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which may pass between the indorser and indorsee, &c. on the transfer of the conof it; and in making this inquiry, it will be advisable to consider, when the validity of the bill will be affected by

1st. The want of consideration.

2dly. The illegality of it.

sideration necessary.

material.

of

It has already been observed, that in general, a contract not under Want seal, will be invalid, unless it be founded on a valuable consideration ; consideraand that it is incumbent on the plaintiff, to state such consideration in tion, when his declaration, and to prove it on the trial, before he can call on the defendant for his defence. But in the case of bills of exchange, or promissory notes, it is not necessary for the plaintiff to state any consideration in his declaration, or to prove it in the first instance on the trial; unless where he brings an action as bearer of a bill transferrable by delivery, and then only under suspicious circumstances, as where it has been made under duress, or lost, and the holder cannot give a reasonable account how he came by it, and has had due notice before the trial of the action, to prove the consideration which he gave for the instrument."(89) And whenever the holder has given full value for the bill,

Ante, 9, 10.

As to the distinction between good and valuable considerations, see 2 Bla. Com. 444. 297.

Crawley v. Crowther, 2 Freem. 257. Per Lord Chancellor. It is now held, and the practice is so, that if a man gives a note for money, payable on demand, he need not prove any consideration; and see Trials per Pais, 301. Meredith v. Short, 1 Salk. 25. 2 Ld. Raym. 760. S. C. 2 Bla. Com. 446 Selw. N. P. 4th edit. 304.

Duncan v. Scott, 1 Campb. Rep 100. Indorsee against the drawer of a bill. It appeared that the defendant gave the bill while under duress abroad, and under a threat of personal violence and confiscation of his property, and that it was given without consideration. Lord Ellenborough held, that the defendant, not having been a free agent when he drew the bill, it was incumbent on the plaintiff to give some evidence of consideration, and no such evidence being given, the plaintiff was nonsuited.

Grant . Vaughan, 3 Burr. 1516. 1527. This was an action on a note payable to bearer, which had been lost, and came to plaintiff's hands for a valuable considera

tion. Lord Mansfield said, it is but just
and reasonable, that if the bearer brings
the action, he ought to entitle himself to
it on a valuable consideration, and strictly
to prove his coming by it bonâ fide; and
see Hinton's case, 2 Show. 235.

King v. Milson, 2 Campb. Rep. 5. Per
Lord Ellenborough. It would greatly im-
pair the credit and impede the circulation
of negotiable instruments, if persons
holding them could, without strong evi-
dence of fraud, be compelled, by any
prior holder, to disclose the manner in
which they received them See also Sir
John Lawson v. Weston, 4 Esp. N. P. C.
56. Rees v. Marquess of Headfort, 2
Campb. Rep. 574 S. P.

Pattison v. Hardacre, 4 Taunt. 114, in which it was decided, that where a bill Fad been lost, or fraudulently or feloni ously obtained from the defendant, the holder, who sued, must prove that he came to the bill upon good consideration, but that the defendant would not be permitted to object to the want of such proof, unless he had given the plaintiff reasonable previous notice, that the plaintiff might come to trial prepared to prove his consideration.

(89) The doctrine, that where a bill has been lost, or fraudulently, or feloniously obtained from the defendant, the holder who sues, must prove that he came to the bill upon a good consideration, seems entirely settled in England; but in a recent case it has recei ved a very material qualification, viz. that the defendant will not be permitted to object to the want of such proof, unless he has given the plaintiff reasonable previous notice of the defence, so that the plaintiff may come to trial prepared to prove the consideration given by him for the bill. Patterson v. Hardacre, 4 Taunt. Rep. 114.

And the general principles upon this subject seem as fully admitted in the United States. It seems, indeed, at one time to have been doubted, whether the want of consideration could be set up even in an action between the original parties to a note; and it

Want

of before it was due, the defendant will not be at liberty to show that he considera- had received none, although the plaintiff knew that circumstance at the tion, when material. time he became the holder, unless he also knew that the party, from whom he received it, was acting fraudulently.

