A party may be willing to lend his credit to another, when he cannot or does not wish to lend him money. He does this by signing or indorsing a note or bill without consideration. Such notes or bills are known as accommodation paper.

It has been sometimes said that the defence of want of consideration is valid against the indorsee when the indorsee took the paper with notice of the want of consideration, or of any circumstances which would have avoided the note in the hands of the indorser. (u) But the case of an accommodation note, held that if taken in conditional payment of such a debt, the holder is a purchaser for value. Poirier v. Morris, 1 W. R."349; Currie v. Misa, L. R. 10 Ex. 153; Swift v. Tyson, 16 Pet. 19; Reid v. Bank of Mobile, 70 Ala. 199; Tabor v. Merchants' Nat. Bank, 48 Ark. 454; Wyman v. Colorado Nat. Bank, 5 Col. 30; Roberts v. Hall, 37 Conn. 205; Townsend v. France. 2 Houst. 441; Meadow v. Bird, 22 Ga. 246; Foy v. Blackstone, 31 Ill. 538; McKnight v. Knisely, 25 Ind. 336; Draper v. Cowles, 27 Kan. 484; Greenwell v. Haydon, 78 Ky. 332; Mallard v. Aillet, 6 La. An. 93; Norton v. Waite, 20 Me. 175; Cecil Bank v. Heald, 25 Md. 562; Thatcher v. Pray, 113 Mass. 291; Stevenson v. Heyland, 11 Minn. 198; Fitzgerald v. Barker, 96 Mo. 661; Williams v. Little, 11 N. H. 66; Armour v. McMichael, 36 N. J. 92; Reddick v. Jones, 6 Ired. 107; Baily v. Smith, 14 Ohio St. 404; Bardsley v. Delp, 88 Pa. 420; Charleston Bank v. State Bank, 13 Rich. 291; Greneaux v. Wheeler, 6 Tex. 515; Russell v. Splater, 47 Vt. 273; Knox v. Clifford, 38 Wis. 651. Contrary authorities are Burroughs v. Ploof, 73 Mich. 604; (cf. Hanold v.. Kays, 64 Mich. 439); Stalker v. M'Donald, 6 Hill, 93; Moore v. Ryder, 65 N. Y. 438; Schaeffer v. Fowler, 111 Pa. 451; Ferriss v. Tavel, 87 Tenn. 386.

(b) Pine v. Smith, 11 Gray, 38; Crosby v. Grant, 36 N. H. 273.

(u) Steers v. Lashley, 6 T. R. 61; Wyat v. Bulmer, 2 Esp. 538; Perkins v.

That one who takes a note as collateral security for an antecedent debt is also a holder for value, is decided in Oates v. National Bank, 100 U. S. 239; Railroad Co. v. National Bank, 102 U. S. 239; Sackett v. Johnson, 54 Cal. 107; Roberts v. Hall, 37 Conn. 205; Meadow v. Bird, 22 Ga. 246; McIutire v. Yates, 104 Ill. 491, 501; Straughan v. Fairchild, 80 Ind. 598; Giovanovich v. Citizens' Bank, 26 La. An. 15; Maitland v. Citizens' Bank, 40 Md. 540; Fisher v. Fisher, 98 Mass. 303; Goodwin v. Mass. L. & T. Co. 152 Mass. 189, 199; Boatman's Saving Inst. v. Holland, 38 Mo. 49; (cf. Deere v. Marsden, 88 Mo. 512); Cobb v. Doyle, 7 R. I. 550; Dearman v. Trimmier, 26 S. C. 506; Kauffman v. Robey, 60 Tex. 308; Atkinson v. Brooks, 26 Vt. 569; (but see Austin v. Curtis, 31 Vt. 64.) Contrary decisions are, Haden v. Lehman, 83 Ala. 243; Bertrand v. Barkman, 13 Ark. 150; Union Bank v. Baron, 56 Ia. 559; Nutter v. Stover, 48 Me. 163; Smith v. Bibber, 82 Me. 34; Henriques v. Ypsilanti Savings Bank, 84 Mich. 168; First Nat. Bank v. Strauss, 66 Miss. 479; Rice v. Raitt, 17 N. H. 116; Stalker v. McDonald, 6 Hill, 93; Atlantic Bank v. Franklin, 55 N. Y. 235; Duncomb v. New York, etc. R. R. Co. 84 N. Y. 190; Roxborough v. Messick, 6 Ohio St. 448;

