Karam v. Ballou , 673 S.W.2d 643 ( 1984 )

CORNELIUS, Chief Justice,

dissenting.

The majority correctly decides that the Cass notes were prepayable at any time, but I would hold that the Cass notes were not paid in full as that term is used in the Karam/Ballou note.

As between the parties to a note, the discharge of an obligation by any means is the equivalent of payment, but when the technical meaning of payment affects the rights of third parties, as it does here, discharge and payment are not necessarily the same. An accord and satisfaction discharges the original obligation and substitutes a different type of performance or promise, but it does not constitute payment in the strict sense of that term. State v. Tyler County State Bank, 277 S.W. 625 (Tex.Comm’n App.1925, holding approved); Barcus v. J.I. Case Threshing Mach. Co., 197 S.W. 478 (Tex.Civ.App.—Amarillo 1917, writ dism’d); Egbert v. Egbert, 235 Ind. 405, 132 N.E.2d 910 (1956); Continental Gin Co. v. Arnold, 52 Okl. 569, 153 P. 160, 162 (1915); 1 Tex.Jur.3d Accord & Satisfaction § 2 (1979); 44 Tex.Jur.2d Payment § 2 (1963); 1 C.J.S. Accord & Satisfaction § 1 (1936). There was an accord and satisfaction here as the trial court and all parties agreed. Karam had assumed the Cass notes, and he was in a position to extinguish them by any agreement satisfactory to the Cass estate. It was not necessary for Ballou to join in the agreement.

The dispositive point is the proper interpretation of the Karam/Ballou note, not the Cass notes. The Karam/Ballou note required the payment of interest until the Cass notes were paid in full. An accord which merely substituted another note for the original ones does not constitute payment in full within the meaning of the Karam/Ballou notes. Mortgage Corp. of N.J. v. Manhattan Savings Bank, 71 N.J. Super. 489, 177 A.2d 326 (Law Div.1962).

I would affirm the judgment on the basis that the Cass notes were not paid in full.