"The payee may be made to appear by a description instead of a name, where he can be ascertained or identified thereby at the time the note is executed."

See, also, Adams v. King, 16 Ill. 169, 61 Am. Dec. 64; Bacon v. Fitch, 1 Root, 181; Knight v. Jones, 21 Mich. 161; Shaw V. Smith, 150 Mass. 166, 22 N. E. 887, 6 L. R. A. 348; United States v. White, 2 Hill (N. Y.) 59, 37 Am. Dec. 374. "A note payable to A. or bearer, or payable to bearer, is," says Story in his work on Promissory Notes, in section 36, "a valid promissory note; for, in contemplation of law, it is solely payable to the person, who is, or may become the bearer; and 'Id certum est, quod certum reddi po

test.'"

In Tiedeman, Commercial Paper, & 17, under the heading "Designation of the Payee," it is said:

"Commercial paper may also be made payable to 'the heirs of A.,' or to 'A. or his heirs,' even though A. should then be alive; or to the bearer, to the holder, and the like."

In Norton on Bills and Notes, p. 59, under the heading "Designation of Payee," the following appears:

"It is not necessary, moreover, that the designation be by name, but a description of the payee is sufficient. 'Bearer' is a sufficient description."

To the same effect are notes in 64 Am. Dec. 156; Masterson v. Ginners' Mut. Underwriters Assoc. (Tex. Com. App.) 235 S. W. 1081, 1083; Gordon v. Anderson, 83 Iowa, 224, 49 N. W. 86, 12 L. R. A. 483, 32 Am. St. Rep. 302, 304. See, also, Chalmers' Bills of Exchange (8th Ed.) 21; 8 C. J. 172; United States v. White, 2 Hill (N. Y.) 59, 37 Am. Dec. 374; Rich v. Starbuck, 51 Ind. 87, 90. When, therefore, section 7801, Or. L., was written it was not necessary to include in it any express requirement concerning certainty as to the payee, because recognition of the negotiability of instruments payable to "bearer" also involved, just as the law merchant involved, recognition by the law that the use of the word "bearer" or its equivalent designated the payee with the requisite certainty. When, however, section 7800, Or. L., was written, it was not only appropriate, but it was advisable that the rule of certainty be stated in express terms, for the reason that this section does not contain any specific and fixed word which is of itself sufficiently descriptive. In the last sentence of section 7800, Or. L., which is declaratory of the law merchant, the payee may be designated by the name of the person, or, if the name is not used, the payee may be designated by words of description. Bacon v Fitch, 1 Root (Conn.) 181; Knight v. Jones, 21 Mich. 161. The word "bearer" describes the payee and designates him with the necessary cer

tainty. In Grant v. Vaughan, 3 Burr. 1516, 1527, it was said:

"Bearer is descriptio personæ and a person may take by that description, as well as by any other."

It is true that we are accustomed to see the word "bearer" only in instruments which are designed to pass from the payee by delivery, and, while it is true that the word "bearer' as used in the Negotiable Instruments Law is used to mean instruments transferable by delivery, it is also true that the Negotiable Instruments Law contains nothing which prohibits the maker of a note from using the word "bearer" to describe the payee in a note designed to pass from the payee by indorsement; and since any word which will describe the payee with certainty may be used and the word "bearer" is one of such words, the maker may employ the word "bearer" for the purpose of describing the payee to whose order the instrument is payable. We conclude that the paper signed by the respondents is a negotiable promissory note payable to order.

[3] The Negotiable Instruments Law, by section 7844, Or. L., defines who is a holder in

due course as follows:

"A holder in due course is a holder who has taken the instrument under the following conditions: (1) That it is complete and regular upon its face; (2) that he became the holder of it before it was overdue, and without notice that it had been previously dishonored, if such was the fact; (3) that he took it in good faith and for value; (4) that at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it."

The respondents argue that the statute excludes payees from those who may be holders in due course under the act, and that therefore the plaintiff, although a holder, is not capable of being a holder in due course. The plaintiff contends that the Negotiable Instruments Law does not, when construed as a whole, exclude payees from those who may be holders in due course. The uniform stattue which was designed to bring about uniformity has, instead of achieving that result, produced an irreconcilable contrariety of judicial opinion concerning the subject under discussion. In the final analysis this difference of judicial opinion arises from the different constructions placed upon the word "negotiated" in section 7844, Or. L., when taken in connection with other sections of the statute. In Iowa it was held in Vander Ploeg v. Van Zuuk, 135 Iowa, 350, 112 N. W. 807, 13 L. R. A. 490, 124 Am. St. Rep. 275, that "holder in due course" should be construed as applicable only to one who takes the instrument by negotiation from another who is a holder. In that case the court manifested a reluctance to come to the conclusion announced by it, and conceded that its

