DEFENCES 1. are described as personal defences and real defences.
Personal defences include conditional or equitable defences, and are good when pleaded by a person as against his immediate successor, or as against someone who is not a holder in due course.
The real or absolute defences attack the instrument itself and strike at the very foundation of the contract. The real defences are good against all the world.
Personal defences are defences not necessarily at tached to or inherent in the instrument. They include defences such as fraud, threats or violence, illegality where the illegality does not void the contract, re lease, want of title in the person transferring, re nunciation of claim or payment, want or failure of consideration, and others.
2. Fraud and threats of enters where a person is induced to act by some misrepre sentation or untrue statement intentionally made for the purpose. Violence or fear and threats, commonly included under the word duress, will vitiate a con tract. Thus a note given to a person in consequence of threats to prosecute the maker for forgery and ob taining money under false pretences, cannot be re covered. by such person. So, too, where a defend ant's son had committed forgery, and the notes sued upon were given to the plaintiff to prevent the scan dal becoming public, they were held to be void. But it has been 'held that where a master gave a female servant his•note for $1,500 over and above her wages, on condition that she would not marry but would re main in his service as long as he wanted her to, the note was not void for being in restraint of marriage for an unreasonable period.' It has also been held that where a creditor secured secretly _the notes of the insolvent for the balance of his claim, this was a fraud on the indorsers of the composition notes, and they were entitled to the benefit of this payment. And again, where an illiterate man thought that he was making his mark to a receipt and the plaintiff concealed the fact that it was really a promissory note, the plaintiff could not recover. It has been held, how ever, that where an educated man adMits his signa ture but sets up such a defence, lie must make very clear proof.
_ 3. Partial or total want of value or consideration.— Valuable consideration for a bill or note may be con stituted by any consideration sufficient to support a simple contract. It may be an antecedent debt or liability. Every party whose signature appears on a bill or note is presumed to have become a party to it for valuable consideration, but he may prove the con trary. If a total failure of consideration is proved, and the plaintiff and defendant are immediate par ties, the defence is good, or if they are remote parties it is good, if value has not been given for the bill. A total failure of consideration is in its effects like an original want of consideration. There would be a total failure of consideration where a person under took to sell a certain thing to another, and it turned out that he had absolutely no title to the thing. It
has been held that where a note was given for logs, on condition that no claiin should be made for the logs, and they were revendicated (that is, seized at the instance of the owner for non-payment, etc.), there was a total failure of consideration, and the note became null. There may be only partial failure of consideration. It is probable that in most of the provinces, partial failure may be set up as a defence to the extent of the consideration that is lacking.
4. the consideration be ille gal in whole or in part, the bill is none the less alto gether void. Considerations are said to be illegal which violate the of morality, are prohibited by law, or are contrary to public policy. Nor will the illegality be cured by renewing or by substituting a new instrument for the old. Thus an agreement not to proceed in a prosecution for permitting unlawful gambling in a tavern, is an illegal consideration for a note. A note given to raise money for corrupt pur poses at an election where the maker was a candidate, is null. The plaintiff cannot recover on a promissory note given by the proprietor of a bucketshop, in set tlement of speculative transactions between them.' 5. Release, renunciation or bill is dis charged by payment by or on behalf of the drawee or indorser. Payment in due course means payment made, at or after maturity of the bill, to the holder thereof, in good faith, and without notice that his title to the bill is defective. Payment is what the holder accepts or recognizes as such. It is the discharge of a contract to pay money; but payment need not be a payment of money: it may be a payment of goods, or any other thing which the creditor is willing to ac cept. But to have the effect of discharging a bill, payment must be made at or after maturity and must be made to the holder, that is, the payee, indorsee or the bearer. If an endorsement is forged or is not authorized, the bill is not discharged, and the acceptor is not released. It has been held that a renewal bill or note does not discharge the original, unless the par ties have so agreed. Payment before maturity does not discharge the bill. The holder may still negotiate it. An accommodation bill is discharged if paid in due course by the party accommodated. Where the acceptor of a bill becomes the holder of it in his own right at or after maturity, the bill is discharged. When the holder of a bill, at or after its maturity, actually or unconditionally renounces his rights against the acceptor, the bill is discharged. The holder may renounce the liabilities of any party to a bill before, at or after maturity. A renunciation must be in writing, however, unless the instrument is delivered up to the debtor.