NOVATI 0 N (from Lat. novare, novus, new). The substitution of a new obliga tion for an old one, which is thereby ex tinguished.
A transaction whereby a debtor is dis charged from his liability to his original creditor by contracting a new obligation In favor of a new creditor by the order of the original creditor. Griggs v. Day, 136 N. Y. 152, 32 N. E. 612, 18 L. R. A. 120, 32 Am. St. Rep. 704. • It is a mode of extinguishing one obliga tion by another—the substitution, not of a new paper or note, but of a new obligation in lieu of an old one—the effect of which is to pay, dissolve, or otherwise discharge it. McDonnell v. Ins. Co., 85 Ala. 401, 5 South. 120.
In Civil Law. There are three kinds of novation.
First, where the debtor and creditor re main the same, but a new debt takes the place of the old one. Here, either the subject-matter of the debt may be changed, or the conditions of time, place, etc., of payment.
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 ecc promissio, 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 transaction is called delegatio. Domat lays down the essential distinction between a del egation and any other novation, thus:_ that the former demands the consent of all three parties, but the latter that only of the two parties to the new debt. See DELEGATION.
Third, where the debt remains the same, but a new creditor is substituted for the old. This also is called delegatio, for the reason adduced above, to wit: that all three par ties must assent to the new bargain. It differs from the cessio nominis of the civil law by completely cancelling the old debt, while the cessio nominis leaves the cred itor a claiin for any balance due after as signment.
In every novation the old debt is wholly extinguished by the new. To effect such a transformation, several things are requi site.
First, there must be an anterior obliga tion of some sort, to serve as a basis for the new contract. If the old debt be void, as being, •e. g., contra bonds mores, then the new debt is likewise void ; because the con. sideration for the pretended novation is null. But if the old contract is only void able, 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 conditional unless made other wise by special agreement,—which agree ment is rarely omitted.
Second, the parties innovating must con sent thereto. In the modern civil law, every novation is voluntary. Anciently, a nova tion not having this voluntary element was in use. And not only consent is exacted, but a capacity to consent. But capacity to make or receive an absolute payment does not of itself authorize an agreement to in novate.
Third, there must be an express inten tion 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 con-1 tract be invalid, without fraud in the trans action, the creditor has now lost all remedy. The anterior obligation is destroyed without being replaced by a new one.
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 ancient agreement, they are can celled by the new one, unless express words retain them. The second contract is simple and independent, and upon its terms is the action ex stipulate to be brought. Hence, too, the new parties cannot avail them selves of defences, claims, and set-offs which would have prevailed between the old par ties.
Obviously, a single creditor may make a novation with two or more debtors who are each liable in solido. In this case any one debtor may make the contract to innovate; and if such a contract be completed, all his fellow-debtors are discharged with him from the prior obligation. Therefore Pothier says that, under the rule that novation can cels all obligations subsidiary to the main one, sureties are freed by a novation con tracted •by their principal. The creditor must specially stipulate that codebtors 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 remain, as before, bound under the old debt. So in Louisiana the debt due to a. community creditor is not necessarily novated by his taking the individual note of the surviving spouse, with mortgages to se cure its payment; Rachel v. Rachel, 11 La. Ann. 687.