![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] |
|
||||||||
United Kingdom House of Lords Decisions |
||||||||||
|
THE FUTURE OF BAILII DEPENDS ON USERS LIKE YOU
If you want to be able to use BAILII in the future, please consider making a donation to celebrate BAILII's 25 years of providing free access to law.
Your donation, no matter the size, will help BAILII maintain the legal databases that you and many other users rely on. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
| ||||||||||
|
You are here: BAILII >> Databases >> United Kingdom House of Lords Decisions >> Foakes v Beer [1884] UKHL 1 (16 May 1884) URL: https://www.bailii.org/uk/cases/UKHL/1884/1.html Cite as: (1883-84) LR 9 App Cas 605, 9 App Cas 605, (1884) 9 App Cas 605, [1884] UKHL 1 |
||||||||||
[New search]
[Context
]
[Printable version]
[Help]
HOUSE OF LORDS
JOHN WESTON FOAKES | APPELLANT |
|
- v - |
||
JULIA BEER | RESPONDENT |
The House took time for consideration.
May 16.
My Lords, upon the construction of the agreement of the
21st of December 1876, I cannot differ from the conclusion in
which both the Courts below were agreed. If the operative part
could properly be controlled by the recitals, I think there would
be much reason to say that the only thing contemplated by the
recitals was giving time for payment, without any relinquishment,
on the part of the judgment creditor, of any portion of
the amount recoverable (whether for principal or for interest)
under the judgment. But the agreement of the judgment
creditor, which follows the recitals, is that she "will not take
any proceedings whatever on the judgment," if a certain condition
is fulfilled. What is that condition? Payment of the sum
of £150 in every half year, "until the whole of the said sum of
£2090 19 s. " (the aggregate amount of the principal debt and
costs, for which judgment had been entered) "shall have been
fully paid and satisfied." A particular "sum" is here mentioned,
which does not include the interest then due, or future interest.
Whatever was meant to be payable at all, under this agreement,
was clearly to be payable by half-yearly instalments of £150
each; any other construction must necessarily make the
conditional promise nugatory. But to say that the half-yearly
payments were to continue till the whole sum of £2090 19 s. ,
"and interest thereon," should have been fully paid and satisfied,
would be to introduce
very
important words into the agreement,
which are not there, and of which I cannot say that they are
necessarily implied. Although, therefore, I may (as indeed I do)
very
much doubt whether the effect of the agreement, as a
conditional waiver of the interest to which she was by law
entitled under the judgment, was really present to the mind of
the judgment creditor, still I cannot deny that it might have
that effect, if capable of being legally enforced.
But the question remains, whether the agreement is capable of being legally enforced. Not being under seal, it cannot be legally enforced against the respondent, unless she received consideration for it from the appellant, or unless, though without consideration, it operates by way of accord and satisfaction, so as to extinguish the claim for interest. What is the consideration? On the face of the agreement none is expressed, except a present payment of £500, on account and in part of the larger debt then due and payable by law under the judgment. The appellant did not contract to pay the future instalments of £150 each, at the times therein mentioned; much less did he give any new security, in the shape of negotiable paper, or in any other form. The promise de futuro was only that of the respondent, that if the half-yearly payments of £150 each were regularly paid, she would "take no proceedings whatever on the judgment." No doubt if the appellant had been under no antecedent obligation to pay the whole debt, his fulfilment of the condition might have imported some consideration on his part for that promise. But he was under that antecedent obligation; and payment at those deferred dates, by the forbearance and indulgence of the creditor, of the residue of the principal debt and costs, could not (in my opinion) be a consideration for the relinquishment of interest and discharge of the judgment, unless the payment of the £500, at the time of signing the agreement, was such a consideration. As to accord and satisfaction, in point of fact there could be no complete satisfaction, so long as any future instalment remained payable; and I do not see how any mere payments on account could operate in law as a satisfaction ad interim, conditionally upon other payments being afterwards duly made, unless there was a consideration sufficient to support the agreement while still unexecuted. Nor was anything, in fact, done by the respondent in this case, on the receipt of the last payment, which could be tantamount to an acquittance, if the agreement did not previously bind her.
