final certificate may have been and probably was issued on May 19, 1874, or very shortly thereafter.

It follows from what has been said that the mechanic's lien claimed by the plaintiff in the instant case never attached to the land, and that the judgment of the court below to the contrary is erroneous and must be reversed. The judgment is therefore reversed and the cause remanded, with directions that judgment be entered in harmony with the views expressed in this opinion.

ROBINSON, J. (dissenting). This is an appeal from a judgment decreeing the validity and superiority of plaintiff's lumber lien for the sum of $47.70, with interest, amounting to $105.10, and a sale of the premises to satisfy the same. From this judgment the Northern Land & Mortgage Company appeals and demands a retrial of the entire case. As alleged in the complaint it appears that in April, 1907, the plaintiff sold and delivered to defendant Oscar Erickson lumber and material to be used and which was used in the construction of a barn on the land in question. The delivery was at dates and in amounts thus:

On October 15, 1907, Erickson made to the plaintiff his promissory note for $71.15 due in one year, with interest at 12 per cent, and it is wholly unpaid. On April 29, 1907, there was duly filed a mechanic's lien for the material. On the same land to secure $800 and interest, Erickson made to appellant a mortgage. It was dated April 12, and filed April 16, 1907. The mortgagee objects to the priority of the lumber lien on these grounds:

1. The insufficiency of evidence to show that the lumber was used in the construction of the building on the land.

2. For the reason that at the time of contracting for the lien on April 4, 1907, Erickson did not own the land.

On the first point the evidence does fairly show-as found by the

trial court that the lumber was bought and used for the construction of a barn. Erickson was in possession and in need of a barn on the land, and the proof is that the lumber was taken and used in the building, and when Erickson gave the mortgage, the bulk of the lumber was on the ground or in the barn on the land, and that was constructive notice to the mortgagee. On April 4, 1907, Erickson made final proof before the United States Land Office at Minot and commuted a homestead entry on the land in question. He paid for it to the receiver of the United States Land Office $177.13. The receiver's receipt for the same was issued on April 6 and recorded April 16, 1907. Of course, the patent did not issue until several months afterwards. Erickson contracted for the lumber and made final proof and payment for the land two days before the issuing of the receiver's receipt, and long before the issuing of a patent. Hence, the principal claim of appellant is based on this section of the United States Revised Statutes:

Section 2296 (Comp. Stat. § 4551, 8 Fed. Stat. Anno. 2d ed. p. 575): No land acquired under the provisions of this chapter shall in any event become liable to the satisfaction of any debt contracted prior to the issuing of a patent therefor. But that statute does not apply to this case because Erickson did not acquire the land under the homestead laws. He commuted his homestead entry and made final proof and payment for the land "as provided by law granting pre-emption rights." Hence, on his making such proof and payment his title was that of a purchaser under the pre-emption laws.

The moment Erickson made his final proof and payment he became the real owner of the land, and his title was not different from that of any other purchaser. The government held in trust for him only the bare legal title.

Counsel cites as directly in point, Paige v. Peters, 70 Wis. 178, 5 Am. St. Rep. 156, 35 N. W. 328. In that case the party contesting a lien for material claimed the land under the homestead laws, and not as a purchaser or commuted homestead pre-emption cash entry, and the debt was contracted for material furnished and used two months prior to the time of the making of final proof. The Wisconsin decision was entirely correct, but it is not at all in point. As this court has held the Mechanic's Lien Law is remedial and equitable, and it should be liberally construed to effect its purpose.

On April 4, 1907, when Erickson bargained for the lumber, he had a perfect equitable title to the land. There is no dispute concerning the lumber which was furnished to Erickson on April 4, 12, 13, and 20, A. D. 1907. It amounted to $71.15.

On October 15, 1907, Erickson gave his promissory note for the same, with interest at 12 per cent. As a subsequent lien holder the mortgage company does rightfully object to interest in excess of 7 per cent. Hence, the judgment should be corrected by striking out the words "forty-seven and seventy-one hundredths dollars," wherever the same occurs, and 12 per cent, and in lieu thereof inserting "seventyone and fifteen hundredths dollars, and annual interest thereon at 7 per cent per annum," and as thus modified the judgment should in all things be affirmed.

BRUCE, Ch. J. I concur in the result reached, but not in the distinction sought to be made by Judge Robinson between a commutation proof and one under the homestead laws proper.

JOHN C. SWEET, Respondent, v. A. B. ANDERSON, Appellant.

(170 N. W. 869.)

Negotiable instruments — promissory note – holder must in due time establish his good faith.

1. A holder in due course of a promissory note must establish his good faith, as a matter of law, either by direct and uncontradicted testimony or by circumstances which show consistently the good faith of his purchase se that no fair-minded person can draw any other inference therefrom. Negotiable instruments-good faith-testimony-consideration of surrounding circumstances — when good faith is question for the jury. 2. Where the plaintiff, claiming to be the bona fide holder of a promissory

NOTE.-For a comprehensive discussion of the question as to what circumstances are sufficient to put a purchaser of negotiable paper on inquiry, see notes in 29 L.R.A.(N.S.) 351; 44 L.R.A.(N.S.) 395; and L.R.A.1918F, 1148,-where it is held that under a statute providing that knowledge of facts sufficient to put a prudent man upon inquiry is sufficient to constitute notice to the purchaser, the question as to what was sufficient to place a prudent man upon inquiry was one of fact for the jury.

note in due course, does not testify that he purchased the same in good faith, and where the surrounding circumstances show that for several years prior thereto, he was the attorney for, and a stockholder in, the corporation named as payee in, and the indorser of, said note, and was possessed necessarily or impliedly of such knowledge as might lead fair-minded men to draw different inferences concerning his good faith, the question of the good faith of such holder is for the jury.

