NOVATION. in law, th6 ektinguishment of an old obligation by the substitution of a new. The civil law distinguished 3 kinds of novation: 1. Where a new debt is substituted, due by the same debtor to the same creditor, but with changed terms of payment. 2. Where a substituted new debtor assumes the old debt. This kind of novation is called delegatio, and differs from the other kinds in that it may be completed without the knowledge of the original debtor. It can be created by an assignment, by the debtor, of the debt to another person who agrees to become responsible for the debt, and whom the creditor agrees to accept in place of the original debtor. When the novation takes place without the action of the original debtor, the transaction is called ex pi.omiaio, and the accepted new debtor ex-promivor. B. Where the old debt is made payable to a new creditor. This is also called delegatio, and requires the consent of all parties. A nova tion was not a matter of legal presumption, but an intent to innovate, animimmayindi, pmst be distinctly shown. In the absence of proof of such intent to extinguish the old debt, the debtor is liable for that, and also liable under the new obligation. There must have been a precedent obligation, the place of which can be taken by the new. The new obli gation is subject to the same conditions, if any, as the old one, and if the old be void, as against good morals, the new one will be void also; but otherwise, at least in sonar cases, where the old debt was merely voidable—the new promise being considered as a waiver of any disability which might have been a good defense. A consent by parties capable of consenting, is requisite to the validity of a novation, though the older civil law recognized a sort of involuntary novation. All obligations are subject to uovation, so that debts by specialty, warranties, legacies, etc., are as capable of novation as debts by simple contract. But it has been held in New York, that an agreement by the obligee in a bond, not to sue the obligor within a certain time, is not a novation, but a covenant, for breach of which the usual action lies. A new debtor has no rights under the old obligation, nor have the creditors any remedy against the old debtor, though the latter be solvent, and the new debtor insolvent. A novation may be conditional, in which case the old obligation subsists, till the condition takes place. All liens attached to the original debt are extinguished by its extinction, unless expressly retained- by the new contract; and in an action upon the ni,rw contract, no claims or set-offs between the parties to the old contracts can be set up in defense by the new parties. A single creditor may make a contract of novation with two
or more debtors, all individually liable. The term novation, in the common law, is much less used than assignment and merger. With some differences, common law and civil law novation are in the main alike. There must have been an original and now extinguished debt, whose cancellation forms the consideration for the 119w con tract, which alone can be the subject of the action. A simple agreement to change the contract is not sufficient; the change must be ratified by the parties, and actually carried into effect. As in the modern civil law, the consent of the debtor is necessary to the novation, and the substitution of a new creditor, nor can the latter, hi the absence of such consent and privity, recover against the debtor. There is no privity of contract between them, and to recover, the creditor must show such privity by setting forth a new promise upon sufficient consideration. In equity, however, a debt may be assigned without the debtor's consent, and the assignee can maintain a suit in his own name. But at law, in the absence of consent or consideration, the assignee cannot sue for the debt in his own name, and in a suit upon it, all see-offs, accounts, or equitable defenses, which could be pleaded by the debtor against the original creditor, may be used. The extinction of the original debt is in itself a sufficient consideration, and no consideration need be stated in the new contract, though one must he proved to constitute a valid defense to a suit by creditors of the assignor. The most usual case of novation in modern law, is the substi tution of a new bill of exchange, or promissory note for an old one surrendered and extinguished. Wherever an intention is shown to make the new note or bill an abso lute payment, it will be so held. In Maine, Vermont, Massachusetts, and some other states, the receipt of a negotiable promissory note or bill is prima facie evidence of payment of the debt, and it is held in Louisiana, that the receipt by creditor for a draft in payinent of the account constitutes a novation. The general rule, however, in England and in this country is that the receipt of a promissory note does not make a novation, but is merely prima facie evidence of a conditional payment, made absolute payment by the occurrence of the condition, i.e., the payment of the note.