Boyd v. Hitchcock — 20 Johns. 76

Majority

p. 76

Boyd and Suydam against Hitchcock.

Headnote

Where a debtor gives his note, indorsed by a third person, cunty 4 a part of the accepted by funcresat?sfaction of ail demands, it is a valid discharge debt, heandboit may be pleadedin bar,asan accord and sati-faciion.

THIS was an action of assumpsit, for five thousand do!e Jr i lars. The declaration contained counts for goods, wares, and merchandises, sold and delivered, for five thousand dollars; a nd a quantum valebant thereon; the usual money counts for the like sum; and an insimul computassent, &c. The defendant pleaded, 1. JYon assumpsit; 2. Payment; 3. “ That after making the said promises and undertakings, in the said declaration mentioned, and before the commencement ot the suit, to wit, on the 7tn of Jlugust, 1818, at the city of New-York, he, the defendant, caused to be delivered, to the plaintiffs, his three several promissory notes, ma d e payable to David yv. Childs, for 916 dollars and 67 cents, each5 dated May 18,1818, and by him indorsed to the plaintiffs ; one of the said notes payable in twelve months, one in eighteen months, and the other in twenty-four months, in full satisfaction and discharge of the said several promises and undertakings, in the said declaration mentioned, and of the damages sustained by the plaintiffs, by reason of the nonperformance of the said promises and undertakings; and which said notes they, the plaintiffs, then and there, accepted and received, of and from the defendant, in full satisfaction and discharge of the said promises and undertakings, 8ic. 4. That the defendant delivered to the plaintiffs, three several promissory notes, made and indorsed as described in the third plea, in full satisfaction and discharge of all promises and undertakings, made by the defendant to the plaintiffs, up to the said 18th of May, 1818, without this, that the defendant had assumed or promised to pay the plaintiffs

p. 77

any sum or sums' of money, since the said 18th of May, 1818, in manner and form, fee.; wherefore he prayed judgment,” &,c„

There was a demurrer to the third and fourth pleas, and joinder in demurrer. The fourth plea was, afterwards, abandoned by the defendant’s counsel as indefensible.

Henry, in support of the demurrer.

He cited 5 Co. 117. Co. Litt. 212. b. 5 East, 230. 1 Str. 426, 2 Term Rep. 24, 2 Johns. Rep. 448 . 17 Johns. Rep. 169 . 2 Chitty’s Pl. 435, 436, note m. 15 Johns. Rep. 247 .; and contended, that a simple note of a debtor cannot be deemed a satisfaction of a debt, unless expressly averred to be paid. A less sum may be a satisfaction of damages, but not of a debt in numero ; nor can it be pleaded in bar of an action for a debt. Again, it does not appear that the note, in this ease, was a negotiable note.

Lynch, contra,

cited 5 Term Rep. 513. 517. 1 Johns. Rep. 37 . 2 Johns. Cas. 432 . 3 Johns. Cas. 71 . 5 Johns. Rep. 68 . 6 Cranch, 253 . 261. 1 Johns. Rep. 34 . 8 Johns. Rep. 15 . 10 Johns. Rep. 105 . 1 Salk. 133. 3 Johns. Rep. 439 . 15 Johns. Rep. 241 . 12 Johns. Rep. 90 . 4 Mod. 88. He contended, that by the English authorities, a negotiable note, given for a simple contract debt due, was a «Rschárge of such debt. And this Court have recognised the rule, but have added a qualification, that the party must deliver up and cancel the note, if he means to proceed on the original contract. The acceptance of the note is deemed, at least, prima^^cie evidence of a satisfaction; and where it is expressly stf 'agreed, it is payment; and it makes no difference whether it is the note of the defendant, or of a third person. From the description of the notes in the plea, as having been indorsed by the payee, it is necessarily to be inferred that they were negotiable. But if they are not to be deemed negotiable, yet, as Childs, the indorser, would be liable to the indorsee, for the amount, they must be regarded as a satisfaction of the original debt.

