Law Dictionary of Legal Terminology

PAYMENT

PAYMENT, contracts. That which is given to execute what has been promised; or it is the fulfilment of a promise. Solvere dicimus cum quis fecit, quod facere promisit. But though this is the general acceptation of the word, yet by payment is understood, every way by which the creditor is satisfied or ought to be, and the debtor, liberated for example, an accord and satisfaction will operate as a payment. If I owe you a sum of money, for the security of which I give you a mortgage, and afterwards you consent to receive in payment a tract of land, from the moment the sale is complete, the first obligation, with all its accessories, is extinct, although you should be afterwards evicted of the property sold. 7 Toull. n. 46 2 Mart. Lo. Rep. N. S. 144; S. C. 2 Harr. Cond. Lo. R. 621, 624.

2. This subject will be considered by taking a separate view of the person by whom the payment may be made; to whom it may be made; when and where it ought to be made; how it ought to be made; the effect of the payment.

3. - 1. The payment may be made by the real debtor and other persons from whom the creditor has a right to demand it; an agent may make payment for his principal; and any mode of payment by the agent, accepted and received as such by the creditor, as an absolate payment will have the effect to discharge the principal, whether known or unknown, and whether it be in the usual course of business or not. If, for example, a factor or other agent should be employed to purchase goods for his principal, or should be entrusted, with money to be paid for him, and, instead of receiving the money, the creditor or seller should take the note of the factor or agent; payable at a future day, as an absolute payment, the principal would be discharged from the debt. 3 Chit. Com. Law, 204; 1 B. & Ald. 14; 6 B. & C. 160; 7 B. & C. 17. When such note has been, received conditionally and not as an absolute payment, it would not have the effect of a payment by the principal; and whether so received or not is a fact to be decided by the jury. 1 Cowen, R, 259, 383; 9 John. R:, 310; 6 Cowen, R. 181; 7 John. R. 311; 15 John. R. 276; 3 Wend. R. 83; 6 Wend. R. 475; 10 Wcnd. R. 271; 5 John., R. 68; 1 Liverm. Ag. 207.

4. Payment may also be made by a third person a stranger to the contract.

5. In the payment of mortgages, it is a˜20rule, that the personal estate shall be applied to discharge them when made by the testator or intestate himself, to secure the payment of a debt due by bim, because the personal estate was benefited by the money borrowed; and it makes no difference whether the mortgaged lands have been devised, or come to the heir by descent. 2 Cruise, 1 Dig. 147. The testator may, however, exempt the personal estate from the payment, and substitute the real in its place. But when the mortgage was not given by the deceased, but be acquired the real estate subject to it, it never was his debt, and therefore his personal estate is not bound to pay the mortgage debt, but it must be paid by the real estate. 2 Cruise, Dig. 164-8; 3 John. Chan. R. 252; 2 P. Wms. 664, n. 1; 2 Bro. C. C. 57; 2 Bro. C. C. 101, 152; 5 Ves. jr. R. 534; 14 Ves. 417.

6. - 2. It must be made by the creditor himself, or his assigns, if known, or some person authorized by him, either expressly or by implication; as to his factor; Cowp. 251: to his broker, 1 Maul. & Selw. 576; 4 Id. 566; 4 Taunt. 242; 1 Stark. Ca. 238.

7. In the case of partners and other joint creditors, or joint execuutors or administrators, payment to one is generally a valid payment. When an infant is a creditor, payment must be made to his guardian. A payment may be good when made to a person who had no authority to receive it, if the creditor shall afterwards ratify it. Poth. Obl. n. 528.

8. - 3. Time and place of payment: first, as to the time. When the contract is, that payment shall be made at a future time, it is clear that nothing can be demanded until after it has elapsed, or until any other condition to which the payment is subject, has been fulfilled; and in a case where the goods had been sold at six or nine months, the debtor had the option as to those two terms. 5 Taunt, 338. When no time of payment is mentioned in the agreement, the money is payable immediately. 1 Pet. 455; 4 Rand. 346.

9. Secondly, the payment must be made at the place agreed upon in the contract; but in the absence of such agreement, it must be made agreeably to the presumed intention of the parties, which, among other things, may be ascertained by the nature of the thing to be paid or delivered, or by the custom in such cases.

10. - 4. How the payment ought to be made. To make a valid payment, so as to compel the receiver to take it, the whole amount due must be paid; Poth. Obl. n. 499, or n. 534, French edition; when a part is accepted, it is a payment pro tanto. The payment must be made in the thing agreed upon; but when it ought to be made in money, it must be made in the lawful coin of the country, or in bank notes which are of the value they are represented to be. A payment made in bills of an insolvent bank, though both parties may be ignorant of its insolvency, it has been held, did not discharge the debt; 11 Verm. 676; 6 Hill, 340; but see 1 W. & S. 92; 8 Yerg. 175; and a payment in counterfeit bank notes is a nullity. 2 Hawks, 326; 3 Hawks, 568, 6 Hill, 840. Iii general, the payment of a part of a debt, after it becomes due, will not discharge the whole, although there may be an agreement by the debtor that it should have that effect, because there is no consideration for such agreement. But see 3 Kelly's R. 210, contra. A payment of a part, before it is due, will discharge the whole, when so agreed.

11. - 5. The payment, when properly made, discharges the debtor from his obligation. Sometimes a payment extinguishes several obligations; this happens when the thing given to discharge an obligation was the same which is the object of another obligation. Poth. Obl. 552.

12. A single payment may discharge several debts; as, for example if Peter be indebted to Paul one thousand dollars, and Paul being indebted to James, Paul give an order to Peter to pay Tames this money; the payment made by Peter to James discharges both the obligations due by Peter to Paul, and by Paul to James. Poth. Ob. n. 553. This rule, that a payment made in order to acquit or discharge an obligation, extinguishes the other obligations which have the same object, takes place also when there are several debtors as regards the whole of them. If, for example, Peter trust Paul on the credit of James, a payment by Paul discharges both himself and James. Poth. Obl. n. 554.

13. But in case money or other things have been delivered to a person who was supposed to be entitles to them as a creditor, when he was not, this is not a payment, and the whole, if nothing was due, or if the debt was less than the amount paid, the surplus, may be recovered in action for money bad and received. Vide, generally, Bouv. Inst. Index, h. t.; Com. Di g. 473; 8 Com. Dig. 607; 16 Vin 6; 1 Vern. by Raith. 3, 150 n. Yelv. 11 a; 1 Salk. 22; 15 East, 12; 8 East, R. 111; 2 Ves. jr. 11; Phil. Ev. Index, b, t,; Stark. Ev. h. t.; Louis. Code, art. 2129; Ayl. Pand. 565; 1 Sell. Pr. 277; Dane's Ab. Index, h. t.; Toull. lib. 3, tit. 3, c. 5; Pardes. part 2, tit. 2, c. 1 Merl. Repert. h. t.; Chit. Contr. Index, h. t.; 3 Eng. C. L. Rep. 130. As to what transfer will amount to an assignment or a payment and extinguishment of a claim, see 6 John. Ch. R. 395; Id. 425; 2 Ves. jr. 261 18Ves. jr. 384; 1 N. H. Rep. 167; 1 N. H. Rep. 252; 2 N. H. Rep. 300; 3 John. Ch. R. 53.

PAYMENT

PAYMENT, pleadings. The name of a plea by which the defendant alleges that he has paid the debt claimed in the declaration; this plea must conclude to the country. 4 Call, 371; Minor, 137. Vide Solvit ad them; Solvit post diem.