It is admitted that the plaintiffs' took the note in suit before it was overdue, for good faith and value, and without knowledge of any infirmity. It is therefore contended that the plaintiffs are holders in due course and entitled to judgment. C. S., 3033. Every person is deemed prima facie to be a holder in due course; but when it is shown the title of any person who has negotiated the instrument was defective, the burden is on the holder to prove that he, or some person under whom he claims, acquired the title as a holder in due course. C. S., 3040. The plaintiffs admit they purchased the original note after maturity, and the verdict shows that its execution was fraudulently procured. Consequently, the plaintiffs held the first note subject to the defendant’s equity. Wilkins-Ricks Co. v. Welch, 179 N. C., 266. The question is whether such equity may be pleaded against the plaintiffs in their suit on the second note.
The parties admit that the note in controversy was given in renewal of the original. As applied to negotiable instruments, the word “renewal,” or “renewed,” signifies more than the substitution of one obligation for another. It means the substitution in place of one engagement of a new obligation on the same terms and conditions — that is, the reestablishment of a particular contract for another period of time. Kedy v. Petty, 54 N. E. (Ind.), 798; National Bank v. Fickett, 50 S. E. (Ga.), 396; Griffin v. Long, 131 S. W. (Ark.), 672; Hyman v. Devereux, 63 N. C., 624; Kidder v. McIlhenny, 81 N. C., 123; Bank v. Hall, 174 N. C., 477. In 8 C. J., 443 (656), it is said: “Where a note is given merely in renewal of another note, and not in payment, the renewal does not extinguish the original debt nor in any way change the debt, except by postponing the time of payment.” Bank v. Bridgers, 98 N. C., 67. If the second note be given and accepted in payment of the debt, and not in renewal of the obligation, a different principle will apply. Wilkes v. Miller, 156 N. C., 428; Collins v. Davis, 132 N. C., 106; Smith v. Bynum, 92 N. C., 108. The first note was surrendered, it is true; but the plaintiffs’ admission that the note sued on was accepted in renewal is inconsistent with any suggestion that the original debt was thereby extinguished.
The Seminole Company, no doubt with the plaintiffs’ consent, withdrew the former note from the National Bank of Goldsboro for the purpose of having it renewed, and the plaintiffs accepted the renewal note with full knowledge of the facts. It is apparent that in renewing the note the Seminole Company acted as the plaintiffs’ agent, and that, with respect to the defense pleaded, the plaintiffs are in no better situation *373than they occupied when they became the holders of the original notg. They did not become holders, in due course, of either paper; and the renewal note, in like manner with the original, was open to the defense of fraud. That is, as between the defendant and the Seminole Company, and as against the plaintiffs, who were not holders in due course, the second note was subject to 'the defense which might have been made against the first. Tyler v. Anderson, 6 N. E. (Ind.), 600; Hunt v. Rumsey, 9 L. R. A. (Mich.), 674; Adams v. Ashman, 53 Atl. (Penn.), 375. The principle is recognized by Bigelow, C. J., in Sawyer v. Wiswell, 9 Allen (Mass.), 39. It will be observed that the paper in suit is not a second note, unrelated to the first, and executed to the plaintiffs as endorsees, for value and without notice, as in Calvert v. Williams, 64 N. C., 168.
The plaintiffs took other exceptions, which refer to the charge on the issue of fraud. It is insisted that the alleged representation was harmless, that it was not relied on, and that the element of fraud was not disclosed by the evidence.
The defendant testified that he could neither read nor write, and that the agent who had sold the stock told him that the paper which he then delivered was a certificate of stock. “He told me that the paper he left with me was stock.” The conduct of the agent cannot be justified or its effect neutralized by proof that the certificate was attached to the note when the retention of the certificate was a material factor in the consummation of the fraud.
The plaintiffs requested this instruction: “If the defendant signed his name to the stock-purchase contract introduced in evidence without asking the same to be read to him, he is bound by the terms thereof; and since the contract is not evidence of fraud, you should answer the second [first] issue No.’ ” The instruction was substantially given, and then modified by the words, “unless something was done or said by the agent of the company to lull him into security or throw him off his guard.” As argued by the plaintiffs, it is the duty of an illiterate person, before signing a paper, to have it read to him, and as a general rule his failure to do so is treated as negligence, for which the'law affords no redress; but this principle does not apply in case of fraud or false representation, by which the person signing the instrument is lulled into security or thrown off his guard and deceived. Griffin v. Lumber Co., 140 N. C., 514; Leonard v. Power Co., 155 N. C., 10; Pittman v. Tobacco Growers Assn., 187 N. C., 340. The plaintiffs admit that the modified instruction is correct as an abstract proposition, but contend it is not supported by the evidence. An instruction which is not based on sufficient evidence is erroneous (Williams v. Harris, 137 N. C., 460), but we think there is evidence tending to show the defendant was thrown *374off bis guard. Positive or direct assertion to tbis effect is not required; proof of circumstances from wbicb tbe jury may reasonably infer tbe fact is sufficient.
Tbe jury were instructed to answer tbe second issue “No,” if tbey believed tbe evidence, and tbe plaintiffs excepted on tbe ground that tbe defendant, knowing tbe paper be held was not a certificate of stock, retained it for more than a year without complaint. The defendant did not discover the fraud until after he had executed the renewal note (Gilpin v. Machine Co., 29 L. R. A. (N. S.), 477), and did not treat with the plaintiffs after such discovery. McDowell v. Simms, 41 N. C., 278; Alexander v. Utley, 42 N. C., 242; Knight v. Houghtalling, 85 N. C., 17, 31. He has not brought suit for rescission, but asserts his right to an equitable defense in the plaintiffs’ action at law. Besides, tbe plaintiffs cannot escape responsibility for tbe fraud on tbe ground that the defendant was negligent, because the evidence shows, and the verdict has established the fact, that the agent resorted to means calculated to induce the defendant to forego inquiring into the fraud. Miller v. Mateer, 172 N. C., 401, 406.
We have considered all the plaintiffs’ exceptions, and find them untenable; but there is another ground on which tbe judgment should be upheld. The contract of subscription did not comply with the provisions of section 6367 of the Consolidated Statutes. The note, therefore, was not enforceable against the defendant by the Seminole Company, and likewise is not enforceable in this action, for the reason that the plaintiffs, as we have said, are not holders in due course. Bank v. Felton, post, 384; Miller v. Howell, 184 N. C., 119; Glenn v. Bank, 70 N. C., 191.
We find
No error.