Manchester v.

Parsons
75 W. Va. 793, 84 S.E. 885
1915
Williams, J.
petitioners Manchester
respondents L.W. Parsons
summary Parsons executed and delivered an $800 negotiable note payable to the order of
Burton & Co. The note was negotiated to Manchester. Parsons subsequently paid
Burton (through delivery of Percheron Colts worth $1675). Manchester (indorsee)
now sues Parsons for the value of the note. Parsons claims that payment was already
made, invoking Sec 119 of the Negotiable Instruments Law, wherein it states that a
note may be discharged by any other act which will discharge a simple contract for
the payment of money.
The Court held that Sec 119 should not be taken literally. It must be read in harmony
with other provisions of the Negotiable Instrument Act and must be limited to such
acts as would relate and affect the holder of the paper demanding payment of it.
Negotiable paper, in the hands of the holder, is not discharged by payment made to
his transferor, either before or after the transfer.

facts of the case

Maker: Parsons:
Payee: Burton & Co.
Indorsee: Manchester
Sept 22, 1910: Parsons executed a note for $800, payable to the order of Burton & Co.
Nov 1, 1910: The note was negotiated to Manchester for value.
June 3, 1911: Parsons sold and delivered to payee, Percheron Colts for $1,675, with the understanding
between the parties that this transaction was to pay the note, and the balance was to be paid for the
execution and delivery by Burton & Co. of their note payable to Parsons.
The indorsee sued the maker. Makers defense: Payment.

issue
WON the payment by the maker to the payee, who is no longer the holder of the instrument, discharges the
liability of the maker to a holder in due course? NO.

ratio
Makers Defense: Upon payment made on June 3, 1911 to the payee, the note is discharged as per Sec 119 of
the Negotiable Instruments Act, where it states that a note may be discharged by any other act which will
discharge a simple contract for the payment of money.
Court: This subsection must be interpreted with reference to the general purpose of the Negotiable
Instruments Act. It must be read in connection with its other provisions1, and made to harmonize with the
general scheme and plan of the act.
The acts that will discharge a simple contract for payment of money, on order to effect a discharge of
negotiable paper, within the contemplation of subsection 4, must therefore necessarily be limited to such acts
as relate to and affect the holder of the paper demanding payment of it. It does not include a holder for value
in due course. Negotiable paper, in the hands of such holder, is not discharged by payment made to his
transferor, either before or after the transfer.

Sec 52 defines a holder in due course to be one who takes the paper in good faith for value, without notice of any infirmities in it or defect
in title of the person negotiating it
Sec 57 says that such a one holds it free from any defect of title of prior parties, and free from defences available to prior parties among
themselves and may enforce payment of the instrument for the full amount thereof against all parties liable thereon.
1

The rights of a bona fide assignee of such a note, in due course, are not affected by the equities of
the maker Trust Co. v. Crawford and Ashby