Drew v. Towle

Bell, J. Upon the question of failure of consideration as a defence to a promissory note, the rule generally adopted elsewhere is well laid down in Bayley on Bills 393. “ A total failure of consideration is where it can be insisted on as a total bar; inadequacy or a partial failure, a bar pro tanto only. If a bill or note is given, either wholly or as to a specific part, as the consideration of a special contract, and that contract either fails in toto, or is in toto rescinded, it will be an answer to an action on the bill or note, either wholly or pro tanto, if the plaintiff stands in a position which makes him liable to such a defence. But the partial failure of consideration will constitute no defence, if the quantum to be deducted on that account is matter not of definite computation, but of unliquidated damages, unless the contract was rescinded on that ground.” v The same rule is laid down substantially in 1 Saund. PI. & Ev. 303; 1 Steph. N. P. 929; 1 Leigh’s N. P. 474, and — 425 — in Story on Prom. Notes, § 187; 2 Greenl. Ev. § 199, and many authorities cited. The reported cases in New Hampshire show that the rule thus stated has been recognized and adopted here. In Copp v. Sawyer, 6 N, H. Rep. 386, it was held that a want of consideration is a good defence to a promissory note, in a suit between the original parties to it; and the same principle is stated in Reed v. Prentiss, 1 N. H. Rep. 174. In the last case, it is said by Woodbury, J., that mere failure of consideration is no defence to an action on a promissory note. But the case was decided upon the point that there was no failure of consideration, inasmuch as the whole article, which was the consideration of the note passed by a valid title, to the purchaser, and it was not shown that there was any warranty of the quality or deceit practised in the sale. In Earle v. Page, 6 N. H. Rep. 477, it was held that where a note has been partially paid, a failure of consideration to a greater amount than the balance due, was a bar to the action. In Haseltine v. Guild, 11 N. H. Rep. 390, it was held that a promissory note for a certain sum given to indemnify a surety in a probate bond, and to enable him to secure himself by attachment was good to the amount actually-paid upon the bond by the surety, at the time of the” judgment, and that for the balance the consideration must be held to have failed. This case clearly recognizes the principle that a partial failure of consideration is, in some cases, a defence pro tanto to a promissory note. In Chase v. Weston, 12 N. H. Rep. 413, it is said by TJpham, J., that on the ground of authority, a mere partial failure of consideration of a note, arising from a breach of covenants of warranty in a conveyance of land, will not constitute a defence; but the point was not decided, because the maker of the note had assigned over the covenants, — 426 — In Fletcher v. Chase, Hillsborough, 1843, the same point was decided; and in Sanborn v. Osgood, Grafton, 1843, it was held that a partial failure of consideration, arising from the fraud of the seller, is no defence to a promissory note, unless the entire contract is rescinded. In Ramsey v. Sargent, 1 Foster’s Rep. 397, it was held that where the seller agreed to refund the price of an article sold, if it did not give satisfaction, the failure of the article to answer its purpose, was a good defence to a note given for the price of it. We have seen no report of the case of - v. Swett, cited by the plaintiff’s ^counsel, but, as stated by him, it seems consistent with the other decisions'cited. It may be fairly inferred that the defendant, having chosen not to avoid nor rescind the contract of sale, but to retain the property, notwithstanding its defects, had reduced his claim from a total failure of consideration to a partial failure, in which case the amount of the failure must depend upon the ascertainment of unliquidated damages. In the present case, as to the tract of sixty-two and a half acres, the failure of consideration is total, and the amount readily ascertained by mere computation; it, therefore, falls within the principle of Haseltine v. Guild. As to the other tract, the case is one of partial failure only, and the amount entirely unliquidated; and it is, therefore, no defence, within the principle of Chase v. Weston, Fletcher v. Chase, and Sanborn v. Osgood, and the defendant must seek his indemnity by his action upon his covenants. The same test, we think, will apply to the question whether damages for the breach of the covenants in a deed, may be set off in an action of assumpsit for the consideration. Where the failure of title is total, and the remedy is to be sought on the breach of the covenant of seizin, the rule of damages is definite, to wit: the value of the property, as shown by the consideration paid and the interest. Parker v. Brown, 15 N. H. Rep. 176, and they may be ascertained — 427 — by numerical calculation alone, and may, therefore, properly be allowed as a set off. In actions on the covenant of warranty, the same rule of damages is adopted here, (Wilson v. Wilson, Coos, Dec. 1851,) and the same principle of set off may apply, and, in many cases, a similar principle will be applicable on the covenant against incumbrances, where the incumbrance has been removed. Loomis v. Bedel, 11 N. H. Rep. 74. Where the damages upon any breach of covenant are uncertain and unliquidated, they cannot, we think, form the subject of a set off. The language of the Revised Statutes differs from that of the English statute of 8 Geo. II. ch. 24, § 4. The latter says, “ whenever there are mutual debts between the plaintiff and defendant, &c., one debt may be set off against the other.” Section 6, chapter 187 of the Revised Statutes provides that “ if there are mutual debts or demands between the plaintiff and defendant, at the time of the commencement of the plaintiff’s action, one debt or demand may be set off against the other.” The first provincial statute of 1765 followed the terms of the 8 Geo. II, Prov. Stat. 1771, 195. The change of phrase was made in the revision of 1791, Stat. 1815, 172. So far as I have found, there is no reported decision relative to the construction and effect of our statute. Under the English statute, “ if the claim of either party consists of uncertain or unliquidated damages, a set off is not allowed.” 