subject-matter of the dispute. 13 A judgment of a court of one of the United States is not, however, treated as a foreign judgment for the purposes of this rule. Such a judgment merges the cause of action throughout the country.14 § 1922. Payment by bill or note. A negotiable bill or note is so far recognized as a specialty, that one who is indebted by simple contract may merge and discharge the debt by his own negotiable instrument for the amount of the debt when the instrument is given and received as full satisfaction. 15 Whether it is so received depends upon the expressed intention of the parties. 16 Generally, no intention is clearly expressed, and the presumption of law is almost universal that absolute payment is not to be inferred simply 13 Ricardo v. Garcias, 12 Cl. & F. 368; Nouvion v. Freeman, 15 A. C. 1; Eastern Township Bank v. Beebe, 53 Vt. 177, 38 Am. Rep. 665. 14 Union Pacific Ry. Co. v. Baker, 5 Kan. App. 253, 47 Pac. 563; North Bank v. Brown, 50 Me. 214, 79 Am. Dec. 609; Bank of United States v. Merchants' Bank, 7 Gill, 415; Harrington v. Harrington, 154 Mass. 517, 28 N. E. 903; Graef v. Bernard, 162 Mass. 300, 38 N. E. 503; Stearns v. Wiborg, 123 Mich. 584, 588, 82 N. W. 283; Child v. Eureka Powder Works, 45 N. H. 547; Barnes v. Gibbs, 31 N. J. L. 317, 86 Am. Dec. 210; Traflet v. Empire Life Ins. Co., 64 N. J. L. 387, 46 Atl. 204; Gray v. Richmond Bicycle Co., 167 N. Y. 348, 60 N. E. 663, 82 Am. St. Rep. 720; Baxley v. Linah, 16 Pa. 241; Paine v. Schenectady Ins. Co., 11 R. I. 411; McGilvray v. Avery, 30 Vt. 538; Green v. Starr, 52 Vt. 426. See also Hatch v. Spofford, 22 Conn. 485, 500, 58 Am. Dec. 433. 15 Re Morrill, 2 Sawy 356; Carlton v. Buckner, 28 Ark. 66; Bonestell v. Bowie, 128 Cal. 511, 61 Pac. 78; Belleville Sav. Bank v. Bornman, 124 Ill. 200, 16 N. E. 210; Thom v. Wilson's Exec., 27 Ind. 370; Farwell v. Salpaugh, 32 Ia. 582; Iowa County v. Foster, 49 Iowa, 676; French v. French, 84 Ia. 655, 660, 51 N. W. 145, 15 L. R. A. 300; Smith v. Johnson, 224 Mass. 50, 52, 112 N. E. 644; Van Middlesworth v. Van Middlesworth, 32 Mich. 183; Curtis v. Browne, 63 Mo. App. 431; Parchen v. Chessman, 49 Mont. 326, 142 Pac. 631, Ann. Cas. 1916 A. 681; Boyd v. Hitchcock, 20 Johns. 76, 11 Am. Dec. 247; Wilbour v. Hawkins, 38 R. I. 116, 94 Atl. 456; Ferguson v. Harris, 39 S. C. 323, 17 S. E. 782, 39 Am. St. Rep. 731; Figuers v. Fly, 137 Tenn. 358, 193 S. W. 117; Morriss v. Harveys, 75 Va. 726; Cushwa v. Improvement, etc., Assn., 45 W. Va. 490, 32 S. E. 259. See also cases cited infra, n. 20. On the possibility of discharging a debt by a negotiable instrument for less than the amount of the debt, see supra, § 124. 