[22]

contradiction of the latter *part; that one part destroys the other, leaving the whole a nullity. If this be so, there is nothing to support the referee's decision as to his conclusions of law that the appellants were indebted upon the old notes,

Holladay & Carey, for Respondents.

I. The agreement of December, 1856, is not set up in the answer, and no defense can be predicated upon it. The appellants had their option to rely upon this agreement as a composition, or upon the new notes, and they elected to plead, as a bar to this action, the new notes.

II. It is everywhere admitted that the extinguishment of one cause of action by the substitution of another of the same degree, can only be by way of accord and satisfaction which requires a distinct and executed agreement between the parties, and cannot be implied by the law in the absence of such an agreement.

In Clark v. Mundol, 1 Salk. 124, it was held, "that a bill should never go in discharge of a precedent debt, except it be a part of the contract that it should be so.'

The rule thus laid down, which has never been disputed in England, is well illustrated by the case of Tobey v. Barber, 9 Johns. 310, and is followed in most of the States of this country, where it is generally admitted that taking a negotiable instrument made by a debtor, or by a third person, on account of a preexisting debt, does not imply a discharge or extinguishment of the demand for which it is taken, nor confine the creditor to proceeding in the new cause of action, unless such was the understanding of the parties. The existence of such an agreement is, in general, a question for the jury, although it would seem to be the duty of the Court to instruct them, that the mere fact of accepting such an instrument as payment, without more, will not sustain a finding, that it was accepted as satisfaction. But for a full discussion of this whole matter see 2 Ames' Leading Cases, 3d ed., title, Note or Bill taken for Debt, 162-179, and cases there cited; also 12 Cal. 317.

III. The agreement of December, 1856, even if it could be considered under the pleadings, constitutes no defense, for

the reason that it was not carried out, but was ignored and abandoned. The *new notes were not given in [23] pursuance of the agreement, but in direct opposition to its terms.

COPE, J. delivered the opinion-of-the-Court-NORTON, J. concurring.

A rehearing was granted in this case for the purpose of considering more fully the matters relied upon by way of defense. After giving these matters the consideration which their importance deserves, we see no reason for a conclusion different from that previously attained. The action is upon four promissory notes, and it is alleged in defense, that before the action was commenced the defendants executed to the plaintiffs certain other notes, in satisfaction of the notes in suit. This is the only defense set up, and the finding of the referee, that the new notes, though given on account of the old, were not received in satisfaction, is undoubtedly correct.

We have repeatedly held, that a note given in consideration of an antecedent indebtedness does not per se discharge the debt; and that in the absence of an agreement to the contrary, the only effect is to suspend the remedy until the maturity of the note. There was no agreement upon the subject in this case, and the only difficulty that suggests itself grows out of a paper executed in the city of New York, which reads as follows: "We, the undersigned, hereby agree to extend the time of payment of the indebtedness of Messrs. P. H. & P. A. Owens, ship-chandlers of San Francisco, to us, so that the aggregate of their outstanding debts, or notes, shall become due in four equal payments of six, twelve, eighteen, and twenty-four months from date, with interest at seven per cent. per annum, and to accept their notes to that effect in exchange for those now held by us." This paper is signed by various parties, including the plaintiffs, and, except as to the latter, appears to have been substantially carried out by an exchange of notes upon the basis therein mentioned. In respect to the latter, the proof shows that it was not intended to be acted upon, and the notes subsequently executed were given, not only in disregard of, but in direct repugnance to its terms. This being the case, the paper and the notes are to be re

garded as separate transactions, and upon the question of satisfaction the paper has no bearing or relevancy. It [24] is con-*tended that the paper itself operates as a de

fense, and the counsel for the defendants has placed on file an able argument in support of this view. The argument is met, however, by the fact that this defense is not pleaded, and the failure in that respect precludes the defendants from taking advantage of it. The case is that of a compromise between debtors in failing circumstances and their creditors, and counsel is correct in saying that in such matters the law requires the utmost good faith. The parties are held to a strict and literal compliance with their agreement, and secret arrangements securing advantages to particular creditors are absolutely void. And they are not only void as to other creditors, but even as against the assenting debtor, and the Courts have uniformly refused to enforce them. (Story's Eq. sec. 379.) The notes were executed in fraud of the compromise, and tested by the agreement they are void; but whether void or valid the result is the same. In either case the plaintiffs are entitled to recover, for there is no evidence to sustain the answer, and no foundation for a defense upon the agreement. It is true, the agreement was given in evidence without objection, but the case must be determined upon the issue presented in the pleadings. The only question. is whether the notes were received in satisfaction, and there is no doubt that the referee arrived at the proper conclusion. The judgment is affirmed.

FALLON v. BUTLER et al., EXECUTORS, ETC.

