Sec 958

When a debtor gives on account of his debt negotiable paper on which he is liable as drawer or endorser, the acceptance of this paper is prima facie an answer to a suit for the debt; and the creditor is bound in reply to account for the bill. If by his negligence the party primarily bound is freed from liability, this discharges the debtor, not only from his secondary liability on the paper, but from his liability on the original contract.7 Where the creditor takes paper on which the debtor is primarily liable, the debtor must show, if he set up the paper in bar to an action for the original debt, either that the paper is still due, or that if overdue it has been paid or endorsed away to other parties so as to keep afloat the liability of the debtor.1 "When, also, the debtor pays to his creditor negotiable paper to which he is not a party, and on which his name does not appear, this is to be regarded as payment unless it be shown that due steps were taken to collect the paper, but that these steps failed.2 If there be laches in pursuit of the bill, so that the liability of the parties is discharged, this, if imputable to the creditor, discharges the debt.3

Negotiable paper may be accepted in satisfaction of a debt.

Negotiable paper taken in payment may bar suit when holder by negligence releases paper.

1 Supra, sec 860; infra, sec 1001; Leake, 2d ed. 891; Lichfield V. Green, 1 H. & N. 884; Lewis V. Lyster, 2 C. M. R. 704; see Meyer V. Lathrop, 73 N. Y. 315; Cake V. Bank, 86 Penn. St. 303.

2 Benj. on Sales, 3d Am. ed. sec 731; Strong V. Hart, 6 B. & C. 160; Robinson V. Read, 9 B. & C. 449; Anderson V. Hillies, 12 C. B. 499; Cowasjee V. Thompson, 5 Moore P. C. 165; supra, sec 956.

3 Sibree V. Tripp, 15 M. & W. 23; see fully as to accord and satisfaction, infra, sec 996 et seq.

4 See supra, sec 504; infra, sec 1000-1. 5 Benj. on Sales, 3d Am. ed. sec 732;.

Sibree V. Tripp, 15 M. & W. 23. As to novation in such cases, see supra, sec 856. As to merger of old debt, supra, sec 684, 860; infra, sec 959, 1040.

6 Bantz V. Basnett, 12 W. Va. 772; supra, sec 852 et seq. That a partnership debt may be extinguished by taking negotiable paper from one partner, see supra, sec 862.

7 Price V. Price, 16 M. & W. 232; Camidge V. Allenby, 6 B. & C. 373. By statute 3 and 4 Anne, a bill of exchange taken in satisfaction of a debt amounts to payment when the holder does not "take his due course to obtain payment." See Peacock V.

Sec 959

Before a vendor can repudiate a negotiable security and bring suit on the price, he must account for the security; since otherwise it may turn up in the hands of third parties,and the purchaser be compelled to pay twice.4 If negotiable paper is passed by the vendor to third parties, it is a bar to his recovery of the debt.1 Nor can the vendor recover the price of goods for which he has taken negotiable paper which he has lost,2 nor when he has so altered a bill as to vitiate it and preclude the purchaser from using it against antecedent parties;3 though it is otherwise when the purchaser is the party primarily liable on the bill.4 sec 960. A payment made by means of a void security may be repudiated by the creditor without taking any steps to pursue the parties liable on the face of the paper.5 "If the securities thus passed were forged or counterfeited; or if not what on their face they purport to be, as if they appeared to be foreign bills needing no stamp, but were really domestic bills invalid for want of a stamp, the vendor would be entitled to rescind the sale for failure of consideration."8 Hence a payment in forged notes is a nullity.7 "A forged note delivered in payment does not operate as a satisfaction or extinguishment of an antecedent debt or demand."8 And the purchaser who knowingly palms off a worthless security (though genuine) on a vendor, is liable for a fraud, and the vendor may rescind the sale and bring trover for the goods;9 or he may recover back the money paid on such worthless security.10 Where, also, both parties are ignorant If passed to others, or lost, or altered, this may bar remedy.

Purcell, 14 C. B. N. S. 728; Smith V. Miller, 43 N. Y. 171; Auburn Bank V. Hunsicker, 72 N. Y. 252; Thompson V. Cooper, 57 Ala. 560.

