ing debt; 234 especially if the creditor offers to return the note within a reasonable time.235

If one agrees to sell goods to B., and takes the note of A. in payment, and A. fails before the note is offered, it will not be a good tender, unless it was expressly agreed that the seller should take the risk.236 So, if the goods are sold "to arrive," and A. fails before their arrival, and his notes are greatly depreciated, they need not be received in payment, nor the goods delivered.237 On the other hand, it has been held that, if a bond is received in absolute payment, it will be a satisfaction, although it proves to be of no value.238 But this is not so, as we have seen, in the case of bank notes which were of no value when delivered.2: 239

Payment by Note to Other Person.

§ 1533. Where by agreement, and at the creditor's request, the debtor gives his note in payment to a third person, it is prima facie an absolute payment of the debt.240 So, where one partner holds the note of his firm for a debt to him, and afterwards surrenders the note for a new note indorsed to a third person, and subsequently transferred without fraud to the original payee's wife, such novation makes the last note provable as a general debt due to the wife against the insolvent partnership.241

But if the debtor draws a note at the creditor's request, payable to a third party, but never delivers it to him, it will not be a payment. 242 So, if he accepts an order in favor of a third person, and

234 Galoupeau v. Ketchum, 3 E. D. Smith (N. Y.) 175.

235 Robson v. Oliver, 10 Q. B. 704.

236 Roget v. Merrit, 2 Caines (N. Y.) 117.

237 Benedict v. Field, 16 N. Y. 595. But see, contra, Bicknall v. Waterman, 5 R. I. 43.

238 Schroder's Case, L. R. 11 Eq. 131. So, where a mortgage is taken, and foreclosed after knowledge of the defective title created by it. O'Conner v. Hurley, 147 Mass. 145, 16 N. E. 764.

239 1 Edw. Bills & N. § 294; 2 Pars. Notes & B. 191. See section 1403, supra. 240 Smalley v. Edey, 19 Ill. 207; whether negotiable or not, Wise v. Hilton, 4 Me. 435. So, too, a bond given to such third person. Huffmans v. Walker, 26 Grat. (Va.) 315.

241 Parsons v. Tillman, 95 Ind. 452.

242 Hughes v. Israel, 73 Mo. 538.

the acceptance is afterwards surrendered.2 243 And it has been held that if one purchases goods from A., and gives his note for the price to B., and it is afterwards indorsed to A., and taken up at maturity by a new note indorsed by B. to A., it will not be a payment for the goods.244 So, if the debtor gives his note to A., who indorses it to the creditor, and the maker afterwards has it declared void for usury,245 And, if the debtor's note is given to another as trustee for the creditor, it will not be a payment of the debt,246 but may be merely a memorandum for use in a subsequent settlement.247 So, if it was given to the creditor's agent, and diverted by him to his own use.248

243 Bassett v. Sanborn, 9 Cush. (Mass.) 58.

244 Stephenson v. Rice, 12 W. Va. 575.

245 Johnson v. Johnson, 11 Mass. 359. But usury in the original debt wil not avoid a note made by the debtor to a third person at the creditor's request. McCoy v. Stranathan, 24 Ohio St. 486.

246 National Sav. Bank v. Tranah, L. R. 2 C. P. 556.

247 Hughes v. Kearney, 1 Schoales & L. 132.

248 Mullins v. Brown, 32 Kan. 312, 4 Pac. 305.

(2201)

§ 1534. If the debtor gives the note of another person in settlement, it will still be no payment, unless it is so agreed.249 But, if received as absolute payment, it will be so.2 250.And the agreement to receive it as such may even be implied from subsequent conduct. without proof of any express agreement.251 And after a lapse of more than 20 years such an agreement will be presumed.2

252

A goldsmith's bill was formerly regarded as money (like the modern bank note), and received as payment at the risk of the taker,253

249 Glenn v. Smith, 2 Gill & J. (Md.) 493; Stevens v. Anderson, 30 Ind. 391; Kephart v. Butcher, 17 Iowa, 240; or unless the holder is guilty of laches, Tobey v. Barber, 5 Johns. (N. Y.) 68. And a receipt given for the original debt is not itself such an agreement, and will not discharge it or the lien securing it.

v. Distilling Co., 67 Wis. 16, 29 N. W. 543.

Allis

250 Partee v. Bedford, 51 Miss. 84. So, where the vendor of goods takes a third party's note in payment expressly at his own risk, Hoopes v. Strasburger, 37 Md. 390; or where a novation is intended, Cammack v. Griffin, 2 La. Ann. 175; Cadens v. Teasdale, 53 Vt. 469; Gardner v. Levasseur, 28 La. Ann. 679; or a third person's acceptance is given with collateral, Delafield v. Construction Co., 118 N. C. 105, 24 S. E. 10. So, where the creditor takes judgment on the new note. Dick v. Flanagan, 122 Ind. 277, 23 N. E. 765.

