defects was worth less than it should have been had it been as warranted, or if the defects had not existed; but he is not entitled to a deduction of the difference between the amount of the note and the sum which the jury may deem the true value of the chattel. Shaw, C. J., said: "This mode of defenses is of modern origin, founded on a liberal application of the rules of law which allow such deduction as a substitute for a cross-action on the warranty to avoid circuity of action. The same rule of damages, therefore, must be adopted as would be adopted in assessing damages in such cross-action. In that case it is very clear that the rule of damages would be the loss ensuing from those defects in respect to which the warranty is broken.”51

In Michigan evidence of failure of consideration, in whole or in part, may be given in any action or set-off upon, or arising out of, any contract except negotiable instruments, negotiated before due, to persons not having notice. 52

In Minnesota a partial failure of consideration can be shown, if properly pleaded, as a defense pro tanto to a negotiable instrument in the hands of the original payee, or of a party standing in his shoes.53 It is also decided in that state that the allegation of a breach of warranty in the sale of chattels may be set up as a partial defense by way of recoupment, and it is well settled in that state that a partial failure of consideration is a good defense or partial defense, and may be availed of to defeat a recovery pro tanto. In another case the defense is held available by way of reduction of damages recoverable upon a nonnegotiable contract or instrument. In earlier cases, however, it is also determined that where the consideration is apportionable a partial failure thereof is a defense;

51 Goodwin V. Morse, 9 Metc. (Mass.) 278. Examine Parish V. Stone, 14 Pick. (Mass.) 198, 25 Am. Dec. 378 (although the language used in this case refers more particularly to partial want of consideration); Noble v. Smith, Quincy (Mass.) 254, states the doctrine that a partial consideration of a note can not be shown in reduction of damages, but as appears from the preceding cases the opposite doctrine prevails.

54

55

52 Hubbard v. Freiburger, 133 Mich. 139, 94 N. W. 727, 10 Det. L. N. 123; Comp. Laws, §§ 769, 828 (Comp. Laws 1915, § 6069).

53 Brown v. Roberts, 90 Minn. 314, 96 N. W. 793.

54 Nichols & Shepard Co. v. Soderquist, 77 Minn. 509, 80 N. W. 630; Durment v. Tuttle, 50 Minn. 426, 52 N. W. 909; Torinus v. Buckham, 29 Minn. 128, 12 N W. 348.

55 Stevens v. Johnson, 28 Minn. 172, 9 N. W. 677.

but where it is not shown to what extent the consideration has failed in proportion to the whole consideration the whole amount of the note may be recovered.56

In Mississippi, in an action upon instruments for a sum certain, if introduced under a special plea, the defense of partial failure of consideration can be made.57 In that state, partial failure of consideration of a note is a defense to an action on a note in the nature of a set-off to the extent of the failure of the consideration.58 In Missouri it is declared that, "It may now be considered as settled in this state, that part failure of consideration may be pleaded to an action at law on a note," and may be shown in evidence.60 And where there was an agreement with an outgoing partner for a pro tanto rebate if accounts proved worthless, such partial failure. may be availed of as a defense in an action at law upon notes for the purchase-price of notes and accounts of the firm at their face. value.61

In a Nebraska case, it is decided that in an action between the parties on a negotiable check and persons not bona fide purchasers, a partial failure of consideration may be shown, and where defendant admits an amount due and alleges such partial failure in an action against the drawer the plaintiff may recover the amount due.62

In New Hampshire, under the statute, such part failure may be proved in reduction of damages, after filing a brief statement thereof,63 in all cases where total failure would have been a good

56 Bisbee v. Tornius, 26 Minn. 165, 2 N. W. 168; Leighton v. Grant, 20 Minn. 345 (Gil. 298).

57 Rasberry v. Moye, 23 Miss. 320. See Etheridge v. Gallagher, 55 Miss. 458, considering code, § 2281 (Hemingway's Ann. Code, 1917, § 2606). Merchants & Planters Bank v. Millsaps (Miss.), 15 So. 659, considering code, § 3503; Stokes v. Winslow, 31 Miss. 518, considering code, 640, § 9.

