The Concept of Satisfaction of Debt: Naked Agreement and Pinnel's Case, Slides of English

Download The Concept of Satisfaction of Debt: Naked Agreement and Pinnel's Case and more Slides English in PDF only on Docsity! FOAKES v. BEER. tive subject-matterof jurisdiction-and if it is, why should not the act of dissolving it be recognised in a foreign jurisdiction; hence it is that two other questions are involved, namely, whether or not marriage is a status ; and secondly, the effect of an ex parte decree of divorce; because if alimony is an incident of a divorce, and only grantable in the divorce proceeding, it should be allowed in an ex parte divorce proceeding, if such proceeding is valid, and it will be valid if marriage is a status and that status is a jurisdictional sub- ject-matter. And if it is not valid, if granted in an ex parte divorce proceeding, it cannot be said to be incident to a divorce. Or, in other words, alimony is incident to a divorce if it can be granted in a valid exparte divorce, and it is not incident if it can- not be so granted. Perhaps the solution is that marriage is a status, hence an ex parte divorce is valid because it acts upon this status. Alimony cannot be decreed ex parte, because it is different from the thing "c status," and there is no jurisdiction to decree in personam in ex parte proceedings; hence it can be decreed after an ex parte divorce or else there would be a failure of justice. Alimony can- not be decreed after a divorce inter parties, because the court then has jurisdiction of the status and the person, and hence all matters involved, or could have been involved, must be adjudicated. The questions, whether or not marriage is a status, and the validity and effect of an ex parte divorce, are connected with this doctrine of domicile. JNo. F. KELLY. Bellaire, Ohio. RECENT ENGLISH DECISIONS. House of Lords. JOHN WESTON FOAKES v. JULIA BEER. An agreement between judgment debtor and creditor that, in consideration of the debtor paying down part of the judgment debt and costs, and on condition of his paying to the creditor, or his nominee, the residue by instalments the creditor will not take any proceedings on the judgment, is nudum pactum, being without con- sideration, and does not prevent the creditor, after payment of the whole debt and costs, from proceeding to enforce payment of the interest upon the judgment. Pinnel's Case, 5 Rep. 117 a., and Cumber v. Wane, I Str. 426, followed. An agreement not to take proceedings if the debtor shall pay certain specified instalments "until the whole of the said sum of 20901. 19s. shall have been fully paid," the said sum being the principal alone without interest, gives the creditor no tight to interest if the condition as to payment of instalments is fulfilled. FOAKES v. BEER. APPEAL from an order of the Court of Appeal. On the 11th of August 1875, the respondent recovered judg- ment against the appellant for 20771. 17s. 2d. for debt, and 131. Is. 10d. for costs. On the 21st of December 1876, a memorandum of agreement was made and signed by. the appellant and respondent in the following terms: "Whereas, the said John Weston Foakes is indebted to the said Julia Beer, and she has. obtained a judgment in Her Majesty's High Court of Justice, Exchequer Division, for the sum of 20901. 19s. And whereas the said John Weston Foakes has requested the said Julia Beer to give him time in which to pay such judg- ment, which she has agreed to do on the following conditibns: Now this agreement witnesseth, that in consideration of the said John Weston Foakes paying to the said Julia Beer, on the signing of this agreement, the sum of 5001., the receipt whereof she doth hereby acknowledge, in part satisfaction of the said judgment debt of 20901. 19s., and on condition of his paying to her or her execu- tors, administrators, assigns or nominee the sum of 1501., on the 1st day of July and the 1st day of January, or within one calendat month after each of the said days respectively in every year, until the whole of the said sum of 20901. 19s. shall have been fully paid and satisfied; the first of such payments to be made on the 1st day of July next, then she, the said Julia Beer, hereby undertakes and agrees that she, her executors, administrators or assigns will not take any proceedings whatever on the said judgment." The respondent having in June 1882 taken out a summons for leave to proceed on the judgment, an issue was directed to be tried between the respondent, as plaintiff, and the appellant, as defendant, whether any and what amount was, on the 1st of July 1882, due upon the judgment. At the trial of the issue before CAVE, J., it was proved that the whole sum of 20901. 