$ 29.

Rights of subsequent

7. A note given to raise money for corrupt purposes at an election where the maker was a candidate, is null: Gugy v. Larkin, 7 L. C. R. 11 (1857).

8. A note given as a wager on an election, held to be void: Dufresne v. Guevremont, 5 L. C. J. 278 (1859).

9. Notes given in excess of composition, held not to be void for illegal consideration: Greenshields v. Plamondon, 8 L. C. J. 192 (1860); Perrault v. Laurin, 8 L. C. J. 195 (1863); Martin v. Macfarlane, 1 L. C. L. J. 55 (1865); Bank of Montreal v. Audette, 4 Q. L. R. 254 (1878); Lefebvre v. Berthiaume, 18 R. L. 325 (1889).

10. A note of a third party given by an insolvent to a creditor, to obtain his consent to the discharge of the insolvent is null and void: Prevost v. Pickel, 17 L. C. J. 314 (1872); Leclaire v. Casgrain, M. L. R. 3 S. C. 355 (1887).

11. A trader obtained from his creditors an extension of time, and a party indorsed the last instalment extension notes, on condition that he would pay into a bank a certain sum per week. He made an assignment before the indorsed notes became due, when about half their amount had been deposited. Held, that the consideration was not illegal, and the assignee could not claim this money without relieving the indorser from his liability Normand v. Beausoliel, 2 Dorion 215 (1882); affirmed, 9 S. C. Can. 711 (1883).

12. A note given to the collector of revenue for a fine is not null, although the fine belongs in part to the provincial treasury: Bois v. Gervais, 10 L. N. 195 (1887).

13. A note given as a subscription to an election fund for provincial elections is null: St. Louis v. Senecal, M. L. R. 5 Q. B. 332 (1889).

14. A note given in part for illegal sales of liquor is wholly invalid Smith v. McEachren, 1 N. S. D. 299 (1868).

3. A holder, whether for value or not, who holder. derives his title to a bill through a holder in due

course, and who is not himself a party to any fraud § 29. 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. Imp. Act, s. 29 (3).

It is only one who has been a party to the fraud or illegality, that is precluded from acquiring all the rights and privileges of a holder in due course. Previous notice or knowledge of the original defect in the bill is not sufficient.

ILLUSTRATIONS.

1. The indorsee of a note given for lottery tickets, who received it from a bona fide holder for value without notice before maturity, can recover from the maker, even although he know what the consideration was when he acquired the note: Wallbridge v. Becket, 13 U. C. Q. B. 395 (1856).

2. Where a bona fide holder for value transferred a note to plaintiff, the latter was entitled to recover although he may have known of previous fraud in connection with the note: Clarkson v. Lawson, 14 U. C. Q. B. 67 (1856).

3. B. indorsed a note for C. to renew another note indorsed by him for C.'s accommodation. C. transferred the note for value to plaintiff, who knew no more than that C. was an accommodation indorser; there was no bad faith on plaintiff's part. Held, that he was entitled to recover: Cross v. Currie, 5 Ont. A. R. 31 (1880).

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

$29. before maturity in good faith and for value: Baxter v. Bruneau, 17 R. L. 360 (1889). Contra, above clause of Act.

Presumption of

6. 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).

7. The indorsee of a bill sues the acceptor who proves that he accepted 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 (1886).

8. 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.)

9. 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. Wisewell, 91 Mass. 42 (1864).

30. Every party whose signature appears on a value and bill is prima facie deemed to have become a party thereto for value:

good faith.

2. And every holder of a bill is prima facie deemed to 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 affected with fraud, duress, or force and fear, On whom or illegality, the burden of proof that he is such proof lies. holder in due course shall be on him, unless and

burden of

until he proves that, subsequent to the alleged § 30. fraud or illegality, value has in good faith been given for the bill by some other holder in due course: Imp. Act, s. 30.

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. 38. Value is defined in sections 2 and 27, and holder in due course in section 29.

66

Illegality" in this section is used as the equivalent of "other unlawful means" and "illegal consideration" in section 29, s-s. 2.

The latter part of sub-section 2 in the Imperial Act reads as follows:-"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." There is probably no difference in the effect of the two clauses.

ILLUSTRATIONS.

See illustrations under section 29, s-s. 2, and section 38 (b).

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, U. C. M. T. 6 Vict. (1842).

$ 30. 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).

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. Where there is fraud in obtaining a note, the law on slight grounds, will presume that the indorsee had knowledge of the fraud, especially if he omitted to satisfy himself as to the validity of the note: Hunt-v. Lee, 3 Rev. de Leg. 336 (1813).

6. 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).

7. Where a note is obtained by fraud, and the holder does not show how it came into his possession, or that he gave value for it, he will be presumed to have been aware of its fraudulent origin: Robinson v. Calcott, Ramsay A. C. 83 (1875).

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