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that extent.1 If he transfers the collateral for less than its face it is his loss. He must settle with the debtor for the whole nominal value of the collateral, though he settled with the maker for less, or took a note in part satisfaction. A creditor may relinquish a collateral security to his debtor without the consent of other creditors, and not thereby lose his resort to the debtor's property. But a surety would be discharged by such relinquishment; for the creditor is bound to hold security for the benefit of the surety as well as for himself; and if he parts with it without the knowledge or against the will of the surety he will lose his claim against him to the value of what is so surrendered. One who receives from his debtor as collateral negotiable paper of a third person indorsed by the debtor makes it his own and releases the debtor's indorsement if he neglects to protest it for non-payment. A creditor

1 Hawks v. Hinchcliff, 17 Barb. 492; Looney v. District of Columbia, 113 U. S. 258; Donnelly v. Same, 119 id. 339; Williams, Ex parte, 17 S. C. 396; Adger v. Pringle, 11 id. 535; Townsends v. Stevenson, 4 Rich. 62. 2 Id.

3 Depuy v. Clark, 12 Ind. 427. See Garlick v. James, 12 Johns. 146; Phillips v. Thompson, 2 Johns. Ch. 418.

4 Dyott's Estate, 2 W. & S. 463. 5 Stewart v. Davis, 18 Ind. 74. vol. 2, ch. 7.

See

6 Whitten v. Wright, 34 Mich. 92. In this case, upon the trial the plaintiff offered to show that at the time the note was given the maker was insolvent, that he was so at the time of its maturity, and continued so up to the time of the trial, for the purpose of showing that though the note was not properly protested the defendant lost nothing by it. That evidence was held properly excluded. Marston, J., delivering the opinion of the court, said: "It is of the utmost importance that no uncertainty should exist as to the rights and liabilities of parties to

negotiable paper. Should the introduction of evidence upon the trial be sanctioned to show that an indorser had not suffered any injury from a want of protest and notice,

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element of uncertainty would then exist, and the way would be opened for a new class of questions and much needless litigation. The value of a note cannot always be determined from the solvency or insolvency alone of the maker. As was said in Rose v. Lewis, 10 Mich. 485, the value of negotiable paper is well understood not to be absolutely dependent on the amount of property liable to execution which may be possessed by the maker. A very large portion of current securities of undoubted goodness would, under such a test, be worthless. And in cases where the holder of such paper is indebted to the maker, it may be as valuable to him, by way of set-off, as if the maker were wealthy and in sound credit. The value of commercial paper must always depend very much upon the integrity and business habits of those who issue it. And we cannot perceive the justice or

having a note for the purchase-money of a slave, on the [384] death of the purchaser took possession of the slave; he was held liable for the injury done to the estate as executor de son tort, and the amount of such liability payment so far upon the note. A creditor who included in a mortgage a premium for a policy of insurance on the life of the debtor as additional security for the debt and neglected to effect the insurance was held liable as upon an express agreement to insure for the amount of the sum for which he should have procured insurance.2

§ 230. Who may make payments. The general rule as to payment or satisfaction by a third person not himself liable as a co-contractor or otherwise seems to be that it is not sufficient to discharge the debtor unless it is made as agent for him and on his account, and with his prior authority or subsequent ratification; but the debtor may ratify the payment by pleading it unless he has previously disavowed it.3

good sense of any rule which should disregard the results of common experience.' If the note in this case had been properly protested and notice given to the defendant, he might have been able to collect it or secure its payment. We think the evidence was properly excluded.”

1 Finnell v. Meaux, 3 Bush, 449. 2 Soule v. Union Bank, 45 Barb. 111; 30 How. Pr. 105.

3 Gray v. Herman, 75 Wis. 453; Walter v. James, L. R. 6 Exch. 124; Simpson v. Eggington, 10 Exch. 845; James v. Isaacs, 12 C. B. 791; Belshaw v. Bush, 11 id. 191; Jones v. Broadhurst, 9 id. 193; Clow v. Borst, 6 Johns. 37; Stark v. Thompson, 3 T. B. Mon. 296; Woolfolk v. McDowell, 9 Dana, 268; Lucas v. Wilkinson, 1 Hurl. & N. 420; Atlantic Dock Co. v. Mayor, 53 N. Y. 64; Bleakley v. White, 4 Paige, 654.

