WHO ARE BONA FIDE HOLD ERS FOR VALUE WITHOUT NOTICE? A bona fide holder for value without notice is a holder who, at the time he becomes the holder and gives value, is really and truly without notice of any facts which, if known, would defeat his title to the bill. Thus where a bill is payable in two installments and the holder pays one installment without notice of any fraud, but before the second payment he learns that the bill was obtained by fraud, if he pays the second installment he cannot collect for it, but only for the first installment. (Benj.'s Chalmers, B. N. & Checks, Art. 85; Dresser v. Missouri Co., 93 U. S., 92.) The terms "bona fide holder," "innocent indorsee," etc., are used synonymously with the expression "bona fide holder for value without notice." Under the English code, Sec. 29, the phrase "holder in due course" is used in the same sense.
By "notice" is meant either actual notice, or a knowledge of such facts of wrong-doing as would, if disregarded, constitute bad faith. Mere negligence or even grossnegligence, will not in the absence of bad faith constitute notice to one who has taken a bill for value without notice. (Goodman v. Sim onds, 20 How., 343.) Gross negligence may be evi dence of bad faith, but is not conclusive of it, and bad faith is now considered necessary to defeat a bona fide holder for value. (Goodman v. Harvey, 4 A & E. at 876; Johnson v. Way, 27 C St., 374•) When a bill is overdue, or has an irregularity appearing on its face the holder of it will be charged with notice. These are considered equivalent to notice of all defects relating to it. (McSherry v. Brooks, 46 Md., 118.) A holder who takes a bin, or note from a bona fide holder for value without notice is subjected to all the rights of such former holder, though he himself gave no value and may have had notice, if he was not a party to the fraud. (Woodworth v. Huntoon, 4o Ill., 131.) But the paper will not be freed from the fraud of a party by being negotiated to an inno cent party when it has come back to the hands of the wrong-doer. (Calhoun v. Albin, 48 Mo., 304.) A defense available against an immediate party, as fraud, lack of consideration, etc., is available against a remote party who is in privity with such immediate party. Immediate parties are those in iirect relation with each other, as the drawer and acceptor, indorser and indorsee; all other parties are remote. Privity between the parties is created in all cases by want of consideration, sometimes by notice, and by agreement. Thus notice creates privity when it is notice of the defective title of him from whom the bill is taken. A holder of a bill who has given no consideration is deemed, as regards third parties, as the agent of the party from whom he took the bill, and he holds it subject to all the defenses against the person for whom he is regarded as an agent. (Benj.'s Chalmers, B. N. & Checks, Art. 88.)