And merely crediting the amount collected to an intermediate indorser, who held the bill for collection, is not a payment to the owner; 28 especially where the indorsement is "for collection" or for the use "of the indorser," and carries on its face notice of the indorser's ownership.29 In like manner, a set-off against an individual partner, under an agreement made by him, will be available as a payment on a partnership note. So, too, an agreement between the maker and the payee of a note, with the consent of the maker's partner, to apply a debt of the payee to the maker's firm as a payment on the note.31 So, a credit of the holder's debt to A. on the individual note of his partner, B., which is charged as a payment by A. against B. on the partnership books.32

30

Payment in Securities-Collateral.

33

§ 1396. A bill may be discharged by annuities received in payment with a special agreement as to sale; or by stock certificates delivered as collateral, and to be received at the maker's option as a satisfaction after maturity.34 But the delivery of property, with power to sell and apply the proceeds, is an unliquidated counterclaim, and not a payment. So, it is not a payment to take another note as collateral; or an assignment of goods from the principal maker, with an

35

28 Blaine v. Bourne, 11 R. I. 119.

29 "For collection." Bank of Metropolis v. First Nat. Bank of Jersey City, 19 Fed. 301; or "For collection for account of A.," or simply. "For account of A.." Central R. R. v. First Nat. Bank of Lynchburg, 73 Ga. 383; or, "For my use." Sigourney v. Lloyd, 8 Barn. & C. 622, affirmed 5 Bing. 525. As to the effect of restrictive indorsements of this character, see, also, §§ 724-727, supra. 30 Wallace v. Kelsall, 7 Mees. & W. 264; Gordon v. Ellis, 7 Man. & G. 607;

2 C. B. 821.

$1 Davis v.

Spencer, 24 N. Y. 386.

32 Gwathney v. McLane, 3 McLean, 371, Fed. Cas. No. 5,882.

33 Nairn v. Prowse, 6 Ves. 759.

34 Brown v. Smith, 122 Mass. 589.

35 Hook v. White, 36 Cal. 299.

36 Although neither collected nor returned. Marschuetz v. Wright, 50 Wis. 175, 6 N. W. 511. So, too, collateral given by a surety for his half of a note is not "Payment" to discharge his co-surety, who had already paid half, and taken a receipt stating it to be a full discharge, if the balance was paid by the other surety. Aldrich v. Blake, 134 Mass. 582. And the drawer of a bill cannot vary his contract by proof of a contemporary agreement of the

38

agreement for possession on future notice; 37 or a mortgage from one joint maker with an absolute covenant to pay the debt; or to take a collateral mortgage from the maker.39 But a collateral bond and mortgage will merge the note.40 And if the holder of a bill takes collateral from the drawer, and informs an accommodation acceptor that he has settled with the drawer, and the acceptor need not trouble himself any further, it will amount to a payment of the bill, although the drawer afterwards becomes bankrupt, and the collateral is not paid.41

If collateral is taken and transferred by the holder, it will satisfy the bill or note irrespective of its value.*2 And if a note is payable when a certain other note "is collected," it will become due upon the sale of such note.43 But if a judgment is rendered on the collateral, and is transferred to the maker himself on a part payment by him, it will amount to a payment pro tanto, and no more.** But if the collateral is retaken by the maker, and a judgment in replevin (rendered against him in the payee's favor) is paid by him, it will satisfy the note secured.45 So, if a note is secured by a collateral trust deed of property sufficient in value, and the property is sold, it will satisfy the note. 46

payee to pay himself out of the sale of collateral received from the acceptor. Abrey v. Crux, L. R. 5 C. P. 37.

37 Twopenny v. Young, 3 Barn. & C. 208.

38 Ansell v. Baker, 15 Q. B. 20.

39 Although the mortgaged land was afterwards sold, and the buyer assumed payment of the mortgage, and afterwards resold it subject to the mortgage, Tucker v. Crowley, 127 Mass. 400; or, although the foreclosure of the mortgage failed for want of a seal, and the mortgage was reformed in equity, Springfield Five Cents Sav. Bank v. South Congregational Soc., Id. 516.

40 Matteson v. Matteson, 55 Wis. 450, 13 N. W. 463. So, the payment of a judgment in foreclosure of a collateral mortgage is good as against a purchaser of the note with notice of the foreclosure. Lewis v. Wintrode, 76 Ind. 13.

41 Black v. Peele, cited in 1 Doug. 248.

42 See § 803, supra.

43 For its face and "without recourse," Loren v. Hillhouse, 40 Ohio St. 302; or for a less amount, Walker v. Phillips, 35 Tex. 784.

