Defences.-Failure of Consideration.-Fraud.

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C. P. 145. So, a note given for past gratuitous services, and in consideration for future services, as to which there was no binding contract. Hulse v. Hulse, 17 C. B. 711; 25 L. J., C. P. 177. But, the compromise of a claim, made bona fide, though unfounded, and known by the defendant to be so, but for which, the claimant threatened to sue, is a good consideration. Cook v. Wright, 1 B. & S. 559 ; 30 L. J., Q. B. 321. See Wilby v. Elgee, L. R., 10 C. P. 497, and Callisher v. Bischoffsheim, L. R., 5 Q. B. 449, on which however see Ex parte Banner, 17 Ch. D. 480, 490, per Brett, L. J.

In an action by indorsee against acceptor, it is not even prima facie evidence of want of consideration between the defendant and the drawer, to show that the drawer, on the day before the bill became due, procured all the indorsements to be made without consideration, in order that the action might be brought by the indorsee, and on the understanding that the money should be divided between one of the indorsees and the drawer. Whitaker v. Edmunds, 1 Ad. & E. 638. Where the defence to an action on a note states an executory consideration for it, which was never executed, the defendant is not precluded from proving his defence, although the note professes, on the face of it, to be founded on a past consideration. Abbott v. Hendricks, 1 M. & Gr. 791. And, generally the consideration or alleged "value received," apparent on the face of a note, may be contradicted, but not the contract or promise itself. Easter v. Jolly, 1 C. M. & R. 703; and see ante, p. 19.

In general, the declarations of a former holder of a bill are not admissible to prove the want of consideration. Shaw v. Broom, 4 D. & Ry. 730. But, where the plaintiff and the party, whose declarations are offered in evidence, are identified in title; as, where the plaintiff took the bill from him after it became due; such declarations are admissible. Benson v. Marshall, cited Id. 732; Beauchamp v. Parry, 1 B. & Ad. 89. So, where the plaintiff, though he did not take the bill after it was due, sues as agent for the party who made the declarations. Welstead v. Levy, 1 M. & Rob. 138.

Fraud.] By sect. 29. "(2.) In particular the title of a person who negotiates a bill is defective within the meaning of this act when he obtained the bill, or the acceptance thereof, by fraud, duress, or force and fear, or other unlawful means, or for an illegal consideration, or, when he negotiates it in breach of faith, or under such circumstances as would amount to a fraud.” "(3.) A holder (whether for value or not) who derives his title to a bill through a holder in due course," vide sub-sect. (1), ante, p. 322, “and who is not himself a party to any fraud or illegality affecting it, has all the rights of that holder in due course as regards the acceptor and all parties to the bill prior to that holder."

See hereon observations, ante, p. 322.

Fraud, which makes the contract void or voidable as against the defendant, must be specially pleaded. Rules, 1883, O. xix., r. 15, ante, p. 283. Formerly, when the effect of the fraud was that the defendant never made the contract sued on, the defence arose on a traverse of the indorsement or acceptance, as the case might be. Foster v. Mackinnon, L. R., 4 C. P. 704, vide ante, p. 357. So, when the fraud was one which avoided the consideration, it might be given in evidence under a general plea denying the consideration. Mills v. Oddy, 2 C. M. & R. 103. But a special defence would be required now, under r. 15, supra. The maker of a note pleaded that it was made and delivered to W. only to get it discounted, and that W. fraudulently indorsed it to the plaintiff, who gave no consideration and knew of the fraud: replication de injuria; letters written by W., while holder of the note, are not admissible against the plaintiff to prove the fraud, without first establishing, aliunde, a privity between the plaintiff and

him. Phillips v. Cole, 10 Ad. & E. 106. A knowledge by the plaintiff, indorsee, of fraud in the concoction of a bill, is no defence if he received it for good consideration, from an innocent indorser. May v. Chapman, 16 M. & W. 355. As to how far a company are affected by knowledge of their director from whom they have bought bills which had been fraudulently obtained by him, see Ex parte Oriental Commercial Bank, L. R., 5 Ch. 358.

The holder without indorsement of a draft payable to order, though taken by him bona fide and for value, has no better title than the person from whom he took it; and such holder is affected by fraud, of which he has notice before he obtains the formal indorsement. Whistler v. Forster,

14 C. B., N. S. 248; 32 L. J., C. P. 161.

Forgery.] See sect. 24, ante, p. 325. Forgery of the defendant's signature is, of course, evidence under a traverse of the making, &c.; but, for the purpose of proving the forgery, the defendant cannot be permitted to prove that other bills, with forged signatures of his, had been in the hands of the plaintiff and circulated by him. Griffits v. Payne, 11 Ad. & E. 131. As to the acknowledgment by the defendant of a forged signature, so as to render himself liable thereon by estoppel or ratification, vile ante, p. 334.

