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81. Note Given after Dissolution of Firm.-A note given in the firm name after dissolution is held not to discharge the original debt, in the absence of an agreement to that effect.14 Especially is this so where it is given without authority, 15 or where it was taken in ignorance of dissolution.16 An agreement to discharge the retiring partner will not be inferred from the mere acceptance of the note of the continuing partners for the joint debt, but must be established by independent proof.17 But it is held that when a creditor of a partnership, after dissolution thereof, knowing that one or several of the partners have agreed with the others to assume and pay the debts of the firm, takes the negotiable notes of those who should pay in payment of the debt of the firm, he thereby cancels the claim against the firm, and discharges the other partners.18 The acceptance by a firm creditor of a note of a succeeding partner who has assumed the debts and liabilities of the old firm, without an acquiescence or agreement of the other member of the old firm, may operate to extinguish the right of the creditor to proceed against the other partner, as such a transaction operates to extend the time of the principal to the detriment of the sureties.19

82. Note Given or Received by Agent or Public Officer:-The general rule is that paper given or taken by an agent will not extinguish the demand, unless there is an agreement to that effect, express or implied, and the agent had authority so to act.20 But if a creditor takes the note of the agent of the debtor, and gives a receipt, as for money due from the principal, in consequence of which the debtor deals differently with the agent, on the faith of the receipt, from what he would otherwise have done, the debt is discharged.1 The acceptance of a note by an officer holding an execution is held no satisfaction unless by agreement made with the creditor, or under his directions. While the plaintiff in an execution may, by express agreement, but not otherwise, accept promissory notes as an absolute payment of the judgment and execution, the sheriff's certificate is not

1019 and note; Grubbe v. Pierce, v. Chafee, 11 R. I. 609, 23 Am. Rep. 156 Wis. 29, 145 N. W. 207, Ann. 531. Cas. 1915C 1199, 51 L.R.A. (N.S.) 358.

Notes: 35 L.R.A. (N.S.) 57, 58; 51 L.R.A. (N.S.) 358.

14. Note: 35 L.R.A.(N.S.) 55. 15. Lee v. Fontaine, 10 Ala. 755, 44 Am. Dec. 505; Perrin v. Keene, 19 Me. 355, 36 Am. Dec. 759.

16. Parker v. Canfield, 37 Conn. 250, 9 Am. Rep. 317.

Note: 35 L.R.A. (N.S.) 54.

17. Arnold v. Camp, 12 Johns. (N. Y.) 409, 7 Am. Dec. 328; Nightingale

78

Note: 35 L.R.A. (N.S.) 56.

18. Note: 7 Am, Dec. 330.

19. Smith v. Shelden, 35 Mich. 42, 24 Am. Rep. 529. See PARTNERSHIP, vol. 20, pp. 987, 988.

20. Taylor v. Conner, 41 Miss. 722, 97 Am. Dec. 419.

Note: 35 L.R.A. (N.S.) 49.

1. Wright v. First Crockery Ware Co., 1 N. H. 281, 8 Am. Dec. 68.

2. Mitchell v. Hockett, 25 Cal. 538, 85 Am. Dec. 151.

Note: 35 L.R.A. (N.S.) -83.

proof of such agreement. The acceptance of the note as a payment must be proved by other evidence. But in a jurisdiction where the rule prevails that a note is prima facie payment, it has been held that a prisoner's note taken by a jailer in payment of a fine and costs is, in effect, so much money in his hands, and he becomes at once debtor for the fine and costs.*

83. View that Negotiable Note Is Payment.-In several jurisdictions the rule is followed that a negotiable note of a debtor given to his creditor is prima facie a satisfaction of a prior simple contract debt, but that taking for an antecedent debt a promissory note not governed by the law merchant is not a payment of the debt, unless it is so agreed to be by the parties, the onus of proving which is on the debtor. One reason advanced for this rule is that a creditor receiving the note of his debtor relinquishes no security, but has the same responsibility for payment which he had before, with more direct and unequivocal evidence of the debt, and a more simple remedy for recovering it, and with power also by indorsement to transfer the whole interest in it to another. The authorities maintaining these views base their decisions on the law merchant, and reason that when the debtor gives a non-negotiable note for an existing debt,

