95

96

celed on a partial payment, and there is no fraud or mistake, it will be a full discharge." On the other hand, an agreement to accept payment of part, or payment in installments, in satisfaction of the whole. will not discharge the bill until the payment is made and the agree ment fully executed. And, even if the acceptor pays part of the bill upon the holder's promise to look to the drawer for the balance, the acceptor will not be discharged." But an agreement by a third party, not otherwise individually liable on the paper, to pay a less amount than its face, is a sufficient satisfaction.98 So, if a note is made by a partnership, A. & B., and A. afterwards transfers to the holder his interest in the partnership (exceeding the amount of the note), upon an agreement that the note shall be canceled, it will be a satisfaction, without regard to his share of the partnership debts."9 21 South. 565, 22 South. 189. Especially where the agreement was made between the co-makers and not with the holder. Shed v. Pierce, 17 Mass. 623. 95 Kent v. Reynolds, 8 Hun (N. Y.) 559; Bowker v. Childs, 3 Allen (Mass.) 434; Ellsworth v. Fogg, 35 Vt. 355.

96 Blake v. Blake, 110 Mass. 202; Young v. Jones, 64 Me. 563; Carraway v. Odeneal, 56 Miss. 223; Wheeler v. Wheeler, 11 Vt. 60; Lee v. Oppenheimer, 32 Me. 253; Rea v. Owens, 37 Iowa, 262; Hyams v. Levy, 1 Speers (S. C.) 368. So, a fortiori, a part payment by the maker, and his promise to pay the balance on request, the note not being surrendered. Peterson v. Wheeler, 45 Mo. 369. And the payment of part, by each of several successive indorsers, to the last indorsee, under their agreement, is no satisfaction, even between themselves, to discharge the liability of the first indorser to the second. Keeler v. Bartine, 12 Wend. (N. Y.) 110. Judgment in favor of the holder on plea of payment, and proof of agreement to settle for a smaller sum, will not bar an action by the maker on the agreement. Hunt v. Brown, 146 Mass. 253, 15 N. E. 587.

97 Parker v. Leigh, 2 Starkie, 228.

98 E. g. by one partner of the firm indebted. Thompson v. Percival, 5 Barn. & Adol. 925, 3 Nev. & M. 167. Or by several joint makers, one making an assignment of property, and each assuming a several liability to their co-maker and surety, who had taken up the joint note and given his individual note for it. Lapham v. Barnes, 2 Vt. 213.

Bates v. Rosekrans, 37 N. Y. 409.

(2560)

Satisfaction by Bill or Note.

§ 1825. The bill of a third person, even for a less amount, will be a sufficient satisfaction, if actually received,100 and delivered,101 as such. It has been held, too, that the debtor himself may satisfy his bill by a negotiable security for a less amount, given and accepted as such; 102 especially if other parties are liable upon the new instrument.103 But an agreement to take a certain note in payment, upon the happening of a certain event, will not be binding on the holder, after the note has become due and been dishonored.104 If a bill or note is taken in full satisfaction and discharge of the original debt,

100 Ralli v. Dennistoun, 6 Exch. 483. Or a third person's check for a less amount. Guild v. Butler, 127 Mass. 386.

101 Hibbard v. Eastman, 47 N. H. 507. But a mere agreement for the note of a third person is not sufficient, although tendered by the maker. Hawley v. Foote, 19 Wend. (N. Y.) 516. And an agreement between one of the makers and the cashier of the bank which holds the note is not a satisfaction, until it is assented to by the bank, and the new note is substituted as agreed. Robertson v. Bank, 41 Mich. 356, 1 N. W. 1033. So, it is not a satisfaction, if the acceptor sends another bill, not mentioning the original acceptance, and the payee discounts the latter as collateral, and sends the excess in amount to the acceptor. Pring v. Clarkson, 1 Barn. & C. 14.

