the debt; the debt and obligation to pay the same remain and the arbitrary bar of the statute alone stands in the way of the creditor seeking to compel payment. The case of Butler v. Johnson, 111 N. Y. 204, 18 N. E. 643, has no application to the case at bar. There at the suit of the devisees an executor was restrained from selling their lands for the payment of o lawed debts. The action was not against the creditor but against one who, as Judge Peckham said, was a trustee for the devisees.. The learned judge recognized the general rule that the statute of limitations is not a ground for affirmative relief, but, as he pointed out, the action of the executor was a breach of his trust for the beneficiaries. There the fealty of the defendant was due not to the creditor but to the landowner. Here the fealty of the defendant was due solely to himself and to the beneficiaries whom he represents. That case was decided on the ground of a breach of trust. There is nothing of the kind here.

Nor is the position in which the plaintiffs are placed anomalous. A pledgee may retain or sell the pledge, though the debt to secure which the pledge was given is outlawed (Jones v. Merchants' Bank of Albany,

Rob. 162; Jones on Pledges, § 582). This is not on the theory that by lapse of time title has vested in the pledgee, for the law is otherwise (Jones on Pledges, § 581), but because the statute bars merely the remedy by action. Doubtless from lapse of time the court might find that a mortgage had been paid, though there were no direct evidence of payment. Bean v. Tonnele, 94 N. Y. 381, 46 Am. Rep. 153; Matter of Neilley, 95 N. Y. 382. But to the statement already made that there is no such claim in the pleadings or in the findings, I may add that no such question is presented by the evidence. So far from proving any payment or anything that might lead the court to believe that payment had been made, the plaintiffs took pains to show affirmatively that nothing had been paid on the mortgage. They proved by witnesses, relatives of the plaintiffs, that Mrs. Gilbert, the defendant's intestate, had on several occasions shown them the bond and mortgage and stated her belief that they had become outlawed, and that her attorney had advised her to that effect. There is, therefore, no equity in the plaintiff's claim, and we can indulge in no speculation or surmise that were it not for the lapse of time and the death of all the parties actual payment might be proved. If the plaintiffs have any such proof, however, that may be given upon a new trial under an amendment to the complaint.

The judgment appealed from should be reversed, and a new trial granted; costs to abide the event.

VANN, J. (dissenting). It is insisted that the judgment appealed from should not

stand because a court of equity will not grant affirmative relief founded only on the statute of limitations, nor restrain the foreclosure of a mortgage for any reason without actual payment or an offer to pay the debt secured thereby. It is a general prinIciple that the statute of limitations may be used as a shield, but not as a sword. The party attacked may use it to defend himself, but he cannot use it for aggressive action or as the means of getting property from the other party. Courts of equity, under ordinary circumstancès, do not open their doors to a plaintiff who can produce no evidence in support of his claim for affirmative relief except the lapse of time and the statute of limitations. In an early case in this court a vendee in possession of land for 20 years under a contract of sale sued in equity to compel the vendor to convey the legal title to him. While he alleged payment of the purchase money, he proved payment only of the first installment and relied on the presumption raised by the statute to enable him to get the land without payment of the balance. Thus he attempted to get property without paying for it and his complaint was dismissed for want of equity. Morey v. Farmers' Loan & Trust Co., 14 N. Y. 302. Lawrence v. Ball, reported in the same volume at page 477, of 14 N. Y. was a similar case resulting in the same way. These cases were followed and made the basis of the judgment rendered in Johnson v. Albany & Susquehanna R. R. Co. 54 N. Y. 416, 13 Am. Rep. 607, where one Edgerton, after subscribing for 20 shares of the defendant's stock at the price of $2,000, paid $1,000 but did not pay five calls for installments of $200 each for the balance and an action was brought against him therefor. He interposed as a defense the statute of limitations, which was held good as to four installments, but judgment was entered against him for the last, which he paid. His assignee then brought an action to compel the defendant to issue its certificate for the 20 shares subscribed for, although 8 of them had not in fact been paid for. He relied wholly on the presumption of payment arising from the statute, but was defeated upon the ground that such presumption was designed simply as a defensive weapon, or as a shield against attack and not as a method of acquiring property through affirmative action. Matter of Willett, 70 N. Y. 490 was similar in principle and was decided substantially without argument on the authorities already referred to. Other cases might be cited to the same effect but the foregoing are sufficient to show that while the statute may be used to defend, it cannot be used to attack, or to enable one person to take away the property of another by means thereof.

