4. A person receiving after its maturity an accommodation note from a holder in due course, may recover from the maker: Pichette v. Lajoie, 10 L. N. 266 (1887). 5. A third party cannot recover from the maker the amount of a promissory note obtained by fraud, if such third party was aware of the fraud before the note was transferred to him, although the transfer was made by an indorser who took it before maturity in good faith and for value: Baxter v. Bruneau, 17 R. L. 359 (1889). Contra, above section of Act. 6. Plaintiff acquired for value a cheque after payment had been stopped to his knowledge, but derived title through an indorser who was a holder in due course. He can recover against the drawer and defendants the indorsers prior to such holder in due course: Gauthier v. Reinhardt, Q. R. 26 S. C. 134 (1904). 7. The indorsee of a note who received it after maturity from a holder in due course, is not affected by the fact that his indorser was aware before he transferred it to the indorsee that it had been issued by a partner in fraud of the partnership: McLeod v. Carman, 12 N. B. (1 Han.) 592 (1869). 8. The indorsee of a bill sues the acceptor who proves that he accepted it for the accommodation of the drawer. This does not make it necessary for the indorsee to prove that he gave value: Mills v. Barber, 1 M. & W. 425 (1836). 9. A partner fraudulently indorses a firm bill to D. for a private debt. F. is aware of the fraud but not a party to it. D. indorses the bill for value to E., who accepts it in good faith. E. indorses it to F., who thereby acquires all E.'s rights. If he gave value for the bill he can sue all parties; if he did not give value, he can sue all except E. May v. Chapman, 16 M. & W. 355 (1847). See also Masters v. Ibberson, 8 C. B. 100 (1849); Marion Co. v. Clarke, 94 U. S. (4 Otto) 278 (1876). 10. C. by fraud induces B. to make a note in his favor, which he indorses to D. for value without notice. Subsequently D. indorses it back to C. for value. C. cannot collect the note from B.; Sawyer v. Wiswell, 91 Mass. 42 (1864); Andrews v. Robertson, 87 N. W. Rep. 190 (Wisc. 1901). $ 57 Illustrations. tion of 58. Every party whose signature appears on a Presump. bill is prima facie deemed to have become a party thereto for value. course. 2. Every holder of a bill is prima facie deemed to Due be a holder in due course; but if, in an action on a bill it is admitted or proved that the acceptance, issue or subsequent negotiation of the bill is M'L.B E.A.-13 § 58 affected with fraud, duress or force and fear, or illegality, the burden of proof that he is such holder in due course shall be on him, unless and until he proves that, subsequent to the alleged fraud or illegality, value has in good faith been given for the bill by some other holder in due course. 53 V., c. 33, s. 30 (1), (2). Imp. Act, ibid. Presump tion of value. Value is defined in section 2 as valuable consideration, which is defined and illustrated in section 53 and the notes thereon. A party to a bill who disputes his liability on the ground that he is only an accommodation party, or a surety for some other person, should make clear proof of such claim. Even if the bill contain the words "value received" or otherwise declare that value was given, the contrary may be proved by parol see p. 166. Evidence to rebut the presumption of value must be clear; mere improbability of the existence of a debt is not sufficient: Larraway v. Harvey, Q. R. 14 S. C. 97 (1898). "Illegality" in this section is used as the equivalent of "other unlawful means and "illegal consideration" in section 56, s.-s. 2. "Good faith" is defined in section 3, and a thing is deemed to be done in good faith when it is done honestly. The latter part of sub-section 2 in the Imperial Act reads as follows:-"The burden of proof is shifted unless the holder proves that, subsequent to the alleged fraud or illegality, value has in good faith been given for the bill." There is probably no difference in the effect of the two clauses. ILLUSTRATIONS. See illustrations under section 56, s.-s. 2. 