collateral only.103 And where it has been given as collateral, and afterwards taken up by the creditor, and surrendered to the maker, it is not a payment.104 And the presumption of payment is rebutted where the payee has sold goods to A., and taken his note for them, not knowing him to be only an agent.105 So, it may be rebutted by circumstantial evidence; e. g. by showing that it was the note of an agent not charged to his principal, and given "on account of vessel's bills," for the evident purpose of a temporary accommodation merely.106 And, although a receipt is given for the debt on taking a negotiable note of the debtor, it is only prima facie payment, and may be rebutted.107

109

Parol evidence is admissible to show the intention with which the note was given,108 and whether it was given for some other consideration or in satisfaction of an earlier debt or note." But, where the consideration is expressed in the note, it has been held inadmissible to show that it was given as a settlement of some other account.110 And a note will not be presumed to be taken in payment where some other security held by the creditor would be lost thereby; 111 e. g. where it is given for an extension of time on a debt secured by mortgage,112 or for a bond covering both past and future indebtedness, and signed by a surety also.113

103 Collamer v. Langdon, 29 Vt. 32; White v. Jones, 38 Ill. 159.

104 Dickinson v. King, 28 Vt. 378.

105 Lovell v. Williams, 125 Mass. 439; Wemet v. Lime Co., 46 Vt. 458.

106 Hudson v. Bradley, 2 Cliff. 130, Fed. Cas. No. 6,833.

10: Fowler v. Ludwig, 34 Me. 455.

168 2 Daniel, Neg. Inst. 285; 2 Pars. Notes & B. 150; Graves v. Shulman, 59 Ala. 406; Weston v. Wiley, 78 Ind. 54; First Nat. Bank of New Castle v. Nugen, 99 Ind. 160. And proof may be made of usage and circumstances to rebut the presumption of payment. Varner v. Nobleborough, 2 Me. 121.

109 Hale v. Rice, 124 Mass. 292.

110 Ross v. Boswell, 60 Ind. 235.

111 2 Daniel, Neg. Inst. 292; 2 Pars. Notes & B. 150; e. g. where it would extinguish a prior mortgage, Bunker v. Barron, 79 Me. 62, 8 Atl. 253; Spencer v. Chrisman, 15 Ind. 215.

112 Bryce v. Bowers, 11 Rich. Eq. (S. C.) 41.

113 Shumway v. Reed, 34 Me. 560.

(2185)

Effect of Receipt.

§ 1519. Where the debtor gives his own note, it does not become an absolute payment by the mere fact that a receipt is given for it as so much cash.1 114 The effect of such receipt, or of a re

113

ceipt in full, is a question of intention for the jury to determine.1 But where a note is secured by mortgage, and payable in installments, and the holder, on the maturity of the first installment, takes a new negotiable note for the purpose of raising money on it, and indorses on the original a receipt for the first installment, it has been held to be a payment discharging the mortgage to that extent.116 So, where a bill of exchange has been paid by a note, and a receipt in full given for the bill, it has been held to be a satisfaction of it.117 So, notes given and received "in full satisfaction and discharge," under a bankruptcy composition which the statute required to be made "in cash," will be so regarded, if so intended by the parties.118 So, it has been held that the buyer's note will be presumed to be payment for goods to be delivered, and the vendor's lien will be discharged by his acknowledgment that he "received payment by note.' And even where the creditor has expressly refused to accept a note as absolute payment, but has taken it from his agent, and given a receipt for it "as collateral," it has been held to be a payment.120 So, where the receipt stated that the creditor "received payment by note with the understanding that, if the note is not paid when due, makers are at liberty to give a city acceptance." So, a receipt for a note "in full for principal and interest of bonds and mortgage [made by a third person], which I hereby agree to assign to such party as he may designate." 122 So, where

99 121

99 119

114 2 Daniel, Neg. Inst. 292; 2 Edw. Bills & N. § 752; 2 Pars. Notes & B. 159. 115 Sutton v. Albatross, 2 Wall. Jr. 327, Fed. Cas. No. 13,645; The Charlotte v. Hammond, 9 Mo. 59; Sykes v. Gerber, 98 Pa. St. 179.

116 Fowler v. Bush, 21 Pick. (Mass.) 230.

117 Francia v. Del Banco, 2 Duer (N. Y.) 135.

118 In re Hurst, 1 Flip. 462, Fed. Cas. No. 6,925.

119 Hutchins v. Olcutt, 4 Vt. 549.

120 Although the agent was not authorized to take the note. Burlington Gas Light Co. v. Greene, 22 Iowa, 508.

121 Walton v. Bemiss, 16 La. 140.

122 Although it may be explained otherwise by parol evidence, Meyer v.

a judgment is rendered against A., and another judgment against A. and B., and the joint note of A. and B. is received by the plaintiff, and receipt in full given for so much money for both judgments, the judgments will be thereby satisfied.123

On the other hand, where money is received from the discount of a note, to be applied on account of another note, if the first is paid, a receipt for the money indorsed on the note may be explained and shown not to discharge it.12 And even a receipt for a draft “in full" has been held not to be evidence of an absolute payment.125 So, without additional evidence of an agreement, a receipt for a note "in payment of the account"; 126 or a receipt of "payment by A.'s note," given to enable the parties to balance their books, with an agreement that it should not be a payment unless paid.127 And where the holder of a note agrees to receive, in payment of the interest due on it, another note with a surety, and indorses the payment on the first note, but the new note is given without the surety, and is afterwards returned by consent, and the indorsement canceled, it will not amount to a payment on the original note.128

Lathrop, 73 N. Y. 315; but to the effect that parol evidence is inadmissible to show that a note was given in absolute payment, where a receipt was given, see Courtney v. Hogan, 93 Ill. 101.

