Payment of a debt may be in any medium the parties agree, and may be absolute or conditional.
The parties may agree upon any medium - gold, silver, certificates, bank notes, etc., or check of the payer. When a debt is expressed to be payable in any medium, as, for instance "gold, of the present standard of weight and fineness" often found in mortgages and mortgage notes, the payment as a matter of fact is not usually in the medium expressed, the creditor having the right, of course, to waive his privileges in that respect.
235. Under a Bulk Sale Act, this sale would be void as to creditors. See further herein and note 236.
236. Bulk sales laws are in force in Alabama, Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin and Wyoming.
Where payment is by bank check or other commercial paper, such payment is in most states considered only a conditional payment and does not in itself discharge the original debt.
If D owes C $100 and gives him his check in payment upon the bank in which he thereby represents he has or will have a deposit, the check is only conditional payment. It is accepted upon the theory that it will be paid. If not paid, there may be a suit either upon the check or upon the original indebtedness. The same is true of any negotiable paper, whether it be the paper of the debtor or of some third person. It is true that such paper might be accepted as an absolute payment, but there is no presumption that it is so accepted. There would have to be a special agreement to that effect.237
A tender of payment of the correct amount when the debt is due, will not discharge the debt, for tender "must be kept good," but it will stop accruing interest, costs, damages, etc. But tender to have this effect must be in legal tender and in the right amount at the right place.
Where and when tender may be made in contracts so that it will operate as a discharge of such contracts is a subject for discussion under the general law of contracts. Usually, we may say, that where tender may be made, a tender will discharge the contract and such tender need not be kept good. But in a money obligation tender must be kept good, that is, a tender once made does not discharge the indebtedness. But a tender properly made at the proper time and place and in the proper amount will discharge accruing interest, costs, damages, etc.
237. This is the rule in all states except, it seems, four: Indiana, Maine, Massachusetts and Vermont, in which states the presumption is that such paper is taken in absolute payment, subject to rebutting evidence. Combination, etc. Co. v. St. Paul City Railway, 47 Minn. 207.
Tender must be in "legal tender," but if the creditor objects on some other ground, then the tender is good though not in legal tender. But if the creditor keeps silent the tender is not good unless in "legal tender," notwithstanding the lack of specific objection. Legal tender is tender in any medium which the law states must be accepted in payment of debts.
There is no tender unless there is an actual handing out of the amount so that the creditor can take it if he desires, accompanied by a statement of the amount, but the money need not be counted unless that is called for. The actual amount must be tendered. There is no legal tender where there is a larger amount tendered with a request for change. But if the change is waived, the tender is good as the greater includes the lesser.
If through a mutual mistake of the facts a wrong amount is paid, the party against whom the mistake operates may recover it by suit.
Where through miscalculation or in some other way there is a mutual mistake concerning the facts and an over payment or an under payment thus made, the party thus prejudiced may recover the amount he has lost through the mistake.
The debt bears the rate of interest agreed upon, provided the rate is not usurious. If no rate is stated, debts of certain kinds bear a rate established by the law, but all debts do not bear interest. The law sets a limit in the rate of interest that can be charged. Charging more than that amount is usury, and subjects the creditor to a penalty.
It is deemed good public policy to prevent a creditor from charging more than a certain amount for the use of money. Therefore the laws of nearly all the states provide a maximum amount that may be charged. When more than the maximum rate is agreed upon the transaction is said to be usurious. The penalty for charging usury differs according to the state laws. A table in the Appendix shows the rate which can be charged and the penalty for charging a greater rate. In some states the entire interest is forfeited; in some there is a subtraction from the principal, but only a very few states deprive the lender of his principal. In very few states is usury a criminal wrong and in many, if usury is paid it cannot be recovered by the debtor. In such states the debtor must refuse to pay the usury and being sued, plead his defense. Charging the highest rate and subtracting if from the principal in advance is not usury though mathematically it may amount to a fraction more than the legal contract rate.
Where there is no agreement for interest all debts do not bear interest. The law provides for a rate where none is specifically agreed upon, but this does not apply to all forms of indebtedness. Usually it merely applies to money borrowed, debts vexatiously withheld, etc. To mere overdue accounts, etc., it does not always apply.
Mere lapse of time will bar a debt. The statutes of the various states provide periods within which suit must be brought. But this bar may be waived by the debtor; as where he does not plead it, or makes new promises to pay, or keeps the debt alive by payments of principal or interest.
After a debt has existed for a long period of time, it will be presumed to have been paid and the states have passed statutes naming certain periods in which suit must be brought. These statutes are called ' 'statutes of limitation." It is deemed wise not to encourage the enforcement of stale claims in which the evidence may have been lost or have become hard to find. The periods provided differ in different states and as to different classes of claims. A note, for instance, will not be barred as soon as an oral indebtedness. This bar provided by the statute is for the benefit of the debtor; he may waive its provisions either by not relying upon it when suit is brought, or by making new promises to pay the debt. If after the period has partially, or wholly run he makes a new promise to pay, the period will begin again from the date of the new promise. In many states this promise must be in writing. Also where payments are made, the payments arrest the running of the statutes. These payments may be either of principal or interest. Thus a note of very ancient date would be perfectly valid if the interest had been kept up upon it, or any interest paid within the period fixed by the law.