This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Any defense may be made against a bona fide holder, which is allowed by the express terms of a statute or by its necessary effect.1 Under a statute allowing "immoral and illegal considerations" to be interposed as a defense against a bona fide holder, a contract to stifle criminal prosecution,2 or a contract for the sale of votes or of political influence,3 may be shown as a defense against a note given in performance of such contract. Statutes which make notes void when given on a gambling consideration,4 or as usury,5 or for intoxicating liquors,6 or for rent for a house to be used for prostitution,7 or by federal statute for land leased from Indians,8 or omitting such words as "peddlers' note,"9 or "given for a patent right," 10 permit such defenses to be set up against bona fide holders for value. Even under such statutes the maker may estop himself from setting up such defense by stating to the prospective indorsee before the purchase that the note is valid, and by misleading him by such statement.11
20 Citizens' State Bank v. Johnson County, 182 Ky. 531, 207 S. W. 8; Mason v. Shaffer, 82 W. Va. 632, 96 S. E. 1023.
21 See ch. LXXXV.
22 Kramer v. Schnitzer, 268 111. 603, 109 N. E. 695; Stevens v. Khetter, - S. Car. - , 96 S. E. 406; Johnston v. Knipe, 260 Pa. St. 504, L. R. A. 1918E, 1042, 103 Atl. 957; Mason v. Shaffer, 82 W. Va. 632, 96 S. E. 1023.
23 Kramer v. Schnitzer, 268 111. 603, 109 N. E. 695.
24 Johnston v. Knipe, 260 Pa. St. 504, L. R. A. 1918E, 1042, 103 Atl. 957.
25 Stevens v. Khetter, - S. Car. - , 96 S. E. 406. The opposite result was reached under a similar contract on the theory that the provision which authorized the note to be detached was in print so fine that the terms were not brought fairly to the knowledge of the maker. Stevens v. Venema, 202 Mich. 232, 168 N. W. 531.
1 Exchange National Bank v. Henderson, 139 Ga. 260, 51 L. R. A. (N.S.) 549, 77 S. E. 36; Eskridge v. Thomas, 79 W. Va. 322, L. R. A. 1918C, 769, 91 S. E. 7.
2 Jones v. Dannenberg Co., 112 Ga. 426, 52 L. R. A. 271, 37 S. E. 729.
3 Exchange National Bank v. Henderson, 139 Ga. 260, 51 L. R. A. (N.S.) 549, 77 S. E. 36.