Argued January 31, 1888
Decided February 28, 1888
Carlisle Norwood, Jr., for appellants. William Henry Arnoux for respondent.
If the transaction between the firm of W.C. Allison Sons and the defendant Abendroth was in legal character, simply a transaction between debtor and creditor, by which the latter agreed to receive and the former agreed to pay twenty-five per cent of the debt in full satisfaction, followed by actual payment and receipt of the stipulated sum in execution of the agreement, there being no consideration for the agreement of the creditor to discharge the balance of the debt, except the payment by the debtor of the agreed proportion thereof, the case would fall within the well settled doctrine of the common law, that a promise by a debtor to pay a part of an admitted debt, followed by actual payment of such part, is not a good accord and satisfaction of the part of the debt unpaid. ( Pinnel's Case, 3 Coke's Rep. pt. 5, fol. 117; Cumber v. Wane, 1 Strange, 426; Keeler v. Salisbury, 33 N.Y. 648.) This rule of the common law, as was said by NELSON, J., in Kellogg v. Richards (14 Wend. 117), is "technical and not very well supported in reason," but it has been steadily maintained by the courts in cases coming strictly within it. But it is held that where there is an independent consideration, or the creditor receives any benefit or is put in a better position, or one from which there may be legal possibility of benefit to which he was not entitled except for the agreement, then the agreement is not nudum pactum and the doctrine of the common law to which we have adverted has no application. Upon this distinction the cases rest which hold that the acceptance by the creditor in discharge of the debt of a different thing from that contracted to be paid, although of much less pecuniary value or amount, is a good satisfaction, as for example a negotiable instrument binding the debtor and a third person for a smaller sum. ( Curlewis v. Clark, 3 Exch. 375.) Following the same principle it is held that when the debtor enters into a new contract with the creditor to do something which he was not bound to do by the original contract, the new contract is a good accord and satisfaction if so agreed. The case of accepting the sole liability of one of two joint debtors or copartners in satisfaction of the joint or copartnership debt is an illustration. This is held to be a good satisfaction, because the sole liability of one of two debtors "may be more beneficial than the joint liability of both, either in respect of the solvency of the parties or the convenience of the remedy." ( Thompson v. Percival, 5 B. Adol. 925.) In perfect accord with this principle is the recent case in this court of Ludington v. Bell ( 77 N.Y. 138), in which it was held that the acceptance by a creditor of the individual note of one of the members of a copartnership after dissolution, for a portion of the copartnership debt, was a good consideration for the creditor's agreement to discharge the maker from further liability. There can be no doubt, therefore, that if the firm of Allison Sons, knowing at the time that the defendant Abendroth was a general partner in the firm of Griffith Wundram, had received his individual note for twenty-five per cent of their debt against the firm in full satisfaction, or in full satisfaction when paid, the agreement would have been supported by a good consideration, and the payment of the notes would have been a satisfaction of the entire debt. The actual case presented differs from the case supposed in two particulars. When Allison Sons took the notes of Abendroth they supposed he was a special and not a general partner in the firm of Griffith Wundram, and therefore not liable for the debts of the firm; and in the next place the agreement of Allison Sons to accept the notes of Abendroth for twenty-five per cent of the debt was accompanied by an agreement to assign to Abendroth their debt against Griffith Wundram, and all claims or demands against that firm, and in pursuance of such agreement Allison Sons, on the 20th day of December, 1872, after they had pressed their claim against Griffith Wundram in bankruptcy, made a formal written assignment to Abendroth of all their debts, claims and demands against the firm of Griffith Wundram, and delivered their notes to him, and Abendroth on his part paid at maturity, his notes to Allison Sons, given on the purchase of the demand against Griffith and Wundram. If the transaction in question had been simply that of taking the note of a known partner in satisfaction of a copartnership debt, although for a less amount, there would, therefore, under the authorities, have been a good consideration, and the transaction would have operated as a full satisfaction. But it is insisted that the receipt of the notes from Abendroth and the assignment to him of the claim against Griffith and Wundram in consideration thereof, having proceeded upon a misapprehension of his relation to the firm, and upon the supposition that he was not liable as a general partner, the plaintiffs are entitled to be relieved from the arrangement and to treat the payment made as having been made on account only. The decisive objection to this view is that the plaintiffs are not in a situation in this action to proceed for the recovery of the balance of the original debt. It is not claimed that Abendroth was guilty of any fraud. When the settlement was made, both Allison Sons, and Abendroth, believed that the latter was a special partner only in the firm of Griffith Wundram, and was not personally liable for the debt. The claim that Abendroth was liable as a general partner was first made long after the transaction in question was completely executed, and it was then held for the reason that the money contributed by Abendroth, as special partner in the firm of Griffith Wundram, was not paid in cash on the day the certificate for the formation of the limited partnership was filed, and not until a few days afterwards, there was a non-compliance with the statute which subjected him to liability as a general partner, although no fraud was intended. ( Durant v. Abendroth, 69 N.Y. 148.) This action is not brought to rescind the transaction between Allison Sons and Abendroth, or to set aside the assignment to him by Allison Sons of the debt against Griffith and Wundram on the ground of mistake. It is an ordinary action at law brought by the assignees of Allison Sons against Abendroth and the other members of the firm of Griffith Wundram upon an account stated to recover the unpaid portion of the original debt of the firm, and Abendroth alone answers. There is no equitable relief claimed in the complaint and no reference to the settlement between Allison Sons and Abendroth, or to the assignment of the claim. The plaintiffs are in the position of suing upon a claim which has been assigned to the defendant Abendroth and to which they have no title. The assignment to Abendroth vested in him as against Allison Sons the legal title to the demand held by that firm against the firm of Griffith Wundram, and until the transaction between these parties is rescinded and the assignment set aside or canceled, the plaintiffs cannot maintain this action. It is not necessary to consider what the position of the parties would have been if the settlement and assignment was procured by the fraud of Abendroth. This is not pretended. If the transaction can be set aside it must be on the ground of mistake. But the rescission of an executed transfer of property on this ground is a matter of equitable and not legal cognizance, and the action is not framed with a view to equitable relief. There has been no rescission or attempt to rescind the transaction, and the action is not brought for a rescission. We are inclined to the opinion that Allison Sons could not rescind without returning or offering to return the money received from the defendant. ( Gould v. Cayuga County Bank, 86 N.Y. 75, and cases cited.). But however this may be, the plaintiffs as the case stands cannot maintain this action.
The judgment should therefore be affirmed.