123 Dogan v. Ashbey, 1 Rich. Law (S. C.) 36. So, a note may be indorsed as payment on an execution, and so received. Dole v. Boutwell, 1 Allen (Mass.) 286.

124 Greenawalt v. McDowell, 65 Pa. St. 464.

125 Gails v. The Osceola, 14 La. Ann. 54. So, a note receipted "in full of all claims and accounts," Dudgeon v. Haggart, 17 Mich. 273; or of a judgment, Maze v. Miller, 1 Wash. C. C. 328, Fed. Cas. No. 9,362. And a note given "in full of demand" for work has been held to be not even presumptive payment. Doebling v. Loos, 45 Mo. 150.

126 Berry v. Griffin, 10 Md. 27; although at the foot of a statement of the account, Glenn v. Smith, 2 Gill & J. (Md.) 494. So, if a note is credited on an account and not paid. Blackmar v. Cornwell, 58 Mich. 400, 25 N. W. 324. A memorandum that the amount had been reduced is not evidence of satisfaction or payment. Mars v. Conner, 9 S. C. 70. But notes may be credited as a payment, if so intended. Riley v. Anderson, 2 McLean, 589, Fed. Cas. No. 11,835.

127 Street v. Hall, 29 Vt. 165.

128 Hayward v. Billings, 48 Vt. 355.

Original Note Surrendered.

§ 1520. Even the surrender and cancellation of the original note has been held not to raise the presumption that a renewal given for it was taken in payment.129 And this is true of the surrender of the original note for a larger note of the original payee held by the debtor, the payee giving his own note for the difference.130 And even the surrender and destruction of the original note upon renewal given is not a payment, unless it is so agreed between the parties. 131

133

132

But the cancellation of the original instrument has been held in other cases to show an absolute payment of it.1 And where an attorney receives in payment some cash and the maker's note for the balance, and surrenders the original note, it will discharge the surety upon it. So, where a note is partly paid in cash, and partly by a new note, and the original collateral is surrendered with it to the maker, it is a payment of the original debt.134 So, if a note is paid with the proceeds of a discount of the renewal note, and the original note is surrendered; 135 or if the note is paid by a bond, and a release given.136 And if a note is taken for a judgment, and the execution discharged, it is a prima facie payment.137

If the note of a deceased maker is surrendered for the individual note of his executor with a new mortgage, and in the meantime another mortgage has intervened, the first note will be regarded as

129 2 Daniel, Neg. Inst. 290; 2 Pars. Notes & B. 164; First Nat. Bank of Racine v. Case, 63 Wis. 504, 22 N. W. 833. So, Merchants' Nat. Bank v. Good, 21 W. Va. 455, as against a fraudulent transfer of property by the maker between the date of the original note and the renewal.

130 Randlet v. Herren, 20 N. H. 102.

131 Welch v. Allington, 23 Cal. 322. So, if the original instrument is marked "paid and canceled." Belleville Sav. Bank v. Bornman, 124 Ill. 207, 16 N. E. 210.

132 Wilkinson v. Stewart, 30 Ill. 48. So, taking a certificate of deposit by agreement in the payee's own name on surrender of a former certificate in the debtor's name. Montgomery v. Schenck, 82 Hun, 24, 31 N. Y. Supp. 42.

133 Livingston v. Radcliff, 6 Barb. (N. Y.) 201.

134 Nexsen v. Lyell, 5 Hill (N. Y.) 466.

135 Fisher v. Marvin, 47 Barb. (N. Y.) 159.

136 Case Wagon Co. v. Wolfenden, 63 Wis. 185, 23 N. W. 485.

137 Day v. Stickney, 14 Allen (Mass.) 255.

paid as against the intermediate mortgagee.138 So, if the original note is surrendered, and a note of the heirs of one co-maker is received in full satisfaction, the original will be discharged.139 But if the negotiable note of an executor, taken for his testator's debt, is void for usury, although the creditor has surrendered the original note and collateral, he may reclaim the collateral as a security for the unpaid debt of the testator.140

Original Note Retained.

§ 1521. On the other hand, if the original note is retained upon taking a renewal, the renewal will not be presumed to be a satis faction.141 So, if the original note is renewed at maturity by a second note signed by additional parties, and the original note is retained; 142 or if the original note is partly paid in cash, and the balance is secured by a new note of the indorser in the maker's absence, the old note being still left with the holder.143 So, where the holder takes a second bill, with the statement that it is insufficient in amount to cover the interest of the first bill, and retains the first bill, the payment of the second bill will not discharge the unsatisfied interest on the first.14. And if a note is taken in payment of interest due on another note, to be indorsed on it as such, it is not an unconditional payment of such interest.145

Renewal with Additional Security.

§ 1522. Where the original debtor's note is taken with the indorsement of a third party, and is received in satisfaction, it will be a settlement of the original debt, although it is for a smaller

138 Lear v. Friedlander, 45 Miss. 559.

139 Lawson v. Gudgel, 45 Mo. 480.

140 Stebbins v. Smith, 4 Pick. (Mass.) 97.

141 Although the witness at the time thought that it was so. McGuire v. Gadsby, 3 Call (Va.) 234.

142 Woods v. Woods, 127 Mass. 141; Schmidt v. Livingston, 16 Mise. Rep. 554, 38 N. Y. Supp. 746.

143 East River Bank v. Butterworth, 45 Barb. (N. Y.) 476.

144 Lumley v. Hudson, 4 Bing. N. C. 15, 5 Scott. 238.

145 Stanton v. Caffee, 58 Wis. 261, 16 N. W. 601.