s. 1.

CH. XXIII. Thus, if a person have two demands upon another, one arising out of a lawful contract, the other out of a contract forbidden by law, and the debtor make a payment which is not specifically appropriated at the time, the law will apply it to the legal demand (u).

Defences (Payment Appropriation).

Partnership debt.

Guaranteed debt.

So, where the plaintiff had two demands against a corporation for work done; but one of those was held not to be valid, because the work had been done under a contract entered into by the corporation not under their common seal; the Court of Exchequer decided, that a payment which had been made by the corporation generally, on account, could not be applied by the plaintiff in liquidation of that demand (x). But in a similar case, where an attorney had a claim against a corporation in respect of several bills of costs, two of which were for business done for the corporation on a retainer not under their common seal: the Court of Common Pleas held, that the attorney had a right to appropriate a general payment in liquidation of these two bills; because his claim thereon was a just and equitable claim, although from the absence of a contract under seal, it could not be made the subject of an action at law (y).

And the rule does not apply to cases, in which the law merely prevents the party from suing on a contract, but does not invalidate the contract itself (z).

Again; if one partner in a firm owe a private debt to A., who is also a creditor of the firm, and he pay money of the firm generally on account; such payment is to be appropriated to the discharge of the partnership debt (a).

It has also been held (b), that a payment by the obligor of a bond, to the obligee, to whom the obligor was otherwise indebted, cannot in an action at law against his surety, be considered as a payment made in discharge of the bond, unless there be evidence to show that it was so intended. But where security had been given by a surety, for goods to be supplied to his principal, from whom money was then due to the creditor in respect of a previously-existing debt; and goods were accordingly supplied, and

(u) Wright v. Laing (1824), 3 B. & C.

165.

(x) Lamprell v. Guardians of Billericay Union (1849), 3 Ex. 283.

(y) Arnold v. Mayor of Poole (1842), 4 M. & G. 860, 897.

(z) Mills v. Fowkes (1839), 7 Scott, 444. And see Philpot v. Jones (1834), 2 A. & E. 41; and Cruikshanks v. Rose (1831), 1 Moo. & Rob. 100; in which it was held, that although one of two demands was for spirituous liquors sup

plied in small quantities, contrary to the Tippling Act, 24 Geo. 2, c. 40, s. 12, ante, p. 364, yet the creditor might apply a general payment to such demand, instead of to the other.

(a) Thompson v. Brown (1827), Moo. & M. 40.

(b) Per Lord Ellenborough, C.J., Plomer v. Long (1816), 1 Stark. 153; and see Williams v. Rawlinson (1825) 3 Bing. 71, 76.

payments from time to time made by the principal, in respect of some of which discount was allowed for prompt payment; it was held that, in the absence of any evidence of the appropriation of these payments, they must be taken as having been intended to be made in liquidation of the secured account (c).

And where there is a pre-existing debt due to the creditor not guaranteed, even although the existence of the debt was not known to the surety, still in the absence of special agreement (d), the creditor receiving payments on account by the debtor is at liberty to appropriate them to the pre-existing debt, and is not bound by any implied contract with the surety to apply such payments in reduction of the guaranteed debt (e).

So, if a creditor receive dividends upon a debt partly guaranteed by a third person, the dividends must not be appropriated to the excess of the debt above the sum guaranteed, but must be applied rateably to the whole debt (ƒ); and accordingly, where the defendant guaranteed the plaintiffs against debts to be contracted by L. M., to the extent of 400l., and L. M. became indebted to the plaintiffs to the amount of 6251.; upon which, under a composition with his creditors, he paid them 8s. 7d. in the pound, thereby leaving 3561. due to the plaintiffs, out of their whole claim: it was held that the defendant was entitled to deduct from that sum 171l. 13s. 4d., that being the amount of the dividend of 8s. 7d. in the pound upon 400l. (g).

So where the creditor receives from the estate of the principal, Instalments. a dividend on the whole of a debt payable by instalments; the surety is not entitled to have the whole of the dividend applied

in discharge of any one instalment, but only rateably in part payment of each instalment as it becomes due (h).

Prima facie, the doctrine of appropriation does not apply where Where no there are not distinct accounts; or where separate accounts are treated as one entire account by all parties. In such cases, therefore, payments made generally, are presumed to have been made in discharge of the earlier items of the account (i).

(e) Marryatts v. White (1817), 2 Stark.

101.

(d) Kinnaird v. Webster (1878), 10 Ch. D. 139; Browning v. Baldwin (1879), 40 L. T. 248.

