 3915) ; Ohio (1880 R. S. ? 5833) ; Tennessee (1884 Code § 2727). •Tenant v. Tenant, 3 Eastern Rep. 398 (Pa. 1885). See Chapter 1, supra. 'Hubbard v. Davis, 1 Ark. 296 (1826). 'State Bank v. Watkins, 6 Ark. 123 (1845) ; Wilson v. Tebbetts, 29 lb. 679 {1874). •Wilson V. Tebbetts, supra. INDIANA STATUTE. 617 Arkansas statute does not include an indorser under the description of a " person bound as security," and an indorser "will not be discharged by such notice.^ In Georgia, a notice to sue entitles the holder to three entire months, and the surety or indorser takes the risk of the maker's removal from the State during that time.^ Under the Georgia statute, a pledgee is entitled to receive such notice.' And the question for the jury to determine is whether the surety required suit to be brought or merely requested it as a favor.* If the surety requests the holder to proceed by distress, and he promises to do so, and after- wards fails to do it, the surety will be discharged thereby.* In Illinois, the acceptor of a bill for the drawer's accommo- dation is not entitled to his discharge as a surety by request- ing the holder to bring suit against the drawer.* § 937. Indiana Statute. — In Indiana, a notice to sue the principal will not be of any avail unless it is made in writing.' And a verbal notice will not avail the surety, even if the holder promises to bring suit accordingly and neglects to do so,* And no such right to a discharge existed in that State at common law.* It is sufficient compliance with the statute if the notice requires the holder to " proceed at once to collect the note."'" But a notice by one surety will not inure to the benefit of another. ^^ The surety may, by writ- ten notice, require the holder of a note payable in bank to bring suit within a reasbnable time, and three years is not, in such case, reasonable time." And the surety may require •EoBs V. Jones, 22 Wall. 576 (1874). 'Howard v. Brown, 3 Ga. 523 (1847). •McCrary v. King, 27 Ga. 26 (1859). 'Bethune v. Dozier, 10 Ga. 235 (1851). 'Bullard v. Ledbetter, 59 Ga. 109 (1877). •Diversy v. Moor, 22 111. 830 (1869). 'Colerick ti. McCleas, 9 Ind. 246 (1857). •Mendel v. Cairnes, 84 Ind. 141 (1882). •HalBtead v. Brown, 17 Ind. 202 (1861). "Franklin v. Franklin, 71 Ind. 573 (1880). "Cochran v. Orr, 94 Ind. 433 (1883). "McCoy V. Lockwood, 71 Ind. 319 (1880). 618 PRINCIPAL AND SURETY. the creditor to proceed under the statute, although the prin- cipal debtor is then dead and his estate in process of settle- ment.^ But he will not be discharged by such notice after the death of the principal, unless it appears that there is some estate left on which an administration is possible.'' § 938. Other Statutes. — In Kentucky, the creditor is enti- tled, under the act of 1828, before mentioned, to sixty days' notice to proceed against the principal.^ And such notice must be in writing.* In Mississippi, the principal must be sued by the creditor on statutory notice or the surety dis- charged, but notice by one surety will be of no avail to discharge a co-surety.^ A statutory requirement that the notice should be in writing may be waived by the creditor, and a promise to sue on receiving verbal notice from a surety, will amount to such waiver.^ In Missouri, a surety may show that he gave such notice to the holder to sue on the note, more than thirty days before." And where the holder under such notice sues a principal in another county, where he then resides, and the action is dismissed on account of the writ not being duly returned, it is the duty of the holder to proceed by an alias writ, and his failure to do so discharges the surety.* In Ohio, the notice is of no avail under the statute, unless it is given in writing.* And it must " require " the creditor forthwith to commence an action," and must announce that he will " stand no longer " as surety." In Tennessee, the notice to proceed must be made and proved, in accordance with the statute, to be of 'Daily v. Robinson, 86 Ind. 382 (1882). ^Franklin v. Franklin, 71 Ind. 573 (1880). 'Nichols V. McDowell, 14 B. Mon. 6 (1853). 'Hibler v. Shipp, 78 Ky. 64 (1879). 'Ranney v. Purvis, 38 Miss. 499 (1860). « Taylor v. Davis, 38 Miss. 493 (1860). 'Coates V. Swindle, 55 Mo. 31 (1874). * Peters v. Linenschmidt, 68 Mo. 464 (1874). •Jenkins v. Clarkson, 7 Ohio 72 (1835). So, in Missouri, Petty v. Doug- lass. 76 Mo. 70 (1882) ; and in Mississippi, Bridges v. Winters, 42 Miss. 135 (1868). '"Baker v. Kellogg, 29 Ohio St. 663 (1876). "Iliff D.Weymouth, 40 Ohio St. 101 (1883). ESTATE OF DECEASED PEINCIPAL. 619 any avail.^ And a surety who is entitled to a discharge under such a notice may there have a perpetual injunction against proceedings on the creditor's part, the principal debtor being a non-resident, but having property in the State and not being sued within two years after notice given.^ In Virginia, the creditor must sue within a reason- able time or discharge the surety.* In West Virginia, if the surety gives notice according to the statute,- the creditor cannot defeat his statutory claim to a discharge by proving that he has suffered no damage.* § 939. Estate of Deceased Principal. — In Illinois the cred- itor is required by statute to present his claim against the estate of a deceased principal within two years after his death on pain of discharging the surety.* And this is necessary, although the principal's estate is insolvent.® A subsequent promise, however, upon the surety's part will amount to a waiver of such discharge.' And if the surety is himself sued within two years after the principal's death, he cannot avail himself of the creditor's neglect to sue the principal within that time.* But in the absence of express statutory requirement, a creditor is not obliged to prove his debt against the princi- pal's estate, and his failure to do so will not discharge the surety.' So, a surety will not be discharged by neglect of the payee to prosecute the estate of the principal or of a co-surety.^" And a statute, prescribing. the time within which 1 Simpson v. Stah, 6 Baxt. 440 (1873). = Hancock v. Bryant, 2 Yerg. 476 (1830). 'Wright V. Stockton, 5 Leigh 153 (1834). *Gillilan v. Lu(lington, 6 W.Va. 128 (1873). ^House V. Trustees, 83 111. 368 (1876). The original act of 1869 was modi- fied in 1874 to limit the surety's discharge to the damages actually sus- tained by reason of the failure to present the claim, 1885 Annot. Stata. [S. & C] 2373; Brockman v. Sieverling, 6 Bradw. 512 (1880). "Tipton V. Carrigan, 10 Bradw. 318 (1882). ' Brockman v. Sieverling, supra; but not if the promise was made in igno- rance of the ditcharge, Tipton v. Carrigan, sttpra, 'Grindall v. Ruby, 14 Bradw. 439 (1883). •Sibley v. McAUaster, 8 N. H. 389 (1836). "Camp V. Bostwick, 20 Ohio St. 337 (1870). 620 PRINCIPAL AND SURETY. claims should be presented against the estate of a deceased debtor, will not operate as a discharge of the surety, if the creditor neglects to present his claim to the principal's estate within the prescribed time.^ The creditor is not, in gen- eral, obliged to resort to the principal's estate, but in Penn- sylvania he may be required by the surety to do so.^ In general, however, mere failure on the creditor's part to prosecute the estate of a principal who has died insolvent, although requested by the surety to proceed against such estate, does not amount to a " positive and willfiil act " which will discharge the surety.* ^Moore v. Gray, 26 Ohio St. 525 (1875). •Cope V. Smith, 8 Serg. & R. 110 (1822). 'Bank of Manchester v. Bartlett, 13 Vt. S15 (1841). DISCHAEGE BY PAYMENT. 621 II. DISCHAEGE BY RELEASE, &C. 940. Discharge of other Parties. 941. by Payment. 942. Satisfaction — Novation. 943. Taking Collateral. 944. Part Payment by Principal — Tender. 945. Insolvency of Principal — Other Proceedings. 946. Release. 947. of Principal. 948. Covenant not to Sue. 949. Eelease Eeserving Rights. 950. Bankruptcy. 951. Release of Collateral. 952. Misuse of Collateral. 953. Waiver of Discharge. § 940. Discharge of other Parties. — In general, anything which discharges the principal debtor will also discharge the surety.^ So, the discharge of any party to commercial paper works a discharge of all subsequent parties, who could have looked to him for their indemnity.'^ The discharge of a surety on such paper does not, however, effect the discharge of a guarantor.^ But if the principal and surety have signed the paper in such form as to be jointly liable to the holder, e. g. as joint makers, a release of the surety will effect a dis- charge of the principal co-maker.* But, in general, a surety may be discharged without discharging the principal debtor. In like manner a party may be discharged or released with- out affecting the liability of any prior party. § 941. Discharge by Payment. — Where a bill or note is paid by the principal, or tender of payment is made by him, even after maturity, the surety will be discharged, although the payment or tender may be insufficient to effect a com- plete discharge of the principal.^ So, if a bill or note is partly paid by a dividend from the estate of an insolvent 'Byles 246. ^Bvles 248; Smith v. Knox, 3 Esp. 46; Claridge v. Dalton, 4 M. & S. 232; VL&\\v. Cole, 4 Ad. & El. 577. 8 Worcester, &c.. Bank v. Hill, 113 Mass. 25 (1872). *Byles 257 ; Chitty 472 ; Nicholson v. Revill, 4 Ad. & EI. 675 ; S. C, 6 Nev. & M. 192. ^Byles 251 ; 2 Edwards § 724. 622 PRINCIPAL AND SURETY. principal, who executed the bill as drawer, it will operate as a satisfaction pro tanto in favor of the estate of the surety who signed as an accommodation acceptor; and if the surety's estate is insolvent, the holder can only make proof against it as a creditor for the balance due.^ If a note is paid by the principal maker, it will discharge the surety, notwithstand- ing a secret agreement between such makfer and the holder to keep it alive as against the surety.^ And if an execution against the principal is returned " satisfied in full," it will be presumptive evidence of payment and discharge by him.* So, if the holder falsely represents to the surety that the note is paid, the surety having no knowledge to the contrary for several years, the holder will not be allowed afterward to claim that the note is not paid and the surety not discharged.* And a false representation of this sort made by the cashier of the bank that held the note will discharge the surety ; although it would not do so, it is said, if he were himself a director of the bank.^ The principal who makes a payment may direct how it shall be appropriated, and such appropriation will bind the surety.® But if a payment made by the principal is afterward refunded by order of the court, as a fraudulent preference or otherwise, it will not eflfect his discharge or that of the surety,'^ So, a surety will not be entitled to the benefit of a payment made by a creditor of the principal under a special agreement with the holder, and made without the intention of satisfying the note.* So, a principal may act as the agent iQook V. Lister, 32 L. J. C. P. 121 (1863). 'Eastman v. Plumer, 32 N. H. 238 (1855). 'Manufacturers' Union Co. v. Todd, 4 Mo. App. 591 (1877). *Whitaker v. Kirby, 54 Ga. 277 (1875). ^Merchants' Bank v. Kudolf, 5 Neb. 527 (1877). "Allen V. Jones, 8 Minn. 202 (1862). But the holder should not appro- priate payments to the prejudice of the surety, 2 Parsons 223. 'Byles 251 ; Pritchard v. Hitchcock, 6 Man. & G. 151 ; Petty v. Cook, L. R. 6 Q. B. 790 ; or because of bankruptcy of principal, Watson v. Poague, 42 Iowa 582 (1876). * Herbert v. Servin, 12 Vroom 225 (187^). STJEETY DISCHAKGED BY SATISFACTION. 623 of another in taking up a note, and such action will not amount to payment of the note or discharge of the surety.^ § 942. Surety Discharged by Satisfaction — Novation. — In general, as we have seen, the drawer of a bill is surety for the acceptor. But where the holder, after non-acceptance by the drawee, drew a second bill on drawer and drawee jointly, its acceptance by the latter will not amount to a payment which will discharge the drawer from liability.* But if a contract is satisfied by a novation, which is not assented to by the surety, he will be discharged by it.* This is the case where subsequent holders make an agree- ment between themselves for the allowance, by way of set- off, of a remote indorsee's liability to the maker,* or where an arrangement is made for the substitution of a new secur- ity." A distinction is' made, however, in such cases, between securities taken in exchange and taken as collateral, and in the latter case they will not amount' to a novation or dis- charge.^ Where a note is paid by the giving of a new note, secured by mortgage, and the old note is surrendered, indorsers or sureties on it will be discharged.^ So, where the holder enters into an agreement with the surety to take new securi- ties from the principal, in satisfaction of the original note, and the arrangement is acted on by the surety, he will be discharged, although it becomes, afterward, impracticable for the principal to carry it out.* If the principal pays a note by giving a check of his firm, post-dated, it will, in like manner, discharge his indorser.* So, if he pays it by •Du Bois V. Stoner, 11 Bradw. 403 (1882). 'Suckley v. Furse, 15 Johns. 338 (1818). 'Sneed i). White, 3 J. J. Marsh. 525 (1830). *Keed v. Garvin, 12 Serg. & E. 100 (1824). 'Smith V. Harper, 5 Cal. 330 (1855). «2 Edwards ? 774. 'Rhodes v. Hart, 51 Ga. 320 (1874). ^Gardner v. Fisher, 87 Ind. 369 (1882). •Okie V. Spencer, 2 Whart 253 (1836). 624 PRINCIPAL AND SURETY. a new note, even after the indorser's liability has already become fixed.^ So, if the holder of a note receives a new note from one partner, in payment of a firm debt, knowing such partner's agreement to assume the debts of the firm, the retiring partner, who has thereby become a surety, will be discharged.^ And where the holder takes in payment a new note, with a new surety, without the original surety's consent, the latter will be discharged, notwithstanding an agreement between the holder of the original note and the maker to keep it alive as collateral security for the new note.^ So, if the principal gives to the holder of a note a bill of sale of personal property, from which the debt might be realized, it will dis- charge the surety.* So, a surety for advances on a bill of lading will be discharged by the principal's drawing a bill of exchange in favor of the creditor against such advances, even though the bill was afterward dishonored.^ § 943. Effect of Taking Collateral.— Where a bill is drawn by two partners, and the holder subsequently takes the note of one of them, retaining the original bill, with an express reservation of his rights against the surety (the other part- ner) he will not be discharged by such act.* • So, the holder of a note will not discharge the surety by taking a separate note from the principal for additional interest ;'' or by taking a new note, with a new surety, whose signature proves to be forged;' or by taking a note which is itself a forgery;* or by taking a forged note as a renewal and receiving an ad- vance payment of interest.^" And, in general, if the holder takes collateral from the principal, it will not effect the dis- 'Hill V. Bostick, 10 Yerg. 409 (1837). ^Smith V. Shelden, 35 Mich. 42 (1876). 'Greening v. Patten, 51 Wis. 146 (1881). * Mutual Loan Fund v. Ludlow, 28 L. J. C. P. 108. ^Bellingham v. Frere, 1 Moo. P. C. 333. « Byles 250 ; Chitty 461 ; Bedford v. Deakin, 2 B. & Aid. 210 ; S. C, 2 Stark. 178. 'Coats V. McKee, 26 Ind. 223 (1866). 'Emerine v. O'Brien, 36 Ohio St. 491 (1881). 'Lovinger v. First Nat. Bank, 81 Ind. 354 (1882). '"The interest being in such case treated as a payment on account, Lovinger v. First Nat. Bank, supra. PART PAYMENT OE TENDER BY PRINCIPAL. 625 charge of the surety.^ Thus, an assignment of personal property by the principal, expressly for " further security," is merely for collateral, and will not discharge the surety.* So, a bond and warrant, to confess judgment, may be given as collateral and not in satisfaction.^ So, taking a mortgage as collateral will not discharge the original surety,* although the mortgage may contain a covenant to pay the debt in a given time.^ So, the surety will not be discharged by the holder's act in taking a deed of trust from the principal,* or in taking a judgment note with a trust deed, but without an extension of time.' So, taking a bill of exchange as collat- eral and agreeing to apply the proceeds on the note, will not amount to an extension of the note or discharge the princi- pal.' So, a second and larger bill, received after the dis- honor of the first, without any express reference to it, will be regarded as collateral, and will not eflFect an extension of the debt or a discharge of the surety.* And the surety will not be discharged, of course, where there is any evidence of his assent to the taking of the collateral.^" § 944. Part Payment or Tender by Principal. — Where the holder receives payment in part, and takes security for the balance from the acceptor, he will thereby discharge an indorser or surety.^^ So, if he refuses a tender of pay- ment made by the principal, he will discharge the surety ;^^ although the tender is made after maturity and is not kept •Byles 255; 2 Daniel 338; 2 Edwards ? 774; 1 Parsons 245; Story on Prom. Notes § 485 ; Gordon v. Calvert, 4 Russ. 581 ; Calvert v. Gordon, 7 B. & C. 809. ^Twopenny v. Young, 3 B. & C. 208; S. C, 5 Dovfl. & R. 259. 'Byles 255; Chitty 461; Norris v. Aylett, 2 Campb. 329; Bell v. Banks, a Man. & G. 258 ; S. C, 3 Scott N. R. 497. 'Thurston v. James, 6 R. 1. 103 (1859). ^Brengle v. Bushey, 40 Md. 141 (1874). «Miller v. Knight, 7 Baxt. 127 (1874) ; S. C, 6 lb. 503 (1873). '.Sayre v. King, 17 W. Va. 662 (1880). «Wade V. Staunton, 5 How. 631 (Miss. 1841). "Pring V. Clarkson, 1 B. & C. 14 ; S. C, 2 Dowl. & R. 78. "Clark V. Devlin, 3 Bos. & P. 363. "English V. Darley, 2 Bos. & P. 61 ; S. C, 3 Esp. 49. j "Joslyn V. Eastman, 46 Vt. 258 (1874). But not a tender in Confederate currency, Bonner v. Nelson, 57 Ga. 433 (1876). voi,. II. •"!* 626 PKIIfCIPAL AND SUEETY. good by the principal.^ But the contrary has been held, and it is said that the surety, in pleading a tender by the principal, must aver hie continued readiness to pay.^ And where payment was offered by the principal to the payee's agent, and the agent told him to wait, as he had no use for the money at the time, this has been held not to amount to such a refusal of a tender as to discharge the surety.^ A mere offer to pay on the principal's part, which falls short of a formal tender, will not discharge a surety.* But where a surety has been discharged by an arrangement for pay- ment made between the principal and the payee of the note, his liability cannot be afterward revived by a subsequent agreement (to which he is not a party) reconsidering the first arrangement.' An actual payment by the principal of part of the debt will discharge the surety to that extent.^ So, an actual pay- ment of usury by him will be treated as a part payment on account, and discharge the surety "pro tanto} But a part payment by the principal without an extension of time will not discharge the surety beyond the amount paid.* And even a part payment by the principal, coupled with the discontinuance of a suit against him or with his discharge from an execution against his body, will not discharge the surety;' unless the part payment is accepted by the creditor in full satisfaction of the debt.'" So, part satisfaction with- out the surety's consent will not discharge the surety, although received by the holder on demanding payment." •Fisher v. Stockebrand, 26 Kans. 565 (1881). = Wilson V. McVey, 83 Ind. 108 (1882). "Clark V. Sickler, 64 N. Y. 231 (1876). *Winnie v. Colorado Springs Co., 3 Col. 155 (1876). 'Gibson v. Eix, 32 Vt. 824 (1860). «Byles 253; Walwyn v. St. Quintin, 1 Bos. & P. 652; S. C, 2 Esp. 515. 'Cady V. Goodnow, 49 Vt. 400 (1877). «Chitty 472; 1 Parsons 245; Gould v. Robson, 8 East 580; Walwyn v. St. Quintin, sufira. 'Lawson v. Snyder, 1 Md. 71 (1851). "Olendorff v. Union Bank of Baltimore, 31 Md. 126 (1869). • "Chitty 472; Hewitt V.Goodrich, 2 Car. & P. 468; Tassel v. Lewis, 2 Ld. Eaym. 744; Kellock v. Eobinson, 2 Stra. 745; Hull v. Pitfield, 1 Wils. 48. INSOLVENCY OF PEINCIPAL. , 627 But part payment received in satisfaction of a debt, with knowledge of the relation of the parties as principal and surety, will discharge the latter.^ § 945. Insolvency of Principal — Other Proceedings. — A surety will not be discharged by an attachment against the principal's property, until it is applied in payment of the debt.'* But if the drawer of a bill by an assignment of his property supplies sufficient funds in the assignee's hands for the payment of the bill, an accommodation acceptor will be discharged, and the creditor will be required to resort to that fund.* But where the principal makes an assignment, until the dividend is ascertained, the surety's liability will be reduced only by such dividends as have been actually declared.* Where the principal conveys his property to the holder of a bill, the surety will not be discharged without actual proof of its delivery to the creditor and acceptance by him." So, a surety will not be discharged by reason of the holder or creditor receiving a dividend from the estate of the bankrupt principal;^ or proving his claim against such estate, the dividend not being yet ascertained;^ or by his recovery of an unsatisfied judgment against the principal;* or taking a judgment by confession against him.' So, where one of several joint and several makers confesses judgment, and a levy for part of the debt is made against him, the others will not be released thereby.^" If the holder, however, discharges the principal from a 'Paddleford v. Thacher, 48 Vt. 574 (1876). ' Amoskeag Bank v. Robinson, 44 N. H. 503 (1863). ^Bradford v. Hubbard, 8 Pick. 155 (1829). *Lincoln v. Bassett, 23 Pick. 154 (1839). 'Haywood v. Lewis, 65 Ga. 221 (1880). ^Byles 254; Brown v. Carr, 2 Buss. 600; S. C, 7 Bing. 508; Langdale v. Parry, 2 Dowl. & R. 337. 'New Bedford Sav. Bank v. Union Mill Co., 128 Mass. 27. Proof against a bankrupt principal, the dividend not being ascertained, is no bar to recovery against surety. *Byles 254; Claxton v. Swift, 2 Show. 441, 1 Lutw. 878; Hardin v. John- ston, 58 Ga. 522 (1877). 'Citizens' Sav. Bank v. Oleson, 47 Iowa 492 (1877). "'Chitty472; Ayreyw. Davenport, 2 New 474; Ex parte Gifford, 6 Yes. 805; Nicholson v. Eevill, 4 Ad. & El. 675; S. C, 6 Nev. & M. 192. 628 PRINCIPAL AND SURETY. capias ad satisfaciendum, he will thereby discharge the surety from his debt.^ So, if the holder discharges the principal's property from the lien of an execution, it will discharge the surety.'' So, if he consents to have such execution returned without a levy which might have been made.' In like man- ner, if he allows an execution against two sureties, which might have realized half the debt from the property of the co-surety, to be returned unsatisfied, he will thereby release the other surety pro tanto} On the other hand, the holder may discontinue an attachment against the principal and transfer the note to the sureties under the attachment, thereby suffering the attached property to be taken by other creditors, without discharging the original surety.^ § 946. Discharge by Eelease. — If the holder promises verb- ally after maturity of the paper to look to the principal and exonerate the surety, it has been held that the surety may set up such agreement as a defense.^ But a parol release of the surety executed without consideration will not discharge him.'' After judgment has been rendered against principal and surety, and an appeal taken by the surety, an agreement on the holder's part to look to the principal only, if the surety will withdraw his appeal, is upon a sufficient consid- eration, and will discharge the surety.* So, an executed agreement to discharge the surety and take another in his stead will release the surety, and may be proved by him by parol.* ^Byles 253; Chitty 464. But the discharge of. an execution against the property of an indorser will not affect prior parties, Hayling v. Mulhall, 2 W. Bl. 1235. 'Sterne v. McKinney, 79 Ind. 578 (1881). So, a discharge of the acceptor will discharge subsequent parties, English v. Darley, 2 Bos. & P. 62; S. C, 3 Esp. 49. 'Sterne ii. Vincennes Bank, 79 Ind. 549 (1881). 'Rice V. Morton, 19 Mo. 263 (1854). 5 Bellows V. Lovell, 5 Pick. 307 (1827). « Harris v. Brooks, 21 Pick. 195 (1838). 'Goodman v. Griffin, 3 Stew. 160 (Ala. 1830); Miller v. Knight, 6 Baxt. 5U3 (1873). ^Wimberly v. Adams, 51 Ga. 423 (1874). "Reid V. Nunnelly. 24 Ark. 366 (1866). EFFECT OF KELEASING PEINCIPAL. 629 And, in general, a release of one of two joint-obligors will discharge the other ;^ except where the holder's remedy against the other is expressly reserved.^ So, it has been held that where a principal and surety sign a. joint and several bond, and the holder releases the principal, or agrees with him for a surrender of the bond on his personal guaranty of payment, the surety will be thereby discharged.^ But where an obligation is joint and several, a court of equity will not, in general, give to the release of one an effect beyond what was intended by the parties at the time.* A release of one surety will, in general, discharge a co-surety.* But a promise, made by the holder of a joint and several note to one of the makers, on receiving part payment from him, that he would look to the other for the balance, is without sufficient consideration and will not discharge either.® So, a release under seal to one joint-maker, in consideration of a part payment by him, will not discharge the other, if all rights against him are expressly reserved.'' § 947. Effect of Releasing Principal. — In general, any change or alteration of the original stipulation of the prin- cipal will discharge the surety.* Mere delay in proceeding against the principal is not enough, but the neglect of any act expressly agreed upon, or the release or surrender of any security held by the creditor, will amount to such discharge.* A release of the principal will discharge the surety, as we have seen;^° but a valid consideration is necessary to give such effect to the release." So, the release of an indorser 'Cocke V. Nash, 9 Bing. 346, 2 Moo. & Sc. 434. 'Yates V. Donaldson, 5 Md. 389 (1854). 'Skip V. Huey, 3 Atk. 91. *Clagett V. Salmon, 5 Gill & J. 314 (1833). 'Chitty 471 ; Stirling v. Forester, 3 Bligh 575. 'Smith V. Bartholomew, 1 Mete. 276 (1840). 'Kenworthy v. Sawyer, 125 Mass. 28 (1878). 'Byles 250; Bonsor v. Cox, 4 Beav. 379; affirmed, 6 Beav. 110; Polaki). Everett, L. R. 1 Q. B. D. 669 ; Croydon Gas Co. v. Dickenson, L. R. 2 C. P. D. 46. •Cherry v. Miller, 7 B. J. Lea 305 (1881). "Byles 251 ; Harrison v. Courtauld, 3 B. & Ad. 36 (1832). "Anthony v. Capel, 53 Miss. 350 (1876). 630 PRINCIPAL AND SURETY. will, in general, discharge subsequent indorsers.^ An agree- ment on the part of other creditors to discharge the principal is sufficient consideration for a like agreement by the holder of a bill or note.'^ But if the release of the principal is made without consideration, and after suit begun against the indorser, he will not be released.^ The holder may release the principal, however, and discharge the surety at common law by making the principal his executor.* If the holder of a note releases the maker, he will thereby discharge the indorser; and if such release amounts to a satisfaction and discharge of the note, the indorser will be discharged, although he may have assented to it.^ And it has been held that the fact of a surety joining in a release to the principal will not prevent his own discharge, where the holder has released the principal.* And even where the surrender of a note to the principal was procured by fraud on his part, the surety would be discharged if he was ignorant of the fraud and relied to his own prejudice on such surrender .'^ So, if a note is surrendered and canceled by mistake, upon payment of another note, the surety cannot be held liable upon it in an action brought against him some months after- ward, both principal and payee having failed in the mean- while.* § 948. Covenant not to Sue. — A general covenant not to sue the principal amounts to a release, and as such discharges the Surety.* But an agreement on the holder's part without due consideration not to sue the principal, if he makes cer- tain payments from time to time, will not have that effect.^" 'Hawkins v. Thompson, 2 McLean 111 (1840); Newcomb v. Raynor, 21 Wend. 108 (1839). 'Paddleford v. Thacher, 48 Vt. 574 (1876). 'Crawford v. Millspaugh, 13 Johns. 87 (1816). *Byles 252. *Eggemann v. Henschen, 56 Mo. 123 (1874). •McDonald, In re, 14 Nat. B'k'cy Reg. 477 (1876). ^Kirby v. Landis, 54 Iowa 150 (1880). «Brown v. Haggerty, 26 111. 469 (1861). " »Byle8 251. "Keirn v. Andrews, 59 Miss. 39 (1881). RELEASE. 631 And where a holder says that he has made a gift of the note to the maker, and afterward changes his mind, the surety will not be discharged by such proposed release of the maker, unless he has been prejudiced and induced by it to alter his situation.^ So, the breach of an agreement on the creditor's part with the principal debtor for further credit, if he pro- cured a certain acceptance, cannot avail the surety as a dis- charge ; although the agreement was communicated by the principal debtor to the surety without the knowledge or assent of the creditor.^ In like manner, a statement made by a bank cashier entirely outside of his authority will not discharge the surety, nor create an estoppel in his favor as against the bank which held the paper.^ The release of any remedy which belongs to the holder as against the principal will release the surety,* e. g. the release of a judgment against the principal,® or of an execution.* But merely countermanding an execution in the hands of the sheriff before levy made,'' or releasing an execution against the person but retaining all the property of the principal debtor,* will not discharge the surety. § 949. Release — Reserving Rights. — A release of the prin- cipal, reserving the holder's rights against the surety and the surety's rights against the principal, will not effect a discharge of the surety.® So, a release, " which is in no way to affect the liability of the other parties," will be construed as a covenant not to sue rather than a release.^" So, it would be sufficient reservation of the holder's rights against the. 'Driskell v. Mateer, 31 Mo. 325 (1861). 2 Hull V. Carter, 86 N. C. 522 (1882). 'Daviess Co. Sav. Assoc, v. Sailor, 63 Mo. 24 (1876). *Byles 250; Watts v. Shuttleworth, 5 Hurlst. & N. 235; affirmed 7 lb. 853. 'Folger V. Donsuran, 37 Wis. 619 (1875). •Byles 253; May hew v. Crickett, 2 Swanst. 190. 'Humphrey v. Hitt, 6 Gratt. 509 (1850). * Commissioners of Berks Co. v. Boss, 3 Binn. 520 (1811). 'Stewart v. Eden, 2 Cai. 121 (1804). "Russell V. Adderton, 64 N. C. 41,7 (1870). 632 PRINCIPAL AND SURETY. surety, if he adds to his signature the words "expressly understood that the sureties are not released."' So, after judgment against maker and accommodation indorser, a release of the maker with reservation of rights against the indorser will have no effect as a discharge of the latter.* And such liability will be preserved by the holder's reserv- ing " the securities given him upon notes or in any other manner."* And the holder may show a parol agreement reserving his rights against the surety.* But where an agreement is made for a compromise without such reserva- tion, the surety will be discharged, although the agreement is not carried into effect, and although a new note is after- ward given with an express reservation.® § 950. Discharge by Bankruptcy. — The bankruptcy of the principal, happening after the making of the instrument, will not operate as a discharge of the surety,^ nor entitle the surety to a stay of proceedings until the principal's estate is distributed.'' And the surety will not be released by a claim on the holder's part, made against the insolvent estate of a deceased principal, except so far as dividends are re- ceived from it.* And where joint debtors are discharged in separate bankruptcy proceeding, the joint debts may be proved against the estate of each joint debtor.' The dis- charge of a principal debtor in a bankruptcy proceeding or by an involuntary composition, will not release the surety,^* especially where he is fully indemnified." So, the holder's 'Mueller v. Dabschuetz, 89 111. 176 (1876). "Bell V. Manning, 11 Grant U. C. Ch. 142. 'Stirewalt v. Martin, 84 N. C. 4 (1881). *Bank of Montreal v. McFaul, 17 Grant U. C. Ch. 234. 'Germania Bank v. Frost, 11 Jones & S. 117 (1878). •Noble V. Scofield, 44 Vt. 281 (1872). 'Gregg V. Wilson, 50 Ind. 490 (1875). ^Greathouse v. Kline, 93 Ind. 598 (1883). 'Hammond, Ex parte, L. it. 16 Eq. 614. '"Byles 254; Megrath v. Gray, L. R. 9 C. P. 216; Jacobs, Ex parte, L. R. 10 Ch. App. 211; Ellis v. Wilmot, L. R. 10 Exch. 10; Simpson v. Henning, L. K. 10 Q. B. 406; Ray v. Brenner, 12 Kans. 105 (1873). "Moore v. Paine, 2 Wend. 123 (1834). DISCHARGE BY BANKRUPTCY. 633 assent to an assignment made by a co-surety, without negli- gence on his part, will not release the remaining surety.^ And a creditor does not release a surety by consenting to a resolution for a composition in bankruptcy, as provided for by act of Congress.^ On the other hand, except as other- wise provided by statute, a surety is released by a voluntary composition with the principal without his consent.^ But a surety who is a joint drawer will not be discharged by the fact that no demand has been made of him until after a composition deed had been entered into between the princi- pal debtor and his creditors.* If a composition in bankruptcy reserves the creditor's rights against sureties, it, will amount to a covenant not to sue, and will not discharge the surety,^ So, if the holder releases the maker of a note on a general assignment by him, excepting " any lien or pledge obtained as security for the debt," his rights will remain unimpaired against the indorser.^ So, if the holder enters into a composition with the acceptor of a bill, reserving all remedies against other parties, he will not discharge a surety thereby.'' So, if he signs a composition deed with a reservation of all rights against sureties.* If an indorser or surety joins the holder in a composition deed, he will not be discharged by it.® So, if the holder joins in insolvency proceedings against the principal, at the surety's request, and receives a dividend in such proceed- 'Paul V. Logansport Nat. Bank, 60 Ind. 199 (1877). » 2 Daniel 341; 2 Edwards i 782; Guild v. Butler, 122 Mass. 498 (1877); Act of 1874 ? 17. 'Olendorfif v. Union Bank, 31 Md. 126 (1869). So, too, obiter, Bangs v. Strong, 10 Paige 11, 7 Hill 250 (1843). 'Perfect v. Musgrave, 6 Price 111. "Bateson v. Gosling, L. R. 7 C. P. 9. 'Gloucester Bank t>. Worcester, 10 Pick. 628 (1830). 'Chitty 466; Boultbee v. Stubbs, 18 Ves. 20. 'North V. Wakefield, 13 Q. B. 258. So held as to drawer and indorser as sureties for acceptor, Sohier v. Loring, 6 Gush. 537 (1850) ; or drawer alone, Wood V. Bret, 9 Grant U. C. Oh. 452 ; or indorser as surety for maker, Tobey V. Ellis, 114 Mass. 120 (1873). •Bruen v. Marquand, 17 Johns. 58 (1819). 634 PRINCIPAL AND SURETY. ing«;^ or if he agrees to discharge aa insolvent principal without consideration and on receipt of a dividend which is not paid.^ § 951. Release of Collateral. — If the creditor gives up collateral securities held by him, he will discharge the surety to the extent of such collateral.* So, if he agrees to dis- charge a collateral mortgage for a sum less than its face, to be received in satisfaction.* So, if a surety has signed a note to be used as collateral for another note, and the holder, without his knowledge or consent, releases an indorser on the other note, it will discharge him.^ If the holder of a note has a lien which is sufficient to satisfy the debt, and voluntarily surrenders it, he will discharge the surety." So, if he releases an execution levied against the principal,' or an attachment.' If a surety joins in executing a note as collateral for another note made by the principal alone, he will not be discharged by the fact of the holder bringing suit upon the principal's individual note.' So, if a note is secured by chattel mortgage on personal property, which the holder seizes on another claim as the property of another person, a surety on the note will not be discharged thereby.^" So, if the holder of a note and collateral mortgage causes the 1 First Nat. Bank of Biddeford v. McKenney, 67 Me. 272 (1877). ' Warrensburg, &c., Ass. v. ZoU, 83 Mo. 94 (1884). "2 Daniel 326; 1 Edwards § 414; 2 lb. | 777; 1 Parsons 242; Story on Prom. Notes ? 485; American Bank v. Baker, 4 Mete. 164 (1842); Otis v. Van Storch, 1 Eastern Rep. 461 (R. 1. 1885) ; Holland v. Johnson, 51 Ind. 346 (1875) ; Barron v. Shields, 13 La. An. 57 (1858) ; Union Nat. Bank v. Corley, 27 lb. 202 (1875) ; Kirkpatrick v. Howk, 80 111. 122 (1875) ; Sample v. Coch- ran, 84 Ind. 594 (1882) ; Austin v. Belknap, 54 Vt. 495 (1882). * Paine v. Jones, 76 N. Y. 274 (1879). 'SUllings V. Bank of Americus, 59 Ga. 70l'(lg77). « Ferguson v. Turner, 7 Mo. 497 (1842) ; Sample v. Cochran, 82 Ind. 260 (1882), the principal being a married woman, and not bound by her promis- sory note. ' Curan v. Colbert, 3 Ga. 239 (1847) ; Brinton v. Gerry, 7 Bradw. 238 (1880). « Springer v. Toothaker, 43 Me. 381 (1857). 'Dalton V. Woburn Agric, &c., Assoc, 24 Pick. 257 (1837). "> Sheehan v. Taft, 110 Mass. 331 (1872). But if the holder of a note, secured by a collateral mortgage, takes the goods covered by it under a distress warrant as landlord, he will thereby discharge the surety, Pearl v. Deacon, 24 Beav. 186 ; S. C, 1 DeG, & J. 461. DISCHARGE BY MISUSE OF COLLATERAL. 635 land to be sold, and the proceeds are appropriated to the payment of prior incumbrances, the surety will still remain liable.^ And it seems that a creditor may abandon collat- eral security for other property that proves less valuable, rather than make advances on the original property to clear off prior incumbrances.^ So, if the creditor releases part of the land mortgaged for his security, without the surety's consent, he will not discharge the surety if sufficient remains in his hands for full indemnity to the surety.^ To release a surety by surrendering collateral, it must be valid security and must have some value. The surrender of a worthless bond, which could not have benefited the surety, will not release him.* Where the maker of a note disposes of property covered by a collateral chattel mortgage, without the holder's con- sent, although with his knowledge, it has been held not to discharge the surety.^ And this is also the case if the holder releases collateral securities with the consent of the surety.' § 952. Discharge by Misuse of Collateral. — If the holder of a bill or note misappropriates collateral securities or loses them by gross negligence, the surety will be in like manner discharged.'' So, too, where the security is destroyed or ren- dered valueless by the holder's negligence.* So, if the cred- itor, by an agreement with the principal, destroys the value of a collateral security or renders it unavailable to the surety, and the surety pays the debt in ignorance of such agreement, ' Riddle v. Bowman, 27 N. H. 236 (1853) ; Neff' s Appeal, 9 Watts & S. 36 (1845). ^ McCune v. Belt, 38 Mo. 281 (1866). 'Saline Co. v. Buie, 65 Mo. 63 (1877). *Loomis V. Fay, 24 Vt. 240 (1852). So, an invalid warrant of attorney, Union Nat. Bank v. Cooleyi 27 La. An. 202 (1875). 