Gillespie v. Smith
Gillespie v. Smith
Opinion of the Court
Gillespie has recovered in a state court a judgment against Walter R. Smith, executor of his father’s estate, for $36,008.74 and $1,341.45 costs. Execution on this decree having been returned “No property found,” he has instituted upon the law side of this court, an aetion of debt in the name of the state, at his relation, against said executor and the sureties upon his official bond. The sureties in said action at law have tendered a special plea, setting forth that Gillespie has, by writing under seal, released one of their number “from all and every obligation and liability as a surety or otherwise upon the said bond,” and they aver that this release operated to release them all. Upon the tender of this plea in the law action. Gillespie filed this bill, in which he seeks to have this release annulled on the grounds that it was procured from him (a) by fraud, misrepresentation, and undue influence: (b) was without consideration; and (c) was materially changed after execution.
Nor do I have difficulty in disposing of the second ground alleged against the validity of the release, that of lack of consideration; and this for the reasons that: At common law the part payment of a debt is not sufficient consideration for its discharge. Bailey v. Day, 26 Me. 88; Potter v. Green, 6 Allen (88 Mass.) 442. If the discharge be by a sealed instrument, it is of no consequence what the' actual consideration may be, for the seal is conclusive evidence of. sufficient consideration. Deering v. Moore, 86 Me. 181, 20 Atl. 988, 41 Am. St. Rep. 534. But, if this were not so, the instrument itself admits payment of one dollar and alleges other considerations; and, while Gillespie now denies payment of this dollar, Smith and his son say it was paid. The Supreme Court of Appeals of this state, in Rease v. Kittle, 56 W. Va. 269, 49 S. E. 150, has very strikingly illustrated the importance and effect of a dollar payment, set forth as paid in contracts. Finally, I have no doubt but what under- ordinary conditions, a rational man may without consideration voluntarily forgive his debtor his debt, although he may have been an unjust steward.
Touching the charge of fraud, the release stands admitted as having been executed, and there was nothing fraudulent on the part of John M. Smith stating to his nephew that he was an old man, desirous of settling up his affairs and of turning over his farm to his sons, and for these reasons asking him if he was willing to release him from this suretyship obligation. It is not to be assumed that this young man, Gillespie, was less able, under all the circumstances, to care for his own interests in this matter than this old farmer was of his. The farmer had lived his life some 20 or more miles away from Sistersville, the largest town in the county; the young man had lived his in this largest town, and in the home of the defaulting executor. He was not wholly ignorant of this executor’s business affairs; on the contrary, he at least knew of the unfortunate Virginia real estate investment made by this executor, and himself had part in the effort to save it. He was not
Upon one point there can he no disagreement. Whether Smith made representation that his release would not affect the liability of the other sureties or not, it cannot be disputed that the release was executed under the clear understanding of both that it would not. If it is to be held that it in fact does operate to release such other sureties from liability, then we are confronted with the fact that it was executed under an innocent misconception of the law governing the matter. I say “innocent,” because it seems to me clear that both parties were sincere in their conception of the legal effect of this paper. And that there was excuse for such conclusion by them will be clearly demonstrated by any one who undertakes to ascertain what the law is touching this question. I am persuaded from a careful examination that few legal propositions have been more confused by conflicting precedents than this one. This confusion can be very well illustrated by quoting from the legal encyclopedias and text-books. Cyc. says:
“Under the common-law rule, where cosureties were bound jointly, a release of one discharged all; but in equity the cosureties remained liable for their proportionate shares, and under the modern law, a covenant not to sue, or a release of one cosurety, does not discharge the others; but he remains liable for Ms proportionate share of the indebtedness, especially if the surety released has paid hits own proportionate part.” 32 Cyc. 156.
The American and English Encyclopaedia of Law (2d Ed.) vol. 27, page 527, says:
“A surety is only partially discharged where the creditor releases a co-surety, and -the result is the same whether the creditor 'obtains from the surety discharged by Mm his full proportion of the debt or merely executes the release voluntarily. As generally stated, the rule is that the remaining surety is exonerated to the extent to which he would have been entitled to contribution from t’ne released surety. Some of the older decisions hold, or seem to hold, that the remaining surety in such ease is wholly discharged at law, but the more equitable rule is now settled as stated above.”
Elliott on Contracts, bk. 3, § 2064, says:
“The unconditional release of one joint or joint and several promisors is generally speaking a release of all: Provided, the release is without the consent of the cosureties or joint obligors.”
Counsel for defendants, in their brief, have very rightly indicated that the proposition has been further complicated by reason of the abolition of the common-law for the Code practice by some of the
“A release given by the beneficiaries to a surety, in order to be upheld, must be shown to be fair and reasonable, because the sureties stand in the same fiduciary relation to the beneficiaries as the principal does.” 11 Am. & Eng. Enc. of Law (2d Ed.) 896, citing Baines v. Barnes, 64 Ala. 375.
And applying this rule to this case, it would seem perfectly clear that these cosureties of Smith, who bound themselves jointly and severally to see to it that this estate of Gillespie should be properly administered and turned over to him when he became of age or to
Therefore I will entertain this bill and enter a decree restraining the defendant sureties from using said release for other purpose than to secure for themselves, in the trial of the law action, credit for such a sum as Smith would he liable for if he had not been released, which sum must be a full and equal share of what the solvent sureties may have to pay or be liable for. No costs in this case will be awarded either side.
Reference
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