19s. had been paid by instalments, but t$e respondent claimed interest. The jury, under his lordship's direction, found that the appellant had paid all the sums which, by the agreement of the 21st of December 1876, he undertook to pay, and within the times therein specified. CAVE, J., was of opinion that, whether the judgment was satisfied or not, the respondent was, by reason of the agreement, not entitled to issue execution for any sum on the judgment. ." The Queen's Bench Division (WATKIN WILLIAMS and MATHm, .FOAKES v. BEER. 25 larly made; the case not being one of a composition with a common debtor, agreed to, inter se, by several creditors. I prefer so to state the quiestion instead of treating it (as pat at the bar) as de- pending on the authority of Cumber v. Wane, 1 Str. 426, decided in 1718. It may well be that distinctions, which in later cases have been held sufficient to exclude the application of that doctrine, existed and .were improperly disregarded in Cumber v. Wane; and yet that the doctrine itself may be law, rightly recognised in Cumber v. Wane, and not really contradicted by any later authori- ties. And this appears to me to be the true state of the case: The doctrine itself, as laid down by Sir EDWARD COKE, may have been criticised as questionable in principle, by some persons whose opin- iong are entitled to respect, but it has never been judicially over- ruled; on the contrary, I think it has always, since the sixteenth century, been accepted aA law. If so, I cannot think that your lordships would do right, if you were now to reverse as erroneous a judgment of the Court of Appeal, proceeding upon a doctrine which has been accepted as part of the law of England for two hundred and eighty years. The doctrine, as stated in Pinnel's Case is "that payment of a lesser sum on the day" (it would of course be the same after the day), " in satisfaction of a greater, cannot be any satisfaction for the whole, because it appears to the judges, that by no possibility a lesser sum can be a satisfaction to the plaintiff for a greater sum." As stated in Coke Littleton 212, it is, "where the condi- tion is for payment of 201. the obligor or feoffor cannot at the time appointed pay a lesser sum in satisfaction of the whole, because it is apparent that a lesser sum of money cannot be a satisfaction of a greater;" adding (what is beyond controversy), that an acquittance under seal, in full satisfaction of the whole, would (under like cir- cumstances) be valid and binding. The distinction between the effect of a deed under seal, and that of an agreement by parol, or by writing not under seal may seem arbitrary, but it is established in our law; nor is it really unreason- able or practically inconvenient that the law should require particular solemnities to give to a gratuitous contract the force of a binding obligation. If the question be (as in the actual state of the law, I think it is), whether consideration is or is not given in a case of this kind, by the debtor who pays down part of the debt presently due from him, for a promise by the creditor to relinquish, after VOL. XXXIII.-4 FOAKES v. BEER. certain further payments on account, the residue of the debt, I can- not say that I think consideration is given, in the sense in which I have always understood that word as used in our law. It might be (and indeed I think it would be) an improvement in our law, if a release or acquittance of the whole debt, on payment of any sum which the creditor might be content to receive by way of accord and satisfaction (though less than the whole), were held to be, gen- erally, binding, though not under seal; nor should I be unwilling to see equal force given to a prospective agreement, like the present, in writing though not under seal; but I think it impossible, with- out refinements which practically alter the sense of the word, to treat such a release or acquittance as supported by any new con- sideration proceeding from the debtor. All the authorities sub- sequent to the case of Cumber v. Wane, 1 Str. 246, which were relied upon by the appellant at your Lordships' Bar (such as Sib- ree v. Tripp, 15 M. & W. 23; (Jurlewis v. Olark, 3 Ex. 375, and aoddard v. O'Brien, 9 Q. B. Div. 37), have proceeded upon the distinction, that, by giving negotiable paper or otherwise, there had been some new consideration for a new agreement, distinct from mere money payments in or towards discharge of the original liabil- ity. I think it unnecessary to go through those cases, or to examine the particular grounds on which each of them was decided. There are no such facts in the case now before your Lordships. What is called "any benefit, or even any legal possibility of benefit," in Mr. Smith's notes to Cumber v. Wane, is not (as I conceive) that sort of benefit which a creditor may derive from getting payment of part of the money due to him from a debtor who might other- wise keep him at arm's length, or possibly become insolvent, but is some independent benefit, actual or contingent, of a kind which might in law be a good and valuable consideration for any other sort of agreement not under seal. My conclusion is, that the order appealed from should be affirmed, and the appeal dismissed, with costs, and I so move your Lordships. Lord BLACKBUN.