CONTRACTS - CONSIDERATION - THE RULE OF FOAKES v. BEER DISCARDED
Greene Jr., Arthur A.
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Abstract
In an action on a promissory note, by an indorsee who was not a holder in due course, the defendant pleaded the following facts. In 1930 the payee held the promissory note of the defendant, who was known to be hopelessly insolvent. An agreement was thereupon made and executed between the payee, the plaintiff and defendant, whereby the plaintiff agreed to purchase the note from the payee in exchange for his automobile. The defendant in turn agreed to turn over to the plaintiff certain livestock or produce, to pay a certain balance in cash, and also to pay the license on plaintiff's automobile when transferred by the payee.
The plaintiff's motion for a directed verdict was granted by the trial court on the theory that "a mere promise of a creditor to receive, and of the debtor to pay, a sum less than the debt in full satisfaction of it, is without consideration and binds neither party." Held, that the trial court was in error in that there was a tripartite agreement supplying adequate consideration, and that whether this was so or not the ancient rule of Foakes v. Beer is no longer law in the state of Minnesota. Rye v. Phillips, (Minn. 1938) 282 N. W. 459.