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The Rule in Pinnel's CaseAuthor(s): William HemingwaySource: Virginia Law Review, Vol. 13, No. 5 (Mar., 1927), pp. 380-387Published by: Virginia Law ReviewStable 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

A PROMINENT official, fter delivering the diplomas tomembers of a graduating law class, advised them to be

progressive nd modern and to get away from moldy precedents.The accuracy of that statement s not now to be challenged,neither s assent given; the official, owever, voiced the generalimpression of the laity and there are some rules of law whichlend color to such statements, ules which courts condemn nd yetfollow.

One of such rules has been selected for review. It is alleged,Rule in Pinnel's Case, being founded upon an actual case de-

cided in 1602.1 The rule was, as first tated in the language of

Lord Coke:But when the whole sum is due by no intendment the ac-

ceptance of parcel can be a satisfaction o the plaintiff.This is the rule from which few Common Law courts have dis-sented during the past three and a quarter centuries. It wasstated further n the opinion:

* * * and it was resolved by the whole court that pay-ment of a lesser sum in satisfaction of a greater can not beany satisfaction for the whole, because it appears to thejudges that by no possibility a lesser sum can be a satis-faction to the plaintiff or the greater sum.

Lord Coke also stated that in this case the plaintiff ad judg-ment for the insufficient leading for he did not plead that hehad paid the i 15, 2 s., 2 d. in full satisfaction (as by law heshould have) but pleaded

the payment of part generally nd thatthe plaintiff ccepted it in full satisfaction, and for this reasonthe judgment was given for the plaintiff. From this it will bediscerned that the case was decided on the pleading and that theso-called rule was dicta, though it may have correctly tated thelaw as applied in other cases. Many courts take as a precedentthe statement hat part payment cannot be accepted as satisfac-

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

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THE RULE IN PIWNEL'S CASE 381

tion for the entire debt or payment. Most, if not all, wvrhoon-cede that n that case it was dictum yet treat the case as authorityfor the so-called rule, are avoidedly hostile and in an attempt oavoid its authority re driven to artificial nd technical distinc-tions. The dictum has been considered a precedent f such forceas to compel courts to pare it until each case is considered andadjudicated on the facts of the case then under review, prece-dents giving birth to such case law. The questions to bedecided are upon what point of law was the Pinnel case decidedand not of the many distinctions nd differentiations-what sleft of the case-and then why should not all courts be boldenough to disregard a disapproved rule.

A brief review of the case shows that Pinnel brought an ac-tion of debt on a bond against Cole; Cole (defendant) pleadedthat at the instance of the plaintiff, efore maturity, he paid alesser sum than that due, and that the plaintiff ccepted the pay-

ment of this lesser sum in full satisfaction. Lord Coke heldthat in that case acknowledgment f satisfaction by deed is agood bar without payment of anything.

In the later case of Foakes v. Beer 2 Lord Blackburn statedthat the principal reason for his thinking hat Lord Coke made amistake of fact in Pinnel's Case was his conviction that all menof business, whether merchants or tradesmen, do every dayrecognize and act on the ground that prompt payment of a partof their demand may be more beneficial o them than it would beto insist on their rights and enforce payment of the whole. Hefurther tated that even where the debtor s perfectly olvent andsure to pay the rest this is often so; and where the credit of thedebtor s doubtful t must be more so.

The courts have agreed in adhering to the so-called rule uponthe point that there must be a new consideration o support thepayment of the lesser sum and anything that is accepted as ofvalue will be sufficient.

The rule was ably commented on in an early Ohio case 3 asfollows:

The history of Judicial decisions on the subject has shown aconstant effort o escape from its absurdity and injustice.

2 1 Eng. Rul. Cas. 370,9 App. Cas. 605.8 20 Ohio 106 (1851).


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* * * We see, then, that the payment f a less sum thanis due the day before the debt falls due will discharge it;payment at another place than is stipulated will do so; thedelivery of a collateral article of any value will do so; theacceptance of the debtor's note with security, he note of athird person, or even the negotiable note of, the debtor him-self will do so; and yet the payment of as much money inhand as is called for by such note will have no such effectalthough it is demonstrable hat the utmost that the credi-tor can get from such a note cannot exceed in amount thatwhich he gets in hand in the other case without trouble, de-lay or expense. It may seem to some persons, not havinga great veneration for these institutions of antiquity forwhich no reason can be given, that a rule so effectually n-dermiinded nd having neither rhyme nor reason to sup-port it, ought to be at once overruled, nd the whole matterplaced upon the footing of reason and common sense,especially as the exigencies of modern commerce frequentlycompel the most deserving men, with the aid of friends, o

compromise their debts for less than the amount due-anoperation actually beneficial o both debtor and creditor, sthe creditor gets part, where otherwise he would lose thewhole, and the debtor is left free to commence again withthe hope of better success. These considerations willnecessarily arise whenever it becomes necessary to decidethe general question. In this case we aspire to nothinghigher than to follow in the footsteps of the sages of thelaw, and hold this one of the cases 'taken out of the rule'because the money by the original obligation was made pay-able in Ohio, whereas the lesser sum of money was paid atanother place, to-wit, n Arkansas.

