Court Opinion

ID: 6511605
Source: CourtListenerOpinion
Date Created: 2022-07-19 18:22:52.279842+00
Date Added: 2024-06-11T15:54:53.821345
License: Public Domain

SOMERVILLE, J.
— The rule governing the composition of debts, between creditor and debtor, at common law, and the one prevailing under our statutes, are in some respects essentially different. The common law rule as to compositions effected by simple contracts, not under seal, is, that the payment of a less sum of money than the whole debt, without a release, is no satisfaction of the plaintiff’s claim. — Fitch v. Sutton, 5 East. 232; Harrison v. Wilcox, 2 Johns. Rep. 449. So a mere agreement to receive a part of a debt, or of liguidaterl damages, in satisfaction of the whole, is but nudum pactum. The promise to release the balance of the demand, being without consideration, is considered as void. — 2 Parsons’ Contr. 618, (519; Wheeler v. Wheeler, 11 Vt. 60.
' The infirmity of such an agreement was not aided by its being reduced to writing. This imparted no additional validity to it, unless a new consideration passed between the parties. Bish. on Contr._§§ 407, 421. But, a^a seal implied a consideration, if such a contract of composition, or release, was in writing and under seal, it was a bar to a suit for the debt, without question as to the amount of consideration actually paid by the debtor. — Brewer v. Bessinger, 25 Miss. 86; Wing v. Chase, 35 Me. 260; Acker v. Phoenix, 4 Paige, 308 ; Bish. on Contr. § 413.
The sole purpose of section 3040 of the present Code (1876) was to meet these two obstacles, as above presented. It declares that “ all settlements in writing, made in good faith for the composition of debts, must be taken as evidence, and held to operate according to the intention of the parties, though no release under seal is given, and no new consideration has passed.” — Code, § 3040. Its whole scope is to render operative and valid a certain class of contracts which were repudiated by the rules of the common law, viz., Written contracts intended, in good faith, by the parties to operate as a composition of debts, executed without a release under seal, and without a new *208or additional consideration. The dictum in Hart v. Freeman, 42 Ala. 567 (570), that the section of the Code under consideration “requires settlements for the composition of debts to be in writing,” is manifestly erroneous as a general proposition, although correct as to the particular case in which it was used.
The present case does not, however, come within the influence of the statute, but is determined by a well settled principle of the common law governing contracts for the composition of debts. This principle is, that, although neither the payment, nor the promise by a debtor to pay apart of a debt, will operate as an extinguishment of the whole, yet where the creditor receives in full satisfaction a guaranty of part of a debt from some responsible third person — or, in other words, receives the obligation or note of the debtor with some other person 'as surety or endorser, the discharge will be good. Though the distinction between this case and the receipt of money does not appear to be entirely sound, yet it has long been recognized, and is well supported by authority. It may be assimilated, perhaps, to the case of a payment in the notes of a third person, which, though for a smaller amount, may be held to operate as an accord and satisfaction of the whole, if such be the agreement.- — Carriere v. Ticknor, 26 Ala. 571; Fulford v. Johnson, 15 Ala. 385; Brooks v. White, 2 Met. (Mass.) 283. So it is a universal .rule, that where any other articles than money are received, and agreed to be accepted, in-full satisfaction of a debt, the law will not undertake to interfere with the estimate of value placed on such consideration by the parties themselves. — Pinnel's case, 5 Co. 117; Rish. on Contr. § 409; Earl v. Peck, 64 N. Y. 596. The particular point under consideration has been often decided, and seems to be now well established. — 2 Parsons’ Contr. 618, 619 ; Rish. on Contr. §§ 412-15 ; (Gunn v. McAden, 2 Ired. (N. C.) Eq. 79; Maddox v. Bevan, 39 Md. 485; Keeler v. Salisbury, 33 N. Y. 648; Boyd v. Hitchcock, 20 John. 76; LePage v. McCrea, 1 Wend. 164; Brooks v. White, 2 Met. 283; Pierce v. Jones, 28 Amer. Rep. 293, note.
The rulings of the court touching these principles were free from error.
The court erred, however, in admitting the testimony of the witness White. It was a disputed question, as to whether the plaintiffs had agreed to make the composition under consideration. Evidence that the defendant had made a similar settlement with other creditors, at the same rates of discount, was immaterial. Plaintiffs are not shown to have had any connection with this settlement; and are not, therefore, to be prejudiced by it. Being res inter alios acta,, it did not conduce to prove that plaintiffs had agreed to do the same thing, nor did *209it furnish any reasonable inference or presumption, that the disputed compromise here in issue had been made. — 1 Greenl. on Ev. § 52.
Reversed and remanded.