• Collins v. Martin, 1 Bos. & Paul. 651. Per Eyre, C. J. No evidence of want of consideration, or other ground, to impeach the apparent value received, was ever admitted in a case between an acceptor er drawer, and a third person holding the bill for value, and the rule is so strict that it will be presumed that he does hold for value until the contrary appear; the onus probandi lies on the

This

defendant. If it can be proved that the
holder gave no value for the bill, then
indeed he is in privity with the first
holder, and will be affected by every thing
which would affect such first holder.
all proceeds upon the argumentum að
hominem, it is saying you have the title,
but you shall not be heard in a court of
justice, to enforce it against good faith
and conscience. For the purpose of ren-

was then said, that all the cases cited were cases in which there was, not a want, but a failure of consideration. Livingston v. Hastie, 2 Canies' Rep. 246. and see also the opinion of Livingston, J. in Baker v. Arnold, 3 Caines' Rep. 279. But it is now held that there is no difference in this respect between a want and a failure of consideration; and that each may be set up as a defence not only between the original parties, but also against a holder claiming by indorsement after the note has become due, or taking it with a knowledge of fraud or other equitable circumstances, entitling the maker to avail himself of the defence. Pearson v. Pearson, 7 John. Rep. 26. Store v. Wadley, 3 John. Rep. 124. Ten Eyck v. Vanderpool, 8 John. Rep. 120. Denniston v. Bacon, 10 John. Rep. 198. Woodhull v. Holmes, 10 John. Rep. 231. Frisbee v. Hoffnagle, 11 John. Rep. 50. Thatcher v. Dinsmore, 5 Mass. Rep. 299. Warner v. Lynch, 5 John. Rep. 239. Bacon v. Arnold, 3 Caines' Rep. 279. Tappan v. Von Wagenen, 3 John. Rep. 465. Bayley v. Faber, 6 Mass. Rep. 451. And the want of consideration may in like manner be set up in an action by a second indorsee against his immediate indorser. Herrick v. Carman, 10 John. Rep. 224. But that a note was made for the accommodation of the maker, and without consideration, is no defence in an action by a bona fide holder for a valuable consideration against an indorser, although he had knowledge of the fact at the time he took the bill. Brown v. Mott, 7 John. Rep. 361. Nor if the action were against an acceptor for the accommodation of the drawer, would the like defence avail -Ibid; nor, as it should seem, even if the holder took the bill after it was due. Ibid. But if the indorser of a promissory note prove that it was put into circulation fraudu lently, he may call upon the holder to show what he gave for it, and how it came into his hands. And the indorser is entitled to give such proof, in order to require such explanation from the holder. Holme v. Karsper, 5 Bin. Rep. 469: See also Ball v. Allen, 15 Mass. 433. See also Braman v. Hess, 13 John. Rep. 52, and Olmstead v. Stewart, 13 John. Rep. 238.

For further cases as to the effect of the indorsement of a bill after it becomes due, see the notes to Chap. IV.-see iii p. 160, et seq.

A promissory note whereby A. “as administrator of P. B. deceased, promised to pay" the plaintiff a certain sum, "for value received by J. B. and heirs, on demand, with lawful interest until paid," has, on demurrer to the declaration, been held void for want of a sufficient consideration. Ten Eyck v. Vanderpool, 8 John. Rep. 120. And a note made in aid of a fund for the support of a minister of a parish has also been adjudged void for want of consideration. Rontelle v. Cowden, 9 Mass. Rep. 254.

The consideration of a promissory note, may be inquired into as between the original parties, and if these is no consideration for the promise, it is nudum pactum and cannot be enforced by an action. Schoonmaker v. Rose, 17 Johns 301.

When a promissory note is assigned for a valuable consideration, and in the course of business, the assignee cannot be affected by any transactions between the assignor and the parties to such note, to which the assignee is not privy, and evidence to that effect is not relevant. But such evidence is relevant if it shows that the assignee was a trustee or had notice of the transactions, or did not receive the note in the usual course of business. Harrisburgh Bank v. Meyer, 6 Serg. & Rawle, 537.

