under the Act, I extent upon what is the present state of the law think that we must express our opinion upon it. The first clause with which we must deal is section 30, subsec. 2, which provides that "every holder of a bill is prima facie deemed to be a holder in due course; but if in an action on a bill it is admitted or proved that the acceptance, issue, or subsequent negotiation of the bill is affected. with fraud, * *the burden of proof is shifted, unless and until the holder proves that, subsequent to the alleged fraud or illegality, value has in good faith been given for the bill." Now the learned judge told the jury that, if money had really and in fact been given for the bill, value had in good faith been given. I have never so read this section of the act; and I think that the attention of the learned judge could not have been called to the other clauses of the act. Giving "value in good faith" must mean something more than the mere actual and real passing of money or other value, and this appears clearly when the other clauses of the Act are looked at. A "holder in due course" is, by section 29, subsec. 1 (b), defined to be a person who has taken a bill in good faith and for value and without notice of any defect in the title of the person who negotiated it. Then section 30, subsec. 2, says, in effect, that, if fraud in the inception or negotiation of a bill is proved or admitted, the holder must prove that he is a holder in due course as defined by section 29, subsec. 1 (b). Again, section 90 says that "a thing is deemed to be done in good faith * when it is in fact done honestly, whether it is done negligently, or not." This clause is obviously founded upon the distinction, which is pointed out by Lord Blackburn in Jones v. Gordon, 2 App. Cas. 616, at page 629, between honest blundering or carelessness and a dishonest refraining from inquiry. Applying that construction to the words "value given in good faith" at the end of section 30, subsec. 2, it appears to me that those words mean value given honestly and without any notice of the fraud, in the sense explained by Lord Blackburn, and not merely the actual giving of value. The words of section 30, subsec. 2, "if it is admitted or proved," mean no more than that some evidence of circumstances in the nature of fraud must be given sufficient to be left to the jury. That was the old law, as stated in Hall v. Featherstone, 3 H. & N. 284, which has not, I think, been altered by this act. When, therefore, some sufficient evidence of fraud has been given, as in this case, the onus is on the plaintiff to prove both that he gave value and that he had no notice of the fraud in the sense explained by Lord Blackburn in Jones v. Gordon, 2 App. Cas. 616, at page 629. * In this case there was evidence of fraud which could not have been withdrawn from the jury, and their verdict on that point cannot be set aside as against the weight of evidence. The onus of proving that he had no notice being upon the plaintiff, it was essentially a matter for the jury to say whether he had satisfied them on that SM.& M.B. & N. (2D ED.)-30 point, and I think that even had the onus been upon the defendant there was evidence upon which the jury were entitled to find a verdict for him. The verdict, therefore, cannot be disturbed. KERR v. ANDERSON. (Supreme Court of North Dakota, 1907. 16 N. D. 36, 111 N. W. 614.) MORGAN, C. J. Action upon a promissory note by the plaintiff, as indorsee, against the defendant, as maker thereof. The complaint alleges the execution and delivery and nonpayment of the note at maturity, and that the same was duly indorsed to the plaintiff before maturity for a valuable consideration in due course of business. The answer is a general denial. A jury was impaneled. Plaintiff established the due indorsement of the note by the payee, and offered the note in evidence, which was received without objection, and thereupon rested. Defendant rested without offering any evidence. Plaintiff moved the court to direct a verdict in his favor, and the motion was denied. The defendant then moved for a directed verdict in his favor, which was granted. Plaintiff excepted to the rulings on each of these motions. Plaintiff thereafter moved for a judgment notwithstanding the verdict, and for a new trial. Both motions were denied. Plaintiff appeals from the order denying these motions. The record does not disclose the grounds upon which the trial court granted defendant's motion for a directed verdict. In their printed argument, the defendant's attorneys attempt to sustain the trial court's action upon the ground that plaintiff offered no evidence to show that he was an innocent purchaser of the note before maturity. It was not necessary to offer such evidence. The presumption is that the indorsement was made in the regular course of business. The statute expressly so declares, and every holder of negotiable instruments is deemed prima facie to be a holder in due course, unless the title of the person negotiating the instrument is shown to be defective for fraud or other reasons. When this is shown, the burden is then upon the holder to show that he took the instrument in due course. Section 6361, Rev. Code 1905.38 This court has often held that the holder of a negotiable instrument is not primarily bound to establish that he is an innocent purchaser. Shepard v. Hanson, 9 N. D. 249, 38 "The instruction in question ought to have been refused. Its rejection was proper for the reason, if there were no other, that it required the jury, if they believed either fraud or illegality in the inception of the bonds to have been established, to find for the township, unless the plaintiff proved that he purchased for value or gave some consideration for them. Such is not the law; for, if any previous holder of the bonds in suit was a bona fide holder for value, the plaintiff, without showing that he had himself paid value, 83 N. W. 20; Id., 10 N. D. 194, 86 N. W. 704. Plaintiff produced the note in court duly indorsed, and by so doing established prima facie that he acquired title thereto in due course of business. Daniel on Neg. Ins. § 812, and cases cited. The fact that plaintiff alleged in his complaint that the note was purchased by him before maturity did not make it incumbent on him. to establish that fact by evidence. The statutory presumption was in force with or without such allegation. It was therefore error to direct a verdict in defendant's favor. Plaintiff requests this court to order judgment in his favor notwithstanding the verdict. This is not a proper case for such a judgment. Defendant may be able to show upon another trial that the allegations of the complaint are not true. * * * Order reversed. SECTION 3.