844                             LAWS OF MARYLAND                      [CH. 538

(a)  infancy, to the extent that it is a defense to a simple contract;
and

(b)  such other incapacity, or duress, or illegality of the trans-
action, as renders the obligation of the party a nullity; and

(c)  such misrepresentation as has induced the party to sign the
instrument with neither knowledge nor reasonable opportunity to
obtain knowledge of its character or its essential terms; and

(d)  discharge in insolvency proceedings; and

(e)  any other discharge of which the holder has notice when he
takes the instrument.

3—306. Rights of One Not Holder in Due Course.

Unless he has the rights of a holder in due course any person takes
the instrument subject to

(a)  all valid claims to it on the part of any person; and

(b)  all defenses of any party which would be available in an action
on a simple contract; and

(c)  the defenses of want or failure of consideration, non-perform-
ance of any condition precedent, non-delivery, or delivery for a
special purpose (Section 3—408); and

(d)  the defense that he or a person through whom he holds the
instrument acquired it by theft, or that payment or satisfaction to
such holder would be inconsistent with the terms of a restrictive in-
dorsement. The claim of any third person to the instrument is not
otherwise available as a defense to any party liable thereon unless
the third person himself defends the action for such party.

3—307. Burden of Establishing Signatures, Defenses and Due
Course.

(1)   Unless specifically denied in the pleadings each signature on
an instrument is admitted. When the effectiveness of a signature is
put in issue

(a)  the burden of establishing it is on the party claiming under
the signature; but

(b)  the signature is presumed to be genuine or authorized except
where the action is to enforce the obligation of a purported signer
who has died or become incompetent before proof is required.

(2)   When signatures are admitted or established, production of
the instrument entitles a holder to recover on it unless the defendant
establishes a defense.

(3)  After it is shown that a defense exists a person claiming the
rights of a holder in due course has the burden of establishing that
he or some person under whom he claims is in all respects a holder
in due course.