Whittemore v. Judd Linseed & Sperm Oil Co. — 36 N.Y. St. Rep. 881

Majority

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William L. Whittemore, Adm’r, App’lt, v. The Judd Linseed & Sperm Oil Co. et al., Resp’ts.^[1]

(Court of Appeals, Second Division,

Filed April 14, 1891.)

Headnote

1. Judgment—Release.

Tlie'strict common law rule is that if two persons he hound 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

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debtors may be restrained by an express provision in the instrument that it shall not operate as to the other.

2. Same.

In an action brought by the defendant company against H. & T. as co-partners, separate judgments were entered against each; and H. & T. having made an assignment, the oil company agreed to accept fifty per cent of the judgment against T. in full satisfaction of its claim against them, and to-release and discharge T. and his individual estate, reserving all rights against H. or the joint estate. The judgment was assigned to L. with a similar reservation. In August, 1874, £. executed to H. a release of the claims of the oil company against H. & T. Subsequently the company assigned to L. their rights and claims against the joint property under the judgment against T. and thereafter issued execution against H. under the judgment against him. In an action to enjoin the collection of such execution and to declare the judgment satisfied and discharged, Held, that as a release is to be construed according to the intent of the parties and the object and purpose of the instrument, in this case its operation must be confined to T., and it in no way tended to release or discharge H.

Appeal from a judgment of the general term of the court of common pleas of the city of New York, affirming a judgment of the special term, which dismissed the plaintiff’s complaint.

This action was brought to restrain the collection of a judgment recovered against Henry W. Hubbell by the Judd Linseed & Sperm Oil Company, and to have it adjudged that such judgment, so far as it was a claim or demand against Hubbell, was. satisfied and discharged.

Hubbell died pending the litigation, and the action was continued by his administrator.

It appeared that Hubbell and one Robert L. Taylor, who jhad been engaged in various joint enterprises, became insolvent in 1867, and made a joint assignment of their joint estate and separate assignments of their individual estates to assignees for the benefit of creditors.

- The Od Company had a claim against them, upon which Taylor denied any liability, and after making an agreement with the assignees to compromise said claim, so far as Taylor was concerned, for fifty cents upon the dollar, in case it established Taylor’s liability therefor, brought an action thereon against both parties.

Taylor alone defended, and the action against him was tried and resulted in favor of the Oil Company, whereupon judgment was entered. But one roll was filed. The final statement in the judgment was dual in form, and a separate judgment was entered against Hubbell for $40,950.29, and against Taylor for $43,420.70. The difference in amount represented the difference in costs and interest

. On August 15, 1872, the Oil Company assigned to the defendant Lord all their claims and demands against Robert L. Taylor individually, and especially all its right, title and interest in and to a certain judgment for $43,420.70 and all its right, title and interest in and to money due and to grow due under the same from said Robert L. Taylor or his individual estate.

Said assignment further provided as follows: “ It is expressly understood that said Judd Linseed & Sperm Oil Company are to retain and do expressly retain all their claims and rights of every nature against the joint property and estate of said Robert

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L. Taylor and Henry W. Hubbell, and against the individual property and estate of said Henry W. Hubbell. It being intended hereby to transfer only such claim as they have against the said Robert L. Taylor individually and his individual estate in whatever way the same may be made available for the payment thereof.”

negotiations followéd for the settlement of the several estates, the object being to release and discharge the assignees and to transfer to Hubbell certain property and claims, particularly a claim against the United States growing out of the destruction of a ship by the Confederate cruiser Alabama, which it was claimed by him had not passed to the assignees. To accomplish this Hubbell professed to have procured and to be able to procure releases of the assignees from all the creditors and consents to their discharge, except from four, among whom was the Oil Company. A tripartite aggreement was entered into between the surviving assignees and Taylor and Hubbell which recited these facts, and the fact that the Oil Company’s claim was to remain ■outstanding.

In these negotiations Mr. Lord represented Taylor, the assignees and certain creditors. Hubbell was represented by Mr. Peet.

On August 8, 1874, there was delivered by Mr. Peet two releases ; one dated September 30, 1873, which was an agreement between certain creditors and Hubbell, and which released and ■discharged the assignees from all claims and demands and right of accounting, and provided that nothing therein contained .should impair or affect the claims .of said creditors against Hub-bell individually or prejudice their rights against him personally or any estate of his not then in the hands of the assignees.

The second release was dated January 3, 1874, and was an •agreement with Hubbell of a like character, and released Taylor from all claims and demands against him, and the assignees from all claims and demands and right of accounting against them, and contained a similar reservation of the releasor’s claims against Hubbell individually and against any estate of his not in the hands of the assignors.

The Oil Company was a party to each of the foregoing instruments. The defendant Lord also executed and delivered to Hub-bell a release, under seal, from all claims against him ©r his individual estate upon certain demands of which Lord claimed to be the owner, among which the demand of the Oil Company was specified as one. Some question appears to have arisen between Hubbell and Lord as to Lord’s authority to execute this release under the assignment of August 15, 1872, and thereafter Hubbell procured from the Oil Company a further assignment, dated October 6, 1874, whereby said company assigned to Lord “all their claims against the joint property and estate of Robert L. Taylor .and Henry W. Hubbell in the hands of their assignees under the assignment dated October 26, 1867, under and by virtue of a judgment against said Taylor and Hubbell in the court of common pleas, etc., for $43,420.70,” granting to Lord power and authority to ask and demand the same from the assignees and from

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any person or persons “ excepting as against Hubbell, or any individual estate or joint estate hereafter realized by him,”

On April 1, 1876, the Oil Company issued an execution upon said judgment, with directions to the sheriff to satisfy the same out of Hubbell’s property, and claiming $25,060.25 and interest to be due thereon.

William C. DeWitt and Edward B. Smith, for app’lt; Joseph Hi Ohoate, for resp’t, Oil Company; S. P. Nash, for resp’t, Lord.

The appellant claims that Hubbell’s discharge from the was in two :

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 latv 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., Hopk., 309-334; Rogers v. Hosack's Ex'rs, 18 Wend., 319 ; S. C., 25 id., 313; see opinion of Cowen, J.; Solly v. Forbes, 2 Brod, & B., 38; North v. Wakefield, 13 Q. B., 536; Burke v. Noble, 48 Penn. St., 168 ; Yates v. Donaldson, 5 Md., 389 ; Edwards v. Varick, 5 Denio, 665 -690; Lysaght v. Phillips. 5 Duer, 106 -116.

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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's Ex’rs, 18 Wend., 886 , 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

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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 reached 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 Beerson 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 Hub-bell, 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 Augustj 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

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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. Ho 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. Ho 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. Ho 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.

Judgment affirmed, with costs.

All concur, except Parker, J., not sitting.