support a note.80 But the consideration is not affected by the fact that the services were rendered without an express promise to pay.81

m. Release and waiver of rights or interests.- Where a person has a valid and subsisting right or interest in property, a waiver or release thereof is a sufficient consideration for a promissory note made to such person.82 As in the case of a note given to the owner of the equity of redemption in real property, to prevent the sale of such equity,83 or of a note given for the release of a homestead right. And the release by a wife of her dower interests in lands owned by her husband is a sufficient consideration for a note made to her. 85 The release of a future contingent interest in certain land under the will of a deceased ancestor, is sufficient consideration for a note given therefor, whether he had in fact any interest in the land or not.86 But a note by a father to his son for the relinquishment of the son's interest in the father's estate cannot be sustained.87

n. Pre-existing or antecedent debts.-(1) In general.— Under the Negotiable Instruments Law: "An antecedent or pre-existing "debt constitutes value; and is deemed such whether the instru"ment is payable on demand or at a future time." 88 Independent of the statute it has always been held in this country that a preexisting debt is a sufficient consideration for a promissory note.89

80. Blanshan v. Russell, 52 N. Y. Supp. 963; Allen v. Bryson, 67 Iowa, 591, 56 Am. Rep. 358.

81. Root v. Strang, 77 Hun, 14, 28 N. Y. Supp. 273.

Services rendered in promoting the election of a candidate to an office, but not at the request of such candidate, are not sufficient to sustain a note given therefor. Dearborn v. Bowman, 3 Metc. (Mass.) 155. But services rendered by a daughter for her father, after she became of age and before her marriage, are a sufficient consideration for a note to her by her father. Gamwell v. Mosely, 11 Gray,

173.

And where a child has been emancipated, the services of such child for the father will constitute a sufficient consideration to sustain a promissory note therefor. Phelps v. Hopkinson, 61 Ill. App. 400.

82. Sykes v. Laferry, 27 Ark. 407. 83. Bradbury v. Blake, 25 Me. 397; Shade v. Creviston, 93 Ind. 591.

84. Nims v. Bigelow, 45 N. H. 343; Hooker v. McIntosh, 76 Miss. 693, 25 South. 866.

85. Sykes v. Chadwick, 18 Wall. (U. S.) 141, 21 L. Ed. 824; Nichols v. Nichols, 136 Mass. 256; Gruver v. Walkup, 55 Neb. 544, 75 N. W. 1091; Yazel v. Palmer, 81 Ill. 82; Citizens' Bank v. Bolen, 121 Ind. 301.

86. Brooks v. Wage, 85 Wis. 12, 54 N. W. 997.

87. Loring v. Sumner, 23 Pick. (Mass.) 98. But see Weston v. Hight, 18 Me. 281.

88. Neg. Inst. L. (N. Y.), § 51. See Appendix for same section in stat

utes of other States.

89. Wooley v. Cobb, 165 Mass. 503, 43 N. E. 497; Thompson v. Gray, 63 Me. 228; Wilkie v. Chandon, 1 Wash. St. 355, 25 Pac. 464; Johnston Harvester Co. v. McLean, 57 Wis. 258, 15 N. W. 177; Mohlman Co. v. McKane, 60 App. Div. (N. Y.) 546, 69 N. Y. Supp. 1046; Petrie v. Miller, 57 App. Div. (N. Y.) 17, 67 N. Y. Supp. 1042.

90

(2) When holder is holder for value.— The question has frequently arisen as to whether a pre-existing debt is a sufficient consideration for the transfer of a bill or note so as to render the transferee a bona fide holder, and has been the subject of much discussion. There would seem to be no controversy in cases where the debt exists coupled with a surrender or relinquishment of security held as collateral for the debt, or where the creditor agrees to forbear in the pursuit of his legal remedies respecting the debt;91 in both of such cases the consideration is sufficient to support the notes and to make their transferees holders for value and free from all equities existing between the original parties. There is, however, a pronounced conflict of authority as to the rights of a transferee of a bill or note, transferred in payment of a pre-existing debt, where there has been no relinquishment of collateral nor any forbearance of remedies; but it may probably be said that the weight of authority is in favor of the proposition that such a bill or note when transferred before maturity, without notice of equities, is transferred for value, and the holder takes it free from defenses or set-off existing between the original parties.92 There is even greater conflict of authority

In the case of Carter v. Odom, 121 Ala. 162, 25 South. 774, it was held that when a creditor takes a note of his debtor with accommodation indorsements in payment of an antecedent debt, he is a purchaser for value in due course of business, equally as if he had advanced money on the faith of it.

