It follows that the new debtor, in a dele gation, can claim nothing under the old contract, since he has consented to the de struction of that contract. For the same reason, a creditor cannot proceed against the discharged debtor. And this is true, though the new debtor should become in solvent while the old remains solvent. And even though at the time of the novation the new debtor was insolvent, still the creditor has lost his remedy against the old debtor. But the rule, no doubt, applies only to a bona fide delegation. And a suit brought by the creditor against a delegated debtor is not evidence of intention to discharge the original debtor; Jackson v. Williams, 11 La. Ann. 93.
In a case of mistake, the rule is this : If the new debtor agree to be substituted for the old, under the belief that he himself owes so much to the discharged debtor, although he do not in fact owe the amount, yet he is bound to the creditor on the nova tion ; because the latter has been induced to discharge the old debtor by the contract of the new, and will receive only his due in holding the new debtor bound. But where the supposed creditor had really no claim upon the original debtor, the sub stitute contracts no obligation with him; and even though he intended to be bound, yet he may plead the fact of no-former debt against any demand of the creditor, as soon as this fact is made known to him.
A novation may be made dependent on a condition. In that case the parties re main bound, as before, until the. condition is fulfilled. The new debtor is not freed from a conditional novation as to the cred itor until the condition happens ; and he is not liable in an action to the old debtor un til it is performed.
Any obligation which can be destroyed at all may be destroyed by novation. Thus, legacies, judgments, etc., with mortgages, guarantees, and similar accessories, are as much the subjects of novation as simple contract debts. But a covenant by the obligee of a bond not to sue the obligor with in a certain time is not an example of the civil-law liovation. The agreement was not a release, not a, substituted contract, but a covenant merely, for the breach of which the obligee has his action ; Chandler v. Her rick, 19 Johns. (N. Y.) 129.
At Common Law. The common-law • doc trine of novation mainly agrees with that of the civil law, but in some parts differs from it.
The term novation is rarely employed. The usual common-law equivalent is assign ment, and sometimes merger. Still, this form of contract found its way into corn mon-law treatises as early as Fleta's day, by whom it was called innovatio. Item, per
innovationem, ut si transfuse sit obligatio de una persona in aim, guce in se susceperit obligationem. Pieta, lib. 2, c. 60, § 12. The same words here quoted are also in Bracton, lib. 3, 0. 2, § 13, but we have novatio for innovatio. In England, recently, the term novation has been revived in some cases.
A case of novation is put in Tatlock v. Harris, 3 Term 180. "Suppose A owes B £100, and B owes C £100, and the three meet, and it is agreed between them that A shall pay C the £100: B's debt is ex tinguished, and C may recover that sum against A." The requisites of a novation are (1) a valid prior obligation to be displaced; (2) the consent of all the parties to the substitu tion; (3) a sufficient consideration ; (4) the extinction of the old obligation; and (5) the creation of a valid new one ; In re Rans ford, 194 Fed. 658.
If a creditor orally directs his debtor to pay a third party and the debtor mutually agrees with the third party to do so, it is a novation ; Castle v. Persons, 117 Fed. 844, 54 C. C. A. 133.
The subject of novation has been much before the courts in reference to the trans fers of the business of life 'assurance com panies. In order to constitute a novation the old obligation must be discharged; and it has often been the interest of claimants on the transferrer company, where the trans feree company has become insolvent, to contend that there is no "novation," but that the old obligation is still in force. In Eng land the questions which have arisen on this matter are for the most part set at rest by the stat. 35 & 36 Viet. c. 41, s. 7, pro viding that no policy-holder shall be deemed to have abandoned any claim against the original company, and to have accepted in lieu thereof the liability of the new com pany, unless such abandonment and accept ance shall have been signified by some writ ing signed by him, or by his agent lawfully authorized. Moz. & W.
There must always be a debt once existing and now cancelled, to serve as a considera tion for the new liability. The action in all cases is brought on the new agreement. But in order to give a right of action there must be an extinguishment of the original debt ; 1 M. & W. 124; Short v. New Orleans, 4 La.. Ann. 281; Warren v. Bathhelder, 15 N. H. 129; Caswell v. Fellows, 110 Mass. 52; Black v. De Camp, 78 Ia. 718, 43 N. W. 625; Brewer y. Winston, 46 Ark. 163.