In Whittemore v. Judd Linseed, etc., Co. (124 N.Y. 565) the court (quoting Rogers v. Hosack, 18 Wend. 336) said: "`The rule [that the release of one of two joint debtors operates to discharge both] has generally, if not universally, been applied to cases where such co-debtors were released without the consent of the other.Summary of this case from Gambold v. MacLean
Argued March 12, 1891
Decided April 14, 1891
Wm. C. De Witt and Edwin B. Smith for appellant.
Joseph H. Choate for respondent, the Judd Linseed and Sperm Oil Company. S.P. Nash for respondent Lord.
D.D. Lord for respondent Lord.
The appellant claims that Hubbell's discharge from the judgment was accomplished in two ways.
First. By the release executed by the defendant Lord and delivered to him on August 8, 1874.
Second. By the release of Taylor by the oil company by the instrument of January 5, 1874.
The first ground is the one upon which relief was based in the complaint. The second is not there mentioned or made the basis of the judgment asked for.
While I have grave doubt whether the second claim is available to the appellant under his complaint or whether the question was raised at the trial by any proper and sufficient request to the court thereon; as the facts upon which the claim is now made appear in the findings of the court the point is considered as if it was properly before us.
The second ground upon which the discharge is claimed will be considered first.
The strict common-law rule is that if two persons be bound jointly and severally in an obligation, and the obligee voluntarily and unconditionally releases one of them, both are discharged and either may plead the release in bar.
But the legal operation of a release of one of two or more joint debtors may be restrained by an express provision in the instrument that it shall not operate as to the other.
This question was recently considered in this court in the case of Hood v. Hayward (35 N.Y. State Rep. 229, 237; 124 N.Y. 1).
In that case one surety upon a non-resident executor's bond, was released and discharged by the devisees and legatees under the will and the appellant's contention was that by virtue of that release to his co-surety he also was released.
That contention was overruled and it was held that he was not discharged, and the decision rested upon an express provision in the release that it should not be construed as in any way affecting any claim or demand which the releasors had or might have against the non-resident executor or against the appellant as surety on his bond.
In addition to the authorities cited by Judge Potter in support of that opinion I refer to the following: (1 Parsons on Contracts [5th ed.] p. 29; Kirby v. Taylor, 6 John. Ch. 246; S.C., Hopkins' Rep. 309-334; Rogers v. Hosack, 18 Wend. 319; 25 id. 313; see opinion of COWEN, J.; Solly v. Forbes, 2 Brod. B. 38; North v Wakefield, 13 Ad. El. 536; Burke v. Noble, 48 Penn. St. 168; Yates v. Donaldson, 5 Md. 389; Edwards v. Varick, 5 Denio. 665-699; Lysaght v. Phillips, 5 Duer, 106-116).
The rule deducible from all the authorities is that equity always gives to a release operation according to the intention of the parties and the justice of the case, and although many early cases may be cited to the effect that the rule applied by courts of law was otherwise, and that a saving clause repugnant to the nature of the grant was void and that the grant remained absolute and unqualified, such is not the modern rule of construction.
The equitable rule now prevails and a release is to be construed according to the intent of the parties and the object and purpose of the instrument, and that intent will control and limit its operation.
Testing the releases in this case by the clear and manifest intention of the parties and the occasion of giving it its operation will be confined to Taylor and it in no way tended to release or discharge Hubbell.
By the terms of the contract, Hubbell was to remain liable, and under all the authorities the release of Taylor operated to discharge him alone.
But the two papers appear to have been delivered by Hubbell's attorney on August 8, 1874, and for the purpose of this appeal, we must assume their delivery to have been Hubbell's act.
The purpose of their execution and delivery is shown by the tripartite agreement executed by and between the surviving assignees and Taylor and Hubbell.
This agreement looked to the settlement of the several estates and the discharge of the assignees, and to accomplish that object Hubbell professed to have procured, or to be able to procure, releases to said assignees from all outstanding creditors of the joint estate and from his individual estate, except four, one of whom was the oil company, and it was therein expressly stated that the four excepted claims were to remain outstanding. Such agreement between them provided that a certain claim against the United States, arising out of the destruction of a ship by the Confederate cruiser Alabama, was not a part of the joint estate assigned, but belonged to Taylor and Hubbell individually, and other claims, with the consent of Taylor, were to be assigned to Hubbell to enable him to procure releases from creditors of the joint estate.
Pursuant to this agreement, the two releases in question were delivered by Hubbell, and he must be held to be bound by the express stipulation that the oil company's claim was to remain outstanding against him, and that so far as the release to Taylor was concerned, it expressly limited its operation to Taylor, and was intended to discharge him alone.
In other words, he must be deemed to have consented to the latter provision.