The defendant was not bound, in his plea, to aver payment of the notes. Whether they have been negotiated and

p. 78

paid, must be known to the plaintiffs. Again, it being aves» red that die notes were given and accepted in full satisfaction and discharge, it will be intended that they were for the full amount of the plaintiffs’ demand. But if the amount of the notes were less than the original demand, the additional security by the indorsement of Childs, is a sufficient consideration for the discharge of the balance ; and it would be a fraud on Childs, if the plaintiffs were permitted to recover the balance of the defendants. (2 Camp. N. P. Rep. 126. 384. 11 East, 390.)

delivered the opinion of the Court.

The question is, whether the third plea sets out such an accord and satisfaction as will bar the action ?

The general rule is well settled, that the payment of a less sum of money than the whole debt, without a release, is no satisfaction ofathe plaintiff’s claim. (Cumber v. Warn, 1 Stra. 426. Harrison v. Wilcox and Close, 2 Johns. Rep. 449 . Fitch v. Sutton, 5 East, 232. Seymour v. Minturn, 17 Johns. Rep. 169 .) And a mere agreement to accept less than the real debt, would be nudum pactum. (Heathcote v. Crookshanks, 2 Term Rep. 24.) But, in my judgment, this case is distinguishable from the cases cited. Here was a beneficial interest acquired, and a valuable consideration received by the plaintiffs, when they agreed to accept less than their whole demand. The plea avers that three promissory notes, drawn by the defendant, payable to David W. Childs, and by him indorsed, were delivered to the plaintiffs, and by them accepted and received from the defendant, in full satisfaction and discharge of the promises stated in the declaration. It would be an abuse of terms to call this a mere nudum pactum. Here was inconvenience to the defendant, in procuring a surety ; and also a benefit to the plaintiffs. The defendant held the notes, with Childs' indorsement, and offered them, to secure 2,750 dollars of the debt, if the plaintiffs would relinquish the residue of their claim. It is to be inferred, that Childs lent his indorsement for the sole purpose of effecting this compromise. The plaintiffs accepted the notes as payment of the whole debt; and, I think, good faith and sound principle require that

p. 79

this should be deemed a valid accord and satisfaction, to bar the plaintiff’s action. It would operate as a fraud upon Childs, the indorser, whose means of reimbursement from the defendant would be greatly impaired, if this plea be not sustained. If Childs had been the maker, and Hitchcock the mere indorser, the case, as to him, (Childs,) would be widely different; for if Childs, as a real debtor, had made the notes, it would be immaterial to him whether he paid them to Hitchcock or to his indorsees. But independent of the consideration due to the surety, I am of opinion, that if a debtor offers additional security, on condition that his creditor shall give up a portion of the debt, and the creditor accepts such security for a less sum, as a satisfaction for the whole debt, it is a valid discharge, on the ground of accord and satisfaction. (Sheehy v. Mandeville, &c., 6 Cranch, 253 .)

In the case of Fitch v. Sutton, (5 East, 231.) Lord Ellenborough said, “ It is impossible to contend that acceptance of 17 pounds, 10 shillings, is an extinguishment of a debt of 50 pounds. There must be some consideration for the relinquishment of the residue ; something collateral, to show a possibility of benefit to the party relinquishing his further claim; otherwise, the agreement is nudum pactum $ but the mere promise to pay the rest when of ability, put the plaintiff in no better condition than he was before.”

In the case of Steinman v. Magnus, (11 East, 390.) Lord Ellenborough said, “ It is true, that if a creditor simply agree to accept less from his debtor than his just demand, that will not bind him ; but if upon the faith of such an agreement, a third person be lured in to become surety for any part of the debt, on the ground that the party will be thereby discharged of the remainder of his debt, the agreement will be binding.” Here, the plaintiffs have, in fact, “ lured in” Mr. Childs. They agreed to purchase his indorsement, and the price to be paid for it was the portion of the debt which they agreed to relinquish to Hitchcock; and why shall they not pay the price, as well as enjoy the benefit of that contract ?

I am of opinion that the defendant is entitled to judgment on the demurrer.

Judgment for the defendant.

Cases cited

Ray v. Bogart 2 Johns. Cas. 432 N.Y. Sup. Ct. p. 77