Sec 857

Whether the new agreement operates as an extinguishment of the old, and hence technically as a novation, is a question to be determined from the entire contract. As will be elsewhere seen, the receipt of a cheque is prima facie proof of payment, which is made stronger by the fact that the cheque comes from a third party.1 Negotiable paper may, by the understanding of the parties, be taken either in satisfaction or as a mere collateral;2 the question being one of the construction of the agreement.3 But, as a general rule, the acceptance of immature negotiable paper on account only suspends the debt and operates as conditional payment, and hence as a conditional novation.4 When, however, by negligence of the holder, the security is lost, so that there can be no recovery on it, the original debtor is thereby released.5 - That the old agreement is not necessarily finally extinguished, but may be revived on contingencies provided for in the agreement of substitution, is well settled.6 But to novation, in its full sense, the extinguishing of the old agreement is an essen-tial feature. The old agreement is absorbed in the new agree-ment, and the plaintiff cannot recover on the old agreement which is no longer operative.7

Whether old agreement is extinguished depends on construction.

1 2 Ch. Cr. L. 11th Am. ed. 1372.

2 See infra, sec 955-7; Story Prom. Notes, sec 104, 438; Good V. Cheese-man, 2 B. & Ad. 328; Garrard V. Wool-ner, 8 Bing. 258; Wright V. Crockery-Co., 1 N. H. 281; Johnson V. Cleaver, 15 N. H. 332; Whitcomb V. Williams, 4 Pick. 228; Huse V. Alexander, 2 Met. 157; Darlington V. Gray, 5 Whart. 487; Weakley V. Bell, 9 Watts,.

273. As to distinctive New York law, see infra, sec 954.

3 1 Ch. on Con. 11th ed. 1377; Tat-lock V. Harris, 3 T. R. 174; Thompson V. Percival, 5 B. & Ad. 925; Cochrane V. Green, 9 C. B. N. S. 448.

4 2 Ch. on Con. 11th ed. 1377.

5 Pothier, Cont. pt. 3, V. 2, art. 6, ss. 1,2.

Sec 858

An agreement for substitution of one debtor for another is void unless it has sufficient consideration.8 If C, the creditor, for instance, simply says, "I agree to take S. (the substitute) in place of O. (the original debtor)," this is void;9 and so if S. simply says, "I agree to take O.'s place and become debtor to C.," this, without a consideration, does not bind S.10 But it is not necessary that such a consideration should in any degree be proportional to the interest involved. The adequacy of consideration is a question the courts do not undertake to determine.11 It is enough if the promisor makes the promise on which he is charged as a compensation for some surrender, no matter how slight, by the promisee.1 Thus if C, the original creditor, says to the substitute, "If you will take his place, I will release D.," the original debtor, this binds C.; and if S., the substitute, says to C, "If you will release D., I will take his place," this is a sufficient consideration so far as concerns S.2 The extinction of intermediate original liabilities is in itself a sufficient consideration to sustain the new contract by which the parties to the reconstructed contract become bound to each other in immediate privity.3 C., the creditor, suffers detriment by surrendering D., the original debtor. S. says, " If you will submit to this detriment by letting D. go, I will take his place." This detriment to E. is a sufficient consideration for S.'s promise to C. - An extension of time, also, may be a sufficient consideration for the substitution of a new security. The creditor suffers the detriment of postponement of payment, and in consideration a better secured note is given him.4 Thus the surrender of one note and the acceptance of another, even for a smaller amount, coupled with an extension of payment, form a sufficient consideration to sustain the second note.5 - The agreement between the substituted debtor and the original debtor can be rescinded at any time before the acceptance of the substitution by the original creditor.6 - A distinction is to be taken between an assignment of a debt to A. and an order on the debtor to pay the debt to A., such order not amounting to an assignment. In the latter case, the debtor is not liable to the holder of the order unless on a promise with sufficient consideration.7

Must be consideration for agreement of substitution.

1 Infra, sec 953.

2 Infra, sec 954 et seq.

3 Sayer V. Wagstaff, 5 BeaV. 415; Maillard V. Argyle, 6 M. & G. 40; Bot-tomley V. Nuttall, 5 C. B. N. S. 122; see Van Vranken V. R. R., 55 Iowa, 135.

4 Infra, sec 954 et seq.

5 Infra, sec 958.

6 Infra, sec 955 et seq.; Story on Part. sec 254.

7 Cuxon V. Chadley, 3 B. & C. 591; Wharton V. Walker, 4 B. & C. 163;.

Heaton V. Angier, 7 N. H. 397; Hall V. Marston, 17 Mass. 575; see supra, sec 728.

8 Cuxon V. Chadley, 3 B. & C. 591; Thomas V. Shillibeer, 1 M. & W. 124; McKinney V. Alvis, 14 Ill. 34; see supra, sec 505.

9 See Butterfield V. Hartshorne, 7 N. H. 345.

10 Ford V. Adams, 2 Barb. 349.

11 Supra, sec 853; and see also supra, sec 516-7.