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.
As in the case of contracts generally,1 an accord and satisfaction has no legal effect if it is made by one who has no authority to bind the party to such accord and satisfaction, whom he attempts to bind, and if such party does not ratify such accord.2 A bank which has agreed to finance a contract has no authority to bind the contractor by a contract of accord and satisfaction between such contractor and the adversary party.3
As in the case of executory contracts generally,4 the courts have had some difficulty in cases in which the satisfaction was made by a third party and not by the party who was originally liable to the party to whom such satisfaction is made.5
In early English authority,6 it is said that a satisfaction by a stranger for the trespass of another is a bar to the creditor, for if he has been satisfied once, it is not reason that he be satisfied again. It was said, nevertheless, in a subsequent case, that a satisfaction by a stranger was not a bar, and this statement, while probably not necessary to the decision of the case, was followed subsequently in England,7 and in the United States.8
Massachusetts. Tuttle v. Tuttle. 53 Mass. (12 Met.) 551, 46 Am. Dec. 701.
Missouri Zinke v. Knights of the Maccabees, 275 Mo. 660, 205 S. W. 1.
New Jersey. Rose v. American Paper Co., 83 N. J. L. 707, 85 Atl. 354.
North Dakota. Paulson v. Ward County. 23 X. D. 601, 42 L. R. A. (N.S.) 111. 137 N. W. 486.
Ohio. Seeds Grain & Hay Co. v. ger, 83 Ohio St. 169, 32 L. R. A. (N.S.) 360, 93 N. E. 892.
Wisconsin. Harris v. Kennedy. 48 Wis. .500, 4 N. W. 651.
See Sec. 612 et seq.
3 Stanley-Thompson Liquor Co. v. Southern Colorado Mercantile Co., - Colo. - . 4 A. L. R. 471, 178 Pac. 577.
See SSec. 612 et seq.
4 Demeules v. Jewel Tea Co., 103
Minn. 150, 14 L. R. A. (N.S.) 954, 114 X. W. 733.
See Sec. 619.
5 Stanley-Thompson Liquor Co. v. Southern Colorado Mercantile Co., - Colo. - 4 A. L. R. 471, 178 Pac. 577; Janci v. Cerny, 287 111. 359, 122 N. E. 507.
See Sec. 619.
1 See Sec. 1762.
2 Matheney v. Eldorado, 82 Kan. 720, 28 L. R. A. (N.S.) 980, 109 Pac. 166.
3 Matheney v. Eldorado, 82 Kan. 720, 28 L. R. A. (N.S.) 980, 109 Pac. 166.
4 See Sec. 527 et seq.
5 Similar problems have arisen in case of payments by a third person. See Ch. LXXXI.
6 Fitzherbert's Abridgment, Title Barre, pl. 166.
The absurdity of the result was apparent from the outset. Under such circumstances the creditor, after receiving a satisfaction from a stranger, could, under this rule, enforce his original liability against his original debtor. It was once said that such a result would operate as a "fraud" upon the third person by whom such payment was made,9 and accordingly the original authorities were carefully examined,10 and it was eventually held in England that a satisfaction accepted from a stranger operated as a discharge of the original liability.11 The same result has been reached in the United States. and it is now generally held that if the original creditor accepts satisfaction from a stranger, he can not thereafter enforce the original liability against the original debtor.12
7Grymes v. Blofield, Cro. Eliz. 541 [see full discussion in Jones v. Broad-hurst, 9 C. B. 173, 195 et seq.]; Edg-oombe v. Rodd, o East 294.
8 Stark v. Thompson, 19 Ky. (3 T. B. Mon.) 296.
9Welby v. Drake, 1 Car. & P. 557.
10 Jones v. Broadhurst, 9 C. B. 173.
11 Jones v. Broadhurst. 9 C. B. 173. "Upon the argument of this case, we were much pressed with the objection to the plea upon the ground that it was, in effect, a plea of satisfaction by a stranger; which, it was said, was bad in law. The opinion of the court upon the other objections to the plea, being in favor of the plaintiffs, it has become unnecessary to decide upon the validity of this particular objection. But, as the court has been called upon to consider the law in relation to this subject, it may be a convenience to the profession to mention the authorities which are to be found upon the subject.
"It may appear that the law is not perfectly settled. The authorities of the textbooks are generally to be found under the title of 'Accord and Satisfaction'; and most, if not all, of such textbooks, refer to accord and satisfaction by and between the parties to the cause of action, and but very few authorities are to be found upon the subject of satisfaction made by a stranger. Notwithstanding the passages referred to in the textbooks, there is very early authority to the effect that satisfaction made by a stranger to a party having a cause of action and adopted by the party liable to the action, may be used as a good bar to an action for such cause. It is stated in Fitzherbert's Abridgment (Title Barre, pl. 166 [Hilary, 36 H. 61), that 'if a stranger does trespass to me, and one of his relations, or any other, gives anything to me for the same trespass, to which I agree. the stranger shall have advantage of that to bar me; for, if I be satisfied, it is not reason that I be again satisfied. Quod tota curia concessit., A very diligent search has not found any old authority inconsistent with the case in Fitzherbert. In several cases obligations given by strangers to parties having a cause of action, have been held to be no bar to an action between the parties to such a cause; but it will be found that all those cases were decided upon the ground that the obligation, so given, was collateral, and not by way of satisfaction, or in extinguishment or merger. In connection with the branch of the law, this consideration will always be found material.
"In Fitzherbert's Abridgment, title Dette, pl. 83, it is said: 'In debt on contract, it is no plea to say that the plaintiff has a bond of a stranger, for the same duty; but, to say, that he has a bond of the defendant himself for the same duty, is a good plea.' (per Shard. [Shardelow, J.], 29 H. 8, Bro. Contract, pl. 29). So, in F. X. B. 121 M., it is said: 'If a man contract to pay money for a thing which he hath bought, if he make a bond for the money, the contract is discharged, and an action of debt will not lie upon the contract. 'But (Lord Hale's note, citing Fitz. Abr., H. 35, E. 3, Dette, pl. 83; and referring to 11 H. 4, fo. 79 [Raufe Baker's case, T. 11 H. 4, fo. 79, pl. 21]; 13 H. 4, fo. 1 [M. 13 H. 4, fo. 1, pl. 3]; 10 H. 7, fo. 21 [P. 10 H. 7, fo. 21, pl. 16]), it is otherwise if a stranger makes an obligation for the same debt.' 5 Viner's Abridgment, 515, is to the same effect; also Brooke's Abridgment, title Contract, pl. 29. In Pudsey's case, cited in Hooper's case (2 Leonard, 110), it was held that 'a bond given by a stranger, pursuant to a stipulation in the original contract, will be a bar; but, otherwise, upon a subsequent contract.' The same point was decided in the principal case of Hooper.