Shannon v. Horley

McAdam, J. It is elementary that one promise is a legal consideration for another. If a promissory note is made by A. to B. in exchange for a promissory note made by B. to A., each note is a valid consideration for the other, whether between the original parties or in an action by an indorsee. It is in the nature of an exchange of property, each party getting title to the property received in exchange. Newman v. Frost, 52 N. Y. 422; Rice v. Grange, 131 id. 149; State Bank v. Smith, 155 id. 185; Backus v. Spaulding, 116 Mass. 418; 4 Am. & Eng. Ency. of Law (2d ed.), 188; Edwards Bills, 322; Chitty Bills (10th Am. ed.), 708; Daniels Neg. Inst., § 187; Wooster v. Jenkins, 3 Den. 187; Dowe v. Schutt, 2 id. 621. If both notes are due, and each remains in the hands of its payee, the one may doubtless be set off against the other. But the two contracts, though mutual, are independent, and if they are for the payment of money at different times, each must be performed according to its terms. Backus v. Spaulding, supra. In Wooster v. Jenkins, supra, the court said: “It is. [624] urged that as between the original parties, cross-notes or acceptances should he regarded as accommodation, in contradistinction to business securities. But the rule is settled the other way. Each party may prove the debt against the other under a commission of bankruptcy. And although one party sells the note or bill at a greater discount than seven per centum, the purchaser will acquire a good title. It is true that so long as the securities are in the Lands of the original parties, they will balance each other. But it will be by way of set-off; and not on the ground that they are invalid.” See also Rice v. Grange, supra. No set-off is pleaded here. The application of these rules to the present controversy entitles the plaintiff to judgment for $910, with interest. Judgment for plaintiff.