'Freaner «. Tingling, 37 Md. 491 (1872). * Pence v. Gale, 20 Minn. 257 (1873) ; and after repeated renewals for eight years, and large partial payments, it will be presumed that the surety had consented to whatever was done with the collateral, Bank of Gettysburg v. Thompson, 8 Grant Cas. 114 (1857). ' Byles 252 ; e. g. by his gross neglect in registering and taking possesaion under a collateral chattel mortgage, Wulfif v. Jay, L. R. 7 Q. B. 756. •Smith V. Day, 23 Vt. 656 (1851). 636 PRINCIPAL AND SURETY. he may afterward recover the amount of such security from the creditor.^ If a creditor who holds collateral for his debts subsequently receives other property from the principal as additional secur- ity for the debt, and fails to appropriate it fairly to that purpose, he will discharge a surety to the extent of such failure.^ And an accommodation indorser on a note, which is secured by collateral, may avail himself of the misappro- priation or sale of the collateral by the holder.^ So, if a creditor has agreed with the surety on a note to apply the proceeds of a collateral lien to its payment, his failure to do so will discharge the surety.* But if a bank holds funds of the principal debtor on a general deposit, and fails to apply them to the payment of a note held by it, a surety on the note will not be discharged by such failure;^ such deposit not being, properly speaking, a collateral security or a trust fund held by the bank for the benefit of the surety.^ So, a bank is not required to apply to such payment subsequent deposits made by the principal debtor.' § 953. Waiver of Discharge. — A surety may become liable after discharge by waiving the discharge. If he acknowl- edges the debt after being informed of his discharge, it will amount to such a waiver.' And he may waive his discharge by any words or acts amounting to an assent on his part to the indulgence or other cause of discharge, and such waiver will not require any new consideration." So, a surety may revive a cause of action against himself on a joint note by fresh acknowledgment of the debt after judgment has been 'Caiester v. Bank of Kingston, 16 N. Y. 336 (1857). 'Springer v. Toothaker, 43 Me. 381 (1857). 'Sitgreavea v. Farmers', &c., Bank, 49 Penna. St. 359 (1865). *Taylor v. Scott, 62 Ga. 39 (1878). * Strong V. Foster, 17 C. B. 201. 'Second Nat. Bank v. Hill, 76 Ind. 223 (1881). ' Voss V. German Am. Bank, 83 111. 599 (1876). 'Lewis V. Hanchman, 2 Penna. St. 416 (1845)^ 'Mayhew v. Crickett, 2 Swanst. 185. WAIVER OF DISCHARGE. 637 taken by confession against the other maker.^ And where a surety waives his discharge by a new promise, he may be sued upon the original liability, and the action need not be brought on the new promise.^ On the other hand, it has been held that a mere payment of interest by the surety after his discharge will not of itself amount to a waiver.^ So, it will not be enough to show that the surety has taken security for his indemnity ; , but if this fact is coupled with statements of his to the effect that he " expected to pay," or " should have to pay," it will be for the jury to determine whether such acts and statements amount to a new promise on his part.* And if a surety who has been discharged voluntarily pays the debt to the creditor, although he does so in ignorance of the facts which entitled him to the discharge, he cannot afterward recover the payment from the creditor.^ 'Elder v. Dyer, 26 Kans. 604 (1881). 'Brockman v. Sieverling, 6 Bradw. 512 (1880). 'Ibid. * Fowler D. Brooks, 13 Vt. 240 (1842). 'Geary v. Gore Bank, 5 Grant U. C. Ch. 536. 638 PRIKCIPAL AND SUBETT. Ill, EXTENSION TO PRINCIPAL. 954. Extension to Principal. 955. to Joint Debtor — Knowledge of Suretyship. 956. Valid Agreement Necessary. 957. What. 958. for Definite Period. 959. Actual Contract Necessary. 960. Extension by taking New Bill. 961. Collateral. 962. by Cognovit — Agreement not to Sue. 963. by Part Payment — Interest. 964. Consideration Necessary. 965. Payment— Interest. 966. Other Agreement. 967. Usury. 968. Parties to Agreement — Consent of Surety. 969. Waiver of Discharge. 970. Reservation of Rights — Indemnity. § 954. Extension to Principal. — Where the holder of a bill or note grants an extension for a definite time to the princi- pal without the surety's consent, and without reservation of his rights against the surety, by a valid agreement based on a valuable consideration, he will thereby discharge the surety, unless the surety is otherwise secured.-' The holder of com- mercial paper cannot give time to the acceptor or maker, in such way as to preclude himself from suing and suspend his own remedy, without discharging parties who are secondarily liable and who stand in the relation of sureties on the paper.* An agreement to give the maker or acceptor indulgence for a definite period takes away this right of immediate action, and prejudices, and therefore discharges, the surety.* • To have such effect, however, the agreement for extension must be a valid one and binding on the creditor as such.* ' For a recent article on this subject, see 20 C. L. J. 183. "Chitty 462; Wright v. Simpson, 6 Ves. 734; Trent Nav. Co. v. Harley, 10 East 40 ; Clark ». Wilson, 3 M. & W. 208. 'Claridge v. Dalton, 7 M. & 8. 232; Hall v. Cole, 4 Ad. & El. 577. *Byle8 250; 2 Daniel 330; 1 Edwards ? 495; Story on Prom. Notes ? 485; Prazer v. Jordan, 8 El. & Bl. 303; Smith v. James, 2 lb. 50 n. ; Bank of Ire- land V. Beresford, 6 Dowl. 237 ; Sprigg v. Bank of Mount Pleasant, 10 Pet. 257 (1836) ; Waters v. Simpson, 7 111. 570 (1845) ; Kennedy v. Evans, 31 lb. 258 (1863) ; First Nat. Bank v. Pierce, 99 lb. 272 (1881) ; Herbert ». Dumont, 3 Ind. 346 (1852) ; Lenynon v. Whitman, 75 lb. 318 (1881) ; Robinson v. Mul- EXTENSION TO ONE JOINT-DEBTOK. 639 Such an agreement will discharge all parties secondarily- liable.^ Thus, an extension to the acceptor discharges the surety.'* An extension to the maker discharges the indorser,* or one who becomes a surety by an indorsement before that of the payee.* So, where a partner, on dissolution of his firm, assumes the partnership debts, he becomes the prin- cipal debtor, and the other partners are sureties, and will be discharged by a definite extension given to him.* So, an accommodation joint-maker of a note is a surety, and will be discharged by an extension given to the principal maker without his consent.' But in such case, as we shall see, the relation of the parties as principal and surety must be known to the holder. § 955. Extension to One Joint -Debtor — Knowledge of Suretyship. — An extension granted to one acceptor or maker will not, in general, operate as a discharge of another ac- ceptor or maker who is jointly liable.'' So, an extension granted to one surety will discharge his co-sureties only so far as they would be entitled to contribution against such discharged surety.* So, the consent of one surety to an extension granted to the principal will not bind his co- surety.® On the other hand, giving time to an acceptor on an execution against him, after judgment recovered against drawer and acceptor, will not discharge the drawer of the ler, 2 Bush 179 (1867) ; Yates v. Donaldson, 5 Md. 389 (1854) ; Thompson v. Bowne, 10 Vroom 2 (1876) ; Paulin v. Kaighn, 3 Dutch. 503 (1859) ; g. C, 5 lb. 480 (1861) ; Nichols v. Pargons, 6 N. H. 30 (1832) ; Bangs v. Mosher, 23 Barb. 478 (1856) ; Burke v. Cruger, 8 Tex. 66 ; S. C, 11 lb. 694 (1854) ; Clark v. Boyce, 64 Ga. 486(1880). ' Philpot V. Bryant, 4 Bing. 719. 2 English V. Darley, 2 Bos. & P. 61. 'Tindal v. Brown, 1 T. R. 169. So, an accommodation indorser, Hall v. Cole, 4 Ad. & El. 677 ; and see ? 767, supra. *Bank of Orleans v. Barry, 1 Denio 116 (1845). 'Millerd v. Thorn, 56 N. Y. 402 (1874). •Barron v. Cady, 40 Mich. 259 (1879). 'Chitty 470; Bedford v. Deakin, 2 B. & Aid. 210; David v. Ellice, 5 B. & C. 196; Lodge v. Bicas, 3 B. & Aid. 611. «Gile V. Churchill, 14 Ohio St. 372 (1863). •Crosby v. Wyatt, 10 N. H. 318 (1839). 640 PKINCIPAL AND SURETY. bill.^ So, after judgment is recovered against the surety, he will not be discharged if the holder takes a judgment against the principal payable in installments.^ And an ex- tension to the acceptor of a bill, aft^er action brought against the drawer or indorser, will not discharge the latter.^ But the surety will be discharged by the holder's agreement to delay proceedings on a judgment against the principal.* If the relation of the parties as principal and surety does not appear on the paper, or is not otherwise known to the holder, an extension granted by him to the principal will not dis- charge the surety.^ And a surety who claims a discharge by reason of such extension must allege and prove that the holder had notice of his character as surety." If the exten- sion is granted to one who is really the principal debtor, but is apparently secondarily liable on the paper, and the holder knows the actual relation of the party, he will thereby discharge the surety, although he obtained such knowledge after he acquired the paper.'' So, an accommo- dation acceptor, who is, in reality, a surety, may claim his discharge by reason of a contract for further time between the holder and the drawer of the bill, on proof that the holder knew the relation then existing between drawer and acceptor.* § 956. Valid Agreement Necessary. — An agreement for an extension of time to the principal, in order to effect the surety's discharge, must be one that is valid at law and 1 Pole V. Ford, 2 Chit. 125. 2 Jenkins v. Kobertson, 2 Drew 351; S. C, 23 L. J. Ch. 816. 'Chitty 468; Pike v. Sweet, 1 Dans. & L. 159; S. C, Moo. & M. 226. * Storms V. Thorn, 8 Barb. 314 (1848). n Parsons 239; Vary v. Norton, 6 Fed. Rep. 808 (1881); Morgan v. Thompson, 60 Iowa 280 (1882) ; Lamson v. First Nat. Bank, 82 Ind. 21 (1882) ; McClosky v. Indianapolis Mfg. Union, 67 lb. 86 (1879) ; Tharp v. Parker, 86 lb. 102 (1882) ; Armes v. Beitman, 73 lb. 85 (1880) ; Albright v. Griffin, 78 lb. 182 (1881). ° Lamson v. First Nat. Bank, supra. 'Byles 252; Oriental Finance Co. v. Overend, L. R. 7 Ch. App. 142; S. C, L. E. 7 H. L. Caa. 348 ; Lanman v. Nichols, 15 Iowa 161 (1863). 'Meggett V. Baum, 47 Miss. 22 (1879). WHAT AGREEMENTS ARE VALID. 641 Isinding on the holder of the paper.^ Thus, an agreement for forbearance, which is void by the Statute of Frauds, will not have such effect.^ So, a parol agreement for extension of a specialty is not, at common law, sufficient,^ and would not discharge a surety ; but he would be obliged to resort to «quity for relief.* So, an extension granted to a bankrupt principal cannot prejudice, and therefore will not discharge, the surety.^ In like manner, one who holds a bill or note for collection cannot, without express authority from the owner, make a valid contract to extend it.^ But if an agent without authority gives such extension, and it is after- ward ratified by the acts of his principal, a surety on the paper will be discharged.'' If an executor holds a bill or note, he has authority as such holder to extend the time for payment.* § 957. What Agreements are Valid. — An agreement for extension of the time of payment, in order to discharge a surety, must be such as to change the contract of the princi- pal, and put it out of the holder's power to enforce it during the time of forbearance agreed on.' If it does not prevent the holder from proceeding against the principal, it will not discharge the surety.^" It need not, however, be such an agreement as could be pleaded by the principal in bar to a suit at law.^^ Neither need it be in express language, or, in ' 2 Daniel 328, 330 ; Eayner v. Fussey, 28 L. J. Exch. 132 ; Frois v. May- field, 33 Tex. 801 (1871) ; Winne v. Colorado Springs Co., 3 Col. 155 (1876). ^ Byles 260 ; Chitty 468 ; Philpot v. Briant, 4 Bing. 717 ; S. C, 3 0. & P. 214. 'Carr v. Howard, 8 Blackf. 190 (1846); Brinagavi v. Phillips, 1 B. Mon. 283 (1841). * Whittmer v. Ellison, 72 111. 301 (1874). ^Tiernan v. Woodru£f, 5 McLean 350 (1852). «Chappell V. Raymond, 20 La. An. 277 (1868). 'Woodbury v. Larned, 5 Minn. 339 (1861). ^North V. Walker, 66 Mo. 453 (1877). 'Buchanan v. Bordley, 4 Har. & McH. 41 (1797) ; Norris v. Crummey, 2 Band. 323 (1824) ; Ripley v. Greenleaf, 2 Vt. 129 (1829) ; Newell v. Hamer, 4 How. 684 (Miss. 1840); Parnell v. Price, 3 Rich. 121 (1846); McCune v. Belt, 38 Mo. 281 (1866). *» Davis V. Graham, 29 Iowa 514 (1870); Grabfelder t). Willis, 10 Bradw. 330 (1882) ; Blackstone Bank v. Hill, 10 Pick. 129 (1830). "Dickerson v. Board of Commissioners, 6 Ind. 128 (1855). VOL. II. ■^Q 642 PRINCIPAL AND SURETY. general, in writing, but a mutual understanding and inten- tion of the parties will be sufficient.^ It may be implied from circumstances.^ The words "received," "renewed," indorsed on a note may be construed to amount to such an agreement.^ So, too, more plainly an indorsement "six months' further time is given on the within note and interest, paid to " the end of such time.* An extension may be proved by parol evidence, even though, an express agreement for it has been indorsed on the note without the holder's author- ity.® So, where an agreement for extension is written out, parol evidence may still be admissible to show, by conversa- tions between the parties before and afterward, that the agreement was made upon the express condition that it should not take effect, unless the surety consented to it.* The burden of proof is upon the surety alleging that the time for paying the instrument has been extended.' And the agreement for extension may be a conditional one, as we have seen. In this case the condition must be strictly per- formed, and the surety will not be discharged unless it is so.* § 958. Definite Period of Extension. — A surety will not be discharged by any agreement giving further time to the principal, unless a definite period of time is given.' And it has been held that a mere agreement to extend the time for paying a note is no bar to an action at law brought on ' Brooks V. Wright, 13 Allen 72 (1866). But to the effect that it must be express, see Miller v. Stern, 2 Penna. St. 286 (1845). * Davis V. Graham, 29 Iowa 514 (1870). »Lime Bock Bank v. Mallett, 34 Me. 54 (1852) ; S. C, 42 16. 349 (1856). *Dubui8son v. Folkes, 30 Miss. 432 (1855). 'And this will be a question for the jury to determine, Thompson v. Boden, 81 Ind. 176 (1881). « Wilson V. Powers, 131 Mass. 539 (1881). 'Barclay v. Miers, 70 Ind. 346 (1880). 'Harnsberger v. Geiger, 3 Gratt. 144 (1846). '2 Daniel 333; 2 Edwards ? 770; 1 Parsons 240; Vary v. Norton, 6 Fed. Eep. 808 (1881); King v. Haynes, 35 Ark. 463 (1880); Gardner v. Watson, 13 111. 347 (1851); Hurd v. Marple, 2 Bradw. 402 (1878) ; Tracy v. Quillen, 65 Ind. 249 (1879) ; Miller v. Arnold, 65 lb. 488 (1879) ; Prather v. Young, 67 lb. 480 (1879) ; Cotes v. Thayer, 93 lb. 156 (1883) ; Morgan v. Thompson, 60 Towa 280 (1882) ; Clarke Co. v. Covington, 26 Miss. 470 (1853) ; Deal v. Coch- ran, 66 N. C. 269 (1872) ; Parnell v. Price, 3 Rich. 121 (1846) ; Hale v. Forbes, 8 Mont. 395 (1879) ; Cherry v. Miller, 7 B. J. Lea 305 (1881). DEFINITE PERIOD OF EXTENSION. 643 the note within the time limited.^ A mere agreement, after due protest and notice given, not to press the acceptor of a bill, will not discharge the drawer.* So, an agreement for an extension of certain notes " beyond the day of their maturity," is not sufficiently certain to discharge the surety.* So, a statement on the payee's part, that the makers could keep the money for the same rate of interest they had been paying, is not definite enough to constitute a binding exten- sion.* So, an agreement to extend the payment of a note "until fall" would seem not to be sufficiently definite.® But the contrary has been held of the expressions " to the sum- mer" (as meaning June 1st), and "until fall" (as meaning September 1st).® In like manner, the expression "until after harvest " has been held to be too indefinite,'' and the expres- sion " until after threshing " to be definite enough.* So, an extension for "twenty or thirty days" has been held to be sufficiently definite.^ If a note payable on demand is extended by a valid agree- ment making it payable in yearly installments, it will dis- charge the surety;'" although the agreement provides for the whole note maturing on default in payment of the first installment." But if a holder agrees not to sue for eight months on a demand note, he will not thereby release an indorser, who has indorsed it " accountable in eight months from date."'^ A renewal of an acceptance is the same thing as an extension.'^ But an agreement, after the making of a ' Murphy v. Eobbins, 17 Ind. 422 (1861) ; Nelson v. White, 61 lb. 139 (1878). 'Chitty 466; Walwyn v. St. Quintin, 1 Bos. & P. 652. 'Ward V.Wick, 17 Ohio St. 159 (1867). * Turner v. Williams, 73 Me. 466 (1882) ; McCune v. Belt, 38 Mo. 281 (1866). 5 Cherry v. Miller, 7 B. J. Lea 305 (1881). 8 Abel V. Alexander, 45 Ind. 523 (1874). ' Findley v. Hill, 8 Oreg. 247 (1880). ' sMoulton V. Posten, 52 Wis. 169 (1881). 'Hamilton v. Prouty, 50 Wis. 592 (1882). "Gifford V. Allen. 3 Mete. 255 (1841). " Beed v. Stoddard, 100 Mass. 425 (1868). * '''Bagley v. Buzzell, 19 Me. 88 (1841). "Thomas v. Stetson, 59 Me. 229 (1871); Koutz v. Vanclief, 55 Oal. 845 (1880). 644 TRINCIPAL AND SURETY. note, for its payment out of certain business profits, and for renewal for two years, will not bar an action on the note or effect a release of the surety/ § 959. Actual Contract Necessary. — To effect the dis- charge of a surety, there must be a valid contract for for- bearance to the principal.^ Mere delay in collecting the bill or note will not discharge an indorser whose liability has been fixed by proper demand and notice,* or a surety. So, a surety for goods purchased will not be discharged by mere delay on the creditor's part in enforcing the payments agreed on by the principal, in the absence of a binding agreement for such forbearance.* In like manner, a surety will not be discharged by indulgence on the creditor's part to the principal, without any definite agreement, although the creditor receives collateral at the time of such forbear- ance.^ So, an indulgence to the principal on an execution, after judgment rendered against the surety, will not dis- charge the latter.^ But a surety will be discharged, if the creditor, after being notified under the statute to sue the principal, takes a judgment against him by consent, and entei'S a formal stay of execution for a given time.' So, an indorser will be discharged by a consent on the holder's part, at a meeting of the maker's creditors, to permit the property of the maker to be sold on time, such sale necessa- rily involving forbearance on the part of the creditors.* It follows, from what has been said, that a surety will not be discharged by a mere offer of extension to the princi- pal, which has not been accepted;* or by giving the pur- 1 Thurston v. James, 6 R. 1. 103 (1859). ^ Heath v. Key, 1 Younge & J. 434. 'Page V. Webster, 15 Me. 249 (1839). 'McKechnie v. Ward, 58 N. Y. 541 (1874); Woolfolk v. Plant, 46 Ga. 422 (1872). 6 Bank of Utica v. Ives, 17 Wend. 501 (1837). «Byles 253 n.; Bray v. Manson, 8 M. & W. 668; Pole v. Ford, 2 Chit. 126; Butler V. Gambs, 1 Mo. App. 466 (1876). 'Shields v. Reynolds, 9W. Va. 483 (1876). 'Lobdell V. Niphler, 4 La. 294 (1832). 'Byles 253; Chitty468; 1 Parsons 245; Hewet v. Goodrick, 2 Car. & P. 468; Badnall v. Samuel, 3 Price 521. EXTENSION BY TAKING NEW BILL OK NOTE. 645 chaser to understand that the debt " might be " extended on payment of interest;^ or by a proposal on the principal's part to pay extra interest if the holder would extend the bill ;^ or by an agreement for extension not actually carried out,^ and not resulting in an extension in fact.* § 960. Extension by Taking New Bill or Note. — If the creditor receives from the principal a new bill or note pay- able in future, in payment of the debt, it will imply a bind- ing agreement for extension pending the running of such new paper, and as such will discharge one who is surety for the original debt.* This is true, also, if the original debt is evidenced by a bond.® So, if a joint note is extended by taking a part payment and the individual note of one maker for the balance, although the original note is re- tained by the holder.'' Any negotiable security payable in the future, taken from the acceptor of a bill or the maker of a note, will have the same effect as to other parties.* But merely giving the check of a third person as collateral on the maker's part will not effect an extension or discharge the surety.® On the other hand, taking a new note from the maker, with fresh collateral, will discharge a surety on the old note.^" And if the maker of a note is ■'known to the holder to be an accommodation maker, and therefore a surety, giving time to the indorser accommodated, and taking his notes, will discharge the maker." So, if the • Booth V. Wiley, 102 111. 84 (1882). ' Dillon V. Russell, 5 Neb. 484 (1877). 'Balch, Ex parte, 2 Low. 44 (1875). ' Jaffray v. Crane, 50 Wis. 349 (1880). * Byles 252 ; Chitty 461 ; Gould v. Robson, 8 East 576 ; English v. Darley, 2 Bos. & P. 62; Myers v. Willis, 5 Hill 463 (1843) ; Millerd v. Thorn, 56 N. Y. 402 (1874) ; Morris Canal Co. v. Van Vorst, 1 Zab. 100 (1847) ; Barnum v. Oilman, 27 Minn. 466 (1881) ; Smith v. Sheldon, 35 Mich. 42 (1876) ; Michi- gan State Bank v. Leavenworth, 28 Vt. 209 (1855) ; Henderson v. Marvin, 31 Barb. 297 (1859) ; or with dismissal of pending suit, Callaway v. Price, 32 Gratt. 1 (1879). «Chitty 463; Rees v. Berrington, 2 Ves. 540. 'Hubbard v. Gurney, 64 N. Y. 457 (1876). »Chitty 464; Claxton v. Smith, 3 Mod. 87. 'Van Etten v. Troudden, 67 Barb. 342 (1874). "Rogers v. School Trustees, 46 111. 428 (1868). " Westervelt v. French, 6 Stew. 451 (N. J. 1881). ^46 PKINCIPAL AND SURETY. holder takes a renewal of the note, which is a conditional payment, and at the same time receives interest on it in advance, he will thereby discharge a surety on the original note.^ And it has been held, that taking a note payable in future with interest for the full amount of a debt, as ■collateral to a bond originally given for it, will suspend the •creditor's right to sue on the bond and discharge the surety •on it* Taking collateral, however, is to be distinguished from taking a bill or note in payment, and will be consid- •ered more particularly hereafter. Taking part payment and a new bill payable in future for the balance is an extension of the original bill of ex- change, although it is retained as security.* And where a new note is taken in payment, its effect as an extension is not diminished by the fact that it is not paid when due.* And even where the note taken in payment was usurious in itself, and was not paid at maturity, it has been held to be a sufficient consideration for a contract of extension.' On the other hand, taking a note payable in the future for arrears of interest due is not an extension of the time for paying the principal.* § 961. Extension by Taking Collateral. — If the holder of a bill or note receives collateral from the principal debtor, it will not amount to an extension of the instrument or a dis- charge of the surety, unless coupled with some agreement for forbearance.' And even if the holder, after maturity of a note, takes a collateral mortgage with a covenant in it to pay at a certain time named, it will not amount to an exten- sion.* So, too, if he takes as collateral a deed of trust, with 'First Nat. Bank. v. Leavitt, 65 Mo. 562 (1877). «Armistead v. Ward, 2 Patt. & H. 504 (1857). 'Chitty 464; Gould v. Robson, 8 East 576; Andrews v. Marrett, 58 Me. 539 (1870). ♦Norton v. Roberts, 4 T. B. Mon. 491 (1827). 'Moulton V. Posten, 52 Wis. 169 (1881). «Gahn v. Nieracewicz, 11 Wend. 312 (1833). ' Brick V. Freehold Nat. Bkg. Co., 8 Vroom 307 (1875) ; Thurston v. James, 6 R. I. 103 (1859) ; Hazard v. White, 26 Ark. 155 (1870). ' Brengle v. Bushey, 40 Md. 141 (1874). EXTENSION BY COGNOVIT. 647 a condition for its defeasance if the note should be paid in a given time, it will not bar his right. of action against the maker, and will therefore not release the surety.^ On the other hand, a deed of trust given after the ma- turity of a note to secure its payment, and providing that no sales of the land conveyed shall be made for that pur- pose for a certain length of time, will be suJSicient consid- eration to support an agreement for extension." And if additional signatures are obtained on a note, as sureties, in I'onsideration of an extension given to the maker, an origi- nal surety on the note will be discharged by the extension.' So, a surety will be discharged if the holder agrees not to sue the principal for a definite term, in consideration of the conveyance of property by the principal to him as collat- eral.* § 962. Extension by Cognovit — Agreement Not to Sue. — If the holder of a bill or note gives time to the acceptor or maker, and takes a cognovit or warrant of attorney for his security, he will thereby discharge the drawer and indors- ers.^ So, too, if he takes a cognovit payable in installments at a distant time,* or if he takes a confession of judgment with a long stay of execution.'' But if the warrant of attor- ney is taken without any agreement to give time to the principal, and without necessarily effecting such extension, it will not discharge a surety,* This is the case where a cognovit is taken from the acceptor after action brought with an extension of time for three weeks before entering •Headlee v. Jones, 43 Mo. 235 (1869). ''Sraarr v. Schnitter, 38 Mo. 478 (1866). 'Eitchie v. Gibbs, 7 Bradw. 149 (1880). * Branch Bank v. James, 9 Ala. 949 (1846). 'Chitty 461. «Chitty 465, 468; Smith v. Becket, 13 East 187; King v. Sheriflf of Surrey, 1 Taunt. 161 ; Smith v. Knox, 3 Esp. 46 ; Willison v. Whitaker, 2 Marsh. S83; 7 Taunt. 53; Hall v. Cole, 4 Ad. & El. 577. 'Nisbett V. Smith, 2 Bro. C. C. 581. *Chitty 468; 2 Edwards ? 775; Ayrey «. Davenport, 2 New Rep. 474; Price V. Edmunds, 10 B. & C. 578 ; Clarke v. Wilson, 8 M. & W. 208 ; Hulme V. Coles, 2 Sim. 12. This rule applies to indorsers, Mohawk Bank v. Vaa Home, 7 Wend. 117 (1831) ; Sizer v. Heacook, 23 76. 81 (1840). 648 PKINCIPAL AND SURETY. up judgment, no delay having been, in fact, occasioned by- such extension.^ And this is true of a confession of judg- ment with an extension for a longer time, e. g., until the second term of court, if the time within which judgment could be obtained in the ordinary way is not thereby pro- longed f and even though an agreement is made at the time of entering the judgment by confession not to issue an exe- cution until such day.^ So, it will be sufficient if the agree- ment for stay of execution is for forbearance until default made in any installment, the cognovit being made payable in installments, and judgment having been actually entered upon the first default sooner than it could have been done in the ordinary course of suit.* In like manner, an agreement with the principal for valu- able consideration to give him time, and not to sue him within such time, will discharge the surety/ And this is true even of a verbal contract not to sue the principal within a given time, if such contract is upon valid consid- eration.^ And the assignment of a judgment by the prin- cipal to the creditor would be such.'' § 963. Extension by Part Payment — Pa}rment of Interest. — Part payment of a note received by the holder is not an extension of the time for paying the balance due on it.* Neither is the receipt of interest by the payee, even after the maturity of a note, evidence of an agreement to give further time on it, so as to discharge a surety.' So, too, an 'Jay V. Warren, 1 C. & P. 532. ' Byles 250 ; Kennard v. Knott, 4 Man. & G. 474 ; Michael v. Myers, 6 lb. 702; Suydam u. Vance, 2 McLean 99 (1840). But, in pleading such an extension, it need not be specially averred by the surety that the time for taking judgment was thereby extended, Kennard v. Knott, supra; Isaac v Daniel, 8 Q. B. 500. 'Hallett V. Holmes, 18 Johns. 28 (1820). *Chitty 468; Price v. Edmunds, 10 B. & C. 578. "^Horne v. Bod well, 5 Gray 457 (1855). 'Byles 252; Moss v. Hall, 5 Exch. 50. ' Varnum v. Milford, 2 McLean 74 (1840). 'Nightingale v. Meginnis, 5 Vroom 461 (1871) ; Holderman v. Woodward, 22 Kan. 734 (1879) ; Garten v. Union City Nat. Bank, 34 Mich. 279 (1876). "Freeman's Bank v. Rollins, 13 Me. 202 (1836). CONSIDERATION NECESSARY TO EXTENSION. 649 agreement on the maker's part to pay interest, in considera- tion of time being given to him, will not, of itself, extend his time for payment or discharge his surety.^ So, an agree- ment to pay a higher rate of interest is not an extension \^ nor the actual payment of extra interest accompanied by forbearance on the holder's part;^ nor even the payment of interest in advance after the maturity of the note.* It has been held, however, that a payment of interest in advance beyond the maturity of a note amounts to an extension of payment and discharges the surety.® And this will be presumed of the payment of a year's interest in advance.* On the other hand, an indorsement in the words " this note is extended to six months, interest paid up to March 1874," has been held not to be sufficient, of itself, to show a bind- ing contract to extend the note.^ But -a receipt for a certain sum indorsed on a note may be shown, in a surety's behalf, to have been for an advance payment of interest, and to have so read originally.* And, in general, an extension of time to the principal may be proved by parol evidence.* But the surety is not entitled to inspect deeds or other instruments in the holder's possession, on the suggestion that an extension of the bill in controversy has been given by such instrument.^" § 964. Consideration Necessary to Extension. — Extension of time to the principal, in order to constitute a discharge of the surety, must be founded upon a consideration which 'Berry v. Pullen, 69 Me. 101 (1879). 'Bucklen v. Huff, 52 Ind. 474 (1876). •Eaton V. Waits, 66 Me. 221 (1877). * Oxford Bank v. Lewis, 8 Pick. 457 (1829) ; Freeman's Bank v. Rollins, 13 Me. 202 (1836) ; Hosea v. Rowley, 57 Mo. 357 (1874) : Coster v. Mesner, 58 lb. 549 (1875). ' Preston v. Henning, 6 Bush 556 (1869) ; New Hampshire Sav. Bank v. Ela, 11 N. H. 385 (1840). •Lemmon d. Whitman, 75 Ind. 318 (1881). 'Grossman v. Wohlleben, 90 111. 537 (1878). "Mennet v. Grisard, 79 Ind. 222 (1881). 'Artcher v. Douglass, 5 Denio 509 (1848). ^'Chitty 468; Smith v. Winter, 3 M. & W. 309; S. C, 4 76. 454. 650 PRINCIPAL AND SURETY. is suflBcient in law ;^ although it seems that the earlier cases did not require this.^ In like manner, an agreement not to sue the principal, which is void for want of consideration, will not efiect a discharge of the surety.' An agreement for extension, to have such effect, must have a new and valid consideration;* and without such consideration it will not discharge the surety/ A surety may by parol prove that an agreement for forbearance was made for a certain consid- eration, e. g. for interest to be paid by the principal.* So, a note by the principal, made upon the same day with the agreement for extension, will be admissible as evidence of a consideration for the agreement.^ And where there has been a special finding showing an agreement for extension, it will not be inferred, in the absence of such a finding, that no consideration existed,*- 'Vary -o. Norton, 6 Fed. Rep. 808 (1881) ; Wilson v. Powers, 130 Mass. 127 (1881) ; Huffman v. Hulbert, 13 Wend. 375 (1835) ; Miller v. Stem, 12 Penna. St. 383 (1849) ; Mariners' Bank v. Abbott, 28 Me. 280 (1848) ; Chute v. Pattee, 37 Me. 102 (1854) ; Blazer «. Bundy, 15 Ohio St. 57 (1864) ; Gardner v. Wat- son, 13 HI. 347 (1851) ; Hurd v. Marple, 2 Bradw. 402 (1878) ; Henderson v. Dodgson, 9 Bradw. 80 (1881) ; Clark v. Bryce, 64 G.a. 486 (l880) ; Dickerson v. Board, 6 Ind. 128 (1855) ; Halstead v. Brown, 17 Ind. 202 (1861) ; Holmes V. Dole, 1 Clarke Ch. 71 (1839); Branch Bank v. James, 9 Ala. 949 (1846); Huey V. Finney, 5 Minn. 310 (1861) ; Friedenberg v. Robinson, 14 Fla. 130 (1872) ; Bowen v. Darby, lb. 202; Bonner v. Nelson, 57 Ga. 433 (1876). 'Ohitty 467; Gould v. Robson, 8 Eaat 576. 'Byles 252; Chitty 467; Arundel Bank v. Goble, 2 Chit. 335; Willison w. Whitaker, 7 Taunt. 53 ; Brickwood v. Annis, 5 lb. 53 ; Walwyn v. St. Quin- tin, 1 Bos. & P. 655; Dean v. Newhall, 8 T. R. 168; Fitch v. Sutton, 5 East 230 ; Carstairs i). Rolleston, 5 Taunt. 551 ; Clarke v. Wilson, 3 M. & W. 208. *2 Edwards \l 770, 771 ; 1 Parsons 240; Grover v. Hoppock, 2 Dutch. 191 (1857) ; Gardiner v. Watson, 13 III. 347 (1851) ; Hunt v. Postlewait, 28 Iowa 427 (1870) ; Roberts v. Richardson, 39 Iowa 290 (1874) ; Dare v. Hall, 70 Ind. 545 (1880) ; Harter v. Moore, 5 Blackf. 367 (1840) ; Roberts v. Stewart, 31 Miss. 664 (1856) ; Clarke Co. v. Covington, 26 Miss. 470 (1853) ; Hunt v. Knox, 34 Miss. 655 (1857); Nichols v. Douglass, 8 Mo. 49 (1843); Farm- ers' Bank r. Reynolds, 13 Ohio 84 (1844) ; Buokalew v. Smith, 44 Ala. 638 (1870) ; Hunter v. Clark, 28 Tex. 159 (1866) ; Burr v. Boyer, 2 Neb. 265. 5 Waters v. Simpson, 7 III. 570 (1845) ; Hogshead i>. Williams, 55 Ind. 145 (1876) ; Carr v. Howard, 8 Blackf. 190 (1846) ; Hemery v. Marksberry, 57 Mo. 399 (1874); Cherry v. Miller. 7 B. J. Lea, 305 (1881); Payne v. Com- mercial Bank, 6 Sm. & M. 24 (1846) ; Roberts v. Stewart, 81 Miss. 664 (1856) ; Rupert V. Grant, 6 8m. & M. 433, overruled ; Costello v. Wilhelm, 13 Kans. 229 (1874). 'Bradshaw v. Combs, 102 111. 428 (1882). ' Hutchinson v. Moody, 18 Me. 393 (1841). « Wendling v. Taylor, 57 Iowa 354 (1881). ; PAYMENT AS CONSIDERATION. 651 § 965. Pajrment as Consideration — Interest. — A part pay- nient of the debt is not, in general, a sufficient consideration for forbearance as to the balance.* Neither is such part payment sufficient, although coupled with a promise to pay the balance in installments.^ Receiving part payment, how- ever, before the debt is due is sufficient consideration for an extension beyond that time as to the balance, and will dis- charge a surety.* So, an agreement for extension, in consid- eration of a payment advanced on account of another debt, will be binding as to the principal, and sufficient to discharge the surety.* An agreement for forbearance in consideration of the pay- ment of interest already due is also insufficient." So, an agreement that a note might run as long as the interest should be paid will not discharge a surety, even upon a sub- sequent payment of the matured interest." So, an agreement in consideration that the interest then due should be paid at the original rate and that a portion of the subsequently ac- cruing interest at such rate should be applied in extinguish- ment of the principal.' A promise to pay interest is not, in general, such a consideration as will support an extension of the debt and discharge the surety.* Neither is it sufficient, if the principal pays the same rate after maturity as before, '2 Daniel 333; Pabodie v. King, 12 Johns. 426 (1815); Jenkins v. Clark- soii, 7 Ohio 72 (1835) ; Turnbull v. Brock, 31 Ohio St. 649 (1877) ; Mason v. Peters, 4 Vt. 101 (1831) ; Wheeler v. Washburn, 24 lb. 293 (1852) ; Eoberts V. Stewart, 31 Miss. 664 (1856); Andrews v. Hagadon, 54 Tex. 571 (1881) ; Prather v. Gammon, 25 Kans. 379 (1881) ; Petty v. Douglass, 76 Mo. 70 (1§82). ''Hunt v. Knox, 34 Miss. 655 (1857). But an extension to the maker on his making an extra payment therefor after maturity, and after the indorser had been fixed by due notice of dishonor, will discharge the indorser, Veazie V. Carr, 3 Allen 14 (1861). ^Greeley v. Dow, 2 Mete. 176 (1840) ; Eigsbee v. Bowler, 17 Ind. 167 (1861). * Eigsbee v. Bowler, supra. = Wilson V. Powers. 130 Mass. 127 (1881); Stuber v. Schack, 83 111. 191 (1876) ; Halstead v. Brown, 17 Ind. 202 (1861) ; Dare v. Hall, 70 Ind. 545 (1880). But see Grafton Bank v. Woodward, 5 N. H. 99 (1829). "Starret v. Burkhalter, 70 Ind. 285 (1880). 'Wilson V. Powers, 130 Mass. 127 (1881). 'Eeynolds v. Ward, 5 Wend. 501 (1830) ; Chrisman v. Tuttle, 59 Ind. 155 (1877) ; Dare v. Hall, 70 Ind. 545 (1880). 652 PRINCIPAL AND SURETY. and agrees to pay the principal already matured in install- ments.' But it has been held in many cases that an agree- ment to extend a bill or note for a definite time on payment of interest is supported by sufficient consideration, although the interest be not paid in advance, and that it will there- fore release the surety.^ An agreement to pay interest after maturity at a reduced rate has been held not to be a sufficient consideration,* while an agreement to pay at an increased rate has been held good.* And it is said that an agreement to pay compound interest on a note already due will not support an agreement for extension.* But payment of inter- est in advance is a sufficient consideration for such exten- sion.* § 966. Other Agreement as Consideration. — The payment of a specified sum for an extension, agreed upon at the time the note was made, will discharge the surety.^ So, the sub- jecting of exempt property to execution by a deed of trust;* or giving a new note in renewal with an additional surety.* So, an agreement to procure the signature of a married woman, who had no separate estate and whose signature was therefore of no legal effect, has been held to be sufficient consideration for a binding extension, thereby releasing the surety.'" So, it is sufficient if the maker agrees, on account 1 Woolford V. Dow, 34 111. 424 (1864) ; Hume v. Mazelin, 84 Ind. 574 (1882). 'Fawcett v. Freshwater, 31 Ohio St. 637 (1877); Ohnte «. Pattee, 37 Me. 102 (1854); Pierce v. Goldsberry, 13 Ind. 52 (1869) ; Keirn v. Andrews, 59 Miss. 39 (1881) ; Abel v. Alexander, 45 Ind. 523 (1874). 'Dare v. Hall, 70 Ind. 545 (1880). ♦Huff «. Cole, 45 Ind. 300 (1873) ; Royal v. Lidsay, 15 Kans. 591 (1875). ^Leeper v. McGuire, 57 Mo. 360 (1874). «Flynn v. Mudd, 27 111. 323 (1861) ; Maher v. Lanfrom, 86 111. 513 (1877) ; Dickeraon v. Board, 6 Ind. 128 (1855) ; Abel v. Alexander, 45 Ind. 523 (1874) ; Kaler v. Hise, 79 Ind. 301 (1881); Williams v. Scott, 83 Ind. 405 (1882); Warren v. Campbell, 26 Iowa 282 (1861); Lime Rock Bank v. Mallett, 34 Me. 547 (1852) ; S. C, 42 lb. 349 (1856) ; Mariners' Bank v. Abbott, 28 lb. 280 (1848) ; St. Joseph Fire, &c., Ins. Co. v. Hauck, 71 Mo. 465 (1880) ; Still- well V. Aaron, 69 lb. 539 (1879) ; Dubuisson v. Folkes, 30 Miss. 432 (1855) ; New Hampshire Sav. Bank v. Calcord, 15 N. H. 119 (1844) ; Calvert v. Good, 95 Penna. St. 65 (1880) ; Gard v. Neff, 39 Ohio St. 607 (1884). ' McComb V. Kittridge, 14 Ohio 348 (1846). "Semple v. Atkinson, 64 Mo. 504 (1877). « Gates V. Hamilton, 12 Iowa 50 (1861). " Williams v. Jensen, 75 Mo. 681 (1882). USUKIOUS CONSIDERATION. 653 of the forbearance, to apply money in his hands to other debts in which the payee is interested ;^ or if he assumes the payment of incumbrances on the land, for which he gave the note, together with other charges, for which he was not otherwise liable.^ So, an agreement to allow certain rentsjo be collected and credited on a judgment has been held to be sufficient consideration for the creditor's agreement to for- bear.^ But an unperformed agreement by the principal to give a confession of judgment as collateral has been held to be insufficient and to have no effect on the surety's liability,* § 967. Usurious Consideration. — If the extension is given in consideration of an executory promise to pay usurious interest, it will not be a binding contract and will not release the surety.^ But it has been held that such an agreement will be binding on actual payment of the usury, and will in equity discharge a surety, although the contract for it was originally executory.® Under the former usury law of Mis- sissippi, which forfeited the excess paid, it made no differ- ence whether the usury was actually paid or not; and it has been held that a promise to pay usury was sufficient con- sideration for an extension discharging the suretj'.' But by a later statute it is held in that State that a usurious consid- eration is not sufficient to riiake a contract binding.* When -Menifee v. Clark, 35 Ind. 304 (1871). ■■'Kester 'd. Hulman, 65 Ind. 100 (1878). 