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do courts of law, 17 though the creditor's right to equitable relief finds some support in this country.18 Whatever may be the rule in equity concerning survivorship, it is clear that English courts of equity, at least, do not now give, and never have given, relief from the effect of a release of one joint or joint and several debtor. Lord Hardwicke said: “There is no doubt but a release to one joint obligor is a release in equity to both as well as at law”;19 and very recently it has been held that an accord and satisfaction with one joint and several debtor precludes proof of the claim in bankruptcy against another,20 though equitable rights have always been recognized in bankruptcy proceedings, and though the English Judicature Act adopts for all cases the rule of equity where that differs from the rule at law. This failure of equity to relieve from the effect of a release finds analogy in the failure of equity to relieve from the legal effect of a judgment against one or more joint debtors in merging the debt and thereby precluding any action against other debtors.” 21
Nevertheless, there can be no doubt that a more equitable result would have been reached if courts having equitable powers had assumed that a release of a joint or of a joint and several debtor, was intended by the parties as a release merely of the debtor to whom the release was given, and had given effect to that intention. Even upon such a construction the creditor's rights against the other co-debtors would not in every case have been reserved, for the question is affected not simply by the technical rule of the common law, but also by the rule which courts of equity have established for the protection of sureties that any discharge or binding agreement to forbear proceedings against a principal debtor discharges a surety since otherwise the burden which he had assumed might be increased or varied.2
17 See Griffith, Joint Rights and Liabilities, 47-55; Ames, Cases on Suretyship, 137, 138, n.; and as to partnership debts, Pro ssor Burdick in ii Col. L. Rev. 102-114. If the deceased debtor was a surety it has always been well settled that equity will give no relief against the rule of law and, therefore, the surety's debt is discharged. See Griffith, Joint Rights and Liabilities, ubi supra; Davis v. Van Buren, 72 N. Y. 587 (1878); Richardson v. Draper, 87 N. Y. 337 (1882), and cases therein cited.
18 Ames, Cases on Suretyship, 138, n.
In the case of joint debtors, or of joint and several debtors, there is always some relation of principal and surety between the parties. One or more of the obligors may have entered into the obligation merely to accommodate one or more of the others. In such a case there is an uncomplicated relation of principal and surety. But even where all the debtors are interested in the debt, each is to some extent a principal debtor, but also each is acting as surety for the others to the extent that the equitable duty to pay belongs to them.23 Accordingly a court of equity could not properly wholly relieve against the rule that a release of one co-debtor discharges the others, except where the debtor released was merely a surety. This result has been reached in a few decisions in the United States.24 Where the joint debtors as between one another are liable equally or in other proportions for the debt, equity should not allow a release of one to relieve the others from liability except to the extent of the share of the debtor released. As to this share the other debtors were merely sureties. This result has been reached in several cases where the joint debtors were co-sureties.25 No reason for a different rule is apparent where the joint debtors are prin·cipals, for such co-debtors like co-sureties are, as between one another, principals as to a portion of the debt and sureties as to the rest.26 No decisions have been found, however, which apply the principle suggested upon this point, but it has been adopted by statute in some states.27
Effect of a covenant not to sue or a qualified release upon the creditor's rights.
A covenant not to sue a debtor or to forbear perpetually has from early times been held a bar to the original cause of action.28 This is to avoid circuity of action, for, if the plaintiff in the original action should recover, the defendant could recover precisely the same damages back for breach of the covenant not to sue or to forbear. Instead of permitting the double action, the court provides the same effect more simply by giving judgment for the defendant in the original action. But in case of a covenant not to sue one of several joint debtors, the intention of the parties can be attained only by enforcing in terms both the original promise and the later covenant. By so doing the obligee retains his right of action at law against all the joint debtors, becoming liable in turn to the one to whom the covenant not to sue or to forbear was given for any damage which the latter may suffer by the breach of covenant. If no part of the judgment obtained against the joint debtors is satisfied out of the property of the covenantee, such damages can only be nominal. Accordingly such a covenant given to one joint obligor does not have the effect of a release and the debt is not discharged. 29
2 In the case of partnership obligations, if the partnership is regarded as an entity, the direct obligation would be that of the firm and the obligation of the individual partners would be as sureties for the firm.
24 Carroll v. Corbitt, 57 Ala. 579 (1877); Schock v. Miller, 10 Pa. St. 401 (1849); Bridges v. Phillips, 17 Tex. 128 (1856); McIlhenny v. Blum, 68 Tex. 197, 4 S. W. 367 (1887). See also Burke v. Noble, 48 Pa. St. 168 (1864).
