The holder of a bill or note, to take it free from defenses, must have given something of value for it.

3 Norton on Bills and Notes, Sec. 88.

4 See Chapter IV (Courts And Procedure Therein).

The exact amount paid is immaterial except as evidence to be considered on the question of good faith.5 A note given in payment of a contemporaneously contracted debt is given for a valuable consideration. Where a bill or note is given before its maturity in payment and extinguishment of a pre-existing debt it is generally held to have been transferred for a valuable consideration,8 but there are some authorities to the contrary.

"A distinction is sometimes drawn, more especially in New York, between cases where negotiable paper is received in absolute payment and extinguishment of a precedent debt and those wherein it is received in mere nominal or conditional payment, the right of the creditor to proceed upon the original indebtedness after the maturity of the paper remaining unimpaired. In the former case the creditor is unaffected by equities of which he has no notice. In the latter he holds subject to such equities." 7 8

When a bill or note is transferred before maturity as collateral security for a debt contemporaneously contracted, the transferee is regarded as a bona fide holder for value,9 and is entitled to hold the same even against a subsequent attaching creditor or payee.10

Where a bill or note is given as collateral security for the existing debt of a third person, there must be a definite agreement for forbearance, or some other circumstance of detriment to the creditor or advantage to the debtor, in order to render the creditor a holder for value.11

5 Swift vs. Tyson, 16 Pet. (U. S.), 1;

Barnum vs. Barnum, 8 Conn., 469, 21 Am. Dec, 689. 6 Townsley vs. Samrall, 2 Pet.

(Del.) (U. S.), 170; Bush vs.

Peckard, 3 Harr (Del.), 385;

Fay vs. Blackstone, 31 I11. 538;

Draper vs. Cowles, 27 Kan., 484.

7 Rosa vs. Brotherson, 16 Wend.

(N. Y.), 77; Ferris vs. Ravel, 87 Tenn., 386.

8 Am. & Eng. Ency. of Law, Vol.

IV, p. 288.

9 Exchange Bank vs. Butner, 60 Ga., 654; Belmont Branch Bank vs. Hoge, 35 N. Y., 65.

10 Davis vs. Carson, 69 Mo., 609.