5 Daly 214 | New York Court of Common Pleas | 1874
It is well settled that in an action between the ■original parties to a promissory note, proof of the entire failure -of consideration will be a complete defense; but both the English and American authorities are very conflicting as to whether a partial failure of consideration may be shown for the purpose of reducing the amount sought to be recovered. The better opinion, however, as well as the more recent decisions, appears to be in favor of permitting it to be interposed as
In the present case, the uncontradicted testimony of the •defendant Sharpe shows that a large part of the -goods was never delivered at all; that another portion was worthless, and that within a few days after they took possession of the store, •they were compelled to remove therefrom and hire another one, at a greatly increased rent, because the landlord refused to consent to the assignment of the lease, unless he was paid $400. This consent it was the duty of Pardee & Co. to obtain before making the assignment (Roberts v. Geis, 2 Daly, 535). It thus appears that there was a failure of consideration exceeding in amount that of the note in suit. It follows that Pardee ■& Co. could not have recovered upon it, if the action had been brought by them.
Let us now inquire whether the plaintiff occupies a better position than Pardee & Co., as regard his right to maintain this action. He claims to be a bona fide holder for value. If such were the fact, he could undoubtedly recover. But to constitute one a bona fide holder of negotiable paper, he must not only have received it before maturity without notice that it is subject to some existing equity, but he must also either have given value for it, or else in consideration thereof, surrendered some subsisting security or parted with a valuable legal right, or incurred some new and distinct legal liability (Lawrence v. Clark, 36 N. Y. 128; Traders' Bank of Rochester v. Bradner, 43 Barb. 379). The plaintiff, it appears, has not complied with any one of these prerequisites. He simply received the note in part payment of a precedent debt. This did not make him a bona fide holder for value (Lawrence v. Clark, supra; Bright v. Judson, 47 Barb. 29). Nor did it operate as a discharge of the debt tanto. To have that effect there must •be an express agreement between the parties, that it is to be ¡received for that purpose (Bright v. Judson, supra).
It is, however, urged that the debt from Pardee & Co. to the plaintiff was due, and that the latter, before he received the note in suit, might have taken steps to compel payment there
The judgment must therefore be reversed.
J. F. Daly, J., concurred.
Judgment reversed.