Daniels v. Englehart

AILSHIE, J.

This is an action on a promissory note. Plaintiff alleged that he was a bona fide purchaser of the note prior to maturity. Defendant answered admitting the execution of the note and that the same had not been paid, but denied that the plaintiff was a bona fide holder of the note by indorsement prior to maturity thereof.

The defendant also alleged as a defense that the note was executed as part payment for a water right from the Great Western Beet Sugar Co., and that the company promised and agreed to construct reservoirs, canals and ditches and furnish the defendant with water for his tract of land, comp-rising 160 acres, which constituted the consideration for the note sued upon. It was also alleged in the answer that the plaintiff was vice-president and agent of the Great Western Beet Sugar Co. at the time the contract was made and the note was executed, and that he had full knowledge of the consideration and the terms of the agreement entered into.

The defendant by way of showing failure of consideration alleged in paragraph 9 of his answer as follows:

“That said ditch was not completed as agreed by the said Great Western Beet Sugar Company on the 31st day of May, 1907, and is not now completed of sufficient capacity to deliver water to this defendant and others entitled to water under said ditch, and that water was not delivered to the land of defendant prior to the 31st day of May, 1908, and has not yet been delivered to said defendant in any sufficient quantity to water said land, or in any quantity whatever more than sufficient to water one and one-half acres as above stated.”

The plaintiff moved for judgment on the pleadings and this motion was predicated on the theory that the answer did not show a failure of consideration, and that under the authority *551 of Cowen v. Harrington, 5 Ida. 329 , 48 Pac. 1059 , and Caldwell v. Ruddy, 2 Ida. 5, 1 Pac. 339 , the defendant conld not successfully defend on the ground of want of consideration where his answer showed on its face that a part consideration had in fact been received and that there had not been a total failure of consideration, and that defendant had not returned the water contract and consideration received and had never attempted to rescind the contract and set up no claim by way of cross-complaint or otherwise for damages for breach of the contract. Under the authority of Cowen v. Harrington and Caldwell v. Ruddy, supra, the answer was not sufficient to defeat plaintiff’s recovery on the grounds of failure of consideration.

A party cannot execute his promissory note and let the matter run until after its maturity and suit is brought on it, and then successfully defend on the ground of want of consideration, where he himself admits that there was not a total failure of consideration and that he in fact received a part of the ■ consideration. He certainly has a remedy unless the note has passed into the hands of an innocent third party, and in this case the evidence was sufficient from which to conclude that plaintiff was not an innocent holder of the note. But the maker of the note cannot retain such consideration as he has received and at the saíne time successfully resist the payment of the obligation. He must either rescind or seek damages for breach of the contract, or pursue some other remedy which will permit the party to whom the obligation is due to receive such compensation as is justly due him under the contract or have a return of the consideration.

The judgment is reversed and the cause is remanded, with direction to the trial court to permit the defendant to amend his answer or to file a cross-complaint if he sees fit so to do. Judgment reversed, with costs in favor of appellant..

Sullivan, C. J., concurs.