$38 may enforce payment against all parties liable on the bill; Imp. Act, s. 38 (2).

A "holder in due course,' is one who takes a bill, complete and regular on its face, before maturity, in good faith, without notice of any defect in the bill or in the title of the person negotiating it to him. The principal defects of title arise from fraud, duress or other unlawful means, illegal consideration or fraudulent negotiation: section 29. "Mere personal defences" might include the foregoing, and also set-off, compensation, etc. They would not include want of capacity, want of authority, the defence of forgery or the like.

Anything which renders a note absolutely void would not be included in either of the above terms.

ILLUSTRATIONS.

See illustrations under section 29, s-s. 2, and 30 s-s. 2.

1. A note indorsed on condition that it was to be used to renew another note was fraudulently negotiated by the maker for value before maturity. Held, that the holder, being in good faith could recover from the indorser: Larkin v. Wiard, 5 U. C. O. S. 661 (1838); Cross v. Currie, 5 Ont. A. R. 31 (1880).

2. A note given for lottery tickets is not void under 12 Geo. 2, c. 28, in the hands of a bona fide holder for value before maturity Evans v. Morley, 21 U. C. Q. B. 547 (1862).

3. Where the maker signed a blank note and delivered it to the payee to fill up, and the latter fraudulently filled it up for a larger sum than authorized, the plaintiff, an indorsee before maturity for value without notice, can recover the full amount from the maker: McInnes v. Milton, 30 U. C. Q. B. 489 (1870); Merchants Bank v. Good, 6 Man. L. R. 339 (1890).

4. A cheque given in settlement of losses at matching coppers is a note of hand given in consideration of a gambling debt within R. S. O. c. 47, s. 53, s-s. 3, and such a security is void

under 9 Anne. c. 14, even in the hands of a bona fide holder for § 38. value in re Summerfeldt v. Worts, 12 O. R. 48 (1886.)

5. A note given for a gambling debt is null and void even in the hands of an innocent indorsee for value before maturity: Biroleau v. Derouin, 7 L. C. J. 128 (1863).

6. A note given in violation of paragraph 3 of the Insolvent Act of 1864 is an absolute nullity, and is void ab initio even in the hands of a third party, innocent holder for value before maturity in re Davis v. Muir, 13 L. C. J. 184 (1869).

7. Cheques fraudulently initialled by the manager of a bank, and for which the drawer has given in exchange to the manager certain securities which the bank retains, cannot be repudiated by the bank when the cheques are held by a bona fide holder for value: Banque Nationale v. City Bank, 17 L. C. J. 197 (1873).

8. A note given for an illegal consideration, namely, to induce a witness not to give evidence on, a criminal prosecution, may be collected by a bona fide holder for value before maturity: Dorais v. Chalifoux, 6 R. L. 375 (1875).

9. The holder of a promissory note for value without notice can recover against the indorser, although the agent to whom the latter transmitted the note delivered it against his instructions Sylvain v. Flanagan, Ramsay A. C. 80 (1875). See as to maker, Hastings v. O'Mahoney, 9 N. B. (4 Allen) 305 (1859).

10. A note fraudulently made by a partner in the partnership name, binds the firm in the hands of a bona fide holder for value: Walter v. Molsons Bank, Ramsay A. C. 80 (1877).

11. Where a note was given by an insolvent to a creditor for his consent to his discharge, an indorsee who received it before maturity for value, and without notice, can recover from the maker Girouard v. Guindon, 2 L. N. 270 (1879).

12. A party to a bill or note when sued by the holder has no right to have the action stayed by dilatory exception, until other parties who may be liable to him are called in as warrantors: Durocher v. Lapalme, M. L. R. 1 S. C. 494 (1885); Banque Nationale v. Ross, 11 Q. L. R. 109 (1885); Block v. Lawrance,

$ 38. M. L. R. 2 S. C. 279 (1886), overruling Beaulieu v. Demers, 5 R. L. 244 (1874).

13. Where an illiterate man was led to believe that he was becoming a party to an agreement, but the instrument proved to be a promissory note, and he was not guilty of negligence, he is not liable on the note even to a holder in due course: Banque Jacques Cartier v. Lescard, 13 Q. L. R. 39 (1886); L'Abbe v. Normandin, 32 L. C. J.163 (1888); Banque Jacques Cartier v. Leblanc, M. L. R. 6 S. C. 217 (1890); Foster v. Mackinnon, L. R. 4 C. P. 704 (1869); Puffer v. Smith, 57 Ill. 527 (1870); Griffiths v. Kellogg, 39 Wis. 290 (1876).