102 Sibree v. Tripp, 15 Mees. & W. 23. If so received. Brown v. Kewley, 2 Bos. & P. 518; Bunge v. Koop, 48 N. Y. 225; Brooks v. White, 2 Metc. (Mass.) 283. And given. Crisp v. Griffiths, 2 Cromp., M. & R. 159, 3 Dowl. 752. Especially if given in pursuance of a previous agreement for ascertainment and correction of the original amount. Murray v. Reed, 17 Wash. 1, 48 Pac. 343. But see Manhood v. Crick, Cro. Eliz. 716. And an agreement to receive notes and cash, amounting altogether to much less than the debt, has been held not to be a satisfaction, but the statute limiting actions against corporate stockholders to one year from the accruing of the corporate debt will run from its original maturity, and not from the agreement, nor from the date of the note. Parrott v. Colby, 71 N. Y. 597, affirming 6 Hun (N. Y.) 55. A note for a smaller amount may be taken in full satisfaction of a disputed claim against the maker. Northern Liberty Market Co. v. Kelly, 113 U. S. 199, 5 Sup. Ct. 422. So, too, a check. Ostrander v. Scott, 161 Ill. 339, 43 N. E. 1089. And see Fuller v. Kemp, 20 Lawy. Rep. Ann. 785, note (s. c. 138 N. Y. 231, 33 N. E. 1034).

103 Hardman v. Bellhouse, 9 Mees. & W. 596; Brooks v. White, 2 Metc. (Mass.) 283; Maddux v. Bevan, 39 Md. 485.

104 Da Costa v. O'Rourke, 12 Phila. 223.

RAND.C.P.-161

(2561)

105

the latter will not revive upon its dishonor.1 A bill may also be satisfied by a tender of the holder's own certificate of deposit, properly indorsed.100

Satisfaction by Other Security.

§ 1826. A note may be satisfied by a higher security taken in its stead; but such security must be co-extensive with the original instrument. Thus, a several mortgage by one of the makers of a joint and several note has been held not to be a sufficient satisfaction.1 107 The tender of stock certificates, under an agreement to take them in full satisfaction, is sufficient.108 So, the assignment of a judg ment 109 and a mortgage is a complete satisfaction, if so received,110 although given long after the maturity of the note,111 or for a longer time than the note, but containing no mention of it; 112 but not a deed or mortgage given as collateral merely.113

Payment of the collateral will, however, discharge to that extent the debt secured, although the payment is made by giving other notes in exchange.114 So, after taking collateral notes, an agreement to

105 Byles, Bills, 238; Chit. Bills, 198; Sard v. Rhodes, 1 Mees. & W. 153, 1 Tyrw. & G. 298; Kearslake v. Morgan, 5 Term R. 513; Crisp v. Griffiths, 2 Cromp., M. & R. 159. As to the effect of payment by bill or note, see supra, chapter 41.

106 Lord v. Favorite, 29 Ill. 149. Or a warehouse receipt. Burch v. Hubbard, 48 Ill. 164.

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

108 Brown v. Smith, 122 Mass. 589. Notwithstanding the subsequent giving of a new note, without prejudice, to save the statute of limitations. Baker v. Hawkins, 14 R. I. 359.

109 First Nat. Bank of Indianapolis v. New, 146 Ind. 411, 45 N. E. 597. 110 Fraser v. Armstrong, 10 U. C. C. P. 506.

111 McLeod v. McKay, 20 U. C. Q. B. 258.

112 Mathewson v. Brouse, 1 U. C. Q. B. 272.

Miller, 1 U, C. Q. B. 353;
Gore Bank v. McWhirter,

113 Byles, Bills, 240; Bedford v. Deakin, 2 Barn. & Ald. 210, 2 Starkie, 178; Kerr v. Hereford, 17 U. C. Q. B. 158; Murray v. Commercial Bank v. Cuvillier, 18 U. C. Q. B. 378; 18 U. C. C. P. 293; Gore Bank v. Eaton, 27 U. C. Q. B. 332. Especially where it failed to take effect by reason of the grantor's bankruptcy. Harner v. Batdorf, 35 Ohio St. 113.

