plaintiff and his immediate indorser. Generally speaking, as between the third person and the defendant, the burden of proof is upon the defendant, and he must show that the third party did not give consideration for the instrument. For instance: A. is a maker of a note, B. the payee; B. transfers the note to C., and C. to D.; D. brings an action against A., and merely sets forth the instrument, consideration being presumed. A. must not only show that no consideration passed from B. to him, but he must show also that no consideration passed from D. to C.

Parties between whom consideration can be questioned. The general rule is, that between the immediate parties to any contract of drawing, accepting, making, or indorsing a negotiable instrument, it may be shown that there was no consideration; while as between parties remote to each other, this can not be done. It becomes important, therefore, to remember who are immediate parties (or parties between whom there is a privity), and who are remote parties.

Immediate parties. (1) Drawer and payee of a draft, (2) maker and payee of a note, (3) indorser and his immediate indorsee of either a note or draft. In an action on a negotiable instrument by anyone of the parties in either class against the other, lack or failure of consideration may always be set up. For instance, in an action by B. the payee against A. the drawer; or by B. the payee against

A. the maker of a note; or by C. the holder against B. the payee, etc., each party sued may set up lack of consideration as against the party bringing the action. The drawer and acceptor have been held immediate parties so far as the acceptor's being able to show as against the drawer that he accepted for too much.

Remote parties.

(1) Indorsee (or holder) and maker of a note, as D. and A. respectively in the following instrument: A. the maker, B. the payee and indorser, C. an indorser, and D. the indorsee, or holder.

(2) Indorsee (or holder) and a prior (not the immediate) indorser, as B. and D. in the above illustration (note that C. is D.'s immediate indorser).

(3) In most cases, the indorsee, or holder, and acceptor of a draft, as A. drawer, B. drawee (acceptor), C. payee and indorser, D. an indorser, and E. indorsee and holder -E. and B. are remote parties.

(4) In most cases, the payee and acceptor, as C. and B. in the above illustration.

As between these parties, two things must be inquired into, and both proved: (1) The consideration which the defendant (the acceptor) received for his liability, and (2) that which the plaintiff (the payee or indorsee) gave for his title. If the payee or the indorsee or any intermediate holder gave consideration for the instrument, the plaintiff's title is sus

tained, and the acceptor must pay the instrument.

Want of consideration can not be pleaded in an action brought between the parties mentioned in the first two classes; and, generally speaking, this is true in the third and fourth. It is not always easy to determine the position of parties to an instrument, as when the payee's name is left blank, or there is a blank indorsement upon the instrument. In such cases, the holder may show his position as a party. Other positions exist, but they are too technical for general understanding, and the best rule to follow in such cases is to consult an attorney for advice and action.

Laws which govern. The laws in force at the time an instrument is given determine its legality and effect. For instance, A. gives a note to B. in exchange for a barrel of whisky, with immediate delivery. Before the note matures, the State passes a prohibitory liquor law, which would make an instrument given for such a consideration invalid. But the instrument was made before the law was passed, and will be governed by the laws in force at the time it was made, and is therefore good.

Indorsement is the writing of the name of the indorser on the instrument with the intent cn his part either to transfer, or pass the title to the instrument; or to add strength to the security of the holder by assuming a contingent liability for its future payment. This latter is called accommodation indorsement.

Indorsement is not only a contract, but it is in addition a transfer. Treated as a contract it is subject to all the rules of contract. As a transfer it is within the law merchant and governed by its rules.

Where written. The indorsement must be written on the instrument itself, or upon a paper attached to it; and the signature of the indorser, without additional words, is a sufficient indorsement. (Sec. 61.) The usual place for an indorsement is on the back of the instrument, but it must be somewhere on the instrument. Whenever a name appears on an instrument, and there is any doubt as to the capacity in which the person intended to sign, it is deemed to be the name of an indorser. (Sec. 36, Sub. 6.)

'Allonge." It may be that the instrument has passed through so many hands that there is no further room for indorsement. The holder may then paste a piece of paper to the instrument, and sign his name thereon. That is what is meant by the words of the statute "upon a paper attached to it," and this act has received the French name of "allonge." It does not often occur, however.

Signature. The rules stated in Part 2 as to signature of the maker or drawer apply to an indorsement as well. Any form of words, or any signature from which the intent of the holder to indorse may be gathered, is a sufficient indorsement; and a person placing his signature upon an instrument otherwise than as maker, drawer, or acceptor, is deemed to be an indorser, unless he clearly indicates by appropriate words his intention to be bound in some other capacity. (Sec. 113.) For instance, I hereby guarantee the payment of this draft," would be a guaranty and not an indorsement.

66

The usual form of indorsement is by a simple signing of the name, though we shall see that there are several kinds of indorsement.

Indorsement of the entire instrument. You can not indorse an instrument in part. If you indorse at all, you must indorse the entire instrument. (Sec. 62.) The reason for this is, that it would split the right of action on the instrument, and thereby create confusion. But suppose you hold a note for $500, on which $300 has been paid, and the instrument is not yet due. If you want to pass it over to another party, you can indorse it, and the indorsement will pass the title to the $200. (Sec. 62.)

*Kinds of indorsement. Indorsements may be (1) special, (2) blank, (3) restrictive (including qualified), (4) conditional. (Sec. 63.)

Special indorsement. A special indorsement (sometimes called a "full" indorsement) is