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5. The Kimball, 3 Wall. 37, 18 U. S. (L. ed.) 50; Segrist v. Crabtree, 131 U. S. 287, 9 S. Ct. 687, 33 U. S. (L. ed.) 125 (stating rule); Smith v. Bettger, 68 Ind. 254, 34 Am. Rep. 256; Thompson v. Peck, 115 Ind. 512, 18 N. E. 16, 1 L.R.A. 201: Varner v. Nobleborough, 2 Greenl. (Me.) 121, 11 Am. Dec. 48 and note; Newall v. Hussey, 18 Me. 249, 36 Am. Dec. 717; Perrin v. Keene, 19 Me. 355, 36 Am. Dec. 759; Banger v. Warren, 34 Me. 324, 56 Am. Dec. 657; Shumway v. Reed, 34 Me. 560, 56 Am. Dec. 679; Crooker v. Crooker, 52 Me. 267, 83 Am. Dec. 509; Paine v. Divinell, 53 Me. 52, 87 Am. Dec. 533; Union Ins. Co. v. Grant, 68 Me. 229, 28 Am. Rep. 42; Bunker v. Barron, 79 Me. 62, 8 Atl. 253, 1 A. S. R. 282; Apthorp v. Shepard, Quincy, (Mass.) 298, 1 Am. Dec. 6; Sargent v. Southgate, 5 Pick. (Mass.) 312, 16 Am. Dec. 409; Reed v. Upton, 10 Pick. (Mass.) 522, 20 Am. Dec. 545; Cary v. Bancroft, 14 Pick. Mass.) 315, 25 Am. Dec. 393; Butts

v. Dean, 2 Metc. (Mass.) 76, 35 Am. Dec. 389; Melledge v. Boston Iron Co., 5 Cush. (Mass.) 158, 51 Am. Dec. 59 and note; Thacher v. Dinsmore, 5 Mass. 299, 4 Am. Dec. 61 and note; Maneely v. MeGee, 6 Mass. 143, 4 Am. Dec. 105; Goodenow v. Tyler, 7 Mass. 36, 5 Am. Dec. 22; Emerson v. Providence Hat Mfg. Co., 12 Mass. 237, 7 Am. Dec. 66; Quimby v. Durgin, 148 Mass. 104, 19 N. E. 14, 1 L.R.A. 514; Brewer Lumber Co. v. Boston, etc., R. Co., 179 Mass. 228, 60 N. E. 548, 88 A. S. R. 375, 54 L.R.A. 435; ThomsonHouston Electric Co. v. Palmer, 52 Minn. 174, 53 N. W. 1137, 38 A. S. R. 536 (stating rule in Illinois).

Notes: 10 Am. Dec. 685; 37 Am. Dec. 48; 64 Am. Dec. 296; 35 L.R.A. (N.S.) 8, 9.

6. Lindeman v. Rosenfield, 67 Ind. 246, 33 Am. Rep. 79; Smith v. Bettger, 68 Ind. 254, 34 Am. Rep. 256.

Notes: 11 Am. Dec. 54; 35 L.R.A. (N.S.) 6.

7. Melledge v. Boston Iron Co., 5 Cush. (Mass.) 158, 51 Am. Dec. 59.

8. Smith v. Bettger, 68 Ind. 254, 34 Am. Rep. 256.

Note: 35 L.R.A. (N.S.), 1.

he cannot be subjected to the payment of the debt twice, for the payment of either the original debt or the note is a discharge of both; but when the debtor gives a bill of exchange or a promissory note governed by the law merchant, and it should pass into the hands of an innocent holder, he might be compelled to pay it, either as maker or indorser, notwithstanding he had previously paid the creditor the original debt. Under such a rule, unless the negotiable paper was held to be a payment, the creditor could collect his debt twice, once from his indorsee when he negotiated the paper, and once from the debtor on the original debt, and thus subject the debtor to the payment of his debt twice. The authorities maintaining the opposite view hold that an action cannot be maintained on the original obligation until the note is delivered up or satisfactorily accounted for and the objection first stated is thereby overcome.10 In answer to this position the courts maintaining the rule that a negotiable note given by a debtor to his creditor is a prima facie payment say that to require a return of the note, which may have passed through several hands, would tend to undo business transactions and disturb commerce.11

84. Force of Presumption that Note Was Accepted as Payment.The presumption that a promissory note given by a debtor to his creditor for an antecedent debt was accepted as payment is one of fact only, and is by no means conclusive, but may be rebutted by proof of an agreement to the contrary,12 or by evidence showing the intention of the parties to have been otherwise; 18 and this evidence may arise from the general nature of the transaction, as well as from direct testimony to the fact.14 The burden of showing, either by direct

9. Smith v. Bettger, 68 Ind. 254, 34 Am. Rep. 256; Varner v. Nobleborough, 2 Greenl. (Me.) 121, 11 Am. Dec. 48; Thacher v. Dinsmore, 5 Mass. 299, 4 Am. Dec. 61; Maneely v. McGee, 6 Mass. 143, 4 Am. Dec. 105.

