23. Rights of a holder in due holder in due course holds a bill or note free from any defect of title of prior parties, as well as from personal defenses available to prior parties among themselves, and may enforce payment against all parties liable on the in strument. Among these personal defenses would probably be included the defense of fraud, illegality, want or failure of consideration, threats or a plea of compensation or set-off. They would not include want of capacity, want of authority, the defense of forgery, or the like.
We have said that every holder is presumed to be a holder in due course. This presumption would be overcome if one or more of these personal defenses were proved. Upon such a defense being raised, the holder must then prove that he is a holder in due course—that is, a bona fide holder for value, without notice of any defect. A note given for an illegal consideration, for example, to induce a witness not to give evidence in a criminal prosecution, may be col lected by a bona fide holder for value before maturity.
A note fraudulently made by a partner in the part nership name binds the firm in the hands of a bona fide holder for value. But a promissory note made by a married woman, separate as to property, in fa vor of a creditor of her husband, is absolutely null, and no action, it has been held in Quebec, can be main tained thereon by a bank which has discounted the same in good faith before maturity, in ignorance of the cause of nullity. The rigor of this rule has been relaxed, in that a third party in good faith, like the bank in question, can now recover. The good faith of the third party will, however, be very zealously scrutinized. However, it has been held in England, in Quebec, in Manitoba, in Illinois and in Wisconsin ( the principle is of general acceptance) that when an illiterate man was led to believe that he was be coming a party to an agreement, but the instrument proved to be a promissory note, and he was not guilty of negligence, he is not liable on the note even to a holder in due course.