The fact that the maker of a negotiable instrument had a personal defence against the indorser or a prior party will not render usurious a sale of the instrument for a low price to a holder in due course.39 But if the instrument except the indorsees obligation is wholly void, the transaction even though intended as a sale is in effect a loan to him, and where the discount is excessive, has been held usurious.40 The same view has been generally taken of accommodation paper indorsed by the accommodated party and discounted at an excessive rate, if the buyer of the paper is aware of the nature of the instrument.41 A number of courts deny recovery even if the purchaser supposed the instrument was enforceable in the hands of the indorser.42 But such decisions seem to rest upon a misapprehension of the nature of accommodation paper, which should be regarded rather as subject to the personal defence of lack of consideration while in the hands of the accommodated party, than as having no existence until negotiated by him. If the buyer knows of the accommodation, he knows that in substance the accommodated party is the principal debtor and therefore the discount may be regarded as in effect a loan to him, but in terms the accommodating maker is the principal debtor, and a purchaser for value without notice has a right to enforce it according to its terms. In accordance "with this view a number of courts uphold the validity of the transaction whatever the rate of discount, if the purchaser is ignorant of the accommodation character of the instrument, and the transaction is made in good faith.48

37Coye v. Palmer, 16 Cal. 158; Noble v. Walker, 32 Ala. 456; Stevenson v. Unkefer, 14 I1L 103, 105; Met-calf v. Pilcher, 6 B. Mon. 529; Lane v. Steward, 20 Me. 98, 104; Cobb v. Titus, 10 N. Y. 198.

38 Tuttle v. Clark, 4 Conn. 153; Roark v. Turner, 29 Ga. 455; National Bank of Michigan v. Green, 33 la. 140; Ayer v. Tilden, 15 Gray, 178, 77 Am. Dee. 355; Becker's Inv. Agency v. Rea, 63 Minn. 459, 65 N. W. 928; Newman v. Williams, 29 Miss. 212; Durant v. Banta, 3 Dutch. 624, 636; Gaul v. Willis, 26 Pa. St. 259; Cook v. Forker, 193 Pa. 461, 44 Atl. 560, 74 Am. St. 699.

39 Wildsmith v. Tracy, 80 Ala. 258; Lay v. Wiseman, 36 Iowa, 305; Joy v. Diefendorf, 130 N. Y. 6, 28 N. E. 602, 27 Am. St. Rep. 484; Baily v.

Smith, 14 Ohio St. 396, 84 Am. Dec. 385.

40 Hall v. Wilson, 16 Barb. 548; Har-ger v. Wilson, 63 Barb. 237, 246.

41 Nichols v. Levins, 15 Iowa, 362; Tufts v. Shepherd, 49 Me. 312; Van Schaack v. Stafford, 12 Pick, 565; Kennedy v. Heyman, 183 N. Y. App. D. 421, 170 N. Y. S. 828; Corcoran v. Powers, 6 Ohio St. 19; Connor v. Don-nell, 55 Tex. 167. See also Belden v. Lamb, 17 Conn. 441.

42 Saltmarsh v. Planters', etc., Bank, 14 Ala. 668; Carlisle v. Hill, 16 Ala. 398; Wildsmith v. Tracy, 80 Ala. 258; Cockney v. Forrest, 3 Gill & J. 482; Whitten v. Hayden, 7 Allen, 407; Cat-lin v. Gunter, 11 N. Y. 368, 62 Am. Dec. 113; Strickland v. Henry, 66 N. Y. App. Div. 23, 73 N. Y. S. 12; Simpson v. Fullenwider, 12 Ired. (N. C.) 334.

It has been assumed thus far that the accommodating party is prior on the instrument to the accommodated party who offers it for discount. If a prior party sells the instrument it is necessarily notice to the purchaser that the obligation of subsequent parties can be undertaken only for accommodation.44