III. PAYMENT BY BILL, CHECK, OR ACCEPTANCE.

§ 1548. There is no difference between bills and notes as to their effect, when taken in payment of a debt. A bill of exchange, like a note, is not in itself an absolute payment.403 In like manner, if the purchaser of goods gives his draft on a third party for them, it will not be payment if it is dishonored. 404 And this has been held to be so where the goods were sold in the morning, and a bank draft was given in payment in the afternoon of the same day, and the drawer failed three days later.405 If a draft is given for goods purchased, it will be presumed to be a conditional, and not an absolute, payment.406

If goods are sold on time bills, and the drawer of the bills fails before the delivery of the goods, the purchaser can only recover

403 Copland v. Martin, 9 Sim. 433; Chitty v. Naish, 2 Dowl. 511; Board of Education of Fairport Union Free School v. Fonda, 77 N. Y. 350; Gallagher v. Roberts, 2 Wash. C. C. 191, Fed. Cas. No. 5,195. So, whether return of the draft is tendered, Morgan v. Bitzenberger, 3 Gill (Md.) 350; or the payee continues to hold it after dishonor, Clark v. Mundal, 1 Salk. 124.

404 Maxwell v. Deare, 8 Moore, P. C. 363, where the drawee failed before maturity of the draft; Mauney v. Coit, 86 N. C. 463.

405 Gibson v. Toby, 53 Barb. (N. Y.) 191.

406 League v. Waring, 85 Pa. St. 244; Haines v. Pearce, 41 Md. 221. And the burden of proof is on the party alleging it to be more, as a question of fact for the jury. Haines v. Pearce, supra. But see, contra, Schierl v. Baumel, 75 Wis. 69, 43 N. W. 724.

nominal damages in a suit on the contract of sale.407 And, after such bill is dishonored, he cannot recover the goods in an action of trover. 408 But, if the purchaser at the time knew that the bill was worthless and would not be paid, the transaction will not ́amount to a valid sale.* 409

Agreement for Satisfaction.

410

§ 1549. Payment by bill or draft upon a third person is not an absolute payment, unless there is an agreement to that effect; and some authorities require an express agreement.*11 And, if a receipt is given for payment "when paid," it will not be sufficient to prove such agreement.412 So, a receipt in full "when paid," or "when in funds," although the original evidence of the debt is sur rendered at the time.413 So, a nonnegotiable order upon a third person and a receipt of the original debt is not a payment without agreement to that effect.414 And this is true of a bill given "in lieu" of the original bill upon its surrender.*15

A draft will, however, be an absolute satisfaction, if the parties so agree, although drawn against a particular fund.416 So, a draft on a bank in another city, indorsed by the debtor, and offered and received "in payment of account in full," will be a payment, al

407 Griffiths v. Perry, 1 El. & El. 680.

408 Miles v. Gorton, 2 Cromp. & M. 504.

409 But an intention to obtain more credit than he was entitled to is not the same thing. Noble v. Adams, 7 Taunt. 59.

410 Haines v. Pearce, 41 Md. 221. So, a bill on the debtor's firm, Dougal v. Cowles, 5 Day (Conn.) 511; or a draft taken for a note, Helme v. Middleton. 14 La. Ann. 484; or a draft payable out of a particular fund, Wadlington v. Covert, 51 Miss. 631. An order upon a third person, payable out of a particular fund to be created is prima facie not an absolute payment, and in any case the presumption of payment may be rebutted by evidence that it was taken as collateral only. Brill v. Hoile, 53 Wis. 537, 11 N. W. 42.

411 Although credited on account as a payment, Jennison v. Parker, 7 Mich. 355.

412 Tucker v. Charpentier, 28 La. Ann. 617; although so receipted and afterwards lost, Phifer v. Maxwell, Id. 862.

413 Proctor v. Mather, 3 B. Mon. (Ky.) 353.

414 Jose v. Baker, 37 Me. 465.

415 Ex parte Barclay, 7 Ves. 597.

416 First Nat. Bank of Wellsburg v. Kimberlands, 16 W. Va. 555.

417

though the bank on which it is drawn afterwards fails; and the debtor will only be liable as indorser of the draft. So, a cash order given by the debtor, and received on condition that the drawee owes the amount.418 So, a check is paid by the holder receiving from the drawee its draft in payment of the check.+19

Where the defendant pleads that he has given a bill "in satisfaction" of the debt, it has been held to be a good plea.420 But he must allege that it was given and received in satisfaction, 21 and was negotiable.22 And, even though a formal accord and satisfaction of a sealed instrument required a seal at common law, it has been held that a bill of exchange might be pleaded by the debtor as given in payment of a sealed bond.42

Presumption as to Payment-Intention.

§ 1550. Where the debtor gives a bill on a third party, and it is not accepted by the drawee, the evidence of an agreement to receive it as payment must be strong.424 And if he pays for goods by an order on a third person for his own convenience, and the drawee has no funds of the drawer in his hands, an action will still lie on the original debt.425 So, if the bill is not accepted or paid by the drawee, it will not be a payment of the debt, although the debtor who drew it afterwards sues upon it in the payee's name, and makes a compromise with the drawee.426

If the bill of the debtor's agent is taken by the creditor under protest, and without any option offered him, it will not be a payment of the debt.27 Thus, where a freight contract provides for pay

417 Day v. Thompson, 65 Ala. 269.

418 Waite v. Vose, 62 Me. 184.

419 Loth v. Mothner, 53 Ark. 116, 13 S. W. 594.

420 Hilliard v. Smith, Comb. 19.

421 Crisp v. Griffiths, 2 Cromp., M. & R. 159.

422 James v. Williams, 13 Mees. & W. 828.

423 Ligon v. Dunn, 28 N. C. 133.

424 2 Pars. Notes & B. 158.