The question, therefore, is nakedly raised by this appeal,
whether your Lordships are now prepared, not only to overrule,
as contrary to law, the doctrine stated by Sir Edward Coke to have been laid down by all the judges of the Common Pleas in Pinnel's Case(1) in 1602, and repeated in his note to Littleton,
sect. 344(2), but to treat a prospective agreement, not under
seal, for satisfaction of a debt, by a series of payments on account
to a total amount less than the whole debt, as binding in law,
provided those payments are regularly 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 question instead of
treating it (as it was put at the Bar) as depending on the
authority of the case of Cumber
v.
Wane(3), 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(3); and yet
that the doctrine itself may be law, rightly recognised in Cumber
v.
Wane(3), and not really contradicted by any later authorities.
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
opinions are entitled to respect, but it has never been judicially
overruled; on the contrary I think it has always, since the
sixteenth century, been accepted as 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 280 years.
The doctrine, as stated in Pinnel's Case(1), 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 (b), it is, "where the condition is for payment of £20, 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 circumstances) 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
unreasonable 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 certain further payments on account,
the residue of the debt, I cannot 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, generally, 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, without refinements
which practically alter the sense of the word, to treat such a
release or acquittance as supported by any new consideration
proceeding from the debtor. All the authorities subsequent to Cumber
v.
Wane(1), which were relied upon by the appellant at
your Lordships' Bar (such as Sibree
v.
Tripp(2), Curlewis
v.
Clark(3), and Goddard
v.
O'Brien(4)) 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
liability. 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(1), 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 otherwise 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 far 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.
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 of £500, and payment within a month after the 1st day of July and the 1st day of January in each ensuing year of £150, until the sum of £2090 19 s. 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 construction of the memorandum requires that after the tenth payment of £150 there should be a further payment of £90 19 s. 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 memorandum was that time was to be given on those conditions for five years, the judgment being on default of any one payment enforceable 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 memorandum. I do not think the question free from difficulty.
It would have been easy to have expressed, in unmistakeable words, that on payment down of £500, and punctual payment at the rate of £300 a year till £2090 19 s. 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 that the two parties put a different construction on the words at the time; but I think the words "till the said sum of £2090 19 s. shall have been fully paid and satisfied" cannot be construed as meaning "till that sum, with interest from the day judgment was signed, shall have been fully paid and satisfied," nor can the promise "not to take any proceedings whatever on the judgment" 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 £500 in satisfaction of the whole
£2090 19 s. , subject to the condition that unless the balance of
the principal debt was paid by the instalments, the whole might
be enforced with interest. If, instead of £500 in money, it had
been a horse
valued
at £500, or a promissory note for £500, the
authorities are that it would have been a good satisfaction, but it
is said to be otherwise as it was money.
This is a question, I think, of difficulty.
In Coke, Littleton 212 b, Lord Coke says: "where the condition is for payment of £20, 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. … If the obligor or feoffor pay a lesser sum either before the day or at another place than is limited by the condition, and the obligee or feoffee receiveth it, this is a good satisfaction." For this he cites Pinnel's Case(1).That was an action on a bond for £16, conditioned for the payment of £8 10 s. on the 11th of November 1600. Plea that
defendant, at plaintiff's request, before the said day, to wit, on
the 1st of October, paid to the plaintiff £5 2 s. 2 d. , which the
plaintiff accepted in full satisfaction of the £8 10 s. The plaintiff
had judgment for the insufficient pleading. But though this
was so, Lord Coke reports that it was resolved by the whole
Court of Common Pleas "that payment of a lesser sum on 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:
but the gift of a horse, hawk, or robe, & c., in satisfaction is good,
for it shall be intended that a horse, hawk, or robe, & c., might be
more beneficial to the plaintiff than the money, in respect of some
circumstance, or otherwise the plaintiff would not have accepted
of it in satisfaction. But when the whole sum is due, by no
intendment the acceptance of parcel can be a satisfaction to the
plaintiff; but in the case at bar it was resolved that the payment
and acceptance of parcel before the day in satisfaction of the
whole would be a good satisfaction in regard of circumstance of
time; for peradventure parcel of it before the day would be more
beneficial to him than the whole at the day, and the
value
of the
satisfaction is not material; so if I am bound in £20 to pay you
£10 at Westminster, and you request me to pay you £5 at the day
at York, and you will accept it in full satisfaction for the whole
£10, it is a good satisfaction for the whole, for the expenses to pay
it at York is sufficient satisfaction."
