Brooks v. White

Dewet, J.

The plaintiffs contend that the evidence, offei ed to sustain the defence of an accord and satisfaction of the *285 note upon which this action is instituted, cannot avail the defendant, because by his own showing it was only the payment and acceptance of a less sum than the amount due on the note. The general principle, that the acceptance of a less sum in money than is actually due cannot be a satisfaction and will not operate to extinguish the whole debt, although agreed by the creditor to be received upon such condition, seems to be ; ecognized in books of unquestionable authority. The reason of the rule is, as stated by Lord Ellenborough,- in Fitch v. Sutton, 5 East, 232, that there must be some consideration for the relinquishment of the excess due beyond the sum paid ; some thing to show a possibility of benefit to the party thus relinquishing a legal right; otherwise the agreement is nudum, pactum,. So in Pinnel’s case, 5 Co. 117, where it was resolved that payment of a less sum, on the day, in satisfaction of the greater, cannot be a satisfaction of the whole, because it appears to the judges that by.no possibility a less sum of money can be a satisfaction to the plaintiff for a greater sum : But the gift of a horse or the like, in satisfaction, is good ; for it shall be intended that the horse might be more beneficial to the party than the money, or he would not have accepted it in satisfaction.

The foundation of the rule seems therefore to be, that in the case of the acceptance of a less sum of money in discharge of a debt, inasmuch as there is no new consideration, no benefit accruing to the creditor, and no damage to the debtor, the creditor may violate, with legal impunity, his promise to his debtor, however freely and understandingly made. This rule, which obviously may be urged in violation of good faith, is not to be extended beyond its precise import; and whenever the technical reason for its application does not exist, the rule itself is not to be applied. Hence judges have been disposed to take out of its application all those cases where there was any new consideration, or any collateral benefit received by the payee, which might raise a technical legal consideration, although it was quite apparent that such consideration was far less than the amount of the sum due. Thus, where any other articles than money are received and agreed to be accepted in full satisfaction of a debt, *286 the court will not estimate their value in money’s worth, but hold the consideration to be good, and the promise to discharge tl:e entire debt a valid contract. This distinction was recognized in the resolutions in Pinnel's case, already cited. In Boyd v. Hitch cock, 20 Johns. 76 , the receiving of a note of hand for a less sum than was due, with the name of another person as promisor or indorser, where the creditor agreed to accept the same as a satisfaction of the whole debt, was held a valid discharge, as an accord and satisfaction. In that case, the court say, “ here was a beneficial interest acquired, and a valuaole consideration received by the plaintiffs, when they agreed to accept less than their whole demand.” The same rule was adopted in Kellogg v. Richards, 14 Wend. 116 , where it was held that if a creditor, on a compromise with his debtor, accept the note of a third person for a less sum than the debt due to him, in full payment of such debt, the acceptance of such note may be pleaded as an accord and satisfaction in bar of an action to recover the balance due beyond the amount thus received. Nelson, J. says, “ it is true there does not seem to be much if any ground of distinction between such a case and one where a less sum of money is paid and agreed to be accepted in full, which would not be a good plea. But the distinction is as sound as that which exists between the cases of receiving a less sum of money, and an article of property just half the value of the sum due, which would constitute a perfect defence. The rule, that the payment of a less sum of money, though agreed to be received in full satisfaction of a debt exceeding that amount, shall not be so considered in contemplation of law, is technical, and not very well supported by reason. Courts therefore have departed from it on slight distinctions.”

But there is another principle, which the facts in the present case authorize us to apply, which is equally fatal to the maintenance of the technical objection relied on by the plaintiffs. The same ancient authority which declares that the payment and acceptance of a less sum, on the day the debt becomes due, in satisfaction of a greater, is no defence beyond the amount paid, also declares that the payment and acceptance of a less *287 sum, before the day of payment has arrived, in satisfaction of the whole, would be a good accord and satisfaction ; for it is said, peradventure parcel of the sum before the day it fell due would be more beneficial to him than the whole at the day; and the value of the satisfaction is not material. Pinnel's case, 5 Co. 117. And the same doctrine is found in Co. Lit. 212 b, where it is said, “if the obligor pay a lesser sum, either before the day, or at another place than is limited by the condition, and the obligee receivethit, this is a good satisfaction.” Yelv. (Amer. ed.) 11a, note. The transfer of the notes by Downing was therefore a sufficient consideration for a promise by the plaintiffs to receive them in full discharge of the note ; and the only remaining inquiry is, whether in its terms the agreement was broad enough to constitute an accord and satisfaction, and a discharge of all the parties to the note, or whether it was restricted to Downing alone. The receipt given by the plaintiffs has been casually lost; but evidence was oflered to the jury tending to show that the receipt given to Downing was in its terms amply sufficient to embrace the note, and without any reservation, on the face of it, or any right to collect any part of it of the other promisors. The court left it to the jury to find whether the receipt was intended as a discharge to Downing only, or to all the promisors ; and the plaintiffs now insist that this was erroneous, and that it was not competent for the jury to pass upon the intent of the parties as to the effect of this agreement. As it seems to us, this objection cannot avail the plaintiff. It was not submitting to them the construction of a written instrument. Their first inquiry was, whether the plaintiffs had given a discharge of this demand. If that discharge was in full of all demands, as the evidence offered tended to show, it was competent to inquire what demands were the subject matter of the adjustment, and were understood by the parties to be embraced in the receipt; whether the individual liabilities of Downing only, or the liabilities of the late firm of White & Co., of which firm Downing was a member.

The case of receipts is an exception to the general rule that oral testimony is not admissible to contradict or vary a written *288 contract. They may always be explained by oral testimony. Stackpole v. Arnold, 11 Mass. 27 . Johnson v. Johnson, 11 Mass. 363 . Harden v. Gordon, 2 Mason, 541 . Rollins v. Dyer, 4 Shepley, 475.

Judgment on the verdict.