Clough v. Baker

48 N.H. 254

Opinion

Sargent, J.

By General Statutes, ch. 201, sec. 11, it is enacted that when in any action upon a bill of exchange, draft, or promissory note, a total want or failure of consideration would be a defence, the defendant may, upon filing a brief statement thereof with his plea, prove a partial want or failure of consideration in reduction of damages.

The question then is, whether in this case, upon the facts stated, there could be any total want or total failure of consideration ?

Although the plea here sets forth that the bond was the consideration for the note, yet it evidently was not the whole consideration. It is evident that Harriman bought out the business of Clough as a dentist, an 1 was to have his place and the good will of the establishment. A part of this consideration he received at the time, all that could then be delivered dr enjoyed; and for what was to be done in the future, he received the contract of said Clough as contained in and secured by said bond. This was evidently the consideration for which he agreed to pay the $3000, for which the note was given, and all this consideration he received — he got all he bargained for.

But taking it to be as stated in the plea, that the bond was the consideration for the note, and assuming that there was no other consideration, then there was no want of consideration, for the plea alleges that the bond was that consideration, and that was received according to the agreement of parties. There was then no want of consideration either total or partial. Has there been any failure of this consideration? Has the bond, which was the sole consideration for this note, failed in any wav? Is it not as valid a security now as at first? Has it proved to be of no binding force or effect? Has it become a void instrument since it was made? If it had been void from the beginning, then there m'ghts have been a want of considera'ion. If it has become void since it was made, so as to be no longer of any force or effect as a security, then the consideration has failed. But it is not claimed that such is the fact. The bond, which is admitted to have been the consideration for which defendant with Harriman agreed to pay $3000, and which was received just according to agreement, and which was a good and sufficient consideration for such promise at the time, remains in full force and effect; just as valid and binding now, as it was the day it was given. If it was a sufficient consideration then, wherein has it failed to be so now ?

We had occasion to consider this general question somewhat, in Dodge v. McClintock, 47 N. H. 383, where the subject of mutual contracts, both dependent and independent, is considered, and where it is held substantially, that though two contracts, made at the same time, and in and by the same written instrument, both of which were executory, might be mutual so far as that one contract or promise might be made in consideration of the other, yet that they might be, and in that case were, independent of each other, so far as their execution was concerned.

It seems to me, though these cases are not parallel, yet that the principle recognized as governing that case must also govern and dispose of this. These contracts or promises, though made at the same time, and mutual, so far as that one may have been the consideration for the other, yet seem to have been entirely independent of each other, so far as performance was concerned. One contract was under seal, the other was not. A different statute of limitations would apply to each.

Suppose Harriman had sued the plaintiff upon his bond, could plaintiff defend that suit upon the ground that the note given as the consideration for the bond was not fully paid? Or suppose we should allow this defence to come in here, and then Harriman should sue Clough in Massachusetts on the bond. How would Clough be able to avail himself- of the fact that the bond had been chancered in • New Hampshire in a suit to which Harriman was not a party ?

This is just the kind of contract, of which Chitty speaks in his work on Contracts, (6 Am. Ed.) p. 738, where he says : " In the case of independent mutual contracts or promises, each party has his remedy on the covenant or promise in his favor, without performing his part of the contract.” See also 1 Chitty PI. 321, (9 Am. Ed.).

The distinction between a failure of consideration, and such a failure to perform on one side as gives the other party an election to rescind the whole contract, or to enforce it, has not always been made or clearly stated, and some confusion may thus be found in the authorities. Tillotson v. Grapes, 4 N. H. 444, is a case in which such a failure to perform his contract on one side as would authorize the other side to rescind the whole contract, is improperly spoken of as a failure of consideration. 2 Smith’s Lead. Cases,* 9 and 10, in note to Cutter v. Powell, and cases cited; Dodge v. McClintock, supra, and cases cited; Wallace v. Company, 44 N. H. 521; Campbell v. Jones, 6 T. R. 570.

Brief statement rejected.