Western Fuel Co. v. Sanford G. Lewald Co.

WASTE, J.

Plaintiff brought this action to recover the sum of $8,000, as a balance due on a book account. The complaint alleged that on November 30, 1916,- the defendant was indebted to plaintiff in the sum of $13,513.15 for coal sold and delivered; that on the second day of December, 1916, the defendant made, executed and delivered to plaintiff two promissory notes for $3,750 and $8,000, respectively, payable one day after date; that the note for $8,000 was secured by a mortgage upon real property, of even date, and

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duly recorded; that the full face value of said notes was credited to defendant on said book account on the date of their execution, and the balance of $1,763'.15 was carried forward on said book account, and was thereafter paid by the defendant; that no part of the principal of said $8,000 note has been paid; that on or about the 26th of November, 1920, plaintiff canceled and offered to redeliver said $8,000 note to defendant, and at said time offered to defendant to redeliver the mortgage securing the same, together with the release thereof, duly executed, but the defendant refused to accept said offer of plaintiff, and said note and mortgage, together with said release, are now held by plaintiff for defendant, subject to its directions. A demurrer on general and special grounds was interposed. It was sustained, without leave to amend, and from the judgment which followed plaintiff has appealed.

On the face of the complaint no question can be raised but that the amount of the original indebtedness of the defendant to the plaintiff, represented by the book account, was covered by the two notes executed by the defendant on December 2, 1916. It is not alleged in the. complaint that the notes were taken in payment. The situation is, therefore, governed by the well-established rule, that in such a case, the indebtedness for which the notes are taken is not paid, in the sense that it is absolutely discharged. If default be made upon the notes, an action can be maintained upon the original debt, as if the notes had never been given.

(Ellison

v.

Henion,

183 Cal. 171,174 [11 A. L. R. 444, 190 Pac. 793].) The taking of a note for a pre-existing debt is not payment, unless it is distinctly understood that the note is taken as such. The note only postpones the time of payment of the old debt until default is made an payment of the note.