ordinary signification, ought to leave no room for doubt upon the subject. There is, however, such a universal disposition among lawyers to look for some hidden or subtle meaning in the most simple language, that it has become quite the fashion to require the courts to construe statutes, which, to the average lay mind, seem to require no construction. If the language of the section under consideration were not obviously clear and unequivocal, and there were need of ascertaining the legislative intent in order to give proper effect to such language, the history of the subject, of the judicial decisions in England and the states of this country, and of the proceedings of the commission on uniformity of laws, leave no possible doubt as to the purpose of this section." And after reviewing the history of the statute the learned judge continued: "It seems evident, therefore, from the history of this subject, as well as from the obvious purpose for which this statute was enacted, no less than from the language of the statute itself, that the New York rule, so called, has been modified so as to conform to the rule in England and in our federal court of last resort." But the Appellate Divisions in the First and Second Departments have been disposed to hold otherwise. Sutherland v. Mead, 80 App. Div. 103; Roseman v. Mahony, 86 App. Div. 377; Bank of America v. Waydell, 103 App. Div. 25, 33. In these last-mentioned cases no reference was made to section fifty-three, and probably this section was not called to the attention of the court. When its provisions are considered together with the provisions of section fifty-one the intent seems to be clear. The holder, who has taken the paper as collateral security, very plainly has a lien upon it, and, therefore, is within the terms of section fifty-three. The only question then is, whether he must be excluded from the operation of this section merely because his lien was acquired for an antecedent indebtedness. But as the statute in another place expressly declares that an antecedent or pre-existing debt constitutes value" (sec. 51) there is no warrant for reading any such exception into the section.

(b) Continental Nat. Bank v. Bell, 125 N. Y. 38, 42; Rogers v. Squires, 98 N. Y. 49; Roach v. Woodall, 91 Tenn. 206. Thus a bank, having in its possession negotiable securities of its customer, would be, by virtue of its general lien, a holder for value to the extent of the balance due from such customer. So, any person to whom negotiable securities are pledged as collateral would be deemed a holder for value to the extent of the amount due to

him. But if such securities should be sold to pay such balance or debt, the purchaser, if a holder in due course within section 91, though he should pay less than their face value for them, could enforce them for the full amount thereof. See section 96.

(c) Under sections 53 and 90 a person who holds a note or bill as collateral security may sue thereon. Mersick v. Alderman, 77 Conn. 634. Ordinarily he is entitled to recover the full amount due on the instrument, with liability to account for the surplus to the pledgor. Camden Nat. Bank v. Fries-Breslin Co., 214 Pa. St. 395. But if the pledgor could not recover upon the instrument, then the extent of the recovery will be limited to the amount of the debt due to the pledgee. Stoddard v. Kimball, 6 Cushing, 469; Fisher v. Fisher, 98 Mass. 303; Chicopee Bank v. Chapin, 8 Metc. 40.

§ 54. Effect of want of consideration.- Absence or failure of consideration is matter of defense as against any person not a holder in due course (a); and partial failure of consideration is a defense pro tanto (b), whether the failure is an ascertained and liquidated amount or otherwise (c).

(a) As between the immediate parties to a negotiable promissory note, while the note itself is prima facie evidence of the consideration, the question of consideration is always open; and it is competent to the defendant to show, by parol, that there was no sufficient consideration, or that the consideration has failed, or that the paper was given for accommodation merely. Batterman v. Dutcher, 95 App. Div. (N. Y.) 213; Cowee v. Cornell, 75 N. Y. 91, 98; Anthony v. Valentine, 130 Mass. 119; Ingersoll v. Martin, 58 Md. 67; Corlies v. Howe, 11 Gray, 125; Breneman v. Furniss, 90 Pa. St. 186. The burden of proving the failure of consideration is on the party alleging it. Jennison v. Stafford, 1 Cush. 168. Total failure of consideration does not impose upon an innocent holder the burden of proving that he gave value for the paper. Wilson v. Lazier, 11 Gratt. 477; Albrecht v. Atrimpler, 7 Pa. St. 476. The failure of consideration does not affect the negotiability of the instrument. Dingman v. Amsink, 77 Pa. St. 114. The right to interpose the defense of want of consideration is governed by the lex loci. Herdic v. Roessler, 109 N. Y. 127, 133, 134.

Upon an exchange of promissory notes, each note is a valid consideration for the other, and is fully available in the hands of the holder; and the fact that one of the notes is not paid at maturity does not sustain a defense of failure of consideration in an action upon the other. Rice v. Grange, 131 N. Y. 149; Woman v. Frost, 52 N. Y. 422.

(b) Black v. Rigway, 131 Mass. 80; Cline v. Miller, 8 Md. 274; Davis v. Wait, 12 Oregon 425.

(c) The rule, both in this country and in England, has been that whenever the defendant is entitled to go into the question of consideration he may set up the partial, as well as the total, want of consideration. Daniel on Negotiable Instruments, § 210. But it has been held in some cases that the part alleged to have failed must be distinct and definite, for only a total failure or the failure of a specific and ascertained part can be availed of by way of defense; and in the case of an unliquidated claim the party must resort to his cross action. Pulsifer v. Hotchkiss 12 Conn. 234; Drew v. Towle, 7 Fost. 412; Moggridge v. Jones, 14 East. 485; Trickey v. Larne, 6 M. & W. 278. In other cases it is held that the defendant may recoup his damages though they be unliquidated. Davis v. Wait, 12 Oregon 425; Wyckhoff v. Runyon, 33 N. J. Law, 107. As to what is necessary to constitute one a holder in due course, see sections 52–56.

