American Blakeslee Mfg. Co. v. Martin & Son

• Decision Date: 20 March 1922
• Docket Number: 22457
• Parties: AMERICAN BLAKESLEE MFG. CO. v. MARTIN & SON
• Court: Mississippi Supreme Court

91 So. 6

128 Miss. 302

AMERICAN BLAKESLEE MFG. CO. v. MARTIN & SON

No. 22457

Supreme Court of Mississippi

March 20, 1922

NOVATION. May be Implied from circumstances; Issue of novation held for jury.

Where a creditor accepts a new debtor for the debt of the old, and deals with the new debtor as though primarily liable novation may be implied from the circumstances, and is for the jury to determine, though a substitution of the new for the old debtor was not expressly understood between the parties.

HON. J D. FATHEREE, Judge.

APPEAL from circuit court of Lauderdale county, HON. J. D. FATHEREE Judge.

Suit by the American Blakeslee Manufacturing Company against Martin &amp Son. Judgment for defendants, and plaintiff appeals. Affirmed.

Judgment affirmed.

S. M. Graham, for appellant.

We submit that taking this proof as a whole and giving it full weight under the law, that it is wholly insufficient to support a plea of novation as was held in the case of Brooks v. Barkley, 27 Miss. 320, 18 So. 419, and of Clopton v. Matheny, 46 Miss. 285, where the court held that: "Where a necessary article is purchased by a husband for the wife's plantation, it is immaterial, that it is charged to his account. If not so agreed, taking his note will not release her from liability; and, where not released, she may be held liable, even after he is pursued to insolvency on a note given by him."

So we submit under this authority that even though the Meridian Veneer Company had given notes to the American Blakeslee Manufacturing Company to cover the account of Martin & Son, and had been sued on those notes and pursued into bankruptcy, that the same could not prevent the American Blakeslee Manufacturing Company from turning around and suing Martin & Son unless it was agreed that Martin & Son should be released. That is, the agreement to release the original debtor is absolutely essential to a novation.

It does not appear what agreement, if any, was made between Martin & Son and the Meridian Veneer Company touching the account against Martin & Son held by appellant. It does appear however, that there was no agreement between the Blakeslee people on the one hand, and Martin & Son and Meridian Veneer Company on the other hand, by which Martin & Son was to be released on its account and the Meridian Veneer Company substituted as debtor in place of Martin & Son. But whatever agreement might have been made between Martin & Son and the Meridian Veneer Company without the knowledge and consent of appellant, would not be binding upon appellant in any manner, shape or form as was held by this court in the case of Van Eaton v. Napier, 63 Miss. 220, where it was held that even though two joint debtors sold lands taking purchase money note payable to their common creditor, where the creditor had no knowledge of the agreement, that the creditor thereby acquired no interest in the note and sustained no relation to the agreement between the joint debtors. It was also held by this court in the case of Kausler v. Ford, 47 Miss. 289, that: "The novation of a debt secured by an expressed lien on real estate, or any part of such debt, by the substitution of a new note of the vendee, does not discharge the lien. To have this effect, it must be shown that such was the intent of the parties."

From which case we contend that a novation is not to be presumed and that the burden is upon him who alleges a novation to prove the same, for this holding by our court is also in line with the overwhelming weight of authority throughout the country. In the case of Cummings v. Moore, 61 Miss. 184, this court held that: "Acceptance of a note of a subvendee for land in substitution for that of a vendor does not discharge the lien of the first vendor." Again in the case of Buchingham v. Walker, 48 Miss. 609, this court held that: "Where a promissory note of a debtor has been accepted for a pre-existing debt and the note has not been transferred unless it was especially so agreed, the mere acceptance thereof will not be treated as payment of the debt."

We have found no case more exactly in point, involving the statement of facts in this case, than the case of Hargadine McKitrick Dry Goods Company v. Goodman, 45 So. 995, 55 Fla. 361, where it is held that: "A novation takes place by agreement of all the parties concerned, and where A undertakes to pay B's debts, the obligation assumed may be collateral to M's obligation rather than substituted therefor, and, if intended as collateral, B's debt continues to exist, and this distinguishes such a case from one of novation in which B's debt would be extinguished."

We submit that from the undisputed proof of this record, that there was no intention expressed or implied on the part of appellant to release appellee as original debtor and that the promise of the Meridian Veneer Company to pay appellee's debt was only collateral to appellee's obligation, rather than being substituted therefor.

There can be no novation unless the Blakesley people intended to release Martin & Son and while their intent might be presumed under a different state of facts from that disclosed by this record, it is conclusively shown by this record that they did not intend to release Martin & Son for the reason that more than two months after the sale by Martin & Son to the Meridian Veneer Company, the Blakesley people were writing Martin & Son at Meridian, Mississippi, demanding payment of the account for one thousand and fifteen dollars and fifteen cents, the exact amount sued for herein against Martin & Son.