425 Heald v. Warren, 22 Vt. 410; McNiel v. McCamley, 6 Tex. 163.

426 Graham v. Sykes, 15 La. Ann. 49.

427 Byles, Bills, 389; 2 Daniel, Neg. Inst. 294; Robinson v. Read, 9 Barn. &

C. 449; Marsh v. Pedder, Holt, N. P. 72, 4 Camp. 257; Indig v. Bank, 80 N. Y. 100.

ment on delivery of the cargo, a bill given for it by the shipper's agent will not be a payment.428 So, where goods are purchased, and the purchaser's agent gives a bill payable out of the proceeds of their sale. In like manner, a bill given by a shipmaster on the owners for supplies furnished will be no bar to an action against the owners for the debt.**

429

430

§ 1551. If, on the other hand, the bill of a third person is voluntarily accepted by the creditor, on reference by the debtor to such third person for payment, it will, in general, be a satisfaction of the debt.431 But, as in the case of the note of a third person, the defendant's plea must aver that the bill was taken in satisfaction or payment.432

And the question is one of intention for the jury. This is so where the consignee of goods buys and remits to his principal a bill on London. 433 So, if the bill of a third person drawn upon another in favor of the creditor is dishonored on its presentment, and the drawer fails the same day, it will not be a payment without clear proof of an agreement to that effect.+34 So, the maker of a note will not be discharged by giving the draft of a bank, which is dishonored on presentment.435 And if a purchaser pays for goods by the bill of a third person, and both drawer and acceptor become bankrupt before maturity, the seller may recover the value of the goods from the purchaser, after deducting such dividends as he has received from the drawer's and acceptor's estates.436 So, the draft of a third person, to be credited to the debtor if it proves "available,"

428 Marsh v. Pedder, Holt, N. P. 72, 4 Camp. 257.

429 Wallace v. Agry, 4 Mason, 336, Fed. Cas. No. 17,096.

420 Zerrano v. Wilson, 8 Cush. (Mass.) 424. So, a draft given by the master on the owner for a loan to the master, on which judgment has been recovered against him. Descadillas v. Harris, 8 Me. 298. But in Louisiana the taking of such draft from the master operates as a novation. Hunt v. Boyd, 2 La. 109.

431 Byles, Bills, 389; 2 Daniel, Neg. Inst. 295; Strong v. Hart, 6 Barn. & C. 160, 9 Dowl. & R. 189, and 2 Car. & P. 55; Smith v. Ferrand, 7 Barn. & C. 19, 9 Dowl. & R. 803.

432 Baillie v. Moore, 8 Q. B. 489.

433 Hardman v. Bellhouse, 9 Mees. & W. 596.

434 Weaver v. Nixon, 69 Ga. 699.

435 Indig v. Bank, 80 N. Y. 100.

436 Ex parte Blackburne, 10 Ves. 204.

is not a payment in case of its dishonor, although the debtor obtained it from his banker by giving a check, which was charged against him.437

Payment by Acceptance of Debtor.

§ 1552. In like manner, the debtor's own acceptance of a bill is no payment, unless it is so agreed.438 And if it is given for the acceptor's note, and the note is left with the creditor until the bill. matures, the presumption will be that the acceptance was not intended as an absolute payment.439 So, the debtor's acceptance is not an absolute payment, where the creditor shows that it was lost before indorsement, and had not been heard from in two years.* So, the debtor's acceptance in favor of another party, to be credited to him if received by such party, will not be a payment if it is not received; and, upon its surrender, the creditor may still sue on the original debt.441 And, where the debtor gives his acceptance, it cannot be pleaded, before it becomes due, as payment of a bond.***

440

If, however, the debtor's acceptance is transferred by the creditor, and is outstanding in the hands of an indorsee at the time suit is brought, it will be a conditional payment, and available as such until dishonored.443 So, if the maker of a note pays it by accepting an order drawn on him, it will be a good payment, as against a subsequent indorsee of the note after maturity.*** And if an acceptance is renewed by another acceptance for a larger amount, and the renewal is received in full satisfaction, and transferred by the creditor, it will be sufficient to plead such acceptance and renewal without averring payment to the indorsee.445

437 Hodgen v. Latham, 33 Ill. 344.

438 Ausable River Boom Co. v. Sanborn, 36 Mich. 358. 439 Cooper v. Gibbs, 4 McLean, 396, Fed. Cas. No. 3,194. 440 Rolt v. Watson, 4 Bing. 273.

441 Tracy v. Pearl, 20 Vt. 162.

442 Worthington v. Wigley, 3 Bing. N. C. 454.

443 Belshaw v. Bush, 11 C. B. 191.

444 Schuster v. Marden, 34 Iowa, 181.

445 Lewis v. Lyster, 2 Cromp., M. & R. 704, 1 Gale, 320.

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