such examination would have disclosed an error, the bank if it has in good faith taken action, or failed to take possible helpful action in the meantime, may assert an estoppel precluding the depositor from setting up the mistake.80 It should be remembered that it is necessary to establish not an admission as such but an implied promise; and all the facts of each case should be admissible in order to determine whether such an implication is warranted.81 If there is sufficient consideration for the promise it will be binding, though, (as appears from the following section) subject, like other contracts, to possible defences. A debt unenforceable because of the Statute of Frauds affords sufficient basis for the promise; 82 as will a debt barred by the Statute of Limitations. But in the latter case under the statutes of most States the debtor's promise would be required to be in writing.83 80 See supra, § 1145; Leather Mnfrs. Bank v. Morgan, 117 U. S. 96, 6 Sup. Ct. 657, 29 L. Ed. 811; New York Produce Exchange Bank v. Houston, 169 Fed. 785, 95 C. C. A. 251; National Bank of Commerce v. Tacoma Mill Co., 182 Fed. 1, 104 C. C. A. 441; Stallo v. Wagner, 220 Fed. 360; National Dredging Co. v. President, etc., of Farmers' Bank, 6 Penn. (Del.) 580, 69 Atl. 607, 130 Am. St. Rep. 158, 16 L. R. A. (N. S.) 593; Dana v. National Bank, 132 Mass. 156; Jordan Marsh Co. v. National Shawmut Bank, 201 Mass. 397, 87 N. E. 740, 22 L. R. A. (N. S.) 250; Scanlon-Gipson Lumber Co. v. Germania Bank, 90 Minn. 478, 97 N. W. 380; Pannonia Building, etc., Assoc. v. West Side Trust Co. (N. J. L.), 108 Atl. 240; Brown v. Lynchburg Nat. Bank, 109 Va. 530, 64 S. E. 950. See also Skyring v. Greenwood, 4 B. & C. 281; Heane v. Rogers, 9 B. & C. 577; Hume v. Bolland, 1 Cr. & Mees. 130. In some States, statutes have fixed a time within which objection must be made by the depositor. See Pratt v. Union Nat. Bank, 79 N. J. L. 117, 75 Atl. 313, affd. 81 N. J. L. 588, 80 Atl. 492. 81 Wilbur v. Win (N. J. Eq.), 103 Atl. 985. 82 Peacock v. Harris, 10 East, 104; Cocking v. Ward, 1 C. B. 858. 83 See supra, § 164. In Slayback v. Alexander, 179 N. Y. App. Div. 696, 167 N. Y. S. 194, 195, the court said: "The account rendered on the 1st day of August, 1908, after the last transaction between the parties, which was received, examined, and retained by defendant without exception, clearly constituted an account stated as to the entire balance, and gave rise to a new cause of action quite independent of the original cause of action on the account; the Statute of Limitations not having then run against any of the items of the account constituting the original transactions. Lockwood v. Thorne, 11 N. Y. 170, 62 Am. Dec. 81; Spellman v. Muehlfeld, 166 N. Y. 245, 59 N. E. 817; Eames Vacuum Brake Co. v. Prosser, 157 N. Y. 289, 51 N. E. 986; Daintrey v. Evans, 148 N. Y. App. Div. 275, 132 N. Y. S. 126; Knickerbocker v. Gould, 115 N. Y. The common law found the same difficulty in allowing an account stated based on prior sealed obligations that it did in permitting such obligations to be discharged by parol rescission,84 or accord and satisfaction.85 The simple contract promise of the account stated could not merge the prior sealed obligation; and even if it could itself be regarded as a valid contract, the creditor must pursue his higher remedy. The 533, 22 N. E. 573; Schutz v. Morette, 146 N. Y. 137, 40 N. E. 780; Delabarre v. McAlpin, 101 App. Div. 468, 92 N. Y. S. 129, 25 Cyc. 1138. "The subsequent monthly state ments of the account were merely renditions of the account already rendered with the exception of the addition of the monthly