10. See supra, par. 58.

11. Smith v. Bettger, 68 Ind. 254, 34 Am. Rep. 256.

143, 4 Am. Dec. 105; Quimby v. Durgin, 148 Mass. 104, 19 N. E. 14, 1 L.R.A. 514; Brewer Lumber Co. v. Boston, etc., R. Co., 179 Mass. 228, 60 N. E. 548, 88 A. S. R. 375, 54 L.R.A. 435; Lewis v. England, 14 Wyo. 128, 82 Pac. 869, 2 L.R.A. (N.S.) 401.

Notes: 50 A. S. R. 722; 35 L.R.A. (N.S.) 6, 7, 8, 98, 99.

12. Smith v. Bettger, 68 Ind. 254, 13. The Kimball, 3 Wall. 37, 18 U. 34 Am. Rep. 256; Thompson v. Peck, S. (L. ed.) 50; Shumway v. Reed, 34 115 Ind. 512, 18 N. E. 16, 1 L.R.A. Me. 560, 56 Am. Dec. 679; Bunker v. 201; Varner V. Nobleborough, 2 Barron, 79 Me. 62, 8 Atl. 253, 1 A. S. Greenl. (Me.) 121, 11 Am. Dec. 48 R. 282; Melledge v. Boston Iron Co., and note; Newall v. Hussey, 18 Me. 5 Cush. (Mass.) 158, 51 Am. Rep. 59; 249, 36 Am. Dec. 717; Butts v. Dean, Brewer Lumber Co. v. Boston, etc., R. 2 Metc. (Mass.) 76, 35 Am. Dec. 389 Co., 179 Mass. 228, 60 N. E. 548, 88 and note; Reed v. Upton, 10 Pick. A. S. R. 375, 54 L.R.A. 435. (Mass.) 522, 20 Am. Dec. 545; Thach- Note: 35 Am. Dec. 391. er v. Dinsmore, 5 Mass. 299, 4 Am. 14. The Kimball, 3 Wall. 37, 18 U. Dec. 61; Maneely v. McGee, 6 Mass. S. (L. ed.) 50; Bunker v. Barron, 79

proof or circumstantial evidence, that a note was not given and received in payment is on the creditor.15 If there is some evidence, although slight, to overcome the presumption, the whole matter becomes a question of fact on the evidence whether the note was in satisfaction and discharge of the original debt.16

85. Evidence that Note Was Not Accepted as Payment.-The circumstances which might have the effect of overcoming the presumption are very numerous. Of the very many that have been spoken of by the courts a few may be mentioned to show how weak the presumption really is. The general doctrine is that the taking of a note is to be regarded as payment only when the security of the creditor is not thereby impaired.17 Thus it has been held that where a note is taken in ignorance of the facts, or under a misapprehension of the rights of the parties, as where the negotiable paper is not binding on all the parties primarily liable, the presumption that it was taken in payment is rebutted; 18 but it may be otherwise, where a creditor, with full knowledge of all the facts, takes the security of a part of his debtors.19 The fact that such presumption of payment would deprive the creditor taking the note of the substantial benefit of some security, such as a mortgage, guaranty, or the like, would be sufficient evidence to meet and repel the presumption.20 Thus where a creditor obtains the bond of a third person conditioned for the payment by a day certain of the amount due him by his debtor, and a few days after takes his debtor's note, which he causes to be antedated so as to correspond with the bond, with which the note also corresponds in time of payment and amount, the presumption of payment is removed, and the bond remains in force notwithstanding the note. If the effect of holding a note to be payment of a claim would be to defeat the right of a creditor to a lien granted by law, such as a mechanic's lien and the like, the presumption of payment will be overcome. It has been held that the rule does not apply

Me. 62, 8 Atl. 253, 1 A. S. R. 282;
Lewis v. England, 14 Wyo. 128, 82
Pac. 869, 2 L.R.A. (N.S.) 401.