16 Baker v. Walker, 14 M. & W. 465; Weaver v. Nixon, 69 Ga. 699; Belleville Sav. Bank v. Bornman, 124 Ill. 200, 16 N. E. 210; Lyon v. Northrup, 17 Ia. 314; Stewart v. Union Mut. L. Ins. Co., 155 N. Y. 257, 49 N. E. 876, 42 L. R. A. 147; Bolt v. Dawkins, 16 S. C. 198; and see cases in this section passim. from taking the debtor's negotiable instrument for a debt. Unless the contrary is clearly indicated, the instrument operates merely as conditional payment; "7 that is, all right of action upon the debt is suspended until the dishonor of the negotiable instrument, but revives upon such dishonor, the instrument thereafter being held as security. 17 The principle of conditional payment applies where a new note is given in renewal of an old one, as well as where the original debt was on simple contract. 18 Even though the debtor 17 Ward v. Evans, 2 Ld. Ray. 928; Ex parte Barclay, 7 Ves. 597; Sayer v. Wagstaff, 5 Beav. 415; Keay v. Fenwick, 1 C. P. D. 745; Lyman v. Bank of United States, 12 How. 225, 13 L. Ed. 965; Segrist v. Crabtree, 131 U. S. 287, 33 L. Ed. 125, 9 S. Ct. 687; Leschen & Sons Rope Co. v. Mayflower &c. Co., 173 Fed. 855, 97 C. C. A. 465, 35 L. R. A. (N. S.) 1; National Bank of Commerce v. Rockefeller, 174 Fed. 22, 25, 98 C. C. A. 8; Keel v. Larkin, 72 Ala. 493; Lee v. Green, 83 Ala. 491, 3 So. 785; Caldwell v. Hall, 49 Ark. 508, 1 S. W. 62, 4 Am. St. Rep. 64; Smith v. Owens, 21 Cal. 11; Stanley v. McElrath, 86 Cal. 449, 25 Pac. 16; Merrill v. Kenyon, 48 Conn. 314, 40 Am. Rep. 174; King v. McConnell, 57 Fla. 77, 49 So. 539; Georgia Code, § 2867; Troutman Lumber Co. v. National Mfg. Co., 145 Ga. 315, 89 S. E. 198; Walsh v. Lennon, 98 Ill. 27, 38 Am. Rep. 75; Cheltenham Stone Co. v. Gates Iron Works, 124 Ill. 623, 16 N. E. 923; Stephens Engineering Co. v. Industrial Commission (Ill.), 124 N. E. 869; McLaren v. Hall, 26 Iowa, 297; Bradley v. Harwi, 43 Kan. 314, 23 Pac. 566; Bradbury v. Van Pelt, 4 Kan. App. 571, 45 Pac. 1105; Bank of Napoleonville v. Knoblock (La.), 80 So. 214; Matthews v. Dare, 20 Md. 248; Riverside Iron Works v. Hall, 64 Mich. 165, 31 N. W. 152; Geib v. Reynolds, 35 Minn. 331, 28 N. W. 923; Guion v. Doherty, 43 Miss. 538; Wileman v. King, 120 Miss. 392, 82 So. 265; Wiles v. Robinson, 80 Mo. 47; Holland v. Rongey, 168 Mo. 16, 67 S. W. 568; Young v. Hibbs, 5 Neb. 433; Spear v. Olson (Neb.), 175 N. W. 1012; Woodward v. Holmes, 67 N. H. 494, 41 Atl. 72; Fry v. Patterson, 49 N. J. L. 612, 10 Atl. 390; Burdick v. Green, 15 Johns. 247; St. Albans Beef Co. v. Aldridge, 112 N. Y. App. D. 803, 99 N. Y. S. 398; Page v. Carton, 64 N. Y. Misc. 645, 120 N. Y. S. 277; Rukeyser v. Fountain, 173 N. Y. S. 21; Bombas v. Fisher, 180 N. Y. S. 449; Delafield v. Construction Co., 118 N. C. 105, 24 S. E. 10; State v. Royal Indemnity Co. (N. Dak.), 175 N. W. 625; Sutliff v. Atwood, 15 Oh. St. 186; Berlin Iron Bridge Co. v. Bonta, 180 Pa. 448, 36 Atl. 867; Philadelphia v. Neill, 211 Pa. 353, 60 Atl. 1033; Taylor v. Slater, 16 R. I. 86, 12 Atl. 727; Baker v. Baker, 2 S. Dak. 261, 49 N. W. 1064, 39 Am. St. 776; Union Bank v. Smiser, 1 Sneed, 501; McGuire v. Bidwell, 64 Tex. 43; Deseret Nat. Bank v. Dinwoodey, 17 Utah, 43, 53 Pac. 215; Morriss v. Harveys, 75 Va. 726; Boston Nat. Bank v. Jose, 10 Wash. 185, 38 Pac. 1026; Hopkins v. Detwiler, 25 W. Va. 734; Mehlberg v. Fisher, 24 Wis. 607; Wagener v. Old Colony L. Ins. Co. (Wis.), 172 N. W. 729. 