This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
Payment to a different person from the creditor,1 as an undertaking to pay promisor's attorney;2 or if additional security is given;3 or if the debt is paid in part by some one other than the debtor,4 as where A releases a debt due from B in consideration of a promise by C to pay interest to A for life;5 or a third person releases an attachment on the debtor's property;6 or one of two joint debtors pays a part of the debt after his discharge in bankruptcy,7 the promisor has received something that he was not entitled to receive in that form, and at that time and place. A contract entered into between the debtor on one side and more than one of his creditors, whereby the creditors agree to discharge the debtor from liability on his paying a part of the amount due to each, is supported by a sufficient consideration, the promise of each creditor to release part of his claim being a consideration for similar promises by the other creditors.8 Accordingly, a consideration exists, in such cases, for a release. Such consideration must, however, be that contracted for by the parties to the contract.9
5 Roberts v. Banse, 78 N. J. L. 57, 72 Atl. 452.
6 Florida. Spann v. Baltzell, 1 Fla. 301, 46 Am. Dec. 346.
Indiana. Hulton v. Stoddart, 83 Ind. 539.
Iowa. Boyd v. Moats, 75 la. 151, 39 N. W. 237; Hamilton Nat. Bank v. Nicholson, 153 la. 369, 133 N. W. 736.
Kentncky. Bell v. Pitman, 143 Ky. 521, 35 L. R. A. (N.S.) 820, 136 S. W. 1026.
Maryland. Chicora Fertilizer Co. v. Dunan, 91 Md. 144, 50 L. R. A. 401, 46 Atl. 347.
Massachusetts. Brooks v. White, 43 Mass. (2 Met.) 283, 37 Am. Dec. 95.
Minnesota. Reed v. McGregor, 62 Minn. 94, 64 N. W. 88.
Rhode Island. Thurber v. Smith, 25 R. I. 60, 54 Atl. 790.
Texas. Kirchoff v. Voss, 67 Tex. 320, 3 S. W. 548.
Vermont. Bedford's Ex'r v. Chandler, 81 Vt. 270, 60 Atl. 874.
Washington. Russell v. Stevenson, 34 Wash. 166, 75 Pac. 627; Baldwin v. Daly, 41 Wash. 416, 83 Pac. 724. Payment within the days of grace is not payment before maturity within the meaning of this rule. McKamy v. Mc-Nabb, 97 Tenn. 236, 36 S. W. 1091.
7 Bice v. Siver, 170 la. 255, 152 N. W. 498.
8 Bell v. Pitman, 143 Ky. 521, 35 L. R. A. (N.S.) 820, 136 S. W. 1026.
9 Fenwick v. Phillips, 60 Ky. (3 Met.) 67; Jones v. Perkins, 29 Miss. 139, 64 Am. Dec. 136; Harper v. Graham, 20 Ohio, 106.
Contra, where such promise is made after maturity, as the debtor may be compelled to pay wherever process can be served. Foster County State Bank v. Lammers, 117 Minn. 94, 134 N. W. 501.
1 Harper v. Graham, 20 Ohio 106.
So an additional promise by the debtor to pay a third person and thus discharge his creditor is a consideration. Bank v. Brooks, 64 Kan. 285, 67 Pac. 860.
2Roberts v. Carter, 31 111. App. 142; Harper v. Graham, 20 Ohio 106.
3 Laboyteaux v. Swigart, 103 Ind. 596, 3 N. E. 373.
See Sec. 544.
4Panamchand v. Temple , 2 K. B. 330; Sigler v. Sigler, 98 Kan. 524, L. R. A. 1917A, 725, 158 Pac. 864; Brooks v. White, 43 Mass. (2 Met.) 283, 37 Am. Dec. 95. So Farmer v. Sellers, 137 Ala. 112, 33 So. 829; Cunningham v. Irwin, 182 Mich. 629, 148 N. W. 786; Clark v. Abbott, 53 Minn. 88, 39 Am. St. Rep. 577, 55 N. W. 542; Fowler v. Smith, 153 Pa. St. 639, 25 Atl. 744.
See Sec. 543.
While payment by a third person is sufficient as a consideration for the promise of the creditor to accept a payment of part of the amount due as full satisfaction of the entire obligation, a different question is presented where such payment is made by the agent of the debtor out of funds which belong to the debtor. Such transaction is not different in legal effect from a transaction in which the debtor himself makes such payment in person; and, accordingly, it has been held that payment by the debtor's agent of a part of the debt which is due, is not a consideration if payment by the debtor himself would not be a consideration.10 Elsewhere, however, it has been held that payment by the debtor's agent is consideration for the promise of the creditor to discharge such obligation.11 If the agent advances his own money directly to the creditor, a consideration exists, although the agent expects the debtor to reimburse him.12
5 Lodge v. Hulings, 63 N. J. Eq. 150, 51 Atl. 1015.
6Bartlett v. Woodworth-Mason Co., 60 N. H. 316, 41 Atl. 264.
7 Ex parte Zeigler, 83 S. Car. 78, 64 S. E. 513 [rehearing denied, 64 S. E. 916].
8 Laird v. Campbell, 02 Pa. St. 470; Crawford v. Krueger, 201 Pa. St. 348, 50 Atl. 931.
9 See Sec. 622.
10 Shaw v. Clark, 6 Vt. 507, 27 Am. Dec. 578.
11 Sigler v. Sigler, 98 Kan. 524, L. R.
A. 1917A, 725, 158 Pac. 864. (In this case, however, the debt was in the form of a negotiable instrument which was surrendered by the holder to the maker for value, with the intent on the part of the holder to transfer all his interest therein. It was controlled by Sec. 126 of the Negotiable Instruments Law. See Sec. 601, n. 9.
12 Bidder v. Bridges, 37 Ch. Div. 406. (The opinion does not show whether the principal had advanced the money to the agent before the agent sent his check to the creditor. The court lays negotiable instrument surrendered it,1 or cancelled it,2 with the intention of discharging such instrument, his act in surrendering it or cancelling it would operate as a discharge as far as the ques-tion of consideration was concerned. Such surrender or cancellation would operate as a discharge, even if no consideration had been paid by the debtor; and, accordingly, such surrender or cancellation would operate as a discharge if the maker paid a part of the amount actually due.3 The delivery seems to be the element which makes such transaction operate as a discharge, without payment in full.4 If the note is already in the hands of the payee,5 or if it remains in the hands of the holder,6 consideration is necessary to make a promise to discharge such note enforceable. Marking a note "paid" does not operate as a cancellation if the holder does not surrender it to the maker.7
The fact that the debtor borrows money with which to pay the creditor, does not make such payment of part of the debt which is due a sufficient consideration if the making of such loan was not a term of the promise by the creditor to accept such payment in full.13