Brief Fact Summary. Mrs. Shillace, (Plaintiff), filed suit against Channell Shopping Partnership (Defendants), seeking to dissolve the seizure of certificates of deposit on the ground that the funds seized were derivative proceeds of the life insurance policy on her late husband and therefore exempt from seizure. Defendants contends that the debt at issue arose after payment of the life insurance proceeds to Plaintiff and therefore such proceeds are not exempt from seizure.
Synopsis of Rule of Law. Whether a novation has been executed depends on the intent of the parties. The character of the transaction, the facts and circumstances surrounding it, as well as the terms of the agreement itself may demonstrate the intent of the parties.
Issue. Whether the promissory note between the parties amounted to a novation and therefore represents a new debt that arose after the insurance proceeds were paid to Plaintiff.
Held. Yes. The parties intended the note to be a novation.
Discussion. The debt under the lease was novated by the execution of the promissory note. The respective obligations were different in date, amount, method of payment, date of payment and signatories. Both parties clearly intended for a novation to take place when they swore under oath during Plaintiffs deposition that the cash payment and execution of the promissory note were in full settlement of Defendants’ suit and necessarily the underlying obligation under the le