The payment of a debt, owed by the drawee to the drawer of an order for the payment of money, is a sufficient consideration for the promise of the drawee to pay the order. Durkee v. Conklin, 13 Colo. 313, 57 Pac. 486.

90. Rule in New York.- Where the owners of a note due in a few days, which was deposited for collection with the bank where it was payable, withdrew it from the bank and surrendered it to the maker on receiving from him his note payable in three months, indorsed by a third person, it was held that such payees were holders for value to the amount of the note surrendered, and that they were entitled to

had been indorsed, they having received it without notice of such diversion. Youngs v. Lee, 12 N. Y. 551. See also Stalker v. McDonald, 6 Hill (N. Y.), 93; Bank of Salina v. Babcock, 21 Wend. (N. Y.) 499; Meads v. Merchants' Bank, 25 N. Y. 143, 149; Justh v. Nat. Bank of Commonwealth, 56 N. Y. 478; Chrysler v. Renois, 43 N. Y. 209; Blair v. Hagemeyer, 26 App. Div. (N. Y.) 219, 49 N. Y. Supp. 965; Chapman v. Ogden, 165 N. Y. 642, 59 N. E. 1120.

In other States the following cases may be cited: Le Breton v. Pierce, 2 Allen (Mass.), 8; Allaire v. Hartshorne, 21 N. J. L. 665; First Nat. Bank of Rochester v. Bentley, 27 Minn. 87, 6 N. W. 422; Heath v. Smelting Co., 39 Wis. 146; Stevens v. Campbell, 13 Wis. 375.

91. Worcester Nat. Bank v. Cheeney, 87 Ill. 602.

92. Among the many cases which may be cited as supporting this proposition are:

recover this United States.-Brooklyn City, etc., amount against the indorser, not- R. R. Co. v. Nat. Bank, 102 U. S. 14, withstanding the delivery of the note 26 L. Ed. 61; Cummings v. Mead, to them was a diversion of it by the Fed. Cas. 3,476; Swift v. Tyson, 16 maker from the purpose for which it Pet. 1, 10 L. Ed. 865.

upon the question as to whether a note transferred before maturity as mere collateral security for the payment of a pre-existing debt is transferred for value and constitutes the transferee a holder for value; it is practically an impossibility to deduce any general

Alabama.- Mobile & M. R. Co. v. it was in that case ruled that the Felrath, 67 Ala. 189; Bank of Mobile v. Hall, 6 Ala. 639, 41 Am. Dec.

72.

California.— Sackett v. Johnson, 54 Cal. 107.

Georgia.- Bond v. Central Bank, 2 Ga. 92.

Illinois. Mix v. National Bank, 91 Ill. 20, 33 Am. Rep. 44; Worcester Nat. Bank v. Cheeney, 87 Ill. 602. Maine.- Homes v. Smyth, 16 Me. 177, 33 Am. Dec. 650.

Michigan.-Outhwaite v. Porter, 13

Mich. 533.

Minnesota.- Stevenson v. Hyland,

11 Minn. 198.

New Jersey.-Allaire v. Hartshorne, 21 N. J. L. 665, 47 Am. Dec. 175.

New York.- Bank of St. Albans v.

transfer of negotiable paper as collateral security merely for an antecedent debt did not make the creditor a holder for value within the rule cutting off prior equities, it was yet asserted that such result followed where, among other things, some existing debt was satisfied thereby. And that, I think, was a natural and logical conclusion from the reasoning upon which the decision rested. The argument was that the holder of the paper merely as collateral lost nothing by its failure, since his debt all the time remained, his original position was unchanged, and he had simply failed to get an added security, himself parting with nothing. It is apparent that the reasoning fails, whenever, as a result of the new contract, the original debt has been actually extinguished, when the paper has been both transferred and accepted as payment, and the debt has been discharged within and by force of the act and concurrent intention of both parties. And so we have steadily decided. (Bank of St. Albans v. Gilliland, 23 N. Y. 551; Philbrick v. Dallett, 2 Wend. (N. Y.) 311; Young v. Lee, 12 J. & S. (N. Y.) 388 Gould v. Segree, Texas. Herman v. Gunter, 83 Tex. 5 Duer (N. Y.), 260; Brown v. Leavitt, 66, 18 S. W. 428, 29 Am. St. Rep. 632. 31 N. Y. 113; P. Ins. Co. v. Church, Vermont.- Dixon v. Dixon, 31 Vt. 81 id. 218; Button V. Rathbone, 450, 76 Am. Dec. 129. For other Sard & Co., 118 id. 666, 23 N. E. cases on this subject see Century 122.) These cases, and many more Dig., "Bills and Notes," Vol. 7, § 924.