conclusion was perhaps different from what would have been held if the Negotiable Instruments Law had not been passed. We may for convenience designate the view expressed in Vander Ploeg v. Van Zuuk as the Iowa rule, for the reason that the Iowa decision is usually cited and relied upon by the other American courts which have adopted that view. The Iowa rule has been followed in Kentucky, Missouri, Oklahoma, and South Dakota. S. N. Life Realty Corp. v. People's Bank of Bardstown, 178 Ky. 85, 198 S. W. 543; First Nat. Bank v. Utterback, 177 Ky. 76, 197 S. W. 534, L. R. A. 1918B, 838; St. Charles Savings Bank v. Edwards, 243 Mo. 553, 147 S. W. 978; Long v. Shafer, 185 Mo. App. 641, 648, 171 S. W. 690; Long v. Mason, 273 Mo. 266, 200 S. W. 1062; First Nat. Bank v. Allen, 88 Okl. 162, 212 Pac. 597; Britton Milling Co. v. Williams, 44 S. D. 464, 184 N. W. 265, 21 A. L. R. 1352; Tripp State Bank v. Jerke, 45 S. D. 448, 188 N. W. 314. In Tennessee the court at least inclines to the Iowa doctrine. Fox v. Cortner, 145 Tenn. 482, 239 S. W. 1069, 22 A. L. R. 1341. Washington is, because of what is said in Bowles Co. v. Clark, 59 Wash. 336, 109 Pac. 812, 31 L. R. A. 613, usually classed among the states which have followed the Iowa rule;

but the opinion in that case should perhaps be read in the light of a subsequent decision. State Bank of Connell v. Pacific Grain Co. (Wash.) 215 Pac. 350.

The courts which have adopted the Iowa rule have reached that result by giving a limited construction to the word "negotiated" as it is used in section 7844, Or. L. In section 7982, Or. L., the Negotiable Instruments Law expressly declares that "holder" means "the payee or indorsee of a bill or note who is in possession of it, or the bearer thereof," and therefore a payee is a holder. Although section 7982, Or. L., declares that a payee is a "holder," and section 7844, Or. L., states that a holder is one who has taken the instrument in good faith and for value, and at the time it was negotiated to him had no notice of any infirmity in the instrument or defect in the title in

the person negotiating it, the Iowa rule limits the word "holder" by excluding "payees"; and this conclusion is reached on the theory that the word "negotiated" as used in section 7844, Or. L., does not apply to the delivery of a note by the maker to the payee. This theory that the word "negotiated" as used in section 7844, Or. L., is limited, and excludes payees, is based upon the language employed in section 7822, Or. L., which

reads as follows:

"An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer, it is negotated by delivery; if payable to order, it is negotiated by the indorsement of the holder, completed by delivery."

If the first sentence stood alone it is not likely that the language would afford much room for debate, for plainly delivery by the maker to the payee would be a transfer from one person to another, and the transfer would be in such manner as to constitute the payee the holder, and therefore the instrument would be "negotiated" within the meaning of the sentence. But it is held under the Iowa rule that the remainder of the section shows that the word "negotiated” was intended to apply only to transfers made by payees and by subsequent holders. The Iowa rule depends primarily for its support upon a mere inference which is drawn from the last half of section 7822, Or. L. If the inference so drawn from section 7822. Or. L., is warranted, then section 7851, Or. L. is inconsistent with it, because the latter section affirms that "every holder is deemed prima facie to be a holder in due course." The statute does not say, "Every holder, except a payee, is deemed prima facie to be a holder in due course."

The respondents contend that this court is committed to the Iowa rule by what is said in Bank of Gresham v. Walch, 76 Or. 272, The language used in that 147 Pac. 534. case must, as in all judicial opinions, be read in the light of the issues presented and of the facts involved. In Simpson v. First Nat. Bank, 94 Or. 147, 159, 185 Pac. 913, we gave notice that nothing said in Bank of Gresham v. Walch, should be construed

to mean that this court is committed to the

doctrine that under the Negotiable Instruments Law the payee is never a holder in due course, and we called attention to the fact that the defense pleaded by Walch was based upon false representations made by

the agents of the bank, and that the decision was controlled by those representations. And when in Bank of Gresham v. Walch it was said that "plaintiff is not a holder therestatute, "language was used which would be of in due course within the meaning of the clearly applicable to the instant case if Kerley was an agent of the bank, or if there was an agreement between the bank and Kerley as alleged in the answer, or if the take for value or had notice of any infirmity bank did not take in good faith or did not in the instrument, even though it be held that a payee is a holder who is capable of being a holder in due course. We have examined the printed abstract, the bill of exceptions, the transcript of evidence, the printed briefs, and the petition for a rehearing, and we find that at no time in the circuit court nor in this court was it urged or even suggested that a payee cannot be a holder in due course under the Negotiable Instruments Law. None of the members of this court as now constituted who were also members of this court as then constituted intended that the opinion rendered in Bank of Gresham v. Walch should decide, or under

"It will be conceded that if plaintiff had taken this as it was presented to it, and paid value therefor, without any knowledge as to any fraud entering into its inception, it would have been a holder in due course, and in a position to enforce it."

The question as to whether in this jurisdiction a payee may under the Negotiable Instruments Law be a holder in due course is still res integra.

