Carlisle v. Wishart. of an indorsee, for a valuable consideration, unless such indorsee had, at the time of indorsement, actual notice of such usurious consideration," etc. This statute, the court will perceive, was passed to alter the common law on that subject; and after its passage, in an action on a bill or note drawn or made after it was passed, by an indorsce against the maker, if the defendant should succeed in showing that such bill or note was founded on a usurious consideration, then the plaintiff was required to show that he gave value for it. Chit. Bills, 110, 9 Am. ed. In the case of Vallance v. Siddell, 2 N. & P. 98, the precise question was raised, whether an antecedent debt was a valuable consideration within the meaning of the term as used in the statute (p. 589, 3, C. 93), and the court there decided that the statute only protected bona fide holders of bills or notes tainted with usury, who have discounted such bills or paid valuable consideration for them at the time of indorsement, "and does not include a bona fide holder who has taken such bill in payment of an antecedent debt." See also Chit. Bills, 111, a, note at the bottom, 9 Am. ed. Here, then, this identical question has been settled by the highest judicial tribunal of England, a country of all others in the world the most famed for its legislation and its judicial decisions in favor of commercial advantage; and in accordance with this principle, cases have been decided in the English courts for more than two hundred years. In Heath v. Samson, 2 B. & Ad. 291, it was held that in all cases where, from a defect of consideration, the original payce can not recover, the indorsee, to recover, must prove on the trial that he gave value for the bill or note. The same is held in 4 B. & C. 325. 187] *The case of Patterson v. Hardover, 4 Taunt. 115, was an action by an indorsee on a bill of exchange, which, or the proceeds of which, had been embezzled, and for which the defendant had received no value. In this case Judge Heath says: "That even in this case of simple loss consideration must be shown, as in Samson v. Weston. In the case of Miller v. Race, Grant v. Vaughen, etc., there was proof that a valuable consideration had been paid by the holder, but not so in this case. If it were in no case necessary to prove consideration paid, all the banking houses. in London would be converted into receptacles for stolen bills." "And Mansfield, in the course of the argument (in the same case), Carlisle v. Wishart. said it had been ruled over and over again that consideration must be shown." And Judge Heath said: "The law had been so settled these one hundred and fifty years." In the case of Fancourt v. Bull, 1 Bing. N. C., 27 Eng. C. L. 543, 681, the court say that a lawful possession and indorsement, unless the indorsement was for value and without notice, would give the indorsee no better title than this indorser had, and not a title against the world. In this case, it will be observed, that the bill was given for a pre-existing debt. In Chitty on Bills, 937, 938, the author says that "in an action on a bill of exchange, by an indorsee, if it appear that the defendant was defrauded out of it, or made it under duress, or received no value for it, the plaintiff must be prepared to prove for what. value he became the holder." In Collins v. Martin, Chief Justice Eyre says that "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 would be affected by everything which would affect the first holder. This is saying, 'You have the title, but you shall not be heard in a court of justice to enforce it against good conscience." Numerous other cases might be referred to in the English reports, but it is unnecessary. It would appear, then, that if this cause were pending in "judicial tribunals" of that country, the plaintiff in error would *certainly fail. A precedent debt is not a valuable consider- [188 ation, within the meaning of that term, there. Then why should we, in Ohio, extend a law founded on commercial policy further than England? Their interests are, in the main, commercial, ours agricultural. It is from England that Ohio and her sister states derive their notions of commercial law, and is it reasonable, or can it be good policy for us to go further in that direction than England? In consonance with this view of the case, New York, one of the greatest and most commercial of our sister states, has regulated her policy. That a precedent debt is not a valuable consideration, within the meaning of the term, as applicable to this class of cases, has been decided and approved again and again in the highest court of that state. 3 Johns. Ch. 260, 263; 6 Wend. 622; 9 Ib. 172; 10 Ib. 85; 12 Ib. 600; 13 Ib. 606; 16 Ib. 661; 21 Ib. 499, 500. VOL. XI-11 161 Carlisle v. Wishart. In 8 Ohio, 528, the court decide similarly the same question. In the case of 11 Conn. 388, the note was indorsed to the plaintiff, in part, for the payment of a precedent debt, and in part for goods delivered at the time. Consequently, the question now under consideration was not properly before that court. And in 5 Conn. 521, that court having made what we claim, at least as would seem, a decision in favor of the doctrine we advocate, the case in 11 Conn. ought not even to be considered as the judgment of that court on the question at issue here. The case in 11 Conn. was decided correctly, from the facts presented, because the plaintiff had parted with his goods on the faith of the defendant's promise, and thus had given value for the note. The dictum in 11 Conn. is based principally on the cases of Payson v. Coolidge, and Townly v. Sumrall. The court will perceive that, in the first of these cases, founded in 2 Wheat. 