The Rule in Pinnel's Case Author(s): William Hemingway Source: Virginia Law Review, Vol. 13, No. 5 (Mar.

, 1927), pp. 380-387 Published by: Virginia Law Review Stable URL: http://www.jstor.org/stable/1065202 . Accessed: 29/10/2013 07:35
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380

VIRGINIA LAW REVIEW

THE

RULE

IN PINNEL'S

CASE

PROMINENT official,after delivering the diplomas to members of a graduating law class, advised them to be progressiveand modern and to get away from moldy precedents. The accuracy of that statementis not now to be challenged, neitheris assent given; the official, however, voiced the general impression of the laity and there are some rules of law which lend color to such statements, rules which courts condemnand yet follow. One of such rules has been selected for review. It is alleged, "Rule in Pinnel's Case," being founded upon an actual case decided in 1602.1 The rule was, as firststated in the language of Lord Coke: "But when the whole sum is due by no intendment the acceptance of parcel can be a satisfactionto the plaintiff."

This is the rule from which few Common Law courts have dissented during the past three and a quarter centuries. It was in the opinion: stated further "* * * and it was resolved by the whole court that payment of a lesser sum in satisfactionof a greater can not be any satisfaction for the whole, because it appears to the judges that by no possibility a lesser sum can be a satisfaction to the plaintiff for the greater sum." Lord Coke also stated that in this case the plaintiff had judgment for the insufficient pleading for he did not plead that he had paid the i 15, 2 s., 2 d. in full satisfaction (as by law he should have) but pleaded the paymentof part generallyand that the plaintiff accepted it in full satisfaction,and for this reason the judgment was given for the plaintiff. From this it will be discerned that the case was decided on the pleading and that the so-called rule was dicta, though it may have correctlystated the law as applied in other cases. Many courts take as a precedent the statementthat part payment cannot be accepted as satisfac1

1 Eng. Rul. Cas. 368, 5 Coke 117.

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THE RULE IN PIWNEL'S CASE

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tion for the entire debt or payment. Most, if not all, wvrho concede that in that case it was dictumyet treat the case as authority for the so-called rule, are avoidedly hostile and in an attemptto avoid its authorityare driven to artificialand technical distinctions. The dictumhas been considereda precedentof such force as to compel courts to pare it until each case is considered and adjudicated on the facts of the case then under review, precedents giving birth to such case law. The questions to be decided are upon what point of law was the Pinnel case decided and not of the many distinctionsand differentiations-whatis left of the case-and then why should not all courts be bold enough to disregard a disapproved rule. A brief review of the case shows that Pinnel brought an action of debt on a bond against Cole; Cole (defendant) pleaded that at the instance of the plaintiff, before maturity,he paid a lesser sum than that due, and that the plaintiff accepted the payment of this lesser sum in full satisfaction. Lord Coke held that in that case acknowledgmentof satisfaction by deed is a good bar withoutpaymentof anything. In the later case of Foakes v. Beer 2 Lord Blackburn stated that the principalreason for his thinkingthat Lord Coke made a mistake of fact in Pinnel's Case was his convictionthat all men of business, whether merchants or tradesmen, do every day recognize and act on the ground that promptpaymentof a part of theirdemand may be more beneficialto them than it would be to insist on their rightsand enforce paymentof the whole. He further stated that even where the debtor is perfectly solventand sure to pay the rest this is often so; and where the credit of the debtor is doubtfulit must be more so. The courts have agreed in adhering to the so-called rule upon the point that there must be a new considerationto support the payment of the lesser sum and anythingthat is accepted as of value will be sufficient. The rule was ably commentedon in an early Ohio case 3 as follows: "The historyof Judicial decisions on the subject has shown a constant effortto escape from its absurdity and injustice.
2 8

20 Ohio 106 (1851).

1 Eng. Rul. Cas. 370, 9 App. Cas. 605.

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VIRGINIA LAW REVIEW * * We see, then,that the paymentof a less sum than is due the day before the debt falls due will discharge it; paymentat another place than is stipulated will do so; the deliveryof a collateral article of any value will do so; the acceptance of the debtor's note with security,the note of a thirdperson, or even the negotiable note of,the debtor himself will do so; and yet the paymentof as much money in hand as is called for by such note will have no such effect although it is demonstrablethat the utmost that the creditor can get from such a note cannot exceed in amount that which he gets in hand in the other case withouttrouble,delay or expense. It may seem to some persons, not having a great veneration for these institutionsof antiquity for which no reason can be given, that a rule so effectually undermiindedand having neither rhyme nor reason to support it, ought to be at once overruled,and the whole matter placed upon the footing of reason and common sense, especially as the exigencies of modern commerce frequently compel the most deserving men, with the aid of friends,to compromise their debts for less than the amount due-an operation actually beneficialto both debtor and creditor,as the creditor,getsa part, where otherwise he would lose the whole, and the debtor is left free to commence again with the hope of better success. These considerations will necessarily arise whenever it becomes necessary to decide the general question. In this case we aspire to nothing higher than to follow in the footsteps of the sages of the law, and hold this one of the cases 'taken out of the rule' because the money by the original obligation was made payable in Ohio, whereas the lesser sum of money was paid at another place, to-wit, in Arkansas."

