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estopped to sue the maker because he has recovered judgment against the indorser are numerous and decisive. Russell & Erwin Manuf. Co. v. Carpenter, 5 Hun (N. Y.), 162; Story, Promissory Notes (7th ed.), sect. 401; Pritchard v. Hitchcock, 6 Man. & G. 151, 201.

Suppose that is so, then it is insisted by the defendant that the plaintiff is not a bona-fide holder for value in the usual course of business within the meaning of the commercial law.

Questions of fact are set at rest by the findings, from which it appears that the note is payable to the treasurer of the defendant or order, by whom it was indorsed in blank as well as by the firm, consisting of the president and financial agent of the company; that it was placed by the maker in the hands of the brokers for sale to raise money for the use of the maker, and that the plaintiff loaned the full amount of the note to the agents of the defendant and took the note indorsed in blank as collateral security for the loan before maturity. None of these matters are disputed, and it is equally and undeniably true that the whole of the money loaned went into the hands of the defendant, in pursuance of the arrangement it made with its own agents.

Neither fraud nor mistake is alleged or even suggested in respect to any one of these matters, from which it follows, as a necessary legal conclusion, that the plaintiff became the actual holder of the note in good faith before maturity by delivery from the agents of the defendant, and that it as such assumed the responsibility to demand payment of the maker when the note fell due, and, if not paid, to give the required notice of nonpayment to the indorsers.

Beyond all question, the findings show that the plaintiff in good faith became a party to the note described in the declaration before maturity, and that as such holder it was bound to adopt proper measures to fix the liability of the indorsers, and that if it had failed to demand payment of the maker, or to give the required notice to the indorsers, it would have become liable to the party from whom it received the note for whatever loss ensued from such neglect. Such a holder of a foreign bill of exchange, if not paid at maturity, must see that it is duly protested; and for the same reason the holder of an inland

bill or negotiable promissory note must see to it that proper steps are taken, in case of non-payment by the acceptor or maker, to fix the liability of parties to the instrument who would otherwise be discharged.

Securities of a negotiable character may be transferred by indorsement made at the time they are delivered, or if indorsed in blank or made payable to bearer, they may be transferred by mere delivery without any new indorsement. In either case, the holder, other things being equal, acquires full title to the instrument, the correct commercial rule being that whoever lawfully and in good faith becomes the holder of a valid negotiable bill of exchange or promissory note before maturity, by direct indorsement or by delivery when indorsed in blank or made payable to bearer, assumes the responsibility, if not paid when it falls due, of entering protest or of making demand and giving notice of non-payment as the case may require; and that in all cases of such a transfer the holder, whether he paid cash for the note or made new advances to the transferrer, or accepted it in substitution of prior collaterals surrendered, or received it in payment of property sold or of antecedent indebtedness, or as collateral security of a pre-existing debt or any pecuniary liability for the pledgor, is a holder for value in the usual course of business within the meaning of the commercial law, and is unaffected by any equities between the antecedent parties, provided he took it in good faith and without notice of anything to impeach the title of the person from whom it was received.

Authorities everywhere agree at the present time that a bona fide holder of a negotiable instrument for a valuable consideration, without notice of anything which impeaches its validity, if he takes it under an indorsement made before maturity, holds the title unaffected by any equities between the antecedent parties, even though as between them it may be without any legal validity. Swift v. Tyson, 16 Pet. 1, 15.

Instruments of the kind are commercial paper in the strictest sense, and must ever be regarded as favored securities, on account of their universal convenience in mercantile transactions and the settled rule is that transferees of the same hold the instrument clothed with the presumption that it was nego

tiated for value, in the usual course of business, at the time of its execution, and without notice of any equities between the antecedent parties to the instrument. Collins v. Gilbert, 94

U. S. 753.

Possession of such an instrument before maturity, if indorsed in blank or payable to bearer, is prima facie evidence that the holder is the owner and lawful possessor of the same; and nothing short of proof that he had knowledge, at the time he took it, of the facts which impeach the title as between the antecedent parties, not even gross negligence, if unattended with mala fides, is sufficient to overcome the effect of that evidence, or to invalidate the title of the holder supported by that presumption. Goodman v. Harvey, 4 Ad. & E. 870; Goodman v. Simonds, 20 How. 343, 365; Bank v. Leighton, 2 Exch. Rep. 61; Wheeler v. Guild, 20 Pick. (Mass.) 545, 550; Magee v. Badger, 34 N. Y. 247, 249.

Apply that rule in an action by the transferee against the maker of a negotiable note indorsed in blank, or payable to bearer, and it is clear that he has nothing to do in the opening of his case except to prove the signatures to the instrument and introduce the same in evidence, as the instrument goes to the jury clothed with the presumption that the plaintiff became the holder of the same for value at its date in the usual course of business, without notice of anything to impeach his title. Pettee v. Prout, 3 Gray (Mass.), 502; Way v. Richardson, id. 412.

