31

34

contradicted by evidence.3 The burden is on the maker to show the failure of consideration,32 or any other defense concerning the consideration that will defeat the object of the instrument, if the instrument is regular on its face. The consideration is presumed to be a valid one until the contrary is proved, unless otherwise provided by statute.33 Anything recited in a note and which is equivalent to the words "for value received" is prima facie evidence of a consideration whether the note is negotiable or not, and any one alleging want of consideration as a defense has the burden of proving the want of consideration.35 Where an indorser is sued upon an instrument, the burden is upon him to prove that he signed after maturity and without any new consideration if he attempts to use this as a defense.36 Parol evidence is not admissible generally to vary or to contradict the consideration if it is a part of the contract;37 but it has been held that parol evidence is admissible to prove a failure of consideration or to show that it was illegal.38 If the original consideration is shown to have been illegal, the presumption is against the holder and he must

31 Parish (Mass.) 198, 25 Am. Dec. 378; Parsons v. Frost, 55 Mich. 230, 21 N. W. 303; Williamson v. Cline, 40 W. Va. 194, 20 S. E. 917.

V. Stone, 14 Pick.

32 Scott V. Fleetford, 13 Colo.

App. 150, 51 Pac. 485; McMicken v.
Safford, 197 Ill. 540, 64 N. E. 540;
Smith v. Griswold, 95 Iowa 684, 64
N. W. 624; Parish v. Stone, 14
Pick. (Mass.). 198, 25 Am. Dec.
378; Crosby v. Ritchey, 47 Neb.
924, 66 N. W. 1605; Sayre V.
Mohney, 35 Ore. 141, 50 Pac. 526.

33 McCallum v. Driggs, 35 Fla. 277, 17 So. 407.

34 Mascolo V. Montesanto, 61 Conn. 50, 23 Atl. 714, 29 Am. St. 170; Huntington V. Shute, 180 Mass. 371, 62 N. E. 371; Parsons v. Frost, 55 Mich. 230, 21 N. W. 303; Messmore v. Morrison, 172 Pa. St. 300, 34 Atl. 45; Thrall v. Newell, 19 Vt. 202, 47 Am. Dec. 682; Conrad Seipp Brewing Co. v. McKittrick, 86 Mich. 191, 48 N. W. 1086;

Averett v. Booker, 15 Gratt. (Va.) 163, 76 Am. Dec. 203.

35 Perot v. Cooper, 17 Colo. 80, 28 Pac. 391, 31 Am. St. 258; Towsey v. Shook, 3 Blackf. (Ind.) 267, 25 Am. Dec. 108; Smith v. Griswold, 95 Iowa 684, 64 N. W. 624; Jennison v. Stafford, 1 Cush. (Mass.) 168, 48 Am. Dec. 594.

30 LaBelle Sav. Bank v. Taylor, 69 Mo. App. 99.

37 Baird v. Baird, 145 N. Y. 659, 40 N. E. 222, 28 L. R. A. 375; Foy v. Blackstone, 31 Ill. 538, 83 Am. Dec. 246; Allen v. Furbish, 4 Gray (Mass.) 504, 64 Am. Dec. 87.

38 Farmers' Sav. Bank v. Hansmann, 114 Iowa 49, 86 N. W. 31; Bigelow v. Bigelow, 93 Me. 439, 45 Atl. 513; Kulenkamp v. Groff, 71 Mich. 675, 40 N. W. 57, 15 Am. St. 283, 1 L. R. A. 594; Foster v. Clifford, 44 Wis. 569, 28 Am. R. 603; Anderson v. Lee, 73 Minn. 397, 76 N. W. 24; Roe v. Kiser, 62 Ark. 92, 32 S. W. 534, 54 Am. St. 288.

39

prove that he purchased for value and without notice of illegality. The failure or lack of consideration may be proved by parol, for it is a competent defense to an action upon the instrument.40 Such evidence has also been held admissible to show that the instrument was given as collateral for a debt11 or that the note was to be credited to the maker's account.42

1827. Ownership.-Where a particular individual or firm is named as the payee of a note such party is generally presumed, in the absence of anything to the contrary, to be the owner, but where the bill or note is payable to bearer, then the burden is upon the maker or drawer to show that the bearer or holder is not the owner.** When the payee indorses a negotiable instrument, it is presumed that he has transferred it to another.45 A blank indorsement is presumed to rest title in the one to whom it is delivered. An indorsement for collection is not presumed to pass any beneficial ownership. Parol evidence, it has been held, may be used to show these facts or that the

"New v. Walker, 108 Ind. 365, 9 N. E. 386, 58 Am. R. 40; Goodrich v. McDonald, 77 Mich. 486, 43 N. W. 1019; Marion County v. Clark, 94 U. S. 278; Fuller v. Hutchings, 10 Cal. 523, 70 Am. Dec. 746; Paton v. Coit 5 Mich. 505, 72 Am. Dec. 58.

