SECTION 12.-INTERPRETATION OF AMBIGUOUS

INSTRUMENTS

Section 17. Where the language of the instrument is ambiguous or there are omissions therein, the following rules of construction apply:

(1) Where the sum payable is expressed in words and also in figures and there is a discrepancy between the two, the sum denoted by the words is the sum payable; but if the words are ambiguous or uncertain, reference may be had to the figures to fix the amount;

(4) Where there is a conflict between the written and printed provisions of the instrument, the written provisions prevail;

(2) Where the instrument provides for the payment of interest, without specifying the date from which interest is to run, the interest runs from the date of the instrument, and if the instrument is undated, from the issue thereof;

(5) Where the instrument is so ambiguous that there is doubt whether it is a bill or note the holder may treat it as either at his election.

SECTION 13.-CONSIDERATION

A negotiable instrument evidences a particular kind of contract. All contracts, not governed by the common-law rules applicable to sealed instruments, must be supported by consideration. A negotiable instrument is no exception to the rule. Only those operative facts which constitute consideration in the law of simple contracts will constitute consideration for a negotiable contract. There are some features of the rule requiring consideration for negotiable instruments which are different from the corresponding rule in simple contracts. As a general rule, in a suit upon a simple contract the party alleging its existence must affirmatively prove that the agreement was supported by consideration. In a suit upon a negotiable contract, the party relying upon it as a ground of action does not sustain the burden of proving consideration. With respect to this feature the Negotiable Instruments Law provides:

. Section 24. Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration; and every person whose signature appears thereon to have become a party thereto for value.

Section 28. Absence or failure of consideration is matter of defense as against any person not a holder in due course; and partial failure of consideration is a defense pro tanto, whether the failure is an ascertained and liquidated amount or otherwise.

SHAFFER v. BOND.

(Court of Appeals of Maryland, 1917. 129 Md. 648, 99 Atl. 973.)

BOYD, C. J. George M. Bond, the appellee, sued E. Whyland Shaffer, the appellant, on the common counts and a special one on a promissory note purporting to be dated January 2, 1915, payable to the order of the appellee on demand for $4,250, with interest, at the Citizens' National Bank of Laurel, Md. The defendant pleaded the general issue, pleas of never promised as alleged and never indebted as alleged, and, issue having been joined, a trial was had, resulting in a verdict in favor of the plaintiff for $4,578.30, being the amount of the note with interest. From a judgment entered on that verdict this appeal was taken.

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The defendant's first prayer as offered was as follows: "The defendant prays the court to instruct the jury that, if the jury find from the evidence in the case that there was no consideration moving from the plaintiff to the defendant for the note, which is the cause of the action in this case, then their verdict must be for the defendant."

The court modified that by adding to it, "but the burden of the proof is on the defendant to show want of consideration," and granted that prayer as modified, to which modification an exception was taken. The defendant's fifth prayer, which was rejected, asked the court "to instruct the jury that, under the pleadings and evidence in this case, the burden of the proof is upon the plaintiff to show that he gave value for the note the cause of action herein sued on.”

Those rulings present the important question in the case, namely, upon which side was the burden in reference to the alleged want of consideration, under the circumstances. The Negotiable Instruments Act was passed in this state in 1898, being chapter 119 of the acts of assembly of that year, and now included in article 13 of the Annotated Code. Section 43 of that article provides that: "Every negotiable instrument is deemed prima facie to have been issued for a valuable consideration; and every person whose signature appears thereon to have become a party thereto for value." And section 47 is: "Absence or failure of consideration is matter of defense as against any person not a holder in due course; and partial failure of consideration is a defense pro tanto, whether the failure is an ascertained and liquidated amount or otherwise."