1. Where in an action on a note payable to A. it was proved that B. indorsed it and brought it to A., who indorsed it for his accommodation: Held, that want of consideration could not on these facts be inferred, as between the maker and B., and plaintiff was not obliged to prove consideration: Mair v. McLean, 1 U. C. Q. B. 455 (1841). 2. In an action on a note where defendant pleads no consideration, he must impeach it, the plaintiff need not prove it in the first instance: Sutherland v. Patterson, 1 Rob. & Jos. Dig. 511 (1842). § 58 3. Where a note is obtained by fraud or affected by illegality on the part of an indorser, plaintiff must prove that he is a bona fide indorsee for value: Maulson v. Arrol, 11 U. C. Q. B. 81 (1853). Illustra 4. Where the indorser indorsed the note while in blank, there being no maker's name, or any sum or payee expressed, and it appeared that the maker's name was afterwards signed without authority held, that the indorsee suing must shew himself a bona fide holder for value: Hanscome v. Cotton, 15 U. C. Q. B. 42 (1857). 5. The presumption of value having been given recognized by this section is not sufficient to protect an executor who pays notes of the testator, after notice that they were given without consideration, and were intended as gifts to the payees: Re Williams, 27 0. R. 405 (1896). 6. Where defendant swears to fraud he is entitled to unconditional leave to defend, although plaintiff swears he is a holder for value: Farmer v. Ellis, 2 O. L. R. 544 (1901); Flour City Bank v. Connery, 12 Man. 305 (1898); Fuller v. Alexander, 47 L. T. N. S. 443 (1882). 7. Proof of fraud in the making of the note, casts upon the holder a third party the burden of showing that he is a bona fide holder for value: Withall v. Ruston, 7 L. C. R. 399 (1857). See also Hunt v. Lee, 2 Rev. de Lég. 28 (1819); Robinson v. Calcott, Ramsay A. C. 83 (1875); Banque Jacques Cartier v. Gagnon, Q. R. 6 S. C. 88 (1894). 8. The presumption created by the words "value received" is not only destroyed by proof that the note was obtained from the maker by fraud, but the presumption then is that the transferee before maturity has not given value and is not owner of the note: Baxter v. Bilodeau, 9 Q. L. R. 268 (1883). 9. Where a note is transferred by indorsement before maturity, but it is proved that it was obtained from the maker by fraud, it does not come under the general rule laid down in Art. 2287 C. C., and the onus of showing that he is in good faith falls upon the holder: Belanger v. Baxter, 6 L. N. 413 (1883). 10. Where a note was obtained from the maker by fraud and without consideration, the holder cannot recover unless he proves that he received the note before maturity, for good and valuable consideration, and in ignorance of the circumstances under which it was given: Dumas v. Baxter, 14 R. L. 496 (1885); Exchange Bank v. Carle, M. L. R. 3 Q. B. 61; 31 L. C. J. 90 (1887). 11. Before the Act there was the same presumption in favor of the holder: Bard v. Francoeur, Q. R. 7 S. C. 315 (1894). 12. Defendants proved that the note was for the accommodation of a third party and not authorized; but there was no defence of illegality or fraud. Held, that the onus was not on plaintiffs to prove that they were holders in due course: Farmers' Bank v. Dominion Coal Co., 9 Man. 542 (1893). tions. 196 $ 58 Presumption of value. 13. Where there is illegality and the plaintiff proves simply that he gave value, but not that he or any previous holder took the note in good faith, and had no notice of the illegality, he is not a holder in due course: Gibson v. Coates, 1 W. L. R. (Man.) 556 (1905). 14. Where a note is taken as collateral security for a debt not then payable, and no new consideration is given, the holder is not a holder for value or a holder in due course : Bank of Commerce v. Wait, 1 Alta. L. R. 68 (1907). 15. The holder of a note sues the maker. It is proved that it was given for an illegal consideration. Plaintiff must prove that he gave value: Bailey v. Bidwell, 13 M. & W. 73 (1844). 16. The indorsee of a note sues the maker, who proves that it was given for a wager, which is a consideration void by statute, but not prohibited under a penalty. Plaintiff is not obliged to prove that he gave value: Fitch v. Jones, 5 E. & B. 238 (1855). 