same rule applies when the new note has been carried to judgment, but without satisfaction.3 31

Professor Parsons says, however, as we have already seen in the preceding section, that the general custom and understanding of the commercial world would seem to demand a contrary ruling when the old note is surrendered.32

1266b. When debt would be lost, renewal not deemed payment. Even where a note is considered as paid and discharged by one given for it, as a general rule, the case is excepted where the debt would by such construction be lost, because then the intention to receive the second as a discharge would be prima facie rebutted.3 This view would apply where the first note is secured by mortgage, and when the renewal is forged or altered.35

34

§ 1266c. Renewals of notes in bank.- In a recent New York case, Andrews, J., said: "It may well be, that by common understanding and usage, when a note is discounted by a bank to take up a prior note held by the bank against the party procuring the discount and the avails are credited to him, the transaction is to be regarded as an extinguishment of the prior note, although it

31. In First Nat. Bank v. Morgan, 6 Hun, 348, suit was brought on a note dated September 8, 1869. On November 8, 1869, a renewal note was given in place of the preceding, which had been delivered up; and upon the renewal note judgment was obtained, but execution thereon was returned unsatisfied. Bockes, J., said: "Now did the acceptance of this note of November 8th, and the subsequent proceedings thereon to enforce its payment, discharge the debt as against Morgan's estate? The giving of the note of November 8th did not satisfy or discharge the debt evidenced by the note of September 8th. Cole v. Sackett, 1 Hill, 516; Elwood v. Deifendorf, 5 Barb. 398; Winsted Bank v. Webb, 39 N. Y. 325; Pratt v. Foote, 12 Barb. 212, 213; Farrington v. Frankfort Bank, 24 Barb. 562; Olcott v. Rathbone, 5 Wend. 490; Bates v. Rosekrans, 37 N. Y. 409. Nor did its prosecution to judgment without • satisfaction. Davis v. Anable, 2 Hill, 339; Hawks v. Hinchleff, 17 Barb. 492; Corn Exchange Ins. Co. v. Babcock, 57 Barb. 231."

32. 2 Parsons on Notes and Bills, 203; ante, § 1266. 33. Hesse v. Dille, 23 W. Va. 97, citing the text. terson, 28 S. C. 116.)

(But see Compton v. Pat

34. Watkins v. Hill, 8 Pick. 522. See Pomeroy v. Rice, 16 Pick. 22; 2 Parsons on Notes and Bills, 205, 219. See vol. I, § 748; Taft v. Boyd, 13 Allen, 84; Dodge v. Emerson, Sup. Ct. Mass., Oct., 1881, Alb. L. J. for Feb. 25, 1882, p. 155.

35. Ante, § 205; Ritter v. Singmaster, 73 Pa. St. 400; Sloman v. Cox, 1 Cromp., M. & R. 471; Goodrich v. Tracey, 43 Vt. 314; Byles on Bills (Sharswood's ed.) [*230], 373; Edwards on Bills, 200.

may not have been actually surrendered." 36 The constant introduction of such refinements shows an impatience with the general principle that a note is not payment unless paid; and if that general principle be conceded, as it must be, to be the rule of the common law and the law merchant, consistency with principle would not admit anything to be payment except money, or something else accepted as such. As said in another New York case by Folger, J.: "Until the promise is in fact redeemed there is no payment.'