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The appellant cited McCosker v. Banks, 84 Md. 292, 35 Atl. 935, to show that, where there is fraud or illegality in the inception of the note, the burden of proof is upon the holder to show that he is a bona fide holder for value. * * *After stating the law of this state as to the legal presumption that the plaintiffs became holders for value before maturity, etc., the court said: "But if the defendant shows by such proof as may be properly left to the jury to consider, that the instrument was procured by fraud, or was fraudulent in its inception, or that the consideration was illegal, or that it had been lost or stolen before it came to the possession of the holder, the burden of proof is changed, and it is then incumbent upon the plaintiff to show that he acquired the note bona fide for value, in the usual course of business, before maturity," etc. *

The reason for the rule, as quoted above, does not apply to an original party to a suit; the onus put on the plaintiff in such case is only

to show that he is a bona fide holder for value, etc., not that there was no fraud, that the consideration was illegal in the inception of the note, etc. It is only when fraud is shown on the part of the payee or some one other than himself that the indorsee is called upon to prove that he was not aware of it in that class of case, and then by reason of the presumption which is raised as stated above. * * *

In 8 C. J. § 1299, p. 994, it is said: "It is a general rule, supported by a multitude of decisions, that the burden of proof is on defendant to establish a defense of want, failure, or illegality of considerations. These decisions, while for the most part apparently without qualification on their face, are subject to explanation, at least according to the rules laid down in many jurisdictions, by adding that what is meant is that defendant must produce some evidence to overcome the presumption of consideration arising from the production of the instrument, in order to shift to plaintiff the necessity for proving facts relating to the consideration. In other words, the rule, at least in most of the states, is that, although a bill or a note imports in itself a consideration, yet when the evidence has been introduced to rebut the presumption of consideration, the burden shifts to plaintiff to show by a preponderance of the evidence that there was a consideration; and this is so even where the instrument on its face recites a consideration as by the use of the words 'value received,' but it has been held that the rule does not apply to a defense of a failure of consideration.”

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It must be admitted that 8 C. J. 994, 3 R. C. L. 928, and 4 Am. & Eng. Ency. of Law, 200, cited above, seem to adopt the rule contended for by the appellant, but it will be observed that 8 C. J. begins by saying that: "It is the general rule, supported by a multitude of decisions, that the burden is on defendant to establish a defense of want, failure, or illegality of consideration." And there are cited in the notes what may very properly be called "a multitude of decisions." The author concludes that, "at least according to the rules laid down in many jurisdictions," it is only meant to say that the defendant is called upon to produce some evidence to overcome the presumption of consideration arising from the production of the instrument, and that when that is done the burden shifts to the plaintiff. While that is undoubtedly correct as to a number of courts, it is by no means so with all of those cited in the notes. * * *

In 3 R. C. L. 928, it is said: "Nevertheless in a number of jurisdictions it is asserted to be the rule that the defense of a want of consideration for a bill or note is an affirmative defense, and that, as a bill or note imports on its face a valuable consideration, the burden of establishing that there was no consideration falls upon the party pleading that defense, or at any rate when the paper, in accordance with commercial usage, specifies a consideration."

It is also true that in a number of the states where there are courts of the highest standing the rule contended for by the appellant has been adopted. * * * McKenzie v. Oregon Imp. Co., 5 Wash. 409, 31 Pac. 748, and Preas v. Vollintine, 53 Wash. 137, 101 Pac. 706, are very emphatic in favor of the appellee's contention, and criticize some of the cases holding the opposite view. The cases in the note in 18 Ann. Cas. 204, cited as sustaining the appellee's position, are from the reports of Alabama, Arkansas, California, District of Columbia, Georgia, Illinois, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Mis

souri, New York, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Texas, and Washington. * * *

Apparently the majority of courts in this country have adopted the view contended for by the appellee, but it would prolong this opinion (already longer than we intended) to an unreasonable extent if we attempt to call attention to all of the cases cited which, adopting the view of the one side or the other, can be distinguished or shown not to be applicable to the precise questions before us. Some of those we have cited may be subject to that criticism.

