However the doctrine may be in New York, Judge Story had no difficulty in saying that, according to the principles established in the general commercial law, a pre-existing debt does constitute a valuable consideration in the sense of the general rule applicable to negotiable instruments. 16 How. 18, 19. The question has been several times before the su preme court of the United States, and this court has uniformly held that it makes no difference as to the rights of the holder, whether the debt for which the negotiable instrument is transferred to him is a pre-existing debt, or is contracted at the time of the transfer. Coolidge v. Payson, 2 Wheat. 66, 70, 73; Townsley v. Sumrall, 2 Peters 170, 182; Swift v. Tyson, 16 Peters 20.

Judge Story considers this the established doctrine in England. Pillans &c. v. Van Mierop, 3 Burr. 1663; Abbott, C. J. in Smith v. De Witt, 6 Dow. & Ry. 120; De La Chaumette v. Bank of England, 9 Barn. & Cress. 209; Bosanquet v. Dudman, 1 Starkie 1; Ex parte Bloxham, 8 Ves. 531; Heywood v. Watson, 4 Bingh. 496; Bramah v. Roberts, 1 Bingh. N. C. 469; Perceival v. Frampton, 2 C. M. & R. 180. Chancellor Walworth thinks the question did not arise and was not decided in Pillans &c. v. Van Mierop; and according to his understanding of the other English cases, cited by Judge Story, only two of them, and these by impli cation merely, conflict with the New York decisions. The two cases to which he alludes, it may be inferred, are Bramah v. Roberts and Perceival v. Frampton, in the last of which Baron Parke expresses the opinion that if the note had been given to the plaintiffs as security for a previous debt, and they held it as such, they might be properly stated to be holders for valuable consideration; from which Chancellor Walworth infers that the Baron's opinion corresponds with that of the supreme court of the United States.

Of the decisions in the state courts, Judge Story refers to Bush v. Scribner, 11 Conn. 388, as supporting the position that a pre-existing debt is a valuable consideration sufficient to convey a valid title to a bona fide holder against all the antecedent parties to a negotiable note; and Chancellor Walworth refers to Homes v. Smyth, 4 Shepl. 177, Norton v. Warte, 2 Appl. 175, and Petrie v. Clark, 11 S. & R. 377, the last of which appears to him to be in accordance with what he understands to be the opinion of Judge Shepley in the first, that a party who takes a note or bill as collateral security for the payment of such a debt, and not in absolute payment and discharge of the same, will not be entitled to protection against the rightful owner. Stalker v. McDonald, 6

Hill 111. In this case the notes not having been received in payment or discharge of a debt, but as mere collateral security for the payment thereof, the plaintiff was held not entitled to protection as a bona fide holder for valuable consideration.

Judge Story, in his treatise on promissory notes, p. 215, § 292, continues to sustain Swift v. Tyson; and Chancellor Kent is inclined to concur in that decision. 3 Kent's Com. 80. There have been opinions one way in Ohio, Carlisle v. Wishart, 11 Ohio 172; and North Carolina, Reddick v. Jones, 6 Iredell 110; and the tendency is the other way in New Hampshire, Jenness v. Bean, 10 New Hamp. 246; Williams v. Little, 11 Id. 66; and Tennessee, Kembro v. Lytle, 10 Yerg. 428; Nichol v. Bale, Id. 429; Wormley v. Lowry, 1 Humph. 468.

The doctrine of Petrie v. Clark, 11 S. & R. 377, has been adhered to in Pennsylvania. Walker v. Geisse, 4 Whart. 256; Depeau v. Waddington, 6 Whart. 232, 3; Appleton v. Donaldson, 3 Barr 387. The rule there is, that though the holder of a negotiable instrument received in payment of a pre-existing debt, before maturity, cannot be subjected to equities which might have furnished a defence as between the original parties, and of which he had no notice, yet if the paper be taken as collateral security merely, for the payment of a debt, or for protection against previously assumed liabilities, the defendant may aver any ground of defence which would have been competent between antecedent parties to the bill or note; unless indeed there was some new and distinct consideration moving between the parties to the transfer; such as giving up some other available security; releasing another party, drawer or endorser; conceding further time for payment and the like. Kirkpatrick v. Muirhead, 4 Harris 123.

