This section is from the book "A Treatise On The Law Of Contracts", by William W. Story. Also available from Amazon: A Treatise On The Law Of Contracts.
§ 1340. Another defence which may be made to a contract is Payment. To enable a party to set up the defence of payment there must be the concurring intention of the party making and the party receiving the payment. The payment must be received as well as made in satisfaction of the debt.1 Payment to be effectual must be made to the party to whom it is rightfully due, or to his properly constituted agent.2 Payment made to one of two partners or executors is therefore sufficient,3 because each is invested by law with the right to receive payment in behalf of all. But if the payment be made to an attorney-at-law, his employment by the creditor must be proved, and then the payment will be good until his authority is revoked,4 and not afterwards.5 Yet payment to the attorney's clerk or agent, if he be not authorized to receive it, is not good.6 It has been held, however, sufficient if it be made to a person sitting in the counting-room of the creditor with account-books near him and apparently intrusted with the conduct of the business.1 Payment to the creditor's wife will not be a valid payment, unless he has made her his agent.2 In all cases where payment is made to one's agent, its sufficiency depends upon the general principles of agency,3 and payment to an authorized agent or to a person acting as ostensible agent and held out as such by the principal, will always be sufficient. Payment, however, if made to any agent must be in money, unless he be authorized to receive payment by a bill or note or in some other way.4
1 Cushing v. Wyman, 44 Me. 121 (1857).
2 A public debtor of the United States cannot defend against a suit on his official bond by proving that he paid the money due the United States to one of its creditors, under an order of the Confederate authorities, where he shows no force or physical coercion which compelled obedience to such order. United States v. Keehler, 9 Wall. 84 (1869).
3 Capel v. Thornton, 3 C. & P. 352; Duff v. The East India Co., 15 Ves. 198; Porter v. Taylor, 6 M. & Selw. 156; King v. Smith, 4 C. & P. 108; Can v. Read, 3 Atk. 695. See ante, Partnership, - Agency, - as to when a partner or agent may properly receive payment, so as to bind his partner or principal. Payment to one partner is good even after dissolution. King v. Smith, 4 C. & P. 108.
4 Hudson v. Johnson, 1 Wash. 10; Langdon v. Potter, 13 Mass. 319; Kellogg v. Gilbert, 10 Johns. 220; Jackson v. Bartlett, 8 Johns. 361; Erwin v. Blake, 8 Pet. 18.
5 Parker v. Downing, 13 Mass. 465; Weist v. Lee, 3 Yeates, 47.
6 Yates v. Freckleton, 2 Doug. 623; Perry v. Turner, 2 C. & J. 89; Sanderson v. Bell, 2 C. & M. 304. See Johnson v. Cunningham, 1 Ala. 249; Kellogg v. Norris, 5 Eng. (Ark.) 18.
§ 1341. Where there are joint creditors, a payment by a debtor to one of them of the whole is sufficient; but a payment of all his portion to one would not enable the others to sue for their portion without joining him in the action.5 So, also, payment to one of several executors is sufficient,6 because they have each a power over the whole estate of the testator, and are considered as distinct persons. But this rule does not apply to bankers; and a payment by a banker to one of several joint depositors or joint trustees of the whole sum does not discharge him as to the others, unless the depositors were partners.7 A payment to one assignee of a bankrupt ordinarily is sufficient, unless it should appear that the co-assignee expressly dissented therefrom.8
1 Barrett v. Deere, Mood. & Malk. 200. A payment by a savings-bank to a person who had stolen the bank-book of a depositor and forged an order from him, is no defence to an action by the depositor for his deposit. Eaves v. The People's Savings Bank, 27 Conn. 229 (1858).
2 Offley v. Clay, 2 Scott, N. R. 372; s. c. 2 Man. & G. 172; Thrasher v. Tuttle, 22 Me. 335.
3 See Catterall v. Hindle, Law R. 1 C. P. 186; 2 Id. 368.
4 Bartlett v. Pentland, 10 B. & C. 760; Thorold v. Smith, 11 Mod. 71; Savoury v. Chapman, 8 Dowl. 656; Kellogg v. Gilbert, 10 Johns. 220; Gullett v. Lewis, 3 Stewart, 23; Carter v. Talcott, 10 Vt. 471.
5 Hatsall v. Griffith, 4 Tyrwh. 488; 2 C. & M. 679. See ante, Joint and Several Contract, § 52 et seq. 68; Morrow v. Starke, 4 J. J. Marsh. 367.
6 Can v. Read, 3 Atk. 695, per Lord Hardwicke.
7 Husband v. Davis, 10 C. B. 645; 4 Eng. Law & Eq. 342; Innes v. Stephenson, 1 Mood. & Rob. 145; Stone v. Marsh, Ry. & Mood. 364.
8 Briatow v. Eastman, 1 Esp. 172; Williams v. Walsby, 4 Esp. 220;
§ 1342. Payment must ordinarily be made in money; but a delivery of other things, if accepted as payment by the other party, will discharge the debt in respect to which it is made.1 A parol agreement by a creditor to accept part payment of a debt in money, in satisfaction for the whole debt, will not be binding upon him for want of consideration, although he actually receive such part payment, and give a receipt for the whole debt.2 But if such part payment be made in a manner more advantageous to the creditor than that agreed upon previously, as if it be made before the day upon which full payment is due,3 or in a more convenient place,4 or if the debtor give his negotiable note for part of a debt not previously negotiable,5 or if the claim be a disputed one,6 this operates as a new consideration, and renders such an agreement binding,7 although it be by parol. Such a payment must, however, be pleaded by way of accord and satisfaction. So, also, if the debtor's note of hand for a less sum than was due, with an indorsement by another person, be accepted in full satisfaction of a debt, it will operate as a complete discharge, for there a beneficial interest is acquired, and a valuable consideration received.1 So, also, the same rule applies where the note of a third person is accepted, although it be for a sum less than the debt due.2 After an action is brought, payment of the debt alone, without the costs, is not a bar to the action.3 But a delivery of other things than money, although of less value than the debt, will, if received as a full payment therefor, discharge the whole debt.4 And the same rule applies when services are rendered and accepted by the creditor in full payment of the debt.6