tiable note, which is received in satisfaction of the debt, he may sue at once and recover the amount of his note of the principal, (*) or contribution from a co-surety. (*)

1

§ 798. Note must be accepted as payment.-* It is to be borne in mind, however, in all these cases, that it is essential that the note should be given and accepted by the creditor as full payment and in complete satisfaction. (©) This has been repeatedly decided. So where an action of covenant was brought by plaintiffs, who had sold the defendants certain coal mines, for which they covenanted to pay a sum certain in instalments, the defendants pleaded payment of part, and a bill of exchange given for payment and in satisfaction of the residue on which judgment had been recovered. To this plea the plaintiff demurred; and it was held bad, because it was not averred that the bill was accepted in satisfaction, nor that it had produced it; that, not having been accepted as satisfaction for the debt, the bill could only operate as a collateral security, and that, therefore, the plaintiff might resort to his original remedy on the covenant; and, said Le Blanc, J.: "The giving of another security, which in itself would not operate as an extinguishment of the original one, cannot operate as such by being pursued to judgment, unless it produce the fruit of a judgment." The principle of this case has been repeatedly recog

1 Drake v. Mitchell, 3 East 25T.

(*) Bone v. Torry, 16 Ark. 83; Mims v. McDowell, 4 Ga. 182; White v. Miller, 47 Ind. 385; Pearson v. Parker, 3 N. H. 366; Elwood v. Deifendorf, 5 Barb. 398, 410; Peters v. Barnhill, 1 Hill (S. C.) 234; contra, Brisendine v. Martin, 1 Ired. L. 286.

() Pinkston v. Taliaferro, 9 Ala. 547; Anthony v. Percifull, 8 Ark. 494; Ralston v. Wood, 15 Ill. 159; Keller v. Boatman, 49 Ind. 104; White v. Carlton, 52 Ind. 371; Robertson v. Maxcey, 6 Dana 101; contra, Brisendine v. Martin, 1 Ired. L. 286; Nowland v. Martin, 1 Ired. L. 307.

(c) White v. Miller, 47 Ind. 385.

nized in New York,' where it is held that a note is not payment of a precedent debt, unless there is an express agreement to receive it as payment.'

In another case, in New York,' the doctrine that negotiable notes are to be considered as money, has been restricted to cases where the notes have been parted with to bona fide holders for value. The plaintiff, Reed, bought of the defendants a threshing-machine, and gave three negotiable notes of $200 each for the purchasemoney. The machine proving worthless, the plaintiff brought an action for money paid against the defendants. A verdict was obtained, but it was set aside and a new trial granted, the court, by Savage, C. J., saying:

"Had the notes in question been given to a third person in payment and discharge of a debt due by the defendants to such third person, then the case would have come within previous decisions. But I cannot find that the giving a note ever has been considered, as between maker and payee, the payment of money by the former to the latter. In my judgment, the mere giving a note cannot be considered payment of the very money for which such note is given as security, so as to justify a recovery of it by the maker against the payee."

In a more recent action, in the same State, where the facts hypothetically put by the court in the case last cited, were actually presented, the notes having been

1 Witherby v. Mann, 11 Johns. 518; Tobey v. Barber, 5 Johns. 68; Johnson v. Weed, 9 Johns. 310.

2 In Massachusetts it would seem that, in some cases, this express agreement is inferred from the mere fact of giving a negotiable note.

The giving a negotiable note for a debt in a single contract raises a legal presumption that the note was received in payment, and will operate as a discharge of the single contract, unless the presumption be controlled by evidence of a contrary intent. Thacher v. Dinsmore, 5 Mass. 299; Maneely 7. M'Gee, 6 Mass. 143; Huse v. Alexander, 2 Met. 157. So, also, in that State it is

held, in an action by the indorsee against the maker of a negotiable note, indorsed when overdue, that a negotiable note made to the defendant by the payee, intended as a payment of the note, may be shown in defense as a set-off. Holland v. Makepeace, 8 Mass. 418; Sargent v. Southgate, 5 Pick. 312. A negotiable promissory note, by the common law of this State, is holden to be a discharge of a simple contract on which it is founded." Emerson v. Prov. H. M. Co., 12 Mass. 237

3 Van Ostrand v. Reed, 1 Wend. 424,

430.

transferred to a bona fide holder for value, the plaintiff was held entitled to recover as for money paid and received.1 **

