Noel v. Murray — 8 N.Y. Super. Ct. 385

Majority

p. 385

Noel and another v. Murray.

(Before Oakley, Ch. J., Paine and Bosworth, J.J.)

Nov. 19, 20;

Dec. 22, 1852.

Headnote

Where the sale and delivery of goods, and the acceptance by the holder of the promissory note of a third person as a payment in full, are simultaneous acts,. the presumption of law is, that the payment was ipeant to be absolute and final.

The general rule, that the acceptance by a creditor of the bill or note of a third person does not operate, unless by an express agreement of the parties, as a satisfaction of a precedent debt, has no application to such a case.

When the sale and the delivery of the goods are simultaneous, the legal inference is that the acceptance of the note, as a final payment, was a part of the agreement, and a condition of the purchase.

If a receipt then given by the seller for the note, expressing it to have been received as a payment in full, may be contradicted at all, it can only be so, by proof of an express agreement that it should be held- 0u}y as a collateral security.

Judgment for the defendant upon a case reserved.

The complaint demanded judgment for the sum of $988 67, as a balance due to the plaintiffs, upon a sale by them to the defendant of a quantity of looking-glass plates.

The answer admitted the sale, but set up as a defence, that the whole debt thereby contracted, amounting to $1,029, was satisfied at the time by a cash payment of $38 33, and a delivery ‘ "

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to the plaintiffs of a promissory note of J. Howland & Son payable in six months from the 23d of September, 1850, and that the plaintiffs, by a receipt in writing then given, acknowledged that the said money and note were received by them as a payment in full.

The cause was tried before Hr. Justice Paine and a jury on the. 14th of April, 1852.

The plaintiffs proved by a clerk that the glass plates were ordered by the defendant, and the order accepted by the plaintiffs on the 8th of October; that all so ordered were subsequently delivered; and that the sum of $988 69, the balance claimed, was still unpaid. The same witness proved that none of the plates were delivered until the 12th of October.

The defendant’s counsel then read in evidence the bill rendered by the plaintiffs, specifying the number, size, and price, of the plates sold. It was dated on the 10th of October, 1850, and was footed at the sum of $1,029 : at the bottom was written the following receipt, signed by the plaintiffs, which was also read in evidence.

“ New Yoke, October 12th, 1850.

“ Eeceived from John B. Hurray, Hessrs. J. Howard & Sons’ note, at six months from 17th September, for nine hundred and eighty-eight t<lo and thirty-eight fW dollars, in full for the above bill.”

The books of the plaintiffs were also produced upon notice, and it appeared from the entries therein that they had credited the defendant with the note in question. The plaintiffs then produced the note, which it was admitted had not been paid, and offered to surrender it to the defendant.

No other facts were given in evidence that are deemed material.

Hnder the direction of the' judge a verdict was rendered for .the plaintiffs for $l,092f¡f¡r, being the balance claimed, with interest, subject to the opinion of the court upon a case, with liberty to either party to turn the same into a bill of exceptions.

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G. C. Goddard, for the plaintiffs,

insisted that they were entitled to judgment upon the verdict, and argued as follows:

It is clear that the goods were not sold for the note, or on an agreement to take the note ; but that the goods were selected, the bill of them made out and rendered, and a written order for them, given by the purchaser, presented some days before the giving of a note in settlement of the bill was suggested.

The case then is clearly distinguishable from those in which it is a part of the bargain on a sale of goods, that a note of a third party shall be taken—as was the case of Whitbeck v. Van Ness ( 11 Johns. Rep. 407 ; also 9 Johns, Rep. 309 ; Johnson v. Weed.)

Even where a note of a third party is taken at the time of the contract on a sale of goods, it is said by Whittlesey, Justice, in Munroe v. Hoff ( 5 Denio, 362 ), and by Sutherland, Justice, in Porter v. Talcott (1 Cowen, 383), not to be payment unless agreed to be received as such.

The note being given after the sale had been made, and there being no agreement to receive it in satisfaction of the debt, at plaintiffs’ risk, it is not payment, and the plaintiffs are entitled to judgment on the verdict. (Tobey v. Barber, 5 John. Rep. 68 ; Porter v. Talcott, 1 Cowen, 383; Munroe v. Hoff, 5 Denio, 362 .)

The receipt given for the note and cash being in full of the bill, does not import that the note was taken in satisfaction. This-was decided in Tobey v. Barber, and many other cases.

H. Day, for the defendant,

argued that judgment ought to be rendered in his favor upon the following grounds :

I. The sale was not made or consummated until the 12th of October, when the delivery and payment were made; and the law regards the sale fraudulent and void until delivery or part payment is made, (Statute of Frauds, R. S. vol. ii., p. 195.) And therefore,.

