Ludington v. Bell

Headnote

I. Joint Debtor Act (Laws 1838,' chap. 257).

1. Compromising debtor.

(a) Essential requisite to his discharge from further

LIABILITY.

The execution of the note or memorandum in writing provided for by the statute, is.

II. Accord, and, satisfaction.

1. Individual notes given for part of a firm note.

(a) A firm note being past due, one of the firm gave to the holder his individual four promissory notes, all dated the same day, payable respectively thirty days, two months, three months and four months after date, and certain cash (the notes and cash equalling one-half the firm note, which was not, however, surrendered), under an agreement that the same should be taken and received in full payment and satisfaction of all claims against him on the firm note. The four notes were subsequently paid.

HELD,

not an accord and satisfaction.

This action was brought to recover the balance due on a promissory note, made by the firm of A. 0. & J. W. Bell, payable to the order of the plaintiff.

This note was for $4,000, and bore date, February 17, 1872, and was payable February 1, 1873.

It was claimed by the defendant, Amos 0. Bell, that in January, 1875, he made an agreement with the plaintiff by which, upon payment of $2,000, he was to be released from all further liability on said note. The evidence tended strongly to establish a verbal agreement to this effect.

It appeared in evidence, that the plaintiff originally held the individual note of the defendant, Amos C. Bell, and that the partnership note on which this action is brought, was given in lieu of such individual note to obtain an extension of time of payment.

It was conceded on the trial, that on January 11, 1875, Amos C. Bell paid $500 on the note, and gave four notes amounting in the aggregate to $1,500. Defendant claimed that this was done under the above-mentioned agreement.

At the close of the testimony on both sides, plaintiff moved that the court direct a verdict for plaintiff on the ground that there was no consideration for the alleged agreement, and that nothing short of a release under seal is valid.

The defendant requested the court to submit to the jury the question as to the settlement and compromise of the defendant, A. 0. Bell, with plaintiff, and the release of said defendant from all liability to plaintiff on said note mentioned in the complaint.

The court granted the plaintiff’s motion, and refused the defendant’s request, assigning the following reasons:

The Court.—“The substitution of one note for another extends merely the time of payment, but does not work payment; neither does it extinguish the original liability. Hence a compromise or an attempted compromise by an individual to pay part of the original indebtedness by the -substitution of a new note in the place of the original indebtedness works no satisfaction. Nothing short of a release under seal will work, a satisfaction.

“ This rule, prior to 1838, applied to a case in which one of several partners, or one of several joint debtors, sought to make a compromise for his own individual benefit with a creditor. To release partners and joint debtors, a statute was passed in 1838, which authorizes one of several partners, or one of several joint debtors, to thus release himself. But it does not touch the question whether such a compromise was made, to be established subsequently by parol evidence. The statute prescribes that ‘ every such debtor or debtors making such composition or compromise shall take from the creditor or creditors with' whom he may make the same, a note or memorandum in writing, exonerating him or them from all and every individual liability incurred by reason of such connection with such copartnership firm, which note or memorandum may be given in evidence by such debtor or debtors under the general issue, in bar of such creditor’s right of recovery against him or them.’

“ This seems to be a sort of statute of frauds applicable to this class of cases, and as the defendant has not gone to the extent prescribed by the statute, I do not think that he is released. I shall therefore direct a verdict for the plaintiff.”

Defendants excepted to these rulings. The jury

under the direction of the court, rendered a verdict for plaintiff for $2,117.70.

The court directed the exceptions to be heard in the first instance at general term.

—I. It is well settled, that the payment and acceptance of a less sum in satisfaction of a greater one, does not discharge the debt, although the creditor agrees to accept the lesser sum in full satisfaction (Bunge v. Koop, 5 Robt. 1; S. C., 48 N. Y. 225 , 229).

II. Whether the act of 1838 (chap. 257), entitled “ An Act for the relief of partners and joint debtors,” was intended to overturn the principles of law above stated, and whether it was intended to render valid and binding, an agreement between debtor and creditor, which was not founded upon some new and valuable consideration, may be an open question—but, if such was the intention of the legislature, then we say—

III. That the only competent evidence of such agreement is a “note or memorandum in writing,” as required by the second section of that act.

—I. The memorandum provided for by chapter 257 of the act of 1838, is not the only competent evidence. The agreement may be proved by common law evidence (Sedgwick on Statutory and Constitutional Law, 93, 401; Stafford v. Ingersoll, 3 Hill, 39 ; Lockwood v. Herrick, 6 Cushing, 465; Rex v. Inhabitants of Birmingham, 8 Barn. & Cress. 29; Cole v. Green, 6 Man. & G. 890; 46 Barb. 110 ; 59 N. Y 191 ; 12 Id. 266 ; 40 Barb. 537 ; 2 Lans. 455 ; 39 Barb. 629 ; 60 N. Y. 430 , 434; 40 Id. 537 ; Jordan & Skaneatelas Plank Road Co. v. Marley, 23 Id. 556 ).

II. The contract was a lawful one. Plaintiff ought

to have given the note or memorandum. In equity he will be deemed to have done it ( 21 N. Y. 499 ; 41 Barb. 283 ).

III. The transaction amounted to an accord and satisfaction (Kent v. Reynolds, 8 Hun, 559 ; Beach v. Bndress, 51 Barb. 570 ; Gray v. Barton, 55 IV Y. 70, 71). The decisions holding that agreeing to accept or accepting less than the sum due in full, is without consideration, are not cases like this. In this case there was a valuable consideration ; a new security was given, binding A. C. Bell alone. Time of payment was extended, within which time A. 0. Bell had no remedy or right of action for contribution, and within which time the other partner might, as in fact he did, become insolvent. The new notes for part of the original debt were (in case the old note remained in force) decidedly prejudicial to A. C. Bell, the maker, as they subjected him to several and separate actions, and if not taken in payment or as a compromise under the act of 1838, they released the other partner, or at least severed the debt, increasing the liability of this defendant, Amos C. Bell, the maker of the new notes. In various ways the giving of the new and individual notes of A. C. Bell, was prejudicial to him if he was not released from the old note, and that is consideration enough. Within the cases before cited, he was discharged from liability on the old note. And the verdict thereon in this action cannot be sustained.