Mcclanahan v. Caul

• Decision Date: 28 January 1908
• Citation: 60 S.E. 382,63 W.Va. 418
• Parties: McCLANAHAN . v. CAUL et al.
• Court: West Virginia Supreme Court

60 S.E. 382

63 W.Va. 418

McCLANAHAN .

v.CAUL et al.

Supreme Court of Appeals of West Virginia.

Jan. 28, 1908.

Bills and Notes—Action on Note—Pleading—Failure op Consideration.

The defense of a failure of consideration may be made, in an action of assumpsit upon a promissory note, either under the plea of non assumpsit or a special plea under section 5, c. 126, Code 1899 [Code 1906, § 3891].

[Ed. Note.—For cases in point, see Cent. Dig. vol. 7, Bills and Notes, § 1604.]

(Syllabus by the Court)

Error to Circuit Court, Fayette County.

Action by H. A. McClanahan against A. O. Caul and others. Judgment for defendants, and plaintiff brings error. Affirmed.

Payne & Hamilton and J. F. Bouchelle, for plaintiff in error.

BRANNON, J. Action of assumpsit in the circuit court of Fayette county on two promissory notes of $500 each by H. A. McClanahan against A. C. Caul and H. A. Scott Pleas of non assumpsit and a special plea. Verdict and judgment for the defendants, from which the plaintiff has appealed.

The plaintiff points out as error the admission of the special plea. That special plea states that three notes of $500 each had been given by the defendants to H. A. McClanahan as the price of a certain saloon and fixtures, and for the rent of a saloon building from 20th August, 1904, to the end of that fiscal year, which saloon and rent amounted to $525, and for the privilege of renting said building for at least one additional year after the end of the fiscal year at a rental price not to exceed $25 per month; that the privilege of renting and using the building for at least one additional year after the end of the fiscal year 1904 formed a large part of the consideration for the notes, to wit, $975, and was one of the inducements to the contract leading to the execution of the notes; that the plaintiff broke the con tract, and wholly failed to permit defendants to occupy and use the building for the year next succeeding the fiscal year 1904, and so the consideration for the notes had partially failed, and the defendants had sustained damages to the amount of the plaintiff's demand. Counsel for plaintiff say that this plea ought not to have been received, because it is a plea of recoupment, and that the defense of recoupment should never be set up by a plea—citing Sterling Co. v. House, 25 W. Va. 87. Counsel say that there must be notice of recoupment, and that this plea was filed first on the day of trial, and thus too late, and it was not legal notice, but worked surprise. In response to these points we must say that this plea would be good notice of recoupment, if recoupment were the matter involved. If it notified of a claim for recoupment, why not good as a notice of recoupment? As to being filed too late, counsel misapply the law, when they say there must be notice of recoupment. When the books say this, no reference is made to the length of time of notice, but simply that a notice must be filed. If filed first on the trial day, it is good. To prevent surprise, the plaintiff, if not prepared to meet it, had right to continuance. But really this pleading does not come under the law of notice of recoupment. It is a plea of partial failure of the consideration on which the notes were based. Really, as the notes were not under seal, no such plea was needed, because failure of consideration on which a parol promise is based may be proven under the plea of non assumpsit. Cases cited in Columbia, etc., v. Roskey, 93 Va. 684, 25 S. E. 1009; 4 Minor 793. But our statute (section 5, c. 126, Code 1899 [Code 1906, § 3891]) says that in any action on a contract the defendant may file a plea of such failure in the consideration in the contract. So the plea is clearly good defense, but unnecessary. Evidence was admissible under it and also under the general issue. The cases just cited hold that the statute does not impair the right to such defense under the general issue.

Another point made is that the contract of lease for more than a year is void under the statute of frauds, because it was not to be performed fully within a year, and was a lease for more than a year, without writing, and that damages cannot be recouped resulting from the refusal of the plaintiff to furnish the building for another year, because that would mean to enforce a contract not enforceable by reason of the statute of frauds. I have already said it is not a question of recoupment. The defendants do not ask damages by way of recoupment, but defend for failure of consideration. We may admit that where there is a contract not enforceable by reason of that statute, but partly performed, and an action for recovery for that part performed, there cannot be recoupment against compensation for the part performed for failure to complete the con-tract, as that would be to enforce an oral contract not enforceable. This is not a void contract as against public policy or other reason, but simply one not enforceable. Where notes are given for a consideration which has failed, can there not be a defense for its failure? The common law said there could be in the case of unsealed instruments, and that under the plea of non assumpsit. And section 5, c. 126, Code 1899 [Code 1906, § 3891], in words authorizes a plea whether the paper is sealed or not Is it possible that, where a note was given for a lease longer than a year, and the lessor fails to deliver possession, no plea or defense for such failure can be allowed because the contract of lease is not enforceable under the statute of frauds?

It is argued that there is a variance in the case in this, that the plea alleges that the defendants were to have the building only until 30th April, 1905, whereas their evidence was that they were to have It until 20th August, 1905, with the...