In determining what is a reasonable time, regard must be had to the nature of the bill, the usage of trade with respect to similar bills, and the facts of the particular case. It has been held that a bill drawn in Toronto on August sixth by a party dealing in bills, on New York, payable at sight, in favor of a party living in Illinois, to be sent there as a remittance and for circulation, which passed thru a number of hands and was presented in New York on November tenth, was presented within a reasonable With our better transportation facilities, this delay would probably be considerably shortened, this decision hav ing been rendered in 1850. There is no absolute rule. MacLaren states that in France there is a limit for presentment of three months fixed for Europe and Algeria, four months for Asia, six months for Amer ica and Southern Africa, and one year for the rest of the 20. Without notice of dishonor or holder in due course must have taken the bill without notice that it had been previously dishonored, or of any defect in the title of the person who negotiated it to him. In other words, he must have taken the in strument in good faith. It is not necessary that formal notice of any kind should have been given him, if there existed good ground for suspicion that the instrument was irregular, or that he was taking it under improper conditions. He must not wilfully shut his eyes. He must investigate any circumstances which to an ordinary business man would appear sus picious. Thus, if A, especially if he is a stranger, offers to give B -a note for $500 upon receiving $300 and A had stolen it from X, who made it, B cannot be considered a holder in due course, because the dif ference between the amount of the note and the amount he paid for it was a sufficient indication that there was irregularity in the transfer. He becomes a mere transferee, and a transferee in bad faith, with no better rights than A had against X.
Mere negligence on the part of the transferee is not enough to deny him the status of a holder in due course, as it is not altogether a question of diligence or negligence in making inquiry in every suspicious case. Good faith is presumed, and a thing is deemed to be done in good faith when it is in fact done hon estly, whether negligently or not. As Lord Black burn has pointed out, there is a difference between honest blundering and dishonest refraining from in quiry. What the court will attempt to discover is whether the transferee acted fairly and honestly. If the transferee receives notice of a defect in title, or of previous dishonor, he does not become a holder in due course; and notice to an agent has been held to be notice to the principal, tho, if a bill is negotiated to the agent and notice is given to the principal, it has been held that a reasonable time must be given for communication between them. Notice may not have been given directly. The indorsee may have come into knowledge of the facts. Thus if he takes
a check from the payee, knowing that the drawer claimed that it had been delivered only conditionally and that he had stopped its payment, he is not a holder in due course. The erasure of the name of one of the sureties of the note is an irregularity in the note which should put the purchaser upon Similarly, the erasure of the indorsement of the payee by a thief has been held to be an irregularity suffi ciently patent to have put the purchaser on his'guard. In another case, in which a bank accepted a bill that had been given for coal to be delivered, it was held that the bank became a holder in due course, tho it turned out that the coal was not subsequently deliv ered. As we have already said, good faith is pre sumed; it would be impossible to do business if the history of every negotiable instrument had to be in vestigated.
21. Consideration.—A holder must have taken the bill for value; if he has not paid value he is not a holder in due course. Value means valuable consid eration. Valuable consideration may be constituted by any consideration sufficient to support a simple contract, or by an antecedent debt or liability. The consideration may be some right, interest, profit or benefit accruing to the one party, or some forbear ance, detriment, loss or responsibility given, suffered or undertaken by the other.' Every party whose sig nature appears on the bill is prima facie deemed to have become a party thereto for value, whether the bill or note contains the words "value received" or not. When a note is received as collateral security, the holder has a lien on it, and he is deemed to be a holder for value to the extent of the stun for which he has a lien; that is, he has a right to retain possession of the bill or note until his claim is satisfied.
22. Negotiation of bill.—The bill must have been negotiated to the holder in due course. That is, it must have been transferred to him in such a way as to constitute him the holder. If a bill is payable to bearer, it is negotiated by delivery; if payable to a specified person or to order, it is negotiated by in dorsement and delivery. A holder who derives his title thru a holder in due course, and who is in good faith and not a party to any fraud or illegality affect ing the instrument, has all the rights of such holder in due course, as against prior parties. It would be unfair that a person deriving his title from a holder in due course should find himself unable to further negotiate the note, owing to some informality or ille gality due to the act of a prior holder. Thus, if A gives a note for five hundred dollars to B, and C steals it and forges B's signature and thus transfers it to D, and E hears of the circumstances and accepts the note from D, paying value for it, E can recover from A, because his predecessor D was a holder in due course; but if E transferred it to C, the latter, being the thief, could not collect from A.