Cancellation, so imperfectly effected that the bill is still apparently uncancelled, affords no answer as against a bona fide holder. Therefore, where the acceptor of a bill tore it in two for the purpose of destroying it before circulation, and the drawer fraudulently rejoined the pieces, and passed the bill to a bona fide holder for value, the acceptor was held liable, whether the fraud amounted to forgery or not. Ingham v. Primrose, 7 C. B., N. S. 82; 28 L. J., C. P. 294. The decision in this case was, however, dissented from by Brett, L. J., in Baxendale v. Bennett, 3 Q. B. D. 525, 532, 533, C. A. As to the alteration of the figures in the margin of a bill accepted in blank, see Garrard v. Lewis, ante, p. 335.

Illegality. See Defences to Actions on Simple Contracts,-Illegality, post. Where a bill has been accepted for good consideration, it seems that in an action against the acceptor, it is no defence that the plaintiff took the bill for illegal consideration. Flower v. Saddler, 10 Q. B. D. 572, 575; per Brett and Cotton, L. JJ.

Sect. 27, ante p. 321, defines valuable consideration and who is a holder for value.

Sect. 30. "(1.) Every party whose signature appears on a bill is primû facie deemed to have become a party thereto for value."

(2.) Every holder of a bill is prima facie deemed to be a holder in due course" (vide sect. 29, ante, p. 322); " but, if in an action on a bill it is admitted or proved that the acceptance, issue, or subsequent negotiation of the bill is affected with fraud, duress, or force and fear, or illegality the burden of proof is shifted, unless and until the holder proves that, subsequent to the alleged fraud or illegality, value has in good faith been given for the bill."

Want of consideration-Onus probandi.] In a case alleged to fall within the latter part of sect. 30 (2), supra, the judge is not bound to decide whether fraud has been proved in order to throw this burden on the plaintiff, but only whether is any evidence of fraud for the jury. Harvey v. Towers, 6 Exch. 656; 20 L. J., Ex. 318; Berry v. Alderman, 14 C. B. 95; 23 L. J., C. P. 34. When the plea alleged that the bill was founded on a wager, and that the indorsements were without value, proof of a wager, void but not unlawful, was held to show only want of consideration and not illegality, and to raise no presumption that the plaintiff

Defences.-Illegality of Consideration.

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was not a bona fide holder for value; it lay on the defendant, therefore, to prove this. Fitch v. Jones, 5 E. & B. 238 ; 24 L. J., Q. B. 293.

It seems that an admission of fraud or illegality on the record throws on the plaintiff the burthen of proof as to consideration, but, not as to absence of notice of the fraud or illegality, though the reason of the distinction is not very clear. The cases in support of this proposition are collected ante, pp. 74, 75, sub tit. Admissions on the record.

In Hogg v. Skeen, 18 C. B., N. S. 426; 34 L. J., C. P. 153, some of the defendants, acceptors, pleaded non-acceptance: held that proof under this issue, that the acceptance was by one of the defendants, who had let judgment go by default, in fraud of the others, his partners, but without showing the plaintiff's privity, obliged the plaintiff to show that he gave value for the bill; in this case, Musgrave v. Drake, 5 Q. B. 185, was distinguished. It would seem that Rules, 1883, O. xix., r. 15, would require this defence to be specially pleaded. A bill was sent to the plaintiff by a clerk with a message, which, if delivered, would have shown that the plaintiff had such notice as would have made him not a bona fide holder for value; the bill was delivered, but the clerk was not called, and it was not proved whether the message had been given or not held, in an action of trover, that the evidence was not sufficient to rebut the presumption that plaintiff was a bona fide holder. Middleton v. Barned, 4 Exch. 241.

Illegality of consideration; bona fides of holder.] See Defences in actions on simple contracts-Illegality, post. See sect. 29 (2), ante, p. 363, and sect. 30 (2), ante, p. 364, and sect. 90, ante, p. 318. Where a stolen note was changed by the plaintiff, a money-changer, who had received notices a year previously of this and other stolen notes, and kept such notices filed in his office, but did not examine them, he was held entitled to recover. Raphael v. Bank of England, 17 C. B. 161; 25 L. J., C. P. 33; Bengal, Bank, of, v. Macleod, 7 Moo. P. C. 35. Gross negligence may, however, be evidence of mala fides, though not equivalent to it. Goodman v. Harvey, 4 Ad. & E. 870. Buying the bill at a considerable undervalue, with a wilful avoidance of inquiry about it, may be evidence of notice of fraud in the concoction of the bill. Jones v. Gordon, 2 Ap. Ca. 616, D. P.