'Ducker i;. Rapp, 67 N. Y. 464 (1876). *Hnnt V. Kiiox, 34 Miss. 655 (1857). = 2 Daniel 381 ; 2 Edwards 1 771 ; Ferman ^..Douhleday, 3 Lans. 216 (1870) ; Billington v. Wagner, 33 N. Y. 31 (I860) ; Kyle v. Bostic'k, 10 Ala. 589 (1846) ; Galbraith v. Fullerton, 53 III. 126 (1870); Braman v. Howk, 1 Blackf. 392 (1825); Halstead v. Brown, 17 Ind. 202 (1861); Williams v. Boyd, 75 Ind. 286 (1881); Scott v. Hall, 6 B. Mon. 285 (1845); Tudor v. Goodloe, 1 76. 322 (1841); Berry v. Pullen, 69 Me. 101 (1879); Brown v. Prophet, 53 Miss. €48 (1876) ; Koberls v. Stewart, 81 lb. 664 (1856) ; Jones v. Brown, 11 Ohio St. 601 (1860) ; Calvert v. Good, 95 Penna. St. 65 (1880) ; Payne v. Powell, 14 Tex. 600 (1855); Burgess v. Dewey, 33 Vt. 618 (1861); Meiswinkle v. Jung, 30 Wis. .%1 (1872) ; St. Maries v. Polleys, 47 lb. 67 (1879) ; Irvine v. Adams, 48 Wis. 468 (1879). «Armistead v. Ward, 2 Patt. & H. 504 (1857). 'Brown v. Prophet, 53 Miss. 648 (1876). spolkinghorne v. Hendricks, 61 Miss. 366 (1883). See Code 1880 I 1141, forfeiting ail interest if usury taken. 654 PRINCIPAL AND SURETY. an extension is made in consideration of an agreement to pay usury, it is said that the whole amount must be paid in advance in order to effect the surety's discharge; and that such payment must be averred by the surety, who pleads that the debt was extended for such consideration.' If the usurious payment is actually made, it is held in many States to be sufficient consideration for an extension which will discharge the surety.^ Many cases, however, hold the contrary, although the forbearance has been given in accordance with the agreement.^ As a general rule, however, the actual payment of usury is sufficient consideration for a binding agreement for extension.* But if a collecting agent receives usury, and in consideration of such pay- ment agrees to extend the note without authority from his principal, it will not discharge the surety, although the usu- rious payment is actually received by the principal ; but such payment will be credited on account of the note.® Where the usurious contract is merely prohibited under a penalty, and not made void, the surety has been held to be discharged by an extension to his principal based upon it.' But where, as in New York, the contract for usury is void, the extension granted will be without consideration and without effect on the surety.' So, in North Carolina it makes no difference whether the usury is actually paid or not, and iPatton V. Shanklin, 14 B. Mon. 15 (1853). ^Kelley v. Gillaspie, 12 Iowa 55 (1861); Robinson v. Miller, 2 Bush 179 (1867) ; Scott v. Harris, 76 N. C. 205 (1877) ; Moulton v. Posten, 52 Wis. 169 (1881). 'Gilder v. Jetter, 11 Ala. 256 (1847); Corielle v. Allen, 13 Iowa 289 (1862) Howell V. Sevier, 1 B. J. Lea 360 (1878) ; Smith v. Hyde, 36 Vt. 303 (1863) *2 Daniel 331; 2 Edwards § 771 ; Vary v. Norton, 6 Fed. Rep. 808 (1881) Scott V. Sattbld, 37 Ga. 384 (1867) ; Camp v. Howell, lb. 312 (1867) ; Dan forth V. Semple, 73 111. 70 (1874) ; Myers v. First Nat. Bank, 78 111. 257 (1875) Harbert v. Dumont, 3 Ind. 346 (1852) ; Gross v. Wood, 30 Ind. 378 (1868) , Lemmon v. Whitman, 75 Ind. 318 (1881) ; Kenningham v. Bedford, 1 B. Moa 326 (1841) ; Stillwell v. Aaron, 69 Mo. 539 (1879) ; Wild v. Howe, 74 Mo, 551 (1881) ; Wright v. Bartlett, 73 N. H. 548 (1862) ; Blazer v. Bundy, 15 Ohio St. 57 (1864) ; Hamilton v. Prouty, 50 Wis. 592 (1880). "Farwell v. Meyer, 35 111. 41 (1864). •Wheat V. Kendall. 6 N. H. 504 (1834). ' Vilas V. Jones, 10 Paige 76, 1 N. Y. 274 (1848) ; National Bank of Glovera- Tille V. Place, 15 Hun 564 (1878) ; Denick v. Hubbard, 27 Hun 347 (1882). PARTIES TO AGREEMENT. 655 the agreement for extension based on it, will not be binding in either case.^ So, too, in Wisconsin.^ And in New Jersey the payment of excessive interest will be treated as a part payment, and an extension based on such consideration will therefore, as in the cases of such payment already spoken of, be without valid consideration and ineffectual as a discharge of the surety.^ § 968. Parties to Agreement — Consent of Surety. — It is necessary, as we have seen, that an agreement for forbear- ance to discharge the surety should be made with the prin- cipal himself. An agreement to that effect, made with a stranger, will not discharge the surety.* So, an agreement for extension between a creditor and one surety will not discharge another surety, except, so far as he is entitled to contribution against the surety making the agreement.^ The agreement for 'extension must not only be made on due consideration and with the principal himself, but it must be without the consent of the surety.^ Thus, an extension to the acceptor, without the drawer's consent, will discharge the drawer.'' So, an extension to one joint-maker (known to be a surety and accepted as such) without consent of the other, will discharge the latter.' But where the relation of joint-makers as principal and surety is not known to the 'First Nat. Bank v. Linneberger, 83 N. C. 454 (1880). 'Meiswinkle v. Jung, 30 Wis. 361 (1872). "Nightingale ■;;. Meginnis, 5 Vroom 461 (1871). *Byles 250 n. ; Chitty 462, 466; 2 Edwards ? 770; Prazer v. Jordan, 8 El. & Bl. 303. But see Lyon v. Holt, 5 M. & W. 250; Hefford v. Morton, 11 La. 115 (1837). ^Ide V. Churchill, 14 Ohio St. 372 (1863). •Chitty 463 ; Bank of Ireland v. Beresford, 6 Dowl. 333 ; Archer v. Hale, 4 Bing. 464 ; S. C, 1 Moo. & P. 285 ; Boaler v. Mayor, 19 C. B. (n. s.) 76 ; Clark v. Boyce, 64 Ga. 486 (1880) ; Henderson v. Dodgson, 9 Bradw. 80 (1881) ; Bla- zer V. Bundy, 15 Ohio St. 57 (1864) ; Burr v. Beyer, 2 Neb. 265; Dickerson V. Board of Com'rs, 6 Ind. 128 (1855) ; Hunt v. Knox, 34 Miss. 655 (1857) ; Cherry v. Miller, 7 B. J. Lea 305 (1881) ; German Sav. Association v. Helm- rick, 57 Mo. 110 (1874) ; Jones v. Fleming, 15 La. An. 522 (1860) ; Prather u Young, 67 Ind. 480 (1879) ; Chickasaw Co. v. Pitcher, 36 Iowa 593 (1873) ; Treat v. Smith, 54 Me. 112 (1866); Rose v. Williams, 5 Kans. 483 (1870); Claggett V. Salmon, 5 Gill & J. 314 (1833). 'Racine Co. Bank v. Lathrop, 12 Wis. 466 (1860). 'Pooley V. Harradine, 7 EI. & Bl. 431. 656 PRINCIPAL AND SURETY. creditor, an extension of time to one will not discharge the other.^ Where the extension of time to the principal is without the surety's consent, it will not be necessary for the surety to prove that he has been damaged by it, but that will be presumed.^ But if the indulgence to the principal is with the surety's consent, he will not be discharged by it.* This is true where the forbearance was in pursuance of the original understanding at the time the note was made.* But consent to an extension will not cover a subsequent extension granted without consent.^ Consent is a question of fact for the jury.* And they are entitled to consider any evidence of assent, e. g. where the surety said, " I know I am liable, and if the acceptor does not pay, I will."'' And the surety's consent may be implied from circumstances,^ but cannot be inferred merely from his silence.* If the surety consents to the creditor " using any means to obtain payment from the acceptor without prejudice of his right to recover from the drawer," it may imply his consent to an extension of time.^" So, if the surety or indorser was the holder's attorney, and the delay grew out of a liti- gation which he was conducting for the holder, he cannot take advantage of any such giving of time to the principal.^^ So, if the surety, at the time of signing the note, knows of an agreement with the principal for an extension of time, 1 Howell V. Lawrenceville Mfg. Co., 31 Ga. 663 (1860) ; Stewart v. Parker, 55 Ga. 656 (1876). "Comegys v. Booth, 3 Stew. 14 (Ala. 1830). Bat see, contra, Brown v. Wright, 7 T. B. Mon. 397 (1828). 'Byles 257; 2 Da,niel 335; Clark v. Devlin, 3 Bos. & P. 363; Wright v. Storrs, 32 N. Y. 691 (1865) ; Baldwin v. Western Reserve Bank, 5 Ohio 273 (1831); Bowling i;. Flood, 1 B. J; Lea 678 (1878); First Nat. Bank v. Whit- man, 66 111.331 (1872). * Jones V. Brown, 11 Ohio St. 601 (1860). ^Gray v. Brown, 22 Ala. 262 (1853). « Treat v. Smith, 54 Me. 112 (1866). 'Chitty 469; Stevens v. Lynch, 12 East 88; Jordan v. D'Heur, 71 Ind. 199 (1880). ^Solomon v. Gregory, 4 Harr. 112 (N. J. 1842). 'Sneed v. White, 3 J. J. Marsh. 525 (1830). 1° Chitty 469 ; Hill v. Johnson, 3 C. & P. 456. "Jones V. Hawkins, 60 Ga. 52 (1878). EIGHTS RESEKVED. 657 in consideration of his signature, he will be bound by it, although he does not know the terms of the agreement.^ But the surety will not be held to have waived his dis- charge by saying that the giving of time " was the best thing that could have been done."^ If he consents to an extension on condition of certain acts to be done within a given time by the creditor, such condition must be strictly performed, in order to hold the surety to his consent.* § 969. Waiver of Discharge. — If the surety is discharged by an extension, a fresh promise on his part will amount to a waiver of the discharge, if it is made with full knowledge of the facts by which he was discharged.* So, he may waive such discharge by a subsequent assent to it without new consideration.^ And his subsequent promise will be a waiver, if made with knowledge of the extension, although in ignorance of the law which effected his discharge.* And such promise, and the surety's knowledge at the time of making it, may, of course, be shown by the creditor.^ In like manner, if he subsequently pays a part of the note, with knowledge of the extension, and promises to pay the balance, it will be a waiver on his part.* It has been ■ held that a new promise on the surety's part requires a new consideration.' But a later case in Ohio lays down the con- trary rule, apparently with more reason.^" § 970. Rights Reserved — Surety Indemnified. — If, in granting an extension to the principal, the creditor reserves ' McHard v. Ives, 5 Bradw. 400 (1879). ^ Byles 257 ; Withall v. Masterman, 2 Campb. 179. 'Cartmel v. Newton, 79 Ind. 1 (1881). *2 Edwards ? 782; 1 Parsons 242; Merchants' Ins. Co. v. Hauck, 83 Mo. 21 (1884). * Byles 257 ; Mayhew v. Crickett, 2 Swanst. 185 ; Smith v. Winter, 4 M. & W. 467. "Byles 257; Stevens v. Lynch, 12 East 38; Smith v. Winter, 4 M. & W. 454. 'Williams v. Boyd, 75 Ind. 286 (1881). » Hinds V. Ingham, 31 111. 400 (1863). 'Porter v. Hodenpuyl, 9 Mich. 11 (1860). i» Bramble v. Ward, 40 Ohio St. 267 (1888). VOL. n. -^K 658 PRINCIPAL AND SURETY. his right against the surety, the surety will not be dis- charged.^ This is the case where the holder of a bill takes a new note payable in future, with express reservation of his rights against the original drawer and indorser.* But an extension, "with the understanding that the bond should remain, in every other respect, unaffected by the agreement,'* has been held not to amount to such a reservation, and the surety was held to be discharged.^ The reservation, how- ever, of rights against the surety need not be known to the surety;* although it is said that it should appear on the instrument unless it is a distinct collateral contract.' And in any case, whether the holder's rights against the surety are reserved or not, the surety will not be discharged by the extension where he has been fully indemnified against loss by the principal.* 'Byles256; 2 Daniel 335; 2 Edwards ? 779 ; 1 Parsons 241; Burke's Case, 6 Ves. 809 ; Boultbee v. Stubbs, 18 Ves. 20 ; Ex parte Glendinning, Buck 517; Harrison v. Courtauld, 3 B. & Ad. 36; Claggett v. Salmon, 5 Gill & J. 314 (1833) ; Hunt v. Knox, 34 Miss. 655 (1857) ; Morse v. Huntington, 40 Vt. 488 (1868) ; First Nat. Bank v. Linneberger, 83 N. C. 454 (1880). 'Bailey v. Baldwin, 7 Wend. 290 (1831). 'Calvo V. Davies, 73 N. Y. 211 (1878). *Byle8 256; Webb v. Hewitt, 3 Kay & J. 438. * Byles 256, 257 ; Ex parte Harvey, 4 DeG. M. & G. 881 ; Wyke v. Rogers, 1 DeG. M. & G. 408. • 1 Parsons 241 ; Chilton v. Robbins, 4 Ala. 223 (1842) : Smith v. Steele, 25 Vt 427 (1853). . ^.. A- CONTRIBUTION. 659 CHAPTER XXIX. EIGHTS OF SUKETY. I. Contribution between Sureties, II. Exoneration by Principal. III. Svhrx>gation of Swrety. I. CONTRIBUTION BETWEEN SURETIES. 971. General Principles. 972. Equitable Contribution — Express Contract. 973. Contribution Controlled by Agreement. 974. Depends on Payment. 975. Affected by Release. 976. Defenses — Statute of Limitations. 977. Action for Contribution. I 971. Contribution — General Principles. — Where there are several sureties, all equally liable for the debt, and it is paid by one of them, he is entitled to receive a contribution from the others, each paying his proportionate share.^ But where two sign as sureties for a co-maker, they cannot claim such contribution of a third person who signed as an accom- modation indorser.^ Accommodation indorsers, however, who are joint-payees and sureties for the maker, are entitled to contribution against one another.^ So, too, a first and second indorser, who have agreed between themselves to share all loss.* But where there are joint-makers and joint-guaran- tors, and payment is made by one of the latter, he will have no such right against the former.® Where a joint and sev- eral note is signed by several principals and sureties, and afterwards by an additional surety, one of the sureties pay- ' Whiting V. Burke, L. R. 6 Ch. App. 342; Norton v. Coons, 6 N. Y. 35 (1851) ; Derosset v. Bradley, 63 N. C. 17 (1868) ; Lapham v. Barnes, 2 Vt. 213 (1828) ; Flint v. Day, 9 Vt. 345 (1837) ; Camps v. Simmons, 62 Ga. 7S (1878). 'Briggs V. Boyd, 37 Vt. 534 (1865). 'Steckel v. Steckel, 28 Penna. St. 233 (1857). ♦Phillips V. Preston, 5 How. 278 (1847). 'Keith V. Goodwin, 31 Vt. 268 (1858). 660 EIGHTS OF SURETY. ing the note may call upon the last signer for contribution.' In like manner, the estate of a deceased surety is liable for contribution to a co-surety who pays the debt.'' § 972. Contribution an Equitable Right — Express Con- tract. — The right of sureties to have contribution from one another is an equitable one, growing out of their relation to each other, and not dependent upon contract between them.' As such, the doctrine was originally confined to courts of equity, but it is now applied by courts of law as well.* The liability may, of course, be controlled by a different contract between the sureties, e. g. to the effect that one shall be liable as a surety only on default of all the others.^ So, a surety who signs his name "A. B., 100," intends, it has been held, to limit his liability in amount to $100 ; and that will be the extent of his liability, the others remaining liable for the balance.^ And where two persons give a warrant of attorney in order to release the property of a third from execution, and one of them signs at the other's request, taking itidem- nity for so doing, he will not be liable to contribute upon payment of the judgment by the other.'' On the other hand, where A. signs a note as co-surety with B. and after paying his half joins with B., in a new note, for the other half, and is obliged to pay it, he will be •entitled to look to B. for contribution on the whole amount, in the absence of an express agreement to the contrary.* But where A. and B. give a joint note to C, who afterward transfers the note by indorsement, and it is subsequently released by the indorsee on receiving a new note made by B. and C. jointly, B. having been surety for A. on the original 'Monson v. Drakeley, 40 Conn. 552 (1873). •Johnson v. Harvey, 84 N. Y. 363 (1881). ' Byles 259 ; Craythorn v. Swinburne, 14 Ves. 169 ; Eeynolds v. Wheeler, SO L. J. C. P. 350; Drummond v. Yager, 10 Bradw. 380 (1882). *Drummond v. Yager, supra. 'Byles 259; 2 Daniel 353; 2 Parsons 254; Craythorne v. Swinburne, 14 Ves. 160; Harthey v. O'Plaherty, Lloyd & G. temp. Plunk. 217. «Klepper v. Borchenius, 3 Bradw. 318 (1883). 'Turner v. Davies, 2 Esp. 478. «MeKee v. Campbell, 27 Mich. 497 (1873). CONTRIBUTION CONTROLLED BY AGREEMENT. 661 BOte cannot recover contribution against C, on payment of the new note, C. being in fact a surety for B. on that note.^ So, if A. and B. are co-sureties for C, and B. afterward gives A. a note to indemnify him against loss, and A. pays the whole amount of the original note, and releases the principal, C, at request of his co-surety, B., the note for indemnity being without consideration and unavailable, B. will remain liable to A. for contribution on the original note.^ § 973. Contribution Controlled by Agreement. — If a surety seeks to be relieved from his liability to contribute to a co-surety on the ground of an agreement with the holder that he should only be liable as a last indorser, he must show that such agreement was known to his co-surety and assented to by him.' And if one signs a note below two other joint- makers as surety for them, they being also sureties, he will not be liable for contribution as a co-surety with them, unless proved to be such ; and the burden of such proof rests upon the person demanding contribution.* And, in general, if one joint-maker sues another for contribution as co-surety, he must prove their relation to be such, and no presumption will be made to that effect.* And if one of two sureties is really principal as to the other, he cannot, of course, claim contribution from him.* Sureties may also by contract between themselves put au end to the right of contribution previously existing.'' Thus, where a note is given by B. as surety for A., the relation not being apparent on the face of the paper, and after- ward signed by C. and D. as sureties, on receiving indem- nity from B. and on A.'s representations that he was the 'Goetchius v. Calkins, 46 Mich. 328 (1881). 'Hutchinson v. Thacher, 49 Vt. 486 (1877). 'Simmons v. Camp, 64 Ga. 726 (1880). *Bobert8on v. Deatherage, 82 111. 511 (1876). 'Paul V. Berry, 78 111. 158 (1875). 'Cubber v. Emery, 37 N. H. 567 (1869), although, in this case, the indem- nity was given for an official bond, and the recovery against the first surety was on a new bond signed afterward by both sureties on the official's re- appointment. 'Paul p. Berry, 78 111. 158 (1875). 662 RIGHTS OF SURETY. principal, if B. afterward pays the note, relying on A. for repayment, and takes back from C. and D. the security given them for their indemnity, they will be discharged from all liability to contribute on the note.' On the other hand, sureties may be liable to contribute to one another, although their relation of joint liability as such co-sureties is not known to them at the time of making the "contract.^ Thus, several sureties, who sign the note at dif- ferent times without any communication with one another, are bound to contribute as co-sureties.^ And, in like man- ner, sureties on different instruments for one debt may be liable to contribution between themselves as co-sureties.* § 974. Contribution Depends on Payment. — The right of a surety to contribution from his co-surety begins when he has paid more than his proportion of the debt,' and not until then.^ He must actually make the payment before he can proceed with his claim for contribution,' The liability to contribute begins, however, with the contract, not with the payment ; and a subsequent transfer of property may there- fore be impeached by a co-surety for fraud.* And the co-surety's rights will not be defeated by such a transfer fraudulently made.® And where the principal is insolv- ent, a court of equity will even, at the instance of a co-surety, restrain a surety from making a contemplated transfer of that character.'" § 975. Contribution — Affected by Release. — A surety who has paid a note is entitled to have contribution against his co-surety, irrespective of their ability to recover against the 'Ayer v. Tilton, 42 N. H. 407 (1861). = Byles259; 2 Daniel 353. ^Norton v. Coons, 6 N. Y. 33 (1851). * Byles 258; 2 Daniel 353; Dering v. Earl of Winchelsea, 2 Bos. & P. 270. 5 Davis V. Humphreys, 6 M. & W. 153; Cowell v. Edwards, 2 Bos. & P. 268; Browne v. Lee, 6 B. & C. 421. • 2 Parsons 254 ; Magruder v. Admire, 4 Mo. App. 133 (1877) ; Schooley v. Fletcher, 45 Ind. 86 (1873). ''in re McLean v. Jones, 2 U. C. L. J. (n. s.) 206 (1866). »Howe V. Ward, 4 Me. 195 (1826). "Pashby v. Mandigo, 42 Mich. 172 (1879). "Bowen v. Hoskins, 45 Miss. 183 (1871). CONTEIBUTION— AFFECTED BY DEFENSES. 66S principal debtor, and without demand of payment and notice of default/ His right to contribution will not be affected by a discharge of the co-surety as to the principal debtor.* And he may have contribution, although he holds collateral not known to, or shared by, the co-surety.^ It has been fre- quently held, however, that collateral given to one surety on a note will inure to the benefit of both.* And a surety, who obtains such collateral from the principal, must bring it into hotchpot for the benefit of his co-sureties, although he con- sented to become surety only on condition of being sepa- rately secured.^ But where two sureties on different notes jointly receive a collateral mortgage, a co-surety of one will not be entitled to contribution against the share of the mortgage belonging to the other surety.* § 976. Contribution — Defeases — Statute of Limita>tious. — Where the payment is made by a surety pending suit on a note, without knowledge of existing defenses, his right to contribution will not be prejudiced by such defenses.^ But if the debt has been already barred by the Statute of Limita- tions, he cannot recover contribution from the co-surety.^ As regards his right to demand contribution, the Statute of Limitations will run in favor of the co-surety from the time of payment and not from the time of making the contract.' But a judgment rendered in favor of one surety against the holder is no bar to an action against the other, or to an action for contribution by such other, if he is obliged to pay." 'Taylor v. Reynolds, 53 Cal. 686 (1879). '2 Parsons 254. 'Byles 259; 2 Daniel 354; 2 Parsons 253; Done v. Walley, 2 Exch. 198. «Aldrich v. Hapgood, 39 Vt. 617 (1867) ; McCune v. Belt, 45 Mo. 174 (1869) ; Seibert v. Thompson, 8 Kans. 65 (1871). And this will include a mortgage given to a co-surety for their joint benefit, Menzies v. Kennedy, 23 Grant U. C. Ch. 360. But collateral given by one surety to, the holder will not go to another co-surety on his paying the note, Bowditch v. Green, 3 Meto. 360' (1841). ^Steel V. Dixon, L. B. 17 Ch. D. 825 (1880). «Whiteman v. Harriman, 85 Ind. 49 (1882). 'Hichborn v. Fletcher, 66 Me. 209 (1877). 'Cocke V. Hoffman, 5 B. J. Lea 105 (1880). 'Camp V. Bostwick, 20 Ohio St. 337 (1870). •»Hin V. Morse, 61 Me. 541 (1873). 664 BIGHTS OF SURETY. In Indiana it is said that if two makers of a note are found to be sureties, they will be presumed to be co-sureties until shown to be otherwise.^ And if a judgment is rendered against several joint-makers, of whom two are sureties, and one does not answer, and the other sets up and establishes his suretyship, the former may still pay the judgment and sue the latter for contribution as a co-surety.* If a note is altered after its delivery, and is voluntarily paid by one accommodation joint-maker, the other will not be liable to contribution unless he has ratified the alteration.* But a subsequent agreement that the note shall be paid in bank bills, which are afterwards refused, will not amount to a variation of the agreement or discharge a co-surety.* § 977. Action for Contribution. — The proper form of action for contribution by a co-surety is an action for money paid.* And even if one maker of a note adds the word "secur- ity " to his signature, his remedy against his co-maker on paying the note should not be upon the note itself, but by an action of this sort.* And such action cannot be brought before the maturity of the paper, nor until payment has been actually made.^ In such action the surety may also recover his proportionate share of the costs paid.* But if a note is proved for its entire face against the estate of an insolvent co-surety by consent of the other surety, and is subsequently paid by, and transferred to, the latter, this will be a pay- ment of the note, and will reduce the proof against the insolvent surety to one-half of the note (the share recover- able by the co-surety), although the dividend on the entii-e sum would have been less than half.* A surety will not be 'Baldwin v. Fleming, 90 Ind. 177 (1883). 'Leaman v. Sample, 91 Ind. 236 (1883). "Davis V. Bauer, 41 Ohio St. 287 (1884). 'Derosaet v. Bradley, 63 N. C. 17 (1868). 'Byles 259; Kemp v. Finden, 12 M. & W. 421. •Stevens v. West, 1 How. 308 (Miss. 1836). 'Dedman v. Williams, 2 111. 154 (1834). »Davis V. Emerson, 17 Me. 64 (1840). •New Bedford Inst, for Sav. v. Hathaway, 184 Mass. 69 (1882). ACTION FOB CONTKIBUTION. 665 entitled, on paying his half of a bill, to have his co-surety's property exhausted to raise the residue, and he can take no measures against the co-surety until he has paid inore than his share.^ In an action for contribution, however, where there are several co-sureties, the number of solvent sureties will deter- mine and measure the damages inter se.^ But a surety may recover contribution against one co-surety even after releas- ing another.* At common law he could only recover from each his adequate part, although the others might be insolv- ent.* And he was obliged to betake himself to equity for relief as to the share of an insolvent co-surety.* Where several joint-makers have become sureties for each other, and are all insolvent, the estate of each will be liable for a divi- dend on the whole note as a several debt of each.® But the extent of liability to contribute, with reference to the share of an insolvent co-surety, may be controlled by contract between the sureties themselves.' 'Schooley v. Fletcher, 45 Ind. 86 (1873). 'Magruder v. Admire, 4 Mo. App. 133 (1877). '2 Parsons 253. *Byles 259 ; Cowell v. Edwards, 2 Bos. & P. 268 ; Browne v. Lee, 6 B. <& C. 689 ; Batard v. Hawes, 22 L. J. Q. B. 443. 'Byles 259. •Citizens' Bank v. Patterson, 78 Ky. 291 (1879). 'Byles 259; Swaine i». Ware, 1 Oh. E. 149; Collins v. Proaser, 1 B. . Searles, 2 Sm. & G. 147; S. C, 24 L. J. Ch. 22. CONSIDERATION. 681 dation partnership indorsement on it is not a bona fide holder as against such indorser.^ A receiver is, of course, not a bona fide holder in due course of business.* Neither is an assignee under a bank- rupt or insolvent law,' nor a trustee who takes paper in trust to collect and pay creditors and return the balance, if any, to the indorser.* § 991. Consideration — Its Relation to Bona Fides. — What consideration is sufficient to constitute a holder for value has been already considered. The good faith of a holder is often affected, and in some degree evidenced by the charac- ter or amount of consideration paid. Thus, one is not a bona fide holder if he takes a note by way of advancement and anticipation of a share in his father's estate.* On the other hand, it is not necessary that a bona fide holder should pay the face value of a bill for it, even though he purchases it from a bill broker.* And evidence of mere inadequacy of consideration will not, of itself, impeach his good faith.^ So, one who purchases a note for less than its face, from a bona fide holder, is himself a holder in good faith.* And this has even been held to be true of bank bills purchased at a large discount.' So, the purchase of a note just before maturity, at a discount of three per cent., will not imply notice of defenses.'" On the other hand, a smaller discount (two per cent.) paid a few days before maturity, has been held to be evi- dence for the jury to consider on the question of the pur- 'Hendrie v. Berkowitz, 37 Cal. 113 (1869). 'Briggs V. Merrill, 58 Barb. 389 (1870) : Litchfield Bank v. Peck, 29 Conn. 884 (1860). •Billings V. Collins, 44 Me. 271 (1857). 'Roberts v. Hall, 37 Conn. 205 (1870). 'Hicks V. Jennings, 4 Fed. Rep. 855 (1880). •Tilden v. Blair, 21 Wall. 241 fl874). 'Brown v. Penfleld, 36 N. Y. 473 (1867). •Vinton v. Peck, 14 Mich. 287 (1866). •Dabney v. Bank of South Carolina, 3 So. Car. 124 (1871). ^Murray v. Beckwith, 81 111. 43 (1875). 682 BONA FIDE HOLDER. chaser's good faith/ But even a large discount of twelve per cent, has been held not to destroy the bona fide charac- ter of the purchaser, although the maker was solvent and resided in the same place.^ So, too, even a discount of one- third.* But a discount of one-half has been held to fall short of the " fair and reasonable value " which is necessary for such holder.* Even a discount of this extent, however, has been held not to establish the bad faith of the purchaser;* especially where the paper in question was purchased with other notes, on information that it was given for a patent, but without any knowledge of fraud.* And in the absence of proof of fraud, a sale made by a sheriff for less than one-fifth the face of the note has been held sufficient to constitute a bona fide purchaser.'' § 992. Inadequate Consideration. — The adequacy of the consideration paid by the purchaser is immaterial except as evidence of bad faith.* Gross inadequacy is admissible and entitled to consideration as evidence of mala fides.^ And in . examining into the question of good faith in the purchaser, the inadequacy of the consideration paid is always an element to be considered.^" Thus, an offer to sell a parcel of notes for one-fifth of their face is a circumstance that should arouse suspicion and at least expose the gocjd faith of the purchaser to close scrutiny." Gross inadequacy of consideration amounts to implied notice of existing defenses.^^ This has been held ■Murray v. Beckwith, 48 111. 391 (1868). 'Tod V. Wick, 36 Ohio St. 370 (1881). 'Sully V. Goldsmith, 32 Iowa 397 (1871) ; Citizens' Bank v. Ryman, 12 Neb. 541 (1882). *Baily v. Smith, 14 Ohio St. 396 (1863). But see, contra, Lay v. Wissman, 36 Iowa 305 (1873). s Cannon v. Canfield, 11 Neb. 506 (1881). "State Bank v. McCoy, 69 Penna. St. 204 (1871). ' Irby V. Blain, 31 Kans. 716 (1884). *Tod V. Wick, supra. "1 Daniel 728; 1 Edwards 2 452; Story on Promissory Notes ? 197; and see supra, I 448. '"Lay 1). Wissman, 36 Iowa 305 (1873); Hereth v. Merchants' Nat. Bank, 34 Ind. 380 (1870). "/ra re Hook, 11 N. B. R. 282 (1875). "1 Daniel 726 ; 1 Edwards i 452. COLLATERAL SECURITY. 683 in the case of a sale of a bill for one-eighth of its face.^ So, a fortiori, the sale of a $300 note of a solvent maker for %6} So, where the inadequacy of consideration is coupled with other circumstances which might reasonably excite suspicion.' In Vermont, where one purchased the note of a good maker, at a large discount, from the payee, who was a stranger to him, and who refused to guarantee it, it was held to be a question for the jury whether the plaintiff, " on reasonable inquiry, could have ascertained that the note was without consideration."* This case goes somewhat farther than the rule now generally recognized as to the need of inquiry. Where a purchaser bought at a large discount, knowing the maker to be a foreigner with property, but with little knowledge of English, and the indorser to be an unknown and irresponsible vendor of patents, and asking no questions, he was held not to be entitled to protection as a bona fide holder.^ So, where the purchaser knows the maker to be in embarrassed circumstances, and buys the note at an excessive discount, he has been held to be entitled to prove his claim in bankruptcy against the maker's estate only for the amount actually paid by him.® In like manner, the holder's damages have been limited to the amount paid, where he had ample opportunity for inquiry and paid a very inadequate consideration.' But, in the absence of notice or of circumstances amounting to it, the purchaser of a bankrupt's note for less than its face, may recover or prove in bankruptcy for the whole amount.* § 993. Collateral Security. — Taking a note as collateral '/n re Gomersall, L. E. 1 Ch. D. 142 (1875) ; affirmed as Jones v. Gordon^, L. R. 2 App. Gas. 617. = De Witt V. Perkins, 22 Wis. 451 (1868). ^Hunt V. Sandford, 6 Yerg. 387 (1834). *Gould V. Stevens, 43 Vt. 125 (1870). «Boyce v. Gayer, 2 Mich. N. P. 71 (1871). 'Jones 1). Gordon, L. R. 2 App. Gas. 616 (1877). 'Coliger V. Francis, 2 Baxt. 422 (1873). '^Ex parte Lee, 1 P. Wms. 782; and see 1 452, mpni. 684 BONA FIDE HOLDER. security for advances made at the time, is sufficient consid- eration to make the purchaser a holder for value and in good faith.^ And this is true, although the original note secured is afterward renewed for a larger amount with additional security.^ So, a bank is a bona fide purchaser, where it refuses a discount of the note to the payee, but takes it (whether by way of discount or pledge) with leave to the payee to draw against it.^ A pledgee is a holder in good faith.* And taking a bill or note as collateral amounts to a purchase of it in the ordinary course of business/ And the character of such holder is not affected by the fact that he has other collateral more than sufficient for his security.* So, one who takes by way of pledge, not from the payee but from a later bona fide holder, becomes himself a bona fide holder.' § 994. Damages Recoverable. — Where a negotiable instru- ment is void between the parties, a bona fide holder can only recover, it is said, " what he or some prior holder, through whom he derives his title, paid for it, with interest."^ His character as a bona fide holder of collateral extends only to the amount of the debt actually secured." But he may recover in bankruptcy the amount due notwithstanding defenses existing and available against his pledgor.^" So, if the paper was given in consideration of an agreement, which 'Belmont, &c., Bank v. Hoge, 35 N. Y. 65 (1866) ; Lyon i). Ewings, 17 Wis. 61 (1863) ; Curtis v. Mohr, 18 Wis. 616 (1865) ; Miller v. Boykin, 70 Ala. 469 (1881) ; Brown v. Callaway, 41 Ark. 418 (1883). ^Miller v. Pollock, 99 Peuna. St. 202 (1881). 'Piatt V. Beebe, 57 N. Y. 339 (1874). *Fisher v. Fisher, 98 Mass. 303 (1867) ; Smith v. Isaacs, 23 La. An. 454. 'Gardner v. Gager, 1 Allen 502 (1861). 'Lord V. Ocean Bank, 20 Penna. St. 384 (1853). 'Prentice v. Zane, 2 Gratt. 262 (1845). "Van Fleet, V. C, in Dekay v. Hackensack Water Co., 11 Stew. 163 (1884) ; Holoomb i;. Wyckoflf, 6 Vroom 35 (1870). So, too. Huff v. Wagner, 63 Barb. 215 (1872); Todd v. Shelbourne, 8 Hun 510 (1876); Petty v. Hannum, 2 Humph. 102 (1840) ; and see I 452 supra. 'Stoddard v. Kimball, 6 Cush. 469 (1850); Smith v. Hiscock, 14 Me. 449 (1837) ; Valette v. Mason, 1 Ind. 288 (1848) ; Stevens v. Campbell, 13 Wis. 419 (1861). So, by statute in Georgia, Code I 2788, 2139 ; Bealle v. Southern Bank of Georgia, 57 Ga. 274 (1876). ^"Ex parte Kelly, 1 Low. 894 (1869). DAMAGES KECXJVEKABLE. G85 has not been performed, a bona fide holder will be entitled to be protected as such only to the extent of the money actually paid by him.^ Where the purchaser takes a note for advances to be made by him and has made only a part of the advances agreed on, he is a bona fide holder only so far.'^ And where a bill has been taken to secure advances, it may be redeemed on a tender of the amount advanced.^ So, the purchaser of an accommodation bill, knowing its character and making advances on it, is only entitled to pro- tection as a bona fide holder to the extent of his advances.* And if, upon the holder's bankruptcy, there is a set-off existing in favor of his indorser against him, the accommo- dation ' maker or indorser will be entitled to the benefit of it.* It has been held, indeed, that one who purchases an accommodation note in good faith for less than its face is only entitled to recover from the maker the amount actually paid by him.* And if an accommodation note has been fraudulently diverted from its intended use, and is bought in good faith by one who gives his indorsement and agrees to give further indorsements in consideration of it, he will only be a bona fide holder to the extent of the liability actually incurred.'' So, one who .takes a bill or note as indemnity is only a bona fide holder to the extent of the risk covered.* But taking such paper in pledge as indemnity against a liability assumed as indorser, is in the ordinary course of business and constitutes the purchaser a bona fide holder ; ' although the contrary has been held as to indemnity against future loss on a contract of suretyship.^" 'Watson V. Eussell, 3 B. & S. 34 (1862). 'Allaire v. Hartshorne, 1 Zab. 665 (1847). 'Key V. Flint, 8 Taunt. 21. 'WiflFen v. Roberts, 1 Esp. 261. ^ Jones V. Hibbert, 2 Stark. 270. •Holeman v. Hobson, 8 Humph. 107 (1847). But see Fowler v. Strickland, 107 Mass. 552 (1871). 'Williams v. Smith, 2 Hill 301 (1842). 'Colman v. Post, 10 Mich. 422 (1862). •Stotts V. Byers, 17 Iowa 303 (1864). '"Bank of Mobile v. Hall, 6 Ala. 639 (1844) ; Bertrand v. Barkman, 13 Ark. 150 (1852). 686 BONA FIDE HOLDER. The giving of credit on an overdrawn bank account is sufficient consideration for such holder.^ So, it is sufficient if a bank takes a draft on deposit to the general credit of the drawer, and the money is checked out before notice of defense.^ But merely discounting a note and crediting it on the indorser's account, without parting with any value for it, is not enough.' § 995. Bona Fide Holder for Existing Debt. — It is now generally acknowledged, although formerly questioned, that payment of an existing debt is sufficient consideration to constitute a bona fide holder for value.* So, too, if part is payment of an existing debt, with fresh consideration for the balance.' So, an existing debt coupled with an exten- sion given on account of the new security.® Taking a note for an existing debt constitutes the purchaser a holder for value to the extent of the debt and not the face of the note.'' And, although the note is taken by a preferred creditor fi-om an embarrassed debtor, he will still be a holder for value.* In New York, however, the rule as to the suffi- ciency of an existing debt to constitute one a holder for value is different.® Where part of the consideration was an old debt, and the balance was paid in cash, and the note purchased from a ' Jn re Carew's Estate Act, 31 Beav. 39. 'Southwick V. First Nat. Bank, 84 N. Y. 420 (1881), and see ? 457 mpra; Fox V. Bank of Kansas City, 30 Kans. 441 (1883). 'Central Nat. Bank v. Valentine, 18 Hun 417 (1879) ; Scott v. Ocean Bank, 23 N. Y. 289 (1861) ; Fulton Bank v. Phoenix Bank, 1 Hall 562 (1829) ; Mann V. Second Nat. Bank of Springfield, 80 Kans. 412 (1883). But see Ex parte Kichdale, L. E. 19 Ch. D. 409 (1881). •Swift V. Tyson, 16 Pet. 1 (1842) ; Riley v. Anderson, 2 McLean 589 (1841) ; Lanning v. Lockett, 10 Fed. Rep. 451 (1882) ; Currie v. Misa, L. R. 10 Ex. 153 (1875) ; Gould v. Segee, 5 Duer 260 (1856) ; Homes v. Smyth, 16 Me, 177 (1839) ; Knox v. Clifford, 38 Wis. 651 (1875) ; Hodges v. Black, 76 Mo. 537 (1882) ; Reddick v. Jones, 6 Ired. 107 (1845) ; Russell v. Hadduok, 8 111. 233 (1846) ; Stevenson v. Heyland, 11 Minn. 198 (1866) ; Wood v. Seitzinger, 14 Phila. 430 (1880) ; Dixon v. Dixon, 31 Vt. 450 (1859) ; Draper v. Cowles, 27 Kans. 484 (1882). And see U 461-5, supra. 'Riggs V. Hatch, 16 Fed. Rep. 838 (1883). •Johnston Harvester Co. v. McLean, 57 Wis. 258 (1883). 'Citizens' Bank v. Payne, 18 La. An. 222 (1866). "Savings Bank of New Haven v. Bates, 8 Conn. 504 (1831). •Turner v. Treadway. 53 N. Y. 650 (1873). And see 2 462, m/pra. BONA FIDE HOLDER FOR EXISTING DEBT. 68'? broker of bad repute and of no responsibility, the purchaser (having reason to know that the note did not belong to the broker) was only allowed to recover as a bona fide holder for the amount actually paid."^ So, if an accommodation bill, with the payee's name left blank, is fraudulently diverted, and is delivered, after the failure of the drawer, to his sister, as payee, with full notice, for an existing debt, she will not be a purchaser "in the usual course of business."