§ 1835. An action may be barred by a formal release made by the holder to the party liable.220 And such release cannot be countermanded after it reaches the hands of a bona fide holder.2 A valid consideration is necessary to a good release.222 And in Pennsyl

220 Bauerman v. Radenius, 7 Term R. 663.

221 Union Nat. Bank v. Oceana Co. Bank, 80 Ill. 212.

221

222 Chit. Bills, 350; Story, Bills, § 431; Parker v. Leigh, 2 Starkie, 228; Weaver v. Fries, 85 Ill. 356; Smith v. Smith, 80 Ind. 267. Thus, it is no release

vania a release is insufficient, if it is not under seal and does not express the consideration. 223

An agreement to release an accommodation maker, if he would pay another note made by him, is without sufficient consideration, and will not be binding upon the holder, although the maker paid the other note, and neglected to take steps for his own security, because of the agreement.224 So, a part payment by the maker of a note is not sufficient consideration for a release.225 Nor is such payment by one joint maker sufficient to support a release or to discharge his co-maker. 226 A note, however, made by one partner after dissolution of the firm, for half the partnership debt, has been held to be a sufficient consideration for a release of the maker, on the ground that such note may be a higher security than the original debt.227 And if the maker obtains the note of a third person, and the payee agrees to look to him, the original maker will be discharged.228 If an agreement is made upon a certain condition, to be performed by the maker, he will not be released without such performance.229 Thus, if it is conditioned on his paying interest until the payee's death, the burden is on him or his executor to prove that he did so.23 230

to agree without consideration to surrender the note at the maker's death, Carrier v. Sears, 4 Allen (Mass.) 336; or to surrender a collateral mortgage, Richardson v. Noble, 77 Me. 390; or "not to collect if the Confederacy fail," Herndon v. Henderson, 41 Miss. 584. But reliance on a promise to look to a collateral mortgage only, with damage resulting therefrom, is sufficient consideration. First Nat. Bank v. Watkins, 154 Mass. 385, 28 N. E. 275. If, however, it is an agreement to release in consideration of an executory promise (e. g. to pay an annuity), performance must be proved. Harmon v. Adams, 120 U. S. 363, 7 Sup. Ct. 553.

223 Kidder v. Kidder, 33 Pa. St. 268.

224 Bragg v. Danielson, 141 Mass. 195, 4 N. E. 622.

225 Smith v. Bartholomew, 1 Metc. (Mass.) 276.

226 Line v. Nelson, 38 N. J. Law, 358; Smith v. Bartholomew, 1 Metc. (Mass.) 276.

227 Ludington v. Bell, 77 N. Y. 138, reversing 43 N. Y. Super. Ct. 557. 228 Carpenter v. Murphree, 49 Ala. 84.

229 Whatcheer Bank v. Cushing, 6 R. I. 303; Collingwood v. Bank, 15 Neb. 118, 17 N. W. 359.

230 Harmon v. Adams, 120 U. S. 363, 7 Sup. Ct. 553.

Form of Release.

§ 1836. It has been held that an express consent is necessary to effect the release of an acceptor.281 The negotiable instrument law and the British bills of exchange act provide for renunciation in writing or by surrender of the bill.232 And in Tennessee the release of a maker must be in writing, and cannot be proved by parol.233 And in Maine a seal has been held to be necessary.23 234 Where a note is given in consideration of an agreement to buy certain property, a sealed release of the agreement will discharge the note.235 So, even a verbal agreement to rescind the contract.236 And if a corporation takes a note for stock, payable in installments, and afterwards declares a forfeiture of the stock for nonpayment of an installment, it will release the maker from further liability on the note.237 If the ⚫ payment of a note is assumed, upon good consideration, by an accommodation indorser, who covenants to indemnify the maker, the maker will be discharged.238 And if a note is payable “in current funds,” and such funds are tendered by the maker, and refused, the indorser will be discharged.29 So, if payment of a joint judgment rendered against successive accommodation indorsers is tendered by the first indorser, and refused by the holder, it will discharge the second indorser. 240

231 Chit. Bills, 349; Dingwall v. Dunster, 1 Doug. 247; Byrn v. Godfrey, 4 Ves. 8.

232 Negotiable Instruments Law (NEW YORK. § 203; COLORADO, CONNECTICUT, FLORIDA, and VIRGINIA, § 122; MARYLAND, § 141); Bills of Exchange Act, § 62. The British act applies to secured notes, Francis v. Bruce, 44 Ch. Div. 627; but is not satisfied by a direction in articulo mortis to destroy a lost note, when it should be found, Id.; nor by a surrender to the maker's devisee, Edwards v. Walters [1896] 2 Ch. 157.

233 Simpson v. Moore, 6 Baxt. 371. As to parol evidence of release, see infra. 284 First Nat. Bank of Auburn v. Marshall, 73 Me. 79.