ANWhy may not men make and substitutea new contract and agreement for an old one? And why may one accept a horse worth $100 in full satisfaction of a promissorynote for $5000 and be bound thereby, and yet not be legally bound by his agreement to accept 999, and his actual acceptance of it in full satisfaction of the $1,0O0O note? No reason can be assigned except that just adverted to, and this rests upon a mistake in fact. And a rule of law which declares that under no circumstances, however favorable and beneficialto the creditor or however hard and full of sacrificeto the debtor,can the paymentof a less sum of money at the time and place stipulated in the original obligation or afterwards, for a greater sum, though accepted by the

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THE RULE IN PINNEL'S

CASE

383

of the whole debt,ever amountin in full satisfaction creditor unlaw to satisfaction of theoriginaldebt,is absurd,irrational, on authority, as has been supported by reason,and not founded of.thehighest and of last resort, declared by courts respectability reluctant assentto it. evenwhenyielding It wouldbe wellto statejust at thistimewhythisruleis recforceby manycourts;it is: ognizedas a binding the "The reasonforthe ruleis thatthereis no consideration, transaction as a merenudumt being regarded pacturnand for is no consideration therefore void, that such payment a releaseof or an agreement to releasethe wholedebt. It to notethe cases in which the court would be of interest has heldthatthe rule did not apply. But the rule and the reasonare purely technical and oftenfosterbad faith,for will be foundto follow thehistory of the judicial decisions a constant effort to escapefrom itsabsurdity and injustice."4 As statedin an earlyAlabama case:) "It is rigidand unreasonable and defeatstheclearly expressed intentions of the partiesand therefore should not be extended to embrace cases not within the veryletter of it." in the Pinnel case itself The paringof the rule commenced whenLord Coke calledacknowledgment by deed a good borrow without any payment.This paringhas beenextended to theacof agreements ceptance underseal, payment at a different place, and anything whichis supposedto be beneficial, as satisfaction, the value of the satisfaction beingimmaterial. In New York the rule has been adheredto but its effect has been completely as exemplified destroyed, by Gray v. Clarke,6 wherefor an accountof eighthundred acdollarsthe creditor ceptedone hundred dollarsand balancedthe accountby the en"Giftto balanceaccount," in try, and gave thedebtor his receipt full. This was helda satisfaction.The New York Court found itselfin good companyfor in Sibree v. Tuck7 Baron Parke had said: "It is clear thatif the claim be liquidated and ascertained some payment of part cannotbe satisfaction of the whole
4 Brooks v. White,2 Met. (Mass.) 283, 37 Am. Dec. (1891). W Wescottv. Wailer, 47 Ala. 492 (1872). 6 55 N. Y. 68, 14 Am. Rep. 181 (1873). 7 15 M. & WV. 23, 15 L. J. Exch. 318.

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although it may ufiderthe circumstancesbe evidence of a gift of a remainder." In this connectiontherecan be no question as to the rightlegally to settlethe remainderas a gift and the great solemnity and dignity attached to the rule may, at this point, create a smile. The satisfaction by giving something of the pretended value and known to be a pretensehas arisen and been adjudicated,8 though it would require consideration slightlyof the ethics of the profession,but the lawyers have been held blameless so long as they kept within the reasonable bounds. Strange enough it seems long to have been thoughtthat if the defendant keeps within reasonable bounds neitherhe nor his lawyers are to blame in getting time in this way by the plea that a chattelwas given and accepted in satisfactionof the debt.9 Again the slenderthread that binds us to the "Rule in Pinnel's Case" is shown by Chief Justice Leroy:10 "The payment merely of a less sum, not being in pursuance of any contract by deed can not by the common law be deemed to be a satisfactionof a greater liquidated sum, but the law will allow the payment of a smaller sum to be a satisfactionof a greater liquidated sum if there be any collateral advantage, however small, to the creditor attending the transaction." There must be some consideration for the relinquishment of the residue, somethingcollateral to show a possibilityof benefit to the party relinquishinghis furtherclaim. If a gift of the remainderbe a subterfugehow much less should we defend the receptionof an article for the remainder which might possibly show some value. The gift and the article of possible value would alone make the rule valueless. What has so far been said applies to liquidated claims. The accepted weight of authorityis that where principaland interest are due on a debt the action cannot be pursued for the interest
Young v. Rudd, 5 Mod. 86, 3 Chitty's Pleading (2nd. ed.) 92. Supra note 8. In Foakes v. Deer, supra note 2, a part of the opinion was as follows: "None for a moment supposed that a beaver hat was really given but everyone knew that the law was that if it was really given it was a good satisfaction." 10 Corporation of Drogheda v. Fairtlough, 8 Ir. C. L. 98, 110, 114.
8 9