44 Burnheimer v. Hart, 27 Iowa, 19.

45 And if the judgment paid exceeds the note secured, the maker paying it may recover the excess. Miles v. Walther, 5 Mo. App. 595.

46 Smith v. Clopton, 48 Miss. 66. Or if the land mortgaged collaterally is

An unsatisfied judgment may merge the bill or note, but is not of itself a payment, and cannot be pleaded as such.48

47

Legacy to Creditor-Debtor Appointed Executor.

§ 1397. A legacy by the acceptor or maker to the holder of a negotiable bill or note is not a satisfaction of it, since it cannot be supposed that the testator knew in whose hands the paper would be at the time of his death.** On the other hand, if the holder appoints his debtor executor of his will, it is prima facie a bequest of the debt or an intention to release or discharge it at common law. And this applies to one who is liable on a bill or note to the testator.50 But there is no presumption of such an intent where there are no personal assets, and the debts are expressly charged on the testator's real estate; 51 or where the testator has shown a different intention by a letter directing the executor to make certain other payments.52 Many of the United States have provided by statute that such appointment shall not be a discharge of debts due from the executor, 53 unless so expressed; 54 and only then if the balance of the estate is sufficient to pay all other debts.55

sold in foreclosure, it will be a payment to the extent of the amount of the sale, although it was bought in by the holder in ignorance of a prior incumbrance, which he was afterwards obliged to pay. Durbin v. Fisk, 16 Ohio St. 533.

47 Tarleton v. Allhusen, 2 Adol. & El. 32. So, a judgment by confession, which the maker's property is not sufficient to satisfy. Norris v. Badger, 6 Cow. (N. Y.) 449.

48 Claxton v. Swift, 2 Show. 441, 494.

49 Byles, Bills, 229;

30 Byles, Bills, 227;

Chit Bills, 452; Carr v. Eastabrooke, 3 Ves. 561.

Benj. Chalm. Dig. art. 238; Story, Bills, § 443; Freakley v. Fox, 9 Barn. & C. 130, 4 Man. & R. 18; subject to the right of other debts to be first satisfied, Marvin v. Stone, 2 Cow. (N. Y.) 781.

51 Lowe v. Peskett, 16 C. B. 500.

52 Carey v. Goodinge, 3 Brown, Ch. 111.

53 ARKANSAS (Sand. & H. Dig. § 107); DELAWARE (Rev. Code, p. 675, c. 89, § 18); INDIANA (Horner's Rev. St. § 2572); KANSAS (2 Gen. St. c.

54 ALABAMA (Code, § 1962); NEW JERSEY (2 Gen. St. p. 1426, § 8); RHODE ISLAND (Gen. Laws, c. 214, § 6).

55 COLORADO (Mills' Ann. St. § 4658); ILLINOIS (Hurd's Rev. St. c. 148, § 19); NEVADA (Gen. St. §§ 2778, 2779); OREGON (1 Hill's Ann. Laws, $$ 1117, 1118).

Payment in Money-Currency.

56

§ 1398. Commercial paper must, in general, be paid in money or coin at its standard value.5 If it is payable in a given currency, and the value of the currency is changed by law before the paper matures, an amount should be paid equivalent to the value of the currency at the time of drawing the bill.57 Some of the United States make special provision by statute for the payment of bank notes in specie.58

By foreign statutes a bill of exchange must be paid in the currency in which it is expressly made payable,5° and, if payable in a foreign or conventional currency, with the usual exchange. It may be paid

60

107, § 66); KENTUCKY (Ky. St. § 3889); MISSOURI (Rev. St. § 99); NEW YORK (2 Rev. St. p. 84, § 13). And this applies to one of several joint obligors, who did not qualify as executor. Mitchell v. Rice, 6 J. J. Marsh. (Ky.) 623.

56 Chit. Bills, 450; 2 Daniel, Neg. Inst. 271; 2 Pars. Notes & B. 219; Story, Bills, § 419. And see § 92 et seq., supra. And if such currency is "dollars," that word will be supplied, if omitted, Williamson v. Smith, 1 Cold. (Tenn.) 1; especially if indicated by the dollar mark in the margin, Petty v. Fleishel, 31 Tex. 169.