1 Leigh’s N. P. 153; B. N. P. 161; Montague on Set Off 13. But an unliquidated demand, capable of being reduced to a certainty by a simple calculation, may be set off. Leigh’s N. P. 160; Gibson v. Bell, 1 Bing. N. C. 743; Rose v. Simms, 1 B. & A. 526; 2 Saund. Pl. & Ev. 790; 1 Banv. Inst. 327. In Hepburn v. Hoag, 6 Cowen 613, the question arose as to the effect of the word “ demands,” in the New York statute; relative to set-offs, and it was decided that the in — 428 — sertion of this word did not change the law so as to give a party the benefit of uncertain damages by way of set off. Such, we think, has been the practical construction of our own statute, and that debts, properly speaking,' or demands capable of liquidation by mere computation, and no others, have ever been allowed as the subjects of set off. The damages arising upon the covenants relative to the sixty-two and a half acres may be set off; but those which relate to the smaller tract being uncertain, and necessarily to be assessed by a jury, can only be recovered in a distinct action. III. By the Revised Statutes, ch. 193, § 15, a form of process is prescribed in trustee cases. By it the sheriff is required to attach the goods, &c. of the debtor, in the hands, &c. of the trustee, to the value of- dollars, and summon the trustee to appear, &c., and show cause why execution should not issue against him for the damages, which may be recovered by the plaintiff against the principal defendant. The question is raised, in this case, whether the plaintiff can recover more than the amount required by the writ to be attached, if it appears that the trustee has more in his hands. By section 5 of chapter 221, “ if the trustee makes default, the charge of having in his hands money, &c. of the principal defendant to the amount alleged in the process, shall be taken to be true, and judgment shall be rendered against the trustee, not exceeding the amount alleged in such process.” By section 7 every person, summoned as trustee as aforesaid, may be put to answer interrogatories as to his liability as such trustee, &c. By section 8 every such trustee, having in his possession any money, &c. of the defendant, at the time of the service of such writ upon him, or at any time after such ser — 429 — vice, and before his disclosure, shall be adjudged trustee therefor. These provisions appear to us to show that although upon a default, the trustee shall be charged only for the amount alleged in the process to be in his hands; yet, upon disclosure or .trial by jury, if it appears that he has property of the principal defendant in his possession, whether it was attached on the process or not, he shall be charged for it. In that case, as between these parties, the amount alleged in the process is immaterial. Being thus chargeable for all that he has in liis possession, the court may order a judgment for the trustee for his costs, to be retained out of the property in his hands, and for the creditor for the amount of Ms judgment against the principal debtor, whether debt or costs, not exceeding the surplus, after deducting the trustee’s costs from the amount in his possession. By section 35, “ in all cases where the trustee has not been guilty of fraud or unreasonable delay, he shall be entitled to his costs, and the court may order the same to be deducted from the amount for which said trustee shall be adjudged chargeable, or may render judgment and issue execution therefor,” &c. In this case, the trustee appeared, and the judgment was not probably rendered on a default, and if not, the judgment seems to be regular, notwithstanding the exception taken. Probably the view of the defendant may be correct, that as she was not a party to the proceeding against the trustee, had no right to be heard, and had no remedy by error to reverse or correct the proceedings, she has the right to avail herself of any defect of the judgment collaterally. Puffer v. Graves, 6 Foster’s Rep. 256. Such judgment, though conclusive upon parties, is not so as to strangers or third persons. Thrasher v. Haines, 2 N. H. Rep. 444. As to the question of interest on the execution against — 430 — the trustee, and the officer’s fees, as a general rule, that is a matter between the creditor and the trustee, with which the debtor has nothing to do. The trustee is discharged for the amount of the judgment against him, so far as the debtor is concerned, and no more. This seems to be made clear by section 30, which provides that when any person shall be adjudged a trustee of any debtor as aforesaid, except where it is otherwise specially provided, judgment shall be rendered and execution issue against such trustee, his own goods and estate therefor, &c., in the same manner as if such writ were brought against him personally. In cases where a special provision is made, as in sections 10 to 14, a different rule may be applicable, but that question does not arise here. In Wadleigh v. Pillsbury, 14 N. H. Rep. 373, it was decided that the pendency of an action against a debtor, as trustee of the creditor, is not a good plea in abatement to an action by the creditor. And by section 38 any trustee from whose possession any money, &c., shall be taken by the trustee process, may, if sued therefor, plead the general issue, and give the special matter in evidence under it. It was not, therefore, necessary to plead, in this case, any plea puis darrien continuance. As, then, a part of the evidence offered ought to have been received, the case must be sent to a new trial.