Butler v. Mitchell

1. Where the holder of a promissory note, other than the payee therein named, who has received the same in dishonor, institutes suit thereon against the maker, the latter may set off, to the extent of the amount due on the note, any sum which may be due from the payee to the maker which is any way connected with the debt sued on or the transaction out of which it sprang. Civil Code, §§3750, 4944.

2. But if there be an issue between the parties touching- the bona lides of the holder, or the payment of a valuable consideration for the note, and it is rendered questionable whether the defendant…