There are two things here resolved. First, that where a matter paid and accepted in satisfaction of a debt certain might by any possibility be more beneficial to the creditor than his debt, the Court will not inquire into the adequacy of the consideration. If the creditor, without any fraud, accepted it in satisfaction when it was not a sufficient satisfaction it was his own fault. And that payment before the day might be more beneficial, and consequently that the plea was in substance good, and this must have been decided in the case.
There is a second point stated to have been resolved,
viz.:
"That payment of a lesser sum on the day cannot be any satisfaction
of 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." This was certainly not necessary for the decision
of the case; but though the resolution of the Court of Common
Pleas was only a dictum, it seems to me clear that Lord Coke
deliberately adopted the dictum, and the great weight of his
authority makes it necessary to be cautious before saying that
what he deliberately adopted as law was a mistake, and though I
cannot find that in any subsequent case this dictum has been
made the ground of the decision, except in Fitch
v.
Sutton(1),as to which I shall make some remarks later, and in Down
v.
Hatcher(2), as to which Parke, B. in Cooper
v.
Parker(3),said, "Whenever the question may arise as to whether Down
v.
Hatcher(2) is good law, I should have a great deal to say against
it," yet there certainly are cases in which great judges have
treated the dictum in Pinnel's Case(4) as good law.
For instance, in Sibree
v.
Tripp(5), Parke, B. says, "It is clear
if the claim be a liquidated and ascertained sum, payment of
part cannot be satisfaction of the whole, although it may, under
certain circumstances, be evidence of a gift of the remainder."
And Alderson, B. in the same case says, "It is undoubtedly
true that payment of a portion of a liquidated demand, in the
same manner as the whole liquidated demand which ought to
be paid, is payment only in part, because it is not one bargain,
but two;
viz.
payment of part, and an agreement without
consideration to give up the residue. The Courts might
very
well
have held the contrary, and have left the matter to the
agreement of the parties, but undoubtedly the law is so settled." After
such strong expressions of opinion, I doubt much whether any
judge sitting in a Court of the first instance would be justified
in treating the question as open. But as this hals
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 Lordships' 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 se 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 reasonable 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 accepted in satisfaction of the debt. The recognised
forms were giving and accepting in satisfaction a beaver
hat: Young
v.
Rudd(1), or a pipe of wine(2). All this is now
antiquated. But whilst it continued to be the practice, the pleas
founded on the first part of the resolution in Pinnel's Case(3)were
very
common, and that law was perfectly trite. No one
far 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 satisfaction. But special
pleas founded on the other resolution in Pinnel's Case(3), 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 satisfaction
of a greater, if objection was raised the jury might perhaps,
as suggested by Holroyd J. in Thomas
v.
Heathorn(4), 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 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(1) down
to Cumber
v.
Wane, 5 Geo. 1(2), a period of 115 years.
In Adams
v.
Tapling(3) 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 satisfaction,
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(4) was not good law.
The Court are said to have gone on to recognise the dictum in Pinnel's Case(1), 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(5) really were. I have obtained the record(6). 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
Georgii subscript pr. solucon eidem Edwardo Cumber
vel
ordiñi
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 £5, fourteen days after date in full satisfaction and discharge of the premises and promises." To this there is a demurrer and judgment in the Common Pleas for the plaintiff "that the replication was good in law."
The reporter, oddly enough, says there was an immaterial
replication. The effect of the replication is to put in issue the
substance of the defence, namely, the giving in satisfaction; Young
v.
Rudd(1), 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 therefore this case is in direct conflict with Sibree
v.
Tripp(2).
Two cases require to be carefully considered. The first is Heathcote
v.
Crookshanks(3). The plea there pleaded would, I
think, now be held perfectly good, see Norman
v.
Thompson(4);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 Cumber
v.
Wane(5) was denied to be law, Hardcastle
v.
Howard (26 Geo. 3, 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(6) 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 creditors 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.
Magnus(1) it was
pretty well admitted by Lord Ellenborough that the decision in Fitch
v.
Sutton(2) would have been the other way, if they had
understood the evidence as the reporter did. But though this
misapprehension of the judges as to the facts, and the absence of
any acceptance of the dividend, greatly weaken the weight of Fitch
v.
