Jaffray v. Davis

The facts found by the trial court in this case were agreed upon. They are simple and present a familiar question of law. The facts are that defendants were owing

The question of law arising from these facts and presented to this court for its determination is whether such agreement, with full performance, constitutes a bar to this action, which was brought after such performance to recover the balance of such indebtedness over the sum so secured and paid.

One of the elements embraced in the question presented upon this appeal is, viz., whether the payment of a sum less than the amount of a liquidated debt under an agreement to accept the same in satisfaction of such debt forms a bar to the recovery of the balance of the debt. This single question was presented to the English court in 1602, when it was resolved (if not decided) in Pinnel's case (5th Co. R. 117), “ that payment of a lesser sum on the day in satisfaction of a greater, cannot be any satisfaction for the whole,” and that this is so, although it was agreed that such payment should satisfy the whole. This simple question has since arisen in the English courts and in the courts of this country in almost numberless instances, and has received the same solution, notwithstanding the courts, while so ruling, have rarely failed, upon any recurrence of the question, to criticise and condemn its reasonableness, justice, fairness or honesty. Bo respectable authority that I have been able to find has, after such unanimous disapproval by all the courts, held otherwise than was held in Pinn el's case (supra) and Cumber v. Wane (1 Str. 426); Foakes v. Beer (L. R. [9 App. Cas.] 605; 36 English Reports, 194);

The steadfast adhesion to this doctrine by the courts in spite of the current of condemnation by the individual judges of the court, and in the face of the demands and conveniences of a much greater business and more extensive mercantile dealings and operations, demonstrate the force of the doctrine of stare decisis. But the doctrine of stare decisis is further illustrated by the course of judicial decisions upon this subject, for while the corn’ts still hold to the doctrine of the Pinnel and Cumber and Wane cases {supra), they have seemed to seize with avidity upon any consideration to support the agreement to accept the lesser sum in satisfaction of the larger, or in other words to extract if possible from the circumstances of each case a consideration for the new agreement, and to substitute the new agreement in place of the old and thus to form a defense to the action brought upon the old agreement. It will serve the purpose of illustrating the adhesion of the court to settled law and at the same time enable us perhaps more satisfactorily to decide whether there was a good consideration to support the agreement in this case, to refer to the consideration in a few of the numerous cases which the courts have held to be sufficient to support the new agreement.

Lord Blackburn said in his opinion in Foakes v. Beer (supra), and while maintaining the doctrine “ that a lesser sum cannot be a satisfaction of a greater sum,” “ but the gift of a horse, hawk or robe, etc., in satisfaction is good,” quite regardless of the amount of the debt. And it was further said by him in the same opinion “ that payment and acceptance of a parcel before the day of payment of a larger sum would be a good satisfaction in regard to the circumstance of time,” “ and so if I am bound in twenty pounds to pay you ten pounds at Westminster, and you request me to pay you five pounds at the day at York, and you will accept it in full satisfaction for the whole ten pounds, it is a good satisfaction.” It was held in Goddard v. O'Brien (L. R. [9 Q. B. Div.) 37; 21 Am. L. Reg. [N. S.] 637) “A. being indebted to B. in 125 pounds 7s & 9d for goods

It was held in Bull v. Bull ( 43 Conn. 455 ), “ and although the claim is a money demand liquidated and not doubtful, and it cannot be satisfied with a smaller sum of money, yet if any other personal property is received in satisfaction, it will be good no matter what the value.”

And it was held in Cumber v. Wane (supra), that a creditor can never bind himself by simple agreement to accept a smaller sum in lieu of an ascertained debt of a larger amount, such agreement being nudum paeimn, but if there be any benefit or even any legal possibility of benefit to the creditor thrown in, that additional weight will turn the scale and render the consideration sufficient to support the agreement.

It was held in LaPage v. McCrea ( 1 Wend. 164 ), and in Boyd v. Hitchcock ( 20 Johns. 76 ), that “ giving further security for part of a debt or other security, though for a less sum than the debt and acceptance of it in full of all demands, make a valid accord and satisfaction.”

That “ if a debtor gives his creditor a note indorsed by a third party for a less sum than the debt (no matter how much less), but in full satisfaction of the debt, and it is received as such, the transaction constitutes a good accord and satisfaction.” ( Varney v. Commey, 3 East, 25.) And so it has been held “ where by mode or time of part payment, different than that provided for in the contract, a new benefit is or may be conferred or a burden imposed, a new consideration arises out of the transaction and gives validity to the agreement of the creditor ” (Rose v. Hall, 26 Conn. 392 ), and so if “ payment of less than the whole debt, if made before it is due or at a

In Watson v. Elliott ( 57 N. H. 511 -513), it was held, “it is enough .that something substantial, which one party is not hound by law to do, is done by him or something which he has a right to do he abstains from doing at the request of the other-party, is held a good satisfaction.”

It has been held in a number of cases that if a note he surrendered (by the payee to the maker),' the whole claim is discharged and no action can afterwards be maintained on such instrument for the unpaid balance. (Ellsworth v. Fogg, 35 Vt. 355 ; Kent v. Reynolds, 8 Hun, 559 .)

It has been held that a partial payment made to another, though at the creditor’s instance and request, is a good discharge of the whole debt. (Harper v. Graham, 20 Ohio, 106 .) “ The reason of the rule is that the debtor in such case has done something more than he was originally bound to do or at least something different. It may be more or it may he less, as a matter of fact.”