18 Ex parte Barclay, 7 Ves. 597; Kendrick v. Lomax, 2 Cromp. & J. 405; Bishop v. Rowe, 3 Maule & S. 362; Anniston Loan & T. Co. v. Stickney, 108 Ala. 146, 19 So. 63; Savings Bank is not a party to the instrument the transaction has still been held presumptively only a conditional payment. 19 In a few jurisdictions, however, the presumption is reversed, and the acceptance of even the debtor's negotiable instrument for a precedent debt is presumed to be in full and final satisfaction, unless a contrary intention appears.20 It has thus far been assumed that a debt existed prior to the transfer of the negotiable instrument. When a bill or note is given for a debt contemporaneously created, there is *more difference of opinion;21 but generally here also it would be held merely conditional payment.22 Even where the instru v. Central Market Co., 122 Cal. 28, 54 Pac. 273; First Nat. Bank v. Newton, 10 Colo. 161, 14 Pac. 428; Askins v. Hott, 188 Ill. App. 235, 240; Godfrey v. Crisler, 121 Ind. 203, 22 N. E. 999; McMorran v. Murphy, 68 Mich. 246, 36 N. W. 60; Citizens' Bank v. Carson, 32 Mo. 191; Reynolds v. Schade, 131 Mo. App. 1, 109 S. W. 629; Lebanon Nat. Bank v. Long, 220 Pa. 556, 69 Atl. 1033; Grissel v. Bank of Woonsocket, 12 S. Dak. 93, 80 N. W. 161. See, however, Union Brewing Co. v. Interstate, etc., Trust Co., 240 Ill. 454, 88 N. E. 997. 19 Robinson v. Read, 9 B. & C. 449; Bottomley v. Nuttall, 5 C. B. (N. S.) 122; Peter v. Beverly, 10 Pet. 532, 9 L. Ed. 522; Fickling v. Brewer, 38 Ala. 685; Caldwell v. Hall, 49 Ark. 508, 4 Am. St. Rep. 64; Brown v. Olmsted, 50 Cal. 162; Zook v. Odle, 3 Colo. App. 87, 32 Pac. 82; Clark v. Savage, 20 Conn. 258; Chicago Times Co. v. Benedict, 37 Ill. App. 250; Huse v. McDaniel, 33 Iowa, 406; Vogel v. Wadsworth, 48 Ia. 28; Hunt v. Higman, 70 Iowa, 406, 30 N. W. 769; Park v. Best, 176 Ia. 7, 157 N. W. 233; Webb v. National Bank, 67 Kan. 62, 72 Pac. 520; Graham v. Sykes, 15 La. Ann. 49; Sebastian May Co. v. Codd, 77 Md. 293, 26 Atl. 316; Thompson v. Briggs, 28 N. H. 40; American Brick &c. Co. v. Drinkhouse, 59 N. J. L. 462, 36 Atl. 1034; Bates v. Rose- See 20 Smith v. Bettger, 68 Ind. 254, 34 Am. Rep. 256; Nixon v. Beard, 111 Ind. 137, 12 N. E. 131; Thompson v. Peck, 115 Ind. 512, 18 N. E. 16, 1 L. R. A. 201; Scott v. Edgar (Ind. App.), 60 N. E. 468; Gates v. Fauvre, (Ind. App.), 119 N. E. 155; Wise v. Hilton, 4 Greenl. 435; Newall v. Hussey, 18 Me. 249, 36 Am. Dec. 717; Mehan v. Thompson, 71 Me. 492; Miller v. Hilton, 88 Me. 429, 34 Atl. 266; Bryant v. Grady, 98 Me. 389, 57 Atl. 92; Ely v. James, 123 Mass. 36; Brigham v. Lally, 130 Mass. 485; O'Conner v. Hurley, 147 Mass. 145, 16 N. E. 764; Paddock &c. Co. v. Simmons, 186 Mass. 152, 71 N. E. 298; Farr v. Stevens, 26 Vt. 299; Dickinson v. King, 28 Vt. 378; Collamer v. Langdon, 29 Vt. 32. 