Sutton(2), still it remains that Lord Ellenborough, a
very
great judge indeed, did, however hasty or unnecessary it
may have been to express such an opinion, say, "It is impossible
to contend that acceptance of £17 10 s. is an extinguishment of a
debt of £50. There must be some consideration for the relinquishment
of the residue; something collateral, to shew a possibility
of benefit to the party relinquishing his further claim,
otherwise the agreement is nudum pactum. But the mere
promise to pay the rest when of ability put the plaintiff in no
better condition than he was before. It was expressly determined
in Cumber
v.
Wane(3) that acceptance of a security for
a lesser sum cannot be pleaded in satisfaction of a similar
security for a greater. And though that case was said by me in
argument in Heathcote
v.
Crookshanks(4) to have been denied to
be law, and in confirmation of that Buller J. afterwards referred
to a case (stated to be that of Hardcastle
v.
Howard (H. 26 Geo. 3)),
yet I cannot find any case of that sort, and none has been now
referred to; on the contrary the decision in Cumber
v.
Wane(3)is directly supported by the authority of Pinnel's Case(5), which
never appears to have been questioned."
I must observe that, whether Cumber
v.
Wane(3) was, or was
not denied to be law in Hardcastle
v.
Howard, it certainly was
denied to be law in Sibree
v.
Tripp(6), and that, though it is
quite true that Pinnel's Case(1), as far as regards the points
actually raised in the case, has not only never been questioned,
but is often assented to, I am not aware that in any case before Fitch
v.
Sutton(2), unless it be Cumber
v.
Wane(3), has that
part of it which I
venture
to call the dictum ever been acted
upon; and as I have pointed out, had it not been for the
composition with other creditors, there could have been no defence in Fitch
v.
Sutton(2), whether the dictum in Pinnel's Case(1) was
right or wrong.
Still this is an authority, and I have no doubt that it was on
the ground of this authority and the adhesion of Bayley J. to it
in Thomas
v.
Heathorn(4), that Barons Parke and Alderson
expressed themselves as they did in the passages I have cited from Sibree
v.
Tripp(5). And I think that their expressions justify
Mr. John William Smith in laying it down as he does in his note
to Cumber
v.
Wane(3), in the second edition of his "Leading
Cases," that "a liquidated and undisputed money demand, of
which the day of payment is passed (not founded upon a bill of
exchange or promissory note), cannot even with the consent of
the creditor be discharged by mere payment by the debtor of a
smaller amount in money in the same manner as he was bound to
pay the whole." I am inclined to think that this was settled in
a Court of the first instance. I think however that it was
originally a mistake.
What principally weighs with me in thinking that Lord Coke made a mistake of fact is my conviction that all men of business, whether merchants or tradesmen, do every day recognise and act on the ground that prompt payment of a part of their demand may be more beneficial to them than it would be to insist on their rights and enforce payment of the whole. Even where the debtor is perfectly solvent, and sure to pay at last, this often is so. Where the credit of the debtor is doubtful it must be more so. I had persuaded myself that there was no such long-continued action on this dictum as to render it improper in this House to reconsider the question. I had written my reasons for
so thinking; but as they were not satisfactory to the other noble and learned Lords who heard the case, I do not now repeat them nor persist in them.
I assent to the judgment proposed, though it is not that which I had originally thought proper.
My Lords, I am of opinion that the judgment of the Court of Appeal ought to be affirmed.
I regret that I have been unable to adopt that construction of
the memorandum of agreement which has commended itself to
your Lordships who have already spoken as well as to the judges
of the Court of Appeal. It appears to me that the respondent
did not intend to pass, and did not pass, from her legal claim
for interest on the judgment debt due to her by the appellant.
She undertakes not to take proceedings on the judgment
provided the stipulated termly instalments are regularly paid,
"until the whole of the said sum of £2090 19 s. shall have been
fully paid and satisfied." But these words, the "said sum,"
ought, in my opinion, to be construed as referring to the sum of
£2090 19 s. previously described as being contained in a
judgment of Her Majesty's High Court of Justice, and therefore
bearing interest ex lege. The whole context of the memorandum
appears to me to be consistent with this
view,
and to point strongly
to the inference that there was no agreement, or even proposal,
that the respondent should make any abatement of her legal
claims, or do more than give her debtor time on the conditions
expressed, "to pay such judgment."
