Simpson Centenary College v. Tuttle

33 N.W. 74, 71 Iowa 596

• Court: Supreme Court of Iowa
• Decided: June 7, 1887
• Status: Published

Opinion

Rothrock, J.

The note sued upon is still in the hands of the payee; and, notwithstanding the use of the words “value received,” the question of consideration is still open. In the ca -3 of Abbott v. Hendricks, 1 Man. & G. 791, the consideration recited was “for commissions due to the plaintiff for business transacted for tbe defendant.” The defendant was allowed to show that the note was given for services to loe thereafter rendered, and that there was failure of consideration because the services had not been rendered. It has long been a settled principle that, as between the maker and the payee of a promissory note, the defense of want of consideration may be interposed. Such a defense does not affect the terms of the written agreement or payment, or the parties to whom the same is to be paid. A gift is not complete until the money or property constituting the subject of the gift is actually delivered, and before such delivery the gift may be revoked. A promise to give money cannot be enforced even when put in the form of a promissory note. Phelps v. Phelps, 28 Barb. 121 ; Fink v. Cox, 18 Johns. 145. The delivery of the note was simply the delivery of the thing promisesd. Starr v. Starr, 9 Ohio St. 75. To this doctrine, however, there must be added the qualification that the benefits to be derived from founding a school, church, or other institution of similar character, may furnish a good consideration for a promise. It must also be remembered, in the case before us, that such consideration is not advanced by plaintiff, and the only reference to its existence is contained in the paragraphs of the answer assailed by the demurrer; the other paragraph setting up a total want of consideration. Where a note, however, is based on a promise to give for the support of the objects referred to, it may still be open to this défense, unless it shall appear that the donee has, prior to any revocation, entered into engagements or made expenditures based on such promise, so that he must suffer loss or injury if the note is not paid. This is based on the equitable principle that, after allowing the. donee to incur obligations on the faith that the note would be paid, the donor should be estopped from pleading want of consideration.

There is nothing in the pleadings to show that the defendant ought to be estopped from setting up want of consideration; and, in the absence of anything of that character, he need not be very particular as to what reasons be shall assign for such defense to a promise to give. The obligations and expenditures on the part of the donee which might prevent the interposition of the defense of want of consideration must be directly in the line of the purpose for which the gift of the note or promise to give was intended. A diversion of the funds to other purposes, contrary to the intent of the donor, would certainly be a good excuse for withholding the consummation of tlie gift; and, if the plaintiff is diverting the funds created by the donations to purposes not contemplated at the time of the gift, but in violation of the agreement on which the promise was based, in such a manner as to show want of good faith on the part of the donee, the proof of such diversion is a defense to the note in the nature of a failure of consideration.

The demurrer to the answer was properly overruled.

Affirmed.