personally, but acted merely on behalf of the principal, if he acted by competent authority, the principal and not the agent will be bound. Pentz v. Stanton, 10 Wendell, 271. It will of course be remembered that the above case respects the liability of the principal on the bill as such, for a principal is liable on his agent's contracts for him whether his name was disclosed or not-unless, the principal being known, credit was exclusively given to the agent,-in an action founded on the original consideration. Ibid.

A promissory note was subscribed thus, "Pro W. G., J. S. C;" it was holden to be the note of W. G, if J. S. C. had auauthority. Long v. Colburn, 11 Mass. 97. And see Emerson v. Providence Man. Co., 12 Mass. 237. Rice v. Gove, 22 Pick. 158. Robertson v. Pope, 1 Richardson, 501. Orfult v. Ayres, 7 Monroe, 356. McBean v. Morrison, 1 A. K. Marshall, 545. When one gives a promissory note as guardian for a minor, although it is so stated in the body of the note, he is personally liable. ForsFuller, 6 Mass. 58. As an administrator cannot by his promise bind the

ter v.

estate of the intestate, so neither can the guardian by his contract bind the person or estate of his ward. Ibid.

When individuals subscribe their proper names to a promissory note, prima facie they are personally liable, though they add a description of the character in which the note is given; but such presumption of liability may be rebutted, as between the original parties, by proof that the note was in fact given by the makers as agents with the payee's knowledge. Brockway v. Allen, 17 Wendell, 40. Webb v. Burke, 5 B. Monroe, 51. Hovey v. Magill, 2 Conn. 680. And see Hills v. Bannister, 8 Cowen, 31. Fogg v. Virgin, 19 Maine, 352. Pomeroy v. Slade, 16 Vermont, 220. Packard v. Nye, 2 Metcalf, 47. Fitch v. Lawton, 6 Howard, (Miss.) 371.

If one draws a bill in his own name, without stating that he acts as agent, unless when acting for the government, he is personally liable, although he directs it to be paid out of a particular fund, and although the person in whose favour it is drawn, knows the drawer to be but an agent. Newhall v. Dunlap, 14 Maine, 180. Snow v. Goodrich, Ibid. 235.

takes a bill or note for a pre-existing debt, takes it subject to all the equities between the original parties. The leading case, and that by which the doctrine has become known, is Coddington v. Bay, 20 Johns. 637. The grounds of the determination may be briefly given in the words of C. J. Spencer: "We are called upon to establish a new principle or or rather to ascertain a principle from decisions in cases as nearly analogous as can be found. In the cases of Miller v. Race, 1 Burr, 452; Grant v. Vaughan, 3 Burr. 1516, and 1 Bl. Rep. 485, and Peacock v. Rhodes, Dougl. 633, the Court lay stress on the fact that the holder came by the notes for a full and valuable consideration by giving money, or money and goods for them, in the usual course of trade; and I consider the real principle to be this, that the person passing the notes, from the fact of his having possession, was the ostensible owner of it, and that the holder having, in the usual course of business, given credit to these appearances which he was justified in doing, has been induced to part with his money or property bona fide; and that, as between him and the real owner there must be a loss on the one side or the other, the law will not divest him of fruits he has honestly acquired, without the possibility of remuneration. In other words, the equities of the parties being equal, the law leaves him in possession who already has it. But how are the equities here? The respondent was clearly and justly entitled to the proceeds of the sale of the vessel, the notes in question; his agents and trustees were

guilty of a grossly fraudulent abuse of their trust, in attempting to deprive him of these notes. Admit that the appelants came to the possession of them without any knowledge of the fraud in passing the notes, how is their situation altered or what equities have they as against the respondent? If they have to account for these notes their situation is exactly as it would have been had the notes not have been transferred to them; merely having had the good fortune to get the notes, without any new consideration or renouncing any lien, their equity to hold the notes bears no comparison with that of the respondent to demand them. It was suggested that they might have had the benefit of some other security, had they not taken these notes; but of this there is no proof or possibility." See also Wardell v. Howell, 9 Wendell, 170. Rosa v. Brotherton, 10 Wendell, 85. Briggs v. Rockwell, 11 Wendell,

504.

523.

Hart v. Palmer, 12 Wendell, Root v. French, 13 Wendell 570. Payne v. Cutler, Ibid. 605. Morton, v. Rogers, 14 Wendell, 575. Dickerson v. Tillinghast, 4 Paige, 205. Fulton Bank v. Phoenix Bank, 1 Hall, 562. Manhattan Company v. Reynolds, 2 Hill, 140. It is confined however to the case where the note is taken as collateral security only, and not in payment or satisfaction of the pre-existing debt. Bank of St. Alban's v. Gilliland, 23 Wendell, 31. Bank of Sandusky v. Scoville, 24 Wendell, 115. Mohawk Bank v Corey, 1 Hill. 513. Norton v. Waite, 2 Appleton, 175. Riley v. Anderson, 2 McLean, 589.

