of his check may always claim of him the full amount.(u) Any exception to this rule must arise from the peculiar circumstances of the case, and from evidence that the holder took it with knowl edge that its payment might be resisted by the drawer, in whole or in part, on good grounds. (v) On the other hand, a bank always has all its equities and defences against a check, unless it be certified; and then it is as an accepted bill.(w) The exceptions to this rule also must arise from the peculiar circumstances of the case.

(u) Alexander v. Burchfield, 3 Scott, N. R. 555, 7 Man. & G. 1061; Robinson v. Hawksford, 9 Q. B. 52; Serle v. Norton, 2 Moody & R. 401; Murray v. Judah, 6 Cowen, 490; Little v. Phenix Bank, 2 Hill, 426; Daniels v. Kyle, 1 Kelly, 304, 5 Ga. 245; Shrieve v. Duckham, 1 Littell, 194; Flemming v. Denny, 2 Philad. 111, 13 Leg. Intelligencer, 140; Pack v. Thomas, 13 Smedes & M. 11; East River Bank v. Gedney, 4 E. D. Smith, 582; Smith v. Janes, 20 Wend. 192; Matter of Brown, 2 Story, 516; Morrison v. Bailey, 5 Ohio State, 13, per Beatty, J; Tryon v. Oxley, 3 Iowa, 289; Foster v. Paulk, 41 Maine, 425; Harbeck v. Craft, 4 Duer, 122; Hoyt v. Seeley, 18 Conn. 353.

In Alexander v. Burchfield, supra, Patteson, J. said: "As between the drawer of a check and the holder, if presentment is deferred to such a time that inconvenience has been sustained, the time may be deemed unreasonable; but if none has resulted, I see nothing unreasonable in a presentment, I should even say, at any time within six years." A similar statement was made by Creswell, J. in Laws v. Rand, 3 C. B. N. S 442. In Mullick v. Radakissen, 9 Moore, P. C. 46, 28 Eng. L. & Eq. 86, Parke, B. said that a check "is more like an appropriation of what is treated as ready money in the hands of the banker, and in giving the order to appropriate to a creditor, the person giving the check must be considered as the person primarily liable to pay, who orders his debt to be paid at a particular place, and as being much in the same position as the maker of a promissory note, or the acceptor of a bill of exchange, payable at a particular place, and not elsewhere, who has no right to insist on immediate presentment at that place." In a few cases, the drawer of a check payable at a future day has been considered conditionally liable, and discharged for want of due diligence in making presentment and giving notice of dishonor, though he has suffered no loss. Bradley v. Delaplaine, 5 Harring 305; Glenn v. Noble, 1 Blackf. 104 This doctrine, however, cannot be supported on authority or principle. (v) Anderson v. Busteed, 5 Duer, 485. See also Thompson v. Hale, 6 Pick. 259. (w) Robson v. Bennett, 2 Taunt. 388; Barnet v. Smith, 10 Foster, 256; Willets v. Phoenix Bank, 2 Duer, 121; Farmers' & Mechanics' Bank of Kent Co. v Butchers' & Drovers' Bank, 4 Duer, 219; s. c. in Court of Appeals, 4 Kern. 623. See also Mussey v. Eagle Bank, 9 Met. 306; Hern v. Nichols, 1 Salk. 289; Bank of Republic v. Baxter, 31 Vt. 101.

After a bank has certified a check, it can no more impute delay to the holder in presenting the check for payment, than it can to the holder of one of its own notes; for the bank then becomes the principal debtor, and can set up no equities against the check. Willet v. Phoenix Bank, 2 Duer, 121 If the drawer of a check procures it to be certified by means of fraudulent representations, the bank may reclaim the check or the money represented by it, unless it has previously been transferred or paid to one who has no notice of such fraud. Bank of the Republic v. Baxter, 31 Vt. 101. VOL. I.-S

Bank-bills are never dishonored by mere lapse of time. They are usually protected by statute, even against the statute of limitations, and are good as against the bank which issues them at any subsequent period. Even if the bank be broken, and the bills have been demanded and refused, they are still salable, and very frequently sold and resold; and the purchaser acquires all the rights of a holder as against the bank or upon its assets.