If the object of this action is to obtain affirmative relief simply, it should fail; but is that its real purpose? What are the facts? A mortgage for $400 on a farm worth $1,000

authorize it, yet it makes the affidavits presumptive evidence of a title equivalent to one obtained by a sale under foreclosure in equity. If a purchaser, in good faith, brought ejectment, how could the landowners defend against one form of sale any more than the other, when the statute pronounces each equivalent to the other? If they could not, the plaintiffs were without any direct means of defense against the attack made by the defendant.

was allowed to run with no effort to collect to from October 13, 1874, when the last payment fell due, until May 11, 1895, when the mortgagor died, and yet seven years longer until the mortgagee died, and one year longer still when his administrator began a foreclosure by advertisement, claiming the amount unpaid to be $938.75, which with the costs would equal the value of the property. Both mortgagor and mortgagee lived in the same county, yet the mortgagee allowed more than 20 years to elapse after the mortgage became due before the mortgagor died, and although he survived him 7 years, he never attempted to collect the mortgage in any way. More than 28 years had passed before the proceeding to foreclose was begun. If the administrator had sued the bond at law, or had commenced to foreclose the mortgage in equity, the statute of limitations could have been pleaded as an absolute defense. Perhaps for this reason he kept out of court altogether and sought to enforce the mortgage through the power of sale contained therein. What was the heir of the mortgagor to do under these circumstances in order to defend himself? He had not commenced the attack. The administrator was the aggressor, although doubtless from prudential motives he did not go into court. Nearly a generation had gone by since the last payment fell due. All the parties to the original transaction had passed away. The witnesses presumed to know whether the mortgage had been paid or not were dead, or incompetent to testify. There was no way to defend against the statutory foreclosure, directly, yet if the sale took place what would be the result? The statute provides that a sale "to a purchaser in good faith is equivalent to a sale pursuant to judgment in an action to foreclose a mortgage" in every substantial respect. Code Civ. Proc. § 2395. The affidavits of sale, when recorded, "are presumptive evidence of the matters of fact therein stated with respect" to the property sold. Id. § 2398. Thus, the proceeding to foreclose by advertisement is a substitute for a foreclosure by action, and has the same effect so far as any question now before us is concerned. Jackson v. Henry, 10 Johns. 185, 6 Am. Dec. 328; Tuthill v. Tracy, 31 N. Y. 157. It was simply another form of foreclosure resorted to, apparently, because no direct defense could be made thereto. Is it possible that a landowner can be deprived of his land by an attack out of court, which has the same effect as an attack in court with no opportunity to defend himself? The plaintiffs were made parties to the proceeding under the statute, for notice was served upon them, yet they could not defend in the proceeding itself as the law does not authorize it. They could only defend themselves by going into court and asserting their defense there. It is true, as urged by the appellant, that they could give notice at the sale that the mortgage was outlawed, but the statute does not

But, assuming that notice given at the sale would be effective as to the purchaser, it would be no protection under the recording act against a grantee or mortgagee of the purchaser acting in good faith and without notice. There would be no effectual means: of giving notice to them, for nothing in the nature of a lis pendens could be filed or recorded in the county clerk's office so as to notify all the world. It would be only by accident or through good fortune in learning of a proposed conveyance or mortgage that notice could be given in time, and if action was thus defeated once what assurance would there be that it could be defeated twice, or indefinitely while another generation was passing and witnesses to prove the notice were disappearing? Can one with a defense to a mortgage given him by statute be prevented from asserting it in any way, directly or indirectly, at the election of the mortgagee? Can the mortgagee by selecting one form of foreclosure or onemethod of attack, prevent an absolute defensegiven by law? Can one party to a contract control both the action and the defense? I think that the plaintiffs did not commence this action by way of attack, but simply for self-defense. With no remedy at law, bound and helpless against the attack made upon them by the mere election of the defendant to foreclose by advertisement, their only means of defending themselves was to make their defense in a court of equity. Quite independently of the technical learning relating to a cloud upon title, or to the duty of paying the debt before asking affirmative relief, I think they had a right to thus defend themselves, for otherwise a mortgagee can nullify the statute of limitations and the mortgagor is powerless to prevent it. The plaintiffs did not go into court for affirmative relief in the ordinary meaning of that term. They did not go there to get the property of the defendant, but went solely for the purpose of defending themselves against the attack made by him. Equity looks at substance rather than form, and the substance of the matter is that the defendant was the assailant. As Chancellor Kent said

in Jackson v. Henry, 10 Johns. 196, 6 Am. Dec. 328: "The notice given by the advertisement is intended for the party as well as the world, and he has an opportunity to apply to chancery if he wishes to arrest the sale," in that case on the ground of usury, but is that a more equitable defense than