Where a note is taken in payment of a debt due and secured by indorsement of a third person, which last note is given пр and discharged, it is taken "in a due course of trade." Nichol v. Bate, 10 Yerger, 429.

One to whom a promissory note has been transferred before due, as collateral security for indorsements to be made by him, which are afterwards made, and who takes it without notice of a defence existing against it in the hands of the person from whom he received it, is entitled to be treated as a bona fide holder in the commercial sense. Such holder, however, cannot recover upon the note when it is not available, as between the original parties beyond what is due on the indorsements against which it was designed to secure him. Williams ex. v. Smith, 2 Hill, 301.

In Brush v. Williams, 11 Connecticut, 388, C. J. Williams, after a learned and elaborate review of all the authorities, maintains, that such a transfer as security for a preexisting debt, ought to invest the transferree with all the rights of a bona fide holder for value in the regular course of trade. In Pennsylvania it has been held, that although the taking of the note of a third person as collateral security for a preexisting debt, without more, will not place the taker in the situation of a holder for value, so as to protect him against the equities subsisting between the original parties to the note; yet it is otherwise, if there is a new and distinct consideration, as if time was given in consideration of obtaining the note as security for the debt. Depeau v. Waddington, 6 Wharton, 220. In the subsequent case of Appleton v. Donaldson, 3 Barr, 381, the same court decided that where a note is given by the maker to the payee for his accommo

dation, he may sell, discount or pledge it for an antecedent debt; the rule governing pledges of the property of others, not being applied to commercial paper of this character. Rogers, J. "The case of Petrie v. Clark, (11 Serg. & Rawle. 238,) as to the general principle is a firmed in Depeau v. Waddington, with the expression of regret, that the negoti ability of commercial paper should have been restrained, so as to prevent it from being pledged as a security for a debt. That it shall be still further extended is now the question. Petrie v. Clark was the case of a misapplication of funds, which the executor held as trustee for the benefit of creditors and legatees; and for this reason, the latter were permitted to interpose a defence as against a person who in legal parlance had not paid value for it. The same equities were supposed to exist between them as the original parties. But that case differs from this in this essential particular, that in Petrie v. Clark the execu tor was not the owner of the note pledged : here the payer is the legal and equitable owner; the note is put into the hands of the payee by the maker, for the express purpose of using it in any manner which will best promote his interest."

The Supreme Court of the United States, however, have gone the full length of holding, that receiving a note in payment or as security for a pre-existing debt is according to the known usual course of business, and entitles the taker to all the rights and benefits of a holder bona fide and for valuable consideration. Swift v. Tyson, 16 Peters, 1. Story J. "It is for the benefit and convenience of the commercial world, to give as wide an extent as practicable to the credit and circulation of negotiable paper, that it may pass not only as security for new

purchases and advances made upon the transfer thereof, but also in payment of and as security for pre-existing debts. The creditor is thereby enabled to realize or to secure his debt, and thus may safely give a prolonged credit, or forbear from taking any legal steps to enforce his rights. The debtor has also the advantage of making his negotiable securities of equivalent value to cash. But establish the opposite conclusion, that negotiable paper cannot be applied in payment of or as security for pre-existing debts, without letting in all the equities between the original and antecedent parties, and the value and circulation of such securities must be essentially diminished, and the debtor driven to the embarassment of making a sale thereof, often at a ruinous discount, to some third person, and then by circuity to apply the proceeds to the payment of his debts. What indeed upon such a doctrine, would become of that large class of cases where new notes are given by the same or by other parties, by way of renewal or security to banks, in lieu of old secu

rities discounted by them, which have

arrived at maturity?

Probably more than one half of all bank transactions in our country as well as those of other countries are of this nature. The doctrine would strike a fatal blow at all discounts of negotiable securities for pre-existing debts."

Besides the considerations thus forcibly presented as to the disastrous consequences of the doctrine upon commercial business generally, it may be observed, that when a note is transferred as collateral security, if forbearance is not actually stipulated for, it is most commonly implied, or at least there follows a remission of that vigilance and activity, which might otherwise have secured satisfaction of the debt. 1 Leigh's Nisi Prius 477. American Edition, note (1). See also Washington Bank v. Lewis, 22 Pickering, 24. The plaintiffs had advanced some money and taken the note for that and as security for a prior debt, it was held to be available in their hands for both amounts, as the money was advanced for the purpose of securing the prior debt.