§ 28. was granted, and the maker was ordered to pay the costs both of the plaintiff and the holder of the note: Cunningham v. Lyster, 13 Grant, 575 (1867).

Holder in due course.

7. The holder of accommodation paper, knowing it to be such, may rank upon the estate of and discharge the indorsers, and then recover the balance from the accommodation maker: Lyman v. Dion, 13 L. C. J. 160 (1868).

8. The holder for value can recover from the accommodation maker the amount of a note although he was aware of the fact when he took it, and was interested in the transaction out of which it arose Beique v. Bury, 2 L. N. 160 (1880); Scott v. Quebec Bank, 7 L. N. 343 (1884).

29. A holder in due course is a holder who has taken a bill, complete and regular on the face of it, under the following conditions, namely:

(a.) That he became the holder of it before it was overdue and without notice that it had been previously dishonored, if such was the fact;

(b.) That he took the bill in good faith and for value, and that at the time the bill was negotiated to him he had no notice of any defect in the title of the person who negotiated it: Imp. Act, s. 29 (1) (a) (b).

"Holder in due course is used in the Act as an equivalent for the old expression, "bona fide holder for value. without notice." Holder has been defined in section 2 as the payee or indorsee of a bill or note who is in possession of it, or the bearer thereof; and bearer as the person in possession of a bill or note which is payable to bearer. The rights and powers of a holder, and holder in due course respectively, are set out in section 38. A holder for value, who has taken a bill under circumstances that do

not meet all the conditions of the present section, has all § 29. the rights of an ordinary holder, and in addition, those mentioned in sections 27, 28 and 58.

In the negotiation of a bill to a holder in due course, the transferor frequently conveys greater rights than he himself possesses. The bill may have been without value in his hands, or void for fraud, illegality or other defect, but these are cured on its coming into the hands of a holder in due course: Whistler v. Forster, 14 C. B. N. S. 248 (1863).

Complete and regular on the face of it. Such a bill must meet all the requirements of the definition in section 3, and be without blanks, and not wanting in any material particular; see section 20 and notes thereon. An undated bill is not invalid: section 3, s-s. 4; but it is irregular, especially if payable at a fixed period after date. A person taking a bill incomplete or irregular, even before maturity, and for full value in good faith, does not acquire the rights of a holder in due course.

The fact of a cheque being post-dated does not prevent its being regular within the meaning of this section: Hitchcock v. Edwards, 60 L. T. N. S. 636 (1889); Carpenter v. Street, 6 T. L. R. 410 (1890).

As to a bill bearing marks of cancellation, see section 62 and notes thereon.

Not overdue. The maturity of bills not payable on demand, is determined by the rules laid down in section 14; those payable on demand, are deemed to be overdue when in circulation for an unreasonable length of time: section 36 s-s. 3. A demand note would not be considered overdue for the purposes of the present section, solely on the ground that a reasonable time for presenting it for payment had elapsed since its issue: section 85.

§ 29.

Without notice of dishonor or defect.--The fact that a bill had been dishonored by non-acceptance, or if a demand bill, for non-payment, would not prevent a person from becoming a holder in due course, if it bore no mark of protest or dishonor, and if he had no notice otherwise : Dunn v. O'Keefe, 5 M. & S. 282 (1816).

Formal notice is not necessary; it is enough that the party have knowledge, or even a suspicion, and that he wilfully shuts his eyes: Raphael v. Bank of England, 17 C. B. 173 (1855); Jones v. Gordon; 2 App. Cas. 616 (1877). Mere negligence however on the part of the person taking a bill does not fix him with the defective title of the party passing it to him: Goodman v. Harvey, 4 A. & E. 870 (1836); Bank of Bengal v. Fagan, 7 Moore P. C. 61 (1849).

