<p>Promissory Note—Negotiable Instrument—Delivery as Part op Final Payment op Executory Building Contract—Failure to Complete Building—Bona Fide Transfer Before Maturity— Pledge — Failure op Consideration.—The maker of a negotiable promissory note, executed and delivered to the payee, a contractor for the erection of a building for the maker, contemporaneously with the execution of the building contract, and as part of the final installment payment provided for therein, cannot, after the failure of the contractor to complete the building, maintain, an action to cancel the note on the ground of failure of consideration, as against a tona fide pledgee of the note for value, before maturity, and before the breach of the building contract, notwithstanding the pledgee, at the time of the pledge, had notice of the terms and conditions of such contract, and that no work had been done thereunder by the pledgor.</p> <p>Id.—Consideration—Estoppel of Maker.—The delivery of such negotiable promissory note long before the time mentioned for the payment of the final installment upon the building, estops the maker from asserting that its only consideration was the completion of the building.</p> <p>Id.—Effect of Failure of Consideration as to Bona Fide Indorsee. A failure of consideration in whole or in part, after a bona fide assignment of . promissory note, is not a defense to a suit by the assignee against the maker, notwithstanding the assignee’s full knowledge of the original consideration for which the note was given.</p> <p>Id.—Executory Contract as Consideration for Note—Assignment Before Maturity—Effect of Breach on Bights of Indorsee.— The breach of an executory contract which formed the consideration for a negotiable promissory note is not a defense against an indorsee who acquired the note in good faith for value before maturity, knowing that the consideration was the executory agreement, but without notice of its breach. The rule is equally applicable where the indorsee so acquired the note, knowing that its consideration was an executory agreement on the part of the payee which might be broken and which was in fact violated after the transfer of the note.</p> <p>Id.—Knowledge of Nature of Consideration by Indorsee — Bona Fide Holder.—Knowledge that the note was given in consideration of the executory agreement or contract of the payee which has not been performed will not deprive the indorsee of the character of a bona fide holder, unless he also has notice of the breach of the agreement or contract.</p>
Good law ✅— No negative treatment on recordhow we know
Later decisions citing this case, by decade. The current decade is in progress, and our corpus holds fewer opinions from the most recent years, so the latest bars are undercounted — not a real decline.
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concurring.—I concur in the judgment solely on the ground that the conduct of Flood in executing the note, under the circumstances stated in the opinion of Mr. Justice Melvin, and the terms of the note itself, show that it was his intention that the note was to be negotiated by Petry, if he chose, before its maturity and prior to the completion of the building contracted for, and that these facts create an estoppel against Flood which prevents him from asserting the failure of the consideration of the note against a third person who took it for value with knowledge of the fact that the consideration was the completion of the building free from liens or claims, provided, as was the fact here, the person took the note before the failure of consideration occurred. I
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think the building contract and the note constituted the parts of a single agreement, and that, under the terms of tb«i agreement as a whole, the consideration of the note was not the mere promise of Petry to erect the building, but the actual erection thereof free from liens or claims, and that the failure to so complete it would have been available to Flood as a defense to the note if it had remained in the hands of Petry.
