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.
If a debtor attempts to purchase his debt, the transaction is regarded as a merger or extinction of the original debt, rather than as a purchase.1 However, a contract to sell the debt to the debtor before maturity at a discount, is regarded as valid;2 and if the maker of a negotiable instrument takes it as collateral security for a debt due to himself, and reissues it before maturity, such instrument is valid.3
A negotiable instrument is not merged or extinguished by being acquired by the maker thereof as collateral security for a note given by a stranger to the original note.4
If a judgment debtor buys in his realty at an execution sale, it operates as a merger of the judgment on which such realty was sold. The judgment debtor is not subrogated to the priority of the lien of such judgment, but the inferior lien may then be asserted against such property in his hands.5
If a testator wishes to discharge his debtor, he ordinarily makes express provision in his will to that effect. In some cases, however, his attempt to discharge his debtor takes the form of a bequest, to the debtor, of the debt in question. If the rights of the creditors of the estate are not affected, such bequest operates as a merger or extinction of the indebtedness.6 Under the general principles which govern the liabilities of joint debtors,7 a bequest to one of two joint debtors of the bond upon which the two are liable jointly, operates as a discharge of the other.8
12 Bigelow v. Bigelow, 4 Ohio 138.
13 California. In re Walker, 125 Cal. 242, 73 Am. St. Rep. 40, 57 Pac. 991.
Connecticut. Davenport v. Richards, 16 Conn. 310.
Maine. Potter v. Titcomb, 7 Me. 302.
Massachusetts. Basnett v. Fidelity & Deposit Co., 184 Mass. 210, 100 Am. St. Rep. 552, 08 N. E. 205.
Ohio. Bigelow v. Bigelow, 4 Ohio 138; Raab's Estate. 16 O. S. 273; Jones v. Willis, 72 O. S. 189, 74 N. E. 166.
New Hampshire. Probate Judge v. Sulloway, 68 N. H. 511, 73 Am. St. Rep. 619, 49 L. R. A. 347, 44 Atl. 720.
New York. Bancus v. Stover, 89 N.
Y. 1. Vermont. Probate Court v. Merriam, 8 Vt. 234.
1 Owings Lumber Co. v. Marlowe, - Ala. - , L. R. A. 1918E, 155, 76 So. 926 (obiter); Exchange National Bank v. Chapline, 109 Ark. 242, 158 S. W. 151; Security State Bank v. Clarke, 99 Kan. 18, 160 Pac. 1149.
2 Bell v. Pittman, 143 Ky. 521. 35 L. R. A. (N.S.) 820. 136 S. W. 1026.
3 Owings Lumber Co. v. Marlowe, - Ala. --, L. R. A. 1918E, 155, 76 So. 926.
4 Owings Lumber Co. v. Marlowe, - Ala. , L. R. A. 1918E, 155, 76 So. 926.
5McCarty v. Christie, 13 Cal. 79.
6 Pierson v. Berry (N. J. Eq.), 97 Atl. 275.
7 See Sec. 2074 and 2456.
8 Pierson v. Berry (N. J. Eq.), 97 Atl. 275.