
    Kitchen v. Loudenback.
    
      Promissory notes — Purchaser before due, for value, Who is — Good faith— Practice.
    
    1. A judgment will not be reversed for error in sustaining a demurrer to a defense, where the defendant does not stand upon such defense, but so amends his answer that upon the trial he has the benefit of all the averments of the original defense.
    2. If, in the absence of a bill of exceptions setting out the evidence, any state of the evidence, consistent with the pleadings, would justify the verdict and the judgment of the court rendered thereon, a reviewing court will presume, in support of the judgment, that such evidence was given.
    3. In an action on a negotiable promissory note, when it appears that the plaintiff is a purchaser before due, for value, in the usual course of trade, it is not sufficient as a defense to show that he took the note under circumstances that ought to have excited suspicion in the mind of a prudent and reasonable man. To constitute a defense the proof must show that, in purchasing the note, he acted in bad faith, or with a want of honesty. Johnson v. Way, 27 Ohio St. 374, approved and followed.
    4. The indorsee of a negotiable promissory note, who purchases it before maturity, for a valuable consideration, without knowledge of facts Which impeach its validity, may recover the amount due by the terms of the note, although the amount paid was less than the face of it, and although the note was obtained by the payee of the maker by illegal and fraudulent means, unless it appears that there was not power to issue the note, or the circumstances of its inception were such as to make it absolutely void by statute.
    (Decided February. 24, 1891.)
    Error to the Circuit Court of Clark county.
    In the court of common pleas, Loudenback filed a petition against Kitchen in the short form authorized by the code, founding his action upon a promissory note to one E. S. Clark for $420, of which a copy is set out, giving copy of indorsement to him, Clark, which bears date prior to the maturity of the note, and averring that the»note remained wholly unpaid. The defendant, by an amended answer, set up that Clark was the Superintendent of the North American Farmers’ and Planters’ Company for the production of cereals, a company incorporated under the laws of the state of Ohio, and engaged in the business of selling red line wheat, and that the note was given in part payment of fifty bushels of red line wheat, then sold by Clark for seed wheat, which wheat was sown by Kitchen at the proper season, but proved worthless and unsound and did not grow, and became a total loss; also averring that the note was given in pursuance of a scheme by which the company agreed that of the crop grown from the wheat thus sold it would sell for Kitchen one hundred bushels at fifteen dollars per bushel, retaining 33¿ per cent, for its commission, which price was a fictitious, speculative, and gambling price, and the transaction an illegal and gambling transaction ; that the note was given contemporaneous with the giving of a bond by the company to carry out its agreement to sell; that the conditions of the bond were not performed, and their performance illegal and impossible, and that the note was void under the statutes of Ohio. A general demurrer to this defense was sustained, to which defendant excepted. The defendant then amended his answer alleging that the purchase of the note by Loudenback was with knowledge of the illegal, fraudulent and gambling consideration, and of facts which put him on notice of the real transaction, and that defendant paid only $367.50 for it. Plaintiff replied admitting that since the commencement of the action he had learned that the note was given for the consideration named in the second defense, but denied every other allegation, and alleged that he had purchased the note in the usual course of trade before it became due, in good faith, without knowledge of the facts set forth in the answer of any infirmity therein, and paid therefor full value as a good and valid note.
    The record does not give any of the evidence, nor is the entire charge given. It shows that the defendant requested the court to charge the jury, in substance, that if the consideration for the note sued for in this case, was found by it to arise out of the illegal and fraudulent transaction set forth in the second defense stated in the second amendment to the defendant’s answer, that in that case the plaintiff would not be entitled to recover more than the amount paid by him for said note, in case they found that he purchased it in good faith for a valuable consideration and without notice of the consideration for which the said note’was given, including interest on the amount thus paid from the date of payment.