the statute of limitations, so as to warrant a distinction? Peters v. Mortimer, 4 Edw. Ch. 279. This is purely a defensive action, and unless the courts confess themselves unable to enforce the law, it should be sustained as the only practicable way of asserting a defense which the law gives. “Ubi jus, ibi remedium, et boni judicis ampliare jurisdictionem." In principle it is like an important case where the defense of the statute was made and a cloud upon title prevented by parties who went into a court of equity as plaintiffs and set up the statute of limitations as a defense to an attempt to sell real estate under a power contained in a will. Butler v. Johnson, 41 Hun, 206, 210; Id., 111 N. Y. 204, 18 N. E. 643, cited in O' Flynn v. Powers, 136 N. Y. 423, 32 N E. 1085, and Mellen v. Mellen, 139 N. Y. 221, 34 N. E. 925. In that case the Special Term had held that the plaintiffs were not entitled to a decree restraining the sale, because the statute was designed as a shield and could not be invoked in aid of affirmative relief. The General Term and the Court of Appeals, however, held otherwise, and it was declared by Judge Follett that the "action is prosecuted strictly in defense of the plaintiffs' title, seeking no affirmative relief as such against the defendant, except to prevent her from clouding their title. Suppose a statutory foreclosure of a mortgage be commenced, all rights of action being barred by the statute, would the owner of the fee be compelled to lie by and permit his title to be clouded by a sale and defend an action of ejectment brought by the purchaser? We think not. The statute of limitations may be used defensively by a plaintiff when, as in this case, he is without an adequate legal remedy." When the case reached this court Judge Peckham said: "In taking proceedings under such circumstances to prevent the further action of the defendant, which would otherwise result in placing such a cloud upon the title to their property, we think the plaintiffs do not run counter to any principle or decision holding the general view that the statute of limitations can only be used as a shield, and not as a sword. Under such circumstances the bar of the statute is simply a defense to the affirmative and improper proceedings of the defendant, and is not an attack upon any right of a third person." The question was asked in that case whether the plaintiffs had the right to enter a court of equity and ask for an injunction to restrain the sale when the foundation of the right rested upon the proposition that there were no legal claims against the estate, and that, in turn, depended upon the barring of such claims by setting up the statute of limitations against them, and it was held that they could. In other words, a defensive action was sustained, founded solely on the statute of limitations, and that is this case.

*

*

ECUTORY AGREEMENT.

Where defendant by a written contract agreed to pay plaintiff's assignor for a release of a certain claim $1,000 on the passing of title to certain premises, and $8,600 on the completion of a roof of a contemplated building on the premises, and afterwards, before the roof was completed, they entered into an agreement whereby defendant agreed to pay $2,500 for the release of the claim and the surrender of the prior agreement, the subsequent agreement was binding, though not executed.

Haight and Gray, JJ., dissenting.

Appeal from Supreme Court, Appellate Division, First Department.

Action by Albert Bandman against William E. Finn. From an order of the Appellate Division, First Department (92 N. Y. Supp. 1096, 103 App. Div. 322), sustaining exceptions to the direction of a verdict at Trial Term and ordering a new trial, defendant appeals. Reversed, and judgment directed to be entered on directed verdict.

Abram I. Elkus, for appellant. Edward M. Shepard, for respondent.

CULLEN, C. J. On May 14, 1902, the defendant became the purchaser from the executors of Henry Hilton of certain premises on Broadway and Lafayette Place, in the city of New York. Out of the negotiations leading to that sale, in the procurement of which the plaintiff's assignor, one Schmidt, had acted as broker, the defendant executed and delivered to said Schmidt the following agreement: "I, William E. Finn, in consideration of H. Schmidt executing a release of claim for commission to Horace Russell and Edward D. Harris, as executors, etc., do hereby agree to pay to said H. Schmidt one thousand dollars on passing of title 726-730 Broadway and 31-39 Lafayette Place, which closing has been set down for May 15, 1902, and to further pay him the additional sum of $8,600 on completion of roof of contemplated building on said premises. In the event of a sale of these premises, I agree to pay H. Schmidt said Eighty-six hundred dollars on consummation of said sale. William E. Finn. Witness: Charles A. Stahl." In October, 1903, no building having been erected on the premises and the defendant not having sold the same, Schmidt retained a lawyer, Mr. Levy, to nego