$799. Payment by bond or non-negotiable note.—It is held in some jurisdictions that payment by any obligation of the surety other than a negotiable promissory note, though accepted in satisfaction of the debt, will not give an immediate right of action to the surety; (*) and the attempt is made to reconcile the English cases upon this distinction. Most of the cases recognize no such distinction; and in some cases it is expressly denied. () There seems no foundation for it, and it indeed appears to have arisen from the form of action brought by the surety. The action was usually brought on a count for money paid, and the courts making the distinction were averse to allowing that count to lie when neither money nor a negotiable note had been given. It is needless to say that a distinction founded entirely upon the form of action should not be supported at the present time. The cases allowing an action where payment has been made by the property of the surety, now to be considered, seem opposed to it.

800. Payment in land or goods.—* It remains to be seen how far the conveyance or transfer of land or other property in discharge of a pecuniary liability furnishes the surety an action against his principal.

In an action of assumpsit for money paid,' the defendant, on the 12th of April, 1817, obtained from the plaintiffs their indorsement on two notes, each for $2,059.35.

1 Colville v. Besly, 2 Denio 139.

2 Ainslie v. Wilson, 7 Cow. 662, 668.

(*) Bennett v. Buchanan, 3 Ind. 47; Morrison v. Berkey, 7 S. & R. 238; Boulware v. Robinson, 8 Tex. 327.

() Robertson v. Maxcey, 6 Dana 101; McVicar v. Royce, 17 Up. Can. Q. B. 529.

The notes were indorsed to John B. Murray & Son, then again indorsed over, and paid by the subsequent indorser. The plaintiffs executed to the Murrays a mortgage on four lots (subject to a previous mortgage for $1,770), as a security for the indorsements, and subsequently released the equity of redemption to the Murrays, who received the release as payment of $1,200 on the plaintiffs' indorsement, and discharged them from all further liability as indorsers. Evidence was taken as to the value of the lots, and the jury found for the plaintiffs $804.45. On a motion for a new trial, it was contended that the conveyance of land would not sustain an action for money paid; but the court, after deciding that under Cumming v. Hackley,' and Taylor v. Higgins,' the mortgage was no payment, used this language, as to the release of the equity of redemption: "We have no doubt that, as the conveyance of the land was received in discharge of a money debt due from the plaintiff, it is in judgment of law to be considered the same thing as if the plaintiff had actually paid money. The Murrays received it as money, or an equivalent for money. They had the right of electing. To the defendant it was immaterial whether the payment was made in one way or the other." And a new trial was denied. This case, however, leaves the question open as to the rate at which land under such circumstances is to be taken. The court say: "There is some question whether the equity of redemption, taken subject to the previous mortgage, was equal in value to the $1,200. The jury found $804.45 only; and, from the evidence, we think they were warranted in finding that amount." This would seem to imply that the actual and not agreed value of the land is to be the guide. Nor does the question appear to have been raised how

18 Johns. 202.

2

* 3 East 169

far the maker and principal debtor, Wilson, the defendant, was benefited by this transaction. The court say, that on the conveyance of the land at the agreed valuation of $1,200, and the release of the plaintiff, Ainslie, "the remainder due on the notes constituted a valid claim in favor of the Murrays, against Wilson, the maker." But is it clear that the claim of the Murrays as against Wilson was good for only the remainder? If the Murrays had sued Wilson on the note, what, as between them, would have been the measure of damages? Could, in such an action, Wilson have had the benefit of the valuation of the land at $1,200 to which he was not privy? As between the Murrays and Wilson, was the land satisfaction for anything more than it was actually worth? What if it had been foreclosed under the first mortgage, and no surplus realized, would Wilson have still had the benefit of the $1,200 agreement?

In a subsequent case,' where the plaintiff, an accommodation maker, had paid the defendant's debt, after judgment recovered for $401.61, by a conveyance of land for a consideration expressed in the deed of $548.31, it was held, after affirming the main point decided in the last case, that the defendant was at liberty to reduce the amount of the recovery by showing that the land conveyed in satisfaction of the judgment was not of value equal to the amount of the note and interest; and this evidence having been excluded at the circuit, a new trial was ordered.** So where the land of the surety was sold on execution by the creditor, he may maintain an action; (*) and the same was held where a mortgage of the surety's land was accepted as payment.()

1 Bonney v. Seely, 2 Wend. 481.

(*) Lord v. Staples, 23 N. H. 448.

() McVicar v. Royce, 17 Up. Can. Q. B. 529.