    This instruction thus asked the court refused to give, but after having stated the issues made in the pleadings, upon which the case was tried, further instructed the jury, as follows:
    “ The definition of the terms which I have just used, may aid you in determining the questions in the case. Briefly, if the purchaser pays cash for a note, he acquires it in the usual course of trade for valuable consideration. Before maturity is before a note, by its terms, is due and payable. This note, by its terms, became due and payable April 1, 1886 ; allowing three days of grace, it became due and payable April 4, 1886. Therefore, if you find that the plaintiff paid $867.50 cash for the note, on July 16,1885, to a person authorized to sell it, and obtained the note, the note being payable to bearer, might pass by delivery, but the transfer is not defeated or affected by the indorsement of the payee, Mr. Clark, and the plaintiff would then have acquired it in the usual course of trade for a valuable consideration, and would be entitled to recover thereon, unless it appears from the evidence that he had, at the time, notice of the alleged considerations, already stated and claimed to be in the note, or that he had information which ought to have excited the suspicion of a reasonable man thereto, and having the opportunity, failed and neglected, or refused to inquire thereto, because he was afraid he would thereby learn what he did not want to know. It is not sufficient, if it only appears that he took the note under circumstances that ought to have'excited suspicion in the mind of a prudent and reasonable man, but it must appear that he took the note under circumstances as show he acted in bad faith or with a want of honesty, and in determining whether he so acted, you will look to all the circumstances and the evidence of the fact, if proved, as claimed, that he paid less than its fair and reasonable value for the note.....
    “ If, under all the circumstances, you find the plaintiff acquired and holds the note by purchase in good faith, in the usual course of trade for a valuable consideration, before due, without notice of such infirmities, your verdict will be in his favor for $420, with six per cent, interest to this date. Add together the sum so found, — that is, the interest and principal, — and the whole amount will be his damages.....
    “If you are satisfied that the note was given for seed wheat at fifteen dollars per bushel and that such seed wheat proved worthless as such, then your verdict would be in favor of defendant, provided you further find that Mr. Loudenback had notice of the worthless character of the wheat and of such consideration, or had such notice as to put him on inquiry, and he failed to inquire, solely for the reason that he did not want to know the consideration.”
    The jury returned a verdict for plaintiff for the full amount of the note with interest, and a judgment was thereon rendered, which was affirmed by the circuit court. To reverse these judgments this proceeding in error was brought.
    
      Keifer Keifer, for plaintiff in error.
    1. Did the court err in sustaining the demurrer to the amendment to the answer setting up a second defense to the petition of the plaintiff below? Was error in sustaining demurrer waived ?
    The circuit court, in its published opinion, (8 Circuit Court Rep. 228,) seems clearly to indicate that it was of the opinion that the common pleas court erred in sustaining this demurrer, but it was of the opinion that Kitchen could not take advantage of such error, because he filed a subsequent amendment setting up another second defense and went to trial on that; also because on the trial of the case the circuit court was of the opinion the law had been properly given to the jury. We controvert both these propositions and deny stoutly that the facts set forth in the record warrant any such conclusions, or that there is any authority to support either of them. To hold that, after a demurrer is sustained to a pleading, the party must submit and make no further effort on any possible grounds, to make a defense, or waive any error the court may have made in sustaining the demurrer, would be absurd and unjust.
    The case of Davis & Co. v. Gray, 17 Ohio St. 331, is cited by the circuit court in support of the proposition. An examination of the syllabus of this case will show nothing on the subject. An examination of the case will show that Judge Brinkerhoff was of the opinion that, where all the averments (and no others of substance) contained in a pleading to which a demurrer had been sustained, were in substance, embraced in an amended pleading, afterwards filed, on which issues were taken, and the party had the full benefit of them in the subsequent progress of the case, that in such case it was immaterial whether the court erred or not, in sustaining the demurrer to the original pleading. This, however, presupposes that the new pleading, on which the case was tried, was not coupled with other averments in the same pleading necessary to be proved in order to make the repeated parts good. In our case an additional averment of notice of value, was set up in the amendment and this was, of substance, entirely new, and with it made the pleading good as against a demurrer even though the court of common pleas was right in sustaining the demurrer to the original second defense. The rule is correctly stated in Knox Co. Bank v. Lloyd, 18 Ohio St. 353.