-My Lords, the first question raised is as to what was the true construction of the memorandum of agreement made on the 21st of December 1876. What was it that the parties by that writing agreed to ? The appellants contend that they meant that on payment down FOA ES v. BEER. of 5001., and payment within a month after the 1st day of July and the 1st day of January in each ensuing year of 1501. until the sum of 20901. 19s. was paid, the judgment for that sum and interest should be satisfied, for an agreement to take no proceedings on the judgment is equivalent to treating it as satisfied. This construc- tion of the memorandum requires that after the tenth payment of 1501. there should be a further payment of 901. 19s. made within. the next six months. This is the construction which all three courts below have put upon the memorandum. The respondent contends that the true construction of the memo- randum was that time was to be given on those conditions for five years, the judgment being on default of any one payment enforce- able for whatever was still unpaid, with interest from the date the judgment was signed, but that the interest was not intended to be forgiven at all. If this is the true construction of the agreement the judgment appealed against is right and should be affirmed, whether the reason on which the Court of Appeal founded its judgment was right or not. I am, however, of opinion that the courts below, who on this point were unanimous, put the true construction on the memoran- dum. I do not think the question free from difficulty. It would have been easy to have expressed, in unmistakable words, that on payment down of 5001., and punctual payment at the rate of 3001. a year till 20901. 19s. was paid, the judgment should not be enforced either for principal or interest; or language might have been used which should equally clearly have expressed that though time was to be given, interest was to be paid in addition to the instalments. The words actually used are such that I think it is quite possible ihat the two parties put a different construction on the words at the time; but I think the words, "till the said sum of 20901. 19s. shall have been fully paid and satisfied" cannot be con- strued as meaning "till that sum, with interest from the day judg- ment was signed, shall have been fully paid and satisfied," nor can the promise "not to take any proceedings whatever on the judg- ment" be cut down to meaning any proceedings except those necessary to enforce payment of interest. I think, therefore, that it is necessary to consider the ground on which the Court of Appeal did base their judgment, and to say whether the agreement can be enforced. I construe it as accepting and taking 5001. in satisfaction of the whole 20901. 19s., subject FOARES v. BEER. instance would be justified in treating the question as open. But as this has very seldom, if at all, been the ground of the decision even in a court of the first instance, and certainly never been the ground of a decision in the Court of Exchequer Chamber, still less in this house, I did think it open in your lordship's house to reconsider this question. And, notwithstanding the very high authority of Lord COKE, I think it is not the fact that to accept prompt payment of a part only of a liquidated demand, can never be more beneficial than to insist on payment of the whole. And, if it be not the fact, it cannot be apparent to the judges. I will first examine the authorities. If a defendant pleaded the general issue, the plaintiff could join issue at once, and, if the case was not defended, get his verdict at the next assizes. But by pleading a special plea, the plaintiff was obliged to reply, and the defendant often caused the plaintiff, merely by the delay occasioned by replying, to lose an assize. If the replication was one to which he could demur, he made this sure. Strangely enough, it seems long to have been thought that if the defendant kept within reason- able bounds, neither he nor his lawyers were to blame in getting time in this way by a sham plea,-that a chattel was given and ac- cepted in satisfaction of the debt. The recognised forms were giving and accepting in satisfaction a beaver hat (Young v. _Rudd, 5 Mod. 86), or a pipe of wine. All this is now antiquated. But whilst it con- tinued to be the practice, the plea founded on the first part of the resolution in Pinnel's Case were very common, and that law was perfectly trite. No one for a moment supposed that a beaver hat was really given and accepted; but every one knew that the- law was that if it was really given and accepted, it was a good satisfac- tion. But special pleas, founded on the other resolution in Pinnel's Case, on what I have ventured to call the dictum, were certainly not common. I doubt if a real defence of this sort was ever specially pleaded. When there really was a question as to whether a debt was satisfied by a payment of a smaller sum, the defendant pleaded the general issue, and if it was proved to the satisfaction of the jury that a smaller sum had been paid and accepted in satis- faction of a greater, if objection was raised the jury might, perhaps, as suggested by HOLROYD, J., in Thomas v. Beatiorn, 2 B. & C. 482, find that the circumstances