T. W. Stevenson Co. v. Peterson

163 Wis. 258 | Wis. | 1916

Maeshall, J.

The following propositions are presented for consideration in this case: First, was there a novation shown by the evidence, — Porter & Son being substituted in place of appellant as respondent’s debtors? Second, if the first proposition must be answered in the negative, Porter & Son and appellant having become principal and surety in respect to the indebtedness, did respondent and Porter & Son make a binding agreement, extending the time of payment of tbe indebtedness without the consent of appellant and thereby discharge him? The conclusion we have reached on the first proposition renders consideration of the second unnecessary, and also consideration unnecessary of some alleged errors in the findings which"are claimed by respondent and to which our attention is called by a notice under ch. 219, Laws 1915.

The essentials of a novation are a mutual agreement between a debtor, his creditor, and a third person by which such third person agrees to be substituted for such debtor and the creditor assents thereto, extinguishing the obligation of such debtor to such creditor and creating one in place thereof of such third person to such creditor. Hemenway v. Beecher, 139 Wis. 399, 121 N. W. 150.

There is no controversy here but that all the suggested essentials were shown by the evidence and found to exist except the assent of respondent to accept Porter & Son in place of appellant, and that such assent was not proved unless circumstantially.

It is not necessary to a substitution of debtors that the assent of the creditor to take a newdebtor in place of the old one should be given by any writing or by express words. The fact is the vital thing. If that appears clearly by circumstances and the other essentials also appear, they establish a novation. If the trial court thought otherwise and so reached the conclusion that respondent did not agree to accept Porter & Son in place of appellant, error was committed. The following authorities, of many which might be cited, leave no doubt on that point: Bishop-Babcock-Becker Co. v. Keeley, 160 Wis. 546, 152 N. W. 189; Hard v. Burton, 62 Vt. 314, 20 Atl. 269; Walker v. Wood, 110 Ill. 463, 48 N. E. 919; Warren v. Batchelder, 15 N. H. 129; J. H. Lane & Co. v. United O. C. Co. 103 App. Div. 378, 92 N. Y. Supp. 1061; De Witt v. Monjo, 46 App. Div. 533, 61 N. Y. Supp. 1046. They are to the effect that assent of the creditor to a substitution may be shown by circumstances and the conduct of the parties the same as other facts may similarly be proved.

In the light of the foregoing, we will refer briefly to the characterizing circumstances and conduct in this case. As indicated by the statement, respondent was fully informed that Porter & Son had purchased appellant’s store business and merchandise and agreed to pay the latter’s debt to respondent and become substituted in his place as debtor. Respondent must have known, when Porter & Son requested time to pay the debt and to have their four months six per cent, note taken therefor, that they were' endeavoring to carry out their agreement to become substituted. With that knowledge, respondent dealt with them without a suggestion of objection to the desired substitution, making the counter proposition for an extension of time for paying the debt, which included material advantages over permitting it to stand on mere open account. Those advantages consisted of obtaining the notes, the agreement to pay exchange and collection charges, and provisions for security against the payors’ defaulting on any other indebtedness which existed or might arise in the business transactions between the parties; indicating a desire to have, and expectation of having, the payors as customers for further purchases of goods. In the letter containing the counter proposition, respondent expressed a willingness “to put the account into two notes” of the kind suggested, saying that the interest rate required “is the lowest rate any of our trade have ever asked us to accept and we believe after further consideration you will feel that this proposition is a very liberal one on our part. Assuming that this will be satisfactory to you, we are inclosing you two notes which we would thank you to sign and return at your earliest convenience. Hoping you are being favored with a satisfactory business and that we may hear from you frequently, we remain,” etc. That indicates, pretty clearly, that respondent treated the account as an indebtedness of Porter & Son, and contemplated that all further business in respect to the matter could be with them in connection with other business. Eespondent replied to the letter in which the notes were sent saying that such notes had been placed to the credit of the senders, in harmony with the idea that they were sent and accepted in settlement of appellant’s indebtedness. The testimony on behalf of Porter & Son was to the effect that they were so sent, and the letter written some time afterwards to appellant, so acknowledging, is in like harmony. Eespondent did not notify Porter & Son that the notes were not accepted for the purpose it knew they were sent, but kept them and gave the latter the significant information that the obligations had been passed to their credit.

The foregoing seems to make a very strong case against respondent. The circumstances, in the whole, are all consistent with the theory that it assented to the substitution of new payors for the old one, and took the notes and gave the credit to fully consummate the matter, and seem to rebut any other theory. If the minds of the parties thus met, a novation occurred and was not affected by the circumstance that, some time afterwards, respondent wrote appellant that he would not be released unless the notes were paid.

Thus it is considered that the assent of respondent to take Porter & Son as substitute debtors for appellant was circumstantially estáblished. Either the trial court did not give due weight to the circumstances which, in the particular instance, as is often the case, speak quite as plainly, if not plainer, than words, or entertained the idea that the essential of assent could not be thus established. Therefore the judgment must be reversed.

We find nothing in the cases referred to in the circuit judge’s reasons for his conclusion inconsistent with what we have said. Willow River L. Co. v. Luger F. Co. 102 Wis. 636, 18 N. W. 162, did not deal with the subject of novation but that of whether the mere taking of the note of a third party for an indebtedness extinguishes it. Neither did Lowry v. Milwaukee Nat. Bank, 114 Wis. 311, 90 N. W. 178, deal with novation but with whether the taking of a new for an old one extinguished the indebtedness represented by the latter. Neither did Grubbe v. Pierce, 156 Wis. 29, 145 N. W. 207, deal with novation; but whether the agreement by a creditor to take one member of a firm as his debtor in place of all required to be supported by a consideration to the creditor for doing so.

By the Court. — The judgment is reversed, and the cause remanded with directions to render judgment in favor of the defendant.

KeewiN, J., dissents.