    We contend that if the court erred in sustaining the demurrer to the original second defense, we were seriously prejudiced thereby. Deery v. Cray, 5 Wall. 796; Moores v. National Bank, 104 U. S. 625; Davis v. Bartlett, 12 Ohio St. 534; McKesson v. Stanbery, 3 Ohio St. 156; Collins v. Gilbert, 94 U. S. 753, 761; Daniels on Neg. Insts., sec. 198, 815, and n. 816-19; Byles on Bills, 223; Monroe v. Cooper, 5 Pick. 412; Todd v. Wick Bros. & Co., 36 Ohio St. 370, 390; Edwards on B. & N. 318-19; Paton v. Coit, 5 Mich. 505; Uther v. Rich, 10 Ad. & E. 784; Tucker v. Morrill, 1 Allen, 528; Sisterman v. Field, 9 Gray 331; 1 Parsons on N. & B. 188-9 and n., 1st ed.; Bliss on Code Pleading, sec. 395; 2 Greenleaf on Evidence, sec. 172. And evidence of fraud or illegality is competent without first offering proof of notice that the holder of a note had knowledge of such illegality or fraud at the time of the purchase. Woodhull v. Holmes, 10 John. 230.
    II. We further submit that the second defense to which the demurrer was sustained, showed the note was based on a gambling consideration, and therefore void under Revised Statute, sec. 4269. Lagonda National Bank v. Portner, 46 Ohio St. 381; Shirey v. Ulsh, 2 Ct. Ct. Rep. 401; Williams v. Keel, 17 Law Bull. 118; see also Daniels on Neg. Insts., sees. 197, 807; Bank v. Prather, 12 Ohio St. 497, 509; Waugh v. Beck, 114 Pa. St. 422; cited also in 17 Law Bull. 171.
    III. We think that the court clearly erred in charging the jury as an abstract proposition, and without qualification, that “ if the purchaser pays cash for a note he acquires it in the usual course of trade for a valuable consideration.” We are aware that this language is loosely used in the case of Todd v. Wick, 36 Ohio St. 370, 392, but we do not think that this sanctifies it into a sound, abstract legal proposition. If it followed that the jury was to understand that the court only meant that the payment of cash for a note, under proper circumstances, gives the purchaser the title to it in the usual course of trade for a valuable consideration, there could be no room for complaint, but an abstract statement of the kind quoted above is wholly misleading and erroneous, and compels a jury to render a verdict, if money or “ cash ” is only shown, to be paid, no matter how, or under what circumstances of notice or knowledge. While it may be true that the court meant that a jury should look over the entire charge and find what it meant by this sentence, we still insist that a jury, in the jury room,, under the instructions, would be driven to reach the conclusion, if the testimony showed that “ cash ” was paid for the note,, that that, and that alone, required it to find the party acquired it in the usual course of trade for a valuable consideration.
    A payment on account of the purchase of a note in any other kind of property than “ cash ” would be as good. Huff v. Wagner, 63 Barb. 215.
    IV. It is also claimed that the common pleas court erred in instructing the jury that “ it must appear that he, (Loudenback,) took the note under such circumstances as show he acted in bad faith or with a want of honesty,” etc. This instruction, taking the connection in which it was used, was equivalent to saying to the jury, that unless Loudenback was found to be a scoundrel in procuring the note, no matter what notice or knowledge he had of its fraudulent and gambling consideration, he could recover on it.