38

" 37

§ 1267. Rebuttal of presumptions. The presumptions of the law which have been referred to are universally held to be open to rebuttal; and it is competent for the parties to show that the bill or note was by express agreement received in absolute payment and discharge of the contemporaneous or precedent debt, or the contrary, or that there were facts and circumstances attendant upon the transaction from which an understanding and agreement might be inferred.39 But the mere fact that a receipt or memorandum passed between the parties at the time speaks of the transaction as "in payment," or "payment in full," or " in satisfaction," it has been considered would not alone warrant the inference that absolute payment was intended, but would be interpreted as meaning conditional payment, to be in full when paid.40 But a different

36. Phoenix Ins. Co. v. Church, 81 N. Y. 226 (1880).

37. Jagger Iron Co. v. Walker, 76 N. Y. 526; First Nat. Bank of Creede v. Miner, Colo. App. 361, 48 Pac. 837; Holland Trust Co. v. Waddell, 75 Hun, 104, 26 N. Y. Supp. 980; Harvey v. First Nat. Bank, 56 Nebr. 320, 76 N. W. 870; Savings Bank v. Central Market Co., 122 Cal. 28, 54 Pac. 273.

38. Boyd v. Hitchcock, 20 Johns. 76; Booth v. Smith, 3 Wend. 66; Thompson v. Wilson, 27 Ind. 370; Appleton v. Parker, 15 Gray, 173; Butts v. Dean, 2 Metc. (Mass.) 76; Comstock v. Smith, 22 Me. 262; Follett v. Steele, 16 Vt. 30; Shumway v. Reid, 34 Me. 560; Iowa County v. Foster, 49 Iowa, 676; Ferguson v. Harris, 39 S. C. 323, 17 S. E. 782, 39 Am. St. Rep. 731, note; Wipperman v. Hardy, 17 Ind. App. 142, 46 N. E. 537; Cushwa v. Improvement, etc., Assn., 45 W. Va. 490, 32 S. E. 259.

39. Harris v. Lindsay, 4 Wash. C. C. 98, 271; White v. Howard, 1 Sandf. 81; Belleville Bank v. Bornman, 124 Ill. 207, citing the text. In the last case, it was held that the question of payment should have been submitted to the jury. 40. Tobey v. Barber, 5 Johns. 68; Maillard v. Duke of Argyle, 6 M. & G. 40; Berry v. Griffin, 10 Md. 27; Muldon v. Whitlock, 1 Cow. 290; Glenn v. Smith, 2 Gill & J. 494; Putnam v. Lewis, 8 Johns. 389; Steamboat Charlotte v. Hammond, 9 Mo. 58; McLaughan v. Bovard, 4 Watts, 308; Gardner v. Gorham, I Doug. 507; In re Hurst, 1 Flipp. C. C. 462; Hotchin v. Secor, 8 Mich. 494; Feamster v. Withrow, 12 W. Va. 651; Dudgeon v. Haggart, 17 Mich. 273; Burchard v. Frazer, 23 Mich. 228; Maze v. Miller, 1 Wash. C. C. 328, 2 Am. Lead. Cas. 246, 247. In 1 Smith's Lead. Cas. (7th Am. ed.) 713, it is said:

view has been taken in some cases. 41 It is clear that when the receipt is "in full when paid," it contemplates the transaction as conditional payment only.42

43

And the presumption of payment does not apply where the creditor abandons some security which he held when he takes the paper. The transaction, however, is always to be inspected in all its parts, and the intent of the parties, as revealed by its circumstances, is the controlling guide to its construction. And the words "received and accepted in satisfaction," employed in settlement of a claim which was in judgment against the maker of the note, coupled with the fact that he gave an indorser on the note so given, were recently considered in Virginia sufficient to show an absolute discharge of the judgment by the debtor's note indorsed.44

§ 1268. In some cases it has been held that an agreement to take a bill or note in absolute payment of a debt must be express in order to render it such;45 but the better opinion is that such agreement may be implied, as well as expressed, and that all the circumstances may be looked to, to ascertain what was the actual agreement of the parties.46

§ 1269. Fraudulent representations on transfers in payment render them void as such. If the debtor, at the time when he passes the bill or note of a third party in payment, represents that it is good, or that the parties to it are solvent, knowing at the time the con

"Merely receipting the notes as cash, or giving a receipt in full, or receipting the notes as being payment of the debt, will not alone be sufficient to prove that the notes were taken, not as conditional payment, but as an immediate and absolute discharge." Soule v. Soule, 157 Mass. 451, 32 N. E. 663.