-EQUITIES WHITEHEAD v. WALKER. (Court of Exchequer, 1842. 10 Mees. & W. 696.) Assumpsit by the assignees of the indorsee against the indorser of a bill of exchange. The declaration stated, that on the 8th of August, 1834, and before the bankruptcy of Benbow, certain persons made their bill of exchange in writing, directed to Grayhurst & Co., and payable to the defendant; that the defendant indorsed the bill to W. Swainson, who indorsed it to Willis & Swainson, who indorsed it to Benbow before his bankruptcy. Averment, that Grayhurst & Co. refused to accept the bill, and that the same was protested, etc. See the former case of Whitehead v. Walker, 9 Mees. & W. 506. Plea, that after the indorsement of the bill to Willis & Swainson, and before and at the time when it was indorsed by them to Benbow, Willis & Swainson were, and still are, indebted to the defendant in certain large sums of money, amounting in the whole to £1,000., in respect of certain bills of exchange, etc., goods sold and delivered, etc. Averment, that the said sums so due from Willis & Swainson could avail himself of the position of such previous holder." Montclair v. Ramsdell, 107 U. S. 147, 159, 2 Sup. Ct. 391, 27 L. Ed. 431 (1882). to the defendant exceeded the amount of the said bill of exchange, of all which premises Benbow, at the time of the said indorsement thereof to him by Willis & Swainson, had notice, and that the said bill was indorsed by them to Benbow, after it had so been refused acceptance and had been protested as in the declaration mentioned, and after it had become due. Verification. Replication, de injuria. Special demurrer, and joinder therein. 39 PARKE, B. It is unnecessary to determine whether the replication is good or not, for we think the plea is bad in substance, on the authority of Burrough v. Moss.40 That case decides that the indorsee of an overdue promissory note takes it, as against the maker, with all the equities arising out of the note transaction itself, but not subject to a set-off in respect of a debt due from the endorser to the maker of the note, arising out of collateral matters. For example, if the note be released or discharged, the plaintiff under such circumstances cannot make a title to it. But a set-off is not an equity; it is a mere collateral matter; it is a right to set off a cross-demand against the plaintiff's cause of action, which was introduced to prevent a multiplicity of actions. The case of Burrough v. Moss is good law, and has been recognized in this court. Nor do I think that case is affected by the decision of Coleridge, J., in Goodall v. Ray, 4 Dowl. P. C. 76. It seems to me that either there must be some inaccuracy in the report, or there must have been in that case that sort of formal notice to the plaintiff which is equivalent to an agreement to set off the cross-demand as against him. On that ground the case may perhaps be supported; otherwise I cannot assent to the position that a mere notice of a set-off between the payee and the maker can operate to restrict the negotiability of a promissory note. Besides, the decision of the point was unnecessary in that case, inasmuch as the plaintiff's demand was for a sum less than the amount of the note. I cannot, therefore, consider that case as an authority that mere notice of the set-off makes any difference. Our judgment must be for the plaintiffs. ALDERSON, B. I am of the same opinion. If the doctrine advanced on the defendant's part were correct, no one would be able to tell whether certain instruments were negotiable or not; for their negotiability would depend on the will of a third person. No one could tell whether the maker would set off his claim against the prior party or not. If he will not, the note is negotiable; otherwise, it is not. Burrough v. Moss, lays down the true rule, that the indorsee of an overdue bill is subject to those equities, and those only, which affect the bill itself. GURNEY, and ROLFE, BB., concurred. 39 The arguments of counsel are omitted. 40 10 Barn. & C. 558. RANGER v. CARY. (Supreme Judicial Court of Massachusetts, 1840. 1 Metc. 369.) See ante, p. 364, for a report of the case. BAXTER v. LITTLE. (Supreme Judicial Court of Massachusetts, Suffolk and Nantucket, 1843. 6 Metc. 7, 39 Am. Dec. 707.) This action was by the indorsee against the maker of a promissory note for $330, dated March 1, 1837, payable to Joseph Harris, Jr., in four months, and by him indorsed. The action was commenced October 4, 1839. At the trial before the Chief Justice, the signatures of the maker and indorser were admitted by the defendant, and he relied upon a set-off of notes against the Franklin Bank, upon the ground that the note in suit was held by that bank, after it was due, and that he had a right to make the same defense against the plaintiff as if the action. were brought by the bank. In order to present the question of law, it was mutually conceded that the note was discounted by the Franklin Bank in the due course of business; that it was held by the bank when it became due; that afterwards, and after the bank had stopped payment, in pursuance of a vote of the directors to pay the debts of the bank in such securities as they had, the note in question, on the 20th of December, 1837, was delivered to the plaintiff, or to the person under whom the plaintiff claims title, in exchange for bills of said bank, at par, which bills were then at a discount in the market; that before this action was brought-upon notice of the plaintiff's attorneys that they had such a note, and demanded payment thereof, but without notice to the defendant that the note had been transferred by the bank-the defendant tendered to said attorneys, in satisfaction of the note, bills of the Franklin Bank, which they declined to accept; that the defendant has ever since had said bills, and has filed them in offset in this action, and now relies upon that tender and set-off. It was agreed that judgment should be entered by the plaintiff if in the opinion of the court he was entitled to recover; otherwise, that the plaintiff should become nonsuit.11 SHAW, C. J. When a negotiable note is indorsed and transferred after it is due, and the defendant relies upon matter of set-off which he may have against the promisee, he can avail himself only of such matter of defense as existed between himself and the promisee, at 41 The arguments of counsel are omitted. Baxter v. Harris is reported with the principal case, but everything relating to that action is omitted. |