58 Wm. R. Moore Dry Goods Co. v. Ainsworth (Miss.), 70 So. 885.

59 Barr v. Baker & Baker, 9 Mo. 850; Nichols v. Hunton, 45 N. H. 470, (Stat. 1861, ch. 2497, § 1), Pub. Stats..

ch. 202, §7, p. 664; Riddle v. Gage, 37 N. H. 519, 75 Am. Dec. 151; Drew v. Towle, 27 N. H. 412, 59 Am. Dec. 380.

60 Gamache v. Grimm, 23 Mo. 38. 61 Battre v. Franklin, 57 Mo. 566; Briscoe v. Kinealy, 8 Mo. App. 76; Smith v. Giegrick, 36 Mo. 369, under Rev. Code 1865 (Rev. Stat. 1919, §§ 1404, 1405).

62 Lanning v. Burns, 36 Nebr. 236, 54 N. W. 427.

63 Pike v. Taylor, 49 N. H. 124, under Stat. 1861, ch. 2497 (Pub. Stat., ch. 202, §7, p. 664).

defense.64 It was also at common law a good defense pro tanto where the sum to be deducted could be ascertained by mere computation, but otherwise where the amount to be deducted was unliquidated. 65

In New Jersey it is held that in a suit between the original parties a partial failure of the consideration may be set up as a defense to the same extent as though the action were founded upon such consideration itself. But it is also decided that partial failure is no defense where the amount to be deducted on account of such failure is unliquidated.67

66

In New York partial failure of consideration is, under the Negotiable Instruments Law, a defense pro tanto, as between the original parties, whether the failure is an ascertained and liquidated amount or otherwise.68 In an early decision in that state it is determined that if a note be given on account of part performance of an entire contract, the nonperformance of the entire contract is no defense to the note, and that a claim for damages for not completing the contract can not be recouped against the note.69 In another case in that state the court declares that partial want of consideration affects the note with nullity pro tanto, and that the same rule applies where there has been a part failure of the consideration," not indeed in all cases, but in many cases, at least where it is a matter capable of definite computation and not mere unliquidated damages.70 Under earlier decisions such partial failure may be shown in defense,71 or be given in evidence to reduce the damages or recovery, under notice of defense 72 Defendant may also show that the note was

64 Nichols v. Hunton, 45 N. H. 470. 65 See Fletcher v. Chase, 16 N. H. 38, holding that past failure was not, in general, a defense, for the defendant was left to resort to action on covenants for indemnity. A tract of land was sold, but no distinction was made between land and personal property. 66 Wycoff v. Runyon, 33 N. J. L. 107.

67 Allen v. Bank of United States, 20 N. J. L. 620.

68 Negot. Inst. Law, art. "Consideration of Negotiable Instruments,” § 28. Rockaway Rolling Mill v. Ross, 76 Misc. 515, 135 N. Y. S. 563.

69 Walker v. Millard, 29 N. Y. 375.

70 Sawyer v. McLouth, 46 Barb. (N. Y.) 350, quoting Story on Prom. Notes, § 187.

71 Sawyer v. Chambers, 43 Barb. (N. Y.) 622, 44 Barb. (N. Y.) 42.

72 Payne v. Cutler, 13 Wend. (N. Y.) 605; Judd v. Dennison, 10 Wend. (N. Y.) 512 (available in mitigation or in bar); Burton v. Stewart, 3 Wend. (N. Y.) 236, 20 Am. Dec. 692; Spalding v. Vandercook, 2 Wend. (N. Y.) 431; Jones v. Swan, 6 Wend. (N. Y.) 589.

given for more than plaintiff was entitled to, and that the excess should be deducted.73 But it is also determined in that state that, where there has been only a partial failure of consideration, the defendant can not say that the note is wholly void; in such case each party may have an action, and this is the only way in which complete justice can be done.74

