Ireland v. Johnson

H. G. Prindle, County Judge. The main question in this case is, whether the giving of the promissory note by the plaintiff .for the purchase-price of the machine was a payment of the purchase-money, and took the case out of the operation of the Statute of Frauds. The statute requires some part of the purchase-money to be actually paid. Can the giving of one’s own promissory note on the purchase of property, in any sense be considered a payment ? Is it any thing more than a promise to pay. It seems to be well settled in this State that the giving of a promissory note by the debtor on the purchase of property is not a payment of the debt; and I am unable to see how, in connection with the Statute of Frauds, it can have the effect of an actual payment of the purchase-money, when it is not regarded as payment in any other case. In Vansteenbergh a. Hoffman (15 Barb., 28), the court held, that the giving of a promissory negotiable note is not prima facie payment of a pre-existing debt. In Waydell a. Luer (3 Den., 416), Senator Lott, who delivered the prevailing opinion in that case said, “I consider that the note of a debtor himself will not discharge a precedent debt, though it may suspend the remedy. Yet I consider it to be equally well settled that the acceptance by a creditor of the note of a third person for an existing indebtedness operates as an extinguishment of the original consideration, when agreed to be accepted in full satisfaction.” It seems to be well established, that there is a distinction between the giving of one’s own note and the note of a third person. "In the one case it is the mere promise of the purchaser to pay, and in the other, it is the actual transfer of .a debt or claim against a third person, which if agreed to be taken as payment, actually extinguishes the debt and discharges the liability of the purchaser, while in the other no new liability is created by the giving of one’s own note, and no liability is extinguished or in the least changed, the debt remains unpaid, and the creditor simply has the promise of the debtor in writing to pay the amount agreed upon at the time fixed. It would simply change the nature of proof when the creditor attempted to enforce collection; in the one case he would prove the signature to the note, and in the other the contract between the parties. A parol contract to sell personal property or a.chose in action [395] for the price of $50 or more, is void even when there is an agreement to endorse the price of the property or claim on a note, or other obligation, held by the purchaser against the vendor, or an agreement by the purchaser to give the vendor credit on an account held by him against the vendor, unless the endorsement has been actually made, or the credit given on the account. (Ely a. Ormsby, 12 Barb., 570; Artcher a. Zeh, 5 Hill, 200.) In these cases the argument is as forcible to maintain that they are not within the statute, as in the case of giving of the note by the debtor for the property purchased. In these ■ cases there is a promise to make the endorsement and give the credit, but until the endorsement is actually made or the credit given, there is nothing in the least to change the rights or liabilities of the parties; in each case it is a mere naked promise to pay, or do what .would amount to payment if done, neither of which in my judgment can have the effect of an actual payment of a part of the purchase-money under the statute; and if I am correct in the view I have taken of the law, the plaintiff in this case should have been non-suited. The defendant could not have enforced payment of the note given for the machine without á delivery of the property, as the whole bargain was void by the Statute of Frauds, and there was no consideration for the note. The authorities relied upon by the plaintiff’s attorney were Chitty on Contracts, 8 ed., 348, where Chitty says, “ The delivery of a bill of exchange or promissory note on account, or in payment of the price of goods sold under a parol contract, will take the case out of the statute, such instrument amounting to payment till dishonoredj” and 10 Petersdorfs Abridgment, 129, note, saying, “ The delivery of a bill of exchange or promissory note in part payment would take the cause out of the statute.” In the case of Combs a. Bateman (10 Barb., 574), the learned justice who delivered the opinion of the court, commented on these cases, and said, “This doubtless refers to a bill of exchange or promissory note of a third’ person, and not of the purchaser. The delivery of the note of the purchaser can in no sense he said to be a payment. It may suspend the right of action of the seller for the purchase-money until the. maturity [396] of the note, but the absolute liability of the purchaser remains. Not so, however, in all cases of the delivery of the obligation of a third person. That, when agreed to be in satisfaction, is an absolute payment, and in all cases the purchaser’s liability is contingent.” I regard this decision as authority in this case, and that it correctly settles the principle involved. I "entertain great, respect for the opinion of his Honor, Judge Clark, before whom this cause was tried, but his decision on the motion to non-suit was made necessarily without a full examination of the authorities bearing upon the question. After a careful examination of the question, l am of the opinion that'the ’ Contract was within the Statute of Frauds; and that the giving of the note was not a payment of the purchase-money, and that the learned judge who ’tried the cause erred in refusing to non-suit the plaintiff. The motion for a new trial is therefore granted, with costs to abide the result.