A negotiable instrument may be given for a sum due, either liquidated or unliquidated. It is in effect a substitution of a new agreement for the old one, but it does not necessarily discharge the old agreement. Where such a payment is made, either in performance of an existing contract or in satisfaction of a broken contract, it may discharge the party making it, either absolutely or conditionally. Whether it has the one or the other of these effects depends upon the intention of the parties." If the instrument is accepted by the party entitled to payment, and in consideration thereof he promises, either expressly or impliedly, to discharge the other party altogether from his existing liabilities, the discharge of the original contract is absolute. The payee relies then upon the rights conferred by the instrument, and, if it is not paid, he must sue on it. He cannot sue on the original contract.1 On the other hand, the instrument may be taken as a tract.* The agreement is defeasible upon condition subsequent; that is, upon nonpayment of the instrument when due.
98 Palmer v. Insurance Co., 84 N. Y. 63; Gurney v. Howe, 9 Gray (Mass.) 404, 69 Am. Dec. 299; Buell v. Chapin, 99 Mass. 594, 97 Am. Dec. 58; Ken-yon v. Association, 122 N. Y. 247, 25 N. E. 299; Burr v. Sickles, 17 Ark. 428, 65 Am. Dec. 437; Williams v. Carpenter, 36 Ala. 9, 76 Am. Dec. 316; Gross v. Criss. 3 Grat (Va.) 262. See "Payment," Dec. Dig. (Key-No.) § 8; Cent. Dig. § 18.
99 CHELTENHAM STONE & GRAVEL CO. v. GATES IRON WORKS. 124 111. 623, 16 N. E. 923, Throckmorton Cas. Contracts, 374; Flanagin v. Hamble-ton, 54 Md. 222; Combination Steel & Iron Co. v. Railway Co., 47 Minn. 207, 49 N. W. 744; Kirkpatrick v. Puryear, 93 Tenn. 409, 24 S. W. 1130, 22 L. R. A. 785; National Park Bank v. Levy, 17 R. I. 746. 24 Atl. 777, 19 L. R. A. 475; Case Mfg. Co. v. Soxman, 138 U. S. 431, 11 Sup. Ct. 360, 34 L. Ed. 1019; Craddock v. Dwight, 85 Mich. 587, 48 N. W. 644; Bank of Monroe v. Gifford, 79 Iowa, 300, 44 N. W. 558; note 2, infra. See "Payment," Dec. Dig. (Key-No.) § 16; Cent. Dig. §§ 63-85.
1 Sard v. Rhodes, 1 Mees. & W. 153; Wolf v. Fink, 1 Pa. 435, 44 Am. Dec. 141; Ralston v. Wood, 15 111. 159, 58 Am. Dec. 604; Bausman v. Guarantee Co., 47 Minn. 377, 50 N. W. 496; Kirkpatrick v. Puryear, 93 Tenn. 409, 24 S. W. 1130, 22 L. R. A. 785; Susquehanna Fertilizer Co. v. White, 66 Md. 444, 7 Atl. 802, 59 Am. Rep. 186; Costar v. Davies, 8 Ark. 213, 46 Am. Dec. 311; McFadden v. Follrath, 114 Minn. 85, 130 N. W. 542, 37 L. R. A. (N. S.) 201 (acceptance and cashing of check by agent of creditor). Where a creditor procures the certification of a check delivered to him by his debtor, it constitutes a payment to the amount of the check. St. Regis Paper Co. v. Tonawanda Board & Paper Co., 107 App. Div. 90, 94 N. Y. Supp. 946 [affirmed conditional discharge only; and in England and in most of our states it is presumed to have been so taken unless there is something to show a contrary intention.2 In such a case the position of the parties is that the payee, having certain rights against the other party under a contract, has agreed to take the instrument from him instead of immediate payment of what is due him, or immediate enforcement of his right of action, and the other party, in giving the instrument, has thus far satisfied the payee's claim; but, if. the instrument is not paid at maturity, the consideration for the payee's promise fails, and his original rights are restored to him. The effect of receiving a negotiable instrument conditionally is merely to suspend the right to sue on the original contract until the instrument matures, and when it matures, and is not paid, to give the right to sue either on it or on the original con-
186 N. Y. 563, 79 N. E. 1115]. And a creditor's failure to use due diligence in presenting a check for payment operates as payment to the extent that the debtor is prejudiced thereby. Mankey v. Hoyt, 27 S. D. 561, 132 N. W. 230; R. H. Herron Co. v. Mawby, 5 Cal. App. 39, 89 Pac. 872. See "Payment;' Dec. Dig. (Key-No.) §§ 16-23; Cent. Dig. §§ 63-90.