235 Barber v. Gordon, 2 Root (Conn.) 95.

236 Dearborn v. Cross, 7 Cow. (N. Y.) 48.

237 Ashton v. Burbank, 2 Dill. 435, Fed. Cas. No. 582.

238 In re Wilder, 3 Fed. 859.

239 Smith v. Bank, 14 Pa. St. 525, notwithstanding the subsequent indorsement of a similar bill.

240 Ewing v. Sugg, 12 Lea (Tenn.) 375.

RAND.C.P.-162

(2577)

Implied Release.

§ 1837. A release of the acceptor may be implied from a promise to pay, indorsed on the bill by the drawer, but the effect of such promise is a question of intention, for the jury to determine.241. The mere expression of an intention to release a party is not a release.212 So, the acceptor will not be released by the holder saying, at a meeting of the acceptor's creditors, that he should look to the drawer, and not come upon the acceptor.248 So, it is not enough for the payee to agree, after maturity of the note, to sue the principal, with an admission that it would not be right to sue the surety.24 Mere neglect, however, on the holder's part, to call on the acceptor for payment, or mere indulgence to him, will not release the drawer.245 And the death of one joint maker, and subsequent receipt of interest from the survivor, will not release the deceased maker's estate.246

Collateral-Received or Surrendered.

§ 1838. Receiving collateral security from the maker of a note, without any special agreement, will not release him.247 So, if the holder takes security from an indorser, for whose accommodation the note was made, and agrees to proceed against the maker, his rights as indorsee will remain unaffected.248 And an indorser will not be discharged by the holder's taking collateral from the maker, and afterwards surrendering it.249 So, if the holder takes security

241 Ellis v. Galindo, 1 Doug. 250. 242 Myers v. Malcom, 20 Ill. 621.

243 Whatley v. Tricker, 1 Camp. 35. But it has been held to be sufficient if the purchaser, knowing the maker signed for the payee's accommodation, agrees with the maker to look to the payee only. Daggett v. Whiting, 35 Conn. 366.

244 Hanchet v. Birge, 12 Metc. (Mass.) 545.

245 Chit. Bills, 350; Farquhar v. Southey, Moody & M. 14, 2 Car. & P. 497; Anderson v. Cleveland, 13 East, 430, note, 1 Esp. 46.

246 Hawk v. Johnson (Pa. Sup.) 6 Atl. 725, 11 East. Rep. 16.

247 South Sea Co. v. Duncomb, 2 Strange, 919.

248 National Bank of Republic v. Conlan, 99 Mass. 181.

249 Pitts v. Congdon, 2 N. Y. 352.

from one joint maker or acceptor, he will not discharge the other.250 If land is conveyed to the payee to secure a note, the payee agreeing to reconvey it on payment of the note, the maker will be discharged by a subsequent devise of the land to him by the payee.251 And if the holder surrenders collateral to the principal debtor, it will discharge the surety.252 So, if he surrenders part of the collateral held by him, and negligently loses the rest.253 But if a guaranty is given to the acceptor, who is to be secured by a bill of lading, and the acceptor's agent applies the proceeds of the bill of lading, without fraud, and with the guarantor's knowledge, to other debts, the guarantor will not be released by such use of the collateral.25

Agreement not to Sue.

§ 1839. An agreement that the holder shall never sue an indorser is a bar to his subsequent action against him.255 So, too, a covenant never to sue, contained in a composition deed.256 On the other hand, a covenant not to sue for a certain time does not amount to a release.257 But where the holder agrees not to sue the acceptor,

250 Evans v. Drummond, 4 Esp. 89; Thompson v. Percival, 5 Barn. & Adol. 925, 3 Nev. & M. 167.

251 Holmes v. Holmes, 36 Vt. 525.

252 Kirkpatrick v. Howk, 80 Ill. 122. So, it will discharge the indorser of another collateral note, whose indorsement was obtained by fraud. Haas v. Bank, 41 Neb. 754, 60 N. W. 85. In California, where suit on a note secured by collateral mortgage must be by foreclosure of the mortgage, release of the mortgage will bar a suit on the note. Hibernia Savings & Loan Soc. v. Thorn

ton, 109 Cal. 427, 42 Pac. 447. And see § -.

253 Bank of Gettysburg v. Thompson, 3 Grant, Cas. (Pa.) 114.

254 Kidder v. Horrobin, 72 N. Y. 159.

255 Bruce v. Wright, 3 Hun (N. Y.) 548. So, as to maker. Simmons v. Thompson, 29 App. Div. 559, 51 N. Y. Supp. 1018. Although merely verbal. Pike v. Street, Moody & M. 226. And a contemporaneous written agreement that the maker should not be personally responsible has the same effect. Marietta Sav. Bank v. Janes, 66 Ga. 286.

256 Ellis v. McHenry, L. R. 6 C. P. 229. Although it is not so if only made between the creditors of the maker. Garnier v. Papin, 30 Mo. 243.

257 Byles, Bills, 244; Thimbleby v. Barron, 3 Mees. & W. 210. Unless expressed to be pleadable in bar. Walker v. Neville, 34 Law J. Exch. 73. Especially if it is merely in consideration of the maker's inability to pay. kins v. Gilman, 8 Pick. (Mass.) 229. But it may suspend the right of action for the time named. Hutchins v. Nichols, 10 Cush. (Mass.) 299.

Per