Pearson v. Thomason , 15 Ala. 700 ( 1849 )

COLLIER, C. J.

The only question which it is necessary to consider, is, whether, if a creditor say to his debtor, who is in insolvent circumstances, if he will pay a designated sum, not more than one-fifth of the debt, he would accept it in full satisfaction, and the debtor thereupon pay the sum named, can the creditor maintain an action against him for the recovery of the residue ?

In Steinman v. Magnus, 11 East’s Reports, 390, Lord Ellenborough said, “It is true, that if a creditor simply agree to accept less from his debtor than his just demand, that will bind him : but if upon the faith of such an agreement, a third person be lured in to become surety for any part of the debt, on the ground that the party will be thereby discharged of the remainder of his debts ; and still more when in addition to that, other creditors have been lured in by the agreement, to relinquish their further demands, upon the same supposition, that makes all 'the difference in the case.” He said it would be a mixed question of law and fact to go to the jury, whether after the plaintiffs had entered into the composition in conjunction with the other creditors, it were not a fraud upon those persons to endeavor to obtain a further payment from the defendant, whom they all proposed to liberate upon the terms of the agreement. All the cases cited for the plaintiff in error belong to the same class, and lay down the law in equivalent terms. See Fitch v. Sutton, 5 East’s R. 230; Cockshott v. Bennett, 2 Term Rep. 763; Frise v. Randall, 6 ib. 146; Smith v. Stone and Mullikin, 4 Gill & J. Rep. 310; Bullen v. Gillicuddy, 2 Dana’s Rep. 92; Russell v. Rogers, 10 Wend. Rep. 473. It is said to be well settled, that the payment of a less sum of money than the whole debt, without a release, is no satisfaction of the plaintiff’s claim. And a mere agreement to accept less than the real debt is nudum pactum. Cumber v. Warn, 1 Stra. Rep. 426; Harrison v. Wilcox, 17 Johns. Rep. 169; Boyd v. Hitchcock, 20 Johns. Rep. 76; Geiser v. Kershner, 4 Gill & J. Rep. 305; Jones v. Bullitt, 2 Litt. Rep. 49; Allen v. Roosevelt, 14 Wend. Rep. 100; Fellows v. Stevens, 24 ib. 294. But an acceptance by a creditor of a less sum than the amount of his demand, in full satisfaction of the debt, if made before payment is due, or in the notes of a third person, it has been held will be a good discharge. Goodnow v. Smith, 18 Pick. Rep. 314; Brooks v. White, 2 Metc. Rep. 283; Booth v. Smith, 3 Wend. Rep. 66; 3 Hawkes’ Rep. 580; Jones v. Bullitt, 2 Litt. Rep. 49. So the acceptance of property in satisfaction of a pre-existing debt, irrespective of its value, will have the effect to extinguish it. This is affirmed by several of the authorities cited. See also, Blinn v. Chester, 5 Day’s Rep. 360.

The fact of the defendant’s insolvency, can have no influence in determining, whether the agreement of the plaintiffs to accept a less sum than the entire debt, in full satisfaction, was without consideration ; for whether he was insolvent or not, the obligation to pay was not impaired, and the moral duty remained in full force. If, in.stead of paying the money, the defendant had paid in property, or in a note or other security on a third person, or had delivered up to the plaintiff a note which he held on him for a smaller sum than the debt sought to be recovered, in either of these cases, we should be inclined to think the satisfaction complete. In the present case, it does not even appear that the note declared on was given up, but only that one of the plaintiffs agreed, when he received the money from the defendant, that the latter should-not be required to pay any thing more. See Woolfolk v. McDowell, 9 Dana’s Rep. 268. The authorities most conclusively show error in the ruling of the circuit court. Its judgment is consequently reversed, and the cause remanded.