I must assume, however, that I have wrongly construed the
memorandum of agreement, and that its language imports that
the respondent was to abstain from taking proceedings upon the
judgment, if and when instalments to the amount of £2090 19 s.
had been duly and regularly paid. Upon that assumption, I am
still of opinion that the respondent ought to prevail, on the
simple ground that, in that
view
of the memorandum her
agreement to abate part of her claim was nudum pactum, for which the
appellant gave no legal consideration.
I do not think it necessary to consider whether it would still be open to this House, if so advised, to overrule the doctrine of Cumber
v.
Wane(1) and Pinnel's Case(2), because I am not prepared
to disturb that doctrine. Nor do I think it necessary to occupy
the time of the House with a detailed explanation of the
considerations which have led me to that result, seeing that I concur
in the judgment of the Lord Chancellor, and also in the opinion
about to be delivered by my noble and learned friend opposite
(Lord FitzGerald), which I have had the advantage of reading.
My Lords, the first question is as to the true construction of
the memorandum of agreement of the 21st of December 1876,
and I express my opinion on it with the greatest diffidence. My
excuse for expressing any opinion upon it is that I feel rather
strongly on the point. The memorandum is, it may be observed,
unilateral, for Dr.
Foakes
by it assumes no obligation.
The first recital is that Mrs.
Beer
had obtained a judgment
against Dr.
Foakes
for a sum of £2090 19 s. The judgment
would not per se, at common law, entitle the plaintiff to interest,
but the statute 1 & 2
Vict.
c. 110 s. 17 provides "that every
judgment debt shall carry interest at 4 per cent. from the time
of entering up until the same shall be satisfied, and such interest
may be levied under a writ of execution on such judgment." This
right to interest is different from interest arising on contract, or
which a jury may give as damages or may withhold. It is a
clear statutory right, arising immediately on entering up the
judgment, and continuing until the judgment debt is fully
paid. The position of the parties at the date of the agreement
then was that Dr.
Foakes
owed Mrs.
Beer
the principal sum of
£2090 19 s. , recovered by a judgment which carried interest at
4 per cent., arising de die in diem as a statutory right, and then
(that is, at the time of the agreement) amounting to £113 16 s. 2 d.
The agreement then contains this recital: "And whereas the
said J. W.
Foakes
has requested the said Julia
Beer
te give him
time in which to pay such judgment , which she has agreed to do
on the following conditions." He does not ask for any remission
of any portion of his obligation, he solicits only time for payment, and she agrees to give him that time and no more.
It seems to me clear and free from doubt that "such judgment"
in this recital would, if there was no more to guide us, mean the
judgment debt with its statutable interest at 4 per cent. The
language of the recital and of the whole agreement seems to be
that of Mr. Smith, the defendant's solicitor, as we find in
Mackreth's evidence this statement: "The agreement was prepared
by Smith and sent to me, and I approved of it on behalf of
Mrs.
Beer."
Returning to the language of the agreement, it is remarkable
that Dr.
Foakes
undertakes by it no obligation whatever; he
does not bind himself to pay any instalment to her or to her
"nominee;" and it was not necessary that he should, for I
can entertain no doubt that if what is called the "condition"
for payment of the instalments had not been fulfilled, then
Mrs.
Beer
could have enforced the whole residue of her demand
for principal and the interest that accrued, by execution on the
judgment. Dr.
Foakes
enters into no obligation to pay to her
"nominee," and this seems to displace in fact the foundation
of the judgment of the Divisional Court, where Williams J. is
reported to have said(1): "The doctrine is that an agreement to
pay a less sum in satisfaction of a debt is without consideration.
The English law forbids such an agreement. That is the law
in its naked simplicity. But I think a
very
little departure from
the mere agreement to pay a less sum will make the agreement
good. If the creditor says, 'You owe me a large sum of money
- I am willing to accede to your request for time, but you must
enter into an agreement in writing, at your expense (as it would
be) and you shall pay the money to me or to any person I may
name at my election,' that, I think, is enough to make this
agreement not a nudum pactum." (There is no such thing in the
agreement here.) And Mathew J. adds, "It is noticeable that
the agreement is framed so that it casts an obligation which
would not otherwise have existed. The agreement to pay the
creditor's nominee renders it a document available as a security."
It would seem, to me at least, that the terms of the agreement
had never been properly conveyed to the minds of the judges;
for in fact Dr.
Foakes
assumed no greater obligation than the
law imposed on him in respect of the judgment.
The expressed consideration is the payment to Mrs.
