§ 1345. But the taking a negotiable note for a pre-existing debt is, in some States, primÔ facie a discharge of such debt, and not a mere collateral security therefor, and the burden of proof is on the party receiving it to take it out of the rule by showing that it was not intended as payment,8
1 Whitbeck v. Van Ness, 11 Johns. 409; Breed v. Cook, 15 Ib. 241; Ellis v. Wild, 6 Mass. 322.
2 Hart v. Boiler, 15 Serg. & Rawle, 162; Johnson v. Weed, 9 Johns. 310; Bonnell v. Chamberlin, 26 Conn. 487.
3 Wiseman v. Lyman, 7 Mass. 286; Ellis v. Wild, 6 Ib. 321; Alexander v. Owen, 1 T. R. 225; Harris v. Johnston, 3 Cranch, 311; Fydell v. Clark, 1 Esp. 447; Rew v. Barber, 3 Cow. 272; Frisbie v. Larned, 21 Wend. 450; Arnold v. Camp, 12 Johns. 409; 2 Greenleaf on Evid. § 523; Sard v. Rhodes, 1 M. & W. 153; Good v. Cheesman, 2 B. & Ad. 328. But see the late case of Roberts v. Fisher, 43 N. Y. 159; 65 Barb. 303 (1873). See, also, note to Ontario Bank v. Lightbody, Redfield & Bigelow's L. C. 634-636.
4 Ellis v. Wild, 6 Mass. 321; Owenson v. Morse, 7 T. R. 64; Salem Bank v. Gloucester Bank, 17 Mass. 1.
5 Pierce v. Drake, 15 Johns. 475; Willson v. Foree, 6 lb. 110; Brown v. Jackson, 2 Wash. C. C. 24.
6 Robinson v. Read, 9 B. & C. 449, by Lord Tenterden.
7 Markle v. Hatfield, 2 Johns. 455; Bank of U. S. v. Bank of Georgia, 10 Wheat. 333; Thomas v. Todd, 6 Hill, 340; Simms v. Clark, 11 I1I. 137; Ramsdale v. Horton, 3 Barr, 330; Hargrave v. Dusenberry, 2 Hawks, 326; Bayard v. Shunk, 1 W. & S. 92; Redfield & Bigelow's L. C. 617, 631.
8 See Butts 9. Dean, 2 Met. 76; Curtis v. Hubbard, 9 Met. 328; Bangor v. Warren, 34 Me. 324; Kimball v. The Anna Kimball, 3 Wall. 37; Milliken v. Whitehouse, 49 Me. 527; Ward v. Bourne, 56 Me. 161.
or that it has not been paid at maturity, the holder being in no default,1 or that it was forged.2
1 Melledge v. Boston Iron Co., 5 Cush. 158. In this case Mr. Chief Justice Shaw said: "Upon the other point the jury were instructed that the taking a negotiable promissory note for a pre-existing debt, was prima facie a discharge of the original indebtedness; that the burden of proof was on the plaintiff to show some sufficient and legal reason for taking the case out of the general rule; that he must control the effect which the law otherwise gives to the acceptance of negotiable notes, and in the present case, as the notes purported to be the notes of third persons, the plaintiff had the further burden to show some sufficient reason why they did not discharge all liability on the part of the defendants to the amount of these notes. The court are of opinion that the directions were sufficiently favorable to the defendants, and had the verdict been the other way, the plaintiffs would have had more cause to complain of them. It is true that it has long been held as the law of Massachusetts, that when the party bound to the payment of a simple contract debt shall give his or their own promissory negotiable note for it, the law presumes it to have been accepted in satisfaction and discharge of the pre-existing debt, because the party receiving the note relinquishes no security, but has the same responsibility for payment which he had before, with more direct and unequivocal evidence of the debt, and a more simple remedy for recovering it, with power also by indorsement to transfer the whole interest in it to another. There seems, therefore, to be no motive for retaining and keeping alive the original debt. But the presumption that any negotiable note is taken in satisfaction of a pre-existing debt, and not as collateral security, is a presumption of fact only, and may be rebutted and controlled by evidence that such was not the intention of the parties. So that when the promissory note given is not the obligation of all the parties who are liable for the simple contract debt, and a fortiori when the note is that of a third person, and, if held to be in satisfaction, would wholly discharge the liability of the party previously liable, the presumption, if it exists at all, is of much less weight, and it is a question of fact, on the evidence, whether the promissory note given on the one hand and accepted on the other was in satisfaction and discharge of the original debt; thus in the early case of Maneely v. McGee et al., 6 Mass. 143, where the promissory note of one who acted as agent and manager for the others was taken for a debt due from four, it was held upon rather slight evidence that it was not intended, and therefore would not operate, as payment. So in French v. Price, 24 Pick. 13, it was decided that when several persons were liable for goods purchased by an agent, and the vendors knowing that others were liable, but without insisting on such liability, took the note of the agents alone, this was presumptive evidence notes prove to be counterfeit.1 It has, indeed, been held that where bank-bills are taken in payment, and the bank is insolvent, the person taking them must bear the loss, unless there were circumstances of fraud, as when the payer knows the bills not to be good.2 But the better doctrine seems to be that they would not operate as a discharge of the debt, unless the circumstances of the case showed that they were not accepted conditionally on their being good (which is the general implication growing out of the mere giving and receiving of bank-notes) but were taken as absolute payment at the risk of the payee.3
2 Redfield & Bigelow's L. C. 617-636.
§ 1346. If bank-notes be taken as payment, and at the time the bank have stopped payment, and the fact be unknown to both parties, in the absence of fraud, the party paying must bear the loss.1 The same rule applies when the of payment. But, said the court, it is competent for the plaintiff to rebut this presumption; and they add, if there was any deception or fraud in the giving of the notes, or if they were accepted under an ignorance of the facts or a misapprehension of the rights of the parties, the vendors ought not to be bound by the acceptance, but may repudiate the notes and rely upon the original contract of sale. The principle rests on the ground that if the vendors know that others are liable, whether they know who those others are or not, they voluntarily assume the responsibility of those others, taking the notes of part of those liable. So when goods are purchased for a company, and a note given therefor by one professing to act as agent of the company, and supposed to be duly authorized to give the note of the company, when it appeared that the agent was not duly authorized, and the note was unavailing as the note of the company, although the holder might have treated it as the personal note of the agent, yet it was held that the holder was not bound to do so, but might treat the note as void, and recover against the company on the original contract for goods sold. Emerson v. Providence Hat Manuf. Co., 12 Mass. 237.