were such that the legal effect was to be as if the whole was paid down and a portion thrown back as a God's-penny. This, however, seems to me to be an FOAKES v. BEER. unsatisfactory and artificial way of avoiding the effect of the dictum, and it could not be applied to such an agreement as that now before this house. For whatever reason it was, I know of no case in which the question was raised whether a payment of a lesser sum could be satisfaction of a liquidated demand, from Pinnel's Case down to Cumber v. Wane, 5 Geo. I., a period of one hundred and fifteen years. In Adams v. Tapling, 4 Mod. 88, where the plea was bad for many other reasons, it is reported to have been said by the court, that: "In covenant where the damages are uncertain, and to be recovered, as in this case, a lesser thing may be done in satisfac- tion, and there ' accord and satisfaction' is a good plea." No doubt, this was one of the cases which PARKE, B., would have cited in support of his opinion, that Down v. Hatcher was not good law. The court are said to have gone on to recognise the dictum in Pin- nel's Case, or at least not to dissent from it, but it was not the ground of their decision. In every other reported case which I have seen the question arose on a demurrer to a replication to what was obviously a sham or dilatory plea. Some doubt has been made as to what the pleadings in Cumber v. Wane really were. I have obtained the record. The plea is, that after the promises aforesaid, and before the issuing of the writ, it was agreed between the said George and Edward Cumber, that he, the said George, "daret eidem Edwardo Cumber quandm notam in script vocatam 'a promissory note,' manu propria ipsius aeorgii subscript pr. solucon eidem -Edwardo Cumber vel ordini quinque librarum," fourteen days after date, in full satisfaction and exoneration of the premises and promises, which said note in writing the said George then gave to the said Edward Cumber, and the said Edward Cumber then and there received from the said George the said note in full satisfaction and discharge of the premises and promises. The replication is that, "the said George did not give to him, Edward, any note in writing called a promissory note, with the hand of him, George, subscribed for the payment to him, Edward, or his order of 51., fourteen days after date, in full satisfaction and discharge of the premises and promises." To this there is a de- murrer and judgment in the Common Pleas for the plaintiff "that the replication was good in law." FOAXES v. BEER. The Reporter, oddly enough, says there was an immaterial replica- tion. The effect of the replication is to put in issue the substance of the defence, namely, the giving in satisfaction: Young v. _Budd, 5 Mod. 86, and certainly that was not immaterial. But for some reason, I do not stop to inquire what, PRATT, C. J., prefers to base the judgment affirming that of the Common Pleas on the supposed badness of the plea rather than on the sufficiency of the replication. It is impossible to doubt that the note, which it is averred in the plea was given as satisfaction, was a negotiable note. And, there- fore, this case is in direct conflict with Sibree v. Tripp. Two cases require to be carefully considered. The first is Heath- cote v. Crookshanks, 2 T. R. 24. The plea there pleaded would, I think, now be held perfectly good, see Norman v. Thompson, 4 Ex. 755; but BULLER, J., seems to have thought otherwise. He says, "thirdly, it was said that all the creditors were bound by this agreement to forbear, but that is not stated by the plea. It is only alleged that they agreed to take a certain proportion, but that is a nudum pactum, unless they had afterwards accepted it. In the case in which (umber v. Wane was denied to be law (Hard- castle v. Howard, 26 Geo. III., B. R.), the party actually accepted. But as the plaintiff in the present case refused to take less than the whole demand, the plea is clearly bad." That decision goes entirely on the ground that accord without satisfaction is not a plea. I do not think it can be fairly said that BULLER, J., meant by saying "that is a nudum pactum, unless they had afterwards accepted it," to express an opinion that if the dividend had been accepted it would have been a good satisfaction. But he certainly expresses no opinion the other way. In -Fitch v. Sutton, 5 East 230, not only did the plaintiff not accept the payment of the dividend in satisfaction, but refused to accept it at all, unless the defendant promised to pay him the balance when of ability, and the defendant assented and made the promise required, so that but for the fact that other cred- itors were parties to the composition there could have been no defence. There was no point of pleading in that case, the whole being open under the general issue. And in Steinman v. Mag- nus, 11 East 390, it was pretty well admitted by Lord ELLENBOROUGH, that the decision in Fitch v. Sutton would have been the other way, if they had understood the evidence as the Reporter did. But though this misapprehension of the judges as