66, 73, that the defendant had no defense, either as against the payee or indorser, and no such question thought of, as presented to the court in this case. And, in the latter case, found in 2 Pet. 170, 182, a full and valuable considera189] tion was given at the *time for the bill. And if the question did arise, in either of these cases, it was improperly up; but it would seem that the court had no idea of deciding this question. Just so in the case of 16 Pet. 1. The bill was, by Norton, indorsed to the plaintiff, in payment of a note made by Norton and Kei h, and not in payment of a note made by Norton alone. Thus the court will at once perceive, that the plaintiff incurred risk, Norton alone being liable on the indorsement. And it also appears, that the note of Norton & Keith, for which the bill indorsed by Norton was taken in payment, was canceled, thus bringing even this case within that of the Bank of Salina v. Babcock, 21 Wend. 499. "Such cancellation is equivalent to paying value at the time, and precludes all defense as between the original parties." 21 Wend. 499. And, for anything that appears, this was what was meant by the court, in the case in 16 Pet. 1. But, if in this we are mistaken, all that we will venture to say, is, that the opinion of the court is against good conscience, and not reconcilable with adjudged cases, and that the supreme court of no state ought even to be asked to make any decision, inequitable in itself, and against well-established principles of law, merely for the purpose of having them coincide with the federal courts, much less to reverse a decision correctly made for such purpose. This court Carlisle v. Wishart. decided the case of Riley et al. v. Johnson, in 8 Ohio, strictly according to the reason and spirit, as well as the very terms of the rule of law governing this class of cases; and, by applying the only proper test, it was adjudged that a precedent debt alone was not such a consideration as would make the equity of the indorsee superior to the maker. "There are but two cases in which a bill or note is void in the hands of an innocent indorsee, for valuable consideration, and these cases are, when the consideration in the instrument is money won at play, or it be given for a usurious debt." 3 Kent's Com. 79, 3 ed.; 1 Strange, 155; Doug. 636, 736; 3 Johns. 206, 1 Bay, 223. However, this principle has been modified in England and New York, by statutory provisions; but would, no doubt, [190 be the law of this state, in the absence of statutory enactments, if we had here usury laws. Here, then, we have a class of cases in which a defense may be made, even against an innocent indorsee, who has paid full value, and that, too, by the maker who has received a full value for the security, less the excess beyond legal interest, and who is a party to the usurious contract, made in violation of the law. If this class of cases should be favored as an exception to the general rule, much more should be favored that class where the indorsee receives the security in payment of a precedent debt, and consequently without paying any consideration whatever, with notice, at least of the law, and where the maker has been entirely defrauded out of it-he therefore making his defense. And with what justice can it be claimed that commercial interests are more injuriously affected in this latter case than in the former? WOOD, J. The reasons assigned for the motion are: 1. That it was proved, on the trial, that the note on which the suit was brought, was assigned by Benham, the payee, to the plaintiff, before due, and without notice of any matter of defense. 2. That the court instructed the jury, if the note were so assigned, and in payment of a pre-existing debt, the defendant would be entitled to make any defense against the note in the hands of the plaintiff, that he could make if the suit were in the name of the payee. This motion, it will be seen, therefore, presents the question for the consideration of the court, whether the transfer of a negotiable Carlisle v. Wishart. note, before due, and without notice, and the consideration of the transfer a precedent debt, subjects the indorsee to all the equities existing between the original parties? The identical question was before this court in 1838, in the case of Riley & Van Amringe v. Johnson et al., 8 Ohio, 526. It was then held, that to protect the indorsee against the equities of the maker, the consideration must be actual; the holder must have 191] incurred *loss, by giving credit to the paper, or by paying a fair equivalent for it. If neither was done, while the condition of the holder was improved, if a recovery was had, and the note taken merely for a pre-existing debt, by a failure to recover, nothing was lost, the condition of the plaintiff remained without change. The same question had been decided in the same way, by the Supreme Court of New York, 10 Wend. 86. And in the court of errors, in the same state. 20 Johns. 637. And the rule there was considered as settled upon a safe and unanswerable foundation. Several adjudications followed in that state, in which the same doctrine was unequivocally maintained. 12 Wend. 600; 13 Ib. 605. Judge Story, however, thinks it questionable whether the above authorities carry the principle to the extent which has been claimed, though he says, from that period, for a series of years, it seems to have been held by the Supreme Court of that state, that a pre-existing debt was not a sufficient consideration to shut out the equities of the original parties, in favor of the holder. Recent cases, however, in the same tribunal, have shaken in a measure the authorities to which I have referred. 21 Wend. 490; 24 Ib. 115; 1 Hill, 512; 2 Ib. 140. In 16 Pet. 1, the question was decided by the Supreme Court of the United States at the January term, 1842. The authorities, English and American, are critically and ably examined; and, in giving the opinion of the court, Mr. Justice Story remarks: "We have no hesitation in saying that a pre-existing debt does constitute a valuable consideration, in the sense of the general rule, as applicable to negotiable instruments. That it is for the benefit of the commercial world to give as wide an extent as practicable to the credit and circulation of negotiable paper, that it may pass, not only as security for new purchases, and advance made upon the transfer thereof, but also in payment of, and as security for, pre-existing debts." It is believed that the law, as thus settled by the highest judi |