25 Gordon v. Moore, 44 Ark. 349 (1884); Smith v. State, 46 Md. 617 (1877); State 0. Matson, 44 Mo. 305 (1869); Massey u. Brown, 4 S. C. 85 (1872). See also Morgan o. Smith, 70 N. Y. 537 (1877). But see Draper 0. Weld, 13 Gray (Mass.) 580 (1859) and cases cited supra, p. 205, n. 4. 36 See infra, p. 214 and note 49.
27 See infra, p. 221. 28 Hodges 0. Smith, Cro. Eliz. 623 (1598); Smith v. Mapleback, 1 T. R. 441, 446
The same effect is given to a release which contains an express reservation of the obligee's rights against the other joint debtors.30
(1786); Ford v. Beech, 11 Q. B. 852 (1848); Flinn o. Carter, 59 Ala. 364 (1877); Jones o. Quinnipiack Bank, 29 Conn. 25 (1860); Guard v. Whiteside, 13 Ill. 7 (1851); Peddiсord v. Hill, 4 T. B. Mon. (Ky.) 370 (1827); Foster v. Purdy, 5 Met. (Mass.) 442 (1843); Stebbins v. Niles, 25 Miss. 267 (1852); Line 0. Nelson, 38 N. J. L. 358 (1876); Phelps v. Johnson, 8 Johns. (N. Y.) 54 (1811); Thurston u. James, 6 R. I. 103 (1859).
29 Fitzgerald v. Trant, 11 Mod. 254 (1710); Lacy v. Kinnaston, Holt 178 (1701); s. C. 1 Ld. Raym. 688; s. C. 2 Salk. 575; S. C. 3 Salk. 298; S. C. 12 Mod. 548; Dean o. Newhall, 8 T. R. 168 (1799); Hutton v. Eyre, 6 Taunt. 289 (1815); Duck o. Mayeu, (1892) 2 Q. B. 511, 513; Garnett v. Macon, 2 Brock. (U. S.) 185, 220 (1825); Roberts v. Strang, 38 Ala. 566 (1863); Kendrick v. O'Neil, 48 Ga. 631 (1873); Haney & Campbell Mfg. Co. v. Adaza Creamery Co., 108 Ia. 313, 79 N. W. 79 (1899); Lane v. Owings, 3 Bibb (Ky.) 247 (1813); Mason v. Jouett's Admr., 2 Dana (Ky.) 107 (1834); McLellan o. Cumberland Bank, 24 Me. 566 (1845); Bradford v. Prescott, 85 Me. 482, 487, 27 Atl. 461 (1893); Shed v. Pierce, 17 Mass. 622 (1822); Durell v. Wendell, 8 N. H. 369 (1836); Benton v. Mullen, 61 N. H. 125 (1881); Rowley v. Stoddard, 7 Johns. (N. Y.) 207 (1810); Catskill Bank v. Messenger, 9 Cow. (N. Y.) 37 (1828); Bank of Chenango v. Osgood, 4 Wend. (N. Y.) 607 (1830); Couch o. Mills, 21 Wend. (N. Y.) 424 (1839).
30 Solly v. Forbes, 2 B. & B. 38 (1820); Thompson o. Lack, 3 C. B. 540, 551 (1846); Price v. Barker, E. & B. 760 (1855); Bateson v. Gosling, L. R. 7 C. P. 9 (1871); Green v. Wynn, L. R. 7 Eq. 28 (1868), L. R. 4 Ch. 204 (1869); Northern Ins. Co. o. Potter, 63 Cal. 157 (1883); Parmelee o. Lawrence, 44 Ill. 405 (1867); Dupee o. Blake, 148 III. 453, 35 N. E. 867 (1893); Gardner v. Baker, 25 Ia. 343 (1863); Bradford v. Prescott, 85 Me. 482, 486, 27 Atl. 461 (1893); Dickinson v. Bank, 130 Mass. 132
In fact such a release is in terms contradictory. If it is to be regarded as a true release of one joint debtor, it would be legally impossible to reserve rights against the others.31 The whole debt would be discharged. In order to give effect to the manifest intention of the parties as nearly as possible, the courts have therefore held that a release with such a reservation is in legal effect no release at all, but merely a covenant not to sue.32
The same doctrine has been applied in any case where it appears from the terms of a release that it was not intended or expected that all the debtors should be released.33 Parol evidence, however, showing an intent to reserve rights against other joint obligors has been held inadmissible.34 But if the evidence is clear of a parol agreement with the released debtor that the creditor's remedies against the other debtors should be reserved, a bill in equity to reform the written release should be sustained 35
Effect of covenants and qualified releases where one joint debtor is a surety.
