full amount thereof. See Negotiable Instruments Act, Code Supp. 1907, section 3060a57. And the amount which the bank might have recovered on the notes had they not been converted by the defendants would be the measure of recovery against defendants for their unlawful conversion.

4. UNAUTHORIZED

transfer of negotiable paper: title.

The main contention for the appellant is that Green had no title to these notes when he transferred them to the Bank of Denison, and that the bank could not, therefore, acquire title or right thereto as against defendants, the lawful owners. The rule invoked is that applicable to personal property in general, that one who has such property in his custody, but without any title, as for instance a thief or the finder of lost goods, cannot by delivery even to a purchaser in good faith and for value transfer title which will be valid as against the real owner, who has not by any act of his conferred apparent authority to transfer title upon the one who has such apparent custody. This rule is applicable not only to goods and chattels, but to instruments quasi negotiable in character, representing property and intended to pass for it by delivery such as bills of lading. Shaw v. Railroad Co., 101 U. S. 557 (25 L. Ed. 892); McMahon v. Sloan, 12 Pa. 229 (51 Am. Dec. 601). But to this rule there is a distinct and universally recognized exception in case of current money and negotiable instruments payable to bearer or indorsed in blank which are considered as standing for and representing money, coming into the hands of a holder in due course; that is, before maturity for value and without notice of defect in the title. In such cases the title of the holder is not dependent upon that of the person from whom the money or instrument is obtained. This is, as said by Lord Chief Justice Holt in 1 Salk. 126 (Anonymous), "by reason of the course of trade which creates a property in the assignee or bearer," and this reason is repeated by Lord Mansfield in Miller v. Race, 1 Burr. 452, with the suggestion that "the bearer' is a more proper expression than assignee," and with the more explicit

statement with reference to bank notes payable to bearer that "they are not goods, not securities nor documents for debts, nor are they so esteemed, but are treated as money, as cash in the ordinary course and transaction of business by the general consent of mankind which gives them the credit and currency of money to all intents and purposes." Lord Mansfield in the later case of Peacock v. Rhodes, 2 Douglas, 633, stated the law to be "well settled that a holder coming fairly by a bill or note has nothing to do with the transaction between the original parties"; and he continues: "I see no difference between a note indorsed blank and one payable to bearer. They both go by delivery and the possession proves property in both cases." And he adds with reference to the particular case under consideration that, as the jury had found that the bill indorsed in blank on which action was brought by a holder taking by delivery was received in course of trade, the case was clear that the holder could recover, although it had been stolen from a previous holder. In Miller v. Race, supra, Lord Mansfield further explains the rule with reference to bank bills payable to bearer, in answer to the suggestion that it was based on the lack of earmarks, which would limit it to money. ""Tis pity that reporters sometimes catch at quaint expressions that may happen to be dropped at the bar or bench; and mistake their meaning. It has been quaintly said that the reason why money cannot be followed is because it has no earmarks; but this is not true. The true reason is upon account of the currency of it. It cannot be recovered after it has passed in currency. So in case of money stolen the true owner cannot recover it after it has been paid away fairly and honestly upon a valuable and bona fide consideration; but before money has passed in currency an action may be brought for the money itself." This reasoning of Lord Mansfield has received unqualified approval both as to money and as to negotiable instruments payable to bearer or indorsed in blank. In Saltus v. Everett, 20 Wend. (N. Y.) 267, 277 (32 Am.

Dec. 541), it is said: "A long series of decisions, beginning with Miller v. Race, 1 Burr. 452, has so settled the law that possession of such paper is presumptive proof of property, and that he who received it in the course of trade for a fair consideration, without any reason for just suspicion, can hold it against the true owner, and recover on it against the drawer, maker, and other parties, even if the paper had been stolen from or lost by the former holder; such former holder retaining all his original rights only against the thief or the finder, or whoever received the paper from them under suspicious circumstances." See, also, Murray v. Lardner, 2 Wall. (U. S.) 110, 118 (17 L. Ed. 857); Tucker v. New Hampshire Savings Bank, 58 N. H. 83 (42 Am. Rep. 580); 2 Randolph's Commercial Paper (2d Ed.) section 736; 1 Daniel's Negotiable Instruments, sections 663, 729. If the bank took these notes in due course of business, its title was not affected by the fact that Green unlawfully abstracted them from the possession of defendants. Wheeler v. Guild, 20 Pick. (Mass.) 545 (32 Am. Dec. 231); Greenwell v. Haydon, 78 Ky. 332 (39 Am. Rep. 234); Negotiable Instruments Act, Code Supp. 1907, sections 3060a56, 57.

