Sec 957

A negotiable security may be accepted in discharge of a debt, when such is the understanding of the parties, in which case the dishonor of the security does not revive the debt.1 If the buyer offers to pay cash, and the vendor takes a negotiable security in preference, the security is taken as an absolute payment.2 Hence, a plea that a bill or note was given in full satisfaction and discharge has been held good on demurrer, and the replication that it was not paid when due has been held bad.3 And as elsewhere stated, a negotiable security for a fractional amount of a debt may be received in satisfaction of the debt when such is the intention of the parties, the creditor thinking (rightly or erroneously) that a higher security for a less sum is better than a lower security for a greater sum.4 When negotiable paper is thus taken in satisfaction, a vendor cannot fall back on the original consideration.5 When a prior debt secured by a note is thus satisfied, the note is extinguished.6

1 Thorne V. Smith, 10 C. B. 659.

2 Bottomley V. Nuttall, 5 C. B. N. S. 122. Mr. Benjamin (Sales, 3d Am. ed. sec 730) says: "The authorities in support of the rule that in the absence of stipulation to the contrary, the negotiable security is only considered to be a conditional payment, defeasible on the dishonor of the security, need not be reviewed, as there is no conflict on the point." To this, he cites among other cases, Owenson V. Morse, 7 T. R. 64; Puckford V. Maxwell, 6 T. R. 52; Griffiths V. Owen, 13 M. & W. 58; James V. Williams, 13 M. & W. 828; Belshaw V. Bush, 11 C. B. 191; Ford V. Beech, 11 Q. B. 873; Plimley V. Westley, 2 Bing. N. C. 249; Valpy V. Oakley, 16 Q. B. 941. The American editor cites to the same effect, Middle-Bex V. Thomas, 5 C. E. Green, 39; Archibald V. Argall, 53 Ill. 307; Guion V. Doherty, 43 Miss. 538; Syracuse R. R. V. Collins, 3 Lansing, 29; Burk-halter V. Bank, 42 N. Y. 538; May V. Gamble, 14 Fla. 467. As to novation in such cases, see supra, sec 856. That a payment of a pre-existing debt by draft of third party is conditional, see League V. Waring, 85 Penn. St. 244.

3 See Benj. on Sales, 3d Am. ed. sec 752, and note a; citing, among other cases, Wallace V. Agry, 4 Mason, 336; Clap in re, 2 Low. 226; Kimball V. Ship Anna Kimball, 2 Cliff. 4; Hudson V. Bradley, 2 Cliff. 130; Paine V. Dwinel, 53 Me. 52; Ward V. Bourne, 56 Me. 161; Hutchins V. Olcutt, 4 Vt. 549; Wait V. Brewster, 31 Vt. 516; Watkins V. Hill, 8 Pick. 522; Reed V. Upton, 10 Pick. 525; Wood V. Bodwell, 12 Pick. 268; Melledge V. Iron Co., 5 Cush. 158; Thurston V. Blanchard, 22 Pick. 18; Camp V. Gullett, 2 Eng. (Ark.) 524; Costar V. Davies, 3 Eng. (Ark.) 213; and see cases supra, sec 954. In Clap in re, Lowell, J., said: "The difference between the law of Massachusetts and that of England, and most of the states of the Union, I understand to be merely this; that in the courts of this state a negotiable bill or note is taken to be a more beneficial security than a book account, or any debt of that kind; and though it does not operate as a merger in law, is presumed prima facia to be taken as payment. But it is a mere question of fact, and any evidence which rebuts the presumption is competent and it is easily overcome." To the same effect, see Morrison V. Smith, 81 Ill. 221; Kappes V. Lumber Co., 1 Ill. App. 280; Frazer V. Boss, 66 Ind. 1; Mehlberg V. Fisher, 24 Wis. 607. As to the distinctive rule in Massachusetts, New York, and Pennsylvania, see supra, sec 954.

4 Belshaw V. Bush, 11 C. B. 191; Turney V. Dodwell, 3 E. & B. 136.