    By this paragraph Loudenback is required to prove, before he can recover, that he acted honestly in acquiring the note without knowledge or notice, if the jury first find that Clark or the person who transferred the note to Loudenback acted fraudulently toward the maker of the note. A man may act honestly and in good faith in the purchase of a note, yet having such notice of equities or defenses existing as will prevent his recovering on it. He may honestly mistake his rights, and still be left without a remedy at law. He might honestly purchase a note, before due, for value, without notice or knowledge of defenses, and yet not be entitled to recover on it because not purchased in the usual course of trade. He may honestly believe there was* no defense to the note, and yet have such notice of the consideration for which it was given as to prevent his recovering thereon. Bad faith on the part of the purchaser in failing to make inquiry, when he has no express notice of the consideration, etc., of the note, may, and often is, the equivalent of such notice, if he has notice or knowledge which, to a reasonable man, would indicate a defect in the note. Daniels on Neg. Insts. sec. 795; see also secs. 777, 796-799; Borden v. Clark, 26 Mich. 410; Sackett v. Kellar, 22 Ohio St. 554; 1 Parsons on N. & B. 191, note, 1st ed.; Daniels on Neg. Insts., sec. 754-758, note. Redfield & Biglow’s Leading Cases on Bills, etc., pp. 214,- 270, and cases cited; Story on Promissory Notes, sec. 191, and cases cited; Sedgwick on Damages, p. 338; Bailey v. Smith, 14 Ohio St. 396: Edwards v. Jones, 7 Car. & P. 633; Stalker v. McDonald, 6 Hill, 93, 96; Williams v. Smith, 2 Hill, 301; Youngs v. Lee, 18 Barb. 187; Huff v. Wagner, 63 Barb. 230; Harger v. Wilson, 63 Barb. 237; Valette v. Mason, 1 Ind. 288; Sisterman v. Field, 9 Gray, 331; Allaire v. Hartshorne, 1 Zab. 665, 21 N. J. L. R. 665; Holcomb v. Wyckoff, 35 N. J. L. R. 35; 6 Vroom 35; Chicopee Bank v. Chapin, 8 Metc. 40; Stoddard v. Kimball, 6 Cush. 469; Hilton v. Smith, 5 Gary, 89; Bond v. Fitzpatrick, 4 Gary, 89; Butterfield v. Town of Ontario, 32 Fed. Rep. 891.
    
      Greorge J. Arthur, for defendant in error.
    The court of common pleas did not err in sustaining Loudenback’s demurrer to Kitchen’s second defense, as originally pleaded.
    While that defense might have been good in a suit on the note in the hands of the original payee, it did not state facts sufficient to defeat a recovery by Loudenback, who purchased the note from the payee, before maturity, for a valuable consideration, in the usual course of business, and without any knowledge or suspicion of any infirmity in the instrument. These facts are fairly inferred from the nature of the case and the express averments of the petition in common pleas. But it is not averred in the second defense, as originally pleaded, that Loudenback purchased the note sued on with notice, or under circumstances which amounted to notice, of any of the facts alleged by Kitchen; and the common pleas court, therefore, very properly sustained Loudenback’s demurrer to Kitchen’s second defense.
    But whether the court of common pleas was right or wrong in sustaining that demurrer, its final judgment cannot be reversed on that ground; because the plaintiff here does not appear to have been, and was not in fact, prejudiced by that decision. The record shows that all of the facts alleged by Kitchen in his second defense as originally pleaded were repeated by him in his amended second defense. In fact, his original second defense and his amended second defense are identical, except as to the averment in the latter that when Loudenback purchased the note he had notice of its “ illegal, fraudulent and gambling consideration,” and had knowledge of such facts as put him on inquiry, and that he paid for the note only $367.50.
    Loudenback did not demur, but replied to this amended second defense; and upon the issues thus joined the case was tried. Kitchen, therefore, had the full benefit of every averment of facts made by him in his original second defense, and could not have been prejudicially affected bythe court’s ruling on Loudenback’s demurrer. Davis & Co. v. Gray, 17 Ohio St. 337; Kitchen v. Loudenback, 3 Ohio Circuit Court Reports, 228.