II. The note of" Howard & Son, the note of a third party, was not given for a precedent debt, and the receipt of the note was prima facie evidence that it was taken in payment of the

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debt. 1. Because it was taken without endorsement by the defendant, and his endorsement was not asked. (Bank of England v. Newman, 1 Ld. Raymond, 442; Whitbeck v. Van Ness, 11 John. 409 ; Breed v. Cook, 15 John. 241 ; Fydele v. Clark, 1 Espinasse, 448; Frisbie v. Larned, 21 Wend. 452 .) 2. The credit of the note to the defendant in the books of the plaintiffs, and the balancing of the books, are primd faeie evidence that the note was taken in payment (Frisbie v. Larned, 21 Wend. 452 ), which case is approved and cited in the Court of Errors, 3 Denio, 410 , and in this court. (St. John v. Purdy, 1 Sand. 9). 3. The receipt, reciting that the note with cash is received in full for the debt, is .primd faeie evidence that the note was accepted as payment.

HI. It is unnecessary to prove that an agreement was made in so many words, that the note would be received in payment. Circumstances may show it. (1 Cowen 80; Whitbeck v. Van Ness, 11 John. 409 ; Waydell v. Luer, 3 Denio, 410 ; Arnold v. Campbell, 12 John. 411 ; St. John v. Purdy, 1 Sand. 9.)

TV". All the circumstances of the transaction show that the note was tendered and accepted in payment, and that the plaintiffs took their choice of the note in' preference to giving credit to defendant. 1. The plaintiffs knew nothing of Murray or his credit. 2. There could be no object in the defendant’s paying part cash and a negotiable note as security for the remainder of the debt, when he had a credit for six months, as appears in the pleadings, for he would thus lose the interest on his money, and put it out of his power to negotiate the note, so that it would not be at his risk. 3. The plaintiffs did not ask defendant to endorse the note, and he did not endorse it, which is the most common and natural way of seeming the liability of the debtor. 4. The receipt is in full for the glass.

It is not necessary to deny that in this state the law is settled, that the acceptance by a creditor of the bill or note of a third person, even when not endorsed by the debtor, never operates as. a satisfaction of a precedent debt, unless it is expressly shown that such, at the time, was the understanding and agreement of the parties; and

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it may also be admitted that this rule prevails, even when a receipt is given by the creditor, acknowledging the bill or note to have been received by him as a payment in full. But these admissions are not at all inconsistent with the position that when the seller of goods, at the time of the sale, accepts the note of a third person not endorsed by the debtor, and gives a receipt for it, as a payment, in part or in full, of the price, it is a presumption of reason and, therefore, of law, that the payment so. made was meant to be absolute and the purchaser to be wholly discharged. That this is the reasonable and legal presumption we cannot doubt.

The error in the argument of the plaintiff’s counsel in this case, consists in assuming the existence of a debt from the defendant, when the parties met on the 12th of October; a debt arising from a sale prior to that day; but, in reality, there was no sale before that day, and, consequently, no precedent debt. The order given by the defendant, and its acceptance by the plaintiffs on the 8th of October, were evidence of a verbal agreement; but as none of the goods were then delivered, and no part of the consideration then paid, the agreement was void under the statute of frauds, so that when the parties met on the 12-th, there was no contract upon which either of them was, or could be rendered, liable to the other. The actual sale was made and completed on that day; and as the date and delivery of the goods, and the delivery and acceptance of the note, were simultaneous acts, they musty in our judgment, be considered as parts of one transaction, and the execution of an entire agreement. The sale, by the election of the plaintiffs, was not for cash, or upon credit, but partly for cash, and partly for the note; and the acceptance of the note and the discharge of the defendant thus became conditions of the purchase. All the facts in the case, the entries in the books, and, emphatically, the terms of the receipt, correspond entirely with this view of the intention nf the parties, and, as it seems to us, do not admit of any other interpretation. Whether a receipt thus given, and expressed to be for a payment in full, ought not to be held as concluding the plaintiffs, is unnecessary now to determine; but we are clearly of opinion that it cast upon them the burden of proof, and that the conclusion, which its terms necessarily

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suggest, could only be repelled by evidence of an express agreement that the note should be held only as collateral security, and its amount be credited to the defendant only when collected. Ho such evidence was given or offered upon the trial.

We are therefore of opinion, that the defence set up in the answer has been established, and that the defendant is, upon the facts, as they appear in the case, e'ntitled to judgment.

We remark, in conclusion, that we have not been referred, tó any adjudged case which is in conflict with the views we have expressed. The observations in Munroe v. Hoff, and in Porter v. Talcott, are merely dicta, while, on the other hand, our present decision is fully sustained by the judgment of this court, in St. John v. Purdy (1 Sand. S. C. Rep. 9).

Verdict for plaintiff set aside, and verdict and judgment thereon, with costs, entered for defendant.