interest. Manifestly the addition of the interest monthly did not constitute the statement then rendered a new account, for in so far as it involved compound interest, which was the only new item in it, it was unauthorized, and therefore the monthly accounts rendered were quite analogous to the monthly rendition of an overdue account by a merchant to a customer, and only different therefrom in the addition of the interest. "No decision has been cited, and we have found none, in which the question arose as to whether a cause of action on an account stated may be continued indefinitely against the Statute of Limitations by merely rendering the same over again within each six-year period. We are of the opinion that, where an account becomes an account stated by reason of its being forwarded and received and retained after examination, as here, the cause of action upon that account stated thereupon accrues, and the Statute of Limitations commences to run, and that it is not within the power of the creditor to extend the rumning of the Statute of Limitations merely by rendering the same account over again from time 86 to time." See also Jasper Trust Co. v. Lampkin, 162 Ala. 388, 50 So. 337, 24 L. R. A. (N. S.) 1237, 136 Am. St. Rep. 33. 84 See supra, § 1834. 88 In Young v. Hill, 67 N. Y. 162, 174, 175, 23 Am. Rep. 99, the court said: "When a sum of money is secured by a deed and a balance is struck for the purpose of ascertaining how much remains due thereon, and the obligor admits the correctness of the account, and promises to pay it, an action will not lie on this account and promise, but the action must be brought on the security. A simple contract is merged in a bond, covenant or other contract by deed or record, but the greater security is not merged in a lesser. (Middleditch v. Ellis, 2 Exch. 623; Wood v. Edwards, 19 J. R. 205; Landis v. Uric, 10 S. & R. 316; Gilson v. Stewart, 7 Watts, 100.) A debt of record or by deed may be turned into a simple contract debt, but only upon some new consideration, and then the action must be upon the special agreement and not upon an insimul computassent. (Miller v. Watson, 4 Wend. 267, S. C. 7 Cow. 39.). . . "Perhaps, if a debt, although secured by deed, is made up of many items, and in the statement of an account the items are mingled with other and distinct items of indebtedness, and a balance struck, the including of the latter class of items may be a sufficient consideration to support an express promise to pay the general balance. (Gilson v. Stewart, supra)." possibility of an account stated has likewise been denied where the prior indebtedness was on a negotiable instrument; 87 and under the California statute on an ordinary written contract.89 There is more difficulty here than in the case of parol rescission and accord and satisfaction in escaping the technical rule of the common law; since an account stated frequently does not fulfil the modern requirements of a contract, there being no consideration for the debtor's promise other than an antecedent debt. Where there is present consideration there should be no hesitation in upholding the new parol agreement. It is not essential that there be cross-demands. Indeed there may be but a single item to the account.90 Usually, however, there are several. On the account being stated, "the balance is a debt as a matter of contract implied by law. It is to be considered as one debt, and a recovery may be had upon it without regard to the items which compose it." 91 1864. Conclusiveness of an account stated. An account stated was said, near the end of the eighteenth century, "to have been formerly conclusive," but that "a greater latitude has of late prevailed in order to remedy the errors which may have crept into the account in surcharging the items." 