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Opinion of the Court.
MR. CHIEF JUSTICE FULLER, after stating the case, delivered the opinion of the court.
The record shows that the cause came on before the District Judge, holding the Circuit Court, for trial,“ without a jury, and a trial by jury having been expressly waived by the written consent of the parties duly filed ;” that a referee was appointed by written consent in accordance with the modes of procedure in such cases in the courts of record of New York, and with the rules of the Circuit Court; and that his findings, rulings and decisions were made those of the court. Under these circumstances the question whether the judgment rendered was warranted by the facts found was open for consideration in the Circuit Court of Appeals, and is so here, and that is sufficient for the disposition of the case. Shipman v. Mining Company, 158 U. S. 356.
By the writing executed and delivered by him, March 9, 1888, Clark acknowledged the receipt of $173,532.49 “in full satisfaction of the amount due me on such estimates, and in full satisfaction of all claims and demands of every kind, name and nature, arising from, or growing out of such contract of March 6, 1886, and of the construction of said railroad,” excepting an item not material here. Five years and nearly five months after the receipt of the money and the execution and delivery of the discharge, this action was instituted. There was no finding or contention that the settlement was procured by fraud, or duress, or was the result of mutual mistake; nor was there any finding that Clark did not have full knowledge of all the facts at the time he signed and delivered the release, and the presumption was that he had such knowledge. But the proposition is that the release was given without consideration, and that Clark was entitled to recover so far as the items of $10,000 and $9558.63 were concerned, on the principle that where a liquidated sum is due, the payment of a less sum in satisfaction thereof, though accepted as satisfaction, is not binding as such for want of consideration. Cumber v. Wane, 1 Strange, 426. The rule therein laid down has been much questioned and qualified. Goddard v. O'Brien, 9 Q. B. Div. 37;
Opinion of the Court.
Sibree v. Tripp, 15 M. & W. 23; Couldery v. Bartrum, 19 Ch. D. 394; Foakes v. Beer, 9 App. Cas. 605; Notes to Cumber v. Wane in Smith's Leading Cases, vol. 1, 606; 12 Harvard Law Review, 521.
The result of the modern cases is that the rule only applies when the larger sum is liquidated, and when there is no consideration whatever for the surrender of part of it; and while the general rule must be regarded as well settled, it is considered so far with disfavor as to be confined strictly to cases within it.
In Johnston v. Brannan, 5 Johns. 268, 271, it was referred to as "that rigid and rather unreasonable rule of the old law;" and in Kellogg v. Richards, 14 Wend. 116, where the acceptance of a promissory note of a third party for a less sum was held to be a good accord and satisfaction, Mr. Justice Nelson, then a member of the Supreme Court of New York, said: “It is true there does not seem to be much, if any, ground for distinction, between such a case and one where a less sum of money is paid and agreed to be accepted in full, which would not be a good plea.
The rule that the payment of a less sum of money, though agreed by the plaintiff to be received in full satisfaction of a debt exceeding that amount, shall not be so considered in contemplation of law, is technical, and not very well supported by reason. Courts therefore have departed from it upon slight distinctions."
So in Brooks v. White, 2 Metcalf, 283, the Supreme Judicial Court of Massachusetts said that: "The foundation of the rule seems therefore to be, that in the case of the acceptance of a less sum of money in discharge of a debt, inasmuch as there is no new consideration, no benefit accruing to the creditor, and no damage to the debtor, the creditor may violate, with legal impunity, his promise to his debtor, however freely and understandingly made. This rule, which obviously may be urged in violation of good faith, is not to be extended beyond its precise import; and whenever a technical reason for its application does not exist, the rule itself is not to be applied. Hence judges have been disposed to take out of its application all those cases where there was any new consideration, or any collateral bene
Opinion of the Court.
fit received by the payee, which might raise a technical legal consideration, although it was quite apparent that such consideration was far less than the amount of the sui due."
To same effect, Ranney, J., in Harper v. Graham, 20 Ohio, 105; Jaffray v. Davis, 124 N. Y. 164; Smith v. Ballou, 1 R. I. 496; Mitchell v. Wheaton, 46 Conn. 315; Seymour v. Goodrich, 80 Va. 303.
In some of the States the contrary rule has been established by statute. · Ala. Code, $2774, c. 10; Cal. Civ. Code, ş 1524; Georgia Code, $3735; Maine Rev. Stat. c. 82, $45; N. Car. Code, $ 574, c. 7, art. 5; Tenn. Code, 1884, $ 4539, c. 3, art. 4; Va. Code, 1887, c. 134; Weymouth v. Babcock, 42 Maine, 42; Memphis v. Brown, 1 Flippin, 188; McArthur v. Dane, 61 Ala. 539.
