This section is from the book "A Treatise On The Construction Of The Statute Of Frauds", by Causten Browne. Also available from Amazon: A treatise on the construction of the Statute of frauds.
§ 341. Besides the acceptance and receipt of part of the goods sold, the statute provides that the giving of something in earnest or in part-payment of the price shall also have the effect of perfecting the contract and making it binding upon the parties. The giving of earnest, for the purpose of binding a bargain, was recognized at common law, and the statute simply permits it as still valid for that purpose, though the bargain be by word of mouth.1 As at common law, however, so under the statute, its only effect is to make the bargain obligatory and to give the buyer a right to demand the goods on payment of the price.2 It seems to be agreed that the earnest must be money or money's worth, - in other words, something of value, though the amount be immaterial.3 And it must be actually paid; merely giving it and then taking it back again, or "crossing the hand" with it will not suffice.4
§ 342. What shall amount to part-payment of the price seems to be a question not altogether free from difficulty. In a case of much authority in New York, the defendant owed a sum of money to a third party, who owed the plaintiff a larger sum upon a promissory note, and all three agreed that the defendant should pay to the plaintiff directly the amount which he owed to the third party, and that the plaintiff should credit the amount on the third party's note held by him; the agreement was entirely oral, and the Statute of Frauds of New York, extending to the sale of choses in action as well as goods, was relied upon in defence to the plaintiff's claim. On error, it was contended that here was something equivalent to part-payment of the money, because the terms of the agreement were such as to extinguish, pro tanto, the debt due from the third party to the defendant; in other words, that the transfer was accepted as a payment, and per se worked a satisfaction. But the court held that, even if there had appeared to be an express agreement between the third party and the defendant that the latter would absolutely credit the amount on the former's note (whereas it was not clear but that it was conditional on his finally recovering the whole amount from the plaintiff), still it was not sufficient to take the contract out of the statute, because no indorsement or receipt was ever actually made. Cowen, J., speaking for the court, said the object of the statute "was to have something pass between the parties besides mere words; some symbol like earnest money. Here everything lies in parol."1
1 See Glanvil, Chapter xiv (Sales Of Goods, Etc)., an interesting reference to show how closely the seventeenth section of the statute pursues the rules of the common law.
2 Langfort v. Tiler, 1 Salk. 113; 2 Bl. Com. 447; 2 Kent, Com. 389. 3 Artcher v. Zeh, 5 Hill (N. Y.) 200; Kuhns v. Gates, 92 Ind. 66;
Weir v. Hudnut, 115 Ind. 525.
4 Blenkinsop v. Clayton, 7 Taunt. 597. And see Hudnut v. Weir, 100 Ind. 501.
§ 342 a. The principle of this decision, that the mere agreement to pay or credit a sum of money without actual payment or crediting is not sufficient to satisfy the Statute of Frauds, has been affirmed in New York, and seems to be entirely conformed to the spirit and policy of the statute.2
1 Artcher v. Zeh, 5 Hill (N. Y.) 205; Brabin v. Hyde, 32 N. Y. 519. That the note of a third person given as payment will take a bargain for goods out of the statute is clear. See Combs v. Bateman, 10 Barb. (N. Y.) 573. Also the check of the purchaser. Hunter v. Wetsell, 84 N. Y. 549; Hunter v. Wetsell, 17 Hun (N. Y.) 133. Qucere, how it may be in Massachusetts as to the purchaser's own note, which is there regarded as payment if given with that intention. In Sharp v. Carroll, 66 Wisc. 62, it was held that the actual surrender of a note of the vendor by the vendee, as part of the purchase money for goods bought, was part payment to satisfy the statute of frauds. See also Krohn v. Brantz, 68 Ind. 277.