92 And now an account stated is open to a wide variety of attack. Of course it may be shown that the parties never agreed to an account stated; 93 or that if an account was This last point was so held in Foster v. Allanson, 2 Term R. 479; State v. Jennings, 10 Ark. 428. See also Spangler v. Springer, 22 Pa. 454. Jasper Trust Co. v. Lampkin, 162 Ala. 388, 50 So. 337, 24 L. R. A. (N. S.) 1237, 136 Am. St. Rep. 33. See also Murphy v. Oregon Engraving Co. (Oreg.), 186 Pac. 12. SB Likewise enacted in Oklahoma, see supra, § 1828. 89 Bennett v. Potter (Cal.), 183 Pac. 156. Tucker v. Barrow, 7 B. & C. 623; Lemere v. Elliott, 6 H. & N. 656; Buck v. Hurst, L. R. 1 C. P. 297; Ware v. Dudley, 16 Ala. 742; Gardner v. Watson, 170 Cal. 570, 150 Pac. 994; State v. Hartman Steel Co., 51 N. J. L. 446, 20 Atl. 67; Benjamin v. Levy, 176 N. Y. S. 454; Truman v. Owens, 17 Oreg. 523, 21 Pac. 665. 91 Allen-West Co. v. Patillo, 90 Fed. 631, 632, 33 C. C. A. 197, 198; Patillo v. Allen-West Co., 131 Fed. 680, 688, 65 C. C. A. 508. See also Bartlett v. Emery, 1 T. R. 42 n. 92 Trueman v. Hurst, 1 T. R. 40, 42, by Lord Mansfield. 93 Clare v. Kelley, 177 N. Y. S. 212; Consolidated Machinery &c. Co. v. Harper Machinery Co., 180 N. Y. S. 135. agreed upon it was not intended to include the claim later in question,94 or that it was induced by fraud.94" But it may also be shown not only that the transaction was without consideration because the promise of the debtor was supported by no previous debt,95 or because the promise of the creditor to accept the stated sum was similarly unsupported since the debtor's promise was merely to pay a portion of an admitted liquidated debt,96 but that the consideration was illegal," or that there was failure of consideration,98 or mistake.99 So far has this last defence been sometimes carried that the nature of an account stated is frequently lost sight of, and it is sometimes regarded as if it were an admission, making out a prima facie case, rather than a contract to pay the stated sum, which must be set aside in order to recur to the original claims which form the basis of the stated account.1 94 Perkins v. Hart, 11 Wheat. 237, 6 L. Ed. 463; Hunt v. Stockton Lumber Co., 113 Ala. 387, 400, 21 So. 454; White v. Thompson (Cal. App.), 180 Pac. 953; Poppell v. Culpepper, 56 Fla. 515, 520, 47 So. 351; Graham v. Chubb, 39 Mich. 417; Treacy v. Powers, 112 Minn. 226, 127 N. W. 936; Ryan v. Rand, 26 N. H. 12; Newhall v. Field, 13 N. Mex. 82, 79 Pac. 713, 12 Ann. Cas. 979; Pierce v. Delamater, 3 How. Pr. 162; Segelke & Kohlhaus Mfg. Co. v. Vincent, 135 Wis. 237, 115 N. W. 806. And see cases cited infra, n. 83. 95 94 The Washtenaw, 163 Fed. 372, 375, and see cases cited infra, n. 83. McAveigh v. Pelham Park R. Co., 120 N. Y. S. 102, 103; Gottfried v. Levy, 177 N. Y. S. 895; Powers v. New England Ins. Co., 68 Vt. 390, 396, 35 Atl. 331. See also Jasper Trust Co. v. Lampkin, 162 Ala. 388, 50 So. 337, 136 Am. St. Rep. 33. 96 French v. French, 2 M. & Gr. 644. See also Smith v. Page, 15 M. & W. 683; Kennedy v. Broun, 13 C. B. (N. S.) 677; Perry v. Attwood, 6 E. & B. 691; Supra, § 120. But it is not necessary that every item of an account stated should be supported by consideration. Patillo v. Allen-West Commission Co., 131 Fed. 680, 65 C. C. A. 508. 97 Rose v. Savory, 2 Bing. (N. S.) 145; Murphy v. Springs, 200 Fed. 371, 118 C. C. A. 524, 45 L. R. A. (N. S.) 539; Elmore-Schultz Grain Co. v. Stonebraker (Mo. App.), 214 S. W. 216. 