¶1The answer set up a good defense of notice, and the court erred in the instruction which cut it off. Partial failure of consideration of a bill of exchange may be set up to an action on the bill, and the defendant may recoup his damages, though they be unliquidated. (Withers v. Green, 9 How. 224; Stacy v. Kemp, 97 Mass. 166; Wyckoff v. Runyon, 4 Vroom, 107.) If an indorsee take a bill with notice of the failure of consideration, his right to recover cannot be superior to that of his indorser. (Herrick v. Carman, 12 Johns. 159; 1 Par. Bills and Notes, 258.) Counsel for the plaintiff argued, however, that conceding error in the instruction, the defendant could not take advantage of it, because he had not properly, alleged notice in his answer, in this, that he did not allege that the draft in suit arose out of the transaction on which the defendant founded his defense. The pleading is defective in the particular alleged, but the plaintiff waived the defect by taking issue on the facts alleged, as is shown in White v. Spencer, 14 N. Y. 247, and Bank of Illinois v. Brady, 3 McLean, 268. The judgment must be reversed, and a new trial ordered.
¶2Judgment reversed.