15. Smith v. Bettger, 68 Ind. 254, 34 Am. Rep. 256; Thompson v. Peck, 115 Ind. 512, 18 N. E. 16, 1 L.R.A. 201.

Note: 35 L.R.A. (N.S.) 6, 7, 98. 16. Melledge v. Boston Iron Co., 5 Cush. (Mass.) 158, 51 Am. Dec. 59. 17. Paine v. Dwinel, 53 Me. 52, 87 Am. Dec. 533 and note.

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5 Cush. (Mass.) 158, 51 Am. Dec. 59. Note: 11 Am. Dec. 54.

19. Paine v. Dwinel, 53 Me. 52, 87 Am. Dec. 533.

20. Shumway v. Reed, 34 Me. 560, 56 Am. Dec. 679; Bunker v. Barron, 79 Me. 62, 8 Atl. 253, 1 A. S. R. 282. Note: 4 Am. Dec. 63.

1. The Kimball, 3 Wall. 37, 18 U. S. (L. ed.) 50; Bunker v. Barron, 79 Me. 62, 8 Atl. 253, 1 A. S. R. 282; Butts v. Dean, 2 Metc. (Mass.) 76, 35 Am. Dec. 389.

18. Paine v. Dwinel, 53 Me. 52, 87 Am. Dec. 533 and note; Bunker v. 2. The Kimball, 3 Wall. 37, 18 U. Barron, 79 Me. 62, 8 Atl. 253, 1 A. S. S. (L. ed.) 50; Brewer Lumber Co. R. 282; Melledge v. Boston Iron Co., v. Boston, etc., R. Co., 179 Mass. 228,

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where a factor has changed an account on his book into a promissory note and that the factor will not be held to have burdened himself with a debt for which he received no consideration. It is thus seen that there is a strong disposition not to extend the doctrine as to the presumption of payment, arising from giving a note for an antecedent debt, but to take advantage of special circumstances in each particular case to except it from the operation of that doctrine. Indeed, the courts are inclined to bring their adjudications on this subject as nearly as possible into accord with the principle established in a majority of the states of the union that a note is to be regarded as payment only when it is so intended by the parties.*

86. Effect of Note as Payment as Question of Fact.-Where there is a conflict of evidence, or dispute as to whether the debt was to be extinguished by the giving of the note, or whether the note was simply an evidence of the debt, or taken as collateral security, or conditional payment, it becomes a question of fact for the jury, and not one of law for the court.5 Whether a note or a receipt in full is evidence of a contract which extinguishes the original cause of action is a question for the jury; but where the only evidence is a receipt stating that the note was taken in settlement of an account, the evidence is insufficient to submit the question to the jury. The burden of proof is on the debtor to establish that a note was accepted in discharge of the obligation.8

6

Note of Third Person

87. View that Note Is Not Payment.-It may be fully conceded that in all cases where a party holding the note or other written obligation of another sells it or exchanges it for other property without indorsement, and without fraud, no presumption of liability arises. against him in the event the paper proves to be worthless." But, where the note, check, or draft is not given and accepted as the thing

60 N. E. 548, 88 A. S. R. 375, 54 L.R.A. 435.

3. Goodenow v. Tyler, 7 Mass.

5 Am. Dec. 22.

4. Note: 11 Am. Dec. 54.

36,

283; Hart v. Boller, 15 Serg. & R. (Pa.) 162, 16 Am. Dec. 536 and note; Jones v. Johnson, 3 Watts & S. (Pa.) 276, 38 Am. Dec. 760 and note.

Note: 35 L.R.A. (N.S.) 107.

6. The Charlotte v. Hammond, 9 Mo. 59, 43 Am. Dec. 536.

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7. McMurray v. Taylor, 30 Mo. 263, 77 Am. Dec. 611.

5. Lyman v. Bank of United States, 12 How. 225, 13 U. S. (L. ed.) 965; Segrist v. Crabtree, 131 U. S. 287, 9 S. Ct. 687, 33 U. S. (L. ed.) 125; Lyons v. Planters' Loan, etc., Bank, 8. Runyon v. Snell, 116 Ind. 164, 18 86 Ga. 485, 12 S. E. 882, 12 L.R.A. N. E. 522, 9 A. S. R. 839; Nightingale 155; Unterharnscheidt V. Missouri v. Chafee, 11 R. I. 609, 23 Am. Rep. State L. Ins. Co., 160 Ia. 223, 138 N. 531.

a

V. 459, 45 L.R.A. (N.S.) 743; Yates 9. See infra, par. 90.

. Donaldson, 5 Md. 389, 61 Am. Dec.

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