Sec 853

Hence, the first essential to novation is the formation of a new contract. No particular form for this purpose is required in the Roman give him that right of action there must have been an extinguishment of the intermediate debt."

In Babcock V. Hawkins, 23 Vt. 561, it was held that an agreement with a sufficient consideration to substitute a new contract in place of an old contract extinguishes the old contract, whether the new contract was ever performed or not.

In Cadens V. Teasdale, 53 Vt. 469, it was held that where, by agreement between the original debtor and creditor and a third party, the third party was accepted in the original debtor's place, the risk of the insolvency of the third party fell on the creditor. "The plaintiffs," said Taft, J., "having a claim against the defendant, agreed if the defendant would procure one Oliver, a debtor of the defendant, to give the plaintiffs his (Oliver's) note on four months' time, that they would take it in payment of so much of the defendant's account. The agreement was accepted and the contract consummated. At the time all the parties believed that Oliver was solvent. He was in fact insolvent, failing before the maturity of the note, and nothing was realized by the plaintiffs upon it. The plaintiffs now seek to recover of the defendant the original account. The question presented is, Upon whom was the risk of the insolvency of Oliver ? In Wainwright V. Webster, 11 Vt. 576, the court say, that where the note of a third person is received in payment of a precedent debt, the risk of the insolvency of the maker is upon the party from whom the paper is received, unless there is an express agreement that the risk of the paper, in this respect, is to be the receiver's, or one is to be implied from the facts and circumstances of the case. In the case at bar, the defendant, at the time of the transaction, had simply an account, the collection of which he could enforce in proesenti. Upon application to Oliver for money with which to pay the plaintiffs, it was arranged between the parties that Oliver should give his note to the plaintiffs, and they should accept it in lieu of their claim against the defendant. The note was given and the right to enforce the collection of the defendant's debt against Oliver was suspended for the life of the note. We regard the transaction as a substitution of the debt against Oliver for the one against the defendant; and that it was the intention of the parties that the defendant should be discharged from his indebtedness, and from any claim on account of the insolvency of Oliver; from the facts and circumstances in the case, we think such was the intention. The taking of a note, either of the debtor or of a third person, upon an open account, is prima facie payment of such account, upon the presumption that such is the intention of the parties at the time. The intention of the parties upon the question presented in this case should be held as equally decisive, as upon the question of payment. Finding that it was the intention of the parties, from all the facts and circumstances of the transaction, that the risk of Oliver's insolvency should be borne by the plaintiffs, the case is brought within the exception to the general rule as stated by Bennett, J., in the case cited, and the result is the judgment of the county court is affirmed." law; no particular form is required in our own law, unless prescribed by the statute of frauds. The new contract, however, as we will presently see more fully, must be on a sufficient consideration. That consideration may, as a mere matter of abstract calculation, be more or it may be less than that of the contract which is superseded.1 The old contract may appear superficially much more beneficial to the creditor than the new contract. A much less sum payable to-day may be taken instead of a much larger sum payable next week. A sum half the old amount with a new endorser may be accepted in the place of the old debt without that endorser. It is the element of time in the one case, and of a new security in the other case, that makes the consideration and counterbalances the diminution on the face of the debt.2 - In our own law, novation of this class falls under the head of accord and satisfaction, and is subject to the same rules.3 No matter how slight may be the additional security, or how small the time gained, it is a sufficient consideration for the substitution of the new contract for the old. But to effect the novation, - in other words, to work this substitution - a valid contract must be made. When a new debtor comes in, the consideration, so far as concerns the creditor, is this new security, to the detriment of the new debtor; the consideration, so far as concerns the new debtor, is the detriment to the creditor arising from the withdrawal of the old dedtor.4 - The new contract, according to Roman law, may be one on which immediate legal process cannot be issued, as where the new debtor is a minor,5 or may be in other respects open to impeachment; yet if the old creditor accepts the novation in ignorance of such a defect, it being concealed from him, he is entitled to have the novation set aside, and a restitution of the old contract decreed.6 That the debt on the new contract may not be immediately payable does not, of itself, affect the validity of the novation. - "Qui in diem stipulatur, statim novat.cum certum sit, diem quandoque venturum"1 - "constat, et stipulatione in diem facta novationem contingere, sed non statim ex ea stipulatione agi posse, antequam dies venerit."2 - Nor is it any objection that the new contract is conditional.3 "At qui sub condicione stipulatur, non statim novat, nisi condicio extiterit." And by the Roman law, the new agreement, when only vacating the old contract without instituting new obligations, is regarded as simply a release.4 - Among the most conspicuous cases of novation in our own practice, are those which arise when a debtor selling property agrees with the purchaser and the creditor, that the purchaser is to be taken as debtor in his place. In other words, C., the creditor, agrees to take P., the purchaser of D.'s property, as debtor in place of D., the original debtor.5 - As falling, also, under the head of novation, may be mentioned the line of cases hereafter discussed,6 where negotiable paper with a new name is accepted in satisfaction of an old debt.7

