
    Nathan Button’s Administrator v. John B. Clark.
    An association of persons bought a tract of land, converted it into stock, gave their notes for a part of the purchase money, took a conveyance, and executed a mortgage to secure the payment. One of the company sold his interest for $1,750 to another member of the concern, who assumed the liability of this vendor to the original vendor, and gave his notes for the $1,750. The company failing to pay the purchase-money, the property was sold to pay the debt, by judicial sale, for a less sum than the amount due.
    
      Held, that these facts constitute no defense to an action on the notes, and did not show a failure of consideration.
    This is a writ of error to the Supreme Court of Portage county.
    The action below was assumpsit, brought by Clark against ^Pomeroy, the administrator of Button, upon three promissory notes, made by Button, on June 9, 1836, for $583.33J each, payable to Clark in six, twelv e, and eighteen months.
    The declaration is in the usual form. The defendant pleaded non assumpsit, and gave notice of special matter. On the trial of the cause to a jury, in the Supreme Court, a bill of exceptions was taken, which discloses the following facts :
    On January 1, 1836, Zenas Kent sold to John B. Clark (the defendant in error) N. C. Baldwin, T. P. Hardy, A. Seymour, D. H. Beardsley, S. J. Andrews, J. A. Foote, Nathaniel Button, and others, certain real estate in Eranklin, Portage county, for the sum of $75,000. Of this sum $15,000 was paid in hand, and the residue was made payable at future times.
    Subsequently, William Pomeroy and Charles S. Rhodes, who owned real estate adjoining that of Kent, sold the same-to other individuals for $40,000, part of which, $-, was paid in hand,, and the residue made payable at future days.
    These two sets of purchasers, united, stocked the lands purchased from Kent, and from Pomeroy and Rhodes; formed a joint-stock company, denominated the “ Franklin Land Company;” and represented said real estate by stock.
    In May, 1836, Kent conveyed the property sold by him to A. Baldwin, Kirkman, and Beach, in trust for those who purchased of him; and Pomeroy and Rhodes at the same time conveyed the property sold by them to the same trustees, in trust for those who purchased of them.
    Contemporaneously with these conveyances, said trustees mortgaged to Kent, and to Pomeroy and Rhodes, by separate deeds, the lands purchased of each, to secure the purchase money due them respectively; and- these mortgages were so drawn that the entire land purchased from Kent, and from Pomeroy and Rhodes, was held for the payment of each and every note due from each and every of their respective purchasers.
    On June 9, 1836, Button bought Clark’s *stock, which was but another name for his interest in the real estate purchased from Kent, and gave his notes therefor, and also executed his bond to Clark for the payment of the balance due from Clark to Kent, on account of the purchase of said land, then amounting to about $4,000.
    These notes constitute the foundation of the action below, and now amount to about $3,000.
    At the same time, Clark gave to Button a written agreement to transfer to Button the said stock as soon as Button should pay the aforesaid notes, or secure the payment of the same, and indemnify him against any liability to Kent for the balance due on said purchase.
    In the fall of 1836, Button died insolvent, without having paid the notes or Kent.
    In the winter of 1836-37, the purchasers from Kent, and from Pomeroy and Rhodes, were incorporated under the name of “ The Franklin Silk Company,” into which the Franklin Land Company ” became and was merged.
    In the winter of 1839-40, the legislature repealed the charter of the “ Franklin Silk Company ” because they assumed banking powers, but gave them five years to close up their business.
    The purchasers from Pomeroy and Rhodes failing to pay the purchase money due from them, Pomeroy and Rhodes, in 1839 instituted proceedings to foreclose their mortgage; and, in November, 1841, obtained a decree of foreclosure; and, in February, 1842, sold on execution all the property previously conveyed by them. The proceeds of this sale were insufficient to pay the amount found due Pomeroy and Rhodes by about $15,000.
    The purchasers from Kent also failing to pay, Kent, in 1843, instituted proceedings to foreclose his mortgage; and, in 1843, obtained a decree, and sold on execution all the property previously conveyed by him.
    At the time Kent obtained his decree, there was due to him from all the purchasers more than $64,000, and due to him from Clark individually $3,147.81.
    *The property sold under Kent’s decree was purchased by him at $27,285, leaving a balance still due to Kent, and to Pomeroy and Rhodes, of about $52,000.
    At the time Kent obtained his decree, Clark, as one of- the purchasers of said land, was personally indebted to Kent in the sum of $3,147.81; and they entered into an agreement whereby Clark was to pay Kent a sum less than that amount, submit to a decree for that sum, and execute to Kent a deed of his stock, in satisfaction of his own notes and his indebtedness thereon, which sum of money was received, and a decree taken by Kent, in pursuance of said agreement, though no deed of the stock has yet been executed.
    The sales of the real estate under the decrees of Kent and Pomeroy and Rhodes exhausted the property, and annihilated the-stock of the company.
    In the year 1844, more than a year after all the property had been-thus exhausted and its stock destroyed, Clark brought suit on-these notes, given by Button for stock.
    Upon this state of facts, the court below was requested to charge the jury that the plaintiff below could not recover, there being a failure of consideration, which the court refused to do.
    This is assigned for error.
    Otis & Wolcott, for plaintiff in error.
    Hitchcock, Wilson & Wade, for defendant in error.
   Avert, J.