Where the bill was given for money lost by gaming, or upon an usurious contract, or to secure money paid to induce a bankrupt's creditors to sign his certificate, various statutes made it a void security, even in the hands of a bona fide holder; but, by 5 & 6 Will 4. c. 41, so much of the former statutes as made the securities void was repealed, and it was enacted that they should be deemed to have been given for an illegal consideration. This act (except so much of sects. 1, 2, as relates to stat. 9 Anne, c. 19, which applies to gaming and betting), was repealed by the Stat. Law Rev. Act, 1874; its unrepealed provisions do not prevent the payee of a bill of exchange given him in repayment of gaming debts, paid by him at the request of the acceptor, from recovering thereon. Ex pte. Pyke, 8 Ch. D. 754, C. A. Before the repeal of 5 & 6 Will. 4, c. 41, the defendant accepted a bill of exchange to secure a loan at usurious interest; after the repeal, he accepted fresh bills for the amount of the loan and the usurious interest, and it was held (Martin B., diss.) that there was good consideration for the new bills. Flight v. Reed, 1 H. & C. 703; 32 L. J., Ex. 265. In Rimini v. Van Praagh, post, p. 366, Cockburn, C. J., intimated that the judgment of Martin, B., in this case, was right. Where the defence was usury in the indorsement, the usury must have been proved; suspicion is not sufficient to put the plaintiff to proof of consideration; thus, in an action by indorsee against one who had indorsed the bill for the accommodation of the drawer, it was shown that one J., a relation of the plaintiff, got the bill discounted

for the drawer, and although it appeared that usurious discount was deducted by J., it was held that, whatever suspicion there might be against the plaintiff, this did not prove usury as against him. Bassett v. Dodgin, 10 Bing. 40. The earlier bankruptcy acts are now repealed, and the Bankruptcy Act, 1883 (46 & 47 Vict. c. 52), contains no provision avoiding a security given to induce a creditor to forbear opposing the bankrupt; the consideration, however, for such a security is illegal; vide post, Defences in actions on simple contracts-Illegality.-Contract by bankrupt. See Rimini v. Van Praagh, L. R., 8 Q. B. 1.

A promissory note given in consideration of the payee's forbearing to prosecute a charge of misdemeanor against the maker cannot be enforced. Clubb v. Hutson, 18 C. B., N. S. 414. See also Brook v. Hook, L. R., 6 Ex. 89, ante, p. 334.

Mere wagers, not made unlawful by any statutes against gaming, &c., are made void, by 8 & 9 Vict, c. 109, s. 18, which avoids all " contracts, parol or in writing, by way of gaming or wagering" But, the act does not in terms avoid a security given to pay a wager; it would, therefore, be only without consideration. See Fitch v. Jones, ante, p. 365, and Beeston v. Beeston, 1 Ex. D. 13.

On issue taken on a defence that a note was given for an illegal consideration, the plaintiff is not bound to produce the note as part of his own case. Read v. Gamble, 10 Ad. & E. 597, n.

By sect. 30 (2), ante, p. 364, illegality in the concoction or transfer of a bill, as well as fraud, felony, &c., will, if proved, put the holder on proof of consideration. See cases cited ante, pp. 364, 365.

The

Agreement at variance with the bill.] The terms of a bill or note cannot be varied by oral evidence to contradict it, even as between original or immediate parties to it; yet, a contemporaneous memorandum in writing is admissible for that purpose, whether on the same or a separate paper. Leeds v. Lancashire, 2 Camp. 205; Bowerbank v. Monteiro, 4 Taunt. 844. two together may thus form one agreement, and must be treated as such. The defence need not allege that the contemporaneous agreement was in writing. Young v. Austen, L. R., 4 C. P. 553; Corkling v. Massey, L. R., 8 C. P. 395; but, it will not be proved unless an agreement in writing is given in evidence in support of it at the trial. Young v. Austen, supra; Abrey v. Crux, L. R., 5 C. P. 37; Foquet v. Moor, infra. This is not, however, in accordance with what is laid down in the earlier cases, for it was formerly held that the plea must have shown that such contemporaneous agreement was in writing, or it would have been bad on general demurrer ; Canham v. Barry, 15 C. B. 597; 24 L. J., C. P. 100; Foquet v. Moor, 7 Exch. 870, 875; 22 L. J., Ex. 35, 37, per Parke, B., and compare Capner v. Mincher, 13 M. & W. 704, with Fryer v. Andrews, 17 L. J., Ex. 25; if, moreover, the plaintiff took issue on a plea, which did not state that the agreement was in writing, the defendant formerly might at the trial have proved the plea by showing an oral agreement; Cupner v. Mincher, supra.

