LEGAL PHASES OP COOPERATIVE ASSOCIATIONS 93 
able instrument, no matter what its character, was executed with- 
out consideration can always be shown as- between the original par- 
ties. It furnishes the maker with a complete defense as against the 
original payee. 
If a negotiable note, whether accommodation or otherwise, has 
been sold, delivered, or transferred, before it is due to a third person, 
in good faith and without notice and for a valuable consideration, the 
note is enforceable by such third person against the maker without 
reference to intervening equities. This rule is settled. 96 However, 
if an accommodation note is delivered after it is due, although trans- 
ferred in good faith to a third person and for a valuable considera- 
tion, the 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 be- 
tween the original parties. 97 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. 98 
In the eyes of the law, the fact that the note was not paid when 
it was due, is notice to the party who takes 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, although 
the note was taken after it was due. 99 But in some jurisdictions 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. 1 
If a note is payable on demand, the general rule as to ordinary 
negotiable commercial paper is that one who takes it an unreasonable 
time after its execution takes it subject to all defenses that existed 
between the original parties. 2 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 juris- 
dictions 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 s 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 authorities 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 determine 
whether a note had been sold or delivered as collateral for a loan 
96 National Bank of Commerce v. Sancho Packing Co., 186 F. 257. 
97 Otis Elevator Co. v. Ford, 27 Del. 286, 88 A. 465. 
98 Hill v. Shield, 81 N. C. 250, 31 Am. Rep. 499. 
"Naef v. Potter, 226 111. 628, 80 N. E. 1084, 11 L. R. A. (N. S.) 1034. 
1 Chester v. Dorr, 41 N. Y. 279 ; Peale v. Addicks, 174 Pa. 543, 549, 34 A. 201, 34 A. 203. 
2 Otis Elevator Co. v. Ford, 4 Beyce's (27 Del.) 286, 88 A. 465. 
8 McAdam v. Grand Forks Mercantile Co., 24 N. D. 645, 140 N. W, 725, 47 L. R. A. 
(N. S.) 246, 251. 