^ The good faith of the purchaser is not, however, impeached by the mere fact of his taking the note as security for, or in payment of, an existing debt;^ although taking it as security for such debt may be held not to be sufficient to make him a holder for value in the mercantile sense of the term.* And one who takes up a note on which he was himself liable, and receives security at the same time for the amount ex- pended in so doing, has been held not to be such a holder.* ^Buckner v. Jones, 1 Mo. App. 538 (1876). 'Thompson v. Poston, 1 Duv. 389 (1864). 'Pugh V. Durfie, 1 Blatch. 412 (1849) ; Manning v. McClure, 36 111. 490 (1865) ; Wood v. Seitzinger, 2 Fed. Eep. 843 (1880) ; National Bank v. Brook- lyn, &c., R. R. Co., 14 Blatch. 242 (1877); Straughan v. Fairchild, 80 Ind. 598 (1881) ; Curtis v. Mohr, 18 Wis. 645 (1864) ; Osgood v. Thompson Bank, 80 Conn. 27 (1861). *Maynard v. Sixth Nat. Bank, 98 Penna. St. 250; Scott v. Betts, Hill & D. 863 (1844) ; Rice v. Raitt, 17 N. H. 116 (1845). «Lintz V. Howard, 18 Hun 424 (1879). 688 BONA FIDE HOLDER. II. SUSPICION AND NEGLIGENCE. 996. Suspicion — Inquiry. 997. Gill V. Cubitt— Followed. 998. Abandoned. 999. Negligence — Presumption of Bad Faith. 1000. may be Disproved. 1001. Gross Negligence. § 996. Suspicion — Inquiry. — The original rule, now re- established, did not require diligence or inquiry on the pur- chaser's part, nor require him to investigate circumstances of suspicion, except so far as they affected his actual good faith. In 1824, however, a departure from this rule was made in the English courts by Lord Chief Justice Abbott, who laid down the rule in Gill v. Cubitt, that circumstances which ought to excite the suspicion of a prudent and careful man make inquiry necessary on his part and destroy his character as a bona fide holder, if such inquiry is not made.^ And due caution in such case is a question of fact for the jury to determine.^ This rule was? followed in England for some years, and has since been followed to some extent in the United States. Under it such circumstances as the fol- lowing have been held fit to excite suspicion and suflScient to defeat the good faith of the purchaser, e. g. taking a lost check five days after its date from a stranger in payment for goods purchased f changing a Bank of England note of £500 for a stranger in a small town, the purchaser not knowing that the note had been stolen and advertised;* taking a lost bank note for £1,000, from a person who was known to be in pecuniary difficulty, without asking any iChitty 292, 293 ; 1 Daniel 720 ; Gill v. Cubitt, 3 B. & C. 466 (1824) ; Roths- child V. Corney, 9 B. & C. 388 (1829). 'Gill V. Cubitt, swpra; Beck with v. Corral, 11 Moo. 506; S. C, 8 Bing. 444 (1826) ; 2 C. & P. 261. 'Down V. Hallings, 4 B. & C. 330 (1825) ; S. C, 6 Dowl. & Ry. 455, 2 C. & P. 11. This case was decided by Abbott, C. J. (afterward Lord Tenterden), on the ground that the check was " to be considered in the same light as a bill of exchange overdue." It had been taken by a shopkeeper for goods purchased for a less amount and the balance paid by him in cash. ♦Snow V. Peacock, 11 Moo. 286; S. C, 3 Bing. 406 (1826) ; 2 0. & P. 216. AMERICAN CASES FOLLOWING GILL V. CUBITT. 689 -questions;^ taking a stolen bill from an unknown persou representing himself as coming from the country, such pur- chase not being in the ordinary course of business;" cashing a bank note for £100, eight days after it had been lost in another town, for a stranger who gave a fictitious address in an illiterate hand, the banker who cashed the note making no inquiry as to the stranger's inn or other circumstances.' § 997. American Oases Following Gill v. Oubitt. — Many American cases, since the decision of Gill v. Cubitt, have followed the ruling in that case.* And in Georgia it is now provided by statute that circumstances sufficient to put a prudent man on his guard in purchasing negotiable paper constitute notice to a purchaser before maturity." And it has been held in Connecticut that the erasure or partial erasure of the word " renewal " on a bill is a circumstance which ought to excite the suspicion of a prudent and careful man, and that the purchaser under such circumstances takes without due caution and is subject to defense.* So, in a later iChitty 294; Egan v. Threlfall, 5 D. & R. 526; Solomons v. Bank of Eng- land, 13 East 135. 'Slater v. West, 3 C. & P. 325 (1628) ; S. C, 1 Dans. & L. 15. 'Strange v. Wigney, 4 Moo. & P. 470; S. C, 6 Bing. 677 (1830). n Daniel 722; 1 Parsons 258; Safiford v. Wyckotf, 1 Hill 11 (1841), affirm- ing 4 lb. 442 (1842) ; Pringle v. Phillips, 5 Sandf. 157 (1851) ; Beltzhoover v. Blackstock, 3 Watts 20 (1834) ; Russell v. Hadduck, 8 111. 233 (1846) ; Greer V. Yosti, 56 Mo. 307 (1874) ; Nicholson v. Patton, 13 La. 213 (1839) ; Roth v. Calvin, 32 Vt. 125, 136 (1859). In the language of Poland, J., in this case : "The rule laid down in QiRv. Cubitt was generally adopted by the American courts, and seemed to have become the settled law of this country until the later decisions in England and the promulgation of them by Judge Story and Prof. Greeiileaf, in their legal treatises. * * * We have been referred to the case of Pringle v. Phillips, 5 Sandf. 157, decided by the Superior Court in the city of New York, in 1851 ; the whole subject is there most ably examined by Duer, J., and all the cases, both English and American, are carefully and ^bly reviewed. That court, upon the fullest considera- tion, both upon authority and reason, established the rule as laid down in Gill V. Cubitt. It is but just to say that the decisions of no tribunal in the country, upon questions of commercial law, are entitled to more considera- tion than those of the Superior Court of New York, at the date of that deci- sion. * * * In our judgment, that docrine is best sustained by author- ity. But if the question were wholly new, and we were now called upon to establish a rule for the first time, we should feel no hesitation in saying that such rule should be the rule to govern the purchase and transfer of negotiable securities." 5 Georgia (1882 Code J 2790). •Hall V. Hale, 8 Conn. 33 (1831). VOL. II. .^T 690 BONA FIDE HOLDER. case in Illinois, it has been held that one who purchases a bill from his prospective brother-in-law (the drawer), and is told, on questioning him, that there are " all sorts of rumors on the street, but the bill has been taken care of," is not a bonafde purchaser of such bill, where he could have learned in a few minutes, by convenient inquiry, that the indorser of the bill had stopped its payment.' So, where a check on a New Orleans bank was lost and was taken, twenty-five days after its date, at St. Louis (a distance of 1,500 miles), from a steamboat passenger, and money and goods given for it, and the bill subsequently sold at a discount of five per cent, to the plaintiff, it was held that inquiry on his part was neces- sary and that he was not entitled to recover on it as a bona fide purchaser.^ So, it was formerly held in Massachusetts that inquiry was necessary to good faith, if the circumstances were such as to put the purchaser on his guard.^ And circumstances sufficient to put a purchaser on his guard have been held to amount to notice of the defense.* So, it has been held in a late case in Missouri, that circum- stances necessarily casting a shade on the transaction amount to notice;^ and, in Tennessee, that circumstances sufficient to put a purchaser on inquiry amount to notice of what the inquiry would have disclosed.* So, if one takes a bill as collateral under circumstances which would lead a man of ordinary prudence to suspect that the holder had no power to pledge it, it has been held to be his duty to make inquiry, and that he is not a bona fide holder in the absence of such inquiry.^ So, if the purchaser of a note knows that the maker is insolvent, with other facts that- ought to have put 'Sturges V. Metropolitan Nat. Bank of N. Y., 49 111. 220 (1868). 'Vairin v. Hobson, 8 La. 50 (1835). 'But in a transfer made long before maturity, for full consideration, the fact of the indorser saying that the purchaser must take it at his own risk, and he would not be responsible for it, is not notice, Cone v. Baldwin, 12 Pick. 545 (1832). 'Nutter V. Stover, 48 Me. 163 (1859). =^ Hamilton v. Marks. 52 Mo. 78 (1873). 'Merritt v. Duncan, 7 Heisk. 156 (1872). 'Buckner v. Jones, 1 Mo. App. 538 (1876). GILL V. CUBITT ABANDONED. 691 him on inquiry.^ But if lie has made inquiry on the strength of such circumstances without discovering anything wrong about the paper, he may then take the bill and be protected as a bona fide holder.^ So, it has been held that one who takes bank notes under suspicious circumstances is bound to make inquiry concerning them.^ And it has even been held that where a promissory note contains a recital that it is given for land, the purchaser should know that the peaceable possession of the land has passed to the purchaser, although he need not know whether the purchase-money has been fully paid.* Where one takes a note without due cau- tion and without paying value for it, he is, of course, not entitled to protection as a bona fide holder for value.* The rule in Vermont seems to still follow Gill v. Cubitt, and it is there held to be a question for the jury whether a holder, " on reasonable inquiry, could have ascertained that the note was without consideration," the purchaser in this case having bought the note at a discount and the indorser having refused to guarantee that the maker was good." § 998. Gill V. Cubitt Abandoned. — A few years after Lord Tenterden laid down the rule requiring caution on the part of the purchaser, this doctrine was abandoned as one that obstructed the negotiation of commercial paper.'' In 1834, it was modified by Lord Denman, who held that one might be a purchaser in good faith, notwithstanding suspicious circumstances, except in case of gross negligence.* And it has been held that circumstances of gross negligence, e. g. where the purchaser must have known that the indorser was without title, amount to mala fides, and as such affect the ^Anderson v. Van Alen, 11 Johns. 343 (1815). '■'Williamson v. Brown, 15 N. Y. 354 (1857). 'Steinhart v. Boker, 34 Barb. 436 (ISBl"). •Eyland v. Brown, 2 Head 273 (1858). *Sandford v. Norton, 14 Vt. 228 (1842). 'Gould V. Stevens, 43 Vt. 125 (1870). ;: 'Chltty 293 ; 1 Parsons 259 ; Story on Promissory Notes g 197. ' «1 Daniel 720 ; 1 Parsons 258 ; Crook v. Jadis, 5 B. & Aid. 909. 692 BONA FIDE HOLDER. character of the purchaser.' This modification, making an exception to the old rule in the case of gross negligence, was, however, soon abandoned by Lord Denman himself, and the rule is now established, both in England and in this country, that a purchaser may become a bona fide holder, notwithstanding gross negligence, unless the circum- stances of suspicion are such as to amount to bad faith on his part." Mere suspicion is not, of itself, bad faith, and will not raise a presumption of bad faith.' And any sus- picion which falls short of bad faith is immaterial and does not amount to notice.* The purchaser is not even bound by circumstances which would put a prudent man on inquiry.* He may be a bona fide holder, although by caution and vigilance he might have known the defects in the instru- ment.* Facts which would put a reasonable man on further inquiry are not equivalent to notice of defects which the inquiry might lead to.'' • Nor is it sufficient proof of notice 'But what a prudent and cautious man would have done is immaterial, Baekhouse v. Harrison, 5 B. & Ad. 1098; S. C, 3 N. & M. 188. 'Chitty293; 1 Edwards ?? 517,449; 1 Daniel 721; 1 Parsons 258; Story on Promissory Notes 1 197 ; Lord Denman in Goodman v. Harvey, 4 Ad. & E. 870 (1836); Swan v. North British Company, 2 Hurlst. & C. 184; Good- man V. Simonds, 20 How. 343 (1857) ; Murray v. Lardner, 2 Wall. 110 (1864) ; Hotchkiss V. National Banks, 21 lb. 354 (1874) ; Hamilton v. Vought, 5 Vroom 187 (1870); Phelan v. Moss, 67 Penna. St. 59 (1870); Comstock v. Hannah, 76 111. 550 (1875); Farrell v. Lovett, 68 Me. 326 (1878) ; Trustees of Iowa College v. Hill, 12 Iowa 474 (1861) ; Pox v. Bank of Kansas City, 30 Kans. 441 (1883). Especially where the purchaser takes from a prior bona fide holder, Mornyer v. Cooper, 35 Iowa 257 (1872). "The doctrine introduced by Lord Tenterden stands at the present moment marked with the disapproval of the highest judicial authority. Nor does such disap- proval rest upon merely speculative grounds. That doctrine was put in practice for a course of years, and it was thus by experience found to be inconsistent with true commercial policy. Its defect, a ^reat defect as I think, was that it provided nothing like a criterion on which a verdict was to be based," Beasley, C. J., in Hamilton v. Vought, 5 Vroom 191 (1870). »Colson V. Arnot, 57 N. Y. 253, 270 (1874). 'Johnson v. Way, 27 Ohio St. 374 ; Frank v. Lilienfeld, 33 Gratt. 377 (1880) ; Hamilton v. Marks, 63 Mo. 167 (1876). ''Ex parte Estabrook, 2 Low 547 (1877) ; Bank of Sherman v. Apperson, 4 Fed. Hep. 25 (1880) ; Lafayette Savings Bank v. St. Louis Stoneware Co., 4 Mo. App. 276 (1877) ; Magee v. Badger, 30 Barb. 246 (1859). Especially where he had made inquiry and obtained credible information which re- moved his suspicions, Belmont Branch Bank v. Hoge, 7 Bosw. 543 (1861). •Belmont Branch Bank v. Hoge, 35 N. Y. 65 (1866), affirming 7 Bosw. 543. 'Lane v. Evans, 49 Iowa 156 (1878) ; Lake v. Keed, 29 lb. 258 (1870). BAD FAITH IMPLIED FEOM NEGLIGENCE. 693 to show that the holder might have heard his indorser speak of the defects in the note before its transfer.* And even if the purchaser buys at a large discount a note which has been released before maturity, and the fact might have been easily ascertained by him with ordinary diligence, his good faith will still be unimpeached.* § 999. Bad Faith Implied from Negligence. — If the cir- cumstances are such as to invite inquiry and imply bad faith on the purchaser's part in neglecting to inquire, they will defeat his character as a bona fide holder.^ But even where stolen railroad bonds were purchased for ten per cent, of their face from a New York banker, through information from a bank cashier in Portland, Maine, without knowledge of their having been lost or advertised, the purchaser was still held to be a bona fide holder and not liable for negligence in making further inquiries, the bonds having at the time defaulted in interest and having then no known market value.* And it is said that inquiry is unnecessary except in case of 'actual or constructive notice to the purchaser from the paper itself or otherwise.® Constructive notice is, however, sufficient, and suspicious circumstances amounting to notice have the same effect as actual notice.* If the holder suspects fraud, and willfully or fraudulently fails to 'Earhart v. Gant, 32 Iowa 481 (1871). "Schoen v. Houghton, 50 Cal. 528 (1875). 'Chitty 295; 1 Daniel 746; 1 Edwards S 517; 1 Parsons 260; Story on Promissory Notes g 197. *Smith V. Harlow, 64 Me. 510 (1874). In the words of Barrow, J., in, this case: "When the proffered trade is attended with circumstances. justly calculated to excite suspicion that the seller has no legal title to dispose of the property which he proposes to sell, not only does the regular course of business require a reasonable attempt to ascertain the facts, but under such circumstances a neglect to use the means at hand to ascertain them could scarcely be distinguished from the gross neglect which is so often held to be equivalent to bad faith. Perhaps it would be more exact to say that it is evidence, from which one could not fail to draw the conclusion, that the purchaser was acting mala fide and not in the due course of business." n Daniel 724 ; 1 Edwards ? 449. «Horton v. Bayne, 52 Mo. 533 (1873) ; Johnson v. Butler, 31 La. An. 770 (1879) ; Grencoux v. Wheeler, 6 Tex. 515 (1851) ; Bennett v. Forlina, 56 Mo. 309 (1874). So, it is said, the holder " must be without any circumstances to cause reasonable belief of suspicious facts," Lapice v. Clifton, 17 La. 152 (1841). 694 BONA FIDE HOLDER. make inquiry, from a belief that such inquiry would result in finding that the bill or note was invalid, he will not be a bona fide holder, but will take the instrument with notice of the defect.^ So, if a purchaser taking a bill of lading, ■which was negotiable by statute, had reason to believe that the indorser had no title to it, he would not be a bona fide holder.^ So, where the note was in a form peculiar to, and used only for discount at, a particular bank, and was not so •discounted, this circumstance has been held to imply such suspicion as to defeat the holder's good faith.^ So, the fact that the paper is sold at an unusually large discount,* or is sold by a traveling vendor of patent rights, who is a stranger in the place, the paper itself being made by a neighbor of the purchaser.^ But one may be a bona fide holder notwithstanding his knowledge that the paper was given for the purchase of a patent, and although he may be negligent or suspicious about it/ But it has been held that his knowledge of the existence of a criminal prosecution against the maker and his fear that the note was given to compound it, coupled with the fact that he was advised to have a new note made, will amount to notice.' § 1000. Presumption of Bad Faith Rebutted. — In general, circumstances raise at most a presumption of bad faith and are not conclusive evidence. Thus, if a check is taken by a bank from its customer eight days after date, the good faith of the bank is a question for the jury.' So, if one purchases stolen bonds,, which lack a certificate of convertibility into stock referred to in the body of the bond, it may be a cir-. cumstance to put a prudent man on his guard and raise a 1 Oakley v. Ooddeen, 2 F. & F. 656 (1861); Craft's Appeal, 42 Conn. 146 <1875). ^Shaw V. Railroad, 11 Otto 557 (1879). 'Fowler v. Brantly, 14 Pet. 318 (1840). 'Auten V. Gruner, 90 111. 300 (1878). *Taylori;. Atchison, 54 111. 196 (1870). "Comstock V. Hannah, 76 111. 550 (1875). 'Pierce v. Kibbee, 51 Vt. 559 (1879). "London, &c., Bank v. Groome, L. R. 8 Q. B. D. 288. PEESUMPTION OF BAD FAITH KEBTJTTED. 695 presumption of bad faith, but will not be conclusive evidence of it.^ And where mala fides is charged, it is always com- petent for the plaintiff to introduce evidence to the contrary,* Thus, if he knew of a previous sale of stolen bonds, he may show that such sale had been explained.* And mere knowledge on the purchaser's part of dishonest methods on the seller's part has been held to be evidence of bad faith.* The purchaser is not, however, put upon in- quiry as to whether a note was made for an illegal sale of liquor, because he knows the maker to be a liquor dealer.' ISTeither does he take the paper with notice by reason of its being bought from an attorney-at-law;** or because he knew the indorser to be a person who dealt in options, and even suspected that the note had been made in such a transac- tion;^ or because he purchased from the payee himself and knew of former usurious transactions of his.* And the fact that the payee has taken up tl^e paper, in the hands of a bona fide holder, at maturity, and struck out his own indorsement, will not defeat the good faith of a pur- chaser from him.' So, the purchaser is not put upon in- quiry by the fact that the note was indorsed by a corporation, by its general agent, and subsequently indorsed by the agent individually, although it may be the custom of banks on discounting paper to credit it to the last indorser.^" So, the fact of a note being marked " ne varietur " will not affect the good faith of the purchaser." In like manner, it is not necessary that the purchaser should inquire intd the suflSciency of collaterals ordered to 'Welch jr. Sage, 47 N. Y. 143 (1872). 'Skidmore v. Clark, 47 Conn. 20. 'Dutchess County Ins. Co. v. Hachfleld, 73 N. Y. 226 (1878). ■•Onnsbee v. Howe, 54 Vt. 182 (1881). ^Bottomley v. Goldsmith, 36 Mich. 27 (1877). *Grencoux v. Wheeler, 6 Tex. 515 (1851). 'Mitchell V. Catchings. 23 Fed. Rep. 710 (1885). «Sherman v. Blackman, 24 111. 345 (1860). 'Bank of Montreal v. Denar, 6 Bradw. 294 (1880). "Edwards v. Thomas, 66 Mo. 468 (1877). "Bank of Kentucky v. Goodale, 20 La. An. 50 (1868). 696 BONA FIDE HOLDER. be deposited by the board of directors ot a corporation on the execution of a negotiable instrument by its chairman/ So, a bank, which discounts drafts with forged bills of lading attached, is not bound to examine into the genuineness of such collaterals, and the acceptor of the drafts cannot recover,, after making payment of them to such bona fide holder.* § 1001. Bad Faith Presumed from Gross Negligence. — If the negligence of the purchaser is so gross as to imply bad faith^on his part, he will, of course, be no longer entitled to the presumption that he is a bona fide holder.^ The ques- tion is, however, in all cases one of good faith and not of mere prudence or caution on his part.* And caution is unnecessary, except so far as the want of it implies bad faith on his part.^ Negligence, however gross, is not of itself mala fides.^ And notwithstanding such negligence the pur- chaser may be a bona fide holder.' And the negligence is immaterial, except as evidence of bad faith.* And it is to be remembered that a bank or other financial institution is bound to no greater degree of caution in purchasing negotia- ble paper than a prudent business man.' Un re Land Credit Co. of Ireland, L. E. 4 Ch. App. 460 (1869). '^Hoflfman v. Bank of Milwaukee, 12 Wall. 181 (1870). 'Chitty60; 1 Daniel 746; 1 Parsons 259; Story on Promissory Notes § 197. ♦Carlon v. Ireland, 5 El. & Bl. 765. ^Stephens v. Foster, 1 C. M. & R. 849; Foster v. Pearson, lb.; Matthews V. Poythress, 4 Ga. 287 (1848) ; Murray v. Beckwith, 81 111. 43 (1875) ; Sal- ander v. Lockwood, 66 Ind. 285 (1879) ; Maitland v. Citizens' Nat. Bank of Baltimore, 40 Md. 540 (1874) ; Howry v. Eppinger, 34 Mich. 29 (1876). •Gage V. Sharp, 24 Iowa 15 (1867); Shreeves v. Allen, 79 111. 553 (1875). 'Brown v. Spofford, 4 Otto 474 (1877) ; Craft's Appeal, 42 Conn. 146 (1875) ; Mears v. Waples, 4 Houst. 62 (1868) ; Magee v. Badger, 34 N. Y. 247, affirm- ing 30 Barb. 246 (1866) ; Chapman v. Rose, 56 N. Y. 137 (1874) ; City Bank of New Haven v. Perkins,' 29 N. Y. 554 (1864); Worcester County Bank V. Dorchester &c. Bank, 10 Cush. 488 (1852); Frank v. Lilienfeld, 33 Gratt. 377 (1880); Matthews v. Poythress, swpra; Citizens' Nat. Bank v. Hooper, 47 Md. 88 (1877) ; New Orleans &c. K. E. Co. v. Mississippi Col- lege, 47 Miss. 560 (1873) ; Smith v. Culton, 5 Bradw. 422 (1879). *Seybel v. National Currency Bank, 64 N. Y. 288 (1873). In this case the purchaser had negligently overlooked a printed notice of loss left at if» banking house. "Bedell v. Burlington Nat. Bank, 16 Kans. 130 (1876). NOTICE TO AGENT. 697 III. NOTICE — EXPRESS OK IMPLIED 1002. Notice— What. 1003. to Agent— Partner. 1004. Agent's Knowledge — When Material. 1005. Before Payment. 1006. on Face of Paper — Overdue Bill. 1007. Interest Overdue — Post-Dating. 1008. Eestrictive Indorsement — " Without Kecourse." 1009. Memoranda on Bill. 1010. Indorsement in Official Capacity. 1011. Peculiar Marks or Words. 1012. Indorsement by Agent. 1013. Memoranda — Blanks. 1014. Implied from Kelation of Parties. 1015. Common Partner. 1016. Authority of Corporation. 1017. _ Statutory Provisions. 1018. Consideration. 1019. Failure. 1020. Accommodation. 1021. Material Facts. ' 1022. Fictitious or Deceased Party — Defenses. 1023. in Collateral — Lis Pendens. § 1002. What is Notice. — It is not in any case necessary that the purchaser of a bill or note should have formal notice of existing defenses. Knowledge, however acquired by him, is equivalent to notice.^ And knowledge on the part of an individual will bind an estate represented by him as executor.'' But to defeat the purchaser's good faith, the defect which comes to his knowledge must be such as would have been clearly available against his indorser.* Thus, a surety's remonstrance at the time against the purchase is not enough to show bad faith.* And a broker is not competent as an expert witness to prove what facts amount to a notice of defects.® § 1003. Notice to Agent — Partner. — Notice of defenses in the sale of commercial paper falls under the general rule '1 Daniel 739; Wagner v. Diedrich, 50 Mo. 484 (1872). 'DeKay v. Hackensack Water Co., 11 Slew. 158 (1884). »1 Parsons 260, 261. *Ransom v. Turley, 50 Ind. 273 (1875). ♦Rowland v. Fowler, 47 Conn. 347. 698 BONA FIDE HOLDER. that notice to an agent is notice to the principal.^ And this applies, of course, to corporation officers. Thus, notice to a bank director has been held to be notice to the bank." So, if a corporation note is discounted by a bank under a general order of the directors to discount all of its paper, notice to the cashier will bind the bank.^ In like' manner, notice to a partner is notice to his firm.* And if a note is made to one partner on the sale of partner- ship property and afterward transferred to the other partner, the latter is in effect the payee and cannot recover on it as a bona fide purchaser.* So, where indorser and indorsee are jointly concerned and practically partners, although for that transaction only.^ § 1004. Knowledge of Agent — When not Notice. — To con- stitute notice to the principal, the agent's knowledge should have been acquired in the transaction itself, or recently enough to be still in his mind.^ Thus, where one of several makers (who are vestrymen and add the official title to their signatures) is cashier of the bank that discounts a note, the bank will be bound by the knowledge of the cashier as to its object and consideration." But the knowledge of a solicitor, not shared by his prin- cipal and not received in his business, will not, in general, bind him.' So, too, the knowledge of a corporation director, which was not obtained in his official character.^" So, the fact that a draft by one firm on another is ofiered for dis- count by A., who is a member of both firms and a director ' 1 Daniel 752; 1 Edwards § 105, 519; Oakley v. Ooddeen, 2 F. & F. 656; Devries v. Shumate, 53 Md. 211 (1879). ^Boggs V. Lancaster Bank, 7 Watts. & S. 331 (1844). 'Mann v. National Bank, 30 Kans. 412 (1883). 'Powell V. Waters, 8 Cow. 699 (1826) ; Quinn v. Fuller, 7 Gush. 224 (1851). *Otis V. Adams, 41 Me. 258 (1856). «Pease v. McClelland, 2 Bond 42 (1866). '1 Daniel 752. *Tilden\. Barnard, 43 Mich. 376 (1880). 'Eyre V. M'Dowell, 14 Ir. C. L. R. (n. s.) 314. '"Atlantic State Bank v, Savery, 82 N. Y. 291 (1880), affirming 18 Hun 36 (1879). NOTICE. 699 of the bank, under an agreement between the two firms that it shall be taken care of by A., will not amount to notice to the baak.^ So, the knowledge of a director, who did not impart his knowledge to the bank and who was not present when the note was discounted, will not bind the bank.*^ And where the corporation agent is himself the other party, or representing the other party to the transaction, his knowledge will not bind the corporation to which he makes the transfer. Thus, if the note is made by a bank director, Tfith a separate agreement for its conditional surrender, and is deposited by the president of the bank, who had reason to know this fa«t, as collateral for a debt of his own, the bank will not be bound by the president's knowledge.* And, a fortisri, where the agent's act is itself a fraud upon the principal, the latter will not be bound by the knowledge of the former.* § 1005. Notice — Before Payment. — Notice of a defect must precede the purchase of a bill or note, if it is -to affect the purchaser's good faith. Notice received after purchase is immaterial.® This means, however, after the purchase is complete. Thus, if the purchaser gets notice before paying the consideration, he will be bound by it.^ But a mere request, made after the purchase of the paper, that he should retain the indorser's funds, will not be sufficient to render him liable.'' If a note is delivered before maturity, 'Fisher v. Murdock, 13 Hun 485 (1878). 'Third Nat. Bank v. Tinsley, 11 Mo. App. 498 (1882). 'Gates V. National Bank, 10 Otto 239 (1879). *In re European Bank, L. R. 5 Ch App. 358 (1870); First Nat. Bank v. Christopher, 11 Vroom 435 (1878) ; DeKay v. Hackensack Water Co., 11 Stew. 158 (1884). In the words of Van Fleet, V. C, page 161 : " Where an agent representing two principals concocts a scheme to defraud one of them for the benefit of the other, it will be presumed that he did not dis- close to the principal he intende'd to cheat the means by which he intended to effect his purpose." n Daniel 739; Swan v. Steele, 7 East 210; Bassett v. Avery, 15 Ohio St. 299 (1864) ; Perkins v. White, 36 Ohio St. 530 (1881). '1 Edwards ? 518; De La Chaumette v. Bank of England, 9 B. & C. 208; Crandall v. Vickery, 45 Barb. 156 (1865) ; Delaware Co. Bank v. Duncombe, 48 Iowa 488 (1878) ; Kerr v. Cowen, 2 Dev. Eq. 356 (1836). 'Sloan V. Union Banking Co., 67 Penna. St. 470 (1871). 700 BONA FIDE HOLDEK. as collateral for a discount to be made, and the discount is not actually made until after the note matures, the pur- chaser may still be entitled to protection to the extent of the agreed discount, as a bona fide holder for value.^ Notice may be received after part payment, but before final pay- ment. In such case, the purchaser is a bona fide holder to the extent of the payments made before notice.^ Even an agreement to pay is not payment until it is executed, and does not make a bona fiee holder as to payments actually made under it after notice.^ So, if the purchaser pays part in cash and gives his note for part, he is not a holder in good faith as to the latter part, if he receives notice of de- fenses before he pays the note.* But if he sells personal property for a note held by the buyer, and receives notice of defenses to the note before delivery of the last install- ment of the property, he may still be entitled to protection against a defrauded party who has estopped himself by his own negligence in using the means available for his secur- ity.® On the other hand, if the purchaser takes a note as a security for another note discounted by him, and, after receiving notice of defenses to the collateral note, discounts a third note on the strength of an earlier agreement to do so, if the first note discounted should be paid, and on the same security, he will not be a bona fide holder as to such last note.* So, if a second debt, independent of the debt first secured and paid, is contracted by the purchaser after notice, he will be bound as to the latter debt by the notice.'' But the purchaser's good faith will be extended to a re- newal of the original note, notwithstanding notice received by him in the meanwhile,* And the same thing is true of 'Spering's Appeal, 10 Penna. St. 235 (1849). n Daniel 739; 1 Edwards f518. 'Dresser v. Missouri &c. Ry., 3 Otto 92 (1876); Hubbard v. Chapin, 2 Allen 328 (1861). ♦Adams v. Soule, 33 Vt. 538 (1860). 'Merritt v. Bagwell, 70 Ga. 578 (1883). •Watson V. Cabot Bank, 5 Sandf. 423 (1852). 'Merchants' &c. Nat. Bank v. Masonic Hall, 62 Ga. 271 (1879). , •1 Parsons 261; Hopkins v. Boyd, 11 Md. 107 (1857). NOTICE ON" FACE. 701 an extension granted after notice.^ But, in a late case in Georgia this was denied in the case of a renewal.^ § 1006. Notice on Face — Overdue Paper. — When the •defect is apparent on the face of a bill or note, the question of notice is one of construction for the court.' If a bill has been dishonored by refusal to accept it, and this does not appear on the paper, it will not be a notice to the purchaser, or enable the drawer to set up a defense against him.* If, however, a bill or note has the marks of a bank upon it, showing that it has been offered for discount at a bank and refused, this will amount to a notice to the purchaser and he will not be a bona fide holder.^ But notarial marks are not ' in themselves notice, and only serve as evidence touching the good faith of the purchaser.^ If the paper appears on its face to be overdue, the holder will, of course, be bound by notice of that fact, and cannot claim to be a bona fide holder before maturity.' So, if a government bond is offered for sale after it became due and fundable, the purchaser will not take it in good faith, and can obtain no better title than that of his vendor ; and if the bond is stolen, he will get no title against the rightful owner.* So, if a bill is transferred after its maturity it will be subject, as we have seen, to •equities attaching to it, e. g. that it was purchased with money stolen from one who claims it as owner;® or trans- ferred by the payee, who was a mere agent for the maker, in violation of his trust and in payment of his individual ■debt.^" So, if a check is transferred six months after its date to a neighbor of the drawer, who made no inquiry about it, iHoge V. Lansing, 35 N. Y. 136 (1866). 2 Merchants' &c. Nat. Bank v. Trustees, 62 Ga. 271. n Parsons 269. "O'Keeffe v. Dunn, 1 Marsh. 613; S. C, 5 M. & S. 282. ^1 Edwards ? 448; Brown v. Taber, 5 Wend. 566 (1830). ^Goodman v. Harvey, 4 Ad. & EI. 870; S. C, 6 N. & Man. 370. '1 Daniel 738; 1 Edwards ?§ 517, 378; Ayer v. Hutchins, 4 Mass. 370 <1808) ; In re Sime, 12 Nat. Bankruptcy Reg. 315 (1875). ^United States d. Vermilye, 10 Blatch. 280 (1872). ^In re European Bank, L. R. 5 Oh. App. 358 (1870). ^»Tempieton v. Poole, 59 Cal. 286 (1881). 702 BONA FIDE HOLDER. it will be treated as overdue at tlie time of transfer and there- fore subject to defense.' But if a note payable one day after date is transferred several days afterwards by indorsement, the indorsee is still held, in North Carolina, to be presumptively a bona fide holder before ipaturity, such note being an exception to the rule as to overdue paper.^ If a note is transferred after its maturity with an extension indorsed on it, another note being given for the interest pending the extension, it will still be an overdue note, and the purchaser will not take as a bona fide holder.^ But if a note is only apparently overdue by reason of a mistake of a year in its date, the purchaser will be a bona fide holder before maturity.* § 1007. Interest Overdue — Post-Dating. — A purchaser may be a bona fide holder, although he purchases a note or a bond with an overdue coupon attached. This is so where there is but one such coupon, and no proof that it had been presented and payment refused,' So, too, even where there is an overdue coupon attached, and the number of the bond indicates an excessive issue.' But where the overdue coupons indicate interest long in arrears, e. g. eight years overdue, the purchaser will take the bond with notice.^ So, if the bond has an overdue coupon attached and an indorsement, referred to in the bond as indicating the place of payment, has not been filled out.* Where interest is overdue on the paper, as in the case of annual interest nearly a year in arrears, it has been held to constitute notice of defenses to the purchaser;* especially where the note is transferred without 1 First Nat. Bank v. Needham, 29 Iowa 249 (1870). ^Parker v. Stallings, 1 Phillips 590 (N. C. 1868). 'Dryer v. Merchants' Bank, 4 Mo. App. 598 (1877). *McSparran i;. Neely, 91 Penna. St. 17 (1879), although the stamp had been omitted. 'Cromwell v. County of Sac, 6 Otto 51 (1877). 'State V. Cobb, 64 Ala. 127 (1879). 'Chouteau v. Allen, 70 Mo. 290 (1879). ■ "Parsons v. Jackson, 9 Otto 434 (1878). •Hart V. Stickney, 41 Wis. 630 (1877). But see Kelley v. Whitney, 45 lb. 110, overruling this case. SPECIAL INDORSEMENTS. 703 indorsement by the payee, and without the transfer of a col- lateral mortgage.^ So, if interest due semi-annually does not appear by receipts to have been paid, and the note (pay- able in four years) has already run more than three, this fact is admissible as evidence to the jury on the iquestion of the purchaser's good faith.^ The mere fact that a note has been post-dated and trans- ferred before its date, is not, of itself, sufficient ground to defeat the purchaser's bona fides.^ And this has been held to be true of a check transferred one day before its date.* But it has been held, on the contrary, that a post-dated check cannot be transferred in the due course of business and carries notice on- its face until its date.^ § 1008. Special Indorsements — "Without Recourse." — If a note is indorsed " for my use," is will be notice to the purchaser of defenses on the part of such indorser.^ So, where a note, held merely as collateral, has a memorandum on it that "this note is held by me for the note of A. B."'' So, if a note is drawn expressly "for the benefit of A. B.,"* or is indorsed in trust for another.' On the other hand, the good faith of the purchaser will not be affected by the fact that the paper is indorsed with- out recourse," or even by the fact of 'a special indorsement without recourse, stating that the ihdorser had no knowl- edge as to the original consideration of the note." So, if a note is given for a patent, and this is known to the pur- »Bilderback v. McConnell, 48 Mich. 345 (1882). ^National Bank of North America v. Kirby, 108 Mass. 497 (1871). '1 Edwards ? 517; Brewster v. McCardel, 8 Wend. 478 (1832). *Walker v. Geisse, 4 Whart. 252 (1838). 'Clarke Nat. Bank v. Bank of Albion, 52 Barb. 592 (1868). 'Treuttel v. Barandon, 8 Taunt. 100; Sigourney v. Lloyd, 8 B. & C. 622. 'National Security Bank v. McDonald, 127 Mass. 82 (1879). ^Carrillo v. McPhillips, 55 Cal. 130 (1880). •Payne v. Eden, 3 Cai. 213 (1805). '»Epler V. Funk, 8 Penna. St. 468 (1848); Kelley v. Whitney, 45 Wis. 110; Stevenson v. O'Neal, 71 111. 314. "Russel V. Ball, 2 Johns. 50 (1806). 704 BONA FIDE HOLDER. chaser who takes it by an indorsement without recourse, he will not be held to have notice of defenses.^ § 1009, Memorandum as te Security, Protest, &c. — Where a note appears by its recitals to be " secured by real estate mortgage," and is indorsed without recourse by the payee, this fact will not amount to notice to the purchaser.^ Neither will the indorsement of a waiver of protest coupled with a statement that the maker is good.* But an indorsement " for collection " merely will be notice that the indorser is the owner of the paper and his indorsee a mere agent.* And such an indorsement, amounting to notice, will defeat a set-off against the indorser individually acting as such agent.^ So, a restrictive indorsement referring to collateral security is a notice to the purchaser.^ So, an indorsement by the holder as collateral will be notice of the indorsee's claim, although he had consented to a sale by the indorser on condition of the secured debt being paid, and although the purchaser was a foreigner who did not read the indorse- ment.' § 1010. Indorsement in Official Capacity. — Where a paper is held by a trustee or guardian, and this appears on its face, it will put the purchaser upon inquiry as to the authority and title of such officer.* Thus, a note made to "A. B., Trustee," taken for property sold by the trustee by order of the court and indorsed by the trustee as such, is not, prop- erly speaking, commercial paper, and a fraud by the trustee on his cestui que trust is admissible as a defense.' So, in 'Goddard v. Lyman, 14 Pick. 268 (1833) ; Borden v. Clark, 26 Mich. 410 (1873). 'Kelley v. Whitney, 45 Wis. 110 (1878). »Fox V. Bank of Kansas City, 30 Kans. 441 (1883). *Bank of Metropolis v. First Nat. Bank, 7 N. J. L. J. 112 (1884) ; S. 0., 19 Fed. Kep. 301. 'Cecil Bank v. Farmers' Bank of Maryland, 22 Md. 148 (1864). "Haskell v. Brown, 65 111. 29 (1872). 'Pier V. Bullis, 48 Wis. 429 (1879). *Shaw V. Spencer, 100 Mass. 382 (1868). And see ? 158 mpra. 'Third Nat. Bank v. Lange, 51 Md. 138 (1878). PECULIAR MARKS OK WORDS. 705 Louisiana, an indorsement by "A. B., syndic."^ This is true also of a note payable to one person as guardian of an- other,'* or so indorsed.