What rights the holder has against the party from whom he received old bills, or bills of insolvent banks, will be considered in the chapter on Payment by Bill or Note.

SECTION III.

AGAINST WHAT DEFENCES A BONA FIDE HOLDER IS PROTECTED.

THE subject of this section might have been said, quite as accurately, to be the peculiar privileges or rights which a bona fide holder of negotiable paper has, although his transferrer did not himself possess them. In the first place it should be remarked, that in this sense, and for this purpose, no one is a bona fide holder who did not take the paper for value before its dishonor; that is, before its maturity, if payable at a time certain; or within a reasonable time, if payable on demand; or before actual demand and refusal, and notice or knowledge thereof.

For every holder of negotiable paper who takes it after dishonor takes it subject to all equities; or rather, to all defences which could have been made to the paper if it had not been transferred to him.

It was a rule of the court of chancery, coeval with the introduction of uses and trusts, that a purchaser of property in good faith, for a valuable consideration and without notice of any equities or trusts to which it was subject in the hands of his vendor, took the property free and discharged from all these equities and trusts. This rule, however, was strictly confined to choses in possession; because choses in action were not legally assignable. Hence the assignee of a chose in action had no legal title, but only an equitable title; and when his equitable title comes into conflict with the equities of other parties, the universal rule of chancery prevailed, by force of which, as between

equal equities, that which is prior in time is prior in right. Now negotiable paper is in this respect an exception to the law of choses in action. It may be assigned by indorsement or deliv ery, and the assignee acquires a legal title as complete as the assignee of choses in possession. Thus, the reason for excluding from the rule negotiable paper wholly failed; and in addition, its peculiar nature and function absolutely required that a bona fide holder should be fully protected. Accordingly, courts of law have for a long period in England, and always here, extended to the bona fide holder of negotiable paper a similar protection to that which chancery gave to the assignee of choses in possession. For the application of this important rule, it must be remembered that no holder is entitled to its benefit who has not a complete legal title to the paper; and we shall presently see how many transfers of negotiable paper this necessity of legal title opens to all equitable defences.

As no one is a bona fide holder in this sense who has notice of a defence against the paper, no one who takes it after dishonor is such bona fide holder, because the dishonor itself is notice to him that there is some defect or defence. Hence the rule, that one who takes paper for value after dishonor is open to all equitable defences.(x)

It is certain that, by the general course and weight of the authorities, one who takes paper after dishonor is subject to all equities; and he who takes it in good faith for value before dishonor is subject to no equities. What these equities are, we shall consider fully hereafter in the chapter on Defences.

The bona fide holder of negotiable paper before dishonor is not protected against those defences which go to the essence of the paper, and either by common law or statute annul and avoid the contract, or which interfere with and prevent his acquiring a legal title to the paper. (y) Thus a person whose name is forged,(z)

(x) Brown v. Davies, 3 T. R. 80, per Buller, J.; Beck v. Robley, 1 H. Bl. 89, note a ; Little v. Dunlop, Busbee, 40; Williams v. Nicholson, 25 Ga. 560; Howard v. Ames, 3 Met. 308; Mackay v. Holland, 4 Met. 69; Potter v. Tyler, 2 Met. 58; M'Neill v. M'Donald, 1 Hill, S. Car. 1; Mosteller v. Bost, 7 Ired. Eq. 39; Connery v. Kendall, 5 La. Ann. 515; Sawyer v. Hoovey, 5 La. Ann. 153; Lancaster Bank v. Woodward, 18 Penn. State, 357; Clay v. Cottrell, 18 Penn. State, 408; Baker v. Wheaton, 5 Mass. 509; Bond v. Fitzpatrick, 4 Gray, 89.

(y) See supra, pp. 217, 218.

