Pioneer Bank & Trust Co. v. Macnab

• Decision Date: 09 July 1925
• Citation: 41 Idaho 146,238 P. 295
• Court: Idaho Supreme Court
• Parties: PIONEER BANK & TRUST COMPANY, a Corporation, Respondent, v. F. A. MACNAB, Appellant

238 P. 295

41 Idaho 146

PIONEER BANK & TRUST COMPANY, a Corporation, Respondent, v. F. A. MACNAB, Appellant

Supreme Court of Idaho

July 9, 1925

PLEADING AND PRACTICE - DEMURRER TO ANSWER - WHEN PROPERLY SUSTAINED - PROMISSORY NOTE - PARTIAL FAILURE OF CONSIDERATION-WHEN NOT A DEFENSE.

1. The maker of a promissory note cannot avoid payment of the same on the ground of a partial failure of consideration where the answer shows that there was not a total failure of consideration and the maker received and retained part of the consideration.

2. Where there is a partial failure of consideration claimed for the execution of a promissory note, the maker, in order to obtain relief, must either rescind the contract and return the consideration received or pursue some remedy whereby the holder of the note will receive compensation for the consideration that passed.

3. The maker of a note cannot avoid payment of the same upon the ground of a partial failure of consideration where such note is a renewal of a former note for which he received and retained the consideration agreed upon and at the time of giving the renewal note had knowledge of all of the facts and circumstances which he claims gave rise to a partial failure of consideration. The giving of a renewal note under these conditions waives such defense.

APPEAL from the District Court of the Sixth Judicial District, for Lemhi County. Hon. Ralph W. Adair, Judge.

Action on promissory note. Judgment for plaintiff. Affirmed.

Judgment affirmed, with costs to the respondent.

Whitcomb Cowen & Clark, for Appellant.

A demurrer admits all of the allegations of the answer to be true. (31 Cyc. 269, 333; 21 R. C. L. 506, sec. 40.)

"An admission of facts by demurrer is equivalent to proof by a witness in open court." (Francis v. Wood, 81 Ky. 16, 4 Ky. L. 616.)

A general demurrer will not lie if any of the allegations of the defense constitute a partial defense. (31 Cyc. 329; 21 R C. L. 514, sec. 77.)

E. H. Casterlin, for Respondent.

Where one gives a note in renewal of another note, with knowledge at the time of a partial consideration of the original note, or false representations by the payee, he waives such defense, and cannot set it up to defeat a recovery on the renewal note. And where one giving such renewal note either had knowledge of such facts and circumstances, or by the exercise of ordinary diligence could have discovered them and ascertain his rights, it becomes his duty to make such inquiry and investigation before executing the renewal note, and if he fails to do so he is as much bound as if he had actual knowledge. (Western Silo Co. v. Pruitt, 94 Okla. 154 221 P. 106; Bills and Notes, Key No. 140, National Reporter System.)

WILLIAM A. LEE, C. J. Wm. E. Lee, Budge, Givens and Taylor, JJ., concur.

OPINION

WILLIAM A. LEE, C. J.

--This is an action to recover on a promissory note. As a defense the answer alleges that the note sued on is a renewal of a note first given on account of certain transactions between respondent bank, appellant and one Carpenter in December, 1919; that this first note was given to respondent bank by appellant and Carpenter for the sum of $ 5,000 to purchase feed for sheep then owned in partnership by himself and Carpenter; that appellant advanced a further sum in excess of $ 5,000 soon thereafter for the purpose of carrying on this partnership business, and it was agreed between appellant and Carpenter that he should reimburse defendant for the money advanced to said partnership account.

The answer further alleges that during the spring of 1920 Carpenter solicited a loan from respondent bank for money to carry on his personal business which loan was refused because the bank had loaned Carpenter more than it had authority to loan to any one person; that about April, 1920, the cashier of respondent bank requested appellant to release Carpenter from said $ 5,000 joint note, in order, as said cashier represented, to enable the bank to make a further loan to Carpenter to enable him to carry on his sheep business on account of which he was already heavily indebted to respondent bank; that appellant refused to release Carpenter from said joint note and respondent's cashier then represented to appellant that he had made arrangements with Carpenter to give appellant security for the amount due from Carpenter to appellant on account of said advances made by appellant and for Carpenter's portion of the money jointly owed respondent bank; that appellant executed such note and the bank canceled the joint note of himself and...