One of the most common of modern no vations is the surrender and destruction of an old promissory note or bill of exchange, and the receipt of a new one in payment thereof. The rules of novation apply as completely to debts evidenced by mercantile paper as to all other obligations; Story, Bills § 441; Pothier, , de Change, n. 189. Hence, everywhere, if the parties intend that a, promissory note or bill shall be absolute payment, it will be so considered; Ans. Contr. 273, n.; 10 Ad. & E. 593; Johnson v. Weed, 9 Johns. (N. Y.) 310, 6 Am. Dec. 279; Torrey v. Baxter, 13 Vt. 452. In some states, the receipt of a negotiable promissory note is prima facie payment of the debt upon which it is given, and no action lies upon the ac count unless the presumption is controvert ed ; Parham Sewing Mach. Co. v. Brock, 113 Mass. 194 ; Bunker v. Barron, 79 Me. 62, 8 Atl. 253, 1 Am. St. Rep. 282; Ricker v. Adams, 59 Vt. 154, 8 Atl. 278; Nixon v. Beard, 111 Ind. 137, 12 N. E. 131; Matasce v. Hughes, 7 Or. 39, 33 Am. Rep. 696. "If a creditor gives a receipt for a draft in pay ment of his account, the debt is novated ;" Hunt v. Boyd, 2 La. 109. But see the cases cited supra for the full Louisiana law. In most states, however, the rule is, as in Eng land, that, whether the debt be pre-existing or arise at the time of giving the note, the receipt of a promissory note is prima facie a conditional payment only, and works no novation.
It is payment only on fulfilment of the condition, i. e. when the note is paid ; 5 Beay. 415; Sheehy v. Mandeville, 6 Cra. (U. S.) 264, 3 L. Ed. 215 ;.Murray v. Gouverneur, 2 Johns. Cas. (N. Y.) 438, 1 Am. Dec. 177; Smith v. Smith, 27 N. H. 253; Brewster v. Bours, 8 Cal. 501; Hart v. Boller, 15 S. & R. (Pa.) 162, 16 Am. Dec. 536.
If a vendor transfer his vendee's note, he can only sue on the original contract when he gets back the note, and has it in his pow er to return it to his vendee ; Parker v. U. S., 1 Pet. C. C. 262, Fed. Cas. No. 10,750; Townsends v. Stevenson, 4 Rich. (S. C.) 59.
Where the holder of a note agrees to ac cept another as debtor in place of the maker, there is a complete novation of thd debt, and the indorsers are discharged; 22 Can. S. C. R. 479.
A novation is not a promise to pay the debt of another, within the statute of frauds, and need not be in writing; Roehl v. Por teous, 47 La. Ann. 1582, 18 South. 646. See Eden v. Chaffee, 160 Mass. 225, 35 N. E. 675; Hamlin. v. Drummond, 91 Me. 1't5, 39 Atl. 551.
See Dixon, Substituted Liabilities ; DisCHARGE ; PAYMENT; MORTGAGE ; MERGER.