^ In Missouri, however, a different rule seems to have been adopted, and it has been there held that the addition of the word "curator,"* or other official designation,^ does not amount to a notice to the indorsee, or make him in any way a trustee for the person represented by such officer. This has been held, too, of a note payable to "A. B., Sheriff." ° The fact that a bill or note was pur- chased from a note broker is not of itself notice to the buyer.'' But where a bank takes county warrants from a public officer (the treasurer of the county) as collateral for his individual debt, knowing the purpose of the deposit, it will not be able to hold such warrants as a bona fide purchaser.* § 1011. Peculiar Marks or Words. — Where the paper pur- chased is in any important respect peculiar, this may consti- tute notice of defenses to the purchaser. This is true of peculiar scrip of a railway which had been abandoned, there being no other scrip of the same character on the market, and its genuineness being denied.' So, a sealed note with the name of the payee blank and with the consideration specified, originally negotiated for a different consideration, carries notice on its face.^" So, in Massachusetts, a sealed note secured by collateral mortgage and making express reference to it.^^ So, a note with the words " to be held as collateral " written across its face.^** So, a negotiable bond marked " con- >NichoIaon v. Chapman, 1 La. An. 222 (1846). 'Strong V. Strauss, 40 Ohio St. 87 (1881). 'Langdon v. Baxter Nat. Bank, 1 Eastern Eep. 223 (Vt. 1885). *Paulette v. Brown, 40 Mo. 52 (1867). "Powell V. Morrison, 35 Mo. 244 (1864). •Fletcher v. Schaumberg, 41 Mo. 501 (1867). 'Atlas Nat. Bank v. Savery, 127 Mass. 75 (1879). •Isom V. First Nat. Bank, 52 Miss. 902 (1876). "Lambert v. Heath, 15 M. & W. 486. "•Mills V. Williams, 16 So. Car. 593 (IP'^l). "Jewett V. Tucker, 1 Eastern Eep. 430 (Mass. 1885). "Gibson v. Hawkins, 69 Ga. 355 (1882). VOL. n. 2lT 706 BONA FIDE HOLDER. solidated " and reciting a collateral mortgage.^ So, a check marked " Mem.," payable to bearer and indorsed several years after its date, is not in the usual course of business and puts the purchaser on inquiry.^ So, if the fact that a note was given for usurious interest appears on its face, it will be notice to the purchaser.^ So, too, if the name of one surety is erased.* But the fact that an indorsement is struck out is not a suspicious circumstance amounting to evidence of bad faith ;^ nor the fact that one indorsement is erased and an- other nearly so.® So, in England, where crossed checks are of common occurrence, the fact that a check is crossed will not affect the good faith of the purchaser.'' § 1012. Indorsement by Agent. — A bill may be drawn payable to a wife and be indorsed by her husband in her name and his own, in the regular course of business, with- out exciting suspicion.^ But, in general, if a bill or note is signed or indorsed by an agent as such, it is notice to all takers of the signer's character as agent.® So, if a note is given by a public officer or to one, his official character appearing on the paper is notice to purchasers. Thus, a purchaser cannot in good faith take a note, which is made payable to a county treasurer and indorsed without author- ity by a clerk in his office,^" So, one who buys a draft accepted by a public officer, such as the Secretary of War, takes it with notice of all limitations of the officer's author- ity." In like manner, one cannot become a bona fide holder of a check drawn by a bank president on his own bank and 'Caylus V. New York &c. E. K. Co., 10 Hun 295 (1877). ^Skillman v. Titus, 3 Vroom 96 (1866). sHamill v. Mason, 51 111. 488 (1869). *McCrainer v. Thompson, 21 Iowa 244 (1866). ^Colson V. Arnot, 57 N. Y. 253, 271 (1874). 'Crosby v. Grant, 36 N. H. 273 (1858). 'Smith V. Union Bank of London, 1 L. K. Q. B. D. 31. ^Dawson v. Prince, 2 De G. & J. 41 (1857). 'Alexander v. McKenzie, 6 C. B. 766 ; Attwood v. Munnings, 7 B. & 0. 278; S. C, 1 Man. & By. 78. '"People V. Bank of North America, 75 N. Y. 547 (1879). "Floyd Acceptances, 7 Wall. 666 (1868). EFFECT OF MEMOKANDA. 707 certified by himself/ or of a certificate of deposit given by a bank cashier in the name of the bank and indorsed and deposited by him to his own credit.^ But it has been held that an agent may under a general power of attorney indorse notes payable to his principal, and pledge them for his own indebtedness, and the pledgee may hold them as a bona fide purchaser against the princi- pal.^ And the fact that negotiable paper is offered for sale by the manager of a bank, is no notice to purchasers of the misappropriation of bank funds or bank paper.* And, as we have seen in an earlier part of this work, an agent is not obliged to sign in such way as to make the agency appear on the paper, although he should properly do so. In case of his signing a note in his principal's name, with- out indication of his own relation to it as agent, a purchaser may become the holder of it in good faith, notwithstanding the fact that it was made payable to the agent individually.* And the mere fact of an indorsement being made by an agent in his principal's name will not affect the purchaser's good faith.^ § 1013. Effect of Memoranda — Blanks. — A memorandum on the face of a negotiable bill or note will not, in general, be notice of anything not directly and naturally implied by its terms. Thus, the words "F. and L. bonds as collateral," on the face of a note, will not amount to notice of an agree- ment between principal and surety for a deposit of such collateral.'' So, the words " given for a patent right " will not be notice to a purchaser inconsistent with his bona fide character.* 'Claflin V. Farmers' &c. Bank, 25 N. Y. 293 (1862), reversing 36 Barb. 540 (1861). 'Lee V. Smith, 20 C. L. J. 212 (Mo. S. C. 1885). ^Bank of Bengal v Fagan, 7 Moo. P. C. 61 (1849). ^Ex parte Oriental Commercial Bank, L. K. 5 Ch. App. 358 (1870). ^Eead v. Abbott, 16 Vroom 303 (1883). 'Bank of Bengal v. Macleod, 5 Moo. Ind. App. 1 ; S. C, 7 Moo. P. C. 85. 'Fitchburg Savings Bank v. Rice, 124 Mass. 72 (1878). 'Goddard v. Lyman, 14 Pick. 268 (1833) ; Hereth v. Merchants' Nat. Bank, 34 Ind. 380 (1870) ; Doherty v. Perry, 38 Ind. 15 (1871). 708 BONA FIDE HOLDER. In like manner, a bona fide holder is none the less so because of the payee's name having been left blank and filled in by a forgery on the indorser's part;' or because of blanks left in the instrument at the time it was discounted ;* or because the required revenue stamp was omitted.' So, the words " marginal letter of credit," indicating an accom- panying bill of exchange, do not put the purchaser on in- quiry as to the purpose for which the bill was issued.* One may even be a bona fide holder of a bill which has been torn into two pieces and pasted together;* or of a note given for a reaping machine and containing a stipulation that the machine should not become the property of the buyer until the note was paid.' So, the acceptance of a contractor's draft, "if his contract be complied with," is no notice to the holder that the drawer was in default in his contract at the time such acceptance was made.' So, the words " Second of Exchange, First unpaid," are not notice to a purchaser that the agent of the acceptor (for whose benefit the bills were negotiated) had already disposed of the first part.* And even a receipt agreeing to account to the payee for the pro- ceeds of the paper is not notice of want of title or of author- ity to sell, the receipt being in the indorser's possession and the indorser alleging that the note was a gift from the payee.* § 1014. Notice from Relation of Parties. — Notice may in some cases be implied from the identity of the parties or their relation to one another. But the mere fact that a bill or note is drawn to the maker's own order will not raise such presumption.'" •Awde V. Dixon, 6 Exch. 869. "Chemung Canal v. Bradner, 44 N. Y. 680. ' Burson v. Huntington, 21 Mich. 415 (1870) ; First Nat. Bank v. Dougherty. 29 Iowa 260 (1870). *Maitland v. Chartered Mercantile Bank of India, 2 H. <& M. 440. 'Ingham v. Primrose, 7 C. B. (n. s.) 82. •Heard v. Dubuque Co. Bank, 8 Neb. 10 (1878). 'United States v. Bank of the Metropolis, 15 Pet. 877 (1841). "Bank of Pittsburgh v. Neal, 22 How. 96 (1859). •Benior v. Paquin, 40 Vt. 199 (1867). "Roberts v. Lane, 64 Me. 108 (1874). NOTICE FROM EELATION OF PARTIES. 709 On the other hand, a partnership indorsement on a note negotiated by the maker is notice of its character to one taking the note from the maker.^ So, too, if the instrument is made by a limited partnership and that fact appears;'* or if it is made in a firm name after the dissolution of the maker's partnership and the fact of dissolution is known to the purchaser.' So, if a partnership note or acceptance is received knowingly for the individual debt of one partner;* or is taken in renewal of an accommodation note of the indi- vidual partner;® or if a partnership note, made by A.'s firm to the order of B., is used to take up A.'s individual check with B.'s indorsement.® If the purchaser knows that a part- nership note was made for the individual debt of one partner, he will not be a bona fide holder, although the note was not made to him as creditor.'^ And it has been held in Vermont that the jury may find that a purchaser, who bought a note from one partner rely- ing on the property of the other for its payment, should have been put upon inquiry by that fact and cannot claim to be a bona fide holder against the injured partner.* But if a firm keeps its bank account and does its business in the individual name of one partner, and this is known to the bank, which discounts a note indorsed by the individual name of such partner, this will not amount to notice of any fraud on the firm." So, it will not afiect the buyer's good faith that a note made and indorsed by the payee is indorsed by his firm also.'" '1 Edwards ? 105. 'Livingston v. Roosevelt, 4 Johns. 251 (1809). •Bootli V. Quinn, 7 Price 193. *Arden v. Sharpe, 2 Esp. 524; 'Ex •parte Agaoe, 2 Cox 312; Eastman w. Cooper, 15 Pick. 276 (1834); Livingston v. Hastie, 2 Oai. 246 (1804); Me- cutchen v. Kennady, 3 Dutch. 230 (1858). 'Gansevoort v. Williams, 14 Wend. 133 (1835). 'Union Nat. Bank v. Underhill, 21 Hun 178 (1880), ''Ex parte Bonbonus, 8 Ves. 540; King v. Faber, 22 Penna. St. 21 (1853) ; Tyree v. Lyon, 67 Ala. 1 (1880). •Both V. Golvin, 32 Vt. 125 (1859). •Mohawk Nat. Bank v. Van Slyck, 29 Hun 188 (1883). "Bedlon v. Churchill, 73 Me. 146 (1882). 710 BONA FIDE HOLDER. It has been said that if a note is made by a firm to one partner, this circumstance of itself " has a tendency to show that it was not a regular business note, but that there might be circumstances between the parties to it which might affect the validity or the amount of it."^ But in recent cases it Las been settled that the purchaser's good faith is not affected by the fact that the note was made by a partner to his firm and discounted for the firm,^ or even made by him to his firm and fraudulently indorsed by him in the firm name.' § 1015. Firms Having Common Partner. — So, a purchaser may be a bona fide holder of a note which is made by one firm payable to another, although both firms have a common partner and the makers were in reality accommodation par- ties only;* or although the note is made by one who is a common partner to the two firms appearing on it as first and second indorsers;' or even although it is pledged by the payee's indorsement made by a partner common to the payee firm and to the firm receiving it as a pledge;* or although it is made by one who is the common partner of the firms and who indorses for both of them, and it is offered for discount by a broker,'' and is used by him in fraud of both firms for the payment of his individual debt.^ So, one may be a bona fide holder of a note made by a firm to one of its partners, A., and indorsed by another firm of which A. was a member, all in A.'s handwriting.® On the other hand, it has been held that one takes a bill of exchange with notice, if it is drawn by one firm on another and accepted by the other, the signatures and handwriting being all made by a partner common to both.^" •Thompson v. Hale, 6 Pick. 259 (1828). ^Atlas Nat. Bank v. Savery, 127 Mass. 75 (1879). ^Parker v. Burgess, 5 R. I. 277 (1858). "Stimson ■». Whitney, 130 Mass. 591 (1881). ^Freemans' Nat. Bank v. Savery, 127 Mass.- 78 (1879). « Walker v. Kee, 14 So. Car. 142. 'Atlas Bank v. Savery, 127 Mass. 75 (1879). «Moorehead v. Gilmore, 77 Penna. St. 118 (1874). 'Miller v. Consolidation Bank, 48 Penna. St. 514 (1865). "Dickson v. Primrose, 2 Miles 366 (1840). NOTICE OF AUTHORITY OF CORPOBATION. 711 If the purchaser of a bill knows that the partnership name on it was signed as a surety for another, he will not be a bona fide holder/ e. g. where the word " surety " is added to the signature;^ or where the partnership contract is a guaranty,* or appears to be an accommodation indorsement;* or where the note is indorsed by a partner to his firm, even without authority, " held by me for note of A. B."° § 1016. Notice of Authority of Corporation. — Where a note or coupon bond is made by a corporation, purchasers take notice of the statutory limitations of its power ; ® e. g. of the illegality of a bill under the banking laws ;'' or of the want of authority in church wardens and vestry to execute a note for the church.' So, the purchaser of municipal bonds is charged with notice of the official character of the signatures and with notice of statutory requirements, if any.' If the corporation has no legal authority to issue the bonds, he is charged with notice of that fact and cannot take as a bona fide holder.'" 'Bank of Eochester v. Bowen, 7 Wend. 158 (1831). "Boyd V. Plumb, 7 Wend. 310 (1831). ^Marsh v. Thompson Nat. Bank, 2 Bradw. 217 (1878). ^Lemoine v. Bank of North America, 3 Dill. 44 (1874). "National Security Bank v. McDonald, 127 Mass. 82 (1879). '2 Edwards 2 894. And see a full discussion of this subject in gg 343, and seq., supra. 'Smith V. Strong, 2 Hill 241, 295 (1842). See, too, 1 Edwards 485, and g 332, supra. « Palmer v. Wardens, 16 Fed. Rep. 742 (1883). 'Anthony v. Jasper Co., 101 U. S. 693 (1879), affirming 4 Dill. 136. '"Hackensack Water Co. v. DeKay, 9 Stew. 562 (1883) ; Morrison v. Ber- nards, 7 Vroom 219 (1873) ; Sykes v. Columbus, 55 Miss. 115 ; Merchants' &c. Bank v. Freeholders, 6 Sup. Ct. Eep. 88 (1885) ; Wilson v. City of Shreveport, 29 La. An. 673 ; Silliman v. Fredericksburg &c. R. K. Co., 27 Gratt. 119 (1876) ; Lindsey v. Eottaken, 32 Ark. 619 (1878) ; Lewis v. City of Shreveport, 3 Woods 205 (1878) ; Treadway v. Schnauber, 1 Dak. 236 (1875) ; Town of Middleport v. Mina. Life Ins. Co., 82 HI. 562 (1876). In the words of Depue, J., in Hackensack Water Co. v. DeKay, supra : " Persons taking securities of this character are chargeable with knowledge of the power to make them as conferred by the charter. If the power granted by the charter is eubject to a condition relating either to the form in which the security shall be made, in order to be valid, or to some preliminary proceedings extraneous to the acts of the corporation or its officers, securities issued not in the prescribed form or without the preliminary proceedings had, are subject to defenses in consequence thereof, even in the hands of bona fide holders. Thus, where the statute required such bonds to be certified across their face and to be registered, and declared that no bonds should be valid unless so registered, bonds issued without such registry and certificates 712 BONA FIDE HOLDER. If the authority is a limited one, he takes with notice of the limit.^ If statutory conditions are not complied with, he i& charged with notice of that fact,*^ and cannot be a bona fid& holder, notwithstanding such notice.^ But if a county issues bonds payable to bearer under statutory authority, but in excess of the statutory limitation of amount, it will become liable to a bona fide purchaser, and he will not be presumed to know a fact which does not form part of the public record constituting the legal authority to act.* § 1017. Compliance with Statute. — Statutory requirements as to formalities of execution cannot, however, be disregarded by the purchaser." So, he must take notice that the election,, prescribed by the act for obtaining popular authority to issue the bonds, was held before it could possibly have been held under the provisions of the statute.* So, if the statute only relates to a particular part of a county;' or, in case of railway aid bonds, to a corporation, which was subdivided afterward without authority.* So, if the statutory provisions, as appeared by the legislative jour- were held to be void, Morrison v. Inhabitants of Bernards, 7 Vroom 219. So, also, where the statute requires, as a preliminary to the issuing of bonds by a county, town or other corporation, that the assent of a certain propor- tion of voters or taxpayers shall first be obtained, this requisite is essea- tial, and the absence of it will avoid the bonds even as against innocent third parties, Hudson v. Inhabitants of Winslow, 6 Vroom 437; Green's Brice's Ultra Vires 531 and note. But this doctrine does not prevail in those instances in which the right to issue such securities is, by the charter, conditioned upon the performance of acts by the corporation or its officers, relating to the management of the affairs of the company. In such cases, as was said by Vice Chancellor Wood, if the party contracting with the directors finds the acts to be within the scope of their power, under the deed of settlement, he has a right to assume that all such conditions have been complied with, In re Athenaeum Society, 4 K. & J. 549." 'Gaddis v. Richland County, 92 111. 119 (1879). 'Gould V. Town of Sterling, 23 N. Y. 456 (1861). •Starin v. Town of Genoa, 23 N. Y. 439 (1861). *Wood V. Allegheny County, 8 Wall. Jr. 267 (1859). 'Veeder v. Lima, 19 Wis. 298 (1865). •McClure v. Township of Oxford, 4 Otto 429 (1876). 'Ogden V. County of Daviess, 12 Ottv, 634 (1880). 'The bonds in this case being issued to one of the new corporations, Marsh v. Fulton County, 10 Wall. 683. COMPLIANCE WITH STATUTE. 713 nal, were themselves unconstitutional,^ e. g. where township bonds in aid of corporations are expressly prohibited by the constitution.* So, if they were issued to aid a corporation in a private purpose and such aid is prohibited.* In like manner, recitals contained in municipal bonds are notice to purchasers,* e. g. a reference to a resolution in- dorsed on the bond,' or to the provisions of the charter authorizing the issue of the bonds.* And a recital referring to the statute is notice not only of the act, but of its legal construction by the courts.^ But the purchaser of a muni- cipal bond is not bound by a direction on the part of the common council that the bond should contain a recital showing that it was issued in lieu of other bonds confiscated during the war, and he will not be affected by the omis- sion of such recital by the officer executing the bonds.* It is not necessary that the purchaser should have positive knowledge or express notice. It is enough if notice may be 'Town of South Ottawa v. Perkins, 4 Otto 260 (1876). •Township of East Oakland v. Skinner, 4 Otto 257 (1876). 'Central Branch Co. v. Smith, 23 Kans. 745 (1880). *County of Bates v. Winters, 7 Otto 83 (1877). On the other hand, a recital of facta peculiarly within the knowledge of the corporation may work an estoppel against it, Mutual Benefit Life Ins. Co. v. Elizabeth, 13 Vroom 235 (1880). In the words of Beasley, C. J., in this case, paare 246: "The question will ever be. Was it the intention of the law maker in this particu- lar case to endow the officer executing the bonds, or some other func- tionary, with the power to adjudge that the condition precedent has been performed? And herein is ground for a wide divergence of opinion. Thia is the single p»int of real difficulty, because if the officer appointed to decide definitely has so decided, the matter is at an end, the only subject remain- ing being how such judgment is to be proved, whether by a recital in the executed instrument or by extraneous evidence. For my own part I am not able to concur in the view, that a legislative intention to make a par- ticular officer a tribunal to decide whether the prerequisites to the exercise of the authority existed at the time of its exercise can be raised up by con- struction alone, when the same act provides that the existence of such pre- requisites shall be made a matter of record. In such case it seems to me that the purchaser of the bond is informed that he must look to this record, if he seeks an infallible assurance of title. In such a state of facts I can- not perceive the faintest indication that it was the legislative design to per- mit the naked statement of the officer executing the instrument, by way of recital or otherwise, to controvert and overthrow the testimony of such record." 'Louisiana Stat« Bank v. Orleans Nav. Co., 3 La. An. 294 (1848). •City of Aurora v. West, 22 Ind. 88 (1864). 'Commonwealth v. Chesapeake &c. Canal Co., 32 Md. 501 (1870), *De Voss II. City of Richmond, 18 Gratt. 338 (1868). 714 BONA FIDE HOLDER. plainly implied from circumstances which cannot but invite inquiry.^ And where an express statute provides that mu- nicipal bonds, regular on their face, shall be conclusive in favor of a bona fide holder against the county issuing them, its effect upon such implied notice may still be questioned.* And if a note is made in a peculiar form for discount at a particular bank, and discount is there refused, and the note so marked, the purchaser will take it subject to defense as a holder with notice.^ § 1018. Notice of Consideration. — Mere recital of the con- sideration is not notice of defect or failure in it.* If the purchaser is informed, however, that the note "will be good if the consideration for which it was given has not been misrepresented," and the note was actually given for a fraudulent copyright, he will take it with notice.^ On the other hand, a mere opinion on the purchaser's part as to the value of a machine for which the note was given, will not be construed as knowledge of a want of consideration.* And even if the purchaser knows that the note was given for the purchase of a patent right, he will be a bona fide holder,' especially where the note is payable to bearer.* But if the statute requires such note to contain words ex- pressing that fact, and the words have been omitted, the purchaser who knows that fact will take subject to defense.* But notice of a foreign statute requiring such words, and making their omission a misdemeanor, will not be implied 'Byles 125 ; 1 Edwards ? 452 ; 2 Edwards § 976. ^Treadwell v. Commissioners &c. of Hancock Co., 11 Ohio St. 183 (1860). 'Fowler v. Brantley, 14 Pet. 318 (1840). n Daniel 747; 1 Edwards i 519; Henneberry v. Morse, 56 111. 394 (1870) ; Bank of Commerce v. Barrett, 88 Ga. 126 (1868) ; Splivallo v. Patten, 38 Oal. 138 (1869). ^Studebaker Mfg. Co. v. Dickson, 70 Mo. 272 (1879). « McDonald Mfg. Co. v. Thomas, 53 Iowa 558 (1880). 'Miller v. Finly, 26 Mich. 249 (1872) ; Gerrish v. Bragg, 55 Vt. 329 (1883) ; Woolen V. Ulrich, 64 Ind. 120 (1878) ; although the statute require that such fact be. expressed in the note, 1 Daniel 748; 1 Edwards ? 519. »Sackett v. Kellar, 22 Ohio St. 554 (1872). 'Tod D.Wick, 36 Ohio St. 370 (1881) ; Hunter v. Harringer, 93 Penna. St. 373 (1880). NOTICE OF ACCOMMODATION. 715 from a knowledge, on the purchaser's part, that the note was given for a patent.^ § 1019. Notice of Failure of Consideration. — Even if the purchaser knows that the bill or note was given for a cer- tain consideration, with a warranty, his knowledge of a breach of the warranty or a failure of the consideration ■will not be presumed.^ And knowledge of an executory ■consideration is not knowledge of its failure,* or of a breach of the agreement which formed the consideration.* And, n fortiori, notice of the agreement is not notice of equities •arising out of it after the transfer of the note.® But if the purchaser knows that the consideration has failed, he is not a, bona fide holder.^ So, too, if he knows that the indorser held the note as a pledge, he must take notice of his want •of authority to sell it.'' But he may purchase knowingly from one who received the note as a gift, without notice that the gift was void on account of the insolvency of the donor.* § 1020. Notice of Accommodation — Condition. — Knowledge on the purchaser's part that the bill or note is accommoda- tion paper will not of itself affect his good faith ;^ although he knew of its possession before maturity by the maker with the payee's accommodation indorsement.^" But if he knew that the accommodation was for a special purpose or on a special condition, which had been disregarded, it would amount to notice of the diversion or breach of condition." 'Palmer v. Minar, 8 Hun 342 (1876). n Daniel 748; 1 Edwards § 519; Mabie v. Johnson, 8 Hun 309 (1876). n Daniel 740. * Davis V. McCready, 17 N. Y. 230 (1858) ; Ferdon v. Jones,, 2 E. D. Smith 106 (1853). 'Patten v. Gleason, 106 Mass. 439 (1871). «1 Daniel 740; 1 Parsons 258. 'Goldsmidt v. First Methodist Church, 25- Minn. 202 (1878). «Fulweiller v. Hughes, 17 Penna. St. 440 (1851-). »1 Daniel 740; 1 Edwards § 473; Smith v. Knox, 3 Esp. 46; Thatcher v. West River Nat. Bank, 19 Mich. 196 (1869) ; Matthews v. Rutherford, 7 La. An. 225 (1852). '"Such possession being no evidence of' payment by the maker, Mishler v. Reed, 76 Penna. St. 76 (1874). "1 Daniel 740; 1 Edwards U 448, 452. 716 BONA FIDE HOLDER. So, if he knew that the maker after becoming insolvent had promised the accommodation indorser not to part with the paper.^ But where he was informed by the accommodation maker that the payee had agreed not to negotiate it and that he would bring a lawsuit, it has been held that he might still be a bona fide holder.^ So, a request on the maker's part that the purchaser should not take the note, because the maker would in such case have to pay it in cash, whereaa he had another arrangement for paying it if it should not be sold, will not be notice to the holder of want of considera- tion.^ If, on a proposal to get A., B. and C. as sureties, a note is signed by A. and delivered without the signatures of B. and C, the purchaser's knowledge that B. and C. had refused to sign it will not be equivalent to notice that A. signed only on condition that B. and C. should sign also.* But if the purchaser knows of the condition and of its breach, he will not be a bona fide holder.^ The condition may, however, be contained in &. separate paper and not known to the pur- chaser, and in such case it will, of course, not affect his good faith.^ But if he knew that the indorsement was for accom- modation and had been withdrawn before it was negotiated on account of the insolvency of the maker, he cannot recover as a bona fide holder against the indorser.'' § 1021. What Notice Material. — It is not necessary that the purchaser should have notice of the particular defect ;* but the notice must be at least sufficient to put him on in- quiry.* It is enough if he knows that a partnership note was 'Skildiiig V. Warren, 15 Johns. 270 (1818). 'Heist V. Hart, 73 Penna. St. 286 (1873). 'Green v. Bickford, 60 N. H. 159 (1880). *Davi8 V. Gray, 61 Tex. 506 (1884). n Edwards ? 519; 1 Parsons 261; Hackensack Water Co. v. DeKay, 9 Stew 548 (1883) ; Small v. Smith, 1 Den. 583 (1845). «Adani8 v. Robinson, 69 Ga. 627 (1882). 'Skilding v. Warren, supra, n Daniel 749. •Greer v. Yosti, 66 Mo. 307 (1874). ' nCTITIOUS OE DECEASED PARTY. 717 made for one partner's individual debt;^ but not the know- ledge that a mortgage, given as collateral to secure the note, was not transferred with it." Nor is it sufficient to charge him with notice, that the broker, from whom he purchased the paper, said he would wish to change the security at its maturity.^ So, although a note (which had been lost) was made payable " to the ship Fortune or bearer," and taken by the purchaser partly for cash and partly for goods sold, after inquiry as to the character of the maker.* But where the maker is known to be good and the indorser refuses to guar- antee the note and offers it at a great discount, these facts are admissible evidence for the jury to consider as to the pur- chaser's good faith.* So, where a broker changed a £1,000 bank note (which had been stolen) for a tavern-keeper, who was known to be in failing circumstances, and asked to have the note changed for a guest, who was purchasing supplies to take to America.* § 1022. Fictitious or Deceased Party — Other Defenses. — One may be a bona fide holder, although the payee is ficti- tious;' and even though, after learning that fact and after the purchase, he procures a conveyance of the original collat- eral from the real owner.* So, too, although he knew that the maker was dead," or that the indorser was an infant.*" •Chitty 60; 1 Edwards § 105. 'Blumeathal v. Jassoy, 29 Minn. 177 (1882). ^Gardner v. Gager, 1 Allen 502 (1861). 'Grant v. Vaughan, 3 Burr. 1516. 'Gould V. Stevens, 43 Vt. 125 (1870). 'Egan V. Threlfall, 5 Dowl. & R. 326. 'Lane V. Krekle, 22 Iowa 399 (1867). Dillon J.: "In thus deciding the point, we do not wish to be understood as holding that if the plaintiff had received the note with knowledge that the payee was fictitious, that this alone would defeat his right to maintain an action upon it. This is a question which we leave open, remarking, simply, that the decisions in England on this subject are such as, in our judgment, to require at least an examination into the grounds upon which they rest before assenting to their correctness." 'Bassett v. Daniels, 136 Mass. 547 (1884). . 'Although the note was made for accommodation and negotiated in fraud ■of the maker, Clark v. Thayer, 105 Mass. 216 (1870). But the holder's knowledge of the accommodation character of the note will not be pre- sumed in such case, 1 Daniel 749. "Nightingale v. Withington, 15 Mass. 272 (1818). 718 BONA FIDE HOLDEK. Eut if he knew that the maker was insane, he would take the note subject to defenses.^ And it is said that notice that the maker denied his liability would have the same effect.* So^ the purchaser will be bound by notice that the payee's wife had refused to sign the deed for which the note was given ;' or that discount had been refused at the bank ;* or that the note had been paid before maturity.^ So, knowledge of the existence of a set-off in the payee's favor, against the maker, exceeding the amount of the note, will bind the purchaser.' So, a notice not to negotiate the note, as the payee would want it in settling accounts with the maker,, will bind the purchaser.' In like manner, he will be bound by knowledge that the note was obtained by fraud.* But knowledge that blanks were left is not notice that they were fraudulently filled up.^ So, knowledge that the payee is a liquor dealer will not amount to notice that the paper was given for an illegal purchase of liquor.^" And notice of equities arising after indorsement will not affect an indorsee, although he may have taken the paper after its maturity." § 1023. Notice in Collateral — Lis Pendens — Publication. — The purchaser of a note is not bound by the provisions of a collateral trust deed not referred to in the note.^^ So, he is not bound by the conditions of a deed requiring the pur- chaser of the note (given originally for the land conveyed) to comply with the original terms of sale.^^ In like manner, the pendency of an action against the 'McClain v. Davis, 77 Ind. 419 (1881). »1 Daniel 749 ; 1 Edwards § 519. 'Zebley v. Sears, 38 Iowa 507 (1874). *Brown v. Taber, 5 Wend. 566 (1833). n Edwards i 517; White v. Kibling, 11 Johns. 128 (1814). 'Although the set-off arose in another transaction, Goodall v. Kay, 4 Dowl. P. C. 76; S. C, 1 Hurlst. & W. 333. 'Eoberts v. Eden, 1 Bos. & P. 398. "Hanauer v. Doane, 12 Wall. 342 (1870). •Huntington v. Branch Bank, 3 Ala. 186 (1841). "Bottomley v. Gtoldsmith, 36 Mich. 27 (1877). "Baxter v. Little, 6 Mete. 7 (1843). "Minell v. Bead, 26 Ala. 730 (1855). "Packwood v. Gridley, 39 111. 388 (1866). NOTICE IN COLLATERAL. 719 indorser of the note will not affect a purchaser who has no notice of it.* Thus, a suit to restrain the transfer of muni- cipal bonds will not affect a purchaser of the bonds before their maturity without actual notice.^ So, a purchaser with- out notice will not be bound by a chancery decree directing payment of a note into court.^ Neither notice of lis pendens, decree or injunction of itself constitutes notice to a purchaser before maturity in good faith.* So, he need not take notice of a pending attachment;^ unless it is made obligatory by statute.* But he will be bound by an inquisition and finding against the maker as a habitual drunkard ;'' or by pending bankruptcy proceedings, which were known to him;* or by a mere commission of bankruptcy.' Public newspaper notice is no notice to a purchaser, unless actual notice is brought home to him.*" But a purchaser of government bonds after their maturity will be bound by the public advertisement of their loss, although it may be the well-established custom of bankers to disregard such notices.^* And, of course, if the loss of the bonds was known to the purchaser the want of public notice would be immaterial.**^ On the other hand, one may be a bona fide purchaser of 'County of Cass v. Gillett, 10 Otto 585 (1879) ; County of Warren v. Marcy, 7 Otto 96 (1877) ; Durant v. Iowa County, 1 Woolw. 69 (1864) ; Board of Supervisors v. Paxton, 56 Miss. 679 (1*879) ; In re Great Western Tel. Co., 5 Biss. 363 (1873) ; Sawyer v. Phaley, 33 Vt. 69 (1860). So, too, of a negotia- ble stock certificate, Leitch v. Wells, 48 N. Y. 585 (1872). "County of Macon v. Shores, 97 U. S. 272 (1877) ; Diamond v. Lawrence Co., 37 Penna. St. 353 (1860). 'Stone V. Elliott, 11 Ohio St. 252 (1-860). * Wiaton v. Westfeldt, 22 Ala. 760 (1853). 'Hall V. Bowker, 44 Vt. 77 (1871) ; G. S. § 47 c. 31 ; Kieflfer v. Ehler, 18 Penna. St. 388 (1852) ; Hill v. Kroft, 29 Penna. St. 186 (1857) ; Minis v. West, 38 Ga. 18 (1868) ; Matheny v. Hughes, 10 Heisk. 401 (1873) ; Mayberry v. Morris, 62 Ala. 113 (1878). '1 Daniel 750. And see stipra Chapter XXIV. ' Wadsworth v. Sharpsteen, 8 N. Y. 388 (1853). 'Humphries v. Blight, 4 Dall. 370 (1803). 'Ibid. '"1 Daniel 752; Kellogg v. French, 15 Gray 354 (1860) ; Hagen v. Bowery Nat. Bank, 6 Lans. 490 (1872) ; Beltzhoover v. Blackstock, 3 Watts 20 (1834) ; Clark V. Ricker, 14 N. H. 44.(1843). "Vermilye v. Adams Exp. Co., 21 Wall. 138 (1874). "Chitty295; 1 Parsons 260. 720 BONA FIDE HOLDER. commercial paper, although he had long before received and forgotten or overlooked such formal notice, and although he bought the securities abroad from a stranger who was only identified by his passport.* And we have already seen that published notice of dissolution of partnership will not affect the purchaser of bills drawn by such firm without proof of the purchaser having actual notice of the dissolution of the firm.^ 'Kaphael v. Bank of England, 17 C. B. 161. 'Boyd V. McCann, 10 Md. 118 (1856). PEESUMPTION OP BONA FIDES. 721 rV. PEESUMPTION OF GOOD FAITH. 1024. Presumption of Bona Fides. 1025. Eebutted. 1026. by Fraud. 1027. Illegality. 1028. Want of Consideration. § 1024. Presumption of Bona Fides. — We have already seen that the law merchant raises a presumption in favor of the purchaser being a holder for value. A like presumption is made in favor of his good faith.^ In Georgia it is expressly provided by statute that the holder of a note is entitled to both of these presumptions in his favor, and subjected to equities, if either is disproved.* Under this statute a plea setting up defenses must deny the bona fides of the holder, 'Byles 124 ; 1 Daniel 759 ; 1 Edwards ? 449 ; Middleton v. Earned, 4 Exfth. 241 ; Solomons v. Bank of England, 13 East 135; King v. Milsom, 2 Campb. 5 ; Bank of the Metropolis v. New England Bank, 1 How. 234 (1843) ; Mur- ray V. Lardner, 2 Wall. 110 (1864) ; Carpenter v. Longan, 16 lb. 271 (1872) ; Swift V. Tyson, 16 Pet. 1 (1842) ; Hotchkiss v. National Banks, 21 Wall. 354 (1874) ; Collins v. Gilbert, 4 Otto 753 (1876) ; New Orleans Canal v. Mont- gomery, 5 lb. 16 (1877) ; Brown v. Spofford, lb. 474 (1877) ; Swift v. Smith, 12 lb. 442 (1880); Bank of British North America v. Ellis, 6 Sawyer 96 (1869) ; Harger v. Worrall, 69 N. Y. 370 (1877) ; First Nat. Bank v. Green, 43 lb. 298 (1871) ; Chemung Canal Bank v. Bradner, 44 lb. 680 (1871) ; Nickerson v. Euger, 76 lb. 279 (1879) ; Mechanics' &c. Bank v. Crow, 60 lb. 85 (1875) ; Dingman v. Amsink, 77 Penna. St. 114 (1874) ; Battles v. Laudenslager, 84 lb. 446 (1877) ; Kuhns v. Gettysburgh Nat. Bank, 68 lb. 445 (1871) ; Knight v. Pugh, 4 Watts & S. 445 (1842) ; Gray v. Bank of Ken- tucky, 29 Penna. St. 365 (1857) ; . Sloan v. Union Banking Co., 67 lb. 470 (1871); Chicopee Bank v. Chapin, 8 Mete. 40 (1844); National Bank of North America v. Kirby, 108 Mass. 497 (1871) ; Miller v. Finley, 26 Mich. 249 (1872); Peabody «. McAvoy, 23 lb. 526 (1871); Chicago &c. E. E. Co. V. Edson, 41 lb. 673 (1879) ; Wright v. Irwin, 33 lb. 32 (1875) ; Sperry v. Spaulding, 45 Cal. 544 (1873) ; Perkins v. Prout, 47 N. H. 387 (1867) ; Quinn V. Hard, 43 Vt. 375 (1871) ; Shelton v. Sherfey. 3 Iowa 108 (1851) ; Lathrop V. Donaldson, 22 Iowa 234 (1867) ; Johnson v. McMurray, 72 Mo. 278 (1880) ; Greer v. Yosti, 56 Mo. 307 (1874) ; Shreeves v. Allen, 79 111. 553 (1875) ; Woodaworth v. Huntoon, 40 lb. 131 (1865) ; Atlas Bank v. Doyle, 9 E. I. 76 (1868) ; Davis v. Bartlett, 12 Ohio St. 541; Hall v. Allen, 37 Ind. 541 (1871) ; Pugh V. Grant, 86 N. 0. 39 (1882) ; Meadows v. Cozart, 76 lb. 450 (1877) ; Blum V. Loggins, 53 Tex. 121 (1880); Liddell v. Grain, lb. 549; Wilson v. Lazier, 11 Gratt. 477 (1854) ; French v. Gordon, 10 Kans. 370 (1872) ; Ecton V. Harlan, 20 Kans'. 452 (1878) ; Habersham v. Lehman, 63 Ga. 380 (1879) ; Faulkner v. Ware, 34 lb. 498 (1866) ; Winstead v. Davis, 40 Miss. 785 (1866) ; Lehman v. Tallassee Mfg. Co., 64 Ala. 567 (1879) ; Wyman v. Colorado Nat. Bank, 5 Col. 30 (1879); Nicholson v. Patton, 13 La. 213 (1839); Wheeler v. Maillot, 20 La. An. 75 (1868) ; Citizens Bank v. Strauss, 26 lb. 736 (1874). See, too, J 567 supra. ^Georgia (1882 Code ? 2787). VOL. II. ■^V 722 BONA FIDE HOLDEE. and will be stricken out if it fails to do so.^ The presump- tion of the law merchant as to the good faith of the holder of a bill or note is now extended to the holder of negotiable coupon bonds,^ and to securities held as collateral to bills and notes.* Mere possession of a negotiable instrument payable in words or effect to bearer is prima facie evidence of the holder's good faith.* And the presumption applies to any holder taking the paper before maturity.^ But the holder of half a bank note, presenting it for payment, is not enti- tled to such presumption.^ On the other hand, the fact that a note was purchased from an agent who exceeded his author- ity,^ or that it was offered for discount with blanks not filled up,^ will not destroy the presumption of good faith. § 1025. Presumption may be Rebutted. — The law mer- chant, however, raises only a presumption of good faith, which may be rebutted like other presumptions.^ And on such evidence the holder's good faith becomes a question for the jury to determine.^" In the presumption is implied ordinarily that the holder took the bill in the ordinary course of business." The holder of a note payable to bearer must prove that he is a bona fide purchaser and not the original payee on the defendant's proving failure or want of consideration.^^ So, evidence that the bill was lost,^^ or 'Faulkner w.Ware, 34 Ga. 498 (1866). 'Bond Debt Cases, 12 So. Car. 200 (1879) ; Robinson v. Hodgdon, 73 Penna. St. 202 (1873) ; Hackensack Water Co. v. DeKay, 9 Stew. 548 (1883). 'Carpenter v. Longan, 16 Wall. 271 (1872); Hackensack Water Co. v. DeKay, 9 Stew. 548 (1883). •Collins V. Gilbert, 4 Otto 753 (1876); Sparry v. Spaulding, 45 Cal. 544 (1873) ; Lehman v. Tallassee Mfg. Co., 64 Ala. 567 (1879). 