It has been lately decided in Pennsylvania, that although by an act of assembly passed in the year 1715, the indorsee of a promissory note is to recover "the money mentioned in such note, or so much thereof as shall appear to be due at the time of assignment;" yet if the note be expressly made payable," without defalcation" and be transferred to an indorsee for a valuable consideration and in the course of business, the ma ker cannot set up failure of consideration, in a suit by the indorsee. Lewis v. Reeder, 9 Serg. & Rawle, 193.

of

considera

And though when a bill of exchange has been given for a particular Want purpose, and that be known to the party taking it, then he cannot apply on, when it to a different purpose; where a bill is given under no such restric material. tion, but merely for the accommodation of the drawer or payee, and sent into the world, it is no answer to an action brought on such bill, that the defendant accepted it for the accommodation of the drawer, and that that fact was known to the holder; and in such case the latter, if he gave a bona fide consideration for it, is entitled to recover the amount, though he had full knowledge of the transaction. Though where he has once returned the bill as useless, it has been held, that he cannot, by afterwards obtaining possession of it, acquire a right of action against the acceptor."(1)

Between the drawer and the acceptor, the drawer and the payee and his agent, and the indorsee and his immediate indorser, fraud, or the total want of consideration, may be questioned. And though we have

dering bills of exchange negotiable, the right of property in them passes with the bills. Every holder, with the bills, takes the property, and his title is stamped upon the bills themselves. The property and the possession are inseparable. This was necessary to make them negotiable, and in this respect they differ essentially from goods, in which the property and possession may be in different persons.

Morris v. Lee, K. B., Hil. 26 Geo. 3. In an action by the indorsee against the maker of a note thirteen years old, the defendant obtained a rule nisi, to set aside a judgment by default, on an affidavit by a third person, that he believed the defendant was swindled out of the note; an affidavit was made on the other side, that the plaintiff took the note bona fide, and gave a valuable consideration for it, and the court held, that however improperly it might have been obtained, a third person who took it fairly, and gave a consideration for it, was entitled to recover, and discharged the rule; see this case cited in Anonymous, 1 Com. Rep. 43; and Bayl. 233.

Haly v. Lane, 2 Atk. 182. "Where there is a negotiable note, and it comes into the hands of a third or fourth indorsee, though some of the former indorsees might not pay a valuable consideration, yet if the last indorsee gave money for it, it is a good note as to him, unless there should be some fraud or equity against him appearing in the case."

See also per Buller, J. in Lickbarrow v. Mason, 2 T. R. 71. Poth. pl. 118. 121. Selw. N. P. 4th edit. 304.

Per Lord Eldon, in Smith v. Knox,

3 Esp. Rep. 47; and see Charles v. Mars-
den, 1 Taunt. 224; and Popplewell v.
Wilson, 1 Stra. 264.

Cartwright v. Williams, 2 Stark. 340;
and see Jones v. Hilbert, 2 Stark. 304.

Jefferies v. Austen, Stra. 647. In an action by the payee of a note against the maker, Eyre, C. J., allowed the defendant to prove that it was given as a reward, in case the plaintiff procured the defendant to be restored to an office, and the defendant was not restored, and on this proof the defendant had a ver dict.

Solomon v. Turner, Bart. I Stark. 51. If a promissory note be given as the stipulated price of a picture, the maker cannot give the inadequacy of the consideration in evidence, with a view to di minish the damages, but may prove such circumstance as indicatory of fraud, in order to defeat the contract altogether; and see Ledger v. Ewer, Peake, 216. Fleming v. Simpson, 1 Campb. 40.

Richmond v. Heapy, 1 Stark. 202. If one of three partners undertake to provide for a bill of exchange drawn by the firm, upon and accepted by the defendant, the latter may, in an action at the suit of the three partners, give in evidence such undertaking as a defence to the action.

