Hanson v. Crawford

NORTONI, J. This is a suit on a promissory note. Plaintiff recovered and defendant appealed. Plaintiff owned and held the note against defendant for'many .years. It amounted at the time this suit was instituted to about $1,300. He finally placed it' in the hands of an attorney, authorizing* him to compromise the same at $200, payable in installments of $50 each. The attorney instituted suit on the note and then entered into an agreement with the defendant whereby the defendant agreed to pay, and the plaintiff, through his attorney agreed to accept $200 in installments of $50 each in full for the indebtedness. Defendant paid the first installment of $50 thereon to the plaintiff’s attorney, which he (the attorney) retained for the account of his client, the plaintiff. Plaintiff personally repudiated the agreement and refused to accept any payment thereon. The defendant tendered to plaintiff several fifty dollar installments thereafter as they became due under the agreement, but defendant says be refused to accept them. It was admitted that the defendant owed the note except for the agreement mentioned; that it was many years past due, and no consideration for the agreement other than above stated appears in the evidence. In fact, the only defense interposed against plaintiff’s right to recover was the agreement above stated, whereby the plaintiff’s duly authorized attorney agreed to accept $200 in full of the entire indebtedness and actually accepted $50 payment thereon. The court found the facts as above stated and declared as a matter of law thereon that there is no consideration to support the promise of the plaintiff to accept less than the amount of the debt, and therefore gave judgment against defendant for the amount due on the note. Yol. 6 Am. and Eng. Ency. Law (2 Ed.), 377, says': “It is a familiar rule of law that an agreement between a debtor and a creditor whereby the latter agrees to discharge the former on payment of [235] a less sum than the debt due, is void for lack of consideration, and that the payment of'the less sum operates only as a discharge pro tanto.” The rule of law thus stated is highly technical and may work hardship in some cases. However that may be, it has since the early history of the State, been the rule of decision in Missouri, as will appear by consulting the following authorities: Price v. Cannon, 3 Mo. 318; Riley v. Kirshaw, 52 Mo. 224; Klausman Brew. Co. v. Schoenlau, 32 Mo. App. 357; Willis v. Gammill, 67 Mo. 730; Orr v. Sanford, 74 Mo. App. 137; Koerper v. Royal Inv. Co., 102 Mo. App. 543, 77 S. W. 307; Harrison Bros. v. Murray Iron Works, 96 Mo. App. 348, 70 S. W. 261. Under the rule thus given the defendant was, of course, entitled to a credit pro tanto for the amount he had paid on the note under the agreement mentioned, and it was entirely proper for the court to give judgment against him for the amount remaining due thereon. In thus declaring the law we must not he misunderstood, for we fully recognize the rule which obtains with respect to agreements made between the debtor and his several creditors, for the composition of his debts at less than the amount owing. Such compositions are excepted from the rule above stated with respect to a want of consideration for the agreement; in fact the mutual covenants between creditors whereby each agrees to relinquish a part of his demand in order that, by similar relinquishments of other creditors, each may be made more nearly certain of the payment of the part which he does not release, constitutes, it is said, a sufficient consideration to sustain the contract in those cases. Such is the established law. [6 Am. and Eng. Ency. Law (2 Ed.), 377; O’Shea, Admr., v. Collier White Lead Co., 42 Mo. 397; Mullin v. Martin, 23 Mo. App. 537.] In this case there is no question of composition however. The facts present a simple proposition where [236] a debtor is attempting to enforce against bis creditors an agreement to accept an amount less than then due and owing on the debt, for which agreement the debtor has surrendered nothing and the creditor received nothing not already due. In s,uch circumstances the agreement falls strictly within the rule respecting a nudum pactum. The judgment will be affirmed. It is so ordered. Bland, P. J., and Goode, J., concur.