
    MARY M. BABCOCK, Administratrix of the goods, &c., of CHARLES A. BABCOCK, deceased, Plaintiff and Respondent, v. SAMUEL BONNELL, Jr., Defendant and Appellant.
    I. Accord and satisfaction.
    1. PAYMENT OF A LESSER FOR A GREATER SUM.
    
      (a) When a holder of promissory notes accepts from the maker less than their face, and surrenders the notes to the maker, there is a complete accord and satisfaction, and the maker is discharged from all liability on the notes and on the indebtedness for which they were given.
    II. Stoppage in transitu.
    1. EFFECT OF, AS CAUSING FAILURE OF CONSIDERATION.
    
      (a) When a note is given for the purchase price of goods, and the goods while in transitu are stopped by the vendor, who takes possession thereof and sells them, the consideration for the note fails, and as between the original parties the maker is discharged from all liability thereon, and on account of the purchase.
    HI. PROMISSORY NOTES.
    1. Surrender of, operating as accord and satisfaction.
    Seo supra.
    
    2. Failure of consideration, what will cause.
    
      (a) Stoppage in transitu.
    See supra.
    
    Before Speir and Freedman, JJ.
    
      Decided November 4, 1878.
    This action was in effect to recover from defendant the amount of insurance received by her upon a policy of insurance for $5,000, dated February 22, 1870, issued upon the life of C. A. Babcock, for the benefit of defendant as a creditor. The loss by the policy was made payable to defendant. All the premiums were paid by the defendant.
    The action was tried before the court without a jury.
    An underlying question of fact arose on the trial, viz. : whether the policy was taken out as collateral security, for an indebtedness of the firm of C. A. Babcock & Co. to defendant, or as payment for the balance of • such indebtedness, after applying thereto this defendant’s percentage (or share) of the assets of the firm of C. A. Babcock (which was this insolvent), as soon as they could be turned into money, and the sum of $705.63, derived from the sale of a cargo of coal consigned to C. A. Babcock and Co., but sold only to this defendant; the court found it was taken out as collateral security. The question then arose whether the indebtedness for which it was taken out as collateral still remained outstanding. The defendant claimed that that indebtedness consisted of three notes, dated September 30, November 11, and November 15, 1869.
    As to the note of November 15, it appeared in evidence that it was given for a cargo Af coal sold to Charles A. Peabody & Co. by defendant, which coal was shipped to that firm; that defendant stopped the coal in transitu, and took possession of it on February 21, 1870, and thereafter sold it.
    As to the notes of September 30 and November 11, it appeared that one Wheelwright, acting under the following letter from C. A. Babcock & Co. (which firm was then insolvent), to wit:
    Office of C. A. Babcock & Co., ) Bangoe, 19 March, 1870. j
    Samuel Bokwell, Jr., Esq., New York.
    
      Bear Sir: Our friend, J. S. Wheelwright, Esq., will visit New York in the early part of next week, and we will avail ourselves of the opportunity to have him arrange for the settlement of your claim against us, leaving in abeyance the cargo of Hepzibah, and the note given in settlement of same. We have not yet heard from the New Boston Coal Mining Company, and presume Mr. Ogden has not yet been able to go to his office. Yours, truly,
    C. A. BABCOCK & CO.
    —paid to defendant $925, and received therefor these two notes, which he subsequently surrendered to C. A. Babcock & Go.
    The court held the consideration for the npte of November 15 wholly failed, and that the notes of September 30 and November 11 had been compromised and settled, and the liability of C. A. Babcock to the defendant thereon had been extinguished. And further held that the entire indebtedness of C. A. Babcock & Co. to the defendant was satisfied and discharged before the death of Charles A. Babcock.
    
      The following opinion was delivered in the court below:
    Sanford, J.—“ Upon the evidence in this case I am satisfied, and therefore find, as matter of fact, that the defendant never acquired or had any interest in the policy upon the life of plaintiff’s intestate, or in the money to accrue and become payable thereon, except as a creditor of the firm of C. A. Babcock & Co., whereof the plaintiff’s intestate was a member, and to the extent of his claim against that firm. As such creditor, and to the extent of such indebtedness, he held the policy as collateral security. The claim set up in his answer of an absolute and indefeasible title to the policy, and of the receipt by him in payment and satisfaction of his demand, is wholly unsupported by the evidence, and, indeed, is refuted by his own letters and his testimony.
    “ I further hold and find that the entire indebtedness of that firm to the defendant was satisfied and discharged before the death of said intestate. Under the circumstances of the case, as they appear in evidence, the transfer by defendant to Wheelwright of the two notes, dated respectively September 30 and November 11, 1869, and their subsequent transfer and surrender by Wheelwright to the firm of C. A. Babcock & Co., operated as a compromise and settlement thereof, and extinguished the liability of that firm to the defendant thereon. The seizure and sale by defendant of the coal shipped by the Hepzibah discharged the liability of C. A. Babcock & Co. upon their note of November 15, 1869. The consideration of that note wholly failed when the defendant assumed to stop the coal in transitu, and to sell it to Farrar. There is no evidence that C. A. Babcock & Co. ever agreed to make good to defendant the difference between the price paid by Farrar, and the amount of their note. The evidence fully warrants the inference that, as between them and the defendant, the sale was rescinded, and that the defendant subsequently dealt with Farrar on his own and not on their account. The sale to Farrar was consummated May 4, 1870, and thereafter the defendant held the policy only as security for the reimbursement of premiums paid by him thereon.
    “I do not think that the plaintiff should be estopped, by her intestate’s disclaimer, on the part of himself and his family, of a “wish to have any interest or advantage in it,” from asserting her legal rights under the policy, nor does the language of such disclaimer seem to me sufficient to change the legal relations previously existing between her intestate and the defendant. It is at most the expression of an erroneous opinion as to those relations, and, in my judgment, concludes no one.
    “If the amount already received by the defendant on account is insufficient to reimburse the premiums paid by him with interest, he may be allowed the deficiency out of the fund in court, subject to such allowance; the fund must be paid to the' plaintiff; judgment is ordered accordingly, but no costs are allowed to either party.”
    Judgment was entered in conformity to this decision, adjudging that plaintiff was entitled to' the amount received by defendant upon the policy,. less the premiums paid by him, and interest, and adjudging that as to so much of the premiums paid by defendant as to which he had not been reimbursed out of moneys received by Mm upon the policy, with, interest, be paid out of the fund on deposit in the United States Trust Company (in which company, by an order of this court, the amount received by defendant on the policy, less certain premiums, and the interest thereon, had been deposited), and that the balance of said fund be paid to plaintiff.
    
      From this judgment defendant appealed to the general term.
    
      N. & If. Niles, attorneys, and W. W. Niles,, of counsel, for appellant.
    
      Davies, WorJc, McNamee & Hilton, for respondent.
   Per Curiam.

The judgment should be affirmed on the opinion delivered at special term, with costs.  