Morehouse v. . Second Nat'l B'k of Oswego

Andrews, J. The agreement of November 1, 1876, was, we think, a good defense to the action. The Generál Term sustained the finding of the referee, upon the ground that the agreement, when made, was executory, that there was no subsequent execution of its provisions, and that .the case was within the general principle that an accord without *509 satisfaction is no bar to a suit upon the original cause of action. It is not, however, universally true that a cause of action on contract, or for tort, may not be extinguished by an agreement between the parties, although the agreement which is the consideration for the satisfaction is executory. If the subsequent agreement is accepted in satisfaction, and this appears expressly or by implication, the original cause of action is merged and extinguished. (Kromer v. Heim, 75 N. Y. 574, and cases cited.) It is plain also, that if one having a debt or claim against another satisfies or releases it in consideration of an executory promise by the party owing the debt or duty, he cannot afterward enforce his original cause of action upon a mere failure by the other party to perform his promise, “for he has a remedy to compel performance.” The agreement found by the referee from its very nature, operated as an immediate discharge and satisfaction of the claim of McRae against the bank. The mutual promises of the parties were not dependent, so as to render the discharge of the claim of McRae conditional upon full performance by the bank of its promise. He agreed to settle and discharge his claim against the bank, and to apply the same in payment pro tanto of his indebtedness, and further that he would not sue, or permit any suit to be brought against the bank thereon. The bank, on its part, agreed in substance to make the application, and also to satisfy the remaining indebtedness, or consent to McRae’s discharge in bankruptcy as he should elect. The agreement to set off the mutual debts became executed eo instanti. This point was expressly adjudged in Davis v. Spencer (24 N. Y. 386). The law, acting upon the agreement itself, made the application without further act of the parties. It is true that the exact amounts of the mutual debts do not appear to have been ascertained at the time, but they were capable of ascertainment. In Davis v. Spencer, the account on one side was, as may be inferred, unliquidated, but this did not stand in the way of the application of the principle decided. The agreement not to sue, or to permit suit to be brought, also operated as a present release and discharge of McRae’s *510 cause of action. (Chandler v. Herrick, 19 Johns. 129; Addison on Cont. 270.) The agreement was not a technical release, but it operated as such, and the fact that it was not under seal, or was oral, does not affect the application of the principle. (Foster v. Purdy, 5 Metc. 442; Davis v. Spencer, supra ; Farmers' Bank v. Blair, 44 Barb. 641.) The only part of the agreement which was executory was the undertaking on the part of the defendant to satisfy the remaining indebtedness of McRae, or to consent to his discharge in bankruptcy at his option. The performance of this part of the agreement depended upon a prior request or election of McRae. If the bank on request should refuse performance, McRae has a remedy in an action for damages, or he can await proceedings by the bank to enforce the balance of the debt, and defend himself under the agreement. But his original claim against the bank was merged and satisfied. The claim that the bank took proceedings subsequent to the agreement, inconsistent with it, is irrelevant here, assuming that it is well founded. It was a proper matter for the consideration of the referee, bearing upon the point whether the agreement claimed by the defendant was made; but the agreement being established, its violation by the defendant would not affect its legal operation. There is no ground for saying that the agreement was released or discharged, or in any way became inoperative. We are of opinion that upon the agreement found, the defendant was, entitled to judgment. This renders it unnecessary to consider the other questions. The judgment should be reversed. All concur, except Ruger, Oh. J., not voting. Judgment reversed.