98 Jacobs v. Fisher, 1 C. B. 178; Wilson v. Wilson, 14 C. B. 616. 99 Thomas v. Hawkes, 8 M. & W. 140; Gough v. Finden, 7 Exch. 48. See cases in the following note. 1 See on the extent to which an account stated may be set aside for mistake, etc.: Perkins v. Hart, 11 Wheat. 237, 6 L. Ed. 463; Patillo v. AllenWest Commission Co., 131 Fed. 680, 65 C. C. A. 508; The Washtenaw, 163 Fed. 372; Jackson v. White, 194 Fed. 677, 115 C. C. A. 71; Allen-West Commission Co. v. Hudgins, 74 Ark. 468, 86 S. W. 289; Godfrey v. Hughes, 114 Ark. 312, 169 S. W. 958; St. Louis Cooperage Co. v. Jackson, 121 Ark. 633, 182 S. W. 534; Gardner v. Watson, 170 Cal. 570, 150 Pac. 994; White v. Thompson (Cal. App.), 180 Pac. 953; Gutshall v. Cooper, 37 Colo. 212, 86 Pac. 125, 6 L. R. A. (N. S.) 820; Riley v. Mattingly, 42 App. Dist. Col. 1865. Novation. A contract may be discharged by novation; that is, a substitution of a new contract for the old. The name is derived from the Roman law and has been commonly used only in recent years in English and American law, but the transactions which it designates are not modern. It is more usually applied in the Common law to a transaction in which the substituted contract has a new party. Merger, substituted contract, accord and satisfaction, are the terms ordinarily used to cover contracts between the same parties which discharge prior obligations. In the Civil law, however, a substituted contract between the same parties, also is called a novation; 2 and the same usage is not infrequent in the Common law. As the features of the transaction which involve particular difficulty are due to the inclusion of three parties, and as substituted contracts between the same parties have been considered elsewhere, the present discussion is confined to situations where a 4 290; Poppell v. Culpepper, 56 Fla. 515, 47 So. 351; State v. Illinois &c. R., 246 Ill. 188, 92 N. E. 814; Schmoker v. Miller, 89 Kan. 594, 132 Pac. 158; McCue v. Hope, 97 Kan. 85, 154 Pac. 216; Hallowell Granite Works v. Orleans (La.), 80 So. 610; Fordyce v. Dillaway, 212 Mass. 404, 99 N. E. 166; Kimmerle v. Lowitz, 203 Mich. 482, 169 N. W. 857; Wharton v. Anderson, 28 Minn. 301, 9 N. W. 860; Wildermann v. Donnelly, 86 Minn. 184, 90 N. W. 366; Treacy v. Powers, 112 Minn. 226, 127 N. W. 936; Behrens v. Kruse, 132 Minn. 69, 155 N. W. 1065; Peeples v. Yates, 88 Miss. 289, 40 So. 996; Union Electric, etc., Co. v. Surgical Supply Co., 122 Mo. App. 631, 99 S. W. 804; Noyes v. Young, 32 Mont. 226, 79 Pac. 1063; Vanderveer v. Statesir, 39 N. J. L. 593; Farry v. Farmers, etc., Bank (N. J. Eq.), 58 Atl. 305; Wilbur v. Win (N. J. Eq.), 103 Atl. 985; Stenton v. Jerome, 54 N. Y. 480; Williams v. Rutherfurd Realty Co., 159 N, Y. App. D. 171, 144 N. Y. S. 357; Tennent v. Dewees, 7 Pa. St. 305; Tustin v. Philadelphia &c. Co., 250 Pa. 425, 95 Atl. 595; Smith v. Allmon, 74 S. C. 502, 54 S. E. 1014; Fourth Nat. Bank v. Stahlman, 132 Tenn. 367, 178 S. W. 942, L. R. A.' 1916 A. 568; McKay v. Overton, 65 Tex. 82; Harman v. Maddy, 57 W. Va. 66, 49 S. E. 1009; Chapman v. Liverpool Salt, etc., Co., 57 W. Va. 395, 50 S. E. 601; Hoover-Dimeling Lumber Co. v. Neill, 77 W. Va. 470, 87 S. E. 855; Jefferson County v. Jones, 19 Wis. 51; Segelke & Kohlhaus Mfg. Co. v. Vincent, 135 Wis. 237, 115 N. W. 806. 2 See Bouvier's Law Dictionary. So in Louisiana: Studebaker Mfg. Co. v. Endom, 51 La. Ann. 1263, 26 So. 90. Hoffman v. Moreman, 184 Ala. 220, 63 So. 942; Morecraft v. Allen, 78 N. J. L. 729, 75 Atl. 920 L. R. A. 1915 B. 1; Bandman v. Finn, 185 N. Y. 508, 78 N. E. 175, 12 L. R. A. (N. S.) 1134; Guichard v. Brande, 57 Wis. 534, 15 N. W. 764. |