
    Ryan & Louthan v. Chew.
    1. Promissory note transferred as collateral security. The assignee of a note transferred before maturity, as collateral security for a pre-existing debt, without any new consideration, is not a holder for value, in the usual course of trade, following The Trustees of Iowa College v. Hill, 12 Iowa, 462.
    2. Set-off asainst a promissory note. Equities between the parties to a promissory note when arising from transactions independent of the note is not available against it in the hands of an assignee, following Shipman v. Bobbins, 10 Iowa, 208, and Benton v. Lewis, write.
    
    
      Appeal from Dubuque District Qourt.
    
    Tuesday, October 14.
    This action was brought upon a negotiable promissory note, made by the defendant to one Thomas' Smith, and by him transferred before maturity to the plaintiffs. The defendant claims a set-off of a balance of an account due from Smith at the time of the transfer of the note. The cause was submitted to the court, which found specially that “ the plaintiffs were not bona fide holders and owners of the note sued, but that the said note was transferred to them by the payee as collateral security for a pre-existing indebtedness.” Judgment was rendered for plaintiff, after deducting the set-off, and from this they appeal.
    
      
      Wilson, Utley & Boud for the appellants,
    relied upon Swift v. Tyson, 16 Pet., 1, 15; Tovmsley v. Sumrall, 2 Pet., 170 ; note, § 195 of Story; Parsons Mer. L. Ck., 9, § 5, and note 5; Atwood v. Growdie, 1 Stark, 481; Lathrop v. Morris, 7 Sand., 7; Ould v. Harrison, 28 Eng. L. & E. R., 524.
    
      Wiltse & Blatchley for tke appellee,
    cited 10 N. H., 266; 20 John., 637; 6 Hill, 93; 11 L. & R, 377; 6 Whart., 220; 31 Maine, 205; 2 G-ratt., 262; 1 Humpk., 470; 1 Wood. & Min., 287; Trustees of Iowa College v. Hill, 12 Iowa, 462.
   Baldwin, G. J.

Tke finding of tke court below tkat tke note sued on was transferred to plaintiff by tke payee tkereof, as collateral security for a pre-existing indebtedness, and tkat tke plaintiffs were not, therefore, bona fide kolders tkereof, is fully supported by tke evidence.

It is, kowever, claimed by counsel for tke appellants, tkat, even though tke plaintiffs should hold tke note as collateral security they would, nevertheless, be bona fide owners and kolders, and tke set-off would not be admissible.

It appears from tke evidence tkat tke note was made by defendant, Ckew, and delivered to one Perry, a hired man, and applied in payment of wages due from Ckew. Tke note was, at tke request of Perry, made directly to Smitk, in payment of a horse purchased by Perry of Smitk.

Tke question as to whether a party who takes a negotiable note before maturity as collateral security for a pre-existing debt, is under tke commercial law a bona fide holder, and is to be protected against any equities of tke maker, seems to have often been presented to tke courts for determination, but the rulings thereon are by no means uniform. This court, kowever, in tke case of 1 he Trustees of Iowa College v. Hill, 12 Iowa, 462, adopted tke conclusion of tke court in the case of Roxborough v. Messick, 6 Ohio St. R., 448, which held that if the note is transferred as collateral security to a pre-existing debt without consideration, so that the transfer is a mere voluntary act on the part of the debtor, and is received by the creditor without incurring any new responsibility, parting with any right, or subjecting himself to any loss or delay, and leaving the subsisting debt precisely in the condition it was before such transfer, the holder had not taken the note for value, nor in the usual course of trade.”

The question, then, arises, whether the fact that the plaintiffs are not bona fide holders of the note within the meaning of the commercial law, will enable the defendant to plead as a set-off the defense he had against the original payee, Smith. It has been held by this court in the case of Shipman v. Robbins, 10 Iowa, 208, that “ equities between the parties to the note arising from other and independent transactions between them, are not available against the note in the hands of the assignee.” See, also, Denton v. Lewis, ante.

The consideration for which this note was given was a separate and independent transaction from that upon which the set-off was based. Following these decisions the case must be

Reversed.  