Opinion
March 9, 1910.
Charles R. Stewart, for the appellant.
E.O. Worden, for the respondent.
In Simons v. American Legion of Honor ( 178 N.Y. 265) the law seems to be declared by the Court of Appeals as follows: "Now it is the settled law of this State that if a debt or claim be disputed or contingent at the time of payment, the payment when accepted of a part of the whole debt is a good satisfaction and it matters not that there was no solid foundation for the dispute. The test in such cases is, Was the dispute honest or fraudulent? If honest, it affords the basis for an accord between the parties, which the law favors, the execution of which is the satisfaction." Can it be held in this case that there was an honest dispute between the parties?
It will be noticed that there was no claim of fraudulent representation; simply a claim that he had agreed to give $140 for what in fact was worth only $75. Without fraud or misrepresentation on the part of the defendant that would not constitute a dispute of the validity of the plaintiff's claim. A dispute as to the moral obligation to pay cannot be made a basis for an accord and satisfaction. But more than that, thereafter the plaintiff went to Rome and was told by the defendant that he was informed by a certain undertaker there that the claim was exorbitant. The plaintiff went with the defendant to the undertaker's and there in the presence of the plaintiff the undertaker denied that he had told the defendant anything of the kind. After this conversation the defendant admitted to the plaintiff that he had made a mistake and promised to pay the balance of the bill before spring. These facts would seem to indicate that at least there was a question for the jury as to whether there was an honest dispute which could be made the basis of an accord and satisfaction, for without such an honest dispute an agreement to take a lesser amount in payment of a liquidated claim is without consideration and void. ( Fuller v. Kemp, 138 N.Y. 237.)
But the defendant contends that the action is brought for fraudulently misrepresenting that the defendant had the policy of insurance in the Prudential Life Insurance Company and that the plaintiff has failed to prove any such cause of action. It is difficult to see why the plaintiff should have alleged such misrepresentation and thereafter have alleged that the defendant drew the moneys from the Prudential Life Insurance Company, which would seem to show conclusively that there could not have been any fraudulent misrepresentation of the fact. Eliminating these inconsistent declarations, there remains an allegation of a fraudulent conversion of funds held by the Prudential Life Insurance Company for the defendant which he had assigned to the plaintiff, and such a cause of action would seem to be supported by the proof.
The judgment and order should, therefore, be reversed and a new trial granted, with costs to appellant to abide the event.
All concurred, except HOUGHTON, J., dissenting.
Judgment and order reversed and new trial granted, with costs to appellant to abide event.