Reese v. Gordon

Cope, J. delivered the opinion of the Court Field, C. J. and Baldwin, J. concurring.

This is an action to recover the amount of a promissory note given for the purchase money of a lot in the city of San Francisco, and to foreclose a mortgage executed to secure its payment. The complaint sets forth all the facts necessary to entitle the plaintiff to recover, and we think there is nothing in the matters of defense relied upon by the defendant. The charges of fraud are negatived by the findings of the Court, and we are of opinion that the findings in that respect are strictly in accordance with the evidence. The only point about which there can be any doubt, is the alleged failure of consideration; but as there was no fraud in the sale, nor any warranty of title in the conveyance, we do not see how the defendant can avail himself of that objection. At most, the consideration has only partially failed, and while there is no doubt that a failure of consideration may be pleaded in bar of an action upon a promissory note, to be available for that purpose the failure must be total. In cases of fraud or warranty, or where the consideration is divisible or capable of apportionment, a partial failure may sometimes be given in evidence in reduction of damages; but the practice in this respect proceeds upon the principle of a cross action, and an affirmative right of action must exist in favor of a party seeking relief in that form. “A partial failure of consideration,” says Edwards, “ is not a defense to an action on a promissory note or bill of exchange; but when properly pleaded it may be shown in reduction or recoupment of damages. * * * In establishing the claim to a mitigation of damages, it is evident that the defendant must plead and show a cause of action against the plaintiff, and prove his case in the same manner as if he had elected to bring a separate action.” (Edw. on Bills and Notes, 333, 334.) There is nothing in any of the matters relied on in this case upon which a separate suit could be maintained, and no further test is required of [150]their want of availability as grounds of defense. A partial failure of the consideration gave the defendant no right to repudiate the contract; and without that right he can no. more resist a recovery than he can sue for the fruits of that recovery when obtained. If the money had been paid, it would be a conclusive answer to an action to recover it back, that the consideration had failed only in part, and the attempt to resist its payment stands precisely upon the same footing. The answer is as conclusive in the latter case as it would be in the former.