21 Daniel, Neg. Instr., § 1261. 22 Williams v. Evans, L. R. 1 Q. B. ment is made by a stranger if it is drawn, indorsed or guaranteed by the debtor, this is true.23 But if the instrument is made by a stranger and not indorsed or guaranteed by the transferor, it is presumptively an absolute payment. 24 § 1922a. A debt may be discharged by laches in regard to a bill or note given in payment or as security. Where a negotiable instrument is taken in conditional payment or as collateral security the creditor is bound to use proper diligence in charging the parties thereto, and is liable for consequences of any failure in this regard even though the debtor is not a party to the instrument; 25 but if the debtor is a party secondarily liable on the instrument, and it was given in payment, absolute or conditional, a failure to charge the debtor as a party to the instrument destroys the creditor's right on the debt for which the instrument was given, as fully as it does his right on the instrument itself. 26 Under this rule 352; Menzel v. Primm, 6 Cal. App. 204, 91 Pac. 754; Charleston &c. R. Co. v. Pope, 122 Ga. 577, 50 S. E. 374; Hoodless v. Reid, 112 Ill. 105; Kirkpatrick v. Bessalo, 116 Mich. 657, 74 N. W. 1042; Guilford v. Mulkin, 85 Hun, 489, 33 N. Y. S. 134; Kirkham v. Bank of America, 26 N. Y. App. Div. 110, 49 N. Y. S. 767; Wagener v. Old Colony L. Ins. Co. (Wis.), 172 N. W. 729. 23 Alcock v. Hopkins, 6 Cush. 484; Marinette Iron Works Co. v. Cody, 108 Mich. 381, 66 N. W. 334; Whitney v. Goin, 20 N. H. 354; Butler v. Haight, 8 Wend. 535; Shriner v. Keller, 25 Pa. 61. 24 Emly v. Lye, 15 East, 7; Noel v. Murray, 13 N. Y. 169; Hall v. Stevens, 116 N. Y. 201, 22 N. E. 374, 5 L. R. A. 802; Dibble v. Richardson, 171 N. Y. 131, 63 N. E. 829; Bicknall v. Waterman, 5 R. I. 43; Eaton v. Cook, 32 Vt. 58; Hoeflinger v. Wells, 47 Wis. 628, 3 N. W. 589; Challoner v. Boyington, 91 Wis. 27, 64 N. W. 422. In Security Warehousing Co. v. The American Exchange Nat. Bank, 118 N. Y. App. Div. 350, 355, 103 N. Y. S. 399, the court said: "If the note of a third person is given at the time an obligation is entered into the presumption is that such note was accepted in payment, and the burden is upon the one accepting to show that it was not thus received. (Gibson V. Tobey, 46 N. Y. 637.) If the note of a third person be given for a past indebtedness, the burden is upon the person giving it to establish that it was accepted in payment. (Noel v. Murray, 13 N. Y. 167.)" 25 See infra, n. 29, 30. 26 Darrach v. Savage, 1 Show. 155; Hill v. Lewis, Skinner, 410; Bridges v. Berry, 3 Taunt. 584; Minehart v. Handlin, 37 Ark. 276; Brown ". Cronise, 21 Calif. 