It is argued, however, that plaintiffs did not show the Bank of Denison to be a holder in due course, because there was no competent evidence with reference to one of the owners of the bank that he had no notice of the want of right or authority on the part of

5. Bona fide PUR

CHASER: presumption: burden of proof.

Green to transfer the notes by delivery, and counsel rely upon cases of which McKnight v. Parsons, 136 Iowa, 390, and Keegan v. Rock, 128 Iowa, 39, are examples, holding that, as against a defense by the maker that the instrument was procured and negotiated through fraud or in breach of trust, the holder must affirmatively establish want of notice. But the cases thus relied upon are those in which it is held that, by reason of defective execution of the instrument itself or lack of assent on the part of the person sought to be charged as maker, it has not become a negotiable

VOL. 139 IA.-37

instrument to which the rules relating to indorsement and transfer are applicable. No such question arises in this case. The notes were fully executed and delivered as negotiable instruments to the defendants, and as such were held by them when they were abstracted from the possession of defendant Chamberlain and delivered by Green to the bank. The authorities already cited expressly negative any obligation on the part of the holder to prove diligence in ascertaining the right of the person in actual possession purporting to transfer title and charge the holder with the defective title of the person making the transfer only where bad faith is shown. In the United States there has been a continuing conflict of authority on this question. See 2 Randolph's Commercial Paper, sections 996-1001; 2 Daniel's Negotiable Instruments, section 1680. This uncertainty in the law has been remedied by the adoption in this State of the Negotiable Instruments Act by which it is provided in section 59 (Code Supp. 1907, section 3060a59), as follows: "Every holder is deemed prima facie to be a holder in due course; but when it is shown that the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he or some person under whom he claims acquired the title as a holder in due course. But the last mentioned rule does not apply in favor of a party who became bound on the instrument prior to the acquisition of such defective title." Defendants cannot, therefore, overcome the presumption that the Bank of Denison became the holder of the notes in due course that is, without notice by showing that the title of Green to such notes was defective. In other words, to defeat the title of the bank, defendants have the burden of proving want of good faith on the part of the bank in accepting the notes from Green.

A rule often applied in deciding a controversy like this, between a holder of negotiable paper and a party who has given it apparent validity in the hands of one transferring

6. SAME.

it without right, is that, when one of two innocent persons must suffer by reason of the wrongful act of a third party, that one must bear the loss who made it possible for the third party to commit the wrong. It is not always easy to say whether in a particular case the one upon whom it is sought to cast the responsibility under this rule has done an act such as to charge him for the wrongdoing of another who has proceeded without legal authority; but the case before us is one coming well within the rule as often applied. The defendants held these notes payable to the order of Green and themselves and indorsed by Green. In this condition the notes could not have been put in circulation so as to come into the hands of a holder in due course without notice. Defendants intentionally indorsed the notes with the purpose that they should be negotiated, and, although this purpose was not at the time carried out, they left the notes in this condition, apparently indorsed for negotiation and transfer by delivery, in the custody of the Exchange Bank of which Green was the owner and manager. By this act of placing the notes within the control of Green, they enabled him to make a transfer of them by delivery as owner, and to put the Bank of Denison in such condition as to suffer a loss without any fault on its part if the apparent title acquired by it from Green should be held defective. It has often been held that, under such circumstances, the rights of the holder are superior to those of the previous party who has made the transfer of the instrument practicable. Emerson v. Crocker, 5 N. H. 159; Tucker v. New Hampshire Savings Bank, 58 N. H. 83 (42 Am. Rep. 580); Cherry v. Frost, 7 Lea (Tenn.) 1. A motion of appellants submitted with the case to strike appellee's additional abstract from the files is overruled. The judgment is affirmed.