    Kitchen’s bill of exceptions does not contain any of the testimony in the case; but it shows that testimony was offered by him, and admitted by the court, tending to prove all of the facts alleged in his answer as finally amended; and it shows also that in regard to the burden of proof, and the shifting of the same from the defendant to the plaintiff, the court of common pleas instructed the jury as requested by Kitchen, and in strict accordance with the rules on that subject as followed in the cases of McKesson v. Stanberry, 3 Ohio St. 156, and Davis v. Bartlett, 12 Ohio St. 534.
    II. The note in controversy was not given for a gambling consideration. Kitchen himself, says in his answer that it was given for a lot of wheat which he purchased at fifteen dollars per bushel. He probably paid too much for what he bought; but that was his own fault. Before buying the wheat and giving his note, he was fully advised and correctly informed of the quality of the wheat and of the nature of the scheme under which the vendors were operating. There was no fraud, therefore, in the transaction as between the original parties to the note — certainly none that would be available as a defense for Kitchen in a suit on the note in the hands of an innocent purchaser before maturity.
    And the transaction in which this note was given was not illegal. The act of May 15th, 1886, “ to punish and prevent fraud in the sale of grain, seed and other cereals,” (83 O. L. 162-163), was not passed until nearly a year after this note was given.
    But neither fraud nor illegality in the inception of the note brings the case under the operation of section 4269 of the Revised Statutes. For there is many a fraudulent, and many an illegal, business transaction which can in no legal sense be called a gambling transaction; and that which is described by Kitchen in his answer is one of this class.
    There is no analogy between the case at bar and the case of The Lagonda National Bank v. Portner, 46 Ohio St. 381. In the last named case the court held that the indorsee of a check given for money lost at a game of cards cannot recover upon it against the drawer, though a bona fide holder for value without notice of the vice in the consideration, because the check was plainly void under the provisions of section 4269 of the Revised Statutes. But there is a vast difference between a check given for money lost at a game of cards and a note given for fifty bushels of wheat, the wheat being actually delivered to and used by the maker of the note.
    III. In regard to the third point urged by counsel for the plaintiff against the proposition that, “ if the purchaser pays cash for a note he acquires it in the usual course of trade for a valuable consideration,” it is sufficient to say that the proposition is fully sustained by the decision of this court in the case of Tod v. Wick, 36 Ohio St. 392, and by numerous other authorities.
    But whether the proposition be sound or unsound, the bill. of exceptions shows only a part of a sentence taken from the charge of the court on this subject. If the entire paragraph from which the words quoted are taken, or if the entire charge of the court which was in writing, were contained in the record, it would not only appear that the court below did not charge this proposition without qualification, but that it instructed the jury fully as to what constitutes the purchase of a note bona fide, for value, and in the usual course of trade; and that the charge as a whole an this subject is fully sustained by all of the authorities. I submit that it is contrary to the settled practice of this court to reverse a judgment on the ground that there was error in the charge of the court below, when only an extract from the charge on the subject is shown by the record.
    IY. The charge of the court below on the question of Loudenback’s good faith in purchasing the note was not erroneous. It was not, as claimed by counsel for the plaintiff, “ equivalent to saying to the jury, that unless Loudenbaek was found to be a scoundrel in procuring the note, no matter what notice or knowledge he had of its fraudulent or gambling consideration, he could recover on it.” Nor was it equivalent to saying that, in order to defeat a recovery on the note, the jury must “ find from the evidence that he was a dishonest man, and in the purchase of the note acted in bad faith before it could find for the defendant below.” The charge will not, as a whole or in any of its parts, bear any such construction, or convey any such meaning as this. On the contrary, the record clearly shows, on pages 14, 15 and 16, that on this question the charge of the court was just to Kitchen, and strictly according to the law, as settled by the following cases. Johnson v. Way, 27 Ohio St. 374; Todd v. Wick, 36 Ohio St. 370; Murrey v. Lardner, 69 U. S. 110; Cromwell v. Sac County, 96 U. S. 51; McKesson v. Stanberry, 3 Ohio St. 156; Davis v. Bartlett, 12 Ohio St. 534; Bassett v. Avery, 15 Ohio St. 299, 479; 1 Daniels on Negotiable Instruments, secs., 769 to 777.