Gilliland, 23 Wend. 311, 35 Am. Dec. 566; Brown v. Leavitt, 31 N. Y. 113. North Carolina.- Reddick v. Jones,

6 Ired. 107.

North Dakota.- Dunham v. Peterson, 5 N. D. 414, 67 N. W. 293. Ohio.-Carlisle v. Wishart, 11 Ohio,

172.

Pennsylvania.-Kirkpatrick v. Muirhead, 16 Pa. St. 117; Bardsley v. Delp, 88 Pa. St. 420.

like them, however differing in their facts, and although the earlier ones Actual payment and absolute dis- have been more or less criticised, yet charge of an antecedent debt is a val- agree, as I read them, in the docuable consideration for the transfer trine that where the pre-existing debt of commercial paper, and cuts off is actually and absolutely extinprior equities. Mayer v. Heidelbach, guished in consideration of a nego123 N. Y. 332, 339, 25 N. E. 416, tiable paper transferred, the transwhere Finch, J., said: "I have no feree is protected against prior equidoubt as to the soundness of the ties. In asserting that as the result first proposition. It was explicitly of the decisions in this State and elseconceded in Coddington v. Bay, 5 where the Federal court in B. & N. Johns. (N. Y.) 57; 20 id. 637, R. R. Co. v. N. Bank, (102 U. S. 31), which originated the difference be- and Mr. Daniel in his text-book on tween the courts of this State and Negotiable Instruments (§§ 831 and the concurring views of the Federal 832)) are fully and fairly supported courts and those of England. While by the line of adjudged cases.'

rule which can be universally applied in face of all this mass of confused authority."

93

95

o. Debt of a third person. A note or bill given in payment of a debt due by a third person to the payee is supported by a sufficient consideration and will bind the maker or drawer.94 As a note given by a father in payment of a claim against his son, and a discharge of such claim, is based upon a sufficient consideration, as is also a note by a wife in payment of an antecedent debt of her husband.96 But in any event there must be a surrender or discharge of the claim for the payment of which the note or bill is made.97 And it has been held that the suspension of the right of a creditor to enforce payment of his debt is a sufficient consideration for the promise of a third person to pay it. But if a third per

93. See cases cited Cent. Dig., 66 Bills and Notes," Vol. 7, § 913.

98

95. Seymour v. Prescott, 69 Me. 376; Crombie v. McGrath, 139 Mass. 550, 2 N. E. 100.

94. Byles on Bills (16th ed.), p. 152, in which it is said: "A subsisting 96. Thompson v. Gray, 63 Me. 376; debt due from a third person is a good Leonard v. Duffin, 94 Pa. St. 218. consideration for a bill or note pay- 97. Surrender of claim.- Wren able at a future day; and so is a debt v. Hoffman, 41 Miss. 616; Harris due from the defendant and a third v. Harris, 180 Ill. 157, 54 N. E. person. If the debt of the third per- 180. In the case of Ward v. Barson is extinguished by the bill or rows, 86 Me. 147, 29 Atl. 922, the note being taken in satisfaction, there defendant gave the plaintiff a due bill is a good consideration, though the instrument be payable on demand."

In New York it has been held that where a trustee invested trust funds in the corporate stock of a corporation, and the beneficiaries afterward threatened to sue the corporation to recover the amount so invested, and the president, to prevent the suit, gave his note for the amount, such note is supported by a sufficient consideration. Struthers v. Smith, 85 Hun, 261, 32 N. Y. Supp. 905. See also Carney v. Downey, 2 N. Y. St. Rep. 707; Stack v. Weatherwax, 32 Hun, 615, 5 N. Y. Supp. 510.

