J.F. Morgan Paving Co. v. Carroll

• Decision Date: 07 February 1924
• Docket Number: 6 Div. 819.
• Citation: 99 So. 640,211 Ala. 121
• Parties: J. F. MORGAN PAVING CO. v. CARROLL.
• Court: Alabama Supreme Court

99 So. 640

211 Ala. 121

J. F. MORGAN PAVING CO. v. CARROLL.

6 Div. 819.

Supreme Court of Alabama

February 7, 1924

Rehearing Denied April 17, 1924.

Appeal from Circuit Court, Jefferson County; J. B. Aird, Judge.

Action on common counts by J. L. Carroll against the J. F. Morgan Paving Company, to recover for road construction work done by a subcontractor. From a judgment for plaintiff, defendant appeals. Affirmed.

Thompson & Thompson, of Birmingham, for appellant.

C. C Nesmith and Edgar E. Garrison, both of Birmingham, for appellee.

BOULDIN J.

The existence of the debt sued upon, the amount thereof, and that it was past due when suit brought, are admitted facts.

The defense was that the debt was extinguished by payment, accord and satisfaction, or novation.

The court below gave the general affirmative charge for plaintiff. The propriety of this instruction is the sole question here presented.

J. F Morgan Paving Company, the defendant, was a road contractor constructing a road under contract with the board of revenue of Jefferson county. J. L. Carroll, plaintiff, was a subcontractor of defendant. The debt accrued to plaintiff pursuant to an agreement in writing of May 27, 1920, closing out the subcontract. On September 1, 1920, defendant gave plaintiff an order in writing directed to the board of revenue for the amount agreed to be due.

The inquiry is, Did the evidence make a jury question as to whether this order was given and received in discharge and satisfaction of the debt?

A debt payable in money can be discharged by the payment of money only, unless otherwise agreed. Payment may be made in anything of value if given and accepted in full of the demand, or a part payment, if given and accepted at an agreed value less than the whole. Payment, strictly speaking, implies a discharge of the obligation according to its terms, or by something given and received of agreed value equal to the debt or liability.

Accord and satisfaction consists of two elements expressed in that phrase. Accord arises in two classes of cases: (1) Where the demand itself is unliquidated or in dispute. In such case the accord is the agreement to give and take a sum of money less in amount than claimed, or something in lieu of the thing promised, of less value than claimed. (2) Where the amount and nature of the demand is not is dispute, and it is agreed to give and take a less sum, or thing of less value, than the demand, the residue being released and discharged in a legal way. Satisfaction is the execution of the agreement of accord.

Novation, as here involved, is the substitution of one debtor for another. It involves three or more parties. There are four essential requisites: (1) A previous valid obligation, (2) the agreement of all parties to the new contract, (3) the extinguishment of the old contract, and (4) the validity of the new one. Hopkins v. Jordan, 201 Ala. 184, 77 South 710.

Whether an order on a third person operates as an extinguishment of the original debt in one of these modes, has been of frequent consideration by this court.

In Greil v. Durr, 203 Ala. 644, 649, 84 So. 743, 748, it is said:

"If a creditor accepts an order on a third person for money or goods as payment of his debt, the debt is unquestionably discharged in the absence of fraud or mistake. Harrison v. Hicks, 1 Port. 423, 27 Am. Dec. 638; Moore

v. Briggs, 15 Ala. 24 Page 642 . But if such order is not accepted as a payment, its effect is that of a conditional payment only; that is, it operates as a payment and extinction of the debt only when the money or goods is paid to the creditor by such third person, responsively to the order. Until that event the debt persists, and the creditor has his remedy against his debtor, though he might also proceed against the third person if the latter has accepted the order."

In Moore v. Briggs, 15 Ala. 24, cited in above decision, an order was given by a former clerk of the county court to his successor, directing the payment of a fixed amount out of fees collected for the former, in part payment for a carriage. The order was accepted by the succeeding clerk, and a receipt given by the payee for the amount as payment on the carriage. There were fees due the drawer in excess of the order. Held error to instruct the jury, in effect, that this was not a payment of the original debt. This latter case cites the case of Harrison v. Hicks, 1 Port. 423, 27 Am. Dec. 638, saying:

"There an order had been given, and accepted as payment by the creditor, drawn on the Cherokee agency, for money due from the government of the United States to the drawer. *** Held, that if the order was accepted as payment and discharge of the debt, by the contract between the parties, in the absence of fraud, or some failure, such as the record did not disclose, the contract should prevail."

In Lowenstein & Bros. v. Bresler, 109 Ala. 326, 328, 19 So. 860, it is said:

"The taking of a bill, or note, or check, for a pre-existing debt, without more, is not payment or satisfaction. The intendment or implication of law is that it is to operate as payment only in the event that it is paid; as to a check that it is cashed. 2 Dan. Neg. Ins. § 1623; 2 Morse on Banks, § 543; 1 Brick. Dig. 287, §§ 501-504. If insisted on as payment, the burden of proof rests on the party making the insistence, and he must repel the legal intendment or implication by evidence as clear and satisfactory as is essential to establish the payment or satisfaction of an admitted debt or demand. Whitley v. Dunham Lumber Co., 89 Ala. 493."

See, also, Smith v. Elrod, 122 Ala. 269, 24 So. 994; Johnson v. Collins, 20 Ala. 435.

In Keel v. Larkin, 72 Ala. 493, 502, the court quotes approvingly Mr. Parsons, saying:

"'In almost all of the states except New York we suppose the note or bill of the debtor, or of a third party, may be payment by implied, as well as by express agreement; for there is no reason why the parties should not indicate their intention by actions, as well as by words. Where an implied agreement may be shown that the bill or note was taken in payment, all the facts are to be considered by the jury.' 2 Parsons, Bills and Notes, pp. 159-161."

Our court, commenting on this doctrine, says:

"Both express and implied contracts are founded upon the actual agreement of the parties; the only distinction between them being as to the mode of proof or evidence by which they are

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