Opinion filed January 7, 1919.

Action on promissory note.

Appeal from judgment entered in the District Court, Sargent County, F. P. Allen, Judge.

Reversed and new trial ordered.

O. M. Sem and Forbes & Lounsburg, for appellant.

"If a note be not properly indorsed it is not transferred in good faith under the merchant." 4 Am. & Eng. Enc. Law, 311; 7 Cyc 791 & 926; Comp. Laws 1913, 8 6934; Massachusetts Loan & T. Co. v. Twitchell, 7 N. D. 440; Vickery v. Burton, 6 N. D. 245.

"A special indorsement specifies to whom or to whose order the instrument is to be payable; and the indorsement of such indorsee is necessary to the further negotiation of the instrument." American Nat. Bank v. Lundy, 21 N. D. 167; Farmers & M. St. Bank v. Shaffer, 154 N. W. 485.

"A breach of warranty is a good defense to a note given for the purchase price of the machinery warranted." 8 Cyc. 55; 4 Am. & Eng. Enc. Law, 154; Vickery v. Burton, 6 N. D. 245; National Bank of Commerce v. Feeney, 70 N. W. 874; Judd v. Dennison, 10 Wend. 512; Hays v. Kingston, 16 Atl. 745; Bank of Evansville v. Kurth, 166 N. W. 658.

"A note may be shown to have been conditionally delivered and a valid defense to it thus established." 8 Cyc. 55; 4 Am. & Eng. Enc. Law, 151; Selma Sav. Bank v. Hinkle, 166 N. W. 748; Porter v. Andrus, 10 N. D. 558; Citizens State Bank v. Garciau, 22 N. D. 576; First St. Bank v. Kelly, 30 N. D. 84; Stockton v. Turner, 30 N. D. 641; Quinn v. Bane, 164 N. W. 788; Merchants Exch. Bank v. Luckow, 35 N. W. 434; 4 Am. & Eng. Enc. Law, 321; Comp. Laws 1913, §§ 6934, 6943; Knowlton v. Schultz, 6 N. D. 417; Landouer v. Sioux

Falls Imp. Co. 72 N. W. 467; Keer v. Anderson, 16 N. D. 36; Citizens State Bank v. Garciau, 22 N. D. 576; Merchants Exch. Bank v. Luckow, 35 N. W. 434; Bank of Montreal v. Richter, 57 N. W. 61; Kirby v. Berguin, 90 N. W. 856.

The unauthorized delivery of the notes to the payee was in fraud of the rights of the defendant. Porter v. Andrus, 10 N. D. 558.

"Actual notice is not indispensable constructive notice arising from the relationship of the parties, or from the circumstances attending the transaction being sufficient." 7 Cya. 940, 947, 957, and cases cited. Arnd v. Aylesworth, 123 N. W. 1000; Comp. Laws 1913, § 7286.

"Although good faith may be shown in some cases by inference from facts, failure to state that the purchase was in good faith is a strong circumstance to negative good faith." Landauer v. Sioux Falls Implement Co. 72 N. W. 467; Walters v. Rock, 18 N. D. 45; American Nat. Bank v. Lundy, 21 N. D. 167; McCarty v. Kroreta, 24 N. D. 395.

"The jury need not accept as true the undisputed testimony of a party to the action, but may weigh it as any other evidence." J. S. Brown & Bros. Mercantile Co. v. Sherod, 101 Pac. 481; Lewis v. Coupe, 85 N. E. 1053; Lautner v. Kann, 39 Atl. 55; Elwood v. Western U. Transp. Co. 45 N. Y. 549; Lavalleur v. Hahn, 149 N. W. 257; Greenwald v. Ford, 109 N. W. 516; McKnight v. Parsons, 113 N. W. 858; Arnd v. Aylesworth, 123 N. W. 1000; Merchants Nat. Bank v. Grigsby, 149 N. W. 626; Mercantile Guaranty Co. v. Hilton, 77 N. E. 312; 8 Cyc. 289, 290; German-American Nat. Bank v. Kelley, 166 N. W. 1053; Commercial Bank v. Paddick, 57 N. W. 687; Landouer v. Sioux Falls Imp. Co. 72 N. W. 467; Porter v. Andrus, 10 N. D. 558; Vosburgh v. Diffendorf, 23 N. E. 801.

"If the decision is to be reached by drawing inferences from other facts, ordinarily the jury alone can draw these inferences." Arnd v. Aylesworth, 123 N. W. 1000.

C. G. Mead, for respondent.

"Good faith does not require the purchaser of a note to make inquiry as to the purpose for which the note was given, or as to the existence of possible defenses, and mere knowledge or notice of suspicious circumstances will not defeat a recovery." American Nat. Bank v. Lundy,