If a valid negotiable instrument made by a third person is indorsed by the owner in payment of a gambling debt, or for other illegal consideration the indorsee becomes the owner and can recover from the parties on the instrument prior to the indorsee58 The contrary has indeed been held,59 but such a conclusion rests on a misapprehension of the nature of an indorsement which is both a contract and a conveyance. As a contract, since it is unlawful, the indorser is no more liable to the indorsee upon it than any obligor to any obligee of a gambling contract; but the indorsement transfers the ownership of the instrument and, in conformity with the well-recognized rule that a court will not disturb an executed transaction on account of illegality, the indorsee becomes the owner of the instrument with all the rights of an owner against all parties to it except his immediate indorser. In jurisdictions, however, where the loser in a gaming transaction is allowed to recover what he has lost even though actually transferred, the indorser may reclaim the instrument as he might reclaim money or other property; 60 and prior parties to the instrument if they had notice of the facts would not be justified in paying the indorsee, who was a part to the illegality, though they would be liable to a holder in due course. If the primary obligor as well as the indorser and indorsee was party to the illegality, no recovery can be allowed, for in that case the obligation on which recovery is sought is illegal and the plaintiff is chargeable with participation in the illegality.61 A few statutes have gone so far as to invalidate totally any transfer for a gaming consideration. Under such a statute not even an innocent holder in due course can maintain an action upon an instrument indorsed to a previous holder for a gambling consideration.62 As a matter of policy the propriety of protecting one who has lost at gaming at the expense of an innocent purchaser for value of what has been lost, may well be questioned.63 In the absence of so drastic a statute, the right of a holder in due course to recover on negotiable instruments previously indorsed on a gaming or other illegal consideration, would not be questioned.64
"The English Statute of 9 Anne, c. 14, which was held to make such instruments totally void, has been the basis of similar legislation in the United States.
56 Bowyer v. Brampton, 2 Str. 1155; Hitchcock v. Way, 6 Ad. & E. 943; Cooke v. Stratford, 13 M. & W. 379; Manning v. Manning, 8 Ala. 138; Kuhl v. M. Gaily Universal Press Co., 123 Ala. 452, 26 So. 535, 82 Am. St. Rep. 135; Birmingham Trust, etc., Go. v. Curry, 160 Ala. 370, 40 So. 319, 135 Am. St. Rep. 102; Conklin v. Roberts, 36 Conn. 461; Cunningham v. National Bank, 71 Ga. 400, 51 Am. Rep. 266; Sherfy v. Lachenmyer, 190 111. App. 443; First Nat. Bank v. Carroll, 80 la. 11, 45 N. W. 304, 8 L. R. A. 275; Holzbog v. Bakrow, 156 Ky. 161, 160 S. W. 792, 50 L. R. A. (N. S.) 1023; Emerson v. Townsend, 73 Md. 224, 20 Atl. 984; Spies v. Rosenstock, 87 Md. 14, 39 Atl. 268; Gray v. Robinson, 95 Miss. 1, 48 So. 226; Lagonda Nat.
Bank v. Portner, 46 Ohio St. 381, 21 N. E. 634; Unger v. Boas, 13 Pa. St. 601; Snoddy v. Bank, 88 Tenn. 573,13 S. W. 127, 7L.R.A. 705, 17 Am. St. Rep. 918; Hurlburt v. Straub, 54 W. Va. 303, 46 S. E. 163, and cases cited infra, n. 72. See also Pearce v. Foote, 113 11I. 228, 55 Am. Rep. 414; Bohon's Assignee v. Brown, 101 Ky. 354, 41 S. W. 273, 38 L. R. A. 503, 72 Am. St. Rep. 420.
57 Anonymous, 2 Mod. 279; Holsbog v. Bakrow, 156 Ky. 161,160 S. W. 792, 50 L. R. A. (N. S.) 1023; Hurlburt v. Straub, 54 W. Va. 303, 46 a E. 163. See also Rodrigues v. Martinez, 5 Philippine, 67.
58 Reed v. Bond, 96 Mich. 134, 55 N. W. 619. See also Flower v. Sadler,
10 Q. B. D. 572.
59 Drinkall v. Movius State Bank,
11 N. Dak. 10, 88 N. W. 724, 57 L. R. A. 341, 95 Am. St. Rep. 693. See also 20 Cyc. 937.