(e) Per Lord Selborne, L.C., In re Sherry (1884), 25 Ch. D. 692, C. A.; following Kirby v. Duke of Marlborough (1813), 2 M. & S. 18; 14 R. R. 573; and Hollond v. Teed (1848), 7 Hare, 50; and distinguishing Pearl v. Deacon (1857), 1 De G. & J. 461.

(f) Raikes v. Todd (1838), 8 A. & E. 846, 855.

(h) Martin v. Brecknell (1813), 2 M. & S. 39.

(i) Clayton's case (1816), 1 Mer. 572, 608; Field v. Carr (1828), 5 Bing. 13; Bodenham v. Purchas (1818), 2 B. & Al. 39; and see Hooper v. Keay (1875), 1 Q. B. D. 178. Holroyd, J., in Bodenham v. Purchas, seemed to be of opinion, that the transfer of the balance due from the obligor, to the account of the other customer, with his assent, operated in point of law as a payment.

distinct accounts, payments presumed to be in discharge of earlier items.

In discharge of earlier items-contd.

CH. XXIII. But this presumption may be rebutted by circumstances; e.g., s. 1. by a particular mode of dealing, or by some stipulation between Defences (Payment). the parties, which shows that such could not have been their intention (). Therefore, where a bond was given, to secure the plaintiffs against advances which they might from time to time make to the defendant, it was held that the rule did not apply; because that showed that the amount of the bond was not to be brought into account, like any other item (1). And where one of several partners dies, and the partnership is in debt, and the surviving partners continue their dealings with a particular creditor, who joins the transactions with the old and new firms in one entire account, the rule appears to be, that the payments made from time to time by the surviving partners, must be applied to the old debt; because it is to be presumed, that all the parties have consented that it should be considered as one entire account, and that the death of one of the partners has produced no alteration (m).

Receipt for money not conclusive, if not under seal.

Stamp on receipts.

Stamped receipt.

(g) Receipt for the Money Paid.

A receipt or other acknowledgment, not under seal (»), is not conclusive, but only primâ facie evidence that the money therein mentioned has been paid (o). And the effect of such receipt may be destroyed, by proof that it was obtained by fraud, or under a mistake of facts (p); or that it formed part of a transaction which was merely colourable, no money having, in fact, been paid (q). So a receipt may be explained by parol evidence (r).

66

The Stamp Act, 1891, 54 & 55 Vict. c. 39 (see sched. tit. Receipt"), imposes a duty of one penny upon a receipt for or upon the payment of money amounting to 21. or upwards, and s. 103 enacts that

If any person—

(1) Gives a receipt liable to duty and not duly stamped; or

(2) In any case where a receipt would be liable to duty refuses to give a receipt duly stamped; or

(3) Upon a payment to the amount of two pounds or upwards gives a receipt for a sum not amounting to two pounds, or separates or divides the amount paid with intent to evade the duty;

he shall incur a fine of ten pounds (8).

(k) City Discount Co. v. McLean (1874), L. R., 9 C. P. 692.

(1) Per Cur., Henniker v. Wigg (1843), 4 Q. B. 792, 794.

(m) Per Bayley, J., Simson v. Ingham (1823), 2 B. & C. 65, 72.

(a) Gilb. Ev. 142; and see Conveyancing Act, 1881, s. 3 (4), (5).

(0) Stratton v. Rastall (1788), 2 T. R.

(p) Farrar v. Hutchinson (1839), 9 A. & E. 641; Alner v. George (1808), 1 Camp. 393, 394, n.; Skaife v. Jackson (1824), 3 B. & C. 421.

(1) Bowes v. Foster (1858), 2 H. & N.

779.

(r) Graves v. Key (1832), 3 B. & Ad.

313.

(s) See further, Ch. VI., p. 117, ante.

SECT. 2.-Accord and Satisfaction.

(a) Generally.

The general rule is, that accord without satisfaction is no bar (t) ; and accord and satisfaction after breach is a good defence at common law and equity to any contract, whether made by parol or specialty. At common law it was the rule that accord and satisfaction could not be pleaded in answer to an action on specialty, but this was not the rule at equity, and now accord and satisfaction is a good defence to an action on a bond (u).

It must always appear that the accord was accepted in satisfaction (x).

fendant's

cheque, only acceptance.

evidence of

Therefore where the plaintiffs claimed a large sum for damages, Plaintiff and the defendants sent a cheque for a less sum, with a form of keeping dereceipt"in full of all demand," and the plaintiffs replied that they took the cheque on account and sent a receipt on account and demanded the balance, the Court of Appeal laid down that the mere keeping of the cheque was not conclusive in law, that it was taken in accord and satisfaction, and that the plaintiffs were not bound either to keep it on the terms on which it was sent or to return it; but that the keeping of the cheque was only evidence of accord and satisfaction, and that it was a question of fact to be determined according to the circumstances whether or not it was taken in satisfaction (y).