114 Post v. Bank, 159 Ill. 421, 42 N. E. 976. And, conversely, payment of the debt secured will discharge the maker of a collateral note. Merrill v. Bank, 94 Cal. 59, 29 Pac. 242.

accept part of them in satisfaction, with a cash payment for a large debt, and to surrender the balance of the collateral.115

116

If a mortgage is given in satisfaction of a note secured by vendor's lien, it will discharge the collateral vendor's lien as well.1 So, a chattel mortgage received after the maturity of a note is a good satisfaction.117 So, if a chattel mortgage is given, and sufficient of the mortgaged property is sold to pay the note.118 And a note made by a husband for his wife's benefit may be satisfied by the wife's mortgage received as such.119 So, if the maker agrees to sell land to the payee, and receive his note in part payment, it will be a satisfaction of the original note.120

But a verbal agreement by the payee to surrender the note to the maker on settlement of his account with another person, to whom the payee was not in any way liable, will not be a satisfaction of the note until it is executed.121 So, an agreement for a cash payment and the conveyance of land at a certain valuation, which, if done in three months, should be a satisfaction of a note for a larger sum, has been held, on conveyance at a later day, to amount only to a part payment of the note to the extent of the valuation agreed.122 If a note is given for land, and the land is conveyed to the holder, to be reconveyed by him on payment of the note, it will be a satisfaction, and discharge the indorsers.123 So, if the holder agrees to receive a mortgage in satisfaction, and on receiving it objects to it, but retains it, and afterwards forecloses it, it is a

115 Lincoln Sav. Bank & Safe-Deposit Co. v. Allen, 27 C. C. A. 87, 82 Fed. 148.

116 White v. Dougherty, Mart. & Y. (Tenn.) 308.

117 Notwithstanding an offer to prove that it was received as collateral only. Parker v. McCrea, 7 U. C. C. P. 124.

118 Bank of British North America v. Jones, 8 U. C. Q. B. 86. So, under a trust deed given by the surety after maturity of the note. Smith v. Clopton, 48 Miss. 66. And the property represented by a collateral mortgage will discharge the note, if received absolutely in satisfaction, although it afterward proves insufficient in amount. Smith v. Judson, 4 U. C. Q. B. (O. S.) 134. 119 Caryl v. Williams, 7 Lans. (N. Y.) 416.

120 Jarratt v. Wilson, 70 N. C. 401.

121 Noble v. Edes, 51 Me. 34.

122 Makepeace v. College, 10 Pick. (Mass.) 298.

123 Ives v. Bank, 12 Mich. 361.

waiver of his objection and a discharge of the bill; 124 even though he repudiates the mortgage for fraud, without formally releasing it or reconveying the property.125

But the foreclosure of a chattel mortgage made by a married woman as security for her husband's note will not operate as a payment, pending action brought by her for conversion.126

§ 1827.

129

Satisfaction by Services or Merchandise.

An agreement to credit on a note work afterwards done for the payee will amount to a satisfaction.127 So, an agreement that the maker's payment as surety on a bond of the payee should be credited on his note; 128 or an agreement on the maker's part to procure a transfer and release of certain liens on the payee's land; or even a verbal agreement for satisfaction by insurance premiums to be paid by the maker, and orders to be drawn on him, the payments being made accordingly; 130 or by an order for mules, the order being so received, and the mules ready for delivery.1 If A. gives his note to B. for goods purchased by B. of C., in fraud of C.'s creditors, and transferred to A. to sell and pay the proceeds to C., A.'s performance of the agreement will be a satisfaction of the note, as against C.'s creditors.132 And if the holder receives from the maker a power of attorney to collect certain debts, agreeing that

124 Johnson v. Watt, 15 La. Ann. 428. 125 Adams v. Nelson, 22 U. C. Q. B. 199.

126 Handy v. Tracy, 150 Mass. 524, 23 N. E. 226.

131

127 Jennings v. Davis, 31 Conn. 134. So, a bill for board, if so agreed. Whittaker v. Ordway (N. H.) 38 Atl. 789. But an administrator's agreement, as holder, to accept in payment work done on lands of his intestate, can only be enforced by independent suit or by way of counterclaim. Cook v. Cook, 24 S. C. 204.

128 Ward v. Winship, 12 Mass. 481.

129 Treadwell v. Himmelmann, 50 Cal. 9.

130 And such defense is admissible under a plea of payment. Jones v. Snow, 64 Cal. 456, 2 Pac. 28.

131 Pettigrew v. Dix, 33 Tex. 277. ery. Costar v. Davies, 8 Ark. 213. became void by the debtor's subsequent bankruptcy. Maxfield v. Jones, 76 Me. 135.

Although they ran away before deliv But not so a delivery of goods, which

132 Carpenter v. McClure, 37 Vt. 127.