Note for $125.00, due May 16, 1932, and
Note for $6250.00, due June 16, 1932, together with the other notes given by defendant to use-plaintiff or its assignors, and paid prior to suit brought herein.
"It is further mutually agreed that the verdict to be taken, as aforesaid, and the payment of $572.75 shall be in full compromise settlement of any claims of use-plaintiff, and/or the Miller Printing Machinery Co., aforesaid, on account of a bailment lease, the subject matter of the suit instituted in the above entitled proceedings, as well as the notes given by defendant to the said Miller Printing Machinery Co., in accordance with the terms of said lease, or any notes substituted in place thereof, as provided by the terms of the said lease, a copy of which is attached as Exhibit A to the Statement of Claim filed in the above entitled proceedings.
"Frederick H. Spotts,
"Attorney for The Philadelphia National Bank, Use-Plaintiff
"Charles C. Gartling,
"Attorney for Defendant."
Does the foregoing agreement constitute an accord and satisfaction which bars the claim of the bank for all except the amount unpaid under it? Considering this question, we must bear in mind that to constitute a bar to an action on the original claim, an accord must be fully executed unless the agreement or promise contained therein, instead of the performance thereof, is accepted in satisfaction. An accord without satisfaction is no bar. If, however, the claimant intends to accept the promise in satisfaction of the original demand, the giving of the promise will operate as a satisfaction of the debt if it is founded on a new consideration. Laughead v. H.C. Frick Coke Co., 209 Pa. 368, 58 A. 685, 103 Am.St.Rep. 1014. Here the accord was reached in settlement of a replevin action between the parties which was being contested by the defendant, the present bankrupt, and was then pending for trial. The agreement provides for the taking of a verdict in that proceeding in favor of the plaintiff with damages to be awarded to it in the sum of $572.75 by the verdict of the jury. It seems quite obvious that there was a controversy between the parties, not only as to the amount due by the defendant to the bank, but also as to the bank's title to the printing press which was the subject of the replevin action. By the verdict, which was agreed upon, this question of title was resolved in favor of the bank, which was a sufficient consideration for its agreement to accept a verdict for $572.75 in settlement of its larger claim. But did the bank accept the verdict and the defendant's agreement to pay it in satisfaction of the prior claim? We think it did. As we have pointed out, the agreement was entered into in connection with the settlement of an existing replevin action. It contemplated the termination of that action by verdict upon a basis satisfactory to the parties. The agreement accordingly provides that such a verdict shall be taken and in our opinion the taking of the verdict with its consequent liquidation of the sum due constituted the satisfaction contemplated by the parties. It is true that the agreement provides for the payment of the verdict in certain installments and for the entry and satisfaction of judgment thereafter. If at this point no provision had been made for the rights of the bank in case of default in payment of the verdict, then a plausible argument might be made that it was contemplated that the bank should be restored to its original position. However, far from providing that the original obligation should be revived the agreement expressly provides that "in case of default in any of the payments as above mentioned, the side use-plaintiff shall verdict and issue execution thereon, notwithstanding anything in this agreement to the contrary." While the use of the word "option" did not tend to clarity, it seems reasonably clear to us that it was used in the sense of a right, alternative or additional to those previously given to the bank by the agreement. It could not have meant that the bank had the right either to claim $572.75, or $1,475 at its election, since such a provision would be an absurdity.
In reaching our conclusion we have not overlooked the fact that the agreement provides that when the payment of $572.75 has been made, in addition to satisfying the judgment to be taken upon the verdict, the bank is to return, canceled, the remaining notes held by it under the bailment lease. There is no right given by the agreement to enforce these notes as independent obligations under any circumstances, and they must, therefore, be held at the most to be merely collateral security for the amount agreed upon in settlement. As such they cannot be made the basis for the proving of a claim by the holder against the bankrupt estate. First Nat. Bank of Beaumont v. Eason (C.C.A.) 149 F. 204. Nor have we overlooked the language in the last paragraph of the agreement that "the verdict to be taken as aforesaid, and the payment of $572.75 shall be in full compromise settlement of any claims." In our opinion this provision that the payment, as well as the verdict, shall be in full settlement is not sufficient to negative the intent, which we believe to be clear from the whole instrument, that the verdict in termination of the replevin suit was to be taken and accepted in full satisfaction of the pre-existing liability, and that the bank's rights, in case of default in payment of the verdict, were limited to those expressly given it in the agreement itself.
The order of the referee is accordingly confirmed, and the petition of the Philadelphia National Bank for review thereof denied.
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