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.
Tender followed by payment into court establishes the debtor's liability to that amount.1 In the absence of statute, the payment into court by the defendant is not an admission of the existence of plaintiff's cause of action; and if plaintiff does not show a cause of action in his favor against the defendant, he can not recover a greater sum than that paid into court, although the defense which the defendant interposes would have prevented the plaintiff from recovering anything had it not been for such tender.2 The money so paid in becomes the property of the creditor.3 If the issue on a plea of tender is found in favor of the defendant, the proper judgment is a judgment in favor of the plaintiff for the amount tendered and in favor of the defendant for the costs.4 It is error on overruling plaintiff's demurrer to defendant's answer, to allow the defendant to take the amount so paid in.5 So if tender is pleaded and kept good in an action in foreclosure it is error to find that there has been no breach of condition.6 Where the verdict should be for the difference, if any, between the amount so paid in and the amount found due, it is error to deduct the amount paid in from the amount of the verdict in rendering judgment.7 Tender does not, of course, prevent the debtor from setting up a counterclaim covering the difference between the amount tendered and the amount claimed.8 If the contract is severable a tender of part of the amount due and paid over does not prevent the defendant from setting up a counterclaim for damages which he has sustained by reason of defective performance of such contract.9 Under some statutes the plaintiff is given the choice between electing to take the money which has been paid in, and prosecuting the action to recover a greater amount; and under such a statute the plaintiff can recover only the amount actually found due, even though such amount is less than that which is paid into court.10
1 Cox v. Parry, 1 T. R. 464; Supply Ditch Co v. Elliott, 10 Colo. 327, 3 Am. St. Rep 586, 15 Pac. 691; Palatine Ins. Co v. O'Brien, 107 Md. 341, 16 L. R. A. (N.S) 1055, 68 Atl. 484; Fox v. Williams, 92 Wis. 320, 66 N. W. 357.
2 Cox v. Parry, 1 T. R. 464.
3 Munk v. Kanzler, 26 Ind. App 105, 58 N. E. 543.
4 Fuller v. Pelton, 16 Ohio 457.
5 Supply Pitch Co. v. Elliott, 10 Colo. 327, 3 Am. St. Rep. 586, 15 Pac. 601.
6 Uedelhofen v. Mason, 201 111. 465, 66 N. E. 364 [affirming, 102 111. App. 1161.
See also, Armstrong v Spears, 18 O. S 373
7 Duck wall v Jones, 156 Ind 682, 58 N E 1055 [affirmed on rehearing, 156 Ind 682, 60 N E. 797].
8 Young v. Borzonc, 26 Wash. 4, 23f 66 Pac 135, 421
9 La Rault v. Palmer, 51 Wash. 664 [sub nomine, Palmer v. La Rault, 21 L. R A (NS) 354, 99 Pac 10361.
"The old rule was harsh and unjust. To relieve a party of the hazards attending a tender, courts gradually came to declare the more liberal rule adopted and Announced in Young v. Borzone, 26 Wash. 4, 66 Pac. 135, 421, but which is more aptly stated in Simpson v. Carson, 11 Or. 361, 8 Pac. 325: The tenders and payment into court only admitted the cause of action, as to the sum tendered. It did not conclude the respondent as to any defense she might have against a further recovery.' Spalding v. Vandercook, 2 Wend 431; Eaton v. Wells, 82 N. Y. 676; Roosevelt v. New York and II. R. Co., 45 Barb. 554; Davis v. Mil-laudon, 17 La. Ann. 07, 87 Am. Dec. 517; Hinds v. Cottle, 143 Mass 310, 9 N. E 654" La Rault v. Palmer, 51 Wash. 664 [sub nomine, Palmer v. La Rault, 21 L R. A. (N.S ) 354, 99 Pac. 10361
In admiralty the title to the money paid into court does not pass to the creditor, and he can take out only the amount to which he is found entitled.11
10 Palatine Ins Co. v O'Brien, 107 Md 341, 16 L. R A. (N S ) 1055, 68 Atl. 484.
"This tender and payment, which constitute the fourth plea in each of these cases, were made under Sec. 20 and 21 of Art. 75, Code Pub., Gen. Laws, 1004 The effect of these pleas was to admit the liability of the defendant upon the causes of action, and the issue raised upon the pleas was merely as to the extent of the defendant's liability. These sections were considered by this court in Gamble v. Sentman, 68 Md 71,11 Atl. 584, where it was said: 'These sections are substantially copied from Stat. 3d and 4th, William IV, ch 42, Sec. 21, and the rules as to costs thereby provided.
Their object is to encourage the settlement of suits without the cost and delay of trial. They allow the defendant, except in certain actions, "to pay into court a sum of money by way of compensation or amends," and such payment may be set up by plea. The plaintiff then, after the money has thus been paid in, may reply by accepting the same "in full satisfaction and discharge of the action," and if he does this, he may have his costs taxed, and if they be not immediately paid, he shall have judgment therefor; or he may reply that the sum paid in "is not enough to satisfy the claim of the plaintiff in respect to the matter to which the plea is pleaded, and in the event of an issue thereon being found for the defendant, the defendant shall be entitled to his costs of the suit, and the plaintiff to so much of the sum paid into court as shall be found for him * * *." The concluding paragraph of the law as above quoted plainly indicates that, where the plaintiff replies that the money paid in is not enough to satisfy his claim, it is the duty of the court to hold on to the money until the issue on that replication is decided, and then to pay over to the plaintiff only so much of it as the jury may find to be due him.'" Palatine Ins. Co. v. O'Brien, 107 Md. 341, 16 L. R. A. (N.S.) 1055, 68 Atl 484.
11 The Mona , p. 265.