money in cash.15 And a bond and warrant to confess judgment, payable in installments, given upon a parol agreement for extension, will not constitute a payment until actually paid.10

17

Note by Executor-Agent.

§ 1510. If a testator's note is renewed by his executor, to gain time to collect funds and pay the debt, the note will not be a payment. And if an administrator gives his bond to the estate for a debt owing from himself, and takes a receipt for the bond, it will be presumed to be a conditional payment only.18 So, if the note of a deceased maker is renewed by the note of his widow, indorsed by the executor, for the purpose of gaining time, and not intended as a payment, it will not discharge the debt.19 But, if the individual note of the executor is taken for a debt owing by him as trustee, it has been held that the debt will thereby lose its fiduciary character.20 So, if the individual note of an administrator, who had received an amount of money from the estate for the purpose of paying a debt, is taken for the debt, and extension is given by renewals of such note for several years, and until the maker had become insolvent, it will be a payment, and discharge the estate originally liable.21

In like manner, an agent s note will not, in general, discharge the debt of his principal; 22 especially where it has been given without prejudice as to the principal.23 And, in the absence of a special agreement, such note is not a payment, although the agent was in

15 Gray v. White, 108 Mass. 228.

16 And the parol agreement for time will be no defense. Davey v. Prendergrass, 5 Baru. & Ald. 187.

17 Peter v. Beverly, 10 Pet. 532; Glenn v. Burrows, 37 Hun (N. Y.) 602; unless it is intended to be a payment, Yerger v. Foote, 48 Miss. 62. And see White v. Thompson, 79 Me. 207, 9 Atl. 118.

1 Hoge v. Vintroux, 21 W. Va. 1.

19 Peter v. Beverly, 10 Pet. 532.

20 Lawton v. Fish, 51 Ga. 647; Hill v. Riley, 21 S. C. 602.

21 James v. Hackley, 16 Johns. (N. Y.) 273.

22 Porter v. Talcott, 1 Cow. (N. Y.) 359; Taylor v. Conner, 41 Miss. 722; especially if the receipt for it reads, "Which, when paid, will be in full," etc., Ayres v. Van Lieu, 5 N. J. Law, 881.

23 Wyatt v. Hertford, 3 East, 147.

24

debted to the principal, and charged him with the amount of the note, or although the time for payment was thereby extended.25 But if a seller of goods accepts the note of the buyer's agent as payment, knowing him to be such agent, it will discharge the principal, although the note is not paid.26 If a husband signs a note as agent for his wife, it will, in like manner, not discharge her debt, unless it is so agreed; 27 but an action will still lie against her on the original debt.28 So, a note given by the selectmen of a town for a debt due from the town will not extinguish the original debt.2

Renewal of Bill or Note.

§ 1511. The renewal of a bill or note is not, in general, a payment.3 30 So, if a note made by A. and B. is paid by the check of A., and a new note by A. and B. is discounted by the bank holding the original note and credited to A., and this is repeated several times, the transactions will be regarded as renewals, and not payment of the original note.31 So, the renewal of a lost draft, with the word "Duplicate" written across the face, and without any new

24 Higby v. Railroad Co., 7 Abb. Prac. (N. Y.) 259. But where the agent has charged the amount to his principal, a corporation, and been paid by it, it was held to be a payment by the corporation in Wright v. Ware Co., 1 N. H. 281. 25 Rathbone v. Tucker, 15 Wend. (N. Y.) 498.