The subject has been much considered in Massachusetts. Wheeler v. Guild, 20 Pick. 545; Chicopee Bank v. Chapin, 8 Metcalf 40. In two cases (decided in 1849) the court distinctly recognizes the principle that the receiving of a negotiable note in payment of a pre-existing debt will exclude all the equities between the original parties; and that when the case is one of a note taken as collateral security, there is no sound reason for a different result. Blanchard &c. v. Stevens, 3 Cush. 168; Stoddard &c. v. Kimball, 4 Id. 604.

19. How far a bona fide endorsee for value may be affected by the endorsement to him being made after the paper became due.

There is no doubt a distinction between bills and notes en

dorsed before and after they become due. Taylor v. Mather, 3 T. R. 83, note; Banks v. Colwell, Id. 81; Brown v. Davies, Id. 80. But it does not follow that a bill or check is not negotiable merely because it is ante-dated, Boehm &c. v. Sterling &c. 7 T. R. 419; or post-dated, Passmore v. North, 13 East 517. Nor can it be maintained that a person taking a check over-due has never a better title than the person from whom he receives it. Rothschild v. Corney &c. 9 Barn. & Cress. 388, 17 Eng. Com. Law Rep. 402; Walker v. Geisse, 4 Whart. 256, 7.

In the United States where an endorsee has taken a bill or note after it was dishonoured, a defence has often been deemed available against him which would not have been sufficient if the same had been taken before it was due. Freeman v. Haskin, 2 Caines's Rep. 372; Hendricks v. Judah, 1 Johns. 319; Sanford v. Mickles &c. 4 Id. 227; Losee v. Dunkin, 7 Id. 70; Loomis v. Pulver, 9 Id. 214; Havens v. Huntington, 1 Cow. 396; Ayer v. Hutchins &c. 4 Mass. 370; Cromwell &c. v. Arrott, 1 S. & R. 183; Barnet v. Offerman, 7 Watts 130; Reakert v. Sanford, 5 W. & S. 170; Snyder v. Riley, 6 Barr 168.

In several cases decisions were made which are not to be reconciled with the doctrine now established in England. Thus in New York evidence was admitted of a set-off existing against the payee before his endorsement. O'Callaghan v. Sawyer, 5 Johns. 118; Ford v. Stuart, 19 Id. 342. In Massachusetts, in one case there are expressions unfavourable to allowing such a set-off, Holland v. Makepeace, 8 Mass. 422; but in a subsequent case it is decided that a set-off may be allowed. Sargent &c. v. Southgate, 5 Pick. 312.

These decisions proceed on the ground that a bill or note endorsed after it becomes due is taken by an endorsee subject to all the equities. A better expression would be that he takes the bill subject to all its equities. Cresswell, J. 4 Man. & Grang. 106. He is liable to such equities only as attach on the bill or note itself and not to claims arising out of collateral matters. Burrough v. Moss, 10 Barn. & Cress. 558, 21 Eng. Com. Law Rep. 128; Stein &c. v. Yglesias &c. 1 C. M. & R. 565.

For example, if the note be released or discharged, the plaintiff, under such circumstances cannot make a title to it. But a set-off of a cross demand is not an equity; it is a mere collateral matter. Whitehead &c. v. Walker, 10 M. & W. 694.

In North Carolina, the extent to which, at law, the doctrine that an assignee is affected by the liabilities of his assignor, has been carried, is that he shall be thus affected in respect of

such liabilities as existed at the time of the assignment and constituted a demand which was then available as a defence at law. Haywood v. McNair, 3 Dev. 231; 2 Dev. & Bat. 283; Turney v. Boggarly, 11 Iredell 334.