2 CHELTENHAM STONE & GRAVEL CO. v. GATES IRON WORKS. 124 111. 623, 16 N. E. 923, Throckmorton Cas. Contracts, 374; Sayer v. Wagstaff, 5 Beav. 423; Robinson v. Read, 9 Barn. & C. 449; Feldman v. Beier, 78 N. Y. 293; The Kimball, 3 Wall. 37, 18 L. Ed. 50; Bill v. Porter, 9 Conn. 23; Stewart Paper Mfg. Co. v. Rau, 92 Ga. 511, 17 S. E. 748; Morriss v. Harveys, 75 Va. 726; Sayre v. King, 17 W. Va. 562; Shepherd v. Busch, 154 Pa. 149, 26 Atl. 363, 35 Am. St. Rep. 815; Sebastian May Co. v. Codd, 77 Md. 293, 26 Atl. 316; Akin v. Peters, 45 Ark. 313; Belleville Sav. Bank v. Bornman, 124 111. 200, 16 N. E. 210; Case v. Seass, 44 Mich. 195, 6 N. W. 227; First Nat. Bank v. Case, 63 Wis. 504, 22 N. W. 833; A. Leschen & Sons Rope Co. v. Mayflower S. M. & R. Co., 173 Fed. 855, 97 C. C. A. 465, 35 L. R. A. (N. S.) 1, and monographic note; Union Biscuit Co. v. Springfield Grocer Co., 143 Mo. App. 300, 126 S. W. 996. Giving receipt in full is not sufficient to rebut presumption that payment was conditional. Johnson v. Weed, 9 Johns. (N. Y.) 310, 6 Am. Dec. 279. But the presumption is reversed where the note of a third person is given without guaranty or indorsement, on account of a contemporaneous debt. Whitbeck v. Van Ness, 11 Johns. (N. Y.) 409, 6 Am. Dec. 3S3; Noel v. Murray, 13 N. Y. 167; Deford v. Dryden, 46 Md. 248; Bicknall v. Waterman, 5 R. I. 43. And see Ford v. Mitchell, 15 Wis. 304. But see Devlin v. Chamblin, 6 Minn. 468 (Gil. 325); Mclntyre v. Kennedy, 29 Pa. 448. In Massachusetts and several other states the presumption is that the instrument was intended to be accepted as an absolute discharge. Dodge v. Emerson, 131 Mass. 467; Mehan v. Thompson, 71 Me. 492; Mason v. Douglas, 6 Ind. App. 558, 33 N. E. 1009; Smith v. Bettger, 68 Ind. 254, 34 Am. Rep. 256; Teal v. Spangler, 72 Ind. 380; Nixon v. Beard, 111 Ind. 137, 12 N. E. 131; Hadley v. Bordo, 62 Vt. 285, 19 Atl. 476. These various presumptions may be rebutted by evidence of a different intention. Norton, Bills & N. (3d Ed.) 19. See "Payment," Dec. Dig. (Key-No.) §§ 16-23; Cent. Dig. §§ 63-90.
Payment, then, consists in the performance either of an original or substituted contract by the delivery of money, or of negotiable instruments conferring the right to receive money; and in this last event the payee may have taken the instrument in discharge of his right absolutely, or subject to a condition (which will be presumed, in the absence of expressions to the contrary) that, if payment be not made when the instrument falls due, the parties revert to their original rights, whether those rights are, so far as the payee is concerned, rights to the performance of a contract, or rights to satisfaction for the breach of one.4