63. NECESSITY - A valuable consideration is essential to the validity of every simple contract.

EXCEPTION - Want of consideration does not avoid a negotiable instrument in the hands of a bona fide purchaser for value.

64. PRESUMPTION - Negotiable instruments are by the law merchant deemed prima facie to have been issued for a valuable consideration; and by statute in some jurisdictions the same is true of all other simple contracts in writing, and of contracts under seal in those jurisdictions where the common-law effect of a seal has been abolished.

Consideration is the universal requisite of all contracts not under seal, except the so-called "contracts of record," which, like contracts under seal, derive their validity from their form alone.20

17 Eastwood v. Kenyon, 11 Adol. & E. 438.

18 Morris v. Norton, 75 Fed. 912, 21 C. C. A. 553. See "Contracts," Dec. Dig. (Key-No.) § 16; Cent. Dig. §§ 357-359; "Gaming," Dec. Dig. (Key-No.) § 19; Cent. Dig. §§ 89-44

19 Anson, Cont. (4th Ed.) 79; Thomas v. Thomas, 2 Q. B. 851. See "Contracts," Dec. Dig. (Key-No.) § 76; Cent. Dig. §§ 357-881.

20RANN v. HUGHES, 7 Term R. 34G, Throckmorton Cas. Contracts, 34; Cooke v. Oxley, 3 Term R. 653; Burnet v. Bisco, 4 Johns. (N. Y.) 235; Doeb-ler v. Waters, 30 Ga. 344; Lowe v. Bryant, 32 Ga. 235; Oullahan v. Baldwin, 100 Cal. G48, 35 Pac. 310; Branson v. Kitchenman, 148 Pa. 541, 24 Atl. 6l; McLean v. McBean, 74 111. 134; Baer v. Christian, 83 Ga. 322, 9 S. E. 790; Bailey v. Walker, 29 Mo. 407; Hendy v. Kier, 59 Cal. 138; Culver v. Banning, 19 Minn. 303 (Gil. 260); In re James, 78 Hun, 121, 28 N. Y. Supp. 992. See "Contracts," Dec. Dig. (Key-No.) § 47; Cent. Dig. §§ 220, 221, 256-258.

The rule applies to all simple contracts,21 including those contracts which are required to be in writing-, either by the statute of frauds, or by other statutes, or by the common law. It was at one time doubted whether a promise not under seal needed a consideration if it was put in writing,22 but the necessity for a consideration was affirmed and settled in England in 1778 in a suit against an administratrix who, without consideration, had promised in writing to answer damages out of her own estate. It was contended that the writing required by the statute of frauds rendered consideration unnecessary, but the contrary was held. "It is undoubtedly true," it was said, "that every man is by the law of nature bound to fulfill his engagements. It is equally true that the law of this country supplies no means nor affords any remedy to compel the performance of an agreement made without sufficient consideration. Such agreement is 'nudum pactum ex quo non oritur actio;' and, whatever may be the sense of this maxim in the civil law, it is in the last sense,only that it is to be understood in our law. * * * All contracts are, by the law of England, distinguished into agreements by specialty, and agreements by parol; nor is there any such third class, as some of the counsel have endeavored to maintain, as contracts in writing. If they be merely written, and not specialties, they are parol, and a consideration must be proved."28

Negotiable Instruments

Bills of exchange, promissory notes, and other negotiable instruments are to some extent an exception to this rule.

As between the immediate parties to the instrument consideration is necessary. Consideration, however, is said to be presumed - that is, the instrument itself is prima facie evidence of consideration; but the defendant may introduce evidence in rebuttal of the presumption, and if he can show that no consideration was given for his making or indorsement of the instrument his promise fails.24 The rule is the same when the party suing is a subsequent holder, unless he is a purchaser for value before maturity without notice, in which case want of consideration is not a defense.28

21Cooley v. Moss, 123 Ga. 707, 51 S. E. 625, holding that a written contract signed by the parties is not binding on a party as to whom it is without consideration. The guaranty. of another's debt must be supported by a consideration. In these contracts there are two considerations - a consideration for the original contract, and a consideration for the guaranty. See Brings v. Latham, 36 Kan. 205, 13 Pac. 129. If, however, as we have seen, a note, for instance, is guarantied by a third person before its delivery to the payee, the consideration from the payee to the maker is sufficient to support the guaranty as well as the note. Winans v. Manufacturing Co., 48 Kan. 777, 30 Pac. 163; Heyman v. Dooley, 77 Md. 162, 26 Atl. 117, 20 L. R. A. 257. See "Contracts," Dec. Dig. (Key-No.) § 47; Cent. Dig. §§ 220, 221, 256-258.

22 Pillans v. Van Mierop (A. D. 1765) 3 Burrows, 1663. See "Contracts," Dec. Dig. (Key-No.) § 1,1; Cent. Dig. §§ 220, 221, 256-258.

23RANN v. HUGHES, 7 Term R. 350, Throckmorton Gas. Contracts, 34. See, also, Cook v. Bradley, 7 Conn. 57, 18 Am. Dec. 79; In re Hess' Estate, 150 Pa. 346, 24 Atl. 676; Brown v. Adams, 1 Stew. (Ala.) 51, 18 Am. Dec. 36; Burnet v. Bisco, 4 Johns. (N. Y.) 235; Perrine v. Cheeseman, 11 N. J. Law, 174, 19 Am. Dec. 388; Train v. Gold, 5 Pick. (Mass.) 380; Eddy v. Roberts, 17 111. 505. See "Contracts," Dec. Dig. (Key-No.) § 47; Cent. Dig. §§ 220, 221, 256-258.