Braly v. Henry, 71 Cal. 481, 11 Pac. 385, 12 Pac. 623, 60 Am. R. 543; Corlies v. Howe, 11 Gray (Mass.) 125, 71 Am. Dec. 693; Taylor v. Dansby, 42 Mich. 82, 3 N. W. 267; Walker v. Haggerty, 30 Neb. 120, 46 N. W. 221; Miller v. McKenzie, 95 N. Y. 575, 47 Am. R. 85; Van Haagen Soap Co.'s Estate, 141 Pa. St. 214, 21 Atl. 598, 12 L. R. A. 223; Trustees v. Saunders, 84 Wis. 570, 54 N. W. 1094; Labbee v. Johnson, 66 Vt. 234, 28 Atl. 986; Martin v. Stubbings, 27 Ill. App. 121, 126 Ill. 387, 18 N. E. 657, 9 Am. St. 620; Dowden v. Wood, 124 Ind. 233, 24 N. E. 1042; Pembroke v. Hayes, 114 Iowa 576, 87 N. W. 492; Harris v. Alcock, 10 G. & J. (Md.) 226, 32 Am. Dec. 158.

46

41 Keeler v. Commercial Printing Co., 16 Wash. 526, 48 Pac. 239.

42 Bennett v. Tillmon, 18 Mont. 28, 44 Pac. 80.

43 Hayward v. Grant, 13 Minn. 165, 97 Am. Dec. 228.

*Gaskell v. Patton, 58 Iowa 163, 12 N. W. 140. But it was held that no presumption of ownership arose where a note not payable to bearer and not indorsed was found among the papers of a deceased person who was not the payee. Hair v. Edwards, 104 Mo. App. 213, 77 S. W. 1089.

45 Dietrich v. Mitchell, 43 Ill. 40, 92 Am. Dec. 99; Farrar v. Gilman, 19 Me. 440, 36 Am. Dec. 766.

46 Whitworth v. Pelton, 81 Mich. 98, 45 N. W. 500; Dietrich V. Mitchell, 43 Ill. 40, 92 Am. Dec. 99.

47 Freeman's Bank V. National Tube Works, 151 Mass. 413, 24 N. E. 779, 21 Am. St. 461, 8 L. R. A. 42; Blaine v. Bourne, 11 R. I. 119, 23 Am. R. 429.

instrument was indorsed for some particular purpose and not to pass beneficial title.48

§ 1828. Bona fide holders.—The owner of a negotiable instrument is presumed to have obtained it in good faith, for a valuable consideration, before maturity and without knowledge of any of the defenses against the maker, and the burden is upon the defendant who sets up the contrary. And this presumption obtains in favor of one to whom the instrument is properly indorsed.50 The burden has been held to be upon the holder, however, to show that he is a bona fide purchaser, when fraud is shown in the execution, or when payment is proved; and all of these defenses may be proved by parol."1

53

1829. Possession.-Possession of a note or acceptance is generally prima facie evidence of ownership,52 but this presumption may be rebutted. The party in actual possession of negotiable instruments is presumed to have authority to collect them, but the payment must be made in good faith to them in order to exclude the claims of another party who may claim ownership of the notes.54 Payment will

4 Stack v. Beach, 74 Ind. 571, 39 Am. R. 113; Breneman v. Furniss, 90 Pa. St. 186, 35 Am. R. 657; Dale v. Gear, 38 Conn. 15, 9 Am. R. 353. "Famous Shoe Co. v. Crosswhite, 124 Mo. 34, 27 S. W. 397, 26 L. R. A. 568; Little v. Mills, 98 Mich. 423, 57 N. W. 266; McGee v. Prouty, 9 Metc. (Mass.) 547, 43 Am. Dec. 400; Hall v. First Nat. Bank, 133 III. 234, 24 N. E. 546; Harger v. Worrell, 69 N. Y. 370, 25 Am. R. 206.