The view that the payee may within the meaning of the Negotiable Instruments Law be a holder in due course was announced in Liberty Trust Co. v. Tilton, 217 Mass. 462, 105 N. E. 605, L. R. A. 1915B, 144; and, since that adjudication is usually cited and relied upon by courts taking the same view, it will be convenient to refer to this view as the Massachusetts rule. A majority of the courts which have thus far considered the subject have followed the Massachusetts rule. The states of Vermont, Alabama, Pennsylvania, Idaho, New York, and Illinois have announced adherence to the Massachusetts rule. Howard Nat. Bank v. Wilson (Vt.) 120 Atl. 889; Ex parte Goldberg & Lewis, 191 Ala. 356, 67 South. 839, L. R. A. 1915F, 1157; Johnston v. Knipe, 260 Pa. 504, 105 Atl. 705, L. R. A. 1918E, 1042; Redfield v. Wells, 31 Idaho 415, 173 Pac. 640; Brown v. Rowan, 91 Misc. Rep. 220, 154 N. Y. Supp. 1098; Bergstrom v. Ritz-Carlton, etc., Co., 171 App. Div. 776, 157 N. Y. Supp. 959; Id., 220 N. Y. 569, 115 N. E. 1033; Drumm Construction Co. v. Forbes, 305 Ill. 303, 137 N. E. 225. In Bank of Commerce & Savings v. Randell, 107 Neb. 332, 186 N. W. 70, 21 A. L. R. 1360, it was held that the Negotiable Instruments Law “recognizes that a payee may be a holder in due course." See, also, White-Wilson-Drew Co. v. Egelhoff, 96 Ark. 105, 131 S. W. 208. With but few exceptions authors of works on the Negotiable Instruments Law and writers of articles found in law journals approve the Massachusetts rule. Dolle on Business Paper, 108; Williston on Commercial Law and the Law of Negotiable Instruments, § 319; Bunker on Ne gotiable Instruments, 103; Brannan, The Negotiable Instruments Law (3d Ed.) pp. 49, 59, 162; 18 Illinois Law Review, 47, 48; 28 Yale Law Journal, 197, 710; 64 University of Pennsylvania Law Review, 318; 70 University of Pennsylvania Law Review, 52; 10 California Law Review, 413; 21 Michigan Law Review, 591; 20 Michigan Law Review, 908; 24 Yale Law Journal, 429. An illuminating article by Prof. Hening ap

1882 and 1906, may be found in Chalmers' Bills of Exchange (8th Ed.) 105. In this connection, see, also, Maclaren on Bills, Notes and Cheques (5th Ed.) 187. However, the Iowa rule is approved in 3 R. C. L. 238, and 15 A. L. R. 442.

Prior to the enactment of the Negotiable Instruments Law it was held almost without dissent that a payee could occupy the status of a holder in due course. Liberty Trust Co. v. Tilton, 217 Mass. 462, 105 N. E. 605, L. R. A. 1915B, 144; Bank of Commerce & Savings v. Randell, 107 Neb. 332, 186 N. W. 70, 21 A. L. R. 1360; Howard Nat. Bank v. Wilson (Vt.) 120 Atl. 889; Boston Steel & I. Co. v. Steuer, 183 Mass. 140, 66 N. E. 646, 97 Am. St. Rep. 426; Ex parte Goldberg & Lewis, 191 Ala. 356, 67 South. 839, L. R. A. 1915F, 1157; Crawford's Ann. Negotiable Instruments Law, 96; 8 C. J. 468. It is true that when the Negotiable Instruments Law speaks its meaning should, if possible, be ascertained from the language used, and it must be conceded that, when the meaning of the act is ascertained, the statute controls even though it lays down a new rule; but it is also true that the statute is, with but comparatively few exceptions, a codification of the rules of the law merchant, and, in the absence of plain and clear language, the courts ought to be slow to hold that the statute prescribes a new rule, especially when such holding must depend for its support upon a mere inference, and is a veritable about face. An analysis of the reasoning upon which the Massachusetts rule is based could be nothing more than a repetition of what has been many times said by jurists and writers who have followed that rule, and we therefore content ourselves with stating that we agree with the reasoning employed in Liberty Trust Co. v. Tilton, and approve the Massachusetts rule.

It must at all times be borne in mind that the instrument in dispute was signed by the three defendants; that Kerley, one of them, is the principal maker, while the other two, Molstrom and Shannon, signed as makers for the accommodation of Kerley, and that, if delivery was made at all, it was made to the bank by Kerley, who, as between the bank and the respondents, was the intermediary. Delivery, if made at all, was not made directly by the respondents to the plaintiff. Since, as between the bank as the payee, on the one side, and Molstrom and Shannon as accommodation makers, on the other side, Kerley was an intermediary, the plaintiff can recover from the respondents if it was a holder in due course. Brown v. Rowan, 91 Misc. Rep. 220, 154 N. Y. Supp. 1098.

[4] The respondents argue that Kerley was the agent of the bank, and that therefore knowledge of Kerley, the agent, is imputed