Sec. 1397. Presumption As To Effect Of Assignment Of Non-Negotiable Right
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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.
Sec. 1397. Presumption As To Effect Of Assignment Of Non-Negotiable Right
The greatest difficulty involved in this topic is to determine what presumption arises when the debtor delivers a thing of value to his creditor. Upon this question there is the greatest divergence of authority. The same state may furthermore treat one kind of instrument as prima facie payment and another kind as prima facie collateral security only. The general weight of authority is that anything of value delivered by the debtor to the creditor is prima facie collateral security only and not payment. This principle has been applied where a note was given for the debt,1 either the note of the debtor,2 or of one of joint debtors,3 or of a third person.4 If the debtor delivers property to his creditor or performs services for him, this is not prima facie payment.5 If the debtor buys realty in the name of his creditor and pays for it this is not prima facie payment of the debt.8 If the delivery of the property is on account of the debt, it is prima facie collateral security,7 and if not, the delivery of the property or rendition of the services may give a right of action to the debtor but does not amount to payment.8 Independent demands in favor of a debtor as against a creditor may give the right of set-off, but do not by operation of law amount to payment.9 Assignments of non-negotiable choses in action are prima facie, not absolute payment.10 So a non-negotiable order is not prima facie absolute payment.11
3 Granite National Bank v. Fitch, 145 Mass. 567; 1 Am. St. Rep. 484; 14 N. E. 650.
4 The Kimball, 3 Wall. (U. S.) 37; Layman v. Bank, 12 How. (U. S.) 225; Quimby v. Durgin, 148 Mass. 104; 1 L. R. A. 514; 19 X. E. 14; Goodall v. Norton, 88 Minn. 1; 92 N. W. 445; Terry v. Robbins. 128 N. C. 140; 83 Am. St. Rep. 663; 38 S. E. 470; Shepherd v. Busch, 154 Pa. St. 149; 35 Am. St. Rep. 815;
26 Atl. 363; Rogers-Ruger Co. v. McCord, 115 Wis. 261; 91 N. W. 685.
5 Terry v. Robbins, 128 N. C. 140; 83 Am. St. Rep. 663; 38 S. E. 470.
6 Shepherd v. Busch, 154 Pa. St. 149; 35 Am. St. Rep. 815; 26 Atl. 363. And see Lyons v. Bank. 86 Ga. 485; 12 L. R. A. 155; 12 S. E. 882.
7 Quimby v. Durgin, 148 Mass. 104; 1 L. R. A. 514; 19 N. E. 14.
8 Fidelity, etc., Co. v. R. R., 86 Va. 1; 19 Am. St. Rep. 858; 9 S. E. 759.
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