N. Car. 62, 12 S. E. 952, 23 Am. St. 49, 17 L. R. A. 326.

52 Hogan v. Dreifus, 121 Mich. 453, 80 N. W. 254; Perot v. Cooper, 17 Colo. 80, 28 Pac. 391, 31 Am. St. 258; Dickerson v. Cass Co., (Iowa) 89 N. W. 15; Hall v. Allen, 37 Ind. 541; Bahnsen v. Gilbert, 55 Minn. 334, 56 N. W. 1117; Middleton v. Griffith, 57 N. J. L. 442, 31 Atl. 405, 51 Am. St. 617; Jackson v. Love, 82 N. Car. 405, 33 Am. R. 685; Murray v. Lardner, 2

50 Owens v. Snell, 29 Ore. 483, 44 Wall (U. S.) 110; Goodman V. Pac. 827.

51 Fulton Bank v. Sargent, 85 Me. 349, 27 Atl. 192, 35 Am. St. 376; New v. Walker, 108 Ind. 365, 9 N. E. 386, 58 Am. R. 40; Skinner v. Raynor, 95 Iowa 536, 64 N. W. 601; Stevens v. McLachlan, 120 Mich. 285, 79 N. W. 627; Fawcett V. Powell, 43 Neb. 437, 61 N. W. 586; Commercial Bank v. Burgwyn, 108

Simonds, 20 How. (U. S.) 367; Brown v. Spofford, 95 U. S. 477; Goodman v. Harvey, 4 Ad. & El. 870; Uther v. Rich, 10 Ad. & El. 784; Middleton v. Barned, 4 Exch. 241.

53 Hovey v. Sebring, 24 Mich. 232, 9 Am. R. 122; Netterville v. Stevens, 2 How. (Miss.) 642.

"Long v. Thayer, 150 U. S. 520,

generally be presumed if the instrument has matured and is in the hands of the maker or accepter;55 and in many states this is held to be the rule even before maturity.56 It is also presumed that the bill or note was surrendered to the accepter or maker when paid."7 On the other hand it has been held that a bill or note is presumed to be unpaid when in the possession of the payee, and the burden is upon the party disputing this presumption.58 An indorsee who is in possession, or any apparent lawful owner in possession of a negotiable instrument, is presumed to be the owner.59 It is also generally presumed that the note has been delivered to the one in possession and upon the date named therein." It has been held, however, that possession of a non-negotiable instrument without a written assignment is not evidence of ownership and the holder must prove ownership. Possession of an unindorsed note by a third person is not, ordinarily, evidence of ownership, and he must show ownership,62 but if the unindorsed note is payable to a particular person, then possession by such person is prima facie evidence of ownership, and when payable to

14 Sup. Ct. 189; Bruce v. Bonney, 12 Gray (Mass.) 107, 71 Am. Dec. 739; Draper v. Rice, 56 Iowa 114, 7 N. W. 524, 8 N. W. 797, 41 Am. R. 88.

"Witte v. Williams, 8 S. Car. 290, 28 Am. R. 294; Love v. Dilley, 64 Md. 238, 1 Atl. 59; Emerson v. Mills, 83 Tex. 385, 18 S. W. 805.

"Perot v. Cooper, 17 Colo. 80, 28 Pac. 391, 31 Am. St. 258; Studebaker v. Langson, 89 Wis. 200, 61 N. W. 773; Turner v. Turner, 79 Cal. 565, 21 Pac. 959; Sturgis v. Baker, 39 Ore. 541, 65 Pac. 810; see also, Ellis v. Blackerby, (Ky.) 78 S. W. 181.

"Pickle v. Muse, 88 Tenn. 380, 12 S. W. 919, 17 Am. St. 900, 7 L. R. A. 93; Seattle Bank v. Harris, 7 Wash. 139, 34 Pac. 466; Smith v. Gardner, 36 Neb. 741, 55 N. W. 245; McGee v. Prouty, 9 Metc. (Mass.) 547, 43 Am. Dec. 409.

Sarraille v. Calmon, 142 Cal. 651, 76 Pac. 497; Perot v. Cooper, 17 Colo. 80, 28 Pac. 391, 31 Am. St. VOL 3 ELLIOTT Ev.-17

61

258; Sturgis v. Baker, 39 Ore. 541, 65 Pac. 810.

"Bigelow v. Burnham, 90 Iowa 300, 57 N. W. 865, 48 Am. St. 442; O'Keeffe v. First Nat. Bank, 49 Kans. 347, 30 Pac. 473, 33 Am. St. 370; Soloman v. Brodie, 10 Colo. App. 553, 50 Pac. 1045; Kells v. N. W. Live Stock Ins. Co., 64 Minn. 390, 67 N. W. 215.

