Novation is mentioned as one of the modes by which a debt may extinguished. This takes place when a creditor, by note or otherwise, accepts some other promise of the debtor (with or without additional security), or of some other person, for the same of a different sum, insubstitution for the original demand, and thereupon agrees that it shall be discharged. 2 Chitty on Contracts (11 Am. Ed.), 1371, To have the effect of discharging the original demand it is essential that the new promise should be accepted as a substitute for the old, which, by the terms of the acceptance, would then be agreed to be discharged.
Whether in any given case a new promise was so accepted is a question of fact and not of law. Like all other facts, it must be proved if disputed, and it may be proved either by direct evidence of the agreement or by inference from other facts. In no case is there any presumption of law as to whether a new security is a substitute for a prior one, or is collateral to it.
There is, however, presumption of fact applicable to such cases, arising out of the maxim that if a certain condition of things is once shown to exist, that condition will in general be presumed to continue until there is proof of a change. So, if a debt or security be one shown to be existing and valid, it will be presumed to continue so until proof of a change. The burden of proof, therefore, is on him who alleges that an original debt has been discharged.
In the present case it is not directly stated that it was a part of the agreement between Bond, the administrator of Hudgins, and the debtor, Knoben, that the mortgage security should be discharged. We are asked, however, to inter as a fact that it was agreed to be (247) discharged from the following admitted facts:
1. That upon the agreement the creditor took the debtor's note, with Hobbs as surety, for a sum not less than the original debt, and
2. Canceled or delivered upon the original note, and
3. That Bond some seven months afterwards caused an entry of satisfaction of the mortgage to be made on the register's book.
It may be remarked here that it strikes us as strange that Bond, who was one of the parties to the agreement, and must have known its terms, did not state with perfect clearness, and that he was not asked whether the discharge of the mortgage was then promised and agreed to by him or not. This was probably an oversight, and as the admission is equally, so far as appears, the act, or with the consent of all the parties, no inference to the prejudice of either can be drawn from it.
The first two facts relied on are consistent with the idea that the new note was to be collateral, and that the security of the mortgage *Page 188 was to be retained — and also with the idea that it was to be discharged; and no certain conclusion can be drawn from them.
As to the entry of satisfaction. If it had been made shortly after taking the new note from Knoben, to which Hobbs became surety, an inference might have been drawn that the entry was made in performance of an agreement that it should be made. But the entry was not made until about seven months after the taking of the new note, and Bond says that the entry was made by his direction, but "upon no consideration from any one, and without the direction, knowledge, or authority of Hobbs or of any other party in interest; that the same was inadvertently done by him," etc., which is admitted. Although Bond gives no reason why he directed the entry, and does not expressly (248) say that it was not made in compliance with an agreement on his part with Knoben, yet, it being a case agreed, the words of which are those of all the parties, on a fair construction, his statement is incompatible with any such agreement. And that being so, the entry amounts to nothing as between these parties.
Our conclusion is that there is nothing in the facts admitted from which it can reasonably be inferred that Bond agreed to discharge the mortgage security. Hence, notwithstanding the change in the form of the debt, the mortgage remained alive as a security for the debt, and Hobbs is entitled to the benefit of it for his indemnity.
As to the claim of the widow and heir of Knoben to dower and homestead from the fund, it is scarcely necessary to say that it cannot be supported, inasmuch as Knoben never had any beneficial interest in the land except as subject to the paramount judgment and to the mortgage.
We think that his Honor erred in directing the fund, after payment of the judgment, to be paid to the administrator of Hudgins, to be dealt with by him according to law.
The judgment should be that it be paid to the administrator of Hudgins in extinguishment pro tanto of the note of Knoben and Hobbs.
Subject to the modification above mentioned, the judgment below is affirmed, and a decree will be drawn in conformity with this opinion.
The costs in this Court will be equally divided between Bond, administrator of Hudgins, and Moore, administrator of Knoben.
PER CURIAM. Judgment accordingly. *Page 189
(249)