* whether made or indorsed for the benefit of the party to whom the maker or indorser intends to lend his credit, is an exception to this rule. If A makes a note to B or his order, intending to lend B his credit, and gives it to B to raise money on, B cannot sue A on that note; but if he indorses it to C, who discounts the note in good faith, knowing it however to be an accommodation note and [given] without valuable consideration, C can nevertheless recover [on] the note from A. The maker may therefore have a defence against the payee which he cannot have against an indorsee who has knowledge of that defence. (v)1 But this is true only where the consideration paid by the indorsee may be regarded as going to the maker in the same manner as it would if the payee had been promisor, and the maker had signed the note as his surety. The successive indorsers of accommodation paper are not however so far sureties as to have a claim of contribution against each other; for each indorsee has the same claim against earlier indorsers that he would have if it was not accommodation paper, unless it can be shown that there was an agreement between the indorsers that they should be considered, as between themselves, as joint indorsers and sureties. (w)2 It has been held in England that where A signs with B for B's accommodation, and C takes the note agreeing, when he takes it, to hold A only as surety, and C gives time to B to the injury of A; a plea by A, stating these facts in defence, was good. (x) In general, accommodation notes or bills are now governed by the same rules as negotiable paper for consideration. (y)1

Challis, 1 N. H. 254; Brown v. Davies, 3 T. R. 80; Down v. Hailing, 4 B. & C. 330; Aver v. Hutching, 4 Mass. 370; Thompson v. Hale, 6 Pick. 259; Littell v. Marshall. 1 Rob. (La.) 51.

(v) Thompson v. Shepherd, 12 Met. 311; Smith v. Knox, 3 Esp. 46; Brown v. Mott, 7 Johns. 361; Grant v. Ellicott, 7 Wend. 227; Molson v. Hawley, 1 Blatch. 409; Lord v. The Ocean Bank, 20 Penn. St. 384; Kemp v. Balls, 10 Exch. 605. And this is so, even if the indorsee took the bill after it became due. Charles v. Marsden, 1 Taunt. 224; Carruthers v. West, 11 Q. B. 143; Renwick v. Williams, 9 Md. 356

(w) Aiken v. Barkley, 2 Spoors, 747. In this case the authorities are fully con-sidered, and it is shown that the rule is held as stated in the text, in Massachusetts, New Fork, Pennsylvania, Virginia, Maryland, Kentucky, Louisiana, and Connecticut, and otherwise only in Ohio and North Carolina. The Supreme Court of the I'. S. have hold that there was no distinction in this respect between indorsers for value and indorsees for accommo-dation, in McDonald v. McGruder, 3 Pet. 470. And it is so hold in Missouri, in McCuue v. Belt, 45 Mo. 174.

Carpenter v. Nat. Bank, 106 Pa. 170; Richardson v. Rice, 9 Baxt. 290; Prentice v. Zane, 2 Gratt. 262; (but see Davis v. Miller, 14 Gratt. 1, 15).

1 If an accommodation note is transferred by the accommodated party as collateral security for an antecedent debt, the transferee may enforce it against the accommodating party, even where such a transferee is not ordinarily regarded as a holder for value. Grocers' Bank v. Penfield, 69 N. Y. 502; Nat. Union Bank v. Todd, 132 Pa. 312. But otherwise if such a note is wrongfully diverted from the purpose for which the accommodation was granted. Continental Nat. Bank v. Hell, 125 N. Y. 38.

2 See ante p. *36, note 1.