Beer
"of
the sum of £500 in part satisfaction of the said judgment debt of £2090 19 s. ," and again I should repeat here that the last words
would mean the debt and the right to interest which it carried,
if there is nothing subsequent to impose a different meaning.
The term "satisfaction" is specially applicable to a judgment.
You could not in former times plead payment simply to a scire
facias on a judgment. The plea should shew satisfaction. The
judgment would not be satisfied on payment of the £2090 19 s.
but only by payment of that sum and the interest. The agreement
then provides as a condition for the payment of the instalments
of £150, "until the whole of the said sum of £2090 19 s.
shall have been fully paid and satisfied ." The whole difficulty
arises on this passage. If in place of using the word "sum" it
had used "judgment" or "judgment debt," in my opinion there
could have been but one construction,
viz.,
that "judgment" or
"judgment debt" meant the principal sum of £2090 19 s. with
"interest at 4 per cent." Now, having regard to what the parties
were at, why should we not read "the said sum of £2090 19 s. " by
the light of the antecedent parts of the same agreement as
meaning "the said judgment for £2090 19 s. ," and thus do full and
complete justice, and not deprive Mrs.
Beer
of about £350 as justly
due to her as the £2090 19 s. , and which, it is to me manifest,
she never intended and was never asked to relinquish? There is
a special recital indicating what the parties intended,
viz.,
"time
on certain conditions" but without a word as to relinquishing
any part of the plaintiff's demand, and if the subsequent words
are more general, we should limit and qualify them by the special
language of the recital.
Dr.
Foakes
did not ask for any remission, he asked for time
and for time alone, and we ought to assume that when his solicitor
prepared and furnished the memorandum of agreement he did
not intend by its language that any part of Mrs.
Beer's
demand
was to be released. Mackreth says that in the course of the
negociation "interest was never mentioned at all in reference to that agreement." She adopted the language of the memorandum,
and it became hers, but was it such as to lead Dr.
Foakes
to
understand that Mrs.
Beer
agreed on performance of the condition
to give up her claim to interest? I think that we ought not to
adopt such a conclusion.
There are many authorities for the proposition that you may
limit the general words of release by the antecedent recitals, so
as to effectuate that alone which was within the intention of the
parties. I might refer to a number of cases, for example Thorpe
v.
Thorpe(1), where it is said per Cur : "Where there are general
words only in a release they shall be taken most strongly against
the releasor, but where there is a particular recital and general
words follow, there the general words shall be qualified by the
special words."
Applying that rule to the present case, you may limit the general
words at the conclusion of the memorandum to the giving of
time alone, that is to say, if "judgment debt of £2090 19 s. "
means the sum of £2090 19 s. and nothing more, then that
Mrs.
Beer
agrees to give time for payment of the principal debt
of £2090 19 s. by the instalments and at the times indicated,
and that pending that arrangement she would not "take any
proceedings whatever on the said judgment." This would give
effect to every word and leave the "interest" untouched, which,
if the principal is to be paid by instalments, could not well be
ascertained until the time had been reached for the payment of
the last instalment. There is nothing in the memorandum, it
should be observed, to prevent Dr.
Foakes
from coming in at any
time and discharging the whole principal before the instalments
became payable. Upon the construction of the memorandum I
am of opinion that the decision of the Court of Appeal should be
affirmed.
The second question now presents itself, but with my
view
on
the first it is not actually necessary for me to express any opinion
on it, but it seems more satisfactory that I should do so.
Assuming that I have fallen into error in interpreting the agreement,
and that it is to be read that if Dr.
Foakes
should pay the actual
sum of £2090 19 s. by instalments according to the condition
she would relinquish her statutable debt for interest and not issue execution on the judgment to recover it, is such an agreement nudum pactum, and therefore incapable of being enforced?
I have listened with much interest, and I may add, with no
small instruction, to the judgment of my noble and learned friend
Lord Blackburn. He has as usual gone to the
very
foundation,
and I regret that I have been unable to assist him in overturning
the resolution of the Court of Common Pleas as reported by Lord
Coke in Pinnel's Case(1), or in expunging from the books the
infinitesimal remains of Cumber
v.
Wane(2). It seems to me doubtful
whether the question arises which my noble and learned friend
has presented,
viz.:
whether payment of a part of a debt
ascertained by judgment can be a satisfaction of the whole? In the
case before us the whole of the £2090 19 s. , the principal of the
judgment, has been paid to the last farthing.