'Woodsworth v. Huntoon, 40 111. 131 (1865). 'Bullet V. Bank of Pennsylvania, 2 Wash. C. C. 172 (1808). 'Chicopee Bank v. Chapin, 8 Mete. 40 (1844). 'Chemung Canal Bank v. Bradner, 44 N. Y. 680 (1871). 'Atlas Bank«. Doyle, 9 R. I. 76 (1868) ; French v. Gordon, 10 Kans. 370 (1872). '"Herrick v. Swomley, 56 Md. 439 (1881). "Shelton v. Sherfey, 3 Iowa 108 (1851). "Bissell V. Morgan, 11 Cush. 198 (1853). "1 Daniel 763; Worcester Co. Bank v. Dorchester Bank, 10 Cush. 488 (1852) ; Matthews v. Poythress, 4 Ga. 287 (1848) ; Merchants' &c. Nat. Bank *. Masonic Hall, 62 lb. 271 (1879) ; Nicholson v. Patton, 13 La. 213 (1839). PRESUMPTION" EEBUTTED BY FRAUD. 723 stolen/ shifts the burden of good faith and throws it on the holder. But he is in such case entitled to notice before trial, that such proof will be required.^ § 1026. Presumption Rebutted by Fraud. — Evidence of illegality or fraud in the origin or transfer of the paper throws on the holder the burden of proving his good faith.* And if the holders are partners, the good faith of all must be shown.* It seems, however, to have been held in Michi- gan that no evidence of fraud is admissible until the pre- sumption of bona fides of the holder has been overcome.^ And in some States the burden of disproving the plaintiff's good faith still rests on the defendant after proof of fraud.' If, indeed, the transfer is made after maturity and fraud is shown, slight circumstances will be sufficient to imply notice,'' The burden of showing his good faith is on the holder, where 'Paterson v. Hardacre, 4 Taunt. 114 (1811); Kuhna v. Gettyshurgh Nat. Bank, 68 Penna. St. 445 (1871) ; Dutchess County Ins. Co. v. Hachfield, 1 Hun 675 (1874) ; Porter v. Knapp, 6 Lans. 125 (1872) ; Robinson v. Hodgdon, 73 Penna. St. 202 (1873). See, too, Wyer v. Dorchester &c. Bank, 11 Gush. 51 (1853). 'Paterson v. Hardacre, supra. n Daniel 762, 718; 1 Edwards §450; 1 Parsons 258; Eees v. Marquis of Headfort, 2 Campb. 274; Bailey v. Bidwell, 13 M. & W. 73; Stewart v. Lan- sing, 14 Otto 505 (1881) ; Smith v. Sac County, 11 Wall. 139 (1870) ; Tracey V. Town of Phelps, 22 Fed. Rep. 634 (1884) ; Chambers v. Falkner, 65 Ala. 448 (1880) ; Sperry v. Spaulding, 45 Cal. 544 (1873) ; Wright v. Brosseau, 73 111. 381 (1874) ; Mitchell v. Tomlinson, 91 Ind. 167 ; Lane v. Krekle, 22 Iowa 399 (1867) ; Union Bank v. Eyan, 21 La. An. 551 (1869) ; Totten v. Bucy, 57 Me. 446 (1881); National Bank of North America i;. Kirby, 108 Mass. 497 (1871) ; Smith v. Livingston, 111 lb. 342 (1873) ; Sullivan v. Langley, 120 Ih. 437 (1876) ; Bottomley v. Goldsmith, 36 Mich. 27 (1877) ; Conley v. Winsor, 41 lb. 253 (1879) ; Hamilton v. Marks. 63 Mo. 167 (1876) ; Cass County v. Green, 66 lb. 498 (1877) ; Johnson v. McMurry, 72 lb. 278 (1880) ; Clark v. Pease, 41 N. H. 414 (1860) ; Perkins v. Prout, 47 lb. 387 (1867) ; Merchants' Exchange Nat. Bank v. Savings Inst., 4 Vroom 170 (1868) ; Duncan v. Gil- bert, 5 Dutch. 521 (1862) ; First Nat. Bank v. Green, 43 N. Y. 298 (1871) ', WoodhuU V. Holmes, 10 Johns. 231 (18l3) ; Ross v. Bedell, 5 Duer 462 (1856) ; Vatlett v. Parker, 6 Wend. 615 (1831) ; Wardell v. Howell, 9 lb. 170 (1832) ; Crampton v. Perkins, 4 Eastern Rep. 653 (Md. 1886) ; Meadows v. Cozart, 76 N. C. 450 (1877) ; Pugh v. Grant, 86 N. 0. 39 (1882) ; McKesson v. Stanberry, 3 Ohio St. 156 (1853) ; Battles v. Laudenslager, 84 Penna. St. 446 (1877) ; Sloan v. Union Banking Co., 67 lb. 470 (1871) ; Holme v. Karsper, 5 Binn. 469 (1813) ; Knight v. Pugh, 4 Watts & S. 445 (1842) ; Blum v. Log- gins, 53 Tex. 121 (1880) ; Arnold v. Campbell, 18 C. L. J. 289 (Manitoba Sup. Ct. 1884). And see ? 567, mpra. 'Frank v. Blake, 58 Iowa 750 (1882). 5 Wright V. Irwin, 33 Mich. 32 (1875). «Quinn v. Hard, 43 Vt. 375 (1871) ; Liddell v. Grain, 53 Tex. 549 (1880). 'Taylor v. Mather, 3 T. K, 83. 724 BONA FIDE HOLDER. the fraud proved by the defendant is that of an agent on his principal/ or of a partner on his firm.* But the presumption of bona fides is not rebutted by evi- dence that the paper (of a corporation) was originally deliv- ered to a creditor who was a stockholder and who was not known as a creditor to other stockholders or on the books of the company f or by evidence that the depositor to whom a bank's check was originally given had misappropriated the funds on account of which the check was drawn;* or that the bill had been previously discounted at a usurious rate by the holder's step-father.^ On the other hand, the burden of proof will be changed by evidence of fraud in the transfer of the paper,* or in any prior indorsement through which the holder must derive his title.'' § 1027. Illegality Overcomes Presumption of Bona Fides. — The burden of proving that the holder is a purchaser for value, is shifted back to him on proof of duress of the drawer of the bill.* And if the defendant proves that the bill is an accommodation bill and has been fraudulently diverted from its purpose, the burden as to the holder's good faith will shift back to the holder.® So, if the defendant proves that the paper was only delivered in escrow.^" In some States, it seems that a mere allegation of fraud made by the defendant will throw upon the plaintiff the burden of proving his good faith." But while a plea of •Camden Safe Deposit &c. Co. v. Abbott, 15 Vroom 257 (1882); Pool v. Watson, 18 J. & 8. 53 (1884). •Heath v. Sansom, 2 B. & Ad. -291 ; Clark v. Dearborn, 6 Duer 309 (1857). 'Lehman v. Tallassee Mfg. Co., 64 Ala. 567 (1879). «Penn Bank v. Prankish, 91 Penna. St. 339 (1879). *Ba8sett V. Dodgin, 10 Bing. 40 (1833). «Horton ti. Bayne, 52 Mo. 531 (1873). 'Berry v. Alderman, 14 C. B. 95 (1853). 'Duncan v. Scott, 1 Campb. 100; Clark v. Pease, 41 Vt. 414 (1860). "Nickerson v. Ruger, 76 N. Y. 279 (1879); Farmers' and Citizens' Nat. Bank V. Noxon, 45 N. Y. 762 (1871). But see 1 Daniel 741. "Vallett V. Parker, 6 Wend. 615 (1831). "Roberts v. Lane, 64 Me. 108 (1874); Reamer v. Bell, 79 Penna. St. 292 (1875) ; Smith v. Popular Loan &c. Assoc, 93 Penna. St. 19 (1880). PKOOF OF WANT OF CONSIDERATION. 725 fraud or duress in the inception of a note does this, it will not be done by a plea that the plaintiff paid no considera- tion for it.^ If the defendant avers that the original con- sideration for the paper was illegal, the plaintiff must prove that he is a bona fide holder.^ It has been held that if the defendant pleads fraud in the making of the bill or note, he must also prove know- ledge of the fraud on the holder's part.* But if fraud and notice of it are averred, the burden is on the holder to prove his good faith.* Even if the plea avers that the note was without consideration and was obtained by duress and fraud, it will be bad unless there is an averment of notice to the holder.* If the defendant pleads that the bill was given in renewal of a forgery, which the defendant after- wards discovered, the burden of proving his good faith is thereby thrown upon the holder.® But if the defendant alleges fraud in making a note and notice thereof to the holder, it is his duty to prove both allegations.'' § 1028. Proof of Want of Consideration, — The burden of proof as to the holder's good faith is not changed to his shoulders by mere evidence that the instrument was accom- modation paper.* And where the holder is shown to be a purchaser for value before maturity, it has been held that his bona fides is presumptively established, and that the defendant cannot show original want of consideration for the paper.' And, although a note has been shown to have been given for the debt of a third person, the purchaser is prima fade a holder in good faith.'" 'Millis V. Barber, 1 M. & W. 425 (1836). 'Hill V. Northrup, 1 Hun 612 (1874). •Woollen ». VanKirk, 61 Ind. 497 (1878). *Totten V. Bucy, 57 Md. 446 (1881). •Hancock v. Hale, 17 Fla. 808 (1880). •Mather v. Lord Maidstone, 1 C. B. (n. s.) 273 (1856). 'Smith V. Martin, 9 M. & W. 304 (1842). * 'Harger v. Worrall, 69 N. Y. 370 (1877) ; Ross v. Bedell. 5 Duer 462 (1856). And see I 567, gupra. •Trader v. Chidister; 41 Ark. 242 (1883). "Chicago &c. R. R. Co. v. Edson, 41 Mich. 673 (1879). 726 BONA FIDE HOLDER If, however, it appears that a note was made without con- sideration and was originally void, the holder must prove that he obtained it in good faith.^ So, in Indiana, upon a plea averring that there was no consideration for the note and that this was known to the holder.^ So, if it appears that the note was signed by the maker for accommodation merely, and that the maker was dead at the time of the transfer, and was known by the holder to be so. But evi- dence that the maker was dead would not of itself suffice to throw on the holder the burden of proving his good faith.* It has been said that if the burden is shifted to the holder by evidence of fraud or illegality in the inception of the paper, it will be satisfied by proof on the holder's part that he paid value for it, and the burden of showing that he had notice of the fraud or illegality will then fall on the defend- ant.* The cases, indeed, hold that where the original con- sideration is shown to have been illegal, the presumption is against the holder and he must prove himself to be a pur- chaser for value.^ But it is also true that the burden of proving himself a bona fide holder is in like manner thrown thereby upon the purchaser.® On proof by the defendant that the original consideration was illegal the holder must show, it is said, that he is a " holder for value in due course of business, unattended with any circumstances justly cal- culated to awaken suspicion," and therefore prima faxtie a holder without notice.' The burden of proving himself a holder for value falls on the plaintiff upon proof of want of original consideration for the paper, as well as upon proof of fraud.* On proof of •Peabody i;. MoAvoy, 23 Mich. 526 (1871). = Zook 0. Simonson, 72 Ind. 83 (1880). = Clark V. Thayer, 105 Mass. 216 (1870). ^Byles 124; 1 Daniel 767-8; 1 Parsons 259. * Emerson v. Burns, 114 Mass. 248 (1874) ; Sistermanns v. Field, 9 Gray 331 (1857). « Commissioners of Marion Co. v. Clark, 4 Otto 278 (1876). 'Peters, J., in Swett v. Hooper, 62 Me. 54 (1873). «Ro88 V. Drinkard, 35 Ala. 434 (1860). PKOOF OF WANT OF CONSIDEEATION. 727 there being no original consideration for the paper, the plaintiff must show himself to be a holder for value ; and he having done so, the burden is then shifted back to the maker to show that he had notice of the want of considera- tion at the time of purchasing the paper.^ The distinction, however, heretofore noted between accommodation paper and paper without any consideration must not be forgotten. In like manner, mere evidence of failure of considera- tion," or partial failure of consideration,' is not sufficient to throw upon the holder the burden of proving that he ob- tained the paper in good faith. 'Davis V. Bartlett, 12 Ohio St. 541. »1 Daniel 761; Mechanics' &o. Bank v. Crow, 60 N. Y. 85 (1875); Citi- zeiis' Bank v. Strauss, 26 La. An. 736 (1874) ; Winstead v. Davis, 40 Miss. 785 (1866). ^'Dingman v. Amsink, 77 Penna. St. 114 (1874). INDEX TO VOL. II. INDEX TO VOL. II. Reference is to Sections. A. -«A. B., SHEEIFF » indorsement, as notice of its character, 1010. "A. B., SYNDIC," indorsement, as notice of its character, 1010. ^'A. B., TRUSTEE," indorsement, as notice of its character, 1010. ACXiEPTANCE, Presentment for — American law : presentment defined, 571 n. necessity for, 568. bills payable at or after sight, 568. not necessary if bill payable on demand, 568. or at certain time after date, 568. though it may be, 568. at any time before its maturity, 568. post-dated draft not necessary, 568. nor checks, 568. deposit note payable " with interest on day of acceptance," 568. Waiver of preaentment : naming place of payment is not a, 569. acceptance waived is a, 569. waiving notice of protest is not, 569. waiving presentment is a waiver of protest, 569. in California and Utah, 569. indorsement " accountable in eight months from date " is a, 569. unconditional agreement for the acceptance of a hill, 569. drawer and drawee one person, 569. bill drawn by one corporation officer on another, 569. direction from drawer to drawee not to accept, 569. is necessary when holder of bill is agent, 569. in such c»se required by statute in California, 569. effect of neglect by the agent in such cases, 569. payee expressly required by the drawer to present the bill, 569. Oiroumstances dispensing with presentment : drawee being an infant, 570. provision of California statute, 570. diawee having no place of business or residence, 570. in New York during an epidemic, 570. C781) 732 INDEX. Beferenoe is to Sections. , ACCEPTANCE- Omiinued. informing holder before maturity that bill will be dishonortd, 570. indorser secured by a transfer of all the drawer's property, 670. drawee forbidden by drawer to accept or pay the bill, 570. drawer having no reason to believe, at th^ time of making bill, that it would be accepted or paid, by the drawee, 570. How made : not necessaiy that it be shown to drawee, 571. though proper that it should be, 571. must be shown if required by drawee, 571. drawn in parts, presentment of one part sufficient, 571. so by statute in California, Dakota and Utah, 571. must be absolute and positive, 571. notary taking bill away and agreeing to call again the next day, 571. not sufficient, 571. holding check until three o'clock, with promise to make his account good, 571. may be, in accordance with the laws of the State or country where it is payable, 571. Sy whom made : by the rightful holder, 572. or his agent, 572. possession is presumptive evidance of a right to demand, 572. by wrongful holder inures to benefit of true owner, 572. authority of agent to demand ends with principal's death, 572. usually made by a notary, 572. or his clerk, 572. statutes of various States, 572. To whom made : to the drawee, 573. or his authorized agent, 573. must be shown to be such agent, 573. authority may be shown by parol evidence, 573. when not sufficient, 573. statutes, 573. when drawee not found, to any notary public, 573. drawee inaccessible by contagious disease, 573, to drawee named as such, in case of need, 573. drawee first named refusing to accept, 573. code of California, 573. to several drawees not partners, to each, 673. to one, by statute, 573. if partners, to one is sufficient, 573. so if previously dissolved by bankruptcy, 573. at former place of business of firm, 573. to surviving partner, 573. to personal representative, 573. to drawee named in letter of advice, 573. INDEX. 733 Referenoe is to Sections. ACCEP' LNCE— Continued. Time for presentment ; payable at or after sight, within a reasonable time, 574. not necessary to be made immediately on receipt of bill, 574. what is a " reasonable time " depends upon the circumstances of each case, 574. is a mixed question of fact and law, 574. in many cases, held to be a question of fact, 574. of law, 574. does not apply to non-negotiable paper, 574. " reasonable time," instances of, 575. Diligence — Affected by circidation : affected by the circulation of the instrument, 576. facility of communication, 576. if not put in circulation, greater dispatch required, 576. may be put into circulation before, 574, 576. instances of diligence, 576. depands on the character of the bill, 576. controlled by the known usage of business at that place, 576. sufficient if presented in the natural and regular course of business, 576. Affected by Jluctuating exchange : affected by fluctuations in exchange, 576, 577. detaining bill for eight months on account of depression in the money market, 577. Affected by other circmnstances : drawee not within easy communication, 578. severe rain storm, 578 n. delay in the mail, 578. after laches already occurred, 578 n. returning bill which had been sent to the wrong place by mistake, 578 n. solvency or insolvency of the parties, 578. sudden and severe illness of the holder, 578. outbreak of war, 578. loss of the bill, 578. American statutes, 579. During business hours : should be made during the usual, 580. such houra governed by custom or usage, 580. , at drawee's residence, before the usual hour of retiring, 580. at late hour, after family has retired, 580. any hour sufficient when an answer is obtained from some person author- ized to give it, 580. statutes, 580. holidays, 580. At what place : at place designated in bill, 581. unless residence or place of business of drawee is known to the holder, 581. 734 INDEX. Reference is to Sections. ACCEPTANCE— OorUinued. London named in bill and drawee residing in Liverpool, 581. at residence or place of business, 581. not at place where bill is made payable, 581. residence in one town, place of business in another, at either is sufficient^ 581. drawee having changed residence since drawing of bill, 581. holder must use due diligence to ascertain place of residence, 581. due diligence is, in such case, a question for the jury, 581. when drawee has left the country, at last residence, 581. dishonored when drawee has absconded, 581. or drawee never resided in the place named in bill and residence not known to holder, 581. or if residence cannot be ascertained by holder, 581. or payable in a city, but at no particular place, 581 n. if house is closed, 581. Presentment for — Foreign law : necessary for bill payable at a certain time after date, 582. contra in other countries, 582. in some other countries it is optional, 582. not until it has been protested for non-payment, 582. in Hungary, only foreign bills need be, 582. only when payable more than thirty days after date, 582. Lower Canada, necessary for bills payable at or after sight, 582. in Germany, necessary that they be presented for vita only, 582. in Denmark, a refusal, and request that it be presented again, 582. Laches in presentment : laches in, discharges the indorsers, 583. unless the parties have received value for meeting the bill, 583. in Denmark, drawer not discharged if not damaged, 583. drawer discharged only on proof that drawee was not in funds, 583. onus of such proof is on the drawer, 583. in Hungary, the drawer, to be discharged, must assign to holder all hi» claim against drawee, 583. in Germany, bill drawn in parts, one part being forwarded for, must be noted on the other, 583. By whom : by holder, 584. or his agent, 584. possession is sufficient evidence of authority to present it for, 584. in Kussia, an agent receiving the first part must deliver it after, to the indorsee, 584. foreign statutes, 584. To whom : to all the drawees named in the bill, 584. several being named in the alternative, then in their order, 684. in other countries, to the first, 584. to drawee's agent, 584. if drawee dead, to his legal representative, 584. INDEX. 735 Reference is to Seotions. ACCEPTANCE— Con«im««d. if refused by drawees, then to all the drawees au besoin in the order named, 684. statutes, 584. Time of presentment : statutes, 585. payable on a certain day after date, before maturity, 585. check on the day of its date, 585. indorser may designate within what time, 585. in Holland, for visa, 585. in Germany, immediately, 585. on a legal holiday, 585. if payable at a fair, can only to be made then, 585. should be on the first day of the fair, 585. in Lower Canada a reasonable time is a question of law, 585. if drawn on a foreign country that law determines, 586. statutes, 586. different parts to be forwarded by different ships, 586. time is doubled in case of a maritime war, 586. when received too late to be presented for, 587. Where presented: in Lower Canada must be made at the place named in the bill, 687. at residence or place of business, 587. to servants of the drawee, 587. to drawee's wife, 587. to adult sons in order, 587. to the mayor or clerk of the town, 587. if residence cannot be found, necessary to inquire of the police, 587. statutes, 587. Acceptance — Oenercd principles: defined, 588. definition of, in foreign statutes, 588, place of, may be written over a blank, 588. may be discounted by drawee before, 588. may be waived, 588. not always necessary, 588. is necessary to create a liability on the part of the drawee, 589. when there is no drawee, 588. drawing of bill on one's self is equivalent to an, 588. in Utah is equivalent to a promissory note, 588. drawn by partner upon his firm, 588. in form of a bill, drawn upon a joint stock bank in England, 688. drawn by the president of a corporation upon its treasurer, 588. certification of checks equivalent to an, 568, 642. Ohligaium to accqat : none because the drawee is indebted to the drawer, 589. except bills or drafts drawn on a banker, 589. drawee of check not liable to payee without, 589. 736 INDEX. Beferenoe is to Sections. ACCEPTANCE— Omtmued. bill drawn against bill of lading retained by payee, the drawee not bound to, 589. drawee not liable to holder without, 589. though bill drawn against a consignment of goods received by drawee, 589. possession of bill by drawee raises a presumption of an, 589. foreign statutes, 590. By whom given : by the drawee named, 591. by stranger equivalent to a promissory note, 591. so by statute in Utah, 591. when no drawee named, 591. place of payment only named, 591. drawee being an infant, 591. By agent : holder may require evidence of agent's authority, 592. such authority must be shown when required, 592. if refused by agent, equivalent to a dishonor of the bill, 592. United States may be bound by the, 592. though it cannot be sued on such an, 592. foreign statutes, 592. holder not bound to take the, of an agent, 592. agent liable personally if the, is without authority, 592. drawn by principal on agent, 592. drawn upon and accepted by agent of a company, 592. acceptance " by A. B., treasurer," 592. By partners : by one partner sufficient, 593. even though it be in his individual name, 593. but should be in firm name, 593. required by statute in Sweden, 593. in Guatemala at least half of the partners should appear, 593. several drawees not partnera, by all, 593. refusal by one may be protested in Hungary, 593. though an, by part only, binding on those who do, 593. in the alternative, may be by either, 593. For honor : by stranger for honor of drawee, 594. bill drawn on A. and, by A. and B., 594. public official, a bill drawn upon his deseased predecessor, 594. second, by one not named in bill as drawee is that of a guaranty, 594. Tinder statute of frauds the consideration for an, must be expressed, 694. second, added by a stranger to bill without consent of first, is an altera- tion, 594. When made: within a reasonable time, 595. generally twenty-four hours, 595. unless shortened by previous, or refusal, 695. INDEX. 737 Reference is to Sections. ACCEPTANCE— Cbrnhnued. may be shortened by the departure of the regular daily mail, 595. not so in the United States, 595. if no answer within that time, the holder should protest, 595. if drawee allowed longer time, prior parties should be notified, 595. foreign statutes, 595. detention beyond that time equivalent to an, 595. payable per advice no, before advice received, 595. after, acceptance refused, 596. after dishonor, 596. equivalent to an, payable on demand, 596. after transfer, 596. after it has matured, 596. after death of the drawer, 596. should not be, after the bankruptcy of the drawer, 596. Acceptance before drawing : may be by force of statute in England, 597. blank, 597. agreement for, equivalent to an, 597. bill described particularly, taken on the faith of such agreement, 597. signature on blank paper, 597. may be declared on, as given before, 597. Dale of: not necessary to be, 598. if payable at a certain time after sight, it should be, 598. signature of drawee and date over it are sufficient, 598. if written above signature in a different writing, is presumptive evi- dence of its, 598. if not dated, presumptively given at date of bill, 598. after date of bill, 598. before the maturity of the bill, 598. and within a reasonable time after its date, 598. though actual date may be shown by parol evidence, 598. Form: no particular words necessary, 599. may be implied, 599. from conduct of drawee, 599. or from other circumstances, 599. . after refusal, letting holder have goods to sell not an, 599. draft on one having no funds, drawee afterwards receiving a consign- ment of goods is not an implied, 599. " accepted " written on a bill is a sufficient, 600. "seen," "presented," written on a bill is a sufficient, 600. marking bill after banking hours, 600. "excepted" written by mistake for accepted, 600. writing one's name across face of bill, 600, 603. English statutes, 603. indorsement, 600. vol. n, 2w 738 INDEX. Reference is to Sections. ACCEPTANCE— Confimued. must be direct, positive and unambiguous, 600. " the bill shall have attention,'' 600. " I take notice of the above," 600. " that is my signature and I will pay the bill," 600. agreement to pay at maturity, equivalent to an, 600. especially when drawee procures the bill for his own accommodation, 600. in letter " I am prepared to pay your bill," 600. " the bill is correct and shall be paid," 600. acceptance pro tanto, 600. discounting on strength of verbal promise to accept, 600. " I will see the within paid eventually," 600. " I must delay payment until in receipt of funds," 600. insufficient expressions, 601. for illustrations, see 601. part payment, 601. expressions refusing acceptance, 601. for illustrations, see 601. not within the statute of frauds, 603. nor is an agreement for, 603. By parol: is sufficient, 603, 604. when not required by statute, 604. so an, to pay a bill out of the proceeds of certain goods, 604. holder not obliged to take an, 604. not necessary to aver that the, was in writing, 604. inland bills by statute of Anne could not be protested unless accepted in writing, 604. statutes of England require foreign bills to be in writing, 604. and signed by the acceptor, 604. some American statutes require the, to be in writing, 605. Acceptor's signature : mere signature not sufficient in England under 19 and 20 Vict., 606.. position of the signature immaterial, 606. in California must be written across the face of the bill, 606. may be written upon another paper, 606. but may be re"quired to be written on the bill, 606. may be by telegram, 606. so an agreement to accept by telegram, 606 n. special provision in Oregon statute for bills drawn by telegram, 606. American statutes, 606. foreign statutes, 607. as to date, 608. as to specifying when the bill shall be paid, 608. and to name a person at such place to be there charged with its pay- ment, 608. Authority to draw : is an agreement for, 609. is equivalent to an, 609. INDEX. 739 Reference is to Sections, ACCEPTANCE— Conimwd. must be express and special, 609. an agreement to draw " on such terms as you may make advantageously for us," is an unconditional, 609. New York revised statutes, 609. " to value against us upon any cotton wliich he may ship to us," 609. " you may draw on me for ^700," 609. " to make draft payable through the clearing house," 609. to draw in favor of creditors, 609. may be given by blank acceptances, 609. leaving bill to be drawn on same paper, 609. one promising a credit in favor of a third person, who receives it in set- tlement of a precedent debt of the promisee, 609. authorizing the drawing of a bill and afterwards refusing to accept it, 609. agreement for an, distinguished from an, 609. authority must be known and relied on, 610. a promise to notify one when he may draw, 610. an authority to draw " on us or either of us," adding " we jointly and severally hold ourselves accountable," 610. revoked by death of the drawee, 610. or by his bankruptcy, 610. may be continuing, 610. Agreement for : an existing bill is an, 611. in New York if the promise be in writing, 611. a letter that writer will "indorse if necessary, for the amount of pur- chases," 611. promise in letter to accept with other statements inconsistent with sucli promise, is not an, 611. when taken on the faith of such promise, 612. statutes, 612. by telegram, 612. when made with the drawer after bill has been dishonored, is not, 612.. letter promising payment is an, 612. though letter was not received until after the maturity of the bill, 612.. when not taken on faith of the promise to accept, 612. verbal agreements, 613. bills to be drawn, 614. taking bill on the faith of the promise is a sufficient consideration, 614, not necessary that the promisor have funds of the drawer, 614. a promise to accept requires a valid consideration, 614. a verbal promise to accept for accommodation, 614. is within the statute of frauds, 614. when made dependent upon some contract on the promisee's part, 614- English statute, 614. must clearly describe the bill, 614. must be particular and plain in terms, 614. a general letter of credit is sufficient, 614. 740 INDEX. Reference is to Sections. ACCEPTANCE— Con«m«ed. communicated to holder, and relied on by him in taking bill, 614. statutes, 614. such promise must be acted on in a reasonable time, 614. two years not a reasonable time, 614. binding in favor of any holder taking bill on the faith of it, 614. but not of a holder who knew nothing of it, 614. must be relied on, 615. verbal agreements for, of non-existing bill, 616. in England not equivalent to an, 616. void in New York, 616. rule in the United States, 616. when not communicated to holder, 616. sufficiency, 617. applies to bills payable a certain time after date, 617. and not to those payable after sight, 617. drawee requesting holder to leave bill, with promise to accept it, C17. returning bUl for correction, with promise to accept, 617. drawn against a cargo, consignee saying " he will not accept until the ship arrives," 617. an agreement to give notice to party when he may draw on the prom- isor, 617. may be presumed from dtewee having funds of the drawer, 617. sufficient, though bill has been transferred, 618. if made to the party for whose account the bill was drawn, 618. though he may not be a party to the bill, 618. will enure to the benefit of subsequent holders, 618. though not known to them until afterwards, 618. breach, 618. bill discounted and lost, the agreement for, may be enforced in equity, 618. obtained by fraud, 618. no liability on, except to bona fide holder, 618. delivery necessary to make an, 618. indorsing of an, upon a bill after its presentment, 618. foreign statutes, 619. Detention : when it implies an, 620. receiving draft by mail and detaining it, 620. beyond a reasonable time is an, 620. especially if it be long and contrary to established custom, 620. after refusal to accept, detention and destruction is not an, 620. twenty-four hours and then returned marked " not good," 620. ten or twelve days, to enable drawee to receive funds promised by the drawer, 620. if detained under a special custom, 620. partly paid and detained by consent as a voucher for the payment made, 620. INDEX. 741 Reference is to Sections. ACCEPTANCE— Confimued. until action brought upon it, 620. in London, check may be detained until five o'clock in the afternoon, 620. statutes, 620. Conditional : holder may insist upon an absolute and unconditional, 621. may refuse a, 621. by code in California, 621. liability of drawer to holder not affected by a, 621. if holder receives a, he must notify all previous parties, 621. in England must obtain the consent of all previous parties, 621. or they will be discharged, 621. not so when the drawer has no funds in drawee's hands and no right to draw, 621. if received, must not be protested, 621. qualified, are either conditional or partial, 622. whether conditional is a question of law, 622. " payable when house is ready for occupancy," 622. on the performance of a contract, 622. " take the sum out of our share of the firm grain," 622. out of drawer's salary, 622. out of a certain fund, 622. on condition of its renewal, 622. on certain event, 622. for other illustrations, see, 622. conditional expressions, 623. " as soon as he shall sell the goods," 623. when collected, 623. " administrator," added to acceptor's signature, 623. for other illustrations, see, 623. foreign statutes, 627. contemporaneous conditions, 624. receipt given as collateral for payment of a note with a contemporaneous receipt agreeing to surrender the first receipt when note is paid, 624. an, cannot be made conditional by a condition subsequently added, 624. cannot be shown by parol evidence to be a, 624. as that bill was accepted on condition of the surrender of note by a third person, 624. though it be in writing, is not admissible to defeat a bona fide holder, 624. if ambiguous may be explained by parol, 624. the onus of proving the condition is upon the acceptor, 625. acceptor and holder bound by the condition, 625. not liable until the happening of the event, 625. "wheninftinds," 625. condition annexed to an indorsement prior to the acceptance, 625. when performance of the condition is prevented by operation of law, 625. onus of proving performance of the condition is on the holder, 625. whether performed or not is a question for the jury, 625. 742 INDEX. Reference is to Sections. ACCEPTANCE— Continued. drawer liable only on failure of acceptor to pay according to the terms of the acceptance, 625. condition performed and acceptor dead, personal representatives liable, 625. the condition and performance should be averred in pleading, 625. Partial : is sufficient, 626. should be protested for balance, 626. may be to pay part in money and part in bills, 626. foreign statutes, 627. drawn payable in one currency, accepted payable in another, 626. may be made payable in installments, 626. changing the' time of payment, 626. drawee offering to pay bill in certain time, and offer is communicated to holder, 626. to see bill " paid eventually," 626. on the last day of grace, 626. which misstates time of the maturity of the bill, 626. " to pay when due," 626 n. a condition that bill be renewed up to a certain time, 626. making bill payable at a particular place, 626. does not affect drawer's liability to payee, 626. if at the acceptoi-'s residence, 626. or at a place different from that named in the bill, 626. payable at a certain bank in the town named, 626. does not affect rights of prior parties by California code, 626. blank, filled up, payable at a particular place, 626. English statute, making bills payable at a particular place, there "only and not otherwise or elsewhere," 626. What it admits : admits signature of drawer, 629. foreign statutes, 641. California and Dakota code, 629. paying one forged, is not an estoppel, 629. admits genuineness, 630. capacity and authority of tlie drawer, 631. restricted in Louisiana only in favor of a bona fide holder, 631. admits authority of executor, 631. of agent, 631. admits existence of firm, 631. drawei-'s legal capacity at time of drawing the bill, 631. as also that of the payee, 631. does not admit the signature of the indorser, 632. agent's authority to indorse, 632. though indorsed before acceptance, 632. and though payable to drawer's order and purporting to be indorsed by the same person who signed it as the drawer's agent, 632. when drawn in a fictitious name, payable to the drawei-'s own order, 632. INDEX. 743 Reference is to Sections. ACCEPTANCE— Continued. Presumptions : raises the presumption of funds in drawee's hands, 633. foreign statutes, 641. applies only to bills and not to a mere letter of i-equest, 633 n. especially so if bill requests the drawee to pay if in funds, 633. only conclusive in favor of a bona fide holder, 633. ' may be rebutted between acceptor and drawee, 633. Construction and effect : most strongly against the acceptor, 635. liable according to the terms of the bill, 635. for attorneys' fees included on the face of bill, 635. not beyond the terms of bill, 635. as for re-exchange, 635. or costs of action against other parties, 635. Hemcation: may be, 637. at any time before delivery, 637. an agreement to accept may be, 637. at any time before actually presented for, 637. California code, 637. cannot be when complete, 637. not after being communicated to holder, 637. after an offer to accept has been refused by holder, 687. before delivery, 637. when complete, not by consent of holder, 637. canceled by mistake, 637. given under mistake as to drawer's funds in hand, 637. what amounts to a revocation, 637. Cancellation : by banker, by mistake, 638. by other than by holder, by mistake, 638. what is, 638. question for jury, 638. protesting bill in ignorance of drawer's agreement to accept, is not a waiver of, 638. foreign statutes, 638. Discharge : by payment, 639. release, 689. not before maturity to a bona fide holder, 639. if by the law where the, is given aud payable, valid everywhere, 639. must be made at or after maturity of the bill, 689. release may be implied, 689. taking new security is not a release, 689. to release two acceptors, separate bill of either is sufficient, 639.' will not discharge a subsequent acceptance, 639. by creditor's composition deed, 639. 744 INDEX. Reference is .to Sections. ACCEPTANCE— Co» EVIDENCE, inadequacy of consideration is admissible as, of fraud, 448. when mala fides is charged it is competent to introduce, to the contrary, 1000. inadmissible to show consideration of note was for cattle for the Confederate gov- ernment, 496. proving bill or note by holder, 565. See Ontjs Peobandi — Pakol Evidenoj;. " EXCEPTED," written by mistake for " accepted," 600. EXECUTION, purchaser of note under an, 989. English common law and statute, 825. could not reach a note or bill at common law, 825. bank note at common law, 825. so of a di'itress warrant for rent, 825. otherwise by present statute of 1 and 2 Viet., 825. payment may be made to sheriff or other officer under an, 825. in United States, regulated by statute, 826. various American statutes, 826, 827, 828. return of an, "satisfied in full," is presumptive evidence of payment, 941. INDEX. 809 Reference is to Sections. EXECUTORS, holding a bill or note have authority to extend the time of payment, 956. EXONERATION OP SURETY, See StTEETY. EXPERT TESTIMONY, a broker is not competent as an, witness to prove what facts amount to notice of defects, 1002. EXTENSION, purchaser's good faith will be extended to an, of note granted after notice, 1005. pledgee cannot extend the time for payment of collateral note, 804. discharging guarantor, 894, 895. will be presumed from a long delay of four or five years, 894. granted to an indorser will not discharge the maker, 902. accommodation drawer of check will not be discharged by an, to the accommo- dated payee, 902. extension to one joint maker will not discharge the other, 906. Surety : to principal discharges surety, 954. must be for a definite time, 954, 958 for illustrations, see 958. to one joint debtor, 955. the relation of the parlies as principal and surety must be known to holder, 955. valid agreement for, necessary to discharge surety, 954, 956. parol agreement for, at common law not sufficient, 956. what agreements are valid for an, 957. must be such as to prevent holder from suing the principal, 957. need not be such as could be pleaded by the principal in bar to a suit at law, 957. need not be in writing, 957. may be implied from circumstances, S57. ■'received," "renewed," indorsed on a note, 957. may be proved by parol evidence, 957. may be conditional, 957. actual contract necessary for, 959. by taking a new bill or note, 960. taking part payment and new bill payable in future, 960. by taking collateral, 961. by cognovit, 962. by agreement not to sue, 962. by part payment, 963, 965. by payment of interest, 963, 965. presumed from the payment of one year's interest, 963. consideration necessary to an, 964. what considerations are sufficient, 966. usurious consideration for an, 967. parties to an agreement for, 968. consent of surety, 968. question of fact, 968. SIO INDEX. Reference is to Sections. EXTENSION— animued. may be inferred from circumstances, 968. cannot be inferred from silence, 968. waiver of discharge by extension, 969. rights reserved against surety, 970. surety indemnified against loss by principal, 970. See Consideration. as a discharge of an indorser. See Indorsee. "EXTINGUISHED," equivalent to payment, 464. transferring bill before maturity, to acceptor, and again by his bill, is not, 667. note paid at maturity is, 682. F. FICTITIOUS PAYEE, equivalent to being payable to bearer, 697. note delivered to one naade payable to another, 790. as affecting a bona fide holder, 1022. FOEBEAEANCE, of third person's debt, is sufficient consideration, 471. note payable in future for an existing debt implies, 471. is a sufficient consideration, 491. "for a reasonable time," 491. See Consideration— Discharge — Extension. FOEEIGN STATUTES, English Bankrupt Act, 488 n. contracts to ransom British ships void, 495 n. English statutes against gaming, 511, 512. Stock Jobbing Act, 515. statute making note valid in hands of a boiw, fide holder, 517. Usury Acts, 521. pleading want of consideration, 564. Presentment for acceptance : requiring presentment for acceptance, 582. laches in presentment, 583, 587. presentment by and to whom, 584. time for presentment, 585, 586. where presented, 587. drawn on a foreign country the law of that country will determine the day for presenting the bill, 586. different parts of bills to be forwasded in different ships, 586. when received too late to be presented, to hold indorser an express waiver in writing must be taken, 587. laches in presentment discharges the drawer and indorser, 587. damages, 587. Acceptance : acceptance defined in, 588. obligation to accept, 590. INDEX. 