§ 55. Liability of accommodation party. An accommodation party is one who has signed the instrument as maker, drawer, acceptor or indorser, without receiving value therefor, and for the purpose of lending his name to some other person (a). Such a person is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party (b).

use.

(a) An accommodation note, in the strict sense, is a loan of the maker's credit, without instructions as to the manner of its Lenheim v. Wilmarding, 55 Pa. St. 73; Bankers' Iowa State Bank v. Mason Hand Lathe Co., 121 Iowa, 570, 572. He cannot set up as a defense that it was given without consideration; for this would defeat the very purpose for which it was made. Car

penter v. National Bank of the Republic, 106 Pa. St. 170-172. In respect to third persons, the law considers him in the character he has assumed and will not permit him to allege that the paper to which he gave his name was an imposition, nor to gainsay its reality by proof that it was a fiction. It shall be taken pro veritate that he was the maker, for de veritate that was the very thing he was intended to be. Bank of Montgomery County v. Walker, 9 S. & R. 229; Stephen v. Monongahela National Bank, 88 Pa. St. 157, 162-3. And this is the rule though the note be pledged merely as collateral security for the debt of the payee. Lord v. Ocean Bank, 20 Pa. St. 384. A mutual exchange of notes will amount to a sufficient consideration, so that the notes will not be regarded as accommodation paper. Williams v. Banks, 11 Md. 198; Rice v. Grange, 131 N. Y. 149; Woman v. Frost, 52 N. Y. 422.

(b) For cases in which the provision of the statute has been applied, see Packard v. Windholz, 88 App. Div. (N. Y.) 365; Smith v. State Bank, 104 N. Y. Supp. 750; Black v. First Nat. Bank of Westminster, 96 Md. 399; White v. Savage, 48 Oregon,. 604; Bankers' Iowa State Bank v. Mason Hand Lathe Co., 121 Iowa, 570. The statute does not change the law of New Jersey so as to validate the contract of a married woman obligating her as surety for her husband or to pay the debt of another person. Peoples' Nat. Bank v. Schepflin, 73 N. J. Law, 29, 38. In Massachusetts, on the other hand, since the Negotiable Instruments Act, as well as before, if a married woman indorses for accommodation the note of a partnership of which her husband is a member payable to him and indorsed also by him, she is liable on her contract of indorsement to a bank to which her husband acting for the partnership negotiates the note. Middleborough National Bank v. Cole, 191 Mass. 168. An accommodation indorser has the right to retract his indorsement at any time before the paper is negotiated. His consent to be indorser is necessary to make him such. He cannot be compelled to indorse whether he will or no; and as the instrument is a mere blank piece of paper until it passes into other hands for valuable consideration, it follows that he has the same right to retract the indorsement already made as he had to refuse his indorsement in the first instance; that is, his indorsement and his continuing to be so are alike voluntary until rights arise by the negotiation to third parties. Berkely v. Tinsley, 88 Va. 1001, 1001. And the

purchaser of an accommodation note, after its maturity, gets no better nor greater right to enforce it against the maker or indorser than if it were ordinary negotiable paper given for value. Cottrell v. Watkins, 89 Va. 801.

not apply to corporawithout power to bind A national bank has

The provision of the statute does tions, which, as a general rule, are themselves as accommodation parties. no such power, National Bank of Commerce v. Atkinson, 55 Fed. Rep. 465, 27 U. S. App. 88; nor has a State bank, The Bank of Genesee v. The Patchin Bank, 13 N. Y. 309; Farmers' & Mechanics' Bank v. Butchers' & Drovers' Bank, 16 N. Y. 125, 128; Morford v. The Farmers' Bank of Saratoga County, 26 Barb. 568; nor a manufacturing corporation, The Central Bank v. The Empire Stone Dressing Co., 26 Barb. 23; The Bridgeport City Bank v. The Empire Stone Dressing Co., 30 Barb. 421; The Farmers' & Mechanics' Bank v. The Empire Stone Dressing Co., 5 Bosw. 275; Wahlig v. The Standard Pump Manufacturing Co., 25 N. Y. St. Rep. 864; Filon v. The Miller Brewing Co., 38 N. Y. St. Rep. 602; National Bank of Newport v. Snyder Manufacturing Co., 117 App. Div. (N. Y.) 371; Monument National Bank v. Globe Works, 101 Mass. 57; nor a railroad company, Davis v. Old Colony Railroad Company, 131 Mass. 258; J. G. Brill Co. v. Norton & Taunton St. Ry. Co., 189 Mass. 431; nor a warehousing and security company, The National Park Bank v. G. A. M. W. & S. Co., 116 N. Y. 281; nor a life insurance company, Aetna National Bank บ. Charter Oak Life Insurance Company, 50 Conn. 167; nor a turnpike company, Hall v. Auburn Turnpike Co., 27 Cal. 256; nor an oil company, Culver v. Reno Real Estate Company, 91 Penn. St. 367. No corporations organized under the statutes of New York are authorized to bind the property of their shareholders by accommodation indorsements. Fox v. Rural Home Co., 90 Hun, 365, 367. But where a corporation is authorized to take a note for any purpose, the presumption in regard to any note executed to it is that it was executed for a legitimate purpose. Howard v. Boorman, 17 Wis. 459; Lehigh Valley Coal Co. v. West Depere Agr. Works, 63 Wis. 45. When in an action upon a promissory note it is shown without dispute that the defendant, a manufacturing corporation, made a note for the accommodation of the payee, another corporation, and that the notes were renewed from time to time by the payee, which