Jackson v. Warwick, 7 T. R. 121. The defendant's son was apprenticed by indenture to the plaintiff, and the defendant gave the plaintiff a note for 107. as an apprentice fee; but this premium was not mentioned in the indentures, nor were they stamped pursuant to 8 Ann. c. 9. The son remained part of his time

(1) Where A. made a note payable to the defendant or order, which was indorsed by the defendant for the purpose of being discounted at bank, for the accommodation of A., who, on its being refused at the bank, negotiated it to a third person at a discount with a knowledge of the circumstances, it was held that this did not amount to a fraud, which could affect the rights of the holder against the parties to it. Powell v. Waters, 17 Johns 176.

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tion, when

Want of seen that a parol agreement to renew a bill, affords no defence to an ace nsideration ; yet if a bill or check be given on a verbal condition, which the material. drawer finds is to be broken or eluded, he has a right to stop the payment, and may defend an action thereon."

[71] In those cases also in which a defendant would be at liberty to insist upon a total want of consideration, he may show that the consideration does not extend to all the money payable by the bill or note, and the plaintiff shall only recover for the residue; and therefore an acceptor of a bill may, in defence to an action against him by the payee, show that he accepted it for value as to a part, and as an accommodation to the plaintiff as to the rest. *

But the money as to which the consideration fails, must be of a specific liquidated amount; for, where a partial failure of consideration arises from unliquidated damages, sustained by the breach of a subsisting contract, the performance of which was the consideration of the bill or note, such breach of contract cannot be investigated in an action on the bill or note; but the plaintiff will be entitled to a verdict for the

Law

and then absconded. In an action on
the note, and the failure of consideration
(the apprenticeship) being relied on as a
defence, it was contended that the avoid-
ing the indentures could not collaterally
affect the note, and that at all events
the consideration had not wholly failed,
inasmuch as the plaintiff had maintained
the apprentice during his stay.
rence, J. however, thought that the con-
sideration was entire, and had wholly
failed; he allowed a verdict to be taken
for the plaintiff, with liberty to the de-
fendant to move to enter a nonsuit. The
court concurred in opinion with Law-
rence, J. and directed a nonsuit to be
entered; see Grant v. Welchman, 16 East,
207.

& Ante, 47, 8.

h Wienholt v. Spitter, 3 Campb. 376.

i Bayl. 234, 5. Barber v. Backhouse, Peake, 61. In an action on a bill of exchange by the payee, the defendant paid part of the money into court, and it appeared upon the trial, that there was no consideration for the other part; Law, however, urged that the payment of the money into court admitted the bill was good for part, and if it was good for part it was good in toto; but Lord Kenyon declared himself clearly of a contrary opinion, upon which the jury found for the defendant, and this case being afterwards mentioned by Lord Kenyon in the course of argument, Law said he was perfectly satisfied with the decision.

Ledger v. Ewer, Peake, 216. In an action by the payee of a bill against the acceptor, the consideration appeared to

be, that the plaintiff had taken the defendant into partnership; but on the defendant's friend's advice he broke off the connexion; there was evidence of fraud on the plaintiff's part in drawing the defendant into the engagement, which Lord Kenyon left to the jury: but he told them, if they were against the defendant on the evidence of fraud, they should take into consideration the damages the plaintiff had really sustained by the nonperformance of the contract, and were not obliged to find the whole amount of the bill. The jury, however, found for the defendant.

Wiffen v. Roberts, 1 Esp. Rep. 261. This was an action by the indorsee against the drawer of a bill of exchange accepted by one Yates. The defence set up was, that the bill was an accommodation one, and that the defendant had not paid full value for it. Lord Kenyon said, that where a bill of exchange is given for money really due from the drawee to the drawer, or is drawn in the regular course of business, in such case the indorsee, though he has not given the indorser the full amount of the bill, yet may recover the whole, and be holder of the overplus above the sum really paid to the use of the indorser; but where the bill is an accommodation one, and that known to the indorsee, and he pays but part of the amount, in such case he can only recover the sum he has actually paid on the bill. The plaintiff was nonsuited on another ground.(93)

Damell v. Williams, 2 Stark. 166.

