6 Simpson v. Turney, 5 Humph. 419; Turner v. Leech, 4 B. & Ald. 451; Marr v. Johnson, 9 Yerg. 1; Beale v. Parrish, 20 N. Y. 407; Palen v. Shurtleff, 9 Met. 581; Story on Promissory Notes, § 303.
§ 1194. But a party who takes negotiable paper after maturity,7 or with actual notice of any defect in the title to the instrument, or of any other defence available between immediate parties (as maker and payee, or indorser and indorsee), subjects himself to all defences which could be raised between such parties, unless, indeed, he derives a title to the paper from a prior bond fide holder for value.1 But it is no defence, in the case of a note or bill given for accommodation (that is, without consideration, for the benefit of another), that the plaintiff knew the character of the paper;2 though it would be otherwise if the defendant should prove that the instrument had been materially diverted from the purpose for which the accommodation was given, to the knowledge of the plaintiff.3
1 Story on Promissory Notes, §§ 190, 191.
2 Ib. § 191.
3 Ib. § 192.
4 Bailey v. Taber, 5 Mass. 286. See Paton v. Coit, 5 Mich. 505; Val-lett v. Parker, 6 Wend. 615, 622; Williams v. Cheney, 3 Gray, 215; Hubbard v. Chapin, 2 Allen, 328; Taylor v. Page, 6 Allen, 86; Brigham v. Potter, 14 Gray, 522; Norris v. Langley, 19 N. H. 423.
5 Story on Promissory Notes, § 190.
6 Allaire v. Hartshorne, 1 Zabr. 665; Holeman v. Hobson, 8 Humph. 127; Edwards v. Jones, 2 M. & W. 414; Robins v. Maidstone, 4 Q. B. 811. See Stoddard v. Kimball, 6 Cush. 469; Chicopee Bank v. Chapin, 8 Met. 40.
7 This paper does not, however, lose its negotiable character at maturity. Leavitt v. Putnam, 3 Comst. 494. The mere fact, therefore, that a bill or note is taken after maturity is in itself no defence; it simply subjects the plaintiff to notice of any defence which may exist. Having thus constructive notice, he is in the same position as one who has actual notice, and consequently is not a bonā fide holder.
§ 1195. It was formerly supposed in England, for a short period, that if an indorsee for value took a bill of exchange or a promissory note under circumstances showing gross negligence, his claim to recover over any defence existing against his vendor would be defeated.4 And this doctrine has been followed in some of the courts of this country.5 But the English case referred to has been overruled,6 and the later doctrine has been generally adopted in America.7 The rule now is that nothing short of proof of bad faith is sufficient to repel the claim of an indorsee who has paid value for the paper; in other words, nothing short of notice, actual or constructive, of some defence.8
§ 1196. Every person is, in the sense of the rule, treated as a holder for value who has advanced money or other value for it, or who has received it in payment of a precedent debt, or when he has a lien upon it, or has taken it as a collateral security for a precedent debt9 or for future as well as for past advances. Thus, a banker who is accustomed to make advances or to give acceptances from time to time for his customers, and has in his possession negotiable securities belonging to them for collection, is deemed to be a holder for value to the extent of such advances and acceptances.1 In every such case he is deemed to have a lien on such securities for the balances due him from time to time, as well as for such acceptances, by the implied consent or agreement of his customer, resulting from usage or the course of business.2
1 Story on Promissory Notes, § 191; Hascall v. Whitmore, 19 Me. 102; Redfield & Bigelow's L. C. 261, 262.
2 Grant v. Ellicott, 7 Wend. 227; Story on Promissory Notes, § 194.
3 Small v. Smith, 1 Denio, 583; Stoddard v. Kimball, 6 Cush. 469; Mohawk Bank v. Corey, 1 Hill, 513. But it would seem to be otherwise if the plaintiff derived title from a prior bond fide holder for value, as is the case in ordinary business paper. See Hascall v. Whitmore, 19 Me. 102.
4 Gill v. Cubitt, 3 B. & C. 466.
5 See Redfield & Bigelow's L. C. 257.
6 Goodman v. Harvey, 4 Ad. & El. 870.
7 Magee v. Badger, 34 N. Y. 247; Belmont Branch Bank v. Hoge, 35 N. Y. 65; Goodman v. Simonds, 20 How. 343; Story on Promissory Notes, § 197 and note; 3 Kent's Comm. 81, 82
8 Ibid. See, also, Fowler v. Brantly, 14 Pet. 318.
9 Swift v. Tyson, 16 Pet. 1; Redfield & Bigelow's L. C. 195 et seq., note, where the conflicts on this point are considered. And such party must bear the loss if by his laches the paper become valueless. Dar-nall v. Morehouse, 45 N. Y. 64.
§ 1197. In the ordinary course of things, the holder is presumed to be a bond fide holder for value; and he is not bound to establish that he has given any value for the paper or taken it without notice, until the other party has clearly established the illegality of the consideration, or that the note or bill has been lost or stolen or diverted (in the case of accommodation paper) from its intended purpose,3 or otherwise obtained by fraud, before it came to the possession of the holder.4 Proof of the original want or failure of consideration is probably insufficient to cast the burden upon the holder of proving that he paid value for the paper.5