In order that the agreement and promissory note may form one agreement, the agreement or memorandum must be between the same parties, and not merely collateral. Thus, in a suit by payee against maker, it is no answer that by an independent contemporary written agreement between the plaintiff on one side, and the defendant and others on the other side, it was agreed that the note should not be payable except in a certain contingency. Webb v. Spicer, 13 Q. B. 894 ; 3 H. L. C. 510. Where a plea alleged a subsequent agreement to vary a note, it could be supported only by proof of an agreement founded on good consideration. McManus v. Bark, L. R.,

5 Ex. 65.

Payment.] Sect. 33. "Where a bill purports to be indorsed conditionally the condition may be disregarded by the payer, and payment to the indorsee is valid whether the condition has been fulfilled or not."

Sect. 59. "(1.) A bill is discharged by payment in due course by or on behalf of the drawee or acceptor.

Payment in due course' means payment made at or after the maturity of the bill to the holder thereof in good faith" (vide sect. 90, ante, p. 318) "and without notice that his title to the bill is defective."

"(2.) Subject to the provisions herein-after contained, when a bill is paid by the drawer or an indorser it is not discharged; but

(a.) When a bill payable to, or to the order of a third party is paid by the drawer, the drawer may enforce payment thereof against the acceptor, but may not re-issue the bill.

(b.) Where a bill is paid by an indorser, or where a bill payable to drawer's order is paid by the drawer, the party paying it is remitted to his former rights as regards the acceptor or antecedent parties, and he may, if he thinks fit, strike out his own and subsequent indorsements, and again negotiate the bill."

"(3.) Where an accommodation bill is paid in due course by the party accommodated the bill is discharged."

See sect. 60, post, p. 371, as to the payment by the banker on whom it is drawn, of a bill payable on demand.

Sect. 71. (3.), ante, p. 323, relates to the payment of bills drawn in sets.

"(5.) When the acceptor of a bill drawn in a set pays it without requiring the part bearing his acceptance to be delivered up to him, and that part at maturity is outstanding in the hands of a holder in due course, he is liable to the holder thereof."

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"(6.) Subject to the preceding rules, where any one part of a bill drawn in a set is discharged by payment or otherwise, the whole bill is discharged."

Payment or satisfaction must be specially pleaded. For presumptive evidence in support of such plea see the cases cited ante, pp. 35, 36. Payment of the exact sum due on a note by the defendant in full satisfaction of debt and damages is sufficient, and entitles the defendant to a verdict, and the jury are not bound to give interest, or even nominal damages, for the detention of the debt. Beaumont v. Greathead, 2 C. B. 494. This was an action of debt; but in an action by indorsee against acceptor, a plea, puis darrein continuance, that an earlier indorser had paid to plaintiff, then the holder, who accepted the full amount of the bill, and also interest thereon, in full satisfaction of the bill, and all moneys due in respect thereof, not mentioning damages or costs, was bad. Goodwin v. Cremer, 18 Q. B. 757; 22 L. J., Q. B. 30; see also Ash v. Pouppeville, L. R., 3 Q. B. 86. Satisfaction to one of several partners is a satisfaction to all. Jacaud v. French, 12 East, 317. And, payment by one, not sued, of several joint and several makers, is payment by the defendant. Beaumont v. Greathead, supra. So, renewal of a joint and several note by one of the makers, and payment of such renewed note, is payment by all of the first note. Thorne v. Smith, 10 C. B. 659; 20 L. J., C. P. 71. But, the mere acceptance by the payee, from one of two joint and several makers of a note, of a mortgage and covenant to pay the amount of the note, is no defence to an action against the other; for the securities are not co-extensive; and proof that the mortgage was given to secure the same debt does not prove that it was accepted in lieu and satisfaction of the note. Ansell v. Baker, 15 Q. B. 20.

A judgment and execution, without satisfaction, against a subsequent party to a bill, will be no discharge of a prior party; it is only an extin