The interpretation put by the judges of the Courts below, and
adopted by the Lord Chancellor, and my noble and learned friend
Lord Blackburn, on the memorandum, seems to me to divide it
in effect into two stipulations, the first being that if Dr.
Foakes,
should pay down £500, and the remainder of the actual sum
of £2090 19 s. in the manner prescribed, Mrs.
Beer
would so
accept it, and pending the payments, would take no proceeding
on the judgment; and the second being that if the £2090 19 s.
should be paid in the manner indicated, she would relinquish her
claim for interest, and would not take any proceedings whatever
on the judgment to enforce that interest. The question is whether
there is any sufficient legal consideration for the relinquishment
of the debt for interest. I am clearly of opinion that there is
not.
My noble and learned friend Lord Blackburn has shewn us
very
clearly that the resolution in Pinnel's Case(1) was not
necessary for the decision of that case, and that the principle on
which it seems to rest does not appear to have been made the
foundation of any subsequent decision of the Exchequer Chamber
or of this House, and further, that some of the distinctions which
have been engrafted on it, make the rule itself absurd. But it
seems to me that it is not the rule which is absurd, but some of
those distinctions, emanating from the anxiety of judges to limit
the operation of a rule which they considered often worked
injustice. That resolution in Pinnel's Case(1) has never been
overruled. For 282 years it seems to have been adopted by our
judges. During that whole period it seems to have been
understood and taken to be part of our law that the payment of a part
of a debt then due and payable cannot alone be the foundation of
a parol satisfaction and discharge of the residue, as it brings no
advantage to the creditor, and there is no consideration moving
from the debtor, who has done no more than partially to perform
his obligation. Though it may not have been made the subject
of actual decision, yet we find that every judge in this country
who has had occasion to deal with the proposition states the law
to be so. And in the sister country it has always been so received,
and in the case of Corporation of Drogheda
v.
Fairtlough(2)Lefroy C.J. thus expresses himself - I may say that his language
is entitled to
very
considerable weight; he was a judge who had
sat at the feet of Lord Kenyon, and he was the well-known
reporter of the decisions of Lord Redesdale. That
very
learned
judge thus states the law:- "There is also a failure of evidence
of the consideration for the contract to remove the rule of the
common law that payment of a less sum cannot be a satisfaction
of a greater liquidated sum, unless there is some further
advantage accompanying the payment." And in another part of his
judgment he puts the proposition thus:- "The payment merely
of a less sum, not being in pursuance of any contract by deed,
cannot by the common law be deemed to be a satisfaction of a
greater liquidated sum, but the law will allow the payment of a
smaller sum to be a satisfaction of a greater liquidated sum if
there be any collateral advantage, however small, to the creditor
attending the transaction." The question did arise directly in
that case, but the plea failed in other points, and it was, therefore,
not necessary actually to decide it. I refer to it as shewing how
a judge of great experience considered the law to stand.
I am not aware of any decision that controverts this position, and the text-books uniformly present it thus; that "the payment of part of a liquidated and ascertained sum is in law no
satisfaction of the whole." The proposition itself is but a part of a rule of our law, which affects and governs many of the daily relations of life, "Nuda pactio obligationem non parit." And, again, the law says that "nudum pactum est ubi nulla subest causa præter conventionem."
I should hesitate before coming to a decision which might be a serious inroad on that rule, but I concur with my noble and learned friend that it would have been wiser and better if the resolution in Pinnel's Case(1) had never been come to, and there had been no occasion for the long list of decisions supporting composition with a creditor on the rather artificial consideration of the mutual consent of other creditors. We find the law to have been accepted as stated for a great length of time, and I apprehend that it is not now within our province to overturn it.
The short question then is, in relation to a judgment debt payable immediately, and on which the creditor is entitled to have execution, is the payment by the debtor of a part a sufficient consideration to support a parol agreement by the judgment creditor not to take any proceedings whatever on the judgment for the residue? In my opinion it is not; and I think, therefore, that the judgment of the Court of Appeal should be affirmed.
The permission for BAILII to publish the text of this judgment
was granted by Incorporated Council of Law Reporting for England & Wales and
the electronic
version of the text was privided by Justis Publishing Ltd.
Their assistance is gratefully acknowledged.