Clothed as the instrument is with the described presumption, the plaintiff is not bound to give any evidence to show that he gave value for the same until the other party has clearly proved that the consideration was illegal, or that the instrument was fraudulent in its inception, or that it had been lost or stolen before it came to the possession of the holder. Fitch v. Jones, 5 El. & Bl. 238; Smith v. Braine, 16 Ad. & E. N. s. 242; Hall v. Featherstone, 3 H. & N. 282.

Cases arise where the supposed defect or the infirmity of the title appears on the face of the instrument; and where that is so, the question whether the party who took it had notice or not is in general a question of construction, and must be determined by the court as matter of law. Andrews v. Pond,

13 Pet. 65; Fowler v. Brantley, 14 id. 318; Brown v. Davis, 3 T. R. 86.

Decided cases of the highest authority support that proposition, but it is a very different matter when it is proposed to impeach the title of the holder by proof of facts and circumistances outside of the instrument itself, as he is then to be affected, if at all, by what has occurred between other parties. For his own acts he is plainly responsible, but he may well claim exemption from any consequences flowing from the acts of others, unless it be first clearly shown that he had knowledge of such facts and circumstances at the time he became the holder of the instrument. Actual knowledge of such facts and circumstances must be proved to defeat the title of the holder; and the question whether he had such knowledge or not is a question of fact for the jury, and, like other questions of scienter, must be submitted to their determination.

Indorsers of negotiable securities enjoyed the protection of that rule for ages before any successful attempt was made to annex to it any qualification, unless it appeared that the consideration was illegal, or that the instrument was fraudulent in its inception, or that it had been lost or stolen before it came to the possession of the holder. Hinton's Case, 2 Show. 235; Anonymous, 1 Salk. 126; Miller v. Race, 1 Burr. 452; Grant v. Vaughan, 3 id. 1516; Peacock v. Rhodes, 2 Doug. 633; Lawson v. Weston, 4 Esp. 56.

Throughout the whole period covered by those decisions it was universally understood that the title of the bona fide holder was unaffected by any equities between the antecedent parties; but it was subsequently decided that if the indorser of the instrument had no valid title to the same, and that such facts and circumstances were known to the indorsee, at the time of the transfer, as would have caused a person of ordinary prudence to suspect that the indorser had no right to transfer the instrument or to use the same for his own benefit, then the holder, as against the acceptor or maker, is not entitled to recover. Gill v. Cubitt, 3 Barn. & Cress. 466.

For a brief period that rule was followed, but it was never satisfactory, and at the end of twelve years was distinctly overruled in the tribunal where it was first promulgated.

Goodman v. Harvey, 4 Ad. & E. 870; Arbouin v. Anderson, 1 Ad. & E. N. s. 498.

We must hold, said Lord Denman, in the case last cited, that the owner of a bill of exchange is entitled to recover upon it if he has come by it honestly, and that that fact is implied prima facie by possession, and that, to meet the inference so raised, fraud, felony, or some such matter must be proved.

Abundant authority to support the proposition that the case which for a period relaxed that rule has been overruled for more than half a century is found in the reported cases already cited, and Mr. Chitty says that the old rule of law, that the nolder of a negotiable security transferable by delivery can give a title, which he himself does not possess, to a person taking the same bona fide for value, is by those decisions again re-established in its fullest extent. Chitty, Bills (13th ed.), 257; Worcester County Bank v. Dorchester & Milton Bank, 10 Cush. (Mass.) 491. Conclusive support to that conclusion is found in decisions not previously cited and in the text-writers of the highest authority. Bank of Pittsburgh v. Neal, 22 How. 96; Murray v. Lardner, 2 Wall. 110.

Nothing short of fraud, not even gross negligence, says Mr. Justice Story, if unattended with mala fides on the part of the taker of the instrument, will invalidate his title so as to prevent him from recovering the amount. Story, Promissory Notes (7th ed.), sect. 382. Every person, says the same learned author, is treated in the sense of the rule as a bona fide holder for value, not only who has advanced money or other value for it, but who has received it in payment of a precedent debt, or has a lien on it, or has taken it as collateral security for a precedent debt, or for future as well as for past advances. Story on Bills (4th ed.), sect. 192.

During the period the modified rule referred to was recognized as good law in the courts of the country where it was first promulgated, it must be admitted that the courts of several of the States in our own country accepted the same rule, and that the pernicious effects resulting from those examples are still to be seen in some of the more recent State decisions. Attempt was made at one time to maintain that the holder of a negotiable security, if he received it as payment of a precedent

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