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.
No additional consideration, If the claim, on the one side, is undisputed and is for a liquidated sum of money, it is held in most jurisdictions that accord and satisfaction can not exist if the debtor pays or promises to pay a less amount of money and if no other and further consideration exists.1 The fact that the debtor borrowed the money from a third person to make such payment, does not amount to a consideration.2
Massachusetts. Brookes v. White, 43 Mass. (2 Met.) 283, 37 Am. Dec. 95: Gilson v. Nesson, 198 Mass. 598, 17 L. R. A. (N.S.) 1208, 84 N. E. 854.
Minnesota. Demeules v. Jewel Tea Co., 103 Minn. 150, 123 Am. St. Rep. 315. 14 L. R. A. (N.S.) 954, 114 X. W. 733.
Wisconsin. Prairie Grove Cheese Mfg. Co. v. Luder, 115 Wis. 20, 89 N. W. 138, 90 N. W. 1085.
3 See Sec. 635 et seq.
4 See ch. XIX.
1 Alabama. Abercrombie v Goode, 187 Ala. 310, 05 So. 816.
Arizona. Phillips v. Graham County, 17 Ariz. 208, 149 Pac. 755; State v. Gregg, 18 Ariz. 121, 157 Pac. 227.
Colorado. Schlessinger v. Schlessinger, 39 Colo. 44, 8 L. R. A. (N.S.) 863, 88 Pac. 970; Weber v. Head Camp, 60 Colo. 529, 154 Pac. 728.
Florida. Jordy v. Maxwell, 62 Fla. 236, 56 So. 946.
Illinois. Woodbury v. United States
Casualty Co., 284 111. 227, 120 N. E. 8; Janci v. Cerny, 287 111. 369, 122 N. E. 507.
Kentucky. Call v. Pinson, 180 Ky. 367, 202 S. W. 883.
Massachusetts. Whittaker Chain Tread Co. v. Standard Auto Supply Co., 216 Mass. 204, 51 L. R. A. (N.S.) 315, 103 N. E. 695.
Minnesota. Foster County State Bank v. Lammers, 117 Minn. 94, 134 N. W. 501.
Nevada. Wolfe v. Humboldt County, 36 Nev. 26, 45 L. R. A. (N.S.) 762, 13 Pac. 964.
New Jersey. Caetelli v. Jereissati, 80 N. J. L. 295, 78 Atl. 227; Decker v. Smith, 88 N. J. L. 630, 96 Atl. 915.
Oklahoma. Sherman v. Pacific Coast Pipe Co., - Okla. - , L. R. A. 1917A, 716, 159 Pac. 333.
Oregon. Schumacher v. Moffitt, 71 Or. 79, 142 Pac. 353.
Pennsylvania. Tustin v. Philadelphia & R. Coal & I. Co., 250 Pa. St. 425, 95 Atl 595.
While this rule has been adopted and enforced by the great weight of authority, and while it is the necessary result of the general rule requiring a consideration, and requiring adequacy where the consideration on each side is money or something the value of which is fixed by law in money, the general dissatisfaction with some of the results of the doctrine of consideration has manifested itself in especial disapproval of this rule, and it has been said even by the courts that recognize the rule itself that it is technical and artificial and without foundation in reason.5
An attempt has been made to evade the rule that payment of a less sum than the full amount of a liquidated and undisputed debt is not a consideration by having the transaction assume the form of a gift or a sale by the creditor to the debtor of the balance of the debt. As to the effect of this device there has been a conflict of authority. It has been held that the creditor may give to the debtor the balance of the debt.6 This is no doubt true if the debtor had paid the full amount of the debt to the creditor, but as applied to accord and satisfaction it results in upholding a gift without delivery. In other jurisdictions it has been held that the debtor can not buy his debt from the creditor for less than the full amount thereof,7 and that if such attempt is made, the creditor may recover the difference between the full amount of the debt and the amount thus paid.8
If the debt is embodied in a negotiable instrument, the cancellation or surrender of such instrument operated as a discharge of the debt without any consideration;9 and accordingly the surrender or cancellation of the instrument or receipt of a part of the amount due had the same effect.10 If the contract is in writing but is not negotiable, the cancellation of such instrument has no legal effect.11
South Carolina. Parker v. Mayes, 85 S. Car. 419. 137 Am. St. Rep. 912. 67 S. E. 559.
Utah. Smoot v. Checketts. 41 Utah 211, Ann.Cas. 1915C, 1113. 125 Pac. 412.
West Virginia. Nixon v. Kiddy, 66 W. Va. 355, 66 S. E. 500.
See Sec. 596 et seq.
2 Schlessinger v. Schlessinger, 39 Colo. 44, 8 L. R. A. (N.S.) 863, 88 Pac. 970.
3 Wolfe v. Humboldt County. 36 Nev. 26, 45 L. R. A. (N.S.) 762, 131 Pac. 964.
4 Wolfe v. Humboldt County, 36 Nev. 26. 45 L. R. A. (N.S.) 762, 131 Pac. 964.
5Sigler v. Sigler, 98 Kan. 524. L. R. A. 1917A, 725, 158 Pac. 864; Brooke v. White. 43 Mass. (2 Met.) 283, 37 Am. Dec. 95; Harper v. Graham, 20 Ohio 105; Bolt v. Dawkins, 16 S. Car. 198.
6 Gray v. Barton, 55 N. Y. 68, 14 Am. Rep. 181.
7 Bourgeois v. Edwards, - N. J. Eq. - 104 Atl. 447.
8 Bourgeois v. Edwards, - N. J. Eq. - , 104 Atl. 447.
An apparent exception to the rule that payment of part of a liquidated and undisputed debt is not a discharge of the entire debt, arises in cases in which there is no express covenant to pay interest, and interest is a mere incident of the principal. In cases of this sort, a creditor who has accepted the principal in full payment, can not maintain an action to recover the interest.12
The dissatisfaction of some of the courts, with the rule that payment of less than the full amount of an undisputed and liquidated debt is not a consideration, has resulted in language disapproving such rule, and asserting that such payment may be a consideration.13 In one of these cases, however, the question was not involved, since the debt was evidenced by a negotiable instrument which was surrendered by the creditor to the debtor.14 In the other case, it appeared that there might have been some other consideration, and accordingly it was held to be error to direct a verdict against the debtor for the balance due upon the original debt.15