NOVATION (from Lat. novare, novus, new). The substitution of a new obligation for an old one, which is thereby extinguished.
In Civil Law. There are three kinds of novation.
2. First, where the debtor and creditor remain the same, but a new debt takes the place of the old one. Here, either the sub ject-matter of the debt may be changed, or tlie conditions of time, place, etc. of pay ment.
Second, where the debt remains the same, but a new debtor is substituted for the old. This novation may be made without the in tervention or privity of the old debtor (in this case the new agreement is called expro missio, and the new debtor expromissor), or by the debtor's transmission of his debt to another, who accepts the obligation and is himself accepted by the creditor. This trans. action is called delegatio. Domat lays down the essential distinction between a delegation and any other novation, thus: that the fermer demands the consent of all three parties, but the latter that only of the two parties to the new debt.
Third, where the debt remains the same, but a new creditor is substituted for the old. This also is called delegatio, for the reasoia ad duced above, to wit : that all three parties must assent to the new bargain. It differs from the cessio nonzinis of the civil law by completely cancelling the old debt, while the cessio nominis leaves the creditor a claim for any balance due after assignment.
3. In every novation the old debt is whailv extinguished by the new. To effect such a transforniation, several things are requisite.
First, there must be an anterior obligation of some sort, to serve as a basis for the new contract. If the old debt be void, as being, e.g., contra bonos mores, then the new debt is likewise void • because the consideration for the pretended novation is null. But if the old contract is only voidable, in some cases the new one may be good, operating as a ratification of the old. Moreover, if the old debt be conditional, the new is also condi tional, unless made otherwise by special agreement,—which agreement is rarely omit ted.
Second, the parties innovating must con sent thereto. In the modern civil law, every
novation is voluntary. Anciently, a novation not having this voluntary element was in use. And not only consent is exacted, but a capa c4 to consent. But capacity to make or re ceive an absolute payment does not of itself authorize an agreement to innovate.
Third, there must be an express intention to innovate,—the animus novandi. A novation is never presumed. If an intent to destroy the old debt be not proved, two obligations now bind the debtor,—the old and the new. Conversely, if the new contract be invalid, without fraud in the transaction, the creditor has now lost all remedy. The anterior obli gation is destroyed without being replaced by ft new one.
4. An important rule of novation is that the extinction of the debt destroys also all rights and liens appertaining thereto. Hence, if any hypothecations be attached to the an cient agreement, they are cancelled by the new one, unless express words retain them. The second contract is simple and independ ent, and upon its terms is the action ex stipulatu to be brought. IIence, too, the new parties cannot avail themselves of defences, claims, and set-offs which would have pre vailed between the old parties.
Obviously, a single creditor may make a novation with two or more debtors who are each liable in solid°. In this case any one debtor may make the contract to innovate ; and if such ft contract be completed, all his fellow-debtors are discharged with him from the prior obligation. Therefore Pothier says that, under the rule that novation cancels all obligations subsidiary to the main one, sure ties are freed by ft novation contracted by their principal. The creditor must specially stipulate that co-debtors and guarantors shall consent to be bound by the novation, if he wish to hold them liable. If they do not consent to such novation, the parties all re main, as before, bound under the old debt. So in Louisiana the debt due a community creditor is not necessarily novated by his taking the individual note of the surviving spouse, with mortgages to secure its payment. 11 Ln,. Ann. 687.