McMillan v. Gardner

Citations

• 88 Kan. 279
• 128 P. 391
• 1912 Kan. LEXIS 53

Syllabus

<p>SYLLABUS BY THE COURT.</p> <p>1. Mortgage—Two Notes—Default on One Matures the Other— Bona Fide Holder. A mortgage on real estate was given to secure two promissory notes, one for $925, due in six months, and one for $1775, due in three years; the second note was for part of the consideration for the sale of the real estate; the first note grew out of a separate transaction and was also secured by a chattel mortgage. The real-estate mortgage contained a provision that “if said sum or sums of money or any part thereof, or any interest thereon, is not paid when the same is due—then the whole of said sum or sums and interest thereon” shall become due. Held, that the failure to pay the first note when due accelerated the maturity of the second, and that one who with notice of the mortgage purchased the second note after the maturity of the first was not a holder in due course.</p> <p>2. Promissory Note Past Due—Equitable Defense. Where the holder in the situation mentioned in the preceding paragraph brings an action upon the second note the makers may assert as a defense the breach of a contract which furnished the consideration for such .note and which was entered into between themselves and the original payee by which the latter bound himself to quiet the title to certain portions of the land conveyed to them.</p> <p>3. -Partial Failure of Consideration. In an action on a promissory note brought by the payee or one who is not a holder in due course a partial failure of .consideration may be shown under an answer which pleads a total failure of consideration.</p> <p>4. -Same. In. such an action where the proof shows that the loss occasioned by the breach of the contract set up as a defense was less than the amount due on the note the plaintiff in the action is entitled to recover for any balance due thereon after allowing credit for the amount of loss shown, and it is error to render judgment against him as for a total failure of consideration.</p>