Sec 1004

It has been already stated that the acceptance of a third party as security on a new contract, before breach, constitutes novation, by which the old agreement is merged in the new.6 And in any view, the security of a third party received for a portion of the debt, is a sufficient consideration for the release of the residue.7 In such cases, however, the plea must aver, and it must be satisfactorily proved, that the substitution was intended as an extinguishment.1

Acceptance of third party as security amounts to novation.

1 Jenness V. Lane, 26 Me. 475; Lee V. Oppenheimer, 32 Me. 253; Babcock V. Hawkins, 23 Vt. 561; Guild V. Butler, 127 Mass. 386; Boyd V. Hitchcock, 20 Johns. 76; Christie V. Craige, 20 Penn. St. 430; Jones V. Perkins, 29 Miss. 142; Bradshaw V. Davis, 12 Tex, 336; Whitsitt V. Clayton, Sup. Ct. Colorado, 1881, 12 Rep. 486.

2 Guild V. Butler, 127 Mass. 386; supra, sec 935, 953.

3 Leake, 2d ed. 880; citing Case V. Barber, T. Raym. 450; Lynn V. Bruce, 2 H. Bl. 317.; Henderson V. Stobart, 5 Ex. 99; McManus V. Bark, L. R. 5 Ex. 65; Plevins V. Downing, L. R. 1 C. P.

D. 220. To same effect see Bragg V. Pierce, 53 Me. 65; Costello V. Cady, 102 Mass. 140; Clarke V. Hawkins, 5 R. I. 219.

4 Cushing V. Wyman, 44 Me. 121; Miller V. Hatch, 72 Me. 481; Clifton V. Litchfield, 106 Mass. 34; Blake V. Blake, 110 Mass. 202; and cases cited supra, sec 997.

5 See supra, sec 1001; infra, sec 1032.

6 Supra, sec 852 et seq.

7 Kemp V. Watt, 15 M. & W. 672; Henderson V. Stobart, 5 Ex. 99; see Sard V. Rhoads, 1 M. & W. 153; Griffiths V. Owen, 13 M. & W. 63.

Sec 1005

An agreement by a creditor to take a fractional payment of his debt, in consideration of other creditors making a like reduction, may be supported as an accord and satisfaction on the same principles. There is an adequate consideration to sustain such an agreement, viz., the reciprocal forbearance of creditors, by which a fair division of the insolvent debtor's estate is secured, and he is protected from undue pressure.2 Whether the agreement of composition is per se a satisfaction, or whether to make it, such payment is a condition precedent, depends upon the construction of the agreement. "At common law, where a body of creditors accept a composition, they may agree to take the promises of the debtor, with or without a surety, in satisfaction of the debts, or they may agree that payment shall be a condition precedent, and that if the debtor pays the composition at a certain time and place, the creditors will accept that composition in satisfaction of their debts. It is a question of construction of the instrument of arrangement."3 In other words, an agreement may be so couched as to make the assent of a specific number of creditors to the com-

When other creditors release, composition mar be satisfactory.

1 Ibid.; Bayley V. Homan, 3 Bing. N. C. 920; Collingbourne V. Mantell, 5 M. ft W. 289; Harris V. Reynolds, 7 Q. B. 71; see 1 Smith's L. C. 7th Am. ed. 612; Babcock V. Hawkins, 23 Vt. 561.

2 Supra, sec 517; Boyd V. Hind, 1 H. ft N. 947; Good V. Cheeseman, 2 B. & Ad. 328. In Couldery V. Bartrum, L. R. 19 Ch. D. 394, Jessel, M. R., said: "It was felt to be a very absurd thing that the creditors could not bind themselves to take less than the amount of their debts. There might be friends of the debtor who would come forward and pay something toward the debts; or it might be that the debtor was in such a position that if the creditors took less than their debts he would have something over for himself, and would exert himself to pay the dividend; whereas, if the creditors did not, they would get nothing, or less than nothing, if they incurred costs in endeavoring to get payment. Therefore, it was necessary to bind the creditors; and as every debtor had not a stock of canary birds, or tomtits, or rubbish of that kind, to add to his dividend, it was felt desirable to bind the creditors in a sensible way, by saying that if they all agreed, there should be a consideration imported from the agreement constituting an addition to the dividend, so as to make the agreement no longer nudum pactum, but an agreement made for valuable considerations, then there would be satisfaction." See for further citation, supra, sec 1001.

