Allison v. Abendroth

stipulated sum in execution of the agreement, there being no consideration for the agreement of the creditors to discharge the balance of the debt, except the payment by the debtor of the agreed proportion thereof, the case will fall within .the well settled doctrine of the common law that a promise by a debtor to pay a part of an admitted debt, followed by actual payment of such part, is not a good accord and satisfaction of the part of the debt unpaid. Pinnel's Case, Coke’s Rep., pt. 5, fol. 117; Cumber v. Wane, 1 Strange, 426; Keeler v. Salisbury, 33 N. Y., 648 .

This rule of the common law, as was said by Nelson, J., in Kellogg v. Richards ( 14 Wend., 117 ), is “technical and not very well supported in reason,” but it has been steadily maintained by the courts in cases coming strictly within it. But it is held that where there is an independent consideration, or the creditor receives any benefit or is put in a better position, or one from which there may be a legal possibility of benefit to which he was not entitled except for the agreement, then the agreement is not nudum pactum, and the doctrine of the common law to which we have adverted has no application. Upon this distinction the cases rest, which hold that the acceptance by the creditor in discharge of the debt, of a different thing from that contracted to be paid, although of much less pecuniary value or amount, is a good satisfaction, as for example, a peppercorn for a thousand pounds (Pinnel's Case, arguendo), or a negotiable instrument binding the debtor or a third person for a smaller sum. Curlewis v. Clark, 3 Exch., 375.

Following the same principle, it is held that when the debtor enters into a new contract with the creditor to do something which he was not bound, to do by the original contract, the new contract is a good accord and. satisfaction if so agreed. The case of accepting the sole- liability of one of two joint debtors or co-partners in satisfaction of the joint or co-partnership debt is an illustration. This is held to be a good satisfaction, because the sole liability of one of. two debtors “may be more beneficial than the joint liability of both, either.in respect of the solvency of the parties or the convenience of the remedy.” Thompson v. Percival, 5 B. & Adol., 925.

In perfect accord with this principle is the recent case in this court of Luddington v. Bell ( 77 N. Y., 138 ), in which it was held that the acceptance by a creditor of the individual note of one of the members of a co-partnership, after dissolution, for a portion of the co-partnership debt, was a good-consideration for the creditor’s agreement to discharge the maker from further liability.

There can be no doubt, therefore, that if the firm of Allison & Sons, knowing at the time that the defendant Abend

roth was a general partner in the firm of Griffith & Wundram, had received his individual note for twenty-five per cent of their debt against the firm in full satisfaction, or in full satisfaction when paid, the agreement would have been supported by a good consideration, and the payment of the notes would have been a satisfaction of the entire debt. The actual case presented differs from the case supposed in two particulars: First, when Allison & Sons took the notes of Abendroth they supposed he was a special, and not a general partner in the firm of Griffith & Wundram, and, therefore, not liable for the debts of the firm; and, second, the agreement of Allison & Sons to accept the notes of Abendroth for twenty-five per cent of the debt, was accompanied by an agreement to assign to Abendroth their debt against Griffith & Wundram, and all claims or demands against that firm, and in pursuance of such agreement Allison & Sons, on the 20th day of December, 1872, after they had pressed their claim against Griffith & Wundram in bankruptcy, made a formal written assignment to Abendroth of all their debts, claims and demands against the firm of Griffith & Wundram, and delivered their notes to him, and Abendroth on his part paid at maturity his notes to Allison & Sons, given on the purchase of the demand against Griffith & Wundram.

If the transaction in question had been simply that of taking the note of a known partner in satisfaction of a co-partnership debt, although for a less amount, there would under the authorities have been a good consideration and the transaction would have operated as a full satisfaction. But it is insisted that the receipt of' the notes from Abendroth and the assignment to him of the claim against Griffith &’ Wundram in consideration thereof, having proceeded upon a misapprehension of his relation to the firm, and upon the supposition" that he was not liable as a general partner, the plaintiffs are entitled to be relieved from the arrangement and" to treat" the payment made as having been made on account only. The decisive objection tb this view" is that'the. plaintiffs are" not" in a 'situation, ih.this; action to proceed for the recovery of the balance of the original debt. It is not claimed that Abendroth was guilty of any fraud. When the settlement was made both Allison & Sons and Abendroth believed that the latter was a special partner only in the firm of Griffith & Wundrain and was not personally liable for the debt. The question was first raised long after the transaction in question was completely executed, and it was then held for the reason that the money contributed by Abendroth, as special partner in the firm of Griffith & Wundram, was not paid in cash on the

day the certificate for the formation of the limited partnership was filed, although he paid a few days afterwards, there was a non-compliance with the statute which subjected him to liability as a general partner, although no fraud was intended. Durant v. Abendroth, 69 N. Y., 148 .

This action is not brought to rescind the transaction between Allison & Sons and Abendroth, or to set aside the .assignment to him by Allison & Sons of the debt against Griffith & Wundram on the ground of mistake. It is an ordinary action at law, brought by the assignors of Allison & Sons against Abendroth, and the other members of the firm of Griffith & Wundram upon an account stated, to recover the unpaid portion of the original debt of the firm, -and Abendroth alone answers. There is no equitable relief .claimed in the complaint and no reference to the settlement between Allison & Sons and Abendroth, or to the assignment of the claim. The plaintiffs are in the position of suing upon a claim which has been assigned to the defendant Abendroth, and to which they have no title. The assignment to Abendroth vested in him as against Allison & Sons the legal title to the demand held by that firm against the firm of Griffith & Wundram, and until the transactions between these parties is rescinded, and the assignment set aside or canceled, the plaintiff cannot maintain this action. It is not necessary to consider what the position of the parties would have been if the settlement and assignment was procured by the fraud of Abendroth. This is not pretended. If the transaction can be set aside it must be on the ground of mistake. But the. rescission of. an executed transfer of property on this ground is a matter, of equitable and not legal cognizance, and the action is not-proved with a view to equitable relief: There has- been no-rescission or attempt to rescind" the transaction, and the action is not brought for a rescission. We are-inclined to. the opinion that' Allison & Sons could not rescind without returning, or offering to return the money received from the defendant. See Gould v. Cayuga County Bank, 86 N. Y., 75 , and cases cited. But however this may be, the plaintiffs, as the case stands cannot maintain this action.

The judgment should therefore be affirmed.

All concur