tiate with the defendant for a satisfaction and surrender of the obligation. Finally the negotiations terminated on Monday before Thanksgiving Day, during that year, in an oral agreement whereby the defendant promised to pay Schmidt the sum of $2,500 on the Wednesday following, and Schmidt agreed to execute to the defendant a. release of all ' his claims and to surrender to him the agreement. The parties met at the time and place appointed, and the defendant offered to carry out the contract. Schmidt had not with him the written agreement which was to be surrendered. On the defendant requiring the production of the agreement, Schmidt went away with the otensible purpose of procuring it. He never returned, but refused to carry out the contract. Thereafter the defendant sold the premises, and after the consummation of that sale, Schmidt having assigned his contract, the assignee brought this suit. At the conclusion of the evidence, each party requested the court to direct a verdict, the plaintiff for the full amount claimed in the agreement and the defendant for the sum which had he had agreed to pay therefor. Neither party requested the submission of the cause to the jury. The court directed a verdict for the plaintiff for the sum of $2,500, and ordered the plaintiff's exceptions to be heard in the first instance by the Appellate Division. That court sustained the exceptions and ordered a new trial. From that order an appeal has been taken to this court. Neither party having asked to go to the jury, the determination of any question of fact was necessarily submitted to the trial court. The case having been before the Appellate Division only on the exceptions taken on the trial, all the facts and inferences therefrom must be assumed to have been found in the defendant's favor, and the Appellate Division could not sustain the exceptions unless in no view of the evidence could a jury have found in the defendant's favor.

The testimony in the case tended to show -we may say conclusively showed, for it was uncontradicted that on Monday there was effected a complete oral agreement by which, on the Wednesday following, the defendant was to pay Schmidt $2,500, and Schmidt was to surrender the agreement and release his claim. This was not the mere act of the lawyer, but Schmidt was informed of the proposed agreement in detail, accepted it, and the defendant was notified of such acceptance. No objection was raised at the trial, nor is it made on this appeal, that the agreement was invalid under the statute of frauds, because not in writing, and therefore that question is not before us; but the plaintiff insisted that the case is one of accord and satisfaction, and till executed had no binding force, and either party was at iberty to withdraw from it. This was the view entertained by the Appellate Division in setting aside the verdict: the learned trial court having directed the verdict on the

ground that the new contract entered into between the parties operated as a novation and discharged the liabilities under the old contract. I am of opinion that the trial court was correct. Doubtless the general rule is that an executory agreement for accord without satisfaction made under it does not bar a cause of action, and that tender of performance is insufficient for that purpose. Ryan v. Ward, 48 N. Y. 204, 8 Am. Rep. 539; Kromer v. Heim, 75 N. Y. 574, 31 Am. Rep. 491. It is also the rule that payment of a less sum than that due does not constitute a valid satisfaction, although otherwise if the debtor gives the creditor additional security. Jaffrey v. Davies, 124 N. Y. 164, 26 N. E. 351, 11 L. R. A. 710. These rules, however, do not apply to the present case. At the time of the agreement between the parties in November, 1903, there had been no breach of the written contract with the defendant. Under that contract he was obligated to pay only in one of two contingencies, on the completion of the roof of the contemplated building on such premises, or in case of a sale of the same by the defendant. Neither of these contingencies had occurred. Therefore the situation was that of a creditor holding an unmatured and contingent obligation, agreeing with his debtor for the surrender of the obligation. Even in the case of a claim unmatured, but not contingent, the payment and receipt of a less sum than that specified is a full satisfaction of the larger claims not yet due. Brooks v. White, 2 Metc. (Mass.) 283, 37 Am. Dec. 95; Bowker v. Childs, 3 Allen (Mass.) 434. As is said in the cases, it may be much more advantageous to the creditor to obtain the money before it is due, and this is sufficient consideration for receiving a smaller sum. So, also, it has been held that an executory agreement for such a surrender or compromise will be enforced. In Fertilizer Company v. Duncan, 91 Md. 144, 46 Atl. 347, 50 L. R. A. 401, the defendant was indebted to the plaintiff in a sum for the payment of which at a future date he executed his written agreement, and as collateral security for the payment of the obligation he delivered certain stock and promissory notes of third parties. Before the maturity of his obligation he entered into an oral agreement with the plaintiff by which he agreed to pay it immediately a less sum than that owing by him, and the plaintiff agreed on such payment to cancel the obligation and surrender the collateral. It was held that the earlier date of payment was sufficient consideration for the agreement on the part of the plaintiff and that the agreement would be enforced. It was there said: "The actual payment of the amount agreed to be paid by Duncan would have constituted a good accord and satisfaction if the collateral consideration relied on was sufficient to support the agreement; but the question is, not whether there has been an accord and satisfaction, but

whether there was a valid consideration for the agreement of December 3d and 5th, and, if there was, whether the failure of the creditor to perform his part of that agreement by refusing to accept the money precludes a court of equity from enforcing it." In the present case the original agreement between the parties, though witnessed, was not under seal, and hence we are not embarrassed with the technical rule that an agreement under seal can be modified only by an instrument of a similar character. The plaintiff's assignor having at the time of the second agreement no cause of action against the defendant, I do not see why he could not enter into a valid agreement with the defendant for the transfer and surrender of the latter's obligation to the same extent as he might have done with any third party.