In Rogers v. Hosack (18 Wend. 336), Judge COWEN said, in speaking of the rule that the release of one of two joint debtors operates to discharge both: "The rule has generally, if not universally, been applied to cases where such co-debtors were released without the consent of the other. * * * The release is like the leaving off of the seal from a bond which subverts the whole contract. * * * But the case is different when the alteration is by the consent of all the parties, accompanied with an intention that those only should be discharged whose names or seals are torn off in the case supposed, or who are released as in the case at bar."
After discussing the facts of the case before him, he reaches the conclusion that the debtor, who claimed the benefit of the strict rule, intended to remain liable, and said: "Upon principle there is nothing to prevent such an agreement."
To the same effect is Burson v. Kincaid (3 Penn. 57).
Upon the assumption, therefore, that the judgment against Taylor and Hubbell was joint, our conclusion is that Hubbell was not discharged by the release of January, 1874.
But the conclusive fact in this connection is that no joint judgment ever was entered against Taylor and Hubbell. The whole of the appellant's argument is built upon the assumption that such a judgment existed, and his effort has been to convince us, that although the judgment was not joint in form, yet it must and should be so treated by the court on this appeal.
Having exhausted all the remedies possible in an ineffective effort to correct the judgment and make it joint, he asks this court to so regard it, for the purposes of enabling him to invoke the aid of a harsh and technical rule of law, to discharge him from an obligation towards the payment of which it does not appear that he has ever contributed a cent.
To do so would manifestly subvert and overthrow the intention of the parties in their various complicated dealings had in the settlement of the several estates. They had a right to contract upon the faith of the record as it stood, and it is not unreasonable to assume that if the judgment had been joint in form the result sought would have been reached in another way, and the case not embarrassed with the questions that have arisen upon the several assignments and releases that have been executed.
The fact that is prominent all through the negotiations is that the oil company never intended to release its claim against Hubbell, and Hubbell was well aware of that fact.
The other ground for the judgment sought rests wholly upon the question whether Mr. Lord had authority to execute and deliver the release given to Hubbell.
The trial court found that such instrument was executed without any power or authority, and as to the oil company's claim was wholly inoperative and void.
It may be conceded that the assignment of October 6, 1874, was intended to relate back to and have effect as of a date prior to the execution of the release.
By the terms of the instrument of August, 1872, the oil company assigned only its claim against Taylor individually, and against his individual estate in the hands of the assignee.
By the instrument of October, 1874, it assigned its claim against the joint property of Taylor and Hubbell. In both, it expressly reserved its claim against Hubbell individually.
This was in entire harmony with the tripartite agreement which recited the fact that the assignees had never realized anything from Hubbell's individual estate and which contemplated the discharge of the assignees by the creditors, but that the oil company should retain its claim against Hubbell.
The legal conclusion which the appellant asked the court to draw from the two assignments was that they were ineffectual to divide the claim and carried to the assignee the right to collect the whole judgment.
That is, that although the assignor intended to sell and the assignee to buy but a part or share of the claim and clearly expressed such intent in the deed of assignment, the law gives to the instrument an entirely different effect and transfers what neither intended should pass by it.
I know of no principle of law that works such a result, and no authority is cited to sustain it.
The authorities that are cited hold simply that a creditor cannot split up a single cause of action without the consent of the debtor.
The reason for this rule is that to permit a cause of action to be divided would subject the debtor to many embarrassments and responsibilities not contemplated in his original contract. He has a right to stand upon the singleness of his original contract and to decline any assignment by which it may be broken into fragments. ( Mandeville v. Welch, 5 Wheat. 277.)
But the rule goes only to the right to sue as assignee of a part of a single cause of action.
It does not deny the right to sell and transfer an undivided part of a demand. And if all the owners unite in a suit upon it, the fact of the assignment of a part constitutes no defense.
We need not consider in this case what title or authority Mr. Lord acquired under the assignment to him or what would have been the effect on the claim if Taylor or the assignee had paid it in full to Lord. No such question arises.
The only pertinent inquiry is did Lord under the assignment of the demand against Taylor acquire power to release Hubbell.
That inquiry was properly answered at the trial and there was no error in the refusal to find the request I have quoted.
If the assignment was ineffectual to divide the claim the title remained in the oil company.
But as the judgments were several and not joint, and no question of payment by either debtor arises, it is not perceived why the judgment against Taylor could not be separately assigned. No one was prejudiced by such a transaction, and the rights of the debtors between themselves remain unimpaired and unaffected.
The claim that Mr. Lord incurred some liability to Hubbell in case the release was ineffectual to discharge him is not available on this appeal. No motion was made to amend the complaint, except in respect to the demand for judgment. The claim against Lord could not stand upon the allegation of the complaint and the court properly denied the motion to amend.
The judgment should be affirmed.
All concur, except PARKER, J., not sitting.