It was held by the Supreme Court of Pennsylvania in Mechanics’ Bank v. Houston (Feb. 13, 1882, 11 W. Note, case 389), “ The decided advantage which a creditor acquires by the receipt of a negotiable note for a part of his debt, is by the increased facilities of recovering upon it, the presumption of a consideration for it, the ease of disposing of it in market, etc., was held to furnish ample reason -why it should be a valid discharge of a larger account or open claim unnegotiable.

It has been held that a payment in advance of the time if agreed to is full satisfaction for a larger claim not yet due. (Brooks v. White, 2 Met. 283 ; Bowker v. Childs, 3 Allen, 434 .)

In some states, notably Maine and Georgia, the legislature, in order to avoid the harshness of the rule under consideration, have by statute changed the law upon that subject by providing, “ no action can be maintained upon a demand which has

And so in Gray v. Barton ( 55 N. Y. 68 ), where a debt of $820 upon book account was satisfied by the payment of $1 by calling the balance a gift, though the balance was not delivered except by fiction, and the receipt was in the usual-form and was silent upon the subject of a gift, and this case-was followed and referred to in Ferry v. Stephens ( 66 N. Y. 321 ).

So it was held in Mitchell v. Wheaton ( 46 Conn. 315 ; 33 Am. R. 24), that the debtor’s agreement to pay and the payment of $150 with the costs of the suit upon a liquidated debt of $299 satisfied the principal debt.

These cases show in a striking manner the extreme ingenuity and assiduity which the courts have exercised to avoid the-operation of the “ rigid and rather unreasonable rule of the old-law,” as it is characterized in Johnston v. Brannan ( 5 Johns, 268 -272), or as it is called in Kellogg v. Richards ( 14 Wend. 116 ),, “ technical and not very well supported by reason,” or as may be more practically stated, a rule that “ a bar of gold worth $100 will discharge a debt of $500, while 400 gold dollars in current coin will not.” (See note to Goddard v. O'Brien, supra, in A. Law Register, New Series, vol. 21, pp. 640, 641.)

The state of the law upon this subject, under the modifica^tion of later decisions both in England and in this country, would seem to be as expressed in Goddard v. O’Brien (Queen’s-Bench Division, supra.) “ The doctrine in Gumber v. Wane is no doubt very much qualified by Sibree v. Tripp, and I cannot find it better stated than in 1st Smith’s Leading Cases-[7th ed.] 595.” The general doctrine in dumber v. Wane, and the reason of all the exceptions and distinctions which have been engraved on it, may perhaps be summed up as follows,, viz.: “ That a creditor cannot bind himself by a simple agreement to accept a smaller sum in lieu of an ascertained debt of larger amount, such an agreement being nudum pactum. But

In the case at bar the defendants gxave their promissory notes upon time for one-half of the debt they owed plaintiff, and also gave plaintiff a chattel mortgage on the stock, fixtures and other personal property of the defendants under an .agreement with plaintiff, to accept the same in full satisfaction .and discharge of said indebtedness. Defendants paid the notes .as they became due, and plaintiff then discharged the mortgage. Tinder the cases above cited, and upon principle,'this new agreement was supported by a sufficient consideration to make it a valid agreement, and this agreement was by the ■parties substituted in place of the former. The consideration ■of the new agreement was that the plaintiff, in place of ah -open book account for goods sold, got the defendants’ promissory notes, probably negotiable in form, signed by defendants, thus saving the plaintiff perhaps trouble or-ex,pense of proving -their account, and got security upon all the defendants’ personal property for the payment of the sum specified in the notes, where before they had no security.

It was some trouble at least, and perhaps some expense to the defendants to execute and deliver the security, and they ■deprived themselves of the legal ownership, or of any exemptions or the power of disposing of this property, and gave the plaintiff such ownership as against the defendants, and the ■claims thereto of defendants’ creditors, if there were any.

It seems to me, upon principle and the decisions of this state (save perhaps Keeler v. Salisbury, 33 N. Y. 653 , and Platts v. Walrath, Lalor’s Supp. 59, which I will notice further on), and of quite all of the other states, the transac

FTotwitlistanding these later and decisive authorities, the

Platts v. Walrath arose in justice court, and the debt in •controversy was put forth as a set-off. The remarks of the judge in the former case were quite obiter, for there were various subjects in dispute upon the trial, and from which the justice might have reached the conclusion that he did. The judge in the opinion relied upon says: “ Looking at the loose .and secondary character of the evidence as stated in the return, -it was perhaps a question of fact whether any mortgage at all -was given; or, at least, whether, if given, it was not in terms :a mere collateral security for the large note,” “ even the ■mortgagee was left to parol proof. Did it refer to and profess to be a security for the note of $1,500, or that sum less -.the fifty dollars agreed to be thrown off, etc., etc. ? ”

There is so much confusion and uncertainty in the case that, it was not thought advisable to publish the case in the regular •series of reports. The case of Keeler v. Salisbury (supra), is not to be regarded as an authority upon the question or as approving the case of Platts v. Walrath (supra). In the case •of Keeler v. Salisbury, the debtor’s wife had joined in the mortgage given by her husband, the debtor, to effect the compromise, thus releasing her inchoate right of dower. The •court held that fact constituted a sufficient consideration to .support the new agreement, though the court in the course of the opinion remarked that it had been held that the debtor’s -mortgage would not be sufficient, and referring to Platts v.

Walrath. But the court did not otherwise indicate any approval of that case, and there was no occasion to do so, for, .as before stated, the court put its decision upon the fact that the wife had joined in the mortgage.

In view of the peculiar facts in these two cases and the ■.numerous decisions of this and other courts hereinbefore

All concur.

Judgment