14. A promissory note made by a married woman, separate as to property, in favor of a creditor of her husband is absolutely null, and no action can be maintained thereon by a bank which has discounted the same in good faith before maturity, in ignorance of the cause of nullity: Banque Nationale v. Guy, M. L. R. 7 S. C. 144 (1891).

15. Abuse of power or betrayal of trust by an agent who indorses a bill of exchange for his principal, does not affect the recourse against the latter of a bona fide holder for value, who had no knowledge of such abuse or betrayal: Quebec Bank v. Bryant, 17 Q. L. R. 98 (1891).

16. Pleas set aside where a demand note sued on was for a gambling debt, but the plaintiff, an indorsee for value, was not aware of the nature of the consideration: Laurence v. Hearn, 21 N. S. 375 (1888).

17. In an action by a bona fide indorsee of a note for value before maturity against the indorsers, it is no defence that the note was indorsed in the firm name by one of the partners fraudulently without the knowledge of the others, and for matters not relating to the business of the partnership: McLeod v. Carman, 12 N. B. (1 Han.) 592 (1869).

18. A writ of attachment having issued against the payee of a promissory note, he endorsed and delivered the note, and the holder indorsed it before maturity for value to plaintiff who was not aware of the insolvency of the payee. Held, that he

was entitled to recover: Maclellan v. Davidson, 20 N. B. § 38. (4 P. & B.) 338 (1880).

19. A bill was indorsed for value before maturity by the drawer who was the payee. On its dishonor the holder returned it to the drawer, by whom it was sent back to the indorsee who sued upon it. The acceptor set up as a defence that he had not received value from the drawer. Held, that this was no defence; that the mere sending of the bill back to the drawer did not deprive the plaintiff of his rights, as a holder in due course : Colin v. Werner, 8 T. L. R. 11 (1891).

with defective title.

(c.) Where his title is defective, (1) if he nego- Holder tiates the bill to a holder in due course, that holder' obtains a good and complete title to the bill, and (2) if he obtains payment of the bill the person who pays him in due course gets a valid discharge for the bill Imp. Act, s. 38 (3).

See the preceding sub-section as to a defective title, and as to the rights of a holder in due course.

Payment in due course means payment made at or after the maturity of the bill to the holder thereof in good faith, and without notice that his title to the bill is defective: section 59. If a bill be made payable to bearer or indorsed in blank, the person in possession may be presumed to be entitled to receive payment in due course, and payment to him is valid if made in good faith, although he may be a thief, finder, or fraudulent holder: Byles, p. 293; Randolph, $ 1444.

In order to vitiate the payment by the maker of a promissory note indorsed in blank, bad faith must be shown; payment under circumstances of suspicion is not enough. The maker is only bound to assure himself of the genuineness of the signatures, and is not bound to make any enquiry Ferrie v. Wardens of the House of Industry, 1 Rev. de Leg. 27 (1845); Johnson v. Way, 27 Ohio St. 374 (1875).

§ 39.

When presentment for acceptance is necessary.

Bills pay

able at or

GENERAL DUTIES OF THE HOLDER.

Sections 39 to 52, inclusive, define the general duties of the holder with reference to obtaining payment of the bill. They include its presentment for acceptance where this is necessary, presentment for payment, notice of dishonor to those who are only conditionally liable, and who may be released if notice is not given them, and protest made in certain cases. In a number of respects the rules as to presentment, protest and notice differ from those in the Imperial Act. These will be pointed out in the notes under the respective sections.

39. Where a bill is payable at sight or after sight, presentment for acceptance is necessary in order to fix the maturity of the instrument: Imp. Act, s. 39 (1); C. C. 2290.

This sub-section in the Imperial Act reads, "Where a bill is payable after sight," etc. The words "at sight or were inserted in the bill in the Canadian House of Commons after it had been determined not to change our law which allowed grace on bills payable at sight, and they had been struck out of section 10, where they stood as one of the classes of bills payable on demand. In England a sight bill is payable on demand, so that it need not be presented for acceptance.

The acceptance of a bill payable at or after sight should after sight. be dated, so that it may be known from what day the time runs. A sight bill is payable on the third day after acceptance, one payable after sight on the third day after the expiration of the time mentioned in the bill. See section 14, s-s. 3 and 4, and section 40. The sub-section