Notice to the agent is notice to the principal and rice versa, but when a bill is negotiated to one and notice is given to the other, a reasonable time must be given for communication: Willis v. Bank of England, 4 A. & E. at p. 39 (1835); Collinson v. Lister, 7 De G. M. & G. at p. 637 (1855). If the agent is a party to a fraud he is not presumed to have advised his principal of it: ex parte Oriental Bank, L. R. 5 Ch. 358 (1870).

Good faith.-A thing is deemed to be done in good faith, within the meaning of this Act, where it is in fact done honestly, whether it is done negligently or not: section 89; see the notes on that section. "Good faith is always presumed. He who alleges bad faith must prove it": C. C. Art. 2202. "Gross negligence may be evidence of bad faith, but it is not the same thing": Lord Denman in Goodman v. Harvey, supra, at p. 881.

For value.-Value means valuable consideration : section 2. For the meaning of valuable consideration see section 27, and the notes thereon. Value is presumed to

have been given whether the bill or note contain the words § 29. "value received," or not: section 30.

Negotiation of bill.-A bill is negotiated when it is transferred from one person to another in such a manner as to constitute the transferee the holder of the bill. The holder need not be the owner of the bill; he may, for example, be merely a pledgee, or hold it for discount, collection, or the like: section 27 s-s. 3.

Defect in title. The defects in the title of one negotiating a bill, which prevent the person acquiring it with notice from becoming a holder in due course, are set out in sub-section 2 of the present section.

ILLUSTRATIONS.

1. The fact that the word "renewal " had been written on the back of a note and erased, was not sufficient notice to prevent an indorsee for value before maturity from becoming a bona fide holder: Larkin v. Wiard, 5 U. C. O.S. 661 (1838).

2. The fact of the name of the maker of the note having been used without authority, is a fact material for the jury to consider in connection with other evidence offered to show that the plaintiff took the note with knowledge of the circumstances: Hanscome v. Cotton, 16 U. C. Q. B. 98 (1858).

3. The maker gave two notes with indorsement on each, "the written note not to be sold," which formed part of the contract. The notes were transferred to plaintiff with the word "not" on one note struck out, (which plaintiff noticed on taking the note,) and the whole indorsement cut off the other, but without destroying any part of the face of the note. Held, that plaintiff had notice of the defects, was not an innocent holder, and could not recover: Swaisland v. Davidson, 3 O. R. 320 (1883).

4. Where a note obtained by fraud is transferred after maturity, the law on slight evidence will presume that the indorser

$ 29.

Title defective in cases

specified.

was aware of the fraud, especially when he omitted to inquire as to the validity of the note: Hunt v. Lee, 3 Rev. de Leg. 336 (1813).

5. A person receiving in good faith, notes before maturity as collateral security without notice of their bogus nature, is not affected by any equities between the original parties: Wood v. Shaw, 3 L. C. J. 169 (1858).

6. The fact that a bill had been torn and the pieces pasted together again, is a sufficient irregularity to prevent the holder becoming a holder in due course: Ingham v. Primrose, 7 C. B. N. S. 82 (1859). See also Scholey v. Ramsbottom, 2 Camp. 485 (1810); Redmayne v. Burton, 2 L. T. N. S. 324 (1860).

7. The erasure of the name of one of the sureties on a note, is an irregularity which should put the purchaser upon enquiry: McCramer v. Thompson, 21 Iowa 244 (1866).

8. The erasure of the indorsement of the payee by a thief, was held to be an irregularity sufficiently patent to have put the purchaser on his guard: Colson v. Arnot, 57 N. Y. 253 (1874).

9. If blanks in a note are filled up by a holder with stipulations repugnant to what was previously written, or erasures are made with like intent, this is a sufficient irregularity to prevent a subsequent holder claiming to be a bona fide holder for value without notice: Angle v. N. W. Mutual Life Ins. Co., 92 U. S. (2 Otto) 330 (1875).

2 In particular, the title of a person who negotiates a bill is defective within the meaning of this Act when he obtained the bill or the acceptance thereof by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration, or when he negotiates it in breach of faith, or under such circumstances as amount to a fraud: Imp. Act, s. 29 (2).