    Y. It is claimed by counsel for the plaintiff that the court below erred in its charge to the jury in regard to the amount which Loudenbaek should recover, if they found he was entitled to recover anything. Their proposition is, as I understand it, that whenever a negotiable promissory note is given without any consideration, or has its inception in fraud, or is the fruit of the illegal transaction, a purchaser before maturity, in good faith, for a valuable consideration, in the usual course of trade, and without notice of any infirmit3r in the note, is not entitled to recover upon it according to its terms, but is limited to the amount which he paid for the paper, with six per cent, interest from the time of his purchase. I submit that this is not the law, and is contrary to the rule followed by the highest authorities in dealing with this question. 1 Daniels on Negotiable Instruments, secs. 757 and 758; Cromwell v. Sac County, 96 U. S. 51; also Gaul v. Willis, 26 Pa. St. 259; Moore v. Baird, 30 Pa. St. 138; and Daniels v. Wilson, 21 Minn. 530.
    I insist that Loudenback was entitled to recover a verdict for the full amount of the note according to its terms, if he was entitled to anything, and that the court below did not err in its instruction to the jury to that effect. For this has always been regarded as a sound rule of commercial law in Ohio, and no decision in this state can be found to contravene it. The question was not involved, and was not decided in the case of Bailey v. Smith, 14 Ohio St. 396. The Supreme Court of the United States has followed this rule, notably in the case of Cromwell v. Sac County, 96 U. S. 51, above cited; and the reasons assigned in support of it by Justice Field, who delivered the opinion of the court in that case, are unanswerable.
   Spear, J.

1. The first exception is to the sustaining of the plaintiff’s demurrer to the second defense as set up in the amendment to answer. It is insisted that this defense showed the note to have been based upon a gambling consideration, and therefore void under section 4269 of the Revised Statutes. That section provides that all notes, etc., when the whole or any part of the consideration is for money or other valuable things won or lost, laid, staked or betted, at or upon any game, or upon any wager, etc., shall be absolutely void. No one would doubt that the alleged contract was immoral and against public policy, but does it involve a wager ? A wager is defined (Fareira v. Gabell, 89 Pa. State, 89), as a contract in which the parties stipulate that they shall gain or lose upon the happening of an uncertain event in which they have no interest except that arising from the possibility of such gain or loss. In this case the company sold and actually delivered to Kitchen fifty bushels of wheat at fifteen dollars per bushel. It further agreed to sell one hundred bushels of wheat to be grown by Kitchen from this seed, at the same price, less commission of 33|- per cent., and gave its bond to him to secure the performance of this agreement. Had the contract been a lawful one the failure of the company to perform would have been measured by damages and enforced by action on the bond. And, whatever may have been the intention of the company, it is clear that Kitchen had no idea but that the company would perform its agreement, and relied upon the bond as. his security. He did not intend to enter into a gambling contract. In that aspect, therefore, the contract lacked mutuality. It is true that there were elements of uncertainty in the transaction. Kitchen’s crop might fail to yield the quantity he expected would be sold, or any quantity, and the company might not be financially able to respond even should he be ready. But it does not follow that every contract which presents uncertainties is a wager. Nor did the company expect or intend to lose in case any failure of crop should make it impossible for the agreement to sell, on its part, to be carried out. Its intent was to obtain Kitchen’s note for the fifty bushels of wheat delivered, and that alone. In no view of the case was this a gambling contract within the meaning of the section of the statute quoted.