811 Reference is to Seotlons. FOEEIQN ST A.TVTES— Continued. acceptance by agent, 592. by partners, 593. when made, 595. may be after acceptance refused, 596. by signature only, 603, 607. in writing, 604, 607. date of acceptance, 608. must specify where bill shall be paid, 608. ' agreements to accept, 619. conditional acceptances, 627. acceptance for part payment, 627. revocation of an acceptance, 638. acceptance what it admits, 641. is prima fade evidence of funds in acceptor's hands, 641. liability of acceptor, 641. '• discharge of acceptor, 641. negotiability of bills and notes, 652 transfer to whom, 667. after maturity, 681. blank indorsements, 711. relating to indorsements, 713, 766. signature, 712. forgery, 712. its position, 713. its date, 713. its consideration, 713. additions, 713. informality, 713. restrictive indorsements, 728. as to guaranty, 869. FOEGEET, describing a bill in an indictment for, 588, 836. cannot be ratified, 629. acceptor may be estopped from setting up the forgery of his signature, 629. praying acceptance on forged indorsement, 636. of indoraements, foreign statutes, 712. recovery on, 790. of principal's name, efieot on surety, 913. FOEM, of acceptance, 599. no particular form of words necessary, 599. of certified checks, 648. of gaaratity, 863 et seq. may be either on the instrument or on separate paper, 863. express or implied, 863. contained in a transfer or be independent of any other contract, 863. implied as to a joint maker or a joint and several maker, 863 812 INDEX. Reference is to Sections. FORM— Continued. suretyship, 896 et seq. may be expressed in the instrument, 896. or be implied, 896. " surety '' added to signature, 896. See Gtjabanty — Subett. FEAUD, transfer through fraud, 694. of bills and notes known to be bad is, 751. parol evidence admissible to show indorsement procured by, 783. agent's act is a, upon the principal, the latter not bound by the knowledge of the former, 1004. onus of showing, 1026. pleading, 1027. indorsement omitted by, 792. paper obtained from owner by, and pledged, 800. discharging guarantor, 894. fraudulent diversion of paper discharges surety, 917. surety discharged by, 918. but it must be a false statement of fact, and not a mere expression of opinion, 918. as a defense to surety, 919. a transfer of property may be impeached by a co-surety for, 974. FBAUDS, See Statute of Feauds. FUNDS, when in, means available funds or cash, 625. /-< GARNISHMENT, of maker or acceptor, 816. contrariety of rulings by the courts, 816. no presumption in favor of an attaching creditor that debt is still owing, 817. answer of garnishee, 818. See Attachment. "GOOD," stipulation that note is, means that it is collectible, 867. parol evidence admissible to show that, means valid, 868. "GOOD AND COLLECTIBLE," guaranteeing of note to be, 884. "GOOD, IF IT IS NOT," one promising to make a note, 884. GUARANTY, General pnnciples : defined, 849. distinguished from a surety, 849. indorsement, 849. must be specially averred in pleading, 849. not liable for contribution, 849. INDEX. 813 Reference is to Sections. GUARANTY— Con(m«ed. liable on reasonable demand and notice of default, 849. is not an indorsement though indorsed on a note, 849. and the indoreee, under such, takes only the rights of the guarantor, 849. may be both a, and an indorsement, 849. an indorser as to remote holders, 849. and a guarantor as to the one taking immediately from him, 849. Extent of guarantor's liability : after the, is made, the guarantor is liable both for the maker and his surety, 850. and is not entitled to contribution as against the surety, 850. may recover from principal after payment, 850. if for payment by the payee and first indorser cannot after payment look to maker for re-imbursement, 850. must see that the maker pays the note, 850. may be absolute, 850. i. e. for the payment of bill and note, 850. or conditional. i. e. it is collectible by due diligence, 850. a, of " ultimate payment," the maker's default must be averred, 850. must be shown that demand was made of maker, 850. maker's inability to pay should also be proved in case of conditional guaranty, 850. so it must be proved in suit upon a guaranty for collection, 850. to pay if the maker should fail to pay, 850. "promptly and in full," 850. on such a, not entitled to demand or notice of dishonor, 850. After maturity : of payment " when due " gives holder an immediate cause of action, 851. so a, of the " within note," 851. a, is simply a, for collection, 851. when co-extensive with the note, 851. lAahility of principal : guarantor liable to a bona fide holder but not to payee, 851. guarantor's liability may go beyond that of principal, 851. a, " should the holder fail to collect," 851 . includes interest, 851. of a note with stipulation for liquidated damages, 851. does not include expenses of collection against maker, 851. but a, for collection will include costs of collection, 851. Construction of: is to be striptly construed, 852. according to the intention of the parties, 852. " to indoi-se if necessary," 852. a note or bill for a certain amount, 852. to be made payable at a bank, 852. a bill " at ninety days," 852. a note for six months without interest, 852. " if waiting till January 1, will answer," 852. 814 INDEX. Reference is to Sections. QTJARA'STY— Continued. to pay for gold to be supplied for certain purposes, 852. to A. will include the firm of A. & B., 852. " for value received we guarantee the payment of the within note," 852. of three months' credit, 852. that debt is collectible " for two years," 852. agreement on separate paper to, a note designating the names of maker and indorser, 852. a, of a note which is appended to the agreement, 852. Acceptcmce of — notice : must be accepted, 853. within a reasonable time, 853, 854. is a question of fact, 853, 854. if for a specific amount, notice of acceptance is necessary, 853. as well as notice of the credit given, 853. not necessary that it should be directly between the parties, 854. knowledge equivalent to notice, 854. may be shown by parol, 854. " very satisfactory," 854. eight months unreasonable, 854. in cases of general letter of credit, notice unnecessary, 855. so where a, is of the payment of draft to be drawn, 855 . written on back of note already drawn, 855. contemporaneous with an agreement, 855. payment of a certain amount at certain time, 855. promise to pay certain bond if surrendered, 855. letter to a particular person, referring to a designated loan, 855. to indemnify "unconditionally at all times," 855. a, of payment on reasonable notice of default, 855. a verbal acknowledgment of liability after default, 855. a subsequent promise to pay made under a mistake of facts, 855. Oontideration for : requires a, 856. of payment made by a stranger, 856. must express a, 446. forbearance in favor of a third person is a sufficient, 471. a contemporaneous, does not require an independent consideration, 856. otherwise if collateral, 856. whether collateral or original determined by the circumstances, 856. when made after the original contract, 856. a distinct consideration for the, should be averred in the pleadings, 856. the consideration for the original contract need not be adequate, 857. % need not be a direct one to the guarantor, 857. its sufficiency is not affected by its subsequent inadequacy or failure, 857. mere forbearance without a definite agreement is not sufficient, 857. for other illustrations of the sufficiency of consideration, see 857. Continuing ; whether continuing determined by the circumstances, 858. may be sliowu to be so by parol, 858. INDEX. 815 Reference is to Sections. GUAEANTY— Cfan•■ transfer of note by thfr payee who has taken it as agent, 874. of collection contained in a transfer, 874. to a collateral verbal promise to pay an acceptance, 874. parol promise to pay debt of another, 874. promise made after the dishonor of note to be responsi- ble for it, 874. to pay note if suit against maker is discontinued, 874. or in consideration of forbearance to him, 874. consideration must be expressed, 875. English rule, 875. American cases, 875. when sufficiently expressed, 876. need not be in words at length, 876. sufficient if court "can see it in the transaction," 876. " value received," sufficient, 876. for other illustrations, see 876. when insufficiently expressed, 877. for illustrations, see 877. proof of consideration, 878. "value received " raises a presumption of consideration, 878. presumed from averments in pleadings, 878. in Iowa by statute, an express guaranty implies a consideration, 878. when given after making of the note, the onus of proving a considera- tion on holder, 878. by blank indorsement of stranger consideration for the, must be ))roved, 878. is a question for the jury, 878. may be proved by parol, 878. when the, applies the, must be in writing, 879. blank indorsement with authority to write a, over it is sufficient, 879. "indorsement by A. B. due" is sufficient, 879. insufficient without special address, 879. or with the amount of the note designated as guaranteed left blank, 879.. Presemiment for payment : formal, not in general necessary, 880. unless he is actually damaged by the want of it, 880. INDEX. 819 Befereuce is to Sections. GUAEANTY— Conimaed. unnecessary if principal is insolvent at maturity, 880. especially if it is known to the guarantor, 880. differs in this respect from an indorser, 880. absolute, of payment does not require any formal demand of the principal, 880. so a, contained in the assignment of a bond, 880. or a, of a bond for a term of years, 880. demand and notice unnecessary, 880. when necessary, 881. for illustrations, see, 881. reasonable demand necessary, 881. what is a reasonable time to make such demand, 882. question for the jury, 882. notice of dishonor not necessary, 882. or notice of protest, 883. and the costs of such -notice are not recoverable against him, 883. notice of maker's default, 884. is not in general necessary, 884, 886. unless he has been damaged for want of it, 885. his liability will remain until he makes such proof, 885. damage from want of such notice will not be presumed, 885. may waive any discharge for want of notice, 885. waiving notice of protest, the onus will not be on holder to show that guarantor was not damaged, 885. reasonable notice of maker's default is a question for the jury, 886. Notice of protest : when necessary, 886. where maker was solvent at time of giving note and insolvent at maturity, 886. where he guarantees the payment of a debt by bill of exchange, 886. or indoraes a guaranty of payment on note, 886. where the guarantor of bill is not a party to it, 886. want of such, is presumably a want of due diligence, 886. when not necessary, 883. Diligence in prosecuting the maker : when necessary, 887, 888. in case of, for collection, 887. both of maker and prior indorsers, 887. laches in, may be set up in defense, 887. "if the holder fails to recover" from the maker, 887. " if not collectible by due course of law," 887, 888. BO of a strangei''s, indorsed on a note at its maturity, 887. one warranting note to be " good " or verbally declaring note to be '' as good as gold," 887. distinction in this respect between a, of payment and a, of collection, 887. a, of collection and payment of note " unless it is paid before," 887. 820 INDEX. Reference is to Sections. GUA'EANTY— Conimued. a, of one who undertakes to " save harmless " a lender of money, 887. negligence causing actual damage to guarantor will effect his dis- charge, 888. negligence amounting to a discharge, question for the jury, 888. onus being on holder to show that guarantor was not injured by indulgence, 888. is entitled to have suit brought against maker at maturity of note, 888. or when maker has left the State, 888. when not necessary, 889. " holder without demand or notice," 889. a, of payment and collection of a note, " with costs, if any made," 889. a, of note, " according to its terms," 889. a conditional, on holder's " using all proper means for collection," 889. for other illustrations, see 889. damaged by negligence, 890. what is due diligence, 891. held to imply " the most rapid and vigorous methods of the law,'' 891. "by the usual legal remedy," 891. must exhaust his legal remedy against the maker, 891. must use " every legal endeavor," 891. is a question of fact for the jury, 891. in North Carolina requires prosecution of the maker to execution and return nulla bona, 891. ," by due process of law," 892. " ultimate payment," 892. for other illustrations, see 891, 892. what is not due diligence, 893. Discharged by fraud : will discharge guarantor from liability to original payee, 894. agreement to accept a draft in consideration of another contract which is broken, 894. mere failure, without fault of holder, to secure an indorser as agreed, will not discharge, 894. cannot avail himself of principal's fraud as a discharge at suit of a bona fide holder, 894. Discharged by extension : extension granted by holder to principal debtor, 894. arranged with maker's agent, 894. maker becoming bankrupt and the guarantor is thereby damaged, 894. by renewing bill without guarantor's knowledge, 894. or by taking a new note, 894. even though the note taken is payable in one day, 894. but not so of note for the exact term for which the, was given, 894 n. INDEX. ' 821 Reference is to Sections. QVABANTY— Continued. receiving part payment and taking bill for balance, 894. for an indefinite time will not discharge him, 894. a mere indulgence without definite agreement, 894. will be presumed from long delay of four or five years, 894. not discharged if given at guarantor's request, 894. or is subsequently ratified by him, 894. Discharged by other collateral — Release — Waiver : taking part payment and receiving new bill, 894, 895. taking collateral without any express extension will not discharge guar- antor, 895. nor the transfer by holder of note, collateral to the original debt guar- anteed, 895. mere change of contract, 895. opening new account, 895. composition made with bankrupt principal with guarantor's consent, 895. agreement for a holder taking the note without the, 895. to indemnify "unconditionally at all times" is a waiver of notice of ' acceptance and laches, 895. H. "HOLDEN A. B.," indorsement on a note, 864. "HOLDEN ON WITHIN," indorsement on note, 864. "HOLDEN WITHOUT DEMAND OK NOTICE," indorsement on a note, 889. "HOLDEE," synonymous with bearer, 653. HOLDEE FOE VALUE, Who is a : sometimes used as equivalent to bona fide holder, 986. note in hands of agent for sale is pledged for his own debt, the pledgee is, as against the principal, 794. taking note as collateral is sufficient consideration to make the pur- chaser a, 560, 993. note given as collateral for a fluctuating balance of account, 457. giving a new note for one already overdue, 459. note for existing debt sufficient to constitute a, 461. and forbearance, 462. with no surrender of collateral or forbearance, 463. transfer of commercial paper in payment of an existing debt of the indorser to the indorsee, 464. transfer of commercial paper as collateral for an existing debt, 465. accommodation paper transferred as pledge, 475. exchange of notes, 479. accommodation paper, onus of showing holder for value, 567 322 INDEX. Reference is to Sections. HOLDER FOR Y AIXJE— Continued. Who is not a : stolen note deposited with a bank and credited to the depositor but not drawn against, 457. bank is not a, of a note sent to it for collection, 457. existing debt, 461, 463. and forbearance, 462. affected by inadequacy of consideration, 560. .See Bona Fide Holder. HOLIDAYS, presentment for acceptance on, 580, 585. ILLEGALITY, See CONSIDEBATION. IMPLICATION, Mi'ceptance by, 599, 620. an agreement to transfer a note is by, an agreement for its indorseqaent, 688. INDORSEMENT, defined, 701, 786. wlien not equivalent to an acceptance, 600, 618. acceptance does not admit the, 632. of note payable to bearer by payee, 653. forged, is not a transfer, 662. to hold drawer there must be proof of the, 662. by joint payees, 663. owners, 663. may be liefore bill is drawn, 668. such an. is a letter of credit for an indefinite sum, 668. on a partially completed bill, 668. on a post-dated bill before its date, 668. after maturity, 670, 673, 739. does not relate back to date of note, 687. is equivalent to new bill at sight, 671. or to a renewal payable on demand, 671. or a negotiable demand note, 671. in oflBcial capacity is notice of defects, 1010. without delivery, 805. is a new contract, 739. and is governed by the law then in force, 739. of a note, may be declared on at common law as a bill, 739. contingent on demand and notice, 758. foreign statutes, 766. , averments as to, in pleading, 773. parol evidence to explain, 778 et seq. must be proved, 774. by a corporation should be by a duly authorized officer, 988. necessary to constitute holder a purchaser in the usual course of business, 989. INDEX. 823 ft Reference is to Sections. INDORSEMENT— Co)i(imued. by agent as notice of its character, 1012. by payee is necessary to bona fides of holder, 789. transferred as collateral subsequent, passes legal title, 793. indorsement after maturity is subject to equitable defenses, 793. even where there is an agreement for indorsement, 793. when made after delivery of the note, 446. for purposes of guaranty, 446. by agent to principal for transfer merely, 447. adequacy of consideration how it affects, 452. accommodation, 472, 692. indoi-sement revoked by death of indorser if before negotiation, 474. prima facie an accommodation, 472. of non-negotiable paper requires a stamp, 658. presumed not to be a guaranty, 745. with a guaranty and waiver, 745. is more than a mere assignment or transfer, 745. in Illinois is an assignment if made by the payee, 745. diversion from original purposes, 747. does not warrant the consideration, 756. ■effect of hypothecating stock without indorsing it, 794 n. by donor for a gift causa mortis does not render donor's estate liable, 809. an, will carry the equitable title of the indorser to the guaranty, 860. a guaranty with it, 861. ^aranty by, 864, 865. Transfer by : necessary to the, 787. in Ohio, is necessary to transfer a sealed note, 787. relates back to time when the transfer was made, 792. omitted by mistake, negligence or fraud, 787, 792. an agreement to, not equivalent to an, 688. statute of California and Dakota, 688. an agreement to transfer is an agreement for its, 688. indorse, a stranger has no authority to write an, 688. delivery essential to an, 689. " indorse " implies delivery, 690. may be shown fpr what purpose an, was made, 690. consideration necessary for an, 691. prima facie for value, 691. a sufficient consideration, 691. statutory in Oregon, 691. in England the King may transfer by his sign manual, 702. cuts off defenses, 736. indoraees may sue, 738. American statutes, 738. See Tbanspee. Form of: applies strictly to negotiable paper, 700. is not equivalent to assignment, 700. 824 INDEX, Reference is to Sections. INDOESEMENT— Cb7i(M«ed. 16 the only recognized method of transferring bills and notes payable to order, 700. is eilher general or special, 700. special, does not require the words "or order," 700. definition of, by Judge Daniel, 701, 786. position of, 701. foreign statutes, 713. need not.be on the back, 701. may be on an allonge, 701. can only be in writing, 702. must be signed by the indorser, 702. mark is sufficient, 702. indorser's initials sufficient, 702. may be in pencil, 702. seal not necessary in case of corporation, 702. figures, 702 n. there is no limit to the number of, on bill or note, 702. attestation not necessary, 703. American statutes, 703. no particular words necessary, 704. "pay" or "pay to," 704. " pay A. on account of the B. Bk.," 704 formal assignment equivalent to an indorsement, 704. a manifest ellipsis may be supplied, 704. misspelling corrected, 704. guaranty is not an, 704. is an, 704. date of, 704. blank indorsement, 705. transfers the title, 707. special, after a blank, 705. foreign statutes as to consideration, 714. additions, 714. informality, 714. ante-dating, 713. date, 713. position, 713. forgery, 712. signature, 712. Modified : with waiver of protest, &c., 723. conditional, 723. does not affect negotiability, 723. restrictive, 724, 1009. restrains negotiability, 724. is revocable at pleasure, 724. " to A. only," " for use," " account credit of B.," 725. for other illustrations, see 725. INDEX. 825 Reference is to Sections. INDOESEMENT— Continued. "for collection," 726, 735. carries no power of sale with it, 726. the indorsee is a mere agent for the indoreer, 726. is not a transfer of bill, 726. does not destroy negotiability, 726. will not be presumed to be restrictive, 726. effect of restrictive, 727. foreign statutes, 728. special, as notice of defects, 1008. does not destroy negotiability, 655. holder may strike out such, as are not necessary, 715. equitable owner may strike out such, as are not necessary, 715. bank may strike out the cashier's, 715. not a restrictive, 715. thief cannot, 715. when the first of several, is in blank, holder may strike out intermedi- ate, 716. holder intentionally striking out the, indorser is discharged, 716. not so if struck out by mistake, 716. erasures, 716. is irrevocable after delivery, 717. by way of pledge, may be struck out, 717. holder may strike out a special, by himself, without showing that it was made for collection, 717. at trial holder may strike out his own, 717. or a subsequent special, 717. alteration of, 718. taking up bill for honor is, in effect, striking out the, of all subsequent indorsers, 718. pleading, 718. re-indorsement, 719. " without recourse," 720. is the proper, for an agent to adopt, 720. in such, there is an implied warranty of title, 720, 755. statutes, 755. of its validity, 720, 7S2, 756. prior signatures are genuine, 720, 752. does not warrant the authority of an agent, 752. similar expressions, 721. effect on bona fides, 722. on negotiability, 722. erasure of, is a material alteration, 722. , American statutes, 722. Jrregvlar indorsements. By stranger: of frequent occurrence in the United States, 829. generally done to procure credit for the maker, 829. presumed to have been done at time when note was made, 829. 826 INDEX. Reference is to Sections. INDORSEMENT— Continued, although after the words " without demand or notice," 829 n. at least so where such, appears above that of the payee, 829. may be shown by, parol evidence to have been so, 829. where it is found below that of the payee, S29. the indorser in such case not being liable as a joint maker, 829 n. must be so shown to fix such indorser as a maker, 829. but the contrary may also be shown, 829. time when such, was made is material, 829. if made after delivery it is a guaranty, 829. though has been held to be a maker or surety, 829. where he signed the day after the note was made, 829. even some months afterwards, according to agreement, 829. or at any time before maturity of note, 829. in order to induce a purchaser to take it, 829. in South Carolina such indorser is a maker, 829. though he signed after delivery to payee, 829. the payee subsequently indorsing above him, 829. and negotiating the note with such indorsement, 829. view which finds most support is that such an, is prima facie a joint maker, 831, 833. objected to because the position of the signature indicates a contrary in- tention, 831. in England, held to be the drawer of a new bill, 831. and liable as such to the indorsee, 831. though held to be a maker without a special undertaking to that effect, 831. in Massachusetts notice of dishonor necessary by statute, 881. holder is a maker, 831. regular and formal maker is a surety, 831. although liable to such co-surety for contribution if so understood, 831. both being in such case accommodation parties and sureties for the payee, 831. is a joint-maker notwithstanding a subsequent, by the payee above the third party's signature, 832. although there was an express agreement between the original parties that he should be a surety only, 832. and though he was ignorant of the legal effect of his, 832. and had expressly refused to become a surety, 832. or had said he would only become liable as indorser, 832. so where maker had asked him to indorse, 832. the, was " without recourse," 832. must share in the original consideration, 832. is sufficient to support his liability as maker, 832. consideration going wholly to maker will be a surety as to him, 832. is bound by acknowledgment of co-maker taking debt out of the Statute of Limitations, 832. entitled to formal demand, 832. and discharged by failure to make it, 832. so where the, was " without demand and notice," 833. INDEX. 827 Reference is to Sections. INDORSEMENT— Conantted. or " responsible without demand or notice," 833. parol evidence of different intention is admissible, 833. between the immediate parties to the contract, 833. but not against a bona fide holder of note, 833. is admissible in an action by him against the payee as prior in- doi-ser, 833. although the payee indorsed first, 833. parol evidence requisite to render such indoreer liable either as maker or guarantor, 833. to hold him as maker not only must such intention be proved but the, was at the inception of the note, 833. also that he was privy to the original consideration, 833. an averment that the, was made before its delivery to induce payee to take it is sufficient, 833. though if such averment be denied by the plea he might be shown to be a guarantor, 833. according to his intention he has been held to be a maker or surety, 833. a maker or indorser, 833. or guarantor, 833. guarantor or indorser, 833. is a question of intention, from the evidence, 833. restricted to actions between the original parties, 833. and in the absence of, by the payee, 833. such, appearing above that of the payee, 833. was made presumptively to obtain credit with the payee, 833. in opposition to the view that such, is a maker, he is liable as an indoraer, 834. his position on the back of the note indicating that intention, 834. this is " the New York rule," 834. where the note was payable to maker's own order and indorsed by him before its delivery, 834. payee's name left blank and afterwards filled with the name of such indorser, 834. intention shown by the signature as "A. B., indorser," 834. "A. B., security," 834. " as if made payable to my order and by me indorsed," 834. signing after the payee to enable him to get the note discounted, 834. such, without that of the payee is an accommodation, 835. so of a firm name in Massachusetts, 835. several indorse a joint and several note, one being a maker, the others liable in their order as indorsers, 835. successive, are joint accommodation, 835. making the indorsers liable to contribute as co-sureties, 835. but the contrary has been held on parol evidence of intention, 835. where the note was afterwards indorsed by the payee, 835. in action by the payee as between themselves, such indorsers signing before payee and before delivery, are indoreers or sureties, 835. according to their intention, 835. if indorsed by the payee, the third person is lialjle as indorser, 835. 828 INDEX. Reference is to Sections. INDORSEMENT— Continued. so of a bill payable to the drawer's order and indorsed by him, 835. where the, was given to obtain credit from the payee for maker, he has been held liable as iSrst indoi-ser, 835. and as indorser he is not liable to the payee, 835. such liability being in effect to make tlie second indorser liable to the first, 835 n. only prima facie an indorser, 836. though the note is in form joint and several, 836 n. especially if he again signs below the payee's, 836. may be proved by parol to be a surety, 836 n. cannot be filled with a guaranty, 836. without proof of a special agreement to that effect, 836. not liable to the payee, 836. in an action against him as maker without special evidence of such intention, 836. indictment for forgery for such, 836. cannot take up the note at maturity and sue the payee as indorser, 836. in California and Dakota liable by statute to the payee, 836. so in Connecticut, 836. whether the note is negotiable or not, 836. and whether he indorses before or after the payee, 836. in Massachusetts he is entitled to notice of dishonor, 836. in Kentucky he is prima facie an assignor, ,836. will be construed as a guaranty if so intended, 838. is a second indorser, 837. if so intended by all parties, 837. and not intended to obtain credit from the payee, 837. not liable until after, by the payee, 837. accommodation payee indorsing above him, 837. payee indorsing above him as part of the original agreement, 837. not liable to the payee by reason of any agreement between the maker and payee unknown to him, 837. nor liable as such to one who purchases from the payee by, after matur- ity, 837. if payee indorses first, second indorser may sue him as first indorser, 837. a third view is that such indorser is a guaranty, 838. so by statute in Iowa and Illinois, 838. in Dakota he is discharged by what discharges a guarantor, 838. in Connecticut, until act of 1884, he guaranteed that the note was col- lectible by due diligence, 838. is guarantor if he indorses at payee's request, 838. or above the payee for the purpose of obtaining credit for him, 888. or if he receives a consideration as guarantor, 838. original consideration of the note is not sufficient to bind him as guar- antor, 838. presumptively a guaranty, 838. at least in the hands of the payee, 838. if two, both are presumed to be guai-antors, 838. may be rebutted by parol evidence of a different intention, 838. INDEX. 829 Reference is to Sections, INDORSEMENT— Omiimed. in Ohio such presumption is confined to, after inception of note, 838 n. must be specially averred in pleading, 838. such averment will be sufficient, although shown by the pleading and proof to be a surety, 838 n. may fill such, by writing a guaranty over it, 838. if wrongly filled is matter of defense, 838. and must be specially pleaded, 838. other cases hold there is no implied authority to write a guaranty, 838. and that it cannot be so filled without proof of a special agreement, 838. parol evidence is not admissible to prove such authority, 838. after the making of the instrument and i^on sufficient consideration, it is, by general admission, a guaranty, 838. and may be filled as such, 838. so if made by way of a transfer of the note after the payee's death, 838. if made after transfer by the payee, 838. is merely a guaranty to the transferee, 838. and does not render the indorser liable to the payee, 838. another view makes such, a surety for the maker, 839. and as such unable to sue the payee as a prior indorser, 839. so by statute in Georgia when note is not indorsed by payee, 839. in North Carolina surety to all holders, 839. except in cases of foreign and inland bills, 839. is a surety where an original agreement to that efTect was made with his knowledge at the time of the, 839. or where he is called a surety in the body of note, 839. in Indiana not a surety without clear evidence of such agreement, 839. in West Virginia a contract of suretyship cannot be written over the, 839 n. prima facie a surety, 839. question of intention, 839. surety on parol evidence of such contract, 839. although the note was afterwards indorsed without recourse by the payee above such indorser, 839 n. and liable on such evidence to the payee, 839. in Georgia successive indorsers liable as co-suretiee, 839. and entitled as such to receive contribution from one another, 839. See Guaranty — Indoksement in Blank — Surety. After transfer t no contract implied, 830. in absence of fraud or special agreement, 830. in Massachusetts is a guaranty to transferee, 830. implying no liability to the payee, 830. After maturity : is a question of intention, 830. is in such case prima facie an indorser, 830. or joint maker, 830. or maker, 830. or guarantor, 830. or a transfer, 830 n. 830 INDEX. Reference is to Sections. INDORSEMENT— Continued. Non-negotiable instruments : is a guaranty, 830. not entitled to formal presentment and notice of dishonor, 830. is an original maker, 830. or guarantor, 830. according to the intention of the parties, 830. which must be averred and proved, 830 n. joint maker, 880. and as such not entitled to notice of dishonor, 830. Sow filled : j the construction of such, determines in general what contract may be written over the, 840. thus in some states a guaranty may be written, 840. on proof of such agreement, 840. or at suit of the payee, 840. especially if the, is after and not at the time of making the note, 840. contra in other states, 840. and if such contract is written by mistake it may be canceled, 840. in some states holder can write an absolute promise to pay, 840. or a joint promise to pay as co-maker, 840. or an original promise or indorsement, 840. but not a contract as surety, 840 n. in suit by payee the actual contract made by the parties may be written over the, 840. if the, was after the maturity of the note, this could not be done in Massachusetts, 840. < but could in Connecticut, 840. wrongly filled might be disregarded at the trial, 840. Parol evidence : admissible at suit of the payee to show that the indorser was a maker, 841, or at suit of the payee's immediate indorsee, 841 n. a surety or maker, 841. not a maker, 841. a guarantor, 841 n. of an indorsee after maturity, 841 ii. of the payee, 841 n. an indorser, 841. a second indorser, 841. an indorser or guarantor, 841. a second indorser or guarantor, 841. a surety, 841. whether the note is negotiable or not, 841. although, was made after maturity, 841. payee's, without recourse was afterwards placed above it, 841. even where it stood below that of the payee, 841. only against original parties or purchasers after maturity or with notice, 841. unless the paper is non-negotiable, 841. iXDi:x. 831 Reference is to Sections. INDOBSEMENT— Continued. admissible where the payee's indorsement was absent, 841. to show that such indoreer is liable to the payee, 841. that the, was made at the date of note and intended as an original promise, 841. although below the payee's, 841 n. and the payee afterward indorsed the note above such signa- ture, 841. that it was not contemporaneous with the note, 841. it was indorsed at the maturity of note as a guaranty, 841. at suit of original payee that he had refused to sign as a joint- maker, 841. that he had signed with payee's name blank, under a special agreement, 841. and that a diversion of the paper had been made contrary to the agreement, 841 . inadmissible to prejudice a bona fide holder, 842. to show an agreement with the payee that he should only be liable as an accommodation indorser, 842. even at suit of a holder with' notice to show the indorser in- tended a joint-making and not an, 842. note payable to the order of the maker to show at suit of the original holder that an, and not a joint-making, was intended, 842. or that anything but an accommodation, was intended, 842. against the payee to change the nature of the contract, 842. to show an original promise as joint-maker, 842. that an, and not a guaranty, was intended, 842. or otherwise to explain such, 842. to show an agreement with maker unknown to the payee by which his liability was to be that of an indorser, 842. at the suit of the payee's indorsee, 842. to show that the maker was only authorized to fill the, with a guaranty, 842. or that a guaranty and not an, was intended, 842 n. to show that the maker and indorser were to be liable upon a joint consideration, 842. or that the indorsement was merely made by the defendant as an officer of the corporation which made it, 842. in order to show his approval of it, 842. Statute of Frauds : many cases hold that the, is not applicable to such, 843. so held where the, was made some days after the note, 843. in other cases held to apply, 843. to a verbal promise given to the maker after the promisor's discharge by laches, 843 n. requires a fuller expression of consideration than the recital of the original consideration in the note, 843. the original consideration of the note is sufficient for such, as a guaranty, 843. 832 INDEX. Reference is to Sections. INDOESEMENT— Cbntinucd. at least prima facie so, 843. a loan from the payee to the maker is sufficient, 843. so credit given by the payee to maker, 843 n. the adequacy of the consideration of the original note is immaterial, 843. if the, was subsequent to the making of the note, sufficient consideration must be shown, 843. and by the New York statute the consideration for a guaranty must be expressed in the note, 843. Liahility to payee: is a question of intention, 844. lo be determined by parol evidence, 844. so liable if he indorsed for the purpose of guaranteeing the note, 844. with the payee's knowledge, 844. or with words or acts that were so understood, 844. and this is true although the indorser had refused to become the maker's surety, 844. and was ignorant of the effect of his, 844. though the payee afterwards indorsed above him without recourse, 844. to hold such indorser, payee must specially aver his liability to him, 844. by Iowa statute such indorser is, as guarantor on his using due diligence in suing the maker, 844. California statute, as an indorser, 844. so in New York and Wisconsin without a statute, 844. in Indiana, as indorser on negotiable paper, 844. as surety on non-negotiable paper, 844. other cases, as maker and not indorser, 844. although only an, was intended by the maker and indorser, 844. and although the note was not indorsed until months afterward under the original agreement, 844. payee indorsing above such indorser to negotiate the note, 844. the indorsenjent being intended as security to the payee, 844. so under a special averment that the, was made to induce the payee to take the note, 844. in Massachusetts before statute of 1874, liable as maker, 844. as joint maker, may be shown by parol evidence, 844. and in some states requires special proof, 844. has been held to be that of guarantor, 844. and as such provable by parol evidence, 844 n. of guarantor or maker, 844. although strictly an indorser, 844 n. and of a surety, 844. liability to payee denied, 845. before delivery not*liable to payee, 845. or to one purchasing note from him, 845. at least, to a. purchaser taking it without the payee's, 845. so held where the indorser intended to become an indorser, 845. and refused to be a joint maker with the knowledge of the payee, 845. INDEX. 