(93) The case of Wiffen v. Roberts seems incidentally recognised as law in Broum v. Mott, 7 John. Rep. 361.

considera

of

whole amount of the bill, leaving the defendant to his cross action; Want and where a promissory note was given as a part of the consideration tion, when of an indenture of apprenticeship for less than seven years, by being an- material. tedated, and the apprentice was discharged by a magistrate after two [ 72 ] years, on account of the master having enticed him to commit felony, it was held that these circumstances did not enable the maker of the note to resist payment of any part of the money payable, particularly as the apprentice fee was to have been paid in the first instance, and it was only in ease of the defendant, that the note was taken for part of it, payable at a distant day."

Where, however, such contract has been rescinded in toto when entire, or in part when it may be divided, it will be competent to the defendant, in an action on the bill or note, brought by the one contracting party against the other, to prove that the contract has been thus wholly or partly rescinded, and thus prove a total or partial failure of consideration."

It does not appear to have been decided, whether a promissory note or check, given by the maker to the payee as a gift, and without consideration, can be enforced between these parties. In the case of

Bayl. $236, 7. Moggeridge v. Jones, 14 East, 486. 3 Campb. 38. S. C. Drawer against the acceptor of a bill. The plain tiff agreed to let a house to the defendant for twenty-one years, and in consideration of 5001., to be paid by three bills to be drawn by the plaintiff, and accepted by the defendant, agreed to execute a lease for that term. The bill in question, and two others, were drawn and accepted accordingly, and the defendant was immediately let into possession; but the plaintiff refused to execute the lease. It was urged therefore, that the consideration had failed. But Lord Ellenborough, and afterwards the court, on a motion for a new trial held, that this was no defence to the action; that the defendant was bound to pay the bills, and might have his remedy on the agreement for non-execution of the lease. Vide Broom v. Davis, cited 7 East's Rep. 400. And Basten . Butter, 7 East's Rep. 479, and the cases therein cited.

Morgan v. Richardson, 1 Campb. 100. To an action by the drawer against the acceptor of a bill drawn payable to the drawer's order, the defence was, that the bill had been accepted for the price of some hams, and that they had proved so bad as to be almost unmarketable. The sum for which they were actually sold was paid into court. Lord Ellenborough held, that this partial failure of consideration was no defence to this action; but that the defendant must take his remedy by action. See also 7 East, 482, note a. 3 Smith's Rep. 487, notes, S. P. Fleming a. Simpson, 1 Campb. 40. From Tye v. Gwynne, 2 Campb. 346, it appears that this case was afterwards brought before the King's Bench, and the court ap

proved of the direction of the Chief Jus-
tice. And see Solomon v. Turner, I
Sark. 57.

Tye v. Gwynne, 2 Campb. 346. This
was an action on a bill of exchange by
the drawer against the acceptor, and the
same point arose as in the last case, with
the exception that no money was paid
into court, Lord Ellenborough said he
should adhere to the judgment of the
court in Morgan Richardson, vide last

case.

m Grant v. Welchman, 16 East, 207.

D Bavl. 236. Lewis v. Cosgrave, 2 Taunt. 2. This was an action on a banker's check drawn by the defendant, and given to the plaintiff for the price of a horse, sold by the plaintiff to the defendant, and warranted sound: the horse was in fact unsound, and that was relied on as a defence. The defendant proved that he had sent back the horse, but the plaintiff refused to take it: he however sent it again, and left it in the plaintiff's stable without his knowledge. Heath, J. told the jury, that as the plaintiff had refused to receive back the horse, the contract for the sale was not rescinded, and that the defendant was therefore bound to pay the check and had his remedy by action, for the deceit. They found a verdict for the plaintiff; but on a rule nisi for a new trial, and cause shown, the court, on the ground of there being clear evidence of fraud, made the rule absolute. See Weston v. Downes, Dougl. 23. Power v. Wells, Cowp. 818. Towers v. Barrett, 1 T. R. 133.

The general opinion appears to be that such a bill or note cannot be enforced. In Nash v. Brown, Sittings at

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