Daniels v. Hatch

The Chief Justice delivered the opinion of the court.

The question raised, and very elaborately argued on the briefs of counsel in this case is, whether a parol agreement by a creditor to accept from his debtor by way of compromiso less than is due, is a discharge or satisfaction of the original debt, or may be set up in bar as an accord and satisfaction of the whole claim.

It would seem to be well settled by authority, that such an agreement is nudum pactum and void, and although payment of the sum agreed upon by way of composition be tendered, or actually received, it is no discharge of the original debt. Although it has been said, and I think with much truth, that the rule rests upon reasons rather technical than satisfactory, it was long since adopted, and is supported by very great weight of authority. Cumber v. Wane, 1 Stran. 425; Heathcote v. Cruikshanks, 2 T. R. 24; Lynn v. Bruce, 2 H. Bl. 317; Fitch v. Sutton, 5 East. 230; Down v. Hatcher, 101 Ad. & El. 121; 1 Smith’s lead. cas. 146; Harrison v. Wilcox, 2 J. R. 450; Seymour v. Minturn, 17 J. R. 174; Boyd v. Hitchcock, 20 J. R. 78; Allen v. Roosevelt, 14 Wend. 100 ; Howe v. Mackay, 5 Pick. 44 ; Brooks v. White, 2 Metcalf 283.

But where a debtor has induced a number of creditors to accept a composition less than their entire demand, each acting upon the faith of the engagements of the others, the case is not *394 within the principle of Cumber v. Wane. In such case each creditor has the undertaking of the others as a consideration for his own.

It is also placed upon the further ground that.the composition, even if voluntary, should be enforced, as it would otherwise operate as a fraud upon the other creditors who were induced by it to accept the composition. Greenwood v. Ledbetter, 13 Price 183; Wood v. Roberts, 2 Stark, 417; Cockshot v. Bennett, 2 T. R. 763; Steinman v. Magnus, 11 East. 390.

The present case, however, appears to rest upon somewhat different principles. So far as can be gathered from the state of the case, a composition deed was executed by Hatch & Co., and their creditors, by which the latter, in consideration of an assignment to be executed by Hatch & Co. for the benefit of their creditors, release and discharge the defendants from their debts. The deed of assignment was executed pursuant to the agreement. If such an agreement • even by parol be executed, the creditor is barred, though he refuse to accept his dividend from the assignee. In contemplation of law, he has received a valuable consideration for the discharge. A new contract is entered into between the parties. The assignment by the debtor constitutes a consideration for the release by the creditor. Eaton v. Lincoln, 13 Mass. 424 ; Good v. Cheeseman, 2 Barn. & Ad. 328; Tatlock v. Smith, 6 Bing. 339; Cranley v. Hillary, 2 Maule & Sel. 120; Bradley v. Gregory, 2 Camp. 383; Boothbey v. Sowden, 3 Camp. 175; Butler v. Rhodes, 1 Esp. 236; Jolly v. Wallis, 3 Esp. 228.

Had the plaintiff in this case become a party to the contract, the defence would have been complete. But the whole case made by the defence, admitting the promise of the defendant to be clearly proved, is not that he became , a party to the compromise, but that he promised to do so. There is no pretence that he became a party to the deed of composition, or that he acquired any rights, or could legally derive any advantage, whatever from it.

Nor is it pretended that any other creditor was induced to accept the. compromise in consequence of the promise made by the plaintiff to sign the deed. On the contrary, it seems highly *395 probable, if not certain, from the evidence, that both the composition deed and the assignment were fully executed before the alleged promise was made by the plaintiff.

Nevitjs, and Carpenter, JJ. concurred.

Let the rule to show cause be discharged.

Cited in Line v. Nelson, 9 Vr. 360 .