The findings of fact bearing on the items of $40,000 for forfeiture, and $9558.63 for nut locks, exclude any other inference than that there was a dispute between the parties in respect to those items as to the facts on which the claim for their allowance was based. This being so, it is insisted that the total balance of $223,091.02, (as it would have been if $9558.63 had not been deducted,) cannot be held to have been liquidated as a whole, that is, agreed upon by the parties or fixed by operation of law, and that the contention cannot be sustained that where there is a dispute as to an aggregate amount due, and the debtor offers to pay so much thereof as he concedes to be correct, and the creditor accepts, is paid and releases, nevertheless the creditor can afterward assert the disputed part of his claim on the ground that he has only received what was undeniably due him.
In United States v. Bostwick, 94 U. S. 53, 67, it was said that: “Payment by a debtor of a part of his debt is not a satisfaction of the whole except it be made and accepted on some new consideration;" while in Baird v. United States, 96 U. S. 430, it was held that if the debt be unliquidated and the amount uncertain, this rule does not apply. “In such cases the question is whether the payment was in fact made and accepted in satisfaction.”
In Fire Insurance Association v. Wickham, 141 U. S. 564, 577, Mr. Justice Brown stated the doctrine thus: “The rule is
Opinion of the Court.
well established that where the facts show clearly a certain sum to be due from one person to another, the release of the entire sum upon payment of a part is without consideration, and the creditor may still sue and recover the residue. If there be a bona fide dispute as to the amount due, such dispute may be the subject of a compromise and payment of a certain sum as a satisfaction of the entire claim, but where the larger sum is admitted to be due, or the circumstances of the case show that there was no good reason to doubt that it was due, the release of the whole upon payment of part will not be considered as a compromise, but will be treated as without consideration and void.”
In this case it cannot be said that at the time the release was executed there was no good reason to doubt that these items were open to dispute. The good faith of the company in claiming their allowance is not impugned, and as Judge Lacombe said : “Both items were legitimate matters of dispute, and unless settled by agreement of parties, might fairly be brought by either party into court.”
And the cases are many in which it has been held that where an aggregate amount is in dispute, the payment of a specified sum conceded to be due, that is, by including certain items but excluding disputed items, on condition that the sum so paid shall be received in full satisfaction, will be sustained as an extinguishment of the whole.
In Fuller v. Kemp, 138 N. Y. 231, where certain items of an account were disputed, and certain items were undisputed, and defendant paid plaintiff only the amount of the undisputed items, the court held that the dispute over certain of the items made the account an unliquidated one, and that plaintiff, by accepting the amount of the undisputed items with notice that it was sent as payment in full, was precluded from recovering the balance of his demand.
Nassoiy v. Tomlinson, 148 N. Y. 326, 330, is to the same effect, and the court said: “A demand is not liquidated even if it
appears that something is due, unless it appears how much is due, and when it is admitted that one of two specific sums is due, but there is a genuine dispute as to which is the proper
Opinion of the Court.
amount, the demand is regarded as unliquidated, within the meaning of that term as applied to the subject of accord and satisfaction."
In Ostrander v. Scott, 161 Ill. 339, plaintiff had an account against defendant amounting to $5282.58, the items of which were not in dispute, but defendant claimed that he was entitled to be allowed the sum of $1210 for commissions, and accordingly he sent his check for the difference to plaintiff, at the same time notifying him that it was sent in settlement of bis account in full, and if not accepted as such to return it. The check was retained by plaintiff, and he afterwards brought suit against defendant to recover the amount withheld, but the Supreme Court of Illinois held that there could be no recovery, and that an account cannot be considered as liquidated, so as to prevent the receipt of a less amount as payment from operating as a satisfaction, where there is a controversy over a set-off and the amount of the balance.
In Tanner v. Merrill, 108 Mich. 58, plaintiff sought to recover a sum which had been deducted from his wages by defendants, his employers. The amount of his wages was not disputed, but the right to make any deduction was questioned. Plaintiff received the amount of his wages less the deduction, and gave a receipt in full, and afterwards brought suit to recover the balance on the ground that, having only received the amount admitted to be due, there was no consideration for the release as to that which was disputed. The Supreme Court of Michigan held that the plaintiff could not recover, and that the rule that a receipt of part payment to be effective in the discharge of the entire debt must be rested upon a valid consideration, is limited to cases where the debt is liquidated by agreement or otherwise; that a claim any portion of which is in dispute cannot be considered to be liquidated within the meaning of the rule; and that a receipt in full, given upon payment of the undisputed part of the claim, after a refusal to pay another part which is disputed, is conclusive as against the right of the creditor to recover a further sum, in the absence of mistake, fraud, duress or undue influence.
Without analyzing the cases, it should be added that it has