As against the petition the answer may have set up a defense, so, at least, as to throw upon Loudenback the burden of proving a purchase of the note before due, in the usual course of trade, and for value, and, in this aspect, it may be that the demurrer should have been overruled. But we think the exception cannot be sustained because it does not appear that the defendant was prejudiced by the ruling. The answer was subsequently amended by adding an allegation that the plaintiff, at the time he obtained the note, had notice of its want of consideration and fraudulent character. The defendant had, therefore, at the trial, advantage of the allegations of the second defense as originally pleaded, unless the court made some improper and prejudicial ruling as to the introduction of evidence, or order of proof. The record fails to show any error of this kind, and it must be presumed, in favor of the judgment, that none such was made. It is settled in Ohio that, in the absence of a bill of exceptions setting out the evidence, if any state of the evidence consistent with the pleadings would justify the verdict and judgment, a reviewing court is bound to presume, in support of the judgment, that such evidence was given. Ide v. Churchill, 14 Ohio St. 372; Bailey v. Smith, Id. 396. And it may be safely concluded that if the defendant had been, in any wise, prejudiced by the holding of the trial court, upon evidence, the vigilant counsel would have seen to it that the error was fully set forth in the record.

2. It is alleged as error that the court said to the jury: “ Briefly, if the purchaser pays cash for a note, he acquires it in the usual course of trade for a valuable consideration.” The equivalent of the above is decided in Tod v. Wick, 36 Ohio St. 370, in these words: “ Where the indorsee of a negotiable promissory note pays cash therefor, he is a purchaser in the usual course of trade,.notwithstanding the fact that he paid for the note a sum less than its fair and reasonable value.” Irrespective of this, however, the charge upon what constitutes a purchase of a note in good faith for value, in the usual course of trade, is full and accurate, and this court would not incline to disturb the judgment, for this cause, alone, even if it doubted the accuracy of the sentence quoted above, taken by itself.

3. The court, in the charge, said to the jury that “it is not sufficient if it only appears that he (plaintiff) took the note under circumstances that ought to have excited suspicion in the mind of a prudent and reasonable man, but it must appear that he took the note under circumstances as show he acted in bad faith, or with a want of honesty.” This is excepted to. We think the exception not well taken. The instruction was given to apply in the event that the jury found the plaintiff purchased the note before due, in the usual course' of trade, for a valuable consideration, and there is express authority for the instruction in Johnson v. Way, 27 Ohio St. 374, and in a large number of other cases. The proposition may be regarded as settled law in this state; and, upon this branch of the case the entire charge is fully as favorable to the defendant below as he could properly ask.

4. It is further urged as error that the court said to the jury that, if entitled to recover at all, the plaintiff was entitled to recover the face of the note, with interest. The theory of this exception is that the indorsee of paper, the consideration of which is illegal or fraudulent, can recover only the amount he paid with interest, because he should not be permitted to speculate as against the maker of the note. A long list of cases is given in support of this claim, and a number of them do support it. It seems to be conceded, however, that, in the absence of fraud or illegality in the inception of the note, though the consideration has wholly failed, the Iona fide purchaser for value before due, may recover the full face with interest. We fail to perceive that, upon principle, there is any difference between the two cases. Undoubtedly such holder’s rights must be determined by ascertaining what he gets by his purchase. If the note, then it seems clear that, unless the maker may be allowed a defense against the note, the measure of his liability is all that appears due on it. Can there be doubt that it is the note he purchases? The familiar rule is that defenses which might be set up as between the original parties to negotiable paper, will not avail as against a Iona fide purchaser for value, in the ordinary course, of trade, before maturity. In other words, such purchaser acquires the note clear of all defenses unless it is absolutely void for want of power in the maker to issue it, or its circulation is by law prohibited by reason of the illegality of the consideration. That is, the purchaser takes the note itself. He does not take a cause of action for money paid to another’s use. In paying, he is not paying money to the use of the maker, or for his benefit. He purchases the maker’s promise to pay. He is protected against defenses because he has the right to put faith in the representation, on the face of the paper, that it was given for a valuable