Powers v. Ball

The opinion of the court was delivered by Redfield, Ch. J. The only question made in the present case is whether the Iona fide holder of a promissory note for value, negotiated before due, is liable to be defeated, in a suit upon the note, by showing that the consideration of the note was fraudulent between the original parties. It is laid down in Story on Bills of Exchange § 188, “ that the partial or total failure of consideration, [663] or even fraud between the antecedent, parties will be no defense or bar to the title of a bona fide holder.” The same rule is laid down in Chit, on Bills, ch. 3, p. 78-79. In Bailey on Bills, 499, 500, numerous English cases are cited in confirmation of the rule. And if any rule of law in regal'd to negotiable paper is well established, it is that a bona fide holder for value will be able to shut out all defenses, except certain statutory ones where the paper in its inception is declared absolutely void, as notes or bills given upon gambling and usurious considerations. And illegality, duress, fraud, and want or. failure of consideration are no defenses as against a bona fide holder for value. In Smith’s Mercantile Law, 320, it is said that the defenses of duress, fraud, &c., will not prevail agiinst a bona fide holder. We think the rule must be regarded as altogether settled. Judgment affirmed.