defect of title of prior parties, and free from defences available to
prior parties among themselves, and may enforce payment of the
instrument for the full amount thereof against all parties liable
thereon."
It is clear, then, that by this section, the Act means that the holder
in due course takes free of personal defences, although he does not take
free of absolute defences. It simply remains for us to consider briefly
what is meant by a personal defence and what is meant by an absolute
defence. We have already illustrated this in one of our cases where the
note was a present. In this case, there was no consideration for the
note. The boy to whom it was given could not recover, whereas when he
transferred it to an innocent third party, a holder for value, he could
recover. Thus we say, failure of consideration is a personal defence.
Again, some person steals my check book, fills out a check, and forges
my name. The check is then taken and finally gets into the hands of a
person who is strictly a holder in due course. He could not recover on
it, however, because forgery is a real defence. That is, no one can hold
me liable on my forged check. The ordinary illustration of real or
absolute defences are infancy, lunacy, illegality and sometimes fraud.
Other defences are generally personal defences and do not affect the
holder in due course. To put it another way, a real defence is good
against the whole world; a personal defence is available only against
such as are not holders in due course.
LIABILITY OF PARTIES.--The parties primarily liable on negotiable
documents are, on a note, the maker; on a bill of exchange, the
acceptor; and on a check, the drawer. The liability of these three
parties is most concisely stated in Sections 60, 61, 62, as follows: