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the paper." It is not necessary that the waiver be written on the note or bill itself; it may be on a separate

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piece of paper. A parol waiver is held good by some courts.

"Curtiss vs. Martin, 20 Ill. 557.

"Spencer vs. Harvey, 17 Wend.,

489.

CHAPTER VIII.

DEFENSES TO BILLS AND NOTES.

SECTION 44. CLASSIFICATION OF DEFENSES.

"The defenses interposed by a party to a bill or note in a suit brought by a holder against him are commonly of two classes:

(a) REAL or those which grow out of some defect inherent in the instrument itself.

(b) PERSONAL-or those which grow out of acts which between privy parties would invalidate the transfer or prevent the enforcement of the instrument, but which do not attach to or invalidate the instrument.”1

SECTION 45. INCAPACITY OF DEFENDANT TO MAKE THE INSTRUMENT.

The general principle is that the incapacity of the defendant to make the instrument is a real defense, and consequently that it can be successfully maintained even against a bona fide holder for value. At the common law the note of a married woman was void. The same is true of the note of a person who has been adjudged insane." Before such adjudication, however, such a note is valid in the hands of a bona fide holder for value, and perhaps even in the hands of the first taker, if the contract was a fair one and the person dealing with the lunatic had no knowledge of his incapacity.

This is the classification of Professor Ames (2 Ames' Bills and Notes, p. 866), and the one which has been generally adopted by recent writers. See Norton on Bills and Notes, p. 206.

Fitzhugh vs. Wilcox, 12 Barb., 236.

Mutual Life Ins. vs. Hunt, 79 N. Y., 541. "If no inquisition has been found, the validity of the bill or note or indorsement depends, first, up

The negotiable instruments of an infant are not void, but voidable. It is sometimes said that an infant is bound on a note given in payment for necessary. A more correct statement would probably be that the infant is bound for the reasonable value of the goods for which the note is given. The infant's right to disaffirm his note exists even against a bona fide holder for value.*

"The bill or note of a corporation and its indorsement thereon is unenforceable except as against a bona fide holder, unless made, given or indorsed for the purposes of its incorporation.

"An indorsement of a corporation transfers title; but except when made for the purposes of its incorporation, and as against a bona fide holder, it subjects the corporation to no liability as an indorser.'

SECTION 46. BILLS AND NOTES DECLARED VOID BY STATUTE.

In some cases bills and notes are declared void by statute. An illustration of such a prohibition

on the degree of understanding possessed by the party sought to be charged. A man of weak mind, if not a lunatic or a fool, can contract. An epileptic or enfeebled mind has been held competent to convey property. A person born deaf and dumb is not necessarily an idiot. And no mere want of business capacity, nor even monomania, will in the absence of fraud prevent a party from being bound upon a bill, note or indorsement. The mental incompetency to avoid such a contract must amount to inability to understand the nature of the contract, and to appreciate its probable consequences; and this only, upon being established, will be allow

ed as a defense. But, once established, the question of the binding liability of this contract depends upon the fact whether the party dealing with him knew or did not know that he was dealing with a lunatic. In the absence of anything being shown upon the subject, the courts lean to the presumption that the party had this knowledge. And if he possess such knowledge then the bill, note or indorsement as between the parties is void, and will not be enforced. Norton on Bills and Notes, Sec. 98.

Howard vs. Simpkins, 70 Ga., 322.

• Norton on Bills and Notes, Sec.

96.

is found in the statute of 9 Anne, Chap. 14, Sec. 1, which provided that "all notes, where the whole or any part of the consideration is money knowingly lent for gaming, shall be void to all intents and purposes whatever."

The most common illustrations of this class of statutory provisions at the present time are those relating to usurious negotiable instruments.

A note declared void by statute cannot be recovered on, even by a bona fide holder for value.

This rule does not apply, however, when the statute merely declares the consideration to be illegal."

SECTION 47. FORGERY AND ALTERATION OF INSTRU

MENT.

A forged instrument, not being the contract of the party alleged to have made it, can, of course, confer no rights upon any person, with the single exception that the alleged maker may become liable to a bona fide holder through the application of the doctrine of estoppel.

The material alteration, whether made with fraudulent intent or not, of a negotiable instrument destroys the identity of the contract, and releases any party thereto who does not consent to such alteration."

An immaterial alteration, i. e., one which does not change the tenor of the instrument, does not avoid it.

SECTION 48. FRAUD AND DURESS.

Fraud and duress are both personal defenses to a bill or note and cannot be set up against bona fide

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