The learned counsel for the respondent insists that what the plaintiff's assignor negotiated for was, not the surrender of an unmatured obligation, but the satisfaction of an existing claim, and that therefore the rules as to accord and satisfaction applied. Assuming that Schimdt urged that the claim was due, to this the defendant did not assent. On the contrary, the defendant's position was that there was no existing liability on the contract, and he required as a condition of the settlement not only a release of any claim but the surrender of the contract. The counsel also suggests there might have been such delay in the construction of the building on the premises as to render the defendant liable, even though the roof of the building was not completed. To this it is sufficient answer that no such fact was pleaded in the complaint nor any proof of it given on the trial. The real nature of the transaction must therefore be determined on the record before us, regardless of the conflicting claims of the parties, and on that record it appears that no default had been made by the defendant when the second agreement was made. Therefore the plaintiff had no cause of action at that time, and the principles of accord and satisfaction have no application.

It is further to be observed that in the aspect most favorable to the plaintiff the claim at the time of the agreement for the surrender of the contract was a disputed one. The contention of the defendant that it was not due was not only made in good faith, but, as we have said, was well taken. The rules as to accord and satisfaction do not obtain in their entirety in the compromise of disputed claims. Thus the payment of a less sum than that claimed or actually owing is a good satisfaction, if the dispute is bona filde. Fuller v. Kemp, 138 N. Y. 231, 33 N. E. 1034, 20 L. R. A. 785; Nassoiy v. Tomlinson. 148 N. Y. 326, 42 N. E. 715, 51 Am. St. Rep. 695. On the other hand, if a defendant gives his note or mortgage in settlement of the demand, he cannot defend on the ground that there was no liability on his part, or, if liable, it was for a less amount. Stewart v. Ahren78 N.E.--12

feldt, 4 Denio 189; Feeter v. Weber, 78 N. Y. 334. Nor does the rule that an executory agreement for accord, until performed, does not constitute a defense, which always obtains in the case of a conceded debt (Kromer v. Heim, 75 N. Y. 574, 31 Am. Rep. 491), equally apply to an agreement or compromise of a disputed claim. In most of the cases in the reports the debtor had given his promissory note or some security for the amount agreed upon. I appreciate that these cases may be distinguished from the one before us, because it may be said that the note or security was itself an execution of the accord. But there are at least two cases in this court in which that distinction cannot be drawn. In Wehrum v. Kuhn, 61 N. Y. 623, the complaint was for work, labor, and services and for money loaned. It also alleged a compromise and settlement between the parties and an agreement to pay $2,000. The referee, who is now a judge of this court, found for the plaintiff on all counts and awarded judgment for the amount at which the parties had compromised the claim. An examination of the printed case on appeal shows that the agreement of compromise was oral and nothing was passed between the parties in pursuance thereof. On appeal is was urged that the finding of the referee on the counts for labor and services and money loaned was without evidence to support it. This court held through Judge Earl: "It is not important to inquire whether the referee committed any error as to his findings upon these claims. or not for the reason that the plaintiff also claims that in May, 1869, he and the defendant came together, and that the defendant agreed to pay him and he agreed to receive the sum of $2,000 as a compromise of all his claims against the defendant and the referee has, upon sufficient evidence, found this compromise and awarded to the plaintiff only the two thousand dollars and interest. * * It is the policy of the law to uphold such a compromise. The compromise of the disputed claim, whether the claims were in fact valid or not, furnishes a sufficient consideration for the promise to pay the $2,000"citing Stewart v. Ahrenfeldt, 4 Denio, 189; Crans v. Hunter, 28 N. Y. 389; Vosburgh v. Teator, 32 N. Y. 561. In Duniam v. Griswold, 100 N. Y. 224, 3 N. E. 76, the plaintiff asserted that he intrusted certain securities to the defendant, who had converted them. To adjust this claim, which he disputed, the defendant executed a written agreement to pay the plaintiff the sum of $9,000. The action was brought upon that promise. The defendant offered to prove that he owed the plaintiff nothing, which proof was excluded. The ruling was upheld by this court; Judge Earl saying: "The plaintiff having made a claim against him, and he having disputed it, and the parties having settled the dispute by agreeing upon the amount due in an account stated, which the defendant promised to pay, that promise is founded upon a suffi