60 Studebaker Bros. Mfg. Co. v. Langson, 89 Wis. 200, 16 N. W. 773; Wines v. State Bank, 22 Ind. App. 114, 53 N. E. 389; McFarland v. Sikes, 54 Conn. 250, 7 Atl. 408, 1 Am. St. 111; Woodford v. Dorwin, 3 Vt. 82, 81 Am. Dec. 573; Garrigus v. Home Frontier &c., 3 Ind. App. 91, 28 N. E. 1009, 50 Am. St. 262; Schallehn v. Hibbard, 64 Kans. 601, 68 Pac. 61.

61 Pier v. Bullis, 48 Wis. 429, 4 N. W. 381.

62 Vastine v. Wilding, 45 Mo. 89, 100 Am. Dec. 347; Ross v. Smith, 19 Tex. 171, 70 Am. Dec. 327.

bearer mere possession raises the presumption.63 If the instrume is in the possession or control of the plaintiff he is generally bou to produce it or give good excuse for not producing it."*

§ 1830. Indorsement.-It has been held that the presumption that indorsers are liable in the order in which they sign their names : but there is much conflict as to the presumption as to what relatio a third person bears who places his name on the back of a note befor the payee; and no attempt will be made to state the varying views i different jurisdictions. The date named in an indorsement is pre sumed to be correct, until the contrary is shown, and if undated, i will, in some jurisdictions, be presumed to have been made at the same time as the note. In some states, it will simply be presumed to have been made before dishonor or maturity.68 An indorser who signs in blank has been presumed to be a regular indorser, and to have signed before maturity. A regular indorsement in blank is a com

67

69

63 Pettee v. Prout, 69 Mass. 502, 63 Am. Dec. 778; Kiff v. Weaver, 94 N. Car. 274, 55 Am. R. 601.

Sebree v. Dorr, 9 Wheat. (U. S.) 558; Foltier v. Schroeder, 19 La. Ann. 17, 92 Am. Dec. 521; Vanauken v. Hornbeck, 14 N. J. L. 178, 25 Am. Dec. 509; Briggs v. McCabe, 27 Ind. 327, 89 Am. Dec. 503; Clift v. Moses, 112 N. Y. 426, 20 N. E. 392; Holmes v. DeCamp, 1 Johns. (N. Y.) 34, 3 Am. Dec. 293.

Crompton v. Spencer, 20 R. I. 330, 38 Atl. 1002; Palmer v. Field, 76 Hun (N. Y.) 229, 27 N. Y. S. 736, 59 N. Y. St. 123.

Many of the authorities upon the subject are classified in the note in 18 L. R. A. 33. See also, 4 Am. & Eng. Ency. of Law (2d ed.) 488, et seq., and the following recent cases: Tinker v. Catlin, 205 Ill. 108, 68 N. E. 773; Nashua Sav. Bank v. Sayles, 184 Mass. 520, 69 N. E. 309; Harnett v. Holdrege, (Neb.) 97 N. W. 443; Elliott v. Moreland, 69 N. J. L. 216, 54 Atl. 224; Camp v. First Nat. Bank,

(Fla.) 33 So. 241; Pearl v. Cortright, (Miss.) 33 So. 72; Lyndon Sav. Bank V. International Co., (Vt.) 54 Atl. 191.

67 Carroll v. Weld, 13 Ill. 682, 56 Am. Dec. 481; Rosenthal v. Rambo, 28 Ind. App. 265, 62 N. E. 637; New Orleans Canal Co. v. Templeton, 20 La. Ann. 141, 96 Am. Dec. 385; National Pemberton Bank v. Lougee, 108 Mass. 371, 11 Am. R. 367; Collins v. Gilbert, 94 U. S. 753; Bradford v. Prescott, 85 Me. 482, 27 Atl. 461; Powell v. Thomas, 7 Mo. 440, 38 Am. Dec. 465; Murto v. Lemon, (Colo. App.) 75 Pac. 160.

08

68 Ft. Scott Bank v. Elliott, 46 Kans. 32, 26 Pac. 487; Snyder v. Riley, 6 Pa. St. 164, 47 Am. Dec. 452; Smith v. Lawson, 18 W. Va. 212, 41 Am. R. 688; New Orleans Canal Co. v. Montgomery, 95 U. S. 16.

60 Bradford v. Prescott, 85 .Me. 482, 27 Atl. 461; National Pemberton Bank v. Lougee, 108 Mass. 371, 11 Am. R. 367; Powell v. Thomas. 7 Mo. 440, 38 Am. Dec. 465; Martin