This case cannot be distinguished from Merchants' National Bank v. Haverhill Iron Works, 159 Mass. 158. In that case the note was signed by the Haverhill Iron Works, payable to its own order and by it indorsed in blank, and the note was also indorsed in blank by the other defendants. The defence in that case, as appears by the original bill of exceptions, was that the note had been fraudulently put into circulation by the Potter-Lovell Company, and that the plaintiff did not take it for value and without notice of the fraud. The Haverhill Iron Works sent the note to the Potter-Lovell Company to be discounted by that company for the Iron Works, and the Potter-Lovell Company pledged the note to the plaintiff before its maturity as collateral security for the payment of á loan of money made by the plaintiff to the Potter-Lovell Company. In the case at bar the testimony of the defendant Morse was that he gave the note to R. Gardner Chase and Company at their request, and under an agreement with them that they should not use it or negotiate it unless he failed to keep his margin good or became indebted to them on account of stocks bought and sold by them for him, and not then unless they first notified him and gave him a chance to make his margin good or to pay such indebtedness, and that at all times he kept his margin good and never became indebted tp them. On the defendant Morse’s testimony, R. Gardner Chase and Company could not maintain an action against him on the note, because either the note was without consideration, or there had been a failure of consideration, or the note had been delivered to them to take effect on a contingency which never occurred. See Burke v. Dulaney, 153 U. S. 228. The main distinction between the defences set up in the two cases is, that in one case the PotterLovell Company pledged for its own debt a note sent to it to be discounted, and in the other R. Gardner Chase and Company pledged for their own debt a note left with them to be used *385only in a certain event which never happened. Both were cases where, on the testimony of the defendants, the note was fraudulently put into circulation.
In Smith v. Livingston, 111 Mass. 342, it is said: “ Upon proof that a note is founded in illegality, or was obtained or put in circulation fraudulently, the burden of proof is upon the indorsee to show that he took it for value and in good faith before its maturity. Sistermans v. Field, 9 Gray, 331. Tucker v. Morrill, 1 Allen, 528. Smith v. Edgeworth, 3 Allen, 233. Clark v. Thayer, 105 Mass. 216.” By note is of course meant negotiable promissory note. See Easter v. Allen, 8 Allen, 7; Freeman’s National Bank v. Savery, 127 Mass. 75; Lee v. Whitney, 149 Mass. 447.
No distinction has been made in this Commonwealth, so far as the defence in this case is concerned, between obtaining a note by fraud and fraudulently putting it into circulation. Cases cited ubi supra. See Joy v. Diefendorf, 130 N. Y. 6; Comstock v. Hier, 73 N. Y. 269.
If the note was taken as collateral security for the payment ■of a pre-existing debt, it was taken for value. Goodwin v. Massachusetts Loan & Trust Co. 152 Mass. 189, 199. If the note was fraudulently put into circulation, the burden was on the plaintiff to show that it took the note for value before maturity and in good faith, that is, without notice or knowledge of the fraud.
For these reasons a majority of the court are of opinion that on the evidence the judge could not direct a verdict for the plaintiff against the objection of the defendant Morse, but that the case should have been submitted to the jury.
Exceptions sustained.