17. Where the plaintiff drew a cheque to the order of the defendant, and gave it to a third party, who was to deliver it only on certain terms, but who delivered it unconditionally to the defendant, who gave value for it in good faith, the latter was held entitled to keep the cheque: Watson v. Russell, 3 B. & S. 34 (1862); affirmed 5 B. & S. 968 (1864). 18. A firm sued as acceptors prove that it was signed by one partner for a private debt in fraud of the others. Plaintiff must prove that he is a holder for value: Hogg v. Skeen, 18 C. B. N. S. 426 (1865). 19. The owner of a negotiable instrument which has been stolen has no title to it against a bona fide holder for value, although he has prosecuted the thief to conviction: Chichester v. Hill, 52 L. J. Q. B. 160 (1882). 20. Where authority was given to fill in the name of a firm as drawers of a bill, and a partner filled in his own name as drawer and accepted the bill in the firm name in fraud of the partnership, the latter was held not liable, as the holder had not exercised due care and did not prove that he had given value in good faith: Oakley v. Boulton, 5 T. L. R. 60 (1888). 21. Where there was evidence that the acceptor of a bill had handed it to L. to get it discounted for him, but instead of doing so, L. had fraudulently handed it to the drawer, who negotiated it, the burden of proof is on the holder to prove both that value had been given, and that it had been given in good faith without notice of fraud: Tatam v. Haslar, 23 Q. B. D. 345 (1889). 22. Sub-section 2 of section 30' of the Imperial Act does not affect or vary the practice of the Chancery Division in dealing with an application for an injunction to restrain negotiation of a bill of exchange, and an acceptor or holder who applies for an injunction in such a case, even though he alleges fraud, must still be prepared, as formerly, to pay the amount of the bill into court or give security: Hawkins v. Ward, W. N. Nov. 29th, 1890, p. 203. The subsection relates to the proceedings at a trial, and the shifting of the burden of proof after evidence has been given of fraud, etc.: Hawkins v. Troup, 7 T. L. R. 104 (1890). § 58 considera 59. No bill, although given for a usurious con- Usurious sideration or upon a usurious contract, is void in tion. the hands of a holder, unless such holder had at the time of its transfer to him actual knowledge that it was originally given for a usurious consideration, or upon a usurious contract. 53 V., c. 33, s. 30. laws. The Imperial Act does not contain any provision similar Usury to this, which was taken in substance from R. S. C. (1886) c. 123, s. 17, where however it applied to Ontario alone, having been enacted for Upper Canada when the usury laws were in force there. There was a similar provision for Quebec in Art. 2335 of the Civil Code. It is now practically obsolete in Canada. The Act, 53 Vict. c. 34, s. 2, which immediately follows the Bills of Exchange Act in the statutes of 1890, and which came into force on the day of its assent, May 16th, 1890, repealed all the subsisting usury laws which remained in force from old provincial enactments, and which were embodied in the Revised Statutes of Canada (1886) as chapter 127, with varying provisions applicable to the provinces of Ontario, Quebec, Nova Scotia and New Brunswick respectively. Since then any individual or corporation, in the, absence of some special statutory prohibition, might stipulate for, allow, and exact, on bills and notes, or on any other contract or agreement, any rate of interest or discount which is agreed upon: R. S. C. c. 120, s. 1. By section 91 of the Bank Act, chartered banks are not allowed to take more than 7 per cent. They do not however incur any penalty or forfeiture for usury. The Money-Lenders' Act of 1906, R. S. C. c. 122, provides that notwithstanding the above provision of the Interest Act, no money-lender shall stipulate for, allow or exact on any negotiable instrument concerning a loan under $500 a rate of interest or discount greater than 12 per cent., and interest shall be reduced to 5 per cent. from the date of a judgment |