Pannell v. M'Mechen

Johnson, J.

delivered the opinion of the court. The present is an appeal from a judgment obtained by the ap-pellee on a suit brought against him by the appellant, decided on a case stated. £After stating the facts he proceeded.]

On those facts the plaintiff ought and would have recovered a judgment. The defence relied on is that the plaintiff, the endorsee and holder of the note, released the drawer and the first endorsor, and thereby discharged the last endorsor.

In forming an opinion in this cause, the nature of the release in question, and the manner and terms on which it was obtained, demand particular attention. The drawer, and the first endorsor, finding themselves in embarrassed circumstances, unable to meet their engagements as they became due, propose to compound with their creditors; and on the 23d of June 1813, executed a deed of trust to certain trustees, of whom the defendant was one, of a large real and personal estate, to be by them applied towards the payment of their debts, in the order directed by the deed; thereby securing, or attempting to secure, to *478the defendant in this cause, the payment oí the notes in question, on the terms, that such of their creditors as should come in and assent by becoming parties to the deed, should participate and have an interest in the property so .conveyed. The deed itself contains a clause by which the' drawer and the first endorsor are'released, on the express terms that such release should not extend to any other person, but that such person should continue responsible as if the deed had not been executed. To those terms the plaintiff and defendant assented, and signed their names, and set their seals to the instrument.

It is on that release, so obtained, and on such express stipulations, that the defendant, against the express terms of the instrument itself, relies for his exoneration.

The first question which arises is, ought a release on principle so obtained, with the consent of all parties interested, specifying its extent and object, to be extended beyond the stipulated object?

The second is', will the law, against the express agreement of all the parties interested, enlarge the release so-as to produce a result different from the express stipulations; in other words, to give to the last endorsor the benefit of the release against his express agreement?

The object of the deed of trust was to give to the creditors of the drawer and first endorsor all the benefit they could derive from the property so conveyed — as between them this arrangement was of considerable moment; without it the second endorsor would have had nothing to rely on, but the individual responsibility of the drawer and first endorsor — that individual responsibility he was willing to release, on the substitution of the property conveyed on the terms and on the conditions prescribed by the deed.

It may be asked, why must a release, to which all persons interested are parties, have an effect different from that they agreed on? Will it violate any well known rule of law, or is it inconsistent with any principle of justice or propriety? So fai from the latter being the case, the re,verse appears to follow; for as the original debtors were bound to pay the whole, and as they could not, but were willing to transfer, on terms acceptable to all interested, what they had, for the easement of those who were bound for them, the refusal of him then holding the obligation to accede to such terms, would present grounds of complaint; not such, it is true,,as would exonerate those who were bound for them. But although it would not free them, yet it is evident such refusal, in its result, must draw more from the funds of the last endorsor than otherwise would have been the case. With the assent of the holder of the note, a part, if not the whole, might have been raised from the funds of the drawer and first endorsor. Those funds could not be obtained except on their discharge, that discharge the second endorsor was willing to assent to, remaining himself responsible. Bui, if such discharges can» *479aot be obtained without releasing the last endorsor also, then no accommodation for his benefit, requiring the assent of the holder, can ever be obtained.

The question then is, must the release of the drawer and first endorsor, by virtue of any fixed principle of law, release also the next endorsor, when he is a party to the instrument containing the release, expressly declaring such should not be the effect?

In a case of this description, when a person claims the benefit of a release against its terms, to which he has assented, it might be expected some decisions in support of the position would have been produced — none such has been cited.

The cases relied on are, that a release given to a joint obligor, or to joint, and several obligors, will release the other, and that a release to one trespasser, will release the co trespasser.

As to the ease of the, joint obligor released, discharging the other, the principle of the decision seems to be, that unless it extended to all, the person to whom the release ’.vas given could obtain no benefit by it; and therefore, that a release given to such an obligor, should extend to the co-obligor, although the release on its facts contained a proviso to the contrary.

The only case which has been produced of such a limited or restricted release is Everard vs. Herne, in Littleton’s Reports, 190; but the counsel differ in opinion as to the seal state of that case. The one supposes the bond to have been joint only, the other joint and several. The reason why it is conjectured to have been joint and several is that the suit was brought against one. There is nothing in the case from which it is to be inferred ¡he bond was several as well as joint, except only that one was sued. Nor is it deemed of any importance whether joint, or joint and several. But supposing the case in Littleton to have been on a joint and several bond, yet it seems not to meet the case before the court; for nothing is disclosed by that case of the assent of the co-obligor to such release producing such an s'-ftect. It is presumed that the release in that case was on a joint bond, for if the bond was joint and several, the obli-gor might have sued one, omitting to sue him he wished to benefit — a release therefore was not necessary, unless it was intended, as between the obligors themselves, to change the co-responsibility, and cast the whole burthen on him, ■whom the obligor elected to remain liable. But the case in Littleton is the only authority cited with a restrictive release.

All the other cases of releases are where the releases are general, importing satisfaction; and the debt, once satisfied, whether joint, or joint and several, the demand of the obligee was at an end, and of course he could recover from no person — differing materially from a release shewing by itself the claim still existed — differing materially from a case, where, by (he facts as agreed on by the parties, *480it is expressly admitted that no part of the money has been paid or satisfied.

The cases most apposite to the cause before the court are where the holder of a note, or bill, gives time, which would exonerate the drawer or endorsor; but which fact of giving liméis deprived of that effect in consequence of the assent of the person who would have been bound, if such time had not been given. The lime given is the ground of discharge or exoneration, the assent deprives the time so given of such an operation.

Therefore, without saying that a release to a person bound jointly and severally, with a proviso attempting to limits its effect, can operate to the discharge.of the co-obli-gors not included in the release, the court are clearly of'the opinion, that the release given in this case cannot discharge the defendant from his responsibility as endorsor of the note on.which the" suit is brought. The judgment of the court is therefore reversed.

JUDGMENT REVERSED^