Though a covenant not to sue or a qualified release does not have the effect as such of discharging other debtors than the one to whom it was given, its effect must also be considered with reference to the equitable principle of suretyship previously alluded to.
An agreement to give time to a principal debtor, the surrender of collateral to him, or any other act or agreement with him which will increase or vary the risk of the surety, discharges the latter from liability:36 Joint debtors as between one another may bear the relation of principal debtor and surety for the whole debt, or they may be bound as between one another to bear the debt in equal proportions or in any other proportions.
(1881); Benton v. Mullen, 61 N. H. 125 (1885); Hubbell v. Carpenter, 5 N. Y. 171 (1851); Greenwald v. Kaster, 86 Pa. St. 45 (1878); Russell v. Adderton, 64 N. C. 417 (1870).
31 See Nicholson v. Revill, 4 A. & E. 675 (1836); Kearsley v. Cole, 16 M. & W. 128 (1846); Webb v. Hewitt, 3 Kay & J. 438 (1857); Green v. Wynn, L. R. 4 Ch. 204 (1869).
32 Bradford v. Prescott, 85 Me. 482, 27 Atl. 461 (1893).
33 Ex parte Good, 5 Ch. D. 46, 55 (1876); Carroll v. Corbitt, 57 Ala. 579 (1877); Bradford v. Prescott, 85 Me. 482, 27 Atl. 461 (1893); Hale v. Spaulding, 145 Mass. 482, 14 N. E. 534 (1888); Burke v. Noble, 48 Pa. St. 168 (1864).
34 Mercantile Bank v. Taylor, (1893] A. C. 317; Clark v. Mallory, 185 III. 227, 56 N. E. 1099 (1900); Hale v. Spaulding, 145 Mass. 482, 14 N. E. 534 (1888). But see contra, Massey v. Brown, 4 S. C. 85 (1872).
35 Bank of Montreal v. McFaul, 17 Grant Ch. (U.C.) 234. 36 Brandt, Suretyship, $ 376 et seq.
In so far then as a creditor chooses to give time and even more clearly in so far as he chooses to covenant never to sue a joint debtor who is the principal debtor, he will be unable thereafter to charge a surety for the same debt. But the principle which discharges the surety is an equitable one and is subject to equitable modifications. If a surety consents to a discharge or change of liability of the principal debtor, he cannot claim exemption from liability.37 It has also been established that the surety cannot claim exemption if the agreement with the principal debtor reserves in effect to the surety all rights of indemnification to which he is entitled, and this is the legal effect of an agreement which reserves to the creditor a right against the surety, as well as of an agreement which in terms reserves the surety's rights against the principal debtor.38 The rule which permits a creditor to make a covenant not to sue or to release a principal debtor known to be such and nevertheless by a reservation of the creditor's rights against codebtors, still hold them bound, though they are sureties and known to be such, is in reality inconsistent in principle with the rule that an agreement with the principal debtor to forbear or to give time discharges the surety. This latter rule must rest on the injustice of holding a surety bound when the creditor has varied the terms of the obligation. The injustice is no less because the creditor when he varies the obligation agrees with the principal debtor but without the consent of the surety that the surety shall not be discharged. If it be urged that where the right against the surety is reserved, his right of indemnity against the principal is also reserved, and that therefore the surety is not injured, the reply is obvious that the surety's right of indemnity can never be taken away from 37 Brandt, Suretyship, $ 379 et seq.; Ames, Cases on Suretyship, 150, n.
38 Bateson u. Gosling, L. R. 7 C. P.9 (1871); Mueller v. Dobschuetz, III. 176, 182 (1878): “An agreement which preserves the right of the creditor to proceed against the surety, or the right of the surety to proceed against the principal, will not discharge the surety," citing Rucker v. Robinson, 38 Mo. 154 (1866); Morse v. Huntington, 40 Vt. 488, 496 (1868); Price v. Barker, 4 E. & B. 760 (1855); Kearsley v. Cole, 16 M. & W. 128 (1846); Viele v. Hoag, 24 Vt. 46 (1851); Hubbell v. Carpenter, 5 N. Y. 171 (1851). Numerous other cases to the same effect might be cited in which the principal and surety were severally but not jointly bound. This can involve no distinction in principle. See Ames, Cases on Suretyship, 150, n.