This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
At common law, the release of one of two or more joint promisors or joint and several promisors operated as a release of all.1 For this reason, in jurisdictions in which a contract of partnership was regarded as joint or joint and several, the release of one partner, by a sealed release, operated as a discharge of all.2
1See Sec. 2178 and eh. LXXVII.
2 Comer v. Sweet. L. R. 1 C. P. 456: Gibbons v. Von Won. 8 C. B. 483; Stowe v. United States Express Co., 179 Mich. 349. 146 X. W. 1.18; Crane v. Ailing, 15 N. J. L. 423.
3 Gibbons v. Vouillon, 8 C. B. 483.
See also Lord North v. Butts. 2 Dyer 139b, 140a; Woodward v. Lord Darcy, Plowd. 184; Cheetham v. Ward. 1 Boa. & P. 630.
4 Ford v. Beech. 11 Q. B. 852.
1 Aston v. Pye, 5 Ves. Jr. 350, n. 31; Newington v. Levy. L. R. 6 C. P. 180; Slater v. Jones, L. R. 8 Ex. 186.
In many cases there might be good reasons for the application of this rule, especially in cases in which the creditor had released the principal debtor, and had then sought to enforce the contract against the sureties. If the creditors were permitted to do this, the sureties would then be prevented from enforcing the contract against the principal debtor on any theory of subrogation, since the discharge given by the creditor would operate as a bar against them. The rule, however, was not put upon logical grounds, but rather upon the theory that if the original contract were joint or joint and several, and it were altered either on the face of the instrument itself,3 or by some extrinsic and valid instrument, such alteration as to the nature and effect of the instrument would operate as a discharge of the parties who were originally liable upon such instrument, without regard to the intention of the party who granted such release or discharge, and without regard to the question of the prejudice to the remaining parties to such contract. in case the creditor were permitted to enforce the contract against them alone.
The result of the application of this rule was that if the creditor granted a release to one, with an express reservation of his right to bring an action against the other joint debtors, or joint and several debtors, the courts felt unable to enforce both provisions, and accordingly, under the general principle that the paramount intent would control,4 the courts regarded the release as the paramount intent, and the reservation of the right of action against the remaining debtors as the subsidiary intent, and accordingly they treated the entire contract as released.5 This rule, however, was limited to a technical release,6 and it did not apply to a gratuitous promise to discharge one party.7
1 Arkansas. Tancred v. Bank, 124 Ark. 164, 187 S. W. 160.
Kentucky. Williamson v. McGinnis, 50 Ky. (11 B. Mon.) 74, 52 Am. Dec. 561.
Massachusetts. Wiggins v. Tudor, 40 Mass. (23 Pick.) 434; Hale v. Spaulding, 146 Mass. 482, 1 Am. St. Rep. 475, 14 N. E. 534; Brooks v. Neal, 223 Mass. 467, 112 N. E. 78.
Nebraska. Banking House v. Rose, 78 Neb. 693, 111 N. W. 590.
West Virginia. Rutherford v. Rutherford, 55 W. Va. 56, 47 S. E. 240.
See Sec. 2074.
On this subject, see Releases and Covenants not to Sue Joint or Joint and Several Debtors, by Samuel Willis-ton, 25 Harvard Law Review, 203.
For the release or discharge of a joint wrongdoer, see Berry v. Pullman Co., 249 Fed. 816, L. R. A. 1918F, 358; Maryland v. Maryland Electric Rys. Co., 126 Md. 300, L. R. A. 1917A, 270, 95 Atl. 43. .
2 Elliott v. Holbrook, 33 Ala. 659; Williamson v. McGinnis. 50 Ky. (11 B. Mon.) 74. 52 Am. Dec. 561.
Contra, Webb. v. Butler, 192 Ala. 287, 68 So. 369.
3 See ch. LXXXV.
The rule that a release of one joint debtor operated as a discharge of all, operated unfairly in so many cases, that in a number of jurisdictions it was changed by statute so that the release of one joint debtor or one joint and several debtor, did not of itself operate as a discharge of the entire liability as against all of the remaining debtors.8 This result has been reached under a statute which provides that a release "must have effect according to the intention of the parties thereto."9
The practical result of this rule has been obviated in many jurisdictions by the rule of construction that in such cases the reservation of the right of action against the remaining debtors will be regarded as the paramount intent, and the release will be regarded as the subsidiary intent: and, accordingly, such intent will be construed as a covenant not to sue, rather than as the release which it purports on its face to be.10
If all the debtors acquiesced in the release of one of the joint debtors, or one of the joint and several debtors, and in the reservation or rights of action against the remaining debtors, effect has been given both to the release and to the reservation.11
A covenant not to bring an action against one of two parties, who are jointly liable, or jointly and severally liable, does not operate as a discharge of the remaining parties:12 although if a thing of value has been given in partial satisfaction of the original claim, the remaining parties are entitled to have the amount thus paid credited upon the entire liability.13
4 See Sec. 2039.
5Cheatham v. Ward, 1 Bos. & P. 630
6 Harvey v. Sweasy, 23 Tenn. (4 Humph.) 449.
7Smith v. Bartholomew. 42 Mass. (1 Met.) 276, 36 Am. Dec. 365; Dewey v. Derby. 20 Johns. (N. Y.) 462.
8 Alabama. Long v. Gwin, - Ala. - , 80 So. 440.
Missouri. Baker v. Hunt, 88 Mo. 405.
New York. Harbeek v. Pupin, 123 N. Y. 115, 25 N. E. 311.
Ohio. Sprague v. Childs, 16 O. S. 107.
South Dakota. Central Banking & Trust Co. v. Pussey, 22 S. D. 223. 116 N. W. 1126.
South Carolina. Meyer v. Bouchier, 107 S. Car. 254, 92 S. E. 471.
9 Long v. Gwin, - Ala. - , 80 So. 440. (Decided under Sec. 3973 of the Alabama Code of 1907.)
10 See Sec. 2453.
11 Rogers v. Hosack, 18 Wend. (N. Y.) 319.
12 England. Lacy v. Kinnaston, Holt (K. B.) 178; Walmesley v. Cooper. 11 Ad. & El. 216.
United States. Berry v. Pullman Co., 249 Fed. 816.