Court Opinion

ID: 6572119
Source: CourtListenerOpinion
Date Created: 2022-07-20 19:30:41.948455+00
Date Added: 2024-06-11T15:56:56.555614
License: Public Domain

The opinion of the court was delivered by
Collamer, J.
It is not every agreement, however deliberately made, by persons capable to contract, which the law will enforce ; nor is it true that the courts of common law have ever taken their suitors under guardianship to set aside contracts, merely because imprudently made. There is one ingredient always necessary, that is, a legal and sufficient consideration. Without this, contracts, executed or executory, are always disregarded by courts, unless thereby innocent third persons would be injured or defrauded. The performance of that, to which a man is already under obligation, can never constitute a consideration for any contract by the other party. The promise by a debtor to pay a debt, which he is then under legal obligation to pay, creates no new duty and can sustain no action, nor constitute the consideration of a promise by the other party. The payment of a debt, by a man then bound to pay, creates no legal obligation on the other party, nor constitutes a consideration for any new promise by him. These principles, in various *67forms of practical application, have always been regarded by the courts; nor can any adjudged case be found where they have been violated. It is on this principle that it was early, and has been uniformly, holden that a payment of part of a debt, by the debtor, when the whole is due, is not and cannot, by possibility, be a legal consideration for a contract, on the part of the creditor, to receive it in full satisfaction of the whole debt. The payment of a debt, or any part of a debt, before it is due, is what the debtor is not under any legal obligation to do, and therefore is a legal consideration for a contract by the creditor, which contract may be to release or cancel his debt, as well as any other contract. So, too, the delivery of a collateral article, for a debt due in money, is what the debtor is under no obligation to do, and therefore may be a legal consideration for a contract by the creditor to receive it in full satisfaction, as well as for any other promise he might make.
This has been so often decided, as appears even by the authorities cited by the defendant, that it is entirely unnecessary to repeat them.
It is, however, insisted by the defendant, that there are decisions, cited by him, that contradict or overrule this principle. This however, on examination, will be found incorrect. Those cases which, at first view, seem to favor such a position, may be arranged under these heads:
First. If a debtor, by agreement, delivers to his creditors or to a trustee for them, debts, effects or any collateral property, whether it be the whole or part of what he has, and it be received in satisfaction, it is a good defence. This is like delivering collateral property to a single creditor on a sole debt. It is doing what the debtor is not under legal obligation to do, and it may be the legal consideration for a contract of discharge or any other contract by the other party. This disposes of several decisions.
Second. If a debtor contracts with one or all of his creditors to procure a friend to secure or pay, out of his own means, part, in satisfaction of a whole debt, and it is done, such creditor can never recover more, even of the debtor himself. It would be a fraud on the third person who paid for *68the entire release ; and the debtor did what he was not under a legal obligation to do, in procuring the act of the third person, which was a legal consideration for the promise on the other part. This disposes of another class of decisions, relied on by the defendant.
Third. If a composition deed has been entered into by a body of creditors and their debtor, by which they agree to receive, and do receive, in money or effects, from the debtor, or in securities from his friends, a part for the whole debts, there, no one who agreed to the composition can collect a balance, because it would operate a fraud on the other creditors who stipulate for a mutuality and have released their debts. The deed being a specialty under seal, is a technical release. Such are a large class of the defendant’s cases.
Fourth. If any creditor, professes to enter into a composion deed with others on terms of mutuality, and so induces them to release, when he in fact secretly takes security for more; all such securities, by whomsoever given, are void, being in bad faith and a fraud upon others. This is, however, only so, when others have actually released their debts. This disposes of all the remainder of the defendant’s cases, cited in authority.
In the present case, the defendant did not deliver to the plaintiff or to his creditors, or to any trustee for them, his debts or effects, or any part thereof. He did not procure any third person to give security or to pay any thing. No composition deed has been signed by any one. Nothing has been paid to any creditor, nor any release by them signed, and they may collect their whole debts. For the plaintiff to recover his just debt can therefore operate no fraud on any creditor or any third person. This plea stands upon the simple question, whether the payment, by a debtor, of a part of a debt, when he is bound to pay the whole, can be a legal consideration for a promise, on the part of the creditor, to receive it in full satisfaction. That such could not be the case anciently is certain, and is fully conceded by the defendant’s counsel. Let us see the language of the courts in some of the most modern cases, where the subject has *69been fully revised and considered. In Fitch v. Sutton, 5 East’s Rep. 230, where the defendant had compounded with his creditors, and paid all, including the plaintiff, ten shillings in the pound, and the plaintiff had given therefor his receipt in full, Lord Ellenborough says, “ it cannot be pre- “ tended that a receipt of part only, though expressed to be “ in full of all demands, must have the same operation as “ a release. It is impossible to contend, that acceptance of “ seventeen pounds ten shillings is an extinguishment of a “ debt of fifty pounds. There must be consideration for “ the relinquishment of the residue; something collateral, to “ show a possibility of advantage to the party relinquishing “ his further claim, otherwise'the agreement is nudum pac“turn.” And, he says, the doctrine of Pynnel’s case, 5 Rep. 117, has never been shaken.
In the more modern case of Lewis v. Jones, 4 B. & C. 506, where the creditor had agreed to receive five shillings on the pound for his debt, upon having the note of the debtor’s father therefor, and which he received, Holroyd, J. says, “ an acceptance of a smaller sum cannot be pleaded in “ satisfaction of a larger. In point of law, something fur- “ ther is necessary to produce that effect. But, I think, “ when the plaintiff in this case accepted the father’s note, “asa security for the payment-of the composition money, “ the agreement did operate as a satisfaction.” Indeed, the distinctions, before mentioned, are recognized in all the cases and not one is found to sustain this plea.
Judgment affirmed.