In a note to Simpson v. Eggington it is said that "the rule which requires the consideration to move between the parties has been modified

in many important particulars by the introduction of the action for money had and received, and it would seem only reasonable to permit a debt to be extinguished by a payment made to a creditor whenever the circumstances are such that the amount paid might have been recovered by the debtor had no debt existed."

The early cases on the subject are considered by Creswell, J., in Jones v. Broadhurst, supra, and also in the arguments of counsel in Walter v. James, supra. See Hooper's Case, 2 Leon. 110; Grimes v. Blofield, Cro. Eliz. 541; Edgecombe v. Rodd, 5 East, 294.

In Belshaw v. Bush, 11 C. B. 191 (1851), Maule, J., said: "If a bill given by the defendant himself on account of the debt operate as a conditional payment, and so be of the same force as an absolute payment by the defendant, if the condition by which it is to be defeated has not arisen, there seems no reason why a bill given by a stranger for and on

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In a recent Wisconsin case the defendant became a debtor for the benefit of a third person, who made payment of his own volition and on his own behalf. The trial court ruled that it was not competent for the party sued to plead payment by another party who was not sued, and who could not be affected by the judgment. Cole, C. J., considers this ruling by asking: "Why not, if it is shown that the creditor accepts the payment in satisfaction of the debt? Can it be said that the obligation is still in force? What sense or reason is there in any such technical rule as that, if it exists? If a debt is fully paid it would seem according to plain common. sense that the obligation was extinguished and is no longer in force as a contract. What concern is it to the creditor who pays his debt, especially where he accepts the payment made in satisfaction of his debt?" If the creditor accepts payment under a mistake of fact, as by erroneously supposing

account of the debt should not operate as a conditional payment by the stranger; and if it have that operation, the plea in the present case will have the same effect as if it had alleged that the money was paid by William Bush (the stranger) for and on account of the debt. But, if a stranger give money in payment, absolute or conditional, of the debt of another, and the causes of action in respect to it, it must be payment on behalf of the other, against whom alone the causes of action exist, and, if adopted by him, will operate as payment by himself." Coke, Litt. 206b, 36 H. 6.

James v. Isaacs, 12 C. B. 791 (1852). In assumpsit for work and labor the defendant pleaded that the money mentioned in the declaration accrued due to the plaintiff under an agreement for the building of a church; that the plaintiff having suspended the work another agreement was entered into between him and one A. under which the plaintiff, in consideration of certain stipulated payments, undertook to complete the

work and to rely for the residue of the contract price upon certain subscriptions which were to be raised; and that A. duly made and the plaintiff received the payments stipulated for by the second agreement in satisfaction and discharge of the original agreement between the plaintiff and the defendants, and of the performance thereof by the latter. Held, that the plea was bad in substance inasmuch as it did not show that the agreement made by A. and the payments under it were intended to be made for the benefit of the defendants, and that they adopted A.'s acts. See 2 Am. Lead. Cas. (4th ed.) 270; Wellington v. Kelly, 84 N. Y. 543; Wolff v. Walter, 56 Mo. 292.

1 Gray v. Herman, 75 Wis. 453.

In Harrison v. Hicks, 1 Port. 423, the payment of a debt by a stranger to the contract was held an extinguishment of it, whether made by the debtor's consent or not.

In Pearce v. Bryant Coal Co., 121 Ill. 590, payment by a trustee at the request of an officer of the corporation owing the debt extinguished the

that the person who made it had authority to do so, he may return the money and apply to his debtor for the payment of his demand. Satisfaction by one joint tort-feasor or joint debtor is a bar to an action against another. If a creditor knowing the liability of his debtor takes the individual note of his agent in payment without at the same time doing anything to indicate a purpose to hold the principal, the latter is discharged.3

A purchaser of mortgaged property subject to the [387] mortgage may pay the debt, and payment by him extinguishes the lien.1 If a mere stranger or volunteer pays a debt for which another is bound he cannot be subrogated to the creditor's rights in respect to the security given by the real debtor. But if the person who pays the debt is compelled to pay for the protection of his own interests and rights, then he is entitled to such subrogation."

