LEGAL PHASES OF COOPERATIVE ASSOCIATIONS. 31 



courts are divided as to whether the maker of the note may plead 

 intervening equities as a defense against the holder. 



The general rule, without special regard to accommodation notes, 

 is that one who takes a note or other negotiable instrument after 

 it is due takes it subject to all the equities or defenses that existed 

 between the original parties.^ For instance, if a note is given 

 without consideration, this could be shown by the maker when 

 sued by one who took the note after it was due.^ 



In the eyes of the law the fact that the note was not paid when 

 it was due is notice to the party taking it from the former holder 

 that there is some defect in the paper. However, with respect to 

 accommodation paper, in view of the fact that it. is always given 

 without consideration, the courts in a majority of the States have 

 refused to allow the maker to plead a want of consideration, al- 

 though the note was taken after it was due.*' But in some juris- 

 dictions the maker of an accommodation note may successfully 

 plead a want of consideration even as against one who received 

 it. in good faith and for a valuable consideration from the original 

 payee.'^ 



Where a note is payable on demand, the general rule as to ordi- 

 nary negotiable commercial paper is that one who takes it an un- 

 reasonable time after its execution takes it subject to all defenses 

 that existed between the original parties.^ Of course, if the maker 

 would not have a defense to a suit on the note if brought by the 

 original payee, he would not have a defense to a suit instituted by 

 one who took the note from the original payee either before or 

 after maturity. With respect to accommodation paper payable on 

 demand, in those jurisdictions where a want of consideration may 

 be shown by the maker as against one who took such paper after 

 it was due, the maker may successfully plead this defense as against 

 one who took the demand accommodation note an unreasonable 

 time after its execution. In a North Dakota case® it was said: 

 " It is well established that a note payable on demand is due within 

 a reasonable time after its date, and there are practically no au- 

 thorities which hold that such a reasonable time can be extended 

 beyond a year." 



In a doubtful case it would be a question for the jury to deter- 

 mine whether a note had been sold or delivered as collateral for a 

 loan an unreasonable length of time after its execution. In those 

 States where the defense of a want of consideration can not be 



* Otis Blev. Co. v. Ford, 27 Del. 286, 88 Atl. 465. 

 B Hill V. Shield, 81 N. C. 250, 31 Am. R. 499. 



6 Naef V. Potter, 226 111. 628, 80, N. B. 1084, 11 L. R. A. (N. S.) 1034. 



7 Chester v. Dorr, 41 N. Y. 279 ; Peale v. Addicks, 174 Pa. 549. 

 » Otis Elev. Co. v. Ford, 27 Del. 286, 88 Atl. 465. 



sAdan V. Grand Forks Merc. Co., 24 N. D. 645, 140 N. W. 725, 47 L. R. A. (N. S.) 246. 