So where the accord is to do a thing in satisfaction at a future day, and the act is accordingly done and accepted at that day, and is in law a sufficient satisfaction; there is no right to sue on the original demand, after the day on which the satisfaction was rendered, although, at the time of accord, the satisfaction was executory (z).

On the other hand, if the accord, that satisfaction should be rendered by the defendant or a third person, at a future day, be not founded on a new consideration; and be not such as to give to the creditor an immediate right of action for its non-performance; an action will lie on the original demand, even before the time. prescribed for rendering satisfaction (a).

And, upon the whole, the true distinction would seem to be, between cases in which the plaintiff has agreed to accept the

(t) Peytoc's case (1612), 9 Co. 79 b. (u) Steeds v. Steeds (1889), 22 Q. B. D. 537, and p. 16, ante; Bullen & Leake's Pleading, 6th ed., pt. 2, p. 89, n.

(x) Hall v. Flockton (1851), 16 Q. B. 1039, Ex. Ch.

(y) Day v. McLea (1889), 22 Q. B. D. 610, C. A.; following Miller v. Davis

The promise of one party may be accepted in

(1879), not reported C. A.; and see satisfaction. Ackroyd v. Smithies (1885), 54 L. T.

130.

(2) 1 Roll. Abr. Accord, 129, pl. 14; Com. Dig. Accord (B.), 4.

(a) See per Parke, J., Good v. Cheesman (1831), 2 B. & Ad. 328, 335.

s. 2.

Defences (Accord and Satisfaction).

CH. XXIII. promise of the defendant in satisfaction, and those in which he has agreed to accept the performance of such promise in satisfaction; the rule being that, in the latter case, there shall be no satisfaction without performance (b); whilst in the former, if the promise be not performed, the plaintiff's only remedy is by action for the breach thereof, and he has no right to recur to the original demand (c). Thus, where A. and B., brothers, were principal and surety in an annuity bond; and, by an agreement afterwards executed between them and a third brother, for the settlement of their affairs and the determination of their mutual claims, an apportionment of property and debts was made among the three, and the annuity bond was declared to be B.'s, the surety's, debt: it was held that this agreement, whether subsequently acted upon or not, was a binding accord between A. and B.; and that B.'s administrator having been obliged to pay arrears of the annuity, he could not recover them from A. (d).

Fraud.

New agree ment to

render satisfaction.

Stracey v.
Bank of
England.

An accord and satisfaction obtained by fraud and misrepresentation is void and can be set aside (e).

So, a new agreement to render satisfaction, founded on a good consideration and mutually binding, whereby a doubtful cause of action for unliquidated damages is not perpetually barred, but is merely suspended for a fixed period, e.g., until the claimant has done a particular act, will be a good defence to an action brought before the prescribed period, on the original cause of action. Thus, in Stracey v. The Bank of England (ƒ), it appeared that certain stock of the plaintiffs having been transferred under a forged power of attorney, the Bank offered to replace the stock, if the plaintiffs would first prove the amount, under a commission of bankruptcy issued against a firm, in which the forger of a power had been a partner; and that, after this offer, the plaintiffs received a dividend, and engaged to tender a proof of their demand under a commission of bankruptcy: and it was held, that they could not sue the Bank in respect of the stock, till they had fulfilled their engagement to tender the proof under the commission.

But the assignment of property by deed, to secure debts due, and to be due, with a power of sale on giving a certain notice, is to be viewed only as a collateral security; and does not suspend

(b) Gabriel v. Dresser (1855), 15 C. B. 622; Hall v. Flockton (1851), 16 Q. B. 1939; Carter v. Wormald (1847), 1 Exch. 81.

(c) Per Cur., Evans v. Powis (1847), 1 Exch. 601, 607; and see Henderson v. Stobart (1850), 5 Exch. 99; Sard v. Rhodes (1836), 1 M. & W. 153.

(d) Cartwright v. Cooke (1832), 3 B. & Ad. 701.

(e) Hirschfield v. London, Brighton, &c., Rail. Co. (1876), 2 Q. B. D. 1.

(f) Stracey v. Bank of England (1830), 6 Bing. 754; and see Wentworth v. Bullen (1829), 9 B. & C. 840, 850.