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THE RULE IN PINNEL'S

CASE

385

and especially where the principal is received in satisfaction. There is no controversy that the lesser sum may be accepted before maturity of the whole sum for perchancethe money before maturitymay be worth more to the creditor than at the maturity. This would particularlybe true where the debtor is insolvent and all authoritiesare in accord as to the legality of the compromise. There are also cases which hold that the lesser sum may be paid if furthersecurityis given for a part of the debt due. It has even been held that the surrenderof a note is a sufficient discharge to part recoveryof the part due. This is justified as being sufficient accord and satisfaction of the old debt. While the liquidated amount for money cannot be satisfied by a smaller sum of money it can be by any other personal propertyno matter what the value. This might afforda good market for lead pencils, usurping the prerogativesof the beggar to evade the law by allowing him to sell lead pencils and possibly shoe strings where the purchaser never takes the article that he has purchased,leaving it in the possession of the seller. Neither does he enterinto a contractof bailmentwith the seller. In disputed claims where the claim is not a money demand or if so is unliquidatedor even if liquidated is doubtful in fact or law, any sum no matter how small will be accepted as a compromise to satisfy the rule. It has also been held that the adequacy of the consideration will not be inquired into by a court of,equity, and that for the purpose of considerationno personal propertyexcept money has any value at law." Another exception generally acquiesced in and supported by the weight of authorityis that of compositionof the creditoron the theorythat it is binding upon each for the undertaking of the rest is a consideration. This brings us finallyto a statementin First National Bank v. Shook 12,that the rule is not in accordance with sound ethics, that it alludes to a general dissatisfactionof the courts with it, and their tendencyis to restrictits operation wherever possible and to lay hold upon very slight circumstancesfor that purpose; and that it might perhaps be better to change the rule in a
12

" Bull v. Bull, 43 Conn. 455 (1876). 100 Tenn,. 436, 45 S. W. 338 (1898).

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VIRGINIA LAW REVIEIW

manner ratherthan seek to destroyits operation straightforward by illogical discrepancies. Several states have abrogated the rule by statute,13 while the courts of others have merelyrefused outright to follow it.14 The Supreme Court of Mississippi first boldly refused to follow the case or recognize the principle. In Clayton v. Clark 1' Judge Woods said: "There Pinnel pleaded paymentof, the lesser sum before the date of the maturityof the greatersum, named in the bond and accepted by the creditorin full satisfactionand he lost, unhappywretchthat he was, born two or threecenturiestoo soon and not knowingthe difference betweena legal tweedledum and a legal tweedledee,because he pleaded that he paid a part of a greater original sum and that the plaintiffaccepted it in full satisfaction and did not plead that he paid it in full satisfaction. The rule is found in Pinnel's Case but is bold dictumand as statedby Lord Blackburnin Foakes v. Beer before the House of Lords (9 App. Cas. 605) for the long period of 115 years after Pinnel's Case was decided no cases had been found 'in which the question was raised whether payment of a lesser sum could be satisfaction of the liquidated demand.' " The exceptionsnoted,the Rule in Pinnel's Case is almost myth. It is as though a road were known more bv its detours than the main highway and it would seem to be more straightforward and ethical for both Bench and Bar to discard what littleremains of the rule in a straightforward manner than to indulge in acts which are recognized and designated as shams. With this in view there is little wonder that the laity charge us with being bound by precedentswhich are of no value and are frequently obsolete. The law encourages people to make contracts and to control such contracts,and in this case there is no intimationof the interestof any third parties in the transaction,no possibilityof its effect extendingbeyond those who are parties and makers of the contract. The law says emphaticallyto the contractingparties, you have constructedsomethingthat you cannot legally destroy
13 Alabama, California, Georgia, Maine, North Carolina, South Dakota, Tennessee, and Virginia. " Frye v. Hubbell, 74 N. H. 358, 68 AtI. 325 (1907); Clayton v. Clarke. 74 Miss. 510, 21 So. 565 (1897). 13 SuPra note 14.

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THE RULE IN PINNETh'S CASE

387

terms but we Nvill exceptby theoriginal any other gladlypermit termswhichwill destroy your own creation;you may control the rule yourown acts and yourown property by goingbeyond theruleyou mustplaythegame acbutif you do notgo beyond to the rule. cording in dictum, Fortunately, thisrule founded followed underprotest, partedwithcheerfully, has aboutvanished intothinair. If not,whynot have a real legal interment and relievethe Bench and Bar of a long discredited precedent?
UNIVERSITYOF MISSISSIUPI LAW SCHOOL.

William Hemtingwtay.

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