The plaintiff in error claims that the facts shown-to exist in the case make out a defense upon two grounds •.

1. A failure of consideration after the execution of the notes.

2. A rescission of the contract.

To support the defense upon the first point, he cites Swan’s Stat. 685, allowing the want or failure of consideration -Ho be proved on the trial; and, in addition to this, repeated decisions upon the same question in several of the states.

That the .want or failure of consideration, when shown, constitutes a defense, is directly asserted in the statute, and is very-clear from the authorities referred to; so that we have only to look into the testimony and see if there is either a failure of consideration, or a rescission of the contract, to defeat an action upon tho-notes. Clark and others, whose names appear amongst the papers of the case, purchased a large tract of land, each having an interest in proportion to their share of the purchase money. A part, only, of the price of the land, was paid down; and to secure the remainder, a mortgage on the same premises was executed by the purchasers to the vendors. It was believed, at the time, to be an advantageous purchase, and that large profits would be realized from the investment. On June 9, 1836, the plaintiff’s intestate negotiated with Clark for an interest in the premises, and took an .agreement, under seal from Clark, for a certain proportion, described in the agreement as two and a half shares in the Franklin Land Company. In the agreement it was provided that he should pay to Clark the amount specified in the notes here declared upon, .and to Kent, one of the vendors, whatever balance of purchase money might remain, and he should be entitled to a transfer on the books of the company as soon as he should pay the several ■sums of money above mentioned, and indemnify Clark for any future liabilities to Kent. This agreement and the notes were executed on the same day. Now, had this investment made by the several purchasers of the land turned out, as was anticipated, to be a very profitable one, there would have been no failure of consideration ; the shares could then have been sold at an advance, and the mortgage debt could easily have been paid off. In that case, Clark would lose the benefit of the increased value of these shares; for he could have been compelled, if necessary, to convey them according to his agreement. Button stands, *then, in this condition: He is the owner, in equity, of the shares; is entitled, of course, to have all the benefit of their advance in value, and to take them at any time by paying the notes and mortgage according to his agreement; he may, for the purposes of this inquiry, be treated as •choosing to leave them in Clark’s possession ; and it is of no consequence if they are to depreciate, and a,t length to become of no value, whether they become so in his own hands or in the possession of Clark. If the interest of Clark at the time of the agreement was sufficient to constitute a valid consideration for the notes, and I do not see how this proposition can be denied, the notes at that time created a legal obligation to pay. Would it not be a new principle that should hold that obligation destroyed, because by some subsequent event, such interest loses its value ? If the vendor must bear the loss on the article sold, his notes should not be the limit of his demand when the article raises in value. The loss of this interest in the land then, by being sold to pay the debt for which it had been mortgaged, can not be regarded as a failure of the consideration of the notes in the declaration specified, and that ground of the defense must fail. Can a recovery upon the notes be prevented on the other ground taken—that the contract has been rescinded ? It must be remembered that Button, the purchaser of those shares, which are seen to be nothing but a certain interest in land, never paid any part of the notes, nor any part of the mortgage debt, according to his agreement, and as his -duty as the equitable owner of that interest required; that his representatives, as well as Clark, were made defendants to the bill of Pomeroy and Rhodes, for a foreclosure of their mortgage; and that by the proceedings upon this mortgage, a sale was effected, and only a part of the mortgage debt paid by the sale. To the bill in chancery, by which the mortgage given to Kent was foreclosed, the representatives of Button, as well as Clark, were likewise made defendants. And in this case, also, a sale of the whole premises was effected; and after applying the proceeds toward the payment *of the mortgage debt, a large balance was left unsatisfied. From the evidence it seems to be satisfactorily shown that all the lands purchased, in which must of course be included the two and a half shares aforesaid, were disposed of by regular •sale, under proceedings to foreclose the mortgages; and that, as they brought a sum much less than sufficient to satisfy the mortgages, Clark is chargeable with no fault because the lands were at length brought to a sale. It is claimed that Clark rescinded the contract, when he agreed to submit to a decree, and execute to Kent a deed of his stock, in satisfaction of his own notes and his indebtedness thereon. But it is believed, according to the evidence, that his agreement to execute, or his actually executing a deed for his stock, had not, and could not have had any greater effect to pass the stock, than the decrees and sales under them. Still, as the evidence shows, he has not up to the present time executed a deed, and thus has not done the act contemplated—to pass the legal title. Nor does it appear that Button' or his representatives have ever desired that a deed should be made; and for a number of years even before the sale of the lands under the proceedings to foreclose, there appeared to be no inducement for desiring the title; for they had lost all their value, except as contributing toward a discharge of the mortgage incumbrances. Looking at the whole circumstances of this case, we can not regard the contract as rescinded. If, in behalf of the representatives, there is any equity which should put an end to this contract, and prevent the collection of these notes, or which should demand relief in any other mode, the redress is properly to be sought in chancery. If there is any legal right yet remaining, it is in the power of these representatives to enforce it by proceedings upon the agreement under seal which is in their hands. They have no valid defense against the notes, and the judgment of the Supreme Court in Portage county is affirmed.  