consideration, and, as against the maker, the note is held to be as he represented it. He is, therefore, estopped from denying such, representation. How is the ease changed where fraud, or illegality, enter into the inception of the note ? The note is not void in either case. The purchaser does not any the less purchase the note. He is not, in any sense, less the owner of the paper itself. When action is brought to recover, the suit is just as much upon the note itself in the one case as in the.other. The representation of the maker has the same effect in inducing a transfer of the paper in the one case as in the other, and it would seem that it ought to be no less conclusive in the one case than in the other. The defense of the maker is against the note, and against the note only, in either case. If he may resist the amount of recovery it is because he has a defense to the note which he may be permitted to make. Without such defense the holder could recover the amount appearing due. If the defense is permitted, it does avail against the bona fide purchaser. And thus it would result that the Iona fide purchaser, instead of holding the note clear of equities existing between the original parties, would be subjected to a partial defense. This would seriously impair the usefulness of commercial paper as a medium of exchange. We think the more logical rule, as well as the safer and sounder one is, that the bona fide purchaser, at whatever price, takes the entire obligation of the maker. The amount paid is important as bearing on the bona fides of the purchase, but when it has been ascertained, from all the circumstances, that the purchase was made in good faith, before due, in the ordinary course of business, the recovery should be the amount of the note and interest. Where the indorsee holds the note only as collateral security for another debt, and there is no innocent party entitled to take the surplus, the doctrine is that the recovery is limited to the amount of the debt actually due. This rule is founded upon principles obviously reasonable and just. But, in strictness, such holder is not a purchaser. He holds only for the protection of his actual debt. The case before us is not that case.

The argument ah ineonvenienti affords considerations supporting the conclusion above indicated. Negotiable paper, in the ordinary course of trade, is likely to pass from hand to hand, and to be purchased for different sums. Its value is determined largely by the present responsibility of the maker, the probability of his continued ability to pay, and his character for punctuality in meeting engagements, and hence that value may change from time to time. If the amount paid is to be taken as the measure of recovery, which purchase is to be regarded as the one fixing the amount of recovery — the last one, or some previous one, and if the latter, which ? It seems to us that the rule contended for by counsel, besides being illogical and tending to impair the value of commercial paper, would lead to perplexing uncertainties.

A strong case sustaining our conclusion is that of Cromwell v. County of Sac, 96 U. S. 51. Bonds authorized by a vote of the people of Sac county, to procure the building of a court-house, had been illegally issued and delivered by a county officer to a contractor who wholly failed to build the court-house, and were purchased by the plaintiff before due for value, without notice of any infirmity. The court held that “ A bona ficle purchaser of negotiable paper for value, before maturity, takes it freed from all infirmities in its origin, unless it is absolutely void for want of power in the maker to issue it, or its circulation is by law prohibited by reason of the illegality of the consideration,” and “ a purchaser of negotiable securities before their maturity, whatever may have been their original infirmity, can, unless he is personally chargeable with fraud in procuring them, recover against the maker the full amount of them, though he may have paid therefor less than their par value.” Mr. Justice Field, in the opinion, after announcing the foregoing, uses this language: “We are aware of numerous decisions in conflict with this view of the law; but we think the sounder rule, and the one in consonance with the common understanding and usage of commerce, is that the purchaser, at whatever price, takes the benefit of the entire obligation of the maker. Public securities, and those of private corporations, are constantly fluctuating in price in the market, one day being above par and the next below it, and often passing within short periods from one half of their nominal to their full value. Indeed, all sales of such securities are made with reference to prices current in the market, and not with reference to their par value. It would introduce, therefore, inconceivable confusion if bona fide purchasers in the market were restricted in their claims upon such securities to the sum they had paid for them.”

Lay v. Wissman, 36 Iowa, 305, is a case directly in point. See, also, Tod v. Wick, supra, and the well considered opin ion of Shauck, J., in the present case, 3 C. C. R. 228.

We find no error in the record, and the

Judgment will be affirmed.  