Russ Lumber & Mill Co. v. Muscupiabe Land & Water Co.

Citations

• 120 Cal. 521
• 52 P. 995
• 1898 Cal. LEXIS 801

Syllabus

<p>Promissory Notes —Failure of Consideration—Contract with Payee— Fraud—Notice to Indorsee.—In an action by an indorsee of promissory notes executed by the defendant to an irrigation company, an answer setting up a total failure of consideration of the notes, and showing in substance that the sole consideration therefor was a'contract for water, the certificate for which was attached to the notes as collateral security, and that the contract was entered into and the notes executed under the sole inducement of representations by the irrigation company that it possessed an abundant supply of water to fulfill the contract, and that it was solvent and prosperous, and able to meet all its obligations, which representations were wholly false and fraudulent, and made with intent not to furnish any water to defendant, but to deceive and defraud defendant out of the sum agreed to be paid in the notes, and alleging that at and before the transfer of the notes, plaintiff had notice and knowledge of the consideration and failure of consideration thereof, and of the false representations of the irrigation company to the defendant, and of its insolvency and inability to furnish and intention not to furnish any water to the defendant, states a sufficient defense, both as against the irrigation company and as against the indorsee of the notes.</p> <p>Id.—Independent Agreement to Pay Note and Interest—Default of Payee—Concurrent Conditions —Though the agreement of the irrigation company to furnish water upon demand, and the agreement of the defendant to pay the notes and interest thereon at specified dates, were not originally concurrent or dependent, and an action might lie for accrued interest before the irrigation company was in default; yet if, before 'suit brought upon any installment of interest, the irrigation company and its receiver in insolvency made default in the delivery of water upon demand, and expressed inability to furnish any water under the contract, all the cond