57 Da Costa v. Cole, Skin. 272. And see 2 Daniel, Neg. Inst. 270; Story, Bills, 418; Story, Prom. Notes, § 390.

58 DELAWARE (Rev. Code, Amend. c. 71, § 6); GEORGIA (Code, § 1963); though expressly payable otherwise, NORTH CAROLINA (Code, § 2492). 59 ARGENTINE REPUBLIC (Code Com. art. 861); BELGIUM (Code Nap.); BOLIVIA (Code Com. art. 394); CHILI (Code Com. art. 712); COLOMBIA (Code Com. art. 448); COSTA RICA (Code Com. art. 441); ECUADOR (Code Com., as in "Spain"); FRANCE (Code Com. art. 143); GREECE (Code Nap.); HAYTI (Code Nap.); HOLLAND (Exch. Law, art. 156); HUNGARY (Exch. Law, § 112); ITALY (Code Com. art. 228); MEXICO (Code Com. art. 386); NICARAGUA (Code Com. art. 274); PERU (Code Com. art. 448); PORTUGAL (Code Com. art. 377); SALVADOR (Code Com. art. 447); SAN DOMINGO (Code Nap.); SPAIN (Code Com. art. 494); SWEDEN (Exch. Law, § 38); TURKEY (Code Nap.); URUGUAY (Code Com. art. 878); VENEZUELA (Code Com. art. 58).

60 ARGENTINE REPUBLIC (Code Com. art. 861); BOLIVIA (Code Com. art. 394); CHILI (Code Com. art. 712); COLOMBIA (Code Com. art. 448); COSTA RICA (Code Com. art. 441); ECUADOR (Code Com., as in "Spain"); GREAT BRITAIN (Bills of Exchange Act. § 72); HOLLAND (Exch. Law, art. 156); ITALY (Code Com. art. 228); MEXICO (Code Com. art. 386); NICARAGUA (Code Com. art. 274); PERU (Code Com. art. 448); PORTUGAL (Code Com. art. 377); SALVADOR (Code Com. art. 447); SPAIN (Code Com.

in the currency of the place of payment, unless required expressly to be paid in some designated currency.1

In general, a check is not payment, but tender of a check in payment is sufficient if not objected to as such.*2 So, the note of a municipal corporation cannot be paid by the city's own notes.63

64

"Dollars"-Confederate Currency.

§ 1399. Payment presupposes money which is a legal tender, and the phrase, "payable in legal tender money," is without meaning in a note. Thus, prior to the United States Legal Tender Act, a note for so many "dollars" meant specie." And it has been held that parol evidence is not admissible to show other money intended.66

By statute, in Mississippi, all contracts for money made between May 1, 1862, and May 1, 1865, were prima facie payable in Confederate currency,

art. 494); SWEDEN (Exch. Law, § 38); URUGUAY (Code Com. art. 878); VENEZUELA (Code Com. art. 58).

61 GERMANY (Exch. Law, art. 37); AUSTRIA (Exch. Law, art. 37); SWITZERLAND (Ob. R. 756).

62 Jennings v. Mendenhall, 7 Ohio St. 257. But see Ohio Ins. Co. v. Nune macher, 10 Ind. 234. And see chapter 41, infra.

63 Louisiana Mut. Ins. Co. v. Batt, 22 La. Ann. 621.

64 Northwestern Nat. Bank v. Jarvis (Manitoba Q. B.) 20 Cent. Law J. 255. So, in Georgia, a tender, before the Scaling Act of 1868, must be alleged to be in lawful United States currency. Bone v. Graves, 43 Ga. 312.

65 Davis v. Phelps, 7 T. B. Mon. (Ky.) 632. And fractional silver currency coined prior to 1853 is a legal tender for two five-dollar bank bills. People v. Dubois, 18 Ill. 333. So, prima facie, United States currency, Hightower v. Maull, 50 Ala. 495; Miller v. Lacy, 33 Tex. 351; although it is a renewal in 1865 of a note made in 1863, McNeel v. Smarr, 3 S. C. 198. So, a note payable "in any current bank paper or state treasury notes of the state of Texas" does not mean Confederate currency, although it was then the only currency, and greatly depreciated. Woods v. Parker, 36 Tex. 131.

6 E. g. depreciated money, McMinn v. Owen, 2 Dall. 173; "commonwealth paper," Baugh v. Ramsey, 4 T. B. Mon. (Ky.) 155; bank notes, Noe v. Hodges, 3 Humph. (Tenn.) 162; Pack v. Thomas, 13 Smedes & M. (Miss.) 11; or Confederate currency, Austin v. Kinsman, 13 Rich. Eq. (S. C.) 259; Leslie v. Langham's Ex'rs, 40 Ala. 524; Roane v. Green, 24 Ark. 210; or to prove a contemporaneous agreement for payment in Confederate currency, at any time, of a note given in July, 1862, for Confederate currency borrowed then, payable on demand, Terrell v. Walker, 66 N. C. 244. But see, contra, as to Confederate currency, Thorington v. Smith, 8 Wall. 1; Lobdell v. Fowler,