In other States the following cases may be cited: Crowder v. Reed, 80 Ind. 1; Henry v. Ritenour, 31 Ind. 136; Findley v. Cowles, 93 Iowa, 389, 61 N. W. 998; Swift v. Crocker, 21 Pick. (Mass.) 241; Wren v. Hoffman, 41 Miss. 616; Brainerd v. Capelle, 31 Mo. 428; Horn v. Fuller, 6 N. H. 511; Leonard v. Duffin, 94 Pa. St. 218; Shabata v. Johnston, 53 Neb. 12, 73 N. W. 278; Murphy v. Illinois Trust & Sav. Bank, 57 Neb. 519, 77 N. W. 1102.

as a memorandum of the amount due the plaintiff as wages from a corporation of which the defendant was president; it was held that the due bill

was without consideration inasmuch as the plaintiff neither assigned to the defendant nor released his claim for wages, nor took the due bill in payment of such wages.

And in the case of Richardson v. Fields, 124 Ala. 535, 26 South. 981, a promissory note executed by the directors of a corporation in their individual names for an antecedent debt of the corporation without other consideration than the debt itself was held void as against the makers of the note for want of consideration. See also Currier v. Clark, 15 Colo. App. 6, 60 Pac. 958.

And where the debt is one which has been discharged in bankruptcy a note therefor by a third person is invalid because of want of consideration. McElven v. Sloan, 56 Ga. 208.

98. Thompson v. Gray, 63 Me. 376; Harris v. Harris, 180 Ill. 157, 54 N. E. 180.

son, without any consideration personal to himself, gives his promissory note to a creditor as collateral security to the mere naked debt of another, without any circumstance of advantage to the debtor, or disadvantage to the creditor, the note is without consideration.99

p. Debts against estate of decedent.- A promissory note made by a widow in payment of a claim against her deceased husband is void for want of consideration if the husband left no estate or assets. But if the deceased husband left an estate, although insolvent, a surrender to the widow of a claim against the estate is a sufficient consideration to support her promissory note for the amount. Where a widow, who was the principal legatee of her husband, executed a note in consideration of the settlement of a suit involving a large portion of her husband's estate, it was held that the note was supported by a sufficient consideration. But in case there is misrepresentation or fraud upon the part of the creditor to induce the widow to give her note in payment of such claim, the note will be deemed invalid for want of consideration.* The surrender of a decedent's note is a sufficient consideration for a note made by the heirs of the decedent.5

3

q. Settlement of doubtful claim.— If a claim is clearly illegal and unfounded, and no proceedings have been instituted thereon, a note given in settlement thereof is without consideration. If

99. Turle v. Sargent, 63 Minn. 211, 65 N. W. 349; Richardson v. Field, 124 Ala. 535, 26 South. 981.

1. Williams v. Nichols, 10 Gray (Mass.), 83; Kircher v. Sprenger, 4 Pa. Dist. 144. The personal note of the executrix of an insolvent estate, given for the balance of a claim of a creditor of the estate, after he had received the dividend to which he was entitled, as a general creditor, is without consideration. Paxson v. Neilds, 137 Pa. St. 385, 20 Atl. 1016. 2. Nowlin v. Wesson, 93 Ala. 509, 8 South. 800; Wilton v. Eaton, 127 Mass. 174.

Civ. App.), 47 S. W. 683; Taylor v. Clark (Tenn.), 35 S. W. 442.

3. Young v. Shepard's Estate, 124 Mich. 552, 83 N. W. 403.

A note given by heirs for a debt of their ancestor which was enforceable against his estate, although it had ceased to be a lien on his realty, is not without consideration. Safe Deposit & Trust Co. v. Wright, 105 Fed. 155, 44 C. C. A. 421.

4. Maull v. Vaughn, 45 Ala. 134. 5. Safe Deposit & Trust Co. V. Wright, 105 Fed. 155, 44 C. C. A. 421; Whelan v. Swain, 132 Cal. 389, 64 Pac. 560; Union & Planters' Bank v. Jefferson, 101 Wis. 452, 77 N. W. 889.

In the case of Carpenter v. Page, 144 Mass. 315, 10 N. E. 853, it was 6. Bullock v. Ogden, 13 Ala. 346; held that a promissory note given Tucker v. Ronk, 43 Iowa, 80. But in by a widow in payment of her de- order to defend such a note on the ceased husband's debt, and received ground that the claim was unfounded as such at her request by his cred- the defendant must show this clearly. itor, who receipts his bill against her Sullivan v. Collins, 18 Iowa, 228. See husband's estate upon which no ad- also Gunning v. Royal, 59 Miss. 45, ministration has been granted, is 42 Am. Rep. 350; Fuller v. Green, founded upon a sufficient considera- 64 Wis. 159, 24 N. W. 907, 54 Am. tion. See also Reuter v. Sullivan (Tex. Rep. 600.