26 Perkins v. Cady, 111 Mass. 318; Paige v. Stone, 10 Metc. (Mass.) 160. 27 Rawlings v. Robson, 70 Ga. 595.

28 Guion v. Doherty, 43 Miss. 538. 29 Kidder v. Knox, 48 Me. 551.

30 Benj. Chalm. Dig. art. 521; 2 Daniel, Neg. Inst. 289; 2 Pars. Notes & B. 204; Farrington v. Bank, 24 Barb. (N. Y.) 554; Bank of Commonwealth v. Letcher, 3 J. J. Marsh. (Ky.) 195; Lowry v. Fisher, 2 Bush (Ky.) 70; Bank of America v. McNeil, 10 Bush. (Ky.) 54; Reeder v. Nay, 95 Ind. 164. Contra, Nichol v. Bate, 10 Yerg. (Tenn.) 429; Belleville Sav. Bank v. Bornman, 124 Ill. 200, 16 N. E. 210; Jansen v. Grimshaw, 125 Ill. 468, 17 N. E. 850; Chisholm v. Williams, 128 III. 115, 21 N. E. 215; McMorran v. Murphy, 68 Mich. 246, 36 N. W. 60; Geib v. Reynolds, 35 Minn. 331, 28 N. W. 923; National Bank of Chester v. Gunhouse, 17 S. C. 489; First Nat. Bank v. Case, 63 Wis. 504, 22 N. W. 833; Holland Trust Co. v. Waddell, 75 Hun, 104, 26 N. Y. Supp. 980. 31 Lee v. Hollister, 5 Fed. 752; McElwee v. Lumber Co., 16 C. C. A. 232, 69 Fed. 302.

consideration, will create no additional liability on the drawer's part.32

But,

A renewal is not a payment, unless so intended or agreed.33 where the renewal was sent to the holder with the request to return the original note, it was held that the old note was discharged, although he retained both.34 On the other hand, where a maker, on the maturity of an indorsed note, leaves a renewal at the bank, with word that the indorsers will call and sign it, it will not be a payment of the original note.35

36

But where the new note is discounted, and the old note is paid with the proceeds of the discount, it has been held to be a payment, and not a mere renewal. And the old note will be canceled if paid in money, although the money is immediately loaned again to the debtor.37 If the original note is taken up with funds other than the proceeds of the discount of the new note, it will not be a renewal. But, if it is paid out of the proceeds of the new discount, it will be a renewal, if so intended.39

32 Benton v. Martin, 52 N. Y. 571, 40 N. Y. 345. And see 31 N. Y. 382. 33 And it is a question for the jury whether there is such an intention, Wheelock v. Berkeley, 138 Ill. 153, 27 N. E. 942; Brown v. Scott, 51 Pa. St. 357; Corner v. Pratt, 138 Mass. 446; or agreement, Hart v. Boller, 15 Serg. & R. (Pa.) 162. And see § 1516, infra. And, if it is usurious, the right of action to recover the usury paid was from its payment, and not from its date, Louisville Trust Co. v. Kentucky Nat. Bank, 87 Fed. 143.

34 Sage v. Walker, 12 Mich. 425.

25 Auburn City Nat. Bank v. Hunsiker, 72 N. Y. 252. Although the renewal was credited on the books of the bank, and although the first note was marked "Paid."

36 Fisher v. Marvin, 47 Barb. (N. Y.) 159.

37 2 Pars. Notes & B. 203; Merriman v. Manufacturing Co., 12 R. I. 175. In such case the second note discounted is not a renewal, but a new loan, and is therefore not covered by security given for the maker's indebtedness prior to the maturity of the original note, although a renewal in general carries the original collateral with it. Buck v. Wood, 85 Me. 204, 27 Atl. 103; Holland Trust Co. v. Waddell, 75 Hun, 104, 26 N. Y. Supp. 980. So, where a second note is discounted at the maturity of the first, and the proceeds credited to the maker, and at its maturity a third note is discounted, including another debt also, the first note has been held to be paid and extinguished by the second. Letcher v. Bank, 1 Dana (Ky.) 82.

38 Hartley v. Kirlin, 45 Pa. St. 49.

39 And the original collateral will go with it. Flanagin v. Hambleton, 54 Md.

RAND.C.P.-137

(2177)

Note Taken as Payment by Agreement.

40

41

42

§ 1512. A bill or note may be taken in absolute satisfaction by agreement of the parties to the payment, and even in discharge of a higher security, such as a note under seal, or a judgment; 2 or it may be taken, with other consideration, in payment of an existing debt of smaller amount.*

43

On the other hand, the debtor's note for a third of the original debt will not be a satisfaction.** So, an agreement to receive part cash and part note, in satisfaction of a debt much larger than the aggregate of both cash and note, is not a payment.45 But where such agreement has been made in a compromise beneficial to all parties, and the notes representing the original debt have been surrendered, no action will afterwards lie upon them.16 And the debtor's own note and the draft of a third person may be taken in satisfaction, although they are for a smaller amount, and such amount paid in cash by the debtor might not have the same effect.**

§ 1513. Where a surety gives his note in satisfaction of the debt on which he is liable, and it is expressly received as such by the