2 Ely v. Ormsby, 12 Barb. 570; Brand v. Brand, 49 Barb. 346; Brabin v. Hyde, 32 N. Y. 519; Teed v. Teed, 44 Barb. 96; Walrath v. Richie, 5
In a case which came before the Court of Exchequer, the plaintiff, then owing the defendant four pounds and odd, sold him a lot of leather, the price of which exceeded ten pounds, and agreed that the defendant might deduct or set off from the payment to be made for the leather the amount already owing to him by the plaintiff. The defendant returned the leather as inferior to the sample, and demanded the money previously due him, on which the plaintiff brought his action for the agreed price of the leather, less the old debt, insisting that the agreement as to the allowance of the old debt, on the price of the leather, was a part-payment of such price and took the bargain out of the statute. All the Barons agreed that it could not be so regarded, because such agreement was part of the bargain for the leather; such bargain being to buy the leather at a certain price, less the old debt; and so denied the motion for a new trial. But it was said that if the defendant had agreed to extinguish the old debt, and receive the plaintiff's goods pro tanto instead of it, the law might have been satisfied without the ceremony of paying to the defendant and repaying it by him.1 The decision, however, went upon the ground, clearly presented by the case, that the agreement was that the defendant, when he paid for the goods, and if he paid, might deduct the old debt; thus evidently leaving that deduction contingent, somewhat as in the New York case above quoted. So far as the suggestions of the Barons on the other point are concerned, they seem to involve a little difficulty. Doubtless, if the parties to the suit had been changed, the defendant suing the plaintiff for the four pounds and odd, the latter could have defended on showing that he had paid the debt in leather; but suppose the bargain of the leather had been wholly fixed by the parties, and afterwards they had agreed that the old debt might be waived or released by way of part-payment; would that have been sufficient, without any receipt or other act showing the release?
Lans. 362. See Mattice v. Allen, 3 Abb. App. Dec. 248; Gilman v. Hill, 36 N. H. 311; Gaddis v. Leeson, 55 111. 83; Matthiessen & Weichers Refining Co. v. McMahon, 38 N. J. L. 536. The question is one of fact, viz., whether there was any actual transfer of money or money's worth from the buyer to the seller, made in pursuance of the agreement. See Dow v. Worthen, 37 Vt. 108; Cotterill v. Stevens, 10 Wisc. 422; Organs Stewart, 60 N. Y. 413, Walrath v. Ingles, 64 Barb. (N. Y.) 265. 1 Walker v. Nussey, 16 Mees. & W. 302.
§ 342 b. The mere tender of earnest will not be sufficient; it must be taken by the seller as well. And so it was held that, where the buyer had sent by mail to the seller a sum of money to bind the bargain, the latter was at liberty, upon receipt of the money, to keep it as earnest, and thereby make a binding contract, or to return it to the sender and refuse to carry out his parol agreement.1 Nor will a deposit with a third person, who is to hand it to either of the parties, if the other neglect or refuse to fulfil his part of the bargain, be a sufficient giving of earnest.2
§ 343. We have seen that the acceptance and receipt of part of the goods may be subsequent to the making of the oral bargain, but that they should be before action brought. The same cases and the same reasoning seem to apply so clearly to a part-payment also, that it is not considered necessary to refer to them here.3
1 Edeerton v. Hodge, 41 Vt. 676.
2 Howe v. Hayward, 108 Mass. 54; Noakes v. Morey, 30 Ind. 103.
3 Ante, §§ 337, 338. And see Thompson v. Alger, 12 Met. (Mass.) 428. The language of the New York statute is "unless the buyer shall, at the time, pay some part of the purchase money" This provision was regarded as satisfied in Bissell v. Balcom, 39 N. Y. 275. by payment made a day or two after the day of the agreement. And in Hunter p. Wetsell, 4 N. Y. 549, by a check delivered and received as payment "at the time," such check being good when drawn and afterwards paid on presentation. Rut from the language of later decisions, it would seem that, where payment is relied upon to take the case out of the statute, the contract must be substantially repeated and made anew by the parties when the payment is made. See Webster v. Zielly, 52 Barb. (N. Y) 482; Hunter v. Wetsell, 57 N. Y. 375; Hunter v. Wetsell, 17 Hun (N. Y.) 133. See also Bates p. Chesebro, 32 Wisc. 594; same case, on new trial, 36 Wisc. 636; Paine v. Fulton, 34 Wisc. 83; Jackson v. Tupper, 101 N. Y. 515; Hallenbeck v. Cochran, 20 Hun (N. Y.) 416.