It is universally held that there must be a mutual agreement among the parties for the substitution of the new debt in place of the old. There must be an extinguishment of the old debt and an agreement to look to the new debtor alone, and the mere taking of a new debtor will not, standing alone, amount to a "novation." The taking by a creditor of a note from one who has assumed the debt is not a "novation" releasing the old debtor, there being no agreement to this effect. Mr. Gimbal and Son v. King, 95 S.W. 7, 43 Tex. Civ. App. 188; Pimental v. Marques, 42 P. 159, 103 Cal. 406; Jackson Iron Company v. Negaudee Concentrating Co., 65 F. 298, 12 C. C. A. 636; Stowell v. Gram, 69 N.E. 342, 184 Mass. 562; Western White Bronze Co. v. Portrey, 50 Me. 601, 138 Mich. 515, 17 L. R. A. (N. S.) 1122, 115 C. C. A. 560, 12 C. C. A. 636; 21 Digest American English Ann. C., 1918, E. P. 1453; McCallister v. McDonald, 40 Mont. 375.

Amis & Dunn, for appellee.

Whether release of original debtor by novation of contract may be established by implication.

Common-law Rule.

It is a thoroughly well-established rule in all jurisdictions in which the common law prevails that the release of the original debtor by a novation of a contract may be established by implication. England--British Home Assur. Corp. v. Paterson (1902), 2 Ch. 404; In re National Provincial L. Assur. Soc., L. R. 9 Eq. 306; In re International L. Assur. Soc., L. R. 9 Eq. 316; Wilson v. Coupland, 5 B. & Ald. 228, 7 E. C. L. 77; In re National Provincial L. Assur. Soc., L. R. 6, Ch. 393. Canada--Fraguhar v. Zwicker, 41 Can. S.Ct. 30; Stecker v. Ontario Seed Co., 20 Ont. L. Rep. 359; Lewis v. D'Enteremon, 29 Nova Scotia 546; See Clark v. Ch. Hubbard Co., 10 Ont. W. Rep. 675. United States--Illinois Car, etc., Co. v. Linstroth Wagon Company, 112 F. 737, 50 C. C. A. 504; California--Mitrovich v. Fresno Fruit Packing Co., 123 Cal. 379, 55 P. 1064. Illinois--Walker v. Wood, 170 Ill. 463, 48 N.E. 919, affirming 69 Ill.App. 542. Missouri--Babbitt v. Chicago, etc., R. Co., 149 Mo.App. 439, 130 S.W. 364. Montana--McAllister v. McDonald, 40 Mont. 375, 387, 106 P. 882. New Hampshire--Warren v. Batchelder, 15 N.H. 129. New York--Dewitt v. Monjo, 46 A.D. 533, 61 N.Y.S. 1046; Lane v. United Oil Cloth Co., 103 A.D. 378, 92 N.Y.S. 1061; Regester v. Dodge, 61 How. Pr. 108; See, also, McLaughlin v. Gillings, 17 Misc. 56, 41 N.Y.S. 22. Ohio--Union Cent. L. Ins. Co. v. Hoyer, 66 Ohio St. 344. Vermont--Hard v. Burton, 62 Vt. 320, 20 A. 269.

Thus it is generally agreed that an intent to release the original debtor is shown by the creditor's bringing suit against the new debtor. Tysen v. Somerville, 35 Fla. 210, 17 So. 567; Arnold v. Lyman, 17 Mass. 404, 9 Am. Dec. 154; Osborn v. Osborn, 36 Mich. 48. So where an insurance company assumes the risks of another company a policyholder sufficiently manifests his assent to the transfer by bringing suit against the new company. Whitney v. American Ins. Co., 127 Cal. 464, 59 P. 897. But in Butterfield v. Hartshorn, 7 N.H. 345, 36 Am. Dec. 741, it was held that neither demand nor bringing suit against the new debtor was sufficient to show a release of the original debtor.

When the dissolution of an old firm occurs and a new firm agrees to assume the liabilities of the old, but slight circumstances are required to justify a finding of an intention on the part of the creditor of the old firm who has notice of the dissolution and agreement to accept the liability of the new instead of the old firm. In re Smith, L. R. 4 Ch. (Eng.) 662; In re Family Endowment Soc., L. R. 4 Ch. (Eng.) 27, 44; Harris v. Farwell, 15 Beav. (Eng.) 31; Hart v. Alexander, 2 M. & W. (Eng.) 484; Stecker v. Ontarion Seed Co., 20 Ont. L. Rep. 359, 15 Ont. W. Rep. 374; Regester v. Dodge, 19 Blatch. (U. S.) 79, 61 How. Pr. (N. Y.) 107; Harris v. Lindsay, 4 Wash. 271, 11 Fed. Cas. No. 61, 124; Tysen v. Sommerville, 35 Fla. 219, 17 So. 567; Jones v. Austin, 26. Ind.App. 399, 59 N.E. 1082; Athens First Nat. Bank v. Green, 40 Ohio St. 431.

However it has been held that neither knowledge of an agreement whereby a new firm takes up the debts of the old nor a partial payment of the debt, nor a demand for payment, nor...