The rule in Maryland is like that of the English courts. Annan v. Houck, 4 Gill 332. So it is likewise in Pennsylvania. The supreme court of this state having established, ante, p. 171, that the endorsee of a note takes it, if, in the usual course of trade, discharged of equities, growing out of transactions between the original parties, has gone one step farther and adopted the rule of Burrough v. Moss and Whitehead v. Walker, that the endorsee of an over-due note takes it liable to equities arising out of the transaction itself, but not to set-off. Hughes v. Large, 2 Barr 103; Epler v. Funk, 8 Barr 468; Clay v. Cottrell, 6 Harris 413.

The mere fact of the bill being an accommodation bill does not prevent it being negotiable after it became due. This fact caused a decision in Quinn v. Fuller, 7 Cush. 224, different from what would now be made in England.

In England a plea has been adjudged bad in substance which shewed merely that the defendant accepted the bill for the drawer's accommodation, and without any consideration, and that after it became due, the drawer endorsed it to the plaintiffs, they knowing that it had been accepted for the drawer's accommodation, and that the defendant had not received any consideration for the same. The plea was considered bad in this that it contained no allegation of fraud nor any averment that the plaintiff did not give a full and valuable consideration for the bill. Charles &c. v. Marsden, 1 Taunt. 224; Sturtevant v. Ford, 4 Man. & Grang. 101, 43 Eng. Com. Law Rep. 61.

In another case the plea besides alleging that the defendant accepted the bill for the accommodation of the drawer and endorser, averred that he accepted it on condition that it might be endorsed and negotiated for their accommodation and use only before the same became due and not afterwards; and that without the defendant's consent the bill was endorsed to plaintiff after it became due, and the plaintiff did not become holder of it until after it so became due. The plea was adjudged bad. Carruthers v. West, 11 Adol. & El. N. S. 143; 63 Eng. Com. Law Rep. 143.

A plaintiff who takes a bill when it is over due, and without consideration, takes it subject to the equities and disabilities attaching on it in the hands of the person from whom he took it. If that person was an endorsee, the plaintiff must prove such an endorsement to that person as he if plaintiff must

have proved. Lloyd v. Howard, 15 Adol. & El. N. S. 998, 69 Eng. Com. Law Rep. 998.

20. Whether endorsement be before or after paper is due, an assignee of only part of what is due on it, can maintain no action on it.

Whether the endorsement be before or after the paper became due, if the assignment thereby, be of only part of what is due on the note, no action can be maintained thereon by the assignee against the maker. He is not to be made liable to two actions when by his contract he is liable to but one. Hawkins v. Cardy, 1 Ld. Raym. 360, Carth. 466, Salk. 65, 12 Mod. 213; Lex Merc. 445.

Where the payee first assigned over $1930 and 50 cents, part of a note, and afterwards assigned over the residue to the same person, it was held in South Carolina that no action could be maintained by that person against the endorser; the court considering that an endorsement for part of a note or bill is bad and that two vitious endorsements cannot make a good one. Hughes v. Kiddell, 2 Bay 324.

This was going farther than the supreme court of New York might be willing to go in a like case. But where the assignment was only of part of what was due on the note, so that on the principle of Hawkins v. Cardy, the assignee could not sue the maker, that court considered it a necessary consequence that he could not sue the endorser. Douglass &c. v. Wilkeson, 6 Wend. 641.

CHAPTER XXVI.

OF INSTRUMENTS NOT NEGOTIABLE. STATUTES OF VIRGINIA AND OTHER STATES GIVE ACTION THEREON IN NAME OF OBLIGEE OR PAYEE OR HIS ASSIGNEE.

1. Where by mutual agreement between debtor, creditor and a third person, the latter takes debtor's place.

There are cases in which by agreement, though it be parol, one person may be substituted for another, as it regards the obligation of the latter. Thus by parol agreement between landlord, tenant and a third person, the latter may be substi