So far as the defense of failure of consideration is concerned, * * it is an affirmative defense, and must be proven by the defendant and sustained by him throughout, if he relies on it. * * * If, then, the defendant in a suit on a negotiable promissory note, which is admitted to bear his signature, attempts to escape payment of it by alleging fraud, or what is equivalent to fraud without the use of the term, in order to show want of consideration for the note, he ought not to complain if he has the burden of establishing it by a preponderance of proof, such burden continuing to the end of the case.

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We are of the opinion that the better rule is to hold that the burden is generally on the maker to show a want of consideration to a promissory note in a suit between him and the payee. There may be circumstances which justify an exception to such a general rule. Sometimes the facts may be so peculiarly within the control of the plaintiff as to place the burden on him, or there may be some other reason for making an exception, but it seems to us that it is the wiser rule to adopt, in order to make negotiable instruments effective and of the value they are supposed to be. When the maker signs a negotiable instrument, it is presumed to be for value, and, without meaning that that is necessary, this one states on its face it is for "value received." In business transactions notes are often taken in order to settle all questions about the amount of liability, etc., and to put them in such shape that they will speak for themselves, in case of the death of debtor or creditor, and yet, if the burden is put upon the payee to sustain the consideration, simply because the maker denies it, they are in fact of little more use between the parties than an open account would be. The creditor may destroy his checks or other evidence, if he has any, tending to prove consideration for a note which has been in existence for some time, or has been renewed from time to time, and if he has done so, then the fact that a negotiable promissory note imports consideration and the prima facie presumption that there was value are of little benefit, if the debtor can by offering some evidence that there was no consideration cast the burden on the plaintiff. It is, of course, wise not to make a note or a bill of exchange conclusive of a valid consideration, but the burden should at least be on the one setting up a want of consideration, and that burden should not be shifted, but should rest on him to the end of the case. Judgment affirmed.

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In applying the doctrine of consideration to negotiable instruments, there are some special situations which may be noted. briefly. As between maker and payee of a negotiable note no

difficulty is presented. The payee may recover on the instrument unless the maker affirmatively proves the absence of consideration. Suppose the payee makes a gift of the instrument to A., may A. recover? Certainly not, as against the payee indorser because the payee can show no consideration between them. But may A., the donee, recover from the maker? If this were a case of an attempted assignment by way of gift of a chose in action not evidenced by a specialty, the answer probably would be no, because such a right-not being capable of actual or constructive delivery, gifts by will excepted-is not the subject of a gift inter vivos. But where we are dealing with a special contract, such as a negotiable instrument, the written evidence of the contract assimilates some of the attributes of tangible property, to the extent that some of the principles of the law of tangible property become applicable. Therefore, a negotiable instrument which evidences a contract between two persons which is supported by consideration becomes capable of actual delivery and, therefore, the subject of a valid gift. This result is stated in the following language of the act:

Section 26. Where value has at any time been given for the instrument, the holder is deemed a holder for value in respect to all parties who become such prior to that time.

Section 25. Value is any consideration sufficient to support a simple contract. An antecedent or pre-existing debt constitutes value; and is deemed such whether the instrument is payable on demand or at a future time.

Section 27.

Where the holder has a lien on the instrument, arising either from contract or by implication of law, he is deemed a holder for value to the extent of his lien.

It will be noticed that section 26 employs the word "value" instead of "consideration" and that sections 25 and 27 define "value" to be (1) any operative facts which constitute consideration; (2) any operative facts showing a transfer for a pre-existing debt or which give rise to a lien on the instrument transferred, whether such facts constitute consideration or not. The legal effect of sections 25 and 27, in all respects is not clear. The difficulty arises from the fact that these sections must be applied to two general situations which are different: (1) We have the situation where the holder, whether payee or some subsequent indorsee, is attempting to recover from some prior party irrespective of his being a holder in due course. (2) We have the situation where a holder is attempting to recover from a prior party who had a defense good as against the party with whom he dealt, and the holder is seeking to recover free from this defense. That is, the holder is asserting his right to recover as a holder in due course. We are not here concerned with the circumstances under which a holder of a negotiable instrument will be a holder in due course and as to the nature of his rights against prior parties, except to