ANWhy ay not men make and substitute new contract andagreement for an old one? And why may one accept a horseworth $100 in full satisfaction of a promissory note for $5000and be bound thereby, nd yet not be legally bound by his agree-

ment to accept 999, and his actual acceptance of it in full satis-faction of the $1,0O0Oote? No reason can be assigned exceptthat just adverted to, and this rests upon a mistake n fact. Anda rule of law which declares that under no circumstances, how-ever favorable and beneficial o the creditor or however hardand full of sacrifice o the debtor, can the payment of a less sumof money at the time and place stipulated n the original obliga-tion or afterwards, for a greater sum, though accepted by the


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THE RULE IN PINNEL'S CASE 383

creditor n full satisfaction f the whole debt, ever amount nlaw to satisfaction f the original ebt, s absurd, rrational, n-supported y reason, nd not founded n authority, s has beendeclared y courts f. he highest espectability nd of last resort,evenwhenyielding eluctant ssent o it.

It would be well to state ust at this ime why hisrule s rec-ognized s a binding orceby many ourts; t is:

The reason for the rule s that there s no consideration, hetransaction eing regarded s a mere nudumt acturn ndtherefore oid, that such payment s no consideration ora releaseof or an agreement o release he wholedebt. Itwouldbe of interest o note the cases in which the courthas held that the rule did not apply. But the rule and thereason are purely echnical nd often foster ad faith, orthe history f the udicialdecisionswill be found o followa constant ffort oescapefrom ts absurdity nd injustice. 4

As stated n an early Alabama case:)It is rigid nd unreasonable nd defeats he clearly xpressedintentions f the parties nd therefore hould not be ex-tended o embrace ases not within he very etter f it.

The paring of the rule commenced n the Pinnel case itselfwhen Lord Coke called acknowledgment y deed a good borrowwithout ny payment. This paring has been extended o the ac-ceptance f agreements nder eal, payment t a different lace,and anything hich s supposed o be beneficial, s satisfaction,the value of the satisfaction eing mmaterial.

In New York the rule has been adhered o but its effect asbeen completely estroyed, s exemplified y Gray v. Clarke,6where for an accountof eight hundred ollars the creditor c-cepted ne hundred ollars nd balanced he account by the en-try, Gift obalance ccount, nd gave the debtor his receipt n

full. This was held satisfaction. The New York Court founditself n good company or n Sibree v. Tuck Baron Parkehad said:

It is clear that f the claim be liquidated and ascertainedsome payment f part cannot be satisfaction f the whole

4 Brooks v. White, Met. (Mass.) 283, 37 Am. Dec. (1891).Wescott . Wailer, 47 Ala. 492 (1872).

6 55 N. Y. 68, 14 Am. Rep. 181 (1873).7 15 M. & WV.3, 15 L. J. Exch. 318.


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although it may ufider the circumstances be evidence of agift of a remainder.

In this connection here can be no question as to the right egallyto settle the remainder s a gift and the great solemnity nd dig-nity attached to the rule may, at this point, create a smile. Thesatisfaction by giving something of the pretended value andknown to be a pretense has arisen and been adjudicated,8 thoughit would require consideration slightly of the ethics of the pro-fession, but the lawyers have been held blameless so long as theykept within the reasonable bounds. Strange enough it seemslong to have been thought that if the defendant keeps withinreasonable bounds neither he nor his lawyers are to blame in get-ting time n this way by the plea that a chattel was given and ac-cepted in satisfaction of the debt.9

Again the slender thread that binds us to the Rule in Pinnel'sCase is shown by Chief Justice Leroy:10

The payment merely of a less sum, not being in pursuanceof any contract by deed can not by the common law bedeemed to be a satisfaction of a greater iquidated sum, butthe law will allow the payment of a smaller sum to be asatisfaction of a greater iquidated sum if there be any col-lateral advantage, however small, to the creditor attendingthe transaction.

There must be some consideration for the relinquishment fthe residue, something collateral to show a possibility of benefitto the party relinquishing his further laim. If a gift of theremainder be a subterfuge how much less should we defend thereception of an article for the remainder which might possiblyshow some value. The gift and the article of possible valuewould alone make the rule valueless.

