The fraudulent putting in circulation of a negotiable instrument which operates to change the burden of proof and call upon the plaintiff to prove his title as a bona fide holder, is where this is done fraudulently as to the defendant or maker, and not where it is so done as to the payee or some intermediate holder or party to the paper. If, therefore, Alton, as president of the railroad company, fraudulently put the note and mortgage in circulation as to the company, it is not perceived how that circumstance is available to the defendants as a distinct ground of defense, or for the purpose of changing the burden of proof. The case of Ganard v. Pittsburg and Connelsville Railroad Company, 29 Pa. St., 154, cited and relied upon by counsel for the defendants on this point, is entirely unlike. That was an action of trover by the railroad company, to recover damages for the conversion of a negotiable security belonging to it, which had been fraudulently and without authority put in circulation by its president. The defendant claimed to hold the instrument, a negotiable bond, in payment of, or as collateral security, for a private debt due him from the president of the company. The court found that it was neither taken in payment nor as collat*189eral security by tbe defendarrt (plaintiff in error), and tbat be bad notice of tbe want of authority and fraudulent intent of tbe president. If tbe railroad company bere bad brought suit for tbe conversion of tbe note and mortgage, against White,' to whom Alton transferred them, and it bad appeared tbat tbe transfer was upon or in security for tbe private or individual debt of Alton, who acted without authority, tbe case referred to would have been apposite, and tbe decision in point. But this case differs altogether. Alton, tbe president, bad tbe fullest authority, by resolution of tbe board of directors, to enter into tbe negotiation and make tbe transfers and exchanges which be did.
Tbe resolution was in these words: “ Resolved, Tbat C. R. Alton, president of tbe Air Line Railroad Company, be, and be is hereby, authorized and empowered to enter into any contract or agreement with any corporation, company or individual, which be, in bis judgment, may think best for tbe interest of this company, and any contract or agreement or thing done by him as president of tbe company, is hereby fully ratified and confirmed.” And tbe transactions bere were in tbe proper business and affairs of tbe company. White was a creditor of tbe company in tbe sum of $3,000, and wanted bis pay, and applied to Alton to obtain it, and tbe note and mortgage in suit, with others, were transferred to him by Alton as security for the debt of the company. Subsequently White, with tbe knowledge and consent' of Alton, deposited tbe notes and mortgages with Carver as collateral security on a loan of $6,000 made by White of Carver. Under these circumstances it is difficult to perceive why White, and after him Carver, were not each of them bona fide holders for value of tbe note and mortgage, and entitled to enforce payment of tbe same to tbe extent of their interest as against tbe defendants, discharged of any equities or matters of defense existing between tbe defendants and tbe railroad company. This. would seem to be so within tbe very principles laid down in tbe case above cited, and per-*190tainly as tbey have always been understood and applied by tbis court. White did not pay bis note given on tbe loan from Carver, but years afterwards took it up on payment of $1,000, and let tbe securities go. It does not appear when, where, or to whom, or upon what consideration, Carver transferred tbe securities. Tbey subsequently came to tbe bands of one Waite, who claimed to own them, and sold them to tbe witness Walker for $2,500. Walker, as be testifies, transferred them to tbe plaintiff as collateral security for about fifty cents on tbe dollar. Tbe notes and mortgages which have been thus transferred and sold amounted to $10;000, without tbe interest.
If, as we have assumed, Carver was a bona fide bolder to tbe extent of bis interest (for tbe title or interest of White became merged or lost in that of Carver), then it follows that tbe plaintiff, as tbe successor of Carver, may bold and enforce payment tbe same as Carver could have done, and that notwithstanding tbe plaintiff may have bad notice of tbe invalidity, or fraud, or want of consideration, at tbe time be purchased or received tbe note and mortgage, or may not have paid value for tbe same. Tbe transferee or purchaser of a note voidable for want of consideration or other cause as against tbe maker, from an innocent indorsee or bolder for value without notice, is entitled to recover, though be took tbe note with full knowledge of such want of consideration or other voidable defect. Smith v. Hiscock, 14 Maine, 449; Hascall v. Whitmore, 19 Maine, 102; Masters v. Ibberson, 8 Man., Gran. & Scott [65 E. C. L.], 100; Byles on Bills, [*110]; Bayley on Bills, 350; Edwards on Bills and Promissory Notes, 312. Tbe principle is, that tbe promise being good to tbe prior indorsee or bolder, free from objection on tbe ground of fraudulent or illegal consideration, be has tbe power of transferring it to others, with tbe same immunity, as an incident to tbe legal right which be bad acquired in tbe instrument. It is no defense, therefore, that a plaintiff, being a transferee of a bill or note, bad notice of a fraudulent or illegal considera*191tion, if be can deduce title from a prior party not shown to baye bad any sncb 'notice.
Tbe plaintiff deduces title from Carver, wbo was clearly an innocent bolder for value. If Carver bad brought suit, what would have been bis rights ? His title would have been none tbe less valid because be held tbe note and mortgage as collateral security. As respected tbe legal title, there could have been no distinction between tbe advance made by him and tbe case of an actual purchaser. Gibson v. Stevens, 8 How. (U. S.), 400; Harrington v. Smith, 8 Pick., 419; Adams v. Wheeler, 10 Pick., 199; Mitchell v. Black, 6 Gray, 105. And bis title would have been tbe same even if be bad so held them upon an advance less than their nominal value. He held them upon a loan of twice or three times their nominal value, and which, beyond tbe sum afterwards repaid by "White to get up bis own note, considerably exceeded tbe nominal value of any two of tbe notes and mortgages deposited, though- short of tbe nominal value of all of them. If Carver bad brought suit, judgment must have gone in bis favor for tbe full amount due on tbe note and mortgage. That would have been bis right as a Iona fide bolder for value, at least until tbe defendants bad shown that bis demand was reduced below such amount by payments or moneys realized from tbe other securities deposited. Carver could have sued upon and proceeded to enforce payment of any and all tbe notes and mortgages, until tbe debt due him, with interest, was fully paid and satisfied. And there are some authorities which would seem to bold that in actions at law bis right of recovery would not have stopped here, but that be might have compelled payment of tbe entire sums secured by all tbe notes and mortgages, although bis own demand was less. Smith v. Hiscock, supra; Bosanquet v. Dudman, 1 Starkie R., 1. But see Story on Promissory Notes, § 195, and cases cited; and especially see authorities referred to in Bange v. Flint, 25 Wis., 550, in which a different rule was held. As tbe representative and person standing in tbe place of Carver, wbo was an inno*192cent bolder for value, tbe plaintiff was, therefore, entitled to recover; and it becomes unnecessary to inquire whether Waite must be presumed to have been an innocent holder, or whether Walker’s purchase made him such, or into the relations existing between the plaintiff and Walker. And it is also unnecessary to examine or discuss the question of fraud in the procurement of the note and mortgage „by the railroad company, as all inquiry into that question is cut off by the bona fide relation in which the plaintiff, as the successor of Qarver, stands to the paper. The judgment must be affirmed.'
By the Court. — Judgment affirmed.