1 Price V. Price, 16 M. & W. 232; National Bank V. Tranch, L. R. 2 C. P. 556.

2 Camidge V. Allenby, 6 B. & C. 373; Rogers V. Langford, 1 C. & M. 637; Robson V. Oliver, 10 Q. B. 704; Smith V. Mercer, L. R. 3 Ex. 51; see Price V. Price, 16 M. & W. 232.

3 Benj. on Sales, 3d Am. ed. sec 735; Swinyard V. Bowes, 5 M. & S. 62; Gallagher V. Roberts, 2 Wash. C. C. 191; Clark V. Young, 1 Cranch, 181; Swett V. Southworth, 125 Mass. 417; Ormsby V. Fortune, 16 S. & R. 302; M'Lughan V. Bovard, 4 Watts, 308; Mehlberg V. Tisher, 24 Wis. 607; Taylor V. Daniel, 9 B. Mon. 53; Thomason V. Cooper, 57 Ala. 560.

In Smith V. Mercer, L. R. 3 Ex. 51, the purchaser gave a bill drawn on Feb. 20th by B.'s Bank of Liverpool or London, but though the vendor put it in circulation, it was not presented in London until April 23d, when it was dishonored, B.'s bank having failed on April 19th. No notice of dishonor was given to the purchaser. It was held that he was discharged, the court ruling that the vendor either took the bill as cash, in which case there was no further liability, or as a negotiable security, in which case the purchaser could not be put in a worse position than he would have been had he endorsed the bill. It will be observed that this was the case of a country bank note, which it is not the practice to present at maturity. And in England it is held that there is no laches in the mere failure to present country bank notes for payment at the bankers on finding they have failed, if the notes are returned to the purchaser within a reasonable time. Robson V. Oliver, 10 Q. B. 704; Rogers V. Lang-ford, 1 C. & M. 637.

4 Benj. on Sales, 3d Am. ed. sec 733; Price V. Price, 16 M. & W. 232; Bun-ney V. Poyntz, 4 B. & Ad. 568; Swett V. Southworth, 125 Mass. 417.

Void security no payment.

1 See Belshaw V. Bush, 11 C. B. 191; and criticism of Miles V. Golton, 2 C. & M. 504, in Smith's Mercantile Law, 539; Benj. on Sales, 3d Am. ed. sec 736.

2 Crowe V. Clay, 9 Ex. 604. That the original bill must be produced, see Ramuz V. Crowe, 1 Ex. 167.

3 Alderson V. Langdale, 3 B. & Ad. 661.

4 Atkinson V. Handon, 2 Ad. & E. 628.

5 Cundy V. Marriott, 1 B. & Ad. 696; Cabot Bank V. Morton, 4 Gray, 156; Markle V. Hatfield, 2 Johns. 455; Mudd V. Reaves, 2 Har. & J. 368; Simms V. Clark, 11 Ill. 137; Hargrave V. Dusen-bury, 2 Hawks, 326. That money paid on void security may be recovered back, see supra, sec 744.

6 Benj. on Sales, 3d Am. ed. sec 739;.

2 Ch. Cont. 11th Am. ed. 1106; Goodrich V. Tracy, 43 Vt. 314.

7 Young V. Adams, 6 Mass. 182; Gloucester Bk. V. Salem Bk., 17 Mass. 33; Thomas V. Todd, 6 Hill, N. Y. 340; Ramsdale V. Horton, 3 Barr, 330; Keene V. Thompson, 4 Gill & J. 463.

8 Boynton, C. J., Emerine V. O'Brien, 36 Oh. St. 496; citing Goodrich V. Tracy, 43 Vt. 314; Eagle Bk. V. Smith, 5 Conn. 71; Markle V. Hatfield, 2 Johns. 455; Ritter V. Singmester, 73 Penn. St. 400; 2 Dan. Neg. Inst. sec 1274.

9 Benj. on Sales, 3d Am. ed. sec 739; Read V. Hutchinson, 3 Camp. 352; Hawse V. Crowe, R. & Mood. 414; Ca-midge V. Allenby, 6 B. & C. 373; Stewart V. Emerson, 52 N. H. 301.

10 Supra, sec 744.

of the insolvency of the maker of a promissory note paid by one to the other, the party taking the note is entitled to recover the amount of the original debt from the party from whom the note was taken.1 - The fact that the parties paying and receiving were ignorant that a bank which has issued notes received in payment failed prior to the reception, does not vary the case. The loss falls on the party paying and not on the party receiving.2