A LIQUIDATED DEMAND CANNOT BE SETTLED EXCEPT BY PAYMENT OF THE WHOLE AMOUNT.
Question—An individual in Providence, R. I., who was indebted to me, forwarded a check for less than the amount of his entire indebtedness. He stated on the face of it “settlement in full.” This in nowise discharged his obligation to me and I wrote him that I would credit his check on account and requested a remittance of the balance. He takes the position that under the Rhode Island law he has discharged his indebtedness. Please advise what rights I hold in the premises.
Reply: We do not find any statute or decision in Rhode Island to the effect that a payment of this kind constitutes payment in full. All the reported decisions by the courts of that State we have been able to find lay down practically the same rules upon the subject that are enforced by the courts of New York. This payment was made in New York, and the laws of this State govern it in any event. The law upon the subject here (and, so far as we can learn, in Rhode Island, too), is briefly this: If there is no doubt, and no dispute, as to the amount due, then payment of less than that amount will not discharge the debt, even though the creditor agree to accept it as a discharge, if there is no release under seal and no new consideration given. If the debt is unliquidated, if there is a doubt or dispute as to the amount of it, then the debtor’s offer of so much as payment in full constitutes his estimate of the amount really due. The creditor cannot accept the money without accepting the estimate. The debtor has a right to go into court to have the dispute settled, and if the creditor is unwilling to accept the condition under which the money is sent he is bound to return the remittance and allow the whole matter to be determined in some authoritative way. For decisions to the effect that part payment of a debt that is liquidated and certain is not payment in full, even when the creditor accepts the money and uses it, see 23 N. Y., 684; 108 N. Y., 470; 1 R. I., 496; and 8 R. I., 381.
Opinion No. 20.