Pulliam v. Taylor

Simrall, J., delivered the opinion of the court: This writ of error is prosecuted to review the rulings of the circuit court in sustaining a demurrer to the defendant’s special pleas, setting up accord and satisfaction. The first plea avers an agreement to make and deliver to the plaintiff three promissory notes of $500 each, and to execute and deliver a deed in trust as security therefor, in payment and satis — 257 — faction of the note sued on; and that the notes and deed in trust were accordingly made and delivered to, and received by the plaintiff. To this plea the demurrer was sustained. Thereupon, the defendants filed, under the judgment of respondeat ouster, a fourth plea, alleging the same facts with more fullness and particularity, with the additional averment, that the defendant had paid the first due of the three notes of $500 each, and that he was ready and willing to pay the other two according to their tenor and effect. At the same time, defendants filed a notice that they would offer to prove a series of facts, substantially the same as those stated in the plea. To this plea the demurrer was also sustained. The case was submitted to the jury on the general issue. There was no motion made for a new trial; and we are without information as to the evidence before the jury. It is urged, in this court, that the demurrer ought not to have been sustained to the third and fourth pleas. Accord and satisfaction is the substitution of another agreement between the parties in satisfaction of the former one, and an execution of the latter agreement. Such is the definition of this sort of defense, usually given. But a broader application of the doctrine has been made in later times, where one promise or agreement is set up in satisfaction of another. The rule is, that an agreement or promise of the same grade will not be held to be in satisfaction of a prior one, unless it has been expressly accepted as such. As, where a new promissory note has been given in lieu of a former one, to have the effect of a satisfaction of the former, it must have been accepted on an express agreement to that effect. But the original promise was to pay $3,400, and the new agreement was to pay only $1,500, in three equal installments. The general rule is, that a similar security for a smaller debt cannot be pleaded in satisfaction of a larger debt. Heathcote v. Crookshanks, 2 T. R., 24; Lynn v. Bruce, 2 H. Bl., 317. But the rule — 258 — is not applied, except where there is a liquidated debt. If the demand is for unliquidated, pecuniary damages, the acceptance of a smaller sum than that originally claimed, will be a satisfaction, and may be pleaded to the action. Longridge v. Dorville, 5 B. & A., 117; Wilkinson v. Byers, 1 A. & E., 106. The doctrine generally accepted by the courts is, that a creditor is not bound by an agreement to accept a smaller sum in lieu of a liquidated ascertained debt of a larger amount. If, however, the latter agreement or promise is supported by some new and-additional advantage to the creditor, it will serve as a consideration sufficient to support the new promise or agreement. Steinman v. Magnus, 2 Camp., 124; Sibree v. Tripp, 15 M. & W., 23. The earlier authorities lay down the rule with strictness, that an accord to avail anything must be executed. The performance too-, it was said, must be strictly in conformity to the accord. It would be difficult to reconcile with this principle that class of cases which hold that a subsequent agreement or promise may be pleaded in satisfaction of a prior one, unless there has been performance of the latter. The distinction which is palpable is,, that in the latter class of cases the promise or agreement is secured in satisfaction. But if the intendment of the parties is, that performance of the latter promise, and not the promise itself, is intended to work satisfaction, then there will be no satisfaction without performance. The reason as given by Lord Ellenborough in Eitch v. Sutton, 5 East, 232, why the acceptance of a less sum in money than is actually due wall not extinguish the whole debt, though received by the creditor upon that condition, is that there must be some consideration for the relinquishment of the excess beyond the-amount paid ; something.to show the possibility of benefit to the creditor. It is well settled on authority, that if the creditor accept some other thing, as a chattel of much less value, it could be pleaded in satisfaction. There is no sound, rational distinction between the acceptance of an article of property, worth just half — 259 — the amount of the debt, especially such commodities as cotton or iron, that have a definite market value, and the .acceptance of half the amount of the debt in money. Yet all the authorities agree that the former would be a good accord and satisfaction, and the latter would not. Because this distinction has no solid foundation, and seems to be without good reason, resting at this day exclusively upon authority, the courts of late years have been astute to withdraw from its application all those cases where there was any new consideration or benefit that might inure to the creditor, although it might fall far short of the original debt. It may be difficult to yield assent to the proposition, that if the debtor pays in money, and the creditor takes in payment and discharge of his debt one half, it is no satisfaction ; yet he may take the bond or promissory note of his debtor with surety, or the note of a third person for half of the amount due, and that will be a good discharge and satisfaction. Boyd v. Hitchcock, 20 John., 76, was the case of receiving the debtor’s note with the name of another person as surety, for less than was due, was held to be a valid accord and satisfaction. In Kellogg v. Richards, 14 Wend., 116, the creditor took the note of a third person for a less sum, which was a good accord and satisfaction. If the payment of a less sum in money is made before the debt is due, that is a satisfaction, because it might be more beneficial than the whole sum on the day. Pinnell’s case, 5 Co., 117. The rule supported by authority is this. If the creditor compounds with the debtor, and agrees to take less than the whole debt, and accepts the bond or promissory note of his debtor with security, or the note of a third person, here the new and additional security makes a consideration for a relinquishment of the excess, and the accord and satisfaction are complete. Brooks v. White, 2 Met., Mass., 285, 6, 7; Boyd & Suydam, 20 John., 76; Booth v. Smith, 8 Wend., 66; Harper v. Graham, 20 Ohio Rep., 114 These and other cases that might be referred to hold the doctrine, that if the debtor offers additional security, on the terms — 260 — that the creditor shall give up a portion of his debt and the creditor consents, .and actually accepts the new security, for less than the whole debt, it does constitute a valid accord and satisfaction. The requisites of the common law, to make a valid contract are met. The security is a sufficient consideration to support the agreement. And since the parties are the judges of the value of the consideration, no good reason can be assigned why the courts should not recognize such a contract. • In the exigencies of business, it may be a very prudent arrangement, for a creditor to secure part of bis debt when the whole is in danger of loss. The pleas (in tbeir substance) bring the defense within the rule we have been discussing. The agreement was that the defendants should make the three promisory notes of $500 each secured by deed of trust, which the plaintiff accepted in discharge of his larger debt. The 3d plea sets up the accord to have been that the not.es and deed of trust were to be made, and tbe creditor agreed to accept tbem in satisfaction of the debt sued on — that they were so executed and received by the plaintiff. The notes and the security, were accepted in satisfaction so tbat the plaintiff would look to them alone, and not to the original debt. The performance contemplated by the plea was the making and delivery to the plaintiff of the notes and security. We are of opinion that tbe demurrer to tbe 3d and 4th pleas ought to have been overruled. The counsel for the defendant in error, insists, that although it may have been erroneous to adjudge the pleas bad, yet the defendants under the notice might have proved the same facts to the jury. We can not, in the absence of information communicated by tbe record, suppose that the circuit court would have allowed testimony to go to the jury to establish a defense which it had twice adjudged to be bad. No question has been made in this court arising on tbe pleas as to tbeir technical fullness. We have confined ourselves to tbeir substantial merits We think the pleas substantially good. — 261 — The judgment of the circuit court is reversed, and judgment rendered in this court, overruling the demurrer to the third and fourth pleas, and cause remanded for further proceedings.