41. The rule in Louisiana is different. Barron v. How, 13 Mart. 144. 42. Dayton v. Trull, 23 Wend. 345.

43. Pomeroy v. Rice, 16 Pick. 22; Butts v. Dean, 2 Metc. (Mass.) 76; Fowler v. Ludwig, 34 Me. 455; Bank v. Good, 21 W. Va. 467, citing the text. 44. Morriss v. Harvey, Sup. Ct. Va., Sept., 1881, Va. L. J., Jan., 1882, p. 21. 45. Dougal v. Cowles, 5 Day, 511; Muldon v. Whitlock, 1 Cow. 290; Hays v. Stone, 7 Hill, 128; Glenn v. Smith, 2 Gill & J. 493; Conkling v. Barb. 372; Pritchard v. Smith, 77 Ga. 465.

King, 10

46. Merrick y. Boury, 4 Ohio St. 60; Miller v. Lumsden, 16 Ill. 161; Fulford v. Johnson, 15 Ala. 384; Gordon v. Price, 10 Ired. 385; Hart v. Boller, 15 Serg. & R. 162; Berry v. Griffin, 10 Md. 27; Johnson v. Cleaves, 15 N. H. 332; Slocumb v. Holmes, 1 How. (Miss.) 139; Norton v. Paragon Oil Can Co., 98 Ga. 468, 25 S. E. 501; Cushwa v. Improvement, etc., Assn., 45 W. Va. 490, 32 S. E. 259.

trary, it is fraud upon the creditor, and immediately on discovering it he may sue the debtor for the original debt. Or if such bill or note were given for goods delivered at the time, the vendor may disaffirm the contract, and sue in trover for the goods. In New York, where there was an agreement to sell a quantity of flour for the note of one Lyon, and when the flour was demanded and the note tendered, Lyon had failed, it was held that the contract, though valid, was executory; and that the consideration for the flour had failed, and the vendor was not bound to part with the flour for the note of an insolvent.48 The court assumed the law to be that upon an agreement to accept notes in payment, if the notes turned out bad before the article was delivered, a tender of them would not be good unless the vendor had contracted to run the risk.

§ 1270. In defense to an action on a debt, it is sufficient to plead that a bill or note payable to order or bearer was delivered for or on account of the amount, and is still current, or has been transferred to a third party. It is necessary to state in the plea that the bill or note was payable to order or bearer.

If a debtor give a bill or note in payment to an agent whom he knows has no authority to receive anything but cash, he is not discharged from the demand of the principal.50

§ 1271. If the debtor, instead of paying the creditor, directs him to take a bill of a third person, and he does so, and the bill is

47. Bridge v. Batchelder, 9 Allen, 394; Hawse v. Crowe, 1 Ryan & M. 414; Pierce v. Drake, 15 Johns. 475; Bayard v. Shunk, 1 Watts & S. 94; Martin v. Pennock. 2 Barr, 376; Lowrey v. Murrell, 2 Port. 280; Brown v. Montgomery, 20 N. Y. 287; Long v. Sprull, 7 Jones (Law), 96; Delaware Bank v. Jarvis, 20 N. Y. 226; Gurney v. Womersley, 4 El. & Bl. 133 (82 Eng. C. L.); Fenn v. Harrison, 3 T. R. 759; Popley v. Ashlin, 6 Mod. 147, Holt, 121. See chapter XXII, § 736, vol. I; also 2 Parsons on Notes and Bills, 41, 266; Byles on Bills (Sharswood's ed.) [*157, 158], 278, 279, note; Story on Bills, § 225. 48. Rogett v. Merritt, 2 Cal. 117. And it has also been held that an action to recover damages, resulting from fraud in obtaining goods by false representation, may be brought before the maturity of a note received in payment therefor, in reliance upon the false representations, and the value of the goods so obtained may be recovered as damages for the fraud, if proved, provided it is shown upon the trial that the note has not been paid and the plaintiff offers to return the note to the defendant. See Thomas v. Dickinson, 67 Hun, 350, 22 N. Y. Supp. 260.