1 See infra, sec 858.

2 See Gneist, op. cit. 229.

3 See infra, sec 996 et seq.

4 See discussion in Windscheid, sec .

354, and see as to consideration, supra, sec 505 et seq.

5 L. 1, sec 1, D. h. t.

6 See authorities in Windscheid, sec 354.

1 L. 8, sec l, D. h. t.

2 L. 5, eod. 3 L. 8, sec 1.

4 Windscheid, sec 354.

5 Supra, sec 786 a; Halsey V. Reed, 9 Paige, 446; Barker V. Bucklin, 2 Denio, 45; Dingeldein V. R. R., 37 N. Y. 575; Campbell V. Smith, 71 N. Y. 26; Calvo V. Davies, 73 N. Y. 211; Girard Ins. Co. V. Stewart, 86 Penn. St. 89; Merriman V. Moore, 90 Penn. St. 78; Johnson V. Knapp, 36 Iowa, 616; Beasely V. Webster, 64 Ill. 458; Snell V. Ives, 85 Ill. 279; Ross V. Kennison, 38 Iowa, 396; McDowell V. Laev, 35 Wis. 171; Jordan V. White, 20 Minn. 91; Shaffer V. McKanna, 24 Kan 22; Mason V. Hall, 30 Ala. 599; Meyer V. Lowell, 44 Mo. 328; Rogers V. Gosnell, 58 Mo. 589; and cases cited Wald's Pollock, 220; and other cases cited, supra, sec 786, 786 a. After acceptance of the substitution, it is irrevocable, Bassett V. Hughes, 43 Wis. 319. Where the plaintiffs are creditors of T., and the defendants debtors to T., an agreement by which the defendants assume T.'s debt to the plaintiffs is valid, though this involves the pro tanto extinction of T.'s indebtedness. Wilson V. Coupland, 5 B. & Ald. 228; Hodgson V. Anderson, 3 B. & C. 855; Fairlie V. Denton, 8 B. & C. 395; Cochrane V. Green, 9 C. B. N. S. 448; Warren V. Batchelder, 15 N. H. 129.

6 Infra, sec 957.

7 Story, Prom. Note, sec 104, 438; Good V. Cheesman, 2 B. & Ad. 328; Wright V. Crockery Co., 1 N. H. 281; Johnson V. Cleeves, 15 N. H. 332; and see supra, sec 852. The following may be cited as cases of novation by acceptance of a new security with a new debtor, discharging the old debt. Price V. Price, 16 M. & W. 241; Camidge V. Allenby, 6 B. & C. 373; Rogers V. Langford, 1 C. & M. 637; Smith V. Mercer, L. R. 3 Ex. 51; Jenness V. Lane, 26 Me. 475; Babcock V. Hawkins, 23 Vt. 561; Brooks V. White, 2.

Where, however, negotiable paper made by other parties is taken in payment of goods, the vendee becomes liable in case such paper, due diligence being shown to pursue it, turns out to be worthless.1