In North Carolina it was held, prior to the enactment of the Negotiable Instruments Act, that such partial failure is inadmissible to defeat recovery or lessen the sum due, but resort must be had to a counterclaim or cross-action for damages;75 or as it has been decided in another case, such part failure furnishes a distinct and independent cause of action, and a distinction is made between the contract and the security. If a part of the contract arises on a good consideration and part on a bad one it is divisible. But it is otherwise as to the security, that being entire.76

77

In Ohio it was held, prior to adoption of the Negotiable Instruments Act, that recovery is barred to the extent of failure of consideration, and a party is entitled to abatement in price, in case of a partial failure of consideration, against all persons seeking to enforce a vendor's lien, as they are not bona fide holders.78 But a purchaser of land who has received a deed containing a covenant of warranty can not plead in bar, to an action on a note given for the purchase-money, a defect of title, unless he has been evicted by title paramount.

79

In Oklahoma partial failure of consideration in recoupment of damages could be shown,80 prior to enactment of the Negotiable Instruments Act. In such state, it is held that as the sale and transfer of a city license to sell intoxicating liquors is prohibited by the law, such sale of a license enters into and becomes part of the consideration for a promissory note executed therefor, and is wholly

73 Phoenix Ins. Co. v. Fiquet, 7 Johns. (N. Y.) 383.

74 Payne v. Ladue, 1 Hill (N. Y.) 116.

75 Evans v. Williamson, 79 N. Car. 86.

76 Washburn v. Picot, 14 N. Car. 390.

77 Lowenstine v. Males, 3 Ohio Dec. (reprint) 330.

78 Sutton v. Kautsman, 6 Ohio Dec. (reprint) 910, 8 Am. Law. Rec. 657. 79 Picket v. Picket, 6 Ohio St. 525, distinguished in Koyle v. Thompson, 11 Ohio St. 616, where an order was made enjoining collection of so much of a note as was necessary to cover a mortgage encumbered

80 Hagan v. Bigler, 5 Okla. 575, 49 Pac. 1011.

void.81 Since the adoption of the Negotiable Instruments Act in that state, the Supreme Court of the state has held that, "Where an action is brought by the original payee against the maker upon a promissory note, it may be properly treated as a defense that the amount of said note was greater than the balance due for which said note was given, and to the extent of such proved excess said note is without consideration."82

In Oregon such part failure may be set up, and defendant may recoup his damages, though they be unliquidated.83

In a Pennsylvania case a note was given in payment pro tanto of work, but it was not to be extinguished or paid if the work was never completed. It was left to the jury to determine whether the work was substantially performed or not, under an instruction to allow an off-set if so done, but compensating plaintiff in damages for such part as was not fully completed.84 It was also held that where notes were given in consideration of the dismissal of indictments for obtaining money under false pretenses, the failure to dismiss is no defense to an action on the notes after default in payment. 85

In Rhode Island, the defense of total or partial failure of consideration of a note is permissible if the extent of the failure can be measured in money value, and the consideration is capable of apportionment, in order to avoid circuity of action; but the defense is not permissible where there can be no apportionment of the consideration, as where the note is given in consideration of repairs to an automobile and other considerations, and defendant claims that the automobile was not properly repaired.86

In South Carolina it is held that where it appears that a purchaser would have the right to recover back the purchase-money he has a good defense by way of set-off in a case where he has not paid the purchase-money; that is, he who has a cross-action has a right of discount against an action brought; and a set-off which equals a total failure as to part of a divisible consideration may be shown under the terms of a contract allowing a return of part of the goods

81 Arnett v. Wright, 18 Okla. 337, 89 Pac. 1116.

82 Holland Banking Co. v. Dicks, 67 Okla. 228, 170 Pac. 253.

$3 Davis v. Wait, 12 Ore. 425, 8 Pac. 356.

84 Truesdale v. Watts, 12 Pa. 73. 85 Gilfert v. Lamond, 55 Pa. Super. Ct. 394; Gilfert v. Norris, 55 Pa. Super. Ct. 399

86 Kendall v Rossi, 35 R I. 451, 87 Atl. 186, 45 L. R. A. (N. S.) 985.