3 Mellish, L. J., Hatton in re, L. R. 7 Ch. 726; adopted Leake, 2d ed. 88l position, coupled with a promise by the debtor to pay a designated dividend, a satisfaction by itself; or it may be so couched as to make the satisfaction conditioned on payment. In the latter case, if the payment be not made, the original indebtedness may be sued on.1 And if negotiable paper given under such a composition, the satisfaction being conditioned on payment, be dishonored on maturity, the creditor is entitled to fall back on his original claim.2 - Where "a debtor has induced a number of his creditors to accept a composition amounting to less than their entire demand," "such an agreement, if entered into with the debtor by a number of creditors, each acting on the faith of the engagement of the others, will be binding upon them, for each in that case has the undertakings of the rest as a consideration for his own undertaking."3 The same rule applies to an agreement to give time.4 But the agreement ceases to bind a creditor who is afterwards refused the benefit held out to him in the proposed composition.5 And when subscriptions are dependent upon all creditors joining, they cannot be enforced if all creditors refuse to join.6 The validity of the composition depends on a correlative agreement by other creditors to proportionally abate.7 sec 1006. Goods or labor may be taken in satisfaction of a debt, and when this is agreed on by the parties, and the thing agreed on is received, the accord and satisfaction are complete. In such case the question of adequacy is not at issue, supposing that there is no taint of imposition or unfairness.8 But services rendered,.

Goods or labor may be taken in satisfaction to work a discharge, must be something to be done in consequence of the agreement of satisfaction; not something previously done.1 And if the services are liquidated by the parties at a sura less than the debt, they are not a satisfaction unless there be some additional consideration.2 - The accord in such cases, to be a bar, must be executed in accordance with its terms.3 - When a thing incapable of exact liquidation, and susceptible of various estimates as to its value, is given in payment of a debt, the rule that a debt is only discharged by a full money payment does not apply. The thing given, if valued by the parties as an equivalent for the whole debt, must be so considered.4 - The payee and holder of an overdue note, an aged woman, agreed with the maker, that in consideration of what he had done for her and furnished her, and in consideration of his paying her doctor's bill and funeral expenses, and putting head-stones at her grave and that of her husband, he should have the note, which, however, she was to retain as security. It was held, on a suit by the payee's administrator against the maker, that the agreement, being performed, constituted an accord and satisfaction.5

1 Leake, 2d ed. 882; Edwards V. Coombe, L. R. 7 C. P. 519; Newell V. Van Praagh, L. R. 9 C. P. 96; Edwards V. Hancher, L. R. 1 C. P. D. 111.

2 Edwards V. Hancher, L. R. 1 C. P. D. 111. See as to payment under such circumstances, supra, sec 954 et seq.

3 1 Smith's L. C. 7th Am. ed. 600, citing Reay V. White, 3 Tyrwh. 596, 1 C. & M. 748; Cutter V. Reynolds, 8 B. Mon. 596; and see cases cited supra, sec 379, 527 et seq.

4 Good V. Cheeseman, 2 B. & Ad. 328.

5 Garrard V. Woolner, 8 Bing. 258.

6 Reay V. Richardson, 2 C. M. & R. 422.

7 Van Rensselear V. Aiken, 44 N. Y. 126.

8 Supra, sec 504; Leake, 2d ed. 878; Metc, on Cont. 191; Curlewis V. Clark, 8 Ex. 375; Reed V. Bartlett, 19 Pick. 273; Eaton V. Lincoln, 13 Mass. 424; Blinn V. Chester, 5 Day, 359; Boyd V. Hitchcock, 20 Johns. 76; Kellogg V. Richards, 14 Wend. 116; Deweese V. Cheeke, 35 Ind. 514; Jones V. Bullitt, 2 Littell, 40.