§ 231. To whom payment may be made. Payment must be made to the creditor or to one authorized by him to receive it as agent or assignee; or to one whom the law substitutes in his place as executor, administrator, creditor by trustee process, or the like. If it is made to one entitled to receive it the debt is extinguished though there was a mistake as to the right in which the amount paid accrued. Payment of a judgment or decree to an attorney of record who obtained it, before his authority is revoked and notice of it given, is valid as to the party making the payment; but payment of a judgment after it has been assigned to one who is merely the beneficial owner is not a discharge of it; it is otherwise when evidence of the indebtedness so that the trustee could not enforce it.

Payment made by one who is primarily liable extinguishes the debt. Smith v. Waugh, 84 Va. 806.

3 Ames P. & P. Co. v. Tucker, 8 Mo. App. 95; Paige v. Stone, 10 Met. 169; Wilkin v. Reed, 6 Me. 220; French v. Price, 24 Pick. 22; Hyde v. Paige, 9 Barb. 250. A less extended rule is

1 Walter v. James, L. R. 6 Exch. applied in some cases. Coleman v.

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payment is made to the person having the legal title without notice of his assignment. A sheriff is only entitled to receive payment of an execution when he is in possession of a judicial mandate directing him to make the collection of the sum called for, unless he is the creditor's agent. Payment made to the party designated by the creditor is good. If a principal has clothed his agent with the indicia of authority to receive payment, as by intrusting to him the possession of the goods to be sold, the purchaser is warranted in paying the price of such as he buys to the agent; but if the latter is not in possession of the goods and is only authorized to make sales, payments made to him are at the risk of the payer. Payment to an agent is unauthorized after the death of the principal." Possession of mercantile paper authorizes the receipt of the [388] money and even before it is due if the possessor has authority from the owner to collect the amount payable on it. But circumstances may impeach a payment made to one having possession of the evidence of the debt. Thus, payment by the maker of a note before maturity to the son of the holder, who had been forbidden to take payment, with the knowledge of the party paying, is not a good payment, although the note is delivered up by the son; the father may maintain a suit for the note, not having ratified the payment.8 The circumstances, however, must show payment in bad faith; it is not enough that there is gross negligence in not ascertaining the party entitled to the money. Payment of a lost

1 Seymour v. Smith, 114 N. Y. 481. 2 Bailey v. Hester, 101 N. C. 538. 3 Walker v. Crosby, 38 Minn. 34; Sailer v. Barnousky, 60 Wis. 169; Fiske v. Fisher, 100 Mass. 97.

4 Butler v. Dorman, 68 Mo. 298; Keown v. Vogel, 25 Mo. App. 35; Pardridge v. Bailey, 20 Ill. App. 351; Putnam v. French, 53 Vt. 404; Hoskins v. Johnson, 5 Sneed (Tenn.), 470; Capel v. Thornton, 3 C. & P. 352; Dean v. International Tile Co., 47 Hun, 319; Higgins v. Moore, 34 N. Y. 417; Artley v. Morrison, 73 Iowa, 132; Adams v. Kearney, 2 E. D. Smith, 42. See Stanton v. French, 83 Cal. 194.

If money is paid to an agent who is not authorized to receive it, the payment is ratified by the principal's bringing an action against him to recover it. Bailey v. United States, 15 Ct. of Cls. 490. And by suing to recover the purchase-price of goods sold. Pardridge v. Bailey, supru. See Estey v. Snyder, 76 Wis. 624.

5 Lochenmeyer v. Fogarty, 112 Ill. 572.

6 Bliss v. Cutter, 19 Barb.. Cheney v. Libby, 134 U. S. 68.

7

8 Kingman v. Pierce, 17 Mass. 247. 9 Cothran v. Collins, 29 How. Pr. 113; Haescig v. Brown, 34 Mich. 503.

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