251 Hotchin v. Secor, 8 Mich. 494.

252 Shipman v. Cook, 16 N. J. Eq. 251.

253 Tassell v. Lewis, 1 Ld. Raym. 743. Although presented and refused next day at 9 a. m., Moore v. Warren, 1 Strange, 415; and a fortiori if not presented for three or four days, Crawley v. Crowther, Freem. Ch. 257. As to bank notes, see § 1402, supra.

although the drawer absconded the next day.254 A city certificate may, in like manner, be received in absolute payment and satisfaction. And, where a corporation indorses and guaranties to a creditor the note of a third person in payment of the debt, it will extinguish the creditor's statutory right of action against stockholders of the company,256 or against the directors, 257 And a note will not bar a suit by attachment,258 or by creditors' bill to set aside a fraudulent conveyance,259 for the original (as an earlier existing) debt.

The note of a third person will even discharge a debt for a larger amount, if it is so received.260 And where it is so received, "if paid at maturity," the condition will be waived by the creditor's receiving payment of the note after maturity.201

Presumption against Payment.

§ 1535. There has been said to be no presumption that the note of a third person is taken in absolute payment, but the burden of such agreement is on the debtor.262 And, even where a renewal note

254 Hill v. Lewis, Skin. 410.

255 Pugh v. City of Little Rock, 35 Ark. 75. But not a county warrant given to an agent who had no authority to receive it. Herriman v. Shomon, 24 Kan. 387.

256 Richmond v. Irons, 121 U. S. 27, 7 Sup. Ct. 788.

257 Novelty Mfg. Co. v. Connell, 88 Hun, 254, 34 N. Y. Supp. 717.

258 Robinson v. Leach, 67 Vt. 128, 31 Atl. 32.

259 Preston Nat. Bank v. Pierson (Mich.) 70 N. W. 1013; Trezevant v. Terrell, 96 Tenn. 528, 33 S. W. 109, even though it includes a later debt. So, as to debtor's own note. Stout v. Stout, 77 Ind. 537.

260 Sanders v. Bank, 13 Ala. 353; Lee v. Oppenheimer, 32 Me. 253; Wipperman v. Hardy, 17 Ind. App. 142, 46 N. E. 537.

261 Conkling v. King, 10 N. Y. 440.

262 Smith v. Applegate, 1 Daly (N. Y.) 91; White Star Line Steamboat Co. v. Moragne, 91 Ala. 610, 8 South. 867; Caldwell v. Hall, 49 Ark. 508, 1 S. W. 62; Hunt v. Higman, 70 Iowa, 406, 30 N. W. 769; Malpas v. Lowenstine, 46 Ark. 552; Cheltenham Stone & Gravel Co. v. Gates Iron Works, 124 Ill. 623, 16 N. E. 923; Quimby v. Durgin, 148 Mass. 104, 19 N. E. 14; McCartney v. Kipp, 171 Pa. St. 644, 33 Atl. 233; Briggs v. Holmes, 118 Pa. St. 283, 12 Atl. 355. But see, contra, Shaw v. Insurance Co., 69 N. Y. 286; Hess v. Dille, 23 W. Va. 90; Challoner v. Boyington, 91 Wis. 27, 64 N. W. 422; Manning v. Lyon, 70 Hun, 345, 24 N. Y. Supp. 265.

is given with some new names on it, the original note will not be presumed to be paid, if it is retained by the creditor, without proof of an agreement, to that effect.263 So, if a judgment is rendered against the maker and the indorser of a note, and the indorser afterwards gives his note for the amount, it will not discharge the judgment without proof of such agreement.264 In like manner, a certificate of deposit, made by a third person who failed soon afterwards, will not be a payment of the original debt, unless such agreement is proved.2

265

If several notes are given by A. for B.'s accommodation, indorsed by B., and secured by an equal number of other notes and a mortgage made by B., the mortgage and notes of B. will not discharge A.'s notes, although the first of A.'s notes was surrendered and taken up by the corresponding note of B.266 If the debtor A. gives B.'s note, and agrees to secure it by mortgage, and the mortgage is afterwards given to A. himself, and not to the creditor, as agreed, the creditor may show that the note was not received in satisfaction of the debt.207 And where payment is alleged on the indorser's part by a transfer of other notes and a mortgage as collateral, the burden is on the debtor alleging the payment to prove that the notes and mortgage were taken as such.208 When the note of a third party is taken as collateral, and not collected by the creditor, it will not be an absolute payment, unless so agreed; and the creditor may still recover on the original debt.269 So, where the note is taken as collateral for a previous indorsement; 270 or where two notes are taken as collateral for a note by other parties, and one is

263 Woods v. Woods, 127 Mass. 141; Gordon v. Price, 32 N. C. 385. 264 Feamster v. Withrow, 12 W. Va. 611.

265 Downey v. Hicks, 14 How. 240.

266 Clopper's Adm'r v. Bank, 7 Har. & J. (Md.) 92.

267 Thom v. Wilson's Ex'r, 27 Ind. 370.

268 Tilford v. Miller, 84 Ind. 185. The note of a third person transferred to the creditor will be considered only as collateral, and disregarded in a judgment on the original bill, unless an express agreement be shown to receive it in satisfaction. Caldwell v. Fifield, 24 N. J. Law, 150. So, it is not payment if a third person's bond be taken as collateral, and judgment obtained on it. Sterling v. Trading Co., 11 Serg. & R. (Pa.) 179.

269 Abercrombie v. Mosely, 9 Port. (Ala.) 145; even without returning the collateral note, Chapman v. Clough, 6 Vt. 123.

270 Austin v. Curtis, 31 Vt. 64.