What has so far been said applies to liquidated claims. The

accepted weight of authority s that where principal and interestare due on a debt the action cannot be pursued for the interest

8 Young v. Rudd, 5 Mod. 86, 3 Chitty's Pleading (2nd. ed.) 92.9 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 every-

one knew that the law was that if it was really given it was a good satis-faction.

10 Corporation of Drogheda v. Fairtlough, 8 Ir. C. L. 98, 110, 114.


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THE RULE IN PINNEL'S CASE 385

and especially where the principal is received in satisfaction.There is no controversy hat the lesser sum may be accepted be-fore maturity f the whole sum for perchance the money beforematurity may be worth more to the creditor than at the ma-turity. This would particularly be true where the debtor is in-solvent and all authorities re in accord as to the legality of thecompromise. There are also cases which hold that the lessersum may be paid if further ecurity s given for a part of thedebt due. It has even been held that the surrender of a note isa sufficient ischarge to part recovery of the part due. This isjustified as being sufficient ccord and satisfaction of the olddebt. While the liquidated amount for money cannot be satis-fied by a smaller sum of money it can be by any other personalproperty no matter what the value. This might afford a goodmarket for lead pencils, usurping the prerogatives of the beggarto evade the law by allowing him to sell lead pencils and possibly

shoe strings where the purchaser never takes the article that hehas purchased, eaving it in the possession of the seller. Neitherdoes he enter nto a contract of bailment with the seller. In dis-puted claims where the claim is not a money demand or if so isunliquidated or even if liquidated is doubtful n fact or law, anysum no matter how small will be accepted as a compromise tosatisfy the rule.

It has also been held that the adequacy of the considerationwill not be inquired into by a court of, equity, and that for thepurpose of consideration no personal property xcept money hasany value at law.

Another exception generally acquiesced in and supported bythe weight of authority s that of composition of the creditor onthe theory that it is binding upon each for the undertaking ofthe rest is a consideration.

This brings us finally o a statement n First National Bankv. Shook 12,that the rule is not in accordance with sound ethics,that it alludes to a general dissatisfaction of the courts with it,and their tendency s to restrict ts operation wherever possibleand to lay hold upon very slight circumstances or that purpose;and that it might perhaps be better to change the rule in a

Bull v. Bull, 43 Conn.455 (1876).12 100

Tenn,. 36, 45 S. W. 338 (1898).


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386 VIRGINIA LAW REVIEIW

straightforward manner rather han seek to destroy ts operationby illogical discrepancies. Several states have abrogated the ruleby statute,13 while the courts of others have merely refused out-right to follow it.14 The Supreme Court of Mississippi firstboldly refused to follow the case or recognize the principle. InClayton v. Clark 1' Judge Woods said:

There Pinnel pleaded payment of, the lesser sum before thedate of the maturity f the greater sum, named in the bondand accepted by the creditor n full satisfaction nd he lost,

unhappy wretch hat he was, born two or three centuries oosoon and not knowing the difference etween legal tweedle-dum and a legal tweedledee, because he pleaded that he paida part of a greater original sum and that the plaintiff c-cepted it in full satisfaction and did not plead that he paidit in full satisfaction. The rule is found in Pinnel's Casebut s bold dictum nd as stated by Lord Blackburn n Foakesv. Beer before the House of Lords (9 App. Cas. 605) forthe long period of 115 years after Pinnel's Case was de-cided no cases had been found 'in which the question wasraised whether payment of a lesser sum could be satisfac-tion of the liquidated demand.'

The exceptions noted, the Rule in Pinnel's Case is almost myth.It is as though a road were known more bv its detours than themain highway and it would seem to be more straightforwardand ethical for both Bench and Bar to discard what little remains

of the rule in a straightforward manner than to indulge in actswhich are recognized and designated as shams. With this inview there is little wonder that the laity charge us with beingbound by precedents which are of no value and are frequentlyobsolete.

The law encourages people to make contracts and to controlsuch contracts, nd in this case there is no intimation f the in-terest of any third parties in the transaction, no possibility f itseffect xtending beyond those who are parties and makers of thecontract. The law says emphatically o the contracting parties,you have constructed omething that 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

exceptby the original erms ut we Nvill ladlypermit ny otherterms which will destroy our own creation; you may controlyour own acts and your own property y going beyond he rulebut f you do not go beyond he rule you must play the gameac-cording o the rule.

Fortunately, his rule founded n dictum, ollowed nder pro-test, arted with heerfully, as about vanished nto thin ir. Ifnot, why not have a real legal interment nd relieve he Benchand Bar of a long discredited recedent?

William Hemtingwtay.UNIVERSITYOF MISSISSIUPILAW SCHOOL.

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