40 Brewer v. Bank, 24 Ala. 439; Kappes v. Lumber Co., 1 Ill. App. 280; Gage v. Lewis, 68 Ill. 604; Warring v. Hill, 89 Ind. 497; Jewett v. Pleak, 43 Ind. 368: Iowa Co. v. Foster, 49 Iowa, 676; Abat v. Nolte, 6 Mart. N. S. (La.) 636; Burchard v. Frazer, 23 Mich. 224; Hunter v. Penland (Tex. Civ. App.) 32 S. W. 421; Dougherty v. Hunter, 54 Pa. St. 380, a duebill; Wheeler v. Faurot, 37 Ohio St. 26, obiter. And a note so received will not be presumed not to be payable at bank, Warring v. Hill, supra. So, an insurance loss may be satisfied by an order drawn by the agent on the secretary of the company, and received in full satisfaction. Spooner v. Rowland, 4 Allen (Mass.) 485.

41 Bolt v. Dawkins, 16 S. C. 198.

42 And cancellation of the judgment record may be enforced upon such a payKusler v. Crofoot, 78 Ind. 597.

ment.

43 Keough v. McNitt, 6 Minn. 513 (Gil. 357).

44 Cumber v. Wane, 1 Strange, 426. But the note of a third person so received would discharge the debt, irrespective of the amount being larger than the note. Brooks v. White, 2 Metc. (Mass.) 283.

45 Parrott v. Colby, 71 N. Y. 597, 6 Hun (N. Y.) 55, the note not being paid. 46 Vinson v. Vives, 24 La. Ann. 336. And such a note has been held to be good in Indiana, although no other creditor was interested in the composition. Devou v. Ham, 17 Ind. 472.

47 Bliss v. Swartz, 7 Lans. (N. Y.) 186.

49

creditor, such payment will support an action by him against the principal debtor for exoneration.48 So, payment by note will support an action by the party paying for money paid; or an allegation of payment in a suit brought to enforce a contract for the purchase of goods, or for breach of warranty of the goods sold.51 So, where B.'s bond is given to A. to indemnify him against payments to be made for B., and A.'s note is afterwards received by the creditor for such payments, action will lie against B. on the bond before the note is actually paid.52

50

But where a principal debtor makes part payment of a debt, and gives his note to the surety for his indemnity against the balance, the note will not discharge collateral already held for that purpose by the surety.53 And it has been held that the bond of one joint maker will not be sufficient, until paid, to support an action by such maker against his co-maker for contribution.54

Some authorities hold that an express agreement is necessary, in order to make the debtor's note an absolute payment and satisfaction; 55 especially if it is for a smaller amount,5" and given in discharge of a larger note and other debts. The intention to make a note a satisfaction of the original note or debt must, at least, not be left to mere inference, but must be clearly proved.

58

48 Witherby v. Mann, 11 Johns. (N. Y.) 518; Doolittle v. Dwight, 2 Metc. (Mass.) 561; Warring v. Hill, 89 Ind. 497. And see § 1509, supra.

49 Cornwall v. Gould, 4 Pick. (Mass.) 444. And see § 1509, supra.

50 Morehouse v. Northrop, 33 Conn. 380.

$1 Bach v. Levy, 101 N. Y. 511, 5 N. E. 345, affirming 50 N. Y. Super. Ct. 519; Frohreich v. Gammon, 28 Minn. 476, 11 N. W. 88.

52 Drake v. Porter, 13 Hun (N. Y.) 658.

53 Pinney v. Kimpton, 46 Vt. 80.

24 Maxwell v. Jameson, 2 Barn. & Ald. 51.

Porter v. Talcott, 1 Cow. (N. Y.) 359; Appleton v. Kennon, 19 Mo. 637; Karelli v. Brown, 1 McCord (S. C.) 449. So, as to payment of an existing debt. Brown v. Olmsted, 50 Cal. 162; Young v. Hibbs, 5 Neb. 433. Or of a judgment against the maker. Riggs v. Goodrich, 74 Mo. 108. And see 2 Daniel, Neg. Inst. 292; 1 Edw. Bills & N. § 290; 2 Edw. Bills & N. § 752; 2 Pars. Notes & B. 159.

5 Paine v. Voorhees, 26 Wis. 522.

Ripley v. Greenleaf, 2 Vt. 129.

Es Nightingale v. Chafee, 11 R. I. 609. But circumstantial evidence is sufficient, Keel v. Larkin, 72 Ala. 493; e. g. the issue of a renewal policy of insur