40 Ia. 136; Blake v. Koons, 71 Ia. 356; Hibernian Bank v. Everman, 52 Miss. 500. And see Warren v. Haight, 65 N. Y. 171; Hill v. Shields, 81 N. C. 250.

Whether the maker or other obligor of paper who innocently pays after maturity a holder whose right to the instrument could be defeated for any of the reasons referred to in this note, can be compelled to pay again the original owner is considered only in Hinckley v. Union Pacific R. R. Co. 129 Mass. 52. In that case overdue coupons, cut from stolen bonds, were paid by the defendant to one who in good faith purchased the bonds after the maturity of the coupons in question. It was held that the defendant must pay the original owner. The court say (p. 60): "It is an elementary principle of commercial law that negotiable paper overdue carries with it, on its very face, notice of defective title sufficient to put the transferee on inquiry. Although the application of the simple rule to payment would be practically of rare occurrence, since notice of the loss or stealing would be given in almost every case, there is no reason why a distinction should be made in this respect between transfer and payment. . . . After maturity, a coupon, like any other negotiable security, loses the protection of the law merchant, and becomes a mere chose in action. There is no presumption of law that the party presenting such a chose in action to the party liable to pay is the true holder." In fact notice had been given to the defendant so that the sentences quoted were but a dictum. It is certainly imposing a great hardship on the obligor to hold him liable a second time in view of the facts that he usually cannot tell whether there has been a transfer after maturity, and is obliged to pay on presentation or suffer loss of credit. No one need purchase an overdue note, but the maker is bound to pay it when overdue as fully as on the day of maturity. The law merchant should, therefore, protect him as fully when he pays overdue paper as it does when he pays paper at maturity. The point, though not noticed by the court, was involved in Cone v. Brown, 15 Rich. 262; Lamb v. Matthews, 41 Vt. 42. See also King v. Fleece, 7 Heisk. 273; in all of which cases the payment was held a discharge, and the English Bills of Exchange Act also apparently protects payments made in good faith after maturity, § 59, (1).

A distinction of this kind is sometimes made. An indorsee * who buys a note for less than its face, can recover from his indorser only what he paid, with interest; but may recover from the maker, the whole amount of the note. This has been held in some cases in New York. (z) See on this subject the chapter on Usury.

On the ground that negotiable paper is intended only for business purposes, and has its peculiar privileges only that it may more perfectly perform this function, it has been held that one who takes a negotiable note, even before its maturity, but only in payment of or as security for an antecedent debt, without giving for it any new consideration, does not take it in the way of business, and is not a bond fide holder; and that he therefore holds the note subject to all equitable defences. This doctrine rests upon adjudications and opinions of great weight; but it is also denied by very high authorities, indeed by the highest in this country, the Supreme Court of the United States, who have decided that a pre-existing debt of itself, and without any strengthening circumstances, is of itself a sufficient consideration. (a) But it has nevertheless been held since that decision, by courts entitled to great respect, that the doctrine of the Supreme Court is erroneous and untenable. It must be admitted that the law on this subject is in a very unsettled state; but it may be supposed that in this country the authority of the Supreme Court will generally prevail.1

(s) De Bras v. Forbes, 1 Esp. 117; Lickbarrow v. Mason, 2 T. R. 71, per Ashhurst, J.; Abbot v. Hendricks, 1 Man. & G. 791; Herrick v. Carman, 10 Johns. 224; Hill v. Ely, 5 S. & R. 363; Clement v. Reppard, 15 Penn. St. 111; Johnson v. Martinus, 4 Halst. 144; Hill v. Buck-minster, 5 Pick. 391; Fisher v. Salmon,

1 Cal. 413; Fisher v. Leland, 4 Cush. 456; Bank of Tennessee v. Johnson, 1 Swan, 217. It is held in Starr v. Torrey,

2 N. J. 190, that failure of consideration known to indorsee, is a defence in a suit by him against maker.

(t) Perkins v. Challis, 1 N. II 254; Waterman v. Barratt, 4 Harring. (Del.)

311. See Klopp & Stump v. Lebanon Valley Bank, 39 Penn. St. 489, as to incompetency of indorser as a witness to impair the legal effect of the note in the hands of a holder to whom it was regularly negotiated. The Supreme Court of Illinois holds that a statute of that State permitting the defence of want or failure of consideration, has changed the common law. Oertel v. Schroeder, 48 Ill. 133.

(z) Ingalls v. Lee, 9 Barb. 647; Cram v. Hendricks, 7 Wend. 569; Rapelye v. Anderson, 4 Hill (N. V.), 472; Youngs v. Lee, 18 Barb. 187.

(a) Swift v. Tyson, 16 Pet. 19.

1 It is universally admitted that one who takes negotiable paper in absolute payment and discharge of an antecedent debt is a holder for value. And it is generally

It has been held that a note indorsed and negotiated on the last day of grace, is subject to the same defences as if indorsed after dishonor. (b)