833 Reference is to Sections. INDOBSEMENT— Confmucrf. or where there is no special evidence of a different intention, 845. and where there is no special evidence his, as a guarantor, has been denied, 845 n. or where the indorser was ignorant of the agreement on the maker's part to furnish a surety to the payee, 845. in such case cannot be held by the payee as a second indorser, 845 n. or where the indorsement was made to procure a discount which was not obtained, 845. or where the note with an original blank for payee's name was diverted from the use intended, 845. or where it was indorsed after transfer by the payee for security of his indorsee, 845. so note which has been fii-st indorsed by another party under payee's, takes it up at maturity, 845. in the absence of payee's, original holder is not a bona fide holder, 84o. and discount without the payee's, is notice of fraud to purchasers, 84'). / Necessary diligence : holder must use due diligence against maker, 846. to hold such indorser as a guarantor, 846. or as indorser, 846. in Connecticut formerly necessary to proceed against the maker by legal process, 846. unless he was insolvent, 846. or had removed froni the State before maturity of the note, 846. leaving no property that could be reached by process, 846. and a subsequent verbal release of laches was not a waiver, 846. neither could laches which discharged the indorser be afterwards waived by his executor, 846. plea that note is " uncollectible " or that holder is " unable to collect," is not prima facie a sufficient excuse for the want of such diligence, S46. in Massachusetts, under act of 1874, is conditional on maker's failui^ to pay note or bill, 846. and a release of the acceptor as insolvent discharges the indorser, 846. in Illinois no. against the maker is necessary, 846. to hold indorser as guarantor, 846. and in other States, to hold indorser as surety, 846. unless an agreement to that effect is shown, 846. Demand — Notice of protest : is entitled to notice of dishonor, 847. required by statute in Massachusetts, 847. necessary when note is not negotiable, 847 and when the irregular, is subsequent to the making of the note, 847. other cases hold that, is unnecessary, 847. unless he suffers damage for want of it, 847. or if the agreement was to be a surety for the maker, 847. in North Carolina dispensed with except in cases of inland and foreign bills, 847. VOL. II. "^ 834 INDEX. Reference is to Sections. INDORSEMENT— Conh-nued. in some States he is entitled as guarantor to reasonable notice of demand and dishonor, 847. five days after maturity of the note has been held to be reasonable notice- when the maker was insolvent, 847. Action against maker and indorser : if the, is before delivery to payee, may be sued in some States jointly with tlie maker as an indorser, 848. but this has been questioned where the note is not negotiable, 848. does not appear to be necessary in case of a negotiable note, 848. such joint action can be brought where the, is subseq'-ent to the making; of the note, 848. INDOESEMENT IN BLANK, what, 705. is equivalent to bill payable to bearer, 705. transferable by delivery, 705. after, further indorsement unnecessary, 705. may follow a special indorsement, 705. holder may sue, 706. transferee may sue, 706. agent receiving note for collection may sue, 706. holder may treat such an, as a transfer to him, 706. or a power as agent to collect the payment, 706. is a transfer of the title, 707. may be filled up, 708. with the contract agreed upon, 868. any consistent contract, 708. cannot write "security" over it, 708. or fill it with a waiver of demand, 708. or notice of protest, 708. or with a guaranty, 660, 708, 836. contra, 838, 868. may be filled up by any subsequent holder, 709. . with his own name, 709. by an equitable holder, 709. by administrator of deceased holder, 709. not by an attorney for collection, 709. by bank cashier, 709. by agent, 709. by partner, 709. no discharge of intervening indorsements, 709. effect of filling, 710. may be filled with a special indorsement, 710. at time of trial, 710. after death of maker, 710. such filling is a protection against fraudulent pledge or sale, 710. foreign statutes, 711. of non-negotiable instruments, 660. indorsee may fill with promise to pay contents to himself, 660. INDEX. 835 BeflBrenoe is to Sections. INDOESEMENT IN BLANK— Continued. remote holder may write over tte, an absolute promise, 660. equivalent to the drawing of a new bill payable to bearer, 660. liable as a guarantor, 660, 765. liability on such to subsequent holders, 661. is limited, in general, to the immediate indorsee, 661. not presumed to be a loan, 691. transferred by delivery, 696. bill in payee's possession, his, is no evidence of a transfer by him, 717. may be stricken out, 717. made restrictive, 724. by a stranger, how filled, 840. a guaranty of payment indorsed on a negotiable note is an, 860. by stranger after issue of note or bill is a guaranty, 864. payee's, on a sealed note is an assignment and not a guaranty, 866. with an express authority to write a guaranty, is a sufficient writing under the Statute of Frauds, 879. See Indoesement. INDOBSEK, contract of, is conditioned on presentment for payment and notice of dishonor, 739, 758. of inland bills, 758. notice of non-acceptance necessary, 758. laches in presenting bill or note for payment discharges the, 758. presentment for acceptance and payment necessary to hold an, 758. a payee indorsing is an, and not a surety, 758. is entitled to notice of dishonor, 758. so an indorser for collection, 758. so an, after maturity, 758. so an, of a demand note, 758. so an, in blank, 758. American statutes, 759. demand and notice, 760. diligence against maker, 761. failure to sue the maker is not a discharge of the, 761. diligence against the maker required by many American statutes, 762, 765. Illinois rule as to diligence, 763. Indiana rule as to diligence, 764. foreign statutes, 766. distinguished from a guarantor, 849. when not discharged by an agreement not to present bill for acceptance, 570. re-issue of note or bill by, 683. is by statute in some States liable as a guarantor, 745. unless otherwise expressed, 745. partners, 746. first indorser as against the second, cannot show that they were partners, 746. by agent to principal, 746. made for special purpose and violated, liable only to a bcma fide holder, 747. it is the duty of an, t» take up a note or bill when dishonored, 747. 836 INDEX. Beference is to Sections. INDORSEE- Continued. his liability is not affected by the non-performance of a contingent coiilract be- tween the maker and the purchaser for a deposit of collateral, 747. or by the fact that the acceptance was for an illegal gacing debt, 747. or tliat the note was payable to bearer and might have been transferred without indorsement, 747. may reserve all warranty arising from the indorsement, 752. Hable for the validity of bill or note, 756. liability of, on non-negotiable paper, 658, 659. when note made " with recourae," 659. liability of, on paper transfer after maturity, 670, 671. accommodation, 692. may be showfi by parol evidence, 692. liable successively, 740. though between immediate parties a different relation may be shown, 740. as to remote holder successive indorsers are liable severally and not jointly, 740. so of a note taken in renewal, 740. though both were accommodation, 740. statutes of Georgia and Montana, 740. successive accommodation indorsers, 740. liable as co-sureties by express agreement, 740. contract of, 742. to pay with damages, 742. interest, 742. not attorney's fees, 742. surety liable before accommodation, to maker, 742. right to indemnity from maker, 743. his liability is a " debt," 743. attachment will lie, 743. not a surety, 744. unless he sign as an accommodation, 744. or such intention be shown, 744. " surety " added to signature, 744. Discharge by payment : discharged by payment or satisfaction, 772. payment by a prior party is not a discharge of the, 772. by a subsequent, will not affect the, 772. indorsement altered, 772. demanding payment of the drawer after protesting the bill, 772. after judgment promise on holdei-'s part not to hold the, 772. notice of dishonor, holder may receive additional guaranties, 772. or request the maker to apply on another note a payment, 772. may waive his discharge, 772. making a voluntary payment is not a waiver, 772, Holder's duly as to collaterals : cannot at common law compel the holder to first exhaust collaterals, 771. otherwise by statute in Minnesota, 771. in Indiana diligent prosecution by maker of collaterals is required, 771. holder surrendering the collateral discharges the, 771. improper sale of collaterals, 771. INDEX. 837 Reference is to Sections. INDOESER— Continued. Discharge by release : releasing prior parties discharges the, 769. unless his rights against such parties are expressly reserved, 769. release of a prior indorsement discharges subsequent, 769. releasing levy against maker releases an accommodation, 769. so discharging maker from arrest, 769. receiving part payment of note and surrendering it to. maker, 769. holder surrendering note to second indoi-ser, 769. surtendering note to maker and taking new note from him, 769. signing composition deed as a creditor of the drawer, 769. When not a discharge : may release one joint maker without discharging the, 770. holder and indorser join in a release of maker, 770. discharging acceptor from arrest, 770. covenant not to sue the maker, 770. composition deed releasing a bankrupt, 770. holdei''s consent to maker's discharge in bankruptcy, 770. joining in a general release given to maker by his creditors, 770. involuntary discharge, 770. payment by later indorser, 770. releasing the, does not release the maker, 770. surrendering note to second indqfser, 770. Discharge by extension : discharged by a definite and binding extension, 767. must be upon a valid agreement, 767. and without the consent of the indorser, 767. it must be definite, 767. giving maker definite time for payment and taking note payable at end of such time, is such extension, 767. immaterial whether given before or after maturity, 767. or whether the note extended be the principal debt or collateral to it, 767. must be made by the holder, with the maker or acceptor, 767. will not discharge the, after his liability has been fixed, 767. or after judgment rendered against him, 767. not discharged if expressly reserves the holder's rights against the, 767. may waive his discharge, 767. by a new promise made after the extension, with knowledge of it, 767. What amounts to an extension : payment of interest in advance is not necessarily, 768. • presumed to be such if made after maturity for interest not accrued, 768. an agreement to "carry" note for certain time is not, 768. taking note of third person and agreeing to hold the original note until paid, is, 768. taking time drafts as security for overdue note, 768. taking bond and mortgage with six months to run, 768. receiving post-dated check in payment of note, 768. after maturity of note taking another note payable at a future day, 768. 838 INDEX. Beference is to Sections. 1 N DOKSEE— CoiUinued. giving time on receiving collateral, 768. if extension is without consideration, it will not discharge the, 768 mere delay or indulgence is not, 768. eitension of another note secured by same mortgage is not, 768. nor the certifying a check, 768. or if the consideration is usurious, 768. but holder is estopped from setting up the usury, 768. money paid as "additional interest" may be a valid consideration, 768 so payment of an installment on note before maturity, 768. agreeing to pay a higher rate of interest, 768. on an unfulfilled condition, 768. INFORMALITY, . of indorsements, 714. See Form. INSTALLMENTS, an acceptance may be made payable in, 626. INTEREST, overdue, as notice of defects, 1007. a guaranty of note or bill includes, 851. payment of, for an extension, 963. surety entitled to recover, on the amount paid, 981. See Us0RY. "10 U," not the subject of a gift causa mortis, 810. J. JUDGMEKT, against principal and surety merges their relation, 925. not so in equity, 925. or in Texas by statute, 925. L. LAW AND FACT, Questions of fact for a jury : diligence against maker of note, 763. agent's authority to indorse, 774. character of holder, 986, 992. due caution, 996, 997. good faith, 1000, 1025. whether a guaranty has been accepted, 853. notice of acceptance of guaranty within a reasonable time, 854. date of guaranty, 868. whether guaranty forms part of the original contract, 871, 873. consideration for a guaranty, 878. reasonable demand, 882. notice of maker's default, 887. INDEX. . 839 Reference is to Sections. LAW AND FACT— Oontmued. negligence that will effect a discharge of guarantor, 888. due diligence, 891. relation which parties have agreed to assume toward one another, 899. consent by a surety to an extension, 968. ratification of co-maker's promise, 446. fraud, 448. want of consideration, 451. " reasonable time," 491. alteration of contract, 543. whether note was given as security or for a premium of insurance, 565 n. for a wager, 566 n. reasonable time for presenting bill is mixed question of fact and law, 574. is question of fact for the jury, 574. contra, 574, 585. rule by Judge Christiancy, 574. due diligence in ascertaining residence of drawee, 581. completeness of an acceptance, 606. whether the condition of an acceptance haa been performed, 625. cancellation of acceptance, 638. waiver of an acceptance, 640. contra, if tJie acceptance is in writing, 640. negotiability of bill when the lex mercatoria is uncertain, 655. undated indorsement, 686 n. blank indorsement whether sale or loan, 691. Questions of law for the court : defect on face of paper, as notice, 1006. laches by pledgee of collateral security, 804. reasonable time for presenting a bill, 574, 585. whether an acceptance is conditional, 622. if -the waiver of an acceptance is in writing, its interpretation is for the court, 640. negotiability of bill, 655. LIEN, of banker on negotiable securities deposited with him, 794. of collateral security discharged by a payment by pledgor to pledgee, 795. for balance of account due, 798. LIMITATIONS, See Statute of Limitations. LIS PENDENS, as notice affecting a bona fide holder, 1023. LOVE AND AFFECTION, consideration of, 453. transfer of note or bill for, 785. See CoNSIDEBATIOlf. 840 . INDEX. Reference is tci Sections. M. MAKEE, an irregular indorser, when liable as a, 831 et seq. a, guarantor, when liable as a, 849. inability of, to pay when must be proved to hold guarantor, 850. when may be sued jointly with the guarantor, 862. signing as an additional, 863. signing under the maker of note, at payee's request, is a, as to such payee, 863. joint makers as sureties, 904, 905, 906. accommodation maker, 907. See Indorsement. MAEK, sufficient for an indorsement, 702. MARKS, peculiar, on paper as notice of its character, 1011. MAERIED WOMEN, note by, 458, 489. for husband's debt, 466. acceptance by, 471. a conveyance by, not a valid consideration for a note, 478. agreement by, for arbitration no consideration for note, 481. consideration for a note by, must be proved, 562 n. notwithstanding her own admissions, 562 n. gift causa mortis may be made by wife to husband, 805. MATURITY, of bills payable at or after sight is fixed by presentment, 568. acceptance may be after, of bill, 596. reckoned from protest, 608. note transferred after maturity is payable on demand, 672. indorsement after, effect of, 670, 671, 672, 673, 674. payment before, 680. at, 682. " MEM.," written on check as notice of its character, 1011. MEMORANDUM, attached to note or bill as notice of defects, 1009, 1013. MERGER, illegal consideration of note, in judgment, 536. relation of principal and surety, by judgment, 925. otherwise by statute in Texas, 925. MISTAKE, note by, 458. indorsement omitted by, 792. may afterwards be supplied by suit in equity^ 793. but purchaser has no authority himself to supply the missing indorsement, 793. "MONEY," as a gift causa mortis includes a note, 809. INDEX. 841 Reference is to Sections. N. NEGLIGENCE, causing damage to guarantor will effect his discharge, 888, 890. whether there is, is a question for the jury, 888. by holder in proceeding against principal discharges a surety, 928, 929. as to collaterals discharges surety, 930, 952. is not equivalent to mala fides, 751. but it may amount to bad faith, 751. indorsement omitted by, 792. by pledgee of collateral security, 804. failure to make due presentment for payment is, 804. as affecting a bona fide holder, 996 ei teq. See Bona Fide Holder. NEGOTIABLE, what, 650. what instruments are, 652. railroad bonds, 651. warehouse receipts, 651. bill payable " to A. or order," 652. payable to bearer, 653. interest coupon, 653. payable to holder, 653. payable to "A. or bearer," 654. note payable " to the bearer A." not, 653. does not lose its, character by a special indorsement, 655. how affected by a conditional indorsement, 723. restrictive indorsement, 724. an indorsement " without recouree," 722. an indorsement " for collection," 726. paper is subject to attachment, 729. a sealed assignment with guaranty does not affect, of the note, 730. instruments may be the subject of gifts causa mortis, 809. guaranty when, 860. wjien not, 861. is not, by being indorsed on a negotiable note, 861. of payment contained in the transfer of bill or note does not affect its negotiability, 860. "NE VABIETUE," note marked, effect on good faith of purchaser, 1000. NON-NEGOTIABLE, municipal warrants are, 651. transfer of, instruments, 655 action by indorsee, 656. subject to defenses, 657. against a bona fide holder, 657. liability of indorser on, paper, 658. to subsequent holders, 661. blank indorsements of, instruments, 660. / 842 INDEX. Reference is to Sections. KOX-NEGOTIABLE— Cbnttnued. indorsement of, bills and notes not equivalent to an assignment, 700 n. title to, paper is not presumed from possession, 777. instruments subject to attachment, 824. before its maturity, 824. if there is no evidence of its prior transfer, 824. but a prior transfer will take effect against such attachment, 824. if notice necessary, before answer by maker is suflBcient, 824. may be stated in the answer on information and belief, 824. indorsement by stranger of a, note, 830. guaranty when, 861. of, instruments, 866. NOTARIAL MARKS, as notice, 1006. NOTICE, absence of indorsement by payee is, of equities, 789. should be given to pledgee by surety to sue, 796. notice of sale by pledgee should be given to pledgor, 802. of transfer when required, 820, 824. may be stated in answer on information and belief, 824. sufficient if given after the attachment in Indiana, 820. ' in Louisiana must be given to the drawer, 820. Vermont law, 821. sufficient if given to one of several joint and several makers, 821. or to an accommodation indorser, 821. to surety not necessary, 821. should be given by indorsee, 821. or his collecting agent, 821. inures to the benefit of a subsequent indorsee, 821. knowledge is equivalent to notice, 821. notice of acceptance of a guaranty when necessary, 853, 854. unnecessary, 855. what notice sufficient, 854. waiver of notice, 855. reasonable notice of maker's default is a question for the jury, 887. " surety " added to signature is notice of its character, 896. by surety to holder to proceed against principal, 932, 933 et seg. as affects a bona fide holder, 1002 et seg. See Bona Fide Holder. NOTICE OF DISHONOR, drawer and indorser discharged by want of, 669. indorser is entitled to notice of dishonor on an indorsement after maturity, 672. not in Georgia by statute, 672. parol evidence to show waiver of, 784. of dishonor unnecessary to hold guarantor, 880, 883. of maker's default unnecessary to hold guarantor, 884. unless he suffers damage from want of it, 885. of protest when unnecessary to hold guarantor, 883. necessary to hold guarantor, 886. See Dishonor. INDEX. 843 Referenoe is to Sections. NOVATION, note illegal, made legal by, 534. original debt assumed by guarantor by, 873. discharge of surety by, 942. o. ONUS PEOBANDI, of proving fi-aud or want of consideration is on the surety, 919. on surety to show that holder knew of his suretyship to be discharged by exten- sion, 955. is on surety to prove that time of payment has been extended, 957. is on the one demanding contribution to show the relation of principal and surfety, 973. is on the defendant to show that a note violates a foreign statute, 533. note given with intention to violate law, is on maker to show payee's illegal intention, 535. is on plaintiff to show consideration, 566. is shown by proving the note, 566. want of consideration, 566, 1028. when, showing failure of consideration is on maker, 481. failure of consideration, 566. partial failure of consideration, 566 n. illegality of consideration, 566, 567, 1027. that note was given for liquor sold without a license, 566. or for the sale of a lottery prize, 566. presumption of consideration must be met by proof, 566. mere denial not sufficient, 566. in Vermont the general issue puts in issue the consideration as well as its execu- tion, 566 n. so by statute in some States a denial of a valid consideration, 566 . of proving good faith, 567. accommodation paper, 567. indorser signing as guarantor, 567. stolen or lost bill, 567. bank bills stolen before being put into circulation, 567. that maker was sick or intoxicated at time of making note or bill, 567. fraud, 567. of showing a condition not written on bill is upon the acceptor, 625. of showing that the condition has been performed is on the holder, 625. indorsement shown to have been made after the note, is on holder to show that it was indoi-sed before suit brought, 686. note payable one day after date, not on the maker to show that it was trans- ferred after maturity, 686. of showing good faith, 1025. when fraud is set up, 1026. guaranty given after the making of note or bill the, of proving a sufficient con- sideration is on the liolder, 878. guarantor waived notice of protest the, will not be on the holder to show that the guarantor was not damaged, 886. 844 INDEX. Reference is to Sections. ONUS P'ROBANDI— Continued. on holder to prove that the guarantor was not injured by indulgence, 888. note signed by three the, upon tlie third in action for indemnity against the other two as principals to show that the second was a principal and not a surety, 897. OVEEDUE PAPER, as notice of defects, 1006. interest overdue as notice, 1007. P. PAEOL EVIDENCE, admissible to show an irregular indorser to be a surety, 839. to explain a blank indorsement by a stranger, 84 1 . indorsements between immediate parties, 778. contra, 778. to show liability of an irregular indorser to the [layee, 844. knowledge or notice of acceptance of a guaranty, 854. that a guaranty is continuing, 858. an indorsement upon a non-negotiable note to be a guaranty, 866. that ''good" indorsed on a note means valid and not merely collectible, 868. extent of guarantor's liability, 868. that guaranty was made at the date of note, 868. the actual date of the guaranty, 868. when a guaranty is an independent contract from the original, 871, 873. , consideration for a guaranty, 878. that one signing as "surety" is a principal, 896. the relation of joint makers as between themselves, 897. in action between three signing a note, that the last two were sureties for the first, 897. between the parties, their relation, 908. at suit of payee, their relation, 909. against party with notice, their relation, 910. that transfer vras made by the wrong person, 662. actual date of a blank indorsement, 686. character of accommodation indorser, 692. liability of indorsers in the order in which they appear, 741. that the note indorsed by him in blank was taken as agent for the plaintiff; 779. that the words " without recoui-se," after being omitted by mis- take, were added by consent, 779. that blank indorsement was made "for collection," 780. liability of successive indorsers inter se, 781. consideration for indorsement, 782. as against an immediate indorsee, 782. to show fraud in an indorsement, 783. or that it was made upon a special trust, 783. date of blank indorsement, 829. INDEX. 845 Reference i&k to Sections. PAEOL EVIDENCE— Oo«ii««ed. admissible to show intention of an indorser by a stranger, 833, 838. but not against a bona fide holder, 833. such indorser liable either as maker or guarantor, 833. by holder, » parol agreement reserving his rights against the surety, 949. an extension, 957, 963, 964. in Indiana, the rtelation of parties on accommodation paper, 474. "dollara'' meant Confederate currency, 497. note for slandering payee's wife, the falsity of charge may be shown by, 550. to prove consideration of note or bill, 565. to show the real consideration, 565. for what given when note expressed " for money loaned," 565. failureof consideration, 565. illegality of consideration, 565. for other illustrations, see 565. to show that one to whom presentment was made was drawer's agent, 573. relation of the parties, 592 n. date of acceptance, 598. acceptance when merely a collateral fact, 615. to explain an ambiguous acceptance, 624. to show due diligence against maker to hold indorser on non-negotiable instru- ments, 659. inadmissible to relieve acceptor from liability as an, when he has written his name across the face of a bill, 603. to contradict authority to draw bill relied on in its purchase, 610. to show a contemporaneous condition annexed to an acceptance, 624. though in writing, as against a bona fide holder, 624. that an overdue note should not be negotiated or payment should be conditional, 678. to prove a conditional indorsement as against a bonu fide holder, 723. to show that indijrsement "without recourse" intended, 779. but admissible to prove a contemporaneous written agreement that the indorsement should be " without recoui-se," 779. that indorsement was made for transfer only, 780. contra, 780. that an indorsement " for collection " was intended to be an absolute transfer, 780 indorsement intended as guaranty or surety, 781. his indorser to be a joint maker, 781. waiver of demand and notice of dishonor, 784. contra, 784. an authority to fill a blank indorsement by a stranger with guaranty, 838. to explain a blank indorsement by a stranger, 842. to charge an express guarantor as an indorser, 868. to show against the holder that one of the makers was a surety merely, 898. 846 INDEX. Reference is*to Sections. PAROL EVIDENCE— Omtinued. inadmissible to show the relation of the parties as, against a bona fide Ijolder, 911. to vary a written instrument, 565. to show, in suit on a note for a deed, a contract other than the deed, 565. that a note given by A. to B., in consideration of C.'s note to A. and a debt due from C. to B., was given only to facilitate the collection of C.'s debt, 565. contemporaneous parol agreement, 565. in Indiana, want of consideration in the transfer of a note, 565. though otherwise if such transfer was accompanied by fraud, 565. See Gtjabantt — Indorsement — Surety. PARTIES, relation of the, as notice of the character of the paper, 1014. on suit to collect collateral by pledgee not necessary to join pledgor, 796. pledgee may bring suit on collateral in his own name, 796. or in the name of the pledgor, 796. transfer by assignment, parties to action, 791. PABTNEKS AND PAETNEESHIP, accommodation paper by, 472. knowledge by, that it is, 473. may give a valid biU to firm for bills receivable of the firm, 479. acceptance by, 593. acceptance admits the existence of a firm, 631. indoreement by one partner to the other for collection, 746. first indorser as against the second indorser cannot show that they were, 746. accommodation indorsement, 990. notice to, 1003, 1004. paper as notice of its character, 1014. firm having common partner, 1014. receiving new note from one partner in payment of a firm debt, retiring partner is discharged, 942. bUl drawn by two, and holder taking the note of one of them, retaining the origi- nal bill will not discharge the other, 943. partner on dissolution of firm assumes debts of firm, an extension of time will discharge other partner, 954. PAYEE, liability of an irregular indorser to, 844, 845. PAYMENT, absolute, 464. conditional, 464. transferred in, 464, 465. payment of debt of a third person, 466. note payable in future, 466. note received in, 466. note by widow in, of note of husband, 468. INDEX. 847 Reference is to Sections. PAYMENT— Coniinued. not a, by usurious note or bill, 530. ■voluntary payments of usury, 531. cannot be recovered, 531. by forged bill is not, 537 n. on contract, part legal, part illegal, may be appropriated to satisfy the illegal pajt, 537. place of, designated in bill, 581. may be written over a blank acceptance, 588. what is a failure to pay, 581. in Germany there are special days for, 585. what is not, 588 n., 600 n. discharge of an acceptance by, 639. appropriation of, by bank of money paid in by drawer of bill, 667. before maturity, 680. at maturity, 682. by bank notes on bank which has failed is not a, 749, 750. by bill or note, 750, 754. in bank notes implies that they are genuine, 754. discharge of indorser by, 772. of check payable to order without indorsement, 787. notice of defects before, 1005. part, 1005. -agreement to pay is not, 1005. note as collateral is collected it operates as, pro ianto, of the debt secured, 795. after note is pledged, to the pledgor will not satisfy it, 795. and will not constitute a defense on maker's part against the pledgee, 795. by pledgor, of his original debt to pledgee discharges lien created by the pledge, 795. pledgee's transfer of note held as collateral, the transfer is a, 803. irrespective of the value of the collateral, 803. holder by such act electing to take the collateral as an absolute, 803. to sheriff or other officer under execution, 825. guaranty of, 851, 887. discharge of surety by, 941. part, 944. tender of, 944. principal may direct the appropriation of, 941. what is not a, to discharge surety, 941. part, for extension, 963, 965. of interest, for extension, 963, 965. contribution from surety depends upon, 974. PENCIL, indorsement may be in, 702. PLACE OF PAYMENT, named in a bill, effect on presentment, 569. accepting bill, naming, 626. accepting, payable there " only and not otherwise or elsewhere," 626. 848 INDEX. Reference is to Sections. PLEADINGS, contract of guarantor must be specially averred in, 849. a g^iaranly of " ultimate payment," the maker's default must be averred, 850. a distinct consideration for the guaranty by indorsement should be averred, 866 surety added to signature a special averment necessary, 896. not sufficient to aver that payee knew one of the drawers to be a surety, 899. surety in, a tender by principal, must aver his continued readiness to )>ay, 944. must allege the holder knew he was a surety to be discharged by exten- sion, 955. extension by cognovit, it need not be specially averred by the surety that the time of taking judgment was thereby extended, 962 n. extension for usury must be paid in advance, and such payment must be averred by the surety, 967. declai'ing upon an acceptance which was given before bill was drawn, 597. consent and notice in receiving a qualified acceptance must be specially averred, 621 n. conditional acceptance, the tondition and performance should be averred, 625. not necessary to aver presentment at the particular place named, 626. waiver of an acceptance, 640. note payable to "A. or bearer," 654. non-negotiable bill indorsed in blank, 655. indorsements, 718, 773. by a stranger, 833. at common law, a note may be declared on as a bill, 739. a plea setting up defenses must deny the bona fides of the holder, 1024. fraud, 1027. in New York, purchaser of note by delivery before maturity need not aver in- dorsement by payee, 791. ■objections to sale by pledgee on account of want of notice or of demand must be specially averred in the, 802. answer of garnishee, 818. irregular indorser, intention to become a joint-maker or guarantor must be spe- cially averred, 838. plea That the renewal of a note which was barred by the Statute of Limitations must show the date of the maturity of the original note, 487. •discharge operating as a want of consideration should be specially averred, 488. plea setting up illegality in note given for the purchase of a slave is sufficient without making any offer to return the slave, 534. partial failure of consideration will not sustain an averment of total failure, 539. in Texas failure of consideration for want of title as a defense must be especially pleaded with an averment either of want of title or an eviction, 547. failure of consideration by a fraudulent warrant must be specially pleaded in Indiana, 548. not necessary to aver or prove a consideration in the first instance, 562, 564. at common law, 564. material in Connecticut, 564. failure of consideration admissible in evidence under the general issue, 564. ■with notice of such defense, 564. may be specially pleaded, 564. must be specially pleaded now in England, 564. INDEX. 849 Reference is to Sections. PLEADINGS— Comiinued. so in Illinois, 564. not necessary to aver that plaintiff had notice of such failure of consideration, 564. demand and notice to indoraer mast be averred in, 758. PLEDGE, See Collateral Sectjeity. POSSESSION, by payee is prima /acie evidence of title in him, 717. under an indorsement is presumptive title, 730. although the transfer may be tainted with illegality, 730. by drawer in action against acceptor is presumptive evidence of title, 775. prima facie title, 776. not as to non-negotiable paper, 777. indorsement and possession, 777. of negotiable paper payable to bearer is evidence of holder's good faith, 1024. at common law, of note payable to order without payee's indorsement is not prima facie evidence of title, 792. such holder must prove title, 792. POST-DATED BILLS, what, 568. cannot be presented for acceptance, 568. indorsement of, 666. post-dated check cannot'be transferred in due course of business, 1007. POST-DATING, as notice of defects, 1007. ^'PRESENTED," written on face of bill sufficient acceptance, 600. ^'PRESENTMENT," defined, 571 n. PRESENTMENT EOE ACCEPTANCE, See Acceptance. PRESENTMENT FOR PAYMENT, when not necessary, 569 n., 581 n. necessary to hold drawer and indorser, 758. when not necessary to hold a guarantor, 880. necessary to hold a guarantor, 880. not necessary to hold surety, 914. PRESUMPTIONS, Of qood faith: that purchaser is a holder for value, 1024. in good faith, 1024. taken in the usual course of business, 1025. by statute in Georgia, 1024. vriT, Tl- ^1-' 85C INDEX. Reference is to Sections. PRESUMPTIONS— Gm(m«cd. extended to negotiable coupon bonds, 1024. to securities as collateral to bill and notes, 1024. mere possession is, of holder's good faith, 1024. applies to any purchaser taking paper before maturity, 1024. holder of half a bank note, 1024. note from agent who exceeded his authority, 1024. note offered for discount with blanks not filled up, 1024. may be rebutted, 1025. is a question for the jury, 1025. onus of proving shifted, 1025. rebutted by fraud, 1026. is not rebutted by evidence that paper was originally delivered to a creditor who was a stockholder, 1026. or that the depositor to whom a bank check was originally given had misappropriated the fund, 1026. or that bill had been previously discounted at a usurious rate by holder's stepfather, 1026. illegality overcomes, of bona fides, 1027, 1028. of bad faith from gross negligence, 1001. rebutted, 1000. Guaranty : written guaranty, 562. what not presumably a continuing guaranty, 858. a guaranty passes presumptively with the delivery of a note payable to- bearer or to A. or bearer, 860. first holder taking paper on credit of the guaranty will be presumed to- be the party to whom the guaranty was originally made, 862. guaranty, to have been made at date of note, 868. a consideration' for a guaranty of an overdue note for forbearance will not be presumed, 875. "value received" in an indorsement of guaranty raises a, of considera- tion, 878. where a guaranty and indorsement are averred in the pleading, sufficient consideration for the guaranty will be, 878. damage from want of notice of maker's default will not be presumed, 885_ want of notice of protest to guarantor is, a want of due diligence, 887. guarantor when, to have suffered damage by neglect, 887. of due diligence, 891. of extension to principal from long delay of four or five years, 894. indorsement presumed not to be a guaranty, 745. to be a guaranty, 838. Surety : relation of parties presumed to be that which is shown by the order of their names, 899. note transferred after its maturity, relation of principal and surety will not be presumed to be known, 899. latter of two accommodation indorsers, to have indorsed on the strength. of an earlier indorsement and not as co-surety with maker, 903. ■ INDEX. 851 Reference is to Sections, PRESUMPTIONS— CtfniiTiued. joint-makei's presumed to be sureties, 906. stranger signs a note lie is presumed to do so as a surety, 914. of extension from the payment of a year's interest, 963. extension to principal, damage to surety will be presumed, 968. in Indiana, two makers found to be sureties, will be presumed to be co-sureties, 976. in suit for contribution no, of the relation of principal and surety, 973. as to date of written instruments, most favorable to the defendant, 704. drawer in possession of a bill with blank indorsement, that bill has been put into circulation, 707. as to erasures of an indorsement, 716. joint payees, to be joint indorsere, 741. indorsers joining in a general release given to maker of note by his creditors, their consent to one another's action will be, 770. from possession, 776. from indorsement and possession, 777. not, to know facts which do not form part of public record, 1016. of tiUe, 792. irregular indorser, that he is a joint maker, 833. appearing above that of the payee, that it was made to obtain credit with the payee, 833. presumptively a guaranty, 838. may be rebutted by parol evidence, 838, 841. no presumption of illegality because note was given for liquor, 532. in New Hampshire since statute of 1855 there is a, of illegality, 532. of consideration, 562. of debt from maker to payee, 562 n. for married woman's note must be proved, 562 n. note by parent to child not presumed to be for a valuable consideration, 562 n. applies to indorsements, 562. acceptances, 562. debt from drawee to drawer, 562. bank check, 562. non-negotiable note does not import a consideration, 562. so of a note payable out of a particular fund, 562 n. contta in California, 562. so in Indiana of notes payable in goods, 562. contra at common law, 562. though, is not disturbed by reference to a fundjas a means of payment, 562 n. does not extend to signature of one who signs after delivery, 562. in such case a fresh consideration i» necessary, 562. indorsement after delivery, 562. " value received," 563. note for " futures " a gaming consideration not presumed, 566 n. possession of bill raises, of a right to demand acceptance or payment, 572. by drawee before it is dishonored raises no presumption of an obligation on his part to accept it, 589. acceptance without date, that it had been given before maturity and within a reasonable time after date of bill, 596. 852 INDEX. Reference is to Sections. PEESUMPTIONS— Co7i