386; Phoenix Ins. Co. v. Allen, 11 Mich. 501, 83 Am. Dec. 756, 13 Mich. 191; Whitten v. Wright, 34 Mich. 92; Jones v. Savage, 6 Wend. 658; Dayton v. Trull, 23 Wend. 345; Woodcock v. Bennet, 1 Cow. 711, 13 Am. Dec. 568; Darnall v. Morehouse, 45 N. Y. 64; Mauney v. Coit, 80 N. Car. 300, 30 Am. Rep. 80; Betterton the drawer of a bill of exchange (other than a check) and the indorser of a promissory note, bill of exchange or check is discharged to the extent of the amount of the instrument from liability for the debt for which the instrument was given, by any unexcused failure to make demand at maturity on the party primarily liable, or to give seasonable notice to the secondary party if the instrument is dishonored, irrespective of any injury this laches may have caused. As the drawer of a check is freed from liability on the instrument only to the extent that he may be injured by unexcused delay in presentment, 27 his discharge from a debt for which a check was given in conditional payment is similarly restricted. 28 If the debtor is not a party to the instrument given in conditional payment, the creditor must exercise reasonable diligence, and failing to do so is chargeable with the consequences; 29 and so if a negotiable instrument is given as collateral security. The extent of the creditor's duty, as in the case of pledged property of other kinds, is measured by reasonable care; and this includes charging parties secondarily liable by proper presentment and notice.30 § 1923. Effect of conditional payment. When a negotiable instrument is taken in conditional pay v. Roope, 3 Lea, 215, 221, 31 Am. Rep. 633; Mehlberg, v. Fisher, 24 Wis. 607; Allan v. Eldred, 50 Wis. 132, 6 N. W. 132; Schierl v. Baumel, 75 Wis. 69, 43 N. W. 724; Byles on Bills (17th Eng. ed.), 280; Chalmers, Bills of Exch. (7th Eng. ed.) 169; 2 Ames, Cas. B. & N. 584, 585. But in a few cases the extent of the discharge has been held limited to the amount of injury caused by the creditor's laches. Gallagher v. Roberts, 2 Wash. C. C. 191; McCrary v. Carrington, 35 Ala. 698; Kephart v. Butcher, 17 Iowa, 240., 27 See supra, § 1209. 28 Burns v. Yocum, 81 Ark. 127, 98 S. W. 956; Wileman v. King, 120 Miss. 392, 82 So. 265; Herider v. Phoenix Loan Assoc., 82 Mo. App. 427; Kilpatrick v. Home Building &c. Assoc., 1 119 Pa. 30, 12 Atl. 754; Manitoba Mortgage &c. Co. v. Weiss, 18 S. Da. 459, 101 N. W. 37, 112 Am. St. 799. 29 Swinyard v. Bowes, 5 M. & S. 62. See also Mordis v. Kennedy, 23 Kan. 408; Blanchard v. Tittabawassee Boom Co., 40 Mich. 566; Grube v. Stille, 61 Mo. 473, 33 Am. Rep. 169. Cf. Camidge v. Allenby, 6, B. & C. 373; Smith Mercer, L. R. 3 Exch. 51. 30 Peacock v. Pursell, 14 C. B. (N. S.) 728; Pickens v. Yarborough, 26 Ala. 417, 62: Am., Dec. 728; Kennedy v. Rosier, 71 Iowa, 671, 33 N. W. 226; Whitten v. Wright, 34 Mich. 92; Smith v. Miller, 43 N. Y. 171, 3 Am. Rep. 690; Roberts v. Thompson, 14 Ohio St. 1; Hanna v. Holton, 78 Pa. 334, 21 Am. Rep. 20. |