49. Kearslake v. Morgan, 5 T. R. 513; Griffiths v. Owens, 13 M. & W. 58; Price v. Price, 16 M. & W. 232; Crisp v. Griffiths, 2 Cromp., M. & R. 159. 50. Sykes v. Giles, 5 M. & W. 645.

dishonored, the debtor's liability revives;51 and it is not necessary that the creditor should notify him of the dishonor.52 If the creditor, not having the option of taking cash, takes of his own accord a bill of the debtor's agent, the debtor is not discharged.53 But if the debtor refers his creditor to a third person for payment generally, and the creditor, having the option of taking cash, elects to take a bill, which is afterward dishonored, the original debtor is discharged.54

SECTION II.

SUSPENSION OF RIGHT OF ACTION BY TAKING BILL OR NOTE FOR

OR ON ACCOUNT OF A DEBT.

§ 1272. There is no doubt that a negotiable bill or note given for or on account of a contemporaneous or pre-existing debt, and whether or not it be in renewal of a previous bill or note, suspends all right of action on such debt during its currency— that is, until it is dishonored by nonacceptance or nonpayment. If this were not so, the creditor who took the additional security, in the form of a bill or note, might, in consequence of its negotiable character, transfer it to a bona fide holder, and subject the debtor to payment of both the original and the new debt.55

But as soon as the bill or note is dishonored, the original debt revives, and the creditor may pursue his remedy for it, or sue upon the bill or note.56 The bill or note taken in conditional pay

51. Marsh v. Pedder, 4 Campb. 257; Taylor v. Briggs, Moody & M. 28; Byles on Bills (Sharswood's ed.) [*370], 550.

52. Swinyard v. Bowes, 5 Maule & S. 62.

53. Robinson v. Read, 9 B. & C. 444 (17 Eng. C. L.); Marsh v. Pedder, 4 Campb. 257; Byles on Bills (Sharswood's ed.) [*371], 550; Continental Ins. Co. v. Dorman, 125 Ind. 189, 25 N. E. 213.

54. Strong v. Hart, 6 B. & C. 160 (13 Eng. C. L.).

55. Armistead v. Ward, 2 Pat. & H. 504; Black v. Zacharie, 2 How. 483: Van Epps v. Dillaye, 5 Barb. 244; Putnam v. Lewis, 8 Johns. 389; Raynor v. Laux, 28 Hun, 36; Lane v. Jones, 79 Ala. 161; Bank of New Hanover v. Bridgers, 98 N. C. 67, citing the text; Phoenix Ins. Co. v. Allen, 11 Mich. 501; Stedman v. Gooch, 1 Esp. 3; Kearslake v. Morgan, 5 T. R. 513; Griffith v. Owen, 13 M. & W. 58; Price v. Price, 16 M. & W. 231; Maier v. Canovan, 57 How. Pr. (N. Y.) 504; Edwards on Bills, 197; Byles on Bills (Sharswood's ed.) [*229], 379; Sturz v. Fischer, 19 App. Div. 198, 45 N. Y. Supp. 1009; Metzerott v. Ward, 10 App. D. C. 514, quoting with approval the text; Otto v. Halff, 89 Tex. 384, 34 S. W. 910, 59 Am. St. Rep. 56, text cited.

56. Stedman v. Gooch, 1 Esp. 4; Owenson v. Morse, 7 T. R. 50; Tobey v. Barber, 5 Johns. 68; Bank of Ohio Valley v. Lockwood, 13 W. Va. 426; Standard Oil Co. v. Snowden, 55 Ohio St. 332, 45 N. E. 320. In this case, a con