(z) Canal Bank v. Bank of Albany, 1 Hill, 287.

or whose note is materially altered, (a) is never liable to the parties who took the paper innocently and for value on the credit of his name; unless his own default was a cause of the forgery or alteration,(b) or of the taking by the holder, in the belief that the paper was genuine. So, wherever a note tainted with usury is thereby annulled, it has no force between any subsequent parties. (c) And if the paper be illegal on any ground which makes it null and void as between the original parties, it is equally void in the hands of subsequent parties. (d) A distinction may perhaps be taken between notes obtained by fraud and those obtained by force or duress. In the former case, we should say that the defrauded party would generally be liable to a bona fide holder. But a note or bill obtained by duress might not be available in any hands against the party so compelled; and if the note were a good note, and a subsequent party indorsed it by duress, he would not be bound to any one; but a subsequent indorsee, who indorsed it over for value, would be bound to his own indorsee, or to those deriving title from him. But we are not aware that this question has been determined by authority.(e)

In the next place, a bona fide holder is not protected against the defence of incapacity, if that be complete, however it be created. Thus an infant,(f) or married woman,(g) or luna

(a) Master v. Miller, 4 T R. 320; Woodworth v. Bank of America, 19 Johns. 391; Clute . Small, 17 Wend. 238; Nazro v. Fuller, 24 Wend. 374; Bruce v. Westcott, 3 Barb. 374. See Lisle v. Rogers, 18 B. Mon. 528; Bumpass v. Timms, 3 Sneed, 459. (b) As where a blank is carelessly left. See supra, pp. 109-113, 115; Isnard v. Torres, 10 La. Ann. 103.

(c) Ramsdell v. Morgan, 16 Wend. 574; Keutgen v. Parks, 2 Sandf. 60; Clark v. Loomis, 5 Duer, 468. In Hall v. Wilson, 16 Barb. 548, it was held that the discount or purchase of a stolen note at a greater discount than the legal rate renders the transaction usurious and the note void, notwithstanding the transaction is in form a purchase of the note of a person other than the maker, who represents it to be a business note and valid. The note in this case was for $ 120, payable to A or bearer. It was stolen by a laborer, and transferred to B for $115, who transferred it before maturity to the plaintiff. Held, that the plaintiff could not recover.

(d) See supra, p. 214. Weed v. Bond, 21 Ga. 195.

(e) In Duncan v. Scott, 1 Camp. 100, the action was brought by the indorsee of a bill against the drawer. It was held, that if it appeared that the defendant drew without consideration and under duress, it was incumbent on the plaintiff to prove that he gave value for it, although it was indorsed before due. This case seems to place duress on the same footing as fraud, in which case, as we have seen, a bona fide holder

may recover.

(f) See supra, p. 67, note ƒ; p. 69, note k. (g) See supra, p. 79.

tic,(h) or spendthrift under guardianship, would not be held by his signature, to any person, however innocently he became the holder.

The same rule must apply to the case of a supposed agency, without any real or sufficient authority. For if A signs paper as the agent of B, B does not sign it, nor can he be affected with any of the liabilities of signature, unless A was his agent, either on the ground that he had actual authority from B, or that B, without giving this authority, had so spoken or acted as to justify the holder, or some one from whom he derives title, in the belief that B had given A this authority. For, as we have already seen, A would be equally the agent of B in law, on either of these grounds.(i)

Either of these incapacities, or indeed any other, may operate against the claim of the holder in either of two ways. If the incapacity attended the making of the note, then the infant, or lunatic, or married person, or person under guardianship, or unauthorizing principal, will not be held; but subsequent parties who are not incapacitated may be held to a bona fide indorsee who is subsequent to them.(j) On the other hand, if the paper is free from all objection of this kind until the last indorsement, and that is tainted by any such incapacity, the holder acquires no legal title, and no rights to the paper or against any parties upon the paper.

There is another broad distinction in respect to the rights of the bona fide taker, which should be distinctly apprehended. It is this. He receives at his own peril all negotiable paper which is assigned to him by written transfer, and cannot be assigned to him by delivery only. Whereas he is generally protected as the holder of paper transferable by delivery. Thus, one steals or finds a note negotiable by indorsement, and forges the indorsement; now the holder by this title can make no claim against any one, because the written transfer confers no title upon him. And this is true if the finder or thief happened to have the same name

(h) See supra, p. 150, note p.

'i) See Weathered v. Smith, 9 Texas, 622; and supra, pp 118 – 120.

(j) In Erwin v. Downs, 15 N. Y. 575, a note was made by two married women, and indorsed by the defendant for their accommodation It was held that the defendant was liable to a bona fide holder, although he knew at the time that the makers were married women.