: FORECLOSURE OF MORTGAGE AGAINST ESTATE OF DECEASED PERSON.-An action may be maintained in the District Court against an executor or administrator, to foreclose a mortgage upon real estate executed by his testator or intestate, although the debt secured by the mortgage has been presented as a claim to the

Affirmed as to jurisdiction in Pechaud v. Rinquet, post 76. Cited as authority in Willis v, Farley, 24 Cal. 498; Matter of Estate of Orr, 29 Cal. 104; Brown v. Orr, Id. 122; and see Hentsch v. Porter, 10 Cal. 559.

executor or administrator and allowed by him, and also by the Probate Judge of the county, where the only object of the action is to reach the property mortgaged and subject it to sale, and have the proceeds applied to the payment of the debt secured, and a judgment is not asked against the general estate of the deceased for the debt or any part of it.

"PROBATE SALES, TO WHAT STATUTE APPLIES.-*The provision of the act regu- [25] lating the settlement of the estates of deceased persons, declaring that no sale

of any property of an estate shall be valid unless made upon an order of the Probate Court, applies only to sales by executors and administrators. It has no reference to judicial sales under the decrees of the District Courts, nor to sales in pursuance of testamentary authority.

316 CLAIMS" DEFINED.-The term "claims," as used in the act, does not embrace mortgage liens, but has reference only to such debts or demands against the decedent as might have been enforced against him in his lifetime by personal actions for the recovery of money, and upon which only a money judgment could have been rendered.

APPEAL from the Fourth Judicial District. The facts are stated in the opinion.

Hoge & Wilson, for Appellants, cited Ellissen v. Halleck, 6 Cal. 386; Falkner v. Folsom's Executors, Id. 412; Act to regulate the Settlement of the Estates of Deceased Persons, secs. 133, 134, 136, 140, and 148.

Delos Lake, for Respondent.

The only question in the case is, as to the right of a mortgagee to maintain an action in a Court of Equity to foreclose a mortgage, the mortgagor being dead; or, in other words, whether Probate Courts are vested by statute with exclusive jurisdisction to enfore such mortgage.

The only doubt or difficulty there is in the case arises from the decisions in the two cases of Ellissen v. Halleck, 6 Cal. 386, and Falkner v. Folsom's Executors, Id. 412.

But we submit, that these cases, if not wholly overruled, have been so qualified and shaken by the later cases of Belloc v. Rogers, 9 Cal. 125; Carr v. Caldwell, 10 Id. 380; Hentsch v. Porter, Id. 555, as to leave us at liberty to appeal to the statute itself.

As to sales by executors, see Belloc v. Rogers, 9 Cal. 148; Payne v. Payne, 18 Cal. 302; Correll v. Buckalew, 14 Cal. 642; White v. Moses, post 44; Larco v. Casaneuava, 30 Cal. 569; Norris v. Harris, 15 Ćal. 256; Sichel v. Carillo, 42 Cal. 505; Pitte v. Shipley, 46 Cal. 158; Hibernia S. and L. Soc. v. Hayes, 56 Cal. 306.

As to the term "claim" and what it includes, commented on and doubted in Ellis v. Polhemus, 27 Cal. 354; and see Gray v. Palmer, 9 Cal. 636; Carr v. Caldwell, 10 Cal. 385; Pico v. De la Guerra, 18 Cal. 427. As to payment of mortgage debt out of general estate, approved in Willis v. Farley, 21 Cal. 498; Estate of McCausland, 52 Cal. 577; Myers v. Reinstein, 67 Cal. 92. See 2 Nev. 332, 333, 338.

The whole question hinges on the proper meaning of the term "claim against an estate," as used in section one hundred and thirty-six of the Probate Act and the preceding sections, and whether a naked mortgage lien is such a claim against the estate of a deceased person.

We think it clear that under the statute, whatever was a personal debt or liability of the decedent becomes by his

death a "claim," against his estate, and that it is only [26] such claims or debts *as are enforcible against the de

cedent in his lifetime by ordinary personal actions for the recovery of money that are required by law to be presented to the executor or administrator for allowance, and upon which by section one hundred and thirty-six no action can be maintained.

All such claims, if allowed voluntarily, become acknowledged debts of the estate; i. e., debts of the decedent, and are to be paid in due course of administration.

In case a claim is rejected, a suit may be maintained against the executor or administrator, but a recovery in such an action has not the ordinary force or effect of a judgment. It only operates as a forced allowance, and is still to be paid in due course of administration. (Sec. 140.)

Hence it will be seen, that in no case can a claim against the estate be collected by action. It can only be established and can only be enforced in the Probate Court in due course of administration.

The object sought to be attained in this action is to subject the lands mortgaged to a sale for the satisfaction of the mortgage debt. No judgment or decree is asked to bind the estate of the decedent, nor for the payment of any moneys whatever out of the estate. The indebtedness is alleged it is true, but only for the purpose of showing a valid consideration for the mortgage, and in order that it may be judicially determined how much of the money realized on a sale the mortgagee shall be entitled to receive.

It is to be observed, that no provision is made by the statute for subjecting mortgaged premises to sale by the Probate Court for the purpose of satisfying the mortgage.

The cases in which sales of real estate by executors are authorized are confined to those where the personal property